Fortescue Ltd

Thank you and welcome all. It's great to be back with you again. I'm here in London and joining me is Mark Hutchinson, an Apple Padgett CFO. Last month, we presented our quarterly production results, which included our highest ever first half shipments of 97.1 million tonnes. We did this while achieving an outstanding safety performance with a significant improvement across all our safety indicators, including a 44% improvement in truth. We remain on track to deliver our FY25 guidance, despite recent weather events in the Pilbara, including cyclone Zelia last week. The team was well prepared and did a phenomenal job in managing its impacts, working hard to resume normal activities as safely and quickly as possible. Apple will talk to the financial shortly. However, there were a few results I wanted to call out. We continue to keep our costs low. achieving a hematite C1 of 19.17 a tonne in the half, delivering a strong underlying EBITDA of 3.6 billion and a net profit after tax of 1.6 billion. Reflecting these results, the board today declared a fully franked interim dividend of 50 Aussie cents per share, representing a 65% payout of net profit after tax and a return of 1.5 billion Aussie dollars to our shareholders. There were many highlights during the half. Our Billion Opportunities Program has now awarded $6.5 billion Australian dollars in contracts to First Nations businesses since 2011. We continued to ramp up Ironbridge with more than 5 million tonnes of high-grade magnetite concentrate now shipped to our customers since operations began. We commenced construction on our green metal project at Christmas Creek with first production on track for later this year. And we continue to work closely with Chinese steel mills and renewable energy companies to further define and partner on developing an Australian-China green metal supply chain. Our decarbonisation plan also went from strength to strength with a $2.8 billion contract signed with LIBA for zero emissions mining equipment. This will see more than a billion dollars of revenue flow back to Fortescue Zero for providing the battery power systems. Our recent deal with XCMG to purchase over 100 pieces of zero emissions heavy mobile equipment marked another step in our journey to real zero. And we also commissioned a 100 megawatt solar farm, the first of around 1.5 gigawatts we'll build before the end of the decade. On Ironbridge, we are continuing to learn every single day and the facility is improving month on month. December, we had our best month to date with concentrate production annualizing at around 9 million tons. The schedule for operating at nameplate capacity, though, by September 2025, as we announced today, is under review. An assessment is underway to optimize the performance of the air classification circuit and downstream aero belt conveying system. This assessment is anticipated to be completed in Q4 this year. Before handing over to Hutch, I'd like to give a huge shout out to the entire Fortisview team and all of our partners for their huge effort this half. It's been a strong half with record production, outstanding safety performance, all while continuing to keep costs low. On that note, I'll hand over to Hutch.

Thanks, Dino, and hi, everybody. Our energy business continues to be agile, innovative, and disciplined in the way we approach a very dynamic global energy market. Our view remains the same. The world needs abundant renewable energy. Recently, the head of the International Energy Agency said electricity demand will increase six times faster than total energy demand over the next 10 years. Where is this going to come from? It won't all come from gas, and our firm belief is it will predominantly come from renewables. We have been focused over the last six months on advancing and commercializing our portfolio of green technology. Technology is key to everything we're doing to decarbonize. To capitalize on that, Fortescue Zero is evolving from the engineering service the company required a few years ago to a customer-driven, profitable product business. The $2.8 billion deal Fortescue signed with Lever has a big flow-on effect for our technology business, with Fortescue Zero supplying the power systems to hundreds of zero-emission pieces of mining equipment. This does mean, as Dino said, that a significant amount of that value will come back to the company. Liebherr and Fortescue will also deploy an autonomous battery electric haulage solution for large-scale mining operations. There is a huge value in the IP we have created, and this presents a significant commercial opportunity for what we're doing at Fortescue Zero. Let me turn to green energy projects. We are continuing to progress and refine our green energy portfolio in a very disciplined manner and remain fully committed to green energy and large-scale industrial decarbonization. As you've heard me say before, our financial discipline always comes first, and we are only focused on developing projects that are economically viable. While we do remain confident in the long-term viability of green energy, We must be realistic about the current challenges the industry faces. Right now, the world is in an uncertain place. The Trump administration has instructed the federal agencies to pause grant payments under the Inflation Reduction Act. There is considerable uncertainty around Red 3 in Europe and how that will be implemented at the member state level, and we're waiting on the outcome of several elections globally. However, our firm belief is that the world needs an enormous amount of green energy and so we will not be pulling back from our ambitions. That is why we continue to maintain our portfolio projects and only execute on them when they make any economic sense. This does include looking at the timelines on the FID projects we have previously announced. These changes are what happens when you have an unstable government policy which creates uncertainty for investors. To be clear, our timelines may change, but our ambitions will not. We anticipate having more clarity on these external factors by the end of the financial year. As you heard Dina say earlier, we are still on track and progressing our Christmas Creek Green Metals plant, where we'll use the green hydrogen we're already producing on site. Feasibility studies and planning approvals will continue to progress for our projects in Norway and Brazil, and there is still plenty to be excited about, and we know what we have done over the last few years in the energy space has set us up for long-term success. Right now, we are focused on making business decisions that make sense commercially and delivering the best value for our shareholders. So let's go now to Apple to deep dive in the financial results.

Thanks, Patrick, and a big hello to everyone from London. It remains a privilege for me to step you through the financials, and you can see from our announcements today that we have reported another set of clean accounts. Turning to the results, first half revenue was $7.6 billion, which was 20% lower than the same time last year as the hematite realized price decreased by 21%. Our costs continue to be impacted by mine plan-led cost escalation and market inflationary pressures, and the first half C1 for hematite was up 8% year-on-year. We remain very focused on cost discipline and are tracking well against our FY25 guidance. EBITDA was $3.6 billion on an EBITDA margin of 48%, with the metals EBITDA margin of 54%. The metals segment EBITDA was $4.1 billion, or $47 a tonne, and the energy segment EBITDA loss was $365 million, in line with the four-year guidance of $700 million. EBITDA flows through to net profit after tax, which was $1.6 billion in the half. For those on the webcast, you can see from this slide the reconciliation of the year-on-year change in impact, with all the moving parts, including the significant price impact on EBITDA. One item to call out here, and as we highlighted in the FY24 full-year results, the increase in depreciation and amortization relates to the lagged impacts of several years of high-sustaining capex together with the commissioning of new assets, and in particular, Ironbridge. The slide shows the variance relative to H1 last year, but in fact, depreciation was flat half and half. Moving to cash flows, net operating cash flow declined to $2.4 billion, and free cash flow was $0.7 billion, and that's after investing $1.8 billion in capital expenditure. The capital expenditure comprises $1.6 billion in metals and $145 million in the energy segment. The details are on this slide and I note the 1.3 billion of sustaining and hub development capital includes 235 million of fleet deposits. Our FY25 guidance for metals capital expenditure has been revised to a narrow range of 3.5 to 3.8 billion, previously 3.2 to 3.8 billion. The revisions include sustaining and hub development capital increase from timing of fleet deposits to 2.4 to 2.6 billion. Also, a revision down on decarbonisation based on phasing of spend of US$500 million. And finally, the inclusion of the Redhawk mining transaction, which will be approximately US$160 million. Today, we reduced the FY25 guidance for energy capex to $400 million from $500 million, and that is the result of lower spend on green energy projects, as you've just heard from Hutch. As reported last month, our balance sheet is in great shape. Cash on hand at 31 December was $3.4 billion and net debt was $2 billion. And you can see Fortescue's robust credit metrics on this slide with the gross debt to EBITDA of 0.6 times and gross gearing of 22%. These credit metrics show we clearly have balance sheet capacity within our threshold leverage metrics of no more than two times gross debt to EBITDA and no more than 40% gross gearing through the cycle. A strong balance sheet is core to Fortescue's capital allocation framework, as is our commitment to return capital to shareholders. And as you've already heard from Dino, the board has declared an interim dividend of 50 Aussie cents per share. This represents a payout of 65% of NPAT and is consistent with our dividend policy to pay out 50% to 80% of NPAT. In closing, we have achieved strong financial results in the first half, and are well positioned heading into the second half. I'll hand back to the operator, Rachel, to facilitate the Q&A session. We will welcome your questions.