Group turnover of EUR 309.0 million (Q1 2003: EUR 291.0 million)

• Operating profit after exceptional items of EUR 3.9 million (Q1 2003: EUR 5.9 million loss)

• Net loss for the quarter of EUR 3.5 million (Q1 2003: EUR 11.1 million)

• Cash inflow before financing of EUR 3.0 million (Q1 2003: EUR 3.4 million)
Market Conditions European PVC market trading conditions showed signs of seasonal recovery during the first quarter of the year enabling Suspension PVC (S-PVC) market prices to rise from the December 2003 level. Market prices for PVC were, on average, 5.1% above those for quarter four 2003 and 6.6% better than those in the first quarter of 2003.
The positive sales price effect was, however, offset by considerably higher average contract raw material prices than those in the equivalent period in 2003 with both ethylene and chlorine prices increasing. As previously reported EVC’s margins in 2003 were adversely impacted by a significant shortfall in supply of chlorine under one of its long term supply contracts and the extra cost of ethylene dichloride (a premix of chlorine and ethylene) to replace the contract chlorine supplies in the first quarter of 2003 was EUR 4.9 million. EVC treated the EUR 4.9 million direct extra costs incurred as exceptional costs within cost of turnover.

Result of Operations
Group turnover at EUR 309.0 million was 6.2 % higher than the equivalent period in 2003, due to higher PVC resin prices, higher volumes and higher turnover in the Compound and Film business area.
Overall, cost of turnover increased by 4.5 %, with plant fixed cost savings and reductions in depreciation only partially offsetting the increased variable production costs. For the quarter, the Group returned a gross margin of EUR 17.1 million, a EUR 5.4 million increase versus the equivalent period in 2003.
Operating expenses at EUR 13.2 million were EUR 4.4 million lower than the equivalent period in 2003, reflecting the continued focus on cost reductions coupled with a EUR 1.4 million beneficial foreign exchange movement (quarter one 2003 had a EUR 2.3 million negative movement).
As a result, Group operating profit increased by EUR 9.8 million to EUR 3.9 million profit compared with EUR 5.9 million loss last year.
The Compound and Film business area continues to experience a highly competitive market and was adversely impacted by the increasing PVC input prices seen over the quarter. Nevertheless the business area produced a better operating profit than the first quarter of 2003, helped by higher volumes and
positive foreign exchange currency movements. The Polymers business suffered an operating loss of EUR 2.1 million, lower than in the equivalent period in 2003 as a direct result of higher sales and the absence of the raw material supply problems experienced during the first quarter 2003.

Net financial expenses at EUR 5.7 million were EUR 1.1 million higher than 2003 as a direct result of the higher borrowings and interest rates resulting from the refinancing in November 2003. The Group produced a loss on ordinary operations before taxation of EUR 1.8 million (Q1 2003: EUR 10.5 million)
and EUR 3.4 million (Q1 2003: EUR 11.0 million) after taxation. Taxation for the quarter was EUR 1.6 million, up EUR 1.1 million on 2003 reflecting the deferred tax charge in Germany given the improved profitability.
The net result for the first quarter was a loss of EUR 3.5 million compared to a loss of EUR 11.1 million in 2003.

CashFlow
The group recorded a EUR 3.0 million cash inflow before financing in 2004, compared to an inflow of EUR 3.4 million last year. The improvement in operating profit was largely offset in cash terms by the increase in trade debtors due to increases in price and volumes.

Financial Position
As at 31 March 2004, the Group had gross borrowings of EUR 279.9 million, up EUR 1.1 million compared to 31 December due mainly to foreign exchange movements. After deducting cash balances of EUR 60.3 million, the net debt position as at 31 March 2004 was EUR 219.6 million, a decrease of
EUR 3.6 million on the 2003 year end position.

Outlook
Quarter one 2004 has seen some positive seasonal developments in the European PVC markets but margins remain under pressure due to the increase in key raw material prices. Market sentiment remains mixed with little sign of any sustained restocking through the product chain.