EDISON SPA : Le Conseil d'administration d'Edison analyse le rapport semestriel

HIGHLIGHTS OF THE GROUP'S ELECTRIC POWER AND HYDROCARBONS OPERATIONS

(in millions of euros)

	6/30/06	6/30/05
Electric Power Operations
Sales revenues	3,360	2,222
EBITDA	563	465
Hydrocarbons Operations
Sales revenues	2,084	1,548
EBITDA	240	154

Sales Volumes and Revenues

During the first six months of 2006, sales revenues were up a strong 32.3% compared with the same period last year (the increase is 42% when the data are restated on a comparable scope of consolidation basis), rising from 3,225 million euros in 2005 to 4,266 million euros this year. The electric power operations and the hydrocarbons operations grew by 51.2% and 34.6%, respectively.

Both businesses benefited from significantly higher average sales prices, due mainly to an increase in raw material prices in the international markets. The electric power operations reported a sharp gain in unit sales, which were up 24.5% to 31,376 GWh (25,211 GWh in 2005). This improvement was made possible by Edison's ability to use the additional capacity provided by its new power plants to increase its share of the deregulated market (sales were up 41.7%) and reflects the success of the marketing policies pursued by the Group.

Unit sales of natural gas available to the Group increased by 1.9% in the first half of the year, rising from 7,063 million cubic meters in 2005 to 7,197 million cubic meters in 2006. Sales to thermoelectric power plants, which reflected the start of production at new facilities, were up 17.9% to 3,995 million cubic meters (3,388 million cubic meters in the first six months of 2005). At the same time, sales of natural gas to residential users decreased from 2,427 million cubic meters in the first half of 2005 to 2,225 million cubic meters this year, as demand was curtailed by a reduction in the supply of natural gas caused by the natural gas emergency.

EBITDA

EBITDA grew by 29.6%, rising from 597 million euros in the first half of 2005 to 774 million euros in the same period this year. The electric power operations reported a gain of 98 million euros. This improvement was made possible by a rise in revenues generated by higher unit sales in the deregulated market and the optimization of the source/uses portfolio. Moreover, in keeping with a conservative accounting approach, the Group did not recognize expected refunds for costs incurred in connection with the natural gas emergency, since the Electric Power and Natural Gas Authority has not yet defined the refund criteria.

Even though unit sales growth was hampered by the factors described above, the hydrocarbons operations reported higher EBITDA (+86 million euros compared with the first six months of 2005) thanks to the successful renegotiation of the natural gas price it pays under long-term contracts. The beneficial effect of the new price more than offset the impact of a provision of about 50 million euros that the Group set aside conservatively to cover the potential effect of Resolutions No. 298/05 and No. 134/06 by which the Electric Power and Natural Gas Authority updated gas rates. Edison is contesting both resolutions. The higher value of hydrocarbons produced in Italy and abroad, which was made possible by a favorable trend in the benchmark oil markets, also helped increase profitability.

EBIT

EBIT totaled 415 million euros, compared with 320 million euros at June 30, 2005 (+29.7%). The increase in profitability was reduced in part by a rise in depreciation, compared with the first half of 2005.

Net Profit

The Group's interest in net profit at June 30, 2006 rose to 398 million euros, or 99% more than the 200 million euros earned in the first half of 2005. A 202-million-euro net tax benefit obtained by realigning the tax-base amounts of a significant portion of Edison's production facilities to the corresponding higher reporting values, as allowed under Law No. 266 of December 23, 2005, is the main reason for this gain.

Net of this nonrecurring item, the tax liability for the period amounted to 85 million euros, up from 37 million euros in the first six months of 2005, when the Company benefited fully from the availability of its tax loss carryforward.

Indebtedness

At June 30, 2006, the Group's net borrowings totaled 4,705 million euros, down from 4,806 million euros in the first half of 2005 (4,820 million euros at December 31, 2005), as the cash flow from operations more than offset the impact of a dividend distribution of 183 million euros and of capital expenditures totaling about 200 million euros.

Outlook for the Balance of 2006

The commissioning of the Torviscosa power plant during the second half of the year, coupled with the full availability of the facilities in Candela, Altomonte and Piacenza, and the positive impact of a renegotiated price for some long-term natural gas supply contracts, would seem to justify expectations of higher industrial results in 2006 compared with the previous year.

Results of the Group's Parent Company

The results shown for Edison Spa, the Group's Parent Company, in the first half of 2006 and all comparison data have been computed in accordance with IAS/IFRS principles. This is because the Board of Directors has approved the first-time adoption of the abovementioned principles. Edison Spa reported a net profit of 442 million euros at June 30, 2006, compared with 268 million euros a year earlier.

- In the first half of 2006, the Group began the process of disposing of 100% of Edison Rete Spa. Several potential industrial and financial investors have expressed an interest in this company. In the second half of July 2006, following the completion of the due diligence process late in June and early in July, Edison received several offers, which will form a basis for negotiations with the objective of completing the sale before the end of this year.

- Lastly, the Board of Directors defined the Agenda of the Ordinary Shareholders' Meeting, which has been convened for October 11, 2006 (on the first calling) and October 12, 2006 (on the second calling) to adopt the resolutions required to carry out the above mentioned realignment of the values at which a significant portion of Edison's facilities are carried for reporting and tax purposes. Specifically, as required by Section 469 of Law No. 266 of December 23, 2005 and amending and related provisions, the Shareholders' Meeting will be asked to approve the recognition on the financial statements of tax restriction on available reserves and of a portion of the Company' share capital, for a total amount of 703,508,704.52 euros.

Conference Call

The Group's operating results for the first half of 2006 will be discussed today at 5:30 PM (4:30 PM GMT) during a conference call. Journalists may follow the presentation by telephone in listen-only mode by dialing +39 02 30350 9005.

The presentation will also be available at the Group's website: www.edison.it.

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Edison's Press Office: Tel. +39 02 62227331, [email protected]
Edison's Investor Relations: Tel. +39 02 62228415, [email protected]
www.edison.it

The Semiannual Report was the subject of a limited Audit, currently being completed.

The Semiannual Report at June 30, 2006 and the Report on first time adoption of IAS/IFRS principles by parent company Edison SpA – as well as the Audit reports and, if any, observations made by statutory auditors – will be available upon request at the Company's headquarters (31 Foro Buonaparte, Milan) and at the offices of Borsa Italiana Spa by September 13, 2006. It may also be consulted at the Group's website: www.edison.it

Public disclosure required by Consob Resolution No. 11971 of May 14, 1999, as amended.

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