ScottishPower results consolidated from April 23

IBERDROLA POSTS RECORD PROFIT OF €1,101.4 MILLION IN THE FIRST HALF OF 2007, UP 34.7%

NEW STRATEGIC PLAN PREPARED FOR A WORLD ENERGY LEADER

• The integration with ScottishPower, which contributed 16.4% of Ebitda in just 70 days, continues according to schedule
   
• The acquisition of Energy East will facilitate expansion in the U.S. market
   
• The IPO of Iberdrola Renewables, whose project pipeline is now 40,100 MW, will enhance leadership in wind power
   
• Iberdrola, operating more than 20 bcm/yr of gas in Spain, the UK and the U.S., will optimise its gas businesses

KEY FEATURES OF THE PERIOD

• Electricity production rose 25.2% to 54,692 million kWh, driven by cleaner technologies
   
• Company cut CO2 emissions in Spain by 15%, confirming its position as one of the least polluting in the sector
   
• Continued growth in a low price environment (-36%) and modest increase in demand for electricity (+2.6%)

RESULTS

• Sales rose 22.2% (€1,222 million) to €6,718.1 million
   
• IBERDROLA Group Ebitda rose 25.4% in the first half of the year  to €2,403.3 million
   
• Earnings per share rose 22% and cash flow per share 31%

IBERDROLA’s strategic plan last October, based on organic growth and corporate transactions, has begun to bear fruit. With completion on April 23 of the transaction with ScottishPower, which thus consolidated its accounts for just 70 days, the Company achieved record first half profits of €1,101.4 million, a rise of 34.7%.

The Company made further progress on cementing the foundations for future growth. It initiated the integration with ScottishPower and agreed a friendly acquisition of U.S. company Energy East, announced an initial public share offer for 20% of its Energías Renovables subsidiary and the integration of its gas businesses. It is also preparing a new Strategic Plan, which will be presented in the final quarter of the year, through which IBERDROLA aims to consolidate its position as one of the world’s leading energy companies.

IBERDROLA’s strategic focus again saw positive results in first half accounts, the first in which ScottishPower has consolidated, although only for the 70 days from April 23 when the transaction was completed.

Despite an environment of low pool prices (-36%) and modest demand for electricity in Spain (+2.6%), performance improved across the board: sales rose 22.2% to €6,718.1 million), Ebitda was up 25.4% at €2,403.3 million, net operating profit rose 22.3% to €1,697.6 million and net profit was 34.7% higher at €1,101.4 million. Earnings per share rose 22% and cash flow per share 31%.

The figures are testimony to the birth of a world energy leader, with a strategic focus on an Atlantic platform (Europe-North America-Latin America), and a cash flow that surged 45% in the first half to €1,712.4 million, laying the foundations for future growth at IBERDROLA. The objectives set in the context of this ambitious international project will be reflected in the new Strategic Plan to be unveiled in the final quarter of the year.

ScottishPower

The ScottishPower transaction, valued at €17.1 billion, has moved into the integration phase according to schedule. The company contributed 16.4% of IBERDROLA group Ebitda (€394.8 million) since April 23.

IBERDROLA is implementing an organisational model in ScottishPower based on operating autonomy and centralisation of corporate functions, with a management structure that has already been defined and put into practice. The first cost savings are being realised and the company’s 2007 budget is being modified. As a result of this, additional cost savings will be achieved over and above the synergies previously announced.

Energy East

The friendly acquisition of Energy East, announced at the end of June and which is expected to close in the second half of 2008, will facilitate IBERDROLA’s penetration of the U.S. market.

The operation, valued at €6.4 billion (including €3.0 billion in debt), will increase IBERDROLA points of supply in electricity by 1.8 million to 23.8 million and in gas by 900,000 to 3 million, while increasing installed capacity to 41,040 megawatts (MW) and distributed energy to 207.2 TWh from 166.7 TWh currently.

IBERDROLA Renewables

The Group has announced an IPO for up to 20% of its renewables subsidiary in the final quarter of the year, with the goal of realising value from this energy source, taking advantage of excellent market conditions, and raising the necessary funding for the growth of this business maintaining IBERDROLA’s financial strength.

IBERDROLA Renewables is today the world leader in wind power with an installed capacity of nearly 7,000 MW, and enormous potential for future growth, based on a project pipeline of 40,152 MW, of which 51% is in the United States, 16% in Spain and15% in the UK.

Gas

The Group intends to become a global operator in gas, and to this end has decided to optimise all businesses currently managed separately by IBERDROLA, ScottishPower and its U.S. subsidiary PPM.

The company’s gas business consists of four segments: liquefied natural gas contracts, trading in Europe, regasification and storage, and administration of more than 20 billion cubic metres of gas a year in Spain, the UK and the United States.

Installed capacity at 40,500 MW

With the incorporation of ScottishPower, IBERDROLA has diversified its generating capacity worldwide. It closed the period with 40,485 MW in installed power, 45% more than the same time last year. Combined cycles accounted for 30.1% of the total, hydroelectricity for 24%, renewables and cogeneration for 19%, thermal 11.6%, nuclear 8.2% and fuel oil 7.1%.

In Spain, the Company increased capacity to 26,253 MW from 24,696 MW in the first half of 2006, an increase of 6.3%. Installed capacity in the UK came to 6,400 MW at the end of June, in Latin America to 5,553 MW and in the United States to 2,279 MW.

As a result of this significant rise in installed capacity, IBERDROLA produced 54,692 million kilowatt hours (kWh) from January to June, an increase of 25.2% over the same period last year.

In Spain, IBERDROLA produced 32,620 million kWh, a decline of 0.2%, with a substantial increase in hydroelectricity (64.3% to 7,820 million kWh) and in renewables (17% to 4,663 million kWh). The Company produced 14,359 million kWh in Latin America, an increase of 30,. %, 6,125 million kWh in the UK and 1,588 million kWh in the United States (of which 85.6% was in renewables).

Emissions came to 261 grammes of CO2 per kWh at Group level and 164 grammes of CO2 per kWh in Spain, a decline of 15% over the same period last year. Nearly half of IBERDROLA’s production (47%) is emission free, a figure that rises to nearly three-quarters in Spain (71.5%), as a result of clean generation technologies.

Leadership in renewables consolidated

IBERDROLA closed the period with an average installed capacity in renewable energy of 6,826 MW, accounting for 17% of total operating capacity and consolidating its leadership in the world wind power sector.

As a result of new renewable capacity installed during the first six months of the year, amounting to 287 MW (169 MW in the second quarter), and the integration with ScottishPower, which added 2,105 MW (1,741 MW in the United States and 364 MW in the UK) IBERDROLA now has 6,484 MW in wind farms and 342 MW from mini-hydro plants.

IBERDROLA’s renewable generation capacity in Spain, located in 13 regions, was increased by 220 MW in the six months, the product of new wind farms and mini-hydro plants and expansion of existing facilities: 73 MW in Castilla-Leon, 106 MW in Andalusia, 29 MW in Murcia, 9 MW in Castilla-La Mancha and 3 MW in La Rioja.

Outside Spain, the Company has total capacity of 2,612 MW, comprising the U.S. (1,767 MW), UK (364 MW), Greece (210 MW), France (61 MW), Germany (60 MW), Poland (51 MW) Portugal (50 MW) and Brazil (49 MW),

Largest operator in combined cycles

Consistent with its strategic focus on cleaner generating technologies, IBERDROLA now manages 5,600 MW through combined cycle plants in Spain and expects to start up additional capacity amounting to 800 MW at the Castellón 4 plant during the second half of this year.

The Company also signed contracts to acquire land where IBERDROLA’s first combined cycle plant in Portugal will be located at Figueira da Foz, amounting to 850 MW and which could start operations at the end of 2009.

Following the Company’s strategy of developing power stations to cover different focuses of consumer demand, IBERDROLA won approval from the Ministry of the Environment to build two new hydro facilities: a new complex at La Muela (Valencia), which will double current capacity of 630 MW, and where an access tunnel is now being dug, and a 175 MW expansion of the San Esteban plant in the Sil basin.

Latin America’s contribution continues to grow

IBERDROLA’s first half results have been to large extent driven by investments in Latin America, where EBITDA rose 24.8% €415 million

IBERDROLA has confirmed its position as the leading private electricity producer in Mexico with an installed capacity of nearly 5,000 MW. It has started up the 1,135 MW combined cycle plant at Tamazunchale in San Luis Potosí State, the largest of its kind to enter operations in Mexico.

IBERDROLA THERMAL GENERATION PROJECTS IN MEXICO

Increasing contribution from non-energy businesses

Non-energy IBERDROLA business lines, led by engineering and construction and real estate subsidiaries, made a significant contribution in the first half of the year, with a 39% rise in Ebitda to €255.4 million.

Iberdrola Ingeniería y Construcción. With projects under way in more than 25 countries, this subsidiary won four major contracts during the period: the modernisation and increase in generating capacity at the Laguna Verde nuclear power station in Mexico, construction of part of the nuclear reactor at Flamamville in France, new electricity infrastructure for the Madrid Metro Line 1, and construction of a 10 MW photovoltaic solar energy plant in Caceres province.

Iberdrola Inmobiliaria. At the end of the first half, it had 13 residential projects in construction (1,080 housing units) and another nine under development (1,035 units). By the end of June it had completed 581 housing units and expects to increase this by another 250 by the year end. Among the main activities were the acquisition and management of an industrial site north of Seville, with a buildable area of 396,017 m2 another commercial site at Cendea de Cizur, south of Pamplona, and development of projects in Grenada (Las Caléndulas) and Santander (Plaza Sur).