"Investing in the Italian local utilities sector"

A Borsa Italiana conference

Investing in Italian local utilities: this is the theme of the second conference promoted by Borsa Italiana with UBM - Unicredit Banca Mobiliare - to present the opportunities associated with this important sector of the Italian economy and to look into the strategies and prospects of the businesses of this sector.

With a capitalisation of € 56 billion, the utilities sector accounts for 12.5 of the total market capitalisation.

The utilities listed in Italy are smaller in terms of capitalisation than in the rest of Europe and have a float level of 36%, less than the European average which is around 57%.

"The merger processes underway are changing the current scenario" stated Massimo Capuano, President & CEO of Borsa Italiana. "In Italy, there are around 50 local utilities that can access the capital market and the number of listable companies could be much higher if there were a significant process of mergers amongst the almost 2,000 companies in the industry. If all 50 companies identified in the sample were listed and the market multiples for the industry were applied, this would give an additional capitalisation, for the Borsa Italiana, of around € 3.6 billion."

Some of the benefits that local utilities can gain from being listed on the stock exchange include flexibility in the financing of development projects, a better relationship with banks, clients and suppliers, greater visibility, including at international level, granting of liquidity (or liquidability) for investment, and the possibility of stimulating management and of attracting the best professionals on the market, which are essential for tackling the new strategic challenges of a sector undergoing a process of transformation.

Over the last two years, the performance of the utilities segment on the stock exchange has been +11.5% in comparison with Mib, thus confirming its "defensive" nature (+12.6% in the year if just local utilities are considered). The average dividend yield for the year 2004 is 3.87%.

Increases in the share prices of local utilities are confirmed by the financial results for 2003 which, on a year-on-year basis, show an average increase in turnover of +22.5%, of +33.6% in terms of Ebit (+23.6% Ebitda) and a rise in net earnings of +57.2%.

Analysts have increased their coverage of the utilities listed: the average number of studies published for each company increased from 13 in 2001 to 23 in 2003, whilst in the first quarter of 2004 a total of 143 studies were published, with an average of 16 studies per listed company.



Milan, 26 May 2004

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