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Whitehaven Coal
Annual Report 2019
This report includes forward looking statements relating to future events and expectations.
While these statements reflect expectations at the date of this publication, they are, by their nature, not certain and are subject to known and unknown risks.
Whitehaven makes no representation, assurance or guarantee as to the accuracy or likelihood of fulfilling any such forward looking statements
(whether express or implied) and, except as required by applicable regulations or law, Whitehaven does not undertake to publically update such
forward looking statements.
Contents
FY2019 in review
Introductions
About us
Resources & Reserves
Directors’ Report
Operating and financial review
Remuneration Report
Financial Report
ASX additional information
Glossary
Corporate directory
2
3
5
14
17
26
37
62
120
122
123
1
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves | Directors’ Report | Financial Report | Glossary | Corporate directory | FY2019 in review
Financial highlights:
– Record net profit after tax before significant items of $564.9m, up 8% on FY2018
– Underlying EBITDA increased to $1,041.7m, up 3% on FY2018. This was driven by increased margins,
underpinned by an increase in the production of high quality thermal coal
– Cash generated from operations increased to $964.1m
– The decrease in net debt to $161.6m at 30 June 2019 was driven by the strong operating cash flow
performance during the year. Gearing decreased to 4% at 30 June 2019 from a level of 7% as at 30 June 2018
– The strength and resilience of Whitehaven’s cash flow generation has resulted in dividends of 50 cents per share
being declared for the year
– As a result of the strength of Whitehaven’s balance sheet, its scale of operations, and its improved earnings
and cash flow generation, Whitehaven is well placed to both expand operations from its existing portfolio
of opportunities and to take advantage of external growth opportunities that may arise.
Revenue
Underlying EBITDA
EBITDA – statutory
Net profit after tax before significant items
Net profit after tax
Cash generated from operations
Net debt
Gearing (net debt/net debt + equity) (%)
Earnings per share (cents)
Shareholder distributions (cents per share)
1 Restated for adoption of AASB 16 Leases.
FY2019
FY2018 1
$ million
$ million
2,487.9
1,041.7
1,001.2
564.9
527.9
964.1
161.6
4%
53.5
50
2,257.4
1,011.9
1,002.2
524.5
524.5
925.9
270.4
7%
53.1
40
Operational highlights:
– Record ROM coal production of 18.4Mt, up 4% on FY2018
– A strong finish to the year at both Narrabri and Maules Creek enabled ROM coal production guidance
to be exceeded
– Coal sales of 17.6Mt including purchased coal for the year
– Increased premiums relative to the prevailing index price for both thermal and metallurgical coal
– High coal inventories at both Maules Creek and Narrabri will support sales during the September quarter of FY2020.
ROM coal production
Saleable coal production
Sales of produced coal
Sales of purchased coal
Total coal sales
2
FY2019
FY2018
000t
18,358
15,817
16,017
1,615
17,631
000t
17,727
16,160
16,109
1,256
17,365
Chairman’s introduction
Dear Shareholder
It has been another busy
year for Whitehaven as we
worked towards our vision
of being the benchmark coal
investment on the Australian
Securities Exchange (ASX)
and further sharpened our
focus on seven key areas
underpinning our growth
strategy.
It is pleasing to report record
ROM production and record profit,
which facilitated an unprecedented
distribution to shareholders by way
of a full-year payout ratio of 88% of
NPAT. I would like to acknowledge
the work of Managing Director
and CEO Paul Flynn, the executive
leadership team and our entire
2,400-strong workforce in
achieving this result.
Just as important as recent
performance is the fact that your
company is in a strong position
for future success, with close
alignment between our strategic
product offering and evolving
demand trends for high-calorific
value (high-CV), low-impurity
thermal coal, and low-sulphur,
low-phosphorous semi-soft
coking coal (SSCC).
The coal we produce will continue
to service our premium markets
of Japan, Korea and Taiwan but,
increasingly, we will look to take
advantage of the substantial growth
in coal-fired power generation in
Southeast Asia. The International
Energy Agency (IEA), in its New
Policies Scenario, predicts these
markets will grow from 71GW in
2017 to 175GW in 2040, requiring
at least 220Mtpa of coal – more
than Australia’s 2018 thermal coal
exports of 208Mpta – by 2040.
Our future growth and value
proposition are underpinned
by two significant, high-quality,
near-term assets: our Vickery
and Winchester South projects.
Together, they will significantly
increase the metallurgical coal
exposure in our portfolio and
take our saleable coal production
towards 40Mtpa by 2030.
In this context, it is worth reflecting
on the market opportunities in India,
which this year accounted for 40%
of our total metallurgical coal sales.
Australia supplies more than 70%
of India’s metallurgical coal, and
according to the Commonwealth
Office of the Chief Economist,
demand for this coal could increase
by one-third between 2015 and
2035 as India’s economy develops.
Whitehaven is positively
differentiated from a number
of our key competitors, increasing
our total production at a time of
ongoing tightness in the higher
energy–content coal market and
given the relative scarcity of
metallurgical coal globally.
Regulatory barriers and a more
uncertain investment environment
will continue to impact supply,
with attendant impacts on price.
And we are well positioned to
continue to take advantage of these
dynamics. This topic is covered in
Whitehaven Coal’s Sustainability
Report 2019, in which we talk about
business resilience and how we see
our company successfully charting a
path into a more carbon-constrained
future. I commend our inaugural
sustainability report to you.
Given the ongoing debate
about the role coal will continue
to play globally, particularly in
power generation, we continue
to communicate regularly with
domestic and international
investors on the full spectrum of
environmental, sustainability and
governance issues. This includes
continuing discussion on voluntary
compliance regimes, such as the
Task Force on Climate-related
Financial Disclosures (TCFD),
which Whitehaven reported
against for the first time in 2019.
On behalf of the Board, I would
like to take this opportunity to
thank shareholders for their
continuing support. While our
sector is unquestionably complex,
our long-term outlook on the market
remains extremely positive. I am
confident we have the strategies
and talent we need to deliver
further value for our shareholders,
and our stakeholders more broadly.
The Hon. Mark Vaile AO
Chairman
3
Whitehaven Coal Annual Report 2019About us | Resources & Reserves | Directors’ Report | Financial Report | Glossary | Corporate directory ||| |IntroductionsFY2019 in review Managing Director
and CEO’s introduction
Dear Shareholder
I am pleased to present
Whitehaven Coal’s
Annual Report 2019.
We delivered another record
profit and continued our pattern
of delivering strong and consistent
financial returns for our shareholders
this year.
The full-year result solidifies our
position as the leading pure-play
coal miner listed on the ASX. It
also serves us well as we prepare
to transform into an even larger,
more efficient and better-integrated
enterprise, to take advantage of
the demand for high-quality coal
in the Asian region.
We reported underlying NPAT
of $564.9 million, and produced
a record 23.2Mt of ROM coal
on a managed basis – results that
allowed us to declare a record
dividend to our shareholders.
I would like to thank the
approximately 2,400 members
of our workforce who contributed
to this result, as well as our joint
venture partners, commercial
partners and the executive
leadership team.
Importantly, we accomplished
these financial and operational
outcomes with an improved total
recordable injury frequency rate
for the year of 6.2, reflecting our
belief that production growth is not
sustainable unless accompanied by
a strong safety focus. Nonetheless,
with a growing business, safety is
always front of mind, and recent
tragic events in the mining and
other sectors are a stark reminder
that we must be vigilant.
Away from the headline results,
the year has had its challenges,
including those relating to
production, labour and the
external pricing environment.
We have not been immune to rising
cost pressures, particularly due to
the Narrabri mine operating deeper
underground and longer hauls
needed for out of pit dumping at
Maules Creek mine. We anticipate
that these are transient aspects
of both operations. Costs should
moderate as we introduce new roof
support cylinders at Narrabri and
begin in-pit dumping at Maules
Creek over the next year. We are
also redoubling our efforts to keep
costs down in other areas.
Operationally, the business
is approaching its other most
important turning point – and our
strong balance sheet readies us to
realise new growth and increased
efficiency. In terms of existing
mines, production at Tarrawonga
will expand to three million tonnes,
supported by a new fleet, and
Narrabri Stage 3 looks to extend
the life of the mine to 2045, with
fewer changeouts. Maules Creek will
benefit from optimisation initiatives,
including deploying autonomous
haulage and in-pit dumping,
with attendant cost reductions.
In addition, our pipeline of
development projects positively
differentiates us from many of our
sector competitors. During the past
year, the Queensland Government
declared the Winchester South
Project a Coordinated Project.
We will soon release our first
statement of reserves, providing
more details about the key attributes
of this exciting project. We are also
anticipating a determination for the
Vickery Extension Project in the
coming months. This development
attracted an unprecedented level
of local community support during
its public exhibition phase.
Other changes are also afoot
throughout the business.
In FY20, we will increase our
focus on rehabilitating Rocglen,
where we stopped mining in
June 2019. We are also due
to extract our last coal from
Sunnyside Mine before the end
of 2019. While we are sad to close
these chapters in Whitehaven’s
production story, we have an
opportunity to make these mines
shining examples of contemporary
approaches to rehabilitation.
We are in the middle of a significant
transition. This includes moving
from operating five mines that
produce about 23 million tonnes
of coal annually to four major mines
that will produce around 40 million
4
tonnes within the next decade.
We are also managing a range of
initiatives across the full exploration,
development, production and
rehabilitation life cycle. Reassuringly,
we have a great team in place,
with the right blend of skills
and experience to deliver on
our strategy.
As we progress down this path,
it is important to acknowledge the
significant contribution we make
to our local, state and national
economies and communities.
We will continue to ensure the
benefits of our operations extend
beyond our direct workforce and
shareholders. We are ever focused
on building capacity in the regions
where we operate, by developing
skills, creating permanent jobs
and procuring services locally.
Our approach and achievements
in this space are detailed in our
inaugural sustainability report,
which I encourage you to read at
www.whitehavencoal.com.au.
As we mark another record year,
and embark on what promises
to be an exciting but challenging
12 months, I thank you for
your support.
Paul Flynn
Managing Director and CEO
About us
5
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions Resources & Reserves | Directors’ Report | Financial Report | Glossary | Corporate directory || |About us Whitehaven Coal is proud to be the leading
Australian producer of premium-quality coal,
and the dominant player in Australia’s only emerging
high-quality coal basin. We help power developed
and emerging economies in Asia where there
is strong and growing demand for our product,
particularly for use in high-efficiency, low-emissions
coal-fired power stations. We are driving prosperity
and economic growth in regional Australia,
particularly in North West NSW, which is the focus
of our capital investment and workforce presence.
We operate five mines (four open cut and one large underground
mine) in the Gunnedah Basin of NSW. Our operating assets are
complemented by two high-quality, near-term development assets:
Vickery, near Gunnedah, and Winchester South, in Queensland’s
Bowen Basin. Over our almost 20-year history, including 12 years
as a publicly listed entity on the ASX, we have developed a
reputation for excellence in project delivery and safe, efficient
and environmentally responsible operations.
We are proudly local, and around 75% of our 2,400-strong
workforce live in the local communities around our mine sites.
We believe in helping communities grow, ensuring benefits
flowing from our operations accrue locally.
6
Purpose, vision and principles
Purpose
Principles
To support and sustain
regional communities
by exporting high-quality
thermal and metallurgical
coal from Australia
to the world.
Vision
To be the benchmark
coal exposure on the ASX.
The following principles guide
our interactions internally and
with external stakeholders.
Safety
We endeavour to ensure
the safety of our employees,
contractors and communities.
Teamwork
We work collaboratively
and support one another.
Respect
We foster a diverse and
inclusive culture and deal with
all stakeholders respectfully.
Integrity
We are honest and do the
right thing.
Value
We create value for
shareholders, customers
and local communities.
Excellence
We deliver on our
commitments.
7
| FY2019 in review | Introductions Resources & Reserves | Directors’ Report | Financial Report | Glossary | Corporate directory || |About us How we create value
Business inputs
1. Assets: We are the dominant
player in Australia’s only emerging
high-quality coal basin with a
footprint in one of Australia’s
highest quality metallurgical
coal basins. Our mine assets
are complemented by a large
fleet of heavy mining equipment
in addition to mine support
infrastructure and rolling stock.
2. People: To ensure we optimise
our physical assets, we seek to
attract, recruit and retain the
technical, specialist and central
office staff with the skills to
support the needs of the business
today and into the future.
3. Financial: We deploy our financial
resources carefully to maintain
our reputation as a reliable and
cost-efficient producer focused
on delivering value for all our
shareholders over the long term.
Our disciplined capital allocation
approach keeps our balance
sheet strong and provides
flexibility through the cycle.
Governance and reporting framework
We seek to design and implement corporate governance and management arrangements to manage our exposure
to political and regulatory risks and to observe best-practice management measures in relation to health, safety,
stakeholder engagement and business integrity.
Our value proposition
We identify, develop and operate
high-quality, cost-efficient, long-
life coal assets and distribute the
financial and non-financial returns
to shareholders, employees,
customers and the communities
where we work and live.
Our community and social compact
depicts the process whereby our
capital investment is recycled
through a value chain including
employees, suppliers, customers
and community members.
Our business focus
We seek to ensure continuous
and sustainable value creation by
applying our human and financial
capital to the following key areas.
Business outputs
– Customers: We form long-term
relationships with our customers
to provide raw materials that
support the efficient utilisation
of industrial assets including
coal-fired power plants and
steel blast furnaces
– Procurement: We are firmly
oriented towards working with
regionally based suppliers in
recognition of the contribution
of local enterprise to long-term
community prosperity and
cohesion
– Infrastructure and logistics:
– Environment: We are responsible
We have supply agreements with
Australian businesses focused
on the efficient movement of our
product, contributing to shared
sustainability goals through our
value chain
stewards of the natural
environment, and maintain strong
sustainability practices through
each stage of the mining process,
from development, to operations,
closure and rehabilitation
– Community: We work with
– Industry: We are members of
local councils, business groups,
the agricultural sector, charitable
organisations and a range of local
service providers to share the
economic and social dividends
of mining and maintain our
social licence to operate
various industry associations and
participate in policy forums on
issues associated with ensuring
Australia’s resource endowment
can better support sustainable
development here and abroad.
Employees
Community
Customers
Investors
We provide skills
development pathways
and stable regional
employment in a safe
and rewarding work
environment.
We support local
communities through
direct investment, job
creation, partnerships
with local suppliers
and working with
community groups.
We offer a reliable supply
of high-quality coal to
support economic and
social development in
the Asian region.
We aim to provide strong
and consistent returns
to shareholders and joint
venture partners from our
existing portfolio of mines
with upside potential from
key growth assets.
FY19 value created
– Approximately 75%
of our 2,400-strong
workforce based in
regional areas
– $189.9 million in
wages paid
– 9% of workforce
identifies as Indigenous
– Launched our
Stretch Reconciliation
Action Plan.
– $333.9 million spent
with local suppliers
– $1.83 million spent
with local Indigenous
businesses
– Supported the Narrabri
Clontarf Academy
and the Girls’ Academy
at Gunnedah.
– Exported over
– $464.9 million returned
21.6 million tonnes
of high-quality thermal
and metallurgical coal
– Japan, our key export
market, has achieved
the highest average
efficiency rate of 42%
and least pollutants for
coal-fired generation
in the world.
to shareholders
through dividends
– Total shareholder
return of 308% over
the past three years
– $1,041.7 million in
underlying earnings
before interest, tax,
depreciation and
amortisation (EBITDA).
8
Our community and social compact
Identify, develop and operate
high-quality, long-life,
lower-cost coal projects
Leave an economic and
social legacy that outlives
mining operations
Instill community trust
through responsible
environmental stewardship
and community partnerships
Promote local economic
growth and sustainability
through permanent
job creation and local
procurement
Help build local community
capacity and viability
through direct and indirect
intergenerational investment
in education, health, skills
and infrastructure
9
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions Resources & Reserves | Directors’ Report | Financial Report | Glossary | Corporate directory || |About us Our future growth and value
proposition is underpinned
by two significant, high-quality,
near-term development assets,
being Vickery, located within
our existing portfolio of mines
in the Gunnedah Coal Basin, and
Winchester South, in Queensland’s
Bowen Basin. The development
of these two projects will take
Whitehaven’s managed saleable
coal production towards 40Mtpa
over the next 10 years.
Our goal is to be
the benchmark
export coal
exposure on
the ASX
Our strategy
Whitehaven Coal has built a strong position in the Gunnedah
Coal Basin, comprising a portfolio of assets producing
high–CV thermal coal and premium SSCC both with low
impurity levels. Last year we expanded our reach into the
well-regarded Bowen Basin in Queensland, and we are on
track to nearly double total production over the next decade.
Saleable production actual and forecast
40
30
t
M
20
10
0
FY12
FY17
FY22
FY27
Note: Graph depicts saleable coal on a 100% basis. The production profile shown is fully underpinned
by Marketable Reserves for the Company’s operating mines and Vickery Project, and Measured
and Indicated Resource for the Winchester South Project. See pages 15 and 16 for full details of
Whitehaven’s Coal Resources and Reserves JORC tables and for the Competent Persons Statement.
100% of the forecast production from the Vickery Project is underpinned by the JORC Reserves
released to the ASX on 13 August 2015. 100% of the forecast production from the Winchester South
Project is underpinned by Measured and Indicated Resources released to the ASX on 25 October 2018.
The full JORC Resources report is also available on whitehavencoal.com.au. All material assumptions
underpinning the initial public reports referenced for Vickery and Winchester South continue to
apply and have not materially changed.
The coals we produce service the premium export markets of Japan,
Taiwan and Korea and we are well positioned to take advantage of the
substantial growth in coal-fired generation capacity projected in South East
Asia, predicted by the IEA to grow from 71GW in 2017 to 175GW in 2040,
requiring at least an additional 220Mtpa of coal – more than Australia’s total
2018 thermal coal exports of 208Mt – by 2040.
South East Asia Generation Capacity
W
G
800
700
600
500
400
300
200
100
0
2017
2025
2030
2035
2040
Solar
Geothermal
Wind
Bioenergy
Hydro
Nuclear
Gas
Oil
Coal
Source: IEA WEO 2018, New Policies Scenario (NPS). The NPS is one of three key scenarios
modelled by the IEA. Refer to page 28 of the 2019 Sustainability Report for details in relation
to the other scenarios.
10
Our strategy is to own and operate large, low-cost mines producing a mix of high-CV
thermal coal and premium SSCC, and to grow our share of the burgeoning market for
these products in our region.
Our framework to deliver on our strategy is focused on seven key areas.
Disciplined growth
and capital management
Towards a bigger, more
productive Whitehaven
We have invested in high-quality, large-scale, long-life assets that allow the
business to efficiently manage the cyclical nature of the commodities sector.
We expect to grow our portfolio from a managed level of approximately 22Mt
in 2019 to over 40Mt by 2030.
As some of our smaller foundation mines reach the end of their lives, our
business is oriented towards growing the scale of larger existing operations
and delivering on our key development assets being Vickery and
Winchester South.
Maintaining capital discipline and a focus on productivity gains over an
expanding production base will continue to drive returns for shareholders.
Our track record of growth and our strong development pipeline make
us an attractive employer for committed and motivated people who value
being a part of a community and achieving goals. As the largest employer
in North West NSW, we will continue to communicate the benefits of our
regional location – and that of our development site in Queensland’s Bowen
Basin – to attract talent to fuel our growth.
We are assessing and pursuing opportunities to access latent capacity in our
mines through upgrades to mobile equipment as well as fixed infrastructure.
These opportunities help us realise the full extent of the resources at our
mines and enable us to do more, with less.
The supply of high-energy, low-ash and low-sulphur coal globally is constrained
but, at the same time, demand for coal with these attributes is increasing in a
world that is becoming more carbon conscious. Our quality assets and strong
customer relationships in export markets situated within our geographic region
mean we are able to attract premium pricing for our products.
Our business produces high-quality thermal coal and SSCC. With the purchase
of Winchester South, we have set a path to materially increase our exposure
to metallurgical coal products. We can also optimise revenue by responding
to prevailing pricing spreads in the thermal and SSCC markets.
Productivity of the coal mining industry has improved over time as equipment
has become bigger and more efficient. At Whitehaven we employ large
equipment matched to the mining conditions at our operations including
ultraclass fleets at the Maules Creek mine.
The work we are undertaking with Hitachi on evaluating its Autonomous
Haulage System on the Hitachi Ultra Class trucks in use at Maules Creek
is one such example.
We take time to critically assess the strengths and weaknesses of our business.
Where acquisition opportunities that enhance our strengths or counteract
any business weaknesses present themselves, we review and act on them
appropriately. We do this in a measured and disciplined manner, as we did
with the acquisition of Winchester South.
Nurturing our
talent pipeline
Attracting and retaining
the right people
Latent capacity
Unlocking future value
Premium products
for premium markets
Leveraged to the quality
end of the spectrum
Diversification
of product range
Building a more
resilient portfolio
Innovating
Delivering the
technology dividend
Opportunistic M&A
Keeping a vigilant eye
on structural shifts
in the market
11
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions Resources & Reserves | Directors’ Report | Financial Report | Glossary | Corporate directory || |About us Our operations and growth
In FY19, Whitehaven
produced a record
23.2Mt of ROM coal
on a managed basis.
The production ramp-up at Maules
Creek continued, with ROM coal
production of 11.7Mt in FY19,
up 7% from 11.0Mt the previous
year. Narrabri ROM production
increased from 6.3Mt in FY18 to
6.4Mt in FY19. ROM coal production
from our four smaller open cut
mines – Tarrawonga, Rocglen,
Werris Creek and Sunnyside –
was 5.1Mt, slightly lower than the
5.7Mt produced in FY18. Sunnyside
is in its rehabilitation phase, and the
remaining Rocglen reserves were
fully mined out during FY19. Rocglen
entered its rehabilitation phase in
the final weeks of FY19. Further
detail on FY19 production is available
in ‘Operating and financial review’
on page 26.
We are exploring a range of
opportunities to optimise and
expand operations at our existing
mines. This includes an expansion at
Tarrawonga that will lift production
to the approved rate of 3.0Mtpa
ROM coal, supported by a more
efficient fleet along with a modest
upgrade to the mine infrastructure.
The Narrabri Stage 3 Project
meanwhile looks to extend the
life of the Narrabri underground
mine to around 2045, using
existing surface infrastructure.
In the shorter term, new equipment
to be installed in FY20 that will
allow us to more efficiently mitigate
the impact of weighting events
that can occur more frequently
in the underground environment
as depth of cover increases.
We also have three key initiatives
underway at Maules Creek,
including the ongoing evaluation
of autonomous haulage systems,
which aims to improve safety and
efficiency; the transition to in-pit
dumping which will positively impact
costs, and a proposed modification
to increase the approved ROM
coal production rate from 13Mtpa
to 16Mtpa ROM coal.
These brownfield opportunities
are complemented by our two
development projects: Winchester
South in Queensland’s Bowen Basin,
and the Vickery Extension Project
in the Gunnedah Basin. If approved,
at full capacity Winchester South
will target ROM production
of approximately 15Mtpa of
predominantly high-quality
metallurgical coal over a mine life
of around 30 years. Our Vickery
Extension Project, if approved,
will target an average of 7.2Mtpa of
a blend of metallurgical and thermal
coal over a 25-year mine life.
Our growth agenda is not just about
scale but also about diversifying
our product range and geographic
presence so we can be more agile
and responsive to market dynamics
and other externalities. Please refer
to our Sustainability Report 2019
for an analysis of the resilience of
our business in response to the
recommendations of the Financial
Stability Board’s Task Force on
Climate-related Financial Disclosures.
Total managed ROM coal production
t
M
25
20
15
10
5
0
12
FY2015
FY2016
FY2017
FY2018
FY2019
Maules Creek managed ROM coal production
t
M
12
10
8
6
4
2
0
FY2015
FY2016
FY2017
FY2018
FY2019
Narrabri managed ROM coal production
t
M
8
7
6
5
4
3
2
1
0
FY2015
FY2016
FY2017
FY2018
FY2019
Gunnedah open cuts managed ROM coal production
t
M
8
7
6
5
4
3
2
1
0
FY2015
FY2016
FY2017
FY2018
FY2019
13
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions Resources & Reserves | Directors’ Report | Financial Report | Glossary | Corporate directory || |About us Resources
& Reserves
14
Whitehaven Coal Limited – Coal Resources – August 2019
Tenement
Maules Creek
Opencut*
CL375 AUTH346
ML1701 ML1719
Narrabri North
Underground**
Narrabri South
Underground**
ML1609
EL6243
Tarrawonga
Opencut
EL5967 ML1579
ML1685 ML1693
Tarrawonga
Underground
EL5967 ML1579
ML1685 ML1693
Werris Creek
Opencut
Rocglen
Opencut
Rocglen
Underground
Vickery
Opencut
Vickery
Underground
Winchester
South
Gunnedah
Opencut
ML1563 ML1672
ML1620
ML1620
CL316 EL4699
EL5831 EL7407
EL8224 ML1464
ML1471 ML1718
MDL 183
ML1624 EL5183
CCL701
Gunnedah
Underground
ML1624 EL5183
CCL701
Bonshaw
Opencut
Ferndale
Opencut
Ferndale
Underground
EL6450 EL6587
EL7430
EL7430
Oaklands North
Opencut
EL6861
Pearl Creek
Opencut***
EPC862
Measured
Resource
(A)
Indicated
Resource
(B)
Measured +
Indicated
(A + B)
Inferred
Resource
(C)
Competent
Person
382
147
144
38
10
11
2
-
230
-
130
7
2
-
103
-
110
-
174
167
170
17
15
2
3
3
165
95
300
47
138
4
135
-
260
14
556
314
314
55
25
13
6
3
395
95
430
54
140
4
238
-
370
14
44
-
8
13
14
-
0
1
110
135
100
89
24
7
134
73
580
38
1
2
2
3
3
2
3
3
3
3
4
3
3
3
5
5
3
6
Report
Date
Mar-19
Mar-19
Mar-19
Mar-19
Apr-14
Mar-19
Mar-19
Mar-15
Jul-15
Jul-15
Oct-18
Jun-14
Jun-14
Jun-14
Jan-13
Jan-13
Jun-14
Nov-12
Total Coal Resources
1,316
1,709
3,026
1,370
1. Mal Blaik, 2. Mark Benson, 3. Benjamin Thompson, 4. Troy Turner, 5. Greg Jones, 6. Phill Sides.
*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.
15
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us Directors’ Report | Financial Report | Glossary | Corporate directory || |Resources & Reserves Whitehaven Coal Limited – Coal Reserves – August 2019
Tenement
Proved
Probable
Total
Proved
Probable
Total
Recoverable
Reserves
Marketable
Reserves
Competent
Person
Report
Date
Maules Creek
Opencut*
CL375
AUTH346
Narrabri North
Underground**
Narrabri South
Underground**
ML1609
EL6243
Tarrawonga
Opencut
EL5967 ML1579
ML1685 ML1693
Werris Creek
Opencut
ML1563 ML1672
Rocglen
Opencut
Vickery
Opencut
ML1620
CL316 EL4699
EL7407
Total Coal Reserves
477
340
120
460
310
100
102
-
26
9
-
-
5
121
10
1
-
200
457
107
121
37
10
-
200
935
98
-
22
9
-
-
439
4
114
8
1
-
178
405
410
102
114
30
10
-
178
844
1
2
2
1
1
1
1
Mar-19
Mar-19
Mar-19
Mar-19
Mar-19
Note
Mar-15
1. Doug Sillar, 2. Michael Barker.
*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.
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. Mal Blak is a senior consultant with JB Mining Services. Phillip Sides is a senior
consultant with JB Mining Services. Benjamin Thompson is a Geologist with Whitehaven Coal. Mark Benson is a
Geologist with Whitehaven Coal. Doug Sillar is a full time employee of RPM Advisory Services Pty Ltd. Michael Barker
is a full time employee of Palaris Ltd. Troy Turner is a full time employee of Xenith.
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 Australasian 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).
16
Directors’ Report
For the year ended 30 June 2019
17
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves Financial Report | Glossary | Corporate directory || |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 2019 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.
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
The directors of the Company at any time during or since the end of the financial year are:
The Hon. Mark Vaile AO
Chairman
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, CBD Energy
Limited and SmartTrans Limited and a former independent
Director on the board of Virgin Australia Holdings Limited.
Mark is currently a Director of ServCorp Limited which is
listed on the ASX (since June 2011), Stamford Land Corp
which is listed on the Singapore Stock Exchange, a Director
Trustee of HostPlus Superfund and Chairman of Palisade
Regional Infrastructure Fund.
Former ASX listed directorships in the last 3 years:
Chairman, SmartTrans Holdings Limited (April 2016–
June 2018); Director, Virgin Australia Holdings Limited
(September 2008–December 2018)
18
Directors’ Report For the year ended 30 June 2019 John Conde AO
BSc, BE (Electrical)
(Hons), MBA (Dist)
Deputy Chairman
Non-Executive Director
Appointed: 3 May 2007
Dr Julie Beeby
BSc (Hons I), PhD
(Physical Chemistry),
MBA, FAICD, FTSE
Non-Executive Director
Appointed: 17 July 2015
Paul Flynn
BComm, FCA
Managing Director
Appointed: 25 March 2013
Previously Non-Executive
Director
Appointed: 3 May 2012
Fiona Robertson
MA (Oxon), FAICD,
MAusIMM
Non-Executive Director
Appointed: 16 February
2018
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 Cooper
Energy Limited (since February 2013) and The McGrath
Foundation. He is also president of the Commonwealth
Remuneration Tribunal and a non-executive director of the
Dexus Property Group (since April 2009). He recently retired
as chairman of Bupa Australia and New Zealand. 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.
Former ASX listed directorships in the last 3 years: Nil
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 the ASX listed coal seam gas producer WestSide
Corporation Ltd. 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
was formerly the Chairman of the Queensland Electricity
Transmission Corporation Limited, and non-executive director
of Gloucester Coal Limited, OzMinerals Limited, CRC Mining,
Queensland Resources Council and Australian Coal Research.
Currently Julie is a non-executive director of Tasmanian
Networks Pty Limited.
Former ASX listed directorships in the last 3 years:
Director, Oz Minerals Limited (April 2016–May 2018)
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.
Former ASX listed directorships in the last 3 years: Nil
Fiona has a corporate finance background, with more than 20
years’ experience as CFO of ASX-listed emerging and mid-tier
mining and oil & gas companies preceded by 14 years with
Chase Manhattan Bank in London, New York and Sydney,
in corporate banking, credit risk management and mining
finance roles. Previous non-executive directorships include
ASX-listed oil and gas producer, Drillsearch Energy Limited
where she chaired the Audit & Risk Committee. Currently
Fiona is a non-executive director of ASX-listed Heron
Resources Limited (since April 2015) and MPC Kinetic Limited.
Former ASX listed directorships in the last 3 years: Nil
19
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves Financial Report | Glossary | Corporate directory || |Directors’ Report 2. Directors and Executives (cont.)
2 (a) Directors (cont.)
Lindsay Ward
BAppSc (Hons I),
GradDip (Mgt), GAICD
Non-Executive Director
Appointed : 15 February
2019
Raymond Zage
BSc Finance
Non-Executive Director
Appointed: 27 August
2013
Tony Haggarty
MComm, FAICD, CPA
Non-Executive Director
from 25 March 2013
Previously Managing
Director to 24 March 2013
Appointed: 3 May 2007
Retired: 25 October 2018
Lindsay has more than 30 years’ experience across
industries including mining, exploration, mineral processing,
ports management, rail haulage, power generation, gas
transmission, transport and logistics. Having started his
career in the mining industry, Lindsay has held a wide range
of leadership and operational roles. He is currently CEO of
Palisade Integrated Management Services, which has eight
diverse infrastructure assets under management. Prior to this,
he was the Managing Director of Dart Mining, a Melbourne-
based exploration company, and a non-executive director
of Metro Mining Limited. Lindsay also has extensive mining
experience having worked with BHP Australia Coal (Bowen
Basin – Queensland), Camberwell Coal (Hunter Valley – NSW)
and Yallourn Energy (Latrobe Valley – Victoria) in various
mine engineering and senior leadership roles including Mine
Manager and General Manager. Lindsay is a Graduate Member
of the Australian Institute of Company Directors and is an
experienced Director of both listed and unlisted companies.
Former ASX listed directorships in the last 3 years:
Director, Metro Mining Limited (October 2011–February 2019)
Raymond is the founder and CEO of Tiga Investments Pte
Ltd. He is also senior advisor to Farallon Capital Management,
L.L.C., one of the largest alternative asset managers in the
world, and a non-executive director of Toshiba Corporation,
which is listed on the Tokyo Stock Exchange, and PT Lippo
Karawaci Tbk, which is listed on the Indonesian Stock
Exchange. Raymond has been involved in investments
throughout Asia in various industries including financial
services, infrastructure, manufacturing, energy and real
estate. Previously Raymond was the Managing Director
and CEO of Farallon Capital Asia, and prior to that worked
in the investment banking division of Goldman, Sachs & Co.
in Singapore, New York and Los Angeles.
Former ASX listed directorships in the last 3 years: Nil
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.
Former ASX listed directorships in the last 3 years: Nil
20
Directors’ Report For the year ended 30 June 2019 2 (b) Senior Executives
Paul Flynn –
Managing Director and Chief
Executive Officer
Refer to details set out in
section 2(a) Directors on page 19.
Timothy Burt –
General Counsel &
Company Secretary
B.Ec, LLB (Hons) LLM
Timothy joined Whitehaven as
General Counsel and Company
Secretary in July 2009. He has
more than 20 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.
Kevin Ball –
Chief Financial Officer and
Executive General Manager –
Human Resources
BComm, CA
Appointed as Chief Financial Officer
of Whitehaven Coal in October
2013, Kevin Ball has over 25 years’
experience working in the mineral
and energy industry across coal,
oil and gas and in complex
consulting practices.
A finance graduate of the
University of New South Wales,
Kevin is a Chartered Accountant
having spent 11 years with Ernst
& Young at the commencement
of his career predominantly
in EY’s natural resources group
and has a graduate Diploma in
Geoscience (Mineral Economics)
from Macquarie University.
21
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves Financial Report | Glossary | Corporate directory || |Directors’ Report 2. Directors and Executives (cont.)
2 (b) Senior Executives (cont.)
Scott Knights –
Executive General Manager –
Marketing and Logistics
BEcons (Hons)
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 25 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 –
Project Delivery
BE (Civil-H1), M Eng Science, MBA,
Fellow IE Aust, C P Eng., M AIMM
Brian was appointed Executive
General Manager – Project Delivery
in June 2012.
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 of circa $2.8 billion.
Jamie Frankcombe –
Chief Operating Officer
BE (Mining), MBA (Technology)
Jamie was appointed Executive
General Manager – Operations
in February 2013 and his title
amended to Chief Operating
Officer in June 2018.
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.
22
Directors’ Report For the year ended 30 June 2019 Michael Van Maanen –
Executive General Manager –
Corporate and External Affairs
BA (Hons)
Michael has nearly 20 years
of experience across corporate
communications and public policy
roles in both the government
and private sectors. He was
appointed Executive General
Manager Corporate and External
Affairs in May 2018. Prior to
joining Whitehaven, Michael was
a founding Partner of Newgate
Communications and led the firm’s
mining and resources practice
group. Michael was previously a
ministerial adviser in the Howard
Government and worked in a
range of national security policy
roles for the Departments of the
Prime Minister and Cabinet, Foreign
Affairs and Trade and Defence.
23
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves Financial Report | Glossary | Corporate directory || |Directors’ Report 2. Directors and Executives (cont.)
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:
Mark Vaile
John Conde
Julie Beeby
Paul Flynn1
Fiona Robertson
Lindsay Ward
Ray Zage
Ordinary shares
1,509,317
708,620
55,000
1,454,327
21,560
-
-
1 Mr Flynn held 2,608,430 options issued by the Company 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:
Directors’
Meetings
Audit & Risk
Management
Committee
Meetings
Remuneration
Committee
Meetings
Health, Safety,
Environment
& Community
Committee
Meetings
B
12
12
12
12
4
12
5
11
A
6
6
-
-
2
6
-
-
B
6
6
-
-
2
6
-
-
A
3
3
-
-
-
2
1
-
B
3
3
-
-
-
2
1
-
A
3
-
4
-
1
3
1
-
B
3
-
4
-
1
3
1
-
Director
Mark Vaile
John Conde
Julie Beeby
Paul Flynn
Tony Haggarty
Fiona Robertson
Lindsay Ward
Ray Zage
A
12
12
12
12
4
12
5
12
Governance &
Nominations
Committee
Meetings
A
B
1
1
1
-
-
-
-
-
1
1
1
-
-
-
-
-
A – Number of meetings held during the time the Director held office during the year
B – Number of meetings attended
24
Directors’ Report For the year ended 30 June 2019
3. Other
3 (a) Dividends
Paid during the year
Dividends of $464,854,000 were paid to shareholders
during the year ended 30 June 2019 (2018: distribution
of $326,936,000 comprising a dividend of $188,052,000
and a capital return of $138,884,000).
Declared after end of year
On 15 August 2019 the Directors declared a dividend
of 30 cents per share totalling $298 million to be paid
on 19 September 2019 and be comprised of an ordinary
dividend of 13 cents, franked to fifty percent and a special
dividend of 17 cents, unfranked.
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 7,788,735 unissued
ordinary shares of the Company under options. Refer to
note 5.5 of the financial statements for further details of
the options outstanding.
3 (c)
Indemnification and insurance
of officers
Indemnification
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 that the
Company will meet the full amount of any such liabilities,
including costs and expenses.
Insurance premiums
During the financial year the Company has paid
premiums in respect of directors’ and officers’ liability
and legal expenses insurance contracts. Such insurance
contracts insure 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.
3 (e) Rounding
The Company is of a kind referred to in ASIC
Corporations Instrument 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.
25
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves Financial Report | Glossary | Corporate directory || |Directors’ Report 4. Operating and financial review
Financial headlines
– Net profit after tax (“NPAT”) increased to $527.9m.
– Underlying EBITDA increased to $1,041.7m.
– Cash generated from operations increased to $964.1m.
– Net debt of $161.6m at 30 June 2019 and gearing reduced to 4%.
– The net profit after tax result was impacted by the following two significant items:
– During the year ended 30 June 2019, the Group transitioned its rehabilitation provision calculations for most sites
to the latest rehabilitation cost calculator available from resource regulators. This resulted in a pre-tax charge to
the income statement of $40.5 million. See note 2.2 of this financial report for further detail.
– Accelerated depreciation adjustment to write down the carrying value of existing longwall roof support legs,
which will be replaced in H1 FY2020 as part of the next longwall change out. See note 2.2 of this financial report
for further detail.
The following table summarises the key reconciling items between the Group’s Underlying EBITDA and its statutory
profit before tax.
Whitehaven Coal Limited – Consolidated
Revenue
Net profit after tax before significant items
Significant items after tax (refer to note 2.2 Significant items)
Net profit after tax
Underlying EBITDA
Rehabilitation expense (refer to note 2.2 Significant items)
Corporate development costs
Statutory EBITDA
Net interest expense (refer to note 5.2 Finance income and expense)
Other financial expenses
Depreciation and amortisation2
Profit before tax
FY2019
$ million
2,487.9
FY20181
$ million
2,257.4
564.9
(37.0)
527.9
1,041.7
(40.5)
-
524.5
-
524.5
1,011.9
-
(9.7)
1,001.2
1,002.2
(32.9)
(8.0)
(224.4)
735.9
(33.1)
(7.1)
(203.1)
758.9
1 The comparative period for FY2018 has been restated to give effect to the change in accounting policies. See note 1.5 of this financial report for details on
this change.
2
Includes $12.3 million of accelerated depreciation recognised in connection with the replacement of the existing hydraulic cylinders with higher capacity
hydraulic cylinders at the Narrabri mine. This has been disclosed as a significant item in Note 2.2 of this financial report.
Review of financial performance
Whitehaven delivered a record NPAT before significant
items of $564.9m representing an increase of $40.4m
compared to $524.5m in FY2018. The strong FY2019
NPAT result was underpinned by Underlying EBITDA of
$1,041.7 million, an increase of $29.8 million compared to
$1,011.9 million in FY2018.
The improvement in the Underlying EBITDA result was
driven by an increase in the EBITDA margin on sales
of produced coal to $66/t in FY2019, up on the $63/t
margin (restated) achieved in FY2018. This improvement
reflects the benefits of higher realised coal prices
experienced during the year, particularly in respect of
high calorific value thermal coal which represented 80%
of total thermal coal sales volume in FY2019 partially
offset by an increase in costs.
26
The key factors that contributed to the FY2019 NPAT
before significant items result for the year include:
– Strong safety performance.
– Gross revenue increased to $2,487.9m in FY2019 from
$2,257.4m in FY2018. The increase was driven by the
increase in A$ realised prices to an average of A$145/t
in FY2019 from A$130/t in FY2018. This was partially
offset by a small decrease in total sales volumes
(including purchased coal) from 17.3Mt in FY2018 to
17.2Mt in FY2019.
Directors’ Report For the year ended 30 June 2019 – The key drivers of A$ realised prices during the
Structural factors
period were:
– The Newcastle GlobalCoal Index price averaged
US$99/t for high quality thermal coal in FY2019
which was $1/t below the average recorded in
FY2018, however Whitehaven made the decision
to increase its production of high quality thermal
coal which saw Whitehaven achieve an average
realised price on thermal sales of US$100/t in
FY2019, $2/t above the average realised price
achieved in FY2018.
– The high quality of thermal coal from the Maules
Creek mine achieved both quality and energy
premiums relative to the Newcastle GlobalCoal
Index price during the period. Sales of Maules Creek
coal achieved an average premium of 9% above the
GlobalCoal index price for the year.
– An increase in the proportion of metallurgical
coal sales from 17% in FY2018 to 19% in FY2019
was underpinned by increased production of
metallurgical coal at Maules Creek.
– The Group realised a US$4/t premium on sales
of metallurgical coal during FY2019 relative to the
average index price. The index averaged US$115/t
in FY2019 or US$5/t below the average price
in FY2018.
– A weaker AUD – the average AUD:USD exchange
rate decreased to 0.72 in FY2019 from an average
of 0.78 in FY2018.
– The impact of the depth of cover at Narrabri was
fully felt in the Group results for FY2019. Deeper
working impacted both development and longwall
production rates while also requiring higher primary
and secondary support intensity. Production at
Narrabri was strong at the end of FY2019 and
there are encouraging signs that the strategies
and actions undertaken over the last 12–24 months
have positively impacted performance.
– Higher strip ratio at Tarrawonga in line with the
natural progression of this mine.
– FOB costs per tonne at the Maules Creek mine
have increased as the pit continues to be expanded
to facilitate optimised mining conditions for the
long term. FOB costs per tonne are expected to fall
in the medium term as haul distances and elevations
benefit from increased in-pit dumping as the mine
matures and the introduction of autonomous
haulage systems.
– Increased demurrage and under-utilised logistics
costs arose due to contracted capacity volumes
being above production volumes at various stages
throughout FY2019. This was also impacted by the
phasing of production over the course of the year,
particularly at the Maules Creek and Narrabri mines.
This impact is expected to moderate as production
levels return to more consistent levels over the near
to medium term.
– FOB costs of A$67/t in FY2019 have increased
Market factors
from A$58/t in FY2018 (restated for AASB 16 Leases
impact) and were impacted by strategic, structural
and market factors. These include:
Strategic factors
– An increased focus on high quality thermal
product due to the price spreads between high
quality thermal coal and lower quality thermal coal.
This has resulted in increased washing and lower
yields relative to the prior year at Maules Creek.
– An increase of approximately 16% in average crude
oil prices in A$ terms fed into the cost of diesel
used in production and transportation.
– The strength in coal prices combined with a number
of large infrastructure projects has increased the
competition for skilled labour resources. This has
had some impact on the ability to fill roles in a
timely manner which has had some impact on
operating productivity during FY2019.
Whitehaven’s portfolio is expected to strengthen further
in the coming years with development of the Vickery and
Winchester South projects.
27
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves Financial Report | Glossary | Corporate directory || |Directors’ Report 4. Operating and financial review (cont.)
Cash flows & capital management
Cash Flow summary
Net cash from operating activities
Investing cash flows
Net free cash flow
Financing cash flows
Cash at the beginning of the period
Cash at the end of the period
Capital management
Net debt2
Undrawn syndicated facility
Gearing ratio2,3 (%)
FY2019
$ million
FY20181
$ million
916.4
(193.8)
722.6
(714.9)
111.8
119.5
892.1
(384.9)
507.2
(482.5)
87.1
111.8
30 June 2019
30 June 20181
161.6
840.0
4%
270.4
725.0
7%
1 The comparative period for FY2018 has been restated to give effect to the change in accounting policies. See note 1.5 of this financial report for details on
this change.
2 Calculated in accordance with the senior facility covenant requirements and therefore excludes lease liabilities recognised for the first time upon adoption
of AASB 16 Leases of $134,111,000 (2018: $205,874,000)
3 Net Debt/(Net Debt plus Equity)
Whitehaven holds a strong capital base to maintain
investor, creditor and debt market confidence and ensure
the business is well positioned to support attractive
future growth opportunities.
Cash flow and capital management
commentary
Operating cash flows of $916.4m in FY2019 increased by
3% compared to FY2018. The increase in operating cash
flows is largely due to the growth in Underlying EBITDA
to $1,041.7 million in FY2019 and reflects the higher
realised coal prices achieved during FY2019 relative
to FY2018.
The increase in realised thermal and metallurgical coal
prices in FY2019 is due to increased price premia relative
to the prevailing Newcastle GlobalCoal Index price for
thermal coal and the index price for semi soft coking
coal. This is principally due to the decision to increase
the production of high quality thermal coal to take
advantage of the increasing demand for high energy,
low ash thermal coal and the growing market awareness
of the benefits of the Maules Creek metallurgical coals.
Interest payments were lower as loans and borrowings
were reduced to $415.3m at 30 June 2019 from $588.1m
at 30 June 2018.
Investing cash outflows of $193.8m in the year ended
30 June 2019 were $191.1 million lower than the $384.9
million outflow in FY2018. This was primarily due to the
payment of purchase consideration in FY2018 for the
Winchester South Project and Idemitsu’s 30% interest
in Tarrawonga. The FY2019 investing cash outflows
include deferred consideration amounts paid for the
above acquisitions, spend on the Winchester South
Project in Queensland and expenditure to progress
the Environmental Impact Statement required for
Government approval of an expanded Vickery mine
(10Mtpa). Growth capital was also allocated to the
Tarrawonga expansion project to increase ROM coal
production to 3.0Mtpa. Throughout the cycle Whitehaven
has continued to allocate sustaining capital to each of
its mines to maintain safe and productive operations.
Net debt at 30 June 2019 was $161.6m, a decrease of
$108.8m from 30 June 2018. Gearing also decreased to
4% at 30 June 2019 from a level of 7% as at 30 June 2018.
The decrease in net debt was driven by the strong
operating cash flow performance during the year. This
has facilitated repayments of the senior facility, leases
and the ECA facility totalling $630.0m. This was offset
by a drawdown of $410.0m during the period.
Undrawn capacity of $840.0m under the senior bank
facility existed at 30 June 2019.
28
Directors’ Report For the year ended 30 June 2019 The strength and resilience of Whitehaven’s cash flow
generation has driven strong returns to shareholders in
FY2019. A final dividend of 27 cents per share was paid in
respect of FY2018 and resulted in a total cash distribution
to shareholders of $268 million in September 2018.
An interim dividend in respect of FY2019 of 20 cents
per share, $198 million in total, was paid in March 2019.
As a result of the strength of Whitehaven’s balance
sheet, its scale of operations, and its improved earnings
and cash flow generation, Whitehaven is well placed to
both expand operations from its existing portfolio of
opportunities and to take advantage of external growth
opportunities that may arise.
Consolidated equity production, sales and coal stocks
Whitehaven Total (000t)
ROM Coal Production
Saleable Coal Production
Sales of Produced Coal
Sales of Purchased Coal
Total Coal Sales
Coal Stocks at Year End
FY2019
FY2018
Movement
18,358
15,817
16,017 1
1,615
17,631
2,754
17,727
16,160
16,109 1
1,256
17,365
2,621
4%
(2%)
(1%)
29%
2%
5%
1
Includes Sunnyside sales of produced coal of 416 kt (2018: 100 kt)
Significant highlights for FY2019 include:
– Record ROM coal production of 18.4Mt, up 4% on pcp.
– A strong finish to the year at both Narrabri and Maules Creek enabled ROM coal production guidance to
be exceeded.
– Coal sales of 16.0Mt of produced coal and 17.6Mt including purchased coal for the year.
– Increased premiums relative to the prevailing index price for both thermal and metallurgical coal.
– High coal inventories at both Maules Creek and Narrabri will support sales during the September quarter of FY2020.
29
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves Financial Report | Glossary | Corporate directory || |Directors’ Report 4. Operating and financial review (cont.)
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
2019 performance
The safety outcome for the Group improved over FY2019 with the TRIFR declining from 6.9 in FY2018 to 6.2 in FY2019.
The Group TRIFR remains well below the NSW coal mining average of 14.7.
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)
ROM Coal Production
Saleable Coal Production
Sales of Produced Coal
Coal Stocks at Year End
FY2019
FY2018
Movement
11,720
9,200
9,309
1,160
10,953
9,664
9,641
646
7%
(5%)
(3%)
80%
Maules Creek ROM coal production increased from 11.0Mt in FY2018 to 11.7Mt in FY2019. The reduction in saleable coal
production in FY2019 relative to the results of FY2018 reflects the phasing of ROM coal production towards the back
end of FY2019 as well as the yield loss associated with producing a higher quality thermal coal than was produced
in FY2018. The phasing of ROM coal production in FY2019 resulted in significant ROM coal inventories being held at
30 June 2019. This coal will be processed during the first quarter of FY2020 and support coal sales during this period.
Management remains focussed on continuing to expand the open cut pit at Maules Creek to facilitate optimised mining
conditions for the long term. This phase of the mine’s life is characterised by out of pit dumping and a resulting increase
in haul distances and haul elevation. These activities will underpin the continued expansion in ROM production towards
the approved level of 13Mt per annum and importantly facilitate the consistent delivery of this production over the
course of each year.
The marketing strategy was refined in FY2019 to focus upon three key products – a very low ash semi soft coking
coal (SSCC), a low ash SSCC and a low ash, high energy thermal coal. The thermal coal product is expected to continue
commanding significant price premiums relative to the Newcastle GlobalCoal Index price due to the combination of low
ash (~10%) and high calorific value delivered to customers. This strategy has contributed to improve margins despite the
increased costs associated with increased washing and lower product yields. This strategy has also streamlined certain
activities at the mine by reducing the number of working stockpiles and simplified operations.
SSCC sales for the year of 2.3Mt represented 25% of total sales from the mine. With the premiums available on thermal
coal combined with prevailing spot prices for SSCC, there was little incentive to produce and sell SSCC on the spot
market. In the longer term we expect to increase sales of SSCC from the mine to about 50% of total production.
30
Directors’ Report For the year ended 30 June 2019 Narrabri
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)
ROM Coal Production
Saleable Coal Production
Sales of Produced Coal
Coal Stocks at Year End
FY2019
FY2018
Movement
6,447
5,630
5,705
1,018
6,289
5,840
5,760
639
3%
(4%)
(1%)
59%
Narrabri ROM production increased marginally from 6.3Mt in FY2018 to 6.4Mt in FY2019. A strong June quarter
ensured that revised full year ROM production guidance was exceeded. The June quarter ROM production result
was encouraging given the longwall negotiated an extensive fault zone during this period.
To reduce the impact of weighting events, Whitehaven has employed a number of strategies which are having a positive
impact. The more intensive primary and secondary support regime is a key component of this and has become the
standard for new development in the working area of the mine that exceeds 250 metres depth of cover. The production
rates achieved during the June quarter provide encouragement that the strategies adopted to mitigate the impacts of
increased depth are having a positive impact.
Whitehaven has ordered a new set of larger capacity hydraulic cylinders to further increase the strength of longwall
face support. The new cylinders are approximately 30% stronger than the current hydraulic cylinders. The new cylinders
will be installed into the longwall roof supports at the longwall change-out which is due to occur in the December
quarter of 2019.
Open cut mines (excluding the Maules Creek mine)
Ownership: Werris Creek Whitehaven 100%; Rocglen Whitehaven 100%; Tarrawonga Whitehaven 100%;
Sunnyside Whitehaven 100%
Open Cuts 100% (000t)
ROM Coal Production
Saleable Coal Production
Sales of Produced Coal
Coal Stocks at Year End
FY2019
FY2018
Movement
5,055
4,977
4,979
1,172
5,683
5,377
5,321
1,689
(11%)
(7%)
(6%)
(31%)
ROM and saleable coal production from the open cuts in FY2019 was 5.1Mt and 5.0Mt respectively. While production
in FY2019 was lower when compared to FY2018 (ROM of 5.7Mt and saleable 5.4Mt) it was in line with planned
production for the year. Inventories at Rocglen and Tarrawonga were drawn down to take advantage of the higher
coal price environment.
During FY2019 the Board approved an expansion at Tarrawonga which will increase ROM coal production in FY2020
to its fully approved level of 3.0Mtpa. The expansion requires the purchase of a larger scale, more efficient mining fleet
that is to be funded via asset financing facilities. The fleet will arrive and be mobilised during the first half of FY2020.
Increasing the annual ROM production rate enhances the cash flows from the mine over the near to medium term.
The Gunnedah open cuts have provided a stable platform over the last five years which has assisted Whitehaven
to develop both the Narrabri mine and the Maules Creek mine. Sunnyside is in its rehabilitation phase and the
remaining Rocglen reserves were fully mined out during FY2019. Rocglen entered the rehabilitation phase in the
final weeks of FY2019.
The Sunnyside and Rocglen rehabilitation programmes are important as they will provide stakeholders with an example
of contemporary mine site rehabilitation.
31
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves Financial Report | Glossary | Corporate directory || |Directors’ Report 4. Operating and financial review (cont.)
Development projects
Vickery
Winchester South
Ownership: Whitehaven 100%
Ownership: Whitehaven 100%
In August 2018 Whitehaven lodged the Vickery Extension
Project Environmental Impact Statement (EIS) with the
Department of Department of Planning, Industry and
Environment (DPIE). The DPIE reviewed the EIS and
it was placed on public display in September 2018 and
available for public inspection and comment for six weeks
until late October 2018.
Whitehaven completed its acquisition of the Winchester
South project in the June 2018 quarter and it has
quickly moved the project along the development path.
A project director with extensive coal mining experience
and a technical team have been appointed to take the
project through the Queensland and Federal Government
approval processes.
In September 2018, the NSW Minister for Planning
referred the Project to the NSW Independent Planning
Commission (IPC) which subsequently formed a panel
of three commissioners. The DPIE prepared an Issues
Paper for consideration by the IPC panel and the IPC
held a public hearing during February 2019 in Boggabri
and in Gunnedah. The IPC, as well as holding the two
February 2019 town hall style meetings, accepted written
submissions. More than 75% of written submissions
supported Whitehaven’s Vickery Extension Project.
Following receipt of the DPIE paper, the written
responses and the two town hall style meetings, the IPC
released its Issues Report in April 2019. Whitehaven is
progressively working through the IPC’s issues report and
expects to complete its work shortly. Once Whitehaven
has responded satisfactorily, the DPIE will prepare
a whole-of-government report on the Project for the
IPC’s final review and to inform its determination.
The New South Wales Government has a stated
objective to complete assessments in less than 500
days. Whitehaven currently expects to receive the IPC’s
determination early in calendar year 2020 and that the
project will be approved given strong local community
support for the Project and the fact that it offers
significant additional economic and community benefits
compared to the already approved Vickery Coal Project.
In June, Whitehaven commenced site works in relation
to the approved 4.5mtpa Vickery Coal Project. This
site work is now complete. A drilling programme has
commenced to determine the line of oxidation in relation
to the first coal seam to be exposed. This drilling will be
used to refine the position of the box cut for the Vickery
open cut mine.
Earlier this calendar year, ground work necessary
to prepare the environmental impact statement
commenced (including ecological and baseline data
collection studies).
Following receipt and assessment of the technical data
on the project, Whitehaven released its JORC Resources
for Winchester South to the ASX on 25 October 2018
(available at www.whitehavencoal.com.au). The JORC
Resources for the project were 530Mt. The Resources
calculation from 25 October has also seen a large
increase in the combined total of Measured and Indicated
Categories from 277Mt to 430Mt.
As part of the evaluation process, and for use in project
planning, Whitehaven completed a comprehensive drill
programme in the June 2019 quarter. The programme
was designed to confirm coal quality data specifically in
relation to metallurgical coal qualities. The data from the
drilling will assist Whitehaven to design the CHPP and
other associated infrastructure while also further defining
the JORC Resources and ultimately the Reserves of the
project. Drill core from the drilling programme is being
tested with the results due in H1 FY2020.
Early in CY2019 an Initial Advice Statement was lodged
with the Queensland Coordinator-General seeking
a Coordinated Project declaration under the State
Development and Public Works Organisation Act 1971.
A significant milestone was achieved for the project
during the June quarter with the declaration of the
project as a Coordinated Project by the Queensland
Coordinator-General. The declaration paves the way
for a whole-of-government assessment of the project
by way of an environmental impact statement. For
full details see the ASX Release dated 18 April 2019.
Another round of drilling will commence in early FY2020
with the aim of enhancing the geological confidence of
the project ahead of detailed mine planning and project
optimisation. Detailed mine planning for the project
continues ahead of Whitehaven determining a JORC
Reserve which is scheduled for later in the CY2019.
32
Directors’ Report For the year ended 30 June 2019 Infrastructure
In order to deliver our products to market, Whitehaven
contracts rail track capacity, rail haulage and port
capacity with each of the providers of these services.
As production has grown and with imminent growth
from Vickery, Whitehaven’s future requirement for
infrastructure will make Whitehaven one of the largest
infrastructure users in the New South Wales rail and
port systems.
Rail Track
Whitehaven contracts rail capacity with the Australian
Rail Track Corporation (ARTC). The capacity framework
that governs this contract is into its second term. We
continue to work with ARTC to expand effective capacity
within the Gunnedah Basin without requiring additional
rail infrastructure through improved operating efficiencies
and investment in new information technology systems.
The objective of this work is to improve supply chain
productivity and increase train path availability.
Preliminary negotiations have begun on obtaining access
to the Goonyella rail network for the Winchester South
project. The rail network is owned by Aurizon.
Rail Haulage
We have rail haulage contracts with each of the major
rail haulage providers, Pacific National and Aurizon. These
contracts have an expiry date in 2026. They provide for
the haulage of all currently projected expansion tonnes
before Vickery. We are 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. This supports the planned increases in our
managed production levels, whilst minimising fixed
cost exposure.
Port Capacity
We maintain contracts at the Port of Newcastle with
both terminal operators, Newcastle Coal Infrastructure
Group and Port Waratah Coal Services that support
all planned shipments. To provide for the forecast
production ramp up over the next five years we will
secure surplus capacity available at the port. This is
sufficient to allow for both short-term surge and
long-term annual shipping requirements.
Early talks have commenced with a number of coal
producers who may have excess port capacity with
the aim of securing port capacity for the Winchester
South Project.
Events subsequent to reporting date
In the interval between the end of the financial year
and the date of this report there has not arisen any item,
transaction or event of a material and unusual nature
likely, in the opinion of the directors of the Company,
to affect significantly the operations of the Group, the
results of those operations, or the state of affairs of the
Group, in future financial years, other than the following:
Subsequent to the end of the financial period, the
Directors have proposed a 30 cent per share dividend
to be paid on 19 September 2019 and be comprised of
an ordinary dividend of 13 cents, franked to fifty percent
and a special dividend of 17 cents, unfranked.
Outlook and likely developments
Thermal coal markets and prices have softened due to
a number of factors – low seaborne LNG prices, Chinese
import restrictions and the negative impact upon global
GDP from trade tensions between the United States
and China.
The decline in gas prices in Europe from US$9/GJ in
September 2018 to US$3/GJ in June 2019 has led to
power generators switching from coal to gas in those
markets where this is possible, causing demand for
coal to fall in the region.
While power demand in China continues to grow,
increased rainfall has led to more power generated
by hydro-electricity combined with increased installed
wind and solar capacity and increased coal fired power
generation in central and western parts of China. With
growing domestic coal production and reduced demand
from the coastal regions, coal imports declined.
Whitehaven’s target markets for thermal coal of Japan,
Taiwan, Korea and the broader South-East Asian region
continue to exhibit increasing demand for high energy,
low ash thermal coal. While Whitehaven does not export
thermal coal into the Chinese market, Chinese import
customs clearance delays and the negative sentiment
arising from trade tensions between the United States
and China has contributed to weaker thermal coal index
prices during 2019. Central banking authorities are acting
to stimulate economic activity.
With the benefit of both good weather and good
prices, seaborne coal supply from Indonesia, Russia and
Australia has increased year on year. With the softening
of prices in the first half of 2019 the market is expected to
rebalance as high cost producers moderate production.
Exports from swing producers in the United States and
Colombia have declined given the price environment.
CRU estimates that exports from those two countries
will fall by 21Mt and 5Mt respectively in 2019. Over the
course of the period since mid-2016, there has been little
new large scale production added to global thermal coal
supply. With seaborne LNG trading below breakeven
levels for new supply, some rebalancing can be expected
to occur in this market as well.
The short term outlook for metallurgical coal has
weakened in the face of lower margins in steelmaking.
However, the longer term outlook remains healthy with
steel production holding up well in several countries
(India, China and Japan) which are dependent upon
the seaborne market to meet coking coal needs.
33
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves Financial Report | Glossary | Corporate directory || |Directors’ Report 4. Operating and financial review (cont.)
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:
Volatility in coal prices
The Company’s future financial performance will be
impacted by future coal prices. Factors which affect
coal prices include the outcome of future sales contract
negotiations, general economic activity, industrial
production levels, changes in foreign exchange rates,
changes in coal demand, changes in the supply of
seaborne coal, changes in international freight rates
and the cost of substitutes for coal. The Company
does not currently hedge against coal price volatility.
Foreign currency risk
As the Company’s sales are predominately denominated
in US dollars, adverse fluctuations in the US$/A$
exchange rate may negatively impact the Group’s
financial position.
The Company uses forward exchange contracts to
hedge some of this currency risk in accordance with
a hedging policy approved by the Board of Directors.
Acquisitions and commercial transactions
Acquisitions and commercial transactions undertaken
with the objective of growing the Company’s portfolio of
assets are subject to a number of risks which may impact
the ability to deliver anticipated value. Risks associated
with acquisitions include:
– operational performance of acquired assets not
meeting expectations;
Capital requirement risk
Although Whitehaven is currently in a strong liquidity
position, there is a risk that insufficient liquidity or the
inability to access funding on acceptable terms may
impact growth opportunities (such as the development
of new projects and/or mergers and acquisitions) and
ongoing operations.
Whitehaven manages liquidity risk by holding a prudent
level of available cash and maintaining adequate
committed credit facilities which have been provided
by a diverse panel of Australian and international banks.
Whitehaven had $959.5 million in liquidity (cash and
undrawn facilities) available as at 30 June 2019.
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.
Operating risks
The Company’s coal mining operations are subject to
operating risks that could 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 weather and natural disasters,
unexpected maintenance or technical problems, failure of
key equipment, higher than expected rehabilitation costs,
industrial action and higher than expected labour costs.
Geological uncertainty is also an inherent operational risk
which could result in pit wall failures or rock falls, mine
collapse, cave-ins or other failures to mine infrastructure.
The Company has in place a framework for the
management of operational risks and a comprehensive
group insurance program which provides insurance
coverage for a number of these operating risks.
– anticipated synergies or cost savings being delayed or
Water security
not being achieved;
– adverse market reaction to proposed transactions; and
– the imposition of unfavourable or unforeseen
conditions, obligations or liabilities.
Whitehaven’s commercial processes are designed to
reduce the likelihood of these risks materialising as a
result of a commercial transaction.
Water is critical to Whitehaven’s mining operations as
it is used for various purposes including dust suppression
and coal washing. Whitehaven’s ability to access water
may be impacted by a number of factors, including
drought, changes in government policy and regulation
and scarcity of supply. The inability to access sufficient
water may negatively impact on Whitehaven’s costs,
future production and financial performance.
Whitehaven regularly monitors the water balance at each
of its sites and investigates opportunities to minimise
water usage and secure alternate, reliable water sources
to build resilience against water availability risks.
34
Directors’ Report For the year ended 30 June 2019 Infrastructure risks
Environment and safety risks and licence to operate
Coal produced from Whitehaven’s mining operations
is transported to customers by a combination of rail
and ship. A number of factors could disrupt these
transport services, including a failure of infrastructure
providers to increase capacity in order to meet future
export requirements.
Rail and port capacity is obtained predominantly
through long-term contract arrangements which
include take-or-pay provisions which require payments
to be made irrespective of whether the service is used.
In the event utilised capacity is below contracted
capacity, there is a risk Whitehaven will be required
to pay take-or-pay charges for capacity which is not
used. Whitehaven seeks to align these take-or-pay
infrastructure obligations with the Company’s
forecasted future production.
Geology risks
There are inherent risks associated with estimating coal
Resources and Reserves, including subjective judgements
and determinations as to coal quality, geological
conditions, tonnage and strip ratio. The Company’s
Resource and Reserve estimates are determined by
suitably qualified competent persons in accordance
with the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves
(JORC Code).
Cyber risk
Whitehaven’s operations are supported by a robust
information technology security framework and
back-up data infrastructure. However, computer viruses,
unauthorised access, cyber-attack and other similar
disruptions may threaten the security of information
and impact operational systems. The Company manages
this risk by continuing to invest in systems to prevent
such attacks and undertaking staff training programmes.
Counterparty risk
The Company deals with a number of counterparties,
including joint venture partners, suppliers and customers.
Counterparty risks include:
– Non-supply or changes to the quality of key inputs
which may impact costs and production at operations;
– Failure to reach agreement with joint venture partners
which could impact the Company’s ability to optimise
value from its projects; and
– Failure of customers to perform against long-term
take-or-pay agreements.
Counterparty risk is assessed prior to entry into any new
arrangements and, if necessary, appropriate risk control
mechanisms are put in place. Whitehaven proactively
engages with its counterparties to manage instances of
non-supply and quality control and to ensure alignment
of expectations.
A range of health, safety and environmental risks exist
with coal mining activities. Accidents, environmental
incidents and real or perceived threats to the
environment or the amenity of local communities
could result in a loss of the Company’s social licence to
operate leading to delays, disruption or the shut-down
of operations. Potential environment and safety risks
include equipment failure, human errors in underground
operations, vehicle and mining equipment interactions
in open cut operations, roof fall hazards in underground
operations and spontaneous combustion risks.
The Company engages with a number of different
stakeholders in the communities within which it operates.
Stakeholder related risks include:
– the requirement to comply with the Native Title
Act 1993 (Cth) which can delay the grant of mining
tenements and impact the timing of exploration,
development and production operations;
– the ability to reach agreement with local landholders
in relation to acquisition and/or access terms which
may delay the timing of project development; and
– notwithstanding the contributions made to the
communities within which the Company operates,
local communities may become dissatisfied with the
impact of operations or oppose new development
projects. There is also the possibility of anti-coal
activism targeted towards the Company’s projects.
Whitehaven has a comprehensive environmental,
health and safety management system to mitigate
the risk of incidents and to ensure compliance with
environmental and safety laws. The Company also
has a dedicated community relations team that engage
with local communities to ensure that community
issues are understood and addressed appropriately.
Further details in relation to how the Company engages
effectively with the communities in which we operate
and steps which the Company takes to maintain its social
licence to operate will be provided in the Company’s
2019 Sustainability Report to be released later in the year.
Environmental regulation
The coal sector is subject to a broad range of
environmental laws, regulations and standards
including in relation to greenhouse gas emissions.
Evolving regulation and standards could result
in increased costs, regulatory action, litigation or,
in extreme cases, threaten the viability of an operation.
Whitehaven actively monitors legislative and regulatory
developments and engages appropriately with legislative
and regulatory bodies to manage this risk.
35
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves Financial Report | Glossary | Corporate directory || |Directors’ Report 4. Operating and financial review (cont.)
Risks relating to Whitehaven’s future prospects (cont.)
Climate change risk
The physical and non-physical impacts of climate change
may affect the Company’s assets, production and the
coal markets where its high quality coal products are
sold. These impacts may include severity and frequency
of weather patterns, policy and regulatory change and
coal demand responses. Further details in relation to
climate change risks will be provided in the Company’s
2019 Sustainability Report to be released later this year.
The IEA has forecast under its New Policies Scenario
(its central scenario, which assumes that all of the
Nationally Determined Commitments (NDCs) as
provided by countries after the 2015 Paris COP21
meeting are met in full) that global coal demand will
continue to grow until at least 2040 – with particularly
strong demand in the broad Asian region, Whitehaven’s
key export market. The IEA regularly makes projections
about world coal demand based on various future
scenarios for energy development. The New Policies
Scenario is the IEA’s central scenario in its most recent
World Energy Outlook (2018). Alternate scenarios
include the Current Policies Scenario (highest projected
coal usage) and the 450 Scenario (lowest projected
coal usage). Further details are available at:
https://webstore.iea.org/world-energy-outlook.
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 2019.
It is set out on page 61.
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 or payable 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 compliance services
Due diligence services
Other non-audit services
36
Consolidated
2019
Consolidated
2018
$
$
125,000
-
69,790
194,790
63,978
836,881
71,226
972,085
Directors’ Report For the year ended 30 June 2019 Remuneration Report
(Audited)
Remuneration outcomes for FY2019
The cost and production pressures experienced during
the year have led to reduced STI and LTI outcomes for
Executive KMP. STI awards for performance during the
year were assessed at between 58% and 64% of the
possible award.
The LTI Cost Hurdle Award that was tested in the year
failed to achieve the gateway target and lapsed. The LTI
Relative Total Shareholder Return (TSR) award vested
in full as a consequence of the substantial shareholder
returns that have been delivered over the three and four
year performance test periods. Further details of the LTI
awards that were tested in 2019 are set out later in this
report at Section 4.2.
Changes to remuneration framework
for FY2020
The Board continues to consider Executive KMP
remuneration in the context of our strategy, relevant
benchmarks and retaining and appropriately rewarding
our leadership team.
Changes in fixed remuneration for Executive KMP
in FY2020 will be capped at 2% with one exception
(detailed later).
Details of the upcoming FY2020 LTI grant and hurdles for
the CEO will be included in the Notice for our upcoming
AGM (at which shareholders will be asked to approve
the grant).
Non-executive Directors fees
There was no increase to Non-executive Directors fees
in the year, nor is any proposed for FY2020. There is no
proposal to change the maximum aggregate Directors’
fee pool.
We thank all our people (the Executive KMP and their
teams) for their continued commitment and contribution
to Whitehaven.
Summary
We present the Remuneration Report for the financial
year ended 30 June 2019 (FY2019) for which we seek
your support at our Annual General Meeting (AGM) in
October. More than 95% of votes cast at last year’s AGM
were in favour of the resolution to approve our 2018
Remuneration Report.
Our objective is to provide a Remuneration Report
containing the key elements that are important to our
shareholders and to present that information in a way
that is clear and readily understood, including details of
realised remuneration outcomes for our Key Management
Personnel (KMP) and performance against the Short
Term Incentive (STI) Key Performance Indicators (KPIs)
and Long Term Incentive (LTI) performance conditions.
Our executive remuneration framework is aligned to
shareholder interests and operates to incentivise and
reward senior executives to execute our strategy to
build a portfolio of assets that is cost competitive and
to develop and operate that portfolio of assets in a safe
and sustainable way.
Whitehaven’s performance in FY2019
Managing Director and Chief Executive Officer, Paul Flynn
(CEO), is supported by a strong executive leadership
group and the Board believes that the Company is well
positioned, with its high quality asset development
pipeline and strength of existing operations, to continue
to grow, to improve its performance and to continue to
deliver value to shareholders.
Whitehaven has performed strongly during the year.
It has delivered record Underlying EBITDA, and record
NPAT. Over the three and four year LTI testing period
Whitehaven has delivered total shareholder returns (TSR)
of 308% and 233% respectively and was ranked 1st and
5th respectively against its LTI peer comparator groups.
During the year, Whitehaven has returned cash dividends
of $465m to shareholders and the Board has resolved
to pay a final dividend of 30 cents per share ($298m)
to shareholders from the FY2019 result.
During the year, Whitehaven increased the quality of
its saleable products to take advantage of increased
demand for higher quality coal, increasing its revenues
and margins which led to a record net profit after
tax before significant items and supported dividend
payments to shareholders.
The decision to increase product quality, combined with
the following factors, contributed to an increase in unit
costs for FY2019:
– The strong coal price environment increased
competition for scarce, skilled resources which
adversely impacted employee turnover levels
and operating productivity; and
– Difficult mining conditions persisted at both our
Werris Creek open cut mine and at our Narrabri
underground mine.
37
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves Financial Report | Glossary | Corporate directory || |Directors’ Report Table of Remuneration
Report contents
1.
Introduction
4. Remuneration outcomes for FY2019
1.1 Key management personnel for FY2019
4.1 STI outcomes for Executive KMP in FY2019
1.2 Summary of Company performance
4.2 LTI outcomes for Executive KMP in FY2019
1.3 How do Remuneration Outcomes align to
FY2019 performance?
1.4 Executive KMP realised remuneration outcomes
2. Remuneration Governance
3. Remuneration framework
5. Executive KMP employment contracts
6. Non-executive Director remuneration
6.1 Setting Non-executive Director fees
6.2 Current Non-executive Director
fee remuneration
3.1 Summary of Executive KMP remuneration
6.3 FY2019 Non-executive Director remuneration
components in FY2019
3.2 Fixed Remuneration
3.3 STI Awards and Structure for FY2019
3.4 LTI Awards and Structure for FY2019
3.5 Policies and conditions of rights awarded
under equity plans
7.
Executive KMP statutory tables
and additional disclosures
7.1 Executive KMP statutory remuneration table
7.2 Movements in options and rights held by
Executive KMP
7.3 Movements in ordinary shares held by
Executive KMP
7.4 Related party transactions and additional
disclosures
38
Directors’ Report Remuneration ReportFor the year ended 30 June 2019 1. Introduction
This Remuneration Report forms part of the Directors Report.
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 FY2019 of the Key Management Personnel 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 FY2019
This Report details the remuneration during FY2019 of:
Name
Role held during FY2019
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 AO
Deputy Chairman and
Non-executive Director
Member of Remuneration Committee
Chairman of Remuneration Committee
Member of Audit & Risk Management Committee
Member of Governance & Nomination Committee
Dr Julie Beeby
Non-executive Director
Chairman of Health, Safety, Environment & Community Committee
Fiona Robertson
Non-executive Director
Member of Governance & Nomination Committee
Chairman of Audit & Risk Management Committee
(effective 1 November 2018)
Member of Health, Safety, Environment & Community Committee
(effective 1 November 2018)
Lindsay Ward
(appointed 15 February 2019)
Non-executive Director
Member of Health, Safety, Environment & Community Committee
Member of Remuneration Committee
Raymond Zage
Non-executive Director
Nil
Tony Haggarty
(retired 25 October 2018)
Non-executive Director
Chairman of Audit & Risk Management Committee
Member of Health, Safety, Environment & Community Committee
Executive KMP
Role held during FY2019
Paul Flynn
Kevin Ball
Timothy Burt
Brian Cole
Managing Director and Chief Executive Officer (CEO)
Chief Financial Officer and Executive General Manager – Human Resources (CFO)
General Counsel and Company Secretary
Executive General Manager (EGM) – Project Delivery
Jamie Frankcombe
Chief Operating Officer (COO)
Scott Knights
Executive General Manager (EGM) – Marketing and Logistics
Michael van Maanen
Executive General Manager (EGM) – Corporate and External Affairs
39
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves Financial Report | Glossary | Corporate directory || |Directors’ Report 1. Introduction (cont.)
1.2 Summary of Company performance
FY19 at a glance
How did we perform in FY19?
Statutory
EBITDA
$1,001.2m
Shareholder
distributions
50c/share
Total shareholder return
(TSR) three year
308%
FY18: $1,002.2m*
FY18: 40c per share
Four year TSR: 233%
*Statutory EBITDA has been restated
for the adoption of AASB 16 Leases
WHC total shareholder return since 1 July 2016
580%
480%
380%
280%
180%
80%
-20%
40
6
1
l
u
J
6
1
p
e
S
6
1
v
o
N
7
1
n
a
J
7
1
r
a
M
7
1
y
a
M
7
1
l
u
J
7
1
p
e
S
7
1
v
o
N
8
1
n
a
J
8
1
r
a
M
8
1
y
a
M
8
1
l
u
J
8
1
p
e
S
8
1
v
o
N
9
1
n
a
J
9
1
r
a
M
9
1
y
a
M
WHC TSR
ASX200 TSR
Directors’ Report Remuneration ReportFor the year ended 30 June 2019
While FY2019 performance produced a strong Statutory EBITDA of $1,001.2m, Net Profit after Tax of $527.9m,
and an improvement in safety from June 2018, unit cost and production targets were not met.
Company performance for the last five years
A snapshot of key Company statutory performance for the past five years is set out below:
Revenue ($m)
Statutory EBITDA ($m)1
Net profit after tax ($m)1
Share price at year end (dollars per share)
Basic EPS (cents per share)
Diluted EPS (cents per share)
Shareholder distributions paid (cents per share)
Total Reportable Injury Frequency Rate (TRIFR)
Environmental Enforcement Action Frequency Rate (EEAFR)3
Saleable Production – Mt
2019
2018
2017
2016
2,487.9
2,257.4
1,773.2
1,164.4
1,001.2
1,002.2
527.9
$3.66
53.5
52.4
47
6.2
1.9
19.8
524.5
$5.78
53.1
52.1
33
6.9
2.1
714.2
405.4
$2.87
41.2
40.7
-
7.4
4.2
20.9
20.8
224.1
20.5
$1.08
2.1
2.1
-
10.6
8.1
19.7
2015
763.3
130.3
(342.7)
$1.32 2
(33.3)
(33.3)
-
11.3
2.9
11.3
1 Statutory EBITDA and Net profit after tax for FY2018 has been restated for the adoption of AASB 16 Leases. Statutory EBITDA and Net profit after tax for
FY2017 – FY2015 has not been restated for the adoption of AASB 16 Leases
2 The opening share price for 2015 was $1.43
3 An Environmental Enforcement Action is defined as a warning letter, an official caution, an order, a penalty or a prosecution. Where a single piece of
enforcement correspondence notes a breach of more than one approval/licence condition, each breach is counted separately.
1.3 How do Remuneration Outcomes align to FY2019 performance?
Component
Principles
Outcome
Fixed
Remuneration
(TFR)
STI
LTI
Total Fixed remuneration
set with reference to market
benchmarking and individual
performance
Reflects the performance
of management during the
performance period, relative
to performance conditions set
at the start of FY2019
Changes in total Fixed remuneration for Executive KMP in FY2020 will be
capped at 2% with one exception, the Executive General Manager Corporate
and External Affairs.
Performance outcomes did not meet all of the objectives set and therefore
the below target STI outcomes reflect this. This was due primarily to the cost
of production and ROM production objectives not being met and consequently
no awards were made for these performance areas.
The Executive KMP STI outcome was between 58% and 64% of maximum
possible STI.
See Section 4.1 for more details on the STI outcomes.
Reflects long-term overall
Company performance
and delivery of value to
shareholders over the
performance period
The LTI awards granted under the 2015 (TSR Tranche 2) and 2016 (TSR Tranche
1 and Costs Hurdle Award) LTI plans reached the end of their respective
performance periods and were tested following 30 June 2019.
Due to the strong TSR performance of 308% and 233% over the respective three
and four year performance period the Relative TSR Awards each vested fully.
The Costs Hurdle Gateway and the Costs Hurdle Target were set in 2016. Actual
costs for FY2019 of $67/t exceeded the Costs Hurdle Gateway and the 2016 Costs
Hurdle Award lapsed in full.
See Section 4.2 for more details on the LTI outcomes for FY2019.
41
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves Financial Report | Glossary | Corporate directory || |Directors’ Report 1. Introduction (cont.)
1.4 Executive KMP realised remuneration outcomes
As set out in Section 1.3, the Remuneration Committee is of the view that while Executive KMP have had a challenging
year with respect to the performance conditions associated with the STI, overall Executive KMP have continued
successfully to execute the Group’s long-term strategy. The table below gives shareholders a better understanding
of the actual remuneration outcomes for Executive KMP in FY2019. It includes:
– Fixed remuneration earned in FY2019;
– STI earned in respect of FY2019 performance (including the cash component payable in September 2019 and
the deferred component awarded in equity which may vest and become exercisable in later years);
– LTI that reached the end of its performance period in FY2019 including the impact of share price growth between
the grant date and the test date; and
– Any non-monetary benefits provided to Executive KMP in FY2019 (including fringe benefits).
The amounts disclosed in the table, while not in accordance with accounting standards, may be more helpful for
shareholders as it demonstrates the linkage between Company performance and remuneration outcomes for Executive
KMP for FY2019, as summarised in Section 1.3.
For further details on the STI and LTI outcomes for FY2019 refer to section 4.1 and 4.2 respectively.
FY
TFR1
STI2
Cash
Total
Cash
FY2019
Deferred
Equity
STI3
LTI4
Vested
At face
value of
award
Other5
Total
Remuneration
Vested LTI6
Share Price
Growth
Total
Including
Share Price
Growth
2019 1,500,000
603,750 2,103,750
603,750
948,092
12,500
3,668,092
2,585,637
6,253,729
2018
1,352,520
636,983
1,989,503
636,983
1,129,962
12,660
3,769,108
3,762,412
7,531,520
2019
700,000
181,913
881,913
181,913
343,201
2018
612,000
201,759
813,759
201,759
420,803
-
-
1,407,027
935,979
2,343,006
1,436,321
1,397,755
2,834,076
2019
600,000
169,050
769,050
169,050
291,721
12,500
1,242,321
795,583
2,037,904
2018
520,200
171,495
691,695
171,495
387,682
12,660
1,263,532
1,279,355
2,542,887
2019
690,000
174,182
864,182
174,182
379,238
10,432
1,428,034
1,034,258
2,462,292
2018
676,260
223,122
899,382
223,122
504,026
635
1,627,165
1,663,282
3,290,447
2019 1,000,000
297,000 1,297,000
297,000
574,324
12,500
2,180,824
1,566,298
3,747,122
2018
910,350
342,991
1,253,341
342,991
719,496
12,660
2,328,488
2,385,627
4,714,115
2019
625,000
176,094
801,094
176,094
287,162
2018
525,000
173,078
698,078
173,078
362,161
2019
375,000
114,461
489,461
114,461
2018
36,308
-
36,308
-
-
-
-
-
-
-
1,264,350
788,699
2,053,049
1,233,317
1,198,778
2,432,095
603,922
36,308
-
-
603,922
36,308
Name
Paul
Flynn
Kevin
Ball
Timothy
Burt
Brian
Cole
Jamie
Frankcombe
Scott
Knights
Michael
van Maanen7
Note: For role held by Executive KMP during FY2019 refer to Section 1.1.
1 Total Fixed Remuneration (TFR) comprises base salary and superannuation.
2 STI represents the amount of cash STI that each Executive KMP will be paid in September 2019 based on FY2019 performance. Refer to section 3.3
and section 4.1 for further details.
3 Deferred Equity STI refers to the amount of STI deferred into rights that are the subject to further service conditions. Whilst not yet granted, the STI
is expected to be issued at a Volume Weighted Average Price (VWAP) of $3.69. It is expected that rights issued under the STI will vest and become
exercisable in two equal tranches following the completion of FY2020 and FY2021. Refer to Section 3.3 for further details.
4 LTI represents LTI awards made in 2015 and 2016 for which the test period ended in FY2019 and which have vested. The amounts shown are the face
value of the awards at grant. Refer to section 4.2 for further details.
5 Other includes parking, motor vehicle benefits and other similar items.
6 LTI Share Price Growth is the amount of the LTI award delivered by an increase between the face value VWAP used for the award that was granted and
the VWAP of a share at the award test date for those awards which vested. Whitehaven Coal share price performance over the 3 and 4 year periods is
shown in the graph below and outcomes are explained further in section 4.2 of this report.
7 Commenced on 28 May 2018.
42
Directors’ Report Remuneration ReportFor the year ended 30 June 2019 3 year vesting period
4 year vesting period
WHC Share Price Growth
$6
$5
$4
$3
$2
$1
$0
Share
price
growth
$2.34
Opening
share
price
$1.32
5
1
n
u
J
6
1
n
u
J
7
1
n
u
J
8
1
n
u
J
9
1
n
u
J
WHC share price
The graphs below illustrate how the actual remuneration mix for Executive KMP for FY2019 was delivered. A significant
proportion of the actual remuneration mix for FY2019 was from LTI awards which is a reflection of the significant share
price growth achieved to the end of FY2019.
CEO
9%
COO
8%
Other Executive KMP
9%
34%
35%
40%
57%
57%
51%
TFR & STI cash
LTI awards
STI Deferred Equity
43
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves Financial Report | Glossary | Corporate directory || |Directors’ Report
2. Remuneration Governance
This section describes the roles and responsibilities 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.
Remuneration governance framework
Remuneration principles
Board
The following principles underpin the
Company’s remuneration framework:
The Board maintains overall responsibility for the remuneration policy and 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.
Delegation and
oversight
Recommendations
and Reporting
Remuneration Committee
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.
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.
External Advice
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.
No remuneration recommendations were obtained during FY2019 as defined under
the Corporations Act 2001 (Cth).
– Remuneration is comparable
and competitive within
our comparator group in
order to attract and retain
skilled executives;
– Short and long-term
incentives are aligned with
the interests of the Company
and its shareholders;
– Structures are equitable and
reinforce relevant Company
policies such as ensuring
a focus on a safe working
environment for all employees
and a focus on compliance
with environmental
approval conditions;
– Reward outcomes are
aligned with performance
with a signficant portion of
pay deemed ‘at risk’ based
on challenging KPI’s which
are linked to the creation of
sustainable shareholder returns
44
Directors’ Report Remuneration ReportFor the year ended 30 June 2019 3. Remuneration framework
The Company’s Executive KMP remuneration framework is based on a set of core principles and is comprised of both
fixed and at-risk remuneration components. This section describes in detail the different components of Executive KMP
remuneration and framework for FY2019.
3.1 Summary of Executive KMP remuneration components in FY2019
The below table summarises the core principles, framework components and how they were applied during FY2019.
The different components of Executive KMP remuneration mentioned below are described in greater detail in section
3.2, 3.3 and 3.4.
Attract and retain
skilled executives
Structures are equitable
and reinforce relevant
Company policies
Incentives are challenging
and linked to the
creation of sustainable
shareholder returns
Incentives are aligned with
the long-term interests of the
Company and its shareholders
Fixed remuneration (TFR)
At-risk STI
At-risk LTI
Cash
Equity
– 50% of STI is deferred
into rights to 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)
–
includes salary
and superannuation
– 50% of STI is delivered
as cash
–
reviewed annually
by the Remuneration
Committee
– determined based
on a mix of financial
and non-financial
performance conditions
– benchmarked against
– STI opportunity is set
peer companies
–
set based on individual
performance and
experience
between 70% and 100% of
TFR for target performance
and between 87.5% and
125% of TFR for stretch
performance
– provides the Remuneration
Committee with the
flexibility to determine
the nature, terms and
conditions of the grant
each year
– operated in FY2019
as an award of 100%
performance rights
–
the face value of the
LTI opportunity is currently
set between 80% and 120%
of TFR
– vesting is subject to two
independent performance
hurdles – Relative TSR
and Costs Target
45
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves Financial Report | Glossary | Corporate directory || |Directors’ Report 3. Remuneration framework (cont.)
3.1 Summary of Executive KMP remuneration components in FY2019 (cont.)
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 graphs below illustrate the remuneration mix for Executive KMP for FY2019 (assuming Target performance for
at-risk components).
CEO
COO
Other Executive KMP
38%
31%
36%
36%
32%
40%
31%
28%
28%
Fixed TFR
At-risk STI
At-risk LTI
The diagram below shows timing for determining and delivering Executive KMP remuneration for FY2019:
FY2019
FY2020
FY2021
FY2022
FY2023
Total Fixed
remuneration
Determined based on:
– Market benchmarking
– FY2018 performance
FY2019
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
46
Directors’ Report Remuneration ReportFor the year ended 30 June 2019 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. 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.
Remuneration is benchmarked against an appropriate market comparator group adopted by the Board. The Board
considers company size, complexity and business challenges when it builds its remuneration comparator group.
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 objective of the Board’s positioning is to meet the market so as to attract and retain a leading management
team while observing appropriate restraint in respect of executive remuneration.
3.2 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 having regard to 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.
3.3 STI Awards and Structure for FY2019
The terms of the STI that applied during FY2019 were as follows:
Feature
Description
Performance period
12 month performance period from 1 July 2018 to 30 June 2019
Form of delivery,
vesting and exercise
The STI for FY2019 is delivered 50% in cash in September 2019 and 50% in deferred rights that are granted in
or around October 2019, which on exercise entitle the recipient to receive one ordinary share in the Company
per deferred right. Half of the deferred rights vest and become exercisable following completion of FY2020,
while the other half will vest and become exercisable following the completion of FY2021, subject to meeting
service conditions. Vested deferred rights that have not been exercised by August 2029 will automatically be
exercised. No amount is payable on vesting or exercise of deferred rights.
Quantum
(% of TFR)
CEO: Target 100% and Stretch 125%
COO: Target 80% and Stretch 100%
Calculation
of STI award
Performance
conditions and
KPI weighting
Other Executive KMP: Target 70% and Stretch 87.5%
The value of STI awards is calculated as follows:
Value of
STI Award
=
TFR
X
Target
Opportunity
X
Level of
KPI result
Whitehaven has chosen performance conditions that link to our strategy and motivate outperformance of
annual business plans. The Board set Target KPIs at the commencement of FY2019.
The table below summarises the KPIs that were adopted as performance conditions in FY2019, and the
applicable weighting of each performance condition:
KPI
Safety (TRIFR)
Net Profit After Tax (NPAT)
ROM production (managed basis)
FOB cost per tonne (equity basis)
Environmental Enforcement (EEAFR)
Individual leadership
All KMP excluding
EGM Project Delivery
EGM Project Delivery
20%
25%
20%
15%
10%
10%
10%
25%
10%
15%
10%
30%
47
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves Financial Report | Glossary | Corporate directory || |Directors’ Report 3. Remuneration framework (cont.)
3.4 LTI Awards and Structure for FY2019
The terms of the LTI grant made during FY2019 to Executive KMP were as follows:
Feature
Description
Form of delivery,
vesting and exercise
FY2019 LTI awards that vest will be delivered in the form of performance rights, being rights to receive one
ordinary share in the Company per performance right, subject to meeting performance conditions. Vested
deferred rights that have not been exercised by October 2028 will automatically be exercised. No amount
is payable on vesting or exercising of deferred rights.
Quantum
(% of TFR)
CEO: 120%
COO: 100%
Other Executive KMP: 80%
Performance
period
TSR Awards: divided into two equal tranches capable of vesting and becoming exercisable after a three
and four year performance period, with each performance period respectively, beginning on 1 July 2018.
Costs Hurdle Awards: FOB cost per tonne achieved for the year ended 30 June 2021 with the Costs Hurdle
Awards being tested at that time. Half the awards will be capable of vesting and becoming exercisable after
the end of the performance period and the remaining half of any awards that vest will be subject to deferral
for a further year before becoming exercisable.
Performance
Conditions
Component
Details
Reason the performance
condition was chosen
This measure allows for an objective
external assessment of the shareholder
value created by the Company relative to
a group of peers over a sustained period
50% of the award is subject to a relative
total shareholder return (TSR) performance
hurdle (TSR Hurdle) which compares the TSR
performance of the Company with the TSR
performance of a peer group of companies
operating in the Australian resources sector.
TSR Award
Costs Hurdle
Award
50% of the award is subject to the Company
achieving a cost per tonne target (Costs
Hurdle) that will position the company
competitively on the then current cost curve.
The Board sets this hurdle having regard to
both the Company’s cost forecasts and to the
estimated coal industry cost curve as advised
by a recognised expert.
This measure is aligned to the Company’s
objective to be positioned competitively
against Australian coal producers
in relation to costs of production.
Competitive costs protect and preserve
shareholder value in difficult times and
support enhanced returns when the
commodity cycle recovers.
Calculation
of LTI award
The value of LTI awards and the number of performance rights granted is calculated as follows:
TFR
X
Target
Opportunity
=
Value of
LTI Award
÷
VWAP of
performance right
=
Number of performance
rights granted
TSR Awards: the TSR of the Company for the FY2019 LTI grant is measured as a percentile ranking compared
to the comparator group of listed entities in the resources sector over the relevant performance period of
the tranche. The TSR comparator group was established before the commencement date of the respective
performance period and comprised the following companies:
Beach Energy Ltd
Mineral Resources Ltd
Rio Tinto Ltd
BHP Group Ltd
New Hope Corporation Ltd
Santos Ltd
Coronado Global Resources Inc.
(from listing)
Newcrest Mining Ltd
South32 Ltd
Northern Star Resources Ltd
St Barbara Limited
Evolution Mining Ltd
Fortescue Metals Group Ltd
Iluka Resources Ltd
Independence Group NL
Oil Search Ltd
OZ Minerals Ltd
Regis Resources Ltd
Woodside Petroleum Ltd
WorleyParsons Ltd
Costs Hurdle Awards: Testing will occur following the completion of FY2021 based on the average
costs achieved on a Company wide basis over the 12 month period from 1 July 2020 to 30 June 2021.
48
Directors’ Report Remuneration ReportFor the year ended 30 June 2019 Vesting schedule
TSR Awards:
Performance level
75th percentile or above
Between 50th and 75th percentile
At 50th percentile
Below 50th percentile
Costs Hurdle Awards:
Outcome as a % of target opportunity
100% of the TSR Awards will vest
Vesting will occur on a pro rata straight line basis
between 50% and 100%
50% of the TSR Awards will vest
0% TSR Awards will vest
Due to the commercially sensitive nature of this hurdle the target will not be disclosed until the year of testing.
Notwithstanding the vesting schedule below, the Board retains discretion to lapse any or all of the Costs
Target Awards if the board considers that vesting would be inappropriate in light of the intent and purpose
of the target. Full vesting will only occur if the Board is satisfied performance meets or exceeds the target
as set out below. The Board may, where it is appropriate to do so, recalibrate the target to take account of
structural changes in the Company’s asset portfolio (such as mergers, acquisitions and divestments) or other
exceptional circumstances. Previous Costs Hurdle Awards have been made by referencing the Company’s
forecasts for the third forward year. Prospectively, rather than setting a fixed dollar number for the Costs
Hurdle Target, the Company will set the target as the entry point to the first quartile in the published Wood
Mackenzie data of industry outcomes. By making the target an externally published industry result, this will
facilitate assessment while preserving totally the intent of this award – that the Company produce industry
leading cost outcomes in its operations. As evidenced during the past two years, the Board will ensure that
the Company does not overlook shareholder value enhancing opportunities even if these opportunities are
higher cost mining operations.
Performance level
Target or lower
Between Gateway and Target
Gateway
Above Gateway
Outcome as a % of target opportunity
100% of the Costs Hurdle Awards will vest
Vesting will occur on a pro rata straight line basis
between 50% and 100%
50% of the Costs Hurdle Awards will vest
0% Costs Hurdle Awards will vest
Retesting
Any component of the LTI award that does not vest following testing will lapse immediately. There is no
re-testing of awards that do not vest.
49
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves Financial Report | Glossary | Corporate directory || |Directors’ Report 3. Remuneration framework (cont.)
3.5 Policies and conditions of rights awarded under equity plans
Malus and clawback
Change of control
The Board has discretion to reduce or clawback all vested
and unvested LTI and STI awards in certain circumstances
if subsequent events show a reduction to be appropriate.
The circumstances in which the Board may exercise this
discretion include: where an Executive KMP engages
in fraud, dishonesty or other misconduct, a material
misstatement of the Company’s financial statements or
other material error which results in vesting, or any other
factor that the Board deems justifiable.
Dividend and voting rights
Rights carry no entitlement to voting or dividends prior
to exercise. Upon exercise of vested rights the recipient
is entitled to receive a dividend equivalent payment
(DEP) in respect of any prior period between the start
of the performance period, and exercise. Any DEP made
to participants may be made in cash or provided as
additional fully paid ordinary shares in the Company,
as determined by the Board.
Prohibition on hedging
Participants are required to comply with the Company’s
securities trading policy in respect of their performance
rights, options and any shares they receive upon exercise.
They are prohibited from hedging or otherwise protecting
the value of their performance rights and options.
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 discretion to determine that vesting of some or all of
any unvested performance awards should be accelerated.
Cessation of employment
Unless the Board determines otherwise, cessation of
employment by:
– Resignation or termination for cause: unvested
performance awards will lapse.
– Mutual agreement with the Company: unvested
performance awards 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 awards and ordinarily, in
the case of a resignation, would be expected to do so.
– Other circumstances: unvested performance
awards will remain on foot and subject to the
original performance hurdle, with Board discretion
to determine that some of the performance awards
(up to a pro rata portion based on how much
of the performance period remains) will lapse.
The performance awards that remain on foot will
be tested in the normal course following the end
of the relevant performance period.
50
Directors’ Report Remuneration ReportFor the year ended 30 June 2019 4. Remuneration outcomes for FY2019
4.1 STI outcomes for Executive KMP in FY2019
The Board set Target KPIs prior to the commencement of the financial year that link to our strategy and motivate
outperformance of annual business plans. The table below summarises details in relation to each KPI and the
performance levels achieved for FY2019.
STI
outcome
Comment
Performance
condition
Safety
KPI
measure
TRIFR
Actual
KPI result
6.16
NPAT
Net Profit
After Tax1
$564.9m
ROM
production
ROM
production
(managed)
23.2Mt
FOB cost
FOB cost
per tonne
$67/tonne
Environmental
Incidents
9 incidents
Individual
leadership
Individual
based
Individual based
Safety performance has improved during FY2019 by 10%.
The TRIFR of 6.2 at the end of June 2019 fell from 6.9
at June 2018 and remains well below the NSW coal industry
average of 14.7. The Company has an aspirational goal of
being the industry leader in safety, and work to improve
safety processes and standards continues.
A record operating profit for the Group was achieved
in FY2019. Higher average coal prices for FY2019 drove
optimal product mix decisions, which resulted in an increase
in the production of high quality thermal coal to increase
margins. The high quality of thermal coal produced typically
achieved both quality and energy premiums during the year.
The higher achieved prices flowed through to results and
facilitated returns to shareholders with surplus cash flow
being returned by way of dividends.
In a market of higher prices, Whitehaven faced
the challenges of increased demand for scarce skilled
resources. This contributed to an increase in staff turnover
and decreased productivity at our open cut mines. This
resulted in managed ROM production of 23.2Mt for the
year which, despite being 1.3% higher than FY2018,
was below the target set.
Due to the strong coal price environment and increased
demand for high quality coal, decisions were taken to
increase the quality of coal produced and sold to take
advantage of higher margins, which led to an increase in
unit costs. The strong coal market increased competition
for scarce, skilled resources which adversely impacted
staff turnover and led to increased costs during FY2019.
Difficult mining conditions experienced at the Narrabri
and Werris Creek mines also led to increased costs.
Consequently unit costs for FY2019 of $67/t were
8% higher than FY2018 and did not meet cost targets.
The Board recognises the importance of compliance
with environmental approval conditions to maintaining
the Group’s standing in the community. The Group strives
to adopt and achieve industry best practice. In FY2019,
there were 9 incidents and the EEAFR was 1.9 per million
man hours worked. This was a stretch outcome.
The leadership performance of the CEO is assessed
annually by the Board. A stretch result was awarded
to the CEO. Awards to other Executive KMP were based
on individual perfomance.
Key:
Stretch
Between Target and Stretch
Below Gateway
1 Net Profit After Tax before significant items
51
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves Financial Report | Glossary | Corporate directory || |Directors’ Report 4. Remuneration outcomes for FY2019 (cont.)
4.1 STI outcomes for Executive KMP in FY2019 (cont.)
The individual STI outcome for each Executive KMP for FY2019 is set out in the table below. The total STI opportunity
at Target and Stretch, by Executive KMP, as a percentage of TFR is detailed in Section 3.3.
Paid as
cash
($)
Deferred
Equity
Total
maximum STI received
maximum STI forfeited
Percentage of
Percentage of
($)
($)
Executive KMP
Paul Flynn
Kevin Ball
Timothy Burt
Brian Cole
603,750
603,750
1,207,500
181,913
181,913
169,050
169,050
363,826
338,100
174,182
174,182
348,364
Jamie Frankcombe
297,000
297,000
594,000
Scott Knights
Michael van Maanen
176,094
114,461
176,094
114,461
352,188
228,922
4.2 LTI outcomes for Executive KMP in FY2019
64%
59%
64%
58%
59%
64%
64%
36%
41%
36%
42%
41%
36%
36%
Vesting
Period
2015–2019
WHC 4 yr TSR
Performance
+233%
WHC TSR Rank
vs Peer Group
5th
Vesting of 2015–
2019 LTI (TSR)
100%
Vesting
Period
2016–2019
WHC 3 yr TSR
Performance
+308%
WHC TSR Rank
vs Peer Group
1st
Vesting of 2016–
2019 LTI (TSR)
100%
This is the third year since the 2012 merger that LTI awards have vested. The Board believes that the Company
is well positioned to continue its strong performance and to deliver value for shareholders. In FY2019 the Company
returned $465m to shareholders. The Company’s balance sheet strength, quality of operations and future capital
needs underpinned the decision by the Board to pay a further $298m in dividends (30 cents per share) to shareholders
from the FY2019 results.
52
Directors’ Report Remuneration ReportFor the year ended 30 June 2019 The table below sets out the LTI awards that were tested in 2019 against performance conditions and the results of
the relevant test.
LTI Year
Tranche
Test Type
Performance
2015
2016
2016
2 of 2
1 of 2
n/a
Relative TSR
Relative TSR
Costs Hurdle
5 in 23
1 in 22
$67/t Actual
$63/t Target
Outcomes
Vested
100%
100%
0%
Lapsed
0%
0%
100%
Costs Hurdle Target
In mid-2016 the Board set the Gateway and Target for FY2019 during the cyclical lows of the coal price. Costs for
FY2016 were $55/t while coal revenues averaged $69/t and EBITDA margins were $14/t. The Board set a Costs Hurdle
Target that was challenging and if achieved would place the company in the first quartile position of the cost curve.
In April 2018 Whitehaven completed its acquisition of 30% of the Tarrawonga open cut mine from Idemitsu and in light
of the strong coal price environment decisions were taken to increase production across the Gunnedah open cut mines.
This, combined with the factors set out in section 4.1, adversely impacted the actual costs outcome for FY2019. The
Board considered the impact of these circumstances.
Actual costs of $67/t exceeded the Costs Hurdle Gateway which caused all cost hurdle awards tested in relation to
FY2019 to lapse.
4.2 LTI outcomes for Executive KMP in FY2019
Executive KMP LTI awards vesting in FY2019
2015
Tranche
2 TSR
Hurdle
2016
Tranche
1 TSR
Hurdle
2015
Tranche
2 Costs
Hurdle1
2016
Costs
Hurdle
Gross
up for
Capital
Return2
2016
Tranche
1 TSR
Hurdle
2016
Costs
Hurdle
LTI
Value
Vested
LTI at
face
value of
award2
Vested LTI
share price
appreciation3
Performance Rights
Options
$
$
$
308,372
139,724
164,466
Lapsed
21,656
455,521
Lapsed 3,533,729
948,092
2,585,637
111,628
50,579
59,535
Lapsed
7,839
164,895
Lapsed
1,279,180
343,201
935,979
94,884
42,992
50,605
Lapsed
6,677
140,161
Lapsed 1,087,304
291,721
795,583
123,349
55,890
65,787
Lapsed
8,663
182,209
Lapsed
1,413,496
379,238
1,034,258
186,802
84,640
99,628
Lapsed
13,119
275,941
Lapsed
2,140,621
574,324
1,566,297
92,093
43,389
49,117
Lapsed
6,512
141,454
Lapsed
1,075,861
287,162
788,699
n/a
n/a
n/a
n/a
n/a
n/a
n/a
-
-
-
30 June
2019
30 June
2019
30 June
2019
30 June
2019
$1.29
$1.21
$1.29
$1.21
$3.69
$3.69
$3.69
$3.69
Executive
KMP
Paul
Flynn
Kevin
Ball
Timothy
Burt
Brian
Cole
Jamie
Frankcombe
Scott
Knights
Michael van
Maanen4
Award
Test Date
VWAP –
Face value
VWAP –
Award
Test Date
1 Tested and vested in 2018 but subject to a further one year deferral period, and vested in FY2019.
2 Refer to the Notice of 2017 Annual General Meeting, Resolution 6. This adjustment applies to rights issued before the ‘ex’ date for the capital return to
shareholders in November 2017 to ensure that incentive plan participants were not disadvantaged by the capital return.
3 As presented in section 1.4.
4 Commenced 28 May 2018.
53
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves Financial Report | Glossary | Corporate directory || |Directors’ Report 4. Remuneration outcomes for FY2019 (cont.)
4.2 LTI outcomes for Executive KMP in FY2019 (cont.)
LTI awards granted in FY2019
A summary of the LTI awards granted in FY2019 (i.e. the face value and the fair value of the LTI granted to each
Executive KMP) is set out in the table below.
Executive KMP
Paul Flynn
Kevin Ball
Timothy Burt
Brian Cole
Jamie Frankcombe
Scott Knights
Michael van Maanen
Number of performance
rights granted1
Face value of performance
rights grant2
Fair value of performance
rights at grant date3
315,790
98,246
84,211
96,843
175,439
87,720
52,632
($)
$1,800,000
$560,000
$480,000
$552,000
$1,000,000
$500,000
$300,000
($)
$1,285,265
$399,861
$342,739
$394,151
$714,037
$357,020
$214,212
1 Refer to Section 3.4 for the terms of the LTI grant.
2 The face value of the LTI performance rights was calculated using the volume weighted average price of Whitehaven shares over the 20 trading day
period commencing 10 trading days prior to 30 June 2018, being $5.70.
3 The fair value for awards granted to the Executive KMP is based on the average fair value of $4.07 (for the fair value of each tranche from which this
average is derived – see note 5.5) per performance right as at 27 October 2018 being the grant date. The factors and assumptions used in determining
the fair value are set out in note 5.5 to the financial statements.
5. Executive KMP employment contracts
This 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).
54
Directors’ Report Remuneration ReportFor the year ended 30 June 2019 Managing Director and CEO
Paul Flynn was appointed as Managing Director and CEO of the Company on 25 March 2013. This table outlines the key
terms of Mr Flynn’s contract of employment.
Fixed remuneration
Short term incentive
Long term incentive
Mr Flynn’s annual TFR for FY2020 is $1,530,000 (FY2019: $1,500,000). It includes salary, superannuation
contributions, and any components under Whitehaven’s salary packaging guidelines and all Director fees.
TFR is reviewed annually.
Mr Flynn is eligible to participate in the annual STI plan, as described in section 3.3. At Target performance,
his FY2020 STI opportunity is 100% of TFR (FY2019: 100%), with up to 125% of TFR for Stretch
performance (FY2019:125%).
Mr Flynn is eligible to participate in the LTI plan as described in section 3.4, subject to receiving required
shareholder approval. Mr Flynn’s LTI grant in FY2020 will be 120% of his TFR (FY2019: 120%). The form
of the Award will be provided 100% as rights to acquire shares; each right held will entitle Mr Flynn to
receive one ordinary share in the Company subject to satisfaction of the relevant performance conditions.
The FY2019 award was in the form of 100% rights.
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 Executive KMP contracts are set out in the table below.
All of the contracts below are of ongoing duration.
Name and position (at year-end)
Kevin Ball
Chief Financial Officer and Executive General Manager – Human Resources
Appointed 16 December 2013
Timothy Burt
General Counsel and Company Secretary
Appointed 29 July 2009
Brian Cole
Executive General Manager – Project Delivery
Appointed 1 July 2012
Jamie Frankcombe
Chief Operating Officer
Appointed 4 February 2013
Scott Knights
Executive General Manager – Marketing and Logistics
Appointed 18 August 2014
Michael van Maanen
Executive General Manager – Corporate and External Affairs
Appointed 28 May 2018
Notice
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
3 months by employee
6 months by the Company
55
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves Financial Report | Glossary | Corporate directory || |Directors’ Report 6. Non-executive Director remuneration
This section explains the fees paid to Non-executive Directors during FY2019.
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. Although there is no formal minimum shareholding, Non-executive Directors are encouraged
to hold shares.
Non-executive Directors are also 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. No change is being sought to the total aggregate Non-executive Directors’ fees pool for FY2020.
6.2 Current Non-executive Director fee remuneration
The table below sets out the Board and Committee fees in Australian dollars for FY2019.
There have been no changes to Directors fees for FY2019. No changes are proposed.
Board
Audit & Risk Management Committee
Remuneration Committee
Governance & Nominations Committee
Health, Safety, Environment & Community Committee
Chairman
Deputy Chairman
$375,000 1
$262,500 1
$40,000
$40,000
No fee
$40,000
-
-
-
-
Member
$140,000
$20,000
$20,000
No fee
$20,000
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 24), the Non-executive
Directors participated in visits to mine sites, development project sites, coal handling and preparation plants and
participated in the Company’s annual safety day.
56
Directors’ Report Remuneration ReportFor the year ended 30 June 2019 6.3 FY2019 Non-executive Director remuneration
The statutory disclosures required under the Corporations Act and in accordance with the Accounting Standards
are set out in the table below.
Non-executive
Directors
The Hon. Mark
Vaile (Chairman)
John Conde
(Deputy Chairman)
Dr Julie
Beeby
Tony
Haggarty1
Fiona
Robertson
Lindsay
Ward2
Raymond
Zage3
Total
FY
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Short-term
benefits
Post-employment
benefits
Board &
Committee fees
Non-monetary
benefits
Other benefits
(non-cash)
Superannuation
benefits
Total fees for services as
a Non-executive Director
375,000
375,000
262,500
262,500
180,000
167,500
63,768
200,000
199,663
67,500
68,250
-
-
-
1,149,181
1,072,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,531
20,049
20,531
20,049
17,100
15,913
6,058
19,000
18,956
6,412
6,484
-
-
-
89,660
81,423
395,531
395,049
283,031
282,549
197,100
183,413
69,826
219,000
218,619
73,912
74,734
-
-
-
1,238,841
1,153,923
1 Mr Haggarty retired on 25 October 2018
2 Mr Ward commenced on 15 February 2019
3 Mr Zage elected not to receive any Board & Committee fees in FY2019 and FY2018
57
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves Financial Report | Glossary | Corporate directory || |Directors’ Report 7. Executive KMP statutory tables and additional disclosures
7.1 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.
Salary
& fees
Non-
Monetary
Benefits
Super-
annuation
Benefits
FY
(A)
Termination
Benefits
Shares
STI
(B)
Rights
and
options
(C)
Total
Remun-
eration
Perfor-
mance
related
%
Share-based payments
Executive Directors
Paul
Flynn
2019 1,475,000
12,500
25,000
1,212,423
2018
1,327,520
12,660
25,000
1,248,639
Other Executive KMP
Kevin
Ball
Timothy
Burt
Brian
Cole
2019
675,000
2018
587,000
-
-
25,000
377,924
25,000
401,275
2019
575,000
12,500
25,000
335,010
2018
508,377
12,660
11,823
339,554
2019
665,000
10,432
25,000
380,929
2018
651,260
635
25,000
440,583
Jamie
Frankcombe
2019
975,000
12,500
25,000
623,628
2018
885,350
12,660
25,000
677,136
Scott
Knights
2019
600,000
2018
500,000
Michael van
Maanen*
2019
350,000
2018
33,750
-
-
-
-
25,000
346,615
25,000
343,275
25,000
152,720
2,558
-
Total
2019 5,315,000
47,932
175,000 3,429,249
2018
4,493,257
38,615
139,381
3,450,462
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
146,859
2,871,782
2,033,472
4,647,291
43,462
1,121,386
738,135
1,751,410
37,367
984,877
632,604
1,505,018
40,950
1,122,311
822,393
1,939,871
79,389
1,715,517
1,237,869
2,838,015
38,721
1,010,336
602,005
1,470,280
31,775
559,495
-
36,308
418,523 9,385,704
- 6,066,478
14,188,193
47%
71%
38%
65%
38%
65%
38%
65%
41%
67%
38%
64%
33%
-
* Commenced 28 May 2018.
(A) The amounts disclosed as non-monetary benefits relate to car spaces, motor vehicle benefits and other similar items.
(B) Comprises the cash component of current year STI (Refer to section 3.3 and section 4.1 for details) and the fair value at each grant date of STI deferred
rights expensed over the relevant period for the service vesting conditions. The fair value for STI grants is based on the volume weighted average price
of Whitehaven shares over the 20 trading day period commencing 10 trading days prior to 30 June of each respective grant.
(C) The fair value for LTI performance rights granted to the KMP is based on the fair value at each grant date expensed over the vesting period. The FY2019
amount includes the reversal of AASB 2 share-based payments expense due to lapse outcomes of cost hurdle LTI rights and options. The factors and
assumptions used in determining the fair value are set out in note 5.5 to the financial statements.
58
Directors’ Report Remuneration ReportFor the year ended 30 June 2019 7.2 Movement in options and rights 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 2018
(number)
Granted
(number)
Granted
(value)
Vested
during
the year
(number)
Exercised
(number)
Exercised
(value)
Lapsed
(number)
(A)
(B) $
(C) $
Balance
as at 30
June 2019
(number)
Vested and
exercisable
at 30 June
2019
Lapsed
(year of
grant)
(D)
Paul
Flynn
Performance
Rights (LTI)
2,180,249
315,790
1,285,265
829,002
829,002
457,935
82,232
2015
1,584,805
Options (LTI)
2,608,430
-
-
-
367,267
111,752
636,983
231,488
-
-
-
-
-
-
-
-
2,608,430
479,019
231,488
Deferred
Rights (STI)
Performance
Rights (LTI)
Kevin
Ball
Deferred
Rights (STI)
Performance
Rights (LTI)
Brian
Cole
797,289
98,246
399,861
308,149
308,149
172,891
29,767
2015
557,619
Options (LTI)
944,229
-
-
-
Deferred
Rights (STI)
127,779
35,397
201,760
84,790
-
-
-
-
-
-
-
-
944,229
163,176
84,790
Timothy
Burt
Performance
Rights (LTI)
698,243
84,211
342,739
282,475
282,475
165,122
25,302
2015
474,677
Options (LTI)
802,595
-
-
-
107,702
30,088
171,496
72,344
-
-
-
-
-
-
-
-
802,595
137,790
72,344
907,744
96,843
394,151
367,245
367,245
214,683
32,893
2015
604,449
Options (LTI)
1,043,373
-
-
-
Deferred
Rights (STI)
136,817
39,145
223,122
90,476
-
-
-
-
-
-
-
-
1,043,373
175,962
90,476
Jamie
Frankcombe
Performance
Rights (LTI)
1,344,699
175,439
714,037
526,156
526,156
298,594
49,814
2015
944,168
Options (LTI)
1,580,107
-
-
-
Deferred
Rights (STI)
208,713
60,174
342,991
136,719
-
-
-
-
-
-
-
-
1,580,107
268,887
136,719
Scott
Knights
Performance
Rights (LTI)
677,503
87,720
357,020
264,497
264,497
151,717
24,558
2015
476,168
Options (LTI)
810,001
-
-
-
Deferred
Rights (STI)
108,104
30,365
173,078
71,210
Michael van
Maanen
Performance
Rights (LTI)
-
52,632
214,212
-
-
-
-
-
-
-
-
-
-
-
-
-
810,001
138,469
71,210
52,632
-
-
-
-
-
-
-
-
-
-
-
-
-
(A) The number of rights granted during FY2019 includes:
a. The FY2018 LTI awards. Further details are provided in section 4.2; and
b. The deferred rights component of the FY2018 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 30 June 2018. The granting of rights occurred on 27 October 2018.
(B) The value of LTI performance rights granted in the year is the fair value of the performance rights at grant date.
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 30 June 2018 of $5.70.
Unvested LTI and STI awards have a minimum value of zero if they do not meet the relevant performance or service conditions.
The maximum value of unvested LTI and STI awards is the sale price of the Company’s shares at the date of vesting, or where applicable, exercise
(plus the value of any dividend equivalent payment attaching to the award on vesting or, where applicable exercise).
(C) The 2014 LTI Rights TSR Hurdle Tranche 2 fully vested during the year. The remaining 50% of the satisfied 2014 LTI Rights Costs Target Hurdle vested
during the year. The 2015 LTI Rights TSR Hurdle Tranche 1 fully vested during the year. The 2015 LTI Costs Target Hurdle vested at a rate of 80%. 50% of
this hurdle vested during the year with the remaining 50% subject to a further 12 month service condition to vest in FY2020. The value of LTI performance
rights vested in the year is the fair value of the performance rights at grant date.
Tranche 1 of the FY2017 STI deferred rights vested during the period. The vested value of rights exercised 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 2017.
Tranche 2 of the FY2016 STI deferred rights 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 1 July 2016.
(D) The year in which the lapsed performance rights, options or deferred shares were granted. 20% of the 2015 LTI Rights Costs Target Hurdle Tranche 1
award lapsed due to the performance conditions not being met.
59
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves Financial Report | Glossary | Corporate directory || |Directors’ Report 7. Executive KMP statutory tables and additional disclosures (cont.)
7.3 Movement in ordinary shares held by KMP
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
Non-Executive Directors
Mark Vaile
John Conde
Dr Julie Beeby
Tony Haggarty1
Raymond Zage
Fiona Robertson
Lindsay Ward2
Executive KMP
Paul Flynn
Kevin Ball
Timothy Burt
Brian Cole
Jamie Frankcombe
Scott Knights
Michael van Maanen
Held at
1 July 2018
Received on vesting
and exercise of STI/LTI
Received as
remuneration
Other net
change
Held at
30 June 2019
2,049,882
888,620
55,000
1,000,000
-
10,000
-
1,241,391
375,722
370,144
501,790
500,000
-
-
-
-
-
-
-
-
-
858,311
319,045
292,463
380,229
544,760
273,850
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(540,565)
(180,000)
-
N/A
-
11,560
-
(645,375)
(156,000)
(187,865)
-
-
(273,850)
-
1,509,317
708,620
55,000
N/A
-
21,560
-
1,454,327
538,767
474,742
882,019
1,044,760
-
-
1 Mr Tony Haggarty retired as a Non-executive Director on 25 October 2018.
2 Mr Lindsay Ward was appointed as a Non-executive Director effective 15 February 2019.
7.4 Related party transactions and additional disclosures
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.
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.
Signed in accordance with a resolution of the Directors:
The Hon. Mark Vaile AO
Chairman
Paul Flynn
Managing Director
Dated at Sydney this 15th day of August 2019
Dated at Sydney this 15th day of August 2019
60
Directors’ Report Remuneration ReportFor the year ended 30 June 2019 Auditor’s independence declaration
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
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
61
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves Financial Report | Glossary | Corporate directory || |Directors’ Report
Financial Report
For the year ended 30 June 2019
62
Table of contents
Consolidated financial statements
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
64
65
66
67
68
112
113
Notes to the consolidated financial statements index
1. About this report
5. Capital structure and financing
2. Group performance
2.1. Segment reporting
2.2. Significant items
2.3. Taxes
2.4. Earnings per share
3. Working capital and cash flows
3.1 Trade and other receivables
3.2
Inventories
3.3 Trade and other payables
3.4 Reconciliation of cash flows
from operating activities
4. Resource assets and liabilities
4.1 Property, plant and equipment
4.2 Exploration and evaluation
4.3
Intangible assets
4.4 Provisions
5.1. Loans and borrowings
5.2. Finance income and expense
5.3. Financial risk management
objectives and policies
5.4. Share capital and reserves
5.5. Share-based payments
6. Group structure
6.1. Acquisition of business
6.2. Group’s subsidiaries
6.3. Interest in joint operations
6.4. Parent entity information
6.5. Deed of cross guarantee
6.6. Related parties
7. Other notes
7.1. Employee benefits
7.2. Auditors’ remuneration
7.3. Commitments
7.4. Contingencies
7.5. Subsequent events
63
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves | Directors’ Report Glossary | Corporate directory || |Financial Report Consolidated statement
of comprehensive income
For the year ended 30 June 2019
Revenue
Other income
Operating expenses
Coal purchases
Selling and distribution expenses
Royalties
Depreciation and amortisation
Administrative expenses
Corporate development costs
Share-based payments expense
Foreign exchange gain/(loss)
Profit before net financial expense
Financial income
Financial expenses
Net financial expense
Profit before tax
Income tax expense
Net profit 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 for the period, net of tax
Note
2019
$’000
2018
$’000
Restated1
2.1
2,487,944
2,257,446
3,930
6,767
(734,858)
(592,151)
(210,678)
(175,069)
(324,131)
(287,294)
(184,754)
(224,459)
(26,185)
-
(7,684)
(2,356)
(169,941)
(203,132)
(22,033)
(9,701)
(9,927)
4,141
776,769
799,106
2,092
(42,993)
(40,901)
1,600
(41,817)
(40,217)
735,868
758,889
5.5(a)
5.2
2.3(a)
(207,970)
(234,379)
527,898
524,510
5.2
2.3(b)
5.2
(4,287)
1,286
(3,001)
(372)
112
(260)
Total comprehensive income for the period, net of tax
524,897
524,250
Net profit for the period attributable to:
Owners of the parent
Non-controlling interests
Comprehensive income for the period, net of tax attributable to:
Owners of the parent
Non-controlling interests
Earnings per share:
527,898
524,510
-
-
524,897
524,250
-
-
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
2.4
2.4
53.5
52.4
53.1
52.1
1 The comparative statement for the year ended 30 June 2018 has been restated to give effect to the change in accounting policies. See note 1.5
for further details.
The consolidated statement of comprehensive income is to be read in conjunction with the notes to the consolidated
financial statements.
64
Consolidated statement
of financial position
As at 30 June 2019
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Total current assets
Trade and other receivables
Investments
Property, plant and equipment3
Exploration and evaluation
Intangible assets
Total non-current assets
Total assets
Liabilities
Trade and other payables
Loans and borrowings2
Employee benefits
Provisions
Income tax payable
Derivative financial instruments
Total current liabilities
Non-current liabilities
Loans and borrowings2
Deferred tax liability
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share-based payments reserve
Hedge reserve
Retained earnings
Total equity
Note
3.1
3.2
5.3(d)
3.1
4.1
4.2
4.3
3.3
5.1
7.1
4.4
2.3(c)
5.3(d)
5.1
2.3(c)
4.4
2019
$’000
119,535
155,745
148,939
47
2018
$’000
Restated1
111,777
97,698
124,567
2,595
424,266
336,637
10,518
37
11,732
37
3,841,872
3,746,758
547,089
21,350
508,552
22,200
4,420,866
4,289,279
4,845,132
4,625,916
197,731
81,728
26,510
29,985
288
2,874
223,984
105,453
22,560
6,136
-
1,136
339,116
359,269
333,529
390,068
260,219
482,641
198,993
102,201
983,816
783,835
1,322,932
1,143,104
3,522,200
3,482,812
5.4(a)
2,980,933
2,993,458
16,909
(1,979)
13,948
1,022
526,337
474,384
3,522,200
3,482,812
1 The comparative statement for the year ended 30 June 2018 has been restated to give effect to the change in accounting policies. See note 1.5
for further details.
2
3
Included within loans and borrowings are lease liabilities recognised for the first time upon adoption of AASB 16 Leases of $134,111,000
(2018: $205,874,000)
Included within property, plant and equipment are right-of-use assets recognised for the first time upon adoption of AASB 16 Leases of $124,680,000
(2018: $195,868,000)
The consolidated statement of financial position is to be read in conjunction with the notes to the consolidated
financial statements.
65
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves | Directors’ Report Glossary | Corporate directory || |Financial Report
Consolidated statement
of changes in equity
For the year ended 30 June 2019
Balance at 1 July 2017
Impact of change in accounting policy
Issued
Capital
Note
$’000
3,136,941
-
Share-
based
Payment
Reserve
$’000
7,827
-
Hedge
Reserve
Retained
Earnings
Total
equity
$’000
$’000
$’000
1,282
146,246
3,292,296
-
(5,938)
(5,938)
Balance as at 1 July 2017 (restated)
3,136,941
7,827
1,282
140,308
3,286,358
Profit for the period (restated)
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Dividends paid
Capital return
-
-
-
-
(138,884)
-
-
-
-
-
Share-based payments
5.5(a)
-
9,927
Transfer on exercise of share-based payments
6,188
(3,474)
Transfer on lapse of share-based payments
-
(332)
Purchase of shares through employee share plan
5.4(a)
(10,787)
-
-
524,510
524,510
(260)
-
(260)
(260)
524,510
524,250
-
-
-
-
-
-
(188,052)
(188,052)
-
-
(138,884)
9,927
(2,714)
332
-
-
-
(10,787)
Closing balance at 30 June 2018
2,993,458
13,948
1,022
474,384
3,482,812
Opening balance at 1 July 2018
2,993,458
13,948
1,022
474,384
3,482,812
Profit for the period
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Dividends paid
Share-based payments
5.5(a)
-
-
-
-
-
Transfer on exercise of share-based payments
Transfer on lapse of share-based payments
15,814
-
-
-
-
-
7,684
(4,621)
(102)
Purchase of shares through employee share plan
5.4(a)
(28,339)
-
-
527,898
527,898
(3,001)
-
(3,001)
(3,001)
527,898
524,897
-
-
-
-
-
(464,854)
(464,854)
-
7,684
(11,193)
102
-
-
-
(28,339)
Closing balance at 30 June 2019
2,980,933
16,909
(1,979)
526,337
3,522,200
The consolidated statement of changes in equity is to be read in conjunction with the notes to the consolidated
financial statements.
66
Consolidated statement
of cash flows
For the year ended 30 June 2019
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
Cash generated from operations
Interest paid
Interest received
Income taxes paid
Note
2019
$’000
2018
$’000
Restated1
2,442,211
2,274,205
(1,478,153)
(1,348,280)
964,058
(34,371)
2,088
(15,321)
925,925
(35,458)
1,596
-
Net cash from operating activities
3.4
916,454
892,063
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Expenditure on projects
Acquisition of Joint Venture interest, net of cash acquired
6.1
Acquisition of Winchester South
Net cash used in investing activities
Cash flows from financing activities
Payment of finance facility upfront costs
Purchase of shares
Proceeds from borrowings
Repayment of borrowings
Payment of lease liabilities
Payment of capital return to shareholders
Payment of dividends
Net cash used in financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
1,195
(92,847)
(32,725)
(4,803)
(64,618)
804
(78,370)
(9,589)
(20,214)
(277,564)
(193,798)
(384,933)
(1,681)
(28,339)
410,000
(8,695)
(10,787)
415,000
(536,908)
(476,907)
(93,116)
(74,166)
-
(138,884)
(464,854)
(188,052)
(714,898)
(482,491)
7,758
111,777
119,535
24,639
87,138
111,777
1 The comparative statement for the year ended 30 June 2018 has been restated to give effect to the change in accounting policies. See note 1.5
for further details.
The consolidated statement of cash flows is to be read in conjunction with the notes to the consolidated
financial statements.
67
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves | Directors’ Report Glossary | Corporate directory || |Financial Report Notes to the consolidated
financial statements
For the year ended 30 June 2019
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 and Queensland. The consolidated
general purpose financial report of the Group for the
year ended 30 June 2019 was authorised for issue in
accordance with a resolution of the directors on 15
August 2019. 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
that have been measured at fair value (refer to note 5.3).
The Company is of a kind referred to in ASIC
Corporations Instrument 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 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:
2.3 Taxes
4.1 Property, plant and equipment
4.2 Exploration and evaluation
4.4 Provisions
6.3 Interest in joint operations
page 78
page 85
page 86
page 88
page 105
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 2019 comprises
the Company and its subsidiaries and the Group’s
interest in joint 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) 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.
68
(iv) Notes to the consolidated financial statements
Impact on the Group:
The effect of adopting AASB 16 on the Group’s
consolidated financial statements is as follows.
Only line items that have been restated have
been included below.
(i)
Impact on the consolidated statement
of financial position
As at 30 June 2018:
Right-of-use asset and Lease liability
Upon adoption of AASB 16 the present value of
the non-cancellable lease payments relating to
all contracts within the Group with an identified
lease was recognised as a lease liability with a
corresponding right-of-use asset, as if AASB 16
had always been applied. As the lease liability and
right-of-use asset do not unwind at the same rate,
the difference between the right-of-use asset and
lease liability upon initial adoption was adjusted
in retained earnings.
The statement of financial position as at 30 June
2018 was restated resulting in recognition of a
right-of-use asset (included in Property, plant
and equipment) for $195,868,000, a Lease
liability (included in Loans and borrowings) for
$205,874,000, a Deferred tax asset for $3,002,000
and a Retained earnings adjustment for $7,004,000.
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.
1.5 New standards, interpretations and
amendments adopted by the Group
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 2018. The Group has early adopted AASB
16 Leases effective from 1 July 2018. Other than AASB
16 Leases, the Group has not early adopted any other
standard, interpretation or amendment that has been
issued but is not yet effective.
The Group applies, for the first time, AASB 16 Leases,
AASB 15 Revenue from Contracts with Customers and
AASB 9 Financial Instruments. The nature and effect
of these changes is described below.
Several other amendments and interpretations apply
for the first time in the current year. However, they
do not impact the consolidated financial statements
of the Group.
a) AASB 16 Leases
The Group has elected to adopt AASB 16 Leases
from 1 July 2018 using the full retrospective method
and therefore the comparative information has been
restated to reflect this change in accounting policy.
AASB 16 supersedes AASB 117 and its associated
interpretative guidance and 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. Under AASB 16, a lessee is
required to recognise, at the commencement date
of the lease, the present value of non-cancellable
lease payments as a lease liability on the statement
of financial position with a corresponding right-
of-use asset. The unwind of the financial charge
on the lease liability and the amortisation of the
leased asset are recognised in the statement
of comprehensive income based on the implied
interest rate and contract term respectively.
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Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves | Directors’ Report Glossary | Corporate directory || |Financial Report 1. About this report (cont.)
1.5 New standards, interpretations and amendments adopted by the Group (cont.)
a) AASB 16 Leases (cont.)
(i)
Impact on the consolidated statement of financial position (cont.)
Assets
Property, plant & equipment
Total assets
Liabilities
As previously
reported
AASB 16
impact
$’000
$’000
Restated
$’000
3,550,890
4,430,048
195,868
195,868
3,746,758
4,625,916
Interest bearing loans and borrowings (current)
(35,137)
(70,316)
(105,453)
Interest bearing loans and borrowings (non-current)
(347,083)
(135,558)
(482,641)
Deferred tax liabilities
Total liabilities
Net assets
Equity
Retained earnings
Total equity
As at 30 June 2017:
Assets
Property, plant & equipment
Deferred tax assets
Total assets
Liabilities
Interest bearing loans and borrowings (current)
Interest bearing loans and borrowings (non-current)
Total liabilities
Net assets
Equity
Retained earnings
Total equity
(201,995)
3,002
(198,993)
(940,232)
(202,872)
(1,143,104)
3,489,816
(7,004)
3,482,812
(481,388)
(3,489,816)
7,004
7,004
(474,384)
(3,482,812)
As previously
reported
AASB 16
impact
$’000
$’000
Restated
$’000
3,442,467
228,283
3,670,750
32,729
2,545
35,274
3,967,040
230,828
4,197,868
(23,560)
(374,715)
(54,991)
(78,551)
(181,775)
(556,490)
(674,744)
(236,766)
(911,510)
3,292,296
(5,938)
3,286,358
(146,246)
(3,292,296)
5,938
5,938
(140,308)
(3,286,358)
70
Notes to the consolidated financial statementsFor the year ended 30 June 2019 (ii)
Impact on the consolidated statement of comprehensive income as at 30 June 2018:
Operating expenses, Depreciation and Amortisation and Financial Expenses
Prior to the adoption of AASB 16 the Group recognised operating leases in the form of mining equipment and other
infrastructure commitments in Operating expenses in the statement of comprehensive income.
Upon adoption of AASB 16 the unwind of the lease liability is charged to the statement of comprehensive income in
Financial expenses, unwinding using the effective interest method, and amortisation of the right-of-use asset is charged
to the statement of comprehensive income in Depreciation and amortisation or allocated as part of the inventory costs
in the statement of financial position, depreciating the leased assets straight line over the contract term.
The consolidated statement of comprehensive income for the year ended 30 June 2018 was restated resulting in
an increase in Depreciation and amortisation and Financial expenses amounting to $62,108,000 and $11,326,000
respectively. Subsequently, Operating expenses was restated resulting in a decrease amounting to $71,911,000.
Operating expenses
Depreciation and amortisation
Financial expenses
Income tax expense
Net profit for the period
Attributable to:
Owners of the parent
Non-controlling interest
As previously
reported
$’000
(664,062)
(141,024)
(30,491)
(234,836)
525,576
AASB 16
impact
$’000
71,911
(62,108)
(11,326)
Restated
$’000
(592,151)
(203,132)
(41,817)
457
(234,379)
(1,066)
524,510
525,576
(1,066)
524,510
-
-
-
(iii) Impact on the consolidated statement of cash flows as at 30 June 2018:
Cash flows
Prior to the adoption of AASB 16 the Group classified cash flows from operating leases within operating activities.
Upon adoption of AASB 16 the Group classifies the principal portion of lease payments within financing activities and
the interest portion within operating activities. The consolidated statement of cash flows was restated resulting in an
increase to Net cash from operating activities amounting to $60,585,000 and an increase in Net cash used in financing
activities amounting to $60,585,000.
Cash paid to suppliers and employees
Interest paid
Net cash from operating activities
Payment of lease liabilities
Net cash used in financing activities
There is no material impact on the basic and diluted EPS.
As previously
reported
$’000
(1,420,191)
(24,132)
831,478
(13,581)
AASB 16
impact
$’000
71,911
(11,326)
60,585
(60,585)
Restated
$’000
(1,348,280)
(35,458)
892,063
(74,166)
(421,906)
(60,585)
(482,491)
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Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves | Directors’ Report Glossary | Corporate directory || |Financial Report 1. About this report (cont.)
1.5 New standards, interpretations and amendments adopted by the Group (cont.)
b) AASB 15 Revenue from Contracts with Customers
The Group has adopted AASB 15 Revenue from
Contracts with Customers from 1 July 2018 using
the modified retrospective method, applying the
completed contracts exemption at 1 July 2018 and
comparatives are not restated. AASB 15 supersedes
AASB 118 Revenue and AASB 111 Construction
Contracts and related Interpretations and it applies
to all revenue arising from contracts with customers,
unless those contracts are within the scope of other
standards. The new standard establishes a five-step
model to account for revenue arising from contracts
with customers. The core principle of AASB 15 is
that an entity recognises revenue related to the
transfer of promised goods or services when control
of the goods or services passes to the customer.
The amount of revenue recognised should reflect
the consideration to which an entity expects to be
entitled in exchange for transferring those goods
or services to a customer.
The standard requires entities to exercise
judgement, taking into consideration all of the
relevant facts and circumstances when applying
each step of the model to contracts with their
customers.
Impact on the Group:
As the Group’s revenue is derived from the sale
of coal on a free on board basis in which the transfer
of the risks and rewards coincides with the fulfilment
of performance obligations and transfer of control
as defined by AASB 15, there was no quantitative
change in respect of the timing and amount of
revenue the Group currently recognises.
c) AASB 9 Financial Instruments
The Group has adopted AASB 9 Financial
Instruments from 1 July 2018. With the exception
of hedge accounting, which the Group has applied
prospectively, the Group has applied AASB 9
retrospectively. AASB 9 replaces AASB 139 Financial
Instruments: Recognition and Measurement,
bringing together all three aspects of the accounting
for financial instruments: classification and
measurement, impairment and hedge accounting.
Impact on the Group:
The accounting for the Group’s financial assets,
financial liabilities and hedge accounting remains
largely the same as under AASB 139 and as a result,
there has been no quantitative impact on the Group
as a result of adopting AASB 9, and no comparative
balances have been restated. A more detailed
analysis of the impact on the Group of the main
components of AASB 9 is as per the below:
72
Classification and measurement of financial assets:
AASB 9 contains three principal classification
categories for financial assets: measured at
amortised cost, Fair Value through Other
Comprehensive Income (“FVOCI”) and Fair Value
Through Profit or Loss (“FVTPL”). This is based on
the concept that financial assets should be classified
and measured at fair value, with changes in fair
value recognised in profit or loss as they arise
(FVTPL), unless restrictive criteria are met for
classifying and measuring the asset at either
amortised cost or FVOCI. The classification is
generally based on the business model in which a
financial asset is managed and its contractual cash
flow characteristics. The Group has reviewed and
assessed its existing financial assets as at 1 July
2018 based on the facts and circumstances that
existed at that date and concluded that the initial
application of AASB 9 has had no material impact
on the Group’s financial assets in regards to their
classification and measurement. Classification
and measurement of financial assets remains
the same under AASB 9.
Impairment: in relation to the impairment of financial
assets, AASB 9 introduces a new forward-looking
expected credit loss approach, replacing AASB 139’s
incurred loss approach whereby the Group needs
to record an allowance for expected credit loss
upon initial recognition of the financial instrument.
For Trade and other receivables, the Group has
elected to measure the loss allowance with respect
to the 12 month expected credit loss. The Group has
assessed the historical credit loss experience, and
adjusted it for forward looking factors specific to the
debtors and economic environment. Based on this
assessment, the initial application of the impairment
requirements of AASB 9 has had no material impact
on the Group’s financial statements.
Hedge accounting: The Group applied hedge
accounting prospectively. At the date of the
initial application, all of the Group’s existing
hedge relationships were eligible to be treated
as continuing hedge relationships. Consistent
with prior periods, the Group has continued to
designate the change in fair value of the entire
forward contract in the Group’s cash flow hedge
relationships and, as such, the adoption of the
hedge accounting requirements of AASB 9
has had no material impact on the Group’s
financial statements.
Notes to the consolidated financial statementsFor the year ended 30 June 2019 2. Group performance
2.1 Segment reporting
Identification of reportable segments
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.
The Group has determined that it has two reportable segments: Open Cut Operations and Underground Operations.
Unallocated operations include 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, profit and capital expenditure information for reportable segments:
Year ended 30 Jun 2019
Revenue
Sales to external customers
Revenue by product type:
Metallurgical coal
Thermal coal
Total revenue from contracts with customers
Result
Segment EBITDA result
Depreciation and amortisation
Income tax expense
Net finance expense
Significant items before income tax and depreciation
(see note 2.2)
Net profit after tax per consolidated statement
of comprehensive income
Capital expenditure
Segment expenditure
Open Cut
Operations
Underground
Operations
Unallocated
Operations
$’000
$’000
$’000
Total
$’000
1,696,424
567,994
223,526
2,487,944
433,074
1,263,350
1,696,424
101,011
466,983
567,994
-
534,085
223,526
1,953,859
223,526
2,487,944
777,967
247,531
16,186
1,041,684
(224,459)
(207,970)
(40,901)
(40,456)
527,898
30,898
62,945
31,729
125,572
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Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves | Directors’ Report Glossary | Corporate directory || |Financial Report
2. Group performance (cont.)
2.1 Segment reporting (cont.)
Year ended 30 Jun 2018
Revenue
Sales to external customers
Revenue by product type:
Metallurgical coal
Thermal coal
Total revenue from contracts with customers
Result
Segment EBITDA result (restated)
Depreciation and amortisation
Income tax expense
Net finance expense
Net profit after tax per consolidated statement
of comprehensive income
Capital expenditure
Segment expenditure
Other segment information
Open Cut
Operations
Underground
Operations
Unallocated
Operations
$’000
$’000
$’000
Total
$’000
1,582,505
507,199
167,742
2,257,446
354,210
1,228,295
1,582,505
79,517
427,682
507,199
-
433,727
167,742
167,742
1,823,719
2,257,446
773,387
224,242
4,609
1,002,238
(203,132)
(234,379)
(40,217)
524,510
23,411
56,873
7,675
87,959
Revenue from external customers is attributed to geographic location based on final shipping destination.
Revenue by
geographic location
Japan
Taiwan
Korea
India
China
Malaysia
Indonesia
Vietnam
Philippines
Chile
Other
New Caledonia
Domestic
Total revenue
2019
$’000
2018
$’000
1,255,751
1,168,965
262,015
351,328
201,637
66,541
100,267
48,755
67,861
35,933
-
60,952
26,128
10,776
302,279
252,039
128,540
87,184
63,352
60,410
47,323
30,836
30,410
56,192
24,618
5,298
2,487,944
2,257,446
2019/2018 Comparison
Revenue by
geographic location
2018
2019
74
Notes to the consolidated financial statementsFor the year ended 30 June 2019
Major customers
The Group has three major customers which account for 29.4% (2018: 27.4%) of external revenue.
Recognition and measurement:
The Group recognises sales revenue related to the transfer of promised goods or services when control of the
goods or services is transferred to the customer. The amount of revenue recognised reflects the consideration
to which the Group is or expects to be entitled in exchange for those goods or services.
Sales revenue is recognised on individual sales when control transfers to the customer. The title, risks and
rewards, and fulfilment of performance obligation occurs when the product is loaded onto the vessel for delivery
to the customer.
The Group sells its products on Free on Board terms where the Group has no responsibility for freight or insurance
once control of the goods has passed at the loading port. Under these terms there is only one performance
obligation, being the provision of goods at the point when control passes to the customer.
The Group’s products are sold to customers under contracts which vary in tenure and pricing mechanisms,
primarily being monthly or quarterly indexes. Certain sales may be provisionally priced at the date revenue is
recognised, however substantially all coal sales are reflected at final prices by the end of the reporting period.
The final selling price is based on the price for the quotational period stipulated in the contract.
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:
Note
2019
$’000
2018
$’000
Operating expenses:
Rehabilitation expense1
Depreciation and amortisation:
Accelerated depreciation at Narrabri2
Significant items before tax
Applicable income tax benefit
Significant items after tax
4.4
(40,456)
(12,330)
(52,786)
15,836
(36,950)
-
-
-
-
1 The Group calculates its rehabilitation provisions based on a combination of its own estimates and rehabilitation cost calculators provided by resource
regulators. Rehabilitation cost calculators are issued by resource regulators for rehabilitation bonding purposes. During the year ended 30 June 2019,
the Group transitioned its rehabilitation provision calculations for most sites to the latest rehabilitation cost calculator available from resource regulators.
This resulted in an increase in the rehabilitation provisions within the Group of $138.5 million. The rehabilitation provisions will be reassessed at each
reporting date using updated survey results and will incorporate the rehabilitation work undertaken during the period. The increase in the rehabilitation
provision at 30 June 2019 for the mines currently in rehabilitation, or approaching rehabilitation was recognised as an ‘Operating expense’ within the
Consolidated Statement of Comprehensive Income. The increase in the provision for mines that remain in operation was recognised as an addition to
‘Property, Plant & Equipment’ within the Consolidated Statement of Financial Position.
2 During the year ended 30 June 2019, the Group ordered higher capacity hydraulic cylinders for the longwall roof supports. The new hydraulic cylinders
will replace the existing hydraulic cylinders following the change-out of the next longwall panel. As a result, the Group recognised an accelerated
depreciation expense in respect of the existing hydraulic cylinders.
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Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves | Directors’ Report Glossary | Corporate directory || |Financial Report 2. Group performance (cont.)
2.3 Taxes
a)
Income tax expense
Current tax expense
Current period
Deferred tax expense
Origination and reversal of temporary differences
Adjustments for prior periods
2019
$’000
2018
$’000
Restated
(186,774)
(204,368)
(180,532)
(204,368)
(27,438)
6,242
(30,011)
-
Income tax expense reported in the consolidated statement of comprehensive income
(207,970)
(234,379)
Reconciliation between tax expense and profit before tax
Profit before tax
735,868
758,889
Income tax expense using the Company’s domestic tax rate of 30% (2018: 30%)
(220,760)
(227,667)
Non-deductible expenses:
Share-based payments
Other non-deductible expenses
On-market share purchases by Employee Share Scheme Trust reimbursed by the Group
Over provided in prior periods
Total income tax expense
b)
Income tax recognised directly in other comprehensive income
Deferred income tax related to items charged directly to equity
Derivatives
Income tax expense recorded in equity
(2,305)
350
8,503
6,242
(2,978)
(3,734)
-
-
(207,970)
(234,379)
2019
$’000
1,286
1,286
2018
$’000
Restated
112
112
76
Notes to the consolidated financial statementsFor the year ended 30 June 2019
c) Recognised tax assets and liabilities
2019
2019
2018
2018
Opening balance
Charged to income – corporate tax
Charged to equity
(Utilisation)/recognition of deferred
tax asset on current year losses
Adjustment for prior periods
Payments
Closing balance
-
(186,774)
-
171,165
-
15,321
(288)
Current income
tax payable
Deferred
income tax
Current income
tax payable
$’000
$’000
(198,993)
(27,438)
1,286
$’000
Restated
-
(204,368)
-
Deferred
income tax
$’000
Restated
35,274
(30,011)
112
(171,165)
204,368
(204,368)
6,242
-
(390,068)
-
-
-
-
-
(198,993)
Deferred income tax assets and liabilities are attributable to the following:
Property, plant and equipment
Exploration and evaluation
Receivables
Investments
Right-of-use assets and liabilities (net)
Deferred stripping
Deferred foreign exchange gain
Provisions
Tax losses
Other items
Tax assets/(liabilities)
Assets
2019
$’000
-
-
-
307
632
-
120
80,908
33,273
2,963
118,203
2018
$’000
Restated
-
7,954
-
358
3,002
-
-
37,093
100,361
3,892
152,660
Set off of tax (liabilities)/assets
(118,203)
(152,660)
Liabilities
2019
$’000
(460,817)
(30,580)
(6,920)
-
-
(9,954)
-
-
-
-
(508,271)
118,203
Net tax assets/(liabilities)
-
-
(390,068)
d) Unrecognised deferred tax assets
There were no unrecognised income tax losses at 30 June 2019 (2018: nil).
2018
$’000
Restated
(343,115)
-
(1,275)
-
-
(6,430)
(833)
-
-
-
(351,653)
152,660
(198,993)
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Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves | Directors’ Report Glossary | Corporate directory || |Financial Report 2. Group performance (cont.)
2.3 Taxes (cont.)
Recognition and measurement:
Income tax on the profit or loss for the year comprises
current and deferred tax. Income tax relating to items
recognised directly in other comprehensive income is
recognised in other comprehensive income and not in
the net profit or loss for the year.
Current tax
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
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 liabilities are recognised for all taxable
temporary differences. Deferred 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 sufficient future taxable profits will be available to
utilise them. Deferred tax assets and liabilities are not
recognised for taxable temporary differences that arise
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.
The carrying amount of deferred 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 tax asset
to be utilised.
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,
based on tax rates and laws that have been enacted
or substantively enacted at the balance date.
Offsetting deferred tax balances
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
taxation authority on the same taxable entity.
Tax consolidation
Whitehaven Coal Limited and its wholly owned
Australian resident subsidiaries have formed a tax
consolidated group with effect from 29 May 2007
and are therefore taxed as a single entity from that
date. Whitehaven Coal Limited is the head entity of
the tax consolidated group. The entities within the tax
consolidated group have entered into a tax sharing
arrangement which provides for the allocation of
income tax liabilities between the entities, should the
head entity default on its tax payment obligations.
No amounts have been recognised in the financial
statements in respect of this agreement as payment
of any amounts under the tax sharing agreement is
considered remote.
The entities within the tax consolidated group have also
entered into a tax funding agreement. 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. Under the terms of the tax funding arrangement
Whitehaven Coal Limited and each of the entities in the
tax consolidated group have agreed to pay (or receive)
a tax equivalent payment to (or from) the head entity,
based on the current tax liability or current tax asset
of the entity.
Whitehaven Coal Limited and the subsidiaries in the
tax consolidated group continue to account for their
own current and deferred tax amounts. The amounts
are measured as if each entity in the tax consolidated
group continues to be a standalone tax payer in its own
right. The current tax balances are then transferred to
Whitehaven Coal Limited via intercompany balances.
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.
78
Notes to the consolidated financial statementsFor the year ended 30 June 2019 2.4 Earnings per share
Basic earnings per share
The calculation of basic earnings per share is based on the profit attributable to ordinary shareholders and a weighted
average number of ordinary shares outstanding during the year calculated as follows:
2019
2018
Restated
Profit attributable to ordinary shareholders
Net profit attributable to ordinary shareholders ($‘000)
527,898
524,510
Weighted average number of ordinary shares
Issued ordinary shares at 1 July (000’s)
Effect of shares acquired during the year (000’s)
Weighted average number of ordinary shares at 30 June (000’s)
992,026
992,026
(4,480)
(3,667)
987,546
988,359
Basic earnings per share attributable to ordinary shareholders (cents)
53.5
53.1
Diluted earnings per share
The calculation of diluted earnings per share is based on the profit 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:
2019
2018
Restated
Profit attributable to ordinary shareholders (diluted)
Net profit attributable to ordinary shareholders (diluted) ($’000)
527,898
524,510
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)
987,546
19,853
988,359
17,604
1,007,399
1,005,963
Diluted earnings per share attributable to ordinary shareholders (cents)
52.4
52.1
79
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves | Directors’ Report Glossary | Corporate directory || |Financial Report
3. Working capital and cash flows
3.1 Trade and other receivables
Current
Trade receivables
Other receivables and prepayments
Receivables due from joint operations
Non-current
Other receivables and prepayments
Recognition and measurement:
2019
$’000
113,441
34,347
7,957
155,745
2018
$’000
57,835
26,267
13,596
97,698
10,518
11,732
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.
3.2 Inventories
Coal stocks1
Consumables and stores
1 Coal stocks include run of mine and product coal.
Recognition and measurement:
2019
$’000
114,036
34,903
2018
$’000
99,435
25,132
148,939
124,567
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 tonnes of contained coal are based on assay
data, and the estimated recovery percentage is based on the expected processing method. Stockpile tonnages
are verified by periodic surveys.
80
Notes to the consolidated financial statementsFor the year ended 30 June 2019 3.3 Trade and other payables
Current
Trade payables
Other payables and accruals
2019
$’000
63,157
134,574
197,731
2018
$’000
47,295
176,689
223,984
Recognition and measurement:
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.
3.4 Reconciliation of cash flows from operating activities
Profit 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)/income accruals
Foreign exchange losses/(gain) unrealised
Unwinding of discounts on provisions
Share-based compensation payments
Gain 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
Recognition and measurement:
2019
$’000
2018
$’000
Restated
527,898
524,510
4.1
4.1
224,459
57,946
203,132
37,835
(110,239)
(102,238)
4.4
5.5(a)
-
6,446
(56)
2,969
2,343
7,684
(1,769)
717,681
(45,855)
(23,984)
29,120
46,844
288
192,360
916,454
841
2,082
1,365
(5,206)
2,182
9,927
(315)
674,115
15,828
(32,004)
(5,873)
5,538
-
234,459
892,063
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.
81
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves | Directors’ Report Glossary | Corporate directory || |Financial Report 4. Resource assets and liabilities
4.1 Property, plant and equipment
Year ended
30 June 2019
Cost
Balance at
1 July 2018
Additions
Transfers
PPE acquired as
part of Tarrawonga
acquisition
Disposals
Balance at
30 June 2019
Freehold
land
Plant and
equipment
Leased
plant and
equipment
Mining
property and
development
Subtotal
Deferred
development
Deferred
stripping
Subtotal
Total
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
109,960
877,001
474,449
2,994,501
4,455,911
296,106
1,672,090
1,968,196
6,424,107
964
59,258
58,687
168,225
287,134
110,239
396,865
507,104
794,238
-
-
1,192
-
-
-
(1,192)
-
4,803
4,803
(3,435)
(3,997)
(32,364)
-
(39,796)
-
-
-
-
-
-
-
-
-
-
4,803
(39,796)
107,489
933,454
500,772
3,166,337
4,708,052
406,345
2,068,955
2,475,300
7,183,352
Accumulated depreciation
Balance at
1 July 2018
Depreciation
charge for the year
Disposals
Transfers
Balance at
30 June 2019
Carrying amount
at 30 June 2019
-
-
-
-
-
(322,488)
(177,956)
(421,176)
(921,620)
(105,072)
(1,650,657)
(1,755,729)
(2,677,349)
(56,030)
(89,009)
(91,552)
(236,591)
(57,946)
(385,119)
(443,065)
(679,656)
3,975
11,550
-
15,525
(1,192)
-
1,192
-
-
-
-
-
-
-
15,525
-
(375,735)
(255,415)
(511,536)
(1,142,686)
(163,018)
(2,035,776)
(2,198,794)
(3,341,480)
107,489
557,719
245,357
2,654,801
3,565,366
243,327
33,179
276,506
3,841,872
82
Notes to the consolidated financial statementsFor the year ended 30 June 2019 Year ended
30 June 2018
Cost
Balance at
1 July 2017
Impact of change
in accounting policy
Balance at
1 July 2017 (restated)
Additions
(restated)
Transfers
PPE acquired as
part of Tarrawonga
acquisition
Disposals/mined
out panels
Balance at
30 June 2018
Accumulated depreciation
Balance at
1 July 2017
Impact of change
in accounting policy
Balance at
1 July 2017 (restated)
Depreciation
charge for the year
Disposals/mined
out panels
PPE acquired as part of
Tarrawonga acquisition
Balance at
30 June 2018
Carrying amount
at 30 June 2018
Note
Freehold
land
Plant and
equipment
Leased
plant and
equipment
Mining
property and
development
Subtotal
Deferred
development
Deferred
Stripping
Subtotal
Total
Total
$’000
$’000
Restated
$’000
$’000
$’000
$’000
$’000
$’000
171,921
850,732
90,019
2,857,382
3,970,054
404,777
1,107,888
1,512,665
5,482,719
-
-
311,309
-
311,309
-
-
-
311,309
171,921
850,732
401,328
2,857,382
4,281,363
404,777
1,107,888
1,512,665
5,794,028
10,306
36,243
103,463
36,243
186,255
102,238
415,188
517,426
703,681
-
-
72,267
-
28,609
30,724
-
-
-
-
-
149,014
149,014
179,738
(72,267)
-
2,115
-
-
(12,089)
(30,342)
-
(42,431)
(210,909)
-
(210,909)
(253,340)
109,960
877,001
474,449
2,994,501
4,455,911
296,106
1,672,090
1,968,196
6,424,107
-
-
-
-
-
-
-
(289,315)
(44,837)
(327,728)
(661,880)
(278,146)
(1,100,226)
(1,378,372)
(2,040,252)
-
(83,027)
-
(83,027)
-
-
-
(83,027)
(289,315)
(127,864)
(327,728)
(744,907)
(278,146)
(1,100,226)
(1,378,372)
(2,123,279)
(43,048)
(71,843)
(87,514)
(202,405)
(37,835)
(401,417)
(439,252)
(641,657)
11,580
21,751
-
33,331
210,909
-
210,909
244,240
(1,705)
-
(5,934)
(7,639)
-
(149,014)
(149,014)
(156,653)
(322,488)
(177,956)
(421,176)
(921,620)
(105,072)
(1,650,657)
(1,755,729)
(2,677,349)
109,960
554,513
296,493
2,573,325
3,534,291
191,034
21,433
212,467
3,746,758
83
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves | Directors’ Report Glossary | Corporate directory || |Financial Report 4. Resource assets and liabilities (cont.)
4.1 Property, plant and equipment (cont.)
Leased Plant & Equipment disclosures
All right-of-use assets recognised as ‘Leased plant
and equipment’ above in note 4.1 relate to the plant
and equipment classification.
The cost relating to leases with a contract term of less
than twelve months amounted to $9,124,000 for the
year ended 30 June 2019 (2018: $7,072,000).
The cost relating to variable lease payments that do not
depend on an index or a rate amounted to $34,243,000
in the year ended 30 June 2019 (2018: $39,790,000).
A maturity analysis of lease liabilities is shown in
Note 5.3(c).
For future payments payable under leases which
are in place at the reporting date, refer to Note 7.3(b).
Recognition and measurement:
Property, Plant and Equipment
Property, plant and equipment are measured at cost
less accumulated depreciation and any accumulated
impairment losses. Cost includes expenditure that is
directly attributable to the acquisition of the items and
costs incurred in bringing assets into use. Subsequent
expenditure is capitalised when it is probable that
the future economic benefits associated with the
expenditure will flow to the Group.
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:
– freehold land
not depreciated
– plant and equipment
2%–50%
– leased plant
and equipment
– mining property and
development, deferred
development and
deferred stripping
3%–20%
units of production
The residual value, the useful life and the depreciation
method applied to an asset are reassessed at least
annually. Any changes are accounted for prospectively.
When an asset is surplus to requirements or no longer
has an economic value, the carrying amount of the
asset is written down to its recoverable amount.
Mining property and development
Mine property and development assets include costs
transferred from exploration and evaluation assets
once technical feasibility and commercial viability
of an area of interest are demonstrable. After transfer,
all subsequent mine development expenditure is
similarly capitalised, to the extent that commercial
viability conditions continued to be satisfied.
Costs of dismantling and site rehabilitation are
capitalised, if the recognition criteria is met and
included within Mining Property and Development.
Biodiversity assets are included within Mining
Property and Development and relate to land acquired
and managed to fulfil the biodiversity obligations
associated with mine approval. The cost of the land
is capitalised as a mining property and development
asset which is subsequently depreciated via the units
of production method.
Leased plant and equipment
At the inception of a contract, the Group assesses
whether a contract is, or contains, a lease based
on whether the contract conveys the right to use
or control the use of an identified asset for a period
of time, in exchange for consideration.
At the commencement date of the lease, the Group
recognises a lease liability and a corresponding
right-of-use asset. The lease liability is initially
recognised for the present value of non-cancellable
lease payments discounted using the interest rate
implicit in the lease or, if that rate cannot be readily
determined, the Group’s incremental borrowing rate.
The right-of-use asset is initially measured at cost
which comprises the initial amount of the lease liability
plus any initial direct costs incurred and an estimate
of costs to dismantle and remove the underlying asset.
The right-of-use asset is depreciated to the earlier
of the useful life of the asset or the lease term using
the straight line method and is recognised in the
statement of comprehensive income in Depreciation
and amortisation.
The unwind of the financial charge on the lease liability
is recognised in the statement of comprehensive
income in Net Financial Expenses based on the implied
interest rate or, if used, the Group’s incremental
borrowing rate.
The Group does not recognise leases that have a
lease term of 12 months or less or are of low value
as a right-of-use asset or lease liability. The lease
payments associated with these leases are recognised
as an expense in the consolidated statement of
comprehensive income in Operating expenses
on a straight line basis over the lease term.
84
Notes to the consolidated financial statementsFor the year ended 30 June 2019 Deferred development
Impairment
Deferred development mainly comprises capitalised
costs (deferred development expenditure) related to
underground mining incurred to expand the capacity
of an underground mine and to maintain production.
Deferred stripping
Expenditure incurred to remove overburden or waste
material during the production phase of an open cut
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 identified
component of the ore body that became more
accessible as a result of the stripping activity.
For the purposes of assessing impairment, deferred
stripping assets are grouped with other assets of the
relevant cash generating unit.
The carrying amounts of the Group’s non-financial
assets 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.
Significant accounting judgements, estimates and assumptions
Recoverable amount of assets
The Group assesses at the end of each period, whether
there is any indication that an asset may be impaired.
If any such indication exists, the Group estimates the
recoverable amount of the asset.
The recoverable amounts of cash-generating units
and individual assets are 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.
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.
85
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves | Directors’ Report Glossary | Corporate directory || |Financial Report 4. Resource assets and liabilities (cont.)
4.2 Exploration and evaluation
Exploration and evaluation assets
Balance at 1 July 2018
Exploration and evaluation expenditure
Balance at 30 June 2019
Balance at 1 July 2017
Exploration and evaluation expenditure
Acquisition of Winchester South
Balance at 30 June 2018
$’000
508,552
38,537
547,089
156,781
9,589
342,182
508,552
During the year ended 30 June 2018, the Group acquired a 100% interest in the Winchester South coking coal project
for total consideration of US$262.5 million (US$212.5 million paid on completion in June 2018 and US$50 million paid
12 months post completion in June 2019).
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.
Recognition and measurement:
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.
Exploration and evaluation assets are assessed for
impairment if:
i) sufficient data exists to determine technical
feasibility and commercial viability, and
ii) facts and circumstances suggest that the
carrying amount exceeds the recoverable amount.
For the purposes of impairment testing, exploration
and evaluation assets are 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 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.
86
Notes to the consolidated financial statementsFor the year ended 30 June 2019 4.3 Intangible assets
Balance at 1 July 2018
Additions
Disposals
Balance at 30 June 2019
Balance at 1 July 2017
Additions
Disposals
Balance at 30 June 2018
Water access
rights
Rail access
rights1
$’000
11,082
323
(1,173)
10,232
11,082
-
-
$’000
11,118
-
-
11,118
11,118
-
-
Total
$’000
22,200
323
(1,173)
21,350
22,200
-
-
11,082
11,118
22,200
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.
Recognition and measurement:
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.
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 access agreement.
4.4 Provisions
Movement in Mine rehabilitation and Biodiversity obligations provisions
Balance at 1 July 2018
Change in cost estimates1
Expenditure on closure, rehabilitation and biodiversity activities
Unwinding of discount
Balance at 30 June 2019
Current
Non-current
Balance at 30 June
$’000
108,337
179,524
-
2,343
290,204
2018
$’000
6,136
102,201
108,337
2019
$’000
29,985
260,219
290,204
1 The Group calculates its mine rehabilitation and closure provisions based on a combination of its own estimates and rehabilitation cost calculators
provided by resource regulators. During the year ended 30 June 2019, the Group transitioned its rehabilitation provisions calculations to the latest
rehabilitation cost calculator available from resource regulators which resulted in an increase to rehabilitation provisions across the Group. The resulting
increase to the rehabilitation provision of $40,456,000 for the mines currently in rehabilitation, or approaching rehabilitation in the near future was
recognised as an ‘Operating expense’ within the Consolidated Statement of Comprehensive Income. The resulting increase to the rehabilitation provision
for the operating sites was recognised as an addition to ‘Property, Plant & Equipment’ within the Consolidated Statement of Financial Position. In the
current year, the Group has also recognised a provision for biodiversity obligations which includes the estimated costs of certain activities that the
Group has committed to perform under the terms of certain mining licences. The resulting increase to the provisions was recognised as an addition
to ‘Property, Plant & Equipment’ within the Consolidated Statement of Financial Position.
87
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves | Directors’ Report Glossary | Corporate directory || |Financial Report 4. Resource assets and liabilities (cont.)
4.4 Provisions (cont.)
Recognition and measurement:
Provisions are recognised when:
– the Group has a present legal or constructive
obligation as a result of a past event;
– it is probable that resources will be expended
to settle the obligation; and
– the amount of the provision can be
measured reliably.
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. The nature of rehabilitation activities
includes dismantling and removing operating facilities,
re-contouring and top soiling the mine, and restoration,
reclamation and revegetation of affected areas.
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 cash flows.
The obligation to rehabilitate arises at the
commencement of the mining project and/or when
the environment is disturbed at the mining location.
At this point, the provision is recognised as a liability
with a corresponding asset included in mining property
and development assets. Additional disturbances or
changes in the rehabilitation costs are reflected in the
present value of the rehabilitation provision, with a
corresponding change in the cost of the associated
asset. In the event the restoration provision is reduced,
the cost of the related asset is reduced by an amount
not exceeding its carrying value.
The unwinding of the effect of discounting
the provision is recorded as a finance cost in the
consolidated statement of comprehensive income.
The carrying amount capitalised as a part of mining
property and development assets is depreciated
over the useful life of the related asset.
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.
Biodiversity obligations
The Group has, under the terms of certain mining
licenses, obligations to perform works to establish
or upgrade biodiversity offset areas and to set aside
and maintain those areas. Provisions are made for the
estimated cost of the Group’s biodiversity obligations
based on current estimates of certain activities that
the Group has committed to perform. These costs are
discounted to their present value based on expected
future cash flows. The provision is recognised as
a liability with a corresponding asset included in
mining property and development assets. The
unwinding of the effect of discounting the provision
is recorded as a finance cost in the consolidated
statement of comprehensive income. The carrying
amount capitalised as a part of mining property
and development is depreciated via the units of
production method.
Significant accounting judgements, estimates and assumptions
Significant estimates and assumptions are made in determining the provision for mine rehabilitation and
biodiversity as there are numerous factors that will affect the ultimate liability payable. These factors include
estimates of the extent and costs of rehabilitation activities and biodiversity, 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 and biodiversity costs required.
88
Notes to the consolidated financial statementsFor the year ended 30 June 2019 5. Capital structure and financing
5.1 Loans and borrowings
Current liabilities
Lease liabilities
Lease liabilities associated with right-of-use assets
Secured loans – ECA facility
Capitalised borrowing costs
Non-current liabilities
Senior bank facility
Lease liabilities
Lease liabilities associated with right-of-use assets
Secured loans – ECA facility
Capitalised borrowing costs
2019
$’000
21,969
54,563
11,908
(6,712)
81,728
2018
$’000
Restated
29,359
70,316
11,908
(6,130)
105,453
160,000
275,000
85,444
79,548
16,444
56,982
135,558
28,353
(7,907)
(13,252)
333,529
415,257
482,641
588,094
Financing facilities
1,269,876
1,332,476
Facilities utilised at reporting date
429,876
607,476
Facilities not utilised at reporting date
840,000
725,000
Financing activities during the financial year
During the current period $525 million of debt drawn under the senior bank facility was repaid (30 June 2018: $465
million) and $410 million was redrawn (30 June 2018: $415 million). The Group repaid $11.9 million of the ECA facility
during the period (30 June 2018: $11.9 million). The senior bank facility and the ECA facility are secured via a fixed and
floating charge over the majority of the Group’s assets.
The prior comparative period was restated for the impact of adopting AASB 16 Leases. This increased the lease
liabilities by $205,874,000 as at 30 June 2018. Lease liabilities are secured over the leased assets to which they relate.
The fair values of loans and borrowings materially approximate their respective carrying values as at 30 June 2019
and 30 June 2018.
Recognition and measurement:
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.
Refer to note 4.1 for the recognition and measurement policy for lease liabilities.
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5.2 Finance income and expense
Recognised in the statement of comprehensive income
Interest income
Financial income
Interest expense on lease liabilities
Interest on drawn debt facility
Other financing costs
Interest and financing costs
Net interest expense
Unwinding of discounts on provisions
Amortisation of finance facility upfront costs
Other financial expenses
Net financial expense
Recognised directly in equity
Net change in cash flow hedges
Income tax effect
Financial income recognised directly in other comprehensive income, net of tax
2019
$’000
2,092
2,092
(12,901)
(8,620)
(13,434)
(34,955)
(32,863)
(2,343)
(5,695)
(8,038)
2018
$’000
Restated
1,600
1,600
(13,269)
(6,696)
(14,699)
(34,664)
(33,064)
(2,182)
(4,971)
(7,153)
(40,901)
(40,217)
(4,287)
1,286
(3,001)
(372)
112
(260)
Recognition and measurement:
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 the statement of comprehensive income 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.
90
Notes to the consolidated financial statementsFor the year ended 30 June 2019 5.3 Financial risk management
objectives and policies
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 Group Treasury and monitored 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
the 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
c) Risk exposures and responses
Market Risk – Foreign currency risk
2019
$’000
415,257
(119,531)
295,726
2018
$’000
Restated
588,094
(111,777)
476,317
3,522,200
3,482,812
3,817,926
3,959,129
8%
12%
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 may use forward exchange contracts (FECs) to hedge its currency risk in relation to contracted sales
where both volume and US dollar price 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 2019, a net foreign exchange loss of $2.4m was recognised (2018: net foreign
exchange gain of $4.1m).
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 2019 was $2.7m (2018: $1.7m), comprising
assets and liabilities that were recognised as derivatives.
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5.3 Financial risk management objectives and policies (cont.)
c) Risk exposures and responses (cont.)
At 30 June 2019, the Group had the following financial instruments that were not designated in cash flow hedges that
were exposed to foreign currency risk:
2019
$’000
USD
53,521
13,062
(9,394)
57,189
2018
$’000
USD
23,254
20,189
(10,010)
33,433
Average rate
Reporting date spot rate
2019
0.7156
2018
0.7753
2019
0.7013
2018
0.7391
Cash and cash equivalents
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
Market Risk – Foreign currency risk
Sensitivity analysis
A change in 10 per cent 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 2018.
30 June 2019
AUD:USD strengthening by 10 per cent
AUD:USD weakening by 10 per cent
30 June 2018
AUD:USD strengthening by 10 per cent
AUD:USD weakening by 10 per cent
Equity
Profit or (loss)
$’000
$’000
(6,161)
7,528
(1,940)
2,368
(7,692)
9,401
(4,112)
5,026
92
Notes to the consolidated financial statementsFor the year ended 30 June 2019 Market Risk – Interest rate risk
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.
At the reporting date the interest rate profile of the Group‘s interest-bearing financial instruments was:
Fixed rate instruments
Lease liabilities
Variable rate instruments
Financial assets
Financial liabilities
Net exposure
Carrying amount
2019
$’000
2018
$’000
Restated
(241,524)
(292,215)
(241,524)
(292,215)
119,531
111,777
(188,352)
(315,261)
(68,821)
(203,484)
(310,345)
(495,699)
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 2018.
30 June 2019
100bp increase
100bp decrease
30 June 2018
100bp increase
100bp decrease
Equity
Profit or (loss)
$’000
$’000
21
(22)
122
(125)
(688)
688
(2,035)
2,035
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5.3 Financial risk management objectives and policies (cont.)
c) Risk exposures and responses (cont.)
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
2019
$’000
119,531
113,441
47
37
2018
$’000
111,777
57,835
2,595
37
233,056
172,244
The Group’s maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:
Asia
Europe
Australia
Trade receivables
87,411
21,867
4,163
113,441
45,169
11,528
1,138
57,835
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 29.4% of the Group’s revenue is attributable to sales
transactions with three customers (2018: 27.4% 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.
The Group recognised an impairment loss for trade receivables of $nil during the year ended 30 June 2019 (2018: $nil).
94
Notes to the consolidated financial statementsFor the year ended 30 June 2019 The aging of the Group’s trade receivables at the reporting date was:
Not past due
Past due 0–30 days
Past due 31–120 days
Past due 121 days to one year
More than one year
Guarantees
Gross
2019
$’000
110,938
2,492
11
-
-
Gross
2018
$’000
50,464
4,105
3,266
-
-
113,441
57,835
The policy of the Group is to provide bank guarantees for bonding requirements associated with the mining operations,
infrastructure assets and other purposes such as security of leased premises. Guarantees are provided under the
senior secured bank facility, secured bilateral bank guarantee facilities, as well as unsecured bank facilities. Details
of outstanding guarantees are provided in note 7.4.
Liquidity risk
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 2019
Carrying
amount
Contractual
cash flows
6 mths
or less
6–12 mths
1–2 years
2–5 years
More than
5 years
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Financial liabilities
Lease liabilities
241,524
285,649
46,477
39,831
63,036
90,389
45,916
Senior bank facility
160,000
160,000
-
-
-
160,000
-
Secured loans
Trade and other payables
Forward exchange contracts:
28,352
197,731
30,849
6,512
6,373
4,190
10,238
3,536
197,731
197,731
-
Outflow
Inflow
198,117
197,267
173,407
23,860
(195,430)
(196,280)
(172,295)
(23,985)
-
-
-
-
-
-
-
-
-
630,294
675,216
251,832
46,079
67,226
260,627
49,452
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5.3 Financial risk management objectives and policies (cont.)
c) Risk exposures and responses (cont.)
30 June 2018
Carrying
amount
Contractual
cash flows
6 mths
or less
6–12 mths
1–2 years
2–5 years
More than
5 years
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Financial liabilities
Lease liabilities (restated)
292,215
343,328
65,001
45,686
79,312
85,260
68,069
Senior bank facility
275,000
275,000
-
-
-
275,000
-
Secured loans
40,261
44,282
6,788
6,645
12,885
11,227
6,737
Trade and other payables
223,984
223,984
223,984
-
Forward exchange contracts:
Outflow
Inflow
(16,138)
112,086
44,564
67,522
14,429
(108,289)
(43,671)
(64,618)
-
-
-
-
-
-
-
-
-
829,751
890,391
296,666
55,235
92,197
371,487
74,806
d) Net fair values
The following table provides the fair value measurement hierarchy of the Group’s financial assets and financial liabilities
as at 30 June 2019 and 30 June 2018.
– 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
30 June 2019
$’000
Level 1
$’000
Level 2
$’000
Level 3
$’000
37
47
84
(2,734)
(140)
(2,874)
-
-
-
-
-
-
-
47
47
(2,734)
(140)
(2,874)
37
-
37
-
-
-
96
Notes to the consolidated financial statementsFor the year ended 30 June 2019 Assets measured at fair value
Equity shares
Forward exchange contracts – receivable
Liabilities measured at fair value
Forward exchange contracts – payable
Interest rate swaps – payable
30 June 2018
$’000
Level 1
$’000
Level 2
$’000
Level 3
$’000
37
2,595
2,632
(888)
(248)
(1,136)
-
-
-
-
-
-
-
2,595
2,595
(888)
(248)
(1,136)
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. During the period the Group entered into forward exchange contracts to hedge foreign exchange risk.
A number of these contracts remained open at 30 June 2019.
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 categories
Financial assets
Cash and cash equivalents
Trade and other receivables
Investments
Other financial assets1
Total financial assets
2019
2018
Amortised
cost
$’000
Other1
$’000
Amortised
cost
$’000
119,531
166,263
-
-
285,794
-
-
37
47
84
111,777
109,430
-
-
221,207
Note
3.1
5.3(d)
1 Other financial assets include $0.1 million (2018: $2.6 million) relating to derivatives in designated hedges.
Financial liabilities
Trade and other payables
Loans and borrowings (restated)
Other financial liabilities2
Total financial liabilities
2019
Amortised
cost1
Note
$’000
3.3
5.1
5.3(d)
197,731
415,257
-
612,988
2018
Amortised
cost1
$’000
223,984
588,094
-
812,078
Other2
$’000
-
-
2,874
2,874
Other1
$’000
-
-
37
2,595
2,632
Other2
$’000
-
-
1,136
1,136
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 $2.9 million (2018: $1.1 million) relating to derivatives in designated hedges.
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5.3 Financial risk management objectives and policies (cont.)
f) Changes in liabilities arising from financing activities
As at 1 July
Outflows from secured loans
Outflows from lease liabilities
Outflows from senior bank facility
Increase in lease liabilities
As at 30 June
Consisting of:
Current Loans and Borrowings1
Non-Current Loans and Borrowings2
30 June 2019
30 June 2018
$’000
607,476
(11,908)
(93,116)
$’000
Restated
648,971
(11,908)
(74,166)
(115,000)
(50,000)
42,424
94,579
429,876
607,476
88,440
341,436
111,583
495,893
1 Current Loans and Borrowings does not include capitalised borrowing costs of $6,712,000 (2018: $6,130,000)
2 Non-Current Loans and Borrowings does not include capitalised borrowing costs of $7,907,000 (2018: $13,252,000).
The Group classifies interest paid as cash flows from operating activities.
Recognition and measurement:
Financial assets:
Classification and measurement
The Group classifies its financial assets into
the following categories: those to be measured
subsequently at fair value (either through OCI, or
profit or loss) and those to be held at amortised cost.
Classification depends on the business model for
managing the financial assets and the contractual
terms of the cash flows.
At initial recognition, the Group measures a financial
asset at its fair value.
Financial liabilities:
Financial liabilities are classified, at initial recognition,
as financial liabilities at fair value through profit or
loss, loans and borrowings, payables or as derivatives
designated as hedging instruments.
All financial liabilities are recognised initially at
fair value.
The Group’s financial liabilities include trade and
other payables and loans and borrowings.
Derivatives and hedge accounting:
The Group uses derivative financial instruments
to hedge its risks associated with foreign currency
and interest rate fluctuations arising from operating
activities. Such derivative financial instruments are
initially recognised at fair value as at the date on
which a derivative contract is entered into and are
subsequently remeasured at fair value. Derivatives
are carried as financial assets when the fair value is
positive and as financial liabilities when the fair value
is negative.
Cash flow hedges:
The effective portion of the gain or loss on the hedging
instrument is recognised in other comprehensive
income in the cash flow hedge reserve. To the extent
that the hedge is ineffective, changes in fair value
are recognised in profit or loss. Amounts taken to
other comprehensive income are transferred out
of other comprehensive income and included in
the measurement of the hedged transaction when
the forecast transaction occurs. When a hedging
instrument expires, or is sold or terminated, or when
a hedge no longer meets the criteria for hedge
accounting, hedge accounting is discontinued
prospectively. The cumulative gain or loss previously
recognised in other comprehensive income remains
in other comprehensive income until the forecast
transaction occurs.
98
Notes to the consolidated financial statementsFor the year ended 30 June 2019 5.4 Share capital and reserves
a) Share capital
2019
2018
No. of shares
$’000
No. of shares
$’000
Fully paid ordinary share capital
1,026,045,885
2,980,933
1,026,045,885
2,993,458
Ordinary share capital at the beginning of the period
1,026,045,885
2,993,458
1,026,045,885
3,136,941
Transfer of shares by share plan
Shares purchased by share plan
Capital return
-
-
-
15,814
(28,339)
-
-
-
-
6,188
(10,787)
(138,884)
Ordinary share capital at the end of the period
1,026,045,885
2,980,933
1,026,045,885
2,993,458
At 30 June 2019, a trust on behalf of the Company held 5,337,876 (30 June 2018: 3,916,379) 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 management of the Group. Refer to Note 5.5 for further details
on the performance rights plan.
Terms and conditions of issued capital
Ordinary shares are classified as equity. 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.
Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction
from equity, net of any related income tax benefit.
b) Nature and purpose of reserves
Hedge reserve
The hedging reserve comprises the effective portion of the cumulative change in the fair value of cash flow hedging
instruments related to hedged transactions that have not yet occurred.
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.
c) Dividends
Dividends of $464,854,000 were paid to shareholders during the year ended 30 June 2019 (2018: distribution
of $326,936,000 comprising a dividend of $188,052,000 and a capital return of $138,884,000).
On 15 August 2019 the Directors declared a dividend of 30 cents per share totalling $298 million to be paid
on 19 September 2019 and be comprised of an ordinary dividend of 13 cents, franked to fifty percent and a special
dividend of 17 cents, unfranked. The financial effect of this dividend has not been brought to account in the financial
statements for this period.
Dividend franking account
As at 30 June 2019 there were franking credits of $15.1 million available to shareholders of Whitehaven Coal Limited
(2018: nil).
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5.5 Share-based payments
a) Recognised share-based payment expenses
Employee expenses
Share options and performance rights – senior employees
2019
$’000
7,684
2018
$’000
9,927
Recognition and measurement:
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 equity instruments. The amount recognised is adjusted to reflect the actual number of instruments 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.
b) Types of share-based payment plans
Performance right and option grant to CEO and senior employees
The Company issued performance rights and options to the CEO and senior employees under the Company’s medium
and long term incentive programs in FY2018 and FY2019. The terms and conditions of the grant are as follows.
Performance Rights
MTI
LTI tranche 1
LTI tranche 2
LTI tranche 3
Total
Options
LTI tranche 1
LTI tranche 2
LTI tranche 3
Total
2019
2018
Number of
instruments
Vesting
date
Number of
instruments
Vesting
date
397,596
30 June 2021
742,121
30 June 2020
337,300
30 June 2021
371,147
30 June 2020
337,294
30 June 2022
371,139
30 June 2021
674,571
30 June 2021/221
742,275
30 June 2020/211
1,746,761
2,226,682
2019
2018
Number of
instruments
Vesting
date
Number of
instruments
Vesting
date
-
-
-
-
-
-
-
587,009
30 June 2020
587,006
30 June 2021
1,174,013
30 June 2020/211
2,348,028
1 To the extent that the Costs Hurdle Award is satisfied at the end of the year of testing, 50% of the Awards will vest and become exercisable immediately
and the remaining 50% will continue on foot, subject to a further one year service condition.
The performance rights and options 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 achieving a cost per tonne target. Detailed disclosures of LTI outcomes against the
target are provided in the Remuneration Report.
100
Notes to the consolidated financial statementsFor the year ended 30 June 2019 The table below details the outcomes of MTI awards that were tested in FY2019 (or for which the test period concluded
on 30 June 2019) and the results of the relevant test.
MTI Year
2016
2016
Test Type
Relative TSR
Costs Target Hurdle
Performance
1st in 21
$67/tonne
Outcomes
Vested
100%
0%
Lapsed
0%
100%
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
2019
$0.58
$0.00
$0.00
$0.00
$0.00
$0.64
$0.00
2019
22,952,635
(4,041,556)
2,183,658 1
(89,819)
(358,586)
20,646,332
882,319
2018
$0.30
$0.00
$1.10
$0.00
$0.00
$0.58
$0.00
2018
22,067,094
(4,542,478)
6,086,6822
(132,440)
(526,223)
22,952,635
328,083
1
2
Includes 436,897 performance rights granted during the year under the FY2018 STI scheme.
Includes 1,011,972 performance rights granted during the year under the FY2017 STI scheme.
The outstanding balance as at 30 June 2019 is represented by:
i) 5,440,707 options over ordinary shares having an exercise price of $1.21, exercisable between 30 June 2019 and
31 August 2021
ii) 2,348,028 options over ordinary shares having an exercise price of $2.85, exercisable between 30 June 2020 and
27 October 2022
iii) 2,209,740 performance rights over ordinary shares having an exercise price of nil, exercisable between 15 August
2019 and 13 August 2025
iv) 4,899,574 performance rights over ordinary shares having an exercise price of nil, exercisable between 15 August
2019 and 31 August 2026
v) 3,584,802 performance rights over ordinary shares having an exercise price of nil, exercisable between 15 August
2019 and 27 October 2027
vi) 2,163,481 performance rights over ordinary shares having an exercise price of nil, exercisable between 15 August 2019
and 27 October 2028
No share options were exercised during the year ended 30 June 2019 (2018: nil).
The weighted average remaining contractual life of share options and performance rights outstanding at 30 June 2019
is 5.7 years (2018: 4.6 years).
101
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves | Directors’ Report Glossary | Corporate directory || |Financial Report 5. Capital structure and financing (cont.)
5.5 Share-based payments (cont.)
d) Option pricing models
The fair value of performance rights granted under the incentive programs with a TSR performance hurdle is
measured using a Monte Carlo Simulation model incorporating the probability of the performance hurdles being met.
The fair value of performance rights with the non-market performance hurdle (costs target) is measured using the
Black-Scholes option pricing formula.
The fair value of options with a TSR performance hurdle and non-market performance hurdle is measured using
a combination of the Monte Carlo Simulation model and Binomial Option Pricing methods.
The following table lists the inputs to the models used for the years ended 30 June 2019 and 30 June 2018:
Rights
2019
MTI
MTI
LTI
LTI
LTI
LTI
Performance
hurdle
TSR
Cost
TSR
TSR
Cost
Cost
Grant date
27 Oct 18
27 Oct 18
27 Oct 18
27 Oct 18
27 Oct 18
27 Oct 18
Vesting date
30 Jun 21
30 Jun 21
30 Jun 21 30 Jun 22
30 Jun 21 30 Jun 22
Fair value at
grant date
Share price
Expected
volatility
Performance
Right life
Risk-free
interest rate
$2.98
$4.81
$5.07
$4.81
$2.99
$4.81
$3.15
$4.81
$5.07
$4.81
$5.07
$4.81
30%
30%
30%
30%
30%
30%
10 years
10 years
10 years
10 years
10 years
10 years
2.0%
2.0%
2.0%
2.1%
2.0%
2.1%
Rights
Options
2018
MTI
MTI
LTI
LTI
LTI
LTI
LTI
LTI
LTI
LTI
Performance
hurdle
TSR
Cost
TSR
TSR
Cost
Cost
TSR
TSR
Cost
Cost
Grant date
27 Oct 17
27 Oct 17
27 Oct 17
27 Oct 17
27 Oct 17
27 Oct 17
27 Oct 17
27 Oct 17
27 Oct 17
27 Oct 17
Vesting date
30 Jun 20 30 Jun 20 30 Jun 20 30 Jun 21 30 Jun 20 30 Jun 21
30 Jun 20 30 Jun 21 30 Jun 20 30 Jun 21
Fair value
at grant date
Share price
Exercise
price
Expected
volatility
Performance
Right life
Expected
dividends
Risk-free
interest rate
$2.43
$3.65
$3.65
$3.65
$2.43
$3.65
$2.50
$3.65
$3.65
$3.65
$3.65
$3.65
$0.61
$3.65
$0.61
$3.65
$0.72
$3.65
$0.69
$3.65
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$2.85
$2.85
$2.85
$2.85
30%
30%
30%
30%
30%
30%
30%
30%
30%
30%
10 years
10 years
10 years
10 years
10 years
10 years
4 years
5 years
4 years
5 years
8.34%
8.34%
8.34%
8.34%
8.34%
8.34%
8.34%
8.34%
8.34%
8.34%
2.0%
2.0%
2.0%
2.1%
2.0%
2.1%
2.0%
2.1%
2.0%
2.1%
All shared-based payments are equity settled.
102
Notes to the consolidated financial statementsFor the year ended 30 June 2019 6. Group structure
6.1 Acquisition of business
Acquisitions in the year ended 30 June 2019
There were no business combinations or acquisitions of non-controlling interests in the current year.
Acquisitions in the year ended 30 June 2018
On 30 April 2018, the Group acquired a 30% interest in the Tarrawonga Coal Project Joint Venture from Idemitsu,
of which the Group already owned 70%. Details of the purchase consideration, the net assets acquired and the impact
of the acquisition on the Group are as follows:
a) Purchase consideration:
Cash consideration1
Total consideration
Less: cash acquired as part of the acquisition
Net cash flow on acquisition
1 Cash consideration includes $4,803,000 paid in the year ended 30 June 2019.
b) Assets acquired and liabilities assumed:
$’000
26,315
26,315
(1,298)
25,017
The fair values of the identifiable assets and liabilities of the 30% share in the Tarrawonga Coal Project Joint Venture at
the date of acquisition were as follows:
Assets
Cash and cash equivalents
Trade and other receivables
Inventory
Property, plant and equipment
Liabilities
Trade and other payables
Provision for decommissioning costs
Total identifiable net assets at fair value
Fair value
recognised on
acquisition
$’000
1,298
3,147
7,921
27,888
40,254
(5,173)
(8,766)
(13,939)
26,315
103
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves | Directors’ Report Glossary | Corporate directory || |Financial Report 6. Group structure (cont.)
6.2 Group’s subsidiaries
The below is a list of the Group’s subsidiaries, all of which are incorporated in Australia, unless otherwise noted:
Ownership interest
2019
2018
Ownership interest
2019
2018
Parent entity
Whitehaven Coal Limited
Subsidiaries
Whitehaven Coal Mining Limited1
100%
100% Boardwalk Resources Limited1
100%
100%
Namoi Mining Pty Ltd1
100%
100% Boardwalk Coal Management Pty Ltd1
100%
100%
Namoi Agriculture & Mining Pty Ltd
100%
100% Boardwalk Coal Marketing Pty Ltd1
Betalpha Pty Ltd1
Betalpha Unit Trust
100%
100% Boardwalk Sienna Pty Ltd1
100%
100% Boardwalk Monto Pty Ltd1
Tarrawonga Coal Pty Ltd1
100%
100% Boardwalk Dingo Pty Ltd1
Whitehaven Coal Holdings Pty Ltd1
100%
100% Boardwalk Ferndale Pty Ltd1
Whitehaven Coal Infrastructure Pty Ltd1
100%
100% Coalworks Limited1
Narrabri Coal Pty Ltd1
100%
100% Yarrawa Coal Pty Ltd1
Narrabri Coal Operations Pty Ltd1
100%
100% Loyal Coal Pty Ltd
Narrabri Coal Sales Pty Ltd1
100%
100% Ferndale Coal Pty Ltd
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
92.5%
92.5%
92.5%
92.5%
Creek Resources Pty Ltd1
100%
100% Coalworks (Oaklands North) Pty Ltd1
100%
100%
Werris Creek Coal Sales Pty Ltd1
100%
100% CWK Nominees Pty Ltd1
Werris Creek Coal Pty Ltd1
100%
100% Oaklands Land Pty Ltd1
100%
100%
100%
100%
WC Contract Hauling Pty Ltd1
100%
100% Coalworks (Vickery South ) Pty Ltd1
100%
100%
Whitehaven Blackjack Pty Ltd1
100%
100% Coalworks Vickery South Operations Pty Ltd1
100%
100%
Whitehaven Project Pty Ltd1
100%
100% Vickery South Marketing Pty Ltd1
Whitehaven Employee Share Plan Pty Ltd1
100%
100% Vickery South Operations Pty Ltd1
Aston Resources Limited1
100%
100% Vickery Pty Ltd1
100%
100%
100%
100%
100%
100%
100%
100%
Aston Coal 2 Pty Ltd1
Aston Coal 3 Pty Ltd1
100%
100% Winchester South WS Pty Ltd
100%
100% Winchester South Coal Operations Pty Ltd
100%
100%
Maules Creek Coal Pty Ltd1
100%
100%
1 These subsidiaries entered into a Class Instrument 2016/785 dated 28 September 2016 and related deed of cross guarantee with Whitehaven Coal
Limited. Refer to Note 6.5 for further information.
Recognition and measurement:
Subsidiaries are entities controlled by the Company. Control exists when the Company is exposed to, or has rights
to, variable returns from its involvement with an entity and has the ability to affect those returns through its power
over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from
the date on which control commences until that control ceases. All intercompany balances and transactions have
been eliminated in preparing the consolidated financial statements.
104
Notes to the consolidated financial statementsFor the year ended 30 June 2019 6.3 Interest in joint operations
The Group has interests in the following joint operations which are proportionately consolidated in the consolidated
financial statements:
Tarrawonga Coal Project Joint Venture2
Narrabri Coal Joint Venture2
Maules Creek Joint Venture2
Dingo Joint Venture2
Ferndale Joint Venture2
Boggabri-Maules Creek Rail Spur Joint Venture2
Tarrawonga Coal Sales Pty Ltd1,3
Maules Creek Marketing Pty Ltd3
Boggabri-Maules Creek Rail Pty Ltd3
Country of incorporation
Australia
Australia
Australia
Ownership interest
and voting rights
2019
100%
70%
75%
70%
92.5%
39%
100%
75%
39%
2018
100% 1
70%
75%
70%
92.5%
39%
100%
75%
39%
1 During the financial year ended 30 June 2018 the Group acquired Idemitsu’s 30% interest in the Tarrawonga Coal project Joint Venture. Refer to note 6.1.
2 These entities have been classified as joint operations under AASB 11 Joint Arrangements, as these joint arrangements are not structured through
separate vehicles.
3 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. The Group recognises its share of assets, liabilities, revenues
and expenses of the above entities as joint operations under AASB 11 Joint Arrangements.
Recognition and measurement:
Joint arrangements are arrangements in which two or more parties have joint control. 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 share 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
joint control, judgement is also required to assess whether the arrangement is a joint operation or a joint venture.
6.4 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 of the parent entity
Total comprehensive income of the parent entity
Company
2019
$’000
692,782
2018
$’000
359,623
3,744,008
3,484,062
-
-
3,136,412
590,687
16,909
-
-
3,136,412
333,702
13,948
3,744,008
3,484,062
734,328
734,328
391,780
391,780
105
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves | Directors’ Report Glossary | Corporate directory || |Financial Report 6. Group structure (cont.)
6.5 Deed of Cross Guarantee
Pursuant to ASIC Corporations Instrument 2016/785 dated 28 September 2016, the wholly-owned subsidiaries listed
in Note 6.2 (refer footnote 1) 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 ‘Deed’). 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 Corporations Act 2001, 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 following consolidated statement of comprehensive income and statement of financial position comprises
the Company and its controlled entities which are party to the Deed of Cross Guarantee (the ‘Closed Group’)
after eliminating all transactions between parties to the Deed.
Statement of comprehensive income
Profit before tax
Income tax expense
Profit 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 income for the period, net of tax
Closed group
2019
$’000
735,868
2018
$’000
Restated
758,889
(207,970)
(234,379)
527,898
524,510
(4,287)
1,286
(3,001)
(372)
112
(260)
Total comprehensive income for the period, net of tax
524,897
524,250
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
Total non-current assets
Total assets
106
119,407
518,183
148,939
47
786,576
10,518
37
111,653
377,173
124,567
2,595
615,988
11,732
37
3,841,575
3,746,461
186,427
21,350
166,331
22,200
4,059,907
3,946,761
4,846,483
4,562,749
Notes to the consolidated financial statementsFor the year ended 30 June 2019 Statement of financial position
Liabilities
Trade and other payables
Interest bearing loans and borrowings
Employee benefits
Income tax payable
Provisions
Derivative financial instruments
Total current liabilities
Non-current liabilities
Interest bearing loans and borrowings
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Issued capital
Share-based payments reserve
Hedge reserve
Retained earnings
Equity
6.6 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
Closed group
2019
$’000
196,028
81,728
26,510
288
29,985
2,874
2018
$’000
Restated
157,763
105,453
22,560
-
6,136
1,136
337,413
293,048
333,529
390,068
260,219
983,816
482,641
198,993
102,201
783,835
1,321,229
1,076,883
3,525,254
2,978,429
16,909
(1,979)
531,895
3,485,866
2,990,954
13,948
1,022
479,942
3,525,254
3,485,866
2019
$’000
6,444
258
3,848
10,550
2018
$’000
7,479
233
7,767
15,479
107
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves | Directors’ Report Glossary | Corporate directory || |Financial Report 7. Other notes
7.1 Employee benefits
Consolidated Statement of Comprehensive Income
Wages and salaries
Contributions to superannuation plans
Other associated personnel expenses
Increase in liability for annual leave
Increase in liability for long service leave
Share-based compensation 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
Recognition and measurement:
Wages, salaries, annual leave and sick leave
2019
$’000
169,971
10,947
6,228
2,365
436
7,684
2018
$’000
153,966
10,019
6,251
1,713
162
9,927
197,631
182,038
2019
$’000
8,156
867
17,487
26,510
2018
$’000
7,007
431
15,122
22,560
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.
Long-term service benefits
Liabilities for long-service leave and other long term benefits are recognised and measured at the present value
of the estimated future cash outflows resulting from employees’ services provided up to the reporting date. Long
term benefits not expected to be settled within twelve months are discounted using the rates attached to the high
quality corporate bonds at the reporting date, which most closely match the maturity dates of the related liability.
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.
108
Notes to the consolidated financial statementsFor the year ended 30 June 2019 7.2 Auditors’ Remuneration
Auditors of the Company – Ernst & Young
Assurance services:
Audit and review of statutory financial statements current year
Audit of joint operations
Other assurance services:
Non-statutory assurance services
Review of National Greenhouse Energy Reporting Act requirements
Total assurance services
Non audit services:
Auditors of the Company – Ernst & Young
Taxation compliance services
Due diligence services
Other non-audit services
2019
$
571,625
283,375
855,000
-
62,629
62,629
917,629
125,000
-
69,790
194,790
2018
$
551,000
314,000
865,000
98,954
58,568
157,522
1,022,522
63,978
836,881
71,226
972,085
109
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves | Directors’ Report Glossary | Corporate directory || |Financial Report
7. Other notes (cont.)
7.3 Commitments
a) Capital expenditure commitments
Plant and equipment and intangibles
Contracted for but not provided for and payable:
Within one year 1
1 There were no commitments for capital expenditure beyond one year.
b) Lease commitments
2019
$’000
2018
$’000
83,663
13,081
Leases relate to property, plant and equipment with lease terms of between one to five years as well as leases
recognised for the first time in accordance with AASB 16 Leases. As a result, 30 June 2018 balances have been restated.
Refer to Note 1.5 for more details.
2019
$’000
86,308
153,425
45,916
2018
$’000
Restated
110,698
164,572
68,070
285,649
343,340
(44,125)
241,524
(51,125)
292,215
76,532
164,992
241,524
2019
$’000
99,675
192,540
292,215
2018
$’000
153,297
30,503
104,240
24,522
2,629
315,191
Within one year
Between one and five years
More than five years
Minimum lease payments
Future finance charges
Total lease liabilities
Included in the financial statements in note 5.1 as:
Current borrowings
Non-current borrowings
7.4 Contingencies
a) Bank guarantees
The Group provided bank guarantees to
(i) Government departments as a condition of continuation of mining and exploration licences
235,826
(ii) Rail capacity providers
(iii) Port capacity providers
(iv) Electricity network access supplier
(vi) Other
27,936
115,941
23,534
2,072
405,309
110
Notes to the consolidated financial statementsFor the year ended 30 June 2019 b) Other
During the current period, the Group was served with a Statement of Claim commencing representative proceedings
against the Group in the Supreme Court of Queensland. The proceedings were commenced by Nathan Tinkler, who
claimed to be trustee of the Boardwalk Resources Trust, and were purportedly brought on behalf of Nathan Tinkler and
a number of parties who were issued with Milestone Shares (subject to restrictions on voting and transfer until various
development milestones are met) in Whitehaven Coal Limited in May 2012.
On 7 May 2019, the Supreme Court of Queensland ordered that the proceedings be transferred to the Equity Division
of the Supreme Court of New South Wales. On 12 July 2019, Nathan Tinkler was given leave to file an amended claim
and amended statement of claim removing Nathan Tinkler, and joining and substituting Les & Zelda Investments Pty Ltd
(ACN 148 907 573) as Trustee for the Les & Zelda Family Trust, as representative plaintiff. The pleadings make various
allegations against the Group concerning an alleged breach of contract and misleading or deceptive conduct in
connection with the Milestone Shares.
With effect from 26 July 2019, the proceedings have been stayed due to the representative plaintiff failing to provide
security for the Group’s costs as ordered.
Other than the above, 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 the above matters, a provision has not been made for any potential
adverse outcome. The Group will vigorously defend these matters, and believes that any adverse outcome would not
be material based on information currently available to the Group.
7.5 Subsequent events
In the interval between the end of the financial year and the date of this report there has not arisen any item,
transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect
significantly the operations of the Group, the results of those operations, or the state of affairs of the Group, in future
financial years, other than the following:
Subsequent to the end of the financial period, the Directors have proposed a 30 cent per share dividend to be paid on
19 September 2019 and be comprised of an ordinary dividend of 13 cents, franked to fifty percent and a special dividend
of 17 cents, unfranked.
111
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves | Directors’ Report Glossary | Corporate directory || |Financial Report Directors’ declaration
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 2019 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 2019.
(e) as at the date of this declaration, there are reasonable grounds to believe
that the members of the Closed Group identified in note 6.5 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
Paul Flynn
Managing Director and
Chief Executive Officer
Sydney
15th August 2019
112
Independent Auditor’s report
For the year ended 30 June 2019
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
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
113
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves | Directors’ Report Glossary | Corporate directory || |Financial Report
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
114
Auditor’s reportFor the year ended 30 June 2019
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
115
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves | Directors’ Report Glossary | Corporate directory || |Financial Report
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
116
Auditor’s reportFor the year ended 30 June 2019
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
117
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves | Directors’ Report Glossary | Corporate directory || |Financial Report
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
118
Auditor’s reportFor the year ended 30 June 2019
A member firm of Ernst & Young Global Limited
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
119
Whitehaven Coal Annual Report 2019| FY2019 in review | Introductions | About us | Resources & Reserves | Directors’ Report Glossary | Corporate directory || |Financial Report
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 Kundrun*
Hans Mende*
AMCI Group*
Lazard Asset Management Pacific Co
Prudential Plc
Percentage of
capital held
Number of ordinary
shares held
Date of substantial
shareholder notice
14.23%
12.09%
11.13%
8.40%
8.80%
5.12%
146,007,208
124,042,252
114,190,086
86,170,596
90,304,489
52,580,134
23 Nov 2017
17 Oct 2014
17 Oct 2014
17 Oct 2014
6 Aug 2019
26 Apr 2019
* 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
3,572
4,209
1,498
1,304
122
10,705
There are 6 holders of options over ordinary shares.
Refer to section 7.2 of the Remuneration Report.
The number of shareholders holding less than
a marketable parcel of ordinary shares is 533.
120
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
HSBC CUSTODY NOMINEES (AUSTRALIA) LTD
CITICORP NOMINEES PTY LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
AET SFS PTY LTD
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