3Q10 results and comments

Transcription

1 INVESTOR & ANALYST UPDATE 11 th November Q10 results and comments 1

2 Disclaimer The views expressed here contain information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. Any forward looking information in this presentation has been prepared on the basis of a number of assumptions which may prove to be incorrect. This presentation should not be relied upon as a recommendation or forecast by Banpu plc. Nothing in this release should be construed as either an offer to sell or a solicitation of an offer to buy or sell shares in any jurisdiction. 2

3 1. Introduction 2. Focus: Centennial update 3. Coal market review 4. Coal operations 5. Power operations 6. Financial summary 3

4 1. Introduction 4

5 Banpu in 3Q 2010 COAL SALES 5.05 Mt Down 0.3 Mt 6% Q-Q Unit: Bt. million Coal Power Total Y-Y Q-Q Revenue 12, ,688-1% -8% Equity income 126 1,128 1,254-25% -45% EBIT 3,431 1,323 4,754-15% -18% Net income 12,128* 1,165 13,293* 249% 250% * Includes gain from divestment of 8.72% shares in ITM 5

6 2. Focus: Centennial update 6

7 Milestones in Banpu s acquisition of Centennial 6 May Banpu acquires 14.9% of Centennial 5 July Banpu s takeover bid for Centennial 20 July Bank of Thailand approval 20 September FIRB approval of Banpu s offer 12 October Banpu closes offer at 98.5% shareholding Nov Apr Development of integration and value creation plan for Centennial May Announcement of integration and value creation plan 15 June Banpu increases stake in Centennial to 19.9% 8 July Centennial Chairman s Letter to shareholders 26 July Bidder s Statement from Banpu Banpu representatives join Centennial Board Chanin Vongkusolkit Rawi Corsiri Somruedee Chaimongkol Philip Gasteen End November Target delisting 7

8 Key Centennial assets WESTERN OPERATIONS Inglenook (exploration area) Neubecks Ivanhoe North (mine under rehabilitation) Open-cut mine Underground mine Project Power station Port Road Rail Note: Centennial equity ownership 100% unless shown in brackets Kilometers Charbon (95%) Airly Angus Place (50%) Springvale Clarence (85%) NORTHERN OPERATIONS Newstan Lochiel (development project) Awaba Mandalong Wollongong Sydney Port Kembla (PKCT) 15 Mtpa (16.66%) Newcastle Port Waratah 113 Mtpa (0%) Myuna Mannering Newcastle (NCIG) 30 Mtpa* (8.79%) *NCIG capacity expansion approved Mandalong Operation 100% 5.5Mt Year to mid-2010 Longwall Newstan Lochiel Project 100% 4.0Mt Target ROM output Longwall Angus Place Operation 50% 3.4Mt Year to mid-2010 Longwall and OP Springvale Operation 100% 2.6Mt Year to mid-2010 Longwall Disclaimer: This document contains information relating to Centennial Coal Company Limited, which has been derived from publicly available sources and has not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of such information. 8

9 Centennial on the cost curve Cash cost (A$/t) 120 AUSTRALIAN COAL COST CURVE : TOTAL CASH COSTS INCLUDES METALLURGICAL AND THERMAL COAL MINES; NOT QUALITY ADJUSTED Centennial* INDICATIVE ONLY Production (Mt) * 70% level of domestic sales Source: Wood Mackenzie

10 Export parity price concept A$/t ILLUSTRATIVE AND CONCEPTUAL ONLY Inland transportation Port Washing Royalty? Potential additional discount reflecting export risks and additional infrastructure, etc. Thermal export price Tangible export related costs Maximum export parity price Intangible factors Domestic selling price* * Note: for higher tonnage Source: Morgan Stanley Research 16 June 2010 on Centennial Coal 10

11 Note on accounting consolidation Illustrative only Total amount paid for Centennial Goodwill and mining rights? Net book value of Centennial Earnings consolidation of Centennial commences 4Q 2010 Goodwill will be re-evaluated and subject to impairment test Goodwill and mining rights are evaluated by a certified external appraiser Mining rights will be amortized through P&L Source: TFRS 3 Business Combinations 11

12 Note on the Mineral Resource Rent Tax (MRRT) MRRT concept Indicative timeline Target effective date: 1 July % tax rate Applies to iron ore and coal mining only No MRRT liability for MRRT assessable profits < A$50m Unutilized losses can carry forward at the long term government bond rate + 7% 25% extraction allowance to further shield tax the important know-how and capital that mining companies bring to mineral extraction Projects get full credit for state royalties Unused royalty credits will be uplifted at the long term government bond rate + 7% July 2010 October 2010 Announcement of the improved resource taxation arrangements and its key elements, a new MRRT and the extension of PRRT Establishment of the Policy Transition Group to oversee the development of the detailed design parameters and implementation June 2011 The Government s proposed public release of the Exposure Draft Legislation for public comment 2H 2011 Proposed introduction of legislation into Parliament Early 2012 The anticipated passage of the legislation Source: MRRT Fact Sheet, 12

13 3. Coal market review 13

14 Long term coal market quality trends Indonesia s share of thermal coal trade Global trade 2005 Others 75% Indonesia 25% Global trade 2010 Others 60% Indonesia* 40% * 55% of Asia-Pacific trade Supply demand balance Possible trend of tight supply and historically high prices Uncertainties towards 2013/ 2014 Higher proportion of lower sulphur, lower ash and lower CV likely Standard qualities: Higher CV: Mid CV: Low CV: Implications? Increasingly scarce Growing but stable Excess Higher impurity products become more competitive i.e. high sulphur and high ash, if higher CV Banpu may investigate reinventing product mixes/ logistics approaches 14

15 Banpu average selling prices in 3Q10 Thermal coal benchmark prices US$ / Ton Coal price benchmarks FOB Richards Bay 6000 kcal/kg, NAR FOB Newcastle 6300 kcal/kg, GAR FOB Kalimantan 5900 kcal/kg, GAR FOB Kalimantan 5000 kcal/kg, GAR Newcastle, RB, Indonesian Coal prices surge upward Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Upswing due largely to : Supply shortfall due rain in Colombia, Australia and particularly Indonesia Expectation of seasonal Northern winter demand Some improved general sentiment Indonesian indices drag behind Australian and S African due to: Being forward estimates without recourse rather than actual deals and they include traders Less tight supply/demand balance (usually) Heavy rain capped supply: cushioned Indonesian downside mid-year 15

16 Thermal Thermal coal market coal market analysis analysis 4Q Q 2010 update update ATLANTIC Bottoming out? Slow recovery encouraging USA Thermal supply remains very low, some LCV to Korea RUSSIA Minor recovery due weakened Ruble but rising domestic demand and rail limits CHINA Faster import pace reverses until 4Q. Imports much higher than Exports drop EAST ASIA Japan minor recovery, but steel mills strong so far; Korea &Taiwan strong recovery REST OF ASIA Continued growth COLOMBIA Diverts coal to Asia, +/- 10mt already sold but heavy rains depress output. Signs of growing regional demand INDONESIA More rain through 4Q depresses output SOUTH AFRICA Continuing problems in rail eases short term INDIA High demand has recovered as monsoon ended Aug/Sep, temporary logistic dislocation AUSTRALIA Floods hamper Queensland output = Demand = Demand/Supply = Supply 16

17 China thermal China coal market thermal review coal market review China domestic coal prices China thermal coal imports and exports Datong super mixed coal (6,000 kcal/kg) Shanxi super mixed coal (5,500 kcal/kg) Common mixed coal (4,000 kcal/kg) End Sep 8 Nov (RMB) (RMB) Datong Shanxi Common Million Mt RMB 1,200 1, Net import 40 Mt 18 Net import c. 80 Mt Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10e Outlook Import Export Source: 8 November 2010 Sources: Energy Publishing Pty Ltd and Banpu sources 17

18 4. Coal operations 18

19 4. Coal operations (a) Indonesia coal (b) China coal 19

20 Indonesian coal operations in 3Q10 ITM OPERATIONS & PROJECTS (2010 saleable output targets) Central Kalimantan POWER COAL Palangkaraya TRUBAINDO 5.5 Mt Operation Project Operation Project INDOMINCO 14.7 Mt Bunyut Port BHARINTO (Commissioning 1n 1H2011) South Kalimantan Banjarmasin JORONG 0.9 Mt Jorong Port East Kalimantan Samarinda Balikpapan Bontang Coal Terminal Captive coalfired power project KITADIN- EMBALUT 1.4 Mt Coal output : 3Q10 : 5.2 Mt 2010e : approx. 23 Mt Project updates: Bontang Coal Terminal: Running at upgraded loading capacity of 18.5 Mtpa Indominco Underground: study complete; high quality does not match blending plan; technical knowledge will be used at other potential sites Bharinto: Delayed due to permitting issues, now resolved; first output now expected mid 2011 Tandung Mayang : First output by 2H11 20

21 Indonesian quarterly output and SR analysis STRIP RATIO (bcm/t) STRIP RATIO (bcm/t) STRIP RATIO (bcm/t) STRIP RATIO (bcm/t) W Block E Block Q09 1Q10 2Q10 3Q10 4Q09 1Q10 2Q10 3Q10 4Q09 1Q10 2Q10 3Q10 4Q09 1Q10 2Q10 3Q10 4.1Mt 1.0 COAL OUTPUT (Mt) 3.9Mt 3.6Mt 3.6Mt 3.5Mt COAL OUTPUT (Mt) COAL OUTPUT (Mt) COAL OUTPUT (Mt) Mt 1.6Mt 1.1Mt 1.3Mt 1.5Mt 0.8Mt 0.4Mt 0.0Mt 0.1Mt 0.4Mt 0.4Mt 0.4Mt 0.3Mt 0.3Mt 0.4Mt 4Q09 1Q10 2Q10 3Q10 4Q10e Indominco-Bontang 4Q09 1Q10 2Q10 3Q10 4Q10e Trubaindo 4Q09 1Q10 2Q10 3Q10 4Q10e Jorong 4Q09 1Q10 2Q10 3Q10 4Q10e Kitadin - Embalut CV: kcal/kg CV: kcal/kg CV: 5300 kcal/kg CV: 5750 kcal/kg E Block proportion will keep increasing from 2010 Lower output than plan due to unusual rainfall Operation resumed after obtaining forestry permit Stable output performance East block West block Note: output figures are saleable coal 21

22 Banpu average selling prices in 3Q10 Banpu average selling prices in 3Q10 USD per tonne Quarterly BJI Quarterly ASP Monthly BJI Monthly ASP Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 ASP 3Q10 vs. 2Q10 up 1% Historical lags continue, hence curves crossing Product mixes with some more lower CV impacted in 2010 Both curves expected to turn upwards through 4Q ASP 3Q10 $78.18t (+ 1% QoQ) BJI* Nov 4, 2010 $

23 Indicative 2010 coal sales Coal Coal sales sales contract contract and and pricing pricing status status Comment Contract Status 100% Contracted Index 5% Fully Sold Price Status 95% Fixed Above plan shipments no longer possible due to rain impact depressing production. Of 4Q 2010 tonnes, about 15% is index linked. Historically high index linked share of sales in 2010 TARGET SALES 2010: APPROX. 23 Mt ASP up 5% on

24 Coal sales by geographic destination (ITM and Thai) Coal sales by geographic destination Coal sales 9M10 (total 16.56Mt) 1.7Mt CHINA 2.6Mt 3.6Mt 2010 HONG KONG 1.3 Mt 1.0Mt 0.0Mt 2010 S.KOREA Mt 1.2Mt 4.0Mt JAPAN 4.2Mt 3.5Mt 2010 ITALY M10 0.6Mt M M Mt 1.4Mt 1.2Mt INDIA 2.2Mt M M10 OTHERS* 0.2Mt 0.9Mt 1.9Mt TAIWAN 2.6Mt 1.8Mt M10 1.4Mt 1.0Mt 0.8Mt THAILAND 2010 INDONESIA 2010 PHILIPPINES Mt M10 *Includes small, nonregular purchasers 2.1Mt 1.2Mt 1.3Mt 1.3Mt 0.6Mt 1.6Mt 1.8Mt 1.0Mt M10 Mid-to-High CV Low-to-Mid CV 2010 trend expectation M M M10 24

25 4. Coal operations (a) Indonesia coal (b) China coal 25

26 China coal operations in 3Q10 BANPU CHINA 2010 COAL PRODUCTION TARGETS* PRICE vs. COST (RMB/ t) PRICE vs. COST (RMB/ t) AVERAGE COAL PRICE AVERAGE COAL PRICE Gaohe (45%), Shanxi 6 Mt BEIJING Q09 2Q10 3Q10 PRODUCTION COST COAL OUTPUT (Mt ROM) Q09 2Q10 3Q10 PRODUCTION COST COAL OUTPUT (Mt ROM) Daning (56%), Shanxi 4 Mt 0.94Mt 1.33Mt 0.53Mt 0.8Mt 0.37Mt 0.42Mt 0.36Mt 0.36Mt Hebi (40%), Henan 1.5 Mt 3Q09 2Q10 3Q10 4Q10e Daning 3Q09 2Q10 3Q10 4Q10e Hebi Zhong Tai Mining CV: Kcal/kg CV: Kcal/kg POWER COAL Operation Project Operation Project * ROM production Banpu 56% Daning has shut down mine operation for 12 weeks from June 12, due to delay of operating license renewal Banpu 40% New coal washery plant has been completed in early September with designed capacity of 1.5 Mt per year 26

27 China coal: Gaohe 6.0 Mtpa underground coal mine located in Shanxi Province, PRC utilizing Longwall mining technique Joint venture between Banpu (AACI) (45%) and Lu an Mining Group (55%) Joint venture established in 2005 Obtained mining license in 2010 All key equipment and facilities (mine monitoring, production, hoisting, coal preparation) are international standard Trial production in 2011 Full production in

28 5. Power operations 28

29 Power Thailand : BLCP in 3Q10 Q-Q: -5% Y-Y: -19% Bt. Million (100% basis) Q-Q: -2% Y-Y: -8% 3,031 2,587 2,456 Q-Q: -1% 2,786 2,620 2,558 5,609 Y-Y: -10% 3Q09 2Q10 3Q10 Availability Payment (AP) 3Q09 2Q10 3Q10 Operating cost Q-Q: +3% Y-Y: - 2% 2,358 2,307 2,250 5,088 5,026 Q-Q: 0% Y-Y: -16% 2,328 1,965 1,960 3Q09 2Q10 3Q10 Energy Payment (EP) 96% 96% 96% 3Q09 2Q10 3Q10 2,822 EBIT Q-Q: 0% Y-Y: -16% 2,469 2,468 EQUITY INCOME 3Q10 Bt 1,128 M* * Based on Banpu s 50% interest; including FX gain Bt 311 million 3Q09 2Q10 3Q10 3Q09 2Q10 3Q10 3Q09 2Q103Q10 Dispatch (%) Total revenue EBITDA 29

30 Power Thailand : Hongsa project 1,800 MW mine-mouth lignitefired power plant project COD targeted at 2015 Partnership between Banpu (40%), Ratch (40%) and Lao government (20%) EPC agreed HONGSA POWER PLANT ARTIST S IMPRESSION PPA execution: April 2010 Loan first drawdown: October 2010

31 Power China in 3Q10 BPIC Sales* (USD m) EBITDA (USD m) Utilization (hours) Power tariff (RMB/kwh) Coal price** (RMB/t) Luannan Hebei Province Power 100MW; Steam 128tph (Banpu 100% ) Lower sales due to lower power tariff, energy efficiency policy and high coal price impact on EBITDA ,247 1, Zhengding Hebei Province Power 48MW; Steam 180tph (100%) EBITDA lower than Q2 due to high coal price and lower steam revenue due to tightening energy efficiency policy ,524 1,345 1, Zouping Shandong Province Power 100MW; Steam 430tph (70%) Enhancing plant operation and high industrial steam sold helps to maintain EBITDA ,791 1,911 1, Note: 100% basis, * Unaudited figures, ** Including transportation 31

32 6. Financial summary 32

33 Sales revenues Units: Bt. million 14,840 (1,124) 13, (41) (54) (1) +7 (111) 13,688-8% Q on Q -1% Y on Y Higher sale volume by 5% QoQ Lower sale volume by 9% QoQ 3Q09 2Q10 Indominco Trubaindo Jorong Kitadin -Embalut Coal Thailand Others Power China 3Q10 33

34 Average gross margin for coal in 3Q10: 47% Bt 8,017 M Bt 9,486 M Bt 8,362 M Coal sales (Bt millions) Bt 3,533 M Bt 3,461 M Bt 3,361 M Gross margin (%) 50% 47% 45% 57% 51% 52% Bt 1,146 M Bt 107 M 43% 43% Bt 65 M 18% Bt 683M Bt 629 M Bt 173M 61% 57% 55% Bt 17M Bt 17M 12% 12% 3Q09 2Q10 3Q10 3Q09 2Q10 3Q10 3Q09 2Q10 3Q10 3Q09 2Q10 3Q10 2Q10 3Q10 Indominco Trubaindo Jorong Kitadin Thai mines 34

35 Consolidated EBITDA Units: Bt. million 6,088 6,300 (594) (1,362) (31) ,226-17% Q on Q -14% Y on Y Power Bt 1,423m Lower equity income from Daning Higher equity income from BLCP- due to FX gain Dividend income +52% Q on Q -4% Y on Y Coal Bt 3,803m -29% Q on Q -17% Y on Y 3Q09 2Q10 Gross profit SG&A Royalty Equity Other Income Income China Coal Other expenses D&A coal EBITDA Power 3Q10 35

36 Consolidated net profit Units: Bt. million ,293 3,809 3,795 (1,530) +10, % Q on Q +249% Y on Y +330 (101) +16 Power Bt 1,165m Gain from divestment of 8.72% shares in ITM Higher equity income from BLCP- due to FX gain Dividend income +72% Q on Q -6% Y on Y Coal Bt 12,128m +289% Q on Q +371% Y on Y 3Q09 2Q10 EBIT Financial charges Tax Minority Nonrecurring FX Net Profit Power 3Q10 36

37 Capital expenditure plans (total c.$466 M) INDICATIVE ONLY Units: USD million Hebi $ 5 M Gaohe $ 17 M CHINA: $22 M Hong Sa $ 255 M LAOS: $255 M* *Note: $255M is for only and is part of total estimated Banpu capex on Hongsa project of approx. $400 M Embalut $ 11 M Trubaindo UG $ 11 M Bharinto $ 38 M Tandung Mayang $ 8 M Indominco UG $ 11 M Others $14 M E Block Conveyor $ 96 M INDONESIA: $189 M The capital expenditure figures shown above do not include estimates for maintenance or sustaining capital expenditure. 37

38 Balance sheet Net D/E (Times) Net gearing (%) Debt structure 0.66 Fixed 35% % 40% % % % % Floating 65% Q10 As end of September 2010 * Net gearing = ND / (ND+E) 91 38

39 Questions & Answers 39

40 Operating profit Units: Bt. million 3Q10 2Q10 3Q09 QoQ% YoY% Total sales revenues* Sales revenues Coal 12,607 13,655 12,801-8% -2% Sales revenues Power (BIC) 970 1, % -3% Cost of sales (7,550) 13,688 14,840 13,881-8% -1% (8,054) (7,057) Gross profit* 6,137 6,786 6,824-10% -10% Gross profit - Coal 5,985 6,612 6,555-9% -9% Gross profit Power (BIC) % -61% GPM 45% GPM - Coal 47% GPM Power (BIC) 10% Note: * Including other business 46% 48% 14% 49% 51% 15% 40

41 Operating profit Units: Bt. million 3Q10 2Q10 3Q09 QoQ% YoY% Gross profit 6,137 6,786 6,824-10% -10% GPM 45% 46% 49% SG&A (1,534) (1,622) (1,151) Royalty (1,542) (1,671) (1,580) Income from associates 1,254 2,298 1,676 Dividend income Coal & Power Other income Other expenses - Operations (110) (248) (498) EBIT 4,754 5,806 5,582-18% -15% EBIT - Coal 3,431 4,961 4,166-31% -18% EBIT - Power 1, ,416 57% -7% EBITDA 5,226 6,300 6,088-17% -14% EBITDA - Coal 3,803 5,364 4,603-29% -17% EBITDA - Power 1, ,485 52% -4% 41

42 Net profit Units: Bt. million 3Q10 2Q10 3Q09 QoQ% YoY% EBIT Interest expenses (383) Financial expenses (77) Income tax (core business) (827) Minorities (332) 4,754 5,806 5,582-18% -15% (308) (44) (857) (661) (312) (48) (1,214) (986) Net profit before extra items 3,136 3,935 3,021-20% 4% Non-recurring items* 9,926 (159) 970 Net profit before FX 13,062 3,776 3, % 227% FX translations (183) Net profit 13,293 3,795 3, % 249% EPS (Bt/share) Note: * Income from non-core assets and other non-operating expenses

43 Banpu s resources & reserves statement (100% basis) Mine operation and project Mine operation Interest (%) Measured Resources Indicated Resources As at 30 September 2010 As at 30 June 2010 Total Resources Proved Reserves Probable Reserves Total Reserves Total Resources Total Reserves Jorong Indominco Kitadin Trubaindo Lampang Payao Daning Hebi* Project Bharinto Gaohe Total 1, , , Note: figures have been estimated in accordance to JORC Code unless otherwise stated * Figures have been estimated in accordance to Chinese reporting standard 43

44 Reserves by operation and project (100% basis) Unit: Mt CHINA Resources: 624 Reserves: 308 Daning Hebi Gaohe Proved reserves Probable reserves Resources (Measured & Indicated) THAILAND Lampang 1 Resources: 1 Payaow 0 0 Indominco INDONESIA Resources: 1,634 Reserves: 278 Trubaindo Jorong Kitadin Bharinto As at 30 September

45 Banpu coal resources & reserves statement INDICATED 575 Mt 346 Mt 100% basis As at 30 September 2010 Equity tonnage Notes: Reporting generally in accordance with JORC Code plus some internal estimates. Major changes audited by independent experts. * Only Measured and Indicated Coal Resources MEASURED 1,685 Mt 1,014 Mt 154 Mt 173 Mt PROBABLE 281 Mt PROVED 305 Mt RESOURCES* 2,260 Mt (100% basis) RESERVES 586 Mt (100% basis) 45

46 Coal reserves by operation and project (equity basis) Unit: Mt CHINA Resources: 299 Reserves: 147 Daning Hebi Gaohe Proved reserves Probable reserves Resources (Measured & Indicated) THAILAND Lampang Payaow 1 Indominco INDONESIA Resources: 1,060 Trubaindo Reserves: 180 Jorong 5 95 Kitadin Bharinto As at 30 September

47 Centennial reserves and resources Mine/Project Measured Resource Indicated Resource Inferred Resource Total Resource (Mt) Proved Reserve Probable Reserve Total Coal Reserves (Mt) Marketable Reserves (Mt) Northern operations Awaba Mandalong Mannering Myuna Newstan Newstan Lochiel Western operations Airly Angus Place Springvale Charbon Clarence Ivanhoe Inglenook Neubecks Total , , Disclaimer: This document contains information relating to Centennial Coal Company Limited, which has been derived from publicly available sources and has not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of such information. 47