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Letter to the Shareholders

Dear Shareholders,

Today we are presenting the results your Company has achieved in its fifth year of business.

It was a year that proved to be extraordinarily complex in attaining what the Industrial Plan envisaged, the results of which, although positive, were above all affected by the unusual weather conditions during the first six months, which limited sales in the gas and district heating sectors compared to the figures usually attained.

Growth of the EBIT was in any case higher than 6%, and was achieved thanks to the good results of the electricity sector and the total commitment of the structure to continuing the in-house efficiency process.

In fact, no contributions came from expansion of the geographic business perimeter as the two activities established in 2007 (acquisition of Sat of Sassuolo and extension of Aspes of Pesaro to the Urbino area) generated effects starting only from 1 January 2008.

The sector's scenario, guided above all by energy issues, witnessed additional concentration processes form on both the European and domestic levels.

As foreseen, operating investments (Euro 464 million) were particularly large, and focused mainly on the water and waste management sectors. The entity of this effort will necessarily have to be reduced over the next three-year period, even though it will continue to be sizeable, owing to the gradual completion of the waste management plants.

To this regard, the Ferrara and Forlė plants have been completed, and the two electrical power plants in Campania were put into operation during the year, significantly strengthening the company's presence in the electricity sector.

The Group's capitalisation figure was slightly corrected in 2007 (-7.3%). This was in part due to the particularly brilliant profit attained in the previous year, but was above all due to the first signs of the difficulties of the international stock markets that then came about, and to a sizeable extent, during the first quarter of this year.

As far as services are concerned, standardisation of the Group's IT systems was completed, as scheduled, for the provinces of Ferrara and Modena, which will continue to be strengthened and undergo innovation over the next few years as well.


Lastly, on the subject of initiatives addressed to the Group's stakeholders, I am pleased to report to you that for this first time this year the results of the financial statements and the sustainability report were published at the same time, guaranteeing the constant link that exists between these two fundamental components of the Group's action, also in formal terms.

In a setting of overall economic difficulty on which the raw material costs trend and the consequent impact on costs borne by the customers did not facilitate their perception of the efforts made by the company with regard to cost efficiency and reduction, the commitment to an ongoing information and communication action grew in order to keep the Company's activity transparent and appreciated by the territory and its customers.

In conclusion, I wish to particularly thank the Board of Directors and the Board of Statutory Auditors, which today complete their three years of office, and also all of our employees for their fine work, with the hope that the Group may continue its positive pattern of achieving excellent results, also through its ability to seize further opportunities for growth.


The Chairman
of the Board of Directors

(Tomaso Tommasi di Vignano)