2006file/PCC_Report_2006_E… · plant commissioned in April 2006 and com-mencement of the...

2006

ANNUAL REPORT

T A B L E O F C O N T E N T S

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M E S S A G E F R O M T H E P R E S I D E N T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

G O V E R N I N G B O D I E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

P C C G R O U P . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2 0 0 6 H I G H L I G H T S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

F I N A N C I A L P E R F O R M A N C E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

P R O D U C T R A N G E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

S A L E S A N D P R O D U C T I O N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 0

D E V E L O P M E N T S T R A T E G Y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2

M A I N I N V E S T M E N T S C O M P L E T E D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 3

M A I N I N V E S T M E N T S – I N P R O G R E S S A N D P L A N N E D . . . . . . . . 1 4

S P E C I A L E C O N O M I C Z O N E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 5

E N V I R O N M E N T A L P R O T E C T I O N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 6

E C O L O G I C A L E D U C A T I O N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 7

F I N A N C I A L S T A T E M E N T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 9

P C C R O K I T A G R O U P . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2

P C C R O K I T A G R O U P I N F I G U R E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2

Przedsi´biorstwo Energetyczne E N E R G E T Y K A – R O K I T A Sp. z o.o . . . . . 2 4

Zak∏ad Chemii Gospodarczej i Samochodowej K O S M E T - R O K I T A Sp. z o.o. . . 2 5

R O K I T A - A G R O S . A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 6

O T H E R G R O U P C O M PA N I E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 7

PCC Rokita in figures [kPLN]

2002 2003 2004 2005 2006

Turnover 406,540 464,762 619,185 620,530 712,111

Gross margin 46,925 59,789 65,185 93,156 86,245

Gross profit 656 9,653 11,510 33,937 22,178

EBT 705 12,143 16,561 34,016 29,318

ROA [%] 0.78 3.09 3.71 7.03 5.84

ROE [%] 1.30 4.71 5.94 11.62 11.51

Equity 191,967 199,305 211,891 241,416 241,225

Balance sheet total 317,567 304,118 338,982 398,797 492,447

Capex 13,552 14,547 22,701 70,464 73,354

Number of employees 872 836 783 712 705

Revenue per employee 466 556 791 872 1,010

G O V E R N I N G B O D I E S AAss aatt 3311 DDeecceemmbbeerr 22000066

O r g a n i s a t i o n a l s t r u c t u r e o f P C C R o k i t a , J a n u a r y 2 0 0 7

M A N A G E M E N T B O A R D

Miros∏aw KrutinPresident, General Director

Jaros∏aw MazurMember, Financial Director

Wies∏aw KlimkowskiMember, Director of Ownership Supervision and Capital Group Development

S U P E R V I S O R Y B O A R D

Piotr Jan Maciejewski Chairperson

Marzena AmbroziakDeputy Chairperson

Mariusz Dopiera∏aSecretary

Alfred PelzerMember

Ryszard K∏eczek Member

Dariusz KrupaMember

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M E S S A G E F R O MT H E P R E S I D E N T

Ladies and Gentlemen,

In 2006, PCC Rokita celebrated the 60th

anniversary of its activity in the chemicals market.

In this period, the Company achieved anincrease in sales revenue to PLN 712m, with a gross income of PLN 29.4m. The entire PCC Rokita Group generated EBT of PLN 40.1m,with sales proceeds of PLN 853m.

Such good performance was possible due to thecontinuing demand for polyols and specialtychemicals, as well as the dynamic growth of export sales, which accounted for 42% of thetotal revenue.

Last year was the first full financial year of thebusiness operation in the Brzeg Dolny Subzoneof the Wa∏brzych Special Economic Zone.

In 2006, PCC Rokita continued its investmentprogramme, spending approx. PLN 73m for this purpose. Amongst other projects, thesefunds were allocated to, including, without limitation, the completion of a new polyols

plant commissioned in April 2006 and com-mencement of the construction of a newsulphonation plant and a monochloroacetic acidplant. Our wide-ranging investment plansinclude: a number of projects, construction ofan ethoxylates plant, construction of the 4th and5th polyol production line to enhance the plant’sperformance, development of phosphorus deriv-atives such as flame retardants and plasticizers,used in the textile industry, as well as construc-tion of a new electrolysis plant. According to ourestimates, within the next 3 years, PCC Rokita’sCapex will exceed PLN 450m.

In 2006, we received two very importantawards. In January 2006, for charity work sup-ported by the PCC Rokita Group SponsoringFund, we received the "Kryszta∏ Roku" awardfrom the County Office in Wo∏ów. In October2006, the Western Chamber of Commerce gaveus the "DolnoÊlàski Gryf" award, a prestigiousbusiness prize given to the best companiesbased in Lower Silesia. The Company won inthe category – outstanding contribution to thedevelopment of the Lower Silesian economy.

Submitting this report, I thank all of you whohave contributed to our joint success.

Miros∏aw Krutin

President of the Management Board, General Director

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Board

Surfactants BusinessUnit

Chlorine Business Unit

Chlorine

Soda lye

Caustic soda

Chlorobenzenes

Polyols for elastic foams

Polyols for rigid foams

Other Polyols

Surfactants

Polyols Business UnitPhosphorus

Chemistry BusinessUnit

Plasticizers and flame retardants

Construction chemicals

O W N E R S H I P S T R U C T U R E

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The majority shareholder of PCC Rokita is theGerman company, PCC SE, which acquired theCompany in 2003. Ever since, as a result ofimplementation of a number of investment projects, the company has seen a dynamic devel-opment. Being in the PCC Group has enabledPCC Rokita to acquire valuable production, sales,logistics and power generation related experience, which is followed by an optimised utilisation of resources and capacity of all the PCC Group companies.

PCC GROUP

PCC is a global group of companies managedby PCC SE based in Duisburg, Germany. Thetotal employment level of the group equals2,800 persons in 16 countries. The corporation’sbusiness focuses on three strategic areas:

• trade in chemical raw materials, coal and electricity,

• chemical production,

• logistics and transport.

PCC SE holds companies and representativeoffices in Poland, Finland, Russia, Czech Republic,Romania, Croatia, the Netherlands, Slovakia,Macedonia, Lithuania, the Ukraine, as well as in China and the United States of America.

PCC Group is present on the following markets:chemical raw materials, energy, coal, coke, fertiliz-ers, fuels, plastics and steel making.

4

T R A D E

• PCC GmbH, D, Duisburg

• PCC Energie GmbH, D, Duisburg

• PCC CAPITAL, D, Duisburg

• C&C GmbH, D, Duisburg (60%)

• PCC OY, FN, Helsinki

• PCC S.A., PL, Gliwice

• PCC Energy S.A., PL, Chorzów

• PCC MORAVA-CHEM spol. s.r.o.,CZ, Cesky Tesin

• Zak∏ad Energetyki Blachownia, PL, K´dzierzyn Koêle

P R O D U C T I O N

• PCC Synteza S.A.,PL, K´dzierzyn-Koêle

• PCC Weglopochodne Sp. z o.o.,PL, K´dzierzyn-Koêle

• PCC Rokita S.A., PL, Brzeg Dolny

• Kosmet-Rokita Sp. z o.o.,PL, Brzeg Dolny

• Rokita Agro S.A.,PL, Brzeg Dolny (88,66%)

• Energetyka Rokita Sp. z o.o., PL, Brzeg Dolny

• Tensis Sp. z o.o.,

PL, Brzeg Dolny,

• Ekologistyka Sp. z o.o.,

PL, Brzeg Dolny

• PCT, PL, Brzeg Dolny

• PCC Chemax Inc.,USA, Piedmont S.C.

L O G I S T I C S

• PCC Cargo GmbH, D, Duisburg

• PCC Cargo S.A., PL, S∏awków

• PCC Spedkol Sp. z o.o.,PL, K´dzierzyn-Koêle

• PCC Rail Morava spol. s.r.o., CZ, Cesky Tesin

• PCC Rail Containers Sp. z o.o., PL, Jaworzno

• PCC Rail S.A., PL, Jaworzno

• PCC Rail Coaltran Sp. z o.o., PL, Warszawa

• Euro-Line GmbH, D, Duisburg

• PCC Kolchem Sp. z o.o.,PL, Brzeg Dolny

• PCC Autochem Sp. z o.o., PL, Brzeg Dolny

• Kolej NadwiÊlaƒska PL, Jaworzno

• PCC ÂLK, PL, Jaworzno

• PIT INTECHKOP, PL, Katowice

P C C R O K I T A O W N E R S H I P S T R U C T U R E

Other2.86%

P C C SE97.14%

* Only the main companies and branches. Unless otherwise specified, the stake in the units’ share capital equals 100%.

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F I N A N C I A L P E R F O R M A N C E

The Company’s financial performance in 2006was as good as in 2005, despite the 2006 EBTbeing 14% lower than in 2005 (with a 15%sales revenue growth). The 2006 sales revenueamounted to PLN 712m. The Company’s EBTequalled PLN 29m, while its gross profitabilitytotalled 4% (compared to the 2005 revenueand EBT in the amount of PLN 620m and PLN 34m, respectively). Compared to 2005,gross profitability dropped by 1.5%. The mainreason for this was a 12% rise in basic rawmaterial prices (mainly crude oil derivatives) and a 5.5% growth in electricity prices.

2006 saw the continuation of a far-reachinginvestment plan, which is reflected in the Com-pany’s balance sheet:

• assets increased by almost 22% when compared to the status at the end of 2005 (including current assets growth by 24%, and fixed assets by 30%).

The Company continues its bond issue pro-gramme, thus diversifying its current operationfinancing sources.

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2 0 0 6 H I G H L I G H T S

2006 – jubilee year, in which PCC Rokita cele-brated the 60th anniversary of its productionand trade operation.

The first year of PCC Rokita’s operation in theBrzeg Dolny subzone of the Wa∏brzych SpecialEconomic Zone.

Establishment of Ekologistyka, the companyemerged in result of a transformation of theLandfill Complex (Zespó∏ Sk∏adowisk Odpadów)of PCC Rokita, and the establishment of theTensis company, producer of chemical formula-tions for light and heavy industry.

"Kryszta∏ Roku" – award granted by the CountyOffice in Wo∏ów in recognition of the charitablecontribution by the Sponsoring Fund of the PCCRokita Group.

Execution of the following investment projects:

• extension of polyether plant – 3rd

production line – completed in April 2006,

• extension of propylene and ethylene oxide storage facilities, including industrial systems – completed in March 2006,

• extension of phosphorus, phosphorus trichloride and phosphorus oxychloride storage facilities – completed in July 2006,

• 2nd stage of upgrading of the wastewater treatment plant,

• redirection of the polluted Lutynia stream into the plant’s wastewater treatment plant – completed in December 2006,

• construction of a new sulphonation plant – started in September 2006,

• continuation of flame retardants production capacity increase – (completion date)– March 2007.

Research and development:

• Development of production technology of polymeric polyols for HR-type foams marketedunder the name of Rokopol MS 1215.

• Development of production technology of a new flame retardant – Roflam F.

• Development of production technology of new isopropylphenol-based plasticizers.

• Development and implementation of production technology for new products: Rokanol NL8P4, Rokanol NL8 and Rokanol NL6.

"DolnoÊlàski Gryf" – prestigious economic prizeoffered to the best companies based in theregion of Lower Silesia granted to Rokita inOctober 2006 by the Western Chamber ofCommerce. PCC Rokita was recognized for itsoutstanding contribution to the economicdevelopment of Lower Silesia.

"Filary Polskiej Gospodarki" – recognitionawarded by the Puls Biznesu journal to the bestPolish companies. PCC Rokita ranked second inthe region of Lower Silesia.

60

100

200

300

400

500

600

700

800

900

2003 2004 2005 2006

EBT in the years 2003-2006 [mPLN]

PCC Rokita PCC Rokita Group

0

5

10

15

20

25

30

35

40

45

2003 2004 2005 2006

Revenue in the years 2003-2006 [mPLN]

PCC Rokita PCC Rokita Group

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P R O D U C T R A N G E

For 60 years, PCC Rokita has been one of thelargest Polish chemical producers. It offers over400 chemical products, a large proportion ofwhich are marketed abroad. The Company’soperation is based on four key product groups:polyols (additives to polyurethanes), surfactants(used in household chemicals and cosmeticindustries), phosphoroorganic compounds (plas-ticizers and flame retardants for plastics), as wellas chlorine and alkalis.

Main products – Polyols Business Unit

P O L Y O L S

Polyols for elastic foams Component for the production of flexible foams used primarily in the furniture-making industry (mattresses and sponges) and for the production of foam foils, self-adhesive laminates,noise-insulating and filtering elements, etc.

Polyols for rigid foams Component for the production of rigid foams used as structurereinforcing and filling material e.g. glued elements, door and window frames, as thermal and acoustic insulation elements.

Other polyols Used in the production of glues, varnishes, polyurethane elastomers, as sealing and lube oils for compressors, as a component of hydraulic liquids.

Main products – Chlorine Business Unit

C H L O R I N E , C H L O R I N E D E R I V A T I V E S , A L K A L I S

Liquid chlorine Used in the chemical industry for chlorination and synthesis, in the pulp and paper industry used as a bleaching agent.

Soda lye Commonly used in the chemical, pulp and paper, household chemicals and textile industries.

Caustic soda Component used in numerous branches of industry, degreasingagent in the metal industry, in the food-processing industry applied as bottle and equipment cleaning agent.

Chlorobenzenes Components for chemical syntheses, pesticides, solvents.

Main products – Surfactants Business Unit

S U R F A C T A N T S

Non-ionic Nonylphenol-, alcohol- and fatty acid-based – used as components of various washing and cleaning liquids, as well as a broad rangeof special-purpose agents.

Anionic Alkylbenzene and ethoxylated fatty acid-based – used as components of washing powders and liquids, washing-up liquids, cleaning liquids, liquid soaps and shampoos.

Main products – Phosphorus Chemistry Business Unit

P H O S P H O R U S D E R I V A T I V E S

Plasticizers and flame retardants Phosphorus derivative plasticizers and flame retardants for plastics.

Construction chemicals Plasticizing, liquefying, aerating, binding retarding agents, etc.8

P R O D U C T R A N G E

Breakdown of sales per product group

Polyols

Surfactants

Alkalis

Chlorine

Monochlorobenzene

Flame retardants and Plasticizers

Other products and services

51%8%

6%

3%

14%

15%

3%

S A L E S A N D P R O D U C T I O N

The PLN 13m reduction in the revenue of the Chlorine BusinessUnit in 2006 was a consequence ofan approx. 3.5% drop in the pricesof electrolysis products (chlorine,soda lye, caustic soda).

The Specialty Chemicals BusinessUnit saw a sales drop of PLN 11m. It resulted from the transfer of pro-duction of tanning and textile industryagents to the newly established Ten-sis Company.

Polyols Business Unit increased salesby PLN 119m due to the increasedproduction capacity, a consistentlyhigh market demand and a rise inpolyol prices.

In 2006, product exports totalled PLN 299m and constituted as muchas 42% of the Company’s total sales. Compared to 2005, the 2006export sales grew by 24%. In the 2006 ranking of the Polityka weekly,the Company took the 91st place in the list of the largest Polishexporters.

The main exported products of PCC Rokita include polyols, caustic soda,flame retardants, chlorobenzenes and soda lye.

PCC Rokita has been present on global sales markets for many years.Europe, in particular Germany with its over 45% share in the totalexports, is the main sales market.

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S A L E S A N D P R O D U C T I O N

E X P O R T SIn 2006 a production output growth of over 7% was achieved as compared to 2005,which resulted from investments launched and production process optimisation.

Main product groups include: polyols, surfactants and alkalis, which, in aggregate,constitute almost 75% of the total sales volume.

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2003200,000

220,000

240,000

260,000

280,000

2004 2005 2006

Sales volume [t]

Main export markets

Germany37%

Czech Republic

Estonia

6.4%

Netherlands7%

Others45.1%

ChlorineBusiness

Unit

Polyols Business

Unit

Specialty Chemicals

Business Unit

Other sales0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

2003

Sales value per Business Unit in the years 2003-2006 [kPLN]

2004

2005

2006

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2003

Export sales value per Business Unitin the years 2003-2006 [kPLN]

2004

2005

2006

ChlorineBusiness

Unit

Polyols Business

Unit

Specialty Chemicals

Business Unit

4.5%

D E V E L O P M E N T S T R A T E G Y

M A I N I N V E S T M E N T SC O M P L E T E D

Polyols – 3rd production line

The new polyols plant with a total productioncapacity of 30,000 tonnes/year was commis-sioned in April 2006. It is one of the mostimportant investment projects delivered so far at PCC Rokita. Increasing the capacity ofproduction of polyols, i.e. components in the production of polyurethane foams used in the furniture-making industry, was aimed atmeeting the large and ever-growing marketdemand for these products (mainly of the furni-ture and automotive industries). By doublingthe production capacity, PCC Rokita has becomean even more active player among the globalpolyol manufacturers. The Company is planningfurther investments in this area.

Increasing flame retardants production capacity

2006 saw the completion of a project plannedto increase the phosphorus flame retardant pro-duction capacity. Development of phosphoruschemistry is one of the strategic lines of devel-opment of the Company. Of the many groups ofphosphorus compounds, PCC Rokita focused onthe production of phosphorus plasticizers andflame retardants used in the flame retardingplastics production. Sales of these products areon the rise, primarily in the EU markets, in Asiaand the USA. PCC Rokita has been committed tothe development of this product line. The nextinvestment aimed at rising the plant capacityfurther is in progress.

Extension of phosphorus, PCl3, POCl3storage facilities

April 2006 witnessed the completion of theextension of the phosphorus, phosphorus trichlo-ride and phosphorus oxychloride storage facili-ties. The first warehouse was enlarged by 150tonnes, the second one by 250 tonnes. The projectwas a consequence of the extension of the flameretardants plant and the increased demand forthe aforementioned components. Within theproject, two independent waste gas absorptionsystems operated on a continuous basis and a back-up system was installed, which will helpreduce gaseous pollutant emissions into the air.

Lutynia project

In December 2006, the project involving the redirection of the Lutynia stream flowingacross the PCC Rokita landfills to the CentralWastewater Treatment Plant was completed.The project started in 2005. The developed con-cept provided for the redirection of the streamgravitationally, taking advantage of the naturalslope of the ground surface, without a need forelectricity-consuming water pumping. This wasan important aspect of the project, since everyreduction of electricity consumption should,because of the greenhouse effect, be regardedas environmentally-friendly. The project was highly evaluated by expertsfrom the National Fund for Environmental Pro-tection and Water Management in Warsaw andreceived EU co-financing. This was an importantsignal to PCC Rokita that the environmentalmanagement strategy taken was correct in viewof sustainable development. The investmentwill contribute to the reduction of environmen-tal impact on the River Odra.

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In order to increase the production capacity, boost the competitiveness of selected products andimprove their quality, as well as to improve the natural environmental protection system, theCompany continued previously undertaken investment projects and launched several new ones.

The broad selection of investment projects completed and planned, and provided for in the strategy for the years 2005-2010, includes:

• New sulphonation plant [40,000 tonnes/year]• New ethoxylates plant [30,000 tonnes/year]• New polyols plant – 4th and 5th line [60,000 tonnes/year] • Monochloroacetic acid plant [25,000 tonnes/year]• New electrolysis plant [120,000 tonnes/year]• New polymeric polyols plant [15,000 tonnes/year]• Pilot plants for new generation flame retardants and plasticizers • New isopropylphenol plant [7,000 tonnes/year]• Expansion of the flame retardants production plant [increase by 65%]• New flame retardants and plasticizers plant [20,000 tonnes/year]• Upgrade of propylene oxide plant• Expansion of raw materials and product storage facilities• Upgrade of wastewater treatment plant

Capex planned will, over the next three years,total approx. PLN 450m.

1 22005

0

20

40

60

80

100

120

140

160

180

2007 2008

Capexin the years 2005-2008 [mPLN]

2006

S P E C I A L E C O N O M I C Z O N E

2006 was the first year of PCC Rokita’s operation in the Special Economic Zone (SSE).

Important 2006 events

Filing the application for the modification of SSE borders in Brzeg Dolny (in order to optimise tax payments), with the desired results to take effect in the next fiscal year.

Capex to date have amounted to PLN 33,968k.

Employment at SSE went up to 565 persons.

Benefits

Supporting investments by relieving the company from income tax on profits generatedby the operation carried out in the area of SSE (the maximum tax relief rate amounts to50% of Capex).

In the first year of operation, due to the investments in the Special Economic Zone, theCompany managed to save almost PLN 4m worth of income tax.

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M A I N I N V E S T M E N T S – I N P R O G R E S S A N D P L A N N E D

Surfactants

PCC Rokita is one of the largest Polish producersof sulphonated and sulphated anionic surfac-tants – key components for the production ofhousehold chemicals and cosmetics. Due todynamic growth (by several percent per annum)of the market, these raw materials are of con-siderable importance for the Company. In order to develop surfactant production, thenew anionic surfactants plant construction wascommenced in September 2006. The invest-ment is scheduled to be finished in the 4th

quarter of 2007. The plant’s production capacity will grow from 10,000 to 40,000tonnes/year. Closely related with the investmentis the construction of a new non-ionic surfac-tants plant (they are the basic input material for the production of anionic surfactants). Both plants make up one production line. Thenon-ionic surfactants plant’s current capacity of 20,000 tonnes/year can be increased to40,000 tonnes/year.

Polyols

Polyols, components for the production ofpolyurethane foams, are of strategic importancefor PCC Rokita. Market forecasts concerningpolyols, which are widely used by the furniture-making industry, are very promising, since theysuggest a continuous and dynamic growth ofthat industry. After the investment, which enabled theincrease of polyol production capacity to60,000 tons/year was completed in April 2006;preparations for the next investment – aimed atdoubling that capacity – were commenced.While seeking new technical and technologicalsolutions, the Company is planning to boostboth the production volume and increase theproduct range.

Phosphoroorganic compounds

The Company also plans to pursue developmentwith respect to phosphorus derivative flameretardants and plasticizers used in the plasticsindustry. These products augur well for thefuture. An upgrade project performed in 2006 made it possible to increase the production capacityby over 65%. A project aiming at securing a fur-ther 60% production capacity growth is underway. The next investment stages planned, to broaden the range of products and then builda large phosphoroorganic compounds plant, arein progress.

Monochloroacetic acid

The construction of the new monochloroaceticacid plant with a production capacity of 42,000 tonnes/year is aimed at maximising theutilisation of chlorine within the Group. Thenew plant will be furnished with equipment relocated from the Arkema – St. Auban plant(France), where production was discontinued in December 2005. The project will help increase PCC Rokita’s salesrevenue by approx. PLN 100m per annum andwill secure supplies of acid to Rokita-Agro, itslargest domestic user. The new investment willmake it possible to balance the intercompanyutilisation of chlorine.

New electrolysis plant

Electrolysis, including chlorine processing plantsis one of the strategic areas of the Company.The corporate strategy provides for moving frommercury electrolysis to modern membrane electrolysis.The first stage of the project is a conversion of 50% of the production capacity. After theimplementation of the project, productioncapacity will grow to 120,000 tonnes.

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E N V I R O N M E N T P R O T E C T I O N

Environmental Education

Building ecological awareness among childrenand young people is an important investmentinto future generations of the Polish people,thus, in 2006, PCC Rokita formulated a new andattractive form of ecological education for thelocal population. In cooperation with the Secre-tariat of the "Responsibility and Care" Pro-gramme, PCC Rokita launched a countrywideinitiative "Tree for a bottle", which was intendedto built ecological awareness, stimulate socialinvolvement and environmental care. The sym-bol of recycled PET bottles collected by childrenand youth are the trees planted around schoolsand places of recreation.

Lutynia stream redirected to the CentralWastewater Treatment Plant

Water and sewage management is one of eco-logical priorities of PCC Rokita. December 2006saw a completion of the redirection of the Luty-nia stream to the Central Wastewater TreatmentPlant, the task which was financed by theNational Fund for Environmental Protection andWater Management. The project will helpreduce environmental impact on the River Odra.

The sustainable approach to environmentalmanagement was also reflected in the newproject for the construction of a hydrogeologicalbarrier that will entirely eliminate the environ-mental impact of the landfill on water resources.This task, also co-financed by the National Fundfor Environmental Protection and Water Man-agement, combined with the completed Lutyniaproject, will largely contribute to the reductionof PCC Rokita Group’s environmental impact onthe River Odra.

Visit our EcoLink at www.pcc.rokita.pl.

E N V I R O N M E N T P R O T E C T I O N

State-of-the-art environmental protection management methods made it possible for the PCC Rokita Capital Group to complete importantprojects in 2006.

One of the key achievements was the acquisi-tion of an Integrated Pollution Prevention andControl certificate.

Other examples of selected projects completedor commenced in 2006 include, but are not limited to: completion of the redirection of theLutynia stream to the Central Wastewater Treat-ment Plant, upgrade of the continuous gasemissions monitoring system installed at theWaste Incinerator, signing a contract with the National Fund for Environmental Protectionand Water Management for the co-financing ofthe construction of the hydrogeological barrierwhich reduces environmental impact of landfillon the River Odra.

Under the framework of the Responsible Careinitiative, PCC Rokita SA carried our ecologicaleducation schemes for children and youth.

Wastewater Treatment Plant

The 1st stage of the upgrade of the CentralWastewater Treatment Plant completed in 2005has brought the expected process-related andenvironmental effects. In 2006, the continuousprocess of optimisation of the wastewater treat-ment processes led to a further reduction ofequipment energy-consumption and reductionof pollutants in the wastewater generated byPCC ROKITA, which is evidenced by a largerCOD reduction rate.1 6

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F I N A N C I A L S T A T E M E N T

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Profit & loss account [kPLN]

Item 2005 2006

Sales revenue 620,530 712,111

Cost of goods and products sold 586,593 689,933

Gross profit 33,937 22,178

Other operating revenue 6,888 7,620

Other operating costs 9,653 5,550

Operating result 31,172 24,246

Financial income 8,194 8,868

Financial costs 5,350 3,797

Result on economic activity 34,016 29,318

EBT 34,016 29,318

Income tax 5,971 1,511

Net result 28,046 27,807

EQUITY AND LIABILITIES as at 31 Dec. 2005 as at 31 Dec. 2006

A. EQUITY 241,416 241,225

I. Share capital (fund) 15,295 15,295

II. Subscribed but unpaid capital - -

III. Own shares and stocks - -

IV. Supplementary capital 151,903 153,897

V. Revaluation reserve 48,213 46,218

VI. Other reserve capital (fund) - 49

VII. Retained profit (loss) - 2,041 - 2,041

VIII. Net profit (loss) 28,046 27,807

IX. Appropriations from the profit during the financial year - -

B. LIABILITIES AND PROVISIONS FOR LIABILITIES 157,381 251,222

I. Provisions for liabilities 15,710 11,164

II. Long-term liabilities 13,863 13,835

III. Short-term liabilities 127,096 224,588

IV. Accruals and deferred income 712 1,636

TOTAL EQUITY AND LIABILITIES 398,797 492,447

ASSETS as at 31 Dec. 2005 as at 31 Dec. 2006

A. FIXED ASSETS 251,654 304,259

I. Intangible fixed assets 1,404 2,929

II. Tangible fixed assets 170,440 221,544

III. Log-term receivables - -

IV. Long-term investments 75,880 75,627

V. Long-term prepayments 3,930 4,159

B. CURRENT ASSETS 147,143 188,188

I. Inventories 38,325 49,812

II. Short-term receivables 86,366 114,923

III. Short-term investments 8,024 14,012

IV. Short-term prepayments 14,427 9,441

TOTAL ASSETS 398,797 492,447

O P I N I O N O F C E R T I F I E D A U D I T O R

Opinion of a certified auditor for the General Meeting ofShareholders of PCC Rokita S.A.

We audited the financial statement of PCC Rokita S.A.,with its registered office in Brzeg Dolny, at ul.Sienkiewicza 4, which included the following:

• Introduction to the Financial Statement,

• Balance Sheet made as at 31 December 2006, with the total of assets and liabilities closing at an amount of PLN 492,447,495.41,

• Profit and Loss Account for the period from 1 January 2006 to 31 December 2006, showing a net profit of PLN 27,806,539.07,

• Cash Flow Statement for the period from 1 January 2006 to 31 December 2006, showing an increase in cash by an amount of PLN 2,988,029.29,

• Statement of Changes in Equity for the period from 1 January 2006 to 31 December 2006, showing a decrease in the equity by an amount of PLN 190,213.53,

• Supplementary Notes.

The preparation of the financial statement is the responsi-bility of the Management Board of the Company.

Our task was to audit and express our opinion on the reli-ability, correctness and fairness of the financial statementand on the correctness of the books of account which con-stitute a basis for the preparation of the financial statement.

The audit was conducted in accordance with chapter 7 ofthe Act on Accounting of 29 September 1994 (Journal ofLaws of 2002 No. 76, item 694, as amended) and profes-sional principles of certified auditors issued by the PolishCouncil of Certified Auditors.

The audit of the financial statement was planned and car-ried out so as to obtain reasonable assurance to express ouropinion on the statement.In particular, the audit included the verification of the cor-rectness of the book-keeping principles (policies) and sig-nificant estimates, verification – mainly on a random basis– of book-keeping notes and entries which were thesources of the figures and disclosures contained in thestatement, as well as an overall assessment of the financialstatement.

We believe that the examination provided a sufficient basisfor giving a reliable opinion.

It is our opinion that the financial statement under audit,comprising all its data and clarification:

• presents in a reliable and fair manner all materialinformation necessary to assess the economic and financial standing of the Company as at 31 December2006 as well as its financial result for the accounting year from 1 January 2006 to 31 December 2006.,

• was drawn up, in all material aspects, in accordance with the provisions laid down in the aforementioned Act and the principles (policies) of accounting and on the basis of books of account with correct entries,

• is compliant with all applicable legal regulations and provisions of the Articles of Association of the Company

The report on the activities of the Management Board iscomplete within the meaning of art. 49, sec. 2 of the Acton Accounting and the information therein contained basedon the financial statement under audit is compliant with thestatement.

Certified auditorMarian Porembaentered in the list of entities authorised to audit financial statementsunder No. 7883/1623

Certified auditorZbigniew Za∏uskientered in the list of entities authorisedto audit financial statementsunder No. 5470/5872

Andrzej Wojciech KinastCertified auditor, registration No. 90003President of the Management Board

Grant Thornton Sp. z. o.o.entered in the list of entities authorised to audit financial statementsunder No. 220

Warsaw, 3 April 2007

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F I N A N C I A L S T A T E M E N T

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Balance sheet [kPLN]

PCC Rokita Group in figures [kPLN]

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P C C R O K I T A G R O U P

Shares in subsidiaries and associated companies owned by PCC Rokita.as at 31 December 2006

Registered Business PCC Rokita’s Share No. Name office Activity stake capital

1 ENERGETYKA - ROKITA Sp. z o.o. Brzeg Dolny Power generation 99.9% 27,588,400

2 EKOLOGISTYKA Sp. z o. o. Brzeg Dolny Services, production 99.99% 26,912 000

3 ROKITA - AGRO S.A. Brzeg Dolny Production 88.66% 24,027,000

4 KOSMET - ROKITA Sp. z o.o. Brzeg Dolny Production 99.9% 4,893,300

5 PCT S.A. Brzeg Dolny Services 99.9% 6,000,000

6 PCC AUTOCHEM Sp. z o.o. Brzeg Dolny Transport 41.14% 3,398,500

7 BIZNESPARK ROKITA Sp. z o.o. Brzeg Dolny Services 99.95% 1,004,000

8 APAKOR - ROKITA Sp. z o.o. Brzeg Dolny Services, production 97.71% 391,100

9 LABANALITYKA Sp. z o.o. Brzeg Dolny Services 99.81% 364,700

10 LABMATIC Sp. z o.o. Brzeg Dolny Services 99.53% 184,900

11 CWB "PARTNER" Sp. z o.o. Brzeg Dolny Services 97.5% 100,000

12 ENVOLT Sp. z o.o. Brzeg Dolny Services 99% 50,500

13 TENSIS Sp. z o.o. Brzeg Dolny Production 100% 50,000

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P C C R O K I T A G R O U P I N F I G U R E S

2003 2004 2005 2006

Turnover 581,925 742,214 767,987 853,419

EBT 16,358 22,250 42,809 40,146

Gross profit 23,415 16,319 44,678 33,201

Gross margin 78,856 76,939 116,804 120,962

Equity 200,408 219,102 247,148 255,634

Balance sheet total 349,490 405,263 467,675 559,256

Average number of employees 2,112 1,955 1,265 1,141

2005 2006


Zak∏ad Chemii Gospodarczeji Samochodowej KOSMET-ROKITA Sp. z o.o.

The Company specialises in the production of cleaning agents for retail customers, profes-sional products for corporate customers as wellas brake fluids and car care products. The over-whelming majority of its products is sold underprivate label brands.

Major events in 2006:

• geographical extension of the sales area to include further Eastern European and Balkan countries

• maintaining the position of the leading Polish producer on the fabric conditioners market, confirmed by the award for the best personal hygiene and household chemistry product given to the "Eden" fabric conditioner manufactured for the Biedronka retail chain

• intensive development in new product segments, especially in relation to bleaching agents and stain removers

• securing contracts for export supplies to French retail chains under Kosmet’s own labels

• improvement in the principal economic indicators, such as profitability, financial liquidity and stock turnover, as well as management indicators, such as production efficiency or product complaint level.

Contact

phone +48 (071) 794 2923fax +48 (071) 794 2879 e-mail: [email protected]

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Przedsi´biorstwo Energetyczne ENERGETYKA - ROKITA Sp. z o.o.

Energetyka – Rokita conducts business in the area of electricity production and distribu-tion, demineralised water production as well as compressed air production and distribution.


• decision No. PZ 34/2006 of the Governor of the Lower Silesia Province– an integrated permit for the operation of a fuel-fired power plant with a nominal power output of over 50 MW as well as EC I and EC II combined heat and power plants on the terms as set out in the decision – June 2006

• conclusion of a contract with Centrum Techniki Budownictwa Komunalnego Ekotechnika Sp. z o.o., a Warsaw-based company, for the provision of services as the Contract Engineer for the project called "Construction of the EC-3 Combined Heat and Power Plant to Ensure Compliance with BAT Requirements by Energetyka – Rokita" – October 2006

• signing of agreement No. WKP_1/2.4.1/3/2005/42/89u with the National Fund for Environmental Protection and Water Management for the provision of additional financing for the project called "Construction of the EC-3 Combined Heat and Power Plant to Ensure Compliance with BAT Requirements by Energetyka – Rokita" – November 2006

• opening of bids to select the General Contractor of the project "Construction of the EC-3 Combined Heat and Power Plant to Ensure Compliance with BAT Requirements by Energetyka – Rokita" – December 2006

• in the same proceedings in early 2007, a Warsaw-based company of Polimex Mostostal SA was selected, with which, on 6 February 2007, contract No. D07011 for the "Construction of the EC-3 Combined Heat and Power Plant to Ensure Compliance with BAT Requirements by Energetyka – Rokita" was signed.

Contact

phone +48 (071) 794 2015 fax +48 (071) 794 2277 e-mail: [email protected]

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PCC AUTOCHEM Sp. z o.o.

The Company’s business activities:• international and domestic transport of liquid

chemicals, including dangerous materials, • forwarding services,• specialist cleaning of car tanks and containers.

Contact

phone +48 (071) 794 2133 fax +48 (071) 794 2381 e-mail: [email protected]

POLSKIE CENTRUMTELEINFORMATYKI S.A.

The Company’s business activities:• Outsourcing of IT systems

• hardware provision and administration (servers,networks, notebooks, printers, etc.),

• system, business and office software provisionand administration (SAP, Microsoft, Lotus),

• design and implementation of new and integration of the existing systems,

• Outsourcing of telecommunication systems • maintenance of the existing telecommunication

network,• design and implementation of new fixed

telecommunication systems,• provision of mobile phones for business users,• LAN/WAN data communication networks.

• Outsourcing of security systems• CCTV systems,• access control systems,• intruder alarm systems.

Contact

phone +48 (071) 794 2200 fax +48 (071) 794 2500 e-mail: [email protected] 2 7


ROKITA-AGRO S.A.

The Company is a manufacturer, formulator and seller of pesticides. It produces active sub-stances and formulates ready-made chemicalsbased on various active substances. The Com-pany’s offer is targeted at agricultural sectorinstitutions and pesticide sales agents. TheCompany offers herbicides and growth regula-tors, 50% of which are sold on foreign markets.

The Company focuses on the development of the following three strategic business units:

• 2.4 D Synthesis,• CCC Synthesis,• Pesticide Formulation.


• launch of a new "Pielik" production technology – December 2006. The technology led to an improvement in the product quality (an increase in the content of the active substance from 93% to 95%), a decrease in COD (by 25%) and a decrease in the consumption of basic raw materials (phenol, chloroacetic acid) by 4%

• extension of the industrial processes control system based on the DCS7-400 controller (Siemens) at the phenol chlorination station.

Contact


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2005/062001/022000/01

Autochem

APAKOR-ROKITA Sp. z o.o. Zak∏ad Budowy Aparatury

The Company’s business activities: • construction and repair of tanks, heat

exchangers, mixers and reactors,• construction of steel structures, • application of anti-corrosive protection,

including rubber and ebonite coating of tanks,pipeline elements and fittings.

Contact

phone +48 (071) 794 2506 fax +48 (071) 794 2020e-mail: [email protected]

BIZNESPARK ROKITA Sp. z o.o.

The Company’s business activities:• management of PCC Rokita’s industrial area,

including lease, letting and sale of real property and chattels,

• supervision over administrative and repairwork,

• warehouse operation, container cleaning andmaterials handling.

Contac

phone +48 (071) 794 2060 fax +48 (071) 794 2090

TENSIS Sp. z o.o.The Company started its business operation in April2006. It produces chemical formulations for light andheavy industry.

The main business objective of Tensis is to provideinnovative solutions for the following industries:

• textile, • tanning, • fire-fighting, • industrial cleaning, • mining, • metallurgy and steel industry, • other.

In 2006, Tensis’s sales revenue totalled almost PLN10m and its EBT closed at PLN 0.8m.

Contact

phone +48 (071) 794 3664fax +48 (071) 794 2064e-mail: [email protected]

C O M P A N Y A D D R E S S A N D R E G I S T R A T I O N D E T A I L S

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CENTRUM WSPIERANIA BIZNESU“PARTNER“ Sp. z o.o.

The Company’s business activities:Outsourcing of financial and personnel functions as well as consulting services, including, in particular:

• human resources and payroll administration,• financial consulting,• accounting,• financial services,• debt collection,• organisation of training courses,• Public Relations.

Contact


Zak∏ad Us∏ugowo-SerwisowyLABMATIC Sp. z o.o.

The Company’s business activities:Comprehensive maintenance of process equipmentand installations, including, but not limited to, the following areas:

• mechanical works,• automatic control and instrumentation,• electric systems and power networks,• technical supervision over investment

and up-grade projects,• technical design and consulting.

Contact


EKOLOGISTYKA Sp. z o.o.

The Company deals mainly with waste management.It started its business operation on 1 January 2006on the basis of a non-financial asset contributionmade by PCC Rokita i.e. the Landfill Complex.

In 2006, the Company signed an agreement with theNational Fund for Environmental Protection andWater Management in Warsaw for the provision of additional financing for the project "Hydrogeo-logical Barrier Eliminating the Penetration of PollutedUnderground Water into the River Odra". The pur-pose of the project is to support the Company in itsefforts to comply with the relevant environmentalprotection requirements and bring about tangibleenvironmental protection benefits. The investmentwas estimated at PLN 2.4m.

Contact

phone +48 (071) 794 2270fax +48 (071) 794 3955

LABANALITYKA Sp. z o.o.The Company’s business activities:

• analyses of chemicals,• control of chemical processes,• environmental protection and occupational

health analyses and measurements.

Contact


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Name PCC Rokita Spó∏ka Akcyjna

Registered office 56-120 Brzeg Dolny, ul. Sienkiewicza 4

Contact phone +48 (071) 794 2000fax +48 (071) 794 2189www.pcc.rokita.pl e-mail: [email protected]

REGON (Business Statistical No.) 930613932

European Classification of Economic Activity No. 2414

VAT No. 917-000-00-15

Legal status Joint-stock company, has a legal corporatestatus and is governed by Polish Company Law and other applicable provisions of law.

Entry in Commercial Register The Company has been registered by theDistrict Court for Wroc∏aw-Fabryczna, 6th Commercial Division of the National Court Register, under No. KRS 0000105885.

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