Whitehaven Coal Limited

Good day and thank you for standing by. Welcome to the Whitehaven Cove Physical Year 22 Financial Results Media Conference Call. At this time, all participants are on the listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, to Mr. Paul Flynn, Managing Director and CEO. Please go ahead.

Good morning everybody and thanks very much for everyone taking the time to come in through the dial-in and also the webcast for Whitehaven Coal's 2022 full year results presentation. I'm joined here today by Kevin Ball our CFO and Ian Humphreys our EGM Operations. Kevin is going to go through the finance section of the presentation today and then Ian as ever is waiting for some questions on operations. So I'll just move over to our presentation and draw your attention to our disclosures on page two of the presentation. There are some forward-looking statements in this presentation today, so I'll draw your attention to the disclaimer that's there on the screen now. I'll move over to our FY22 highlight. It has been an incredible year, I think, as everybody has already commented. We saw global energy supply shortfalls intensify during the course of the years as a result of the Ukraine and associated sanctions for Russian coal, gas and oil. And as a result, coal prices at record levels and customers are very much focused on energy security as a priority. As you would have seen with the various reports of our quarters successfully through the year, coal prices have been very good and we've leveraged that significantly. very well. Realised pricing for the year at $325 Aussie for the year in FY22 compares very favourably to $95 Aussie for the previous year. Despite COVID and the related absentees went with that and of course labour constraints more generally compounded by weather interruptions, our team delivered a solid operational performance and product quality improvements during the course of FY22. We delivered $3.1 billion in EBITDA this year and $2 billion in NPAT. and in aggregate across the FY22 result. Pleasingly, our operational performance and our focus on our people has been reflected also in our safety results. We've recorded a recordable injury frequency rate of 5.4, which represents an 8% improvement on the last year. The exceptionally strong cash flows has allowed us to maintain a disciplined approach to our capital allocation to build the business resilience and deliver shareholder value in the near and longer term. As you know, we have been successfully executing our buyback plan for 10% of the stock and we are now returning to fully franked dividend paying as well. And of course, with a total shareholder return of 154% in FY22, Whitehaven finished the year number one ranked in the ASX 100. I did want to cover a bit of context on the market before we get to our results, so I'll move across to a couple of slides on market context. Most of you will be aware of this in terms of where we are and who we service, but we are an exporter, and very small amounts go into the domestic market here for boutique users, but we are very much focused on Asia as the center of our business, although we are seeing emerging interest from Europe obviously given the energy scarcity concerns that are playing out there. But very much focused on Asia as the centre of our universe. Our thermal coal is the highest quality and with the highest energy content you can get in the world. Both Russia and Australia are participants in this part of the coal supply market and so having scarcity of Russian coal as a result of sanctions is certainly playing a part in increasing prices but it's also also causing concerns with our customers. This slide here gives you some context in terms of where Whitehaven is positioned relatively across other jurisdictions on the quality perspective. Whitehaven has the highest leverage of all companies to the high-end market of the thermal market, with 89% of our products above 5,500. and 34% of that above 6,200 cacao in the market, which is a very, very unique place. And as we've seen, the distortions between the 5,500 market and the GCNUC market, Whitehaven has the greatest leverage to that benefit of all the coal companies on the market. And with this supplier squeeze, we're just seeing that market diverge even further between those two markets. Now, what's the usefulness of that? Well, of course, our coal delivers more energy per tonne than any of our rivals. And you can see what the relative results of consuming our coal are when consumed in power stations. So this graphic you would have seen, Whitehaven Watchers would have seen this, used this in previous years. We've refreshed it and updated it for you. So if you look at the coal, the comparison from left to right on this slide, and you look at The typical power stations that we are servicing in Japan, say for instance, and we've thrown into this example the Osogo Power Station in Japan, an ultra-critical power station, there is a 44% lower emissions outcome compared to our most inefficient power station operation in Australia. That is the brownfield coal generation in Victoria. Now, that's not to say they're not playing a very important part in the security of our energy supply system in Australia. But this gives you a measure of the efficiency delivered by consuming the type of coal that Whitehaven produces with its low impurities. And obviously our export markets have benefited from that. Now if I go to the page, a little bit more context for you also provides a little bit more of the notion of how important we are to our various markets. These estimates highlight the daily contribution that we make to the essentials of life in these key markets. Of course, this is just Whitehaven's piece of the puzzle overall, but you can see that we're integral to the daily consumption or the daily provision of electricity across our key markets. So whether that be 22.9 minutes in Korea, Taiwan a little bit more at 27, and up to Japan at 33 minutes of every day. Now, these customers are obviously critical markets to us, but we're part of the energy puzzle for them, which they rely on every day to keep the lights on for this amount of time. And so this is something that we back up every day rather than being weather dependent to keep the lights on. So over the page, the challenge here with all of this is despite that integral nature of our participation in these markets and the reliance that these key customers place on us, there is an emerging gap in the supply of coal, and not just our coal, but coal more generally. As you can see,

In this graph, 85% of the world's coal-fired generation capacity will be in emerging and developing countries, but there is service for these needs.