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Analysis of the Electricity Area

There was an increase in the electricity area between 2009 and 2010, including in terms of the amount of overall Group profit that rose from 9.3% to 9.8% as shown in the table below:

(millions of )31-dic-0931-dic-10Change% Change
Electricity area EBITDA53,059,8+6,8+12,8%
Group EBITDA567,3607,3+40,0+7,1%
Percentage weight9,3%9,8%+0,5 p.p.

The EBITDA for the area increased from Euro 53.0 million as at 31 December 2009 to Euro 59.8 million as at 31 December 2010.

The main results of the area are briefly summarised below:

Income statement
(millions of )
31-dic-09% Inc.31-dic-10% Inc.Abs. Change% change
Operating costs(1.969,6)-96,9%(1.399,2)-95,3%-570,4-29,0%
Personnel costs(24,1)-1,2%(23,8)-1,6%-0,3-1,2%
Capitalised costs14,20,7%14,51,0%+0,3+2,1%

Revenues decreased from Euro 2032.5 million in 2009, to Euro 1468.3 in 2010, down by 27.8%, mainly linked to the decrease in trading activities and, to a lesser extent, to the reduction in the average market price of electricity.

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

(millions of euro)31-dic-09% Inc.31-dic-10% Inc.Abs. Change% Change
Sales revenues690,033,9%720,549,1%+30,5+4,4%
Distribution revenues48,32,4%52,03,5%+3,7+7,7%
Trading / other1.294,263,7%695,847,4%-598,4-46,2%
Total revenues2.032,5100,0%1.468,3100,0%-564,2-27,8%

Sales revenue increased by 4.4% due to higher volumes sold, resulting from the increased trade activity, partially offset by the aforementioned reduction in the average energy market price. Distribution revenues increased over the previous year, due both to the AEEG tariff adjustments and the recovery of revenues invoiced and equalisation components for previous years. Please refer to the appropriate section on the regulatory tariff framework for further discussion.

The quantitative data of the area, that do not include trading activities, are shown in the table hereunder:

Quantitative data31-dic-0931-dic-10Change% Change
Number of customers (thousand units)335,3382,5+47,2+14,1%
Volumes sold (Gw/h)7.047,47.744,0+696,6+9,9%
Volumes distributed (Gw/h)2.117,52.237,8+120,3+5,7%

The increase in volumes distributed shows an upswing in consumption, with the Imola and Modena territories displaying higher than average increases with respect to the average in the reference area of Emilia Romagna and Tuscany (+0.2%) and the national average (+1.8%).

The 9.9% increase in volumes sold is due to the strong performance of the commercial activities in the residential and VAT number segments of Emilia Romagna and the surrounding regions. The over 47 thousand unit increase in customers is especially significant, since it does not consider the customers who left and those who changed supplier. In addition, we should mention that the sales company acquired the protection service of the Tuscany, Umbria and Marche regions in 2009, and will expand the area serviced to Lombardy, Tuscany, Lazio, Abruzzo, Molise and Puglia in 2011.

The reduction in volumes traded and prices proportionally affected the decrease in operating costs for the purchase of raw materials, and the percentage margin increased from 2.6% in 2009 to 4.1% in 2010, also due to the effect of the different mix of volumes billed.

The capitalised costs increased by Euro 0.3 million as a whole due to the combined effect of higher increases for the aforementioned accounting reclassification, and application of the IFRIC 12 standard. Net of these effects, the capitalised costs are down by Euro 2.0 million between 2009 and 2010.

EBITDA increased from Euro 53.0 million in 2009 to Euro 59.8 million at the end of 2010, with a percentage increase of 12.8% as a result of the higher volumes sold and the improved profits obtained mainly from the brokerage activities, which interpreted the market situation with a provisioning campaign that allowed the flexibility of the available plant portfolio to be balanced against the market opportunities, thereby reducing the effects of the reduction in profits from the generation activities. Finally, the activities initiated in renewable energy sources and industrial cogeneration also contributed to the overall result.

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