ANNUAL REPORT 2009 Chairman’s Letter........................................................................................ 1 Statements of Changes in Equity................................ 45 Highlights............................................................................................................. 2 Statements of Cash Flows.............................................................47 Achievements................................................................................................... 4 Notes to the Financial Statements....................................... 48 Managing Director’s Report............................................................. 6 Directors’ Declaration..................................................................... 100 Directors’ Report .................................................................................... 18 Independent Auditor’s Report............................................... 101 Income Statements................................................................................ 43 ASX Additional Information....................................................... 103 Balance Sheets......................................................................................... 44 Corporate Directory.......................................................................... 105 Delivering growth chairman’s letter Dear Whitehaven Shareholder, Whitehaven Coal Limited (Whitehaven) has reported a strong financial result for the year, underlining the company’s ability to deliver growth – both in terms of our operations and value for shareholders. SUSTAINABILITY The.significant.expansion.of. Whitehaven’s.operations.is.being. carried.out.with.a.strong.focus.on. safety,.the.environment.and.the. communities.in.which.we.operate. Our.commitment.to.safety.has.been. demonstrated.over.the.course.of.the. year.by.our.maintaining.a.LTIFR.level. below.industry.standard..We.have. also.improved.our.risk.management. processes,.and.made.further. improvements.in.the.Occupational. Health.and.Safety.Management.System. In.terms.of.the.environment,.our.new. projects.have.provided.an.opportunity. for.us.to.ensure.we.have.best.practice. environmental.plans.in.place.including. rigorous.monitoring.procedures.and. community.consultation.frameworks.. We.continue.to.welcome.feedback.from. all.stakeholder.groups.in.the.areas. where.we.operate. FINANCIAL PERFORMANCE The.company.reported.net.profit.after.tax. (NPAT).of.$244.2.million.for.FY2009.. This.included.NPAT.of.$166.9.million. from.the.sale.of.15%.of.the.Narrabri.Joint. Venture.and.other.significant.items. Underlying.NPAT.(before.significant. items).was.$77.3.million,.more.than.five. times.the.FY2008.level. This.strong.performance.has.allowed.us. to.declare.a.fully-franked.final.dividend. of.6.0.cents.per.share,.payable.on. 30.September.2009. In.addition,.our.business.reported.a.strong. cash.position,.with.$135.6.million.being. generated.from.operations,.compared.to. $17.9.million.in.FY2008,.and.$131.2.million. cash.available.at.year.end..This.compares. with.$80.9.million.cash.available.at. 30.June.2008. AChIEvEMENTS During.the.year,.Whitehaven.brought. the.Rocglen.and.Sunnyside.mines.near. Gunnedah.into.production..In.addition,. the.Werris.Creek.mine’s.performance. improved.considerably.during.the. second.half.of.the.year,.following.the. company’s.move.to.100%.ownership. and.operator.in.late.2008. This.has.further.enhanced.Whitehaven’s. core,.low-risk.opencut.business.which. now.has.the.capacity.to.produce.up.to. 5.Mtpa.of.saleable.coal.(managed.basis. 100%).from.four.opencut.mines. Construction.of.the.world-class.Narrabri. underground.project.is.advancing.with. the.coal.seam.expected.to.be.intersected. by.the.end.of.this.calendar.year.. Development.and.expansion.of.our. operations.is.being.closely.co-ordinated. with.the.associated.infrastructure. requirements,.with.both.rail.and.port. capacity.being.managed.to.meet.the. company’s.short.and.medium.term. growth.plans. MANAGEMENT ChANGES A.significant.restructuring.and. expansion.of.the.Whitehaven. management.team.was.undertaken. during.the.year,.in.line.with.the. company’s.rapid.growth..Tony.Haggarty. was.appointed.Managing.Director.in. October.2008,.and.both.Andy.Plummer. and.Allan.Davies.have.been.appointed. Executive.Directors..Under.Tony’s. leadership.an.experienced.executive. team.has.been.developed,.providing. Whitehaven.with.the.skills.and.depth. required.to.continue.delivering.value- enhancing.operational.growth..Further. details.of.the.executive.team.are. available.on.Page.18.of.this.report. RECENT DEvELOPMENTS Capital.Raising Subsequent.to.balance.date,.Whitehaven. undertook.a.capital.raising.through.an. institutional.placement.and.a.share. purchase.plan..The.institutional.placement. raised.net.cash.of.$177.million,.while.the. share.purchase.plan.raised.$26.million. Refinancing Whitehaven.is.in.the.final.stages.of. negotiation.with.two.banks.to.refinance. its.existing.bank.guarantee.and.foreign. exchange.(FX).facilities.and.to.consolidate. existing.equipment.leasing.and.overdraft. facilities..Negotiations.are.expected.to. be.completed.and.facilities.available.for. drawdown.before.the.end.of.September. 2009..Whitehaven’s.current.bank.is. winding.down.lending.support.for.the. mining.and.resource.sectors.in.Australia. and.is.withdrawing.its.existing.financing. facilities.on.30.September.2009. OUTLOOK Coal.demand.has.slowed.as.a.result.of. the.global.economic.downturn..However,. the.structural.uptrend.continues.as. demand.for.thermal.coal.remains. strong.and.demand.for.metallurgical. coal.continues.to.recover,.with.China. importing.much.larger.tonnages.of. Australian.thermal.coal.and.India. appearing.to.follow.. On.behalf.of.the.board.and.all. shareholders.I.thank.Tony.Haggarty. and.his.executive.team,.as.well.as. all.of.our.employees.and.contractors. for.their.leadership.and.contribution. to.Whitehaven’s.strong.FY2009. performance. John Conde, AO Chairman 1 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W 2009 highlights • • • • • • • • Reported net profit after tax (NPAT) of $244.2 million, including NPAT of $166.9 million from the sale of 15% of the Narrabri Joint Venture and other significant items; Underlying NPAT, before significant items, of $77.3 million, more than five times the FY 2008 level; Fully franked final dividend of 6.0 cents per share declared; Revenue of $356.3 million (net of purchased coal and excluding NSW royalty), up 92% from FY 2008; Earnings before interest, tax, depreciation and amortisation (EBITDA) of $174.5 million (excluding coal purchases); Cash generated from operations of $135.6 million, compared to $17.9 million in FY 2008; Proceeds received from the sale of Narrabri of $59.0 million during the year; Strong cash flow and financial position – $131 million cash available with net cash of $53 million; • Institutional placement raised additional net cash of $177 million subsequent to balance date. Financial Performance (A$ millions) Sales revenue EBITDA before significant items EBIT before significant items NPAT before significant items Significant items net of tax NPAT after significant items 2009 489.4 136.3 110.0 77.3 166.9 244.2 2008 252.0 34.9 16.9 12.9 38.9 51.9 Movement +94.2% +290.5% +550.9% +499.2% +329.0% +370.5% EPS-diluted 60.3 cents 14.4 cents +318.8% 2 nsw coalfielDs Bonshaw Project GUNNEDAH COALFIELD Narrabri Project Whitehaven CHPP Tarrawonga Mine Canyon Mine Rocglen Mine Sunnyside Mine Werris Creek Mine HUNTER COALFIELD WESTERN COALFIELD NEWCASTLE COALFIELD SOUTHERN COALFIELD 3 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W MoreeRailwayNarrabriGunnedahACTNEW SOUTH WALESSingletonUlanBylongRylstoneKandosDunedooNewcastleWollongongPort KemblaBomaderryLithgowRailwaySydneyGoulburnGLOUCESTER BASINGUNNEDAH BASINKILOMETRES050100NMuswellbrookGloucesterMudgeeGulgongCessnockCampbelltownPictonSYDNEY BASINAshfordBonshawQUEENSLANDASHFORD BASINPACIFIC OCEANNSWAUSTRALIANSWWhitehaven AssetsMoss Vale achievements Consolidated Equity Production and Sales (Equity Share) Whitehaven Total (Thousand tonnes) ROM Coal Production Saleable Coal Production Sales of Produced Coal Sales of Purchased Coal Total Coal Sales Coal Stocks at Period End 2008 2,275 2,050 2,007 406 2,413 212 Movement +33% +36% +37% +100% +48% +50% 2009 3,025 2,797 2,753 811 3,564 317 4 Operating Highlights • • • • • • • • • Coal sales up 48% (equity basis) compared with previous year (up 42% on 100% basis); Saleable coal production up 36% (equity basis) from FY 2008 (up 20% on 100% basis); JORC coal resources increased to 761.8 Mt, with marketable coal reserves more than doubled to 278.6 Mt; Opencut marketable coal reserves increased to 106 Mt, sufficient to support opencut saleable coal production of 5 Mtpa for more than 20 years; Rocglen and Sunnyside opencut mines were commissioned successfully; Owner operation was introduced at Werris Creek mine in December 2008, resulting in an increase in saleable production rate from 0.9 Mtpa in Q2 to 1.4 Mtpa in Q4; Narrabri Stage 1 construction is on track to reach the coal seam late in 2009; Rail track upgrades were commissioned, resulting in more paths and longer trains; Development of the NCIG port facility is progressing on schedule. First coal is scheduled to be shipped by the end of March 2010. • Excellent safety record maintained. 5 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W managing Director’s report The past year has been one of transformation for Whitehaven as we have demonstrated our ability to generate both green-fields and organic growth. During.the.past.year.we.have.commissioned.two.new.opencut.mines,.and.construction.of.our.world-class.Narrabri.underground. mine.has.proceeded.to.schedule.with.the.coal.seam.expected.to.be.reached.by.the.end.of.2009. In.addition,.our.coal.reserves.and.resources.have.been.expanded.significantly.through.successful.exploration.programs.and.we. have.been.active.in.developing.value-enhancing.joint.venture.opportunities. This.has.required.significant.effort.and.focus.from.our.management.team,.many.of.whom.joined.us.during.the.course.of.the. year,.as.well.as.great.commitment.from.all.of.Whitehaven’s.employees.and.the.many.contractors.we.work.in.partnership.with. I.want.to.express.my.thanks.to.all.the.members.of.our.team.for.achieving.an.excellent.outcome.during.a.year.of.considerable. change.and.challenges. FINANCIAL PERFORMANCE Whitehaven.reported.strong.earnings.and.revenue.growth.for.the.year.to.June.30,.2009.(FY.2009)..Revenue.for.the.year.was. $356.3.million.(net.of.purchased.coal.and.excluding.NSW.royalty),.up.92%.from.FY.2008. Earnings.before.interest,.tax,.depreciation.and.amortisation.(EBITDA).was.$174.5.million.(excluding.coal.purchases),.reduced. to.$136.3.million.after.coal.purchases. The.company’s.balance.sheet.remains.very.strong.with.a.cash.position.which.gives.us.the.financial.capacity.to.fund.our.new. project.development.pipeline.and.to.meet.working.capital.commitments. Cash.flow.from.operations.of.$135.6.million.for.the.year.compared.to.$17.9.million.for.FY.2008..Overall.net.cash.flows.from. operating.activities.were.$122.7.million.for.the.year.versus.$12.million.for.FY.2008..Closing.cash.on.hand.at.30.June.2009. was.$131.2.million,.compared.to.$80.9.million.in.FY.2008. 6 Financial Performance And Balance Sheet (A$.millions) Cash.on.Hand. Interest.Cover.Ratio1.(times) Interest.Bearing.Liabilities2 Net.Cash.Position Net.Assets. Gearing.Ratio3.(%) 2009 131.2 2008 80.9 19.45 times 3.80.times 78.2 53.0 722.8 -7.9% 55.2 25.6 489.5 -5.5% 1. EBIT.before.significant.items.to.Interest.Expense.excluding.FX.in.financing.expense,.losses.on.ineffective.hedges.and.unwind.of.provision.discounting. 2. Interest.bearing.liabilities.include.loans.from.Rail.Infrastructure.Corporation.for.track.upgrades.($21.6.million.2009,.$15.2.million.2008) 3. Net.Debt.to.Net.Debt.plus.Equity OPERATING PERFORMANCE Consolidated Equity Production and Sales (Equity Share) Whitehaven.Total.(Thousand.tonnes). ROM.Coal.Production Saleable.Coal.Production Sales.of.Produced.Coal Sales.of.Purchased.Coal Total.Coal.Sales Coal.Stocks.at.Period.End 2009 3,025 2,797 2,753 811 3,564 317 7 2008 2,275 2,050 2,007 406 2,413 212 Movement +33% +36% +37% +100% +48% +50% 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W managing Director’s report Gunnedah Operations (Equity Share) Gunnedah.Operations.(Thousand.tonnes) ROM.Coal.Production Saleable.Coal.Production Sales.of.Produced.Coal Sales.of.Purchased.Coal Total.Coal.Sales Coal.Stocks.at.Period.End 2009 1,902 1,690 1,651 811 2,462 233 2008 1,501 1,266 1,088 381 1,469 143 Movement +27% +33% +52% +113% +67% +63% The.Gunnedah.Operations.include.the.Canyon.(100%.owned.by.Whitehaven),.Tarrawonga.(70%.owned.by.Whitehaven),. Rocglen.(100%.owned.by.Whitehaven),.and.Sunnyside.(100%.owned.by.Whitehaven).opencut.mines.and.the.Whitehaven.coal. handling.and.preparation.plant.and.train.load-out.facility.(‘CHPP’).(100%.owned.by.Whitehaven). Gunnedah.saleable.coal.production.of.1.69.Mt.was.33%.above.the.previous.year,.due.to.continuing.solid.performance.from. Tarrawonga.and.the.commencement.of.operations.at.Rocglen.and.Sunnyside..Last.coal.was.produced.from.the.Canyon.mine.in. July.2009.with.progressive.rehabilitation.program.nearing.completion. Werris Creek Mine (Equity Share) Werris.Creek.Mine.(Thousand.tonnes). ROM.Coal.Production Saleable.Coal.Production Sales.of.Produced.Coal Sales.of.Purchase.Coal Total.Coal.Sales Coal.Stocks.at.Period.End 2009 1,123 1,107 1,102 – 1,102 84 2008 774 784 919 25 944 69 Movement +45% +41% +20% -100% +17% +22% Whitehaven.took.operational.control.of.Werris.Creek.in.December.2008..Saleable.coal.production.has.increased.steadily.since. then.and.was.running.at.capacity.of.1.4.Mtpa.in.the.last.quarter.of.FY.2009. 8 DEvELOPMENT PROJECTS Narrabri Construction.of.Narrabri.Stage.1. continues.to.progress.on.plan.. Surface.works.are.well.advanced. and.construction.of.the.three.drifts. is.progressing.well..The.coal.seams. are.expected.to.be.reached.in.late. 2009..Contracts.have.been.awarded. for.all.Narrabri.Stage.1.work..Total. expenditure.up.to.the.end.of.June. 2009.was.approximately.$135.million.. Construction.costs.for.Narrabri.Stage.1. are.still.expected.to.be.within.10%.of. the.$186.million.budget;.however.the. final.cost.of.the.underground.drifts. remains.exposed.to.ground.conditions. as.work.progresses. Detailed.design.of.Stage.2.for. installation.and.operation.of.the.longwall. is.progressing.well.with.lodging.of.an. application.for.approval.with.the.NSW. Department.of.Planning.lodged.on. 28.August.2009. Subsequent.to.balance.date,. Whitehaven.announced.that.it.has. entered.into.a.Heads.of.Agreement. to.sell.a.7.5%.interest.in.its.Narrabri. Joint.Venture.Project.to.a.Korean. Consortium.for.A$125.million.plus. 7.5%.of.all.costs.incurred.since. 1.January.2008.(estimated.to.be. in.excess.of.A$11.million)..In.addition,. the.consortium.will.contribute.7.5%.of. the.project’s.future.costs.. The.Korean.consortium.comprises. Daewoo.International.Corporation. (Daewoo).and.Korea.Resources. Corporation.(KORES)..Daewoo.is.a. major.manufacturing,.investment.and. trading.conglomerate.and.is.one.of. Korea’s.largest.companies..KORES.is.a. Korean.government.corporation.which. invests.in.natural.resources..Subject.to. completion,.the.A$125.million.purchase. price.will.be.paid.in.three.tranches:. Carbon’s.Kooragang.Island.plant.at. Newcastle,.where.coal.is.used.to. produce.retort.coke,.a.product.for.which. international.demand.is.growing.strongly. •. •. •. .A$32.5.million.upon.completion. of.the.sale;. .A$30.0.million.by.15.November. 2009;.and. .A$62.5.million.by.December. 2010.(subject.to.Narrabri.. Stage.2.approval).. As.part.of.the.transaction,.Whitehaven. has.agreed.to.sell.to.Daewoo.up.to. 1.5.Mtpa.of.Korean.specification.coal.. This.annual.tonnage.is.benchmarked. to.25%.of.Narrabri’s.annual.production. over.the.life.of.the.mine.and.can.be. supplied.by.Whitehaven.from.any.source.. The.price.of.coal.sold.to.Daewoo.will. be.based.upon.the.published.NEWC. globalCOAL.Index.with.appropriate. adjustments.for.calorific.value.. The.transaction.is.subject.to.the. approval.of.the.Whitehaven,.Daewoo. and.KORES.Boards,.and.the.obtaining. of.relevant.Australian.and.Korean. regulatory.approvals.. Bonshaw Exploration.and.evaluation.work.continued. at.Bonshaw.during.the.year.in.accordance. with.tenement.work.programs. Blackjack Joint venture During.the.last.quarter.of.FY.2009.a. wholly-owned.subsidiary.of.Whitehaven. entered.into.a.50:50.joint.venture.called. the.Blackjack.Joint.Venture.(Blackjack. JV).with.Modderriver.Minerals.Pty.Ltd,. an.associate.of.Pacific.Carbon.Pty. Ltd..Whitehaven.currently.supplies. some.80,000.tonnes.of.coal.to.Pacific. 9 The.Blackjack.JV.is.now.constructing.an. additional.two.retorts.adjacent.to.Pacific. Carbon’s.existing.Kooragang.Island. plant..These.new.retorts.are.expected. to.be.commissioned.over.the.next.six. months..In.addition,.the.Blackjack.JV.has. project.approval.for.the.construction.of.a. new.six-retort.coke.plant.at.Gunnedah.. The.timing.of.construction.of.this.plant.is. dependent.on.sufficient.demand.being. secured.for.the.additional.coke..Good. progress.is.being.made.in.this.regard. Under.the.terms.of.the.Blackjack.JV,. Whitehaven.is.providing.100%.of.the. capital.required.to.construct.these. new.coke.plants,.estimated.to.be. approximately.$15.million.in.total.with. Modderriver’s.50%.share.being.funded. by.Whitehaven.as.an.interest.bearing. loan,.to.be.repaid.by.Modderriver.from. its.50%.share.of.Blackjack.JV.cash.flow. Whitehaven.is.the.exclusive.coal. supplier.to.the.Blackjack.JV,.and.when. completed.the.eight.new.coke.retorts. will.consume.approximately.240,000. tonnes.of.coal..This.is.in.addition.to. Whitehaven’s.existing.80,000.tonnes. coal.supply.contract.to.Pacific.Carbon. COAL RESOURCES AND RESERvES (100% Basis) Whitehaven’s.JORC.Coal.Resources. now.total.761.8.Mt,.with.JORC. Marketable.Coal.Reserves.of.278.6.Mt.. Opencut.Marketable.Coal.Reserves. are.now.in.place.to.support.5.Mtpa.of. saleable.production.for.more.than.. 20.years. 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W Measured. Resource Indicated. Resource Inferred.. Resource Total.. Resources Competent. Person Report.. Date managing Director’s report JORC August Statement WhITEhAvEN COAL LIMITED – COAL RESOURCES – AUGUST 2009 – (100% BASIS) Tenement West.Bluevale.Opencut Rocglen.Opencut Rocglen.Underground EL4699 ML1620 ML1620 Tarrawonga.Opencut.* EL5967/ML1579 Tarrawonga.Underground EL5967/ML1579 .2.76. .11.74. .–. .7.36. .8.44. Sunnyside.Opencut ML1624/EL5183 .20.35. EL5183 CCL701 CCL701 .–. .–. .–. .1.49. .6.19. .2.09. .37.57. .18.10. .47.84. .7.20. .–. .12.90. .0.7. .2.1. .2.1. .9.9. .25.3. .22.9. .32.2. .1.4. .2.5. .5.0. .20.1. .4.2. .54.8. .51.8. .91.1. .39.4. .1.4. .15.4. 50.65 133.38 99.1 283.2 ML1609 29.96 .88.64. 4.79 .81.00. 2.7 37.4 .60.0. .229.6. EL6243 .30.66. .103.00. .75.0. .208.7. EL5183.Underground BLOCK.7.Opencut BLOCK.7.Underground Total Gunnedah Operations Total Werris Creek ** Narrabri.North. Underground Narrabri.South. Underground Total Narrabri *** 1 2 2 2 2 2 2 2 2 2 3 3 4 Aug-07 May-09 May-09 May-09 May-09 May-09 May-09 Jan-09 Jan-09 May-09 Aug-07 Aug-07 Feb-09 Brunt.Deposit.Opencut EL6450 Total Ashford 119.30 184.00 135.0 438.3 .–. – .2.60. 2.60 .0.3. 0.3 .2.9. 2.9 Total Coal Resources 199.91 324.77 237.1 761.8 1..Greg.Jones,.2..Colin.Coxhead,.3..Patrick.Hanna,.4..Tom.Bradbury *. **. Tarrawonga.Joint.Venture.–.Whitehaven.owns.70%.share.of.ML.1579..Combined.Reserve.for.Tarrawonga.Mining.Lease.and.Exploration.Licence. Combined.Reserve.for.Werris.Creek.Mining.Lease,.Exploration.Licence.and.Exploration.Licence.Application ***. Narrabri.Joint.Venture.–.Whitehaven.owns.77.5%.share #. The.Coal.Resources.for.active.mining.areas.are.reported.on.the.end.of.May.2009.pit.surface 10 WhITEhAvEN COAL LIMITED – COAL RESERvES – AUGUST 2009 – (100% BASIS) Tenement Recoverable.Reserves Marketable.Reserves Competent. Person Report.. Date Proved Probable Total Proved Probable Total West.Bluevale.opencut EL4699 .–. .–. .–. .–. .–. .–. Rocglen.Opencut ML1620 .9.83. .3.87. .13.70. .8.60. .3.38. .11.98. .1. May-09 Tarrawonga.Opencut.* EL5967/ML1579 .6.59. .30.82. .37.41. .6.11. .28.59. .34.70. .1. May-09 Tarrawonga.Underground EL5967/ML1579 .–. .–. .–. .–. .–. .–. Sunnyside.Opencut ML1624/EL5183 .7.14. .20.85. .27.99. .7.14. .20.85. .27.99. .1. May-09 EL5183.Underground BLOCK.7.Opencut BLOCK.7.Underground Total Gunnedah Operations Total Werris Creek ** Narrabri.North. Underground Narrabri.South. Underground Total Narrabri *** EL5183 CCL701 CCL701 .–. .–. .–. .–. .–. .–. .–. .–. .–. .–. .–. .–. .–. .–. .–. .–. .–. .–. 23.56 55.54 79.10 21.85 52.82 74.67 27.60 4.38 31.98 27.60 4.40 32.00 1 May-09 ML1564/ EL5993/ ELA3727 ML1609 .53.7. .58.3. .112.0. .51.1. .51.6. .102.7. .2. Nov-07 EL6243 .16.8. .73.1. .89.9. .13.0. .56.2. .69.2. .2. Jan-09 Brunt.Deposit.Opencut EL6450 Total Ashford Total Coal Reserves 1..Paul.Westcott,.2..Graeme.Rigg 70.5 131.4 201.9 64.1 107.8 171.9 .–. – .–. – .–. – .–. – .–. – .–. – 121.66 191.32 312.98 113.55 165.02 278.57 *. **. Tarrawonga.Joint.Venture.–.Whitehaven.owns.70%.share.of.ML.1579..Combined.Reserve.for.Tarrawonga.Mining.Lease.and.Exploration.Licence Combined.Reserve.for.Werris.Creek.Mining.Lease,.Exploration.Licence.and.Exploration.Licence.Application ***. Narrabri.Joint.Venture.–.Whitehaven.owns.77.5%.share #. The.Coal.Reserves.for.active.mining.areas.are.reported.on.the.end.of.May.pit.surface ##. Coal.Reserves.are.quoted.as.a.subset.of.Coal.Resources ###. Marketable.Reserves.are.based.on.geological.modeling.of.the.anticipated.yield.from.Recoverable.Reserves NB:.Refer.to.Page.12.for.full.JORC.competent.persons.statements. 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . 11 m L i . l a o C . n e v a h e t i h W managing Director’s report JORC COMPETENT PERSONS STATEMENT Information.in.this.report.that.relates. to.Coal.Resources.and.Reserves. is.based.on.and.accurately.reflects. reports.prepared.by.the.Competent. Person.named.beside.the.respective. information..All.these.persons.are. consultants.for.Whitehaven.Coal. Limited..Mr.Greg.Jones.is.a.principal. consultant.employed.by.JB.Mining. Services..Mr.Colin.Coxhead.is.a.private. consultant..Mr.Patrick.Hanna.is.a.private. consultant..Mr.Tom.Bradbury.is.a.full. time.employee.of.Geos.Mining..Mr. Graeme.Rigg.is.a.full.time.employee.of. Minarco-MineConsult.Pty.Ltd..Mr.Paul. Westcott.is.a.part.time.employee.of. Minarco-MineConsult.Pty.Ltd.. Named.Competent.Persons.consent.to. the.inclusion.of.material.in.the.form.and. context.in.which.it.appears..This.Coal. Resources.and.Reserves.statement.was. compiled.by.Mr.Mark.Dawson,.Group. Geologist,.Whitehaven.Coal.Limited.. All.Competent.Persons.named.are. Members.of.the.Australian.Institute. of.Mining.and.Metallurgy.and/or.The. Australian.Institute.of.Geoscientists.and. have.the.relevant.experience.in.relation. to.the.mineralisation.being.reported. on.by.them.to.qualify.as.Competent. Persons.as.defined.in.the.Australian. Code.for.Reporting.of.Exploration. Results,.Mineral.Resources.and.Ore. Reserves.(The.JORC.Code,.2004. Edition). ThE ENvIRONMENT Responsible.management.of.the. environment.within.which.we.operate. remains.a.high.priority.for.Whitehaven. 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.and.to.minimise.any.adverse. impact.on.the.communities.in.which. we.operate. Progressive.rehabilitation.is.underway. at.each.of.the.company’s.operations. and.full.rehabilitation.at.the.Canyon. mine,.which.ceased.operation.in. July.2009,.is.almost.complete..For. further.information.on.the.company’s. environmental.initiatives.please.visit. the.company’s.website. SAFETY Whitehaven.continued.its.commitment. to.Health.and.Safety.throughout.the. year.with.excellent.performance.and. system.improvements..This.commitment. has.been.demonstrated.over.the.course. of.the.year.by.maintaining.our.LTIFR. level.below.industry.standard..We. have.also.improved.our.understanding. of.the.company’s.risk.profile.and. risk.management.processes.and. achieved.further.improvements.in. the.Occupational.Health.and.Safety. Management.System. The.company.has.seen.rapid.growth. in.the.workforce.with.both.employee. and.contractor.numbers.increasing.. The.primary.focus.throughout.the. 12 year.has.been.to.continue.developing. an.Occupational.Health.and.Safety. Management.System.that.meets.the. needs.of.the.workforce.and.mitigates. risk.while.maintaining.focus.on.routine. work.practices. INFRASTRUCTURE Rail.track.capacity.upgrades.by.ARTC1. as.far.as.Gunnedah.were.completed.in. December.2008,.providing.track.and. train.capacity.to.deliver.Whitehaven’s. current.requirement.for.an.average. of.300,000.tonnes.per.month.to.be. railed.to.port.from.Gunnedah.and. Werris.Creek. Further.ARTC.track.upgrades.were. completed.during.June.2009.to.extend. this.additional.capacity.to.Narrabri.. Whitehaven.and.ARTC.are.now.focusing. on.the.further.track.upgrades.required. to.meet.ongoing.growth.requirements. from.the.Gunnedah.basin. An.Implementation.Memorandum. regarding.a.system.for.providing. long-term.access.to.port.capacity.at. Newcastle.was.agreed.by.Newcastle. Ports.Corporation,.PWCS2.and. NCIG3.in.April.2009.and.submitted. to.the.ACCC4.for.approval..Detailed. documentation.to.support.this.agreement. is.close.to.finalisation..Under.the. agreement,.Whitehaven.will.have.access. to.at.least.9.5.Mtpa.of.port.capacity.from. PWCS.and.NCIG.stages.1.and.2. 1. ARTC.–.Australian.Rail.Track.Corporation 2. PWCS.–.Port.Waratah.Coal.Service. 3. NCIG.–.Newcastle.Coal.Infrastructure.Group 4. ACCC.–..Australian.Competition.and. Consumer.Commission Construction.of.the.new.NCIG.coal. loading.terminal.(Whitehaven.owns. 11%).remains.on.track.with.first.coal. shipments.expected.in.early.2010. CORPORATE Institutional Placement And Share Purchase Plan Subsequent.to.balance.date,. Whitehaven.undertook.a.capital.raising. through.an.institutional.placement.and. a.share.purchase.plan..The.institutional. placement.raised.net.cash.of. $177.million,.while.the.share.purchase. plan.raised.$26.million.. The.institutional.placement.was. oversubscribed.with.strong.demand. from.both.existing.and.new.Australian. and.international.investors. The.strong.support.shown.by.both. existing.and.new.institutional.investors. is.an.endorsement.of.Whitehaven’s. business.and.growth.plans..These.funds. will.provide.Whitehaven.with.additional. capital.to.fund.new.growth.opportunities. and.strategic.initiatives,.increase. working.capital.and.provide.balance. sheet.flexibility..The.capital.raising.has. also.increased.free.float.and.liquidity.in. Whitehaven’s.shares.. Relocation Of Head Office During.the.year,.the.company’s.head. office.was.moved.from.Brisbane. to.Sydney. BOARD AND MANAGEMENT In.October.2008,.Mr.Andy.Plummer. was.appointed.an.Executive.Director. –.Business.Development,.providing. support.to.the.Managing.Director.and. Chief.Financial.Officer..Mr.Plummer. was.a.non-executive.director.of. Whitehaven.from.May.2007.and.was. an.executive.director.of.Excel.Coal. with.responsibility.for.the.company’s. business.development.activities. In.February.2009,.Mr.Allan.Davies. was.appointed.Executive.Director.–. Operations..Mr.Davies.is.a.professionally. qualified.mining.engineer.with.35.years. mining.experience.in.the.Australian. and.international.coal.and.metalliferous. mining.industries.and.is.a.registered. mine.manager.in.Australia.and. South.Africa.. In.October.2008,.Mr.Austen.Perrin. was.appointed.Chief.Financial.Officer,. and.in.July.2009.Mr.Timothy.Burt.was. appointed.General.Counsel.and.Joint. Company.Secretary. OUTLOOK Coal.demand.has.slowed.as.a.result.of. the.global.economic.downturn,.however. the.structural.uptrend.continues.as. demand.for.thermal.coal.remains. strong.and.demand.for.metallurgical. coal.continues.to.recover,.with.China. importing.much.larger.tonnages.of. Australian.thermal.coal.and.India. appearing.to.follow.. Supply.is.expected.to.remain. constrained.by.infrastructure.in.the. short.term,.with.a.general.trend.to. higher.production.costs,.slower.and. more.difficult.mine.development.and. increasing.time.for.approvals.providing. ongoing.constraints.to.new.supply.. Australia.is.well.placed.to.protect. and.gain.market.share.in.the.coming. years.with.major.Asian.power.utilities. and.steel.mills.looking.to.Australia.as. a.reliable,.long-term.supplier.of.high. quality.coals. Contracted.coal.prices.for.2009.hard. coking.coal.settled.around.US$128/t. FOB,.with.semi-soft.coking.and.PCI. coals.settling.around.US$80/t..Demand. for.metallurgical.coal.is.recovering.and. spot.prices.are.being.reported.at.levels. substantially.above.contract.prices. Thermal.coal.contracts.for.2009.settled. around.US$70-72/t.FOB..Spot.market. prices.for.thermal.coal.are.around. US$72/t.with.forward.thermal.coal. prices.stronger.at.around.US$77/t. for.calendar.year.2010.and.around. US$87/t.for.calendar.year.2011. Tony haggarty Managing.Director 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . 13 m L i . l a o C . n e v a h e t i h W safetY Whitehaven Coal Limited continued its commitment to health and safety throughout the year with excellent performance and system improvements. This commitment has been demonstrated over the course of the year by maintaining a LTIFR level below industry standard, improved understanding of the company’s risk profile and risk management processes and continuous improvement of the Occupational Health and Safety Management System. The Whitehaven Group has seen rapid growth in the workforce with both employee and contractor numbers increasing. The diversity of the workforce ranges from local farmers to experienced coal miners which adds complexity in managing risk at the coal face and implementing systems to grow with the company. The primary focus throughout the year has been to continue developing an Occupational Health and Safety Management System that meets the needs of the workforce and mitigates risk while maintaining focus on routine work practices. 14 Achievements •. •. •. •. •. •. •. .Appointment.of.the.Group.OH&S.Manager.and.OH&S.Advisor..In.January.2009.Whitehaven.appointed. Justin.Lawrence.to.the.role.of.Group.OH&S.Manager..Following.this.appointment.Rachael.Schneider. commenced.in.the.role.of.OH&S.Advisor.in.June.2009..The.focus.for.the.first.half.of.2009.was.system. review.and.improvements,.incident.reporting.and.data.capture.and.compliance. .Coordination.of.the.legal.compliance.audit.program..All.sites,.excluding.Narrabri.Underground.due.to. Whitehaven.not.being.the.operator,.were.involved.in.a.legal.compliance.audit.to.the.Coal.Mines.Health. and.Safety.legislation. .Coal.Handling.Preparation.Plant.Occupational.Health.and.Safety.Management.System.Review..A.full. review.of.the.Occupational.Health.and.Safety.Management.System.of.the.Coal.Handling.Preparation. Plant.was.coordinated.with.involvement.from.all.levels.of.the.workforce..A.detailed.action.plan.supports. the.review.with.individuals.assigned.actions.to.implement.system.improvements. .Improvements.to.the.Health.and.Safety.Communications.Process..A.system.to.improve.health.and.safety. communications.across.the.group.was.developed.and.implemented..The.system.incorporates.learnings. from.Whitehaven.incidents,.communication.of.safety.programs.and.initiatives.and.general.tool.box.talk. topics..The.communications.process.improves.the.sharing.of.information.to.all.levels.of.the.organisation. .Preparation.of.crisis.management.protocols.for.improved.response.if.the.worst.case.scenario.occurs.. Work.has.commenced.on.the.establishment.of.a.crisis.management.plan,.crisis.management.duty.cards. and.crisis.management.facilities.for.both.the.underground.and.opencut.operations..Crisis.management. is.a.risk.mitigation.process.to.ensure.family,.media,.legal,.community.and.business.concerns.are. managed.in.a.controlled.form. .Employee.Assistance.Program.implementation..A.reputable.employee.assistance.company.has.been. engaged.to.provide.confidential.support.and.counselling.to.Whitehaven.employees.and.immediate. family.members..The.program.consists.of.a.24.hour.7.day.a.week.support.service.that.is.able.to.be. utilised.over.the.phone.or.by.arranging.face-to-face.appointments. .Health.and.Safety.document.management.and.consolidation..An.intranet.is.currently.under.construction. to.improve.access.and.availability.of.documents..The.intranet.includes.provision.for.a.document. management.system.that.will.ensure.only.the.latest.version.of.a.controlled.document.is.available. 15 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W environment Whitehaven is committed to ensuring its projects are carried out in accordance with site specific protocols for environmental management. Each site has its own set of specific environmental management plans designed to ensure minimal impact from the operation on the environment and local community. Over the course of the year, Whitehaven commenced operations at its Rocglen and Sunnyside Open Cut operations. The commencement of operations at these sites followed a rigorous process of development of required environmental management plans and the implementation of effective environmental monitoring. The development of these two operations also culminated in the establishment of the Rocglen and Sunnyside Community Consultative Committees which meet on a quarterly basis. Each committee provides the local community with an opportunity to assess and comment on environmental performance at each site and raise issues of community concern. Both committees are operating effectively and provide an appropriate means of information transfer between the local community and the mine. 16 Achievements •. •. •. •. •. .Continued.progressive.rehabilitation.of.the.Tarrawonga.site..A.further.20.hectares.of.the.out.of.pit. waste.emplacement.has.received.rehabilitation.treatment.of.reshaping,.subsoil/topsoil.replacement,. drainage.installation.and.seeding.to.cover.crop..Approximately.4,000.tree.seedlings.were.also.planted. over.this.period. .Rehabilitation.and.landscaping.across.the.pit.top.area.of.the.Narrabri.project.including.seeding.and. fertilizing,.drainage.installation.and.planting.of.approximately.300.tree.seedlings.for.improved.visual. amenity.of.the.pit.top.area. .Finalisation.of.the.Canyon.Closure.Plan..This.plan.provides.the.blueprint.for.completion.of.rehabilitation. requirements.at.the.Canyon.site.and.establishes.clear.completion.criteria.requirements.to.enable. appropriate.review.of.rehabilitation.outcomes.prior.to.lease.relinquishment. .Ongoing.rehabilitation.of.the.Canyon.site.including.planting.of.approximately.4,000.tree.seedlings,. seeding/fertilizing.of.reshaped.areas,.shaping.of.the.final.landform.and.establishment.of.appropriate. drainage.controls..Final.reshaping.to.the.void.is.expected.to.be.completed.by.the.end.of.2009,.with. ongoing.rehabilitation.works.and.monitoring.to.continue.in.accordance.with.the.mine.closure.plan.over. the.next.five.years. .Determination.of.the.Whitehaven.Regional.Biodiversity.Offset.area,.comprising.1,500ha.of.established. woodland.and.areas.for.progressive.regeneration..Whitehaven.Coal.Limited.is.one.of.the.first.mining. operations.to.develop.a.regional.offset.proposal.in.accordance.with.the.Department.of.Environment. and.Climate.Change’s.BioBanking.methodology..Establishment.of.the.regional.offset.area.is.being. undertaken.with.the.full.support.of.both.the.Department.of.Environment.and.Climate.Change.and. Department.of.Planning.as.an.improved.environmental.outcome.to.what.was.initially.proposed.in. the.development.consent.for.the.Canyon.mine..On.completion,.management.of.the.offset.area.will. be.undertaken.in.accordance.with.a.management.plan.subject.to.annual.review.through.the.DECC.. Whitehaven.Coal.Limited.will.also.provide.up-front.in.perpetuity.management.costs.for.the.ongoing. management.of.the.offset.area.in.accordance.with.the.BioBanking.methodology. •. .Whitehaven.Coal.Limited.has.continued.its.support.of.two.environmental.cadets.throughout.the.year. providing.scholarships.for.their.ongoing.studies.at.university.and.providing.paid.work.opportunities. on.our.mine.sites.during.university.breaks..Both.cadets.are.from.the.local.area.and.will.have.full.time. employment.with.Whitehaven’s.Environment.team.on.completion.of.their.studies.in.2010. 17 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W Directors’ report Left to right: John.Conde,.Neil.Chatfield,. Tony.Haggarty,.Alex.Krueger,. Hans.Mende,.Andy.Plummer,. Allan.Davies NEIL ChATFIELD FCPA, FAICD Independent Non-Executive Director Appointed: 3 May 2007 Neil.is.an.established.executive.and. non-executive.director.with.experience. across.a.range.of.industries.and.is. currently.the.Chairman.of.Virgin.Blue. Holdings.Ltd,.and.a.Non-Executive. Director.of.Seek.Ltd,.Transurban. Group.and.Grange.Resources,.all. ASX.listed.companies..He.has.over. 30.years.experience.in.the.resources. and.transport.and.logistics.sectors.and. has.extensive.experience.in.financial. management,.capital.markets,.mergers. and.acquisitions,.and.risk.management.. Neil.was.most.recently.Executive. Director.and.Chief.Financial.Officer. of.ASX.listed.Toll.Holdings.Limited,. Australia’s.largest.transport.and. logistics.company,.a.position.he.held. for.over.10.years..Prior.to.joining.Toll,. Neil.held.a.number.of.senior.financial. and.general.management.roles.in.the. resources.and.transport.industries. TONY hAGGARTY MComm Non-Executive Director Appointed: 3 May 2007 Managing Director Appointed: 17 October 2008 Tony.has.over.30.years.experience.in. the.development,.management.and. financing.of.mining.companies,.and. was.co-founder.and.Managing.Director. of.Excel.Coal.Limited.from.1993.to. 2006..Prior.to.this,.Tony.worked.for. BP.Coal.and.BP.Finance.in.Sydney. and.London,.and.for.Agipcoal.as.the. Managing.Director.of.its.Australian. subsidiary..Tony.was.appointed.to.the. Board.of.Whitehaven.on.3.May.2007. and.was.appointed.Managing.Director. on.17.October.2008..He.is.also.non- executive.chairman.of.King.Island. Scheelite.Limited.and.a.non-executive. director.of.IMX.Resources.Limited. 18 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.2009.and. the.auditor’s.report.thereon. 1. DIRECTORS 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 Appointed: 3 May 2007 John.has.over.30.years.of.broad-based. commercial.experience.across.a.number. of.industries,.including.the.energy.sector.. John.is.chairman.of.Energy.Australia,. BUPA.Australia.Health.Pty.Ltd,.Sydney. Symphony.Limited.and.Homebush.Motor. Racing.Authority.Advisory.Board..He.is. also.president.of.the.Commonwealth. Remuneration.Tribunal.and.a.non- executive.director.of.Dexus.Property. Group..He.was.formerly.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.BHP. Billiton.Limited.and.Excel.Coal.Limited. ALEx KRUEGER BS (Finance) BS (Chemical Engineering) Independent Non-Executive Director Appointed: 3 May 2007 Alex.is.a.Managing.Director.of.First. Reserve.Corporation.(FRC)..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 Non-Executive Director Appointed: 3 May 2007 Hans.has.been.President.of.the. AMCI.Group.since.he.co-founded.the. company.in.1986..Prior.to.starting.AMCI. Group,.Mr..Mende.was.employed.by.the. Thyssen.group.of.companies.in.various. senior.executive.positions.. Other.current.Directorships.held.by. Hans.include.MMX.Mineracao,.New. World.Resources,.Excel.Maritime. and.a.non-executive.director.of. Felix.Resources.Limited,.an.ASX. listed.company.. ANDY PLUMMER BSc Mining Eng Non-Executive Director Appointed 3 May 2007 Executive Director Appointed: 17 October 2008 Andy.has.over.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.1985.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.was.appointed. to.the.Board.of.Whitehaven.on.3.May. 2007.and.was.appointed.Executive. Director.on.17.October.2008..He.is. also.a.non-executive.director.of.King. Island.Scheelite.Limited.and.Chairman. of.Ranamok.Glass.Prize.Ltd. ALLAN DAvIES BE (Mining) honours Executive Director Appointed 25 February 2009 Allan.is.a.mining.engineer.and.has. 35.years.experience.in.the.Australian. and.international.coal.and.metalliferous. mining.industries..He.is.a.registered. mine.manager.in.Australia.and.South. Africa..Allan.was.a.founding.director.of. Excel.Coal.Limited.and.as.Executive. Director.–.Operations.for.Excel.Coal. Limited,.Allan.had.direct.responsibility. for.operations.and.construction.projects.. From.2000.until.early.2006,.Allan. worked.for.Patrick.Corporation.as. Director.operations..Currently,.Allan.is. a.non-executive.director.of.QR.Limited,. a.member.of.the.Advisory.Board.of. the.Kaplan.Infrastructure.and.Logistics. Fund.and.a.non-executive.director.of. QMastor.Limited. FORMER DIRECTORS ROB STEWART ME Mining, BE Civil (hons) Retired 17 October 2008 Rob.Stewart.joined.Whitehaven.in. October.2007.as.CEO.and.became. Managing.Director.in.April.2008.. He.retired.in.October.2008.. 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . 19 m L i . l a o C . n e v a h e t i h W Directors’ report 2. COMPANY SECRETARIES TIMOThY BURT B.Ec, LLB (hons), LLM Appointed.29.July.2009 Timothy.joined.Whitehaven.as.General.Counsel.and.Company.Secretary.in.July.2009..Prior.to.that,.Timothy.held.senior.legal. roles.at.a.number.of.listed.Australian.companies.including.Boral.Ltd,.United.Group.Ltd.and.Australian.National.Industries.Ltd.. Timothy.has.completed.Chartered.Secretaries.Australia’s.Graduate.Diploma.of.Applied.Corporate.Governance.. AUSTEN PERRIN B.Ec, CA Appointed.19.November.2008 Austen.has.been.with.Whitehaven.Group.since.October.2008.as.Chief.Financial.Officer.and.Company.Secretary..He.has.over. 20.years.experience.in.the.transport.and.infrastructure.industry.including.Chief.Financial.Officer.for.Asciano.Ltd.and.the.Chief. Financial.Officer.for.Toll.NZ.Limited. FORMER COMPANY SECRETARIES PAUL MARShALL LLB, Grad Dip Acc & Fin, CA Resigned:.4.September.2009 Paul.has.25.years.in.the.accountancy.profession.having.worked.for.the.accountancy.firm.Ernst.&.Young.for.ten.years,.and. subsequently.fifteen.years.spent.in.commercial.roles.as.Company.Secretary.and.CFO.for.a.number.of.listed.and.unlisted. companies.mainly.in.the.resources.sector..He.resigned.on.4.September.2009. LEIGh WhITTON B.Com, MBA, CPA Resigned:.31.December.2008 Leigh.joined.Whitehaven.Group.in.2005.as.was.appointed.Chief.Financial.Officer.and.Company.Secretary.on.3.May.2007.. He.resigned.in.December.2008. 20 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(1).of.the.Corporations Act 2001,.at.the.date.of.this.report.is. as.follows: John.Conde Neil.Chatfield Tony.Haggarty Alex.Krueger.* Hans.Mende Andy.Plummer Allan.Davies.** Ordinary.shares Options.over.ordinary.shares 378,605 306,805 – – 31,153,631 7,326,266 Granted.on.3.May.2007.(refer.to.details. in.Section.7.3.of.this.report) – 76,019,833 – – 29,887,988 7,326,266 125,000 – Granted.on.3.May.2007.(refer.to.details. in.Section.7.3.of.this.report) *. .Mr.Alex.Krueger.is.a.nominee.of.FRC.Whitehaven.Holdings.BV.(FRC).which.owns.131,650,000.Whitehaven.shares.or.approximately.28.14%. of.Whitehavens.share.capital..Mr.Krueger.neither.has.a.relevant.interest.in.those.shares.nor.is.he.an.associate.of.FRC.under.section.12.of.the. Corporations.Act. **. .In.February.2009.the.Board.resolved.to.issue.to.a.related.company.of.Mr.Allan.Davies.2,500,000.ordinary.shares.and.an.option.to.acquire.5,000,000. ordinary.shares.in.three.separate.tranches,.subject.to.obtaining.shareholder.approval. 4. DIRECTORS’ MEETINGS 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 John.Conde Neil.Chatfield Tony.Haggarty.* Alex.Krueger Hans.Mende Andy.Plummer Allan.Davies.** Rob.Stewart.*** Directors’.Meetings Audit.and.Risk.. Committee.Meetings A 15 16 16 16 11 16 8 2 B 16 16 16 16 16 16 8 2 A 3 3 1 2 – – – – B 3 3 1 2 – – – – A.–.Number.of.meetings.attended. B.–.Number.of.meetings.held.during.the.time.the.director.held.office.during.the.year *. Mr.Tony.Haggarty.resigned.from.the.Audit.and.Risk.Committee.on.17.October.2008.when.he.became.an.executive.Director **. Mr.Allan.Davies.appointed.25.February.2009 ***.Mr.Rob.Stewart.retired.17.October.2008 Due.to.the.frequency.with.which.the.Board.met,.the.functions.of.the.Remuneration.and.Nominations.Committee.were.carried. out.by.the.Board.throughout.the.2009.financial.year. 21 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W Directors’ report 5. CORPORATE GOvERNANCE STATEMENT The.Board.of.Whitehaven.Coal.Limited.(the.‘Company’).is.committed.to.achieving.the.highest.standards.of.corporate. governance.and.to.conducting.its.operations.and.corporate.activities.safely.and.in.accordance.with.all.applicable.laws. and.regulatory.obligations..This.Corporate.Governance.Statement.sets.out.the.key.details.of.Whitehaven’s.corporate. governance.framework. Scope of responsibility of Board The.Board.has.a.formal.Board.Charter.which.sets.out.the.responsibilities,.structure.and.composition.of.the.Board..It.provides. that.the.Board’s.broad.function.is.to: •. determine.strategy.and.set.financial.targets.for.the.Whitehaven.Group •. monitor.the.implementation.and.execution.of.strategy.and.performance.against.financial.targets •. appoint.and.oversee.the.performance.of.executive.management.and.to.take.and.fulfill.an.effective.leadership.role.in.relation. to.Whitehaven The.Charter.sets.out.the.responsibilities.which.are.specifically.reserved.for.the.Board..These.include.the.following: •. composition.of.the.Board,.including.the.appointment.and.removal.of.Directors •. oversight.of.the.Company,.including.its.control.and.accountability.systems •. appointment.and.removal.of.senior.management.and.the.Company.Secretary •. reviewing.and.overseeing.systems.of.risk.management.and.internal.compliance.and.control,.codes.of.ethics.and.conduct,.and. legal.and.statutory.compliance •. monitoring.senior.management’s.performance.and.implementation.of.strategy •. approving.and.monitoring.financial.and.other.reporting.and.the.operation.of.committees Day-to-day.management.of.the.Company’s.affairs.and.implementation.of.its.strategy.and.policy.initiatives.are.delegated.to. the.Managing.Director.and.senior.executives,.who.operate.in.accordance.with.Board.approved.policies.and.delegated.limits. of.authority. A.copy.of.the.Board.Charter.can.be.viewed.on.Whitehaven’s.website. Audit and Risk Management Committee The.purpose.of.Audit.and.Risk.Management.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). Alex.Krueger The.Committee.performs.a.variety.of.functions.relevant.to.risk.management.and.internal.and.external.reporting.and.reports. to.the.Board.following.each.meeting..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.. 22 Remuneration and Nominations Committee The.purpose.of.the.Remuneration.and.Nominations.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). Hans.Mende. 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. Due.to.the.frequency.with.which.the.Board.met,.the.functions.of.the.Remuneration.and.Nominations.Committee.were.carried. out.by.the.Board.throughout.the.2009.financial.year. Best practice commitment Whitehaven.is.committed.to.achieving.and.maintaining.the.highest.standards.of.conduct.and.has.undertaken.various.initiatives,. as.outlined.in.this.statement,.designed.to.achieve.this.objective..Whitehaven’s.corporate.governance.charter.is.intended.to. ‘institutionalise’.good.corporate.governance.and,.generally,.to.build.a.culture.of.best.practice.both.in.Whitehaven’s.own.internal. practices.and.in.its.dealings.with.others. Independent professional advice With.the.prior.approval.of.the.Chairman,.each.Director.has.the.right.to.seek.independent.legal.and.other.professional.advice. concerning.any.aspect.of.Whitehaven’s.operations.or.undertakings.in.order.to.fulfil.their.duties.and.responsibilities.as.Directors.. Any.costs.incurred.are.borne.by.the.Company. Compliance with ASx corporate governance guidelines and best practice recommendations The.Board.has.assessed.the.Company’s.practice.against.the.Australian.Securities.Exchange.Corporate.Governance.Council’s. ‘Corporate Governance Principles and Recommendations’.(‘ASx Guidelines’)..Whitehaven.complied.with.the.ASX.Guidelines. in.all.material.respects.throughout.the.2009.financial.year..Where.the.Company.has.an.alternative.approach,.this.has.been. disclosed.and.explained. 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W 23 Directors’ report Principle 1 – Lay solid foundations for management and oversight The.role.of.the.Board.and.delegation.to.senior.management.have.been.formalised.as.described.above.. On.an.annual.basis,.the.Board.reviews.the.performance.of.the.Managing.Director..The.assessment.criteria.used.in.these. reviews.is.both.qualitative.and.quantitative.and.includes.the.following: •. financial.performance •. safety.performance •. strategic.actions The.Managing.Director.annually.reviews.the.performance.of.Whitehaven’s.senior.executives.using.criteria.consistent.with. the.above. The.performance.of.the.Managing.Director.and.the.Company’s.senior.executives.during.the.2009.financial.year.has.been. assessed.in.accordance.with.the.above.processes. Principle 2 – Structure the Board to add value The.Board.reviews.its.composition.from.time.to.time.to.ensure.the.Board.benefits.from.an.appropriate.balance.of.skills.and. experience..The.Board.is.currently.comprised.as.follows: Director J.Conde.(Chairman) N.Chatfield A.Krueger H.Mendes T.Haggarty A.Davies A.Plummer Independent Non-executive Term.in.Office Yes Yes Yes. No.–.substantial.shareholder No.–.employed.in.an.executive.capacity No.–.employed.in.an.executive.capacity No.–.employed.in.an.executive.capacity Yes Yes Yes Yes No No No 2.years 2.years 2.years 2.years 2.years 6.months 2.years Whitehaven.did.not.comply.with.recommendation.2.1.of.the.ASX.Guidelines.during.the.2009.financial.year.as.a.majority.of.the. Board.are.not.considered.to.be.independent.when.considered.in.accordance.with.the.criteria.set.out.in.recommendation.2.1.. Notwithstanding.this,.the.Board.believes.that.the.individuals.on.the.Board.can.and.do.make.quality.and.independent.judgements. in.the.best.interests.of.the.Company.and.other.stakeholders..The.Board.regularly.assesses.the.independence.of.each.non- executive.Director. The.Board.periodically.undertakes.an.evaluation.of.the.performance.of.the.Board.and.its.Committees..The.evaluation. encompasses.a.review.of.the.structure.and.operation.of.the.Board,.and.the.skills.and.characteristics.required.by.the.Board.to. maximise.its.effectiveness,.and.the.appropriateness.of.the.Board’s.practices.and.procedures.to.meet.the.present.and.future. needs.of.the.Company..A.formal.assessment.of.the.Board’s.performance.was.conducted.in.August.2009. In.addition.to.the.above,.Whitehaven’s.corporate.governance.charter.requires.an.external.review.of.the.performance.of.the. Board.at.intervals.not.exceeding.three.years,.to.ensure.independent.professional.scrutiny.and.benchmarking.against.developing. best.market.practice.. Principle 3 – Promote ethical and responsible decision making Whitehaven.has.a.Code.of.Ethics.and.Values.and.a.Code.of.Conduct.for.Transactions.in.Securities..The.purpose.of.these.codes. is.to.provide.Directors.and.employees.with.guidance.on.what.is.acceptable.behaviour,.including.in.dealings.in.the.Company’s. securities..The.codes.require.all.Directors,.managers.and.employees.to.maintain.the.highest.standards.of.honesty.and.integrity.. The.Code.of.Ethics.and.Values.and.the.Code.of.Conduct.for.Transactions.in.Securities.can.be.viewed.on.Whitehaven’s.website.. 24 Principle 4 – Safeguard integrity in financial reporting Whitehaven.is.committed.to.a.transparent.system.for.auditing.and.reporting.of.the.Company’s.financial.performance.. Whitehaven’s.Audit.and.Risk.Management.Committee.performs.a.central.function.in.achieving.this.goal..The.Chair.and.members. of.the.Committee.are.independent.directors,.and.all.the.members.of.the.Committee.are.financially.literate..The.Committee.holds. discussions.with.external.auditors.without.management.present.as.required. The.Audit.and.Risk.Management.Committee’s.Charter.can.be.viewed.on.Whitehaven’s.website. Principle 5 – Make timely and balanced disclosure Whitehaven.has.in.place.practices.and.procedures.which.are.aimed.at.ensuring.timely.compliance.with.the.Company’s. obligations.under.the.Corporations Act 2001.(Cth).and.ASX.Listing.Rules..These.practices.and.procedures.require.information. which.may.need.to.be.disclosed.to.be.brought.to.the.attention.of.the.Board.for.consideration.as.to.whether.disclosure.is. required..These.practices.and.procedures.can.be.viewed.on.Whitehaven’s.website. Principle 6 – Respect the rights of shareholders The.Board.recognises.the.importance.of.ensuring.that.shareholders.are.kept.informed.of.all.major.developments.affecting.the. Company..Information.is.communicated.to.shareholders.in.the.following.ways: •. regular.announcements.are.made.to.the.Australian.Securities.Exchange.in.accordance.with.the.Company’s.continuous. disclosure.obligations,.including.quarterly.reports,.half-year.results,.full-year.results.and.an.Annual.Report..These. announcements.are.available.on.Whitehaven’s.website •. Whitehaven’s.Annual.Report.is.delivered.to.those.shareholders.who.have.elected.to.receive.it •. through.participation.at.the.Company’s.annual.general.meeting..The.Board.encourages.full.participation.of.shareholders.at. the.Annual.General.Meeting •. the.Company’s.external.auditors.attend.the.annual.general.meeting.and.are.available.to.answer.shareholders’.questions. Whitehaven’s.policy.on.communications.with.shareholders.can.be.viewed.on.Whitehaven’s.website.. Principle 7 – Recognise and manage risks Whitehaven.recognises.that.risk.is.a.part.of.doing.business.and.that.effective.risk.management.is.fundamental.to.achieving.the. Company’s.strategic.and.operational.objectives.. Whitehaven.has.a.Risk.Management.Framework.which.provides.the.approach,.infrastructure.and.processes.for.risk. management.at.the.Company..This.Framework.is.constantly.evolving,.enabling.the.Company.to.manage.its.risks.effectively.and. efficiently..The.key.components.of.the.Framework.are.as.follows: Risk Management Policy.–.This.Policy.provides.an.overview.of.Whitehaven’s.approach.to.risk.management,.and.includes.a. summary.of.the.roles.and.responsibilities.of.both.the.Board.and.management. Risk Management Standards.–.These.Standards.define.the.minimum.risk.management.requirements.that.apply.to. Whitehaven’s.operations..They.address.the.identification,.assessment.and.management.of.all.material.risks.that.could.impact. the.Company’s.objectives. Risk Management Guidelines.–.These.Guidelines.provide.guidance.to.Directors.and.management.as.to.what.needs.to.be. done.to.meet.the.objectives.of.the.Risk.Management.Policy.and.the.Risk.Management.Standards.. Under.the.supervision.of.the.Board,.management.is.responsible.for.identifying.and.managing.risks..The.Board.is.responsible.for. ensuring.that.a.sound.system.of.risk.oversight.and.management.exists.and.that.internal.controls.are.effective..In.particular,.the. Board.ensures.that.the.principal.strategic,.operational,.financial.reporting.and.compliance.risks.are.identified,.and.that.systems. are.in.place.to.manage.and.report.on.these.risks. The.Board,.together.with.management,.constantly.seeks.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.Whitehaven’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.the.Audit.and.Risk.Management.Committee.level.and.at.Board.level.. 25 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W Directors’ report Senior.management.has.reported.to.the.Audit.and.Risk.Management.Committee.and.the.Board.on.the.effectiveness.of.the. management.of.the.business.risks.faced.by.Whitehaven.during.the.2009.financial.year..The.Board.has.also.received.assurance. from.the.Managing.Director.and.the.Chief.Financial.Officer.that.the.declaration.provided.in.accordance.with.section.295A.of. the.Corporations.Act.is.founded.on.a.sound.system.of.risk.management.and.internal.control,.and.that.the.system.is.operating. efficiently.and.effectively.in.all.material.respects.in.relation.to.financial.reporting.risks. Principle 8 – Remunerate fairly and responsibly Whitehaven’s.remuneration.policy.and.practices.are.designed.to.attract,.motivate.and.retain.high.quality.people..The.policy. is.built.around.the.following.principles: •. remuneration.being.competitive.in.the.markets.in.which.the.Company.operates •. remuneration.being.linked.to.Company.performance.and.the.creation.of.shareholder.value •. a.proportion.of.remuneration.to.be.dependent.upon.performance.against.key.business.measures,.both.financial.and. non-financial Whitehaven.has.a.Remuneration.and.Nominations.Committee.whose.responsibilities.include.considering.the.Company’s. remuneration.strategy.and.policy.and.making.recommendations.to.the.Board.that.are.in.the.best.interests.of.the.Company.and. its.shareholders..The.Committee.is.comprised.of.a.majority.of.independent.Directors,.is.chaired.by.an.independent.Director.and. has.three.members..Due.to.the.number.of.Board.meetings.during.the.2009.financial.year,.the.functions.of.the.Committee.were. carried.out.by.the.Board. The.Remuneration.and.Nominations.Committee.has.a.formal.charter.which.sets.out.its.roles.and.responsibilities,.composition. structure.and.membership.requirements..A.copy.of.this.charter.can.be.viewed.on.Whitehaven’s.website. The.remuneration.of.non-executive.Directors.is.fixed.by.way.of.cash.and.superannuation.contributions..Non-executive.Directors. do.not.receive.any.options,.bonus.payments.or.other.performance.related.incentives,.nor.are.they.provided.with.any.retirement. benefits.other.than.superannuation. More.information.relating.to.the.remuneration.of.non-executive.Directors.and.senior.managers.is.set.out.in.the.Remuneration. Report.on.pages.27.to.34..As.required.by.the.Corporations.Act,.a.resolution.that.the.Remuneration.Report.be.adopted.will. be.put.to.the.vote.at.the.Annual.General.Meeting,.however,.the.vote.will.be.advisory.only.and.will.not.bind.the.Directors.of. the.Company. Whitehaven’s.Code.of.Conduct.for.Transactions.in.Securities.prohibits.executives.from.entering.into.transactions.or. arrangements.which.limit.the.economic.risk.of.participating.in.unvested.entitlements.under.the.Company’s.equity.based. remuneration.schemes.. 6. DIvIDENDS During.the.year.the.company.paid.fully.franked.dividends.of.$16,841,000,.representing.a.final.2008.dividend.of.1.7.cents.per. ordinary.share.and.an.interim.dividend.for.2009.of.2.5.cents.per.ordinary.share. Declared after end of year After.the.balance.sheet.date.the.following.dividend.was.proposed.by.the.directors..The.dividend.has.not.been.provided.and. there.are.no.income.tax.consequences. Director Final.ordinary.(Fully.franked) Cents.per.share 6.0 Total.amount. $’000 28,583 Franked.amount.. per.security Date.of.payment 100% 30.September.2009 The.record.date.for.determining.entitlement.to.the.dividend.will.be.18.September.2009. The.financial.effect.of.these.dividends.has.not.been.brought.to.account.in.the.financial.statements.for.the.year.ended. 30.June.2009.and.will.be.recognised.in.subsequent.financial.reports. 26 REMUNERATION REPORT – AUDITED 7. 7.1 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.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.may.include.a.mix.of.fixed.compensation.and.short.and.long-term.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.Nominations.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. Short-term incentive bonus Each.year,.the.Managing.Director.assesses.the.performance.of.senior.executives.and.may.recommend.the.payment.of. a.short-term.incentive.bonus.to.the.Board.for.approval. 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . 27 m L i . l a o C . n e v a h e t i h W Directors’ report REMUNERATION REPORT – AUDITED (CONTINUED) 7. Long-term incentive The.objective.of.LTI.compensation.is.to.reward.and.retain.key.management.personnel.in.a.manner.which.aligns.this.element. of.compensation.with.the.creation.of.shareholder.wealth..As.such,.LTI.grants.are.made.to.employees.who.are.able.to.influence. the.generation.of.shareholder.wealth.and.therefore.have.a.direct.impact.on.the.Company’s.performance..LTI.grants.to. executives.are.delivered.in.the.form.of.options. The.grant.of.options.is.a.direct.link.between.director,.executive.and.shareholder.wealth..The.following.indices.are.considered. when.measuring.the.Group’s.performance.and.benefits.for.shareholder.wealth: Profit/(loss).attributable.to.the.group.($000’s) 244,212 51,854 24,095 2009 2008 2007 Revenue.($000’s) Share.price.at.year.end.(dollars.per.share) Basic.EPS.(cents.per.share) Diluted.EPS.(cents.per.share) Other benefits Other.benefits.include.motor.vehicles.and.some.minor.benefits. Employment contracts 489,397 252,000 106,201 $3.14 60.5 60.3 $4.47 14.5 14.4 $2.09 8.0 8.0 2006 11,697 88,957 n/a 3.9 3.9 It.is.the.consolidated.entity’s.policy.that.service.contracts.are.entered.into.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. Tony.Haggarty,.Managing.Director,.was.appointed.on.17.October.2008.and.has.an.evergreen.employment.agreement,.which. can.be.terminated.by.either.party.with.three.months.notice.or.payment.in.lieu.thereof..The.components.of.Mr.Haggarty’s. remuneration.package.include:.a.salary.inclusive.of.superannuation.of.$600,000.and.the.eligibility.to.participate.in.the. Company’s.bonus.scheme. Andy.Plummer,.Executive.Director,.was.appointed.on.17.October.2008.and.has.an.evergreen.employment.agreement,.which. can.be.terminated.by.either.party.with.three.months.notice.or.payment.in.lieu.thereof..The.components.of.Mr.Plummer’s. remuneration.package.include:.a.salary.inclusive.of.superannuation.of.$300,000.and.the.eligibility.to.participate.in.the. Company’s.bonus.scheme. Allan.Davies.contracts.his.services.to.Whitehaven.through.Dalara.Management.Services.Pty.Ltd..This.service.agreement.can. be.terminated.by.either.party.with.one.months.notice.or.payment.in.lieu.thereof. Austen.Perrin,.Chief.Financial.Officer,.was.appointed.on.27.October.2008.and.has.an.evergreen.employment.agreement.which. can.be.terminated.by.either.party.with.three.months.notice.or.payment.in.lieu.thereof..The.components.of.Mr.Perrin’s.remuneration. package.include:.a.salary.inclusive.of.superannuation.of.$360,000.and.the.eligibility.to.participate.in.the.Company’s.bonus.scheme. Non-executive directors The.constitution.of.the.Company.provides.that.the.Non-executive.directors.may.be.paid,.as.remuneration.for.their.services.as. Non-executive.directors,.a.sum.determined.from.time.to.time.by.the.Company’s.shareholders.in.general.meeting,.with.that.sum. to.be.divided.amongst.the.Non-executive.directors.in.such.manner.and.proportion.as.they.agree. The.maximum.aggregate.amount.which.was.approved.by.shareholders.for.fees.to.the.Non-executive.directors.is.$500,000. per.annum..An.amount.of.$380,951.was.paid.during.the.year.ended.30.June.2009.. Non-executive.directors.do.not.receive.equity.instruments. 28 7.2.1 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.shown.in.the.tables.below..Options.issued.to.entities.associated.with.Andy.Plummer.and. Tony.Haggarty.under.the.Equity.Participation.and.Option.Deed.are.also.disclosed.in.this.table. Short-term Share-based.payments Salary.&. Fees. $ Non- monetary. benefits. $ Other. benefits. .(A). $ Termin-. ation. .benefits. .(B). $ Super-. annuation. benefits. .(A). $ Post-. employ- ment benefits. $ Options. issued. to.senior. employees. (C). $ Total. $ Options. issued.under. the.Equity. Participation. and.Option. Deed.. (D). $ Value.of. options.as. proportion. of.total. % In.AUD Directors Non-executive directors John.Conde.. (Chairman). 2009 120,000 2008 120,000 Neil.Chatfield. 2009 75,000 2008 75,000 Alex.Krueger.****** 2009 118,083 2008 – Hans.Mende 2009 49,958 2008 54,500 Executive directors Tony.Haggarty.* 2009 386,714 2008 65,400 Andy.Plummer.** 2009 193,356 2008 59,950 Allan.Davies.*** 2009 200,531 Rob.Stewart.**** 2009 227,273 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 10,800 130,800 10,800 130,800 6,750 81,750 6,750 81,750 – 118,083 – – – – 49,958 54,500 38,671 425,385 – 65,400 19,336 212,692 – 59,950 – 200,531 1,865 336,703 22,727 588,568 2008 301,111 21,295 400,000 Keith.Ross.***** 2008 435,561 32,747 – – – 75,779 798,185 69,483. 537,791 *. Tony.Haggarty.appointed.Managing.Director.17.October.2008; **. Andy.Plummer.appointed.Executive.Director.–.Business.Development,.17.October.2008; ***. Allan.Davies.appointed.Executive.Director.–.Operations,.25.February.2009; ****. Rob.Stewart,.Managing.Director,.retired.17.October.2008; *****. Keith.Ross,.Managing.Director,.resigned.31.March.2008; ******.in.2009.Alex.Krueger.was.paid.$68,125.for.Directors.Fees.earned.in.prior.periods – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 82,018 54,979 – – – – – – – – – 57,500 1,309,614 57,500 1,309,614 – – – – – – – – – – – – 11.9 95.2 21.3 95.6 – 12.2 6.4 – 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . 29 m L i . l a o C . n e v a h e t i h W Directors’ report REMUNERATION REPORT – AUDITED (CONTINUED) 7. 7.2.1 Directors’ and executive officers’ remuneration (Company and Consolidated) – audited (continued) Short-term Share-based.payments Salary.&. Fees. $ Non- monetary. benefits. $ Other. benefits. .(A). $ Termin-. ation. .benefits. .(B). $ Super-. annuation. benefits. .(A). $ Post-. employ- ment benefits. $ Options. issued. to.senior. employees. (C). $ Total. $ Options. issued.under. the.Equity. Participation. and.Option. Deed.. (D). $ Value.of. options.as. proportion. of.total. % 2009 224,475 – 11,330 – 22,448 258,253 – 14,532 2009 325,585 28,390 2008 220,165 15,189 – – – – 32,558 386,533 100,000 335,354 2009 164,550 – 5,033 417,683 16,455 603,721 2008 286,320 30,153 – 2008 350,890 – 6,168 – – 40,711 357,184 95,428 452,486 2008 229,964 30,299 2008 39,600 – – – – 102,121 362,384 – – 39,600 – – – – – – – – 6,286 – 6,286 – – – – – – – – – – – 5.3 – 1.8 – 1.7 – – – In.AUD Executives Austen.Perrin.. (CFO/Company. Secretary).* Tony.Galligan. (General.Manager. Infrastructure) Leigh.Whitton.. (CFO/Company. Secretary).** Chris.Burgess. (General.Manager. New.Projects) Casper.Deiben. (General.Manager. Operations) Paul.Marshall.. (Joint.Company. Secretary) *. Austen.Perrin.appointed.CFO.27.October.2008,.appointed.Joint.Company.Secretary.19.November.2008;.**Leigh.Whitton.resigned.31.December.2008 7.2.2 Notes in relation to the table of directors’ and executive officers’ remuneration – audited A.. B.. C.. .An.amount.of.$400,000.was.paid.to.Mr.Rob.Stewart.in.two.payments.of.$200,000.each.on.24.October.2007. and.28.April.2008.as.consideration.for.agreeing.to.hold.the.position.of.Chief.Executive.Officer.effective.from. 22.October.2007..The.remaining.amounts.disclosed.as.other.benefits.relate.to.car.spaces,.professional.fees.and.other. similar.items. .An.amount.of.$336,703.was.paid.to.Mr.Rob.Stewart.on.retirement.as.Managing.Director..An.amount.of.$417,683.was. paid.to.Mr.Leigh.Whitton.on.termination.of.his.contract.as.CFO.and.Joint.Company.Secretary..These.payments.include. pay-out.of.accrued.leave.entitlements.. .The.fair.value.for.share.options.granted.to.the.directors.and.senior.employees.is.based.on.the.fair.value.of.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 Executives 19/02/09 19/02/09 19/02/09 Expected.. option.life/. Expiry.date Fair.value. per.option Exercise. price 26/10/11 119.3.cents 26/10/12 136.3.cents 26/10/13 156.1.cents $1.00 $1.00 $1.00 Price.of.. shares.on.. grant.date $1.51 $1.51 $1.51 Expected. volatility Risk.free.. interest.rate Dividend. yield 30% 30% 30% 3.00% 3.00% 3.00% 10% 10% 10% 30 D. Equity Participation and Option Deed The.fair.value.for.options.issued.under.the.Equity.Participation.and.Option.Deed.is.based.on.the.fair.value.of.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 3/5/07 Expected.. option.life/. Expiry.date Fair.value. per.option Exercise.price Price.of.. shares.on.. grant.date Expected. volatility Risk.free.. interest.rate 10.years 7.2.cents $1.00 $1.00 30% 5.88% Dividend. yield 10% During.the.year.ended.30.June.2007,.the.consolidated.entity.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.related.entities.of.Andy.Plummer. and.Tony.Haggarty.were.granted.six.options.each.to.acquire.additional.shares.in.the.Company..The.number.of.option.shares.is.the. percentage.(the.‘Grant.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.10.consecutive. trading.days.reaches.the.required.amount..Options.1.and.2.were.exercised.during.the.year.ended.30.June.2008..Options.3. and.4.were.exercised.during.the.year.ended.30.June.2009..All.options.have.an.exercise.price.of.$1.and.must.be.exercised. by.the.related.entities.within.90.days.of.being.notified.the.Company’s.share.price.has.reached.the.target.share.price. The.number.of.option.shares.to.be.received.will.be.reduced.if.a.specified.percentage.of.the.Tranche.2.shares.formerly.held. in.escrow.are.not.held.at.the.time.of.the.Company’s.share.price.reaching.the.target.share.price.specified.in.the.option..For. example.if.for.option.5,.only.50%.of.the.Tranche.2.shares.are.held,.then.the.number.of.option.shares.will.be.reduced.to. 50%/60%.of.the.relevant.grant.percentage.in.the.table.below. Option.No. Grant.percentage 1 2 3 4 5 6 0.835% 1.5% 1.2% 1.195% 1.1% 1.1% Maximum.number.. of.potential.. shares.each 2,505,000 4,575,150 3,769,924 3,844,317 3,623,277 3,702,989 22,020,657 Percentage.of.the. Tranche.2.shares. released.from.. escrow.to.be.held 100% 90% 80% 70% 60% 50% Share.price $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 The.options.were.granted.for.nil.consideration..The.fair.value.of.the.options.at.grant.date.was.7.2.cents.per.option.share.. For.accounting.purposes.the.fair.value.of.these.options.attributable.to.the.period.ended.30.June.2009.of.$115,000. (2008:.$2,619,228).has.been.recognised.in.the.profit.and.loss. 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . 31 m L i . l a o C . n e v a h e t i h W Directors’ report REMUNERATION REPORT – AUDITED (CONTINUED) 7. 7.3 Equity instruments – audited All.options.refer.to.options.over.ordinary.shares.of.Whitehaven.Coal.Limited. 7.3.1 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.2009 Fair.value.per. option.at.. grant.date Exercise.price. per.option Grant.date. Expiry.date Vesting.date CFO Austen.Perrin 33,333 19.Feb.2009 119.3.cents 33,333 19.Feb.2009 136.3.cents 33,334 19.Feb.2009 156.1.cents $1.00 $1.00 $1.00 26.Oct.2011 26.Oct.2011 26.Oct.2012 26.Oct.2012 26.Oct.2013 26.Oct.2013 The.fair.value.of.these.options.attributable.to.the.period.ended.30.June.2009.of.$14,532.has.been.recognised.in.the.profit. and.loss. No.options.have.been.granted.since.the.end.of.the.financial.year..The.options.were.provided.at.no.cost.to.the.recipients.. 7.3.2 Modification of terms of equity-settled share-based payment transactions – audited No.terms.of.equity-settled.share-based.payment.transactions.have.been.altered.or.modified.by.the.issuing.entity.during.the. reporting.period.. 7.3.3 Exercise of options granted as compensation – audited During.the.reporting.period.the.following.shares.were.issued.on.the.exercise.of.options.previously.granted: . Director related entities Tony.Haggarty Andy.Plummer Executives Leigh.Whitton Tony.Galligan Number.of. shares Amount.paid. $/share 7,614,241 7,614,241 33,333 33,333 1.00 1.00 1.00 1.00 There.are.no.unpaid.amounts.on.the.shares.issued.as.a.result.of.the.exercise.of.the.options.in.the.2009.financial.year. 32 7.3.4 Analysis of options and rights over equity instruments granted as compensation – audited Details.of.vesting.profile.of.the.options.granted.to.each.of.the.named.executives.and.director.related.entities.are.detailed.below. Executives Rob.Stewart.* Leigh.Whitton.** Tony.Galligan Options.granted Number Date %.vested.in.year %.forfeited.. in.year Financial.years.. in.which.. grant.vests 1,000,000 5.Sept.2007 1,000,000 5.Sept.2007 1,000,000 5.Sept.2007 33,333 33,334 33,333 33,334 3.May.2007 3.May.2007 3.May.2007 3.May.2007 100 100 100 100 – 100 – – – – – – – – 2009 – – 2009 2010 2009 2010 *. Mr.Rob.Stewart’s.options.vested.upon.his.retirement.from.the.Company.on.17.October.2008. **. Mr.Leigh.Whitton.continues.to.hold.his.options.following.his.cessation.of.employment.with.the.Company. Director related entities Tony.Haggarty Andy.Plummer Options.granted Number Date %.vested.in.year %.forfeited.. in.year Share.price.. at.which.. grant.vests 3,769,924 3.May.2007 3,844,317 3.May.2007 3,623,277 3.May.2007 3,702,989 3.May.2007 3,769,924 3.May.2007 3,844,317 3.May.2007 3,623,277 3.May.2007 3,702,989 3.May.2007 100 100 – – 100 100 – – – – – – – – – – $3.50 $4.00 $4.50 $5.00 $3.50 $4.00 $4.50 $5.00 The.options.provided.to.the.related.entities.of.Mr.Haggarty.and.Mr.Plummer.vest.when.the.volume.weighted.average.price.of. the.ordinary.shares.on.the.ASX.measured.over.10.consecutive.trading.days.reaches.the.specified.share.price. 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . 33 m L i . l a o C . n e v a h e t i h W Directors’ report REMUNERATION REPORT – AUDITED (CONTINUED) 7. 7.3.5 Analysis of movements in options – audited The.movement.during.the.reporting.period,.by.value,.of.options.over.ordinary.shares.in.the.Company.held.by.director.related. entities.and.each.key.management.person.is.detailed.below. Executives Austen.Perrin Leigh.Whitton Tony.Galligan Director related entities Tony.Haggarty Andy.Plummer Granted.in.. year.. $.(A) Value.of.options. exercised.. in.year.. $.(B) Lapsed.. in.year.. $.(C) 137,233 – – – – – 69,999 69,999 15,983,211 15,983,211 – – – – – (A). (B). (C). .The.value.of.options.granted.in.the.year.is.the.fair.value.of.the.options.calculated.at.grant.date.using.the.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.1.July.2008.to.1.July.2013). .The.value.of.options.exercised.during.the.year.is.calculated.as.the.market.price.of.shares.of.the.Company.as.at.close.of. trading.on.the.date.the.options.were.exercised.after.deducting.the.price.paid.to.exercise.the.option. .The.value.of.options.exercised.that.lapsed.during.the.year.represents.the.benefit.forgone.and.is.calculated.at.the.date. the.option.lapsed.using.the.Black.Scholes.model..No.options.lapsed.in.the.year. 34 8. PRINCIPAL ACTIvITIES The.principal.activity.of.the.Group.during.the.period.was.the.development.and.operation.of.coal.mines.in.New.South. Wales..During.the.year.ended.30.June.2009,.Whitehaven.Coal.Limited.and.its.controlled.entities.(‘the.Group’).completed. the.development.of.and.began.operating.from.the.Rocglen.and.Sunnyside.mines..Development.continued.at.the.Narrabri. underground.mine.during.the.year. 9. OPERATING AND FINANCIAL REvIEW 9.1 Overview of the consolidated entity Whitehaven.Coal.Limited.was.incorporated.on.15.March.2007.and.legally.acquired.Whitehaven.Coal.Mining.Limited.and. its.controlled.entities.on.29.May.2007..During.the.year.ended.30.June.2009,.the.Group.completed.the.development.of.the. Rocglen.and.Sunnyside.mines.and.began.operations..Development.of.infrastructure.and.underground.drift.construction. continued.at.the.Narrabri.underground.mine.during.the.year. 9.2 highlights Financial •. Reported.net.profit.after.tax.(NPAT).of.$244.2.million,.including.NPAT.of.$166.9.million.from.the.sale.of.15%.of.the.Narrabri. Joint.Venture.and.other.Significant.Items; •. Underlying.NPAT,.before.Significant.Items,.of.$77.3.million,.more.than.five.times.the.FY.2008.level; •. A.fully.franked.final.dividend.of.6.0.cents.per.share.has.been.declared,.payable.on.30.September.2009; •. Revenue.of.$356.3.million.(net.of.purchased.coal.and.excluding.NSW.royalty),.up.92%.from.FY.2008; •. Earnings.before.interest,.tax,.depreciation.and.amortisation.(EBITDA).of.$174.5.million.(excluding.loss.on.coal.purchases),. reduced.to.$136.3.million.after.coal.purchases; •. Cash.generated.from.operations.of.$135.6.million,.compared.to.$17.9.million.in.FY.2008; •. Proceeds.received.from.the.sale.of.Narrabri.of.$59.0.million.during.the.year; •. Strong.cash.flow.and.financial.position.–.$131.2.million.cash.available.with.net.cash.of.$53.million.compared.to.$80.9. million.cash.available.and.net.cash.of.$25.6.million.at.30.June.2008;. •. Subsequent.to.balance.date,.an.institutional.placement.was.completed.on.30.July.2009,.raising.additional.net.cash.of. $177.million..In.addition.to.the.institutional.placement,.a.Share.Purchase.Plan.was.completed,.raising.$26.million.. Operating •. Coal.sales.up.48%.(equity.basis).compared.with.previous.year.(up.42%.on.100%.basis); •. Saleable.coal.production.up.36%.(equity.basis).from.FY.2008.(up.20%.on.100%.basis); •. JORC.coal.resources.increased.to.761.8.Mt,.with.marketable.coal.reserves.more.than.doubled.to.278.6.Mt; •. Opencut.marketable.coal.reserves.increased.to.106.Mt,.sufficient.to.support.opencut.saleable.coal.production.of.5.Mtpa. for.more.than.20.years; •. Rocglen.and.Sunnyside.opencut.mines.were.commissioned.successfully; •. Owner.operation.was.introduced.at.Werris.Creek.mine.in.December.2008,.resulting.in.an.increase.in.saleable.production.rate. from.0.9.Mtpa.in.Q2.to.1.4.Mtpa.in.Q4; •. Narrabri.Stage.1.construction.is.on.track.to.reach.the.coal.seam.late.in.2009; •. Rail.track.upgrades.were.commissioned.through.to.Narrabri,.resulting.in.more.paths.and.longer.trains; •. Development.of.the.NCIG.port.facility.is.progressing.on.schedule..First.coal.is.scheduled.to.be.shipped.by.the.end.of. March.2010. 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . 35 m L i . l a o C . n e v a h e t i h W Directors’ report 9.3 Review of operations The.Managing.Director’s.Report,.containing.a.review.of.operations,.commences.on.page.6.of.this.Annual.Financial.Report.. This,.together.with.the.Chairman’s.Letter.and.the.sections.headed.‘Significant.Changes.in.State.of.Affairs’.and.‘Significant. Events.Subsequent.to.Balance.Date’.in.this.report,.provides.a.review.of.operations.of.the.consolidated.entity.during.the.year.and. subsequent.to.the.reporting.date. 10. 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. 11. Events subsequent to reporting date In.the.interval.between.the.end.of.the.financial.year.and.the.date.of.this.report.there.has.not.arisen.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.other.than.the.following: •. During.July.2009,.the.Group.ceased.operations.from.the.Canyon.mine.as.it.had.reached.the.end.of.its.mine.life. •. On.6.August.2009,.the.Group.announced.it.had.entered.into.a.Heads.of.Agreement.to.sell.a.7.5%.interest.in.its.Narrabri. Joint.Venture.Project.to.a.Korean.Consortium,.comprising.Daewoo.International.Corporation.(Daewoo).and.Korea.Resources. Corporation.(KORES),.for.A$125.million.plus.7.5%.of.all.costs.incurred.since.1.January.2008..The.transaction.is.subject.to.the. approval.of.Whitehaven,.Daewoo.and.KORES.Boards,.and.the.obtaining.of.relevant.Australian.and.Korean.regulatory.approvals. •. On.30.July.2009,.Whitehaven.Coal.Limited.successfully.completed.an.institutional.placement.of.60,680,040.new.ordinary. shares.at.$3.05.per.share,.raising.approximately.net.$177.million.(‘Institutional.Placement’)..The.Institutional.Placement.was. oversubscribed.with.strong.demand.from.both.existing.and.new.Australian.and.international.investors. •. On.7.September.2009,.Whitehaven.Coal.Limited.successfully.raised.$26.million.under.a.Share.Purchase.Plan..A.total.of. 8,501,896.ordinary.shares.were.issued.under.the.plan.at.a.price.of.$3.05.per.share,.the.same.price.as.the.institutional. placement.completed.on.30.July.2009. •. The.directors.have.resolved.to.pay.a.fully.franked.dividend.of.6.0.cents.per.ordinary.share.(refer.Note.26). The.financial.effect.of.the.above.matters.has.not.been.brought.to.account.in.the.financial.statements.for.the.year.ended. 30.June.2009.but.will.be.recognised.in.future.financial.periods. 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. 36 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 Austen.Perrin Austen.Perrin Austen.Perrin Number.of. options.granted 33,333 33,333 33,334 Exercise.price Expiry.date $1.00 $1.00 $1.00 26.Oct.2011 26.Oct.2012 26.Oct.2013 All.options.were.granted.during.the.financial.year..No.options.have.been.granted.since.the.end.of.the.financial.year..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.the.financial.year,.the.Company.issued.the.following.ordinary.shares.as.a.result.of.the.exercise.of.options. Director related entities Tony.Haggarty Andy.Plummer Executives Leigh.Whitton Tony.Galligan 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.2010 30.June.2010 31.December.2010 30.June.2011 26.October.2011 2.November.2011 30.June.2012 21.October.2012 26.October.2012 2.November.2012 26.October.2013 2.November.2013 4.April.2017 Number.. of.shares Amount.paid. $/share 7,614,241 7,614,241 33,333 33,333 Exercise.price $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $2.50 $1.00 $1.00 $1.00 $1.00 $1.00 1.00 1.00 1.00 1.00 Number.of. shares 66,668 33,333 16,667 16,666 66,666 33,333 33,334 3,000,000 66,666 33,333 66,668 33,334 14,652,532 For.details.of.options.issued.to.key.management.personnel.refer.to.section.7.of.the.Directors’.report. 37 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W Directors’ 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.EPA.prosecuted.Werris.Creek.Coal.Pty.Ltd.for.a.breach.of.condition.of.an.environmental.licence..Werris.Creek.Coal.Pty. Ltd.pleaded.guilty.to.the.strict.liability.offence.and.was.fined.$49,000..This.money.is.to.be.allocated.to.the.local.Quipolly.Dam. Regeneration.Project..Werris.Creek.Coal.Pty.Ltd.was.also.ordered.to.pay.the.prosecutors.costs.of.$34,700.and.put.a.notice.in. the.Sydney.Morning.Herald.and.Australian.Financial.Review.to.publicise.the.offence.to.deter.other.offenders..The.Judge.found. that.the.breach.of.licence.was.not.foreseeable,.that.minor.or.no.environmental.harm.was.caused.and.Werris.Creek.Coal.is. only.responsible.because.it.is.the.licence.holder..Sixty.per.cent.of.the.costs.and.fine.monies.are.recoverable.under.the.Sale.of. Shares.agreement. 38 16. NON-AUDIT SERvICES During.the.year.Ernst.&.Young.and.KPMG,.the.Company’s.current.and.previous.auditor.respectively,.have.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 2001.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.110.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,.Ernst.&.Young.and.KPMG,.and.their.related.practices.for.non-audit. services.provided.during.the.year.are.set.out.below.. In.AUD Non-audit services Ernst & Young Due.diligence.services Review.of.Greenhouse.Gas.emissions Other.assurance.services. KPMG Australia Accounting.advice. Taxation.services 39 Consolidated 2009 2008 202,996 32,000 43,900 278,896 – 96,780 96,780 – – – – 4,200 225,377 229,577 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W Directors’ report 17. LEAD AUDITOR’S INDEPENDENCE DECLARATION The.Lead.auditor’s.independence.declaration.is.set.out.on.page.41.and.forms.part.of.the.Directors’.report.for.financial.year. ended.30.June.2009. 18. ROUNDING The.Company.is.of.a.kind.referred.to.in.ASIC.Class.Order.98/100.and.dated.10.July.1998.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: John Conde Chairman Dated.at.Sydney.this.16th.day.of.September.2009 40 auDitor’s inDepenDence Declaration 41 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W financial report Income.Statements..................................................................................................................... 43 Balance.Sheets............................................................................................................................ 44 Statements.of.Changes.in.Equity........................................................................................... 45 Statements.of.Cash.Flows.........................................................................................................47 Notes.to.the.Financial.Statements......................................................................................... 48 Directors’.Declaration...............................................................................................................100 Independent.Auditor’s.Report................................................................................................101 ASX.Additional.Information.....................................................................................................103 42 income statements for the Year enDeD 30 june 2009 Selling.and.distribution.expenses (44,433) (24,631) 10 (10,570) (12,646) (272) (2,687) In.thousands.of.AUD Revenue. Operating.expenses Depreciation.and.amortisation Cost of sales Gross profit Other.income Before.significant.items Significant.items Other.expenses Administrative.expenses Before.significant.items Significant.items Profit/(loss) before financing income Financial.income Financial.expenses Before.significant.items Significant.items Note 8 7 12 12 7 Net financing income/(expense) 12 (16,931) Profit/(loss) before tax Income.tax.(expense)/benefit Before.significant.items Significant.items Profit/(loss) for the year attributable to equity holders of the parent Before.significant.items Significant.items Net profit/(loss) attributable to equity holders Earnings per share: Basic.earnings.per.share.(cents.per.share) Diluted.earnings.per.share.(cents.per.share) Earnings per share before significant items: Basic.earnings.per.share.(cents.per.share) Diluted.earnings.per.share.(cents.per.share) 7 13 36 36 36 36 Consolidated Company 2009 2008 2009 2008 489,397 252,000 (296,251) (177,948) (26,290) (18,091) (322,541) (196,039) 166,856 55,961 9 9 7,598 263,715 271,313 5,308 55,629 60,937 – – – – – – – – – – – – – – – – (9,446) (6,938) (7,061) – (16,384) (7,061) – – – (5) – (5) 366,782 10,203 72,560 8,912 (272) (2,692) 30,047 334 (7,443) (8,881) (5,043) (10,558) (16,576) (27,134) 349,851 – – (7,443) (8,881) 1,469 74,029 21,166 20,894 (32,332) (5,486) 2,614 (73,307) (16,689) – (105,639) (22,175) 2,614 – (5,043) (4,709) (7,401) (99) – (99) 77,318 166,894 244,212 12,914 38,940 51,854 23,508 (7,500) – – 23,508 (7,500) 60.5 60.3 19.1 19.1 14.5 14.4 3.6 3.5 The.income.statements.are.to.be.read.in.conjunction.with.the.notes.to.the.financial.statements.set.out.on.pages.48.to.99. . 43 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W balance sheets as at 30 june 2009 In.thousands.of.AUD Assets Cash.and.cash.equivalents Trade.and.other.receivables Inventories Deferred.stripping Derivative.financial.instruments Total current assets Trade.and.other.receivables Investments Property,.plant.and.equipment Exploration.and.evaluation 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 Derivative.financial.instruments Total current liabilities Non-current liabilities Payables Interest-bearing.loans.and.borrowings Deferred.tax.liabilities Deferred.income Provisions Derivative.financial.instruments Total non-current liabilities Total liabilities Net assets Equity Issued.capital Consolidated Company Note 2009 2008 2009 2008 14 15 16 17 15 18 19 20 21 13 17 22 23 24 13 25 17 22 23 13 25 17 131,159 173,550 13,869 5,716 31,208 355,502 98,343 37 80,867 48,996 9,353 2,029 26,670 167,915 27,217 81 50 276,968 170,400 – – – – – – 277,049 170,450 – – 37 464,750 464,750 508,838 388,921 3,838 37,394 – 3,047 651,497 1,006,999 64,799 33,421 3,966 106,874 245 1,738 3,093 1,774 17,382 – 20,106 455,437 623,352 37,871 22,959 2,159 10,143 123 593 – – – – 2,810 – 467,560 744,609 – – – 954 – 465,704 636,154 156,918 148,070 – – – – 87,726 9,995 – – – – – – 214,136 73,848 244,644 158,065 – 44,847 4,415 701 14,323 5,732 70,018 284,154 722,845 10,431 32,267 9,957 513 6,807 – 59,975 133,823 489,529 – – – – – – – – – – – – – – 244,644 499,965 158,065 478,089 26(a) 367,352 351,374 496,352 480,374 Share.based.payments.reserve Hedge.reserve Retained.earnings/(accumulated.deficit) Total equity attributable to equity holders of the parent 442 16,298 338,753 722,845 1,211 25,562 111,382 489,529 442 – 1,211 – 3,171 (3,496) 499,965 478,089 The.balance.sheets.are.to.be.read.in.conjunction.with.the.notes.to.the.financial.statements.set.out.on.pages.48.to.99. 44 statements of changes in equitY for the Year enDeD 30 june 2009 Consolidated In.thousands.of.AUD Issued.. capital Share.based. payments. reserve Note Retained.. earnings Hedge. reserve Total Opening balance at 1 July 2007 192,883 44 59,528 – 252,455 Effective.portion.of.changes.in.fair.value. of.cash.flow.hedges,.net.of.tax Change.in.fair.value.of.cash.flow.hedges. transferred.to.profit.and.loss,.net.of.tax Total.income.and.expense.recognised. directly.in.equity Net.profit.for.the.period Total.recognised.income.and.expense. for.the.period Share.based.payments,.net.of.tax Share.options.exercised Transfer.from.share.based.payment.reserve Shares.issued Share.issue.costs Closing balance at 30 June 2008 Opening balance at 1 July 2008 Effective.portion.of.changes.in.fair.value. of.cash.flow.hedges,.net.of.tax Change.in.fair.value.of.cash.flow.hedges. transferred.to.profit.and.loss,.net.of.tax Total.income.and.expense.recognised. directly.in.equity Net.profit.for.the.period Total.recognised.income.and.expense. for.the.period Dividends.paid Share.based.payments,.net.of.tax Share.options.exercised Transfer.from.share.based.payment.reserve Costs.of.shares.issued,.net.of.tax . – . – . – – . – – 14,227 1,520 145,366 (2,622) 351,374 351,374 . – . – . – – . – – – 15,295 1,041 (358) 33 26 26 26 26 33 26 26 26 . – . – . – – . – 2,687 – (1,520) – – 1,211 1,211 . – . – . – – . – – 272 – (1,041) – . – . – . – 51,854 . 51,854 – – – – – . 33,643 . (8,081) . 25,562 – . 25,562 – – – – – . 33,643 . (8,081) . 25,562 51,854 . 77,416 2,687 14,227 – 145,366 (2,622) 111,382 25,562 489,529 111,382 25,562 489,529 . – . – . – 244,212 . 244,212 (16,841) – – – – . (23,021) . (23,021) . 13,757 . (9,264) . 13,757 . (9,264) – 244,212 . (9,264) – – – – – . 234,948 (16,841) 272 15,295 – (358) Closing balance at 30 June 2009 367,352 442 338,753 16,298 722,845 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W 45 statements of changes in equitY (continueD) for the Year enDeD 30 june 2009 Company In.thousands.of.AUD Issued.. capital Share.based. payments. reserve Note Retained.. earnings Hedge. reserve Opening balance at 1 July 2007 321,883 Net.loss.for.the.period Total.recognised.income.and.expense.for. the.period Share.based.payments Transfer.from.share.based.payment.reserve Share.options.exercised Shares.issued Share.issue.costs Closing balance at 30 June 2008 Opening balance at 1 July 2008 Net.loss.for.the.period Total.recognised.income.and.expense.for. the.period Dividends.paid Share.based.payments Transfer.from.share.based.payment.reserve Share.options.exercised Cost.of.shares.issued.net.of.tax – . – – 1,520 14,227 145,366 (2,622) 480,374 480,374 – . – – – 1,041 15,295 (358) 33 26 26 26 26 33 26 26 26 44 – . – 2,687 (1,520) – – – 1,211 1,211 – . – – 272 (1,041) – – 4,004 (7,500) . (7,500) – – – – – (3,496) (3,496) 23,508 . 23,508 (16,841) – – – – Closing balance at 30 June 2009 496,352 442 3,171 – – . – – – – – – – – – . – – – – – – – Total 325,931 (7,500) . (7,500) 2,687 – 14,227 145,366 (2,622) 478,089 478,089 23,508 . 23,508 (16,841) 272 – 15,295 (358) 499,965 The.statements.of.changes.in.equity.are.to.be.read.in.conjunction.with.the.notes.to.the.financial.statements.set.out.on. pages.48.to.99. 46 statements of cash flows for the Year enDeD 30 june 2009 In.thousands.of.AUD Note 2009 2008 2009 2008 Consolidated Company 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 518,748 236,464 (383,132) (218,612) 135,616 (4,957) 4,425 17,852 (4,916) 3,398 – – – – 47 (12,419) (4,348) (12,419) Net cash from/(used in) operating activities 31 122,665 11,986 (12,372) Cash flows from investing activities Proceeds.from.sell.down.of.Narrabri.project 7 59,021 Proceeds.from.sale.of.property,.plant.and.equipment Acquisition.of.subsidiary,.net.of.cash.acquired – – 67,500 3,021 (36,730) Acquisition.of.property,.plant.and.equipment (130,677) (40,027) – (5) (5) – 334 (4,610) (4,281) – – – – – – – – – – – – – – Acquisition.of.intangible.assets Exploration.and.evaluation.expenditure Contract.guarantee.security Loans.to.related.entities Loans.repaid.by.related.entities (61) (2,064) 18,838 (5,155) (861) (102) (25,000) (7,943) 13,949 (144,262) – 11,338 – – Net cash from/(used in) investing activities (60,098) (28,804) 13,949 (144,262) Cash flows from financing activities Proceeds.from.the.issue.of.share.capital Proceeds.from.the.exercise.of.share.options Transaction.costs.paid.on.issue.of.share.capital 26 26 Repayment.of.borrowings Payment.of.finance.lease.liabilities Dividends.paid Net cash from/(used in) financing activities Net.increase/(decrease).in.cash.and.cash. equivalents Cash.and.cash.equivalents.at.1.July – 135,366 – 135,366 15,295 – – (10,729) (16,841) (12,275) 50,292 80,867 14,227 (3,815) (61,223) (8,055) 15,295 – – – – (16,841) 14,227 (3,815) – – – 76,500 59,682 21,185 80,867 (1,546) 145,778 31 50 81 (2,765) 2,815 50 Cash and cash equivalents at 30 June 14 131,159 The.Statements.of.Cash.Flows.are.to.be.read.in.conjunction.with.the.notes.to.the.financial.statements.as.set.out.on.. pages.48.to.99. 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . 47 m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 1. REPORTING ENTITY The.financial.report.for.Whitehaven.Coal.Limited.(‘Whitehaven’.or.‘Company’).for.the.year.ended.30.June.2009.was.authorised. for.issue.in.accordance.with.a.resolution.of.the.directors.on.16.September.2009..Whitehaven.Coal.Limited.is.a.company. limited.by.shares.incorporated.and.domiciled.in.Australia.whose.shares.are.publically.traded.on.the.Australian.Stock.Exchange.. The.address.of.the.Company’s.registered.office.is.Level.9,.1.York.Street,.Sydney.NSW.2000..The.principal.activity.of.the. consolidated.entity.is.the.development.and.operation.of.coal.mines.in.New.South.Wales. 2. BASIS OF PREPARATION The.financial.report.is.a.general.purpose.financial.report.which.has.been.prepared.in.accordance.with.the.requirements.of. the.Corporations.Act.2001,.Australian.Accounting.Standards.(AAS).and.other.authoritative.pronouncements.of.the.Australian. Accounting.Standards.Board.(AASB).. The.financial.report.has.been.prepared.on.a.historical.cost.basis.except.for.derivative.financial.instruments.which.are.measured. at.fair.value.(refer.note.3g). The.Company.is.of.a.kind.referred.to.in.ASIC.Class.Order.98/100.and.dated.10.July.1998.and.in.accordance.with.that. Class.Order,.all.financial.information.presented.in.Australian.dollars.has.been.rounded.to.the.nearest.thousand.unless. otherwise.stated. a) Statement of compliance The.financial.report.complies.with.Australian.Accounting.Standards.and.International.Financial.Reporting.Standards.(IFRS). issued.by.the.International.Accounting.Standards.Board.(IASB).and.interpretations.of.the.International.Financial.Reporting. Interpretations.Committee.(IFRIC). b) Functional and presentation currency Both.the.functional.and.presentation.currency.of.the.Company.and.of.all.entities.in.the.consolidated.entity.is.Australian. dollars.($). 3. SUMMARY OF 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. Comparative information The.income.statement.comparatives.have.been.restated.to.show.$4,450,000.plant.hire.revenue.as.other.income.rather.than. operating.income.as.disclosed.in.the.annual.financial.report.for.the.year.ended.30.June.2008. The.balance.sheet.comparatives.have.been.restated.to.reflect.share.based.payment.transactions.in.a.share.based.payment. reserve.rather.than.retained.earnings.as.disclosed.in.the.30.June.2008.financial.report..The.impact.of.this.restatement.has. been.to.increase.share.capital.by.$1,520,000,.decrease.retained.earnings.by.$2,731,000.and.recognise.a.share.based. payment.reserve.of.$1,211,000. The.balance.sheet.comparatives.have.been.restated.to.show.$25,000,000.cash.held.as.security.for.a.sale.and.purchase. agreement.as.trade.and.other.receivables. The.balance.sheet.comparatives.have.been.restated.to.show.overburden.in.advance,.incurred.prior.to.production,.in.mine. development..The.impact.of.this.restatement.has.been.to.decrease.deferred.stripping.assets.by.$21,103,000.and.to.increase. mining.property.and.development.by.$21,103,000. 48 notes to the financial statements 30 june 2009 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) a) Basis of consolidation The.consolidated.financial.report.of.the.Company.for.the.financial.year.ended.30.June.2009.comprises.the.Company. and.its.subsidiaries.(together.referred.to.as.the.‘consolidated.entity’).and.the.consolidated.entity’s.interest.in.jointly. controlled.operations. (i) Subsidiaries Subsidiaries.are.all.those.entities.over.which.the.consolidated.entity.has.the.power.to.govern.the.financial.and.operating.policies. so.as.to.obtain.benefits.from.their.activities..In.assessing.control,.potential.voting.rights.that.are.currently.exercisable.are.taken. into.account..Subsidiaries.are.fully.consolidated.from.the.date.that.control.commences.until.the.date.that.control.ceases.. The.financial.statements.of.the.subsidiaries.are.prepared.for.the.same.reporting.period.as.the.Company,.using.consistent. accounting.policies. Investments.in.subsidiaries.are.carried.at.their.cost.of.acquisition.in.the.Company’s.financial.statements. (ii) Jointly controlled operations The.consolidated.entity.recognises.its.interest.in.jointly.controlled.operations.by.recognising.its.interest.in.the.assets.and. liabilities.of.the.joint.venture..The.consolidated.entity.also.recognises.the.expenses.it.incurs.and.its.share.of.the.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.initially.recorded.in.the.functional.currency.at.the.rate.ruling.at.the.date.of.the.transaction.. Monetary.assets.and.liabilities.denominated.in.foreign.currencies.are.retranslated.at.the.rate.of.exchange.ruling.at.the.balance. sheet.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.as.at.the. date.of.the.initial.transaction. c) Segment reporting A.business.segment.is.a.group.of.assets.and.operations.engaged.in.providing.products.or.services.that.are.subject.to.risks.and. returns.that.are.different.to.those.of.other.business.segments..A.geographical.segment.is.engaged.in.providing.products.or. services.within.a.particular.economic.environment.and.is.subject.to.risks.and.returns.that.are.different.from.those.of.segments. operating.in.other.economic.environments. d) Cash and cash equivalents Cash.and.cash.equivalents.comprise.cash.balances.and.call.deposits..For.the.purpose.of.the.Statement.of.Cash.Flows,.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. e) Trade and other receivables Trade.receivables,.which.generally.have.5-21.day.terms,.are.recognised.initially.at.fair.value.and.subsequently.measured.at. amortised.cost.using.the.effective.interest.method,.less.an.allowance.for.impairment..Recoverability.of.trade.receivables.is. reviewed.on.an.ongoing.basis. Receivables.due.in.more.than.one.year.are.recognised.initially.at.fair.value,.discounted.back.to.net.present.value.based.on. appropriate.discount.rates.for.the.consolidated.entity. 49 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) f) 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.coal.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. Inventory.are.classified.as.follows: •. Run.of.mine:.material.extracted.from.through.the.mining.process. •. Finished.goods:.products.that.have.passed.through.all.stages.of.the.production.process. •. Consumables:.goods.or.supplies.to.be.either.directly.or.indirectly.consumed.in.the.production.process.. g) Derivative financial instruments The.consolidated.entity.uses.derivative.financial.instruments.to.hedge.its.risks.associated.with.foreign.currency.rate.fluctuations. arising.from.operating.activities. Derivative.financial.instruments.are.initially.recognised.at.fair.value.on.the.date.on.which.a.derivative.contract.is.entered.into,. and.are.subsequently.remeasured.to.fair.value..Any.gains.and.losses.arising.from.changes.in.the.fair.value.of.derivatives.are. accounted.for.as.described.below..The.fair.values.of.forward.exchange.contracts.are.calculated.by.reference.to.current.forward. exchange.rates.for.contracts.with.similar.maturity.profiles..All.attributable.transaction.costs.are.recognised.in.the.income. statement.as.incurred.. Cash flow hedges Cash.flow.hedges.are.hedges.of.the.consolidated.entity’s.exposure.to.variability.in.cash.flows.that.is.attributable.to.a.particular. risk.associated.with.a.recognised.asset.or.liability.that.is.a.firm.commitment.and.that.could.affect.profit.or.loss..Changes.in.the. fair.value.of.the.hedging.instrument.designated.as.a.cash.flow.hedge.are.recognised.directly.in.equity.to.the.extent.that.the. hedge.is.effective..To.the.extent.that.the.hedge.is.ineffective,.changes.in.fair.value.are.recognised.in.profit.or.loss.. Amounts.taken.to.equity.are.transferred.out.of.equity.and.included.in.the.measurement.of.the.hedged.transaction.(coal.sales). when.the.forecast.transaction.occurs. The.consolidated.entity.tests.each.of.the.designated.cash.flow.hedges.for.effectiveness.on.at.each.balance.date,.both. retrospectively.and.prospectively,.by.using.the.dollar.offset.method..If.the.testing.falls.within.the.80:125.range,.the.hedge.is. considered.to.be.highly.effective.and.continues.to.be.designated.as.a.cash.flow.hedge. If.the.hedging.instrument.expires.or.is.sold,.terminated.or.exercised.without.replacement.or.rollover,.or.if.it.no.longer.meets.the. criteria.for.hedge.accounting.(due.to.it.being.ineffective),.then.hedge.accounting.is.discontinued.prospectively..The.cumulative. gain.or.loss.previously.recognised.in.equity.remains.in.equity.until.the.forecast.transaction.occurs. Economic hedges Derivatives.which.do.not.qualify.for.hedge.accounting.are.measured.at.fair.value.with.changes.in.fair.value.recognised.in.the. profit.and.loss. 50 notes to the financial statements 30 june 2009 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) h) Investments and other financial assets Financial.assets.in.the.scope.of.AASB.139.are.categorised.as.either.financial.assets.at.fair.value.through.profit.and.loss,.loans. and.receivables,.held-to-maturity.investments,.or.available-for-sale.financial.assets. Financial.assets.are.recognised.initially.at.fair.value.plus,.for.assets.not.at.fair.value.through.profit.or.loss,.any.directly. attributable.transaction.costs. Recognition and derecognition 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.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.. i) 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..Cost. also.may.include.transfers.from.equity.of.any.gain.or.loss.on.qualifying.cash.flow.hedges.of.foreign.currency.purchases.of. property,.plant.and.equipment..Purchased.software.that.is.integral.to.the.functionality.of.the.related.equipment.is.capitalised.as. part.of.that.equipment..Borrowing.costs.related.to.the.acquisition.or.construction.of.qualifying.assets.are.capitalised.as.part.of. the.cost.of.the.asset. Mine.property.and.development.assets.include.costs.transferred.from.exploration.and.evaluation.assets.once.technical.feasibility. and.commercial.viability.of.an.area.of.interest.are.demonstrable.and.subsequent.costs.to.develop.the.mine.to.production.phase. 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. Gains.and.losses.on.disposal.of.an.item.of.property,.plant.and.equipment.are.determined.by.comparing.the.proceeds.from. disposal.with.the.carrying.amount.of.property,.plant.and.equipment.and.are.recognised.net.within.‘other.income’.. (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.the.income. statement.as.incurred. (iii) Depreciation Depreciation.is.charged.to.the.income.statement.on.a.straight-line.or.units.of.production.basis.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% 11.–.14% •. 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. 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . 51 m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) j) Mine development costs The.cost.of.acquiring.mineral.reserves.and.mineral.resources.are.capitalised.on.the.balance.sheet.as.incurred..Capitalised.costs. (development.expenditure).include.expenditure.incurred.to.expand.the.capacity.of.a.mine.and.to.maintain.production..Mine. development.costs.include.acquired.proved.and.probable.mineral.resources.at.cost.at.acquisition.date. Mineral.reserves.and.capitalised.mine.development.expenditure.are,.upon.commencement.of.production,.depreciated.over. the.remaining.life.of.mine..The.net.carrying.amounts.of.mineral.reserves.and.resources.and.capitalised.mine.development. expenditure.at.each.mine.property.are.reviewed.for.impairment.either.individually.or.at.the.cash-generating.unit.level.when. events.and.changes.in.circumstances.indicate.that.the.carrying.amount.may.not.be.recoverable..To.the.extent.to.which.these. values.exceed.their.recoverable.amounts,.that.excess.is.fully.provided.against.in.the.financial.year.in.which.this.is.determined. k) 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.equipment. (ii) Water access rights The.consolidated.entity.holds.water.access.rights,.which.have.been.determined.to.have.an.indefinite.life..The.water.access. rights.have.been.recognised.at.cost.and.are.assessed.annually.for.impairment.. (iii) Rail access rights Rail.access.rights.have.a.finite.useful.life.and.are.carried.at.cost.less,.where.applicable,.any.accumulated.amortisation.and. accumulated.impairment.losses..The.carrying.values.of.rail.access.rights.are.reviewed.to.ensure.they.are.not.in.excess.of.their. recoverable.amounts..Rail.access.rights.are.amortised.over.the.life.of.the.mine.or.access.agreement.using.a.unit.sold.basis.. (iv) Other intangible assets Other.intangible.assets.that.are.acquired.by.the.consolidated.entity,.which.have.finite.useful.lives,.are.measured.at.cost.less. accumulated.amortisation.and.accumulated.impairment.losses..Amortisation.is.charged.to.the.income.statement.on.a.straight. line.basis.over.the.estimated.life.of.the.mining.property.to.which.the.intangible.asset.relates. (v) Subsequent expenditure Subsequent.expenditure.is.capitalised.only.when.it.increases.the.future.economic.benefits.embodied.in.the.specific.asset.to. which.it.relates..All.other.expenditure.is.recognised.in.the.income.statement.as.incurred. 52 notes to the financial statements 30 june 2009 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) l) 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. m) Leases The.determination.of.whether.an.arrangement.is.or.contains.a.lease.is.based.on.the.substance.of.the.arrangement.and.requires. an.assessment.of.whether.the.fulfilment.of.the.arrangement.is.dependent.on.the.use.of.a.specific.asset.and.the.arrangement. conveys.a.right.to.use.the.asset. Consolidated entity as lessee Finance.leases,.which.transfer.to.the.consolidated.entity.substantially.all.the.risks.and.benefits.incidental.to.ownership.of.the. leased.item,.are.capitalised.at.the.inception.of.the.lease.at.an.amount.equal.to.the.lower.of.the.fair.value.of.the.leased.asset. and.the.present.value.of.the.minimum.lease.payments. Lease.payments.are.apportioned.between.the.finance.charges.and.the.reduction.of.the.lease.liability.so.as.to.achieve.a. constant.rate.of.interest.on.the.remaining.balance.of.the.liability..Finance.charges.are.recognised.as.an.expense.in.the.income. statement..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. Capitalised.leased.assets.are.depreciated.over.the.shorter.of.the.estimated.useful.life.of.the.asset.and.the.lease.term.. Operating.lease.payments.are.recognised.as.an.expense.in.the.income.statement.on.a.straight-line.basis.over.the.lease.term.. Operating.lease.incentives.are.recognised.as.a.liability.when.received.and.subsequently.reduced.by.allocating.lease.payments. between.rental.expense.and.a.reduction.of.the.liability.. n) Impairment (i) Financial assets A.financial.asset.is.assessed.at.each.reporting.date.to.determine.whether.there.is.any.objective.evidence.that.it.is.impaired..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.. 53 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) n) Impairment (continued) (ii) Non-financial assets The.carrying.amounts.of.the.consolidated.entity’s.non-financial.assets,.other.than.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. The.recoverable.amount.of.an.asset.or.cash-generating.unit.is.the.greater.of.its.value.in.use.and.its.fair.value.less.costs.to.sell.. In.assessing.value.in.use,.the.estimated.future.cash.flows.are.discounted.to.their.present.value.using.a.pre-tax.discount.rate. that.reflects.current.market.assessments.of.the.time.value.of.money.and.the.risks.specific.to.the.asset..For.the.purpose.of. impairment.testing,.assets.are.grouped.together.into.the.smallest.group.of.assets.that.generates.cash.inflows.from.continuing. use.that.are.largely.independent.of.the.cash.inflows.of.other.assets.or.groups.of.assets.(the.‘cash-generating.unit’).. 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.to.reduce.the.carrying.amount.of.the.assets.in. the.unit.(group.of.units).on.a.pro.rata.basis. o) Trade and other payables Trade.and.other.payables.are.carried.at.amortised.cost..Due.to.their.short-term.nature.they.are.not.discounted..They.represent. liabilities.for.goods.and.services.provided.to.the.consolidated.entity.prior.to.the.end.of.the.financial.year.that.are.unpaid.and. arise.when.the.consolidated.entity.becomes.obliged.to.make.future.payments.in.respect.of.the.purchase.of.these.goods.and. services..The.amounts.are.unsecured.and.are.usually.paid.within.30.days.of.recognition. p) Interest bearing loans and borrowings All.loans.and.borrowings.are.initially.recognised.at.the.fair.value.of.the.consideration.received.less.directly.attributable. transaction.costs. After.initial.recognition,.interest-bearing.loans.and.borrowings.are.subsequently.measured.at.amortised.cost.using.the.effective. interest.method..Fees.paid.on.the.establishment.of.loan.facilities.that.are.yield.related.are.included.as.part.of.the.carrying. amount.of.the.loans.and.borrowings. q) Employee benefits (i) Wages, salaries, annual leave and sick leave Liabilities.for.wages,.salaries,.annual.leave.and.sick.leave.are.recognised.in.respect.of.employees’.services.up.to.the.reporting. date..They.are.measured.at.the.amounts.expected.to.be.paid.when.the.liabilities.are.settled.i.e..at.undiscounted.amounts.based. on.remuneration.wage.and.salary.rates.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. (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. 54 notes to the financial statements 30 june 2009 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) q) Employee benefits (continued) (iii) Defined contribution superannuation funds Obligations.for.contributions.to.defined.contribution.superannuation.funds.are.recognised.as.an.expense.in.the.income. statement.as.incurred. (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. r) 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.resources.embodying.economic.benefits.will.be.required.to.settle.the. obligation.and.a.reliable.estimate.can.be.made.of.the.amount.of.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. (i) Mine rehabilitation and closure 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.based.on.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. 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . 55 m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) s) Contributed equity Ordinary.shares.are.classified.as.equity..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. t) Revenue recognition (i) Sale of coal 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..Transfer.of.risk.and.rewards.are.considered.to.have.passed.to.the.buyer.under.the.terms.of.the. individual.contracts. (ii) Rental income Rental.income.is.recognised.in.the.income.statement.on.a.straight-line.basis.over.the.term.of.the.lease..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.. (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. u) 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,.except.where.capitalised.as.part.of.a.qualifying.asset.. Foreign.currency.gains.and.losses.are.reported.on.a.net.basis. v) 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.assets.and.liabilities.for.the.current.and.prior.periods.are.measured.at.the.amount.expected.to.be.recovered.or.paid. to.the.taxation.authorities.based.on.the.taxable.income.for.the.year,.using.tax.rates.enacted.or.substantively.enacted.at.the. balance.sheet.date. Deferred.income.tax.is.provided.on.all.temporary.differences.at.the.balance.sheet.date.between.the.tax.basis.of.assets.and. liabilities.and.their.carrying.amounts.for.financial.reporting.purposes,.other.than.for.the.following.temporary.differences:. •. when.the.deferred.income.tax.asset/liability.arises.from.the.initial.recognition.of.goodwill.or.of.an.asset.or.liability.in.a. transaction.that.is.not.a.business.combination.and.that.affects.neither.accounting.nor.taxable.profit, •. when.the.taxable.temporary.difference.is.associated.with.investments.in.subsidiaries.and.jointly.controlled.entities.to.the. extent.that.it.is.probable.that.they.will.not.reverse.in.the.foreseeable.future.. Deferred.income.tax.assets.are.recognised.only.to.the.extent.that.it.is.probable.that.future.taxable.profits.will.be.available. against.which.the.deductible.temporary.differences.can.be.utilised..The.carrying.amount.of.deferred.income.tax.assets.is. reviewed.at.each.reporting.date.and.reduced.to.the.extent.that.it.is.no.longer.probable.that.sufficient.taxable.profit.will.be. available.to.allow.all.or.part.of.the.deferred.income.tax.asset.to.be.utilised. Deferred.income.tax.assets.and.liabilities.are.measured.at.the.tax.rates.that.are.expected.to.apply.when.the.asset.is.realised. or.the.liability.settled,.based.on.tax.rates.and.tax.laws.that.have.been.enacted.or.substantively.enacted.by.the.reporting.date. 56 notes to the financial statements 30 june 2009 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) v) Income tax (continued) Deferred.tax.assets.and.liabilities.are.offset.only.if.a.legally.enforceable.right.exists.to.offset.current.tax.assets.and.liabilities,. and.the.deferred.tax.assets.and.liabilities.relate.to.income.taxes.levied.by.the.same.tax.authority.on.the.same.taxable.entity,.or. on.different.tax.entities,.but.they.intend.to.settle.current.tax.liabilities.and.assets.on.a.set.basis.or.their.tax.assets.and.liabilities. will.be.realised.simultaneously. 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.controlled.entities.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. (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. w) Goods and services tax Revenues,.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.and.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. 57 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) x) 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.2009,.but.have.not.been.applied.in. preparing.this.financial.report: Revised.AASB.3.Business Combinations.changes.the.application.of.acquisition.accounting.for.business.combinations. and.the.accounting.for.non-controlling.(minority).interests..Key.changes.include:.the.immediate.expensing.of.all.transaction. costs;.measurement.of.contingent.consideration.at.acquisition.date.with.subsequent.changes.through.the.income.statement;. measurement.of.non-controlling.(minority).interests.at.full.fair.value.or.the.proportionate.share.of.the.fair.value.of.the.underlying. net.assets;.guidance.on.issues.such.as.reacquired.rights.and.vendor.indemnities;.and.the.inclusion.of.combinations.by. contract.alone.and.those.involving.mutuals..The.revised.standard.becomes.mandatory.for.the.consolidated.entity’s.30.June. 2010.financial.statements..The.consolidated.entity.has.not.yet.determined.the.potential.effect.of.the.revised.standard.on.the. consolidated.entity’s.financial.report. Revised.AASB.1039.Concise Reporting..AASB.1039.was.revised.in.August.2008.to.achieve.consistency.with.AASB.8. Operating.Segments..The.revisions.include.changes.to.terminology.and.descriptions.to.ensure.consistency.with.the.revised. AASB.101.Presentation.of.Financial.Statements..The.consolidated.entity.has.not.yet.determined.the.potential.impact.of.the. revised.standard.on.the.consolidated.entity’s.financial.report. AASB.8.and.AASB.2007-3.Operating Segments and consequential amendments to other Australian Accounting Standards. introduce.the.‘management.approach’.to.segment.reporting..AASB.8,.which.becomes.mandatory.for.the.consolidated.entity’s. 30.June.2010.financial.statements,.will.require.the.disclosure.of.segment.information.based.on.the.internal.reports.regularly. reviewed.by.the.consolidated.entity’s.Chief.Operating.Decision.Maker.in.order.to.assess.each.segment’s.performance.and. to.allocate.resources.to.them..Currently.the.consolidated.entity.presents.segment.information.in.respect.of.its.business.and. geographical.segments.(see.note.6)..The.consolidated.entity.has.not.yet.determined.the.potential.impact.of.the.revised.standard. on.the.consolidated.entity’s.financial.report. Revised.AASB.101.Presentation of Financial Statements.introduces.as.a.financial.statement.(formerly.‘primary’.statement). the.‘statement.of.comprehensive.income’..The.revised.standard.does.not.change.the.recognition,.measurement.or.disclosure.of. transactions.and.events.that.are.required.by.other.accounting.standards..The.revised.AASB.101.will.become.mandatory.for.the. consolidated.entity’s.30.June.2010.financial.statements..The.consolidated.entity.has.not.yet.determined.the.potential.effect.of. the.revised.standard.on.the.consolidated.entity’s.disclosures. Revised.AASB.123.Borrowing Costs.removes.the.option.to.expense.borrowing.costs.and.requires.that.an.entity.capitalise. borrowing.costs.directly.attributable.to.the.acquisition,.construction.or.production.of.a.qualifying.asset.as.part.of.the.cost.of.that. asset..The.revised.AASB.123.will.become.mandatory.for.the.consolidated.entity’s.30.June.2010.financial.statements..There. will.be.no.impact.upon.adoption.of.the.revised.standard.to.the.consolidated.entity’s.financial.report.as.the.consolidated.entity’s. policy.is.to.capitalise.such.costs.. Revised.AASB.127.Consolidated and Separate Financial Statements..There.are.a.number.of.changes.arising.from.the.revision. to.AASB.127.relating.to.changes.in.ownership.interest.in.a.subsidiary.without.loss.of.control,.allocation.of.losses.of.a.subsidiary. and.accounting.for.the.loss.of.control.of.a.subsidiary..Specifically.in.relation.to.a.change.in.the.ownership.interest.of.a.subsidiary. (that.does.not.result.in.loss.of.control).–.such.a.transaction.will.be.accounted.for.as.an.equity.transaction..The.consolidated. entity.has.not.yet.determined.the.potential.effect.of.the.revised.standard.on.the.consolidated.entity’s.disclosures.. AASB.2008-1.Amendments to Australian Accounting Standard – Share-based Payment: Vesting Conditions and Cancellations.change.the.measurement.of.share-based.payments.that.contain.non-vesting.conditions..AASB.2008-1.becomes. mandatory.for.the.consolidated.entity’s.June.2010.financial.statements..The.consolidated.entity.has.not.yet.determined.the. potential.effect.of.the.amending.standard.on.the.consolidated.entity’s.financial.report. AASB.2008-5.Amendments to Australian Accounting Standards arising from the Annual Improvements Project.and. AASB.2008-6.Further amendments to Australian Accounting Standards arising from the Annual Improvements Project.become. mandatory.for.the.consolidated.entity’s.30.June.2010.and.30.June.2011.financial.statements,.respectively..The.consolidated. entity.has.not.yet.determined.the.potential.effect.of.the.amending.standards.on.the.consolidated.entity’s.financial.report. 58 notes to the financial statements 30 june 2009 4. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS The.preparation.of.the.consolidated.financial.statements.requires.management.to.make.judgements,.estimates.and.assumptions. that.affect.the.reported.amounts.in.the.financial.statements..Management.continually.evaluates.its.judgements.and.estimates. in.relation.to.assets,.liabilities,.contingent.liabilities,.revenue.and.expense..Management.bases.its.judgements.and.estimates.on. historical.experience.and.on.other.various.factors.it.believes.to.be.reasonable.under.the.circumstances,.the.result.of.which.form. the.basis.of.the.carrying.values.of.assets.and.liabilities.that.are.not.readily.apparent.from.other.sources. Management.has.identified.the.following.critical.accounting.policies.for.which.significant.judgements,.estimates.and. assumptions.are.made..Actual.results.may.differ.from.these.estimates.under.different.assumptions.and.conditions.and.may. materially.affect.financial.results.or.the.financial.position.reported.in.future.periods..Revisions.to.accounting.estimates.are. recognised.in.the.period.in.which.the.estimate.is.revised.and.in.any.future.periods.affected. 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. Mine rehabilitation The.consolidated.entity.assesses.its.mine.rehabilitation.provisions.at.each.reporting.date..Significant.estimates.and.assumptions. are.made.in.determining.the.provision.for.mine.rehabilitation.as.there.are.numerous.factors.that.will.affect.the.ultimate.liability. payable..These.factors.include.estimates.of.the.extent.and.costs.of.rehabilitation.activities,.technological.changes,.regulatory. changes,.cost.increases,.and.changes.in.discount.rates..Those.uncertainties.may.result.in.future.actual.expenditure.differing. from.the.amounts.currently.provided..The.provisions.at.balance.date.represent.management’s.best.estimate.of.the.present.value. of.the.future.rehabilitation.costs.required..Changes.to.estimated.future.costs.are.recognised.in.the.balance.sheet.by.adjusting. the.rehabilitation.asset.and.liability..If,.for.mature.mines,.the.revised.mine.assets.net.of.rehabilitation.provisions.exceed.the. carrying.value,.that.portion.of.the.increased.is.charged.directly.to.expense..For.closed.mines,.changes.to.estimated.costs.are. recognised.immediately.in.the.income.statement. Exploration and evaluation expenditure The.application.of.the.consolidated.entity’s.accounting.policy.for.exploration.and.evaluation.expenditure.requires.judgement.in. determining.whether.it.is.likely.that.future.economic.benefits.are.likely,.which.may.be.based.on.assumptions.about.future.events. or.circumstances..Estimates.and.assumptions.made.may.change.if.new.information.becomes.available..If,.after.expenditure. is.capitalised,.information.becomes.available.suggesting.that.the.recovery.of.expenditure.is.unlikely,.the.amount.capitalised.is. written.off.in.the.income.statement.in.the.period.when.the.new.information.becomes.available. Carrying value of assets All.mining.assets.are.amortised.over.the.shorter.of.the.estimated.remaining.useful.life.or.remaining.mine.life..For.mobile.and. other.equipment,.the.straight-line.method.is.applied.over.the.estimated.useful.life.of.the.asset.which.does.not.exceed.the. estimated.mine.life.based.on.proved.and.probable.mineral.reserves,.as.the.useful.lives.of.these.assets.are.considered.to.be. limited.to.the.life.of.the.relevant.mine. The.recoverable.amounts.of.cash-generating.units.and.individual.assets.have.been.determined.based.on.the.higher.of.value-in- use.calculations.and.fair.values..These.calculations.require.the.use.of.estimates.and.assumptions..It.is.reasonably.possible.that. the.coal.price.assumption.may.change.which.may.then.impact.our.estimated.life.of.mine.determinant.which.could.result.in.a. material.adjustment.to.the.carrying.value.of.tangible.assets. The.consolidated.entity.reviews.and.tests.the.carrying.value.of.assets.when.events.or.changes.in.circumstances.suggest.that. the.carrying.amount.may.not.be.recoverable..Assets.are.grouped.at.the.lowest.level.for.which.identifiable.cash.flows.are.largely. independent.of.cash.flows.of.other.assets.and.liabilities..If.there.are.indications.that.impairment.may.have.occurred,.estimates. are.prepared.of.expected.future.cash.flows.for.each.group.of.assets..Expected.future.cash.flows.used.to.determine.the.value. in.use.of.goodwill.and.tangible.assets.are.inherently.uncertain.and.could.materially.change.over.time..They.are.significantly. affected.by.a.number.of.factors.including.reserves.and.production.estimates,.together.with.economic.factors.such.as.spot.and. future.coal.prices,.discount.rates,.foreign.currency.exchange.rates,.estimates.of.costs.to.produce.reserves.and.future.capital. expenditure..The.related.carrying.amounts.are.disclosed.in.note.19. 59 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 4. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (CONTINUED) Intangible assets The.fair.values.of.intangible.assets.with.indefinite.useful.lives.are.based.on.the.outcome.of.recent.transactions.for.similar.assets. within.the.same.industry,.less.estimated.costs.of.disposal. Inventories Costs.that.are.incurred.in.or.benefit.the.productive.process.are.accumulated.as.stockpiles..Net.realisable.value.tests.are. performed.at.least.annually.and.represent.the.estimated.future.sales.price.of.the.product.based.on.prevailing.and.long-term. sale.prices,.less.estimated.costs.to.complete.production.and.bring.the.product.to.sale..Stockpiles.are.measured.by.estimating. the.number.of.tonnes.added.and.removed.from.the.stockpile,.the.tonnes.of.contained.anthracite.are.based.on.assay.data,.and. the.estimated.recovery.percentage.based.on.the.expected.processing.method..Stockpile.tonnages.are.verified.by.periodic. surveys..Although.the.quantities.of.recoverable.anthracite.are.reconciled,.the.nature.of.the.process.inherently.limits.the.ability.to. precisely.monitor.recoverability.levels..As.a.result.the.process.is.constantly.monitored.and.the.engineering.estimates.are.refined. based.on.actual.results.over.time..The.related.carrying.amounts.are.disclosed.in.note.16. Derivatives The.fair.value.of.forward.exchange.contracts.is.based.on.their.listed.market.price,.if.available..If.a.listed.market.price.is.not. available,.then.fair.value.is.estimated.by.discounting.the.difference.between.the.contractual.forward.price.and.the.current. forward.price.for.the.residual.maturity.of.the.contract.using.a.risk-free.interest.rate.(based.on.government.bonds). 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. 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. Share-based payment transactions The.consolidated.entity.measures.the.cost.of.equity.settled.transactions.with.employees.and.director-related.entities.by. reference.to.the.fair.value.of.the.equity.instruments.at.the.date.at.which.they.are.granted.. 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. 60 notes to the financial statements 30 june 2009 4. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (CONTINUED) Mineral reserves and resources The.estimated.quantities.of.economically.recoverable.reserves.and.resources.are.based.upon.interpretations.of.geological.and. geophysical.models.and.require.assumptions.to.be.made.including.factors.such.as.estimates.of.future.operating.performance,. future.capital.requirements.and.short.and.long-term.coal.prices..The.consolidated.entity.is.required.to.determine.and.report. reserves.and.resources.under.the.Australian.Code.for.Reporting.Mineral.Resources.and.Ore.Reserves.December.2004.(the. JORC.Code)..The.JORC.Code.requires.the.use.of.reasonable.investment.assumptions.to.calculate.reserves.and.resources.. Changes.in.reported.reserves.and.resources.can.impact.the.carrying.value.of.property,.plant.and.equipment,.provision.for. rehabilitation.as.well.as.the.amount.charged.for.amortisation.and.depreciation. Overburden in advance The.consolidated.entity.defers.advanced.stripping.costs.incurred.during.the.production.stage.of.its.operations..This.calculation. involves.the.use.of.judgements.and.estimates.such.as.estimates.of.the.tonnes.of.waste.to.be.removed.over.the.life.of.the. mining.area.and.economically.recoverable.reserves.extracted.as.a.result..Changes.in.a.mine’s.life.and.design.will.usually.result. in.changes.to.the.expected.stripping.ratio.(waste.to.mineral.reserves.ratio)..These.changes.are.accounted.for.prospectively. Recovery of deferred tax assets Deferred.tax.assets.are.recognised.for.deductible.temporary.differences.as.management.considers.that.it.is.probable.that. future.taxable.profits.will.be.available.to.utilise.those.temporary.differences. Taxation The.consolidated.entity’s.accounting.policy.for.taxation.requires.management’s.judgement.as.to.the.types.of.arrangements. considered.to.be.a.tax.on.income.in.contrast.to.an.operating.cost..Judgement.is.also.required.in.assessing.whether.deferred.tax. assets.and.certain.deferred.tax.liabilities.are.recognised.on.the.balance.sheet..Deferred.tax.assets,.including.those.arising.from. unrecouped.tax.losses,.capital.losses.and.temporary.differences,.are.recognised.only.where.it.is.considered.more.likely.than. not.that.they.will.be.recovered,.which.is.dependent.on.the.generation.of.sufficient.future.taxable.profits..Deferred.tax.liabilities. arising.from.temporary.differences.in.investments,.caused.principally.by.retained.earnings.held.in.foreign.tax.jurisdictions,.are. recognised.unless.repatriation.of.retained.earnings.can.be.controlled.and.are.not.expected.to.occur.in.the.foreseeable.future. Assumptions.about.the.generation.of.future.taxable.profits.and.repatriation.of.retained.earnings.depend.on.management’s. estimates.of.future.cash.flows..These.depend.on.estimates.of.future.production.and.sales.volumes,.operating.costs,.restoration. costs,.capital.expenditure,.dividends.and.other.capital.management.transactions..Judgements.are.also.required.about.the. application.of.income.tax.legislation..These.judgements.and.assumptions.are.subject.to.risk.and.uncertainty,.hence.there.is. a.possibility.that.changes.in.circumstances.will.alter.expectations,.which.may.impact.the.amount.of.deferred.tax.assets.and. deferred.tax.liabilities.recognised.on.the.balance.sheet.and.the.amount.of.other.tax.losses.and.temporary.differences.not.yet. recognised..In.such.circumstances,.some.or.all.of.the.carrying.amounts.of.recognised.deferred.tax.assets.and.liabilities.may. require.adjustment,.resulting.in.a.corresponding.credit.or.charge.to.the.income.statement. 61 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 5. FINANCIAL RISK MANAGEMENT OBJECTIvES AND POLICIES Overview The.Company.and.consolidated.entity.have.exposure.to.the.following.risks.from.their.use.of.financial.instruments: •. market.risk •. credit.risk •. liquidity.risk This.note.presents.information.about.the.Company’s.and.consolidated.entity’s.exposure.to.each.of.the.above.risks,.their. objectives,.policies.and.processes.for.measuring.and.managing.risk,.and.the.management.of.capital..Further.quantitative. disclosures.are.included.throughout.this.financial.report. The.Board.of.Directors.has.overall.responsibility.for.the.establishment.and.oversight.of.the.risk.management.framework..The. Board.has.established.the.Audit.and.Risk.Management.Committee,.which.is.responsible.for.developing.and.monitoring.risk. management.policies..The.committee.reports.regularly.to.the.Board.of.Directors.on.its.activities. Risk.management.policies.are.established.to.identify.and.analyse.the.risks.faced.by.the.Company.and.consolidated.entity,.to. set.appropriate.risk.limits.and.controls,.and.to.monitor.risks.and.adherence.to.limits..Risk.management.policies.and.systems.are. reviewed.regularly.to.reflect.changes.in.market.conditions.and.the.Company’s.and.consolidated.entity’s.activities..The.Company. and.consolidated.entity,.through.their.training.and.management.standards.and.procedures,.aim.to.develop.a.disciplined.and. constructive.control.environment.in.which.all.employees.understand.their.roles.and.obligations. The.consolidated.entity’s.Audit.and.Risk.Management.Committee.oversees.how.management.monitors.compliance.with. the.Company’s.and.consolidated.entity’s.risk.management.policies.and.procedures.and.reviews.the.adequacy.of.the.risk. management.framework.in.relation.to.the.risks.faced.by.the.Company.and.consolidated.entity.. Capital management The.Board’s.policy.is.to.maintain.a.strong.capital.base.so.as.to.maintain.investor,.creditor.and.market.confidence.and.to.sustain. future.development.of.the.business..The.consolidated.entity.defines.capital.as.total.shareholders’.equity..The.Board.of.Directors. monitors.the.capital.structure.on.a.regular.basis.including.the.level.of.dividends.paid.to.ordinary.shareholders. The.Board.seeks.to.maintain.a.balance.between.the.higher.returns.that.might.be.possible.with.higher.levels.of.borrowings.and. the.advantages.and.security.afforded.by.a.sound.capital.position. There.were.no.changes.in.the.consolidated.entity’s.approach.to.capital.management.during.the.year. Neither.the.Company.nor.any.of.its.subsidiaries.is.subject.to.externally.imposed.capital.requirements. Risk exposures and responses Foreign currency risk The.Company.and.consolidated.entity.are.exposed.to.currency.risk.on.sales,.purchases.and.demurrage.that.are.denominated. in.a.currency.other.than.the.respective.functional.currency.of.the.consolidated.entity,.the.Australian.dollar.(AUD)..The.currency. in.which.these.transactions.primarily.are.denominated.is.US.Dollars.(USD).. The.Company.and.consolidated.entity.use.forward.exchange.contracts.(FECs).to.hedge.their.currency.risk.. The.Hedging.Policy.of.the.consolidated.entity.is.to.utilise.forward.exchange.contracts.to.cover: •. 100%.of.contracted.sales.where.both.volume.and.US.dollar.price.are.fixed; •. 90%.of.contracted.sales.where.volume.is.fixed.but.pricing.is.provisional; •. 80%.of.planned.sales.from.existing.operations.over.a.12.month.period;.and •. a.maximum.of.50%.of.planned.sales.from.existing.operations.for.between.12.and.24.months. No.cover.is.be.taken.out.beyond.24.months.other.than.contracted.sales.where.both.volume.and.US.dollar.prices.are.fixed. In.respect.of.other.monetary.assets.and.liabilities.denominated.in.foreign.currencies,.the.consolidated.entity.ensures.that.its. net.exposure.is.kept.to.an.acceptable.level.by.buying.and.selling.foreign.currencies.at.spot.rates.when.necessary.to.address. short-term.imbalances. The.consolidated.entity.classifies.its.forward.exchange.contracts.as.cash.flow.hedges.and.measures.them.at.fair.value. The.fair.value.of.forward.exchange.contracts.used.as.hedges.at.30.June.2009.was.$25,430,000.(2008:.46,776,000),. comprising.assets.and.liabilities.that.were.recognised.as.fair.value.derivatives. 62 notes to the financial statements 30 june 2009 5. FINANCIAL RISK MANAGEMENT OBJECTIvES AND POLICIES (CONTINUED) Risk exposures and responses (continued) Foreign currency risk (continued) At.30.June.2009,.the.consolidated.entity.had.the.following.financial.instruments.that.were.exposed.to.foreign.currency.risk: In.thousands.of.USD Cash Trade.and.other.receivables Trade.and.other.payables Finance.lease.liabilities Net balance sheet exposure USD 30.June.2009 USD 30.June.2008 3,300 128,727 (10,672) (18,291) 103,064 3,668 34,743 (19,588) (10,034) 8,789 Currency.risk.exposure.arising.from.derivative.financial.instruments.is.disclosed.in.note.17. The.Company’s.exposure.to.foreign.currency.payable.risk.was.AUD156,917,000/EUR.90,244,000.(2008:.AUD148,037,000/ EUR.90,244,000). The.following.significant.exchange.rates.applied.during.the.year: Fixed.rate.instruments USD EUR Sensitivity analysis Average.rate Reporting.date.spot.rate 2009 0.7477 0.5420 2008 0.9038 0.6102 2009 0.8114 0.5751 2008 0.9626 0.6096 A.10.per.cent.strengthening.of.the.Australian.dollar.against.the.following.currencies.at.30.June.would.have.increased/ (decreased).equity.and.pre-tax.profit.or.loss.by.the.amounts.shown.below..The.analysis.assumes.that.all.other.variables,.in. particular.interest.rates,.remain.constant..The.analysis.is.performed.on.the.same.basis.for.2008. Effect.in.thousands.of.AUD 30 June 2009 USD EUR 30 June 2008 USD EUR Consolidated Company Equity Profit.or.loss Equity Profit.or.loss – – – – (15,224) – (1,022) – – – – – – 14,262 – 13,458 A.10.per.cent.weakening.of.the.Australian.dollar.against.the.following.currencies.at.30.June.would.have.increased/(decreased). equity.and.pre.tax.profit.or.loss.by.the.amounts.shown.below..The.analysis.assumes.that.all.other.variables,.in.particular.interest. rates,.remain.constant..The.analysis.is.performed.on.the.same.basis.for.2008. Effect.in.thousands.of.AUD 30 June 2009 USD EUR 30 June 2008 USD EUR Consolidated Company Equity Profit.or.loss Equity Profit.or.loss – – – – 19,121 – 834 – – – – – – (17,437) – (16,448) 63 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 5. FINANCIAL RISK MANAGEMENT OBJECTIvES AND POLICIES (CONTINUED) Risk exposures and responses (continued) Credit risk Credit.risk.arises.from.the.financial.assets.of.the.consolidated.entity,.which.comprise.cash.and.cash.equivalents,.trade.and.other. receivables,.available.for.sale.financial.assets,.derivative.financial.instruments.and.the.granting.of.financial.guarantees..The. consolidated.entity’s.exposure.to.credit.risk.arises.from.potential.default.of.the.counter.party,.with.a.maximum.exposure.equal.to. the.carrying.amount.of.the.financial.assets,.as.outlined.below..For.the.Company.it.arises.from.receivables.due.from.subsidiaries. Exposure.to.credit.risk The.consolidated.entity’s.maximum.exposure.to.credit.risk.at.the.reporting.date.was: In.thousands.of.AUD Cash.and.cash.equivalents Trade.and.other.receivables Derivative.financial.instruments Available-for-sale.financial.assets Carrying. Amount Carrying. Amount Note 30.June.2009 30.June.2008 14 15 17 18 131,159 271,893 34,255 37 80,867 76,213 46,776 37 437,344 203,893 The.company’s.exposure.to.credit.risk.at.the.reporting.date.was.$276,968,000.(2008:.$170,400,000).arising.from.receivables. from.subsidiaries. The.consolidated.entity’s.maximum.exposure.to.credit.risk.for.trade.receivables.at.the.reporting.date.by.geographic.region.was: In.thousands.of.AUD Asia Australia Trade.and.other.receivables Carrying. Amount Carrying. Amount 30.June.2009 30.June.2008 30,151 1,113 31,264 30,574 1,217 31,791 The.Company’s.and.consolidated.entity’s.exposure.to.credit.risk.is.influenced.mainly.by.the.individual.characteristics.of.each. customer..The.demographics.of.the.consolidated.entity’s.customer.base,.including.the.default.risk.of.the.industry.and.country.in. which.customers.operate,.has.less.of.an.influence.on.credit.risk..Approximately.39.percent.of.the.consolidated.entity’s.revenue. is.attributable.to.sales.transactions.with.two.customers.(2008:.29%). More.than.90.percent.of.the.consolidated.entity’s.customers.have.been.transacting.with.the.consolidated.entity.for.over.5.years,. and.losses.have.occurred.infrequently..Of.the.consolidated.entity’s.trade.and.other.receivables,.77%.relate.to.receivables. resulting.from.the.sell.down.of.the.Narrabri.Joint.Venture.(refer.to.note.7)..The.remaining.trade.and.other.receivables.relate. mainly.to.coal.customers. The.consolidated.entity.does.not.require.collateral.in.respect.of.trade.and.other.receivables.. The.consolidated.entity.trades.only.with.recognised,.creditworthy.third.parties. Receivable.balances.are.monitored.on.an.ongoing.basis.with.the.result.that.the.consolidated.entity’s.exposure.to.bad.debts.is. not.significant.. The.Company.and.consolidated.entity.have.not.recognised.any.impairment.loss.for.trade.and.other.receivables.during.the.year. ended.30.June.2009.(2008:.Nil). 64 notes to the financial statements 30 june 2009 5. FINANCIAL RISK MANAGEMENT OBJECTIvES AND POLICIES (CONTINUED) Risk exposures and responses (continued) Credit risk (continued) Impairment.losses The.aging.of.the.consolidated.entity’s.trade.receivables.at.the.reporting.date.was: In.thousands.of.AUD Not.past.due Past.due.0-30.days Past.due.31-120.days Past.due.121.days.to.one.year More.than.one.year Gross 2009 30,906 200 91 64 3 31,264 Impairment 2009 – – – – – – Gross 2008 29,336 2,305 50 69 31 31,791 Impairment 2008 – – – – – – Based.on.historic.default.rates,.the.consolidated.entity.believes.that.no.impairment.allowance.is.necessary.in.respect.of.trade. receivables. None.of.the.Company’s.trade.and.other.receivables.are.past.due.(2008:.$nil).. Guarantees. The.policy.of.the.consolidated.entity.is.to.provide.financial.guarantees.for.statutory.bonding.requirements.associated.with.the. mining.operations.and.for.construction.of.the.rail.upgrade.and.other.purposes.such.as.security.of.leased.premises..Guarantees. are.provided.under.a.$52,900,000.facility..Details.of.outstanding.guarantees.are.provided.in.note.30. Liquidity.risk Liquidity.risk.is.the.risk.that.the.Company.and.consolidated.entity.will.not.be.able.to.meet.their.financial.obligations.as.they.fall. due..The.consolidated.entity’s.approach.to.managing.liquidity.is.to.ensure,.as.far.as.possible,.that.it.will.always.have.sufficient. liquidity.to.meet.its.liabilities.when.due,.under.both.normal.and.stressed.conditions,.without.incurring.unacceptable.losses.or. risking.damage.to.the.consolidated.entity’s.reputation. Typically,.the.Company.and.consolidated.entity.ensures.that.they.have.sufficient.cash.on.demand.to.meet.all.expected. operational.expenses.as.and.when.due,.including.the.servicing.of.financial.obligations..This.excludes.the.potential.impact.of. extreme.circumstances.that.cannot.reasonably.be.predicted,.such.as.natural.disasters..In.addition,.the.consolidated.entity. maintains.the.following.lines.of.credit: •. $1,000,000.overdraft.facility.that.is.secured.by.a.fixed.and.floating.charge.over.the.assets.of.the.consolidated.entity..Interest. would.be.payable.at.the.rate.of.BBSY.plus.100.basis.points. •. $2,020,000.that.can.be.drawn.down.to.meet.short-term.financing.needs..The.facility.has.a.30-day.maturity.that.renews. automatically.at.the.option.of.the.consolidated.entity..Interest.would.be.payable.at.a.rate.of.BBSY.plus.150.basis.points. 65 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 5. FINANCIAL RISK MANAGEMENT OBJECTIvES AND POLICIES (CONTINUED) Risk exposures and responses (continued) Liquidity risk (continued) The.following.are.the.contractual.maturities.of.financial.liabilities,.including.estimated.interest.payments.and.excluding.the. impact.of.netting.agreements: In.thousands.of.AUD Financial liabilities Carrying. amount Contractual. cash.flows 6.mths. or.less 6-12.mths 1-2.years 2-5.years More.than. 5.years Consolidated.30.June.2009 Finance.lease.liabilities 56,701 68,035 Interest.bearing.liabilities 21,567 33,575 8,033 1,158 Trade.and.other.payables 64,799 64,799 56,399 8,031 1,158 8,400 Forward.exchange.contracts: 16,132 35,839 – 2,315 9,262 19,682 – – Outflow Inflow 589,152 609,413 193,675 183,493 216,542 15,703 (614,583) (635,084) (213,352) (192,308) (214,817) (14,607) – – – 117,636 140,738 45,913 8,774 20,172 46,197 19,682 Carrying. amount Contractual. cash.flows 6.mths. or.less 6-12.mths 1-2.years 2-5.years More.than. 5.years Consolidated.30.June.2008 In.thousands.of.AUD Financial liabilities Finance.lease.liabilities 40,008 48,158 5,315 5,271 10,541 24,103 2,928 Trade.and.other.payables 48,302 49,649 37,871 Interest.bearing.liabilities 15,218 15,218 15,218 – – 11,778 – – – Forward.exchange.contracts: Outflow Inflow 408,315 452,834 111,829 66,004 154,310 120,691 (455,091). (503,488) (130,361) (74,977) (169,695) (128,455) – – – – 56,752 62,371 39,872 (3,702) 6,934 16,339 2,928 Amounts.included.in.the.tables.above.include.interest.bearing.liabilities.of.$21,567,000.(2008:.$nil).for.which.the.contractual. cash.flows.extend.out.for.more.than.5.years..These.amounts.are.repayable.on.demand,.and.as.such.the.entire.amount.is. included.within.current.liabilities.in.the.balance.sheet.and.notes.to.the.accounts. In.thousands.of.AUD 30 June 2009 Carrying. amount Contractual. cash.flows 6.mths. or.less 6-12.mths 1-2.years 2-5.years More.than. 5.years Company Loans.from.subsidiaries 156,918 156,918 156,918 30 June 2008 Loans.from.subsidiaries 148,037 148,037 148,037 – – – – – – – – 66 notes to the financial statements 30 june 2009 5. FINANCIAL RISK MANAGEMENT OBJECTIvES AND POLICIES (CONTINUED) Risk exposures and responses (continued) Interest rate risk The.consolidated.entity’s.borrowings.comprise.both.variable.and.fixed.rate.instruments..The.variable.rate.borrowings.expose.the. consolidated.entity.to.a.risk.of.changes.in.cash.flows.due.to.the.changes.in.interest.rates.. The.consolidated.entity.does.not.engage.in.any.hedging.to.mitigate.interest.rate.risk,.instead.management.analyses.its. exposure.on.an.ongoing.basis. At.the.reporting.date.the.interest.rate.profile.of.the.Company’s.and.consolidated.entity’s.interest-bearing.financial.instruments.was: In.thousands.of.AUD Fixed rate instruments Financial.liabilities variable rate instruments Financial.assets Financial.liabilities Net exposure Consolidated Carrying.amount Company Carrying.amount 2009 2008 2009 2008 (78,268) (40,008) (78,268) (40,008) 131,159 80,867 – (15,218) 131,159 52,891 65,649 25,641 – – 81 – 81 81 – – 50 – 50 50 Cash flow sensitivity analysis for variable rate instruments A.change.of.100.basis.points.in.interest.rates.at.the.reporting.date.would.have.increased/(decreased).equity.and.profit.or.loss. by.the.amounts.shown.below..This.analysis.assumes.that.all.other.variables,.in.particular.foreign.currency.rates,.remain.constant.. The.analysis.is.performed.on.the.same.basis.for.2008..The.Company’s.exposure.to.interest.rate.risk.is.small,.and.as.such.no. sensitivity.analysis.has.been.undertaken.. Effect.in.thousands.of.AUD 30 June 2009 Variable.rate.instruments Cash.flow.sensitivity.(net) 30 June 2008 Variable.rate.instruments Cash.flow.sensitivity.(net) Commodity price risk Profit.or.loss Equity 100bp. increase 100bp. decrease 100bp. increase 100bp. decrease 1,312 1,312 656 656 (1,312) (1,312) (656) (656) – – – – – – – – The.consolidated.entity’s.major.commodity.price.exposure.is.to.the.price.of.coal..The.consolidated.entity.has.chosen.not.to. hedge.against.the.movement.in.coal.prices.but.enters.into.sales.contracts.with.durations.of.more.than.12.months.to.mitigate. this.risk..For.the.following.financial.year.78%.of.coal.sales.tonnages.have.had.the.sales.price.fixed.. Net Fair Values The.carrying.values.of.financial.assets.and.financial.liabilities.recorded.in.the.financial.statements.approximates.their.respective. net.fair.values,.determined.in.accordance.with.the.accounting.policies.disclosed.in.note.3.to.the.financial.statements. 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . 67 m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 5. FINANCIAL RISK MANAGEMENT OBJECTIvES AND POLICIES (CONTINUED) Risk exposures and responses (continued) Financial Assets and Liabilities by Categories Consolidated.Entity 2009 At.fair.. value. through. profit.and. loss Note Loans.and. Receivables In.thousands.of.AUD Financial.Assets Cash.and.cash.equivalents Trade.and.other.receivables 14 15 131,159 271,893 – – Other.financial.assets 17,.18 – 34,255 2008 At.fair.. value. through. profit.and. loss 46,776 46,776 – – – Other Loans.and. Receivables 80,867 76,213 – 157,080 48,302 55,226 – 103,528 37 37 – – – – Other 37 37 – – – – 403,052 34,255 22 23 17 64,799 78,268 – 143,067 – – 8,825 8,825 2009 2008 Note Loans.and. Receivables Other Loans.and. Receivables Other 14 15 18 81 276,968 277,049 156,918 464,750 464,750 50 170,400 170,450 148,037 464,750 464,750 6. SEGMENT REPORTING Business and geographical segments The.consolidated.entity.undertakes.coal.mining.in.New.South.Wales..Revenue.is.derived.from.the.sale.of.coal.to.customers.in. Asia.and.Australia.. Sales revenue by geographical location of customer In.thousands.of.AUD Asia Australia Consolidated Consolidated 2009 2008 481,162 249,239 8,235 2,761 489,397 252,000 68 Total Financial Assets Financial.Liabilities Trade.and.other.payables Borrowings Other.financial.liabilities Total Financial Liabilities Company In.thousands.of.AUD Financial.Assets Cash.and.cash.equivalents Trade.and.other.receivables Other.financial.assets Total Financial Assets Financial.Liabilities Trade and other payables notes to the financial statements 30 june 2009 7. SIGNIFICANT ITEMS In.thousands.of.AUD Consideration.on.sale.of.15%.of.Narrabri.joint.venture.interest Transaction.costs Assets.disposed Gain on sale of joint venture interest1 Restructure.costs2 Employee.on-costs.adjustment3 Due.diligence.costs4 Reimbursed.due.diligence.costs Finance.costs.on.retranslation.of.EDF.receivable1 Significant items before tax Applicable.income.tax.expense Significant items after tax Reconciliation of significant items to face of Income Statement: Other income: Gain.on.sale.of.joint.venture.interest. Reimbursed.due.diligence.costs Administrative.expenses: Restructure.costs. Employee.on-costs.adjustment Due.diligence.costs Consolidated Consolidated 2009 285,345 (520) 2008 67,500 – (23,210) (11,871) 261,615 55,629 (2,444) (1,145) (3,349) 2,100 (16,576) – – – – – 240,201 55,629 (73,307) (16,689) 166,894 38,940 261,615 55,629 2,100 – 263,715 55,629 (2,444) (1,145) (3,349) (6,938) – – – – Significant.items.are.amounts.considered.by.the.Company.not.to.be.in.the.normal.course.of.operations.and.are.generally. one-off.or.non-recurring. 1. .During.the.half-year.period,.the.Company.sold.a.further.15%.of.its.joint.venture.interest.in.the.Narrabri.North.Project,.taking.its.interest.in.the.project. down.to.77.5%..EDF.Trading.(EDFT).and.Electric.Power.Development.Co..Ltd.(J-Power).each.purchased.7.5%.interests,.joining.Upper.Horn.Investments. Limited.(UHI),.as.joint.venturers.in.this.project. .. .. .. .EDFT.will.pay.the.Company.US$120.million.in.a.series.of.tranches.over.the.next.three.calendar.years,.and.will.contribute.its.7.5%.share.of.all. development.costs.incurred.since.1.January.2008. .The.receivable.is.denominated.in.US$.and.has.been.discounted.on.initial.recognition..At.the.reporting.date.the.receivable.has.been.retranslated.and. the.discount.unwound..The.resulting.expense.has.been.disclosed.as.a.significant.item. .J-Power.agreed.to.pay.the.Company.AU$125.million,.to.be.settled.in.two.tranches,.plus.J-Power’s.7.5%.share.of.project.development.costs.incurred. since.1.January.2008..The.first.tranche.of.AU$41.7.million.was.received.during.the.year,.as.well.as.J-Power’s.7.5%.share.of.project.development. costs.incurred.since.1.January.2008..The.second.tranche.will.be.payable.when.the.Company.obtains.NSW.Government.approval.for.Stage.2.of.the. Narrabri.Project. 2. .Following.strategic.management.changes.to.the.Group,.the.corporate.office.was.relocated.from.Brisbane.to.Sydney..This.has.resulted.in.costs.of. $2,444,000.associated.with.redundancies.and.office.closures. 3. .During.the.year.the.Group.was.made.aware.of.an.underpayment.of.employee.on-costs..Management.has.recorded.a.provision.for.the.amounts.that.are. due.to.be.paid.and.associated.fees.for.late.payment..As.at.30.June.2009,.$700,000.of.the.provision.had.been.utilised.for.payment.of.employee.on-costs. 4. During.the.year.the.Group.undertook.a.number.of.due.diligence.projects.in.relation.to.potential.acquisitions.and.mergers.which.did.not.proceed. 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . 69 m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 In.thousands.of.AUD 8. REvENUE Sale.of.coal 9. OThER INCOME Before significant items: Hire.of.plant Rental.income Sundry.income Gain.on.sale.of.cattle Significant items: Gain.on.sale.of.interest.in.Narrabri.project* Sundry.income Consolidated Company 2009 2008 2009 2008 489,397 252,000 5,815 371 1,412 – 7,598 4,450 12 823 23 5,308 261,615 55,629 2,100 – 263,715 55,629 – – – – – – – – – – – – – – *. .During.the.year.the.Group.sold.15%.(2008:.7.5%).of.its.joint.venture.interest.in.the.Narrabri.North.Project..Refer.to.Note.7.for.further.details.of.these. transactions..Further.sell.downs.of.the.Narrabri.Coal.Project.have.been.agreed.to.subsequent.to.year.end,.refer.to.note.32. In.thousands.of.AUD 2009 2008 2009 2008 Consolidated Company 10. OThER ExPENSES Loss.on.sale.of.non-current.assets Impairment.on.disposal.of.cattle Payments.for.unfulfilled.legacy.contracts Share-based.compensation.payments 11. PERSONNEL ExPENSES Wages.and.salaries Contributions.to.superannuation.plans Other.associated.personnel.expenses Increase.in.liability.for.annual.leave Increase.in.liability.for.long-service.leave Share-based.compensation.payments – – 10,298 272 5 84 9,870 2,687 10,570 12,646 28,064 2,537 322 1,026 6 272 32,227 15,535 1,297 241 533 60 2,687 20,353 – – – 272 272 – – – – – 272 272 – – – 2,687 2,687 – – – – – 2,687 2,687 70 notes to the financial statements 30 june 2009 In.thousands.of.AUD 2009 2008 2009 2008 Consolidated Company 12. FINANCE INCOME AND ExPENSE Recognised in profit and loss Interest.income.on.bank.facilities Dividend.income Net.realised.foreign.exchange.gain Gains.from.ineffective.portion.of.hedges 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 4,425 4 5,774 – 10,203 – 3,394 308 3,200 2,010 8,912 (633) (4,283) (2,357) – (699) (704) (452) Losses.on.derivatives.not.qualifying.for.hedge.accounting – (2,985) Losses.from.ineffective.portion.of.hedges Net.unrealised.foreign.exchange.loss Net.foreign.exchange.loss.on.translation.of.EDF.receivable Other.interest.charges Financial expenses Net financing income Recognised directly in equity (1,727) (3,175) (16,576) (674) (27,134) (16,931) – – – (312) (7,443) 1,469 47 30,000 – – 334 – – – 30,047 334 – – – – – – – – – – – – (8,881) (5,043) – – – – (8,881) 21,166 (5,043) (4,709) Effective.portion.of.changes.in.fair.value.of.cash.flow.hedges (32,887) 48,061 Net.change.in.fair.value.of.cash.flow.hedges.transferred.to. profit.or.loss.–.sale.of.coal Income.tax.on.income.and.expense.recognised.directly.in.equity Finance (expense)/income recognised directly in equity, net of tax 19,653 3,970 (11,544) (10,955) (9,264) 25,562 – – – – – – – – 71 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 In.thousands.of.AUD 2009 2008 2009 2008 Consolidated Company 13. INCOME TAx a) Income tax (expense)/benefit Current income tax Current.period Adjustment.for.prior.periods Deferred income tax (106,968) (14,959) (601) 1,035 (107,569) (13,924) Origination.and.reversal.of.temporary.differences 1,930 (8,251) Income tax expense reported in the income statement (105,639) (22,175) Numerical reconciliation between tax expense recognised in the income statement and profit before tax 244,212 51,854 (105,639) (22,175) 349,851 74,029 (104,956) (22,209) (82) – – (601) (901) – (100) 1,035 Profit/(loss).for.the.period Total.income.tax.(expense)/benefit Profit excluding income tax Income.tax.using.the.Company’s.domestic.tax.rate.of.30%. (2008:.30%) Non-deductible.expenses Intra-group.dividend.–.non.taxable Change.in.unrecognised.temporary.differences Underprovided.in.prior.periods Aggregate income tax expense b) Income tax recognised directly in equity Deferred income tax related to items charged/(credited) directly to equity Derivatives Transaction.costs.on.issue.of.share.capital Income tax expense recorded in equity 400 – 400 2,214 2,614 23,508 2,613 20,895 (6,269) (117) 9,000 – – 140 – 140 (239) (99) (7,500) (99) (7,401) 2,220 (2,319) – – – (105,639) (22,175) 2,614 (99) 3,970 (358) 3,612 (10,955) 1,193 (9,762) – (358) (358) – 1,193 1,193 72 notes to the financial statements 30 june 2009 13. INCOME TAx (CONTINUED) c) Recognised deferred tax assets and liabilities In.thousands.of.AUD Opening.balance Charged.to.income Charged.to.equity Payments Closing balance Tax.expense.in.income.statement Amounts.recognised.in.the.balance.sheet: Deferred.tax.asset Deferred.tax.liability In.thousands.of.AUD Opening.balance Charged.to.income Charged.to.equity Transfer.of.tax.balances.from.tax.consolidated.group Payments Closing balance Tax.expense.in.income.statement Amounts.recognised.in.the.balance.sheet: Deferred.tax.asset Deferred.tax.liability Consolidated 2009. Current.. income.tax 2009. Deferred. income.tax 2008. Current.. income.tax (10,143) (9,957) 25 (107,569) – 10,838 1,930 3,612 – (13,924) – 3,756 (106,874) (4,415) (10,143) (105,639) – (4,415) (4,415) 2008. Deferred. income.tax 8,056 (8,251) (9,762) – (9,957) (22,175) – (9,957) (9,957) 2009. Current.. income.tax (9,995) 400 – (77,837) (294) (87,726) Company 2009. Deferred. income.tax 2008. Current.. income.tax 2008. Deferred. income.tax – 140 – (10,135) – (9,995) 954 2,214 (358) – – 2,810 2,614 2,810 – 2,810 2,152 (239) (1,193) 234 – 954 (99) 954 – 954 Unrecognised deferred tax assets Deferred.tax.assets.have.not.been.recognised.in.respect.of.the.following.items: In.thousands.of.AUD Land.and.mining.tenements Consolidated Company 2009 21,530 21,530 2008 21,530 21,530 2009 2008 – – – – 73 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 13. INCOME TAx (CONTINUED) c) Recognised deferred tax assets and liabilities Deferred.income.tax.assets.and.liabilities.are.attributable.to.the.following: In.thousands.of.AUD Property,.plant.and.equipment Receivables Derivatives Investments Inventories Deferred.stripping Deferred.revenue Deferred.foreign.exchange.gain. Mining.tenement. Provisions Unearned.income Restructure.costs Other.items Tax (assets)/liabilities Set.off.of.tax.assets Net tax assets/(liabilities) In.thousands.of.AUD Investments Net tax assets/(liabilities) d) Tax consolidation Consolidated Assets Liabilities 2009 168 2008 164 2009 2008 (18,363) (13,446) – – – – – – 11,958 15,930 5,473 214 84 2,445 36,272 – – – – – – 58 15,727 7,419 190 – 1,557 25,115 (36,272) (25,115) – – (119) (8,756) (1) (20) (3,065) (3,214) (7,062) (87) – – – – (90) (9,054) (1) (12) (6,939) – (51) (914) (4,565) – – – (40,687) (35,072) 36,272 4,415 25,115 (9,957) Company Assets Liabilities 2009 2,810 2,810 2008 954 954 2009 2008 – – – – The.Company.and.its.100%.owned.Australian.subsidiaries.formed.a.tax.consolidated.group.with.effect.from.29.May.2007.. The.consolidated.tax.group.has.entered.into.both.a.tax.funding.arrangement.and.a.tax.sharing.agreement.. 74 notes to the financial statements 30 june 2009 In.thousands.of.AUD 2009 2008 2009 2008 Consolidated Company 14. CASh AND CASh EqUIvALENTS Cash and cash equivalents 131,159 80,867 81 50 The.weighted.average.interest.rate.for.cash.balances.at.30.June.2009.is.2.59%.(2008:.6.94%). 15. TRADE AND OThER RECEIvABLES Current Trade.receivables Other.trade.receivables.and.prepayments Receivables.due.from.related.parties Non-current 31,264 140,918 1,368 31,791 15,579 1,626 – – – 33 276,968 170,367 173,550 48,996 276,968 170,400 Other trade receivables and prepayments 98,343 27,217 – – Included.in.Trade.and.Other.Receivables.is.a.30-day.term.deposit.for.$6,162,000.(2008:.$25,000,000).as.security.for.a.sale. and.purchase.agreement.with.a.major.customer.to.supply.coal.to.31.March.2010. Included.in.Current.and.Non-current.Trade.and.Other.Receivables.are.amounts.of.$121,353,000.and.$88,394,000.respectively,. relating.to.consideration.due.on.the.sell.down.of.the.Narrabri.North.project..For.further.details.of.this.transaction.please.refer.to. note.7. 16. INvENTORIES Coal.stocks.(at.NRV) Coal.stocks.(at.cost) Consumables.and.stores 789 10,994 2,086 13,869 – 7,225 2,128 9,353 17. DERIvATIvE FINANCIAL INSTRUMENTS Current assets Forward exchange contracts – receivable 31,208 26,670 Non-current assets Forward exchange contracts – receivable 3,047 20,106 Current liabilities Forward exchange contracts – payable Non-current liabilities Forward exchange contracts – payable 3,093 5,732 – – – – – – – – – – – – – – – – – – 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . 75 m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 17. DERIvATIvE FINANCIAL INSTRUMENTS (CONTINUED) Instruments used by the consolidated entity Derivative.financial.instruments.are.used.by.the.consolidated.entity.in.the.normal.course.of.business.in.order.to.hedge.exposure. to.fluctuations.in.foreign.exchange.rates.. Forward currency contracts – cash flow hedges The.consolidated.entity.undertakes.sales.in.US.dollars..In.order.to.protect.against.exchange.rate.movements.and.reduce.the. foreign.exchange.rate.related.volatility.of.the.consolidated.entity’s.revenue.stream,.the.consolidated.entity.enters.into.forward. exchange.contracts.to.sell.US.dollars.in.the.future.at.stipulated.exchange.rates..Forward.exchange.contracts.are.entered.for. future.sales.undertaken.in.US.dollars. The.contracts.are.timed.to.mature.when.funds.for.coal.sales.are.forecast.to.be.received..At.30.June.2009,.the.forward. exchange.contracts.are.designated.as.cash.flow.hedges.and.are.expected.to.impact.profit.and.loss.in.the.periods.specified. below..The.details.of.outstanding.forward.exchange.contracts.at.balance.date.are.set.out.below. Forward exchange contracts In.thousands.of.AUD.(except.exchange.rates) Sell US dollars Less.than.six.months Six.months.to.one.year One.year.to.less.than.two.years Two.years.to.less.than.three.years Three.years.to.less.than.four.years In.thousands.of.AUD 18. INvESTMENTS Non-current investments Investment.in.unlisted.shares. Investments.in.subsidiaries Fair.. Value. . 2009 Average. Exchange. Rates. 2009 Fair.. Value. . 2008 Average. Exchange. Rates. 2008 19,527 8,588 (1,692) (993) – 0.7354 0.7628 0.7852 0.8215 – 25,430 0.7632 18,224 8,446 13,647 6,048 411 46,776 0.8176 0.8175 0.8170 0.8189 0.8215 0.8178 Consolidated Company 2009 2008 2009 2008 37 – 37 37 – 37 – 464,750 464,750 – 464,750 464,750 76 notes to the financial statements 30 june 2009 19. PROPERTY, PLANT AND EqUIPMENT Consolidated In.thousands.of.AUD Note Freehold. land Plant.and. equipment Leased.plant. and.equipment Mining. property.and. development Total Cost Balance.at.1.July.2007 Acquisitions Reclassification.of.initial.boxcuts Acquisition.through.business. combinations Transfer.to.mining.property.and. development Transfer.to.other.inventory Disposals Balance at 30 June 2008 Balance.at.1.July.2008 Acquisitions Transfer.to.plant.and.equipment Disposals 19,184 12,529 – 2,854 – – (3,068) 31,499 31,499 8,551 2,031 (426) 43,546 4,689 – 5,918 (1,667) (503) (36) 51,947 51,947 52,009 11,272 (545) 37,065 18,066 – 1,062 – – – 56,193 56,193 27,058 190,837 290,632 24,033 21,103 64,018 59,317 21,103 73,852 1,667 – – (503) (11,390) (14,494) 290,268 429,907 290,268 429,907 81,646 169,264 (6,870) (6,433) – – (22,239) (23,210) Balance at 30 June 2009 41,655 114,683 76,381 343,242 575,961 Depreciation Balance.at.1.July.2007 Depreciation.charge.for.the.year Transfer.to.mining.property.and. development Disposals Balance at 30 June 2008 Balance.at.1.July.2008 Depreciation.charge.for.the.year Transfer.to.plant.and.equipment Disposals Balance at 30 June 2009 Carrying amounts At.1.July.2007 At 30 June 2008 At.1.July.2008 At 30 June 2009 – – – – – – – – – – (8,643) (6,535) 102 36 (4,524) (5,976) – – (9,853) (5,491) (102) – (23,020) (18,002) – 36 (15,040) (10,500) (15,446) (40,986) (15,040) (10,500) (15,446) (40,986) (5,243) (2,684) – (10,806) (10,088) (26,137) 2,684 – – – – – (22,967) (18,622) (25,534) (67,123) 19,184 31,499 31,499 41,655 34,903 36,907 36,907 91,716 32,541 45,693 45,693 57,759 180,984 267,612 274,822 274,822 388,921 388,921 317,708 508,838 77 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 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.2009,.the. consolidated.entity’s.net.carrying.amount.of.leased.plant.and.machinery.was.$57,759,000.(2008:.$45,693,000)..The.Company. does.not.hold.leased.plant.and.machinery..The.leased.equipment.is.pledged.as.security.for.the.related.finance.lease.liabilities. 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.1.July.2007 Exploration.and.evaluation.expenditure Balance at 30 June 2008 Balance.at.1.July.2008 Exploration.and.evaluation.expenditure Balance at 30 June 2009 Exploration and evaluation assets Consolidated Company Cost 1,672 102 1,774 1,774 2,064 3,838 Impairment. losses Cost Impairment. losses – – – – – – – – – – – – – – – – – – 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. 78 notes to the financial statements 30 june 2009 21. INTANGIBLE ASSETS In.thousands.of.AUD Water.access.rights Acquired.Haulage.Rights Less:.Accumulated.amortisation Rail.access.rights Consolidated Company 2009 953 1,300 (242) 35,383 37,394 2008 953 1,300 (89) 15,218 17,382 2009 2008 – – – – – – – – – – The.consolidated.entity.has.entered.into.agreements.with.the.Rail.Infrastructure.Corporation.and.Australian.Rail.Track. Corporation.to.underwrite.60%.of.the.funding.of.a.major.upgrade.of.the.Muswellbrook.to.Narrabri.rail.infrastructure,.which.will. increase.the.capacity.of.that.line.to.more.than.15.million.tonnes.per.annum.over.the.next.three.years..The.initial.funding.for.the. upgrade.has.been.obtained.by.Rail.Infrastructure.Corporation.and.60%.of.this.will.be.subject.to.repayment.by.the.consolidated. group.over.15.years..The.corresponding.asset.has.been.recognised.and.represents.the.group’s.right.to.rail.access.over.that. period..The.access.rights.will.be.amortised.on.a.units.sold.basis.reflecting.the.economic.benefit.derived.over.the.life.of.the. access.once.the.upgrades.are.complete. . In.thousands.of.AUD Consolidated – movement in intangibles Balance.at.1.July.2007 Acquired.during.the.year Less:.Accumulated.amortisation Balance.at.30.June.2008 Balance.at.1.July.2008 Acquired.during.the.year Less:.Accumulated.amortisation Balance.at.30.June.2009 Water.. access.. rights Contract. related. intangible 920 33 – 953 953 – – 953 – 1,300 (89) 1,211 1,211 – (153) 1,058 Rail.. access. rights – Total 920 15,218 16,551 – 15,218 15,218 20,165 – 35,383 (89) 17,382 17,382 20,165 (153) 37,394 79 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 22. TRADE AND OThER PAYABLES In.thousands.of.AUD Current Trade.payables Other.payables.and.accrued.expenses Deferred.purchase.consideration Payable.to.controlled.entities Non-current Consolidated Company 2009 2008 2009 2008 21,909 34,490 8,400 – 6,003 31,868 – – – – – 156,918 64,799 37,871 156,918 – – – 148,070 148,070 Deferred purchase consideration – 10,431 – – 23. INTEREST-BEARING LOANS AND BORROWINGS This.note.provides.information.about.the.contractual.terms.of.the.consolidated.entity’s.interest-bearing.loans.and.borrowings. In.thousands.of.AUD Current liabilities Finance.lease.liabilities Other.loans.unsecured Non-current liabilities Finance.lease.liabilities Financing facilities Secured.bank.loans Bank.overdraft.facility Facilities utilised at reporting date Secured.bank.loans Bank.overdraft.facility Facilities not utilised at reporting date Secured.bank.loans Bank.overdraft.facility Consolidated Company 2009 2008 2009 2008 11,854 21,567 33,421 44,847 44,847 78,268 2,020 1,000 3,020 – – – 2,020 1,000 3,020 7,741 15,218 22,959 32,267 32,267 55,226 13,280 1,000 14,280 – – – 13,280 1,000 14,280 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 80 notes to the financial statements 30 june 2009 23. INTEREST-BEARING LOANS AND BORROWINGS (CONTINUED) Financing arrangements Bank loans Bank.loans.were.repaid.during.the.year.ended.30.June.2008..The.loan.attracts.interest.at.the.quarterly.‘BBSY’.rate.plus.1.5%. The.bank.loans.were.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.were.as.follows: In.thousands.of.AUD Freehold.land Property,.plant.and.equipment Finance lease facility Consolidated Company 2009 41,655 2008 31,499 409,424 290,626 451,079 322,125 2009 2008 – – – – – – At.30.June.2009,.the.consolidated.entity’s.lease.liabilities.are.secured.by.the.leased.assets.of.$57,759,000. (2008:.$45,693,000),.as.in.the.event.of.default,.the.leased.assets.revert.to.the.lessor..The.Company.did.not.have.any.lease. liabilities.at.30.June.2009.(2008:.nil). 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 Consolidated Minimum. lease. payments. 2009 16,064 51,971 – Interest. 2009 4,210 7,124 – Principal. 2009 11,854 44,847 – 68,035 11,334 56,701 Minimum. lease. payments. 2008 10,586 34,644 2,928 48,158 Interest. 2008 2,845 5,284 21 8,150 Principal. 2008 7,741 29,360 2,907 40,008 81 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 In.thousands.of.AUD 2009 2008 2009 2008 Consolidated Company 24. EMPLOYEE BENEFITS Current Salaries.and.wages.accrued Liability.for.long.service.leave Liability.for.annual.leave 25. PROvISIONS Mine.rehabilitation.and.closure Other.provisions Current Non-current Consolidated In.thousands.of.AUD Balance.at.1.July.2008 Provisions.made.during.the.period Unwind.of.discount Balance at 30 June 2009 1,204 15 2,747 3,966 15,710 351 16,061 1,738 14,323 16,061 428 9 1,722 2,159 7,400 – 7,400 593 6,807 7,400 – – – – – – – – – – – – – – – – – – – – Mine. rehabilitation. and.closure 7,400 7,611 699 15,710 Increases.in.the.provision.for.rehabilitation.were.made.during.the.year.as.a.result.of.additional.disturbance.at.several.mines,. which.came.into.production. 82 notes to the financial statements 30 june 2009 26. ShARE CAPITAL AND RESERvES In.thousands.of.AUD a) Share capital Authorised,.issued.and.fully.paid.up.ordinary.shares. 407,213,601.(2008:.391,918,453) b) Movements in shares on issue Ordinary shares Consolidated Company 2009 2008 2009 2008 367,352 351,374 496,352 480,374 Consolidated Company 2009 2008 2009 2008 Nos.of. shares. 000s $000s Nos.of. shares. 000s $000s Nos.of. shares. 000s $000s Nos.of. shares. 000s $000s Beginning.of.the. financial.year Issued.for.cash 391,918 351,374 323,000 192,883 391,918 480,374 323,000 321,883 – – 51,081 135,366 – – 51,081 135,366 Exercise.of.share.options 15,295 15,295 14,227 14,227 15,295 15,295 14,227 14,227 Transfer.from.share.based. payment.reserve Acquisition.of.Creek. Resources.Pty.Ltd Costs.of.shares.issued,. net.of.tax – – – 1,041 – 1,520 – 3,610 10,000 (358) – (2,622) – – – 1,041 – 1,520 – 3,610 10,000 (358) – (2,622) 407,213 367,352 391,918 351,374 407,213 496,352 391,918 480,374 The.Company.has.also.issued.share.options.(see.note.33). The.Company’s.and.the.consolidated.entity’s.share.capital.differ.as.a.result.of.reverse.acquisition.accounting.in.2007.. The.adjustment.to.share.capital.represents.a.net.adjustment.for.the.replacement.of.the.legal.parent’s.equity,.with.that.of. the.deemed.acquirer. c) Terms and conditions of issued capital Fully.paid.ordinary.shares.carry.one.vote.per.share,.either.in.person.or.by.proxy,.at.a.meeting.of.the.Company.and.carry.the. right.to.receive.dividends.as.declared..In.the.event.of.a.winding.up.of.the.Company,.fully.paid.ordinary.shares.carry.the.right. to.participate.in.the.proceeds.from.the.sale.of.all.surplus.assets.in.proportion.to.the.number.of.and.amounts.paid.up.on. shares.held. 83 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 26. ShARE CAPITAL AND RESERvES (CONTINUED) d) hedge reserve The.hedging.reserve.comprises.the.effective.portion.of.the.cumulative.change.in.the.fair.value.of.cash.flow.hedging.instruments. related.to.hedged.transactions.that.have.not.yet.occurred. e) Share based payment reserve The.share.based.payment.reserve.is.used.to.record.the.value.of.share.based.payments.provided.to.director-related.entities.and. senior.employees.under.share.option.plans..Refer.to.note.33.for.further.details.of.these.plans. f) Dividends In.thousands.of.AUD Recognised amounts Declared.and.paid.during.the.year: Final.franked.dividend.for.2008:.1.7c.(2007:.nil) Interim.franked.dividend.for.2009:.2.5c.(2008:.nil) Unrecognised amounts Consolidated Company 2009 2008 2009 2008 6,663 10,178 16,841 – – – 6,663 10,178 16,841 – – – Final.franked.dividend.for.2009:.6.0c.(2008:.1.7c) 28,583 6,663 28,583 6,663 After.the.balance.sheet.date.the.above.dividends.were.proposed.for.approval.at.the.Company’s.Annual.General.Meeting.. These.amounts.have.not.been.recognised.as.a.liability.in.the.financial.statements.for.the.year.ended.30.June.2009.but.will. be.brought.to.account.in.the.year.ending.30.June.2010.. Dividend franking account In.thousands.of.AUD 30.per.cent.franking.credits.available.to.shareholders.of. Whitehaven.Coal.Limited.for.subsequent.financial.years Company 2009 2008 102,818 16,849 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;.and (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.(2008:.$nil).franking.credits. 84 notes to the financial statements 30 june 2009 27. OPERATING LEASES Consolidated entity as lessee The.consolidated.entity.leases.mining.equipment,.office.equipment.and.office.space.under.operating.leases..The.leases. typically.run.for.one.to.five.years.with.an.option.to.renew.on.the.mining.equipment.and.office.space..None.of.the.leases.include. contingent.rentals.. Future.minimum.rentals.payable.under.non-cancellable.operating.leases.as.at.30.June.2009.are.as.follows: In.thousands.of.AUD Less.than.one.year Between.one.and.five.years Leases as lessor Consolidated Company 2009 4,206 1,099 5,305 2008 164 112 276 2009 2008 – – – – – – 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.2009.$7,135,000.(2008:.$7,135,000).of.land.was.leased.under.these.operating.leases. 28. CAPITAL ExPENDITURE COMMITMENTS In.thousands.of.AUD 2009 2008 2009 2008 Consolidated Company Plant and equipment and intangibles Contracted but not provided for and payable: Within.one.year One.year.or.later.and.no.later.than.five.years 54,386 73,775 – – 54,386 73,775 – – – – – – 29. 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 Consolidated Company 2009 1,664 5,403 7,067 2008 1,061 1,899 2,960 2009 2008 – – – – – – 85 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 30. CONTINGENCIES 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 Guarantees Consolidated Company 2009 2008 2009 2008 (i). .The.consolidated.entity.provided.bank.guarantees.to.the. Department.of.Mineral.Resources.NSW.as.a.condition.of. continuation.of.mining.and.exploration.licenses. 20,585 16,901 (ii). .The.consolidated.entity.provided.bank.guarantees.. 30,000 28,820 to.Rail.Infrastructure.Corporation. (iii). .The.consolidated.entity.provided.bank.guarantees.to.the. 1,700 Roads.and.Traffic.Authority.of.NSW. (iv). .The.consolidated.entity.provided.bank.guarantees.to. Westpac.Banking.Corporation. (v). .The.consolidated.entity.provided.bank.guarantees.to.the. Salvation.Army.Property.Trust. 222 28 – – 28 52,535 45,749 – – – – – – – – – – – – Contractual claim The.consolidated.entity.has.received.a.claim.in.relation.to.the.performance.of.its.obligations.under.a.coal.sales.contract..Based. on.legal.advice,.the.directors.do.not.expect.the.outcome.of.the.claim.to.have.a.material.effect.on.the.consolidated.entity’s. financial.position..In.the.directors’.opinion,.disclosure.of.any.further.information.would.be.prejudicial.to.the.interests.of.the. consolidated.entity. 86 notes to the financial statements 30 june 2009 31. RECONCILIATION OF CASh FLOWS FROM OPERATING ACTIvITIES In.thousands.of.AUD Note 2009 2008 2009 2008 Consolidated Company Cash flows from operating activities Profit/(loss).for.the.period 244,212 51,854 23,508 (7,500) Adjustments.for: Depreciation. Amortisation Foreign.exchange.losses.unrealised Unwinding.of.discounts.on.provisions Share-based.compensation.payments Non-cash.dividends Gain.on.sale.of.interest.in.Narrabri.project Loss.on.sale.of.non-current.assets Operating profit before changes in working capital and provisions 19 21 25 33 9 10 26,137 18,002 89 1,702 452 2,687 – – 8,881 – 272 153 21,652 699 272 – – (30,000) (261,615) (55,629) – 5 – – – – 5,043 – 2,687 – – – 31,510 19,162 2,661 230 Change.in.trade.and.other.receivables 385 (33,334) (5,709) Change.in.inventories.and.deferred.stripping Change.in.trade.and.other.payables Change.in.unearned.revenue Change.in.provisions.and.employee.benefits Change.in.tax.payable Change.in.deferred.taxes (12,704) 6,000 311 1,807 96,729 (1,373) (6,615) 13,971 312 664 – – – – 10,168 (106) – – – – – 7,658 (14,927) 1,198 Cash.flows.from.operating.activities 122,665 11,986 (12,372) (4,281) 32. SUBSEqUENT EvENTS In.the.interval.between.the.end.of.the.financial.year.and.the.date.of.this.report.there.has.not.arisen.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.other.than.the.following: •. During.July.2009,.the.Group.ceased.operations.from.the.Canyon.mine.as.it.had.reached.the.end.of.its.mine.life. •. On.6.August.2009,.the.Group.announced.it.had.entered.into.a.Heads.of.Agreement.to.sell.a.7.5%.interest.in.its.Narrabri. Joint.Venture.Project.to.a.Korean.Consortium,.comprising.Daewoo.International.Corporation.(Daewoo).and.Korea.Resources. Corporation.(KORES),.for.A$125.million.plus.7.5%.of.all.costs.incurred.since.1.January.2008..The.transaction.is.subject.to.the. approval.of.Whitehaven,.Daewoo.and.KORES.Boards,.and.the.obtaining.of.relevant.Australian.and.Korean.regulatory.approvals. •. On.30.July.2009,.Whitehaven.Coal.Limited.successfully.completed.an.institutional.placement.of.60,680,040.new.ordinary. shares.at.$3.05.per.share,.raising.approximately.net.$177.million.(‘Institutional.Placement’)..The.Institutional.Placement.was. oversubscribed.with.strong.demand.from.both.existing.and.new.Australian.and.international.investors. •. On.7.September.2009,.Whitehaven.Coal.Limited.successfully.raised.$26.million.under.a.Share.Purchase.Plan..A.total.of. 8,501,896.ordinary.shares.were.issued.under.the.plan.at.a.price.of.$3.05.per.share,.the.same.price.as.the.institutional. placement.completed.on.30.July.2009. •. The.directors.have.resolved.to.pay.a.fully.franked.dividend.of.6.0.cents.per.ordinary.share. The.financial.effect.of.the.above.matters.has.not.been.brought.to.account.in.the.financial.statements.for.the.year.ended. 30.June.2009.but.will.be.recognised.in.future.financial.periods. 87 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 33. ShARE-BASED PAYMENTS a) Recognised share-based payment expenses In.thousands.of.AUD Employee expenses Share.options.–.director-related.entities Share.options.–.senior.employees Consolidated Company 2009 2008 2009 2008 115 157 272 2,619 68 2,687 115 157 272 2,619 68 2,687 b) Types of share-based payment plans Option grant to CEO/Managing Director on 5 September 2007 The.Company.issued.share.options.to.the.Managing.Director.when.he.was.appointed.as.Chief.Executive.Officer.in.October. 2007..The.terms.and.conditions.of.the.grant.are.as.follows.. Option Tranche.1 Tranche.2 Tranche.3 Exercise.. price Number.of.. instruments Vesting.conditions Expiration.date $2.50 $2.50 $2.50 1,000,000 1st.anniversary.of.employment 22.October.2012 1,000,000 2nd.anniversary.of.employment 22.October.2012 1,000,000 3rd.anniversary.of.employment 22.October.2012 Option grant to director-related entities on 3 May 2007 3,000,000 Option Option.1 Option.2 Option.3 Option.4 Option.5 Option.6 Exercise.. price $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 Maximum.. potential.. shares.each Grant.. percentage. % Vesting. conditions Percentage.of.. Tranche.2.shares.. released.from.. escrow.to.be.held 2,505,000 4,575,150 3,769,924 3,844,317 3,623,277 3,702,989 22,020,657 0.835 $2.50/share 1.5 1.2 $3.00/share $3.50/share 1.195 $4.00/share 1.1 1.1 $4.50/share $5.00/share 100 90 80 70 60 50 In.the.year.ended.30.June.2007,.the.related.entities.of.directors.Andy.Plummer.and.Tony.Haggarty.were.granted.six.options. each.to.acquire.additional.shares.in.the.Company.under.the.terms.of.the.Equity.Participation.and.Option.Deed.(the.Deed).. The.number.of.potential.shares.under.the.options.is.the.‘grant.percentage’.(set.out.in.the.table.above).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.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.$1.and.must.be.exercised.by.the.related.entities.within. 90.days.of.being.notified.the.Company’s.share.price.has.reached.the.target.share.price. 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. The.options.have.an.expiry.date.of.4.April.2017..Upon.resignation.by.the.director,.any.options.that.have.not.been.vested.will. be.forfeited. 88 notes to the financial statements 30 june 2009 33. ShARE-BASED PAYMENTS (CONTINUED) b) Types of share-based payment plans (continued) Option grant to senior employees on 3 May 2007 Option Tranche.1 Tranche.2 Tranche.3 Exercise.. price $1.00 $1.00 $1.00 Number.of.. instruments 66,666 66,666 66,668 200,000 Vesting.conditions Expiration.date 1st.anniversary.after.listing 30.June.2008 2nd.anniversary.after.listing 30.June.2009 3rd.anniversary.after.listing 30.June.2010 Option grant to senior employees on 19 February 2009 The.Company.issued.share.options.to.senior.employees.on.19.February.2009..The.terms.and.conditions.of.the.grant.are. as.follows.. Option Tranche.1 Tranche.2 Tranche.3 Tranche.4 Tranche.5 Tranche.6 Tranche.7 Tranche.8 Tranche.9 Tranche.10 Exercise.. price Number.of.. instruments $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 33,333 16,667 16,666 66,666 33,333 33,334 66,666 33,333 66,668 33,334 400,000 Vesting.conditions 30.June.2010 Expiration.date 30.June.2010 31.December.2010 31.December.2010 30.June.2011 26.October.2011 2.November.2011 30.June.2012 26.October.2012 2.November.2012 26.October.2013 2.November.2013 30.June.2011 26.October.2011 2.November.2011 30.June.2012 26.October.2012 2.November.2012 26.October.2013 2.November.2013 c) Movement in options The.following.table.illustrates.the.number.and.weighted.average.exercise.prices.of,.and.movements.in,.share.options.issued. during.the.year:. Weighted.average. exercise.price.. Movement.in.options Outstanding.at.beginning.of.period Exercised.during.the.period Granted.during.the.period Outstanding.at.30.June Exercisable at 30 June 2009 $1.14 $1.00 $1.00 $1.25 $1.00 Number.of.. options. 2009 33,014,348 (15,295,148) 400,000 18,119,200 – Weighted.average. exercise.price.. 2008 $1.00 $1.00 $2.50 $1.14 $1.00 Number.of.. options. 2008 44,241,314 (14,226,966) 3,000,000 33,014,348 15,228,482 89 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 33. ShARE-BASED PAYMENTS (CONTINUED) c) Movement in options (continued) The.outstanding.balance.as.at.30.June.2009.is.represented.by: (i). (ii). (iii). (iv). .66,668.senior.employee.options.over.ordinary.shares.having.an.exercise.price.of.$1,.exercisable.on.meeting.the.above. conditions.and.until.30.June.2010. .400,000.senior.employee.options.over.ordinary.shares.having.an.exercise.price.of.$1.00,.exercisable.on.meeting.the. above.conditions.and.until.the.dates.shown.above. .14,652,532.director-related.entity.options.over.ordinary.shares.having.an.exercise.price.of.$1,.exercisable.on.meeting. the.above.conditions.and.with.an.average.estimated.remaining.contractual.life.of.four.years. .3,000,000.senior.employee.options.over.ordinary.shares.having.an.exercise.price.of.$2.50,.exercisable.on.meeting.the. above.conditions.and.until.22.October.2012. The.weighted.average.share.price.at.the.date.of.exercise.for.share.options.exercised.during.the.year.ended.30.June.2009. was.$3.10.(2008:.$2.75). The.weighted.average.remaining.contractual.life.of.share.options.outstanding.at.30.June.2009.is.6.9.years.(2008:.8.3.years). d) Option pricing models 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. The.fair.value.of.options.granted.to.the.senior.employees.is.measured.using.a.Black.Scholes.model. The.following.table.lists.the.inputs.to.the.models.used.for.the.years.ended.30.June.2009.and.30.June.2008: 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) Senior.employees 2009 2008 144.3.cents 4.6.cents $1.51 $1.00 30% 1-4.years 10% 3% $1.64 $2.50 30% 5.years 10% 6.75% 90 notes to the financial statements 30 june 2009 34. 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: Name Directors John.Conde. Neil.Chatfield Alex.Krueger Hans.Mende Tony.Haggarty Position Chairman Non-executive.Director Non-executive.Director Non-executive.Director Managing.Director.(appointed.non-executive.director.3.May.2007,.appointed.managing.director. 17.October.2008) Andrew.Plummer Executive.Director.(appointed.non-executive.director.3.May.2007,.appointed.executive.director. 17.October.2008). Allan.Davies Rob.Stewart Executives Austen.Perrin Leigh.Whitton Tony.Galligan Chris.Burgess Executive.Director.(appointed.25.February.2009) Managing.Director.(retired.17.October.2008) Chief.Financial.Officer.and.Joint.Company.Secretary.(appointed.27.October.2008) Chief.Financial.Officer.and.Company.Secretary.(resigned.31.March.2009) General.Manager.Infrastructure General.Manager.New.Projects.(resigned.15.August.2008) Key management personnel compensation The.key.management.personnel.compensation.included.in.‘personnel.expenses’.(see.note.11).is.as.follows: In.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 Company 2009 2008 2009 2008 2,939,413 2,830,708 46,617 70,243 – 135,851 276,541 32,284 – – – – – – – – 211,550 2,686,779 3,267,823 5,962,163 211,550 211,550 2,686,779 2,686,779 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. 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. 91 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 34. RELATED PARTIES (CONTINUED) 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: In.the.prior.year.an.amount.was.repaid.to.AMCI.Investments.Pty.Ltd,.an.entity.jointly.controlled.by.Hans.Mende,.including. accrued.interest,.totalling.$33,506,000.(2009:.$nil)..The.consolidated.entity.paid.interest.of.5%.on.the.outstanding.balance.of. the.loan,.recognising.interest.expense.of.$704,000.during.the.prior.year.(2009:.$nil)..The.balance.was.fully.repaid.during.the. prior.year. 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:. (i). (ii). (iii). (iv). .The.consolidated.entity.entered.into.a.sub-lease.with.XLX.Pty.Limited,.a.company.of.which.Tony.Haggarty,.Andrew. Plummer.and.Allan.Davis.are.all.directors,.for.office.space.in.Sydney..Fees.amounted.to.$183,295..This.agreement. includes.payment.for.utilities,.parking,.teleconferencing,.office.supplies.and.services.and.is.on.normal.commercial.terms. .The.consolidated.entity.sells.coal.to.Energy.Coal.Marketing.Pty.Ltd.(‘ECM’),.a.company.controlled.by.Hans.Mende.. During.the.year.the.company.made.sales.to.ECM.amounting.to.$39,829,142..These.transactions.were.carried.out.on. an.arm’s.length.basis.at.market.rates..At.the.year.end.there.was.a.balance.owed.to.the.consolidated.entity.amounting. to.$3,015,904.. .The.consolidated.entity.used.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.$1,567,500.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. .In.the.year.ended.30.June.2007,.the.consolidated.entity.had.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..During.the.prior.year.the.consolidated.entity.converted.its.hedge.book. comprising.foreign.currency.options.to.forward.exchange.contracts.and.there.have.been.no.further.transactions.with.AMCI. Investments.Pty.Ltd..In.the.year.ended.30.June.2008.the.consolidated.entity.recognised.a.foreign.currency.loss.under.the. options.of.$1,867,000.(2009:.$nil).. 92 notes to the financial statements 30 june 2009 34. RELATED PARTIES (CONTINUED) 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: No..of.shares Directors John.Conde Neil.Chatfield Tony.Haggarty Alex.Krueger Hans.Mende Andy.Plummer Allan.Davies Rob.Stewart Executives Austen.Perrin Leigh.Whitton Tony.Galligan Chris.Burgess Casper.Dieben No..of.shares Directors John.Conde Neil.Chatfield Tony.Haggarty Alex.Krueger Hans.Mende Andy.Plummer Rob.Stewart Keith.Ross Executives Leigh.Whitton Tony.Galligan Chris.Burgess Casper.Dieben Held.at.. 1.July.2008 Received.on. exercise.of. options Purchased. under.. the.Equity. Participation. and.Option. Deed Other.. Purchases Held.at.. Sales 30.June.2009 301,887 301,887 22,374,554 – 75,379,833 22,268,829 125,000 11,887 – 239,994 59,333 5,261,480 70,020 – – – – – – – – – 33,333 33,333 – – – – – – 7,614,241 1,155,000 – – 7,614,241 – – – – – – – – – – – – 49,717 – – – – – – – – – – – – – (1,000) – – 301,887 301,887 31,143,795 – 75,379,833 29,883,070 125,000 n/a1 49,717 n/a1 91,666 n/a1 n/a Held.at.. 1.July.2007 Received.on. exercise.of. options Purchased. under.. the.Equity. Participation. and.Option. Deed Other.. Purchases Held.at.. Sales 30.June.2008 250,000 250,000 15,150,000 – 75,379,833 15,000,000 – 14,235,227 201,000 26,000 5,261,480 50,000 – – – – – – – – 33,333 33,333 – – – – 51,887 51,887 – – 301,887 301,887 7,080,150 254,404 (110,000) 22,374,554 – – – – – 5,660,377 (5,660,377) 75,379,833 7,080,150 188,679 – – – – – – 11,887 327,356 5,661 – – 20,020 – – – – – – – 22,268,829 11,887 n/a1 239,994 59,333 5,261,480 70,020 1. These.parties.have.ceased.employment.with.Whitehaven.during.the.year.and.are.not.considered.related.parties.at.30.June.2009.. 93 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 34. RELATED PARTIES (CONTINUED) Options and rights over equity instruments 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.and.director-related.entities,.including.their.related.parties,.is.as.follows: Director-related entities Tony.Haggarty Andy.Plummer Executives Rob.Stewart Leigh.Whitton Tony.Galligan Director-related entities Tony.Haggarty Andy.Plummer Executives Rob.Stewart Leigh.Whitton Tony.Galligan Held.at.. 1.July.2008 Granted/ (Forfeited). Exercised 30.June.2009 Held.at.. Vested.during. the.year Vested.and. exercisable.at.. 30.June.2009 14,940,507 14,940,507 3,000,000 66,667 66,667 Held.at.. 1.July.2007 – – – – – 7,614,241 7,326,266 7,614,241 7,326,266 – 33,333 33,333 n/a1 n/a1 33,334 Held.at.. Granted. Exercised 30.June.2008 – – – 33,333 33,333 – – – – – Vested.during. the.year Vested.and. exercisable.at.. 30.June.2008 22,020,657 22,020,657 – – 7,080,150 14,940,507 14,694,391 7,614,241 7,080,150 14,940,507 14,694,391 7,614,241 – 3,000,000 – 3,000,000 100,000 100,000 – – 33,333 33,333 66,667 66,667 – 33,333 33,333 – – – 1. These.parties.have.ceased.employment.with.Whitehaven.during.the.year.and.are.not.considered.related.parties.at.30.June.2009. 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 Mr.Timothy.Burt.was.appointed.General.Counsel.and.Company.Secretary.on.20.July.2009. Other related party disclosures Parent The.Company.has.loans.payable.totalling.$156,917,000.to.two.subsidiaries.at.30.June.2009.(2008:.$148,037,000).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.are.repayable.on.demand.and.are.non-interest.bearing..During.the.financial.year.ended.30.June.2009,.such. loans.to.subsidiaries.totalled.$276,968,000.(2008:.$170,367,000).. 94 notes to the financial statements 30 june 2009 35. CONSOLIDATED ENTITY’S SUBSIDIARIES, ASSOCIATES AND INTERESTS IN JOINT vENTURES The.consolidated.financial.statements.include.the.financial.statements.of.the.Company.and.the.subsidiaries.listed.in.the.below. Ownership.interest Country.of. Incorporation 2009 2008 Parent entity Whitehaven.Coal.Limited Subsidiaries Whitehaven.Coal.Mining.Limited Namoi.Mining.Pty.Ltd Betalpha.Pty.Ltd Betalpha.Unit.Trust Tarrawonga.Coal.Pty.Ltd Whitehaven.Coal.Holdings.Limited Whitehaven.Coal.Infrastructure.Pty.Ltd Narrabri.Coal.Pty.Ltd Narrabri.Coal.Operations.Pty.Ltd Narrabri.Coal.Sales.Pty.Ltd Creek.Resources.Pty.Ltd Werris.Creek.Coal.Sales.Pty.Ltd Werris.Creek.Coal.Pty.Ltd WC.Contract.Hauling.Pty.Ltd Whitehaven.Blackjack.Pty.Ltd Australian.Coal.Inter.Holdings.11.B.V. Australian.Coal.Inter.Holdings.11A.B.V. Associates Tarrawonga.Coal.Sales.Pty.Ltd Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Netherlands Netherlands Australia 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 70 100 100 100 100 100 100 100 100 100 100 100 100 100 100 – 100 100 70 The.consolidated.entity’s.has.interests.in.the.following.jointly.controlled.operations,.whose.principal.activities.involve.the. development.and.mining.of.coal: Tarrawonga.Coal.Project.Joint.Venture Narrabri.Coal.Joint.Venture Blackjack.Carbon.Joint.Venture 2009 70% 77.5% 50% 2008 70% 92.5% – The.consolidated.entity’s.share.of.the.above.jointly.controlled.entities.has.been.recorded.using.the.proportional.consolidation. method..The.amounts.set.out.below.are.included.in.the.30.June.2009.consolidated.financial.statements.under.their. respective.categories. 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . 95 m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 35. CONSOLIDATED ENTITY’S SUBSIDIARIES, ASSOCIATES AND INTERESTS IN JOINT vENTURES (CONTINUED) Income Statement Operating.and.administration.expenses Current Assets Cash.and.cash.equivalents Trade.and.other.receivables Inventory Deferred.stripping Total Current Assets Non-Current Assets Trade.and.other.receivables Property,.plant.and.equipment Total Non-Current Assets Total Assets Current Liabilities Trade.and.other.payables Provisions Non-Current Liabilities Provisions Total Liabilities 2009 $000 2008 $000 65,089 44,660 25,697 4,606 3,634 524 34,461 2,274 136,101 138,375 172,836 20,052 136 20,188 4,078 4,078 1,407 838 4,202 1,457 7,904 2,714 43,627 46,341 54,245 9,809 56 9,865 1,577 1,577 24,266 11,442 96 notes to the financial statements 30 june 2009 36. EARNINGS PER ShARE Basic earnings per share The.calculation.of.basic.earnings.per.share.at.30.June.2009.was.based.on.the.profit.attributable.to.ordinary.shareholders.of. $244,212,000,.and.profit.attributable.to.ordinary.shareholders.before.significant.items.of.$77,318,000.(2008:.$51,854,000. and.$12,914,000).and.a.weighted.average.number.of.ordinary.shares.outstanding.during.the.year.of.403,785,000. (2008:.357,041,000).calculated.as.follows: In.thousands.of.AUD Profit attributable to ordinary shareholders Net profit attributable to ordinary shareholders Net profit attributable to ordinary shareholders before significant items Weighted average number of ordinary shares Issued.ordinary.shares.at.1.July Effect.of.shares.issued.during.the.year Weighted.average.number.of.ordinary.shares.at.30.June Basic earnings per share attributable to ordinary shareholders (cents) Basic earnings per share before significant items attributable to ordinary shareholders (cents) Diluted earnings per share Consolidated 2009 2008 244,212 77,318 51,854 12,914 391,918 323,000 11,867 34,041 403,785 357,041 60.5 19.1 14.5 3.6 The.calculation.of.diluted.earnings.per.share.at.30.June.2009.was.based.on.the.profit.attributable.to.ordinary.shareholders. of.$244,212,000,.and.profit.attributable.to.shareholders.before.significant.items.of.$77,318,000.(2008:.$51,854,000. and.12,914,000).and.a.weighted.average.number.of.ordinary.shares.outstanding.during.the.year.of.404,884,000. (2008:360,253,000).calculated.as.follows: In.thousands.of.AUD Profit attributable to ordinary shareholders (diluted) Net profit attributable to ordinary shareholders (diluted) Net profit attributable to ordinary shareholders before significant items 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) Diluted earnings per share attributable to ordinary shareholders (cents) Diluted earnings per share before significant items attributable to ordinary shareholders (cents) Consolidated 2009 2008 244,212 77,318 51,854 12,914 403,785 357,041 1,099 3,212 404,884 360,253 60.3 19.1 14.4 3.5 The.options.issued.to.director-related.entities.with.hurdle.rates.of.$4.50/share.and.$5.00/share.were.not.included.in.the. calculation.of.2009.diluted.earnings.per.share.as.they.were.anti-dilutive..Refer.to.note.33.for.further.information.regarding. the.options.issued.to.director-related.entities. 97 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W notes to the financial statements 30 june 2009 37. AUDITORS’ REMUNERATION In.AUD Audit services: Auditors.of.the.Company.–.Ernst.&.Young Audit.and.review.of.statutory.financial.statements. current.year Audit.of.joint.ventures Previous.auditors.of.the.Company.–.KPMG Audit.and.review.of.statutory.financial.statements Audit.of.joint.ventures. Other.regulatory.audit.services Non audit services: Auditors.of.the.Company.–.Ernst.&.Young Due.diligence.services Review.of.National.Greenhouse.Energy Reporting.Act.requirements Other.assurance.services Previous.Auditors.of.the.Company.–.KPMG Accounting.advice Taxation.services Consolidated Company 2009 2008 2009 2008 370,000 94,500 464,500 – – – 15,000 – 15,000 – – – – 419,100 107,040 8,000 534,140 202,996 32,000 43,900 278,896 – 96,780 96,780 – – – – 4,200 225,377 229,577 – – – – – – – – – – – – – – 15,000 – – 15,000 – – – – – – – During.the.year.the.Company.and.the.consolidated.entity.changed.auditors.from.KPMG.Australia.to.Ernst.&.Young. 98 notes to the financial statements 30 june 2009 38. DEED OF CROSS GUARANTEE Pursuant.to.ASIC.Class.Order.98/1418.(as.amended).dated.13.August.1998,.the.wholly-owned.subsidiaries.listed.below. are.relieved.from.the.Corporations.Act.2001.requirements.for.preparation,.audit.and.lodgement.of.financial.reports,.and. directors’.report. It.is.a.condition.of.the.Class.Order.that.the.Company.and.each.of.the.subsidiaries.enter.into.a.Deed.of.Cross.Guarantee.. The.effect.of.the.Deed.is.that.the.Company.guarantees.to.each.creditor.payment.in.full.of.any.debt.in.the.event.of.winding. up.of.any.of.the.subsidiaries.under.certain.provisions.of.the.Corporations.Act.2001..If.a.winding.up.occurs.under.other. provisions.of.the.Act,.the.Company.will.only.be.liable.in.the.event.that.after.six.months.any.creditor.has.not.been.paid.in.full.. The.subsidiaries.have.also.given.similar.guarantees.in.the.event.that.the.Company.is.wound.up. The.subsidiaries.subject.to.the.Deed.are: •. Whitehaven.Coal.Mining.Limited •. Namoi.Mining.Pty.Ltd •. Betalpha.Pty.Ltd •. Tarrawonga.Coal.Pty.Ltd •. Whitehaven.Coal.Holdings.Limited •. Whitehaven.Coal.Infrastructure.Pty.Ltd •. Narrabri.Coal.Pty.Ltd •. Narrabri.Coal.Operations.Pty.Ltd •. Narrabri.Coal.Sales.Pty.Ltd •. Creek.Resources.Pty.Ltd •. Werris.Creek.Coal.Sales.Pty.Ltd •. Werris.Creek.Coal.Pty.Ltd •. WC.Contract.Hauling.Pty.Ltd The.Company.and.each.of.the.subsidiaries.entered.into.the.deed.on.27.June.2008. The.Deed.of.Cross.Guarantee.includes.the.Company.and.subsidiaries.which.are.included.within.the.income.statement. and.balance.sheet.of.the.consolidated.entity. 99 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W Directors’ Declaration In.accordance.with.a.resolution.of.the.directors.of.Whitehaven.Coal.Limited.(‘Whitehaven’.or.‘the.Company’),.I.state.that: 1.. In.the.opinion.of.the.directors.of.Whitehaven.Coal.Limited.(‘the.Company’): . . . . a). .the.financial.statements,.notes.and.the.additional.disclosures.included.in.the.directors’.report.designated.as.audited,. of.the.Company.and.of.the.consolidated.entity.are.in.accordance.with.the.Corporations.Act.2001,.including: . . (i). .giving.a.true.and.fair.view.of.the.Company’s.and.the.consolidated.entity’s.financial.position.as.at.30.June.2009.. and.of.their.performance.for.the.financial.year.ended.on.that.date;.and (ii)..complying.with.Accounting.Standards.and.the.Corporations.Regulations.2001; b). .there.are.reasonable.grounds.to.believe.that.the.Company.will.be.able.to.pay.its.debts.as.and.when.they.become.. due.and.payable. 2.. .There.are.reasonable.grounds.to.believe.that.the.Company.and.the.group.entities.identified.in.note.38.will.be.able.to.meet. any.obligations.or.liabilities.to.which.they.are.or.may.become.subject,.by.virtue.of.the.Deed.of.Cross.Guarantee.between.the. Company.and.those.group.entities.pursuant.to.ASIC.Class.Order.98/1418. 3.. .This.declaration.has.been.made.after.receiving.the.declarations.required.to.be.made.to.the.directors.in.accordance.with. section.295A.of.the.Corporations.Act.2001.for.the.financial.year.ending.30.June.2009. Dated.at.Sydney.this.16th.day.of.September.2009. Signed.in.accordance.with.a.resolution.of.the.directors: John Conde Chairman 100 inDepenDent auDitor’s report to the members of whitehaven coal limiteD 101 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W inDepenDent auDitor’s report to the members of whitehaven coal limiteD 102 asX aDDitional information Additional.information.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.as.advised.in.substantial.shareholder.notices.to.the. Company.are.set.out.below: Shareholder FRC.Whitehaven.Holdings.BV Hans.Mende. Fritz.Kundrun. AMCI.International.AG Anthony.Haggarty.and.HFTT.Pty.Ltd* Ranamok.Pty.Ltd Percentage.of.. capital.held Number.of.ordinary. shares.held 27.63 15.96 15.82 11.32 7.37 6.27 131,650,000 76,019,833 75,379,833 53,951,500 29,988,795 29,887,988 *. .Figures.are.based.upon.the.substantial.shareholder.notice.received.on.29.September.2008..Current.holding.as.at.11.September.2009.is.31,153,631. shares.equating.to.6.54%.of.capital. voting rights Ordinary shares Refer.to.note.26.in.the.financial.statements Options There.are.no.voting.rights.attached.to.the.options.. Distribution of equity security holders Category 1.–.1,000 1,001.–.5,000 5,001.–.10,000 10,001.–.100,000 100,001.and.over There.are.five.holders.of.options.over.ordinary.shares..Refer.to.note.33.in.the.financial.statements. 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.. 103 Number.of.equity. security.holders 699 1,695 1,027 1,038 87 4,546 9 0 0 2 . t r o p e R . l a u n n A – . d e t i . m L i . l a o C . n e v a h e t i h W asX aDDitional information OThER INFORMATION Whitehaven.Coal.Limited,.incorporated.and.domiciled.in.Australia,.is.a.publicly.listed.company.limited.by.shares. Twenty largest shareholders Name FRC.Whitehaven.Holdings.BV ANZ.Nominees.Limited.(Cash.Income.A/C) UBS.Wealth.Management.Australia.Nominees.Pty.Ltd HFTT.Pty.Ltd.(Haggarty.Family.A/C) Ranamok.Pty.Ltd.(Plummer.Family.A/C) National.Nominees.Limited JP.Morgan.Nominees.Australia.Limited HSBC.Custody.Nominees.(Australia).Ltd Mr.Michael.Jack.Quillen.(Quillen.Family.A/C) Cogent.Nominees.Pty.Limited Nicola.Investments.II.LLC Kirstin.Investments.II.LLC Markus.Investments.II.LLC Citicorp.Nominees.Pty.Limited.(Cfs.Future.Leaders.Fund.A/C) Citicorp.Nominees.Pty.Ltd CS.Fourth.Nominees.Pty.Ltd Mr.Michael.Jack.Quillen ARGO.Investments.Limited AMP.Life.Limited Ms.Julie.Ann.Mammen Number.of.ordinary. shares.held 131,650,000 59,444,541 57,923,997 30,937,988 29,887,988 29,377,448 22,965,345 13,818,806 7,164,750 5,753,151 5,660,377 2,830,189 2,830,188 2,799,939 2,684,659 2,248,893 2,164,750 2,094,397 2,084,870 1,661,520 Percentage.of. capital.held 27.63 12.48 12.16 6.49 6.27 6.17 4.82 2.90 1.50 1.21 1.19 0.59 0.59 0.59 0.56 0.47 0.45 0.44 0.44 0.35 This.information.is.current.as.at.11.September.2009 415,661,473 87.25 104 corporate DirectorY DIRECTORS John.Conde,.Chairman. Tony.Haggarty,.Managing.Director. Neil.Chatfield. Alex.Krueger. Hans.Mende. Andy.Plummer. Allan.Davies COMPANY SECRETARIES Austen.Perrin. Timothy.Burt REGISTERED AND PRINCIPAL ADMINISTRATIvE OFFICE Level.9,.1.York.Street. Sydney.NSW.2000. Ph:.+61.2.8507.9700. Fax:.+61.2.8507.9701 AUSTRALIAN BUSINESS NUMBER ABN.68.124.425.396 STOCK ExChANGE LISTING Australian.Securities.Exchange.Ltd. ASX.Code:.WHC AUDITOR Ernst.&.Young. Ernst.&.Young.Centre. 680.George.Street. Sydney.NSW.2000 Ph:.+61.2.9248.5555. Fax:.+61.2.9248.5199 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.whitehavencoal.com.au . . . u a m o c e e r p u d w w w . p u o r G . n g s e D . e e r p u D i . : n o i t c u d o r p . d n a . n g s e D i www.whitehavencoal.com.au w h i t e h A v e n c o A l l i m i t e d A n n u a l R e p o r t 2 0 0 9