Q2 2007 Business and Financial Performance 3 September 2007 - PowerPoint PPT Presentation

ZŁOMREX S.A. Q2 2007 Business and Financial Performance 3 September 2007

Content 1. Introduction 2. Business overview 3. Financials 4. Q2 2007 outlook 5. Q&A Appendix: June 30, 2007 Indebtednes 2

ZŁOMREX S.A. Introduction Section 1

Introduction Speakers [To come] Krzysztof Krzysztof Dominik Walarowski Zola Barszcz Member of the CFO Chief Board Accountant Age – 51 Age – 35 Age - 31 4 yrs with 6 yrs with 7 yrs with Złomrex Złomrex Złomrex 4

Introduction Q2 2007 Highlights � Secondary public offering of Centrostal Gdansk; completed in April 2007 � Establishing of ZLOMREX STEEL SERVICES and commencement of integration process; May 2007. Contribution of VASTH and merger with Centrostal Gdansk to follow. � Signing of the investment agreement with STALEXPORT S.A. on purchase of Stalexport Trade: May 31, 2007 � Negotiations with Croatian Privatization Fund on acquisition of ś eljezara Split. Share purchase agreement signed on August 3, 2007. 5

Introduction Q2 2007 Highlights � Good market environment weakening in May and June � Steel consumption growth in Poland: 31 % in April and 18% in May 2007 against the same periods 2006. � GDP growth at 6% in Poland and 3% in Europe. � Prices reaching peak in May and decreasing to the end of Q2. Rebar market to suffer most. � first quarter of consolidation of voestalpine Stahlhandel GmbH. 6

Introduction Q2 2007 Highlights LTM LTM ('000 PLN) 2Q 2007 2Q 2006 2Q 2007 2Q 2006 Revenues 980 530 498 804 2 655 977 1 023 209 Cost of sales -849 562 -323 864 -2 285 220 -889 956 Gross profit 130 878 69 788 370 757 133 253 EBIT 59 719 42 696 198 042 78 637 Depreciation/amortization -13 672 -8 939 -42 292 -14 045 EBITDA 73 391 51 615 240 334 92 682 Net financing costs -10 094 -7 890 -43 547 -14 703 Negative goodwill - - 22 526 - Profit before tax 50 767 34 785 178 154 63 933 Tax expense -12 379 -7 431 -32 486 -12 237 Profit for the period 38 388 27 354 145 668 51 696 7

ZŁOMREX S.A. Business overview Section 2

Business overview Business environment (million tons) Q2 2006 Q2 2007 % YoY Q1 2006 Q1 2007 % YoY Production of Steel Global 311,7 332,3 7% 288,4 318,9 11% Europe (EU 25) 53,6 54 1% 49,1 53,1 8% Poland 2,5 2,8 12% 2,3 2,7 17% (million tons) May 2007 % YoY April 2007 % YoY Jan - Mar Jan - Mar % YoY 2007 2006 Consumption Poland 1 449 31% 1 040 31% 3 012 2 350 28% long products 467 27% 477 51% 1 321 836 58% flat products 488 7% 474 18% 1 409 1 281 10% Tubes 123 35% 89 16% 282 233 21% (million tons) Q2 2006 Q2 2007 % YoY Q1 2007 Q2-Q1 2007 % Change Unit prices Scrap 703 808 15% 751 8% Billets 1 457 1 775 22% 1 571 13% Rebars 2 161 2 806 30% 2 425 16% 9

Business overview Q2 2007 performance drivers Q2 2006 2006 Acquisitions contribution ZLOMREX (‘000 tonnes) CONSOLIDATED HISTORICAL HSW-HSJ Cen Gor Cen Gd Cen Opo Scrap purchases 242 195 46 0 0 0 Billets 55 53 2 0 0 0 Finished products 124 70 37 15 0 0 Q2 2007 2006 and 2007 Acquisitions contribution ZLOMREX HSW Cen (‘000 tonnes) CONSOLIDATED HISTORICAL -HSJ Gor Cen Gd Cen Opo VASTH Scrap purchases 252 180 71 0 0 0 0 Billets 46 43 3 0 0 0 0 Finished products 265 59 45 18 16 11 (1) 129 (1) Includes 5 thousand tonnes of bulk product sales conducted by ZLOMREX S.A. in Q2 2006 10

Business overview Q2 2007 performance drivers Q2 2006 2006 ACQUISITIONS’CONTRIBUTION ZLOMREX Cen Cen Cen (‘m PLN) CONSOLIDATED HISTORICAL HSW-HSJ Gor Gdansk Opole SALES 499 187 327 704 133 148 38 335 EBITDA 54 031 36 762 16 319 949 NET PROFIT 30 002 17 975 11 474 553 Q2 2007 2006 and 2007 ACQUISITIONS’CONTRIBUTION ZLOMREX Cen Cen Cen (‘000 PLN) CONSOLIDATED HISTORICAL HSW-HSJ Gor Gdansk Opole VASTH SALES 980 530 292 899 156 302 47 968 44 399 29 020 409 942 EBITDA 74 518 32 858 28 117 1 210 1 919 427 9 987 NET PROFIT 36 532 12 679 20 631 693 1 285 92 1 152 11

Business overview Production and sales 2 Q 2007 2 Q 2006 % YoY SCRAP sales to external customers volume (‘000 tons) 60 84 -29% value ('000 PLN) 48 455 60 417 -20% Intercompany sales and processing volume (‘000 tons) 192 156 23% TOTAL TURNOVER (‘000 tons) 252 242 4% 2 Q 2007 2 Q 2006 % YoY SEMI FINISHED PRODUCTS Production volume (‘000 tons) 154 133 16% sales to external customers volume (‘000 tons) 45 55 -18% value ('000 PLN) 79 892 80 138 -1% 12

Business overview Production and sales 2 Q 2007 2 Q 2006 % YoY FINISHED PRODUCTS production volume (‘000 tons) 108 109 -1% bulk product sales volume (‘000 tons) 125 106 18% value (‘000,000 PLN) 332 216 54% retail volume (‘000 tons) 140 19 637% value ('000 PLN) 411 54 661% TOTAL (‘000 tons) 265 125 112% TOTAL ('000 PLN) 743 270 175% 2 Q 2007 2 Q 2006 % YoY OTHER sales to external customers value ('000 PLN) 108 716 88 112 23% 13

ZŁOMREX S.A. Financials Section 3

Financials Q2 2007 P&L account ‘000 PLN Q2 2007 Q2 2006 External Sales steel scrap 48 455 60 417 billets 79 892 80 138 finished products 743 467 270 137 other 108 716 88 112 Total net sales 980 530 498 804 Gross profit steel scrap 4 144 3 939 billets 20 357 14 992 finished products 100 133 44 871 other 6 244 5 986 Total gross profit 130 878 69 788 Operating profit [EBIT] 59 719 42 696 Net financing costs -10 094 -7 890 Profit before tax 50 767 34 785 Net result 38 388 27 354 Depreciation -13 672 -8 939 15

Financials Q2 2007 Balance Sheet ‘000 PLN Q2 2007 Q2 2006 Inventories 692 918 186 887 Trade and other receivables 543 026 286 495 Cash 147 922 16 082 Total current assets 1 387 399 504 529 Trade and other payables 455 403 212 068 Interest bearing debt long term 777 190 146 908 short term 259 229 245 910 incl. RCF 139 756 - Total Interest bearing debt 1 036 419 392 818 Total current liabilities 749 248 464 849 Equity 570 285 310 893 Total Assets 2 202 357 989 401 16

Financials Q2 2007 Key Metrics in thousand PLN where applicable Q2 2007 Q2 2006 LTM SALES 2 625 977 1 023 209 LTM COGS (2 285 220) (889 956) LTM EBITDA 240 334 92 682 LTM EBITDA margin 9,2% 9,1% LTM financing costs (43 547) (14 703) LTM net result 145 668 51 696 Interest coverage 5,52 6,30 Net debt to EBITDA 3,7 4,1 Liquidity ratio 1,9 1,1 inventories turnover 111 77 Receivables turnover 75 102 Payables turnover 73 87 ROCE 26% 17% 17

Financials Q2 2007 Proforma Key Metrics in thousand PLN where applicable Q2 2007 LTM Proforma SALES 3 703 028 LTM Proforma COGS (3 220 437) LTM Proforma EBITDA 292 693 LTM Proforma EBITDA margin 7,9% LTM Proforma financing costs (52 158) LTM Proforma net result 179 406 Interest coverage 5,6 Net debt to EBITDA 3,0 Liquidity ratio 1,9 inventories turnover 79 Receivables turnover 54 Payables turnover 52 ROCE 31% 18

Financials Q2 2007 v. Q1 2007 Balance Sheet Data Q2 2007 Q1 2007 change Non current assets 814 971 806 072 8 899 Inventories 692 918 570 158 122 760 Trade and other receivables 543 026 595 560 (52 534) Cash 147 922 87 223 60 699 Total current assets 1 387 399 1 254 088 133 311 Trade and other payables 455 403 474 340 (18 937) Interest bearing debt long term 777 190 771 454 5 736 short term 259 229 185 018 74 211 incl. RCF 139 616 70 606 69 150 Total Interest bearing debt 1 036 419 956 472 79 947 Net debt 888 497 869 249 19 248 Total current liabilities 749 248 682 430 66 818 Equity 570 285 481 529 88 756 Total Assets 2 202 357 2 060 160 142 197 CAPEX 22 571 Working capital 780 541 691 378 89 163 Operating cash flow (70 286) 19

ZŁOMREX S.A. Q2 2007 Outlook Section 4

Q3 2007 outlook � GDP dynamics stable at 6% � Further decrease in steel consumption � Weaker sales in Poland � Decrease in products prices � Possible slight decrease in Q3 2007 EBITDA (PLN 5-10 million); ZLOMREX excl. VASTH Q2 2007 Q3 2006 in thousand PLN Sales 570 588 561 222 EBITDA 64 531 63 982 Net result 35 380 44 085 � Increase in indebtedness due to Stalexport Trade closing. 21

ZŁOMREX S.A. Q&A Section 4

ZŁOMREX S.A. APPENDIX

Appendix Q 1 Indebtedness Q1 2007 Q2 2007 Interest bearing debt long term, incl: 771 454 777 190 The notes 641 670 639 143 NFOS environmental loans 19 241 16 185 leasing 24 893 23 991 deferred payment for VASTH 23 217 22 959 VASTH put/call option 22 854 22 487 VASTH 24 033 38 995 Centrostal Gdansk 15 546 11 282 Other 0 2 148 short term, incl: 185 018 254 353 FORTIS RCF 56 914 63 317 BRE RCF 13 691 62 264 PEKAO RCF 0 14 036 NFOS environmental loans 7 048 6 459 factoring 47 686 60 604 leasing 12 081 11 754 VASTH 35 615 25 385 Centrostal Gdansk 1 617 7 202 other 10 366 3 333 Total Interest bearing debt 956 472 1 031 543 24