STYROLUTION GMBH: 3rd Quarter Results

  STYROLUTION GMBH: 3rd Quarter Results

UK Regulatory Announcement

FRANKFURT, Germany

                            Styrolution Group GmbH

    Unaudited Interim Financial Statements –three and nine months ended 30
                                September 2012

                          Forward Looking Statements

The following report includes “forward-looking statements”, based on our
current expectations and projections about future events, including:

  *the cyclical nature of our businesses and their sensitivity to changes in
    supply and demand;
  *raw material availability and costs, as well as supply arrangements,
    including arrangements with principal feedstock suppliers;
  *the highly competitive nature of our principal industries;
  *current or future environmental requirements, including those related to
    greenhouse gas and other air emissions, and the related costs of
    maintaining compliance and addressing liabilities;
  *currency fluctuations and economic downturns in the countries in which we
    operate;
  *our ability to implement our business and cost reduction strategies;
  *our ability to successfully integrate our businesses and realize
    anticipated synergies and cost savings; and
  *our substantial indebtedness following the consummation of the Joint
    Venture Transaction may affect our ability to service our outstanding
    indebtedness, which would likely impact the way we operate our business.

All statements other than statements of historical facts included in this
report, without limitation, statements regarding our future financial
position, risks and uncertainties related to our Company and the notes,
strategy, capital expenditures, projected costs and our plans and objectives
for future operations, may be deemed to be forward-looking statements. These
forward-looking statements are subject to a number of risks and uncertainties.
Words such as “believe,” “expect,” “anticipate”, “may”, “intend”, “will”,
“should”, “estimate” and similar expressions or the negatives of these
expressions are intended to identify forward-looking statements. In addition,
from time to time we or our representatives, acting in respect of information
provided by us, have made or may make forward-looking statements orally or in
writing and these forward-looking statements may be included in but are not
limited to press releases (including on our website), reports to our security
holders and other communications. Although we believe that the expectations
reflected in such forward-looking statements are reasonable, we can give no
assurance that such expectations will prove to be correct. We undertake no
obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.

       Styrolution Group GmbH – Unaudited Interim Financial Statements

   Consolidated Statement of Income for the three and nine months ended 30
                                September 2012

In millions of EUR              1 July – 30           1 January – 30
                                  September 2012         September 2012
Revenue                          1,484.0                4,553.9
Cost of sales                    (1,358.1)              (4,113.1)
Gross profit                      125.9                  440.8
                                                         
Selling expenses                  (83.6)                 (244.9)
General and administrative        (14.5)                 (59.9)
expenses
Research and development          (3.8)                  (9.5)
expenses
Other operating expenses         (12.7)                 (22.4)
(net)
Result from operating             11.3                   104.1
activities
                                                         
Interest income                   2.9                    4.9
Interest expense                  (12.9)                 (40.4)
Other finance gain (loss)         (4.4)                  0.7
(net)
Net finance costs                 (14.4)                 (34.8)
                                                      
Income (loss) before tax          (3.1)                  69.3
Income tax benefit (expense)     0.7                    (22.6)
Net income (loss)                 (2.4)                  46.7
Attributable to:
                                 0.4                    0.7
Non-controlling interests
Owners of the company            (2.8)                  46.0

       Styrolution Group GmbH – Unaudited Interim Financial Statements

 Consolidated Statement of Comprehensive Income (loss) for the three and nine
                        months ended 30 September 2012

In millions of EUR                        1 July – 30      1 January – 30
                                           September 2012    September 2012
                                                                             
Net income (loss)                          (2.4)             46.7
Other comprehensive loss:
Foreign currency translation reserve       (13.2)            15.9
Actuary gains and losses on defined        -                 -
benefit plans
Total other comprehensive income (loss)    (13.2)            15.9
Total comprehensive income (loss)          (15.6)            62.6
Attributable to:
                                           0.5               0.7
Non-controlling interests
Owners of the company                      (16.1)            61.9

       Styrolution Group GmbH – Unaudited Interim Financial Statements

                 Consolidated Statement of Financial Position

In millions of EUR                      30 September 2012  31 December 2011
Assets                                  
Property, plant and equipment             780.2               809.4
Intangible assets and goodwill            1,236.2             1,241.1
Deferred tax assets                       25.7                22.8
Other receivables and miscellaneous       6.7                 7.1
non-current assets
Non-current assets                       2,048.8             2,080.4
Inventories                               560.1               463.6
Accounts receivable, trade                767.1               756.3
Other receivables and miscellaneous       199.5               360.3
current assets
Cash and cash equivalents                 225.4               266.0
Assets held for sale                      -                   13.2
Current assets                           1,752.1             1,859.4
Total assets                             3,800.9             3,939.8
                                                           
Equity
Share capital                             10.0                10.0
Contributed Surplus                       1,641.4             1,641.4
Other reserves                            35.3                24.0
Accumulated deficit                       (23.2)              (69.2)
Equity attributable to owners of the     1,663.5             1,606.2
Company
Non-controlling interest                  7.1                 8.4
Total equity                             1,670.6             1,614.6
Liabilities
Financial indebtedness                    470.0               468.2
Employee benefits                         45.6                42.8
Deferred tax liabilities                  360.9               367.8
Other liabilities and other long term     67.5                124.4
provisions
Non-current liabilities                  944.0               1,003.2
Accounts payable, trade                   674.3               728.0
Financial indebtedness                    322.0               439.6
Current tax liabilities                   0.8                 13.1
Other liabilities and short term          189.2               137.6
provisions
Liabilities held for sale                 -                   3.7
Current liabilities                       1,186.3             1,322.0
Total liabilities                        2,130.3             2,325.2
Total equity and liabilities             3,800.9             3,939.8

       Styrolution Group GmbH – Unaudited Interim Financial Statements

                 Consolidated Statement of Changes in Equity


                                                                          Equity
               Share    ContributedSurplus  Accumulated  Other     attributable  Non-controlling  Total
                  Capital                        deficit       Reserves   to owners of   interest          Equity
In millions                                                               the company
of EUR
                                                                                                   
At 31            10.0      1,641.4              (69.2)        24.0       1,606.2        8.4               1,614.6
December 2011
             
Net income                                       46.0                     46.0           0.7               46.7
Other
Comprehensive                                              15.9       15.9                            15.9
income
Total
comprehensive                                    46.0          15.9       61.9           0.7               62.6
income
                                                                                                                   
India share                                                    (4.6)      (4.6)          (2.0)             (6.6)
repurchase
                                                                                                   
At 30
September        10.0      1,641.4              (23.2)        35.3       1,663.5        7.1               1,670.6
2012

       Styrolution Group GmbH – Unaudited Interim Financial Statements

                     Consolidated Statement of Cash Flows

In millions of EUR                                  1 January – 30 September
                                                      2012
Cash flows from operating activities                
Income before tax                                     69.3
Adjustment for:
Depreciation and impairment of property, plant        84.6
and equipment
Amortization and impairment of intangible assets      43.2
Change in pension provisions, other liabilities       (18.7)
and charges
Net finance cost                                      34.8
Current income tax paid                              (59.2)
Working capital adjustments:
                                                      (94.5)
  *Inventories
                                                      ))
  *Trade receivables                                 (9.4)
  *Other receivables                                 6.0
  *Trade payables                                   64.7
Cash generated from operating activities              120.8
Interest paid                                        (26.2)
Net cash flows from operating activities             94.6
                                                      
Cash flows from investing activities
Investments in property, plant and equipment and      (60.4)
intangible fixed assets
Proceeds from disposal of property, plant and         -
equipment and intangible assets
Proceeds from sale of disposal group (ELIX)          22.1
Net cash flows used in investing activities          (38.3)
                                                      
Cash flows from financing activities
Share repurchase India                                (6.6)
                                                      (29.1)
Repayment of asset securitization, net
                                                      ))
Receipt from borrowings from related parties          29.5
Repayment of borrowings from related parties          (106.5)
Receipt of other borrowings                           58.4
Repayment of other borrowings                        (40.8)
Net cash flows used in financing activities          (95.1)
                                                    
Net changes in cash and cash equivalents             (38.8)
                                                      
Cash and cash equivalents at 31 December 2011         266.0
Effect of exchange rate fluctuations on cash held    (1.8)
Cash and cash equivalents at 30 September 2012       225.4

       Styrolution Group GmbH – Unaudited Interim Financial Statements

                                    Notes

1. Reporting entity

Styrolution Group GmbH (‘Group’ or the ‘Company’) is an intermediate holding
Company which is wholly owned by Styrolution Beteiligungs GmbH, a wholly owned
subsidiary of Styrolution Holding GmbH. Styrolution Holding GmbH is a joint
venture ultimately owned by two shareholders, INEOS Industries Holdings Ltd.,
a subsidiary of INEOS AG, and BASF SE (“BASF”). INEOS Industries Holdings Ltd.
(“INEOS”) owns 50% of the shares of Styrolution Holding GmbH. BASF SE directly
owns 15.95% of the shares of Styrolution Holding GmbH and indirectly through
BASF Antwerpen N.V. (a wholly owned subsidiary) another 34.05%. The Company is
domiciled in Germany and has its registered office at Erlenstrasse 2, 60325
Frankfurt am Main, Germany. The Company was incorporated on 19 April 2011.

On 1 October 2011, BASF contributed the BASF Styrenics Business to the Company
and INEOS contributed the INEOS Styrenics Business and the INEOS ABS Business
to the Company by way of the Joint Venture Transaction. As used herein, the
“Joint Venture Transaction” means the consummation of the Joint Venture and
related financings by and among BASF SE and INEOS Industries Holdings Limited
as described in the Styrolution Group GmbH Offering Memorandum dated May 12,
2011 (the “Offering Memorandum”). Also as used herein, the BASF Styrenics
Business, the INEOS Styrenics Business and the INEOS ABS Business shall have
the meanings set forth in the Offering Memorandum. BASF SE and INEOS
Industries Holdings Limited are sometimes referred to herein as the “Joint
Venture Partners”. The Company accounts for these contributions as business
combinations. The consolidated interim financial statements are not
accompanied by comparative financial information preceding its formation as
these businesses were previously not under common control. The consolidated
interim financial statements of the Company comprise the Company and its
subsidiaries (together referred to as the ‘Group’ and individually as ‘Group
entities’). The Group is the leading global producer, marketer and merchant
seller of styrene monomer and styrenics polymers.

2. Basis for preparation

(a) Statement of compliance

These consolidated interim financial statements of Styrolution Group GmbH for
the period ended 30 September 2012 have been prepared in accordance with IAS
34 Interim Financial Reporting. They do not provide all of the information and
disclosures included in complete consolidated financial statements and are
therefore to be read in conjunction with the consolidated financial statements
as of and for the period ending 31 December 2011.

The consolidated interim financial statements were authorized for issue by the
Managing Directors on 19 November 2012.

(b) Basis of measurement

The basis of measurement for the consolidated financial statements is
generally the historical cost basis except for those financial instruments
categories measured at fair value.

On 1 October 2011 the Group engaged in the Joint Venture Transaction and
acquired the BASF Styrenics Business, the INEOS Styrenics Business and the
INEOS ABS Business from the respective Joint Venture Partners by means of a
combination of contributions in kind and cash payments. The fair value of the
consideration exchanged in the transaction has been allocated to the
identified assets acquired and liabilities assumed. In particular, the
following fair values had originally been determined on a provisional basis:
intangible assets (including goodwill), property, plant and equipment,
employee benefit obligations, liabilities related to unfavorable supply
agreements with related parties, provisions and deferred taxes. As of 30
September 2012, the Company finalized the allocation for those assets
contributed and liabilities assumed based on information obtained about facts
and circumstances that existed at the acquisition date. The finalization of
the allocation resulted in an increase of the goodwill of EUR 13.3 million and
corresponding increases, primarily affecting deferred tax liabilities. These
changes were not significant to the consolidated financial statements for the
year ended 31 December 2011 and are reflected in the interim financial
statements for the third quarter of 2012.

The accounting and valuation methods disclosed in the notes to the
consolidated financial statements as of and for the period ending 31 December
2011 have been applied consistently, except for the finalization of the
allocation of the fair value of consideration exchanged.

(c) Functional and presentation currency

These consolidated interim financial statements are presented in EUR, which is
the Company’s functional currency. All financial information presented in EUR
has been rounded to the nearest tenth of a million, except when otherwise
indicated.

(d) Use of estimates and judgments

The preparation of financial statements in conformity with IFRS requires
management to make judgments, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these
estimates. Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognized in the period in which
the estimates are revised and in any future periods affected.

(e) Segment reporting

Segment results that are reported to the CEO include items directly
attributable to a segment as well as those that can be allocated on a basis
considered reasonable. Unallocated items comprise mainly assets that are used
across segments (primarily the Company’s headquarters), head office expenses,
and tax assets and liabilities. The Company has defined the following
operating segments:

  *EMEA
  *Americas
  *Asia

Detailed information by segment for the three months ended 30 September 2012
is presented in the following tables.

In millions of EUR    External sales  Inter-segment sales  EBITDA before
                                                              Special Items
EMEA                   621.4            22.6                  26.3
Americas               506.6            11.8                  24.6
Asia                   356.0            1.6                   16.0
Corporate and                          (36.0)                
eliminations
Total for the period   1,484.0          0.0                   66.9

Detailed information by segment for the first nine months ended 30 September
2012 is presented in the following tables.

In millions of EUR    External sales  Inter-segment sales  EBITDA before
                                                              Special Items
EMEA                   1,939.6**        66.4                  108.0
Americas               1,564.6*         84.9*                 112.8
Asia                   1,049.7**        4.6                   29.9
Corporate and                          (155.9)*              
eliminations
Total for the period   4,553.9*         0.0                   250.7

* In the first quarter 2012, the Company reported certain internal sales of
styrene monomer sales in the Americas region as external sales. These sales
have been properly reported in the tables above.

** In the first two quarters of 2012, the Company reported external sales for
certain location and time swaps. These swaps are not included as external
sales in the tables above. Management considers this to be a better
presentation of the actual trading and revenue of the Company.

Reconciliation of EBITDA before special items to Income (loss) before tax:

In millions of EUR              1 July – 30           1 January – 30
                                  September 2012         September 2012
                                                      
EBITDA before special items       66.9                   250.7
Special items (restructuring      (15.3)                 (18.8)
expenses)
Depreciation and Amortization     (40.3)                 (127.8)

Results from operations          11.3                   104.1

Net finance costs                 (14.4)                 (34.8)
Income (loss) before tax         (3.1)                  69.3

The special items primarily include estimated contract termination costs.

3. Disposal group held for sale

As part of the Joint Venture Transaction on 1 October 2011, the Group acquired
shares in ELIX Polymers S.L. On June 1, 2011, the EU Commission gave its
approval for the completion of the Joint Venture Transaction subject to the
requirement that the Company divest its interest in ELIX Polymers S.L. In
December 2011 the Group agreed to an agreement to sell ELIX Polymers S.L. for
an amount of EUR 23 million in cash, subject to adjustment for any debt and
certain working capital requirements defined in the agreement. The Company
retained certain liabilities of the disposal group. The price obtained on the
market was used as a basis for measuring the fair value of ELIX Polymers S.L.
in the Joint Venture Transaction purchase price allocation.

The sale of ELIX Polymers S.L. was completed on 30 March 2012. After
adjustments, the Company received proceeds on 1 April 2012 from the sale of
EUR 22.1 million in cash.

4. Income taxes

Income tax expense is recognized based on management’s best estimate of the
income tax rate expected for the year 2012 applied to the income before taxes
of the third quarter 2012. The Group’s consolidated effective tax rate for the
first three quarters of 2012 was 32.6%.

5. Equity

As a result of the Joint Venture transactions the Company undertook and on 6
February 2012 completed a public offer to purchase the non-controlling
interest in Styrolution ABS (India) Limited (formerly INEOS ABS (India) Ltd.).
As a result of this process the Company increased its share in Styrolution ABS
(India) Limited from 83.33% to 87.26%. The total amount paid from this
increase was EUR 6.6 million. The reduction in the total value of the
non-controlling interest is EUR 2.0 million.

6. Financial indebtedness

In millions of EUR                      30 September 2012  31 December 2011
Current liabilities
Short term borrowings from related       0.8                 106.5
parties
Short term borrowings from asset         300.5               329.1
securitizations
Short term borrowings other              20.3                1.8
Short term finance lease liabilities     0.4                 2.2
Total                                    322.0               439.6

The Group repaid interest-bearing loans from shareholders that were due on 15
February 2012. The loans primarily originated in the contribution of the
businesses under the capital increase resolution and represent excess cash
balances contributed.

7. Related parties

In millions of EUR           Transaction value          Balance outstanding
                             1 January – 30 September    30 September 2012
                              2012
Sale of products
  *BASF**                    233.3
  *INEOS                     120.1
Purchase of raw materials
  *BASF**                    1,413.1
  *INEOS                     741.4
Services received
  *BASF                      51.3
  *INEOS                     27.5
Trade and other receivables
  *BASF                                                  85.7
  *INEOS                                                 16.6
  *Shareholder                                           56.6
Trade and other payables
  *BASF                                                  (300.8)
  *INEOS                                                (79.9)

** In the first two quarters of 2012, the Company reported external sales for
certain location and time swaps. To the extent that these swaps involve a
shareholder of the Company, they are not included as sales of product in the
table above – see also note 2.

The Company completed a settlement agreement with its shareholder who assumed
trade payable balances of EUR 119.6 million in exchange for the Company’s
receivable due from shareholder. The corresponding receivables and payables
were extinguished as a result of the settlement agreement.

On 19 March 2012 the Company announced the termination of tolling agreements
with INEOS concerning the styrenics plant of INEOS in Marl, Germany. Supply of
polystyrene and styrene from Marl continued through October 2012. As a result
of the termination of the agreement, the Company will accelerate payments of
approximately EUR 43.2 million under the contract of which EUR 33.5 million
was identified as an unfavorable contractual agreement in accounting for the
business combination.

    Presentation of the Styrolution third quarter 2012 business results of
                                  operation

The Company prepared this discussion and analysis of its results of operations
by comparing its unaudited consolidated interim financial statements of income
and cash flows for the three and nine months ended 30 September 2012 to the
pro forma information for the corresponding periods, i.e. the three and nine
months ended 30 September 2011. The pro forma information is based on the
combined performance of the businesses that were contributed to the Company by
its shareholders in connection with the completion of the Joint Venture
transaction on 1 October 2011, but do not include the effects of purchase
accounting which affect the actual financial information for 2012.

In millions of EUR          1 July – 30      Pro forma 1 July –    %
                            September 2012    30 September 2011
                                                                   
                           
Revenue                      1,484.0           1,540.8                (3.7)
Cost of sales               (1,358.1)         (1,400.2)              3.0
Gross profit                 125.9             140.6                  (10.5)
                                                                             
Selling expenses             (83.6)            (85.1)                 1.8
General and                  (14.5)            (25.7)                 43.6
administrative expenses
Research and development     (3.8)             (3.0)                  (26.7)
expenses
Other operating income      (12.7)            1.6                    >(100)
(expenses)
Result from operating        11.3              28.4                   (60.2)
activities
                                                                             
Interest income              2.9               -                      -
Interest expense             (12.9)            (11.6)                 (11.2)
Other finance gain           (4.4)             0.2                    >(100)
(loss) (net)
Net finance costs            (14.4)            (11.4)                 (26.3)
                                                                  
Income (loss) before tax     (3.1)             17.0                   >(100)
Income tax benefit          0.7               (10.3)                 >100
(expense)
Net income (loss)            (2.4)             6.7                    >(100)
Attributable to:
                            0.4               -                      -
Non-controlling
interests
Owners of the company       (2.8)             6.7                    >(100)

Presentation of the Styrolution first nine months year 2012 business results
of operation

In millions of EUR         1 January – 30   Pro forma 1 January  Delta in
                           September 2012    – 30 September 2011   %
                                                                 
                          
Revenue                     4,553.9           4,959.0               (8.2)
Cost of sales              (4,113.1)         (4,399.8)             6.5
Gross profit                440.8             559.2                 (21.2)
                                                                             
Selling expenses            (244.9)           (248.5)               1.4
General and                 (59.9)            (59.1)                (1.4)
administrative expenses
Research and                (9.5)             (8.8)                 (8.0)
development expenses
Other operating income     (22.4)            (13.5)                (65.9)
(expenses)
Result from operating       104.1             229.3                 (54.6)
activities
                                                                             
Interest income             4.9               -                     -
Interest expense            (40.4)            (35.0)                (15.4)
Other finance gain          0.7               (9.8)                 >100
(loss) (net)
Net finance costs           (34.8)            (44.8)                22.3
                                                                
Income before tax           69.3              184.5                 (62.4)
Income tax expense         (22.6)            (50.2)                55.0
Net income                  46.7              134.3                 (65.2)
Attributable to:
                           0.7               -                     -
Non-controlling
interests
Owners of the company      46.0              134.3                 (65.7)

Revenue: Revenue in the third quarter of 2012 amounts to EUR 1,484.0 million,
a decrease of EUR (56.8) million or (3.7%) compared to EUR 1,540.8 million in
the third quarter 2011. Revenue reduced mainly because of lower styrene
monomer sales. The Company optimized its styrene balance by using more styrene
internally, part of Styrolution’s strategy. The Sarnia styrene plant was down
due to a force majeure while Texas City and Antwerp were in turnaround for
several weeks during the quarter which also reduced styrene sales volumes.
This reduction was partly offset by the strengthened USD compared to the Euro.

The polymer sales volumes slightly increased in the third quarter 2012
compared to third quarter 2011, mainly in Asia and EMEA. The Company benefited
from low Inventory volumes in the industry and subsequent restocking of our
customers. This increase was accelerated by the strengthened USD compared to
the Euro.

As of the fourth quarter 2011 Styrolution does not recognize any sales from
the operations of the ELIX Polymers S.L. Tarragona ABS Specialties plant in
Spain. This asset was sold on March 30 2012 and is treated in that way under
IFRS accounting rules. This decreased the third quarter 2012 sales compared to
previous quarter last year.

Revenues by segment:

In millions of EUR  1 July – 30 September  Pro forma 1 July – 30    %
                     2012                    September 2011
EMEA                 621.4                   731.6                     (15.1)
Americas             506.6                   472.0                     7.3
Asia                 356.0                   337.2                     5.6
Revenue              1,484.0                 1,540.8                   (3.7)

Revenues by product:

In millions of EUR       1 July – 30      Pro forma 1 July – 30     %
                          September 2012    September 2011
                                                                    
Acrylonitrile Butadiene   227.0             217.2                      4.5
Styrene
Polystyrene               625.8             594.2                      5.3
Styrene Monomer           318.4             347.3                      (8.3)

Specialties               312.8             382.1                      (18.1)
Revenue                   1,484.0           1,540.8                    (3.7)

The Company has slightly revised the reporting structure of its portfolio.
While the Company still has the same product groupings: styrene monomer,
polystyrene and ABS, the Company has identified a number of ABS grades which
will join copolymers to be classified as specialties in the future. This
change is reflected in the reporting starting in Q1 2012. The comparative
revenues for 2011 have been adjusted accordingly. Prior to the third quarter
of 2012, the Company reported external sales for certain location and time
swaps. These swaps are not included as external sales in the tables above.
Management considers this to be a more representative presentation of the
actual trading and revenue of the Company and adjusted comparative revenues
accordingly.

Cost of Sales: Cost of sales decreased by EUR 42.1 million, or 3.0%, to EUR
(1,358.1) million compared to EUR (1,400.2) million in the previous year. This
decrease is due to the reduction in third party styrene sales volumes, partly
offset by improved margins for polymers mainly in Asia and Americas. As a
result of the Purchase Price allocation the cost of sales increased by EUR
15.6 million in the third quarter of 2012. This was mainly higher depreciation
and amortization costs. Cost of sales increased because of the strengthening
of the US dollar against the Euro.

Gross profit: Gross profit decreased by EUR (14.7) million, or (10.5%) to EUR
125.9 million compared to EUR 140.6 million in the previous year. This was
mainly due to higher depreciation and amortization expenses of EUR 22.8
million in the third quarter 2012 compared to the third quarter 2011. The
Company’s cost of sales increased as a results of purchase price allocations
by EUR 15.6 million.

The Company was able to improve its polymer margins in the third quarter 2012
in Asia and the Americas. This and an improved supply demand balance resulted
in improved gross profit compared to the third quarter 2011 in Asia and the
Americas. Margins reduced in EMEA due to the uncertainty of the European
economic climate.

The gross profit of the styrene business reduced significantly due to a
decrease in margins in EMEA, the turnaround at our Texas City and Antwerp
styrene plants and the force majeure in the Sarnia plant in the Americas.

Selling expenses: Selling expenses decreased by EUR 1.5 million or 1.8% to EUR
(83.6) million compared to EUR (85.1) million in the previous year. The
decrease mainly reflects lower freight and selling costs. Freight costs are
not always related to external sales volumes, because of freight costs related
to captive use.

General and administrative expenses: General and administrative expenses
decreased by EUR11.2 million, or 43.6%, to EUR(14.5) million compared to
EUR(25.7) million in the previous year. The decrease is caused by several
unusual items including a bad debts release of EUR 3.5 million in the
Americas.

Research and development expenses: Research and development expenses increased
by EUR(0.8) million, or (26.7%), to EUR(3.8) million compared to EUR(3.0)
million in the previous year.

Other operating expenses: Other operating expenses were EUR (12.7) million, an
increase of EUR (14.3) million compared to other operating income of EUR1.6
million in the previous year. The increase is mainly because of estimated
contract termination and project integration costs.

EBITDA before special items: EBITDA before special items increased by EUR20.0
million, or 42.6%, from EUR 46.9 million to EUR 66.9 million. The third
quarter of 2012 was an acceptable volume and margin quarter in an uncertain
economic environment. The increase is mainly due to improved performance of
the polymers business, mainly in Asia and Americas. Special items were
incurred in the context of the formation of the Joint Venture, the termination
of certain contracts or the integration of activities.

Reconciliation of EBITDA before special items to income (loss) before tax:

                                1 July – 30       Pro forma 1 July   Delta in
In millions of EUR             September 2012   – 30 September    EUR
                                                  2011
EBITDA before special items     66.9              46.9               20.0
(1)
Special items (restructuring    (15.3)            (1.0)              (14.3)
expenses)
                                (40.3)            (17.5)             (22.8)
Depreciation and Amortization
Results from operations         11.3              28.4               (17.1)
Net finance costs               (14.4)            (11.4)             (3.0)
Income (loss) before tax        (3.1)             17.0               (20.1)

(1) EBITDA represents income from operations plus depreciation of property,
plant and equipment and amortization of intangible assets. EBITDA before
special items represents EBITDA less special items. Although EBITDA and EBITDA
before special items should not be considered substitute measures for profit
and net cash flow from operating activities, we believe that they provide
useful information regarding our ability to meet future debt service
requirements. EBITDA and EBITDA before special items may not be comparable to
similarly titled measures used by other companies.

                       LIQUIDITY AND CAPITAL RESOURCES

The cash flow statement is prepared in accordance with the indirect method.
Cash and cash equivalents do not include deposits and guarantees that are not
immediately available. These amounts are included in other receivables.

Cash provided by operating activities

Cash provided by operating activities by Styrolution in the first nine month
of 2012, excluding interest payments was EUR 120.8 million. The cash flows
generated by operations were significantly higher than the result from
operations on the income statement due to material depreciation and
amortization amounts included in the result from operations. The Company used
cash to fund its working capital needs. By the end of the third quarter of
2012, feedstock prices had increased compared to the beginning of the year,
which tends to have an increasing effect on the cash flow requirements of the
Company. In addition, interest and income taxes paid reduced cash flows from
operations.

Cash used in investing activities

The cash used in investing activities of EUR 38.3 million consists of two
items. The cash used for capital expenditures was EUR 60.4 million. Capital
expenditures relate to regular maintenance and new investments in our plants,
including an extension of our plant in Ulsan, Korea, dedicated to the
production of styrene acrylonitrile copolymers and inaugurated on 19 July
2012. Proceeds from sale of ELIX were EUR 22.1 million.

Cash used in financing activities

The Company used cash flow in financing activities primarily to repay loans
from related parties of a net amount of EUR 77.0 million and reduce the
balance from asset securitizations by EUR 29.1 million, offset by net
additional borrowings of EUR 17.6 million. In addition, EUR 6.6 million was
paid in connection with the tender offer in India.

Financing of Styrolution

The financing of the Company is through the issuance of Senior Secured Notes
of EUR480 million, a Trade Receivables Securitization Facility (up to EUR 500
million) and ancillary lines for instruments such as guarantees and letters of
credit.

The financing of Styrolution and the use of funds at the end of September 2012
of the Company was as follows:

In millions of EUR                                                 
                                                                    
Senior secured bond                                                   480.0
Short term borrowings from asset securitizations and other             322.0
borrowings
Total Financing on 30 September 2012                                   802.0
Cash and cash equivalents                                             (225.4)
Net Debt on 30 September 2012                                         576.6

Contact:

STYROLUTION GMBH
 
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