Chairman's and CEO's report
Welcome to the 2019 Annual Report for Bathurst
Last year saw an ambitious change in our operations, and 2019 has seen us consolidate and capitalise on these bold strategic decisions.
Whilst coal remains an essential part of steelmaking with no known substitute, and domestic demand for our product to fuel local industries and supplement renewable energy generation continues, we will be here to provide it.
In short: business is humming at Bathurst and we are optimistic about the future.
Year ended 30 June 2019 – snapshot:
NB: Financial figures are 100 percent Bathurst and 65 percent BT Mining
- EBITDA* $106.6m, up from $93.7m in FY18.
- Net profit after tax was NZD $45.0m, up from $5.5m.
- Record financial results, including a maiden dividend of AUD $5.1m (AU 0.3¢ per share).
- We are New Zealand’s leading coal producer.
- Major investments in two key growth projects: Waipuna West (Rotowaro mine extension); Crown Mountain, Canada (coking coal joint venture).
- Excellent health, safety and environmental standards.
- We now employ over 570 employees, with over 70 percent of our revenue coming from steelmaking customers.
*Earnings before net finance costs (including interest), tax, depreciation, amortisation, impairment, fair value movements on derivatives and deferred consideration, and movements in rehab provisioning.
FY19: a year to be proud of
It’s been another strong year at Bathurst as we continue to transition and diversify our business. All our operations are tracking very well, and we are delighted to announce our first dividend. This will see the return of AUD $5.1m to our shareholders, whose support has been instrumental in enabling the significant changes to our business over the past few years.
We continue to see a future in coal and our business is significantly less risky with our diversification into coking coal (for steelmaking) in 2017.
Our growth prospects are very strong because of our Buller, Rotowaro North (Ruawaro) and Crown Mountain projects – combined, they are forecast to be close to half our total production tonnage within ten years.
The bottom line is that our business is reliable and repeatable – we know what we’re doing, we stay very close to our customers, and we have a unique product. And as we continue using technology and innovation to reduce our costs, we’ll keep creating opportunities to improve our margin.
Strength in diversity
Our strategy has changed significantly in the past few years, opening up a wider range of potential customers and markets for us. Via acquisitions made in 2017, we've transitioned from being a business selling coal domestically to a company with a strong export focus as well.
Adaptive management and solid relationships
In FY19 we continued to maximise returns from our existing domestic assets. We maintained our share of the domestic coal sales market where we enjoy excellent relationships with our large independent food manufacturing, energy generation and steelmaking customers.
In addition to maximising our existing assets, we limited the risk of overcapitalisation by only seeking a new mining area where we already had a strong commercial partnership (and the costs are shared).
Conducting on and off-market share buy-backs helped us to consolidate our ownership structure and bolster shareholder value, and this will help us form a stable platform not only for our business as usual activities, but future expansion as well.
Managing risk – and celebrating success
During the year we undertook a fraud and risk survey that examined both our risk management and corporate governance practices.
And we were delighted to receive the Innovation Award at the New Zealand Minerals Forum held in May 2019. The award recognised innovation in the life-of-mine planning, productivity and market improvements at our Canterbury mine.
As global citizens, we understand our responsibilities around climate change and what this means within New Zealand’s regulatory environment. We’ve continued to work with the government on a managed transition from coal as we look into internal operational changes, aiming for a zero carbon future.
Supporting the community
In the communities where we work, we’ve continued to support various local initiatives such as the Life Education Trust West Coast which educates and empowers children to embrace positive choices for a healthy mind and body.
Our community sponsorships and donations also include support for the Ohai Nightcaps Junior Rugby Club, the Buller Bay Fishing Competition, and the Hororata Golf Club.
Promoting health and safety
This year we continued to develop our health monitoring programme. Two-thirds of our workforce have now completed the initial stage. This programme was also a finalist for the Health and Safety Initiative Award as part of the recent New Zealand Minerals Forum 2019.
In addition, our training programme for leadership and supervision commenced across all sites, targeting key areas for effectively managing people to bring improvement to our health and safety results.
Facing ongoing challenges
The L&M Coal Holdings Limited case was heard in the Court of Appeal in August 2019 and we were pleased with the proceedings. The judgment is expected in early 2020, and based on legal advice we continue to believe that we have a strong case.
Ready for the road ahead
Every business faces challenges – and in that regard, we’re no different. But we understand that mineral extraction and moving coal around the planet requires a unique level of commitment to environmental protection and remediation.
The Emissions Trading Scheme and Resource Management Act both have the potential to add complexities to the way that we are able to operate – but we continue to seek regulatory certainty, so we understand the environment we’re working in and can plan accordingly.
Optimistic about the future
FY19 has been a strong and successful year for Bathurst, and looking ahead to FY20 and beyond, we’ll continue to focus on innovation, cost control and maintaining margins.
We believe we’re a great business with talented people, and we are ready to take our business to the next level.
Chief Executive Officer