New Hope Corporation Limited · ASX:NHC
New Hope — FY2019 Earnings Presentation
46 slides from New Hope's earnings presentation, Sep 17, 2019
Slide 1: Financial Results Release Full Year Ended 31 July 2019
NEW HOPE GROUP FINANCIAL RESULTS RELEASE FULL YEAR ENDED 31 JULY 2019 New Hope Corporation Limited (ASX code: NHC Presented by Rob Millner, Shane Stephan, Matthew Busch and Andrew Boyd Seen
Slide 2: Results Overview
RESULTS OVERVIEW Robert Millner, Chairman
Slide 3: Full year highlights
Cash generated from ops Profit after income tax (before interest, tax and Total tonnes sold (before non regular items) acquisition costs) $268M $510M 10.9M ▲21% from 2018 ▲3% from 2018 ▲17% from 2018 State Government EBITDA Final dividend Certified Rehabilitated (before non regular items) Land $517M
Slide 4: Financial Overview
ry | \sa LLL TTT SE FINANCIAL OVERVIEW Matthew Busch, Chief Financial Officer
Slide 5: Financial results summary
Revenue from Profit before income tax Profit after income tax operations (before non regular items) (before non regular items) $1,306M $384M $ 268M ▲21% from 2018 ▲3% from 2018 ▲3% from 2018 EBITDA Earnings per share Final dividend (before non regular items) (before non regular items) $517M 9.0 cent
Slide 6: Year Ended 31 July earnings table
Year Ended 31 July (A$ millions) Restated* Variance 2019 2018 EBITDA before non regular items 517.6 465.5 11% Profit before tax and non regulars 384.2 373.2 3% Non regular items before tax (76.3) (159.4) 52% Profit before tax and after non regular items 308.0 213.8 44% Profit after tax before non re
Slide 7: Profit before tax by segment
$m 250.0 239.0 197.0 200.0 182.0 172.0 150.0 100.0 50.0 15.0 - (7.3) (19.0) (21.0) (50.0) Coal mining Coal mining Other Treasury QLD NSW 2019 2018 Please refer to Appendix for reconciliation of Non IFRS Financial Information 7 FINANCIAL RESULTS RELEASE | FULL YEAR ENDED | 31 JULY 2019
Slide 8: Profit before tax bridge
$m 410 82.1 21.5 380 50.2 4.7 29.6 16.5 350 9.1 384.3 373.2 320 290 Actuals QLD Revenue QLD rehabilitation QLD mining NSW Revenue NSW Costs NSW acquisition Treasury and Actuals 31 July 2018 Volume movements other AUD Price R&M / Other 40% other 31 July 2019 Please refer to Appendix for reconciliatio
Slide 9: EBITDA bridge
$m 530 110.9 10.0 500 470 50.2 4.7 28.0 14.5 440 9.0 517.1 410 465.5 380 350 Actuals QLD Revenue QLD rehabilitation QLD mining NSW Revenue NSW Costs NSW acquisition Treasury and Actuals 31 July 2018 Volume movements other AUD Price R&M / Other 40% other 31 July 2019 Please refer to Appendix for reco
Slide 10: Cash movement bridge
A$m 344.8 831.3 1,200 1,000 205.0 509.8 165.4 800 600 400 47.7 275.0 98.3 133.0 200 58.8 0 Actuals Operating Interest, tax, Term Acquisition Funding Bengalla Bengalla Capital Dividends Actuals 31 July 2018 cashflows FX and other deposits Net costs acquisition (40%) acquisition 31 July 2019 costs 10
Slide 11: Cash and debt
• During the year, the Company entered into an amortising Cash and Debt $m secured loan facility for $600 million (amortised to $570 million) with a syndicate of Australian and international banks. The 500 Company had been debt free since 2006 prior to the draw down 400 for the Bengalla acquisition.
Slide 12: Economic contribution to governments, employees and community
$1,500 $1,448.7 $1,218.7 Federal Government $1,200 ($1,519 million) $1,100 State Government $1,000 ($285 million) $946.9 $900 $767.0 Local Government $734.9 ($132 million) $800 $687.2 $642.5 $660.8 Employees $700 $597.9 $553.7 ($492 million) $600 Capital $500 ($933 million) $400 Suppliers and $300 C
Slide 13: Operational Performance
OPERATIONAL PERFORMANCE Andrew Boyd, Chief Operating Officer
Slide 14: Quarterly Total Recordable Injury Frequency Rate
NHG Quarterly Total Recordable Injury Frequency Rate (TRIFR)^ 30 25 20 15 10 5 0 TRIFR Linear (TRIFR) ^ Bengalla included from 1 December 2018 14 FINANCIAL RESULTS RELEASE | FULL YEAR ENDED | 31 JULY 2019
Slide 15: Coal sale volumes and production
New Acland Coal sale volumes 4.1Mt ▼8% from 2018 EXPORT Total tonnes produced 10.6Mt Jeebropilly ▲23% from 2018 0.7Mt 10.9Mt In line with 2018 ▲21% from 2018 DOMESTIC Bengalla (80%*) 6.0Mt 0.3Mt ▲ 5% from 2018 ▲60% from 2018 * New Hope’s equity share increased from 40% to 70% on 1 December 2018 and
Slide 16: Bengalla operations
• New Hope share of saleable coal production 6.0Mt • Profit before income tax and non regular items of $239.1 million • Cash contribution since 1 March 2016 $631.1 million (before tax) • Continued focus on operational efficiency • The Company acquired an additional 40% interest in the Bengalla Joint
Slide 17: Bengalla mine video
Please find a video of the Bengalla mine at: https://www.youtube.com/watch?v=MoMLTk8nXlU&feature=youtube 17 FINANCIAL RESULTS RELEASE | FULL YEAR ENDED | 31 JULY 2019
Slide 18: Bengalla integration
• A major focus during the second half of 2019 has been the integration of Bengalla into the New Hope business • Key activities have been focused on marketing, finance, human resources, procurement and systems with a range of support functions now provided to site from New Hope’s corporate center •
Slide 19: New Acland approvals and production
• Environmental Authority granted March 2019 • Court of Appeal ruled in favour of New Hope in September 2019 • Mining Leases and Associated Water Licence still under consideration • Production and employment levels to reduce on 1 November 2019 due to inaction from Government on approvals, 150 direct
Slide 20: West Moreton Finishing Well
• FY2019 focus has been on Finishing Well and leaving New Hope Group Ipswich land holdings (shown in orange) a positive legacy in the region • Jeebropilly Mine last coal expected before end of calendar 2019 • Rehabilitiation works being undertaken at New Oakleigh East • Continued maintenance of reha
Slide 21: Coal terminal
• Excellent safety record with over 7 years worked without a lost time injury • Strong environmental performance achieved through extensive dust monitoring and water management practices • One of Australia’s most efficient coal terminals • Coal through put in FY2019 was 6.7 million tonnes • Operatin
Slide 22: Rehabilitation and agriculture
• 349ha of progressive rehabilitated land certified by the Queensland State Government • 180ha of rehabilitated mined land handed over to pastoral operations • Pasture management strategy, including use of rehabilitated land for grazing is ongoing • Continued to build size and quality of breeding he
Slide 23: Oil and gas exploration and production
• The drilling of five development wells (three successful and on production) • Production optimisation from well workovers resulting in increased production • Progressing feasibility studies for the enhanced oil recovery project at the Moonie field in the Surat Basin • Successfully de-risking our e
Slide 24: Supporting local communities over five years
Over the last five years… New Hope supporting local its communities Taxes paid to Payments made Supporting Aboriginal education federal to employees government through a partnership with the Graham $335M $261M (Polly) Farmer Foundation Payments for Donations & goods & services sponsorships $2.8B $4.
Slide 25: Projects
PROJECTS Shane Stephan, Managing Director and Chief Executive Officer
Slide 26: Lenton and Burton Mine project
• Combined project including former Burton Mine and New Hope’s neighbouring Lenton Project • 90% joint venture participant • Even split of coking / thermal coal • 412 million tonne resource* • Planned ~1.5 million tonne per annum for approximately 16 years • First coal estimated for calendar 2022 su
Slide 27: Surat Basin thermal coal projects
• 1 billion tonnes of thermal coal resource* • Four project areas - Elimatta, Collingwood, Taroom and Woori • To meet anticipated market demand from mid 2020s • Finalising Pre-Feasibility Study • Elimatta Mining Lease application advancing • Completed resource definition exploration drilling at Taro
Slide 28: Group Outlook
GROUP OUTLOOK Shane Stephan, Managing Director and Chief Executive Officer
Slide 29: Company history and milestones
1952-1980 • New Hope commenced operations in Ipswich, Queensland in 1952 • Commenced the West Moreton mining operations at Jeebropilly Mine in 1982 1980-1990 • Acquired 50% stake in QBH in 1983 • Interest acquired in PT Adaro Indonesia in 1989 • Purchased the Rhonnda Colleries operation in 1995 1990
Slide 30: ROM and saleable coal
Mbcm 70 14.0 65 12.5 60 55 11.0 50 9.5 Rom and Saleable Coal (Mt) 45 8.0 40 35 6.5 30 5.0 25 20 3.5 15 2.0 10 0.5 5 - -1.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Prime Waste Rom Coal Saleable Coal 30 FINANCIAL RESULTS RELEASE | FULL YEAR ENDED | 31 JULY 2019
Slide 31: Diversified revenue base
Group Coal Revenue by Jurisdiction • Diversified revenue base – lowering market risk • Over 70% of revenue derived from stable, developed 4% economies looking for higher quality coals 8% 1% • Growth markets being pursued but not at the expense of 0% quality of revenue 8% • Vietnam and India will bec
Slide 32: Asian demand for coal quality
ASH <15% SULPHUR <0.6% • Traditionally Japan has demanded the highest quality ENERGY >6000 kcal/kg GAR coal in the world due to ash disposal costs, and a drive to clean-up industry in the 1970’s High JAPAN • Taiwan is now seeking lower ash, higher energy coals for environmental reasons 140Mtpa KOREA
Slide 33: Coal power generation efficiency
Generation Efficiency Advanced USC 65% Thermal Efficiency: 46% CO2: 710g/kWh 60% 55% IGFC (Integrated coal Gasification Fuel 50% IGCC (Air-blown) Cell combined cycle) Advanced Turbine 45% (1700 degrees Celsius) Thermal efficiency: 55% CO2: 590g/kWh 40% Integrated coal Gasification Combined Cycle (IG
Slide 34: China thermal coal imports
• Thermal coal has not been competitive against cheap gas into Europe • China’s total thermal coal imports are flat year on year with increased domestic supply and slower growth in demand. Domestic Chinese coal prices held up • Newcastle thermal coal prices appear to have found a bottom over the pas
Slide 35: Thermal coal imports to Vietnam and Pakistan
• Thermal coal imports to Vietnam and Pakistan have been growing strongly • USA, Columbia and South Africa have suffered cuts to thermal coal exports as reliant upon European market • Russia and Australia increasing exports of higher energy coal whilst Indonesia continues to increase supply of lower
Slide 36: CRU Thermal Coal Market Outlook
CRU Thermal Coal Market Outlook - July 2019 36 FINANCIAL RESULTS RELEASE | FULL YEAR ENDED | 31 JULY 2019
Slide 37: Russia and Indonesia seaborne supply
• Russia is a growing competitor in the Seaborne thermal coal market • Indonesian exports are expected to decrease due to increasing domestic demand CRU Thermal Coal Market Outlook - July 2019 37 FINANCIAL RESULTS RELEASE | FULL YEAR ENDED | 31 JULY 2019
Slide 38: CRU Data
CRU Data 38 FINANCIAL RESULTS RELEASE | FULL YEAR ENDED | 31 JULY 2019
Slide 39: Well positioned to meet Asian energy demand
New Hope is well positioned to meet the growing energy demands of its Asian customers Coal operations Projects and development Growing Developing Lenton Joint Obtaining approvals to meet Improving safety performance production levels Venture Burton Mine future demand Bengalla Growth / Efficiency Sec
Slide 40: 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 41: Appendices
APPENDICES
Slide 42: EBITDA and EBIT reconciliation
Year Ended 31 July (A$ millions) *Restated Variance (%) 2019 2018 Profit after tax 210.6 149.5 41% Income tax expense (97.4) (64.3) 51% Profit before income tax 308.0 213.8 44% Non regular items before tax (76.3) (159.4) (52%) Profit before income tax and non regular items 384.3 373.2 3% Interest ex
Slide 43: Non regular items reconciliation
Year Ended 31 July (A$ millions) *Restated 2019 2018 Profit after tax before non regular items 268.5 261.2 Insurance proceeds from shiploader 1.7 - Gain / (loss) on discontinued operation 0.2 (37.8) Onerous contract and related expenses (19.7) (10.5) Acquisition costs expensed (33.4) - Establishment
Slide 44: Segment reconciliation year ended 31 July 2019
(A$ million) Coal Mining QLD Coal Mining NSW Other Treasury Total Year Ended 31 July 2019 Profit / (loss) before tax from continuing operations after non 169.2 191.4 (41.0) (11.7) 307.8 regular items Non regular items before tax: Insurance proceeds from shiploader 2.4 - - - 2.4 Onerous contract and
Slide 45: Segment reconciliation year ended 31 July 2018
Year Ended 31 July 2018 Coal Mining QLD Coal Mining NSW Other Treasury Total Profit / (loss) before tax from continuing operations after non 196.5 181.9 (126.1) 15.3 267.6 regular items Non regular items before tax Impairment of coal exploration and evaluation assets - - (91.5) - (91.5) Reversal of
Slide 46: Earnings per share reconciliation
Year Ended 31 July (cents per share) Restated* 2019 2018 Basic earnings per share (cents) (before non regular items) 32.3 31.5 Insurance proceeds from shiploader 0.2 - Gain / (loss) from discontinued operations - (4.6) Onerous contract and related expenses (2.4) (1.3) Acquisition costs expensed (4.0