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Press Release

25/09/2006

CONSOLIDATED RESULTS FOR THE FIRST HALF-YEAR OF 2006

Limited audit

THE VOLATILITY INHERENT TO THE TRADING SECTOR AND THE DOWNTURN IN EXCEPTIONAL INCOME IMPACT RESULTS.

The Board of Directors of the Sapec Group examined the half-yearly consolidated results as at 30 June 2006.

CONSOLIDATED RESULTS

        (*) After adjustments due to the first IAS treatment of the accounts as at 30 June 2005 (see also the site www.sapec.be )

GENERAL COMMENTS

Despite a slight growth in turnover, the consolidated operating result of the Group during the first half-year of 2006 is 35% below that of the first half-year of 2005.

This can be explained by three non-recurrent factors, which had strongly impacted the results of the first half of 2005: (1) the realisation of capital gains on the sale of the Logic subsidiary (contractual logistics), (2) the realisation of capital gains following the sale of a storage warehouse belonging to this same company, and (3) a context that was exceptionally favourable for our food processing distribution business (import, freight and prices). It should also be pointed out that the economic context remained difficult during the first half-year, mainly for the sectors linked to agriculture and logistics.

ANALYSIS OF THE SECTORS

Results per Sector

COMMENTS ON THE SECTORS OF ACTIVITIES

Plant Protection Sectors

After the 20% downturn suffered by the markets on the Iberian Peninsula in 2005 following the drought, despite more favourable climatic conditions, these failed to recover during the first half of 2006, managing an average of only 2 to 3%.

The high levels of stock being distributed at the beginning of the year and the price and outlet difficulties faced by certain crops (vine in Portugal and citrus in Spain) explain this weak recovery of the markets and, consequently, the increase in competitive pressure.

•  Evolution on the Portuguese market

Sapec Agro Portugal maintains its position as co-leader on the Portuguese market, with a market share of over 33% and during the first half of 2006 generated sales that are practically identical to the 2005 levels.

On the other hand, the competitive pressure is making itself felt and is starting to eat away at the gross margin compared with 2005 (-1,5%), while at the same time the client payment deadlines have increased. Different measures have been taken and others are being analysed in order to counteract this negative evolution of the client payment deadlines.

Selectis witnessed a very difficult start to the year as the second player on the market. As it operates a more rigid commercial policy, the company was unable to impose its sales objectives in a context of high client stock levels.

The structural costs and the financial costs are in line with our forecasts.

•  Evolution on the Spanish market

Sapec Agro Espagne saw a 6,6% growth in sales compared with the 2005 figures and was therefore able to slightly increase its market share in Spain. The gross margin is holding up at its 2005 level and the rotation of the circulating capital is at the same level as 2005.

Tradecorp in the agrochemical sector saw its sales increase by 8,9% compared with 2005 and therefore was also able to increase its market share in this sector in Spain. The gross margin is up by 2 points compared with 2005.

In Spain as well, our structural costs and our financial costs are in line with our forecasts.

Plant Nutrition Sector

Total sales are up by 13,6 %, 6,7 % of which in the Iberian Peninsular and 20 % internationally, but remain below our forecasts, in particular in Brazil.

•  Evolution on the Iberian market

On the Iberian market, the commercial reorganisation carried out at Tradecorp, which has been effective since March, seems to be already bearing fruit. Sales are up and a product focused policy should allow an improvement in the gross margin, halting the erosion that had set in back in 2005.

At Tradecorp in Spain, the structural costs are in line with our forecasts as well as the rotations of the circulating capital.

•  International evolution

At international level, sales are up by 20 % compared with 2005 and the average gross margin is holding up.

The increase in sales is confirmed on all the markets with the exception of Brazil. The team in Brazil was reorganised and the effective launch of this new commercial subsidiary is thus postponed by six months.

The structural costs are in line with our forecasts as well as the rotations of circulating capital.

•  Chemical Product Distribution Sector

The chemical product distribution sector witnessed rather a difficult first half year, the second quarter allowing a considerable recovery of the differences observed at the end of the first quarter. The solvents sector is suffering most from the failure of Portugal's economic recovery to materialise and from strong competition.

The polymers and paraffin sector is making good progress compared with the first half year of 2005, and the incorporation of new products in the plastics sector is starting to bear fruit.

The classics sector is finishing the half year below its objectives, failing to live up to its good performance during the first half of 2005 but the differences do not give ground for concern and recovery is underway.

•  Environmental sector

The first half year was reasonably buoyant for the CITRI activity.

•  The production of RDF (secondary fuel) is underway and the local cement works should start to use this source of fuel from September onwards.

•  The construction project of the third cell is still awaiting final authorisation, but the signs are that the investment will be made in 2007.

•  The CIRVER project is following the usual administrative procedure to obtain all the required authorisations and this procedure should be finalised before the end of the year.

Food Processing Distribution Sector

The usual activity of Interpec Iberica is essentially divided into two: the Trade activity which consists of buying then selling or of selling then buying the « commodities » by always maintaining the positions, the « open positions (purchase or sale promises) strictly under control, and the Distribution activity, which consists of taking delivery, transporting, insuring, unloading, storing and delivering the merchandise ordered by the clients.

As laid down by IAS 39, the company values the « open position » for the calculation of its result (in fact we have been following this accounting principle since 1988). We therefore have more active periods of Trade, followed by calmer periods during which Distribution takes over

During the 1st half-year of 2006:

1. The demand for agricultural products in Spain fell by around 15%, especially in the pork and poultry industry following the bird flu threat.
2. A large majority of the 2005 agricultural production that had been kept back by the farmers (which favoured imports during the 2 nd half year of 2005) flooded the market during the first half of 2006, provoking surpluses and leading to pressure on the price that is damaging to imports.

It is within this framework that Interpec Ibérica suffered a strong reduction of its Trade activity and therefore consequently a strong reduction in its operating result even if, parallel to that, it maintained its Distribution volume.

The companies Seporta and Seporsur have on the whole suffered a slight downturn in activity, partially offset by the unloading of « clinker » for third parties in Seporsur.

In Portugal, Seteia was less affected than Interpec, the outcome of a well targeted niche policy. The volumes processed are also down but the unitary margin is up.

Logistics Sector

Land Activity:

Despite a turnover that is slightly higher than that of the 1st half year of 2005, the current result of the division showed a negative trend.

The rail junction of the Valongo terminal is only operational since early September (three months behind schedule) and the activity of the Lisbon terminal is continuing to be penalised by an unfavourable economic environment. In this context, a reformulation of the commercial strategy and a reorganisation of the teams are underway in order to better target the most buoyant markets and clients.

Port Activity:

The Setubal port terminal for its part has significantly increased its profitability compared with 2005.

Energy Sector

The production of our power stations is lower than that obtained during the 1st half year of 2005 (-10,6%), essentially due to the lack of water in the reservoirs that supply our power stations in the region of Albacete. Galicia and Extramadura are doing better than in 2005 and the North is stable.

The average accumulated price paid to the producer is 6% higher than that of 2005.

The difference between the recurrent EBITDA 2005/2006 for the period is mainly due to the recognition in the 2006 accounts of a large part of the costs of the major repairs carried out on one of our power stations.

During the first half-year, the accounts recognised the capital gains earned on the sale of the wind park of Cuenca (1,956 mill. €), this is the first block of the capital gains on the sale of the wind park projects.

Others

During the first half-year, the sale of land belonging to our industrial estate was recognised in the accounts.

PROSPECTS FOR THE FINANCIAL YEAR IN PROGRESS

Despite signs of an upturn in the economic context for certain of our sectors, according to our forecasts, the second half-year looks set to deliver the same performance as the first half-year as far as our current activities are concerned.

For the year as a whole, the capital gains on disposals of non-current assets will be lower than those realised in 2005.

In the Energy sector, an application has been submitted for a concession for an important photovoltaic project (10 MW) in Spain, which should be given the green light in the upcoming months.

M.M. Antoine Velge   ou   Eric van Innis      Tel : + 351 213 222 777

                                                           Email : investorsrelations@sapec.pt