Whitehaven Coal Limited

Good morning, everybody. Thanks very much for taking the time to join us today for the full year results for Whitehaven Coal's financial year 2025. I'm joined here, as always, with Kevin Ball, our CFO, and our IR team with Kylie and Karen here to support as well. As usual, Kevin and I will go through the slides and... Bear with us and we'll get to the Q&A session for what's been a very good year for Whitehaven as our first full year of our expanded footprint with our now enlarged portfolio of assets. Quickly turn over, of course, there's some forward-looking statements here, so I draw your attention to the disclaimer that's there. Let me just start the highlights and I'll start with safety being an important feature of our business first and foremost. Safety performance has been good. So we're pleased with the result now with our expanded business. And our TRIFA was 4.6 for the year. And I've given you just some numbers there incorporating some historical data. So the New South Wales and Queensland combined performances there for you to see. And so on a five-year average basis, which is how we set our targets, you can see that we're doing pretty well relative to the average of the last five years. So we're pleased with the progress, but more work to be done, of course. Another pleasing aspect of our performance here is that our environmental enforcement actions performance has been pretty good, three years without any incidences at all. So, again, the team is very focused on this, making sure that we manage ourselves appropriately in compliance with all the various conditions. There are thousands upon us on any given day, and so we need to make sure that we are compliant with all of those. I'll turn over now to the highlights. Now, you've seen some of these, but it's important just to call out some of them. We've had a very good year, and certainly execution has been excellent across pretty much every dimension of our business. We're pleased with it. Of course, Dornier and Blackwater successfully integrated into the business and have either met or exceeded their wrong guidance. At 39.1, we've had very good results, 60% better than last year, and the top end of our range. Equity sales also in the very good part of our range at 26.5. as a result of the Queensland acquisition, a good step forward. The average price for the year at 215 was broke up in two parts, as you can see. Queensland, 232 on average income for the average revenue for the year. New South Wales, 193. Our costs at 139 were at the bottom, just below the bottom end of our guidance, which was a terrific result from the team. So nice to bring that round. The total revenue at 5.8 split between Queensland at 3.5 and New South Wales at 2.2 billion. The underlying EBITDA at 1.4, you would have seen one of that accrue in the first half, and in the second half, 400 million, broadly consistent with the downturn in experience, certainly in that second half, and certainly have a year of two halves in this particular financial year. The underlying NPAT 319, $309 million, was a decent enough result, given all that I've just mentioned. The statutory result was actually double that at 649, our underlying NPAT, at $649 because it includes the one-off gains associated with the formation of the joint venture. As a result of these good outcomes, the board has seen fit to declare a fully franked final dividend of $0.06 per share, which will be paid on the 16th of September, and an equal in value buyback of up to $48 million will be engaged in over the next six months as well. The aggregate of this works out to be about 60% of our underlying NPAT in line with the capital allocation framework, which has been updated, and we'll talk in a bit more detail on that a little later. Now, those highlights are great, and it's easy to look at that at a superficial level, but let's just dive very quickly just to the structural change within the business that I wanted to highlight for you. And this is an important point, I think, for our shareholders to see, Now, what we've provided here for you is the attributable tons per share and then also the attributable EBITDA per share. And that's now analysed across pre and post buyback and then pre and post acquisition. So what you can see here is a really interesting story where because we haven't used new equity, the buyback obviously drives a significant step forward in terms of attributable tons per share and attributable EBITDA per share. And then when you overlay the acquisition across the top of that, then you can see the big step forward that the attributable EBITDA per share also takes as a result of that. And so you can see in the context of EBITDA per share, you're actually three times what it was if you're a shareholder as you've taken this ride with us through this very short period of time through which we've executed both the buyback and the acquisition. Now, obviously, the chart or the bar to the right on both these scenarios just points to a bright future. And as you can see, there'll be volumed growth, as we know there will be. We're driving hard to move our costs down. Productivity improvements and costs out will drive better margins. And our margins are pretty low based on the cyclical low position we're in at the moment. And of course, the continued use of our buyback is going to amplify the positive effects of all the above as we go forward. So nice structural change for our shareholders to be in. I'm moving over to markets, and I'll just focus on this again. I know you've watched many of these aspects, but I will just summarise quickly. Obviously, two sides of our business with the thermal and the MET side of our business now, which are much more balanced and lower risk business, which is great. The POV performance during the course of the year certainly has taken more of a cyclical turn and has dropped 32% down to 196 for the year, whereas the thermal side actually a little less dramatic than that, 11% down year on year, down to 121. Now, we've seen some good signs since June that says the thermal side has firmed, which is good, and on the met coal side of things, Also, there would appear to be some nice policy announcements coming out in China in particular, focused on constraints of surplus production of coal and, of course, surplus steel production, which I know there's been lots of conversation about that. So I think those two factors and also a settling position potentially on the side of the trade discussions and tariff-related movements does point to, hopefully, further stability in the markets. And with the effects of those policies in China, we expect there to be a firming of the market and prices will go along with it. Overall, you've seen this slide before, 64% of our revenue was generated on the MET side, 36% on the thermal side of our business. And you can see the distribution of the sales by destination. Japan clearly remains the standout for our business, terrific market. uh, takes, uh, nearly half of our total volume, which is, which is good. India's actually emerged as a, it's always been a part of our business, but India's emerged at 11% now, which is, which is good because, uh, that footprint we know will expand considerably as we go forward. Um, a new thing for us, of course, is sales into China. That's obviously met based, uh, having never sold really any thermal coal there. Um, and then the Malaysia and Korea taking up seven, 7% of the business overall, and there's a spread of other smaller destinations, but, uh, But, yeah, Japan continues to be an excellent market for us. And we remain confident about the outlook for the business because there's a supply-demand gap here that we know is going to continue to drive robust pricing into the future. So on the thermal side there on the left-hand side of the page there, you can see out to 2040, a projected gap there from Quality Insights who are assisting us with our views on these things. It's about 150 million tonnes difference between the runoff of mines and the growing appetite for thermal coal. across our region. And on the metallurgical side, perhaps more modest growth, but this is actually a more modestly sized market. So the 61 is actually really important in a market that's actually much smaller in total volume. And so both of which give us the confidence to move forward, and we look forward to enjoying the tension that the supply-demand delta creates in the pricing market. The upside of things, I'm not going to go over too far because I know you've seen all that through the procession of quarters during the course of the year. Only really to summarise that we've had a very good year operationally and we've done well relative to the guidance we gave you at the beginning of the year. We took a conservative position in doing that and I'll get to guidance in a moment. And we've done the same again in this year in terms of taking a conservative view. But the 39.1%. is in the upper end of our guidance, very good. And the sales are similarly so at 30.2. So very good results across, across the business. Um, if I move over to the actual operations themselves, the 24 Queensland, very good start to our first year of ownership. And we want to continue to see that momentum going into the new year, both new mines, Blackwater and Dornier have, have certainly exhibited, um, better than historical performance, uh, over the last few years. And so that's terrific. Um, You know, proportionately, Dornier's had a step up, which has been really good. Blackwater is doing the same, but we want to see more momentum in this year from both of them, and we're encouraged to think that that will come. We did set ourselves a target of $100 million out of cost by the 30th of June of the year. We did achieve that, which is very positive, and the teams have done a great job there in Queensland in delivering on that undertaking. And you saw the benefit of that come through, that cost at $139 for the year. We'll continue to see further cost outs and benefits and productivity improvements in the course of the new year. And New South Wales did a good job as well. At 19.1, that ran it out a solid year. The open cuts did very well. Narrabri obviously less than what we would have liked, but it did have a very long and extensive change out for eight weeks as we did some serious refurbishment work on many of the legs with that change out. So 19.1 off the back of that was actually a solid outcome all round. And we're looking forward to seeing that continue in this new year. So as far as Narrabri goes, we have some revised CapEx news for you, which was the action item on us to come back and release that to the market once we've gone through the various hurdles with our joint venture partners. We have done that, so I'll speak to that shortly. So the only other thing to mention off the back of this is similarly with last year where we had $100 million out of Queensland, it was our cost out target. In this year, we're seeking to take another $60 million to $80 million of costs out of the business, and that is across the whole business. So as I mentioned in the quarter just gone by, our focus has turned to New South Wales as well, just to make sure that we are optimising the underlying structure of the business there in the same way as we've been doing in Queensland. And so the $60 million to $80 million that we're intending to take out here covers both New South Wales and Queensland and corporate, by the way. And that is outside the guidance range that we'll talk about a little bit later on. So with that, I'll hand to Kevin.

Thanks, Paul. I'm over on the five-year financial graphs. As you know, 22 and 23 were really strong years with frequent coal prices compared with FY25, which you'd have to think you're at the bottom of the cycle in the second half of FY25. Full year underlying EBITDA, as Paul said, of 1.4 and FY25. You can see the scale and the benefits that have been delivered to us by acquiring Dornier and Blackwater with nearly 900 million of EBITDA contributed by those two mines. Underlying NPAT at 319, a pretty strong first half and a pretty soft second half with coal prices where they're at. At a statutory level, I've got to apologise. These accounts have got a lot of noise in them as a result of that acquisition and divestiture. But we're going to take you through that and we're going to explain those in slides that are coming up. Our results are translating really well into cash. You can look at the cash generated from operation versus the underlying EBITDA. And you can see that's translated into net debt coming down from $1.3 billion in FY24 to $600 billion in FY25. So we're pretty happy with that. So we reported $1.355 billion of underlying EBITDA. The DNA combined at $607 million includes $238 million for New South Wales and $369 million for Queensland. That's lower than what we initially guided, and that really reflects the settlement of the acquisition accounting within the 12 months of ownership. We had net underlying financial expenses of $289 million. About $190 of that relates to the interest payments on the US $1.1 billion credit facility, and the balance of that is drawn from a number of places including other interest charges of 40-odd, leases, lease interest of $14 million, some non-cash unwinds of provisions of about $50, amortisation of the upfront fees on setting up that facility for $20, and then we had some interest income of $27, which was down substantially from last year. An underlying income tax expense ratio of about 30% continues to hold, so you can use that in your models, and it came to an underlying NPAT of $319 million. As I said, there's plenty of noise in these numbers, but it's good noise. We've got $330 million of net gains from recurring items on a post-tax basis. And that's all spelled out in Note 2.2 to the financials. But if you've got questions, just give us a call and we're going to take you through those things. We booked a post-tax gain on the sale of the 30% of Blackwater of $274 million. And because coal prices were lower than we expected when we went into the contingent process, contingent price mechanism with BMA, We remeasured that at the end of the year and we booked a gain of 289. But that just simply reflects that we haven't paid BMA what we expected because coal prices have softened. We had about $37 million of post-tax transition and transaction costs when we sold the 30%. And we fleshed out SAP and we had a little redundancy in restructuring costs in Queensland. So that's those explanations. And as you know, the US denominated debt, the cash and the deferred consideration are is all in US dollars. So when we retranslate that, we pick up some gains and losses here. So the total of these are about 195 million after tax. If I take you over the page, we said we'd give you a little bit better detail on depreciation, amortization, and finance, and hopefully we do that. So if you look at the depreciation, amortization, net finance for FY25, DNA came in at 607, as I said before. We said we'd be about 750 on guidance when we talked to you earlier this year. We're better than that because it just reflected the acquisition accounting where we rebuilt or restructured that cost of acquisition just at the end of the year. The FY25 DNA for Queensland, there were some one-off adjustments. There were some assets in there that we'd had on the books when we brought them on that we found were surplus, so we took the hit on that. But for depreciation, we estimate it's about $16 to $18 a tonne of owned coal sold for New South Wales and about $23 to $28 a ton for Queensland. And because a lot of the depreciation charge is based on units of measure, it's a function of how well we produce in the pit, how well productivity forms. On the amortization side, that's about $6 a ton, and I think that's pretty safe to use in your models. And I think the net financial expense, we've told you where that is historically. But there's plenty of noise in that number with $568 million of net finance expense, I think spent $219 of that in cash and non-cash is about $350. This year, in this financial year, you should expect that we will look at refinancing the US $1.1 billion. The long call period for that finishes in March 2026. And we would expect to be talking to potential providers of debt capital over this next year. So stay tuned for that as we go through the year. The segment result over the page on that, we give this to you. I think this is a really handy slide. From this, you can pretty much work out what the unit cost is at each of those bases, New South Wales and Queensland. But what you really do see is New South Wales, sorry, Queensland contributed $3.5 billion of revenue, close to 60% of overall revenues. and nearly $900 million in EBITDA. So the acquisition is really helping diversify Whitehaven Coal, has helped to diversify Whitehaven Coal quite well. The net finance expense of $289 million, the underlying components we talked about, I expect that to be down next year. And as I said at the half year, the financial show really do show the benefits of that diversification. And as Paul said earlier, you see that in the participation per share, all without issuing a share in the process. So a good outcome. Um, moving forward, we've told you, we think we can do better at Dornier and Blackwater. That's certainly the focus in, in FY26. And we're really well placed, I think, to, to, to look at a recovery in coal prices and see that translate to better economic performance. Over the page, um, As I said, we think we could continue to improve. At the group level, we realised $215 a tonne and a unit cost of $139 and we paid the various governments an average royalty of $25 a tonne. In Queensland, you know, that's a tiered structure. The average royalty in Queensland was about 12.5% and the average royalty in New South Wales, as you know, is a flat structure, is about 10%. So on the cost side, guidance was about $140 to $155. We thought it would be a higher year, and we expected it to be a higher year because we'd closed Warris Creek, put that into rehab. That was a really low-cost operation, bypass 100%, closer to the port. And we brought on Vickery, and we're digging a box cut at Vickery. We're mining through the hill at Tarrawonga. So, you know, 25 and 26 are periods of higher cost in this operation. Productivity improvements, we've focused on that pretty heavily in Queensland. And in New South Wales, we're seeing benefits from that. And we've reduced the costs in Queensland, but I think there's still more to go there. As we said, we'd rebuild blasted stocks at Blackwater. That's helping us. There's still more to go on the productivity front there in ROM volumes. But I think overall, in the bottom of this market, it's been a pretty good outcome. That'd be my summary for it. So I'm pleased with the second half result. and I'm pleased with the strength of the balance sheet. If I take you over the page, this is just a standard bridge that we use each year. It'll help you understand how we think about things. You can see the New South Wales price was softer, and this is trying to bridge you from $1.4 billion EBITDA, which had one quarter of the whole operation in, to $1.355, which had all of Dornier for all of the year and three quarters of Blackwater in there for the year. But you can see softer coal price. We're down on volume because of Werris Creek closing and Vickery just starting up. Our costs were up as a result of that switch in proportion of coal from different places and higher cost operations. But you can see $600 million in EBITDA, which is the proportion of the year from that operation that's come through in here. So it really has contributed quite strongly to performance. If I go over the page on the net debt, again, it's been a really busy year. You can see that the business delivered $1.1 billion of cash. We had to pay BMA 1.104, which is a combination of the US $500 million, the $363 million in stamp duty that we paid, and then there was about $56 million that we got back in a completion adjustment from BMA. So that's how you get to the 1.104. And the 1.719... is the sell-down of $1.8 billion to Nippon Steel and JFE. So, sorry, yeah. In that process of selling down Blackwater and in that process of re-measuring that contingent liability, there was taxes that had to be paid. That's about $150 million. So really the 1719 is more like 155 net. And the capital expenditure and other acquisitions of 448 is what we've spent on Capital expenditure, what we spent on the remaining 7.5% of the final payments there for the 7.5% of Narrabri. And we also bought a seat at the table at the DBCT coal terminal in Queensland. So that was $24 million. And we gave shareholders $200 – well, call it $200 million. It rounds up to that. In here, the next line in there is really the leases that are paid for. And we've got some foreign exchange variations and others. But we finished the year with net debt at about $600 million, which we're really pleased with. And I think the balance sheet with 10% gearing and a leverage ratio of less than a half is really well positioned to get through the bottom of this cycle. And we've seen the coal prices turn late in the half or late in the year anyway. So a strong balance sheet with gearing of 10%, a leverage ratio That's less than half a turn. We've got plenty of liquidity on the balance sheet, so I think that's good. The sell-down or the receipt of the proceeds from selling down that 30% joint venture interest in Blackwater improved our liquidity. But we're holding that cash on the balance sheet, or $500 million of that, to meet the second payment to BMA next year. Coal price contingent payments. We paid $9 million in the 2nd of July. So that structure, which was really an upside-downside sharing structure, is working as anticipated. And if I look at where we're up to in July year-to-date, we don't expect to pay anything out of the 1st May-June or the April-May-June-July period. So coal prices need to recover in order for us to pay the BMA out of this. And as I said, we intend to reposition our funding sources. So I think a Very busy year, but a pretty good year. A business really well positioned, bottom of the cycle with a turn coming and looking forward to 2026. So with that, I'll hand it back to Paul.

Thanks, Kevin. I'll just switch over now to the refresh of Whitehaven's capital allocation framework. And just reminding everybody, I suppose we're not looking for wholesale change with the capital allocation framework. It's certainly served us very well and we get good feedback on the clarity that this provides. But we have said that with the acquisition that we would revise that at the end of the two years. But because we've been able to accelerate the de-risk and the balance sheet with the sell down at Blackwater, we committed to revising that and announcing that with the full year results. And this is the outcome of that process. As I say, it served us well in terms of balancing the needs for CapEx within the business. And so I'll just go through the parameters that we've changed within the capital allocation framework itself. As Kevin's mentioned, we're modestly geared and will continue to stay that way, both on a gearing metric but also on a leverage basis as well, depending on how you'd like to measure it. If we look at historically, we were in a business which was half the size. The payout ratio from NPAT group, NPAT, was 20% to 50%. That was wider than what we think is necessary now with a broader business based lower risk business. So we are narrowing the range of that and elevating the top end. So we've gone from 20 to 50 to now 40 to 60 of our underlying group NPAT. So that's an improvement. And then that is total returns. So when we look at that and the two instruments we're using in which to deliver those returns are through dividends and buybacks. And basically we're going to take a position where we have a balanced in value approach to dividends and buybacks now within that 40% to 60% range. And as we've already noted at the beginning of the presentation, we're at 60% in this current year. So that's the changes to the structure of the capital allocation framework itself, of course. Money to be spent on – well, in the internal competition for the allocation, that incremental dollar on capital remains the same. So whether it be money for internal projects, Vickery, or Stage 3, or M&A from time to time, they must go through the same hurdles that this dictates. And as I say, it's served us well. We don't have any M&A on our agenda at all, so – So, um, that, that part is not part of the immediate considerations for, uh, for how to allocate capital within the framework. So if we look at the outcomes, uh, the 16th of September, we will pay, as I said earlier, six, a six cent fully frank dividend, um, which totals about $48 million of capital. We intend to buy up to about the same amount, $48 million in shares back over the next six months through our buyback program. So a balanced by value approaches, as we've mentioned. And that takes the full year dividend outcome to 15 cents per share, fully franked. And with the buybacks added in, that's $191 million of capital returned, which represents, as I said, 60% payout ratio of the underlying group, NPAT. So I hope those changes, everyone can process those. I think it's a better outcome where we were before. It should be more consistent. more consistent uh payout ratio than what we've had before with the 20 to 50 so a narrow range but the top end is higher and a balanced approach in value to delivery of the dividends and buyback one of the other action items we had or commitments we made to you to to come back to you with was obviously revision of uh the narrow barrage stage three capital so i do want to spend a little bit of time just going through that so i've got a couple of slides here which which does that now a couple of key key points i should just mention which um which are influential in terms of the revision of CapEx. So obviously the time, the much delayed approval of stage three was something which, uh, was grinding on us for some time, unfortunately, uh, which has been very annoying. Um, and so, uh, and, and then that consumption of time during going through that process also, um, diminished the opportunity for the walk on walk off scenarios we mentioned before. And so we've, we have, uh, jettisoned the idea of having the walk-on walk-off and we've now deferred the decision on a new long wall for 10 plus years and so the other decision which we've taken which is influential in this is to look at the changing the direction of mining and under those other scenarios we were going to go from north to south and in this scenario in the scenarios we've now adopted now we are going from south to north and so that makes a That means access will be used through the 201 mains for the 300 series panels. And so you only incrementally drive the 201s as you need incremental access. But the 300 series mains and the 301 mains are no longer required to be done up front. In fact, the 300s, not at all. 301 access is only required in the same vein as 201 as you need to incrementally drive it to get access to develop the next panel. So that will be incremental over time, not something which was going to be a large liquor capital up front with the previous iteration of of stage three. So much lower capex profile now as a result. And I'll walk that through. The assumption in terms of volumes for us modeling out Narrabri, we're in the six to seven million tons range. And I think as we talked about, I got the question last quarter about this as well. And that's how we think about the average volumes for Narrabri over the life of mine. I'm over the page now just to go through what the implications of this are. So the previously discussed 800, 850 capitals has changed dramatically. So Narrabri stage three capital is now 2,62300. the bulk of which is actually deployed to the maintenance of our existing long wall. We will make this last longer. There's clearly a trade-off there in terms of less capital up front, more in maintenance over time to make sure we keep this wall in good shape. Of the $260,000 to $300,000, we've already spent $40,000 of it. There's about $15,000 in the new guidance that we're giving you. And then there's a bit more that's got to go into this. The balance of capital goes over the next six years outside of guidance. but a big reduction from the 800, 850, as I say. I mean, if you looked at like-for-like basis on an inflation-adjusted basis, that would be well over a billion dollars in capital for this project. So, which, you know, given Narrabri has been producing less in recent times, the deferrals in the receipt of approvals and our view on the direction of mining, this is a far superior outcome from our perspective in terms of... from a capital management perspective, but also then, you know, given the competing demands that the enlarged business has for capital, there's obviously a need to fight for its capital, just like every other site does within the portfolio. So I think there are positive changes to be made. Just to go through quickly some of the other outcomes from that, we've given you some numbers there in terms of the sustaining CapEx requirements for the mine. So life of mine is $8 to $9.00. In the next couple of years, that does go higher in the short term just to be setting up balances of infrastructure needed over the next two years. But life of mine is the $8 or $9 that you should use in your model. Remaining capex for the 200 series panels is there's about $80 million in that. And $60 million of that will be spent between $26 and $27 million. So overall, we feel like a much better optimised plan for Narrabri, a big reduction in capital required for Narrabri. The trade-off in tonnes is not too difficult. At six to seven, we feel that's an appropriate thing to do. But overall, a much better outcome for our investment in Narrabri. I'll flick over now just to our guidance. Now, I'll start by saying, look, last year and the year before, we took a measured approach to guidance, so we took quite a conservative position which we thought was prudent to do. We feel it's prudent to do that again. We're only a year into this, this bending down these assets and there's more bending down to do, even though the year has shown great promise and we delivered good outcomes at the upper end of our guidance. And so, so our intention is to do the same, but we are going to start the year with, with sensible guidance that doesn't bank in everything. And so just for everybody's understanding, it's the same approach to last year. So we're talking about 37 to 41 million tonnes of ROM at, at the group level. We're talking about managed sales, 29.5 to 33 million tonnes across the group as well. And obviously, just to remind everybody when they're comparing year to year, that, of course, the sales guidance at the equity level is only 70% of Blackwater. I'm sure everyone understands that, but just to remind everybody, because when you look at the numbers year on year, you think, oh, what's the difference? But, of course, we've sold 30% of Blackwater and very happy to have done that. The cost guidance itself at 130 to 145, reminding everybody knows we came in at 139, just at the bottom, below the bottom end of our guidance. And we're certainly aggressively targeting costs again to try and drive a better outcome. But again, let's just be conservative to start off with here. The $60 to $80 million I've mentioned already, that run rate change of annual cost savings we want to see by 30 June at the end of this financial year 26th. We did deliver on the $100 million last year. We intend to deliver on this as well. But that is outside of the guidance, so on top of the guidance range that we've given you there. And there are other levers there to continue to drive things, improvements. Blackwater, obviously, we're continuing our journey with the pre-strip inventories being rebuilt. We are continuing to see good opportunities with the AHS system and the productivity that we can deliver by driving that harder with the support of the OEMs. And we're always trying to maximise our margins by tweaking and refining not just the marketing strategies, but then also the cost base of the business more generally. So there will be more of that in this new year as the 60 to 80 highlights. And as I say, we intend to deliver that on top of the cost outcomes that naturally form from our guides. Given what we've done with Narrabri, you can see the CapEx profile for this year is lower than last year. And so our CapEx guidance there, 340 to 440, reflects not just the times and markets being what they are, but also that lower CapEx expectation for demand for narrowed by with the revised approach to stage three. So with that, I think we'll finish up the formal presentation. Very good year from us. We're happy to have got through the first year well, setting ourselves up for FY26 in a positive way and look forward to the questions in the session with the sell-side analyst. Thank you.