ternienergia star conference london 2011

TerniEnergia A leading Italian PV energy company

London - Star Conference 2011

3-4-5 October 2011

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Disclaimer

This document has been prepared by TerniEnergia solely for information purposes and for use in

presentations of the Group’s strategies and financials. The information contained herein has not been

independently verified. No representation or warranty, express or implied, is made as to, and no

reliance should be placed on, the fairness, accuracy, completeness or correctness of the information

or opinions contained herein. Neither the company, its advisors or representatives shall have any

liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this

document or its contents or otherwise arising in connection with this document.

The forward-looking information contained herein has been prepared on the basis of a number of

assumptions which may prove to be incorrect and, accordingly, actual results may vary. This

document does not constitute an offer or invitation to purchase or subscribe for any securities and no

part of it shall form the basis of or be relied upon in connection with any contract or commitment

whatsoever. The information herein may not be reproduced or published in whole or in part, for any

purpose, or distributed to any other party. These materials do not constitute or form a part of any offer

or solicitation to purchase or subscribe for securities.

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Investment highlights – Stefano Neri (CEO)

Market growth – Paolo Ricci (Executive Board

Member)

2010 Financial Highlights - Paolo Allegretti (CFO)

Development Strategy and 2011-2013 Plan –

Stefano Neri (CEO)

Agenda

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Italian leading player as a supplier of photovoltaic systems and energy producer in the fast growing PV market

Significant presence in the reference market with substantial growth potential

Experienced Management Team

Reliable and efficient operating and commercial model

Listed on STAR Italian Stock Exchange

Over delivered expectations

Flexible business model

Investment Highlights

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Successful historical growth and balanced diversification of the business in the power generation activity: Solid free cash flow generation

Gained market shares, consolidating leadership in PV market, exploiting new opportunities of growth

Profitability levels confirmed by quarter to quarter growth trend

Revenues EBITDA

31.9

46.8

99.9

0

10

20

30

40

50

60

70

80

2008 2009 2010

(Mln €) (Mln €) CAGR 2008-2010 > 77% CAGR 2008-2010 > 146%

A solid track record

5



Member)



Stefano Neri (CEO)

Agenda

6

Our positioning in the PV market value chain

UPSTREAM MIDSTREAM DOWNSTREAM POWER

GENERATION

Players:

► Producers of silicon and wafers

Market structure

► Global

► Concentrated

Business characteristics:

► Huge barriers to entry

Players:

► Manufacturers of solar cells

► Assemblers of modules

Main countries: the US, Germany, China and Japan

Market structure:

► 40% of the manufacturers are not integrated

► 60% are integrated


► Capital intensive

► High degree of automation

Players:

► System integrators

Role:

► The management of the authorization demand

► The design of the PV plant

► Installation


► Strong relationships with local authorities are key

► High working capital needs

TerniEnergia presence

SILICON INSTALLATION DISTRIBUTION

GENERATION WAFERS CELLS MODULES

Players:

► Producers of electricity from the conversion of the sunlight

Hemlock, MEMC, Tokuyama, Wacker Chemie, M. Setek

REC, Yingli Green Energy

Bosch Solar Energy, PV Crystalox, RWE Schott, Sanyo, Sharp, Solarworld, First Solar, Evergreen Solar

TerniEnergia

Solar Energy Italia, Enerpoint, Enerqos, Phoenix Solar, Juwi, OPDE Group, Enel si

Conergy, Solon, SolarFabrik, Solaria

Suntech, Solarfun, Kyocera

Kerself, Q Cells, Sunpower

Enel Green Power, Edison, Sorgenia, Enipower,…

Positioning in the Italian PV industry value chain

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EPC Turnkey Solutions Business Power Generation Business

Drafting & feasibility studies

Authorization procedures

PV panels purchase and installation

Plant construction

Plant operation and maintenance

Customer support

50:50 Joint Ventures with highly

reputable partners

►Financing of projects guaranteed

►Leveraging “turnkey” expertise of

TerniEnergia

“Full Equity” started in 4Q 2010

Our business model: a fully integrated player

Build, Operate and Transfer (“BOT”) of

grid connected PV plants

Build Operate and Transfer

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Reliable and efficient business model

TerniEnergia’s unique business model enables in particular to:

► Control the entire construction process

► Optimize resources with a careful and synergistic management of construction sites and workshop

► Exploit the efficiency of trained, qualified and specialized personnel

► Optimize plant construction and installation timing through the planned integration of the typical activities of the different phases required

► Long term relationships with clients thanks to maintenance and customer assistance contracts (20 years)

MARKETI

NG

SITE

IDENTIFICATION

PROJECT

DEVELOP

MENT

PV PLANT

CONSTRU

CTION

REMOTE

CONTROL

AND

MAINTENANCE

Marketing

► Feasibility

studies

► Contract

management

and job order

opening

Project development

► Authorization

process

Plant construction

► Preparation of

the final design

► Materials

planning and

procurement

► Construction and

installation

► Grid connection

Plant operation and maintenance

► Monitoring,

emergency

services,

ordinary and

extraordinary

maintenance

Customer assistance

TerniEnergia’s business model allows full control of the entire operating process

Site identification

► Agricultural and

industrial sites

acquisition for

PV project

implementation

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• Stop PV investments

• Financial difficulties in planning new plants

Cutting

incentives

and legislation

vacatio

• Strong focus on PV Industry

• Development of large plants in JV and FE to increase the power generation business

Previous plan

based on

«Terzo Conto Energia»

•Strong focus on PV Industry

•Development of large plants in JV and FE to increase the power generation business

•All plants covered by “Salva Alcoa” law connected to the grid

•28 photovoltaic plants of industrial size, for a cumulated installed power capacity of 57.3 MWp connected between July and August

A new business plan: PV strategic guidelines

TerniEnergia’s

reaction in 1H2011

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• Retreat of foreign investors

• Overproduction of PV panels

Competitive

framework

• Increases the incentive decalage

• Introduces restrictions on large ground PV plants and an annual installation cap

New

“Quarto Conto

Energia”

• Focus on reduction of production costs and increasing installation quality, e.g. on roof top

• Return of foreign and large utilities investments

Market

changing

TerniEnergia’s

challenge to grow

A new business plan: PV strategic guidelines

• Property management systems of the PV plants to maximize revenues from incentived fees and sale of produced energy

• Optimization of plant operation and maintenance in order to achieve revenues stability and high margins

• Expansion into foreign countries, attraction strategy of foreign investor (e.g. international PV panels productors) and focus on industrial roof top plants

• Acquiring stakes in Italian companies in order to enforce industrial activity and diversifying energy efficiency business

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A new business plan: Energy Efficiency guidelines

Market size limited but grew in the late 90's, to reach

€ 10 billion between the USA and EU in 2008

Hold strong growth over the next 10 years in Europe,

even after approval of the Directive “Pacchetto Clima“

European market (EU-25) estimated at least € 75

billion for 2020, with expected growth of 10 times

between 2008 and 2020

Market Overview

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Accredited by the AEEG and the GME

investments in projects that generate energy

efficiency for the customers

The energy savings generated by our projects amounted to

over 150 million kWh

Energy Efficiency

Experience

Our activities

and our proposal

Identification of intervention areas, verification of technical

feasibility and verification of the economic and financial

viability of the project

Planning of the intervention, supply of materials, execution

of work - retrofitting and upgrading – plant testing

Management and maintenance of the facility, ensuring the

smooth functioning of the same

Industrial Energy Efficiency produces High Margins (over 30%)


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Contracts for Energy Spread or Energy Service with Public and Private Target: 34,000 LA in management by 2013, total investments of € 15 mln

Focus: Public illumination Medium and large industrial groups and multi-facility in private lighting

Technologies: ORC (TerniEnergia), motors, inverter, others (es., actions on productivity lines, ecc.)

Achievements "turnkey" for the redevelopment of lighting systems for other energy efficiency

Target: 23,000 LA in management by 2013;

Lightning

projects

In FTT

ORC

Organic

Rankine Cycle

Engineering

EPC

14



Member)



Stefano Neri (CEO)

Agenda

15

Historical evolution of installed capacity (MWp)

5%

33%

62%

FE (MWp)

JV (MWp)

EPC (MWp)

Source: Company information, as at 1° September 2011

Total installed Plants 242

Total installed Power (MWp) 187,00

FE (MWp) 10,40

JV (MWp) 61,20

EPC (MWp) 115,40

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Sound financial structure with outstanding growth track record

Source: Company information

Revenues EBITDA Net income

Double-digit organic growth with margins of industry best in class

+900%

10,0

31,8

46,8

99,9

2007 2008 2009 2010 2007 2008 2009 2010

0,2 0,5

3,7

9,0

1,7%

1,7%

8%

9%

2007 2008 2009 2010

0,8

2,3

7,3

14,6

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Revenues EBITDA Net income

Double-digit organic growth with margins of industry best in class

1H 2009 1H 2010 1H 2011 1H 2009 1H 2010 1H 2011 1H 2009 1H 2010 1H 2011

20,6

36,3

116,4

2,8

5,9

8,9

13,6

16,2

7,6

1,2

3,6

5,4

5,9

9,9

4,6

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116.435

(42.033)

(39.755)

(21.675)

(3.920) (156) 8.896

(635) 8.262

1.128 1.127 8.262

REVENUES Changeinvetories

Cost ofMaterials

Cost ofServices

staff charges other cost EBITDA D&A EBIT Interest cost Joint Venture EBT


1H 2011 Bridge to Earnings Before Taxes (€ ‘000)

100.0% (18.6%) (3.4%) (0.1%) 7.6% (0,5%) 7.1,0% (1,0%) 1.0% 7,1% (36.1%)

2010 Bridge to Earnings Before Taxes (€ ‘000)

(34.1%)

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100.0% 60,3% (33.7%) (5.5%) (0.3%) 14,6% (0,9%) 13,8% (0,9%) 0.6% 13,5% (106,1%)

99,933

60,220

(106,220)

(33,647)

(5,494) (349)

14,425

(859)

13,766

(893) 586

13,460

Revenues Chg in

invetories

Material

costs

Services

costs

Personnel

costs

Other

costs

EBITDA D&A EBIT Interest

cost

JV EBT

100.0% 60,3% (33.7%) (5.5%) (0.3%) 14,6% (0,9%) 13,8% (0,9%) 0.6% 13,5% (106,1%)

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NWC (€m) and NWC / Sales (%)

39 12.4 23,2 NWC

Net debt (€m) and net debt / EQUITY(x)

Net

debt 36 2,7 5.7

11,0 22,2

51,5

(8,3)

(16,4)(19,6)

0,2x 0,2x

1,2x

2009 2010 1H 2011

Financial Indebtness Cash and CashEquivqlents

NFP/Equity

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Focus on joint ventures

JVs – Sales and EBITDA (€ ‘000) Comments

According to IFRS, JVs are not included in the

consolidated EBITDA nor in the net debt of TerniEnergia

JV business model: 15% equity (shared ½ by JV’s

partners) – 85% debt

60 plants completed as of June 30, 2011

Total capacity: 61,2 MWp in operation (40 in 2011)

JVs consolidated net debt: €197.9m as of June 30, 2011

of wich €9.9m of cash

► Approx. 50% long term debts (18/20 years)

► Approx. 80-90% swapped at a fixed rate in order to

stabilise cash-flows

The EBITDA margin is typically affected by the time

gap between the installation phase (when most of the

operating costs are incurred) and the grid connection

(when the plant start generating revenues)

At regime, it is expected that EBITDA margin could

range between 80-90% according to the electricity

production results

Cumulated installed capacity MWp

Source: Company information

19.8 49,3

13.3 27,4

Cumulated operating MWp

4.112

10.604

1.756

8.932

42,7%

84,2%

Fatturato EbitdaEbitda margin

2009 2010

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2012E

• Revenues: 86 Euro Mln

• EBITDA: 16 Euro Mln

16

86

18

93

0

10

20

30

40

50

60

70

80

90

100

EBITDA Revenues

EBITDA and REVENUES TREND (Euro ML)

2012 E 2013 E

CAGR 2012-2013 = 12%

CAGR 2012-2013 = 8%

2012- 2013 Plan: EBITDA and Revenues

2013E

• Revenues: 93 Euro Mln

• EBITDA: 18 Euro Mln

Target 2012E-2013E

EBITDA Margin 2012 E: 18%

2013 E: 19%

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10,9

11,5

10,0

11,0

12,0

2012 2013

Capex Targeted 2012-2013 (ML euro)

CAGR 2012-2013 = 8%

2012- 2013 Plan: Capex targeted

Total targeted Capex for JV and Energy Efficiency Business

D/E 2013: 1.0

23



Member)



Stefano Neri (CEO)

Agenda

24

Advanced approach in the new industrial energy

efficiency business in 2011 since now. Business no

policy driven

Starting abroad PV industrial activity through first EPC

contract with a subsidiary of an european major utility

PV activities as EPC Turnkey and JV providers: target

capacity over 120 MWp in 2012-2013 (PV modules

partially included)

Profitability in power generation business through JV

and Full equity plants guaranteed for 20 years

Keep unchanged the dividend value

“A strong reaction to changes in PV regulatory and incentives”

A new business plan: development guidelines

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Additional material

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Additional material

Appendix

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Highly skilled management team

Highly experienced management with deep industry knowledge on board since the creation of TerniEnergia

Well connected in Italian PV business

Running a young, dynamic and skilled organization to deliver strong results

Stefano Neri – Chairman and CEO of TerniEnergia

Born in Terni on 14 September 1959

Degree in Law at “La Sapienza” University in Rome

Certified attorney since 1985, specialized in administrative law, authors of several papers in the field

1998-2000: vice president at “Interpark Servizi per l’Ecologia S.r.l.” (Group Falck)

Founder of T.E.R.N.I. Research, from September 2006 is chairman of TerniEnergia BoD

Paolo Ricci – Executive Director – Business Development

Born in Terni on 15 July 1940

Degree in Electric Engineering at “La Sapienza” University in Rome

1978-2000: several managerial roles at Enel S.p.A. before becoming head of Transmission sector division

2000-2005: responsible for the engineering and the management of “Rete Elettrica Nazionale” plants at

TERNA S.p.A.

From 2007 is a member of TerniEnergia BoD, and chairman of the BoD of Solar Energy S.r.l., Energia

Alternativa S.r.l., Energie S.r.l. and Foto Solare Settima S.r.l. JV

Fabrizio Venturi – Executive Director – Chief Operating Officer

Born in Terni on 14 February 1964

Degree in Sociology at “La Sapienza” in Rome

1990-2007: CEO at Venturi S.p.A., a company operating in the realization of electric industrial plants.

From August 2007 is a member of TerniEnergia Board of Directors

Paolo Allegretti – Chief Financial Officer and Investor Relator

Born in Terni on 6 July 1971

Degree in Business Administration at “La Sapienza” University in Rome

2002-2008: head of the internal control and financial controller at Keryos S.p.A.

From October 2009 is CFO at TerniEnergia, after being head of the Planning & Control department from

2008 and head of Internal Control from 2009

Ex

pe

rie

nc

ed

an

d r

eli

ab

le m

an

ag

em

en

t te

am

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“Quarto Conto Energia”

Deadline extention to enter in the third feed in tariff (August 31th, 2011 instead of

June 30th, 2011);

Fixing, only for the big PV Plants, of a cap, for each year until 2016, in MWp and in

sum of money to provide FIT. Follow the table:

The establishment of a FIT application register to run a ranking which is previously

established based on the progress of the PV Plant installation booked;

june 2011 -

december

2011

First

Half

2012

Second

Half 2012

First

Half

2013

First Half

2013

Second

Half 2014

Second

Half 2014

First

Half

2015

Second

Half 2015

First

Half

2016

Second

Half 2016

Total

Cost CAP

€/mio 300 150 130 240 240 200 200 155 155 80 80 1.930

General

level of

MWp

1.200 770 720 1.115 1.225 1.130 1.300 1.140 1.340 1.040 1.480 12.460

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New FIT 2011 - June – August

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New FIT 2011 september - December

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New FIT - 2012

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New FIT - 2013

Starting 2013 the FIT system becoming only a Feed In system on German model.

ternienergia star conference london 2011

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