Results of the Group
As the net result of the various factors described when reviewing the core businesses, the Group reported a gain in sales revenues, which rose 18.2% to 6,650 million euros, but a decline in EBITDA (-11.5%) and EBIT (-20.4%), which fell to 1,306 million euros and 649 million euros, respectively.
Group interest in net profit was up a strong 41.3%, growing to 500 million euros.
This improvement reflects the progress made in streamlining and optimizing the use of borrowed funds and the positive impact of the sale of nonstrategic assets completed in recent years. It is also the product of nonrecurring gains earned in 2005. A decrease in average indebtedness, coupled with the absence of nonrecurring borrowing costs, produced a decline in net financial expense of about 90 million euros. In addition, the Group's tax burden decreased by 72 million euros and minority interest was reduced by 62 million euros. The largest nonrecurring gains were those generated by the sales of the investments in AEM Spa (23 million euros) and Tecnimont Spa (86 million euros).
At December 31, 2005, the Group's net borrowings totaled 4,878 million euros, down slightly from 4,906 million euros at the end of 2004, despite the high level of capital investments (more than 600 million euros) required by the Company's expansion plan.
The table below presents in simplified form the Gruoup's net borrowings:
(in millions of euros) 12.31.05 12.31.04 Change
Long-term indebtedness
Bonds 2,838 2,825 13
Bank borrowings 1,757 1,738 19
Amounts owed to other lenders 65 83 (18)
Total long-term debt 4,660 4,646 14
Short-term borrowings
Current financial liabilities 655 805 (150)
Current financial assets (76) (87) 11
Cash and cash equivalents (361) (458) 97
Total short-term borrowings 218 260 (42)
Net borrowings 4,878 4,906 (28)
The table below provides an analysis of the Group's net financial position:
edison and the financial markets
Gwh
Stock Market Price of the Edison Common Share
2.0
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
  Edison common     Mibtel       MIB 30       S&P Mib
NB Note: Starting on May 13, 2005, the share price was affected by the announcement of a change in the chain of control of Edison Spa and the resulting launch of a mandatory tender
offer at a price of 1.86 euros per share.
  05/01 05/02 05/03 05/04 05/05 05/06 05/07 05/08   05/09 05/10 05/11 05/12
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
(in millions of euros) 2005 2004
A. Net borrowings at beginning of period (4,906) (5,264)
  EBITDA 1,306 1,475
  Change in operating working capital (192) (16)
  Income taxes paid (-) (131) (20)
  Change in other assets (liabilities) (141) (231)
B. Cash flow from operating activites 842 1,208
Investments in property, plant and equipment, intangibles
and non-current financial assets (-) (883) (836)
Proceeds from the sale of property, plant and equipment,
  intangibles and non-current financial assets 470 242
  Dividends received 8 14
C. Free cash flow 437 628
  Financial income (expense), net (219) (310)
  Contributions of share capital and reserves 18 52
  Dividends declared (-) (11) (82)
D. Net cash flow from financial activities 225 288
  Change in the scope of consolidation (197) 70
E. Net cash flow for the period 28 358
F. Net borrowings at end of period (A+B) (4,878) (4,906)
Forecast 2006
For 2006 we foresee a good development of our Group's activities due to the availability of Candela power plant for the whole year, the full operation of Altomonte power plant and the start up of Torviscosa new power plant.
Edison's 2005 Stock Market Chart