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Strategic approach

Heras strategy is focused on the creation of value through a multi-stakeholder approach and is aimed at achieving growth through all lines of development, both internal and external, benefiting from both economies of scale and synergies from mergers with multi-utility companies operating in the reference sectors.

For Hera, the multi-business portfolio is a distinctive feature that management has focused on since its establishment, because it guarantees strategic advantages that stem from the single management of related activities. Synergies of cost and revenue are one of the most visible advantages; in actual fact it has been possible through the individual management of the water, gas distribution, district heating and electricity networks to achieve synergies in maintenance activities, remote-control operations, and customer management. The composition of Heras core activities portfolio demonstrates a firm commitment to limiting the legal/regulatory, operational and financial risk profile. This is achieved by having a balance between regulated and free-market activities, which gives the economic-financial results a low volatility profile and a good long-term outlook.

Hera pursues efficiency strategies which leverage an innovative organisational model based on centralising several general functions and maintaining a strong local presence in the areas served. In 2010, the multi-business companies operating in the regions were transformed into organisational units as part of a further cost-cutting measure, while maintaining a local presence to safeguard the customer base.

The development of free competition markets has always been one of the Groups key strategies, even in times of economic-financial crisis. Great emphasis has been placed on cross-selling policies of services to the customer base in the activities portfolio. The development of quotas in the free markets of energy and the treatment of special waste is supported by the plant-capacity development strategy, which has reached its final stage; during the last 12 months two WTE plants and one CCGT cogeneration plant came into operation.

The free competition market for the treatment of waste in Italy continues to highlight serious shortcomings in infrastructures compared with the average in other European countries. In some regions of Italy this situation has led to a real waste emergency. As a result, government authorities have taken measures to unleash the construction of new plants in Italy, setting the stage for an important development in the industry. In view of these prospects, Hera intends to expand its presence in the domestic market, using its leadership position for leverage and the exclusive know-how from the construction, in recent years, of a large number of plants that have transformed the Emilia-Romagna region into one of the most technologically advanced areas in the country, with an impressive number of infrastructures.

In the area of regulated activities the goal has been to pursue the expansion of the reference area by increasing the ownership of assets through the purchase of gas and district heating networks managed by the Group and belonging to third parties in order to further streamline ownership structures, investments, management and maintenance costs. The strategy in regulated activities areas is to renew licences that are expiring, bid for tenders in the reference areas and expand into several adjacent areas for some network services.