Current report no 6 /2006

The Management Board of Grupa Kęty S.A. informs about the estimated impact of the consequences of the fire in the Packaging Plant on the financial results of the company for the current year.

In the production hall where the fire broke out, there were 5 rotogravure printers, including three modern 8-10 colour machines and two over 20-year old machines. These machines constituted a significant element of the flexible packaging production, which ? in the opinion of the Management Board - in the present situation may be replaced to a large extent by outsourcing the printing services to third parties. The preliminary losses caused by the fire of the production hall have been estimated for approximately 30-50 million PLN. The real estate and the equipment were insured.

A significant fact should be pointed out that the fire did not damage the aluminum rolling mill or the equipment for the production of printing cylinders, and none of the two of the remaining segments of activity were affected.

Securing the continuity of supplies to our customers is the priority. In order to achieve this objective Grupa Kęty S.A. intends to take the following actions:
1) Use the safety stock buffers that the company kept for selected customers in case of unpredictable events. These stocks shall satisfy the most urgent orders for some of the customers
2) Produce partly by means of the flexo printing technology having consulted the customers
3) Outsource the overprinting operation to other printing houses interested in such cooperation.
4) Move the production load to the packaging plant in Tychy.
5) Initiate immediately investment projects.

After the preliminary analysis of the situation the Management Board is confident to be able to reconstruct most of the lost production capacity in 2006, and estimates the negative impact for the operating result of Grupa Kęty for the maximum amount of ca. 20 million PLN. The Management Board does not foresee group layoffs related to the ensuing situation.

The management and the employees of Grupa Kęty SA would like to thank the customers, suppliers and competitors for their expression of solidarity at this difficult moment for the company.

distributed by