JPM Global Emerging Markets Conference

Transcription

1 JPM Global Emerging Markets Conference Wednesday 29 February and Thursday 1 March 2012, Miami Radek Nemecek, Head of Investor Relations Maerle Wasmann, Corporate Finance Manager New World Resources Plc

2 Disclaimer Forward looking statements Certain statements in this document are not historical facts and are or are deemed to be forward-looking. NWR s prospects, plans, financial position and business strategy, and statements pertaining to the capital resources, future expenditure for development projects, results of operations, may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology including, but not limited to; may, expect, intend, estimate, anticipate, plan, foresee, will, could, may, might, believe or continue or the negatives of these terms or variations of them or similar terminology. Although NWR believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. These forward-looking statements involve a number of risks, uncertainties and other facts that may cause actual results to be materially different from those expressed or implied in these forward-looking statements because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond NWR s ability to control or predict. Forward-looking statements are not guarantees of future performance. No offer of securities This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities. Reliance on third party information The information contained and/or views expressed herein may contain and/or be based on information that has been derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of such information. 2

3 Agenda Introduction 20 Highlights 2012 Outlook & Summary Appendix 3

4 Company profile NWR produces quality coking coal, thermal coal and coke from assets in the Czech Republic for the steel and energy sectors in the CEE. Principal subsidiary OKD is the Czech Republic s only hard coal mining company and second largest private employer. Subsidiary OKK is Europe s largest producer of foundry coke. Strategically located within the CEE supplying to a blue chip customer base including Arcelor Mittal, U.S. Steel, voestalpine, CEZ, and Dalkia. Four active mines in the Czech Republic. Three development projects in Poland and the Czech Republic, monitoring Poland and Ukraine for M&A opportunities. Total JORC reserves: 385Mt as at 1 January Incorporated in the UK and constituent of FTSE 250 and FTSE 350 Mining indices. 4

5 Corporate overview Group structure Management BXR Group Limited 1 Free float BXR Mining B.V % (A shares) 63.65% (A shares) New World Resources Plc Mike Salamon Chairman Klaus Beck OKD CEO 0.22% Minorities 99.78% New World Resources N.V. Marek Jelinek CFO Jan Fabian COO OKD, a.s. (Mining business) OKK Koksovny, a.s. (Coking business) NWR KARBONIA S.A. (Polish projects) History Rothschild family Nationalisation Privatisation OKD, HBZS, a.s. (Safety unit) Asset Consolidation Public Offerings Ownership is 0% unless otherwise stated. 5

6 Capital history Bridge Loan to finance the Acquisition in EUR 1.1bn Senior Secured Facility in 2006 to refinance bridge loan. In 2007 issued 7.375% EUR 300m Senior Notes maturing in 2015 (outstanding volume EUR 258m). In May 2008 listed on the London, Prague and Warsaw Stock Exchanges. In 20 raised EUR 141m Export Credit Agency facility to help finance POP 20 capital investment programme (outstanding volume EUR 93m). In 20 issued 7.875% EUR 500m Senior Secured Notes maturing in 2018 to refinance SSF. In 20 reincorporated in the UK and included in FTSE series indices. In February 20 EUR 0m Revolving Credit Facility raised, and fully drawn down in December 20. 6

7 Debt structure and credit ratings New World Resources Plc 2014 RCF 2018 Note New World Resources N.V. (S&P: BB-, Moody's: Ba3) S&P: BB- (stable) 2018 ECA Moody s: B1 (positive) 2015 Note (S&P: B, Moody's: B3) FY 20 leverage ratio at 0.85x Management s policy is to target a gearing ratio (Net Debt/EBITDA) of 2.0x over the cycle. OKD, a.s. (Mining business) OKK Koksovny, a.s. (Coking business) NWR KARBONIA S.A. (Polish projects) OKD, HBZS, a.s. (Safety unit) Restricted group 7

8 Customer base Customers 20 sales volumes by customer Coking coal Thermal coal Coke 6% Arcelor Mittal 7% 8% US Steel 33% voestalpine 19% 27% Novscom Moravia Steel Other 19% 7% 14% 15% 26% 19% Novscom Dalkia CEZ Verbund Arcelor Mittal Other 53% 14% 17% % 5% Moravia Steel KSK Handels ThyssenKrupp voestalpine Other 8

9 Regional coal drivers Electricity generation by source, Poland GDP per capita, CEE countries as % of EU-27 Source: International Energy Agency % Source: Eurostat 2% 1% 1% 90 2% 2% Coal Biomass 80 Gas 70 Czech Republic Slovakia Hydro electricity 60 Poland 92% Oil Wind Electricity generation and thermal coal production, Poland Source: International Energy Agency GWh 150,000 Mt 90 Industrial production growth, CEE Per cent Source: Goldman Sachs 145, , , , Electricity production Thermal coal production e 2013e Czech Republic Poland Germany EU-27 9

10 Regional coal drivers cont. NWR at the heart of the CEE manufacturing base Vehicle production Millions 7 Czech Slovakia Poland Germany All displayed logo s are protected by copyright and are used by NWR with specific consent of the owners. NWR does not necessarily have a contractual relationship with the mentioned companies. Some of the companies are end users of coal related products. The locations of the logo s and company names displayed on the map above do not represent the exact location of the companies involved. Source: : International Organisation of Motor Vehicle Manufacturers; 20: NWR estimates, Czech Statistics Office Region GDP CAGR for % compared to 1% in the Eurozone 1. Car production in the Czech Republic and Slovakia rose by 12% and 13% respectively in million vehicles produced in Germany, Czech, Poland, Slovakia and Austria in million consumers in the region. 1 Source: Bloomberg. 2 Source: Czech Statistics Office and Association of the Slovak Automotive Industry.

11 Organic growth projects NWR s growth projects in the Upper Silesian Coal Basin Debiensko (PL) Reserves (JORC) Expected mix Total project cost Expected unit costs Average production 190Mt (50 yr mining license) 7/8 coking coal 1/8 thermal coal EUR 4m development CAPEX; EUR 133m pre-production operating costs EUR 70/t (in today s prices) 2Mtpa Slope 1 development scheduled to commence during H Continue to acquire land and surface assets and construct surface facilities. Development projects Current operations Amended license for additional seams expected during 2012 following the completion of the environmental review. Frenstat (CZ) 1.5 billion tonnes hard coal resource. Exploration process commenced in 20 to take four years to complete after which feasibility of developing the resource is decided. Morcinek (PL) Currently NWR holds an exploration license for this coking coal deposit. Continue with the drilling and geological work on site.

12 Development of current operations Development of current reserves Two horizontal expansion projects with the aim of accessing a 30Mt of hard coking coal deposits from existing Karvina Mine. Expected year of completion: Two shaft deepening projects at Karvina Mine. Expected year of completion: Karvina Mine the largest operating mine in our current portfolio (89Mt of JORC reserves). CAPEX EUR m e Debiensko POP % 90% 80% 70% 60% 50% 40% 30% 20% % 0% External sales coal mix 57% 53% 52% 45% 48% e Coking coal incl. PCI Thermal coal 2012 expected CC:TC split 48:52. External coking coal sales expected above 50% over the medium term (2-3 years). Longer term, additional production from Debiensko expected to increase the proportion of coking coal in the overall mix. Development of current reserves and Operational improvements Maintenance & Safety 12

13 Safety performance Mining injury rate 2 per 00 employees Source: NWR estimates NWR s Lost time injury frequency rate NWR Poland -66% Lost Time Injury Frequency Rate represents the number of reportable injuries causing at least three days of absence per million hours worked. Includes contractors. 2 Mining injury rate represents the number of reportable injuries per 00 employees including contractors in any given year. 13

14 Agenda Introduction 20 Highlights 2012 Outlook & Summary Appendix 14

15 Revenue m EUR 1,7 1,590 1,632 Financial highlights FY 20 FY 20 FY 20 Consolidated revenues 1 of EUR 1,632m, up 3%. EBITDA 1 of EUR 454m, down 2%. EBITDA m EUR Underlying net profit of EUR 130m, up 1% 2. Underlying earnings per share of EUR Full year dividend of EUR Net debt of EUR 391m. No significant short term debt maturities. FY 20 FY 20 FY 20 Underlying EPS 2 EUR (0.25) FY 20 FY 20 FY 20 DPS EUR From continuing operations. 2 Excluding EUR 82m one-off gain from the sale of NWR Energy and EUR 23m positive tax refund in FY 20. FY 20 FY 20 FY 20 15

16 Operational and strategic highlights LTIFR 1 improved by 8% to Coal production down 2% at.2mt, and external sales down 1% at.6mt. Coke production down 23% at 770kt, and external sales down 50% at 555kt. Broke ground at Debiensko Mine in southern Poland. Commenced a four-year exploration process for Frenstat Mine in the Czech Republic. 1 Lost Time Injury Frequency Rate represents the number of reportable injuries causing at least three days of absence per million hours worked. Includes contractors. 16

17 International coal markets International hard coking coal benchmark contract prices USD/tonne (FOB) 350 Source: AME Thermal coal spot prices, ARA USD/tonne (CIF) 200 Source: Platts Net coking coal imports, China & India Million tonnes Source: AME e 2013e China India Thermal coal consumption by region Million tonnes of oil equivalent Source: BP Statistical Review of World Energy 3,500 3,000 2,500 2,000 1,500 1, Asia and Pacific North America Europe and RoW 17

18 Steel price tracker (year 2000 = 0), Europe Source: Steel Business Briefing 240 Steel environment Steel production, NWR s customer markets 1 Million tonnes Source: World Steel Association Jan Jun Nov Apr Sep Feb Jul Dec- Flat Products Long Products Global steel capacity utilisation ratio 2 Per cent Source: World Steel Association Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr July Oct Jan Apr Jul Oct Dec Steel production in NWR s main customer markets was up 2% in 20 compared to the previous year. In FY 20, European flat steel products price increased by 3%, long steel products increased 17%. Global steel capacity utilisation ratio was at 72% at the year end. 1 Czech Republic, Poland, Slovakia, Germany, and Austria. 2 Based on 64 countries reporting to the World Steel Association. 18

19 NWR quarterly prices Coking coal EUR/t NWR quarterly coking coal price Coke EUR/t International hard coking coal benchmark contract prices Thermal coal EUR/t Note 1: Given the ultimate consumer of PCI coking coal is the steel making industry, we started to classify its sales as coking coal as of 1 January 2012, in line with industry practice. Note 2: Final realised prices can be influenced by a range of factors including, but not limited to, exchange rate fluctuations, quality mix, timing of the deliveries and flexible provisions in the individual agreements. Thus the actual realised price for the period may differ from the average agreed prices previously announced. All of the forward-looking price guidance for 2012 is based on an exchange rate of CZK/EUR of Prices are expressed as a blended average between the different qualities of coal and coke and are ex works. FY 12 19

20 Coal segment Coking coal revenues EUR m % Thermal coal revenues EUR m % Costs per tonne 3 EUR % Ex-FX + 15% Production 82,443kt - 2%,247kt FY 20 FY 20 FY 20 FY 20 Volumes and prices 1 Volumes and prices 2 5,257kt 6,231kt - 16% + 14% 4,415kt 5,455kt EUR 181 EUR % + % EUR 141 EUR 63 FY 20 FY 20 Coal segment EBITDA 4 EUR m % 483 FY 20 FY 20 FY 20 FY 20 FY 20 FY 20 1 Blended average across all qualities of coking coal. In FY 20, approx. 53% of coking coal sales was hard coking coal and 47% was semi-soft grades. 2 Blended average price for all qualities of thermal coal. In FY 20, approx. 77% of thermal coal sales was thermal coal, 6% PCI coal and 17% middlings. 3 Mining costs per tonne reflect the operating costs incurred in mining of both coking coal and thermal coal. It does not include cost of transportation. 4 Includes internal sales to the coke segment. The full disclosure on operational segments is presented in the latest Operating and Financial Review. 20

21 Coke segment Coke revenues EUR m % Conversion costs per tonne 2 EUR 70 1,006kt - 17% Ex-FX - 14% - 23% Production kt FY 20 FY 20 Volumes and prices 1 FY 20 FY 20 Coke segment EBITDA 3 EUR m 1,0kt - 50% 31 EUR % 555kt EUR % 7 FY 20 FY 20 FY 20 FY 20 1 Blended average price for all types of coke. In FY 20, approx. 67% of coke sales was foundry coke, 23% blast furnace coke and % other types of coke. 2 Coke conversion costs per tonne reflects the operating costs incurred in converting coking coal into coke. It does not include the cost of internal or externally purchased coking coal. Transportation costs are also not included. 3 Includes both internal and external coal charges. The full disclosure on operational segments is presented in the latest Operating and Financial Review. 21

22 EBITDA EBITDA reconciliation EUR m FY 20 EBITDA Coal prices Coke prices Coal volumes and product mix Coke volumes Personnel and and product contractors mix Mining material and spare parts External coal for coke production Maintenance Energy for coal mining Change in inventories and other items FY 20 EBITDA 22

23 Net debt Net debt development EUR m Debt maturity profile EUR m 2018 Senior Secured Notes (7.875%) 2015 Senior Notes (7.375%) ECA Loan Jan Net Debt CF from operations Taxes and interest CAPEX Dividends paid Other Dec Net Debt 1 Comprises of the final A shares dividend for the 20 financial year of EUR 58m; an interim distribution from the B dividend reserve to the sole holder of the B shares, RPG Property B.V., for the amount of EUR 40m; and the interim A shares dividend for the 20 financial year of EUR 43m. 23

24 Agenda Introduction 20 Highlights 2012 Outlook & Summary Appendix 24

25 FY 2012 outlook Production.8 Mt of coal and 700kt of coke. External sales Prices Coal:.25.5Mt of which 52% thermal coal and 48% coking coal including PCI coking coal. Coke: 600kt. Thermal coal priced at EUR 74/t for calendar year 2012 with expected mix 82% thermal coal and 18% middlings. Coking coal priced quarterly: 2012 average price agreed at EUR 142/t with expected mix of 54% hard coking coal, 38% semi soft coking coal and 8% PCI coking coal. Coke priced quarterly: 2012 average price agreed at EUR 3/t with expected mix of 70% foundry coke, 20% blast furnace coke and % other types of coke. Costs CAPEX Mining unit costs expected to be broadly flat, on a constant FX basis. Coke conversion unit costs expected to increase in line with expected decrease in production. Expected CAPEX of EUR 250m of which EUR 40-50m for Debiensko. Note: Final realised prices can be influenced by a range of factors including, but not limited to, exchange rate fluctuations, quality mix, timing of the deliveries and flexible provisions in the individual agreements. Thus the actual realised price for the period may differ from the average agreed prices previously announced. All of the forward-looking price guidance for 2012 is based on an exchange rate of CZK/EUR of Prices are expressed as a blended average between the different qualities of coal and coke and are ex works. 25

26 Summary 20: strong performance in challenging macro-economic environment Financial good profitability and cost inflation containment Operational strong production with injury frequency lowest ever Organic growth one project in development and two at exploration stage Shareholders full year dividend of EUR 0.23 per share in line with dividend policy Well positioned for 2012 and beyond State-of-the art technology in both mining and coking Regional economic drivers attractive medium and long term Pricing cycle for coking coal aligned with global practice Attracting and retaining the best people in the region Strong balance sheet 26

27 H financial calendar and conferences 7 March Citi Global Resources, UK 14 March NWR Annual report and accounts publication 21 March BNP Basic Materials, UK -13 April RCB Institutional Investor, A 26 April NWR Annual General Meeting 16 May NWR 2012 Financial Results 18 May CS Poland/CE3, UK Contacts Radek Nemecek Maerle Wasmann Amy Rajendran rnemecek@nwrgroup.eu mwasmann@nwrgroup.eu arajendran@nwrgroup.eu Subscribe to alerts at 27

28 Agenda Introduction 20 Highlights 2012 Outlook & Summary Appendix 28

29 Financial overview EUR m FY 20 FY 20 Chg Chg Revenues 1,632 1,590 3% (2%) EBITDA (2%) 85 9 (29%) - coal segment % (17%) - coke segment (77%) (1) 0 - Margin 28% 29% - 22% 30% - Operating profit (6%) (45%) - Net financial expense - Profit on sale of NWR Energy - Income tax expense (89) - (57) (5) 82 (31) (19) - (13) (29) - () Total net profit (44%) 9 34 (74%) Underlying net profit % Operating CF (18%) (47%) Average CZK/EUR (3%) % 1 The full disclosure on all operational segments including the Other segment as well as consolidation adjustments and eliminations is presented in the Operating and Financial Review for the year ended 31 December Excluding EUR 82m one-off gain from the sale of NWR Energy and EUR 23m positive tax refund in FY

30 Balance sheet EUR m 31 Dec Dec 20 Total Assets 2,374 2,258 Non current assets 1,535 1,475 Property, plant & equipment 1,354 1,281 Current assets Cash and cash equivalents Total Equity and Liabilities 2,374 2,258 Total equity Total liabilities 1,621 1,449 Long-term loans Bonds issued Current portion of long-term loans Short-term loans 0 0 Net Debt Net Working Capital

31 Coal segment statistics Coal production per mining employee 1 Tonne Mining EBITDA per tonne of production EUR Daily longwall production t/lw % Mining EBITDA margin 1,500 1,750 1, Including mining contractors. 31

32 Historical sales figures Coking coal sales Thermal coal sales Coke sales Volumes Volumes Volumes kt 6,970 7,767 6,781 6,293 5,170 5,257 4,145 kt 6,231 5,771 5,707 5,282 5,455 5,5 4,891 kt 1,6 1,060 1,262 1, , Prices Prices Prices 181 EUR/t EUR/t EUR/t Note : Until 20, PCI coking coal was included in thermal coal sales. As of 1 January 2012, it is included in coking coal, in line with industry practice. 32