Agenda. Executive Summary. Group Overview. Group Strategy and Overview. Financial Information. Contact Details

Transcription

1 Welcome to KHD KHD Humboldt Wedag International Ltd. is an industrial plant engineering and equipment supply company specializing in the cement, coal and minerals processing industries. October 2007

2 DISCLAIMER Certain statements in this presentation concerning future events or our future financial performance are forward looking statements, which reflect the expectations of management regarding future growth, results of operations, performance and business prospects and opportunities for KHD Humboldt Wedag International Ltd. ( KHD ). Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. KHD representatives will use their efforts to identify such statements during this presentation. These forward looking statements are only predictions and involve assumptions, known and unknown risks, uncertainties and other factors that may cause KHD's or its industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied in these forward-looking statements. Although KHD believes that the expectations reflected in the forward-looking statements are reasonable, KHD cannot guarantee future results, levels of activity, performance or achievements. The assumptions, risks and uncertainties that could affect future events or KHD's future financial performance, as well as the material factors or assumptions applied in making such forecasts or projections, are more fully described in KHD's quarterly report filed on August 14, 2007 (on Form 6-K filed in the US and on Form F1 filed in Canada) and our annual report filed on April 3, 2007 (on Form 20-F filed in the US and Canada). These filings are available at in the US and in Canada. 1

3 Agenda Executive Summary Group Overview Group Strategy and Overview Financial Information Contact Details 2

4 EXECUTIVE SUMMARY (1/2) We are currently in the final phase of our transition from a financial services company to a pure industrial plant engineering and equipment supply company: In November 2005 we changed our name from MFC Bancorp Ltd. to KHD to reflect the change in our business orientation. We transferred a significant part of our financial services assets to Mass Financial Corp. ( Mass ) and distributed shares of Mass to our shareholders in January We changed our reporting currency to US$. We spun out our real estate assets, SWA Reit Ltd ( SWA ) in September SWA is now in the final phase of the distribution of its assets to the shareholders. We are now planning to dispose the last of redundant assets relating to the financial services business. Results for our industrial plant engineering and equipment supply business for the first six months of 2007 vs. the same period last year: Revenues are up by 89% to US$ 270 million. Income from continuing operations increased by 131% to US$ 22.9 million. 3

5 EXECUTIVE SUMMARY (2/2) The environment for our products has been favorable, and we see demand for our products to continue over the medium term. Growth in cement consumption (Russia, Eastern Europe, India and China) Replacement of technology (Asia and Russia). Substitution of imports through local production (USA). We have strengthened our executive team through the appointment of a new chief financial officer, senior managers for Mergers & Acquisitions, Technology Transfer, Risk Management, Internal Audit and Global Procurement. We have put in place three key strategic initiatives. Profit Improvement Plan: Increase income through the transfer of engineering and procurement functions to low cost locations, in particular India. Establish an extensive global risk management program. Innovation Plan: Put in place a significant program to expand our position as technology leader. Diversification Plan: Grow our coal & minerals business and push into related businesses, organically and through acquisitions. A strategy to achieve the attractive multiples of other companies in the industrial plant engineering and equipment supply industry. 4

6 Agenda Executive Summary Group Overview Group Strategy and Overview Financial Information Contact Details 5

7 INTRODUCTION The group has activities in two areas, cement and coal & minerals 2007* 91% of Revenue 2007* 9% of Revenue CEMENT COAL & MINERALS ACTIVITIES Design Engineering Manufacturing Erection Commissioning Design Engineering Manufacturing Erection Commissioning * Six month ended June , Source: KHD Humboldt Wedag International Ltd. Form 6-K, p. 31 6

8 BUSINESS UNIT CEMENT KHD has the skill and know how to provide approximately 55% of the equipment value of a new cement plant. Blasting and Crushing of Storing, Mixing and Raw Material Quarrying Limestone Pre-Homogenizing Grinding and Clay Ball mills, Drilling machine, Blending Bed Roller presses Loader 8% Crusher 5% 8% 15% Clinker Storage Waste Gas Cleaning Electrostatic Clinker Burning Raw Meal Homogenizing Clinker Silo Precipitator, Bag filler Preheater, Kiln, Burner, Clinker Cooler Raw Meal Silo 3% 8% 20% 4% Clinker Grinding Storing of Cement Packing Grinding Plants, Cement Silo Packing Plant Separators 15% 6% 8% = KHD core competence PROCESS AUTOMATION / EXPERT SYSTEMS Note: Percentage figures denote percentage of overall value of a cement plant for each process step. 7

9 BUSINESS UNIT CEMENT KHD has built more than 480 cement plants world wide. > 140 Europe more than 140 Russia 150 > 110 USA Iran Americas more than 60 Korea 4 > 60 Ecuador 1 10 China Saudi Arabia 10 Brazil 16 Argentina 8 > 25 India 3 20 Thailand Sri Lanka 3 Malaysia 4 Indonesia 4 Africa more than 25 Asia more than 110 Australia 3 8

10 Each plant has a different set of requirements in order to meet our clients objectives BUSINESS UNIT CEMENT app. 100 meter Cooler & Cooler ESP Kiln & Preheater 1,370 meters above sea level Finish Grinding Clinker Silo India s largest clinker production plant and one of the largest cement production lines worldwide with a capacity of 10,000 t/day High altitude (1,370m above sea level) 9

11 BUSINESS UNIT CEMENT Our track record is a direct result of KHD s history of innovations Many of the designs developed by KHD have become standards in the industry, including innovations in: Roller Press Kiln design Pyro processing Calciners Coolers Grinding technologies Separators and roller presses Today, KHD holds 305 patents and 159 trademarks. KHD has set the industry standards for energy efficiency and environmental compatibility in a number of areas. Dramatic advances in process engineering, reduced fuel consumption and lowered NOX emissions. Our most recent major R&D initiative, the PYROFLOOR clinker cooler has already sold 18 units to eight countries after only 15 months of development. The PYROFLOOR is a major new cooler design that has many advantages over traditional designs, including reduced height requirements, minimal installation time and costs, high thermal efficiency, minimal wear and reduced maintenance. 10

12 BUSINESS UNIT CEMENT Why customers buy KHD Technology Branding Reputation Set the Industry standards in Pyro-Processing Production capacity up to 12,000 tonnes per day Energy efficiency and use of alternative fuels Optimized emissions technology Reliability Meets delivery commitments Meets pricing commitments Superior plant availability factors Meets energy consumption specifications Meets emissions specifications Value Global sourcing procurement Global engineering Pricing 11

13 BUSINESS UNIT COAL AND MINERALS KHD s Coal and Minerals activities focus on the sorting and washing of coal, and the grinding of minerals Primary Mines Secondary Deposits Mixing Blending Conveying Comminution (Crushing) Roller Press Chemistry Flotation Reagents Flocculants = KHD core competence Classifying Screens Dedusters Sorting Jigs, Heavy Medium Separation Flotation Dewatering Screens Downstream Industries Consumer 12

14 BUSINESS UNIT COAL AND MINERALS Since entering this business area, KHD has supplied equipment to 150 coal plants worldwide. 50 Europe Canada 1 Eastern Europe China 40 USA 6 5 India South Africa 3 Thailand Brazil 2 10 Australia 13

15 Agenda Executive Summary Group Overview Group Strategy and Overview Financial Information Contact Details 14

16 Forecast World Cement Consumption to 2015 million tonnes MARKET ENVIRONMENT , , The annual volume up from the 1,758 mta of 2003, and 2,347 mta by This represents overall forward expansion of some 33.5%. 15

17 Global demand for new cement kiln capacity MARKET ENVIRONMENT USA High import prices Lack of capacity CIS countries Old technology Infrastructure projects Recovery from post Soviet Union stagnation North Africa / Middle East Infrastructure projects Export opportunities China Economic growth Foreign currency reserves South-East Asia Growing population High economic growth 16

18 MARKET ENVIRONMENT We see continued strong demand for our products in the medium term, we are well positioned in key markets. Drivers of Growth Consumption Replacement of technology Substitution of imports MARKET Cement consumption is forecast to grow by 3% p.a. from 2.3 bn tons in 2005 to 3.6 bn tons in Commodity prices remain high due to global economic expansion. Key areas for growth are India, China, Eastern Europe and Russia. Russian, Chinese and Indian markets require modernizations. Capacity shortages and imports are leading to capacity additions in North America. Russia, China and India are trying to become net exporters of basic industrial commodities. KHD Sales offices in China and Russia have been converted to operating companies. 40+ years KHD experience in India and Russia. India is the focus for our low cost platform. Extensive international base of KHD equipment serves as a market for upgrades and/or replacement. 33 years of experience in the US market. Our US subsidiary revenues has increased 60% by June 30, 2007 over previous year. Source: Exane BNP Paribas, KHD Humboldt Wedag International Ltd. Form 6-K, Chairman s Report 17

19 MARKET ENVIRONMENT Drivers = Demands = Markets Russia and Eastern Europe at Q % of KHD Order Intake, 29 % of KHD Backlog Old technology plus huge demand driven by infastructure projects plus economics growth Cement prices increased 25 30% in 2006 and 48% in the first half of 2007 Asia at Q % of KHD order Intake 30% of KHD Backlog Old technology plus infrastructure projects plus industrialization plus economic growth Middle East and Africa at Q % of KHD Order Intake 32% of KHD Backlog Infrastructure projects plus export opportunities 18

20 MARKET ENVIRONMENT KHD global market share 2006 (excl. of China) measured in terms of new contracted cement kiln capacity Listed on NYSE KHD 20% Other 11% Sinoma 28% Listed on Shanghai Stock Exchange Part of Listed on OMX Copenhagen Stock Exchange FLSmidth 29% Polysius 12% ThyssenKrupp Group 19

21 MARKET ENVIRONMENT World cement plants investment forcast consumption in million tonnes cement per 3% average annual increase from 2008 on (rest of world) 3%/ 2%/ 1% from 2008 on (China). With actual increase estimates up to 2008 Additional production capacity required Replacement capacity required for decommissioned 30 years average plant lifetime Expected total investment in new cement plant capacity in million 70 USD/ tpy (China) resp. 160 USD/ tpe (Rest of World) million tpy cement million tpy cement million tpy cement million USD Year World total China Rest of world China Rest of world China Rest of world World China World Total ,342 1,030 1, ,553 1,123 1, ,599 8,851 25, ,757 1,213 1, ,547 8,838 25, ,936 1,292 1, ,182 8,233 23, ,024 1,331 1, ,529 5,508 16, ,115 1,371 1, ,175 5,673 16, ,208 1,398 1, ,111 4,855 19, ,305 1,426 1, ,897 4,952 19, ,404 1,440 1, ,029 4,023 23, ,506 1,455 2, ,944 4,063 23, ,611 1,469 2, ,886 4,104 24, ,719 1,484 2, ,858 4,145 25, ,831 1,499 2, ,861 4,186 26, ,946 1,514 2, ,894 4,228 27, ,064 1,529 2, ,960 4,270 28, ,186 1,544 2, ,058 4,313 29,745 Sources: The Global Cement Report, 7th edition BNP Paribas: Current status of the world cement industry and future trends, Intercem China, Beijing October

22 We have put in place three strategic initiatives GROUP STRATEGY Improvements Innovation Diversification OBJECTIVE Increase margins through the transfer of engineering and procurement functions to low cost locations. Establish an extensive global risk management and internal audit program. Significant R&D program to expand our position as technology leader. Systematize design process. Grow our existing coal & minerals business. Push into related industries and technology where our know-how can be applied. Execute through organic growth and through acquisitions. Strategic alliances with industrial partners in the mineral industry. 21

23 Agenda Executive Summary Group Overview Group Strategy and Overview Financial Information Contact Details 22

24 PERFORMANCE Growth in industrial plant engineering and equipment supply revenues and Earnings Before Tax INDUSTRIAL PLANT ENGINEERING AND EQUIPMENT SUPPLY BUSINESS Revenues (Six months ended June 30 Unaudited) KEY DRIVERS - REVENUES US$ million Strong world wide demand. Technical acceptance Repeat business Earnings Before Tax (Six months ended June 30 Unaudited) KEY DRIVERS - EBT US$ million Increased cost controls Source: KHD Humboldt Wedag International Ltd. Form 6-K, p

25 Growth in the key indicators of our operating business, order intake and backlog PERFORMANCE Order Intake (six months ended June 30) Order Backlog (at June 30) Notes US$ million Coal and Minerals Cement US$ million Coal and Minerals Cement The order intake decline for the second quarter of 2007 was a timing issue. Had our policy for booking orders been based on signed contracts as opposed to advance payments, the level of order intake in the second quarter of 2007 would have been nearly double what we are reporting, and there would have been an increase over the first six months of In the first few weeks of the third quarter, we received significant advance payments on contracts signed in the second quarter, including approximately $110 million contact to build a new cement production line with a capacity of 5,000 tonnes of clinker per day from Saudi Arabia-base Arabian Cement Company. It should be noted that the order intake for the second quarter of 2006 was extraordinarily high, with 48% of the order intake for the entire year being booked in the second quarter. Order backlog as of June 30, 2007 was a record $643.3 million and as of the date of the last 6K filing the backlog was approaching $800 million. Source: Exchange rate EURO 1 = US KHD Humboldt Wedag International Ltd. Form 6-K, Chairman s Report p

26 KHD has a good geographic mix of order intake RECENT PERFORMANCE Order Intake (Six months through June ) US$ million Africa 2% Middle East Asia 21% 26% Europe 7% 13% Americas Russia / Eastern Europe 31% Source: KHD Humboldt Wedag International Ltd. Form 6-K, , Chairman s Report p

27 FINANCIAL INFORMATION FINANCIAL SUMMARY (JUNE 30, 2007 and December 31, 2006) (Unaudited. All data in US$ thousands except per share data and ratios) Cash and cash equivalents: $ 228,183 $ 204,678 Short-term securities: $ 20,006 $ 4,111 Working capital: $ 206,254 $ 169,017 Total assets: $ 722,021 $ 641,920 Shareholders equity: $ 328,207 $ 273,288 Book value per share: (post-split) $ $ 9.27 Current ratio: Long-term debt to equity ratio: Source: KHD Humboldt Wedag International Ltd. Form 6-K, p

28 Peer group review Andritz AG FLSmidth & Co. A/S * Sinoma International Engineering Co. Ltd. FINANCIAL INFORMATION KHD Humboldt Wedag International Ltd. June 30, 2007 YTD 06/30 YTD 06/30 YTD 06/30 YTD 06/30 Shares outstanding 51,633,592 53,200, ,000,000 30,306,128** Shares outstanding diluted 51,851,254 52,542, ,000,000 32,171,966** Shareholders' equity (US$ 000) 626, , , ,207 Share price closing, Oct 10, 2007 (US$) ** Market capitalization (US$ 000) 3,818,953 4,381,214 1,294,063 1,166,786 Revenues (US$ 000) 2,173,987 1,568, , ,992 Net income ttm (US$ 000) 198, ,989*** 23,705 45,705* Net income last six months (US$ 000) 89, ,328 14,649 22,932 Working capital (US$ 000) 596, ,397 86, ,254 Working capital ratio Price / Book value per share ** Price / Earnings per share diluted t.t.m *** ** * From continuing operations **Post-split basis ***Excludes gain in

29 FINANCIAL INFORMATION LIMITED GUIDANCE INDUSTRIAL PLANT ENGINEERING AND EQUIPMENT SUPPLY US$ million Q1 (actual) Q2 (actual) 2007 (forecast) Earnings Before Tax Source: KHD Humboldt Wedag International Ltd. Form 6-K, p

30 GROUP STRATEGY Major challenges for KHD Chinese Competitors The CITIC Agreement Low cost platform manufacturing resources Low cost platform global engineering centers Outsourcing Technology advances Research and Development Limited risk program Qualified Suppliers Global procurement Cross training former shop staff as field QA/QC personnel Expanding low cost platform capacities in India and elsewhere Conversion of representative offices in Russia and China to operating companies Qualified Staff Resources Technology transfer from European and North American Centers of Expertise Professional recruiting Formal training and advancement programs Intensive staff retention programs 29

31 CONTACT DETAILS Suite 702, 7th Floor Ruttonjee House Ruttonjee Centre 11 Duddell Street Central Hong Kong S.A.R. China Telephone Hong Kong: 011 (852) Facsimile Hong Kong: 011 (852) Telephone North America: 1 (604)