Rhodia Reports 2006 Annual Results; Successful Turnaround Shows First Positive Net Income Since 2000

Share Name	Share Symbol	Market	Type
Eksportfinans 8.70 Pfd Accelerated Return Notes Linked TO The Russell 2000 Index	NYSE:RHA	NYSE	Ordinary Share

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	0.00	0.00%	13.13				0.00	01:00:00

Rhodia (NYSE:RHA)
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From Jul 2019 to Jul 2024

Specialty chemical producer Rhodia (NYSE:RHA) has exceeded its ambitious recovery targets set three years ago: 14.2% Recurring EBITDA margin on Net Sales, versus 11.3% in 2005 (2006 target: above 13%) Net Income of 62 million euros, versus a loss of �616 million in 2005 (2006 target: positive Net Income) Net Debt on Recurring EBITDA ratio of 2.4(1) times (2006 target: below 2.9 times) Strong operating performance in 2006: Recurring EBITDA(2) up 33% to 683 million euros, versus 513 million euros in 2005, driven by strong pricing, solid market demand and reduced fixed costs Sharp rise in Operating Profit of 359 million euros, versus 66 million euros in 2005 Q4 2006 Recurring EBITDA up 65% to 195 million euros, compared to Q4 2005, due to solid volumes, strong pricing and first CER sales 2007 outlook: Satisfactory market conditions at the beginning of the year Strong growth in Recurring EBITDA expected Positive Free Cash Flow Summary Income Statement In million euros, under IFRS 2005(3) 2006(3) Variation Net Sales 4,521� 4,810� + 6.4% Recurring EBITDA(2) 513� 683� + 33% Recurring EBITDA margin on Net Sales 11.3% 14.2% -� Operating Profit 66� 359� + 444% Income/ (Loss) from continuing operations (419) 111� -� Net Income /(Loss) Group Share (616) 62� -� �2006 marks the successful delivery of Rhodia�s recovery plan. We have beaten the ambitious targets that we set three years ago and are pleased to announce the first positive Net Income since 2000. Today Rhodia is stronger, leaner, more agile and profitable,� said Chief Executive Officer Jean-Pierre Clamadieu. �The Group has recovered full flexibility, with a portfolio focused on businesses in which we enjoy solid leadership positions, with a streamlined organization and rigorous financial discipline. We have demonstrated the strength of our operating performance and are in a good shape to continue on our route of profitable growth.� 1. Return to positive Net Income with a very strong improvement in operating performance Net Sales rose by 6.4% to 4,810 million euros from 4,521 million euros in 2005, driven by a 2.9% volume growth and a 4.8% positive impact of price increases to offset the rise in the costs of raw materials and energy. Recurring EBITDA increased significantly by 33% to 683 million euros, reflecting the impact of sustained pricing power, improved industrial performance and further fixed costs savings. All businesses showed a strong improvement of their operating performance in 2006 in comparison with 2005. Fourth-quarter Recurring EBITDA of 195 million euros was up 65% compared to the same period the year before, due to solid volumes, strong pricing and first CER sales. Recurring EBITDA margin 2006 increased to 14.2% from 11.3% in 2005. Operating Profit stood at 359 million euros, versus 66 million euros in 2005, on the back of the improved recurring EBITDA and a reduction in restructuring costs. The Financial Results saw strong improvement at a negative 305 million euros, versus a negative 432 million euros in 2005, due to reduced interest expenses and despite 77 million euros of non recurring refinancing charges. The foreign exchange gains amounted to 10 million euros (versus an unrealized foreign exchange loss of 69 million euros in 2005). Net Income Group Share for 2006 was 62 million euros, versus a Net Loss of 616 million euros in 2005. 2. Further Net Debt reduction Operating Cash Flow(4) was 394 million euros. Working Capital Requirements increased by 142 million euros; this is essentially due to the return to a more sustainable inventory level after an exceptionally low level end of 2005. The ratio of Working Capital Requirement on total sales stood at 12.3% compared with 10.8% the year before. Capital Expenditure amounted to 311 million euros for the year, versus 286 million euros in 2005. After taking into account 80 million euros in restructuring cash costs, Free Cash Flow(5) was negative at 139 million euros in 2006. A successful 1.1 billion euros refinancing initiative with the issue of Floating Rate Notes in October 2006, coupled with the reimbursement of the most expensive debt, helped to improve the Group�s debt structure, gain greater flexibility, lengthen debt maturity and reduce interest expenses. Consolidated Net Debt decreased from 2,089 million euros in December 2005, to 1,949 million euros in December 2006. The Net Debt on Recurring EBITDA ratio was 2.8 times. After including the cash proceeds from the Silicones divestiture, which was closed on January 31, 2007, the Net Debt was down on a pro forma basis to 1,657 million euros, which resulted in a Net Debt on Recurring EBITDA ratio of 2.4 times. 3. A quality business portfolio Over the last three years, the Group refocused very significantly its business portfolio and realized 1.4 billion euros of divestments. The Group pursued this strategy with the divestment of the European Industrial Fibers, the Silicones activities, and its stake in Nylstar. Today, 80% of the Rhodia's sales are in businesses in which it holds strong leadership positions. Based on this strong portfolio, the Group will pursue its profitable growth, with an ongoing focus on its development in Asia. 4. Well on track to benefit from greenhouse gas emissions projects The two projects under the Kyoto Protocol�s Clean Development Mechanism to reduce greenhouse gas emissions at the plants in Onsan, South Korea and Paulinia, Brazil are up and running. The first emissions reductions were audited, and 1.6 million tonnes of Carbon Emission Reduction Credits (CER) were issued and sold in Q4 2006. From 2007 until 2013, Rhodia should dispose of 11 to 13 Mt per year of CERs. The trading platform Orbeo, joint venture between Rhodia and Soci�t� G�n�rale was created in 2006 to optimize the value of the CERs. 5. Outlook Market conditions remain satisfactory at the beginning of 2007, with solid volumes and a pricing power that remains strong, in an environment still influenced by high raw material and energy costs. 2007 will be a year of investment to support growth, while at the same time focusing on maximizing cash flow generation, with the objective of generating positive Free Cash Flow. Rhodia is confident that it will generate in 2008 a Recurring EBITDA margin above 15% for the chemical business. The Group will establish and maintain a sound financial structure with a Net Debt on Recurring EBITDA ratio below 2. (1) Pro forma after completion of Silicones divestment (2) Before restructuring and other operating income and expenses (3) After reclassification of discontinued operations (4) Before Working Capital, restructuring, and "non recurring refinancing cash costs" (5) Defined as "net cash provided by operating activities" plus "non recurring refinancing cash costs" minus Capital Expenditure" This press release and a detailed presentation of the 2006 results are available at www.rhodia.com This press release contains elements that are not historical facts including, without limitation, certain statements on future expectations and other forward-looking statements. Such statements are based on management�s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those anticipated. Rhodia is a global specialty chemicals company recognized for its strong technology positions in Performance Materials, Functional Chemicals and the Organics and Services clusters. Partnering with major players in the automotive, electronics, pharmaceuticals, agrochemicals, consumer care, tires, and paints and coatings markets, Rhodia offers tailor-made solutions combining original molecules and technologies to respond to customers� needs. Rhodia subscribes to the principles of Sustainable Development communicating its commitments and performance openly with stakeholders. Rhodia generated sales of �4.8 billion in 2006 and employs around 16,000 people worldwide. Rhodia is listed on the Paris and New York stock exchanges. Results Fact Sheet: Q4 & FY 2006 Income Statement Million euros Q4(a) 2005 Q4(a) 2006 Variation FY 2005 FY 2006 Variation Net Sales 1 185� 1 217� 2,7% 4 521� 4 810� 6,4% Other revenue 140� 129� (7,9)% 435� 451� 3,7% Recurring EBITDA 118� 195� 65,3% 513� 683� 33,1% Recurring EBITDA Margin (c) 10,0% 16,0% � 11,3% 14,2% � Depreciation & Amortization (88) (78) (323) (304) Other Gains and Losses (32) (22) (42) 1� Restructuring Costs (40) (7) � (82) (21) � Operating Profit (42) 88� � 66� 359� � Financial Results (118) (134) � (432) (305) � Income/(loss) before income tax (160) (46) � (366) 54� � Income tax (15) (53) 57� Income/(loss) from continuing operations (175) (46) (419) 111� Income/(loss) from discontinued operations (49) (2) (196) (45) Net Income/(loss) (224) (48) � (615) 66� � Net Income/(loss) (Group Share) (225) (49) � (616) 62� � Minority interests 1� 1� � 1� 4� � Q4 Net Sales Recurring EBITDA Operating Profit Million euros Q4(a)2005 Q4(a) 2006 Variation Q4(a) 2005 Q4(a) 2006 Variation Q4(a) 2005 Q4(a) 2006 RHODIA 1 185� 1 217� 2,7% 118� 195� 65,3% (42) 88� POLYAMIDE 444� 501� 12,8% 52� 81� 55,8% 24� 43� ACETOW 109� 117� 7,3% 23� 24� 4,3% 14� 16� NOVECARE 242� 222� (8,3)% 20� 27� 35,0% 10� 18� SILCEA 96� 108� 12,5% 11� 16� 45,5% 0� 9� ECO SERVICES 51� 55� 7,8% 10� 19� 90,0% 5� 14� ORGANICS 254� 201� (20,9)% 11� 22� 100,0% (26) 13� ENERGY SERVICES 24� 15� 33� 120,0% 12� 27� CORPORATE & Others (11) (1) (11) (1) 0% (24) (27) (12,5)% (81) (52) FY Net Sales Recurring EBITDA Operating Profit Million euros FY 2005 FY 2006 Variation FY 2005 FY 2006 Variation FY 2005 FY 2006 RHODIA 4 521� 4 810� 6,4% 513� 683� 33,1% 66� 359� POLYAMIDE 1 710� 1 922� 12,4% 243� 284� 16,9% 135� 172� ACETOW 410� 447� 9,0% 100� 108� 8,0% 65� 78� NOVECARE 935� 936� 0,1% 96� 110� 14,6% 53� 76� SILCEA 393� 412� 4,8% 45� 61� 35,6% 2� 33� ECO SERVICES 209� 230� 10,0% 57� 79� 38,6% 36� 58� ORGANICS 912� 875� (4,1)% 34� 74� 117,6% (23) 31� ENERGY SERVICES 25� 25� 60� 140,0% 13� 76� CORPORATE & Others (48) (1) (37) (1) 22,9% (87) (93) (6,9)% (215) (165) (1) including intercompany sales elimination Net Financial Debt December 31. 2005 Sept 30. 2006 Dec. 31. 2006 Dec. 31. 2006 proforma 2 089� 1 921� 1 949� 1 657� 2006� 2008� Targets Delivered Targets Recurring EBITDA margin(c) > 13 % Recurring EBITDA margin(c) = 14.2 % Recurring EBITDA Margin(c) > 15% for the Chemical business � � Establishing & maintaining a sound financial structure with a Net Debt / Recurring EBITDA ratio below 2 Positive Net Income Net Income group share = 62m euros Net Debt / Recurring EBITDA < 2.9x Net Debt / Recurring EBITDA = 2.8 before silicones(b) Net Debt / Recurring EBITDA = 2.4 after silicones(b) (a) Unaudited (b) 2.8x before silicones: includes recurring EBITDA and debt before discontinued operation treatment. 2.4x after completion of silicones divestment (c) Calculated as Recurring EBITDA / Net Sales Results Fact Sheet: Q4 2006 (all figures are in million euros after discontinued operations) POLYAMIDE Solid volume growth for all nylon intermediates and engineering plastics Strong pricing more than offsets raw material and energy cost increases ACETOW Stable volumes Good pricing trends offset raw material and energy cost increases NOVECARE Performance driven by good volume growth and favourable pricing in most markets Buoyant Industrial Additives & Oilfield Chemicals market Further benefits from fixed cost savings SILCEA Good volume growth in all activities Favourable pricing trends notably in Silica systems ECO SERVICES Positive impact of price indexation mechanism Good volumes driven by increased demand for regeneration compared to Q405 ORGANICS Good pricing trends offset raw material and energy cost increases Fixed cost reduction drives margin growth ENERGY SERVICES First emissions reduction at South Korean abatement plant audited & 1.6mt of CERs issued by UNFCCC 1.6mt of CERs sold for �22m Brazilian abatement plant up and running � million Net Sales Q4(a) 2005 Scope Foreign Exchange conversion Volume & mix Selling Price Foreign Exchange transaction effect Net Sales Q4(a) 2006 RHODIA 1 185� (25) (31) 31� 77� (20) 1 217� POLYAMIDE 444� (2) (6) 22� 53� (10) 501� ACETOW 109� 0� (2) 7� 5� (2) 117� NOVECARE 242� (8) (10) (5) 4� (1) 222� SILCEA 96� 4� (3) 4� 8� (1) 108� ECO SERVICES 51� 0� (4) 3� 5� 0� 55� ORGANICS 254� (24) (5) (21) 3� (6) 201� ENERGY SERVICES 0� 0� 0� 24� 0� 0� 24� CORPORATE & Others�including intercompany�sales�elimination (11) 5� (1) (3) (1) 0� (11) Million euros Recurring EBITDA Q4(a) 2005 Scope Foreign Exchange conversion Volume & mix Selling Price** Raw materials& Energy Fixed Costs Recurring EBITDA Q4(a)2006 Recurring EBITDA Margin(c) Q4(a) 2006 RHODIA 118� 0� (5) 47� 54� (18) (1) 195� 16,0% POLYAMIDE 52� (3) (1) 13� 41� (20) (1) 81� 16,2% ACETOW 23� 0� (1) 0� 3� (1) 0� 24� 20,5% NOVECARE 20� (2) (2) 6� 2� (4) 7� 27� 12,2% SILCEA 11� 0� 0� 3� 7� (2) (3) 16� 14,8% ECO SERVICES 10� (1) (1) 3� 4� 3� 1� 19� 34,5% ORGANICS 11� 0� (1) (6) (2) 3� 17� 22� 10,9% ENERGY SERVICES 15� 0� 0� 23� 0� 2� (7) 33� CORPORATE & Others (24) 6� 1� 5� (1) 1� (15) (27) � (a) Unaudited (b) Including foreign exchange transaction effect � (c) Calculated as recurring EBITDA / Net Sales Results Fact Sheet: FY 2006 (all figures are in million euros after discontinued operations) POLYAMIDE Good volumes (+6%) driven by Asia & Latin America Proven pricing (+6%) in a high & volatile raw material and energy cost environment ACETOW Raw material & energy cost increases offset by solid pricing Favourable USD hedging NOVECARE Successful price management allows for full offset of raw material & energy cost increases Operational performance & fixed cost reduction supports margin momentum SILCEA Growing demand from tyre, emission control & electronics markets Price rises to increase value creation ECO SERVICES Record margins driven by price indexation mechanism (sharp fall in natural gas prices in the USA) Incremental volume demand due to regulation change in 2005 (MTBE) ORGANICS Restructuring & reorganisation delivers fixed cost reduction Improved industrial reliability drives performance Continued portfolio pruning ENERGY SERVICES Successful start up of abatement facilities ahead of plan Set to benefit fully from 11-13mt of CERs in 2007 Million euros Net Sales FY 2005 Scope Foreign Exchange conversion Volume & mix Selling Price Foreign Exchange transaction effect Net Sales FY 2006 RHODIA 4 521� (69) 79� 130� 219� (70) 4 810� POLYAMIDE 1 710� (10) 78� 102� 103� (61) 1 922� ACETOW 410� 0� 4� 13� 20� 0� 447� NOVECARE 935� (33) (1) 10� 27� (2) 936� SILCEA 393� (18) 1� 17� 23� (4) 412� ECO SERVICES 209� 0� (2) 0� 23� 0� 230� ORGANICS 912� (33) 1� (30) 28� (3) 875� ENERGY SERVICES 0� 0� 0� 25� 0� 0� 25� CORPORATE & Others including intercompany sales elimination (48) 25� (2) (7) (5) 0� (37) Million euros Recurring EBITDA FY 2005 Scope Foreign Exchange conversion Volume & mix Selling Price(a) Raw materials& Energy Fixed Costs Recurring EBITDA FY 2006 Recurring EBITDA Margin(b) FY 2006 RHODIA 513� (2) 10� 97� 141� (101) 25� 683� 14,2% POLYAMIDE 243� (12) 13� 45� 40� (37) (8) 284� 14,8% ACETOW 100� 0� 0� 2� 19� (14) 1� 108� 24,2% NOVECARE 96� (8) 0� 5� 24� (23) 16� 110� 11,8% SILCEA 45� 1� 1� 11� 18� (13) (2) 61� 14,8% ECO SERVICES 57� 1� (1) 3� 20� 1� (2) 79� 34,3% ORGANICS 34� (10) 0� (5) 23� (15) 47� 74� 8,5% ENERGY SERVICES 25� 12� 0� 31� 0� (4) (4) 60� CORPORATE & Others (87) 14� (3) 5� (3) 4� (23) (93) � (a) Including foreign exchange transaction effect (b) Calculated as recurring EBITDA / Net Sales Results Fact Sheet: Quarterly results RHODIA Q1(a) 2005 Q1(a) 2006 Q2(a) 2005 Q2(a)2006 Q3(a) 2005 Q3(a) 2006 Q4(a) 2005 Q4(a) 2006 (Million Euros) Net Sales 1 096� 1 203� 1 161� 1 211� 1 079� 1 179� 1 185� 1 217� Recurring EBITDA 150� 161� 145� 167� 100� 160� 118� 195� % Sales(b) 13,7% 13,4% 12,5% 13,8% 9,3% 13,6% 10,0% 16,0% Operating Profit 66� 69� 34� 90� 8� 112� (42) 88� � � � � � � � � � POLYAMIDE (Million Euros) Net Sales 419� 464� 441� 478� 406� 479� 444� 501� Recurring EBITDA 74� 57� 71� 77� 46� 69� 52� 81� % Sales(b) 17,7% 12,3% 16,1% 16,1% 11,3% 14,4% 11,7% 16,2% Operating Profit 52� 32� 38� 51� 21� 46� 24� 43� ACETOW (Million Euros) Net Sales 92� 109� 105� 113� 104� 108� 109� 117� Recurring EBITDA 23� 30� 27� 26� 27� 28� 23� 24� % Sales(b) 25,0% 27,5% 25,7% 23,0% 26,0% 25,9% 21,1% 20,5% Operating Profit 15� 21� 18� 21� 18� 20� 14� 16� NOVECARE (Million Euros) Net Sales 228� 246� 239� 239� 226� 229� 242� 222� Recurring EBITDA 28� 29� 28� 26� 20� 28� 20� 27� % Sales(b) 12,3% 11,8% 11,7% 10,9% 8,8% 12,2% 8,3% 12,2% Operating Profit 19� 21� 20� 17� 4� 20� 10� 18� SILCEA (Million Euros) Net Sales 93� 103� 104� 103� 100� 98� 96� 108� Recurring EBITDA 11� 15� 12� 17� 11� 13� 11� 16� % Sales(b) 11,8% 14,6% 11,5% 16,5% 11,0% 13,3% 11,5% 14,8% Operating Profit 5� 7� 3� 11� (6) 6� 0� 9� ECO SERVICES (Million Euros) Net Sales 48� 56� 55� 60� 55� 59� 51� 55� Recurring EBITDA 11� 14� 18� 23� 18� 23� 10� 19� % Sales(b) 22,9% 25,0% 32,7% 38,3% 32,7% 39,0% 19,6% 34,5% Operating Profit 6� 7� 12� 19� 13� 18� 5� 14� ORGANICS (Million Euros) Net Sales 229� 232� 225� 229� 204� 213� 254� 201� Recurring EBITDA 18� 17� 8� 21� (3) 14� 11� 22� % Sales(b) 7,9% 7,3% 3,6% 9,2% (1,5)% 6,6% 4,3% 10,9% Operating Profit 6� 4� (6) 8� 3� 6� (26) 13� ENERGY SERVICES (Million Euros) Net Sales 1� 24� Recurring EBITDA 2� 22� 7� 3� 1� 2� 15� 33� Operating Profit (5) 17� 5� 3� 1� 29� 12� 27� CORPORATE & OTHERS (Million Euros) Sales & intercompany sales elimination (13) (7) (8) (11) (16) (8) (11) (11) Recurring EBITDA (17) (23) (26) (26) (20) (17) (24) (27) Operating Profit (32) (40) (56) (40) (46) (33) (81) (52) (a) Unaudited (b) Calculated as recurring EBITDA / Net Sales Results Fact Sheet: Semester and FY results RHODIA H1* 2005 H1* 2006 H2* 2005 H2* 2006 FY 2005 FY 2006 (Million Euros) Net Sales 2 257� 2 414� 2 264� 2 396� 4 521� 4 810� Recurring EBITDA 295� 328� 218� 355� 513� 683� % Sales(a) 13,1% 13,6% 9,6% 14,8% 11,3% 14,2% Operating Profit 100� 159� (34) 200� 66� 359� � � � � � � � POLYAMIDE (Million Euros) Net Sales 860� 942� 850� 980� 1 710� 1 922� Recurring EBITDA 145� 134� 98� 150� 243� 284� % Sales(b) 16,9% 14,2% 11,5% 15,3% 14,2% 14,8% Operating Profit 90� 83� 45� 89� 135� 172� ACETOW (Million Euros) Net Sales 197� 222� 213� 225� 410� 447� Recurring EBITDA 50� 56� 50� 52� 100� 108� % Sales(b) 25,4% 25,2% 23,5% 23,1% 24,4% 24,2% Operating Profit 33� 42� 32� 36� 65� 78� NOVECARE (Million Euros) Net Sales 467� 485� 468� 451� 935� 936� Recurring EBITDA 56� 55� 40� 55� 96� 110� % Sales(b) 12,0% 11,3% 8,5% 12,2% 10,3% 11,8% Operating Profit 39� 38� 14� 38� 53� 76� SILCEA (Million Euros) Net Sales 197� 206� 196� 206� 393� 412� Recurring EBITDA 23� 32� 22� 29� 45� 61� % Sales(b) 11,7% 15,5% 11,2% 14,1% 11,5% 14,8% Operating Profit 8� 18� (6) 15� 2� 33� ECO SERVICES (Million Euros) Net Sales 103� 116� 106� 114� 209� 230� Recurring EBITDA 29� 37� 28� 42� 57� 79� % Sales(b) 28,2% 31,9% 26,4% 36,8% 27,3% 34,3% Operating Profit 18� 26� 18� 32� 36� 58� ORGANICS (Million Euros) Net Sales 454� 461� 458� 414� 912� 875� Recurring EBITDA 26� 38� 8� 36� 34� 74� % Sales(b) 5,7% 8,2% 1,7% 8,7% 3,7% 8,5% Operating Profit 0� 12� (23) 19� (23) 31� ENERGY SERVICES (Million Euros) Net Sales 25� 25� Recurring EBITDA 9� 25� 16� 35� 25� 60� Operating Profit 0� 20� 13� 56� 13� 76� CORPORATE & OTHERS (Million Euros) Sales & intercompany sales elimination (21) (18) (27) (19) (48) (37) Recurring EBITDA (43) (49) (44) (44) (87) (93) Operating Profit (88) (80) (127) (85) (215) (165) (a) Unaudited (b) Calculated as recurring EBITDA / Net Sales Consolidated income statements as of December 31, 2006 � (in millions of euros) � For the year ended December 31, � � 2006� � 2005� � 2004� Net sales � 4 810� � 4 521� � 4 184� Other revenue � 451� � 435� � 424� Cost of sales (4 261) (4 139) (3 941) Administrative and selling expenses (518) (523) (455) Research and development expenses (103) (104) (116) Restructuring costs (21) (82) (168) Goodwill impairment -� -� (16) Other operating income/(expenses) � 1� � (42) � (47) Operating profit � 359� � 66� � (135) Financial income 133� 133� 121� Finance costs (448) (496) (449) Foreign exchange gains/(losses) 10� (69) 68� Share of profit/(losses) of associates � -� � -� � 3� Income/(loss) before income tax � 54� � (366) � (392) Income tax expense 57� (53) (98) Income/(loss) from continuing operations 111� (419) (490) loss from discontinued operations � (45) � (196) � (142) Net Income/(loss) � 66� � (615) � (632) Attributable to: Equity holders of Rhodia SA 62� (616) (641) Minority interests � 4� � 1� � 9� Income/(loss) per share from continuing operations (in euro) � basic and diluted � 0.05� � (0.95) � (1.36) Income/(loss) per share (in euro) � basic and diluted � 0.05� � (0.95) � (1.36) Consolidated balance sheets as of December 31, 2006 � Assets � At December 31, (in millions of euros) � 2006� � 2005� � 2004� Property, plant & equipment 1 760� 2 135� 2 245� Goodwill 225� 244� 226� Other intangible assets 178� 154� 139� Investments in associates 4� 4� 3� Other non-current financial assets 121� 164� 226� Deferred tax assets � 183� � 83� � 99� Non-current assets � 2 471� � 2 784� � 2 938� Inventories 620� 630� 701� Income tax receivable 23� 20� 14� Trade and other receivables 1 082� 1 188� 1 260� Derivative financial instruments 34� 42� 36� Other current financial assets 19� 5� 5� Cash and cash equivalents 467� 920� 612� Assets classified as held for sale � 437� � 57� � -� Current assets � 2 682� � 2 862� � 2 628� TOTAL ASSETS � 5 153� � 5 646� � 5 566� Liabilities and shareholders� equity � At December 31, (in millions of euros) � 2006� 2005� 2004� Share capital 1 204� 1 177� 628� Additional paid-in capital 23� 570� 807� Other reserves 109� 141� 12� Deficit � (1989) � (2 580) � (1 993) Equity attributable to equity holders of Rhodia SA (653) (692) (546) Minority interests � 25� � 26� � 25� Total equity � (628) � (666) � (521) Borrowings 2 022� 1 975� 2 250� Retirement benefits and similar obligations 1 227� 1 269� 1 038� Provisions 306� 297� 216� Deferred tax liabilities 32� 34� 55� Other non-current liabilities � 43� � 46� � 51� Non-current liabilities � 3 630� � 3 621� � 3 610� Borrowings 413� 1 039� 721� Derivative financial instruments 34� 14� 49� Retirement benefits and similar obligations 98� 81� 74� Provisions 147� 204� 237� Income tax payable 41� 31� 38� Trade and other payables 1 178� 1 271� 1 358� Liabilities associated with assets classified as held for sale � 240� � 51� � -� Current liabilities � 2 151� � 2 691� � 2 477� TOTAL EQUITY AND LIABILITIES � 5 153� � 5 646� � 5 566� Consolidated statements of cash flows as of December 31, 2006 � � For the year ended December 31, (in millions of euros) 2006� 2005� 2004� Net loss (Group Share) 62� (616) (641) Adjustments for : Minority interests 4� 1� 9� Depreciation, amortization and impairment of long-term assets 339� 518� 750� Net increase/(decrease) in provisions and employee benefits (98) 25� 110� Net increase/(decrease) in financial provisions -� 133� 103� Share of profit/(loss) of associates -� -� 65� Other income and expense 27� (3) (2) Gain/(loss) on disposal of non-current assets 15� 22� (258) Income tax expense/(income) (97) 20� 60� Foreign exchange losses/(gains) (8) 110� (91) Cash flow from operating activities before changes in working capital 244� 210� 105� Changes in working capital - (Increase)/decrease in inventories and work in progress (112) 91� (52) - (Increase)/decrease in trade and other receivables (22) 62� 74� - Increase/(decrease) in trade and other payables 1� (26) (22) - Increase/(decrease) in other current assets and liabilities (9) (199) (98) Net cash from operating activities 102� 138� 7� Purchases of property, plant and equipment (263) (254) (221) Purchases of other non-current assets (48) (32) (27) Proceeds on disposal of non-current assets 140� 51� 652� (Purchases of)/repayments of loans and financial investments 1� 24� (107) Net cash (used by) / from investing activities (170) (211) 297� Proceeds from issue of shares, net of costs 36� 576� 447� Dividends paid (2) -� -� New long-term borrowings, net of costs 1086� 1228� 980� Repayments of non-current borrowings, net of costs (1 402) (1 285) (987) Net increase/(decrease) in current borrowings (94) (176) (926) Net cash (used by) / from financing activities (376) 343� (486) Effect of foreign exchange rate changes (9) 38� (4) Net increase/(decrease) in cash and cash equivalents (453) 308� (186) Cash and cash equivalents at the beginning of the year 920� 612� 798� Cash and cash equivalents at the end of the year 467� 920� 612�

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RHA Eksportfinans 8.70 Pfd Accelerated Return Notes Linked TO The Russell 2000 Index