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13 Income taxes


This item is made up as follows

Current, deferred and prepaid taxes79,00966,05512,954

The total percentage of income taxes for the period on the pre-tax result came to 44%.

Shareholders are hereby informed that in accordance with and for the purposes of Article 27 of Italian Law No. 62 dated April 18, 2005, which established the procedure for the recovery of government aid declared illegitimate by the Ruling of the European Commission No. 2003/193 dated June 5, 2002, Hera S.p.A has presented tax declarations relating to the tax periods affected by the exemption regime. The Inland Revenue office responsible for the area has completed the assessment activities at the Company relating to the afore-mentioned declarations, issuing a verification proceedings report as at October 17, 2005; the Company therefore presented briefs on 1 December 2005. Furthermore, section 132 of the Finance Bill, Italian Law No 266 dated 23 December 2005 introduced significant amendments to Article 27 of Italian Law No. 62 dated April 18, 2005, foreseeing, among other things, the extension of the timescale for the recovery of the aid and a change of responsibility from the Exchequer to the Home Office. Italian Legislative Decree 10 of 15/2/2007 was then issued, effective as of 16/2/2007, establishing the reimbursement methods of aid declared illegitimate. At the current date, this decree is still to be converted into law.

Shareholders are also informed that, in accordance with the matters established by the agreements between the shareholders at the time of the corporate merger which led to the formation of HERA, as contained in the Stock market listing Information Prospectus, “the Local Authorities pledged to compensate HERA for any costs, losses or damages suffered by the same in relation to compulsory legislative rulings which revoke the tax concessions which the Company and the companies taking part in the merger have availed of”. Consequently, HERA SpA did not provide for any additional provision against charges in the accounts.

In relation to the former Meta SpA, please note that the tax periods affected by the moratorium have been subject to automatic definition (“tax amnesty”) as per Article 9 of Italian Law No. 289/2002 and therefore all assessment activities in relation to the same are precluded in accordance with the matters laid down by Article 9.9 of the afore-mentioned Italian Law No. 289/2002. The financial statements do not contain any provision for this purpose since the Directors believe that the risk of having to repay the taxes following a negative final outcome of the entire infraction procedure is possible but not probable. Prudently, it was considered expedient to restrict a portion of the Unrestricted Reserves, amounting to Euro 4,100 thousand, for the possible liability generated by the merger with Meta SpA and on a consistent basis with the resolution adopted on 15 January 2003 by said company; this amount would cover any charges consequent to the recovery of the government aid declared illegitimate by the European Commission.

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