EDISON SPA : Le Conseil d'Administration d'Edison examine le rapport trimestriel au 31 mars 2007

HIGHLIGHTS OF THE GROUP'S ELECTRIC POWER AND HYDROCARBONS OPERATIONS

(in millions of euros)

	1Q07	1Q06	Var. %
Electric Power Operations
Sales revenues	1,737	1,789	(2.9)
EBITDA	291	285	2.1
Hydrocarbons Operations
Sales revenues	1,201	1,256	(4.4)
EBITDA	123	59	108.5

Operating Performance of the Group in the First Quarter of 2007

In the first quarter of 2007, Edison reported a further improvement in the profitability, despite a reduction in domestic demand for electric power and natural gas due to exceptionally mild winter weather: average temperatures were approximately 25% higher than in the same period last year and than the average of previous 40 years. Specifically, gross consumption of electric power decreased by 1.6% in the Italian market compared with the first three months of 2006, domestic production decreased by more than 9% and import nearly doubled. Demand for natural gas contracted by 12.4%.
A sharp decline in the price of energy commodities in the national and international markets was also reported: for example, Brent price in US dollars decreased by 6.5% year-over-year (price in euros decreased by 14%), while IPEX prices of electric power were down approximately 11%.

Nevertheless, the Group increased by 4.4% its sales to customers in the deregulated markets, thereby minimizing the impact of lower demand on revenues, which totaled 2,231 million euros (-8.4%).

On the other hand, a positive contribution by both areas of business boosted EBITDA to 397 million euros, for a year-over-year gain of 20.7%. Specifically, the hydrocarbons operations benefited from last year second quarter's renegotiation of the price paid for natural gas under some long-term supply contracts, while the performance of electric power operations reflected the favorable impact of an effective strategy of optimizing the mix of energy sources and uses in the deregulated markets.

EBIT were also up significantly (+23.9% to 228 million euros) and the net profit rose by 27.9% to 87 million euros.

Sales Volume and Revenues

The above mentioned reduction of domestic demand for electric power and natural gas and sharp decline in the price of energy commodities in the international markets determined sales revenues for 2,231 million euros in the first three months of 2007, or 8.4% less than in the same period last year. The electric power operations and the hydrocarbons operations reporting reductions of 2.9% (mainly due to the sale of Serene), and 4.4%, respectively.
On a more positive note, a successful marketing strategy enabled the electric power operations to increase unit sales in the deregulated markets by 4.4% to a total of 10,058 GWh (9,635 GWh in the first quarter of 2006). However, this improvement was more than offset by a 13.2% decrease in CIP6 sales caused by the sale of Serene. Overall, the electric power operations sold 16,022 GWh in the first three months of 2007, compared with 16,558 GWh in the same period a year earlier (-3.2%).

In the natural gas area, volumes sold totaled 3,920 million cubic meters (-11.2%). Residential and industrial customers purchased a total of 1,413 million cubic meters (-33.1%, due to the exceptionally mild weather that characterized the first three months of the year), while consumption by the Group's thermoelectric power plants increased by 13.7%.

EBITDA

EBITDA rose to 397 million euros in the first quarter of 2007, for a gain of 20.7% compared with the 329 million euros earned in the same period last year.
The EBITDA generated by the hydrocarbons operations more than doubled to 123 million euros (+108.5% compared with 59 million euros in the first three months of 2006), owing in part to last year second quarter's renegotiation of the price paid for natural gas under some long-term supply contracts. The year-over-year comparison is also affected by a charge that reduced reported EBITDA by 27 million euros in the first quarter of 2006, when the Group chose to set aside a provision to recognize the potential impact of Resolution No. 298/05 by which the Electric Power and Natural Gas Authority updated customer gas rates for the first quarter of 2006.
During the first quarter of 2007, the electric power operations increased EBITDA by 2.1% to 291 million euros (285 million euros in the same period in 2006). This improvement is the result of an effective strategy of optimizing the mix of energy sources and uses in the deregulated markets, which more than offset the impact of lower margins earned on CIP6 sales and the absence of the contribution provided in the past by Edison Rete and Serene (11 million euros in first quarter of 2006).
The sales gain achieved in the deregulated markets against the background of a sharp decline in wholesale prices is the product of a rise in the volume available for this market segment, an increase in sales on the power exchange (which totaled 3.343 Gwh versus 1.083 Gwh in the same period last year) and a better cost structure. The commissioning of the Torviscosa power plant in October 2006 and the full availability of the Altomonte and Marghera facilities (their production capacity was curtailed for various reasons in the first three months of 2006) boosted profitability compared with the first three months of 2006, when margins had been reduced by the higher costs incurred to operate Edipower's power plants that use fuel oil (put into service in response to the natural gas emergency) and higher purchases from third-party suppliers.

EBIT

EBIT grew to 228 million euros at March 31, 2007, or 184 million euros more (+23.9%) than in the first quarter of 2006, despite an increase of 24 million euros in depreciation and amortization compared with the same period last year.

Net Profit

In the first three months of 2007, the Group's net profit totaled 87 million euros (+27.9%, compared with 68 million euros in the same period a year ago) after taxes of 80 million euros (39 million euros in the first quarter of 2006).

Indebtedness

At March 31, 2007, the Group's net borrowings amounted to 3,368 million euros. The improvement compared with the 4,256 million euros owed at December 31, 2006 (4,856 million euros in the first quarter of 2006) was made possible by the positive cash flow generated during the period (251 million euros), the exercise of warrants (520 million euros) and the sale of the investment in Serene Spa (117 million euros).
Capital expenditures and investments in exploration totaled 135 million euros in the first three months of 2007.
The debt/equity ratio improved significantly, standing at 0.45 at March 31, 2007, compared with 0.62 at December 31, 2006.

Bonds Due Within 18 Months of March 31, 2007

A fixed-rate (7.375%) 600-million-euro bond issue floated in 2000 will mature on July 20, 2007.
A variable-rate 830-million-euro bond issue floated in 2002 will mature on August 26, 2007.
Both bond issues will be repaid using ample funds provided by bank credit lines secured at more favorable terms.

Outlook for the Balance of 2007

In 2007, the planned commissioning of new facilities in Simeri Crichi (800 MW) and Turbigo (800 MW owned by Edipower) and the full availability of the Torviscosa power plant, coupled with the implementation of policies carefully designed to optimize its energy portfolio, should enable the Group to offset the impact of unfavorable changes in the regulatory environment.
For the rest of 2007, industrial results should be in line with those reported in 2006. The Group's financial position is expected to show further improvement, due to the exercise of the 2007 Edison Spa common share warrants.

An investment in Greece was approved

At today's meeting, the Board of Directors approved an approximately 250 million euros investment project for the construction of a 400-MW power plant in Thisvi, in Greece. The Greek authorities have already issued an installation permit for this project, which will be built in partnership (Edison to hold a 65% stake) with Hellenic Energy & Development and Viohalco, two local energy development companies. The Group is planning to establish a permanent and significant presence in Greece, where a project for the construction of the IGI gas pipeline linking Italy with Greece is already at an advanced stage.

Conference Call

The Group's operating results for the first quarter of 2007 will be discussed today at 4:00 PM (3:00 PM GMT) during a conference call. Journalists may follow the presentation by telephone in listen-only mode by dialing +39 02 802 09 28.

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

***

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

The Quarterly Report at March 31, 2007 will be available upon request at the Company's headquarters (31 Foro Buonaparte, Milan) and at the offices of Borsa Italiana Spa by May 15, 2007. It may also be consulted at the Group's website: www.edison.it.

The Group's balance sheet, statement of income, cash flow statement and statement of changes in consolidated shareholders' equity are annexed to this press release.
The Quarterly Report was not audited.

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

Consolidated Balance Sheet

(in millions of euros)

IFRIC 4 is applicable as of January 1, 2006. This interpretation, which is included in the International Financial Reporting Standards, provides guidelines to determine whether certain agreements constitute or contain leases, which should be recognized in accordance with the provisions of IAS 17 (as either finance or operating leases).

3/31/06 restated in
accordance with		3/31/07	12/31/06
IFRIC 4
	ASSETS
8,527	Property, plant and equipment	8,023	8,057
48	Investment property	40	40
3,505	Goodwill	3,518	3,518
332	Hydrocarbon concessions	317	323
36	Other intangible assets	42	44
59	Investments in associates	45	44
85	Available-for-sale investments	142	122
126	Other financial assets	145	130
121	Deferred-tax assets	109	102
282	Other assets	49	85
13,121	Total non-current assets	12,430	12,465
172	Inventories	133	387
2,068	Trade receivables	1,579	1,943
6	Current-tax assets	42	15
350	Other receivables	326	276
66	Current financial assets	221	42
478	Cash and cash equivalents	439	298
3,140	Total current assets	2,740	2,961
-	Assets held for sale	-	231
16,261	Total assets	15,170	15,657
	LIABILITIES AND SHAREHOLDERS' EQUITY
4,273	Share capital	4,793	4,273
612	Equity reserves	606	606
944	Other reserves	1,135	1,116
1	Reserve for currency translations	(4)	(3)
442	Retained earnings (Loss carryforward)	730	97
68	Profit (Loss) for the period	87	654
6,340	Total Group interest in shareholders' equity	7,347	6,743
153	Minority interest in shareholders' equity	130	147
6,493	Total shareholders' equity	7,477	6,890
75	Provision for employee severance indemnities and provision for pensions	73	72
1,091	Provision for deferred taxes	757	752
948	Provisions for risks and charges	879	881
2,858	Bonds	1,201	1,207
1,702	Long-term borrowings and other financial liabilities	1,323	502
246	Other liabilities	7	2
6,920	Total non-current liabilities	4,240	3,416
-	Bonds	1,477	1,457
902	Short-term borrowings	106	1,461
1,468	Trade payables	1,072	1,576
58	Current taxes payable	45	26
420	Other liabilities	753	694
2,848	Total current liabilities	3,453	5,214
-	Liabilities held for sale	-	137
16,261	Total liabilities and shareholders' equity	15,170	15,657

Consolidated Income Statement
(in millions of euros)

	First quarter of 2007	First quarter of 2006 restated as
		per IFRIC 4
Sales revenues	2,231	2,435
Other revenues and income	94	192
Total net revenues	2,325	2,627
Raw materials and services used (-)	(1,876)	(2,248)
Labor costs (-)	(52)	(50)
EBITDA	397	329
Depreciation, amortization and writedowns (-)	(169)	(145)
EBIT	228	184
Net financial income (expense)	(55)	(46)
Income from (Expense on) equity investments	(4)	2
Other income (expense), net	1	(28)
Profit before taxes	170	112
Income taxes	(80)	(39)
Profit (Loss) from continuing operations	90	73
Profit (Loss) from discontinued operations	-	-
Profit (Loss) for the period	90	73
Broken down as follows:
Minority interest in profit (loss)	3	5
Group interest in profit (loss)	87	68
Earnings per share (in euros)
basic	0.0182	0.0150
diluted	0.0169	0.0137

Cash Flow Statement

				First quarter of
2006 full year		(in millions of euros)	First quarter of	2006 restated as
			2007	per IFRIC 4
542		Group interest in profit (loss) from continuing operations	87	68
112		Group interest in profit (loss) from discontinued operations	-	-
654		Total Group interest in profit (loss)	87	68
8		Minority interest in profit (loss)	3	5
700		Amortization and depreciation	167	145
(2)		Interest in the result of companies valued by the equity method (-)	-	(1)
-		Dividends received from companies valued by the equity method	-	-
1		(Gains) Losses on the sale of non-current assets	(3)	-
84		(Revaluations) Writedowns of intangibles and property, plant and equipment	2	-
2		Change in the provision for employee severance indemnities	1	1
(413)		Change in other operating assets and liabilities	246	(143)
1,034	A.	Cash flow from operating activities of continuing operations	503	75
(548)		Additions to intangibles and property, plant and equipment ( - )	(135)	(85)
(85)		Additions to non-current financial assets ( - )	(158)	(11)
28		Proceeds from the sale of intangibles and property, plant and equipment	15	9
345		Proceeds from the sale of non-current financial assets	98	-
-		Capital grants received during the year	-	-
29		Change in the scope of consolidation	-	-
34		Other current assets	(179)	(10)
(197)	B.	Cash used in investing activities	(359)	(97)
1,203		Receipt of new medium-term and long-term loans	935	40
(1,712)		Redemption of new medium-term and long-term loans (-)	(1,274)	(140)
-		Capital contributions provided by controlling companies or other shareholders	520	-
(196)		Dividends paid to controlling companies or minority shareholders (-)	(3)	(6)
(181)		Change in short-term debt	(181)	245
(886)	C.	Cash used in financing activities	(3)	139
4	D.	Cash and cash equivalents of discontinued operations	-	-
-	E.	Net currency translation differences	-	-
(45)	F.	Net increase in cash and cash equivalents (A+B+C+D+E)	141	117
361	G.	Cash and cash equivalents at beginning of period	298	361
316	H.	Cash and cash equivalents at end of period (F + G)	439	478
316	I.	Total cash and cash equivalents at end of period (H)	439	478
(18)	L.	(-) Cash and cash equivalents of discontinued operations	-	-
298	M.	Cash and cash equivalents of continuing operations (I-L)	439	478

Changes in Consolidated Shareholders' Equity

(in millions of euros)	Share	Reserves and ret.	Reserve for	Profit for	Group inter.	Minority inter.	Total
	capital	earnings (loss	currency	the period	in sharehold.	in sharehold.	shareholders'
		carryforward)	translations		equity	equity	equity
	(a)	(b)	(c)	(d)	(a+b+c+d)=(e)	(f)	(e)+(f)
Balance at 12/31/05 restated as per IFRIC 4	4,273	1,492	3	504	6,272	159	6,431
Share capital increase for conversion of warrants	-	-	-	-	-	-	-
Appropriation of the 2005 profit	-	504	-	(504)	-	-	-
Restatements for adoption of IAS 32 and IAS 39	-	(10)	-	-	(10)	-	(10)
Change in the scope of consolidation	-	-	-	-	-	(6)	(6)
Dividend distribution	-	(183)	-	-	(183)	(13)	(196)
Difference from translation of financial statements in foreign
currencies and sundry items	-	16	(6)	-	10	(1)	9
Profit at December 31, 2006	-	-	-	654	654	8	662
Balance at 12/31/06	4,273	1,819	(3)	654	6,743	147	6,890
Share capital increase for conversion of warrants	520	-	-	-	520	-	520
Reclassification of prior period earnings	-	654	-	(654)	-	-	-
Restatements for adoption of IAS 32 and IAS 39	-	19	-	-	19	-	19
Change in the scope of consolidation	-	-	-	-	-	-	-
Dividend distribution	-	-	-	-	-	(10)	(10)
Difference from translation of financial statements in foreign
currencies and sundry items	-	(21)	(1)	-	(22)	(10)	(32)
Profit at March 31, 2007	-	-	-	87	87	3	90
Balance at 3/31/07	4,793	2,471	(4)	87	7,347	130	7,477