Yancoal Australia Ltd. · ASX:YAL
Yancoal Australia — H1 2020 Earnings Presentation
26 slides from Yancoal Australia's earnings presentation, Aug 31, 2020
Slide 1: 2020 First Half Financial Result Presentation ASX Release
YANCOAL AUSTRALIA LTD ADDRESS: Tower 2, 201 Sussex Street Sydney NSW 2000 PHONE: 61 2 8583 5300 FAX: 61 2 8583 5399 WEBSITE: www.yancoal.com.au 31 August 2020 ASX Release: 2020 First Half Financial Result Presentation Yancoal Australia Ltd (the “Company”) is pleased to present its investor presentat
Slide 2: Yancoal Australia Ltd 2020 First Half Financial Result
Yancoal Australia Ltd 2020 First Half Financial Result 31 August 2020
Slide 3: Important Notice and Disclaimer
Important Notice and Disclaimer Acceptance - This presentation is issued by Yancoal Australia Limited ABN 82 111 859 119 (“Yancoal”). By accepting, accessing or reviewing this presentation, you acknowledge and agree to the terms set out in this Important Notice and Disclaimer. Summary of information
Slide 4: 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 Reserv
Slide 5: 1H 2020 – Yancoal responded to challenging conditions
1H 2020 – Yancoal responded to challenging conditions Continued improvement in safety $481 million Operating EBITDA performance & operating margin of 24% 19.0Mt Attributable Saleable Gearing sustained at 29% Production No interim dividend declared for A$60/tonne Operating Cash Cost the period Additi
Slide 6: Safety Performance
Safety Performance 12 month Rolling TRIFR & LTIFR * 12 Month Rolling TRIFR Weighted Industry Benchmark TRIFR 12 Month Rolling LTIFR 12 10 8 6 4 2 0 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Ongoing focus resulted in improved metrics across Yancoal operations • TRIF
Slide 7: Coal Production
Coal Production Attributable Saleable Production by Asset * (Million tonnes) • Yancoal is on track for ~38Mt of attributable Moolarben MTW HVO Yarrabee Stratford Duralie Non-attributable saleable coal production in 2020. 30 26.4 25.4 25.7 25.6 25 24.6 • 19.0Mt of attributable saleable coal (+7% vs 1
Slide 8: Unit costs and achieved price
Unit costs and achieved price Cash Operating costs (per production tonne) (A$/tonne) • A$60/t operating cash costs, -3% YoY. Cash operating costs Royalty Implied operating cash margin • A$94/t average sale price, -24% YoY. 160 • 2020 unit cost target revised to A$60/tonne 140 compared to A$61/tonne
Slide 9: EBITDA and Operating Cashflow
EBITDA and Operating Cashflow EBITDA and Margin Operating Cashflow (A$ Million) (A$ Million) Operating EBITDA EBITDA Margin Operating cash flow 2,000 1,500 1,800 48% 1,600 42% 40% 1,035 1,400 1,000 1,200 1,200 33% 783 765 980 712 1,000 940 24% 800 695 505 500 600 481 400 200 - - 1H 2018 2H 2018 1H 2
Slide 10: Operating EBITDA Drivers
Operating EBITDA Drivers 1H 2019 to 1H 2020 drivers of the change in Operating EBITDA A$ million External factors The lower coal price was the most significant factor 9
Slide 11: Debt and Distributions
Debt and Distributions Annual Net Debt* and Gearing Ratio** (A$ Million) | (%) Net debt, A$ mn Net debt, US$ mn Gearing ratio, % • Debt level and gearing are at manageable and 4,000 42% stable levels. 3,500 • At 30 June the ‘cash and cash equivalents’ 35% 3,000 32% balance was $423 million. 29% 29%
Slide 12: Profit After Tax has non-operating items
Profit After Tax has non-operating items Pre and Post Tax Profit Results (A$ Million) • Non-operating items totalling $576 million Profit before tax Profit after tax 700 bolstered the Reported Profit. 633 593 605 • Non-operating items include an accounting 600 564 539 gain of $653 million on Moolarb
Slide 13: Customer base and product mix
Customer base and product mix • Yancoal’s diverse customer base limits the impact • Yancoal’s thermal coal sales can be an annual from disruption from any one market. fixed price, index price or spot price basis. Typically our low-ash coal is priced off the • The product mix is predominantly thermal
Slide 14: Coal market conditions
Coal market conditions • Yancoal’s average realised thermal coal price, A$88/t, • Yancoal’s average realised met. coal price, A$140/t, in in 1H 2020 was down 21% from 1H 2019 as lower 1H 2020 was down 24% from 1H 2019 as low-grade economic activity affected demand for thermal coal. met. coal prices
Slide 15: Coal market conditions
Coal market conditions • We have recently observed coal price indices • Yancoal’s three largest production assets sit demonstrating some price stability as supply in the first quartile on global, quality curtailment begins in response to market conditions. adjusted thermal coal cost curve. Newcastle
Slide 16: Guidance for 2020
Guidance for 2020 Current operational guidance for 2020: • Attributable saleable coal production of around 38 million tonnes. • Attributable cash cost (excl. government royalties) of around $60/t. • Attributable capital expenditure of less than $300 million. Initial operational guidance for 2020: •
Slide 17: Strategy and Investment case
Strategy and Investment case Low cost, Tier 1 assets underpin the business, especially during cyclical downturns The diverse customer base continues to demonstrate appetite for Yancoal product Asset reinvestment and shareholder returns are a priority Debt optimisation and reduction is an ong
Slide 18: Appendices
Appendices 17
Slide 19: Watagan Flagship Assets – Portfolio Overview
Portfolio Overview A diversified portfolio including world-class coal assets mines and supporting infrastructure Yancoal’s Portfolio Asset Overview (100% basis as at 31 December 2019) Saleable Production Marketable Location Ownership Reserves Resources CY18 CY19 Flagship Assets Moolarben NSW 95% 226
Slide 20: Reserves and Resources
Reserves and Resources As at 31 December 2019, Yancoal had: Recoverable Coal Reserves of 1,780Mt, Marketable Coal Reserves of 1,297Mt, and Coal Resources of 9,720Mt (on 100% basis) • On an attributable basis, Yancoal’s Coal Reserves were 1,211Mt, Marketable Coal Reserves were 880Mt and total Coal Re
Slide 21: Yancoal Commentary for the 1H 2020 Result Presentation
Yancoal Commentary for the 1H 2020 Result Presentation Slide 1 – Cover Sheet This presentation covers aspects of the Company’s performance in six months to 30 June 2020. The Financial Result release contains full detail. Slide 2 & 3 – Important Notice and Disclaimer Please take note of the informati
Slide 22: Commentary: safety and coal production
Yancoal’s Total Recordable Injury Frequency Rates improved during the period; over the six months, it reduced from 7.3 to 6.9. This rate sits below the industry weighted average applicable to our sites. Our Lost Time Injury Frequency rate also declined during the period from 3.5 to 3.1. Slide 6 – Co
Slide 23: Commentary: operations flexibility and EBITDA drivers
Having multiple operations also allows us the flexibility to respond to changes in rail and port capacity and to take advantage of any opportunities that arise to maximise output and sales volumes. Our ability to blend product, to leverage production from low-cost mines and to implement efficiency i
Slide 24: Commentary: Profit After Tax and customer base
Slide 11 – Profit After Tax The reported profit was bolstered by $576million of non-operating items. The most notable non-operating item was a $653 million gain Yancoal was required to book on the Moolarben asset. The acquisition of the additional 10% stake triggered the accounting gain; we recognis
Slide 25: Commentary: coal price cost curve and guidance
The Newcastle coal price has dropped to below the 50th percentile on the cost curve; the last time this occurred was 2016, before there was a subsequent upward swing in the coal price. It is a similar profile for the Indonesian coal price. The implication from this data is that a significant proport
Slide 26: Commentary: expansion projects and investor relations contact
Yancoal has expansion projects at its primary assets to pursue over the coming years. At Moolarben, we have the required approval to increase annual production from 21 million tonnes to 24 million tonnes, and at Mount Thorley Warkworth there is the potential to add 5 million tones per annum of salea