New Hope Corporation Limited · ASX:NHC
New Hope — FY2016 Earnings Presentation
64 slides from New Hope's earnings presentation, Sep 20, 2016
Slide 1: Financial Results Release Full Year Ended 31 July 2016
For personal use only INTEGRITY • RESPECT • ACCOUNTABILITY SAFETY • RESILIENCE • SUCCESS Financial Results Release Full Year Ended 31 July 2016 Presented by Robert Millner & Shane Stephan 20 September 2016 newhopegroup.com.au
Slide 2: Overview
For personal use only Overview Robert Millner Chairman 20 September 2016 2
Slide 3: Executive Summary: 2016 Financials
Executive Summary 2016 Financials For personal use only • Challenging past year for coal producers • Ongoing focus on safety and sustainable cost reduction • Invested $901 million* on 1st March 2016 for a 40% interest in the Bengalla JV – 1.5Mt in sales from Bengalla over 5 months – $97.4m in revenu
Slide 4: Executive Summary: 2016 Highlights
Executive Summary 2016 Highlights For personal use only Positive EBITDA of $81.3 million during difficult coal markets Bengalla acquisition completed and running well with positive contribution to Group cashflows QCA decision on below rail provides lower access charge & recovery of revenue P
Slide 5: Executive Summary: Focus next period
Executive Summary Focus next period For personal use only 1. Continuity of safe production 2. Expected record Australian production and sales 3. Obtain New Acland Stage 3 approvals 4. Start Stage 3 construction 5. Optimise Bengalla investment performance – Acquisition at low point in thermal coal cy
Slide 6: Safety Performance
For personal use only Safety Performance Shane Stephan Managing Director 20 September 2016 6
Slide 7: Safety Performance: Principle of safe production
Safety Performance Principle of safe production For personal use only • 3 year Safety trend continues to improve • Overall safety performance indicators declined slightly during 2016 • Continued focus on Safe Production including: – Continued focus on i-Safe/We-Safe through refresher sessions – Esta
Slide 8: Quarterly Total Recordable Injury Frequency Rate
Safety Performance For personal use only Quarterly Total Recordable Injury Frequency Rate (TRIFR ) 35 30 25 20 15 10 5 0 TRIFR Linear (TRIFR) 20 September 2016 8
Slide 9: Production and Sales
For personal use only Production and Sales 20 September 2016 9
Slide 10: Production and Sales Performance
Production and Sales Performance FY 2016 use only Australian Operating Results 8,000 Production Sales 7,000 6,000 Tonnes - 000's 5,000 For personal 4,000 3,000 2,000 1,000 - 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Years ended 31 July 20 September 2016 10
Slide 11: Production and Sales Tonnages
Production and Sales Tonnages FY 2016 For personal use only 12 Months Ended 31 July (million tonnes) 2016 2015 Change ROM Coal Processed^ 12.429 11.140 11.6% Saleable Coal Production^ 6.614 5.747 15.1% Export Sales *^ 6.744 5.681 18.7% Domestic Sales^ 0.186 0.145 28.3% TOTAL SALES * 6.930 5.826 18.9
Slide 12: Financial Overview
For personal use only Financial Overview 20 September 2016 12
Slide 13: Financial Overview
Financial Overview FY 2016 For personal use only 12 Months Ended 31 July (A$m) 2016 2015 Change % Revenue from ordinary activities 531.5 505.8 5.1% Earnings before interest, tax, depreciation, amortisation and 81.3 132.8 (38.8%) non regular items ^ Earnings before interest, tax and non regular items
Slide 14: Financial Overview: per share
Financial Overview FY 2016 For personal use only 12 Months Ended 31 July (cents per share) 2016 2015 Earnings per share before non regular items^ 0.6 6.2 Earnings per share (6.5) (2.6) EBITDA per share before non regular items^ 9.8 16.0 Interim Dividend 2.0 4.0 Final Dividend to be paid in November
Slide 15: Group NPAT Comparison
For personal use only NPAT $m 0 20 40 60 80 20 September 2016 Actuals 31 July 2015 52.5 Bengalla 3.5 Administration and other 9.3 Sales ‐ Price and Foreign 22.6 exchange Group NPAT Comparison Before non regular items 2015 to 2016 Strip ratio and yield variance 18.5 (net cost savings) Bridgeport 3.0
Slide 16: Group EBITDA Comparison
For personal use only EBITDA $m 0 20 40 60 80 100 120 140 160 180 20 September 2016 Actuals 31 July 2015 132.8 Bengalla 21.3 Administration and other 4.7 Sales ‐ Price and Foreign 32.2 Exchange Before non regular items 2015 to 2016 Strip ratio and yield variance 20.0 (net cost savings) Group EBITDA
Slide 17: Significant Items
Significant Items Impact of non-regular items on 2016 financial year results For personal use only • The following events occurred during the period which are of a non regular nature and have resulted in a net reduction to the group’s after tax profit of $58.7 million, and a negative impact on Group
Slide 18: Cost Management
For personal use only Cost Management 20 September 2016 18
Slide 19: Cost management: Operations maintaining cost competitiveness
Cost management Operations maintaining cost competitiveness For personal use only • Costs at Acland operations were Administration Costs per Tonne Sold (operating sites) impacted during the earlier part of $1.60 the year by mine sequencing $1.55 issues and associated lower product yields $1.50 • Fue
Slide 20: Cost management: Trend Analysis
Cost management Trend Analysis For personal use only 5 Year Trend Analysis FOR/FOB costs Operating sites 105% 100% 95% FOR ($/Sales t) FOB 90% ($/Sales t) 85% 80% 2012 2013 2014 2015 2016 22 March 2016
Slide 21: Cost Management – Queensland Competition Authority
Cost Management – Queensland Competition Authority Final Decision For personal use only • On 16th June 2016 QCA refused to approve QR’s 2015 Draft Access Undertaking • QR is required to submit an amended draft access undertaking in line with the QCA’s decision not later than 15th Sept 2016 to the QC
Slide 22: Thermal Coal Markets
For personal use only Thermal Coal Markets 20 September 2016 22
Slide 23: Thermal coal price recovery
Thermal coal price recovery For personal use only Source: Global Coal Pty Ltd USD/tonne • Coal prices have improved ~40% since January 2016 • Forward curve has increased ~35% since April 2016 • Supply side discipline in China has been the major driver. 20 September 2016 23
Slide 24: Seaborne trade of thermal coal
Seaborne trade of thermal coal • Following a strong period of growth in 2010-2012, supply started adjusting downwards in 2015 For personal use only • Pre-2014 growth was driven mainly by Indonesia, and this is where most of the supply contraction is now coming from due to margin pressures • US expor
Slide 25: Seaborne trade of thermal coal
Seaborne trade of thermal coal • The common thread amongst respected analysts, is for increasing seaborne thermal coal demand in the Asia, that over the long term will offset decreasing demand in the Atlantic For personal use only • Growth will be at slower rates than the rapid ramp-up in the early
Slide 26: Seaborne trade of thermal coal
Seaborne trade of thermal coal • Chinese demand for seaborne thermal coal is expected to remain flat, but dependant on Government policy • India is a key growth market – it will absorb Colombian, South African, Indonesian coal For personal use only • India has ambitious growth plans for coal product
Slide 27: HELE Plants work best with high quality coal
HELE Plants work best with high quality coal • What is a high quality coal? For personal use only • Low CO2 intensity • Low levels of SOX & NOX on combustion • Excellent handling characteristics • Low levels of trace elements • Other good combustion characteristics (slagging/fouling) • Taxes on CO2
Slide 28: Coal projects (QLD)
For personal use only Coal projects (QLD) 20 September 2016 28
Slide 29: New Acland Mine
New Acland Mine Stage 2 - current For personal use only • Produced 4.6 million tonne in 2016 • Hampered by mine sequencing issues impacting on yield • 6.6% reduction on overburden removal cost per BCM vs pcp • Negatively impacted by a reduction in yield of 1.8% vs pcp • Numerous site tours continued
Slide 30: New Acland Mine Rehabilitation: Cattle grazing trial
For personal use only Cattle grazing trial on rehabilitation paddock New Acland Mine Rehabilitation 20 September 2016 30
Slide 31: New Acland Mine Rehabilitation – November 2013
For personal use only 7 November 2013 New Acland Mine Rehabilitation 20 September 2016 31
Slide 32: New Acland Mine Rehabilitation – June 2014
For personal use only 29 June 2014 New Acland Mine Rehabilitation 20 September 2016 32
Slide 33: New Acland Mine Rehabilitation – January 2016
For personal use only 23 January 2016 New Acland Mine Rehabilitation 20 September 2016 33
Slide 34: New Acland Stage 3 Approvals Journey and Current Status
New Acland Stage 3 Approvals Journey and Current Status For personal use only 20 September 2016 34
Slide 35: West Moreton Operations: Jeebropilly
West Moreton Operations Jeebropilly For personal use only • Continued cost management strategies kept costs in line with expectations • Investigation into final land form well underway 20 September 2016 35
Slide 36: Rehabilitation: New Oakleigh
Rehabilitation New Oakleigh For personal use only November 2012 September 2013 July 2015 March 2016 20 September 2016 36
Slide 37: New Oakleigh Rehabilitation – March 2016
For personal use only March 2016 New Oakleigh Rehabilitation 20 September 2016 37
Slide 38: Chuwar Status
Chuwar Status For personal use only August 2015 August May2015 2016 20 September 2016 38
Slide 39: North Surat Projects
North Surat Projects For personal use only • The three projects acquired from Cockatoo/Mitsui are Taroom, Collingwood and Woori • In combination with New Hope’s existing Elimatta project, the projects contain total resources of over 1 billion tonnes * • In the short term, New Hope will focus on proj
Slide 40: Bengalla Operations
For personal use only Bengalla Operations 20 September 2016 40
Slide 41: Bengalla Operations
Bengalla Operations For personal use only 20 September 2016 41
Slide 42: Bengalla Operations: Locality Map
Bengalla Operations Locality Map For personal use only 20 September 2016 42
Slide 43: Bengalla Operations: Overview
Bengalla Operations Overview For personal use only • Joint Venture partners from 1st March 2016 – New Hope Group 40%, Wesfarmers Resources 40%, Mitsui Coal 10%, Taipower 10% • Open cut mine, using a single dragline, truck and excavator method • High quality thermal coal for export used for electrici
Slide 44: Bengalla Joint Venture: Period March – July
Bengalla Joint Venture Period 1 March – 31 July For personal use only • Produced 3.5 million tonnes (100% - New Hope equity share 1.4Mt) • Appointed new joint venture CEO • Significant progress in construction & commissioning Dry Creek Diversion project • Strong performance in safety, environmental
Slide 45: Innovation
For personal use only Innovation 20 September 2016 45
Slide 46: Innovation
Innovation • Introduction of Aerial Survey Drones to Qld operations For personal use only – Trialling 4G Internet connection to make drones visible to other aircraft, Oakey Army Base and Amberley Airforce Base • Soon to commence natural gas powered haul truck trials at Acland – First operational tri
Slide 47: Community and Sustainability
For personal use only Community and Sustainability 20 September 2016 47
Slide 48: Social Responsibility: Working together with communities
Social Responsibility Working together with communities For personal use only New Hope Group recognises the importance of adopting a socially responsible approach to business. We do this through: • Managing and mitigating the social impacts our business activities may have on local stakeholders and
Slide 49: Social Responsibility: Highlights
Social Responsibility Highlights For personal use only Some of the highlights from the past reporting period included: • LifeFlight Partnership – delivering valuable medical services to rural areas • In partnership with the Cancer Council Qld, delivering the QUEST program aimed at educating school k
Slide 50: Port Operations
For personal use only Port Operations 20 September 2016 50
Slide 51: Queensland Bulk Handling
Queensland Bulk Handling For personal use only • Exported 7 million tonnes on 90 vessels • Demurrage free port • 4 years Lost Time Injury free milestone 20 September 2016 51
Slide 52: Oil and Gas
For personal use only Oil and Gas 20 September 2016 52
Slide 53: Oil & Gas: Bridgeport Energy Ltd - BEL
Oil & Gas Bridgeport Energy Ltd - BEL For personal use only • Oil production totalled 191,994 barrels • Increase 20.8% on 2015 production • Difficult trading conditions • Managed to limit EBITDA loss to $1.9 million before non-regular • Acquired Moonie oil field from Santos in Dec 2015 • Moonie fiel
Slide 54: Oil and Gas: Key Developments
Oil and Gas Key Developments Cooper Basin For personal use only • Planned acquisition of Kenmore- Bodalla assets from Beach Energy from Nov’16 • BEL production targeting >1,000 bopd from all fields • Inland-13 Birkhead frac program successfully completed at Inland • Utopia on unmanned operation • 3
Slide 55: Oil and Gas: Key progress – Other Basins & Business Development
Oil and Gas Key progress – Other Basins & Business Development For personal use only Surat Basin • Moonie oil field acquired from Santos in Dec 2015. Moonie has contributed ~28,000 barrels to BEL production for the six months to 31 July 2016 • Moonie oil field reservoir modelling in progress – will
Slide 56: Outlook
For personal use only Outlook 20 September 2016 56
Slide 57: Outlook
Outlook • 2017 financial year targeting record Australian production of 8.9 Mt For personal use only • Timing of the 40% Bengalla acquisition in relation to improving coal prices to have a significant impact upon future financial results • Securing the future of Acland is a top management priority •
Slide 58: Appendix
For personal use only Appendix 20 September 2016 58
Slide 59: Reconciliation of Net Profit After Tax Before and After Non Regular Items
RECONCILIATION OF NET PROFIT AFTER TAX BEFORE AND AFTER NON REGULAR ITEMS For personal use only Coal Mining Coal Mining Treasury and 12 Months Ended 31 July (A$000) Oil and Gas Total QLD NSW Investment 2016 Net profit/(loss) after tax (2,051) (32,851) (26,505) 7,727 (53,680) Non regular items after
Slide 60: Reconciliation of Non-IFRS financial information
Reconciliation of Non-IFRS financial information 12 Months Ended 31 July (A$m) For personal use only 2016 2015 Net loss after tax (53.7) (21.8) Income tax benefit (24.0) (1.9) Petroleum resource rent tax expense/(benefit) 3.6 (1.0) Profit before income tax (74.1) (24.7) Non regular items before tax
Slide 61: Reconciliation of Non-IFRS Financial Information: EPS
Reconciliation of Non-IFRS Financial Information For personal use only 12 Months Ended 31 July 2016 2015 Basic earnings per share (cents) (before non regular items) 0.6 6.2 Land access compensation 0.6 ‐ Acquisition costs expensed (4.4) ‐ Impairment of oil producing and exploration assets (2.3) (4.3
Slide 62: Reconciliation of Non-IFRS Financial Information: EBITDA per share
Reconciliation of Non-IFRS Financial Information For personal use only 12 Months Ended 31 July 2016 2015 EBITDA per share (cents) (before non regular items) 9.8 16.0 Land access compensation 0.6 ‐ Acquisition costs expensed (6.3) ‐ Impairment of oil producing and exploration assets (3.4) (6.2) Impai
Slide 63: 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 64: For personal use only
For personal use only INTEGRITY • RESPECT • ACCOUNTABILITY SAFETY • RESILIENCE • SUCCESS newhopegroup.com.au