New Hope Corporation Limited · ASX:NHC
New Hope — Shareholder Meeting (November 2016)
71 slides from New Hope's shareholder meeting presentation, Nov 17, 2016
Slide 1: New Hope Corporation Limited 14th Annual General Meeting
INTEGRITY • RESPECT • ACCOUNTABILITY SAFETY • RESILIENCE • SUCCESS New Hope Corporation Limited 14th Annual General Meeting Presented by Robert Millner Chairman Shane Stephan Managing Director and CEO Andrew Boyd Chief Operating Officer 17 November 2016 newhopegroup.com.au
Slide 2: Overview
Overview Robert Millner Chairman 17 November 2016 2
Slide 3: Executive Summary: 2016 Highlights
Executive Summary 2016 Highlights Positive EBITDA of $81.3 million during difficult coal markets Bengalla acquisition completed and running to expectations with positive contribution to Group cashflows QCA decision on below rail provides 12% lower access charge going forward and recovery of pr
Slide 4: Executive Summary: 2016 Financials
Executive Summary 2016 Financials • Challenging past year for all 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 – $21.3m in EBITDA from Bengalla over 5 months during a period of low coal prices
Slide 5: Executive Summary: Focus 2017 Financial Year
Executive Summary Focus 2017 Financial Year 1. Continuity of safe production 2. Expected record Australian production and sales 3. Obtain New Acland Stage 3 approvals 4. Start Stage 3 construction 5. Optimise Bengalla investment performance 6. Improve Bridgeport’s financial performance Unaudited fir
Slide 6: Safety Performance
Safety Performance Shane Stephan Managing Director 17 November 2016 6
Slide 7: Safety Performance: Principle of safe production
Safety Performance Principle of safe production • 3 year safety trend continues to improve • Overall safety performance indicators declined slightly during 2016 • Continued focus on Safe Production including: – Continued focus on i-Safe/We-Safe through refresher sessions – Established further focus
Slide 8: Quarterly Total Recordable Injury Frequency Rate
Safety Performance Quarterly Total Recordable Injury Frequency Rate (TRIFR ) 35 30 25 20 15 10 5 0 TRIFR Linear (TRIFR) 17 November 2016 8
Slide 9: Production and Sales
Production and Sales 17 November 2016 9
Slide 10: Production and Sales Performance
Production and Sales Performance FY 2016 Australian Operating Results 8,000 Production Sales 7,000 6,000 Tonnes - 000's 5,000 4,000 3,000 2,000 1,000 - 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Years ended 31 July 17 November 2016 10
Slide 11: Production and Sales Tonnages
Production and Sales Tonnages FY 2016 12 Months Ended 31 July (million tonnes) 2016 2015 Change ROM Coal Processed^ 12.429 11.140 11.6% Saleable Coal Production^ 6.614 5.747 15.1% Export Sales*^ 6.744 5.681 18.7% Domestic Sales^ 0.186 0.145 28.3% TOTAL SALES * 6.930 5.826 18.9% ^Includes Bengalla fr
Slide 12: Financial Overview
Financial Overview 17 November 2016 12
Slide 13: Financial Overview
Financial Overview FY 2016 12 Months Ended 31 July (A$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^ 6.4 71.6 (91.1%) Prof
Slide 14: Financial Overview: FY2017 YTD
Financial Overview FY 2017 YTD 3 Months Ended 31 3 Months Ended October 2016 31 October 2015 (A$m) (A$m) 2017 YTD* 2016 YTD Earnings before interest, tax, depreciation and 40.0 26.2 amortisation Profit / (loss) before income tax 15.0 11.5 * Please note all amounts above are unaudited results to 31 O
Slide 15: Financial Overview: Cents per share
Financial Overview FY 2016 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 2016 2.0 2.5 Special D
Slide 16: Group NPAT Comparison
NPAT $m 20 40 60 80 0 17 November 2016 Actuals 31 July 2015 52.5 Bengalla 3.5 Administration and other 9.3 Sales - Price and Foreign 22.6 exchange Before non regular items 2015 to 2016 Group NPAT Comparison Strip ratio and yield variance 18.5 (net cost savings) Bridgeport 3.0 Port Operations 3.8 Int
Slide 17: Group EBITDA Comparison
EBITDA $m 20 40 60 80 0 100 120 140 160 180 17 November 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 Comparison 1.2 Bridgepo
Slide 18: Significant Items
Significant Items Impact of non-regular items on 2016 financial year results • 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 operating cashflow of
Slide 19: Cost Management
Cost Management 17 November 2016 19
Slide 20: Cost Management
Cost Management Operations maintaining cost competitiveness Administration Costs per Tonne Sold • Fuel costs savings of $6.1 million for $1.60 (operating sites) operating sites equating to 24.7% of total fuel costs $1.55 • Administration costs reduced by $0.9 million or 9.5% $1.50 • Marketing and lo
Slide 21: Thermal Coal Markets
Thermal Coal Markets 17 November 2016 21
Slide 22: Energy Policy
17 November 2016 ENERGY POLICY Reliability/Risk of Supply Disruption VAX NEW HOPE GROUP 22
Slide 23: 1.3 Billion People have no access to electricity
1.3 Billion People or 20% of the world’s population have no access to electricity People without access to modern energy services by region SOURCE: World Energy Outlook 2012 17 November 2016 23
Slide 24: Coal use continues to grow, even as share of market declines
Coal use continues to grow, even as share of market declines Global electricity mix Electricity Generation 2040 39,444 TWh Electricity Generation 2014 23,185 TWh SOURCES: IEA WEO2015 New Policies Scenario and 2016 Key Electricity Trends 17 November 2016 24
Slide 25: Asia will drive new coal generation capacity
Asia will drive new coal generation capacity Installed coal generation capacity by country / region SOURCE: World Coal Association Analysis 17 November 2016 25
Slide 26: Coal and gas-fired power investment in Asian markets
Coal and gas-fired power investment in Asian markets (2015) • “Asian markets comprised 85% of global coal powered investment, while North America and Middle East with robust infrastructure favoured gas over coal” IEA World Energy Investment, London 16 Sept 2016 17 November 2016 26
Slide 27: HELE Plants work best with high quality coal
HELE Plants work best with high quality coal • What is a high quality coal? • 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 emissions and flat rat
Slide 28: High Efficiency Low Emission Coal Technology MUST become the Standard
High Efficiency Low Emission Coal Technology MUST become the Standard • Japan and China have been the most active in building Ultra Super-Critical plants • J-Power upgraded their 1967 sub-critical Isogo 38% efficient coal-fired power plant to an USC 43% efficiency plant with SOx, NOx, PM reduced to
Slide 29: HELE Coal Technology in India
HELE Coal Technology in India would meet Twin Energy Objectives Lower Global Emissions and Increased Global Generation Deploying cleaner coal technology promotes energy access, while managing emissions of carbon dioxide SOURCE: World Coal Association 17 November 2016 29
Slide 30: Technology for Carbon Capture and Storage is available NOW
Technology for Carbon Capture and Storage is available NOW! • The world’s first application of CCS at large scale in the power sector became operational in October 2014, at the Boundary Dam power station in Canada (1 Mtpa CO2 capture) • An upgrade of a 1960’s coal unit chosen by Saskpower over gas a
Slide 31: 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 • Growth will be at slower rates than the rapid ramp-up in the early 2000’s • Japan, Korea
Slide 32: 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 • 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 exports have also plummeted
Slide 33: Thermal Coal Price Recovery
Thermal Coal Price Recovery • Coal prices have improved ~100% since January 2016 • Supply side discipline in China has been the major driver • Supply response to price increase out of Australia and Indonesia currently limited 17 November 2016 33
Slide 34: Coal projects (QLD)
Coal projects (QLD) Andrew Boyd Chief Operating Officer 17 November 2016 34
Slide 35: New Acland Mine
New Acland Mine Stage 2 - Current • Produced 4.6 million tonnes 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 – members of the pub
Slide 36: Cattle grazing trial on rehabilitation paddock
Cattle grazing trial on rehabilitation paddock New Acland Mine Rehabilitation 17 November 2016 36
Slide 37: New Acland Stage 3 Approvals Journey and Current Status
New Acland Stage 3 Approvals Journey and Current Status 17 November 2016 37
Slide 38: Social Responsibility
Social Responsibility Some of the highlights: • LifeFlight Partnership – delivering valuable medical services to rural areas • In partnership with the Cancer Council Qld, delivering the QUEST program aimed at educating school kids on healthy lifestyles • Assisting to build the Oakey Hospital Communi
Slide 39: Day of Action Rally
Day of Action Rally Video 17 November 2016 39
Slide 40: West Moreton Operations
West Moreton Operations Jeebropilly • Continued cost management strategies kept costs in line with expectations • Investigation into final land form well underway 17 November 2016 40
Slide 41: Rehabilitation
Rehabilitation New Oakleigh November 2012 September 2013 July 2015 March 2016 17 November 2016 41
Slide 42: New Oakleigh Rehabilitation
March 2016 New Oakleigh Rehabilitation 17 November 2016 42
Slide 43: North Surat Projects
North Surat Projects • 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 project development studies
Slide 44: Bengalla Operations
Bengalla Operations 17 November 2016 44
Slide 45: Bengalla Operations
Bengalla Operations 17 November 2016 45
Slide 46: Bengalla Operations: Locality Map
Bengalla Operations Locality Map 17 November 2016 46
Slide 47: Bengalla Operations Overview
Bengalla Operations Overview • 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 electricity generation • 8.3 mi
Slide 48: Bengalla Joint Venture
Bengalla Joint Venture Period 1 March – 31 July • Produced 3.7 million tonnes (100%) - New Hope equity share 1.5Mt • Appointed new joint venture CEO • Significant progress in construction and commissioning Dry Creek Diversion project • Strong performance in safety, environmental compliance & communi
Slide 49: Port Operations
Port Operations 17 November 2016 49
Slide 50: Queensland Bulk Handling
Queensland Bulk Handling • Exported 7 million tonnes on 90 vessels • Demurrage free port • 4 years Lost Time Injury free milestone 20 September 2016 50
Slide 51: Queensland Bulk Handling: Incident November 2016
Queensland Bulk Handling Incident – 13 November 2016 • Extreme weather event – super cell • Damage to ship loader at coal terminal • Delays to shipping • Financial implications still being assessed 17 November 2016 51
Slide 52: Oil and Gas
Oil and Gas 17 November 2016 52
Slide 53: Oil & Gas: Bridgeport Energy
Oil & Gas Bridgeport Energy Ltd - BEL • Oil production totalled 191,993 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 field has contributed ~28,
Slide 54: Social Responsibility and Outlook
Social Responsibility and Outlook Shane Stephan Managing Director 17 November 2016 54
Slide 55: Social Responsibility
Social Responsibility Working together with communities to materially improve living standards Over the past 10 Years New Hope Corporation has: • Contributed $3.6 million to community organisations and charities • Paid wages and salaries (and related oncosts) of $765 million • Purchased goods and se
Slide 56: 25 Year Club
25 Year Club New Hope is proud of it’s heritage and recognises long serving employees • 25 Year Club established in 2012 • Recognises the company’s longest serving employees • Welcomes five new members this year • 45 members in total, some have worked for New Hope upwards of 30 years 17 November 201
Slide 57: Outlook
Outlook • 2017 financial year targeting record Australian production of 8.9 Mt • Timing of the 40% Bengalla acquisition in relation to improving coal prices to have a significant impact upon future financial results • Securing the future of Acland is a top management priority • Bridgeport continues
Slide 58: Stakeholder and Community Support
Stakeholder and Community Support Thank you • Toowoomba Regional Council • Deveth Drilling • Toowoomba and Surat Basin Enterprise • Coops • Oakey Chamber of Commerce • Toowoomba Chamber of Commerce • AJ Bush • Oakey Beef • Wolff Group • Downs Group Training • LiveWell Australia • Stonestreet Coaches
Slide 59: Proxy Results
Proxy Results Annual General Meeting – 17 November 2016 Resolution 1 - Remuneration Report Proxies in favour of FOR AGAINST OPEN TOTAL ABSTAIN Chairman 648,515,075 881,263 668,257 650,064,595 2,601,624 Other Attendees 4,418 37,000 486,215 527,633 0 Total 648,519,493 918,263 1,154,472 650,592,228 2,6
Slide 60: Proxy Results
Proxy Results Annual General Meeting – 17 November 2016 Resolution 4 - Election of Mr Thomas Millner as Director Proxies in favour of FOR AGAINST OPEN TOTAL ABSTAIN Chairman 562,711,339 90,669,643 696,857 654,077,839 2,407,268 Other Attendees 745,650 8,000 493,715 1,247,365 0 Total 563,456,989 90,67
Slide 61: Appendix
Appendix IFC es—“(‘;(‘SCSCSCSC‘(‘(‘#$NNNSCGV VAX NEW HOPE 17 November 2016 GROUP 61
Slide 62: 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 Treasury and 12 Months Ended 31 July (A$000) Oil and Gas Total QLD NSW Investment 2016 Net profit/(loss) after tax (2,051) (32,851) (26,505) 7,727 (53,680) Non regular items after tax Land access compen
Slide 63: Reconciliation of Non-IFRS Financial Information
Reconciliation of Non-IFRS Financial Information 12 Months Ended 31 July (A$m) 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 80.2 96.3 Profit befor
Slide 64: Reconciliation of Non-IFRS Financial Information
Reconciliation of Non-IFRS Financial Information 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) Impairment of availa
Slide 65: Reconciliation of Non-IFRS Financial Information
Reconciliation of Non-IFRS Financial Information 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) Impairment of available for
Slide 66: Australia's Energy Supply
Australia’s Energy Supply 17 November 2016 66
Slide 67: Total Australian Wind Power
Total Australian Wind Power October 2016 17 November 2016 67
Slide 68: Oil and Gas: Key Developments
Oil and Gas Key Developments Cooper Basin • Acquisition of Kenmore-Bodalla assets from Beach Energy • BEL production targeting >1,000 bopd from all fields • Inland-13 Birkhead frac program successfully completed at Inland • Utopia on unmanned operation • 3 new Cuisinier development wells and a succe
Slide 69: Oil and Gas: Key Progress - Other Basins & Business Development
Oil and Gas Key Progress - Other Basins & Business Development 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 identify production op
Slide 70: 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 71: newhopegroup.com.au
INTEGRITY • RESPECT • ACCOUNTABILITY SAFETY • RESILIENCE • SUCCESS newhopegroup.com.au