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Yancoal Australia LtdWHITEHAVEN COAL
ANNUAL REPORT 2016
AUSTRALIA'S LEADING
HIGH-QUALITY
COAL COMPANY
Whitehaven Coal is
a producer of some
of the world’s highest
quality coal.
PRIORITIES SET OUT IN
2015 ANNUAL REPORT
Continuing the ramp
up of operations at Maules Creek
Positioning the company to commence
the deleveraging process
Driving further cost efficiencies
across each of our operations
Increasing contracted sales
of higher margin metallurgical coal
Progressing the fully-approved
4.5Mtpa Vickery project
GUIDANCE FOR FY16
Maules Creek
Narrabri
Gunnedah
Total
Costs
INNOVATION
Welcome to the 2016 Annual Report.
This year we achieved record
production, recorded a modest but
welcome profit and reduced the
Company's debt. As a producer of
some of the world's highest quality
coal, Whitehaven is well on the way
to achieving its strategic goal of
becoming the largest independent
coal producer in Australia. With the
commercial declaration of production
from Maules Creek on 1 July 2015, the
company is positioned to continue
growing over the next three years.
Coal plays a vital role in meeting global
energy and industry demand – helping
to heat our homes, light our cities and
power modern technology. Nowhere
is demand for Australian coal stronger
– including Whitehaven’s – than Asia
where around 361 million people in the
region have no electricity, according to
the IEA and Minerals Council Australia.
Australia’s world-class coal is also in
demand for its high energy content,
which makes it the preferred fuel for
high efficiency low emission (HELE)
technologies. HELE technology reduces
CO2 emissions by up to 40%¹.
In addition to reporting on company
performance, we aim to show that
Whitehaven’s innovation and world-
class mines are helping provide the
high-quality coal that will be part of
the global energy mix for many years
to come.
In an effort to keep this Annual Report
succinct, further information on these
matters, not included in this report,
can be found on our website:
www.whitehavencoal.com.au.
PROGRESS MADE
PRIORITIES FOR FY17
✓ Maules Creek operating at
over 8.5 Mtpa
Next ramp up stage of operations
at Maules Creek to 10.5 Mtpa
✓ Net debt was reduced to $859.1 million
Further reduction in net debt
with gearing down slightly to 23%
✓ Unit costs fell again to average
$56/t for the year
✓ Sales increased by 42%
✓ Environmental Impact
Statement progressed
Narrabri underground mine
operating a 400 metre wide face
Increase contracted volumes of semi
soft coking coal from Maules Creek
Sell down process for Vickery
to commence
GUIDANCE FOR FY2016
ACTUAL OUTCOME
7.6MT ROM & 7.4Mt Saleable
7.8Mt ROM & 7.4Mt Saleable
6.6Mt – 6.8Mt ROM
5.1Mt – 5.3Mt ROM
6.8Mt ROM
5.8Mt ROM
19.5Mt – 20.1Mt Saleable
19.7Mt Saleable
$1/t – $2/t lower than $58/t in H1
$56/t
THE SUPPLIER
OF SOME OF THE
WORLD'S HIGHEST
QUALITY COAL
SEE PAGE 20
MAULES
CREEK USES
WORLD-CLASS
MINING FLEET
SEE PAGE 26
USING WORLD-CLASS
EQUIPMENT, NARRABRI
IS ONE OF THE MOST
PRODUCTIVE
UNDERGROUND MINES IN
AUSTRALIA SEE PAGE 30
Maules Creek Mine
1 ACA Low Emissions Technologies Ltd Assessment July 2015
OVERVIEW P2
STRATEGY P12
OPERATIONS P24
SUSTAINABILITY P34
RESOURCES
AND RESERVES P54
LEADERSHIP AND
MANAGEMENT P56
FINANCIAL
REPORT P62
Whitehaven Coal Annual Report 2016/1
Operations and financial performance tables ...................................3
Map .............................................................................................................. 4
Year at a glance ........................................................................................ 5
Delivering on guidance ........................................................................... 6
Chairman's statement ............................................................................. 8
CEO statement .........................................................................................10
Whitehaven Coal produces approximately
20 million tonnes of saleable (100% basis)
thermal and metallurgical coal per annum
for export into the premium international
markets. Whitehaven Coal is a leading
producer of some of the world’s highest
quality coal. Operating in NSW’s Gunnedah
Basin, our vision is to be Australia’s leading
independent coal company.
Operating four open cut mines (Maules Creek, Werris Creek,
Tarrawonga and Rocglen), one underground mine (Narrabri)
and a Coal Handling and Preparation Plant, we have offices in
Gunnedah, Newcastle, Sydney and Tokyo, Japan.
Whitehaven Coal has been growing our workforce and currently
employs over 800 people, sourcing the majority from the local
communities in which we operate. We are focusing on increasing
the diversity of the workforce and are hiring more women and
Aboriginal employees.
Listed on the Australian Securities Exchange with the code WHC,
Whitehaven had 1026m shares on issue as at 30 June 2016. More
information on Corporate Governance is elsewhere in this report
and available at www.whitehavencoal.com.au.
PERFORMANCE
SUMMARY
PROFIT
$20.5M
NET PROFIT AFTER TAX
COAL
PRODUCTION
15.1Mt
OF SALEABLE COAL
(EQUITY BASIS)
PEOPLE
843 (FTE)
FULL TIME EMPLOYEES WITH 80%
LIVING IN AREA OF OPERATIONS
SAFETY
PERFORMANCE
10.6 TRIFR
TOTAL RECORDABLE INJURY
FREQUENCY RATE
OPERATIONAL
PERFORMANCE
1ST YEAR
OF COMMERCIAL COAL
PRODUCTION FROM
MAULES CREEK
AWARDS
MAULES CREEK
NAMED NSW MINING
OPERATION OF THE YEAR
Maules Creek Mine
2 /
OVERVIEWSECTION 1SECTION 1 OVERVIEW OPERATIONS AND FINANCIAL
PERFORMANCE TABLES
OPERATING PERFORMANCE
Equity Basis
Saleable Coal Production
Costs FOB (excludes Royalties)
Price Achievement (excludes Royalties)
Product Mix
Capital Expenditure
FINANCIAL PERFORMANCE
Revenue
Operating EBITDA before significant items
Operating EBIT before significant items
Net profit/(loss) after tax
Cash generated from operations
Net debt at 30 June 2016
Leverage at 30 June 2016
Earnings/(loss) per share
OUTLOOK
Operations
In FY2016 Whitehaven’s Narrabri mine produced a record
7.3Mt of saleable coal to remain one of the most productive
and lowest cost underground mines in Australia. Production
in FY2017 is expected to increase. Mining is scheduled to
transition to the first 400 metre wide panel around the start
of the fourth quarter of FY2017. Maules Creek will continue to
ramp up its production level to an annualised rate of 10.5Mt
ROM coal in the second half of FY2017 and is expected to
produce 9.0Mt of saleable coal for the financial year. The
smaller open cut mines will produce a similar amount of
coal in FY2017 as in FY2016.
Management remains focused on improving productivity and
lowering costs so as to remain in the lowest cost quartile.
Demand
Whitehaven’s high-quality clean coals are attracting growing
demand from new and existing customers. With the restricted
availability of these coals in the seaborne market Whitehaven
is well placed to increase the premium it receives for its coals
and grow overall sales from both Maules Creek and Narrabri.
It is positive to note that Whitehaven’s customers in Asia
are adding more coal-fired power station capacity, and
are seeking increased tonnages of coal from Whitehaven.
FY2016
FY2015
YOY CHANGE
(Mt)
$AUD/t
$AUD/t
15.072
11.255
56
69
61
74
Met%/Thermal%
16%/84%
16%/84%
34%
(8%)
(7%)
–
$M
81.4
290.2
(72%)
FY2016
1,164.4
224.1
93.7
20.5
269.3
859.1
3.8
2.1
FY2015
YOY CHANGE
763.3
130.3
32.7
(342.7)
152.7
935.8
7.2
(33.3)
53%
72%
187%
106%
76%
(8.1%)
(47.2%)
106%
$M
$M
$M
$M
$M
$M
$M
c
Pricing
After five years of declining prices, coal markets appear
to have found a bottom in the first quarter of CY2016. The
Newcastle GlobalCoal Index coal price increased from a low
of about US$48/t in early January to be $68/t in mid-August.
Metallurgical coal prices have also risen over the last year.
Whitehaven remains cautiously optimistic in the short-term.
However, in the medium to longer term, as demand for low
priced reliable electricity continues to grow in the Asian
region, Whitehaven is confident coal prices will rise and
that Whitehaven’s high-quality coals will continue to
attract a premium price in the market.
Whitehaven Coal Annual Report 2016 / 3
OVERVIEW1 MAP
WHITEHAVEN MAJOR
SALES DESTINATIONS
India
Japan
Korea Republic
Taiwan
KEY
Thermal Coal
Met Coal
For more detail on
Whitehaven's sales
see pages 22 and 23.
WHITEHAVEN FACILITIES
ASSET
Maules Creek Mine
Narrabri Mine
Tarrawonga Mine
Rocglen Mine
Vickery Project
Gunnedah CHPP
Werris Creek Mine
INTEREST
75%
70%
70%
100%
100%
100%
100%
OTHER ASSETS
Dingo Project (QLD)
INTEREST
70%
Sienna Project (QLD)
Monto Project (QLD)
100%
100%
Ferndale Project (QLD)
92.5%
Oaklands North Project (QLD)
100%
4 /
KOREA
REPUBLIC
JAPAN
INDIA
TAIWAN
Narrabri
QLD
NSW
Gunnedah
Basin
Newcastle
Whitehaven
Coal HQ
K
a
milaroi
Narrabri
Mine
H
i
g
h
w
a
y
Baan
Baa
Boggabri
Maules Creek Mine
Tarrawonga Mine
Rocglen Mine
Vickery Project
Gunnedah CHPP
B
l
u
e
V
a
l
e
R
o
a
d
Hig h w a y
O x l e y
Gunnedah
Curlewis
K
a
m
ila
r
oi
0
10
20
30
40
50
N
km
O x l e y
Highway
Tamworth
H
i
g
h
w
a
y
Werris Creek
Werris Creek
Mine
Quirindi
To Newcastle
310 km (approx)
HEADINGSECTION 1 OVERVIEW
YEAR AT A GLANCE
HEADING
REVENUE
$1.16B
MAULES CREEK
MINE OFFICIALLY
OPENED
OPERATING COSTS
$56/t FOB
RUN-OF-MINE
PRODUCTION
20.5MT ( 100%
BASIS)
COAL SALES
20.1MT ( 100%
BASIS)
OPENED NEW
GUNNEDAH OFFICE
ABORIGINAL
EMPLOYMENT
11% IDENTIFY AS
ABORIGINAL OR
TORRES STRAIT
ISLANDER
REDUCED DEBT BY
$76.7M
AT 30 JUNE 2016
EMPLOYEES
843 FTE
SAFETY
10.6 TRIFR
TOTAL RECORDABLE INJURY
FREQUENCY RATE
Whitehaven Coal Annual Report 2016 / 5
TBA
OVERVIEW1HEADING DELIVERING ON GUIDANCE
RECORD
PRODUCTION
REDUCED
DEBT
We measure both financial and non-financial
performance in order to determine whether we
are on track to achieve our long-term goals. In
2016, Whitehaven Coal delivered a profit despite
a very challenging market environment. Our
equity saleable coal production increased 34%
and equity sales volumes rose 42%. We also saw
EBITDA rise 72%, revenue increase 53%, debt
carried by the Company reduce and net debt
at 30 June 2016 decline by $77 million.
FINANCIAL HIGHLIGHTS
PROFIT
(BEFORE SIGNIFICANT ITEMS)
Measurement: Net profit after tax is
the net amount earned by a business
after all expenses have been deducted.
FY2016
FY2015
FY2014
(10.7)
(38.4)
20.5
Relevance to the business:
Profit after tax is often a better
assessment of what a business
is earning than future revenues.
Performance: In 2016 Whitehaven
achieved net profit after tax of
$20.5 milllion, an improvement on the
net loss including significant items of
$342.7 million in the previous year.
$31.2M
LEVERAGE (NET DEBT/EBITDA)
3.8
FY2016
FY2015
FY2014
47%
7.2
7.6
FOB COST OF SALES
FY2016
FY2015
FY2014
$56/t
$61/t
$69/t
$5
DOWN
8%
6 /
Measurement: Leverage (or net debt
to EBITDA) is calculated as the Group’s
financial borrowings minus cash and
cash equivalents divided by EBITDA.
Relevance to the business: This is a
measure of the strength of a company
to repay its debts and demonstrates
the financial health of the Group.
Performance: Leverage as at 30 June
2016 was 3.8, substantially below the
previous year and demonstrates that
the Company can reduce debt in the
current coal price environment.
Measurement: Free on Board
means the cost of coal delivered
to vessel, excluding government
royalties on a per tonne basis.
Relevance to the business:
This is a measure of the company’s
production costs which helps underpin
the profitability of the Company.
Performance: Whitehaven has reduced
FOB costs year-on-year from $69 per
tonne in FY2014 to $56/t in FY2016.
This has established a position in the
low cost quartile of the cost curve.
HEADINGSECTION 1 OVERVIEW NON-FINANCIAL HIGHLIGHTS
PRODUCTION (EQUITY)
FY2016
FY2015
FY2014
15.1Mt
11.3Mt
8.2Mt
34% INCREASE
3.8Mt
SALES VOLUMES (EQUITY)
FY2016
FY2015
FY2014
15.4Mt
10.9Mt
8.7Mt
42%INCREASE
4.6Mt
Measurement: Million tonnes
of saleable coal produced within
the year, on an equity basis.
Relevance to the business:
Production volumes
demonstrate how Whitehaven
Coal is performing and expanding
its coal mining business.
Performance: In 2016, Whitehaven
Coal produced 15 million tonnes of
saleable coal, which represents a 34%
increase year-on-year compared to
2015. Thermal coal accounted for
84% of total coal production.
Performance: Sales have increased
year-on-year since 2014.
Measurement: Millions of tonnes
of coal sold in the financial year,
on an equity basis.
Relevance to the business:
Sales volumes demonstrate
the Company’s performance in
its markets and growth of market
penetration over the financial year.
TRIFR
FY2016
FY2013
10.6
20.11
47%
SINCE
FY2013
Measurement: TRIFR stands
for the Total Recordable
Injury Frequency Rate.
Relevance to the business:
This shows injuries per million
hours worked by employees
and long-term contractors.
Performance: Our TRIFR this year
was 10.6. In 2013 the Group TRIFR
was 20.11, meaning performance
has improved 47% in that time.
Whitehaven Coal Annual Report 2016 / 7
OVERVIEW1HEADING CHAIRMAN'S STATEMENT
I am delighted to provide my Chairman’s Report
on Whitehaven’s performance during the 2015/16
financial year. I am pleased to report we are on track
to achieving our stated goal of becoming Australia’s
leading independent coal company. This year has seen
us produce, ship and market over 20 million tonnes of
premium quality coal.
The Company has delivered improved
results this year. Whitehaven has produced
a record amount of coal, reduced its costs,
improved high safety standards, recorded
the first full year profit since 2012 and
strengthened the balance sheet. All this
strengthens the long-term relationships
we enjoy with our partners and customers.
These are driven by the premium high-
quality product we produce and also
because our product is predictable,
performs very well in their facilities
and our team is very reliable and
professional to deal with.
FINANCIAL PERFORMANCE
For the year to 30 June 2016, Whitehaven
Coal recorded a modest but welcome
profit of $20.5m. In a weak pricing
environment the Company achieved
revenue of $1,164.4 million, reduced costs
to $56/t FOB and importantly, delivered
on our commitment to reduce debt.
Pleasingly, operating EBITDA increased
72% to $224.1 million on the back of a
3% increase in operating margin. The
company is conservatively geared at
23% at 30 June 2016 and is positioned
to continue to deliver as Maules Creek
ramps up production this year and into
the future. No dividend was declared
in FY2016.
Our financial results this year show that
we have a stronger balance sheet to drive
the future development of our business.
OPERATING PERFORMANCE
In my report last year I described the
importance of FY2016 to the company.
I am pleased to report to shareholders that
Whitehaven, led by CEO and Managing
Director Paul Flynn, has delivered on
the targets set out 12 months ago.
Operations across the Company
have performed strongly and safely,
reflected in the fact that Maules Creek
was named Mining Operation of the
Year by the NSW Minerals Council and
Narrabri has cemented itself as one of the
most productive underground mines in
Australia. Whitehaven’s smaller, but no
less important, mines have also performed
impressively and provide a solid platform
for the company’s operations.
POSITIONED FOR GROWTH
We believe that coal will be a reliable
and sustainable source of energy for
many years to come, helping to make
our homes warmer, our cities brighter,
and enabling vital infrastructure growth
and development.
According to the IEA, there are currently
over 1 billion people in the world without
access to electricity and nearly 3 billion
without access to clean cooking facilities.
For these people, electricity enables
sustainable development and social
resilience, in line with the UN’s development
goals. Affordable and widely available, coal
provides light, heat and energy to people
the world over, helping to meet basic needs
even in remote and less developed regions.
With Whitehaven’s high-quality coal,
emissions are lowered at the same time.
1
The IEA has developed different scenarios which have different implications for coal usage.
For further detail on the IEA forecasts used in this document see page 51.
8 /
HEADINGSECTION 1 OVERVIEW HEADING
The IEA forecasts¹ that given the
growth in energy demand in the
coming decades, globally coal will
power about a third of all electricity
in the next 20 years (IEA New Policies
Scenario), and will continue to play an
important role in the development of
cities and transport infrastructure. In
the main, this demand will be driven
by demographic change, urbanisation
and economic growth in emerging
economies, particularly in Southeast
Asia, as key economies in the region
look for affordable, reliable and
abundant sources of energy.
A QUALITY PRODUCT
FOR PREMIUM MARKETS
An increasing number of all new
coal-fired power plants globally are
now of the advanced category with
higher efficiency and lower emissions
(HELE) technologies requiring higher
coal grades. In the coming years the
world will see a more balanced coal
sector, with an emphasis on new
technologies that utilise coal in
more efficient and environmentally
friendly ways.
As a supplier of some of the highest
quality coal in the world, we are certainly
well placed to meet increased demand
for cleaner coal. Our world-class Maules
Creek and Narrabri assets are producing
the high-quality coal which gives us
a major competitive advantage in
the premium growth markets of Asia.
SUPPORTING OUR
LOCAL COMMUNITIES
More locally, Whitehaven takes great
pride in our long-standing links with the
local townships of Narrabri, Gunnedah
and Boggabri where we operate. With
the majority of our expanding workforce
living in these communities, Whitehaven
brings jobs, services and investment
to the region. This year the Company
strengthened our community link by
opening a new office in Gunnedah,
relocating staff to the town and
providing people the opportunity to visit
us. We also continue to support local
businesses, charities and organisations.
Our total economic input into the north-
west NSW region over the past three
years amounts to more than $800m.
CONCLUSION
Paul Flynn has continued to lead an
outstanding executive team who have
shown great leadership right across
our business, our industry and the
local community in which we operate.
Together with my fellow Directors, I
would like to thank Paul and the entire
Whitehaven team for their efforts and
dedication during 2016, and we look
forward to another outstanding year
in 2017.
The Hon. Mark Vaile AO
Chairman
Whitehaven Coal Annual Report 2016 / 9
OVERVIEW1 CEO STATEMENT
Over the past twelve months Whitehaven Coal's
dedicated team of employees, suppliers and contracting
partners have worked tirelessly to deliver strong results
that ensure we are closing on our goal of becoming
Australia’s leading independent coal company. The
Company has again reported a positive set of financial,
strategic and operational outcomes with a welcome
but modest return to profitability.
The Narrabri underground mine
again delivered an excellent year
of performance, which incorporated
two longwall change outs. We believe
Narrabri has now become one of the
most productive underground mines in
Australia, with more to come in the year
ahead following the recent approval to lift
site capacity to 11 Mtpa and installation
of a wider longwall face in H2 FY2017.
While Maules Creek and Narrabri often
receive much of the attention, I would like
to highlight the success of the teams at
our smaller open cut operations – Werris
Creek, Tarrawonga and Rocglen. These
mines have again delivered solid and
dependable performance – Tarrawonga
achieved record annual production. These
mines have provided the base from which
Whitehaven has been able to grow.
EFFICIENCY
Whitehaven’s commitment to efficiency
has resulted in the business continuing
to grow while strategically addressing
the challenges of a continued market
downturn. Costs during FY16 were
reduced to $56 per tonne from $61 per
tonne the previous year. Since 2014 we
have reduced production costs 19% which
places us firmly at the low cost end of the
industry curve. We have targets in place
to drive our competitive position further.
We are continuing to drive a smarter,
more efficient and cost effective way
of operating at Whitehaven.
At a time when many participants
in the coal sector are doing it tough,
Whitehaven’s achievements and
performance are driving home our
leadership within the industry as a
‘best in class’ operator – a business
that is well-run, efficient and delivering
on our promises.
In last year’s Annual Report we set out
a number of priorities, to continue the
ramp up of operations at Maules Creek,
to position the company to commence the
deleveraging process, to drive further cost
efficiencies across each of our operations,
to increase contracted sales of higher
margin metallurgical coal and to progress
the 4.5Mtpa Vickery project. I am pleased
to report that good progress has been
made against all these priorities.
SAFETY
Our team’s continued focus on safety
has seen the Total Recordable Injury
Frequency Rate (TRIFR) improve 47%
since 2013. Safety remains a key priority
and this year Rocglen and Gunnedah
CHPP achieved a zero TRIFR score,
an excellent achievement that sets the
example for the rest of the business.
For FY2017, we have set challenging
targets to inspire sustained improvement
in safety across all our operations.
PRODUCTION
After achieving our targeted saleable coal
production rate in FY2015, Whitehaven
again delivered a record rate of production
for FY2016 of 19.7 Mtpa. Over the past
four years production has increased
by nearly four times.
We are now well positioned to fully
optimise our world class assets at Maules
Creek and Narrabri. Operationally, our
newest mine at Maules Creek was officially
opened this year and is now ramping up
towards full production. Pleasingly the
new team at Maules Creek were honoured
with the mine named Operation of the
Year by the NSW Minerals Council.
10 /
HEADINGSECTION 1 OVERVIEW PEOPLE
Our people ensure our success. Their
commitment underpins who we are and
what we do. Whitehaven takes pride in
our reliance on local employees and this
year we welcomed more females and
Aboriginal employees to our growing
workforce. The company’s employee
satisfaction survey reported that three
quarters (73%) of respondents are
satisfied with Whitehaven Coal as a
place of work. The company recognises
that the investment in its people and a
strong leadership team are paramount
for ongoing success. A pilot program
to develop emerging leaders is being
developed to support people managers
to increase their effectiveness and
impact, and help female leaders
transition into more senior roles.
COMMUNITY
Whitehaven continued to provide
economic opportunity for the
community through our support for
local businesses and suppliers. Over
the past three years the Company
has delivered economic benefits in
the north-west NSW region worth
more than $800m and supported
more than 600 local businesses and
suppliers along the way (see page 48).
Whitehaven’s ongoing support for
the region is reflected in population
growth across the Gunnedah,
Narrabri and Liverpool LGA.
A significant milestone for the Company
this year was opening a new permanent
office in Gunnedah which places us at
the heart of the communities, illustrates
that we want to be visible and accessible
to community members and that we are
here for the long-term. Our projects are
quite literally intergenerational. In time
there will be people whose children,
and whose children’s children,
will work on Whitehaven sites.
Whitehaven’s work with our valued
community partners continued though
FY2016, with our team continuing to
fundraise for the Westpac Rescue
Helicopter. This support has now
reached more than $500,000 over
the past five years. The business also
provided sponsorships and donations
to a number of organisations and good
causes throughout north-west NSW.
We value our communities and the
organisations we work with and we
are proud of the difference we can
make together.
ABORIGINAL ENGAGEMENT
Whitehaven’s commitment to creating
opportunities for Aboriginal people
through training, employment and
business development continued
during the year, with the launch of the
company’s inaugural Reconciliation
Action Plan. 11% of our total workforce
self-identify as Aboriginal and/or Torres
Strait Islander. More than 50 new local
indigenous jobs have been created
at Maules Creek (mainly trainee
operators) and approximately
$10m in annual salaries are flowing
through our indigenous workforce
back into local communities.
Whitehaven’s approach goes beyond
direct employment. We support
programs that facilitate access to
education from kindergarten through
to university and mature age. These
include the Winanga-Li Aboriginal
Child and Family Centre in Gunnedah,
which was the first of nine Aboriginal
Child and Family Centres to open
its doors in NSW when it began
operation two years ago.
Another significant milestone this
year was the signing of a Native Title
Agreement with Gomeroi Native
Title Applicants, who represent the
Gomeroi Nation of north-western NSW.
OUTLOOK
The strong results achieved by
Whitehaven in FY2016 have further
cemented a strong and resilient
foundation for our business,
positioning us to build on our significant
achievements in production, cost
and productivity in the year ahead.
Finally, a word about coal more
generally. Despite the claims of some
activists, coal continues to play a vital
role in meeting global energy demand
– helping to heat our homes, light our
cities, power modern technology and
build our roads, cities and infrastructure.
Nowhere is demand for Australian coal
stronger – including Whitehaven’s – than
Asia where around 360 million people in
the region have no electricity, according
to the IEA.
Coal consumption in Asian countries
is expected to continue its 40 year
growth trend and Asian countries will
continue to drive their economic growth
by adding competitive coal-fired power
generating capacity¹. Most of these new
power stations use super critical, or ultra
super critical, boiler technology and
so the demand for Whitehaven’s high-
quality coals is expected to grow in
the years ahead. We can be confident
about our future prospects.
I take this opportunity to thank all
our dedicated people for their excellent
contribution to our business and look
forward to a strong year ahead as
we continue our journey to become
Australia’s leading independent
coal company.
Paul Flynn
Managing Director and CEO
1
IEA South-East Energy Outlook New Policy Scenario. The IEA has developed different scenarios
which have different implications for coal usage. For more information see page 51.
Whitehaven Coal Annual Report 2016 / 11
OVERVIEW1HEADING
KEY
OBJECTIVES
BECOME
DOMINANT COAL MINER
IN GUNNEDAH BASIN
PRODUCE
HIGH-QUALITY COAL
#1
#2
#3
REMAIN
A LOW COST PRODUCER
#4
#5
GROW
THE COMPANY
OPTIMISE
REVENUE INTO
PREMIUM MARKETS
12 /
Strategy ..................................................................................................... 13
Our process from pit to port ................................................................ 14
Coal fundamentals uses and advantages ......................................... 16
Asia drives demand for Australian coal ............................................ 18
SE Asia is the world's fastest growing coal consumer ................. 19
Quality and energy efficiency ............................................................ 20
Recovering global pricing .....................................................................22
MISSION, VALUES, COMMITMENT
MISSION
Our mission is to produce 23 million tonnes of coal by FY2018
safely and sustainably whilst delivering value to all our
stakeholders. We will accomplish this by:
— Reliably supplying high-quality coal to our customers in
premium international markets
— Building long-term relationships with suppliers and partners
— Developing the skills and competences of our efficient,
agile and dynamic workforce
— Contributing to the socio-economic development of Australia,
and of the communities in the regions where we operate
— Protecting the environment and leading the way
in environmental standards
— Creating long-term value for our shareholders
VALUES
The core values of our business are:
— Safety in all our operations
— Social and environmental responsibility
— Leadership in all areas
— Continuous development and improvement
— Operational excellence and sustainable growth
— Openness with customers and partners
— Professionalism and integrity in everything we do
COMMITMENT
Our commitment is to be:
— A leading producer of some of the world’s highest quality coal
— A company that has locally-based employees, wherever possible
— A proud member of and leading employer in the north-west
NSW region
— A provider of stable and secure employment opportunities
for local Aboriginal people
— A company that achieves zero harm to our people and our
environment
STRATEGYSECTION 2SECTION 2 STRATEGY STRATEGIC FRAMEWORK
DOMINANCE
MAIN PLAYER IN
ONLY EMERGING
HIGH-QUALITY COAL
BASIN IN AUSTRALIA
WORLD-
CLASS
TWO LONG-LIFE
ASSETS IN PORTFOLIO
EFFICIENCY
REDUCING COSTS,
INCREASING
PRODUCTIVITY AND
GROWING MARGINS
Our business model and strategic framework ensures we
remain well positioned for the future. To deliver on our
goal to become the leading independent ASX listed coal
company, we must be the coal supplier of choice, the
employer of choice and the coal mining investment of
choice. To meet these objectives we have identified
the following strategic pillars:
SUPERIOR COAL QUALITY
The world supply of high energy,
low ash and low sulfur quality coal is
constrained. As the dominant player in
the only emerging high-quality coal basin
in Australia, Whitehaven Coal is uniquely
positioned to fulfil the needs of those
markets requiring premium quality coal.
TALENTED PERSONNEL
Whitehaven Coal is committed to
developing the skills of its people. We
are working together to build a robust
culture of respect, transparency and
efficiency, while continuing to employ
and retain the right people with the right
skills to grow the business into the future.
SUSTAINABLE FOCUS
ON COMMUNITY
The whole community must benefit
from our presence. As the largest
employer in our region, the social and
economic contributions are fundamental
to our deep local connection. Reflecting
the Aboriginal representation in our
communities, our commitment includes
creating economic opportunities for
Aboriginal people through training,
employment and business development.
PREMIUM MARKETS
High-quality coal ensures we are
aligned to the Asian markets that
require a premium product. All our
markets are growing and as a result,
growing their coal consumption.
ASSET PORTFOLIO
With two long-life world-class assets
in our portfolio, Whitehaven Coal
is positioned as a credible, reliable
and independent supplier to our
key customers for the long-term.
OPERATING EFFICIENCY
By reducing costs through the
improvement of operational efficiencies,
Whitehaven continues to grow its
business, while strategically addressing
the challenges of a sustained market
downturn. The business has grown margins
in recent years, increasing productivity
while reducing costs. This reduction in
costs places Whitehaven in the lowest
quartile of the coal cost curve.
ALIGNED TO FUTURE
REGULATION AND
TECHNOLOGICAL INNOVATION
The world wants technological
advancement and more energy created
with lower emissions. Regulatory change
around the world encourages the use
of Whitehaven’s high-quality coal.
Whitehaven Coal Annual Report 2016 / 13
STRATEGIC FRAMEWORK2 OUR PROCESS
FROM PIT TO PORT
KEY HIGHLIGHT
To minimise water extraction
and increase water recycling,
Whitehaven has invested $3.8m
on state-of-the-art equipment
at our Gunnedah Coal Handling
and Preparation Plant.
HOW WE CREATE VALUE
We create value in a
number of ways within
four key areas of activity.
OPEN CUT MINING
OUR MINES
Maules Creek
Tarrawonga
Werris Creek
Rocglen
Vickery Project
KEY HIGHLIGHT
Our Maules Creek mine
uses state-of-the-art
ultra-class mining fleet.
UNDERGROUND MINING
OUR MINES
Narrabri
14/
SECTION 2 STRATEGY
KEY HIGHLIGHT
Whitehaven’s Narrabri longwall
mine is one of the most
productive in Australia.
1.
Open cut and underground
mining: Our cost-efficient mining
delivers a sustainable supply
of high-quality thermal and
metallurgical coal. Using
open-cut mining methods
at Maules Creek, Tarrawonga,
Werris Creek and Rocglen and
underground mining at Narrabri,
we produce high-quality coal.
Ongoing sustaining capital
investment ensures operations
maintain a low cost position.
KEY HIGHLIGHT
Whitehaven’s coal from the
Gunnedah Basin is some of
the highest quality among
Australian producers –
attracting premium pricing
from our Asian partners
and customers.
KEY HIGHLIGHT
To support increased
production from Maules
Creek, railway tracks have
been upgraded to allow
for full 30 tonne axle load
operations. Up to 8,000
tonne trains can now
operate along the line.
2.
3.
4.
Washing and processing:
Washing plants and
processing facilities improve
the quality of coal and
enables the production of
higher value metallurgical
coal. Washing reduces ash,
increases energy content
and improves the market
value. Coal is also crushed
and screened so that it can
precisely meet customers’
size specifications.
Whitehaven operates
washing and processing
facilities at Maules Creek,
Narrabri and Gunnedah.
Transport: Whitehaven’s
coal is transported by train
to the Port of Newcastle
before being loaded on
to ships which deliver the
coal to our customers
in Asia (more details on
Logistics are on page
33). The location of our
assets, with good access
to key transport and port
infrastructure, enables
Whitehaven to reliably
supply the major markets
of the Asia Pacific region.
Sales: Whitehaven Coal’s
extensive sales network
ensures reliable coal
supplies to customers
across Asia. Our marketing
offices in Newcastle
and Tokyo help mitigate
business risk.
KEY HIGHLIGHT
Where applicable,
disturbed land is generally
rehabilitated to align with
pre-mining vegetation
communities such as
pasture, woodland and
forest. Rehabilitation
monitoring is conducted in
accordance with each site's
mining operations plan and
relevant management plans.
Whitehaven Coal Annual Report 2016 / 15
STRATEGIC FRAMEWORK2 COAL FUNDAMENTALS
USES AND ADVANTAGES
AVAILABLE
RELIABLE
AFFORDABLE
Coal is one of the most important energy sources in the
world. Derived from the organic remains of prehistoric
plants, coal is an integral part of the global energy mix,
alongside the other fossil fuels, oil and gas. For centuries,
coal’s main usage was as a domestic fuel. However, in
the 19th century coal became the driving force of the
Industrial Revolution. In turn, the Industrial Revolution
helped to develop and expand the coal industry, creating
the foundations of the global economic system.
Coal is the largest source of electricity
generation in the world, providing
41% of the world’s supply1.
Some of the best quality, high energy
coal in the world can be found in Australia
– including in the Gunnedah Basin where
Whitehaven Coal operates.
COAL IS UTILISED BY ALMOST
ALL MAJOR INDUSTRIES
Electric power industry: Within electric
power plants, coal is burned to heat water
in boilers, generating steam which in turn
propels turbines and generators. In this
way, coal’s chemical energy is transferred
into mechanical energy, and then into
electric energy.
Thermal energy: As part of this process,
coal-fired thermal power plants or
dedicated boilers supply hot water
to residential buildings and industrial
facilities. The use of power and heat
co-generation increases the efficiency
of coal-fired power plants.
Metallurgical industry: About 70%2 of
global steel is produced using coking
coal, which has high carbon content
and low levels of sulfur and phosphorus.
Coke is also used as a foundry fuel in
the chemical and ferroalloy industries.
Pulverised coal injection (PCI) allows
for cheaper coal to be consumed in
a blast furnace, replacing expensive
coke, thereby cutting down on costs.
Chemical industry: Coal provides a vital
raw material for the chemical industry,
where coking by-products are used to
create materials such as synthetic rubber,
benzene, naphthalene and other products.
Coal derivatives also form the basis of
pigments, synthetic medicines, varnishes,
plastics and many other products.
Fuel and gas industry: Coal can be
processed into other fuels, such as gas
or liquid coal fuel, which have similar
properties to petrol or diesel fuel. These
coal-derived fuels are sulfur-free and
low in particulates and nitrogen oxides,
which means they can play a key role
in meeting the growing energy needs
of the transport sector.
Construction industry: Coal is used as
the main source of energy in cement
production. Coal combustion products
such as fly ash, which has good binding
properties, also play an important role in
cement and concrete manufacture and
in the construction industry generally.
Other industries: Other major industrial
consumers of coal include the paper,
textile and glass industries. Coal is also
used to produce carbon fibre and special
components for household appliances
and personal hygiene product
1 World Energy Outlook 2015, International Energy Agency
2 World Coal Association 'How steel produced'
16 /
SECTION 2 STRATEGY Coal-fired power is used to provide electricity to many of our cities including Sydney.
Versatility: It is the most versatile
energy resource. As well as generating
electricity, coal is a core component in
iron and steel making and is integral to
a vast range of processes and products,
including aluminium refining, paper
manufacture and chemical production.
Affordability: Coal is easy to stockpile,
which contributes to making it the
most affordable energy source in
the world.
Safety: Compared to alternative fossil
fuels which can easily ignite, coal is
easier and safer to handle and store.
USES FOR
WHITEHAVEN’S COAL
Whitehaven Coal produces some of
the best quality, high CV, low ash and
sulfur coal in the world from our mines
in north-west NSW. This thermal and
metallurgical coal is transported by
train to the Port of Newcastle (see
page 33) before being exported to our
customers across Asia to manufacture
steel, and for use in state-of-the-art
coal-fired electricity generating
power stations (see page 18).
THE ADVANTAGES OF COAL
Availability: Coal does not require
high-pressure pipelines, expensive
protection during transport or costly
processing. It is easy to store for use
on demand, making it the world’s most
readily available energy source.
Usability: Coal only needs to be
mined before it can be used. Other
fossil fuels must be refined. Other
energy sources such as wave, wind
and solar are dependent on the
vagaries of nature, and generate
less reliable intermittent power.
Powering the world.
Whitehaven Coal Annual Report 2016 / 17
STRATEGIC FRAMEWORK2 ASIA DRIVES DEMAND
FOR AUSTRALIAN COAL
360M PEOPLE
IN THE ASIAN REGION
HAVE NO ELECTRICITY
2/3 HELE
TWO THIRDS OF COAL-
FIRED POWER PLANTS
UNDER CONSTRUCTION
OR PLANNED USE HELE
As the world’s population grows, more and more
people are living in urban areas. As a major component
of the urban energy system, coal will keep the bright
lights on in large cities for many years to come. Coal is
also used in the production of cement, steel and glass
– vital materials that form the living fabric of urban
growth and infrastructure.
Source: Minerals Council Australia
'Asian Demand for Coal'
* The IEA has developed
different scenarios which
have different implications
for coal usage. For further
detail on the IEA forecasts
used in this document see
page 51.
Australia’s coal exports to Asia are
forecast to grow according to the
International Energy Agency (IEA),
boosting Australia’s share of the global
coal trade. Nowhere is demand for
Australian coal stronger than in Asia.
Reliable, low cost, base load electricity
generation underpins expected
urbanisation and industrialisation in
South-East Asia and India over the next
30 years. Around 360 million people
in the Asian region have no electricity,
according to the IEA. A further 1.5 billion
have no access to clean cooking facilities.
Australia’s coal exports will play a central
role in helping lift people out of poverty –
and have access to many of the amenities
that we in developed countries have
used on a daily basis for decades.
SOUTH-EAST ASIA ELECTRICITY CAPACITY BY SOURCE (GIGAWATTS)
Australia’s world-class coal is also in
demand for its high energy content,
which makes it the preferred fuel for
high efficiency, low emission (HELE)
technologies such as those used by our
main Japanese partners and customers –
such as J-Power’s Isogo power plant.
Across the region, two-thirds of
coal-fired power plants planned
and under construction will utilise
HELE – technology which can reduce
CO2 emissions by up to 40%.
According to the IEA New Policies Scenario,
the global supply of electricity is forecast to
grow by more than 70% to 2040, and coal-
fired electricity generation is to increase
by 23% in the same period*. Demand for
quality coal globally is also on the rise.
The opportunities for Whitehaven
Coal – producer and supplier of
some of the world’s highest quality
coal – and investors are significant.
Coal
Oil
Gas
Nuclear
Hydro
Renewables
2013
2020
2025
2030
2035
2040
Source: International Energy Agency
Outlook, World Energy Outlook 2015,
New Policies Scenario*
In emerging Asia,
the arithmetic of
rising electricity
and coal demand
is inescapable.
Source: Whitehaven Coal
18 /
MORE
PEOPLE
MOVING TO
CITIES
DRIVING
EFFICENCY
ELECTRICITY
DEMAND
COAL
SHARE
COAL
DEMAND
POPULATION
X
GDP
PERSON
X
ELECTRICITY
GDP
=
ELECTRICITY
X
% COAL
SHARE
=
COAL
DEMAND
600
500
400
300
200
100
0
SECTION 2 STRATEGY SE ASIA IS THE WORLD'S FASTEST
GROWING COAL CONSUMER
The Minerals Council Australia report the following projections in relation to
South-East Asia.
ENERGY DEMAND
80%
Increase in primary energy
demand to 2040. Coal overtakes
oil and gas to become the region's
largest energy source.
POWER GENERATION
2,212Twh
Electricity generation across
South-East Asia in 2040. That
is a 180% increase on electricity
generated in 2013 (789Twh).
COAL DEMAND
162%
Increase in coal-fired electricity
generation to 2040. The South-East
Asia region is the fastest growing
coal consumer in the world.
COAL'S SHARE
Power generation 2040.
Coal 50%
Gas 26%
Hydro 12%
Renewables 4%
Other 8%
50%
CURRENT COAL FLEET
340
Coal powered units in operation
across South-East Asia today,
requiring 66 Mtoe of coal every year.
COAL ACCOUNTS FOR
55% OF ELECTRICITY
CAPACITY UNDER
CONSTRUCTION AND 52%
OF PLANNED CAPACITY.
NEW TECHNOLOGY
65%
Increase in new and planned
coal-fired capacity that is
high-efficency, low emission
(HELE) technology.
ENERGY POVERTY
120m
People across South-East Asia
have no electricity – that is more
than five times Australia's population.
UNDER CONSTRUCTION
412
New coal-fired units under
construction or planned,
boosting capacity by 133 GW.
FOSSIL FUEL
REPLACEMENT
97,661km2
Area needed for turbines to replace
fossil fuels in South-East Asia in 2040.
CLEAN COOKING
276m
People without clean cooking
facilities. More than 1.67 million deaths
were linked to pollution from biomass
stoves in South-East Asia in 2012.
Source: Minerals Council Australia 'Asian Demand for Australian Coal'
Whitehaven Coal Annual Report 2016 / 19
STRATEGIC FRAMEWORK2 QUALITY AND ENERGY EFFICIENCY
HIGH RANK
COALS ARE HIGH IN
CARBON AND LOW IN
ASH AND MOISTURE
6,000 KCALS
HIGH-QUALITY COAL
HAS ATTRIBUTES OF
GREATER THAN 5,500
KCALS/PER KG
PREMIUM
COAL FROM
GUNNEDAH BASIN
IS IN DEMAND
Australia’s high energy coal burns hotter, faster and
cleaner than coal from many other mining nations.
This makes Australian coal ideal for use for use
in high efficiency, low emission (HELE) coal-fired
power generation – the innovative technology at the
forefront of a rapidly modernising global coal fleet.
Whitehaven’s coal from the Gunnedah
Basin is some of the highest quality
among Australian producers – attracting
premium pricing from our Asian partners
and customers.
HIGH-QUALITY COAL
High-rank coals are high in carbon and
low in ash and moisture. This means that,
when burned, less fuel is required to
vaporise moisture and less heat is lost to
the ash. Furthermore, washing coal prior
to combustion helps not only to reduce
the coal’s ash content by more than 50%,
but also the sulfur content. Therefore,
the higher the quality of coal, the fewer
emissions there are for the same amount
of electricity produced.
High-quality coal is defined as
having attributes of greater than
5500 Kcals/per kg, ash levels less
than 14% and sulfur less than 0.5%.
STATE-OF-THE-ART
COAL-FIRED STATIONS
Increasing the efficiency of coal
plants also leads to fewer CO2 emissions
without affecting the power output. A
one percentage point improvement in
the efficiency of a conventional pulverised
coal combustion plant results in a 2–3%
reduction in CO2 emissions. Currently,
most coal-fired power plants (such as
those in Australia) operate under sub-
critical steam conditions and have an
average efficiency of 35%.
New technologies enable coal-fired
plants to work at supercritical and ultra-
supercritical temperatures, temperatures
and pressures with an efficiency increase
to over 40%. Supercritical and ultra-
supercritical power plants require less
coal than conventional plants, leading
to lower emissions, higher efficiency
and lower fuel costs per megawatt.
Source: World Coal Association 'High Efficiency,
Low Emissions Coal' fact sheet
WORLD ELECTRICITY GENERATION BY SOURCE (TWh)
INTERNATIONAL COAL SUPPLIERS
40000
35000
30000
25000
20000
15000
10000
5000
0
2013
2020
2025
2030
2035
2040
Coal
Oil
Gas
Nuclear
Hydro
Renewables
4000
5000
6000
7000
Energy
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
h
s
A
Indonesia
Whitehaven
Russia
Australia
South Africa
Source: International Energy Outlook, World Energy Outlook 2015, New Policies Scenario
Source: Whitehaven Coal Analysis
20 /
SECTION 2 STRATEGY Globally, 64% of coal power
plants under construction are
HELE (supercritical or ultra-
supercritical), up from 50% in
2012. There are approximately
670 HELE coal units in operation
in 10 Asian nations today including
places such as Vietnam, Thailand,
Malaysia and the Philippines, in
addition to the much larger, more
developed economies including
China, Japan, South Korea
and Taiwan.
HELE technology in these
nations is already reducing
CO2 emissions by an estimated
479 million tonnes a year,
compared to emissions if these
plants were built using sub-
critical power plant technology.
This emissions reduction is
roughly equivalent to Australia’s
total annual carbon emissions.
Critically, this low emissions
coal revolution is accelerating,
with a further 1066 HELE units
under construction or planned
in these economies alone.
Increasing the efficiency of all
coal-fired power plants from
33% to 40% would cut CO2
emissions by an amount equal
to expanding the world’s
current solar power capacity
by 195 times.
RISE BY 1% IN EFFICENCY OF COAL POWER PLANTS REDUCES CO2 EMISSIONS BY 2–3%
l
a
c
i
t
i
r
c
b
u
s
l
a
c
i
t
i
r
c
r
e
p
u
s
l
a
c
i
t
i
r
c
r
e
p
u
s
-
a
r
t
l
u
C
S
U
d
e
c
n
a
v
d
a
without
CCS
with
CCS
25%
30%
35%
40%
45%
50%
Efficency of coal-fired power plants
h
W
k
/
2
0
C
g
s
n
o
i
s
s
i
m
e
2
O
C
1500
1000
800
600
400
200
0
Sources: Minerals Council Australia and World Coal Association
SOUTH-EAST ASIA COAL-FIRED CAPACITY (GW)
250
200
150
100
50
0
Source: Minerals Council Australia
'Coal Future' fact sheet and World
Coal Association 'High Efficiency,
Low Emissions Coal' fact sheet
2014
2020
2030
2040
IGCC
Ultra-supercritical
Supercritical
Subcritical
Sources: International Energy Agency South-East Asia, World Energy Outlook 2015, New Policies Scenario.
For more information see page 51
Whitehaven Coal Annual Report 2016 / 21
STRATEGIC FRAMEWORK2
RECOVERING
GLOBAL PRICING
After five years of declining prices coal markets appear to have found a bottom
in the first quarter of CY2016. The Newcastle GlobalCoal Index coal price has
increased from a low of about US$48/t in early January to be $68/t in mid-August.
Metallurgical coal prices have also risen over the last year.
Whitehaven remains cautiously
optimistic in the short-term. However,
in the medium to longer term, as
demand for low priced reliable
electricity continues to grow in the
Asian region, Whitehaven is confident
the coal prices will rise and that
Whitehaven’s high-quality coals
will continue to attract a premium
price in the market.
Production cuts gathered pace during
CY2015, with Indonesia and the United
States bearing the brunt of these cuts.
These production cuts combined with
a new working day policy introduced
by the Chinese Government have seen
the thermal market reach balance.
The Chinese Government reduced the
working days in coal mines from 330
per year to 276 per year. This has led
to a significant production cut across
the coal industry in China resulting
Chinese domestic coal producers
pushing through two price rises.
Coal price forward markets rallied with
the change with the CY2018 Newcastle
Index price increasing from US$41/t in
early March to be US$60/t at the end
of the year. The move in the forward
markets combined with higher than
expected imports into China have
enabled the spot price to increase
since January this year. The spot price
ended the year at US$54/t and has
increased further into September.
NEWCASTLE GLOBALCOAL INDEX COAL PRICE FY2016 ($/T)
90
80
70
60
50
40
30
Jul ’15
Sep ’15
Nov ’15
Jan ’16
Mar ’16
May ’16
Jul ’16
USD
AUD
Source: Whitehaven Coal
22 /
SECTION 2 STRATEGY 2
I
S
T
R
A
T
E
G
C
F
R
A
M
E
W
O
R
K
Whitehaven reached a tonnage of 20 million tonnes of coal railed, sold
and loaded for FY16 on 29 June 2016. Pictured is MV Pacific Power, containing
the 20 millionth tonne, sailing from the Port of Newcastle en route to South Korea.
ANNUAL COAL SALES BY TYPE
100%
80%
60%
40%
20%
0%
FY2014
FY2015
FY2016
LCV Coal
Benchmark Thermal
Metallurgical Coal
Source: Whitehaven Coal
Whitehaven Coal Annual Report 2016/23
Maules Creek ........................................................................................... 26
Endorsements for Maules Creek ........................................................ 28
Narrabri .....................................................................................................30
Gunnedah Open Cuts ............................................................................. 31
Growth Projects ..................................................................................... 32
Infrastructure and Logistics ................................................................ 33
EQUITY SHARE BASIS – PRODUCTION
MAULES CREEK
NARRABRI
7.8Mt ROM
6.9Mt ROM
24 /
SECTION 3OPERATIONAL ACHIEVEMENTSECTION 3 OPERATIONS 3
O
P
E
R
A
T
I
O
N
S
OPEN CUTS
5.8Mt ROM
Whitehaven Coal Annual Report 2016 / 25
MAULES CREEK
Commercial production at Maules Creek commenced on
1 July 2015 with the mine producing 7.4Mt saleable coal in
FY2016. The mine was operating at an annualised rate of
over 9.5Mt at the end of FY2016 following its production
ramp up during the year.
Maules Creek was awarded Mining Operation of the
Year by NSW Minerals Council, a significant achievement
in its first year of operation.
Construction activities at the mine were effectively
completed early in FY2016 with total capital expenditure
for the project of $701 million. The project came in under
the budget of $767 million and ahead of the original
schedule. Maules Creek is one of the lowest cost coal
mining projects developed over the past decade.
A key feature of Maules Creek’s performance during FY2016
has been the high-quality of its thermal and metallurgical
coal products. Maules Creek thermal coal is one of the highest
quality coals sold into the Asian seaborne market. Many of our
customers are utilising this high energy low ash coal in new
HELE technology power stations to reduce their emissions.
The quality of its metallurgical coal product has exceeded the
expectations of many steelmakers. Many steelmakers have
provided feedback in relation to the positive contribution of
Maules Creek's semi-soft coking coal to their coking blends.
Sales of semi-soft coking coal during FY2016 were above
expectations and sales are expected to increase as
production ramps up to the approved level of 13Mtpa.
There were 390 people employed at Maules Creek at the
end FY2016. Many of these employees live locally. This is
consistent with Whitehaven’s aim to ensure that the local
community is a key economic beneficiary of the mine.
Employee and contractor numbers have grown from about
200 at the beginning of FY2016 while Aboriginal employees
make up 13% of the total, exceeding the 10% target set
by the company when Maules Creek started operating.
Approximately 15% of employees at site are female.
MAULES CREEK SALEABLE COAL PRODUCTION (000'S T)
Maules Creek’s coal reserves have been updated as
part of Whitehaven’s annual update of its coal resources
and reserves under the JORC code 2012. This update
incorporates an increase in Maules Creek coal reserves
to 510Mt. This represents an upgrade of 129Mt relative
to the coal reserves of 381Mt declared at the end of FY2015.
CATEGORY
STATISTIC
Ownership
Location
Whitehaven 75%, ICRA MC Pty Ltd 15%
(an entity associated with Itochu Corp)
and J-Power 10%
45 kilometres south-east of Narrabri and
17km north east of Boggabri in the Gunnedah
Basin of New South Wales, Australia
Tenements
CL375 and AUTH346
Coal Types
(5 year target)
50% SSCC/PCI coal and 50% high energy,
low sulfur, low ash thermal coal
Life of Mine
30+ years
Coal Reserves
See Resources and Reserves on
page 54 and 55
Coal Resources
As above
2016 Production
Target
2016 Actual
Production
2017 Production
Target
7.1Mt–7.3Mt ROM coal
7.8Mt ROM coal
9.5Mt–9.8Mt ROM coal
8000
7000
6000
5000
4000
3000
2000
1000
0
26 /
2014
2015
2016
Maules Creek: NSW Mining Operation of the Year
SECTION 3 OPERATIONS NSW MINING OPERATION
OF THE YEAR
Whitehaven Coal’s Maules Creek Mine was this
year awarded Mining Operation of the Year by
NSW Mining.
Peter Wilkinson, General Manager of Maules
Creek, collected the award at NSW Parliament
from the Deputy Premier, the Hon Troy Grant
MP and the Minister for Industry, Resources
and Energy, the Hon Anthony Roberts MP.
Whitehaven Coal CEO and Managing Director
Paul Flynn said the award was a 'strong
endorsement of the hard work of each, and
every, Whitehaven employee to get the Maules
Creek mine up and running. Maules Creek is
a big and complex project that we were able
to complete substantially ahead of time and
under budget. That doesn’t happen with many
projects, and is a huge feat, which the team can
be justifiably proud of.
To receive recognition from your industry peers
is especially rewarding’.
Whitehaven Coal Annual Report 2016 / 27
OPERATIONS3 ENDORSEMENTS
FOR MAULES CREEK
“Japan depends on Australia
as a very indispensable
and reliable supplier of
coal. The Maules Creek
mine will certainly advance
the economic partnership
we enjoy between our
two countries.”
Masato Takaoka, Consulate-General
of Japan in Sydney, September 2015.
"This mine (Maules Creek)
is the epitome of how to
develop a coal mine both
in an environmentally
sustainable way but also
one that produces coal
that produces the lowest
emissions of any coal-fired
electricity in the world.”
Hon. Ian Macfarlane MP, Federal Minister
for Science and Industry. Official Opening
of Maules Creek, September 2015.
“Mining plays a positive role
in our state and the Maules
Creek Project and others like
it contribute significantly to
making NSW the economic
leader in our nation.”
Rt Hon. Mike Baird MP, Premier of NSW
on visit to Maules Creek, January 2015.
Whitehaven Coal Annual Report 2016 / 29
OPERATIONS3 NARRABRI
The Narrabri underground mine continued to deliver
excellent results and has broken a series of production
records. In CY2015 the mine produced 8.3Mt ROM coal,
making it one of Australia’s most productive and lowest
cost coal mines.
CATEGORY
STATISTIC
Ownership
Whitehaven 70%, J-Power 7.5%, EDF
Trading 7.5%, Upper Horn Investments 7.5%
and Posco Daewoo and Korea Resources
Corporation 7.5%
The CY2015 result was followed in CY2016 by two monthly
production records of 981kt in January and 1,057kt in April.
Location
17 kilometres southeast of Narrabri and
70km northwest of Gunnedah
Roadway development, which is important to maintain
longwall mining continuity, increased to 22,098 metres
from 19,800 metres in the previous year.
ROM coal production for FY2016 was 6.9Mt. The 11%
reduction in FY2016 production relative to FY2015 was
due to the completion of two full longwall change-outs
during the year. This equates to approximately 12 weeks
of lost production.
At the end of FY2016 mining had commenced in LW06,
the final 300 metre wide panel. Mining in LW07, the first
400 metre wide panel, is scheduled to commence in the
second half of FY2017. Work on the longwall expansion
has progressed well with the surface infrastructure and
electrical upgrades being completed on schedule.
In December 2015 the NSW Department of Planning and
Environment granted approval to increase Narrabri's annual
production limit from 8.0Mtpa to 11.0Mtpa ROM coal. This
provides the necessary headroom to support an expected
increase in production from the 400 metre wide panel.
Tenements
ML1609 and EL6243
Coal Types
Approximately 80% high energy, low sulfur,
low ash thermal coal and 20% PCI coal
Life of Mine
22+ years
Coal Reserves
See Resources and Reserves on page 54
and 55
Coal Resources
As above
2016 Production
Target
6.6Mt–6.8Mt ROM coal,
7.0Mt–7.2Mt product
2016 Actual
Production
6.9Mt ROM coal,
7.3Mt product
2017 Production
Target
8Mt–8.3Mt ROM coal
NARRABRI SALEABLE COAL PRODUCTION (000'S t)
8000
7000
6000
5000
4000
3000
2000
1000
0
30 /
2012
2013
2014
2015
2016
Narrabri: One of the most productive underground mines in Australia.
SECTION 3 OPERATIONS GUNNEDAH OPEN CUTS
Whitehaven’s three smaller open cuts – Tarrawonga,
Rocglen and Werris Creek – performed strongly with ROM
production of 5.8Mt and saleable production of 5.0Mt for
the year. Sustainable cost reductions have been recorded
at each of the mines, largely due to the implementation of
more efficient mining practices and procurement driven
cost savings.
Tarrawonga has successfully utilised improved mining
techniques to reduce overburden removal costs. This has led
to an improvement in its financial contribution to the Group
and its record ROM production for the year.
Rocglen and the Gunnedah Coal Handling and Preparation
Plant (CHPP) have both achieved two years free of injuries.
CATEGORY
STATISTIC
Ownership
Tarrawonga: Whitehaven 70%, Idemitsu 30%
Rocglen: Whitehaven 100%
Werris Creek: Whitehaven 100%
Location
Gunnedah region and Werris Creek
Tenements
Coal Types
Life of Mine
Tarrawonga: ML1579, EL5967 and CL368
Rocglen: ML1620
Werris Creek: ML1563 and ML1672
Various qualities of thermal coal,
SSCC and PCI coal
Tarrawonga +15 years,
Rocglen 3 years,
Werris Creek approximately 8 years
Coal Reserves
See Resources and Reserves
on page 54 and 55
Coal Resources
As above
2016 Production
Target
5.0–5.2Mt ROM coal,
4.7–4.9Mt product
2016 Actual
Production
5.8Mt ROM coal,
5Mt product
2017 Production
Target
5.2–5.5Mt ROM coal
OPEN CUT SALEABLE COAL PRODUCTION (000’S t)
6000
5000
4000
3000
2000
1000
0
FY2012
FY2013
FY2014 FY2015
FY2016
Whitehaven Coal Annual Report 2016 / 31
Rocglen: One of our Gunnedah mines
underpinning our operations.
OPERATIONS3 CATEGORY
STATISTIC
Ownership
Whitehaven 100%
Location
Tenements
Coal Types
Approximately 23 kilometres north of
Gunnedah in the Gunnedah Basin of
New South Wales, Australia
CL316, EL4699, EL5831, EL7407,
EL8224, AUTH406
60% SSCC/PCI coal and 40% high energy,
low sulfur, low ash thermal coal
Life of Mine
10Mtpa case
Coal Reserves
See Resources and Reserves on page
54 and 55
Coal Resources
As above
GROWTH PROJECTS
VICKERY
Vickery is a high-quality metallurgical and thermal coal
project with products that are scheduled to be sought after
in the premium markets of Asia. Approval is in place for a
4.5Mtpa mining operation at Vickery, however Whitehaven
is focussed on progressing an application for a larger scale
10Mtpa project. Several parties have expressed their desire
to acquire an interest in the project.
Vickery has the potential to become Whitehaven’s third
major mine in the Gunnedah Basin. The timing of Vickery’s
development is likely to follow the full ramp up of Maules
Creek to its approved production level of 13Mtpa ROM,
which is expected to occur during FY2019.
The Vickery open cut project was approved by the New
South Wales Department of Planning and Infrastructure
on September 19, 2014. The approval is for an open cut
project to produce 4.5Mtpa ROM coal, with the coal to
be transported along an approved haulage route to the
Gunnedah CHPP.
Since 2012, when Whitehaven lodged its application with the
NSW Government for a 4.5Mtpa project, the Company has
increased the total Resources and Reserves in the Vickery
project area. These larger Reserves support a higher annual
production rate while maintaining a mine life of more than
20 years, and project economics improve significantly in
the higher production case.
EXPLORATION PROJECTS
Whitehaven has several exploration and potential
development projects in Queensland and New South
Wales. These are early stage exploration projects. In
the current market environment, the Company is focused
on maintaining the tenements in good standing but
continues to limit its spending on those projects.
Vickery
32 /
SECTION 3 OPERATIONS INFRASTRUCTURE AND LOGISTICS
Port Capacity:
The company holds contracts for sufficient capacity at
the Port of Newcastle – either at NCIG or at PWCS – to
support planned shipments in CY2017. Whitehaven will
require additional port capacity for the forecast production
ramp up over the next 5 years. Current surplus port
capacity is expected to provide opportunity to secure
Whitehaven’s requirements.
Rail Track:
Whitehaven contracts below rail capacity with the
Australian Rail Track Corporation (ARTC).
Whitehaven is working with ARTC to improve operating
efficiencies and to provide additional capacity without the
need to construct new rail infrastructure. The objective
of this work is to improve supply chain productivity and
to reduce the costs.
Rail Haulage:
Whitehaven has two rail haulage contracts, one with
Pacific National and one with Aurizon. These contracts
have a common expiry date in 2026. The Pacific National
contract provides for the haulage of up to 13Mtpa and the
Aurizon contract provides for up to 16Mtpa. The company is
able to align planned increases in production with contract
rail haulage capacity by giving notice to the rail providers
of the need for additional capacity. The contract structures
support the planned increases in Whitehaven’s managed
production levels, whilst minimising additional cost exposure.
Whitehaven Coal Annual Report 2016 / 33
OPERATIONS3 Corporate Social Responsibility (CSR) ........................................... 35
Performance data ................................................................................. 36
Engaging with stakeholders .............................................................. 38
A safe and healthy workforce ............................................................40
Maintaining a high performance culture ........................................ 42
Diversity and inclusion ........................................................................44
Aboriginal engagement ......................................................................46
Working with the community ............................................................48
Minimising Whitehaven’s environmental impact...........................50
PERFORMANCE
SUMMARY
NUMBER OF
EMPLOYEES
(FTE): 843
ABORIGINAL
ENGAGEMENT
11%
OF WORKFORCE IDENTIFY
AS ABORIGINAL OR
TORRES STRAIT ISLANDER
EMPLOYEE
ENGAGEMENT
73%
OF EMPLOYEES SATISFIED
WITH WHITEHAVEN AS
A PLACE TO WORK
SAFETY
PERFORMANCE
10.6 TRIFR
TOTAL RECORDABLE INJURY
FREQUENCY RATE
FEMALE
REPRESENTATION
10%
OF WORKFORCE
LOCAL
PROCUREMENT
600
BUSINESSES AND
SUPPLIERS
34 /
SUSTAINABILITYSECTION 4SECTION 4 SUSTAINABILITY CORPORATE SOCIAL
RESPONSIBILITY (CSR)
Whitehaven Coal places an ongoing emphasis on a strong operational culture,
and ensuring the company contributes to sustainable development in the regions
where we operate. At the heart of our view on sustainability is that the community
in which we work must benefit from our presence.
ACHIEVING A
SOCIAL LICENSE
Coal mining has been part of the
Gunnedah Basin region for more than
100 years. Like agriculture, the industry
supports local business and provides
high-skilled local jobs. The people who
work in the coal industry are part of
the community and care about the
environment in which they live.
Whitehaven’s environmental and
social performance is not only central
to obtaining and maintaining our
regulatory license, it’s also critical to
achieving the community’s ‘social
license’ to operate. As a result,
Whitehaven must operate in a way
that integrates Corporate Social
Responsibility (CSR) principles into all
aspects of its operations. Whitehaven
does this by empowering communities,
providing economic opportunity,
behaving with respect and care for
people and the environment, taking
responsibility for its presence and
doing what it says it will do.
APPROACH TO CSR
This report provides an overview of
how Whitehaven approaches and
manages CSR. The company draws
on a number of global and national
frameworks to guide business strategies
and operations, as well as reporting
requirements. Whitehaven is a signatory
to the Minerals Council Enduring Value
framework which sets out a range
of principles in this area.
Whitehaven regularly reports our
activities to Community Consultative
Committees that have been established
for each mine we operate. We seek to
maintain our social licence by ensuring
that we operate sustainably in the
Gunnedah Basin.
The company’s Health, Safety,
Environment and Community
Committee analyses each of our
major activities through the lens
of sustainable development and
encourages and supports steps
taken by management to ensure
Whitehaven delivers on our promise
to be a good corporate citizen.
BUSINESS ETHICS
AND GOVERNANCE
Whitehaven is committed to ethical
business practices, strong corporate
governance and active stakeholder
engagement. Transparency,
accountability, stewardship and integrity
are essential elements of the approach.
More detailed information can be found
in the Corporate Governance section
of the website.
Whitehaven has a number of policies
in place which are specific to its
CSR agenda. These policies help
govern business activities and clear
expectations regarding business
practices. They are supported by
established management systems
which assist the business in the day
to day management of CSR issues
and performance.
Whitehaven’s policies are available on
its website including:
— Employee Code of Conduct
— Diversity Policy
— Continuous Disclosure Policy
— Securities Trading Policy
— Political Donation Policy
— Anti Corruption Policy
The Employee Code of Conduct
embraces the company’s values and
provides guidance on the standards
of behaviour expected from the
Whitehaven workforce. Whitehaven
prides itself on an established
reputation for acting with integrity,
honesty and in compliance with all
applicable laws and regulations. The
company maintains a formal policy
of zero-tolerance of corruption in
all its forms, including bribery.
Whitehaven Coal Annual Report 2016 / 35
SUSTAINABILITY4 KEY STATISTICS
PERFORMANCE DATA
YEAR TO 30 JUNE
Health, Safety, People
Number of employees (FTE)
Percentage of females in workforce
Percentage identifying as Aboriginal and/or Torres Strait Islander in workforce
Fatalities
Total recordable injury frequency rate per million hours worked (TRIFR)
Lost time injury frequency rate per million hours worked (LTIFR)
Health: Number of Penalty Infringement Notices
Safety: Number of Penalty Infringement Notices
Environment
Number of Penalty Infringement Notices
Environment – Air and Noise
Number of Air Monitoring Stations
Number of Noise Monitoring Stations
Environment – Land
Land footprint – owned/leased (hectares)
Land footprint – disturbed (hectares)
Land footprint – rehabilitated (hectares)
Land footprint – leased for agriculture (hectares)
Land footprint – biodiversity offset (hectares)
Properties leased for agricultural purposes
YEAR TO 30 JUNE
Environment – Energy
Greenhouse gas emissions (tonnes CO2 equivalent)
Intensity – greenhouse gas emissions (tonnes CO2-e per tonne ROM coal)
Total energy use (Gigajoules)
Intensity – total energy use (Gigajoules per tonne ROM coal)
2016
843
10.3%
11%
0
10.6
2.8
0
0
2
79
38
65,487
2,582
653
29,382
20,078
111
2015*
761, 847
0.05
3,128,361
0.198
2015
779
8.7%
8%
0
9.7
2.1
0
0
–
–
–
63,270
1,450
550
30,350
20,078
109*
2014*
465,612
0.04
2,212,164
0.192
36 /
SECTION 4 SUSTAINABILITY PERFORMANCE DATA (CONTINUED)
YEAR TO 30 JUNE
Total overburden moved (BCM)
Total material moved
Environment – Water
Total Group Water License Allocation (ML)
Total Group River/Bore extraction (ML)
Total Group Water Used (ML)
Total Group Water recycled (ML)
* see commentary on page 52 for further information.
Economic – Community
Wages and Salaries ($m)
Payments in taxes and royalties to governments ($m)
Payments to businesses and suppliers in north-west NSW ($m)
Voluntary planning agreement expenditure ($m)
Total number of grants and donations made to community groups
Total value of sponsorship and donations ($)
Total value of donations and sponsorships
to Aboriginal Community initiatives
* Most recent reportable period. Data revised.
– Data not reported
2016
82,677
92,763
9,925
1,580
3,964
1,985
139.3
166
203
6.4
81
231,093
80,597
2015
55,775
61,783
–
–
–
–
125.6
129.6
214.9
0.9
63
183,615
19,850
Whitehaven Coal Annual Report 2016 / 37
SUSTAINABILITY4 ENGAGING WITH STAKEHOLDERS
Understanding the needs of stakeholders helps to better meet accepted social
norms and needs over the long-term so that Whitehaven can continue to operate
and share the value we create. Key stakeholders interests and how we regularly
engage with them is outlined below.
STAKEHOLDERS
INTERESTS AND CONCERNS
STAKEHOLDER ENGAGEMENT
AND RESPONSE
CUSTOMERS
Steel producers
and power plants,
including joint venture
partners, in Japan
and South-East Asia
EMPLOYEES
Employees working
across Whitehaven’s
operations
LOCAL AND
ABORIGINAL
COMMUNITIES
Local and Aboriginal
communities in proximity
to Whitehaven’s
operations and the
broader north-west
NSW community
— Safe, reliable and consistent
— Regular communication
supply and delivery of
quality products
— Maintain strong technical
and commercial relationships
through open and honest
communication and delivering
on our promises
— Providing employees with
a safe and rewarding work
environment, where they
feel empowered through
career development and
opportunities
— Fostering a strong culture
to attract and retain the
best talent
— Potential environmental and
social impacts associated
with Whitehaven’s operations
— Sustainable community
development through
local employment,
training and education,
business development and
opportunities, and investment
in services and amenities
— Culture and heritage impacts
— Japan office
(with in-country manager)
— Highly skilled and
experienced marketing team
— Quality control of
Whitehaven products
— Targeted continuous
improvement programs
— Visits to operations
— Annual Safehaven Conference
— Leadership briefing sessions
— Employee survey
— Internal communications
channels including prestart
meetings, company emails,
newsletters, site notices
and events
— Newly-opened office in
Gunnedah
— Community consultation
and engagement
— Whitehaven-hosted
community events
— Whitehaven Community
Support program
— Partnerships and investments
in major projects
— Training and apprentice
programs
— Dedicated Aboriginal
Community Relations officer
38 /
SECTION 4 SUSTAINABILITY STAKEHOLDERS
INTERESTS AND CONCERNS
STAKEHOLDER ENGAGEMENT
AND RESPONSE
TRADITIONAL
OWNERS AND
NATIVE TITLE
GROUPS
Traditional Owners
and Native Title groups
of the land on which
Whitehaven operates
— Compliance with Land Access
— Dedicated heritage and
agreements, including heritage
and Native Title compliance
— Strengthening cultural
awareness and understanding
and creating opportunities
through training, employment,
and business development
Aboriginal engagement teams
— Regular communication
and consultation with Native
Title groups and prescribed
working group committees
— Targeted and tailored business
development meetings
— Whitehaven hosted
business and employment
expos and events
— Held Cultural Awareness
Training for Board and
Executive Team
GOVERNMENT AND
REGULATORS
Federal, State and Local
Government agencies
and regulators
— Environmental, social and fiscal
performance and compliance
— Legislative and regulatory
— Regular engagement with
Government and regulators at
Federal, State and Local levels
SUPPLIERS AND
CONTRACTORS
Businesses local to
Whitehaven’s operations
in north-west NSW and
Australia, as well as
international business
EDUCATIONAL
INSTITUTIONS
Local schools,
universities, and other
educational institutions
NON-GOVERNMENT
ORGANISATIONS
Local, regional
and international
organisations concerning
environmental, human
rights, sustainability
and corporate social
responsibility
policy frameworks
— Regulatory information
— Land access and approvals
— Public information including
— Community development
— Working closely with suppliers
and contractors to achieve
mutually beneficial outcomes
— Transparent communication
throughout contract award
process and meeting
agreements and processes
on an ongoing basis
financial results and
community reports
— Regular meetings,
communication and reviews
with strategic suppliers and
contractors
— Strategic relationships with
contractors and suppliers
— Early engagement with key
contractors and suppliers
for major projects
— Creating career pathways
— Cadetships, traineeships
and opportunities
and apprenticeships
— Involvement in local
career expos
— Risk management
— Annual report
— Community engagement
— Sustainability reporting
— Environmental performance
— State and Federal
— Human rights
— Compliance
Government reporting
— Media releases
— ASX announcements
— Environment and community
departments
Whitehaven Coal Annual Report 2016 / 39
SUSTAINABILITY4 A SAFE AND
HEALTHY WORKFORCE
At Whitehaven Coal, safety is the number one priority. The focus on safety
leadership and culture empowers everyone to take whatever action is required
to ensure safe operations, including stopping production when necessary. Our
goal is for zero workplace injuries and for every person at Whitehaven to go
home safe and healthy after each work day.
APPROACH
Whitehaven Coal recognises health
and safety is inherent in the business
and across the entire mining
sector. As a consequence, safety is
identified as a key focus across all
operations. Whitehaven’s people are
committed to continually improve
safety performance and provide a
safe workplace for fellow employees,
business partners and contractors.
Whitehaven’s health and safety
program is based on two key priorities:
achieving zero workplace injuries
and zero workplace illnesses.
Safety interactions are a key
component of Whitehaven’s overall
safety program, and are an integrated
part of daily work at all operations.
Whitehaven encourages safety
awareness and a thoughtful approach
to managing the risks. Positive
safety behaviour is commended and
encouraged, while leaders take the
time to discuss at risk behaviour,
which may compromise safety.
SAFETY PERFORMANCE
Whitehaven’s reporting on safety
confirms the effectiveness of the
Safehaven Rules introduced by
Whitehaven in 2014 (see case study).
In FY16, Whitehaven’s TRIFR (Total
Recordable injury frequency rate per
million hours worked) was 10.6 per
million hours worked. The Whitehaven
TRIFR has reduced by approximately
24% since the implementation of
the Safehaven Program in 2014.
Whitehaven’s TRIFR rate compares
favourably with the NSW coal
industry average of 15.5.
Over the year there were no fatal
accidents across Whitehaven’s
operations. All high risk accidents
were investigated and necessary
measures taken to prevent similar
incidents.
HEALTH
Whitehaven takes care of its employees
by preventing and reducing their
exposure to noise, dust and vibration.
We also promote the fundamentals
of fitness for work, particularly for
safety-critical roles.
The potential for fatigue to contribute
to safety incidents is understood
across the industry, and Whitehaven
uses a range of methods to reduce
potential for harm.
As part of Whitehaven’s wellness
programme, campaigns have been
implemented on making Whitehaven a
smoke-free workplace from 2016 and
on obesity, mental health, stretching,
hydration and skins cancers.
WHITEHAVEN AND NSW COAL INDUSTRY TRIFR
25
20
15
10
5
0
Jul ’13
40 /
Jan ’14
Jul ’14
Jan ’15
Jul ’15
Jan ’16
Whitehaven Coal TRIFR
NSW Coal TRIFR
As part of Whitehaven’s
wellness programme,
calisthenics warms ups are
held to improve performance.
SECTION 4 SUSTAINABILITY SAFEHAVEN PROGRAM
CASE STUDY
WOULD YOU PUT YOUR CHILD IN THAT SITUATION?
During FY15 Whitehaven enhanced the Safehaven Program with the
creation of a video to promote the program’s seven safety rules. Featuring
employees and their families, the film’s theme of ‘Would you put your child
in that situation?’ questions workers to check that the controls they have in
place are good enough to allow a child in that particular situation.
The seven rules are:
1. Never work at heights above 2m without fall
protection/prevention
2. Always confirm that equipment is correctly isolated
and de-energised before commencing work
Launched at Whitehaven’s annual Safehaven
Conference, attended by more than 100 employees,
the video was sent to every employee in the
company, along with contracting partners. To date
the Safehaven video has received more than 3,000
views on Youtube.
3. Never operate maintenance or operational
equipment unless trained and authorised
4. Never work on a tyre without first deflating
the tyre to a safe working pressure
5. Always follow positive communication
requirements
6. Never enter designated exclusion/no go zones
without appropriate authorisations
7. Always ensure that you are not standing or
working within the fall zone of a suspended
load, unsupported roof, unstable high wall
or an inadequately supported load
Whitehaven Coal Annual Report 2016 / 41
SUSTAINABILITY4 MAINTAINING A HIGH
PERFORMANCE CULTURE
843
(FTE)
11%
OF WORKFORCE
IDENTIFY AS
ABORIGINAL OR
TORRES STRAIT
ISLANDER DESCENT
73%
OF EMPLOYEES ARE
SATISFIED WITH
WHITEHAVEN AS A
PLACE TO WORK
In FY16, Whitehaven maintained a strong focus on
building a productive and diverse workforce through
the development of internal talent, and by leveraging
its culture to support the delivery of high performance
outcomes and efficiencies. The company recognises that
investment in its people, and a strong leadership team, is
paramount for ongoing success.
This year’s survey achieved a response
rate of 76%. Findings from the survey
this year showed 73% of employees are
satisfied with Whitehaven as a place to
work with one in five stating they are
very satisfied. Over the past two years,
overall satisfaction levels with Whitehaven
as an employer have increased by 25%.
There were also positive responses in
the areas of teamwork, satisfaction with
immediate supervisor and high standard
of commitment to health and safety
in the workforce.
HR processes: Work was undertaken to
simplify and formalise the performance
review and development process to
ensure all employees have clear objectives
aligned to business targets, are provided
with support and performance feedback,
and are recognised and rewarded for
strong performance. This process also
closely aligns perfomance and reward
across the business.
WHITEHAVEN’S WORKFORCE
As Whitehaven has grown over the last
three years, at a time of volatility in the
coal market, the Company has been
focused on operating as efficiently
and productively as possible.
This improvement in efficiency was
achieved through a range of measures
including operational roster changes,
effective resourcing and training.
As the leading employer in the north-
west NSW region, Whitehaven maintains
a local employment focus as a key
strategic pillar of the business. As a
result, the company does not promote
Fly-In-Fly-Out principles, instead
encouraging employees to live locally
and providing financial support and
investment to the local community.
More than 80% of our workforce
live in the area of our operations.
Reflecting the desire that the local
community in which we work must
benefit from our presence, our goal is
that the composition of Whitehaven’s
workforce should reflect the population
in which we operate. More details on
this can be found below, and also in
the Aboriginal Engagement section
on page 46.
A pilot program to develop emerging
leaders is being designed to support
people managers to increase their
effectiveness and impact, and help female
leaders transition into more senior roles.
MEETING OUR PRIORITIES
In last year’s report we set out three
people priorities for the year ahead.
They were:
— Increase workforce productivity
— Increase staff loyalty and commitment
— Improve HR processes
Staff loyalty and commitment:
An Employee Engagement Survey was
undertaken again this year, providing an
independent and confidential measure
of satisfaction levels of employees
at Whitehaven.
42 /
SECTION 4 SUSTAINABILITY Maules Creek was named NSW Mining Operation of the Year, a reflection of the new operation's high performance culture.
Pictured (L-R): NSW Deputy Premier Troy Grant MP, Maules Creek General Manager Peter Wilkinson and
the Minister for Industry, Resources and Energy Anthony Roberts MP.
As at 30 June 2016, Whitehaven
employed 843 employees (FTE), an
increase of 64 people on the previous
year. Of Whitehaven’s workforce at
30 June 2016, 10.3% were women,
which represents a 30% increase
over the last year. This progress in
female participation in our workforce
is further highlighted with 15% of
operational roles at our largest open
cut site being carried out by females.
11% self-identified as Aboriginal and
or Torres Strait Islanders, which
represents a 3% increase since 2015.
Further information on Diversity
can be found on page 44.
Whitehaven will continue to focus
on building a diverse, productive
and successful workforce in the
year ahead.
Employee engagement is measured
in a number of ways at Whitehaven,
with voluntary employee turnover
rate recorded at 11.5%. A number of
internal channels are used to regularly
communicate transparent, accurate
and timely information to employees
such as email updates, newsletters,
quarterly and half yearly meetings
with senior leadership and the
employee engagement survey.
Winners: (L–R) Aron Cane, Statutory Electrical Engineer, Whitehaven Coal, Paul Briscoe,
Field Officer, HVTC north-west, Joel McKenty, Group Training & Safety Superintendent,
Whitehaven Coal and Janet Lee, Manager Human Resources and Safety Services, HVTC.
APPRENTICESHIP PROGRAM
Whitehaven has run an apprenticeship
program since 2011. Operated in
conjunction with training provider
HVTC, Whitehaven has hosted 25
apprentices in that time and currently
has 14 apprentices working with
the company.
During FY16, Whitehaven’s
apprenticeship and trainee scheme
won two major awards at this
year’s HVTC’s Excellence Awards
presentation in Newcastle.
Aron Cane, Statutory Electrical
Engineer with Whitehaven Coal,
accepted the 2016 HVTC Large
Host Employer Award (more than
40 employees), while Whitehaven
colleague Joel McKenty, Group
Training & Safety Superintendent,
accepted the 2016 HVTC Host
Safety Award.
The awards recognised Whitehaven
Coal’s outstanding contribution to the
ongoing training and development of
its apprentices and trainees and its
rigorous commitment to the safety,
health and wellbeing of its employees.
Special guest at the awards was
Minister for Regional Development,
Skills and Small Business John Barilaro.
Whitehaven Coal Annual Report 2016 / 43
SUSTAINABILITY4 WORKFORCE DIVERSITY
AND INCLUSION
Whitehaven is committed to providing a safe, balanced and fair working
environment. The Company believes that an inclusive workplace bringing together
men and women from diverse backgrounds, which reflects diversity of gender,
culture, experience and skills. This strengthens Company performance through
ideas, opinions and skills of people selected from the widest pool of talent
available. Our goal is that as Whitehaven grows, the composition of the
Company’s workforce should reflect the population in which we operate.
The company’s Diversity Policy, which
is reported in accordance with the
requirements of the Workplace Gender
Equality Act 2012 (Act), shows that
FY16 has seen Whitehaven make
good progress to increase female
participation in our workforce.
In the last 12 months Whitehaven
has welcomed 32 new females to
the workforce, a 30% increase in our
female representation. A total of 15%
of operational roles at Maules Creek
are being carried out by females – an
above industry average figure, while at
the Whitehaven Board level, two of our
six non-executive Directors are female.
Whitehaven’s annual public report
lodged with the Workplace Gender
Equality Agency can be accessed
at www.whitehavennews.com.au/
gender-diversity.
AS AT 30 JUNE 2016
FEMALE
FEMALE
%
MALE
MALE
%
Board
Senior Management
Other/Employees
Total
2
5
82
89
29
13
10
10
5
34
722
761
71
87
90
90
AS AT 30 JUNE 2015
FEMALE
FEMALE
%
MALE
MALE
%
Board
Senior Management
Other/Employee
Total
1
5
62
68
14
13
8
9
6
35
672
713
86
88
92
91
In the last 12 months Whitehaven has
welcomed 32 new females to the workforce
and a 16% increase in our female representation.
44 /
SECTION 4 SUSTAINABILITY Each year the Board review and approve measurable diversity objectives. The objectives for FY16, and progress against
these is summarised below, together with objectives for FY17. Key areas of focus include:
— Representation and participation
— Leadership and culture development
— Systems, processes and performance metrics
— Community and industry
Representation and
participation – Increase
representation of
Aboriginal and female
employee in all areas
across the business
Leadership and culture
development
MEASURABLE OBJECTIVES
AND PROGRESS FOR FY16
FY17 INITIATIVES
— Female representation in business
— Continue to increase female representation
increased from 8.7% to 10.3%
across all areas of business
— Females occupy 15% of operational
roles at Maules Creek, Whitehaven’s
largest open cut mine site
— Aboriginal representation across
company increased from 8% to 11%
— Increase female retention rate
— Maintain or increase Aboriginal representation
across the workforce
— Develop careers webpage to highlight
inclusive workforce and attract a more
diverse pool of candidates
— The Executive team attended an
on-site Aboriginal Cultural Awareness
training program
— Women of Whitehaven focus group
was previously held to identify priorities
going forward
— Informal mentors identified and
appointed to support new Aboriginal
employees
— Pilot program for emerging leaders is being
developed to identity enablers for people
managers and help female leaders transition
into more senior roles
— Additionally a diagnostic survey is being
developed to support emerging leaders
when navigating and building their careers
— An event to promote diversity and inclusion
with employees to be held in FY17
Systems, Processes and
Performance Metrics
— SCOUT e-recruitment system
implemented, providing data on number
of female and Aboriginal applications,
interviews and appointment statistics
— All vacancies advertised on Our Mob,
an Aboriginal careers website
— Provide quarterly report on diversity
performance metrics for each site
— Monitor tenure data and collect exit interview
data to gain understanding of reasons for
employee turnover
— All advertised vacancies have a statement
outlining Whitehaven’s commitment to
increasing the number of women and Aboriginal
people in workforce and welcomes applicants
who reflect diversity of gender and culture
— Monitor pay equity as part of WGEA reporting
and annual salary review and identify areas
needed to be addressed
Community and
Industry
— Reconciliation Australia endorsed
Whitehaven’s Reconciliation Action Plan
(RAP) 2015–2017
— Continue to meet targets and milestones set
out in Reconciliation Action Plan 2015–2017
— Increase number of female apprentices
— Continued sponsorship and
and cadets across business
development of female apprenticeships
and promotion of female cadet work
experience programs
— Ongoing partnership with labour hire
providers to continue ‘employment
ready’ Aboriginal workforce
— Continued involvement in industry recognition
of women in the workplace through
submissions to Women in Mining Awards
— Investigate establishing a Women in Mining
Chapter in local community
Whitehaven Coal Annual Report 2016 / 45
SUSTAINABILITY4 ABORIGINAL ENGAGEMENT
11%
OF WORKFORCE
IDENTIFY AS
ABORIGINAL OR
TORRES STRAIT
ISLANDER DESCENT
LAUNCH
OF FIRST
RECONCILIATION
ACTION PLAN
$10M
IN WAGES AND
BENEFITS FLOWING
THROUGH TO
INDIGENOUS
FAMILIES
At the heart of Whitehaven’s view on Sustainability and
Aboriginal Community Engagement is the belief the local
community must benefit from our presence. A key focus
from discussions with Gunnedah and Narrabri councils, in
early 2013, was that Indigenous people in Gunnedah Basin
represented approximately 10% of population and suffered
disproportionate under employment.
As a local business with a local
employment focus, we took the view
that over time, the composition of
Whitehaven’s workforce should reflect
the population in which we operate.
Since 2013, Whitehaven has committed
to creating economic opportunities
for Aboriginal people through training,
employment and business development.
By providing long-term sustainable jobs
Whitehaven is addressing the disparity
between Aboriginal and non-Aboriginal
Australians in socio-economic outcomes.
PROGRESS MADE IN FY16
— 11% of our workforce identify as
Aboriginal and/or Torres Strait Islander
— Launch of Whitehaven’s first
Reconciliation Action Plan (to 2017)
— Native Title Agreement signed with
local Gomeroi Applicants
— More than 50 new local indigenous
jobs at Maules Creek (mainly trainee
operators)
— At Maules Creek, 12% of the current
workforce are Indigenous.
Of those, 80% are Gomeroi
— Approximately $10m in wages
and benefits flowing through to
indigenous families back into local
communities annually
CREATING EMPLOYMENT
OPPORTUNITIES THROUGH
EDUCATION AND TRAINING
Whitehaven’s approach goes beyond
direct employment. To enable long-term
access to employment opportunities
and to develop the pool of employment
ready Aboriginal and Torres Strait Islander
people in our region, we support programs
that facilitate access to education from
kindergarten through to university and
mature age.
These include the Winanga-Li Aboriginal
Child and Family Centre, which was the
first of nine Aboriginal Child and Family
Centres to open its doors in NSW when
it began operation two years ago. The
centre brings together a range of family,
early childhood and health services for the
region, catering for 35 children, from birth
to eight years of age, and their families.
Whitehaven Coal has donated $40,000
to the Winanga-Li Aboriginal Child and
Family Centre for the purchase of the
centre’s existing mini-bus, which had
previously been leased. This enables
families with no adequate transport to get
their children to preschool, a vital logistic
component in the early education of
Aboriginal children in Gunnedah.
CULTURAL AWARENESS
AND UNDERSTANDING
We embed cultural awareness and
understanding within our everyday
activities. We have built these aspects into
our new hire inductions, communications
strategies and the design of our corporate
documents. Significant events are often
opened with a Welcome to Country and
our Executive Team this year participated
in a Country Cultural immersion day.
ECONOMIC AND BUSINESS
DEVELOPMENT
One of the actions articulated in our
Reconciliation Action Plan is to investigate
opportunities for Whitehaven Coal to
support Aboriginal and Torres Strait
Islander economic development.
As part of this program, we held a meet
and greet Aboriginal and Torres Strait
Islander business information exchange
day, which delivered tender specifications
for Aboriginal and Torres Strait Islander
businesses (i.e. Procurement workshops).
We identified and communicated contract
opportunities for Aboriginal and Torres
Strait Islander businesses. We have
reviewed our procurement procedures
and policies to ensure that any barriers
for Aboriginal and Torres Strait Islander
businesses doing work with us are able
to be highlighted and addressed.
46 /
SECTION 4 SUSTAINABILITY We are currently developing a list of
local available Aboriginal and Torres
Strait Islander businesses and services
from which Whitehaven Coal can procure
goods and services.
INDUSTRY BASED AGREEMENT
(IBA) COMMITTEE
Whitehaven sits on the Industry Based
Agreement committee. This committee
has a number of other mining companies
present, in conjunction with government
bodies and the NSW Indigenous Chamber
of Commerce.
NATIVE TITLE
This financial year, Whitehaven signed
a Native Title Agreement with Gomeroi
Native Title Applicants who represent
the Gomeroi Nation of Northern Western
NSW. The Agreement will see the
Gomeroi Native Title Applicants work
with Whitehaven to meet Whitehaven’s
goal of maintaining 10% employment
of Aboriginal people at the Maules Creek
mine. It also outlines how the groups
will work together on cultural heritage
activities and improving communications
between the two groups.
The identification and management
of Aboriginal cultural heritage sites is
fundamental to Whitehaven’s approach
to sustainable operations and the
company’s commitment to protect and
promote Aboriginal history and culture.
Whitehaven consults with the relevant
Registered Aboriginal Parties to ensure
effective heritage management and
meet compliance requirements.
Whitehaven works closely with its
Registered Aboriginal Parties to conduct
heritage surveys and consults extensively
on heritage approvals and compliance
matters. In FY15 and FY16, Whitehaven
worked with 105 Registered Aboriginal
Parties including the Gomeroi Native Title
Applicants in site salvage work at Maules
Creek, with 38 registered sites surveyed.
Over 7,000 Aboriginal items were
recovered for safe-keeping.
This year, as part of the company’s
Reconciliation Action Plan commitments,
Whitehaven delivered on country cultural
awareness education for the executive
team, with other employees and contractors
to follow next year. In FY16, other activities
included acknowledgement and promotion
of National Reconciliation Week.
RECONCILIATION ACTION PLAN
CASE STUDY
Whitehaven Coal launched its inaugural Reconciliation Action Plan
at the Winanga-Li Aboriginal Child and Family Centre in Gunnedah,
north-west NSW.
Justin Mohamed, CEO of Reconciliation Australia, The Hon Barnaby
Joyce MP, Member for New England and and Haylene Grogan, Director
of Reform and Policy, Aboriginal Affairs NSW were on hand to
participate in the ceremony.
Whitehaven CEO and Managing Director, Paul Flynn said the launch was a
timely opportunity for Whitehaven to reaffirm its commitment to making
a meaningful long-term contribution to regional mining communities.
The Reconciliation Action Plan focuses on practical and meaningful
efforts Whitehaven will undertake to address issues affecting local
Aboriginal and Torres Strait Islander people. The Plan seeks to align
these initiatives with national efforts aimed at closing the social,
economic and health gap between Aboriginal and Torres Strait
Islanders and the broader Australian population.
“I didn’t want to get the job on anything
but my own merits, and that’s what is
great about Whitehaven. The Indigenous
employment program isn’t about them
just being able to show a few Aboriginal
faces on their staff list; it’s a genuine
program where opportunities are created
for the Indigenous community, but we still
have to be qualified and we have to earn
the job.”
DARRIN TRINDALL
Whitehaven Coal Annual Report 2016 / 47
SUSTAINABILITY4 WORKING WITH THE COMMUNITY
$800M
IN ECONOMIC
BENEFITS TO THE
REGION OVER PAST
THREE YEARS
81
COMMUNITY
PROJECTS
SUPPORTED
DURING THE YEAR
$6.4M
TOWARDS COUNCIL
INFRASTRUCTURE
AND PROJECTS
(VOLUNTARY
PLANNING
AGREEMENTS)
DURING THE YEAR
Whitehaven aspires to be welcomed by the communities
that host its activities, and believes in generating long-
term value for all of its stakeholders. Whitehaven does
this by, empowering communities, providing economic
opportunity, behaving with respect and care for people
and the environment, taking responsibility for its presence
and doing what it says it will do.
Whitehaven actively encourages
community feedback and consultation.
We engage with communities through a
variety of activities, including maintaining
a dedicated office in the Gunnedah central
business district, formal consultations,
involvement in community events and by
conducting an annual community survey.
We also regularly report our activities
to each of the Community Consultative
Committees that has been established
for each mine we operate.
Understanding community views
informs decision making processes,
and enables investment in projects
and programs that deliver the
greatest benefits to the community.
Over the past three years Whitehaven
has delivered economic benefits into the
north-west NSW region worth more than
$800m (wages and superannuation to
local employees, payment to councils for
community projects and for voluntary
planning agreements, support for local
businesses and suppliers and in donations
to local charities and community groups).
We are a large employer with over 80% of
our full time equivalent employees living
in the region surrounding our operations,
receiving wages, much of which is spent in
the local economy. In FY2016, Whitehaven
sourced products and services from over
600 business and suppliers in the local
government shires surrounding the mines.
During FY2016 we supported a total of 81
community projects via donations to local
charities, and we made $6.4m in voluntary
planning agreement payments to local
councils during FY2016, which help supply
improved services to local residents.
Support for the Westpac Rescue Helicopter has now
passed $500,000 over the last five years.
Closer to the community with our new dedicated
office in the Gunnedah central business district.
48 /
SECTION 4 SUSTAINABILITY Over the past three years Whitehaven has delivered
economic benefits into the north-west NSW region
worth more than $800m.
Among the 81 activities that we
supported in FY16 Whitehaven was a
proud sponsor of the Keegan Downes
Memorial Sundowner Handicap Cycling
Classic and is a long-standing supporter
of the Narrabri Education Foundation
and Dorothea Mackellar Poetry Awards.
In the area of Aboriginal sport,
Whitehaven was a sponsor of the
Indigenous Oztag team, while
the company this year sponsored
the Gomeroi Roos junior rugby
league team.
Sponsorship and donation applications
are welcome from the local community.
Whitehaven operates a sponsorship
and donation policy. For further details,
or to submit an application, email
community@whitehavencoal.com.au.
Factsheets on the support provided to
each Local Government Area around
our operations have been produced
and are available on the company
website at www.whitehavennews.com.
au/about-us/documents/.
Whitehaven’s ongoing support for the
local region is reflected in the growth
of the local population. Gunnedah
LGA population grew from 11,524 in
August 2006 to 12,826 in 2013/14 (an
11.3% increase), while the population
also increased year-on-year (2013/14)
in Liverpool Plains (0.7%) and Narrabri
(0.6%). Total employment in Gunnedah
Shire increased 16% between 2001-
2011, while agricultural employment
in the area declined 22% over the
same period.¹
The entire Whitehaven team works
hard to volunteer and raise funds
within the communities in which it lives
and operates. Areas of focus include
raising funds for the Westpac Rescue
Helicopter, support which has now
reached more than $500,000 over
five years through matched employee
payroll deductions.
1 Namoi Valley Independent 'Gunnedah's
Growing' and Australian Bureau of Statistics
Whitehaven was a sponsor of the Indigenous Oztag team.
Whitehaven Coal Annual Report 2016 / 49
SUSTAINABILITY4 MINIMISING WHITEHAVEN’S
ENVIRONMENTAL IMPACT
Whitehaven is committed to responsibly managing its environmental impacts
and meeting its licence requirements. The company takes its environmental
responsibility very seriously and continues to invest in initiatives and technologies
that minimise its environmental impacts and contribute to sustainable
environmental benefits.
When planning our operations,
we carefully assess environmental
risks and seek to minimise
environmental impact.
Mining is subject to more regulatory
requirements than most, if not all, other
economic activities. As a responsible
corporate citizen, compliance with
all relevant environmental laws and
obligations is the minimum standard
to which Whitehaven operates and
the minimum requirement against
which the Company measures
environmental performance.
Whitehaven’s environmental
management includes the development
of impact assessments, management
plans, monitoring programs and detailed
reports and registers. An extensive
library of these resources is available
on the Whitehaven website, along
with various regulatory disclosures,
complaint registers and factsheets.
Whitehaven reviews environmental
performance comparative to
compliance requirements through
monitoring, assessment, auditing
and reporting.
Mining is subject to more regulatory requirements
than most, if not all, other economic activities.
50 /
SECTION 4 SUSTAINABILITY CLIMATE CHANGE
At Whitehaven, we recognise that the production of coal and coal-fired generation are associated with GHG emissions,
and we are aware of our responsibilities to help preserve the Earth’s environment for current and future generations.
As a major coal producer, we also recognise our responsibility to continue providing the energy people need.
In our view, environmental problems are part of a complex and multi-faceted scientific and sustainable development
agenda. It’s an agenda that also embraces the need to support economic development and to help to improve the
quality of life of billions of people in developing nations. As the most affordable and widely available fuel on Earth, coal
will long be a vital and cost-effective resource to meet rising demand for energy across the world.
The task we share with many others, therefore, is to develop and introduce new coal-production and energy-
generation technologies and working practices that will help to reduce environmental impact while continuing to meet
global energy demands. We believe that the high energy, low ash product that we produce will become an increasingly
important source of the move to using higher quality coal for power generation. More information on this can be found
on page 18.
To assess how carbon policy and regulation will impact our business we closely monitor national and international
climate and energy policy developments. We advocate for policies that are environmentally effective and
economically efficient.
INTERNATIONAL ENERGY AGENCY
PROJECTIONS
The International Energy Agency (IEA) regularly makes
projections about world coal demand based on various
future scenarios for energy development. The scenarios
used by the IEA as the bases for these projections vary
by time and publication. Further details are available
to the public directly from IEA, including through
the IEA's website: http://www.iea.org/publications/
scenariosandprojections/.
The "New Policies Scenario" is IEA's central scenario in
its World Energy Outlook report (WEO). It incorporates
policies and measures affecting energy markets that
have already been adopted, as well as other relevant
commitments and plans that have been announced by
countries, including national pledges to reduce emissions
and plans to phase-out fossil fuel subsidies, even if the
measures to implement these commitments have yet
to be identified or announced.
Different scenarios used by the IEA in its projections
of energy demand have different implications for coal
usage. Projected coal usage is highest in the "Current
Policies Scenario" and lowest in the "450 Scenario."
The Current Policies Scenario (previously called the
"Reference Scenario") assumes no changes in policies
from the mid-point of the year of publication, thus
considering policies and measures that have already
been formally enacted, but assuming that governments
do not implement any commitments that have yet to be
finalised by legislation and will not introduce any new
policies affecting coal usage.
Finally, the 450 Scenario assumes implementation of
a set of government policies consistent with a goal
of limiting long-term increases in the average global
temperature to two degree Celsius, a limit determined
by various governments and non-governmental
organisations and recognised by nations of the world
in the 2010 United Nations Climate Change Conference
in Cancun, Mexico.
Although the New Policies Scenario is the IEA's central
scenario, the IEA does not endorse any particular
scenario as being a more probable forecast than the
others.
Whitehaven Coal Annual Report 2016/51
SUSTAINABILITY4 ENVIRONMENT
AIR
QUALITY
MANAGEMENT OF
NON-MINING LANDS
WATER
MANAGEMENT
NOISE
MANAGEMENT
Air emissions from
Whitehaven’s coal mines
are tightly regulated. All
coal mines have in place
systems for monitoring
and managing air quality,
particularly dust from
excavation and haul truck
activity and emissions arising
from the use of explosives.
Monitoring results are made
available to government
and communities through
each site’s Community
Consultative Committee
or online.
Most of the land we own
and lease is not in mining
leases. Whitehaven works
with local farmers and land
managers to ensure that
large areas of non-mining
land is managed responsibly.
About two per cent, or less
than 2,000 hectares, of the
land owned by Whitehaven
is either being used for
current mining operations
or being rehabilitated
following mining.
Where industry activity
intersects with agriculture,
Whitehaven seeks to put
land to productive use.
Nearly 30,000 hectares
of land are being used for
agricultural purposes. This
can include arrangements
with previous managers of
the land to continue grazing
or cropping. This ensures
non-mining land continues
to contribute to a diverse
local economy.
Each of our operations
are guided by site-specific
Water Management Plans.
In FY2016 Whitehaven’s
total water allocation
across our operations was
9,925 megalitres. The total
amount used was 3,964
megalitres – less than half
our available allocation.
Much of the water used by
our operations is obtained
from rainfall captured in
dams at our sites and is used
to assist mining activities,
coal washing and dust
suppression. Mine water
cannot be released off site
(except on certain regulated
occasions at our Werris
Creek operation). Sediment
laden water is permitted to
be released following certain
rainfall events or under
controlled release scenarios
where the water quality
complies with strict criteria.
To minimise water extraction
and increase water
recycling, Whitehaven has
invested $3.8m on state-of-
the-art equipment at our
Gunnedah Coal Handling
and Preparation Plant.
The Company is operating
under stringent noise
guidelines, set by the New
South Wales Government.
A number of sites utilise
predictive meteorological
systems to plan operations
to minimise noise impacts.
Real-time monitoring
is in place to allow our
site-based staff to
undertake adaptive
management to minimise
noise impacts. The
Company also implements
a range of other noise
management measures
such as sound attenuation
on mining equipment.
52/
SECTION 4 SUSTAINABILITY
BIODIVERSITY
PROGRESSIVE
REHABILITATION
WASTE AND
RECYCLING
CLOSURE
PLANNING
Whitehaven applies an
integrated approach to
land management to ensure
responsible rehabilitation
practices are reflected
throughout every stage
of the mining life cycle.
Where applicable,
disturbed land is generally
rehabilitated to align with
pre-mining vegetation
communities such as
pasture, woodland and
forest. Rehabilitation
monitoring is conducted in
accordance with each site’s
mining operations plan and
relevant management plans.
Whitehaven generates
various types of waste
during exploration,
construction, operation
and closure activities
across its mining facilities.
Our strategy for mineral
waste management includes
segregation and placement
of overburden and coal
reject materials in waste
emplacements which are
designed to be safe,
stable and non-polluting.
Wherever possible
Whitehaven segregates
recyclable materials
and engages specialist
contractors for collection
and reprocessing.
Closure plans and financial
provisions to execute
these plans are developed
and maintained for all
of Whitehaven’s sites.
Closure planning plays
an important role in the
planning and development
of Whitehaven’s projects
and operations to ensure
that the legacy impacts of
its operations are minimised.
A key component in the
development and fulfilment
of the Company’s closure
plans is the consultation
and engagement with key
stakeholders to ensure
that land is returned in a
state that supports future
opportunity and long-term
benefit. Whitehaven’s closure
plans are subject to external
review and approval.
Across the business,
Whitehaven acknowledges
the importance of
conserving the biodiversity
of plant and animal life in
the regions that host its
operations, and continually
improving its sustainable
management of land.
Whitehaven has 20,000
hectares of land that
are being managed as
biodiversity offset areas.
These areas are established
conservation areas to offset
impacts which cannot
be avoided, managed or
mitigated due to the nature
of the coal resource.
These environmental offset
areas are many times the
size of the area mined. In
Whitehaven’s case, the
20,000 hectares is more
than ten times the area of
land disturbed by mining
operations. Put another
way, this is the same size as
32,000 football pitches.
These offset areas are
based on guidance from
independent experts and
regulatory authorities to
ensure they represent like-
for-like or better biodiversity
values than the area
impacted by operations.
Whitehaven Coal Annual Report 2016/53
SUSTAINABILITY4 SECTION 5
RESOURCES AND RESERVES
COAL RESOURCES – AUGUST 2016
TENEMENT
Vickery Opencut
Vickery Underground
CL316/EL4699
EL5831/EL7407
EL8224/ML1464
ML1471
Rocglen Opencut
ML1620
Rocglen Underground ML1620
Tarrawonga Opencut* EL5967/ML1579
ML1685/ML1693
Tarrawonga
Underground
Maules Creek
Opencut**
EL5967/ML1579
ML1685/ML1693
CL375/AUTH346/
EL8072
Werris Creek Opencut ML1563/ML1672
Narrabri
Underground***
Gunnedah Opencut
Gunnedah
Underground
ML1609/EL6243
ML1624/EL5183/
CCL701
ML1624/EL5183/
CCL701
Bonshaw Opencut
EL6450/EL6587
Ferndale Opencut
EL7430
Ferndale
Underground
Oaklands North
Opencut
Pearl Creek
Opencut****
EL7430
EL6861
EPC862
TOTAL COAL RESOURCES
MEASURED
RESOURCE
INDICATED
RESOURCE
INFERRED
RESOURCE
TOTAL
RESOURCE
COMPETENT
PERSON
REPORT
DATE
230
165
–
6
–
45
10
230
15
190
7
2
–
103
–
110
–
948
95
4
3
18
15
360
3
300
47
138
4
135
–
260
14
1563
110
135
–
1
13
14
70
–
230
89
24
7
134
73
580
38
1518
505
230
10
4
76
39
660
18
720
143
164
11
372
73
950
52
4029
1
1
2
2
2
2
6
2
5
2
2
2
3
3
2
4
Jun–15
Jun–15
Mar–16
Mar–15
Mar–16
Apr–14
Mar–16
Mar–16
Mar–16
Aug–14
Aug–14
Aug–14
Jan–13
Jan–13
Aug–14
Jan–13
1. John Rogis, 2. Ben Thompson, 3. Greg Jones, 4. Phil Sides, 5. Rick Walker, 6. Shaun Tamplin
* Whitehaven owns 70% share of opencut resources within ML1579, ML1685 and ML1693. The total combined resource for Tarrawonga Mining Leases (ML1579,
1685 and 1693) and Exploration Licence (EL5967) is reported.
** Maules Creek Joint Venture - Whitehaven owns 75% share.
*** Narrabri Joint Venture - Whitehaven owns 70% share.
**** Dingo Joint Venture - Whitehaven owns 70% share.
# The Coal Resources for active mining areas are current to the pit surface as at the report date.
54 /
SECTION 5 RESOURCES AND RESERVES
Narrabri North
Underground***
Narrabri South
Underground***
COAL RESERVES – AUGUST 2016
TENEMENT
Vickery Opencut
CL316/
EL4699/
EL7407
Rocglen Opencut
ML1620
Tarrawonga
Opencut*
Maules Creek
Opencut**
EL5967/
ML1579
ML1685/
ML1693
CL375/
AUTH346
Werris Creek Opencut ML1563/
RECOVERABLE RESERVES
MARKETABLE RESERVES
PROVED
PROBABLE
TOTAL
PROVED
PROBABLE
TOTAL
COMPETENT
PERSON
REPORT
DATE
–
2.8
200
0.6
200
3.4
–
2.1
178
0.5
178
2.6
1
1
Mar-15
Mar-16
29
10
39
27
9
35
1
Mar-16
210
300
510
190
270
460
3
Mar-16
ML1672
12
2
14
12
2
14
1
Mar-16
ML1609
80
42
122
78
40
118
4
Mar-16
EL6243
–
94
94
–
TOTAL COAL RESERVES
334
649
982
309
1. Doug Sillar, 2. Graeme Rigg, 3. James Smith, 4. Michael Barker
75
575
75
883
2
Mar-15
* Whitehaven owns 70% share of opencut reserves within ML1579, ML1685 and ML1693. The total combined reserve for Tarrawonga Mining Leases (ML1579, 1685
and 1693) and Exploration Licence (EL5967) is reported.
** Maules Creek Joint Venture - Whitehaven owns 75% share.
*** Narrabri Joint Venture - Whitehaven owns 70% share.
# The Coal Reserves for active mining areas are current as at report date.
## Coal Reserves are quoted as a subset of Coal Resources.
###
Marketable Reserves are based on geological modeling of the anticipated yield from Recoverable Reserves.
Coal Resources and Reserves for active mining areas are as at the 31st of March 2016. Production for the quarter
ended 30 June 2016 is detailed in the June 2016 Quarterly Report. Please see the Whitehaven Coal website
(www.whitehavencoal.com.au) for all the Coal Resource and Coal Reserve Table 1 details.
Information in this report that relates to Coal Resources and Coal Reserves is based on and accurately reflects reports
prepared by the Competent Person named beside the respective information. Greg Jones is a principal consultant
with JB Mining Services. Phillip Sides is a senior consultant with JB Mining Services. Ben Thompson is a Geologist with
Whitehaven Coal. John Rogis is a Geologist with Whitehaven Coal. Rick Walker is a Geologist with Whitehaven Coal. Graeme
Rigg is a full time employee of RungePincockMinarco Ltd. Doug Sillar is a full time employee of RungePincockMinarco
Ltd. Shaun Tamplin is a full time employee of Tamplin Resources Pty Ltd. James Smith is a Senior Mining Engineer with
Whitehaven Coal. Michael Barker is a full time employee of Palaris Ltd.
Named Competent Persons consent to the inclusion of material in the form and context in which it appears. 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, 2012 Edition).
Whitehaven Coal Annual Report 2016 / 55
RESOURCES AND RESERVES5
Directors .................................................................................................... 58
Senior Executives .................................................................................... 59
CORPORATE GOVERNANCE
Our Board is focused on high standards of governance, compliance,
business conduct, safety and environmental performance – all of
which are vital to Whitehaven’s performance. It is our belief that
high-quality corporate governance supports long-term value
creation for shareholders and other stakeholders. With this in
mind, we have reviewed our corporate governance and reporting
practices and our corporate governance statement has been made
available on our website this year, in the section titled Corporate
Governance: www.whitehavencoal.com.au/about_us/corporate_
governance.cfm.
56 /
SECTION 6LEADERSHIP AND MANAGEMENTSECTION 6 LEADERSHIP AND MANAGEMENT LEADERSHIP AND MANAGEMENT6 DIRECTORS
THE HON. MARK VAILE AO
Chairman and
Non-executive Director
Appointed: 3 May 2012
As Deputy Prime Minister of Australia and
Leader of the National Party from 2005
to 2007, Mark established an extensive
network of contacts throughout Australia
and East Asia. His focus at home was
with regional Australia and particularly
northern NSW.
As one of Australia’s longest serving
Trade Ministers from 1999 through
until 2006, Mark led negotiations which
resulted in Free Trade Agreements being
concluded with the United States of
America, Singapore and Thailand as
well as launching negotiations with
China, Japan and ASEAN.
Importantly, early in his Ministerial
career as the Minister for Transport and
Regional Services, Mark was instrumental
in the establishment of the ARTC which
operates the Hunter Valley rail network.
Mark brings significant experience
as a company director, having been
Chairman of Aston Resources and
CBD Energy Limited, and is currently an
independent Director on the boards of
Virgin Australia Limited and Servcorp
Limited which are both listed on the ASX.
Mark is also a Director of Stamford Land
Corp which is listed on the Singapore
Stock Exchange, a Director Trustee
of HostPlus Superfund, Chairman
of Palisade Regional Infrastructure
Fund and Independent Director and
Chairman of SmartTrans Limited.
JOHN C CONDE AO
BSc, BE (Electrical) (Hons),
MBA (Dist)
Deputy Chairman and
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,
and was chairman of the company prior
to the merger with Aston Resources. John
is chairman of Bupa Australia and New
Zealand, Cooper Energy Limited and The
McGrath Foundation. He is also president
of the Commonwealth Remuneration
Tribunal and a non-executive director
of the Dexus Property Group. He retired
as chairman of the Sydney Symphony
Orchestra in May 2015. He was previously
chairman of Ausgrid (formerly Energy
Australia) and Destination NSW. He was
formerly chairman and managing director
of Broadcast Investment Holdings, as well
as a non-executive director of BHP Billiton
Limited and Excel Coal Limited.
DR JULIE BEEBY
BSc (Hons I), PhD (Physical Chemistry),
MBA, FAICD
Non-executive Director
Appointed: 17 July 2015
Julie has more than 25 years’ experience
in the minerals and petroleum industries
in Australia including major Australian
and US resources companies and as
Chief Executive Officer of WestSide
Corporation, an ASX listed, Queensland-
based coal seam gas company. Julie
has technical, operations and strategy
expertise and has held senior and
executive positions in coal mining,
mining services and coal seam gas
after commencing her career in coal
and mineral processing research.
Julie is currently the Chairman of the
Queensland Electricity Transmission
Corporation Limited, Powerlink
Queensland, and non-executive director
of OZ Minerals Limited. Julie has
previously held non-executive director
positions on the Boards of Gloucester
Coal Limited, Forge Group Limited, CRC
Mining, Queensland Resources Council
and Australian Coal Research.
The Hon. Mark Vaile AO
John Conde AO
Dr Julie Beeby
58 /
SECTION 6 LEADERSHIP AND MANAGEMENT PAUL FLYNN
BComm, FCA
Managing Director
Appointed: 25 March 2013
Previously Non-executive Director
Appointed: 3 May 2012
Paul has extensive experience in the
mining, infrastructure, construction
and energy sectors gained through
20 years as a professional advisor at
Ernst & Young. Paul was formerly Chief
Executive Officer and Managing Director
of the Tinkler Group and was instrumental
in the merger of Whitehaven Coal with
Aston Resources. Paul joined the Board of
Whitehaven on 3 May 2012 and assumed
the role of Managing Director and CEO on
27 March 2013. Prior to joining the Tinkler
Group, Paul was the managing partner
of Ernst & Young’s Sydney office and a
member of its Oceania executive team.
As a partner for over eight years, Paul
managed many of the firm’s largest mining
and energy clients across Australia, Asia,
South and North America. Paul has also
fulfilled various leadership roles with large
corporations on secondment including
as the CFO of a top 50 listed company.
TONY HAGGARTY
MComm, FAICD, CPA
Non-executive Director
from 25 March 2013
Previously Managing Director
to 24 March 2013
Appointed: 3 May 2007
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 until 27 March 2013.
CHRISTINE MCLOUGHLIN
BA, LLB (Honours), FAICD
Non-executive Director
Appointed: 3 May 2012
Christine has more than 25 years’
experience working in diverse and highly
regulated sectors in Australia, UK and
South-East Asian markets. Christine has
expertise in strategy, risk, stakeholder
engagement and human resources in
industries including financial services,
telecommunications, health and nuclear
science. Christine is currently a Director
of Suncorp Group Limited, nib holdings
ltd, Spark Infrastructure Group and
Chairman of Stadium Australia. She was
formerly Chairman of the Australian
Payments Council and a former Director
of the Australian Nuclear Science &
Technology Organisation (ANSTO), the
Victorian Transport Accident Commission
and Westpac insurance companies in
Australia and New Zealand.
RAYMOND ZAGE
BSc Finance
Non-executive Director
Appointed: 27 August 2013
Raymond is the Managing Director
and Chief Executive Officer of Farallon
Capital Asia, which is responsible for
investing capital in Asia on behalf of
Farallon Capital Management, one of the
largest alternative asset managers in the
world. Raymond has been involved in
investments throughout Asia in various
industries including financial services,
infrastructure, manufacturing, energy
and real estate. Previously, Raymond
was in the investment banking division
of Goldman, Sachs & Co. in Singapore,
New York and Los Angeles.
RICK GAZZARD
BE (Mining) Honours
Non-executive Director
Appointed: 3 May 2012
Resigned: 16 July 2015
Paul Flynn
Tony Haggarty
Christine McLoughlin
Raymond Zage
Whitehaven Coal Annual Report 2016 / 59
LEADERSHIP AND MANAGEMENT6 SENIOR EXECUTIVES
PAUL FLYNN
Managing Director
and Chief Executive Officer
Refer to details set out on page 59.
KEVIN BALL
BComm, CA
Chief Financial Officer
Appointed as Chief Financial
Officer of Whitehaven Coal in December
2013, Kevin has over 30 years’ experience
working in the mineral and energy
industry across coal, oil and gas
and in complex consulting practices.
Kevin is a Chartered Accountant
having spent 11 years with Ernst & Young,
predominantly in the natural resources
group, and has a graduate Diploma
in Geoscience (Mineral Economics)
from Macquarie University.
TIMOTHY BURT
B.Ec, LLB (Hons) LLM
General Counsel and Company Secretary
Timothy joined Whitehaven as General
Counsel and Company Secretary
in July 2009. He has 19 years’ ASX
Listed company legal, secretarial and
governance experience across a range
of industries. Prior to joining Whitehaven,
Timothy held senior roles at ASX listed
companies Boral Limited, UGL Limited
and Australian National Industries Limited.
He holds a Master of Laws from the
University of Sydney.
BRIAN COLE
BE (Civil-H1), M Eng Science, MBA,
Fellow IE Aust, C P Eng., M AIMM
Executive General Manager –
Project Delivery
Brian has more than 35 years of
experience in heavy engineering projects
and operations at an executive level in
the energy related sector and has been
focused on the Maules Creek project
and other brownfields capital projects
within the Whitehaven portfolio.
Most recently Brian managed the
construction of the three stages of
the third coal terminal in Newcastle
for NCIG with a combined capital cost
circa $2.8 billion.
Brian was appointed Executive General
Manager – Project Delivery in June 2012.
Paul Flynn
Kevin Ball
Timothy Burt
60 /
SECTION 6 LEADERSHIP AND MANAGEMENT JAMIE FRANKCOMBE
BE (Mining), MBA (Technology)
SCOTT KNIGHTS
BEcons (Hons)
Executive General Manager –
Marketing and Logistics
Scott was appointed Executive
General Manager – Marketing in August
2014. Prior to joining Whitehaven he
was Vice President Sales, Marketing and
Logistics for Peabody Energy Australia.
Scott has over 23 years of experience
in a wide range of commercial roles
including marketing, sales, logistics,
management and business strategy
in the commodities sector, working
for Peabody Energy, Rio Tinto, PwC
and Renison Goldfields Consolidated.
Brian Cole
Executive General Manager – Operations
Jamie was appointed Executive General
Manager – Operations in February 2013.
Jamie was previously Director Operations
at Fortescue Metals Group Ltd. Prior to that
he has had extensive senior experience
in coal mine operations and development
including as the Chief Operating Officer
of PT Adaro Indonesia, Executive General
Manager – Americas for Xstrata Coal and
General Manager Operations for Xstrata
Coal’s Hunter Valley open cut operations.
Jamie holds a Bachelor of Engineering
(Mining) from Wollongong University
and a Master of Business Administration
(Technology) from APESMA Deakin
University. Additionally he holds
First Class Certificate of Competency
qualifications for both the NSW
and Queensland coal industry.
Jamie Frankcombe
Scott Knights
Whitehaven Coal Annual Report 2016 / 61
LEADERSHIP AND MANAGEMENT6 Directors’ report ..................................................................................... 63
Remuneration report (audited) ....................................................... 70
Consolidated statement of comprehensive income ...................... 88
Consolidated statement of financial position ................................. 89
Consolidated statement of changes in equity ................................90
Consolidated statement of cash flows ............................................... 91
Notes to the consolidated financial statements ............................. 92
Directors’ declaration ...........................................................................123
Independent Auditor’s report ............................................................124
ASX additional information .................................................................126
62 /
SECTION 7FINANCIALREPORTSECTION 7 FINANCIAL REPORT DIRECTORS’ REPORT
The Directors present their report together with the consolidated financial report of
Whitehaven Coal Limited (‘the Company’ or ‘Whitehaven’), being the Company, its
subsidiaries, and the Group’s interest in joint operations for the year ended 30 June
2016 and the auditor’s report thereon.
1
PRINCIPAL ACTIVITIES
The principal activity of Whitehaven Coal Limited and its controlled entities (the ‘Group’) during the period was the
development and operation of coal mines in New South Wales. During the year ended 30 June 2016, commercial production
commenced at the Maules Creek open cut mine.
In the opinion of the directors, there were no significant changes in the state of affairs of the Group that occurred during the
financial year that have not been noted in the review of operations.
2
DIRECTORS AND EXECUTIVES
2(a) Directors
See pages 58 to 59.
2(b) Senior Executives
See pages 60 to 61.
2(c) 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 section 205G(1) of the Corporations Act 2001, at the date of this report is as follows:
DIRECTOR
Mark Vaile
John Conde
Julie Beeby
Paul Flynn
Tony Haggarty
Christine McLoughlin
Ray Zage
ORDINARY SHARES
2,567,767
888,620
55,000
383,7921
21,796,293
55,000
–
1
Includes shares subject to restrictions granted as part of the FY2014 STI which were held by the Whitehaven Coal Limited Equity Incentive Plan Trust at 30 June 2016.
There were no interests in options issued by the Company held by Directors as at the date of this report.
2(d) 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
Mark Vaile
John Conde
Julie Beeby
Paul Flynn
Tony Haggarty
Christine McLoughlin
Ray Zage
DIRECTORS’
MEETINGS
AUDIT & RISK
MANAGEMENT
COMMITTEE
MEETINGS
REMUNERATION
COMMITTEE
MEETINGS
HEALTH, SAFETY,
ENVIRONMENT
& COMMUNITY
COMMITTEE
MEETINGS
GOVERNANCE &
NOMINATIONS
COMMITTEE
MEETINGS
A
11
11
10
11
11
11
11
B
11
11
10
11
10
11
10
A
6
6
–
–
6
–
–
B
6
6
–
–
6
–
–
A
4
4
–
–
–
4
–
B
4
4
–
–
–
4
–
A
–
–
4
–
4
4
–
B
–
–
4
–
4
4
–
A
1
1
–
–
–
1
–
B
1
1
–
–
–
1
–
A – Number of meetings held during the time the Director held office during the year
B – Number of meetings attended
Whitehaven Coal Annual Report 2016 / 63
FINANCIAL REPORT7
3(a) Dividends
Paid during the year
that the Company will meet the full amount of any such liabilities,
including costs and expenses.
During the year the Company did not pay any dividends.
Insurance premiums
Declared after end of year
Directors have resolved not to declare a dividend in respect
of the 2016 financial year.
3(b) Share options
Shares issued on exercise of options
During the reporting period no options have been exercised.
Unissued shares under options
At the date of this report there were no unissued ordinary shares
of the Company under options (8,241,278 at the reporting date).
Refer to note 5.5 of the financial statements for further details
of the options outstanding.
3(c)
Indemnification and insurance of officers
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 persons who are or have
been directors or officers of the Company or its controlled entities
against certain liabilities (subject to certain exclusions).
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.
3(d)
Indemnification of auditors
To the extent permitted by law, the Company has agreed to
indemnify its auditors, Ernst & Young, as part of the terms of its audit
engagement agreement against claims by third parties arising from
the audit (for an unspecified amount). No payment has been made
to indemnify Ernst & Young during or since the financial year.
Indemnification
3(e) Rounding
The Company has agreed to indemnify, to the fullest extent
permitted by law, all current and former directors of the Company
against liabilities that may arise from their position as directors of
the Company and its controlled entities. The agreement stipulates
The Company is of a kind referred to in ASIC Class Order 2016/191
and dated 24 March 2016 and, in accordance with that Class Order,
all financial information presented in Australian dollars has been
rounded to the nearest thousand unless otherwise stated.
4
OPERATING AND FINANCIAL REVIEW
Financial Headlines
— Statutory profit after tax increased to $20.5m.
— Operating EBITDA before significant items increased by 72% to $224.1m.
— Cash generated from operations increased by 76% to $269.3m.
— Net debt of $859.1m at 30 June 2016.
— Conservatively geared at 23% at 30 June 2016.
The 30 June 2016 statutory result includes no significant items. The 30 June 2015 statutory result included the impact of the significant items
set out at note 2.2.
The following table summarises the key reconciling items between the Group’s operating EBITDA before significant items and its statutory profit.
WHITEHAVEN COAL LIMITED – CONSOLIDATED
Revenue
Net profit/(loss) before significant items
Significant items after tax (refer to note 2.2)
Net profit/(loss) for the period
Operating EBITDA before significant items
Significant items before tax and financing (refer to note 2.2)
Net interest expense (refer to note 5.2)
Other financial expenses
Depreciation and amortisation
Loss on asset disposals
Profit/(loss) before tax
64 /
FY2016
$ MILLION
1,164.4
20.5
–
20.5
224.1
–
(56.9)
(9.1)
(130.4)
–
27.7
FY2015
$ MILLION
763.3
(10.7)
(332.0)
(342.7)
130.3
(447.3)
(31.0)
(37.4)
(97.6)
(0.3)
(483.3)
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORT Review of financial performance
FY2016 net profit after tax (“NPAT”) of $20.5m represents an
increase of $31.2m compared to the net loss before significant
items of $10.7m in FY2015. The FY2016 NPAT result was driven
by a strong operating performance with FY2016 EBITDA before
significant items of $224.1m reflecting an increase of $93.8m
(72%) compared to $130.3m in FY2015.
The return to profit in FY2016 was driven by the benefits of a
significant increase in production and sales volumes along with
a 12% increase in EBITDA margins to 19% from 17% in FY2015.
The improved margin performance reflects a substantial reduction
in unit costs of production which more than offset a lower average
selling price realised for coal sold.
The key factors that contributed to the FY2016 NPAT result
for the year include:
— Strong safety performance.
— The commencement of commercial production at Maules
Creek. This underpinned the production result with group
ROM production of 15.8mt, up 55% compared to 10.2mt in
FY2015. Run rate ROM production at Maules Creek at the
end of FY2016 was above 9.5Mtpa.
— FOB costs per tonne of $56 in FY2016 have decreased by
8% from $61 reported in FY2015. FOB costs per tonne have
decreased for 3 ½ years since the first half of FY2013. These
savings have contributed to the Group being able to consistently
defend and grow average EBITDA margins. The key drivers of
the significant reduction in unit costs during the year were:
— The commencement of commercial production at Maules
Creek at a lower unit cost than the mine portfolio average.
— Continued productivity improvements at Narrabri and the
Gunnedah open cut mines:
— Narrabri production rates continue to improve due
to an ongoing focus on operational and technical
improvements. Increased automation has led to consistent
performance on the longwall, development rates continue
to improve and longwall change-outs are increasingly
efficient. Further productivity and cost improvements
are expected when mining transitions to 400 metre wide
panels late in FY2017.
— Narrabri unit cost performance was achieved despite
the reduction in ROM production in FY2016 caused
by the impact of two change-outs during the year.
Cash Flows & Capital Management
— Production in FY2016 from the Gunnedah Open Cuts
was slightly above FY2015, however overall unit costs
decreased significantly due to an ongoing focus on
containing costs, efficiencies associated with blasting
and overburden movement initiatives and ongoing
productivity improvements.
— Procurement initiatives continue to result in contracts for
goods and services being re-negotiated on improved terms.
— Stable production from Maules Creek has increased the
resilience of the overall portfolio. This has reduced the
impact of longwall change-outs and supported a further
improvement in the utilisation of contracted rail and
port capacity.
— The decline in rail, port and demurrage unit costs reflects
a sustained focus on logistics management across the
business.
— Administration costs remain broadly consistent despite
the growth in production of 55%.
— The fall in world crude oil prices in FY2016 has contributed
to decreased unit costs of coal production.
— Gross revenue increased by $401.1m to $1,164.4m in FY2016. The
increase was driven by increased sales volumes with total sales
of 15.5mt up by 63% on FY2015 sales volumes of 9.5mt. The
increase in sales volumes was partly offset by a fall in A$ prices
to A$75 per tonne in FY2016 from A$80 per tonne in FY2015
average (US$ denominated coal prices fell 19% while the A$:US$
exchange rate improved by 14%).
— The mix of sales between thermal (84%) and metallurgical coal
products (16%) in the year ended 30 June 2016 is slightly down
on FY2015 where metallurgical coal sales represented 18% of
total sales. The reduction in the proportion of metallurgical sales
is primarily due to the mix at Maules Creek being below the
portfolio average in the first year of commercial production. The
proportion of metallurgical coal sales is expected to increase
progressively over the next four years as the high-quality Maules
Creek semi-soft coking coal gains increased market acceptance
and term based contracts are concluded.
— Realised prices have been supported by the quality of thermal
coal from Maules Creek. Sales of Maules Creek thermal coal have
typically achieved substantial quality and energy premiums
relative to the Newcastle Index price during the year. The
quality of the thermal coal from Maules Creek has also provided
opportunities to increase sales to customers in premium
markets, particularly Japan and Taiwan.
WHITEHAVEN COAL LIMITED – CONSOLIDATED
FY2016
FY2015
Cash flows
Cash from operations ($ million)
Investing cash flows ($ million)
Senior facility (repayment)/drawings ($million)
Capital management & balance sheet
Cash on hand ($ million)
Undrawn syndicated facility ($ million)
Interest bearing liabilities ($ million)
Net debt ($ million)
Net assets ($ million)
Gearing ratio1
Leverage2
Net Debt/(Net Debt plus Equity)
1
2 Net Debt/EBITDA
269.3
(93.1)
(65.0)
152.7
(376.7)
275.0
30 June 2016
30 June 2015
101.5
365.0
960.6
859.1
2,888.7
22.9%
3.8
102.4
300.0
1,038.2
935.8
2,865.0
24.6%
7.2
Whitehaven Coal Annual Report 2016 / 65
FINANCIAL REPORT7 Cash Flow Commentary
Operating cash flows
Investing cash flows
Cash generated from operations of $269.3m increased by 76%
from the prior year. The improvement is due to the following:
— An increase in EBITDA before significant items of $93.8m
($224.1m in FY2016 from $130.3m in FY2015), largely driven
by increased sales volumes and improved margins in FY2016.
— A net reduction in inventory during the year due to sales
of produced coal of 15.4mt exceeding saleable production
of 15.1mt.
Investing cash outflows of $93.1m in the year ended 30 June 2016
is a decrease of $283.6m compared to FY2015. The decrease
was primarily due to the reduction in Maules Creek construction
expenditure due to the substantial completion of the project during
FY2015. Other factors which affected investing cash outflows include:
— Decreased main road development expenditure at Narrabri.
— Expenditure of $21.2m in relation to the Narrabri 400m wide
face expansion project.
— Partially offset by increased investment in gate road
development in FY2016 in preparation for the increased
length of upcoming longwall panels.
— Remaining capital spend across the group was tightly controlled
and related to sustaining capital required at each of the mines
and expenditure at Vickery.
Capital Management And Balance Sheet Commentary
Cash on hand at 30 June 2016 of $101.5m is consistent with the cash balance at 30 June 2015.
Net Debt at 30 June 2016 was $859.1m, a decrease of $76.7m from 30 June 2015. The decrease has primarily been due to repayments
of $65m on the senior syndicated facility and principal amortisation of finance leases.
The gearing ratio has fallen due to the reduction in net debt at 30 June 2016. Undrawn capacity of $365m existed at 30 June 2016.
Consolidated Equity Production, Sales And Coal Stocks
WHITEHAVEN TOTAL (000T)
FY2016
FY20151
MOVEMENT
ROM Coal Production
Saleable Coal Production
Sales of Produced Coal
Sales of Purchased Coal
Total Coal Sales
Coal Stocks at Year End
15,760
15,072
15,432
79
15,511
1,307
12,205
11,255
10,859
–
10,859
2,035
29%
34%
42%
–
43%
(36%)
1
The data set out in the above table is presented on an equity basis. The FY2015 data includes the Group’s share of Maules Creek pre-commercial production,
sales and coal stock tonnages
Significant highlights for FY2016 include:
— Rocglen and Gunnedah CHPP achieving two years with zero
recordable injuries.
— Record ROM and Saleable coal production for the year.
— Ramp up at Maules Creek is running on schedule with the
ongoing focus on cost management contributing to lower costs
than expected.
— Metallurgical coal quality from Maules Creek has exceeded
expectations and is attracting high levels of interest from
Asian steelmakers.
— The final capital cost of $701 million for Maules Creek came in
below the original budget of $767 million.
— Strong production from Narrabri in a year with two complete
longwall moves.
— Two new monthly production records set at Narrabri.
— Narrabri face widening project and budget on schedule to
coincide with the next longwall changeout in H2 FY2017.
— Strong production and lower costs from the three smaller
open cut mines.
— Further sustainable cost reductions achieved at all operating
mines during the year, continuing the trend of reductions in
unit costs for seven successive halves.
There were 843 FTE Whitehaven employees at the end of FY2016.
Approximately 80% of these employees live in the region of our
operations. This is consistent with Whitehaven’s aim to ensure that
the local community is a key beneficiary of the Group’s operations.
Employee and contractor numbers have grown from the beginning
of FY2016 as Maules Creek has expanded. A total of 11% of the
Group’s employees self-identify as Aboriginal and/or Torres Strait
Islander. Approximately 10% of the Group’s employees are female.
Review of Operations – Safety
Providing a safe working environment for employees is critical
at Whitehaven Coal and is key to the Group’s improving financial
performance. Whitehaven Coal provides training, equipment,
resources and systems to create the safest possible work
environment at each site. Building a culture of safety awareness
is the foundation for continuous improvement to exceed targets
and to exceed industry averages.
As part of the Company’s Health and Safety Policy, Whitehaven Coal
aims to:
— Achieve zero workplace injuries and illnesses.
— Achieve zero plant and equipment damage.
— Achieve zero environmental incidents.
66 /
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORT 2016 Performance
The introduction of the seven “Safehaven Rules” in late FY2014 has embedded safety as a cornerstone of the Group’s culture. Ongoing
education and training ensures that safety remains front of mind for all employees and continues to deliver improved safety outcomes
at most operations.
— Both Rocglen and the Gunnedah CHPP achieved two years without a recordable injury.
— Whitehaven Coal Group TRIFR of 10.6 at the end of the year.
— The TRIFR is significantly below the NSW average coal mining rate of 15.5.
Review of operations
Maules Creek
Ownership: Whitehaven 75% and Operator; ICRA MC Pty Ltd (an entity associated with Itochu Corporation) 15%; J-Power Australia Pty Ltd 10%.
MAULES CREEK 100% (000T)
FY2016
FY20151
MOVEMENT
ROM Coal Production
Saleable Coal Production
Sales of Produced Coal
Coal Stocks at Year End
1
FY2015 includes pre-commercial production and sales
For commentary, see page 26.
Narrabri
7,826
7,384
7,421
609
2,614
2,231
1,769
779
199%
231%
320%
(22%)
Ownership: Whitehaven 70% and Operator; J-Power 7.5%; EDF Trading 7.5%; Upper Horn Investments Limited 7.5%; Daewoo International
Corporation and Korea Resources Corporation 7.5%.
NARRABRI MINE 100% (000T)
FY2016
FY2015
MOVEMENT
ROM Coal Production
Saleable Coal Production
Sales of Produced Coal
Coal Stocks at Year End
For commentary, see page 30.
6,888
7,269
7,532
135
7,703
7,193
7,071
1,038
(11%)
1%
7%
(87%)
Open Cut Mines (Excluding The Maules Creek Mine)
Ownership: Werris Creek Whitehaven 100%; Rocglen Whitehaven 100%; Tarrawonga Whitehaven 70% and operator and Idemitsu 30%
OPEN CUTS 100% (000T)
ROM Coal Production
Saleable Coal Production
Sales of Produced Coal
Coal Stocks at Year End
For commentary, see page 31.
Development Projects
Vickery
Ownership: Whitehaven 100%
For commentary, see page 32.
Exploration Projects
For commentary, see page 32.
FY2016
FY2015
MOVEMENT
5,791
5,038
5,095
901
5,498
5,140
5,147
824
5%
(2%)
(1%)
9%
Infrastructure
Rail Track
For commentary, see page 33.
Rail Haulage
For commentary, see page 33.
Port Capacity
For commentary, see page 33.
Whitehaven Coal Annual Report 2016 / 67
FINANCIAL REPORT7 Events Subsequent To Reporting Date
Market Risks
The Company’s future financial performance will be impacted
by future coal prices and foreign exchange rates.
The factors which affect coal prices and demand include the
outcome of future sales contract negotiations, general economic
activity, industrial production levels, changes in foreign exchange
rates, changes in energy demand and demand for steel, changes
in the supply of seaborne coal, changes in international freight rates
or other transportation infrastructure and costs, the cost of other
commodities and substitutes for coal, market changes in coal quality
requirements and government regulation which restricts the use of
coal, imposes taxation on the resources industry or otherwise affects
the likely volume of sales or pricing of coal.
Sales made under export contracts are denominated in US dollars.
The Company uses forward exchange contracts (FECs) to hedge
some of its currency risk in line with its hedging policy.
Operating Risks
The Company’s coal mining operations are subject to operating
risks that could result in decreased coal production which could
reduce its revenues. Operational difficulties may impact the amount
of coal produced at its coal mines, delay coal deliveries or increase
the cost of mining for varying lengths of time. Such difficulties
include (but are not limited to) weather (including flooding) and
natural disasters, unexpected maintenance or technical problems,
failure of key equipment, depletion of the Company’s Reserves,
increased or unexpected reclamation costs and interruptions due
to transportation delays.
Geology Risks
Resource and Reserve estimates are stated to the JORC Code
and are expressions of judgement based on knowledge, experience
and industry practice. There are risks associated with such estimates,
including that coal mined may be of a different quality, tonnage or
strip ratio from those in the estimates.
Development Risks
There is a risk that circumstances (including unforeseen
circumstances) may cause delays to project development,
exploration milestones or other operating factors, resulting in
the receipt of revenue at a date later than expected. Additionally,
the construction of new projects/expansion by the Company
may exceed the currently envisaged timeframe or cost for
a variety of reasons outside of the control of the Company.
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 Group,
the results of those operations, or the state of affairs of the Group,
in future financial years other than the following:
In July 2016, the Group repaid a further $35 million of debt drawn
under the senior bank facility.
Outlook And Likely Developments
Operations
In FY2016 Whitehaven’s Narrabri mine produced a record 7.3Mt of
saleable coal to remain one of the most productive and lowest cost
underground mines in Australia. Production in FY2017 is expected
to increase. Mining is scheduled to transition to the first 400 metre
wide panel around the start of the fourth quarter of FY2017.
Maules Creek will continue to ramp up its production level to an
annualised rate of 10.5Mt ROM coal in the second half of FY2017
and is expected to produce 9.0Mt of saleable coal for the financial
year. The smaller open cut mines will produce a similar amount of
coal in FY2017 as in FY2016.
Management remains focused on improving productivity and
lowering costs so as to remain in the lowest cost quartile.
Demand
Whitehaven’s high-quality clean coals are attracting growing
demand from new and existing customers. With the restricted
availability of these coals in the seaborne market Whitehaven is
well placed to increase the premium it receives for its coals and
grow overall sales from both Maules Creek and Narrabri. It is positive
to note that Whitehaven’s customers in Asia are adding more coal-
fired power station capacity and are seeking increased tonnages
of coal from Whitehaven.
Pricing
After five years of declining prices coal markets appear to have
found a bottom in the first quarter of CY2016. The Newcastle
GlobalCoal Index coal price has increased from a low of about
US$48/t in early January to be $68/t in mid-August. Metallurgical
coal prices have also risen over the last year.
Whitehaven remains cautiously optimistic in the short-term.
However, in the medium to longer term, as demand for low priced
reliable electricity continues to grow in the Asian region, Whitehaven
is confident the coal prices will rise and that Whitehaven’s high-
quality coals will continue to attract a premium price in the market.
Risks relating to Whitehaven’s future prospects
Whitehaven operates in the coal sector. There are many factors,
both specific to Whitehaven and to the coal industry in general,
which may, either individually or in combination, affect the future
operating and financial performance of the Group, its prospects
and/or the value of Whitehaven. Many of the circumstances giving
rise to these risks are beyond the control of the Whitehaven Directors
and its management. The major risks believed to be associated with
investment in Whitehaven are as follows:
68 /
DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORT 5
AUDITOR INDEPENDENCE AND
NON-AUDIT SERVICES
5(a) Auditor’s independence declaration
The auditor’s independence declaration forms part of the Directors’
report for financial year ended 30 June 2016. It is set out on page 86.
5(b) Non-audit services
During the year Ernst & Young, the Company’s auditor, has
performed certain other services in addition to their statutory duties.
The Board has considered the non-audit services provided during the
year by the auditor and, in accordance with written advice provided by
resolution of the Audit and Risk Management Committee, is satisfied
that the provision of those non-audit services during the year by
the auditor is compatible with, and did not compromise, the auditor
independence requirements of the Corporations Act 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 & Risk Management 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 their related practices for non-audit services provided
during the year are set out below.
IN AUD
Non-audit services
Ernst & Young
Taxation services
Other non-audit services
Review of National Greenhouse Energy
Reporting Act requirements
CONSOLIDATED
2016
$
2015
$
42,712
126,962
99,500
65,000
11,068
64,849
Assurance services for refinancing
–
299,134
153,280
555,945
Whitehaven Coal Annual Report 2016 / 69
FINANCIAL REPORT7 REMUNERATION REPORT (AUDITED)
Dear Shareholder
We present our Remuneration Report for the financial year
ended 30 June 2016 (FY2016). The report is designed to explain
to shareholders our remuneration arrangements as we strive to
achieve our goal of becoming the premier independent listed
coal producer in Australia.
The Board is committed to applying a fair and responsible executive
remuneration framework, which operates effectively to appropriately
incentivise and reward senior executives to execute our strategy
while being aligned with shareholder interests. Our strategy has
been to build a portfolio of assets that is in the best quartile of the
coal cost curve and to develop and operate our assets in a safe and
sustainable manner. The Board believes that the current framework
has been effective and is proposing further enhancements as the
Company grows.
Managing Director and Chief Executive Officer, Paul Flynn, is
supported by a strong executive leadership group and the Board
believes that the Company is well positioned to continue to improve
its performance and to deliver value for shareholders. At the 2015
Annual General Meeting, shareholders voted almost 96% in favour of
our Remuneration Report.
Financial Year ended 30 June 2016 (FY2016)
The Remuneration Committee considered that the Executive
Key Management Personnel (Executive KMP) have continued
to successfully execute our strategy. The Executive KMP have
focused on key projects and initiatives including:
— improving safety outcomes;
— ramping up coal production, coal processing and coal sales
at Maules Creek (to achieve an annualised ROM production
rate of 9.5mt);
— furthering engineering works and receiving all regulatory
approvals necessary to deploy a wider longwall face at Narrabri;
— improving the sustainability of the Company by driving FY2016
costs lower to $56/t;
— improving community engagement in the Gunnedah and
Narrabri region; and
— reducing debt.
In FY2016, remuneration for Executive KMP was positioned
between the 50th and 75th percentile of the market comparator
group. Remuneration is benchmarked against an appropriate market
comparator group consisting of Australian listed companies, which
have been identified as relevant competitors for talent and operate
in similar business environments. The Board considers company size,
complexity and business challenges when it builds its comparator
group. Our overarching objective is to motivate, attract and retain
a leading management team while at the same time exercising
appropriate restraint.
Short-Term Incentive (STI) awards to Executive KMP for their
performance during the year will be paid in September 2016.
Executive KMP achieved between 72% and 78% of the maximum
possible award. 70% of each Executive KMP’s FY2016 STI award
will be paid in September and 30% of each Executive KMP’s FY2016
STI award will be deferred into equity which will vest in two tranches
at the end of FY2017 and FY2018.
The two tranches of the Long-Term Incentive (LTI) that were tested
during FY2016 each lapsed when the Company’s Relative TSR
performance failed to reach the required threshold vesting levels.
The upcoming Financial Year (FY2017)
As the Company grows the Board continues to refine its
remuneration arrangements. Changes proposed by the Board for
FY2017 have been considered in the context of both our strategy
and consideration of relevant benchmarks.
For FY2017 the total potential remuneration of our Managing Director
and Chief Executive Officer will be increased, by increasing the STI
potential to 100% of Total Fixed Remuneration (TFR). The uplift in STI
will be delivered in deferred equity – the STI award will be 50% in cash
and 50% in deferred equity. This change will also align the CEO’s
at-risk remuneration component with shareholder interests.
The introduction of a Costs Hurdle into our LTI structure in 2014
has been effective. Whitehaven is now in the lowest quartile for costs
of production, and as a consequence, has returned to profitability in
what are widely acknowledged as very difficult times for our industry.
Tightly controlling costs of production is a key plank in our strategy.
The Board has been considering whether relative TSR continues
to be the most appropriate second hurdle. The Board continues to
engage in stakeholder consultation on the selection of the second
hurdle. Details of the final LTI structure and hurdles for FY2017 will be
included in the Notice of Meeting for our upcoming AGM where
the LTI grant for the CEO for FY2017 will be tabled for approval.
The Board has decided not to increase Non-executive Directors
fees for FY2017, but will review them against the market in the
coming year.
We thank our Executive KMP and their teams for their commitment
and contribution to Whitehaven. We hope shareholders find the
information provided in the Remuneration Report informative,
and we welcome your feedback.
Yours sincerely,
The Hon. Mark Vaile AO
Chairman
Christine McLoughlin
Chairman of the
Remuneration Committee
70 /
SECTION 7 FINANCIAL REPORT
Table of Remuneration Report Contents
1
2
3
Introduction
1.1 Key management personnel for FY2016
1.2 Summary of Company performance
Remuneration Governance
2.1 Role of the Board and Remuneration Committee
2.2 Use of external remuneration advisors
2.3
Executive KMP remuneration principles
and framework
Remuneration of the Executive KMP for FY2016
3.1 Mix and timing of Executive KMP remuneration
3.2 Benchmarking total remuneration
3.3 Fixed Remuneration
3.4 Short-Term Incentives (STI)
3.5 Long-Term Incentives (LTI)
3.6 Rights granted to Executive KMP
3.7 Executive KMP realised remuneration outcomes
1.
INTRODUCTION
This Remuneration Report forms part of the Directors Report.
4
5
6
7
Executive KMP employment contracts
Executive KMP - statutory remuneration table
Non-executive Director fees and fee pool
6.1 Setting Non-executive Director fees
6.2 Current Non-executive Director fee levels and fee pool
6.3 Non-executive Director fees – statutory disclosures
Related party transactions and additional disclosures
7.1
Loans with Executive KMP and Non-Executive
Directors
7.2 Other KMP transactions
7.3 Movements in equity instruments held by Executive
KMP
7.4 Additional disclosures relating to ordinary shares
7.5
Additional disclosures relating to options and rights
over equity instruments
In accordance with Section 308 (3C) of the Corporations Act 2001 (Cth) (Corporations Act), the external auditors, Ernst & Young,
have audited this Remuneration Report.
This report details the remuneration and fees during FY2016 of the KMP of the Company, who are listed in the table below.
For the remainder of this Remuneration Report, the KMP are referred to as either Executive KMP or Non-executive Directors.
1.1
Key Management Personnel for FY2016
NAME
ROLE HELD DURING FY2016
COMMITTEE POSITIONS HELD
Non-executive Directors
The Hon. Mark Vaile AO
Chairman and
Non-executive Director
Chairman of Governance & Nomination Committee
Member of Audit & Risk Management Committee
John Conde
Deputy Chairman and
Non-executive Director
Member of Remuneration Committee
Chairman of Governance & Nomination Committee
Chairman of Audit & Risk Management Committee
Member of Remuneration Committee
Member of Governance & Nomination Committee
Dr Julie Beeby
(Commenced 17 July 2015)
Non-executive Director
Member of Health, Safety, Environment & Community Committee
Tony Haggarty
Non-executive Director
Chairman of Health, Safety, Environment & Community Committee
Christine McLoughlin
Non-executive Director
Chairman of Remuneration Committee
Member of Audit & Risk Management Committee
Member of Governance & Nomination Committee
Member of Health, Safety, Environment & Community Committee
Ray Zage
Rick Gazzard
(Retired 16 July 2015)
Non-executive Director
Non-executive Director
Whitehaven Coal Annual Report 2016 / 71
FINANCIAL REPORT7 EXECUTIVE KMP
Paul Flynn
Kevin Ball
Timothy Burt
Brian Cole
Jamie Frankcombe
Scott Knights
ROLE HELD DURING FY2016
Managing Director and Chief Executive Officer
Chief Financial Officer
General Counsel and Company Secretary
Executive General Manager – Project Delivery
Executive General Manager - Operations
Executive General Manager – Marketing
1.2
Summary of Company performance
Against a challenging environment of 7% lower AUD coal prices, Whitehaven has increased ROM production by 30%, lowered costs by 8% and
delivered a Net Profit after Tax of $20.5m. The Company’s return to profit in FY2016 and the repayment of debt are the obvious indicators of
strength of the performance of the Executive KMP and management.
THERE WERE MANY HIGHLIGHTS IN FY2016 INCLUDING:
TRIFR of 10.6 improved by 6%
Net Profit After Tax of $20.5m
ROM Production of 20.5 Mt increased by 30%
Costs of Production $56/t decreased by 8%
Saleable Production of 19.7Mt increased by 35%
Cash generated from operations of $269m increased by 76%.
Coal Sales of 20.1Mt increased by 44%
EBITDA of $224m increased by 72%
As a consequence of the Group’s strong operational and financial outcomes, Whitehaven decreased net debt by $77m and leverage for the
trailing twelve months has decreased to 3.8x EBITDA.
Company performance for the last five years
A snapshot of key Company performance for the past five years is set out below:
Revenue ($m’s)
EBITDA ($m’s)
Profit/(loss) attributable to the group ($m’s)
Share price at year end (dollars per share)
Basic EPS (cents per share)
Diluted EPS (cents per share)
Dividends paid (cents per share)
Special dividends paid (cents per share)
Total Reportable Injury Frequency Rate (TRIFR)
Saleable Production – Mt
2016
1,164.4
224.1
20.5
$1.08
2.1
2.1
–
–
10.6
19.7
2015
763.3
130.3
(342.7)
$1.32
(33.3)
(33.3)
–
–
11.3²
11.3
2014
755.4
90.4
(38.4)
$1.43
(3.9)
(3.9)
–
–
14.1
8.2
2013
622.2
17.1
(88.7)
$2.30
(9.0)
(9.0)
3.0
–
20.1
6.6
2012
618.1
149.2
62.5
$4.15¹
10.9
10.9
4.1
50.0
34.6
4.3
1
2
The opening share price for 2012 was $5.83.
FY2015 TRIFR from continuing operations. The FY2015 Total Group TRIFR was disclosed at 9.2, however in FY2016 two injuries were later classified as
recordable and this increased the Total Group TRIFR from 9.2 to 9.7. The FY2015 Total Group TRIFR benefitted from the Maules Creek Construction programme
helping to lower the TRIFR from continuing operations of 11.3 to a TRIFR of 9.7.
2.
REMUNERATION GOVERNANCE
This section describes the role of the Board, Remuneration Committee and external remuneration advisers when making remuneration
decisions, and sets out an overview of the principles and policies that underpin the Company’s remuneration framework.
2.1
Role of the Board and Remuneration Committee
The Board is responsible for ensuring that the Company’s remuneration structures are equitable and aligned with the long-term interests of
the Company and its shareholders. Consistent with this responsibility, the Board has established a Remuneration Committee, whose role is to:
— review and approve the remuneration of the Executive KMP;
— review and approve the remuneration policies and practices for the Group generally, including incentive plans and other benefits; and
— review and make recommendations to the Board regarding the remuneration of Non-executive Directors.
72 /
REMUNERATION REPORT FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORT The Remuneration Committee comprises three Non-executive Directors: Christine McLoughlin (Committee Chairman), John Conde,
and Mark Vaile. The Remuneration 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.
Further information regarding the Remuneration Committee’s role, responsibilities and membership is set out in the Company’s Corporate
Governance Statement.
2.2 Use of external remuneration advisors
From time to time, the Remuneration Committee seeks and considers advice from external advisors who are engaged by and report directly to
the Remuneration Committee. Such advice will typically cover Non-executive Director fees, Executive KMP remuneration and advice in relation
to equity plans.
The Corporations Act requires companies to disclose specific details regarding the use of remuneration consultants. The mandatory disclosure
requirements only apply to those advisers that provide a ‘remuneration recommendation’ as defined in the Corporations Act. The Committee
did not receive any remuneration recommendations.
2.3
Executive KMP remuneration principles and framework
The Company’s Executive KMP remuneration policies are based on the following core principles:
— to ensure the Company’s remuneration structures are equitable and aligned with the long-term interests of the Company and its
shareholders, having regard to relevant Company policies;
— to attract and retain skilled executives;
— to structure short and long-term incentives that are challenging and linked to the creation of sustainable shareholder returns; and
— to ensure any termination benefits are justified and appropriate.
These principles are reflected in the Company’s remuneration framework, which comprises both fixed and at-risk remuneration components
as indicated below.
Details of each of these components and how they applied during FY2016 are described in the table below and in section 3.
TOTAL FIXED REMUNERATION (TFR)
SHORT-TERM INCENTIVES (STI)
LONG-TERM INCENTIVES (LTI)
— reviewed annually by the
Remuneration Committee
— determined based on a mix of
financial and non-financial measures
— benchmarked against peer companies
— 30% of STI is deferred into rights to
— influenced by individual performance
and experience
receive shares in the Company subject
to meeting service based vesting
conditions (with vesting periods
of 12 and 24 months)
— ability of the Remuneration Committee
to reduce the number of deferred equity
instruments that vest if subsequent
events show such a reduction to be
appropriate (clawback)
— STI opportunity is set at 50% of TFR
for target performance and at 75%
of TFR for stretch performance
— provides the Remuneration Committee
with the flexibility to determine the
nature, terms and conditions of the
grant each year
— operates as an award of performance
rights (i.e. a right to receive a share in
the Company if specified performance
hurdles are satisfied)
— the face value of the LTI opportunity is
currently set at between 80% and 100%
of TFR
— contains two independent performance
hurdles – Relative TSR and Costs
3.
REMUNERATION OF THE EXECUTIVE KMP FOR FY2016
This section describes in greater detail the different components of Executive KMP remuneration for FY2016.
3.1
Mix and timing of Executive KMP remuneration
Executive KMP remuneration is delivered as a mix of fixed and at-risk remuneration. At-risk remuneration can be earned through both STI and
LTI and is delivered to Executive KMP over multiyear timeframes to create a layered retention effect and to encourage sustained performance.
The table below illustrates the remuneration mix for Executive KMP for FY2016 (assuming Target performance for at-risk components).
Managing Director & Chief Executive Officer
Executive General Manager – Operations
Other Executive KMP
FIXED
AT RISK
TFR
40%
42%
43%
STI
20%
21%
22%
LTI
40%
37%
35%
Whitehaven Coal Annual Report 2016 / 73
FINANCIAL REPORT7 The diagram below shows timing for determining and delivering Executive KMP remuneration for FY2016 and FY2017:
FY2016
FY2017
FY2018
FY2019
FY2020
FY2021
Total Fixed
Remuneration
Determined based on:
– Market benchmarking
– FY2015 performance
FY2016
Executive
KMP
Remuneration
Short-Term Incentive*
At risk based on
financial and
non-financial KPI’s
Restriction period for
Tranche 1 of STI Deferred
Equity Instruments
Service Based Vesting
Period – Tranche 2
Long-Term Incentive
At risk based on performance against
relative TSR measure & cost hurdle
Vesting period for Tranche 1
Service Based Vesting
Period – Tranche 2
FY2017
Executive
KMP
Remuneration
Total Fixed
Remuneration
Determined based on:
– Market benchmarking
– FY2016 performance
Short-Term Incentive
At risk based on
financial and
non-financial KPI’s
Restriction period for
Tranche 1 of STI Deferred
Equity Instruments
Service Based Vesting
Period – Tranche 2
Long-Term Incentive
At risk based on performance against
relative TSR measure & cost hurdle
Vesting period for Tranche 1
Service Based Vesting
Period – Tranche 2
3.2 Benchmarking total remuneration
While benchmarking is a useful starting point, it is only one input used by the Board when determining total remuneration for Executive
KMP. Remuneration is benchmarked against an appropriate market comparator group adopted by the Board. The market comparator group
consists of Australian listed companies, which have been identified as relevant competitors of Whitehaven that operate in similar business
environments. The Board considers company size, complexity and business challenges when it builds its comparator group. The objective
of the Board’s positioning is to meet the market so as to attract and retain Executive KMP while still ensuring appropriate restraint in respect
of executive remuneration. Actual market positioning for each individual may deviate from the positioning policy (above or below) due to
considerations such as internal relativities, experience, tenure in role, individual performance and retention considerations.
3.3
Fixed remuneration
Fixed remuneration received by Executive KMP is subject to approval by the Remuneration Committee. Fixed remuneration is comprised of
base salary and superannuation. In line with Company policy and executives’ service agreements, remuneration levels are reviewed annually
based on market benchmarking and individual performance.
Fixed remuneration will typically be positioned between the 50th and 75th percentile of the market comparator group adopted by the Board.
3.4
STI for FY2016
The following table details the terms of the STI that applied during FY2016.
All Executive KMP.
The STI for FY2016 operated over a 12 month performance period from 1 July 2015 to 30 June 2016.
Executive KMPs’ target STI was 50% of fixed remuneration over the 12 month performance period with up to 75% of
fixed remuneration for stretch performance. The minimum possible total value of an STI grant is nil. The STI amount
actually awarded to each Executive KMP in FY2016 is shown later in this section 3.7.
Who
participated?
What was the
performance
period?
What was the
target STI
award?
74 /
REMUNERATION REPORT FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORT What were the
performance
conditions, why
were they chosen
and how were
they assessed?
The following KPIs were adopted as performance conditions and applied to the FY2016 STI:
— Safety (TRIFR)
— FOB cost per saleable tonne (equity basis)
— ROM production (managed basis)
— Net Profit After Tax (NPAT)
— Leadership and individual key performance indicators as agreed between the Managing Director and Chief
Executive Officer and the Board, for example project development targets.
These performance conditions were chosen as they were directly linked to the financial and operational priorities
of the Company.
At the commencement of FY2016, the Board set Target KPIs, the achievement of which was expected to be critical to
the success of the Company as it continued to grow ROM coal production volumes closer to the Board target of 23Mtpa
and as it commenced the debt repayment process at this time in the coal cycle. The KPIs remain appropriate as they are
aligned with the interests of shareholders. The Board designed these KPIs to ensure that the balance sheet of the Group
was stronger at the end of the financial year even though difficult circumstances were anticipated.
The Group’s return to NPAT continues the story of delivering upon promises. The Board was mindful that all Target KPIs
had been met or exceeded, and resolved that the STI awards should therefore be approved as assessed.
The Remuneration Committee and the Board assessed and approved the STI performance conditions applying to the
Managing Director’s STI award. The performance conditions for Other Executive KMP were assessed by the Managing
Director and approved by the Board.
The weightings of each performance condition are set out in the following table.
Safety (TRIFR)
FOB cost per saleable tonne
ROM production
NPAT
Individual Leadership KPIs
MANAGING
DIRECTOR
20%
15%
20%
25%
20%
CFO
20%
20%
10%
20%
30%
COMPANY
SECRETARY/
GROUP
COUNSEL
EGM
PROJECTS
EGM
OPERATIONS
EGM
MARKETING
20%
20%
20%
20%
20%
20%
10%
10%
20%
40%
20%
20%
20%
20%
20%
20%
15%
10%
25%
30%
What
performance
level was
achieved?
A snapshot of the performance levels achieved for FY2016 is set out below:
PERFORMANCE CONDITION1
YOY2
ACTUAL
TARGET OUTCOME
Safety3
FOB cost per saleable tonne
ROM production
NPAT
6%
8%
30%
NM⁴
10.6
10.6 Target
$56/t
$60.38 Exceeded Stretch
20.5Mt
19.4Mt Between Target and Stretch
$20.5m
$1.0m Between Target and Stretch
Excludes individual leadership KPIs.
1.
2. Year on year improvement.
3. Target TRIFR from continuing operations 10.6.
4. Not meaningful.
Additional detail on each KPI is set out below.
Safety
The emphasis on a safe working environment has continued to drive a sustained reduction in the TRIFR rate. Against
tough market conditions the Whitehaven view that “tonnes cannot come at the expense of safety” is embedded in the
Company. Our operations have performed very safely – our TRIFR of 10.6 is superior to the NSW coal industry average,
and is a 6% improvement in TRIFR rate from our continuing operations when compared with FY2015. The progress of
the Company to improve safety processes and standards now positions the Company above the average for the NSW
coal industry.
FOB cost per saleable tonne
The effort to lower operating costs continues. Costs for FY2016 were driven substantially lower than the previous year
and well below target. The actual outcome for the FY2016 Costs target (equity basis) was $56/t FOB, which exceeded
the stretch target. This cost performance helped to increase EBITDA margins to $14/t in FY2016 from ~$13/t in FY2015
in the face of falling prices.
Whitehaven Coal Annual Report 2016 / 75
FINANCIAL REPORT7 What
performance
level was
achieved?
(continued)
ROM production (managed)
In FY2016, first commercial production from Maules Creek was achieved. Narrabri met its target and our Gunnedah
open cut mines exceeded their respective production targets for the year.
NPAT
Cost control across overburden removal, coal mining, transportation, coal preparation, port, rail, sales and
marketing and administration, combined with record production and sales volumes to underpin the Company’s
return to profitability. The reported NPAT of $20.5m approached the stretch target despite the very difficult
coal price environment.
How is the STI
delivered?
Individual Leadership KPIs
The Managing Director’s KPIs are cascaded into the Company to site management level. Below site management
level a mix of specific site based and Company-wide targets are adopted as appropriate. The STI classification
weightings that apply for the Managing Director are broadly consistent when cascaded into the Company.
70% of the STI award will be paid to the Executive KMP in cash in September 2016.
The remaining 30% of the STI award will be deferred into rights to receive Whitehaven ordinary shares (Deferred
Equity), which will vest and become exercisable subject to meeting service conditions. In accordance with the service
conditions, half of the Deferred Equity will vest and become exercisable at the completion of FY2017, while the other
half will vest and become exercisable at the completion of FY2018.
There is no exercise price payable upon vesting or exercise of Deferred Equity. On exercise of Deferred Equity, each
right entitles the recipient to one ordinary share in the Company. Vested Deferred Equity that has not been exercised
by 13 August 2025 (the expiry date) will automatically be exercised.
Deferred Equity will not vest if the Executive KMP resigns or is terminated for cause or the Board applies its discretion
to clawback some or all of the Deferred Equity. Dividends do not accrue on Deferred Equity.
Executive KMP are required to comply with the Company’s securities trading policy in respect of their Deferred Equity,
which includes a prohibition on hedging or otherwise protecting the value of their unvested securities. In the event of a
takeover or any proposed transaction that, in the Board’s opinion, is likely to result in a change of control, the Deferred
Equity will vest and become exercisable.
3.5
LTI for FY2016
The following table describes the full terms of the FY2016 LTI grants to Executive KMP.
Who
participated?
How much LTI
was granted?
What are the
performance
conditions?
All Executive KMP.
LTI is granted to Executive KMP in the form of performance rights, being rights to receive ordinary shares subject
to meeting performance conditions and exercise by the Executive KMP.
There is no exercise price payable on vesting or exercise of the performance rights. On exercise, each performance right
entitles the recipient to one ordinary share in the Company. Vested performance rights that have not been exercised
by 13 August 2025 (the expiry date) will automatically be exercised. The Managing Director was granted performance
rights with a face value equal to 100% of his TFR and the EGM Operations was granted performance rights with a face
value equal to 90% of his TFR, Other KMP were granted performance rights with a face value equal to 80% of their
TFR. The number of performance rights granted was determined by reference to the volume weighted average price
of the Company’s shares over the 20 trading day period commencing 10 trading days prior to 1 July 2015. Shareholder
approval was obtained at the 2015 Annual General Meeting for the FY2016 grant of performance rights to Mr Flynn.
The award was split into the following components:
— TSR Rights: 60% of the award is subject to a relative TSR performance hurdle, which compares the TSR
performance of the Company with the TSR performance of a peer group of companies operating in the Australian
resources sectors; and
— Costs Target Rights: 40% of the award is subject to the Company achieving a defined cost per tonne target Costs
Hurdle – see next page.
76 /
REMUNERATION REPORT FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORT Why were these
performance
conditions
chosen?
What are the
performance
periods?
How will the
performance
condition be
calculated for
the TSR Rights?
How will the
performance
condition be
calculated for
the Costs Target
Rights?
A relative TSR performance hurdle was chosen because:
1.
it allows for an objective external assessment of the shareholder value created by the Company relative to a
comparator group of peers over a sustained period;
2. it is familiar to shareholders.
The Costs Hurdle was chosen and set at a level which is aligned to the Company’s vision to be Australia’s leading
independent coal producer and positioned in the lowest cost quartile of Australian coal producers.
Tight control of costs of production (i.e. in the lowest cost quartile) is a key plank in our strategy. For this reason we
have a cost metric in both our short and long-term incentive structures. Lowest quartile costs protect and preserve
shareholder value in difficult times and support enhanced returns when the commodity cycle recovers. With costs in
the lowest quartile the Company has access to lower cost debt and larger liquidity pools, it is able to avoid dilutive and
often expensive equity raisings, and its employees and suppliers have confidence in the Company’s sustainability and
ability to provide opportunities to grow.
The TSR Rights are divided into two equal tranches capable of vesting and becoming exercisable after a three
and four year performance period (respectively), with each performance period commencing on 1 July 2015.
The Costs Target Rights will be based on the FOB cost per saleable tonne achieved on a Company-wide basis
for the year ending 30 June 2018.
The TSR of the Company for the FY2016 LTI grant is measured as a percentile ranking compared to the below
comparator group of listed entities over the relevant performance period for the tranche. The TSR comparator
group is established before the commencement of the respective performance period.
BHP Billiton
Origin Energy
South32
Rio Tinto
Oil Search
Caltex Australia
Fortescue Metals Group
Alumina
Woodside Petroleum
Newcrest Mining
Santos
Iluka Resources
WorleyParsons
BlueScope Steel
Whitehaven Coal
OZ Minerals
Sims Metal Management
Liquefied Natural Gas
New Hope Corp
Beach Energy
Evolution Mining
Sirius Resources
Northern Star Resources
Independence Group
The level of vesting will be determined based on the ranking against the comparator group companies in accordance
with the following schedule:
— at the 75th percentile or above – 100% of the TSR Rights vest;
— between the 50th and 75th percentile – vesting will occur on a pro rata straight line basis;
— at 50th percentile – 35% of the TSR Rights vest; and
— below the 50th percentile – no TSR Rights vest.
Unless the Remuneration Committee determines otherwise, the TSR of a company for a performance period will be
calculated adopting the following determination of the relevant opening and closing share prices:
— the volume weighted average share price over the 20 trading day period commencing 10 trading days before
1 July 2015 (opening share price); and
— the volume weighted average share price over the corresponding 20 trading day period at the conclusion of the
performance period ending 30 June 2018 and 30 June 2019, as applicable (closing share price).
The Remuneration Committee has set the LTI Costs Hurdle having regard to the Company’s budgeted cost forecasts
and to the current coal industry cost curve as measured by a recognised expert. The Board is satisfied that the LTI
Costs Hurdle is challenging and that achievement of the performance condition will place the Company in the lowest
cost quartile of the current coal industry cost curve.
Testing will occur at the end of FY2018 based on the average costs achieved on a Company-wide basis over the
12 month period from 1 July 2017 to 30 June 2018. Full vesting will only occur if the Board is satisfied that performance
meets or exceeds the Maximum as set out below. The Board may, where it is appropriate to do so, revise the targets
below to take account of mergers, acquisitions and divestments or other exceptional circumstances.
Vesting will occur based on the following schedule:
— maximum or above – 100% of Costs Target Rights vest;
— between Gateway and Maximum – 35% of the Costs Target Rights vest at Gateway performance and thereafter
additional vesting will occur on a pro rata straight line basis up to stretch performance;
— gateway – 35% of Costs Target Rights vest; and
— below Gateway – no Costs Target Rights vest.
Whitehaven Coal Annual Report 2016 / 77
FINANCIAL REPORT7 How will the
performance
condition be
calculated
for the Costs
Target Rights?
(continued)
Re-testing
Do the
performance
rights attract
dividend and
voting rights?
What happens
in the event
of a change
in control?
What happens
if an executive
ceases
employment
during the
performance
period?
Due to the commercially sensitive nature of this hurdle, the exact target will not be disclosed until the year of testing.
However, retrospective disclosure of the outcomes against the target will be provided in the Remuneration Report
for the year of testing.
To the extent that the Costs Hurdle is satisfied at the end of FY2018:
— 50% of the Costs Target Rights that vest will immediately become exercisable; and
— The remaining 50% will be subject to a further one year service condition prior to vesting and becoming exercisable.
Notwithstanding the vesting schedule above, the Board retains discretion to lapse any or all Costs Target Rights
if the Board considers that vesting would be inappropriate in light of the intent and purpose of the target.
All performance rights that do not vest following testing will lapse immediately. There is no re-testing of awards that do
not vest.
Performance rights do not carry voting or dividend rights.
Shares allocated on exercise of performance rights rank equally with other ordinary shares on issue, including in relation
to dividend and voting rights. Participants are required to comply with the Company’s securities trading policy in
respect of their performance rights and any shares they receive upon exercise. They are prohibited from hedging or
otherwise protecting the value of their performance rights.
In the event of a takeover bid or other transaction, event or state of affairs that in the Board’s opinion is likely to result in
a change in control of the Company, the Board has a discretion to determine that vesting of some or all of any unvested
performance rights should be accelerated.
In general, unless the Board determines otherwise, where an executive’s employment is terminated:
— for cause: all unvested performance rights will lapse;
— due to resignation or by mutual agreement with the Company: unvested performance rights will remain on foot
and subject to the original performance hurdle. However, the Board may at its discretion determine to lapse any or
all of the unvested performance rights and ordinarily, in the case of a resignation, would be expected to do so;
— for any other reason: unvested performance rights will remain on foot and subject to the original performance
hurdle, with Board discretion to determine that some of the performance rights (up to a pro rata portion based
on how much of the performance period remains) will lapse. The performance rights that remain on foot will be
tested in the normal course following the end of the relevant performance period.
3.6
Rights granted to Executive KMP
Details of rights granted to Executive KMP under the STI and LTI during FY2016 are set out in the table below. The grants to Executive KMP
included the Deferred Equity component of their FY2015 STI and their full 2015 LTI opportunity (granted in FY2016) and were made on the
terms summarised in sections 3.4 and 3.5 above.
PLAN
NUMBER
OF RIGHTS
GRANTED
PERFORMANCE
HURDLE¹
Service³
Service³
GRANT DATE
8 April 2016
8 April 2016
Contingent⁴
8 April 2016
TSR
TSR
8 April 2016
8 April 2016
Costs hurdle
8 April 2016
Service³
Service³
8 April 2016
8 April 2016
Contingent⁴
8 April 2016
TSR
TSR
8 April 2016
8 April 2016
FAIR VALUE
PER RIGHT AT
GRANT DATE²
$1.29
$1.29
$1.29
$0.16
$0.20
$0.57
$0.55
$1.29
$1.29
$1.29
$0.16
$0.20
$0.57
$0.55
$1.29
$1.29
$1.29
$0.16
LATEST
VESTING DATE
27 August 2016
27 August 2017
27 August 2017
30 June 2018
30 June 2019
30 June 2018
30 June 2019
27 August 2016
27 August 2017
27 August 2017
30 June 2018
30 June 2019
30 June 2018
30 June 2019
27 August 2016
27 August 2017
27 August 2017
30 June 2018
30 June 2019
148,837
Costs hurdle
8 April 2016
Service³
Service³
8 April 2016
8 April 2016
Contingent⁴
8 April 2016
TSR
TSR
8 April 2016
8 April 2016
$0.20
97,312
97,311
69,284
308,372
308,372
411,163
37,791
37,791
29,070
111,628
111,628
37,791
37,791
29,070
94,884
94,883
KMP
Paul Flynn
Kevin Ball
Timothy Burt
78 /
STI
STI
STI
LTI
LTI
LTI
STI
STI
STI
LTI
LTI
LTI
STI
STI
STI
LTI
LTI
REMUNERATION REPORT FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORT KMP
PLAN
LTI
Brian Cole
Jamie
Frankcombe
Scott Knights
STI
STI
STI
LTI
LTI
LTI
STI
STI
STI
LTI
LTI
LTI
STI
STI
STI
LTI
LTI
LTI
NUMBER
OF RIGHTS
GRANTED
PERFORMANCE
HURDLE¹
GRANT DATE
FAIR VALUE
PER RIGHT AT
GRANT DATE²
126,512
Costs hurdle
8 April 2016
49,128
49,128
37,791
123,349
123,349
164,465
Service³
Service³
8 April 2016
8 April 2016
Contingent⁴
8 April 2016
TSR
TSR
8 April 2016
8 April 2016
Costs hurdle
8 April 2016
68,678
Service³
8 April 2016
68,678
33,916
186,802
186,802
249,070
28,403
28,403
22,724
92,093
92,093
122,791
Service³
8 April 2016
Contingent⁴
8 April 2016
TSR
TSR
8 April 2016
8 April 2016
Costs hurdle
8 April 2016
Service³
Service³
8 April 2016
8 April 2016
Contingent⁴
8 April 2016
TSR
TSR
8 April 2016
8 April 2016
Costs hurdle
8 April 2016
$0.57
$0.55
$1.29
$1.29
$1.29
$0.16
$0.20
$0.57
$0.55
$1.29
$1.29
$1.29
$0.16
$0.20
$0.57
$0.55
$1.29
$1.29
$1.29
$0.16
$0.20
$0.57
$0.55
LATEST
VESTING DATE
30 June 2018
30 June 2019
27 August 2016
27 August 2017
27 August 2017
30 June 2018
30 June 2019
30 June 2018
30 June 2019
27 August 2016
27 August 2017
27 August 2017
30 June 2018
30 June 2019
30 June 2018
30 June 2019
27 August 2016
27 August 2017
27 August 2017
30 June 2018
30 June 2019
30 June 2018
30 June 2019
1
To the extent that the Costs Hurdle is satisfied at the end of FY2018, 50% of the rights will vest and become exercisable immediately and the remaining
50% will continue on foot, subject to a further one year service condition.
2 The fair value for rights granted to the Executive KMP is based on the fair value at the grant date, measured using a Monte Carlo simulation model.
The factors and assumptions used in determining the fair value are set out in note 5.5 to the financial statements.
3 Service STI is the Deferred Equity component of FY2015 STI and is subject to service conditions of one and two years, respectively. There is no exercise price
payable on vesting or exercise of Deferred Equity. On exercise of Deferred Equity, each right entitles the recipient to one ordinary share in the Company.
Vested Deferred Equity that has not been exercised by 13 August 2025 (the expiry date) will automatically be exercised.
4 Contingent STI relates to STI amounts in FY2015 for above Target EBITDA performance and above Target Maules Creek performance that were subject to
further performance conditions. In August 2016 the Board confirmed that both elements had been achieved and therefore in August 2016 the Contingent
STI vested and became exercisable. On exercise of Contingent STI, each right entitles the recipient to one ordinary share in the Company. Vested Deferred
Equity that has not been exercised by 13 August 2025 (the expiry date) will automatically be exercised.
A summary of the LTI performance rights shown above (i.e. the face value and the fair value of the LTI granted to each Executive KMP) is set
out in the table below.
EXECUTIVE KMP
Paul Flynn
Kevin Ball
Timothy Burt
Brian Cole
Jamie Frankcombe
Scott Knights
NUMBER OF PERFORMANCE
RIGHTS GRANTED
FACE VALUE OF
PERFORMANCE RIGHTS AT
GRANT DATE
FAIR VALUE OF
PERFORMANCE RIGHTS AT
GRANT DATE
1,027,907
372,093
316,279
411,163
622,674
306,977
$1,326,000
$480,000
$408,000
$530,400
$803,250
$396,000
$341,265
$123,535
$105,005
$136,506
$206,728
$101,916
Whitehaven Coal Annual Report 2016 / 79
FINANCIAL REPORT7 3.7
Executive KMP realised remuneration outcomes
The table below is designed to give shareholders a better understanding of the actual remuneration outcomes for Executive KMP in FY2016.
It includes:
— Fixed remuneration earned in FY2016;
— STI earned in respect of FY2016 performance (including cash payable in September 2016 and Deferred Equity STI which may vest and
become exercisable in later years);
— LTI that reached the end of its performance period on 30 June 2016;
— any termination benefits provided in FY2016; and
— any non-monetary benefits provided to Executive KMP in FY2016 (including fringe benefits).
The amounts disclosed in the table, while not in accordance with accounting standards, are considered more helpful for shareholders to
demonstrate the linkage between Company performance and remuneration outcomes for executives for FY2016.
TFR¹
STI²
LTI³ CESSATION⁴
OTHER⁵
TOTAL
REMUNERATION
FY2016
DEFERRED
EQUITY STI⁶
FY2015
CONTINGENT
STI AWARD⁷
NAME
Paul Flynn
Kevin Ball
1,326,000
772,046
600,000
337,193
Timothy Burt
510,000
298,346
Brian Cole
663,000
356,023
Jamie Frankcombe
892,500
522,104
Scott Knights
495,000
276,821
N/A
N/A
N/A
N/A
–
N/A
–
–
–
–
–
–
12,020
–
12,020
8,824
12,020
–
2,110,066
937,193
820,366
231,614
101,158
89,504
1,027,847
106,807
1,426,624
771,821
156,631
83,046
89,375
37,500
37,500
48,750
43,750
29,312
Fixed remuneration comprises base salary and superannuation.
1
2 STI represents the total amount of STI that each Executive KMP is able to earn based on FY2016 performance including the 30% portion that is
awarded as Deferred Equity, where vesting of rights is subject to meeting further service based conditions. Refer to section 3.4 for further details.
3 No LTI vested during FY2016. See section 3.5 for details of LTI.
4 There were no cessation payments during FY2016.
5 Other includes parking, motor vehicle benefits and other similar items.
6 Deferred Equity STI refers to the amount of STI deferred into rights that are the subject to further service based conditions refer Section 3.4 for further details.
7 Contingent STI refers to STI amounts in FY2015 for above Target EBITDA performance and above Target Maules Creek performance that were subject to further
performance conditions. The first component (60%) would not vest unless the Company returned to profit prior to 30 June 2017 while the second component
(40%) would only fully vest if the unexpended contingency for the Maules Creek Project exceeded a stretch target of $37m. In August 2016 the Board declared
that each of these contingent conditions had been met. The details of these contingent awards were fully disclosed in the Company’s Remuneration Report for
the year ended 30 June 2015.
The individual STI outcome for each Executive KMP is set out in the table below.
STI EARNED ($A)
EXECUTIVE KMP
Paul Flynn
Kevin Ball
Timothy Burt
Brian Cole
Jamie Frankcombe
Scott Knights
PAID AS CASH
($)
540,432
236,035
208,842
249,216
365,473
193,775
DEFERRED
EQUITY
($)
231,614
101,158
89,504
106,807
156,631
83,046
TOTAL
($)
772,046
337,193
298,346
356,023
522,104
276,821
PERCENTAGE OF
MAXIMUM STI
RECEIVED
PERCENTAGE OF
MAXIMUM STI
FORFEITED
78%
75%
78%
72%
78%
75%
22%
25%
22%
28%
22%
25%
Details of the remuneration of KMP prepared in accordance with statutory obligations and accounting standards are contained in section 5 of
this Remuneration Report.
80 /
REMUNERATION REPORT FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORT 4
EXECUTIVE KMP EMPLOYMENT CONTRACTS
The following section sets out an overview of key terms of employment for the Executive KMP, as provided in their service agreements.
All Executive KMP contracts give the Company discretion to make payment in lieu of notice. No notice is required where termination
is for cause. The contracts do not provide for any termination payments other than payment in lieu of notice.
Treatment of unvested incentives is dealt with in accordance with the terms of grant. In general, under the STI and LTI arrangements, unvested
entitlements will be forfeited where an executive is terminated for cause or, subject to the Board’s discretion, where they resign. In all other
circumstances where the Board considers the executive to be a ‘good leaver’, outgoing executives will generally retain their entitlements
(subject to any applicable performance conditions in the case of LTI arrangements).
Managing Director
Paul Flynn was appointed as Managing Director and CEO of the Company on 27 March 2013. This table outlines the key terms of Mr Flynn’s
contract of employment.
Fixed remuneration
Mr Flynn’s annual TFR for FY2017 is $1,352,520 (FY2016: $1,326,000) which includes salary, superannuation
contributions, and any components under Whitehaven’s salary packaging guidelines and all Director fees.
TFR is reviewed annually.
Short-term incentive
Mr Flynn is eligible to participate in the annual STI plan, as described in section 3.4. At Target performance,
his FY2017 STI opportunity is 100% of TFR (FY2016: 50%), with up to 125% of TFR for Stretch performance
(FY2016: 75%).
Long-term incentive
Mr Flynn is eligible to participate in the LTI plan as described in section 3.5, and subject to receiving required
or appropriate shareholder approval. Mr Flynn’s LTI grant will be 100% of his TFR for FY2017 (FY2016: 100%).
Other key terms
Other key terms of Mr Flynn’s service agreement include the following:
— his employment is ongoing, subject to twelve months’ notice of termination by Whitehaven or six months’
notice of termination by Mr Flynn,
— the Company may terminate without notice in certain circumstances, including serious misconduct or
negligence in the performance of duties. Mr Flynn may terminate immediately in the case of fundamental
change to his role (i.e. there is a substantial diminution in his responsibilities), in which case his entitlements
will be the same as if the Company terminated him without cause,
— the consequences for unvested incentive awards on termination of Mr Flynn’s employment will be in
accordance with the Company’s STI and LTI plans,
Mr Flynn will have post-employment restraints for a period of three months. No additional amounts will be
payable in respect of this restraint period.
Other Executive KMP contracts
A summary of the notice periods and key terms of the current KMP contracts are set out in the table below. All of the contracts below
are of ongoing duration.
NAME AND POSITION (AT YEAR-END)
NOTICE
Kevin Ball
Chief Financial Officer
Appointed 16 December 2013
Timothy Burt
General Counsel and Joint Company Secretary
Appointed 29 July 2009
Brian Cole
Executive General Manager - Project Delivery
Appointed 1 July 2012
Jamie Frankcombe
Executive General Manager – Operations
Appointed 4 February 2013
Scott Knights
Executive General Manager – Marketing
Appointed 18 August 2014
3 months by employee
6 months by the Company
3 months by employee
12 months by the Company
6 months by employee or the Company
3 months by employee
6 months by the Company
6 months by employee or the Company
Whitehaven Coal Annual Report 2016 / 81
FINANCIAL REPORT7 5
EXECUTIVE KMP – STATUTORY REMUNERATION TABLE
The following table sets out the statutory remuneration disclosures required under the Corporations Act and has been prepared in accordance
with the appropriate accounting standards and has been audited.
NON –
MONETARY
BENEFITS
(A)
SALARY
& FEES
SUPER–
ANNUATION
BENEFITS
STI
(B)
TERMINATION
BENEFITS
SHARES
RIGHTS
AND
OPTIONS
(C)
TOTAL
REMUNERATION
SHARE–BASED
PAYMENTS
IN AUD
FY
Executive Directors
Paul Flynn
2016
1,291,000
2015
1,275,518
12,020
11,530
35,000
772,046
24,482
926,250
Other Executive KMP
Kevin Ball
2016
575,000
2015
475,000
–
–
25,000
337,193
25,000
362,500
Timothy Burt
2016
480,000
12,020
30,000
298,346
2015
469,697
Brian Cole
2016
623,600
Jamie
Frankcombe
2015
2016
615,100
857,500
2015
850,000
Scott Knights
2016
470,000
2015
371,032
11,530
8,824
18,193
12,020
11,530
–
–
30,000
362,500
39,400
356,023
35,000
471,250
35,000
522,104
25,000
634,375
25,000
276,821
22,520
273,575
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
321,283
180,678
114,962
61,606
147,782
116,809
195,860
157,000
229,867
137,379
84,766
–
2,431,349
2,418,458
1,052,155
924,106
968,148
990,536
1,223,707
1,296,543
1,656,491
1,658,284
856,587
667,127
A. The amounts disclosed as non-monetary benefits relate to car spaces, motor vehicle benefits and other similar items.
B. Refer to section 3.7 for details of the FY2016 STI – approximately 70% will be paid in September 2016 while 30% will be subject to further service based
vesting conditions.
C. The fair value for LTI Performance Rights granted to the KMP is based on the fair value at the grant date, measured using a Monte Carlo simulation model.
The factors and assumptions used in determining the fair value are set out in note 5.5 to the financial statements.
6
NON-EXECUTIVE DIRECTOR FEES
AND FEE POOL
This section explains the fees for Non-executive Directors.
6.1
Setting Non-executive Director fees
Non-executive Directors fees are designed to ensure that the
Company can attract and retain suitably qualified and experienced
Non-executive Directors.
Non-executive Directors do not receive shares, share options or
any performance-related incentives as part of their fees from
the Company. However, although there is no formal minimum
shareholding, Non-executive Directors are strongly encouraged
to hold shares.
Non-executive Directors are also entitled to be reimbursed for travel
and other expenses reasonably incurred when attending meetings
of the Board or in connection with the business of the Company.
The Remuneration Committee reviews and makes recommendations
to the Board with respect to Non-executive Directors’ fees and
Committee fees.
In 2012 the shareholders approved a total aggregate maximum
amount of Non-executive Directors’ fees of $2,500,000 per annum.
6.2
Current Non-executive Director fee levels
and fee pool
The table below sets out the Board and Committee fees in Australian
dollars as at 30 June 2016. The Board determined that there would
be no fee increases for Non-executive Directors for FY2017. Director
fees have remained unchanged since 2012.
CHAIRMAN
DEPUTY
CHAIRMAN
MEMBER
Board
$350,000¹
$262,500¹
$140,000
Audit & Risk
Management
Committee
Remuneration
Committee
Governance &
Nominations
Committee
Health, Safety,
Environment
& Community
Committee
$40,000
$25,000
No fee
$25,000
–
–
–
–
$20,000
$12,500
No fee
$12,500
1
The Chairman and Deputy Chairman of the Board do not receive
Committee fees in addition to their Board fees.
The fees set out above exclude mandatory statutory superannuation
contributions made on behalf of the Non-executive Directors.
In addition to the meetings that the Non-executive Directors
attended (as shown on page 63), the Non-executive Directors
participated in site visits to mines, coal handling and preparation
plants and participated in the Company’s annual safety day.
82 /
REMUNERATION REPORT FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORT 6.3 NON-EXECUTIVE DIRECTOR FEES - STATUTORY DISCLOSURES
The statutory disclosures required under the Corporations Act and in accordance with the Accounting Standards are set out in the table below.
IN AUD
Non–executive Directors
The Hon. Mark Vaile
(Chairman)
John Conde
(Deputy Chairman)
Dr Julie Beeby¹
Tony Haggarty
Christine McLoughlin
Ray Zage
Rick Gazzard²
Philip Christensen⁴
Total
SHORT–TERM BENEFITS
POST–EMPLOYMENT BENEFITS
BOARD &
COMMITTEE
FEES
NON–
MONETARY
BENEFITS
OTHER
BENEFITS
(NON–CASH)
SUPER–
ANNUATION
BENEFITS
TERMINATION
BENEFITS
TOTAL
FEES FOR
SERVICES AS A
NON–EXECUTIVE
DIRECTOR
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
350,000
350,000
262,500
262,500
145,869
–
185,000
165,000
177,500
177,500
–³
–³
14,375
172,500
–
5,979
1,135,244
1,133,479
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
19,308
18,783
19,308
18,783
13,858
–
17,575
15,675
16,863
16,863
–
–
1,366
16,388
–
568
88,278
87,060
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
369,308
368,783
281,808
281,283
159,727
–
202,575
180,675
194,363
194,363
–
–
15,741
188,888
–
6,547
1,223,522
1,220,539
1 Appointed 17 July 2015.
2 Resigned 16 July 2015.
3 Mr Zage elected not to receive any Board & Committee fees in FY2015 and FY2016.
4 Resigned 14 July 2014.
7.0 RELATED PARTY TRANSACTIONS AND ADDITIONAL DISCLOSURES
7.1
Loans with Executive KMP and
Non-executive Directors
There were no loans outstanding to any Executive KMP or any Non-
executive Director or their related parties, at any time in the current
or prior reporting periods.
7.2
Other KMP transactions
Apart from the details disclosed in this report, no Executive KMP or
Non-executive Director or their related parties have entered into a
material contract with the consolidated entity since the end of the
previous financial year and there were no material contracts involving
those people’s interests existing at year-end.
Whitehaven Coal Annual Report 2016 / 83
FINANCIAL REPORT7 7.3
Movement in equity instruments held by Executive KMP
The movement during the reporting period, by number and value of equity instruments in the Company held by each Executive KMP is
detailed below.
EXECUTIVE KMP
INSTRUMENT
BALANCE
AS AT
1 JULY
2015
(NUMBER)
GRANTED
(NUMBER)
(A)
GRANTED
(VALUE)
(B)
$
VESTED
(NUMBER)
VESTED
(VALUE)
(C)
$
LAPSED
(NUMBER)
LAPSED
(YEAR
OF
GRANT)
(D)
Paul Flynn
Kevin Ball
Timothy Burt
Brian Cole
Jamie
Frankcombe
Scott Knights
Performance
Rights (LTI)
Deferred
Rights (STI)
Deferred
Shares (STI)
Performance
Rights (LTI)
Deferred
Rights (STI)
Deferred
Shares (STI)
Performance
Rights (LTI)
Deferred
Rights (STI)
Deferred
Shares (STI)
Performance
Rights (LTI)
Deferred
Rights (STI)
Deferred
Shares (STI)
Performance
Rights (LTI)
Deferred
Rights (STI)
Deferred
Shares (STI)
Performance
Rights (LTI)
Deferred
Rights (STI)
1,303,238
1,027,907
341,265
–
263,907
340,438
–
–
–
–
126,410
–
–
63,205
121,354
370,353
372,093
123,535
–
104,652
135,000
–
–
–
–
19,150
–
–
9,575
18,384
505,254
316,279
105,005
–
104,652
135,000
–
–
–
–
39,083
–
–
22,115
42,974
672,745
411,163
136,506
–
136,047
175,500
–
–
–
–
52,846
–
–
29,548
57,357
791,952
622,674
206,728
–
171,272
220,938
–
–
–
–
71,625
–
–
37,482
72,298
246,575
306,977
101,916
–
79,530
102,591
–
–
–
–
BALANCE AS AT
30 JUNE 2016
(NUMBER)
2,331,145
263,907
63,205
742,446
104,652
9,575
–
–
–
–
–
–
–
–
–
–
–
–
30,819¹
2012
790,714
–
–
–
–
104,652
16,968
42,174¹
2012
1,041,734
–
–
–
–
–
–
–
–
–
–
–
–
–
–
136,047
23,298
1,414,626
171,272
34,143
553,552
79,530
1
The performance period for Tranche 2 of the 2012 LTI grant expired on 23 September 2015 and all of the rights lapsed as a result of the performance condition
not being met.
(A) The number of rights granted during FY2016 includes the Deferred Equity component of the FY2015 STI award and the FY2015 Contingent STI award,
calculated by reference to the volume weighted average price of the Company’s shares for the 20 day trading period commencing 10 trading days prior
to 1 July 2015. The grant date of the rights was 8 April 2016. Further details are provided in section 3.4.
(B) The value of LTI performance rights granted in the year is the fair value of the performance rights at grant date using the Monte Carlo simulation model.
The value of deferred STI rights granted in the year has been calculated using the volume weighted average price of the Company’s shares for the 20 day
trading period commencing 10 trading days prior to 1 July 2015.
Unvested LTI performance rights and unvested STI rights have a minimum value of zero if they do not meet the relevant performance or service conditions.
The maximum value of unvested LTI performance rights, unvested deferred STI rights and unvested STI deferred shares is the sale price of the Company’s shares
at the date of vesting, or where applicable, exercise.
(C) No LTI awards vested or were exercised during the period.
Tranche 2 of the FY2013 STI deferred shares vested during the period. The vested value has been calculated using the volume weighted average price of the
Company’s shares for the 20 day trading period commencing 10 trading days prior to the effective grant date of 27 August 2013.
Tranche 1 of the FY2014 STI deferred shares vested during the period. The vested value has been calculated using the volume weighted average price of the
Company’s shares for the 20 day trading period commencing 10 trading days prior to the effective grant date of 27 August 2014.
(D) The year in which the lapsed performance rights, rights or deferred shares were granted.
84 /
REMUNERATION REPORT FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORT
7.4
Additional disclosures relating to ordinary shares
The movement during the reporting period in the number of ordinary shares in the Company held, directly, indirectly or beneficially, by each
Executive KMP and each Non-executive Director, including their related, parties is as follows:
NO. OF SHARES
Directors
Mark Vaile
John Conde
Dr Julie Beeby¹
Paul Flynn
Rick Gazzard²
Tony Haggarty
Christine McLoughlin
Ray Zage
Executive
Kevin Ball
Timothy Burt
Brian Cole
Jamie Frankcombe
Scott Knights
HELD AT
1 JULY 2015
2,567,767
378,605
–
265,792³
200,000
20,060,787
55,000
–
44,150³
224,129³
59,096³
327,650³
–
RECEIVED
ON VESTING
OF STI/LTI
RECEIVED AS
REMUNERATION
OTHER NET
CHANGE
HELD AT
30 JUNE 2016
–
–
–
–
–
–
–
–
N/A
N/A
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,567,767
510,015
55,000
118,000
N/A
888,620
55,000
383,792⁴
N/A
1,735,506
21,796,293
–
–
80,000
–
–
100,000
40,000
55,000
–
124,150⁴
224,129⁴
59,096⁴
427,650⁴
40,000
1 Dr Julie Beeby commenced 17 July 2015.
Rick Gazzard resigned 16 July 2015.
2
Includes shares subject to restrictions granted as part of the FY2013 and FY2014 STI which were held by the Whitehaven Coal Limited Equity Incentive Plan
3
Trust at 1 July 2015.
Includes shares subject to restrictions granted as part of the FY2014 STI which were held by the Whitehaven Coal Limited Equity Incentive Plan Trust at 30 June 2016.
4
7.5
Additional disclosures relating to options and rights over equity instruments
The movement during the reporting period in the number of options and performance rights over ordinary shares in the Company held,
directly, indirectly or beneficially, by each Executive KMP and each Non-executive Director, including their related parties, is as follows:
HELD AT
1 JULY 2015
GRANTED
EXERCISED
LAPSED/
FORFEITED²
HELD AT
30 JUNE 2016
VESTED
DURING THE
YEAR
VESTED AND
EXERCISABLE
AT 30 JUNE
2016
Directors
Mark Vaile¹
Paul Flynn
Executives
Kevin Ball
Timothy Burt
Brian Cole
Jamie Frankcombe
Scott Knights
189,000
–
1,303,238
1,291,814
370,353
505,254
672,745
791,952
246,575
476,745
420,931
547,210
793,946
386,507
–
–
–
–
–
–
–
189,000
–
–
–
30,819
42,174
–
–
2,595,052
847,098
895,366
1,177,781
1,585,898
633,082
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1
The Group issued fully vested options over the Company’s shares in consideration for fully vested options held in Aston Resources Limited as part of the scheme
of arrangement. Directors and director related entities received these options in their capacity as option holders in Aston Resources Limited and as such they do
not form part of their remuneration.
2 The performance period for Tranche 2 of the 2012 LTI grant expired on 23 September 2015 and all of the rights lapsed as a result of the performance condition
not being met.
Signed in accordance with a resolution of the Directors:
The Hon. Mark Vaile AO
Chairman
Dated at Sydney this 18th day of August 2016
Whitehaven Coal Annual Report 2016 / 85
FINANCIAL REPORT7 AUDITORS INDEPENDENCE DECLARATION
FOR THE YEAR ENDED 30 JUNE 2016
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Auditor’s Independence Declaration to the Directors of Whitehaven
Coal Limited
As lead auditor for the audit of Whitehaven Coal Limited for the financial year ended 30 June 2016, I
declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Whitehaven Coal Limited and the entities it controlled during the
financial year.
Ernst & Young
Ryan Fisk
Partner
18 August 2016
45
86 /
SECTION 7 FINANCIAL REPORT
FINANCIAL REPORT
TABLE OF CONTENTS
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial statements
Directors’ Declaration
Independent Auditor’s Report
88
89
90
91
92
123
124
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS INDEX
1. About this report
2. Group performance
2.1.
2.2.
2.3.
2.4.
Segment reporting
Significant items
Taxes
Earnings/(loss) per share
3. Working capital and cash flows
3.1
3.2
3.3
3.4
Trade and other receivables
Inventory
Trade and other payables
Reconciliation of cash flows
from operating activities
4. Resource assets and liabilities
4.1
4.2
4.3
4.4
Property, plant and equipment
Exploration and evaluation
Intangible assets
Provisions
92
93
93
95
96
99
100
100
100
100
101
102
102
105
105
106
5. Capital structure and financing
Interest-bearing loans and borrowings
Finance income and expense
Financial risk management objectives and policies 109
Share capital and reserves
Share-based payments
5.1.
5.2.
5.3.
5.4.
5.5.
6. Group structure
6.1.
Group’s subsidiaries and interests
in joint operations
6.2.
Parent entity information
6.3. Deed of cross guarantee
6.4. Related parties
7. Other notes
7.1.
7.2.
7.3.
7.4.
7.5.
Employee benefits
Auditors’ remuneration
Commitments
Contingencies
Subsequent events
7.6. New accounting standards and interpretations
107
107
108
114
115
117
117
119
119
121
121
121
122
122
122
123
123
Whitehaven Coal Annual Report 2016 / 87
FINANCIAL REPORT7
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2016
Revenue
Other income
Operating expenses
Coal purchases
Selling and distribution expenses
Government royalties
Impairment of assets
Administrative expenses
Depreciation and amortisation
Other expenses
Profit/(loss) before net financial expense
Financial income
Financial expenses
Net financial expense
Profit/(loss) before tax
Income tax (expense)/benefit
Net profit/(loss) for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Net movement on cash flow hedges
Income tax effect
Other comprehensive income/(loss) for the period, net of tax
Total comprehensive income/(loss) for the period, net of tax
Net profit/(loss) for the period attributable to:
Owners of the parent
Non–controlling interests
Total comprehensive income/(loss) for the period, net of tax attributable to:
Owners of the parent
Non–controlling interests
Earnings per share:
Basic earnings/(loss) per share (cents per share)
Diluted earnings/(loss) per share (cents per share)
NOTE
2.1
2016
$'000
1,164,437
8,356
2015
$'000
763,290
10,713
(509,815)
(358,089)
(5,616)
(314,248)
(88,155)
–
(26,321)
(130,385)
(4,505)
93,748
1,056
(67,130)
(66,074)
–
(202,226)
(58,120)
(445,363)
(24,750)
(97,584)
(2,784)
(414,913)
4,756
(73,160)
(68,404)
2.2
5.2
27,674
(483,317)
2.3(a)
(7,186)
140,592
20,488
(342,725)
5.2
2.3(b)
5.2
1,186
(356)
830
21,318
(1,507)
452
(1,055)
(343,780)
20,488
(330,625)
–
(12,100)
21,318
–
(331,680)
(12,100)
2.4
2.4
2.1
2.1
(33.3)
(33.3)
The consolidated statement of comprehensive income is to be read in conjunction with the notes to the financial statements.
88 /
SECTION 7 FINANCIAL REPORT
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2016
Assets
Cash and cash equivalents
Trade and other receivables¹
Inventories
Derivative financial instruments
Total current assets
Trade and other receivables¹
Investments
Property, plant and equipment
Exploration and evaluation
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
Liabilities
Trade and other payables
Interest bearing loans and borrowings
Employee benefits
Current tax payable
Provisions
Derivative financial instruments
Total current liabilities
Non-current liabilities
Interest bearing loans and borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share based payments reserve
Hedge reserve
Retained earnings
Equity attributable to owners of the parent
Non-controlling interest
Total equity
NOTE
3.1
3.2
5.3(d)
2016
$'000
2015
$'000
101,453
102,393
68,347
68,737
351
238,888
95,066
89,892
162
287,513
30,162
37
3.1
28,964
37
4.1
4.2
4.3
3,497,613
3,539,244
206,583
201,346
19,818
19,954
2.3(c)
103,573
111,115
3,856,588
3,901,858
4,095,476
4,189,371
3.3
5.1
7.1
2.3(c)
4.4
5.3(e)
135,928
147,422
24,451
16,872
–
7,260
1,138
21,750
14,055
42,331
7,380
2,136
185,649
235,074
5.1
4.4
936,115
84,996
1,016,481
72,782
1,021,111
1,089,263
1,206,760
1,324,337
2,888,716
2,865,034
5.4(a)
3,144,944
3,146,147
18,417
(551)
36,543
(1,381)
(275,172)
(317,353)
2,887,638
2,863,956
1,078
1,078
2,888,716
2,865,034
1
The comparative period has been restated to better reflect the current and non-current classification of other receivables. Current ‘Trade and other receivables’
as at 30 June 2015 as previously reported was $101.1m. This has been reduced by $6.0m to align with the current year’s presentation. Correspondingly, non-
current ‘Trade and other receivables’ as at 30 June 2015 has increased by $6.0m.
The consolidated statement of financial position is to be read in conjunction with the notes to the consolidated financial statements.
Whitehaven Coal Annual Report 2016 / 89
FINANCIAL REPORT7
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2016
SHARE
BASED
PAYMENT
RESERVE
ISSUED
CAPITAL
HEDGE
RESERVE
RETAINED
EARNINGS
NOTE
$’000
$’000
$’000
$’000
NON–
CONTROLLING
INTEREST
TOTAL
EQUITY
$’000
$’000
TOTAL
$’000
Opening balance at 1 July
2014
Loss for the period
Other comprehensive
income
Total comprehensive
income for the year
3,146,300
35,206
(326)
12,178
3,193,358
13,178
3,206,536
–
–
–
–
–
–
–
(330,625)
(330,625)
(12,100)
(342,725)
(1,055)
–
(1,055)
–
(1,055)
(1,055)
(330,625)
(331,680)
(12,100)
(343,780)
Transactions with owners in their capacity as owners:
Share based payments
5.5(a)
Transfer on exercise/lapse
of share based payments
–
–
2,431
(1,094)
5.4(b)
(148)
5.4(b)
(5)
–
–
–
–
–
–
–
2,431
1,094
–
–
–
(148)
(5)
–
–
–
–
2,431
–
(148)
(5)
3,146,147
36,543
(1,381)
(317,353)
2,863,956
1,078
2,865,034
3,146,147
36,543
(1,381)
(317,353)
2,863,956
1,078
2,865,034
–
–
–
–
–
–
–
20,488
20,488
830
–
830
830
20,488
21,318
Transactions with owners in their capacity as owners:
Share based payments
5.5(a)
–
3,715
Transfer on exercise/lapse
of share based payments
148
(21,841)
5.4(b)
(1,351)
–
–
–
–
–
3,715
21,693
–
–
(1,351)
–
–
–
–
–
–
20,488
830
21,318
3,715
–
(1,351)
3,144,944
18,417
(551)
(275,172)
2,887,638
1,078
2,888,716
Purchase of shares
through employee
share plan
Cost of shares issued,
net of tax
Closing balance at
30 June 2015
Opening balance at
1 July 2015
Profit for the period
Other comprehensive
income
Total comprehensive
income for the year
Purchase of shares
through employee
share plan
Closing balance at
30 June 2016
The consolidated statement of changes in equity is to be read in conjunction with the notes to the consolidated financial statements.
90 /
SECTION 7 FINANCIAL REPORT
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2016
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees¹
Cash generated from operations
Interest paid
Interest received
Income taxes (paid)/refunded
Net cash from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment¹
Purchase of intangible assets
Exploration and evaluation expenditure
Net cash used in investing activities
Cash flows from financing activities
Net proceeds from issue/(purchase) of shares
Proceeds from borrowings
Repayment of borrowings
Payment of finance facility upfront costs
Payment of finance lease liabilities
Net cash (used in)/from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
NOTE
2016
$'000
2015
$'000
1,188,341
(919,010)
269,331
(56,123)
1,056
(42,331)
740,162
(587,442)
152,720
(39,914)
4,752
36,111
3.4
171,933
153,669
5.1
902
(88,867)
–
(5,107)
–
(370,851)
(4,975)
(851)
(93,072)
(376,677)
(1,351)
9,450
(73,610)
(787)
(13,503)
(79,801)
(940)
102,393
101,453
(153)
1,125,000
(858,246)
(27,084)
(17,283)
222,234
(774)
103,167
102,393
The consolidated statement of cash flows is to be read in conjunction with the notes to the financial statements.
1
The Group has made the decision to reclassify cash flows relating to Narrabri deferred development expenditure as ‘Cash paid to suppliers and employees’.
The comparative period has been restated to reflect this change. ‘Purchase of property, plant and equipment’ for the year ended 30 June 2015 as previously
reported was $430.6m. This has been reduced by $59.7m to align with the current year’s presentation. Correspondingly, ‘Cash paid to suppliers and employees’
for the year ended 30 June 2015 has been increased by $59.7m. The change has been made to improve clarity of financial information. Narrabri deferred
development expenditure includes the costs of developing future longwall gateroads, longwall move costs and gas drainage costs associated with future
longwall panels. These costs are incurred and spent, deferred and the associated amortisation charge is included in operating expenses in the consolidated
statement of comprehensive income when the longwall panel is mined.
Whitehaven Coal Annual Report 2016 / 91
FINANCIAL REPORT7 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.4
SUMMARY OF OTHER SIGNIFICANT
ACCOUNTING POLICIES
The accounting policies set out below, and in the notes, have been
applied consistently to all periods presented in these consolidated
financial statements and have been applied consistently by all
subsidiaries in the Group. Other significant accounting policies are
contained in the notes to the consolidated financial statements to
which they relate.
i. Basis of consolidation
The consolidated financial report of the Company for the
financial year ended 30 June 2016 comprises the Company and
its subsidiaries and the Group’s interest in jointly controlled
operations (together referred to as the ‘Group’).
ii. Foreign currency translation
Transactions in foreign currencies are initially recorded in the
functional currency by applying the exchange rates ruling at the date
of the transaction. Monetary assets and liabilities denominated in
foreign currencies are retranslated at the rate of exchange ruling at the
balance date. Foreign exchange differences arising on translation are
recognised in the consolidated statement of comprehensive income.
Both the functional and presentation currency of the Company
and of all entities in the Group is Australian dollars ($).
iii. Notes to the consolidated financial statements
The notes to these consolidated financial statements have been
organised into logical groupings to present more meaningful and
dynamic information to users. To the extent possible the relevant
accounting policies and numbers have been provided in the same
note. The Group has also reviewed the notes for materiality and
relevance and provided additional information where considered
material and relevant to the operations, financial position and
performance of the Group.
1 ABOUT THIS REPORT
1.1
REPORTING ENTITY
Whitehaven Coal Limited (‘Whitehaven’ or ‘Company) is a for-profit
entity, and the principal activity of Whitehaven and its controlled
entities (referred to as the ‘Group’) is the development and operation
of coal mines in New South Wales. The consolidated general purpose
financial report of the Group for the year ended 30 June 2016 was
authorised for issue in accordance with a resolution of the directors
on 18 August 2016. Whitehaven Coal Limited is a company limited
by shares incorporated and domiciled in Australia whose shares are
publicly traded on the Australian Securities Exchange. The address
of the Company’s registered office is Level 28, 259 George Street,
Sydney NSW 2000.
1.2 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 also
complies with International Financial Reporting Standards (IFRS)
issued by the International Accounting Standards Board (IASB)
and interpretations of the International Financial Reporting
Interpretations Committee (IFRIC).
The financial report has been prepared on a historical cost basis,
except for derivative financial instruments and available for sale
financial assets that have been measured at fair value (refer to
note 5.3).
The Company is of a kind referred to in ASIC Class Order 2016/191
and dated 24 March 2016 and in accordance with that Class Order,
all financial information has been presented in Australian dollars and
rounded to the nearest thousand dollars unless otherwise stated.
1.3
SIGNIFICANT ACCOUNTING
JUDGEMENTS, ESTIMATES
AND ASSUMPTIONS
In the process of applying the Group’s accounting policies,
management has made a number of judgements and applied
estimates of future events of which form the basis of the carrying
values of assets and liabilities that are not readily apparent from
other sources. Judgements and estimates which are material to the
financial report are found in the following notes: i) 2.3 Taxes; ii) 4.1
Property, plant and equipment; iii) 4.2 Exploration and evaluation;
iv) 4.4 Provisions; and v) 6.1 Group’s subsidiaries and interests in
joint operations.
92 /
FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2 GROUP PERFORMANCE
2.1 SEGMENT REPORTING
Accounting policy:
The Group identifies its operating segments based on the internal reports that are reviewed and used by the executive management team
in assessing performance and in determining the allocation of resources. The performance of operating segments is evaluated at least
monthly based on revenues and profit before taxes and is measured in accordance with the Group’s accounting policies.
a. Identification of reportable segments
The Group has determined that it has two reportable segments: Open Cut Operations and Underground Operations.
Unallocated operations includes coal trading, corporate, marketing and infrastructure functions which are managed on a group basis
and are not allocated to reportable segments.
The Group’s financing (including finance costs and finance income), depreciation and income taxes are managed on a group basis
and are not allocated to reportable segments.
The following table represents revenue and profit information for reportable segments:
YEAR ENDED 30 JUNE 2016
$’000
$’000
$’000
OPEN CUT
OPERATIONS
UNDERGROUND
OPERATIONS
UNALLOCATED
OPERATIONS
Revenue
Sales to external customers
Total segment revenue
771,036
771,036
397,207
397,207
(3,806)
(3,806)
Total revenue per consolidated statement of comprehensive income
Result
Segment result
Depreciation and amortisation
Income tax expense
Net finance expense
129,759
116,203
(21,829)
Net profit after tax per consolidated statement of comprehensive income
TOTAL
$’000
1,164,437
1,164,437
1,164,437
224,133
(130,385)
(7,186)
(66,074)
20,488
Capital expenditure
Segment expenditure¹
19,117
54,074
8,230
81,421
YEAR ENDED 30 JUNE 2015
$’000
$’000
$’000
OPEN CUT
OPERATIONS
UNDERGROUND
OPERATIONS
UNALLOCATED
OPERATIONS
Revenue
Sales to external customers
Total segment revenue
365,809
365,809
406,093
406,093
(8,612)
(8,612)
Total revenue per consolidated statement of comprehensive income
Result
Segment result
Depreciation and amortisation
Income tax benefit
Significant items before income tax and financing
(see note 2.2)
Loss on investments and asset disposals
Net finance expense
36,694
113,538
(19,982)
Net loss after tax per consolidated statement of comprehensive income
TOTAL
$’000
763,290
763,290
763,290
130,250
(97,584)
140,592
(447,253)
(884)
(67,846)
(342,725)
Capital expenditure
Segment expenditure¹
1 Open Cut operations includes Maules Creek expenditure.
239,630
43,861
6,689
290,180
Whitehaven Coal Annual Report 2016 / 93
FINANCIAL REPORT7 2.1 SEGMENT REPORTING (CONTINUED)
Accounting policy:
Revenue from the sale of coal is recognised and measured at the fair value of consideration received or receivable to the extent that:
i.
it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured;
ii. the significant risks and rewards of ownership have been transferred to the buyer; and
iii. transfer of risk and rewards are considered to have passed to the buyer under the terms of the individual contracts.
Revenue from the sale of Maules Creek development coal in the previous year was offset against development costs capitalised on the
consolidated statement of financial position until production reached commercial levels on 1 July 2015
Other segment information
Revenue from external customers is attributed to geographic location based on final shipping destination.
Revenue by geographic location
Japan
Korea
Taiwan
India
China
Other
Mexico
Malaysia
Chile
Domestic
Total revenue
Revenue by product
Thermal
Metallurgical
Domestic
Total revenue
Major customers
The Group has three major customers which account for 34.4% (2015: 36.1%) of external revenue.
2016
$'000
2015
$'000
631,524
148,496
141,122
84,522
50,928
39,660
21,636
20,962
20,710
4,877
1,164,437
950,398
209,162
4,877
1,164,437
274,520
253,324
50,890
106,834
14,957
57,555
–
–
–
5,210
763,290
589,856
168,224
5,210
763,290
94 /
FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2.2 SIGNIFICANT ITEMS
The items below are significant to the understanding of the overall results of the consolidated group. The Company believes the disclosure
of these items provides readers of the financial statements with further meaningful insights to understand the financial performance of the
Group.
Included within the balances presented on the face of the Consolidated Statement of Comprehensive Income:
Operating expenses:
Restructuring costs¹
Impairment of assets
Impairment of exploration and related assets²
Impairment of MRRT goodwill³
Administrative expenses:
Bad debt provisions⁴
Financial expenses:
Write–off of finance facility upfront costs
Significant items before tax
Applicable income tax (expense)/benefit
De–recognition of MRRT net deferred tax liability³
Tax benefit on refund of overpaid tax⁵
Franking deficit tax charge⁵
Significant items after tax
NOTE
2016
$'000
–
–
–
–
–
–
–
–
–
–
–
5.1
2015
$'000
(585)
(354,652)
(90,711)
(445,363)
(1,305)
(23,093)
(470,346)
112,573
25,801
42,331
(42,331)
(331,972)
1 During the prior year, the Group incurred redundancy costs of $0.6m as a result of a restructure of its workforce.
2 During the prior year, an impairment charge of $355m was taken in respect of early stage exploration assets. The impairment charge reflected the recently
changed coal market environment and prospects for early stage exploration assets and particularly assets higher in ash and lower in energy. This included assets
that would have been targeted towards customers in China.
3 De-recognition of MRRT related deferred tax balances in the prior year as a result of the enactment of legislation repealing the MRRT. This included the MRRT
goodwill that arose on the acquisition of Aston $53.2m (allocated to the open-cut segment), Boardwalk ($29.9m) and Coalworks ($7.6m) that were not allocated
during the year ended 30 June 2012 as a result of the recognition of deferred taxes on the implementation of the MRRT legislation. This MRRT goodwill, being
an intangible asset was created upon the introduction of the MRRT. The carrying value of the MRRT goodwill was reviewed in the prior year following the
enactment of legislation repealing the MRRT, and as a result was fully reversed, together with the associated deferred tax assets and liabilities initially recognised
on introduction of the MRRT legislation.
4 The Company was advised in July 2014 that a domestic customer had been placed into voluntary administration. A provision was established to cover balances
owed which were not expected to be recovered. This outstanding debt was written off in the current financial year.
5 During the prior year the company received a tax refund of $42.3m following conclusion of an outstanding tax matter resulting in a tax benefit being recognised
in the consolidated statement of comprehensive income. As a result of the tax refund the company was required to pay franking deficit tax of $42.3m to
rebalance its franking account, resulting in recognition of an income tax expense in the consolidated statement of comprehensive income. This amount
was paid on 31 July 2015 and will remain as a credit available to the company to offset future tax liabilities.
Whitehaven Coal Annual Report 2016 / 95
FINANCIAL REPORT7
2.3 TAXES
Accounting policy:
Income tax
Income tax on the profit or loss for the year comprises current
and deferred tax. Income tax relating to items recognised directly
in equity is recognised in equity and not in the statement of profit
or loss.
Current tax assets and liabilities 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 date. Deferred tax assets and
liabilities are measured at the tax rates that are expected to apply
in the period in which the liability is settled or the asset is realised.
The tax rate and laws used to determine the amounts are based on
those enacted or substantively enacted at the balance date
Deferred tax expense is the movement in the temporary
differences between the carrying amount of an asset or liability
in the consolidated statement of financial position and its tax
base. Deferred tax is not recognised if the temporary difference
arises from goodwill or from the initial recognition (other than
in a business combination) of assets and liabilities in a transaction
that affects neither accounting profit nor the taxable profit.
Deferred income tax assets, including unused tax losses, are
recognised in relation to deductible temporary differences and
carried forward income tax losses only to the extent that it is
probable that future taxable profits will be available against which
these deductible temporary differences and carried forward
income tax losses 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 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 net 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.
Minerals Resource Rent Tax (MRRT)
On 19 March 2012, the Australian Government passed through the
Senate the Minerals Resource Rent Tax Act 2012, with application
to certain profits arising from the extraction of iron ore and coal in
Australia. On 5 September 2014 the MRRT Repeal and Other Measures
Bill 2014 received Royal Assent. Following the enactment of this
legislation the MRRT balances were derecognised (see Note 2.2).
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.
The Company and its wholly-owned Australian resident controlled
entities continue to account for their own current and deferred tax
amounts. The Group has applied the Group allocation approach in
determining the appropriate amount of current taxes and deferred
taxes to allocate to members of the tax consolidated group.
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 to next page).
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
receivable (payable) is at call. 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.
Goods and Services Tax
Revenues, expenses and assets (excluding receivables) 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
consolidated statement of financial position.
Cash flows are included in the consolidated 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.
Significant accounting judgements, estimates and assumptions
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.
Assumptions about the generation of future taxable profits depend
on management's estimates of future cash flows. These depend
on estimates of future production and sales volumes, operating
costs, rehabilitation 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 consolidated statement of financial
position and the amount of other tax losses and temporary
differences not yet recognised which may require adjustment,
resulting in a corresponding credit or charge to the consolidated
statement of comprehensive income.
96 /
FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2.3 TAXES (CONTINUED)
a)
Income tax (expense)/benefit
Current income tax – corporate tax
Current period
Adjustment for prior periods
Deferred income tax – corporate tax
Origination and reversal of temporary differences
Adjustment for prior periods
De–recognition of MRRT net deferred tax liability
Income tax (expense)/benefit reported in the consolidated statement of comprehensive income
Numerical reconciliation between tax expense recognised in the consolidated statement of
comprehensive income and profit before tax
2016
$'000
25,691
–
25,691
(34,862)
1,985
–
(7,186)
2015
$'000
60,401
(888)
59,513
55,278
–
25,801
140,592
Profit/(loss) before tax
27,674
(483,317)
Income tax (expense)/benefit using the Company’s domestic tax rate of 30% (2015: 30%)
(8,302)
144,995
Non–deductible expenses:
Share based payments
Impairment of goodwill
Impairment of exploration assets
Other non–deductible expenses/adjustments
De–recognition of MRRT net deferred tax liability
Recognition of tax losses
Tax benefit on refund of overpaid tax
Franking deficit tax liability
Over/(under) provided in prior periods
Total income tax (expense)/benefit
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
(1,115)
–
–
246
–
–
–
–
1,985
(7,186)
(356)
–
(356)
(729)
(27,213)
(28,668)
(1,374)
25,801
28,668
42,331
(42,331)
(888)
140,592
452
1
453
Whitehaven Coal Annual Report 2016 / 97
FINANCIAL REPORT7 2.3 TAXES (CONTINUED)
c)
Recognised tax assets and liabilities
2016
2016
2015
2015
CURRENT
INCOME TAX
PAYABLE
DEFERRED
INCOME TAX
CURRENT
INCOME TAX
PAYABLE
DEFERRED
INCOME TAX
$’000
(42,331)
25,691
–
(25,691)
–
–
–
–
42,331
–
$’000
111,115
(34,862)
(356)
25,691
–
–
–
1,985
–
103,573
(7,186)
(356)
103,573
–
103,573
$’000
(6,219)
59,513
–
(59,513)
–
(42,331)
–
–
6,219
(42,331)
$’000
(29,931)
55,279
453
59,513
25,801
42,331
(42,331)
–
–
111,115
140,592
453
111,115
–
111,115
ASSETS
LIABILITIES
2016
$’000
–
13,539
–
358
–
–
–
30,943
356,815
8,959
410,614
(307,041)
103,573
2015
$’000
2016
$’000
2015
$’000
–
(302,459)
(265,748)
16,435
–
358
–
–
–
25,384
329,396
11,614
383,187
(272,072)
111,115
–
(1,696)
–
(2,356)
(236)
(294)
–
–
–
(307,041)
307,041
–
–
(499)
–
(5,186)
(592)
(47)
–
–
–
(272,072)
272,072
–
Opening balance
Charged to income – corporate tax
Charged to equity
Recognition of deferred tax asset on current year losses
De–recognition of MRRT net deferred tax liability
Franking deficit tax payable
Tax benefit on refund of overpaid tax
Over/(under) provided in prior periods
Payments/(receipts)
Closing balance
Tax expense in consolidated statement of comprehensive income:
Charged to income
Charged to equity
Amounts recognised in the consolidated statement of financial position:
Deferred tax asset (net)
Deferred tax liability (net)
Deferred income tax assets and liabilities are attributable to the following:
CORPORATE TAX
Property, plant and equipment
Exploration and evaluation
Receivables
Investments
Deferred stripping
Derivatives
Deferred foreign exchange gain
Provisions
Tax losses
Other items
Tax assets/(liabilities)
Set off of tax (liabilities)/assets
Net tax assets/(liabilities)
98 /
FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2.3 TAXES (CONTINUED)
d)
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items:
CORPORATE TAX
Tax losses
Tax credits
2.4 EARNINGS/(LOSS) PER SHARE
Basic earnings/(loss) per share
2016
$'000
31,219
73,289
104,508
2015
$'000
32,164
30,958
63,122
The calculation of basic earnings/(loss) per share is based on the profit/(loss) attributable to ordinary shareholders and a weighted
average number of ordinary shares outstanding during the year calculated as follows:
Profit/(loss) attributable to ordinary shareholders
Net profit/(loss) attributable to ordinary shareholders ($‘000)
Weighted average number of ordinary shares
Issued ordinary shares at 1 July (000’s)
Effect of shares issued/(acquired) during the year (000’s)
Weighted average number of ordinary shares at 30 June (000’s)
2016
2015
20,488
(330,625)
992,026
991,740
(1,554)
129
990,472
991,869
Basic earnings/(loss) per share attributable to ordinary shareholders (cents)
2.1
(33.3)
Diluted earnings/(loss) per share
The calculation of diluted earnings/(loss) per share is based on the profit/(loss) attributable to ordinary shareholders and a weighted
average number of ordinary shares outstanding adjusted for the diluting impact of potential equity instruments calculated as follows:
Profit/(loss) attributable to ordinary shareholders (diluted)
Net profit/(loss) attributable to ordinary shareholders (diluted) ($’000)
20,488
(330,625)
2016
2015
Weighted average number of ordinary shares (diluted)
Weighted average number of ordinary shares (basic) (000’s)
Effect of share options/performance rights on issue (000’s)
Weighted average number of ordinary shares (diluted) (000’s)
990,472
991,869
8,612
-
999,084
991,869
Diluted earnings/(loss) per share attributable to ordinary shareholders (cents)
2.1
(33.3)
Whitehaven Coal Annual Report 2016 / 99
FINANCIAL REPORT7
3 WORKING CAPITAL AND CASH FLOWS
3.1 TRADE AND OTHER RECEIVABLES
Accounting policy:
Trade receivables, which generally have between 5 and 21 day terms, are recognised initially at fair value and subsequently measured
at amortised cost using the effective interest method, less any allowance for impairment. Recoverability of trade receivables is reviewed
on an ongoing basis.
Current
Trade receivables
Other receivables and prepayments
Receivables due from related parties
Non-current
Other receivables and prepayments
3.2
INVENTORIES
Accounting policy:
2016
$’000
47,586
15,986
4,775
68,347
2015
$’000
56,686
29,889
8,491
95,066
28,964
30,162
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. Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, the number of
contained coal is based on assay data, and the estimated recovery percentage is based on the expected processing method. Stockpile
tonnages are verified by periodic surveys.
Coal stocks¹
Consumables and stores
1
Coal stocks include run of mine and product coal.
3.3 TRADE AND OTHER PAYABLES
Accounting policy:
44,536
24,201
68,737
67,563
22,329
89,892
Trade and other payables are initially recognised at fair value and subsequently measured at amortised cost when goods and services
are received, whether or not billed to the Group, prior to the end of the reporting period. Due to their short-term nature they are not
discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
Trade payables
Other payables and accruals
57,241
78,687
135,928
46,935
100,487
147,422
100 /
FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 3.4 RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
Accounting policy:
Cash and cash equivalents comprise cash at bank and in hand and short-term deposits. For the purpose of the consolidated statement
of cash flows, cash and cash equivalents is equal to the balance disclosed in the consolidated statement of financial position.
Profit/ (loss) for the period
Adjustments for:
Depreciation and amortisation
Amortisation of deferred development costs
Development costs deferred
Write-off of finance facility upfront costs
Amortisation of finance facility upfront costs
Non cash interest expense accruals
Foreign exchange losses/(gains) unrealised
Unrealised loss on investment
Unwinding of discounts on provisions
Share-based compensation payments
Write-off of assets¹
Loss on sale of non-current assets
Subtotal
Change in trade and other receivables
Change in inventories and deferred stripping
Change in trade and other payables
Change in provisions and employee benefits
Change in tax payable
Change in deferred taxes
Cash flows from operating activities
NOTE
4.1
4.1
2.2
4.4
5.5(a)
2016
$’000
20,488
130,385
55,134
(65,798)
-
6,835
1,925
770
-
2,327
3,715
-
-
155,781
21,590
29,539
(1,543)
1,711
(42,331)
2015
$’000
(342,725)
97,584
75,357
(59,704)
23,093
11,433
(4,046)
(5,023)
531
2,427
2,431
444,668
353
246,379
(22,694)
(2,983)
36,510
938
36,111
7,186
(140,592)
171,933
153,669
1
The prior year balance includes the impairment of the MRRT goodwill of $90.7m and exploration and related assets of $354.7m, partially offset by other net
write-off and reversals totalling $0.7m.
Whitehaven Coal Annual Report 2016 / 101
FINANCIAL REPORT7 4 RESOURCE ASSETS AND LIABILITIES
4.1 PROPERTY, PLANT AND EQUIPMENT
Accounting policy:
Recognition and measurement
identified component of the ore body that became more
accessible as a result of the stripping activity.
Property, plant and equipment are measured at cost less
accumulated depreciation and any accumulated impairment losses.
For the purposes of assessing impairment, deferred stripping costs
are grouped with other assets of the relevant cash generating unit.
Cost of property, plant and equipment and mining property and
development assets include initial cost to acquire, construct, install
or complete production and infrastructure facilities, such as cost of
materials, direct labour, capitalised borrowing costs and transferred
exploration and evaluation assets. Costs of dismantling and site
rehabilitation are also capitalised, if the recognition criteria is met.
Depreciation
Depreciation and amortisation is charged to the consolidated
statement of comprehensive income on a straight line basis at the
rates indicated below. Depreciation commences on assets when it
is deemed they are capable of operating in the manner intended by
management:
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.
— freehold land
— plant and equipment
— leased plant and equipment
— mining property and development,
deferred developmentand deferred
stripping
not depreciated
2% – 50%
3% – 14%
units of production
The residual value, the useful life and the depreciation method
applied to an asset are reassessed at least annually.
Impairment
The carrying amounts of the Group’s non-financial assets, other
inventories and deferred taxes, are reviewed at each balance 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.
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’).
The recoverable amount of an asset or cash-generating unit is the
greater of its value in use and its fair value less costs of disposal
(‘FVLCD’). In assessing FVLCD, 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.
An impairment loss is recognised whenever the carrying amount
of an asset or its cash-generating unit exceeds its recoverable
amount. 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.
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 Group and its cost can be measured reliably.
The costs of the day-to-day servicing of property, plant and
equipment are recognised in the consolidated statement
of comprehensive income as incurred.
Mining property and development
When commercially recoverable reserves are determined and
such proposed development receives the appropriate approvals,
capitalised exploration and evaluation expenditure is transferred
to mining property and development. All subsequent development
expenditure is similarly capitalised, to the extent that commercial
viability conditions continue to be satisfied.
Deferred development
Deferred development mainly comprises capitalised costs
(deferred development expenditure) related to underground
mining incurred to expand the capacity of a mine and to
maintain production.
Deferred stripping
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. The stripping activity asset is subsequently
depreciated on a units of production basis over the life of the
102 /
FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 4.1 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Significant accounting judgements, estimates and assumptions:
Recoverable amount of assets
The recoverable amounts of cash-generating units and individual
assets have been determined based on the higher of value-in-use
calculations and FVLCD. These calculations require the use of
estimates and assumptions.
Expected future cash flows used to determine the FVLCD of
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, stripping ratio, production rates and
future capital expenditure. It is reasonably possible that these
assumptions may change which may then impact the estimated
life of mine which could result in a material adjustment to the
carrying value of tangible assets.
The determination of FVLCD for a CGU is considered to be a Level
3 fair value measurement, as they are derived from valuation
techniques that include inputs that are not based on observable
market data. The Group considers the inputs and the valuation
approach to be consistent with the approach taken by market
participants.
The recoverable amount has been determined by the FVLCD
method, determined based on the net present value of the future
estimated cash flows. These cash flows are discounted using a real
pre-tax discount rate of 11%. The coal prices and foreign exchange
rates applied for the first three years of the cash flow estimates
are based on detailed financial budgets approved by senior
management which includes consideration of external sources.
Long-term estimates are based on a consideration of third party
forecasts and management estimates in respect of long-term
incentive coal prices in the seaborne export coal market.
Costs to dispose are estimated based on the current market rate
applied by advisors in respect of the disposal of mining assets.
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 requiring
factors such as estimates of future operating performance, future
capital requirements and short and long-term coal prices. The
Group is required to determine and report Reserves and Resources
under the Australian Code for Reporting Mineral Resources
and Ore Reserves December 2012 (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.
FREEHOLD
LAND
PLANT
AND
EQUIPMENT
LEASED
PLANT AND
EQUIPMENT
MINING
PROPERTY AND
DEVELOPMENT
SUBTOTAL
DEFERRED
DEVELOP–
MENT¹
DEFERRED
STRIPPING¹
SUBTOTAL
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
TOTAL
$’000
YEAR ENDED
30 JUNE 2016
Cost
Balance at 1 July 2015
156,857
566,149
129,683
3,011,883
3,864,572
252,773
508,480
761,253
4,625,825
Additions
Transfer to land and
plant and equipment
Disposals
Balance at
30 June 2016
Accumulated depreciation
Balance at 1 July 2015
Depreciation charge
for the year
Disposals
Balance at
30 June 2016
Carrying amount at
30 June 2016
4,362
1,238
42,632
189,913
–
(21,143)
–
–
–
40,299
(191,151)
–
–
(21,143)
87,293
65,798
268,738
334,536
421,829
–
–
–
–
–
–
–
(21,143)
162,457
777,551
129,683
2,861,031
3,930,722
318,571
777,218
1,095,789
5,026,511
–
–
–
–
(219,988)
(35,222)
(172,553)
(427,763)
(167,623)
(491,195)
(658,818)
(1,086,581)
(45,481)
(10,701)
(73,622)
(129,804)
(55,134)
(278,170)
(333,304)
(463,108)
20,791
–
–
20,791
–
–
–
20,791
(244,678)
(45,923)
(246,175)
(536,776)
(222,757)
(769,365)
(992,122)
(1,528,898)
162,457
532,873
83,760
2,614,856
3,393,946
95,814
7,853
103,667
3,497,613
1
’Deferred development’ and ‘Deferred stripping’ were previously included in the ‘Mining, property and development’ asset class. These have now been
reclassified into their own category in order to improve clarity of financial information. The depreciation expense for deferred development and deferred
stripping assets is included in the ‘Operating expenses’ line in the Consolidated statement of comprehensive income. Spend on these assets incurred throughout
the financial year is included in ‘Cashflows from operating activities’ in the Consolidated statement of cashflows.
Whitehaven Coal Annual Report 2016 / 103
FINANCIAL REPORT7 4.1 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
FREE–
HOLD
LAND
PLANT
AND
EQUIPMENT
LEASED
PLANT AND
EQUIPMENT
MINING
PROPERTY AND
DEVELOPMENT
SUBTOTAL
DEFERRED
DEVELOP–
MENT¹
DEFERRED
STRIPPING¹
SUBTOTAL
NOTE
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
TOTAL
$’000
154,312
2,545
–
–
–
4.2
526,149
26,244
14,254
–
(498)
143,747
190
(14,254)
–
–
2,773,774
3,597,982
193,069
356,808
549,877
4,147,859
266,690
295,669
59,704
151,672
211,376
507,045
–
–
(28,581)
(28,581)
–
(498)
–
–
–
–
–
–
–
–
–
–
(28,581)
(498)
156,857
566,149
129,683
3,011,883
3,864,572
252,773
508,480
761,253
4,625,825
YEAR ENDED
30 JUNE 2015
Cost
Balance at 1 July 2014
Additions
Transfer to plant and
equipment
Transfer to
exploration and
evaluation
Disposals
Balance at
30 June 2015
(171,306)
(40,451)
(32,776)
(10,683)
(126,445)
(330,527)
(92,267)
(340,128)
(432,395)
(762,922)
(46,094)
(97,228)
(75,357)
(151,066)
(226,423)
(323,651)
(1,086,581)
(8,237)
8,237
142
(136)
–
–
–
–
(14)
–
142
(150)
–
–
–
–
–
–
–
–
–
–
142
(150)
–
–
–
–
–
–
(219,988)
(35,222)
(172,553)
(427,763)
(167,624)
(491,194)
(658,818)
(1,086,581)
156,857
346,161
94,461
2,839,330
3,436,809
85,149
17,286
102,435
3,539,244
Accumulated depreciation
Balance at 1 July 2014
Depreciation charge
for the year
Transfer to plant
and equipment
Disposals
Impairment
Balance at
30 June 2015
Carrying amount at
30 June 2015
Accounting policy:
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.
Group as lessee
Finance Leases
Finance leases, which transfer to the Group 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. Refer to Note 5.1.
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 consolidated statement of
comprehensive income. 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 Leases
Operating lease payments are recognised as an expense in the
consolidated statement of comprehensive income 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. Refer to Note 7.3.
The Group leases mining equipment under a number of finance lease agreements. At 30 June 2016, the Group’s net carrying amount of
leased plant and machinery was $83,760,000 (2015: $94,461,000). The leased equipment is pledged as security for the related finance lease
liabilities. During the prior year the Group entered into sale and leaseback transactions resulting in the reclassification of items of equipment
between property, plant and equipment and leased plant and equipment.
104 /
FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 4.2 EXPLORATION AND EVALUATION
Accounting policy:
Exploration and evaluation assets are assessed for impairment if:
Exploration and evaluation assets, including the costs of acquiring
licences, are capitalised on an area of interest basis and only after
the Company has obtained the legal rights to explore the area.
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.
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 not
allocated to cash-generating units.
Where a potential impairment is indicated, an assessment is
performed for each area of interest or at the CGU level, in line with
the assessment disclosed at note 4.1. To the extent that capitalised
expenditure is not expected to be recovered it is charged to the
consolidated statement of comprehensive income. 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.
Significant accounting judgements, estimates and assumptions:
The application of the Group’s accounting policy for exploration and evaluation expenditure requires judgement in determining whether
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 indicating that
the recovery of expenditure is unlikely, the amount capitalised is written off in the consolidated statement of comprehensive income in the
period when the new information becomes available.
The recoverability of the carrying amount of exploration and evaluation assets is dependent on the successful development and
commercial exploitation or sale of the respective areas of interest.
EXPLORATION AND EVALUATION ASSETS
Balance at 1 July 2015
Exploration and evaluation expenditure
Balance at 30 June 2016
Balance at 1 July 2014
Exploration and evaluation expenditure
Transfer from property, plant and equipment
Impairment¹
Balance at 30 June 2015
$’000
201,346
5,237
206,583
526,914
851
28,581
(355,000)
201,346
Exploration and evaluation assets include tenements granted by the Queensland State Government which are subject to periodic
relinquishment requirements of up to 20% per year.
1
During the prior year, an impairment charge of $355m was taken in respect of early stage exploration assets, which is not allocated to a segment. The
impairment charge reflected the change in coal market environment and prospects for early stage exploration assets. Exploration and evaluation assets are
carried at their fair value less impairment.
4.3
INTANGIBLE ASSETS
Accounting policy:
Water access rights
The Group 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.
The carrying amounts of water access rights are reviewed at
each balance date to determine whether there is any indication
of impairment. When reviewing for indicators of impairment, the
Group considers mining plans, project approvals and market
values, among other factors, in line with those disclosed at note 4.1.
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. Rail access rights are amortised over the life of
the mine or access agreement.
Whitehaven Coal Annual Report 2016 / 105
FINANCIAL REPORT7 4.3
INTANGIBLE ASSETS (CONTINUED)
Movement in intangibles
Balance at 1 July 2015
Additions during the year
Less: Amortisation charge
Balance at 30 June 2016
Balance at 1 July 2014
Additions during the year
Less: Amortisation charge
Less: MRRT goodwill impairment
Balance at 30 June 2015
WATER
ACCESS
RIGHTS
$’000
8,577
4
–
8,581
8,577
–
–
–
8,577
CONTRACT
RELATED
INTANGIBLE
RAIL ACCESS
RIGHTS¹
MRRT
GOODWILL
$’000
140
–
(140)
–
293
–
(153)
–
140
$’000
11,237
–
–
11,237
6,262
4,975
–
–
11,237
$’000
–
–
–
–
TOTAL
$’000
19,954
4
(140)
19,818
90,711
105,843
–
–
(90,711)
–
4,975
(153)
(90,711)
19,954
1
As part of the agreement to cancel previously existing infrastructure sharing arrangements Whitehaven agreed to pay 10.1% of the construction cost of the
shared portion of the Boggabri - Maules Creek rail spur. In return, Whitehaven receives access to rail tonnes on the joint rail spur.
4.4 PROVISIONS
Accounting policy:
A provision is recognised in the consolidated statement of financial
position when the Group has a present legal or constructive
obligation as a result of a past event, and it is probable that
resources will be expended to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
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.
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 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 expense
in the consolidated statement of comprehensive income as it
occurs.
For closed mines, changes to estimated costs are recognised
immediately in the consolidated statement of comprehensive income.
The amount of the provision relating to rehabilitation of
environmental disturbance caused by on-going production and
extraction activities is recognised in the consolidated statement
of comprehensive income as incurred.
Significant accounting judgements, estimates and assumptions:
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.
MOVEMENTS IN PROVISION
Balance at 1 July 2015
Provisions made during the period
Provisions used during the period
Unwind of discount
Balance at 30 June 2016
106 /
$’000
76,458
10,608
–
2,327
89,393
MINE
REHABILITATION
AND CLOSURE
OTHER
PROVISIONS
$’000
3,704
–
(841)
–
TOTAL
$’000
80,162
10,608
(841)
2,327
2,863
92,256
FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 4.4 PROVISIONS (CONTINUED)
Current
Non-current
Balance at 30 June
2016
$’000
7,260
84,996
92,256
2015
$’000
7,380
72,782
80,162
Increases in the provision for rehabilitation were made during the year as a result of additional disturbance at several mines and a
reassessment of the areas of disturbance and rehabilitation rates. Rehabilitation expenditure is expected to occur over the life of the mining
operations which ranges from 4 to 42 years. Refer above for details on the nature of the obligation.
Other provisions include amounts recognised on acquisition of subsidiaries as part of the purchase price allocation and amounts for costs
expected to be incurred for maintaining Sunnyside mine in care and maintenance.
5 CAPITAL STRUCTURE AND FUNDING
5.1
INTEREST-BEARING LOANS AND BORROWINGS
Accounting policy:
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.
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings
Current liabilities
Finance lease liabilities
Secured loans
Non-current liabilities
Senior bank facility
Finance lease liabilities
Secured loans
Financing facilities
Facilities utilised at reporting date
Facilities not utilised at reporting date
Financing facilities
2016
$’000
14,420
10,031
24,451
2015
$’000
13,503
8,247
21,750
835,000
900,000
69,073
32,042
936,115
960,566
1,351,766
960,566
391,200
83,494
32,987
1,016,481
1,038,231
1,338,231
1,038,231
300,000
On 26 March 2015 the Company entered into a $1.4 billion senior
secured bank facility. The facility has a maturity date of July 2019
and provides Whitehaven with lines of credit up to A$1.4 billion
comprising of A$1.2 billion revolving and term facility, and $0.2 billion
guarantee facilities. This facility was used to replace the Company’s
previous $1.2 billion facility. As a result, in the prior year the Company
wrote off $23.1 million of finance upfront costs relating to the
$1.2 billion facility.
During the current year $65 million of debt drawn under the senior
bank facility was repaid (2015: An amount of $225 million was drawn
down under the old facility. A further $900 million was drawn down
under the new facility, of which $850 million was used to repay debt
drawn on the old facility). An amount of $9.5 million was drawn down
under other loans (2015: $nil) and $8.6 million of other loans
were repaid during the year (2015: $8.3 million). The security
provided in relation to the facilities is a fixed and floating charge
over substantially all of the assets of the Group.
During the year the Company entered into an additional $65 million
of secured bilateral bank guarantee facilities.
Finance lease facility
At 30 June 2016, the Group’s lease liabilities are secured by the
leased assets of $83,760,000 (2015: $94,461,000), as in the event
of default, the leased assets revert to the lessor.
Finance lease liabilities of the Group are payable as follows:
Whitehaven Coal Annual Report 2016 / 107
FINANCIAL REPORT7 5.1
INTEREST-BEARING LOANS AND BORROWINGS (CONTINUED)
Less than one year
Between one and five years
MINIMUM
LEASE
PAYMENTS
2016
$’000
20,405
72,875
93,280
INTEREST
PRINCIPAL
2016
$’000
5,985
3,802
9,787
2016
$’000
14,420
69,073
83,493
MINIMUM
LEASE
PAYMENTS
2015
$’000
20,405
93,280
113,685
INTEREST
PRINCIPAL
2015
$’000
6,902
9,786
16,688
2015
$’000
13,503
83,494
96,997
5.2 FINANCE INCOME AND EXPENSE
Accounting policy:
Finance income comprises interest income on funds invested and foreign currency gains. Interest income is recognised as it accrues, using
the effective interest method.
Finance expenses comprise interest expense on borrowings, unwinding of the discount on provisions, foreign currency losses in relation
to finance leases, 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.
2016
$’000
1,056
–
–
1,056
(6,768)
(41,857)
(9,343)
(57,968)
(56,912)
–
(2,327)
–
(6,835)
–
2015
$’000
1,025
3,727
4
4,756
(8,002)
(17,715)
(10,005)
(35,722)
(30,966)
(23,093)
(2,350)
(531)
(11,433)
(31)
(9,162)
(37,438)
(66,074)
(68,404)
1,186
(356)
830
(1,507)
452
(1,055)
Recognised in profit or loss
Interest income
Interest on tax refund
Dividend income
Financial income
Interest expense on finance lease liabilities
Interest on drawn debt facility
Other interest charges
Interest and financing costs
Net interest expense
Write–off of finance facility upfront costs
Unwinding of discounts on provisions
Unrealised loss on investments
Amortisation of finance facility upfront costs
Net foreign exchange loss on finance leases
Other financial expenses
Net financial expense
Recognised directly in equity
Net change in cash flow hedges
Income tax effect
Financial income/(expense) recognised directly in equity, net of tax
108 /
FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 5.3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Accounting policy:
The Group uses derivative financial instruments to hedge
its risks associated with foreign currency and interest 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.
Cash flow hedges
Cash flow hedges are hedges of exposure to variability in cash
flows that is attributable to a particular risk associated with forecast
sales and purchases 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 and asset
purchases) when the forecast transaction occurs.
Each designated cash flow hedge is tested for hedge effectiveness
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, 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
profit or loss.
Impairment of 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 for 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.
a. Overview
The Group’s overall risk management program seeks to mitigate risks and reduce the volatility of the Group’s financial performance.
Financial risk management is carried out centrally by the Group’s Audit and Risk Management Committee under policies approved by
the Board of Directors. The Committee reports regularly to the Board on its activities and also reviews policies and systems regularly
to reflect changes in market conditions and Group’s activities.
The Group’s principal financial risks are associated with:
— market risk
— credit risk
— liquidity risk.
b. 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 Group defines capital as total shareholders’ equity and debt. The Board manages its capital structure
and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust
the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.
The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt.
There were no changes in the Group’s approach to capital management during the year.
The Group’s gearing ratio is calculated as net debt divided by total equity plus net debt.
Interest-bearing loans and borrowings
Less: cash and cash equivalents
Net debt
Equity
Equity and net debt
Gearing ratio
2016
$’000
960,566
(101,453)
2015
$’000
1,038,231
(102,393)
859,113
935,838
2,887,638
3,746,751
2,863,956
3,799,794
23%
25%
Whitehaven Coal Annual Report 2016 / 109
FINANCIAL REPORT7 5.3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
c. Risk exposures and responses
Market Risk – Foreign currency risk
The Group is exposed to currency risk on sales, purchases and demurrage that are denominated in a currency other than the respective
functional currency of the Group, the Australian dollar (AUD).The currency in which these transactions primarily are denominated is
US Dollars (USD).
The Group uses forward exchange contracts (FECs) to hedge its currency risk from 100% of contracted sales where both volume and
US dollar price are fixed to 50% of planned sales from existing operations for a period of 12 to 24 months. No cover is 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 Group 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.
During the current year ended 30 June 2016, a net foreign exchange gain of $1.3m was recognised (2015: net foreign exchange loss of $2.8m).
The Group designates its forward exchange contracts in cash flow hedges and measures them at fair value.
The fair value of forward exchange contracts used as hedges at 30 June 2016 was $0.3m (2015: $0.1m), comprising assets and liabilities that
were recognised as derivatives.
At 30 June 2016, the Group had the following financial instruments that were not designated in cash flow hedges that were exposed to foreign
currency risk:
Cash
Trade and other receivables
Trade and other payables
Net statement of financial position exposure
The following exchange rates applied during the year:
FIXED RATE INSTRUMENTS
USD
Sensitivity analysis
2016
$’000
21,834
7,612
(6,795)
22,651
2015
$’000
11,613
42,486
(5,682)
48,417
AVERAGE RATE
REPORTING DATE SPOT RATE
2016
$’000
0.7283
2015
$’000
0.8282
2016
$’000
0.7387
2015
$’000
0.7649
A change in 10% 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 2016.
30 June 2016
USD strengthening by 10%
USD weakening by 10%
30 June 2015
USD strengthening by 10%
USD weakening by 10%
Market Risk – Interest rate risk
EQUITY
$’000
–
–
PROFIT OR
(LOSS)
$’000
(2,788)
3,407
–
–
(5,755)
7,033
The Group‘s borrowings comprise both variable and fixed rate instruments. The variable rate borrowings expose the Group to a risk of changes
in cash flows due to the changes in interest rates.
Management analyses interest rate exposure on an ongoing basis and uses interest rate swaps to mitigate interest rate risk.
110 /
FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5.3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
At the reporting date the interest rate profile of the Group‘s interest-bearing financial instruments was:
Fixed rate instruments
Financial liabilities
Variable rate instruments
Financial assets
Financial liabilities
Net exposure
CARRYING AMOUNT
2016
$’000
2015
$’000
(83,493)
(83,493)
(96,997)
(96,997)
101,453
(877,073)
(775,620)
(859,113)
102,393
(941,234)
(838,841)
(935,838)
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 2015.
30 June 2016
100bp increase
100bp decrease
30 June 2015
100bp increase
100bp decrease
EQUITY
$’000
566
(587)
PROFIT OR
(LOSS)
$’000
(7,756)
7,756
877
(918)
(8,388)
8,388
Market Risk – Commodity price risk
The Group’s major commodity price exposure is to the price of coal. The Group has chosen not to hedge against the movement in coal prices.
Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, trade receivables, available for sale
financial assets, derivative financial instruments and the granting of financial guarantees. The Group‘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.
Exposure to credit risk
The Group’s maximum exposure to credit risk at the reporting date was:
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Investments
NOTE
3.1
5.3(d)
CARRYING AMOUNT
2016
$’000
101,453
47,586
351
37
2015
$’000
102,393
56,686
162
37
149,427
159,278
The Group’s maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:
Asia
Europe
Australia
29,030
10,845
7,711
45,964
8,132
2,590
47,586
56,686
Whitehaven Coal Annual Report 2016 / 111
FINANCIAL REPORT7
5.3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
Trade receivables
occurred infrequently.
The Group‘s exposure to credit risk is influenced mainly by the individual
characteristics of each customer. The demographics of the Group’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 34.4% of the Group’s revenue is attributable to sales
transactions with three customers (2015: 36.1% with three customers).
The Group trades only with recognised, creditworthy third parties and
generally does not require collateral in respect of trade receivables.
Receivable balances are monitored on an ongoing basis and
as a result the exposure to bad debts is not significant.
More than 60% (2015: 88%) of the Group’s current customers have
been transacting with the Group for over five years, and losses have
The Group recognised an impairment loss for trade receivables of
$nil during the year ended 30 June 2016 (2015: $1,305,000).
The aging of the Group’s trade receivables at the reporting date was:
FIXED RATE INSTRUMENTS
Not past due
Past due 0–30 days
Past due 31–120 days
Past due 121 days to one year
More than one year
The Company was advised in July 2014 that a domestic customer had
been placed into voluntary administration. A provision was established to
cover balances owed which were not expected to be recovered. During
the current financial year this balance was subsequently written off.
Guarantees
The policy of the Group 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 the A$1.4 billion
senior secured bank facility and $65 million of secured bilateral bank
guarantee facilities. Details of outstanding guarantees are provided
in note 7.4.
GROSS
IMPAIRMENT
GROSS
IMPAIRMENT
2016
$’000
46,456
832
298
–
–
47,586
Liquidity risk
2016
$’000
–
–
–
–
–
–
2015
$’000
55,619
168
536
–
4,024
60,347
2015
$’000
–
–
–
–
(3,661)
(3,661)
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due. The Group’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 Group’s reputation.
Typically, the Group ensures that it has 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.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting
agreements:
30 JUNE 2016
Financial liabilities
Finance lease liabilities
Interest bearing liabilities
Trade and other payables
Forward exchange contracts:
Outflow
Inflow
CARRYING
AMOUNT
CONTRACTUAL
CASH FLOWS
6 MTHS
MORE
THAN
OR LESS
6–12 MTHS
1–2 YEARS
2–5 YEARS
5 YEARS
$’000
$’000
$’000
$’000
$’000
$’000
$’000
83,493
877,073
135,928
38,116
(38,396)
10,203
10,203
93,280
882,144
135,928
5,436
135,928
37,579
37,579
(37,857)
(37,857)
5,719
–
–
–
55,239
11,080
17,635
857,251
–
2,658
–
–
–
–
–
–
–
–
–
1,096,214
1,111,074
151,289
15,922
66,319
874,886
2,658
30 JUNE 2015
Finance lease liabilities
Interest bearing liabilities
Trade and other payables
Forward exchange contracts:
Outflow
Inflow
96,997
941,234
147,422
25,166
(25,268)
10,203
10,203
20,405
72,874
113,685
947,016
147,422
5,176
147,422
103,788
103,788
(104,230)
(104,230)
5,071
9,822
926,947
–
–
–
–
–
–
–
–
–
1,185,551
1,207,681
162,359
15,274
30,227
999,821
112 /
–
–
–
–
–
–
FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 5.3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
d) Net fair values
The Group complies with AASB 7 Financial Instruments: Disclosures which requires disclosure of fair value measurements by level of the
following fair value measurement hierarchy:
— Level 1 – measurements based upon quoted prices (unadjusted) in active markets for identical assets or liabilities,
— Level 2 – measurements based upon inputs other than quoted prices included within level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from prices), and
— Level 3 - measurements based on inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The Group held the following financial instruments carried at fair value in the consolidated statement of financial position:
Assets measured at fair value
Equity shares
Forward exchange contracts – receivable
Liabilities measured at fair value
Forward exchange contracts – payable
Interest rate swaps – payable
Assets measured at fair value
Equity shares
Forward exchange contracts – receivable
Liabilities measured at fair value
Forward exchange contracts – payable
Interest rate swaps – payable
Commodity swaps – payable
30 JUNE
2016
$’000
37
351
388
(71)
(1,067)
(1,138)
30 JUNE
2015
$’000
37
162
199
(60)
(1,005)
(1,071)
(2,136)
LEVEL 1
$’000
LEVEL 2
$’000
LEVEL 3
$’000
–
–
–
–
–
–
–
351
351
(71)
(1,067)
(1,138)
37
–
37
–
–
–
LEVEL 1
$’000
LEVEL 2
$’000
LEVEL 3
$’000
–
–
–
–
–
–
–
–
162
162
(60)
(1,005)
(1,071)
(2,136)
37
–
37
–
–
–
–
The fair value of derivative financial instruments is derived using valuation techniques based on observable market inputs, such as forward
currency rates, at the end of the reporting period. The amounts disclosed in the consolidated statement of financial position are the fair values
and are classified under level 2 in the fair value measurement hierarchy.
The fair value of the Group’s investment in unlisted shares is classified under level 3 in the fair value measurement hierarchy. The Group’s
holding in unlisted shares is minor and any reasonably possible change in assumptions would not have a material impact on the Group’s
financial statements.
The carrying values of financial assets and financial liabilities recorded in the financial statements materially approximates their respective net
fair values, determined in accordance with the accounting policies disclosed in note 3.1, 3.3 and 5.1 to the financial statements.
e)
Financial assets and liabilities by category
2016
2015
NOTE
LOANS AND
RECEIVABLES¹
AVAILABLE
FOR SALE
$’000
$’000
OTHER²
$’000
LOANS AND
RECEIVABLES¹
AVAILABLE
FOR SALE
$’000
$’000
OTHER²
$’000
Financial assets
Cash and cash equivalents
Trade and other receivables
3.1
Investments
Other financial assets²
5.3(d)
Total financial assets
101,453
97,311
–
–
198,764
–
–
–
–
–
–
–
37
351
388
102,393
125,228
–
–
227,621
–
–
–
–
–
–
–
37
162
199
1
Loans and receivables are non-derivatives with fixed or determinable payments and are not quoted on an active market. Loans and receivables are valued at
amortised cost.
2 Other financial assets include $0.4 million (2015: $0.2 million) relating to derivatives in designated hedges.
Whitehaven Coal Annual Report 2016 / 113
FINANCIAL REPORT7 5.3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
Financial liabilities
Trade and other payables
Borrowings
NOTE
3.3
5.1
Other financial liabilities²
5.3(d)
Total financial liabilities
2016
LOANS AT
AMORTISED
COST¹
AVAILABLE
FOR SALE
$’000
$’000
135,928
960,566
–
1,096,494
–
–
–
–
2015
LOANS AT
AMORTISED
COST¹
AVAILABLE
FOR SALE
$’000
$’000
147,422
1,038,231
–
1,185,653
–
–
–
–
OTHER²
$’000
–
–
1,138
1,138
OTHER²
$’000
–
–
2,136
2,136
1
Loans at amortised cost are non-derivatives with fixed or determinable payments and are not quoted on an active market. Loans and payables are valued at
amortised cost.
2 Other financial liabilities include $1.1 million (2015: $2.1 million) relating to derivatives in designated hedges.
5.4 SHARE CAPITAL AND RESERVES
Accounting policy:
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.
a) Share capital
Fully paid ordinary shares 1,026,045,885 (2015: 1,026,045,885)
b) Movements in Ordinary shares on issue
Beginning of the financial year
Share based payments
Transfer of shares by share plan
Shares purchased by share plan
Costs of shares issued, net of tax
End of financial year
2016
$’000
2015
$’000
3,144,944
3,146,147
2016
2015
NO. OF SHARES
NO. OF SHARES
$’000
$’000
$’000
$’000
1,026,046
3,146,147
1,025,760
3,146,300
–
–
–
–
–
148
(1,351)
–
286
–
–
–
–
–
(148)
(5)
1,026,046
3,144,944
1,026,046
3,146,147
At 30 June 2016, a trust on behalf of the Company held 3,707,778 (30 June 2015: 443,588) ordinary fully paid shares in the Company. These were purchased during
the year for the purpose of allowing the Group to satisfy performance rights to certain senior management of the Group. Refer to Note 5.5 for further details on the
performance rights plan.
c) Terms and conditions of issued capital
d) Hedge reserve
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. Under the terms
of the acquisition of Boardwalk Resources Limited, 34,020,000
ordinary shares are subject to a restriction deed which removes
their entitlement to vote, receive dividends as declared or participate
in the proceeds from the sale of all surplus assets. These restrictions
will be released on reaching certain milestones.
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 and long-term incentive
plans. Refer to note 5.5 for further details of these plans.
114 /
FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 5.4 SHARE CAPITAL AND RESERVES (CONTINUED)
f) Dividends
No dividends were paid during the year ended 30 June 2016 (2015: nil).
The directors resolved not to pay a dividend for the year ended 30 June 2016.
Dividend franking account
As at 30 June 2016 there were no franking credits available to shareholders of Whitehaven Coal Limited for subsequent financial years (2015: nil).
5.5 SHARE-BASED PAYMENTS
Accounting policy:
The grant date fair value of options and performance rights 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.
Once the instruments have vested, no further expenses are recognised nor reserves reversed in respect to costs already charged. However,
where the share rights or options have lapsed after vesting the Group transfers the equivalent amount of the cumulative cost for the lapsed
awards from the share based payments reserve to another component of equity.
a) Recognised share-based payment expenses
Employee expenses
Share options and performance rights – senior employees
b) Types of share-based payment plans
Performance Right grant to CEO and senior employees
2016
$’000
3,715
2015
$’000
2,431
The Company issued performance rights to the CEO and senior employees under the Company’s medium and long-term incentive programs
in FY2015 and FY2016.The terms and conditions of the grant are as follows.
PERFORMANCE RIGHTS
NUMBER OF
INSTRUMENTS
VESTING AND
EXPIRATION DATE
NUMBER OF
INSTRUMENTS
VESTING AND
EXPIRATION DATE
FY2016
FY2015
MTI
LTI tranche 1
LTI tranche 2
LTI tranche 3
Total
1,166,796
1,371,895
1,371,887
1,829,189
5,739,767
30 June 2017
30 June 2018
30 June 2019
30 June 2018/19
1,225,363
1,072,548
1,072,533
1,430,057
4,800,501
30 June 2016
30 June 2017
30 June 2018
30 June 2017/18
The performance rights are subject to a performance measure linked to relative total shareholder return (TSR) and a costs hurdle. The TSR
performance measure compares the TSR performance of the Company with the TSR performance of a peer group of companies operating in
the Australian resources sector. The costs hurdle performance measure relates to the Company’s achieving a defined cost per tonne target.
Detailed disclosures of outcomes against the target are provided in the Remuneration Report.
Whitehaven Coal Annual Report 2016 / 115
FINANCIAL REPORT7 5.5 SHARE-BASED PAYMENTS (CONTINUED)
c) Movement in options and performance rights
The following table illustrates the number and weighted average exercise prices of, and movements in, options and performance rights during
the year:
Outstanding at beginning of period
Exercised during the period
Granted during the period
Forfeited during the period
Lapsed during the period
Outstanding at 30 June
Exercisable at 30 June
WEIGHTED
AVERAGE
EXERCISE
PRICE
NUMBER OF
OPTIONS/
RIGHTS
WEIGHTED
AVERAGE
EXERCISE
PRICE
NUMBER OF
OPTIONS/
RIGHTS
2016
$2.70
$0.00
$0.00
$0.00
$0.00
$1.76
$4.73
2016
24,517,802
–
6,925,746¹
(280,435)
(9,017,088)
22,146,025
8,241,278
2015
$3.13
$0.00
$0.00
$0.00
$0.00
$2.70
$3.92
2015
21,146,767
–
4,830,468²
(520,051)
(939,382)
24,517,802
16,872,910
1
2
Includes 1,185,979 performance rights granted during the year under the FY2015 STI scheme.
Includes 29,967 performance rights granted during the year under the FY2014 program.
The outstanding balance as at 30 June 2016 is represented by:
i. 8,241,278 options over ordinary shares having an exercise price of $4.73, exercisable until 17 August 2016.
These options were granted in May 2012 to Aston Resources option holders as part of the Scheme of Arrangement.
ii. 342,799 performance rights over ordinary shares having an exercise price of nil, exercisable on 23 September 2016.
iii. 2,085,138 performance rights over ordinary shares having an exercise price of nil, exercisable between 30 June 2016 and 30 June 2017.
iv. 4,632,137 performance rights over ordinary shares having an exercise price of nil, exercisable between 30 June 2016 and 30 June 2018.
v. 6,844,673 performance rights over ordinary shares having an exercise price of nil, exercisable between 13 August 2016 and 30 June 2019.
No share options were exercised during the year ended 30 June 2016 (2015: nil).
The weighted average remaining contractual life of share options and performance rights outstanding at 30 June 2016 is 0.87 years
(2015: 0.96 years).
d) Option pricing models
The fair value of options granted is measured using a Black Scholes model.
The fair value of performance rights granted under the LTI program is measured using a Monte Carlo Simulation model incorporating the
probability of the performance hurdles being met.
The following table lists the inputs to the models used for the years ended 30 June 2016 and 30 June 2015:
FY2016
Grant date
Vesting date
Fair value at grant date
Share price
Exercise price
Expected volatility
Performance Right life
Expected dividends
Risk-free interest rate
FY2015
Grant date
Vesting date
Fair value at grant date
Share price
Exercise price
Expected volatility
Performance Right life
Expected dividends
Risk-free interest rate
116 /
MTI
8 Apr 16
30 Jun 17
$0.09
$0.595
$0.00
50%
2 years
0%
1.9%
MTI
16 Jan 15
30 Jun 16
$0.68
$1.190
$0.00
40%
LTI
8 Apr 16
30 Jun 18
$0.16
$0.595
$0.00
50%
3 years
1.2%
1.8%
LTI
16 Jan 15
30 Jun 17
$0.71
$1.190
$0.00
40%
LTI
8 Apr 16
30 Jun 19
$0.20
$0.595
$0.00
50%
4 years
2.3%
1.8%
LTI
16 Jan 15
30 Jun 18
$0.72
$1.190
$0.00
40%
LTI
8 Apr 16
30 Jun 18
$0.57
$0.595
$0.00
50%
3 years
1.2%
1.8%
LTI
16 Jan 15
30 Jun 17
$1.17
$1.190
$0.00
40%
LTI
8 Apr 16
30 Jun 19
$0.55
$0.595
$0.00
50%
4 years
2.3%
1.8%
LTI
16 Jan 15
30 Jun 18
$1.13
$1.190
$0.00
40%
2 years
3 years
4 years
3 years
4 years
0%
2.2%
0.8%
2.1%
1.4%
2.1%
0.8%
2.1%
1.4%
2.1%
FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 6 GROUP STRUCTURE
6.1 GROUP’S SUBSIDIARIES AND INTERESTS IN JOINT OPERATIONS
Accounting policy:
Subsidiaries
Subsidiaries are all those entities over which the Group has
control. Control is achieved when the Group is exposed, or has
rights, to variable returns from its involvement with the investee
and has the ability to affect those returns through its power over
the investee. Specifically, the Group controls an investee if and
only if the Group has:
— Power over the investee (i.e. existing rights that give it the
current ability to direct the relevant activities of the investee),
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.
Intragroup balances and any unrealised gains and losses or income
and expenses arising from intragroup transactions, are eliminated
in preparing the consolidated financial statements.
— Exposure, or rights, to variable returns from its involvement
Jointly controlled operations
with the investee, and
— The ability to use its power over the investee to affect its returns.
Profit or loss and each component of other comprehensive
income (OCI) are attributed to the equity holders of the parent
of the Group and to the non-controlling interests, even if this
results in the non-controlling interests having a deficit balance.
Joint control is the contractually agreed sharing of control over
an arrangement, which exists only when decisions about relevant
strategic and/or key operating decisions require unanimous
consent of the parties sharing control. The Group recognises its
interest in jointly controlled operations by recognising its interest
in the assets and liabilities of the joint operation. The Group 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 operation.
Significant accounting judgements, estimates and assumptions
The Group assesses whether it has the power to direct the relevant activities of the investee by considering the rights it holds with respect to
the work programme and budget approval, investment decision approval, voting rights in joint operating committees and changes to joint
arrangement participant holdings. Where the Group has control judgement is also required to assess whether the arrangement is a joint
operation or a joint venture.
The consolidated financial statements include the financial statements of the Company and the subsidiaries listed below.
COUNTRY OF
INCORPORATION
OWNERSHIP INTEREST
AND VOTING RIGHTS
2016
2015
Parent entity
Whitehaven Coal Limited
Subsidiaries
Whitehaven Coal Mining Limited
Namoi Mining Pty Ltd
Namoi Agriculture & Mining Pty Ltd
Betalpha Pty Ltd
Betalpha Unit Trust
Tarrawonga Coal Pty Ltd
Whitehaven Coal Holdings Pty Ltd
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
Whitehaven Project Pty Ltd
Whitehaven Employee Share Plan Pty Ltd
Aston Resources Limited
Aston Coal 2 Pty Ltd
Aston Coal 3 Pty Ltd
Maules Creek Coal Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Whitehaven Coal Annual Report 2016 / 117
FINANCIAL REPORT7 6.1 GROUP’S SUBSIDIARIES AND INTERESTS IN JOINT OPERATIONS (CONTINUED)
Boardwalk Resources Limited
Boardwalk Coal Management Pty Ltd
Boardwalk Coal Marketing Pty Ltd
Boardwalk Sienna Pty Ltd
Boardwalk Monto Pty Ltd
Boardwalk Dingo Pty Ltd
Boardwalk Ferndale Pty Ltd
Coalworks Limited
Yarrawa Coal Pty Ltd
Loyal Coal Pty Ltd
Ferndale Coal Pty Ltd
Coalworks (Oaklands North) Pty Ltd
CWK Nominees Pty Ltd
Oaklands Land Pty Ltd
Coalworks (Vickery South ) Pty Ltd
Coalworks Vickery South Operations Pty Ltd
Vickery South Marketing Pty Ltd
Vickery South Operations Pty Ltd
Vickery Pty Ltd
COUNTRY OF
INCORPORATION
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
OWNERSHIP INTEREST
AND VOTING RIGHTS
2016
100%
100%
100%
100%
100%
100%
100%
100%
100%
92.5%
92.5%
100%
100%
100%
100%
100%
100%
100%
100%
2015
100%
100%
100%
100%
100%
100%
100%
100%
100%
92.5%
92.5%
100%
100%
100%
100%
100%
100%
100%
100%
The consolidated financial statements include a share of the financial statements of the joint operations listed below.
Tarrawonga Coal Project Joint Venture¹
Narrabri Coal Joint Venture¹
Maules Creek Joint Venture¹
Dingo Joint Venture¹
Ferndale Joint Venture¹
Boggabri-Maules Creek Rail Spur Joint Venture¹
Tarrawonga Coal Sales Pty Ltd²
Maules Creek Marketing Pty Ltd²
Boggabri-Maules Creek Rail Pty Ltd²
COUNTRY OF
INCORPORATION
Australia
Australia
Australia
OWNERSHIP INTEREST
AND VOTING RIGHTS
2016
70%
70%
75%
70%
2015
70%
70%
75%
70%
92.5%
92.5%
39%
70%
75%
39%
39%
70%
75%
39%
1
These entities have been classified as joint operations under AASB11 Joint Arrangements, as these joint arrangements are not structured through separate
vehicles.
2 The joint operations above operate as the sales and marketing vehicles or manager of the related unincorporated joint operations and require joint consent
from all joint venture partners on all significant management and financial decisions. As such the group recognises its share of assets, liabilities, revenues and
expenses of the above entities as joint operations under AASB11 Joint Arrangements.
118 /
FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
6.2 PARENT ENTITY INFORMATION
Information relating to Whitehaven Coal Limited:
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Retained earnings
Share based payments reserve
Total shareholders’ equity
Profit/(loss) of the parent entity
Total comprehensive income/(loss) of the parent entity
6.3 DEED OF CROSS GUARANTEE
COMPANY
2016
$’000
2015
$’000
63
6,886
2,815,799
2,790,877
61,960
61,960
42,331
42,331
3,275,296
3,275,296
(539,874)
(564,384)
18,417
37,634
2,753,839
2,748,546
1,726
1,726
(563,186)
(563,186)
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’ reports.
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 Company and each of the relevant subsidiaries entered into the deed on 27 June 2008 with subsequent assumption deeds entered into on
27 June 2012 and 25 June 2013.
The subsidiaries subject to the Deed are:
— Whitehaven Coal Mining Limited (lead entity)
— Boardwalk Coal Management Pty Ltd
— Namoi Mining Pty Ltd
— Betalpha Pty Ltd
— Tarrawonga Coal Pty Ltd
— Whitehaven Coal Holdings Pty Ltd
— Boardwalk Coal Marketing Pty Ltd
— Boardwalk Sienna Pty Ltd
— Boardwalk Monto Pty Ltd
— Boardwalk Dingo Pty Ltd
— Whitehaven Coal Infrastructure Pty Ltd
— Boardwalk Ferndale 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
— Whitehaven Employee Share Plan Pty Ltd
— Whitehaven Project Pty Ltd
— Aston Resources Limited
— Aston Coal 2 Pty Ltd
— Aston Coal 3 Pty Ltd
— Maules Creek Coal Pty Ltd
— Boardwalk Resources Limited
— Coalworks Limited
— Yarrawa Coal Pty Ltd
— Coalworks (Oaklands North) Pty Ltd
— CWK Nominees Pty Ltd
— Oaklands Land Pty Ltd
— Coalworks (Vickery South) Pty Ltd
— Coalworks Vickery South Operations Pty Ltd
— Vickery South Marketing Pty Ltd
— Vickery South Operations Pty Ltd
— Vickery Pty Ltd
The Deed of Cross Guarantee includes the Company and
subsidiaries, which are included within the consolidated statement
of comprehensive income and consolidated statement of financial
position of the Group. The consolidated statement of comprehensive
income and consolidated statement of financial position of the
entities that are members of the Closed Group are as follows.
Whitehaven Coal Annual Report 2016 / 119
FINANCIAL REPORT7
6.3 DEED OF CROSS GUARANTEE (CONTINUED)
Profit/(loss) before tax
Income tax (expense)/benefit
Profit/(loss) after tax
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Net movement on cash flow hedges
Income tax effect
Other comprehensive (loss)/income for the period, net of tax
Total comprehensive (loss)/income for the period, net of tax
Statement of financial position
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Total current assets
Trade and other receivables
Investments
Property, plant and equipment
Exploration and evaluation
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
Liabilities
Trade and other payables
Interest bearing loans and borrowings
Employee benefits
Current tax payable
Provisions
Derivative financial instruments
Total current liabilities
Non-current liabilities
Interest bearing loans and borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
Issued capital
Share based payments reserve
Hedge reserve
Retained earnings
Non-controlling interest
Equity
120 /
CLOSED GROUP
2016
$’000
30,164
(7,186)
22,978
2015
$’000
(483,317)
140,592
(342,725)
1,186
(356)
830
(1,507)
452
(1,055)
23,808
(343,780)
101,329
70,699
68,737
351
241,116
28,964
37
102,269
97,418
89,892
162
289,741
30,162
37
3,497,316
3,538,947
202,428
19,818
103,573
197,191
19,954
111,115
3,852,136
3,897,406
4,093,252
4,187,147
134,327
23,561
16,872
–
7,260
1,138
147,421
21,750
14,055
42,331
7,380
2,136
183,158
235,073
936,115
84,996
1,021,111
1,204,269
2,888,983
3,142,439
18,417
(551)
(272,400)
1,078
1,016,481
72,782
1,089,263
1,324,336
2,862,811
3,143,642
36,543
(1,381)
(317,071)
1,078
2,888,983
2,862,811
FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 6.4 RELATED PARTIES
Compensation to Executive KMP and Non-executive Directors of the Group
Short-term employee benefits
Contributions to superannuation plans
Share-based compensation payments
Total compensation
7 OTHER NOTES
7.1
EMPLOYEE BENEFITS
Accounting policy:
2016
$’000
8,040
278
1,095
9,413
2015
$’000
8,273
249
653
9,175
Wages, salaries, annual leave and sick leave
Long-term service benefits
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.
A provision is recognised for the amount expected to be paid
under short-term cash bonus or profit-sharing plans if the Group
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.
The Group’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 high-quality corporate
bonds at the balance date which have maturity dates approximating
to the terms of the Group’s obligations.
Defined contribution superannuation funds
Obligations for contributions to defined contribution superannuation
funds are recognised as an expense in the consolidated statement of
comprehensive income as incurred.
Consolidated Statement of Comprehensive Income
Wages and salaries
Contributions to superannuation plans
Other associated personnel expenses
Increase in liability for annual leave
Increase/(decrease) in liability for long service leave
Share based compensation payments¹
1 Disclosed in “Other expenses” in the Statement of Comprehensive Income.
Consolidated Statement of Financial Position
Salaries and wages accrued
Liability for long service leave
Liability for annual leave
2016
$’000
126,280
8,325
3,109
1,319
110
3,715
2015
$’000
91,892
6,662
3,248
802
405
2,431
142,858
105,440
5,461
384
11,027
16,872
4,073
274
9,708
14,055
Whitehaven Coal Annual Report 2016 / 121
FINANCIAL REPORT7 7.2 AUDITORS' REMUNERATION
IN AUD ($)
Audit services:
Auditors of the Company – Ernst & Young
Audit and review of statutory financial statements current year
Audit of joint ventures
Non audit services:
Auditors of the Company - Ernst & Young
Taxation services
Other non-audit services
Review of National Greenhouse Energy Reporting Act requirements
Assurance services for refinancing
7.3 COMMITMENTS
Operating leases – Group as lessee
2016
2015
500,000
275,000
775,000
652,200
373,478
1,025,678
42,712
99,500
11,068
–
126,962
65,000
64,849
299,134
153,280
555,945
The Group leases mining equipment, office equipment and office space under operating leases. The leases typically run for one to five years on
commercial terms. None of the leases includes contingent rentals. The operating lease expenses recognised in profit or loss in the current year
amounted to $29,346,000 (2015: $1,378,000).
Future minimum rentals payable under non-cancellable operating leases as at 30 June 2016 are as follows:
Less than one year
Between one and five years
Capital expenditure commitments
Plant and equipment and intangibles
Contracted for but not provided for and payable:
Within one year¹
1
There were no commitments for capital expenditure beyond one year.
7.4 CONTINGENCIES
Bank guarantees
The Group provided bank guarantees to
i. Government departments as a condition of continuation of mining and exploration licenses
ii. Rail capacity providers
iii. Port capacity providers
iv. Electricity network access supplier
v. Other
Litigation
2016
$’000
36,554
87,200
123,754
2015
$’000
23,254
76,541
99,795
34,593
21,706
2016
$’000
79,104
21,357
69,708
26,499
1,880
2015
$’000
49,375
30,027
88,291
26,200
2,117
198,548
196,010
There is a number of legal and potential claims against the Group which have arisen in the ordinary course of business. As the Group believes
that it has no liability for such matters, a provision has not been made for any potential adverse outcome. The Group will defend these claims
and believes that any adverse outcome would not be material based on information currently available to the Group.
122 /
FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
7.5 SUBSEQUENT EVENTS
AASB 16 Leases
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 Group,
the results of those operations, or the state of affairs of the Group,
in future financial years other than the following:
In July 2016, the Group repaid a further $35 million of debt drawn
under the senior bank facility.
7.6 NEW ACCOUNTING STANDARDS
AND INTERPRETATIONS
i. Changes in accounting policy and disclosures
The accounting policies adopted in the preparation of the
consolidated financial statements are consistent with those
of the previous financial year, except for the adoption of new
standards and interpretations effective as of 1 July 2015.
Several amendments apply for the first time in the current year.
However, they do not impact the annual consolidated financial
statements of the Group or the interim condensed consolidated
financial statements of the Group.
AASB 2013-9 Amendments to Australian Accounting Standards –
Conceptual Framework, Materiality and Financial Instruments,
Part C
Part C makes amendments to a number of Australian Accounting
Standards, including incorporating Chapter 6 Hedge Accounting into
AASB 9 Financial Instruments.
AASB 2015-3 Amendments to Australian Accounting Standards
arising from the Withdrawal of AASB 1031 Materiality
The Standard completes the AASB’s project to remove Australian
guidance on materiality from Australian Accounting Standards.
ii. Accounting Standards and Interpretations issued
but not yet effective
Australian Accounting Standards and Interpretations that have
recently been issued or amended but are not yet effective and have
not been adopted by the Group for the annual reporting period
ended 30 June 2015 are outlined below:
AASB 9 Financial Instruments
A finalised version of AASB 9 which contains accounting
requirements for financial instruments, replacing AASB 139
Financial Instruments: Recognition and Measurement. The
standard contains requirements in the areas of classification and
measurement, impairment, hedge accounting and derecognition.
The Group has not yet determined the potential impact of the
amendments on the Group’s financial report. This standard applies
to annual reporting periods beginning on or after 1 January 2018.
AASB 15 Revenue from Contracts with Customers
AASB 15 provides a single, principles-based five-step model to be
applied to all contracts with customers. Guidance is provided on
topics such as the point in which revenue is recognised, accounting
for variable consideration, costs of fulfilling and obtaining a contract
and various related matters. New disclosures about revenue are also
introduced. The Group is in the process of determining the potential
impact of the amendments on the Group’s financial report. This
standard applies to annual reporting periods beginning on or after
1 January 2018.
IFRS 16 provides a new lessee accounting model which requires a
lessee to recognise assets and liabilities for all leases with a term of
more than 12 months, unless the underlying asset is of low value. A
lessee measures right-of-use assets similarly to other non-financial
assets and lease liabilities similarly to other financial liabilities.
Assets and liabilities arising from a lease are initially measured on
a present value basis. The measurement includes non-cancellable
lease payments (including inflation-linked payments), and also
includes payments to be made in optional periods if the lessee is
reasonably certain to exercise an option to extend the lease, or not to
exercise an option to terminate the lease. IFRS 16 contains disclosure
requirements for lessees. This standard applies to annual reporting
periods beginning on or after 1 January 2019.
AASB 2015-1 Amendments to Australian Accounting Standards
– Annual Improvements to Australian Accounting Standards
2012–2014 Cycle
The subjects of the principal amendments to the Standards in
respect to AASB 119 Employee Benefits can be described below:
— Discount rate: regional market issue - clarifies that the high-
quality corporate bonds used to estimate the discount rate for
post-employment benefit obligations should be denominated
in the same currency as the liability. Further it clarifies that the
depth of the market for high-quality corporate bonds should be
assessed at the currency level.
DIRECTORS’ DECLARATION
In accordance with a resolution of the directors of Whitehaven Coal
Limited, I state that:
In the opinion of the Directors:
a. the financial statements and notes of Whitehaven Coal Limited
are in accordance with the Corporations Act 2001, including:
i. giving a true and fair view of the consolidated entity’s
financial position as at 30 June 2016 and of its performance
for the year ended on that date; and
ii. complying with Australian Accounting Standards (including
the Australian Accounting Interpretations) and the
Corporations Regulations 2001;
b. the financial statements and notes also comply with
International Financial Reporting Standards as disclosed
in note 1; and
c. there are reasonable grounds to believe that the Company will
be able to pay its debts as and when they become due and
payable.
d. 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 2016.
e. as at the date of this declaration, there are reasonable grounds
to believe that the members of the Closed Group identified
in note 6.3 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.
On behalf of the Board
The Hon. Mark Vaile AO
Chairman
Sydney
18th August 2016
Paul Flynn
Managing Director and
Chief Executive Officer
Whitehaven Coal Annual Report 2016 / 123
FINANCIAL REPORT7
AUDITORS REPORT
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent auditor's report to the members of Whitehaven Coal
Limited
Report on the financial report
We have audited the accompanying financial report of Whitehaven Coal Limited, which comprises the
consolidated statement of financial position as at 30 June 2016, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, notes comprising a summary of significant accounting
policies and other explanatory information, and the directors' declaration of the consolidated entity
comprising the company and the entities it controlled at the year's end or from time to time during the
financial year.
Directors' responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal controls as the directors determine are necessary to enable the preparation of
the financial report that is free from material misstatement, whether due to fraud or error. In Note
1.2, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of
Financial Statements, that the financial statements comply with International Financial Reporting
Standards.
Auditor's responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal controls relevant to the entity's
preparation and fair presentation of the financial report in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity's internal controls. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by the directors, as well as
evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
90
124 /
FOR THE YEAR ENDED 30 JUNE 2016SECTION 7 FINANCIAL REPORT
Independence
In conducting our audit we have complied with the independence requirements of the Corporations Act
2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a
copy of which is included in the directors’ report.
Opinion
In our opinion:
a.
the financial report of Whitehaven Coal Limited is in accordance with the Corporations Act
2001, including:
i
ii
giving a true and fair view of the consolidated entity's financial position as at 30 June
2016 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations
2001; and
b.
the financial report also complies with International Financial Reporting Standards as
disclosed in Note 1.2.
Report on the remuneration report
We have audited the Remuneration Report included in the directors' report for the year ended 30 June
2016. The directors of the company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Whitehaven Coal Limited for the year ended 30 June
2016, complies with section 300A of the Corporations Act 2001.
Ernst & Young
Ryan Fisk
Partner
Sydney
18 August 2016
91
Whitehaven Coal Annual Report 2016 / 125
FINANCIAL REPORT7
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 recorded as owned by substantial shareholders and their associates in the most recent substantial shareholder notices
advised to the Company by these shareholders are set out below:
SHAREHOLDER
Farallon Capital Management LLC
Fritz Kundrun¹
Hans Mende¹
Prudential PLC
AMCI Group¹
Kerry Group Limited
PERCENTAGE OF
CAPITAL HELD
NUMBER OF ORDINARY
SHARES HELD
DATE OF SUBSTANTIAL
SHAREHOLDER NOTICE
16.61%
12.09%
11.13%
10.09%
8.40%
5.00%
170,414,721
124,042,252
114,190,086
103,608,536
86,170,596
51,323,822
19 June 2013
17 Oct 2014
17 Oct 2014
18 July 2016
17 Oct 2014
19 May 2014
1 The holdings of Mr Kundrun and Mr Mende both include the 86,170,596 shares owned by AMCI Group.
Voting rights
Ordinary shares
Refer to note 5.4 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
NUMBER OF
EQUITY SECURITY
HOLDERS
1,780
2,520
1,114
1,410
166
6,990
There are 2 holders of options over ordinary shares. Refer to note 5.5(c) in the financial statements.
The number of shareholders holding less than a marketable parcel of ordinary shares is 602.
126 /
SECTION 7 FINANCIAL REPORT Securities exchange
The Company is listed on the Australian Securities Exchange.
Other information
Whitehaven Coal Limited, incorporated and domiciled in Australia, is a publicly listed company limited by shares.
TWENTY LARGEST SHAREHOLDERS (LEGAL OWNERSHIP)
NAME
Citicorp Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited-GSCO ECA
HSBC Custody Nominees (Australia) Ltd
J P Morgan Nominees Australia Limited
National Nominees Limited
AET SFS Pty Ltd
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