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Stock exchange share performance

The worldwide recession that started in 2008 had severe repercussions on global financial markets during 2011 as well, causing high uncertainty among operators. The situation was further exacerbated by economic analysts' concern about the sovereign debt of some European countries which in the first half of 2011 reached levels deemed as no longer sustainable. The joint action of EU institutions, together with rigorous budget policies implemented by the certain European countries, attempted to restore confidence in the system which bear still a widespread sense of uncertainty.
In this context, the Italian local utility sector followed the negative market trend, registering at the end of 2011 performance lower than the Italian stock market index. The FTSE Italia All Share index, which includes all shares listed on the Milan stock exchange, closed 2011 with a performance of -24.3% from the beginning of the year, whereas the index of Italian local utilities closed the same period at -32.3%. In this context, Hera was the second best Italian local utility: the last quoted Stock market price for the year was Euro 1.096, with a performance of -29.7% since the start of 2011. In the rankings of the stock market performance of major Italian local utility companies, Hera was only bested by the Lombard company A2A, which benefited from the Edison reorganisation.
The average liquidity level recorded by Hera stock disclosed lower trading in 2011 than in 2010, in line compared to that registered on all the European stock markets. The average value of the daily transactions involving Hera stock in 2011 decreased compared to that of 2010, from Euro 2.3 million to Euro 1.8 million.

Official share price and average traded quantities in 2011
 QIQIIQIIIQIV
Official price at close of period (Euro)1.6821.4641.1411.096
Average volume traded (thous.)1.1881.2901.7711.068
Average value traded (in thousands of €)1.9282.1082.1381.193

At the beginning of 2011, Hera stock disclosed one of the best performances in the sector in concurrence with the publication of the excellent annual results for 2010, taking prices to over Euro 1.73 (+13% from the start of the year) at the beginning of June. Subsequently, following the results of the referendums and the sharpening of the sovereign debt crisis in peripheral European countries, the trend of all the stock in the sector disclosed an emphasised bearish trend until the end of the year, at levers never seen before. In this context, Hera continued to stand out maintaining an improved performance with respect to the other local utility companies in the second half of the year partly thanks to the publication of satisfactory quarterly financial results and a business plan with further growth prospects for the future.
At the beginning of 2012, with a progressive improvement in confidence in the italian public debt shown by foreign investors, a reduction was seen in speculative phenomenon and a progressive improvement in the prices of sector securities which however remain significantly under-estimated in the opinion of the financial analysts with respect to the Hera book value, when compared with many assessment parameters (on EBITDA and on the dividend) and with respect to the solid growth prospects announced.
In addition to the usual presentations of its financial results, in 2011 Hera's top management maintained its commitment to dialogue with investors, despite the difficult context; an international road show was organised, which made it possible to meet major international investment funds and to discuss in depth Group performance and strategy. The total number of encounters and contacts made during the year came to 330, in line with sector best practices.

 
Yield of the share compared to the price

The changes are calculated with reference to the price of the share at listing.

The graph illustrates the returns to a shareholder who owned Hera shares from the year they were listed (2003) to 31 December 2011, including the proposed dividend for 2011 (which will be distributed in 2012). Despite the effects of the economic and financial recession of recent years, the overall return from listing for shareholders remains positive, with an overall value of over 42%. This result was entirely attributable to the dividend growth policy pursued since the establishment of the Group, which represents confirmation of the success of Group operations and the attention paid to shareholders.
For 2012, too, international road shows will be organised: as usual, they will enable top management to illustrate Hera's financial results and strategy in detail. During 2012, moreover, new instruments will be implemented to reply ever more effectively to requests for information from the financial community and, in particular, from private non professional shareholders and "sustainable" investors.

Stock exchange indices

Hera stock is included in many ethical indices, as evidence of the company's sustainable profile: in fact, for years it has been included in the "Kempen SNS Smaller Europe SRI Index" and in 2008 it was included in the "ECPI Italy SME's Equity" and the "ECPI Ethical Index EMU" ethical index, which consists of 150 listed companies in the European Economic and Monetary Union market which are considered ethical investments under the "ECPI SRI" methodology. This methodology was developed by ECPI, a company that has been researching social, environmental and governance aspects of companies, assigning ethical ratings and developing, calculating and publishing sustainability indices of the companies at global level since 1997.
Furthermore, during 2011, "Oekom Research AG", one of the leading world rating agencies in the sustainable investments segment, judged Hera to be a "Prime" investment, since it satisfies the environmental and social criteria established by the agency.

Share coverage

The Investor Relations Department promotes awareness of Hera with Italian and foreign financial analysts to increase interest in and awareness of the company and raise the number of opinions and independent professional assessments on the business results. The dissemination of this information enables investors to make well informed decisions on the use of their resources.
Despite the financial crisis of recent years has caused major restructuring in banking institutions, Hera still has a widespread coverage consisting of 11 independent research firms, half of which are international: Alpha Value, Banca Akros, Banca IMI, Centrobanca, Cheuvreux, Deutsche Bank, Equita, Exane (BNP Paribas), Intermonte, Kepler and Mediobanca. Moreover, the Banca IMI, Cheuvreux, Kepler and Deutsche Bank analysts included Hera stock among the best investment opportunities for 2011. At the end of 2011 Hera received 9 Buy/Outperform ratings, 2 Hold/Neutral ratings and no negative ratings. The average target price over 12-18 months, expressed by the evaluations of the analysts, is Euro 1.48 per share. At the end of 2011 Banca Aletti began Hera coverage.