New Hope Corporation Limited · ASX:NHC
New Hope — FY2014 Earnings Presentation
46 slides from New Hope's earnings presentation, Sep 23, 2014
Slide 1: Financial Results Release Full Year Ended 31 July 2014
FINANCIAL RESULTS RELEASE Full Year Ended 31 July 2014 Presented by Shane Stephan, CEO 23 September 2014
Slide 2: 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 3: Overview
OVERVIEW Mr Robert Millner, Chairman
Slide 4: Executive Summary
EXECUTIVE SUMMARY • Significant improvement in safety performance • Challenging coal market environment continues – Low US$ prices – AUD:USD remains high • Profit after tax totals $58.4 million: – $10.8 million from coal mining, marketing and logistics – $3.4 million from oil and gas – $44.2 million
Slide 5: Safety Performance
SAFETY PERFORMANCE EMERGENCY RESPONSE TEAM TRAINING
Slide 6: Safety Performance FY 2014
SAFETY PERFORMANCE FY 2014 • Significantly improved performance with fewer people being injured • All lagging indicators improved over FY 2013 – TRI’s down 7% – LTI’s down 15% – HPI’s down 50% • Concentration through i-Safe/We-Safe behavioural program on individual responsibility and Safe Production
Slide 7: Safety Performance: Quarterly TRIFR
SAFETY PERFORMANCE Quarterly TRIFR Performance 60 50 40 30 TRIFR Linear (TRIFR) 20 10 0 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 7 | 23 September 2014
Slide 8: Financial Overview
FINANCIAL OVERVIEW NEW HOPE GROUP
Slide 9: Financial Overview
FINANCIAL OVERVIEW FY 2014 12 Months Ended 31 July (A$m) 2014 2013 Change % Revenue from ordinary activities $549.0m $652.1m - 16% Earnings before interest tax depreciation and $131.1m $170.5m - 23% amortisation^ Earnings before interest and tax^ $71.2m $122.0m - 42% Profit before income tax $71.0m
Slide 10: Financial Overview: Earnings per Share and Dividends
FINANCIAL OVERVIEW FY 2014 12 Months Ended 31 July (cents per share) 2014 2013 Earnings per share 7.0 8.9 Interim Dividend 6.0 6.0 Final Dividend to be paid in November 2014 2.0 5.0 Special Dividend to be paid in November 2014 3.5 5.0 10 | 23 September 2014
Slide 11: Group NPAT Comparison
GROUP NPAT COMPARISON 160 140 14.7 3.8 3.3 120 100 67.8 64.7 80 8.8 74.1 17.5 60 2.4 58.4 40 20 2013 Non regular Mining Bridgeport Sales Sales Price Sales FX Treasury Other 2014 items Operations Operations Allocation Variance Variance 11 | 23 September 2014
Slide 12: Cost Management
COST MANAGEMENT NEW HOPE GROUP
Slide 13: Cost Control
COST CONTROL • Focus on cost management and productivity initiatives across the total business • Efficiency reviews resulted in redundancies of 45 employees and a reorganisation of mining operations and head office structure. Production levels have been maintained • Innovate to reduce operating cost
Slide 14: Cost Control
COST CONTROL • FOR operating costs at Acland reduced • Digger productivity improved (bcm/ophr) 2011 2012 2013 2014 Hitachi 3600 (2) 1,280 1,320 1,325 1,315 Hitachi 5500 1,680 1,700 1,725 1,780 • In addition, administration costs have been reduced during 2014 by 25% to $12.2m 14 | 23 September 2014
Slide 15: Production and Sales
PRODUCTION AND SALES NEW HOPE GROUP
Slide 16: Production & Sales Performance
PRODUCTION & SALES PERFORMANCE FY 2014 Australian Operating Results 7,000 Production Sales 6,000 Tonnes - 000's 5,000 4,000 3,000 2,000 1,000 - 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Years ended 31 July 16 | 23 September 2014
Slide 17: Production & Sales Tonnages
PRODUCTION & SALES TONNAGES FY 2014 12 Months Ended 31 July (million tonnes) 2014 2013 Change ROM Coal Production 11,046 11,405 -3% Saleable Coal Production 5,637 5,826 -3% Coal Sold 6,003 5,985 0% • Scheduled closure of New Oakleigh mine impacting production – Lower cost per tonne towards the end o
Slide 18: Coal Production Volumes
COAL PRODUCTION VOLUMES FY 2014 12 Months Ended 31 July (million tonnes) 2014 2013 Change New Acland 4.92 4.69 5% New Oakleigh 0.00 0.27 -100% Jeebropilly 0.72 0.87 -17% TOTAL 5.64 5.83 -3% 18 | 23 September 2014
Slide 19: Coal Sales Volumes
COAL SALES VOLUMES FY 2014 12 Months Ended 31 July (million tonnes) 2014 2013 Change Export 5.85 5.80 1% Domestic 0.16 0.19 -16% TOTAL 6.00 5.99 0% • One third of export sales are premium low ash coal with pricing based on the JFY annual price • The balance of export sales is higher ash coal sold on
Slide 20: Community and Sustainability
COMMUNITY AND SUSTAINABILITY
Slide 21: Our People: The New Hope Advantage
OUR PEOPLE The New Hope Advantage • We recruit and retain the best people for the job • Very experienced senior management team • Ensure a safe and healthy workplace, incorporating well- being initiatives • Provide development and training opportunities • Plan and structure for future growth opportu
Slide 22: Community & Social Responsibility
COMMUNITY & SOCIAL RESPONSIBILITY Working together to maintain our Social Licence to Operate • New Hope actively partners with, and supports, its local communities • Our Community Reference Group at Acland provides insight on local topics which informs company decision making • We contribute around
Slide 23: Rehabilitation: Land Management
REHABILITATION Land Management • New Hope is committed to the progressive rehabilitation of disturbed land across its operations • Rehabilitation is progressive and occurs right behind the mining activities • Acland Pastoral Company (APC) manages around 2,400 head of cattle on 4,000 hectares of land
Slide 24: Rehabilitation: Acland
REHABILITATION Acland • The aim of rehabilitation is to return land to beef cattle production as soon as possible • 307 Ha of land fully rehabilitated to date • Cattle are routinely grazing on rehabilitated land • Stage 2 - Cattle Trials commenced in Jan 2013 • Monitors soil characteristics, pasture
Slide 25: Rehabilitation: New Oakleigh
REHABILITATION New Oakleigh • 3.5 mbcm of overburden returned to West pit since January 2013 • A further 6 months work required to complete • End use: Cattle grazing and large lot residential 25 | 23 September 2014
Slide 26: Thermal Coal Markets
THERMAL COAL MARKETS NEW HOPE GROUP
Slide 27: Coal Demand: Market Context
COAL DEMAND Market Context Demand Global thermal coal consumption has grown from 4.9Bt to 7.8Bt in the 10 year period from 2002 – 2012 (CAGR 4.6%) Over this time Asia more than doubled its consumption accounting for all of the global growth Chinese coal consumption has increased by 2.6x over t
Slide 28: Coal Supply: Market Context
COAL SUPPLY Market Context Supply The vast majority of global thermal coal is supplied from domestic sources Seaborne traded coal however has a strong position in the global coal supply mix due largely to quality and supply certainty Seaborne thermal coal trade has more than doubled in the las
Slide 29: Coal Supply: Oversupply Challenge
COAL SUPPLY Oversupply Challenge Total global seaborne supply Seaborne supply from the big two Mt Mt 450 1,100 Indonesia Australia 400 1,000 350 900 300 800 250 700 200 600 150 500 100 400 50 300 0 2013E 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2014F 2015F 2016F 2017F 2018F 2
Slide 30: Coal Price: Market Context
COAL PRICE Market Context Price Thermal coal prices have been in decline since the start of 2011 due to a combination of new supply and weakening growth in China It is estimated that approximately 20% of Australian thermal coal mines are currently operating at negative cash margins Global aver
Slide 31: Market Outlook
MARKET OUTLOOK • Seaborne thermal coal markets will remain oversupplied for some time • However current pricing levels are unsustainable in the longer term and are stimulating change • China is taking action to reduce domestic supply and concurrently reduce imports of other than premium coals • Indo
Slide 32: New Acland Continuation Plan
NEW ACLAND CONTINUATION PLAN
Slide 33: Revised New Acland Coal Mine Stage 3 Project: Highlights
REVISED NEW ACLAND COAL MINE STAGE 3 PROJECT Highlights New Hope has presented a revised Project to the Office of the Queensland Coordinator-General, which would: • Continue the mine until approximately 2029, supporting approximately 435 operational jobs at peak, construction jobs of up to 260, plus
Slide 34: Revised New Acland Coal Mine Stage 3 Project: Progress
REVISED NEW ACLAND COAL MINE STAGE 3 PROJECT Progress Forecast Timetable: • EIS submitted January 2014 • EIS public comment period ended 3 March 2014 • Additional Information on EIS submitted Q3 2014 • Coordinator-General Report anticipated Q4 2014 • Complete Feasibility Study Q4 2014 • Environmenta
Slide 35: Oil and Gas
OIL AND GAS NEW HOPE GROUP
Slide 36: Oil and Gas: Bridgeport Energy
OIL AND GAS Bridgeport Energy • Strong safety performance with 32 months LTI free • Oil production increased at about 12,000 barrels/month • Two new wells in Utopia field and four new wells in Cuisinier • Substantial seismic survey work undertaken in Victoria and Cooper basin tenements • Planning fo
Slide 37: Oil and Gas: Bridgeport Energy Financials
OIL AND GAS Bridgeport Energy 12 Months Ended 31 July ($000) 2014 2013 Total Revenue 14,153 6,369 EBITDA 200 (581) Profit Before Tax (after non regular items) (2,240) (1,874) Less Income Tax Benefit (expense) (1,662) 108 Less Petroleum Resources Rent Tax Benefit 7,317 1,509 Profit After Tax (after n
Slide 38: Coal to Liquids: Indirect Liquefaction
COAL TO LIQUIDS • Indirect Liquefaction • Construction of Stage 1 Jeebropilly plant (1 TPH) completed • Testing program now underway • Technical and commercial review to be completed Q4 2014 to determine ongoing plans 38 | 23 September 2014
Slide 39: Port Operations
PORT OPERATIONS NEW HOPE GROUP
Slide 40: QBH - Port Operations
QBH - PORT OPERATIONS • QBH exported 7.9Mt for the year on 100 vessels • QBH remains essentially a demurrage free port • QBH management and staff maintained the strong safety performance, this year delivering 2 years Lost Time Injury (LTI) free • QBH monitors the air quality for dust particles in su
Slide 41: QBH - Port Operations: Cost Savings
QBH - PORT OPERATIONS Cost Savings • Various cost saving initiatives were undertaken throughout the period with a Dozer Hours Reduction Project delivering significant savings • The chart below summarizes the results of the project 1,550 1.4 1,500 1.2 1,450 1 1,400 1,350 0.8 Tonnes Pushed/Hour 1,300
Slide 42: Outlook
OUTLOOK NEW HOPE GROUP
Slide 43: Strategic Vision: Our Points of Focus
STRATEGIC VISION Our points of focus A commitment to meet or exceed our legal, financial, safety and environmental obligations; and the expectations of our shareholders Retain a high calibre team with the right culture Deliver safe, efficient and cost effective production outcomes Achieve an
Slide 44: Appendix
APPENDIX NEW HOPE GROUP
Slide 45: Reconciliation of Non-IFRS Financial Information
RECONCILIATION OF NON-IFRS FINANCIAL INFORMATION 12 Months Ended 31 July (A$m) 2014 2013 Net profit after tax 58.4 74.1 Income Tax 19.9 49.4 Petroleum Resource Rent Tax (7.3) (1.5) Profit before income tax 71.0 122.0 Interest Expense 0.2 0.0 Earnings before interest and tax 71.2 122.0 Depreciation 5
Slide 46: newhopegroup.com.au
newhopegroup.com.au