ZŁOMREX S.A. Q3 2007 Business and Financial Performance 5 December 2007
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 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 Q3 2007 Highlights � August 3, 2007 - execution of a share purchase agreement with Croatian Privatization Fund on acquisition of ś eljezara 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 5
Introduction Q3 2007 Highlights � 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. 6
Introduction Q3 2007 Highlights LTM LTM PRFORMA ('000 PLN) 3Q 2007 3Q 2006 3Q 2007 3Q 2007 Revenues 951 215 561 192 3 046 000 3 750 662 Cost of sales -836 703 -475 693 -2 646 230 -3 251 378 Gross profit 114 512 85 499 399 770 499 284 EBIT 36 796 54 963 178 597 199 140 Depreciation/amortization -14 710 -7 914 -48 729 -53 957 EBITDA 51 506 64 007 227 326 253 097 Net financing costs -21 340 -7 890 -56 973 -62 766 Profit before tax 17 043 52 943 124 346 139 096 Tax expense -1 320 -8 890 -24 596 -21 686 Profit for the period 15 726 44 053 99 750 117 410 7
ZŁOMREX S.A. Business overview Section 2
Business overview Business environment (million tons) Q3 2006 Q3 2007 % YoY Q2 2007 Q3 2007 % Chg Production of Steel Global 310,7 330,3 6% 332,6 330,3 -1% Europe (EU 27) 50,1 49,8 -1% 54,4 49,8 -8% Poland 2,7 2,6 -2% 2,8 2,6 -9% (million tons) Jul-06 Aug-06 Sep-06 Q3 2006 Jul-07 Aug-07 Sep-07 Q3 2007 % YoY Consumption Poland 837 885 976 2 698 915 806 917 2 638 -2% long products 357 392 411 1 160 340 280 407 1 026 -12% flat products 391 426 409 1 226 487 444 432 1 363 11% tubes 90 77 156 323 88 83 78 249 -23% (million tons) Apr- May-07 Jun-07 Q2 2007 Jul-07 Aug-07 Sep-07 Q3 2007 % Chg 07 Consumption Poland 1 040 1 078 969 3 086 915 806 917 2 638 -15% long products 477 467 365 1 308 340 280 407 1 026 -22% flat products 474 488 515 1 477 487 444 432 1 363 -8% tubes 89 123 89 301 88 83 78 249 -17% 9
Business overview Business environment (million tons) Q3 2006 Q3 2007 % YoY Q2 2007 Q3 2007 % Chg Unit prices Scrap 763 763 0% 807 763 -5% Billets 1 489 1 644 9% 1 678 1 644 -2% Bars 2 009 1 977 -2% 2 144 1 977 -8% 10
Business overview Q2 2007 performance drivers Q3 2006 2006 Acquisitions contribution CONSOLI ZLOMREX Cen (‘000 tonnes) DATED HISTORICAL HSW-HSJ Cen Gor Cen Gd Opo Scrap purchases 215 154 60 0 0 0 Billets 60 56 3 0 0 0 Finished products 149 52 38 40 13 7 Q2 2007 2006 and 2007 Acquisitions contribution CONSOLI ZLOMREX HSW- Cen Cen (‘000 tonnes) DATED HISTORICAL HSJ Cen Gor Gd Opo VASTH Scrap purchases 226 156 70 0 0 0 0 Billets 51 48 3 0 0 0 0 Finished products 260 43 45 16 18 11 128 11
Business overview Q3 2007 performance drivers Q3 2006 2006 ACQUISITIONS’CONTRIBUTION CONSOLIDA ZLOMREX HSW- Cen (‘m PLN) TED HISTORICAL HSJ Cen Gor Cen Gdansk Opole SALES 561 192 308 996 154 374 48 261 31 355 18 206 EBITDA 64 007 38 508 20 442 2 558 1 633 866 NET PROFIT 44 053 25 824 14 471 1 874 916 968 Q3 2007 2006 and 2007 ACQUISITIONS’CONTRIBUTION CONSOLID ZLOMREX HSW- Cen Cen (‘000 PLN) ATED HISTORICAL HSJ Cen Gor Gdansk Opole VASTH SALES 951 215 307 798 148 159 35 053 45 921 25 763 388 521 EBITDA 51 506 22 363 23 793 -787 -3 427 187 9 377 NET PROFIT 15 726 -1 182 16 785 -1216 -3 874 -168 5 381 12
Business overview Production and sales 3 Q 2007 3 Q 2006 % YoY SCRAP sales to external customers volume (‘000 tons) 47 59 -20% value ('000 PLN) 35 056 50 017 -30% Intercompany sales and processing volume (‘000 tons) 180 161 12% TOTAL TURNOVER (‘000 tons) 252 215 3% 3 Q 2007 3 Q 2006 % YoY SEMI FINISHED PRODUCTS Production volume (‘000 tons) 158 144 10% sales to external customers volume (‘000 tons) 48 69 -19% value ('000 PLN) 83 113 91 452 -9% 13
Business overview Production and sales 3 Q 2007 3 Q 2006 % YoY FINISHED PRODUCTS production volume (‘000 tons) 94 108 -13% bulk product sales volume (‘000 tons) 130 90 44% value (‘000,000 PLN) 357 218 64% retail volume (‘000 tons) 131 36 264% value ('000 PLN) 376 97 288% TOTAL (‘000 tons) 261 126 107% TOTAL ('000 PLN) 734 314 133% 2 Q 2007 2 Q 2006 % YoY OTHER sales to external customers value ('000 PLN) 99 350 105 273 -6% 14
ZŁOMREX S.A. Financials Section 3
Financials Q3 2007 P&L account ZŁOMREX ZŁOMREX ZŁOMREX VASTH ACTUAL ACTUAL HISTORICAL ACTUAL In PLN thousand Q3 2006 Q3 2007 % Q3 2007 % Q3 2007 Revenue 561 192 951 215 69% 562 694 0% 388 521 Cost of sales -475 693 -836 703 -488 128 -348 575 Gross profit 85 499 114 512 34% 74 566 -13% 39 946 Other income 933 1 267 592 675 Distribution expenses -9 097 -35 942 -9 549 -26 393 Administrative expenses -20 560 -38 158 -29 190 -8 968 Other expenses -1 812 -4 883 -3 903 -980 EBIT 54 963 36 796 -33% 32 516 -41% 4 280 Financial income 1 925 -917 4 772 -5 689 Financial expenses -9 839 -20 423 -26 353 5 930 Net financing costs -7 914 -21 340 170% -21 581 173% 241 other 5 894 1 590 983 607 Profit before tax 52 943 17 046 -68% 11 918 -77% 5 128 Income tax expense -8 890 -1 320 -1 573 253 Profit for the period 44 053 15 726 -64% 10 345 -77% 5 381 EBITDA 64 007 51 506 -20% 42 129 -34% 9 377 16
Financials Q3 2007 P&L account ‘000 PLN Q3 2007 Q3 2006 External Sales steel scrap 35 056 50 017 billets 83 113 91 452 finished products 733 710 314 450 other 99 350 105 273 Total net sales 951 229 561192 Gross profit steel scrap 3 031 billets 22 470 finished products 85 478 other 3 533 Total gross profit 114 512 85 499 Operating profit [EBIT] 36 796 54 963 Net financing costs -21 340 -7 890 Profit before tax 17 046 52 943 Net result 15 726 44 053 Depreciation -14 710 -9 044 17
Financials Q3 2007 Balance Sheet ‘000 PLN Q3 2007 Q3 2006 Inventories 649 775 255 780 Trade and other receivables 513 341 329 361 Cash 144 534 27 576 Total current assets 1 313 638 624 067 Trade and other payables 453 072 271 577 Interest bearing debt long term 754 755 142 793 short term 247 288 278 393 Total Interest bearing debt 1 002 043 421 186 Total current liabilities 722 885 557 800 Equity 562 725 389 288 Total Assets 2 132 112 1 138 216 18
Financials Q3 2007 Key Metrics ‘000 PLN where applicable Q3 2007 LTM SALES 3 046 000 LTM COGS -2 646 230 LTM EBITDA 227 326 LTM EBITDA margin 7,5% LTM financing costs -24 596 LTM net result 99 755 Interest coverage 9,2 Net debt to EBITDA 3,8 Liquidity ratio 1,8 inventories turnover 90 Receivables turnover 62 Payables turnover 62 ROCE 18% 19
Financials Q3 2007 Proforma Key Metrics ‘000 PLN where applicable Q3 2007 LTM Proforma SALES 3 750 622 LTM Proforma COGS -3 251 378 LTM Proforma EBITDA 253 097 LTM Proforma EBITDA margin 6,7% LTM Proforma financing costs -30 389 LTM Proforma net result 117 415 Interest coverage 8,3 Net debt to EBITDA 3,4 Liquidity ratio 1,8 inventories turnover 73 Receivables turnover 50 Payables turnover 51 ROCE 21% 20
Financials Q3 2007 v. Q2 2007 Balance Sheet Data ‘000 PLN Q3 2007 Q2 2007 change Non current assets 818 474 814 971 3 503 Inventories 649 775 692 918 -43 143 Trade and other receivables 513 341 543 026 -29 685 Cash 144 534 147 922 -3 388 Total current assets 1 313 638 1 387 399 -73 761 Trade and other payables 453 072 455 403 -2 331 Interest bearing debt 754 755 777 190 -22 435 247 288 259 229 -11 941 Total Interest bearing debt 1 002 043 1 036 419 -34 376 Net debt 857 509 888 497 -30 988 Total current liabilities 722 885 749 248 -26 363 Total Assets 2 132 112 2 202 357 -70 245 Working capital 710 044 780 541 -70 497 Operating cash flow 85 027 -70 286 21
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