2016 Annual Report
CONTENTS
Chairman’s Letter
Financial Summary
Directors’ Report
Auditor’s Independence Declaration
Financial Report
Directors’ Declaration
Independent auditor’s report to the
members of New Hope Corporation Limited
Shareholder Information
i
1
2
26
27
78
79
81
NEW HOPE CORPORATION LIMITED
AND CONTROLLED ENTITIES
CORPORATE DIRECTORY
DIRECTORS
Robert D. Millner
Chairman of Directors
Todd J. Barlow
Non Executive Director
William H. Grant
Non Executive Director
Thomas C. Millner
Non Executive Director
Sue J. Palmer
Non Executive Director
Ian M. Williams
Non Executive Director
MANAGING DIRECTOR
Shane O. Stephan
COMPANY SECRETARY
Janelle S. Moody
AUDITORS
Deloitte Touche Tohmatsu
Level 25, Riverside Centre
123 Eagle Street
BRISBANE QLD 4000
PRINCIPAL
ADMINISTRATION
& REGISTERED OFFICE
3/22 Magnolia Drive
BROOKWATER QLD 4300
Telephone: (07) 3418 0500
Facsimile: (07) 3418 0355
SHARE REGISTER
Computershare Investor
Services Pty Limited
117 Victoria Street
WEST END QLD 4101
Telephone: 1300 552 270
www.computershare.com
WEBSITE ADDRESS
www.newhopegroup.com.au
ASX Code: NHC
CHAIRMAN’S
REVIEW
Dear Shareholders,
The past year was one in which the company exhibited
its resilience to difficult market conditions for both coal
and oil. With the completion of the acquisition of a 40%
interest in the Bengalla Joint Venture on 1 March 2016,
New Hope Corporation Limited (New Hope) has positioned
itself well to take advantage of Asia’s significant growth
in coal consumption. The high quality coal that New Hope
produces will be demanded for many decades to come
in the growing economies of North and South East Asia.
New Hope’s overall production totalled 6.6 million tonnes
of clean coal during FY2016, an increase of 15.8% on
FY2015’s total production of 5.7 million tonnes. Total coal
sales for FY2016 were 6.9 million tonnes, well above the
5.7 million tonnes sold in FY2015. Directors have approved
a final dividend of 2 cents per share taking total dividends
per share for the year to 4 cents.
Financial Performance
Despite tough market conditions in what was a difficult
year for the entire Australian coal sector, New Hope
has reported a net profit after tax (NPAT) and before
non regular items of $5.0 million for the year ended
31 July 2016.
Revenue from operations totalled $531.5 million,
up $25.7 million or 5% from the 2015 financial year.
Cash generation remained solid with Earnings Before
Interest, Tax, Depreciation and Amortisation (EBITDA)
and non regulars of $81.3 million. The Company produced
a positive cash operating surplus of $61.2 million (before
acquisition costs, interest and income tax).
Non regular items before tax, including $52.1 million
acquisition costs expensed (largely stamp duty) and
$33.1 million of impairments, negatively impacted the
group’s results.
Non-cash significant items impacting the 2016
result included:
• $10.5 million impairment of oil producing assets
• $8.4 million impairment of oil exploration assets
• $5.0 million impairment of available for sale financial
assets (being shares in IGas and Planet Gas)
• $3.4 million de-recognition of Petroleum Resource
Rent Tax deferred tax balances.
Although Bridgeport Energy’s oil production increased
20.8% on FY2015 to 191,993 barrels, the continued
drop in Brent oil price for the majority of the year saw
sales revenue down 7% at $10.5 million against FY2015
of $11.9 million. Despite this Bridgeport Energy managed
to limit its EBITDA loss to $1.9 million before non regular
items. Bridgeport Energy posted a loss of $26.5 million
after tax and non regular items.
Acquisition Timing
New Hope has had a history of buying and selling assets
at the right time in the cycle. In recent history, New Hope
has been patiently analysing many potential acquisitions
over a number of years before acquiring a 40% interest
in the Bengalla coal mine in the Hunter Valley of New
South Wales. This disciplined approach to investing
is a company hallmark.
Investing a significant proportion of available cash funds
into a 40% interest in the Bengalla coal mine at a time
when prices were at a low, has had an immediate positive
impact on New Hope’s cash flows.
160.00
Newcastle Thermal Coal Price FOB
Bengalla Transaction
Completed 01 Mar 16
Bengalla Transaction
Announced 30 Sept 15
140.00
120.00
100.00
80.00
60.00
E
N
N
O
T
R
E
P
$
S
U
40.00
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Source: globalCOAL
The Bengalla transaction was announced in September
2015 and it completed on 1 March this year when the
benchmark Newcastle Spot price was US$51/tonne. Since
the beginning of July there has been a significant rise
in coal prices with the Newcastle Spot price currently
at US$70/tonne.
In five months of New Hope’s ownership of Bengalla
production has contributed 1.5 million tonnes to our coal
sales providing EBITDA of $21.3 million to the group result.
i
New Hope Corporation Limited and Controlled Entities | 2016 Annual Report
Sustainability
New Oakleigh Mine Rehabilitation
Our extensive rehabilitation efforts
at Acland and West Moreton, and
associated cattle grazing trials,
have drawn nationwide interest and
acclaim. We seek to continue to grow
the operations of the Acland Pastoral
Company as a profitable part of our
business concentrating on cattle
breeding and grazing.
November 2012
September 2013
VALUES
INTEGRITY
We are ethical, honest and can
be trusted to do the right thing.
RESPECT
We listen to our stakeholders and
treat others as we expect to
be treated ourselves.
ACCOUNTABILITY
We act in accordance with
our obligations, deliver on our
commitments and take responsibility
for our actions.
SAFETY
We share a mutual responsibility to
prevent harm and promote wellbeing.
RESILIENCE
We strive to achieve long-term
sustainability by navigating through
change and uncertainty.
SUCCESS
We take pride in the achievement
of our goals, being innovative and
making a positive difference.
July 2015
March 2016
ii
This operational performance was consistent with our
pre-acquisition expectations and it is expected that in the
next financial year Bengalla should increase New Hope’s
equity production of thermal coal by approximately
3.5 million tonnes to a total of approximately
8.9 million tonnes.
Likewise acquisitions by the company’s oil subsidiary,
Bridgeport Energy has positioned it well to improve
production and financial performance to take advantage
of any increase in future oil prices.
After finalising the acquisition of the Moonie oil fields
in South East Queensland from Santos in December
2015, Bridgeport Energy also completed due diligence
on Beach Energy Queensland’s Kenmore – Bodalla and
surrounding production and exploration assets in FY2016.
This transaction should finalise late calendar 2016.
These acquisitions make Bridgeport Energy the second
largest conventional oil producer in Queensland.
Highlights
A major positive for the company’s coal operations was
the delivery of the Queensland Competition Authority’s
final decision on Queensland Rail’s 2015 Draft Access
Undertaking for below rail users of the Western
System. Once implemented, this decision will result
in an approximate 12% reduction in below rail tariffs
going forward.
Other highlights for the year included your Company
receiving two national awards.
We’re immensely proud of winning the Australian Business
Awards ABA100 2016 Sustainability award for our industry
leading rehabilitation work.
Additionally the company’s “Live Well, Work Well” program
won the inaugural Australian Mines & Metals Association
(AMMA) Industry Award for Health & Wellbeing. These
awards are recognition that the corporate values which
drive our positive business culture are being recognised
and are making your company an employer of choice
within the resources industry.
Significant Milestones
The revised New Acland Coal Mine Stage 3 Project
continued to progress through its approval process with
Land Court hearings commencing in March 2016.
It is anticipated that the Land Court recommendations
should be delivered to the relevant Minister by end
of calendar year 2016.
The company is exploring various options for current
operations, plan of operations and project construction
that seeks to preserve the current workforce for as long
as possible and seamlessly transition them from Stage 2
to Stage 3, however the reality is, the longer the decision
takes the more likely it is that we may have to adjust
our workforce according to changing circumstances.
It is vitally important to the economic and social benefits
of the local, regional and greater Queensland economy
that the mining lease is granted early 2017. Importantly,
our employees are also locals, with more than 80% of our
people living and contributing to the communities in the
vicinity of our operations. The revised Stage 3 project
would provide direct employment for up to 435 people
with an economic contribution to south east Queensland
of $300m with $100m of that going into the Darling Downs
region. The Stage 3 Project will extend the life of the
operation through until 2029, delivering significant positive
benefits to the community in and around the operation.
Social Responsibility
New Hope places a high importance on adopting
a socially responsible approach to business. We do this
through managing and mitigating the social impacts our
business activities may have on local stakeholders and
the community. We endeavour to build trust through
communication and engagement with local communities
and landholders and share the benefits of our activities
through significant social investment and community
development programs.
Some of the highlights from the past reporting period
include our partnership with LifeFlight (previously known
as CareFlight) which continues to deliver critical and
valuable medical services to rural areas.
This year we also partnered with the Cancer Council Qld,
delivering the QUEST program aimed at educating school
kids on healthy lifestyles across our local communities.
Some of the Company’s employees also assisted to build
the Oakey Hospital Community Gardens.
Conclusion
Unlike many of our competitors, New Hope has maintained
its corporate capabilities in resource and project
development during the downturn over the past few
years. Having made the investments in both resources
and corporate capability during the recent years of cyclical
downturn, the Company is now in a prime position to
take advantage of potential increases in future coal and
oil prices.
I would like to thank my board colleagues for their efforts
and commitment during the year.
I would also like to thank the management and staff
of the Company for their hard work in a challenging market
and congratulate them on their success. Cognisant of the
current stage of the coal price cycle, both the board and
management have undertaken appropriate restraint
of their fees and salaries. Finally I would like to thank you,
the shareholders, for your continued support.
R D Millner
Chairman
iii
New Hope Corporation Limited and Controlled Entities | 2016 Annual Report FINANCIAL
SUMMARY
New Hope Corporation Limited and Controlled Entities
Financial Summary
2016
$000
2015
$000
2014
$000
2013
$000
Total revenue
531,459
505,781
548,959
652,097
Profit before tax (before non regular items)
Profit after tax (before non regular items)
Profit/(loss) before tax
Income tax and petroleum resource rent tax expense
Profit/(loss) after tax
Loss attributable to minority interests
Net profit/(loss) attributable to NHCL members
6,116
5,029
(74,112)
20,432
(53,680)
(1)
(53,679)
71,578
51,749
(24,709)
2,888
(21,821)
(1)
(21,820)
53,665
41,490
71,047
(12,598)
58,449
(1)
58,450
172,575
124,955
121,984
(47,856)
74,128
(1)
74,129
Total assets employed
Shareholders' funds
2,018,549
1,750,412
2,075,158
1,852,625
2,185,842
1,973,859
2,268,564
2,016,456
Dividends paid during the financial year
66,484
78,944
132,928
257,466
2016
2015
2014
2013
Weighted average shares on issue
831,050,306
830,999,449
830,836,913
830,551,140
Net profit/(loss) attributable to NHCL members as a % of shareholders'
funds
-3.07%
-1.18%
2.96%
7.42%
Earnings per share (cents) before non regulars
(Loss)/Earnings per share (cents)
Normal dividends per share (cents)
Special dividends per share (cents)
0.6
(6.5)
4.00
-
6.2
(2.6)
6.50
3.50
5.0
7.0
8.00
3.50
15.0
8.9
11.00
5.00
Net tangible asset backing per share (cents)
203.45
220.56
234.55
239.66
1
1
New Hope Corporation Limited and Controlled Entities
Directors' Report - 31 July 2016
Directors
The following persons were Directors of New Hope Corporation Limited during the whole of the financial year and up to the date of this report:
Mr R.D. Millner
Mr T.J. Barlow
Mr W.H. Grant
Ms S.J. Palmer
Mr I.M. Williams
Mr S.O. Stephan
Mr D.J. Fairfull was a Director until his retirement on 19 November 2015.
Mr T.C. Millner was appointed Director on 16 December 2015.
Consolidated results
Revenue from operations
Profit before income tax (before non regular items)*
Land access compensation
Acquisition costs expensed
Impairment of oil producing assets
Impairment of oil exploration assets
Impairment of available for sale financial assets
Impairment of coal to liquids facility
Gain on sale of Dart Energy Limited
Impairment of goodwill
Loss before income tax (after non regular items)
Profit after income tax (before non regular items)*
Land access compensation
Acquisition costs expensed
Impairment of oil producing assets
Impairment of oil exploration assets
Impairment of available for sale financial assets
Petroleum resource rent tax (derecognition due to recoverability)
Impairment of coal to liquids facility
Gain on sale of Dart Energy Limited shares
Impairment of goodwill
Loss after income tax (after non regular items)
Non-controlling interests
Loss attributable to New Hope Shareholders
Basic earnings per share (cents) (before non regular items)*
Land access compensation
Acquisition costs expensed
Impairment of oil producing assets
Impairment of oil exploration assets
Impairment of available for sale financial assets
Petroleum resource rent tax (derecognition due to recoverability)
Impairment of coal to liquids facility
Gain on sale of Dart Energy Limited
Impairment of goodwill
Basic loss per share (cents) (after non regular items)
2016
$000
531,459
2015
$000
505,781
6,116
5,000
(52,104)
(15,029)
(13,117)
(4,978)
-
-
-
(74,112)
5,029
5,000
(36,473)
(10,520)
(8,388)
(4,978)
(3,350)
-
-
-
(53,680)
(1)
(53,679)
0.6
0.6
(4.4)
(1.3)
(1.0)
(0.6)
(0.4)
-
-
-
(6.5)
71,578
-
-
(51,456)
-
(17,558)
(24,267)
1,151
(4,157)
(24,709)
51,749
-
-
(36,019)
-
(17,558)
-
(16,987)
1,151
(4,157)
(21,821)
(1)
(21,820)
6.2
-
-
(4.3)
-
(2.1)
-
(2.0)
0.1
(0.5)
(2.6)
%
Change
+ 5.1%
- 91.5%
- 199.9%
- 90.3%
- 146.0%
- 90.3%
- 150.0%
* The profit before non regular items and the earnings per share before non regular items contained within this Directors' Report have not been audited in accordance with Australian
Auditing Standards.
2
2
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportDIRECTORS’ REPORT for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Directors' Report - 31 July 2016
Principal activities
The principal activities of the Group consisted of:
h
h
h
h
Coal mining - exploration, development, production and processing in Queensland and New South Wales;
Marketing and logistics;
Oil and gas - exploration, development, production and processing; and
Investments.
Dividends paid to members during the financial year were:
h
h
h
A final dividend for the year ended 31 July 2015 of 2.50 cents per share paid on 3 November 2015
A special dividend for the year ended 31 July 2015 of 3.50 cents per share paid on 3 November 2015
An interim ordinary dividend for the year ended 31 July 2016 of 2.0 cents per share paid on 3 May 2016
$000
20,766
29,087
16,621
In addition to the above dividends, since the end of the financial year, the Directors have declared a final ordinary dividend of 2.0 cents per share.
This dividend is fully franked, to be paid on 1 November 2016 out of retained profits at 31 July 2016 with the record date for such dividend to be 18
October 2016. This will provide shareholders of New Hope with total dividends for the year of 4.0 cents per share (2.0 cents interim) compared
with total dividends for the 2015 year of 10.0 cents per share, including a special dividend of 3.5 cents per share.
Operating and Financial Review
New Hope Corporation Limited (the Company) has reported a net profit after tax and before non regular items of $5.0 million for the year ended 31
July 2016. The result comprises a loss of $3.6 million from coal mining, marketing and logistics operations; a loss of $4.1 million from oil operations
and a profit of $12.7 million from treasury. The result is down 90.3% on the 2015 result of $51.7 million.
After non regular items the Company reported a net loss after tax of $53.7 million for the year ended 31 July 2016. The result comprises a loss of
$34.9 million from coal mining, marketing and logistics operations; loss of $26.5 million from oil operations and profit of $7.7 million from treasury.
The result is down 146% on the 2015 loss of $21.8 million.
During the year the company generated a positive cash operating surplus of $61.2 million (including receipts from customers and payments to
suppliers) and received interest of $25.4 million from held to maturity investments (term deposits). Cash outflows from investing activities rose due
to the acquisition of a 40% interest in the Bengalla project ($898 million including acquisition costs).
Before non regular items, basic earnings for 2016 were 0.6 cents per share, compared to 6.2 cents per share in 2015. After non regular items basic
losses per share were (6.5) cents per share for 2016 against (2.6) cents in 2015.
Directors have declared a final dividend of 2.0 cents per share (2015 – 2.5 cents per share and 3.5 cents per share special dividend). This dividend
is fully franked and payable on 1 November 2016 to shareholders registered as at 18 October 2016.
Compared to the previous corresponding period, the 2016 full year result was affected by:
h
h
h
h
Increased production and sales due to the inclusion of Bengalla for the period 1 March 2016 – 31 July 2016;
Lower average unit coal and oil revenues due to market conditions;
Acquisition of a 40% interest in the Bengalla thermal coal mine; and
A non regular impairment on oil producing and oil exploration assets.
Operations
Coal production for the year was 6.6 million tonnes compared to 5.7 Million tonnes produced in 2015. Bengalla contributed 1.4 million tonnes during
the five months of New Hope’s ownership and the Queensland mining operations produced 5.2 million tonnes compared to 5.7 million tonnes
produced in 2015.
Coal sales for 2016 totalled 6.9 million tonnes (including 1.5 million tonnes from Bengalla) which was well above the 5.7 million tonnes sold in 2015.
3
3
DIRECTORS’ REPORT for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Directors' Report - 31 July 2016
New Acland Coal Mine
The New Acland open cut mine produced 4.6 million tonnes of coal
in 2016. This was 0.5 million tonnes lower than 2015. Production was
somewhat hampered by localised geological conditions that increased raw coal ash and negatively impacted on clean coal yield. These localised
geological conditions have now been worked through. As the operation reaches the end of the Stage 2 reserves, there is less operational flexibility
due to a reduction in the number of mining faces available.
New Acland improved its safety performance over the year as measured by lagging safety performance indicators. During the year the New Acland
health and wellness program was embraced by the workforce and this innovative program received recognition through industry awards at both
state and national levels.
Key achievements in 2016 have included:
h
Continued focus on cost management and productivity improvements with improved unit mining costs (6.6% reduction year on year);
h
h
h
h
h
h
h
Increased loading unit and truck productivity across the majority of the fleet;
Undertaking the planning and initial works in conjunction with equipment manufacturers for a natural gas fuel trial on a rear dump truck, the first
operational trial of this technology in a mining environment;
Installation of sound attenuation equipment on major mobile plant to reduce noise levels and allow for greater operational flexibility;
Positive results from cattle grazing trials which demonstrated that cattle raised on rehabilitated land achieved growth rates and meat quality
comparable to cattle raised on un-mined land;
The Queensland Competition Authority decision requiring Queensland Rail to provide an amended draft access undertaking which when
implemented, will result in both a lower access charge to apply to the Western Rail Corridor until 2021 as well as an adjustment for over-
recovery of revenue for the period between 1 July 2013 and the commencement date of the new regulatory period;
New Acland Community Reference Group continued to provide a forum for community engagement and the allocation of funds to local
community projects; and
New Acland hosted numerous site tours for community, business and industry groups, as well as representatives from educational,
environmental and agricultural organisations.
New Acland Stage 3 Development (NAC03)
Pre-construction works undertaken during the year included relocation of Telstra assets, site survey, geotechnical investigations, flora surveys and
trial crushing of basalt reserves to confirm suitability for construction purposes. The relocation of Ergon power infrastructure has commenced and
engineering design for the rail, road and water management infrastructure is well advanced.
The approvals process for the NAC03 mining leases progressed with the Queensland Land Court expected to deliver a recommendation by
December 2016, approximately six months later than anticipated. Construction of NAC03 is planned to commence in Q1 2017 pending grant of the
Mining Leases and Environmental Authority. Federal Government approval
is expected in 2016. Due to the continued delays in the approval
process it is possible that there will be a time interval between the exhaustion of stage 2 coal production and the commencement of stage 3 coal
production. A range of mitigating measures are being progressed to minimise this timing interruption.
A number of key project plans are complete and in use including the Local Procurement Plan, Australian Industry Participation Plan, the Social
Impact Management Plan and various project management plans. A number of other supporting plans are in various stages of development
including the Operational Readiness Plan, the Site Security Plan and various environmental management plans.
West Moreton Operations
West Moreton operations (comprising Jeebropilly Mine and rehabilitation sites at New Oakleigh and Chuwar), produced 0.6 million tonnes of
product coal in 2016 which was similar to the production volumes in 2015.
Key achievements in 2016 included:
h
h
h
h
Continued cost management initiatives assisted to keep production costs close to budget for the year;
Mine plan revisions that optimised the mine with current market conditions;
Continued rehabilitation of the New Oakleigh and Chuwar sites with further work planned during 2017; and
Investigation into final land form and alternative land uses at the completion of coal mining at Jeebropilly.
4
4
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportDIRECTORS’ REPORT for the year ended 31 July 2016 New Hope Corporation Limited and Controlled Entities
Directors' Report - 31 July 2016
Queensland Bulk Handling (QBH)
QBH, New Hope Corporation’s 100% owned coal terminal at the Port of Brisbane, exported 7 million tonnes of coal on 90 vessels. This result was
similar to last year. QBH remains essentially a demurrage free port.
Key activities at QBH in 2016 included:
h
h
h
4 years Lost Time Injury (LTI) free safety milestone achieved;
Continuation of engineering and other studies required for upgrades of existing infrastructure and to allow for future expansion potential; and
Business improvement programs aimed at reducing costs and improving operational efficiencies were commenced with several key stages
completed.
Bengalla Joint Venture
New Hope’s acquisition of a 40% interest in the Bengalla open cut coal mine in New South Wale’s Hunter Valley region from Coal and Allied settled
on 1 March 2016. Since settlement New Hope has played an active role in the transition from Coal and Allied and the ongoing management of the
Bengalla operation in conjunction with the other joint venture participants (Wesfarmers 40%, Mitsui 10% and Taipower 10%).
The operational performance of the Bengalla mine has been consistent with our pre-acquisition expectations with key activities and achievements
including:
h
h
h
h
h
Production of 3.5 million tonnes of coal in the period 1 March 2016 – 31 July 2016 (100% basis);
Appointment of a new CEO;
Strategy reset and identification of a range of cost reduction initiatives;
Strong performance in safety, environmental compliance and community engagement; and
Significant progress in the construction and commissioning of the Dry Creek Diversion Project.
New Hope Exploration and Development Projects
An active exploration program utilising the company's own drill rigs was advanced during the past year. Exploration activities during 2016 focused
on resource definition in and around the New Acland project area (MDL244 for the revised New Acland Coal Mine Stage 3 Project). The drilling
operations were supported by gravity and geochemical surveys. The New Acland drilling program consisted of 18 water monitoring bore holes, 175
open holes and 91 core holes totalling 16,553 meters.
The exploration team incurred no recordable injuries during the year and is currently over two years LTI free.
The current group Resources and Reserves are tabled below.
2016 Total
424
186
Coal Resources (million tonnes)
(Coal resources are inclusive of the reserves reported below)
Inferred
2015 Total
699
39
-
80
-
-
208
-
187
60
73
94
126
-
5
872
Indicated Measured
213
57
-
-
68
-
14
-
108
43
158
84
-
745
-
-
380
-
240
76
286
276
433
84
13
2,398
-
-
741
-
240
76
286
276
433
84
13
2,848
172
49
-
-
104
-
39
16
105
139
149
-
8
781
Deposit
New Acland 1
Bengalla* 2
Ownaview
West Moreton*
Lenton* 3
Bee Creek
Yamala 4
Colton
Elimatta*
Collingwood*
Taroom
Woori
Ashford 5
Total
5
Status
Mine
Mine
Exploration
Mine
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
5
DIRECTORS’ REPORT for the year ended 31 July 2016 New Hope Corporation Limited and Controlled Entities
Directors' Report - 31 July 2016
1
2
3
4
5
6
Notes:
Resources have mainly been reduced due to finer discrimination of parting material, additional exploration around faulting and basalt edges, as well as mining reduction during
the year.
Figures shown are 100% of total resources. New Hope share is 40%. The Resource is exclusive of area covered by Reserves.
Figures shown are 100% of total resources. New Hope share is 90%. Resources have mainly been reduced due to a cut of 150m for low yielding coals.
Figures shown are 100% of total resources. New Hope share is 70%.
Figures shown are 100% of total resources. New Hope share is 50%.
* denotes the Resource estimations that have been reviewed against and have followed the 2012 JORC Code, all other resource estimations are scheduled to be reviewed
against and follow the 2012 JORC Code.
JORC Declaration - Coal Resources
The estimates of coal resources herein have been prepared in accordance with the guidelines of the “Australian Code for Reporting of Exploration Results, Mineral Resources and
Ore Resources – The JORC Code. These resources are inclusive of the reserves reported in the Reserves Statement. The work has been undertaken internally and reviewed by Mr
Patrick Tyrrell who is a Member of AusIMM. Mr Tyrrell has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the
activity which he is undertaking, to qualify as a Competent Person as defined in the 2012 Edition of the JORC Code. Mr Tyrrell consents to the inclusion in this report of the matter
based on this information in the form and context in which it appears.
Coal Reserves (million tonnes)
Deposit
New Acland 1
Lenton 2
Elimatta
Colton3
Bengalla4
Total
Status
Mine
Exploration
Exploration
Exploration
Mine
Recoverable Reserves
Probable
136
Proved
263
Total 2016
399
Total 2015 Probable
74
410
Marketable Reserves5
Proved
142
Total 2016
216
12
29
23
96
11 -
106
294
147
529
35
125
11
52
125
11
7
17
14
66
5 -
21
83
5
253 -
823
587
103
222
325
Notes on Reserves:
37Mt of Recoverable Reserves are located in the Far East deposit which could be influenced by strategic cropping land legislation.
Figures shown are 100% of total Reserves. New Hope share is 90%.
The financial model is based off a mine plan that has 85% of the scheduled tonnes at a Resource classification of Inferred status or lower.
Figures shown are 100% of total Reserves. New Hope share is 40%. The JORC report did not identify the Marketable Reserves.
Marketable Reserves are based on modelled washplant yields based off reconciled data for the operating mines, or simulated product yields for the exploration areas.
1
2
3
4
5
JORC Declaration – Coal Reserves
The information in this Coal Reserves Statement that relates to coal reserves for New Acland, Lenton and Elimaatta is based on information compiled by Mr Brett Domrow, who is a
Member of AusIMM. Mr Domrow is a full time employee of the company. The information in this Coal Reserves Statement that relates to coal reserves for Bengalla is based on
information compiled by Tony O’Connell, who is a Member of the AusIMM. Mr O’Connell is a consultant working with Optimal Mining Solutions Pty Ltd. Mr Domrow and Mr O’Connell
have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a
Competent person as defined in the 2012 Edition of the ‘Australian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves’. Mr Domrow and Mr O’Connell
consent to the inclusion in the report of the matters based on their information in the form and context in which it appears.
Details of the 2016 exploration program and development projects including approvals are as follows:
New Acland
The exploration program consisted of 18 water monitoring bore holes, 175 open holes and 91 core holes totalling 16,553 meters. The Willeroo
Resource Area, Manningvale coring campaign and the ground water monitoring program was completed on New Acland tenements and
surrounding areas. This allowed improved resource definition for the current operation and the NAC03 Project. A gravity survey was completed
and preliminary results suggest that there will be a significant reduction in basalt delineation drilling.
A full review of the modelling process was undertaken providing a better correlation between the geological model and operational observations.
A relinquishment program of non-prospective tenure across the Darling Downs and the West Moreton Regions has commenced
6
6
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportDIRECTORS’ REPORT for the year ended 31 July 2016 New Hope Corporation Limited and Controlled Entities
Directors' Report - 31 July 2016
Colton
Exploration focused on ground water studies and coal seam correlation seams across the deposit. On completion of the coal seam correlation work
the area will be remodelled and geostatistics will be undertaken to provide the necessary data for reporting under the 2012 JORC code.
The Mining Lease Application process continued with public objections heard subsequent to the end of the financial year in the Land Court during
August 2016.
Bee Creek (EPC777)
Limited work was undertaken in 2016. A 2-D seismic explorations program is planned to be undertaken in 2017. This survey will target the Rangal
Coal Measures sub-cropping on the western edge of the Hail Creek Syncline.
North Surat Projects
A Concept Study was completed for the four North Surat Projects (Elimatta, Taroom, Collingwood and Woori) to outline key capital, operating and
marketing aspects of the projects. A Pre-Feasibility Study will be undertaken to further advance the opportunities identified in the concept study.
The Elimatta Mining Lease Application was progressed with all objections having been withdrawn.
Lenton (EPC 766, EPC 865, EPC1675 and ML 70337)
A review of coal quality has been undertaken and the structural and quality model was updated. Field work was limited and consisted of completing
groundwater monitoring for the purposes of the Environmental Impact Statement (EIS).
Mineral projects
On ground activities on the mineral projects was limited to an Induced Polarisation survey at Courtney in order to better delineate drilling targets. A
review was undertaken of the Cloncurry regional structure to better understand the interactions between the regional and local geological structure.
This review observed a number of trends which can be identified between large regional structures and locations of known mining operations which
should improve the accuracy of drill hole targeting.
Pastoral Operations
The implementation of the Acland Pastoral’s five year plan was essentially completed with the transition to a cow/calf breeding enterprise. The last
of the back-grounding steers were sold in May 2016. During the year 489 calves were produced on the property.
A water network and fencing renewal (wire and water) capital program was completed which now covers 75% of the Acland Pastoral usable land.
As a result of good seasonal rainfall the cropping program yielded excellent outcomes for the year.
Stage 3 of the grazing trial was completed. This stage of the program was structured to provide data to evaluate aspects of the sustainability of the
program.
Bridgeport
Oil production for the year totalled 191,993 barrels, an average of 563 barrels of oil per day against prior year results of 158,884 barrels
representing an increase in production of 20.8%. Sales revenue for the year was $10.5 million against prior year of $11.9 million, a decrease of
11.8%, despite the higher production levels. The reduction in sales revenue was entirely a consequence of the continued drop in the oil price
through the first half of the year which reached a low in Jan 2016 of US$27/bbl. The price subsequently increased and stabilised at circa US$45/bbl
at year end. The decline in oil prices in USD terms was partially offset by a declining AUD:USD exchange rate. The average price realised for the
2016 year was A$56.6/bbl (compared to A$74.3/bbl in 2015).
Despite difficult trading conditions, Bridgeport was able to limit is EBITDA loss to $1.9 million before non regular items. Non regulars during the
year, included impairments of oil producing assets of $10.5 million (after tax), impairments of oil exploration assets of $8.4 million (after tax) for two
exploration tenements the company expects to withdraw from and two tenements subject to an extended moratorium period as well as $3.4 million
resulting from the de-recognition of PRRT balances.
7
7
DIRECTORS’ REPORT for the year ended 31 July 2016 New Hope Corporation Limited and Controlled Entities
Directors' Report - 31 July 2016
Strategic focus during the year, primarily in response to the drop in oil price from mid-2015 to January 2016, included:
h
h
h
h
Reduce operating expenditures within the company (achieving 17% below budget expenditures for the year);
Move one field to “not normally manned” improving operating costs by some 25% at that field;
Defer drilling of operated production wells in alignment with the oil price drop (five wells deferred); and
Focus on well workover activities and the Moonie field acquisition, which has increased production by 22%.
Production
Bridgeport’s production rate increased during the year from an average of 435 bopd to a production rate of 563 bopd at the end of the financial
year, through a combination of the acquisition of the PL 1 (Moonie field) tenements and production enhancement workover activities across the
company production portfolio.
Cuisinier (PL 303: 15% (Santos operated))
During the year, hydraulic fracture stimulation of five low productivity wells in the field was completed resulting in a gross production improvement
of 390 bopd at the field. The drilling of five wells (3 development, 1 appraisal and 1 exploration) in PL 303 commenced in the last month of the
financial year with Cuisinier 22 cased and suspended for production and Cuisinier 23 drilling at the end of the period. Gross production decreased
from the prior year by 7.8% due to deferral of development wells and at year end, the field was producing at circa 1,567 bopd (BEL net: 235 bopd)
down from 1,700 bopd (Bridgeport net: 255 bopd) at prior year end.
Inland (PL 98: 100%)
During the year, production enhancement work on five wells at the field utilising the Bridgeport owned service rig resulted in an increase in
production rate of 60 bopd. Field debottlenecking at the main production facility also improved production and at year end production had improved
43% from 102 bopd to 146 bopd. Average daily field production for the year was 4,300 bopm (140 bopd).
Utopia (PL 214: 100%)
In the third quarter of the financial year, Bridgeport acquired Bounty’s 40% interest, which increased its net interest from 60% to 100%. Capital
expenditure was restricted to only repair and maintenance capital comprising workovers and facility changes to allow for not normally manned
operations. Production through the year declined 28% from 1,800 barrels per month to 1,294 barrels per month, partly offset by service work
undertaken on critical wells. Average daily field production for the year was 1,271bopm (42bopd).
Moonie (PL 1: 100%)
At mid-year Bridgeport acquired 100% of the Moonie field and commenced integration of the operation. During the second half, downhole pump
and flowline repairs were carried out on four wells. Average daily field production for the half year from acquisition was 3,480 bopm (116 bopd).
8
8
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportDIRECTORS’ REPORT for the year ended 31 July 2016 New Hope Corporation Limited and Controlled Entities
Directors' Report - 31 July 2016
Naccowlah Assets (2%)
This holding provides access to production infrastructure in the eastern Cooper Eromanga Basin. The interest delivered annual gross production of
1,679 bopd (net: 36 bopd).
Capital expenditure on producing assets (excluding the cost of the Moonie field acquisition) during the year was similar to the prior year at $7.9
million and down on planned budget due to deferral of development wells at Inland and Utopia fields.
Exploration – Cooper Basin
PEL 630 (100%)
415 km2 of seismic data were acquired and processed over the West and East blocks of the tenement. Interpretation and mapping has been
completed on the West block, where several material oil prospects have been assessed and the best two have been prepared for drilling next
financial year. The hydrocarbon resource potential of the East block is still under assessment but, based on play based exploration work to date is
expected to identify oil and gas-liquids resource potential.
Other tenement activities included:
Tenement
Activities
ATP 794 (88%)
80 km2 of 3D seismic data were acquired over the Barcoo Junction discovery area. A substantial prospect has
been mapped, which is up dip of existing wells and is being readied for drilling next financial year.
ATP 944 (100%)
Rationalisation of the tenement area is in progress with the Department of Natural Resources and Mines (DNRM)
through application for a formal work programme reduction combined with partial relinquishment of the permit
area.
PELA 641 (100%)
A Native Title agreement has been negotiated with the Dieri people.
ATP 752 (15%)
The Santos operated joint venture has submitted a partial relinquishment of acreage to comply with regulatory
requirements.
ATP 736/737/738 (20%)
(Senex operated)
Senex (operator) and Bridgeport are finalising a Joint Operating Agreement for these newly-granted permits.
Bridgeport is in discussion with various parties interested in farming into selected tenements held within the Cooper Basin portfolio.
Exploration – Surat Basin
ATP 805 (100%)
32 km2 of 3D seismic were acquired over the Donga discovery area, which will now be used to support a conversion of the exploration permit to a
longer term petroleum lease (PL) or a potential commercial area (PCA).
ATP 608 (100%)
Bridgeport has submitted an application to the DNRM for a Special Amendment to reduce the work programme combined with an early partial
relinquishment. An application for a PCA over the Rookwood oil discovery will be lodged with the DNRM in late August.
Exploration – Otway Basin
PEP 150 (15%) and PEP 151 (100%) - remains under moratorium by the Victorian State Government.
Capital expenditure against exploration assets during the year was $9.7 million, principally related to moving the exploration portfolio forward
towards the drilling of wells with the acquisition of 3D seismic.
9
9
DIRECTORS’ REPORT for the year ended 31 July 2016 New Hope Corporation Limited and Controlled Entities
Directors' Report - 31 July 2016
New Hope Group Outlook
During the past year a material capital investment decision was made to invest a significant proportion of available cash funds into a 40% interest
in the Bengalla coal mine located in the Hunter Valley, New South Wales. During the next financial year Bengalla should increase New Hope’s
equity production of thermal coal by approximately 3.5 million tonnes to a total of approximately 8.9 million tonnes . New Hope is working with its
joint venture partners and the Bengalla management team to improve operational efficiency and effectiveness at the Bengalla operation. The New
Hope management team is focused on achieving the grant of the New Acland Stage 3 mining leases as expeditiously as possible in order to avoid
the negative impacts of any delays in transition from mining Stage 2 reserves into Stage 3.
Bridgeport continues to seek opportunities to grow its production base. It is now the second largest conventional oil producer in Queensland.
Following significant investment in seismic studies of its extensive exploration portfolio, Bridgeport is identifying drilling targets for oil exploration to
take advantage of any increase in oil prices in future.
New Hope believes that Asia will continue to demand significant amounts of energy in order to continue its long term growth trajectory and that
both coal and oil will be required in order to meet that demand. The high quality coals that New Hope produces will be demanded for many
decades to come in particular in the growing economies of North Asia. New Hope has a significant suite of coal growth projects in the North Surat
as well as at Lenton, Colton and Yamala. Unlike many of our competitors, New Hope has maintained its corporate capabilities in resource and
project development during the downturn which has occurred in both coal and oil pricing over the past few years. We have refined our ability to
operate safe low cost operations whilst maintaining excellent standards of mine rehabilitation. Having made the investments in both resources and
corporate capability during the recent years of cyclical downturn the company is now in a prime position to take advantage of potential increases in
future coal and oil prices.
Since 31 July 2016 prices for Australian thermal coal on the seaborne market have reached levels around US$70 per tonne. This represents
approximately a 40% increase from the lows of just under US$50 per tonne which prevailed during the 2016 financial year.
Risk Management
The operations of the Company span a number of industries and geographical locations, all of which are subject to specific risks.
The Company has a robust and well documented risk management framework which is overseen by the board of Directors and embedded into all
levels of the organisation. The framework assists the organisation to identify, classify, document, manage and report on the risks facing the
Company. Each identified risk is tracked in a risk register and allocated to an accountable individual who is discharged with managing and
reporting on the risk. Maintenance of the risk register has been delegated to the Risk Manager and Internal Auditor.
The perceived likelihood and potential consequence of each risk are used to determine the risk level, which in turn determines the actions required
to manage the risk and reporting obligations. The risk management framework requires that all significant risks have a specific documented action
plan, and that updates are provided to the board of Directors on a periodic basis.
A summary of the significant risks facing the entity include the following:
Safety
The nature of the Company’s operations comes with an inherent risk of accidents which have the potential to cause harm to individuals. These
risks are proactively managed using comprehensive safety management systems as well as a continual focus on a strong safety culture.
Social License
A number of stakeholders have an interest in the impact our operations have on the surrounding environment and the communities in which we
operate. In addition, the Company is subject to stringent regulation and reporting obligations spanning multiple government jurisdictions and
departments.
10
10
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportDIRECTORS’ REPORT for the year ended 31 July 2016 New Hope Corporation Limited and Controlled Entities
Directors' Report - 31 July 2016
Failure to adequately acknowledge and address the interests of these stakeholders could negatively impact the operations of the Company and
potentially result in an inability to secure, maintain or renew the regulatory approvals required to continue the operations of the Company. The
Company engages appropriately qualified experts to both manage the underlying risks and to engage proactively with stakeholder groups. The
Company also utilises a variety of systems to manage and report upon the Company’s performance against those obligations.
The Company is currently in the process of securing approvals for the NAC03 expansion. Timing of these approvals is critical to ensure continuity
of operations as reserves on the existing lease are expected to be consumed in 2018.
Project Development
The Company is actively pursuing growth through both developments of existing assets and the acquisition of complimentary assets. Such
activities will ultimately require the deployment of significant capital. To ensure that capital
is deployed in an optimal manner, the company
undertakes rigorous and well document due diligence using a mix of internal and external subject matter experts prior to making any investment
decisions. All significant project development and acquisition transactions require approval from the Board of Directors.
Bengalla Joint Venture
The Bengalla mine faces many of the same risks as the New Acland and Jeebropilly mining operations. Bengalla mine management is charged
with discharging these duties day to day but the Company provides oversight and governance via participation in the Bengalla Joint Venture
management committee and by monitoring operational performance.
Failure of Infrastructure
The company is highly dependent upon the availability and effectiveness of key infrastructure in order to produce and bring products to market.
The company undertakes timely and effective preventative maintenance as well as regular third party inspections of key infrastructure to minimise
the risk of unforeseen failure.
Market Forces
The Group's activities expose it to a variety of financial risks including but not limited to commodity price risk and foreign currency risk. The Group's
overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the
financial performance of the Group. The Group uses derivative financial instruments such as foreign exchange contracts to hedge certain risk
exposures.
Insurance of officers
In accordance with the provisions of the Corporations Act 2001 , New Hope Corporation Limited (the Company, Corporation or parent entity) has a
Directors' and Officers' Liability policy covering Directors and Officers of the Group. The insurance policy prohibits disclosure of the nature of the
liability insured against and the amount of the premium.
Proceedings on behalf of the Corporation
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Corporation, or
to intervene in any proceedings to which the Corporation is a party, for the purpose of taking responsibility on behalf of the Corporation for all or
part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Corporation with leave of the Court under section 237 of the Corporations Act
2001 .
Significant changes in the state of affairs
Except as disclosed in the review of operations, there has not arisen any item, transaction or event of a material and unusual nature likely, in the
opinion of the directors of the parent entity, to affect substantially the operations or results of the consolidated entity in subsequent financial years.
11
11
DIRECTORS’ REPORT for the year ended 31 July 2016 New Hope Corporation Limited and Controlled Entities
Directors' Report - 31 July 2016
Matters subsequent to the end of financial year
Since the end of the financial year no matters or circumstances not referred to elsewhere in this report have arisen that have or will significantly
affect the operations of the consolidated entity, the results of those operations or the state of affairs of the consolidated entity in subsequent
financial years.
Likely developments and expected results of operations
The activities of the consolidated entity in the next financial year are expected to be similar to those of the financial year just ended.
The consolidated entity will continue to pursue a policy of increasing its strength in its major business sectors including the development and
operation of additional mineral resource projects in Australia and is regularly reviewing potential new opportunities.
The Group will disclose further information on likely developments in the operations of the consolidated entity and the expected results of
operations as appropriate. However, Directors are mindful that premature release of information may be prejudicial to the best interests of the
Company and its shareholders.
Corporate Governance Statement
The Company's Corporate Governance statement can be accessed on New Hope Corporation Website at:
www.newhopegroup.com.au/content/investors/corporate-governance.
Work place compliance
The company has complied with the Workplace Gender Equality Act 2012 and has lodged its report with the Workplace Gender Equality Agency.
The report can be accessed on New Hope Corporation Website at www.newhopegroup.com.au/content/investors/corporate-governance.
Environmental compliance
During the 2016 financial year, the Group has not been prosecuted for any breach of environmental laws.
Environmental performance
The majority of the Company’s operations which include coal mining operations and exploration tenements, the Jondaryan rail loading facility, the
Queensland Bulk Handling (QBH) coal export port facility and oil & gas operations are in Queensland. The key piece of environmental legislation in
Queensland is the Environmental Protection Act 1994 (EP Act). The EP Act protects our environment with a focus on ecologically sustainable
development.
The Company’s operations have proactively undertaken initiatives to improve their environmental performance.
Environmental systems
During prior financial year the New Hope Group adopted a new Environmental policy aligned with the requirements of the ISO 14001 standard and
the Company’s operations have continued the embedding of the Environmental Management System (EMS) in 2016. The EMS assists the
Company to improve its environmental performance by increasing environmental awareness, optimising operational control, monitoring compliance
and facilitating continuous improvement.
Environmental reporting
The Group’s operational sites have submitted reports under the National Pollutant Inventory program.
For the purposes of National Greenhouse and Energy Reporting the Group reports as part of the corporate group of Washington H. Soul Pattinson
and Company Limited.
12
12
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportDIRECTORS’ REPORT for the year ended 31 July 2016 New Hope Corporation Limited and Controlled Entities
Directors' Report - 31 July 2016
Information on Directors
Mr R.D. MILLNER (Non-executive Chairman)
Experience
Mr Millner is Chairman of the Company's holding company, Washington H. Soul Pattinson and Company Limited. Mr Millner joined the Board
of New Hope Corporation Limited in 1995 and was appointed Chairman in 1998.
Appointed 1984 Chairman since 1998
Appointed 2000
Appointed 2000
Appointed 2003 Chairman since 2003
Appointed 1997 Chairman since 1999
Appointed 1998 Chairman since 2002
Appointed 2000
Other current listed Directorships
Washington H. Soul Pattinson and Company Limited
Apex Healthcare Berhad
Australian Pharmaceutical Industries Limited
BKI Investment Company Limited
Brickworks Limited
Milton Corporation Limited
TPG Telecom Limited
Former listed Directorships in last 3 years
Nil
Special responsibilities
Chairman of the Board
Interests in shares and options
3,781,962 ordinary shares in New Hope Corporation Limited
Nil options or rights over ordinary shares in New Hope Corporation Limited
Mr T.J. Barlow - BBus, LLB (Non-executive Director)
Experience
Mr Barlow is the Managing Director of Washington H. Soul Pattinson and Company Limited. Prior to that Mr Barlow was Managing Director of
Pitt Capital Partners for 8 years. He has extensive experience in corporate finance across a range of industries. Mr Barlow joined the Board of
New Hope Corporation Limited on 22 April 2015.
Other current listed Directorships
Washington H. Soul Pattinson and Company Limited
Washington H. Soul Pattinson and Company Limited
PM Capital Asian Opportunities Fund Limited
TPI Enterprises Limited
Clover Corporation Limited
Appointed 2015
Appointed 2014
Appointed 2015
Former listed Directorships in last 3 years
Nil
Special responsibilities
Member of the Remuneration Committee, Chair of the Nomination Committee (from August 2016) and member of the Audit Committee.
Interests in shares and options
Nil ordinary shares in New Hope Corporation Limited
Nil options or rights over ordinary shares in New Hope Corporation Limited
13
13
DIRECTORS’ REPORT for the year ended 31 July 2016 New Hope Corporation Limited and Controlled Entities
Directors' Report - 31 July 2016
Information on Directors (continued)
Mr D.J. FAIRFULL - BCom, ACIS, CPA, ASIA (Non-executive Director) (retired 19 November 2015)
Experience
Mr Fairfull has extensive experience in finance, investment and merchant banking. He was appointed to the New Hope Corporation Limited
Board in 1997 and retired in November 2015.
Other current listed Directorships
Nil
Former listed Directorships in last 3 years
Washington H. Soul Pattinson and Company Limited
Appointed 1997 Resigned 2014
Special responsibilities
Member of the Audit Committee (retired 2015)
Interests in shares and options
11,000 ordinary shares in New Hope Corporation Limited
Nil options or rights over ordinary shares in New Hope Corporation Limited
Mr W.H. GRANT - OAM, FAICD, ALGA (Non-executive Director)
Experience
Mr Grant has over 35 years experience in project management, corporate and fiscal governance, local government administration and
strategic planning. He was the CEO of the South Bank Corporation in Brisbane from 1997 to 2005 and prior to that he was the General
Manager/CEO of the Newcastle City Council from 1992 to 1997. He is currently chairman of Brisbane Airport Corporation. He joined the
Board of New Hope Corporation Limited in 2006.
Other current listed Directorships
Nil
Former listed Directorships in last 3 years
Nil
Special responsibilities
Chairman of the Remuneration Committee and Chairman of the Nomination Committee (until 24 August 2016) and a member of the Audit
Committee
Interests in shares and options
30,000 ordinary shares in New Hope Corporation Limited
Nil options or rights over ordinary shares in New Hope Corporation Limited
Mr T.C. MILLNER - (Non-executive Director)
Experience
Mr Millner is the Chief Executive Officer of BKI Investment Company Limited (BKI). He joined BKI in 2008 from Souls Funds Management
Limited where he was responsible for the investment portfolio of BKI. He is currently a non-executive Director of Washington H Soul
Pattinson and Company Limited and PM Capital Global Opportunities Fund Limited. Mr Millner’s experience includes management of
listed equities and business development. Mr Millner joined the Board of New Hope
investment portfolios, research and analysis of
Corporation Limited on 16 December 2015.
Other current listed Directorships
Washington H. Soul Pattinson and Company Limited
PM Capital Global Opportunities Fund Limited
Appointed 2011
Appointed 2013
14
14
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportDIRECTORS’ REPORT for the year ended 31 July 2016 New Hope Corporation Limited and Controlled Entities
Directors' Report - 31 July 2016
Information on Directors (continued)
Mr T.C. MILLNER (continued)
Former listed Directorships in last 3 years
Nil
Special responsibilities
Nil
Interests in shares and options
3,774,368 ordinary shares in New Hope Corporation Limited
Nil options or rights over ordinary shares in New Hope Corporation Limited
Ms S.J. PALMER - Bcom, CA, FAICD (Non-executive Director)
Experience
Ms Palmer is a Chartered Accountant with over 30 years of extensive experience in the financial and resources fields. Ms Palmer brings a
current knowledge to the New Hope board in all aspects of accounting, finance,
financial reporting, risk management and corporate
governance. Prior to becoming a professional director, Sue was Chief Financial Officer and Executive Director with Thiess Pty Ltd. She is also
a non-executive director of METS Ignited, an industry-led, government-funded growth centre for the mining equipment, technology and
services sector. Ms Palmer was appointed to the New Hope Corporation Limited Board on 1 November 2012.
Appointed 2015
Appointed 2014
Other current listed Directorships
Charter Hall Retail REIT
RCR Tomlinson Ltd
Former listed Directorships in last 3 years
Nil
Special responsibilities
Chair of the Audit Committee
Interests in shares and options
15,000 ordinary shares in New Hope Corporation Limited
Nil options or rights over ordinary shares in New Hope Corporation Limited
Mr I.M. WILLIAMS - BEc, LLB (Non-executive Director)
Experience
As a legal and strategic adviser to International investors in the energy and resources sectors, Mr Williams has been involved in every aspect
of the Australian coal industry. Mr Williams was appointed to the New Hope Corporation Limited Board on 1 November 2012.
Other current listed Directorships
Nil
Former listed Directorships in last 3 years
Nil
Special responsibilities
Member of the Remuneration Committee and Member of Nomination Committee
Interests in shares and options
38,087 ordinary shares in New Hope Corporation Limited
Nil options or rights over ordinary shares in New Hope Corporation Limited
15
15
DIRECTORS’ REPORT for the year ended 31 July 2016 New Hope Corporation Limited and Controlled Entities
Directors' Report - 31 July 2016
Information on Directors (continued)
Mr S.O. STEPHAN - BBus (Dist), MBA (AGSM), MAusIMM, MAICD (Managing Director)
Experience
Mr Stephan has over 25 years experience in the coal mining industry including senior line management roles, experience as a District
Inspector of Mines in Queensland and as a member of the Coal Industry Health and Safety Advisory Council. He has also held executive roles
in the corporate finance division of an investment bank. He commenced with New Hope as Chief Financial Officer in 2009. He was appointed
Managing Director on 20 November 2014.
Other current listed Directorships
Nil
Former listed Directorships in last 3 years
Nil
Special responsibilities
Managing Director
Interests in shares and options
241,021 ordinary shares in New Hope Corporation Limited
338,310 Performance rights in New Hope Corporation Limited
Company Secretary
Appointed 2014
Ms Janelle Moody was appointed to the role of Company Secretary on 31 May 2016. Ms Moody has extensive legal experience, specifically in
the area of corporate and commercial matters in the mining industry. Most recently Ms Moody has been running her own legal practice, and
has previously been a Partner in the law firm McCullough Robertson.
16
16
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportDIRECTORS’ REPORT for the year ended 31 July 2016 New Hope Corporation Limited and Controlled Entities
Directors' Report - 31 July 2016
Remuneration report
The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001.
a. Remuneration governance
The performance of the Group depends upon the quality of its Directors and Executives.
appropriately qualified and experienced Directors and executives.
It is the Company’s objective to attract and retain
The Remuneration Committee comprises Messrs Grant (Chair), Barlow and Williams. The Remuneration Committee is responsible for
reviewing and setting the remuneration packages for Directors and executives on an annual basis. The Remuneration Committee engages
independent consultants, utilises data from independent surveys and reviews other market information and reports to ensure that remuneration
is consistent with current industry practices. The Corporate Governance Statement provides further information on this Committee.
b. Key management personnel
Name
Mr R.D. Millner
Mr T.J. Barlow
Mr D.J. Fairfull
Mr W.H. Grant
Mr T.C. Millner
Ms S.J. Palmer
Mr I.M. Williams
Mr S.O. Stephan
Mr B.D. Denney
Mr A.L. Boyd
Mr M.J. Busch
Positions Held
Chairman and Non-executive Director.
Non-executive Director. Chairman of the Remuneration Committee (appointed 24 August 2016).
Non-executive Director (retired 19 November 2015).
Independent Non-executive Director, Chairman of the Remuneration Committee (until 24 August 2016) and Chairman
of the Nominations Committee.
Non-executive Director (appointed 16 December 2015).
Independent Non-executive Director and Chairman of the Audit Committee.
Independent Non-executive Director.
Managing Director.
Chief Operating Officer (retired 18 December 2015).
Chief Operating Officer (appointed 21 December 2015).
Chief Financial Officer.
c. Executive remuneration policy and framework
The Company aims to ensure that remuneration packages properly reflect the person's duties, experience and responsibilities and are aligned
so that management is rewarded in creating value for shareholders. Remuneration of senior executives is reviewed annually after taking into
consideration the executives’ performance, the Company’s performance, market rates and level of responsibility. As a result of the current year
review, there will be no increase to Executive Remuneration for the 2017 financial year.
Executive remuneration comprises a mix of base remuneration, short
term incentives (STIs) and long term incentives (LTI's). Target
remuneration mix (based on the entitlement to 100% of the available STI and LTI which is at risk and subject to performance hurdles) for the
year ended 31 July 2016 is:
Target remuneration mix
CEO
COO
CFO
62%
62%
66%
19%
19%
19%
19%
17%
17%
0%
20%
40%
60%
80%
100%
Base remuneration
STI
LTI
17
17
DIRECTORS’ REPORT for the year ended 31 July 2016 New Hope Corporation Limited and Controlled Entities
Directors' Report - 31 July 2016
Remuneration report (continued)
c. Executive remuneration policy and framework (continued)
The detail of each component is as follows:
Base remuneration
Base remuneration for senior executives is fixed annually by the Remuneration Committee.
It comprises a cash salary, superannuation, and
other non-cash benefits such as a company vehicle. Executives may elect to take a vehicle allowance in lieu of a company vehicle and may
salary sacrifice a portion of their cash salary into superannuation or other benefits. Base remuneration for the 2017 financial year remains the
same as the 2016 financial year.
Short Term Incentives
STI's are designed to motivate and reward senior executives to achieve the short term goals of the Company as set by the Board.
Maximum allowable STI's are provided for in senior executive employment contracts and are paid in the form of an annual cash bonus. At the
end of each period the Remuneration Committee will award executives a percentage of their maximum allowable STI's having regard to the
performance of the executive and the Company during the period. The Key Performance Indicators (KPI's) set by the Remuneration Committee
and their respective weightings for the 2016 financial year are detailed below.
Short Term Incentives KPI's
Group Profit, Sales and Investment Performance
Group Compliance – Safety, Environment and Risk Management
Group Production Cost, Project Development and M&A Activities
Weighting
60%
20%
20%
Given the historically low coal price and profit performance of New Hope, it was recommended by executive management that no STI be paid
for the 2016 financial year. The Remuneration Committee accepted this proposal resulting in no STI being payable for the 2016 financial year,
including the Managing Director.
Long Term Incentives
LTI’s are designed to motivate and reward senior executives to achieve the strategic goals set by the Board, align shareholder and executive
objectives, and to retain the services of senior executives.
Maximum allowable LTI’s are provided for in senior executive employment contracts. At the end of each period the Remuneration Committee
will award executives a percentage of their maximum allowable LTI having regard to the performance of the executive and the Company during
the period.
LTI’s are paid in the form of Performance Rights at the discretion of the Remuneration Committee. The value of an executive’s LTI is converted
into Performance Rights by reference to the 5 day volume weighted average share price of the Company over the 5 days immediately
preceding issue. The Remuneration Committee has the discretion to select alternative equity instruments for the award of LTI’s in the event
that Performance Rights do not align to the strategic goals set by the Remuneration Committee or Board.
18
18
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportDIRECTORS’ REPORT for the year ended 31 July 2016 New Hope Corporation Limited and Controlled Entities
Directors' Report - 31 July 2016
Remuneration report (continued)
c. Executive remuneration policy and framework (continued)
Performance Rights are issued subject to performance and service conditions. The service condition requires that the executive remain an
employee of the Company for the duration of the 3 year vesting period. The performance conditions attaching to the rights are measured over
three years. The Remuneration Committee will determine the percentage of rights that will vest based on the performance of the executive and
the Company during the three year period. The KPI's set by the Remuneration Committee and their respective weightings relevant for the 2016
financial year are detailed below.
Long Term Incentives KPIs
Shareholder Value
Project Development and M&A Activities
Strategic Plan (including Succession Planning and Stakeholder Management)
Weighting
50%
25%
25%
The Shareholder Value KPI compares the total shareholder return (TSR) of the Company against the ASX 200 TSR over the three year period.
The details of the amount of rights vesting, given the relative TSR performance, are detailed below:
% of 3 year Company TSR
vs ASX 200 TSR
< 100%
100%
105%
110%
115%
120%
> 125 %
% Vesting
0%
25%
30%
35%
40%
45%
50%
Subject to the employee satisfying the above service and performance conditions, a percentage of the Performance Rights will vest three years
after their grant date in accordance with the above table.
d.
Consequences of performance on shareholder wealth
The Company's performance is not only impacted by market factors, but also by employee performance. The financial performance for the last
five years is shown below.
Net profit/(loss) attributable to shareholders
Profit/(loss) after tax
Net profit after tax before non regular items
Earnings per share
Dividends paid during the year
Share price as at 31 July
Shareholders' funds
Year ended 31 July
A$000's
A$000's
A$000's
cents/share
cents/share
$/share
A$000's
2016
(53,679)
(53,680)
5,029
(6.50)
8.00
1.60
1,750,412
2015
(21,820)
(21,821)
51,749
(2.60)
9.50
1.91
1,852,625
2014
58,450
58,449
41,490
7.00
16.00
3.00
1,973,859
2013
74,129
74,128
124,955
8.90
31.00
3.76
2,016,456
2012
167,126
167,125
171,080
20.10
26.00
4.07
2,252,916
e.
Non-executive director remuneration policy
It is intended that remuneration paid to non-executive Directors reflects the demands and responsibilities of Directors. Non-Executive Directors
fees are reviewed annually after taking into consideration the Company’s performance, market rates and level of responsibility.
Non-executive Directors receive a fixed fee that is paid within an aggregate limit as approved by the shareholders from time to time. The current
maximum aggregate is set at $1,750,000 (2015 - $1,750,000) per annum. There is no proposal to increase Directors’ Fees for the 2017
financial year.
f.
Voting made at the Company’s 2015 Annual General Meeting
The Company received 99% “yes” votes on its remuneration report for the 2015 financial year.
19
19
DIRECTORS’ REPORT for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Directors' Report - 31 July 2016
Remuneration report (continued)
g. Details of remuneration
Details of remuneration of Directors and the key management personnel of New Hope Corporation Limited are set out below for the current and
previous financial years.
Short-term employee benefits
Cash salary
and fees
$
Cash
bonus 8
$
Non cash
benefits 9
$
Long-term
benefits
LSL
$
Post employment benefits
Super-
annuation
$
Termination
Benefits
$
Share-based
payments
Rights
$
Total
$
2016
Non-executive Directors
Mr R.D. Millner
Mr T.J. Barlow
1
Mr D.J. Fairfull
Mr W.H. Grant
Mr T.C. Millner 2
Ms S.J. Palmer
Mr I.M. Williams
Total Non-executive Directors
Executive Directors
Mr S.O. Stephan
Key Management Personnel
Mr B.D. Denney3
Mr A. L. Boyd4
Mr M.J. Busch
293,000
135,000
41,250
150,000
84,620
160,000
135,000
998,870
1,247,833
312,686
389,709
546,028
Total Key Management Personnel
1,248,423
Total Remuneration - 2016
3,495,126
2015
Non-executive Directors
Mr R.D. Millner
Mr P.R. Robinson6
Mr D.J. Fairfull
Mr W.H. Grant
Ms S.J. Palmer
Mr I.M. Williams
5
Mr T.J. Barlow
293,000
90,000
135,000
150,000
160,000
135,000
37,330
Total Non-executive Directors
1,000,330
Executive Directors
7
Mr S.O. Stephan
Key Management Personnel
Mr B.D. Denney
Mr M.J. Busch
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19,308
12,825
5,344
14,250
8,039
15,200
12,825
87,791
9,740
11,520
19,385
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
312,308
147,825
46,594
164,250
92,659
175,200
147,825
1,086,661
127,574
1,416,052
9,930
38,728
(990)
47,668
10,682
22,327
9,796
42,805
7,111
14,370
19,305
40,786
136,316
-
-
136,316
(66,010)
-
61,686
(4,324)
410,715
465,134
635,825
1,511,674
57,408
54,325
147,962
136,316
123,250
4,014,387
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,783
8,550
12,825
14,250
15,200
12,825
3,546
85,979
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
311,783
98,550
147,825
164,250
175,200
147,825
40,876
1,086,309
43,056
1,307,272
75,539
48,492
832,487
626,544
124,031
1,459,031
167,087
3,852,612
1,209,630
(24,967)
42,778
17,860
18,915
Total Key Management Personnel
1,187,724
(24,968)
117,890
673,774
513,950
(15,605)
(9,363)
72,920
44,970
6,944
9,716
16,660
18,915
18,779
37,694
Total Remuneration - 2015
3,397,684
(49,935)
160,668
34,520
142,588
1
2
3
4
5
Mr D.J. Fairfull retired as a director on 19 November 2015.
Mr. T. Millner was appointed a director on 16 December 2015.
Mr. B. D Denney resigned as Chief Operating officer on 18 December 2015. The negative share
based payments amount reflects Rights forfeited.
Mr. A. L. Boyd was appointed as Chief Operating Officer on 21 December 2015.
Mr. T.J. Barlow was appointed a director on 22 April 2015.
6 Mr. P.R. Robinson retired as a director on 31 March 2015.
7 Mr. S.O. Stephan was promoted from Chief Executive Officer to Managing Director from 20
November 2014.
8 Cash Bonus for 2015 represents the difference between the accrual of the 2014 STI to the actual
payment made during the 2015 financial year.
9 Non Cash Benefits include movements in annual leave provisions.
20
20
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportDIRECTORS’ REPORT for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Directors' Report - 31 July 2016
Remuneration report (continued)
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Name
Mr S.O. Stephan
Mr B.D. Denney
Mr A. L. Boyd
Mr M.J. Busch
Fixed Remuneration
2016
2015
97%
91%
91%
116%
0%
100%
92%
90%
At Risk - STI
At Risk - LTI
2016
0%
0%
0%
0%
2015
0%
0%
0%
0%
2016
9%
-16%
0%
10%
2015
3%
9%
0%
8%
Since the long-term incentives are provided exclusively by way of rights, the percentages disclosed reflect the value of remuneration consisting
of rights, based on the value of rights expensed during the year.
h. Employment contracts
The agreements with the senior executives provide for a cash salary, superannuation and a fully maintained motor vehicle. Executives may
elect to take a vehicle allowance in lieu of a company vehicle and may salary sacrifice a portion of their cash salary into superannuation or other
benefits.
Name
Mr S.O. Stephan
Mr A.L. Boyd
Mr M.J. Busch
Term of agreement and
Base remuneration including
Superannuation 2
notice period 1
Termination
Payments 3
No fixed term
6 months' notice period
No fixed term
3 months' notice period
No fixed term
3 months' notice period
$1,300,000
6 months’ base remuneration
$650,000
3 months’ base remuneration
$600,000
3 months’ base remuneration
1 This notice applies equally to either party.
2 Base remuneration quoted is for the year ended 30 June 2016; they are reviewed annually by the remuneration committee.
3
Base salary payable if the company terminates employees with notice, and without cause (e.g. for reasons other than unsatisfactory
performance).
i. Details of share based compensation
Rights
Rights are granted under the New Hope Corporation Limited Employee Performance Rights Share Plan (Rights Plan). Membership of the
Rights Plan is open to those senior employees and those Directors of New Hope Corporation Limited, its subsidiaries and associated bodies
corporate whom the Directors believe have a significant role to play in the continued development of the Group’s activities.
Rights will be granted for no consideration. Rights to be granted in accordance with the Rights Plan will be allotted at the sole discretion of the
Directors of the Company and in accordance with the Group’s reward and retention strategy. Rights will vest and automatically convert to
ordinary shares in the Company following the satisfaction of the relevant performance and service conditions. Performance and service
conditions applicable to each issue of Rights are determined by the Board at the time of grant.
The assessed fair value at grant date of Rights granted to the individuals is allocated equally over the period from grant date to vesting date and
the amount will be included in the remuneration of the executive. The fair value of the rights is determined based on the market price of shares
at the grant date, with an adjustment made to take into account the vesting period, expected dividends during that period that will not be
received by the participants and the probability that the performance conditions will be met.
21
21
DIRECTORS’ REPORT for the year ended 31 July 2016 New Hope Corporation Limited and Controlled Entities
Directors' Report - 31 July 2016
Remuneration report (continued)
i. Details of share based compensation (continued)
Rights
The terms and conditions of each grant of rights affecting remuneration of key management personnel in the current or future reporting periods
and the associated pricing model inputs are as follows:
Performance Period
to which LTI relates
Grant Date
Vesting Date
Value of a
Right at Grant
Date ($)
2011
2012
2012
2014 - 2016
2014 - 2016
2015 - 2018
December 2011
December 2012
December 2012
December 2014
November 2015
November 2015
August 2015
August 2015
August 2016
August 2017
August 2017
August 2018
5.84
4.08
4.08
1.58
1.91
2.17
Rights granted under the plan carry no dividend or voting rights.
Details of Rights over ordinary shares in the Company as at 31 July 2016, provided as remuneration to each Director of New Hope Corporation
Limited and each of the key management personnel of the Group are set out below. Upon satisfaction of the service and performance conditions
each right will automatically vest and convert into one ordinary share in New Hope Corporation Limited. The minimum value of the rights yet to
vest is nil, as the rights will be forfeited if the vesting conditions are not met. The maximum value in future periods has been determined as the
amount of the grant date fair value of the right that is yet to be expensed.
Name
Grant date
Vesting date
Number granted
Value per
share
Number
vested
Vested %
Number
forfeited
Forfeited
%
Mr S.O.Stephan
December 2011
August 2015
December 2012
December 2012
November 2015
November 2015
Mr B.D. Denney
December 2011
December 2012
December 2012
December 2014
Mr M.J. Busch
December 2011
December 2012
December 2012
December 2014
August 2015
August 2016 1
August 2017
August 2018
August 2015
August 2015
August 2016
August 2017
August 2015
August 2015
August 2016 1
August 2017
November 2015
August 2018
8,432
11,211
11,210
134,228
204,082
8,010
11,211
11,210
83,893
4,005
8,408
8,408
50,336
76,531
5.84
4.08
4.08
1.91
2.17
5.84
4.08
4.08
1.58
5.84
4.08
4.08
1.58
2.17
8,432
11,211
100%
100%
-
-
-
-
-
-
8,010
11,211
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(11,210)
(83,893)
100%
100%
4,005
8,408
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 The August 2016 vesting rights do not have a maximum value at 31 July as they vest in August 2016.
The fair value of the rights is determined based on the market price of the company’s shares at the grant date.
Maximum
value in
future
periods
-
-
-
73,297
160,750
-
-
-
-
-
-
-
29,839
60,281
22
22
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportDIRECTORS’ REPORT for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Directors' Report - 31 July 2016
Remuneration report (continued)
j. Equity instruments held by Key Management Personnel
The tables below show the number of rights and shares in the Company that were held during the financial year by key management personnel
of the Group, including their close family members and entities related to them.
There were no shares granted during the reporting period as remuneration.
Rights holdings
Name
Mr S.O. Stephan
Mr B.D. Denney
Mr A. L. Boyd
Mr M.J. Busch
Share holdings
Balance at the start
of the year
Granted as
remuneration
Vested
Forfeited
Balance at the
end of the year
Unvested
30,853
114,324
-
71,157
338,310
-
-
(19,643)
(19,221)
-
76,531
(12,413)
-
(95,103)
-
-
349,520
349,520
-
-
-
-
135,275
135,275
Name
Balance at the start
of the year
Purchased /
(sold)
Received on the
vesting of rights
Other changes
during the year1
Balance at the
end of the year
Mr R.D. Millner
Mr T.J. Barlow
Mr D.J. Fairfull
Mr W.H. Grant
Mr T.C. Millner
Ms S.J. Palmer
Mr I.M. Williams
Mr S.O. Stephan
Mr B.D. Denney
Mr A.L. Boyd
Mr M.J. Busch
3,781,962
-
11,000
30,000
-
15,000
38,087
162,078
46,452
-
698,911
-
-
-
-
-
-
-
-
-
-
-
-
-
-
59,300
-
-
-
19,643
19,221
-
12,413
-
-
(11,000)
-
3,781,962
-
-
30,000
3,774,368
3,774,368
-
-
-
(65,673)
15,438
-
15,000
38,087
241,021
-
15,438
711,324
1
Other changes for Mr D.J. Fairfull and Mr B.D. Denney represent balance of final holdings upon retirement. Other changes also reflect share holdings upon
appointment.
k. Other transactions with Key Management Personnel
Mr R.D. Millner, Mr P.R. Robinson and T.J. Barlow are Directors of WHSP, the ultimate parent entity of New Hope Corporation Limited and Pitt
Capital Partners Limited. Pitt Capital Partners Limited acted as financial advisor to the Group for various corporate transactions during the 2016
and 2015 financial years. All transactions are at normal commercial terms.
Aggregate amounts of each of the above types of transactions were as follows:
Financial advice
$
6,488,295
Directors are required to take all reasonable steps to manage actual, potential or perceived conflicts of interest. Directors are required to
consider and notify the Company of any potential or actual conflicts of interest and Related Party transactions. Directors do not participate in any
negotiations of transactions with related parties.
23
23
DIRECTORS’ REPORT for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Directors' Report - 31 July 2016
Shares issued on the vesting of rights
Since the end of the financial year 19,618 rights have vested and will be converted to ordinary shares in the Company.
Loans to directors and executives
There were no loans to directors and executives granted during the reporting period, nor were there any outstanding loans as at balance date.
Non-audit services
Deloitte Touche Tohmatsu has acted as auditor for the Group for the entire 2016 year. The Company may decide to employ the auditor on
assignments additional to their statutory audit duties where the auditor's expertise and experience with the Company are important.
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-
related audit firms (refer note 33):
Audit services
Audit and review of financial reports and other audit work under the
Corporations Act 2001 :
Deloitte Touche Tohmatsu (Australian firm)
Other audit firms for the audit or review of financial reports of any
entity in the Group
Total remuneration for audit services
Other services
Deloitte Touche Tohmatsu (Australian firm)
Audit of joint operations
Accounting advisory services
PricewaterhouseCoopers (Australian firm)
Audit of joint operations
Total remuneration for non-audit services
Consolidated
2016
$
2015
$
433,000
240,000
-
-
433,000
240,000
24,000
33,000
18,000
75,000
23,000
-
-
23,000
Total auditors remuneration
508,000
263,000
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 26.
24
24
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportDIRECTORS’ REPORT for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Directors' Report - 31 July 2016
2016/191
The Company is of a kind referred to in Corporations Instrument 2016/19 1, issued by the Australian Securities and Investments Commission,
relating to the "rounding off" of amounts in the Directors' report. Amounts in the Directors' report have been rounded off in accordance with that
Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.
Meetings of Directors
The following table sets out the number of meetings of the Company's Directors held during the year ended 31 July 2016 and the number of
meetings attended by each Director:
Mr R.D. Millner
Mr T.J Barlow
Mr W.H. Grant
Mr T.C. Millner
Ms S.J. Palmer
Mr I.M. Williams
Mr S.O. Stephan
Mr D.J. Fairfull (retired 19 November 2015)
Full meetings
Held
12
12
12
7
12
12
12
5
Attended
11
12
12
7
12
12
12
5
Audit Committee
Held
-
3
4
-
4
-
-
2
Attended
-
2
4
-
4
-
-
2
Remuneration
Held
-
1
1
-
-
1
-
-
Attended
-
1
1
-
-
1
-
-
Nomination
Held
-
2
2
-
-
2
-
-
Attended
-
2
2
-
-
1
-
-
Signed at Sydney this 19th day of September 2016 in accordance with a resolution of Directors.
R.D. Millner
Director
S.J. Palmer
Director
25
25
DIRECTORS’ REPORT for the year ended 31 July 2016 Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Riverside Centre
Level 25
123 Eagle Street
GPO Box 1463
Brisbane QLD 4001 Australia
DX 115
Tel: +61 (0) 7 3308 7000
Fax: +61 (0) 7 3308 7001
www.deloitte.com.au
D
D
e
e
l
l
o
o
i
i
t
t
t
t
e
e
T
T
o
o
u
u
c
c
h
h
The Board of Directors
New Hope Corporation Limited
3 / 22 Magnolia Drive
Brookwater QLD 4300
19 September 2016
Dear Board Members
Independence Declaration
In accordance with section 307C of the Corporations Act 2001 , I am pleased to provide the following declaration of
independence to the directors of New Hope Corporation Limited.
As lead audit partner for the audit of the financial statements of New Hope Corporation Limited for the financial year ended
31 July 2016, I declare that to the best of my knowledge and belief, there have been no contraventions of:
(i)
(ii)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
Yours sincerely,
DELOITTE TOUCHE TOHMATSU
Richard Wanstall
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
26
26
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportAUDITOR’S INDEPENDENCE DECLARATION for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Financial Report - Contents
for the year ended 31 July 2016
Contents
Financial Report
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Notes to the financial statements
Basis of preparation and Basis of consolidation
Results for the year
1. Financial reporting
segments
Operating assets
and liabilities
8. Receivables
2. Revenue
9. Accounts payable
3. Other income
10. Inventories
4. Expenses
11. Property, plant and
equipment
5. Income taxes
12. Intangibles
6. Reconciliation of net
operating cashflow
13. Exploration and
evaluation
Page
28
29
30
31
32
Capital
Risk
Other
15. Cash and cash
equivalents
23. Financial risk
management
29. Related party
transactions
16. Held to maturity
investments
17. Available for sale
financial assets
18. Lease liabilities
Group structure
30. Share based payments
24. Business combination
31. Parent entity financial
information
25. Interests in other
entities
32. Deed of Cross
Guarantee
19.Derivative financial
instruments
Unrecognised items
20. Dividends
26. Contingent liabilities
33. Remuneration of
Auditors
34. Other accounting
policies
7. Earnings per share
14. Provisions
21. Contributed equity
27.Commitments
22. Reserves
28. Subsequent events
Signed reports
Directors' declaration
Independent audit report to the members of New Hope Corporation Limited
78
79
New Hope Corporation Limited is a company limited by shares on the Australian Securities Exchange (ASX). The Company is incorporated
and domiciled in Australia and its registered office and principal place of business is:
New Hope Corporation Limited
3/22 Magnolia Drive
BROOKWATER QLD 4300
A description of the nature of the consolidated entity's operations and its principal activities is included in the Directors' report on pages 3 to 12,
which is not part of this financial report. The financial report was authorised for issue by the Directors on 19 September 2016. The Company
has the power to amend and reissue the financial report.
Through the use of the internet, the Company has ensured that corporate reporting is timely, complete and available globally at minimum cost
to the Company. All financial reports and other announcements to the ASX are available on the Investor Relations pages of the website:
www.newhopegroup.com.au.
27
FINANCIAL REPORT for the year ended 31 July 2016 New Hope Corporation Limited and Controlled Entities
Consolidated Statement of Comprehensive Income
for the year ended 31 July 2016
Revenue from operations
Other income
Expenses
Cost of sales
Marketing and transportation
Administration
Other expenses
Acquisition costs expensed
Impairment of assets
Loss before income tax
Petroleum resource rent tax (expense)/benefit
Income tax benefit
Loss after income tax for the year
Loss attributable to:
New Hope Shareholders
Non-controlling interests
Other comprehensive income/(loss)
Items that may be reclassified to profit and loss:
Changes to the fair value of cash flow hedges, net of tax
Transfer to profit and loss for cash flow hedges, net of tax
Exchange differences on translation of foreign operation
Changes to the fair value of available for sale financial assets, net of tax
Transfer to profit and loss - available for sale financial assets, net of tax
Other comprehensive income/(loss) for the year, net of tax
Total comprehensive loss for the year
Total comprehensive loss attributable to:
New Hope Shareholders
Non-controlling interests
Notes
2016
$000
2015
$000
2
3
4
4
5(a)
5(a)
22
22
22
22
22
531,459
4,846
536,305
(353,196)
(150,278)
(8,152)
(13,563)
(52,104)
(33,124)
(74,112)
(3,574)
24,006
(53,680)
505,781
1,177
506,958
(279,219)
(137,409)
(9,010)
(8,591)
-
(97,438)
(24,709)
961
1,927
(21,821)
(53,679)
(1)
(53,680)
(21,820)
(1)
(21,821)
2,455
15,294
(258)
-
355
17,846
(35,834)
(35,833)
(1)
(35,834)
(33,861)
18,225
71
(3,894)
(1,151)
(20,610)
(42,431)
(42,430)
(1)
(42,431)
Earnings per share for loss attributed to ordinary equity holders of the Company
Basic loss per share (cents/share)
Diluted loss per share (cents/share)
7
7
(6.5)
(6.5)
(2.6)
(2.6)
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
28
28
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportSTATEMENT OF COMPREHENSIVE INCOME for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Consolidated Balance Sheet
as at 31 July 2016
Current assets
Cash and cash equivalents
Receivables
Inventories
Held to maturity investments
Current tax assets
Derivative financial instruments
Total current assets
Non-current assets
Receivables
Available for sale financial assets
Property, plant and equipment
Exploration and evaluation assets
Intangible assets
Total non-current assets
Total assets
Current liabilities
Accounts payable
Lease liabilities
Current tax liabilities
Derivative financial instruments
Provisions
Total current liabilities
Non-current liabilities
Lease liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained profits
Capital and reserves attributable to New Hope Shareholders
Non-controlling interests
Total equity
Notes
2016
$000
2015
$000
15
8
10
16
5(d)
19
8
17
11
13
12
9
18
5(d)
19
14
18
5(e)
14
21
22
22(b)
91,162
83,254
53,518
116
1,486
2,313
231,849
1,200
3,364
1,340,415
382,048
59,673
1,786,700
2,018,549
64,604
2,272
-
-
45,733
112,609
12,588
51,575
91,365
155,528
268,137
1,750,412
95,692
24,353
1,630,362
1,750,407
5
1,750,412
24,789
43,296
57,613
1,040,480
-
-
1,166,178
2,029
7,986
502,113
377,120
19,732
908,980
2,075,158
42,512
-
4,732
23,144
32,262
102,650
-
60,186
59,697
119,883
222,533
1,852,625
95,444
6,632
1,750,525
1,852,601
24
1,852,625
The above balance sheet should be read in conjunction with the accompanying notes.
29
29
BALANCE SHEET as at 31 July 2016
New Hope Corporation Limited and Controlled Entities
Consolidated Statement of Changes in Equity
for the year ended 31 July 2016
Contributed
Equity
Notes
$000
Reserves
$000
Retained
Earnings
Non-controlling
Interests
Total
$000
$000
$000
Balance at 1 August 2014
95,119
27,400
1,851,289
51
1,973,859
Loss for the year
Other comprehensive loss
Total comprehensive loss for the year
Transactions with owners in their capacity as owners
Dividends provided for or paid
Special dividend paid
Transfer from share based payment reserve to equity
Net movement in share based payment reserve
Share of non-controlling interests equity contributions
Balance at 31 July 2015
Loss for the year
Other comprehensive profit
Total comprehensive loss for the year
Transactions with owners in their capacity as owners
Dividends provided for or paid
Special dividend paid
Transfer from share based payment reserve to equity
Net movement in share based payment reserve
Share of non-controlling interests equity contributions
20
20
22
22
20
20
22
22
-
-
-
-
-
325
-
-
325
-
(20,610)
(20,610)
-
-
(325)
167
-
(158)
(21,820)
-
(21,820)
(49,859)
(29,085)
-
-
-
(78,944)
(1)
-
(1)
-
-
-
-
(26)
(26)
(21,821)
(20,610)
(42,431)
(49,859)
(29,085)
-
167
(26)
(78,803)
95,444
6,632
1,750,525
24
1,852,625
-
-
-
-
-
248
-
-
248
-
17,846
17,846
-
-
(248)
123
-
(125)
(53,679)
-
(53,679)
(37,397)
(29,087)
-
-
-
(66,484)
(1)
-
(1)
-
-
-
-
(18)
(18)
(53,680)
17,846
(35,834)
(37,397)
(29,087)
-
123
(18)
(66,379)
Balance at 31 July 2016
95,692
24,353
1,630,362
5
1,750,412
The above statement of changes in equity should be read in conjunction with the accompanying notes.
30
30
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportSTATEMENT OF CHANGES IN EQUITY for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Consolidated Cash Flow Statement
for the year ended 31 July 2016
Cash flows from operating activities
Receipts from customers inclusive of GST
Payments to suppliers and employees inclusive of GST
Acquisition costs expensed
Interest paid
Income taxes paid
Net cash inflow from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangibles
Payments for acquisition of business - Bengalla
Payments for acquisition of business - Other
Payments for exploration and evaluation assets
Receipt from available for sale financial assets
Refunds of/(payments for) security and bond guarantees
Net proceeds from held to maturity investments
Proceeds from sale of property, plant and equipment
Interest received
Net cash inflow from investing activities
Cash flows from financing activities
Repayment of finance leases
Dividends paid
Net cash outflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial year
Notes
2016
$000
2015
$000
532,081
(470,896)
61,185
(52,104)
(249)
(2,104)
6,728
(66,257)
(38)
(846,048)
(3,482)
(17,774)
-
9
1,032,412
822
25,363
125,007
(985)
(66,484)
(67,469)
64,266
24,789
2,107
91,162
6
24
24
15
475,908
(380,524)
95,384
-
-
(6,929)
88,455
(62,442)
-
-
-
(53,215)
8,622
(98)
23,792
333
38,390
(44,618)
-
(78,944)
(78,944)
(35,107)
57,015
2,881
24,789
The above cash flow statement should be read in conjunction with the accompanying notes.
31
31
CASH FLOW STATEMENT for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
The financial report covers New Hope Corporation Limited and its subsidiaries as the consolidated entity and together are referred to as the
Group or the consolidated entity in this financial report.
Basis of preparation
This financial report is a general purpose financial report which:
h
h
h
h
h
h
h
Has been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting
Standards Board, Australian Accounting Interpretations and the Corporations Act 2001.
Complies with IFRS as issued by the International Accounting Standards Board (IASB). For the purposes of preparing the consolidated
Financial Statements, the company is a for profit entity.
Adopts policies which are consistent with those of the previous financial year and corresponding interim reporting period.
Has been prepared under the historical cost convention, as modified by the revaluation of available for sale financial assets, derivative
instruments carried at fair value, agricultural assets carried at fair value and inventory carried at net realisable value.
Does not adopt any Accounting Standards and Interpretations that have been issued or amended but are not yet effective (such as AASB 15
Revenue from Contracts with Customers and AASB 9 Financial Instruments (December 2010) as amended by 2013-9). Refer to note 34 for
more information on this and other accounting policies.
Is for a company which is of a kind referred to in Corporations Instrument 2016/191 , issued by the Australian Securities and Investment
Commission, relating to the "rounding off" of amounts in the financial statements. Amounts in the financial statements have been rounded off
in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.
Presents comparative information that has been reclassified where appropriate to enhance comparability.
Subsidiaries
Basis of consolidation
(i)
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of New Hope Corporation Limited (Company or
parent entity) as at 31 July 2016 and the results of all subsidiaries for the year then ended.
Subsidiaries are all those entities (including special purpose entities) over which the Group has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are
deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of comprehensive income,
statement of changes in equity and balance sheet respectively.
Joint Arrangements
(ii)
For information on Joint Arrangements refer to note 25.
32
32
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016 New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
Other accounting policies
Significant and other accounting policies relevant to gaining an understanding of the financial statements have been grouped with the relevant
notes to the financial statements.
Key judgements and estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its
judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the financial statements are disclosed within the following notes:
Note 5
Note 11
Note 11
Note 11
Note 11
Note 12
Note 13
Note 13
Note 14
Note 17
Note 24
Note 25
Deferred Tax Assets
Impairment assessment
Estimation of coal reserves and resources
New Acland Stage 3 approvals
Impairment of property, plant and equipment
Impairment of goodwill
Exploration and evaluation expenditure
Impairment of oil exploration assets
Provisions - rehabilitation
Impairment of available for sale financial assets
Business combination - fair value
Classification of joint arrangements
Page
41
47
47
47
49
51
51
51
53
55
66
67
33
33
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016 New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
1. FINANCIAL REPORTING SEGMENTS
Accounting policy
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM).
The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as
comprising the Board, Managing Director (MD), Chief Operating Officer (COO) and Chief Financial Officer (CFO).
a. Description of segments
The Group has four reportable segments, namely Coal mining in Queensland (including mining related exploration, development, production,
processing, transportation, port operations and marketing), Coal mining in New South Wales (including mining production, processing,
transportation and marketing), Oil and gas (including oil and gas related exploration, development, production and processing) and Treasury
and investments (including cash, held to maturity investments and available for sale financial assets).
Operating segments have been determined based on the analysis provided in the reports reviewed by the Board, CEO, COO and CFO (being
the CODM). The reportable segments reflect how performance is measured, and decisions regarding allocations of resources are made by the
CODM.
Other immaterial coal mining and related operations that do not meet the quantitative thresholds requiring separate disclosure in AASB 8
Operating Segments have been combined with the Queensland coal mining operations. Segment information is presented on the same basis
as that used for internal reporting purposes. Sales between segments are carried out at arm’s length and are eliminated on consolidation.
b. Segment information
Notes
Coal
mining
QLD
Coal
mining
NSW
Oil and
gas
Treasury
and
investment
$000
$000
$000
$000
Total
$000
Year ended 31 July 2016
Revenue from external customers
EBITDA
Interest expense
Depreciation and amortisation
Profit/(loss) before tax and non regular items
Non regular items before tax ^
Profit/(loss) before tax after non regular items
Less Income tax benefit/(expense)
Less Petroleum resource rent tax expense
Profit/(loss) after tax after non regular items
Total segment profit before tax includes:
Interest revenue
Reportable segment assets
Total segment assets includes:
Additions to non-current assets
2
4
406,231
97,411
10,522
17,295
531,459
43,832
(248)
(54,523)
(10,940)
5,000
(5,940)
3,889
-
(2,051)
21,271
(1)
(16,234)
5,036
(51,862)
(46,826)
13,975
-
(32,851)
(1,901)
-
(4,148)
(6,049)
(28,388)
(34,437)
11,506
(3,574)
(26,505)
18,068
-
-
18,068
(4,978)
13,090
(5,363)
-
7,727
81,270
(249)
(74,905)
6,116
(80,228)
(74,112)
24,006
(3,574)
(53,680)
2
519
25
23
17,295
17,862
925,832
907,347
88,422
96,948
2,018,549
82,745
877,467
26,839
-
987,051
^ Non regular items relate to land access compensation income, impairment charges for oil producing and exploration assets, derecognition of
petroleum resource rent tax, impairment of available for sale financial assets and acquisition costs expensed in relation to business
combinations during the year.
34
34
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
1. FINANCIAL REPORTING SEGMENTS (continued)
b.
Segment information (continued)
Notes
Coal
mining
QLD
Coal
mining
NSW
Oil and
gas
Treasury
and
investment
$000
$000
$000
$000
Total
$000
Year ended 31 July 2015
Revenue from external customers
EBITDA
Interest expense
Depreciation and amortisation
Profit/(loss) before tax and non regular items
Non regular items before tax
Profit/(loss) before tax after non regular items
Less Income tax benefit/(expense)
Less Petroleum resource rent tax benefit
Profit/(loss) after tax after non regular items
2
453,465
93,420
(1)
(57,624)
35,795
(24,267)
11,528
(2,505)
-
9,023
Total segment profit before income tax includes:
Interest revenue
2
168
Reportable segment assets
Total segment assets includes:
Additions to non-current assets
921,737
108,460
-
-
-
-
-
-
-
-
-
-
-
-
-
11,955
40,361
505,781
(692)
-
(3,557)
(4,249)
(55,613)
(59,862)
16,442
961
(42,459)
40,033
-
-
40,033
(16,408)
23,625
(12,010)
-
11,615
132,761
(1)
(61,181)
71,579
(96,288)
(24,709)
1,927
961
(21,821)
62
35,191
35,421
88,118
1,065,303
2,075,158
16,401
-
124,861
^ The prior year segment note has been restated due to the change in reporting in the current year to enhance comparability.
c. Other segment information
(i) Segment revenue
Total segment revenue by geographical location
Japan
Taiwan/China
Chile
Korea/Indonesia
Other
Australia
Investment income - Australia
2016
$000
2015
$000
208,261
205,371
12,331
9,104
24,650
54,448
514,165
17,294
531,459
173,104
240,590
8,443
-
-
48,453
470,590
35,191
505,781
Included within revenue for the Coal mining - QLD segment is one customer that represents more than 10% of the Group's total revenue. For
the year ended 31 July 2016, one customer contributed $182,520,000 (2015 - 240,590,000) in sales revenue, whilst in 2015 another customer
contributed $62,952,000.
(ii) Segment assets
The amounts provided to the CODM with respect to total assets are measured in a manner consistent with that of the financial statements.
These assets are allocated based on the operations of the segment. All non-current assets are located in Australia.
35
35
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
2. REVENUE
Accounting policy - revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade
allowances, rebates and amounts collected on behalf of third parties.
The Group recognises revenue where the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to
the entity and specific criteria have been met for each of the Group's activities as described below. The Group bases its estimates on historical
results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. Revenue is recognised
for the major business activities as follows:
h
h
h
h
h
h
Coal sales revenue is recognised at the time the risks and benefits of ownership have been transferred to the customer in accordance with
the sales terms. For export sales this is normally at the time of loading the shipment, and for domestic sales this is generally at the time the
coal is delivered to the customer.
Oil sales revenue is recognised at the time the risks and benefits of ownership have been transferred to the customer in accordance with the
sales terms. For oil sales this is normally when the oil is delivered to the customer.
Service fee income and management fee income is recognised as the services are performed.
Interest income is recognised as it accrues using the effective interest method.
Rental income is recognised on a straight line basis over the lease term.
Dividend income is taken into profit when the right to receive payment is established.
Sales revenue
Sale of goods
Services
Other revenue
Property rent
Interest
Sundry revenue
3. OTHER INCOME
Gain on sale of investments held for sale - Dart Energy Limited
Land access compensation
Gain/(loss) on sale of property, plant and equipment
4. EXPENSES
Profit/(loss) before income tax includes the following specific expenses:
Foreign exchange gains and losses
Net foreign exchange gains
Depreciation
Buildings
Plant and equipment
2016
$000
2015
$000
486,220
22,358
508,578
1,048
17,862
3,971
531,459
-
5,000
(154)
4,846
441,009
23,305
464,314
865
35,421
5,181
505,781
1,151
-
26
1,177
(2,107)
(2,881)
11
11
752
50,238
50,990
619
51,588
52,207
36
36
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
4. EXPENSES (continued)
Amortisation
Mining reserves, leases and mine development
Software
Oil producing assets
Mining information
Water rights
Doubtful debt expense^
Other charges against assets
Impairment of available for sale investments (IGas Plc and Planet Gas Limited)
Impairment of oil producing assets (Bridgeport)
Impairment of oil exploration assets (Bridgeport)
Impairment of non current assets (Jeebropilly Coal to Liquids Facility)
Impairment of goodwill (Bridgeport)
Notes
11
12
11
12
12
8
17
11
13
11
12
Acquisition costs expensed
Exploration costs expensed
Employee benefits expensed
Superannuation expensed*
Operating lease costs expensed
-
2015
$000
4,555
1,426
2,993
-
-
8,974
-
17,558
51,456
-
24,267
4,157
97,438
-
2016
$000
18,600
1,027
3,593
585
110
23,915
6,377
4,978
15,029
13,117
-
-
33,124
52,104
14,150
15,976
100,782
86,513
7,131
4,718
6,031
4,168
^ Doubtful debt expense is included in Other expenses.
* Superannuation expensed is included in Employee benefits expensed.
5. INCOME TAXES
Accounting policy
The income tax expense or revenue for the period is the tax payable on the current period's taxable income, based on the relevant income tax
rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences, and to unused tax
losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in
the jurisdictions where the company’s subsidiaries and associates operate and generate taxable income.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises
from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither
accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially
enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax
liability is settled.
37
37
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
5. INCOME TAXES (continued)
Accounting policy (continued)
Tax consolidation legislation
New Hope Corporation Limited and its wholly owned Australian controlled entities implemented the tax consolidation legislation as of 1 August
2003. All entities within the group are party to both Tax Sharing and Funding Agreements (TSA and TFA). The TSA, in the opinion of the
Directors, limits the joint and several liability of each entity in the case of default by New Hope Corporation Limited. The TFA provides the basis
to account for compensation for tax related items transferred between the subsidiaries and the head entity of the group. The head entity, New
Hope Corporation Limited, and the controlled entities in the tax consolidated group account for their own current and deferred tax amounts.
These tax amounts are measured as if each entity in the tax consolidation group continues to be a stand alone tax payer in its own right.
In addition to its own current and deferred tax amounts, the Company also recognises the current tax liabilities (or assets) and the deferred tax
assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group. Assets or liabilities
arising under TFAs with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the Group. Any
difference between the amounts assumed and amounts receivable or payable under the TFA are recognised as a contribution to (or distribution
from) wholly-owned tax consolidated entities.
Petroleum Resource Rent Tax (PRRT)
The Group accounts for current and deferred tax arising from PRRT in accordance with the requirements in relation to income tax as detailed
above. New Hope Corporation Limited, as head company of the income tax consolidated group has made a PRRT consolidation election and
as such the Group currently includes three PRRT consolidated groups at 31 July 2016 (two at 31 July 2015). The Group has accounted for its
PRRT tax balances in accordance with the stand alone taxpayer method in alignment with its TFA.
a.
Income Tax Expense
Income tax - Current tax expense
Income tax - Deferred tax benefit
Income tax - Adjustments for current tax of prior periods
Petroleum resource rent tax - Deferred tax expense/(benefit)
Effective tax rate
Effective tax rate (excluding PRRT)
2016
$000
2015
$000
-
(19,827)
(4,179)
3,574
(20,432)
18,692
(17,349)
(3,270)
(961)
(2,888)
27.6%
32.4%
11.7%
7.8%
38
38
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
5. INCOME TAXES (continued)
b.
Numerical reconciliation of income tax expense to prima facie tax payable
Loss before income tax
Income tax calculated at 30% (2015 - 30%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Non-taxable entities
Effect of previously unrecognised capital losses
Gain on sale of available for sale financial assets
Impairment of available for sale financial assets
Impairment of goodwill
Income tax on petroleum resource rent tax
Sundry items
Over provided in prior year
Petroleum resource rent tax (benefit)/expense
Income tax benefit
c. Tax expense relating to items of other comprehensive income
Cash flow hedges (note 22)
d.
Reconciliation of income tax payable/(receivable)
Loss before income tax
Income tax calculated at 30% (2015 - 30%)
Tax effected adjustments to taxable income:
Non-taxable entities
Non temporary differences
Non assessable income
Gain on sale of investments available for sale
Impairment of available for sale financial assets
Impairment of goodwill
Other non temporary items
Temporary differences:
Taxable income at 30% (2015 - 30%)
Tax losses generated
Current tax liability
Less: Tax instalments paid
Tax (refundable)/payable
-
2016
$000
2015
$000
(74,112)
(24,709)
(22,234)
(7,413)
(104)
(1,500)
-
1,493
-
(1,072)
205
(23,212)
(794)
3,574
(20,432)
(7,606)
(7,606)
543
-
(345)
5,267
1,247
288
(220)
(633)
(1,294)
(961)
(2,888)
6,701
6,701
(74,112)
(24,709)
(22,234)
(7,413)
(104)
543
(1,500)
-
1,493
-
205
13,575
(8,565)
(8,565)
-
(1,486)
(1,486)
-
(345)
5,267
1,247
(220)
19,575
18,654
-
18,654
(13,922)
4,732
39
39
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
s
e
i
t
i
t
n
E
d
e
l
l
o
r
t
n
o
C
d
n
a
d
e
t
i
i
m
L
n
o
i
t
a
r
o
p
r
o
C
e
p
o
H
w
e
N
s
t
n
e
m
e
t
a
t
s
l
a
i
c
n
a
n
i
f
e
h
t
o
t
s
e
t
o
N
6
1
0
2
y
l
u
J
1
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
f
0
0
0
$
'
s
e
i
t
i
l
i
b
a
i
l
x
a
t
d
e
r
r
e
f
e
D
-
)
2
6
6
,
9
(
)
7
3
9
,
1
9
(
-
)
4
9
6
(
)
9
1
6
,
6
(
9
1
2
,
1
-
-
)
4
3
9
,
3
(
-
-
)
7
2
6
,
1
1
1
(
-
)
5
0
5
,
7
(
)
0
0
4
,
9
8
(
-
-
)
2
8
3
(
)
3
3
9
,
6
(
-
-
-
)
2
6
8
,
3
(
)
2
8
0
,
8
0
1
(
s
t
e
s
s
a
0
0
0
$
'
x
a
t
d
e
r
r
e
f
e
D
1
5
6
,
9
2
-
-
-
-
-
-
9
3
6
1
8
4
,
1
1
-
1
8
7
,
6
1
0
0
5
,
1
2
5
0
,
0
6
6
9
6
-
4
7
5
,
3
3
4
9
,
6
6
3
7
,
8
1
-
-
4
7
4
0
7
4
5
8
,
8
5
1
3
,
8
6
9
8
,
7
4
t
e
N
0
0
0
$
'
1
5
6
,
9
2
)
2
6
6
,
9
(
)
7
3
9
,
1
9
(
-
)
4
9
6
(
)
9
1
6
,
6
(
9
3
6
9
1
2
,
1
1
8
4
,
1
1
)
4
3
9
,
3
(
1
8
7
,
6
1
0
0
5
,
1
)
5
7
5
,
1
5
(
6
3
7
,
8
1
)
9
0
8
,
6
(
)
0
0
4
,
9
8
(
4
7
5
,
3
2
1
9
,
6
)
3
3
9
,
6
(
)
2
8
3
(
4
0
7
4
5
8
,
8
)
7
5
7
,
3
(
5
1
3
,
8
)
6
8
1
,
0
6
(
0
0
0
$
'
s
s
e
n
s
u
b
i
n
i
d
e
r
i
u
q
c
A
n
o
i
t
a
n
b
m
o
c
i
6
0
9
,
8
)
6
8
1
,
0
1
(
-
-
-
-
)
9
6
6
(
3
1
1
6
3
8
,
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
n
i
i
d
e
s
n
g
o
c
e
R
n
i
i
d
e
s
n
g
o
c
e
R
1
t
a
e
c
n
a
l
a
b
t
e
N
)
d
e
u
n
i
t
n
o
c
(
S
E
X
A
T
E
M
O
C
N
I
.
5
s
e
c
n
a
l
a
b
x
a
t
d
e
r
r
e
f
e
D
.
e
I
C
O
0
0
0
$
'
-
-
-
-
)
6
0
6
,
7
(
-
-
-
-
-
-
)
6
0
6
7
(
,
-
-
-
-
1
0
7
,
6
-
-
-
-
-
-
1
0
7
,
6
0
0
0
$
'
s
s
o
l
r
o
t
i
f
o
r
p
0
0
0
$
'
t
s
u
g
u
A
9
0
0
,
2
3
3
3
,
7
)
7
3
5
,
2
(
)
4
7
5
,
3
(
-
4
1
3
0
7
2
,
2
)
8
7
1
(
1
9
7
)
7
7
1
(
5
6
5
,
8
1
0
4
,
1
7
1
2
,
6
1
8
4
9
,
2
7
0
4
,
9
1
)
8
3
6
,
3
(
0
6
9
-
)
3
(
2
5
2
)
0
0
2
(
2
9
2
)
2
0
7
(
)
6
0
0
,
1
(
0
1
3
,
8
1
0
4
6
3
7
,
8
1
)
9
0
8
6
(
,
)
0
0
4
,
9
8
(
4
7
5
,
3
2
1
9
,
6
)
3
3
9
6
(
,
)
2
8
3
(
4
0
7
4
5
8
,
8
)
7
5
7
3
(
,
6
1
2
,
8
9
9
)
6
8
1
,
0
6
(
8
8
7
,
5
1
)
6
1
2
,
6
2
(
)
2
6
7
,
5
8
(
1
1
2
4
1
6
,
2
)
5
8
1
,
7
(
)
9
7
3
(
4
0
9
2
6
5
,
8
)
5
5
0
,
3
(
1
2
3
,
9
)
7
9
1
,
5
8
(
i
i
n
o
s
v
o
r
p
n
o
i
t
a
t
i
l
i
b
a
h
e
r
e
t
i
s
e
n
M
i
6
1
0
2
i
t
n
e
m
p
u
q
e
d
n
a
t
n
a
p
l
,
y
t
r
e
p
o
r
P
n
o
i
t
a
r
o
p
x
e
l
d
e
s
i
l
a
t
i
p
a
C
x
a
t
t
n
e
r
e
c
r
u
o
s
e
r
l
m
u
e
o
r
t
e
p
n
o
g
n
s
i
r
i
A
i
i
n
o
s
v
o
r
p
s
e
s
n
e
p
x
e
d
e
u
r
c
c
A
s
t
i
f
e
n
e
b
e
e
y
o
p
m
E
l
r
e
h
t
O
s
e
s
s
o
l
x
a
t
e
u
n
e
v
e
R
s
e
s
s
o
l
l
a
t
i
p
a
C
n
o
i
t
a
t
i
l
i
b
a
h
e
r
e
t
i
s
e
n
M
i
5
1
0
2
i
t
n
e
m
p
u
q
e
d
n
a
t
n
a
p
l
,
y
t
r
e
p
o
r
P
n
o
i
t
a
r
o
p
x
e
l
d
e
s
i
l
a
t
i
p
a
C
l
e
b
a
v
e
c
e
r
i
s
t
n
u
o
c
c
a
r
e
h
t
O
s
e
i
r
o
t
n
e
v
n
I
s
e
g
d
e
h
w
o
l
f
h
s
a
C
x
a
t
t
n
e
r
e
c
r
u
o
s
e
r
l
m
u
e
o
r
t
e
p
n
o
g
n
s
i
r
i
A
l
e
b
a
v
e
c
e
r
i
s
t
n
u
o
c
c
a
r
e
h
t
O
s
e
i
r
o
t
n
e
v
n
I
s
e
g
d
e
h
w
o
l
f
h
s
a
C
s
e
s
n
e
p
x
e
d
e
u
r
c
c
A
s
t
i
f
e
n
e
b
e
e
y
o
p
m
E
l
s
e
s
s
o
l
x
a
T
r
e
h
t
O
40
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
5. INCOME TAXES (continued)
Deferred tax balances (continued)
e.
Accounting policy
Deferred tax assets are recognised for the deductible temporary differences and unused tax losses only when it is probable that future
taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for
temporary differences between the carrying amount and tax bases of investments in controlled entities where the company is able to control
the timing of the reversal of the temporary difference and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the
deferred tax balances relate to the same taxation authority.
f. Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items
Tax losses (Capital)
PRRT (net of income tax)
Temporary differences associated with available for sale financial assets
2016
$000
2015
$000
9,549
57,702
7,717
74,968
10,068
17,586
7,409
35,063
Significant judgements and estimates
The deferred taxation benefits will only be obtained if, assessable income is derived of a nature and of an amount sufficient to enable the
benefit from the deductions to be realised, conditions for deductibility imposed by the law are complied with, and no changes in tax
legislation adversely affect the realisation of the benefit from the deductions.
The recognised deferred tax assets include carried forward transferred losses from previous acquisitions and current period Group revenue
losses. The deferred tax assets will be recoverable against future taxable income based on the current forecasts for the Group. The deferred
tax assets will be recoverable against future taxable income over the estimated life of the Group’s assets based on the current forecasts. Key
judgements and estimates underpinning these forecasts are the estimated cash flows and reserves and resources detailed in note 11.
Revenue tax losses do not expire and are deemed to be low risk of denial of utilisation.
Capital tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items
because it is uncertain when future capital gains will be available against which the Group can utilise the benefits from these assets.
41
41
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
6. RECONCILIATION OF NET CASH INFLOW/(OUTFLOW)
FROM OPERATING ACTIVITIES TO PROFIT AFTER INCOME TAX
Loss after income tax
Depreciation and amortisation
Non-cash employee benefit expense - share based payments
Impairment of non current assets
Impairment of goodwill
Impairment of available for sale financial assets
Impairment of oil producing assets
Impairment of oil exploration assets
Net foreign exchange gain
Net profit on sale of held for sale assets
Net profit/(loss) on sale of non-current assets
Interest income
Income taxes paid
Income tax benefit
Changes in operating assets and liabilities
(Increase)/decrease in receivables*
(Increase)/decrease in other receivables*
(Increase)/decrease in inventories*
(Increase)/decrease in prepayments*
(Increase)/decrease in other assets*
Increase/(decrease) in payables*
Increase/(decrease) in provisions and employee entitlements*
Net cash provided by operating activities
-
2015
$000
(21,821)
61,181
167
24,267
4,157
17,558
51,456
-
(2,881)
(1,151)
(26)
(35,421)
(6,929)
(2,888)
(33)
92
(1,094)
(182)
546
(84)
1,541
88,455
2016
$000
(53,680)
74,905
123
-
-
4,978
15,029
13,117
(2,107)
-
154
(17,549)
(2,104)
(20,432)
(20,729)
(2,954)
16,559
(475)
-
2,748
(855)
6,728
*The above net movement excludes the increase associated with the acquisition of the Bengalla joint operation interest.
Non-cash investing and financing activities
Acquisition of plant and equipment by means of finance leases
15,845
-
7. EARNINGS PER SHARE
Accounting policy
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company, excluding any costs of servicing
equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the year, adjusted for bonus
element in ordinary shares issued during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income
tax effect of interest and other financial costs associated with dilutive potential ordinary shares and the weighted average number of shares
assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
42
42
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
7. EARNINGS PER SHARE (continued)
a.
Basic earnings/(loss) per share attributable to ordinary equity holders of the Company
b.
Diluted earnings/(loss) per share attributable to ordinary equity holders of the Company
c. Reconciliation of adjusted profits
Loss attributable to the ordinary equity holders of the Company
d. Weighted average number of shares used as the denominator
Weighted average number of ordinary shares (basic)
Rights
Weighted average number of ordinary shares (diluted)
Earnings per share (cents)
2016
(6.5)
(6.5)
2015
(2.60)
(2.60)
Basic and Diluted
2016
$000
2015
$000
(53,679)
(21,820)
Consolidated
2016
2015
831,050,306
438,136
831,488,442
830,999,449
167,423
831,166,872
e.
Rights granted to employees are considered to be potential ordinary shares and have been included in the determination of diluted earnings
per share to the extent to which they are dilutive. The rights have not been included in the determination of basic earnings per share. Details
relating to the rights are set out in note 30.
8. RECEIVABLES
Accounting policy
Trade receivables are recognised initially at fair value and subsequently at amortised cost, less provision for doubtful debts. Trade receivables
are due for settlement no more than forty five days from the date of recognition.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are
initially recognised at fair value, and subsequently at amortised cost less provisions for doubtful debts. They are included in current assets,
except for those with maturities greater than 12 months after the reporting date which are classified as non-current assets.
Impairment
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is
impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of
impairment as a result of one or more events that occurred after the initial recognition of the asset (a "loss event") and that loss event (or events)
has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
Collectability of trade debtors is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying
amount directly. An allowance account (provision for doubtful debts) is used when there is objective evidence that the Group will not be able to
collect all of the amounts due according to the original terms of receivables. The amount of the provision is the difference between the carrying
amount and the present value of estimated future cash flows, discounted at the effective interest rate.
The amount of the impairment loss is recognised in profit or loss within other expenses. When a trade receivable for which an impairment
allowance has been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent
recoveries of amounts previously written off are credited against other expenses in profit or loss.
43
43
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
8. RECEIVABLES (continued)
Current
Trade receivables (a)
Less: Provision for doubtful debts
Other receivables (b)
Prepayments
Non-current
Prepayments
Other receivables
-
2015
$000
26,108
-
13,454
3,734
43,296
213
1,816
2,029
2016
$000
60,659
(6,377)
24,209
4,763
83,254
-
1,200
1,200
a. Recoverable receivable
As of 31 July 2016, trade receivables past due but not impaired were $14,251,000 (2015: $6,498,000). This receivable relates solely to
invoices issued by Queensland Bulk Handling Pty Ltd (QBH) (a wholly owned subsidiary of New Hope Corporation Limited) to Peabody
(Willkie Creek) Pty Limited for coal port services. The amounts invoiced to Peabody were the subject of an action in the Supreme Court of
Queensland brought by QBH. An initial decision in favour of QBH was handed down on 27 February 2015. A subsequent appeal by
Peabody was heard on 30 July 2015 and was dismissed. QBH commenced a further action against Peabody in the Supreme Court of
Queensland on 8 December 2015.
Subsequent to 31 July 2016, an agreed settlement (in principle conditional upon the execution of a Settlement Deed which is currently
being negotiated) for an amount of $12,950,000 plus GST has been achieved. A doubtful debt expense of $6,377,000 (refer note 4) has
been recognised against the total amount initially invoiced and recognised as a receivable in order to bring the amount outstanding at 31
July 2016 in line with the in principle settlement amount. While the amount is past due, it is considered recoverable at year end.
b. Other receivables
These amounts relate to long service leave payments recoverable from the Coal Mining Industry Long Service Leave Fund, diesel fuel
rebates receivable, GST refunds receivable and security deposits. None of these receivables are impaired or past due but not impaired.
c. Foreign exchange and interest rate risk
Information about the Group's exposure to foreign currency risk and interest rate risk in relation to trade and other receivables is provided in
note 23. In both the current and prior year all non-current receivables are non-interest bearing.
d. Fair value and credit risk
Due to the short term nature of current receivables, their carrying value is assumed to approximate their fair value. The fair value of non-
current receivables approximates their carrying amounts. Information about the Group's exposure to fair value and credit risk in relation to
trade and other receivables is provided in note 23.
9. ACCOUNTS PAYABLE
Accounting policy
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid.
The amounts are unsecured and usually paid within forty five days of recognition.
Trade payables and accruals
2016
$000
2015
$000
64,604
42,512
44
44
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
10. INVENTORIES
Accounting policy
Coal stocks are valued at the lower of cost and net realisable value in the normal course of business. Cost comprises the weighted
average costs of direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being
allocated on the basis of normal operating capacity.
Inventories of consumable supplies and spare parts expected to be used in production are valued at weighted average cost.
Coal stocks
Self-generating and regenerating assets
Raw materials and stores at cost
2016
$000
26,818
2,076
24,624
53,518
2015
$000
33,482
1,305
22,826
57,613
Inventory expense
a.
Coal stocks recognised as an expense during the year ended 31 July 2016 amounted to $211,394,000 (2015 - $200,357,000). The cost
of inventories recognised includes $79,000 resulting from the reversal of write-downs to net realisable value in the prior period. Previous
write-downs have been reversed as a result of increased selling prices in the current market.
Raw materials recognised as an expense during the year ended 31 July 2016 amounted to $72,310,000 (2015 - $58,802,000).
45
45
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
11. PROPERTY, PLANT AND EQUIPMENT
Accounting policy
Property, plant and equipment is stated at historical cost less applicable depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items. Cost may also include transfers from equity of any gains/losses on qualifying cash flow hedges of
foreign currency purchases of property, plant and equipment.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and
maintenance are charged to profit or loss during the financial period in which it is incurred.
Depreciation is calculated so as to write off the cost of each item of property, plant and equipment over its expected economic life to the
consolidated entity. Each item's useful life has due regard both to its own physical life limitations and to present assessments of economically
recoverable resources of the mine property at which the item is located. Estimates of residual values and remaining useful lives are made on
an annual basis. Straight line method is predominately used. The expected useful life of plant and equipment is 4 to 20 years, buildings is 25
to 40 years and motor vehicles is 4 -8 years. Land is not depreciated.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its recoverable
amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss.
Mine properties, development costs, reserves and leases and oil producing assets
Development expenditure incurred by the consolidated entity is accumulated separately for each area of interest in which economically
recoverable mineral and oil resources have been identified to the satisfaction of the Directors. Direct development expenditure, pre-operating
start-up costs and an appropriate portion of related overhead expenditures are capitalised as development costs up until the relevant area of
interest is ready for use. The cost of acquiring mineral and oil reserves and resources are capitalised on the statement of financial position as
incurred.
Mining reserves, leases and development costs are amortised over the estimated productive life of each applicable mine on either a unit of
production basis or years of operation basis, as appropriate. Amortisation commences when an area of interest is ready for use.
Oil producing assets are amortised on a unit of production basis. The method uses the actual costs of the asset to date plus all its projected
future costs. Amortisation commences when an area of interest is ready for use.
Deferred stripping costs
The Group does not recognise any deferred stripping costs. Based on the nature of the Group's mining operations and the stripping ratio for
the components of its operations, the recognition criteria of a deferred stripping asset are not satisfied. Further, it is anticipated that the
In the
operations will maintain a consistent stripping ratio at the component level and as such no overburden in advance should be recognised.
event that a stripping campaign is undertaken in the future a deferred stripping asset will be recognised at that time and amortised in
accordance with the requirements of IFRIC 20. An asset will be recognised for stripping activity where the following criteria are met:
h
h
h
It is probable that future economic benefits (improved access to the ore body) associated with the stripping activity will flow to the entity;
The entity can identify the component of the ore body for which access has been improved; and
The costs relating to the stripping activity associated with that component can be measured reliably.
Impairment
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset's fair value less cost to sell and its value in use. For the purposes of assessing impairment under value in use
testing, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the
cash inflows from other assets or groups of assets (cash-generating units). Annual assessments of impairments reversals are undertaken.
46
46
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
11. PROPERTY, PLANT AND EQUIPMENT (continued)
Significant judgements and estimates - impairment of assets
(a) Impairment assessment
All property, plant and equipment allocated to cash generating units (CGU’s) containing goodwill must be tested for impairment at the CGU
level on an annual basis. Other property, plant and equipment assets must also be tested for impairment when impairment indicators are
identified.
Judgement is involved in assessing whether there are indicators of impairment of property, plant and equipment including in relation to the
impact of events or changes in circumstances. For coal mining and oil production assets, key judgements include external factors such as
forecast commodity prices and foreign exchange rates. Judgement is also required in relation to the estimation of coal and oil reserves and
resources (refer (b) below for further information in relation to the estimation of coal reserves and resources).
Where the recoverable amounts of the Group’s CGU’s are tested for impairment using analyses of discounted cash flows, the resulting
valuations are also sensitive to changes in estimates of long-term commodity prices, production timing and recovery rates, exchange rates,
operating costs, reserve and resource estimates, closure costs and discount rates. Estimates in respect of the timing of project expansions
and the cost to complete asset construction are also critical to determining the recoverable amounts for cash-generating units (refer (c) below
in relation to specific considerations related to Acland Stage 3 approvals).
(b) Estimation of coal reserves and resources
The Group estimates its coal reserves and resources based on information compiled by Competent Persons as defined in accordance with
the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves of December 2012 (the JORC code, which
is produced by the Australasian Joint Ore Reserves Committee).
The estimation of reserves and resources requires judgment to interpret available geological data and then to select an appropriate mining
method and establish an extraction schedule. It also requires assumptions about future commodity prices, exchange rates, production costs,
recovery rates and discount rates and, in some instances, the renewal of mining licences. There are many uncertainties in the estimation
process and assumptions that are valid at the time of estimation may change significantly when new information becomes available.
Changes in coal reserves could have an impact on: the calculation of depreciation, amortisation and impairment charges; the timing of the
payment of closedown and restoration costs; and the recovery of deferred tax assets. Changes in coal resources could have an impact on the
recoverability of Exploration and evaluation costs capitalised (refer note 13).
(c) New Acland Stage 3 approvals
There remain a number of uncertainties associated with the approvals timeline and ultimate conditionality of the New Acland Stage 3 project.
The lengthy duration of the approval process may result in a delay to the commencement of stage3 operations. The financial statements have
been prepared on the basis of a reasonable expectation the Group will be successful in securing approval for the Acland Stage 3 expansion
during the next financial year. If this was not to occur, it could impact the assessment of recoverable amount for property, plant and
equipment at the New Acland site as well as the calculation of depreciation, amortisation and rehabilitation provisions.
47
47
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
l
a
t
o
T
0
0
0
$
'
4
6
9
,
0
3
9
)
0
5
4
,
4
6
3
(
4
1
5
,
6
6
5
-
7
2
1
)
0
7
1
(
)
2
1
3
(
0
3
4
,
1
7
)
3
2
7
,
5
7
(
)
3
5
7
,
9
5
(
)
6
2
9
,
9
9
4
(
3
1
1
,
2
0
5
9
3
0
,
2
0
0
,
1
9
8
6
,
6
8
8
7
7
,
1
1
2
3
5
,
9
2
8
-
)
9
2
5
(
)
6
2
1
(
)
0
3
8
(
)
9
2
0
,
5
1
(
)
3
8
1
,
3
7
(
3
5
5
,
8
2
9
,
1
)
8
3
1
,
8
8
5
(
5
1
4
,
0
4
3
,
1
0
0
0
$
'
5
8
7
,
1
3
-
5
8
7
,
1
3
-
)
0
7
1
(
4
2
4
,
5
1
)
7
6
2
,
3
2
(
-
-
-
2
7
7
,
3
2
-
2
7
7
,
3
2
1
5
4
,
6
2
3
3
,
7
3
-
)
2
1
4
,
3
1
(
-
)
6
2
1
(
-
-
-
7
1
0
,
4
5
-
7
1
0
,
4
5
r
e
d
n
u
t
n
a
l
P
n
o
i
t
c
u
r
t
s
n
o
c
0
0
0
$
'
s
t
e
s
s
A
3
1
1
,
4
9
)
9
3
0
,
3
(
4
7
0
,
1
9
)
6
1
6
(
7
2
1
8
0
2
,
1
1
-
-
)
3
9
9
,
2
(
)
6
5
4
,
1
5
(
2
3
8
,
4
0
1
)
8
8
4
,
7
5
(
4
4
3
,
7
4
7
7
2
,
4
-
3
8
4
,
1
1
1
9
8
1
-
-
)
3
9
5
,
3
(
)
9
2
0
,
5
1
(
2
8
7
,
0
2
1
)
0
1
1
,
6
7
(
2
7
6
,
4
4
0
0
0
$
'
8
3
7
,
3
6
)
5
5
6
,
0
5
(
3
8
0
,
3
1
0
0
0
$
'
3
1
8
,
9
)
0
8
1
8
(
,
3
3
6
,
1
t
n
e
m
p
o
e
v
e
D
l
s
e
s
a
e
L
7
3
9
,
8
0
3
5
-
-
-
-
-
-
-
-
-
-
)
2
7
0
,
4
(
)
3
8
4
(
5
7
6
,
2
7
)
7
2
7
,
4
5
(
8
4
9
,
7
1
1
9
1
,
4
2
3
9
,
7
1
-
4
5
3
,
1
-
-
-
-
3
4
3
,
0
1
)
3
6
6
8
(
,
0
8
6
,
1
-
-
)
0
3
5
(
2
0
6
7
6
2
,
3
3
6
-
-
-
0
0
0
$
'
0
8
4
,
3
7
5
)
3
4
8
,
9
9
2
(
7
3
6
,
3
7
2
d
n
a
t
n
a
P
l
t
n
e
m
p
u
q
E
i
3
0
7
,
3
2
1
6
6
,
0
2
-
-
)
2
1
3
(
)
0
0
4
,
1
2
(
)
8
8
5
,
1
5
(
2
3
5
,
7
1
6
)
1
3
8
,
2
7
3
(
1
0
7
,
4
4
2
0
0
7
,
9
3
6
5
9
,
6
5
1
7
3
2
9
3
7
,
1
1
-
-
)
8
6
(
-
0
0
0
$
'
6
2
6
,
1
1
)
4
5
9
1
(
,
2
7
6
,
9
8
6
2
2
2
,
3
-
-
-
)
7
8
4
(
)
7
6
8
,
2
(
6
1
9
,
4
1
)
8
0
3
5
(
,
8
0
6
,
9
0
1
-
-
1
3
2
-
-
-
-
i
g
n
n
m
i
)
3
8
8
,
7
(
)
7
1
7
,
0
1
(
)
8
3
2
,
0
5
(
)
7
4
4
(
2
5
1
,
6
9
)
0
1
6
,
2
6
(
2
4
5
,
3
3
2
8
6
,
3
4
6
)
0
8
3
,
9
1
(
2
0
3
,
4
2
6
6
9
0
,
6
2
8
)
9
6
0
,
3
2
4
(
7
2
0
,
3
0
4
8
4
7
5
1
,
5
1
)
5
5
7
5
(
,
2
0
4
,
9
i
g
n
n
M
i
0
0
0
$
'
9
0
4
,
6
4
1
)
9
7
7
(
0
3
6
,
5
4
1
0
6
5
,
1
1
-
-
-
-
-
)
0
3
1
(
9
6
9
,
7
5
1
)
9
0
9
(
0
6
0
,
7
5
1
8
5
)
1
0
1
(
7
7
5
6
2
9
,
4
1
-
-
)
2
6
7
(
-
)
5
0
3
(
7
6
6
,
2
7
1
)
4
1
2
,
1
(
3
5
4
,
1
7
1
)
3
1
e
t
o
n
(
n
o
i
t
a
u
a
v
e
l
d
n
a
n
o
i
t
a
r
o
p
x
E
m
o
r
f
l
s
r
e
f
s
n
a
r
T
n
o
i
t
a
s
i
t
r
o
m
a
/
n
o
i
t
a
c
e
r
p
e
d
i
l
d
e
t
a
u
m
u
c
c
A
4
1
0
2
t
s
u
g
u
A
1
t
A
t
s
o
C
5
1
0
2
y
l
u
J
1
3
d
e
d
n
e
r
a
e
Y
t
n
u
o
m
a
k
o
o
b
t
e
N
)
t
u
o
(
/
n
i
s
r
e
f
s
n
a
r
T
s
n
o
i
t
i
d
d
A
)
4
2
e
t
o
n
(
a
l
l
a
g
n
e
B
r
e
h
t
O
-
-
s
s
e
n
s
u
b
i
f
o
n
o
i
t
i
s
u
q
c
A
i
s
s
e
n
s
u
b
i
f
o
n
o
i
t
i
s
u
q
c
A
i
)
t
u
o
(
/
n
i
s
r
e
f
s
n
a
r
T
s
n
o
i
t
i
d
d
A
n
o
i
t
a
s
i
t
r
o
m
a
/
n
o
i
t
a
c
e
r
p
e
d
i
l
d
e
t
a
u
m
u
c
c
A
6
1
0
2
y
l
u
J
1
3
d
e
d
n
e
r
a
e
Y
t
n
u
o
m
a
k
o
o
b
t
e
N
e
s
n
e
p
x
e
n
o
i
t
a
s
i
t
r
o
m
a
/
n
o
i
t
a
c
e
r
p
e
D
i
s
t
e
s
s
a
f
o
t
n
e
m
r
i
a
p
m
I
s
t
e
s
s
a
f
o
l
a
s
o
p
s
D
i
5
1
0
2
y
l
u
J
1
3
t
A
t
s
o
C
)
3
1
e
t
o
n
(
n
o
i
t
a
u
a
v
e
l
d
n
a
n
o
i
t
a
r
o
p
x
E
o
t
l
s
r
e
f
s
n
a
r
T
)
2
1
e
t
o
n
(
l
i
s
e
b
g
n
a
t
n
I
o
t
s
r
e
f
s
n
a
r
T
)
2
1
e
t
o
n
(
l
i
s
e
b
g
n
a
t
n
I
o
t
s
r
e
f
s
n
a
r
T
e
s
n
e
p
x
e
n
o
i
t
a
s
i
t
r
o
m
a
/
n
o
i
t
a
c
e
r
p
e
D
i
s
t
e
s
s
a
f
o
t
n
e
m
r
i
a
p
m
I
s
t
e
s
s
a
f
o
l
a
s
o
p
s
D
i
6
1
0
2
y
l
u
J
1
3
t
A
t
s
o
C
n
o
i
t
a
s
i
t
r
o
m
a
/
n
o
i
t
a
c
e
r
p
e
d
i
l
d
e
t
a
u
m
u
c
c
A
t
n
u
o
m
a
k
o
o
b
t
e
N
48
s
e
i
t
i
t
n
E
d
e
l
l
o
r
t
n
o
C
d
n
a
d
e
t
i
i
m
L
n
o
i
t
a
r
o
p
r
o
C
e
p
o
H
w
e
N
s
t
n
e
m
e
t
a
t
s
l
a
i
c
n
a
n
i
f
e
h
t
o
t
s
e
t
o
N
6
1
0
2
y
l
u
J
1
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
f
g
n
i
c
u
d
o
r
P
l
i
O
e
n
M
i
d
n
a
s
e
v
r
e
s
e
R
i
g
n
n
M
i
d
n
a
d
n
a
L
-
n
o
N
s
g
n
d
i
l
i
u
B
d
n
a
d
n
a
L
s
g
n
d
i
l
i
u
B
)
d
e
u
n
i
t
n
o
c
(
T
N
E
M
P
U
Q
E
D
N
A
T
N
A
L
P
I
,
Y
T
R
E
P
O
R
P
.
1
1
e
t
o
N
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
11. PROPERTY, PLANT AND EQUIPMENT (continued)
Finance leases
Accounting policy
Plant, fixtures and motor vehicles includes the following amounts where the Group is a lessee under a finance lease (refer to note 18 for
further details).
Leasehold equipment
Cost
Accumulated depreciation
2016
$000
15,845
(1,346)
14,499
2015
$000
-
-
-
Significant judgements and estimates
The Group has made significant judgements and estimates in relation to the recoverability of the coal to liquids facility proof of concept plant
and oil producing assets and associated goodwill. Impairment charges to property, plant and equipment are as follows:
Land and buildings (non-mining) (a)
Plant, fixtures and motor vehicles (a)
Oil producing assets (b)
2016
$000
-
-
15,029
15,029
2015
$000
2,867
21,400
51,456
75,723
(a) Impairment of land and buildings (non-mining) and plant
In 2015, it was evident that the carrying value of the proof of concept plant exceeded the recoverable amount of the plant and as such a
decision was taken to fully impair the carrying value of the asset.
(b) Impairment of oil producing assets and associated goodwill
The Group has determined that due to the continued significant decline in global oil prices there is an indicator that the carrying value of
certain oil producing assets are impaired.
The Group has classified its Cooper Basin assets as separate Cash Generating Units (CGU) on a per field basis and has measured the
recoverable amount of each CGU using the Fair value less cost of disposal (FVLCD) method with all fair value measurements categorised
as Level 3 in the fair value hierarchy. All CGUs are included in the Oil and gas segment.
The Group has estimated the future cash flows of each CGU making assumptions in respect of key variables including: economically
recoverable reserves, future production profiles, commodity prices, foreign exchange rates, operating costs and future development costs
necessary to produce the reserves. The commodity price and foreign exchange assumptions have been based on consensus market data
in the range of oil prices of USD41-USD85 (2015: USD62-USD91) (before escalation) and AUD/USD exchange rates of 0.72-0.75 (2015:
0.75-0.93). The future cashflows have been discounted using an after tax discount rate of 10% (2015: 10%).
The recoverable amount and impairment loss calculated under the FVLCD method of the CGUs determined to be impaired are:
2015
2016
Recoverable
amount
$000
6,901
1,383
Impairment Recoverable
amount
$000
12,869
6,719
loss
$000
8,342
5,673
Impairment
loss
$000
51,410
1,545
(1,097)
-
7,187
1,014
-
15,029
(277)
-
19,311
1,613
1,045
55,613
Cooper Basin PL98
Cooper Basin PL214
Cooper Basin PL24-26, 35, 36,62, 76-79, 82, 87, 105, 107, 109, 133, 149,
175, 181, 182, 189 and 302
Cooper Basin PL15
49
49
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
12. INTANGIBLES
Accounting policy
IT development and software
Costs incurred in developing products or systems and costs incurred in acquiring software and licenses that will contribute to future period
financial benefits through revenue generation and/or cost reduction are capitalised to software and systems. Costs capitalised are external
direct costs of materials and services. Amortisation is calculated on a straight line basis over periods generally ranging from 3 to 5 years.
Water rights and Mining information
The Group benefits from water rights associated with its mining operations through the efficient and cost effective operation of the mine. These
rights are amortised on a straight line basis over the life of the mine. The value of exploration, pre-feasibility and feasibility costs necessary for
regulatory, reporting and internal control purposes have been recognised as a mining information intangible asset. The total value is amortised
over the estimated life of the mine.
Goodwill
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of associates is included in investments in
associates. Goodwill is not amortised. Goodwill is carried at cost less accumulated impairment losses. Gains or losses on the disposal of an
is allocated to cash-generating units for the purpose of
entity include the carrying amount of goodwill relating to the entity sold. Goodwill
impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from
the business combination in which the goodwill arose.
Impairment
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more
frequently if events or changes in circumstances indicate that they might be impaired. Refer to note 11 for details of impairment testing.
Goodwill impairments are not reversible.
At 1 August 2014
Cost
Accumulated amortisation and impairment
Net book amount
Year ended 31 July 2015
Additions
Transfers in/(out) (note 11)
Impairment of assets
Amortisation charge
At 31 July 2015
Cost
Accumulated amortisation and impairment
Net book amount
Year ended 31 July 2016
Additions
Acquisition of business - Bengalla (note 24)
Transfers in/(out) (note 11)
Amortisation charge
At 31 July 2016
Cost
Accumulated amortisation and impairment
Net book amount
Software
$'000
Goodwill
$'000
Water
rights
$'000
Mining
information
$'000
22,024
-
22,024
-
-
(4,157)
-
22,024
(4,157)
17,867
-
-
-
-
22,024
(4,158)
17,866
12,853
(9,996)
2,857
264
170
-
(1,426)
13,224
(11,359)
1,865
38
40
126
(1,027)
13,428
(12,386)
1,042
50
-
-
-
-
-
-
-
-
-
-
-
6,560
-
(110)
6,560
(110)
6,450
-
-
-
-
-
-
-
-
-
-
-
34,900
-
(585)
34,900
(585)
34,315
Total
$'000
34,877
(9,996)
24,881
264
170
(4,157)
(1,426)
35,248
(15,516)
19,732
38
41,500
126
(1,722)
76,912
(17,239)
59,673
50
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
12. INTANGIBLES (continued)
Critical estimate - Goodwill impairment assessment
Goodwill cost relates to the acquisition of Queensland Bulk Handling Pty Ltd ($5,596,000) and Northern Energy Corporation Limited (NEC)
($12,271,000).
The recoverable amount of the CGU to which NEC goodwill
is attributable has been based on FVLCD using a comparable resource
transaction multiple multiplied by the resources attributable to this CGU. This assessment is determined under Level 2 of the fair value
hierarchy based on observable external market data for reserve and resource transaction multiples, rather than quoted prices. Observable
transactions included in the assessment of an appropriate multiple are comparable transactions in the last 3 years for Australian coal
exploration projects with the same coal type as the CGU's assets. The estimation of the resources used to determine the recoverable amount
requires judgement and assumptions as detailed in note 11.
The recoverable amount of the QBH CGU has been based on value in use calculations using a discounted cashflow model. The future
cashflows have been discounted using a post tax rate of 10% (31 July 2015: 10%).
a. Goodwill impairment
There was an impairment of goodwill recognised in the year ended 31 July 2015 of $4,157,000. This impairment related to the goodwill on the
Bridgeport acquisition in 2012. Details of the FVLCD impairment assessment are included in note 11.
13. EXPLORATION AND EVALUATION
Accounting policy
Exploration, evaluation and relevant acquisition costs are accumulated separately for each area of interest. They comprise acquisition costs,
direct exploration and evaluation costs and an appropriate portion of related overhead expenditure. Costs are carried forward only if they
relate to an area of interest for which rights of tenure are current and such costs are expected to be recouped through successful development
and exploitation or from sale of the area.
Exploration and evaluation expenditure which does not satisfy these criteria are expensed.
Critical judgements in applying the entity's accounting policy
Exploration and evaluation expenditure
During the year the entity capitalised various items of expenditure to the exploration expenditure asset. The relevant items of expenditure
were deemed to be part of the capital cost of developing future mining operations, which will subsequently be amortised over the life of the
mine. The key judgement applied in considering whether the costs should be capitalised, is that costs are expected to be recovered through
either successful development or sale of the relevant mining interest.
Exploration and evaluation at cost
Exploration and evaluation - mining reserves acquired
Reconciliation
Carrying amount at beginning of year
Additions
Impairment of assets
Transfers in/(out) (note 11)
Carrying amount at end of year
2016
$000
124,616
257,432
382,048
377,120
17,514
(13,117)
530
382,048
2015
$000
120,219
256,901
377,120
323,816
53,431
-
(127)
377,120
Critical estimate - impairment oil exploration assets
There are two oil exploration tenements which will shortly be required to commence renewal processes. Due to the prospectivity of these oil
exploration tenures it is currently anticipated that a full relinquishment will arise in respect of these tenures and management have no intention
of further exploring or development the resource. As such, it has been determined that the recoverable amount for these tenures is nil and a
full impairment has been recognised for the carrying value of $8,998,000. In addition, there are two further Victorian oil exploration tenures
which are subject to government moratorium until at least 2020. With the uncertainty of future exploitation of these tenures a full impairment of
$4,119,000 has been recognised in respect of the exploration asset.
51
51
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
14. PROVISIONS
Accounting policy
Short-term employee benefit obligations
Liabilities for wages and salaries, including non-monetary benefits, annual leave and vesting sick leave expected to be settled within twelve
months after the end of the period in which the employees render the related service are recognised in respect of employees' services up to
the end of the reporting period. These are measured at the amounts expected to be paid when the liabilities are settled. The liability of annual
leave and accumulating sick leave is recognised in the provision for employee benefits. All other short-term employee benefit obligations are
presented as payables.
Other long-term employee benefit obligations
The liability for long service leave and annual leave which is not expected to be settled within twelve months after the end of the period in
which the employees render the related service is recognised in the provision for employee benefits and measured as the present value of
expected future payments to be made in respect of services provided by employees up to the end of the reporting period. Consideration is
given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are
discounted using market yields at the end of the reporting period on a high quality corporate bonds rate with terms to maturity and currency
that match, as closely as possible, the estimated future cash outflows.
Restoration, rehabilitation and environmental expenditure
Provisions are raised for restoration, rehabilitation and environmental expenditure as soon as an obligation exists, with the cost being charged
to profit or loss in respect of ongoing rehabilitation. Where the obligation relates to decommissioning of assets and restoring the sites on
which they are located, the costs are carried forward in the value of the asset and amortised over its useful life.
Provisions are measured at the present value of expected future cash outflows with future cash outflows reassessed on a regular basis. The
present value is determined using an appropriate discount rate. The obligations include profiling, stabilisation and revegetation of the
completed area, with cost estimates based on current statutory requirements and current technology.
2016
Current
Non-current
2015
Current
Non-current
Employee
benefits
Rehabilitation
Total
$000
$000
$000
34,160
5,269
39,429
27,415
3,351
30,766
11,573
86,096
97,669
4,847
56,346
61,193
45,733
91,365
137,098
32,262
59,697
91,959
52
52
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
14. PROVISIONS (continued)
a. Mining restoration and rehabilitation
Movements
Carrying amount at beginning of year
Provision capitalised/(written down)
Provision credited to profit and loss
Provision arising on acquisition
Charged to profit and loss - unwinding of discount
Carrying amount at end of year
-
2015
$000
52,486
8,624
(2,348)
-
2,431
61,193
2016
$000
61,193
(3,118)
(578)
37,982
2,190
97,669
Significant estimate - determination of coal reserves estimates and rehabilitation costs
Provision is made for rehabilitation, restoration and environmental costs when the obligation arises, based on the net present value of
estimated future costs. The ultimate cost of rehabilitation and restoration is uncertain, and management uses its judgment and experience to
provide for these costs over the life of the operations.
The Group makes estimates about the future cost of rehabilitating tenements which are currently disturbed, based on legislative requirements
and current costs. Cost estimates take into account past experience and expectations of future events that are expected to alter past
experiences. Any changes to legislative requirements could have a significant impact on the expenditure required to restore these areas.
The estimation of coal reserves and resources are also a key judgement that affects the timing of the payment of closedown and restoration
costs as detailed in note 11.
b. Employee benefits
Long service leave obligations expected to be settled after 12 months
2016
$000
10,478
2015
$000
7,187
The current provision for employee benefits includes accrued annual leave, vested sick leave and long service leave for all unconditional
settlements where employees have completed the required period of service and also those where employees are entitled to pro-rata
payment in certain circumstances. The entire amount is presented as current, since the group does not have an unconditional right to
defer settlement. However, based on past experience, the Group does not expect all employees to take the full amount of accrued long
service leave or require payment within the next 12 months.
15. CASH AND CASH EQUIVALENTS
Accounting policy
Cash and cash equivalents include cash on hand, deposits held at call with financial institutions and other short-term, highly liquid investments
that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value, excluding funds on
deposit for which there is no short term identified use in the operating cash flows of the Group.
Cash at bank and on hand
2016
$000
2015
$000
91,162
24,789
53
53
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
15. CASH AND CASH EQUIVALENTS (continued)
a. Cash at bank and on hand
Cash at bank and on hand includes deposits for which there is a short term identified use in the operating cash flows of the Group, and attracts
interest at rates between 0% and 1.9% (2015 - 0% to 2.93%).
b. Risk exposure
Information about the Group's exposure to foreign exchange risk and credit risk is detailed in note 23.
16. HELD TO MATURITY INVESTMENTS
Accounting policy
Held to maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group's
management has the positive intention and ability to hold to maturity. Held to maturity investments are carried at amortised cost using the
effective interest method.
Impairment
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is
impaired. Such assets are impaired and impairment losses incurred only if there is objective evidence of impairment as a result of one or more
events that occurred after the initial recognition (a "loss event") and that loss event has an impact on the estimated future cash flows of the
financial asset or group of financial assets that can be reliably estimated.
Term Deposits
2016
$000
116
2015
$000
1,040,480
The term deposits are held to their maturity of less than one year and carry a weighted average fixed interest rate of 2.44% (2015 - 2.77%).
Information about the Group's exposure to credit risk is
Due to their short-term nature the carrying value is assumed to approximate fair value.
disclosed in note 23.
17. AVAILABLE FOR SALE FINANCIAL ASSETS
Accounting policy
Available for sale financial assets, comprising principally marketable securities, are non-derivatives that are either designated in this category
or not classified in any other category. They are included in non-current assets unless management intends to dispose of the investment within
12 months of the balance sheet date.
Available for sale financial assets are initially recognised at fair value. Unrealised gains and losses arising from changes in the fair value of non-
monetary securities classified as available for sale are recognised in equity in the available for sale investments revaluation reserve. When
securities classified as available for sale are sold or impaired, the accumulated fair value adjustments are included in the income statement as
gains and losses from investment securities.
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is
impaired. Such assets are impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or
more events that occurred after the initial recognition of the asset (a "loss event") and that loss event has an impact on the estimated future
cash flows of the financial asset or group of financial assets that can be reliably estimated.
In the case of equity investments classified as
available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the assets are
impaired.
If there is objective evidence of impairment of available for sale financial assets, the cumulative loss, measured as the difference between the
acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss, is removed
from equity and recognised in profit or loss.
Impairment losses on equity instruments that were recognised in profit or loss are not reversed through profit or loss in a subsequent period.
54
54
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
17. AVAILABLE FOR SALE FINANCIAL ASSETS (continued)
Listed equity securities
Unlisted equity securities
-
2015
$000
7,983
3
7,986
2016
$000
3,361
3
3,364
During the year equity securities held were impaired by $4,622,000 (2015 - $17,558,000). In addition $356,000 was transferred from reserves
to profit or loss.
Critical judgements in applying the accounting policy
In the 2016 financial statements, the Group made a significant judgement about the impairment of one of its available for sale financial assets.
As a result of a prolonged decline in the fair value of the security it was considered to be impaired and a loss recognised in profit and loss.
18. LEASE LIABILITIES
Accounting policy
Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards of ownership are classified as
finance leases. Finance leases are capitalised at the lease’s inception at the fair value of the leased property or, if lower, the present value of
the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term and long-term
payables.
The property, plant and equipment acquired under finance leases is depreciated over the asset’s useful life or over the shorter of the asset’s
useful life and the lease term if there is no reasonable certainty that the group will obtain ownership at the end of the lease term.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as
operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income
statement on a straight line basis over the period of the lease.
a. Secured - finance lease liabilities
Current
Non-current
2016
$000
2,272
12,588
14,860
2015
$000
-
-
-
The group leases various plant and equipment with a carrying amount of $14,499,000 (2015: $nil) under finance leases expiring within four to
five years. Refer to note 11 for further detail on these assets.
Commitments in relation to finance lease are payable as follows:
Within one year
Later than one year but not later than five years
Minimum lease payments
Future finance charges
Total lease liability
The present value of finance lease liabilities is as follows:
Within one year
Later than one year but not later than five years
Minimum lease payments
2,767
13,653
16,420
(1,560)
14,860
2,272
12,588
14,860
-
-
-
-
-
-
-
-
Secured liability
Lease liabilities are effectively secured as the rights to the leased assets recognised in the financial statements revert to the lessor in the event
of default. No other assets are pledged as security for borrowings.
Risk exposures
Details of the Group’s exposure to risks arising from current and non-current borrowings are set out in note 23.
55
55
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
19. DERIVATIVE FINANCIAL INSTRUMENTS
Accounting policy
Forward foreign exchange contracts
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair
value at each reporting date. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging
instrument, and if so, the nature of the item being hedged. The Group designates derivatives as hedges of highly probable forecast transactions
(cash flow hedges).
The Group documents at the inception of the transaction, the relationship between hedging instruments and hedged items, as well as its risk
management objectives and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at hedge
inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be highly
effective in offsetting changes in fair values or cash flows of hedged items.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in the hedging
reserve. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss.
Amounts accumulated in equity are recycled in the income statement in the periods when the hedged item will affect profit or loss (for instance
when the forecast sale that is hedged takes place). However, when the forecast transaction that is hedged, results in the recognition of a non-
financial asset (for example, inventory) or a non-financial liability, the gains and losses previously deferred in equity are transferred from equity
and included in the measurement of the initial cost or carrying amount of the asset or liability.
When a hedging instrument expires, is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative
gain or loss in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss.
When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately reclassified to
profit or loss.
Current assets
Forward foreign exchange contracts
Current liabilities
Forward foreign exchange contracts
2016
$000
2,313
2015
$000
-
-
23,144
56
56
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
19. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
Instruments used by the Group
a.
New Hope Corporation Limited and certain controlled entities are parties to derivative financial instruments in the normal course of business
in order to hedge exposure to fluctuations in foreign exchange rates. The portion of the gain or loss on the hedging instrument that is
determined to be an effective hedge is recognised directly in equity. When the cash flows occur, the Group reclassifies the gain or loss into
the income statement.
At balance date these contracts represented an asset with a fair value of $2,313,000 (2015 - liability with a fair value of $23,144,000). At
balance date the details of outstanding contracts are:
Maturity
0 to 6 months
6 to 12 months
Sell US Dollars
Buy Australian Dollars
Average exchange rate
2016
$000
7,297
21,831
29,128
2015
$000
82,116
84,188
166,304
2016
2015
0.68520
0.68709
0.84027
0.80771
b. Credit risk exposures
Credit risk also arises from the potential failure of counterparties to meet their obligations under the respective contracts at maturity. A
material exposure arises from forward exchange contracts and the consolidated entity is exposed to loss in the event that counterparties fail
to deliver the contracted amount. At balance date $29,128,000 (2015 - $166,305,000) was receivable (AUD equivalents).
20. DIVIDENDS
Accounting policy
Provision is made for any dividend declared on or before the end of the financial year but not distributed at balance date.
a. Ordinary dividend paid
2014 final dividend at 2.00 cents per share - 100% franked (tax rate - 30%) (paid on 4 Nov 2014)
2014 special dividend at 3.50 cents per share - 100% franked (tax rate - 30%) (paid on 4 Nov 2014)
2015 interim dividend at 4.00 cents per share - 100% franked (tax rate - 30%) (paid on 5 May 2015)
2015 final dividend at 2.50 cents per share - 100% franked (tax rate - 30%) (paid on 3 Nov 2015)
2015 special dividend at 3.50 cents per share - 100% franked (tax rate - 30%) (paid on 3 Nov 2015)
2016 interim dividend at 2.00 cents per share - 100% franked (tax rate - 30%) (paid on 3 May 2016)
Total dividends paid
b. Proposed dividends
2016
$000
-
-
-
20,776
29,087
16,621
66,484
2015
$000
16,619
29,085
33,240
-
-
-
78,944
In addition to the above dividends, since the end of the financial year, the Directors have declared a final dividend of 2.0 cents (2015 - 2.5
cents per share final dividend and a 3.5 cents per share special dividend). The dividend is fully franked based on tax paid at 30%. The
proposed dividend expected to be paid on 1 November 2016 but not recognised as a liability at year end is $16,621,000 (2015 -
$49,860,000).
c. Franked dividends
The franked portions of the final dividend recommended after 31 July 2016 will be franked out of existing franking credits.
Franking credits available for subsequent financial years based on a tax rate of 30% (2015 - 30%)
467,998
497,414
57
57
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
20. DIVIDENDS (continued)
Franked dividends (continued)
c.
The above amounts represent the balances of the franking account as at the end of the financial year, adjusted for franking debits that will arise
from the payment/refund of income tax, franking debits that will arise from the payment of dividends recognised as a liability at the reporting date
and franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date. The impact on the franking
account of the dividend recommended by the Directors since year end, but not recognised as a liability at year end, will be a reduction in the
franking account of $7,123,000 (2015 - $21,369,000).
d. Dividend
There were no dividend reinvestment plans in operation at any time during or since the end of the financial year.
reinvestment plans
21. CONTRIBUTED EQUITY
Accounting policy
Ordinary shares are classified as equity.
deduction net of tax, from the proceeds. The amounts of any capital returns are applied against contributed equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
Ordinary shares
a.
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of and
amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy is entitled to
one vote, and upon a poll each share is entitled to one vote. Ordinary shares have no par value and the company does not have a limited
amount of authorised capital.
Rights
b.
Information relating to the New Hope Corporation Employee Performance Rights Share Plan, including details of rights granted, vested and
lapsed during the financial year and rights outstanding at the end of the financial year, is set out in note 30.
c. Share Capital
Issued and paid up capital
d.
Movements in share capital
2016
No. of shares
831,050,676
2016
$000
95,692
2015
No. of shares
830,999,449
2015
$000
95,444
Date
1 August 2013
1 August 2013
1 December 2013
1 January 2014
31 January 2014
31 July 2014
1 August 2014
31 July 2015
31 July 2015
Details
Opening Balance
Vesting of performance rights
Vesting of performance rights
Vesting of performance rights
Vesting of performance rights
Transfer from SBP reserve to Equity (note 22)
Vesting of performance rights
Transfer from SBP reserve to Equity (note 22)
Balance
4 August 2015
31 July 2016
31 July 2016
Vesting of performance rights
Transfer from SBP reserve to Equity (note 22)
Balance
Number of
Shares
830,563,352
151,873
52,317
52,317
113,253
-
66,337
-
830,999,449
51,227
-
831,050,676
Issue
Price
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$0.0000
$000
93,342
-
-
-
-
1,777
-
325
95,444
-
248
95,692
Capital risk management
e.
The Group's objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide
returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to
maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue
new shares, or source debt to fund growth projects.
58
58
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
l
a
t
o
T
0
0
0
$
0
0
4
,
7
2
4
6
8
,
5
2
)
0
1
7
,
7
(
1
7
)
6
1
3
,
3
5
(
0
9
7
,
6
1
8
4
,
4
1
7
6
1
)
5
2
3
(
2
3
6
,
6
2
3
6
,
6
3
0
2
,
2
2
)
4
5
5
,
6
(
)
8
5
2
(
7
0
5
,
3
)
2
5
0
,
1
(
8
7
4
,
4
2
3
2
1
)
8
4
2
(
3
5
3
,
4
2
-
-
-
-
-
)
9
2
0
,
6
(
-
-
)
9
2
0
,
6
(
)
9
2
0
,
6
(
-
-
-
-
-
0
0
0
$
)
9
2
0
,
6
(
I
^
C
N
n
o
d
i
a
p
m
u
m
e
r
P
i
-
-
-
1
7
-
-
1
7
-
-
1
7
1
7
-
-
)
8
5
2
(
-
-
0
0
0
$
*
R
T
C
F
)
9
2
0
,
6
(
)
7
8
1
(
-
-
-
-
)
9
2
0
,
6
(
)
7
8
1
(
9
4
5
0
0
0
$
-
-
-
-
-
9
4
5
7
6
1
)
5
2
3
(
1
9
3
1
9
3
-
-
-
-
-
1
9
3
3
2
1
)
8
4
2
(
6
6
2
)
5
6
5
(
0
0
0
$
4
6
8
,
5
2
)
0
1
7
,
7
(
-
)
1
7
2
,
8
4
(
1
8
4
,
4
1
)
1
0
2
,
6
1
(
-
-
0
0
0
$
2
1
4
,
7
2
-
-
-
-
-
2
1
4
,
7
2
-
-
)
1
0
2
,
6
1
(
2
1
4
,
7
2
)
1
0
2
,
6
1
(
8
4
8
,
1
2
)
4
5
5
,
6
(
-
7
0
5
,
3
)
2
5
0
,
1
(
8
4
5
,
1
-
-
-
-
-
-
-
2
1
4
,
7
2
2
1
4
,
7
2
-
-
8
4
5
,
1
2
1
4
,
7
2
0
0
0
$
0
9
6
,
4
-
-
-
-
)
5
5
3
(
)
5
4
0
,
5
(
-
-
)
5
5
3
(
)
5
5
3
(
5
5
3
-
-
-
-
-
-
-
-
t
n
e
m
y
a
p
d
e
s
a
b
-
e
r
a
h
S
i
g
n
g
d
e
H
n
o
i
t
a
u
a
v
e
R
l
s
t
e
s
s
a
l
a
i
c
n
a
n
i
f
S
F
A
0
0
0
$
3
4
3
,
1
l
a
t
i
p
a
C
s
t
i
f
o
r
p
-
-
-
-
-
3
4
3
,
1
-
-
3
4
3
,
1
3
4
3
,
1
-
-
-
-
-
3
4
3
,
1
-
-
3
4
3
,
1
s
e
t
o
N
)
c
(
5
5
)
e
(
9
2
)
d
(
1
2
)
c
(
5
5
)
e
(
9
2
)
d
(
1
2
s
e
i
t
i
t
n
E
d
e
l
l
o
r
t
n
o
C
d
n
a
d
e
t
i
i
m
L
n
o
i
t
a
r
o
p
r
o
C
e
p
o
H
w
e
N
s
t
n
e
m
e
t
a
t
s
l
a
i
c
n
a
n
i
f
e
h
t
o
t
s
e
t
o
N
6
1
0
2
y
l
u
J
1
3
d
e
d
n
e
r
a
e
y
e
h
t
r
o
f
s
r
e
n
w
o
s
a
y
t
i
c
a
p
a
c
r
i
e
h
t
n
i
s
r
e
n
w
o
h
t
i
w
s
n
o
i
t
c
a
s
n
a
r
T
e
s
n
e
p
x
e
t
n
e
m
y
a
p
d
e
s
a
b
e
r
a
h
S
y
t
i
u
q
e
d
e
t
u
b
i
r
t
n
o
c
o
t
r
e
f
s
n
a
r
T
5
1
0
2
y
l
u
J
1
3
t
A
e
m
o
c
n
i
i
e
v
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
x
a
t
d
e
r
r
e
f
e
d
s
s
o
r
g
-
-
n
o
i
t
a
u
a
v
e
R
l
n
o
i
t
a
u
a
v
e
R
l
s
r
e
n
w
o
s
a
y
t
i
c
a
p
a
c
r
i
e
h
t
n
i
s
r
e
n
w
o
h
t
i
w
s
n
o
i
t
c
a
s
n
a
r
T
e
m
o
c
n
i
i
e
v
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
x
a
t
d
e
r
r
e
f
e
d
s
s
o
r
g
-
-
n
o
i
t
a
u
a
v
e
R
l
n
o
i
t
a
u
a
v
e
R
l
e
s
n
e
p
x
e
t
n
e
m
y
a
p
d
e
s
a
b
e
r
a
h
S
y
t
i
u
q
e
d
e
t
u
b
i
r
t
n
o
c
o
t
r
e
f
s
n
a
r
T
6
1
0
2
y
l
u
J
1
3
t
A
s
e
v
r
e
s
e
r
f
o
e
s
o
p
r
u
p
d
n
a
e
r
u
t
a
N
s
t
i
f
o
r
p
l
a
t
i
p
a
C
x
a
t
d
e
r
r
e
f
e
d
s
s
o
r
g
i
y
r
a
d
s
b
u
s
i
-
-
t
i
f
o
r
p
t
e
n
o
t
r
e
f
s
n
a
r
T
t
i
f
o
r
p
t
e
n
o
t
r
e
f
s
n
a
r
T
-
l
n
o
i
t
a
s
n
a
r
t
y
c
n
e
r
r
u
C
5
1
0
2
t
s
u
g
u
A
1
t
A
x
a
t
d
e
r
r
e
f
e
d
s
s
o
r
g
i
y
r
a
d
s
b
u
s
i
-
-
t
i
f
o
r
p
t
e
n
o
t
r
e
f
s
n
a
r
T
t
i
f
o
r
p
t
e
n
o
t
r
e
f
s
n
a
r
T
-
l
n
o
i
t
a
s
n
a
r
t
y
c
n
e
r
r
u
C
4
1
0
2
t
s
u
g
u
A
1
t
A
S
E
V
R
E
S
E
R
.
2
2
59
9
5
.
e
r
u
t
a
n
l
a
t
i
p
a
c
a
f
o
s
t
i
f
o
r
p
e
r
e
w
t
a
h
t
s
t
i
f
o
r
p
i
d
e
n
a
t
e
r
m
o
r
f
d
e
t
a
c
o
l
l
a
s
t
n
u
o
m
a
s
t
n
e
s
e
r
p
e
r
e
v
r
e
s
e
r
i
s
h
T
.
t
s
e
r
e
n
t
i
g
n
i
l
l
o
r
t
n
o
c
-
n
o
N
-
I
C
N
^
.
e
v
r
e
s
e
r
l
n
o
i
t
a
s
n
a
r
t
y
c
n
e
r
r
u
c
i
n
g
e
r
o
F
-
R
T
C
F
*
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
22. RESERVES (continued)
Available for sale investments revaluation
Changes in the fair value of investments classified as available for sale financial assets are taken to this reserve. Amounts are recognised in
profit and loss when the associated assets are sold or impaired.
Property, plant and equipment revaluation
This reserve represents the revaluation arising on the fair value uplift of property, plant and equipment on the initial holding of Queensland
Bulk Handling Pty Ltd further to the acquisition of the remaining 50% of this company.
Hedging
The hedging reserve is used to record the gains and losses on a hedging instrument in a cash flow hedge that are recognised directly in
equity, as described in note 19. Amounts are recognised in profit and loss when the associated hedged transaction affects profit and loss.
Share based payment reserve
The share based payment reserve is used to recognise the fair value of options and rights issued, but not yet exercised. Fair values at grant
date are independently determined using the Black-Scholes options pricing model that takes into account the exercise price , the term of the
option, the impact of dilution, the share price at grant date and expected volatility of the underlying share, the expected dividend yield and
risk free interest rate for the term of the option.
Premium paid on non-controlling interest acquisition
The premium paid on non-controlling interest acquisition is used to recognise any excess paid on the acquisition of a non-controlling interest
in a subsidiary.
Foreign currency translation reserve (FCTR)
Exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive income as described in
note 34(a) and accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit or loss when the net
investment is disposed of.
b. Retained profits
Carrying amount at beginning of year
Net profit/(loss) after income tax
Dividends paid (note 20)
Carrying amount at end of year
23. FINANCIAL RISK MANAGEMENT
2016
$000
2015
$000
1,750,525
(53,679)
(66,484)
1,630,362
1,851,289
(21,820)
(78,944)
1,750,525
Accounting policy
The Group's activities expose it to a variety of financial risks: market risk (including currency risk, price risk and interest rate risk), credit risk
and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects on the financial performance of the Group. The Group uses derivative financial
instruments such as foreign
exchange contracts to hedge certain risk exposures. Derivatives are used exclusively for hedging purposes, i.e. not as trading or other
speculative instruments. The Group uses different methods to measure different types of risk to which it is exposed. These methods include
sensitivity analysis in the case of interest rate, foreign exchange and other price risks and aging analysis for credit risk.
60
60
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
23. FINANCIAL RISK MANAGEMENT (continued)
Risk management is carried out in accordance with written policies approved by the Board of Directors. These written policies cover specific
areas, such as mitigating foreign exchange, interest rate and credit risks, use of forward exchange contracts and investment of excess liquidity.
The Group holds the following financial instruments:
Financial assets
2016
Cash and cash equivalents
Trade and other receivables
Available for sale financial assets
Held to maturity investments
Derivative financial instruments
2015
Cash and cash equivalents
Trade and other receivables
Available for sale financial assets
Held to maturity investments
Other financial assets
Financial liabilities
2016
Borrowings
Trade and other payables
2015
Trade and other payables
Derivative financial instruments
Available for
Sale
Hedging
Derivatives
Amortised at
cost
$000
$000
$000
Total
$000
-
-
3,364
-
-
3,364
-
-
7,986
-
-
7,986
-
-
-
-
-
-
-
-
-
-
2,313
2,313
-
-
-
-
-
-
-
-
-
-
23,144
23,144
91,162
78,491
-
116
-
169,769
24,789
41,009
-
1,040,480
369
1,106,647
14,860
64,604
79,464
42,512
-
42,512
91,162
78,491
3,364
116
2,313
175,446
24,789
41,009
7,986
1,040,480
369
1,114,633
14,860
64,604
79,464
42,512
23,144
65,656
a.
Market risk
(i) Foreign exchange risk
Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is
not the entity's functional currency. The Group is exposed to foreign exchange risk arising from currency exposures to the US dollar.
Forward contracts are used to manage foreign exchange risk. Senior management is responsible for managing exposures in each foreign
currency by using external forward currency contracts. Contracts are designated as cash flow hedges. External foreign exchange contracts
are designated at Group level as hedges of foreign exchange risk on specific future transactions.
The Group's risk management policy is to hedge up to 65% of anticipated transactions (export coal sales) in US dollars for the subsequent
year, up to 57% of anticipated revenue beyond a year but less than two years and up to 50% for revenue beyond two years but less than three
years. All hedges of projected export coal sales qualify as "highly probable" forecast transactions for hedge accounting purposes.
61
61
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
23. FINANCIAL RISK MANAGEMENT (continued)
a.
Market risk (continued)
The Group's exposure to foreign currency risk at the reporting date was as follows:
Cash and cash equivalents
Trade receivables
Forward exchange contracts - sell foreign currency (cash flow hedges)
Trade payables
-
2015
USD
$000
3,586
11,299
137,000
11
2016
USD
$000
9,135
13,501
20,000
389
Group sensitivity
Based on the trade receivables, cash and trade payables held at 31 July 2016, had the Australian dollar weakened/strengthened by 10%
against the US dollar with all other variables held constant, the Group's post-tax profit for the year would have increased/(decreased) by
$2,300,000/($1,882,000) (2015 - $1,588,000/($1,300,000)), mainly as a result of foreign exchange gains/losses on translation of US dollar
receivables and cash balances as detailed in the above table. The Group's equity as at balance date would have increased/(decreased) by the
same amounts.
Based on the forward exchange contracts held at 31 July 2016, had the Australian dollar weakened/strengthened by 10% against the US dollar
with all other variables held constant,
(2015 -
$21,075,000/($17,208,000)). There is no effect on post-tax profits.
the Group's equity would have increased/(decreased) by $2,961,000/($2,419,000)
(ii) Price risk
The Group is exposed to equity securities price risk arising from certain investments held by the Group and classified on the balance sheet as
available for sale and held for sale.
The majority of the Group's equity investments are publicly traded. The table below summarises the impact of increases/decreases in the
financial
instrument on the Group's equity as at balance date. The analysis is based on the assumption that the equity instrument had
increased/decreased by 10% with all other variables held constant.
Index
All Ordinaries - 10% increase
All Ordinaries - 10% decrease
Impact on post-tax profit
2015
2016
$000
$000
-
-
-
-
Impact on equity
2016
$000
306
(306)
2015
$000
593
(593)
The price risk for unlisted securities is immaterial in terms of the possible impact on total equity.
sensitivity analysis.
It has therefore not been included in the
(iii) Fair value interest rate risk
Refer to (e) below.
b.
Credit risk
Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with
banks and financial institutions, as well as credit exposure to export and domestic customers, including outstanding receivables and committed
transactions. The Group has no significant concentrations of credit risk. The Group has policies in place to ensure that sales of products and
services are made to customers with an appropriate credit history. The majority of customers, both export and domestic have long term
relationships with the Group and sales are secured with long term supply contracts. Sales are secured by letters of credit when deemed
appropriate. Derivative counterparties, held to maturity investments and cash transactions are limited to financial institutions with a rating of at
least BBB. The Group has policies that limit the maximum amount of credit exposure to any one financial institution.
62
62
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
23. FINANCIAL RISK MANAGEMENT (continued)
b. Credit risk (continued)
Credit risk further arises in relation to financial guarantees given to certain parties (see note 26). Such guarantees are only provided in
exceptional circumstances and are subject to specific board approval.
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to historical information about
counterparty default rates. The table below summarises the assets which are subject to credit risk.
Trade receivables
Cash at bank and short term bank deposits
Held to maturity investments
Derivative financial instruments
c. Liquidity risk
2016
$000
83,254
91,162
116
2,313
2015
$000
42,927
24,789
1,040,480
-
Prudent liquidity risk management is adopted through maintaining sufficient cash and marketable securities, the ability to borrow funds from
credit providers and to close-out market positions. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows
and matching the maturity profiles of financial assets and liabilities. Surplus funds are generally only invested in instruments that are tradeable
in highly liquid markets.
Financing arrangements
The Group's only significant external borrowings relate to finance leases detailed in note 18. The maturity of these finance leases are shown in
(d) below.
d. Maturity of financial liabilities
The maturity groupings of derivative financial instruments are detailed in note 19.
Trade and other payables (note 9) are normally settled within 45 days of recognition. The Group's borrowings (note 18) comprise finance
leases payable over a period of four to five years. The finance lease are fixed rate leases with a weighted average interest rate of 3.58%.The
table below details the contractual maturities of finance lease liabilities:
Finance leases
0 to 6
months
$000
1,383
6 to 12
months
1 to 2
years
2 to 5
years
Total
Carrying
amount
$000
$000
$000
$000
$000
1,384
2,767
10,886
16,420
14,860
63
63
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
23. FINANCIAL RISK MANAGEMENT (continued)
e. Cash flow and fair value interest rate risk
The Group currently has significant interest-bearing assets which are placed with reputable investment counterparties for up to 12 months. The
Group has a treasury investment policy approved by the Board which stipulates the maximum dollar exposure to each financial institution, and
the maximum percentage of funds that can be invested with an individual institution. Significant changes in market interest rates may have an
effect on the Group's income and operating cash flows. The Group manages its cash flow interest rate risk by placing excess funds in term
deposits and other fixed interest bearing assets. Refer to notes 15 and 16 for details.
Based on the deposits held at balance date, the sensitivity to a 1% increase or decrease in interest rates would increase/(decrease) after tax
profit by $1,000 (2015 - $7,228,000).
f. Fair value measurements
Accounting policy - fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement for disclosure purposes.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using
valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each
balance date. The fair value of forward exchange contracts is determined using forward exchange market rates at the balance sheet date.
The carrying value less the estimated credit adjustments of trade receivables and payables is assumed to approximate their fair values due to
their short term nature.
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.
AASB 7 Financial Instruments: Disclosures requires disclosure of fair value measurements by level of the following fair value measurement
hierarchy:
a.
b.
Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly
(derived from prices) (level 2); and
c.
Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
The following table presents the Group's assets measured and recognised at fair value as at 31 July 2016 and 31 July 2015.
2016
Assets
Derivatives used for hedging
Available for sale financial assets
Equity securities
Total assets
Level 1
$000
Level 2
$000
Level 3
$000
Total
$000
-
2,313
-
2,313
3,364
3,364
-
2,313
-
-
3,364
5,677
64
64
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
23. FINANCIAL RISK MANAGEMENT (continued)
f. Fair value measurements (continued)
2015
Assets
Available for sale financial assets
Equity securities
Total assets
Liabilities
Derivatives used for hedging
Total liabilities
Level 1
$000
Level 2
$000
Level 3
$000
Total
$000
7,986
7,986
-
-
-
-
7,986
7,986
-
-
23,144
23,144
-
-
23,144
23,144
The fair value of financial instruments traded in active markets (such as available for sale securities) is based on quoted market prices at the
reporting date. The quoted market price used for financial assets held by the Group is the last sale price. The fair value of forward exchange
contracts is determined using forward exchange market rates at the reporting date.
24. BUSINESS COMBINATION
Accounting policy
The acquisition method of accounting is used to account for all business combinations regardless of whether equity instruments or assets are
acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets transferred, the liabilities
incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent consideration
arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred.
Identifiable assets acquired, and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured at
fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree
either at fair value or at the non-controlling interest's proportionate share of the acquiree's net identifiable assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any
previous equity interest in the acquiree over the fair value of the net identifiable assets acquired is recorded as goodwill.
If those amounts are
less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the
difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to present value as at the date
of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which similar borrowings could be obtained from
an independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial
remeasured to fair value with changes in fair value recognised in profit or loss.
liability. Amounts classified as a financial
liability are subsequently
65
65
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
24. BUSINESS COMBINATION (continued)
a. Summary of acquisition - joint operation
On 1 March 2016, New Hope Corporation Limited’s wholly owned subsidiary, New Hope Bengalla Pty Ltd, acquired 40% of the assets and
liabilities of the Bengalla Joint Venture. The Bengalla Joint Venture is a coal mining and extraction operation producing thermal coal in the
Hunter Valley, New South Wales.
Details of the purchase consideration and the net assets acquired are as follows:
Purchase Consideration (refer b below)
Cash Paid – Current Year
Purchase price adjustment receivable
Total Purchase Consideration
The fair value of assets and liabilities recognised as a result of the acquisition are as follows:
Cash
Receivables
Inventories
Property, Plant and Equipment (note 11)
Intangibles (note 12)
Accounts Payables & Accruals
Provisions
Net assets acquired
There were no acquisitions in the year ended 31 July 2015.
2016
$000
850,796
(1,668)
849,128
4,748
15,079
12,464
829,532
41,500
(18,386)
(35,809)
849,128
Revenue and profit contribution
The acquired business contributed revenues of $97,411,000 and profit before tax since acquisition $5,036,000 (i.e. before non regulars) to the
Group for the period 1 March 2016 to 31 July 2016. Due to the variability in key market factors and operational variations it is considered
impractical to disclose an estimated revenue and profit/(loss) assuming the acquisition had occurred 1 August 2015. The anticipated increase
in production and sales tonnes annually are 3,360,000 tonnes.
b. Purchase Consideration
Outflow of cash to acquire subsidiary, net of cash acquired
Total cash consideration
Less: Balances acquired
Cash
Outflow of cash – investing activities
850,796
(4,748)
846,048
It is noted that incidental costs of acquisition have been incurred of $51,863,000 (stamp duty $44,738,000, financial advice $6,388,000 and
other costs of $737,000) and these cashflows are recognised as outflows from operating activities.
Summary of acquisition - oil producing asset business
c.
During the year ended 31 July 2016, the Group acquired a business constituting the Moonie oil producing and exploration fields and also the
previously unowned 40% joint operation interest in the Utopia oil producing and exploration fields. These transactions constitute business
combinations. The acquisitions resulted in cash outflows of $3,482,000 for the acquisition of oil producing assets and assumption of
rehabilitation related provisions.
Significant judgement and estimate - Acquisition fair value
The determination of the fair values of net identifiable assets acquired, and of any goodwill, involves significant judgment. The allocation of fair
value between intangible assets, and the tangible assets with which they are used, is also judgmental. The Group engages third-party valuers
to advise on the purchase price allocation for significant acquisitions.
66
66
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
25. INTERESTS IN OTHER ENTIITIES
Accounting policy
a. Subsidiaries
Significant New Hope 100% owned subsidiaries are as per note 32. In addition, the company also holds 100% ownership in New Hope
Bengalla Pty Ltd, Bridgeport Energy Limited and Northern Energy Corporation Limited.
b. Joint arrangements
Accounting policy
Under AASB 11 Joint Arrangements ,
classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement.
investments in joint arrangements are classified as either joint operations or joint ventures. The
Joint operations
The Group recognises its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of any jointly held or
incurred assets, liabilities, revenues and expenses. These have been incorporated in the financial statements under the appropriate
headings.
Joint ventures
Interests in joint ventures are accounted for using the equity method , after initially being recognised at cost in the consolidated balance
sheet.
(i) Bengalla Joint Venture
On 1 March 2016 New Hope Corporation Limited acquired indirectly through New Hope Bengalla Pty Ltd, from a subsidiary of Rio Tinto, a
40 percent interest in the Bengalla thermal coal mine in New South Wales. This joint operation is managed by Bengalla Mining Company
Pty Limited (BMC). BMC is owned proportionately by the Bengalla Joint Venture participants.
(ii) Lenton Joint Venture
A subsidiary of New Hope Corporation Limited has entered into a joint operation to develop the Lenton project. The subsidiary has a 90%
participating interest in this joint operation and is entitled to 90% of the output of the Lenton project. The Group's interests employed in the
joint operations are included in the balance sheet, in accordance with the accounting policy described above.
(iii) Yamala Joint Venture
A subsidiary of New Hope Corporation Limited has entered into a joint operation to develop the Lenton project. The subsidiary has an 70%
participating interest in this joint operation and is entitled to 70% of the output of the Yamala project. The Group's interests employed in the
joint operations are included in the balance sheet, in accordance with the accounting policy described above.
(iv) Cuisinier Joint Venture
A subsidiary of New Hope Corporation Limited entered into a joint operation in relation to the Cuisinier project. The principal activity of this
joint operation is to extract oil from PL303. This project also includes the Barta and Wompi projects conduct oil exploration on ATP752.
The subsidiary has a 15% participating interest in the Cuisinier and Barta projects and 17.5% in the Wompi project and is entitled to 15%
and 17.5% of the output respectively. The Group’s interests in the joint operation are included in the balance sheet in accordance with the
accounting policy described above.
Critical judgement - classification of joint arrangements as a joint operation
The Group assesses whether it has the power to direct the relevant activities of the investee by considering the rights it holds with respect
to the work programme and budget approval, investment decision approval, voting rights in joint operating committees and changes to joint
arrangement participant holdings. Where the Group has control judgement is also required to assess whether the arrangement is a joint
operation or a joint venture.
67
67
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
26. CONTINGENT LIABILITIES
Details and estimates of maximum amounts of contingent liabilities for which no provision is included in the
accounts, are as follows:
Controlled entities
The bankers of the consolidated entity have issued undertakings and guarantees to the Department of
Natural Resources and Mines, Statutory Power Authorities and various other entities.
-
2015
$000
2016
$000
14,249
15,968
The bankers of the consolidated entity have issued undertakings and guarantees in relation to stage 1 of the
Wiggins Island Coal Export Terminal expansion project and expansion of rail facilities.
12,494
9,095
No losses are anticipated in respect of any of the above contingent liabilities.
Lines of credit
Unrestricted access was available at balance date to the following lines of credit:
Guarantee facility - available
Guarantee facility - utilised
Unused at balance date
The parent entity has given unsecured guarantees in respect of:
(i)
Mining restoration and rehabilitation
The liability has been recognised by the Group in relation to its rehabilitation obligations.
(ii) Statutory body suppliers
No liability was recognised by the consolidated entity in relation to these guarantees as no losses are
foreseen on these contingent liabilities.
27. COMMITMENTS
a. Capital commitments
Capital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:
Property plant and equipment
Within one year
The Group's share of the Bengalla Joint Venture capital expenditure contracted for at the reporting date but
not recognised as liabilities is as follows:
Within one year
135,000
118,411
16,589
100,000
75,899
24,101
91,667
50,836
26,744
25,063
8,705
7,002
6,004
-
b. Lease commitments: Group as lessee
Non-cancellable operating leases
The Group leases port facilities under non-cancellable operating leases expiring within five to fifteen years. The leases have varying terms,
escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated. The Group leases office space and small items of
office equipment under operating leases.
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
The Bengalla Joint Venture leases property, plant and equipment. The Group's share of commitments for
minimum lease payments in relation to non-cancellable operating leases are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
68
4,622
19,769
36,434
60,825
5,765
7,732
732
14,229
4,081
18,105
41,321
63,507
-
-
-
-
68
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
27. COMMITMENTS (continued)
c. Take or pay commitments
The Group has purchase obligations in relation to take or pay agreements which are legally binding and enforceable with Queensland Rail
(QR), Aurizon, Wetalla Water and Wiggins Island Coal Export Terminal.
In relation to access charges payable for use of the Western System rail line, the Queensland Competition Authority (QCA) has assessed QR's
draft access undertaking and made a final decision to refuse to approve it. In the final decision the QCA provided a mechanism for an
adjustment amount to address the disparity between tariffs which have been charged since 1 July 2013 and the tariffs in the QCA's final
decision. QR must submit an amended draft access undertaking for review by the QCA by 15 September 2016. In light of the fact that there is
not yet an approved access undertaking in place, these financial statements do not reflect any adjustment amount.
28. EVENTS OCCURRING AFTER THE REPORTING PERIOD
On 3 August 2016, Bridgeport (Cooper Basin) Pty Ltd entered a contract to acquire oil producing and exploration assets in the Cooper Basin
from Beach Energy Limited. The acquisition is in the greater Kenmore Bodalla region and is expected to produce synergies with the Bridgeport
Group's existing oil producing fields in South West Queensland in relation to operational and transportation activities. The acquisition is
expected to represent an increase of approximately 145,000 barrels per annum to Bridgeport production and is expected to be complete by the
end of the calendar year.
29. RELATED PARTY TRANSACTIONS
a. Parent entities
The parent entity within the Group is New Hope Corporation Limited. The ultimate Australian parent entity and controlling entity is
Washington H. Soul Pattinson and Company Limited (WHSP) which at 31 July 2016 owned 59.65% (2015 - 59.65%) of the issued ordinary
shares of New Hope Corporation Limited.
b. Transactions with related parties
Reimbursement of travel related expenses paid to Australian controlling entity (WHSP)
Dividends paid to ultimate Australian controlling entity (WHSP)
2016
$
2015
$
3,098
39,655,713
12,251
47,091,160
c.
Outstanding balances arising from sales/purchases of goods and services
No provision for impairment of receivables has been raised to any outstanding balances and no impairment expense has been recognised in
the books of the parent entity in respect of amounts owing from subsidiaries.
d. Terms and conditions
Transactions relating to dividends were on the same terms and conditions that applied to other shareholders.
e. Key management personnel
(i) Directors
The following persons were Directors of New Hope Corporation Limited during the financial year:
Chairman - Non-executive
Mr R.D. Millner
Non-executive Directors
Mr D.J. Fairfull (retired 19 November 2015)
Mr T.J Barlow
Mr W.H. Grant
Mr T.C. Millner (appointed 16 December 2015)
Ms S.J. Palmer
Mr I.M. Williams
Executive Directors
Mr S.O. Stephan
69
69
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
29. RELATED PARTY TRANSACTIONS (continued)
e. Key management personnel (continued)
(ii) Other key management personnel
The following persons also had authority and responsibility for planning, directing and controlling the activities of the Group, directly or
indirectly, during the financial year:
Name
Mr S.O. Stephan
Mr B.D. Denney
Mr A.L Boyd
Mr M.J. Busch
Position
Managing Director
Employer
New Hope Corporation Limited
Chief Operating Officer (retired 18 December 2015)
New Hope Corporation Limited
Chief Operating Officer (appointed 21 December 2015)
New Hope Corporation Limited
Chief Financial Officer
New Hope Corporation Limited
(iii) Key management personnel compensation
Short-term employee benefits
Long-term employee benefits
Post employment benefits
Termination benefit
Share based payment
2016
$
2015
$
3,552,534
3,508,417
54,325
147,962
136,316
123,250
4,014,387
34,520
142,588
-
167,087
3,852,612
Detailed remuneration disclosures can be found in sections (a) to (j) of the remuneration report on pages 17 to 25.
f. Other transactions of key management personnel
Mr R.D. Millner, Mr P.R. Robinson and T.J. Barlow are Directors of WHSP, the ultimate parent entity of New Hope Corporation Limited and Pitt
Capital Partners Limited. Pitt Capital Partners Limited acted as financial advisor to the Group for various corporate transactions during the
2016 and 2015 financial years. All transactions are at normal commercial terms.
Aggregate amounts of each of the above types of transactions with the above were as follows:
Financial advice^
2016
$
6,488,295
2015
$
379,269
^ The increase in financial advice costs is predominantly attributable to a success fee paid on the Bengalla acquisition (refer note 24).
Directors are required to take all reasonable steps to manage actual, potential or perceived conflicts of interest. Directors are required to
consider and notify the Company of any potential or actual conflicts of interest and Related Party transactions. Directors do not participate in
any negotiations of transactions with related parties.
g. Loans to key management personnel
No loans have been made available to the key management personnel of the Group.
30. SHARE-BASED PAYMENTS
Accounting policy
Share-based compensation benefits are provided to employees via the New Hope Corporation Limited Employee Share Option Plan and the
New Hope Corporation Limited Employee Performance Rights Share Plan.
The fair value of options granted under the New Hope Corporation Limited Employee Share Option Plan and Rights granted under the New
Hope Corporation Limited Employee Performance Rights Share Plan are recognised as an employee benefit expense with a corresponding
increase in equity. The fair value is measured at grant date and recognised over the period during which the employee becomes
unconditionally entitled to the options or rights. Options and rights are exercisable by current employees during the nominated vesting period
or by Directors' consent. Rights vest at the nominated vesting date upon successful completion of applicable service and performance
conditions. Detailed vesting conditions are set out in the Directors' report.
70
70
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
30. SHARE-BASED PAYMENTS (continued)
The fair value of rights at grant date is calculated as the number of rights offered at the share price at offer date. The fair value of options at
grant date is independently determined using a Black Scholes option pricing model that takes into account the exercise price, the term of the
option, the vesting criteria, the impact of dilution, the non-tradeable nature of the option, the share price at grant date and expected price
volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.
The fair value of the options granted is adjusted to reflect the market vesting condition, but excludes the impact of any non-market vesting
conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable.
At each reporting date, the entity revises its estimate of the number of options that are expected to become exercisable. The employee benefit
expense recognised each period takes into account the most recent estimate. The impact of the revision to the original estimates, is recognised
in profit or loss with a corresponding adjustment to equity.
Rights are granted under the New Hope Corporation Limited Employee Performance Rights Share Plan (Rights Plan). Membership of the Plan
is open to those senior employees and those Directors of New Hope Corporation Limited, its subsidiaries and associated bodies corporate
whom the Directors believe have a significant role to play in the continued development of the Group's activities.
Rights are granted for no consideration. Rights will vest and automatically convert to ordinary shares in the company following the satisfaction
of the relevant service and performance conditions. Service and performance conditions applicable to each issue of rights are determined by
the Directors at the time of grant. Total expense arising from rights issued under the Rights Plan during the financial year was $123,000 (2015 -
$167,000).
Rights
Set out below are the summaries of rights granted under the plan:
As at 1 August
Granted during the year
Forfeited during the year
Vested during the year
As at 31 July
2016
2015
Average price
per share
Number of rights
Average price
per share
Number of
rights
$2.696
$2.084
$1.875
$4.782
$2.112
216,334
414,841
(95,103)
(51,277)
484,795
$4.694
$1.581
-
$5.047
$2.696
148,442
134,229
-
(66,337)
216,334
The weighted average share price at the date of vesting of rights during the 2016 year was $2.08 (2015 - $2.95).
Share rights outstanding at the end of the year have the following expiry date and fair value at grant date:
Grant Date
17 Dec 2011
17 Dec 2012
17 Dec 2012
12 Dec 2014
20 Nov 2015
20 Nov 2015
Total
Vesting Date
Value of Right at
Grant Date
Share rights
2016
2015
1 Aug 2015
1 Aug 2015
1 Aug 2016
1 Aug 2017
1 Aug 2017
1 Aug 2018
$5.840
$4.080
$4.080
$1.581
$1.911
$2.166
-
-
19,618
50,336
134,228
280,613
20,447
30,830
30,828
134,229
-
-
484,795
216,334
Weighted average remaining contractual life of rights outstanding at end of period
1.5 years
1.4 years
71
71
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
31. PARENT ENTITY FINANCIAL INFORMATION
Accounting policy
The financial information for the parent entity, New Hope Corporation Limited, has been prepared on the same basis as the consolidated
financial statements, except as set out below.
Investments in subsidiaries, associates and joint ventures
Investments in subsidiaries, subsidiaries and joint ventures are accounted for at cost in the financial report of New Hope Corporation Limited.
Dividends received from subsidiaries are recognised in the parent entity’s income statement rather than being deducted from the carrying
amount of these investments.
a. Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
2016
$000
2015
$000
Balance Sheet
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Shareholders' equity
Issued capital
Reserves
Share-based payment
Retained earnings
Profit/(loss) for the year
Total comprehensive income/(loss)
b. Guarantees entered into by parent entity
Bank guarantees issued in relation to rehabilitation and utility obligations
172,305
1,388,053
1,560,358
282,443
1,700
284,143
2,202,683
28,647
2,231,330
815,607
3,770
819,377
95,692
95,444
266
1,180,257
1,276,215
391
1,316,118
1,411,953
(69,378)
56,735
(69,378)
56,735
91,667
91,667
50,936
50,936
The parent entity has given unsecured guarantees in respect of mining restoration and rehabilitation. The liability has been recognised in
the consolidated accounts of the parent entity in relation to its rehabilitation obligations. See notes 14 and 26.
Further guarantees are provided in respect of statutory body suppliers with no liability being recognised by the parent entity as no losses
are foreseen on these contingent liabilities.
72
72
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
31. PARENT ENTITY FINANCIAL INFORMATION (continued)
c. Contingent liabilities of the parent entity
Details and estimates of maximum amounts of contingent liabilities for which no provision is included in the accounts, are as follows:
Controlled entities
The bankers of the consolidated entity have issued undertakings and guarantees to the Department of Natural
Resources and Mines, Statutory Power Authorities and various other entities.
2016
$000
2015
$000
14,249
15,968
The bankers of the consolidated entity have issued undertakings and guarantees in relation to stage 1 of the
Wiggins Island Coal Export Terminal expansion project and expansion of rail facilities.
12,494
9,095
No losses are anticipated in respect of any of the above contingent liabilities.
d. Contractual commitments for the acquisition of property, plant and equipment
As at 31 July 2016, the parent entity had contractual commitments for the acquisition of property, plant or equipment totalling $Nil (2015 - $Nil).
32. DEED OF CROSS GUARANTEE
During 2012, a number of entities within the Group entered into a deed of cross guarantee. New Hope Corporation Limited, Jeebropilly Collieries
Pty Ltd, Acland Pastoral Co. Pty Ltd, New Oakleigh Coal Pty Ltd, New Acland Coal Pty Ltd, New Lenton Coal Pty Ltd, Andrew Wright Holdings
Pty Ltd, Arkdale Pty Ltd and Queensland Bulk Handling Pty Ltd are parties to a deed of cross guarantee under which each company guarantees
the debts of the others. By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare a financial
report and directors' report under Class Order 98/1418 (as amended) issued by the Australian Securities and Investments Commission.
a. Consolidated statement of comprehensive income
The above companies represent a "closed group" for the purposes of the Class Order, and as there are no other parties to the deed of cross
guarantee that are controlled by New Hope Corporation Limited, they also represent the "extended closed group".
Set out below is the consolidated statement of comprehensive income for the year ended 31 July 2016 for the closed group consisting of New
Hope Corporation Limited, Jeebropilly Collieries Pty Ltd, Acland Pastoral Co. Pty Ltd, New Oakleigh Coal Pty Ltd, New Acland Coal Pty Ltd, New
Lenton Coal Pty Ltd, Andrew Wright Holdings Pty Ltd, Arkdale Pty Ltd and Queensland Bulk Handling Pty Ltd.
Revenue from operations
Other income
Expenses
Cost of sales
Marketing and transportation
Administration
Debt forgiveness
Other expenses
Profit/(loss) before income tax
Income tax expense
Profit/(loss) after income tax for the year
Other comprehensive income
Items to be reclassified to profit and loss
Changes in the fair value of cash flow hedges, net of tax
Transfer to profit and loss for cash flow hedges, net of tax
Other comprehensive income for the year, net of tax
Total comprehensive income/(loss) for the year
73
73
2016
$000
443,784
164
443,948
(283,149)
(131,302)
(6,118)
(97,862)
(6,377)
(80,860)
(5,022)
(85,882)
2015
$000
491,625
185
491,810
(261,778)
(137,164)
(7,847)
-
-
85,021
(24,756)
60,265
2,455
15,294
17,749
(68,133)
(33,790)
18,225
(15,565)
44,700
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
32. DEED OF CROSS GUARANTEE (continued)
Consolidated balance sheet
b.
Set out below is a consolidated balance sheet as at 31 July 2016 of the closed group consisting of New Hope Corporation Limited, Jeebropilly
Collieries Pty Ltd, Acland Pastoral Co. Pty Ltd, New Oakleigh Coal Pty Ltd, New Acland Coal Pty Ltd, New Lenton Coal Pty Ltd, Andrew Wright
Holdings Pty Ltd, Arkdale Pty Ltd and Queensland Bulk Handling Pty Ltd.
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Held to maturity investments
Derivative financial instruments
Total current assets
Non-current assets
Receivables
Other financial assets
Property, plant and equipment
Exploration and evaluation assets
Deferred tax assets
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Current tax liabilities
Provisions
Derivative financial instruments
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Provisions
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
2016
$000
2015
$000
58,737
138,120
43,843
22
1,029
241,751
1,104,999
248,506
399,570
50,766
15,393
6,510
1,825,744
2,067,495
93,778
2,272
18,203
40,295
-
154,548
-
44,498
12,588
57,086
211,634
1,855,861
91,596
37,457
1,726,808
1,855,861
23,348
459,954
57,447
1,010,267
-
1,551,016
2,029
248,183
376,808
47,104
14,004
7,223
695,351
2,246,367
130,852
-
20,481
31,128
23,143
205,604
-
49,367
-
49,367
254,971
1,991,396
91,348
20,731
1,879,317
1,991,396
74
74
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
33. REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services provided by the auditor of the parent
a. Audit services
Audit and review of financial reports and other audit work under the Corporations Act
2001:
Deloitte Touche Tohmatsu (Australian firm)
Other audit firms for the audit or review of financial reports of any entity in the Group
Total remuneration for audit services
b. Other services
Deloitte Touche Tohmatsu (Australian firm)
Audit of joint ventures
Accounting advisory services
PricewaterhouseCoopers (Australian firm)
Audit of joint ventures
Total remuneration for other services
Total auditors' remuneration
34. OTHER ACCOUNTING POLICIES
a.
Foreign currency translation
-
2015
$
2016
$
433,000
240,000
-
-
433,000
240,000
24,000
33,000
18,000
23,000
-
-
75,000
23,000
508,000
263,000
Functional and presentation currency
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment
in which the entity operates (the functional currency). The consolidated financial statements are presented in Australian dollars, which is New
Hope Corporation Limited's functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of
monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in equity as
qualifying cash flow hedges and qualifying net investment hedges.
Translation differences on non-monetary items, such as equities held at fair value through profit or loss, are reported as part of the fair value
gain or loss. Translation differences on non-monetary items, such as equities classified as available for sale financial assets, are included in
the fair value reserve in equity.
Group companies
The results and financial position of all of the Group entities that have a functional currency different from the presentation currency are
translated into the presentation currency as follows:
h
h
Assets and liabilities for each balance sheet presented are translated at the closing rates at the date of that balance sheet;
Income and expenses for each income statement and statement of comprehensive income are translated at average exchange rates
(unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income
and expenses are translated at the dates of the transactions); and
h
All resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net
in foreign entities, are recognised in other
comprehensive income. When a foreign operation is sold, a proportionate share of such exchange differences is reclassified to profit or loss as
part of the gain or loss on sale where applicable.
investment
75
75
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
34. OTHER ACCOUNTING POLICIES (continued)
b.
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the
taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or
payable to, the taxation authority is included with other receivables or payables in the balance sheet.
Cash flows are presented on a gross basis. The GST component of cash flows arising from investing or financing activities which are
recoverable from, or payable to the taxation authority, are presented as operating cash flows.
c.
Borrowings
Interest bearing liabilities are initially recognised at fair value, net of any transactions costs incurred. These balances are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the
income statement over the period of the liability using the effective interest method. Interest bearing liabilities are classified as current liabilities
unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.
Borrowing costs
Borrowing costs incurred for the construction of a qualifying asset are capitalised during the period of time that is required to complete and
prepare the asset for its intended use or sale. Other borrowing costs are recognised as expenses in the period in which they are incurred.
d.
New and amended standards adopted by the Group
A number of new and revised standards became effective for the first time to annual periods beginning on or after 1 August 2015. None of
these had a significant effect on the Group.
New accounting standards and interpretations not yet adopted
e.
Certain new accounting standards and interpretations have been published that are not mandatory for 31 July 2015 reporting periods and have
not been early adopted by the Group. The Group’s assessment of the impact of these new standards and interpretations is set out below:
(i)
AASB 15 Revenue from Contracts with Customers - AASB 15 outlines a single comprehensive model for entities to use in accounting for
It supersedes current revenue recognition guidance including AASB 118 Revenues, AASB
revenue arising from contracts with customers.
111 Construction Contracts and related Interpretations. The core principle is that an entity recognises revenue to depict the transfer of
promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange
for those goods or services. This standard also allows costs associated with obtaining a contract to be capitalised and amortised over the
life of the new contract. The Group has not yet assessed how its own revenue recognition would be affected by the new rule. The Group
does not intend on adopting the new standard before its operative date, which means that it would be first applied in the annual reporting
period ending 31 July 2019.
(ii) AASB 9 Financial Instruments - AASB 9 addresses the classification, measurement and derecognition of financial assets and financial
liabilities. Since December 2013, it also sets out new rules for hedge accounting. There will be no impact on the Group's accounting for
financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or
loss and the Group does not have any such liabilities. The new hedging rules align hedge accounting more closely with the Group's risk
management practices. As a general rule, it will be easier to apply hedge accounting going forward. The new standard also introduces
expanded disclosure requirements and changes in presentation. The Group has not yet assessed how its own hedging arrangements would
be affected by the new rules. The Group does not intend on adopting the new standard before its operative date, which means that it would
be first applied in the annual reporting period ending 31 July 2019.
76
76
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportNOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Notes to the financial statements
for the year ended 31 July 2016
-
34. OTHER ACCOUNTING POLICIES (continued)
e.
New accounting standards and interpretations not yet adopted (continued)
(iii)
AASB 16 Leases replaces AASB 117 Leases and some lease-related Interpretations and requires that all leases to be accounted for ‘on-
balance sheet’ by lessees, other than short-term and low value asset leases. The standard provides new guidance on the application of the
definition of lease and on sale and lease back accounting. It largely retains the existing lessor accounting requirements in AASB 117. It
requires new and different disclosures about leases. The Group is yet to undertake a detailed assessment of the impact of AASB 16 owing to
the fact that the AASB will be first reported on at 31 July 2020.
There are no other standards that are not yet effective and that are expected to have a material impact on the Group in the current or future
reporting periods and on foreseeable future transactions.
77
77
NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 July 2016
New Hope Corporation Limited and Controlled Entities
Directors Declaration
In the Directors' opinion:
a.
the financial statements and notes set out on pages 28 to 77 are in accordance with the Corporations Act 2001 , including:
(i)
(ii)
complying with Accounting Standards ,
requirements; and
the Corporations Regulations 2001 and other mandatory professional
reporting
giving a true and fair view of the consolidated entity's financial position as at 31 July 2016 and of their performance, for the
financial year ended on that date; and
b.
there are reasonable grounds to believe that the Company will be able to pay its debts, as and when they become due and payable; and
The Basis of preparation on page 32 confirms that the financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
The Directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the
Corporations Act 2001.
At the date of this declaration, the company is within the class of companies affected by ASIC Class Order 98/1418. The nature of the deed of
cross guarantee is such that each company which is party to the deed guarantees to each creditor payment in full of any debt in accordance
with the deed of cross guarantee. In the directors’ opinion, there are reasonable grounds to believe that the company and the companies to
which the ASIC Class Order applies, as detailed in note 32 to the financial statements will, as a group, be able to meet any obligations or
liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee.
This declaration is made in accordance with a resolution of the Directors.
R.D. Millner
Director
S.J. Palmer
Director
Sydney
19 September 2016
78
78
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportDIRECTORS’ DECLARATION Deloitte Touche Tohmatsu
ABN 74 490 121 060
Riverside Centre
Level 25
123 Eagle Street
Brisbane QLD 4000
GPO Box 1463
Brisbane QLD 4001 Australia
DX 115
Tel: +61 (0) 7 3308 7000
Fax: +61 (0) 7 3308 7001
www.deloitte.com.au
Independent Auditor’s Report
to the members of New Hope Corporation Limited
Report on the Financial Report
We have audited the accompanying financial report of New Hope Corporation Limited, which comprises the consolidated
balance sheet as at 31 July 2016, the consolidated statement of comprehensive income, the consolidated cash flow
statement and the consolidated statement of changes in equity for the year ended on that date, notes comprising a
summary of significant accounting policies and other explanatory information, and the directors’ declaration of the
consolidated entity, comprising the company and the entities it controlled at the year’s end or from time to time during
the financial year as set out on pages 28 to 78.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the
directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is
free from material misstatement, whether due to fraud or error. On page 32, the directors also state, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, that the consolidated financial statements comply
with International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in
accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical
requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the
financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control, relevant to the company’s preparation of the financial report that gives a true and fair view,
in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating
the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Auditor’s Independence Declaration
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We
confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors
of New Hope Corporation Limited, would be in the same terms if given to the directors as at the time of this auditor’s
report.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
79
79
INDEPENDENT AUDITOR’S REPORT to the Members of New Hope Corporation Limited
Opinion
In our opinion:
(a) the financial report of New Hope Corporation Limited is in accordance with the Corporations Act 2001 ,
including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 31 July 2016 and of its
performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001 ; and
(b) the consolidated financial statements also comply with International Financial Reporting Standards as disclosed
on page 32.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 17 to 23 of the directors’ report for the year ended 31
July 2016. The directors of the company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on
the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion the Remuneration Report of New Hope Corporation Limited for the year ended 31 July 2016,
complies with section 300A of the Corporations Act 2001.
DELOITTE TOUCHE TOHMATSU
Richard Wanstall
Partner
Chartered Accountants
Sydney, 19 September 2016
80
80
New Hope Corporation Limited and Controlled Entities | 2016 Annual ReportINDEPENDENT AUDITOR’S REPORT to the Members of New Hope Corporation Limited New Hope Corporation Limited
Shareholder Information as at 12 September 2016
As at 12 September 2016 there were 7,027 holders of ordinary shares in the Company.
Voting entitlement is one vote per fully paid ordinary share.
Distribution of equity securities
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Number of
shareholders
1,712
2,570
1,559
1,096
90
7,027
Fully paid
ordinary
shares
888,533
7,625,192
11,015,341
29,116,113
782,405,547
831,050,726
Number of
rights holders
Ordinary
rights
-
-
-
-
2
2
-
-
-
484,795
-
484,795
Holding less than a marketable parcel
597
76,865
The names of substantial shareholders as disclosed in substantial shareholder notices received by the Company:
Shareholder
Washington H Soul Pattinson And Company Limited
Mitsubishi Materials Corporation
Perpetual Limited and subsidiaries
20 largest shareholders as disclosed on the share register as at 12 September 2016
Washington H Soul Pattinson And Company Limited
Mitsubishi Materials Corporation
RBC Investor Services Australia Nominees Pty Limited (Pi Pooled A/C)
J P Morgan Nominees Australia Limited
UBS Nominees Pty Ltd
Farjoy Pty Ltd
HSBC Custody Nominees (Australia) Limited
Domer Mining Co Pty Limited
BKI Investment Company Limited
Citicorp Nominees Pty Limited
BNP Paribas Noms Pty Ltd (Drp)
BNP Paribas Nominees Pty Ltd (Agency Lending Drp A/C)
Taiheiyo Kouhatsu Inc
National Nominees Limited
RBC Investor Services Australia Nominees Pty Limited (Piselect)
RBC Investor Services Australia Nominees Pty Limited (PIIC A/C)
UBS Nominees Pty Ltd
J S Millner Holdings Pty Limited
Robert Charles Neale
Milton Corporation Limited
Number
of shares
495,696,418
91,490,000
95,829,674
495,696,418
93,240,000
27,794,978
27,771,340
16,606,087
15,500,000
15,316,754
15,000,000
14,815,952
10,177,903
7,002,972
4,942,699
4,054,000
3,256,794
2,572,162
2,377,955
2,288,388
2,109,197
1,400,000
1,290,107
763,213,706
%
59.65%
11.01%
11.53%
59.65%
11.22%
3.34%
3.34%
2.00%
1.87%
1.84%
1.80%
1.78%
1.22%
0.84%
0.59%
0.49%
0.39%
0.31%
0.29%
0.28%
0.25%
0.17%
0.16%
91.83%
Unquoted equity securities
Rights issued under the New Hope Corporation Limited Employee
Performance Rights Share Plan to take up ordinary shares
Number on
issue
Number of
holders
484,795
2
81
81
SHAREHOLDER INFORMATION as at 31 July 2016