YAL.AXYAL.AXASX
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Operator: Good day, and thank you for standing by. Welcome to Yancoal 2025 Financial Results. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Brendan Fitzpatrick, Investor Relations Manager. Please go ahead. Brendan Fitzpatrick: Thank you, Maggie, and thank you to everyone for joining us on this briefing for Yancoal's 2025 financial results. My name is Brendan Fitzpatrick, the Investor Relations Manager. To present today's briefing, we have the following members from Yancoal's executive leadership team: Sharif Burra, Chief Executive Officer; Kevin Su, Chief Financial Officer; Laura Zhang, Company Secretary, Chief Legal, Compliance, Corporate Affairs Officer; Frank Fulham, Chief Sustainability, Technology, Innovation and Development Officer; David Bennett, EGM Operations; Mark Salem, EGM, Marketing and Logistics; Mike Wells, EGM Finance; Mark Jacobs, EGM, Environment and External Affairs; and Sebastian de Koning, EGM, Audit and Risk. After the executive team completes the review, we will move to a question-and-answer session. The commentary provided today is based on the 2025 financial results and associated announcements published to the Australian Securities Exchange and the Stock Exchange of Hong Kong yesterday, the 25th of February. Slides 2 and 3 contain notices and disclaimers relevant to today's presentation and the forward-looking statements it contains. Please make yourself familiar with the content of these 2 slides. Throughout the presentation, we will use Australian dollars unless otherwise stated. Sharif Burra will provide the introductory remarks for Yancoal's 2025 results. Sharif Burra, I hand over to you. Thank you. Sharif Burra: Thank you, Brendan, and welcome to everyone on the call. During 2025, we delivered a great operational performance. ROM coal production was 67 million tonnes and our attributable saleable coal production was 38.6 million tonnes. This was a production record for Yancoal and in the upper quartile of our production guidance. Our cash operating costs were $92 per tonne, a reduction of $1 per tonne from the first half. The 2025 costs were also $1 per tonne lower than our 2024 costs. Lowering our cost was a great outcome in the current industry setting, and I applaud all the people working at our mines for the operational performance they've delivered. Our overall realized price for the year was $146 per tonne, giving an implied cash operating margin of $39 per tonne after government royalties. We achieved revenue of almost $6 billion and an operating EBITDA of over $1.4 billion at a 24% margin. As we've noted previously, delivering this margin during a period of weak coal prices is a testament to the quality of our assets and our ability to operate them effectively. Our profit after tax was $440 million, or $0.33 per share. In accordance with our dividend policy, the Board has elected to distribute $161 million to shareholders as a $0.122 per share fully franked final dividend. Together with the $0.062 per share interim dividend, the total 2025 dividend represents a 55% of net profit after tax payout ratio. Company retains a strong balance sheet, with $2.1 billion of cash and no external debt at the 31st of December. Slide 5 shows our safety performance. Keeping our workforce safe is always our first priority. The TRIFR statistic improved over the year and remains below the industry average, but we aim to reduce it further. Safe mines are productive mines. Our push towards a strong operational outcome this year is underpinned by our commitment to improving safety performance through targeted intervention activities. As part of the 2025 financial results, we've also published our AASB S2 climate-related disclosures. Preparation of the disclosures included identification and assessment of climate-related risks and opportunities. We intend to develop a Climate Transition Plan in 2026 to strengthen our climate resilience and support the Yancoal P4 Sustainability Strategy. Initiatives already underway include the Sustainability Digital Data Platform, which was launched in Q3 of 2025. This will improve the capture, quality and governance of sustainability data and reporting. Our P4 Report provides an annual update on sustainability activities, including progress in delivering the company's P4 Sustainability Strategy. The 2025 P4 Report will be published in April 2026. I'll now hand over to David Bennett to take you through our operational performance. David Bennett: Thank you, Sharif. Slide 7 summarizes the operational drivers behind our full year performance. As Sharif mentioned, we delivered record performance, near the top end of our production guidance. The second half improvement in cash operating costs took us just below the midpoint of the guidance range for the year. ROM coal and saleable coal production figures were 5% to 7% higher than 2024. Attributable sales were up 1% after we optimized our sales volumes and stock position. Our lower realized prices reflect conditions in the international coal markets. Mark Salem will provide more detailed comment on our sales in the coal market shortly. Turning to Slide 8. We see that ROM coal on a 100% basis was 67 million tonnes. This was up 7% from 2024 and was the best performance in the past 5 years. All of our operations other than Ashton, increased ROM production compared to 2024. This was a notable achievement as we encountered above-average rainfall at our New South Wales mines, but our past investment in water storage capacity meant less disruption to production. Attributable saleable coal production was up 5% compared to 2024. We have consistently delivered toward the upper end of our asset and equipment capabilities throughout the year. The quarterly production profile was much more consistent in 2025, which allowed us to pursue optimization and efficiency gains. The aim is for a similar approach in 2026. That said, the first quarter is likely to have the lowest production figure, so we will look to increase production in the subsequent quarters. During the year, we set 2 separate world records with our Liebherr 9800 excavators. At Moolarben, we set a world record for total material movement in 2025 with 17.6 million bcms of material movement. And at MTW, a second excavator, set a world record for total material movement in a month of 1.75 million bcm. These performances demonstrate Yancoal's capability to operate at the highest industry levels. R9800 excavators are also in use at HVO, and sharing the knowledge and best practices between mines improves performance across all of our operations. Slide 11 shows our cash operating costs. As Sharif said, our cash operating costs were $92 per tonne in 2025. We continue to work extremely hard to keep our costs in check to offset the impacts of wet weather delays and inflationary pressures. This operating cost is not just an improvement over last year. It is the best performance in the last 4 years. Increased production, mine plan optimization as well as equipment reliability and utilization, all contributed to combating cost inflation elements and the impacts of higher demurrage throughout the year. We see our ability in keeping costs flat over the past few years as a great outcome relative to the sector, and this leads to the next slide. Turning to Slide 12, we demonstrate why keeping cash operating costs low is crucial. Our implied operating cash margin in 2025 was $39 per tonne. This chart shows the expansion and contraction of margins we have experienced over the past 5 years. The margin, while lower than in recent years, remains positive. Combined with our scale of production, this drives the financial performance, which Mike Wells will cover shortly. Slide 13 has data we have used in the past. The chart displays our 3 largest mines in the context of other Australian thermal coal mines. The total cash costs are shown on an energy adjusted basis to counter the influence of coal quality on the operating margin. We updated the slide to show the same data set 12 months apart with December 2025 compared against December 2024. We can see the collective move by the industry to curb costs. The key takeaway remains that large-scale, low-cost mines, such as ours, remain viable when many other mines struggle through coal price cycles. This is why we focus on maintaining our assets and operating them as well as we do. I'll now hand over to Mark Salem to cover the coal markets. Mark Salem: Thank you, David. Starting with the product mix on Slide 14. 84% of our sales were thermal coal, with the balance being lower-grade metallurgical coal. This product split varies from period to period, depending on which coal seams are in production at each mine and how we can maximize the market opportunities. You may recall back on Slide 7, we had 38.6 million tonnes of attributable production, but only 38.1 million tonnes of attributable sales, a variance of 0.5 million tonnes. This was a result of weather-related issues causing some delays to vessel arrivals and cargo assembly, resulting in some sales slipping into January. In addition, if you look back at 2024, we had 800,000 tonnes more sales than production, optimizing our sales at a time when the market was in backwardation and therefore, reducing our stocks. The ability to rebuild stock will allow ongoing optimization of our 2026 position. Turning to Slide 15. We show our market split in contrast to both sales, revenue and sales volume, for 2025 against 2024. We optimized the revenue contribution of our various coal products to specific markets. China is a significant offtake partner, both on a volume and revenue basis. Customers in China tend to take a higher proportion of our API5 5,500 net as received calorific value quality coal. However, revenue and volumes decreased in 2025 as China utilized more domestic supply. Our Japanese customers purchased a significant portion of our higher calorific thermal coal, our lowe volatile PCI and semi-soft coking coals. This market, therefore, is very important to revenue contribution. Revenue to Japan increased mostly due to an increased proportion of our metallurgical coal sales. In Australian dollar terms, our overall realized coal price was $146 per tonne for the year, down 17% from 2024. Strong supply and benign demand conditions persisted in the international thermal coal markets through most of 2025. Geopolitical events, port disruptions at Newcastle, economic initiatives in China and seasonal trading patterns, all contributed to short-term price movements during the year, none of which having an effect on any long-term structural trends. Cuts to supply from Indonesia, less 10% and Colombia, less 18% were constructive, but there were also lower imports by China, down 18% and Taiwan down 12%. We price our thermal coal against the API5 and globalCOAL Newcastle Indices. Our realized price in U.S. dollar terms sits between these indices as shown in the chart. In Australian dollar terms, our realized thermal coal price was $136 per tonne, down 15% from 2024. Australian metallurgical coal exports fell 9% in 2025 due to the mine and port disruptions and weather impacts. This contributed to a 7% decrease in global metallurgical coal exports. However, demand for metallurgical coal lackluster as steel exports from China displaced production from other countries. Metallurgical coal indices that Yancoal sells against finished at similar levels to the start of the year. In Australian dollar terms, our realized met coal price was $203 per tonne, for the year, down 2026 from 2024 -- 26% from 2024. There are various groups providing forecast for international thermal coal markets. A common theme we see in recent forecasts is the ongoing revision of when coal demand will peak and at what level. Delays to projected closure dates for existing coal-fired power generation, combined with new facilities coming online, drive the evolving demand profile. Since we last included this slide, the second half of 2025 forecast revisions have lifted the profile once again. On Slide 19, we look at projections for seaborne supply over the next 10 years. Approval and financing challenges for new mines compound natural reserve depletion in the coming years. There is a growing appreciation that coal still has a meaningful role in global energy mix, and there is the potential for a supply shortfall in coming years. Since we last provided this profile, the projection for supply beyond 2030 has been bolstered by whether it will satisfy demand, is still debatable. In the seaborne metallurgical coal market, demand for mature regions like Europe and Northern Asian are likely to decline over the next 15 years. However, this could be outpaced by the growing demand from emerging economies leading to an increase in total demand. In the seaborne metallurgical coal market, some supply growth is required over the next 15 years to meet demand. Unless the additional supply entering the market has a total cash profile lower than existing supply, which seems unlikely. This situation likely necessitates higher met coal prices in the forward years. I will now hand over to Mike Wells to cover our financial performance. Michael Wells: Thank you, Mark. Starting with the key numbers on Slide 22. Whilst we delivered record production, the lower average realized coal price drove a 13% decrease in our full year revenue to $5.95 billion. This price impact naturally flows down to our operating EBITDA of $1.44 billion. Similarly, looking at the cash flow statement, the 41% reduction in operating cash inflows reflects the 44% decrease in operating EBITDA. $769 million was distributed to shareholders during the year, and capital spend was $750 million. Overall, we retained a strong financial position with $2.1 billion of cash at 31 December and minimal lease liabilities. The 2 charts on Slide 23 demonstrate the close correlation between average realized price, revenue, operating EBITDA and the operating EBITDA margin. We extended these charts back to 2018 to show the impacts of the cyclical coal price. Looking at Slide 24, the profit after tax and operating cash flow profiles tend to replicate the revenue and operating EBITDA profiles, but can also be subject to accounting adjustments, one-off items or timing differences. 2023 was one such example where a one-off tax payment was made related to our 2022 earnings as the company moved into a taxpaying position. I will now hand over to Kevin Su to cover the financial position and dividend. Ning Su: Thank you, Mike. Looking at Slide 25, I'd like to remind people that in the 3 years to early 2023, we repaid loans of more than USD 3 billion. This debt repayment transformed the capital structure of the company. As a result of the debt reduction, our financial position is far more secure than it was the last time we faced a cyclical low in coal prices just 6 years ago in 2020. Turning to Slide 26. We look at how well Yancoal has rewarded its shareholders during the past 7 years. We have a strong financial position as noted at the start of the call. The directors have allocated $161 million to pay a fully franked final dividend of $0.122 per share. Together with the $82 million allocated to the interim dividend, the total 2025 dividend is $243 million, or just over $0.18 per share. This total dividend represents 55% of reported profit after tax for 2025. Including the 2025 financial dividends, the company will have distributed $2.5 billion of unfranked and $2.8 billion of franked dividends since 2018, a total of over $5.3 billion, or around $4 per share. Slide 27 has our operational guidance for 2026. We're looking to carry forward our operational momentum. The increased attributable saleable production guidance range is 36.5 million to 40.5 million tonnes. Our guidance range for cash operating cost per tonnes is $90 to $98 per tonne as we allow for some cost inflation. Our capital expenditure guidance is $750 million to $900 million. As we have said in the past, continued reinvestment is required to ensure our large-scale mines remain productive, low-cost mines. We continue to balance production volumes, product quality, efficiency metrics, cash operating cost and capital expenditure to deliver the best possible outcome for shareholders. This year was no different, and our executive team and the people at the site are focused on delivering again in 2026. I'll now hand back to Brendan to coordinate the Q&A session. Brendan Fitzpatrick: Thank you, Kevin, Sharif, David, Mark and Mike. As usual, we have included appendices and additional information for reference at the end of the presentation pack. We will now take questions from the phone lines and written questions submitted via the webcast. Let's start with questions from the phones. Maggie, could you please start the process for questions on the phone line? Operator: Thank you, Brendan. [Operator Instructions] First question comes from Wayne Fung from CMBI. Kin Wing Fung: This is Wayne Fung with CMBI. So my first question is about the output. So how would you expect the production cadence this year? Would that be more front-end or back-end loaded? And my second question is on the cost side. So we're likely to see an inflationary environment given the raw material cost hike, which could possibly hit both OpEx and CapEx. And any measures to ease the pressure? And my final question is on pricing. How would you expect the coal price in Q1 and implementation of the production cut policy in Indonesia? Brendan Fitzpatrick: Thank you, Wayne. Appreciate a couple of good topics to touch on at the start of the call. For the production profile, I know we've had a differentiated performance across quarters in the past. Sharif, could you provide some comments on the production profile for 2026? Sharif Burra: Yes. Thanks, Brendan. Look, our intention is to carry the strong momentum from 2025 into 2026. We have -- we have had a good start to 2026 with regards to weather in the Hunter Valley. And we intend on maintaining some of the record productivity levels, particularly out of our open-cut earthmoving fleet. David, with regards to cadence, you might want to add any further comments throughout the year. David Bennett: Yes. Thanks, Sharif. Just further to the production, as we talked about in the update a little while ago, we expect quarter 1 to be a little lower on the coal production side and then more of an even flow of coal throughout quarters 2, 3 and 4. However, on the other side, in our open-cut mines in quarter 1, we need to move a lot of overburden and unlock the coal so that it's there for -- to produce and sell that product down the supply line. So expect a lower -- slightly lower quarter 1 for coal production but an increase in overburden volumes in quarter 1 at the same time. Thank you. Brendan Fitzpatrick: Thanks, David, Sharif. The second part of the question from Wayne was cost inflation and the impact on both OpEx and CapEx. There may well be a connection back there to the production profile and the unit costs, but what can we say about the inflation effects? And I note that we did allow for a slight cost inflation when we set our unit cost guidance this year. Michael Wells: Yes. Thanks, Brendan. It's Mike. Maybe if I take that. Yes, as you stated, we have increased the guidance range by $1 at the upper and lower end this year to reflect the fact that we are expecting some cost inflationary pressures to come through. As we've demonstrated in the last 4 years, we have been successful in being able to offset inflationary increases through both production increases and productivity initiatives. So we will continue to target those in 2026, but there are inevitably some inflationary cost headwinds that will -- or are likely to flow into our results for the year. Sharif Burra: And I think, Mike, those comments extend through to capital as well. Brendan Fitzpatrick: Thanks, Mike, Sharif. And then the final part of the question was coal price markets. Coal price, the outlook for markets and the potential impact for reported actions in Indonesia. Perhaps Mark Salem, could we turn to you for a comment on the coal markets? Mark Salem: Sure, sure. Look, prior to Chinese New Year and a couple of weeks prior to Chinese New Year, the Indonesians made some -- several different comments about production cuts or allocation of domestic production to domestic utilization. And we did see the market react. The market is very reactive to comments like that. And we -- under normal circumstances, we would see a substantial cut of Indonesian exports in the marketplace. And so the market did react. But none of those comments or rumors have been verified yet or have been made policy within Indonesia. They were made by different ministers. And we haven't seen any concrete movements except for the movement of preserving an increase of 5%, going from 25% to 30% of production for domestic use. So we did see the market react. But since then and during Chinese New Year, when things are relatively quiet in the market, we have seen the market soften a little bit. And so we really just need to wait and see whether any of those policies come through officially as well as whether we'll see a reaction from the Chinese market, which we understand still has very high stocks at the moment. So moving forward, I think we're still expecting the market to be relatively flat. We saw the GCNewc come back down to around $114 this morning, and the API5 is still sitting around that $84 price. So everything is coming back to normal levels that they were prior to the announcements. Brendan Fitzpatrick: Thanks, Mark. Wayne, have we satisfied your questions? Kin Wing Fung: I have no further questions. Operator: Next, we have Peter Wang from CICC. Unknown Analyst: So I have 3 questions. On the foreign exchange loss, which was primarily driven by holding U.S. dollar as the Australian dollar appreciated, how do you see this FX effect and potential for similar losses going forward? And also just a follow-up question on production cost and CapEx. So of the increase in cost guidance, how much would you attribute to the inflation versus some other factors? And the CapEx, are we supposed to expect the sustaining CapEx to remain around the similar levels in the future years? That's all my questions. Brendan Fitzpatrick: Thanks, Peter. Let's start with the first question, the FX loss on the U.S. dollar holding. I'll turn to Kevin first for an initial comment. Ning Su: Thanks, Peter. As you know, Australian dollar is a very volatile currency. It's moved up and down quite a sharply. And then the rapid appreciation of Aussie dollar rate, yes, in 2025 and also in 2026 in the past 2 months, what we have observed, the Aussie dollar appreciated pretty sharply. As a result, we will see the U.S. dollar working capital unfortunately suffered the foreign exchange loss. As of today, what we can see the expectation of Aussie dollar and the U.S. dollar with the 2 Central Bank policy is completely different. As a result, we potentially see an elevated Australian dollar rate for 2026. But once again, I want to just remind investors, the nature of Australian dollars is very volatile. We have seen... [Technical Difficulty] Operator: Next question comes from Paul Young from Goldman Sachs. Paul Young: First question is on the 6,000 kilocal market. We're at sort of peak demand, I guess, in Northern Hemisphere at the moment and the traditional market. So just wondering if you can add any comment around inventory levels across Japan, Korea, Taiwan and any forward look on just how demand is at the moment and demand into 2Q? Michael Wells: [Technical Difficulty] that will start to roll off in the coming years given we have been going through a substantial fleet replacement cycle. Brendan Fitzpatrick: Okay. I'm just checking with the moderator that we've still got audio connection. Maggie, can you... Operator: Brendan, yes. Paul, sorry about that. Could you please repeat your question, Paul? Paul Young: The first question is just on the thermal market. I know you just covered off the uncertainties around Indonesian export quotas, et cetera. But just I'm curious around your thoughts on the 6,000 kilocal market at the moment. We're sort of peak demand in Northern Hemisphere in theory at the moment. But any color you can provide on what demand you're seeing into 2Q for 6,000 kilocal higher quality coal into traditional markets such as Japan, Korea and Taiwan? Brendan Fitzpatrick: Okay. Mark, sounds like a question for you. What are we looking at in the North Asian market and the GCNewc-style product? Mark Salem: Yes, sure. Thanks, Brendan. Thanks, Paul. Look, I can honestly say, Paul, that the market for your 6,000 product is very stable. And we're seeing very, very solid, consistent demand. I think it's safe to say that in some of North Asia, there has been a shift in the way they think about coal. And we've definitely had a lot of interest in Japan, in particular, on security of supply of the premium quality material. And that's from both government level as well as customer level. So there's definitely the shift to -- a very good stability for 6,000 product. Paul Young: Okay. And then another question on your production guidance for 2026. 2025, you did really well from a perspective of where you finished versus the guidance at the beginning of the year. Just on -- your guidance implies broadly flat year-on-year saleable coal production. Are there any movements mine by mine that is worth calling out between the open cuts and underground of Queensland versus New South Wales? And where production might be slightly higher or lower between the operations? Brendan Fitzpatrick: Thanks, Paul. We did know that there would be a slightly lower production in the first quarter, hopefully more steady production through the year. I'll turn to David Bennett, perhaps you could touch on elements such as the longwall movement schedules across some of the underground mines. I know, David, you touched on the overburden and some of the priorities that we had to have through the production schedule this year. But what can we say in addition to what we've already said with regards to the production profile and the mine-by-mine or state-by-state splits? David Bennett: Yes. Thanks, Brendan. And thanks, Paul, for your question. Look, our big mines in New South Wales, our big open-cut operations are fairly consistent with what we're expecting from them in 2026 versus 2025. There's some very small ups and downs between MTW and HVO. Moolarben open cut is basically producing exactly the same profile as what it did in 2025. In our underground operations, we're expecting extra production this year from Ashton mine. Last year, we had a big relocation from one mining domain into a new mining domain, and the longwall is in there now and producing. So this year, we're expecting quite a step-up in production from Ashton. Moolarben underground is doing a little less this year. Whilst it remains in the same mining domain, it's got an extra longwall move that will take the nominal sort of 35 days or thereabouts to do that move. So there will be a little less production from Moolarben open cut but more than offset by the extra at Ashton. So overall, from a New South Wales perspective, the volumes are very, very similar. And likewise, in Queensland, similar volumes there as well. But overall, when you put it all together, we'll do slightly more coal as per our guidance in 2026 compared to what we did in 2025. Paul Young: Yes. That's very helpful. And then last question for me is, the balance sheet is strong. It has been for a little while. You've got a number of underground projects. You're very good at developing underground. I know you've got the MTW underground approval in the works at the moment. There's a number of opportunities, I think, coming up in the market from an M&A perspective. And you've outlined a pretty positive outlook for metallurgical coal over the medium to long run in your presentation. So I'm just curious about where, again, maybe -- I know you've spoken about this in the past, where M&A fits as far as -- and how active are you looking at the moment for opportunities? Brendan Fitzpatrick: Yes. It's often one of the questions that comes up. I appreciate that one, Paul. Sharif, could I turn to you for some initial thoughts on how we're thinking about the balance sheet, internal opportunities and the broader context for capital management? Sharif Burra: Yes. Thanks, Paul. Look, we do have a very strong financial position, but noting we've also followed our dividend framework, and we have readily returned cash to shareholders. You'd appreciate international coal prices are improving. However, as we've mentioned, the strengthening Aussie dollar does adversely affect our revenue. In this setting, we are continuing to evaluate opportunities to improve shareholder value, and we will utilize our financial position once suitable opportunities are identified. We are aware of media speculation, but we don't comment on specific scenarios. What I would say is our strong financial position does enable us to explore opportunities that may arise. We are continually evaluating any opportunities in context of current market conditions. I guess it's worth noting that it is a continual process to evaluate opportunities, and we make that evaluation in the context of market conditions, as you've noted. Operator: Thank you. Yes, Brendan, back to you for webcast questions. Brendan Fitzpatrick: Thank you. I'll move on to the webcast questions. I can see several coming through. Some of them are touching on topics which we've already worked through. With the phone questions, I'll amalgamate or combine some of the questions to try and make the process efficient for all of us. Starting with a query about the reported profit. One of the people have made the observation that 2024 was a stronger year, 2025 net profit of $440 million. Should that be considered more of a mid-cycle earnings base, asking if we see downside risk to coal prices softening further. And also asking, at the current realized price, what we would describe as a breakeven cash flow. There are a few elements in there, which we wouldn't necessarily specifically comment on. But I think through the slides, we certainly demonstrated how the coal price links through to revenue, operating EBITDA and EBITDA margins. And with the cost profile we've established -- I think there's a reasonable capacity to sort of work backwards in terms of where we might get to, some sort of breakeven price. But the coal price assumptions is very much dependent upon the individual to form a view. The next question was, CapEx. We came in at $750 million at the lower end of the guidance. We did touch on this earlier, Mike, the split between sustaining and growth related. But perhaps we could just reiterate the -- what we see as the true underlying sustaining and what's the longer run reinvestment into the assets. Michael Wells: Yes. Thanks, Brendan. So also just to note, so in the $751 million, there's some $130 million of capitalized development with respect to our underground mines, which is the development done in advance of longwall extraction, which is included in that -- disclosed in the financials. Of the balance, I mean, more than 3/4 of that, certainly the majority is in relation to sustaining capital. That's sort of the level that we incurred in 2025, and that will be sort of similar going forward in the current year. Brendan Fitzpatrick: Thanks, Mike. There's a few questions related to dividend franking balances and policy. Perhaps, Kevin, we could test your thinking on these topics. There's a noted observation that franking credit balance is in excess of $2 billion. Conceptually, could sustain a fully franked dividend up over $4 billion. And there's also a general question coming through from Ian at CICC about the dividend policy. Could you give us some reiteration of the company's dividend framework and how the capital management considers special dividends in that context? Ning Su: Yes. Thanks, Brendan. From the company perspective, we try to maintain a consistent distribution to our shareholders. And following the policy, which is 50% NPAT or 50% free cash flow, whichever is higher. And that's exactly the dividend payout we follow this time. As a result, you can see a 55% payout ratio for the final dividend in 2025. It's a very good question about the franking credit balance of $2 billion. It's a very decent balance, which definitely enable us, as Yancoal, we can just keep paying fully franked dividend in a very -- for a very long period. But as a result, we will link this franking credit to the ongoing dividend payments instead of using the franking credit as a special dividend payment. Brendan Fitzpatrick: Thanks, Kevin. The benefit of a real-time webcast and market data is we can see the share price reaction. We have a question coming through that makes the observation that the share price is down about 10% today since market open and asking for a thought process on how we observe the equity market reaction and how we link that back to the priorities of dividends and other opportunities that the company might be considering in the short, medium and longer term. Sharif to start and then perhaps Kevin to follow up. Sharif Burra: Yes. Thanks, Brendan. I think if you look at the fundamentals, Yancoal had an exceptionally good year last year. We operated more safely, more productively and the discipline in our operations is certainly there. Yancoal is in a very fortunate position of being a very good coal miner with some very strong assets, and that certainly lays the foundations for Yancoal to explore certainly other opportunities. Ning Su: Thanks, Sharif. I think quite importantly, it's about how we look at the yield and how we look at the share price and how we plan from a capital management perspective to set the right discipline internally for the company to grow. From company perspective, we have to balance the growth, dividends and then potentially debt management, which fortunately enough, Yancoal has fully repaid all the loans 3 years ago. And now between the growth and the dividend, yes, normally, as a company, we do not keep 30% cash. I think that's a really good observation. But as a company, as Sharif just mentioned, we just need to have the right mentality to look at different opportunities. However, we are not in the position to give any comments to such opportunities, but we do want to have such flexibility to pursue value-accretive opportunity, which we believe is in the long-term interest of shareholders. And then we're still very strictly following the policy as I just mentioned previously, which is 55% payout ratio, we feel is a fair payout ratio for the year. Thanks. Brendan Fitzpatrick: Thanks, Kevin. I see Peter from CICC has been able to rejoin the call. Maggie, could we come back to you and find out what Peter was able to hear or not hear when he asked questions earlier? Operator: Yes, no problem. Just a moment for Peter. Next we have... Unknown Analyst: I'm sorry, my connection... Operator: Please go ahead, Peter. Unknown Analyst: Yes. I'm sorry, my connection just dropped when you talked about the cost guidance changes. I just want to confirm what portion of the upward revision in the cost guidance would you attribute to the inflationary pressures compared to others? Brendan Fitzpatrick: Yes. Thanks, Peter. We covered it whilst your line was out, but perhaps just to take the opportunity, if Mike could recover that inflationary element within the unit cost guidance? Michael Wells: Yes. Thanks, Peter. So essentially, our 2 major costs within our operating costs relate to labor costs and maintenance costs. And both of those would be expected to face inflationary headwinds in the current year, with our labor costs underpinned by enterprise agreements covering the majority of our site employees. And similarly, we'd expect some increases in maintenance costs being passed on by the OEMs during the year as well. After that, we get more into the commodity type pricing area, of diesel, electricity, explosives and things like that, where the position and how that will play out in the year is less certain. So safe to say there's certainly some inflationary costs will be embedded in our cost profile in 2026. And as we touched on before, the expectation is that we'll be able to offset to some degree -- some of that through further increases in production volumes as well as further productivity initiatives. So hopefully, that gives you a bit more flavor around how we see the cost in the current year. Operator: I see no further questions at this time. Brendan, back to you. Brendan Fitzpatrick: Thanks, Maggie. There's a follow-up question on the dividend policy topic. One of our participants asking if there's the potential to refine the dividend policy, potentially catering to noncash items or impairments and hence, adjusting payout ratio parameters. Kevin, can you give some thoughts on that topic? Ning Su: Sure. This is a very good question. I think one thing we should have elaborated more is, what I just mentioned, 50% NPAT or 50% free cash flow is all pre-abnormal items, which means all the noncash item or the normal items will be excluded. As a result, -- that's the reason why you can see a 55% payout ratio instead of strictly 50% payout ratio. And that's caused by the NPAT. Adjusted NPAT number is better than the adjusted free cash flow number. But I think that's a very good question. It's a good opportunity to clarify that. Brendan Fitzpatrick: Yes. And perhaps also worth clarifying that the policy is not rigid, the Board has discretion within the allocation parameters. One of the questions coming through relates to reserve depletion and how do we -- how does management think about reserve depletion and what should investors look at in terms of lead indicators for managing the coal reserves. I know that we've just published our reserves and resources statement alongside the financial results. There was some mining depletion as would be expected on an operating basis. But beyond that, it's a fairly steady-state reserve and resource basis with some specific adjustments for recalculation of geology. But perhaps a broad comment on how we think about the long-term reserve profile. Sharif Burra: Yes. Thanks, Brendan. Obviously, previously in the call, we mentioned the Mount Thorley Warkworth underground project, which we're progressing through the study stages. And the intent is subject to those studies, is to bring another underground mine online over time. Also, we regularly look at all of our assets and through our life of mine planning process, seek to optimize and further extend or take advantage of the assets in and around what we have. And the other arm to that is obviously the nonorganic opportunities that may present themselves over time. Brendan Fitzpatrick: Thanks, Sharif. Question coming through related to our coal sales. Somebody is interested in knowing if we have fixed price contracts with customers for this calendar year, what percentage is fixed or variable pricing and is that anything that changed from 2025 in terms of the contract status. So Mark, what can we say without giving away our commercial position? Mark Salem: Yes, sure. I understand, Brendan. Look, in terms of our price strategy, we always apply a risk mitigation strategy, and we also ascertain the market movement. We know prices declined in 2025, and we did see some recovery in -- so far in January, February and towards the end of 2025. And so we're always modifying our pricing strategy to reflect that in terms of what portion of sales that we do on a fixed basis versus a variable basis or based on the indices. And we apply a lot of rigor in terms of that strategy as well. Brendan Fitzpatrick: Thanks, Mark. I recollect that last year, we had a slightly higher than normal volume committed through the calendar year, which left us somewhat protected or less vulnerable to volatility in prices. Is it a similar approach to this calendar year? Can we say anything about that? Mark Salem: It is a similar approach. We are definitely focused on maintaining and capturing market share from a volume point of view. So in terms of our volume position, we're very well contracted going into 2026. And a lot of that is based on index profile. Brendan Fitzpatrick: Thanks, Mark. There's a follow-up question from Eunice at Millennium, wanting to check on that comment about the FX exchange losses, looking for some clarification on how we manage our costs and handle FX risks. So Kevin, perhaps I could turn it to you for a comment on FX exposure and how we think about it and manage it. Ning Su: Sure. If I understand the question correctly, it is about the foreign exchange impact on the cost side. Largely, the cost is in Aussie dollars. As what Mike just mentioned, the biggest portion is labor cost and also our maintenance cost. We do have some small portion U.S. dollar-linked cost exposure, which is something we can share with the investors. Yancoal's revenue largely driven by the U.S. dollar-linked indices. So as a result, we can always keep some U.S. dollar currency to reserve them and pay out of pocket for the U.S. dollar expenses. So it's a natural hedge itself. Thanks. Brendan Fitzpatrick: Okay. And Perhaps, Kevin, a question that might have some relation to that topic. It looks like the question is asking about the $2.1 billion we have in cash, and it seems to be asking about what sort of returns we get on the cash that we hold on the balance sheet. Ning Su: Yes. If we look at the sizable cash deposits, we have been very diligently to put them into term deposits to maximize return. A high-level indicative return is about 4%, plus/minus. Yes. Brendan Fitzpatrick: Thanks, Kevin. We're just coming towards the end of the hour that we've allocated. I see one final question. We'll take this one. It does link back to some of the discussion we've already had that perhaps it's an appropriate place to close out the call. Share price seems to be indicating that the dividend has disappointed investors. The question is, in our opinion, does this mean investors need to change the thought process towards Yancoal and the way the company approaches dividends? Or conversely, has Yancoal and the market diverged in terms of the current expectations in the short term and what value -- or how do we see value being generated going forward? So Kevin, could you give us your thoughts once more on how we prioritize dividends, capital management and that longer-term growth thought process? Ning Su: Sure. It's a very good question, and a way -- we fully respect the concern from the investor expecting higher dividend return, which is very understandable. And then from a management perspective, many executives holding Yancoal shares as well. So we fully appreciate the sentiment. But I think back to the position we shared earlier, first of all, the dividend is a part of profit. So to have very high dividend, we do need a good profit to support the dividend. And that's the point we made earlier, 55% payout ratio, managing all the capital -- CapEx and an uncertain market, we feel 55% payout ratio is a reasonable fair ratio. But at the same time, we also want to make this clearer. We do hold very substantial amount of cash. And then this is following Yancoal's management -- capital management discipline, which we have to balance between the value-accretive growth opportunities with rewarding our shareholders. And we, as a management team and from a Board perspective, try to do our best to maintain such a balance. We fully appreciate your understanding. Thank you. Brendan Fitzpatrick: Thanks, Kevin. We're at the end of the hour allocated. Sharif, could I hand over to you to provide the closing remarks? Thank you. Sharif Burra: Thank you, Brendan. 2025 was truly a year of great operational performance for Yancoal. We set world records at 2 mines and delivered record coal production. These achievements demonstrate our leading technical and operational capabilities. I believe we have some of the best assets in the industry and that our scale and competitive cash costs drive our performance. The guidance Kevin provided shows we're looking for further gains from our assets. We have a strong net cash position and continued access to debt markets. This provides considerable financial flexibility. We continue to reward our shareholders with fully franked dividends. We remain focused on what has made Yancoal the second largest coal producer in Australia, that's maximizing production, keeping costs under control and a balanced allocation of capital. We look forward to giving you our next update on the 21st of April after we release our first quarter production report. Thank you to everyone who joined us on the call. Have a great day. Brendan Fitzpatrick: Thank you, Sharif. Maggie, could you conclude the call, please? Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.