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Analysis of the Gas Area

During year 2009, the Gas area, which includes sales and distribution of natural gas and LPG, district heating services and heat management, increased the weight of its contribution to the Group's overall margin by 3.6 percentage points, compared to the corresponding period last year, as shown below:

(millions of €)31-Dec-200831-Dec-2009Abs. Change% Change 
Area EBITDA143.8174.4+30.6+21.3%
Group EBITDA528.3567.3+39.0+7.4%
Percentage weight27.2%30.8%+3.6 p.p. 

The results outlined above incorporate the effects of the transfer by asset companies of some of the Gas and District Heating networks operated by the Group, which represent and approximate contribution of Euro 16.8 million to EBITDA.

It must be emphasized that 2009 saw the implementation of resolution no. 159/08 of the Authority, passed to establish the correspondence between the thermal and the calendar years, and altering in fact the comparability to 2008.

The following table shows the main quantitative indicators of the area:

Quantitative data31-Dec-200831-Dec-2009Abs. Change% Change
Number of customers (thousand units)1,065.71,070.6+4.9+0.5%
Gas volumes distributed (millions of cubic metres)2,370.32,334.4-35.9-1.5%
Gas volumes sold (millions of cubic metres)2,493.12,802.7+309.6+12.4%
- of which Trading volumes294.8627.9+333.1+113.0%
Heat volumes delivered (Gwht)422.6476.4+53.8+12.7%

The volumes of gas distributed changed from 2,370.3 million cubic meters in 2008 to 2,334.4 in 2009, down 1.5%. The volumes of gas sold rose from 2,493.1 million cubic meters in 2008 to 2,802.7 in 2009, an increase of 12.4%. The volumes of heat delivered rose from 422.6 Gwht in 2008 to 476.4 in 2009, an increase of 12.7%.

The change in volumes was the result of two opposite effects: on the one hand, lower average temperatures in 2009 compared to 2008, on the other, lower average fuel consumption per unit caused by the ongoing economic crisis.

The effects mentioned above led to the economic results briefly summarized below:

Income statement (millions of €)31-Dec-2008Inc.%31-Dec-2008Inc%Var. Ass.Var. %
Revenues1,216.4 1,259.5 +43.1+3.5%
Operating costs(1,083.8)-89.1%(1,040.2)-82.6%-43.6-4.0%
Personnel costs(54.6)-4.5%(63.5)-5.0%+8.9+16.3%
Capitalised costs65.95.4%18.71.5%-47.2-71.7%
EBITDA143.811.8%174.413.9%+30.6+21.3%

Revenues increased by 3.5%, from Euro 1,216.4 million in 2008 to Euro 1,259.5 million in 2009, over one third attributed to the capital gains derived from to the acquisition of the network, and for the remainder of the distribution revenues and greater volumes of heat supplied. It should be stressed in connection with sales that the effect on revenues of the higher volumes sold was offset by the lower prices of raw materials, which follow the oil price trend on international markets.

The lower capitalized costs can be attributed, for approximately Euro 40 million, to the different accounting treatment of business investments undertaken independently, following the merger into the parent company of the Territorial Operating Companies, and for the remaining part for minor works completed.

The higher cost of personnel is primarily related to higher marketing costs incurred and the focus of activity following the aforementioned spin-off process for the territorial operating companies.

Compared to previous year, the Group recorded an increase in EBITDA of Euro 30.6 million, from Euro 143.8 million to Euro 174,4 million, a significant increase in margin, moving from 11.8% in 2008 to 13.9% in 2009. This result shall be attributed to the performance of Trading operations, even after a negative change in fair value of derivatives, and to distribution activities and the acquisition of networks.

 
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