Yancoal Australia Ltd. · ASX:YAL
Yancoal Australia — FY2018 Earnings Presentation
27 slides from Yancoal Australia's earnings presentation, Feb 26, 2019
Slide 1: Annual Results 2018
Annual Results 2018 Australia’s Largest Pure-play Coal Producer February 2019
Slide 2: Agenda
Agenda 1 Key Highlights 2 2 Operations Overview 13 3 Outlook for Thermal Coal 18 4 Appendix 21 1
Slide 3: Key Highlights
Key Highlights
Slide 4: Highlights
Highlights Over A$1Bn of debt repayments Sustained improvement in safety made in 2018 – leverage and performance gearing reduced to 1.4x and 71% respectively(1) Full year dividend of A$507MM Record total of 32.9Mt attributable implying payout ratio of ~60% of saleable production(2) NPAT for 2018 wit
Slide 5: Safety Performance
Safety Performance Commitment to operating mines to the highest safety standards. Core Hazard Critical Control development and implementation continued throughout the year Yancoal Total Recordable Injury Frequency Rate(1) Rolling 12 Month Basis 13.0 12.0 Total Recordable Injury Frequency Rate reduce
Slide 6: Record Full Year Profit and Net Cash Flow
Record Full Year Profit and Net Cash Flow Higher volumes and realised coal prices combined with steady costs led to record full year profit and cash flow generation Abbreviated Income Statement Comments (A$MM) 2018 2017 4,850 2,601 • Operating EBITDA increased by 121% against previous Revenue year d
Slide 7: Key Financial Metrics
Key Financial Metrics Operating performance delivers record operating EBITDA of A$2,180MM and NPAT of A$852MM driving continued deleveraging and dividend payments of A$507MM in 2018 Operating EBITDA and EBITDA Margin(1) Net Profit After Tax (A$MM) | (%) (A$MM) 45% 852 3,000 50% 900 38% 2,400 2,180 4
Slide 8: Coal Production
Coal Production Significant expansion post completion of Coal & Allied acquisition and record production from Moolarben Saleable Production by Asset (100% Basis) Comments (Mt) 60 12.1 18.5(1) 32.9(2) • Record 2018 total of 50Mt gross saleable coal production, up 59% on the prior year 50.0 48 – Yanco
Slide 9: Margins, Costs and Capex
Margins, Costs and Capex Strong realised pricing and disciplined cost management drives our attractive margins Revenue, Costs and Operating EBITDA per sold tonne(1) Comments (A$/t) 12 46 60 150 132 • Coal prices in A$ terms increased as demand for our 114 thermal and met coal products remained stron
Slide 10: Capital Structure
Capital Structure Materially strengthened balance sheet allows us to deliver attractive dividends and positions us for value accretive future growth Net Debt(1) Leverage Ratio (A$MM) Net Debt(1) / Last Twelve Months Operating EBITDA (x) 6,000 30.0x Voluntary repayments of 27.7x US$750MM in 2018 and
Slide 11: Guidance for 2019
Guidance for 2019 Yancoal is aiming to balance long-term deleveraging with shareholder returns by: • Targeting a long term Net Debt / Operating EBITDA Leverage Ratio of <1.5x • Setting a target 2019(1) dividend payout ratio of 50% of Net Profit After Tax Operational guidance: • Yancoal consolidated
Slide 12: Well-positioned for Growth
Well-positioned for Growth Our large-scale and long-life asset base contains several organic growth initiatives which have the potential to deliver material value for shareholders Large-scale and long-life asset base… …with growth projects that could drive material value for shareholders Yancoal Own
Slide 13: Our Proposition to Drive Shareholder Returns
Our Proposition to Drive Shareholder Returns Australia’s largest pure-play coal producer and the largest HKSE-listed exporter of high quality seaborne thermal coal World class large-scale coal mines which produce high value export coal and operate at industry-leading cash margins Long-term sus
Slide 14: Operations Overview
Operations Overview
Slide 15: Large-scale and High Margin Coal Portfolio
Large-scale and High Margin Coal Portfolio Largest Australian pure-play coal producer servicing a diversified customer base and operating at industry leading cash margins Attributable Marketable Production Coal Revenue by Customer Location(3) (Mt) (A$MM) 40 6,000 32.9 5,000 Focused on Executing a Di
Slide 16: Hunter Valley Operations
Hunter Valley Operations World-class tier one thermal coal asset – operating synergies realised with potential for mine extension through JV with Glencore Key Metrics Saleable Coal Production (Mt) (100% basis) (2) Production (Mt) Location New South Wales, Australia 15.0 13.3 Mine Type Open Cut 10.0
Slide 17: Mount Thorley Warkworth
Mount Thorley Warkworth World-class tier one thermal coal asset – integrated operation of two open cut mines with potential underground opportunity being assessed Key Metrics Saleable Coal Production (Mt) (100% basis) (2) Production (Mt) Location New South Wales, Australia 15.0 12.1 Mine Type Open C
Slide 18: Moolarben
Moolarben World-class tier one thermal coal asset – integrated operation of two mines (one open cut and one underground) after successful underground expansion in 2017 Key Metrics Saleable Coal Production (Mt) (100% basis) Production (Mt) Location New South Wales, Australia 18.0 16.5 12.4 Mine Type
Slide 19: Outlook for Thermal Coal
Outlook for Thermal Coal
Slide 20: Demand for High Quality Coal Expected to Remain
Demand for High Quality Coal Expected to Remain Regulatory landscape means power generators are increasingly focused on securing coal with a high energy content Power generators are focused on improving thermal efficiency …which should drive demand for high quality Australian product(1) Note: bubble
Slide 21: Demand Driving Premium Pricing on High Quality Coal
Demand Driving Premium Pricing on High Quality Coal Demand dynamics are driving premium pricing for coals with higher energy content Premium pricing being realised for higher energy coal Newcastle 6,000 kcal/kg vs 5,500 kcal/kg NAR Price 140 90% 80% 120 70% 100 60% Premium / Discount (%) 80 50% US$/
Slide 22: Appendix
Appendix
Slide 23: Portfolio Overview
Portfolio Overview A diversified portfolio of world-class coal assets comprising interests in 9 mines with supporting rail and port infrastructure Yancoal’s Portfolio Asset Overview(1) Saleable Production Marketable South Location Ownership Reserves(3) Resources(4) (CY17)(5) (CY18) Abbot Point Bowen
Slide 24: Reserves and Resources By Mine
Reserves and Resources By Mine As at 30 June 2018, Yancoal has Coal Reserves of 1,710Mt, Marketable Coal Reserves of 1,218Mt and Coal Resources of 8,327Mt (on 100% basis) • On an attributable basis, Yancoal’s Coal Reserves were 1,178Mt, Marketable Coal Reserves were 837Mt and total Coal Resources (m
Slide 25: Summary of Yancoal's Product Suite
Summary of Yancoal’s Product Suite NSW Queensland Low Ash Thermal High Ash Thermal SSCC(1) PCI(2) Coking Coal Calorific Value kcal / kg 6,322 <6,322 6,784 6,767 NA Ash % ≤15 >15 9.5 11.5 10 Total Moisture % 10 10 10 9 10 Fixed Carbon % 53 53 52 77.8 69.5 Sulphur % 0.55 0.55 0.65 0.68 0.43 Phosphorou
Slide 26: Important Notice and Disclaimer
Important Notice and Disclaimer Acceptance By attending an investor presentation or briefing, or accepting, accessing or reviewing this presentation, you acknowledge and agree to the terms set out in this Important Notice and Disclaimer. Summary of information This presentation is issued by Yancoal
Slide 27: Important Notice and Disclaimer (Continued)
Important Notice and Disclaimer (Continued) Reserves and Resources Reporting In this Presentation, references to mineral resources (Resources) and ore reserves (Reserves) for Yancoal are compliant with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 201