! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! Annual Report and Accounts 2011 New World Resources N.V. ! Table of Contents Overview ................................................................................................................................................ 2 NWR at a glance ................................................................................................................................ 2 Highlights ........................................................................................................................................... 2 Our operations and customer base ................................................................................................. 3 Chairman’s Statement ...................................................................................................................... 5 Strategy .................................................................................................................................................. 9 Highlights ........................................................................................................................................... 9 Business model: How NWR creates value .................................................................................... 11 Key performance indicators ........................................................................................................... 12 Strategic context in which NWR operates .................................................................................... 14 Growth .............................................................................................................................................. 17 Risk management at NWR .............................................................................................................. 19 Business Review ................................................................................................................................. 25 Financial Review ............................................................................................................................. 25 Coal ................................................................................................................................................... 29 Coke .................................................................................................................................................. 33 Development Projects ..................................................................................................................... 36 Sustainability ................................................................................................................................... 39 Corporate Governance ....................................................................................................................... 46 Board of Directors and Senior Management ................................................................................ 46 Corporate Governance ................................................................................................................... 49 Related Party Transactions ............................................................................................................ 69 Material Contracts ........................................................................................................................... 74 Directors’ Statement of Responsibility ......................................................................................... 80 Remuneration Report ...................................................................................................................... 80 Financial Statements .......................................................................................................................... 89 Consolidated financial statements ................................................................................................ 89 Company financial statements .................................................................................................... 150 Other information .......................................................................................................................... 164 Independent Auditor's Report ...................................................................................................... 165 Additional information ...................................................................................................................... 166 Shareholder information ............................................................................................................... 166 Ancillary information for shareholders ....................................................................................... 171 Disclaimer and Cautionary Note on Forward Looking Statements and Notes on Certain Other Matters ............................................................................................................................................ 173 ! ! ! Directors’ report comprises of Strategy and Business Review sections within this document. Average exchange rate for 2011 used throughout this report is 24.590 CZK/EUR, unless stated otherwise. ! "! Overview NWR1 at a glance In 2011 New World Resources N.V. ('NWR') completed reincorporation in the United Kingdom We announced the intention to move domicile from the Netherlands to the United Kingdom in October 2010 and we completed this process in May 2011. Following the process, New World Resources Plc (‘NWR Plc’) was established and became the holding company of New World Resources N.V. In June NWR Plc was included in the FTSE index series, namely FTSE 250 and FTSE 350 Mining. The process of reincorporating NWR in the UK included a share-for-share recommended exchange – holders of shares in NWR were given the opportunity to exchange one share in NWR for one share in the new NWR Plc. Shares were exchanged in voluntary exchanges with 0.22 per cent of NWR's share capital currently subject to squeeze out proceedings. As a result, NWR became an intermediate holding company whose shares were delisted from London and Prague Stock Exchange, and are to be delisted from the Warsaw Stock Exchange. This annual report covers NWR's activities for the financial year ended 31 December 2011. Highlights We have three principal subsidiaries: OKD, a.s. (‘OKD’) Our principal wholly owned subsidiary OKD is the Czech Republic’s only hard coal mining company and second largest private employer. Its four operating mines are located in Northern Moravia, south of the Polish border and are part of the Upper Silesian coal basin. Refer the Coal section of this report from page 29 onwards for further information. OKK Koksovny, a.s. (‘OKK’) Our wholly owned coking subsidiary, situated at the Svoboda coking plant site in Ostrava, produces both foundry and blast furnace coke from four batteries. Refer the Coke section of this report from page 33 onwards for further information. NWR KARBONIA S.A. (‘NWR KARBONIA’) NWR KARBONIA oversees two development projects in southern Poland – D!bie"sko and Morcinek. Refer the Development projects section of this report from page 36 onwards for further information. Who we are NWR is one of Central Europe’s leading hard coal and coke producers. We access coal from deep underground. NWR N.V. is headquartered in Amsterdam and listed on the Warsaw Stock Exchange. NWR Plc is a holding company of NWR, headquartered in Amsterdam, listed on stock exchanges in London, Prague and Warsaw and included in the FTSE 250 and FTSE 350 Mining indices. NWR Group has four working mines and several development projects in the Czech Republic and Poland. The NWR Group employs over 18,000 people and as at 1 January 2012 had 385 million tonnes of JORC2 reserves. What we do NWR is a trusted supplier of coal and coke. We principally produce coking and thermal coal for the steel and energy markets in Central Europe through our mining operations located in Czech Republic. Our coke subsidiary is the largest producer of foundry coke in Europe. In 2011 total production of NWR reached 11.2 million tonnes of coal and externally sold 4.4 million tonnes of coking coal, 6.2 million tonnes of thermal coal and 555 thousand tonnes of coke. NWR supplies to a blue chip !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! "! NWR or the ‘Company’ refers to New World Resources N.V. The ‘Group’ or the ‘NWR Group’ refers to NWR N.V. and its subsidiaries up to the date of reincorporation in the UK. From the date of the reincorporation in the UK, it refers to New World Resources Plc and its subsidiaries (including NWR N.V.). 2 Full name: Joint Ore Reserves Committee. The Group currently uses both the FSU system and the JORC system in parallel to report reserves and resources. The Group employs a certified geologist who prepares the reserve numbers in accordance with JORC certified expert. ! #! customer base of steel makers and power generators in the Central European region, one with which we have developed longstanding relationships. How we create value The region suffers from supply constraints arising from limited port capacity and freight infrastructure and NWR is thus well positioned to serve its customer base more efficiently than overseas producers. We have invested in technologies, streamlined the business and extended our reserve base. We set the region’s standards in terms of health and safety, technology, corporate governance and customer service. We have a track record of