MOL Plc.'s 2008 first half preliminary results - Continued strong results in second quarter of 2008

• Exploration & Production operating profit, excluding non-recurring profit of USD 393 mn from the sale of the Szőreg-1 field in Q1 2008, increased substantially by 53% year-on-year to USD 328 mn in H1 2008.  Operating profit in HUF terms (excluding one-off items) saw considerable growth of 34% year-on-year to HUF 54.4 bn, mainly due to the strong crude price environment.
• Refining & Marketing operating profit increased by 43% year-on-year to USD 657 mn, (up 26% in HUF-terms to HUF 109.1 bn), due to the strong operating profit contribution of IES, improved diesel yield and higher diesel crack spreads as well as inventory gain in H1 2008.  
• The Petrochemical segment reported USD 67 mn operating losses in H1 2008 (HUF 11.1 bn losses), as the integrated petrochemical margin deteriorated further and energy costs increased significantly, resulting in USD 87 mn losses for Q2 2008 vs. USD 15 mn operating profit in Q1 2008.
• Gas Transmission operating profit remained stable at USD 95 mn in H1 2008 (down 12% in HUF terms to HUF 15.7 bn), mainly due to increased operating costs as a result of higher own gas consumption due to the surplus volumes of transmitted natural gas and higher gas prices.
• Corporate and other operating losses of HUF 20.7 bn (excluding HUF 6.4 bn subsequent settlement from E.On in H1 2008 represent a 16% increase year-on year from HUF 17.8 bn operating losses excluding a one-off gain of HUF 14.4 bn on the acquisition of a 42.25% minority interest in TVK in H1 2007.
• Net financial gain of HUF 38.9 bn was recorded in H1 2008 (compared to the net financial expense of HUF 33.2 bn in H1 2007), including HUF 20.0 bn interest paid, HUF 7.8 bn interest received, a foreign exchange gain of HUF 53.2 bn and HUF 8.2 bn unrealised fair valuation gain on the conversion option embedded in the capital security (Magnolia Finance Ltd.) as a result of the share price depreciation and increased implied spread.
• Income tax expense decreased by HUF 22.9 bn from the previous year to HUF 22.2 bn in H1 2008, primarily as a result of the
• Capital expenditure and investments increased to HUF 161.0 bn (USD 970 mn) in H1 2008, compared to the HUF 100.8 bn (USD 534 mn) in H1 2007 as a result of the expansion of Gas business’ activities, the international expansion of Refining and Marketing and the more intensive international exploration and production activities.
• Net debt at the end of June 2008 was HUF 434.4 bn, while our gearing ratio (net debt divided by the sum of net debt and total equity) decreased from 38.8% in Q1 2008 to 27.3% as a result of the decrease in long term debts and the increase in shareholder’s equity, which was influenced by the realisation of the CEZ transaction.

Mr Zsolt Hernádi, Chairman-CEO of MOL commented:

I am pleased to announce that in the second quarter our Downstream and Upstream businesses continued to deliver strong results, demonstrating the consistent quality of our management systems and high efficiency of all key operations.  According to independent research from Wood Mackenzie published during the quarter, MOL's Duna and Bratislava refineries again achieved the highest net cash margin in Europe in 2007, maintaining their leading position in the field. In our Upstream business, where we have intensified our international activity, we made discoveries in Kazakhstan and Russia capable of adding to our future oil and gas production.

At a strategic level we have also made encouraging progress with two of our most important partnerships.  Following the clearance by the antimonopoly authorities, we have formally established the joint venture with CEZ, focusing on building and operating gas-fired power generation in the region.  In addition, we have taken steps to strengthen the strategic cooperation between MOL and INA, and have notified the relevant bodies in Croatia of our intention to launch an unconditional public offer for all of the shares which are not owned by MOL or the Republic of Croatia.

This operational and strategic progress, coupled with the increased level of dividend payment, demonstrate our strong determination to create further value for our investors.