Prague, March 1st, 2007 - Continued restructuring, successful performance in petrochemical segment and in fuel retail as well as fair results in refining brought UNIPETROL to year on year net profit growth of over 25%. However, the set of negative One-offs amounting to nearly CZK 2.7bn pulled the net profit down to CZK 1.6bn, representing almost 53% decline compared to year 2005.

Financial highlights of 2006 
Despite the negative One-offs specified below, the strong operational performance of UNIPETROL substantiates the Group’s potential. In year 2006 the company’s total revenues grew by 17.3% and amounted to nearly CZK 95bn. Cash flow from operations grew by 4.7% and UNIPETROL’s indebtedness (net debt/equity) has been significantly reduced from 30.1% to 12.0%. Without including the One-offs the company achieved EBIT of CZK 5.9bn and net profit CZK 4.3bn which would mean a significant year on year improvement. However, after including the extraordinary items the results decreased under the level of 2005.

Consolidated, non-audited results 2006 (million CZK)

* Impairment Kaucuk and Spolana, EC fine 
** Chemopetrol tax withdrawal

One-offs and their influence on Group’s EBIT and Net profit

Major One-off items resulted from the impairments (negative difference in book and market value) related to the sale of Spolana and Kaučuk. The effect of impairment related to Spolana sale amounted to CZK -347m and the effect of impairment related to the shares of Kaučuk amounted to CZK -1 670m. Despite of the negative impact on book results the transactions positively influences the Group’s cash flow.

Another extraordinary cost brought to books in Q4 of 2006 was the fine charged to UNIPETROL and Kaučuk by the European Commission for Kaučuk´s accusations due to the reported participation in a synthetic rubber cartel. The fine amounted to CZK 483m (CZK 150m accrued in previous years). It is important to remind that this remains an open issue as both UNIPETROL and Kaučuk lodged applications with the European Court of First Instance against the European Commission’s decision. In their applications, UNIPETROL and Kaučuk challenge the Commission’s decision to the full extent.

The financial result was influenced also by the withdrawal of CZK 324m investment allowance provided in 2005 to Chemopetrol. The company decided not to utilize the incentives connected to the tax statements for 2005 and has already taken steps to claim the tax back in the form of a tax return.

Outlook in 2007

In 2007 UNIPETROL will continue implementing its announced strategy i.e. remains focused on its key areas of business – processing of oil, petrochemicals and fuel retail - and further increases efficiency, effectiveness and competencies in all of these areas. In this year the project of New Corporate Governance Model should be completed to bring elimination of bureaucracy, simplification and unification of processes as well as development of commercial excellence. Also a significant stage of Benzina´s retail network modernization will be finalized by introducing over 70 Benzina Plus premium stations. Besides of that UNIPETROL will also undertake further implementation of initiatives within the Partnership Program that started in 2005, and is focused to identify and utilise synergy effects between UNIPETROL and PKN ORLEN.

“In the first eight moths of this year we expect significant year on year bottom line growth thanks to continued strong operational performance and internal improvements,“ says François Vleugels, UNIPETROL’s CEO. Good results of the eight months will be unfortunately weakened in the later part of the year by planned shutdowns in UNIPETROL production plants. Shutdowns – due to regular maintenance and in some cases also due to enlargement of production capacity - are scheduled in Česká Rafinérská for up to 60 days, in Chemopetrol for 45 days and in Paramo 21 days. “ Resources spent in 2007 for maintenance and capacity expansion will be harvested in the following years,” says François Vleugels.

This year will UNIPETROL also present ambitious investment plan for shareholders´ value increase and the overall investment will go up to nearly CZK 5.5 bln compared to CZK 3.4bn in 2006. Major investments will be directed at refining and petrochemical segments to renew or enlarge production facilities and also into retail (Benzina). The company also has a taste for acquisitions. It has already been announced that UNIPETROL is interested to increase its stake in Česká rafinérská and the company is also ready to upgrade its retail network.

2006 results by business segments

Consolidated, non-audited results 2006 (million CZK)

* 51% Česká rafinérská, 100 % Paramo 
** mainly Spolana and Kaučuk

Refining: The refining business was strongly influenced by macroeconomic influences such as low refinery margins and fluctuating prices of oil that are very much determined by conditions on the global market. Although macroeconomic conditions were under market expectations UNIPETROL has dealt with this situation fairly well. There were excellent performances in refinery segment during H2 of 2006 and good results for diesel and virgin naphtha during H2 2006 because of high inland premium (decrease of crude oil price with maintained favourable selling prices). The wholesale fuels volume sales increased by 18.9% to 2 558 kt.

Petrochemical: Chemopetrol results in 2006 are the best in the company’s history. Main factors that impacted such good results are full utilization of production capacities available, excellent market conditions for company products and favourable exchange rate.

Retail: The business results in 2006 have been the best since 2001, and the long-term trend of declining market share has been reverted. This has been driven by improved service standards, successful promotion, and strengthened organization. 
Furthermore, in Q4 2006, BENZINA has announced new strategy focused on two sub brands and value proposition improvement across all important factors (fuel, shop, gastronomy and service). This strategy should further boost growth in the following years.

UNIPETROL is a group of companies operating in the petrochemical industry in the Czech Republic. In 2005 UNIPETROL became part of PKN ORLEN Group, the largest downstream oil company in Central Europe. UNIPETROL primarily focuses on crude oil processing, fuels distribution and petrochemical production. In all these areas UNIPETROL group is one of leading players in both the Czech and Central European markets. UNIPETROL belongs to the Czech Republic’s most important companies according to revenues and it employs approximately 4000 people.

Contact: 
Michaela Lagronová 
Spokesperson 
Unipetrol, a.s. 

Mobile: + 420 602 304 708 
E-mail: michaela.lagronova@unipetrol.cz