1

PSG\JAN05\EP\K2_OVERVIEW(01).PPT

Financial results: FY 2004 and financial assumptions for the 2005 plan

Igor Chalupec, CEO2 March 2005

2

Financial results 2004The highest net profit in PKN ORLEN’s history

Cost cutting5 PLN 637 m

Wholesale volume sales6 + 8.0%

Utilisation ratio7 90.0%

Headcount in PKN ORLEN Group -5.5 %

Key financial data 20041 Operating data 2004

ROACE2 19.0%

EBITDA PLN 4.0 bnNet profit3 PLN 2.4 bnCAPEX PLN 1.5 bnOperating cash flow PLN 3.6 bn

Gearing4 1.5%

1) Refers to the Capital Group, IFRS numbers in the whole presentation if not otherwise pointed2) ROACE = operating profit after tax / average employed capital (equity + net debt)3) Includes net profit of PKN ORLEN subsidiaries for 2004 of PLN 285 m IFRS based4)Gearing = net debt / equity

5) For further details please go to slides 28, 29, 306) Refers to PKN ORLEN sales (gasoline, diesel, Jet, LHO)7) Based on deep processing capacity of PKN ORLEN 13.5 m tonnes/year

3

Agenda

Summary of 2004 financial results

Assumptions for 2005 financial plan

Supporting slides

4

Refinery margin $5.6/b average in 2004 Increase of 84% 2004/2003Exchange rate average in 20041

1)2)

Macroeconomic environment in 2004Extraordinary favourable conditions in oil & gas business

0

2

4

6

8

10

12

01.04 02.04 03.04 05.04 06.04 08.04 09.04 10.04 12.04

2004 20032 3

2.5

3.0

3.5

4.0

4.5

5.0

01.04 02.04 03.04 05.04 06.04 08.04 09.04 10.04 12.04

PLN/USD 2004 PLN/EUR 2004

Brent $38.3/b average in 2004 Increase of 33% 2004/2003

Brent/Ural differential $4.1/b average in 2004 Increase of 134% 2004/2003

0.0

2.0

4.0

6.0

8.0

10.0

01.04 02.04 03.04 05.04 06.04 08.04 09.04 10.04 12.04

2004 2003

202530354045505560

01.04 02.04 03.04 05.04 06.04 08.04 09.04 10.04 12.04

2004 2003

1) Source: NBP (Polish National Bank) 2) Calculated as: Products (88.36%) vs Brent Dtd (100%). Products contain Premium Unl (25.21%),

EN590 (23.20%), Naphtha (16.51%), LHO (15.31%), HSFO (5.44%) i Jet (2.69%) 3) As in 2) above with a change: EN590 should be replaced by ULSD (source: CIF NWE quotations, except HSFO FOB ARA)

5

Revenues in segmental breakdown Dynamic increase across all segments

IFRS basis, PLN m 2003 2004 y/y

Revenue total 24 412 30 535 25%

of whichRefining1) 2) 10 066 14 337 42%

Poland 10 066 12 533 25%

Germany (without excise tax) 391 902 -

excise tax - Germany 902 1 094 -

Retail 2) 10 651 11 548 8%

Poland 4 381 4 910 12%

Germany (without excise tax) 1 998 2 646 32%

excise tax - Germany 4 272 3 992 -7%

Petrochemicals 3 145 4 000 27%

Others 550 650 18%

Revenues increased by 25% across all segments

due to growth of fuels sales volume by 5.6% and

growth of fuels and petrochemical products

prices quotations

Extraordinary increase of revenues in refining

segment due to change in Orlen Deutschland

revenues classification between retail and

wholesale

Higher dynamic due to shorter 10 month

consolidating period starting from March 2003

1) Refining, Wholesale and Logistics 2) The total revenue of Orlen Deutschland was attributed to the retail segment in 2003.

Starting from 2004, German revenues are split into retail and wholesale segments

6

Operating costVariable costs grew less than revenues

IFRS basis, PLN m 2003 2004 y/y

Raw materials and energy 11 005 12 407 12.7%

Costs of goods for resale 7 537 10 594 40.6%

External services 1 789 1 774 -0.8%

Staff costs 1 055 1 035 -1.9%

Depreciation and amortisation 1 236 1 234 0.2%

Taxes and charges 263 262 -0.4%

Other 595 1 004 68.7%

Total costs 23 480 28 310 20.6%

Variable costs 19 147 23 766 24.1%

Fixed costs 3 945 3 825 -3.0%

Other operating costs 388 719 85.3%

Change in inventories 87 -182 -309.2%

Total operating costs 23 567 28 128 19.4%

Increase due to the growth of fuel prices in OrlenDeutschland (39.8%)1

Increase of PKN ORLEN efficiency supported by decrease in fixed costs

Increase in other costs a result of higher provisions for: the cost of

land reclamation and contamination removal (PLN 128 m), economic

risk (PLN 147 m), asset revaluation (PLN 138 m)

and non-financial assets revaluation (PLN 161 m)

1) Also higher purchase goods for resale in Orlen Deutschland in 2004 in relation to 2003 due to the consolidation starting from 1 March 2003

7

Operating costs and segment split of operating profit2004 vs. 2003

Operating profit improvement due to a favourable refining and petrochemical margin,

the Brent/Ural differential and efficient

cost control

Significant increase in petrochemical results due to high demand for PKN

ORLEN and Anwil products

IFRS basis, PLN m 2003 2004 change

Operating profit 1 267 2 777 119.2%of which

Refining1 1 213 2 292 89.0%

Retail 38 49 28.9%

Petrochemical 418 810 93.8%

Others2 6 22 266.7%

Non attributable3 -408 -396 -2.9%

1) Refining, Wholesale and Logistics 2) Departments responsible for energetic media and social activity and services subsidiaries of PKN ORLEN

3) Includes corporate centre of PKN and subsidiaries not mentioned in previous segments included

8

Profit and loss accountRecord net profit

Impact of foreign exchange rates on financial revenues

and costs at a level of PLN 226 m and PLN 6 m

respectively. Financial costs increased due to provision for

sales receivables of NOM stake (PLN 111 m)

Reduction of distribution cost and administrative

expenses by PLN 187 m (2004/2003)

Effective tax rate at the level of 17.3%

IFRS basis, PLN m 2003 2004 change

Revenue 24 412 30 535 25.1%

Cost of sales -19 986 -24 403 22.1%

Distribution costs -2 259 -2 180 -3.5%

Administrative expenses -934 -826 -11.6%

Other1 34 -349 -

Profit from operations 1 267 2 777 119.2%

Financial income 279 400 43.4%

Financial expenses -377 -256 -32.1%

Profit before tax & minor. int. 1 219 3 021 147.8%

Income tax -198 -524 164.6%

Net profit 987 2 442 147.4%

1) Other operating income and expenses

9

Operating activity main driver supporting 2.5x increase in net profit

987

1510

325 58 50

(21)

(326) (141)

2 442

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PLN m2003 2004

∆∆ ∆

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Operating profit increase more than 119% shows unquestionable

improvement in oil & gas sector

10

EBITDA and ROACE in 2004 compared to adjusted 2003 results1

EBITDA (PLN bn)

1

4.0

4.3

3.5

3.6

3.7

3.8

3.9

4.0

4.1

4.2

4.3

4.4

2003 - adjusted 2004

ROACE (%)

1

19.0

19.8

16.0

17.0

18.0

19.0

20.0

2003 - adjusted 2004

1)2003 results adjusted to 2004 results with: Brent price 38.3$/b, Brent-Ural differential 4.1$/b, refinery margin 5.6 $/b, PLN/EUR 4.52; PLN/USD 3.65

11

Refining segment1

Increase in operating efficiency through favourable macroeconomic conditions

1 213

737

733

219151 62 17

(43)(96)

(155)(254)

(292)

2 292

0

500

1 000

1 500

2 000

2 500

3 000

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PLN m 2003 2004

∆

∆

∆

∆

∆

∆

∆ ∆ ∆ ∆

Effective realisation of cost cutting programme

Increase in the segment result a result of favourable

environmental conditions

1) Refining, Wholesale and Logistics

12

Retail segment Improvement results due to cost cutting programme

38

141

187

(20)

(25)

(87)

(23)

49

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100

150

200se

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2003

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PLN m 2003 2004

∆

∆

∆ ∆

∆

∆

Keeping favourable trend in non-fuel products sales

Poor Orlen Deutschland result confirms the validity

of current strategy

13

PetrochemicalAlmost double increase in segment result mainly due to petrochemical margins improvement

418

493

147

6326

(28) (29)(98)

(112)(70)

810

0

200

400

600

800

1000

1200se

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PLN m2003 2004

∆

∆ ∆

∆

∆ ∆ ∆ 1) Consolidation of contribution to Basell Orlen Polyolefins (BOP)

Anwil took advantage of favourable macroeconomic

conditions Due to the difference in valuation of contribution

to BOP in 2003

14

Agenda

Summary of 2004 financial results

Assumptions for 2005 financial plan

Supporting slides

15

Macroeconomic assumptions for 2005

Macro assumptions1 2004 2005

• Refinery margin2: 5.6$/b 3.4$/b

• Brent/Ural differential: 4.1$/b 3.5$/b

• Brent crude oil: 38.3$/b 36.0$/b

• Exchange rate PLN/USD2 3.65 3.20

• Exchange rate PLN/EUR2 4.53 4.40

• Fuel consumption in Poland3: +8.1% +3.7%

• Retail fuel consumption4: +6.9% +1.4%

of which: Gasoline 0% 0% Diesel +12% +10%

1) Semi annual assumptions2) Source: please go to slide no 4

3) Own estimates calculated as: 100% gasoline and LPG consumption, and 75% diesel consumption4) Own estimates calculated as: 100% gasoline, diesel and LHO consumption

16

Operating assumptions for 2005

• Wholesale volume sales increase > 4% (gasoline, diesel, Jet, LHO)

• Retail volume sales increase >5% (gasoline, diesel, LPG)

• Petrochemical volume sales increase: >5%

• Crude oil processed 13.1 m tonnes

• Utilization rate1 96%

• Main maintenance shutdowns:

Olefins 60 days; 1H’05Hydrocracking 27 days; 2H’05Diesel oil desulphurisation 20 days; 2H’05Aromatic extraction 70 days; 1H’05

1) In relation to the deep processing capacity 13,5 m tonnes/year

17

Financial assumptions for 2005

Financial assumptions

• EBITDA : > 14% referring to macro environment in 20041

• Personnel cost: below the 2004 level2

• CAPEX PLN 2.3 bn3

• Dividend: recommendation of 30% payout ratio4

Total increase in CAPEX of ca. PLN 800 m 2005 vs. 2004

392 319

722

105

622 639777

267

Refining Wholesale andLogistics

Retail Petrochemical Others

2004 2005

1) Macroeconomic environment conditions as in 2004 :Brent price 38.3$/b, Brent-Ural differential 4.1$/b, refinery margin 5.6 $/b, PLN/EUR 4.52; PLN/USD 3.65

2) Refers to PKN ORLEN 3) Refers to PKN ORLEN Group

4) Refers to PKN ORLEN net profit of 2004

18

Strategic actions in 2005

Internal strengthening of home markets

• Effective implementation of new retail strategy

• Closing the Unipetrol acquisitiontransaction programme

• Preparation and implementation of the integration plan for Unipetrol

• Defining of further actions on German market

• Preparation of new cost cutting programme

• Centralization of procurement

• Implementation of a new management system

• Implementation of Management by Objectives

19

PKN ORLEN share price performance against WSE indexes

0

10

20

30

40

50

60

70

PKN Orlen share pricePKN Orlen share pricePKN ORLEN price performance1Brokers’ commentsBrokers’ commentsAnalysts comments2

Strategy will create shareholder value for shareholders

neutral Strongly agree

yes%

PKN ORLEN strategy

announcement

PKN ORLEN

WIG20

WIG

27 4 11October

18 25 2 8 15November

22 29 6 13December

20 27 3 102005

17 24 31 7February

14 21 28March

32333435363738394041424344454647484950

PKN ORLEN strategy is the best way of equity utilization

“The story coming out from the strategy presentation shows in our opinion determination on internal depolitisation and strengthening and corporate governance. 2009 financial targets are ambitious and exceed our estimations. It supports our opinion than our model and assumption were conservative and realistic”

JPMorgan, 03 February

“The story coming out from the strategy presentation shows in our opinion determination on internal depolitisation and strengthening and corporate governance. 2009 financial targets are ambitious and exceed our estimations. It supports our opinion than our model and assumption were conservative and realistic”

JPMorgan, 03 February

1) Source: PKN ORLEN source based on closing pries2) Source: Based on interview made by Smithfield in 9,10 February 2005

20

Agenda – supporting slides

Supporting slides

Macroeconomic environment

Operating and financial data for Q4 2004

Cost cutting

ORLEN Deutschland

21

Macroeconomic environment in Q4 2004

Exchange rates1 in Q4’04 Refining margin – $7/b average in Q4’04 Increase by 139% 2004/2003

2.5

3.0

3.5

4.0

4.5

5.0PLN/USD '04 PLN/EUR '04

10.04 11.04 12.040

2

4

6

8

10

124Q '2004 4Q 2003

2)3)

10.04 11.04 12.04

Brent $44/b average in Q4 ’04Increase by 49% 2004/2003

Brent/Ural differential $6,1/b average in Q4 ’04Increase by 262% 2004/2003

20

25

30

35

40

45

50

55

60 4Q 2004 4Q 2003

1) Source: NBP (Polish National Bank)2) Calculated as: Products (88.36%) vs. Brent Dtd (100%). Products contain Premium Unl (25.21%), EN590 (23.20%),

Naphtha (16.51%), LHO (15.31%), HSFO (5.44%) and Jet (2.69%)3) As in 1) above with a change: EN590 should be replaced by ULSD (source: CIF NWE quotations, except HSFO FOB ARA

0.0

2.0

4.0

6.0

8.0

10.04Q 2004 4Q 2003

10.04 11.04 12.0410.04 11.04 12.04

22

Macroeconomic environment in Poland

• Strong growth of GDP supports stable economic tendency. Still high unemployment rate – 19.1% (decrease by 0.9 pp y/y)

• New car sales estimated decline to 10% to 318.1 thousand (2004/2003)

• Growth in fuel consumption (gasoline, diesel, LHO) estimated at 6.9%E (2004/2003)

• Decrease in exchange rate of PLN/USD by over 6% from 3.89 to 3.65 (2004/2003)

Real GDP growth

4.5%4.8%

6.1%6.9%

4.7%4.0%3.9%

2.3%

1q '03 2q '03 3q '03 4q '03 1q '04 2q '04 3q '04 4q '04E

Unemployment rate

19.1%18.9%19.4%

20.5%20.0%

19.4%19.7%

20.6%

1q '03 2q '03 3q '03 4q '03 1q '04 2q '04 3q '04 4q '04

23

Profit and loss accountQ4 2004 vs. Q4 2003

IFRS basis, PLN m Q4 '03 Q4 '04

Revenue 6 908 8 313

Cost of sales -5 775 -6 674

Distribution costs -664 -585

Administrative expenses -243 -205

Other1 -74 -251

Profit from operations 152 598

Financial income 43 251

Financial expenses -55 -168

Profit before tax & minor. int. 148 710

Income tax 78 -88

Net profit 219 610

Distribution and GA cost reduction by PLN 117 m

Increase in „oincludes i

relating to environmental readjustment, business

risk and asset

ther costs” tems mainly

revaluation

1) Other operating revenue and costs included

24

Operating highlightsQ4 ‘04 vs. Q4 ‘03

Opearing data1 Q4 '03 Q3 '04 Q4 '04 y/y q/q

Total sales (tt), of w hich 4 112 4 053 4 041 -1,7% -0,3%

l ight product sales 2 2 721 2 743 2 754 1,2% 0,4%

- other refinery products sales (tt) 801 675 618 -22,8% -8,4%

- pet-chem sales (tt) 563 579 569 1,1% -1,7%

- other products sales (tt) 27 56 100 270,4% 78,6%

Retail sales of motor fuels3 971 893 852 -12,3% -4,6%

Processed crude (tt) 3 001 3 256 3 240 8,0% -0,5%

Utilisation 88,9% 96,5% 96,0% +7.1pp -0.5pp

White product yield 81,9% 80,3% 80,0% -1.9pp -0.3pp

Fuel yield 71,0% 67,5% 68,0% -3pp +0.5pp

Headcount4 15 133 14 191 14 296 -5,5% 0,7%

1) Refers to PKN ORLEN2) Gasoline, Diesel, LHO, Jet

3) Gasoline, diesel, LPGProduction data refers to Płock Refinery only, nameplate capacity of 13.5 m t

25

Refining, Wholesale and Logistics 4Q‘04 vs. 4Q ‘03

IFRS basis, PLN m Q4 '03 Q3 '04 Q4 '04 y/y q/q

Revenue 4 372 6 015 5 933 36% -1%

Segment costs - total 4 133 5 245 5 392 30% 3%

Profit 239 770 541 126% -30%

Sales (tt) 2 473 2 524 2 519 2% 0%

⇑ 2% y/yTotal volume sales increase. Visible

shift towards middle distillates.

OthersLPGGasoline

Diesel i LHO

20042003

18%

54%

2%

26%18%

47%

2%

33%

Changes Structure of volume sales

26

RetailQ4 2004 vs. Q4 2003

IFRS basis, PLN m Q4 '03 Q3 '04 Q4 '04 y/y q/q

Revenue 3 174 3 131 2 937 -7% -6%

Segment costs - total 3 212 3 050 3 003 -7% -2%

Profit -38 81 -66 74% -181%

Sales (tt) 1 049 894 852 -19% -5%

Changes Structure of volume sales

Change in structure and volume sales due to change in consolidation

method of German activities since 2004

OthersLPGGasoline

Diesel

20042003

58%

38%

2%53%

37%

3%

7%

27

Petrochemical4Q’ 04 vs. 4Q’03

IFRS basis, PLN m Q4 '03 Q3 '04 Q4 '04 y/y q/q

Revenue 1 164 1 474 1 496 29% 1%

Segment costs - total 1 092 1 258 1 241 14% -1%

Profit 72 216 255 254% 18%

Sales (tt) 563 579 569 1% -2%

Changes

⇑ 1% y/yTotal volume sales increase. Change

due to shift in polyolefin sales to Basell Orlen Polyolefins.

PolyolefinsOlefins

OthersPVCAmmonium nitrate

Glycols

20042003

2%

49%

15%

4%

17%

7%

1%47%

5%

22%

23%

8%

Structure of volume sales

28

Cost cutting programme in 2004

Realisation of cost cutting programme in 2004

167

637800

-113 -40-208

-300

-200

-100

0

100

200

300

400

500

600

700

800

Q4 '04 realisation 2004 realisation 2005 - plan

- Acquisition

- Implementation costs

- Investment and developmentcosts

-403

0

-851

-28

-35

-1121

-612

-113 -208

-

-

-40

PLN m

Savings (sustainable)

Investments and acquisition costs (one off)

1) Of which mainly: restructuring provision PLN 70 m2) Of which mainly: investments PLN 26 m

3) Excluding acquisition costs planned for 2005

29

Positive effect of cost cutting programme on 2004 results

637 m PLN1PLN m

70

112

77

227

378

119

171

120

0

100

200

300

400

500

600

Production Logistics Retail Other Acquisition anddevelopment

Implementationcosts

Other Impact on EBIT

Effects and costs of implementing cost cutting programme in 2004

• Total gross effect in 2004 of PLN 637 m

• Sustainable improvement of PLN 560 m

• Impact on EBIT of PLN 378 m

• Acquisition and development costs due to strategic projects and organizational changes

• Implementation costs mainly include provisions for future restructuring costs

• Others include mainly an increase in average remuneration costs due to annual rises

1) Operating cost cutting compared to 2002 cost base

30

Impact of cost cutting programme on Q4’04 results

2

18

85 1

46

PLN 149 m1PLN m

64

18

41

26

0

20

40

60

80

100

120

140

Production Logistics Retail Others Acquisition anddevelopment

Implementationcosts

Impact on EBIT

1) Cost cutting refers to 2002 cost base2) Planed restructuring provision

31

ORLEN Deutschland Volume sales higher than average for the market

Trends in Q4’04

Retail margin in Q4’04 at 4.1 cent/litre (decrease in Q4‘04 of almost 30% compared to Q3 ‘04). This had material effect on the financial results of Orlen Deutschland in Q4 ’04 and FY 2004.

Average retail margin in 2004 – 5.02 cent/litre

Total volume sales increase by 5.9%STAR stations increase 11.5%ORLEN stations decrease 13.1%

Fuel consumption in Germany 2004 vs. 20031

Gasoline - decrease 3.3%

Diesel - increase 3.1%

1) Based on estimates of MWW Mineralölwirtschaftsverband e.V.

32

ORLEN DeutschlandFinancial highlights 2004 vs. 2003

Financial highlights, PLN m1 2003 y/y 2004

Total assets 1 628 -13% 1 416

Equity 571 -22% 447

PLN m2

Revenue 6 270 38% 8 634

Costs of sale - 5 946 40% - 8 315

Distribution and GA costs - 375 15% - 433

Profit/loss on sales - 51 121% - 114

Other revenue and costs 55 -49% 28

Operating profit/loss 3 - - 86

Net profit/loss 5 - - 52

1) Based on PLN/EUR: 4.71 for 2003 and 4.08 for 2004 2) Based on PLN/EUR: 4.50 for 2003 and 4.52 for 2004