1, UZINEI STREET, code 240050, RAMNICU VALCEA , · PDF filePLANT BRADU Ethylene Propylene ... and overhauls to ensure the operation of production facilities ... is used at the maximum

1, UZINEI STREET, code 240050, RAMNICU VALCEA , ROMANIA

TEL : 0040 250 701200,FAX : 0040 250 735030 / 736188

E-mail: [email protected]

January 2016

Raw materials. Product portofolio

Electric power

Salt CHLOR-ALKALI PLANT

Caustic soda

Hydrochloric acid Chlorine

Sodium hypochlorite Hydrogen

Propylene

Orthoxylene CHEMICAL PLANT I

Oxo-alcohols Phthalic anhydride

Dioctylphthalate

Propylene

Ethyleneoxide

Chlorine

Milk of lime

CHEMICAL PLANT II

Propylene oxide Propylene glycol

Polyether-polyols

Ethylene

Chlorine PVC PLANT

Vinyl chloride

PVC

Raw materials Plant Products

Naphta gasoline

C4 cut

PETROCHEMICAL PLANT BRADU

Ethylene

Propylene Polyethylene

Ethylenenoxide Aromatics

Main product groups sales - 2015

71,770

92,807

21,465

105,709,486

28,532,478

17,605,541

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

Polyols Caustic soda Oxo-alcohols

Val

ue

(Eu

ro)

Qu

anti

ty (

to)

Product Quantity (to) Value (Euro) Polyols 71,770 105,709,486 Caustic soda 92,807 28,532,478 Oxo-alcohols 21,465 17,605,541

Main Products Sales breakdown - 2015

Product Export (Euro)

Domestic (Euro)

Total 2015 (Euro)

Polyols 83,320,772 22,388,714 105,709,486 Caustic soda 19,289,926 9,242,552 28,532,478 Oxo-alcohols 17,536,872 68,669 17,605,541

Export 79%

Intern 21%

Polyols 70%

Caustic soda 19%

Oxo-alcohols

11%

Financial Statement - Preliminary 2015 4,4450 4,4450 -th. euro-

No. Indicators

Implementation of the

reorganization plan and

other income/expenses

not related to current

activity

Current activityTOTAL

2015

0 1 2 3 4 = 2 + 3

1 Turnover 1.249 167.017 168.2662 TOTAL REVENUES 538.283 171.170 709.453

-operating revenues 538.283 170.195 708.478 -financial revenues 975 975

3 TOTAL EXPENSES 3.638 179.326 182.964 - operating expenses 3.638 177.626 181.264 - financial expenses, from which: 1.700 1.700

- interests expenses 482 4824 GROSS PROFIT/LOSS 534.645 -8.156 526.489

-operating profit / loss, from which: 534.645 -7.431 527.214 - depreciation -17.067 -17.067 -financial result -725 -725

5 INCOME TAX 7.273 7.2736 GROSS PROFIT/LOSS 519.215

7EBITDA (operating result

- depreciation)9.636

Financial Statement - Main business 2013 - 2015

-th. euro-

Nr.

Crt.Indicatori

2013

actual

2014

actual

2015

preliminary

0 1 2 3 4

1 TURNOVER 112.685 141.190 167.0172 TOTAL REVENUES 123.597 147.305 171.170

-operating revenues 112.653 146.679 170.195 -financial revenues 10.944 626 975

3 TOTAL EXPENSES 196.031 190.121 179.326 - operating expenses 183.358 187.305 177.626 - financial expenses, from which: 12.672 2.816 1.700

- interests expenses 8.688 1.772 4824 GROSS PROFIT/LOSS -72.434 -42.816 -8.156

-operating profit/loss, from which: -70.705 -40.626 -7.431 - depreciation -24.507 -31.497 -17.067 -financial result -1.728 -2.190 -725

5EBITDA (operating result

- depreciation)-46.198 -9.128 9.636

Financial Statement-Indicators main business (1)

OLTCHIM achieved the best value of EBITDA from 2008 to date

After entering the insolvency proceedings, the company has resumed its activity from scratch, entering in a comprehensive

restructuring process which involved the following main areas:

- regaining partners trust, mostly external, to prove that the company is able to deliver products consistently on

time and manner requested by them;

- drastic reduction in costs to streamline the company.

In 2015 the company achieved the best economic & financial performance since the entry into insolvency proceedings and

the best value of EBITDA from 2008 to date (the best results in the last 8 years).

Thus, the preliminary economic & financial results of OLTCHIM for 2015 are presented as follows, confirming the effectiveness

of measures implemented after entering insolvency proceedings:

- turnover of 167 million euro, higher by 26 million euro, or by 18 % compared to 2014 and by 54 million euro, or

by 48% compared to 2013;

- the cumulative EBITDA from current business is approximately + EUR 9.6 million compared to the period 2010-

2014 when its value was negative.

Financial Statement-Indicators main business (2)

OLTCHIM achieved 3.0 million euro total profit obtained from the operating plants

except the expenses with the mothballing of unoperational plants

The gross result from the main business in 2015 is –8.2 million euro showing an improvement by 34.6 million euro

compared to 2014 and by 64.2 million euro compared to 2013.

The gross result of -8.2 million euro consists in:

+3.0 million euro total profit obtained from the operating plants;

-11.2 million euro loss caused by the expenses with the mothballing of unoperational plants from Bradu and

Valcea sites, plus expenses with severance payments related to personnel dismissal completed in December 2015 and

other banking financial costs calculated before the date of the approval of the Reorganization Plan.

The increase in turnover was driven by quantitative growth in sales of main products manufactured. Thus, for polyether

polyols quantity sales increased by 20% compared to the same period last year, while sales of chlor-alkali products as a

share have increased by 3%.

Over 75% of turnover comes from export and intracommunity market.

Financial Statement-Investments and major repairs

In 2015, Oltchim has carried out investment work and overhauls to ensure the operation of production facilities safely and

efficiently. They were worth 3.8 million euro, only from own sources:

√ 1.8 million euro for the rehabilitation of two electrolyzers in Membrane Electrolysis Plant, one of which was

rehabilitated in September 2015;

√ 0.6 million euro for the overhaul of tank wagons in which the main feedstocks are supplied and the finished

products are delivered;

√ 0.6 million euro payment in two installments for the purchasing of the hydrogenation catalyst for the oxo-

alcohols plant;

√ 0.5 million euro for the overhaul of the lime kiln carried out in the Propylene Oxide Plant early this year;

√ 0.3 million euro investment in other objectives such, the purchase of a heat exchanger for the propylene

oxide plant .

At the main process plant, the Membrane Electrolysis there are rehabilitated 4 electrolyzers of the total of 7, the next 3

following to be rehabilitated in 2016, the investment being estimated at 2.4 million euro.

Production activity

Permanent efforts were made to streamline the business, reduce costs and ensure the liquidity required for smooth running

of current business, including the rehabilitation required for safe and efficient operation of the production facilities.

Utilization of production capacity is currently at a level of about 30% and is achieved by the operation of the following

plants:

√ The Membrane Electrolysis is used at the maximum capacity that can be operated under current technical

conditions (approximately 95%); to operate at 100% capacity, the other 3 electrolyzers from the total of 7 should be

rehabilitated

√ Propylene oxide, Polyether polyols plants are technologically interrelated and are used at about 65% of

capacity, their operation being limited by the chlorine quantity produced by the membrane Electrolysis;

√ Oxo-alcohols plant was restarted in June 2015 and operates at about 90% capacity, to reach 100% capacity

must be changed hydrogenation catalyst.

There are still shut-down the following production lines:

• Phthalic anhydride-dioctyl phthalate production line totally stopped since August 2012;

• Mercury Electrolysis plant totally stopped since May 2012;

• PVC plant totally stopped since September 2011;

• VCM plant totally stopped since November 2008;

• Petrochemical Division Bradu stopped since November 2008.

Forecast 2016 (1)

For 2016 we are considering the following:

√ Operation of the membrane eletrolysis at the maximum technological capacity, by rehabilitation of the 3 electrolyzers;

√ Operation of oxo-alcohols plant starting with April 2016 after replacing the hydrogenation catalyst;

√ Operation of propylene oxide plant based on the amount of chlorine obtained internally and the purchasing of about 10,000 to

chlorine;

√ Operation of polyether polyols plants based on propylene oxide production;

√ Production of a new product since July 2016, namely dioctyl terephthalate by revamping the existing dioctyl phthalate plant.

The production of this product will drive a diversification of octanol utilization, allowing thus for a smooth and continous operation

of the oxo-alcohols plant.

The company estimates growth for 2016 compared to 2015 by the production of the following finished products:

- 107.500 to caustic soda liquid, i.e. an increase by 3%;

- 27.000 to octanol, i.e. an increase by 37%;

- 75.900 polyether polyols including propylene glycol, i.e. an increase by 5%;

- 7.800 to dioctyl terephthalate, starting with July 2016.

In these conditions the company expects for 2016 to obtain profit on the entire business, i.e. full coverage of depreciation and

financial charges. Last year when OLTCHIM achieved profit on total business was 2006.

Thus, at a turnover of about same value as in 2015, i.e. 168 million euro, the sale price being lower than the average of 2015 driven

by lower oil prices, the company estimates:

√ EBITDA +12,3 million euro, i.e. by 2.7 million euro better than in 2015;

√ operational profit 330 thousand euro;

√ profit on entire business 110 thousand euro.

Forecast 2016 (2)

BUDGET FOR 2016 YEAR

th. euro

Q I Q II Q III Q IV

Turnover 33.917 44.819 44.628 44.635 168.000

Production costs 34.479 44.270 44.462 44.459 167.670 - raw material and materials 15.809 21.664 22.276 22.150 81.899

- util ities 7.953 11.075 10.679 10.711 40.417

- salary and fringes 5.694 5.706 5.722 5.729 22.851

- depreciation 2.801 3.120 3.029 3.013 11.963

- other production costs 2.223 2.706 2.757 2.856 10.541

EBIT -562 549 166 176 330

EBITDA 2.239 3.669 3.195 3.189 12.293

Financial expenses 67 59 51 43 220

TOTAL PROFIT/LOSS -628 490 115 133 110

Indicators

periodTOTAL

2016

The selling prices for finished products and the procurement prices for raw materials and utilities

used in budget 2016 are the actual prices for December 2015.