Harworth Group Plc · LSE:HWG
Harworth — UK Coal — H1 2003 Earnings Presentation
24 slides from Harworth's earnings presentation, Jun 30, 2003
Slide 1: UK Coal PLC Interim Results
UK COAL PLC INTERIM RESULTS SIX MONTHS TO 30 JUNE 2003
Slide 2: Financial Highlights
Financial Highlights six months to 30 June 2003 2002 £m £m Turnover 299.2 310.8 Profit/(loss) before tax and exceptionals 1.3 0.5 Loss before taxation (0.8) (12.5) Loss after taxation (0.8) (11.2) Cash inflow before financing and dividends 30.3 3.5 Dividend per share 5.0p 5.0p 1
Slide 3: Segmental Profit/(Loss)
Segmental Profit/(Loss) six months to 30 June 2003 2002 £m £m Coal sales - Deep Mines (0.3) (6.0) Coal sales - Surface Mines (1.4) 7.0 Surface Mines contract mines and associated activities 0.3 (0.5) Manufactured fuel 0.3 (0.1) Emissions trading 1.4 0.0 Australia - coal sales (1.2) 1.8 - hedging los
Slide 4: Movement in Profit and Loss
Movement in Profit and Loss £m £m 2002 H1 Loss before Taxation (12.5) Deep Mines 5.7 Surface Mines (7.7) Manufactured fuel 0.4 Emissions trading 1.4 Australia (1.5) Property activities 4.6 Total movement in operating profit 2.9 Movement in net interest (2.1) Movement in exceptional items 10.9 2003 H
Slide 5: Balance Sheet
Balance Sheet 30 June 2003 31 Dec 2002 £m £m Fixed assets 412.4 433.7 Stocks 79.2 79.2 Debtors 74.6 82.0 Cash and short term deposits 61.6 60.9 Total Assets 627.8 655.8 Equity shareholders’ funds 223.5 228.1 Provision for liabilities and charges 249.8 258.7 Creditors 154.5 169.0 Total funds employed
Slide 6: Cash Flow
Cash Flow six months to 30 June 2003 2002 £m £m Operating loss (after exceptionals) (2.6) (11.6) Depreciation 31.7 32.4 Stocks movement (0.1) (25.7) Working capital movement 2.5 30.4 Gov’t contribution to Selby redundancy 1.8 0.0 Cash inflow from continuing operations 33.3 25.5 Net interest and fina
Slide 7: UK Generation Forecast
UK Generation Forecast 400 350 51 46 40 38 300 48 mtce mtce mtce mtce mtce Coal 250 Oil TWh 200 Gas 150 Nuclear 100 Renewables 50 0 2002 2003 2004 2005 2006 Source:Dti Energy Trends - actual UK COAL forecast of energy mix 6
Slide 8: Contracted ESI Sales and Projected ESI Market
Contracted ESI Sales and Projected ESI Market 2003 2004 2005 Projected burn 2006 Firm sales 0 5 10 15 20 25 30 35 40 45 50 55 Million tonnes 7
Slide 9: NW Europe Spot Steam Coal Price
NW Europe Spot Steam Coal Price (Delivered Into Deep Water Ports) 50 45 40 $ / tonne 35 Actual 30 TFS Forward 25 20 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 Source: MCIS / TFS Basis: <1%S, CIF NW Europe, 6000 Kcal / Kg NAR (25.122 GJ/Tonne) 8
Slide 10: UK Electricity Market
UK Electricity Market • Over capacity in generation market resulted in station closures in early part of the year. Security of supply issues now starting to be raised • Continued low electricity prices – reduced electricity imports • Lower gas generation - high gas prices • Electricity consumption 2
Slide 11: Medium Term (Pre 2008)
Medium Term (Pre 2008) • Unlikely to see new station build in short term • Short term market determined by traditional economics within NETA • Continued possibility of upside in coal burn • New FGD plants will increase available market for UK Coal — West Burton (2GW), Cottam (1GW), Eggborough (1GW)
Slide 12: Deep Mines Operational Review
Deep Mines Operational Review • Production 7.9m tonnes (2002: 8.3m tonnes) • Daw Mill performance improved as production has passed the geological feature and worked through known fault • Selby — Continued losses in H1 — Output reduced due to poor geological conditions • Project 105 initiatives cont
Slide 13: Deep Mines Production
Deep Mines Production - six months to June 2003 2002 Deep Mines: Mil tonnes Mil tonnes Clipstone 0.2 0.2 Ceased production in April 2003 Daw Mill 1.0 0.7 Ellington 0.4 0.4 Harworth 0.5 0.4 Kellingley 0.9 0.8 Maltby 0.8 0.6 Prince of Wales 0.0 0.5 Ceased production in August 2002 Riccall Combine 0.3
Slide 14: Investment Aid
Investment Aid • UK Coal submitted applications for £79m • Total scheme capped at £60m • Expect decision on applications in H2 • Applications based on reserves being accessed • Decision to award will be on a discretionary basis but will take into consideration viability and jobs secured 13
Slide 15: Surface Mining Operational Review
Surface Mining Operational Review • Production of 1.8m tonnes (2001: 2.2m tonnes) • No new planning has been received during H1 • 2.4m tonnes awaiting planning determination • One new site and two extensions commenced • Profitability hit by lower coal prices and reduced production from high volume s
Slide 16: Property Operational Review
Property Operational Review • Rental income – £1.62m (2002: £1.56m) • Sales of land - £8.29m (2002: £1.36m) • Business parks — Asfordby (Leicestershire) — Whitemoor (Yorkshire) — North Selby (Yorkshire) 15
Slide 17: Property Development Sites
Property Development Sites • Denby Hall (60 acres, B1,B2,B8) • Wardley (150 acres, B2,B8) • Tetron Point (75 acres, B1,B2,B8, • South Leicester (30 acres, B2,B8) leisure) • Rockingham (15 acres, B1,B2,B8) • Prince of Wales (60 acres, B1,B2,B8) • Waverley/Orgreave (350 acres, • North Gawber (80 acres
Slide 18: Property Outlook
Property Outlook • Waverley AMP Phase I – infrastructure works now complete • Orgreave - major consultation exercise underway for 250 acre mixed employment/residential development • Asfordby - masterplanning discussions underway to add up to 400,000 sqft of additional units on a pre-let basis • Furt
Slide 19: Outlook
UK COAL PLC Outlook • Continue to match production to sales, maintain investment in economic operations • Reduce unit operating costs across the organisation by delivering Project 105 initiatives • Continue to develop property assets and strategy • Return free cash to shareholders 18
Slide 20: Appendices
Appendices 19
Slide 21: Coal Consumption 2003
Coal Consumption 2003 excluding coking - 6 months to 30 June 3% 3% ESI Domestic & MFP Industrial 94% 29.3m tonnes (2002: 25.6m tonnes) Source: Dti Energy Trends 20
Slide 22: UK Steam Coal Supply and Consumption
UK Steam Coal Supply and Consumption excluding coking - 6 months to 30 June 2003 Jan -June 2002 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 Source: Dti Energy Trends 21 UK COAL UK Others Imports
Slide 23: UK Coal Production/Market Projections
UK COAL Production/Market Projections 60 50 Millions of tonnes 40 UK COAL production 30 Industrial 20 Domestic 10 ESI 0 2002 2003 2004 2005 2006 Source:Dti Energy Trends UK COAL forecast of energy mix 22
Slide 24: 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. Government provisionally minded to implement the National Plan, but decision finely balanced • UK COAL prefers the ‘ELV’ option. Deliv