Harworth Group PLC · LSE:HWG
Harworth — UK Coal — Investor Presentation (July 2004)
32 slides from Harworth's investor presentation, Jul 21, 2004
Slide 1: UK Coal PLC Analysts Presentation
UK COAL PLC ANALYSTS PRESENTATION MALTBY COLLIERY – 21ST JULY 2004
Slide 2: Agenda
Agenda 1. Coal sales and markets 2. Mining review 3. Project 105 update 4. Property 5. Outlook
Slide 3: Coal Sales and Markets
COAL SALES AND MARKETS
Slide 4: UK Electricity Market
UK Electricity Market • Interest in acquiring generating assets has risen following a recent recovery in electricity wholesale prices. CGE Power, a consortium of six UK banks, has withdrawn from the market following higher offers. • Coal burn lower by around 4% for first four months of 2004 compared
Slide 5: Medium Term (Pre 2008)
Medium Term (Pre 2008) • Unlikely to see new station build in 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 (2GW), Eggborough (1GW) together in
Slide 6: UK Generation Forecast
UK Generation Forecast 400 350 38 53 47 41 39 300 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
Slide 7: 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
Slide 8: 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 $ / tonne 50 Forward Sep04 40 Forward Dec03 Forward 30 Mar04 Forward 20 Jul04 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07 Source: MCIS/TFS Brokers Basis: <1%S, CIF NW Europe,
Slide 9: 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 approximately £400m to £450m before inflation — Linkage to international prices between limits — Protection for both parties from extreme price fluctuations • Phasing in from 0.5m
Slide 10: 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 11: Mining Review
MINING REVIEW
Slide 12: 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 • Fewer face changes in H2 will improve output and reduce unit cost • Industrial action in Q2 now resolved • Project 105 revit
Slide 13: 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 revised to focus on productivity
Slide 14: Deep Mines Production - six months to June
Deep Mines 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 Nil 0.2 Total Deep M
Slide 15: Surface Mining Operational Review
Surface Mining 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 • 2.8m tonnes awaiting planning determination for three sites • No new planning has been received during H1
Slide 16: Investment Aid
Investment Aid • UK Coal have accepted eight offers totalling £37.5m • Further applications submitted to DTI totalling £16.7m New Accepted Applications £m £m Daw Mill 9.6 1.4 Ellington 2.2 1.7 Harworth 4.6 1.8 Kellingley 7.2 2.3 Maltby 2.4 2.8 Rossington 3.3 0.4 Thoresby 2.9 3.8 Welbeck 5.3 2.5 Tota
Slide 17: Project 105 Update
PROJECT 105 UPDATE
Slide 18: P105 has been revitalised
P105 has been revitalised • UK Coal ownership across all initiatives • CEO-led programme • Emphasis on sustainability • More focus underground – bottom up solutions
Slide 19: Project 105 Initiatives
Project 105 Initiatives Management Equipment Incentives and MAT Process Run Time Organisation Upgrade Review and Align above- Increase Improve Develop best Reduce travel Step change in Delay standardise ground Machine frontline practice time at key internal Reduction underground management Available
Slide 20: Harworth Estates
HARWORTH ESTATES THE PROPERTY DIVISION OF UK COAL PLC
Slide 21: Property Agenda
Property Agenda • The Properties • Planning • Business Parks • Development Sites • Promoting Development
Slide 22: The Properties
The Properties • Total Area - 49,000 Acres of which… — Operating Collieries - 2,500 Acres — Surface Mines - 5,200 Acres — Agricultural Land - 37,500 Acres — Other Land - 3,800 Acres Of which developable - 1,000 Acres
Slide 23: Planning
Planning • Existing Consents at December 2003 - 260 Acres • Planning Consents 2004 - 40 Acres • Planning Applications in the System at June 2004 - 220 Acres
Slide 24: Business Parks
Business Parks • Asfordby - 230,000 Sqft • Whitemoor - 80,000 Sqft • North Selby - 80,000 Sqft • Other Selby Sites :- • Gascoigne Wood - 270,000 Sqft • Stillingfleet - 71,000 Sqft • Wistow - 75,000 Sqft • Riccall - 76,000 Sqft • • Asfordby Phase II 400,000 Sqft • Harworth HQ North Wing 20,000 Sqft •
Slide 25: Development Sites
Development Sites • Denby Hall (60 Acres, B1, B2, • Prince of Wales (60 Acres, B1, B8) B2, B8) • Tetron Point (60 Acres, B1, B2, • North Gawber (25 Acres, B8) Residential / mixed) • Rockingham (15 Acres, B1, B2, • Yorkshire Main (32 Acres, B8) Residential) • Waverley (350 Acres, B1, B2, • Lounge (10
Slide 26: Consented Development Sites
Consented Development Sites • Tetron Point - 60 acres left • Houghton Main - 60 acres • Denby - 60 acres • Bilsthorpe - 40 acres • Waverley AMP - 20 acres • Cut Acre - 60 acres • Total - 300 acres
Slide 27: Promoting Development
Promoting Development • Waverley / Highfield Commercial • Prince of Wales
Slide 28: Thank You
THANK YOU 27
Slide 29: Outlook
Outlook • International coal prices are high • Long term contract baseload • Improved operating performance through Project 105 • Continue to develop property assets
Slide 30: Appendices
APPENDICES
Slide 31: Coal's Contribution to Winter Peaks
Coal’s Contribution to Winter Peaks 14 12 10 Coal 8 Gas TWh Nuclear Oil 6 Hydro 4 2 0 O J 99 A J O J 00 A J O J 01 A J O J 02 A J O J 03 A J O J 04 A Source: Dti Energy Trends Table 5.4 3 month moving averages - major power producers
Slide 32: UK Oil & Gas Prices
UK Oil & Gas Prices 45 40 35 Gas 30 $/Barrel 25 Gas Forward 20 Oil 15 Oil 10 Forward 5 0 99 J '00 J '01 J '02 J '03 J '04 J '05 J Source: International Petroleum Exchange