1François VleugelsCEO Spolchemie

Ústí nad Labem

CENTRAL EUROPE& Czech Republic

•Geographical & logisticadvantaged position in Europe

•More than century of tradition in chemical production

•Skilled blue and white collars

•Personnel costs advantage to the West Europe countries

•All logistic infrastructure near Usti n.Labem plant (road, rail, water) 2

Spolchemiehistory

• 1856 – Austro-Hungarian aristocracy grounded the company

• 1918 – heavy chemistry in Czechoslovakia concentrated in Spolchemie

• 1945 – Nationalisation• 1990 – Privatisation –

joint stock company

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IN SHORT

• 750 employees• Turnover 2008 approx 200 million € • More than 90 % of Spolchemie’s

production is sold outside the Czech Republic

• Major European player in resins market for coatings and composites

• Products– Resins– Inorganics– Specialties

RESPONSIBLECARE

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Focus: Mainly Europe & Global

– Tradition– Market knowledge– Flexible and Dynamic – Strong position in epoxy resins – Strong industry segments

• Automotive• Construction

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Focus: Technology

2004 • Restarting of BPA plant

2005• Epispol – latest technology for the production of liquid epoxy resin (license of DIC

Japan)• New SER plant – all products designed for powder coatings• Construction of new unsatured polyesters and alkyds plant

2006• Latest technology for the production of unsaturated polyester resins (cooperation with

Reichhold US)• Construction of Epispol II production facility (startup in October 2007)• Start of production of new unsatured polyesters and alkyds plant

2007• Start-up of a new capacity of glycerin based ECH

2011-13• Conversion of chlorine production into modern membrane technology

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Focus: TechnologyUnique patented ECH process

ENVIRONMENT

• Production from renewable sources (Glycerine)

• Contribution to sustainable development

• Exceeding benchmarks of Best Available Techniques (BAT)

• Unique process safety compare to propylene based technology

ECONOMY

• Production of all wastes much lower than ECH-P ones

• Consumption of all utilities much lower than ECH-P ones

• Turndown of 30%

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Diverse portfolio

• Inorganics– Chlorine– Potassium Hydroxide– Sodium Hydroxide– Sodium Hypochlorite, Hydrochloric Acid– Epichlorohydrin, Allylchloride,

Perchloroethylene

• Specialities– Synthetic Sapphire– Calcium Sulphate– Hydrofluoric Acid– Sodium Fluoride– Potassium Permanganate

Pharmaceutics

Electronics

Food and beverages

Detergents

Paper and celulose

Construction etc.

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• In the end of 60’s PROPYLENE based technology development

• 1973 first propylene-based ECH plant start up

• 1999 start of the GLYCERIN based technology R&D

• Patent application• 2007 New plant start up

Epoxy resins & Epichlorohydrine

- core products- unique technology

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ECH: Core process parameters

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100

chlorine causticsoda

ECH-P ECH-G

Specific consumption index

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in summary

• GREEN TECHNOLOGY– Technology of Epoxy resins based on Glycerine

• COST STABILITY– Gycerine price not connected to crude oil and less

fluctuating

• FLEXIBILITY– Own strong R&D team works with customers to fully

align the product with requirements

• CAPACITY– Total production capacity increased

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crisis

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Global crisis

Customers hit - demand decreased

Payment delays

Return of investment jeopardized

Cash crisis

Payment to row material suppliers delayed

Delivery problems

QUICK RECOVERY ACTION NEEDEDQUICK RECOVERY ACTION NEEDED13

Key services

• Restructuring approach to address the current economic crisis

• Operational improvements in Production and Supply Chain

• Sales and marketing optimization • Product and asset portfolio optimization as well as

support with the resulting divestments and/or investments.

• Organizational efficiency improvements and leadership selection

• Management control and execution of crisis plan14

Chemical Solutions analysis

New plantUnique technologySkilled staffProduct portfolioTradition

Marketing practicesCompany culture

Optimization

• staffing and HR

• production process

• supply chain

• procurement

• logistics

Co-production

Cash

Credibility loss

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Conclusion for

• Cash problem being addressed – credibility addressed• Marketing focus Europe only – based on portfolio

flexibility, and sales increase (=regain lost market share)• Processes and procedures optimized – significant

efficiency increase• Co-operations – modern technology fully utilised

SHORT-TERM RECOVERY PLAN WAS NEEDED TO OVERCOME CASH ISSUES AND DRIVE

GROWTH BASED ON ITS CORE STRENGHTS & MARKET OPPORTUNITIES

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Recovery projectSTEP ONE - rescue• Stand-still agreement• Payment calendar• Recovery plan - agreed by shareholders and

banks

STEP TWO – savings more than 10mil €

• Staff reduction• Redundant property sales• Process optimisationSTEP THREE – revenue growth of 40mil €

• Regain lost market share• Optimize channels to market

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PROJECT OUTLINE

• SHORT DURATION– 8 weeks project duration from project kick-off to

outcome acceptance

• PROFESSIONALS ONLY– Team of experienced professionals in all area of

Production, Maintenance, Supply Chain, Procurement, HR, Legal and Corporate Governance

• VERY SHORT PAYBACK – Cost of project vs. benefits identified and verified with

management resulted into a very short payback

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Spolchemie - bright future

• Slim, efficient and flexible mid-size company

• Focused marketing – Europe region

• Interesting portfolio – resins, glycerin/green technology, inorganics, specialties

• Reliable partner and co-producer

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Thank you

François Vleugels

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• BACK UP SLIDES

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Steam Electricity Coolingwater

Processwater

ECH-P

ECH-G

ECH: Core process parameters

Specific consumption

index

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Core process parameters

020406080

100120

hydro

carb

on w

aste

s

was

te w

ater

disso

lved

sal

ts in

WW

COD in

WW

AOX in

WW

EHC-P

EHC-G

Specificproduction

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