+255%
total yield
of the stock
compared to
its 2003 price
9.5
euro cent
dividend
per share
1,248
million euro
of added value distributed
to local stakeholders

Hera’s commitment toward the investors

The Hera Group undertakes to create value by placing the quality and efficiency of the services managed and the growth by lines, both internal and external, at the centre of its strategic approach; at the same time, it pursues a balanced development of the strategic areas of its business portfolio. The stability of these strategic policies over time, the handling of a low propensity to risk and the sustainable approach have contributed towards producing economic-financial results constantly on the up, also under adverse market conditions. The overall share investment return (total shareholder return), with respect to the IPO, came to +225.0% at the end of 2017: a value which has always remained positive, during a period characterised by considerable volatility on the financial markets.

Total shareholder's return from IPO

The Hera stock ended 2017 with a performance of +33.9%, higher than the Italian stock market (+15.5%), reaching an official price of Euro 2.929, compared with a price of Euro 2.187 at the end of 2016, and with a capitalisation of around Euro 4.4 billion which stands amongst the 44 highest capitalisations of the Italian share list. The performance of the price of the stock was supported by the appreciation of the investors for the business plan presented to the financial community in January and by the sound fundamentals of the company emerging during the year at the time of the publication of the quarterly and annual results.

Official share price and average traded quantities in 2017
  QI QII QIII QIV
Official price at close of period (Euro) 2.60 2.69 2.67 2.93
Average volume traded (thous.) 2,362 2,758 1,569 2,341
Average volume traded (in thousands of Euro) 5,543 7,724 4,264 6,754

The Hera official listed price at the end of 2017 disclosed an implicit valuation premium with respect to the local utilities sector. The multiple of the business value on the gross operating margin (EV/Ebitda) was in fact equal to 7.2 compared with a 6.8 peer average, and also the multiple of the share value on the net profit (P/E), equal to 17.8, exceeded the 14.0 average. The greater valuation which the market acknowledged Hera with respect to the main listed local utility companies reflects: the persistent outperformance of the final results with respect to expectations, the future growth prospects of the business results, the low risk implicit in the mix of the strategic business areas, the stability of top management over time, the diversified composition of the shareholding structure and the time series of the results undergoing continual growth.

Performance of the Hera stock with respect to the market (accumulated performance)

The dividend policy has been identified as the most important component of the remuneration of the invested capital. Hera has ensured a constant and rising flow of dividends since listing: it has distributed Euro 1.4 billion in total since its establishment in 2002. The stock has thus been included in the Etf Spdr S&P Euro Dividend Aristocrats during 2016, a basket of 40 European securities (only four are Italian, including Hera) which distinguished themselves due to the uninterrupted distribution of stable or rising dividends in the last 10 years. At the end of 2017, Hera was at the top of the ranking of the basket, as main investment of the Etf.

The constant income flow guaranteed the shareholders the return of the capital

In the five-year business plan, presented in the first few days of 2018, Hera increased the remuneration objectives for the shareholders envisaging a minimum dividend rising up to 10.5 cents per share at 2021, up +17% compared with the last dividend distributed. This policy permits the shareholders clear visibility on the minimum future return of their investment with respect to the remuneration used by other companies in the sector, which conditions the dividends dependent on the forecast performance of the net profits (pay-out ratio).

The consensus of the financial analysts deems the Hera dividend policy to be sustainable: it is consistent with the expected cash generation which, after the payment of the dividends, will be capable of improving the equity solidity and financial stability further, already today among the best in the sector with a ratio between net financial payables and Gross Operating Margin of around 2.6 times.