Park Elektrik Üretim Madencilik Sanayi ve Ticaret A.Ş.

Presentation Transcript

park elektrik retim madencilik sanayi ve ticaret a

Turkish Growth Companies Conference

September 2010

Contents

Introduction 3
Ciner Group in Brief 7
Operations 10
Planned Investments 23
Financial Structure 25
Evaluation of 1H10 Results 40
Recent Developments 47
Future Prospects 50
Market Data 53

September 2010

I. Introduction

September 2010

The Company

Established in 1994.
Initially offered to public in 1997.
Changed its commercial title in 2000.
Commenced copper operations in late 2006.
Gathered electricity production license in 2008 for establishment of a hydro electricity power plant.
Merged with ISE-listed Group company, Ceytas, in May 2009.
Currently operating a copper and an asphaltite mine and plans to establish an HPP in the near future.

September 2010

Ownership Structure

September 2010

Participations, Park Termik

Park Elektrik has a 10% participation in Park Termik Elektrik San. ve Tic. A.S., a Ciner Group company which is involved in thermal power generation in Ankara province.
Park Termik operates Cayirhan Thermal Power Plant which has a total production capacity of 630 MW in four units.
Cayirhan Thermal Power Plant is the first thermal power plant that was privatized by the government. Right after the privatization, the CUR in the plant was increased from 48% to 81%, while also the coal production amount of the related coal fields was increased from 500 tons to 7,000 tons level.
Park Termik paid TL1.28mn of dividends to Park Elektrik in 2010 out of its 2009 net earnings.

September 2010

II. Ciner Group in Brief

September 2010

Park Holding is controlled by Ciner Group, which is solely owned by Mr. Turgay Ciner. Ciner Group’s history goes back to 1978 when it was founded.

Ranking among the largest Groups of Turkey, Ciner Group diversified its operations from the energy and mining sectors to tourism, media and broadcasting sectors.

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 high-speed growth.

As of 1H10, The Group has a total asset size of US$3.2 bn, shareholder’s equity of US$1.6bn, consolidated revenues of US$490 mn and consolidated EBITDA of US$133 mn with a sound EBITDA margin of 27%.

Ciner Group, Introduction

September 2010

Ciner Group, Main Line of Businesses

Ciner Group

Energy & Mining

Group

Media

Group

Commerce,

Industry &

Services Group

Major Companies

Park Elektrik

Park Teknik

Park Termik

Eti Soda

Silopi Elektrik

Park Enerji Ekipmanları

Major Companies

& Brands

Ciner Yayın Holding

Haberturk Newspaper

Haberturk TV, Radio,

Haberturk Web Site

Bloomberg HT, FHM,

Marie Claire, Newsweek

Major Companies

Park Construction

Park Marine

Park Aviation

Lares Park Hotels

Park Insurance

Park Foreign Trade

Denmar Logistics

September 2010

III. Operations

September 2010

Park Elektrik’s Existing Facilities

Ciner Group Headquarters

(Cu)

(As)

September 2010

Snapshot of Existing & Planned Facilities

(Cu) Siirt, Madenköy Copper Zone
Started operations in 2006. Initial reserves were 13.6 mn tons.
(As) Şırnak, Silopi Asphaltite Zone
Started operations in 2Q 2009. Total reserves at 25 mn tons of asphaltite. Operational rights are belong to Park Elektrik by the end of 2033.
(HEPP) Diyarbakır, Şirvan Hydro Electricity Power Plant
The company’s application for HEPP establishment and electricity production license was approved by the Energy Market Regulatory Authority in December 2008. HEPP of 50,5 MW will be established.

September 2010

I) Madenköy Copper Zone

License of copper mine in Madenköy zone was acquired from Eti Holding, a state-owned company, for YTL9.4 mn in January 2000.
The company sells concentrated copper that includes 20-24% copper content.
The company’s concentration facility’s max. capacity is to run 100,000 tons of copper concentrate per annum.
Selling price is determined based on the spot price at the day of transaction in London Metal Exchange.

September 2010

Zone Plan

September 2010

II) Silopi Asphaltite Zone

In 2003, Ceytaş signed a protocol for Şırnak Silopi asphaltite fields of Turkish Coal Enterprises (TKİ) in order to operate Silopi asphaltite zone for 20 years. Then, the protocol was extended until the end of 2033.
According to TKI reports, estimated asphaltite reserve in Silopi is around 25 mn tones.
The company realized TL18mn of investments in the zone, which were totally financed through shareholders’ equity.
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 a beginning capacity of 135 MW.
Total production amount in Silopi asphaltite zone is planned to be around 400,000 tons for year 2010, of which will be totally procured by Silopi Elektrik Üretim A.Ş. Sales price of asphaltite per ton is determined as TL 40.5 for 2009 and 2010.

September 2010

Asphaltite Preparation Facility

September 2010

IV. Planned Investments

September 2010

Tarihler HEPP

Installed capacity will be 50.5 MW.
Production license is valid for 49 years.
Estimated investment amount is US$ 60 mn.
Estimated start-up time for the investments is 2010.
The plant is estimated to be operational by the end of 2013.
Estimated IRR of the investment is around 15%.

September 2010

V. Financial Structure

September 2010

Quarterly Copper Sales Since The Beginning (dmt)

September 2010

Annual Copper Sales (dmt)

September 2010

Total Sales Revenues* (TL)

* Ignores other sales & discounts.

September 2010

Main Determinant; LME Price

September 2010

Copper Prices In Last 3 Years ($/ton)

September 2010

Average Product Price

September 2010

COGS, as of YE09

September 2010

Per Unit Cash Costs (TL/dmt)

September 2010

Sales, EBITDA (TL mn) & EBITDA Margin

September 2010

Net Earnings (TL mn)

September 2010

Margins

September 2010

Margins

September 2010

Sources of Financing (TL mn)

September 2010

Working Capital (TL)

September 2010

VI. Evaluation of 1H2010 Financial Results

September 2010

Evaluation of 1H10 Results

Despite lower copper concentrate sales due to strike in copper zone, the company’s sales and margins were not deteriorated thanks to higher copper prices in 1H10 as compared to same period of last year.
Although the company’s copper concentrate sales was decreased from 14,698 dmt in 2Q09 to 5,708 dmt in 2Q10 by 61%, sales revenues reflected a 14% increase, y-o-y, in 1H10.
Asphaltite sales also reflected a record rise due to base term effect. Recall that the company had initiated its asphaltite sales in June 2009.
Benefiting from higher copper prices, the company’s margins also increased despite lower copper sales.
The company also benefited from financial income on his interest bearing huge cash lent to parent Park Holding A.S.
The company recorded TL18.5mn of net income in 1H10, with a sound 63% increase, y-o-y.

September 2010

Sales Amount

September 2010

Sales Breakdown (TL) & Gross Margin by Products

September 2010

Income Statement (TL)

September 2010

Margins

September 2010

Summary Balance Sheets (TL)

September 2010

VII. Recent Developments

September 2010

Recent Developments, Corporate Governance Rating

Park Elektrik was rated with 8.65 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 almost no deficiencies in any of the areas rated.

September 2010

Recent Developments, Strike & Temporary Prod. Halt

On May 15, Park Elektrik’s copper production was halted temporarily following the dispute between the Workers’ Union in Siirt Copper Mine and the company over salary increase issues.
The production halt lasted in September 15th, following the agreement with the Workers Union and the company.
However, the company’s 1H10 financial results have not reflected tremendous revenue decrease thanks to higher product prices as compared to previous year.

September 2010

VIII. Future Prospects

September 2010

Future Prospects

In the very near future, Park Elektrik is going to start construction of itsHPP. The company will call for a tender for the construction of the HPP in the coming months. It is estimated that HPP will become operational by the end of 2013 or in 2014, in the worst case scenario.
Having a pile of cash, Park Elektrik looks for new investment opportunities. Electricity production tenders which are expected to be opened in 2011, are among the target areas of the company.
The company keeps on consecutive drilling in Madenkoy copper mine, targeting to increase its proven copper reserves above its initial level of 13.6 mn tons up until the probable reserves of 23 mn tons level. These studies are estimated to increase Park Elektrik’s life period considerably. The company also aims to increase its tenor rate through these drillings.

September 2010

Future Prospects

As Silopi Elektrik’s capacity will be tripled by 2014, at the latest, Park Elektrik’s asphaltite sales will be also tripled in the meantime. This means that the company’s annual asphaltite sales will increase to 1,2-1,3 mn tons level by the year 2014.

September 2010