POLYNT Leading Integrated Specialty Chemical Player March 2007
Agenda Overview Strategic Objectives Financials Appendix 1
OVERVIEW
Leadership in Key Chemical Intermediates and Specialties Resins & Compounds Market Leader #1 in Southern Europe (1) Top Competitors % of 2006 Total Sales Specialties: DSM, Cray Valley, Menzolit, Ashland, Reichold 29% End User Applications Reinforced plastics Un-reinforced matrices Production Location Brembate, BG (Italy) San Giovanni Valdarno, AR (Italy) Niepolomice (Poland) (1) Company estimates 3
Leadership in Key Chemical Intermediates and Specialties Maleic Anhydride, Derivatives, Catalysts Market Leader #1 in Europe (1) Top Competitors Building Blocks: BASF, Huntsman Specialties: DSM, NJC, Fuso, Bartek % of 2006 Total Sales 28% End User Applications Unsatured polyester resins, alkyd resins, lube oil additives, special anhydrides Powder coatings and alkyd resin, epoxy hardeners Production Location Scanzorosciate, BG (Italy) Ravenna (Italy) (1) Company estimates 4
Leadership in Key Chemical Intermediates and Specialties Pthalic Anhydride & GPP Trimellitic Anhydride & SPP Market Leader #2 in Europe for PA (1) #2 worldwide (1) Top Competitors Building Blocks: Arkema, BASF Specialties: Degussa, Building Blocks: Sasol, Flint Hill Resources Specialties: Lanxess, % of 2006 Total Sales 28% 15% End User Applications Production location Plasticizers for PVC Coating resins Unsatured polyester resins PVC additives Scanzorosciate, BG (Italy) San Giovanni Valdarno, AR (Italy) Specialty plasticizers, wire enameles and powder coatings PVC additives, lubricant oils and emulsions Scanzorosciate, BG (Italy) San Giovanni Valdarno, AR (Italy) (1) Company estimates 5
Strategic Objectives Product Innovation Integration New Markets Growth through exploiting market and technology leadership 6
Integration Specialties 61% 2006 Production Breakdown (1) Building Blocks 39% Value Added Chain Building Blocks Maleic Phthalic Trimellitic 1,000 2,500 Resins Plasticizers Maleic Derivatives 1,000 3,000 Virgin Naphtha Orthoxylene Benzene n-butane Mixed-xylenes Pseudocumene Styrene Glycols Oxo-alcohols (2) (2) Catalysts 25,000 75,000 (2) Compounds 1,500 4,500 (2) POSITIONING End Market (1) Company estimate (2) Average price (US$ / ton) Strong Portfolio of Specialty Derivatives 7
Improving Specialties Mix CAGR Volumes Specialties 2003 2006 7,5% 2006 2011 Specialties 74% Building Blocks 26% EBIT Specialties 80% Building Blocks 20% 8
Product Innovation: developing end market applications Household Applications 8% Sporting Goods 6% Transportation 24% Food & Feed 3% Electronic & Electrical 32% Broad range of products serving different industries Ability to satisfy client needs through tailor-made solutions Construction 27% 9
Product Innovation 70,000 Sales Generated from New Products Cumulative turnover of new products from the year of introduction Platform for growth from new products already in place Euros '000 000 60,000 50,000 40,000 30,000 20,000 10,000 0 2001 2002 2003 2004 2005 Year 2001 2002 2003 2004 2005 Rich pipeline of new products for the coming future In 2006 the Company developed, produced and sold 140 new products Examples of New Products Recent Innovations Anhydride MTHPA 500-K2 2-Ethyl Hexyl Fumarate Trimellitic anhydride Polimix 740/N SMC 8000 UPR 180 V6 UPR 181 CNG Future Innovations Coating for gas barrier New Powder Resins UPR UV/Chemical resistant Polymeric plasticizers suitable for food application Green SMC/BMC Epopreg SMC/BMC Tetrahydrophthalimide 10
New Markets: European vs Global Leader 2006 Sales Breakdown (1) Rest of Europe 51% America 4% Asia 5% Other 1% Duplicate Business Model in fast growing markets: Eastern Europe Asia Italy 39% (1) Company estimate 11
Current Production Capacity Polynt has six manufacturing facilities, of which four are located in Italy, one in Poland and one in Germany Production Facilities Polynt Compounds GmbH & Co Miehlen (D) Polynt Sp.zo.o Niepolomice (PL) Polynt SpA San Giovanni Valdarno (Arezzo) (I) Polynt SpA Scanzorosciate (Bergamo) (I) Polynt SpA Ravenna (I) Polynt SpA Compounds Brembate di Sopra (Bergamo) (I) Proximity to Customers 12
New Markets Polynt s strategy focuses on the geographic expansion of its activities to meet customer needs Relocation of some customers production to Eastern Europe / Asia, e.g. electrical and transportation applications Eastern Europe and China expected to grow faster and are attracting Western investment in manufacturing Polynt has identified investment opportunities in Poland and Asia with the aim to duplicate the business model into new markets Ideal time to enter Chinese market Increasing demand for Specialties 13
Implementation: Poland Eastern Europe market growth 7 8% per year The Project: Production of Resins & Compounds in Poland to serve the growing Eastern Europe Market and support the business growth in Northern Europe Completed in October 2006 the Compounds Plants, successfully started the production in November 2006 Within 2007 completion of the Resins Plant to start integrated operations in 2008 14
Implementation: China China market growing at 10 15% per year Identified investment opportunity Approved a first step investment of 20 ml in 2007 Build-up new specialties plant to serve the local market needs currently not supported by local production 15
FINANCIALS
Raw materials and selling prices trend ( /MT) MARKET PRICE OF SOME RAW MATERIALS 1600 1400 1200 1000 MARKET PRICE OF SOME FINISHED PRODUCTS 800 600 400 200 0 Jan 04 April 04 July 04 Oct 04 Jan 05 April 05 July 05 Oct 05 Jan 06 April 06 July 06 Oct 06 OX 2-EH N-BUTANE MPG STYRENE 1.600 1.400 1.200 1.000 800 600 400 200 0 Jan 04 April 04 July 04 Oct 04 Jan 05 April 05 July 05 Oct 05 Jan 06 April 06 July 06 Oct 06 DOP PA MA 17
Strong Top Line Momentum ( m) CAGR 2003-2006 + 11.8% +17.7% p.a. 500,5 Growth driven by: 358,1 393,0 324,1 425,1 315,0 340,8 Increasing volume in specialties 301,9 Improved mix 1,19 1,21 1,35 1,47 Ability to pass on increase in price of raw materials to final customers 2003 2004 2005 2006 CAGR Volume (Ktons) 2006/2005 2003/2006 Specialties 197.2 218.6 226.8 245,0 7,5% 8.0% Building 104.7 105.5 88.2 95,8 n.m. 8,6% Blocks (*) (*) includes PA, MA, TMA Revenues Volume (Ktons) Price ( /kg) 18
Resilient EBITDA across the Cycle ( m) CAGR 2003-2006 + 4.8% +11.3% p.a. 51,2 EBITDA growing despite high raw material costs supported by: 44,4 45,9 Improved product mix (focus on specialty chemicals) 43,3 Volumes growth Operating efficiencies 2003 2004 2005 2006 EBITDA Margin 12.4% 11.0% 10.8% 10,2% % EBITDA (1) 2003-05 CAGR 19
Income Statement FY Ending December 31 ( m) - IFRS 2003A 2004A 2005A 2006A Y-o-Y Growth CAGR 03A 06A Revenues 358.1 393.0 425.1 500.5 17.7% 11.8% EBITDA 44.4 43.3 45.9 51.2 11.4% 4.8% EBITDA Margin 12.4% 11.0% 10.8% 10.2% EBIT 26.6 25.1 27.5 31.8 15.5% 6.1% EBIT Margin 7.4% 6.4% 6.5% 6.4% PBT 24.5 22.6 25.8 28.7 11.0% 5.3% PBT Margin 6.8% 5.8% 6.1% 5.8% Tax Rate 39.7% 46.8% 45.2% 46.1% Target: to lower tax rate thanks to international growth Net Income 14.8 12.0 14.1 15.4 9.4% 1.5% Net Income Margin 4.1% 3.1% 3.3% 3.1% 20
Cash Flow Statement. FY Ending December 31 ( m) IFRS 2003A 2004A 2005A 2006A Net Income 14.7 11.9 14.0 15.4 Depreciation and Amortisation 17.8 18.2 18.4 19.4 Net Taxes Paid (12.1) (9.5) (4.2) (9.4) Other changes in NWC and others 0.2 6.0 35.6 12.0 Total Operating Cash Flow 20.6 26.6 63.8 37.4 Total Net Capex (13.1) (12.8) (27.0) (21.3)(*) (*) This figure includes 4 m for disinvestments of assets and (0,9) m of net financial investment. Net of these items, Capex is (24.4) m. 21
Solid Capital Structure ( m) 253.2 251.2 48,4 46,5 227.4 14,3 226.7 26,4 2006 Net Debt increased due to: Ordinary dividend ( 16m) Extraordinary dividend ( 12m) 204,7 204,6 213,1 200,3 Significant opportunities for investment and expansion in growing markets whilst maintaining a high and stable dividend 2003 2004 2005 2006 Net debt/ Equity 23.7% 22.7% 6.7% 13.2% Equity Net Debt 22
Balance Sheet FY Ending December 31 ( m) - IFRS 2004A 2005A 2006A Current Assets 178.9 183.2 209.0 Fixed Assets 224.9 233.3 235.3 Total Assets 403.8 416.5 444.3 Current Liabilities 120.5 120.6 157.0 Non-Current Liabilities 78.7 82.8 87.0 Total Liabilities 199.1 203.4 244.0 Shareholders' Equity 204.4 212.9 200.3 Minorities 0.3 0.2 0 Total Equity and Liabilities 403.8 416.5 444.3 Net Debt 46.5 14.3 26,4 Key Leverage and Return Statistics ROCE 10.0% 12.1% 14.0% ROE 5.9% 6.6% 7.7% Net Debt/EBITDA 1.1x 0.3x 0.5x Equity/Net Debt 4.4x 15.0x 7.6x 23
Efficient Working Capital ( m) 97,4 104,9 76,9 78,5 Positive Working Capital dynamics 2003 2004 2005 2006 Net Working Capital As % of Revenues 27.2% 26.7% 18.1% 15,7% 24
Improving ROCE(1) 14.0% 12.1% 10.5% 10.0% 2003 2004 2005 ROCE 2006 ROE 7.2% 5.9% 6.6% 7.7% (1) ROCE calculated as EBIT / (Net Debt + Shareholders Equity) 25
APPENDIX
Board and Management Team Board of Directors -Stefano Meloni (Chairman) Toralf Haag Rosario Valido Angelo Maria Triulzi Christian Dudeck CEO Rosario Valido CEO and Management Team Assistant Simona Grilli Internal Audit Salvatore Di Pasquale Chief Operating Officer Mario Novelli Chief Corporate Services Officer Sergio Moreno Chief Financial Officer & Investor Relations Paolo Carugati Product Line PA & GPP + TMA & SPP Luca Bielli Product Line Maleic & Derivatives Carmine Masullo Product Line Resins & Compounds Massimiliano Schiavi Members of the Management Committee 27
Long Term Incentive Plan 10 Top Managers 1st STEP Payable in 2007 2nd STEP Payable in 2008 3rd STEP Payable in 2009 Number of phantom shares 415.000 415.000 415.000 Target EPS 2006 TSR* vs Peers 10/2006 6/2008 TSR* vs Peers 7/2008 6/2009 *TSR = Total Shareholders Return 28
Main Shareholders Healthcor Management LP 5,03% Oppenheimer Funds Inc. 2,72% BG SGR SpA 2,08% SAB Capital Management LP 9,88% Mercato 37,23% JP Morgan Asset Management UK Limited 9,31% Lonza Europe BV 31,00% Kairos Partner S.g.r. S.p.A. 2,75% Based on latest information received (March 19 th, 2007) 29
Integration as a Key Competitive Advantage Visibility on Market Dynamics React more quickly to changes in end market demand or supply changes Secure price leadership Certainty of Supply to Customers Core, reliable supplier Access to critical intermediate materials (e.g. maleic anhydride, special anhydrides, trimellitic anhydride) Product Development Launch of new products faster than competitors (e.g. compounds) Improved Profitability Upstream businesses provide base load and therefore high capacity utilisation for downstream businesses Higher and more stable margins on specialty products Reduced Cyclicality Lower volatility of EBITDA Smoothing ( portfolio ) effect of downstream and upstream combination 30
Distinctive R&D Capabilities Performance Products Heterogeneous Catalysts Proven experience in the development of performance products (UPR, epoxy hardeners, special plasticizers) which are fine-tuned according to customer needs Broad experience in the development and manufacture of high performance catalysts for gas phase partial selective oxidation and ammoxidation Time to market reduction for new products Production cost optimisation Chemical Reaction Thermoset Compounding Gas and liquid phase partial selective oxidation Gas and liquid phase selective hydrogenation Esterification / polyesterification / imidation Double bond reactions: Additions, Isomerisation, Diels- Alder reaction, Ene reactions Compounds new and tailor-made formulations Cost efficiency increase Proprietary information protection 31
Outstanding Environmental Track Record Measures aimed at reducing environmental risks connected to the operations by: Obtaining the necessary environmental certifications for the PP&E Constantly monitoring processes and cycles of production facilities Environmental Management System ( EMS ) to identify, evaluate and compare the main environmental problems in a systematic manner Including also ISO 14001 System, a widely adopted voluntary program to improve the quality of environmental management 32