Presentation on theme: "Results of KGHM Polska Miedź S.A. in Q2 2006. 2 Plan of presentation Q2 2006 results Costs Profitability ratios and EBITDA Investment plans Resources."— Presentation transcript:
Results of KGHM Polska Miedź S.A. in Q2 2006
2 Plan of presentation Q results Costs Profitability ratios and EBITDA Investment plans Resources Selected financial data
3 Macroeconomic conditions 6M056M06% change2005Plan 2006Execution of Plan Cu price USD/t Ag price USD/kg Exchange rate PLN/USD (0.62) Cu production 000 t Ag production t Cost of electrolytic copper production PLN/t In H the Company was supported by beneficial macroeconomic conditions, in particular very good copper and silver prices.
4 Production results Ore extraction (mln t) Production of electrolytic copper (000 t) Production of metallic silver (t) Production of copper in concentrate (000 t) By the end of H1 2006, 40 thousand tonnes out of the planned 70 thousand tonnes of electrolytic copper production from external charges had been produced. Production by the Company is proceeding as planned.
5 Net revenues from sales (in mln PLN) Operating profit (in mln PLN) Profit before tax (in mln PLN) Net profit (in mln PLN) Financial results after H1 2006
6 Result on sales (mln PLN) The result on sales for H is higher by PLN mln versus that for H OTHER PRODUCTS, GOODS FOR RESALE AND MATERIALS SILVER COPPER AND COPPER PRODUCTS REVENUES COSTS COSTS OF SALES, GEN. ADMIN AND THE VALUE OF GOODS FOR RESALE AND MATERIALS COST OF MANUFACTURED PRODUCTS
7 Factors impacting the H results (mln PLN) After the first 6 months of 2006 the Company had recorded an increase in net profit versus H by PLN 978 mln, including mainly due to: Higher income tax Fall in revenues due to changes in exchange rate Change in the impact of hedging transactions Increase in operating activity costs Change in the volume of Cu and Ag sales An increase in revenues due to changes in copper and silver prices
8 Unit costProfitability on sales exclu. hedging transactions Cost of production from external charges Cost of production from internal charges Profitability on sales from external charges Profitability on sales from internal charges Unit cost (PLN/t) and profitability on sales (%)
9 Costs by type In H costs by type amounted to PLN mln, being an increase by PLN mln (i.e. by 51%), versus H1 2005, including due to increased consumption of external charges by PLN 878 mln (incl. external charges 254) (incl. external charges 1 132) (mln PLN)
10 Risk management Results on hedging transactions (mln PLN) Amounts hedged per segment * fair value of open positions in derivative instruments at 30 June 2006 Ag (mln troz) Cu (000 t) USD (mln) Hedging strategies implemented in H1 2006: copper – t, (options), to be realised in 2007 silver – 93 t, (options), to be realised in 2007 currency – 90 mln USD for Q4 2006, (options + forwards) adjustment hedge transactions – Cu – t for July/August 2006 Ag – 28 t – June 2006 Au – 218 kg – August 2006
11 Profitability ratios and EBITDA ROA (%) EBITDA (in mln PLN) ROE (%) An improvement in profitability and an increase in EBITDA versus Q2 2005
12 Investment plans The Company plans to invest PLN 5 billion in the years 2006 – 2010 for mine/smelter modernisation, mainly through: Exchanging mining machinery and equipment Preparatory work Sinking of new shafts Modernising concentrators The Company also intends to commit around PLN 1 billion towards equity investments. Tangible investments (000 PLN)
13 Tangible investments (mln PLN) An increase in tangible investments by PLN 207 mln MiningSmelting Other Divisions and reserve for basic tasks Active new projects New projects awaiting decision Selected investment projects (to 2010): –Hydrotransport of concentrate (PLN 200 mln) –Modernisation of shaft furnaces (PLN 579 mln) –Building of SW-4 shaft (PLN 358 mln) –Głogów Głęboki Przemysłowy (PLN 409 mln) –Modernisation of Rudna concentrator (PLN 103 mln) –Installation for producing chemigypsum (PLN 49 mln) –Energetyka – enhancing power generating capacity (PLN 400 mln) Basis tasks in 2006 include expenditures on: –investments in new facilities and equipment (PLN 436 mln) –equipment replacement purchases (PLN 260 mln), incl. underground machinery (PLN 140 mln) –shaft complexes R-XI, R-IX, SG-1 and SG-2 (PLN 42 mln)
14 Resources Industrial ore resources in copper and metals (Cu, Ag) in licensed areas of KGHM Polska Miedź S.A. : Mining Division Ore resources [mln t] Cu [%] Ag [g/t] Cu [mln t] Ag [t] Lubin Polkowice –Sieroszowice Rudna OG Głogów Głęboki – Przemysłowy (GGP) KGHM Polska Miedź S. A Presently-licensed areas GGP Reserve areas It is estimated that reserve areas contain appx. 5 mln t of copper in ore.
15 Planned production of electrolytic copper by KGHM PM S.A. in the period , including the Głogów Głęboki Przemysłowy deposit Resources ZG Lubin, ZG Polkowice- Sieroszowice, ZG Rudna Scrap + blister Imported concentrate Electrolytic Cu [ t ] GGP
16 Other information On 2 August 2006 KGHM paid a sharholders dividend of PLN , or PLN per share. The Management Board of KGHM Polska Miedź S.A. resolved to terminate the plan to build a hydrometallurgical installation, and also to withdraw the Company from the Democratic Republic of Congo by selling its mining rights to the Kimpe deposit – acquired by KGHM in Listing of the company Interferie on 9 August – the offer includes 5 mln newly-issued shares, the share price will range from PLN Should all of the issued shares be sold, the KGHM Group will retain 66% of the shares of this company. * As at 27 July 2006 Ownership structure *
17 Balance sheet in 000 PLN At At ASSETS Non-current assets Current assets EQUITY AND LIABILITIES Equity Liabilities and provisions for liabilities
18 Income statement in 000 PLN 2005Q2 2005Q2 2006H1 2005H Net revenues from sales Gross profit on sales Profit on sales Operating profit Financial income Profit before taxation Tax ( ) ( )( )( )( ) Valuation of entities using the equity method Net profit
19 Cash flow in 000 PLN Q2 2005Q2 2006H1 2005H Net cash flow from operating activities Net cash used in investing activities (81 104)(21 118)( )( ) Net cash used in financing activities (8 054)19 759(11 733) Total net cash flow Monetary resources at end of period
20 Costs by type in 000 PLN Q2 2005Q2 2006H1 2005H Depreciation Materials and fuel consumed Energy consumed External services Labor costs Taxation and fees Other