Whitehaven Coal Limited · ASX:WHC
Whitehaven Coal — FY2016 Earnings Presentation
48 slides from Whitehaven Coal's earnings presentation, Aug 18, 2016
Slide 1: Full Year Results FY2016
Whitehaven Coal Limited FULL YEAR RESULTS FY2016 Australia’s Leading High Quality Coal Company 18 AUGUST 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 – Financial Performance – Operations – Community – Outlook for Coal Use – High Coal Quality – Outlook – Appendices – Additional Information 3 // FULL YEAR RESULTS PRESENTATION FY2016
Slide 4: Highlights
Highlights Profitable half year at cycle lows Record equity saleable coal Record equity coal sales of production of 15.1Mt up 34% 15.4Mt up by 42% Full year profit of $20.5 EBITDA of $224.1 million up million Profitable half year at cycle lows 72% on prior year Net debt reduced to $859 Cash cost red
Slide 5: Safety
Safety
Slide 6: Safety Performance
Safety Performance – Whitehaven’s TRIFR remains Whitehaven and NSW Coal Industry TRIFR significantly below the NSW average 30 – The TRIFR was 10.6 at the end of 25 FY2016 20 – Behaviour based training to underpin 15 15.52 Whitehaven’s “Safehaven Rules” will 10 10.60 be reemphasised as the scale of 5
Slide 7: Financial Performance
Financial Performance
Slide 8: Financial Highlights
Financial Highlights STRONG RESULTS AT THE BOTTOM OF THE COAL PRICE CYCLE Profit and loss FY2016 FY2015 Comment Net profit after tax ($’m) 20.5 (342.7) – Significant turnaround EBITDA ($’m) 224.1 130.3 – Up 72% on previous year Cash generated from operations ($’m) 269.3 152.7 – Up 76% Unit cost per
Slide 9: Profitable
Profitable CASH FLOW AND PROFITS INCREASING AS PRODUCTION GROWS Financial Performance - A$ millions H2 FY2016 H1 FY2016 FY2016 FY2015 Revenue 590.1 574.3 1,164.4 763.3 Other income 4.4 4.0 8.4 10.7 Operating expenses (251.4) (264.0) (515.4) (357.5) Rail, Port, Marketing and Royalties (NSW Gov) (212.
Slide 10: Costs Down and Margins Up
Costs Down and Margins Up – Costs have declined sustainably at all FY2016 FY2015 mines during the year Coal Sales (equity basis, excl. purchased Mt 15.4 9.5 – Margins on a $/t basis maintained and coal) EBITDA margin increased despite Average revenue (excl. purchased coal & net lower coal prices $A/
Slide 11: Strong and Consistent Margin
Strong and Consistent Margin WHITEHAVEN HAS HELD MARGINS IN A DECLINING PRICE ENVIRONMENT Whitehaven's EBITDA Margin ($/t) – Whitehaven has generated consistent 20 margins over the past two years, underpinned by improving efficiency 15 at all of Whitehaven’s operations and increasing price premium f
Slide 12: Balance Sheet
Balance Sheet STRENGTHENING THE BALANCE SHEET WITH DEBT REDUCED 30 June 2016 30 June 2015 $’m $’m – Net debt reduced by $77m (including Cash on hand 101.5 102.4 reduction in Senior debt facility of $65m) Senior secured bank facility 835.0 900.0 – The decline in net debt of $77m occurred after a $42m
Slide 13: Debt Facility Reduction
Debt Facility Reduction CLEAR PATHWAY TO DELEVER THE BALANCE SHEET – As Maules Creek continues to ramp up Whitehaven's Net Debt/EBITDA Ratio (LTM) 12.0 increased margins enable further reductions in leverage 10.0 – As volumes grow and product mix moves towards metallurgical coal, Whitehaven 8.0 expe
Slide 14: Capital Allocation
Capital Allocation CAPITAL SPEND LIMITED TO SUSTAINING AND NARRABRI GROWTH CAPEX H2 H1 – Sufficient capital spent at existing Capital Investment - $ Million FY2016 FY2015 FY2016 FY2016 mines to sustain production levels Mine Sustaining Capital – Maules Creek project construction is Gunnedah Open Cut
Slide 15: Operations
Operations
Slide 16: Coal Sales
Coal Sales KEY MILESTONE – MANAGED COAL SALES OF 20.1MT IN THE YEAR Equity Basis – 000t FY2016 FY2015 Change Maules Creek 5,566 1,327 319% Narrabri 5,272 4,950 7% Gunnedah Open Cuts 4,503 4,558 (2%) Coal Trading 170* 24 na Whitehaven Total 15,511 10,859 43% Whitehaven Coal Sales (100%, 000's t) 20,0
Slide 17: Sales Destinations
Sales Destinations COAL SALES FOCUSSED ON PREMIUM ASIAN MARKETS Thermal Coal Sales FY2016 – Total coal sales of 20.1Mt for the year comprised 16% 2% Japan metallurgical coal and 84% thermal coal 4% 7% Korea – The new high quality SSCC product from Maules Creek is Taiwan 13% Americas being sold into
Slide 18: ROM Coal Production
ROM Coal Production RECORD MANAGED ROM PRODUCTION OF 20.5MT AS MAULES CREEK CONTINUES TO RAMP Equity Basis – 000t FY2016 FY2015 Change Maules Creek 5,870 1,961 199% Narrabri 4,822* 5,392 (11%) Gunnedah Open Cuts 5,068 4,852 4% Whitehaven Total 15,760 12,205 29% Whitehaven ROM Coal Production (100%,
Slide 19: Maules Creek Wins NSW Mine of the Year
Maules Creek Wins NSW Mine of the Year PRODUCTION RAMPING ON SCHEDULE – Maules Creek awarded the prestigious Mining Operation of the Year by The NSW Minerals Council in May, less than one year after startup of commercial operation – Production for the year was 7.8Mt ROM coal and 7.4Mt saleable coal
Slide 20: Growing Reserves
Growing Reserves INCREASED RESERVES AT MAULES CREEK WILL ADD 10 YEARS TO THE MINE LIFE – Additional drilling during FY2016 combined with revised mine planning has extended the open cut shell to the north of the previous mine plan – Open cut Reserves have increased by 129Mt to 510Mt at the end of the
Slide 21: Another Record Year for Narrabri
Another Record Year for Narrabri FACE WIDENING PROJECT ON SCHEDULE Narrabri Saleable Coal Production (000's t) – Narrabri produced 6.9Mt ROM coal 8,000 and 7.3Mt saleable coal in a year where two longwall moves occurred 7,000 – The face widening project is running 6,000 to schedule and budget with 5
Slide 22: Gunnedah Open Cuts
Gunnedah Open Cuts SIGNIFICANT PRODUCTIVITY IMPROVEMENTS DURING THE YEAR – ROM coal production of 5.8Mt and Gunnedah Saleable Coal Production (000's t) saleable coal production of 5.0Mt for the 6,000 year – Tarrawonga had a record year by producing 2.4Mt ROM coal and 2.0Mt 4,000 saleable coal – Prod
Slide 23: Vickery Update
Vickery Update SIGNIFICANT PROGRESS WITH APPROVAL PROCESS FOR 10MTPA PROJECT Project is currently approved as a 4.5Mtpa open cut by the NSW Government. Whitehaven is seeking approval to increase production to 10Mtpa ROM coal Location About 25kms north of Gunnedah Resources and Reserves Resource of 5
Slide 24: Community
Community
Slide 25: People
People BUILDING A PRODUCTIVE AND DIVERSE WORKFORCE – Increased workforce with 843 FTE at 30 June 2016 – More than 80 per cent live in area of operations – Increased number of women in workforce (10%) – 11% of workforce self-identify as Aboriginal and/or Torres Strait Islander – Launched first Reconc
Slide 26: Working with the Community
Working with the Community NEW OFFICE IN GUNNEDAH REFLECTS COMMITMENT TO THE REGION – New dedicated office in Gunnedah CBD enhances link with local community – Supported more than 600 businesses and suppliers from local government shires in FY16, with payments of more than $200m – $6m in Voluntary P
Slide 27: Outlook for Coal Use
Outlook for Coal Use
Slide 28: Coal's Key Role In Global Energy Mix
Coal’s Key Role In Global Energy Mix DEMAND FOR COAL IN MANY ASIAN COUNTRIES CONTINUES TO GROW – Coal represents the largest share of the energy mix in most Asian countries – For power and industry in Asia, coal’s comparative advantage remains formidable – Coal is simple to produce, ready to use, sa
Slide 29: Impact of Higher CV Coals
Impact of Higher CV Coals USE OF MAULES CREEK COAL IN POWER GENERATION REDUCES CARBON EMISSIONS Carbon Emission Improvement by Coal Type 0.0% Lignite (2%) – Using higher quality coals in Improvement in CO2 intensity (%) (4%) USC power stations will lower (6%) Indo, Sub-bit carbon emissions 4000 NAR
Slide 30: Coal - Pathway to Lower Carbon Emissions
Coal - Pathway to Lower Carbon Emissions UTILISING HIGH QUALITY COALS IN MORE EFFICIENT HELE POWER STATIONS LOWERS EMISSIONS Emissions by Technology (tCO2/MWh) 1.6 1.4 – If the world (including Australia) 1.2 (22%) converted from lignite and black (36%) (49%) 1.0 coal fired subcritical power (18%) (
Slide 31: Asia Adding Generation Capacity
Asia Adding Generation Capacity INSTALLATION OF NEW HELE CAPACITY IN ASIA IS INCREASING DEMAND FOR HIGHER QUALITY COAL Asian Coal Fired Capacity Growth (MW) 15000 – Significant new electricity generating capacity is being added to Whitehaven’s 10000 key markets in north Asia and southeast 5000 Asia
Slide 32: Whitehaven's High Quality Coal
Whitehaven’s High Quality Coal
Slide 33: World Ranking Coal Quality
World Ranking Coal Quality WHITEHAVEN’S GUNNEDAH BASIN COALS ARE AMONG THE HIGHEST QUALITY IN THE WORLD Asian Thermal Coal Suppliers Net Calorific Value, kcal/kg – Demand for higher quality coals will 4000 5000 6000 7000 increase as more HELE power stations 20.0 are deployed in the region 18.0 South
Slide 34: Met and Thermal Qualities
Met and Thermal Qualities MAULES CREEK HAS SOME OF THE HIGHEST QUALITY COAL IN THE SEABORNE MARKET 50 Metallurgical Coal Low Sulfur 40 Low Global Range Phosphorous – Low ash, sulphur, phosphorous 30 Low Ash and good fluidity make this an 20 NSW SSCC Range attractive SSCC 10 - Maules Creek Total Phos
Slide 35: Outlook
Outlook
Slide 36: Supply Demand Outlook
Supply Demand Outlook SEABORNE MARKET IS CLOSE TO BALANCE – Production cuts of over 50Mtpa from Indonesia, China Domestic Coal Price (QHD RMB/t 5500kcal) United States and other countries through 2015 550 and 2016 are rebalancing the market 500 – Recent policy changes in China (276 working day limit
Slide 37: Thermal Coal Pricing
Thermal Coal Pricing SIGNIFICANT INCREASE IN FORWARD COAL PRICES – The shape of the forward curve for Forward Curve Newcastle Coal Prices (US$/t) 70 the Newcastle thermal coal has changed significantly in recent 65 months moving from backwardation in March to contango in July 60 – Calendar year 2018
Slide 38: Whitehaven's Production Growth
Whitehaven’s Production Growth MAULES CREEK RAMP UP AND WIDER FACE AT NARRABRI CONTRIBUTING TO GROWTH – Ramping up of production from Saleable Coal Production (100%, Mt) 25.00 Maules Creek continues and the wider face at Narrabri contributes 20.00 from H2 FY2017 – Increased production higher 15.00 q
Slide 39: Targets for Next Year
Targets for Next Year FOCUSSED ON GROWING PRODUCTION SAFELY AND DEBT REDUCTION OPERATIONS − Improve safety performance − Increase saleable coal production for FY2017 to the range of 21Mt to 22Mt (100% basis) − Deliver the face widening project at Narrabri and commence mining in the initial 400m wide
Slide 40: Whitehaven Coal
www.whitehavencoal.com.au >» WHITEHAVEN COAL WHITEHAVEN
Slide 41: Appendices
Appendices
Slide 42: Location
Location 42 // FULL YEAR RESULTS PRESENTATION FY2016
Slide 43: Resources
WHITEHAVEN COAL LIMITED - COAL RESOURCES - AUGUST 2016 Measured Indicated Inferred Total Competent Report Tenement Resource Resource Resource Resources Person Date Vickery Opencut 230 165 110 505 1 Jun-15 Resources CL316/EL4699 EL5831/EL7407 EL8224/ML1464 Vickery Underground ML1471 - 95 135 230 1 Ju
Slide 44: Reserves
Reserves WHITEHAVEN COAL LIMITED - COAL RESERVES - AUGUST 2016 Recoverable Reserves Marketable Reserves Competent Report Tenement Proved Probable Total Proved Probable Total Person Date Vickery Opencut CL316/EL4699/EL7407 – 200 200 – 178 178 1 Mar-15 Rocglen Opencut ML1620 2.8 0.6 3.4 2.1 0.5 2.6 1
Slide 45: Additional Information
Additional Information
Slide 46: Significant Items
Significant Items THERE WERE NO SIGNIFICANT ITEMS FOR THE YEAR A$ millions FY2016 FY2015 Included within the balances presented on the face of the Consolidated Statement of Comprehensive Income: Operating expenses: Workforce restructure costs - (0.6) Impairment: Impairment of exploration and related
Slide 47: Balance Sheet
Balance Sheet A$ millions 30 Jun 2016 30 Jun 2015 Cash 101.5 102.4 Current receivables 68.3 95.1 Other current assets 69.1 90.0 Current assets 238.9 287.5 Non-current receivables 29.0 30.2 Other non-current assets 3,827.6 3,871.7 Total assets 4,095.5 4,189.4 Current payables 135.9 147.4 Current inte
Slide 48: Access to Infrastructure
Access to Infrastructure BALANCED TAKE OR PAY POSITION – Whitehaven’s take or pay Whitehaven's Committed Port Capacity (Mtpa) 25 commitments in line with production 23 24 22 – Port capacity is readily available at 20 20 both of the major facilities in Newcastle 15 23 22 21 21 10 5 0 FY16 FY17 FY18 F