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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-K/A
AMENDMENT NO. 1

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2002

Commission File Number 333-68632

Mission Energy Holding Company(Exact name of registrant as specified in its charter)

|Delaware                                                                                    |  | 95-4867576                          
|------------------------------------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization)                              |  | (I.R.S. Employer Identification No.)
|2600 Michelson Drive, Suite 1700
Irvine, California(Address of principal executive offices) |  | 92612(Zip Code)                     

Registrant's
telephone number, including area code:(949) 852-3576

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days. YES ý NO o

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. ý

Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).
YES o NO ý

Aggregate
market value of the registrant's Common Stock held by non-affiliates of the registrant as of June 28, 2002: $0. Number of shares outstanding of the
registrant's Common Stock as of March 27, 2003: 1,000 shares (all shares held by an affiliate of the registrant).

DOCUMENTS INCORPORATED BY REFERENCE

None.

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EXPLANATORY NOTE

This annual report on Form 10-K/A for the fiscal year ended December 31, 2002 is being filed to include in Part IV, Item 15,
financial statements with respect to ISAB Energy S.r.l. which were omitted from the annual report on Form 10-K for the year ended December 31, 2002 filed on March 28,
2003.

Except
as described above, no other changes have been made to the annual report on Form 10-K filed on March 28, 2003. This Amendment No. 1 does not
update any other disclosures to reflect developments since the original date of filing.

The
following item of the original filing is amended by this Amendment No. 1:

Item
15. Exhibits, Financial Statement Schedules and Reports on Form 8-K

Unaffected
items have not been repeated in this Amendment No. 1.

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

The
following item is filed as a part of this report pursuant to Item 14(d) of Form 10-K:

PageInvestment in Unconsolidated Affiliates Financial Statements:ISAB Energy S.r.l. Financial Statements as of December 31, 2002, 2001 and 2000

4


Financial
statements with respect to ISAB Energy S.r.l. which meets the definition of a foreign business as defined in Rule 1-02(i) of
Regulation S-X are being filed in this report pursuant to Rule 3-09 of Regulation S-X. These statements are prepared in accordance with
generally accepted accounting principles in Italy which differ from generally accepted accounting principles in the United States. See Note 9 to the financial statements on page 47.

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ISAB Energy S.r.l.  Annual report for the year ended December 31st 2002  Directors' Report on Operations

|Board of Directors           |  |                 
|---------------------------- |  | ----------------
|Domenico D'Arpizio           |  | Chairman        
|Daniel Melita                |  | Vice Chairman   
|Filippo Bifulco              |  |                 
|Marco Ferrando               |  |                 
|Pierantonio Nebuloni         |  |                 
|Board of Statutory Auditors  |  |                 
|Maria Sarno                  |  | Chairman        
|Antonio Ippoliti             |  | Standing Auditor
|Mario Pacciani               |  | Standing Auditor
|External Auditors            |  |                 
|Reconta Ernst & Young S.p.A. |  |                 

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ISAB Energy Structure

ISAB Energy is 51% owned by ERG Petroli S.p.A. and 49% owned by MEC Priolo B.V. (a wholly-owned subsidiary of Edison Mission Energy). It is the
proprietor of the Gasification and Cogeneration plant at Priolo Gargallo (Syracuse), located near to the ISAB refinery owned by ERG Raffinerie Mediterranee.

The
plant has a guaranteed net capacity of 507 MW and in 2002 net electricity production was 4,197 GWh.

Main economic and financial data

The currency used for the following figures is the Euro; the sum of figures that have been rounded to the nearest million may differ from the
actual total displayed.

|                                  |  | 2002  |   | 2001  |   | 2000  |  
|--------------------------------- |  | ----- | - | ----- | - | ----- | -
|
|Total revenues                    |  | 444   |   | 396   |   | 295   |  
|EBITDA                            |  | 208   |   | 160   |   | 53    |  
|EBIT                              |  | 162   |   | 115   |   | 21    |  
|Income from ordinary operations   |  | 115   |   | 62    |   | (16   | )
|Extraordinary net income (loss)   |  |      |   |      |   | 2     |  
|Net income for the year           |  | 107   |   | 57    |   | (12   | )
|Cash flow from operations         |  | 124   |   | 133   |   | (36   | )
|Investments/divestments           |  | (12   | ) | (15   | ) | (23   | )
|Changes in shareholders' equity   |  | (34   | ) |      |   | 24    |  
|                                  |  |       |   |       |   |       |  
|Changes in net financial debt     |  | 79    |   | 118   |   | (35   | )
|Total shareholders' equity        |  | 144   |   | 71    |   | 14    |  
|Net financial debt                |  | 692   |   | 770   |   | 888   |  
|                                  |  |       |   |       |   |       |  
|Net invested capital              |  | 836   |   | 841   |   | 902   |  
|Number of employees at year-end   |  | 19    |   | 22    |   | 21    |  
|Electrical power generation (GWh) |  | 4,197 |   | 3,621 |   | 3,079 |  

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Report on Operations

Financing for the construction of the plant was in the form of non-recourse Project Financing for the sum of Euro 971 million.

ISAB
Energy produces electrical power generated by the gasification of heavy residues resulting from crude oil processing at the nearby ISAB refinery. The electrical power produced is
sold to the "Gestore della Rete di Trasmissione Nazionale", or "GRTN" (National Grid) at the CIP/6 tariff. (The rights and obligations regarding the purchase of energy from national third party
companies were transferred from ENEL S.p.A. to the GRTN as from January 1st 2001, in accordance with the Bersani Decree (legislative decree of March 16th
1999) enforced by the Ministry for Industry).

Comments on the results for the year

Economic and financial results

The financial statements for 2002 show a profit of Euro 107.0 million (compared to Euro 57.0 million in 2001), after depreciation and amortisation
amounting to Euro 45.7 million (Euro 45.2 million in 2001).

This
result is a reflection of the plant's remarkable reliability over the year, which saw it operating at 94% of its potential.

These
financial statements have been audited by Reconta Ernst & Young S.p.A.

Major events during the year

The major events of 2002 were:



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Relations with the financing institutions

As previously mentioned, during 2002 there were events of significant economic/financial impact both in terms of the present and the future. They
are summarised below:



In
order to be able to evaluate the future effects that the above-mentioned events will have and enable the banks to carry out a more precise check of the risk profile accepted under the
new insurance cover, a comparison of information is underway between the company and the banks themselves, which, with the support of the plurennial economic/financial model that is currently being
updated, will allow for the evaluation of the possible steps to be taken to ensure the economic and financial optimisation of the company. Amongst the hypotheses considered there is that of a
re-elaboration of the plan to amortise the debt with the advance repayment of capital shares.

Whilst
waiting for the most appropriate decisions to be reached, due within the next few months, the financing institutions have asked the company to refrain from distributing dividends.

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Agreements with the Snam ProgettiFoster-Wheeler Energy consortium and with Texaco Development Corporation

The agreement reached on December 30th 2002 between ISAB Energy and the Snam ProgettiFoster-Wheeler Energy
consortium as a whole provides for:



Contract management

Vanadium Concentrate

The agreement with GfE has been formalised, completely settling the existing dispute. According to the agreement ISAB Energy may annul the contract in force, with
the payment of a penalty of 263 thousand Dollars.

The
financing institutions gave their approval in January 2003, the payment was made and the contract therefore annulled.

Oxygen

The dispute has been settled regarding the interpretation of the commercial conditions to be applied in the case of operational arrangements during which one or
two trains of the oxygen plant are kept on standby.

As
compensation for the events recorded up until December 31st 2001, a lump-sum payment of Euro 170 thousand was agreed upon (against a request of Euro
2.1 million); for 2002 the cost of missing collections of oxygen, for reasons attributable to ISAB Energy is, on the basis of the agreement reached, Euro 100 thousand.

Electrical energy

In 2001 the entry into the "free market" had allowed significant savings to be achieved, thanks not only to the price of so-called modulation energy
(at more advantageous economic conditions compared to the "restricted market") but also thanks to purchases of the "take or pay" type.

In
2002, the contract regarding the purchase of so-called modulation energy was settled at a price, in a similar scenario, lower than that of 2001, but the higher level of
participation in the requests to allocate bands did not allow the purchase of imported energy to reach the levels of 2001.

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Insurance

The renewal of the insurance policy "All Risks Property Damage and Business Interruption" brought about a considerable increase in premiums and a worsening of the
insurance conditions (increase in excess franchises and exclusion of the risk of terrorism).

The
reasons for this can be traced to the particular context of a tighter insurance market as a result of both the sharp losses recorded in the Energy sector and the international
economic and political situation.

The
scarce availability of insurance cover has reduced the negotiating power, as far as premiums are concerned, to a minimum.

Information and Telecommunications Systems

During 2002 further SAP modules were implemented, as part of the policy to cover the majority of company procedures. They included:



Furthermore,
the CED was relocated to more suitable premises, and a DECT cordless telephone network was set up for the plant operators, ensuring that they are always immediately
available.

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Staff

The company staff is made up of 19 people, as the company avails itself of ISAB Energy Services for the actual management of the plant, according
to the "Operation & Maintenance" contract signed between the two companies.

Summary of financial information

Income Statement

|                                              |  | 2002     |   | 2001     |   | 2000     |  
|--------------------------------------------- |  | -------- | - | -------- | - | -------- | -
|
|Revenues from ordinary operations             |  | 421,319  |   | 377,207  |   | 229,416  |  
|Other revenues and income                     |  | 22,413   |   | 18,872   |   | 65,374   |  
|                                              |  |          |   |          |   |          |  
|Total                                         |  | 443,732  |   | 396,079  |   | 294,790  |  
|Purchase expenses                             |  | (164,249 | ) | (169,230 | ) | (187,262 | )
|Changes in inventories                        |  | 1,075    |   | 1,485    |   | 3,303    |  
|Services and other operating expenses         |  | (71,521  | ) | (66,775  | ) | (57,130  | )
|Personnel expenses                            |  | (1,316   | ) | (1,204   | ) | (1,013   | )
|                                              |  |          |   |          |   |          |  
|EBITDA                                        |  | 207,721  |   | 160,356  |   | 52,688   |  
|Amortisation and depreciation                 |  | (45,776  | ) | (45,258  | ) | (31,733  | )
|                                              |  |          |   |          |   |          |  
|EBIT                                          |  | 161,945  |   | 115,098  |   | 20,955   |  
|Net financial income (expenses)               |  | (47,232  | ) | (52,826  | ) | (36,934  | )
|Net income (expenses) from equity investments |  |         |   |         |   |         |  
|                                              |  |          |   |          |   |          |  
|Revenues from ordinary operations             |  | 114,713  |   | 62,272   |   | (15,979  | )
|Net extraordinary income (expenses)           |  | (391     | ) | (161     | ) | 2,025    |  
|                                              |  |          |   |          |   |          |  
|Income before taxes                           |  | 114,321  |   | 62,111   |   | (13,954  | )
|Income taxes                                  |  | (7,362   | ) | (5,152   | ) | 2,437    |  
|                                              |  |          |   |          |   |          |  
|Income (loss) for the year                    |  | 106,959  |   | 56,959   |   | (11,517  | )

When
comparing figures for previous years it should be noted that the figures for the year 2000 reflect values which were produced during the plant construction and technical trial
stages. The income statement only took on the typical characteristics of an active company (without the capitalisation of financial expenses relating to the Project Financing, with the recording of
revenues from ordinary operations and the beginning of the depreciation of the plant) after April 18th 2000, the date when the construction consortium handed over the plant to
ISAB Energy.

Revenues from ordinary operations

These revenues consist of the sale of electrical power to the GRTN (Euro 409 million) and the sale of minor products and utilities (around Euro
12 million).

Other revenues and income

The other revenues and income include the Euro 21 million compensation from the Snamprogetti Foster Wheeler Energy consortium (following the settlement of
the litigation arising from the delayed handing over of the IGCC plant and the subsequent loss of profit), rents receivable and ordinary surpluses.

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Purchase expenses

Purchase expenses relate mainly to supplies of feedstock, diesel, other fuel oils, oxygen and nitrogen.

Services and other operating expenses

The services received were maintenance services, insurance, commercial, technical and general services and consultancy services.

Amortisation and depreciation

This item includes the economic and technical amortisation and depreciation of tangible fixed assets (Euro 37 million) and intangible fixed assets (Euro
9 million).

The
average useful life of the plants was estimated in 23.4 years from April 18th 2000.

Net financial income (expenses)

The financial expenses incurred during 2002 consist mainly of interest payable on the financing of Euro 31 million and additional bank charges and
brokerage margins for Euro 6 million.

The
financial income refers to current account deposits, which earn an average rate of 2.1%.

Income taxes

The taxes for 2002 do not include current IRPEG taxation since the company was given 10-year exemption from IRPEG, which will expire in
October 2003. The figures refer mainly to IRAP taxation, both as the tax expense of the year and as the net effect of the deferred tax assets.

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Balance Sheet

The following table shows reclassified balance sheet figures for 2002 and 2001.

|                                        |  | 31.12.02 |   | 31.12.01 |  
|--------------------------------------- |  | -------- | - | -------- | -
|
|Fixed assets                            |  | 766,565  |   | 800,421  |  
|Net working capital                     |  | 50,361   |   | 17,965   |  
|Staff leaving indemnities               |  | (161     | ) | (144     | )
|Other assets                            |  | 37,154   |   | 31,222   |  
|Other liabilities                       |  | (17,897  | ) | (8,353   | )
|                                        |  |          |   |          |  
|NET INVESTED CAPITAL                    |  | 836,022  |   | 841,111  |  
|Shareholders' equity                    |  | 144,083  |   | 70,657   |  
|Medium/long-term financial debt         |  | 657,618  |   | 742,658  |  
|Short-term financial debt               |  | 34,322   |   | 27,796   |  
|                                        |  |          |   |          |  
|SHAREHOLDERS' EQUITY AND FINANCIAL DEBT |  | 836,022  |   | 841,111  |  

At
December 31st 2002 the net invested capital amounted to approximately Euro 836 million, a decrease of around Euro 5 million.

The
most significant variations between the situation at December 31st 2001 and December 31st 2002 are analysed below.

Fixed assets

|                                       |  | 31.12.02 |  | 31.12.01
|-------------------------------------- |  | -------- |  | --------
|
|Intangible fixed assets                |  | 56,331   |  | 64,858  
|Tangible fixed assets                  |  | 710,225  |  | 735,554 
|Investments and other financial assets |  | 9        |  | 9       
|                                       |  |          |  |         
|Total                                  |  | 766,565  |  | 800,421 

Net working capital

|                  |  | 31.12.02 |   | 31.12.01 |  
|----------------- |  | -------- | - | -------- | -
|
|Leftovers         |  | 15,615   |   | 14,636   |  
|Trade receivables |  | 76,528   |   | 52,890   |  
|Trade payables    |  | (41,783  | ) | (49,561  | )
|                  |  |          |   |          |  
|Total             |  | 50,361   |   | 17,965   |  

Trade
receivables increased largely as a result of the higher quantity of electricity sold to the GRTN.

Trade
payables decreased due to the lower amount of services and supplies received.

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Other assets

|                                                  |  | 31.12.02 |  | 31.12.01
|------------------------------------------------- |  | -------- |  | --------
|
|Short-term tax receivables                        |  | 5,950    |  | 819     
|Other short-term receivables                      |  | 17,955   |  | 19,304  
|Short-term pre-paid expenses and accrued income   |  | 3,989    |  | 2,086   
|Receivables from tax authoritieslong/medium-term |  | 3,231    |  | 9,013   
|Other medium/long-term receivables                |  | 6,030    |  |        
|                                                  |  |          |  |         
|Total                                             |  | 37,154   |  | 31,222  

Other liabilities

|                                                |  | 31.12.02 |   | 31.12.01 |  
|----------------------------------------------- |  | -------- | - | -------- | -
|
|Short-term tax payables                         |  | (2,497   | ) | (3,720   | )
|Other short-term payables                       |  | (4,790   | ) | (427     | )
|Short-term deferred income and accrued expenses |  | (543     | ) | (479     | )
|Other provisions for risks and charges          |  | (10,068  | ) | (3,727   | )
|                                                |  |          |   |          |  
|Total                                           |  | (17,897  | ) | (8,353   | )

The
other provisions include the provision for the plant maintenance cycles for Euro 10 million.

Net financial debt

The table below outlines the medium/long-term financial debt for ISAB Energy S.r.l.

|                                      |  | 31.12.02 |   | 31.12.01 |  
|------------------------------------- |  | -------- | - | -------- | -
|
|Medium/long-term bank borrowings      |  | 700,142  |   | 783,234  |  
|Other medium/long-term financial debt |  | 81,425   |   | 45,540   |  
|Current portion of loans              |  | (123,949 | ) | (86,116  | )
|                                      |  |          |   |          |  
|Total                                 |  | 657,618  |   | 742,658  |  

Short-term
financial debt:

|                                       |  | 31.12.02 |   | 31.12.01 |  
|-------------------------------------- |  | -------- | - | -------- | -
|
|Short-term bank borrowings             |  | 97,598   |   | 84,448   |  
|Other short-term financial debt        |  | 26,351   |   | 1,668    |  
|                                       |  |          |   |          |  
|Short-term financial liabilities       |  | 123,949  |   | 86,116   |  
|Cash and cash equivalents              |  | (85,101  | ) | (58,320  | )
|Other short-term financial receivables |  | (4,526   | ) | 0        |  
|                                       |  |          |   |          |  
|Short-term financial assets            |  | (89,627  | ) | (58,320  | )
|                                       |  |          |   |          |  
|TOTAL                                  |  | 34,322   |   | 27,796   |  

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Set
out below is a breakdown of the change in net financial debt for the last three years:

|                                           |  | 2002    |   | 2001     |   | 2000    |  
|------------------------------------------ |  | ------- | - | -------- | - | ------- | -
|
|CASH FLOW FROM OPERATIONS:                 |  |         |   |          |   |         |  
|Cash flow from operations                  |  | 159,391 |   | 104,434  |   | 15,675  |  
|Change in operating assets and liabilities |  | (35,284 | ) | 28,252   |   | (51,766 | )
|                                           |  |         |   |          |   |         |  
|Total                                      |  | 124,107 |   | 132,686  |   | (36,091 | )
|CASH FLOW FROM INVESTMENT ACTIVITIES:      |  |         |   |          |   |         |  
|Investments                                |  | (12,059 | ) | (16,242  | ) | (23,966 | )
|Divestments                                |  |        |   | 1,351    |   | 1,320   |  
|                                           |  |         |   |          |   |         |  
|Total                                      |  | (12,059 | ) | (14,891  | ) | (22,646 | )
|CASH FLOW FROM SHAREHOLDERS' EQUITY:       |  |         |   |          |   |         |  
|Capital increase                           |  |        |   |         |   | 8,808   |  
|Capital subsidies                          |  |        |   |         |   |        |  
|Dividends paid                             |  | (25,000 | ) |         |   |        |  
|Other changes to shareholders' equity      |  | (8,534  | ) |         |   | 15,494  |  
|                                           |  |         |   |          |   |         |  
|Total                                      |  | (33,534 | ) |         |   | 24,302  |  
|                                           |  |         |   |          |   |         |  
|CHANGE IN NET FINANCIAL DEBT               |  | 78,514  |   | 117,795  |   | (34,434 | )
|INITIAL NET FINANCIAL DEBT                 |  | 770,454 |   | 888,250  |   | 853,815 |  
|CHANGE FOR THE YEAR                        |  | (78,514 | ) | (117,795 | ) | 34,434  |  
|                                           |  |         |   |          |   |         |  
|FINAL NET FINANCIAL DEBT                   |  | 691,939 |   | 770,454  |   | 888,250 |  

Equity investments

ISAB Energy S.r.l. does not own shares in the parent companies nor in the associated company ISAB Energy Services S.r.l.; it holds a share of 5%
of the share capital of the company Industria Acqua Siracusana S.p.A., a co-operative company managing industrial waste water.

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Relations with parent companies, associated companies and other related parties

ISAB Energy S.r.l. purchases the main raw materials necessary for production from ERG Raffinerie Mediterranee. At the same time it sells some raw
materials and auxiliary services to ERG Raffinerie Mediterranee. Relations between the two companies also entail several contracts regarding the supply of industrial and general services, such as:



ISAB
Energy also receives other general services from ERG S.p.A.:



The
amounts paid for these services are detailed in the Notes to the financial statements.

The
company has, furthermore, contracts for services supplied by Edison Mission Italia and Erg S.p.A. as part of the "Sponsor Support Agreements."

The
relationship which links ISAB Energy with ISAB Energy Services is regulated by the Operation and Maintenance contract, which assigns to ISAB Energy Services the role of plant
operation and maintenance.

As
far as relations with related parties are concerned, as defined by the CONSOB recommendation dated February 20th 1997, recalled by the CONSOB recommendation dated
February 27th 1998, there are not any relations which come under that definition and which have significant operations as their subject.

Subsequent events

During February the Financing Institutions gave their approval to cancel the line of credit of Euro 57.3 million made available to ISAB
Energy to cover any compensation should the arbitration tribunal have given judgement against the company in the litigation with the plant construction consortium. They have, furthermore,
"de-subordinated"for the period 2002-2004several components of the payment relating to the "Operation and Maintenance" contract made from ISAB Energy
to ISAB Energy Services, binding them however to check the financial ratios, calculated on a six-monthly basis, which must be in line with those indicated in the Project Credit Facility
Agreement.

On
March 5th 2003, following the settlement with the consortium, meetings were held by the Executive Committee and the Board of Directors, during which it was
decided that the corporate organisation would be altered. Such an amendment would be decreed during an extraordinary shareholders' meeting called to alter the company Statute. The annulment of the
Executive Committee is expected, together with the nomination of a Chief Executive Officer or General Manager.

Operations expectations

For 2003 the company expects a trend similar to that of 2002, with a slightly lower economic result due to the carrying out of the general
shutdown for an equivalent of 28 days, which will affect train 2 and the parts in common. The general shutdown planned for the fourth quarter 2002 will in fact take place starting from
March 29th 2003, in the light of the results of the inspection analysis carried out in June, which allowed the maintenance cycle to be revised. The complete maintenance cycle will
now last

15

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8 years
rather than the current 6 years. This revision was decided after checks and technical were studies carried out, together with the licensees Ansaldo and Texaco.

In
October 2003 the ten-year exemption from IRPEG taxation, from which the company has benefited, will end.

Regarding
the revenue inspection for 1999 it is believed that within the first half of the current year the assessment will be concluded, as occurred for 1998.

For
2003 the company has planned investments to improve plant reliability amounting to Euro 2 million, and investments amounting to Euro 5 million for Health, Safety and
Environment.

Furthermore,
investments are planned to automate several company procedures and boost the I.T. infrastructures.

Of
particular importance are: the creation of software in the safety at work area; the improvement of internal communication and work permit processes; a revision of the Plant Management
(PM) SAP maintenance module for managing statistics and preventive/predictive activities; the replacement of all Personal Computers, as they need to be technologically updated or are obsolete, and a
large part of the servers, with a strengthening of the plant network.

Board of Directors' Proposal

Shareholders,

We
close this report by inviting you to:



Taking
into account the limitations previously mentioned in the paragraph "Relations with the Financing Institutions" contained in the present report.

Rome,
March 27th 2003

On
behalf of the Board of Directors

The
Chairman

Domenico
D'Arpizio

16

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Independent Auditor's Report

To
the Shareholders of
ISAB Energy S.r.l.

We
have audited the accompanying balance sheets of ISAB Energy S.r.l. as of December 31, 2002 and 2001, and the related statements of income for the each of the three years in the
period ended December 31, 2002. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on
our audits.

We
conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ISAB Energy S.r.l. at December 31, 2002 and 2001,
and the results of its operations for each of the three years in the period December 31, 2002, in conformity with accounting principles generally accepted in Italy.

Accounting
principles generally accepted in Italy vary in certain significant respects from accounting principles generally accepted the United States of America. The application of the
latter would have affected the determination of net income for each of the three years in the period ended December 31, 2002 and the determination of Shareholder's equity as of
December 31, 2002 and 2001, to the extent summarized in Note 9.

Reconta
Ernst & Young S.p.A.

Genoa,
Italy
May 5, 2003

17

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ISAB Energy S.r.l.

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Annual report for the year ended December 31st 2002
Financial statements

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ISAB ENERGY S.r.l.Financial StatementsAmounts expressed in Thousands of Euro

BALANCE SHEET

|ASSETS             |  |      |  | 31.12.02                 |  |                                                                   |  | 31:12:01         
|------------------ |  | ---- |  | ------------------------ |  | ----------------------------------------------------------------- |  | -----------------
|
|A)                 |  |      |  | Subscribed capita unpaid |  |                                                                   |  |                 
|B)                 |  |      |  | Fixed assets             |  |                                                                   |  |                  
|                   |  | I.   |  | Intangible assets        |  |                                                                   |  |                  
|                   |  |      |  | 1)                       |  | Start up and expansion expenses                                   |  |                  
|                   |  |      |  | 2)                       |  | Costs of research, development and advertising                    |  |                  
|                   |  |      |  | 3)                       |  | Patents and right to use patents of others                        |  |                  
|                   |  |      |  | 4)                       |  | Concessions, licenses, trade marks and similar rights             |  |                  
|                   |  |      |  | 5)                       |  | Goodwill                                                          |  |                  
|                   |  |      |  | 6)                       |  | Intangible assets in progress and payments on account             |  |                  
|                   |  |      |  | 7)                       |  | Other                                                             |  |                  
|                   |  |      |  |                          |  |                                                                   |  |                  
|                   |  |      |  | Total                    |  |                                                                   |  | 56,331           
|                   |  | II.  |  | Tangible assets          |  |                                                                   |  |                  
|                   |  |      |  | 1)                       |  | Land and buildings                                                |  |                  
|                   |  |      |  | 2)                       |  | Plants and machinery                                              |  |                  
|                   |  |      |  | 3)                       |  | Other fixture, tools and equipment                                |  |                  
|                   |  |      |  | 4)                       |  | Other                                                             |  |                  
|                   |  |      |  | 5)                       |  | Tangible assets in course of construction and payments on account |  |                  
|                   |  |      |  |                          |  |                                                                   |  |                  
|                   |  |      |  | Total                    |  |                                                                   |  | 710,225          
|                   |  | III. |  | Investments              |  |                                                                   |  |                  
|                   |  |      |  | 1)                       |  | Equity investments in                                             |  |                  
|                   |  |      |  |                          |  | a) subsidiary companies                                           |  |                  
|                   |  |      |  |                          |  | b) associated company                                             |  |                  
|                   |  |      |  |                          |  | c) parent companies                                               |  |                  
|                   |  |      |  |                          |  | e) other entities                                                 |  |                  
|                   |  |      |  |                          |  |                                                                   |  |                  
|                   |  |      |  |                          |  |                                                                   |  |                  
|                   |  |      |  | 2)                       |  | Loans                                                             |  | Beyond
12 months:
|                   |  |      |  |                          |  | a) subsidiary companies                                           |  |                 
|                   |  |      |  |                          |  | b) associated company                                             |  |                 
|                   |  |      |  |                          |  | c) parent companies                                               |  |                 
|                   |  |      |  |                          |  | e) other entities                                                 |  |                 
|                   |  |      |  |                          |  |                                                                   |  |                  
|                   |  |      |  |                          |  |                                                                   |  |                  
|                   |  |      |  | 3)                       |  | Other investments                                                 |  |                  
|                   |  |      |  | 4)                       |  | Own shares, with indication of their aggregate nominal value      |  |                  
|                   |  |      |  |                          |  |                                                                   |  |                  
|                   |  |      |  | Total                    |  |                                                                   |  | 9                
|                   |  |      |  |                          |  |                                                                   |  |                  
|Total fixed assets |  |      |  | 766,565                  |  |                                                                  |  | 800,422          

18

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[LOGO]

ISAB ENERGY S.r.l.Financial StatementsAmounts expressed in Thousands of Euro

BALANCE SHEET

|ASSETS                               |  |      |  | 31.12.02                           |  |                                                              |  | 31:12:01
|------------------------------------ |  | ---- |  | ---------------------------------- |  | ------------------------------------------------------------ |  | --------
|
|C)                                   |  |      |  | Current assets                     |  |                                                              |  |         
|                                     |  | I.   |  | Stocks                             |  |                                                              |  |         
|                                     |  |      |  | 1)                                 |  | Raw materials and consumables                                |  |         
|                                     |  |      |  | 2)                                 |  | work in progress and components                              |  |         
|                                     |  |      |  | 3)                                 |  | contract in progress                                         |  |         
|                                     |  |      |  | 4)                                 |  | finisched goods and goods for resale                         |  |         
|                                     |  |      |  | 5)                                 |  | payments on account                                          |  |         
|                                     |  |      |  |                                    |  |                                                              |  |         
|                                     |  |      |  | Total                              |  |                                                              |  | 15,615  
|                                     |  | II.  |  | Debtors                            |  | Beyond
12 months:                                            |  |         
|                                     |  |      |  | 1)                                 |  | trade debtors                                                |  |        
|                                     |  |      |  | 2)                                 |  | amounts owed by subsidiary companies                         |  |        
|                                     |  |      |  | 3)                                 |  | amounts owed by associated companies                         |  |        
|                                     |  |      |  | 4)                                 |  | amounts owed by parent companies                             |  |        
|                                     |  |      |  | 4bis                               |  | amounts owed by other associated companies                   |  |        
|                                     |  |      |  | 5)                                 |  | others debtors                                               |  | 9,261   
|                                     |  |      |  |                                    |  |                                                              |  |         
|                                     |  |      |  | Total                              |  |                                                              |  | 114,219 
|                                     |  | III. |  | Investment which are not permanent |  |                                                              |  |         
|                                     |  |      |  | 1)                                 |  | subsidiary companies                                         |  |         
|                                     |  |      |  | 2)                                 |  | associate companies                                          |  |         
|                                     |  |      |  | 3)                                 |  | parent companies                                             |  |         
|                                     |  |      |  | 4)                                 |  | other companies                                              |  |         
|                                     |  |      |  | 5)                                 |  | own shares, with indication of their aggregate nominal value |  |         
|                                     |  |      |  | 6)                                 |  | other investments                                            |  |         
|                                     |  |      |  |                                    |  |                                                              |  |         
|                                     |  |      |  | Total                              |  |                                                              |  |        
|                                     |  | IV.  |  | Cash at bank and in hand           |  |                                                              |  |         
|                                     |  |      |  | 1)                                 |  | Banks and postal current account                             |  |        
|                                     |  |      |  | 2)                                 |  | Banque cheques                                               |  |        
|                                     |  |      |  | 3)                                 |  | Cash on hand                                                 |  |        
|                                     |  |      |  |                                    |  |                                                              |  |         
|                                     |  |      |  | Total                              |  |                                                              |  | 85,101  
|                                     |  |      |  |                                    |  |                                                              |  |         
|Total currents assets C)             |  |      |  | 214,936                            |  |                                                              |  | 154,982 
|D)                                   |  |      |  | Prepayments and accrued income     |  |                                                              |  |         
|                                     |  |      |  |                                    |  | accrued income                                              |  |         
|                                     |  |      |  |                                    |  | prepayments                                                 |  |         
|                                     |  |      |  |                                    |  |                                                              |  |         
|Total Prepayments and accrued income |  |      |  | 3,989                              |  |                                                              |  | 2,086   
|                                     |  |      |  |                                    |  |                                                              |  |         
|Total Assets                         |  |      |  | 985,490                            |  |                                                              |  | 957,490 

19

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[LOGO]

ISAB ENERGY S.r.l.Financial StatementsAmounts expressed in Thousands of Euro

BALANCE SHEET

|LIABILITIES                                    |  |       |  | 31.12.02                         |  |                                                |  | 31:12:01 | 
|---------------------------------------------- |  | ----- |  | -------------------------------- |  | ---------------------------------------------- |  | -------- | 
|
|A)                                             |  |       |  | Capital and reserves             |  |                                                |  |          | 
|                                               |  | I.    |  |                                  |  | Share capital                                  |  |          | 
|                                               |  | II.   |  |                                  |  | Share premium account                          |  |          | 
|                                               |  | III.  |  |                                  |  | Revaluation reserves                           |  |          | 
|                                               |  | IV.   |  |                                  |  | Legal reserves                                 |  |          | 
|                                               |  | V.    |  |                                  |  | Reserve for own shares                         |  |          | 
|                                               |  | VI.   |  |                                  |  | Reserve provided by the article of association |  |          | 
|                                               |  | VII.  |  |                                  |  | Others reserves                                |  |          | 
|                                               |  |       |  | 1)                               |  | Additional paid in capital                     |  |          | 
|                                               |  | VIII. |  |                                  |  | Profit (Loss) brought forward                  |  |          | 
|                                               |  | IX.   |  |                                  |  | Profit (Loss) for the finacial period          |  |          | 
|                                               |  |       |  | 1)                               |  | Coverage losses                                |  |          | 
|                                               |  |       |  | 2)                               |  | Profit (Loss) for the financial period         |  |          | 
|                                               |  |       |  |                                  |  |                                                |  |          | 
|TOTAL CAPITAL AND RESERVES                     |  |       |  | 144,083                          |  |                                                |  | 70,657   | 
|B)                                             |  |       |  | Provisions for risks and charges |  |                                                |  |          | 
|                                               |  |       |  | 1)                               |  | Provision for pension and similar obbligation  |  |          | 
|                                               |  |       |  | 2)                               |  | Provision for taxation                         |  |          | 
|                                               |  |       |  | 3)                               |  | Other provision                                |  |          | 
|                                               |  |       |  |                                  |  |                                                |  |          | 
|TOTAL PROVISION FOR RISKS AND CHARGES          |  |       |  | 10,068                           |  |                                                |  | 3,727    | 
|C)                                             |  |       |  | Employee severance indemnity     |  |                                                |  | 161      | 
|D)                                             |  |       |  | Creditors                        |  | Beyond
12 months:                              |  |          | 
|                                               |  |       |  | 1)                               |  | Deberture loans                                |  |         | 
|                                               |  |       |  | 2)                               |  | Convertible debenture loans                    |  |         | 
|                                               |  |       |  | 3)                               |  | Amounts own to banks                           |  | 698,786  | 
|                                               |  |       |  | 4)                               |  | Amounts own to other finansor                  |  |         | 
|                                               |  |       |  | 5)                               |  | Advanced received                              |  |         | 
|                                               |  |       |  | 6)                               |  | Amounts owed to suppliers                      |  |         | 
|                                               |  |       |  | 7)                               |  | Debts represented by bill of exchange          |  |         | 
|                                               |  |       |  | 8)                               |  | Amounts owed to subsidiary companies           |  |         | 
|                                               |  |       |  | 9)                               |  | Amounts owed to associated companies           |  |         | 
|                                               |  |       |  | 10)                              |  | Amounts owed to parent companies               |  | 43,871   | 
|                                               |  |       |  | 10bis                            |  | Amounts owed to other associated companies     |  |         | 
|                                               |  |       |  | 11)                              |  | Amounts owed to tax administration             |  |         | 
|                                               |  |       |  | 12)                              |  | Amounts owed to social security intitutions    |  |         | 
|                                               |  |       |  | 13)                              |  | Other creditors                                |  |         | 
|                                               |  |       |  |                                  |  |                                                |  |          | 
|Total Creditors                                |  |       |  | 830,635                          |  |                                                |  | 882,482  | 
|E)                                             |  |       |  | Accruals and deferred income     |  |                                                |  |          | 
|                                               |  |       |  |                                  |  | accrued income                                |  |          | 
|                                               |  |       |  |                                  |  | prepayments                                   |  |          | 
|                                               |  |       |  |                                  |  |                                                |  |          | 
|Total accruals and deferred income             |  |       |  | 543                              |  |                                                |  | 479      | 
|                                               |  |       |  |                                  |  |                                                |  |          | 
|Total liabilities                              |  |       |  | 841,407                          |  |                                                |  | 886,832  | 
|                                               |  |       |  |                                  |  |                                                |  |          | 
|Total liabilities, capital and deferred income |  |       |  | 985,490                          |  |                                                |  | 957,489  | 
|                                               |  |       |  | Memorandum accounts              |  |                                                |  |          | 
|                                               |  |       |  | Other personal guarantees        |  |                                                |  |          | 
|                                               |  |       |  |                                  |  | In favour of related parties                  |  |          | 
|                                               |  |       |  |                                  |  | In favour of third parties                    |  |          | 
|                                               |  |       |  |                                  |  |                                                |  |          | 
|                                               |  |       |  |                                  |  |                                                |  |          | 
|                                               |  |       |  | Other memorandum accounts        |  |                                                |  |         | 
|                                               |  |       |  |                                  |  | Others                                        |  |          | 
|                                               |  |       |  |                                  |  |                                                |  |          | 
|                                               |  |       |  |                                  |  |                                                |  |          | 
|                                               |  |       |  |                                  |  |                                                |  |          | 
|Total memorandum accounts                      |  |       |  | 3,651                            |  |                                                |  | 3,057    | 

20

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[LOGO]

ISAB ENERGY S.r.l.Financial StatementsAmounts expressed in Thousands of Euro

INCOME STATEMENTS

|                                                      |  |                     |   |                                                                        |   | 2002     |   | 2001     |   | 2000     |  
|----------------------------------------------------- |  | ------------------- | - | ---------------------------------------------------------------------- | - | -------- | - | -------- | - | -------- | -
|A)                                                    |  | VALUE OF PRODUCTION |   |                                                                        |   |          |   |          |  
|                                                      |  | 1)                  |   | Net turnover from sales and services                                   |   | 421,319  |   | 377,207  |   | 229,416  |  
|                                                      |  | 2)                  |   | variation in stocks of finisched goods and in work in progress         |   | (137     | ) | 65       |   | 151      |  
|                                                      |  | 3)                  |   | Variance in contracts in progress                                      |   | 0        |   | 0        |   | 0        |  
|                                                      |  | 4)                  |   | work performed for own purposes and capitalized                        |   | 824      |   | 37       |   | 12,506   |  
|                                                      |  | 5)                  |   | Other revenues and income                                              |   | 0        |   | 0        |   | 0        |  
|                                                      |  |                     |   | other                                                                  |   | 22,413   |   | 18,872   |   | 65,374   |  
|                                                      |  |                     |   |                                                                        |   |          |   |          |   |          |  
|                                                      |  |                     |   |                                                                        |   | 22,413   |   | 18,872   |   | 65,374   |  
|                                                      |  |                     |   |                                                                        |   |          |   |          |   |          |  
|TOTAL VALUE OF PRODUCTION                             |  | 444,419             |   | 396,181                                                                |   | 307,447  |  
|B)                                                    |  | COST OF PRODUCTION  |   |                                                                        |   |          |   |          |  
|                                                      |  | 6)                  |   | For raw materials, consumable and goods for sale                       |   | (165,073 | ) | (169,267 | ) | (187,262 | )
|                                                      |  | 7)                  |   | For services                                                           |   | (58,123  | ) | (59,349  | ) | (49,281  | )
|                                                      |  | 8)                  |   | For use of assets owned by other                                       |   | (1,964   | ) | (989     | ) | (1,296   | )
|                                                      |  | 9)                  |   | For staff costs                                                        |   | 0        |   | 0        |   | 0        |  
|                                                      |  |                     |   | a) wages and salaries                                                  |   | (952     | ) | (906     | ) | (995     | )
|                                                      |  |                     |   | b) social security costs                                               |   | (281     | ) | (242     | ) | (283     | )
|                                                      |  |                     |   | c) provision for severance indemnity                                   |   | (65      | ) | (55      | ) | (69      | )
|                                                      |  |                     |   | d) pension costs                                                       |   | 0        |   | 0        |   | 0        |  
|                                                      |  |                     |   | e) other costs relating to staff                                       |   | (19      | ) | (1       | ) | (0       | )
|                                                      |  |                     |   |                                                                        |   |          |   |          |   |          |  
|                                                      |  |                     |   |                                                                        |   | (1,316   | ) | (1,204   | ) | (1,347   | )
|                                                      |  | 10)                 |   | Value adjustments                                                      |   |          |   |          |   |          |  
|                                                      |  |                     |   | a) Amortization of intangible assets                                   |   | (8,795   | ) | (9,011   | ) | (6,629   | )
|                                                      |  |                     |   | b) Amortization of tangible assets                                     |   | (36,981  | ) | (36,247  | ) | (25,001  | )
|                                                      |  |                     |   | c) Reduction in value of fixed assets                                  |   | 0        |   | 0        |   | 0        |  
|                                                      |  |                     |   | d) Allowance for doubtful debtors included                             |   | 0        |   | 0        |   | 0        |  
|                                                      |  |                     |   | in current assets                                                      |   | 0        |   | 0        |   | (102     | )
|                                                      |  |                     |   |                                                                        |   |          |   |          |   |          |  
|                                                      |  |                     |   |                                                                        |   | (45,776  | ) | (45,258  | ) | (31,733  | )
|                                                      |  | 11)                 |   | Variation in stocks of raw materials, consumables and good for reseals |   | 1,212    |   | 1,420    |   | 3,152    |  
|                                                      |  | 12)                 |   | Amounts provided for risk provisions                                   |   | 0        |   | 0        |   | 0        |  
|                                                      |  | 13)                 |   | Other accruals                                                         |   | (6,459   | ) | (1,931   | ) | (1,889   | )
|                                                      |  | 14)                 |   | Other operating charges                                                |   | (4,975   | ) | (4,506   | ) | (4,663   | )
|                                                      |  |                     |   |                                                                        |   |          |   |          |   |          |  
|TOTAL COSTS OF PRODUCTION                             |  | (282,474            | ) | (281,084                                                               | ) | (274,319 | )
|DIFFERENCE BETWEEN VALUE AND COST OF PRODUCTION (A-B) |  | 161,945             |   | 115,097                                                                |   | 33,128   |  

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[LOGO]

ISAB ENERGY S.r.l.Financial StatementsAmounts expressed in Thousands of Euro

INCOME STATEMENTS

|                                     |  |                                  |   |                                        |   |                                                         |   | 2002    |   | 2001    |   | 2000    |  
|------------------------------------ |  | -------------------------------- | - | -------------------------------------- | - | ------------------------------------------------------- | - | ------- | - | ------- | - | ------- | -
|C)                                   |  | FINANCIAL INCOME AND CHARGES     |   |                                        |   |                                                         |   |         |  
|                                     |  | 15)                              |   | Income from equity investments         |   | 0                                                       |   | 0       |   | 0       |  
|                                     |  | 16)                              |   | Other financial income                 |   | 0                                                       |   | 0       |   | 0       |  
|                                     |  |                                  |   | a)                                     |   | from loans forming part of fixed assets                 |   |         |   |         |   |         |  
|                                     |  |                                  |   | b)                                     |   | from other permanent investments other than equity ones |   | 0       |   | 0       |   | 0       |  
|                                     |  |                                  |   | c)                                     |   | from other investments which are not permanent          |   | 0       |   | 0       |   | 0       |  
|                                     |  |                                  |   | d)                                     |   | other income not included above                         |   |         |   |         |   |         |  
|                                     |  |                                  |   |                                        |   | subsidiary companies                                    |   | 0       |   | 0       |   | 0       |  
|                                     |  |                                  |   |                                        |   | associated companies                                    |   | 0       |   | 0       |   | 0       |  
|                                     |  |                                  |   |                                        |   | parent companies                                        |   | 52      |   | 237     |   | 29      |  
|                                     |  |                                  |   |                                        |   | other associated companies                              |   | 26      |   | 0       |   | 0       |  
|                                     |  |                                  |   |                                        |   | other companies                                         |   | 2,487   |   | 2,837   |   | 868     |  
|                                     |  |                                  |   |                                        |   |                                                         |   |         |   |         |   |         |  
|                                     |  |                                  |   |                                        |   |                                                         |   | 2,566   |   | 3,074   |   | 897     |  
|                                     |  | 17)                              |   | interest payable                       |   |                                                         |   |         |   |         |  
|                                     |  |                                  |   |                                        |   | subsidiary companies                                    |   | 0       |   | 0       |   | 0       |  
|                                     |  |                                  |   |                                        |   | associated companies                                    |   | 0       |   | 0       |   | 0       |  
|                                     |  |                                  |   |                                        |   | parent companies                                        |   | (2,804  | ) | (3,455  | ) | (660    | )
|                                     |  |                                  |   |                                        |   | other associated companies                              |   | (115    | ) | (45     | ) | (634    | )
|                                     |  |                                  |   |                                        |   | other companies                                         |   | (46,879 | ) | (52,400 | ) | (48,709 | )
|                                     |  |                                  |   |                                        |   |                                                         |   |         |   |         |   |         |  
|                                     |  |                                  |   |                                        |   |                                                         |   | (49,797 | ) | (55,900 | ) | (50,003 | )
|                                     |  |                                  |   |                                        |   |                                                         |   |         |   |         |   |         |  
|T TOTAL FINANCIAL INCOME AND CHARGES |  | (47,232                          | ) | (52,825                                | ) | (49,106                                                 | )
|D)                                   |  | VALUE ADJUSTMENT OF INVESTMENT   |   | 0                                      |   | 0                                                       |   | 0       |  
|                                     |  | 18)                              |   | Revalutation                           |   | 0                                                       |   | 0       |   | 0       |  
|                                     |  | 19)                              |   | Devaluation                            |   | 0                                                       |   | 0       |   | 0       |  
|                                     |  |                                  |   |                                        |   |                                                         |   |         |   |         |   |         |  
|TOTAL VALUE ADJUSTMENT OF INVESTMENT |  | 0                                |   | 0                                      |   | 0                                                       |  
|E)                                   |  | EXTRAORDINARY INCOME AND CHARGES |   |                                        |   |                                                         |   |         |  
|                                     |  | 20)                              |   | Income                                 |   |                                                         |   |         |   |         |  
|                                     |  |                                  |   |                                        |   | from disposal of assets                                 |   | 0       |   | 34      |   | 0       |  
|                                     |  |                                  |   |                                        |   | extraordinary income                                    |   | 0       |   | 0       |   | 2,404   |  
|                                     |  |                                  |   |                                        |   | other                                                   |   | 0       |   | 0       |   | 0       |  
|                                     |  |                                  |   |                                        |   |                                                         |   |         |   |         |   |         |  
|                                     |  |                                  |   |                                        |   |                                                         |   | 0       |   | 34      |   | 2,404   |  
|                                     |  | 21)                              |   | Charges                                |   |                                                         |   |         |   |         |  
|                                     |  |                                  |   |                                        |   | from disposal of assets                                 |   | 0       |   | (195    | ) | (1      | )
|                                     |  |                                  |   |                                        |   | incomes taxes from previous year                        |   | (305    | ) | 0       |   | 0       |  
|                                     |  |                                  |   |                                        |   | contingent liabilities                                  |   | 0       |   | (0      | ) | (378    | )
|                                     |  |                                  |   |                                        |   | other                                                   |   | (86     | ) | 0       |   | 0       |  
|                                     |  |                                  |   |                                        |   |                                                         |   |         |   |         |   |         |  
|                                     |  |                                  |   |                                        |   |                                                         |   | (391    | ) | (195    | ) | (379    | )
|                                     |  |                                  |   |                                        |   |                                                         |   |         |   |         |   |         |  
|TOTAL EXTRAORDINARY INCOME TAXES     |  | (391                             | ) | (161                                   | ) | 2,025                                                   |  
|                                     |  |                                  |   |                                        |   |                                                         |   |         |   |         |   |         |  
|Profit (Loss) before income taxes    |  | 114,321                          |   | 62,111                                 |   | (13,954                                                 | )
|                                     |  | 22)                              |   | Income taxes                           |   | (7,362                                                  | ) | (5,152  | ) | 2,437   |  
|                                     |  |                                  |   |                                        |   |                                                         |   |         |   |         |   |         |  
|                                     |  | 23)                              |   | Profit (Loss) for the financial period |   | 106,959                                                 |   | 56,959  |   | (11,517 | )

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ISAB Energy S.r.l.

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Annual report for the year ended December 31st 2002  Notes to the financial statements

1.     The company

ISAB Energy is the owner of the industrial gasification and cogeneration complex denominated "IGCCIntegrated Gasification Combined Cycle", situated
in Priolo Gargallo, Sicily, designed for the production of electrical power.

The
plant, which became operational on April 18th 2000 following the "provisional acceptance" issued to the plant construction consortium Snamprogetti Foster Wheeler
Energy (the "Consortium"), on December 30th 2002 completed the guarantee period with regard to regular functioning and productive capacity, leading to the definitive and
conclusive declaration of "final acceptance".

2.     Criteria for the preparation of the financial statements

The financial statements have been prepared in compliance with the laws which govern their preparation, interpreted and integrated using the accounting principles
issued by the "Consigli Nazionali dei Dottori Commercialisti e dei Ragionieri".

The
financial statements include the Balance Sheets, Income Statement and the Notes to the financial statements.

Every
item on the Balance Sheets is accompanied by the corresponding financial statement amounts for 2001 and 2002, while in the Income Statements the figures for 2000, 2001 and 2002 are
provided.

For
the sake of clarity the figures in the Notes to the financial statements have been rounded to the nearest thousand Euro, in line with past practices; as a result some of the total
amounts may vary slightly from the sum of their components.

3.     Accounting policies and evaluation criteria

The accounting policies and evaluation criteria adopted are set out below. They conform entirely to articles 2423 bis and 2426 of the Italian Civil Code.

The
evaluation criteria adopted for the drawing up of the financial statements at December 31st 2002 are the same as those adopted the previous year.

3.1   Intangible fixed assets

Intangible fixed assets are recorded at their purchase price or production cost, including related capitalization interest, incurred at the date of completion,
and are amortised on a straight line basis, according to their useful life, also considering their residual value.

More
specifically, the figures result from the application of the following criteria:



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3.2   Tangible fixed assets

Tangible fixed assets are recorded at purchase or production price and are displayed net of amortisation and depreciation provisions.

The
figures shown have not undergone any revaluation.

The
cost of assets includes capitalization interest incurred during the period of construction.

Improvement,
modernisation, transformation and maintenance costs are capital in nature and are thus capitalised and depreciated in relation to the useful life of the asset they relate
to.

Non-capital
maintenance and repair costs are expensed in the periods in which they are incurred.

The
depreciation rates, determined on a prudent basis, which are the same as those used in prior years and follow a depreciation schedule which takes account of the estimated residual
value of each asset, are listed below according to the type of asset in question:

|                               |  | %       |  | Degree of
depreciation at
31.12.02 |  
|------------------------------ |  | ------- |  | ---------------------------------- | -
|Industrial buildings           |  | 3-4     |  | 10                                 | %
|Light buildings                |  | 10      |  | 24                                 | %
|IGCC complex buildings         |  | 3.5-7.5 |  | 12                                 | %
|Industrial equipment           |  | 10      |  | 25                                 | %
|Office equipment and furniture |  | 12      |  | 40                                 | %
|Sundry and minor equipment     |  | 10      |  | 36                                 | %
|Electronic equipment           |  | 20      |  | 53                                 | %
|Vehicles                       |  | 25      |  | 89                                 | %

With
regard to the IGCC plant, the rates shown refer exclusively to the values arising from an independent survey on the single technical units of the plant.

3.3   Equity investments

Shareholdings are recorded at their purchase price or subscription price and adjusted if there has been a permanent loss of value.

3.4   Inventories

Raw materials are accounted for at the lower of cost, using the LIFO (Last InFirst Out) method on an annual basis, and the current market value.

Finished
products are accounted for on the basis of the current market value.

Inventories
of ancillary and consumer goods are accounted for at the lower of their weighted average cost and the current market value.

3.5   Receivables and payables

Receivables and payables are recorded at their nominal value reduced where necessary by a provision for doubtful accounts.

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Transactions
in foreign currency during the year are converted into Euro at the exchange rate on the day of the transaction and the difference between this value and the amount actually
paid or received is recorded in the income statement under financial income and expenses.

The
foreign exchange differences, resulting from the conversion of foreign exchange receivables and payables at the year-end are included in the income statement.

3.6   Current and deferred income taxes

The current income taxes have been accrued to cover estimated tax charges. Deferred tax liabilities and assets are accrued to reflect the timing differences
between the financial reporting basis and tax basis of assets and liabilities and tax losses carried forward.

The
deferred tax assets are included in the statements only if there is a reasonable chance of recovering them; deferred taxes are not accounted for if the liability is considered
remote. These taxes have been calculated on the basis of estimated tax rates expected for the periods in which the taxable timing differences will be concentrated.

3.7   Accruals and payables

Accrued income and liabilities and deferred income and expenses are accounted for on an accrual basis, with reference to the provisions of article 2424 bis
of the Italian Civil Code.

3.8   Provisions for risks and charges

The provisions for risks and charges cover specific, definite or possible liabilities, but whose amount or date of payment is not certain at the end of the year.

3.9   Maintenance cycles

The provision for the extraordinary periodical maintenance is carried out pro rata temporis for each financial year on the basis of the estimate of costs to be
sustained and the multi-year maintenance cycle programmes of the IGCC plant.

3.10 Provision for staff leaving indemnities

This item represents all the liabilities to personnel, calculated according to current legislation and collective labour contracts in force at the close of the
year.

3.11 Memorandum accounts

Memorandum accounts are accounted for at the value of the commitment taken or received and the potential value of the risk objectively estimated.

In
relation to the accounting principle number 22 issued by the "Consigli Nazionali dei Dottori Commercialisti e dei Ragionieri", the guarantees issued against the payables recorded in
the balance sheet are not recorded amongst the memorandum accounts but are shown in the Notes to the financial statements, where necessary, in the comments to the relevant payable items.

3.12 Financial expenses

The interest payable and the financial expenses incurred by the financing obtained from the parent company and subsequently by the financing received from the
Project financing, until the date the plant started operations (April 18th 2000), have been capitalised amongst the various asset items.

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The
interest payable and financial expenses subsequent to that date contributed to the formation of the economic result.

3.13 Income Statement

Income and expenses are accounted for in the income statement on an accrual basis.

Up
until the date when the plant was accepted, the costs pertaining to technical studies, legal and financial services, permits and licenses, internal work, directly or indirectly
attributable to the start-up and development of the project and the building of the plant, as well as its trial run, were capitalised amongst the fixed assets, whereas the expenses not
directly pertaining to the project's progress and its implementation were recorded in the financial year.

3.14 Extraordinary income and expenses

This item consists exclusively of the effects resulting from changes in the application of accounting principles, from extraordinary events not in any way
connected to ordinary operations, taxes pertaining to previous years and litigation underway with the tax authorities.

4.     Related party transactions

The company engages in commercial relations and service-linked and financial relations both with its direct parent companies and with the companies of the same
Groups, regulated by contracts fixed at market conditions, with the exception of financing, which is paid back at zero rate in 10 years and matures in 2010.

During
2002, most of the activity previously done with ERG Petroli were transferred to ERG Raffinerie Mediterranee S.r.l.

The
most significant are:



ISAB
Energy Services S.r.l. belongs to the same groups of the associated companies ERG Petroli and MEC Priolo.

ERG
S.p.A. performs other services with regard to legal, corporate, tax and administrative assistance and public relations. ERG Petroli, up until September 30th
2002, performed certain public relations, personnel administration, organisation and management of human resources. As of October 1st 2002, ERG Raffinerie Mediterranee began
performing certain services related to personnel

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administration,
organisation and management of human resources. Mission Energy Italia S.r.l. and Edison Mission Energy Ldt. provide services by staff at headquarters and advice in the financing,
insurance and commercial sectors.

The
figures regarding inter-group operations are detailed further on in these Notes.

5.     Project financing

Supplied below is a general outline of the guarantees and relations arising from the Project financing operation which was concluded in 1996 with the signing of
the Contract of Project Credit, which was subjected to its last change on September 15th 2000 as a conclusion to the re-financing operation:



The
duration of the obligations after the re-financing operation was extended from eight to fourteen years from the payment of the first instalment, which occurred on
December 15th 2000, and therefore until December 15th 2014.

Furthermore,
the financial management of the Company, in particular its cash flow, is monitored very closely by the banks.

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6.     Notes to Balance Sheet

Assets

Fixed assets (Euro 766,565 thousand)

6.1   Intangible fixed assets

|                           |  | Start-up
and
expansion
expenses |   | Licenses
and
trademarks |   | Assets
under
construction
&
advances |   | Other
intangible
fixed
assets |   | Total   |  
|-------------------------- |  | ------------------------------- | - | ----------------------- | - | ------------------------------------ | - | ----------------------------- | - | ------- | -
|Historical cost            |  | 26,166                          |   | 8,900                   |   | 8                                    |   | 45,761                        |   | 80,835  |  
|Amortisation               |  | (8,916                          | ) | (2,597                  | ) |                                     |   | (4,464                        | ) | (15,977 | )
|                           |  |                                 |   |                         |   |                                      |   |                               |   |         |  
|Balance at 31.12.01        |  | 17,250                          |   | 6,303                   |   | 8                                    |   | 41,296                        |   | 64,858  |  
|Movements during the year: |  |                                 |   |                         |   |                                      |   |                               |   |         |  
|Acquisitions               |  |                                |   |                        |   | 268                                  |   |                              |   | 268     |  
|Reclassification           |  |                                |   | 166                     |   | (166                                 | ) |                              |   |        |  
|Amortisation               |  | (5,233                          | ) | (980                    | ) |                                     |   | (2,583                        | ) | (8,795  | )
|Historical cost            |  | 26,166                          |   | 9,066                   |   | 111                                  |   | 45,761                        |   | 81,103  |  
|Amortisation               |  | (14,149                         | ) | (3,576                  | ) |                                     |   | (7,047                        | ) | (24,772 | )
|                           |  |                                 |   |                         |   |                                      |   |                               |   |         |  
|Balance at 31.12.02        |  | 12,017                          |   | 5,490                   |   | 111                                  |   | 38,714                        |   | 56,331  |  

The start-up and expansion expenses include the cost of forming the company, amounting to Euro 5 thousand, and Euro
12,012 thousand of start-up expenses, valued as recoupable and directly attributed to the start-up of operations. They include financial expenses amounting to Euro
872 thousand consisting of:



The
licenses and trademarks and similar rights include Euro 5,221 thousand pertaining to the cost of the licenses to use the "Texaco" gasification processes and the "Lurgi"
sulphur recovery processes. The amortisation applied amounts to Euro 1,709 thousand.

The
assets under construction amounting to Euro 111 thousand relate to the development of software (Euro 42 thousand) and to advances to suppliers (Euro
69 thousand).

The
other intangible fixed assets include the contribution paid to Enel for the connection of the I.G.C.C. plant to the National power grid for a total of Euro 22,405 thousand,
and the deferred financing expenses (Euro 16,308 thousand). These amounts are shown after amortisation amounting to Euro 3,576 thousand and Euro 3,471 respectively.

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6.2   Tangible fixed assets

|                                |  | Land and
Buildings |   | Plant and
machinery |   | Indust and
Comm.
equipment |   | Other
Assets |   | Fixed assets
under costr.
Advances |   | Total   |  
|------------------------------- |  | ------------------ | - | ------------------- | - | -------------------------- | - | ------------ | - | ---------------------------------- | - | ------- | -
|Historical cost                 |  | 17,031             |   | 771,046             |   | 211                        |   | 1,516        |   | 7,111                              |   | 796,915 |  
|Revaluations                    |  |                   |   |                    |   |                           |   |             |   |                                   |   |        |  
|                                |  |                    |   |                     |   |                            |   |              |   |                                    |   |         |  
|                                |  | 17,031             |   | 771,046             |   | 211                        |   | 1,516        |   | 7,111                              |   | 796,915 |  
|Depreciation                    |  | (1,096             | ) | (59,643             | ) | (38                        | ) | (585         | ) |                                   |   | (61,361 | )
|Excess amortisation             |  |                   |   |                    |   |                           |   |             |   |                                   |   |        |  
|Write-downs                     |  |                   |   |                    |   |                           |   |             |   |                                   |   |        |  
|                                |  |                    |   |                     |   |                            |   |              |   |                                    |   |         |  
|Balance at 31.12.01             |  | 15,936             |   | 711,403             |   | 173                        |   | 931          |   | 7,111                              |   | 735,554 |  
|Movements during the year:      |  |                    |   |                     |   |                            |   |              |   |                                    |   |         |  
|Acquisitions                    |  |                   |   |                    |   |                           |   |             |   | 11,791                             |   | 11,791  |  
|Capitalization/reclassification |  | 956                |   | 9,318               |   | 49                         |   | 210          |   | (10,533                            | ) |        |  
|Disposal and divestment         |  |                   |   | (136                | ) |                           |   | (4           | ) |                                   |   | (140    | )
|Depreciation                    |  | (627               | ) | (36,034             | ) | (26                        | ) | (294         | ) |                                   |   | (36,981 | )
|Excess amortisation             |  |                   |   |                    |   |                           |   |             |   |                                   |   |        |  
|Write-downs                     |  |                   |   |                    |   |                           |   |             |   |                                   |   |        |  
|Historical cost                 |  | 17,988             |   | 780,208             |   | 260                        |   | 1,707        |   | 8,370                              |   | 808,532 |  
|Revaluations                    |  |                   |   |                    |   |                           |   |             |   |                                   |   |        |  
|                                |  |                    |   |                     |   |                            |   |              |   |                                    |   |         |  
|                                |  | 17,988             |   | 780,208             |   | 260                        |   | 1,707        |   | 8,370                              |   | 808,532 |  
|Depreciation                    |  | (1,722             | ) | (95,656             | ) | (64                        | ) | (865         | ) |                                   |   | (98,307 | )
|Excess amortisation             |  |                   |   |                    |   |                           |   |             |   |                                   |   |        |  
|Write-downs                     |  |                   |   |                    |   |                           |   |             |   |                                   |   |        |  
|                                |  |                    |   |                     |   |                            |   |              |   |                                    |   |         |  
|Balance at 31.12.02             |  | 16,266             |   | 684,552             |   | 196                        |   | 843          |   | 8,370                              |   | 710,225 |  

The tangible fixed assets include the capitalized interest expenses incurred during the construction period that remained capitalised to the
individual assets. The figure at December 31st 2002 was Euro 100,794 thousand.

All
of the buildings destined for industrial use, for Euro 13,541 thousand, include the set of buildings made up of the entrance and porter's lodge, the offices, the canteen, the
warehouse, the control room, the laboratory, the cabins and roads, parking lots and the other respective infrastructures. The item includes Euro 505 thousand relating to light constructions.

The
depreciation for Euro 1,722 thousand relates to buildings for Euro 1,561 thousand, and to light constructions for Euro 161 thousand.

The
item plant and machinery refers to the I.G.C.C. industrial gasification and cogeneration plant. The sum of Euro 780,208 thousand refers to the plants making up the electrical
power plant for Euro 717,101 thousand, the transformer substations for Euro 57.188 thousand and Euro 5,919 thousand for the auxiliary treatment and purification stations.

The
depreciation amounting to Euro 95,656 thousand was applied with exclusive reference to the economic and technical life valued in a weighted average residual time of
21 years. The increases in the year are due to the capitalisation on the electrical power plant (Euro 9,209 thousandEuro 4,586 thousand of which is for new
investments in strategic reserves), new metallurgical developments, adapting to safety regulations and other improvements and the coming on stream of a plant component called the "turbo expander"
(Euro 4,623 thousand). The "turbo expander" could not be activated on April 18th 2000, when the IGCC plant was accepted, because of design alterations which needed to be
made. This technical unit increases the electrical power production capacity by around 6 MWh.

The
item "fixed assets under construction and advances" refers to investments not yet concluded (Euro 8,230 thousand), and advances to suppliers (Euro 140 thousand).

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6.3   Financial fixed assets

The value of equity investments in other companies relates to the purchase cost at the nominal value of 100 shares, equal to 5% of the share capital, of the
company Industria Acqua Siracusana S.p.A., with registered headquarters in Syracuse, Sicily.

Current Assets (Euro 214,936 thousand)

6.4   Inventories

|                                   |  | 31.12.02 |  | 31.12.01
|---------------------------------- |  | -------- |  | --------
|Raw materials                      |  | 3,417    |  | 3,702   
|Ancillary and consumable materials |  | 11,953   |  | 10,456  
|Finished products and goods        |  | 113      |  | 250     
|Advances                           |  | 132      |  | 228     
|                                   |  |          |  |         
|TOTAL                              |  | 15,615   |  | 14,636  

Inventories
of raw materials fell due to the lower quantities of diesel in stock at the end of the year.

The
increase in the inventory value of ancillary and consumable goods can be attributed to the higher level of spare reserves, whose effect amounted to Euro 1,455 thousand.

The
inventories of products refer to the quantities of sulphur and vanadium concentrate.

The
advances refer to receivables for advances to suppliers on purchase orders for spare parts and consumable goods, which are due to be delivered in the first few months of the
following year.

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6.5   Receivables

|                                      |  | 31.12.02 |  | 31.12.01
|------------------------------------- |  | -------- |  | --------
|Trade receivables                     |  | 66,084   |  | 49,897  
|Receivables from parent companies     |  | 8,284    |  | 3,777   
|Receivables from associated companies |  | 6,686    |  | 242     
|Other receivables                     |  | 33,165   |  | 28,110  
|                                      |  |          |  |         
|TOTAL                                 |  | 114,219  |  | 82,026  

Trade
receivables

|                                                  |  | 31.12.02 |  | 31.12.01
|------------------------------------------------- |  | -------- |  | --------
|Receivables due form the sale of electrical power |  | 65,698   |  | 49,336  
|Sundry trade receivables                          |  | 386      |  | 561     
|                                                  |  |          |  |         
|TOTAL                                             |  | 66,084   |  | 49,897  

The
receivables refer mainly to the sale of electricity in the months of November and December 2002. The figure shown at the end of the year is higher than that of the previous
year due to greater electricity production in the last two months of the year.

The
receivables for the sale of electrical power were collected in the months of January and February 2003.

Receivables from parent companies

|                   |  | 31.12.02 |  | 31.12.01
|------------------ |  | -------- |  | --------
|Trade receivables: |  |          |  |         
|ERG Petroli S.p.A. |  | 8,284    |  | 2,751   
|ERG S.p.A.         |  |         |  | 1,026   
|                   |  |          |  |         
|TOTAL              |  | 8,284    |  | 3,777   

These
receivables relate only to ERG Petroli and arose mainly from the sale of minor products and valuation adjustments to feedstock supplies in 2002.

Receivables from associated companies

|                                   |  | 31.12.02 |  | 31.12.01
|---------------------------------- |  | -------- |  | --------
|Trade receivables:                 |  |          |  |         
|ERG Raffinerie Mediterranee S.r.l. |  | 2,053    |  |        
|ISAB Energy Services S,r,l,        |  | 107      |  | 242     
|                                   |  | 2,160    |  | 242     
|Financial receivables:             |  |          |  |         
|ISAB Energy Services S.r.l.        |  | 4,526    |  |        
|                                   |  |          |  |         
|TOTAL                              |  | 6,686    |  | 242     

Receivables
from ERG Raffinerie Mediterranee refer to the sale of minor products in the months of November and December 2002.

Receivables
from ISAB Energy Services relate to charges for general service.

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Other receivables

|                                         |  | 31.12.02 |  | 31.12.01
|---------------------------------------- |  | -------- |  | --------
|Receivables due from Tax Authorities     |  |         |  | 494     
|Receivables due from public bodies       |  |         |  | 2       
|Receivables from employees               |  | 11       |  | 5       
|Receivables for damage compensation      |  | 21,030   |  |        
|Receivables for insurance reimbursements |  | 2,421    |  | 16,941  
|Receivables for advance taxes            |  | 9,180    |  | 9,338   
|Sundry receivables                       |  | 134      |  | 1,289   
|Advances to suppliers                    |  | 389      |  | 42      
|                                         |  |          |  |         
|TOTAL                                    |  | 33,165   |  | 28,111  

The
sum of Euro 21,030 thousand relates to the settlement of the litigation with the Consortium signed on December 30th 2002, according to which the company
is to be compensated for the breaches of the construction contract (Turnkey Construction Contract of June 21st 1996) pertaining to the industrial IGCC plant.

The
agreement provides for the payment of the compensation in the following way: Euro 15 million by February 2003 and Euro 6 million in the following periods for
waived royalty expenses.

The
item "Receivables for insurance reimbursements", already recorded in 2001 following the damage incurred during the construction of the IGCC plant and during its operation, was
reduced by Euro 14,469 thousand following the settlement and payment of the damages; there is a sum of Euro 2,421 thousand outstanding, which should be collected during 2003.

The
tax credit for advance taxes relates for Euro 5,603 thousand to IRPEG taxation and Euro 3,577 thousand to IRAP taxation.

The
IRPEG taxation reflects the effect of lower taxation from losses carried forward to the end of ten-year exemption period (October 2003).

The
IRAP taxation refers for Euro 3,133 thousand to the payments made during the previous tax periods on the capitalised expenses up until the moment the plant became operational,
and which will be absorbed in future years in relation and proportion to the depreciation of the costs which generated it and for Euro 444 thousand to the timing differences generated in 2000,
2001 and 2002, which will arise in the coming years.

The
recording of deferred taxes was carried out in compliance with the accounting principle number 25 issued by the "Consigli nazionali dei dottori commercialisti e dei ragionieri".

The
receivables collectable beyond twelve months relate mainly to IRAP calculated on capitalised expenses and the receivable from the Consortium.

6.6   Cash and cash equivalents

|                           |  | 31.12.02 |  | 31.12.01
|-------------------------- |  | -------- |  | --------
|Bank and postal deposits:  |  |          |  |         
|ordinary current accounts |  | 42       |  | 13      
|Project Financing         |  | 85,057   |  | 58,304  
|                           |  |          |  |         
|                           |  | 85,099   |  | 58,318  
|Cash on hand               |  | 2        |  | 3       
|                           |  |          |  |         
|TOTAL                      |  | 85,101   |  | 58,321  

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The
item is generated by the existing availability at the end of the year of cash in hand and in bank accounts.

6.7   Accrued income and pre-paid expenses

Pre-paid expenses

|                                 |  | 31.12.02 |  | 31.12.01
|-------------------------------- |  | -------- |  | --------
|Premiums for sureties            |  | 178      |  | 385     
|Fees for services and other fees |  | 390      |  | 442     
|Insurance                        |  | 3,420    |  | 1,259   
|                                 |  |          |  |         
|TOTAL                            |  | 3,989    |  | 2,086   

The
premiums for sureties refer to amounts paid to the banks as securities issued for the VAT credit for the years 1998 and 1999.

The
insurance deferrals relate to premiums on policies to cover property and civil responsibility risks, which expire after the year in question.

The
other deferrals arose mainly from the payments for diagnostic activities to the turbines for Euro 214 thousand made to the parent company ERG Petroli.

The
following table shows the receivables, accrued income, and pre-paid expenses broken down by maturity:

|                                         |  | within
12 months |  | within
5 years |  | beyond
5 years |  | Total  
|---------------------------------------- |  | ---------------- |  | -------------- |  | -------------- |  | -------
|Receivables included as financial assets |  |                  |  |                |  |                |  |        
|from others                             |  |                 |  | 4              |  |               |  | 4      
|Receivables included as current assets   |  |                  |  |                |  |                |  |        
|advances to suppliers (inventories)     |  | 132              |  |               |  |               |  | 132    
|from customers                          |  | 66,084           |  |               |  |               |  | 66,084 
|from parent companies                   |  | 8,284            |  |               |  |               |  | 8,284  
|from associated companies               |  | 6,686            |  |               |  |               |  | 6,686  
|from others                             |  | 23,905           |  | 5,674          |  | 3,586          |  | 33,165 
|                                         |  |                  |  |                |  |                |  |        
|                                         |  | 105,091          |  | 5,674          |  | 3,586          |  | 114,351
|Accrued income and pre-paid expenses     |  |                  |  |                |  |                |  |        
|pre-paid expenses                       |  | 3,980            |  | 9              |  |               |  | 3,989  
|                                         |  |                  |  |                |  |                |  |        
|TOTAL                                    |  | 109,071          |  | 5,687          |  | 3,586          |  | 118,344

Liabilities and Equity

6.8   Shareholders' Equity

Share capital

The fully paid-up share capital is as follows:

|                            |  | Share of capital |  | %  
|--------------------------- |  | ---------------- |  | ---
|ERG Petroli S.p.A.Siracusa |  | 2,634,150        |  | 51 
|MEC Priolo BVOlanda        |  | 2,530,850        |  | 49 
|                            |  |                  |  |    
|TOTAL                       |  | 5,165,000        |  | 100

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Although
ERG Petroli S.p.A. possesses the majority share, these statements show both shareholders to be the parent companies, in consideration of the fact that the Shareholders
agreements define the joint control of the company by both shareholders.

Legal reserve (Euro 1,033 thousand)

The legal reserve corresponds to one fifth of the share capital.

Income (Loss) carried forward (Euro 30,926 thousand)

The item refers to the share carried forward of the income for 2001.

Changes in Shareholders' Equity

|                                                                         |  | Share
Capital |  | Share
Premium
Reserve |  | Legal
Reserve |  | Other
Reserve |   | Retained
earnings
(loss) |   | Income
(Loss)
for the year |   | Total
Shareholders
Equity |  
|------------------------------------------------------------------------ |  | ------------- |  | --------------------- |  | ------------- |  | ------------- | - | ------------------------ | - | -------------------------- | - | ------------------------- | -
|Balance at 31.12.2000                                                    |  | 5,165         |  |                      |  |              |  | 15,494        |   |                         |   | (6,960                     | ) | 13,699                    |  
|Loss for 2000 brought forward                                            |  |              |  |                      |  |              |  |              |   | (6,960                   | ) | 6,960                      |   |                          |  
|Result for 2001                                                          |  |              |  |                      |  |              |  |              |   |                         |   | 56,959                     |   | 56,959                    |  
|                                                                         |  |               |  |                       |  |               |  |               |   |                          |   |                            |   |                           |  
|Balance at 31.12.2001                                                    |  | 5,165         |  |                      |  |              |  | 15,493        |   | (6,960                   | ) | 56,959                     |   | 70,657                    |  
|Cover of losses for 1999 and 2000                                        |  |              |  |                      |  |              |  | (6,960        | ) | 6,960                    |   |                           |   |                          |  
|Appropiation of residual reserve in capital account to financial payable |  |              |  |                      |  |              |  | (8,533        | ) |                         |   |                           |   | (8,533                    | )
|Appropriation of income for 2001                                         |  |              |  |                      |  | 1,033         |  |              |   | 30,926                   |   | (31,959                    | ) |                          |  
|Distribution of income for 2002                                          |  |              |  |                      |  |              |  |              |   |                         |   | (25,000                    | ) | (25,000                   | )
|Result for 2002                                                          |  |              |  |                      |  |              |  |              |   |                         |   | 106,959                    |   | 106,959                   |  
|                                                                         |  |               |  |                       |  |               |  |               |   |                          |   |                            |   |                           |  
|Balance at 31.12.2002                                                    |  | 5,165         |  |                      |  | 1,033         |  |              |   | 30,926                   |   | 106,959                    |   | 144,083                   |  

34

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6.9   Provisions for risks and charges

|                                        |  |        |  |       |  | Changes | 
|--------------------------------------- |  | ------ |  | ----- |  | ------- | 
|
|Provision for back taxes                |  | 305    |  |      |  | 305     | 
|Provision for maintenance cycles        |  | 9,716  |  | 3,304 |  | 6,412   | 
|Provision for finished product expenses |  | 47     |  | 424   |  | 47      | 
|                                        |  |        |  |       |  |         | 
|TOTAL                                   |  | 10,067 |  | 3,727 |  | 6,764   | 

The
provision for back taxes was made in anticipation of higher tax charges for the years 1998 and 1999, after the presentation of notices of assessment and adjustment for direct taxes
and VAT.

Following
these notices the company has presented assessment petitions, which will be defined in the first few months 2003.

The
maintenance cycle provision has been adjusted with the competent share for the year of the shutdown of plants for extraordinary maintenance which, originally planned for 2002, was
re-scheduled for the first six months of 2003 following the revision of the maintenance plan to four-year cycles for each train and bi-annual for the parts in
common.

The
provision is stated net of the costs incurred to that end during the year.

The
expenses provision for finished products has been utilized within the limits of the provision set up in 2001 to cover both the costs arising from the conclusion of the sales
negotiations for the sale of off-specification vanadium concentrate and those incurred against the quantities of vanadium concentrate in stock at December 31st 2001,
sold in the first few months of 2002.

6.10 Staff leaving indemnities

|                          |  |     |  |     |  | Changes | 
|------------------------- |  | --- |  | --- |  | ------- | 
|
|Staff leaving indemnities |  | 161 |  | 144 |  | 34      | 

This
fund fully covers the leaving indemnities of all the employees up to December 31st 2002, in compliance with current legal and contractual requirements.

The
decrease is largely due to the resignation of some employees.

6.11 Payables

|                                    |  | 31.12.02 |  | 31.12.01
|----------------------------------- |  | -------- |  | --------
|Bank borrowings                     |  | 700,142  |  | 783,234 
|Trade payables                      |  | 24,429   |  | 30,629  
|Payables to parent companies        |  | 78,767   |  | 57,693  
|Payables to associated companies    |  | 24,400   |  | 6,779   
|Due to tax authorities              |  | 2,497    |  | 3,720   
|Due to social security institutions |  | 83       |  | 65      
|Other payables                      |  | 317      |  | 362     
|                                    |  |          |  |         
|TOTAL                               |  | 830,635  |  | 882,482 

35

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Bank borrowings

|                                       |  | 31.12.02 |  | 31.12.01
|-------------------------------------- |  | -------- |  | --------
|Loans and financing:                   |  |          |  |         
|Project financing San Paolo IMI S.p.A. |  | 700,142  |  | 783,234 
|                                       |  |          |  |         
|TOTAL                                  |  | 700,142  |  | 783,234 

The
bank borrowings related to the Project financing operation, which was accompanied by special liens and a mortgage on the land, as previously mentioned in the introduction to this
document.

The
financing agreed with the company via the "Project Credit Facility Agreement" contract, dated April 5th 1996, was re-negotiated on
September 15th 2000 with a "Refinancing" operation whose main outcome was the extension of the expiry terms to December 15th 2014.

At
the date of this report, several of the conditions (insurance cover and projected financial and economic ratios), which were laid out in the Project Financing contract, have not been
fulfilled; for this reason the financing banks, exercising their contractual right, did not authorise either the payments of the subordinate debts to the shareholders and their subsidiaries or the
payment of the 2001 profits as decreed.

The
financing is of the "non recourse" type, is to be repaid in 29 instalments (the first on December 15th 2000), at variable rates linked to the Euribor at six
months on tranche "B" and to the EIB at three months BEI on tranche "C".

At
December 31st 2002, given the current debt, hedging operations on the interest rate (Interest Rate Swap) were in existence, for notional values equal to Euro
567 million, fixing the effective interest rate at 4.925%.

During
2002, the debt was reduced through 4 payments for Euro 48,389 thousand on tranche "B" and Euro 34,473 thousand on tranche "C".

The
residual capital of the various tranches is displayed below and includes the interest payable accrued at December 31st 2002:

|                              |  | 31.12.02 |  | 31.12.01
|----------------------------- |  | -------- |  | --------
|Tranche "B"                   |  | 384,264  |  | 432,653 
|Tranche "C"                   |  | 314,522  |  | 348,996 
|Interest payable on financing |  | 1,356    |  | 1,586   
|                              |  |          |  |         
|TOTAL                         |  | 700,142  |  | 783,234 

According
to year-end commitments, to the changes being defined with the financing banks regarding the structure of the debt, to the subsequent expected
re-formation of the depreciation plan and to the advance reimbursement contractually provided for regarding a share of the compensation to be paid by the construction consortium as part of
the litigation settlement, the expiry dates for repayment per year are estimated thus:

|2003        |  | 97,598 
|----------- |  | -------
|2004        |  | 75,211 
|2005        |  | 78,630 
|2006        |  | 88,886 
|2007        |  | 91,450 
|beyond 2008 |  | 268,367
|            |  |        
|TOTAL       |  | 700,142

36

---

Payables due to suppliers

|                      |  | 31.12.02 |  | 31.12.01
|--------------------- |  | -------- |  | --------
|Italian suppliers     |  | 19,976   |  | 28,417  
|E.U. suppliers        |  | 1,001    |  | 1,087   
|Suppliers outside E.U |  | 3,451    |  | 1,125   
|                      |  |          |  |         
|TOTAL                 |  | 24,429   |  | 30,630  

The
payables due to suppliers were lower than in 2001 because of the fewer services and supplies received at the end of the year.

Payables due to parent companies

|                            |  | 31.12.02 |  | 31.12.01
|--------------------------- |  | -------- |  | --------
|Trade payables:             |  |          |  |         
|ERG S.p.A.                  |  | 87       |  | 2       
|ERG Petroli S.p.A.          |  | 74       |  | 12,151  
|                            |  | 161      |  | 12,153  
|Financial payables:         |  |          |  |         
|ERG Petroli S.p.A.          |  | 37,851   |  | 26,978  
|Edison Mission Energy (USA) |  | 19,744   |  | 18,562  
|MEC Priolo B.V. (Olanda)    |  | 16,623   |  |        
|                            |  | 74,218   |  | 45,540  
|Other payables:             |  |          |  |         
|ERG S.p.A.                  |  | 4,389    |  |        
|                            |  | 4,389    |  |        
|                            |  |          |  |         
|TOTAL                       |  | 78,767   |  | 57,693  

The
trade payables due to ERG S.p.A. relate to services received, while the other payables relate to the payment of VAT for the month of December 2002, transferred to the Group's
centralised account.

The
financial payables due to ERG Petroli S.p.A. refer to the subordinated loan (sub-debt) and the Project financing loan amounting to Euro 23,281 thousand, as well as
the interest accrued for Euro 1,820 thousand and the income for 2001 determined at Euro 12,750 thousand, suspended and awaiting payment after the approval from the financing banks.

The
repayment plan and the conditions of the disbursement of the subordinated loan provide for 34 semi-annual instalments of the same amount, starting from the moment in
which the settlement of the litigation with the Consortium was effective. There was an increase of Euro 4,352 thousand on this debt during 2002, arising from the partial use of the capital
account reserve to be reimbursed to the Shareholders.

Comparisons
with the previous year highlight the transfer of the financing arising from the "Loan agreement" of April 5th 1996 (Euro 7,207 thousand) to the
company ERG Raffinerie Mediterranee.

The
financial payables due to Edison Mission Energy represent the subordinate loan (sub-debt) and the Project financing loan, which was raised in the interest of the parent
company MEC Priolo B.V. for Euro 18,186 thousand. The figure shown in the balance sheet includes accrued interest for Euro 1,558 thousand.

The
conditions of collectability and repayment are the same as those of the same debt due to ERG Petroli.

37

---

The
financing for Euro 4,181 thousand from MEC Priolo B.V. also consists of the subordinate loan and Project financing loan. It is recorded following the destination of the
capital account reserve and is shown in the balance sheet inclusive of the accrued interest payable for Euro 191 thousand.

With
regard to the conditions of collectability and repayment, the same clauses of the same above-mentioned debts are valid.

The
amount includes for Euro 12,250 thousand the income from 2001, awaiting payment after approval from the financing banks.

Payables due to associate companies

|                                   |  | 31.12.02 |  | 31.12.01
|---------------------------------- |  | -------- |  | --------
|Trade payables:                    |  |          |  |         
|ERG Raffinerie Mediterranee S.r.l. |  | 6,308    |  |        
|ISAB Energy Services S.r.l.        |  | 10,780   |  | 6,628   
|Mission Energy Italia S.r.l.       |  | 20       |  | 106     
|Edison Mission Energy Ltd. (UK)    |  | 85       |  | 45      
|                                   |  | 17,193   |  | 6,779   
|Financial payables:                |  |          |  |         
|ERG Raffinerie Mediterranee S.r.l. |  | 7,207    |  |        
|                                   |  |          |  |         
|TOTAL                              |  | 24,400   |  | 6,779   

The
payables due to ERG Raffinerie Mediterranee relate to business relations for supplies for December and services carried out in the final quarter, for a value of Euro
6,308 thousand, and the financing subordinate to the "Loan agreement" contract of April 5th 1996 for Euro 7,207 thousand. This debt, without accrued interest, is
repaid at six-monthly rates of the same amount and expires on April 1st 2010.

As
far as ISAB Energy Services S.r.l. is concerned, the figure shown relates to services received on the basis of the previously mentioned "Operation & Maintenance" contract.

Trade
payables due to the companies Mission Energy Italia S.r.l. and Edison Mission Energy Limited consist of consultancy expenses, services and emoluments for directors' social
appointments.

Due to tax authorities

|                                      |  | 31.12.02 |  | 31.12.01
|------------------------------------- |  | -------- |  | --------
|Income tax for the year               |  | 2,300    |  | 3,570   
|Due to tax authorities for deductions |  | 73       |  | 60      
|Other tax payables                    |  | 123      |  | 91      
|                                      |  |          |  |         
|TOTAL                                 |  | 2,497    |  | 3,720   

The
item is due for Euro 2,300 thousand to IRAP taxation for the year, net of the advances paid during the year as well as the deductions from the income of employees and independent
workers and the taxes on emissions and waste disposal.

During
the year, the company was still exempt from IRPEG taxation, an exemption which will expire in October 2003.

38

---

Due to Social Security Institutions (Euro 83 thousand)

This item (Euro 65 thousand at December 31st 2001) includes Euro 49 thousand due to the various institutions for social
security and national insurance contributions relating to salaries and wages for the months of December 2002 and the allocation of Euro 34 thousand for contributions due from the pay
accrued by employees on holidays and paid days off not taken, productivity premiums and overtime not yet paid.

Other payables

|                          |  | 31.12.02 |  | 31.12.01
|------------------------- |  | -------- |  | --------
|Payables due to employees |  | 202      |  | 140     
|Other sundry payables     |  | 115      |  | 221     
|                          |  |          |  |         
|TOTAL                     |  | 317      |  | 362     

"Payables due to employees" refers to sums not yet paid and includes holidays and paid days off not yet taken, overtime and productivity
premiums.

The
item "other sundry payables" relates to expenses for 2001 paid to the Antitrust Authority for electricity and gas.

6.12 Accrued expenses and deferred income

|                                             |  | 31.12.02 |  | 31.12.01
|-------------------------------------------- |  | -------- |  | --------
|Accrued expenses:                            |  |          |  |         
|Additional salary expenses and contributions |  | 33       |  | 29      
|Expenses from swap operations (IRS)          |  | 510      |  | 446     
|                                             |  |          |  |         
|                                             |  | 543      |  | 476     
|Rents payable                                |  |         |  | 4       
|                                             |  |          |  |         
|TOTAL                                        |  | 543      |  | 479     

The
accrued expenses include the expense of Euro 510 thousand of the hedging operation on the interest rates (IRS) of the financial debt obtained via Project financing.

Payables
and Accrued expenses are broken down by maturity as follows:

|                                     |  | within
12 months |  | within
5 years |  | beyond
5 years |  | Total  
|------------------------------------ |  | ---------------- |  | -------------- |  | -------------- |  | -------
|Payables                             |  |                  |  |                |  |                |  |        
|bank borrowings                     |  | 97,598           |  | 334,177        |  | 268,367        |  | 700,142
|due to suppliers                    |  | 24,429           |  |               |  |               |  | 24,429 
|due to parent companies             |  | 29,550           |  | 15,653         |  | 33,565         |  | 78,767 
|due to associated companies         |  | 18,544           |  | 3,603          |  | 2,252          |  | 24,400 
|due to tax authorities              |  | 2,497            |  |               |  |               |  | 2,497  
|due to social security institutions |  | 83               |  |               |  |               |  | 83     
|other payables                      |  | 317              |  |               |  |               |  | 317    
|Accrued expenses and deferred income |  |                  |  |                |  |                |  |        
|accrued expenses                    |  | 543              |  |               |  |               |  | 543    
|deferred income                     |  |                 |  |               |  |               |  |       
|                                     |  |                  |  |                |  |                |  |        
|TOTAL                                |  | 173,561          |  | 353,433        |  | 304,184        |  | 831,178

6.13 Memorandum accounts (Euro 3,651 thousand)

Memorandum accounts are open on the raw materials deposited at the ISAB refinery belonging to ERG Raffinerie Mediterranee S.r.l. for Euro 3,631 thousand,
and to company goods on consignment to third parties for Euro 20 thousand, as they were goods in transit at December 31st 2002.

Reference
is made to previous descriptions regarding the Project Financing restrictions, to which the financial flows produced by the company are subject, and to the commitments accepted
via the Interest Rate Swap operation, which was activated in order to cover the interest rates on the Project Financing debt.

39

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7.     Notes to the Income Statement

7.1   Production Value (Euro 444,419 thousand)

Revenues from sales and services

|                                            |  | 2002    |  | 2001    |  | 2000   
|------------------------------------------- |  | ------- |  | ------- |  | -------
|Sales and services to customers:            |  |         |  |         |  |        
|Electricity                                |  | 409,329 |  | 366,760 |  | 221,380
|Other services and sales                   |  | 2,437   |  | 1,975   |  | 1,292  
|                                            |  |         |  |         |  |        
|                                            |  | 411,765 |  | 368,736 |  | 222,672
|Sales and services to parent companies:     |  |         |  |         |  |        
|Heat                                       |  | 4,886   |  | 5,943   |  | 4,214  
|Steam                                      |  | 1,066   |  | 1,364   |  |       
|Fluxing product (oil)                      |  | 176     |  | 228     |  | 1,521  
|Other services and sales                   |  | 909     |  | 937     |  | 1,009  
|                                            |  |         |  |         |  |        
|                                            |  | 7,038   |  | 8,471   |  | 6,745  
|Sales and services to associated companies: |  |         |  |         |  |        
|Heat                                       |  | 1,966   |  |        |  |       
|Steam                                      |  | 302     |  |        |  |       
|Other services and sales                   |  | 248     |  |        |  |       
|                                            |  |         |  |         |  |        
|                                            |  | 2,516   |  |        |  |       
|                                            |  |         |  |         |  |        
|TOTAL                                       |  | 421,319 |  | 377,207 |  | 229,416

Sales
revenues are mainly made up of sales of electrical power at the incentive price of CIP/6, inclusive of the adjustment to the sales tariff for 2002, estimated to be minus Euro
21,293 thousand. Net production sold amounted to 4,197 thousand MWh (3,621 thousand in 2001).

Sales
and services include revenues for the supply of steam, air, water and various supplies of minor products.

The
revenues from parent companies relate to ERG Petroli for just the first nine months of the year and those from associated company ERG Raffinerie Mediterranee for the last three
months of the year.

Changes in the inventories of products in progress, semi-finished products and finished products (Euro 137 thousand)

The changes relate to the lower value of sulphur inventories (Euro 72 thousand) and vanadium concentrate (Euro 65 thousand).

Fixed asset increases for internal work

|                                       |  | 2002 |  | 2001 |  | 2000  
|-------------------------------------- |  | ---- |  | ---- |  | ------
|Interest payable and financial charges |  |     |  |     |  | 12,173
|Work by employees                      |  |     |  |     |  | 333   
|Material taken from the warehouse      |  | 824  |  | 37   |  |      
|                                       |  |      |  |      |  |       
|TOTAL                                  |  | 824  |  | 37   |  | 12,506

This
item refers to the value of the spare parts taken from the warehouse and used to increase capitalised investments.

40

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Other income and revenues

|                                           |  | 2002   |  | 2001   |  | 2000  
|------------------------------------------ |  | ------ |  | ------ |  | ------
|Sales and services to customers:           |  |        |  |        |  |       
|Electricity                               |  |       |  |       |  | 63,180
|Other services and sales                  |  |       |  |       |  | 234   
|                                           |  |        |  |        |  |       
|                                           |  |       |  |       |  | 63,414
|Sales and services to parent companies:    |  |        |  |        |  |       
|Heat                                      |  |       |  |       |  | 873   
|Fluxing product (oil)                     |  |       |  |       |  | 632   
|Other services and sales                  |  |       |  |       |  | 293   
|                                           |  |        |  |        |  |       
|                                           |  |       |  |       |  | 1,798 
|Other revenue and income                   |  |        |  |        |  |       
|Insurance reimbursements                  |  | 5      |  | 17,070 |  |      
|Penalties and compensation from suppliers |  | 21,091 |  | 233    |  | 4     
|Ordinary surpluses                        |  | 988    |  | 1,268  |  |      
|Sundry revenue and income                 |  | 328    |  | 300    |  | 158   
|                                           |  |        |  |        |  |       
|                                           |  | 22,413 |  | 18,872 |  | 162   
|                                           |  |        |  |        |  |       
|TOTAL                                      |  | 22,413 |  | 18,872 |  | 65,374

The
compensation arising from the settling of the dispute with the Consortium was recorded amongst "Other revenue and income" as it is linked to the late delivery of the IGCC plant.

For
the sake of clarity it should be noted that the sales figures for 2000 refer to the trial period of the plant, completed on April 18th 2000, and after that date
the values generated by production are entirely allocated in the item a 1) of the Income Statement.

7.2   Production expenses (Euro 282,474 thousand)

Raw, ancillary, and consumable materials and goods

|                               |  | 2002    |  | 2001    |  | 2000   
|------------------------------ |  | ------- |  | ------- |  | -------
|Raw materials and goods        |  | 155,552 |  | 160,297 |  | 179,818
|Materials and spare parts      |  | 9,422   |  | 8,909   |  | 7,363  
|Sundry materials and purchases |  | 99      |  | 61      |  | 81     
|                               |  |         |  |         |  |        
|TOTAL                          |  | 165,073 |  | 169,267 |  | 187,262

The
purchases relate to the supplies of oxygen and nitrogen for Euro 48,943 thousand, electrical power for Euro 11,388 thousand, methane gas for Euro 5,229 thousand
and raw materials supplied by the parent company ERG Petroli and the associated company ERG Raffinerie Mediterranee for Euro 67,700 thousand and Euro 22,293 thousand, respectively.

The
relations with other group companies consisted of: the supply of diesel (Euro 10,451 thousand), feedstock (Euro 65,204 thousand), fuel oil (Euro 5,006 thousand)
and LCO, Virgin naphtha and LPG (Euro 9,332 thousand).

41

---

Service costs

|                                               |  | 2002   |  | 2001   |  | 2000  
|---------------------------------------------- |  | ------ |  | ------ |  | ------
|Commercial services and transportation         |  | 6,459  |  | 5,306  |  | 3,108 
|Maintenance and operational assistance         |  | 11,970 |  | 18,096 |  | 10,876
|Technical, legal and other advice and services |  | 4,208  |  | 7,878  |  | 17,004
|Insurance                                      |  | 9,730  |  | 3,527  |  | 1,247 
|Personnel Costs                                |  | 192    |  | 216    |  | 159   
|Services from parent companies                 |  | 4,767  |  | 3,975  |  | 2,528 
|Services from associated companies             |  | 18,858 |  | 20,063 |  | 14,105
|Other services                                 |  | 1,939  |  | 289    |  | 253   
|                                               |  |        |  |        |  |       
|TOTAL                                          |  | 58,123 |  | 59,349 |  | 49,281

Service
costs on a whole dropped by Euro 1,226 thousand, compared to the previous year. More specifically, the industrial services for the year and the running and maintenance of
the plants decreased by Euro 6,083 thousand, commercial services increased by Euro 1,165 thousand and administrative and general services increased by Euro 3,692 thousand.

Of
particular relevance were the increases of insurance policy premiums to cover the risks of damage on the IGCC plant, which recorded an increase of more than 275%.

The
services supplied by the parent company ERG Petroli relate to the provision of steam (Euro 2,923 thousand), fire-fighting/prevention services (Euro
797 thousand), several general services, I.T. services, first aid and medical services and public relations (Euro 806 thousand).

The
amount paid to ERG S.p.A. (Euro 240 thousand) relates to service contracts regarding staff activities, public relations and the emoluments of directors directly employed by
the parent company.

Services
received from the associated companies Mission Energy Italia S.r.l. and Edison Mission Energy Ltd. amounted to Euro 336 thousand and relate to the
off-site personnel, the emoluments of the directors employed by the companies and financial and insurance consultancy services.

The
services rendered by ISAB Energy Services S.r.l. (Euro 17,823 thousand) relate exclusively to the activities of running and maintaining the IGCC complex.

The
services received from the associated company ERG Raffinerie Mediterranee relate to the provision of steam (Euro 438 thousand), to fire-fighting/prevention
services (Euro 266 thousand) and to other general and commercial services (Euro 42 thousand).

According
to the provisions of article 2427 no. 16 of the Italian Civil Code, the fees paid to the Directors and Auditors are set out below:

|Directors          |  | 106
|------------------ |  | ---
|Statutory Auditors |  | 35 

Leases and rentals

|                        |  | 2002  |  | 2001 |  | 2000 
|----------------------- |  | ----- |  | ---- |  | -----
|Rents paid              |  | 247   |  | 205  |  | 366  
|Long-term hires/leasing |  | 245   |  | 179  |  | 214  
|Royalties               |  | 1,472 |  | 604  |  | 717  
|                        |  |       |  |      |  |      
|TOTAL                   |  | 1,964 |  | 989  |  | 1,296

42

---

The
item "rents paid" consists of rents paid to the parent company ERG Petroli and to the associated company ERG Raffinerie Mediterranee for the storage of raw materials (Euro
157 thousand and Euro 53 thousand, respectively), to the leasing of service cars (Euro 41 thousand), to office equipment (Euro 41 thousand), to the leasing of computers and
instruments (Euro 79 thousand), and various rents (Euro 121 thousand).

The
royalties mainly relate to the use of the "Texaco" technological license for the industrial and gasification processes (Euro 1,409 thousand).

Personnel expenses

|                          |  | 2002  |  | 2001  |  | 2000 
|------------------------- |  | ----- |  | ----- |  | -----
|Wages and salaries        |  | 952   |  | 906   |  | 995  
|Social security expenses  |  | 281   |  | 242   |  | 283  
|Staff leaving indemnities |  | 65    |  | 55    |  | 69   
|Other expenses            |  | 19    |  | 1     |  |     
|                          |  |       |  |       |  |      
|TOTAL                     |  | 1,316 |  | 1,204 |  | 1,347

The
company avails itself of services rendered by the company ISAB Energy Services for the running of the industrial complex. Personnel expenses therefore refer only to white-collar
staff and not operational personnel.

The
table shows the breakdown of company personnel by category (average number during the year):

|           |  | 2002 |  | 2001 |  | 2000
|---------- |  | ---- |  | ---- |  | ----
|Managers   |  | 4    |  | 4    |  | 4   
|Executives |  | 4    |  | 5    |  | 7   
|Employees  |  | 11   |  | 12   |  | 11  
|           |  |      |  |      |  |     
|TOTAL      |  | 19   |  | 21   |  | 23  

At
December 31st 2002 the total number of employees was 19 (22 at December 31st 2001).

Amortisation, depreciation and write-downs

|                                        |  | 2002   |  | 2001   |  | 2000  
|--------------------------------------- |  | ------ |  | ------ |  | ------
|Amortisation of intangible fixed assets |  | 8,795  |  | 9,011  |  | 6,629 
|Depreciation of tangible fixed assets   |  | 36,981 |  | 36,247 |  | 25,001
|Write-downs of intangible fixed assets  |  |       |  |       |  | 102   
|                                        |  |        |  |        |  |       
|TOTAL                                   |  | 45,776 |  | 45,258 |  | 31,733

The
value of the amortisation of intangible assets fell due to the completion of the three-year cycle of several software programmes.

The
slight increase in the depreciation of fixed assets is due to new assets becoming operational during the year.

Amortisation
and depreciation was calculated with exclusive reference to the economic and technical values and excess amortisation and depreciation was therefore not applied.

43

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Changes in the inventories of raw, ancillary and consumable materials and goods (Euro 1,212 thousand).

The inventories of raw materials saw a negative change of around Euro 285 thousand almost totally due to the fall of 1,151 tonnes of diesel.

The
change in ancillary and consumable materials was Euro 1,497 thousand, largely due to the effect from the higher levels of spare parts.

Other provisions (Euro 6,459 thousand)

This item mainly consists (Euro 6,412 thousand) of the maintenance costs for the cyclical shutdown of the plant.

Other operating expenses

|                                   |  | 2002  |  | 2001  |  | 2000 
|---------------------------------- |  | ----- |  | ----- |  | -----
|Duties and taxes for the year      |  | 3,510 |  | 3,439 |  | 4,470
|Entertainment and public relations |  | 159   |  | 181   |  | 96   
|Ordinary losses                    |  | 1,166 |  | 886   |  |     
|Losses on disposals of assets      |  | 139   |  |      |  |     
|Other expenses                     |  |      |  |      |  | 97   
|                                   |  |       |  |       |  |      
|TOTAL                              |  | 4,975 |  | 4,506 |  | 4,663

The
duties and taxes mainly refer to I.C.I. paid to the council of Priolo Gargallo (Euro 3,242 thousand), the tax on waste (Euro 122 thousand) and the tax on emissions
(Euro 76 thousand).

The
ordinary losses refer to expenses and revenues pertaining to previous years.

The
losses on disposals of assets relate to the ordinary disposal of the productive process of a plant asset replaced during the year and to several personal computers.

7.3   Financial income and expenses (Euro 47,232 thousand)

Other financial income

|                                               |  | 2002  |  | 2001  |  | 2000
|---------------------------------------------- |  | ----- |  | ----- |  | ----
|Bank interest receivables                      |  | 2,300 |  | 2,525 |  | 793 
|Interest receivables from parent companies     |  | 52    |  | 237   |  | 29  
|Interest receivables from associated companies |  | 26    |  |      |  |    
|Sundry financial income                        |  | 188   |  | 312   |  | 76  
|                                               |  |       |  |       |  |     
|TOTAL                                          |  | 2,566 |  | 3,074 |  | 897 

The
bank interest receivables arise mainly from the current cash account balances. The interest receivables from parent companies relate to trade relations with ERG Petroli and those
from associated companies represent the current share of the loan receivable from ISAB Energy Services.

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Interest and other financial expenses

|                                                |  | 2002   |  | 2001   |  | 2000  
|----------------------------------------------- |  | ------ |  | ------ |  | ------
|Interest payable on financing                   |  | 30,971 |  | 43,943 |  | 42,923
|Financial expenses payable on financing         |  | 5,780  |  | 5,989  |  | 5,564 
|Payables due to swap differentials              |  | 9,461  |  | 2,230  |  |      
|Interest payable to ERG Petroli S.p.A.          |  | 1,431  |  | 1,768  |  | 660   
|Interest payable to MEC Priolo (Holland)        |  | 191    |  |       |  |      
|Interest payable to Edison Mission Energy (USA) |  | 1,182  |  | 1,687  |  | 634   
|Interest payable to ISAB Energy Services        |  | 115    |  | 45     |  |      
|Payable due to exchange rate differences        |  | 60     |  | 178    |  | 179   
|Sundry interest payable and financial expenses  |  | 607    |  | 59     |  | 43    
|                                                |  |        |  |        |  |       
|TOTAL                                           |  | 49,797 |  | 55,900 |  | 50,003

The
Project financing expenses for the year were Euro 5,951 thousand lower than in the previous year, because of the combined effect of lower interest rates and a reduced level of
overall debt, partially compensated by the higher negative differentials paid on the "Interest Rate Swap."

The
interest payable to ERG Petroli and MEC Priolo and Edison Mission Energy relate to those accrued on subordinated loans and Project financing.

The
other financial expenses relate to the adjustment of interest receivables for previous years (Euro 550 thousand) and bank commissions.

7.4   Extraordinary items (Euro 391 thousand)

|                                   |  | 2002 |   | 2001 |   | 2000 
|---------------------------------- |  | ---- | - | ---- | - | -----
|Extraordinary income               |  |      |   |      |   |      
|Gains on disposal of assets        |  |      |   | 34   |   |     
|Extraordinary gains                |  |     |   |     |   | 59   
|Other extraordinary income         |  |     |   |     |   | 2,346
|                                   |  |     |   | 34   |   | 2,404
|Extraordinary expenses             |  |      |   |      |   |      
|Taxes pertaining to previous years |  | 391  |   |     |   |     
|Losses on disposal of assets       |  |     |   | 195  |   | 1    
|Extraordinary losses               |  |     |   |     |   | 378  
|                                   |  | 391  |   | 195  |   | 379  
|                                   |  |      |   |      |   |      
|TOTAL                              |  | (391 | ) | (161 | ) | 2,025

Euro
391 thousand has been allocated to cover the estimate of the tax charges which the company should have to pay for the assessment by the revenue authorities for the tax
periods 1998 and 1999.

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7.5   Income tax

|                           |  | 2002  |  | 2001  |  | 2000   |  
|-------------------------- |  | ----- |  | ----- |  | ------ | -
|Current IRAP               |  | 7,290 |  | 5,066 |  | 1,601  |  
|Advance and deferred taxes |  | 72    |  | 86    |  | (4,037 | )
|                           |  |       |  |       |  |        |  
|TOTAL                      |  | 7,362 |  | 5,152 |  | (2,437 | )

The
provision for income taxes for the year was calculated taking into account the estimated IRAP taxable income determined in the light of current tax regulations.

As
far as IRPEG is concerned, the company is covered by a ten-year exemption, which expires in 2003.

Movements
in deferred taxes mainly refer to the recovery of IRAP paid in advance on the capitalisation of financial expenses.

Reconciliation between financial statements and theoretical tax charges

IRPEG

|Profit before taxes                                   |  | 114,321  |   |        |  
|----------------------------------------------------- |  | -------- | - | ------ | -
|Theoretical IRPEG taxation (36%)                      |  |          |   | 41,156 |  
|Taxable timing differencessubsequent years           |  |         |   |        |  
|Deductible timing differencessubsquent years         |  |         |   |        |  
|Transfer of timing differences from previous years    |  |         |   |        |  
|Differences which will not arise in subsequent years: |  |          |   |        |  
|Changesincreases                                     |  | 11,817   |   |        |  
|Changesdecreases                                     |  | (126,139 | ) |        |  
|                                                      |  |          |   |        |  
|IRPEG taxable income                                  |  | (0       | ) |        |  
|Balance sheet IRPEG (exempt)                          |  |          |   | (0     | )

IRAP

|Difference between production value and costs                  |  | 161,945 |   |      
|-------------------------------------------------------------- |  | ------- | - | -----
|Costs and revenues not relevant for IRAP tax purposes          |  | 1,316   |   |      
|Reclassified costs and revenues relevant for IRAP tax purposes |  | (391    | ) |      
|                                                               |  |         |   |      
|IRAP theoretical taxable base                                  |  | 162,870 |   |      
|Theoretical IRAP taxation (4.25%)                              |  |         |   | 6,922
|Deductibile timing differencessubsequent years                |  | 4,319   |   |      
|Transfer of timing differences from previous years             |  | (6,575  | ) |      
|Differences which will not arise in subsequent years:          |  |         |   |      
|Changesincreases                                              |  | 8,797   |   |      
|Changesdecreases                                              |  | (134    | ) |      
|                                                               |  |         |   |      
|IRAP taxable income                                            |  | 169,277 |   |      
|Balance sheet IRAP (4.25%)                                     |  |         |   | 7,194

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8.     Cash Flow statements

|(Thousands of euro)                                   |                              | 2002    |         | 2001    |         | 2000    |        
|----------------------------------------------------- | ---------------------------- | ------- | ------- | ------- | ------- | ------- | -------
|CASH FLOWS FROM OPERATING ACTIVITIES (A)              |                              |         |         |         |         |         |        
|Net profit (loss) for the period                      |                              | 106,959 |         | 56,959  |         | (11,517 | )      
|Amortization                                          |                              | 45,776  |         | 45,258  |         | 31,733  |        
|Losses / (gains) on asset disposals                   |                              | 139     |         | 161     |         | 1       |        
|Changes in assets and liabilities:                    |                              |         |         |         |         |         |        
|                                                      | Inventories                  |         | (980    | )       | (1,625  | )       | (3,303 
|                                                      | Trading account receivables  |         | (23,639 | )       | 59,972  |         | (91,201
|                                                      | Other short term assets      |         | (5,932  | )       | (20,399 | )       | (793   
|                                                      | Trading account payables     |         | (7,779  | )       | (11,991 | )       | 37,645 
|                                                      | Accruals and provisions      |         | 6,358   |         | 1,971   |         | 1,842  
|                                                      | Other short term liabilities |         | 3,203   |         | 2,381   |         | (497   
|                                                      |                              |         |         |         |         |         |        
|Net cash provided (used in) operating activities      |                              | 124,107 |         | 132,687 |         | (36,091 | )      
|CASH FLOWS FROM INVESTING ACTIVITIES (B)              |                              |         |         |         |         |         |        
|Investments in fixed assets                           |                              | (268    | )       | (483    | )       | (20,470 | )      
|Investments in intangible assets                      |                              | (11,791 | )       | (15,758 | )       | (3,211  | )      
|Investment in financial assets                        |                              |        |         |        |         | (285    | )      
|Disposals of fixed assets                             |                              |        |         | 1,065   |         | 1,320   |        
|Disposals of financial assets                         |                              |        |         | 285     |         |        |        
|                                                      |                              |         |         |         |         |         |        
|Net cash used in investing activities                 |                              | (12,059 | )       | (14,891 | )       | (22,646 | )      
|CASH FLOWS FROM FINANCING ACTIVITIES (C)              |                              |         |         |         |         |         |        
|Increase (decrease) in mid-long term debt             |                              | (60,040 | )       | (98,458 | )       | 4,414   |        
|Increase (decrease) in short term debt                |                              | 8,306   |         | 16,549  |         | 47,130  |        
|Capital contribution                                  |                              |        |         |        |         | 24,302  |        
|Dividends                                             |                              | (33,534 | )       |        |         |        |        
|                                                      |                              |         |         |         |         |         |        
|Net cash provided from (used in) financing activities |                              | (85,267 | )       | (81,909 | )       | 75,846  |        
|                                                      |                              |         |         |         |         |         |        
|INCREASE / (DECREASE) IN CASH (A+B+C)                 |                              | 26,781  |         | 35,887  |         | 17,110  |        
|CASH, BEGINNING OF YEAR                               |                              | 58,321  |         | 22,434  |         | 5,325   |        
|INCREASE IN CASH (A+B+C)                              |                              | 26,781  |         | 35,887  |         | 17,110  |        
|                                                      |                              |         |         |         |         |         |        
|CASH, END OF YEAR                                     |                              | 85,101  |         | 58,321  |         | 22,434  |        

9.     Reconciliation to Generally Accepted Accounting Principles in the United States

(Amounts in Thousands of Euro, unless otherwise indicated)

The Company's accounting policies for financial reporting in accordance with Italian GAAP differ in certain respects from accounting principles generally accepted
in the United States ("US GAAP"). Significant differences, which have an effect on Net Income / (Loss) and Shareholders' Equity, are described below:

(a)   Levelisation
of incentive componentThe selling tariffs of electricity are established annually by the Italian Authority for Energy and include, for the
first eight years of operations, an incentive premium referred to as CIP/6. The CIP/6 premium is available to the Company due to an Italian Law applicable to companies that generate electricity
through renewable sources. The incentive is currently being received by the Company as part of its annual billing to GTRN; for purposes of Italian GAAP revenue recognition, the amount of the premium
is billed annually and recognized in the Profit and Loss Statement.

Under
US GAAP, EITF 91-6, Revenue Recognition of Long-Term Power Sales Contracts ("EITF 91-6"), provides the framework for revenue recognition on
these types of arrangements. Within EITF

47

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91-6,
the Company's contract falls under the "type 1" contract, that is, a contract where the utility is obligated to take or pay for all power made available by the independent power
producer for the term of the contract. The price per KwH is specified and could either increase or decrease during the contract term. EITF 91-6 states that revenue recognition for these
types of contracts should be at the lower of i) amounts billable under the contract and ii) an amount equal to the KwH made available during the period multiplied by the estimated
average revenue per KwH over the term of the contract. The determination of the lesser amount should be made annually based on the cumulative amounts that would have been recognized had each method
been applied consistently since the commencement of the contract.

Therefore,
for US GAAP purposes, such incentive should be recognized in income over the life of the fifteen-year power sales contract. Therefore, a portion of the CIP/6
incentive billed in each of the first eight years of the plant operation is being deferred to the following years.

(b)   Capitalization
of refinancing costsIn 2000, the project-financing contract was re-negotiated in order to extend its length; according to Italian
GAAP, the cost of this re-negotiation was charged to the 2000 statement of operations.

The
accounting under US GAAP for this situation is highlighted in EITF 96-19, Debtor's Accounting for a Modification or Exchange of Debt Instruments ("EITF
96-19"). According to EITF 96-19, an exchange of debt is considered significant if, from the debtor's perspective, an exchange of debt instruments between or a modification of
a debt instrument by a debtor and a creditor in a non troubled debt situation is deemed to have been accomplished with debt instruments that are substantially different if the present value of the
cash flows under the terms of the new debt instrument is at least 10 percent different from the present value of the remaining cash flows under the terms of the original instrument. The
restructuring of the debt arrangement, and the resultant net present value of the cash flows was not more than the 10% required by EITF 96-19, therefore, the exchange was not considered
substantially different. Such costs have been capitalized and amortized over the life of the project-financing contract.

(c)   Reversal
of cyclical maintenance fundThe plant consists of two separate lines which need to be shut down every four years for cyclical maintenance.
According to Italian GAAP, the budgeted costs for the cyclical maintenance are distributed over the scheduled cycle period through the accrual of a cyclical maintenance provision. Actual costs are
charged against the reserve as incurred. According to US GAAP, all maintenance costs are entirely charged to the statement of operations when incurred or, to the extent necessary, capitalized.

(d)   DerivativesThe
only derivative products in use by ISAB are interest rate swaps, which are used to lock-in a targeted level of interest rates on
the Company's long-term debt. For Italian GAAP purposes, the changes in the fair value of the hedges are not recognized. For US GAAP purposes, it is necessary to designate derivative
financial instruments at the time of their inception in order to qualify for hedge accounting. The Company has certain derivatives that have qualified for hedge accounting treatment. The change in the
fair values of these hedges is included in Shareholders' Equity. However, one tranche of the debt is covered by an interest rate swap that does not qualify for hedge accounting, therefore the change
in the fair value of the derivative has been recognized in earnings. The liability recognized on the balance sheet at December 31, 2002 for this derivative was
€ 5,983 thousand (€ 6,859 thousand as at December 31, 2001).

(e)   Settlement
agreementA claim was pending between ISAB and the plant construction consortium for costs related to delayed start up of the plant and additional
construction costs related to change orders.

On
February 17, 2003, the syndicate banks gave their consent to the settlement agreement reached with the consortium, the agreement was signed on December 30, 2002. By way
of indemnity and

48

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considerations
for the reached agreements, the Consortium agreed to pay a total amount of € 21,030 thousand, a portion of which
(€ 15,000 thousand) was to be in cash within February 2003 and an additional € 6,030 thousand in waived royalty payments.

In
accordance with Italian Law, the effectiveness of the settlement was retroactive to the signature date and the settlement was treated as income in the year ended December 31,
2002. For US GAAP purposes, the settlement would not be recognized in 2002 as it was contingent on future events, in particular the consent of the banks.

(f)    Accounting
for start-up costsUnder Italian GAAP, the Company has capitalized and deferred various costs, mainly start-up and other
ancillary costs such as training that are to be expensed as incurred under US GAAP.

(g)   Recognition
of insurance reimbursementThe Company incurred certain reimbursable damages in 2001, for which insurance claims were filed. According to Italian
GAAP, these claims are recognized when reasonably estimable on the basis of supporting documentation. For US GAAP purposes, these amounts are not recognized until they are realizable.

(h)   Accounting
for income taxesIn the accompanying reconciliation the effects of the recognition of deferred income taxes relate only to the US GAAP adjustments
that give rise to temporary differences between the reporting basis for Italian GAAP and the reporting basis for US GAAP, no significant differences exist between the method of accounting for deferred
income taxes applied by ISAB under Italian GAAP and US GAAP. The Italian statutory taxation is based on a national tax (IRPEG36% in 2002 and previous years, 34% in 2003 and following) and
on a Regional Tax on Productive Activities (IRAP4.25%). The taxable basis for the computation of IRAP is essentially operating income, calculated on the basis of the legal Italian
statements, plus labor costs. In addition, the company is in a ten-year exemption from IRPEG, which expires in October 2003; the 2003 income will be therefore taxable at the average
IRPEG rate of 8.5%, which corresponds to the application of the full tax rate (34%) on a pro-rata basis for one-quarter of 2003.

The
following table summarizes the significant adjustments to the net loss and quotaholders' equity which would be required if US GAAP had been applied instead of Italian accounting
principles.

|  |  |                                         |  | NET EQUITY |   | NET INCOME / (LOSS) |  
|- |  | --------------------------------------- |  | ---------- | - | ------------------- | -
|
|  |  | Amounts as per Italian GAAP             |  | 144,083    |   | 70,657              |  
|a |  | Levelisation of Incentive Component     |  | (130,553   | ) | (76,060             | )
|b |  | Capitalization refinancing costs        |  | 5,047      |   | 5,468               |  
|c |  | Reversal cyclical maintenance fund      |  | 9,716      |   | 3,304               |  
|d |  | Derivatives                             |  | (12,078    | ) | (14,097             | )
|e |  | Settlement agreement                    |  | (21,030    | ) |                    |  
|f |  | Accounting for start up costs           |  | 710        |   | (3,436              | )
|g |  | Recognition of insurance reimbursements |  | (895       | ) | (3,977              | )
|h |  | Accounting for income taxes             |  | 61,313     |   | 33,652              |  
|  |  |                                         |  |            |   |                     |  
|  |  | Amounts in accordance with US GAAP      |  | 56,312     |   | 15,511              |  

49

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Shareholders' equity consisted of the following:

|Amounts in thousands of Euro      |  | Capital stock |  | Additional paid
in capital |  | Retained
earnings |   | Total   |  
|--------------------------------- |  | ------------- |  | -------------------------- |  | ----------------- | - | ------- | -
|Balance as of December 31, 1999   |  | 5,165         |  |                           |  | (13,647           | ) | (8,482  | )
|Paid in capital                   |  |              |  | 24,302                     |  |                  |   | 24,302  |  
|2000 net loss                     |  |              |  |                           |  | (20,543           | ) | (20,543 | )
|                                  |  |               |  |                            |  |                   |   |         |  
|Balance as of December 31, 2000   |  | 5,165         |  | 24,302                     |  | (34,190           | ) | (4,723  | )
|2001 net income                   |  |              |  |                           |  | 26,614            |   | 26,614  |  
|Fair value of hedging derivatives |  |              |  |                           |  | (6,381            | ) | (6,381  | )
|                                  |  |               |  |                            |  |                   |   |         |  
|Balance as of December 31, 2001   |  | 5,165         |  | 24,302                     |  | (13,957           | ) | 15,510  |  
|Dividends payable as a note       |  |              |  |                           |  | (8,533            | ) | (8,533  | )
|Dividends                         |  |              |  |                           |  | (25,000           | ) | (25,000 | )
|Fair value of hedging derivatives |  |              |  |                           |  | 1,094             |   | 1,094   |  
|2002 net income                   |  |              |  |                           |  | 73,242            |   | 73,242  |  
|                                  |  |               |  |                            |  |                   |   |         |  
|Balance December 31, 2002         |  | 5,165         |  | 24,302                     |  | 26,845            |   | 56,312  |  

The coverage of losses under Italian GAAP utilizing paid-in capital has been reclassified under "Additional paid-in
capital," for the purpose of US GAAP.

Furthermore,
the reimbursement of paid in capital (€ 8,533 thousand), classified in the Italian accounts as increase of subordinated debt from
Shareholders is classified in the above table as dividends.

Italian
law requires that 5% of a company's net income be retained as a legal reserve, until such reserve equals 20% of the share capital. This reserve, amounting to
€ 1,033 thousand at December 31, 2002, is not available for distribution.

The
Company has capitalized certain start-up and expansion costs under Italian GAAP. According to the Italian Law dividends can be distributed only if the equity reserves are
higher than the unamortized amount of such capitalized costs that, at December 31, 2002, amounted to € 12,017 thousand.

Dividends
amounting to € 25,000 thousand were authorized by the Shareholders to be distributed; however, as above mentioned, the banks have blocked
all subordinated payments, including dividends, until the Project Financing covenants are met or reviewed.

50

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 on
Form 10-K/A to its annual report on Form 10-K for the year ended December 31, 2002 to be signed on its behalf by the undersigned, thereunto duly
authorized.

| |  | Mission Energy Holding Company
(Registrant)
| |  | -------------------------------------------
| |  | By:                                        
| |  | Date:                                      

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

|Signature                                         |  | Title                           |  | Date         
|------------------------------------------------- |  | ------------------------------- |  | -------------
|                                                  |  |                                 |  |              
|Principal Executive Officer:                      |  |                                 |  |              
|/s/THEODORE F. CRAVER, JR.Theodore F. Craver, Jr. |  | Chief Executive Officer         |  | June 27, 2003
|Controller or Principal Accounting Officer:       |  |                                 |  |              
|/s/MARK C. CLARKEMark C. Clarke                   |  | Controller                      |  | June 27, 2003
|Majority of Board of Directors:                   |  |                                 |  |              
|/s/JOHN E. BRYSONJohn E. Bryson                   |  | Director, Chairman of the Board |  | June 27, 2003
|/s/BRYANT C. DANNERBryant C. Danner               |  | Director                        |  | June 27, 2003
|/s/THEODORE F. CRAVER, JR.Theodore F. Craver, Jr. |  | Director                        |  | June 27, 2003

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CERTIFICATIONS

I,
Theodore F. Craver, Jr. certify that:

|Date: June 27, 2003 |  | By: |  | /s/THEODORE F. CRAVER, JR.Theodore F. Craver, Jr. Director,
 Chief Executive Officer and President
|------------------- |  | --- |  | --------------------------------------------------------------------------------------------------

52

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CERTIFICATIONS

I,
Kevin M. Smith, certify that:

|Date: June 27, 2003 |  | By: |  | /s/KEVIN M. SMITHKevin M. Smith Senior Vice President and
Chief Financial Officer
|------------------- |  | --- |  | ---------------------------------------------------------------------------------

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