1. Mission, vision and objectives of the Unipetrol Group Introduction Unipetrol is the leading refinery and petrochemical group in the Czech Republic and a major player in Central and Eastern Europe; since 2005 it has been part of Central Europe’s largest refining and petrochemical group, PKN Orlen. Unipetrol Mission: We strive to ensure long-term and permanent value growth for our shareholders. We want to achieve this by focusing on three strategic business segments: • Crude oil refining and wholesale • Petrochemical production • Retail distribution of motor fuels The company’s main goals in 2009 One of the top priorities will be to increase profitability through strict cash management and working capital reductions. With regard to the current economic crisis, the management of Unipetrol is preparing further operating cost cuts and capital expenditure reductions. The company is planning to modify its product portfolio, which will feature fewer types of polyethylene and polypropylene, and to enter into product swaps with PKN Orlen. Unipetrol also intends to launch fuels with a higher added value, such as aviation fuel kerosene, and promote a more competitive pricing policy. Other goals include completion of the expansion of available capacities and production volumes. Code of Conduct The members of the Unipetrol Group are aware of their responsibility to all the stakeholders – their employees, customers, shareholders, trade and social partners, and the public. Therefore, with the Code of Conduct we commit to clear principles, which form the basis for our business and social conduct and for forming corporate culture in the Unipetrol Group companies. The Unipetrol Group observes laws, directives, internal policies, and ethical values in all business areas. We respect international, national and local regulations–those that are directly binding as well as those to which we commit voluntarily, such as the principles of corporate governance. These are primarily provisions that set out safety and environmental standards for facilities and their operation, describing the requirements for the quality of products and services, defining conduct in markets, and regulating conduct and practices. The UNIPETROL Group considers it to be its priority to observe such standards and operate exclusively within their limits. The conduct of Unipetrol employees is always and under all circumstances legal, ethical, transparent, and compliant with the law and Unipetrol values. All procedures and activities are based on the best practices of corporate governance and operating excellence and emphasise safety and environmental protection. All customers (external and internal) of the Unipetrol Group have the right to the best quality products and services respecting ethical principles. The Code of Conduct is linked to the applicable laws of the Czech Republic and internal policies of the company and defines the basic rules of conduct for Unipetrol employees. 1 WorldReginfo - fb90fe51-50c8-4c2a-bafd-299d5f9111de Application of corporate governance rules The Unipetrol Group continuously strives to maintain long-term and transparent relationships with its shareholders and investors as part of its strategic objectives. Unipetrol Group management follows the Corporate Governance Code. The Corporate Governance Code is based on OECD Principles, the provisions of which the Company satisfies in all material respects. The General Meeting held on 26 June 2008 approved modifications to the Company’s Articles of Association. The changes were made to improve the efficiency of corporate governance and for the purpose of adopting certain OECD recommendations concerning corporate governance best practice. The changes concern, for example, the rules for the decision-making of the Supervisory Board and the Board of Directors. One of the changes is intended to prevent any possibility of conflicts of interest arising. The number of Supervisory Board members was reduced from twelve to nine. 2. Profile The Unipetrol Group operates refineries and petrochemical production facilities and sells and distributes fuels in the Czech Republic and the Central European region. The Group companies focus primarily on the production and sale of refinery products, chemical and petrochemical products, polymers, fertilizers, and specialty chemicals. The Group also operates its own transport services and finances in-house research and development. Unipetrol is the leading refinery and petrochemical group in the Czech Republic and a major player in Central and Eastern Europe; since 2005 it has been part of Central Europe’s largest refining and petrochemical group, PKN Orlen. The Group’s major companies in 2008 were the following subsidiaries: As at 31 December 2008 UNIPETROL RPA, s.r.o. BENZINA, s.r.o. PARAMO, a.s. ČESKÁ RAFINÉRSKÁ, a.s. Historical milestones 1994 The formation of Unipetrol, a.s. fulfilled one of the conceptual objectives of the privatisation of the Czech petrochemical industry. Unipetrol was intended to combine selected Czech petrochemical firms in a group capable of competing with strong international groups. With 63% of the shares, the Czech State was the company’s majority shareholder, represented by the National Property Fund. Investment funds and minority shareholders owned the rest of the shares. Under the original concept, the State’s interest in the company was to be privatised. Unipetrol gradually integrated Kaučuk, Chemopetrol, Benzina, Paramo, Koramo, Česká rafinérská, Unipetrol Trade, Spolana and Unipetrol Rafinérie public companies. 1996 The refineries of Chemopetrol in Litvínov and of Kaučuk in Kralupy were demerged and included in Česká rafinérská. 2003 2 WorldReginfo - fb90fe51-50c8-4c2a-bafd-299d5f9111de Koramo and Paramo merged, with Paramo becoming the successor company. From that year on, Česká rafinérská has operated as a processing refinery, or cost centre of its processors. 2004 Agreement on the sale of 63% of Unipetrol shares was executed between PKN Orlen and the National Property Fund. 2005 In 2005 the privatisation process of Unipetrol was completed and consequently the company became a crucial part of one of the largest refinery and petrochemical groups in Central Europe, PKN Orlen. 2006 Majority interest in the Spolana subsidiary was sold to Zaklady Azotowe ANWIL of Poland. 2007 The Kaučuk subsidiary was sold to Firma Chemiczna Dwory of Poland. A new subsidiary, Unipetrol Services, started operations. Unipetrol Doprava, Benzina and Petrotrans changed their legal form from public limited companies to limited liability companies. Butadien Kralupy was founded, its shareholders being Unipetrol (51%) and Kaučuk (49%). The Chemopetrol and Unipetrol Rafinérie subsidiaries were combined with Unipetrol RPA. Unipetrol purchased shares representing a 0.225% interest in the share capital of Česká rafinérská from ConocoPhillips. Unipetrol acquired 14.51% of Paramo shares from MEI Group companies. The largest maintenance shutdown in the company’s history took place. 2008 Settlement of the sale of Agrobohemie and Synthesia shares based on share purchase agreements between Unipetrol and Deza. Unipetrol owned 50% of Agrobohemie shares and 38.79% of Synthesia shares. The purchase price for 47,000 Agrobohemie shares totalled CZK 503 million. The purchase price for 27,977,162 shares of Synthesia totalled CZK 680 million. Unipetrol’s ordinary general meeting has decided to pay dividends from retained earnings of previous years. 2009 The group has paid compensation to minority shareholders and acquired a 100% interest in Paramo. 3 WorldReginfo - fb90fe51-50c8-4c2a-bafd-299d5f9111de 3. Key financial data of the Unipetrol Group Indicator 2007 2008 restated 2006 2005 2004 Structure of assets and liabilities (in CZK thousand) Total assets 58,696,075 66,070,865 71,906,988 76,441,640 72,143,595 Non-current assets (Long- term assets) 38,889,978 38,052,157 39,781,307 48,989,591 47,859 ,137 Current assets 19,806,097 28,018,708 32,125,681 27,452,049 24,284,458 Shareholders‘ equity 38,912,840 42,112,397 41,160,194 39,695,630 33,421,531 Liabilities 19,783,235 23,958,468 30,746,794 36,746,010 38,722,064 Structure of profit/loss (in CZK thousand) Revenues 98,143,951 88,462,174 93,698,270 80,946,337 71,097,589 EBITDA (EBIT + depreciation) 4,480,503 8,297,652 7,825,742 9,505,133 11,919,030 Operating profit (EBIT) 1,002,619 4,812,047 3,779,929 5,279,069 5,846,248 Income tax 44,554 -649,821 -1,496,389 -893,876 -1,210,723 Profit of shareholders of the parent company 64,530 1,210,010 1,599,827 3,428,573 3,639,453 Financial indicators ROACE 1.81 % 8.37 % 6.23 % 7.90 % 9.00 % Earnings per share 0.36 6.67 8.82 19 20 Net debt / shareholders‘ equity 8.36 % 3.71 % 12.00 % 30.10 % 51.80 % CZK / USD – end of period 19.346* 18.078* 20.876 24.588 22.365 CZK / EUR – end of period 26.93* 26.62* 27.495 29.005 30.465 * ex. rate valid as at 31.12.2008 and 31.12.2007 www.cnb.cz 4. Highlights of the year 2008 JANUARY January 18, 2008 Unipetrol settled its obligations to DEZA arising from an agreement on the out-of-court settlement of a dispute over shares in Agrobohemie and Synhtesia, which was signed in October 2007. January 29, 2008 Early in the year, Česká rafinérská launched, as a test run, the mixing of bioethanol into automobile gasoline at the Litvínov. 4 WorldReginfo - fb90fe51-50c8-4c2a-bafd-299d5f9111de MARCH March 3, 2008 Benzina launched its campaign ”We Change with the Times“, introducing Benzina as a stable brand that has a long history and can keep up with modern times. March 12, 2008 The polyethylene production unit of Unipetrol RPA produced its four millionth ton of polyethylene. March 14, 2008 In the first half of March, Česká rafinérská carried out a short-term shutdown of a part of its facilities. During the shutdown, the company replaced hydro-refining catalysts and regenerated the catalyst in the catalytic reforming unit.