Fortescue Ltd · ASX:FMG
Fortescue — Fortescue Metals Group — FY2011 Earnings Presentation
30 slides from Fortescue's earnings presentation, Aug 19, 2011
Slide 1: Full Year Results – June 2011
For personal use only 1 Full Year Results – June 2011 19th August 2011
Slide 2: Disclaimer
Disclaimer For personal use only Important Notice The purpose of this presentation is to provide general information about Fortescue Metals Group Ltd ("Fortescue"). It is not recommended that any person makes any investment decision in relation to Fortescue based on this presentation. This presentat
Slide 3: Highlights Corporate
For personal use only Highlights Corporate 3
Slide 4: 2011 – Year in Review
2011 – Year in Review For personal use only • Classified Injury Frequency Rate improved 25 per cent from 2010 • Board approval and commencement of T155 expansion program • Completion and successful ramp up of Christmas Creek • Transition from project to corporate funding platform • Payment of maiden
Slide 5: Financial Highlights
For personal use only Financial Highlights 5
Slide 6: FY2011 Financial Highlights
FY2011 Financial Highlights For personal use only • Cash balances at 30 June 2011 of US$2,663m • Operating revenues of US$5,442 million; + 69% 1 • Record underlying EBITDA of US$2,815m; +119% 2 • Reported profit after tax US$1,023m and normalised profit of US$1,634m • Higher C1 costs US$44.35 per wm
Slide 7: Financial Highlights – Income Statement
Financial Highlights – Income Statement Year Ended 30 June (US$m) 2011 2010 % For personal use only Tonnes shipped1 (millions - wmt) 40.0 38.9 3% Average CFR price (US$/dmt) 149.0 88.5 68% Underlying EBITDA2 2,815 1,288 119% Re-estimation of unsecured loan note (93) (280) (67%) Net foreign exchange
Slide 8: Underlying EBITDA
1 Underlying EBITDA US$m 2,176.9 3,500 For personal use only 3,000 2,815.1 478.7 138.8 62.5 2,500 2,000 1,500 1,288.2 30.1 1,000 500 0 Underlying EBITDA- Net volume Impact Selling Price Input Costs Government Royalties Other Underlying EBITDA- FY10 FY11 1. Underlying EBITDA: calculated as operating
Slide 9: Normalised NPAT
1 Normalised NPAT For personal use only US$m 2,000 1,800 1,633.7 65.0 42.7 1,600 503.4 1,400 1,200 1,022.6 1,000 800 600 400 200 0 Statutory NPAT - FY11 Tax Effected Refinancing Costs Tax Effected Re-estimation of Tax Effected Foreign Exchange Normalised NPAT - FY11 Unsecured Notes 1. Normalised NPA
Slide 10: Earnings Profile
Earnings Profile Earnings Profile(1 & 2) Earnings and cash flow per share(3 & 4) For personal use only US$m US Cents 3,000 90 2,500 80 70 2,000 60 1,500 50 40 1,000 30 500 20 10 - - 2009 2010 2011 2009 2010 2011 Underlying EBITDA Normalised NPAT Normalised EPS CFPS 1. Underlying EBITDA: calculated a
Slide 11: Total Shareholder Returns
Total Shareholder Returns • Share value as at June 30 For personal use only • A$4.12 in 2010 • A$6.35 in 2011 • Maiden interim dividend A$0.03 per share • Final dividend – fully franked A$0.04 per share 55.8% 11.7% 2009 2010 2011 (69.1%) TSR Growth 11
Slide 12: Balance Sheet
Balance Sheet For personal use only • Strong Balance sheet • Cash on hand US$2,663m • Undrawn revolver US$600m • Net debt of US$2,209m • Capital, exploration and development expenditure US$1.8 billion • Unsecured debt – provides flexibility • Rapidly improving credit metrics • Credit Ratings • S&P B
Slide 13: Key Financial Metrics
Key Financial Metrics Debt to EBITDA Ratio For personal use only EBITDA Interest Cover Ratio 7.00x 6.00x 6.20x 6.00x 4.58x 5.00x 5.00x 4.00x 4.00x 1.73x 3.27x 3.00x 3.00x 2.32x 1.73x 2.00x 2.00x 1.14x 1.00x 1.00x 1.17x 0.96x 0.95x 0.00x 0.00x 2009 2010 2011 2009 2010 2011 Net debt to underlying EBIT
Slide 14: Capital Investment
Capital Investment For personal use only Capital, exploration and development expenditure (US$m) 2011 2010 Expansion to 155mtpa 456 - Expansion to 55mtpa 394 380 Optimisation 229 59 Sustaining 40 62 Development 200 19 Corporate 29 4 Exploration 113 18 Finance lease 206 - Other (rehab, JV assets) 137
Slide 15: Capital Commitments
Capital Commitments For personal use only T155 Expansion (US$m) 30 June August Cumulative capital spend 446 850 Commitments >2,000 >4,000 Capital, exploration and development spend Indicative (US$m) FY2012 T155 4,700 Optimising 300 Sustaining 520 New development 100 Total 5,620 15
Slide 16: Debt Maturity Profile
Debt Maturity Profile For personal use only Pro Forma Debt Maturity Profile June 2011 (US$m) $2,500 Senior Notes Revolving Credit Facility (undrawn) Call Option (Senior Notes) $2,040 $2,000 $1,500 $1,000 $900 $600 $600 Unsecured Preference $500 Loan Note shares $154 $100 $0 CY2011 CY2012 CY2013 CY20
Slide 17: Cash Flows
Cash Flows For personal use only Cash flow Statement (US$m) 2011 2010 % Cashflows from operations 2,778 1,294 115% Net cash Investing activities (1,481) (564) 163% Net cash from financing 73 (189) (139%) Net increase in cash 1,370 541 153% Increasing cash flows generating cash balances of US$2,663m
Slide 18: Future Funding Plan
Future Funding Plan For personal use only • Existing strong cashflows – provide solid basis • Unsecured and flexible debt structure • Traditional sources of funding • Bonds / Banks / Customers • Alternative funding markets are also available • ECA Financial position and strong operations form basis
Slide 19: Tax
Tax For personal use only US$m FY11 Income Tax Position: Prima facie tax on profit at 30% (401) Currency translation of tax base 81 Other 9 Accounting income tax expense (313) Tax Breakdown: Current tax 91 Deferred tax 222 Key Points: • Fortescue’s maiden corporate tax payment will be made in Decemb
Slide 20: Update Development
For personal use only Update Development 20
Slide 21: Expansion Forging Ahead
Expansion Forging Ahead For personal use only Commitments to date - Scheduled completion end December 2012 Project Budget Committed to Date US$ million US$ million Port 2,400 1,407 Rail 2,200 748 Chichester 1,300 1,057 Solomon 2,500 851 TOTAL 8,400 4,063 21
Slide 22: Forging Ahead – Herb Elliott Port
Forging Ahead – Herb Elliott Port Port well advanced For personal use only Completion date Dec Qtr 2012 • Third berth wharf structures well advanced with ship loader commissioning Dec Qtr 2011 • 2nd reclaimer formation complete with plant delivery in Sept Qtr and commissioning through Dec Qtr 2011 •
Slide 23: Forging Ahead – Chichester Hub
Forging Ahead – Chichester Hub For personal use only Seamless Roll Out of Christmas Creek Duplication • Contract for 2nd Ore Processing Facility awarded and earthworks underway • Contract for ancillary services including duplicated power plant and water infrastructure awarded • Permanent operations
Slide 24: Forging Ahead – Rail
Forging Ahead – Rail For personal use only Mainline duplication underway Solomon spur line this quarter • Three contractors mobilised on duplication works with deployment of 300 + people • Contract award for Solomon spur line made with mobilisation over this quarter • Additional rolling stock (1,750
Slide 25: Forging Ahead – Solomon
Forging Ahead – Solomon Mobilisation underway For personal use only • Focus to date on mobilisation and related accommodation and infrastructure development • Two construction camps operational at 600 people with increase to 1,500 by Nov 2011; 3rd camp by end Sept 2011 • Three rail camps nearing com
Slide 26: The Next 100mtpa to 255mtpa
The Next 100mtpa to 255mtpa Feasibility Studies Continue For personal use only • Recent Board visit to mine, rail and Anketell Port sites to overview staged opportunity • Focus on developing long term strategy with work in progress on approvals for heritage, native title and environmental • State Go
Slide 27: Conclusion
For personal use only Conclusion 27
Slide 28: Real Training for Guaranteed Jobs
Real Training for Guaranteed Jobs For personal use only • Fortescue Vocational Training & Employment Centre established in 2006 • VTEC has engaged over 900 people in training and other support eg driver’s licences • Operates in South Hedland, Roebourne and now Fitzroy Crossing • More than 9.5 per ce
Slide 29: 2011 and Beyond
2011 and Beyond For personal use only • Consolidation to 55mtpa and start of journey to 155mtpa • New Executive / Board structure in place for the next phase • Maiden dividend reflects the Board’s confidence of a balance between rapid growth and conservative yield • Restructured finance structure la
Slide 30: Sign up to alerts online
For personal use only Sign up to alerts online www.fmgl.com.au
Fortescue Metals Group — FY2011 Earnings Presentation on 6ix