ANNUAL REPORT 2007
Whitehaven Coal Limited ABN 68 124 425 396
www.whitehaven.net.au
CONTENTS
Chairman’s Letter
Highlights
Achievements
Managing Director's Report
Directors’ Report
Income Statements
Statements of Changes in Equity
Balance Sheets
Statements of Cash Flows
Notes to the financial statements
Directors’ Declaration
Independent Auditor's Report
ASX Additional Information
Corporate Directory
1
2
4
6
14
38
39
40
41
42
80
81
83
85
CORPORATE DIRECTORY
Directors
John Conde, Chairman
Keith Ross, Managing Director
Neil Chatfield
Tony Haggarty
Alex Krueger
Hans Mende
Andy Plummer
Company Secretaries
Leigh Whitton
Paul Marshall
Registered and Principal
Administrative Office
Ground Floor, 895 Ann Street
Fortitude Valley QLD 4006
Ph: +61 7 3000 5690
Fax: +61 7 3000 5699
Australian Business Number
ABN 68 124 425 396
Stock Exchange Listing
Australian Securities Exchange Ltd
ASX Code: WHC
Auditor
KPMG
Level 16, Riparian Plaza
71 Eagle Street
Brisbane Qld 4000
Ph: +61 7 3233 3111
Fax: +61 7 3233 3100
Share Registry
Computershare Investor Services Pty Limited
GPO Box 523
Brisbane QLD 4001
Ph: 1300 850505
Fax: +61 7 3237 2100
Legal Advisers
McCullough Robertson
Level 12, Central Plaza Two
66 Eagle Street
Brisbane Qld 4000
Country of Incorporation
Australia
Web Address
www.whitehaven.net.au
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D
CHAIRMAN’S LETTER
Dear Whitehaven Shareholder
This has been an important year for Whitehaven Coal Limited
(“Whitehaven”). In June the company was listed on the Australian
Securities Exchange and raised $26 million. Substantial progress has
been made developing the company’s coal projects and mines and
our team of highly skilled professionals has been expanded to lead
the company’s continuing development.
Profit
Profit for the year was $24. million. Although coal prices were high, infrastructure constraints limited the tonnages shipped
and long vessel queues at the port limited coal sales and caused substantial demurrage costs.
Achievements for 2007
Managed saleable coal production for the year increased from .397 million tonnes in FY 2006 to 2.288 million tonnes, a
rise of 65 percent. Much of the production increase came from the Tarrawonga mine which started production in September
2006 and from the first full year of production at Werris Creek.
Development applications have been submitted to the Department of Planning for our new projects at Narrabri North,
Belmont and Sunnyside.
Exploration continued on the Narrabri South and Bonshaw prospects.
Public Listing
Whitehaven is now a listed company on the Australian Securities Exchange with the issue of 323 million shares. The public
listing will assist the company to reach its full potential and develop the attractive projects within its portfolio.
Safety
Whitehaven commenced mining in the Gunnedah region in 2000. To the end of June 2007 there had only been one
recorded lost time injury over this seven year period.
Future Outlook
The market for coal continues to remain strong and most indicators suggest that this demand will continue. With our new
projects, the company plans to increase production significantly over the next few years and we are involved actively in new
rail and port infrastructure projects to support our increased production.
On behalf of the Board, I compliment the Managing Director and all Whitehaven staff on a successful year and thank
shareholders for their support
John C. Conde, AO
Annual Report 2007
HigHLigHtS
• Net profit after tax of $24.1m on 1.46 Mt of coal sales
• EbITdA of 39.4m
• Ipo and listing on the ASx in June 2007
• Tarrawonga open cut mine commissioned
• owner operation introduced at canyon and
Tarrawonga mines with significant cost savings
• Environmental assessments lodged for the three
coal projects:
– Narrabri North
– belmont
– Sunnyside
• Additional 110 Mt Jorc resources identified at
Narrabri South
• Increasing demand for Whitehaven’s low ash, low
sulphur products.
Key Summary
Lost Time Injuries
Sales (Mt) – Equity
Revenue (A$m)
EbITdA (A$m)*
Net profit (A$m)
* Adjusted for one off listing & restructure costs
Whitehaven Coal Limited
2
FY 2007
0
1.46
106.2
39.4
24.1
QUEENSLAND
N
ASHFORD
BASIN
Bonshaw
0
50
100
Ashford
Bonshaw Project
KILOMETRES
NEW SOUTH WALES
Moree
R
a
i
l
w
a
y
GUNNEDAH
COALFIELD
Narrabri Project
Narrabri
Tarrawonga Mine
Canyon Mine
Belmont Project
Whitehaven CHPP
Gunnedah
Sunnyside Project
GUNNEDAH
BASIN
Werris Creek Mine
Dunedoo
GLOUCESTER
BASIN
Gloucester
Gulgong
Mudgee
Ulan
Muswellbrook
Bylong
WESTERN
COALFIELD
HUNTER
COALFIELD
Singleton
Rylstone
Kandos
SYDNEY
BASIN
Cessnock
NEWCASTLE
COALFIELD
Lithgow
PACIFIC
OCEAN
Newcastle
Whitehaven Assets
Railway
AUSTRALIA
Sydney
NSW
Campbelltown
Picton
SOUTHERN
COALFIELD
Mossvale
Bomaderry
Wollongong
Port Kembla
NSW
NEW SOUTH WALES COALFIELDS
Goulburn
ACT
AcHievementS
Saleable production up 65%
Saleable production (Mt)
Whitehaven Mining precinct
Werris Creek
Total
00% Basis
Coal sales up 48%
Coal Sales (Mt)
Whitehaven Mining precinct
Werris Creek
Total
00% Basis
FY 2007
997
1,291
2,288
FY 2006
563
824
1,397
Change
+77%
+57%
+65%
FY 2007
1,021
1,361
2,382
FY 2006
731
880
1,611
Change
+40%
+55%
+48%
Whitehaven Coal Limited
4
Historical Milestones
Established
Mining commenced at Canyon open cut mine
(Formerly Whitehaven open cut mine)
February 1999
September 2000
Mining commenced at Werris Creek open cut mine
September 2005
Mining commenced at Tarrawonga open cut mine
Whitehaven Coal Limited listed on the ASx
June 2006
June 2007
Future development Targets
Commence construction at Narrabri North
Stage 1 of coal mining to commence at
Narrabri North
Mining to commence at belmont open cut mine
Mining to commence at Sunnyside open cut mine
Stage 2 of mining to commence at Narrabri North
december 2007
January 2009
July 2008
August 2008
July 2010
5
Annual Report 2007
MANAgINg dIRECToR'S REpoRT
It has been an exciting year for Whitehaven Coal with the increased
production at both the Tarrawonga and Werris Creek mines, the
lodgement of development applications for the Narrabri North,
Sunnyside and Belmont projects and the listing of Whitehaven
on the ASX.
Whitehaven enjoyed another year without a lost time injury and
credit must be given to all of our employees.
Profit for the year was $24. million and EBITDA (after adjusting for one-off listing and restructure costs) was $39.4 million.
Revenue was $06.2 million on equity sales of .46 million tonnes.
Whitehaven has a strong balance sheet and is well positioned with the financial capacity to deliver our program of new
project development.
OveRvieW
Whitehaven is a leading coal producer in the Gunnedah Basin of New South Wales. The region c ontains much of the
remaining undeveloped, high quality export coals in NSW and is expected to contribute a large proportion of future growth
in NSW coal production.
Whitehaven’s extensive tenements and established infrastructure provide it with a valuable, strategic platform in this
emerging coal province.
Whitehaven Coal Mining Limited (WCML) was formed in 999 to develop the Canyon (formerly Whitehaven) open cut coal
mine approximately 30km north of Gunnedah and it has since established a further two open cut operations at Tarrawonga
and Werris Creek. Whitehaven has been profitable every year since FY200, when it commenced signifi-cant production
from the Canyon mine.
The company plans to start two more opencut mines (Belmont and Sunnyside) and one large underground project (Narrabri
North) in FY2008 and FY2009.
Production Summary
(Thousand tonnes) *
ROM Coal Production
Saleable Coal Production
Coal Sold **
Coal stocks at end of period
* All figures are on an 00% basis,
** Includes purchased coal
FY 2007
FY 2006
% Variance
2677
2288
2382
342
6
387
6
87
66%
65%
48%
293%
Whitehaven Coal Limited
6
MANAgINg dIRECToR'S REpoRT
Whitehaven Mining precinct (WMp)
• Canyon open cut (00% owned)
• Tarrawonga open cut (70% owned)
• Belmont project (00% owned)
• Sunnyside project (00% owned)
• Tarrawonga underground project
(00% owned)
• West Blue Vale and Canyon West prospects
(00% owned)
Whitehaven CHpp (100% owned)
Narrabri
• Narrabri North Project (00% owned)
• Narrabri South Project (00% owned)
Werris Creek open Cut (40% owned)
bonshaw prospect (66.7% owned)
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Annual Report 2007
MANAgINg dIRECToR'S REpoRT
OPeRAting PeRFORmAnce
Whitehaven mining Precinct
(Thousand tonnes) *
ROM Coal Production
Saleable Coal Production
Coal Sold **
Coal stocks at end of period
* All figures are on an 00% basis,
** Includes purchased coal
FY 2007
1,388
997
1,021
286
FY 2006
% Variance
708
563
73
35
96%
77%
40%
77%
The Whitehaven Mining Precinct includes the Canyon and Tarrawonga open cut mines and the Whitehaven Coal Handling
and Preparation Plant and train load-out facility located north of the town of Gunnedah.
There were no Lost Time Injuries recorded in the Whitehaven Mining Precinct in FY 2007.
Saleable coal production of .0 Mt was 77% above the previous corresponding period.
There has been a large increase in coal stocks and overburden in advance.
canyon mine (100%)
Opencut operation commenced in September 2000, producing approximately 0.6 Mtpa of semi-soft, PCI and export thermal
coals. Unless further low ratio reserves are identified, production from Canyon will be replaced by coal produced from the
new Belmont mine.
tarrawonga mine (70% owned)
Opencut operation commenced in June 2006, producing approximately .4 Mtpa of PCI and export thermal coals. Existing
reserves are sufficient to support a mine life of 8 years.
The mine produces a high percentage of coal which requires no washing and hence is a high margin operation. Also the low
ash washed product is in increasing demand from steel mills.
The company is purchasing its own coal mining fleet for the mine which will reduce operating costs.
Whitehaven Coal Limited
8
MANAgINg dIRECToR'S REpoRT
Werris creek mine (40% owned)
(Thousand tonnes)
ROM Coal Production
Saleable Coal Production
Coal Sold **
Coal stocks at end of period
* All figures are on an 00% basis,
** Includes purchased coal
FY 2007
1,289
1,291
1,361
56
FY 2006
% Variance
903
824
880
52
43%
57%
55%
8%
First coal production from Werris Creek took place in late 2005. It is an opencut mine located 60km south east of Gunnedah.
Werris Creek can produce at an annualised rate of .5 Mtpa, comprising approximately 0.5 Mtpa of PCI coal and .0 Mtpa
of thermal coal. The mine produces raw crushed coal products which are loaded onto rail on site using a dedicated rail siding
and loading facility. The coal is sold primarily to major coal trading groups for blending with other export Hunter Valley
thermal coals.
There were no Lost Time Injuries recorded at Werris Creek in FY 2007.
Saleable coal production of .29 Mt was 57% above the previous corresponding period.
During the year a new mining contractor, Marshall Mining and Earthmoving, a subsidiary of John Holland, was appointed.
DeveLOPment PROJectS
narrabri (100% owned)
The Narrabri project is located on an Exploration Licence over an area of 3km2 situated adjacent to the Kamilaroi Highway
and the main northern railway line between Boggabri and Narrabri.
The Narrabri project comprises two separate developments – Narrabri North and Narrabri South. The coal resources are
contained within the Hoskissons Seam, which has a thickness of up to 9 metres and a potential working section of up to 4.5
metres.
narrabri north will produce a low-ash, high-energy and low-sulphur thermal coal. This will be a superior quality product
destined for export markets. It is intended that mining at Narrabri North will take place in two stages. Stage will be a
continuous miner operation producing up to 2.5 Mtpa. Stage 2 will be a longwall operation which is expected to increase
production to more than 6 Mtpa. The proposed Narrabri North longwall mine has the potential to be one of the most
productive in Australia due to the thickness and continuity of the coal seam which will allow for panels up to 4km long.
Because of the exceptional quality of the coal (low ash and high energy) as well as what is expected to be very favourable
9
Annual Report 2007
MANAgINg dIRECToR'S REpoRT
mining conditions, it is expected that production from Narrabri North will require little or no beneficiation. Hence the capital
cost of the project should be relatively low and product yield should be relatively high.
The application for a mining lease for Narrabri North was lodged in October 2006 and the Environmental Assessment (EA)
was lodged in March 2007. Whitehaven expects the mining lease application to be approved in late 2007 with construction
of surface facilities and underground access commencing shortly thereafter.
Narrabri North development Timetable
Development Approval expected
Construction to commence
First coal production
Longwall production
Sunnyside (100% owned)
October 2007
Late 2007
End 2008
200
Sunnyside is an opencut project with production planned to commence in FY2008. Production will be up to .0 Mtpa of
medium and high ash thermal coal. The coal will be blended with lower ash coal from other mines for sale into export
markets. Reserves are sufficient to support a mine life of 5 years. A draft EA has undergone an Adequacy Review by the
NSW Department of Planning and other government agencies with final EA scheduled to be submitted by the end of
October 2007. It is expected that the EA will be put on Public Display during November 2007.
Belmont (100% owned)
Belmont is an opencut project with production planned to commence in FY2008. Production will be approximately
. Mtpa of semi-soft, PCI and export thermal coals. Reserves are sufficient to support a mine life of 8 years. An EA has
been submitted and is expected to be put on Public Display during October 2007.
eXPLORAtiOn PROJectS
narrabri South (100% owned)
The Hoskisson Seam, as at Narrabri North, extends into the Narrabri South project area. Exploration to date has identified
208 Mt of resources of which 33 Mt is either measured or indicated. A potential working section of around 4 metres
extends over most of the area.
With further exploration, this deposit may prove to be comparable to Narrabri North. In any case, future development of
Narrabri South should benefit from the infrastructure that will already be in place at Narrabri North.
Whitehaven Coal Limited
0
MANAgINg dIRECToR'S REpoRT
Bonshaw (66.7% owned)
A hard coking/semi-hard metallurgical coal deposit has been identified of up to 2.0 Mt north of the town of Ashford.
Exploration drilling and coal quality evaluation is ongoing.
West Blue vale and canyon West prospects (100% owned)
Exploration has identified deposits with 5.4 Mt of similar quality coal and strip ratio to the nearby Canyon mine. These
deposits have the potential to extend the life of the Canyon operation by a further 5 to 0 years.
tarrawonga underground project (100% owned)
Exploration over the past two years has identified significant resources of very low ash coal with coking properties in seams
outside the footprint of the existing Tarrawonga opencut mine. A feasibility study is being carried out.
inFRAStRUctURe
Whitehaven cHPP (100% owned)
The Whitehaven Mining Precinct includes a modern CHPP and train loader at Gunnedah which are 00% owned by
Whitehaven. ROM Coal from WMP mines is transported over relatively short distances by road-trains via a network of private
and public roads to the CHPP for processing and loading onto rail for export via Newcastle port. The existing train loading
loop is being extended to allow the use of 72 wagon trains from early 2008.
Rail
Under an agreement completed with the NSW Government, Whitehaven has by way of a take-or-pay arrangement,
committed to underwrite 60% of the funding of a major upgrade of the Werris Creek to Narrabri rail infrastructure which
will increase the capacity of that line to more than 0 million tonnes per annum over the next two years. The first stage is to
be commissioned in the first quarter of calendar year 2008 and will provide a 70% increase to the current capacity.
Total cost of the upgrade is $50 million and the project will be completed within 2 years. The use of longer trains will greatly
assist in assembling cargoes at Newcastle in shorter time frames than at present. Additionally, rail freight rates per tonne will
be reduced by using the longer trains.
Port
Currently Whitehaven Coal is shipped through Port Waratah Coal Services (PWCS) at Newcastle. As it has with all of the
coal exporters from the Hunter Valley region, capacity constraints at PWCS have constrained the rate of production from the
company’s mines.
Whitehaven has an .% interest in the Newcastle Coal Infrastructure Group (NCIG) which is planning to build a new coal
terminal at Newcastle. Stage (30 Mt capacity) is scheduled for completion by the end of 2009.
Annual Report 2007
MANAgINg dIRECToR'S REpoRT
SAFetY
In FY 2007 the Lost Time Injury Frequency Rate at all Whitehaven operations was zero. From the commencement of the
Canyon mine in 2000 to the end of June 2007, there have been no lost time injuries in the Whitehaven Mining Precinct
while Werris Creek has incurred only one lost time injury.
tHe enviROnment
Responsible management of the environment within which the company operates remains a high priority for Whitehaven
Coal directors, management, and employees. There is a strong focus on maintaining all of our operations within the very
strict conditions imposed by the relevant authorities under our Development Consents.
Whitehaven employs two full time environmental officers as part of its commitment to managing the environment.
mAnAgement
Whitehaven has appointed Mr. Rob Stewart as Chief Executive Officer commencing
October 22, 2007.
Mr. Stewart most recently held the position of Executive Manager Mining at Thiess Pty
Limited, where he had held a number of senior positions since 997. He has a Bachelor
of Engineering (hons) – civil engineering from Monash University (972) and a Masters of
Engineering Science – mining engineering from the University of Melbourne (975).
We are very pleased to have a mining executive the calibre of Rob join the Whitehaven
management team. This is an important period of growth for the company, requiring
additional management resources and expertise. In particular, Rob brings to Whitehaven a
long history of experience in coal mining and project management.
cOAL PRiceS & FOReign eXcHAnge
The current medium term outlook for thermal coal and semi-soft demand and price outcomes remains strong and it is
expected that this will be reflected in higher US$ prices for Whitehaven’s products in the Japanese Financial Year (“JFY”) 08
(commencing April 2008).
At the end of July 2007, Whitehaven implemented a new foreign exchange risk management policy. For FY 2008, the
company has hedged US$84.3M of US$ denominated sales receipts at an effective exchange rate of A$:00 = US$0.86
using forward exchange contracts.
Whitehaven Coal Limited
2
MANAgINg dIRECToR'S REpoRT
Strong demand is expected to continue:
• JFY 2008 prices should reflect current high spot prices
• Increased demand for Whitehaven’s low ash, low sulphur products
• Strong end-user interest in the Narrabri project thermal coal
OUtLOOK
• Productivity will continue at current high levels
• Coal prices for JFY08 expected to increase in line with current spot prices
•
•
•
Narrabri North Stage approval is expected by the end of 2007 with commencement of construction following shortly
thereafter
Production from Belmont and Sunnyside projects may not commence until FY 2009 due to approval processing delays
Rail capacity to Gunnedah to increase by 70% with longer trains commencing in Q CY 2008.
• Port constraints will limit sales growth
• Coal stocks to be maintained at high levels
• Accounting profit for hedge book taken in June 2007
• Cash effect of current hedge book is favourable vs accounting impact
Outlook Beyond FY2008
• High productivity of Whitehaven’s operations to be maintained
• New projects are well advanced in planning process
• Belmont and Sunnyside are low capital, straight-forward projects
• Rail capacity expansion is committed and underway
• Port capacity expansion addressed by NCIG project
• Narrabri North longwall on-track for commencement in 200
•
Increased demand expected for Whitehaven’s high quality coals
I would like to thank the board for their support and all employees of Whitehaven for their efforts.
K.Ross
Managing Director
3
Annual Report 2007
dIRECToRS' REpoRT
Left (l–r):
John Conde
Keith Ross
Hans Mende
Right (l–r):
Tony Haggarty
Andy plummer
Alex Krueger
Neil Chatfield
1 Directors
The directors present their report together with the financial report of Whitehaven Coal Limited (‘the Company’) and of the
consolidated entity, being the Company, its subsidiaries, and the consolidated entity’s interest in joint ventures for the year
ended 30 June 2007 and the auditor’s report thereon.
The directors of the Company at any time during or since the end of the financial year are:
John conde, BSc, Be (electrical) (Hons), mBA (Dist)
Chairman, Independent Non-Executive director, Age 59
Appointed: 3 May 2007
John has over 30 years of broad based commercial experience across a number of industries, including the energy sector. He
was chairman and managing director of Broadcast Investment Holdings, the owner of a number of media assets including
Channel 9 South Australia and radio stations 2UE and 4BC, as well as being a former non-executive director of Excel Coal
Limited. John is currently the chairman of Energy Australia, MBF Australia Limited and Sydney Symphony Limited, President
of the Commonwealth Remuneration Tribunal and a board member of the Scouts Australia Foundation.
Keith Ross, Be mining (Hons)
Managing director, Age 73
Appointed: 3 May 2007
Keith has over 50 years experience in the coal industry, both operational and managerial, in a number of board and senior
executive positions. His previous experience has included Managing Director of AMCI (Australia), Executive Director and then
Managing Director of Oakbridge Limited, General Manager of the minerals division of McIlwraith McEacharn Operations,
Managing Director/General Manager of the Cook Colliery for Coal Resources of Queensland Limited and a General Manager
for Bellambi Coal Company Limited. Keith has a Bachelor of Engineering (Mining) Honours st Class from the Sydney
University and is a certificated Colliery Manager.
neil chatfield, FcPA, AicD
Independent Non-Executive director, Age 53
Appointed: 3 May 2007
Neil has over 25 years experience in the transport and resources sectors and is currently a director and Chief Financial Officer
for Toll Holdings Limited, a director of Seek Limited, and Chairman of Virgin Blue Holdings Limited, all ASX-listed companies.
Neil’s previous roles involved senior finance positions in the coal industry including Chief Financial Officer of Cyprus Australia
Coal and Oakbridge Limited.
Whitehaven Coal Limited
4
dIRECToRS' REpoRT
tony Haggarty, mcomm
Independent Non-Executive director, Age 49
Appointed: 3 May 2007
Tony has over 30 years experience in the development, management and financing of mining projects. He was a co-founder
and the Managing Director of Excel Coal Limited from 993 to late-2006. Prior to this he worked for BP Coal and BP Finance
in Sydney and London, and for Agipcoal as the Managing Director of its Australian subsidiary. He is the non-executive
Chairman of King Island Scheelite Limited and a non-executive Director of Illawarra Coke Company Pty Ltd.
Alex Krueger, BS (Finance) BS (chemical engineering)
Independent Non-Executive director, Age 33
Appointed: 3 May 2007
Alex is a Managing Director of First Reserve Corporation (“FRC”). He is also a director of Foundation Coal Holdings Inc. Alex
is a senior member of the FRC investment team and his responsibilities range from deal origination and structuring to due
diligence, execution and monitoring. He is involved in investment activities in all areas of the worldwide energy industry, with
particular expertise in the coal sector. Prior to joining FRC, Alex worked in the Energy Group of Donaldson, Lufkin & Jenrette
in Houston.
Hans mende
Independent Non-Executive director, Age 63
Appointed: 3 May 2007
Hans has been President and Chief Operating Officer of AMCI (USA), since he co-founded the company in 986, and
remains one of its largest shareholders. Hans is also a director of MMX Mineracao and a director of Quintana Maritime.
Prior to starting AMCI (USA), Hans was employed by Thyssen consolidated entity of Companies, in various senior executive
positions within the organisation. He was responsible for the worldwide raw material trading activities of the consolidated
entity (coal, iron-ore, steel, scrap, fertilisers and turn-key projects) where he developed strong international marketing skills
and overall management expertise. When he left Thyssen in 986, he was President of their international trading company,
which had revenues in excess of US$b.
Andy Plummer, BSc mining eng
Independent Non-Executive director, Age 57
Appointed: 3 May 2007
Andy has 35 years experience in the investment banking and mining industries. He was most recently an executive director of
Excel Coal Limited, responsible for the company’s business development activities. He has worked in the Australian banking
and finance industry since 985 with Eureka Capital Partners, Resource Finance Corporation and Westpac. Prior to that, he
was employed in a variety of management and technical positions with ARCO Coal, Utah International and Consolidation
Coal. He is also a director of King Island Scheelite Ltd, XLX Pty Ltd and Chairman of Ranamok Glass Prize Ltd.
5
Annual Report 2007
dIRECToRS’ REpoRT
Former directors
Stephen Bizzell, B.com, cA
Executive director, Age 39
Appointed: 5 March 2007, Resigned: 3 May 2007
Stephen Bizzell is a Chartered Accountant and has worked independently since 994. Work undertaken by Stephen has
included acting as lead adviser and principal on numerous transactions, providing advice on corporate structuring issues,
private and public capital raisings, ASX listings, valuations, mergers, acquisitions and divestments and strategic and general
corporate advice to a large range of clients in a variety of industries.
Dominic Kazlauskas, Bcom LLB(Hons) mappFin
Executive director, Age 34
Appointed: 5 March 2007, Resigned: 3 May 2007
Dominic Kazlauskas spent seven years as a corporate lawyer involved in capital raisings, mergers and acquisitions, venture
capital and private equity transactions across a broad range of industries. Work performed by Dominic has included acting as
lead adviser on ASX listings and capital raisings and general corporate advice across a variety of industries.
Paul marshall, LLB, grad Dip Acc & Fin, cA
Executive director, Age 45
Appointed: 5 March 2007, Resigned: 3 May 2007
Paul Marshall is a Chartered Accountant. He has extensive experience in all aspects of company financial reporting, corporate
regulatory and governance areas, business acquisition and disposal due diligence, capital raisings and company listings and
company secretarial responsibilities.
2 company secretaries
Leigh Whitton, B.com, mBA, cPA
(Company Secretary)
Appointed: 3 May 2007
Leigh has been with the Whitehaven Group since 2005 as Chief Financial Officer and Company Secretary. He has over
20 years experience in the resources industry including senior roles with Jellinbah Resources, Cyprus Australia Coal and
Oakbridge. He holds a Bachelor of Commerce and a Masters of Business Administration and is a Certified Practising
Accountant.
Paul marshall, LLB, grad Dip Acc & Fin, cA
(Company Secretary)
Appointed: 5 March 2007
Paul Marshall is a Chartered Accountant. He holds a Bachelor of Laws degree and a post Graduate Diploma in Accounting
and Finance. He has more than 20 years in the accountancy profession having worked for the accountancy firm Ernst and
Young for ten years, and subsequently over ten years spent in commercial roles as Company Secretary and CFO for a number
of listed and unlisted companies mainly in the resources sector.
Whitehaven Coal Limited
6
dIRECToRS’ REpoRT
3 Directors’ interests
The relevant interest of each director in the shares and options issued by the Company, as notified by the directors to the
Australian Securities Exchange in accordance with S205G() of the Corporations Act 200, at the date of this report is as
follows:
director
John Conde
Keith Ross
Neil Chatfield
Tony Haggarty
Alex Krueger
Hans Mende
Andy Plummer
ordinary shares
options over
ordinary shares
250,000
4,235,227
250,000
5,50,000
3,650,000
75,379,833
5,000,000
-
-
-
6 exercisable over a maximum of 22,020,657 ordinary shares (refer to
details on the Equity Participation and Option Deed in Sections 6.,
6.2, 6.3., 6.3.2 and 6.3.3 of this report)
-
-
6 exercisable over a maximum of 22,020,657 ordinary shares (refer to
details on the Equity Participation and Option Deed in Sections 6.,
6.2, 6.3., 6.3.2 and 6.3.3 of this report)
4 Directors’ meeting
The number of directors’ meetings (including meetings of committees of directors) and number of meetings attended by
each of the directors of the Company during the financial year are:
director
board Meetings
Audit and Risk Committee
Meetings*
Remuneration and
Nomination Committee
Meetings*
John Conde
Keith Ross
Neil Chatfield
Tony Haggarty
Alex Krueger
Hans Mende
Andy Plummer
Stephen Bizzell
Dominic Kazlauskas
Paul Marshall
A
5
5
5
5
5
3
5
3
3
b
5
5
5
5
5
5
5
3
3
3
A
-
-
-
-
-
-
-
-
-
-
b
-
-
-
-
-
-
-
-
-
-
A
-
-
-
-
-
-
-
-
-
-
b
-
-
-
-
-
-
-
-
-
-
A – Number of meetings attended
B – Number of meetings held during the time the director held office during the year
*
The Company listed on the ASX in June 2007. Committees were established in relation to the listing on the ASX in particular in relation to the ASX
Corporate Governance Guidelines. Neither Committee met in the month of June 2007.
7
Annual Report 2007
dIRECToRS’ REpoRT
5 corporate governance statement
This statement outlines the main corporate governance practices in place since the ASX listing of the Company, which
comply with the ASX Corporate Governance Council recommendations, unless otherwise stated.
Scope of responsibility of Board
Responsibility for the Company’s proper corporate governance rests with the Board. The Board’s guiding principle in meeting
this responsibility is to act honestly, conscientiously and fairly, in accordance with the law, in the interests of the Company’s
shareholders (with a view to building sustainable value for them) and those of employees and other stakeholders.
The Board’s broad function is to:
(a) determine strategy and set financial targets for the Whitehaven Group;
(b) monitor the implementation and execution of strategy and performance against financial targets; and
(c) appoint and oversee the performance of executive management and generally to take and fulfil an effective leadership
role in relation to the consolidated entity.
Power and authority in certain areas is specifically reserved to the Board – consistent with its function as outlined above.
These areas include:
(a) composition of the Board itself including the appointment and removal of Directors;
(b) oversight of the consolidated entity including its control and accountability system;
(c) appointment and removal of senior management and the Company secretary;
(d) reviewing and overseeing systems of risk management and internal compliance and control, codes of ethics and conduct,
and legal and statutory compliance;
(e) monitoring senior management’s performance and implementation of strategy; and
(f) approving and monitoring financial and other reporting and the operation of committees.
composition of Board
The Board performs its roles and function, consistent with the above statement of its overall corporate governance
responsibility, in accordance with the following principles:
(a) the Board should comprise at least five directors;
(b) at least half of the Board should be non-executive directors; and
(c) the chairman of the Board should be one of the independent non-executive directors.
Board charter and policy
The Board has adopted a charter (which will be kept under review and amended from time to time as the Board may
consider appropriate) to give formal recognition to the matters outlined above. This charter sets out various other matters
that are important for effective corporate governance.
These initiatives, together with the other matters provided for in the Board’s charter, are designed to ‘institutionalise’ good
corporate governance and generally, to build a culture of best practice in the Company’s own internal practices and in its
dealings with others.
Audit and risk management committee
The purpose of this committee is to advise on the establishment and maintenance of a framework of internal control and
appropriate ethical standards for the management of the consolidated entity. Its current members are:
(a) Neil Chatfield (Chairman);
(b) John Conde; and
(c) Tony Haggarty.
The committee performs a variety of functions relevant to risk management and internal and external reporting and reports
to the Board following each meeting. Meetings are held at least four times each year. A broad agenda is laid down for each
regular meeting according to an annual cycle. The committee invites the external auditors to attend each of its meetings.
Whitehaven Coal Limited
8
dIRECToRS’ REpoRT
Remuneration and nominations committee
The purpose of this committee is to assist the Board and report to it on remuneration and issues relevant to remuneration
policies and practices including those for senior management and non-executive Directors and make recommendations to
the Board in relation to the appointment of new Directors (both executive and non-executive) and senior management.
Its current members are:
(a) John Conde (Chairman);
(b) Neil Chatfield; and
(c) Andy Plummer.
Among the functions performed by the committee are the following:
(a) review and evaluation of market practices and trends on remuneration matters;
(b) recommendations to the Board in relation to the consolidated entity’s remuneration policies and procedures;
(c) oversight of the performance of senior management and non-executive Directors;
(d) recommendations to the Board in relation to the remuneration of senior management and non-executive Directors;
(e) development of suitable criteria (as regards skills, qualifications and experience) for Board candidates;
(f) identification and consideration of possible candidates, and recommendation to the Board accordingly; and
(g) establishment of procedures, and recommendations to the Chairman, for the proper oversight of the Board and
management.
Meetings are held at least three times each year.
Best practice commitment
The Company is committed to achieving and maintaining the highest standards of conduct and has undertaken various
initiatives, as outlined in this section, that are designed to achieve this objective. The Company’s corporate governance
charter is intended to ‘institutionalise’ good corporate governance and, generally, to build a culture of best practice both in
the Company’s own internal practices and in its dealings with others.
The following are a tangible demonstration of the Company’s corporate governance commitment.
independent professional advice
With the prior approval of the Chairman, which may not be unreasonably withheld or delayed, each Director has the right to
seek independent legal and other professional advice concerning any aspect of the Company’s operations or undertakings in
order to fulfil their duties and responsibilities as directors. Any costs incurred are borne by the Company.
code of ethics and values
The Company has developed and adopted a detailed code of ethics and values to guide Directors in the performance of their
duties.
code of conduct for transactions in securities
The Company has developed and adopted a formal code to regulate dealings in securities by Directors and senior
management and their associates. This is designed to ensure fair and transparent trading in accordance with both the law
and best practice.
charter
The code of ethics and values and the code of conduct for transactions in securities (referred to above) both form part of
the Company’s corporate governance charter which has been formally adopted and can be inspected on its website at
www.whitehaven.net.au.
9
Annual Report 2007
dIRECToRS’ REpoRT
5 corporate governance statement (continued)
compliance with ASX corporate governance guidelines and best practice recommendations
The ASX document, ‘Principles of Good Corporate Governance and Best Practice Recommendations’ (Guidelines) applying
to listed entities was published in March 2003 by the ASX Corporate Governance Council with the aim of enhancing the
credibility and transparency of Australia’s capital markets.
The Board has assessed the Company’s current practice against the Guidelines and outlines its assessment below:
principle 1 – Lay solid foundations for management and oversight
The role of the Board and delegation to management have been formalised as described above in this section and will
continue to be refined, in accordance with the Guidelines, in light of practical experience gained in operating as a listed
company. The Company complies with the Guidelines in this area.
principle 2 – Structure the board to add value
Six of the Board (which comprises 7 Directors in total) are non-executives.
Together the Directors have a broad range of experience, expertise, skills, qualifications and contacts relevant to the business
of the Company.
principle 3 – promote ethical and responsible decision making
The Board has adopted a detailed code of ethics and values and a detailed code of conduct for transactions in securities.
The purpose of these codes is to guide Directors in the performance of their duties and to define the circumstances in which
both they and management, and their respective associates, are permitted to deal in securities.
The Board will ensure that restrictions on dealings in securities are strictly enforced. Both codes have been designed with a
view to ensuring the highest ethical and professional standards, as well as compliance with legal obligations, and therefore
compliance with the Guidelines.
principle 4 – Safeguard integrity in financial reporting
The audit and risk committee (with its own charter) complies with the Guidelines. All the members of the audit committee
are financially literate.
principle 5 – Make timely and balanced disclosure
The Company’s current practice on disclosure is consistent with the Guidelines. Policies and procedures for compliance with
ASX Listing Rule disclosure requirements are included in the Company’s corporate governance charter.
principle 6 – Respect the rights of shareholders
The Board recognises the importance of this principle and strives to communicate with shareholders both regularly and
clearly – both by electronic means and using more traditional communication methods. Shareholders are encouraged to
attend and participate at general meetings. The Company’s auditors always attend the annual general meeting and are
available to answer shareholders’ questions. The Company’s policies comply with the Guidelines in relation to the rights
of shareholders.
principle 7 – Recognise and manage risks
The Board, together with management, has constantly sought to identify, monitor and mitigate risk. Internal controls are
monitored on a continuous basis and, wherever possible improved. The whole issue of risk management is formalised in
the Company’s corporate governance charter (which complies with the Guidelines in relation to risk management) and
will continue to be kept under regular review. Review takes place at both committee level (audit and risk management
committee), with meetings are least four times each year, and Board level.
principle 8 – Encourage enhanced performance
The corporate governance charter adopted by the Board requires individual performance review and evaluation to be
conducted formally on an annual basis. In addition, an external review of the performance of Directors and key executives
is planned to take place after the completion of previous financial year audit and prior to the convening of the next annual
general meeting, and this external review process will be repeated on a regular basis (at intervals not exceeding three
years) to ensure independent professional scrutiny and benchmarking against developing best market practice. The Board
acknowledges that performance can always be enhanced and will continue to seek and consider ways of further enhancing
performance both individually and collectively. The Company’s practice complies with the Guidelines in this area.
Whitehaven Coal Limited
20
dIRECToRS’ REpoRT
principle 9 – Remunerate fairly and responsibly
The Company’s current practices in this area are reviewed regularly and comply with the Guidelines. Remuneration of
Directors and executives is fully disclosed in the annual report. The remuneration committee, which advises and reports to
the Board, is appropriately constituted in that it is comprised of 3 non-executive Directors.
principle 10 – Recognise the legitimate interests of stakeholders
The Board recognises the importance of this principle (which it believes represents not only sound ethics but also good
business sense and commercial practice) and continues to develop and implement procedures to ensure compliance
with legal and other obligations to legitimate stakeholders. The Company and its policies and practices comply with the
Guidelines in this area.
6 Remuneration report
6.1 Principles of compensation - audited
Remuneration is referred to as compensation throughout this report.
Key management personnel have authority and responsibility for planning, directing and controlling the activities of the
Company and the consolidated entity, including directors of the Company and other executives. Key management personnel
comprise the directors of the Company and executives for the Company and the consolidated entity including the five most
highly remunerated S300A executives.
Compensation levels for key management personnel and secretaries of the Company and key management personnel
of the consolidated entity are competitively set to attract and retain appropriately qualified and experienced directors
and executives. The remuneration and nominations committee obtains independent advice on the appropriateness of
compensation packages of both the Company and the consolidated entity given trends in comparative companies both
locally and internationally and the objectives of the Company’s compensation strategy.
The compensation structures explained below are designed to attract suitably qualified candidates, reward the achievement
of strategic objectives, and achieve the broader outcome of creation of value for shareholders. The compensation structures
take into account:
•
•
•
the capability and experience of the key management personnel
the key management personnel’s ability to control performance
the consolidated entity’s performance including:
- the consolidated entity’s earnings
- the growth in share price and delivering constant returns on shareholder wealth
- the amount of incentives within each key management person's compensation.
Compensation packages include a mix of fixed and variable compensation and short- and long-term performance-based
incentives. In addition to their salaries, the consolidated entity also provides non-cash benefits to its key management
personnel.
Fixed compensation
Fixed compensation consists of base compensation (which is calculated on a total cost basis and includes any FBT charges
related to employee benefits including motor vehicles), as well as employer contributions to superannuation funds.
Compensation levels are reviewed annually by the remuneration and nomination committee through a process that
considers individual and overall performance of the consolidated entity. In addition, external consultants provide analysis and
advice to ensure the directors’ and senior executives’ compensation is competitive in the market place. A senior executive’s
compensation is also reviewed on promotion.
performance linked compensation
Performance linked compensation includes both short-term and long-term incentives and is designed to reward key
management personnel for meeting or exceeding their financial and personal objectives. The short-term incentive (STI) is an
‘at risk’ bonus provided in the form of cash, while the long-term incentive (LTI) is provided as options over ordinary shares of
the Company.
2
Annual Report 2007
dIRECToRS’ REpoRT
6 Remuneration report (continued)
Short-term incentive bonus
Each year, the Managing Director assesses the performance of senior staff and may recommend the payment of a short term
incentive bonus to the board for approval.
Long-term incentive
Options were issued to two senior managers at the time that the Company listed on the Australian Securities Exchange. The
options will vest over a three year period. In addition at the time that the Company listed all permanent employees were
gifted ,000 shares on the condition that they are not permitted to dispose of the shares until the earlier of 3 years after the
gift or the time when they cease to be employed by the consolidated entity.
Service contracts
It is the consolidated entity’s policy that service contracts are entered into for with key management personnel. These
contracts vary in term but are capable of termination by the consolidated entity at short notice should the specified executive
commit any serious breach of any of the provisions of their agreement or is guilty of any grave misconduct or wilful neglect
in the discharge of their duties
Keith Ross, Managing Director, has a contract of employment dated 28 February 2005 with the Company. The contract
specifies the duties and obligations to be fulfilled by the chief executive officer. The contract is for a three year term and
can be terminated before the expiry by payment of a termination payment equal to the balance of the contract term and a
further twelve month termination payment.
Leigh Whitton, Company Secretary and Chief Financial Officer, has a contract of employment dated 6 May 2005 with the
Company. The contract specifies the duties and obligations to be fulfilled by the Chief Financial Officer. The contract is for
a three year term and can be terminated before expiry by payment of a termination payment equal to the balance of the
contract term or one year, whichever is the greater. The contract can also be terminated without notice for gross misconduct.
Non-executive directors
The constitution of the Company provides that the Directors may be paid, as remuneration for their services as Directors, a
sum determined from time to time by the Company’s shareholders in general meeting, with that sum to be divided amongst
the Directors in such manner and proportion as they agree.
The maximum aggregate amount which has been approved by Shareholders for payment to the Directors is $500,000 per
annum. An amount of approximately $447,000 per annum is to be paid to the Directors for the current year.
Remuneration provided to Executive Directors may be in addition to the sum approved by Shareholders.
Whitehaven Coal Limited
22
dIRECToRS’ REpoRT
6.2 Directors’ and executive officers’ remuneration (company and consolidated) - audited
Details of the nature and amount of each major element of remuneration of each director of the Company and each of the
five named Company executives and relevant consolidated entity executives who receive the highest remuneration and other
key management personnel are:
Short-term
post-
employment
Share-based
payments
Salary &
fees
$
STI cash
bonus
(A)
$
Non-
monetary
benefits
$
Total
Super-
annuation
benefits
$
options
$
Shares
$
Total
$
proportion of
remuneration
performance
related
%
Value of
options as
proportion of
remuneration
%
2007
In AUd
directors
Non-executive directors *
John Conde
(Chairman)
(appointed 3/5/07)
2007
30,000
Neil Chatfield
2007
8,749
(appointed 3/5/07)
Tony Haggarty
2007
6,350
(appointed 3/5/07)
Alex Krueger
2007
2,500
(appointed 3/5/07)
Hans Mende
2007
2,500
(appointed 3/5/07)
Andy Plummer
2007
4,988
(appointed 3/5/07)
Executive directors
Keith Ross
2007
338,000
(Managing Director)
Stephen Bizzell
2007
(appointed
5 March 2007,
resigned
3 May 2007)
Dominic Kazlauskas
2007
(appointed
5 March 2007,
resigned
3 May 2007)
Paul Marshall
(appointed
5 March 2007,
resigned
3 May 2007)
2007
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30,000
2,700
8,749
,689
6,350
-
2,500
,25
2,500
,25
4,988
-
-
-
-
-
27,394
365,394
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32,700
20,438
6,350
3,625
3,625
4,988
365,394
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
* Although non-executive directors were appointed 3/5/07, they were paid from /4/07 for services associated with the IPO
23
Annual Report 2007
dIRECToRS’ REpoRT
6 Remuneration report (continued)
Details of the nature and amount of each major element of remuneration of each director of the Company and each of the
five named Company executives and relevant consolidated entity executives who receive the highest remuneration and other
key management personnel are:
Short-term
post-
employment
Share-based
payments
Salary &
fees
$
STI cash
bonus
(A)
$
Non-
monetary
benefits
$
Total
Super-
annuation
benefits
$
options
(b)
$
Shares
$
Total
$
proportion of
remuneration
performance
related
%
Value of
options as
proportion of
remuneration
%
2007
In AUd
Executives
Leigh Whitton
2007
2,000
0,000
6,792
237,792
3,650
500
,000
270,942
3.7
0.2
2007
76,658
0,000
4,38
200,796
45,439
2007
-
-
4,388
4,388
47,744
-
-
-
246,235
4.
,000
53,32
-
-
-
2007
60,000
0,000
8,987
88,987
00,000
500
,000
290,487
3.4
0.2
2007
990,745
30,000
81,899
1,102,644
231,472
1,000
3,000
1,338,116
2007
-
-
-
-
-
1,000
3,000
4,000
-
-
-
-
(CFO/Company
Secretary)
Chris Burgess
(General
Manager New
Projects)
Casper Deiben
(General
Manager
Operations)
(appointed
May 2007)
Tony Galligan
(Managing
Director,
Whitehaven
Coal
Infrastructure)
Total
compensation:
key
management
personnel
(consolidated)
Total
compensation:
key
management
personnel
(company)
Whitehaven Coal Limited
24
dIRECToRS’ REpoRT
Equity participation and option deed
The consolidated entity has entered into an Equity Participation and Option Deed (the Deed) with entities related to Directors
Andy Plummer and Tony Haggarty. In accordance with the Deed, the following shares and options in the Company have
been issued to these related entities.
Shares
The related entities of Andy Plummer and Tony Haggarty hold 30 million shares in the Company (5 million shares each).
The 30 million shares were issued at $0.50 per share. These shares comprise Tranche (5 million shares) and Tranche 2 (5
million shares). Tranche 2 shares have been escrowed and are subject to the holding requirements set out below. They will
be released from escrow over a five year period but will be released earlier if the Company’s share price reaches $2.50 or
the options referred to below lapse. Dividends (net of an allowance for tax) attaching to the escrowed shares will be held in
escrow accounts and released at the time the shares are released.
In order for Tranche 2 shares to be released from escrow, the related entities of Andy Plummer and Tony Haggarty must each
hold the following proportions of Tranche shares:
(a) Years and 2 – 00% of Tranche shares;
(b) Year 3 – 80% of Tranche shares; and
(c) Year 4 and 5 – 50% of Tranche shares.
If these prescribed numbers of Tranche Shares are not held on the relevant release date, then some of the Tranche 2 shares
to be released from escrow on that date will be forfeited on a pro rata basis. For example if for the year 3 release from
escrow only 50% of the Tranche shares are held, then the amount of shares released would be equal to 50%/80% with
the remaining shares that would otherwise have been released on that date (i.e. 30%/80%) to be forfeited.
For accounting purposes, the difference between the consideration received by the Company and the fair value of the issued
shares of $5,000,000 has been recognised in the profit and loss for the period ended 30 June 2007.
options
The related entities of Andy Plummer and Tony Haggarty have also been granted 6 options each to acquire additional shares
in the Company. The number of option shares is the percentage (set out in the table below) of a deemed amount of issued
shares. For the purposes of the Deed, the deemed number of shares is 300 million shares plus any shares issued under
previous exercised options.
Each option is exercisable when the share price reaches a certain level (as set out in the table below). All share prices will be
considered attained when the volume weighted average price of ordinary shares on the ASX measured over 0 consecutive
trading days reaches the required amount. All options have an exercise price of $.
The number of option shares will be reduced if the relevant percentage shown in the table below of the Tranche 2 shares
released from escrow are not held at the time of exercising the option on a pro rata basis. For example if for option 3, only
50% of the Tranche 2 shares are held, then the number of option shares will be reduced to 50%/80% of the relevant grant
percentage in the table below.
option no.
grant percentage
(aggregate)
Maximum number of
potential shares
Share price
percentage of the
Tranche 2 shares released
from escrow to be held
2
3
4
5
6
.67%
3.0%
2.4%
2.39%
2.2%
2.2%
2,505,000
4,575,50
3,769,924
3,844,37
3,623,277
3,702,989
22,020,657
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
00%
90%
80%
70%
60%
50%
25
Annual Report 2007
dIRECToRS’ REpoRT
6 Remuneration report (continued)
The options were granted for nil consideration. The fair value of the options at grant date was 7.2 cents per option share.
The fair value of these options attributable to the period ended 30 June 2007 of $55,000 has been recognised in the profit
and loss of the Company.
The fair value of these options have been determined using Black Scholes barrier option techniques, incorporating the
probability of the performance hurdles being met.
Details of the nature and amount of each major element of remuneration of each director of the Company and each of
the four named Company executives and relevant consolidated entity executives who receive the highest remuneration and
other key management personnel are:
Short-term
post-
employment
Share-based
payments
Salary &
fees
$
STI cash
bonus
(A)
$
Non-
monetary
benefits
$
Total
Super-
annuation
benefits
$
options
$
Shares
$
Total
$
proportion of
remuneration
performance
related
%
Value of
options as
proportion of
remuneration
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
298,260
-
-
-
-
-
-
25,455
4.6
93,859
5.2
3,695
739,269
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20061
In AUd
directors
Non-executive directors
Hans Mende
Fritz Kundrun
Michael Quillen
William Macauley
Alex Krueger
Executive directors
Keith Ross (Managing
Director)
2006
2006
2006
2006
2006
-
-
-
-
-
2006
257,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,300
277,000
2,260
Leigh Whitton (CFO)
2006
72,439
0,000
5,83
97,622
7,833
Executives
Chris Burgess (Area
Manager)
Tony Galligan
(Managing Director,
Whitehaven Coal
Infrastructure)
(appointed 22 May
2006)
Total compensation:
key management
personnel
(consolidated)
Total compensation:
key management
personnel (company)
2006
56,22
0,000
4,854
80,976
2,883
2006
8,256
-
2,029
20,285
,40
2006
604,317
20,000
51,366
675,883
63,386
2006
-
-
-
-
-
In 2006, those listed were directors and senior executives of Whitehaven Coal Mining Limited
Whitehaven Coal Limited
26
dIRECToRS’ REpoRT
A. The short-term incentive bonus is for performance during the 30 June 2006 and 30 June 2005 financial year.
B. The fair value of services received in return for share options granted to the senior employees is based on the fair value of
share options granted, measured using a Black Scholes model.
The following factors and assumptions were used in determining the fair value of options on grant date:
grant date
director
Related Entities
3/5/07
Executives
3/5/07
3/5/07
3/5/07
option life/
Expiry date
Fair value per
option
Exercise
price
price of
shares on
grant date
Expected
volatility
Risk free
interest rate
dividend
yield
0 years
7.2 cents
$.00
$.00
30%
5.88%
0%
30/6/08
0.7 cents
30/6/09
0.7 cents
30/6/0
0.7 cents
$.00
$.00
$.00
$.00
$.00
$.00
30%
30%
30%
5.88%
5.88%
5.88%
0%
0%
0%
6.3 equity instruments
All options refer to options over ordinary shares of Whitehaven Coal Limited.
6.3.1 options over equity instruments granted as compensation – audited
Details on options over ordinary shares in the Company that were granted to each key management person during the
reporting period and details on options that were vested during the reporting period are as follows:
Number of
options granted
during 2007
Fair value per
option at grant
date ($)
grant date
Exercise price
per option ($)
Expiry date
Number of
options vested
during 2007
director related
entities
Tony Haggarty
Andy Plummer
6
6
3 May 2007
3 May 2007
7.2 cents
7.2 cents
$.00
$.00
none
none
-
-
Investment entities associated with Andy Plummer and Tony Haggarty have been granted options to acquire additional shares
in the Company, details are set out in section 6.2 for a maximum number of potential shares of 22,020,657 each.
Executives
Leigh Whitton
Tony Galligan
33,333
33,333
33,334
33,333
33,333
33,334
3 May 2007
3 May 2007
3 May 2007
3 May 2007
3 May 2007
3 May 2007
0.7 cents
0.7 cents
0.7 cents
0.7 cents
0.7 cents
0.7 cents
$.00
$.00
$.00
$.00
$.00
$.00
30 June 2008
30 June 2009
30 June 200
30 June 2008
30 June 2009
30 June 200
-
-
-
-
-
-
27
Annual Report 2007
dIRECToRS’ REpoRT
6 Remuneration report (continued)
No options have been granted since the end of the financial year. The options were provided at no cost to the recipients.
All executive options expire on the earlier of their expiry date or termination of the individual’s employment. The options are
exercisable over a period of three years from grant date. For options granted in the current year, the earliest exercise date is 2
June 2008.
Further details, including grant dates and exercise dates regarding options granted to director related entities and executives
are in note 34 to the financial statements.
6.3.2 Modification of terms of equity-settled share-based payment transactions - audited
No terms of equity-settled share-based payment have been altered or modified by the issuing entity during the
reporting period.
6.3.3 Exercise of options granted as compensation - audited
During the reporting period no shares were issued on the exercise of options previously granted as compensation.
6.3.4 Analysis of options and rights over equity instruments granted as compensation – unaudited
Details of vesting profile of the options granted as remuneration to each of the five named Company executives and relevant
consolidated entity executives and other key management personnel are detailed below.
Executives
Leigh Whitton
Leigh Whitton
Leigh Whitton
Tony Galligan
Tony Galligan
Tony Galligan
options granted
Number
33,333
33,333
33,334
33,333
33,333
33,334
date
2 June 2007
2 June 2007
2 June 2007
2 June 2007
2 June 2007
2 June 2007
% vested in
year
% Forfeited in
year
Financial years
in which grant
vests
Value yet to
vest $
-
-
-
-
-
-
-
-
-
-
-
-
2008
2009
200
2008
2009
200
3,060
3,560
3,580
3,060
3,560
3,580
For details of options granted to entities associated with directors refer to section 6.2.
6.3.5 Analysis of movements in options – unaudited
The movement during the reporting period, by value, of options over ordinary shares in the Company held by entities
associated with each Company director and each of the five named Company executives and relevant consolidated entity
executives and other key management personnel is detailed below.
granted in year
$
Exercised in year
$
Forfeited in year
$
Total option value in year
$
Value of options
director related entities (a)
Tony Haggarty
Andy Plummer
Executives (b)
Leigh Whitton
Tony Galligan
,590,000
,590,000
3,180,000
0,700
0,700
21,400
-
-
-
-
-
-
-
-
-
-
-
-
,590,000
,590,000
3,180,000
0,700
0,700
21,400
(a) The value of options granted in the year to entities related to directors is based on the fair value of share options
granted, measured using Black Scholes barrier options techniques, incorporating the probability of the performance
hurdles being met. The total value of the options granted is included in the table above This amount is allocated to
remuneration over an estimated 0 year vesting period.
(b) The value of options granted in the year to executives is the fair value of the options calculated at grant date using
Black Scholes model. The total value of the options granted is included in the table above. This amount is allocated to
remuneration over the vesting period (i.e. in years 3 May 2007 to 30 June 200).
Whitehaven Coal Limited
28
dIRECToRS’ REpoRT
7 Principal activities
The principal activity of the consolidated entity during the year was the development and operation of open cut coal mines
in New South Wales. During the year the consolidated entity completed the acquisition of a portfolio of coal assets and
successfully listed on the Australian Securities Exchange in June 2007. There were no other significant changes in the nature
of the activities of the consolidated entity during the year.
8 Operating and financial review
8.1 Overview of the consolidated entity
Whitehaven Coal Limited was incorporated on 5 March 2007 and legally acquired Whitehaven Coal Mining Limited and
its controlled entities on 29 May 2007. In accordance with AASB 3 Business Combinations, this acquisition was determined
to be a “reverse acquisition”. In a reverse acquisition, the legal acquirer becomes the accounting subsidiary and the legal
acquiree becomes the accounting parent. As a result of the reverse acquisition, the income statement for the consolidated
entity for the period ended 30 June 2007 comprises the following material trading results:
• Whitehaven Coal Limited for the period 29 May 2007 to 30 June 2007;
• Whitehaven Coal Holdings Pty Ltd for the period 6 April 2007 to 30 June 2007;
• Whitehaven Coal Mining Limited for the period July 2006 to 30 June 2007;
• Betalpha Pty Ltd for the period July 2006 to 30 June 2007; and
• Narrabri Coal Pty Ltd for the period 6 April 2007 to 30 June 2007.
8.2 Shareholder returns
Highlights from the year include the following:
• Net Profit After Tax of $24,095,000 on sales of ,460,000 tonnes of coal
• EBITDA (adjusted for one off listing and restructure costs) of $39,400,000
• Successful IPO and listing on the ASX in June 2007
• Tarrawonga open cut mine successfully commissioned
• Owner operation implemented at Canyon and Tarrawonga with significant cost savings
• Environmental Assessments lodged for the Narrabri, Belmont and Sunnyside development projects
• Additional resources identified at Narrabri South
The operating results are summarised below:
Whitehaven Coal Limited - Consolidated
Revenue
Net profit for the period attributable to members
Earnings per share (cents)
2007
$000
106,201
24,095
8.0
2006
$000
88,957
,697
3.9
Movement
%
9.38%
05.99%
05.3%
The consolidated entity’s operations during the year focused on operating and developing coal mines. There were two
operating projects during the year with total coal production (on an equity basis) of ,73,000 tonnes compared to
,069,000 tonnes in the 2006 year. The Company completed a listing on the Australian Securities Exchange with an initial
public offering of .9 million shares at $ per share. The share price at 30 June 2007 was $2.09.
29
Annual Report 2007
dIRECToRS’ REpoRT
8 Operating and financial review (continued)
8.3 investments for future performance
The consolidated entity has interests in three operating mines (Canyon, Tarrawonga opencut and Werris Creek) that produce
thermal coal, semi-soft coking coal and PCI coal. Most of this coal is exported out of Newcastle to major steel mills and
international power utilities.
During FY2008 and FY2009, the consolidated entity plans to commence mining at two additional open cut mines (Belmont
and Sunnyside) within the Whitehaven Mining Precinct and a large underground project at Narrabri North.
The consolidated entity’s key assets include:
(a) Whitehaven Mining Precinct (Canyon: 00%, Tarrawonga: 70%, Belmont: 00% and Sunnyside: 00%);
(b) Werris Creek (40% ); and
(c) Narrabri (North and South: 00%).
These projects are expected to result in aggregated managed production of approximately ,000,000 tonnes per annum
by FY20.
These production forecasts do not include possible additional production from the Narrabri South, Tarrawonga underground,
Canyon West, West Blue Vale or Bonshaw exploration projects.
Under an agreement completed with the NSW Government, the consolidated entity has committed to underwrite 60% of
the funding of a major upgrade of the Werris Creek to Narrabri rail infrastructure which will increase the capacity of that line
to more than 0 million tonnes per annum over the next two years. The first stage is to be commissioned in the first quarter
of calendar year 2008 and will provide a 70% increase of the current capacity.
8.4 Review of financial condition
Capital structure and treasury policy
Whitehaven Coal Limited completed its Initial Public Offer and listed on the ASX on June 2007 following strong demand
from both retail and institutional investors. Under the offer, a total of .9 million shares were offered at $.00 per share.
At the time of listing the Company had 978 shareholders, with approximately 87% of shares held by directors, management,
and employees.
At 30 June 2007, the Company had 323,000,000 shares on issue with a total of ,235 shareholders.
Liquidity and funding
The consolidated balance sheet shows the consolidated entity is well positioned for growth and with a portfolio of projects
that can be used to raise the finance required for their development.
In thousands of AUd
Cash on hand
Interest cover ratio
Interest bearing liabilities
Net debt
Net assets
Gearing ratio 2
EBIT to Interest Expense
2 Net Debt to Net Debt plus Equity
FY 2007
21,185
6.5
76,695
55,510
252,455
18%
FY 2006
,756
5.8
25,593
23,837
5,34
32%
Whitehaven Coal Limited
30
dIRECToRS’ REpoRT
8.5 Operations
Details of the mine operations of the consolidated entity that operated during the 2006/07 financial year are as follows:
Whitehaven mining Precinct
Thousand Tonnes *
ROM Coal Production
Saleable Coal Production
Coal Sold **
Coal stocks at end of period
* All figures are on a 00% basis
** Includes purchased coal
FY 2007
FY 2006
% Variance
1,388
997
1,021
286
708
563
73
35
96%
77%
40%
77%
The Whitehaven Mining Precinct currently includes the Canyon and Tarrawonga open cut mines and the Whitehaven Coal
Handling and Preparation Plant and train load-out facility.
There were no Lost Time Injuries recorded in the Whitehaven Mining Precinct in FY2007.
Saleable coal production of 0.997 million tonnes was 77% above the previous corresponding period.
The Tarrawonga mine commenced production in September 2006 and overburden removal has increased to budgeted rates
by the end of FY 2007. There has been a large increase in coal stocks and overburden in advance.
Werris creek
Thousand Tonnes *
ROM Coal Production
Saleable Coal Production
Coal Sold **
Coal stocks at end of period
* All figures are on a 00% basis
** Includes purchased coal
FY 2007
FY 2006
% Variance
1,289
1,291
1,361
56
903
824
880
52
43%
57%
55%
8%
There were no Lost Time Injuries recorded at Werris Creek in FY2007.
Saleable coal production of .29 million tonnes was 57% above the previous corresponding period.
Strategy and future performance
Coal prices and marketing
The current medium term outlook for thermal coal and semi-soft demand and price outcomes remains strong and it is
expected that this may be reflected in higher US$ prices for the consolidated entity’s products in Japanese Financial Year
(“JFY”) 08 (commencing April 2007).
Outlook
• Productivity will continue at current high levels.
• Coal prices for JFY08 expected to increase in line with current spot prices.
• Production and sales will be limited by port constraints.
• Production from Belmont and Sunnyside projects may not commence until FY09 due to processing delays in the approval
process.
• Rail capacity to Gunnedah to increase by 70% with longer trains commencing in Q CY08.
• Planning approval for the Narrabri North Coal project expected to allow commencement of construction by the end of
CY07.
3
Annual Report 2007
dIRECToRS’ REpoRT
9 Significant changes in the state of affairs
In the opinion of the directors, there were no significant changes in the state of affairs of the consolidated entity that have
not been noted in the review of operations that occurred during the financial year.
10 Dividends
There were no dividends paid or declared by the Company to members during, or since the end of, the financial year.
11 events subsequent to reporting date
There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction
or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the
operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity, in
future financial years.
12 Likely developments
The consolidated entity will continue with the operation and development of its coal projects. Further information about
likely developments in the operations of the consolidated entity and the expected results of those operations in future
financial years has not been included in this report because disclosure of this information would be likely to result in
unreasonable prejudice to the consolidated entity.
13 Share options
13.1 Options granted to directors and officers of the company
During or since the end of the financial year, the Company granted options for no consideration over unissued ordinary
shares in the Company to the following of the five most highly remunerated officers of the Company as part of their
remuneration:
officers
Leigh Whitton
Leigh Whitton
Leigh Whitton
Tony Galligan
Tony Galligan
Tony Galligan
Number of options
granted
Exercise price
Expiry date
33,333
33,333
33,334
33,333
33,333
33,334
$.00
$.00
$.00
$.00
$.00
$.00
30 June 2008
30 June 2009
30 June 200
30 June 2008
30 June 2009
30 June 200
In addition there are a total of 2 options exercisable over a maximum of 44,04,34 ordinary shares. Full details of these
options are set out in section 6.2 of the Director’s report.
These options do not entitle the holder to participate in any share issue of the Company or any other body corporate.
13.2 Shares issued on exercise of options
During or since the end of the financial year, the Company has not issued any ordinary shares as a result of the exercise of
options.
All options were granted during the financial year. No options have been granted since the end of the financial year.
Whitehaven Coal Limited
32
dIRECToRS’ REpoRT
13.3 Unissued shares under options
At the date of this report unissued ordinary shares of the Company under option are:
Expiry date
30 June 2008
30 June 2009
30 June 200
Exercise price
Number of shares
$.00
$.00
$.00
66,666
66,666
66,668
All options expire on the earlier of their expiry date or termination of the employee’s employment. For details of options
issued to entities related to directors refer to section 6 of the Director’s report.
14 indemnification and insurance of officers
14.1 indemnification
The Company has agreed to indemnify all current and former directors of the Company against all liabilities to another
person (other than the Company or a related body corporate) that may arise from their position as directors of the Company
and its controlled entities, except where the liability arises out of conduct involving a lack of good faith. The agreement
stipulates that the Company will meet the full amount of any such liabilities, including costs and expenses.
14.2 insurance premiums
During the financial year the Company has paid premiums in respect of directors’ and officers’ liability and legal expenses
insurance contracts. Such insurance contracts insure against certain liability (subject to certain exclusions) persons who are or
have been directors or officers of the Company or its controlled entities.
The directors have not included details of the nature of the liabilities covered or the amount of the premium paid in respect
of the directors’ and officers’ liability and legal expenses’ insurance contracts, as such disclosure is prohibited under the terms
of the contract.
15 environmental regulation
The consolidated entity’s operations are subject to various environmental regulations under both Commonwealth and State
legislation. The directors are not aware of any significant breaches of environmental regulations.
33
Annual Report 2007
dIRECToRS’ REpoRT
16 non-audit services
During the year KPMG, the Company’s auditor, has performed certain other services in addition to their statutory duties.
The board has considered the non-audit services provided during the year by the auditor and in accordance with written
advice provided by resolution of the audit and risk management committee, is satisfied that the provision of those non-audit
services during the year by the auditor is compatible with, and did not compromise, the auditor independence requirements
of the Corporations Act 200 for the following reasons:
• all non-audit services were subject to the corporate governance procedures adopted by the Company and have been
reviewed by the audit committee to ensure they do not impact the integrity and objectivity of the auditor; and
•
the non-audit services provided do not undermine the general principles relating to auditor independence as set out in
APES 0 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own
work, acting in a management or decision making capacity for the Company, acting as an advocate for the Company or
jointly sharing risks and rewards.
Details of the amounts paid to the auditor of the Company, KPMG, and its related practices for audit and non-audit services
provided during the year are set out below. In addition, amounts paid to other auditors for the statutory audit have been
disclosed:
In AUd
Audit services:
Auditors of the Company (KPMG Australia)
Audits of statutory financial statements
other auditors
Audit of financial statements
Services other than statutory audit:
Other regulatory audit services – KPMG Australia
Coalsuper Retirement Income Fund contributions audit
LSL Levy contributions audit
other assurance services
Reviews of financial statements to support listing
Accounting advice – KPMG Australia
Due diligence services – KPMG related practice
other services
Taxation services
Consolidated
2007
Consolidated
2006
27,333
3,800
22,33
2,00
,550
42,373
29,726
20,58
232,555
518,462
39,600
4,274
43,874
2,675
,975
-
-
-
3,828
36,478
Whitehaven Coal Limited
34
dIRECToRS’ REpoRT
17 Lead auditor’s independence declaration
The Lead auditor’s independence declaration is set out on page 27 and forms part of the directors’ report for financial year
ended 30 June 2007.
18 Rounding
The Company is of a kind referred to in ASIC Class Order 98/00 and dated 0 July 998 and in accordance with that Class
Order, all financial information presented in Australian dollars has been rounded to the nearest thousand unless otherwise
stated.
Signed in accordance with a resolution of the directors:
Neil Chatfield
Director
Dated at Melbourne this 27th day of September 2007
35
Annual Report 2007
AUdIToR'S INdEpENdENCE dECLARATIoN
(cid:4)(cid:5)(cid:6)(cid:7)
Lead auditor’s independence declaration under Section 307C of the Corporations Act
2001
To: the directors of Whitehaven Coal Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30
June 2007 there have been:
(cid:120)
(cid:120)
no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in
relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Simon Crane
Partner
Brisbane
27 September 2007
27
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International, a Swiss cooperative.
Whitehaven Coal Limited
36
Financial Report
Income Statements
Statements of Changes in Equity
Balance Sheets
Statements of Cash Flows
Notes to the Financial Statements
Directors' Declaration
Independent Auditor's Report
ASX Additional Information
38
39
40
4
42
80
8
83
37
Annual Report 2007
INCoME STATEMENTS
FoR THE YEAR ENdEd 30 JUNE 2007
In thousands of AUd
Revenue
Cost of sales
gross profit
Other income
Selling and distribution expenses
Administrative expenses
Other expenses
(Loss)/profit before financing income
Financial income
Financial expenses
Net financing income
profit/(loss) before tax
Income tax benefit/(expense)
Profit for the year attributable to equity holders
of the parent
Earnings per share:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Note
Consolidated
2007
Consolidated
2006
Restated*
Company
2007
7
8
9
12
37
37
06,20
(67,206)
38,995
,40
(28,23)
(6,824)
(5,72)
(10,092)
20,62
(5,26)
5,486
5,394
18,701
24,095
8.0
8.0
88,957
(56,953)
32,004
395
(9,074)
(2,057)
-
11,268
5,07
(907)
4,64
15,432
(3,735)
11,697
3.9
3.9
-
-
-
-
-
(6)
(5,63)
(15,224)
4,073
(6)
4,067
(11,157)
42
(11,115)
* see correction of error – note 40
The income statements are to be read in conjunction with the notes to the financial statements set out on pages 42 to 79
Whitehaven Coal Limited
38
STATEMENTS oF CHANgES IN EqUITY
FoR THE YEAR ENdEd 30 JUNE 2007
Consolidated
In thousands of AUd
Note
Issued capital
Retained earnings
Hedge reserve
Opening balance at July 2005
3,000
Net gain on derivative instruments
transferred to profit and loss
Net profit for the period – restated*
40
Total recognised income and
expense for the period
Dividends paid
27
-
-
-
-
closing balance at 30 June 2006
31,000
20,67
-
,697
11,697
(2,000)
20,314
3,393
(3,393)
-
-
-
-
In thousands of AUd
Note
Issued capital
Retained earnings
Hedge reserve
Opening balance at July 2006
3,000
Net profit for the period
Total recognised income and
expense for the period
Share based payments
Shares issued
Share issue costs
closing balance at 30 June 2007
Company
In thousands of AUd
Opening balance at July 2006
Net profit for the period
Total recognised income and
expense for the period
Share based payments
Shares issued
Share issue costs
closing balance at 30 June 2007
-
-
-
62,046
(63)
192,883
34
27
27
20,34
24,095
24,095
5,63
-
-
59,572
-
-
-
-
-
-
-
Note
Issued capital
Retained earnings
Hedge reserve
-
-
-
-
322,046
(63)
321,883
-
(,5)
(11,115)
5,63
-
-
4,048
34
27
27
-
-
-
-
-
-
-
Total
55,00
(3,393)
,697
11,697
(2,000)
51,314
Total
5,34
24,095
24,095
5,63
62,046
(63)
252,455
Total
-
(,5)
(11,115)
5,63
322,046
(63)
325,931
Amounts are net of tax.
* See correction of error – note 40
The statements of changes in equity are to be read in conjunction with the notes to the financial statements set out
on pages 42 to 79.
39
Annual Report 2007
bALANCE SHEETS
AS AT 30 JUNE 2007
In thousands of AUd
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Deferred stripping
Current tax receivable
Derivative financial instruments
total current assets
Trade and other receivables
Biological assets
Investments
Property, plant and equipment
Exploration and evaluation
Other intangible assets
Deferred tax assets
Derivative financial instruments
total non-current assets
total assets
Liabilities
Trade and other payables
Interest-bearing loans and borrowings
Employee benefits
Current tax payable
Deferred income
Provisions
total current liabilities
Non-current liabilities
Interest-bearing loans and borrowings
Deferred tax liabilities
Deferred income
Provisions
total non-current liabilities
total liabilities
net assets
Equity
Share capital
Retained earnings
total equity
Note
Consolidated
2007
Consolidated
2006
Restated*
3
4
5
22
6
4
7
8
9
20
2
22
6
23
24
25
22
26
24
22
26
27
2,85
4,336
0,768
,425
25
5,202
62,941
2,24
80
37
267,62
,672
920
7,876
8,870
289,281
352,222
6,35
22,294
,380
-
62
708
40,579
54,40
-
262
4,525
59,188
99,767
252,455
92,883
59,572
252,455
,756
8,467
,52
4,707
-
6
26,567
256
80
37
78,0
,880
-
-
86
80,450
107,017
3,020
6,760
,9
988
-
,384
23,271
8,833
,624
-
,975
32,432
55,703
51,314
3,000
20,34
51,314
Company
2007
2,85
,38
-
-
-
-
4,133
-
-
464,750
-
-
-
2,52
-
466,902
471,035
45,04
-
-
-
-
-
145,104
-
-
-
-
-
145,104
325,931
32,883
4,048
325,931
* See correction of error – note 40
The balance sheets are to be read in conjunction with the notes to the financial statements set out on pages 42 to 79.
Whitehaven Coal Limited
40
STATEMENTS oF CASH FLoWS
FoR THE YEAR ENdEd 30 JUNE 2007
Note
Consolidated
2007
Consolidated
2006
Company
2007
In thousands of AUd
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Cash generated from operations
Interest paid
Interest received
Income taxes (paid)/received
net cash from operating activities
32
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Cash acquired in business combination
Acquisition of property, plant and equipment
Acquisition of intangible
Exploration and evaluation expenditure
Issuance of loans to related entities
net cash from investing activities
Cash flows from financing activities
Proceeds from the issue of share capital
Transaction costs paid on issue of share capital
Proceeds from the issuance of borrowings
Repayment of borrowings
Payment of finance lease liabilities
Dividends paid
net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at July
cash and cash equivalents at 30 June
13
08,668
(0,905)
6,763
(2,489)
2,428
(,739)
4,963
-
7,79
(54,287)
(92)
(604)
(2,54)
(40,318)
4,296
(63)
67,855
(,226)
(3,478)
(2,500)
54,784
9,429
,756
21,185
95,05
(69,00)
26,041
(472)
34
30
-
(,379)
(1,379)
(6)
67
-
26,193
(1,318)
05
-
(3,60)
-
(0)
(5,66)
(36,781)
-
-
20,832
-
(,382)
(9,500)
9,950
(638)
2,394
1,756
-
-
-
-
-
-
-
4,296
(63)
-
-
-
-
4,133
2,85
-
2,815
The statements of cashflows are to be read in conjunction with the notes to the financial statements as set out on
pages 42 to 79.
4
Annual Report 2007
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
1 Reporting entity
Whitehaven Coal Limited (the ‘Company’) is a company domiciled in Australia. The address of the Company’s registered
office is Ground Floor 895 Ann Street, Fortitude Valley QLD 4006. The consolidated financial report of the Company for the
financial year ended 30 June 2007 comprises the Company and its subsidiaries (together referred to as the ‘consolidated
entity’) and the consolidated entity’s interest in jointly controlled operations. Whitehaven Coal Limited was incorporated
on 5 March 2007 and legally acquired Whitehaven Coal Mining Limited and its controlled entities on 29 May 2007. In
accordance with AASB 3 Business Combinations, this acquisition was determined to be a “reverse acquisition”. In a reverse
acquisition, the legal acquirer becomes the accounting subsidiary and the legal acquiree becomes the accounting parent.
As a result of the reverse acquisition, the income statement for the consolidated entity for the period ended 30 June 2007
comprises the following material trading results:
• Whitehaven Coal Limited for the period 29 May 2007 to 30 June 2007;
• Whitehaven Coal Holdings Pty Ltd for the period 6 April 2007 to 30 June 2007;
• Whitehaven Coal Mining Limited for the period July 2006 to 30 June 2007;
• Betalpha Pty Ltd for the period July 2006 to 30 June 2007; and
• Narrabri Coal Pty Ltd for the period 6 April 2007 to 30 June 2007.
The consolidated entity primarily develops and operates coal mines in New South Wales.
As the Company was incorporated on 5 March 2007, the results and cash flows for the Company are for the period from
incorporation to 30 June 2007. Accordingly, there is no comparative information for the Company.
2 Basis of preparation
a) Statement of compliance
The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting
Standards (AASBs) (including Australian Accounting Interpretations) adopted by the Australian Accounting Standards Board
(AASB) and the Corporations Act 200. The consolidated financial report of the consolidated entity also complies with the
IFRSs and interpretations adopted by the International Accounting Standards Board. The Company’s financial report does
not comply with IFRSs as the Company has elected to apply the relief provided to parent entities by AASB 32 Financial
Instruments: Presentation and Disclosure in respect of certain disclosure requirements.
The financial statements were approved by the Board of Directors on 26 September 2007.
b) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except for derivative financial
instruments which are measured at fair value.
c) Functional and presentation currency
These consolidated financial statements are presented in Australian dollars, which is the Company’s functional currency and
the functional currency of the majority of the consolidated entity.
The Company is of a kind referred to in ASIC Class Order 98/00 dated 0 July 998 and in accordance with that Class
Order, all financial information presented in Australian dollars has been rounded to the nearest thousand unless otherwise
stated.
Whitehaven Coal Limited
42
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
d) Use of estimates and judgements
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. In
particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting
policies that have the most significant effect on the amount recognised in the financial statements are described in the
following notes:
• Note 6 – business combinations
• Note 6 – valuation of financial instruments
• Note 22 – utilisation of tax loss
• Notes 26 and 3 – provisions and contingencies
• Note 34 – measurement of share-based payments
3 Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial
statements and have been applied consistently by all subsidiaries in the consolidated entity.
The entity has elected to early adopt the following accounting standards and amendments:
• AASB 0 Presentation of Financial Statements (October 2006)
• ED 5 Australian Additions to, and Deletion from, IFRSs
Certain comparative amounts have been reclassified to conform with the current year’s presentation.
a) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the consolidated entity. Control exists when the consolidated entity has the power
to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control,
potential voting rights that presently are exercisable are taken into account. The financial statements of subsidiaries are
included in the consolidated financial statements from the date that control commences until the date that control ceases.
Investments in subsidiaries are carried at their cost of acquisition in the Company’s financial statements.
(ii) Jointly controlled operations
The interest of the consolidated entity in unincorporated joint ventures are brought to account by recognising in its financial
statements the assets it controls, the liabilities that it incurs, the expenses it incurs and its share of income that it earns from
the sale of goods or services by the joint venture.
(iii) Transactions eliminated on consolidation
Intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup transactions, are
eliminated in preparing the consolidated financial statements.
b) Foreign currency
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Australian dollars at
the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the
income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are
translated using the exchange rate at the date of the transaction.
43
Annual Report 2007
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
3 Significant accounting policies (continued)
c) Financial instruments
(i) Non derivative financial instruments
Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings,
and trade and other payables.
Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit
or loss, any directly attributable transaction costs, except as described below. Subsequent to initial recognition non-derivative
financial instruments are measured as described below.
A financial instrument is recognised if the consolidated entity becomes a party to the contractual provisions of the
instrument. Financial assets are derecognised if the consolidated entity’s contractual rights to the cash flows from the
financial assets expire or if the consolidated entity transfers the financial asset to another party without retaining control
or substantially all risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for
at trade date, i.e., the date that the consolidated entity commits itself to purchase or sell the asset. Financial liabilities are
derecognised if the consolidated entity’s obligations specified in the contract expire or are discharged or cancelled.
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form
an integral part of the consolidated entity’s cash management are included as a component of cash and cash equivalents for
the purpose of the statement of cash flows.
Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any
impairment loss.
(ii) derivative financial instruments
The consolidated entity uses derivative financial instruments to hedge its exposure to foreign exchange risks arising from
operating activities. In accordance with its treasury policy, the consolidated entity does not hold or issue derivative financial
instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading
instruments.
Derivative financial instruments are recognised initially at fair value with attributable transaction costs recognised in the
income statement when incurred. Subsequent to initial recognition, derivative financial instruments are measured at fair
value. The gain or loss on re-measurement to fair value is recognised immediately in profit or loss as part of foreign currency
gains and losses.
(iii) Share capital
Ordinary shares
Incremental costs directly attributable to issue of ordinary shares and share options are recognised as a deduction from
equity, net of any related income tax benefit.
Dividends
Dividends are recognised as a liability in the period in which are declared.
d) Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets
includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working
condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are
located.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items
(major components) of property, plant and equipment.
Whitehaven Coal Limited
44
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
(ii) Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is
probable that the future economic benefits embodied within the part will flow to the consolidated entity and its cost can be
measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as
incurred.
(iii) depreciation
Depreciation is charged to the income statement on a straight-line basis or units of production over the estimated useful lives
of each part of an item of property, plant and equipment. Land is not depreciated. Mining property and development assets
are depreciated on a units of production basis over the life of the economically recoverable reserves.
The depreciation rates used in the current and comparative periods are as follows:
• plant and equipment
•
leased plant and equipment
2 – 20%
– 4%
• mining property and development assets
units of production
The residual value, the useful life and the depreciation method applied to an asset are reassessed at least annually.
e) intangible assets
(i) Exploration and evaluation assets
Exploration and evaluation costs, including the costs of acquiring licences, are capitalised as exploration and evaluation assets
on an area of interest basis. Costs incurred before the consolidated entity has obtained the legal rights to explore an area are
recognised in the income statement.
Exploration and evaluation assets are only recognised if the rights of the area of interest are current and either:
i.
the expenditures are expected to be recouped through successful development and exploitation of the area of interest;
or
ii. activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable assessment of
the existence or otherwise of economically recoverable reserves and active and significant operations in, or in relation to,
the area of interest are continuing.
Exploration and evaluation assets are assessed for impairment if (i) sufficient data exists to determine technical feasibility and
commercial viability, and (ii) facts and circumstances suggest that the carrying amount exceeds the recoverable amount. For
the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating units to which the
exploration activity related. The cash generating unit shall not be larger than the area of interest.
Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are
demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then
reclassified from intangible assets to mining property and development assets within property, plant and development.
(ii) Water access rights
The consolidated entity holds water access rights having a perpetual life, which have been determined to have an indefinite
life. The water access rights have been recognised at cost and will be assessed annually for impairment.
f) Deferred stripping costs
Expenditure incurred to remove overburden or waste material during the production phase of a mining operation is deferred
to the extent it gives rise to future economic benefits and charged to operating costs on a units of production basis using the
estimated average stripping ratio for the area being mined. Changes in estimates of average stripping ratios are accounted
for prospectively.
For the purposes of assessing impairment, deferred stripping costs are grouped with other assets of the relevant cash
generating unit.
45
Annual Report 2007
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
3 Significant accounting policies (continued)
g) Leased assets
Leases in terms of which the consolidated entity assumes substantially all the risks and rewards of ownership are classified
as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and
the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance
with the accounting policy applicable to that asset.
Other leases are operating leases and the leased assets are not recognised on the consolidated entity’s balance sheet.
h) inventories
Inventories are measured at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the
ordinary course of business, less the estimated costs of completion and selling expenses.
The cost of mining inventories is determined using a weighted average basis. Cost includes direct material, overburden
removal, mining, processing, labour, mine rehabilitation costs incurred in the extraction process and other fixed and variable
overhead costs directly related to mining activities.
i) impairment
(i) Financial assets
A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative
effect on the estimated future cash flows of that asset.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its
carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate.
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are
assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in profit or
loss.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was
recognised. For financial assets measured at amortised cost, the reversal is recognised in profit or loss.
(ii) Non-financial assets
The carrying amounts of the consolidated entity’s non-financial assets, other than biological assets, inventories and deferred
tax assets, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such
indication exists, the asset’s recoverable amount is estimated. For intangible assets that have indefinite lives or that are not
yet available for use, recoverable amount is estimated at each reporting date.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its
recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that are largely
independent from other assets and groups. Impairment losses are recognised in the income statement, unless an asset
has previously been revalued, in which case the impairment loss is recognised as a reversal to the extent of that previous
revaluation with any excess recognised through profit or loss.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any
goodwill allocated to cash-generating units (consolidated entity of units) and then, to reduce the carrying amount of the
other assets in the unit (consolidated entity of units) on a pro rata basis.
Whitehaven Coal Limited
46
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
j) employee benefits
(i) defined contribution superannuation funds
Obligations for contributions to defined contribution superannuation funds are recognised as an expense in the income
statement as incurred.
(ii) Long-term service benefits
The consolidated entity’s net obligation in respect of long-term service benefits is the amount of future benefit that
employees have earned in return for their service in the current and prior periods. The obligation is calculated using expected
future increases in wage and salary rates including related on-costs and expected settlement dates, and is discounted
using the rates attached to the Commonwealth Government bonds at the balance sheet date which have maturity dates
approximating to the terms of the consolidated entity’s obligations.
(iii) Short-term benefits
Liabilities for employee benefits for wages, salaries, annual leave and sick leave represent present obligations resulting from
employees’ services provided to reporting date and are calculated at undiscounted amounts based on remuneration wage
and salary rates that the consolidated entity expects to pay as at reporting date including related on-costs, such as workers
compensation insurance and payroll tax. Non-accumulating non-monetary benefits, such as medical care, housing, cars and
free or subsidised goods and services, are expensed based on the net marginal cost to the consolidated entity as the benefits
are taken by the employees.
A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the
consolidated entity has a present legal or constructive obligation to pay this amount as a result of past service provided by
the employee and the obligation can be estimated reliably.
(iv) Share-based payment transactions
The grant date fair value of options granted to employees is recognised as an expense, with a corresponding increase in
equity, over the period in which the employees become unconditionally entitled to the options. The amount recognised is
adjusted to reflect the actual number of share options that vest, except for those that fail to vest due to market conditions
not being met.
k) Provisions
A provision is recognised in the balance sheet when the consolidated entity has a present legal or constructive obligation
as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and, where appropriate, the risks specific to the liability.
47
Annual Report 2007
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
3 Significant accounting policies (continued)
(i) Mine closure, rehabilitation, site restoration and dismantling
Provisions are made for the estimated cost of rehabilitation relating to areas disturbed during the mine’s operation up to
reporting date but not yet rehabilitated. Provision has been made in full for all disturbed areas at the reporting date based on
current estimates of costs to rehabilitate such areas, discounted to their present value based on expected future cashflows.
The estimated cost of rehabilitation includes the current cost of re-contouring, topsoiling and revegetation employing
legislative requirements. Changes in estimates are dealt with on a prospective basis as they arise.
Significant uncertainty exists as to the amount of rehabilitation obligations which will be incurred due to the impact of
changes in environmental legislation. The amount of the provision relating to rehabilitation of mine infrastructure and
dismantling obligations is recognised at the commencement of the mining project and/or construction of the assets where a
legal or constructive obligation exists at that time. The provision is recognised as a non-current liability with a corresponding
asset included in mining property and development assets.
At each reporting date the rehabilitation liability is re-measured in line with changes in discount rates, and timing or
amount of the costs to be incurred. Changes in the liability relating to rehabilitation of mine infrastructure and dismantling
obligations are added to or deducted from the related asset, other than the unwinding of the discount which is recognised
as a finance cost in the income statement as it occurs.
If the change in the liability results in a decrease in the liability that exceeds the carrying amount of the asset, the asset is
written-down to nil and the excess is recognised immediately in the income statement. If the change in the liability results in
an addition to the cost of the asset, the recoverability of the new carrying amount is considered. Where there is an indication
that the new carrying amount is not fully recoverable, an impairment test is performed with the write-down recognised in
the income statement in the period in which it occurs.
The amount of the provision relating to rehabilitation of environmental disturbance caused by on-going production and
extraction activities is recognised in the income statement as incurred.
l) Revenue
(i) Coal sold
Revenue from the sale of coal is recognised in the income statement when the significant risks and rewards of ownership
have been transferred to the buyer.
(ii) Rental income
Revenue received before it is earned is recorded as unearned lease income in the balance sheet at its net present value
determined by discounting the expected notional future cash flows at a pre-tax rate that reflects current market assessments
of the time value of money. Rental income is recognised in the income statement on a straight-line basis over the term of the
lease.
(iii) Hire of plant
The consolidated entity hires plant under operating leases to its subsidiaries and joint ventures. Revenue from the plant hire is
recognised in the income statement as earned.
m) Lease payments
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease.
Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.
Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of
the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant
periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising
the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.
Whitehaven Coal Limited
48
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
n) Finance income and expense
Finance income comprises interest income on funds invested, dividend income, changes in the fair value of financial assets
at fair value through profit or loss and foreign currency gains. Interest income is recognised as it accrues, using the effective
interest method. Dividend income is recognised on the date that the consolidated entity’s right to receive payment is
established.
Finance expenses comprise interest expense on borrowings, unwinding of the discount on provisions, foreign currency losses,
changes in the fair value of financial assets at fair value through profit or loss, impairment losses recognised on financial
assets, and losses on hedging instruments that are recognised in profit or loss. All borrowing costs are recognised in profit or
loss using the effective interest method.
o) income tax
Income tax on the profit or loss for the year comprises current and deferred tax. Income tax expense is recognised in the
income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in
equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted
at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying
amounts of recognised assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial
recognition of assets or liabilities that affect neither accounting nor taxable profit and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided
is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates
enacted or substantively enacted by law at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against
which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to
the extent that it is no longer probable that the related tax benefit will be realised.
Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay
the related dividend.
(i) Tax consolidation
The Company and its wholly-owned Australian resident entities have formed a tax-consolidated group with effect from 29
May 2007 and are therefore taxed as a single entity from that date. The head entity within the tax-consolidated group is
Whitehaven Coal Limited.
Current tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the
members of the tax-consolidated group are recognised in the separate financial statements of the members of the tax-
consolidated group using the ‘separate taxpayer within a consolidated group’ approach by reference to the carrying amounts
of assets and liabilities in the separate financial statements of each entity and the tax values applying under tax consolidation.
Any current tax liabilities (or assets) and deferred tax assets arising from unused tax losses of the subsidiaries is assumed by
the head entity in the tax-consolidated group and are recognised as amounts payable (receivable) to/(from) other entities in
the tax-consolidated group in conjunction with any tax funding arrangement amounts (refer below). Any difference between
these amounts is recognised by the Company as an equity contribution or distribution.
The Company recognises deferred tax assets arising from unused tax losses of the tax-consolidated group to the extent
that it is probable that future taxable profits of the tax-consolidated group will be available against which the asset can be
utilised.
Any subsequent period adjustments to deferred tax assets arising from unused tax losses as a result of revised assessments of
the probability of recoverability is recognised by the head entity only.
49
Annual Report 2007
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
3 Significant accounting policies (continued)
(ii) Nature of tax funding arrangements and tax sharing arrangements
The head entity, in conjunction with other members of the tax-consolidated group, has entered into a tax funding
arrangement which sets out the funding obligations of members of the tax-consolidated group in respect of tax amounts.
The tax funding arrangements require payments to/from the head entity equal to the current tax liability/(asset) assumed by
the head entity and any tax-loss deferred tax asset assumed by the head entity, resulting in the head entity recognising an
inter-entity receivable/(payable) equal in amount to the tax liability/(asset) assumed. The inter-entity receivables/(payables) are
at call.
Contributions to fund the current tax liabilities are payable as per the tax funding arrangement and reflect the timing of the
head entity’s obligation to make payments for tax liabilities to the relevant tax authorities.
The head entity, in conjunction with other members of the tax-consolidated group, has also entered into a tax sharing
agreement. The tax sharing agreement provides for the determination of the allocation of income tax liabilities between the
entities should the head entity default on its tax payment obligations. No amounts have been recognised in the financial
statements in respect of this agreement as payment of any amounts under the tax sharing agreement is considered remote.
p) goods and services tax
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount
of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the
cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable
to, the ATO is included as a current asset or liability in the balance sheet.
Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from
investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.
q) earnings per share
The consolidated entity presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated
by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of
ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to
ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive
potential ordinary shares, which comprise convertible notes and share options granted to employees.
r) new standards and interpretations not yet adopted
The following standards, amendments to standards and interpretations have been identified as those which may impact the
entity in the period of initial application. They are available for early adoption at 30 June 2007, but have not been applied in
preparing this financial report:
• AASB 7 Financial Instruments: Disclosures (August 2005) replaces the presentation requirements of financial instruments
in AASB 32. AASB 7 is applicable for annual reporting periods beginning on or after January 2007, and will require
extensive additional disclosures with respect to the consolidated entity’s financial instruments and share capital.
• AASB 2005-0 Amendments to Australian Accounting Standards (September 2005) makes consequential amendments
to AASB 32 Financial Instruments: Disclosure and Presentation, AASB 0 Presentation of Financial Statements, AASB
4 Segment Reporting, AASB 7 Leases, AASB 33 Earnings Per Share, AASB 39 Financial Instruments: Recognition
and Measurement, AASB First time Adoption of Australian Equivalents to International Financial Reporting Standards,
AASB 4 Insurance Contracts, AASB 023 General Insurance Contracts and AASB 038 Life Insurance Contracts arising
from the release of AASB 7. AASB 2005-0 is applicable for annual reporting periods beginning on or after January
2007 and is expected to only impact disclosures contained within the consolidated financial report.
Whitehaven Coal Limited
50
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
4 Determination of fair values
A number of the consolidated entity’s accounting policies and disclosures require the determination of fair value, for both
financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure
purposes based on the following methods. Where applicable, further information about the assumptions made in
determining fair values is disclosed in the notes specific to that asset or liability
a) Property, plant and equipment
The fair value of property, plant and equipment recognised as a result of a business combination is based on market values.
The market value of property is the estimated amount for which a property could be exchanged on the date of valuation
between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had
each acted knowledgeably, prudently and without compulsion. The market value of items of plant and equipment is based
on the quoted market prices for similar items.
b) intangible assets
The fair value of water access rights with indefinite useful lives is based on the outcome of recent transactions for similar
assets within the same industry, less estimated costs of disposal.
c) trade and other receivables
The fair value of trade and other receivables, excluding construction work in progress, is estimated as the present value of
future cash flows, discounted at the market rate of interest at the reporting date.
d) Derivatives
The fair value of foreign currency options is the estimated amount the consolidated entity would pay or receive to terminate
the derivative at the balance sheet date, taking into account quoted market rates and the current creditworthiness of the
counterparties.
e) non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and
interest cash flows, discounted at the market rate of interest at the reporting date. For finance leases the market rate of
interest is determined by reference to similar lease agreements.
f) Share-based payment transactions
The fair value of services received in return for share options granted to the directors is based on the fair value of share
options granted, measured using Black Scholes barrier options techniques, incorporating the probability of the performance
hurdles being met.
The fair value of services received in return for share options granted to the senior employees is based on the fair value of
share options granted, measured using a Black Scholes model.
Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility (based
on weighted average historic volatility adjusted for changes expected due to publicly available information of publicly
listed companies operating in the same industry with similar operating characteristics), weighted average expected life of
the instruments (based on historical experience of similar instruments and similar option holder characteristics), expected
dividends, and the risk-free interest rate (based on government bonds). Service and non-market performance conditions
attached to the transactions are not taken into account in determining fair value.
5
Annual Report 2007
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
5 Segment reporting
Business and geographical segments
The consolidated entity operates within the coal industry in Australia.
6 Acquisition of subsidiaries
Acquisition of Whitehaven coal Limited and Whitehaven coal Holdings Pty Ltd
Whitehaven Coal Limited was incorporated on 5 March 2007 and legally acquired Whitehaven Coal Mining Limited and
its controlled entities on 29 May 2007. In accordance with AASB 3 Business Combinations, this acquisition was determined
to be a “reverse acquisition”. In a reverse acquisition, the legal acquirer becomes the accounting subsidiary and the legal
acquiree becomes the accounting parent.
The reverse acquisition had the following effect on the consolidated entity’s assets and liabilities on acquisition date:
In thousands of AUd
Trade and other receivables
Cash and cash equivalents
Net identifiable assets and liabilities
Goodwill on acquisition
consideration paid, satisfied in issuance of shares*
pre –acquisition
carrying amounts
Fair value
adjustments
Recognised values
on acquisition
9
7,79
17,198
-
-
-
9
7,79
17,198
-
17,198
* Whitehaven Coal Mining Limited issued 5,50,000 notional shares to acquire Whitehaven Coal Limited and Whitehaven Coal Holdings Pty Ltd.
Pre-acquisition carrying amounts were determined based on applicable AASBs immediately before the acquisition. The values
of assets and liabilities recognised on acquisition are their estimated fair values.
Since their acquisition on 29 May 2007, Whitehaven Coal Limited contributed a loss of $4,65,000, net of tax benefit of
$42,000, to the consolidated entity’s net profit for the year ended 30 June 2007.
Acquisition of narrabri coal Pty Limited
Whitehaven Coal Mining Limited legally acquired Narrabri Coal Pty Ltd on 6 April 2007. The acquisition had the following
effect on the consolidated entity’s assets and liabilities on acquisition date:
In thousands of AUd
Property, plant and equipment
Trade and other receivables
Deferred tax asset
Trade and other payables
Net identifiable assets and liabilities
Goodwill on acquisition
consideration paid, satisfied in issuance of shares*
Note
9
pre –acquisition
carrying amounts
Fair value
adjustments
Recognised values
on acquisition
0,963
39,90
50,864
03
8
(,400)
(253)
-
352
-
140,253
03
433
(,400)
140,000
-
140,000
* Whitehaven Coal Mining Limited issued 40,000,000 shares to acquire Narrabri Coal Pty Ltd.
Pre-acquisition carrying amounts were determined based on applicable AASBs immediately before the acquisition. The values
of assets and liabilities recognised on acquisition are their estimated fair values.
Since its acquisition on 6 April 2007, Narrabri Coal Pty Ltd contributed a profit of $2,000, net of tax benefit of $250,000,
to the consolidated entity’s net profit for the year ended 30 June 2007.
Whitehaven Coal Limited
52
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
Consolidated
2007
Consolidated
2006
Company
2007
03,46
2,622
8
106,201
88,92
-
45
88,957
86
7
-
846
9
1,140
9
5,63
15,172
9,762
,255
75
23
48
5,63
26,426
897
-
4
5,88
3,830
20,612
(,822)
(,768)
(957)
(374)
(205)
(5,126)
15,486
235
6
30
-
4
395
-
-
-
,35
44
87
294
4
-
2,114
34
533
4
,207
3,03
5,071
(238)
(24)
-
(98)
(230)
(907)
4,164
-
-
-
-
-
-
-
-
-
-
-
5,63
15,163
-
-
-
-
-
5,63
15,163
67
-
-
4,006
-
4,073
-
-
-
-
(6)
(6)
4,067
In thousands of AUd
7 Revenue
Sale of coal
Hire of plant
Rental income
8 Other income
Gain on sale of scrap materials
Gain on sale of cattle
Gain on sale of non-current assets
Management income from joint venture participant
Sundry income
9 Other expenses
Loss on sale of non-current assets
Share based compensation payments
10 Personnel expenses
Wages and salaries
Superannuation
Other associated personnel expenses
Increase in liability for annual leave
Increase in liability for long-service leave
Share-based compensation payments
11 Finance income and expense
Interest income on bank facilities
Interest income on loans to related entities
Dividend income
Net foreign exchange gain
Gains from derivatives not qualifying for hedge accounting
Financial income
Interest expense on secured bank loans
Interest expense on finance lease liabilities
Interest expense on unsecured loan from related entity
Unwinding of discounts on provisions
Other interest charges
Financial expenses
net financing income
53
Annual Report 2007
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
In thousands of AUd
12 income tax benefit/(expense)
Current tax expense
Current period
Adjustment for prior periods
deferred tax benefit/(expense)
Origination and reversal of temporary differences
Change in unrecognised temporary differences
income tax benefit/(expense)
Numerical reconciliation between tax benefit/(expense) and
profit before tax
Profit for the period
Total income tax benefit/(expense)
Profit excluding income tax
Income tax using the Company’s domestic tax rate of 30%
(2006: 30%)
Non-deductible expenses
Recognition of previously unrecognised temporary differences
Tax benefit from joining tax consolidated group
Change in unrecognised temporary differences
Under/(over) provided in prior periods
* See correction of error – note 40
Consolidated
2007
Consolidated
2006
restated*
Company
2007
(799)
-
(799)
9,500
-
19,500
18,701
24,095
8,70
5,394
(,68)
(5,705)
-
25,955
(0)
79
(2,297)
906
(1,391)
(2,344)
-
(2,344)
(3,735)
,697
(3,735)
15,432
(4,630)
346
(348)
-
(9)
906
18,701
(3,735)
-
-
-
42
-
42
42
(,5)
42
(11,157)
3,347
(3,305)
-
-
-
-
42
Whitehaven Coal Limited
54
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
In thousands of AUd
13 cash and cash equivalents
Consolidated
2007
Consolidated
2006
Company
2007
Cash and cash equivalents in the statement of cash flows
2,85
,756
2,85
The weighted average interest rate for cash balances at 30 June 2007 is 5.69% (2006: 4.75%)
14 trade and other receivables
Current
Trade receivables
Other trade receivables and prepayments
Receivables due from related parties
Non-current
Other trade receivables and prepayments
6,446
2,640
5,250
14,336
2,24
2,214
7,406
,976
9,085
18,467
256
256
Receivables denominated in currencies other than the functional currency comprise $3,64,000 of trade receivables
denominated in US dollars (2006: $4,629,000)
15 inventories
Work in progress
Finished goods
inventories at cost
16 Derivative financial instruments
Current assets
Foreign currency options – receivable
Non-current assets
Foreign currency options – receivable
instruments used by the consolidated entity
0,238
530
10,768
5,202
8,870
377
,44
1,521
6
86
-
20
,98
1,318
-
-
-
-
-
-
-
The consolidated entity enters into foreign currency options to sell specified amounts of foreign currencies in the future at
stipulated exchange rates. The objective of entering into the foreign currency options is to reduce the foreign exchange
rate related volatility of the consolidated entity’s revenue stream and thereby assist in risk management for the consolidated
entity. Foreign currency options contracts are entered for future sales undertaken in US dollars.
55
Annual Report 2007
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
16 Derivative financial instruments (continued)
The contracts are timed to mature when funds for coal sales are forecast to be received. The details of outstanding foreign
currency options at balance date are set out below.
In thousands of AUd (except exchange rates)
Sell US dollars
Average Exchange
Rates
Sell US dollars
Average Exchange
Rates
Settlement
Less than 6 months
6 months to year
year to less than 2 years
2 years to less than 3 years
3 years to less than 4 years
In thousands of AUd
17 Biological assets
Cattle
18 investments
Non-current investments
Investment in unlisted shares – at cost
Investments in subsidiaries
2007
2,8
3,02
4,60
2,930
,330
14,072
2007
0.7677
0.7647
0.7684
0.752
0.752
0.7626
2006
66
50
23
63
-
302
2006
0.754
0.7526
0.7589
0.7562
-
0.7562
Consolidated
2007
Consolidated
2006
Company
2007
80
37
-
37
80
37
-
37
-
-
464,750
464,750
Whitehaven Coal Limited
56
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
19 Property, plant and equipment
In thousands of AUd
Note
Freehold land
Consolidated
plant and
equipment
Restated*
Leased
plant and
equipment
Mining
property and
development
Capital works
in progress
Cost
Balance at July 2005
Acquisitions
Transfer from exploration and
evaluation assets
20
Transfer from mining property
and development
Transfers from capital works
in progress
Disposals
Balance at 30 June 2006
Balance at July 2006
Acquisitions
Acquisition through business
combinations
Transfer from exploration and
evaluation assets
Transfer from mining property
and development
Disposals
6
20
7,22
,8
-
-
-
-
9,023
9,023
6,95
3,246
-
-
-
Balance at 30 June 2007
19,184
depreciation
Balance at July 2005
Depreciation charge for the
year
Disposals
Balance at 30 June 2006
Balance at July 2006
Depreciation charge for the
year
Disposals
Balance at 30 June 2007
Carrying amounts
At July 2005
At 30 June 2006
At July 2006
At 30 June 2007
0,048
2,769
-
82
,865
(69)
34,325
34,325
5,949
-
-
3,389
(7)
43,546
(2,904)
(,565)
95
(4,374)
(4,374)
(4,386)
4,596
885
-
-
-
-
5,481
5,48
3,584
-
-
-
-
32,807
6,869
,60
(82)
-
-
40,024
40,024
5,420
47,970
82
(3,389)
-
37,065
190,837
(78)
(7)
-
(1,492)
(,492)
(3,032)
(,806)
(3,70)
-
(4,976)
(4,976)
(4,877)
7
-
-
(8,643)
(4,524)
(9,853)
,865
-
-
-
(,865)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,22
9,023
9,023
19,184
7,43
29,950
29,950
34,903
3,85
3,989
3,989
3,00
35,048
35,048
32,541
180,984
,865
-
-
-
Total
56,528
3,334
,60
-
-
(69)
88,853
88,853
49,868
5,26
82
-
(7)
290,632
(5,49)
(5,446)
95
(10,842)
(0,842)
(2,295)
7
(23,020)
5,037
78,011
78,0
267,612
The Company did not hold property, plant and equipment at 30 June 2007.
*See correction of error – note 40.
57
Annual Report 2007
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
19 Property, plant and equipment (continued)
Leased plant and machinery
The consolidated entity leases mining equipment under a number of finance lease agreements. At 30 June 2007, the
consolidated entity’s net carrying amount of leased plant and machinery was $32,54,000 (2006: $3,989,000). The
Company does not hold leased plant and machinery. The leased equipment secures lease obligations.
Security
The assets of the consolidated entity are subject to a fixed and floating charge to secure bank loans.
20 exploration and evaluation
In thousands of AUd
Balance at July 2005
Exploration and evaluation expenditure
Transfer to mining property and development
Balance at 30 June 2006
Balance at July 2006
Exploration and evaluation expenditure
Transfer to mining property and development
Balance at 30 June 2007
exploration and evaluation assets
Consolidated
The Company
Cost
Impairment losses
Cost
Impairment losses
,770
,270
(,60)
1,880
,880
604
(82)
1,672
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The recoverability of the carrying amounts of exploration and evaluation assets is dependent on the successful development
and commercial exploitation or sale of the respective area of interest.
21 Other intangible assets
In thousands of AUd
Water access rights
Less: Accumulated amortisation
Consolidated
2007
Consolidated
2006
Company
2007
920
-
920
-
-
-
-
-
-
Whitehaven Coal Limited
58
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
22 income tax assets and liabilities
current tax assets and liabilities
The current tax asset for the consolidated entity of $25,000 (2006: $nil) represents the amount of income taxes recoverable
in respect of current periods and that arise from the payment of tax in excess of the amounts due to the relevant tax
authority. The current tax liability for the consolidated entity of $nil (2006: $988,000) and for the Company of $nil represent
the amount of income taxes payable in respect of prior financial periods.
The Company liability includes the income tax payable by all members for the tax consolidated entity.
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items:
In thousands of AUd
Deductible temporary differences
Tax losses - revenue
Consolidated
2007
Consolidated
2006
Company
2007
20,985
-
20,985
06
-
106
-
-
-
The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not
been recognised in respect of these items because it is not probable that future taxable profit will be available against which
the consolidated entity can utilise the benefits there from.
59
Annual Report 2007
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
22 income tax assets and liabilities (continued)
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
In thousands of AUd
Consolidated
Property, plant and equipment
Derivatives
Inventories
Deferred stripping
Deferred revenue
Deferred foreign exchange gain
Mining tenement
Provisions
Unearned income
Restructure costs
Other items
Tax loss carry-forwards
Tax (assets)/liabilities
Set off of tax
net tax (assets)/liabilities
Company
Investments
Tax (assets)/liabilities
Set off tax
net tax (assets)/liabilities
Assets
Liabilities
Net
2007
(6)
-
-
-
-
-
(8,775)
2006
-
-
-
-
-
-
-
(,980)
(,385)
(97)
(66)
(0)
(2,52)
-
(43)
(28)
-
2007
9,232
848
52
3,427
4
,93
892
-
-
-
57
-
2006
3,593
224
7
,243
-
-
2007
9,6
848
52
3,427
4
,93
2006
3,593
224
7
,243
-
-
7,829
(7,883)
7,829
(,980)
(,385)
-
-
-
74
(97)
(66)
47
-
(2,52)
-
(43)
46
-
(23,791)
(1,456)
15,915
13,080
(7,876)
11,624
5,95
(7,876)
(2,52)
-
(2,152)
,456
(5,95)
(,456)
-
-
-
-
-
-
-
-
-
-
11,624
(7,876)
11,624
-
-
-
(2,52)
-
(2,152)
-
-
-
Whitehaven Coal Limited
60
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
In thousands of AUd
23 trade and other payables
Current
Trade payables
Other payables and accrued expenses
Dividends payable
Payable to controlled entities
Amounts payable to joint venture partner
Consolidated
2007
Consolidated
2006
Company
2007
2,383
3,022
-
-
730
16,135
8,207
492
2,500
-
,82
13,020
-
-
-
42,994
-
142,994
24 interest-bearing loans and borrowings
This note provides information about the contractual terms of the consolidated entity’s interest-bearing loans and
borrowings.
Current liabilities
Current portion of secured bank loans
Current portion of finance lease liabilities
Current portion of unsecured loan from related entity
35
Non-current liabilities
Secured bank loans
Finance lease liabilities
Unsecured loan from related entity
35
Financing facilities
Secured bank loans
Facilities utilised at reporting date
Secured bank loans
Facilities not utilised at reporting date
Secured bank loans
Financing arrangements
bank loans
3,360
6,904
2,030
22,294
3,280
22,007
9,4
54,401
76,695
6,640
16,640
6,640
16,640
-
-
5,575
,85
-
6,760
6,880
,953
-
18,833
25,593
22,455
22,455
22,455
22,455
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The non-current bank loans of the Company are payable on or before 30 June 20. Instalments are payable quarterly, refer
to note 39 for timing of payments. The loan bears interest at the quarterly “BBSY” rate plus .5% (2006: .0% to .5%).
The bank loans are secured by registered first mortgages over a number of the consolidated entity’s freehold properties,
certain items of property, plant and equipment, cash deposits, trade receivables and guarantees from related parties. The
carrying values of the pledged non-current assets are as follows:
6
Annual Report 2007
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
24 interest-bearing loans and borrowings (continued)
In thousands of AUd
Freehold land
Property, plant and equipment
* See correction of error – note 40.
Consolidated
2007
9,84
25,887
235,071
Consolidated
2006
Restated*
9,023
64,999
74,022
Company
2007
-
-
-
Unsecured loan from related entity
AMCI Investments Pty Ltd, a related entity, made loans totalling $35,82,000 (2006: $nil) to the consolidated entity during
the year. The consolidated entity pays interest of 5% on the outstanding balance of the loan.
In accordance with the contract, the consolidated entity repays the loan and interest through delivery of coal. Refer to the
maturity analysis table in note 39 for forecasted deliveries of coal.
Finance lease facility
At 30 June 2007, the consolidated entity’s lease liabilities are secured by the leased assets of $32,54,000 (2006:
$3,989,000), as in the event of default, the leased assets revert to the lessor. The Company did not have any lease liabilities
at 30 June 2007.
Finance lease liabilities
Finance lease liabilities of the consolidated entity are payable as follows:
In thousands of AUd
Less than one year
Between one and five years
More than five years
Minimum
lease
payments
2007
8,747
25,053
-
Consolidated
Interest
2007
,843
3,046
-
principal
2007
6,904
22,007
-
Minimum
lease
payments
2006
,358
2,027
-
33,800
4,889
28,911
3,385
Interest
2006
principal
2006
73
73
-
246
,85
,954
-
3,139
Whitehaven Coal Limited
62
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
Consolidated
2007
Consolidated
2006
Company
2007
460
89
83
1,380
,86
2,09
876
477
5,233
708
4,525
5,233
370
4
708
1,119
,670
782
8
96
3,359
,384
,975
3,359
-
-
-
-
-
-
-
-
-
-
-
-
Mine
rehabilitation
Mine closure
Site restoration
dismantling
Total
,670
236
(7)
26
1,861
782
,5
-
22
2,019
8
46
(44)
63
876
96
38
-
63
477
3,359
,75
(25)
374
5,233
In thousands of AUd
25 employee benefits
Current
Salaries and wages accrued
Liability for long service leave
Liability for annual leave
26 Provisions
Mine rehabilitation
Mine closure
Site restoration
Dismantling
Current
Non-current
In thousands of AUd
Consolidated
Balance at July 2006
Provisions made during the period
Provisions used during the period
Unwind of discount
Balance at 30 June 2007
Provision for the rehabilitation of mine sites is made in accordance with note 3(k). Provision is made for separate categories
of rehabilitation and reported separately. Additional provisions for rehabilitation were recorded during the year in line with a
new mine being developed and commencing production.
63
Annual Report 2007
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
In thousands of AUd (except for shares)
27 Share capital
a) Share capital
Consolidated
2007
Consolidated
2006
Company
2007
Authorised, issued and fully paid up ordinary shares
323,000,000 (2006: 31,000,000)
192,883
31,000
321,883
b) movements in shares on issue
Ordinary shares
Consolidated
2007
Consolidated
2006
Company
2007
Beginning of the financial year
Issued for cash
Acquisition of Narrabri Coal
Pty Ltd
Acquisition of Whitehaven
Coal Mining Ltd
Acquisition of Whitehaven
Coal Holdings Pty Ltd
Share split
Issued to settle contract
Issued to employees
Costs of shares issued
Nos of shares
000’s
3,000
5,43
$000’s
3,000
4,296
40,000
40,000
-
-
30,000
5,000
4,000
2,750
07
-
-
2,750
-
(63)
Nos of shares
000’s
3,000
$000’s
3,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Nos of shares
000’s
-
5,43
-
$000’s
-
4,296
-
47,000
47,000
68,000
68,000
-
2,750
07
-
-
2,750
-
(63)
323,000
192,883
31,000
31,000
323,000
321,883
c) terms and conditions of issued capital
Effective July 998, the Company Law Review Act abolished the concept of par value shares and the concept of authorised
capital. Accordingly the Company does not have authorised capital or par value in respect of its issued shares. Ordinary
shareholders have the right to receive dividends as declared and, in the event of winding up of the Company, to participate
in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on share held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
Whitehaven Coal Limited
64
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
d) Dividends
Dividends recognised in the prior year are:
2006
Final 2005 ordinary – tranche
Final 2005 ordinary – tranche 2
total amount
dollars per share
Total amount
Franked/
unfranked
date of payment
7.2
.88
9.00
9,500,000
2,500,000
12,000,000
Unfranked
October 2005
Unfranked
9 January 2007
No dividends were declared during the 2007 year.
After the balance sheet date no dividends were proposed by the directors.
In thousands of AUd
dividend franking account
30 per cent franking credits available to shareholders of Whitehaven Coal Limited for
subsequent financial years
The Company
2007
2,993
2006
,254
The above available amounts are based on the balance of the dividend franking account at year-end adjusted for:
(a) franking credits that will arise from the payment of the current tax liabilities;
(b) franking debits that will arise from the payment of dividends recognised as a liability at the year end;
(c) franking credits that will arise from the receipt of dividends recognised as receivables by the tax consolidated entity at the
year-end; and
(d) franking credits that the entity may be prevented from distributing in subsequent years.
The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends. In
accordance with the tax consolidation legislation, the Company as the head entity in the tax-consolidated consolidated entity
has also assumed the benefit of $nil (2006: $nil) franking credits.
65
Annual Report 2007
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
28 Operating leases
Leases as lessee
Non-cancellable operating lease rentals are payable as follows:
In thousands of AUd
Less than one year
Between one and five years
More than five years
Consolidated
2007
Consolidated
2006
Company
2007
65
276
-
441
8
2
-
93
-
-
-
-
The consolidated entity leases office equipment and office space under operating leases. The leases typically run for three to
five years with an option to renew on the office space. None of the leases includes contingent rentals. During the year rental
expense of $99,000 (2006: $36,000) was recorded under these contracts in the income statement.
Leases as lessor
The consolidated entity leases out land it will use for future mining operations under operating leases. All lease payments
have been received upfront under these contracts and have been recorded as deferred income on the balance sheet.
At 30 June 2007 $3,247,000 (2006: $nil) of land was leased under these operating leases.
Whitehaven Coal Limited
66
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
In thousands of AUd
29 capital expenditure commitments
plant and equipment
Contracted but not provided for and payable:
Within one year
One year or later and no later than five years
Later than five years
Consolidated
2007
Consolidated
2006
Company
2007
96
-
-
196
-
-
-
-
-
-
-
-
30 exploration expenditure commitments
In order to maintain current rights of tenure to exploration tenements, the consolidated entity is required to perform
minimum exploration work to meet the minimum expenditure requirements specified by various State governments. These
obligations are subject to renegotiation when application for a mining lease is made and at other times. These obligations
are not provided for in the financial report and are payable:
In thousands of AUd
Within one year
One year or later and no later than five years
Later than five years
31 contingencies
Consolidated
2007
Consolidated
2006
Company
2007
809
,882
-
2,691
,00
2,487
204
3,692
-
-
-
-
The directors are of the opinion that provisions are not required in respect of these matters, as it is not probable that a future
sacrifice of economic benefits will be required or the amount is not capable of reliable measurement.
In thousands of AUd
Contingent liabilities considered remote
Guarantees
(i) The consolidated entity provided bank guarantees to the
Department of Mineral Resources NSW as a condition of
continuation of mining and exploration licenses.
Consolidated
2007
Consolidated
2006
Company
2007
0,736
9,52
-
67
Annual Report 2007
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
In thousands of AUd
Consolidated
2007
Consolidated
2006
Company
2007
32 Reconciliation of cash flows from operating activities
9
0
Cash flows from operating activities
Profit for the period
Adjustments for:
Depreciation and amortisation
Foreign exchange gains unrealised
Unwinding of discounts on provisions
Interest on finance leases
Share based compensation payments
Loss/(gain) on sale of non-current assets
operating profit before changes in working capital
and provisions
Change in trade and other receivables
Change in inventories
Change in trade and other payables
Change in unearned revenue
Change in provisions and employee benefits
Change in tax payable
Change in deferred taxes
cash flows from operating activities
33 Subsequent events
24,095
,697
(,5)
2,295
(8,205)
374
,768
5,63
9
35,499
,466
(5,963)
3,278
86
,038
(,03)
(9,428)
4,963
5,446
(634)
98
24
-
(30)
16,918
5,208
(2,25)
942
-
5,86
30
(83)
26,193
-
(4,006)
-
-
5,63
-
42
(,38)
-
-
-
-
-
(42)
(1,318)
There has not arisen in the interval between the end of the financial year and date of this report any item, transaction or
event of a material and unusual nature likely, in the opinion of the directors, to affect significantly the operations of the
consolidated entity, the result of those operations, or the state of the consolidated entity in future financial years.
Whitehaven Coal Limited
68
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
34 Share-based payments
Option issuances
The Company issued share options to two senior employees and entities related to two directors at the time of listing the
Company on the ASX. The terms and conditions of the grants are as follows.
Option grant to director related entities on 3 May 2007
option
Option
Option 2
Option 3
Option 4
Option 5
Option 6
grant percentage Vesting conditions
percentage of
Tranche 2 shares
released from
escrow to be held
.67
3.00
2.40
2.39
2.20
2.20
$2.50/share
$3.00/share
$3.50/share
$4.00/share
$4.50/share
$5.00/share
00
90
80
70
60
50
Maximum
potential shares
each
2,505,000
4,575,50
3,769,924
3,844,37
3,623,277
3,702,989
22,020,657
The related entities of two directors have been granted six options each to acquire additional shares in the Company. The
number of potential shares under the options is the percentage (set out in the table above) of a deemed amount of issued
shares. For the purposes of the agreement, the deemed number of shares is 300 million shares plus any shares issued under
previous exercised options.
Each option is exercisable when the share price reaches a certain level (as set out in the table above). All share prices will
be considered attained when volume weighted average price of ordinary shares on the ASX measured over ten consecutive
trading days reaches the required amount. All options have an exercise price of $.
The maximum number of potential shares will be reduced if the relevant percentage shown in the table above of the Tranche
2 shares released from escrow are not held at the time of exercising the option on a pro rata basis. Refer below for further
discussion the Tranche 2 shares.
The options have no expiry date.
Option grant to senior employees on 3 May 2007
option
- Tranche
- Tranche 2
- Tranche 3
Outstanding at beginning of period
Granted during the period
outstanding at 30 June
exercisable at 30 June
Number of
instruments
66,666
66,666
66,668
200,000
Vesting conditions
Expiration date
st anniversary after listing
30 June 2008
2nd anniversary after listing
30 June 2009
3rd anniversary after listing
30 June 200
Weighted average
exercise price
2007
Number of options
2007
-
.00
1.00
-
-
22,220,657
22,220,657
-
The senior employee options outstanding at 30 June 2007 have an exercise price of $ and a weighted average contractual
life of 2 years.
69
Annual Report 2007
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
34 Share-based payments (continued)
The fair value of options granted to entities associated with the directors is measured using Black Scholes barrier options
techniques, incorporating the probability of the performance hurdles being met, with the following inputs.
The fair value of options granted to the senior employees is measured using a Black Scholes model, with the following
inputs.
director related
entities
2007
director related
entities
2006
Senior employees
2007
Senior employees
2006
7.2 cents
$1
$
30%
0 years
0%
5.88%
-
-
-
-
-
-
-
0.7 cents
$1
$
30%
3 years
0%
5.88%
-
-
-
-
-
-
-
Fair value of share options and
assumptions
Fair value at grant date
Share price
Exercise price
Expected volatility (weighted average volatility)
Option life (expected weighted average life)
Expected dividends
Risk-free interest rate (based on government
bonds)
Share issuances
Shares issued to directors
The Company issued 30,000,000 shares to entities related to two directors for $0.50 per share in conjunction with listing
on the ASX. The fair value of shares issued is measured using a Black Scholes model. This amounted to 30,000,000 shares
issued at the $ per share listing price.
Investment entities associated with two directors hold 30 million shares. These shares comprise Tranche (5 million shares)
and Tranche 2 (5 million shares). Tranche shares were issued on receipt of the initial subscription amount.. Tranche 2 will
be escrowed and subject to satisfying the holding requirements set out below, will be released from escrow over a five year
period but will be released earlier if the share price reaches $2.50 or the director related entities’ options referred to above
lapse. Dividends (net of an allowance for tax) attaching to the escrowed shares will be held in escrow accounts and released
at the time the shares are released.
In order for Tranche 2 shares to be released from escrow, the investment entities must each hold the following proportions of
Tranche shares:
(a) Years and 2 – 00% of Tranche shares;
(b) Year 3 – 80% of Tranche shares; and
(c) Year 4 and 5 – 50% of Tranche shares.
If these prescribed numbers of Tranche shares are not held on the relevant release date, then the Tranche 2 shares to be
released from escrow on that date will be forfeited on a pro rata basis.
Whitehaven Coal Limited
70
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
Shares issued to employees
The Company issued ,000 shares to each employee in the consolidated entity for no consideration upon listing on the ASX.
The fair value of services received in return for shares issued is based on the fair value of the shares issued measured using a
Black Scholes model. This amounted to 07,000 shares issued at the $ per share listing price.
The following inputs were used to value these shares:
director related
entities
2007
director related
entities
2006
Employees
2007
Employees
2006
Fair value of share options and assumptions
Fair value at grant date
Share price
Exercise price
Expected volatility (weighted average volatility)
Option life (expected weighted average life)
Expected dividends
Risk-free interest rate (based on government
bonds)
$
$1
$
30%
-
-
5.88%
Employee Expenses
In AUd
Share options granted in 2007 – director related entities
Share options granted in 2007 – senior employees
Shares granted in 2007 – director related entities
Shares granted in 2007 – employees
-
-
-
-
-
-
-
$
$1
$
30%
-
-
5.88%
-
-
-
-
-
-
-
Consolidated
2007
55,000
,000
Company
2007
55,000
,000
5,000,000
5,000,000
07,000
07,000
15,163,000
15,163,000
7
Annual Report 2007
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
35 Related parties
The following were key management personnel of the consolidated entity at any time during the reporting period and unless
otherwise indicated were key management personnel for the entire period:
Non-executive directors
Name
position
John Conde
Neil Chatfield
Tony Haggarty
Alex Krueger
Hans Mende
Andy Plummer
Executive director
Keith Ross
Executives
Leigh Whitton
Tony Galligan
Chris Burgess
Casper Dieben
Chairman (appointed 3 May 2007)
Director (appointed 3 May 2007)
Director (appointed 3 May 2007)
Director (appointed 3 May 2007)
Director (appointed 3 May 2007)
Director (appointed 3 May 2007)
Managing Director
Chief Financial Officer and Company Secretary
Managing Director Whitehaven Coal Infrastructure Pty Ltd
General Manager New Projects
General Manager Operations (appointed May 2007)
Key management personnel compensation
The key management personnel compensation included in ‘personnel expenses’ (see note 0) is as follows:
In thousands of AUd
Wages and salaries
Other associated personnel expenses
Increase in liability for annual leave
Increase in liability for long service leave
Share-based compensation payments
Consolidated
2007
,252,27
8,325
84,228
30,262
5,059,000
16,607,032
Consolidated
2006
Company
2007
729,77
64,7
24,469
-
-
818,357
-
-
-
-
5,059,000
15,059,000
individual directors and executives compensation disclosures
Information regarding individual directors and executives compensation and some equity instruments disclosures as
permitted by Corporations Regulations 2M.3.03 and 2M.6.04 are provided in the Remuneration Report in the Directors’
report in sections 6., 6.2, 6.3., 6.3.2 and 6.3.3.
Apart from the details disclosed in this note, no director has entered into a material contract with the Company or the
consolidated entity since the end of the previous financial year and there were no material contracts involving directors’
interests existing at year-end.
Whitehaven Coal Limited
72
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
Loans from key management personnel and their related parties
Details regarding loans outstanding at the reporting date to key management personnel and their related parties, at any time
in the reporting period, are as follows:
AMCI Investments Pty Ltd, an entity jointly controlled by Hans Mende, made loans totalling $35,82,000 (2006: $nil) to
the consolidated entity during the year. The balance outstanding at 30 June 2007 is $2,030,000 in current liabilities and
$9,4,000 in non-current liabilities on the balance sheet.
The consolidated entity pays interest of 5% on the outstanding balance of the loan, recognising interest expense of
$957,000 during the year ended 30 June 2007.
In accordance with the contract, the consolidated entity repays the loan and interest through delivery of coal.
Other key management personnel transactions
A number of key management persons, or their related parties, hold positions in other entities that result in them having
control or significant influence over the financial or operating policies of those entities.
These entities transacted with the Company or its subsidiaries in the reporting period. The terms and conditions of the
transactions with management persons and their related parties were no more favourable than those available, or which
might reasonably be expected to be available, on similar transactions to non-director related entities on an arm’s length basis.
The aggregate amounts recognised during the year relating to key management personnel and their related parties were as
follows:
In AUd
Key management person and
their related parties
other related parties
Hans Mende – AMCI
International AG
Hans Mende – AMCI
Investments Pty Ltd
Keith Ross – LD Operations
Pty Ltd
Namoi Agricultural and
Mining Pty Ltd
Transaction
Note
2007
2006
2007
2006
Transactions value
year ended 30 June
balance outstanding
as at 30 June
Marketing fees
(i)
373,000
393,000
,567,500
9,000
Foreign exchange derivatives
(ii)
8,70,000
-
8,70,000
Mining consultant services
Royalty payments
(iii)
(iv)
375,000
32,000
8,000
-
-
-
-
-
-
(i)
The consolidated entity uses the marketing services of AMCI International AG, a company jointly controlled by Hans
Mende, under a contract renewable annually. In conjunction with the Company’s listing on the ASX, the Company issued
AMCI International AG $,567,500 in shares to prepay the marketing contract, which was determined to be the fair
value of the remaining services to be provided under the contract. Contract terms are based on market rates for these
types of services.
(ii) The consolidated entity entered into foreign currency options with AMCI Investments Pty Ltd, a company jointly
controlled by Hans Mende. The foreign currency options were entered to economically hedge certain sales and mature
over a four-year period. The consolidated entity recorded current derivative receivables of $,874,000 and non-current
derivative receivables of $6,836,000 on the balance sheet at 30 June 2007, and foreign currency gains of $8,70,000
were recognised under the options during the year ended 30 June 2007.
(iii) LD Operations Pty Ltd is a mine development company providing consulting, management and operating services to
a number of coal companies in NSW and Queensland. Keith Ross and Hans Mende (directors of the Company) are
shareholders of LDO. LDO is providing consulting and management services to Whitehaven at its Narrabri project and has
provided statutory management services at Tarrawonga opencut mine.
(iv) Keith Ross, Michael Quillen and Chris Burgess are shareholders of Namoi Agriculture and Mining Pty Ltd ACN 09 750
370 (NAM). This company has entered into an arrangement with Whitehaven for the sale of gravel by NAM from the
Canyon mine site. NAM pays a royalty to Whitehaven of 20 cents per cubic metre of gravel sold.
73
Annual Report 2007
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
35 Related parties (continued)
Assets and liabilities arising from the above transactions
Amounts receivable from and payable to key management
personnel and other related parties at reporting date arising from
these transactions were as follows:
Derivative financial instruments
Prepayment
Current receivables
Derivative financial instruments
Prepayments
Non-current receivables
total assets
Current interest bearing liability/current liabilities
Non-current interest bearing liability/non-current liabilities
total interest bearing liabilities/total liabilities
Options and rights over equity instruments
Consolidated
2007
Company
2007
Consolidated
2006
,874,000
309,500
2,183,500
6,836,000
,258,000
8,094,000
10,277,500
2,030,000
9,4,000
31,144,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The movement during the reporting period in the number of options over ordinary shares in the Company held, directly,
indirectly or beneficially, by each key management person, including their related parties, is as follows:
directors
Tony Haggarty
Andy Plummer
Executives
Leigh Whitton
Tony Galligan
Held at
1 July 2006
granted as
compensation
Exercised
Held at 30 June
2007
Vested during
the year
Vested and
exercisable at 30
June 2007
-
-
-
-
22,020,657
22,020,657
00,000
00,000
-
-
-
-
22,020,657
22,020,657
00,000
00,000
-
-
-
-
-
-
-
-
No options existed during the 2006 financial year. No options held by key management personnel are vested but not
exercisable at 30 June 2007.
Whitehaven Coal Limited
74
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
movements in shares
The movement during the reporting period in the number of ordinary shares in Whitehaven Coal Limited held, directly,
indirectly or beneficially, by each key management person, including their related parties is as follows:
Held
at 1 July
2006
Issued on
acquisition of
subsidiaries
Issued as
share based
compensation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,650,000
75,379,833
-
4,25,227
-
-
5,26,480
-
-
-
-
-
-
-
-
,000
,000
-
,000
directors
John Conde
Neil Chatfield
Tony Haggarty
Alex Krueger
Hans Mende
Andy Plummer
Executive director
Keith Ross
Executives
Leigh Whitton
Tony Galligan
Chris Burgess
Casper Dieben
purchased
under the
Equity
participation
and option
deed
-
-
5,000,000
-
-
5,000,000
-
-
-
-
-
other
purchases
Transfers
Held at
30 June 2007
250,000
250,000
60,000
-
-
250,000
250,000
(0,000)
5,50,000
-
-
-
20,000
200,000
25,000
-
49,000
-
-
-
-
-
-
-
-
3,650,000
75,379,833
5,000,000
4,235,227
20,000
26,000
5,26,480
50,000
Changes in key management personnel in the period after the reporting date and prior to the date when the
financial report is authorised for issue
Robert Stewart will commence as Chief Executive Officer of Whitehaven Coal Limited on 22 October 2007.
parent
The Company has loans payable totalling $42,994,000 to two subsidiaries at 30 June 2007 in current liabilities on the
balance sheet. The loans are interest free and repayable on demand but are not intended to be called by the subsidiaries
during the next twelve months.
Subsidiaries
Loans are made by the Company to wholly owned subsidiaries for operating activities. Loans outstanding between the
Company and its subsidiaries have no fixed date of repayment and are non-interest bearing. During the financial year ended
30 June 2007, such loans to subsidiaries totalled $,38,000.
75
Annual Report 2007
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
36 consolidated entity’s subsidiaries and interests in joint ventures
Country of
Incorporation
ownership interest
2007
2006
parent entity
Whitehaven Coal Limited
Subsidiaries
Whitehaven Coal Mining Limited
Namoi Mining Pty Ltd
Betalpha Pty Ltd
Betalpha Unit Trust
Tarrawonga Coal Pty Ltd
Tarrawonga Coal Sales Pty Ltd
Whitehaven Coal Holdings Limited
Whitehaven Coal Infrastructure Pty Ltd
Narrabri Coal Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
00
00
00
00
00
70
00
00
00
The consolidated entity has interests in the following jointly controlled operations, whose principal activities involve the
development and mining of coal:
Tarrawonga Coal Project Joint Venture
Werris Creek Coal Joint Venture
37 earnings per share
Basic earnings per share
2007
70%
40%
-
00
00
00
00
70
-
00
00
2006
-
40%
The calculation of basic earnings per share for the consolidated entity at 30 June 2007 was based on the profit attributable
to ordinary shareholders of $24,095,000 (2006: $,697,000) and a weighted average number of ordinary shares
outstanding during the year of 30,933,000 (2006: 300,000,000) calculated as follows:
In thousands of AUd
profit attributable to ordinary shareholders
Net profit attributable to ordinary shareholders
Weighted average number of ordinary shares
Issued ordinary shares at July
Effect of shares issued at 29 May 2007
Weighted average number of ordinary shares at 30 June
Consolidated
2007
Consolidated
2006
24,095
11,697
300,000
,933
301,933
300,000
-
300,000
Whitehaven Coal Limited
76
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
diluted earnings per share
The calculation of diluted earnings per share at 30 June 2007 was based on the profit attributable to ordinary shareholders
of $24,095,000 (2006: $,697,000) and a weighted average number of ordinary shares outstanding during the year of
30,95,000 (2006: 300,000,000) calculated as follows:
In thousands of AUd
Profit attributable to ordinary shareholders (diluted)
Consolidated
2007
Consolidated
2006
Net profit attributable to ordinary shareholders (diluted)
24,095
11,697
Weighted average number of ordinary shares (diluted)
Weighted average number of ordinary shares (basic)
Effect of share options on issue
Weighted average number of ordinary shares (diluted)
30,933
8
301,951
300,000
-
300,000
The options issued to director related entities were not included in the calculation of 2007 diluted earnings per share as they
were anti-dilutive. No such options existed in the year ended 2006. Refer to note 34 for further information regarding the
options issued to director related entities.
38 Auditors’ remuneration
In AUd
Audit services:
Auditors of the Company - KpMg Australia
Audits of statutory financial statements
Reviews of financial statements to support listing
Other regulatory audit services
other auditors
Audit of financial statements
other Services:
Auditors of the Company - KpMg Australia
Accounting advice
Taxation services
Auditors of the Company - KpMg related practices
Due diligence services
Consolidated
2007
Consolidated
2006
Company
2007
27,333
42,373
3,650
263,356
3,800
267,156
29,726
232,555
20,58
472,439
39,600
-
4,650
44,250
4,274
48,254
-
3,828
-
31,828
-
-
-
-
-
-
-
30,000
30,000
77
Annual Report 2007
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
39 Financial instruments
Exposure to credit, interest rate and currency risks arises in the normal course of the consolidated entity’s business.
Derivatives are used to economically mitigate exposure to fluctuations in foreign exchange rates.
credit risk
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations
are performed on all customers requiring credit over a certain amount. The consolidated entity does not require collateral in
respect of financial assets.
At the reporting date there were significant concentrations of credit risk in relation to the derivative financial instruments.
Transactions involving derivatives are with counterparties who have sound credit ratings. Management does not expect any
counterparty to fail to meet its obligations.
There were no other significant concentrations of credit risk at reporting date. The maximum exposure to credit risk is
represented by the carrying amount of each financial asset, including derivatives in the balance sheet.
interest rate risk
The consolidated entity’s variable-rate borrowings are exposed to a risk of change in cash flows due to changes in interest
rates.
maturity analysis
The carrying amounts of financial instruments exposed to interest rate risk are contracted to mature in the following periods
after the reporting date. Cash and cash equivalents have not been included.
30 June 2007
Consolidated
In thousands of AUd
Finance lease liabilities
Unsecured loan from related entity
Secured bank loans
30 June 2006
Consolidated
In thousands of AUd
Finance lease liabilities
Secured bank loans
Foreign currency risk
Note
24
24
24
Note
24
24
Weighted
Average
Interest
Rate
1 year or
less
1-2 years
2-3 years
3-4 years
4-5 years
Total
7.38%
(6,904)
(5,457)
(5,904)
(6,344)
(4,302)
(28,9)
5.00% (2,030)
(7,866)
(7,740)
(3,508)
8.37%
(3,360)
(3,360)
(3,360)
(6,560)
-
-
(3,44)
(6,640)
(22,294)
(16,683)
(17,004)
(16,412)
(4,302)
(76,696)
1 year or
less
1-2 years
2-3 years
3-4 years
4-5 years
Total
7.00%
7.2%
(,85)
(,90)
(44)
-
-
(3,39)
(5,575)
(3,600)
(3,360)
(3,360)
(6,560)
(22,455)
(6,760)
(5,510)
(3,404)
(3,360)
(6,560)
(25,594)
The consolidated entity is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in a
currency other than Australian dollars. The currency giving rise to this risk is US Dollars.
The consolidated entity holds foreign currency options to cover a maximum of 80% of forecasted US Dollar sales within 2
months of balance date, 60% between 2 and 24 months and 40% between 24 and 30 months. Beyond 30 months foreign
currency option coverage was restricted to contracted sales where the US Dollar price and the quantity is known.
Subsequent to reporting date the consolidated entity settled all foreign currency options and entered into forward exchange
contracts to cover the same forecasted sales detailed above. Management expect the forward exchange contracts to qualify
for hedge accounting.
Whitehaven Coal Limited
78
NoTES To THE FINANCIAL STATEMENTS
30 JUNE 2007
Recognised assets and liabilities
The consolidated entity determined its foreign currency options did not qualify for hedge accounting. The net fair value of
foreign currency options at 30 June 2007 was $4,072,000 (2006: $302,000), comprising current assets of $5,202,000
(2006: $6,000), non-current assets of $8,870,000 (2006: $86,000) and liabilities of $nil (2006: $nil).
Fair values
The fair values of the consolidated entity’s financial assets and financial liabilities at 30 June 2007 and 30 June 2006
approximate their carrying amounts.
estimation of fair values
The methods used in determining the fair values of financial instruments are discussed in note 4.
40 correction of an error
Subsequent to issuing its financial report dated 3 November 2006 for the year ended 30 June 2006, the directors
determined certain assets in mining property and development were not depreciated when one of the consolidated entities
mines commenced production at the beginning of the 2006 financial year. As a result, additional depreciation expense
should have been recognised in the income statement.
Accordingly, the income statement for the year ended 30 June 2006 has been restated to recognise the additional
depreciation expense for these assets. The impact of this restatement on the prior year financial position and performance is
as follows:
• At 30 June 2006 retained earnings and mining property and development (accumulated depreciation) decreased by
$,940,000;
•
For the year ended 30 June 2006 cost of sales (depreciation expense) increased by $2,77,000, tax expense decreased by
$83,000 and net profit for the year decreased by $,940,000; and
• Basic earnings per share and diluted earnings per share decreased by 0.6 cents.
79
Annual Report 2007
dIRECToRS' dECLARATIoN
In the opinion of the directors of Whitehaven Coal Limited (‘the Company’):
(a) the financial statements and notes and the remuneration disclosures that are contained in sections 6., 6.2, 6.3., 6.3.2
and 6.3.3 of the Remuneration report in the Directors' report, set out on pages 38 to 79, are in accordance with the
Corporations Act 200, including:
(i)
giving a true and fair view of the Company’s and the consolidated entity’s financial position as at 30 June 2007 and
of their performance, for the financial year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 200;
(b) the financial report also complies with International Financial Reporting Standards as disclosed in note 2(a);
(c) the remuneration disclosures that are contained in sections 6., 6.2, 6.3., 6.3.2 and 6.3.3 of the Remuneration report in
the Directors’ report comply with Australian Accounting Standard AASB 24 Related Party Disclosures; and
(d) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
2 The directors have been given the declarations required by Section 295A of the Corporations Act 200 from the chief
executive officer and chief financial officer for the financial year ended 30 June 2007.
Dated at Melbourne 27th day of September 2007.
Signed in accordance with a resolution of the directors:
Neil Chatfield
Director
Whitehaven Coal Limited
80
INdEpENdENT AUdIToR’S REpoRT
(cid:4)(cid:5)(cid:6)(cid:7)
Independent auditor’s report to the members of Whitehaven Coal Limited
Report on the financial report and AASB 124 remuneration disclosures contained in the directors’ report
We have audited the accompanying financial report of Whitehaven Coal Limited (the Company), which
comprises the balance sheets as at 30 June 2007 and the income statements, statements of changes in equity
and cash flow statements for the year ended on that date, a summary of significant accounting policies and
other explanatory notes 1 to 40 and the directors’ declaration of the Group comprising the Company and the
entities it controlled at the year’s end or from time to time during the financial year.
As permitted by the Corporations Regulations 2001, the Company has disclosed information about the
remuneration of directors and executives (remuneration disclosures), required by Australian Accounting
Standard AASB 124 Related Party Disclosures, under the heading “remuneration report” in sections 6.1, 6.2,
6.3.1, 6.3.2 and 6.3.4 of the directors’ report and not in the financial report. We have audited these
remuneration disclosures.
Directors’ responsibility for the financial report and the AASB 124 remuneration disclosures contained in the
directors’ report
The directors of the Company are responsible for the preparation and fair presentation of the financial report in
accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the
preparation and fair presentation of the financial report that is free from material misstatement, whether due to
fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are
reasonable in the circumstances. In note 2(a), the directors also state, in accordance with Australian Accounting
Standard AASB 101 Presentation of Financial Statements, that the financial report of the Group, comprising the
financial statements and notes, complies with International Financial Reporting Standards but that the financial
report of the Company does not comply.
The directors of the Company are also responsible for the remuneration disclosures contained in the directors’
report.
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. These Auditing 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. Our responsibility is also to express
an opinion on the remuneration disclosures contained in the directors’ report based on our audit.
70
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International, a Swiss cooperative.
8
Annual Report 2007
INdEpENdENT AUdIToR’S REpoRT
(cid:4)(cid:5)(cid:6)(cid:7)
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report and the remuneration disclosures contained in the directors’ report. The procedures selected
depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the
financial report and the remuneration disclosures contained in the directors’ report, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial report and the remuneration disclosures contained in the
directors’ report 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 entity’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 and the
remuneration disclosures contained in the directors’ report.
We performed the procedures to assess whether in all material respects the financial report presents fairly, in
accordance with the Corporations Act 2001 and Australian Accounting Standards (including the Australian
Accounting Interpretations), a view which is consistent with our understanding of the Company’s and the
Group’s financial position and of their performance and whether the remuneration disclosures are in
accordance with Australian Accounting Standard AASB 124.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Auditor’s opinion on the financial report
In our opinion:
(a)
the financial report of Whitehaven Coal Limited is in accordance with the Corporations Act 2001,
including:
(i) giving a true and fair view of the Company’s and the Group’s financial position as at 30 June 2007
and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards
(including
the Australian Accounting
Interpretations) and the Corporations Regulations 2001; and
(b)
the financial report of the Group also complies with International Financial Reporting Standards as
disclosed in note 2(a).
Auditor’s opinion on AASB 124 remuneration disclosures contained in the directors’ report
In our opinion the remuneration disclosures that are contained in sections 6.1, 6.2, 6.3.1, 6.3.2 and 6.3.4 of the
directors’ report comply with Australian Accounting Standard AASB 124 Related Party Disclosures.
KPMG
Simon Crane
Partner
Brisbane
27 September 2007
71
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International, a Swiss cooperative.
Whitehaven Coal Limited
82
ASx AddITIoNAL INFoRMATIoN
Additional information as at 27 September, 2007 required by the Australian Securities Exchange Limited Listing Rules and not
disclosed elsewhere in this report is set out below.
Shareholdings
Substantial shareholders
The number of shares held by substantial shareholders and their associates are set out below:
Shareholder
FRC Whitehaven Holdings BV
AMCI International AG
Mr Hans Mende & Ingrid Mende as trustees of the Mende Family Trust
Fritz Kundrun as trustee of the Kundrun Family Trust
Voting rights
Ordinary shares
Refer to note 27 in the financial statements.
Options
There are no voting rights attached to the options.
Distribution of equity security holders
Category
- ,000
,00 - 5,000
5,00 - 0,000
0,00 - 00,000
00,00 and over
percentage of
capital held
40.76
6.70
6.63
6.63
Number of
ordinary shares
held
3,650,000
53,95,500
2,428,333
2,428,333
Number of equity security holders
72
503
305
388
35
1,403
The number of shareholders holding less than a marketable parcel of ordinary shares is nil.
Securities exchange
The Company is listed on the Australian Securities Exchange.
Other information
Whitehaven Coal Limited, incorporated and domiciled in Australia, is a publicly listed company limited by shares.
83
Annual Report 2007
ASx AddITIoNAL INFoRMATIoN
twenty largest shareholders
Name
FRC Whitehaven Holdings BV
AMCI International AG
Mr Hans Mende & Ingrid Mende as trustees of the Mende Family Trust
Fritz Kundrun as trustee of the Kundrun Family Trust
HFTT Pty Ltd as trustee of the Haggarty Family Trust
Ranamok Pty Ltd as trustee of the Ranamok Family Trust
Mr Michael Quillen
Mr Keith Ross
Keith Ross and Alison Ross as trustees of the Ross Family Trust
National Nominees Limited
Mr Christopher John Burgess & Ms Julie Ann Mammen
J P Morgan Nominees Australia Limited
Mr Christopher John Burgess
Julie Ann Mammen
ANZ Nominees Limited
HSBC Custody Nominees (Australia) Ltd
Corrobare Coal Pty Ltd
Argo Investments Limited
Whittingham Securities Pty Ltd
Cogent Nominees Pty Limited
Number of
ordinary shares
held
3,650,000
53,95,500
2,428,333
2,428,333
5,000,000
5,000,000
4,329,500
7,292,227
6,923,000
4,640,609
,938,440
,90,503
,66,520
,66,520
,227,25
,86,395
,82,500
992,844
500,000
436,59
percentage of
capital held
40.76
6.70
6.63
6.63
4.64
4.64
4.44
2.26
2.4
.50
0.60
0.98
0.5
0.5
0.34
0.37
0.37
0.3
0.5
0.4
304,340,598
94.21
Whitehaven Coal Limited
84
CONTENTS
Chairman’s Letter
Highlights
Achievements
Managing Director's Report
Directors’ Report
Income Statements
Statements of Changes in Equity
Balance Sheets
Statements of Cash Flows
Notes to the financial statements
Directors’ Declaration
Independent Auditor's Report
ASX Additional Information
Corporate Directory
1
2
4
6
14
38
39
40
41
42
80
81
83
85
CORPORATE DIRECTORY
Directors
John Conde, Chairman
Keith Ross, Managing Director
Neil Chatfield
Tony Haggarty
Alex Krueger
Hans Mende
Andy Plummer
Company Secretaries
Leigh Whitton
Paul Marshall
Registered and Principal
Administrative Office
Ground Floor, 895 Ann Street
Fortitude Valley QLD 4006
Ph: +61 7 3000 5690
Fax: +61 7 3000 5699
Australian Business Number
ABN 68 124 425 396
Stock Exchange Listing
Australian Securities Exchange Ltd
ASX Code: WHC
Auditor
KPMG
Level 16, Riparian Plaza
71 Eagle Street
Brisbane Qld 4000
Ph: +61 7 3233 3111
Fax: +61 7 3233 3100
Share Registry
Computershare Investor Services Pty Limited
GPO Box 523
Brisbane QLD 4001
Ph: 1300 850505
Fax: +61 7 3237 2100
Legal Advisers
McCullough Robertson
Level 12, Central Plaza Two
66 Eagle Street
Brisbane Qld 4000
Country of Incorporation
Australia
Web Address
www.whitehaven.net.au
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ANNUAL REPORT 2007
Whitehaven Coal Limited ABN 68 124 425 396
www.whitehaven.net.au