Prague, November 13, 2007 - The main driver of UNIPETROL’s increasing earnings was a continuous improvement in internal efficiency and profitability in all segments for the entire year, supported by favourable market and macroeconomic conditions. The company was able to create significantly more operating profits although the revenues in the first nine months, CZK 67.629bn, slightly decreased in comparison with last year.

Consolidated, non-audited, results 9M 2007 (millions CZK)

* One-offs 9M 2006: Adjustment for hydrocracker shutdown in March 2006 with a gross margin negative impact of CZK 300m and excluding 2006 EBITDA of SPOLANA and KAUČUK of CZK 1,669m; net profit further adjusted by excluding the additional 2005 claimed tax charge in an amount of CZK 324m. One-offs 9M 2007: Adjustment for negative impact of Q3 maintenance shutdown amounting to CZK 1,200m and impact of the sale of KAUČUK in an amount of CZK 449m; net profit further adjusted by excluding the Impairment to shares in AGROBOHEMIE and SYNTHESIA of CZK 2,471m.

BENZINA reports 129 stations fully re-branded

BENZINA continues to modernise and re-brand its retail network according to plan. By the end of 2007 it will be able to introduce 164 – i.e. one half - out of the total 319 filling stations to be reconstructed and 82 of them upgraded to BENZINA Plus. The new Benzina Plus premium brand filling stations offer top-class service to those who require high quality and a wide choice of products. At all of them, premium gasoline VERVA 100 is being offered and a range of fresh meals is served at their bistros. The remaining stations, under the Benzina brand, cater to motorists who look for good quality at a reasonable price. “So far 129 stations have been re-branded, of which 66 were upgraded to BENZINA Plus. Although the process is far from being complete yet – it is planned until 2009 – we can see sales up by 17% y/y while the market grew just by 3.5% on average”, says Martin Durčák, Executive of BENZINA. In the market research carried out under the patronage of GE Money Bank BENZINA was assessed as the filling station of the year 2007.

All production units back in operation after the planned shutdown

The purposes of this largest ever planned shutdown in UNIPETROL RPA included regular maintenance, process equipment modernisation, and production capacity increase. Maintenance, operating, and capital investment work worth more than CZK 1.5bn and involving more than 2,900 employees of supplier companies was carried out during the shutdown. In the past shutdowns in the UNIPETROL Group’s companies took place once a year, later once every two and still later every three years. “In 2005 the decision was made to introduce a four-year shutdown periodicity, which is more favourable for both producers and customers. The next shutdown is therefore planned for 2011,” says François Vleugels, CEO of UNIPETROL. Beside extending the shutdown periodicity, the following improvements have been achieved:

• Increasing yearly capacity of the main hydrocracker by 0.3mt to 1.5 mt;
• Further increase in production capacities in the next two years;
• Improving reliability of all units;
• Improving product yield;
• Increasing Nelson complexity index of the Litvínov refinery from 7.3 to 7.6.

The dispute with DEZA settled 

As announced earlier, UNIPETROL and DEZA have signed an agreement on out-of-court settlement of their disputes concerning the transfer of UNIPETROL’s shares in AGROBOHEMIE and SYNTHESIA. Under the settlement agreement, DEZA shall withdraw all its legal actions brought against UNIPETROL and shall not seek a payment of any penalties by UNIPETROL. At the same time UNIPETROL and DEZA agreed on the sale of the AGROBOHEMIE and SYNTHESIA shares owned by UNIPETROL to DEZA for a purchase price reflecting the fair market value.

This settlement agreement means for UNIPETROL:

• Opportunity to sell the shares on fair market conditions;
• Elimination of potential legal defects of the sale of the shares;
• Opportunity to obtain cash for assets that do not belong to core business;
• Minimisation of costs related to potential court proceedings;
• Elimination of risk of penalties resulting from a potential unfavourable court decision;
• Future co-operation with companies controlled by DEZA in the sale and purchase of raw materials.

UNIPETROL’s stake in PARAMO increased to 88%

As announced last Friday, UNIPETROL has bought 14.51% of shares of PARAMO from companies in the MEI Group, for a price of over CZK 241m, thereby increasing its shareholding to about 88%. PARAMO is a crude oil processing company engaged in fuels, lubricants and bitumen manufacturing. The increase of its stake will enable UNIPETROL to strengthen its position within this business segment and to proceed with the further restructuring of PARAMO.

Outlook for the rest of 2007

Strong financial performance in all segments should continue also in Q4; however, final results will be further weakened by one-offs related to the planned shutdowns. As announced earlier, operational problems occurred in the Litvínov production plan while starting up the Partial Oxidation Unit and Steam Cracker (now running at just 70-80% capacity). Although all necessary measures to address this inconvenience were taken immediately the negative impact of the shutdowns on 2007 EBIT will exceed the original estimates and will go up to the level of CZK 2.5 bn.

BENZINA will finish the refurbishment and re-branding of 164 filling stations and following its VERVA 100 premium gasoline it will also introduce VERVA Diesel.

High priority has always been given also to the Partnership Programme. The series of projects and initiatives started in 2005, focused on identifying and utilising synergy effects between UNIPETROL and PKN ORLEN, was expected to generate an additional EUR 138 million in 2008 EBITDA (under the 2004 macroeconomic conditions). “By the end of Q3 already EUR 135 million were captured and we are confident to reach the goal by the end of this year; it means one year earlier than expected,” says François Vleugels.

Next, and one of the last steps, in the implementation of the New Corporate Governance Model will be the split of UNIPETROL RPA by spin-off. It will lead to the creation of production and commercial organisations as two separate legal entities as planned. This will take place on January 1, 2008 and become effective as soon as confirmed by court. The changes in management model will lead to a higher efficiency and better harmonisation across the entire group.

Development in particular segments in Q3/2007

Refining: The refining business, traditionally strongly influenced by macroeconomic conditions, was affected by an impaired trend in the refinery margin and Brent-Ural price differential. The situation improved at the end of Q3. 991kt of crude oil (17% less than in Q3/2006) were processed and 673kt of motor fuels (wholesale) were sold.

Petrochemical: Although the petrochemical business remained in a very good shape both in terms of market conditions and the company’s performance the quarterly results in this segment were lowered by the impact of the planned shutdowns – the sales volumes went down by 19% and EBIT by 10% (both y/y).

Retail: The retail volume sales went up by 9% (y/y) and the quarterly EBIT increased by 21% compared with the previous quarter and by a much as 63% compared with the year before due to successful transformation of petrol stations.

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 2006 UNIPETROL posted revenues amounting to CZK 95 billion and a net profit of CZK 1.6 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 
www.unipetrol.cz