New Hope Corporation Limited · ASX:NHC
New Hope — Shareholder Meeting (November 2018)
47 slides from New Hope's shareholder meeting presentation, Nov 20, 2018
Slide 1: Annual General Meeting
NEW HOPE GROUP ANNUAL GENERAL MEETING New Hope Corporation Limited (ASX code: NHC) newhopegroup.com.au
Slide 2: Group Overview
GROUP OVERVIEW Robert Millner, Chairman
Slide 3: Company history 1952 to now
1952-1980 • New Hope commenced operations in Ipswich, Queensland in 1952 • Commenced the West Moreton mining operations at Jeebropilly Mine in 1982 1980-1990 • Acquired 50% stake in QBH in 1983 • Interest acquired in PT Adaro Indonesia in 1989 • Purchased the Rhonnda Colleries operation in 1995 1990
Slide 4: Australian export values by commodity
70 60 50 40 A$ billion 30 20 10 0 Iron ore Coal Tourism Rural goods Manufacturing Other metals LNG Other services Gold services and minerals Source: ABS Cat No. 5368 International Trade in Goods and Services 4 ANNUAL GENERAL MEETING | 20 NOVEMBER 2018
Slide 5: Australian coal exports by destination
18000 16000 14000 12000 10000 8000 6000 4000 2000 0 Japan China India South Korea Taiwan EU Malaysia Thailand Thermal Metallurgical Source: Department of Industry, Innovation and Science; Resources and Energy Quarterly – December 2017 5 ANNUAL GENERAL MEETING | 20 NOVEMBER 2018
Slide 6: Export volume and value
450 60 400 50 350 300 40 Export value, A$ billion Export volume, Mt 250 30 200 150 20 100 10 50 0 0 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Thermal Volume Metallurgical Volume Total Value Source: ABS Cat No. 5368 International Trade in Goods and Services; Department of
Slide 7: Thermal coal import demand by country
(imports Mt) • Thermal coal exports from Australia to Japan in Jan-Sept fell 2% to 59.8mt while exports to China during the same period Country 2017 2020 2025 2030 Growth rose 23% to 37.9mt China 188 175 188 194 6 • High demand for high energy coals with India 137 155 201 268 131 the premium of benc
Slide 8: Coal-fired units under construction and planned in Asia
Number of Coal-fired Units Under Construction and Planned/Proposed in Asia (Total = 857) 300 250 200 150 100 50 0 China India Indonesia Vietnam Philippines Turkey Pakistan Japan Bangladesh Russia South Korea Construction Planned Source: Platts 8 ANNUAL GENERAL MEETING | 20 NOVEMBER 2018
Slide 9: ANNUAL GENERAL MEETING | 20 NOVEMBER 2018
9 ANNUAL GENERAL MEETING | 20 NOVEMBER 2018
Slide 10: Taipower upgrading Linkou Power Plant
• Taipower is upgrading its Linkou Power Plant facility • 2 operating units with 1 more under construction • Transition from sub-critical to ultra super critical facility • Lower emissions, higher energy output 10 ANNUAL GENERAL MEETING | 20 NOVEMBER 2018
Slide 11: Key results summary 2018 vs 2017
• TBC 2018 2017 Change Saleable Coal Production^ ‘000 tonnes 2,002 2,379 -16% Total Coal Sales ‘000 tonnes 2,066 2,146 -4% QBH Exports ‘000 tonnes 1,672 1,659 6% Oil Production Barrels 95,095 92,409 +3% Revenue A$000 286,737 238,639 +20% EBITDA A$000 127,302 99,029 +29% Net Profit Before Tax A$000 1
Slide 12: Financial Overview
FINANCIAL OVERVIEW Matthew Busch, Chief Financial Officer
Slide 13: FY2018 financial highlights
Revenue from Profit before income tax Cash generated from ops operations (before non regular items) (before interest and tax) $1,079M $361M $434M ▲28% from 2017 ▲96% from 2017 ▲39% from 2017 EBITDA Earnings per share Final dividend (before non regular items) (before non regular items) $453M 8.0 cent
Slide 14: NPAT by segment
NPAT $m $125.4 $127.4 130 115 100 85 $74.6 70 $58.5 55 40 25 10 ($0.2) ($4.4) -5 Coal mining QLD Coal mining NSW Oil and gas 2018 2017 Please refer to Appendix for reconciliation of Non IFRS Financial Information 14 ANNUAL GENERAL MEETING | 20 NOVEMBER 2018
Slide 15: EBITDA bridge
EBITDA $m 480 26.7 16.1 7.0 440 70.4 400 94.5 6.5 6.4 360 453.1 320 280 240 283.1 200 Actuals QLD Revenue QLD rehabilitation QLD mining NSW Revenue NSW Revenue NSW strip ratio Bridgeport Actuals 31 July 2017 AUD Price movements FX and other AUD Price Volume 31 July 2018 Please refer to Appendix for
Slide 16: Cash movement bridge
A$m 433.9 1.1 51.7 680 14.2 23.9 99.7 580 480 380 480.0 280 180 236.9 80 Actuals Operating cashflows Interest, tax, PPE Burton Exploration Dividends Actuals 31 July 2017 FX and other 31 July 2018 16 ANNUAL GENERAL MEETING | 20 NOVEMBER 2018
Slide 17: Operations
OPERATIONS Andrew Boyd, Chief Operating Officer
Slide 18: Quarterly Total Recordable Injury Frequency Rate
Quarterly Total Recordable Injury Frequency Rate (TRIFR ) 35 30 25 20 15 10 5 0 TRIFR Linear (TRIFR) 18 ANNUAL GENERAL MEETING | 20 NOVEMBER 2018
Slide 19: Coal production and sales volumes
New Acland Coal sale volumes 4.5Mt ▼2% from 2017 EXPORT Total tonnes produced 8.6Mt Jeebropilly ▲5% from 2017 0.7Mt 9.0Mt In line with 2017 ▲5% from 2017 DOMESTIC Bengalla (40%) 3.8Mt 0.3Mt ▼25% from 2017 ▲10% from 2017 19 ANNUAL GENERAL MEETING | 20 NOVEMBER 2018
Slide 20: Bengalla (40%)
• New Hope share of saleable coal production 3.8Mt • Profit before income tax of $181.9 million • Cash contribution from 1st March 2016 to 31st July 2018 of $322.7 million (before tax) • Continued focus on operational efficiency • Commencement of new water management and diversion project • Resolved
Slide 21: New Acland Stage 3 approvals
• Investigating options to extend Stage 2 mining operations • Currently working through community consultation, economic viability and operational considerations • Seeking to avoid gap in production between Stage 2 and 3 to safeguard existing workforce – 288 FTE, around 500 contractors • Favourable
Slide 22: Noise management at New Acland
• Trigger Action Response Plan (TARP) monitors noise levels and prompts action when noise approaches approved limits • Triggers action at levels set below approved Environmental Authority noise limits • Noise attenuation installed across the majority of the mining fleet • Mine planning based on nois
Slide 23: ANNUAL GENERAL MEETING | 20 NOVEMBER 2018
23 ANNUAL GENERAL MEETING | 20 NOVEMBER 2018
Slide 24: Jeebropilly Mine rehabilitation
• Jeebropilly Mine last coal expected before end of New Hope Group Ipswich land holdings (shown in orange) calendar 2019 • 459ha rehabilitated, cattle grazing on western areas of the mining lease for more than 15 years • FY2019 focus on Finishing Well • Introduction of monitoring programs and on-goi
Slide 25: Queensland Bulk Handling coal terminal
• 6 years Lost Time Injury Free • One of Australia’s most efficient coal terminals • Implemented technology that provides remote and semi-automated inbound transfer systems • Maximised customer throughput through flexible work practices and stockpile availability • Providing reliable delivery option
Slide 26: Acland Pastoral operations
• 180ha of rehabilitated mined land handed over to pastoral operations • Completion of a five year cattle grazing trial on rehabilitated mined land shows cattle on mined land perform as well as, or better, than cattle on unmined land • Continued to build size and quality of breeding herd • Breeder n
Slide 27: Oil and gas production
400,000 35,000 350,000 30,000 • Record production performance 373,875 barrels • 21% increase in oil production 300,000 25,000 • 56% increase in revenue 250,000 Revenue (A$'000) Production (bbls) • EBITDA contribution of $8 million 20,000 • Continued donation of water to local landholders 200,000 15,
Slide 28: Economic contribution over five years
Over the last five years… Continued access to STEM education New Hope and LifeFlight’s rural safety partnership tailored for students Taxes paid to Payments made federal to employees government^ $298.9M $251.4M Payments for Donations and goods & services sponsorships $1.9B* $2.9M ^ Additional $76 mi
Slide 29: Lenton Joint Venture and Burton Mine
• Burton purchase completed November 2017 • Combined project including former Burton Mine and New Hope’s neighbouring Lenton Project • 90% joint venture participant • Even split of coking/thermal coal • 380 million tonne resource* • ~1.5 million tonne per annum for approx. 16 years • Operational rea
Slide 30: North Surat Project
• 1 billion tonnes of thermal coal resource* • Four project areas - Elimatta, Collingwood, Taroom and Woori • To meet anticipated market demand in mid 2020’s • Pre-Feasibility Study progressing • Elimatta Mining Lease application advancing • Resource definition drilling commenced in late July 2018,
Slide 31: Group Outlook
GROUP OUTLOOK Shane Stephan, Managing Director and CEO
Slide 32: Positioned to meet Asian customers' energy demand
New Hope is well positioned to meet the growing energy demands of its Asian customers Coal operations Projects and development Growing Developing Lenton Joint Obtaining approvals to meet Improving safety performance production levels Venture Burton Mine future demand Securing approval for New Carefu
Slide 33: Economic contribution by stakeholder
$1,400 $1,370.1 $1,300 Federal Government $1,200 ($1,374.8 million) State Government ($147.2 million) $800 $762.8 $675.7 $685.1 Local Government $700 ($124.0 million) $595.9 $600 $561.6 $569.4 $560.5 Employees $496.6 $503.8 $500 ($461.1 million) $400 Capital ($957.4 million) $300 Suppliers / Communi
Slide 34: Bengalla transactions
Second Bengalla $160 Transaction announced for $140 $860m First Bengalla Bengalla Transaction Transaction #1 $120 announced for completes $865m $100 $80 $60 $40 $20 $0 34 ANNUAL GENERAL MEETING | 20 NOVEMBER 2018
Slide 35: Thermal and metallurgical coal exports and domestic use
6.2 181.5 Thermal coal exports 200.5 Thermal coal domestic Metallurgical coal exports Metallurgical coal domestic 54.3 Source: Department of Industry, Innovation & Science, Resources and Energy Quarterly, June 2018, Table 5.2 page 34 and Table 6.2, page 41. 35 ANNUAL GENERAL MEETING | 20 NOVEMBER 20
Slide 36: New Acland Mine domestic customers
New Acland Mine provides: 1. Suitable coal quality 27 customers 2. Low transport costs 3. Suits operational infrastructure 4. Long-term relationship 5. No export price parity Rendering animal byproducts Abattoir Food Floral Building Materials Hospital Nursery and garden Fertilisers Paper Aquatic 36
Slide 37: Impacts of customers converting from domestic coal
• Increased operational costs • Transport costs • Higher prices of gas • Higher price of coal • Coal quality impacts to energy output • Capital expenditure • Conversion to new coal source • Conversion to gas • Timeline of conversion to alternative coal or energy source • Lead time for planning, appr
Slide 38: Japan Fifth Strategic Energy Plan
• In July 2018, the Japanese government formulated “The Fifth Strategic Energy Plan in line with the Long-term Energy Supply and Demand Outlook issued in 2015, and the previous strategic energy plan in 2013 TARGET Energy Security, Economic Efficiency, Environment, Safety DIRECTION Strategic Energy P
Slide 39: Japan coal-fired generation efficiency
• Reducing environmental burden and enhancing generation efficiency simultaneously towards FY2013 • For installed capacity as a whole, aiming at an equivalent efficiency to a USC boiler • Strategically developing new technologies such as CCS 2030 in order to reduce CO2 emissions as close to zero as
Slide 40: Advanced coal generation technologies
Generation Efficiency Advanced USC 65% Thermal Efficiency: 46% CO2: 710g/kWh 60% 55% IGFC (Integrated coal Gasification Fuel 50% IGCC (Air-blown) Cell combined cycle) Advanced Turbine 45% (1700 degrees Celsius) Thermal efficiency: 55% CO2: 590g/kWh 40% Integrated coal Gasification Combined Cycle (IG
Slide 41: FY2019 priorities
1. Focus on Safe Production – Improve LTIFR and TRIFR 2. Complete Bengalla Acquisition from Wesfarmers 3. Obtain New Acland Stage 3 Approvals 4. Continue “Finishing Well” at Jeebropilly Mine 5. Investigate options for Lenton Joint Venture Burton Mine Infrastructure 6. Progress North Surat Feasabilit
Slide 42: Proxy voting results
Resolution 1 - Remuneration Report Proxies in favour of FOR AGAINST OPEN TOTAL ABSTAIN Chairman 698,488,478 2,911,586 1,159,529 702,559,593 414,891 Other Attendees 129,824 29,624 434,301 593,749 0 Total 698,618,302 2,941,210 1,593,830 703,153,342 414,891 % Issued Capital 84.04% 0.35% 0.19% 84.59% 0.
Slide 43: Disclaimer
Disclaimer IMPORTANT: The information in this document has been provided to you for information only by New Hope Corporation Limited (“NHC”) and is subject to change without notice. Nothing contained in this document constitutes investment, legal, tax or other advice. The information in this documen
Slide 44: Appendices
APPENDICES
Slide 45: Reconciliation of profit to EBITDA
Year Ended 31 July (A$ millions) 2018 2017 Variance (%) Profit after tax 149.5 140.6 6% Income tax expense (64.3) (61.6) 4% Profit before income tax 213.8 202.2 6% Non regular items before tax (147.0) 17.9 (922%) Profit before income tax and non regular items 360.8 184.3 96% Interest expense 0.1 0.9
Slide 46: NPAT reconciliation by segment
(A$ million) Coal Mining QLD Coal Mining NSW Oil and Gas Total Year Ended 31 July 2018 Net profit / (loss) after tax 22.3 127.4 (0.2) 149.5 Non regular items after tax: Impairment of property, plant and equipment (0.6) - - (0.6) Impairment of coal exploration and evaluation assets (92.6) - - (92.6)
Slide 47: Earnings per share reconciliation
Year Ended 31 July (cents per share) 2018 2017 Basic earnings per share (cents) (before non regular items) 30.4 15.4 Impairment of property, plant and equipment (0.1) - Impairment of coal exploration and evaluation assets (11.1) - Reversal of impairment of coal to liquids facility assets 0.1 - Handl