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Analysis of the Waste Management Area

The Waste Management Area had higher profits than 2009, as shown in the table below:

(millions of )31-dic-0931-dic-10Change% Change
Waste mgmt area EBITDA187,3195,1+7,8+4,2%
Group EBITDA567,3607,3+40,0+7,1%
Percentage weight33,0%32,1%-0,9 p.p.

The Hera Group has been for some time an important operator in the waste management sector, capable of integrated operations over the entire waste cycle, with 77 treatment and disposal plants for urban and special waste.

In addition, it expanded its activities during 2010 through renting the CAM S.p.A. line of business, and consolidation of the company Naturambiente S.r.l. operating in the Urban Hygiene and Waste Disposal sectors of the Marche Multiservizi Group.

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

Income statement (millions of )31-dic-09% Inc.31-dic-10% Inc.Change% Change
Operating costs(334,7)-52,1%(386,0)-54,9%+51,3+15,3%
Personnel costs(142,4)-22,2%(147,2)-20,9%+4,8+3,4%
Capitalised costs22,33,5%25,33,6%+3,0+13,5%

As at 31 December 2010, revenues showed a 9.5% increase compared to the previous year, from Euro 642.1 million to Euro 703.1 million, linked to higher volumes disposed and, to a lesser extent, to higher revenues from urban hygiene due to tariff adjustments obtained to cover a greater number of services required. Please refer to the appropriate section on the analysis of regulated revenues for more information.

The increase in personnel costs of Euro 4.8 million is due to consolidation of the company Naturambiente S.r.l. and accounting for the rent of the CAM S.p.A. business line for Euro 2.1 million.

The capitalised costs, net of applying the previously mentioned accounting reclassification on the construction of plants between the Group companies, are down by Euro 3.8 million.

Separate waste collection, as a percentage of total volume of waste collected, reached at the end of 2010 a value of 47.8%, against 44.8% for the year 2009, up 3.0 percentage points. The % final balance of the 2009 and 2010 separate waste collection still does not include the DGR 1620-01 modification which does not include inorganic waste from multimaterial waste collection in the equation.

The following table highlights the growth in quantities of waste disposed of, which showed a 4.4% increase compared to 31 December 2009:

Quantitative data (thousands of tonnes)31-dic-09% Inc.31-dic-10% Inc.Abs. Change% Change
Urban waste1.793,935,1%1.864,132,7%+70,2+3,9%
Market waste1.530,829,9%1.608,528,2%+77,7+5,1%
Commercialized waste3.324,765,0%3.472,660,9%+147,9+4,4%
Plant by-products1.790,235,0%2.230,539,1%+440,3+24,6%
Waste treated by type5.114,8100,0%5.703,1100,0%+588,3+11,5%
Waste-to-energy plants734,514,4%800,614,0%+66,1+9,0%
Selection plants290,65,7%322,25,7%+31,6+10,9%
Composting plants402,07,9%463,88,1%+61,8+15,4%
Stabilization and chemical-physical plants1.084,621,2%1.218,621,4%+134,0+12,4%
Waste treated per plant5.114,8100,0%5.703,1100,0%+588,3+11,5%

An analysis of the quantitative data shows an increase in both urban waste and market waste, due to the improved waste disposal capacity on the one hand, and a recovery of the economic activities in general on the other: 2009 was characterised by a sharp contraction in production activities.

Specifically, note the development in the disposal amounts recorded in 2010, which, due to the combined effect of availability of the new WTE plants and further developments in the recycling and separated waste collection activities, resulted in the significant increase in the volumes utilised in the waste to energy and selection and composting plants against a concomitant stabilisation in the use of the landfills.

The EBITDA of the Waste Management area increased by Euro 7.8 million over the previous year, going from Euro 187.3 million in 2009 to Euro 195.1 million in 2010, with a 4.2% increase. This result is due to the increase in the volumes disposed of and the lower revenues from electricity production, due to the lower Green Certificate price for the plants, and the higher street cleaning costs related to the abundant snowfalls.

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