A Leading Chemical Company in the CEE

1
A Leading Chemical Company in the CEE

• 29 September 2005

2
A Snapshot View

• BorsodChem is a leading European producer of high
  value added performance chemicals and commodity
  chemicals, and is one of Hungarys largest
  industrial companies
• In the CEE region, BorsodChem is the largest
  producer of PVC the sole producer of MDI a
  leading producer of TDI
• Well-balanced product portfolio reduces overall
  exposure to market cycles
• The Group is well placed as a low cost producer
  to take advantage of strong demand for its core
  products particularly from the CEE region
• Maintained strong cash flow throughout the
  chemical cycle

Source Company Report Accounts
3
MDI

• BorsodChem is the sole producer of MDI in CEE
  with approximately 5.0 of total production in
  Europe1
• Less cyclical, higher value-added isocyanate
  product
• Strong expected annual demand growth
  approximately 5.8 in CEE and 3.4 in Western
  Europe1 over the period 2003-2008
• Combination of licensed and in-house designed
  technology
• current capacity of 60kt/year, representing
  approximately 5.0 of total European capacity1
• programme of capacity expansion to 160kt/year by
  2006
• technological barriers to entry

MDI - Main end user markets in Europe

• Construction
• Automotive
• Refrigeration
• Footwear
• Coatings
• Engineering plastics

Source Management data
Development of listed prices (EUR/t)
1 Source SRI Consulting
Source ISIS-LOR
4
TDI
TDI - Main end user markets in Europe

• Leading CEE producer of TDI with 15.0 of
  production in Europe1
• Higher value-added polyurethane raw material
• Strong expected growth of the demand in the
  region approximately 4.2 in CEE and 2.9 in
  Western Europe1 over the period 2003-2008
• One of three producers in Europe manufacturing
  three grades of TDI (65, 80, and 100) - A single
  source of supply for all TDI needs
• The newest TDI plant in Europe
• nameplate capacity of 60kt/year (approximately
  10.0 of European total TDI capacity1)
• expanded to 80kt /year at the end of 2004
• technological barriers to entry

• Flexible foams
• Coatings
• Adhesives
• Sealants
• Elastomers

Source Management data
Development of listed prices (EUR/t)
Source ISIS-LOR
1 Source SRI Consulting
5
PVC
PVC - End user markets for BorsodChem

• BorsodChem is the largest PVC producer in CEE
  with approximately 20.01 of production
• Global demand is projected to grow at
  approximately 2.7 p.a.2 between 2003-2008.
  Annual growth in CEE is expected to reach 7.3 2
• Current capacity of 330kt/year (3.9 of European
  capacity1)
• planned capacity expansion to 400 kt/year by the
  end of 2006
• The Group achieves substantial cost advantages
  due to
• certain key raw materials produced internally
• double use of chlorine
• economies of scale with one of largest single PVC
  plants sites in Europe

• Construction
• Packaging
• Cables

Source Management data
Development of listed prices (EUR/t)
Source ISIS-LOR
1 SRI Consulting 2 CMAI
6
Further Development of IntegratedProduct
Structure
Outside of the main site
On the main site
7
Continued Expansion Organic Growth

• Significant investment undertaken since 2000 in
  order to develop the isocyanates operations
• BorsodChem is currently implementing a
  substantial three-year HUF 801 bn (EUR 300
  million) capital expenditure program to increase
  its production capacities both in isocyanates and
  PVC. This should enable the Company to
• reduce cyclicality and increase resilience of
  earnings
• secure cost advantages and increase margins
  through economies of scale

Production capacity (kt)
Capital expenditures (HUF bln)
42.0
32.0
35
Product 2001 2002 2003 2004 2005 2006
30
26.0
PVC 300 300 300 330 365 400 MDI 60 60 60 60 70 1
60 TDI - 60 60 80 80 80 VCM 220 185 185 250 250
350 Chlorine 130 130 130 130 130 210
25
16.2
20
15.0
15
10.7
10
5
0
Source Management Data Note the reduction in
VCM capacity in 2002 reflected the TDI capacity
coming on line 1 BorsodChem CAPEX
unconsolidated basis not including CAPEX
maintenance
2001
2002
2003
2004
2005 E
2006 E
Source Company Report Accounts Year End CAPEX
Expenditures for BorsodChem consolidated basis
including maintenance