Slide 1: Half Year Results FY2019
WHITEHAVEN COAL LIMITED AUSTRALIA’S LEADING HIGH QUALITY COAL COMPANY HALF YEAR RESULTS FY2019 15 FEBRUARY 2019
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 AGENDA – Highlights – Safety Performance – Financial Performance – Operations – Growth – Outlook for Coal Use – Coal Demand Outlook – Outlook for Whitehaven – Appendices 3 // HALF YEAR RESULTS FY2019
Slide 4: Highlights
HIGHLIGHTS HIGHLIGHTS RECORD HALF YEAR PROFIT TRIFR of 7.6 at 31 December Record first half net profit of slightly higher than pcp and $305.8 million up 19% on pcp well below NSW average Equity coal sales of 8.4Mt Record EBITDA of $550.8 including purchased coal million up 12% on pcp An interim & sp
Slide 5: Safety Performance
SAFETY PERFORMANCE SAFETY PERFORMANCE ONGOING FOCUS TO IMPROVE SAFETY OUTCOMES Whitehaven Group TRIFR and Saleable Coal – Whitehaven recorded a TRIFR of Production (Mt) 7.57 at December 2018 25 – In an effort, to improve there has 20 been a renewed focus on safety across the business 15 – Work on im
Slide 6: Financial Performance
FINANCIAL PERFORMANCE
Slide 7: Highlights – Record H1 Result
FINANCIAL PERFORMANCE HIGHLIGHTS – RECORD H1 RESULT H1 H1 Profit and loss Comment FY2019 FY2018* Net profit after tax ($’m) 305.8 256.2 – Up 19% on pcp Underlying EBITDA before significant items ($’m) 550.8 493.7 – Up 12% on pcp Cash generated from – Increasing EBITDA flowing 463.7 442.6 operations
Slide 8: Half Year Profit & Loss
FINANCIAL PERFORMANCE HALF YEAR PROFIT & LOSS HIGHER COAL PRICES AND SALES FLOWING DIRECTLY TO RESULTS Financial Performance - A$ millions H1 FY2019 H1 FY2018* FY2018* Revenue 1,270.1 1,146.4 2,257.4 Other income 1.8 3.6 6.8 Operating expenses * (451.9) (388.4) (768.1) Rail, Port, Marketing and Roya
Slide 9: Impact of IFRS 16 Reclassifications
FINANCIAL PERFORMANCE IMPACT OF IFRS 16 RECLASSIFICATIONS FY2018 RESTATED TO SHOW THE IMPACT OF IFRS 16 RECLASSIFICATIONS Restatement of FY2018 for IFRS 16 (#039;m) IFRS 16 adopted to: – Align the Group’s operating cost with its peers – Improve comparability of performance and cost - 71 593 664 curve p
Slide 10: Margins and Costs
FINANCIAL PERFORMANCE MARGINS AND COSTS STRONG UNDERLYING DEMAND FOR QUALITY COAL DRIVES INCREASED MARGINS H1 FY2019 FY2018 – Higher average prices for H1FY2019 compared with FY2018 – achieved prices Coal Sales (equity basis, excl. for thermal coal averaged US$110/t and Mt 7.4 16.0 purchased coal) m
Slide 11: Costs
FINANCIAL PERFORMANCE COSTS COSTS IMPACTED BY STRATEGIC, STRUCTURAL & SHORT TERM FACTORS IN H1 FY2019 Strategic and market factors (~ $3/t) – Product strategy is focussed on high quality products - impacts washing and product yields (see slide 19) – Higher oil prices and falling AUD (H1FY2019 cf. FY
Slide 12: Balance Sheet
FINANCIAL PERFORMANCE BALANCE SHEET BALANCE SHEET IN EXCELLENT SHAPE 31 Dec 2018 30 June 2018 – Strong balance sheet supporting a sustainable capital $’m $’m allocation framework Cash on hand 89.2 111.8 – The Board has declared an unfranked interim and special dividend totalling $0.20ps, payable in
Slide 13: Shareholder Distributions
FINANCIAL PERFORMANCE SHAREHOLDER DISTRIBUTIONS STRONG RETURNS TO SHAREHOLDERS Shareholder returns paid between November 17 – Shareholders rewarded with surplus cash flow and March 19 ($m) being returned by way of dividends 198 793 9 – Total returns to shareholders of 80 cents per 268 share or ~$800
Slide 14: Operations
OPERATIONS
Slide 15: Coal Sales
OPERATIONS COAL SALES Whitehaven Managed Coal Sales (000's t) 12,000 10,000 8,000 6,000 4,000 2,000 - H1 FY16 H2 FY16 H1 FY17 H2 FY17 H1 FY18 H2 FY18 H1 FY19 Purchased Coal Open Cuts Narrabri Maules Creek Equity Basis – 000t H1 FY2019 H1 FY2018 Change Maules Creek 3,196 3,554 (10%) Narrabri 1,961 2,
Slide 16: Sales to Premium Markets
OPERATIONS SALES TO PREMIUM MARKETS WHITEHAVEN CONTINUES TO DIVERSIFY ITS SALES TO THE GROWING ASIAN MARKET H1 FY2019 THERMAL COAL SALES – Managed coal sales of 10.3Mt including purchased 2% 3% 2% coal for the year 5% Japan Taiwan – Taiwan’s demand for higher quality coal continues to 12% Korea grow
Slide 17: ROM Coal Production
OPERATIONS ROM COAL PRODUCTION STRONG PRODUCTION FROM MAULES CREEK WHILE H1 FY2019 GOC PRODUCTION TRACKS ITS HISTORICAL PATTERN Whitehaven Managed ROM Coal Production (000's t) 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - H1 FY16 H2 FY16 H1 FY17 H2 FY17 H1 FY18 H2 FY18 H1 FY19 Open Cuts Narrabri M
Slide 18: Maules Creek Mine
OPERATIONS MAULES CREEK MINE MAULES CREEK PRODUCTION RAMP UP CONTINUES Maules Creek ROM Coal Production (000's t) – Maules Creek produced 6.2Mt ROM coal in 14,000 the first half and is expected to meet guidance of 11.8Mt to 12.2Mt ROM coal for 12,000 the full year 10,000 H2 – Work continues with Hit
Slide 19: Maules Creek High Value Products
OPERATIONS MAULES CREEK HIGH VALUE PRODUCTS STRATEGY TO INCREASE PRICING REALISATIONS Strategy – To deliver fewer high quality products from the mine and to capture the full value of the low ash and low sulphur coals produced at Maules Creek – Three key products to be delivered – a very low ash SSCC
Slide 20: Narrabri Mine
OPERATIONS NARRABRI MINE STRONG PERFORMANCE IN THE DECEMBER QTR AFTER THE SEPTEMBER QTR CHANGEOUT – ROM coal production of 2.9Mt for the first half, with Narrabri ROM Coal Production (000's t) 8,000 production in the December quarter close to record levels 7,000 – Following a number of weighting eve
Slide 21: Narrabri Stage 3
OPERATIONS NARRABRI STAGE 3 Mined LONG TERM OPTIONS FOR NARRABRI Area Mining – Work has commenced on the process to convert the Lease southern exploration licence at Narrabri into a mining Boundary lease Potential Stage 3 – In the first stage, a Gateway submission has been Development Outline lodged
Slide 22: Gunnedah Open Cuts
OPERATIONS GUNNEDAH OPEN CUTS TARRAWONGA EXPANSION TO OFFSET ROCGLEN SALEABLE COAL PRODUCTION Gunnedah Open Cut ROM Coal – ROM coal production from the three open cuts Production (000's t) – Tarrawonga, Rocglen and Werris Creek was 7,000 1.7Mt in the first half 6,000 – Production at Tarrawonga is be
Slide 23: Growth
GROWTH
Slide 24: Vickery Extension Project Status
GROWTH VICKERY EXTENSION PROJECT STATUS MOVING THROUGH THE REGULATORY PROCESS – Public display of EIS completed 25 September 2018 – 63% of 560 submissions were supportive – Independent Planning Commission (IPC) of three commissioners formed – Department of Planning and Environment completed Prelimin
Slide 25: Winchester South
GROWTH WINCHESTER SOUTH LOCATED IN A WORLD CLASS MINING PRECINCT – The Winchester South project is in a world class, established mining precinct surrounded by a number of operating mines with a rail line that passes directly over the Winchester South tenement – The project’s high quality Rangal coal
Slide 26: Well Drilled
GROWTH WELL DRILLED RESOURCES WELL DEFINED BY PREVIOUS DRILLING PROGRAMMES – Whitehaven declared JORC Resources of 530Mt to the ASX in October 2018 – A large core drilling programme of 18 holes will commence in the June quarter, directed toward confirming and increasing knowledge of the project’s me
Slide 27: Outlook for Coal Use
OUTLOOK FOR COAL USE
Slide 28: IEA New Policies Scenario (NPS)
OUTLOOK FOR COAL USE IEA NEW POLICIES SCENARIO (NPS) THE NPS IS THE CORE SCENARIO DEVELOPED BY THE UNITED NATIONS INTERNATIONAL ENERGY AGENCY (IEA) FOR THE WORLD’S ENERGY OUTLOOK (WEO) NPS World Primary Energy Demand by – In the IEA WEO 2018 report the IEA has Fuel (Mtoe) projected in the NPS: World
Slide 29: Generation Capacity & Source
OUTLOOK FOR COAL USE GENERATION CAPACITY & SOURCE FOR AT LEAST THE NEXT 20 YEARS COAL REMAINS THE LARGEST SINGLE SOURCE OF ELECTRICITY World Generation Capacity 2017 -2040 (GW) 8000 Capacity 6000 – Installed generation capacity almost doubles 4000 from 2017 to 2040 growing from >7,000GW 2000 to >12,
Slide 30: Upgraded Coal Fired Technology
OUTLOOK FOR COAL USE UPGRADED COAL FIRED TECHNOLOGY POWER STATION GENERATING TECHNOLOGY IS ON THE UPGRADE PATH – In the NPS, the IEA has projected that coal Coal Demand by Generation Technology NPS (Mtce) consumed for electricity generation (3.4Btce) 4000 will remain stable over the outlook period 3
Slide 31: Coal Demand Outlook
COAL DEMAND OUTLOOK
Slide 32: World Coal Demand
COAL DEMAND OUTLOOK WORLD COAL DEMAND LARGE REGIONAL DIFFERENCES IN WORLD PROJECTED COAL DEMAND Coal Demand Change 2017 - 2040 (Mtce) – Under the NPS, the IEA projects coal demand to increase by 1.5% or 100Mt of 6,000 kcal/kg coal Other Asia over the outlook period – relatively flat SE Asia – Howeve
Slide 33: Global Coal Production
COAL DEMAND OUTLOOK GLOBAL COAL PRODUCTION THE IEA PROJECTS THAT MORE MINES ARE REQUIRED TO MEET DEMAND UNDER NPS – Under the NPS, the IEA projects that a total of US$1 trillion investment is required in existing and new mines to deliver coal out to 2040 – Expansions and new mines will be needed to
Slide 34: Growth in Asia Pacific
COAL DEMAND OUTLOOK GROWTH IN ASIA PACIFIC COAL DEMAND PROJECTED TO GROW STRONGLY IN WHITEHAVEN’S KEY MARKETS Coal Demand in Asia Pacific Region – Under the NPS, the IEA projects coal demand to NPS (Mtce) increase by 12% or 491Mtce (575Mt of 6,000 kcal/kg 5000 coal) in the Asia Pacific region out to
Slide 35: Australian Coal Exports
COAL DEMAND OUTLOOK AUSTRALIAN COAL EXPORTS IEA EXPECTS AUSTRALIA TO INCREASE EXPORTS OF COAL BY 22% OR 78MTCE Major Coal Exporters NPS (Mtce) – Under the NPS, the IEA projects coal 1200 exports (seaborne market) to stabilise around current levels out to 2040 1000 – The IEA projects Australia will g
Slide 36: Outlook for Whitehaven
OUTLOOK FOR WHITEHAVEN
Slide 37: Whitehaven's Production Profile
OUTLOOK FOR WHITEHAVEN WHITEHAVEN’S PRODUCTION PROFILE PRODUCTION FORECAST TO GROW WITH VICKERY & WINCHESTER SOUTH PROJECTS Whitehaven Saleable Coal Production Profile – Managed saleable coal production (100%, Mt) is forecast to grow strongly from 40 the startup of the Vickery and 35 30 Winchester S
Slide 38: Targets for Second Half of FY2019
OUTLOOK FOR WHITEHAVEN TARGETS FOR SECOND HALF OF FY2019 CONTINUING TO DELIVER Operations − Continue improving safety performance − Deliver saleable coal production guidance in the range of 21.5Mt to 22.5Mt (100% basis) − Deliver updated FY2019 cost guidance of A$67/t − Continue ramping up productio
Slide 39: Thank You
THANK YOU www.whitehavencoal.com.au
Slide 40: Appendices
APPENDICES
Slide 41: IFRS 16 Leases
APPENDICES IFRS 16 LEASES BACKGROUND – WHC has adopted IFRS 16 Leases from 1 July 2018 and restated comparative periods – The new standard requires operating leases and some rental arrangements to be brought onto the balance sheet as a ‘lease’ liability and right of use asset, effectively aligning t
Slide 42: IFRS 16 Leases
APPENDICES IFRS 16 LEASES IMPACT OF ADOPTION OF IFRS 16 LEASES ON H1 FY2019 PROFIT OR LOSS H1 FY2019 IFRS 16 IFRS 16 $/t H1 FY2019 Financial Performance - A$ millions excl IFRS 16 Impact impact* as reported Revenue 1,270.1 - - 1,270.1 Other income 1.8 - - 1.8 Operating expenses (490.5) 38.6 $5.20 (4
Slide 43: IFRS 16 Leases
APPENDICES IFRS 16 LEASES RESTATEMENT OF FY2018 PROFIT OR LOSS IFRS 16 IFRS 16 $/t FY2018 Financial Performance - A$ millions FY2018 Adjustments impact* Restated Revenue 2,257.4 - - 2,257.4 Other income 6.8 - - 6.8 Operating expenses (839.2) 71.1 $4.45 (768.1) Rail, Port, Marketing and Royalties (45
Slide 44: IFRS 16 Leases
APPENDICES IFRS 16 LEASES RESTATEMENT OF H1 FY2018 PROFIT OR LOSS IFRS 16 IFRS 16 $/t H1 FY2018 Financial Performance - A$ millions H1 FY2018 Adjustments impact* Restated Revenue 1,146.4 - - 1,146.4 Other income 3.6 - - 3.6 Operating expenses (421.3) 32.9 $3.85 (388.4) Rail, Port, Marketing and Roya
Slide 45: IFRS 16 Leases
APPENDICES IFRS 16 LEASES RESTATEMENT OF H1 FY2018 CASH FLOW IFRS 16 H1 FY2018 Cash flow statement - A$ millions H1 FY2018 Adjustments Restated Cash paid to suppliers and employees (719.2) 32.9 (686.3) Interest paid (10.9) (5.8) (16.7) Net cash from operating activities 399.4 27.1 426.5 Payment of l
Slide 46: Location
APPENDICES LOCATION 46 //HALF YEAR RESULTS FY2019
Slide 47: Winchester South Project
APPENDICES WINCHESTER SOUTH PROJECT ACQUISITION OF HIGH QUALITY METALLURGICAL COAL PROJECT COMPLETED 47 //HALF YEAR RESULTS FY2019
Slide 48: Resources
APPENDICES RESOURCES 48 //HALF YEAR RESULTS FY2019
Slide 49: Reserves
APPENDICES RESERVES Note: See Competent Person Statement on Slide 2 49 //HALF YEAR RESULTS FY2019
Slide 50: Winchester Resources
APPENDICES WINCHESTER RESOURCES Information in this report that relates to Coal Resources is based on and accurately reflects reports prepared by the Competent Person named beside the respective information. Troy Turner is the Managing Director of Xenith Consulting Pty Ltd. The named Competent Perso