New Hope : Half Year Report and Accounts

For personal use only

ASX Appendix 4D - Interim Report

for the half-year ended 31 January 2022

New Hope Corporation Limited	ABN 38 010 653 844
A. STATUTORY RESULTS
Current reporting period	From 1 August 2021 to 31 January 2022
Previous reporting period	From 1 August 2020 to 31 January 2021
B. RESULTS FOR ANNOUNCEMENT TO THE MARKET
Statutory results		2022	2021
		$000	$000	Movement
Revenue from Ordinary Activities		1,025,561	405,527	Up 152.9%
Profit / (Loss) from Ordinary Activities after Tax attributable to Members	330,357	(55,375)	Up 696.6%
Net Profit / (Loss) for the Period attributable to Members	330,357	(55,375)	Up 696.6%

C. BRIEF EXPLANATION OF FIGURES REPORTED

This report is based on the Interim Financial Report of the Company which has been reviewed by the auditor. The Independent Auditor's Review Report, which was unmodified, is included within the Company's Interim Financial Report for the period ended 31 January 2022 which accompanies this Appendix 4D.

For a brief explanation of the figures above, please refer to the Company's Presentation of Half-Year 2022 Results, and the Directors' Report which forms part of the Interim Financial Report.

D. DIVIDENDS - ORDINARY SHARES

	Amount	Franked amount
	Cents per share	Cents per share
2021 Final Dividend	7.0	7.0
2022 Interim Dividend1	17.0	17.0
2022 Special Dividend1	13.0	13.0

• Declared 22 March 2022, payable 4 May 2022. Record date for determining the entitlements to dividends: 19 April 2022.

The Directors have declared an Interim Dividend of 17.0 cents per share and a further Special Dividend of 13.0 cents per share. Both dividends are fully franked based on tax paid at 30 per cent. This dividend is payable on 4 May 2022 to shareholders registered as at 19 April 2022.

E. NET TANGIBLE ASSETS PER SECURITY

	31 January 2022	31 July 2021
	Cents	Cents
Net Tangible Assets per Security	232.8	200.6

F. FOREIGN ENTITIES

Foreign entities have been accounted for in accordance with Australian Accounting Standards.

G. CONTROL GAINED OR LOST OVER ENTITIES DURING THE PERIOD

1. Names of entities where control was gained in the period

There were no entities over which control was gained during the period.

1. Names of entities where control was lost in the period

There were no entities over which control was lost during the period.

New Hope Group Half-year 2022

For personal use only

Directors' Report

for the half-year ended 31 January 2022

The Directors present their report on the consolidated entity consisting of New Hope Corporation Limited ('the Company' or 'New Hope') and its controlled entities ('the Group').

DIRECTORS

The following persons were Directors of New Hope during the year and up to the date of this report:

Mr R.D. Millner	Mr I.M. Williams
Mr T.C. Millner	Ms J.E. McGill AO
Mr T.J. Barlow

PRINCIPAL ACTIVITIES

The principal activities of New Hope consisted of the development and operation of coal mines, port handling and logistics, agriculture and oil and gas development and production.

HIGHLIGHTS

The Company reported an exceptional financial performance underpinned by the combination of cost control disciplines implemented during the 2021 financial year in response to a period of lower prices, and the significant increase in realised coal prices during the reporting period. In addition, the Company responded effectively to weather events and labour shortages relating to COVID-19 to limit the disruption to operations.

• Net profit after tax (NPAT) of $330.4 million (31 January 2021: Loss of $55.4 million);
• Underlying EBITDA1 result of $554.4 million (31 January 2021: $81.2 million);
• The Company produced 4.4Mt of saleable coal (31 January 2021: 4.4Mt);
• Net cash from operating activities $452.7 million, an increase of 625.7 per cent (31 January 2021: $62.4m)
• Balance of debt reported at 31 July 2021, fully repaid from operating funds;
• Interim Dividend of 17.0 cents per share, fully franked, payable 4 May 2022;
• Special Dividend of 13.0 cents per share, fully franked, payable 4 May 2022;
• Land Court of Queensland recommends grant of the New Acland Mine Stage 3 approvals, subject to conditions; and
• NHC closing share price at 31 January 2022, $2.27 representing a 79 per cent increase (31 January 2021: $1.27)

	31 January 2022	31 January 2021
	$000	$000
Statutory Revenue	1,025,561	405,527
Statutory Profit / (Loss) after tax	330,357	(55,375)
Underlying EBITDA1	554,383	81,208
Impairment of Queensland Coal Mining Assets	-	(40,259)
Impairment of Coal Exploration and Evaluation Assets	-	(1,618)
Onerous Contracts	-	(37,276)
New Acland Ramp Down2	-	11,393
Group Redundancies	(5,318)	(10,136)
Liquidation Related Expenses	(2,427)	(1,189)
Strategic Growth and M&A	(650)	-
Debt Waiver Consent Fees	-	(1,110)
Total Non-Regular Items	(8,395)	(80,195)
EBITDA	545,988	1,013
Finance Income and Expenses	(7,767)	(9,393)
Depreciation and Amortisation	(67,283)	(70,956)
Statutory Profit before Tax	470,938	(79,336)
Net Profit before Tax and before Non-Regular Items1	479,333	859

• Underlying Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) and Net Profit before Tax (NPBT) and before Non-Regular Items are non-IFRS measures.

This non-IFRS information has not been reviewed by Deloitte.

• New Acland Ramp Down represents a change in coal stock inventory valuation following the increase in coal prices during the 2021 financial year.

New Hope Group 2022 Interim Financial Report 1

For personal use only

Directors' Report

for the half-year ended 31 January 2022

OPERATING AND FINANCIAL REVIEW

The Company reported a NPBT and before Non-Regular Items of $479.3 million for the half year ended 31 January 2022. This represents a 557 per cent increase from the comparative period (31 January 2021). The primary drivers contributing to the NPBT and before Non-Regular Items result include:

• An increase in average A$ realised prices to A$192.38/t in 2022 from A$77.98/t in 2021. Thermal coal prices continued to increase from July 2021 levels, which materialised into strong revenue generation over the reporting period. The closing realised price received was A$236.66.
• Underlying Free On Board (FOB) costs of A$73.74/t, excluding royalties with the focus on keeping costs low. Cost initiatives implemented during 2021, following the period of lower prices are being embedded into business processes to ensure Company profits are maximised.
• Gross revenue from coal sales increased to $1,005.7 million from $384.9 million against 31 January 2021. This represents a 161 per cent increase based on improved prices. Gross revenue was offset slightly by lower sales volumes as a result of New Acland transitioning into care and maintenance.
• Debt reported at 31 July 2021 of A$310 million, was fully repaid during the reporting period from operating cash flows.

The variance between Underlying EBITDA1 and Cash flow from Operations is primarily driven by the movement in Working Capital as outlined below.

	31 January 2022	31 January 2021
	$000	$000
Underlying EBITDA1	554,383	81,208
Net Interest Paid	(8,957)	(7,750)
Net Income Taxes Paid	(28,100)	(60)
Settlement of Non-Regular Items1,2	(3,077)	(1,974)
Net Foreign Exchange	(1,758)	806
Impairment of Building Assets	-	925
Non-Cash Employee Benefit Expense - Share-Based Payments	(35)	391
Net Working Capital	(59,788)	(11,172)
Cash Flow from Operations	452,668	62,374
	31 January 2022	31 July 2021
	$000		$000
Capital Management
Cash and Cash equivalents	513,083		424,663
Drawn debt under Syndicated Facility	-		(310,000)
Undrawn Syndicated Facility	420,000		140,000
Total Cash and Liquidity	933,083		254,663

• Underlying Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) and Non-Regular Items are a non-IFRS measures. This non-IFRS information has not been

reviewed by Deloitte.

• Settlement of Non-Regular Items are cash Items that impact Cash Flow from Operations.

The Company holds a strong capital position, with a closing Cash and Cash Equivalents balance of $513.1 million, including cash received from the issuance of the Convertible Notes and debt availability of $420.0 million. Total liquidity available to the Company is $933.1 million, made up of cash of $513.1 million and undrawn debt of $420.0 million. This represents an increase of 65 per cent compared to 31 July 2021, made up of cash of $424.7 million and undrawn debt of $140.0 million.

New Hope Group 2022 Interim Financial Report 2

For personal use only

Directors' Report

for the half-year ended 31 January 2022

OPERATING AND FINANCIAL REVIEW (CONTINUED)

Review of Operations

Health, Safety, Environment and Community

During the reporting period, the Company adopted the All-Injury Frequency Rate (AIFR) as a primary safety performance metric as part of initiatives targeting ongoing improvement in safety culture and systems. AIFR represents all types of injury and provides a more holistic indicator of safety incidents and risk. The AIFR for the six months to 31 January 2022 was 33.32.

The Company continues to monitor Total Recordable Injury Frequency Rate (TRIFR) as a secondary indicator of safety. TRIFR has trended downward during the reporting period with the 12-month moving average of 4.76 as at the end of the reporting period remaining well below the open-cut industry average1.

The Company strongly believes that mining and agriculture can exist together and appreciates that as the custodians of large parcels of land, it has an obligation to return land to a productive and sustainable use post mining operations. For the reporting period, the Company recontoured 30 hectares and seeded 20 hectares of mining land at New Acland. As the operation transitioned to care and maintenance, the focus has been to rehabilitate previous mining land. The Company has continued to support local communities through donations and in-kind support.

COVID-19

Despite increasing COVID-19 cases as a result of the Omicron variant, the Company remained vigilant with managing the COVID-19 risks and potential impacts to the business. COVID-19 related disruption to operations have been minimal.

Operations

The Company produced 4.4Mt of saleable coal for the half year ended 31 January 2022, equal to the prior comparative period. The Bengalla Mine experienced limited disruption to production during the half-year despite uncontrollable impacts of weather and COVID-19. New Acland continued the transition to care and maintenance while meeting production expectations.

Strong market demand combined with lower than normal customer stock levels created tightness in the market which transitioned into high prices and remained well above the long-term average. The average sales price achieved during the year was A$192.38/t representing an increase of 146 per cent compared to the 31 July 2021 realised price of A$77.98/t.

The Company, in the short-term, will continue to focus on optimal product split and maximise the production of high energy, low emission products. Our forward sales book will allow us to achieve robust returns in the coming months, with Newcastle Index Pricing now exceeding US$300/t.

Newcastle Index Pricing US$/t
350
300
250
200
150
100
50
0

• New South Wales Surface Coal Mines average.

New Hope Group 2022 Interim Financial Report 3

For personal use only

Directors' Report

for the half-year ended 31 January 2022

OPERATING AND FINANCIAL REVIEW (CONTINUED)

Group Coal Mining Operational Metrics	Metric	31 January 2022	31 January 2021
		$000	$000
Prime overburden	kbcm	21,155	26,053
Run-of-Mine (ROM) coal produced	kt	5,654	6,687
ROM strip ratio - prime	bcm/t	3.7	3.8
Bypass	kt	663	368
Saleable coal produced	kt	4,372	4,433
Washed product yield	%	72	67
Coal sales	kt	5,138	4,815
Average sale price achieved	A$/t	$192.38	$77.98
Unit costs of sales
Bengalla mine site costs	A$/prod	$48.05	$58.38
Acland mine and care and maintenance costs	A$/prod	$80.08	$121.95
Free on Rail (FOR) cost	A$/sold	$34.36	$37.86
FOR to FOB cost (ex. State and Private royalties)	A$/sold	$39.38	$21.50
State and Private royalties	A$/sold	$13.83	$5.20
Underlying FOB cash cost	A$/sold	$87.57	$64.56
Margin	A$/sold	$104.81	$13.42

Bengalla Mine

Bengalla (100 per cent basis) delivered 5.00Mt saleable production, an increase of 0.56Mt from the prior comparative period. Despite challenges from wet weather and labour shortages due to COVID-19, strong dragline performance and high opening stocks resulted in minimal impacts to coal production, up 13 per cent compared to the prior comparative period. Bengalla will shortly take delivery of two additional haul trucks which will increase saleable production during the second half of the financial year.

Site operating costs for Bengalla have reduced against the comparative period, with the site maintaining strong cost control in the face of uncontrollable weather and COVID-19 labour impacts. FOR to FOB costs (excluding State royalties) did increase due to the purchase of trade coal which has allowed Bengalla to maximise revenue by achieving the optimal product mix for customers in a demand driven market.

Bengalla continues to be recognised as a large-scale cost competitive mine, with the FOB cost per tonne positioned within the lowest quartile, compared with other seaborne thermal coal producers worldwide.

New Acland Coal Mine

New Acland produced 0.4Mt of saleable coal for the half year, a decrease of 0.5Mt from the comparative period. Mining was completed in December 2021 and the mine has transitioned into care and maintenance. Rehabilitation work is now the focus for the operation while awaiting decisions from the relevant Queensland Government departments for the granting of New Acland Stage 3 approvals.

New Acland Stage 3 (NAC03) Development

On 17 December 2021, the Land Court of Queensland recommended that the New Acland Mine Stage 3 mining leases and the environmental authority amendment application be granted, subject to conditions.

New Acland has submitted a change request application to the Queensland Coordinator General in accordance with the Land Court of Queensland's recommendation and awaits the Coordinator General's decision. New Acland continues to work closely and productively with the relevant Queensland Government departments to progress the environmental authority amendment application, mining leases and associated water licence required for Stage 3 with a view to securing the grant of the required approvals and obtain certainty to restart operations as soon as possible.

New Hope Group 2022 Interim Financial Report 4