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Producers of
high-quality coal.
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 guidance 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
FY20 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
12
15
25
37
62
120
122
123
Whitehaven Coal Annual Report 2020 | 1
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY FY20 in review
Financial highlights
– Net profit after tax before significant items of $30.0 million, a decrease of 95% on FY19
– Underlying earnings before interest, depreciation and amortisation (EBITDA) of $306.0 million, a decrease of 71%
– Operating cash flows of $146.4 million, a decrease of 84%
– FY20 earnings reflect the softening of gC Newcastle thermal prices and the impact on run of mine (ROM)
production of previously reported labour shortages and dust events at our largest mine, Maules Creek,
and the scheduled eight week Narrabri mine longwall move
– Net debt of $787.5 million at 30 June 2020
– Dividends of $312.2 million were paid during the period
– Refinanced our A$1.0 billion secured bank debt facility, now maturing in July 2023
– $468.8 million of available liquidity.
Results summary
Revenue ($m)
Underlying EBITDA ($m)
Net profit after tax before significant items ($m)
Operating cash flows ($m)
Dividends (cps)
Unit cost per tonne ($/t)
Net debt ($m)
Gearing (%)
FY20
1,721.6
306.0
30.0
146.4
1.5
75
FY19
2,487.9
1,041.7
564.9
916.4
50
67
% change
(31%)
(71%)
(95%)
(84%)
(97%)
12%
30 June 2020
30 June 2019
787.5
20%
161.6
4%
Operational highlights
Equity ROM coal production for FY20 was 16.5Mt, 4% below the previous corresponding period (pcp), reflecting
the eight week Narrabri longwall change out, the challenging production conditions at Maules Creek due to labour
shortages and disruption due to drought and bushfires, and the impact of unmapped historical underground
workings at Werris Creek.
Equity coal sales, including purchased coal, were 16.6Mt, in line with the pcp.
Equity own metallurgical coal sales were 17% of total FY20 sales, below pcp of 21%.
Consolidated equity production and sales – continuing operations1
Whitehaven total (000’s t)
ROM coal production
Saleable coal production
Sales of produced coal
Sales of purchased coal
Total coal sales
Coal stocks at period end
FY20
16,539
14,638
14,201
2,376
16,577
3,047
FY19
17,172
14,684
14,873
1,615
16,487
2,602
% change
(4%)
(0%)
(5%)
47%
1%
18%
1 Continuing operations do not include Sunnyside or Rocglen mines, which have transitioned into rehabilitation phase.
2 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY Introductions
Chairman’s introduction
skill and dedication in managing a
tough year and a testing confluence
of events and circumstances.
The arrangements implemented
by management to protect
against COVID-19 were swift,
comprehensive and effective.
Other demanding and complex
issues that arose during the year
were also successfully overcome.
From supporting our operations
through the worst drought since
Federation, to quickly addressing
acute labour shortages, to
managing the growing appetite
for environmental, social and
governance (ESG) strategy and
performance data among our
investment community – it was
a commendable team effort.
At the same time, charting a path
away from COVID-19 and towards
better performance and greater
prosperity means acknowledging
those areas where we have not met
the high standards our shareholders
expect. Let me assure investors
that every member of the Board
is cognisant of the need to address
these aspects, including in relation
to improving our environmental
compliance and delivering greater
consistency of output from our
larger mines.
The road out of the current
economic downturn and our
company’s transformation to
a more efficient, cost-effective
producer will not always be easy.
But there are good reasons to
be confident, starting with the
fact that we have toughed-out
low points in the cycle before and
delivered for patient shareholders
in the periods that followed, and
that will inevitably follow again.
We have also invested significantly
in our leadership capability
and structure.
The fundamentals of our business
remain strong, and we have a
positive role to play in the local
and global economic recovery,
and indeed in a more carbon-
conscious world. It is worthwhile
noting that in its World Energy
Outlook 2019, the International
Energy Agency estimated
that more than US$1 trillion of
capital invested in existing global
coal-fired generation – most of
which is located in Asia – is yet
to be recovered. We expect our
customer nations to capitalise on
their installed and planned coal-fired
power generation to underpin their
economic recoveries when the threat
of the pandemic is either eliminated
or can be sustainably managed.
We continue to expand our
business, geared towards increased
production. Our key development
projects, Vickery and Winchester
South, will help us to further diversify
our product mix, with a greater
weighting towards metallurgical
coal low in impurities. Our strong
relationships with customers in
India will put us in good stead to
meet the forecast growth in demand
for metallurgical coal in that market,
in particular once Vickery and
Winchester South are operational.
We continue to work with a range
of stakeholders to share our views
on the role high-quality coal will
play as part of the continuing global
energy transition, as well as a range
of other ESG-related issues. In FY19,
we reported against the voluntary
recommendations of the Financial
Stability Board’s Task Force on
Climate-related Financial Disclosures,
and have done so again this year.
Our business remains robust, with
the right assets, people and strategy
to continue to deliver value for our
shareholders over the medium to
long term. On behalf of the Board,
I would like to thank shareholders
for their ongoing support.
The Hon. Mark Vaile, AO
Chairman
Whitehaven Coal Annual Report 2020 | 3
Dear Shareholder
FY20 was not a year anyone could
have predicted. Even for our sector,
which is accustomed to having to
weather cyclical lows, it has proven
to be a uniquely challenging time.
COVID-19 has been remarkable in
terms of its rapid onset and spread,
and the significant disruption it has
caused to global supply chains and
entire economies.
At the start of the pandemic, many
of our key customers in North Asia
acted decisively to respond to the
threat of the virus, as did Australia
itself. Since that time, these nations
have been able to demonstrate
considerable resilience even while
others faltered. This meant that
through the second half of FY20
our coal remained well sold in many
of our key markets – a fact that also
gives us optimism for the time when
we are better able to contain and
control COVID-19 worldwide.
Notwithstanding the fact that
demand held up relatively well,
we could not evade the downturn
in price that negatively affected
all key energy commodities.
I acknowledge that serious and
real challenges persist in this
area, but they are by no means
insurmountable.
On behalf of the entire Board,
I want to take this opportunity
to commend Managing Director
and CEO Paul Flynn and the entire
Executive Leadership Team on their
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY Managing Director and CEO’s introduction
shape to commit ourselves fully to
the task of Zero Harm for our people,
workplaces and communities today
and into the future.
Relatedly, our COVID-19 response
demonstrated our adaptability
and resilience in the face of new
threats. Our crisis management,
HSE, and production teams
worked together seamlessly in a
fast-moving environment to design
and implement measures to keep
our people and communities safe,
as well as maintain continuity of
production. Crucially, this meant our
contributions to local communities,
businesses and the economy could
continue with minimal disruption,
providing North West NSW with
a strong sense of optimism.
We also continued work on our
development assets during the year,
with an approval for our Vickery
Extension Project now in hand after
a comprehensive technical evaluation
and community consultation process.
In addition, work progressed on
various aspects of our Winchester
South Project alongside our proposal
to extend the life of the Narrabri
Underground Mine to 2044.
While the cyclical lows we
approached towards the end of FY20
may signal price improvements in the
near future, significant uncertainty
about the global economic recovery
and associated changes in market
conditions remains. Against this
backdrop, we will be cautious
about allocating further capital to
our growth pipeline. This time will
not be lost, as we will continue to
challenge ourselves to reduce the
build and operating costs of our
important projects.
In the closing stages of FY20,
we commenced our business
improvement program, Project
STRIVE, which is designed to achieve
greater consistency of operational
performance, improve productivity
and lower costs. Implementing
the core recommendations of
this review will be a key priority
for us through the first half of
FY21 and will help ensure we
are well-positioned to maximise
earnings when coal markets
begin to rebalance and recover.
Environmental compliance is
another area where we must address
some more recent shortcomings.
While our year-on-year record of
environmental compliance is good
considering the growing scale of
the business, FY20 outcomes fell
significantly short of what we expect
and what the community and other
stakeholder groups deserve. Material
improvement in this area is essential
to maintaining our broader social
licence to operate and to meeting
the high standards required in the
Australian resources sector.
In this context, FY20 also saw
us round out changes to our
management team that represent
a significant investment in the
leadership and governance
structures required to drive change
where it is needed. Individually and
as a leadership group, I am confident
we have the right mix of experience,
skills and interpersonal qualities
required to take the company
to the next stage of its evolution.
Finally, a word on climate change.
This year, we continued to review
and address climate-related risks and
opportunities, and prepare for the
release of our second Sustainability
Report. Once again, we will respond
to the recommendations of the Task
Force on Climate-related Financial
Disclosures, after becoming the first
pure-play coal company to do so
in FY19. Having completed this and
other work, we remain confident
about the continuing demand for
high-quality coal in a more carbon-
conscious world, particularly in our
key markets across Asia, and the
major role it will play as part of the
global economic recovery.
In closing, let me reiterate my thanks
to all our people for navigating a
difficult year and for their continued
commitment to the task that now
lies ahead. On behalf of the entire
management team, I also extend
thanks to our shareholders for
their continued support, and
I look forward to a strong FY21.
Paul Flynn
Managing Director and CEO
Dear Shareholder
I am pleased to present Whitehaven
Coal’s Annual Report 2020.
As you know, it has been a tough
year and our company has not been
immune to the challenges brought
about by COVID-19. While demand
in our key overseas markets held up
relatively well through the continuing
pandemic, the abrupt decline
in economic activity worldwide
negatively affected pricing for our
mix of thermal and metallurgical
coal products. Indeed, the significant
contraction in coal prices was the
single biggest factor in reaching
a disappointing underlying net
profit after tax of $30 million for
FY20, a decrease of 95% on the
previous year.
Together with subdued demand,
we also grappled with a number of
production-related issues, from the
planned longwall move at Narrabri
to unplanned stoppages and labour
shortages at Maules Creek. However,
our ROM production of 20.6Mt fell
within the guidance range, and,
pleasingly, customer demand for our
high-quality coal is as strong as it has
ever been. With that, I want to thank
the 2,500 members of our workforce
who contributed to this result.
Amid these testing circumstances,
it was especially pleasing to record
some big wins, none more notable
than delivering our best ever safety
result. The Total Recordable Injury
Frequency Rate of 4.13 was the
lowest in our history and it continues
the trend of improving safety
performance over an expanding
production base. We are in strong
4 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | 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. We are 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.
Our purpose as a company is
to support and sustain regional
communities by exporting high-
quality thermal and metallurgical
coal from Australia to the world.
North West NSW is the focus
of our capital investment and
workforce presence.
We operate four mines (three
open-cut and one large underground
mine) in the Gunnedah Coal Basin
of NSW. Our operating assets are
complemented by two high-quality,
near-term development assets,
being 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
Australian Securities Exchange,
we have developed a growing
reputation for excellence in project
delivery, safe operation, and targeted
investment in the local economy
and community.
We are proudly local, and around
75% of our 2,500-strong workforce
lives in the local communities around
our mine sites. We believe in helping
communities grow, ensuring benefits
flowing from our operations are seen
and felt locally.
Port of Abbot Point
Bowen
Mackay
Port of Hay Point
Moranbah
Winchester South Project
QLD
Moranbah
AUSTRALIA
NSW
Gunnedah
Sydney
QUEENSLAND
Rockhampton
Blackwater
Port of Gladstone
Gladstone
PACIFIC OCEAN
Narrabri Mine
Gunnedah CHPP
Narrabri
Boggabri
Gunnedah
Gunnedah
Coal Basin
Maules Creek Mine
Tarrawonga Mine
Vickery Extension Project
Tamworth
Werris Creek Mine
NEW SOUTH
WALES
Gloucester
Muswellbrook
Singleton
Whitehaven Coal
shipped to premium
Asian markets
Sydney
Newcastle
(PWCS and NCIG Coal Terminals)
0
50
km
100
Key:
Projects
Current operations
Railway
6 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY Purpose, vision and principles
Purpose
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
investment on the ASX.
Safety
Safety
Teamwork
Safety
Teamwork
Safety
Integrity
Respect
Safety
Teamwork
Integrity
Value
Integrity
Safety
Teamwork
Respect
Integrity
Value
Integrity
Excellence
Value
Integrity
Value
Excellence
Principles
The following principles guide our interactions internally
and with external stakeholders.
Safety
The safety of our people, workplaces and
the communities around us comes first.
We are committed to Zero Harm.
Teamwork
Teamwork
We work collaboratively and support one another.
Respect
Respect
Respect
We foster a diverse and inclusive culture
and deal with all stakeholders respectfully.
Respect
Teamwork
Value
Excellence
Integrity
We are honest and do the right thing.
Respect
Excellence
Value
Value
We create value for shareholders,
customers and local communities.
Excellence
Excellence
Excellence
We deliver on our commitments.
Whitehaven Coal Annual Report 2020 | 7
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY How we create value
How we create value
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.
Business inputs
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.
– 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.
– Infrastructure and logistics:
We have supply agreements with
Australian businesses focused
on the efficient movement of our
product, contributing to shared
sustainability goals through our
value chain.
– Community: We work with
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.
Business outputs
– 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.
– Environment: We are responsible
stewards of the natural
environment, and maintain strong
sustainability practices through
each stage of the mining process,
from development to operations,
closure and rehabilitation.
– Industry: We are members of
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.
FY20 value created
– Approximately 75%
of our 2,500-strong
workforce based in
regional areas
– $209.1 million in
wages paid
– 9% of workforce
identifies as Indigenous.
– $365.4 million spent
with local suppliers
– $3.15 million spent
with local Indigenous
businesses
– Supported the Narrabri
Clontarf Academy
and the Girls’ Academy
at Gunnedah.
– Exported 20.2Mt of
high-quality thermal
and metallurgical coal
– Supported emission
improvement initiatives
by supplying high-CV,
low-impurity coal to
help reduce absolute
coal consumption
in Taiwan, and meet
Korean seasonal
sulphur content limits.
8 | Whitehaven Coal Annual Report 2020
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.
– $14.9 million returned
to shareholders through
dividends
– Total shareholder return
of 66% over the past
four years
– $306 million in
underlying EBITDA.
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 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
Whitehaven Coal Annual Report 2020 | 9
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY Our strategy
Our vision is to be the benchmark coal investment on the ASX.
Our strategy is to own and operate large, lower-cost mines producing a mix
of high-CV thermal coal and premium semi-soft coking coal, and to increase
our share of the growing 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
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.
Towards a bigger, more
productive Whitehaven
We expect to grow our portfolio from a managed level of approximately 21Mt in
2020 to over 40Mt by 2030.
As some of our smaller foundation mines reach the end of their lives, our business
is oriented towards scaling-up larger existing operations and delivering on our key
development assets, 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 private 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 support high performance and further expansion.
We are actively 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 seeking to minimise atmospheric carbon emissions. Our quality assets and
strong customer relationships in the key export markets within our geographic
region mean we are able to attract premium pricing for our products.
Our business produces high-quality thermal coal and semi-soft coking coal
(SSCC). With the purchase of Winchester South, we have set a path to increase
our exposure to other metallurgical coal products. We can also optimise
revenue by responding to prevailing pricing spreads between 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 and
autonomous fleets at Maules Creek.
We take time to critically assess the strengths and weaknesses of our business and
market dynamics. Where acquisition opportunities present themselves, we review
and act on them appropriately. We do this in a measured and disciplined manner
with the objective of creating longer-term value for our shareholders.
Investing in
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
10 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY Whitehaven Coal Annual Report 2020 | 11
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY Resources
& Reserves.
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY Whitehaven Coal Limited – Coal Resources – August 2020
Measured
Resource
(A)
Indicated
Resource
(B)
Measured +
Indicated
(A + B)
Inferred
Resource
(C)
Competent
Person Report Date
Tenement
Maules Creek
Opencut*
Narrabri North
Underground**
Narrabri South
Underground**
Tarrawonga
Opencut
Tarrawonga
Underground
Werris Creek
Opencut
Rocglen
Opencut
Rocglen
Underground
Vickery
Opencut
Vickery
Underground
Winchester
South
Gunnedah
Opencut
Gunnedah
Underground
Bonshaw
Opencut
Ferndale
Opencut
Ferndale
Underground
Oaklands North
Opencut
Pearl Creek
Opencut***
CL375 AUTH346
ML1701 ML1719
ML1609
EL6243
EL5967 ML1579
ML1685 ML1693
EL5967 ML1579
ML1685 ML1693
ML1563 ML1672
ML1620
ML1620
CL316 EL4699 EL5831
EL7407 EL8224
ML1464 ML1471 ML1718
MDL 183
ML1624 EL5183
CCL701
ML1624 EL5183
CCL701
EL6450 EL6587
EL7430
EL7430
EL6861
EPC862
372
143
144
36
10
9
2
–
230
–
130
7
2
–
103
–
110
–
174
153
170
18
15
1
3
3
165
95
300
47
138
4
135
–
260
14
546
296
314
54
25
10
6
3
395
95
430
54
140
4
238
–
370
14
Total Coal Resources
1298
1695
2994
1. Mark Benson, 2. Benjamin Thompson, 3. Troy Turner, 4. Greg Jones, 5. Phill Sides.
* Maules Creek Joint Venture – Whitehaven owns 75% share.
** Narrabri Joint Venture – Whitehaven owns 77.5% 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.
44
–
8
13
14
–
0
1
110
135
100
89
24
7
134
73
580
38
1370
1
1
1
2
2
1
2
2
2
2
3
2
2
2
4
4
2
5
Mar-20
Mar-20
Mar-20
Mar-20
Apr-14
Mar-20
Mar-19
Mar-15
Jul-15
Jul-15
Oct-18
Jun-14
Jun-14
Jun-14
Jan-13
Jan-13
Jun-14
Nov-12
Whitehaven Coal Annual Report 2020 | 13
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY Whitehaven Coal Limited – Coal Reserves – August 2020
Recoverable
Reserves
Marketable
Reserves
Competent
Person
Tenement
Maules Creek
Opencut*
Narrabri North
Underground**
Narrabri South
Underground**
Tarrawonga
Opencut
Werris Creek
Opencut
Rocglen
Opencut
Vickery
Opencut
CL375
AUTH346
ML1609
EL6243
EL5967 ML1579
ML1685 ML1693
ML1563 ML1672
ML1620
CL316 EL4699
EL7407
Proved
Probable
Total
Proved
Probable
Total
330
120
450
300
100
400
97
–
24
7.1
–
–
5
121
10
0.4
–
200
456
102
121
35
7.5
–
200
916
93
–
20
7.1
–
–
421
4
114
8
0.4
–
178
405
98
114
28
7.5
–
178
826
Total Coal Reserves
458
1. Doug Sillar, 2. Michael Barker.
* Maules Creek Joint Venture – Whitehaven owns 75% share.
** Narrabri Joint Venture – Whitehaven owns 77.5% share.
# The Coal Reserves for active mining areas are current as at report date.
## Coal Reserves are quoted as a subset of Coal Resources.
Report
Date
Mar-20
Mar-20
Mar-20
Mar-20
Mar-20
Note
Mar-15
1
2
2
1
1
1
1
### Marketable Reserves are based on geological modelling 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. 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.
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).
14 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY Directors’
Report.
For the year ended 30 June 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 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 2020 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 and Queensland.
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 three years:
Chairman, SmartTrans Holdings Limited (April 2016–June 2018);
Director, Virgin Australia Holdings Limited (September 2008–
December 2018)
16 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYDirectors’ ReportFor the year ended 30 June 2020 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
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 three 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 three 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 three years: Nil
Whitehaven Coal Annual Report 2020 | 17
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 2. Directors and executives (cont.)
2 (a) Directors (cont.)
Fiona Robertson
MA (Oxon), FAICD,
MAusIMM
Non-Executive Director
Appointed:
16 February 2018
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
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 and Heron Resources
Limited. Currently Fiona is a Non-Executive Director of Bellevue
Gold Limited (since May 2020).
Former ASX listed directorships in the last three years:
Heron Resources Limited (April 2015–July 2020)
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 three 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 three years: Nil
18 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYDirectors’ ReportFor the year ended 30 June 2020 2 (b) Senior Executives
Paul Flynn –
Managing Director and Chief
Executive Officer
Refer to details set out in section 2(a)
Directors on page 17.
Kevin Ball –
Chief Financial Officer
BComm, CA
Appointed 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.
Timothy Burt –
General Counsel and
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.
Whitehaven Coal Annual Report 2020 | 19
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 2. Directors and executives (cont.)
2 (b) Senior Executives (cont.)
Ian Humphris –
Executive General Manager –
Operations
BE Mining (Hons)
Scott Knights –
Executive General Manager –
Marketing and Logistics
BEcons (Hons)
Scott was appointed Executive
General Manager – Marketing
and Logistics 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.
Appointed Executive General
Manager – Operations in April 2020,
Ian is a Mining Engineer with more
than 20 years’ experience in the
Australian resources sector, with
a diverse and deep background
across open cut and underground
operations. Ian was most recently
Vice President – Health, Safety and
Environment at Peabody Energy
Australia. Prior to this, he fulfilled a
broad range of senior roles covering
many aspects of that business,
including managing the company’s
open cut operations, supply chain
and infrastructure assets. Ian began
his career in resources as a mining
engineer in various Queensland
mines before transferring to the
New South Wales Coalfields and
working in senior roles for a number
of mine owners and for mining
services provider, Thiess.
Michael van Maanen –
Executive General Manager –
Corporate, Government and
Community Affairs
BA (Hons)
Michael has nearly 20 years’
experience across corporate
communications and public policy
roles in both the government and
private sectors. He was appointed
Executive General Manager –
Corporate, Government and
Community 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
advisor 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.
20 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYDirectors’ ReportFor the year ended 30 June 2020 Leigh Martin –
Executive General Manager –
People and Culture
BA (Psych & Sociology), Grad Cert
HRM, MMgt Leadership, MSc (Psych)
Appointed Executive General
Manager – People and Culture
in January 2020, Leigh joined
Whitehaven from Broadspectrum,
where she managed capability
and culture across a complex
workforce of 14,000 on a range of
major projects and infrastructure
assets. Leigh has also held roles
across HR, talent and organisational
development both domestically and
internationally at UGL, BHP, Tabcorp
and the Queensland Government.
Mark Stevens –
Executive General Manager –
Project Delivery
BSc (Hons), MSc, MBA
Sarah Withell –
Executive General Manager –
Health, Safety and Environment
BSc, MEngSc
Mark joined Whitehaven as Executive
General Manager – Project Delivery
in January 2020. Mark has more
than 30 years of Australian and
international experience in project
management and delivery across
infrastructure, coal, and oil and gas.
A qualified Mining Engineer, Mark
has successfully delivered projects
across all phases, from concept
to completion, with a combined
capital cost in the billions, most
recently for the Australian Rail Track
Corporation’s Inland Rail project
and prior to that, for Santos GLNG.
Sarah joined Whitehaven as
Executive General Manager –
Health, Safety and Environment
in July 2020. Sarah has more than
20 years’ experience in the mining
and resources sector with a proven
track record of delivering major
mining approvals, effective safety
and governance systems, and
excellent HSEC performance.
Sarah has held senior positions
across open cut and underground
operations in both NSW and
Queensland. Most recently Sarah
led the HSE function for BHP’s
NSW Energy Coal and BMC division,
and has also held roles at Coal &
Allied and Peabody.
Whitehaven Coal Annual Report 2020 | 21
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 2. Directors and executives (cont.)
2 (b) Senior Executives (cont.)
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.
Brian retired in December 2019.
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.
Jamie left Whitehaven in
December 2019.
22 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYDirectors’ ReportFor the year ended 30 June 2020 2 (c) Directors’ interests
The following table lists each Director’s relevant Company-issued shares and options, as notified by the Directors to the
Australian Securities Exchange in accordance with section 205G(1) of the Corporations Act 2001 (Cth), at the date of
this report.
Mark Vaile
John Conde
Julie Beeby
Paul Flynn1
Fiona Robertson
Lindsay Ward
Ray Zage
Ordinary shares
1,509,317
708,620
65,000
1,282,535
45,985
35,000
9,200,000
1 Mr Flynn held 1,241,869 Company-issued options as at the date of this report.
2 (d) Directors’ meetings
Following are the number of Directors’ meetings (including meetings of committees of Directors) and the number of
meetings each Director attended during the financial year.
Director
Mark Vaile
John Conde
Julie Beeby
Paul Flynn
Fiona Robertson
Lindsay Ward
Ray Zage
A
13
13
13
13
13
13
13
Directors’
Meetings
Audit & Risk
Management
Committee Meetings
Remuneration
Committee Meetings
Health, Safety,
Environment
& Community
Committee Meetings
Governance &
Nominations
Committee Meetings
B
13
13
13
13
13
13
12
A
6
6
–
–
6
–
–
B
6
6
–
–
6
–
–
A
3
3
–
–
–
3
–
B
3
2
–
–
–
3
–
A
–
–
4
–
4
4
–
B
–
–
4
–
4
4
–
A
1
1
1
–
–
–
–
B
1
1
1
–
–
–
–
A – Number of meetings held during the time the Director held office during the year.
B – Number of meetings the Director attended.
Whitehaven Coal Annual Report 2020 | 23
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY
3. Other
3 (a) Dividends
Paid during the year
Dividends of $312,197,000 were paid to
shareholders during the year ended 30 June 2020
(2019: $464,854,000).
Declared after end of year
The Directors resolved not to pay a final dividend
with respect to the year ended 30 June 2020.
3 (b) Share options
Shares issued on exercise of options
During the reporting period 1,360,181 options
were exercised.
Unissued shares under options
At the date of this report there were 3,708,203
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 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.
24 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYDirectors’ ReportFor the year ended 30 June 2020 4. Operating and financial review
Financial headlines
– Net profit after tax (NPAT) of $30.0 million, a decrease of 94%
– Statutory EBITDA of $306.0 million, a decrease of 69%
– Net cash from operating activities of $146.4 million, a decrease of 84%
– Net debt of $787.5 million at 30 June 2020
– Dividends of $312.2 million were paid during the period
The following table summarises the key reconciling items between the Group’s EBITDA and its 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)
Statutory EBITDA
Net interest expense (refer to note 5.2 Finance income and expense)
Other financial expenses
Depreciation and amortisation1
Profit before tax
FY20
$ million
1,721.6
FY19
$ million
2,487.9
30.0
–
30.0
306.0
–
306.0
(36.0)
(3.1)
(224.6)
42.3
564.9
(37.0)
527.9
1,041.7
(40.5)
1,001.2
(32.9)
(8.0)
(224.4)
735.9
1 The prior year ended 30 June 2019 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
FY20 NPAT of $30.0 million was 94% below FY19
NPAT of $527.9 million. Following are the key features
of the FY20 NPAT result.
– A continuing strong safety performance with a
pleasingly low TRIFR of 4.1 at 30 June 2020, well
below the 6.2 at the end of 30 June 2019.
– A $45/t decrease in the EBITDA margin on sales
of produced coal in FY20 to $21/t from $66/t in FY19.
– A $41/t decrease in average A$ realised prices,
to A$104/t in FY20 from A$145/t in FY19.
– A decrease in FY20 sales volumes which
contributed to an increase of $8/t in FY20
unit costs compared with FY19.
– Equity ROM production of 16.6Mt in FY20 was 9%
below the 18.4Mt produced in FY19. The decrease
in FY20 ROM production contributed to decreased
sales of produced coal and increased unit costs.
The decrease in ROM production was a result
of the following factors:
– Productivity at Maules Creek was impacted
adversely by turnover in experienced operators
and by dust events. The rate of turnover in
experienced operators led to a decrease in
skill levels, and the replacement of departing
operators lagged exits during H1 FY20. Dust
events disrupted December quarter production
due to production stoppages and the lowering
of truck speeds to ensure safety when visibility
was diminished.
Whitehaven Coal Annual Report 2020 | 25
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 4. Operating and financial review (cont.)
Review of financial performance (cont.)
Maules Creek
– The strip ratio increased, compared with FY19,
consistent with the natural progression of the mine
as it approaches the 20 year average.
– There was a drive to reach pit bottom so that in-pit
dumping could commence. Overburden movement
in FY20 was characterised by out-of-pit dumping
and a resulting increase in haul distances and haul
elevation. FOB costs per tonne are expected to
fall over FY21, FY22 and FY23 as in-pit dumping
increases to reach 100%.
– Shortages of skilled workers, including truck drivers,
reduced equipment utilisation and productivity.
Dust and smoke haze also had an effect (as a 24x7
operation still to achieve 100% in-pit dumping,
Maules Creek has been disproportionately affected
by these conditions relative to our other open cut
operations that operate five days a week and which
have shorter haul distances). During the March
quarter, manning requirements at Maules Creek
were met fully and the focus shifted to investing
in skills development to improve utilisation of
equipment and the productivity of our workforce.
– The Company continued to focus on producing high
quality thermal product to meet market demand.
This strategy, combined with the seam mix during
the period, increased the proportion of coal washed
with a decrease in overall yield relative to FY19.
– ROM production was weighted to the June quarter
with 39% of FY20 production delivered during this
period. While this production came at a lower than
average cost during FY20, a significant proportion
remained in inventory at year-end. Coal stocks at
30 June 2020 of 2.0Mt were well up on the balance
of 1.2Mt at 30 June 2019.
– ROM production at Narrabri reflects the impact
of the eight week longwall move in Q2 FY20,
which incorporated an additional two weeks to
upgrade the longwall’s hydraulic leg cylinders,
ahead of commencing mining panel 109.
Production was adversely impacted for 20 days
by a weighting event which caused a deferral
of 500–600Kt of longwall coal production.
– Gunnedah open cut mines production (excluding
Sunnyside) decreased by 19% to 3.8Mt (FY19:
4.7Mt), mainly due to Rocglen entering into the
rehabilitation phase in the final weeks of FY19.
For the continuing operations at Werris Creek
and Tarrawonga, full year production was
slightly down on FY19 due to the impact of
more extensive former underground workings
at Werris Creek than anticipated and heavy
rains in the March quarter.
– Gross revenue decreased by $766.3 million to
$1,721.6 million in FY20. The decrease was driven
mainly by the decrease in average net realised prices
and, to a lesser extent, decreased sales volumes.
Following are the key drivers of A$ realised prices
during the period.
– The Newcastle globalCOAL Index price averaged
US$65/t for Newcastle quality thermal coal in FY20,
US$34/t below the average of US$99/t in FY19.
The Group realised an average price of US$66/t
for its thermal coal sales in FY20. The Newcastle
globalCOAL Index began to soften in late FY19
before reducing further in Q4 FY20 due to the
impact of COVID-19.
– The Group realised an average price of US$89/t
in FY20 for its sales of metallurgical coal products,
down from US$119/t in FY19. The realised price
reflects a combination of sales under quarterly
benchmark linked and index based contract
pricing structures.
– Equity own metallurgical coal sales were 17% of
total FY20 sales, below the 21% achieved in FY19.
– The AUD:USD exchange rate decreased to 0.67
in FY20 from 0.72 in FY19, partially offsetting
the decrease in realised prices.
– Sales of produced coal decreased to 14.3Mt
from 15.6Mt in FY19. The decline in sales volumes
reflects the decrease in ROM production.
– FOB costs of A$75/t in FY20 increased from
A$67/t in FY19. Unit costs were impacted by
the following activities.
26 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYDirectors’ ReportFor the year ended 30 June 2020 Other
– There was an increase in strip ratio at the
Tarrawonga mine relative to the prior corresponding
period, consistent with the natural progression of
the mine as it approaches its life of mine (LOM)
average of 10:1.
Lower mining fleet utilisation and lower productivity rates
contributed to an increase in the depreciation costs per
tonne. Depreciation per tonne has also been affected
both by depreciation of Rehabilitation and Biodiversity
assets and by an increased proportion of overburden
movement relative to coal production during the period.
Increased unit costs of demurrage, overheads and
under-utilised logistics costs arose from the lower
ROM production during the period.
Cash flows & capital management
Cash flow summary
Operating cash flows
Investing cash flows
Financing cash flows
Cash at the end of the period
Capital management
Net debt1
Undrawn syndicated facility
Gearing ratio1,2 (%)
FY20
FY19
$ million
$ million
146.4
(268.0)
108.8
106.8
916.4
(193.8)
(714.9)
119.5
30 June 2020
30 June 2019
787.5
362.0
20%
161.6
840.0
4%
1 Calculated in accordance with the senior facility covenant requirements and therefore excludes lease liabilities recognised upon adoption of AASB 16 Leases of
$130,313,000 (2019: $134,111,000).
2 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.
Investing cash flows
Investing cash outflows during FY20 of $268.0 million
were $74.2 million higher than FY19. This was
primarily due to:
Operating cash flows
Cash generated from operations of $146.4 million in FY20
decreased 84% relative to FY19. This was driven largely
by the decline in the EBITDA result which reflected
the decline in coal prices relative to FY19 and the ROM
production performance in FY20. ROM performance was
the key driver of the reduction in sales of produced coal
during the year. Operating cash flows were also impacted
by the rehabilitation expenditures for work undertaken
at Rocglen and Sunnyside, and the payment of corporate
taxation. In addition, there were timing related impacts
associated with investment in Narrabri development,
overburden in advance and working capital.
– the acquisition of the fleet to underpin the
expansion of Tarrawonga ($75.4 million);
– replacement of hydraulic cylinders at Narrabri
($16.5 million);
– investments in access to, construction and
uprading of water infrastructure ($19.3 million);
– consideration paid for the acquisition of EDF
Trading Australia Pty Limited ($19.7 million).
This was partially offset by the payment of the final
instalment in respect of the acquisition of Winchester
South in FY19 (FY20: nil).
Expenditure on major development projects – Narrabri
Stage 3, Winchester South and Vickery Extension –
continued as the Group progressed these key projects.
Throughout the cycle, Whitehaven has continued
to allocate sustaining capital to each of its mines
to maintain safe and productive operations.
Whitehaven Coal Annual Report 2020 | 27
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 4. Operating and financial review (cont.)
Cash flows & capital management (cont.)
Financing cash flows and capital management
– investment in sustaining and expanding production
Net proceeds from financing activities during FY20
were $108.8 million, largely comprised of the following:
– net proceeds from borrowings ($478.0 million)
– payment of dividends ($312.2 million)
– payment of lease liabilities ($79.8 million).
A final dividend in respect of FY19 of 30 cents per share,
totalling $297.3 million, was paid in September 2019. An
interim dividend in respect of FY20 of 1.5 cents per share,
totalling $14.9 million, was paid in March 2020.
Net debt at 30 June 2020 was $787.5 million, an increase
of $625.9 million from 30 June 2019. Gearing of 20%
marked an increase from 4% as at 30 June 2019. The
increase in net debt was driven by investment in the
business and returns to shareholders during the
period. The components of the increase are as follows:
of $268.0 million;
– the final FY19 dividend and interim FY20 dividend
of $312.2 million;
– new equipment finance leases at Maules Creek
and the conversion of a number of AASB 16 right
of use asset leases into traditional finance lease
arrangements;
– lease repayments in respect of AASB 16 right of
use assets.
This was partially offset by operating cash flows of
$146.4 million.
There was $468.8 million of available liquidity at 30 June
2020 consisting of $106.8 million of cash holdings and
$362.0 million of undrawn capacity under the senior bank
facility at 30 June 2020.
Review of operations
Safety
The TRIFR decreased to 4.1 at the end of June 2020, from 6.2 at the end of June 2019. Whitehaven’s TRIFR remains
well below the NSW coal mining average of 14.6. The Company is committed to achieving zero harm to its people and
environment, and management is striving for better safety performance across all operations.
Production, sales and coal stocks
Whitehaven share (000t)
ROM Coal Production
Saleable Coal Production
Sales of Produced Coal
Sales of Purchased Coal
Total Coal Sales
Coal Stocks at year end
FY20
16,632
14,841
14,511
2,376
16,887
3,074
FY19
18,358
15,817
16,017
1,615
17,631
2,754
Movement
(9%)
(6%)
(9%)
47%
(4%)
12%
Note: Tonnages in the above table include saleable coal production and sales of produced coal from Sunnyside of 174kt and 232kt respectively (2019: 417kt and 416kt respectively).
The tonnages in the table above are presented on an equity basis. Production tables and associated commentary set out in the mine-by-mine analysis
are presented on a managed (100%) basis.
FY20 saleable coal production and sales of produced coal were below the previous corresponding period.
Following are key features of the period:
– ROM coal production was below the prior corresponding period.
– Opening coal inventories were drawn down in H1 FY20, supporting both saleable coal production and sales volumes.
– ROM production was weighted to the June quarter in both periods with 40% of FY20 and 32% of FY19 ROM
production delivered in the June quarter respectively.
– Equity product stocks at 30 June 2020 were 1.4Mt, an increase of 0.5Mt compared to the 0.9Mt at 30 June 2019.
This resulted from an increase in the proportion of final quarter ROM production being processed in FY20
relative to FY19.
28 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYDirectors’ ReportFor the year ended 30 June 2020 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
FY20
10,726
8,190
7,906
1,976
FY19
11,720
9,200
9,309
1,160
Movement
(8%)
(11%)
(15%)
70%
Note: Tonnages in the table above are presented on a managed basis.
Maules Creek ROM production decreased by 8% to 10.7Mt (FY19: 11.7Mt), owing primarily to labour shortages, and
dust and smoke events associated with drought conditions and regional bushfires. The labour shortages were largely
filled in the third quarter and the focus shifted to investing in skills development to improve utilisation of equipment
and the productivity of our workforce. Record ROM production of 4.2Mt was achieved in the final quarter of the year.
This coincided with planned access to the high yielding Braymont seam, a return to a full roster of labour and improved
excavator productivity.
Saleable coal production decreased by 11% to 8.2Mt (FY19: 9.2Mt), reflecting both the decrease in ROM coal production
and a decrease in mine yields from 82% in FY19 to 80% in FY20. The decrease in mine yields over the 12-month period
was related to seam mix and a continuing focus on producing high quality thermal product to meet market demand.
During the second half of the year, Maules Creek reached pit bottom in the first of three planned locations. Access to
pit bottom has created in-pit dump space that has delivered shorter overburden haulage distances and elevations than
have been experienced in the last two years. In-pit dumping is expected to increase to 100% of overburden material in
FY23. The transition to 100% in-pit dumping is expected to improve operational productivity and decrease unit costs.
24 x 7 operation of the first overburden autonomous haulage system (AHS) fleet commenced during the June quarter.
The second AHS fleet is scheduled to be commissioned in Q3 FY21 with the remaining three fleets scheduled to
commence at six month intervals over the following 18 months.
Narrabri
Ownership: Whitehaven 77.5% and Operator; J-Power 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
FY20
6,111
6,547
6,215
793
FY19
6,447
5,630
5,705
1,018
Movement
(5%)
16%
9%
(22%)
Note: Tonnages in the table above are presented on a managed basis.
Narrabri production decreased by 5% to 6.1Mt (FY19: 6.4Mt). The decrease in production was a result of an additional
two weeks taken to upgrade the longwall’s 398 leg cylinders that took place during the longwall relocation in the
second quarter and a weighting event in March that caused a deferral of 500–600kt of longwall coal production.
Following these two events, the Narrabri operation has delivered strong production performance. In April Narrabri
recorded 1.0Mt ROM production – the second time in its history that it has recorded one million tonnes in a month.
Saleable coal production increased by 16% to 6.5Mt (FY19: 5.6Mt), reflecting improved mine yields, with annual yield
increasing from 94% in FY19 to 99% in FY20. The improved yield partly reflects operational improvements at the CHPP.
The next longwall move from panel 109 to 110 is scheduled for the end of Q3 FY21.
Whitehaven Coal Annual Report 2020 | 29
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 4. Operating and financial review (cont.)
Review of operations (cont.)
Gunnedah open cut mines
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
FY20
3,851
3,624
3,690
978
FY19
5,055
4,977
4,979
1,172
Movement
(24%)
(27%)
(26%)
(17%)
Note: Tonnages in the above table include the discontinued Sunnyside and Rocglen mines that have both transitioned into rehabilitation.
Gunnedah open cut mines production decreased by 24% to 3.9Mt (FY19: 5.1Mt). The decrease is primarily due to
production ceasing at Rocglen. For the continuing operations, Werris Creek and Tarrawonga, the full year production
was slightly down on FY19 due to the impact at Werris Creek of more extensive former underground workings than
anticipated and the heavy rains in the March quarter.
The reduction in saleable coal production and sales in FY20 reflects the ROM coal production decrease and the
weighting of ROM coal production to the final months of the year. The increase in production in recent months
is a result of the full utilisation of the new fleet at Tarrawonga during the June quarter.
Rocglen and Sunnyside rehabilitation is progressing well, with major earth moving activities at Sunnyside scheduled
to be finalised in H1 FY21 and at Rocglen in H1 FY22.
Development projects
Vickery
Ownership: Whitehaven 100%
Vickery is an approved open cut mine in the Gunnedah
Basin with a 20-year mine life and marketable reserves
of 178Mt. The mine will produce a majority metallurgical
coal for steel-making, with the balance being high quality
thermal coal destined for premium export markets in
our region.
Following extensive public consultation and an exhaustive
review by the NSW Department of Planning, Industry
and Environment, the Vickery Extension Project was
approved by the Independent Planning Commission
NSW on 12 August 2020 and is now proceeding through
the necessary secondary approvals and the federal
approvals process.
Progress on design work for the CHPP, rail spur, and
other site infrastructure continues. Work is continuing
on draft Management Plans including those required
for Secondary Approval, such as for noise, air quality,
cultural heritage and traffic management.
30 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYDirectors’ ReportFor the year ended 30 June 2020 Winchester South
Ownership: Whitehaven 100%
The proposed Winchester South open cut metallurgical
coal mine, situated in Queensland’s Bowen Basin,
continues to progress through the Queensland
Government’s major project development process.
Studies to support drafting of the Environmental
Impact Statement (EIS) have been advanced. Progress
on design work for the CHPP, rail spur and other site
infrastructure continues.
Work, including further coal quality drilling, continues
on the maiden JORC Reserve estimate for the project,
with an expected release date estimated to be the
end of 2020.
Narrabri Stage 3 extension
Ownership: Whitehaven 77.5%
The project seeks to convert Narrabri’s existing
exploration licence into a mining lease and use the
existing portals, CHPP, rail loop and associated
infrastructure to extract, process and ship 80–100Mt
of ROM coal using the longwall mining method. The
project involves extending the longwall panels planned
for the mining lease south of the current main roads
into the contiguous Narrabri South Exploration
Licence area, to extend the approved life of the
mine from ~2031 to ~2044.
The project has received its Secretary’s Environmental
Assessment Requirements (SEARS) from the NSW
Government as well as its Environmental Protection
and Biodiversity Conservation Act 1999 referral from the
Federal Government. Whitehaven has been incorporating
these requirements in the preparation of an EIS, which
it plans to lodge with the NSW Department of Planning,
Industry and Environment (DPIE) in Q1 FY21.
Exploration
Whitehaven maintains several exploration and potential
development projects in Queensland and NSW. These
are early stage projects where activity and spending
is undertaken to keep the tenements in good standing.
Infrastructure
In FY20, the Hunter Valley supply chain faced
challenges including the effects of bushfires, flooding,
train derailments, periods of high seas and COVID-19 –
all primarily in the second half of the financial year.
Our close relationships with major suppliers has
allowed us to work through these issues and deliver
the required tonnes to customers.
Rail track capacity
Whitehaven contracts its below rail capacity from the
Australian Rail Track Corporation (ARTC). Expansion
and track upgrade options have been identified for
Whitehaven’s additional capacity requirements within the
Gunnedah Basin through improved operating efficiencies.
These include the ARTC Network Control Optimisation
project currently being implemented. Whitehaven is
continuing this work with ARTC to ensure long term
rail logistics costs are optimised.
Rail haulage capacity
Whitehaven has capacity within its two long term rail
haulage contracts for all current NSW based mine
production plans including the initial ramp up production
profile from the Vickery Expansion Project. The NSW
related haulage contracts allow Whitehaven to align
planned increases in production with rail capacity
by giving notice to the rail providers of the need for
additional capacity. Whitehaven has also continued
to progress efficiency projects with our rail haulage
operators providing benefits for all companies.
Port capacity
Whitehaven holds contracts at the Port of Newcastle that
allow access to all three export coal terminals to support
planned shipments. Whitehaven will require additional
port capacity for the forecast production ramp up
over the coming years, noting there is sufficient surplus
capacity to support these production increases at the
existing terminals including the planned increase at the
NCIG terminal where Whitehaven is a major shareholder.
Analysis continues on the timing of options to secure
long term capacity most efficiently.
Queensland
Following the acquisition of the Winchester South
tenement, Whitehaven has commenced analysis of
options available for the logistics task in Queensland and
alternative infrastructure requirements. Owners of both
port and track have been engaged regarding existing
capacity and expansion opportunities. Whitehaven will
work with these parties to ensure a robust logistics
solution for the project.
Whitehaven Coal Annual Report 2020 | 31
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 4. Operating and financial review (cont.)
Events subsequent to reporting date
Risks relating to Whitehaven’s future prospects
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 significantly affect 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:
On the 12th August 2020, following extensive public
consultation and a detailed review by the NSW
Department of Planning, Industry and Environment,
the Vickery Extension Project was approved by the
Independent Planning Commission NSW. The Project
is now proceeding through the necessary secondary
and federal approvals processes.
Outlook and likely developments
Thermal and Metallurgical Coal Outlook
Thermal coal and metallurgical coal market fundamentals
deteriorated due to the impact of COVID-19 but quickly
found a floor.
For the seaborne thermal coal market, a combination
of Chinese government import restrictions and the
lockdown of Indian and northern Asian economies
reduced demand and saw prices fall. At current coal
prices, the price arbitrage between Chinese domestic
coal and imported seaborne coal is at record levels.
Supply side responses to these historically low prices
initially emerged from USA, Canadian and Colombian
exporters, and more recently from Indonesian and
Australian producers.
Actions taken by steel producers across Asia and India
to initially defer metallurgical coal shipments in response
to weak domestic steel demand softened the price for
hard coking coal. The price for SSCC and PCI coal has
similarly softened.
The short-term outlook for thermal and metallurgical
coal is dependent upon post-pandemic economic
and industrial recovery in our region. In recent weeks
there have been positive signs in the affected markets
that industrial activity is recovering, resulting in the
resumption of term contract shipping schedules and
increasing spot demand. The long-term outlook remains
healthy as the need for industrial products such as steel,
cement and alloys, and electricity generation remain
strong for the future growth of Asia, Whitehaven’s
export market.
32 | Whitehaven Coal Annual Report 2020
Whitehaven operates in the coal sector. There are many
factors, both specific to Whitehaven and to the coal
industry in general, that may 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 Whitehaven’s 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;
– anticipated synergies or cost savings being delayed
or 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.
Capital requirement risk
There is a risk that insufficient liquidity or the inability to
access funding on acceptable terms may impact ongoing
operations and growth opportunities.
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYDirectors’ ReportFor the year ended 30 June 2020 Whitehaven manages liquidity risk by holding a prudent
level of available cash, maintaining adequate committed
credit facilities which have been provided by a diverse
panel of Australian and international banks and
refinancing committed credit facilities well before
they become current liabilities.
Whitehaven had $468.8 million in liquidity (cash and
undrawn facilities) available as at 30 June 2020.
Capital Allocation and 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.
Missed opportunities to invest or a failure to effectively
allocate capital or achieve expected return from
assets may also lead to a failure to achieve expected
commercial objectives.
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, labour shortages 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.
Water security
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.
Infrastructure risks
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.
Whitehaven Coal Annual Report 2020 | 33
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 4. Operating and financial review (cont.)
Risks relating to Whitehaven’s future prospects (cont.)
Environment and safety risks and licence to operate
Climate change risk
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
2020 Sustainability Report to be released later this 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.
34 | Whitehaven Coal Annual Report 2020
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
2020 Sustainability Report to be released later this year.
The International Energy Agency (IEA) has forecast
under its Stated 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 remain stable until at
least 2040 – with relatively stronger 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 Stated Policies Scenario
is the IEA’s central scenario in its most recent World
Energy Outlook (2019). Alternate scenarios include the
Current Policies Scenario (highest projected coal usage)
and the Sustainable Development Scenario (lowest
projected coal usage). Further details are available at:
https://webstore.iea.org/world-energy-outlook.
COVID-19 risk
As with most businesses around the world the COVID-19
pandemic has presented a range of health, commercial
and financial risks to Whitehaven. This includes risk to
continuity of operations, and potential disruptions to
the movement of goods and people. Since before the
pandemic emerged in Australia, we have been carefully
planning to ensure continuity of supply of inputs, and
have taken a range of steps – including direct advocacy
to key government and other stakeholders – to ensure
our workforce is ready to respond to the pandemic and is
not adversely impacted by domestic border restrictions,
limiting the operational impacts we have experienced.
Whitehaven, and the resources sector more broadly,
has so far demonstrated its resilience in the face of
COVID-19. It has been widely acknowledged that the
comprehensive suite of measures adopted across the
resources sector quickly became the model for others to
emulate. The development and rapid implementation of
our response plan kept our people safe and supported
continuity of production and employment. More broadly
the experience of responding to COVID-19 has validated
the robustness of our WHS systems and procedures
and ensured our preparedness to manage any future
emerging risks of this nature.
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYDirectors’ ReportFor the year ended 30 June 2020 The exceptional circumstances stemming from the
pandemic have resulted in uncertainty surrounding
public health and the global economy, including impacts
on energy and industrial markets. Short-term demand
for both metallurgical and thermal coal has contracted
as a result of measures employed in many countries
to slow the spread of the virus. Despite uncertainties
surrounding the economic outlook, the fundamentals
of our business model remain robust. Throughout the
pandemic, our portfolio of coal products have remained
sought after and well sold under long term contracts to
the cornerstone high-energy, low-impurity coal markets
of Japan, Korea and Taiwan, as well as emerging markets
in developing Southeast Asian nations. In contrast,
lower-energy and/or higher-impurity coal basins globally
have traditionally been the first to exit the seaborne coal
market during times of declining demand, and this has
been borne out during the first half of CY20. We expect
our customer nations to capitalise on their installed and
planned coal-fired power generation to underpin their
economic recoveries when the threat of the pandemic
is either eliminated or can be sustainably managed.
Whitehaven actively monitors and responds to all
factors with potential to impact global supply and
demand for our products.
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 the financial year ended 30 June 2020.
It is set out on page 36.
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
Other non-audit services
Consolidated
2020
Consolidated
2019
$
$
30,000
32,994
62,994
125,000
69,790
194,790
Whitehaven Coal Annual Report 2020 | 35
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 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
Auditor’s Independence Declaration to the Directors of Whitehaven
Coal Limited
As lead auditor for the audit of the financial report of Whitehaven Coal Limited for the financial year
ended 30 June 2020, I declare to the best of my knowledge and belief, there have been:
a) No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Whitehaven Coal Limited and the entities it controlled during the
financial year.
Ernst & Young
Ryan Fisk
Partner
26 August 2020
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
21
36 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY
2020 Remuneration Report
(Audited)
Summary
We present the Remuneration Report for the financial
year ended 30 June 2020 (FY20) for which we seek
your support at our Annual General Meeting (AGM)
in October. More than 98% of votes cast at last year’s
AGM were in favour of the resolution to approve
our 2019 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. This includes
details of realised remuneration outcomes for our
Key Management Personnel (KMP) for FY20 and
performance against the Short Term Incentive (STI)
Key Performance Indicators (KPIs) and Long Term
Incentive (LTI) performance conditions.
Our executive remuneration framework is designed
to be aligned to shareholder interests while operating
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 FY20
Managing Director and Chief Executive Officer (CEO)
Paul Flynn is supported by a strong executive leadership
group. In FY20 the CEO completed a structural change
of the executive leadership team, detailed later in
this report. The Board believes that with the strength
of its existing operations and its high-quality asset
development pipeline, the Company is well positioned
to continue to grow, improve its performance and
deliver value to shareholders.
FY20 was a difficult year from both a coal markets
perspective and from an operating perspective.
Coal prices realised an average of A$104/t on own
coal sales in FY20 in contrast to the FY19 average of
A$145/t. The decrease in realised prices was the principal
cause of the decrease in EBITDA and cash flow from
operating activities between FY19 and FY20. However, in
FY20 the Maules Creek operation was affected adversely
by the impacts of drought (smoke and dust events)
and by the increased levels of staff turnover that had
been induced by the higher coal price environment in
FY18 and FY19. At Narrabri 398 hydraulic leg cylinders
were safely changed during the longwall move in the
December quarter but in February 2020 difficult mining
conditions caused a deferral of between 500Kt and
600Kt (managed) longwall production. These operational
difficulties (together with the closure of Rocglen in late
FY19) contributed to lower production and 1.3Mt lower
volumes of own coal sold than in FY19, increasing our
unit operating costs.
Remuneration outcomes for FY20
In relation to STI awards, market and operating
performance achieved in FY20 have delivered
reduced STI outcomes for Executive KMP. STI awards
for performance during the year were assessed at
28% of the possible award.
In relation to LTI awards, the 2017 LTI Costs Hurdle
Award that was tested following the end of FY20 failed
to achieve the gateway and lapsed in full. Tranche 1 of
the 2017 LTI Relative TSR award also failed to satisfy the
relevant performance condition and therefore lapsed in
full while Tranche 2 of the 2016 LTI Relative TSR award
vested at 64.2%.
Further details of the LTI awards that were tested
in 2020 are set out later in this report at section 4.2.
Changes to remuneration framework for FY21
The Board continues to consider Executive KMP
remuneration in the context of our strategy, relevant
benchmarks, and retaining and appropriately rewarding
our leadership team.
There will be no changes to fixed remuneration for
Executive KMP in FY21 with one exception (detailed later).
We have well-developed plans for strong growth at
our operations and from new operations, including the
recently approved Vickery Extension Project and our
Queensland metallurgical coal project – Winchester
South. A strong executive leadership group has been
assembled to support our growth agenda.
For FY21 the Board intends to retain the existing
remuneration framework but to improve alignment
of the framework by introducing, in addition to the
existing two components (Relative TSR and Costs),
an additional LTI component related to delivery of
strategic objectives. The change does not alter the
total reward opportunity for Executive KMP but rather
reallocates the LTI opportunity across three elements
(Relative TSR, Costs Hurdle and Strategic Priority
Delivery) each with hurdles and each underpinned
by a gateway condition to be satisfied prior to vesting.
Shareholders will be asked to consider the changes as
part of the FY21 LTI grant for the CEO. The Resolution
proposing the LTI grant to the CEO, including details
and explanations of the changes, will be set out in the
AGM Notice of meeting.
We have also made a number of refinements to our
Short Term Incentive Plan for FY21, including to increase
the weighting of environmental metrics. The overall STI
reward opportunity remains unchanged.
Non-Executive Directors’ fees
There was no increase to Non-Executive Directors’
fees in the year, nor is any proposed for FY21. There
is no proposal to change the maximum aggregate
Directors’ fees pool.
We thank the Executive KMP and their teams for their
continued commitment and contribution to Whitehaven.
Whitehaven Coal Annual Report 2020 | 37
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY Table of Remuneration
Report contents
1.
Introduction
1.1 Key management personnel for FY20
4. Remuneration outcomes for FY20
4.1 STI outcomes for Executive KMP in FY20
1.2 Summary of Company performance
4.2 LTI outcomes for Executive KMP in FY20
1.3 How do remuneration outcomes align
to FY20 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 FY20 Non-Executive Director remuneration
components in FY20
3.2 Fixed remuneration
3.3 STI awards and structure for FY20
3.4 LTI awards and structure for FY20
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 KMP
7.4 Related party transactions and additional
disclosures
38 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYDirectors’ Report Remuneration ReportFor the year ended 30 June 2020 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 FY20 of the Key Management Personnel (KMP) of the Company,
who are listed in the table below. For the remainder of this Remuneration Report, the KMP are referred to as either
Executive KMP or Non-Executive Directors.
1.1 Key Management Personnel for FY20
The table below details the remuneration of KMP during FY20.
Name
Role held during FY20
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
Chairman of Audit & Risk Management Committee
Member of Governance & Nomination Committee
Lindsay Ward
Non-Executive Director
Member of Health, Safety, Environment & Community Committee
Member of Health, Safety, Environment & Community Committee
Raymond Zage
Non-Executive Director
Nil
Member of Remuneration Committee
Dates
Full year
Full year
Full year
Full year
Full year
Executive KMP
Role held during FY20
Managing Director and Chief Executive Officer (CEO)
Chief Financial Officer (CFO)
General Counsel and Company Secretary
Paul Flynn
Kevin Ball
Timothy Burt
Ian Humphris
Scott Knights
Executive General Manager (EGM) – Operations
From 6 April 2020
Executive General Manager (EGM) – Marketing and Logistics
Michael van Maanen
Executive General Manager (EGM) –
Corporate, Government and Community Affairs
Leigh Martin
Mark Stevens
Brian Cole
Executive General Manager (EGM) – People and Culture
From 13 January 2020
Executive General Manager (EGM) – Project Delivery
From 28 January 2020
Executive General Manager (EGM) – Project Delivery
Until 31 December 2019
Jamie Frankcombe
Chief Operating Officer (COO)
Until 11 December 2019
Whitehaven Coal Annual Report 2020 | 39
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 1. Introduction (cont.)
1.2 Summary of Company performance
FY20 at a glance
EBITDA
$306m
Four-year total
shareholder return
(TSR)
66%
Total Recordable
Injury Frequency
Rate
33%
Company performance for the last five years
A snapshot of key Company statutory performance for the past five financial years is set out below:
Revenue ($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
Managed saleable production (Mt)
2020
1,721.6
306.0
30.0
$1.43
3.0
3.0
1.5
4.1
3.9
18.4
2019
2,487.9
1,001.2
527.9
$3.66
53.5
52.4
47
6.2
1.9
19.8
2018
2,257.4
1,002.2
524.5
$5.78
53.1
52.1
33
6.9
2.1
2017
1,773.2
714.2
405.4
$2.87
41.2
40.7
–
7.4
4.2
20.9
20.8
2016
1,164.4
224.1
20.5
$1.082
2.1
2.1
–
10.6
8.1
19.7
1 Statutory EBITDA and net profit after tax for FY18 has been restated for the adoption of AASB 16 Leases. Statutory EBITDA and net profit after tax for
FY17–FY16 has not been restated for the adoption of AASB 16 Leases.
2 The opening share price for 2016 was $1.32.
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 or licence condition, each breach is counted separately.
40 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYDirectors’ Report Remuneration ReportFor the year ended 30 June 2020
1.3 How do remuneration outcomes align to FY20 performance?
Component
Principles
Outcome
Fixed
Remuneration
(TFR)
Total fixed remuneration
set with reference to market
benchmarking and individual
performance
There will be no changes in TFR for Executive KMP in FY21 with one exception;
the Executive General Manager – Corporate, Government and Community Affairs.
STI
LTI
Reflects the performance
of management during the
performance period, relative
to performance conditions
set at the start of FY20
Performance outcomes did not meet all of the objectives set and therefore
the below target STI outcomes reflect this. While safety performance has improved,
the ROM production, free on board (FOB) costs per tonne, net profit after tax and
environmental objectives were not met. Consequently no awards were made for
these performance areas.
Reflects long-term overall
Company performance
and the delivery of value
to shareholders over the
performance period
The Executive KMP STI outcome was 28% of the maximum possible STI.
See section 4.1 for more details on STI outcomes.
The LTI awards granted under the 2016 (TSR Tranche 2) and 2017 (TSR Tranche 1 and
Costs Hurdle Award) LTI plans reached the end of their respective performance periods
and were tested after 30 June 2020.
Due to the TSR performance of 66% over the four year performance period the LTI awards
granted under the 2016 (TSR Tranche 2) LTI plan vested at 64%. The LTI awards granted
under the 2017 (TSR Tranche 1) LTI plan failed to satisfy the performance condition and
therefore lapsed in full.
The Costs Hurdle Gateway and the Costs Hurdle Target were set in 2017. Actual costs
for FY20 of $75/t exceeded the Costs Hurdle Gateway and the 2017 Costs Hurdle Award
lapsed in full.
See section 4.2 for more details on the LTI outcomes for FY20.
1.4 Executive KMP realised remuneration outcomes
As set out in section 1.3, the Remuneration Committee is of the view that while the Company and the Executive KMP
have had a challenging year, the Executive KMP have continued to execute successfully the Group’s long-term strategy.
The table below gives shareholders a better understanding of the actual remuneration outcomes for Executive KMP
in FY20. It includes:
– fixed remuneration earned in FY20
– STI earned in respect of FY20 performance (including the cash component payable in September 2020
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 FY20 including the impact of share price growth between
the grant date and the test date
– any non-monetary benefits provided to Executive KMP in FY20 (including fringe benefits).
The amounts disclosed in the table, while not in accordance with accounting standards, may be helpful for shareholders
as they demonstrate the link between Company performance and remuneration outcomes for Executive KMP for FY20,
as summarised in section 1.3.
For further details on STI and LTI outcomes for FY20 refer to sections 4.1 and 4.2 respectively.
Whitehaven Coal Annual Report 2020 | 41
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 1. Introduction (cont.)
1.4 Executive KMP realised remuneration outcomes (cont.)
FY
TFR1
STI2
cash Severance
Total
cash
FY20
deferred
equity
STI3
LTI4
vested
at face
value of
award
Other5
Total
remuneration
Vested
LTI6
share
price
growth
Total
including
share
price
growth
Name
Paul
Flynn
Kevin
Ball
Timothy
Burt
Ian
Humphris8
Scott
Knights
2020 1,530,000 267,750
2019 1,500,000 603,750
2020
714,000
87,465
2019
700,000
181,913
2020
612,000
74,970
2019
600,000
169,050
2020
152,732
18,710
2019
–
–
2020
637,500
78,094
2019
625,000
176,094
Michael
van Maanen
2020
420,000
51,450
2019
375,000
114,461
2020
197,404
24,182
2019
–
–
2020
211,749
25,569
2019
–
2020
345,000
–
–
2019
690,000
174,182
Leigh
Martin8
Mark
Stevens8
Brian
Cole7
Jamie
Frankcombe7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,797,750
267,750
217,079
12,900
2,295,479
59,541
2,355,020
2,103,750
603,750
948,092
12,500
3,668,092 2,585,637
6,253,729
801,465
87,465
78,581
881,913
181,913
343,201
–
–
967,511
21,554
989,065
1,407,027
935,979
2,343,006
686,970
74,970
66,794
12,900
841,634
18,320
859,954
769,050
169,050
291,721
12,500
1,242,321
795,583
2,037,904
171,442
18,710
–
–
–
–
715,594
78,094
67,410
801,094
176,094
287,162
190,152
–
–
–
190,152
–
861,098
18,489
879,587
1,264,350
788,699
2,053,049
471,450
51,450
489,461
114,461
221,586
24,182
–
–
237,318
25,569
–
345,000
–
–
–
–
–
–
–
–
522,900
603,922
5,375
251,143
–
–
–
–
262,887
–
–
–
–
–
–
–
522,900
603,922
251,143
–
262,887
–
864,182
174,182
379,238
10,432
1,428,034 1,034,258
2,462,292
76,015
14,917
435,932
20,850
456,782
–
–
–
–
–
–
2020
448,087
–
935,000 1,383,087
–
110,619
6,450
1,500,156
30,341
1,530,497
2019 1,000,000 297,000
–
1,297,000
297,000
574,324
12,500
2,180,824 1,566,298
3,747,122
Note: for role held by Executive KMP during FY20 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 2020 based on FY20 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 subject to further service conditions. While not yet granted, the STI is expected to be
issued at a volume weighted average price (VWAP) of $1.53. It is expected that rights issued under the STI will vest and become exercisable in two equal tranches
following the completion of FY21 and FY22. Refer to section 3.3 for further details.
4 LTI represents LTI awards made in 2016 and 2017 for which the test period ended in FY20 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. LTI outcomes are explained further in section 4.2 of this report.
7 Jamie Frankcombe and Brian Cole ceased to be members of the Executive KMP as of 11 December 2019 and 31 December 2019, respectively.
8
Ian Humphris, Leigh Martin and Mark Stevens were appointed as members of the Executive KMP on 6 April 2020, 13 January 2020 and 28 January 2020,
respectively.
42 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYDirectors’ Report Remuneration ReportFor the year ended 30 June 2020 2. Remuneration Governance
This section describes the roles and responsibilities of the Board, Remuneration Committee and external remuneration
advisors when making remuneration decisions. It also provides an overview of the principles and policies that underpin
the Company’s remuneration framework.
Remuneration governance framework
Remuneration principles
The following principles underpin the
Company’s remuneration framework:
– 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
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 that are linked to the creation of
sustainable shareholder returns.
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.
Board
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 FY20 as defined under
the Corporations Act 2001 (Cth).
Whitehaven Coal Annual Report 2020 | 43
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 3. Remuneration framework
The Company’s Executive KMP remuneration framework is based on a set of core principles and comprises both
fixed and at-risk remuneration components. This section details the components of Executive KMP remuneration
framework for FY20.
3.1 Summary of Executive KMP remuneration components in FY20
The table below summarises how the core remuneration principles and remuneration framework were applied during
FY20. The different components of Executive KMP remuneration mentioned below are described in greater detail
in sections 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
–
includes salary
and superannuation
Cash
Equity
– 50% of STI is delivered
– 50% of STI is deferred
– provides the Remuneration
as cash
into rights to receive shares
in the Company subject to
meeting service based vesting
conditions (with vesting
periods of 12 and 24 months)
Committee with the flexibility
to determine the nature,
terms and conditions of
the grant each year
–
reviewed annually
by the Remuneration
Committee
– determined based on a mix
of financial and non-financial
performance conditions
– operated in FY20 as an award
of 100% performance rights
– 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)
– benchmarked against
– STI opportunity is set
peer companies
between 70% and 100% of
TFR for target performance
and between 87.5% and
125% of TFR for stretch
performance
–
set based on individual
performance and experience
–
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
44 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYDirectors’ Report Remuneration ReportFor the year ended 30 June 2020 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 STI and LTI. It is delivered to Executive KMP over multiyear timeframes to create a layered retention
effect and encourage sustained performance.
The graphs below illustrate the remuneration mix for Executive KMP for FY20 (assuming target performance for
at-risk components).
CEO
Other Executive KMP
38%
31%
32%
40%
Fixed TFR
At-risk STI
At-risk LTI
31%
28%
The diagram below shows the timing for determining and delivering Executive KMP remuneration for FY20:
FY20
FY21
FY22
FY23
FY24
Total Fixed
remuneration
Determined based on:
– Market benchmarking
– FY19 performance
FY20
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
Whitehaven Coal Annual Report 2020 | 45
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 3. Remuneration framework (cont.)
3.1 Summary of Executive KMP
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.
remuneration components in FY20 (cont.)
Benchmarking total remuneration
While benchmarking is a useful starting point,
it is only one input the Board uses to determine
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.
46 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYDirectors’ Report Remuneration ReportFor the year ended 30 June 2020 3.3 STI awards and structure for FY20
The terms of the STI that applied during FY20 were as follows:
Feature
Description
Performance period
12 month performance period from 1 July 2019 to 30 June 2020
Form of delivery,
vesting and exercise
The STI for FY20 is delivered 50% in cash in September 2020 and 50% in deferred rights that are granted in
or around October 2020, which on exercise entitle the recipient to receive one ordinary share in the Company for
each deferred right that vests. Half of the deferred rights vest and become exercisable following completion of FY21,
while the other half will vest and become exercisable following the completion of FY22, subject to meeting service
conditions. Vested deferred rights that have not been exercised by August 2030 will automatically be exercised.
No amount is payable on vesting or exercise of deferred rights.
Quantum (% of TFR)
CEO: target 100% and stretch 125%
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 sets target KPIs at the commencement of FY20.
The table below summarises the KPIs that were adopted as performance conditions in FY20, 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
Executive KMP excluding
EGM Project Delivery
EGM Project Delivery
20%
20%
20%
20%
10%
10%
10%
20%
10%
20%
10%
30%
Whitehaven Coal Annual Report 2020 | 47
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 3. Remuneration framework (cont.)
3.4 LTI awards and structure for FY20
The terms of the LTI grant made during FY20 to Executive KMP were as follows:
Feature
Description
Form of delivery,
vesting and exercise
LTI Awards granted in FY20 were provided in the form of performance rights, being rights to receive one
ordinary share in the Company for each performance right that vests on meeting the relevant performance
conditions. Vested deferred rights that have not been exercised by October 2029 will automatically be exercised.
No amount is payable on vesting or exercising of deferred rights.
Quantum (% of TFR)
CEO: 120%
Other Executive KMP: 80%
Performance period
TSR Awards (50%): divided into two equal tranches capable of vesting and becoming exercisable after a three
and four year performance period, with each of the respective performance periods, beginning on 1 July 2019.
Costs Hurdle Awards (50%): FOB cost per tonne achieved for the year ended 30 June 2022 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. 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
TSR Award
Costs Hurdle
Award
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.
50% of the award is subject to the Company
achieving a cost per tonne target (Costs
Hurdle Target) that will position the Company
competitively on the then current cost curve.
The Board sets the Costs Hurdle Target as the
entry point to the first quartile in the published
Wood Mackenzie data of Australia coal industry
outcomes. A Costs Hurdle Gateway also applies
to ensure that a base level of cost control
is achieved before any of the Costs Hurdle
Award is capable of vesting.
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.
This measure is aligned to the Company’s
objective to be positioned competitively against
Australian coal producers in relation to costs
of production when measured on the then
current coal industry cost curve. 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 FY20 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
BHP Group Ltd
Mineral Resources Ltd
Rio Tinto Ltd
New Hope Corporation Ltd
Santos Ltd
Coronado Global Resources Inc.
Newcrest Mining Ltd
South32 Ltd
Evolution Mining Ltd
Northern Star Resources Ltd
St Barbara Limited
Fortescue Metals Group Ltd
Oil Search Ltd
Woodside Petroleum Ltd
Iluka Resources Ltd
OZ Minerals Ltd
WorleyParsons Ltd
Independence Group NL
Regis Resources Ltd
Costs Hurdle Awards: testing will occur following the completion of FY22 based on the average costs achieved
on a Company-wide basis over the 12 month period from 1 July 2021 to 30 June 2022.
48 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYDirectors’ Report Remuneration ReportFor the year ended 30 June 2020 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
The Board has set the Costs Hurdle Target as the entry point to the first quartile in the published Wood Mackenzie
data of industry outcomes. 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. Notwithstanding the vesting schedule below, the Board retains discretion to lapse any or all of the
Costs Hurdle 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 Costs Hurdle Target
as set out below. The Costs Hurdle Awards will lapse in full if the Costs Hurdle Gateway is not achieved. The Board
may, where it is appropriate to do so, recalibrate the Gateway and Target to take account of structural changes in
the Company’s asset portfolio (such as mergers, acquisitions and divestments) or other exceptional circumstances.
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.
Whitehaven Coal Annual Report 2020 | 49
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 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.
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:
Dividend and voting rights
– Termination for cause: unvested performance awards
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.
will lapse.
– Resignation or by 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 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYDirectors’ Report Remuneration ReportFor the year ended 30 June 2020 4. Remuneration outcomes for FY20
4.1 STI outcomes for Executive KMP in FY20
Before a financial year begins, the Board set target KPIs that link to our strategy and motivate outperformance of
annual business plans. At the end of the financial year, the CEO recommends to the Board the individual outcomes for
each Executive KMP. The Board then assesses and approves the overall STI outcomes for the CEO and Executive KMP.
The table below summarises details in relation to each KPI and the performance levels achieved in FY20.
STI
outcome
Comment
Performance
condition
Safety
KPI
measure
TRIFR
Actual
KPI result
4.13
NPAT
Net Profit
After Tax
$30.0m
ROM
production
ROM
production
(managed)
20.6 Mt
FOB cost
FOB cost
per tonne
$75/tonne
Environmental
Incidents
19.0 incidents
Individual
leadership
Individual
based
Individual based
Key:
Stretch
Below Gateway
Safety performance has improved during FY20 by 33%. The
TRIFR of 4.13 at the end of June 2020 fell from 6.16 at June 2019
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.
The trade dispute between the USA and China that started in
mid H2 CY18 continued during FY20 causing coal prices to soften.
While global demand for thermal coal remained relatively strong
seaborne coal import restrictions into China weighed upon coal
prices throughout the year. The coal price softened further in the
final months of the year due to the impact of COVID-19. Lower than
expected sales volumes and higher than expected costs adversely
impacted margins and net profit. NPAT was below Gateway and
no STI was earned.
FY20 ROM coal production was adversely impacted by factors
at open cut and underground mines. Labour shortages, dust
and smoke events associated with drought and regional bushfires,
affected Maules Creek. Legacy underground workings and the
impacts of wet weather when drought breaking rains finally arrived
in H2 FY20 were felt at Gunnedah open cuts. ROM production
was below Gateway and no STI was earned.
Below expectation ROM production and sales adversely
affected the recovery of the fixed cost base of the business –
labour, infrastrutcure and overheads. Consequently unit costs
for FY20 of $75/t exceeded the FOB cost target gateway and
no STI was earned.
The Board recognises the importance of compliance with
environmental approval conditions to maintaining the Group’s
standing in the community. The Group strives to adopt and achieve
industry best practice. In FY20, there were 19.0 incidents and
the EEAFR was 3.9 per million man hours worked. The EEAFR
exceeded Gateway and no STI was earned.
The leadership performance of the CEO is assessed annually by the
Board. A target result was awarded to the CEO. Awards to other
Executive KMP were based on individual perfomance.
Whitehaven Coal Annual Report 2020 | 51
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 4. Remuneration outcomes for FY20 (cont.)
4.1 STI outcomes for Executive KMP in FY20 (cont.)
The individual STI outcomes for Executive KMP for FY20 are set out in the table below. The total STI opportunity
at target and stretch, by Executive KMP, as a percentage of TFR is detailed in section 3.3.
Executive KMP
Paul Flynn
Kevin Ball
Timothy Burt
Ian Humphris
Scott Knights
Michael van Maanen
Leigh Martin
Mark Stevens
Brian Cole
Jamie Frankcombe
Paid as
cash
($)
Deferred
equity
($)
267,750
267,750
87,465
74,970
18,710
78,094
51,450
24,182
25,569
–
–
87,465
74,970
18,710
78,094
51,450
24,182
25,569
–
–
Total
($)
535,500
174,930
149,940
37,420
156,188
102,900
48,364
51,138
–
–
Percentage of
Percentage of
maximum STI received
maximum STI forfeited
28%
28%
28%
28%
28%
28%
28%
28%
–
–
72%
72%
72%
72%
72%
72%
72%
72%
–
–
4.2 LTI outcomes for Executive KMP in FY20
Over the four year performance period to 30 June 2020, the Company has returned over $1.1 billion to shareholders.
For the TSR Award to vest in full, the TSR percentile ranking achieved over the relevant performance period relative
to the TSR performance of the comparator group would need to be at or above the 75th percentile. Between the
50th and 75th percentile ranking, vesting will occur on a pro rata straight line basis.
The table below sets out the LTI awards that were tested in 2020 against performance conditions and the results of
the relevant test. Additional information about the terms of these prior year LTI awards is available in the Remuneration
Report for the relevant financial years.
LTI year
2016
2017
2017
Performance
period
1 July 2016–
30 June 2020
1 July 2017–
30 June 2020
1 July 2019–
30 June 2020
Tranche
Test type
Target
2 of 2
TSR Award
1 of 2
TSR Award
75th percentile
or above
75th percentile
or above
Performance
achieved
10 in 22
20 in 22
n/a
Costs Hurdle
Award
$64/t
$75/t
Vesting
outcome
64.2%
0%
0%
52 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYDirectors’ Report Remuneration ReportFor the year ended 30 June 2020 Executive KMP LTI awards vesting in FY20
2016
Tranche
2 TSR
Hurdle
2017
Tranche
1 TSR
Hurdle
2017
Costs
Hurdle
Gross up
for capital
return1
2016
Tranche
2 TSR
Hurdle
2017
Tranche
1 TSR
Hurdle
2017
Costs
Hurdle
LTI value
Vested
LTI at face
value of
award2
Vested LTI
share price
appreciation2
Performance Rights
Options
$
$
$
89,702
Lapsed
Lapsed
3,171
292,444
Lapsed
Lapsed
276,620
217,079
59,541
32,472
Lapsed
Lapsed
1,148
105,862
Lapsed
Lapsed
100,135
78,581
21,554
27,601
Lapsed
Lapsed
976
89,983
Lapsed
Lapsed
85,114
66,794
18,320
n/a
n/a
n/a
n/a
n/a
n/a
n/a
–
–
–
27,855
Lapsed
Lapsed
985
90,813
Lapsed
Lapsed
85,899
67,410
18,489
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
–
–
–
–
–
–
–
–
–
31,411
Lapsed
Lapsed
1,110
102,405
Lapsed
Lapsed
96,865
76,015
20,850
45,710
Lapsed
Lapsed
1,616
149,023
Lapsed
Lapsed
140,960
110,619
30,341
30 June
2020
30 June
2020
30 June
2020
$1.21
$2.85
$2.85
$1.53
$1.53
$1.53
Executive
KMP
Paul
Flynn
Kevin
Ball
Timothy
Burt
Ian
Humphris3
Scott
Knights
Michael
van Maanen
Leigh
Martin3
Mark
Stevens3
Brian
Cole4
Jamie
Frankcombe4
Award
Test Date
VWAP –
Face value
VWAP –
Award
Test Date
1 Refer to the Notice of 2017 Annual General Meeting, Resolution 6. This adjustment applies to rights issued before the ‘ex’ date for the capital return to shareholders
in November 2017 to ensure that incentive plan participants were not disadvantaged by the capital return.
2 As presented in section 1.4.
3
Ian Humphris, Leigh Martin and Mark Stevens were appointed as members of the Executive KMP on 6 April 2020, 13 January 2020 and 28 January 2020,
respectively.
4 Jamie Frankcombe and Brian Cole ceased as members of the executive KMP on 11 December 2019 and 31 December 2019 respectively. The Board considered
Jamie Frankcombe and Brian Cole to be ‘good leavers’ and therefore have retained components of their unvested incentives, subject to any applicable
performance conditions that are required to be met under the terms of the grant.
Whitehaven Coal Annual Report 2020 | 53
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 4. Remuneration outcomes for FY20 (cont.)
4.2 LTI outcomes for Executive KMP in FY20 (cont.)
LTI awards granted in FY20
A summary of the LTI awards granted in FY20 (i.e. the face value and the fair value of the LTI granted to each
Executive KMP) is set out in the table below.
Executive KMP
Paul Flynn
Kevin Ball
Timothy Burt
Brian Cole
Ian Humphris4
Scott Knights
Michael van Maanen
Leigh Martin
Mark Stevens
Number of performance
rights granted1
Face value of performance
rights grant2
Fair value of performance
rights at grant date3
497,561
154,797
132,683
74,797
–
138,212
91,057
42,798
45,908
($)
$1,836,000
$571,200
$489,600
$276,000
–
$510,000
$336,000
$157,923
$169,399
($)
$1,362,073
$423,757
$363,220
$204,757
–
$378,355
$249,269
$117,160
$125,673
1 Refer to section 3.4 for the terms of the LTI grant.
2 The face value of the LTI performance rights of $3.69 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 2019.
3 The fair value for awards granted to the Executive KMP is based on the average fair value of $2.74 (for the fair value of each tranche from which this average is
derived – see note 5.5) per performance right as at 15 November 2019, 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.
4
Ian Humphris became a member of the Executive KMP effective 6 April 2020.
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 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYDirectors’ Report Remuneration ReportFor the year ended 30 June 2020 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
Mr Flynn’s annual TFR for FY21 remains unchanged at $1,530,000 (FY20: $1,530,000). It includes salary,
superannuation contributions and any components under Whitehaven’s salary packaging guidelines and all
Director fees. TFR is reviewed annually.
Short term incentive
Mr Flynn is eligible to participate in the annual STI plan, as described in section 3.3. At target performance, his
FY21 STI opportunity is 100% of TFR (FY20: 100%), with up to 125% of TFR for stretch performance (FY20: 125%).
Long term incentive
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 FY21 will be 120% of his TFR (FY20: 120%). 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 FY19 award was provided
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 (that is, 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 is 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
Appointed 16 December 2013
Timothy Burt
General Counsel and Company Secretary
Appointed 29 July 2009
Ian Humphris
Executive General Manager – Operations
Appointed 6 April 2020
Scott Knights
Executive General Manager – Marketing and Logistics
Appointed 18 August 2014
Michael van Maanen
Executive General Manager – Corporate, Government and Community Affairs
Appointed 28 May 2018
Leigh Martin
Executive General Manager – People and Culture
Appointed 13 January 2020
Mark Stevens
Executive General Manager – Project Delivery
Appointed 28 January 2020
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
6 months by employee or the Company
3 months by employee
6 months by the Company
3 months by employee
6 months by the Company
3 months by employee
6 months by the Company
Whitehaven Coal Annual Report 2020 | 55
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 6. Non-Executive Director remuneration
This section explains the fees paid to Non-Executive Directors during FY20.
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 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 FY21.
6.2 Current Non-Executive Director fee remuneration
The table below sets out Board and Committee members’ fees in Australian dollars for FY20.
There have been no changes to Directors fees for FY20. No changes are proposed.
Board
Audit & Risk Management Committee
Remuneration Committee
Governance & Nominations Committee
Health, Safety, Environment & Community Committee
Chairman
$375,000 1
$40,000
$40,000
No fee
$40,000
Deputy Chairman
$262,500 1
–
–
–
–
Member
$140,000
$20,000
$20,000
No fee
$20,000
1
The Chairman and Deputy Chairman of the Board do not receive committee member 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 23), the Non-Executive
Directors participated in visits to mine sites and in the Company’s annual Safehaven conference. While the
Board had scheduled additional visits to mine sites as well as participation in the Company’s annual safety day,
COVID-19 restrictions resulted in these scheduled visits being cancelled.
56 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYDirectors’ Report Remuneration ReportFor the year ended 30 June 2020 6.3 FY20 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.
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
Non-Executive
Directors
The Hon. Mark
Vaile (Chairman)
John Conde
(Deputy Chairman)
Dr Julie Beeby
FY
2020
2019
2020
2019
2020
2019
375,000
375,000
262,500
262,500
180,000
180,000
Fiona Robertson
2020
200,000
Lindsay Ward2
2019
2020
2019
Raymond Zage3
2020
2019
Tony Haggarty1
2020
Total
2019
2020
2019
199,663
180,000
68,250
140,000
140,000
–
63,768
1,337,500
1,289,181
1 Mr Haggarty retired on 25 October 2018.
2 Mr Ward commenced on 15 February 2019.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
21,003
20,531
21,003
20,531
17,100
17,100
19,000
18,956
17,100
6,484
–
–
–
6,058
95,206
89,660
396,003
395,531
283,503
283,031
197,100
197,100
219,000
218,619
197,100
74,734
140,000
140,000
–
69,826
1,432,706
1,378,841
3 Previously, Mr Zage elected not to receive any Board and Committee fees given he represented a substantial shareholder of the Company. However, that
representation ceased, so Mr Zage elected to resume receiving Board and Committee fees, and the Board fees with respect to FY20 and FY19 were paid to
Mr Zage during FY20.
Whitehaven Coal Annual Report 2020 | 57
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 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.
Short-term
benefits
Post-employment
benefits
Share-based
payments
Superannuation
benefits
Termination
benefits
Rights and
options
Total
remuneration
Performance
related
FY
Salary
& fees
Non-monetary
benefits
(A)
STI
(B)
Executive Directors
Paul Flynn
2020
1,505,000
12,900
765,964
2019
1,475,000
12,500
1,212,423
Other Executive KMP
Kevin Ball
2020
689,000
2019
675,000
–
–
236,772
377,924
Timothy Burt 2020
587,000
12,900
212,813
2019
575,000
12,500
335,010
Brian Cole2
2020
332,500
14,917
118,970
2019
665,000
10,432
380,929
Jamie
Frankcombe2
2019
975,000
12,500
623,628
Ian Humphris1 2020
141,656
2019
–
Scott Knights 2020
612,500
2019
600,000
Michael
van Maanen
2020
395,000
2019
350,000
–
–
–
–
–
–
18,710
–
220,601
346,615
120,162
152,720
Leigh Martin1
2020
185,887
5,375
33,288
2019
–
Mark Stevens1 2020
196,877
2019
–
–
–
–
–
42,210
–
(C)
649,185
2,958,049
146,859
2,871,782
216,503
1,167,275
43,462
1,121,386
184,836
1,022,549
37,367
984,877
179,840
660,810
40,950
1,122,311
–
–
–
–
–
–
–
–
25,000
25,000
25,000
25,000
25,000
25,000
14,583
25,000
25,000
13,457
–
25,000
25,000
25,000
25,000
14,295
–
18,703
–
–
–
–
–
–
–
–
–
–
–
–
79,389
1,715,517
–
–
173,823
–
189,686
1,047,787
38,721
1,010,336
65,388
605,550
31,775
559,495
–
–
–
–
238,845
–
257,790
–
%
48%
47%
39%
38%
39%
38%
45%
38%
23%
41%
11%
–
39%
38%
31%
33%
14%
–
16%
–
2020
444,735
6,450
197,399
12,500
935,000
211,881
1,807,965
Total
2020
5,090,155
52,542
1,966,889
198,538
935,000
1,697,319
9,940,443
2019
5,315,000
47,932
3,429,249
175,000
–
418,523
9,385,704
1
Ian Humphris, Leigh Martin and Mark Stevens were appointed as members of the Executive KMP effective 6 April 2020, 13 January 2020 and
28 January 2020, respectively.
2 Jamie Frankcombe and Brian Cole ceased as members of the Executive KMP effective 11 December 2019 and 31 December 2019, respectively.
(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 sections 3.3 and 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 KMP is based on the fair value at each grant date expensed over the vesting period. The FY20 amount
includes the reversal of AASB 2 share-based payments expense due to lapse outcomes of costs 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 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYDirectors’ Report Remuneration ReportFor the year ended 30 June 2020 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
Paul
Flynn
Performance
Rights (LTI)
Balance
as at
1 July
2019
(number)
Granted
(number)
Granted
(value)
Vested
during
the year
(number)
Exercised
(number)
Exercised
(value)
Lapsed
(number)
(A)
(B) $
(C) $
Lapsed
(year of
grant)
(D)
Forfeited
(number)
1,584,805
497,561
1,362,073
612,562
472,838
474,893
279,446
2016
Options (LTI)
2,608,430
–
–
455,521
455,521
719,723
911,040
2016
Deferred
Rights (STI)
Performance
Rights (LTI)
Kevin
Ball
479,019
163,618
603,750
191,655
–
–
–
–
557,619
154,797
423,757
221,742
221,742
171,907
101,157
2016
Options (LTI)
944,229
–
–
164,895
164,895
260,534
329,788
2016
Deferred
Rights (STI)
Timothy
Burt
Performance
Rights (LTI)
163,176
49,299
181,913
60,688
145,478
396,501
–
–
474,677
132,683
363,220
188,481
188,481
146,121
85,983
2016
Options (LTI)
802,595
–
–
140,161
140,161
221,454
280,320
2016
Deferred
Rights (STI)
137,790
45,814
169,050
50,402
122,746
332,046
N/A
–
–
–
–
–
–
–
–
–
–
Performance
Rights (LTI)
476,168
138,212
378,355
184,599
141,210
145,662
86,777
2016
Options (LTI)
810,001
–
–
141,454
141,454
223,497
282,907
2016
Ian
Humphris1
Scott
Knights
Deferred
Rights (STI)
138,469
47,722
176,094
52,076
Michael
van Maanen
Performance
Rights (LTI)
52,632
91,057
249,269
Deferred
Rights (STI)
Performance
Rights (LTI)
Performance
Rights (LTI)
Performance
Rights (LTI)
Leigh
Martin1
Mark
Stevens1
Brian
Cole2
–
–
–
31,020
114,461
42,798
117,160
45,908
125,673
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance
as at
30 June
2020
(number)
Vested and
exercisable
at 30 June
2020
1,330,082
139,724
1,241,869
–
642,637
423,143
389,517
449,546
66,997
332,896
382,114
60,858
–
–
–
–
–
–
–
–
386,393
43,389
385,640
–
186,191
123,286
143,689
31,020
42,798
45,908
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
604,449
74,797
204,757
245,026
245,026
189,959
111,779
2016
142,050
180,391
Options (LTI)
1,043,373
–
–
182,209
182,209
287,890
364,416
2016
91,313
405,435
Deferred
Rights (STI)
175,962
47,204
174,182
65,914
–
–
–
–
–
223,166
156,390
Jamie
Frankcombe2
Performance
Rights (LTI)
944,168
Options (LTI)
1,580,107
–
–
–
–
371,290
371,290
288,182
169,280
2016
151,287
252,311
275,941
275,941
435,987
551,880
2016
167,796
584,490
Deferred
Rights (STI)
268,887
80,488
297,000
102,081
238,800
660,181
–
–
–
110,575
–
–
–
1
Ian Humphris, Leigh Martin and Mark Stevens were appointed as members of the Executive KMP on 6 April 2020, 13 January 2020 and 28 January 2020,
respectively.
2 Jamie Frankcombe and Brian Cole ceased to be members of the Executive KMP as of 11 December 2019 and 31 December 2019, respectively.
Whitehaven Coal Annual Report 2020 | 59
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 7. Executive KMP statutory tables and additional disclosures (cont.)
7.2 Movement in options and rights held by Executive KMP (cont.)
(A) The number of rights granted during FY20 includes:
a. the FY19 LTI awards (further details are provided in section 4.2)
b. the deferred rights component of the FY19 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 2019. The granting of rights occurred on 15 November 2019.
(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 2019 as fair value, being $3.69 per share.
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, on exercise
(plus the value of any dividend equivalent payment attaching to the award on vesting or, where applicable on exercise).
(C) The 2015 LTI Rights TSR Hurdle Tranche 2 fully vested during the year. The remaining 50% of the satisfied 2015 LTI Rights Costs Target Hurdle vested during
the year at a rate of 80%. The 2016 LTI Rights TSR Hurdle Tranche 1 fully vested during the year. 100% of the 2016 LTI Costs Target Hurdle lapsed during the year
due to the performance conditions not being met. 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 FY18 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 2018.
Tranche 2 of the FY17 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 2017.
(D) The year in which the lapsed performance rights, options or deferred shares were granted. Performance conditions were not met, and therefore 100% of the
2016 LTI Rights and Options Costs Target Hurdle award lapsed.
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 Executive KMP and each Non-Executive Director, including their related parties is as follows.
Held at
1 July 2019
Received on vesting and
exercise of STI/LTI
Received as
remuneration
Other net
change
Held at
30 June 2020
–
–
–
–
–
–
793,708
509,538
448,716
375,350
847,358
–
240,652
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
10,000
1,509,317
708,620
65,000
9,200,000
9,200,000
24,425
35,000
(965,500)
(308,305)
(323,938)
N/A
N/A
–
(240,652)
–
–
–
45,985
35,000
1,282,535
740,000
599,520
N/A
N/A
–
–
–
–
–
No. of shares
Non-Executive Directors
Mark Vaile
John Conde
Dr Julie Beeby
Raymond Zage
Fiona Robertson
Lindsay Ward
Executive KMP
Paul Flynn
Kevin Ball
Timothy Burt
Brian Cole
1,509,317
708,620
55,000
–
21,560
–
1,454,327
538,767
474,742
882,019
Jamie Frankcombe
1,044,760
Ian Humphris
Scott Knights
Michael van Maanen
Leigh Martin
Mark Stevens
N/A
–
–
N/A
N/A
60 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYDirectors’ Report Remuneration ReportFor the year ended 30 June 2020 7.4 Related party transactions and additional disclosures
Loans with Executive KMP and Non-Executive Directors
There were no loans outstanding to 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 26th day of August 2020
Dated at Sydney this 26th day of August 2020
Whitehaven Coal Annual Report 2020 | 61
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY Financial
Report.
For the year ended 30 June 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 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
113
114
Notes to the consolidated financial statements index
1. About this report
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. Capital structure and financing
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
Whitehaven Coal Annual Report 2020 | 63
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY Consolidated statement
of comprehensive income
For the year ended 30 June 2020
Revenue
Other income
Operating expenses
Coal purchases
Selling and distribution expenses
Royalties
Depreciation and amortisation
Administrative expenses
Share-based payments expense
Foreign exchange 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
Total comprehensive income for the period, net of tax
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
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Note
2.1
5.5(a)
5.2
2020
$’000
2019
$’000
1,721,609
2,487,944
3,495
3,930
(695,621)
(734,858)
(220,658)
(210,678)
(342,084)
(324,131)
(121,215)
(184,754)
(224,583)
(224,459)
(29,810)
(6,259)
(3,494)
81,380
957
(40,007)
(39,050)
(26,185)
(7,684)
(2,356)
776,769
2,092
(42,993)
(40,901)
42,330
735,868
2.3(a)
(12,294)
(207,970)
30,036
527,898
5.2
2.3(b)
5.2
10,289
(3,087)
7,202
37,238
(4,287)
1,286
(3,001)
524,897
30,036
527,898
–
–
37,238
524,897
–
3.0
3.0
–
53.5
52.4
2.4
2.4
The consolidated statement of comprehensive income is to be read in conjunction with the notes to the consolidated
financial statements.
64 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY Consolidated statement
of financial position
As at 30 June 2020
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
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
Liabilities
Trade and other payables
Loans and borrowings
Employee benefits
Provisions
Income tax payable
Derivative financial instruments
Total current liabilities
Non-current liabilities
Other payables
Loans and borrowings
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
2.3(c)
5.3(d)
3.1
5.3(d)
4.1
4.2
4.3
3.3
5.1
7.1
4.4
2.3(c)
5.3(d)
3.3
5.1
2.3(c)
4.4
2020
$’000
106,760
129,145
2019
$’000
119,535
155,745
175,593
148,939
13,225
8,286
–
47
433,009
424,266
9,708
37
10,518
37
4,154,994
3,841,872
591,343
22,946
547,089
21,350
4,779,028
4,420,866
5,212,037
4,845,132
189,474
81,553
30,430
10,083
–
824
197,731
81,728
26,510
29,985
288
2,874
312,364
339,116
62,111
–
943,008
333,529
384,920
260,044
390,068
260,219
1,650,083
983,816
1,962,447
1,322,932
3,249,590
3,522,200
5.4(a)
3,003,964
2,980,933
15,253
5,223
16,909
(1,979)
225,150
526,337
3,249,590
3,522,200
The consolidated statement of financial position is to be read in conjunction with the notes to the consolidated
financial statements.
Whitehaven Coal Annual Report 2020 | 65
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY Consolidated statement
of changes in equity
For the year ended 30 June 2020
Balance at 1 July 2018
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
Transfer on exercise of share-based payments
Transfer on lapse of share-based payments
5.5(a)
Issued
capital
$’000
Note
2,993,458
–
–
–
–
–
15,814
–
Share-
based
payment
reserve
$’000
5.4(b)
13,948
–
–
–
–
7,684
(4,621)
(102)
–
Hedge
reserve
Retained
earnings
$’000
5.4(b)
$’000
Total
equity
$’000
1,022
474,384
3,482,812
–
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)
Purchase of shares through employee share plan
5.4(a)
(28,339)
Closing balance at 30 June 2019
2,980,933
16,909
(1,979)
526,337
3,522,200
Opening balance at 1 July 2019
2,980,933
16,909
(1,979)
526,337
3,522,200
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
Transfer on exercise of share-based payments
Cash settled share-based payments
5.5(a)
–
–
–
–
–
26,392
–
Purchase of shares through employee share plan
5.4(a)
(3,361)
–
–
–
–
6,259
(7,366)
(549)
–
–
30,036
30,036
7,202
7,202
–
30,036
7,202
37,238
–
–
–
–
–
(312,197)
(312,197)
–
6,259
(19,026)
–
–
–
(549)
(3,361)
Closing balance at 30 June 2020
3,003,964
15,253
5,223
225,150
3,249,590
The consolidated statement of changes in equity is to be read in conjunction with the notes to the consolidated
financial statements.
66 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY Consolidated statement
of cash flows
For the year ended 30 June 2020
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
2020
$’000
2019
$’000
1,744,954
2,442,211
(1,555,020)
(1,478,153)
189,934
964,058
(30,938)
953
(13,513)
(34,371)
2,088
(15,321)
Net cash from operating activities
3.4
146,436
916,454
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Expenditure on projects
Acquisition of shares in subsidiary, 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 senior bank facility
Proceeds from secured loans – ECA facility
Repayment of senior bank facility
Repayment of secured loans – ECA facility
Payment of lease liabilities
Payment of dividends
Net cash from/(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
27
(190,779)
(57,567)
(19,679)
–
1,195
(92,847)
(32,725)
(4,803)
(64,618)
(267,998)
(193,798)
(13,650)
(3,361)
598,000
51,671
(1,681)
(28,339)
410,000
–
(120,000)
(525,000)
(11,908)
(79,768)
(312,197)
(11,908)
(93,116)
(464,854)
108,787
(714,898)
(12,775)
119,535
7,758
111,777
106,760
119,535
The consolidated statement of cash flows is to be read in conjunction with the notes to the consolidated
financial statements.
Whitehaven Coal Annual Report 2020 | 67
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY Notes to the consolidated
financial statements
For the year ended 30 June 2020
1. About this report
1.1 Reporting entity
Whitehaven Coal Limited (‘Whitehaven’ or the
‘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 2020
was authorised for issue in accordance with a resolution
of the Directors on 26 August 2020. 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; 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.
68 | Whitehaven Coal Annual Report 2020
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 that form the basis
of the carrying values of assets and liabilities, which are
not readily apparent from other sources. Judgements
and estimates that 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 77
page 86
page 87
page 89
page 106
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 2020 comprises
the Company and its controlled entities (together
referred to as the ‘Group’). A list of the Group’s
significant controlled entities is presented in
note 6.2.
Control is achieved when the Group is exposed,
or has rights, to variable returns from its involvement
with the investee and has the ability to affect
those returns through its power over the investee.
The Group re-assesses whether or not it controls
an investee if facts and circumstances indicate
that there are changes to one or more of the three
elements of control. Specifically, the Group controls
an investee if, and only if, the Group has all of
the following:
– Power over the investee (i.e. existing rights that
give it the current ability to direct the relevant
activities of the investee);
– Exposure, or rights, to variable returns from its
involvement with the investee; and
– The ability to use its power over the investee
to affect its returns.
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the year
are included in the consolidated financial statements
from the date the Group gains control until the
date the Group ceases to control the subsidiary.
1.5 New standards, interpretations and
amendments adopted by the Group
(i) Changes in accounting policy and disclosures
The accounting policies adopted in the preparation
of the consolidated financial statements are
consistent with those of the previous financial year.
Several amendments apply for the first time in the
current year. However, they do not impact the annual
consolidated financial statements of the Group.
As disclosed in the 2019 Annual Financial Report,
the Group adopted AASB 16 Leases, AASB 15
Revenue from Contracts with Customers and
AASB 9 Financial Instruments in the financial year
ended 30 June 2019, effective from 1 July 2018.
(ii) Accounting standards and interpretations issued
but not yet effective
Australian Accounting Standards and Interpretations
that have recently been issued or amended but are
not yet effective and have not been adopted by
the Group for the annual reporting period ended
30 June 2020 are outlined below:
Amendments to AASB 3: Definition of a Business
In October 2018, the IASB issued amendments
to the definition of a business in AASB 3 Business
Combinations to help entities determine whether
an acquired set of activities and assets is a business
or not. They clarify the minimum requirements for a
business, remove the assessment of whether market
participants are capable of replacing any missing
elements, add guidance to help entities assess
whether an acquired process is substantive, narrow
the definitions of a business and of outputs, and
introduce an optional fair value concentration test.
The amendment to AASB 3 is effective for reporting
periods beginning on or after 1 January 2020. Since
amendments apply prospectively to transactions or
other events that occur on or after the date of first
application, the Group will not be affected by these
amendments on the date of transition.
(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 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.
(iv) Notes to the consolidated financial statements
The notes to these consolidated financial statements
have been organised into logical groupings to
present more meaningful and dynamic information
to users. To the extent possible, the relevant
accounting policies and numbers have been
provided in the same note. The Group has also
reviewed the notes for materiality and relevance,
and provided additional information where
considered material and relevant to the operations,
financial position or performance of the Group.
Whitehaven Coal Annual Report 2020 | 69
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY
1. About this report (cont.)
1.5 New standards, interpretations and amendments adopted by the Group (cont.)
(ii) Accounting standards and interpretations issued but not yet effective (cont.)
Amendments to IAS 1 and IAS 8: Definition
of Material
Amendments to IAS 37: Onerous Contracts –
Costs of Fulfilling a Contract
In October 2018, the IASB issued amendments
to IAS 1 Presentation of Financial Statements and
IAS 8 Accounting Policies, Changes in Accounting
estimates and Errors to align the definition of
‘material’ across the standards and to clarify certain
aspects of the definition. The new definition states
that ‘Information is material if omitting, misstating
or obscuring it could reasonably be expected to
influence decisions that the primary users of general
purpose financial statements make on the basis of
those financial statements, which provide specific
information about a specific reporting entity.’
These amendments are effective for reporting
periods beginning on or after 1 January 2020.
The amendments to the definition of material
is not expected to have a significant impact on
the Group’s consolidated financial statements.
Amendments to IFRS 3: Reference to
Conceptual Framework
In May 2020, the IASB issued Amendments
to IFRS 3 Business Combinations – Reference to
the Conceptual Framework. The amendments are
intended to replace a reference to a previous version
of the IASB’s Conceptual Framework (the 1989
Framework) with a reference to the current version
issued in March 2018 (the Conceptual Framework)
without significantly changing its requirements.
The amendments add an exception to the
recognition principle of IFRS 3 to avoid the issue of
potential ‘day 2’ gains or losses arising for liabilities
and contingent liabilities that would be within the
scope of IAS 37 Provisions, Contingent Liabilities
and Contingent Assets or IFRIC 21 Levies, if incurred
separately. The exception requires entities to apply
the criteria in IAS 37 or IFRIC 21, respectively, instead
of the Conceptual Framework, to determine whether
a present obligation exists at the acquisition date.
At the same time, the amendments add a new
paragraph to IFRS 3 to clarify that contingent assets
do not qualify for recognition at the acquisition date.
These amendments are effective for annual periods
beginning on or after 1 January 2022. They are not
expected to have a significant impact on the Group’s
consolidated financial statements.
In May 2020, the IASB issued amendments to IAS
37 Provisions, Contingent Liabilities and Contingent
Assets to specify which costs an entity needs
to include when assessing whether a contract is
onerous or loss-making.
The amendments apply a ‘directly related cost
approach’. The costs that relate directly to a
contract to provide goods or services include both
incremental costs (e.g., the costs of direct labour
and materials) and an allocation of costs directly
related to contract activities (e.g., depreciation of
equipment used to fulfil the contract as well as costs
of contract management and supervision). General
and administrative costs do not relate directly to a
contract and are excluded unless they are explicitly
chargeable to the counterparty under the contract.
These amendments are effective for annual periods
beginning on or after 1 January 2022. They are not
expected to have a significant impact on the Group’s
consolidated financial statements.
Amendments to IAS 1: Classification of Liabilities
as Current or Non-current
In January 2020, the IASB issued amendments
to paragraphs 69 to 76 of IAS 1 Presentation of
Financial Statements to specify the requirements
for classifying liabilities as current or non-current.
The amendments clarify:
– What is meant by a right to defer settlement
– That a right to defer must exist at the end of
the reporting period
– That classification is unaffected by the likelihood
that an entity will exercise its deferral right
– That only if an embedded derivative in a
convertible liability is itself an equity instrument,
would the terms of a liability not impact its
classification.
These amendments are effective for annual periods
beginning on or after 1 January 2022. They are not
expected to have a significant impact on the Group’s
consolidated financial statements.
70 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYNotes to the consolidated financial statementsFor the year ended 30 June 2020
Amendments to IAS 16: Property, Plant and
Equipment: Proceeds before Intended Use
The amendment prohibits entities from deducting
from the cost of an item of property, plant and
equipment (PP&E), any proceeds of the sale of
items produced while bringing that asset to the
location and condition necessary for it to be
capable of operating in the manner intended by
management. Instead, an entity recognises the
proceeds from selling such items, and the costs
of producing those items, in profit or loss.
These amendments are effective for annual periods
beginning on or after 1 January 2022. They are not
expected to have a significant impact on the Group’s
consolidated financial statements.
Amendments to The Conceptual Framework
for Financial Reporting
The revised Conceptual Framework for Financial
Reporting (‘the Conceptual Framework’) is not a
standard, and none of the concepts override those
in any standard or any requirements in a standard.
The purpose of the Conceptual Framework is to
assist the IASB in developing standards, to help
preparers develop consistent accounting policies if
there is no applicable standard in place and to assist
all parties to understand and interpret the standards.
These amendments are effective for annual periods
beginning on or after 1 January 2020. They are not
expected to have a significant impact on the Group’s
consolidated financial statements.
Whitehaven Coal Annual Report 2020 | 71
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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 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, and 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), and 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 June 2020
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
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
1,040,781
475,820
205,008
1,721,609
246,434
794,347
1,040,781
73,605
402,215
475,820
–
205,008
205,008
320,039
1,401,570
1,721,609
212,276
107,655
(13,968)
305,963
(224,583)
(12,294)
(39,050)
30,036
94,832
91,797
61,717
248,346
72 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYNotes to the consolidated financial statementsFor the year ended 30 June 2020
Year ended 30 June 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
Other segment information
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
223,526
1,953,859
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
Revenue from external customers is attributed to geographic location based on final shipping destination.
2020/2019 Comparison
Revenue by
geographic location
2019
2020
Revenue by
geographic location
Japan
Taiwan
Korea
India
Vietnam
Malaysia
Philippines
China
Indonesia
New Caledonia
Other
Domestic
2020
$’000
844,007
256,089
231,217
134,814
61,888
51,346
37,786
28,507
26,593
25,291
10,767
13,304
2019
$’000
1,255,751
262,015
351,328
201,637
67,861
100,267
35,933
66,541
48,755
26,128
60,952
10,776
Total revenue
1,721,609
2,487,944
Whitehaven Coal Annual Report 2020 | 73
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2. Group performance (cont.)
2.1 Segment reporting (cont.)
Major customers
The Group has three major customers, which account for 28.1% (2019: 29.4%) 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 to 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: the provision of goods at the point when control passes to the customer.
The Group’s products are sold to customers under contracts that 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 understanding the overall results of the Group. The Company believes the disclosure
of these items provides readers of the financial statements with further meaningful insights to understand the financial
performance of the Group.
Included within the balances presented on the face of
the consolidated statement of comprehensive income:
Operating expenses
Rehabilitation expense1
Depreciation and amortisation
Accelerated depreciation at Narrabri2
Significant items before tax
Applicable income tax benefit
Significant items after tax
2020
$’000
2019
$’000
–
–
–
–
–
(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 prior 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 re-assessed 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.
74 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYNotes to the consolidated financial statementsFor the year ended 30 June 2020 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
2020
$’000
2019
$’000
50,365
(186,774)
(61,965)
(27,438)
(694)
6,242
Income tax expense reported in the consolidated statement of comprehensive income
(12,294)
(207,970)
Reconciliation between tax expense and profit before tax
Profit before tax
42,330
735,868
Income tax expense using the Company’s domestic tax rate of 30% (2019: 30%)
(12,699)
(220,760)
Non-deductible expenses:
Share-based payments
Other non-deductible expenses
Non-assessable income (acquisition related)
On-market share purchases by employee share scheme trust reimbursed by the Group
Over/(under) provided in prior periods
Total income tax expense
b)
Income tax recognised directly in other comprehensive income
Deferred income tax related to items (credited)/charged directly to equity
Derivatives
Income tax expense recorded in equity
(1,878)
(359)
2,326
1,010
(694)
(2,305)
350
–
8,503
6,242
(12,294)
(207,970)
2020
$’000
(3,087)
(3,087)
2019
$’000
1,286
1,286
Whitehaven Coal Annual Report 2020 | 75
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2. Group performance (cont.)
2.3 Taxes (cont.)
c) Recognised tax assets and liabilities
Opening balance
Charged to income – corporate tax
Charged to equity
Recognition of deferred tax asset on current year losses
Utilisation of tax losses
Acquisition of a subsidiary (note 6.1)
Adjustment for prior periods
Payments
Closing balance
2020
2020
2019
2019
Current income
tax receivable
Deferred
income tax
Current income
tax (payable)
Deferred
income tax
$’000
$’000
$’000
$’000
(288)
(390,068)
–
(198,993)
50,365
–
(50,365)
–
–
–
13,513
13,225
(61,997)
(3,087)
50,365
(186,774)
(27,438)
–
–
1,286
–
–
171,165
(171,165)
20,561
(694)
–
(384,920)
–
–
15,321
(288)
–
6,242
–
(390,068)
Deferred income tax assets and liabilities are attributable to the following:
Property, plant and equipment
Exploration and evaluation
Receivables
Inventory
Investments
Right-of-use assets and liabilities (net)
Deferred stripping
Deferred foreign exchange gain
Provisions
Tax losses
Other items
Tax assets/(liabilities)
Set-off of tax (liabilities)/assets
Net tax assets/(liabilities)
Assets
Liabilities
2020
$’000
2019
$’000
–
–
–
–
359
–
–
–
89,664
112,370
36
202,429
–
–
–
–
307
632
–
120
80,908
33,273
2,963
118,203
2020
$’000
2019
$’000
(501,359)
(460,817)
(51,783)
(30,580)
(5,601)
(1,687)
–
(1,989)
(17,623)
(2,286)
–
–
(5,021)
(6,920)
–
–
–
(9,954)
–
–
–
–
(587,349)
(508,271)
(202,429)
(118,203)
202,429
118,203
–
–
(384,920)
(390,068)
d) Unrecognised deferred tax assets
There were $21,771,000 in unrecognised income tax losses at 30 June 2020 (2019: nil).
76 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYNotes to the consolidated financial statementsFor the year ended 30 June 2020 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
The 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
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, 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 formed a tax
consolidated group with effect from 29 May 2007
and have therefore been 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 its members.
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 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 rely 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 liabilities recognised on the consolidated statement of financial position. Other tax losses
and temporary differences not yet recognised may also require adjustment, resulting in a corresponding credit or
charge to the consolidated statement of comprehensive income.
Whitehaven Coal Annual Report 2020 | 77
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 2. Group performance (cont.)
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:
Profit attributable to ordinary shareholders
Net profit attributable to ordinary shareholders ($‘000)
30,036
527,898
2020
2019
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
(1,891)
(4,480)
990,135
987,546
Basic earnings per share attributable to ordinary shareholders (cents)
3.0
53.5
Diluted earnings per share
Diluted earnings per share are 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:
Profit attributable to ordinary shareholders (diluted)
Net profit attributable to ordinary shareholders (diluted) ($’000)
30,036
527,898
2020
2019
Weighted average number of ordinary shares (diluted)
Weighted average number of ordinary shares (basic) (000’s)
Effect of share options/performance rights on issue (000’s)
Weighted average number of ordinary shares (diluted) (000’s)
990,135
12,869
987,546
19,853
1,003,004
1,007,399
Diluted earnings per share attributable to ordinary shareholders (cents)
3.0
52.4
78 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYNotes to the consolidated financial statementsFor the year ended 30 June 2020 3. Working capital and cash flows
3.1 Trade and other receivables
Current
Trade receivables
Other receivables and prepayments
Receivables due from other investors in joint operations
Non-current
Other receivables and prepayments
Recognition and measurement
2020
$’000
97,435
19,618
12,092
2019
$’000
113,441
34,347
7,957
129,145
155,745
9,708
10,518
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
2020
$’000
134,330
41,263
175,593
2019
$’000
114,036
34,903
148,939
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.
Whitehaven Coal Annual Report 2020 | 79
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY
3. Working capital and cash flows (cont.)
3.3 Trade and other payables
Current
Trade payables
Other payables and accruals
Non-current
Other payables
2020
$’000
59,892
129,582
189,474
2019
$’000
63,157
134,574
197,731
62,111
–
Non-current other payables relate to deferred consideration payable on the acquisition of EDF Trading Australia Pty
Limited which is payable over five years. Refer to note 6.1 for more information.
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.
Short term trade and other payables are not discounted. The amounts are unsecured and are usually paid within
30 days of recognition. Long-term trade and other payables are discounted to their present value based on
expected future cash flows. The unwinding effect of discounting trade and other payables is recorded as a
finance cost in the consolidated statement of comprehensive income.
80 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYNotes to the consolidated financial statementsFor the year ended 30 June 2020
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
Amortisation of finance facility upfront costs
Modification gain on senior debt facility
Non-cash interest (expense)/income accruals
Foreign exchange losses unrealised
Unwinding of discounts on provisions
Share-based compensation payments
Cash-settled share-based payments
Gain on acquisition of a subsidiary
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
Note
4.1
4.1
5.2
4.4
5.5(a)
6.1
2020
$’000
30,036
224,583
81,767
(110,610)
8,782
(8,673)
4,664
2,172
4,297
6,259
(549)
(6,701)
(1,765)
234,262
18,110
(40,514)
(43,170)
(21,033)
(13,458)
12,239
146,436
2019
$’000
527,898
224,459
57,946
(110,239)
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
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 are equal to the balance disclosed in the
consolidated statement of financial position.
Whitehaven Coal Annual Report 2020 | 81
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 4. Resource assets and liabilities
4.1 Property, plant and equipment
Year ended
30 June 2020
Cost
Balance at
1 July 2019
Additions
PPE acquired as
part of subsidiary
acquisition
Disposals
Balance at
30 June 2020
Accumulated depreciation
Balance at
1 July 2019
Depreciation
charge for the year
Disposals
Balance at
30 June 2020
Carrying amount
at 30 June 2020
Freehold
land
Plant and
equipment
Leased
plant and
equipment
Mining
property and
development
Subtotal
Deferred
development
Deferred
stripping
Subtotal
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
107,489
933,454
500,772
3,166,337
4,708,052
406,345
2,068,955
2,475,300
7,183,352
35,621
144,745
258,253
22,904
461,523
110,610
427,785
538,395
999,918
968
28,321
142
35,416
64,847
26,071
–
(17,953)
(144,228)
–
(162,181)
(75,669)
–
–
26,071
90,918
(75,669)
(237,850)
144,078
1,088,567
614,939
3,224,657
5,072,241
467,357
2,496,740
2,964,097
8,036,338
–
(375,735)
(255,415)
(511,536)
(1,142,686)
(163,018)
(2,035,776)
(2,198,794)
(3,341,480)
–
–
–
(54,799)
(80,705)
(96,544)
(232,048)
(81,767)
(402,219)
(483,986)
(716,034)
17,953
82,548
–
100,501
75,669
–
75,669
176,170
(412,581)
(253,572)
(608,080)
(1,274,233)
(169,116)
(2,437,995)
(2,607,111)
(3,881,344)
144,078
675,986
361,367
2,616,577
3,798,008
298,241
58,745
356,986
4,154,994
82 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYNotes to the consolidated financial statementsFor the year ended 30 June 2020 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
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
Freehold
land
Plant and
equipment
Leased
plant and
equipment
Mining
property and
development
Subtotal
Deferred
development
Deferred
stripping
Subtotal
Total
$’000
$’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
–
(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
Whitehaven Coal Annual Report 2020 | 83
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 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 $9,823,000 for the
year ended 30 June 2020 (2019: $9,124,000).
The cost relating to variable lease payments – that do not
depend on an index or a rate – amounted to $37,545,000
in the year ended 30 June 2020 (2019: $34,243,000).
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 units of production basis for mine specific assets,
including mining property and development, deferred
development and deferred stripping.
All remaining assets are depreciated on a straight
line basis at the rates indicated below. Depreciation
commences on assets when they are deemed capable
of operating in the manner intended by management.
– Freehold land
– Plant and equipment
– Leased plant
Not depreciated
2%–50%
and equipment
3%–20%
– Mining property and
development, deferred
development and
deferred stripping
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.
The 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 the right to use or control 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.
84 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYNotes to the consolidated financial statementsFor the year ended 30 June 2020 The right of use asset is depreciated to the earlier
of the asset’s useful life or the lease term using
the straight line method and is recognised in the
statement of comprehensive income in depreciation
and amortisation. Where the lease transfers ownership
of the underlying asset to the Group by the end of
the lease term, the right of use asset is depreciated
from the commencement date to the end of the
useful life of the underlying asset.
The unwinding of the financial charge on the
lease liability is recognised in the statement
of comprehensive income in financial expenses,
and is 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. 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.
Deferred development
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. This expenditure is
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 (CGU).
Impairment
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, the 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,
and which are largely independent of the cash inflows
of other assets or groups of assets – the CGU. The
recoverable amount of an asset or CGU 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 CGU exceeds its
recoverable amount. Impairment losses recognised
in respect of CGUs are allocated to reduce the carrying
amount of the assets in the unit (group of units) on a
pro rata basis.
Whitehaven Coal Annual Report 2020 | 85
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 4. Resource assets and liabilities (cont.)
4.1 Property, plant and equipment (cont.)
Significant accounting judgements, estimates and assumptions
Recoverable amount of assets
At the end of each period, the Group assesses 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 CGUs and individual
assets are determined based on value-in-use
calculations. These calculations require the use
of estimates and assumptions.
Expected future cash flows used to determine the
recoverable value of tangible assets are inherently
uncertain and could materially change over time.
They are 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 possible that these assumptions may change,
which could impact the estimated life of a mine and
result in a material adjustment to the carrying value
of tangible assets.
The recoverable amount of CGUs are sensitive to the
below key assumptions.
– Coal price: the coal prices applied are based
on a consideration of third party forecasts and
management estimates.
– Discount rate: the discount rate is derived using
the weighted average cost of capital methodology
adjusted for any risks that are not reflected in the
underlying cash flows. A real pre-tax discount rate
of 11% was applied to pre-tax cash flows.
Material changes in circumstances may affect the
assumptions used to determine recoverable amount
of CGUs and could result in an impairment of tangible
assets being recognised at future reporting dates.
The determination of recoverable value for a CGU
is considered to be a Level 3 fair value measurement,
as it is derived from valuation techniques that include
inputs not based on observable market data. The
Group considers the inputs and 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 on interpretations
of geological and geophysical models, which require
assumptions to be made of 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, as well as provision
for rehabilitation and the amount charged for
amortisation and depreciation.
86 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYNotes to the consolidated financial statementsFor the year ended 30 June 2020 4.2 Exploration and evaluation
Exploration and evaluation assets
Balance at 1 July 2019
Exploration and evaluation assets acquired as part of subsidiary acquisition
Exploration and evaluation expenditure
Balance at 30 June 2020
Balance at 1 July 2018
Exploration and evaluation expenditure
Balance at 30 June 2019
$’000
547,089
949
43,305
591,343
508,552
38,537
547,089
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 that 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 CGUs.
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.
Whitehaven Coal Annual Report 2020 | 87
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 4. Resource assets and liabilities (cont.)
4.3 Intangible assets
Water access
rights
Rail access
rights1
Balance at 1 July 2019
Additions
Intangible assets acquired as part of subsidiary acquisition
Balance at 30 June 2020
Balance at 1 July 2018
Additions
Disposals
Balance at 30 June 2019
$’000
10,232
1,380
216
11,828
11,082
323
(1,173)
10,232
$’000
11,118
–
11,118
11,118
–
–
Total
$’000
21,350
1,380
216
22,946
22,200
323
(1,173)
11,118
21,350
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 2019
Payments made on rehabilitation and biodiversity activities
Rehabilitation provision acquired as part of acquisition of subsidiary
Change in cost estimates
Unwinding of discount
Balance at 30 June 2020
Current
Non-current
Balance at 30 June
88 | Whitehaven Coal Annual Report 2020
$’000
290,204
(23,024)
1,643
(2,993)
4,297
270,127
2019
$’000
29,985
2020
$’000
10,083
260,044
260,219
270,127
290,204
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYNotes to the consolidated financial statementsFor the year ended 30 June 2020 Under the terms of its mining licenses and project approvals, the Group is required to comply with certain rehabilitation
and biodiversity obligations. The Group maintains provisions for these rehabilitation and biodiversity requirements. The
Group continues to assess estimates of these obligations as further developments occur and additional commitments
arise that may be required to settle its obligations. However, based on current estimates, any potential changes to these
obligations and commitments in addition to those already recognised in the financial statements are not financially
significant to the Group.
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.
Whitehaven Coal Annual Report 2020 | 89
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 5. Capital structure and financing
5.1 Loans and borrowings
Current liabilities
Lease liabilities
Secured loans – ECA facility
Capitalised borrowing costs
Non-current liabilities
Senior bank facility
Lease liabilities
Secured loans – ECA facility
Capitalised borrowing costs
Financing facilities
Facilities utilised at reporting date
Facilities not utilised at reporting date
2020
$’000
81,977
11,908
(12,332)
81,553
638,000
264,628
56,207
(15,827)
943,008
1,024,561
2019
$’000
76,532
11,908
(6,712)
81,728
160,000
164,992
16,444
(7,907)
333,529
415,257
1,414,720
1,269,876
1,052,720
429,876
362,000
840,000
Financing activities during the financial year
During the current year, the Group refinanced its senior bank debt facility with a syndicate of Australian and
international banks. The new facility is a senior secured syndicated revolving corporate debt facility with an aggregate
limit of A$1.0 billion and is able to be utilised for general corporate purposes with bilateral bank guarantee capacity.
The term has been extended to now mature in July 2023.
During the current year, $120 million of debt drawn under the senior bank facility was repaid (30 June 2019:
$525 million) and $598 million was redrawn (30 June 2019: $410 million). The Group repaid $11.9 million of the ECA
facility during the year (30 June 2019: $11.9 million). During the current year, a new ECA facility was entered into and
in May 2020, $51.7 million of this facility was drawn down. The senior bank facility and the ECA facilities are secured
via a fixed and floating charge over the majority of the Group’s assets. Under the facility, the Group is subject to
compliance with gearing, net worth and interest coverage financial covenants.
Included within current and non-current lease liabilities are leases recognised in accordance with AASB 16 Leases
of $39,605,000 and $90,708,000 respectively (30 June 2019: $54,563,000 and $79,548,000 respectively).
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 2020
and 30 June 2019.
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.
90 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYNotes to the consolidated financial statementsFor the year ended 30 June 2020 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
Modification gain on senior debt facility1
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
2020
$’000
957
957
(11,786)
(13,209)
(11,942)
(36,937)
(35,980)
(4,297)
(7,446)
8,673
(3,070)
2019
$’000
2,092
2,092
(12,901)
(8,620)
(13,434)
(34,955)
(32,863)
(2,343)
(5,695)
–
(8,038)
(39,050)
(40,901)
10,289
(3,087)
7,202
(4,287)
1,286
(3,001)
1 During the current year, the Group refinanced its senior debt facility. In accordance with AASB 9, the net present value of the financial liability is required to be
recalculated when the contractual terms are renegotiated or otherwise modified. As the net present value of the financial liability did not change by more than 10%,
a gain on modification was recognised in the consolidated statement of comprehensive income.
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.
Whitehaven Coal Annual Report 2020 | 91
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 5. Capital structure and financing (cont.)
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 its 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 the total shareholders’ equity and debt.
The Board manages its capital structure and makes adjustments in light of changes to 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, seek waivers or restructure its arrangements with its financiers
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 ratio1
2020
$’000
1,024,561
(106,760)
2019
$’000
415,257
(119,531)
917,801
295,726
3,249,590
3,522,200
4,167,391
3,817,926
22%
8%
1 Calculated including lease liabilities recognised upon adoption of AASB 16 Leases of $130,313,000 (2019: $134,111,000).
c) Risk exposures and responses
Market risk – foreign currency risk
The Group is exposed to currency risk on sales, purchases and demurrage that are denominated in a currency
other than the respective functional currency of the Group, the Australian dollar (AUD). The currency in which these
transactions primarily are denominated is US dollars (USD).
The Group 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.
92 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYNotes to the consolidated financial statementsFor the year ended 30 June 2020 During the current year ended 30 June 2020, a net foreign exchange loss of $3.5 million was recognised
(2019: net foreign exchange loss of $2.4 million).
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 2020 was $7.5 million asset
(2019: $2.7 million liability), comprising assets and liabilities that were recognised as derivatives.
At 30 June 2020, the Group had the following financial instruments that were not designated in cash flow hedges
that were exposed to foreign currency risk.
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
Sensitivity analysis
2020
$’000
USD
17,082
12,675
(4,855)
24,902
2019
$’000
USD
53,521
13,062
(9,394)
57,189
Average rate
Reporting date spot rate
2020
0.6714
2019
0.7156
2020
0.6863
2019
0.7013
A change of 10% in 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 2019.
30 June 2020
AUD:USD strengthening by 10%
AUD:USD weakening by 10%
30 June 2019
AUD:USD strengthening by 10%
AUD:USD weakening by 10%
Equity
Profit or (loss)
$’000
$’000
(2,674)
3,268
(6,161)
7,528
(3,299)
4,032
(7,692)
9,401
Whitehaven Coal Annual Report 2020 | 93
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 5. Capital structure and financing (cont.)
5.3 Financial risk management objectives and policies (cont.)
c) Risk exposures and responses (cont.)
Market risk – interest rate risk
The Group‘s borrowings comprise both variable and fixed rate instruments. The variable rate borrowings expose the
Group to the 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.
The interest rate profile of the Group‘s interest-bearing financial instruments at the reporting date was:
Fixed rate instruments
Lease liabilities
Variable rate instruments
Financial assets
Financial liabilities
Net exposure
Carrying amount
2020
$’000
2019
$’000
(346,605)
(241,524)
(346,605)
(241,524)
106,760
119,531
(706,116)
(188,352)
(599,356)
(68,821)
(945,961)
(310,345)
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 2019.
Equity
Profit or (loss)
$’000
$’000
–
–
21
(22)
(5,994)
5,994
(688)
688
30 June 2020
100bp increase
100bp decrease
30 June 2019
100bp increase
100bp decrease
94 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYNotes to the consolidated financial statementsFor the year ended 30 June 2020 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 is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract,
leading to a financial loss. The Group is exposed to credit risk from its financial assets, including trade receivables,
deposits with banks and other financial institutions, foreign exchange transactions and other financial instruments.
Maximum exposure is 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
2020
$’000
106,760
97,435
8,286
37
2019
$’000
119,531
113,441
47
37
212,518
233,056
The Group’s maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:
Asia
Europe
Australia
Trade receivables
76,713
13,524
7,198
97,435
87,411
21,867
4,163
113,441
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 28.1% of the Group’s revenue is attributable to sales
transactions with three customers (2019: 29.4% with three customers).
The Group trades only with recognised, creditworthy third parties and generally does not require collateral with respect
to 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 2020 (2019: $nil).
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
Gross
2020
$’000
95,953
1,351
131
–
–
Gross
2019
$’000
110,938
2,492
11
–
–
97,435
113,441
Whitehaven Coal Annual Report 2020 | 95
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 5. Capital structure and financing (cont.)
5.3 Financial risk management objectives and policies (cont.)
c) Risk exposures and responses (cont.)
Guarantees
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 and 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 2020
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
346,605
396,920
47,169
47,090
83,203
176,637
42,821
Senior bank facility
638,000
638,000
–
–
–
638,000
Secured loans
68,115
74,113
5,796
5,805
Trade and other payables
251,585
254,015
189,597
–
11,099
16,176
30,170
48,242
Forward exchange contracts:
Outflow
Inflow
150,862
149,360
107,160
26,267
15,933
(158,403)
(158,403)
(113,969)
(28,258)
(16,176)
–
–
–
21,243
–
–
–
1,296,764
1,354,005
235,753
50,904
110,235
893,049
64,064
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
28,352
197,731
30,849
197,731
–
6,512
197,731
–
6,373
–
Secured loans
Trade and other payables
Forward exchange contracts:
Outflow
Inflow
198,117
197,267
173,407
23,860
(195,430)
(196,280)
(172,295)
(23,985)
–
160,000
–
4,190
10,238
3,536
–
–
–
–
–
–
–
–
–
96 | Whitehaven Coal Annual Report 2020
630,294
675,216
251,832
46,079
67,226
260,627
49,452
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYNotes to the consolidated financial statementsFor the year ended 30 June 2020 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 2020 and 30 June 2019.
– Level 1 – measurements based on quoted prices (unadjusted) in active markets for identical assets or liabilities,
– Level 2 – measurements based on inputs other than quoted prices included within level 1 that are observable
for the asset or liability, either directly (as prices) or indirectly (derived from prices), and
– Level 3 – measurements based on inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
The Group held the following financial instruments carried at fair value in the consolidated statement of
financial position:
Assets measured at fair value
Equity shares
Forward exchange contracts – receivable
Liabilities measured at fair value
Forward exchange contracts – payable
Interest rate swaps – payable
Assets measured at fair value
Equity shares
Forward exchange contracts – receivable
Liabilities measured at fair value
Forward exchange contracts – payable
Interest rate swaps – payable
30 June 2020
$’000
Level 1
$’000
Level 2
$’000
Level 3
$’000
37
8,286
8,323
(824)
–
(824)
–
–
–
–
–
–
–
8,286
8,286
(824)
–
(824)
37
–
37
–
–
–
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
–
–
–
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 some foreign exchange
risk. A number of these contracts remained open at 30 June 2020.
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 notes 3.1, 3.3 and 5.1 to the financial statements.
Whitehaven Coal Annual Report 2020 | 97
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 5. Capital structure and financing (cont.)
5.3 Financial risk management objectives and policies (cont.)
e) Financial assets and liabilities by categories
Financial assets
Cash and cash equivalents
Trade and other receivables
Investments
Other financial assets1
Total financial assets
2020
2019
Note
3.1
5.3(d)
Amortised
cost
$’000
106,760
138,853
–
–
245,613
Other1
$’000
–
–
37
8,286
8,323
Amortised
cost
$’000
119,531
166,263
–
–
285,794
1 Other financial assets include $8.3 million (2019: $0.1 million) relating to derivatives in designated hedges.
Financial liabilities
Trade and other payables
Loans and borrowings
Other financial liabilities2
Total financial liabilities
2020
2019
Amortised
cost1
Note
$’000
3.3
5.1
5.3(d)
251,585
1,024,561
–
1,276,146
Other2
$’000
–
–
824
824
Amortised
cost1
$’000
197,731
415,257
–
612,988
Other1
$’000
–
–
37
47
84
Other2
$’000
–
–
2,874
2,874
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 $0.8 million (2019: $2.9 million) relating to derivatives in designated hedges.
98 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYNotes to the consolidated financial statementsFor the year ended 30 June 2020 f) Changes in liabilities arising from financing activities
As at 1 July
Outflows from secured loans
Outflows from lease liabilities
Inflows/(outflows) from senior bank facility
Increase in secured loans
Increase in lease liabilities
As at 30 June
Consisting of:
Current loans and borrowings1
Non-current loans and borrowings2
1 Current loans and borrowings does not include capitalised borrowing costs of $12,332,000 (2019: $6,712,000).
2 Non-current loans and borrowings does not include capitalised borrowing costs of $15,827,000 (2019: $7,907,000).
The Group classifies interest paid as cash flows from operating activities.
30 June 2020
30 June 2019
$’000
429,876
(11,908)
(79,768)
478,000
51,671
184,849
$’000
607,476
(11,908)
(93,116)
(115,000)
–
42,424
1,052,720
429,876
93,885
958,835
88,440
341,436
Recognition and measurement
Financial assets
The Group classifies its financial assets into
the following categories: those to be measured
subsequently at fair value (either through other
comprehensive income, 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 derivatives
designated as hedging instruments.
All financial liabilities are recognised initially at
fair value.
The Group’s financial liabilities include trade and
other payables, loans and borrowings and derivative
financial instruments.
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.
Hedge accounting is discontinued prospectively
when a hedging instrument expires, or is sold or
terminated, or when a hedge no longer meets the
criteria for hedge accounting. The cumulative gain
or loss previously recognised in other comprehensive
income remains in other comprehensive income
until the forecast transaction occurs.
Whitehaven Coal Annual Report 2020 | 99
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 5. Capital structure and financing (cont.)
5.4 Share capital and reserves
a) Share capital
2020
2019
No. of shares
$’000
No. of shares
$’000
Fully paid ordinary share capital
1,026,045,885
3,003,964
1,026,045,885
2,980,933
Ordinary share capital at the beginning of the period
1,026,045,885
2,980,933
1,026,045,885
2,993,458
Transfer of shares by share plan
Shares purchased by share plan
–
–
26,392
(3,361)
–
–
15,814
(28,339)
Ordinary share capital at the end of the period
1,026,045,885
3,003,964
1,026,045,885
2,980,933
At 30 June 2020, a trust on behalf of the Company held 1,591,838 ordinary fully paid shares in the Company (30 June 2019: 5,337,876). During the year, 5,246,038
of these shares were transferred to performance rights plan recipients and 1,500,000 purchased by the share plan. 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 $312,197,000 were paid to shareholders during the year ended 30 June 2020 (2019: $464,854,000).
The Directors resolved not to pay a final dividend with respect to the year ended 30 June 2020.
Dividend franking account
As at 30 June 2020, $0.2 million in franking credits were available to shareholders of Whitehaven Coal Limited
(2019: $15.1 million).
100 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYNotes to the consolidated financial statementsFor the year ended 30 June 2020 5.5 Share-based payments
a) Recognised share-based payment expenses
Employee expenses
Share options and performance rights – senior employees
2020
$’000
6,259
2019
$’000
7,684
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 options. The amount recognised is adjusted to reflect the actual number of share options that vest, except
for those that fail to vest due to market conditions not being met. Once the instruments have vested, no further
expenses are recognised nor reserves reversed in respect to costs already charged. However, where the share
rights or options have lapsed after vesting the Group transfers the equivalent amount of the cumulative cost for
the lapsed awards from the share-based payments reserve to another component of equity.
b) Types of share-based payment plans
Performance right and option grant to CEO and senior employees
The Company issued performance rights to the CEO and senior employees under the Company’s medium and
long term incentive (MTI and LTI) programs in FY19 and FY20. The terms and conditions of the grant are as follows.
Performance rights
MTI
LTI tranche 1
LTI tranche 2
LTI tranche 3
Total
2020
2019
Number of
instruments
Vesting and
expiration date
Number of
instruments
Vesting and
expiration date
1,173,680
30 June 2022
397,596
30 June 2021
492,613
30 June 2022
337,300
30 June 2021
492,595
30 June 2023
337,294
30 June 2022
985,190
30 June 2022/231
674,571
30 June 2021/221
3,144,078
1,746,761
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 are subject to a performance measure linked to relative total shareholder return (TSR)
and a costs hurdle. The TSR performance measure compares the TSR performance of the Company with the TSR
performance of a peer group of companies operating in the Australian resources sector. The costs hurdle performance
measure relates to the Company’s achieving a defined cost per tonne target. Detailed disclosures of LTI outcomes
against the target are provided in the Remuneration Report.
The table below details the outcomes of MTI awards that were tested in FY20 (or for which the test period concluded
on 30 June 2020) and the results of the relevant test.
MTI Year
2017
2017
Test Type
Relative TSR
Costs Target Hurdle
Performance
20th in 22
$75/tonne
Outcomes
Vested
0%
0%
Lapsed
100%
100%
Whitehaven Coal Annual Report 2020 | 101
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 5. Capital structure and financing (cont.)
5.5 Share-based payments (cont.)
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
2020
$0.64
$0.32
$0.00
$0.00
$0.66
$0.59
$0.00
2020
20,646,332
(5,200,653)
3,781,5541
–
(4,996,569)
14,230,664
1,012,730
2019
$0.58
$0.00
$0.00
$0.00
$0.00
$0.64
$0.00
2019
22,952,635
(4,041,556)
2,183,6582
(89,819)
(358,586)
20,646,332
882,319
1
2
Includes 637,476 performance rights granted during the year under the FY19 STI scheme.
Includes 436,897 performance rights granted during the year under the FY18 STI scheme.
The outstanding balance as at 30 June 2020 is represented by:
i)
1,360,175 options over ordinary shares having an exercise price of $1.21, exercisable between 30 June 2020 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) 186,615 performance rights over ordinary shares having an exercise price of nil, exercisable between 26 August 2020
and 13 August 2025
iv) 1,351,083 performance rights over ordinary shares having an exercise price of nil, exercisable between 26 August
2020 and 31 August 2026
v) 3,156,731 performance rights over ordinary shares having an exercise price of nil, exercisable between 26 August
2020 and 27 October 2027
vi) 2,046,478 performance rights over ordinary shares having an exercise price of nil, exercisable between 26 August
2020 and 27 October 2028
vii) 3,781,554 performance rights over ordinary shares having an exercise price of nil, exercisable between 26 August
2020 and 28 October 2029
During the year ended 30 June 2020, 1,360,181 share options and 3,840,472 performance rights were exercised
(2019: nil).
The weighted average remaining contractual life of share options and performance rights outstanding at 30 June 2020
is 6.3 years (2019: 5.7 years).
102 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYNotes to the consolidated financial statementsFor the year ended 30 June 2020 d) Option pricing models
The fair value of performance rights granted under the LTI program 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 2020 and 30 June 2019.
2020
Performance hurdle
Grant date
Vesting date
Fair value at grant date
Share price
Expected volatility
Performance Right life
Risk-free interest rate
2019
Performance hurdle
Grant date
Vesting date
Fair value at grant date
Share price
Expected volatility
Performance Right life
Risk-free interest rate
MTI
TSR
MTI
Cost
Rights
LTI
TSR
LTI
TSR
LTI
Cost
LTI
Cost
15 Nov 19
15 Nov 19
15 Nov 19
15 Nov 19
15 Nov 19
15 Nov 19
30 Jun 22
30 Jun 22
30 Jun 22
30 Jun 23
30 Jun 22
30 Jun 23
$1.98
$3.15
30%
$3.43
$3.15
30%
$1.99
$3.15
30%
$2.10
$3.15
30%
$3.43
$3.15
30%
$3.43
$3.15
30%
10 years
10 years
10 years
10 years
10 years
10 years
0.8%
0.8%
0.8%
0.8%
0.8%
0.8%
MTI
TSR
MTI
Cost
Rights
LTI
TSR
LTI
TSR
LTI
Cost
LTI
Cost
27 Oct 18
27 Oct 18
27 Oct 18
27 Oct 18
27 Oct 18
27 Oct 18
30 Jun 21
30 Jun 21
30 Jun 21
30 Jun 22
30 Jun 21
30 Jun 22
$2.98
$4.81
30%
$5.07
$4.81
30%
$2.99
$4.81
30%
$3.15
$4.81
30%
$5.07
$4.81
30%
$5.07
$4.81
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%
All shared-based payments for existing employees are equity settled.
Whitehaven Coal Annual Report 2020 | 103
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 6. Group structure
6.1 Acquisition of business
Acquisitions in the year ended 30 June 2020
On 31 December 2019, the Group completed the acquisition of EDF Trading Australia Pty Limited which owns a 7.5%
interest in the Narrabri Coal Project Joint Venture. The acquisition had an effective date of 1 July 2019 and brings
Whitehaven’s ownership interest in the Narrabri Coal Project Joint Venture to 77.5%. The completion of the acquisition
triggered pre-emptive rights in favour of each of the Narrabri Joint Venture participants (including Whitehaven).
All participants have elected not to exercise their rights.
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 consideration
Deferred consideration1
Total consideration
Cash acquired as part of the acquisition
Net cash flow on acquisition2
$’000
17,640
81,156
98,796
(1,029)
16,611
1 Deferred consideration on the acquisition of EDF Trading Australia Pty Limited of US$55 million is payable over five years and is not contingent.
2 Other acquisition related payments of $3,068,000 were made during the year ended 30 June 2020.
b) Assets acquired and liabilities assumed
The fair values of the identifiable assets and liabilities of EDF Trading Australia Pty Limited at 1 July 2019, the effective
date of acquisition were as follows:
Assets
Cash and cash equivalents
Trade and other receivables
Inventory
Deferred tax asset
Property, plant and equipment
Exploration and evaluation
Intangible assets
Liabilities
Trade and other payables
Provision for rehabilitation costs
Total identifiable net assets at fair value
Total consideration
Gain on acquisition
Acquisition related costs
Fair value
recognised on
acquisition
$’000
1,029
2,036
5,622
20,561
90,918
949
216
121,331
(14,191)
(1,643)
(15,834)
105,497
98,796
6,701
(6,679)
Total tax losses (tax effected at 30%) transferred from EDF Trading Australia Pty Limited were $50,532,000.
The Group recognised $28,761,000 of these losses and $21,771,000 remained unrecognised.
104 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYNotes to the consolidated financial statementsFor the year ended 30 June 2020 c)
Impact of the acquisition on the results of the Group
From the effective date of acquisition, EDF Trading Australia Pty Limited contributed $45,833,000 of revenue and
$3,412,000 of profit before tax for the Group, as disclosed in the consolidated statement of comprehensive income
for the year ended 30 June 2020.
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
2020
2019
Ownership interest
2020
2019
Parent entity
Whitehaven Coal Limited
Subsidiaries
Whitehaven Coal Mining Limited1
Namoi Mining Pty Ltd1
Namoi Agriculture & Mining Pty Ltd
Betalpha Pty Ltd1
Tarrawonga Coal Pty Ltd1
Tarrawonga Coal Sales Pty Ltd2
Whitehaven Coal Holdings Pty Ltd1
Whitehaven Coal Infrastructure Pty Ltd1
Narrabri Coal Australia Pty Ltd2,3
Narrabri Coal Pty Ltd1
Narrabri Coal Operations Pty Ltd1
Narrabri Coal Sales Pty Ltd1
Creek Resources Pty Ltd1
Werris Creek Coal Sales Pty Ltd1
Werris Creek Coal Pty Ltd1
WC Contract Hauling Pty Ltd1
Whitehaven Blackjack Pty Ltd1
Whitehaven Project Pty Ltd1
Whitehaven Employee Share Plan Pty Ltd1
Whitehaven WS Pty Ltd2
Aston Resources Limited1
Aston Coal 2 Pty Ltd1
Aston Coal 3 Pty Ltd1
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100% Maules Creek Coal Pty Ltd1
100% Boardwalk Resources Limited1
100% Boardwalk Coal Management Pty Ltd1
100% Boardwalk Coal Marketing Pty Ltd1
100% Boardwalk Sienna Pty Ltd1
100% Boardwalk Monto Pty Ltd1
100% Boardwalk Dingo Pty Ltd1
100% Boardwalk Ferndale Pty Ltd1
– Coalworks Limited1
100% Yarrawa Coal Pty Ltd1
100% Loyal Coal Pty Ltd
100% Ferndale Coal Pty Ltd
100% Coalworks (Oaklands North) Pty Ltd1
100% CWK Nominees Pty Ltd1
100% Oaklands Land Pty Ltd1
100% Coalworks (Vickery South) Pty Ltd1
100% Coalworks Vickery South Operations Pty Ltd1
100% Vickery South Marketing Pty Ltd1
100% Vickery South Operations Pty Ltd1
100% Vickery South Pty Ltd1
100% Vickery Coal Pty Ltd2
100% Winchester South WS Pty Ltd
100% Winchester South Coal Operations Pty Ltd2
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
92.5%
92.5%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
92.5%
92.5%
100%
100%
100%
100%
100%
100%
100%
100%
100%
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.
2 These subsidiaries entered into a Class Instrument 2016/785 dated 24 June 2020 and related deed of cross guarantee with Whitehaven Coal Limited.
Refer to note 6.5 for further information.
3 During the financial year ended 30 June 2020 the Group acquired EDF Trading Australia Pty Limited, which owns a 7.5% interest in the Narrabri Coal Project
Joint Venture. Upon completion of the acquisition, the entity was renamed to Narrabri Coal Australia Pty Ltd.
Whitehaven Coal Annual Report 2020 | 105
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 6. Group structure (cont.)
6.2 Group’s subsidiaries (cont.)
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.
6.3 Interest in joint operations
The Group has interests in the following joint operations, which are accounted for in the consolidated financial
statements using the equity method:
Narrabri Coal Joint Venture1,2
Maules Creek Joint Venture2
Dingo Joint Venture2
Ferndale Joint Venture2
Boggabri-Maules Creek Rail Spur Joint Venture2
Maules Creek Marketing Pty Ltd3
Boggabri-Maules Creek Rail Pty Ltd3
Country of incorporation
Australia
Australia
Ownership interest and voting rights
2020
77.5%
75%
70%
92.5%
39%
75%
39%
2019
70%
75%
70%
92.5%
39%
75%
39%
1 During the financial year ended 30 June 2020, the Group completed the acquisition of EDF Trading Australia Pty Limited which owns a 7.5% interest in the
Narrabri 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 consolidated financial statements of the Group include its share of the assets and liabilities, revenues and
expenses arising jointly or otherwise from those operations, and its revenue derived from the sale of its share of
goods and services from the joint operation. All such amounts are measured in proportion to the Group’s interest
in 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 program 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.
106 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYNotes to the consolidated financial statementsFor the year ended 30 June 2020 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/(loss) of the parent entity
Total comprehensive income/(loss) of the parent entity
6.5 Deed of cross guarantee
Company
2020
$’000
315,415
2019
$’000
692,782
3,406,886
3,744,008
–
–
3,136,412
255,221
15,253
–
–
3,136,412
590,687
16,909
3,406,886
3,744,008
(3,950)
(3,950)
734,328
734,328
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 the 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 of any debt in full 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, 25 June 2013 and 24 June 2020.
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 (‘Closed Group’) after eliminating all transactions
between parties to the Deed.
Whitehaven Coal Annual Report 2020 | 107
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY Closed Group
2020
$’000
40,830
(12,294)
28,536
10,289
(3,087)
7,202
35,738
106,636
131,117
175,593
13,180
8,286
2019
$’000
735,868
(207,970)
527,898
(4,287)
1,286
(3,001)
524,897
119,407
518,183
148,939
–
47
434,812
786,576
9,708
37
10,518
37
4,154,697
3,841,575
591,343
22,946
186,427
21,350
4,778,731
4,059,907
5,213,543
4,846,483
6. Group structure (cont.)
6.5 Deed of cross guarantee (cont.)
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
Total comprehensive income for the period, net of tax
Statement of financial position
Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax receivable
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
108 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYNotes to the consolidated financial statementsFor the year ended 30 June 2020 Statement of financial position
Liabilities
Trade and other payables
Loans and borrowings
Employee benefits
Income tax payable
Provisions
Derivative financial instruments
Total current liabilities
Non-current liabilities
Other payables
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
Termination benefits
Share-based compensation payments
Total compensation
Closed Group
2020
$’000
189,426
81,553
30,430
–
10,083
824
312,316
62,111
943,008
384,920
260,044
1,650,083
1,962,399
3,251,144
3,001,564
15,253
5,223
229,104
2019
$’000
196,028
81,728
26,510
288
29,985
2,874
337,413
–
333,529
390,068
260,219
983,816
1,321,229
3,525,254
2,978,429
16,909
(1,979)
531,895
3,251,144
3,525,254
2020
$’000
6,480
294
935
3,664
11,373
2019
$’000
6,444
258
–
3,848
10,550
Whitehaven Coal Annual Report 2020 | 109
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORY 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/(decrease) in liability for long service leave
Share-based compensation payments
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
2020
$’000
186,490
12,265
7,847
3,062
(549)
6,259
2019
$’000
169,971
10,947
6,228
2,365
436
7,684
215,374
197,631
9,562
318
20,550
30,430
8,156
867
17,487
26,510
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 – that is,
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.
110 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYNotes to the consolidated financial statementsFor the year ended 30 June 2020 7.2 Auditors’ remuneration
Auditors of the Company – Ernst & Young (Australia)
Audit services
Audit and review of statutory financial statements of the parent covering the Group
Other assurance services where there is discretion as to whether the service
is provided by the auditor or another firm
Audit of joint operations
Review of National Greenhouse and Energy Reporting Act 2007 requirements
Other services
Taxation compliance services
Others
Total auditor’s remuneration
7.3 Commitments
a) Capital expenditure commitments
Contracted for but not provided for and payable:
Within one year1
1 There were no commitments for capital expenditure beyond one year.
b) Lease commitments
2020
$
2019
$
553,927
553,927
571,625
571,625
316,073
283,375
67,204
62,629
383,277
346,004
30,000
32,994
62,994
1,000,198
125,000
69,790
194,790
1,112,419
2020
$’000
2019
$’000
8,773
83,663
Leases relate to property, plant and equipment with lease terms of between one and five years, as well as leases
recognised in accordance with AASB 16 Leases.
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
2020
$’000
94,258
259,841
42,821
2019
$’000
86,308
153,425
45,916
396,920
285,649
(50,315)
346,605
(44,125)
241,524
81,977
264,628
346,605
76,532
164,992
241,524
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7. Other notes (cont.)
7.4 Contingencies
a) Bank guarantees
The Group provided bank guarantees to government departments as a condition
of continuation of mining and:
(i) exploration licences
(ii) rail capacity providers
(iii) port capacity providers
(iv) electricity network access supplier
(vi) other
b) Other
2020
$’000
257,877
27,936
135,220
22,470
10,785
2019
$’000
235,826
27,936
115,941
23,534
2,072
454,288
405,309
As previously reported, representative proceedings were commenced against the Group on 21 December 2018 in
the Supreme Court of Queensland by Nathan Tinkler as representative applicant. The proceedings were brought
on behalf of 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. The proceedings have since
been transferred to the Supreme Court of New South Wales and the representative applicant has been replaced by
Les & Zelda Investments Pty Ltd (ACN 148 907 573) as Trustee for the Les & Zelda Family Trust. The pleadings make
various allegations against the Group concerning an alleged breach of contract, misleading and deceptive conduct
and minority shareholder oppression in connection with the Milestone Shares. The Group has filed a defence that
denies those allegations. The proceedings are ongoing, and no trial date has yet been set.
Other than the above, there are a number of legal and potential claims against the Group that have arisen in
the ordinary course of business. The Group does not believe that these matters will result in any material adverse
outcome based on information currently available and no provision has been made for any potential adverse outcome.
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 or 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:
On the 12th August 2020, following extensive public consultation and a detailed review by the NSW Department
of Planning, Industry and Environment, the Vickery Extension Project was approved by the Independent Planning
Commission NSW. The Project is now proceeding through the necessary secondary and federal approvals processes.
112 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYNotes to the consolidated financial statementsFor the year ended 30 June 2020 Directors’ declaration
For the year ended 30 June 2020
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 2020 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 2020
(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
26th August 2020
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For the year ended 30 June 2020
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent Auditor’s Report to the Members of Whitehaven Coal
Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Whitehaven Coal Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
2020, the consolidated statement of comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, notes to the financial
report, including a summary of significant accounting policies, and the Directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a) giving a true and fair view of the consolidated financial position of the Group as at 30 June 2020
and of its consolidated financial performance for the year ended on that date; and
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our
audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a
separate opinion on these matters. For each matter below, our description of how our audit addressed
the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
76
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Impairment assessment of Property, Plant & Equipment
Why significant
How our audit addressed the key audit matter
At 30 June 2020, the Group’s
consolidated statement of financial
position included $4,155m of property,
plant and equipment relating to
operating mines.
As disclosed in Note 4.1 of the financial
report, the Directors have assessed
property, plant and equipment for
impairment as one cash-generating
unit. This assessment involves critical
accounting estimates and assumptions,
specifically key forecast assumptions
such as commodity prices, discount
rates, inflation rates, foreign exchange
rate and recoverable reserves. These
estimates and assumptions are
summarised in Note 4.1.
We considered this to be a key audit
matter due to the value of the balance
in the consolidated statement of
financial position relative to total
assets, and the significant judgments
and assumptions involved in the
impairment test.
Our audit procedures included the following:
•
•
•
•
•
•
•
•
Consideration of the appropriateness of the
Group’s identification of its single cash generating
unit.
Assessment of whether the model used by the
Group for their impairment test of the carrying
value of property, plant and equipment complied
with the requirements of Australian Accounting
Standards.
Testing the mathematical accuracy of the
impairment model.
Assessment of key forecast assumptions such as
coal prices, discount rates, inflation rates, and
foreign exchange rates, with reference to external
observable market data and independent economic
analysis and with involvement from our valuation
specialists.
Analysis of forecast operating and capital cost
assumptions against historical performance and
the latest approved budgets and forecasts.
Assessment of the work of the Group’s internal and
external experts with respect to the coal reserves
and resources used in the cash flow forecasts. This
included understanding the reserve estimation
processes carried out, and assessing the
qualifications, competence and objectivity of the
Group’s experts and the scope and appropriateness
of their work.
Evaluation of the sensitivity analysis performed by
the Group, focusing on the components in
impairment models where a reasonably possible
change in key forecast assumptions could cause
impairment.
Assessment of the adequacy of the disclosures
relating to property, plant and equipment in the
financial statements, including those made with
respect to judgements and estimates.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
77
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Mine rehabilitation, closure and biodiversity provisions
Why significant
How our audit addressed the key audit matter
At 30 June 2020, the consolidated
statement of financial position included
$270.1m of mine rehabilitation,
closure and biodiversity provisions.
As a consequence of its operations, the
Group incurs obligations to restore,
rehabilitate and maintain the land used
for its operations. Rehabilitation and
biodiversity activities are governed by
a combination of legislative
requirements and Group policies.
Estimating the costs associated with
these future activities requires
considerable judgement in relation to
factors such as when the rehabilitation
will take place, the time period required
for the rehabilitation to be effective,
the extent and costs of rehabilitation
activities, technological changes,
regulatory changes, cost increases, the
extent of ongoing maintenance
following the completion of
rehabilitation activities and changes in
economic assumptions including
discount rate.
This was considered to be a key audit
matter due to the significant judgments
and assumptions involved in the
calculation of these mine rehabilitation,
closure and biodiversity provisions.
Our audit procedures included the following:
•
•
•
•
•
•
•
•
Assessment of the Group’s process applied in
quantifying the recognition, review and approval of
the rehabilitation, closure and biodiversity
provisions.
Agreement of the forecast disturbed areas
included in rehabilitation models to surveys
completed over areas requiring rehabilitation.
Consideration of the reasonableness of cost rates
applied in deriving the provisions with respect to
government specified cost and bonding rates.
Consideration of the qualifications, competence
and objectivity of the Group’s experts, both
internal and external, who produced the surveys
and cost estimates.
Testing the mathematical accuracy of the
rehabilitation models to support the provision
balance.
Consideration of the discount rate applied by the
Group.
Evaluation of the appropriateness of accounting
treatment applied to changes in the rehabilitation
provision.
Assessment of whether the judgments and
estimates disclosures relating to mine closure,
rehabilitation and biodiversity provisions met the
requirements of Australian Accounting standards.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
78
116 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYAuditor’s reportFor the year ended 30 June 2020
Information other than the Financial Statements and Auditor’s Report
The Directors are responsible for the other information. The other information comprises the
information included in the Company’s 2020 Annual Report other than the financial report and our
auditor’s report thereon. We obtained the Directors’ Report that is to be included in the Annual Report,
prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the Annual
Report after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report and
our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and
for such internal control as the Directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to liquidate the Group or cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Australian Auditing Standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of this financial report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgment
and maintain professional scepticism throughout the audit. We also:
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
79
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•
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the entity’s internal control.
•
•
•
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the Directors.
Conclude on the appropriateness of the Directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events and conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial
report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor’s report. However, future events
or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain
solely responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated to the Directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
80
118 | Whitehaven Coal Annual Report 2020
FY20 IN REVIEW | INTRODUCTIONS | ABOUT US | RESOURCES & RESERVES | DIRECTORS’ REPORT | FINANCIAL REPORT | GLOSSARY | CORPORATE DIRECTORYAuditor’s reportFor the year ended 30 June 2020
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Auditor’s Independence Declaration to the Directors of Whitehaven
Coal Limited
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
As lead auditor for the audit of the financial report of Whitehaven Coal Limited for the financial year
ended 30 June 2020, I declare to the best of my knowledge and belief, there have been:
a) No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) No contraventions of any applicable code of professional conduct in relation to the audit.
Independent Auditor’s Report to the Members of Whitehaven Coal
Limited
This declaration is in respect of Whitehaven Coal Limited and the entities it controlled during the
financial year.
Report on the Audit of the Financial Report
Opinion
Mine rehabilitation, closure and biodiversity provisions
We have audited the financial report of Whitehaven Coal Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30 June
2020, the consolidated statement of comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, notes to the financial
report, including a summary of significant accounting policies, and the Directors’ declaration.
Report on the Remuneration Report
Opinion on the Remuneration Report
Ernst & Young
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 25 to 49 of the Directors' report for the
year ended 30 June 2020.
Why significant
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
Ryan Fisk
Partner
26 August 2020
a) giving a true and fair view of the consolidated financial position of the Group as at 30 June 2020
In our opinion, the Remuneration Report of Whitehaven Coal Limited for the year ended 30 June
2020, complies with section 300A of the Corporations Act 2001.
We have audited the Remuneration Report included in pages 25 to 49 of the Directors' report for the
year ended 30 June 2020.
Responsibilities
At 30 June 2020, the consolidated
statement of financial position included
$270.1m of mine rehabilitation,
closure and biodiversity provisions.
and of its consolidated financial performance for the year ended on that date; and
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Opinion on the Remuneration Report
In our opinion, the Remuneration Report of Whitehaven Coal Limited for the year ended 30 June
2020, complies with section 300A of the Corporations Act 2001.
As a consequence of its operations, the
Group incurs obligations to restore,
The Directors of the Company are responsible for the preparation and presentation of the
rehabilitate and maintain the land used
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
for its operations. Rehabilitation and
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
biodiversity activities are governed by
accordance with Australian Auditing Standards.
a combination of legislative
requirements and Group policies.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
The Directors of the Company are responsible for the preparation and presentation of the
Report section of our report. We are independent of the Group in accordance with the auditor
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
independence requirements of the Corporations Act 2001 and the ethical requirements of the
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
Accounting Professional and Ethical Standards Board’s APES110 Code of Ethics for Professional
accordance with Australian Auditing Standards.
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
Basis for Opinion
Responsibilities
•
•
•
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Ernst & Young
Key Audit Matters
Ernst & Young
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our
audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a
separate opinion on these matters. For each matter below, our description of how our audit addressed
the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
Ryan Fisk
Partner
Sydney
26 August 2020
Ryan Fisk
Partner
Sydney
26 August 2020
Estimating the costs associated with
these future activities requires
considerable judgement in relation to
factors such as when the rehabilitation
will take place, the time period required
for the rehabilitation to be effective,
the extent and costs of rehabilitation
activities, technological changes,
regulatory changes, cost increases, the
extent of ongoing maintenance
following the completion of
rehabilitation activities and changes in
economic assumptions including
discount rate.
This was considered to be a key audit
matter due to the significant judgments
and assumptions involved in the
calculation of these mine rehabilitation,
closure and biodiversity provisions.
•
•
•
•
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
How our audit addressed the key audit matter
Our audit procedures included the following:
Assessment of the Group’s process applied in
quantifying the recognition, review and approval of
the rehabilitation, closure and biodiversity
provisions.
Agreement of the forecast disturbed areas
included in rehabilitation models to surveys
completed over areas requiring rehabilitation.
Consideration of the reasonableness of cost rates
applied in deriving the provisions with respect to
government specified cost and bonding rates.
Consideration of the qualifications, competence
and objectivity of the Group’s experts, both
internal and external, who produced the surveys
and cost estimates.
Testing the mathematical accuracy of the
rehabilitation models to support the provision
balance.
Consideration of the discount rate applied by the
Group.
21
Evaluation of the appropriateness of accounting
treatment applied to changes in the rehabilitation
provision.
•
Assessment of whether the judgments and
estimates disclosures relating to mine closure,
rehabilitation and biodiversity provisions met the
requirements of Australian Accounting standards.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
76
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
81
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
78
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
81
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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
Fritz Kundrun*
Hans Mende*
AMCI Group*
Lazard Asset Management Pacific Co
Percentage of
capital held
Number of ordinary
shares held
Date of substantial
shareholder notice
12.09%
9.65%
8.40%
9.89%
124,042,252
99,054,726
86,170,596
101,493,276
17 Oct 2014
13 Aug 2020
17 Oct 2014
20 Aug 2020
* 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
% of Units
5,229
6,294
2,510
2,713
203
16,949
0.27
1.68
1.89
6.96
89.20
100.00
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 1,942.
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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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