Saras GroupPreliminary full year report for the period

ending 31 December 2006

Saras SpA

“This is a translated version of the fourth quarter and preliminary full year -2006 report of the Saras Group especially intended for an international audi-ence. Those who wish to receive the original report in Italian should addresstheir request in writing or refer to the company website”

I

II

Board of Directors ChairmanGian Marco Moratti

Chief Executive OfficerMassimo Moratti

Vice ChairmanAngelo Moratti

Independent DirectorsGilberto Callera Mario Greco

DirectorsAngelomario MorattiGabriele PreviatiDario Scaffardi

Board of statutory auditors ChairmanClaudio Massimo Fidanza

Permanent AuditorsGiovanni Luigi CameraMichele Di Martino

Stand-in AuditorsLuigi BorrèMassimiliano Nova

Independent auditing firm PricewaterhouseCoopers SpA

1Corporate Bodies

Saras’s preliminary results for 2006, unaudited, have been prepared inaccordance with the evaluation and measurement criteria contained in theInternational Financial Reporting Standards (IFRS) issued by theInternational Accounting Standard Board (IASB) and adopted by theEuropean Commission according to the procedure set forth in Article 6 of theEuropean Regulation (CE) No. 1606/2002 of the European Parliament andEuropean Council of July 19, 2002.

Group activities The Saras Group is active in the energy sector, and is one of the leading operators inItaly and the rest of Europe when it comes to refining crude oil. It sells and distrib-utes oil products in both the domestic and international market, and produces andsells power, as well as engaging in other activities.

As part of its refining activities, it processes both crude oil obtained directly from Sarasand the crude oil of third parties. Refining is carried out at the Saras Group’s plant inSarroch, on the south-western coast of Sardinia. The Sarroch refinery is theMediterranean’s largest refinery in terms of productive capacity, and one of WesternEurope’s six super-sites 1, as well as one of the most complex refineries. Boasting aneffective refining capacity of approximately 15 million tons per year (around 300,000barrels/day), the refinery accounts for 15% of Italy’s total distillation capacity. Thanksto the refinery’s size, highly complex organisation and location, the Saras Group hasbeen able to refine different types of crude oil, while developing commercial relation-ships over the years with both crude-producing countries in North Africa and the NearEast and major international oil corporations.

The Saras Group, both directly and via the subsidiary companies Arcola PetroliferaSpA and Saras Energia S.A., sells and distributes oil products such as diesel, gasoline,heating oil, liquid petroleum gas (LPG), virgin naphtha and aviation fuel to marketsin Italy, Europe, overseas (mainly the Spanish market) and outside of Europe.

The Saras Group also operates in the power sector though the IGCC plant (IntegratedGasification Combined Cycle) of the subsidiary Sarlux Srl and the joint venture ParchiEolici Ulassai Srl, which owns and manages the wind power farm located in theMunicipality of Ulassai in the Sardinia island (power from renewable sources/windpower).

The IGCC plant, which is completely integrated with the Sarroch refinery’s produc-tion processes, produces power, hydrogen and steam, as well as sulphur and metalconcentrates, by using heavy crude residues originating from refining processes(assimilated to renewable sources). The power produced by the IGCC plant is sold toGSE (the national grid operator for renewable sources) in accordance with the termsand conditions set out in CIP 6 Resolution, while hydrogen and steam are used bySaras in the refinery’s production processes.

The Saras Group also provides industrial engineering and scientific research servicesto the oil, energy and environment sectors and operates in the information servicessector.

1 Source Wood Mackenzie, February 2006.

2

Structure of the saras group Below is the complete structure of the Saras Group and the various segments ofbusiness, with the main companies for each segment.

Consolidated by the line-by-line method

Saras SpA Saras Energia SA

ArcolaPetrolifera SpA

Sarlux Srl Akhela Srl

Sartec SpA

Parchi EoliciUlassai Srl

Sardeolica Srl

Consolidated by theequity method

Saras share is 70%

REFINING MARKETING POWERGENERATION

OTHER WIND

SARAS SpA

HANGZHOU DADIEncon Env. Equip.

Co.

SARINT SALUXEMBOURG

PARCHI EOLICIULASSAI SrlAKHELA Srl

SARAS RICERCHEE TECNOLOGIE

SpA

ARCOLAPETROLIFERA

SpASARLUX Srl

SARDEOLICA SrlConsorzio Cifra

100

ENSAR Srl

16.67

1008.7

EOLICA ITALIANASrl

NOVA EOLICASrl

100

20

XANTO Srlin liquidation

XANTO BASILICATASrl in liquidation

100

100

100

100

5

5Consorzio CESMA

Consorzio TECHNOMOBILITY

DINERGY Srl98.9

17.4

4.75

8.7

37.5

37.5

CONSORZIO LASPEZIA ENERGIA

0.1

C.R.A. Cons.ricerche associate

in liquidation

HYDROCONTROLSoc. Consortile a r.l.

SARDA FACTORING

1.1

100 99.9 100 100 100 70

SARAS ENERGIARED SA

99.9

0.1

REASAR SALUXEMBOURG

SARASENERGIA SA

MADRID

3

2006 Highlights:

• Proforma revenues 6,169 M€, up 11% vs 2005.

• Proforma comparable EBITDA 4 568 M€, down 13% vs 2005.

• Proforma adjusted net income 242 M€, up 5% vs 2005.

• Improved operating performance vs 2005 from refining and power seg-ments:

• refining&power margin continue to be above 10 $/bl (10.1);

• refining margin 6.2 $/bl, down 0.9 $/bl vs 2005, with EMC benchmarkdown 1.9 $/bl.

• IGCC power margin 3.9 $/bl, up 5% vs 2005.

• Net financial position reduced to 291 M€ from 573 2 M€.

• BoD shall propose to AGM a dividend of 0.15 euro/share (payout 59% onadjusted net income).

Milan, 21st February 2007. The board of Directors of Saras SpA met yesterday underChairman GianMarco Moratti and reviewed the preliminary 2006 results.

The Chairman declared: “We are happy to announce that in 2006, despite a challeng-ing market with extremely volatile product prices and lower refining margins, we havebeen able to achieve a proforma adjusted net income higher than 2005. Our solid per-formance, together with our strong balance sheet, set the base for our strategy to con-tinue to invest and to grow in our core business in order to increase our position as aleading Mediterranean refiner and consequently adding value to our shareholders”.

Proforma Saras Group income statement figures

€/Mil. Q4 2006 Q4 2005 �% Q3 2006 2006 2005 �%

REVENUES 1,200 1,718 –30 1,999 6,169 5,547 +11EBITDA 102.4 102.1 +0 84.5 526.2 783.7 –33Comparable EBITDA 138.9 157.2 –12 160.5 567.5 653.6 –13EBIT 58.7 57.5 +2 44.2 363.5 612.8 –40Comparable EBIT 5 95.2 112.6 –15 120.0 404.8 482.7 –16NET INCOME 35.7 48.0 –25 33.8 207.8 306.4 –32

Adjusted net income 66.2 74.0 –11 69.2 241.9 230.5 +5

SARAS Board of Directorsreviewed FY2006preliminary results.Proforma 2 adjustednet income 3 242 M€,up 5% vs 2005

2 Proforma: considering Sarlux Srl fully consolidated with the line-by line method as of 1st January 2005.3 Adjusted Net income: Net income adjusted by (inventories at LIFO-inventories at FIFO) after taxes, non

recurring items after taxes and variation in the derivatives fair value after taxes.4 Comparable EBITDA: calculated evaluating inventories at LIFO.5 Comparable EBIT: comparable EBITDA – depreciation&amortization.

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Saras Group income statement figures

Comparisons quarter on quarter and year on year not relevant due to thechange in consolidation area in Q3 2006

€/Mil. Q4 2006 Q4 2005 �% Q3 2006 2006 2005 �%

Revenues 1,200 1,637 –27 1,999 6,019 5,236 +15EBITDA 102.4 49.3 +108 84.7 411.0 570,3 –28EBIT 58.7 29.3 +100 44.2 292.2 492,4 –41NET INCOME 35.7 46.9 –24 33.8 395.4 292.6 +35

Group Proforma balance-sheet and cashflow figures

€/Mil. Q4 2006 Q4 2005 Q3 2006 2006 2005

Net Financial Position (291) (573) (187) (291) (573)Of which Sarlux Project Finance (369) (465) (421) (369) (465)CAPEX 41 24 47 133 86Operating Cashflow 6 (63) 174 164 271 379

Group balance-sheet and cashflow figures

Comparisons quarter on quarter and year on year not relevant due to thechange in consolidation area in Q2 2006

€/Mil. Q4 2006 Q4 2005 Q3 2006 2006 2005

Net Financial Position (291) (177) (187) (291) (177)CAPEX 41 15 47 130 59

6 Includes working capital changes.

5

Comments to the Comments on Full year 2006Proforma Group results

Saras Group achieved a positive overall performance in 2006.

Revenues increased by 11% vs 2005 due to the increase of oil prices.

Comparable EBIT registered a decrease of 16% vs 2005 due to the lower refiningmargins that affected the performance of the refining segment partially compensatedby the increase in the power segment.

The adjusted net income of 242 M€ is above to the 230.5 M€ of 2005 thanks togood operational performance in all segments and reduced net financial expensesthat in 2005 were affected by losses on oil derivatives.

Refining&Power margin also in 2006 has been above 10 $/bl (10.1) confirming thetrack record of superior margins of the Saras site.

CAPEX of 133 M€, totally financed by the cashflow generated by the operating activ-ities, are up 55% compared to 2005. Investments are mainly focused in the refiningsegment.

Net Financial Position at the end of the year decreased to –291 M€ from –573 M€

at the end of 2005 in the light of the strong operating cashflow of the period(271 M€) and also thanks to the capital increase of 342 M€ during IPO.

As a consequence leverage 7 is down to 19% from 39% at the end of 2005.

ROACE 8 in 2006 has been 16%, almost unchanged from previous year.

Comments on fourth quarter 2006

Comparable EBIT registered a decrease of 15% vs same period last year and 21% vsprevious quarter due to a decline of refining margins that affected the performanceof the refining segment.

The adjusted net income of 66 M€, is down 11% vs same period last year and downonly 4% vs previous quarter due to hedging on refining margins and EUR/USDexchange rate that positively affected net financial expenses.

CAPEX of 41 M€, are in line with previous quarter and are mainly concentrated inthe refining segment.

Net Financial Position at the end of the year increased to –291 M€ from –187 M€

at the end of Q3 2006 due to a sharp increase of working capital mainly affected bythe change of current tax liabilities.

7 Leverage: net debt/net debt + equity.8 ROACE: return on average capital employed.

6

Saras refining&power margin

Refinery margins: (comparable refining LIFO EBITDA + Fixed Costs)/Refinery CrudeRuns in the period.IGCC margin: (power.gen EBITDA + Fixed Costs)/Refinery Crude Runs in the periodEMC benchmark: margin calculated by EMC (Energy Market Consultants) based onruns equal to 50% of Ural and 50% of Brent and used by Saras as a benchmark.

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IGCC EMC BenchmarkRefinery

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2000 2001 2002 2003 2004 Q12005

Q22005

Q32005

Q42005

2005 Q12006

Q22006

Q32006

Q42006

3.3

3.3

3.5

1.9

4.1

2.21.5

0.61.9

2.8

4.7

2.62.1

3.5

6.1

5.6

4.5

3.9

9.510.6

4.2

3.7

6.5 6.5

5.3

3.6

10.1

12.0

3.4

5.6

8.6 6.6

4.1

3.6

10.2 10.7

3.7

4.7

7.1 5.6

1.9

4.0

9.6

12.2

4.5

4.7

7.7 6.5 5.6

1.62.8

3.6

10.1 9.2

3.6

2006

6.2

3.9

10.1

2.8

6.2

3.9

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The oil market The graph shows the course of the price of Dated Brent crude oil in the year 2006.

2006: Dated Brent

Source: Platt’s

Dated Brent price at end 2006 was very similar to the price at end 2005, around 60$/bl, but the average quotation during the year was significantly higher: 65.2 $/bl.

We can remark that prices were below the year average during Q1 and from earlySeptember till the end of the year, while they were higher than the average duringthe April-August period.

During Q1, a mild winter in the northern hemisphere dampened oil demand and keptcrude price around the 60 $/bl level. Starting from the end of March, the beginningof the driving season in the US and several geopolitical factors (such as the Iraniannuclear plans and terrorist attacks in the Niger Delta) drove prices above the 70 $/blthreshold for the first time. At the beginning of Q3 another price spike was driven byexpectations of a violent hurricane season in the US gulf coast, that fortunately didnot materialize: Dated Brent quotations hit the highest level ever on 8th of August (78.7$/bl); after that, Brent price fell sharply to an end of Q3 value of less than 60 $/bl.

In the last quarter of 2006, another exceptionally mild start of winter affected strong-ly oil demand, and inventories of crude and products grew quickly. Brent price wasquite stable in the 55-60 $/bl range until the end of November, when the OPEC deci-sion to cut production pushed crude oil price to the 65 $/bl threshold. After that therewas another declining trend during December to around 60 $/bl.

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The courses of the most important product prices are shown in the following graph:

2006: unleaded gasoline/ultra low sulphur diesel (ULSD) Fob Med quotations

Source: Platt’s

Looking at the development of gasoline and diesel crack spreads vs dated Brent it’s clearthat during 2006 the oil market was mainly driven by gasoline: crude price was strong-ly correlated with the gasoline crack spread (that traded in an extremely wide range,from –5 to +20 $/bl), while the ULSD crack spread was more stable (in the range 10-20$/bl) also because the winter seasons at the beginning and at the end of 2006 were bothvery mild, with a weak heating oil demand that depressed all the middle distillates.

2006: unleaded gasoline/ultra low sulphur diesel (ULSD) Fob Med crack spreads vs Brent

Source: Platt’s

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Unleaded crack (RHS axis) ULSD crack (RHS axis)Brent dated (LHS axis)

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Unleaded ULSDFourth Quarter

9

During the fourth quarter there was a clear declining trend for diesel crack spread,while gasoline crack spread oscillated in a narrow range and lost any correlation withcrude price, that was mainly affected by speculations on OPEC decisions to cut pro-duction.The graphs shows the margin calculated by EMC (Energy Market Consultants) usedby Saras as a benchmark. Average of Q4 2006 has been 1.6 $/bl to be compared with2.8 $/bl of previous quarter and 4.1 $/bl of same quarter last year.The average benchmark margin for the full year 2006 was 2.8 $/bl to be compared to4.7 $/bl in 2005; there were only 3 months in 2006 with margins higher than 2005,from May to July, but the general rule was a constant weaker market for refining,especially in April and September-October (Katrina and Rita hurricanes in 2005).

Emc Fob Med Benchmark (50% Brent - 50% Urals)

Source: Platt’s

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n

20052006

10

9

8

7

6

5

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2

1

0January February March April May June July August September October November December

0.6

2.7

1.4

3.83.6

4.7

2.9

7.0

5.3

4.4

5.9

4.4 4.2

3.2 3.1

4.6

1.2

9.1

1.9

7.7

1.92.5

1.1

2.0

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Segment reviews Below is the main information relating to the various segment of business of the SarasGroup.Furthermore, detailed results of the Sardeolica joint venture (wind segment) are givenin order to provide complete information, although the company is consolidatedusing the equity method.

REFINING

€/Mil. Q4 2006 Q4 2005 Q3 2006 2006 2005

EBITDA 55.1 58.6 31.0 292.2 531.5Comparable EBITDA 80.8 100.8 98.5 323.8 421.5EBIT 36.8 38.0 13.8 223.8 458.2

Comparable EBIT 62.5 80.2 81.3 255.4 348.2

Margins and refinery runs

€/Mil. Q4 2006 Q4 2005 Q3 2006 2006 2005

Benchmark refining margin * $/bbl 1.6 4.1 2.8 2.8 4.7Saras refinery margin ** $/bbl 5.6 6.6 6.5 6.2 7.1Total refinery runs Kt 3,895 3,765 3,765 14,286 14,423

M bl 28.4 27.5 27.5 104.3 105.3of which: processing for

own account Kt 2,085 1,966 1,982 7,381 7,326processing on

behalf of third parties Kt 1,810 1,799 1,783 6,905 7,097

* Calculated by EMC: 50% Ural + 50% Brent (see our website www.saras.it for more details).** (Comparable EBITDA + fixed costs)/Refinery Runs.

Comments on full year 2006

2006 has been characterized by a decline of refining margins with the EMC bench-mark lower at 2.8 $/bl versus 4.7 $/bl in 2005 (–1.9 $/bl).

The operational improvements and the achievement of one important step in theorganic growth strategy allowed Saras to achieve a refining margin of 6.2 $/bl, only0.9 $/bl lower than 2005. Consequently premium over the EMC benchmark increasedfrom 2.5 $/bl in 2005 up to 3.4 $/bl in 2006.

To be noted that during 2006 (in Q2) an important maintenance cycle has been per-formed, significantly affecting both runs and conversion capacity of the refinery.

In this context the refinery runs are in line with those achieved during 2005: 104.3million bl (14.3 million tons) in 2006 vs 105.3 million bl (14.4 million tons) in 2005.

An important improvement has to be highlighted in the products yields with middledistillate production (mainly diesel oil) averaging 51.4% in 2006 vs 49.2% in 2005,while the total yield of light products (middle distillates+gasoline+LPG) increasedfrom 78.4% in 2005 up to 80.9% in 2006.

11

The result has been achieved with a crude slate averaging the same API gravity of2005 (32.9 deg in 2006 vs 32.8 in 2005). This is the result of an improved operationalperformance and also of the strategy of increasing conversion capacity: during the Q2maintenance, modifications carried out to the vacuum, mild hydrocracking andreforming units allowed to increase the production of low sulphur diesel by about200,000 tons per year. Further 150,000 tons per year will be added during Q3 2007.

Comments on fourth quarter 2006

Refining margins declined during Q4 and reached the year lows during the month ofDecember.

EMC benchmark averaged 1.6 $/bl in the quarter decreasing by 42% versus Q3 whileSaras refining margin decreased only by 21% from 7.1 $/bl (including 0.6 $/bl impactof unexpected shutdown of reforming in Q3) to 5.6 $/bl .

Premium over the benchmark reached 4.0 $/bl in Q4 despite a minor impact due toa routine cleaning of the Visbreaking unit (abt 0.2 $/bl), confirming the advantagesderiving from a complex and diesel oriented refinery.

Refinery runs in the quarter at 28.4 Mbbl (3.9 Mton) are also higher (+2.5%) comparedto same quarter last year and to previous quarter.

Middle Distillate yield in Q4 2006 has been 51.6% vs 50.2% in Q4 2005 and 50.9% inQ3 2006, with API gravity of our crude slate substantially unchanged, confirming theachievement of additional conversion capacity during the year.

Production

Q4 2006 Q4 2005 Q3 2006 2006 2005

LPG kt 60 62 89 312 334yield 1,5% 1,6% 2,4% 2,2% 2,3%Naphtha + Gasoline Kt 1.055 1.013 969 3.893 3.873yield 27,1% 26,9% 25,7% 27,3% 26,9%Middle Distillates Kt 2.011 1.891 1.915 7.350 7.095yield 51,6% 50,2% 50,9% 51,4% 49,2%Fuel Oil & other Kt 275 334 273 725 1.154yield 7,1% 8,9% 7,3% 5,1% 8,0%TAR Kt 263 239 300 1.152 1.111yield 6,8% 6,3% 8,0% 8,1% 7,7%

Crude oil slate

Q4 2006 Q4 2005 Q3 2006 2006 2005

Light extra sweet Kt 1.471 1.355 1.752 6.092 5.375Light sweet Kt 357 243 78 707 1.176Medium sweet Kt 83 225 3 205 225Light sour Kt 0 0 0 0 0Medium sour Kt 910 861 817 3.346 3.660Heavy Sour Kt 1.074 1.081 1.114 3.936 3.987

Total Runs Kt 3.895 3.765 3.764 14.286 14.423

M bl 28,4 27,5 27,5 104,3 105,3Average crude gravity °API 32,4 32,5 32,9 32,9 32,8

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MARKETING

Below are the main financial data of the marketing segment, concentrated especiallyin the wholesale business where the Saras Group operates through Arcola PetroliferaSpA in Italy and Saras Energia S.A. in Spain.

€/Mil. Q4 2006 Q4 2005 Q3 2006 2006 2005

EBITDA (5.4) (10.0) 0.8 15.1 43.1Comparable EBITDA 5.4 2.9 9.3 24.8 23.0EBIT (7.6) (9.2) 0.2 11.7 41.9Comparable EBIT 3.2 3.7 8.7 21.4 21.8

Comments on full year 2006

In Italy and Spain the growth trend of diesel oil continues, the opposite is true forgasoline and heating oil, the latter mainly due to warmer weather in Europe. Highvolatility of product prices together with the increase of compulsory storage costs inSpain determined a retail margin reduction compared to 2005. Saras’ marketing divi-sion has been able to increase sales, for the fist time exceeding 3 million tons (+9%versus 2005), also gaining market share. Comparable EBITDA up 8% versus 2005,comparable EBIT, however in line with 2005 due to the additional depreciation result-ing from the acquisition of the 37 service stations in Spain.

Also notable is the increase of sales of 15% in Spain, +11% for diesel oil, comparedto overall diesel market increase of 5.8%. Important in this strategy has been to theacquisition in July of 37 service stations in the south of Spain.

The sales in Italy were slightly lower than 2005 (–2%) due to extremely low consump-tion of heating oil in the North of Italy. Saras has however been able to increase mar-ket share in the diesel oil market with sales up 5.4% versus a 1.5% increase in nation-al consumption.

Comments on fourth quarter 2006

Warm weather conditions reduced heating oil consumption in Europe putting pres-sure also on retail margins.

Nonetheless, EBITDA registered an increase of 86% versus the same period last yearthanks to continued growth of sales (+12% versus Q4 2005), EBIT however is in linewith Q4 2005 due to additional depreciation deriving from the finalization of the serv-ice stations acquisition.

Sales in the Italian market declined by 8% compared to same period last year. Thereduction is totally due to the fall in consumption of heating oil only partially com-pensated for by an increase of sales in diesel oil.

During the month of October a turnkey contract for the construction of a 200,000ton/year biodiesel plant was awarded to Desmet Ballestra. The plant will be builtclose to the depot in Cartagena (Spain). Total estimated cost will be around EUR 35ml with production planned to start in Q1 2008.

13

Sales in Italy

Q4 2006 Q4 2005 Q3 2006 2006 2005

Gasoline Kt 18 28 31 76 105Diesel Kt 160 166 143 608 593Other gasoil Kt 56 69 33 176 185Other products Kt 42 38 31 153 154

Total sales Kt 276 301 238 1,013 1,037

Sales in Spain

Q4 2006 Q4 2005 Q3 2006 2006 2005

Gasoline Kt 114 82 120 440 345Diesel Kt 344 286 317 1,258 1,133Other gasoil Kt 133 116 98 501 435Other products Kt 2 1 2 7 7

Total sales Kt 593 485 537 2,206 1,920

POWER GENERATION

Sarlux has been fully consolidated with the line-by-line method as of 28th June2006. In order to facilitate quarter on quarter comparisons and to better explainimpact of acquisition a proforma reporting has been made available by Saras on25th October 2006 with the main assumption of full consolidation of Sarlux as of 1st

January 2005.

The following table shows the Sarlux main financial data:

€/Mil. Q4 2006 Q4 2005 Q3 2006 2006 2005

EBITDA 52.0 52.8 52.6 220.0 213.4EBIT 29.9 29.4 30.5 131.7 120.4

Supplementary information - Italian GAAP figures

€/Mil. Q4 2006 Q4 2005 Q3 2006 2006 2005

EBITDA 68.8 53.5 88.7 323.8 269.7EBIT 55.2 37.6 75.2 270.0 208.0Net Income 32.4 22.9 45.2 160.9 121.8

Operational figures Q4 2006 Q4 2005 Q3 2006 2006 2005

Electricityproduction (MWh/1000) 999 921 1,177 4,467 4,347Power tariff c€/KWh 13.49 13.28 13.84 13.59 12.10Power IGCCmargin $/bl 3.6 3.6 3.6 3.9 3.7

MWh: Megawatt hour; KWh: Kilowatt hour.

14

Comments on full year 2006

The power segment reported an excellent result in 2006 with IFRS EBITDA increasedby 3% versus 2005. The reasons are mainly attributable to an excellent operationalperformance of the IGCC plant (92.5% availability during the year that led to electric-ity sales up 2.8% versus 2005) and to a consistent increase of the power tariff, up+11.9% versus 2005. The increase of the power tariff is mainly due to the increase ofoil and product prices in 2006 that affected the fuel component of the tariff. Sales ofhydrogen to the refinery have also been increased by 26% thanks to improvementsto the hydrogen production unit.

Comments on fourth quarter 2006

During the fourth quarter routine shutdown of 1 out of 3 trains in October and rou-tine shutdown of one gasifier in November has been successfully completed.Electricity sales increased by 8.5% versus same period last year and power tariffdeclined by 2.6% versus previous quarter due to lower products and crude oil prices.

Effect on IFRS EBITDA is limited since routine shutdowns are already included in thelinearization procedure required by IFRS accounting principles.

On 15th November 2006, resolution No. 249/06, from the “Autorità per l’energia elet-trica e il gas” (the Italian authority for electricity and gas) modifies the criteria for eval-uating the fuel cost component of the price of the electricity generated by CIP 6 plantssince 2007. Sarlux believes that the above mentioned resolution is unlawful for sev-eral reasons and therefore on 12th January 2007 challenged the resolution before therelevant court in Italy.

OTHER

The following table shows the main financial data of the segment related to opera-tions by Sartec SpA and Akhela Srl.

€/Mil. Q4 2006 Q4 2005 Q3 2006 2006 2005

EBITDA 0.7 0.7 0.1 (1.1) (4.3)EBIT (0.4) (0.7) (0.5) (3.7) (7.7)

Comments on Full year 2006

Akhela (IT services) and Sartec (research and engineering services in the oil sector)restructuring efforts have shown concrete results in 2006 with EBIT improved by 52%versus 2005.

Comments on fourth quarter 2006

Continue the positive trend of the segment with EBIT improved both versus sameperiod last year and previous quarter.

15

WIND

Please note that wind segment is a Joint Venture (Saras share 70%) consolidated bythe equity method.

Results below are 100% figures.

€/Mil. Q4 2006 Q4 2005 Q3 2006 2006 2005

EBITDA 7.9 – 5.4 25.7 –EBIT 5.6 – 3.3 17.4 –Net income 3.2 – 0.8 8.9 –Adjusted Net income 9 1.7 – 1.4 8.1 –

Operational figures Q4 2006 Q4 2005 Q3 2006 2006 2005

Electricityproduction (MWh) 39,708 – 33,058 157,290 –Power tariff * c€/KWh 20.7 – 19.0 19.9 –

* Includes green certificates

Comments on Full year 2006

First year of full production of the Ulassai wind farm has been fully in line with expec-tations despite mild weather conditions in particular during the second half of theyear. Power tariffs remained strong during the entire year contributing to the goodresult.

During the year the Ulassai wind farm has been upgraded from 72 MW to 84 MW ,the further upgrade up to 96 Mw is under review because of the change in the lawregulating the permitting phase. A pipeline of projects in Sardinia and southern Italyunder development are in the permitting phase.

Comments on fourth quarter 2006

Milder weather in the Ulassai wind farm caused the electricity production to be slight-ly below expectations. This has been fully compensated for by higher power tariffswhich increased by 7% versus the previous quarter.

EBITDA up 46% versus Q3 2006, but comparison is more effective with Q1 2006 (inthis case EBITDA is up 2.5%) where weather conditions were similar.

9 Adjusted Net income: Net income adjusted by (inventories at LIFO-inventories at FIFO) after taxes, nonrecurring items after taxes and variation in the derivatives fair value after taxes.

16

17

Net financial position The proforma net financial position of the Group is represented as follows:

31/12/2006 31/12/2005

Medium/long term bank loans (323) (496)

Total long term net financial position (323) (496)

Short term bank loans (146) (215)Bank overdrafts (61) (106)Other loans 0 0Loans from unconsolidated subsidiaries (2) (2)Loans made to unconsolidated subsidiaries 9 19Other marketable financial assets 14 13Cash and cash equivalents 218 214

Total short term net financial position 31 (76)

Total net financial position (291) (573)

Net Financial Position at the end of the year decreased to –291 M€ from –573 M€

at the end of 2005 in the light of the strong operating cashflow of the period (278 M€) and also thanks to the capital increase of 342 M€ during IPO.

Personnel Personnel employed at the end of the period, split by business segment and com-pared with the same period last year, was:

12/2006 12/2005

Refining personnel 1,157 1,168Marketing personnel 234 60Power Generation personnel 22 23Wind personnel 25 1Other personnel 357 347

Total Group personnel 1,795 1,599

Increase in the Marketing segment due to acquisition of the 37 service stations fromCaprabo.

Investments During 2006 Saras had total CAPEX of 133, mainly in the refining segment, as part ofits organic growth strategy with the main goal of increasing Sarroch refinery profitabil-ity through the projects summarized in the herebelow table:

Project Target Delivered notes Impact on refiningmargins

Increasing conversion capacity 350,000 t/y 200,000 t/y 150,000 t/y byof ULSD in Q3 2006 Q3 2007 (aheadby 2008 (ahead of of schedule)

schedule)200,000 t/y 1.0-1.3 $/blof Heating Additionaloil converted achievementinto ULSD inQ3 2006

50,000 Additionalt/y of Unleaded achievementgasoline

Energy Efficiency 0.5% reduction PreliminaryCons&Losses eng. phase 0.25-0.30 $/blby 2009

Heavy up crude slate –2 deg API Preliminaryby 2009 eng. phase 0.60-0.80 $/bl

TOTAL 1.85-2.40 $/bl

Increase refinery runs 15,1 Mton in 40-60 M$ per year2008 (from 14.4 on EBITDAin 2005)

Here are some more details about each single project of the strategy:1. Increasing conversion capacity: the goal is to increase the production of high

value added products such as Ultra Low Sulphur Diesel; the target is to increase pro-duction by 350,000 tons per year of ULSD (base year 2005) by 2008. An intermedi-ate step has already been achieved during 2006, thanks to several improvements onthe existing units performed during Q2 maintenance, which added about 200,000tons on a yearly basis. The second and final step will be completed during 2007 tak-ing the opportunity of the scheduled maintenance that will be performed during Q2.

2. Efficiency recovery: the goal is to reduce consumption and losses through aseries of distributed projects such as heat recovery from exhausted gas, processunits heat integration, fuel gas network optimization, continuous improvement ofrecoveries (steam and fuel).

3. Heavy up crude slate: we believe that heavy crude oils will become increasinglymore profitable than lighter grades. In order to exploit this market trend we haveplanned some upgrades to existing units and a new addition as follows:a. Mild-Hydrocracking-2 will be revamped for a more severe operation and high-

er conversion.b. New hydrogen plant (steam reformer).c. Increased hydrogen production in the IGCC plant (+40%).d. Visbreaker and Vacuum1 revamp in order to further enhance the capability of

processing the residues of heavy crude oils.4. Increase refinery runs: thanks to debottleneckings and operational improve-

ments performed during 2007 maintenance, the refinery will be able to increaseaverage runs starting from 2008.

18

The above plan will involve about 300 million euro CAPEX in the period 2006-2009with an estimated return from completion in the range of 220-300 million USD onyearly EBITDA.

In addition Saras is continuously investing to maintain the efficiency and reliability ofexisting units, to comply with more stringent standards in terms of polluting emissionsand oil products specifications, and to further improve its Health-Safety&Environmentaltrack record.In particular two major projects have been under execution during 2006 (and will becompleted in 2008):• the second phase of the Prime G+ project, which will make it possible to align the

entire production of gasoline in 2008 with the new European specification of 10-ppm of sulphur (starting from 2009);

• the tail gas treatment plant, which will make it possible to increase the recovery ofsulphur while reducing atmospheric emissions, in line with the best available tech-niques (BAT) indicated in the European IPPC directive (Integrated PollutionPrevention and Control).

All of these activities will involve another 300 million euro CAPEX in the period 2006-2009.

Saras is also investing in other projects, such as:

• Biodiesel plant in Cartagena (Spain): during the month of October 2006 has beenawarded to Desmet Ballestra the turnkey contract for the construction of the200,000 ton/year first generation biodiesel plant with a total estimated costs ofabout 35 M€ with estimated start of production in Q1 2008.

• Preliminary seismic tests of gas fields in Sardinia: this activity started at thebeginning of 2007 and will involve CAPEX between 5 and 10 M€ for the period2007-2008, with the first partial results available at end 2007.

• Pipeline of Wind projects in Sardinia and mainland Italy under development arein the permitting phase.

19

Stock performance Below are some data concerning prices and daily volumes relating to the Saras sharebetween 18/5/2006 and 29/12/2006.

Share price €

Minimum price (26/09/2006) * 3.968Maximum price (18/05/2006) * 5.670Average price 4.499Closing price at 29/12/2006 4.047

* Intended as minimum and maximum price during the day’s trading, therefore not coincident with the official reference prices on the same date

Daily trading volumes M€

Maximum volume (18/05/2006) 677.2Minimum volume (12/07/2006) 4.1Average volume 23.3

Market capitalization at 29/12/2006 amounts to about € 3,800 million.

The graph reported below shows the daily performance of the share.

Saras share performance from 18/05/2006 to 14/02/2007

3,500

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3,900

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Outlook • Margins rebounded in January from December 2006 lows. EMC benchmark aver-aged 2.7 $/bbl in the first 50 days of the year, in line with the average of 2006 andbetter than first quarter 2006 (1.9 $/bl).

• Margins are expected to remain robust throughout 2007, the fundamentals of thesector remain strong with the incremental refining capacity planned struggling tomatch the incremental demand for oil products.

• Diesel oil demand continues to increase in Europe allowing complex refinerieswith high diesel yields, such as Saras, to fully exploit this market trend.

• Saras’ refinery flexibility allows it to take advantage of more frequently available“unconventional” crudes.

• Processing contracts have been renewed in line with current market conditionsallowing Saras to retain the highest portion of the upside in refining margins cou-pled with an efficient protectsion in case of downturns.

• Refining operations in 2007 will have 2 maintenance cycles (in Q2 and Q4). Totalruns are planned to be in line with those of 2006. As already reported the loss ofconversion during maintenance will penalize EBITDA by 14-20 million $ during2007.

• One of the goals of the medium term strategy will be achieved during the routinemaintenance in Q2 that will allow Saras to further increase its conversion capacityadding abt 150,000 tons/year of diesel oil to its production with an estimatedimpact on refining margins from Q3 2007 of +0.5-0.6$/bl at current market levels.

• IGCC plant expected to perform in line with 2006 as well as Marketing and Winddivision.

• Sarlux project finance restructuring ongoing. Benefits from Q2 2007.

• Hedging in place on refining margins.

• About 2 million barrels per quarter (15% of own crude runs).

• Level of margin hedging: EMC benchmark about 4.0 $/bl.

21

€/Mil. 12/2004 31/03/2005 30/06/2005 30/09/2005 12/2005 31/03/2006 30/06/2006 30/09/2006 12/2006

Current assets 1,050 1,427 1,425 1,657 1,409 1,618 1,643 1,654 1,516of which:– cash 166 357 242 282 227 261 300 393 232– other current assets 884 1,069 1,183 1,372 1,182 1,356 1,344 1,261 1,284

Non current assets 1,775 1,752 1,732 1,702 1,684 1,676 1,689 1,707 1,707

Totale assets 2,825 3,179 3,157 3,356 3,093 3,294 3,332 3,361 3,223

Non int. bearing liabilities 1,179 1,336 1,479 1,426 1,376 1,574 1,502 1,520 1,410Int. bearing liabilities 927 1,079 973 1,081 820 930 618 596 532

of which:– Sarlux Project Finance 566 566 507 507 465 465 421 421 369

Equity 719 765 705 849 897 790 1,211 1,245 1,281

Equity & total liabilities 2,825 3,179 3,157 3,356 3,093 3,294 3,332 3,361 3,223

Loans to unconsolidatedsubsidiaries 35.3 28.6 68.8 75.2 19.4 13.6 14.6 15.8 8.9

Net financial position * (726) (693) (662) (724) (573) (655) (304) (187) (291)

Net financial position/EBITDA ** 1.17 1.12 1.09 0.88 1.14 0.57 0.33 0.38

* Net financial position = Interest bearing liabilities – cash – loans to unconsolidated subsidiaries (wind).** Calculated using comparable EBITDA figures.

22 Saras Group Proforma Statements

Proforma consolidated Balance-Sheet

€/Mil. Q4 2006 Q4 2005 Q3 2006 2006 2005

EBITDA 102.4 102.1 84.7 526.2 783.7Comparable EBITDA 1 138.9 157.2 160.5 567.5 653.6Depreciation (43.7) (44.6) (40.5) (162.7) (170.9)

EBIT 58.7 57.5 44.0 363.5 612.8Comparable EBIT 2 95.2 112.6 120.0 404.8 482.7

Net financial income (expenses) 5.9 27.0 11.7 (9.8) (93.9)Adj to the value of fin. assets 4 2.5 (0.2) 0.5 6.5 (0.4)Non recurring items 5 (9.3) 0.0 0.0 (22.2) 0.0

Profit before taxes 57.8 84.3 56.4 337.9 518.5taxes (22.1) (36.3) (22.6) (130.0) (212.1)

Net income 35.7 48.0 33.8 207.8 306.4

Adjusted Net income3 66.2 74.0 69.2 241.9 230.5

1 Comparable EBITDA: calculated evaluating inventories at LIFO.2 Comparable EBIT: comparable EBITDA – depreciation&amortization.3 Adjusted Net income: reported Net income:

+/– (inventories at FIFO-inventories at LIFO) net of taxes;+/– non recurring items net of taxes;+/– � in derivatives fair value net of taxes.

4 Adj to the value of financial assets: Joint Ventures consolidated by the Equity method (Wind).5 Non recurring items: includes certain IPO costs in Q2 2006 and other non recurring in Q4 2006.

Detail of consolidated Net income adjustments

€/Mil. Q4 2006 Q4 2005 Q3 2006 2006 2005

Reported net income 35.7 48.0 33.8 207.8 306.4

(Inventories at FIFO – Inventories at LIFO)Net of Taxes 22.9 34.6 47.7 26.3 (81.6)

Non recurring items net of taxes 6.6 14.7� in derivatives value net of taxes 0.8 (8.6) (12.3) (7.0) 5.7

Total adjustment to reported net income 30.4 26.0 35.4 34.0 (75.9)

Adjusted net income 66.2 74.0 69.2 241.9 230.5

Reported EPS 1 0.04 0.05 0.04 0.22 0.34

Adjusted EPS 1 0.07 0.08 0.07 0.25 0.26

1 Number of shares: 891,000,000 in 2005; 951,000,000 after IPO in Q2 2006.

23Proforma consolidated income statement

€/Mil. Q4 2006 Q4 2005 Q3 2006 2006 2005

Initial net financial position (187) (724) (304) (573) (703)Cashflow from operations (A) (63) 174 164 271 379

of which p/l+dep&amort. + changein provisions 93 134 93 494 699

Working capital (157) 40 71 (222) (320)

Cashflow from investments (B) (41) (24) (47) (161) (86)

Investments in tangible and intangibleassets (41) (19) (133) (86)

Acquisition of service stations in Spain (28) (28) 0

Cashflow from financing (C) 0 0 0 172 (140)

Capital increase 0 0 0 342 0Dividends 0 0 0 (170) (140)

Total cashflow for the period(A + B + C) (104) 151 117 283 152

Final net financial position (291) (573) (187) (291) (573)

24 Proforma consolidated cashflow

€ thousand 2006 2005

ASSETSCurrent Assets 1,513,799 1,084,525Cash and cash equivalents 217,604 24,709Other financial assets held for trading or available for sale 13,816 13,039Trade receivables 574,483 442,788Inventory 599,802 541,408Current tax assets 66,344 24,227Other assets 41,750 38,354

Non-current assets 1,706,568 546,283Property, palnt and equipment 1,105,088 443,055Intangible assets 584,350 4,335Equity interests consolidated by the equity method 9,970 97,175Other equity interests 1,192 1,400Other financial assets 5,968 318

Toatal assets 3,220,367 1,630,808

LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities 866,545 749,375Short-term financial liabilities 202,097 102,164Trade and other payables 551,622 513,182Current tax liabilities 52,093 75,749Other liabilities 60,733 58,280

Non-current liabilities 1,068,440 352,665Long-term financial liabilities 322,671 132,004Provisions for risks 24,485 17,569Provisions for employee benefits 45,431 49,685Deferred tax liabilities 161,087 96,374Other liabilities 514,766 57,033

Total liabilities 1,934,985 1,102,040

SHAREHOLDERS’ EQUITYShare capital 54,630 51,183Legal reserve 10,237 10,237Other reserves 657,144 268,915Profit/(loss) carried forward 167,946 (94,209)Profit/(loss) for the period 395,425 292,642

Total shareholders’ equity 1,285,382 528,768

Total liabilities and shareholders’ equity 3,220,367 1,630,808

25Saras Group Statements

Consolidated balance-sheet

€ thousand Share Legal Other Profit/(Loss) Profit/(Loss) Shareholders’capital reserve reserves carried forward for the period equity

Balance as at 1/01/2005 51,183 10,237 208,365 (92,495) 198,938 376,228Appropriation of previous period profit 90,675 (2,019) (88,656) 0Dividends (29,810) (110,256) (140,066)Utilisation of grants (157) 157 0Other (26) (26)First half 2005 result 105,790 105,790

Balance as at 30/06/2005 51,183 10,237 269,073 (94,357) 105,790 341,926Third quarter 2005 result 139,914 139,914

Balance as at 30/09/2005 51,183 10,237 269,073 (94,357) 245,704 481,840Utilisation of other reserves (158) 158 0Fourth quarter 2005 result 46,938 46,938Other (10) (10)

Balance as at 31/12/2005 51,183 10,237 268,915 (94,209) 292,642 528,768Capital increase (net of IPO costs) 3,447 338,983 342,430Appropriation of previous period profit (109,209) 262,155 (152,946) 0Dividends (30,485) (139,696) (170,181)Fair value of 55% Sarlux stake 188,940 188,940First half 2006 result 325,935 325,935

Balance as at 30/06/2006 54,630 10,237 657,144 167,946 325,935 1,215,892Third quarter 2006 result 33,806 33,806

Balance as at 30/09/2006 54,630 10,237 657,144 167,946 359,741 1,249,698Fourth quarter 2006 result 35,684 35,684

Balance as at 31/12/2006 54,630 10,237 657,144 167,946 395,425 1,285,382

26 Statement of changes in Consolidated Shareholders’ Equity

€ thousand 2006 2005 Q4 2006 Q4 2005

Revenues from ordinary operations 5,986,815 5,196,001 1,193,870 1,626,010Other income 32,613 39,535 5,955 11,158

Total revenues 6,019,428 5,235,536 1,199,825 1,637,168

Purchases of raw materials, spare parts and consumables (5,118,970) (4,245,896) (955,033) (1,473,363)Cost of services and sundry costs (378,102) (303,543) (111,353) (84,589)Personnel costs (111,596) (115,786) (31,181) (29,920)Depreciation, amortization and write-downs (118,553) (77,881) (43,583) (20,008)

Total costs (5,727,221) (4,743,106) (1,141,150) (1,607,880)

Operating results 292,207 492,430 58,675 29,288Net income (charges) from equity interests 35,302 48,747 2,505 12,770Other financial income/(charges), net (2,003) (76,693) 5,886 31,030Non recurring income/(charges) 176,945 (9,300) 0

Profit before taxes 502,451 464,484 57,766 73,088

Income tax for the period (107,026) (171,842) (22,082) (26,149)

Net profit/(loss) for the period 395,425 292,642 35,684 46,939

Earnings per share - base (€ cent) 41.58 32.84 3.75 5.27 Earnings per share - diluited (€ cent) 41.58 32.84 3.75 5.27

27Consolidated Income Statement

Consolidated cashflow 28

2006 2005

A- Cash and cash equivalents at beginning of period (short-term net financial indebteness) 24,709 13,464

B - Cash generated from/(used in) operating activitiesProfit/(Loss) for the period of the Group 395,425 292,642 Non recurring income due to the Sarlux acquisition (199,168) 0 Amortization, depreciation and write-down of fixed assets 118,553 77,881 Net (income)/charges from equity interests (35,523) (48,747)Net change in provisions for risks and charges (3,082) 1,878 Net change in employee benefits (4,586) 3,848 Change in tax liabilities and tax assets (33,527) 62,224 Current taxes 107,026 171,842

Profit (Loss) from operating activities before changes in working capital 345,118 561,568

(Increase)/Decrease in trade receivables 8,110 (80,095)(Increase)/Decrease in inventory (29,766) (188,155)Increase/(Decrease) in trade and other payables (15,739) 99,682 Change in other current assets (41,769) (5,523)Change in other current liabilities 86,684 (49,059)tax paid (205,555) (134,839)Change in other non-current liabilities 61,513 (18,026)

Total (B) 208,596 185,553

C - Cashflow from/(used in) investment activities(Investments) in tangible and intangible assets, net of disinvestments and accumulated

depreciation and amortization (129,807) (59,381)Change in equity interests valued by the equity method 0 4,363 Changes in other equity interests 208 (107)Dividends from unconsolidated subsidiaries 0 30,718 45% Sarlux acquisition (127,047) 0 100% Caprabo (now Saras Energia Red S.A.) acquisition (28,041) 0 Interests (12,563) (8,971)

Total (C) (297,250) (33,378)

D - Cash generated from/(used in) financing activitiesIncrease/(Decrease) in medium/long term borrowings (134,350) (44,173)(Increase)/Decrease in other financial assets (6,427) (1,140)Increase/(Decrease) in short term borrowings (1,409) 34,182 Capital increase 342,430 0 Dividend distribution to shareholders (170,181) (140,066)Fair Value beni immateriali Sarlux Srl (al netto effetto fiscale) 0

Total (D) 30,063 (151,197)

E - Cashflow for the period (B + C + D) (58,591) 978 Other changes in shareholders’ equity due to the adoption of IAS 32 and IAS 39 since

January, 1st 2005 0 10,267 Other changes in shareholders’ equity due to the adoption of IAS 32 and IAS 39 since

January, 1st 2005 in unconsolidated subsidiaries 0 0

F - Cash from new consolidated subsidiaries 251,486 0 Sarlux Srl 249,940 0 Caprabo (Saras Energia Red S.A.) 1,546 0

G - Cash and cash equivalents at the end of period (short-term net financial indebteness) 217,604 24,709