HMS Bergbau AG ($HMU)

Ladies and gentlemen, we warmly welcome you to the Montega Markets Critical Resources Summit. This roundtable is dedicated to HMS Bergbau. Please note that this call is being recorded, and a replay will be available on airtime later on. And now I am pleased to welcome CEO, Dennis Schwindt as well as CFO, Jens Moir, who will guide you through the presentation and insights shortly. After which, we will move over to a Q&A session via audio line. And with that, I'm handing over to you, Dennis.

Yes. Thanks, [indiscernible]. Good morning, everyone, and I'll start with some apologies. First of all, we prepared a German presentation here. We'll have the session in English as announced, but it remains for me to give like the full explanation around what you're going to see. Questions always welcome. I think we have a Q&A session afterwards. So bear with me for the moment, I try to enlighten you around the German taxes here as good as I can. So commodities...

Actually, I think there's only German participants here, when I look at the participants list. So we can continue in English.

Okay. We will continue to English [indiscernible] reading or then we're unable to read. So moving to, Dennis Schwindt, that's myself, CEO of HMS Bergbau since July 2020. Jens joined the management board in September 2020. And since then, we are basically the Management Board. Jens joined from an external side, and I am with the company since 2012. So like I do have a bit of, yes, let's say, company order with me. The Supervisory Board here is led by Heinz Schernikau, the founder of the company in 1995 and long-term CEO for 25 years. He is supported by Michael Barlein [indiscernible] from Berlin. And Henry Werkmeister, I learned a very well-known figure in the investment environment former Citibank man who joined in 2025 to the Supervisory Board. So highlights of HMS. I mean, we'll come to -- come to what we -- no, actually, let's get that -- so what are we actually doing in HMS. And that -- these pictures here indicate our fields of operation from left to right in maturity basically. So we are doing international dry by trade, and in particular [indiscernible] since the last -- basically since the foundation of the company in 1995. So we're doing this with a long history and strong expertise and this is how the company got started by basically importing and marketing coal to German power stations in the coal source from Russia, Poland, Mozambique. And yes, we're still doing this. We will do trade physical dry bulk, coal, iron ore, chrome or cementitious products all around that. However, we don't do it in Germany anymore, so we're entirely international business. We see the subsidiary structure a bit later. So on the left, the dry back, that's what we'll be doing for the last 30 years. As of the second half of last year of 2025, we have a strong emphasis in the trade of bunker trade. So fuels and lubricants for ships, for vessels and around that also cargo trade with liquid fields. That's an exercise. We'll come to that a bit later, that we started basically through -- let's say, [indiscernible] transaction, yes, special circumstances here, but we will come to that later a bit, but that's basically a late addition to the business environment of HMS. And then the thing on the right side, that's representing our mining activities. Since February this year, we are -- we can proudly announce that we also own an old mine that we operate. So in February, we took into operation our mining -- our mine in Botswana. There's another mine currently being assembled in South Africa. We'll come to that later in detail. But basically, this is what the HMS as of today, it looks like, again, with very late additions in -- on the business operations side here that already indicates we are really like a company in transition and a company that in growth with a growth perspective. Yes, this is what our subsidiary network looks like, headquartered in Berlin -- founded in Berlin, headquartered in Berlin, still the intention to remain in Berlin, also with the stock listing at the German Stock Exchange since 2008. And then, yes, basically, wherever we do source our dry bulk material, we have our own subsidiaries. So Jakarta, Johannesburg, Miami, so -- and all where we basically do the trade finance around that. So Geneva, Singapore. This is where we do have our subsidiaries, new subsidiaries just opened up with our liquid fuels business in Shanghai and Seoul. Other parts of this liquid fuel business, we were just -- we're just putting our existing infrastructure using the Dubai office and the Singapore office for our activities there. So the message here is headquarter in Berlin, but Pacific Trade region. This is where we operate and where we have a clear emphasis. So basically delivering for the developing world and base materials. So yes, that's a bit -- the emphasis of HMS and also the growth driver for the last, not, let's say, since 2008, 2010, more or less, yes, this is where we are like growing the demography of the planet, more or less. Let's have a look at our dry bulk trade movements here. The left diagram indicating where we source our material and that's predominantly Southern Africa. So you see Mozambique and South Africa making the bulk of our sourcing. Then Indonesia, second strongest -- but I also would want to highlight that, yes, with the U.S. 18% and also Australia, 5% now, we are unlocking markets that over the last 10 years we are almost negligible in sourcing for us. So we really like broaden our supplier base in almost all of the -- all of the sourcing countries that are relevant in the cohort anyhow, Australia bit underrepresented this year. But again, that we are starting now. And yes, where do we ship it. So we bring the stuff here, it's aggregated on the Southeast Asia, the 58%. And that's -- I mean, there's a big chunk of Vietnam in that, but then also there's Thailand and other developing nations of Southeast Asia that we're aggregating here, indicating, yes, so developing nations, Pacific trade region, not necessarily China. And you see that China with a 6% is -- we do trade with China, but it's not really that our -- our trade volumes really are strongly related to what's happening in China, also a bit difficult market. But yes, so we are going more on the, like smaller and more complex trading environments where you need a bit of expertise. And again, also some feet on the ground and boots on the ground to understand what you're dealing with and how to overcome also some operational assets. Something that I always like to show in Europe is the outlook of one of our main trade comrade commodities on coal. Contrary to European perception or let's say, Western perception, coal is not a dying commodity. It's not -- so the coal production is not in only one direction over -- over the last -- or one tendency over the last decades, and that's basically it grows. So every year, there's basically more produced and more consumed than the year before. Also the indication for the preliminary figures for 2025 show that like 9.2 billion tonnes produced and consumed, we set another record that -- on the -- yes, on the back of the demographical changes in precisely the region where we do trade also Southeast Asia, India. So as long as there is a growing population and a growing energy demand per capita, every reasonable energy research agency will forecast that at least in the midterm and in absolute numbers, the coal will be the backbone of any primary energy movement in this region. So hence, we feel very, very comfortable there in our -- in one of our main trading commodities and with our setup in the subsidiary environment. So we are there where it happens and where it also will happen for the foreseeable future. I mentioned that we made this move of, like extending our activities into the liquid fuels business, in particular, bunker trade. So I call it a quasi M&A transaction. It wasn't an M&A transaction because we didn't pay a purchase price. We were once looking in a due diligence into takeover of some business units that was very active in bunker trade, we decided not to buy it, opted out only to learn 3 months later that basically, the business was wound down. And we immediately approached the teams there that were bringing the strongest revenues and yes, managed to pull over a team of 35 people now to do what they did before under the roof of HMS. So as of the second half of 2025, we are house of or we are giving shelter to 35 people trading bunker fuel and especially in the first quarter of 2026. These guys are giving us a good fun. So in light of the geopolitical environment, they could make some very, very strong profits. So yes, turned out this move, this I'd say a bit of guts and good luck that like combined in the second half of last year starts to pay out now under a fairly profitable development in this year with a new team. Why did we go there? Same as in coal. That's indication of the growing container shipments around the planet. So everyone reasonable expect also that global transport will not stop in particular, container shipments will keep on going around the planet in an increasing number. And when we put up this -- the other slide of like shipping routes are actually getting [indiscernible] out of geopolitical risk. When we are putting up this slide, the Strait of Hormuz was not shut down yet. So yes -- so we've seen this before in many occasions, shipping routes are getting longer and homeless is just a latest representation of what we see around the planet and quite -- quite a frequency. So yes, in light of this, we are thinking really our move into this like bunker trade environment. It was more or less a no-brainer where if you do things with good operational control, you can live on the admitted fairly small margins that you make with like -- fairly like risk low back-to-back trade of bunker fuels. Third is, and I was mentioning this as our -- we are basically the latest addition. The truth is we actually started evolving into the mining activities by developing a greenfield project already in 2021. But now in 2026, that plays out. So we started production in our first coal mine in Botswana. So it's Botswana on the border to South Africa. The coal that's lying there, some -- some -- well, we call it highway thermal and then later on with lower seems it will be hematological coal, fits nicely into the South African market. It transports prices until the Western Cape. The mine is an open pit mine. So the development basically in the last year's meant setting up a process plant and doing the so-called box cuts to open up and remove the overburden, so that you get down to the coal [indiscernible]. So it's designed for 1.2 million tonnes of production. And yes, there's some 95 million tons lying there. So life of mine, we will not see in my generation, I'd assume. But yes, so that's the latest -- that's related -- it's not the latest addition. So that's the first addition in our mining activity. Latest addition is actually this exercise here, a mine in South Africa that contrary to the greenfield project before in Botswana, that is a brownfield project where we -- yes, there was a [ mothball endocyte mine ]. We are reopening up. It will be in full production mid-May way smaller. So it's there basically 300,000 to 600,000 tonnes per annum exercise. But yes, so that's what we also bring on board here now at -- more or less at the same time and that together with the liquid fuel and the growing dry bulk makes HMS undergo a transitional period, let's say, where we are going from a pure dry bulk trade to a vertically integrated broad commodity trader. How this plays out with the numbers, I have my CFO, Jens explain.

Yes. Thank you, Dennis. We just released the preliminary figures for 2025. So 2025 was a very good year for HMS Bergbau. Revenues are slightly below the previous year's numbers. This is due to the fact that coal prices were a bit lower in that period of time, EBITDA, on the other hand was way higher with EUR 59 million compared to EUR 21.7 million in the year before. And the reason for this primarily is that we, for the first time, consolidated the mining activity in Botswana and Matla, Dennis just mentioned, the project. So -- and we switched to IFRS so that our results are more comparable to other international companies. And also, we will have more transparency in our reporting due to the extensive notes. Also, what we can see for 2025 is that equity improved to EUR 140 million almost. And this also is a result of consolidating the mining activity for the first time in 2025. When we look at the development over the past years, we see strong growth in revenues coming from EUR 430 million in 2021. We were able to increase that to EUR 1.4 billion in 2024. As mentioned, 2025, volume-wise, we are on the same levels, but due to the lower prices, revenue was slightly below the year before. We see in the gray graph or the great part of the graph shows the research of Montega where you see that for the future, they expect that our revenue is further growing and which is mostly attributable to the liquid foods business, that is kind of evolving and increasing over time. And also EBITDA, which is increasing due to the fact that we're in the more profitable mining business. And as Dennis mentioned, it's not only 1 mine, but we're also consolidating another mine this year with shows. A look at the share price development in 2025, the share price was growing almost 50%. And and we had the all-time high over EUR 80 in mid of last year. We have a kind of solid consolidation at the moment. And you can see that the price targets are ranging from EUR 70 to EUR 85 in the different research that are available in the market. And also, we issued a bond last year of EUR 50 million, which was then later increased by another EUR 20 million. And we see a very solid development here with over ranging from 103% to 105% over time. Some more information about the shareholder structure. Most of the shares are in the hands of the family, the farming family, which accounts for 75% overall. We are in discussion with the family to increase the free flow, but these are ideas that we have and which will be evolving over time. Yes. And my part of the presentation was a bit faster so that we can make it within the 30 minutes, and we have some time for Q&A. [indiscernible] So here's the summary of our USPs that we see, and we're happy to take your questions now. Thank you.

Thank you very much, Denison and Jens. [Operator Instructions] We have one raised hand from Bastian Brach.

So thank you for the presentation. I have more like general questions on the different dynamics in the liquid fuels market compared to the coal business. Like could you point out if the margin structure is similar. And also, are there more long-term contracts? Or is it more like a spot business? And how do you meet annual customers [indiscernible]?

So what they have in common is it's basically a back-to-back traders. So we buy and sell at the same time at the same quality and the same quantities. So this is what they do share. For coal business, a ship is typically a higher -- for ships, it's typically a higher transaction volume and handling a ship that basically offer to bid acceptance to a contract, and then that can take 6 weeks, whereas these bunker trade, that's a very high frequency business with lower transaction volume, also ship comes into the port and then our team starts selling and basically within 20, 30 minutes, the deal may be over and we will be handled with the accounting department later on. So that's a bit of a -- in terms of transaction structure. So let's say, from the risk structure and then again, back to back, that's the same -- different dimensions of the single trade transactions, basically, that is what really differs.

And the customer structure, they are more like big customers or many small customers?

No, there's -- I mean, there's some of the big fish in the pond. So like you have to transact with Costco, for instance, the biggest container shipper. So if you have these guys on board, then you have a solid bread and butter business. But I mean, overall, the customer and supplier side is highly fragmented. So it's -- I think [indiscernible] onboarded with more than 1,000 counterparties on each site meanwhile.

Okay. And then my second shorter question is, what are your plans for the own coal production. Do you plan on increasing that with further mine acquisitions? Or are there currently no plans for that?

Yes. So at the moment, I'd say, like let's -- I always say let's chew and digest. So we've bitten some good chunk here, so let's chew and digest in the first place. Let's make sure that all of the integration into the company can happen smoothly. However, the situation as of the second half of this year will be the one with us having increased cash flows from the mines to the headquarter. And the situation out there is still that there are assets out there that are highly interesting because they were either idle or under bad management. So we're at least scanning the environment and we will have a bit of a dry powder to shoot. Nothing in particular at the moment that we could announce, but more likely than not in the medium term, we will keep on growing.

And we have a few minutes left for the questions in our chat box, transportation is a challenge in South Africa. How do you secure this in South Africa? And what is the next harbor you are using going forward?

Yes. So well, is indeed and in particular, the inland transportation with the rail [indiscernible] being always a bottleneck here. So we are shipping out of many ports in South Africa from Durban, Richards Bay Coal Terminal Richards Bay dry bulk, but also like up to Mozambique and Maputo what we're using. So everything that we can get our hands on, on the port side, but it's true, ensuring basically, the inland transport is what is operationally challenging. And this is precisely where we have, again, our own boots on the ground. So the Juanesburg office operates with transport logistics guys with mining engineers and geologists, so that we always can ensure basically the mines are capable to deliver and we have control over the transport logistics to the port.

And one last short question. How do you currently assess the rise in your renewable energy used regarding your business in the future?

Yes. In my view, it's not a rise. It's an addition. It comes on and it will come on. But like what people forget when they -- for instance, say that China has brings on so much renewable capacity and is the world champion. China also like inaugurated as much coal-fired power capacity last year as we have an entire Germany together. So you have to see the full picture, and renewables will come. They will play a role in parts of the world, but the backbone, especially in the developing world will be the fossil fuels.

Thank you very much. We have one more raised hand from [indiscernible]. With an eye on the time, Mr. Price, please your question.

I'm trying to be brief. Three questions. A, what type of bunker [indiscernible] that needs to be scrapped or the at least a bit cleaner bunker?

So I mean, basically, all of the products that are needed, but like for, I think, more than 90%, that's the very low sulfur fuel [indiscernible].

Regarding shareholder structure. Are the plans to lower the 75% only on increasing free float or are you already addressing strategic investors for a longer perspective?

Well, both -- the last has always been the sport. I think throughout the history of the company with the family. So if they find like-minded strategic investors who like the company and believe in the development. I mean they are always welcome to talk. For us, it's a bit -- it's a bit like how do we broaden the -- yes, the shareholder structure a bit. But both is welcome.

And there are no talks ongoing as of now. So you're not speaking to anybody?

Not in particular, no. I mean what we do is we are doing the road show here, and try to promote the share in general. But like there is no exclusive talks or no talks ongoing on -- I don't know, on a relevant minority state, let's say.

So lastly, you communicated very well today that the decline in expected EBITDA and profitability for '26 is only due to the consolidation effect in the last year. Do you think you make that clear to a broader audience as well that this is the fact?

Let's see. I mean 0.5 hour is a bit difficult to go through all of that. I just see here. But yes, I mean, we have this like a onetime effect. I mean, still, if you deduct the effect, you can see we are still growing. I mean all of the things -- you saw all the things that really play out operationally, like the bunker trade, the mine operations, operationally, that we all have the major impact basically as of now through on 2026. The bookkeeping effect we already saw, I mean, I like that. It looks it's also a fair representation of that we're not an asset-light company anymore. That's all nice, but I think the balance of HMS will be more significantly impacted by actually the operational performance of those new business divisions that come on board and will deliver profits. So I think that's just a matter of time. Whoever doesn't see this in those pictures, we'll see that basically in the near future.

Thank you very much, Mr. Price. And we have some questions left in the chat box, ladies and gentlemen, with an eye on the time we come to the end of today's round table. You can place your questions afterwards to Montega markets and HMS Bergbau, who are very welcome to do that. And I thank you, Dennis and Jens, for your presentation and your time. I wish you all a successful day and handing over to Dennis once again for some final remarks.

Thanks for your interest in HMS. Again, like an exciting time to start looking at us for whoever [indiscernible] the first glance. You're welcome to look and join us and see what's happening. I think as an investment case, if I wouldn't be in already, I would join.