FY 2007 results and comments

Transcription

1 FY 2007 results and comments INVESTOR & ANALYST UPDATE 29 February

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: mine planning process 3. Operational review 4. Commercial review 5. Financial review 3

4 1. Introduction Chanin Vongkusolkit Chief Executive Officer 4

5 Banpu in 2007: big picture 1 Indonesia 18mt coal sale Bontang port expansion Impact of force majeure and rains on output ITM listing* Stock exchange: Ticker: Date: Shares offered: Type: Offering % (post): Offer price: Banpu % (post): Lead underwriter: Indo. Stock Exch. ITMG 18 th Dec ,985,000 Primary 100% 20% Rp 14,000 /sh % UBS *Indo Tambangraya Megah Tbk. POWER COAL LP2/ CMMC Ratch 1 Operation Project Operation Project Gaohe Daning HongSa Zhengding BLCP Hebi 3 Bharinto Luannan Trubaindo Zouping Kitadin Jorong 2 Indominco 2 China Daning (3mt) and Hebi (1.4mt) expansions in line expectation BPIC expansion under way 3 Thailand LP2/CMMC: winding down BLCP: achieved targets HongSa: EPC signed (CMEC/Harbin) Tariff MOU (Bt2.05/kWh 25yrs) Shareholder structure agreed (Ratch 40%, Lao 20%) 5

6 Banpu in 2007: the figures Unit: Bt. million Coal Power Total Y-Y Revenue 28,577 3,865 32,442-3% Equity income 427 4,077 4, % EBIT 3,903 5,073 8,976 49% Net income 2,405 4,248 6,654 84% Coal sales 19.3 MT Down 2.4 MT 11% Y-Y 6

7 Global economic and coal market context: year ahead N. America Europe E USA & AMERICAS S. America Mt E Middle East EUROPE & MEDITERANEAN RUSSIA & E. EUROPE JAPAN 79 Mt S.KOREA CHINA Mt 45 INDIA TAIWAN SE ASIA Japan E E 65 Mt COLUMBIA E Source: IMF Data Mapper, McCloskey 2007 estimate Key: 67 Mt S.AFRICA GDP % growth Thermal coal exports (Mt) Thermal coal imports (Mt) 203 Mt INDONESIA 111 Mt AUSTRALIA E Asia Pacific (including Japan) 7

8 Indonesia: year ahead ITM OPERATIONS & PROJECTS Central Kalimantan Palangkaraya Trubaindo East Kalimantan Bunyut Port Bharinto South Kalimantan Indominco Samarinda Balikpapan Bontang port CFP project Kitadin Production: target 19.5mt coal Debottleneck: address contractor and equipment capacity constraints Reserves: expansion: feasibility studies, adjustment of SRs, exploration Costs: continue rationalisation schemes: Bontang CFP, washing plants, barge fleet management, flexible loading schedule to reduce demurrage charges POWER Operation Project Banjarmasin Jorong Acquisitions: Continue to evaluate new investment and acquisition opportunities COAL Operation Project Jorong Port 8

9 China: year ahead BANPU CHINA OPERATIONS & PROJECTS Daning: (56% AACI) completion of 15km rail spur to connect to provincial railway; 4mt target for 2008 POWER COAL ZHENGDING 48MW Shandong GAOHE (10%) 6mtpa (COD 2011) Shanxi Operation Project Operation Project DANING (12%) 4mtpa Shanxi HEBI (40%) 1.5mtpa Henan LUANNAN 100MW Hebei ZOUPING (70%) 100MW Shandong Ownership 100% unless indicated otherwise Gaohe: (45% AACI) new 5-6mtpa* mine project selling to Chinese utilities and steel mills; first output 2010 full output by 2013; ordering equipment; degas tests mid-year; licensing AACI: Banpu position under review Hebi: 1.5mt target 2008; further output expansion potential under study Power: tariff adjustment vs coal cost increases likely to impact performance *Production potential will be determined by de-gas tests mid-year; coal is semi-anthracite; 157mt reserves 9

10 Thailand: year ahead BANPU THAILAND OPERATIONS & PROJECTS CMMC Payao open-pit LP-2 Lampang open-pit Hong Sa (40%) Laos 1,800MW lignite-fired Banpu Power: develop and strengthen O&M expertise BLCP: 1.4GW operation (on-stream 2006/7); aim for smooth second year of operation Ratch (15%) 3,995MW gas-fired BLCP (50%) 1,434MW coal-fired Hong Sa: 1.8GW project ($2.8bn) COD by 2013; target PPA by mid-08; financial closure by end-08 POWER COAL Operation Project Operation Project LP-2, CMMC: last output in 2008 (0.5mt); closure cost planning Ownership 100% unless indicated otherwise 10

11 Banpu corporate and financial: year ahead BANPU GROUP EMPLOYEES BY GEOGRAPHIC LOCATION Total staff: 3,266 ITM management: emphasis on developing best practice corporate governance, management systems and IR following listing. China 24% Thailand 14% Indonesia 62% HR: continued emphasis on integration, training (leadership, Technical Knowledge Portal and Innovation Promotion) and instilling Banpu Spirit for growing multinational workforce Renewable energy: make first investments (in line 2% asset policy) Main staff nationalities: Indonesian, Chinese, Thai, Australian, British, Indian, Philippines Dividend policy: change to 50% payout of consolidated profit (subject to cash flows) 11

12 2. Focus: mine planning process Neil Turvey Head of Technical Development & Services 12

13 Mine planning process overview Coal mines are complex operations and require detailed planning. Establishing a mine - and an ultimate production profile - is subject to a number of constraints including technical, financial, logistical, regulatory as well as commercial - and can take many years Overall mine operations are guided by Mine Master Plans, which aim to maximize long term value from a coal deposit and are subject to key assumptions and constraints Mine Master Plans need to be updated when key assumptions and constraints change. Any changes to mine planning are given careful consideration Annual, quarterly, monthly and weekly mine operation planning is linked to the Mine Master Plan - and deliver the short term production and cost performance 13

14 Mine-to-port illustrations: Indominco and Trubaindo Trubaindo Indominco PT. BHARINT O WEST BLOCK Product coal conveyor/stacking/ stockpile km ROM stockpile Product coal conveyor/stacking/stockpile Raw coal stockpile EAST BLOCK Mine stockyard HAUL ROAD 40K m SOUTH BLOCK 40Km NORTH BLOCK 35Km HAUL ROAD BUNYUT PORT Kedangpahu River BARGE 300KM TO TRANSHIPMENT Mahakam River km Bontang City Operation Ship Port Hauling Stockpile Barge Port Crusher Santan river ASHPHALT HAUL ROAD SEA CONVEYOR CONVEYOR Panamax 90,000DWT km Source: Company information Port stock yard 4Km 2.5Km 14

15 Pre-production planning* Scoping Pre- production Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 DISCOVERY PRELIMUNARY CONSULTATION + COMMUNICATION Local community Government Contractors EXPLORATION DRILLING PRE-CONSTRUCTION PLANNING Coal resource estimate Conceptual Plan Pre-feasibility study Feasibility study/coal reserves estimate PRE-PRODUCTION DRILLING & PLANNING Mine Master Plan Contracting and Construction Permits and licenses Geological survey *indicative only 15

16 Production planning Pre- production Production YEAR 1 PRODUCTION DRILLING Year 1 Year 2 MINE MASTER PLAN PREPARE YEAR 1 ANNUAL MINE PLAN Year 1 annual budget Quarterly Plan Monthly & weekly plans YEAR 2 PRODUCTION DRILLING PREPARE YEAR 2 ANNUAL MINE PLAN Year 2 annual budget Quarterly Plan Monthly & weekly plans YEAR 3 PRODUCTION DRILLING MINE MASTER PLAN UPDATE* PREPARE YEAR 3 ANNUAL MINE PLAN Year 3 annual budget * if necessary 16

17 Production planning: Mine Master Plan update Mine Master Plans provide a long term schedule of planned mine activities, with estimates of likely production, costs and revenues. They are updated only when key assumptions and constraints change significantly. Late January April/May UPDATE COAL MODEL PIT OPTIMISATION BASE CASE MINE DESIGN LONG TERM PRODUCTION SCHEDULE SENSITIVITY ANALYSIS Master Plan production schedule Tax rates WACC Mine equity Coal price forecasts Coal reserves at different strip ratios What is the maximized NPV vs. strip ratio? Permits Engineering Geology Infrastructure (roads, power?) Asset synergies (coal blending, BoCT) Integration of development projects Cash cost estimates CAPEX estimates Key infrastructure Production vs Reserves Balance between contractor capacity and mine capacity Coal prices Fuel prices FOREX Risk scenarios Development strategy Mining sequence Annual mining targets * Each step assumes that approvals are signed off. Each step may be subject to a number of revisions 17

18 Production planning: Annual Mine Plan preparation The Annual Mine Plan forms the basis of annual operations. Using updated information, it marks the transition between the Mine Master Plan and its implementation. It is the basis of the annual mine budget for the following year. July October FINANCIAL MINING STRATEGY PERMITTING & MINE DESIGN UPDATED RESERVE ESTIMATES ANNUAL PRODUCTION SCHEDULE DETAILED PRODUCTION SCHEDULE Annual Plan and budget (Year +1) Fuel price Base case S/R Coal price forecast Cash costs FOREX Contractor prices Consistency with Mine Master Plan Preliminary pit & dump layouts developed Infrastructure capacity Detailed pit & dump designs Geological limits on annual production rate (e.g. seam length, width and depth determine constraints on mining) Impact of detailed pit designs on reserve estimates Consistency with the Mine Master Plan mining targets Commercial and sales commitments Mining equipment availability (especially at short notice) Rapidly expanding contractor industry in Indonesia size and reliability issues Quarterly plans Monthly plans Weekly plans Environmental and legal * Each step assumes that approvals are signed off. Each step may be subject to a number of revisions 18

19 3. Operational review Rawi Corsiri Chief Operating Officer 19

20 Estimated 2008 production c.20m tonnes (excld. China) 100% basis Daning 4.0 mt (Banpu 12.5%) Hebi 1.5 mt (Banpu 40%) Thailand 0.5 mt Trubaindo 5.0 mt Jorong 3 mt Indominco-Bontang 11.5 mt Kitadin 20

21 Indonesian and Thai coal production review and outlook Increased stripping ratio to capture favorable market price Indominco-Bontang CV kcal/kg 1Q SR 10.5:1 2Q :1 3Q :1 4Q :1 1Q08F 2.7 Replaced mining contractor in October 2007; Increased stripping ratio Trubaindo CV kcal/kg 1Q SR 5.4 2Q Q Q Q08F 0.9 Stable output; Stripping ratio unchanged Jorong CV 5300 kcal/kg 1Q Q Q Q Q08F 0.7 SR Thai mines are in closure stage due to reserves depletion LP-2 / CMMC CV kcal/kg 1Q SR 4.7 2Q Q07 4Q071Q08F Evaluating alternatives to utilize existing assets Kitadin-Embalut CV 5800 kcal/kg 21

22 China coal operations Q07 1Q08F Completed minor capacity increased to 1.5Mtpa; Further expansion to 2Mtpa is under consideration HZTM (Hebi Zhong Tai Mining) Henan Province, PRC CV kcal/kg (Banpu 40%) Production (Mt) Coal price (RMB/t) Production in 1Q08 will be briefly interrupted by relocation of longwall Daning Shanxi Province, PRC CV kcal/kg (Banpu 12.5%) Production (Mt) Coal price (RMB/t)

23 Power Thailand : BLCP Units: Bt. million 3Q/2007 4Q/2007 Q-Q 2007 Total revenue 5,517 3,853-29% 20,307 Availability Payment (AP) 3,284 1,856-43% 11,716 Energy Payment (EP) 2,056 1,789-13% 7,906 Dispatch (%) 87% 70% 87% Operating cost 2,240 2,267 1% 8,938 EBIT 2, % 9,340 EBITDA 3,238 1,513-53% 11,243 Equity income 2007 Bt 4,076 m* * Based on Banpu s 50% interest; including FX gain Bt591million 23

24 Power China : BPIC Sales* (USD m) EBITDA (USD m) Utilization (Hours) Power tariff (RMB/kwh) Coal price** (RMB/t) #1 Major overhaul completed; #1 unit DCS retrofit completed Luannan Hebei Province, PRC Power 100MW; Steam 128tph (Banpu 100% ) 3Q07 4Q , , , Second phase (hot water) completed; expansion for other lines have commenced Zhengding Hebei Province, PRC Power 48MW; Steam 180tph (100%) 3Q , Q , , Third phase (25MW) : turbine # 4 was in commercial operation Zouping Shandong Province, PRC Power 100MW***; Steam 490tph (70%) 3Q , Q , , * Unaudited figures ** Including transportation *** Including Expansion 100% basis 24

25 4. Commercial review Philip Gasteen Head of Marketing and Logistics 25

26 Average Selling Prices (ASP) US$/Tonne BJI* February 28, Q02 2Q02 3Q02 4Q02 1Q03 BJI Weighted avg Indominco 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08e Note: *Barlow Jonker Index (BJI) based on CV 6,700 kcal/kg GAD from Australia to Japan Source: Barlow Jonker $ Chinese winter cuts export S. Africa electricity cut disrupts mining operation Australia flooding cuts export ASP 4q07 : $44.18 / tonne ASP 2007 :$41.06 / tonne 26

27 Strong market likely to stay strong China S.Africa Australia Demand easing in March from winter peaks Stockpiling vs. small mine safety Tighter 2008 demand than forecast at end Exports drop while imports maintain Growing domestic power demand New (expensive) production may not be sufficient to meet export orders, due investment risk Coking coal supply constraints due to floods (forecast $300+/t) Diversion of thermal coal to metallurgical markets Overall impact? 1Q08 10 Mt thermal coal lost from export markets FY Mt thermal coal lost from export markets could be 20 Mt from China / Vietnam Approx 5 Mt in diversions annually from thermal to metallurgical markets in 2008 / 2009 Pressure on thermal prices other things being equal 27

28 Indicative 2008 coal sales Approx. 20 MT Contracted & Unpriced 70% 11% 19% Uncontracted Very strong global import demand through 2008 Thai coal fully sold Indonesian low CV grades largely placed Gradually committing remaining high CV grades EU contracts linked to API # 4 Contracted & Priced 28

29 Coal sales by geographic destination Total coal sales volume: 19.3Mt in 2007 (5.02Mt in 4Q07) ITALY CHINA S.KOREA 0.8 Mt JAPAN 4.6 Mt 1.0 Mt THAILAND 2.5 Mt 2.9 Mt 1.2Mt INDIA TAIWAN OTHERS* 0.5 Mt 3.3 Mt PHILIPPINES 1.2 Mt 1.4 Mt INDONESIA 1.1 Mt Mid-to-High CV Low-to-Mid CV *Includes Vietnam, Pakistan and other small, non-regular purchasers 29

30 5. Financial review Somruedee Somphong Chief Financial Officer 30

31 Sales revenues: coal and power Units: Bt. million 25,046 33,242 32,294-3% Y on Y Power Bt3,865m +38% Y on Y Revenues in USD +6.59% Y on Y Coal Bt28,429m -7% Y on Y 11% decrease in sale volume 17% increase in selling price % appreciation of Thai Baht Note : Revenues from other businesses (e.g. industrial minerals) are not included Consolidation of BPIC started in March 2006 (Bt2,808m revenue for the year) 31

32 Avg. gross margin for coal in 2007 at 37% Bt. million GPM Sales revenue Indominco Indominco 39% 39% 46% 14,013 16,638 18,758 Trubaindo Trubaindo 38% 41% 42% 3,162 6,126 6,971 Jorong Jorong 31% 36% 43% 2,616 3,035 3,016 Kitadin-Embalut Kitadin-Embalut 32% % 40% 2,123 2, Thai mines Thai mines 10% 37% 48% 717 1,667 2, Trade Trade 38 32

33 EBITDA Units: Bt. million 12,916 8,874 9,528 Power Bt5,518m +211% Y on Y +36% Y on Y Coal Bt7,398m -5% Y on Y

34 Net Profit Units: Bt. million 6,654 5,559 Power Bt4,411m +238% Y on Y +84% Y on Y Non-Recurring 2,708 3,610 2,851 Coal Bt2,243m -3% Y on Y

35 CAPEX plans: $363million Units: USD million Coal Indonesia Coal China Power China 120 Power Indonesia Status Coal projects Committed Feasibility Conceptual Bontang Port 66 Bharinto 45 Indonesia 50 China 120 Power projects Bontang Power Plant 22 China 60 The capital expenditure figures shown above are indicative only and do not include estimates for maintenance or sustaining capital expenditure. The figures shown in the Conceptual column should be treated with extra caution and are likely to change as new projects are conceived, some are cancelled and as pre-feasibility analyses generate modified estimates of capital expenditure requirements. 35

36 Balance sheet Net D/E (Times) Net gearing (%) Debt structure 0.66 Fixed 51% Floating 49% % % 25% % As end of December

37 Dividend payment Dividend per share (Bt) 5 (Special) (1H06) 4.75 (2H07) 3.75 (1H07)

38 Question & Answer 38

39 APPENDICES 39

40 Operating profit Units: Bt. million YoY % Total sales revenues* Sales revenues Coal 28,429 30,434-7% Sales revenues Power (BPIC) 3,865 2,808 38% Cost of sales (20,964) (20,838) Gross profit* 11,478 12,541-8% GPM 35% 32,442 33,378-3% Gross profit - Coal 10,467 11,681-10% Gross profit Power (BPIC) % GPM - Coal GPM Power (BPIC) Note: * Including other business 37% 25% 38% 38% 29% 40

41 Operating profit Units: Bt. million YoY % Gross profit 11,478 12,541-8% GPM 35% 38% SG&A (3,952) (4,607) Royalty (3,247) (3,238) Income from associates 4, Dividend income Coal & Power Other income Other expenses - Operations (511) (225) EBIT 8,976 6,036 49% EBIT - Coal 3,903 4,744-18% EBIT - Power 5,073 1, % EBITDA 12,916 9,528 36% EBITDA - Coal 7,398 7,979-7% EBITDA - Power 5,518 1, % 41

42 Net profit Units: Bt. million YoY % EBIT Interest expenses (1,160) Financial expenses (146) Income tax (core business) (1,120) Minorities (269) Net profit before extra items 6,281 Non-recurring items* 1,107 Income tax (non-core business) (372) Net profit before FX 7,015 3,796 85% FX translations (361) (186) Net profit 6,654 3,610 84% EPS (Bt/share) Note: * Income from non-core assets and other non-operating expenses 8,976 6,036 49% (953) (227) (869) (134) 3, (253) 63% 42

43 Operating profit Units: Bt. million 4Q07 3Q07 4Q06 QoQ % YoY % Total sales revenues* Sales revenues Coal 7,981 7,654 9,210 4% -13% Sales revenues Power (BPIC) 1, % 25% Cost of sales (6,198) (5,462) (6,324) Gross profit* 2,987 3,178 3,838-6% -22% Gross profit - Coal 2,783 2,884 3,554-4% -22% Gross profit Power (BPIC) % -30% GPM 33% GPM - Coal GPM Power (BPIC) Note: * Including other business 9,185 8,641 10,162 6% -10% 35% 17% 37% 38% 30% 38% 39% 29% 43

44 Operating profit Units: Bt. million 4Q07 3Q07 4Q06 QoQ % YoY % Gross profit 2,987 3,178 3,838-6% -22% GPM 33% 37% 38% SG&A (1,029) (1,116) (1,343) Royalty (884) (882) (1,008) Income from associates 614 1, Dividend income Coal & Power Other income Other expenses - Operations (251) (120) (414) EBIT 1,532 2,554 2,171-40% -29% EBIT - Coal 1,133 1,004 1,481 13% -24% EBIT - Power 399 1, % -42% EBITDA 1,876 4,060 3,042-54% -38% EBITDA - Coal 1,284 2,421 2,276-47% -44% EBITDA - Power 592 1, % -23% 44

45 Net profit Units: Bt. million 4Q07 3Q07 4Q06 QoQ % YoY % EBIT Note: * Income from non-core assets and other non-operating expenses 1,532 2,554 2,171-40% -29% Interest expenses (282) (304) (266) Financial expenses (34) (34) (57) Income tax (core business) (173) (335) (345) Minorities (154) (51) (34) Net profit before extra items 890 1,830 1,469-51% -39% Non-recurring items* 1,362 (55) (325) Income tax (non-core business) (135) - - Net profit before FX 2,117 1,774 1,144 19% 85% FX translations (134) (55) 31 Net profit 1,983 1,719 1,175 15% 69% EPS (Bt/share)

46 Banpu s Resources & Reserves statement (100% basis) Mine operation and project Mine operation Measured Resources Indicated Resources As at 31 December 2007 Total Resources Proved Reserves Probable Reserves Total Reserves As at 31 December 2006 Total Resources Total Reserves Jorong Indominco Kitadin-Embalut Kitadin-Tandung MaYang Trubaindo Lampang Payao Daning No Hebi Zhongtai Project Intere st (%) Bharinto Barasentosa* Total 1, , , Note : * Divest in May 07 Resources and Reserves are classified in accordance with JORC Code 46