Utilities

In 2008 the Sorgenia Group reported consolidated revenues of € 2,433.7 million, which were up by 30.7% from € 1,861.7 million in 2007. Against a backdrop of falling energy demand, especially in the last part of the year, the group increased its electricity sales volumes (10.4 TWh up from 9.7 TWh in 2007) and maintained its natural gas sales to end user clients (2.1 billion cubic metres) in line with those of 2007. The rise in revenues was partly affected by the different energy scenario linked to the rise in the prices of oil products recorded in the first half of the year.

In 2008 the Sorgenia group reported consolidated net income of € 66.7 million, up by 2.3% from € 65.2 million in the previous year, despite the impact of the Robin Hood Tax for € 12 million, higher amortization due mainly to the entry into the group of the French wind company Société Française d'Eoliennes (SFE) and the rise in interest expense because of the higher average level of debt during the year. The net income of the group net of the Robin Hood Tax would have been € 78.7 million, with a rise of 18%.

Consolidated revenues can be broken down as follows:

The consolidated gross operating margin (EBITDA) came to € 189.7 million (7.8% of sales revenues) up from € 152.1 million (8.2% of sales), posting a rise of 24.7%. This margin benefited from the excellent operating results achieved by the Termoli CCGT plant (with an annual production of over 4.4 TWh), from the expansion of the micro-business client portfolio, which has good levels of profitability, and from the billing of contractual penalties on the delivery schedule of the Modugno power plant. The margin was however affected negatively by the introduction of the new tax, known as Robin Hood Tax, which hit the net income of the affiliated company Tirreno Power, which is consolidated at equity and contributes pro-rata to the EBITDA of the Sorgenia group.

Consolidated EBIT for 2008 was € 154.7 million (6.4% of sales) compared to € 126.9 million (6.8% of sales) in 2007.

Consolidated net financial debt stood at € 1,013.9 million at December 31 2008, up by € 109 million from € 904.9 million at December 31 2007. The change was substantially due to disbursements made for investments of around € 260 million in new production capacity (for the thermoelectric power plants under construction at Modugno and Lodi and for photovoltaic and wind plants built and being built), to the change in working capital of approximately € 177 million linked to the growth in revenues and to the payment of dividends for approximately € 20 million. These outflows were partly offset by the subscription of a € 200 million capital increase in Sorgenia by Verbund Italia in June 2008, the repayment of loans made to Tirreno Power for € 42.5 million, dividends received from Tirreno Power for a total of € 39 million and selffinancing for € 66 million.

At December 31 2008 the group had 339 employees compared with 276 at December 31 2007.

The Board of Directors of Sorgenia S.p.A., which met on February 23 2009, proposed distributing dividends for a total of € 14.4 million, up from € 11.5 million in the previous year, corresponding to a dividend of € 0.0165 per share up from € 0.014 in 2007.

During 2008 the Sorgenia group continued to roll out its Business Plan.

In the field of thermoelectric generating, the construction work on the combined cycle plant at Modugno (BA) has reached the final stages and the plant is scheduled to start operating by the summer of 2009. Building work has commenced on the Bertonico-Turano Lodigiano plant (LO) and the preliminary works have begun on the site of the Aprilia plant (LT).

In wind generation the two wind parks of Castelnuovo di Conza (SA), with an output of 10 MW, and Minervino Murge (BA), 18 MW, were completed. Work progressed on the 39 MW plant at San Gregorio Magno (SA). The Molise Region has also authorized Sorgenia to build and run another wind farm in the local districts of San Martino In Pensilis and Ururi, for a total output of 12 MW.

In France, through Société Française d'Eoliennes (SFE), the Sorgenia group has generating facilities of 100 MW in operation, over 110 MW authorized and soon to be built and a vast portfolio of projects at various stages of development.

The development activities of Sorgenia Romania are continuing , the aim of which is to build, run and maintain wind parks.

In the solar energy sector, in 2008 the subsidiary Sorgenia Solar activated the national grid connections of 7 new photovoltaic plants each with an output of approximately 1 MW, bringing the photovoltaic capacity installed throughout the country to 13 MW.

Lastly, the Sorgenia group is continuing to develop important projects to guarantee diversification of gas sources and improve the safety of the whole national gas network. In particular, the plan for the construction of a 12 billion cubic metre regasifier at Gioia Tauro (Calabria) by LNG Med Gas Terminal, the company 69.77% controlled by Fin Gas Srl (an equal share joint venture between Sorgenia and Iride), is awaiting the Services Conference, which is the last stage of the authorization process.

In 2008 the generating company Tirreno Power reported revenues of € 1,466.8 million, up by 39.5% from € 1,051.6 million in 2007, and a gross operating margin of € 323 million, which was up by 27% from € 254.4 million in 2007. These improvements were largely attributable to the contribution of the new combined cycle unit at Vado Ligure for which 2008 was the first full year in which it was up and running commercially. Net income came in at € 99.9 million and was slightly down from the figure of € 102.6 million recorded in 2007 due to the impact of the Robin Hood Tax of € 26.4 million euro as mentioned earlier. Lastly, with the completion on the repowering of the Naples plant, which is currently in the startup phase, Tirreno Power has now substantially finished repowering its power plants.