Flash Report Q4 2006

IN SPITE OF DETERIORATING EXTERNAL CONDITIONS AND EXTENSIVE MAINTENANCE SHUTDOWNS SLOVNAFT GROUP PERFORMANCE CONTINUED BEING STRONG ALSO IN 2006

Today the SLOVNAFT Group announced its Q1-4 2006 results. This report contains unaudited, consolidated financial statements for the period ended 31 December 2006 for the SLOVNAFT Group as prepared by management in accordance with International Financial Reporting Standards (IFRS).

In Q1-4 2006, the SLOVNAFT Group recorded a CCS adjusted operating profit of SKK 7,890 mln which is 11% lower than the Q1-4 2005 result. This was predominantly caused by an unfavourable external environment during Q4 2006, which impacted the performance of the entire oil industry. In case of SLOVNAFT this was further affected by a rescheduled regular turnaround performed during this period resulting in a lower production of motor fuels. However strong performance during Q1-3 2006 created a robust basis for SLOVNAFT to maintain its position on the export markets, and the yearly revenues actually recorded a y-o-y increase of 13%. The continuous improvement of key internal processes and ongoing synergy utilisation from joint operations within the MOL Group further helped to compensate the unfavourable Q4 result.

In comparison to Q1-4 2005, the SLOVNAFT Group operating performance was positively influenced by:

  • higher volumes produced and sold with total effect of SKK 1.0 bn
  • better gasoline crack spreads contributing SKK 481 mln
  • better Brent-Ural spread bringing SKK 135 mln

On the other hand, negative impacts included:

  • inventory changes SKK –1.4 bn
  • lower other refined products’ margins SKK – 1.6 bn,
  • development of exchange rate SKK –1.8 bn,

- EBITDA for Q1-4 2006 reached SKK 11,564 mln, which is lower than the EBITDA achieved in Q1-4 2005 due to lower operating profit.

- Total net sales revenues were higher by 17% (in SKK terms) compared to Q1-4 2005, as a result of higher volumes sold and higher level of quoted prices.

- Net result from financial operations for Q1-4 2006 represented SKK -46 mln, which is SKK 362 mln lower than in the previous year. This is a result of FX development and interest paid partially offset by proceeds from the sale of shares of Doplnková dôchodková spoločnos» Tatra banky, a.s.

- Capital expenditures of the SLOVNAFT Group reached SKK 4.3 bn for Q1-4 2006, which represents the total increase of SKK 0.3 bn in comparison with the same period of 2005. The main driver behind this difference was the increased investment into ecological projects aimed at improvement of the operating reliability (including periodical maintenance).

“In spite of deteriorating external conditions towards the end of the year and extensive planned maintenance shutdowns rescheduled to Q4 SLOVNAFT Group performance continued being strong also in 2006. Among others it is proved also by net sales revenues, which increased by 17% y/y. Sound performance has been predominantly due to strong export position of the company, sale of fuels with bio-components and continuous improvement of key internal processes and ongoing synergy utilisation from joint operations within the MOL Group. Those factors are expected to remain the key pillars of the sustainable growth also in the future” commented the results the SLOVNAFT CEO Oszkár Világi.

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