Q3 2007 Business and Financial Performance 5 December 2007 Content - - PowerPoint PPT Presentation

ZŁOMREX S.A.

Q3 2007 Business and Financial Performance

5 December 2007

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Content

• 1. Introduction
• 2. Business overview
• 3. Financials
• 4. Q4 2007 outlook
• 5. Q&A

Appendix:

• 1. Q1-Q3 2007 indebtednes;
• 2. Liguidity breakdown as of 30.11.2007

ZŁOMREX S.A.

Introduction

Section 1

4

[To come]

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

Introduction

Speakers

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Introduction

Q3 2007 Highlights

• August 3, 2007 - execution of a share purchase agreement with Croatian

Privatization Fund on acquisition of śeljezara Split.

• September 1, 2007 - Contribution of scrap operations into ZLOMREX METAL,

a 100% owned subsidiary.

• October 1, 2007 - Purchase of STALEXPORT (formerly STALEXPORT

TRADE) as a consequence of the investment agreement May 31, 2007 entered into with STALEXPORT AUTOSTRADY S.A. (formerly STALEXPORT S.A.).

• New management of ZSS, redefinition of integration strategy; dismissal of

CEO of Centrostal Gdansk

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• Bad market conditions with falling prices and weaker offtake in the whole of

Q3.

• No consumption growth in Poland in comparison to Q3 2006; in July and

August 2007 average steel consumption lower by 16,4% than an average for Q2 2007.

• GDP growth over 5% in Poland and 2 % in Europe.
• Prices reaching bottom in October; first price increase by 1-2% in mid

November since May 2007. Next increase by another 2% in December.

Introduction

Q3 2007 Highlights

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Introduction

Q3 2007 Highlights

117 410 99 750 44 053 15 726 Profit for the period

• 21 686
• 24 596
• 8 890
• 1 320

Tax expense 139 096 124 346 52 943 17 043 Profit before tax

• 62 766
• 56 973
• 7 890
• 21 340

Net financing costs 253 097 227 326 64 007 51 506 EBITDA

• 53 957
• 48 729
• 7 914
• 14 710

Depreciation/amortization 199 140 178 597 54 963 36 796 EBIT 499 284 399 770 85 499 114 512 Gross profit

• 3 251 378
• 2 646 230
• 475 693
• 836 703

Cost of sales 3 750 662 3 046 000 561 192 951 215 Revenues 3Q 2007 3Q 2007 LTM PRFORMA LTM 3Q 2006 3Q 2007 ('000 PLN)

ZŁOMREX S.A.

Business overview

Section 2

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Business overview

Business environment

• 9%

2,6 2,8

• 2%

2,6 2,7 Poland

• 8%

49,8 54,4

• 1%

49,8 50,1 Europe (EU 27)

• 1%

330,3 332,6 6% 330,3 310,7 Global Production of Steel % Chg Q3 2007 Q2 2007 % YoY Q3 2007 Q3 2006 (million tons)

• 17%

249 78 83 88 301 89 123 89 tubes

• 8%

1 363 432 444 487 1 477 515 488 474 flat products

• 22%

1 026 407 280 340 1 308 365 467 477 long products

• 15%

2 638 917 806 915 3 086 969 1 078 1 040 Poland Consumption % Chg Q3 2007 Sep-07 Aug-07 Jul-07 Q2 2007 Jun-07 May-07 Apr- 07 (million tons)

• 23%

249 78 83 88 323 156 77 90 tubes 11% 1 363 432 444 487 1 226 409 426 391 flat products

• 12%

1 026 407 280 340 1 160 411 392 357 long products

• 2%

2 638 917 806 915 2 698 976 885 837 Poland Consumption % YoY Q3 2007 Sep-07 Aug-07 Jul-07 Q3 2006 Sep-06 Aug-06 Jul-06 (million tons)

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Business overview

Business environment

• 8%

1 977 2 144

• 2%

1 977 2 009 Bars

• 2%

1 644 1 678 9% 1 644 1 489 Billets

• 5%

763 807 0% 763 763 Scrap Unit prices % Chg Q3 2007 Q2 2007 % YoY Q3 2007 Q3 2006 (million tons)

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Business overview

Q2 2007 performance drivers

7 13 40 38 52 149 Finished products 3 56 60 Billets 60 154 215 Scrap purchases Cen Opo Cen Gd Cen Gor HSW-HSJ 2006 Acquisitions contribution ZLOMREX HISTORICAL CONSOLI DATED Q3 2006 (‘000 tonnes) 128 11 18 16 45 43 260 Finished products 3 48 51 Billets 70 156 226 Scrap purchases VASTH Cen Opo Cen Gd Cen Gor HSW- HSJ 2006 and 2007 Acquisitions contribution ZLOMREX HISTORICAL CONSOLI DATED Q2 2007 (‘000 tonnes)

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Business overview

Q3 2007 performance drivers

968 916 1 874 14 471 25 824 44 053 NET PROFIT 866 1 633 2 558 20 442 38 508 64 007 EBITDA 18 206 31 355 48 261 154 374 308 996 561 192 SALES Cen Opole Cen Gdansk Cen Gor HSW- HSJ 2006 ACQUISITIONS’CONTRIBUTION ZLOMREX HISTORICAL CONSOLIDA TED Q3 2006 (‘m PLN) 5 381

• 168
• 3 874
• 1216

16 785

• 1 182

15 726 NET PROFIT 9 377 187

• 3 427
• 787

23 793 22 363 51 506 EBITDA 388 521 25 763 45 921 35 053 148 159 307 798 951 215 SALES VASTH Cen Opole Cen Gdansk Cen Gor HSW- HSJ 2006 and 2007 ACQUISITIONS’CONTRIBUTION ZLOMREX HISTORICAL CONSOLID ATED Q3 2007 (‘000 PLN)

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Business overview

Production and sales

3% 215 252 TOTAL TURNOVER (‘000 tons) 12% 161 180 volume (‘000 tons) Intercompany sales and processing

• 30%

50 017 35 056 value ('000 PLN)

• 20%

59 47 volume (‘000 tons) sales to external customers SCRAP % YoY 3 Q 2006 3 Q 2007

• 9%

91 452 83 113 value ('000 PLN)

• 19%

69 48 volume (‘000 tons) sales to external customers 10% 144 158 volume (‘000 tons) Production SEMI FINISHED PRODUCTS % YoY 3 Q 2006 3 Q 2007

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Business overview

Production and sales

133% 314 734 TOTAL ('000 PLN) 107% 126 261 TOTAL (‘000 tons) 288% 97 376 value ('000 PLN) 264% 36 131 volume (‘000 tons) retail 64% 218 357 value (‘000,000 PLN) 44% 90 130 volume (‘000 tons) bulk product sales

• 13%

108 94 volume (‘000 tons) production FINISHED PRODUCTS % YoY 3 Q 2006 3 Q 2007

• 6%

105 273 99 350 value ('000 PLN) sales to external customers OTHER % YoY 2 Q 2006 2 Q 2007

ZŁOMREX S.A.

Financials

Section 3

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Financials

Q3 2007 P&L account

9 377

• 34%

42 129

• 20%

51 506 64 007 EBITDA 5 381

• 77%

10 345

• 64%

15 726 44 053 Profit for the period 253

• 1 573
• 1 320
• 8 890

Income tax expense 5 128

• 77%

11 918

• 68%

17 046 52 943 Profit before tax 607 983 1 590 5 894

• ther

241 173%

• 21 581

170%

• 21 340
• 7 914

Net financing costs 5 930

• 26 353
• 20 423
• 9 839

Financial expenses

• 5 689

4 772

• 917

1 925 Financial income 4 280

• 41%

32 516

• 33%

36 796 54 963 EBIT

• 980
• 3 903
• 4 883
• 1 812

Other expenses

• 8 968
• 29 190
• 38 158
• 20 560

Administrative expenses

• 26 393
• 9 549
• 35 942
• 9 097

Distribution expenses 675 592 1 267 933 Other income 39 946

• 13%

74 566 34% 114 512 85 499 Gross profit

• 348 575
• 488 128
• 836 703
• 475 693

Cost of sales 388 521 0% 562 694 69% 951 215 561 192 Revenue Q3 2007 % Q3 2007 % Q3 2007 Q3 2006 In PLN thousand ACTUAL HISTORICAL ACTUAL ACTUAL VASTH ZŁOMREX ZŁOMREX ZŁOMREX

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Financials

Q3 2007 P&L account

• 9 044
• 14 710

Depreciation 44 053 15 726 Net result 52 943 17 046 Profit before tax

• 7 890
• 21 340

Net financing costs 54 963 36 796 Operating profit [EBIT] 85 499 114 512 Total gross profit 3 533

• ther

85 478 finished products 22 470 billets 3 031 steel scrap Gross profit 561192 951 229 Total net sales 105 273 99 350

• ther

314 450 733 710 finished products 91 452 83 113 billets 50 017 35 056 steel scrap External Sales Q3 2006 Q3 2007 ‘000 PLN

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Financials

Q3 2007 Balance Sheet

1 138 216 2 132 112 Total Assets 389 288 562 725 Equity 557 800 722 885 Total current liabilities 421 186 1 002 043 Total Interest bearing debt 278 393 247 288 short term 142 793 754 755 long term Interest bearing debt 271 577 453 072 Trade and other payables 624 067 1 313 638 Total current assets 27 576 144 534 Cash 329 361 513 341 Trade and other receivables 255 780 649 775 Inventories Q3 2006 Q3 2007 ‘000 PLN

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Financials

Q3 2007 Key Metrics

18% ROCE 62 Payables turnover 62 Receivables turnover 90 inventories turnover 1,8 Liquidity ratio 3,8 Net debt to EBITDA 9,2 Interest coverage 99 755 LTM net result

• 24 596

LTM financing costs 7,5% LTM EBITDA margin 227 326 LTM EBITDA

• 2 646 230

LTM COGS 3 046 000 LTM SALES Q3 2007 ‘000 PLN where applicable

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Financials

Q3 2007 Proforma Key Metrics

21% ROCE 51 Payables turnover 50 Receivables turnover 73 inventories turnover 1,8 Liquidity ratio 3,4 Net debt to EBITDA 8,3 Interest coverage 117 415 LTM Proforma net result

• 30 389

LTM Proforma financing costs 6,7% LTM Proforma EBITDA margin 253 097 LTM Proforma EBITDA

• 3 251 378

LTM Proforma COGS 3 750 622 LTM Proforma SALES Q3 2007 ‘000 PLN where applicable

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Financials

Q3 2007 v. Q2 2007 Balance Sheet Data

• 70 286

85 027 Operating cash flow

• 70 497

780 541 710 044 Working capital

• 70 245

2 202 357 2 132 112 Total Assets

• 26 363

749 248 722 885 Total current liabilities

• 30 988

888 497 857 509 Net debt

• 34 376

1 036 419 1 002 043 Total Interest bearing debt

• 11 941

259 229 247 288

• 22 435

777 190 754 755 Interest bearing debt

• 2 331

455 403 453 072 Trade and other payables

• 73 761

1 387 399 1 313 638 Total current assets

• 3 388

147 922 144 534 Cash

• 29 685

543 026 513 341 Trade and other receivables

• 43 143

692 918 649 775 Inventories 3 503 814 971 818 474 Non current assets change Q2 2007 Q3 2007 ‘000 PLN

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Financials

Liquidity as of November 30, 2007

1 159 711 Indebtedness 131 540 Available lines 95 402 Cash on balance sheet Nov-07 ‘000 PLN Indebtedness’ maturity table: – includes STALEXPORT and proforma ZELJEZARA SPLIT; – excludes: (i) VASTH put/call option and deffered payment (ii) leasing agreements. Liquidity table: – includes STALEXPORT and proforma ZELJEZARA SPLIT; – excludes: (i) VASTH put/call option and deffered payment (ii) leasing agreements. 1 159 711 662 458 16 912 17 999 462 342 amount outstanding TOTAL above 36 24-36 12-24 up to 12 ‘000 PLN

ZŁOMREX S.A.

Q2 2007 Outlook

Section 4

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Q3 2007 outlook

• GDP dynamics stable at 5-6%
• Increase in steel consumption
• Higher sales
• Slight Increase in products prices
• Expected stabilization or slight increase in Q4 2007 EBITDA in comparison to ;
• Increase in indebtedness due to Stalexport Trade closing and Zeljezara Split.

31 122 10 890 20 232 Net result 50 984 13 429 37 555 EBITDA 871 805 346 261 525 544 Sales TOTAL VASTH ZLOMREX

in thousand PLN

Q4 2006

ZŁOMREX S.A.

Q&A

Section 4

ZŁOMREX S.A.

APPENDIX

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Appendix 1

Q 1 – Q3 2007 Indebtedness

997 257 1 031 543 956 472 Total Interest bearing debt 3 735 3 333 10 366

• ther

4 097 7 202 1 617 Centrostal Gdansk 45 179 25 385 35 615 VASTH 13 394 11 754 12 081 leasing 48 578 60 604 47 686 factoring 7 127 6 459 7 048 NFOS environmental loans 13 560 14 036 PEKAO RCF 43 456 62 264 13 691 BRE RCF 63 376 63 317 56 914 FORTIS RCF 242 502 254 353 185 018 short term, incl: 2 754 2 148 Other 2 664 11 282 15 546 Centrostal Gdansk 38 643 38 995 24 033 VASTH 23 141 22 487 22 854 VASTH put/call option 23 624 22 959 23 217 deferred payment for VASTH 22 149 23 991 24 893 leasing 14 889 16 185 19 241 NFOS environmental loans 626 891 639 143 641 670 The notes 754 755 777 190 771 454 long term, incl: Interest bearing debt Q3 2007 Q2 2007 Q1 2007