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During the first part of 2009, the economic crisis continued to influence all sectors of the economy, including basic public services. Nevertheless, Hera continued to post growing profits during the first six months, thanks to implemented growth strategies and to the realized profits from the regulated activities that account for more than half of the EBITDA of the Group.

Hera's regulated activities (waterworks, distribution of electricity and gas, municipal waste collection and disposal) are managed on the basis of tariff schedules that tend to insulate overall revenues from fluctuations in volume. They have also benefited from tariff updates authorized by competent authorities.

Electricity generation from renewable sources and similar activities, which represents an important part of Group profits, felt the slowdown of the economy only in the reduction of electricity prices. Meanwhile, it did not suffer from a general contraction of demand, because demand is guaranteed by deploying production through the national transmission network. Waste to energy (WTE) power plants benefited from an increase in legislated incentives (going from 1.1 to 1.3 Green Certificates per megawatt produced from biodegradable waste).

In energy sales, Hera pursued a strategy of expanding electricity sales through cross selling, with sold volumes increasing compared to the first six months of last year. It more than compensated the reduction in consumption by existing customers because of the crisis. The performance of gas at sales was in line with the past, thanks also to colder temperatures compared to last winter. This almost offset the effects of lower consumption, mainly by manufacturing customers affected by the crisis.

The only sector in which volumes shrank during the first quarter of 2009 was the disposal of industrial waste, affected by the contraction of manufacturing at the national level. Commercial activity to expand the market in Italy, implemented during the last part of the first quarter, continued to produce the positive results expected, significantly abating the impact of the crisis recorded during the first three months of this year.

WTE activities posted an increase in volumes thanks to the operation of the new WTE plant in Forlì (which started up in mid-2008) and, in part, the plant in Modena (which became fully operational only at the end of June following acceptance testing and the necessary load tests).

Herambiente, the company that operates on the deregulated market for waste disposal, has been active since 1 July 2009. Herambiente inherited national leadership from the Group, and has prepared expansion strategies both in the waste disposal market and in the construction and operation of new WTE plants, taking advantage of the expertise developed over the years by the Group. The company has already taken its first steps in this direction, by competing to build and manage the new WTE plant in Florence and by acquiring 50% of a joint venture to build and operate a new biomass plant with an installed capacity of 13.7 megawatts (MW).

A rearrangement of the asset portfolio has led to a more reasonable grouping of "lesser complementary activities", for example, gathering district heating and heat management into the gas area and microcogeneration activities into the electricity area. This provides a more complete view of the energy activities of the Group.

Finally, Hera has continued to restructure its financial debt, with positive effects on the average cost of loans, by renegotiating the conditions of a bond loan of Euro 200 million and by issuing an additional, 15-year bond loan of Euro 150 million, denominated in JPY with an attractive interest rate of 2.925%.

The work of making the operating activities more efficient following the recent merger of companies like SAT and Megas continues, with the new plants built in 2008 coming online, the company restructuring, the expansion policy for electricity sales and trading, and the updating of regulated service tariffs agreed to with the authorities for regulated services are the principal factors that have made it possible to maintain positive growth during the first half of 2009 and that allow us to look to the future with cautious optimism, notwithstanding a macroeconomic picture that remains difficult to read.


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.


These half-year financial statements as at 30 June 2009 were drawn up pursuant to Legislative Decree 58/1998 and subsequent amendments, as well as in accordance with the Issuers’ Regulations issued by Consob. These half-year financial statements were prepared in compliance with the International Accounting Standards “IFRS” issued by the International Accounting Standards Board “IASB” and approved by the European Union, and in compliance with IAS 34 – Interim Financial Statements

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