PERFORMANCE OF THE GROUP

Consolidated revenues for 2010 came in at € 4,805.5 million, up from € 4,266.8 million in 2009, with a rise of € 538.7 million (+12.6%).

Consolidated revenues can be broken down by business sector as follows:

The key figures of the consolidated income statement are as follows:

1)            This balance is the sum of the items “earnings before interest and taxes (EBIT)” and “amortization, depreciation and write-downs” in the consolidated income statement

2)            This balance is the sum of the items “financial income”, “financial expense”, “dividends”, “gains from trading securities”, “ losses from trading securities” and “adjustments to the value of financial assets” in the consolidated income statement

The consolidated gross operating margin (EBITDA) was € 400.1 million in 2010 (8.3% of sales revenues), up from € 294.6 million in 2009 (6.9% of revenues), with a rise of € 105.5 million (+35.8%) thanks to the improved profitability of all the main operating groups.

The consolidated operating margin (EBIT) for 2010 was € 215.8 million (4.5% of sales revenues), up from € 148 million (3.5% of revenues) in 2009, posting a rise of € 67.8 million (+45.8%).

The net result of financial management was a negative figure of € 79.8 million and was made up of the following: net financial expense of € 110.9 million, dividends and net gains from trading and valuing securities for € 37.0 million and adjustments to the value of financial assets for a negative € 5.9 million. This result compares with net income of € 37.1 million in 2009. The decrease was due for approximately € 101 million to the non-recurring and capital gains that were present in the year 2009.  

The key figures of the consolidated balance sheet of the CIR Group at December 31 2010, compared with the same figures at December 31 2009, are as follows:

(1)These figures are the result of a different organization of the balance sheet items. For a definition of the same, reference should be made to the notes referring to the chart “consolidated balance sheet by business sector” shown earlier .

Net invested capital stood at € 4,689.7 million at December 31 2010 compared to € 4,133.4 million at December 31 2009, with a rise of € 556.3 million, due essentially to the fixed asset investments of the Sorgenia group and to changes in working capital.

The consolidated net financial position at December 31 2010 showed net debt of € 2,166.8 million (up by € 365.7 million from € 1,801.1 million at December 31 2009) caused by:

-         A financial surplus for CIR and its financial holding subsidiaries of € 123.6 million which compares with € 121.6 million at December 31 2009;

-         Total net debt for the operating groups of € 2,290.4 million, up from € 1,922.7 million at December 31 2009. The rise of € 367.7 million was due mainly to the investments made by the Sorgenia group in new production capacity partially offset by the reduction in the net debt of the Espresso group for € 73.2 million and of the Sogefi group for € 5.3 million.

The net financial position includes the shares of hedge funds, which totalled € 84 million at December 31 2010. The accounting treatment of these investments  involves recognizing changes in the fair value of the funds directly to shareholders’ equity. The fair value reserve relating to these investments amounted to € 15 million at December 31 2010 (€ 13.2 million at December 31 2009). In financial year 2010 sales of shares in hedge funds led to the realization of gains, net of write-downs, of € 2.6 million (€ 44.5 million in 2009).

The performance of these investments since inception (April 1994) up to and including 2010 gave a weighted average return of the portfolio in dollar terms of 7.6%. In 2010 performance was a positive 4.7% and in January 2011 it was 0.1%.

Total equity stood at € 2.522,9 million at December 31 2010, up from € 2,332.3 million at December 31 2009, with a rise of € 190.6 million.

The equity of the Group went up from € 1,396.7 million at December 31 2009 to € 1.487 million at December 31 2010, with a net rise of € 90.3 million.

Minority Shareholders’ equity rose from € 935.6 million at December 31 2009 to € 1,035.9 million at December 31 2010, with a rise of € 100.3 million caused by the capital increases, net of dividends and the net income for the year.

The evolution of consolidated equity is given in the Notes to the Financial Statements.

The consolidated cash flow statement for 2010, prepared according to a “managerial” format which, unlike the format used in the statements attached, shows the changes in net financial position instead of the changes in cash and cash equivalents, can be broken down as follows:

The composition of the net financial position is given in the Notes to the Financial Statements.

During 2010 the net debt figure rose from € 1,801.1 million to € 2,166.8. million. The rise of € 365.7 million in the debt figure was the result of investments made in the period for € 638 million, funded for € 39.1 million by capital increases and for € 233.6 million by the cash flow generated by operations.

The cash flow generated by operations was lower than in the previous year due to lower self-financing and to the higher absorption of working capital especially in the Sorgenia group. The applications referred mainly to the net investments made in the utilities sector by the Sorgenia group.

At December 31 2010 the CIR group had 12,910 employees, up from 12,746 at December 31 2009.