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STYROLUTION GMBH: Half-yearly Report



  STYROLUTION GMBH: Half-yearly Report

UK Regulatory Announcement

FRANKFURT, Germany

                            Styrolution Group GmbH

  Unaudited Interim Financial Statements – the three and six months ended 30
                                  June 2013

                          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 six months ended 30 June
                                     2013

In millions of EUR         1 Apr - 30   1 Apr - 30   1 Jan - 30   1 Jan - 30
                           Jun 2013     Jun 2012     Jun 2013     Jun 2012    
Revenue                    1,485.9      1,539.4      3,006.0      3,069.9
Cost of sales              (1,339.1)    (1,408.0)    (2,721.6)    (2,755.0)
Gross profit               146.8        131.4        284.4        314.9
                                                                              
Selling expenses           (67.4)       (82.9)       (133.8)      (161.3)
General and                (24.9)       (25.9)       (48.2)       (45.4)
administrative expenses
Research and development   (3.3)        (3.2)        (6.6)        (5.7)
expenses
Other operating expenses   (6.5)        (0.6)        (11.0)       (9.7)
(net)
Result from operating      44.7         18.8         84.8         92.8
activities
                                                                              
Interest income            1.0          -            1.9          -
Interest expense           (13.2)       (13.5)       (25.7)       (25.5)
Other finance gain         (11.5)       8.1          0.9          5.1
(loss) (net)
Net finance costs          (23.7)       (5.4)        (22.9)       (20.4)
                                                                   
Income before tax          21.0         13.4         61.9         72.4
Income tax benefit         0.2          (5.5)        (13.9)       (23.3)
(expense)
Net income                 21.2         7.9          48.0         49.1
Attributable to:
Non-controlling            0.2          (0.1)        0.5          0.3
interests
Owners of the company      21.0         8.0          47.5         48.8
                                                                              

       Styrolution Group GmbH – Unaudited Interim Financial Statements

 Consolidated Statement of Comprehensive Income (loss) for the three and six
                                    months

                              ended 30 June 2013

                                1 Apr –       1 Apr –    1 Jan –    1 Jan –
In millions of EUR                                                 
                                30 Jun 2013   30 Jun     30 Jun     30 Jun
                                              2012       2013       2012
                                                                              
Net income                      21.2          7.9        48.0       49.1
Other comprehensive loss:
Foreign currency translation    (30.9)        48.5       (10.7)     29.1
reserve
Total other comprehensive       (30.9)        48.5       (10.7)     29.1
income (loss)
Total comprehensive income      (9.7)         56.4       37.3       78.2
(loss)
Attributable to:
                                (1.0)         (0.2)      (0.4)      0.2
Non-controlling interests
Owners of the company           (8.7)         56.6       37.7       78.0
                                                                              

       Styrolution Group GmbH – Unaudited Interim Financial Statements

                 Consolidated Statement of Financial Position

In millions of EUR                           30 June 2013   31 December 2012
                                                                              
Assets
Property, plant and equipment                786.1          799.6
Intangible assets and goodwill               1,265.1        1,312.0
Deferred tax assets                          24.8           25.4
Other receivables and miscellaneous          25.0           25.3
non-current assets
Non-current assets                           2,101.0        2,162.3
Inventories                                  550.2          581.4
Accounts receivable, trade                   729.9          682.5
Other receivables and miscellaneous          129.7          138.4
current assets
Cash and cash equivalents                    248.0          190.1
Current assets                               1,657.8        1,592.4
Total assets                                 3,758.8        3,754.7
Equity
Share capital                                10.0           10.0
Contributed Surplus                          1,641.4        1,641.4
Other reserves                               13.6           17.3
Retained income (accumulated deficit)        9.5            (38.0)
Equity attributable to owners of the         1,674.5        1,630.7
Company
Non-controlling interest                     13.0           6.8
Total equity                                 1,687.5        1,637.5
Liabilities
Financial indebtedness                       479.7          470.6
Employee benefits                            58.0           60.9
Deferred tax liabilities                     392.7          407.0
Other liabilities and other long term        75.8           89.0
provisions
Non-current liabilities                      1,006.2        1,027.5
Accounts payable, trade                      566.5          531.2
Financial indebtedness                       298.9          359.1
Current tax liabilities                      52.6           35.9
Other liabilities and short term             147.1          163.5
provisions
Current liabilities                          1,065.1        1,089.7
Total liabilities                            2,071.3        2,117.2
Total equity and liabilities                 3,758.8        3,754.7
                                                                              

       Styrolution Group GmbH – Unaudited Interim Financial Statements

                 Consolidated Statement of Changes in Equity

 
                                        Retained                  Equity         Non-
                Share     Contributed   income         Other      attributable   controlling   Total
                Capital   Surplus       (Accumulated   Reserves   to owners of   interest      Equity
In millions                             deficit )                 the company
of EUR
31 December     10.0      1,641.4       (38.0)         17.3       1,630.7        6.8           1,637.5
2012
                                                                                                        
Net income                              47.5                      47.5           0.5           48.0
Other
Comprehensive                                          (9.8)      (9.8)          (0.9)         (10.7)
income
Total
comprehensive                           47.5           (9.8)      37.7           (0.4)         37.3
income
India share                                            6.1        6.1            6.6           12.7
sale
30 June 2013    10.0      1,641.4       9.5            13.6       1,674.5        13.0          1,687.5
                                                                                                
31 December     10.0      1,641.4       (69.2)         24.0       1,606.2        8.4           1,614.6
2011
                                                                                                        
Net income                              48.8                      48.8           0.3           49.1
Other
Comprehensive                                          29.2       29.2           (0.1)         29.1
loss
Total
comprehensive                           48.8           29.2       78.0           0.2           78.2
income
India share                                            (4.6)      (4.6)          (2.0)         (6.6)
repurchase
30 June 2012    10.0      1,641.4       (20.4)         48.6       1,679.6        6.6           1,686.2
                                                                                                        

       Styrolution Group GmbH – Unaudited Interim Financial Statements

                     Consolidated Statement of Cash Flows

In millions of EUR                               1 January –    1 January –
                                                 30 June 2013   30 June 2012
Cash flows from operating activities
Income before tax                                61.9           72.4
Adjustment for:
Depreciation of property, plant and equipment    49.0           58.7
Amortization of intangible assets                51.5           28.8
Change in Other receivables                      25.0           2.3
Change in pension provisions, other              (31.8)         (24.2)
liabilities and charges
Net finance cost                                 22.9           20.4
Current income tax paid                          (30.2)         (31.2)
Working capital adjustments:
  * Inventories                                  29.0           (77.6)
  * Trade receivables                            (53.9)         5.1
  * Trade payables                               35.5           36.0
Cash generated from operating activities         158.9          90.7
Interest paid                                    (22.2)         (24.6)
Net cash flows from operating activities         136.7          66.1
                                                                              
Cash flows from investing activities
Investments in property, plant and equipment
and assets
and intangible fixed assets                      (39.6)         (22.6)
Proceeds from disposal of property, plant and
equipment intangible
and intangible fixed assets                      0.1            0.0
Proceeds from sale of disposal group (ELIX)      0.0            22.1
Net cash flows used in investing activities      (39.5)         (0.5)
                                                                              
Cash flows from financing activities
Share repurchase India                           0.0            (6.6)
Share sale India                                 12.7           0.0
Repayment of asset securitization, net           (53.6)         (3.1)
Receipt from borrowings from related parties     10.2           29.5
Repayment of borrowings from related parties     0.0            (106.5)
Receipt of other borrowings                      1.4            51.6
Repayment of other borrowings                    (7.7)          (16.4)
Net cash flows used in financing activities      (37.0)         (51.5)
                                                                 
Net changes in cash and cash equivalents         60.2           14.1
                                                                              
Cash and cash equivalents at prior year end      190.1          266.0
Effect of exchange rate fluctuations on cash     (2.3)          (0.9)
held
Total Cash and cash equivalents                  248.0          279.2
                                                                              

       Styrolution Group GmbH – Unaudited Interim Financial Statements

                                    Notes

1. Reporting entity

Styrolution Group GmbH (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.
(“INEOS”), a subsidiary of INEOS AG owns 50% of the shares of Styrolution
Holding GmbH. BASF SE directly owns 18.09% of the shares of Styrolution
Holding GmbH and indirectly through BASF Antwerpen N.V. (a wholly owned
subsidiary) another 31.91%. The Company is domiciled in Germany and has its
registered office at Erlenstrasse 2, 60325 Frankfurt am Main, Germany.

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 June 2013 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 2012.

The consolidated interim financial statements were authorized for issue by the
Managing Directors on 21 August 2013.

(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.

As of 1 January 2013 Company adopted IAS 19 (revised). The revised standard
requires that interest cost and expected return on plan assets were replaced
by a net interest cost which is calculated by applying the discount rate to
the net defined benefit obligation (or asset). In addition, past service costs
are recognized immediately instead of being accrued over the vesting period.
Further, according to IAS 19 (revised), it will no longer be possible to apply
the so called corridor method. Since the Group has not applied the corridor
method and estimated an expected return on plan assets for the preceding
period that did not exceed the discount rate on the benefit obligation, this
change has not had an effect on the Group's financial statements. The actual
benefits and the cash contributions for these plans are not impacted by IAS 19
(revised).

During 2012 the Group changed its presentation for certain time and location
swaps of commodities. These swap transactions amounted to EUR 99.4 million for
the three months ended 30 June 2012 and to EUR 174.2 million for the six
months ended 30 June 2012. They are not included as external sales and cost of
sales as management considers that to be a better presentation of the actual
trading and revenue of the Group. The amounts of revenue and cost of sales in
the periods ended 30 June 2012 were changed accordingly.

(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:

  * Polymers EMEA
  * Polymers Americas
  * Polymers Asia
  * Styrene Monomer

While for previous periods the management of the Group had identified three
operating business segments EMEA, Americas and Asia, which included the
Styrene Monomer business in the respective regional units, the global Styrene
Monomer business of the Group has been separated and will be presented as a
global business unit from 1 January 2013. The comparative financial
information for the year 2012 has been adjusted respectively.

Detailed information by segment for the three months ended 30 June 2013 is
presented in the following tables. Inter-segment-sales of the Styrene Monomer
business contain external sales to other Styrolution entities as well as
internal consumption within one legal entity.

In millions of    External sales        Inter-segment sales   EBITDA before
EUR                                                           Special Items
                  1 Apr –    1 Apr –    1 Apr –    1 Apr –    1 Apr    1 Apr
                  30 Jun     30 Jun     30 Jun     30 Jun     – 30     – 30
                  2013       2012*      2013       2012*      Jun      Jun
                                                              2013     2012
Polymers EMEA     553.4      514.9      23.9       25.9       50.3     23.7
Polymers          320.0      348.7      0.2        2.6        20.6     19.4
Americas
Polymers Asia     288.9      284.0      2.0        2.9        10.2     4.9
Styrene Monomer   323.6      391.8      655.9      547.7      20.7     17.1
Corporate and                           (682.0)    (579.1)              
eliminations
Total             1,485.9    1,539.4    0.0        0.0        101.8    65.1
                                                                              

* The Group changed its presentation for certain time and location swaps of
commodities. These swap transactions amounted to EUR 99.4 million for the
three months ended 30 June 2012 and are not included as external sales and
cost of sales as management considers that to be a better presentation of the
actual trading and revenue of the Group.

Detailed information by segment for the six months ended 30 June 2013 is
presented in the following tables. Inter-segment-sales of the Styrene Monomer
business contain external sales to other Styrolution entities as well as
internal consumption within one legal entity.

In millions     External sales        Inter-segment sales      EBITDA before
of EUR                                                         Special Items
                1 Jan –    1 Jan –                 1 Jan –     1 Jan   1 Jan
                30 Jun     30 Jun     1 Jan – 30   30 Jun      – 30    – 30
                2013       2012*      Jun 2013     2012*       Jun     Jun
                                                               2013    2012
Polymers EMEA   1,103.5    1,052.5    45.9         43.8        99.3    68.0
Polymers        629.1      709.4      2.4          5.3         34.9    32.2
Americas
Polymers Asia   553.3      562.8      3.5          3.0         19.4    13.4
Styrene         720.1      745.2      1,304.3      1,127.8     42.1    70.2
Monomer
Corporate and                         (1,356.1)    (1,179.9)            
eliminations
Total           3,006.0    3,069.9    0.0          0.0         195.7   183.8
                                                                              

** In the first quarter 2012, the Group reported certain internal sales of
styrene monomer sales in the Polymers Americas segment as external sales.
These sales have been properly reported in Polymers Americas in the tables
above. In addition, the Group changed its presentation for certain time and
location swaps of commodities. These swap transactions amounted to EUR 174.2
million for the six months ended 30 June 2012 and are not included as external
sales and cost of sales as management considers that to be a better
presentation of the actual trading and revenue of the Group.

The reconciliation of EBITDA before special items to Income before tax is as
following:

In millions of EUR         1 Apr - 30   1 Apr - 30   1 Jan - 30   1 Jan - 30
                           Jun 2013     Jun 2012     Jun 2013     Jun 2012    
EBITDA before special      101.8        65.1         195.7        183.8
items
Special items              (6.6)        (2.4)        (10.4)       (3.5)
(restructuring expenses)
Depreciation and           (50.5)       (43.9)       (100.5)      (87.5)
Amortization
Results from operations    44.7         18.8         84.8         92.8
Net finance costs          (23.7)       (5.4)        (22.9)       (20.4)
Income before tax          21.0         13.4         61.9         72.4
                                                                              

The special items primarily include costs related to the implementation of a
common ERP system that cannot be recorded as an asset, payments to legal and
tax advisors, training of personnel in the context of replacing leased
employees and contract termination costs.

3. Equity

As a result of the Joint Venture transaction, the Group was obliged to comply
with Indian legislation and initiated on 6 February 2012 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 Group
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.

In the second quarter of 2013 the Group completed this compliance process and
made a public offer on 23 May 2013 to sell part of its interest in Styrolution
ABS (India) Limited. As a result of this process the Group decreased its share
in Styrolution ABS (India) Limited from 87.26% to 75.0%. The total net amount
received from this increase was EUR 12.7 million. The increase in the total
value of the non-controlling interest is EUR 6.6 million.

4. Financial Indebtedness

In millions of EUR                             31 June 2013   31 December 2012
Non-Current liabilities                     
Senior secured bond                            471.6          470.6
Finance Leases                                 8.1            0.0
Current liabilities
Short term borrowings from asset               280.6          334.2
securitizations
Short term borrowings other                    18.3           24.9
Total                                          778.6          829.7
                                                               

5. Related parties

In millions of   Transaction     Balance         Transaction     Balance
EUR              value           outstanding     value           outstanding
                 1 January –     30 June 2013    1 January –     30 June 2012
                 30 June 2013                    30 June 2012
Sale of
products
BASF**           151.7                           211.1
INEOS            71.8                            79.6
Purchase of
raw materials
BASF**           728.5                           779.8
INEOS            203.3                           493.6
Services
received
BASF             104.8                           34.2
INEOS            11.0                            18.1
Trade and
other
receivables
BASF                             53.9                            75.6
INEOS                            11.0                            23.2
Shareholder                      32.7                            56.3
Trade and
other payables
BASF                             (284.8)                         (288.7)
INEOS                            (34.3)                          (88.2)

In the second quarter of 2013, the Group entered into a finance lease for a
building with BASF for a 33 year term and recorded the asset and related lease
liability at EUR 8.3 million at inception.

6. Income taxes

Income tax expense is recognized based on management’s best estimate of the
income tax rate expected for the year 2013 applied to the income before taxes
of the second quarter 2013. The Group’s consolidated tax rate for the first
six months of 2013 was 22.4%.

On 23 April 2013 the Group reached an agreement with the respective tax
authority on a retrospective change in the transfer pricing structure of parts
of the Group´s European business. This led to a reduction of the income taxes
to be paid by the Group for the year 2012 of EUR 8.5 million and for the first
quarter of 2013 of EUR 4.6 million which were recognized in the second quarter
of 2013 upon reaching an agreement with the authority.

7. Contingencies

The group companies are and may from time to time be involved in proceedings
or litigation arising in the ordinary course of business. Styrolution then
takes measures to protect its own legal position and provides for this
financially as and to the extent required.

   PRESENTATION OF THE STYROLUTION SECOND QUARTER 2013 BUSINESS RESULTS OF

                                  OPERATION

The Group 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 second quarters of 2013 and 2012.

In millions of    1 Apr -     1 Apr -              1 Jan -     1 Jan -    
EUR               30 Jun      30 Jun      %        30 Jun      30 Jun      %
                  2013        2012                 2013        2012                
Revenue           1,485.9     1,539.4     (3.5)    3,006.0     3,069.9     (2.1)
Cost of sales     (1,339.1)   (1,408.0)   (4.9)    (2,721.6)   (2,755.0)   (1.2)
Gross profit      146.8       131.4       11.7     284.4       314.9       (9.7)
                                                                                   
Selling           (67.4)      (82.9)      (18.7)   (133.8)     (161.3)     (17.0)
expenses
General and
administrative    (24.9)      (25.9)      (3.9)    (48.2)      (45.4)      6.2
expenses
Research and
development       (3.3)       (3.2)       3.1      (6.6)       (5.7)       15.8
expenses
Other operating   (6.5)       (0.6)       >100     (11.0)      (9.7)       13.4
expenses (net)
Result from
operating         44.7        18.8        >100     84.8        92.8        (8.6)
activities
                                                                                   
Interest income   1.0         -           -        1.9         -           -
Interest          (13.2)      (13.5)      (2.2)    (25.7)      (25.5)      0.8
expense
Other finance
gain (loss)       (11.5)      8.1         n/a      0.9         5.1         (82.4)
(net)
Net finance       (23.7)      (5.4)       >100     (22.9)      (20.4)      12.3
costs
                                                                            
Income (loss)     21.0        13.4        56.7     61.9        72.4        (14.5)
before tax
Income tax
benefit           0.2         (5.5)       n/a      (13.9)      (23.3)      (40.3)
(expense)
Net income        21.2        7.9         >100     48.0        49.1        (2.2)
(loss)
Attributable
to:
Non-controlling   0.2         (0.1)       n/a      0.5         0.3         66.7
interests
Owners of the     21.0        8.0         >100     47.5        48.8        (2.7)
company

Revenue in the second quarter of 2013 amounted to EUR 1,485.9 million, a
decrease of EUR (53.5) million or (3.5 %) percent compared to EUR 1,539.4
million in the second quarter 2012. Revenue declined primarily due to lower
Styrene Monomer sales volumes as a result of the closure of the Marl facility
in the second half of 2012 that were only partly offset by higher sales
prices.

Revenue in Polymers Americas decreased due to weaker sales volumes. Sales
volumes decreased as a result of high PS sales pricing since beginning of the
year 2013 leading to lower demand. The main impact was in Polystyrene. Sales
prices increased because of higher feedstock prices (mainly benzene) passed on
to our customers.

Revenue in Polymers EMEA increased, despite the weak market economic
conditions in Europe. Sales prices increased moderately because of higher
feedstock prices (mainly Styrene Monomer) passed on to our customers. Sales
volumes in Polymers EMEA also increase slightly.

Revenue in Polymers Asia increased slightly as a result of higher sales
volumes in the ABS and PS market improved, which was mostly offset by lower
sales prices because of lower feedstock prices.

Revenue in Styrene Monomer declined significantly because of lower volumes.
Volumes especially dropped in EMEA because the Marl facility closed which
provided feedstock under a tolling agreement to the Group until its closure in
the last quarter of 2012 and the company has less excess styrene to sell into
the market. These lower volumes were partly offset by higher sales prices in
all three regions. Prices increased because of higher feedstock prices passed
on to our customers.

Cost of Sales: Cost of sales decreased by EUR (68.9) million or (4.9 %) to EUR
(1,339.1) million compared to EUR (1,408.0) million in the previous year. This
decrease is mainly due to lower sales volumes, whereas depreciation and
amortization related to the purchase price allocation increased by EUR 10.1
million in accordance with the greater estimated economic benefits of the
assets.

Gross profit: Gross profit increased by EUR 15.4 million or 11.7 % to EUR
146.8 million compared to EUR 131.4 million in the previous year.

In Q2-2013 the gross profit was positively impacted by strong margins in the
EMEA polystyrene business, on the back of higher utilization rates resulting
from the Marl closure. The company also benefited from investments made in the
specialties business.

Feedstock prices decreased slightly in Q2-2013, leading to a negative flow
through of approximately EUR 12 million, similar to the flow through impact in
the second quarter of 2012.

The improvements in the PS and Specialties business were partly offset due to
a reduction of Styrene Monomer sales volumes as described under revenue.

Selling expenses: Selling expenses decreased by EUR (15.5) million or (18.7 %)
to EUR (67.4) million compared to EUR (82.9) million in the previous year. The
decrease mainly results from savings in freight costs because of lower sales
volumes and diesel prices.

General and administrative expenses: General and administrative expenses
decreased by EUR (1.0) million or (3.9 %) to EUR (24.9) million compared to
EUR (25.9) million in the previous year.

Research and development expenses: Research and development expenses increased
by EUR 0.1 million or 3.1 % to EUR (3.3) million compared to EUR (3.2) million
in the previous year. The Group invests in new products or product
applications.

Other operating expenses: Other operating expenses were EUR (6.5) million, an
increase of EUR 5.9 million compared to other operating expenses of EUR (0.6)
million in the previous year. The increase is mainly because of higher costs
related to the legal and IT integration of the joint venture. These costs are
treated as special items and increased by EUR (4.2) million to EUR (6.6)
million.

EBITDA before special items: EBITDA* before special items increased by EUR
36.7 million or 56.4 % from EUR 65.1 million to EUR 101.8 million. The second
quarter of 2013 was a good volume and margin quarter in an uncertain economic
environment. Special items were incurred in the integration of mainly IT and
legal integration activities.

Net finance results: While interest income and expense were at a similar level
compared to the second quarter of 2012, other finance gains and losses that
result from foreign currency exchange effects changed from a gain of 8.1
million to a loss of (11.5) million. The effect mainly comes from translation
effects on intra group loans.

The development of the product groups on a global level for the three months
and six months periods ended 30 June was as following:

In millions     External sales                   EBITDA before Special Items
of EUR
                             1 Apr –                           1 Apr
                1 Apr – 30   30 Jun     %        1 Apr – 30    – 30    %
                Jun 2013     2012                Jun 2013      Jun
                                                               2012
Polystyrene     633.0        606.0      4.5      32.8       7.4        >100.0
ABS Standard    218.1        216.8      0.6      14.3       9.7        47.4
Specialties     311.3        324.4      (4.0)    34.0       30.9       10.0
Styrene         323.5        392.2      (17.5)   20.7       17.1       21.1
Monomer
Total           1,485.9      1,539.4    (3.5)    101.8      65.1       56.4

In millions of   External sales                    EBITDA before Special
EUR                                                Items
                 1 Jan – 30   1 Jan – 30           1 Jan –   1 Jan –
                 Jun 2013     Jun 2012     %       30 Jun    30 Jun    %
                                                   2013      2012
Polystyrene      1,234.1      1,217.4      1.4     57.2      21.3      >100.0
ABS Standard     437.4        456.9        (4.3)   30.4      30.2      0.7
Specialties      614.5        650.2        (5.5)   66.0      62.1      6.3
Styrene          720.0        745.4        (3.4)   42.1      70.2      (40.0)
Monomer
Total            3,006.0      3,069.9      (2.1)   195.7     183.8     6.5

* 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 from operating activities

Cash provided from operating activities by Styrolution in the first six months
of 2013, excluding interest payments increased by EUR 68.2 million or 75.2% to
EUR 158.9 million. The cash flows provided from 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 increase mainly results from a reduced cash flow requirement for working
capital. In an environment of higher feedstock prices the Group had a negative
cash flow for working capital changes of EUR 36.5 million in the first six
months of 2012 whereas in the reporting period changes in working capital
resulted in a positive cash flow of EUR 10.6 million.

Cash used in investing activities

The cash used in investing activities consists of Investment activities in
tangible fixed assets (EUR 29.6 million) and its internal use software (EUR
10.0 million).

Cash used in financing activities

The Group used cash flow in financing activities primarily to reduce the
balance from asset securitizations by EUR 53.6 million, partly offset by
receipts of EUR 12.7 million for a partial sale of shares in its subsidiary in
India and EUR 10.2 million for receivables from shareholders that resulted
from the formation of the joint venture.

Financing of Styrolution

The financing of the Group is through the issuance of Senior Secured Notes of
EUR 480 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 June 2013 of
the Group was as follows:

In millions of EUR                             30 June 2013   31 December 2012
Senior secured bond*                           480.0          480.0
Long term Finance Leases                       8.1            0.0
Short term borrowings from asset               298.9          359.1
securitizations and other borrowings
Total Financing                                787.0          839.1
Cash and cash equivalents                      (248.0)        (190.1)
Net Debt*                                      539.0          649.0

* Net debt includes the notional amount of the senior secured bond rather than
the carrying amount in accordance with IFRS which is lower than the notional
amount due to debt issuance cost that are amortized over the term of the bond.

Contact:

STYROLUTION GMBH
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