Prysmian S.p.A.: 2006 Results approved. Strong increase in net sales and profitability

HIGHLIGHTS OF ANNUAL CONSOLIDATED FINANCIAL STATEMENTS¹

• Net Sales: €5,007 Million (+ 34% compared to 2005)
• Adjusted EBITDA²: €407 Million (€265 Million in 2005)
• EBITDA³: €371 Million (€219 Million in 2005)
• Operating income: €258 Million (€117 Million in 2005)
• Net income for the year: €91 Million (€3 Million in 2005)
• Net financial position: improved to €879 Million from €892 Million

Milan, 28 February 2007 - The General Shareholders' Meeting of Prysmian S.p.A., a leading manufacturer in the energy and telecommunications cables and systems industries, approved its consolidated financial statements for the year ended December 31, 2006 today.

"The Prysmian Group's results for the first full year of operations since the acquisition of the cables and systems division of Pirelli & C. S.p.A. in mid-2005 had a significant increase both in volume and profitability," said Valerio Battista, Chief Executive Officer of Prysmian S.p.A. " We believe there are two reasons behind the achievement of such strong results: During the short period since our company split from the Pirelli Group, we have restructured the Group while remaining heavily focused on our core business, with a strategy that has further strengthened our Group's position in the high value added markets."

The Prysmian Group, which has a global presence with 54 plants and more than 12,000 employees located in 20 countries, generated €5,007 million in net sales in 2006, a 34% increase compared to 2005. Overall, Prysmian was able to seize opportunities offered by favorable market conditions, which resulted in part from increased investments by utilities business area in energy transportation infrastructure projects and the recovery of the telecom cables market (in particular, the optical-fiber cables). The Group also benefited from the increase in the price of its primary raw materials, i.e., copper and aluminum, as the company was able to transfer this effect on to the market.

Adjusted EBITDA increased to €407 million in 2006 from €265 million in 2005. There was an improvement also in Adjusted EBITDA as a percentage of total net sales, which increased to 8.1% in 2006 from 7.1% in 2005.

In 2006, EBITDA increased to €371 million from € 219 million in 2005. There was also an improvement in EBITDA as a percentage of total net sales, which increased to 7.4% in 2006 from 5.9% in 2005.

The year ending December 31, 2006 was also marked by further improvements in cost structure as a result of ongoing corporate restructuring and reorganization of production operations.

Noteworthy investments, were the start-up of operations of a new plant in Brazil for the production of umbilical cables for the petroleum industry; and an acquisition in China of certain assets for the production of special cables for the industrial applications businesses (such as cables for the transportation, wind and nuclear energy industries) from the Tianjin Angel Group Co., one of the major Chinese manufacturers of special cables for industrial applications.

Business Performance

Energy Cables & Systems

Net sales of the Energy Cables & Systems business division in 2006 reached €4,570 million (up 35% compared to 2005). In addition, EBITDA increased to €357 million from €202 million in 2005 and Adjusted EBITDA 4 increased to €379 million from €246 million in 2005. Net sales of this business division amounted to €4,570 million, including €69 million for sales to the Telecom Cables and Systems division, which have been eliminated in consolidated results.

Net sales increased in all three of the main business areas of this division: Utilities increased 28% compared to 2005; Trade and Installers increased 39% compared to 2005; and Industrial Applications increased 29% compared to 2005.

Prysmian continued to follow its strategy of focusing its sales policies on higher value-added products. As a result, , sales of high and extra-high voltage cables increased and the industrial applications cable business area expanded.

During 2006, the Prysmian Group won one of the industry's major contracts: the construction of an undersea link to carry energy between Sardinia and the Italian mainland (SAPEI) on behalf of Terna S.p.A. In addition, the Neptune link project in the United States is currently in the process of being completed.

Telecom Cables & Systems

Net sales of the Telecom Cables and Systems business division increased to €537 million in 2006, or by 26% as compared to 2005. This trend substantiated the recovery of the telecom cables industry that began in 2005 and resulted in an increase in demand in various geographical areas. The EBITDA for this business division increased to €37 million from €18 million in 2005. Adjusted EBITDA 4 of this business division increased to €39 million in 2006 from €19 million in 2005. Net sales of this business division amounted to €537 million, including €31 million for sales to the Energy Cables & Systems division, which have been eliminated in consolidated results.

Specifically, sales of optical-fiber cables has recovered, especially in the United States, Australia, and certain European countries, with the start-up of numerous projects to upgrade existing networks in response to the growing demand for increased bandwidth and related broadband products.

4 We have calculated the Adjusted EBITDA as EBITDA, adjusted for costs that, according to the Group's management, do not have a recurring nature. These costs are listed in Annex C, which present the reconciliation among operating income, EBITDA and Adjusted EBITDA for each business division.

Operating Results

Operating income increased to €258 million in 2006 from €117 million in 2005 and to 5.2% in 2006 from 3.1% in 2005, as a percentage of total net sales.

The improvement in profitability was primarily due to the execution of certain business actions initiated in 2005, including:

• focusing on business units with greater value-added and higher technological content;
• expanding market presence in geographical markets with higher growth potential;
• implementing actions aimed to further improve competitiveness through the use of innovative production materials and processes; and
• further improvement of operating efficiency and reduction of costs.

Net income for the year ended December 31, 2006 increased to €91 million from €3 million in 2005, primarily due to the improvement in operating profit.

Net financial position as of December 31, 2006 improved, reaching €879 million, compared to €892 million at December 31, 2005.

Prysmian:

Prysmian S.p.A. is the parent company of the group that acquired the shareholdings and business of the Cables & Systems Division of the group Pirelli & C. S.p.A., in 2005. The group is one of the world's leaders in the energy and telecommunication cables industry, with a strong market position in higher added value market segments. Organized in two business divisions, Energy Cables & Systems (submarine and terrestrial cables for electricity transmission and distribution) and Telecom Cables & Systems (optical fibers and cables for video, data and voice transmission, and copper telecom cables), the Prysmian Group has a global presence, with 54 plants and more than 12,000 employees located in 20 countries. Specializing in the development of products and systems designed on the basis of clients' specific requirements, Prysmian's main competitive strengths include its focus on research and development, the ability to innovate its products and production processes, and the use of its own advanced proprietary technologies.

This announcement is not an offer for sale of securities in the United States. Securities may not be sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. Prysmian S.p.A does not intend to register securities in the United States or to conduct a public offering of the securities in the United States. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from Prysmian S.p.A or the selling shareholder and that will contain detailed information about the company and management, as well as financial statements. Copies of this announcement are not being made and may not be distributed or sent into the United States, Canada, Australia or Japan.

1 Although Prysmian S.p.A. was first incorporated and registered on May 12, 2005, an income statement for the period from January 1, 2005 to December 31, 2005 was prepared in order to allow an analysis of the Group's results of operations for the year ended 31 December 2006 as compared to 2005. In particular, the following have been prepared:

- A combined income statement for the period from January 1 to July 28, 2005 relating to the entities transferred to Prysmian S.r.l. by the Pirelli Group on July 28, 2005. The income statement was prepared as if these entities had always operated as a group, autonomous from Pirelli & Co group. However, if these entities had been operating as a group during these periods, the results of operations could have been different from those presented in the combined income statement;

--An aggregation of the combined income statement for the period from January 1 to July 28, 2005 (prepared as explained above) and the consolidated income statement for the period from May 12 to December 31, 2005, as extracted from the consolidated financial statements as of December 31, 2005 and for the period from May 12, 2005 (the date when Prysmian S.p.A. was first incorporated and registered) to December 31, 2005.

2 - We have calculated Adjusted EBITDA as EBITDA, adjusted for costs that, according to the Group's management, do not have a recurring nature. These costs are listed in Annex B, which provides the reconciliation of net income/(loss) for the period (as stated in the Group's income statement), EBITDA and Adjusted EBITDA.

3 - We have calculated EBITDA as net income/(loss) before income tax expense, financial income and expenses, share of income from associates and depreciation and amortization. For further information please refer to Annex B.

4 We have calculated the Adjusted EBITDA as EBITDA, adjusted for costs that, according to the Group's management, do not have a recurring nature. These costs are listed in Annex C, which present the reconciliation among operating income, EBITDA and Adjusted EBITDA for each business division.