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Analysis of the Electricity Area

The Electricity Area accounts for 45% of the total turnover of the Group with a contribution to the total margin of 9.3% as shown in the table below:

(millions of €)31-Dec-200831-Dec-2009Abs. Change% Change 
Area EBITDA54.453.0-1.4-2.6%
Group EBITDA528.3567.3+39.0+7.4%
Percentage weight10.3%9.3%-1.0 p.p. 

At the end of year 2009, the area showed a decrease of Euro 1.4 million in EBITDA, which moves from Euro 54.4 million in 2008 to Euro 53.0 million in 2009.

The economic results of the area are briefly summarized below:

Income statement (millions of €)31-Dec-2008% Inc.31-Dec-2009% Inc.Abs. Change% Change
Revenues1,557.3 2,027.7 +470.4+30.2%
Operating costs(1,505.8)-96.7%(1,965.0)-96.9%+459.2+30.5%
Personnel costs(22.2)-1.4%(24.1)-1.2%+1.9+8.6%
Capitalised costs25.11.6%14.40.7%-10.7-42.7%

Revenues moved from Euro 1,557.3 million in 2008 to 2,027.7 in 2009, up by 30.2%, due to higher trading volumes and the increased cost of energy commodities.

The table below provides a detailed view on the evolution of revenues by type:

(millions of €)31-Dec-2008% Inc.31-Dec-2009% Inc.Abs. Change% Change 
Sales revenues595.938.3%690.034.0%+94.1+15.8%
Distribution revenues (*)46.83.0%48.32.4%+1.5+3.2%
Trading / other (*)914.658.7%1,289.363.6%+374.7+41.0%
Total revenues1,557.3100.0%2,027.7100.0%+470.4+30.2%
(*) the 2008 figure reclassifies Euro 1.5 million through equalization from other activities to distribution

Sales revenue increased by 15.8% due to higher volumes resulting from the increased trade activity and the rise in the average energy market price. The strong trading revenues growth in the electricity market is in line with the commercial objectives of the Group.

The quantitative data of the area, excluding the trading activity, through which approximately 15 TWh have been brokered, displays a volume pattern that reflects the above:

Quantitative data31-Dec-200831-Dec-2009Abs. Change% Change 
Number of customers (thousand units)286.9335.3+48.4+16.9%
Volumes sold (Gw/h)5,075.27,047.4+1,972.2+38.9%
Volumes distributed (Gw/h)2,263.42,117.5-145.9-6.4%

The drop in volumes distributed revealed the decline in consumption linked to the economic crisis. As for the volumes sold instead, the increase was caused by strong performance of commercial activities, on both the open and regulated markets.

The increase in activity and prices explains the proportional increase in operating costs, due to raw material purchases, and the marginal rate dropping from 3.5% in 2008 to 2.6% in 2009.

Personal costs increased compared to 2008 due to higher marketing costs incurred and due to the increased focus on this area following the aforementioned spin-off process of the territorial operating companies.

Overall capitalized costs decreased by Euro 10.7 million, of which Euro 6.4 million belong to the aforementioned change in accounting treatment of work done internally.

At the end of the year 2009, the EBITDA shows a reduction over the previous year, from Euro 54.4 million to Euro 53.0 million, down 2.6%: this result should be considered in view of the fact that, as at 31 December 2009 there was a negative change in the fair value of derivatives related to trading activities for Euro 4.5 million. Moreover, adverse market conditions penalized the production of new electric power plant in Imola.  Year 2009 also saw the negative effect of losses tied to the massive replacement of electricity meters.

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