Harworth Group PLC · LSE:HWG
Harworth — UK Coal — H1 2004 Earnings Presentation
25 slides from Harworth's earnings presentation, Jun 30, 2004
Slide 1: UK Coal PLC Interim Results Six Months to 30 June 2004
UK COAL PLC INTERIM RESULTS SIX MONTHS TO 30 JUNE 2004
Slide 2: Highlights
Highlights • Turnover £228.2m (2003: £299.2m) • Operating loss on continuing operations before exceptional items £14.2m (2003: £0.7m profit) • Loss before tax £5.8m (2003: £0.8m) • Cash outflow before dividend £1.9m (2003: £30.3m inflow) • Unit costs in deep mines £1.36/GJ (2003: £1.18/GJ) • Propert
Slide 3: Segmental Profit/(Loss)
Segmental Profit/(Loss) six months to 30 June 2004 2003 £m £m •Income £1.17/GJ (2003: Coal sales - Deep Mines (20.9) (0.3) £1.15/GJ) Coal sales - Surface Mines 4.2 (1.4) •Sales volume 7.4 million tonnes (2003: 9.9 million tonnes) Other associated activities 0.2 0.3 •Surface mines recovered Manufactu
Slide 4: Movement in Profit before Interest and Exceptional items
Movement in Profit before Interest and Exceptional items 10 •Proceeds 2p per GJ higher 5 •Mining cost – output related 0 •Australia - 3 months trading & £ millions profit on disposal -5 •Property – disposals timing -10 -15 -20 -25 Em Ot Au Ju Ju M Pr Co M ini an ne ne he op str al is s ng . r er 20
Slide 5: Exceptional Items
Exceptional Items 2004 2003 £m £m Net closure and redundancy 3.3 (1.3) TXU & other debtors - (0.8) Coal Investment Aid 4.4 - Total 7.7 (2.1) • 189 miners transferred from Selby to other mines 4
Slide 6: Investment Aid
Investment Aid • UK Coal have accepted eight offers totalling £37.5m • Further applications submitted to DTI totalling £16.7m Claims submitted 2003 2004 Balance Total H1 Revenue 3.4 4.5 Capital 2.0 6.2 Total 5.4 10.7 21.4 37.5 Cash received 2.0 5
Slide 7: Balance Sheet
Balance Sheet 30 June 2004 31 Dec 2003 £m £m Fixed assets 374.3 399.9 Stocks 56.2 59.5 Debtors 97.8 82.4 Cash and short term deposits 57.5 60.4 Total Assets 585.8 602.2 Equity shareholders’ funds 218.1 222.5 Provision for liabilities and charges 209.9 227.0 Creditors 157.8 152.7 Total funds employed
Slide 8: Cash Flow
Cash Flow six months to 30 June 2004 2003 £m £m EBITDA 14.7 29.1 Surface mine restoration (4.6) (7.8) Coal stocks 3.7 3.5 Other working capital (9.5) 12.9 Net redundancy inc. Government contribution (4.7) (4.4) Cash (outflow)/inflow from operating activities (0.4) 33.3 Net interest and finance charg
Slide 9: Contracted ESI Sales
Contracted ESI Sales1 2004 13.5 9.1 Financial Year 2005 2006 7.6 2007 4.0 0 2 4 6 8 10 12 14 16 18 Million tonnes per annum 1 includes sales to Alcan 8
Slide 10: NW Europe Spot Steam Coal Price
NW Europe Spot Steam Coal Price (Delivered Into Deep Water Ports) 80 Actual 70 Forward Mar03 60 Forward Jun03 Forward $ / tonne 50 Sep03 Forward Dec03 40 Forward Mar04 30 Forward Jul04 Forward 20 Sep04 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07 Source: MCIS/TFS Brokers Basis: <1%S, C
Slide 11: Deep Mines Operational Review
Deep Mines Operational Review • Production 6.0m tonnes (2003: 7.9m tonnes) • Low production in H1 due to:- face changes, industrial action, and poor operational performance — Face changes – 40 weeks lost 2004 (2003: 20 weeks) — Industrial action at Kellingley — Revised mining plans at Rossington and
Slide 12: Deep Mines Operational Review
Deep Mines Operational Review • Consistent production from Daw Mill • Selby — Wistow ceased production in Q2 — Riccall and Stillingfleet to cease production in Q3 • Production incentives being revised to focus on productivity 11
Slide 13: Surface Mines Operational Review
Surface Mines Operational Review • Production of 1.2m tonnes (2003: 1.8m tonnes) • 2.5m tonnes of reserves with planning consent to mine • Three sites completed coaling and are in restoration • No new planning has been received during H1, continuation of difficult planning environment will further i
Slide 14: Property Operational Rental Review
Property Operational Rental Review • Rental income – £2.10m (2003: £1.77m) • Business parks rental demand:- — Asfordby (South Leicestershire) – units 90% let — Whitemoor (Yorkshire) – units 58% let — North Selby (Yorkshire) – units 60% let 13
Slide 15: Property Sales H1 2004
Property Sales H1 2004 • Proceeds from disposals £1.93m (2003: £8.29m) comprising: Tetron Point £1.25m Prince of Wales £0.31m Other £0.37m • Profit on disposals £1.32m (2003: £5.86m) 14
Slide 16: Property Planning
Property Planning • New planning consents 2004 - 40 acres • Total consents on development properties - 300 acres • Planning application submitted in 2004 - 80 acres • Total planning applications awaiting decisions - 220 acres 15
Slide 17: Property Progress
Property Progress • Waverley AMP Phase I – building completed for first occupier • Waverley/Orgreave - major consultation exercise completed for 250 acre mixed employment/residential development and application for commercial element 55 acres being prepared • Bilsthorpe – progress site development f
Slide 18: Outlook
Outlook • Continue to invest in improved production equipment and reserve development • International coal prices remain high • New sales contracts should reflect better proceeds during 2005 • H2 performance should improve with fewer production gaps at deep mines and a return to full production at K
Slide 19: Appendices
Appendices 18
Slide 20: New Agreement with Drax
New Agreement with Drax • Almost 14 million tonnes over a five year period • 1 January 2005 to 31 December 2009 • Value from almost £400m to around £450m — Linkage to international prices between limits — Protection for both parties from extreme price fluctuations • Phasing in from 0.5m tonnes 2005
Slide 21: UK Generation Forecast
UK Generation Forecast 400 350 41 53 49 43 42 300 mtce mtce mtce mtce mtce Coal 250 Oil TWh 200 Gas 150 Nuclear 100 Renewables 50 0 2003 2004 2005 2006 2007 Source:Dti Energy Trends - actual UK COAL forecast of energy mix 20
Slide 22: UK Steam Coal Supply and Consumption
UK Steam Coal Supply and Consumption 2004 Jan -June 2003 Jan - June 30 30 25 25 20 20 Million Tonnes Million Tonnes 15 15 10 10 5 5 0 0 Consumption Supply Consumption Supply Electricity Dom./MFP Industry 21 UK COAL UK Others Imports
Slide 23: Large Combustion Plant Directive
Large Combustion Plant Directive • European legislation: - applies from 2008. • Government to choose between “Emission Limit Values (ELV)” and “National Plan” approach. UK COAL prefers the ‘ELV’ option. Delivers the same environmental objectives without damaging the indigenous mining industry. • Gov
Slide 24: EU Emissions Trading Scheme
EU Emissions Trading Scheme • Government reaffirmed 20% CO2 reduction by 2010, significantly higher than Kyoto 12.5% reduction of GHGs. • Electricity generators to be responsible for achieving additional reductions of 5.5 MtCO2 by 2010, over and above projected business as usual. • First phase 1st J
Slide 25: Production - six months to June
Production - six months to June 2004 2003 (m tonnes) (m tonnes) Daw Mill 1.4 1.0 Ellington 0.3 0.4 Harworth 0.5 0.5 Kellingley 0.3 0.9 Maltby 0.4 0.8 Rossington 0.2 0.5 Thoresby 0.4 0.9 Welbeck 0.4 0.8 Ongoing Collieries 3.9 5.8 Selby Complex 2.1 1.9 Closed Collieries - 0.2 Total Deep Mines 6.0 7.9