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Specialty chemicals company Rhodia (NYSE:RHA) reported net sales(a) at 1,179 million euros, up 9.3% vs. Q3 2005, driven by strong volume growth (up 5.5%) and price increases (up 7%) to offset the rise in the cost of raw materials and energy. Recurring EBITDA(b) climbed 60% to 160 million euros; recurring EBITDA Margin of 13.6% compared with 9.3% in Q3 2005. Sharp rise in Operating Profit, to 112 million euros from 8 million euros in Q3 2005. Net Income of 71 million euros, against a loss of 121 million euros in Q3 2005. � Summary income statement � � � � � � � In million euros After impact of discontinued operations � Q3 2005 � Q3 2006 � % Variation Net Sales(a) � 1,079� � 1,179� � +9.3% Recurring EBITDA(b) � 100� � 160� � +60% Recurring EBITDA Margin � 9.3% � 13.6% � -� Operating Profit � 8� � 112� � -� Income/(loss) before income tax � (80) � 50� � -� Profit/(loss) from continuing operations � (84) � 73� � -� Discontinued operations � (37) � (2) � -� Net Income (loss) � (121) � 71� � -� � 1. Strong improvement in Q3 2006 operating performance Net Sales(a) rose 9.3% to 1,179 million euros in the third quarter 2006, from 1,079 million euros a year earlier. The increase reflected the very significant impact of price increases (up 7%) and the strong growth in volumes (up 5.5%), driven by robust demand across all businesses. Recurring EBITDA increased by 60%, to 160 million euros from 100 million euros in the third quarter 2005. Recurring EBITDA Margin rose to 13.6% from 9.3% year on year. This operating performance reflected the solid demand during the period and the Group�s ability to increase prices to offset the rise in raw material and energy costs. Operating Profit climbed to 112 million euros from 8 million euros a year earlier, driven by the improvement in operating performance and the reduction in restructuring costs. In addition, a 27 million euros profit was recorded in connection with the setting up of Orbeo, the 50-50 joint venture with Soci�t� G�n�rale to trade Rhodia�s carbon emissions credits. The Financial Result improved to (62) million euros from (88) million euros in the third quarter 2005, primarily due to the decline in interest expense following the reduction in consolidated debt. The third quarter 2005 was also impacted by a 14 million euros unrealized foreign exchange loss. Net Income was 71 million euros compared to a net loss of 121 million euros a year earlier. Net Income in the third quarter 2006 included the recognition of 34 million euros of deferred tax assets following the return to profit of the Group�s North American operations. Consolidated net debt slightly down from June 30, 2006 Capital Expenditure totaled 68 million euros during the period, while Working Capital Requirement rose a modest 13 million euros. The ratio of operational Working Capital Requirement to total sales improved to 13.5% at September 30, 2006 from 13.9% a year earlier. Free Cash Flow(c) was negative, at (5) million euros, after including 17 million euros of restructuring cash costs. Consolidated net debt totaled 1,921 million euros, a 149 million euros decrease compared to June 30, 2006. The reclassification of the debt linked to discontinued operations under �liabilities associated with assets classified as held for sale� led to 111 million euros of debt reduction, relating to Silicones for the most part. 2. Building for the future On the back of its improved operating performance, Rhodia took advantage of favorable market conditions in October to issue 1.1 billion euros in floating rate notes to refinance part of its debt. The transaction enabled the Group to extend its debt maturity profile, provide greater flexibility and reduce interest expenses. The planned sale of Rhodia�s Silicones business to China National BlueStar Corporation will contribute further to the refocusing on businesses in which the Group holds strong leadership positions and in which Rhodia expects to generate its future growth. The Group is pursuing its development in Asia, with the announcement of the construction of a polyamide intermediates (HMD) plant in China and a new specialty surfactants unit in India. These projects will strengthen the Asian presence of Rhodia Polyamide and Novecare. Rhodia has submitted ahead of plan its first request to the United Nations Framework Convention on Climate Change Secretariat (UNFCCC) to obtain CERs. This follows a third party audit of its greenhouse gas emissions reduction at the Onsan plant in South Korea. As a consequence, Rhodia expects to receive 1 million tonnes of CERs before the end of the year. The greenhouse-gas abatement unit in Brazil is scheduled to come on stream in the fourth quarter. The Group confirms that it will have a total of 11 to 13 million tonnes a year of CERs available starting in 2007. 3. Outlook Market conditions should remain satisfactory in the fourth quarter, in an environment still shaped by high, volatile raw material and energy prices. For the year as a whole, price increases made by the Group should offset higher raw material and energy costs. Rhodia remains confident it will meet its 2006 objectives: A recurring EBITDA Margin of at least 13%. A positive Net Income for 2006. A ratio of net debt to recurring EBITDA no higher than 2.9 times. Looking further ahead, the Group reiterates its medium-term objectives. (a) Excluding other revenues (b) Before restructuring, amortization and depreciation, other operating income and expense, and capital gains and losses on divestments (c) Defined as �net cash provided by operating activities� less �additions to property, plant and equipment� and �other capital investments� This press release and a detailed presentation of the third-quarter results will be available as of 7:30 am at: www.rhodia.com This press release contains elements that are not historical facts including, without limitation, certain statements on future expectations and other forward-looking statements. Such statements are based on management�s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those anticipated. Rhodia is a global specialty chemicals company recognized for its strong technology positions in Performance Materials, Functional Chemicals and the Organics and Services clusters. Partnering with major players in the automotive, electronics, pharmaceuticals, agrochemicals, consumer care, tires, and paints and coatings markets, Rhodia offers tailor-made solutions combining original molecules and technologies to respond to customers� needs. Rhodia subscribes to the principles of Sustainable Development communicating its commitments and performance openly with stakeholders. Rhodia generated sales of 5 billion euros in 2005 and employs around 19,500 people worldwide. Rhodia is listed on Euronext Paris and the New York Stock Exchange. � Results Fact Sheet: Q3 2006 � (Note new discontinued operations: Silicones) � Income Statement million euros � Q3 2005 � Q3 2006 � Variation � YTD 30/09/2005 � YTD 30/09/2006 � Variation Net Sales � 1 079� � 1 179� � 9.3% � 3 336� � 3 593� � 7.7% Other revenue � 75� � 75� � -� � 295� � 322� � 9.2% Recurring EBITDA 100� 160� 60.0% 395� 488� 23.5% Recurring EBITDA Margin(a) � 9.3% � 13.6% � � � 11.8% � 13.6% � � Depreciation & Amortization (81) (73) (235) (226) Other Gains and Losses 6� 27� (10) 23� Restructuring Costs � (17) � (2) � � � (42) � (14) � � Operating Profit � 8� � 112� � � � 108� � 271� � � Financial Results � (88) � (62) � � � (314) � (171) � � Income/(loss) before income tax � (80) � 50� � � � (206) � 100� � � Income tax (4) 23� (38) 57� Income/(loss) from continuing operations (84) 73� (244) 157� Income/(loss) from discontinued operations (37) (2) (147) (43) Net Income/(loss) � (121) � 71� � � � (391) � 114� � � Net Income/(loss) (Group Share) � (122) � 70� � � � (391) � 111� � � Minority interests � 1� � 1� � � � -� � 3� � � � � � � � � � Net Sales Recurring EBITDA Operating Profit million euros � Q3 2005 � Q3 2006 � Variation � Q3 2005 � Q3 2006 � Variation Q3 2005 Q3 2006 RHODIA 1 079� 1 179� 9.3% 100� 160� 60.0% 8� 112� POLYAMIDE 406� 479� 18.0% 46� 69� 50.0% 21� 46� ACETOW 104� 108� 3.8% 27� 28� 3.7% 18� 20� NOVECARE 226� 229� 1.3% 20� 28� 40.0% 4� 20� SILCEA 100� 98� (2.0)% 11� 13� 18.2% (6) 6� ECO SERVICES 55� 59� 7.3% 18� 23� 27.8% 13� 18� ORGANICS 204� 213� 4.4% (3) 14� -� 3� 6� ENERGY SERVICES -� 1� -� 1� 2� -� 1� 29� CORPORATE & Others � (16) � (8) � 50.0% � (20) � (17) � 15% (46) (33) � (all figures are in a million euros after discontinued operations) � Sales and Recurring EBITDA of new discontinued operations: Silicones � � Q1 05 � Q2 05 � Q3 05 � Q4 05 � FY 05 � Q1 06 � Q2 06 � Q3 06 Net Sales 97� 103� 100� 100� 400� 107� 110� 98� Recurring EBITDA � 14� � 13� � 13� � 16� � 56� � 17� � 21� � 11� � � Net Financial Debt December 31. 2005 March 31. 2006 June 30. 2006 Sept 30. 2006 2 089� 2 107� 2 070� 1 921� � � � 2006 Targets � Mid term Targets Recurring EBITDA Margin(a) of at least 13% Recurring EBITDA margin(a) > 15%(b) Positive Net Income Net Debt / Recurring EBITDA < 2.2x(b) Net Debt / Recurring EBITDA ? 2.9x � � � (a) Calculated as recurring EBITDA / Net Sales (b) Excluding CER projects Results Fact Sheet: Q3 2006 (all figures are in a million euros after discontinued operations) POLYAMIDE � Solid volume growth for both nylon intermediates and engineering plastics Strong price increases in particular in nylon intermediates offset raw material cost increases Particularly strong end markets for electric & electronics and consumer & industrial goods ACETOW � Stable volumes Good pricing trends offset raw material cost increases NOVECARE � Performance driven by good volume growth and favourable pricing particularly in North America in Home & Personal Care Buoyant Industrial Additives and Oilfield Chemicals market Further benefits from fixed cost savings SILCEA � Now focused on Silica systems and Rare Earths Good volume growth particularly in Rare Earths Favourable pricing trends notably in Silica systems ECO SERVICES � Positive impact of price indexation mechanism Good volumes driven by increased demand for sulphuric acid and regeneration ORGANICS � Return to reliable industrial performance after major operational difficulties in Q3 2005 Good pricing trends offset raw material cost increases Restructuring delivers further significant fixed cost reduction ENERGY SERVICES � South Korean abatement plant now up and running First emissions reduction audited & CER issuance request filed with UNFCCC 1 Mt of CERs expected by year end � Q3 06 Energy supply optimization continues to deliver benefits No cogeneration activity (seasonal) � � � � � � � � � Foreign Net Foreign Exchange Net Sales Exchange Volume Selling transaction Sales � � Q3 2005 Scope conversion & mix Price effect Q3 2006 RHODIA 1079� (15) (7) 59� 77� (14) 1179� POLYAMIDE 406� (2) 5� 21� 59� (10) 479� ACETOW 104� 0� (1) 2� 4� (1) 108� NOVECARE 226� (9) (5) 15� 3� (1) 229� SILCEA 100� (7) (1) 3� 5� (2) 98� ECO SERVICES 55� 0� (2) 3� 3� 0� 59� ORGANICS 204� (3) (2) 9� 5� 0� 213� ENERGY SERVICES 0� 0� 0� 1� 0� 0� 1� CORPORATE & Others � (16) 6� (1) 5� (2) 0� (8) � Recurring EBITDA Q3 2005 Scope Foreign Exchange conversion Volume & mix Selling Price(a) Raw materials & Energy Fixed Costs Recurring EBITDA Q3 2006 Recurring EBITDA Margin(b) Q3 2006 RHODIA 100� (1) (1) 33� 60� (43) 12� 160� 13.6% POLYAMIDE 46� (2) 0� 13� 47� c (38) c 3� 69� 14.4% ACETOW 27� 0� 0� 0� 2� (1) 0� 28� 25.9% NOVECARE 20� (1) (1) 5� 2� 0� 3� 28� 12.2% SILCEA 11� 0� 0� 2� 4� (3) (1) 13� 13.3% ECO SERVICES 18� 0� (1) 2� 2� 1� 1� 23� 39.0% ORGANICS (3) (5) 0� 10� 4� (2) 10� 14� 6.6% ENERGY SERVICES 1� 2� 0� 2� 0� (3) 0� 2� -� CORPORATE & Others (20) 5� 1� (1) (1) � 3� � (4) (17) -� (a)Including FX transaction effect (b) Calculated as recurring EBITDA / Net Sales � c: Polyamide: Local currency price increases +56m euros Local currency material costs -43m euros Results Fact Sheet: YTD 30/09/2006 (all figures are in a million euros after discontinued operations) � Net Sales Recurring EBITDA Operating Profit � YTD 30/09/2005 YTD 30/09/2006 Variation YTD 30/09/2005 YTD 30/09/2006 Variation YTD 30/09/2005 YTD 30/09/2006 RHODIA 3 336� 3 593� 7.7% 395� 488� 23.5% 108� 271� POLYAMIDE 1 266� 1 421� 12.2% 191� 203� 6.3% 111� 129� ACETOW 301� 330� 9.6% 77� 84� 9.1% 51� 62� NOVECARE 693� 714� 3.0% 76� 83� 9.2% 43� 58� SILCEA 297� 304� 2.4% 34� 45� 32.4% 2� 24� ECO SERVICES 158� 175� 10.8% 47� 60� 27.7% 31� 44� ORGANICS 658� 674� 2.4% 23� 52� 126.1% 3� 18� ENERGY SERVICES -� 1� -� 10� 27� 170% 1� 49� CORPORATE & Others (37) (26) 29.7% (63) (66) (4.8)% (134) (113) � Net Sales YTD 30/09/2005 Scope Foreign Exchange conversion Volume & mix Selling Price Foreign Exchange transaction effect Net Sales YTD 30/09/2006 RHODIA 3336� (44) 110� 99� 142� (50) 3593� POLYAMIDE 1266� (7) 84� 79� 49� (50) 1421� ACETOW 301� 0� 6� 6� 15� 2� 330� NOVECARE 693� (26) 10� 15� 24� (2) 714� SILCEA 297� (21) 4� 11� 15� (2) 304� ECO SERVICES 158� 0� 2� (3) 18� 0� 175� ORGANICS 658� (9) 6� (7) 24� 2� 674� ENERGY SERVICES 0� 0� 0� 1� 0� 0� 1� CORPORATE & Others (37) 19� (2) (3) (3) 0� (26) � Recurring EBITDA YTD 30/09/2005 Scope Foreign Exchange conversion Volume & mix Selling Price(a) Raw materials & Energy Fixed Costs Recurring EBITDA YTD 30/09/2006 Recurring EBITDA Margin(b)YTD 30/09/2006 RHODIA 395� (2) 15� 50� 88� (84) 26� 488� 13.6% POLYAMIDE 191� (9) 14� 32� (1) (18) (6) 203� 14.3% ACETOW 77� (1) 2� 2� 16� (13) 1� 84� 25.5% NOVECARE 76� (6) 2� (1) 20� (18) 10� 83� 11.6% SILCEA 34� 1� 1� 7� 12� (11) 1� 45� 14.8% ECO SERVICES 47� 0� 1� 1� 16� (2) (3) 60� 34.3% ORGANICS 23� (9) 1� 1� 26� (19) 29� 52� 7.7% ENERGY SERVICES 10� 12� 0� 9� 0� (6) 2� 27� -� CORPORATE & Others (63) 10� (6) (1) (1) 3� (8) (66) -� (a)Including FX transaction effect (b) Calculated as recurring EBITDA / Net Sales Results Fact Sheet: YTD September 30, 2005 & 2006 results adjusted for Q3 06 discontinued operations � RHODIA � Q1 2005 Q1 2006 Q2 2005 Q2 2006 H1 2005 H1 2006 Q3 2005 Q3 2006 YTD 30/09/2005 YTD 30/09/2006 ( M Euros ) Net Sales 1 096� 1 203� 1 161� 1 211� 2 257� 2 414� 1 079� 1 179� 3 336� 3 593� Recurring EBITDA 150� 161� 145� 167� 295� 328� 100� 160� 395� 488� % Sales(a) 13.7% 13.4% 12.5% 13.8% 13.1% 13.6% 9.3% 13.6% 11.8% 13.6% Operating Profit � 66� 69� 34� 90� 100� 159� 8� 112� 108� 271� � � � � � � � � � � � � POLYAMIDE ( M Euros ) Net Sales 419� 464� 441� 478� 860� 942� 406� 479� 1 266� 1 421� Recurring EBITDA 74� 57� 71� 77� 145� 134� 46� 69� 191� 203� % Sales(a) 17.7% 12.3% 16.1% 16.1% 16.9% 14.2% 11.3% 14.4% 15.1% 14.3% Operating Profit � 52� 32� 38� 51� 90� 83� 21� 46� 111� 129� ACETOW ( M Euros ) Net Sales 92� 109� 105� 113� 197� 222� 104� 108� 301� 330� Recurring EBITDA 23� 30� 27� 26� 50� 56� 27� 28� 77� 84� % Sales(a) 25.0% 27.5% 25.7% 23.0% 25.4% 25.2% 26.0% 25.9% 25.6% 25.5% Operating Profit � 15� 21� 18� 21� 33� 42� 18� 20� 51� 62� NOVECARE ( M Euros ) Net Sales 228� 246� 239� 239� 467� 485� 226� 229� 693� 714� Recurring EBITDA 28� 29� 28� 26� 56� 55� 20� 28� 76� 83� % Sales(a) 12.3% 11.8% 11.7% 10.9% 12.0% 11.3% 8.8% 12.2% 11.0% 11.6% Operating Profit � 19� 21� 20� 17� 39� 38� 4� 20� 43� 58� SILCEA ( M Euros ) Net Sales 93� 103� 104� 103� 197� 206� 100� 98� 297� 304� Recurring EBITDA 11� 15� 12� 17� 23� 32� 11� 13� 34� 45� % Sales(a) 11.8% 14.6% 11.5% 16.5% 11.7% 15.5% 11.0% 13.3% 11.4% 14.8% Operating Profit � 5� 7� 3� 11� 8� 18� (6) 6� 2� 24� ECO SERVICES ( M Euros ) Net Sales 48� 56� 55� 60� 103� 116� 55� 59� 158� 175� Recurring EBITDA 11� 14� 18� 23� 29� 37� 18� 23� 47� 60� % Sales(a) 22.9% 25.0% 32.7% 38.3% 28.2% 31.9% 32.7% 39.0% 29.7% 34.3% Operating Profit � 6� 7� 12� 19� 18� 26� 13� 18� 31� 44� ORGANICS ( M Euros) Net Sales 229� 232� 225� 229� 454� 461� 204� 213� 658� 674� Recurring EBITDA 18� 17� 8� 21� 26� 38� (3) 14� 23� 52� % Sales(a) 7.9% 7.3% 3.6% 9.2% 5.7% 8.2% (1.5)% 6.6% 3.5% 7.7% Operating Profit � 6� 4� (6) 8� 0� 12� 3� 6� 3� 18� ENERGY SERVICES ( M Euros ) Net Sales 1� 1� Recurring EBITDA 2� 22� 7� 3� 9� 25� 1� 2� 10� 27� Operating Profit � (5) 17� 5� 3� 0� 20� 1� 29� 1� 49� CORPORATE & OTHERS ( M Euros ) Sales & intercompany sales eliminations (13) (7) (8) (11) (21) (18) (16) (8) (37) (26) Recurring EBITDA (17) (23) (26) (26) (43) (49) (20) (17) (63) (66) Operating Profit � (32) (40) (56) (40) (88) (80) (46) (33) (134) (113) � (a)Calculated as recurring EBITDA / Net Sales Results Fact Sheet: 2005 Enterprise quarterly results adjusted for Q3 06 discontinued operations � RHODIA Q1 2005 Q2 2005 Q3 2005 Q4 2005 FY 2005 ( M Euros) Net Sales 1 096� 1 161� 1 079� 1 185� 4 521� Recurring EBITDA 150� 145� 100� 118� 513� % Sales(a) 13.7% 12.5% 9.3% 10.0% 11.3% Operating Profit 66� 34� 8� (42) 66� � � � � � � POLYAMIDE ( M Euros) Net Sales 419� 441� 406� 444� 1 710� Recurring EBITDA 74� 71� 46� 52� 243� % Sales(a) 17.7% 16.1% 11.3% 11.7% 14.2% Operating Profit 52� 38� 21� 24� 135� ACETOW ( M Euros ) Net Sales 92� 105� 104� 109� 410� Recurring EBITDA 23� 27� 27� 23� 100� % Sales(a) 25.0% 25.7% 26.0% 21.1% 24.4% Operating Profit 15� 18� 18� 14� 65� NOVECARE ( M Euros) Net Sales 228� 239� 226� 242� 935� Recurring EBITDA 28� 28� 20� 20� 96� % Sales(a) 12.3% 11.7% 8.8% 8.3% 10.3% Operating Profit 19� 20� 4� 10� 53� SILCEA ( M Euros ) Net Sales 93� 104� 100� 96� 393� Recurring EBITDA 11� 12� 11� 11� 45� % Sales(a) 11.8% 11.5% 11.0% 11.5% 11.5% Operating Profit 5� 3� (6) 0� 2� ECO SERVICES ( M Euros ) Net Sales 48� 55� 55� 51� 209� Recurring EBITDA 11� 18� 18� 10� 57� % Sales(a) 22.9% 32.7% 32.7% 19.6% 27.3% Operating Profit 6� 12� 13� 5� 36� ORGANICS ( M Euros ) Net Sales 229� 225� 204� 254� 912� Recurring EBITDA 18� 8� (3) 11� 34� % Sales(a) 7.9% 3.6% (1.5)% 4.3% 3.7% Operating Profit 6� (6) 3� (26) (23) ENERGY SERVICES ( M Euros ) Recurring EBITDA 2� 7� 1� 15� 25� Operating Profit (5) 5� 1� 12� 13� CORPORATE & OTHERS ( M Euros ) Sales & intercompany sales eliminations (13) (8) (16) (11) (48) Recurring EBITDA (17) (26) (20) (24) (87) Operating Profit (32) (56) (46) (81) (215) � (a)Calculated as recurring EBITDA / Net Sales Consolidated income statements as of September 30, 2006 � (in millions of euros) Quarter ended September 30, Nine months ended September 30, Full year � 2006 (a) 2005 (a) 2006 (a) 2005 (a) 2005 (a) Net sales 1 179� 1 079� 3 593� 3 336� 4 521� Other revenue 75� 75� 322� 295� 435� Cost of sales (1 023) (974) (3 197) (3 002) (4 139) Administrative and selling expenses (120) (137) (379) (388) (523) Research and development expenses (24) (27) (77) (80) (104) Restructuring costs (2) (14) (14) (43) (82) Other operating income/(expenses) 27� 6� 23� (10) (42) Operating profit 112� 8� 271� 108� 66� Financial income 29� 29� 97� 90� 133� Finance costs (93) (103) (273) (335) (496) Foreign exchange gains/(losses) 2� (14) 5� (69) (69) Share of profit/(losses) of associates � � � � � Income/(loss) before income tax 50� (80) 100� (206) (366) Income tax expense 23� (4) 57� (38) (53) Income/(loss) from continuing operations 73� (84) 157� (244) (419) loss from discontinued operations (2) (37) (43) (147) (196) Net Income/(loss) 71� (121) 114� (391) (615) Attributable to: Equity holders of Rhodia SA 70� (122) 111� (391) (616) Minority interests 1� 1� 3� � 1� Income/(loss) per share from continuing operations (in euro) � basic and diluted 0.06� (0.13) 0.13� (0.39) (0.63) Income/(loss) per share (in euro) � basic and diluted 0.06� (0.19) 0.10� (0.62) (0.95) Weighted average number of shares before dilution 1 204 186 174� 627 582 158� 1 186 074 328� 627 582 158� 645 635 891� Weighted average number of shares after dilution 1 207 481 329� 627 582 158� 1 189 756 561� 627 582 158� 645 635 891� � (a) unaudited Consolidated balance sheets as of September 30, 2006 � Assets � (in millions of euros) September 30 2006 (a) December 31 2005 Property, plant & equipment 1 760� 2 135� Goodwill 229� 244� Other intangible assets 167� 154� Investments in associates 4� 4� Other non-current financial assets 109� 164� Deferred tax assets 177� 83� Non-current assets 2 446� 2 784� Inventories 606� 630� Income tax receivable 21� 20� Trade and other receivables 1 017� 1 188� Derivative financial instruments 21� 42� Other current financial assets 14� 5� Cash and cash equivalents 394� 920� Assets classified as held for sale 577� 57� Current assets 2 650� 2 862� TOTAL ASSETS 5 096� 5 646� � (a) unaudited � � � � Liabilities and shareholders' equity � � � (in millions of euros) September 30 2006 (a) December 31 2005 Share capital 1 204� 1 177� Additional paid-in capital 22� 570� Other reserves 136� 141� Deficit (1 795) (2 580) Equity attributable to equity holders of Rhodia SA (433) (692) Minority interests 26� 26� Total equity (407) (666) Borrowings 1 846� 1 975� Retirement benefits and similar obligations 1 146� 1 269� Provisions 262� 297� Deferred tax liabilities 32� 34� Other non-current liabilities 58� 46� Non-current liabilities 3 344� 3 621� Borrowings 483� 1 039� Derivative financial instruments 19� 14� Retirement benefits and similar obligations 54� 81� Provisions 141� 204� Income tax payable 39� 31� Trade and other payables 1 028� 1 271� Liabilities associated with assets classified as held for sale 395� 51� Current liabilities 2 159� 2 691� TOTAL EQUITY AND LIABILITIES 5 096� 5 646� � (a) unaudited Consolidated statements of cash flows as of September 30, 2006 � � Nine months ended September 30, (in millions of euros) 2006 (a) 2005 (a) Net loss (Group Share) 114� (391) Adjustments for : Depreciation, amortization and impairment of long-term assets 258� 396� Net increase/(decrease) in provisions and employee benefits (77) (1) Net increase/(decrease) in financial provisions 1� 34� Share of profit/(loss) of associates Dividends received from associates Other income and expense 4� (13) Gain/(loss) on disposal of non-current assets (2) 14� Income tax expense/(income) (86) 21� Foreign exchange losses/(gains) 5� 101� Cash flow from operating activities before changes in working capital 217� 161� Changes in working capital - (Increase)/decrease in inventories and work in progress (89) 11� - (Increase)/decrease in trade and other receivables 43� 114� - Increase/(decrease) in trade and other payables (97) (96) - Increase/(decrease) in other current assets and liabilities 2� (170) Net cash from operating activities 76� 20� Purchases of property, plant and equipment (174) (177) Purchases of other non-current assets (26) (21) Proceeds on disposal of non-current assets 62� 35� (Purchases of)/repayments of loans and financial investments 12� (2) Net cash (used by) / from investing activities (126) (165) Proceeds from issue of shares, net of costs 36� Dividends paid (2) New long-term borrowings, net of costs 9� 1175� Repayments of non-current borrowings, net of costs (508) (1100) Net increase/(decrease) in current borrowings (5) (152) Net cash (used by) / from financing activities (470) (77) Effect of foreign exchange rate changes (6) 37� Net increase/(decrease) in cash and cash equivalents (526) (185) Cash and cash equivalents at the beginning of the year 920� 612� Cash and cash equivalents at the end of the year 394� 427� � (a) unaudited Specialty chemicals company Rhodia (NYSE:RHA) reported net sales(a) at 1,179 million euros, up 9.3% vs. Q3 2005, driven by strong volume growth (up 5.5%) and price increases (up 7%) to offset the rise in the cost of raw materials and energy. Recurring EBITDA(b) climbed 60% to 160 million euros; recurring EBITDA Margin of 13.6% compared with 9.3% in Q3 2005. Sharp rise in Operating Profit, to 112 million euros from 8 million euros in Q3 2005. Net Income of 71 million euros, against a loss of 121 million euros in Q3 2005. -0- *T Summary income statement ---------------------------------------------------------------------- In million euros After impact of discontinued Q3 2005 Q3 2006 % Variation operations ---------------------------------------------------------------------- Net Sales(a) 1,079 1,179 +9.3% ---------------------------------------------------------------------- Recurring EBITDA(b) 100 160 +60% ---------------------------------------------------------------------- Recurring EBITDA Margin 9.3% 13.6% - ---------------------------------------------------------------------- Operating Profit 8 112 - ---------------------------------------------------------------------- Income/(loss) before income tax (80) 50 - ---------------------------------------------------------------------- Profit/(loss) from continuing operations (84) 73 - ---------------------------------------------------------------------- Discontinued operations (37) (2) - ---------------------------------------------------------------------- Net Income (loss) (121) 71 - ---------------------------------------------------------------------- *T 1. Strong improvement in Q3 2006 operating performance Net Sales(a) rose 9.3% to 1,179 million euros in the third quarter 2006, from 1,079 million euros a year earlier. The increase reflected the very significant impact of price increases (up 7%) and the strong growth in volumes (up 5.5%), driven by robust demand across all businesses. Recurring EBITDA increased by 60%, to 160 million euros from 100 million euros in the third quarter 2005. Recurring EBITDA Margin rose to 13.6% from 9.3% year on year. This operating performance reflected the solid demand during the period and the Group's ability to increase prices to offset the rise in raw material and energy costs. Operating Profit climbed to 112 million euros from 8 million euros a year earlier, driven by the improvement in operating performance and the reduction in restructuring costs. In addition, a 27 million euros profit was recorded in connection with the setting up of Orbeo, the 50-50 joint venture with Societe Generale to trade Rhodia's carbon emissions credits. The Financial Result improved to (62) million euros from (88) million euros in the third quarter 2005, primarily due to the decline in interest expense following the reduction in consolidated debt. The third quarter 2005 was also impacted by a 14 million euros unrealized foreign exchange loss. Net Income was 71 million euros compared to a net loss of 121 million euros a year earlier. Net Income in the third quarter 2006 included the recognition of 34 million euros of deferred tax assets following the return to profit of the Group's North American operations. Consolidated net debt slightly down from June 30, 2006 Capital Expenditure totaled 68 million euros during the period, while Working Capital Requirement rose a modest 13 million euros. The ratio of operational Working Capital Requirement to total sales improved to 13.5% at September 30, 2006 from 13.9% a year earlier. Free Cash Flow(c) was negative, at (5) million euros, after including 17 million euros of restructuring cash costs. Consolidated net debt totaled 1,921 million euros, a 149 million euros decrease compared to June 30, 2006. The reclassification of the debt linked to discontinued operations under "liabilities associated with assets classified as held for sale" led to 111 million euros of debt reduction, relating to Silicones for the most part. 2. Building for the future -- On the back of its improved operating performance, Rhodia took advantage of favorable market conditions in October to issue 1.1 billion euros in floating rate notes to refinance part of its debt. The transaction enabled the Group to extend its debt maturity profile, provide greater flexibility and reduce interest expenses. -- The planned sale of Rhodia's Silicones business to China National BlueStar Corporation will contribute further to the refocusing on businesses in which the Group holds strong leadership positions and in which Rhodia expects to generate its future growth. -- The Group is pursuing its development in Asia, with the announcement of the construction of a polyamide intermediates (HMD) plant in China and a new specialty surfactants unit in India. These projects will strengthen the Asian presence of Rhodia Polyamide and Novecare. -- Rhodia has submitted ahead of plan its first request to the United Nations Framework Convention on Climate Change Secretariat (UNFCCC) to obtain CERs. This follows a third party audit of its greenhouse gas emissions reduction at the Onsan plant in South Korea. As a consequence, Rhodia expects to receive 1 million tonnes of CERs before the end of the year. The greenhouse-gas abatement unit in Brazil is scheduled to come on stream in the fourth quarter. The Group confirms that it will have a total of 11 to 13 million tonnes a year of CERs available starting in 2007. 3. Outlook Market conditions should remain satisfactory in the fourth quarter, in an environment still shaped by high, volatile raw material and energy prices. For the year as a whole, price increases made by the Group should offset higher raw material and energy costs. Rhodia remains confident it will meet its 2006 objectives: -- A recurring EBITDA Margin of at least 13%. -- A positive Net Income for 2006. -- A ratio of net debt to recurring EBITDA no higher than 2.9 times. Looking further ahead, the Group reiterates its medium-term objectives. (a) Excluding other revenues (b) Before restructuring, amortization and depreciation, other operating income and expense, and capital gains and losses on divestments (c) Defined as "net cash provided by operating activities" less "additions to property, plant and equipment" and "other capital investments" This press release and a detailed presentation of the third-quarter results will be available as of 7:30 am at: www.rhodia.com This press release contains elements that are not historical facts including, without limitation, certain statements on future expectations and other forward-looking statements. Such statements are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those anticipated. Rhodia is a global specialty chemicals company recognized for its strong technology positions in Performance Materials, Functional Chemicals and the Organics and Services clusters. Partnering with major players in the automotive, electronics, pharmaceuticals, agrochemicals, consumer care, tires, and paints and coatings markets, Rhodia offers tailor-made solutions combining original molecules and technologies to respond to customers' needs. Rhodia subscribes to the principles of Sustainable Development communicating its commitments and performance openly with stakeholders. Rhodia generated sales of 5 billion euros in 2005 and employs around 19,500 people worldwide. Rhodia is listed on Euronext Paris and the New York Stock Exchange. -0- *T Results Fact Sheet: Q3 2006 (Note new discontinued operations: Silicones) Income Statement ---------------------------------------------------------------------- million euros Q3 Q3 YTD YTD 2005 2006 Variation 30/09/2005 30/09/2006 Variation ---------------------------------------------------------------------- Net Sales 1 079 1 179 9.3% 3 336 3 593 7.7% ---------------------------------------------------------------------- Other revenue 75 75 - 295 322 9.2% ---------------------------------------------------------------------- Recurring EBITDA 100 160 60.0% 395 488 23.5% Recurring EBITDA Margin(a) 9.3% 13.6% 11.8% 13.6% ---------------------------------------------------------------------- Depreciation & Amortization (81) (73) (235) (226) Other Gains and Losses 6 27 (10) 23 Restructuring Costs (17) (2) (42) (14) ---------------------------------------------------------------------- Operating Profit 8 112 108 271 ---------------------------------------------------------------------- Financial Results (88) (62) (314) (171) ---------------------------------------------------------------------- Income/(loss) before income tax (80) 50 (206) 100 ---------------------------------------------------------------------- Income tax (4) 23 (38) 57 Income/(loss) from continuing operations (84) 73 (244) 157 Income/(loss) from discontinued operations (37) (2) (147) (43) Net Income/(loss) (121) 71 (391) 114 ---------------------------------------------------------------------- Net Income/(loss) (Group Share) (122) 70 (391) 111 ---------------------------------------------------------------------- Minority interests 1 1 - 3 ---------------------------------------------------------------------- *T -0- *T ---------------------------------------------------------------------- Net Sales Recurring EBITDA Operating Profit million Q3 Q3 Q3 Q3 Q3 Q3 euros 2005 2006 Variation 2005 2006 Variation 2005 2006 ---------------------------------------------------------------------- RHODIA 1 079 1 179 9.3% 100 160 60.0% 8 112 POLYAMIDE 406 479 18.0% 46 69 50.0% 21 46 ACETOW 104 108 3.8% 27 28 3.7% 18 20 NOVECARE 226 229 1.3% 20 28 40.0% 4 20 SILCEA 100 98 (2.0)% 11 13 18.2% (6) 6 ECO SERVICES 55 59 7.3% 18 23 27.8% 13 18 ORGANICS 204 213 4.4% (3) 14 - 3 6 ENERGY SERVICES - 1 - 1 2 - 1 29 CORPORATE & Others (16) (8) 50.0% (20) (17) 15% (46) (33) ---------------------------------------------------------------------- (all figures are in a million euros after discontinued operations) *T -0- *T ---------------------------------------------------------------------- Sales and Recurring EBITDA of new discontinued operations: Silicones ---------------------------------------------------------------------- Q1 05 Q2 05 Q3 05 Q4 05 FY 05 Q1 06 Q2 06 Q3 06 ---------------------------------------------------------------------- Net Sales 97 103 100 100 400 107 110 98 Recurring EBITDA 14 13 13 16 56 17 21 11 ---------------------------------------------------------------------- *T -0- *T ---------------------------------------------------------------------- Net Financial Debt December 31. 2005 March 31. 2006 June 30. 2006 Sept 30. 2006 ---------------------------------------------------------------------- 2 089 2 107 2 070 1 921 ---------------------------------------------------------------------- *T -0- *T ---------------------------------------------------------------------- 2006 Targets Mid term Targets ---------------------------------------------------------------------- Recurring EBITDA Margin(a) of Recurring EBITDA margin(a) at least 13% greater than 15%(b) Positive Net Income Net Debt / Recurring EBITDA less than 2.2x(b) Net Debt / Recurring EBITDA less than or equal to 2.9x ---------------------------------------------------------------------- (a) Calculated as recurring EBITDA (b) Excluding CER projects / Net Sales *T -0- *T Results Fact Sheet: Q3 2006 (all figures are in a million euros after discontinued operations) ---------------------------------------------------------------------- -- Solid volume growth for both nylon intermediates and engineering plastics POLYAMIDE -- Strong price increases in particular in nylon intermediates offset raw material cost increases -- Particularly strong end markets for electric & electronics and consumer & industrial goods ---------------------------------------------------------------------- ACETOW -- Stable volumes -- Good pricing trends offset raw material cost increases ---------------------------------------------------------------------- -- Performance driven by good volume growth and favourable pricing particularly in North America in Home NOVECARE & Personal Care -- Buoyant Industrial Additives and Oilfield Chemicals market -- Further benefits from fixed cost savings ---------------------------------------------------------------------- -- Now focused on Silica systems and Rare Earths SILCEA -- Good volume growth particularly in Rare Earths -- Favourable pricing trends notably in Silica systems ---------------------------------------------------------------------- -- Positive impact of price indexation mechanism ECO SERVICES -- Good volumes driven by increased demand for sulphuric acid and regeneration ---------------------------------------------------------------------- -- Return to reliable industrial performance after major operational difficulties in Q3 2005 ORGANICS -- Good pricing trends offset raw material cost increases -- Restructuring delivers further significant fixed cost reduction ---------------------------------------------------------------------- ENERGY -- South Korean abatement plant now up and running SERVICES -- First emissions reduction audited & CER issuance request filed with UNFCCC -- 1 Mt of CERs expected by year end ---------------------------------------------------------- -- Energy supply optimization continues to deliver Q3 06 benefits -- No cogeneration activity (seasonal) ---------------------------------------------------------------------- *T -0- *T ---------------------------------------------------------------------- Foreign Net Foreign Exchange Net Sales Exchange Volume Selling transaction Sales Q3 2005 Scope conversion & mix Price effect Q3 2006 ---------------------------------------------------------------------- RHODIA 1079 (15) (7) 59 77 (14) 1179 POLYAMIDE 406 (2) 5 21 59 (10) 479 ACETOW 104 0 (1) 2 4 (1) 108 NOVECARE 226 (9) (5) 15 3 (1) 229 SILCEA 100 (7) (1) 3 5 (2) 98 ECO SERVICES 55 0 (2) 3 3 0 59 ORGANICS 204 (3) (2) 9 5 0 213 ENERGY SERVICES 0 0 0 1 0 0 1 CORPORATE & Others (16) 6 (1) 5 (2) 0 (8) ---------------------------------------------------------------------- *T -0- *T Recurring Foreign EBITDA Exchange Volume Selling Q3 2005 Scope conversion & mix Price(a) ---------------------------------------------------------------------- RHODIA 100 (1) (1) 33 60 POLYAMIDE 46 (2) 0 13 47 (c) ACETOW 27 0 0 0 2 NOVECARE 20 (1) (1) 5 2 SILCEA 11 0 0 2 4 ECO SERVICES 18 0 (1) 2 2 ORGANICS (3) (5) 0 10 4 ENERGY SERVICES 1 2 0 2 0 CORPORATE & Others (20) 5 1 (1) (1) ---------------------------------------------------------------------- Recurring Raw Recurring EBITDA materials Fixed EBITDA Margin(b) & Energy Costs Q3 2006 Q3 2006 -------------------------------------------------------------- RHODIA (43) 12 160 13.6% POLYAMIDE (38)(c) 3 69 14.4% ACETOW (1) 0 28 25.9% NOVECARE 0 3 28 12.2% SILCEA (3) (1) 13 13.3% ECO SERVICES 1 1 23 39.0% ORGANICS (2) 10 14 6.6% ENERGY SERVICES (3) 0 2 - CORPORATE & Others 3 (4) (17) - -------------------------------------------------------------- (a)Including FX transaction effect (b) Calculated as recurring EBITDA / Net Sales c: Polyamide: Local currency Local currency material costs price increases +56m euros -43m euros *T -0- *T Results Fact Sheet: YTD 30/09/2006 (all figures are in a million euros after discontinued operations) Net Sales YTD YTD 30/09/2005 30/09/2006 Variation ------------------------------------------------ RHODIA 3 336 3 593 7.7% POLYAMIDE 1 266 1 421 12.2% ACETOW 301 330 9.6% NOVECARE 693 714 3.0% SILCEA 297 304 2.4% ECO SERVICES 158 175 10.8% ORGANICS 658 674 2.4% ENERGY SERVICES - 1 - CORPORATE & Others (37) (26) 29.7% ------------------------------------------------ Recurring EBITDA Operating Profit YTD YTD YTD YTD 30/09/2005 30/09/2006 Variation 30/09/2005 30/09/2006 ---------------------------------------------------------------------- RHODIA 395 488 23.5% 108 271 POLYAMIDE 191 203 6.3% 111 129 ACETOW 77 84 9.1% 51 62 NOVECARE 76 83 9.2% 43 58 SILCEA 34 45 32.4% 2 24 ECO SERVICES 47 60 27.7% 31 44 ORGANICS 23 52 126.1% 3 18 ENERGY SERVICES 10 27 170% 1 49 CORPORATE & Others (63) (66) (4.8)% (134) (113) ---------------------------------------------------------------------- *T -0- *T Net Sales Foreign YTD Exchange Volume 30/09/2005 Scope conversion & mix ---------------------------------------------------------------------- RHODIA 3336 (44) 110 99 POLYAMIDE 1266 (7) 84 79 ACETOW 301 0 6 6 NOVECARE 693 (26) 10 15 SILCEA 297 (21) 4 11 ECO SERVICES 158 0 2 (3) ORGANICS 658 (9) 6 (7) ENERGY SERVICES 0 0 0 1 CORPORATE & Others (37) 19 (2) (3) ---------------------------------------------------------------------- Foreign Exchange Net Sales Selling transaction YTD Price effect 30/09/2006 ---------------------------------------------------------------------- RHODIA 142 (50) 3593 POLYAMIDE 49 (50) 1421 ACETOW 15 2 330 NOVECARE 24 (2) 714 SILCEA 15 (2) 304 ECO SERVICES 18 0 175 ORGANICS 24 2 674 ENERGY SERVICES 0 0 1 CORPORATE & Others (3) 0 (26) ---------------------------------------------------------------------- *T -0- *T Recurring EBITDA Foreign YTD Exchange Volume & Selling 30/09/2005 Scope conversion mix Price(a) ---------------------------------------------------------------------- RHODIA 395 (2) 15 50 88 POLYAMIDE 191 (9) 14 32 (1) ACETOW 77 (1) 2 2 16 NOVECARE 76 (6) 2 (1) 20 SILCEA 34 1 1 7 12 ECO SERVICES 47 0 1 1 16 ORGANICS 23 (9) 1 1 26 ENERGY SERVICES 10 12 0 9 0 CORPORATE & Others (63) 10 (6) (1) (1) ---------------------------------------------------------------------- Recurring Recurring Raw EBITDA EBITDA materials Fixed YTD Margin(b)YTD & Energy Costs 30/09/2006 30/09/2006 -------------------------------------------------------------- RHODIA (84) 26 488 13.6% POLYAMIDE (18) (6) 203 14.3% ACETOW (13) 1 84 25.5% NOVECARE (18) 10 83 11.6% SILCEA (11) 1 45 14.8% ECO SERVICES (2) (3) 60 34.3% ORGANICS (19) 29 52 7.7% ENERGY SERVICES (6) 2 27 - CORPORATE & Others 3 (8) (66) - -------------------------------------------------------------- (a)Including FX transaction effect (b) Calculated as recurring EBITDA / Net Sales *T -0- *T Results Fact Sheet: YTD September 30, 2005 & 2006 results adjusted for Q3 06 discontinued operations Q1 Q1 Q2 Q2 H1 H1 Q3 Q3 RHODIA 2005 2006 2005 2006 2005 2006 2005 2006 ---------------------------------------------------------------------- ( M Euros ) Net Sales 1 096 1 203 1 161 1 211 2 257 2 414 1 079 1 179 Recurring EBITDA 150 161 145 167 295 328 100 160 % Sales(a) 13.7% 13.4% 12.5% 13.8% 13.1% 13.6% 9.3% 13.6% Operating Profit 66 69 34 90 100 159 8 112 ---------------------------------------------------------------------- ---------------------------------------------------------------------- POLYAMIDE ( M Euros ) Net Sales 419 464 441 478 860 942 406 479 Recurring EBITDA 74 57 71 77 145 134 46 69 % Sales(a) 17.7% 12.3% 16.1% 16.1% 16.9% 14.2% 11.3% 14.4% Operating Profit 52 32 38 51 90 83 21 46 ---------------------------------------------------------------------- ACETOW ( M Euros ) Net Sales 92 109 105 113 197 222 104 108 Recurring EBITDA 23 30 27 26 50 56 27 28 % Sales(a) 25.0% 27.5% 25.7% 23.0% 25.4% 25.2% 26.0% 25.9% Operating Profit 15 21 18 21 33 42 18 20 ---------------------------------------------------------------------- NOVECARE ( M Euros ) Net Sales 228 246 239 239 467 485 226 229 Recurring EBITDA 28 29 28 26 56 55 20 28 % Sales(a) 12.3% 11.8% 11.7% 10.9% 12.0% 11.3% 8.8% 12.2% Operating Profit 19 21 20 17 39 38 4 20 ---------------------------------------------------------------------- SILCEA ( M Euros ) Net Sales 93 103 104 103 197 206 100 98 Recurring EBITDA 11 15 12 17 23 32 11 13 % Sales(a) 11.8% 14.6% 11.5% 16.5% 11.7% 15.5% 11.0% 13.3% Operating Profit 5 7 3 11 8 18 (6) 6 ---------------------------------------------------------------------- ECO SERVICES ( M Euros ) Net Sales 48 56 55 60 103 116 55 59 Recurring EBITDA 11 14 18 23 29 37 18 23 % Sales(a) 22.9% 25.0% 32.7% 38.3% 28.2% 31.9% 32.7% 39.0% Operating Profit 6 7 12 19 18 26 13 18 ---------------------------------------------------------------------- ORGANICS ( M Euros) Net Sales 229 232 225 229 454 461 204 213 Recurring EBITDA 18 17 8 21 26 38 (3) 14 % Sales(a) 7.9% 7.3% 3.6% 9.2% 5.7% 8.2%(1.5)% 6.6% Operating Profit 6 4 (6) 8 0 12 3 6 ---------------------------------------------------------------------- ENERGY SERVICES ( M Euros ) Net Sales 1 Recurring EBITDA 2 22 7 3 9 25 1 2 Operating Profit (5) 17 5 3 0 20 1 29 ---------------------------------------------------------------------- CORPORATE & OTHERS ( M Euros ) Sales & intercompany sales eliminations (13) (7) (8) (11) (21) (18) (16) (8) Recurring EBITDA (17) (23) (26) (26) (43) (49) (20) (17) Operating Profit (32) (40) (56) (40) (88) (80) (46) (33) ---------------------------------------------------------------------- YTD YTD RHODIA 30/09/2005 30/09/2006 ---------------------------------------------------------------------- ( M Euros ) Net Sales 3 336 3 593 Recurring EBITDA 395 488 % Sales(a) 11.8% 13.6% Operating Profit 108 271 ---------------------------------------------------------------------- ---------------------------------------------------------------------- POLYAMIDE ( M Euros ) Net Sales 1 266 1 421 Recurring EBITDA 191 203 % Sales(a) 15.1% 14.3% Operating Profit 111 129 ---------------------------------------------------------------------- ACETOW ( M Euros ) Net Sales 301 330 Recurring EBITDA 77 84 % Sales(a) 25.6% 25.5% Operating Profit 51 62 ---------------------------------------------------------------------- NOVECARE ( M Euros ) Net Sales 693 714 Recurring EBITDA 76 83 % Sales(a) 11.0% 11.6% Operating Profit 43 58 ---------------------------------------------------------------------- SILCEA ( M Euros ) Net Sales 297 304 Recurring EBITDA 34 45 % Sales(a) 11.4% 14.8% Operating Profit 2 24 ---------------------------------------------------------------------- ECO SERVICES ( M Euros ) Net Sales 158 175 Recurring EBITDA 47 60 % Sales(a) 29.7% 34.3% Operating Profit 31 44 ---------------------------------------------------------------------- ORGANICS ( M Euros) Net Sales 658 674 Recurring EBITDA 23 52 % Sales(a) 3.5% 7.7% Operating Profit 3 18 ---------------------------------------------------------------------- ENERGY SERVICES ( M Euros ) Net Sales 1 Recurring EBITDA 10 27 Operating Profit 1 49 ---------------------------------------------------------------------- CORPORATE & OTHERS ( M Euros ) Sales & intercompany sales eliminations (37) (26) Recurring EBITDA (63) (66) Operating Profit (134) (113) ---------------------------------------------------------------------- (a)Calculated as recurring EBITDA / Net Sales *T -0- *T Results Fact Sheet: 2005 Enterprise quarterly results adjusted for Q3 06 discontinued operations RHODIA Q1 Q2 Q3 Q4 FY 2005 2005 2005 2005 2005 ---------------------------------------------------------------------- ( M Euros) Net Sales 1 096 1 161 1 079 1 185 4 521 Recurring EBITDA 150 145 100 118 513 % Sales(a) 13.7% 12.5% 9.3% 10.0% 11.3% Operating Profit 66 34 8 (42) 66 ---------------------------------------------------------------------- ---------------------------------------------------------------------- POLYAMIDE ( M Euros) Net Sales 419 441 406 444 1 710 Recurring EBITDA 74 71 46 52 243 % Sales(a) 17.7% 16.1% 11.3% 11.7% 14.2% Operating Profit 52 38 21 24 135 ---------------------------------------------------------------------- ACETOW ( M Euros ) Net Sales 92 105 104 109 410 Recurring EBITDA 23 27 27 23 100 % Sales(a) 25.0% 25.7% 26.0% 21.1% 24.4% Operating Profit 15 18 18 14 65 ---------------------------------------------------------------------- NOVECARE ( M Euros) Net Sales 228 239 226 242 935 Recurring EBITDA 28 28 20 20 96 % Sales(a) 12.3% 11.7% 8.8% 8.3% 10.3% Operating Profit 19 20 4 10 53 ---------------------------------------------------------------------- SILCEA ( M Euros ) Net Sales 93 104 100 96 393 Recurring EBITDA 11 12 11 11 45 % Sales(a) 11.8% 11.5% 11.0% 11.5% 11.5% Operating Profit 5 3 (6) 0 2 ---------------------------------------------------------------------- ECO SERVICES ( M Euros ) Net Sales 48 55 55 51 209 Recurring EBITDA 11 18 18 10 57 % Sales(a) 22.9% 32.7% 32.7% 19.6% 27.3% Operating Profit 6 12 13 5 36 ---------------------------------------------------------------------- ORGANICS ( M Euros ) Net Sales 229 225 204 254 912 Recurring EBITDA 18 8 (3) 11 34 % Sales(a) 7.9% 3.6%(1.5)% 4.3% 3.7% Operating Profit 6 (6) 3 (26) (23) ---------------------------------------------------------------------- ENERGY SERVICES ( M Euros ) Recurring EBITDA 2 7 1 15 25 Operating Profit (5) 5 1 12 13 ---------------------------------------------------------------------- CORPORATE & OTHERS ( M Euros ) Sales & intercompany sales eliminations (13) (8) (16) (11) (48) Recurring EBITDA (17) (26) (20) (24) (87) Operating Profit (32) (56) (46) (81) (215) ---------------------------------------------------------------------- (a)Calculated as recurring EBITDA / Net Sales *T -0- *T Consolidated income statements as of September 30, 2006 (in millions of Quarter Nine months euros) ended September 30, ended September 30, ---------------------------------------------------------------------- 2006 (a) 2005 (a) 2006 (a) 2005 (a) ---------------------------------------------------------------------- Net sales 1 179 1 079 3 593 3 336 ---------------------------------------------------------------------- Other revenue 75 75 322 295 ---------------------------------------------------------------------- Cost of sales (1 023) (974) (3 197) (3 002) Administrative and selling expenses (120) (137) (379) (388) Research and development expenses (24) (27) (77) (80) Restructuring costs (2) (14) (14) (43) Other operating income/(expenses) 27 6 23 (10) ---------------------------------------------------------------------- Operating profit 112 8 271 108 Financial income 29 29 97 90 Finance costs (93) (103) (273) (335) Foreign exchange gains/(losses) 2 (14) 5 (69) Share of profit/(losses) of associates ---------------------------------------------------------------------- Income/(loss) before income tax 50 (80) 100 (206) Income tax expense 23 (4) 57 (38) ---------------------------------------------------------------------- Income/(loss) from continuing operations 73 (84) 157 (244) loss from discontinued operations (2) (37) (43) (147) ---------------------------------------------------------------------- Net Income/(loss) 71 (121) 114 (391) ---------------------------------------------------------------------- Attributable to: Equity holders of Rhodia SA 70 (122) 111 (391) Minority interests 1 1 3 ---------------------------------------------------------------------- Income/(loss) per share from continuing operations (in euro) - basic and diluted 0.06 (0.13) 0.13 (0.39) Income/(loss) per share (in euro) - basic and diluted 0.06 (0.19) 0.10 (0.62) ---------------------------------------------------------------------- Weighted average number of shares before dilution 1 204 186 174 627 582 158 1 186 074 328 627 582 158 Weighted average number of shares after dilution 1 207 481 329 627 582 158 1 189 756 561 627 582 158 ---------------------------------------------------------------------- (in millions of euros) Full year ---------------------------------------------------------------------- 2005 (a) ---------------------------------------------------------------------- Net sales 4 521 ---------------------------------------------------------------------- Other revenue 435 ---------------------------------------------------------------------- Cost of sales (4 139) Administrative and selling expenses (523) Research and development expenses (104) Restructuring costs (82) Other operating income/(expenses) (42) ---------------------------------------------------------------------- Operating profit 66 Financial income 133 Finance costs (496) Foreign exchange gains/(losses) (69) Share of profit/(losses) of associates ---------------------------------------------------------------------- Income/(loss) before income tax (366) Income tax expense (53) ---------------------------------------------------------------------- Income/(loss) from continuing operations (419) loss from discontinued operations (196) ---------------------------------------------------------------------- Net Income/(loss) (615) ---------------------------------------------------------------------- Attributable to: Equity holders of Rhodia SA (616) Minority interests 1 ---------------------------------------------------------------------- Income/(loss) per share from continuing operations (in euro) - basic and diluted (0.63) Income/(loss) per share (in euro) - basic and diluted (0.95) ---------------------------------------------------------------------- Weighted average number of shares before dilution 645 635 891 Weighted average number of shares after dilution 645 635 891 ---------------------------------------------------------------------- (a) unaudited *T -0- *T Consolidated balance sheets as of September 30, 2006 Assets ---------------------------------------------------------------------- (in millions of euros) September 30 December 31 2006 (a) 2005 ---------------------------------------------------------------------- Property, plant & equipment 1 760 2 135 Goodwill 229 244 Other intangible assets 167 154 Investments in associates 4 4 Other non-current financial assets 109 164 Deferred tax assets 177 83 ---------------------------------------------------------------------- Non-current assets 2 446 2 784 ---------------------------------------------------------------------- Inventories 606 630 Income tax receivable 21 20 Trade and other receivables 1 017 1 188 Derivative financial instruments 21 42 Other current financial assets 14 5 Cash and cash equivalents 394 920 Assets classified as held for sale 577 57 ---------------------------------------------------------------------- Current assets 2 650 2 862 ---------------------------------------------------------------------- TOTAL ASSETS 5 096 5 646 ---------------------------------------------------------------------- (a) unaudited ---------------------------------------------------------------------- Liabilities and shareholders' equity ---------------------------------------------------------------------- (in millions of euros) September 30 December 31 2006 (a) 2005 ---------------------------------------------------------------------- Share capital 1 204 1 177 Additional paid-in capital 22 570 Other reserves 136 141 Deficit (1 795) (2 580) ---------------------------------------------------------------------- Equity attributable to equity holders of Rhodia SA (433) (692) Minority interests 26 26 ---------------------------------------------------------------------- Total equity (407) (666) ---------------------------------------------------------------------- Borrowings 1 846 1 975 Retirement benefits and similar obligations 1 146 1 269 Provisions 262 297 Deferred tax liabilities 32 34 Other non-current liabilities 58 46 ---------------------------------------------------------------------- Non-current liabilities 3 344 3 621 ---------------------------------------------------------------------- Borrowings 483 1 039 Derivative financial instruments 19 14 Retirement benefits and similar obligations 54 81 Provisions 141 204 Income tax payable 39 31 Trade and other payables 1 028 1 271 Liabilities associated with assets classified as held for sale 395 51 ---------------------------------------------------------------------- Current liabilities 2 159 2 691 ---------------------------------------------------------------------- TOTAL EQUITY AND LIABILITIES 5 096 5 646 ---------------------------------------------------------------------- (a) unaudited *T -0- *T Consolidated statements of cash flows as of September 30, 2006 Nine months ended September 30, ---------------------------------------------------------------------- (in millions of euros) 2006 (a) 2005 (a) ---------------------------------------------------------------------- Net loss (Group Share) 114 (391) Adjustments for : Depreciation, amortization and impairment of long- term assets 258 396 Net increase/(decrease) in provisions and employee benefits (77) (1) Net increase/(decrease) in financial provisions 1 34 Share of profit/(loss) of associates Dividends received from associates Other income and expense 4 (13) Gain/(loss) on disposal of non-current assets (2) 14 Income tax expense/(income) (86) 21 Foreign exchange losses/(gains) 5 101 ---------------------------------------------------------------------- Cash flow from operating activities before changes in working capital 217 161 ---------------------------------------------------------------------- Changes in working capital - (Increase)/decrease in inventories and work in progress (89) 11 - (Increase)/decrease in trade and other receivables 43 114 - Increase/(decrease) in trade and other payables (97) (96) - Increase/(decrease) in other current assets and liabilities 2 (170) ---------------------------------------------------------------------- Net cash from operating activities 76 20 ---------------------------------------------------------------------- Purchases of property, plant and equipment (174) (177) Purchases of other non-current assets (26) (21) Proceeds on disposal of non-current assets 62 35 (Purchases of)/repayments of loans and financial investments 12 (2) ---------------------------------------------------------------------- Net cash (used by) / from investing activities (126) (165) ---------------------------------------------------------------------- Proceeds from issue of shares, net of costs 36 Dividends paid (2) New long-term borrowings, net of costs 9 1175 Repayments of non-current borrowings, net of costs (508) (1100) Net increase/(decrease) in current borrowings (5) (152) ---------------------------------------------------------------------- Net cash (used by) / from financing activities (470) (77) ---------------------------------------------------------------------- Effect of foreign exchange rate changes (6) 37 ---------------------------------------------------------------------- Net increase/(decrease) in cash and cash equivalents (526) (185) ---------------------------------------------------------------------- Cash and cash equivalents at the beginning of the year 920 612 Cash and cash equivalents at the end of the year 394 427 ---------------------------------------------------------------------- (a) unaudited *T