Harworth Group PLC · LSE:HWG
Harworth — UK Coal — H1 2011 Earnings Presentation
25 slides from Harworth's earnings presentation, Aug 23, 2011
Slide 1: 2011 Interim Financial Results
2011 Interim Financial Results 23 August 2011
Slide 2: Agenda
Agenda • Overview Jonson Cox • Mining Results Gareth Williams • Harworth Estates Results Jonson Cox • Financial Results David Brocksom • Update on Recovery Plan Jonson Cox 2
Slide 3: Summary of results for H1 2011
Summary of results for H1 2011 • Safety: a long march underway to change culture • Production: steady production throughout H1 KPIs H1 2011 H1 2010 FY 2010 • Revenues: increased average realised sales price Lost Time Injury Rate * 27.8 29.5 27.3 Production T'm 4.1 2.7 7.2 • Property: disposals reduc
Slide 4: Mining
Mining
Slide 5: Mining – a structured approach reflected in results
Mining – a structured approach reflected in results Renewed focus on safety • Improving but not fast enough Refocus on mine budgeting system • Better use of geological information H1 H2 H1 H2 H1 • Getting to grips with mine planning Million tonnes 2009 2009 2010 2010 2011 Daw Mill 1.7 1.2 0.6 2.0 1.
Slide 6: Safety – behavioural change is key to improving performance
Safety – behavioural change is key to improving performance Aim LTI Rate "v" 15% Improvement • Significantly reduce lost time injuries within two years 45 • Reduce the major hazard risks across the company 40 35 • Three to five year safety journey 30 Progress 25 20 • 12% improvement in all accident
Slide 7: Deep Mines – beginning to see consistent performance
Deep Mines – beginning to see consistent performance Daw Mill • Current face extended to mine through fault Deep Mines Production Million tonnes • New face being installed for Q4 start 4.0 • First time we have continued developments during 3.5 face installation • New coal preparation plant being com
Slide 8: Surface Mines – solid performance
Surface Mines – solid performance Planning Surface Mines Production Thousand tonnes • Minorca (1.25mT reserve) approved – 2012 start 1,100 6 • Bradley (0.55mT reserve) appealed – rejected 6 1,000 despite recommendation 900 • Lodge House extension (0.75mT reserve) decision outstanding 800 4 Number of
Slide 9: Harworth Estates
Harworth Estates
Slide 10: Harworth Estates – excellent progress on disposal programme
Harworth Estates – excellent progress on disposal programme Property disposals: £54m of net sales value • Disposed of 8,300 acres of surplus agricultural land and strategic residential land • Average realised price achieved above book value • £36m received in the period and used to reduce bank £'m H
Slide 11: Principal progress – segmental approach provides focus
Principal progress – segmental approach provides focus Strategic land: £77m • Harworth Colliery - granted planning consent March 2011 for 996 homes, 825,000 sqft employment space, 22,000 sqft foodstore • Cutacre – site included in local authority’s strategy as suitable location for 200 acres of deve
Slide 12: Principal progress (continued)
Principal progress (continued) Major developments: £59m • Waverley – planning consent issued in March 2011 for mixed use development. Now engaged in discussions with housebuilders to bring forward first phase of development to start 2012 • Prince of Wales Colliery – remediation of the former pit yar
Slide 13: Group Financials
Group Financials
Slide 14: Segmental income statement – improved production and reduced legacy contracts result in H1 profit
Segmental income statement – improved production and reduced legacy contracts result in H1 profit £'m H1 2011 H1 2010 FY 2010 Volume increase of 52% to Total revenue 256.1 141.3 351.2 4.4mt of sales in H1 2011 (H1 2010: 2.9mt, FY 2010: (£2.36/GJ) (£1.97/GJ) (1.97/GJ) 7.2mt) Deep mines 20.5 (52.4) (4
Slide 15: Operating costs – reflects increased activity
Operating costs – reflects increased activity £'m H1 2011 H1 2010 FY 2010 Costs broadly in line although commodity prices higher. Comparatives reflect Daw Mill 56.6 50.8 109.1 lower activity and completion Kellingley 47.3 40.8 83.6 of Kellingley and Thoresby Thoresby 40.8 35.9 77.1 investments in 20
Slide 16: Cashflow – property disposals drive debt reduction
Cashflow – property disposals drive debt reduction H1 H1 FY £'m H1 2011 H1 2010 FY 2010 2011 2010 2010 Revaluation of property - 10.1 34.2 Profits on sale of assets (2.1) (0.2) 0.3 Operating profit/(loss) before non-trading exceptionals 35.2 (61.4) (74.3) Depreciation/diminution 19.8 15.8 35.2 Non-c
Slide 17: Balance Sheet – 2010 distortions cleared but pensions offset profit
Balance Sheet – 2010 distortions cleared but pensions offset profit £'m H1 2011 H1 2010 FY2010 Property disposals of £52m Fixed assets offset by £8m transferred in Operating assets 229.8 220.6 237.2 from operating properties Surface mines development assets 27.6 20.3 35.7 from sites where mining now
Slide 18: Update on Strategic Recovery Review
Update on Strategic Recovery Review
Slide 19: Strategic Recovery Review update
Strategic Recovery Review update Key objectives Progress Review strategy for the sale of coal • Negotiations to start H2 with customers for 2013 deliveries Overhaul operating costs and, in particular, terms, • Majority of unions have agreed to or are recommending changes in terms, conditions and fle
Slide 20: Summary
Summary • Good progress on Strategic Recovery Plan • Still a long way to go • Remain cautious on Daw Mill output for H2 • H2 priorities include: • Operational performance and improvement • Finalise working practices and other terms and conditions • Completion of new pension arrangments • Sales order
Slide 21: Appendices
Appendices I. Bank facilities and generator loan/prepayment commitments II. Provisions and retirement benefits
Slide 22: Bank Debt and available facilities
Bank Debt and available facilities Appendix I £'m H1 2011 Change FY 2011 Gross bank debt (111.5) 30.1 (141.6) Unrestricted cash 1.7 1.3 0.4 Gross bank debt less unrestricted cash (109.8) 31.4 (141.2) Generator loans and prepayments (97.5) 3.7 (101.2) Total debt less unrestricted cash (207.3) 35.1 (2
Slide 23: Provisions
Provisions Appendix II Within 1 Within 1-2 Within 2-5 More than Restricted £'m H1 2011 FY 2010 year years years 5 years cash Provisions offset by restricted funds Employee insurance liabilities etc 5.6 2.6 3.9 0.4 12.5 15.1 13.1 Surface damage (subsidence) 3.8 3.4 7.1 2.7 17.0 8.8 15.3 9.4 6.0 11.0
Slide 24: Retirement benefit liabilities
Retirement benefit liabilities Appendix II cont £'m Total Pensions Fuel Deficit December 2010 (171.7) (135.2) (36.5) Contributions paid less current service cost 7.2 6.9 0.3 Interest cost less expected return on assets (2.4) (1.4) (1.0) Difference between actual return and expected return on assets
Slide 25: Disclaimer
Disclaimer • These presentation slides contain forward-looking statements with respect to the operations. Performance and financial condition of UK COAL. By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to differ materiall