New Hope Corporation Limited · ASX:NHC
New Hope — FY2017 Earnings Presentation
69 slides from New Hope's earnings presentation, Sep 19, 2017
Slide 1: Financial Results Release
INTEGRITY • RESPECT • ACCOUNTABILITY SAFETY • RESILIENCE • SUCCESS Financial Results Release Full Year Ended 31 July 2017 Presented by Robert Millner & Shane Stephan 19 September 2017 newhopegroup.com.au
Slide 2: Overview
Overview Robert Millner Chairman 19 September 2017 2
Slide 3: Executive Summary
Executive Summary 2017 Financials • Good year for coal producers demonstrating cyclical nature of the industry • Ongoing focus on safety and sustainable cost reduction • Invested $901 million* on 1st March 2016 for a 40% interest in the Bengalla JV – 3.4Mt in sales from Bengalla for the first full y
Slide 4: Executive Summary: 2017 Highlights
Executive Summary 2017 Highlights 19 September 2017 4
Slide 5: Financial Summary
Financial Summary 2017 2016 2015 2014 The last four years $000 $000 $000 $000 Total revenue 844,077 531,459 505,781 548,959 Profit before tax (before non regular items) 184,335 6,116 71,578 53,665 Profit after tax (before non regular items) 128,713 5,029 51,749 41,490 Profit/(loss) before tax 202,21
Slide 6: Safety Performance
Safety Performance Shane Stephan Managing Director 19 September 2017 6
Slide 7: Safety Performance
Safety Performance Principle of safe production • 3 year Safety trend continues to improve • Significant safety performance improvement – West Moreton TRIFR of 4 compared with 35 in 2016 – New Acland TRIFR of 3 down from 11 in 2016 – QBH and Exploration TRIFR of 0 – Industry average TRIFR is current
Slide 8: Safety Performance
Safety Performance Total recordable injury frequency rate 19 September 2017 8
Slide 9: Production and Sales
Production and Sales 19 September 2017 9
Slide 10: Production and Sales Performance
Production and Sales Performance FY 2017 Operating Results 10,000 9,000 8,000 Tonnes - 000's 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Production Sales Years ended 31 July 19 September 2017 10
Slide 11: Production and Sales Tonnages
Production and Sales Tonnages FY 2017 12 Months Ended 31 July (million tonnes) 2017 2016 Change ROM Coal Processed^ 14.7 12.4 19% Saleable Coal Production^ 8.6 6.6 30% Export Sales ^ 8.2 6.7 22% Domestic Sales^ 0.4 0.2 100% TOTAL SALES* 8.5 6.9 23% ^ Includes New Hope’s 40% share of Bengalla product
Slide 12: Financial Overview
Financial Overview 19 September 2017 12
Slide 13: Thermal Coal Price Recovery
Thermal Coal Price Recovery Newcastle Weekly Coal Spot Index 200.00 180.00 Bengalla Transaction Completed 160.00 140.00 Bengalla Transaction Announced 120.00 USD/Tonne 100.00 80.00 60.00 40.00 20.00 0.00 5/01/2007 5/01/2008 5/01/2009 5/01/2010 5/01/2011 5/01/2012 5/01/2013 5/01/2014 5/01/2015 5/01/2
Slide 14: Financial Overview
Financial Overview FY 2017 12 Months Ended 31 July (A$m) 2017 2016 Change % Revenue from ordinary activities 844.1 531.5 59% Earnings before interest, tax, depreciation, amortisation and 283.1 81.3 248% non regular items ^ Earnings before interest, tax and non regular items ^ 185.2 6.4 2,794% Profit
Slide 15: Financial Overview
Financial Overview FY 2017 12 Months Ended 31 July (cents per share) 2017 2016 Earnings per share before non regular items^ 15.4 0.6 Earnings per share 16.9 (6.5) EBITDA per share before non regular items^ 34.0 9.8 Interim Dividend 4.0 2.0 Final Dividend to be paid in November 2017 6.0 2.0 ^ Refer t
Slide 16: Segment Result July 2017
Segment Result 31 July 2017 Coal Mining Coal Mining Oil & Gas Total QLD NSW $000 $000 $000 $000 Revenue from external customers 502,825 322,570 18,682 844,077 Earning before interest, tax, depreciation and amortisation 135,249 146,771 1,098 283,118 Interest expense (903) - - (903) Depreciation and a
Slide 17: Group NPAT Comparison
NPAT $m 0 20 40 60 80 100 120 140 160 180 19 September 2017 5.0 Actuals 31 July 2016 Sales revenue ‐ Price and 156.6 Foreign Exchange Sales ‐ Volume Variance 6.1 Strip ratio and major R&M Group NPAT Comparison 18.8 Before non regular items 2016 to 2017 (cost changes) Interest income 10.7 4.0 WICET 5
Slide 18: Group EBITDA Comparison
EBITDA $m 0 40 80 120 160 200 240 280 320 360 19 September 2017 Actuals 31 July 2016 81.3 Sales revenue ‐ Price and 222.9 Foreign Exchange Sales ‐ Volume Variance 25.8 Strip ratio and major R&M 19.7 (cost changes) Before non regular items 2016 to 2017 3.0 Bridgeport Group EBITDA Comparison 5.8 WICET
Slide 19: Group Cashflow
Cashflow $m 0 40 80 120 160 200 240 280 320 360 400 440 19 September 2017 91.2 Balance 31 July 2016 Cash flow from operating activities 313.0 Year ended 31 July 2017 Group Cashflow Tax and interest 28.5 Property, plant and 72.3 equipment and intangibles 12.5 Exploration and evaluation Dividend paid
Slide 20: Non-regular Items
Non-regular Items Impact of non-regular items on 2017 financial year results • The following events occurred during the period which are of a non regular nature and have resulted in a net increase to the group’s after tax profit of $11.9 million, and a positive impact on Group operating cashflow of
Slide 21: Australian Energy Crisis & Thermal Coal Markets
Australian Energy Crisis & Thermal Coal Markets 19 September 2017 21
Slide 22: Australian household electricity prices
Australian household electricity prices Historical trends Source: ABS Cat No. 6401 Consumer Price Index, December 2016. Minerals Council of Australia, Presentation to Coalition Resources and Energy Committee 2017. 19 September 2017 22
Slide 23: Rising electricity prices in Australia
Rising electricity prices in Australia Impact of declining coal share in generation mix Source: Minerals Council of Australia, Presentation to Coalition Resources and Energy Committee 2017. 19 September 2017 23
Slide 24: The energy market playing field is grossly distorted
The energy market playing field is grossly distorted Subsidies per unit of electricity, 2015-16 Source: BAEconomics, Electricity production subsidies in Australia March 2017. Minerals Council of Australia, Presentation to Coalition Resources and Energy Committee 2017. 19 September 2017 24
Slide 25: HELE electricity is the lowest cost 24/7 power
HELE electricity is the lowest cost 24/7 power Electricity generation costs, 2017 Source: Solstice Development Services, Prospects for a HELE USE coal-fired power station development desktop study June 2017. GHD, HELE power station cost and efficiency report June 2017. 19 September 2017 25
Slide 26: Coal generation is the most productive
Coal generation is the most productive… Average output per gigawatt of installed capacity Source: Australian Energy Council, Electricity Gas Australia 2016. Minerals Council of Australia, Presentation to Coalition Resources and Energy Committee 2017. 19 September 2017 26
Slide 27: Asia electricity forecast to 2040
Asia electricity forecast to 2040 By generation source Source: International Energy Agency, World Energy Outlook, 2016. Minerals Council of Australia, Presentation to Coalition Resources and Energy Committee 2017. 19 September 2017 27
Slide 28: Seaborne Trade of Thermal Coal
Seaborne Trade of Thermal Coal • The common thread amongst respected analysts, is for increasing seaborne thermal coal demand in Asia, that will offset decreasing demand in the Atlantic over the long term • Growth will be at slower rates than the rapid ramp-up in the early 2000’s • Japan, Korea and
Slide 29: Coal Projects (QLD)
Coal Projects (QLD) 19 September 2017 29
Slide 30: New Acland Mine
New Acland Mine Stage 2 operations • Produced 4.6 million tonnes in 2017 • Marginal cost increase due to slightly higher strip ratio • Positively impacted by an improved yield of 1% vs pcp • Numerous site tours continued – members of the public can visit Acland • Continued focus on progressive rehab
Slide 31: New Acland Mine: Priorities
New Acland Mine Priorities • Continue safe production • Stage 2 life extension – Improved coal market provides opportunity to assess previously uneconomic resource areas within Stage 2 • Fleet management system (FMS) installed – Assessing improvement opportunities based on data derived from FMS • Op
Slide 32: Acland Pastoral Company
Acland Pastoral Company Status • New management in place • Grazing trial continuing to prove up sustainability • Majority of water and fence investment program completed and work underway to water and fence major portion of rehab ground • In excess of 2000 cows with expectation of approximately 1800
Slide 33: Acland Pastoral
Acland Pastoral Achievements • Successfully transitioned to a breeding operation • Revenue $1.9 million for FY17 • Limited cropping to produce silage and hay for internal use • Completed upgrade of fencing and water distribution network 19 September 2017 33
Slide 34: New Acland Mine Rehabilitation
December 2016 New Acland Mine Rehabilitation 19 September 2017 34
Slide 35: New Acland Stage 3 Support
New Acland Stage 3 Support Online petition link at www.change.org/p/steven-miles-save-our-town-community-region-approve-new-acland-stage-3 19 September 2017 35
Slide 36: New Acland Stage 3
New Acland Stage 3 Approvals journey and current status 19 September 2017 36
Slide 37: West Moreton Operations
West Moreton Operations Jeebropilly • Produced 0.6 million tonnes in 2017 • Improved coal price and strong cost management have enabled an extension of production from Jeebropilly • Jeebropilly North pit commenced operations in early 2017 • Coal production from Jeebropilly is expected to continue un
Slide 38: Rehabilitation
Rehabilitation New Oakleigh November 2012 September 2013 July 2015 March 2017 19 September 2017 38
Slide 39: New Oakleigh Rehabilitation
March 2017 New Oakleigh Rehabilitation 19 September 2017 39
Slide 40: Peabody Burton Asset Acquisition
Peabody Burton Asset Acquisition Acquisition detail • On 6 September 2017 the Lenton Joint Venture (LJV – New Hope 90%, Formosa Plastics Group 10%) agreed terms with Peabody Energy Australia Pty Ltd to acquire certain key assets of the Burton Coal Project for A$14m • Key infrastructure assets to be
Slide 41: Peabody Burton Asset Acquisition
Peabody Burton Asset Acquisition Strategic rationale Strategic Rationale Detail 1. Unlocks potential of New Lenton LJV’s New Lenton Project adjoins ML70109 to the North. Project New Lenton has approvals in place to mine 2Mtpa of raw coal – no allowance for coal processing. New Lenton reserves 35MT,
Slide 42: Peabody Burton Asset Acquisition
Peabody Burton Asset Acquisition Development options • Burton operation was placed on care and maintenance by Peabody in December 2016 – infrastructure is in good condition and can be restarted relatively easily • New Hope has assembled a project team to assess development options and undertake oper
Slide 43: Other Coal Projects
Other Coal Projects • North Surat projects – Contain total resources of over 1 billion tonnes* – Current focus on project development studies including evaluating a range of coal transport alternatives • Colton project – Mining lease secured in May 2017 – Currently undertaking pre-feasibility studie
Slide 44: Bengalla Operations
Bengalla Operations 19 September 2017 44
Slide 45: Bengalla Operations
Bengalla Operations Overview • 8.5 million tonnes produced in 2017 • Strong focus on operational improvement initiatives • EBITDA of $146.8 million • Approximately 572 full time equivalent employees • Strong safety culture and safety record • Bengalla is one of the lowest cost export thermal coal mi
Slide 46: Bengalla Operations: Outlook
Bengalla Operations Outlook • Continuing to investigate production expansion opportunities • Continued focus on improving safety and productivity • Progressing legal proceedings against MACH Energy in the NSW Land and Environment court 19 September 2017 46
Slide 47: Innovation
Innovation 19 September 2017 47
Slide 48: Innovation
Innovation New Acland and West Moreton Aerial Survey Drones Automatic Brake Application System MES Hybrid Truck Multi-Fit Pipe Attachment 19 September 2017 48
Slide 49: Community and Sustainability
Community and Sustainability 19 September 2017 49
Slide 50: Social Responsibility
Social Responsibility Working together with communities New Hope Group recognises the importance of adopting a socially responsible approach to business. We do this through: 19 September 2017 50
Slide 51: Social Responsibility
Social Responsibility Highlights Some of the highlights from the past reporting period included: • LifeFlight Partnership – delivering valuable medical services to rural areas • Partnering with Qld Minerals and Energy Academy to deliver STEM program to Oakey State High School • Partnering with the C
Slide 52: Port Operations
Port Operations 19 September 2017 52
Slide 53: Queensland Bulk Handling
Queensland Bulk Handling • Exported 6.9 million tonnes on 88 vessels • Essentially demurrage free port • 5 years Lost Time Injury free milestone 19 September 2017 53
Slide 54: Queensland Bulk Handling Storm Recovery Project
Queensland Bulk Handling Storm recovery project 19 September 2017 54
Slide 55: QBH – Storm Recovery Project
QBH – Storm Recovery Project The Situation • First 24 hours – QBH disengaged shiploader from vessel following risk assessment – Shiploader and stacker inspections – both damaged – Key contractors visited site for inspection – Broad work scope and schedule formed for works ahead, three key contractor
Slide 56: QBH – Storm Recovery Project
QBH – Storm Recovery Project Response – Day 21 – Reassembled and commissioning 19 September 2017 56
Slide 57: QBH – Storm Recovery Project
QBH – Storm Recovery Project Response – Day 24 – Operational and vessel alongside 19 September 2017 57
Slide 58: Oil and Gas
Oil and Gas 19 September 2017 58
Slide 59: Oil & Gas
Oil & Gas Bridgeport Energy Ltd – BEL • Oil production totalled 308,959 barrels • Increase 60% on 2016 production • Low oil prices continued during the year • EBITDA $1.1 million • Acquired Greater Kenmore Bodalla Area (GKBA) oil fields in October 2016 • GKBA has contributed ~105,000 barrels to 31 J
Slide 60: Oil & Gas: Key developments
Oil & Gas Key developments • Acquisition of Kenmore-Bodalla assets from Beach Energy October 2016 • BEL production targeting >1,000 bopd from all fields having finished the year at 935 bopd • Utopia on unmanned operation • 3 new Cuisinier development wells and a successful exploration well 19 Septem
Slide 61: Outlook
Outlook 19 September 2017 NEW HOPE GROUP 61
Slide 62: Group Outlook
Group Outlook Overview • 2018 financial year targeting similar production to 2017 • Securing the future of Acland is a priority • Bridgeport to focus on improving financial result • Complete Burton acquisition and advance New Lenton project planning • Advance development options for the Colton mine
Slide 63: Appendix
Appendix 19 September 2017 63
Slide 64: Reconciliation of Net Profit After Tax Before and After Non Regular Items
Reconciliation of Net Profit After Tax Before and After Non Regular Items Coal Mining Coal Mining 12 Months Ended 31 July (A$000) Oil and Gas Total QLD NSW 2017 Net profit/(loss) after tax 70,436 74,576 (4,393) 140,619 Non regular items after tax Recovery of prior year below rail access charges 13,9
Slide 65: Reconciliation of Non-IFRS Financial Information
Reconciliation of Non-IFRS Financial Information 12 Months Ended 31 July (A$m) 2017 2016 Net profit/(loss) after tax 140.6 (53.7) Income tax (benefit)/expense 61.6 (24.0) Petroleum resource rent tax expense ‐ 3.6 Profit/(loss) before income tax 202.2 (74.1) Non regular items before tax (17.9) 80.2 P
Slide 66: Reconciliation of Non-IFRS Financial Information
Reconciliation of Non-IFRS Financial Information 12 Months Ended 31 July 2017 2016 Basic earnings per share (cents) (before non regular items) 15.4 0.6 Recovery of prior period below rail access charges 1.7 ‐ Impairment of available for sale investments (0.2) (0.6) Land access compensation ‐ 0.6 Acq
Slide 67: Reconciliation of Non-IFRS Financial Information
Reconciliation of Non-IFRS Financial Information 12 Months Ended 31 July 2017 2016 EBITDA per share (cents) (before non regular items) 34.0 9.8 Recovery of prior period below rail access charge 2.4 ‐ Impairment of available for sale investments (0.2) (0.6) Land access compensation ‐ 0.6 Acquisition
Slide 68: 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 69: newhopegroup.com.au
INTEGRITY • RESPECT • ACCOUNTABILITY SAFETY • RESILIENCE • SUCCESS newhopegroup.com.au