Presentation September 2012

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Park Elektrik Üretim Madencilik
Sanayi ve Ticaret A.Ş.
September 2012
BGC Partners Conference
London
Contents
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
Park Elektrik Overview
Ciner Group in Brief
Operations
Reserves
Planned Investments
Financial Structure
Evaluation of The Latest Financial Tables
Corporate Governance Rating
Park Elektrik
September 2012
3
7
10
13
20
23
32
38
2
I.
Park Elektrik
Park Elektrik Overview
September 2012
3
The Company


Park Elektrik was established as a textile company in 1994.
Initially offered to public in 1997, Park Elektrik is the sole listed
company within Ciner Group.




Changed its commercial title and main line of activity in 2000.
Took over operational rights of copper mine in Siirt in 2004.
Commenced copper mining operations in late 2006.
Merged with ISE-listed Group company, Ceytas, in May 2009 and
added asphaltite mining into its operation line following Ceytas merger.
Park Elektrik
September 2012
4
Ownership Structure
Others
32%
Park Holding
61%
Turgay Ciner
7%
Park Elektrik
September 2012
5
Participation, Park Termik




Park Elektrik has 10% stake in Park Termik Elektrik San. ve Tic. A.S., a
Ciner Group company which is involved in thermal power generation in
Çayırhan, Ankara.
Park Termik operates Cayirhan Thermal Power Plant which has a total
production capacity of 620 MW, in four units.
The plant is an integrated power generator which procures coal through
its own lignite mines.
In June 2012, Park Termik paid TL5.2 mn dividends to Park Elektrik &
Madencilik.
Park Elektrik
September 2012
6
II.
Park Elektrik
Ciner Group in Brief
September 2012
7
Ciner Group, Main Line of Businesses
Ciner Group
Ciner Yayın Holding
Park Holding
Energy & Mining
Group
Commerce,
Industry &
Services Group
Media
Group
Major Companies
Park Elektrik
Park Termik
Park Teknik
Eti Soda
Silopi Elektrik
Major Companies
Park Marine
Park Aviation
Lares Park Hotels
Park Insurance
Park Foreign Trade
Denmar Logistics
Major Companies
& Brands
Haberturk Newspaper
Haberturk TV, Radio,
Haberturk Web Site
Bloomberg HT
News Channel, FHM,
Marie Claire, Newsweek
Park Elektrik
September 2012
8
Ciner Group, Introduction
 Park Holding, the main shareholder of Park Elektrik with 61% share, is
solely owned by Mr. Turgay Ciner.
 Ranking among the largest Groups of Turkey, Ciner Group’s history goes
back to 1978 when it was founded. The Group has a diversified business
portfolio including companies in construction, insurance, logistics, media and
broadcasting sectors. However, the Group’s main line of businesses are
mining and energy in which it has a wide expertise.
 Ciner Group is a pioneering actor in energy and mining sector given its
new and initial steps since early 1990s. In line with accelerated privatization
efforts in 1990s, the Group successfully involved in mining and energy
sectors which are the underlying sectors of the Group’s fast growth in recent
years.
 As of year-end 2011, Park Holding has TL1.3 bn of consolidated sales
and TL3.2 bn of total assets.
Park Elektrik
September 2012
9
III.
Park Elektrik
Operations
September 2012
10
Park Elektrik’s Existing & Planned Facilities
Copper Mine
Siirt
HPP
Natural Gas
Power Plant
Adana
Park Elektrik
September 2012
Diyarbakır
Asphaltite
Mine
Sırnak
11
I) Madenköy Copper Zone

Park Elektrik acquired operation license of Madenkoy copper mine in 2004
from Eti Holding, a state-owned entity engaged in mining businesses, for
TL9.4 mn.

Mine operations started in late 2006 in the copper zone. So far, around 4 mn
tons of ore was extracted in the copper zone.

According to initial reports, proven reserves in the zone was determined as
13 mn tons of ore. However, according to the recent report issued by
Micromine Consulting Services, total reserves in the zone was determined as
39.8 mn tons of ore, 31.2 mn tons of which was classified as measured.

The company has a concentration facility and it produces and sells
concentrated copper that includes copper content of around 19-20% levels.

Park Elektrik exports all of its concentrated copper production to international
commodity brokers.
Park Elektrik
September 2012
12
Micromine Reserve Report Based On JORC


According to a JORC (Joint Ore Resources Code) compliant reserve report issued
by Micromine Consulting Services in October 2011, based on the drilling and
sampling works by Eti Holding (1981), Preussag AG Metall (1988) and Park
Elektrik, the total reserves of Madenköy project was determined as 39,821,000
tons of ore, 31,182,000 tons of which was measured.
According to the same report, average grade in Madenkoy copper mine is 2.4%
for the whole zone. Current grade in the zone is lower, at 1.8-1.9% levels in
average.
Resource Category
Measured
Indicated
Total Measured & Indicated
Inferred
Project's Total Resources
Tonnes
Cu (%)
31,182,000
6,433,000
37,615,000
2,206,000
39,821,000
2.26
2.79
2.34
3.38
2.40
Source: JORC Resource Estimate Report by Micromine
Park Elektrik
September 2012
13
Capacity Expansion



In parallel with growing reserves in the Madenkoy copper zone, the company
increased its concentration facility’s capacity from 750k to 1.2 mn tons as of
October 2011. Total capex for this investment was Euro 3.5mn.
Furthermore, Park Elektrik plans to increase its concentration capacity to 1.8 mn
tons in the short term. The company plans to complete this second phase capacity
expansion by December 2012 with a planned investment amount of Euro 3.5-4mn.
In line with increasing capacity, Park Elektrik revised its production targets for the
coming two years. The company expects 90k production in 2012. For 2013, Park
Elektrik expects production volume to be in a band of 130k-150k levels, with the
assumptions of 1,8% and 2% grades respectively.
Capacity Expansion & Production Targets
Concentration Capacity (tons)
Concentrated Copper Production (wmt)
2011 A
2012 E *
2013 E **
750,000
1,200,000
1,800,000
77,510
90,000
130,000-150,000
* 2012 production targets have been revised as 90k from 95k due to an unexpected delay in delivery of new production line equipment in the
capacity expansion process.
** Production targets for 2013 have been revised within the context of budget revision and new grade assumptions.
Park Elektrik
September 2012
14
2012 Production Targets & Realizations by 1H12
JAN.
FEB.
Actual
Actual
MAR.
Actual
APR.
Actual
MAY
Actual
JUNE
Actual
JULY
Target
AUG.
SEP.
OCT.
NOV.
DEC.
Target Target Target Target Target
TOTAL
Target
Ore (wmt)
100,191
84,912
96,148
102,127
104,014
102,232 94,000 94,000 91,000 94,000 93,000 106,000 1,161,624
Ore (dmt)
95,181
80,666
91,340
97,020
98,813
97,206 89,300 89,300 86,450 89,300 88,350 100,700 1,103,626
Con. Copper (wmt)
7,888
6,879
7,877
7,874
7,778
8,553
7,436
6,500
7,400
7,436
7,000
7,500
90,121
Con. Copper (dmt)
wmt: wet metric ton
dmt: dry metric ton
7,257
6,328
7,247
7,244
7,156
7,869
6,841
5,980
6,808
6,841
6,440
6,900
82,911


As of 1H12, Park Elektrik exceeded its first half production targets by producing
46,852 wmt of concentrated copper, 9% over its target of 43k.
The company revised its year-end production target from 95k to 90k due to an
unexpected delay in delivery of new production line equipment. There might also be
a few daily production shortages in the second half of the year in line with ongoing
capacity expansion process in the current concentration center.
Park Elektrik
September 2012
15
Current Underground Zone Plan
Park Elektrik
September 2012
16
Shift To Open Pit Mining in 2013




Park Elektrik plans to shift its copper mining operations from underground to
open-pit mining by the mid of 2013. Based on projections, production
through open pit mining will continue until the end of 2025 for thirteen years
in two different phases.
Regarding this shift, the company started stripping in the copper zone by
assigning two subcontractors. The initial stripping of 13 mn m3,which will
take one year from mid of 2012 to mid of 2013, will cost TL65mn with an
average stripping cost of TL5 per m3.
The company plans to excavate 198 mn m3 soil to produce 19.75 mn tons
of ore in thirteen years period of open pit mining, including initial stripping of
13 mn m3.
The compulsory purchase process which has started in line with Park
Elektrik’s shift to open pit mining has completed recently with a total
expense of TL11 mn.
Park Elektrik
September 2012
17
II) Silopi Asphaltite Zone

Asphaltite is a petroleum-origin hydrocarbon with a thermal value of 5,500-5,800
kcal/kg.

Park Elektrik has the operational rights of Silopi asphaltite mine until 2033.
Estimated asphaltite reserve in Silopi is around 35 mn tons based on Turkish Coal
Enterprise (TKI) reports.

Operations in the asphaltite zone started in June 2009. The company provides
asphaltite to Silopi Elektrik Üretim A.Ş., a group company which is involved in
electricity production in Silopi with fluidized bed technology and has a starting
capacity of 135MW.

Annual production amount in Silopi is around 450,000 tons and is subject to
increase from 2014 onwards in line with capacity expansion of Silopi EUAS from
135MW to 405MW. With the expansion, annual asphaltite production of Park
Elektrik is also estimated to be tripled.

Based on recently renewed contract by two companies, sale price of asphaltite is
determined as “Costs + 15%”.

Asphaltite mine will be open-pit for the first years of operation. Later on,
underground mining will be done by the method of “Cut and Fill Block Caving”.
Park Elektrik
September 2012
18
Open-Pit Mining in Silopi
Park Elektrik
September 2012
19
IV.
Park Elektrik
Planned Investments
September 2012
20
Diyarbakır HPP

Installed capacity will be 50.5 MW.

Production license is valid for 49 years.

According to recent feasibility studies, estimated investment
amount is US$ 100 mn.
Park Elektrik
September 2012
21
Ceyhan Natural Gas Power Plant

Park Elektrik applied to Energy Market Regulatory Authority for a
license to establish a NGPP in Ceyhan, Adana.

Installed capacity will be 423 MW.

Production license will be valid for 49 years.

Estimated investment amount is Euro 250 mn.
Park Elektrik
September 2012
22
V.
Park Elektrik
Financial Structure
September 2012
23
Annual Concentrated Copper Production (wmt)
130,000
90,000
77,510
64,371
63,138
52,554
37,426
13,771
2006
2007
2008
2009
2010 *
2011
2012 E
2013 E **
* Annual production declined due to production halt of four-month in 2010.
** To be on the conservative side, production estimation of 130k for 2013 has been used in the graph.
Park Elektrik
September 2012
24
Annual Con. Copper (dmt) & Cathode (ton) Sales
60,931
59,163
55,054
47,417
32,239
9,271
1,210
2006
2007
2008
2009
2010
2011
* In 2010, there was a production halt of four months.
** 6,613 wmt of concentrated copper were used to produce 1,210 mt copper cathode. This pushes 2011 total sales up to 61,667 dmt.
Park Elektrik
September 2012
25
Annual Asphaltite Sales (ton)
476.899
434.333
204,856*
2009
2010
2011
* Asphaltite operations started in mid 2009.
Park Elektrik
September 2012
26
Total Sales Revenues (TL)
copper
asphaltite
2007
2008
2009
151,135,664
19,314,397
64,191,660
8,211,605
69,857,081
110,713,833
80,040,645
19,709,514
2010
2011*
* Revenues from other sales is 1,616,016.
Park Elektrik
September 2012
27
Net Earnings (TL mn)
100.8
74.8
37.2
19.8
2007
Park Elektrik
19.4
2008
2009
September 2012
2010
2011
28
Breakdown of COGS, as of YE11
Maintanence,
4%
Machinery Rent
Costs, 3%
Others, 10%
Labor Costs,
31%
Depreciation,
17%
Fuel & Energy,
12%
Park Elektrik
Mach. Spare
Part Repl.
Costs, 24%
September 2012
29
Annual Margin Comparison
(TL mn)
2007
2008
2009
2010
2011
Sales
Gross Profit
Gross Margin
EBITDA
EBITDA Margin
Net Earnings
Net Margin
80
47
59%
43
52%
20
25%
111
73
66%
62
56%
75
68%
79
32
41%
24
30%
19
25%
84
44
52%
42
50%
37
44%
173
107
62%
112
65%
101
58%
Park Elektrik
September 2012
30
Sources of Financing (TL mn)
Shareholders' Equity
Total Debt
41
33
30
60
66
8
53
443
302
343
223
88
14
100
130
143
2004
2005
2006
2007
2008
2009
2010
2011
* Park Elektrik has no financial debt.
Park Elektrik
September 2012
31
VI. Evaluation of 1H12 Financial Results
Park Elektrik
September 2012
32
Evaluation of 1H2012 Financial Results




In the first half of 2012, total copper concentrate production was realized as
46,852 wmt, indicating 27% increase. Total sales for copper products was
realized as 38,488 dmt for concentrate copper and 2,521 mt for cathode
copper.
Total revenues increased by 86% due to the capacity expansion in the
concentration center. Although profit margins of the company did not realize
as high as the previous year due to the depreciation costs of an open pit
copper site in which the operations ended, they showed significant
improvement from 1Q to 2Q despite the fact that falling copper prices
through the years 2011-2012.
The production and sales of asphaltite decreased as 40% due to the
operational halt caused by a technical failure in the Silopi Elektrik A.Ş.
Park Elektrik distributed TL100 mn dividends out of 2011 earnings in May
2012.
Park Elektrik
September 2012
33
Production & Sales Amount
Production
Concentrated Copper (wmt)
1H11
1H12
%
37,021
46,852
27%
852*
902*
6%
204,069
122,594
-40%
1H11
1H12
%
29,681
38,488
30%
-
2,521**
-
204,069
122,594
-40%
Cathode Copper (MT)
Asphaltite (ton)
* 852 mt cathode equals to 5,015 wmt con. copper.
902 mt cathode equals to 5,540 wmt of con. copper.
Sales
Concentrated Copper (dmt)
Cathode Copper (MT)
Asphaltite (ton)
** 2,521 mt cathode equals to 14,032 dmt of con. copper which push up total sales to 52,520 dmt, with a 77% y-o-y
growth.
Park Elektrik
September 2012
34
Sales Breakdown (TL) & Gross Margin by Products
1H11
1H12
%
68,387,080
132,234,152
93%
71%
55%
-
8,842,048
9,515,643
8%
18%
14%
-
390,576
2,932,976
625%
Total Sales Revenues
77,619,904
144,682,771
86%
Overall Gross Margin
64%
51%
-
Copper Sales
Gross Margin of Copper
Asphaltite Sales
Gross Margin of Asphaltite
Other Sales
Park Elektrik
September 2012
35
Income Statement (TL)
Sales
COGS
Gross Profit
1H11
1H12
%
77,619,704
-27,581,165
50.038.539
144,682,771
-70,931,733
73,751,038
86%
157%
47%
64%
51%
-
-4,286,574
-7,329,810
5,331,285
-1,537,688
42,215,752
-6,447,206
-7,810,182
10,448,793
-2,498,127
67,444,316
50%
7%
96%
62%
60%
54%
47%
-
15,065,031
-3,224,718
54,056,065
-10,632,392
43,423,673
19,587,033
-5,491,655
81,539,694
-14,880,193
66,659,501
30%
70%
51%
40%
54%
56%
46%
-
49,918,858
96,706,418
94%
64%
67%
-
Gross Margin
Marketing Selling & Dist. Exp.
General Adm. Expenses
Other Operating Income
Other Operating Expenses
Operating Income
Operating Margin
Financial Income
Financial Expenses
Profit Before Tax
Tax
Net Profit
Net Margin
EBITDA
EBITDA Margin
Park Elektrik
September 2012
36
Summary Balance Sheets (TL)
1H11
1H12
Current Assets
310,062,557
290,575,782
Fixed Assets
112,209,004
176,806,617
TOTAL ASSETS
422,271,561
467,382,399
Short Term Liabilities
29,745,368
51,258,531
Long Term Liabilities
6,541,679
6,007,815
Shareholders Equity
385,984,514
410,116,053
TOTAL LIABILITIES
422,271,561
467,382,399
Park Elektrik
September 2012
37
Corporate Governance Rating
Park Elektrik was rated with 8.82 as a
result of the Corporate Governance
study done by SAHA Kurumsal Rating
Agency. According to report done by
SAHA, the rating means that the
company performs “very good” in
terms of Capital Markets Board’s
corporate governance principles. It
has, to varying degrees, identified and
actively managed all significant
corporate governance risks through
comprehensive internal controls and
management systems. The
company’s performance is considered
to represent best practice, and it had
no deficiencies in any of the areas
rated.
Park Elektrik
MAIN SECTIONS: Avg. 88,24
Board Of Directors
78.77
Stakeholders
89.86
Public Disclosure &
Transparency
94.75
87.62
Shareholders
September 2012
0
20
40
60
80
100
38
T H A N K Y O U.
CONTACTS
Yesim Bilginturan
Selim Erdogan
IR Manager
IR Manager
Phone: +90 216 531 25 33
+90 216 531 25 35
[email protected]
[email protected]
www.parkelektrik.com.tr
www.cinergroup.com.tr
Park Elektrik
September 2012
39
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