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Analysis of the Integrated Water Cycle Area

The Group currently operates in the Integrated Water Cycle management in over 180 municipalities with an overall population of more than 2.5 million inhabitants, with almost complete coverage of the territory of reference.

Hera operates through seven ATO in the Provinces of Ravenna, Ferrara, Forlì - Cesena, Rimini, Modena, Bologna and Pesaro - Urbino.

Agreements were set up with all of the aforementioned agencies to regulate the integrated water service, and in addition to extending the licence terms up to 2022 on average, hence guaranteeing the Group the return on its capital investment over the next few years.

In 2009, the Integrated Water Cycle area showed a slight increase in results compared to the same period in the previous year:

(millions of €)31-Dec-200831-Dec-2009Abs. Change.% Change
Area EBITDA130.2131.4+1.2+0.9%
Group EBITDA528.3567.3+39.0+7.4%
Percentage weight24.6%23.2%-1.4 p.p. 

This result is considered particularly positive, if we take into account which was achieved against a substantial alignment distributed volume, fewer jobs and tie and the fact that the year 2008 benefited from exceptional items for about Euro 3 million related to a contingent asset of the Group Marche Multiservizi.

An analysis of the operating results achieved in the area is shown below:

Income statement (millions of €)31-Dec-2008% Inc.31-Dec-2009% Inc.Abs. Change% Change
Revenues459.0 471.4 +12.4+2.7%
Operating costs(359.0)-78.2%(264.5)-56.1%-94.5-26.3%
Personnel costs(100.8)-22.0%(104.7)-22.2%+3.9+3.9%
Capitalised costs131.028.5%29.36.2%-101.7-77.6%
EBITDA130.228.4%131.427.9%+1.2+0.9%

Revenues amounted to Euro 471.4 million, up 2.7% compared to 2008, as a result of the combined effect of increasing tariffs and additional minor works and connections.

The decrease in operating costs is due for approximately Euro 82 million to the different accounting treatment of capitalized costs connected to investments, and for the remainder of the minor works performed.

The following table reproduces the main quantitative indicators of the area, resulting in a slight overall increase compared to 2008:

Quantitative data 31-Dec-200831-Dec-2009Abs. Change% Change
Number of users (thousand units)1,153.91,166.3+12.4+1.1%
Volumes sold (millions of cubic metres)    
Aqueduct system257.0256.6-0.4-0.2%
Sewage system224.4225.7+1.3+0.6%
Purification system224.3226.2+1.9+0.8%

Volumes distributed show a substantial alignment with the previous year, recovering much of the delay shown in the first half year, while the volume of sewage and purification increased as a result of changes in the scope of related industrial activities.

EBITDA at the end of 2009 increased by Euro 1.2 million, changing from Euro 130.2 million in 2008 to Euro 131.4 million this year (+0.9%). In the analysis of this result, it should be considered that 2008 saw the special effects of a contingent asset of the Marche Multiservizi Group for about Euro 3 million: net of this effect, despite the decline in works and connections, the result of the area will still shown an improvement of Euro 4.2 million, up by 3.2%.

 
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