The 19.7% rise in sales revenues reported by the Group's core businesses reflects primarily gains by the electric power operations (+16% compared with 2004), which expanded unit sales to deregulated customers and benefited from the higher prices that could be charged to end customers, and the contribution of the hydrocarbons operations, which increased revenues by 48.1%, thanks to growing unit sales (+19.1%) and significantly improved conditions in the benchmark oil market.
20. Other Revenues and Income
In 2005, other revenues and income totaled 588 million euros, or 267 million euros less than in 2004, due in part to a different method used to recognize contract work in process in accordance with IAS 11 (as explained when discussing sales revenues).
This item includes 226 million euros in differentials on derivatives used to manage the risk of fluctuations in the price of fuels and electric power, including those that can be defined both as hedges in accordance with IAS 39 and as margin hedges (in 2004, they were treated as financial items because, as explained when discussing the Group's accounting principles, IAS 39 was adopted starting in 2005); 123 million euros representing the Group's pro rata interest in sales of non-gaseous fuel and recovery of logistics costs incurred for Edipower power plants under the Tolling Agreement; 27 million euros in insurance settlements; and 55 million euros from the recovery of costs incurred to provide services to partners in hydrocarbon exploration projects. Sundry operating items account for the difference.
21. Raw Materials and Services Used
The cost of raw materials and services used totaled 5,682 million euros, up 20.5% compared with 2004. A breakdown is as follows:
(in millions of euros) 2005 2004 Change % change
Materials and services used:        
- Natural gas 2,747 1,935 812 42.0%
- Electric power 528 285 243 85.3%
- Blast furnace, recycled and coke furnace gas 276 201 75 37.3%
- Oil and other fuels 316 295 21 7.1%
- Demineralized industrial water 28 31 (3) (9.7%)
- Green certificates 58 30 28 93.3%
- Other materials and utilities 146 450 (304) (67.6%)
- Dispatching and balancing services 66 45 21 46.7%
- Facilities design, construction
and maintenance 346 469 (123) (26.2%)
- Transmission of electric power 385 299 86 28.8%
- Transmission and treatment of natural gas 254 212 42 19.8%
- Professional services 82 82 - 0.0%
- Insurance services 31 38 (7) (18.4%)
- Excise taxes on natural gas and electric power - 116 (116) na
- Commodity derivatives 170 - 170 na
- Provisions and writedowns of acc. receiv. 59 56 3 5.4%
- Sundry charges 190 172 18 10.5%
Total for the Group 5,682 4,716 966 20.5%
Breakdown by Type of Business
(in millions of euros) 2005 2004 Change % change
Electric Power operations 4,312 3,216 1,096 34.1%
Hydrocarbons operations 3,019 1,931 1,088 56.3%
Corporate activities 89 120 (31) (25.8%)
Eliminations (1,944) (1,259) (685) 54.4%
Core businesses 5,476 4,008 1,468 36.6%
Water 19 16 3 18.8%
Other operations 19 16 3 18.8%
Engineering 187 692 (505) (73.0%)
Divested operations 187 692 (505) (73.0%)
Total for the Group 5,682 4,716 966 20.5%
This expense item consists mainly of purchases of natural gas, electric power and other raw materials used in production processes. It also reflects the costs of goods held for resale, such as green certificates and non-gaseous fuel. The overall increase of more than 20% compared with 2004 reflects a rise in revenues and the higher prices paid for fuel and other purchases, which market prices did not reflect fully.
The consolidation of the Tecnimont Group's operations just for the first six months of 2005 accounts for most of the decrease shown by Other materials and utilities and by Facilities design, construction and maintenance.
The value shown for commodity transactions corresponds to both the amount of the transactions that can be classified as hedges in accordance with IAS 39 and to margin hedges. In 2004, before the adoption of IAS 39, they were treated as financial items.
22. Labor Costs
At 250 million euros, labor costs were 41 million euros less than in 2004. The sale of the Tecnimont Group and the corresponding reduction in staff discussed in the note to Provision for employee severance indemnities and provision for pensions account for most of this decrease.
23. EBITDA
At December 31, 2005, EBITDA amounted to 1,306 million euros, or 11.5% less than in 2004.
A breakdown by type of business is as follows:
(in millions of euros) 2005 as a % of sales 2004 as a % of sales
    revenues   revenues
Electric Power operations 1,006 20,1% 1,205 28.0%
Hydrocarbons operations 353 10,7% 335 15.0%
Corporate activities (76) n.a. (89) n.a.
Eliminations - n.a. - n.a.
Core businesses 1,283 20,1% 1,451 27.2%
Water 8 25,8% 4 14.8%
Other operations 8 25,8% 4 14.8%
Engineering 15 6,8% 20 7.8%
Divested operations 15 6,8% 20 7.8%
Total for the Group 1,306 19,6% 1,475 26.2%