Financial highlights of 2007

Prague, February 29, 2008 – Unipetrol’s performance was excellent during the first half of last year whereas the latter half and mainly the 4th quarter were affected by low petrochemical and refining margins, the planned shutdown, subsequent POX unit (the partial oxidation unit) emergency and the failure of the ethylene unit’s coldbox. The total revenues dropped 5% to CZK 88.78bn.* Fuel retail saw the biggest increase in the amount of revenues, increasing 15% over 2006 to CZK 8.82bn. Among other things, the modernisation of Benzina contributed to a major year-on-year increase of fuel sales (16%).

* The reason of this slight drop is the fact that Spolana and Kaučuk were part of the group in 2006; Spolana´s revenues were CZK 5.3bn and Kaučuk´s revenues were CZK 11.3bn. In 2007 Kaučuk was part of sales of the group for 6 months (CZK 7bn).

Consolidated, non-audited results for a full 2007 (million CZK)

* 2006: Shutdown of the hydrocrack unit in March 2006 with a negative impact on gross margin of CZK 785 million, excluding EBITDA for 2006 for Spolana and Kaučuk of CZK 2.122bn Kaučuk value impairment item of CZK 1.670bn; EU fine of CZK 241m. 
** 2006 Further adjustment of the excluded additional tax liability for 2005 of CZK 324 million. 
* 2007: Negative impact of the shutdown in the 2nd half of CZK 2.8bn and the impact of the sale of Kaučuk of CZK 449m. 
** 2007 Further adjustment of the excluded Agrobohemie and Synthesia share value impairment amounting to CZK 2.471bn.

Financial results for the 4th quarter of 2007

In Q4 of 2007 Unipetrol reported a loss of CZK 557m; this loss is CZK 674m lower than that in the same period of 2006. Operating loss (EBIT) for the 4th quarter was CZK 657m – or CZK 130m less than in Q4 of the previous year. The revenues for Q4 were CZK 21.15bn, or a year-on-year decrease of 3%.

The results for Q4 2007 were significantly impacted due to one-offs related to the planned shutdown and subsequent problems. The Litvínov production facility encountered operating problems during the start-up of the partial oxidation (POX) and ethylene units. The adverse impact of the shutdowns on EBITDA for Q4 2007 exceeded the original estimates and grew to CZK 1.6bn (thus the total impact for the 2nd half is CZK 2.8bn). The rapidly declining refining and petrochemical margins further contributed to the unfavourable results in Q4.

Consolidated, non-audited results for Q4 2007 (million CZK)

* Q4 2006: Impact of an unplanned shutdown in October and December of CZK 485m, excluding EBITDA for 2006 of Spolana and Kaučuk of CZK 2.122bn; Spolana impairment of CZK 387m; EU penalty of CZK 241m. 
** Q4 2006 Further adjustment in excluding the additional tax liability for 2005 of CZK 324m. 
* 4Q 2007: Negative impact of a planned shutdown of CZK 1.6bn.

“The shutdown, POX emergency, coldbox failure, and low margins caused the truly weak results for the 4th quarter. Nevertheless, the investment in the maintenance of our equipment and the enlarged capacity will definitely bring returns in the years to come. If everything works as planned, we will grow this year,” says François Vleugels, CEO of Unipetrol.

2007 results by business segments

Consolidated, non-audited results for 2007 (millions CZK)

1) Unipetrol RPA BU I + 100% Paramo + 51.22% Česká rafinérská

Refining: The refining business, traditionally strongly influenced by macroeconomic conditions, was hit by the rapidly increasing price of crude oil as well as by the problems encountered during the shutdown in Litvínov. Exports were reduced to a minimum to ensure a sufficient quantity of products for the domestic market. For 2007, 4,138 kt of crude oil was processed, which is 143 kt less than in 2006.

Petrochemical: The sales of petrochemical products were reduced in October and November due to a failure of the ethylene unit. In autumn, the sales of petrochemical products were hit by low gross margins. December saw an improvement in polyethylene and polypropylene sales prices. The production of polyethylene and polypropylene gradually ramped up to full output towards the end of the year and since December the ethylene production has been higher than before the autumn shutdown. Only benzene production is limited to 80% of its capacity due to the problems with the ethylene unit.

Retail: Retail fared very well thanks to the successfully continuing transformation of the Benzina fuel filling station network and marketing activities. The volume of fuel sales grew 16% year-on-year and the annual value of EBIT grew 40% compared with the previous year to CZK 524m. Record-breaking sales were achieved in October. The sales growth rate of fuel and other products at fuel filling stations exceeded the average growth rate on the market.

Outlook for 2008

In 2008 Unipetrol will continue increasing performance and efficiency in its core businesses – refining, petrochemicals and fuel retail. Margins, above all, should stabilise in the 1st quarter of this year.

The Unipetrol Group intends to invest up to CZK 5bn in its companies. In the refining segment, Unipetrol plans to invest primarily in the modernisation of the process equipment; in the petrochemical segment, in the extension of capacity and construction of a butadiene unit; and in fuel retail, in the modernisation of the Benzina fuel filling station network.

Benzina intends to increase its market share (which was 13.3% at the end of last year) by means of greenfield projects (building new fuel stations) near highways, the Dealer Owned-Dealer Operated concept as well as by acquiring individual fuel filling stations or, as the case may be, a complete fuel filling station network. In addition, the company will also complete the reconstruction and rebranding of another 51 fuel filling stations this year. In early March, it will launch a new big advertising campaign to introduce and support the Benzina Plus premium fuel filling station brand and its services.

Unipetrol will also carry out planned shutdowns this year, although their scope will be smaller than last year. A distillation unit in Kralupy will be shut down for 15 days in March and an agro product unit will be shut down for 20 days in June; this latter shutdown takes place every year. The coldbox will be installed in the ethylene unit by the end of March. At this moment, Unipetrol is researching into various technical solutions that would enable the installation of the repaired coldbox with a minimum impact on the production. Benzene production will be reduced to 80% until the installation of coldbox in the ethylene unit. Also in March, the polyethylene and polypropylene units will be shut down for 10 to 14 days. A bitumen unit in Paramo will be shut down for 35 days in March.

Unipetrol’s other plans include the restructuring of Unipetrol Trade and the potential purchase of the remaining interests in Paramo.

Supplement:

The year 2007 at UNIPETROL

BENZINA modernised and rebranded 164 fuel filling stations last year

The process of modernising and improving Benzina’s retail network continues as planned. By the end of 2007 Benzina introduced 164 retrofitted facilities out of the total 320 fuel filling stations intended for retrofit; 82 of them underwent the upgrade to the highest standard, Benzina Plus. “This year we will embark on another phase of the retrofit, which will include much costlier retrofits of 18 fuel filling stations Benzina Plus near highways,” says Martin Durčák, Executive of Benzina. In addition, 33 stations will be rebuilt under the Benzina Standard brand.

Benzina became the new general partner to Litvínov’s ice hockey team last year. HC Litvínov progressed to the ice hockey extra-league play-off this February.

UNIPETROL RPA held a planned shutdown

The purposes of this largest ever planned shutdown at Unipetrol RPA included regular maintenance, process equipment modernisation, and a production capacity increase.

Objective of the shutdown:

• Increase the annual capacity of the main hydrocrack unit
• Stabilise the ethylene unit
• Further extend the production capacity over the next two years
• Improve the reliability of all units
• Improve the product yield
• Prolong the shutdown cycle to 4 years

The divestment plan continued; the dispute with DEZA was settled

The divestment plan approved in 2006 continued at Unipetrol in 2007. Last year, Unipetrol sold its subsidiary, Kaučuk because its product portfolio was not part of the company’s core business to Poland’s Dwory Company for EUR 195m (CZK 5.514bn).

In addition, 50% of Unipetrol’s shares in Agrobohemie and 38.79% of shares in Synthesia were sold to Deza for EUR 44.1m (CZK 1.183bn) earlier this year. Unipetrol and Deza executed an agreement on an out-of-court settlement of their disputes concerning the transfer of Unipetrol’s shares of Agrobohemie and Synthesia last autumn. Under the out-of-court settlement, Deza will withdraw all of its legal actions brought against Unipetrol and shall not seek a payment of any penalties by Unipetrol.

UNIPETROL’s stake in PARAMO increased

In line with its portfolio strategy, Unipetrol strengthened its position last year by acquiring 14.51% of Paramo shares for EUR 8.8m (CZK 241m) from MEI. Unipetrol thus increased its ownership interest in Paramo to approximately 88%. This will enable Unipetrol to strengthen its position within this business segment and to proceed with the further restructuring of Paramo.

UNIPETROL also acquired shares in ČESKÁ RAFINÉRSKÁ

Unipetrol also purchased a 0.225% interest in Česká rafinérská from ConocoPhillips last year. The acquisition will allow Unipetrol to amass a qualified majority together with one of the remaining owners of Česká rafinérská at the company’s General Meetings.

Unipetrol shares grew 44.1% last year from CZK 234.30 (Dec 29, 2006) to CZK 337.60 (Dec 31, 2007).

UNIPETROL, a.s. is a group of companies operating in the petrochemical industry in the Czech Republic. In 2005 UNIPETROL became part of the 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. In 2007 UNIPETROL posted revenues of CZK 89 billion and a net profit of CZK 1.2 billion. The UNIPETROL group employs approximately 4,000 people.

Contact: 
Michaela Lagronová 
Spokesperson 
Unipetrol, a.s. 

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