New Hope Corporation Limited · ASX:NHC
New Hope — H1 2019 Earnings Presentation
39 slides from New Hope's earnings presentation, Mar 19, 2019
Slide 1: Financial Results Release
FINANCIAL RESULTS RELEASE Presented by Rob Millner, Shane Stephan, Matthew Busch and Andrew Boyd New Hope Corporation Limited (ASX code: NHC) newhopegroup.com.au.
Slide 2: Results Overview
RESULTS OVERVIEW Robert Millner - Chairman
Slide 3: Half year highlights
Cash generated Net Profit After Tax Total tonnes sold from operations (before non regular items) $160M $283M 4.5M * ▲2% from 2018 Before acquisition ▲33% from 2018 costs, interest and tax EBITDA Interim dividend Land rehabilitated (before non regular items) 8 cents 349ha $285M ▲33% from 2018 State G
Slide 4: Safety and Sales Performance
SAFETY AND SALES PERFORMANCE Shane Stephan - Managing Director and Chief Executive Officer
Slide 5: Total Recordable Injury Frequency Rate
• The company remains focussed on improving the reliability of critical controls • Improving both TRIFR and lead safety indicators remain a management focus NHG Quarterly Total Recordable Injury Frequency Rate (TRIFR ) TRIFR (includes Bengalla data from 1 Dec 2018) Linear (TRIFR) 35 30 25 20 15 10 5
Slide 6: Coal sale volumes
Coal sale volumes NEW ACLAND 1.9Mt ▼ 13% from 2018 EXPORT 4.4 Mt ▲ 5% from 2018 JEEBROPILLY Total tonnes produced 0.4Mt 4.7Mt ▲ 15% from 2018 ▲ 5 % from 2018 DOMESTIC BENGALLA* 0.1 Mt** 2.4Mt ▼ 57% from 2018 ▲ 23% from 2018 * New Hope’s interest in Bengalla increased to 70% from 1 December 2018. **
Slide 7: Financial Overview
FINANCIAL OVERVIEW Matthew Busch — Chief Financial Officer
Slide 8: Financial results summary
Revenue from Profit before income tax Profit after income tax operations (before non-regular items) (before non-regular items) $617M $229M $160M ▲21% from 2018 ▲33% from 2018 ▲33% from 2018 Earnings per share EBITDA Interim dividend (before non-regular items) (before non-regular items) $285M 8 cents
Slide 9: Profit before tax by segment
130 126.6 115 110.9 100 94.9 83.8 85 70 55 40 25 10 4.4 0.6 -5 Coal mining QLD Coal mining NSW Treasury (9.2) (11.3) -20 Other 2019 2018 Please refer to Appendix for reconciliation of Non-IFRS Financial Information 9 FINANCIAL RESULTS RELEASE | HALF YEAR ENDED | 31 JANUARY 2019
Slide 10: Reconciliation of Non-IFRS Financial Information
Please refer to Appendix for reconciliation of Non-IFRS Financial Information 10 FINANCIAL RESULTS RELEASE | HALF YEAR ENDED | 31 JANUARY 2019
Slide 11: Group cash balance
The Group cash balance above includes total cash and cash equivalents and term deposits at 31 July 2018. There are no term deposits held at 31 January 2019. 11 FINANCIAL RESULTS RELEASE | HALF YEAR ENDED | 31 JANUARY 2019
Slide 12: Cash and debt facilities
• During the half year, the Group entered into a secured loan A$m Cash and Debt Facilities facility for $600 million with a syndicate of Australian and international banks. The Group had been debt free since 2006 600 prior to the draw down for the Bengalla acquisition. • Net debt at 31 January 2019
Slide 13: Shareholder returns since listing
Time Period Compound Annual Return 1 Year 99% 3 Years 47% 5 Years 9% Since listing in 2003 23% Closing share price 7 March 2019 $4.25 13 FINANCIAL RESULTS RELEASE | HALF YEAR ENDED | 31 JANUARY 2019
Slide 14: Contribution to government, employees and community
A$m $2,050 $2,000 Federal Government ($1,378 million) State Government ($208 $1,500 million) Local Government ($128 million) Employees ($472 million) $1,000 $892 $853 $863 Capital ($878 million) $759 $702 $735 $627 Dividend ($1,845 million) $583 $602 $500 Suppliers and Community ($3,756 million) $-
Slide 15: Operations & Projects
OPERATIONS & PROJECTS Andrew Boyd — Chief Operating Officer
Slide 16: Video link
Please click here to watch video. 16 FINANCIAL RESULTS RELEASE | HALF YEAR ENDED | 31 JANUARY 2019
Slide 17: Bengalla mine overview
• Thermal coal mine located in the Sydney Basin of the Upper Hunter Valley region, NSW • Current Joint Venture participants: – New Hope 70% – Taipower 20% – Mitsui 10% • ~9.0mtpa thermal coal (100% basis) with plans to increase outputs in the short term • Long life, fully consented, thermal coal ass
Slide 18: Bengalla update
• New Hope completed its acquisition of an additional 30% interest in Bengalla and reached a binding commitment to purchase an additional 10% from Mitsui • From 1 April 2019, JV participation expected to be: – New Hope 80% – Taipower 20% • Equity share of saleable production for the half year 2.4 mi
Slide 19: New Acland update
• Produced 1.9 million tonnes of coal, a decrease of 0.3 million tonnes on the prior corresponding period • Optimising Stage 2 coal resource areas with a view to maximising Stage 2 operational timeframe and coal recovery; and • Improvements to train weighing and loading systems to increase productiv
Slide 20: New Acland Stage 3 approvals
• The New Acland Stage 3 application to amend the Environmental Authority was granted on Tuesday March 12, 2019 • The second Land Court hearing in November 2018 recommended the Project be approved subject to obtaining a change report from the Coordinator-General for amended noise conditions • The Co
Slide 21: New Acland if Stage 3 not approved
• If NAC Stage 3 is not approved by end of calendar year 2019 it’s likely that the following will occur: – Current NAC Stage 2 production activity levels will start to reduce by the end of calendar year 2019 – The remainder of the Stage 2 resource will be mined over the course of 2020 – In early 202
Slide 22: Jeebropilly mine
• Produced 0.4mt, an increase of 15% on the prior corresponding period • Jeebropilly Mine last coal prior to end of calendar 2019 • Preparing for the end of mine life, the following key activities have been completed to ensure a successful end to mining operations: – Reserve optimisation review – As
Slide 23: Queensland Bulk Handling terminal
• 3.2 million tonnes of coal exported through the terminal • Significant concrete and cladding refurbished works on critical infrastructure; and • Continued focus on health and safety with the site now over six years lost time injury (LTI) free. 23 FINANCIAL RESULTS RELEASE | HALF YEAR ENDED | 31 JA
Slide 24: Rehabilitation and agriculture at New Acland
• The Queensland Government certified 349 hectares of progressively rehabilitated mined land at New Acland, the largest single area of certified rehabilitation for an open cut coal mine in the State • Breeder numbers at 2,281 • 1,682 calves branded in the half year; and • The irrigation network has
Slide 25: Bengalla agricultural lands
• The majority of the Bengalla agricultural lands have recently become available known as Stage 1 land highlighted dark pink on the adjacent map • The use of stage 1 land (490ha. approximately) is currently under review; and • The intention is to establish a farming enterprise over this land. This m
Slide 26: Community support
New Acland Mine Bengalla Mine • Over $170,000 donated through New Hope’s Sponsorships and • Over $300,000 donated through Bengalla’s Community Support Donations Program, the New Acland Mine Community Investment Team and Community Development Fund. Fund, and partnerships with not-for-profit groups. •
Slide 27: Oil production
• Oil production totalled 189,952 barrels • Revenue for the business was $17.0 million for the half year, an improvement of 33% on the prior corresponding period resulting from improved realised oil prices; and • Completed upgrade to the Bridgeport drilling rig and drilled five operated wells (two a
Slide 28: Lenton Joint Venture and Burton Mine
Lenton Joint Venture Burton Mine / Lenton Project Bowen Basin • Coking/thermal coal • Operational readiness activities reduced as • Subject to final investment decision after investigations into accessing the downstream securing appropriate supply chain capacity. • 380 million tonne resource (Lenton
Slide 29: Group Outlook
GROUP OUTLOOK Shane Stephan — Managing Director and Chief Executive Officer
Slide 30: Seaborne thermal coal demand and supply
Seaborne Thermal Coal Demand Seaborne Demand Versus Supply Status Source: Wood Mackenzie Coal Supply & Market Services 30 FINANCIAL RESULTS RELEASE |HALF YEAR ENDED | 31 JANUARY 2019
Slide 31: Asian demand and constrained supply
• Growing demand from Asian markets is keeping prices elevated • Only a marginal increase in supply over the past 4 years from Australia • Expect only a small increase year on year in 2019 as existing mines ramp–up • Normal time lag for new supply to respond to pricing is ~ 4 years; and • Increasing
Slide 32: New coal plants in Asia
• Developing Asia is reliant on new technology coal plants for the most cost competitive electrification of their countries • Developed Asia building gas and renewables, but continue to take a balanced and risk averse approach to electricity supply – coal is still required: and • In total, new plant
Slide 33: Coal quality demand in Asia
ASH <15% SULPHUR <0.6% • Traditionally Japan has demanded the ENERGY >6000 kcal/kg GAR highest quality coal in the world due to ash High disposal costs, and a drive to clean-up JAPAN industry in the 1970’s 140Mtpa • Taiwan is now seeking lower ash, higher KOREA energy coals for environmental reasons
Slide 34: Positioned to meet Asian energy demand
New Hope is well positioned to meet the growing energy demands of its Asian customers Coal operations Projects and development Transitioning to active management of the Bengalla Joint Venture Securing approval for New Acland Stage 3 Project Growing Developing Lenton Joint Obtaining approvals to meet
Slide 35: Appendices
APPENDICES
Slide 36: Reconciliation of profit to EBITDA
Half Year Ended 31 January (A$ million) 2019 2018 Variance (%) Profit after tax 120.2 115.6 4% Income tax expense 57.2 49.6 15% Profit before income tax 177.4 165.2 7% Non-regular items before tax 51.5 6.7 669% Profit before income tax and non-regular items 228.9 171.9 33% Interest expense 3.5 (0.2)
Slide 37: Profit before tax by segment reconciliation
Half year ended 31 January 2019 Coal Mining Coal Mining (A$ million) Other Treasury Total QLD NSW Profit / (loss) before tax from continuing operations after non-regular items 113.3 88.7 (21.1) (3.8) 177.2 Non-regular items before tax: • Insurance proceeds ship-loader 2.4 - - - 2.4 • Onerous contrac
Slide 38: Earnings per share reconciliation
Half Year Ended 31 January (cents per share) 2019 2018 Variance (%) Basic earnings per share (cents) (after non-regular items) 14.4 13.9 4% Insurance proceeds 0.2 - (100%) Gain / (loss) on discontinued operation - (0.6) (100%) Onerous contract expenses (1.4) - Acquisition costs expensed (3.2) - (100
Slide 39: 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