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Introduction

In 2008 Hera recorded a two-figure growth in economic and financial results, especially significant given the current global crisis. These results reflect the implementation of certain strategic projects aiming to establish and consolidate the key strengths of the Group.

During the year, further significant progress was recorded in market development regarding the sale and trading of electricity, maximising advantages offered by the over one million-strong customer base already provided with other services, for which a new cogeneration plant in Imola became operative in the latter part of the year, and the strategy of covering sales with competitive sources continued.

In the gas sector, also, where Hera is the third leading operator in Italy with a dominant position in its home territory, the Group defended its market shares in 2008 and acquired a gas transport capacity directly from foreign producers (for 250 million cubic metres per year) via the TAG gas pipeline, continuing its strategic diversification of procurement sources.

The plant development projects in the waste-to-energy sector were almost completed on operational start-up in the second half of 2008 of a plant in Forlì and another in Modena. Hera’s leadership in terms of plants, now 70 in all, represents the main competitive leverage in a sector characterised by a serious lack of infrastructures, and once again in 2008 contributed considerably to the year’s growth.

On reaching these objectives in 2008, Hera practically completed the projects envisaged in the five-year listing plan, consolidating conditions in defence of its competitive positions achieved on the free competition market, which contribute to 40% of Group EBITDA.

Hera also defined the tariff increases with local authorities in 2008 for the all of the new regulatory period (2009-2012) with regard to licensed water and waste management services and with a view to achieving the target return on investments at the level established by national law. The new regulatory period for electricity distribution (2008-2011) began in 2008, and the tariff system was defined for the regulatory period for gas distribution (2009-2011). These events contribute to a definition of overall stability and visibility of the entire regulated component of Hera’s business portfolio, which represents over 60% of Group EBITDA.

These factors, together with the constant business efficiency improvement that has always been Hera's primary strategic focus, form the basis of the organic growth seen in 2008 results.

From the outset, Hera has unceasingly followed these internal line growth strategies alongside a development policy for external lines.

 

The expansion strategies adopted by consolidated companies in the sector have contributed to 2008 results through the full integration of SAT (a multi-utility operating in Sassuolo, Modena province) and Megas (a multi-utility in Urbino integrated into Marche Multiservizi). These operations helped to consolidate presence in the area covered by Hera and fuelled the exploitation of synergies.

Lastly, Hera completed the acquisition of an electricity and gas sales company (Megas Trade) operating in Urbino province to strengthen Hera’s presence in the Marche region, and invested in two joint ventures (Tamarete and SEI) for the construction of two more plants in support of the development of electricity sales in the coming years.

The action taken with regard to internal and external line expansion in 2008 led to one of the most significant EBITDA results in absolute terms since the Group was founded (mostly based on the same business area) and steadily reinforced Hera's competitive structure, allowing for more a more tranquil outlook for the future.

 
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