CHAIRMAN’S OVERVIEW The pool price result for the 2002/03 season of $276.70 per tonne IPS was a reduction from the previous season ($331.60 per IPS tonne). Total sugar production rose by over 700,000 tonnes to 4.95 million tonnes aided by the improved growing conditions and CCS levels, particularly in the Northern Region. Payments to industry for the 2002/03 financial year totalled $1.383 billion compared to $1.482 billion for the 2001/02 financial year. Again, the accounts for the year have been signed off by the auditors as being unqualified. It was a volatile and difficult year clouded by uncertainty in international markets and in Australia, particularly with fluctuating currency rates. Although below the average level of recent years, the result by financial year-end was better than was likely earlier in the year and above the various measurements used to gauge performance. This outcome stemmed from the dedication, patience and skills of the executive and key market operatives in selling, pricing and currency, and operations activities. As this is a report of the marketing company, it is inappropriate to discuss at length the concerns in the industry surrounding discussions on the subject of possible industry reform and restructuring which has been ongoing for months, other than to comment that in periods of prolonged uncertainty, quality people throughout the industry will reassess their positions. The improvement in the performance of the bulk sugar terminals is noteworthy as has been the efficient management of the pool arrangements. It is very pleasing to report very good outcomes

in respect of occupational health and safety, compliance, environmental issues and corporate E G PA governance. I have said it often before but I say again, the industry is indeed fortunate to have a CEO of the calibre of Ian White, ably supported by the management team. 01 Harry Bonanno retired as a grower director at the 2002 Annual General Meeting after two years on the company’s Board and a long involvement with the industry. Graham Davies retired as mill owner representative in January 2003 after serving as a director of the company and before it with QSC since August 1997. We thank Harry and Graham for their contribution to the company. We also welcomed Russ McNee and Eddie Westcott to the Board during the year. Concurrently with the day-to-day activities, international trade matters have been vigorously addressed. There are three distinct tasks, albeit interrelated, at the end of the day, whenever that might be. Firstly the macro WTO issues, secondly the challenge by Australia, Brazil and Thailand to some aspects of the EU sugar regime and thirdly, discussions under the banner of an Australian-USA Free Trade Agreement. One has to be mindful in respect of WTO and FTA issues D E T I M I L R A G U S D N A L S N E E U Q that there is a proliferation of bi-lateral free trade discussions going on all around the world. In all these trade discussions our stance is unequivocal. Sugar must be treated equally and fairly along with all other commodities/products. Given the competitive pressures the sugar industry has in the international markets, it is imperative Australia, both government and industry, continue to pursue these trade goals albeit often time consuming and frustrating. There is no sustainable, intellectually honest argument not to include sugar equally and fairly. 3 0 0 2 - 2 0 0 2 T R O P E R L A U N N A As this is my last annual general meeting as Chairman of Queensland Sugar Limited, I take this opportunity to thank all those who have helped and supported me during my time in the industry. The international competitive pressures will continue and given Australia, in absolute and relative terms, has limited or nil support for industries, the sugar industry in Australia has only one way to go if it cannot step up and compete in the world markets. I wish the stakeholders in the industry good fortune; the outcomes and a sense of urgency are in your hands.

RB Vaughan AO Chairman Salary and employee benefit costs reduced by 6.4% in addition to 4.7% 2001/02’s reduction of Total staff numbers reduced during equivalent basis the year by 4.1%, from 170 to by 12.2% (excluding sub-lease rental) Bulk sugar terminal operating expenses reduced 163 on a full-time increase 17.6% production by only 3.1% despite selling expenses increased Direct • • • • comprehensive review of review customer comprehensive sugar This quality has requirements. led to a market- revised driven Raw Sugar Quality Scheme which has been introduced for the work with 2003 customers season. also provides Technical Queensland with an additional point of differentiation in our marketing strategies. is a commodity market characterised by a relatively small number of reliable buyers and sellers. Our primary strategy continues to be to differentiate the the Queensland“Queensland package” and maintain product access to reliable onmarkets. This revolves the around close basis of working relationships with customers regarding their sugar needs, producing and supply chain. and operating an efficient delivering superior quality product consistently This year, with the assistance of industry technical experts, Queensland Sugar undertook a The building of an additional 400,000-tonne capacity sugar storage facility at Townsville by Sugar by Townsville at facility storage sugar capacity 400,000-tonne additional an of building The Terminals Limited is nearing completion. This facility will provide us with increased flexibility in marketing, selling and pricing strategies, and will be available to receive 2003/04 season sugar in September. The global tradeable raw sugar market, in which Queensland Sugar is a significant participant, Operationally, Queensland Sugar had a successful season process for of 2002/03.continuous Queenslandreview Sugar’s includes targeting ongoing removed during cost 2002/03 to reduction.consolidate on Furthersavings achieved costs through the were company’s formation Notably these included: operational restructures. management and and recent increasing increasing ethanol demand in Brazil and an early finish to the 2002/03 CS the end of 2002. tone towards positive market adopt a more Brazil crop saw the Similarly, toward the end of increase managers fund saw calendarThis Iraq. in war of prospect significant the was there and expected, year 2002, world economic their growthspeculative position wasas they moved slowermoney from equities than to commodities, helping provide liquidity to the NY11. improved When the 2002/03 season commenced the price outlook was poor. A tradeable surplus of raw sugar continued to overhang the market, largely from a long tail to the anticipated Thai by crop the that market and was a not big forecast crop then in progress in Centre South (CS) Brazil. September/October Toward 2002, a more positive sentiment began to emerge with speculation that some new crop estimates were overly optimistic. A general tightening of physical supply, Queensland Sugar was able to take advantage of movements in these markets to return a pool price of $276.70 per IPS tonne for the season. This produced an overall net revenue of $1.419 season pool. billion for the 2002/03 The production increase, despite continuing dry conditions in some regions, consolidated on the 2001 season recovery. As the harvesting and crushing season progressed, it became apparent cane was cutting better than estimated with high CCS levels. that even in the drier regions, raw sugar production reaching 4.95 million tonnes actual, up from 4.21 million tonnes actual in 2001/02. Although sugar prices showed some during recovery the quarter third of calendar year levels at the start of the season, Australian the dollar depressed (AUD) values dropped 2002 from back towards the end of the season as the New the Australian dollar strengthened. (NY11) fell away and York Number 11 raw sugar futures contract Despite the significant volatility in NY11 values, physical premiums and the Australian dollar, CHIEF EXECUTIVE’SThe 2002/03 season saw an increase in productionREPORT in most areas of Queensland with overall

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ANNUAL REPORT 2002 - 2003 02 PAGE QUEENSLAND SUGAR LIMITED ANNUAL REPORT 2002 - 2003 03 efineries. Continued to differentiate Queensland’s sugar on the basis of the “Queensland Package” Queensland’s Continued to differentiate to technical visits to customers Continued co-operative approach Sales revenues for 2002/03 financial year were down $72.74 million (4%) to $1.584 despite a billion, 16% increase in volume. This reflected generally lower raw sugar prices during the period Successfully marketed increased tonnage and expanded market share to key customers in primary markets Placed additional tonnage to primary customers in the non-crushing period Worked closely with customers to consolidate previous sugar quality work to determine the most mutually beneficial products • • • • • • Key outcomes as the industry-owned marketing and supply chain management company capable of operating successfully in changing world and industry environments. MARKETING As the marketing company of the Queensland sugar industry, we are relentless in our objective to optimise revenue through our marketing, supply areas. are chainWe also examining likely future alternatives management,for the development of Queensland Sugar treasury and finance Direction on domestic market pricing.governmentQueensland the announced 2003 has September 10 On affected. be could company If passed, some current until at least 1 January 2005. that this legislative change will not come into effect marketing activities of the legislative amendments to the Sugar Industry Act were introduced into State Parliament during early 2003. The proposed changes would establish a process to permit exemption from vesting sugar for domestic markets and other uses. The legislation would also remove the Ministerial Economics (CIE) commissionedannouncement by Governments of a bySugar Industry Reform Program which included assistance the State Government.to address shortThese andhave long-termled needsto theand jointthe removal of regulatory impediments. Draft The commencement of the 2002/03 the seasonCommonwealth Governmentsaw and the there releasehas been ofa reportthe by Hildebrandthe Centre Reportfor International by the Australian dollar rise considerably. the Australian dollar rise considerably. Given current market factors, the 2003/04 season pool price is unlikely to exceed that achieved for 2002/03. Thai crop and a big CS Brazil crop in progress are manifesting themselves physical in market. an oversupplied The continuing strong performance of the Australian Australia/US interest economy rate differentials coupled and with a widening slow US have economy, seen the value of Toward the end of the 2002 conspired financialto erode potential year, Australian fallingdollar returns NY11for the values2003/04 season. andAnother record a strengthening AUD C.Czarnikow Limited, our longstanding broker, and Simpson, Spence and Young, our shipping the year. both continued to ably assist our operations throughout broker, Outlook months prior to expiry, for the relevant contract months for of the July 2003, relevant 2002, October 2002, March months prior to expiry, May 2003, brought to AUD using the weekly hedge settlement rate, and adjusting for handling value of $252.01 per IPS tonne. and US quota benefit, gives a comparative and storage costs Overall, the pool price result of indicator $276.70on an equivalent per basis. Using IPS the weekly tonne average NY11 comparescontract price, favourablybeginning six with a simple 2003/04 season will see similar milestones as we reach 30 years Contract of sales Long to Term the Malaysian Government. Calendar year 2004 will witness the 50th anniversary of our first sale Malaysian r anniversary of the first sales to to Japan and the 40-year maintaining maintaining and recognising mutually beneficial longstanding relationships with our customers. 2002/03 season was very significant and witnessed the celebration of 30 years of dealing in Korea. our customers with This past season, Queensland has continued its long history, and key strategic platform, of 2001 2002 Middle East Asia Australasia 0% 70% 60% 50% 40% 30% 20% 10% Consistent quality to meet customers’ individual needs Consistent quality to meet customers’ sugar terminal operations Reliable delivery via shipping and bulk Developing long-term relationships assistance Focus on end user and operational/technical Flexibility • • • • • continues to offer the greatest value to the Queensland sugar industry in terms of volume and net and volume of terms in industry sugar Queensland the to value greatest the offer to continues returns. It is the area where Queensland Sugar places the greatest volume and has experienced in tonnage. increase the greatest Regional marketing mix expand and regain market share in our primaryreduction in 2000/01 season. Increased production marketsenabled us to maximise relative followingsales to key the significant production and North America. Asian markets whilst maintaining sales levels to Australia, the Middle East Our key marketing focus continues to centrecustomers around primarilythe long-termin the relationshipsAustralasian with ofand major accessFar to East the markets.preferentially Outsidepriced Unitedof Statesthe sugarsmall market, degree the Far East Asian region Domestic sales continue to be made the on sugaran exportprice parity directionpricing basisCommunities. from in the accordanceQueensland with Minister for PrimaryOur markets Industries and Rural Queensland Sugar consolidated on progress made during the previous 2001/02 season to physical market and a lower price outlook. optimising returns to the industry. Access to our primary markets will be crucial in Queensland Sugar continues to differentiatefollowing principles: customers and concentrating on the itself in the market place by selling direct to provided the opportunity to consolidate on technical visits which understandinghad facilitated an increased of our customers’segments. needs and of their requirementsIn addition, Queensland forSugar continuedindividual to evaluate returns to producers. an opportunity to enhance markets that may provide emerging marketand alternative products and oversupplied an with season, marketing difficult a as up shaping is 2003/04 future, the to Looking be to optimise our marketing mix by increasing tonnage markets, while placed leaving sufficient to flexibility primaryto take customersadvantage of in opportunistic sales key when and if the market allowed. Higher production enabled betterbeneficial servicing customer-relationships of year-round continue customer to beneeds, a andQueensland mutually strength. 2002/03 season Queensland Sugar welcomed the challenge of rising production through afterthe crushing severalseason seasons of Queensland restricted sugar, despite an oversupplied availability.physical market. Our Therekey objectives wascontinued to continuing strong demand for

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ANNUAL REPORT 2002 - 2003 04

PAGE QUEENSLAND SUGAR LIMITED ANNUAL REPORT 2002 - 2003

05

Jun- 03 Jun-

May - 03 - May

Apr - 03 - Apr Mar - 03 - Mar

e Feb - 03 - Feb

Jan - 03 - Jan Dec- 02 Dec-

AUD Spot Rat Nov- 02 Nov-

Oct - 02 - Oct

Sep - 02 - Sep

Aug - 02 - Aug Jul - 02 - Jul

0.52 0.68 0.66 0.64 0.62 0.60 0.58 0.56 0.54

Jun- 03 Jun-

May - 03 - May

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Jan - 03 - Jan

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NY11 Prompt Futures

Oct - 02 - Oct

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Aug - 02 - Aug Jul - 02 - Jul billion compared to the previous season’s $1.446 billion season’s to the previous billion compared 2002/03 season marked the first season of operation of the Call Pool pricing scheme. Under this qualifying facility, producers make their own pricing decisions within the pooling system pricing performance. company’s to the with a neutral effect Borrowing rate of 4.92% per annum achieved on commercial paper on commercial rate of 4.92% per annum achieved Borrowing borrowing our on (long-term) AA and (short-term) A1+ of rating Poor’s & Standard Maintained program 70% of total 2002/03 seasonal payments were made to producers by 31 December payments Total 2002. to Queensland sugar producers decreased by 2% or $27 million to $1.419 Pool returns of $276.70 per tonne IPS delivered Pool returns of $276.70 • • • • • 6.00 5.50 5.00 7.00 6.50 8.50 8.00 7.50 9.50 9.00 likely unless a supply side issue pushes the market out of this range. increases in both Thailand and Brazil, however, this has been production in offset Cuba, somewhat Australia and by South decreased Africa. NY11 values in the US6-8c/lb range are most Looking forward, NY11 prices are expected to remain under pressure following significant crop blend total in gasoline Brazilian is has crop to expected increased to 25% 20%. from This year’s be a record 340 million tonnes of cane and sugar exports are again expected to be around 13.0 million tonnes. Early season CS Brazil production concentrated on fulfilling the domestic ethanol requirement. It appears that this demand has now been met and the government mandate for the ethanol production production for 2002/03 hit a record 74 million tonnes of cane, well above market expectations. This production increase was the catalyst for the decline in prices during the second quarter of 2003. Prompt Prompt prices peaked at just above US 9.00 c/lb in mid-February 2003 on a forecast shortfall in Brazilian ethanol production and a speculative sector long position of around 115,000 contracts. Sentiment began to turn bearish in March 2003 as news of a record Thai crop surfaced. Thai crop crop of 272 million tonnes of cane in the 2002/03 Season. NY11 prices physical tightness in on a forecast the end of calendar year 2002 as the outlook improved toward gradually appreciated the first half of 2003. Returns NY11 prices began the financial year trading below US 6.00 c/lb following a record CS Brazil TREASURY AND FINANCE TREASURY Key outcomes and was delivered to a range of domestic and export customers. and export customers. to a range of domestic and was delivered As part of the ongoing commitment to working with the industry in the area of new products, we raw sugar. for organic of export markets the development assisted with Dedicated Dedicated production of Queensland High Pol (QHP) continued from two of Queensland’s mills

Jul- 03 Jul-

Jun- 03 Jun-

May - 03 - May

Apr - 03 - Apr

Mar - 03 - Mar

Feb - 03 - Feb

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Dec- 02 Dec- Nov- 02 Nov- s

te Oct - 02 - Oct ra

r te 02 - Sep ar

ch Aug - 02 - Aug me

ti x 02 - Jul ma Handymax timecharter rates y nd Ha

$8,000 $6,000 $4,000

$14,000 $12,000 $10,000 USD per day per USD Achievement of a 12-month period free of lost time injuries Achievement of a 12-month period free 15.5% increase in tonnes handled through the bulk sugar terminals to 2001/02 season 4.00 million tonnes during from 4.68 million tonnes 27,398 tonnes to 28,236 tonnes size by 3% from in average cargo Increase Finalisation of the Raw Sugar Quality Scheme review Sugar Quality Scheme for 2003 season and implementation of a new Raw Construction of an additional 400,000 tonnes of storage at Townsville bulk due for completion in September 2003 sugar terminal • • • • • rates for Handymax size vessels more than doubling through the below). year (as shown in the chart Increased Increased production saw a commensurate increase in exports and ship chartering. Chartering during 2002/03 season consisted of a total of 155 ships, an increase of 17.4% from 2001/02, of which 136 were for export. Average cargo size increased to 28,236 tonnes continuing the trend for more of our exports to be handled by larger 40,000 mt capacity is now an optimal size for many markets. ships. The Handymax size vessel of around Rates in the freight market rose significantly through the 2002/03 with financial timecharter year, Operations Looking forward, the positive interest rate as differential well as domestic economic strength will continue to support the AUD. The AUD is expected to give back some of the recent gains once of a recovery. the US economy shows significant signs CHAIN MANAGEMENT SUPPLY Key Outcomes recovery recovery in the US. This, in turn, led to a widening of the returns interest rate availabledifferential. The in higher Australia provided an enticement to support internationalthe local upsurge. currency’s investors After breaking andthrough resistance at served AUD/USD 0.6000 to in late February 2003, the AUD continued to appreciate reaching as high as AUD/USD 0.6737 near year. the end of the financial 16% relative to the US dollar over the period. The strong gains were attributed to strength in the Australian economy as well as a widening of interest rate differentials between Australia and the US. The AUD has risen close to 9 cents against the per IPS tonne in possible pool returns. $38 around USD in the past year accounting for a fall of Australia’s strong economic performance throughout 2002/03 has contrasted with the patchy Australian Dollar Australian The Australian Dollar appreciated strongly during the 2002/03 financial year, gaining around

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ANNUAL REPORT 2002 - 2003 06 PAGE QUEENSLAND SUGAR LIMITED ANNUAL REPORT 2002 - 2003 07 Brisbane, 22 September 2003 DI R E C T O R S IAN WHITE Chief Executive in and is a result of continued effort throughout the company to strive for improved safety. the company to strive for improved throughout of continued effort in and is a result during the year. On 20 May 2003, the bulk sugar terminals reached a significant safety milestone in achieving a twelve month period free of lost time injuries. This is an achievement we can all take great pride Workplace Health & Safety Workplace health and No safety lost continues time to injuries recorded be Workplace were a major priority. Amdel Ltd continued to provide analytical services to Queenslandsugar laboratory Sugar. During was the relocated year, from its to Brisbane in analytical services. reliable order to provide more timely and representatives were also able to assist customers with for use in their refineries. product sugar brands and selecting the optimum their understanding of Queensland’s staff from Queensland Sugar accompanied by technical representatives These from visits improved supplyingthe understanding company’s of customer mills. quality requirements and have led to some further tailoring of sugar quality to meet individual customer needs. The technical This review has facilitated the implementation of a more beyond. Scheme for the 2003/04 season and market focussed Raw Sugar Quality As part of the quality review, discussions with customers and site visits were conducted with Reliable and consistent quality continues to be a priority of the Queensland sugar industry and a key component of the “Queensland Package”. Queensland Sugar, in consultation with industry participants, completed a review of the Raw Sugar Quality Scheme during the 2002/03 season. adapt its marketing mix dependant on market conditions. adapt its marketing mix dependant on Quality Queensland Sugar continues to work closely with Sugar Limited, Terminals as its agent, in constructionthe of increased storage at Townsville bulk sugar terminal. completed during This the 2003/04 crushing facility season and iswill greatly enhance due the ability industry’s to to be average basis. The integration of weightower and gantry systems control to enhance shiploading and efficiency was Mackay This completed terminals integration in this is Townsville year. now in sugar terminals. place at all the bulk tonne were 12.9% below last financial year. tonne were Shiploading rates increased from 1,746 tonnes per hour to 1,774 tonnes per hour on a weighted The bulk sugar terminal operational and management restructure implemented during the 2001/ 02 season continued to flow through to realise cost savings. Bulk sugar terminal operating costs (excluding lease rental) were reduced by 12.2% from the previous costs financial Total per year. degree degree from the rapidly increasing market. Forecasts are that the firming of rates the freight will market continue and Queensland Sugar has progressively rise. to mitigate this expected available, been taking freight cover, when Fortunately much of the company’s freight was booked freight ahead of this Fortunately rise, much shielding of us the to company’s a large Long Service Leave) Authority,of a director Queensland Corporation Electricity and QueenslandLimited. Transmission MotorwaysShe is Queenslanda formerSugar Corporation. director Appointed of 24 December the1999. Lives in Brisbane. Age 52. chairman of Organisation Queensland Limited Canegrowers and Canegrowers the Council. Australian He Canegrowers isHerbert River chairman District, Herbert of River Harvesting Equity Committee, Herbert River Mill Suppliers’ Committee and Herbert River Canegrowers Co-operativeHe is Society.also a member of the SugarDevelopment Advisory Council, Herbert IndustryRiver Cane and Board Production the Herbert River Negotiating Team. He is a offormer director the QueenslandAppointed 24 Sugar DecemberIngham. Age 55. Corporation. 1999. Lives in FAICD Sarah A Israel BBus FCPA Sarah Israel development regional and banking investment has widein both the private and public sectors. She is experience a director of in Export Finance and InsuranceCorporation and Skytranshas Airlines. also been Building She and Construction deputy Industry (Portable chairman of the and chairman of Sugar North Limited. He is a former director of the Queensland Corporation. Sugar Appointed 24 December 1999. Age 61. district. Tully Lives in the Alan H Cole Alan Cole has extensive aspectsexperience of sugarin caneall production. grower A incane the South Johnstone area,a he directoris of QueenslandOrganisation Cane Growers Canegrowers Limited, Innisfail District and a member Chairpersonof the South of Committee, Johnstone South Johnstone Mill Improvement Shire Suppliers’ Trust River and SouthNegotiating JohnstoneTeam. He is a offormer director the QueenslandAppointed 24 Sugar December South Johnstone. Age 69. 1999. Corporation. Lives in Alf F Cristaudo Alf Cristaudo hasin the extensive cane experience industry. He is senior vice to be involvedindustry committees. in He variousof is Tully the Sugar chairmanLimited, local a deputy of chairman sugarAustralian Sugar Milling Council Limited Rino Cargnello FAICD Rino Cargnello Involved in the sugar cane1961, industry Rino since Cargnello wasBoard of the Co-operative Tully Sugar Milling elected to the Association Limited in 1971 and continues Queensland Cotton’s operations, Australianwas managing director and chief and US executive officer of Defiance Mills andLimited, was the chiefLimited. Appointed executive17 April 2000. ofLives in Brisbane. Age 53. Grainco commodity sector both in Australia and North America. He is a director of the World Sugar Research Organisation, a Sugar memberIndustry ofDevelopment the and CouncilAdvisory and a member of theCompetition Authority. He Queensland previously headed Ian White BEcon (Hons) CPA FAICD Ian White BEcon (Hons) CPA Executive and Chief Managing Director Ian White hassenior management extensivelevel in the agricultural experience at Limited. He has also been a director of ANZ Bank, Dalgety PLC () and Tubemakers Limited. He was a founding member of Business the Council of Australia and served for 10 years. Appointed 24 Age 75. Lives in Sydney. December 1999. Assurance Company and the Australian Wool Realisation Commission, vice of president the Australia-Japan Co-operation Committee and a member of the Australia-Japan BusinessForum, and chairman and ofchief Dalgety executivein Australia and Dalgety Farmers He is a former chairman Limited,of MIM Holdings the Federal Policy Government’sAdvisory Council and ICI Limited, and Trade the Queensland Sugar Corporation. He has been deputy chairman of Australian Meat and Livestock Corporation, Commercial Union Alliance for Sugar Trade Reform and deputy Chairman of Transgrid. He is a themember of Advisory Board ofInternational and Business president and chairman Catalyst of the Institute Research for Asia and the Pacific of Sydney. within the University Bruce Vaughan AO Chairman AO Bruce Vaughan Bruce Vaughan is chairman of the Global

PAGE QUEENSLAND SUGAR LIMITED

ANNUAL REPORT 2002 - 2003 08 PAGE QUEENSLAND SUGAR LIMITED ANNUAL REPORT 2002 - 2003 09 He has previously served as a Canegrowers Board Director from currently 1998 the -Invicta Grower 2001 Representative and Member with is Queensland Sugar. Appointed Age 55. 21 January 2003. Lives in Clare. Charles E (Eddie) Westcott Eddie Westcott was appointedof Mackay Sugar Chairman Co-operative Association Limited following its 2002 MeetingAnnual (previously GeneralDeputy Chairman since 1998) and is a Director of Australian MillingSugar Council Limited. AppointedFebruary 2003. on Lives 19 in the Sarina District. Age 55. Geoffrey E Mitchell AO Geoffrey Geoff Mitchell Sugar Bundaberg Ltd, Chairman of Australian is managing Sugar directorMilling Council Limited and a member of of the Food and Agribusiness Advisory Board of Rabo Australia Limited and PIBA. He has been a member of the Business Council Australiaof and has held theboard sugar positionsindustries in of China asand directorVietnam of Tate and Lyle and Swire Nghe An Limited Tate and Lyle Sugar Company Limited. He is a former Limited Terminals and the directorQueensland Sugar of Sugar Corporation. Appointed 28 July 2000. Lives in Brisbane. Age 60. Russell K McNee Russ McNee isInvicta area a and is cane currentlyCanegrowers Invicta, a farmerposition Chairmanhe has held of in since 1998. He is also Chairman of theBurdekin River Irrigation Area Committee and Deputy Chairman of Queensland Irrigators Council. Products Products Division. He is a former director of Sugar Terminals Limited. Appointed 28 July 2000. Lives in Brisbane. Age 55. with BHP including group general manager Hot Briquetted Iron, president and BHPgroup generalChina manager Sheet and Coil Australia Pty Limited, New ZealandLimited and SugarC. Czarnikow Limited. He held has a range of senior management positions Ian M McMaster BE ME Ian McMaster is the chief executive of officerCSR Sugar. He is also director of Sugar District Executive. Appointed Age 50. 2000. Lives in Gordonvale. 16 October Experiment Stations, was an elected member of Mulgrave Mill Suppliers Committeedeputy and chairman of Canegrowers Cairns Association, Sugar Terminals Limited, and the Association, Sugar Terminals Queensland Rural Adjustment Authority. He is a former director of the Bureau of Sugar Warren Martin is Australian a Cane Farmers former Association,is chairman and a director of of Australian Cane Farmers Warren Martin Dip Man MBA MAICD Warren Managing Director of the Ricegrowers group. Appointed 23 July 2001. Lives in Canberra. Age 56. Supermarket to Asia Council, and a member of the Trade Policy Advisory Council.13 years, For he was Chief Executive Officer/ Australia Limited, and Golden Craig Mostyn Circle Ltd. LimitedHe executivewas previously director of the Prime Ministers strategic marketingmanagement. He and is a Limited,director financial Agri of ChainTandou Solutions riskLimited, BRI FAIM Jim Kennedy has extensive commodityexperience trading, in food product exports, James R Kennedy B Comm Dip Ag Ec Kennedy B Comm James R - meet ethical and corporate governance standards promoting the good health of corporate governance the company by embracing appropriate and goals strategic direction setting the organisation’s issues of good and budgets performance targets policies, plans, and approving reviewing assessing ongoing Queensland performance Sugar’s and strategies and monitoring both the and the performance of management suitability of strategies to: systems to, appropriate of, and adherence overviewing the establishment business and financial risks to be managed - enable the company’s assets to be safeguarded - enable company’s compliance with laws and regulations - enable business to be conducted in • • • • • reimbursed reimbursed travel and related expenses incurred in the course of carrying out their duties. Non- executive directors do not receive benefits retirement other than amounts set by the compulsory Guarantee Act. under the Superannuation superannuation levy required Remuneration of directors Queensland Sugar Limited’s constitution requires that the aggregate executivefees to directorsbe paid to be non- set by were the agreed with companythe sugar inindustry representative generalbodies, based meeting.on determined remuneration by previously Thethe Queensland initialGovernment for aggregatethe Queensland feesSugar subsequentlyCorporation, and were confirmed at the company’s annual general meeting in 2001. Directors are set by the chairman and chief executive. The as Commissioner, the board chairperson of meetsthe Sugar Authority quarterlyunder the Sugar with Industry Act 1999, the to Sugar Industry issues. industry-related discuss current New directors receive comprehensive briefings from management on all areas of the company’s activities. Directors receive monthly reports from thecompany’s marketing, chief operational, executivefinancial, and and financial seniorrisk managementmanagement these performance reportson and the are discussed at the consumption monthlyand sugar board production patterns, meetings.and governments’ involvement The around boardthe world, also to reviewsidentify sugar strategies to optimise returns to the Queensland industry. Meeting agendas are independent of sugar industry representative bodies. independent of sugar industry representative Non-executive directors act as independent advisers to the company, rather than representing their own interests or those of their organisations. If a potential the director conflict concerned does not receive of the relevant board papers and interest leaves the meeting room does arise, while the matter is discussed. The work of the board The board comprises 11 non-executive directors together with the chief executive who, the under company’s constitution, is the managing director. Under the directors company’s constitution, are elected four by the grower representative members; four members;directors by andthe mill at owner least three directors,expertise in other commoditythan marketing,the finance,chief executive,vesting, law must or havebusiness specificadministration and be Queensland Sugar Limited’s activities are consistent with the Sugar Industry Act 1999. consistent with the Sugar activities are Queensland Sugar Limited’s Composition of the Board The Queensland Sugar Limited board is responsible for strategic setting direction the company’s performance. senior management and monitoring functions include: The board’s CORPORATE GOVERNANCE of the Board The Role

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ANNUAL REPORT 2002 - 2003 10 PAGE QUEENSLAND SUGAR LIMITED ANNUAL REPORT 2002 - 2003 11 ector. environmental management and compliance environmental crisis management compliance with trade practices law workplace health and safety equal opportunity and anti-discrimination privacy customer and trade credit liquidity risk management risk – financial institutions credit • • • • • • • • • professional standards and consultation. standards professional behaviour in the execution of their duties. Under the code, all those associated with Queensland Sugar Limited withmust act thein accordance fundamental principles of integrity, objectivity, confidentiality, ethical behaviour, The board has adopted a Code of Ethics requiring directors, management, employees, agents and brokers to act with integrity and objectivity, and maintain high standards, and ethical Business conduct also has policies for: regularly reviewed by the board. Speculative transactions are permitted under the not policies to manage permitted.risks associated with the Hedgingsugar pool prices schemes. is In only its commitment to managing its exposure to significant business risk, Queensland Sugar Limited Monitoring and review of financial risk is a key function of the and board, policies and are approved in principles place to manage sugar price and foreign exchange risk. These policies are formal terms of reference approved by the board. A committee consists of of the company or the managing dir one of whom must be either the chairman any two directors, Managing risk decision already taken by the board, or acknowledges a matter agreed at a board meeting; or where the subject matter of the document falls within the scope of the Financial Delegations and Authorities policy and has been approved within the scope of that policy. The committee has a purpose of authorising the execution of a document under the common or seal otherwise on of behalf of the the company, company, where the document brings into effect or implements a advises the board in relation to all matters necessary to ensure the company adopts and follows sound principles of corporate governance. The directors established a Board Administration Committee on 15 April 2003 for the limited plans and results of both external and internal audits and actions proposed arising from The them. committee is a direct link for providing the viewsboard, if necessary, independently of of internalmanagement influence. The and committee also external monitors and auditors to the an effective and efficient audit function. and efficient an effective Specific responsibilities include advising the board on external the auditors appointmentand reviewing, and in remunerationconsultation with of management and the auditors, the audit auditors attend by invitation. The committee’s role is to assist the board and in controls reviewing in systems place for financial reporting, risk management, and compliance policies and with with laws and regulations company that apply to the activities, company’s and in maintaining The current members of the committee are Ms SAD Israel (committee chair), Mr AF Cristaudo, Mr IM McMaster and Mr RB Vaughan (company managerchairman). The financechief executive,and thecorporate general services, and representatives of the external and internal To assist in carrying out its functions, the board has established a Finance, Audit and Compliance Compliance and Audit Finance, a established has board the functions, its out carrying in assist To the board. by approved of reference has a formal terms The committee Committee. Board committees committees Board the company’s operations in future financial years; operations in future the company’s financial years; or in future of those operations the results financial years. in future state of affairs the company’s • • • environmental regulations and new regulations as they come into force. and new regulations regulations environmental Directors are not aware of any Reporting Period. significant breaches of environmental regulation during the Environmental Performance Environmental The company’s operationsCommonwealth areand Queensland subject management and site contamination at its bulk sugar terminal operations. law, toparticularly significant with regard environmentalto Theair, company noise, has regulationestablishedwater, procedureswaste to monitor under and manage compliance with existing Likely Developments Likely developments in the company’s operations in to on pages 1 to 7 of this Annual Report. referred of those operations are results future financial years and the expected Events after End of Reporting Period Other than reported on pages 1 to 7 of this Annual Report, no matter or circumstance has arisen or may significantly affect: that has significantly affected since the end of the Reporting Period Principal Activities The company’s principal activities are the marketing of sugar vested in it by the Sugar Industry Act 1999 as amended and the provision of ancillary services in financial transport risk in and connection with such management marketing. of There have been no significant changes in the the year. of those activities during nature report. report. Change in State of Affairs set out on pages 1 to 7 of are of the company and significant changes thereto The state of affairs this Annual Report. Other than these matters, there was no significant change in the company’s Reporting Period. during the state of the affairs In conformity with the Corporations Act 2001, your directors present this report on the company ended 30 June 2003. for the financial year and Results Review of Operations The operations of the company during the Reporting Period and the results of those operations are reviewed in detail on pages 1 to 7 of this Annual Report and these pages form part of this directors directors as a group or as individuals, believe it to be in their interests and in the interests of the company to seek independent professional advice, on matters such as accounting, taxation or law, at the expense. company’s Requests for the provision of such advice are to be directed to company secretary. the chairman or the DIRECTORS’ REPORT Independent advice Independent Queensland Sugar Limited recognises there may be occasions when the board as a whole, or

PAGE QUEENSLAND SUGAR LIMITED

ANNUAL REPORT 2002 - 2003 12 PAGE QUEENSLAND SUGAR LIMITED ANNUAL REPORT 2002 - 2003 13 4 4 11 11 12 WA Martin WA GE Mitchell CE Westcott IH White 2 3 6 6 12 11 12 GR Davies SAD Israel JR Kennedy IM McMaster RK McNee 1 4 12 12 12 12 lack of good faith or conduct known to the person to be wrongful; for costs and expenses incurred by theor criminal, person in which in judgement defending is given proceedings, in favour whether of acquitted, the or in civil connection person with any application or in relation to in such proceedings in which which the the person is to the person under the Corporations Law. court grants relief to any person (other than the company) which does not arise out of conduct involving the • • AF Cristaudo R Cargnello AH Cole RB Vaughan HR Bonanno attended 4 meetings held since appointment on 19 February 2003) attended 4 meetings held since appointment attended 4 meetings held to retirement on 28 October 2002) held to retirement attended 4 meetings on 24 January 2003) attended 6 meetings held to resignation on 23 January 2003) attended 6 meetings held since appointment 4 2 3 1 of the extent of the cover and the amounts of the premium. of the extent of the cover and the amounts of the premium. The company has paid or has agreed to pay premiums in respect of contracts insuring against liability the following persons (being persons who are – any past, or present or future director or officer of The the contracts havecompany. prohibit disclosure been officers of the company) a director, secretary, auditor, employee or other officer of the company. company The to obligation indemnify persons of as the set out in the preceding paragraph is reduced to of that liability under a contract of insurance. that a person is entitled to an indemnity in respect the extent The constitution also that provides the of may board directors authorise the company to, and the company may enter into any insurance policy for the benefit of any person who is, or has been, person who is, or has been, a director or secretary of the company against any liability (resulting directly or indirectly from facts or circumstances relating to the person serving in that capacity in to the company): relation Indemnities and Insurance Premiums to The the constitution that extent provides must the permitted indemnify company, by each law, CE Westcott) met on one occasion during the year. on one occasion during the year. met CE Westcott) Particulars of the qualifications and experience of each director of the company are set out on pages 7 to 11. independent directors are matters for determination by the grower directors and the mill owner directors. consider To this grower matter, directors (Messrs AH Cole, AF Cristaudo, RK McNee and WA Martin) and mill owner directors (Messrs R Cargnello, IM McMaster, GE Mitchell and 2003. Messrs GE Mitchell and IH White participated in that meeting. 2003. Messrs GE Mitchell and IH White Under the company’s constitution, the selection of the chairman of the company and the SAD Israel, Messrs AF Cristaudo and (company chair) attended 6 meetings. IM McMaster attended all meetings. Mr RB Vaughan A Board Administration Committee met once since the formation of the committee on 15 April ( The Finance Audit and Compliance Committee met 7 times during the year. Committee chair ( ( ( The following table shows the persons who wereattendance directors of duringdirectors the at financialmeetings yearof andthe theboard. financial year. There were 12 board meetings during the Information Relating to Directors Information Ian White Chief Executive

22 September 2003 RB Vaughan AO RB Vaughan Chairman thousand thousand dollars. Queensland Sugar Limited is a company of a kind referred in 98/0100. Class Order Investments Commission Securities the Australian This report is signed for and on behalf of the directors Directors. of Board in accordance with a resolution of the Rounding Unless otherwise shown in this Annual Report, amounts have been rounded to the nearest

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ANNUAL REPORT 2002 - 2003 14