Q1 2009 Business and Financial Performance June 8, 2009 Content - PowerPoint PPT Presentation

ZŁOMREX S.A. Q1 2009 Business and Financial Performance June 8, 2009

Content 1. Introduction 2. Business overview 3. Financials 4. Q2 2009 outlook 5. Q&A 2

ZŁOMREX S.A. Introduction Section 1

Introduction Speakers Krzysztof Dominik Zola Barszcz CFO Chief Member of the Accountant Board Age - 32 Age – 35 8 yrs with 7 yrs with Złomrex Złomrex 4

Introduction Q1 2009 Highlights � Very weak demand with prices falling continuously. � Zeljezara Split’s financial situation deteriorating. � Production capacities utilized much under maximum levels (FERR 53%, HSJ 34%, ZJEL 14%) � Very weak performance, negative EBITDA for the second consecutive quarter 5

Introduction Q1 2009 Highlights � Very bad market environment � GDP growth still over 0% in Poland � Steel consumption decline by 31% in Poland. 48% decrease in steel production � Decreasing steel prices into Q2 2009 � Worst quarter for ZŁOREX ever. 6

ZŁOMREX S.A. Business overview Section 2

Business overview Business environment CRUDE STEEL PRODUCTION (1) Q1 2009 % YoY Q1 2008 Q1 2007 million tonnes Poland 1,4 -48% 2,7 2,7 EU (25) 29,5 -43% 51,8 53,1 Global 263,3 -23% 340,1 318,9 STEEL USE (2) Q1 2009 % YoY Q1 2007 Q1 2007 million tonnes Poland 1,977 -31% 2,869 3,012 long produts 0,828 -32% 1,210 1,321 flat products 0,941 -31% 1,365 1,409 other 0,208 -29% 0,294 0,282 UNIT PRICES(3) Q1 2009 % YoY Q1 2008 Q1 2007 PLN / Tonne Scrap metal 600 -28% 834 747 Billets 1 427 -10% 1 591 1 501 Bars 1 799 -8% 1 947 2 024 (1) Source: IISI (2) Source: HIPH (3) Source: ZŁOMREX S.A. 8

Business overview Q1 2009 performance drivers SALES Q1 2009 % YoY Q1 2008 Tonnes SCRAP 29 537 -32% 43 564 BILLETS 17 442 -70% 57 310 FINISHED PRODUCTS 184 292 -43% 323 065 SALES Q1 2009 % YoY Q1 2008 000 PLN SCRAP 17 717 -50% 35 356 BILLETS 24 888 -75% 98 906 FINISHED PRODUCTS 470 601 -44% 838 428 9

Business overview Segments SCRAP METAL Q1 2009 Q1 2008 PURCHASES FROM EXTERNAL SUPPLIERS Tonnes ZLOM 0 0 ZLMET 82 811 160 261 HSJ 18 944 42 956 ZJEL 7 568 20 470 OTHER 0 0 INTERNAL USE Tonnes ZLOM 0 96 064 ZLMET 58 103 0 HSJ 26 492 71 047 ZJEL 7 682 21 465 SALES TO EXTERNAL CUSTOMERS Tonnes ZLOM 0 2 ZLMET 29 136 42 958 HSJ 0 0 OTHER 401 604 SALES ‘000 PLN CONSOLIDATED 17 717 35 356 TOTAL PURCHASES in TONNES 109 323 223 687 TOTAL INTERNAL USE in TONNES 92 277 188 576 TOTAL SALES in TONNES 29 537 43 564 TOTAL SALES in '000 PLN 17 717 35 356 10

Business overview Segments BILLETS Q1 2009 Q1 2008 PURCHASES Tonnes EXTERNAL SOURCES 0 0 PRODUCTION Tonnes FERR 50 046 88 653 HSJ 22 188 60 694 ZJEL 6 572 18 323 INTERNAL USE Tonnes ZLOM 33 683 38 993 HSJ 21 118 53 051 ZJEL 6 563 18 316 SALES TO EXTERNAL CUSTOMERS Tonnes ZLOM 129 41 014 FERR 16 234 0 HSJ 1 070 7 643 STX 0 8 646 ZJEL 9 7 SALES '000 PLN CONSOLIDATED 24 888 98 906 TOTAL PURCHASES in TONNES 0 0 TOTAL PRODUCTION in TONNES 78 806 167 670 TOTAL INTERNAL USE in TONNES 61 364 110 360 TOTAL SALES in TONNES 17 442 57 310 TOTAL SALES in '000 PLN 24 888 98 906 11

Business overview Segments FINISHED PRODUCTS Q1 2009 Q1 2008 PRODUCTION Tonnes ZWWB 20 527 29 984 FERR 12 292 10 812 HSJ 25 380 51 876 ZJEL 7 076 19 706 SALES TO EXTERNAL CUSTOMERS ( Tonnes) RETAIL 91 348 150 373 BULK 92 944 172 692 CONSOLIDATED '000 PLN 470 601 838 428 TOTAL PRODUCTION in TONNES 65 275 112 378 TOTAL RETAIL SALES in TONNES 91 348 150 373 TOTAL BULK PRODUCT SALES in TONNES 92 944 172 692 TOTAL SALES in '000 PLN 470 601 838 428 12

ZŁOMREX S.A. Financials Section 3

Financials P&L INCOME STATEMENT Q1 2009 Q1 2008 '000 PLN Revenue 561 243 1 060 578 Cost of sales -550 658 -936 796 Gross profit 10 585 123 782 Other income 14 331 4 843 Distribution expenses -37 423 -38 986 Administrative expenses -39 822 -39 844 Other gains/losses net -8 390 1 962 Other expenses -3 101 -5 609 EBIT -63 820 46 148 EBIT margin -11,4% 4,4% Financial income 27 525 1 687 Financial expenses -84 896 -26 991 Net financing costs -57 371 -25 304 Share of profits of associates -1 021 786 Profit before tax -122 212 21 630 Income tax expense -57 -8 332 Profit for the period -122 269 13 298 Depreciation and amortyzation 18 594 -18 171 EBITDA -45 226 64 319 EBITDA margin -8,1% 6,1% 14

Financials Assets ASSETS Q1 2009 Y 2008 Q1 2008 '000 PLN A. TOTAL NON-CURRENT ASSETS 997 963 976 319 1 206 519 I. Intangible assets 47 085 46 267 44 596 II. Property, plant and equipment 817 849 855 713 1 049 868 III. Other receivables 1 556 1 533 2 992 IV. Investment property and other investments 43 949 41 472 22 813 V. Prepaid perpetual usufruct of land 58 976 31 334 63 920 VI. Deferred tax assets 28 548 46 267 22 330 B. TOTAL CURRENT ASSETS 971 280 1 291 014 1 429 609 I. Inventories 540 676 565 726 687 981 II. Other investments 1 856 0 3 456 III. Receivables 375 907 369 360 644 104 1. Trade and other receivables 370 987 295 226 641 572 2. Income tax receivable 4 920 74 134 2 532 IV. Cash and cash equivalents 47 138 99 505 88 072 V. Assets classified as held for sale 5 703 0 5 996 C. ASSETS AND DISPOSAL GROUP OF ASSETS 277 462 256 423 0 TOTAL ASSETS 2 246 705 2 267 333 2 636 128 15

Financials Equity and Liabilities EQUITY AND LIABILITIES ‘000 PLN Q1 2009 Y 2008 Q1 2008 A. EQUITY 449 727 538 579 698 948 I. Issued share capital 47 691 47 691 47 691 II. Reserves and retained earnings 248 860 345 700 504 198 III. Minority interest 153 176 145 188 147 059 B. LIABILITIES 1 631 262 1 728 754 1 937 180 I. Non-current liabilities 872 645 826 200 812 667 1. Interest-bearing loans and borrowings 746 138 699 379 652 510 2. Employee benefis 54 775 50 505 46 471 3. Other payables 37 832 37 246 44 074 4. Deferred grants and other deferred income 3 143 3 557 2 877 5. Deferred tax liabilities 30 757 35 513 66 735 II. Current liabilities 758 617 753 228 1 124 513 1. Interest-bearing loans and borrowings 240 680 242 788 326 098 2. Other financial liabilities 4 966 5 257 7 936 3. Trade payables 382 970 381 299 650 070 5. Bank overdraft 119 700 115 888 115 258 6. Income tax payable 5 415 3 591 18 498 7. Employee benefis 2 609 3 039 3 139 8. Provisions for payables 175 171 3 018 III. Deferred income 2 102 1 195 496 C. Liabilities of disposal group classified as held for sale 165 716 0 0 TOTAL EQUITY AND LIABILITIES 2 246 705 2 267 333 2 636 128 16

Financials Cash Flow CASH FLOW Q1 2009 Q1 2008 Q1 2007 '000 PLN A. FROM OPERATING ACTIVITIES -46 628 96 830 -43 299 B. FROM INVESTING ACTIVITIES -55 804 -146 383 -128 970 C. FROM FINANCING ACTIVITIES -57 666 -95 033 198 122 17

Financials Metrics MAIN METRICS Q1 2009 Q1 2008 Liquidity ratio 1,28 1,27 Quick ratio 0,57 0,66 Inventories turnover (days) 88 66 Receivables turnover (days) 60 55 EBITDA margin -8,10% 6,10% Net profit margin -21,80% 1,30% Equity 449 727 698 948 Net debt* 1 064 346 1 013 730 LTM EBITDA** 100 103 224 660 Net debt / LTM EBITDA 10,6 4,5 Adjusted net debt*** * Interest bearing loans and borrowing plus overdraft and other financial liabilities ** LTM operating profit plus depreciation and amortization 18

ZŁOMREX S.A. Q2 2009 Outlook Section 4

Q2 2009 outlook � Polish GDP close to 0 � Slight increase in steel consumption in Poland comparison to Q1 2009 � Prices still falling � Poor sales, negative results (incl. EBITDA) � Slight recovery in production level � Sale of Zeljezara Split 20

ZŁOMREX S.A. Q&A Section 4