Whitehaven Coal Limited · ASX:WHC
Whitehaven Coal — H1 FY2016 Earnings Presentation
40 slides from Whitehaven Coal's earnings presentation, Feb 5, 2016
Slide 1: Half Year Results FY2016
Whitehaven Coal Limited HALF YEAR RESULTS FY2016 Return to Profit, Record Production 5 FEBRUARY 2016
Slide 2: Disclosure
Disclosure STATEMENTS CONTAINED IN THIS MATERIAL, PARTICULARLY THOSE REGARDING THE POSSIBLE OR ASSUMED FUTURE PERFORMANCE, COSTS, DIVIDENDS, RETURNS, PRODUCTION LEVELS OR RATES, PRICES, RESERVES, POTENTIAL GROWTH OF WHITEHAVEN COAL LIMITED, INDUSTRY GROWTH OR OTHER TREND PROJECTIONS AND ANY ESTIMATE
Slide 3: Agenda
Agenda − Highlights − Safety − Operations − Financial Performance − Community − Coal Market Overview − Outlook − Appendices − Additional Information 3 // FIRST HALF RESULTS FY16
Slide 4: H1 FY2016 Highlights
H1 FY2016 Highlights RETURNED TO PROFIT WITH RECORD PRODUCTION Profitable half year at cycle EBITDA $106 million, more lows than double previous corresponding half Sustainable cost reductions Net debt reduced to $925 continue in half year - $58/t million with more to come Debt reduction commenced wi
Slide 5: Safety
Safety 5 // FIRST HALF RESULTS FY16
Slide 6: Safety
Safety Whitehaven and NSW Coal Industry TRIFR 25.00 – Whitehaven’s TRIFR remains 20.00 significantly below the NSW 15.00 average of 15.5 – The TRIFR increased to 10.7 10.00 from 9.2 at the end of FY2015 5.00 – Renewed focus across all 0.00 operations to improve safety Jul-12 Jan-13 Jul-13 Jan-14 Jul
Slide 7: Operations
Operations 7 // FIRST HALF RESULTS FY16
Slide 8: Coal Sales
Coal Sales RECORD SALES VOLUMES DRIVE STRONGER REVENUES Equity Basis – 000t H1 FY2016 H1 FY2015 Change Maules Creek 2,413 - - Narrabri 2,613 2,237 17% Gunnedah Open Cuts 2,133 2,464 (13%) Coal Trading 157 11 - Whitehaven Total 7,316 4,713 52% Whitehaven Half Year Coal Sales (100%,000's t) 10,000 8,0
Slide 9: ROM Coal Production
ROM Coal Production INCREASED PROPORTION FROM TIER ONE MINES – MAULES CREEK AND NARRABRI Equity Basis – 000t H1 FY2016 H1 FY2015 Change Maules Creek 2,473 71 - Narrabri 2,423 1,996 21% Gunnedah Open Cuts 2,189 2,390 (8%) Whitehaven Total 7,085 4,457 59% Whitehaven Half Year ROM Coal Production (100%
Slide 10: Maules Creek Production Ramping Up
Maules Creek Production Ramping Up OUTSTANDING MARKET ACCEPTANCE OF MAULES CREEK COAL – Mine operating at 8.5Mtpa rate in December – Costs averaged $58/t in the half – High quality thermal coal from Maules Creek achieved Maules Creek Half Yearly ROM Coal a 7% premium over Newcastle benchmark price f
Slide 11: Narrabri – In Australia's Top Three U/G Mines
Narrabri – In Australia’s Top Three U/G Mines PRODUCTION APPROVAL INCREASED TO 11MTPA - WHITEHAVEN’S LOWEST COST MINE Narrabri Half Yearly ROM Coal – Narrabri produced a record 8.3Mt Production (000's t) ROM coal in CY2015 10,000 – First production from 400 metre wide 8,000 face scheduled for April
Slide 12: Narrabri Mine Plan
Narrabri Mine Plan SUBSTANTIAL MINE LIFE EXTENSION – Work on integrating Narrabri South and Narrabri North has commenced – Plan to extend the longwall panels from Narrabri North into Narrabri South lease – Drilling is scheduled in FY2017 in Narrabri South tenement to convert existing Resources into
Slide 13: Gunnedah Open Cuts Production
Gunnedah Open Cuts Production CONTINUING TO PROVIDE STABLE PRODUCTION ROM Coal Production (000's t) – Impressive safety performance at 4,000 Gunnedah open cuts - Rocglen, operating for 841 days without an 3,000 incident and Gunnedah CHPP 1,175 days LTI free 2,000 – Costs successfully lowered at all
Slide 14: Financial Performance
Financial Performance 14 //FIRST HALF RESULTS FY16
Slide 15: Financial Highlights
Financial Highlights RETURN TO PROFIT H1 H1 Profit and loss Comment FY2016 FY2015 Net profit after tax ($’m) 7.8 (77.9) Up $85.7m EBITDA before 106.4 52.1 More than double the pcp significant items ($’m) Cash generated from 118.3 22.7 Up $95.6m operations ($’m) Unit cost per tonne 58 63 Down
Slide 16: Return to Profit
Return to Profit H1 H2 H1 Financial Performance - A$ millions FY2016 FY2015 FY2015 Revenue 574.3 391.5 371.8 Other income 4.0 3.3 7.4 Operating expenses (269.9) (170.6) (186.9) Selling and distribution expenses (including NSW Govt. (190.0) (131.1) (129.2) royalties) Admin and other expenses (includi
Slide 17: Costs & Margins
Costs & Margins COSTS DRIVEN LOWER AGAIN – EBITDA margin of 19% maintained H1 H2 H1 FY2014 through H1FY2016 period of weak FY2016 FY2015 FY2015 coal prices Coal Sales (equity basis, excl. Mt 7.3 4.8 4.7 8.2 purchased coal) – Margin per tonne combined with increased volume provides for debt Average r
Slide 18: Balance Sheet and Capital Management
Balance Sheet and Capital Management BALANCE SHEET IMPROVED AT CYCLE LOWS 31 Dec 2015 30 Jun 2015 $’m $’m – Net interest expense has peaked Cash on hand 112.0 102.4 – EBITDA increases with increased sales and Senior secured bank facility 900.0 900.0 changes in sales mix from Maules Creek and Narrabr
Slide 19: Capital Allocation
Capital Allocation MAULES CREEK PROJECT CAPEX “COMPLETED” H1 H2 H1 Capital Investment - $ Million FY2016 FY2015 FY2015 – Following the asset refresh Mine Sustaining Capital sustaining capital is minimal Gunnedah Open Cuts sustaining 0.5 1.2 3.2 – Maules Creek project construction Narrabri sustaining
Slide 20: Community
Community 20 //FIRST HALF RESULTS FY16
Slide 21: Supporting Our Local Community
Supporting Our Local Community OPPORTUNITIES FOR NORTH WEST NSW - TRAINING, EMPLOYMENT AND BUSINESS – Contributed $843m to local economy since 2012 (infrastructure, services, wages and super of local employees, procurement and sponsorships) – Spent $64.1m with local businesses in H1 2016 – Aborigina
Slide 22: Coal Market Overview
Coal Market Overview 22 //FIRST HALF RESULTS FY16
Slide 23: Paris Meeting
Paris Meeting LOW EMISSION POWER GENERATION TECHNOLOGIES HAVE A GROWING FUTURE – With the Paris Nationally Determined Contributions (NDC) commitments, the IEA expects electricity generation from coal to grow by 24% between 2013 and 2040 1 – The submitted NDC’s are the foundation of the Paris Agreeme
Slide 24: Asian Market Growth
Asian Market Growth NEW GENERATING CAPACITY BEING ADDED ACROSS ASIA EX CHINA – Significant new capacity has recently been added or is to be added to generating capacity in New Coal Fired Generation Capacity (GW) Whitehaven’s key markets 14000 – The Asian region excluding China, Japan, Korea 12000 10
Slide 25: Whitehaven's Markets
Whitehaven’s Markets STRONG ASIAN DEMAND GROWTH FOR HIGH QUALITY THERMAL COAL – Seaborne coal demand from Import Demand (Mt) Whitehaven key markets is expected to 500 grow by about 80Mtpa by 2019 400 – As new HELE power station technology is deployed in the region, demand for 300 high quality coal l
Slide 26: Indonesian Coal Impacted By China
Indonesian Coal Impacted By China INDONESIA REBALANCING AFTER MAJOR DISRUPTION FROM CHINA WITHDRAWAL China Seaborne Thermal Coal Imports (Mt) – The change of policies by Chinese authorities to 300 apply quality constraints and limit imports has caused 200 rapid adjustment 100 – The impact was signif
Slide 27: Outlook
Outlook 27 //FIRST HALF RESULTS FY16
Slide 28: Production Growth To Continue
Production Growth To Continue GROWTH IN HIGH QUALITY, LOW COST, HIGH MARGIN COAL – Production growth continues as Saleable Coal Production (100%, Mt) production commences from Narrabri’s 30.0 wider longwall and Maules Creek 25.0 ramps up to full production anticipated in FY2019 20.0 – As production
Slide 29: Vickery – Whitehaven's Next Project
Vickery – Whitehaven’s Next Project ANOTHER SIGNIFICANT GROWTH OPTION Approval granted by the NSW Government in September 2014 for a 4.5Mtpa open cut mine Location About 25kms north of Gunnedah Resources and Reserves Resource of 505Mt, Underground Resources of 230Mt, Open cut Reserves of 200Mt Owner
Slide 30: Outlook Guidance
Outlook Guidance FINANCIAL POSITION IMPROVING OVER NEXT THREE YEARS − Improve safety performance − Coal production guidance for FY2016 increased by 0.6Mt to range of 19.5Mt to 20.1Mt following the strong first half − Increase tonnages of higher margin metallurgical coal sales − Growth tonnage of hig
Slide 31: Thank You
THANK YOU www.whitehavencoal.com.au
Slide 32: Appendices
Appendices 32 //FIRST HALF RESULTS FY16
Slide 33: Where We Operate
Where We Operate Maules Creek (75%) Tier One Mine – Reserves ~ 30 years, Permitted & Planned 13Mtpa – SSCC, PCI and high energy thermal Narrabri (70%) Tier One Mine – Reserves ~ 25 years, Permitted 8Mtpa, Planned 7Mtpa – PCI & low ash thermal Werris Creek (100%) – Reserves ~ 8 years, Permitted & Pla
Slide 34: Resources
Resources Note: See Competent Person Statement on Slide 2 34 //FIRST HALF RESULTS FY16
Slide 35: Reserves
Reserves Note: See Competent Person Statement on Slide 2 35 //FIRST HALF RESULTS FY16
Slide 36: Additional Information
Additional Information 36 //FIRST HALF RESULTS FY16
Slide 37: No Significant Items
No Significant Items A$ millions H1 FY2016 FY2015 Included within the balances presented on the face of the Consolidated Statement of Comprehensive Income: Operating expenses: Suspension of mining activities and office closures - (0.6) Impairment: Impairment of exploration and related assets, and MR
Slide 38: Balance Sheet at 31 December
Balance Sheet at 31 December A$ millions 31 Dec 2015 30 Jun 2015 Cash 112.0 102.4 Current receivables 102.8 101.1 Other current assets 71.1 90.0 Current assets 285.9 293.5 Non-current receivables 21.3 24.2 Other non-current assets 3,855.3 3,871.7 Total assets 4,162.5 4,189.4 Current payables 151.7 1
Slide 39: Cash Flows Simplified
Cash Flows Simplified – Cash flows available pre-financing A$ millions H1 FY2016 H2 FY2015 H1 FY2015 increased significantly in H1 FY2016 EBITDA 106.4 78.2 52.1 Interest (25.6) (18.2) (17.0) due to improved profit performance and Sustaining capex (5.6) (7.9) (6.3) Narrabri mains (8.2) (8.2) (18.4) r
Slide 40: Debt Facilities
Debt Facilities Debt Limit Drawn Maturity/ Purpose facility (Million) (Million) Amortisation Senior Bank $400 Term $400 Term Bullet repayment July General corporate $800 Revolver $500 Revolver 2019 purposes mainly $200 Bank G’tee $200 Bank G’tee Maules Creek CAPEX Export Credit $37 (Tranche A) $37 (