About the Report

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North Queensland Bulk Ports Corporation Limited

About the Report

The North Queensland Bulk Ports Corporation Limited (NQBP) Annual Report is a summary of our financial and non-financial performance during 2010-11. It includes our major highlights over the past year and how we plan to deliver sustainable development of our new business into the future. This year’s annual report will focus on our continuing growth and development, outlining our achievements in infrastructure development and trade growth. As a leading Port Authority, our report meets with the requirements of the Corporations Act 2001, and the Government Owned Corporations Act 1993. This report includes details of NQBP’s two wholly owned subsidiaries, Ports Corporation of Queensland Limited (PCQ) and Mackay Ports Limited (MPL). Throughout this report, NQBP represents the entire group. One of the leading port authorities in Australia, NQBP is committed to supporting the growth of trade in Queensland through delivering world-class port facilities and customer service excellence. Our expert leadership team manages and inspires our employees to work together to retain our status as one of the nation’s most forward thinking, results-driven and progressive port authorities. N o rth Quee n s l a d Bu k P o rts C o r po ration Li m ited Brisbane Office: Annual Report 2010–2011 The purpose of this report is to provide our shareholding Ministers and other stakeholders with a relevant Level 24, 300 Queen Street and comprehensive source of information. Our report is distributed to shareholding Ministers, members of GPO Box 409, Brisbane Qld 4001 federal, state and local governments, existing and prospective customers, industry and business groups, Phone 07 3224 7088 Facsimile 07 3224 7234 local communities, environmental groups and our existing and prospective employees.

Mackay Office: (registered office of NQBP, MPL and PCQ) Level 1, Wellington House, 181 Victoria Street, Mackay Qld 4740 PO Box 3340, North Mackay Qld 4740 Phone 07 4969 0700 Facsimile 07 4969 0799 [email protected] www.nqbp.com.au

North Queensland Bulk Ports Corporation Limited ACN 136 880 218

ABN 36 136 880 218

Ports Corporation of Queensland Limited ACN 126 302 994 Celebrating Diversity ABN 49 657 447 879

Mackay Ports Limited ACN 131 965 707 Annual Report ABN 69 131 965 707 2010–2011

North Queensland Bulk Ports Corporation Limited cares about sustainablility and has chosenCert n o. SGS-COC-005396 to print on paper sourced from certified well managed plantations, forests and controlledCert no. SGS-COC-005396 sources. North Queensland Bulk Ports Corporation Limited

About the Report

North Queensland Bulk Ports Corporation Limited ACN 136 880 218

ABN 36 136 880 218

Ports Corporation of Queensland Limited ACN 126 302 994 Celebrating Diversity ABN 49 657 447 879

Mackay Ports Limited ACN 131 965 707 Annual Report ABN 69 131 965 707 2010–2011

Feedback Year in Review 2 We are very interested to hear how you think we can improve our Our Highlights 2 annual report, as a major aim is to fulfil the diverse information Performance Overview 2010-11 5 needs of readers and ensure that we continue to improve on our Who We Are 10 reporting standards. Chairman’s Message 13 We invite you to contact us with any feedback you have on the content or design of the report by completing the feedback form Chief Executive Officer’s Report 15 at the back of the report or by contacting our Corporate Relations Board of Directors 16 team on (07) 3224 8863 or email [email protected]. Executive Leadership Team 18 Postal Details: Senior Management Team 19 Corporate Relations Team North Queensland Bulk Ports Corporation Limited Operational Performance 21 GPO Box 409 Our Customers 21 Brisbane Queensland 4001 Our Trade 21 This report and various other publications are available on our Our Port Infrastructure 21 website www.nqbp.com.au. Requests for printed copies of the Port of Hay Point 23 report can be made through our Corporate Relations team via the details above. Port of Mackay 25 Port of Abbot Point 27 Photography: Port of Weipa 29 Above Photography Pty Ltd Thomas Calder Photographer Social Performance 31 Wricor Photography Nicole Betham Social Performance Summary 31 Fiona Langsdorf People 32 Special acknowledgements: Health and Safety 35 Front cover: Community 36 Second photo of Anton van Staden – courtesy of Mackay Daily Mercury Environmental and Sustainability Performance 38 Page 35: Our Highlights 38 Brad Fish and Greg Mallin – courtesy of Mackay Daily Mercury Our Environmental Management System 41 Our Environment and Sustainability 41 Sustainable Design 43 Effective Implementation 44 Protecting the Marine Environment 44 Environmental Performance 45

Corporate Governance 46 Corporate Structure 46 Board of Directors 46 Remuneration Arrangements 49 Board Committees 50 Risk Management 52 Legal Compliance 53

Additional Information 54

Ports at a Glance 56

Financial Performance 61 Directors’ Report 62 Independent Auditor’s Report 103

Glossary of Terms 104 NQBP | YEAR IN REVIEW

Our Highlights

ABBOT POINT X50 EXPANSION SUCCESSFULLY LEASED ABBOT POINT T4-7 WELCOMED THE FIRST SHIP ABBOT POINT TERMINAL EXPRESSIONS OF INTEREST The works program to expand the On 3 May 2011, the Queensland The initial planning was completed export capacity of Terminal 1 at Government announced that and a site for inland stockpiles and Abbot Point progressed very well Mundra Port Pty Ltd (Mundra terminals was selected within the and was completed ahead of the Port) was the successful lessee Abbot Point State Development contracted demand requirement. of Terminal 1 at Abbot Point Area following consultation with The shiploader commenced as part of the State’s Renewing the Department of Infrastructure operations on 9 May 2011 Queensland program. NQBP and Planning (DIP). The site will when it loaded the first ship at finalised the long term lease of cater for both standard and narrow Terminal 1, Berth 2. Terminal 1 to Mundra Port in gauge rail inloading and up to four June 2011, with the transaction terminals at ultimate development. PREFERRED PROPONENTS including the right for Mundra With strong demand from the ANNOUNCED FOR Port to investigate the feasibility mining sector for increased port DEVELOPMENT OF of further expansion of the capacity at Abbot Point, NQBP DUDGEON POINT Terminal utilising land areas called for Expressions of Interest adjacent to the eastern boundary for the development of Terminals 4 In July 2010, NQBP announced of the Terminal. DBCT Management Pty Ltd and through 7 (T4-7) on 28 May 2011. Adani Mining Pty Ltd (Adani Group) as the preferred proponents for the development of new coal export infrastructure at Dudgeon Point within the Port of Hay Point.

2 MULTI CARGO FACILITY (MCF) MACKAY Property review CONSTRAINTS ANALYSIS Environmental Impact In 2010, NQBP completed a rent STUDY COMPLETED FOR Statement (EIS) COMPLETED review of 52 Port of Mackay property UNDEVELOPED PORT LANDS Planning for the Multi Cargo Facility leases, including the marina which NQBP has completed master gained momentum as NQBP and was the first review in 10 years. As a planning for the sites at the the State put in place the building result, rental charges now reflect a northern and southern ends blocks to allow the Abbot Point more accurate market value. of Mulherin Park. Preferred State Development Area (APSDA) commercial uses for the to realise its enormous potential. BLUE DIAMOND LEASE approximate 1.85 hectare northern Planning commenced for project Coal mine expansions in the site have been identified as boat procurement and delivery. Northern Bowen and Galilee Basins repairs, office accommodation have provided impetus to expand (including a potential site PORT OF HAY POINT fuel terminal storage capacity at for NQBP’s principal office DEVELOPMENT MASTER the Port of Mackay. Pioneer Energy in Mackay) and retail space. PLAN UNDERWAY (Blue Diamond) has leased land and The 8.44 hectare southern NQBP has commenced preparation commenced works relating to new triangular parcel of land can of a Port of Hay Point Port diesel storage tank facilities. potentially provide for future Development Master Plan which commercial uses including a 2 will be a blueprint for future 2000 metres area of retail space development. The concepts fronting Mulherin Drive and presented in the Master Plan will possible bulk liquid storage direct decision making on the use facilities to the rear of the site. of Strategic Port Land as well as surrounding land that has potential for development.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 3 NQBP | YEAR IN REVIEW

4 Performance Overview

Financial Performance This financial year has seen NQBP continue to develop a long term, sustainable business while building significant value for the State of Queensland. The successful $1.829 billion lease of Abbot Point Terminal 1 has strengthened our case to embark on a multi-phased expansion of the Port of Abbot Point. The lease of Abbot Point Terminal 1 has also positively impacted on NQBP’s 2010-11 financial results and enabled NQBP to release significant value to the State of Queensland to mitigate the cost impact of the January floods and cyclones. Despite the impacts on our customers and our facilities from the recent natural disasters, NQBP maintained strong underlying revenues for the period. Contributing to this outcome was a consolidation and strategic review of fees and charges which has also seen an overall increase in business value.

2010-11 2009-10 FINANCIAL SUMMARY $ MILLION $ MILLION Revenue and income 530.850 135.495 Expenses 146.987 110.592 Profit before income tax equivalent expense 383.863 24.903 Capital expenditure 178.818 387.231 Total assets 2130.912 1494.798 Total liabilities 373.357 961.889 Net assets 1757.555 532.909 Current ratio 6.9 0.6 Debt/debt plus equity ratio 0.04 0.59

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 5 NQBP | YEAR IN REVIEW

Performance Overview (continued)

Operational Performance Strategic Objective Performance Targets Results Deliver value-adding HIGH QUALITY BUSINESS ANALYSIS AND growth for NQBP ensuring PROJECT PLANNING sustainable returns while • Ensure Framework Agreements for T2 and T3 at Framework Agreements are being finalised minimising risk Abbot Point are in place by January 2011 with the two proponents in accordance with – Develop port infrastructure stakeholder requirements. in line with long term • Master planning with Queensland’s Department of T4-7 master planning was completed on time. demand Infrastructure and Planning (DIP) and Department of Invitations for EOIs were advertised in May 2011. – Work with current and Employment, Economic Development and Innovation (DEEDI) for Terminals 4-7 (T4-7) to be completed new customers to identify by August 2010 with subsequent invitation for and establish trade Expressions of Interest (EOI) to take project forward opportunities • Dudgeon Point development studies 50% completed Port of Hay Point Master Planning studies and baseline by end of 2010-11 environmental monitoring of proposed development areas commenced in January 2011. Dudgeon Point studies are on target. • Multi Cargo Facility (MCF) approvals progressed An Indigenous Land Use Agreement including the and development of the facility to be integrated with MCF is being negotiated with local traditional owners. the Framework Agreements The MCF Environmental Impact Study is in the final stages of approval by the Federal Government. • Mackay port land development planning 70% Master Plans have been completed for two sites in completed by end of 2010-11 Mulherin Drive. The Constraints Study has been completed. Development is continuing, with four fuel expansions underway, including a commitment from Blue Diamond. • 100% of approved proposals meet return All current projects either committed or in delivery requirements at project commitment and stage, are on target to meet return requirements. post delivery • 100% of commercial projects implemented on time This year’s cyclones and overall wet weather has and on budget impacted a small number of projects. All other projects were delivered on time.

CUSTOMER ENGAGEMENT AND SUSTAINABILITY • Customers perceive value for money from NQBP A stakeholder survey in May 2011 indicated that services with 100% customer retention within overall, customers and other stakeholders are very agreed terms satisfied with NQBP’s performance.

• Effective engagement with potential new customers The Port Development Approval process has been including preparation of communication documents streamlined with a full suite of user friendly documents. for Port Development Processes The streamlined process is already being used and NQBP has received positive feedback.

Continual IMPROVEMENT OF MARKET SHARE • 100% of budgeted tonnages are achieved Grain and bauxite exports were well ahead of budget; or exceeded bauxite and fuel imports exceeded annual budget in 11 months. However, the wet summer impacted both coal and raw sugar tonnages, with sugar down 25%.

6 The strategies, objectives and actions in our Statement of Corporate Intent (SCI) are outlined below. As a Queensland company Government Owned Corporation, this document is part of our performance agreement with our shareholding Ministers. Our performance against the 2010-11 SCI is summarised on pages 6 to 9.

Financial Performance Strategic Objective Performance Targets Results Deliver and maintain • Risk/return hurdle ratio All current projects presently satisfying the target. timely and cost effective • Project completion port capacity that is fit for purpose Ensure only proposals which provide favourable return for risk and align with business objectives are pursued Implement pricing reform • All business areas meet required rate of return Revised pricing introduced. Mackay property rent reviews completed. Deliver life cycle • Asset management plans Formats and hierarchies of asset management plans management • Project completion have been finalised. Draft plans are being developed in accordance with the adopted framework. Overall asset project delivery is on target at this stage. Add value to business • Customer value for money from NQBP services New customers emerging for coal, cement, petroleum outcomes of NQBP’s and chemicals imports. customers Maintain an effective suite • Business needs are supported Formal roadmap developed to ensure business of business systems that needs are met. enable NQBP to achieve its corporate mission Competitive and • All business areas meet required rate of return 100% of business areas meet targeted return as sustainable pricing per pricing policy.

Environmental Performance Strategic Objective Performance Targets Results Deliver sustainable port • Provide systematic protection of the environment External ISO certification was renewed without any development and operations through 100% compliance with legislation significant non-conformances. and critical incident and standards management capability that minimises environmental and social impacts of NQBP activities and those of our • Take a whole of port approach to environmental An environmental audit program for tenants has commercial partners performance including 100% compliance with been implemented. Service providers are required NQBP licensing requirements to act in conformance with their environmental – Implement effective management plans. strategies to address environmental issues • Undertake operations and developments to reduce Significant offset arrangements have been included in such as greenhouse the environmental footprint all project planning. emissions, global warming • Provide systematic protection of the environment Emergency response planning is in place and was and rising sea levels and port operations tested during the natural disasters over summer. Whole of NQBP business continuity plans are in the process of being revised and updated.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 7 NQBP | YEAR IN REVIEW

Performance Overview (continued)

Corporate Governance Performance Strategic Objective Performance Targets Results Enhance NQBP’s • Implement all Government policies and Key Government policies and guidelines for GOCs governance by continually guidelines for GOCs have been implemented, including the introduction improving planning, of policies in relation to new legislation applying financial management, to GOCs. Examples include the Integrity Act 2009, project management Crime and Misconduct Act 2011 and the Public Interest Disclosure Act 2010. and performance reporting capability NQBP procurement processes were updated to comply with the new requirements of the State Procurement Policy. Governance policies, including Conflict of Interest, were reviewed and updated to recognise the importance of diversity at Board level. An external evaluation of the Board was undertaken in September 2010, and a further review of the structure and performance of Board Committees occurred in June 2011.

Corporate Relations Performance Strategic Objective Performance Targets Results Continually improve • Engage local communities to foster The Port Communities Program is in place to work marketing and corporate acceptance of NQBP closely with local residents and businesses. relations and implement Detailed community engagement strategy is in place processes to promote NQBP and being implemented for the Hay Point master as a good corporate citizen planning process. This includes a dedicated locally based community engagement officer. • Proactively engage stakeholders to facilitate an The recent stakeholder survey showed that 70% of informed, positive and professional corporate stakeholders are extremely or very satisfied, and 87% image of NQBP satisfied with their relationship with NQBP. Community Reference Groups for both Hay Point and Mackay have been broadened and refocused. • Corporate relations strategies implemented in all Communication plans are in place to manage NQBP locations with no surprises community and stakeholder issues.

8 Human Resources Performance Strategic Objective Performance Targets Results Deliver leadership and a • Provide all employees with opportunities to gain All Personal Professional Agreements (PPA) are in working environment that the necessary knowledge and skills to contribute place and incorporate the setting of training programs. enables NQBP employees effectively to the achievement of NQBP goals to excel and objectives • Develop productive industrial harmony through an The new Enterprise Bargaining Agreement is nearing integrated single culture of achievement completion and will incorporate productivity offsets for wage outcome and cultural alignment initiatives. A major review of NQBP’s internal services, business operations and future business development is underway. • Foster a commercially astute organisation which NQBP’s values are incorporated into the PPA process. respects NQBP’s customers’ business needs to The Chief Executive Officer (CEO)/Deputy Chief deliver strong customer service Executive Officer (DCEO) and managers regularly engage with staff to promote these values. Strive for lower lost time • To systematically protect NQBP’s employees and All staff inducted into a revised Safety Management System. injuries in accordance visitors to NQBP’s workplaces, and ensure 100% Systematic review of all Standard Operating Procedures with safety principles compliance with legislation and standards has been undertaken. No breach notices received or and practices severe incidents recorded during the reporting period.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 9 NQBP | YEAR IN REVIEW

Who We Are

With five ports under management and a total asset base of $201 billion, NQBP is one of Australia’s largest port authorities by tonnage throughput. More than half of Queensland’s trade, by tonnage, passes through four of our ports: Weipa, Abbot Point, Mackay and Hay Point.

A recognised leader in the delivery of sustainable bulk cargo NQBP is a company under the Corporations Act 2001 and the infrastructure, the sea port facilities we manage are vital to the export Government Owned Corporations Act 1993 (GOC Act) and a port and import performance of Queensland and Australia. NQBP ports authority under the Transport Infrastructure Act 1994. handle bulk shipments of coal, bauxite, sugar, molasses, grain, Under the GOC Act, NQBP’s activities are governed by: petroleum, fertiliser and general cargo. While coal is by far the main commodity handled, each port and each commodity is important in its • a Statement of Corporate Intent, which is an agreement between the own right. organisation’s Board and its shareholding Ministers; and As a port authority, NQBP is responsible for: • a five-year Corporate Plan. • strategic port planning; As a GOC, NQBP operates according to commercial principles, raises its own revenue and makes dividend and tax equivalent payments to the • port business development; Queensland Government. • port infrastructure development; • environmental management and marine pollution (within NQBP port limits); GOC and Port Authority for Hay Point, Mackay, • port security and safety; Abbot Point, Weipa and Maryborough • port efficiency; Shares in NQBP are owned by the Queensland Minister for Main • maintaining navigable port depths for shipping; and Roads, Fisheries and Marine Infrastructure and by the Minister for • issuing licences, leases and permits to other organisations for Finance, Natural Resources and The Arts. use of port land, infrastructure and facilities (NQBP has a multi- user access policy in place at its ports to facilitate the highest possible utilisation of port infrastructure and the greatest possible PCQ MPL operational efficiency). Our Environmental Management System implemented across all four Owns the port assets at Owns the port assets ports is among the elite in Australia to receive accreditation under the Abbot Point, Hay Point, at Mackay standard AS/NZS ISO14001:2004. Weipa and Maryborough NQBP has both one- and five-year plans in place, which provides us with the focus and direction in order for the business to achieve our Throughout this report, NQBP represents the entire Group comprising vision and continually improve our financial performance. NQBP and the two subsidiary companies, PCQ and MPL. We have two shareholding Ministers – the Minister for Finance, Natural Resources and The Arts, and the Minister for Main Roads, Fisheries and Marine Infrastructure.

10 Our Vision NQBP to be the recognised global leader for bulk ports. Our Mission NQBP will provide safe, sustainable and competitive seaport services. We will manage our ports in accordance with our values to deliver excellent, commercial and sustainable outcomes for customers, employees, communities and shareholders. Our Values NQBP is: • Customer focused – Fostering open, trusting and enduring relationships with our customers for mutual commercial benefit. • Respectful – Respectful and committed to one another and to the communities in which we operate. • Environmentally responsible – Pursuing high standards of environmental performance both of our own activities and those of our commercial partners. • Committed to safety – Striving for zero harm in improving health and safety outcomes. • Innovative – Embracing creativity and innovation to go beyond continuous improvement in achieving our mission. • Courageous in leading change – Being courageous in demonstrating personal and organisational leadership to make the changes needed for our future sustainability.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 11 NQBP | YEAR IN REVIEW

“Again this year, I am honoured to lead a Board of Directors with such a diverse range of talent and expertise who are all committed to growing a sustainable bulk ports business for the people of Queensland.”

Leonie Taylor Chairman

12 Chairman’s Message

Looking Back Diversity of Opportunity My role as Chairman of the Board The opportunity for growth at NQBP’s ports is unprecedented. We have has always carried an enormous just finished one of the largest coal port expansion projects Australia amount of responsibility leading has ever seen, investing $818 million in the X50 Expansion project. a group of highly professional We are now embarking on planning for a $6.2 billion multi-phased Directors in the decision making expansion of the Port of Abbot Point. which contributes significantly The planning and development of Terminals 2 and 3 are well underway to the economy of Queensland with the intent to take the number of terminals to seven bringing total by facilitating trade in our natural capacity to nearly 300 Mtpa – confirming Abbot Point’s place as the resources and agricultural products. This past year this responsibility largest coal export port. has increased considerably as NQBP responds to the demand from the mining sector, in particular the Bowen and Galilee Basins. NQBP’s commitment to the environment and sustainable development will see our focus on progressing the proposed Multi Cargo Facility Our ports and our people play a critical role in supporting the as the superior choice for development offshore and the best exploration, new mining initiatives and export of coal and emerging environmental outcome for long term strategic port development. resources markets, such as LNG. We are facilitating some of the biggest infrastructure projects in Australian port expansion history, The strategic location of the Port of Mackay and its ability to handle a both to export, as well as support the import of cargo necessary for this variety of cargoes – many of which are essential for mining development mining boom. and growth – presents substantial opportunities. To avail ourselves of these opportunities we plan to invest approximately $2 million in land It is a mere two years on from the merger of the Port of Mackay with development at the Port. the four ports of Hay Point, Abbot Point, Weipa and Maryborough. During this time we have taken stock of our diverse talent and trade The Hay Point Development Master Plan is due for release before opportunities and have achieved many milestones which contribute to December 2011. The development of this plan will outline options the bright future for the Queensland ports under our management. for the sustainable development of the Port for the next 20 years and enable us to work closely with local residents to manage and mitigate Our relationship with our port communities is also a priority and any impacts. we take our role in regional communities very seriously. While our ports are significant in underpinning the local economies in which The Port of Weipa continues to be a strategically important port we operate, we are also acutely aware that we have a social and supporting primarily the export of bauxite. environmental responsibility to the residents and businesses who live Thank you and work in close proximity to our facilities. We continue to actively engage with these communities and welcome their ongoing feedback I want to thank our customers and stakeholders who have supported on ways in which we can improve our longstanding relationships. us through the first two years as NQBP and who also have willingly provided their time and feedback to contribute to the continual This year, we celebrated the first coal to be delivered through the X50 improvement of our business. Expansion Project at Abbot Point and facilitated the 99 year lease of this terminal to Mundra Port. We have furthered the comprehensive Again this year, I am honoured to lead a Board with such a diverse planning that will take Abbot Point from a capacity of 50 Mtpa to a range of talent and expertise, all committed to growing a sustainable potential 300 Mtpa within the next ten years. bulk ports business for the people of Queensland. In particular, I would like to acknowledge and congratulate Board Member, Graham Davies, We have invested in the development of the Port of Mackay to for being appointed a Member of the Order of Australia in June 2011 accommodate the import of cargo necessary to support the demand of for his service to primary industries and regional communities. As a Queensland resources and expand fuel businesses, while at the same team, we are looking forward to the many challenges and opportunities time, stood next to the community of Mackay to celebrate the return of in the year ahead. an upgraded Mulherin Park. Finally I would like to thank each member of the NQBP team – We continue to provide high quality port management to Rio Tinto it is their diversity of skills and their commitment which makes supporting its bauxite trade in Weipa, investing in significant North Queensland Bulk Ports the leader in bulk port development maintenance dredging within the South Channel and Inner Harbour. and management. Financial Performance Despite the impacts of Queensland’s natural disasters, NQBP’s financial performance across the period has been strong. This is due to a number of factors, including the re-evaluation of fees and charges across the ports, to ensure they are more reflective of true market value. While the organisation can rightly be proud of the successful lease of Leonie Taylor Abbot Point Terminal 1, the impact of the loss of this revenue stream Chairman can be expected to be significant in the forthcoming year, as NQBP pursues growth opportunities to generate value for our shareholders and the State of Queensland.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 13 NQBP | YEAR IN REVIEW

“Each of our ports is as unique and diverse as our staff who are committed to making them world class facilities.”

Brad Fish Chief Executive Officer

14 Chief Executive Officer’s Report

Strength in Diversity Port Communities Reflecting back on this year I NQBP recognises the impact of its operations on the surrounding cannot help but be impressed communities and also recognises that the communities around our and proud of what NQBP has ports are as diverse as the people who work for NQBP. accomplished in 12 months. With so many significant projects being planned or underway, NQBP This year as a team we focused on strengthens its commitment to engage and educate the communities what NQBP needed to achieve for around our ports as well as support initiatives for youth, environment, its customers, owners and staff to regional development and the indigenous communities. become successful in the business of port services and as a bulk cargo This year we reopened Mulherin Park, an iconic place of recreation for specialist. Each of our ports is as unique and diverse as our staff who the community of Mackay. We hosted a community celebration which are committed to making them world class facilities. saw 40 members of the JM Mulherin family – after whom the park was named – attend to commemorate this event. Our Ports We were able to participate and support local projects which are Abbot Point has the potential to be one of Australia’s largest coal export making important contributions to the community. Among these was ports with plans in place to grow capacity to 300 Mtpa in the next ten the Regional Indigenous Employment Program which had a significant years through the development of six additional coal terminals. In May, impact within the Bowen community and the indigenous community as the first coal was delivered from stockpile to ship via new conveyors, a whole, through providing employment services and identifying and a new berth and shiploader as part of the X50 Expansion Project. cultivating job opportunities. This could not have been achieved without the depth of talent within We provided support to local school and environmental initiatives in NQBP. Our environmental staff worked for two years to study the port communities of Hay Point, Mackay, Weipa and Bowen. environmental impacts and obtain environmental approvals before this This year we have appointed a dedicated community engagement project could even begin. Commercial staff secured contracts for the officer to Hay Point to support the community with information coal while the project team managed multiple contracts to achieve the regarding the Hay Point Development Master Plan and the potential construction. Staff with expertise in legal requirements, administration, future development of Dudgeon Point. safety and risk management, planning, IT and communications all contributed to the success of this project. We value and look forward to our involvement with our port communities in the next year. The NQBP team has brought new opportunity to the Port of Mackay securing a lease with the first independent fuel company to come to Looking Forward Mackay. Blue Diamond is the first major new port trade to establish This coming year will be one of unprecedented opportunity and significant facilities at the port in some time and we have plans in planning for the growth of our ports. Our expert team will be place to continue to attract major business to Mackay. We have also responding to the national and international interest in Abbot Point, completed our first rent review of our tenancies at the port since 2005 wanting to be a part of one of the fastest growing ports in Australia. which required intensive, sometimes difficult negotiation. The process is now complete which will enhance the Port of Mackay’s viability in The proposed Multi Cargo Facility will set the standard for planning today’s market. and development of a comprehensive offshore port facility which can cater for a range of bulk cargo. It will be a leading example of how The Hay Point Development Master Plan is well underway. This planning and innovation can accommodate export growth within set planning process will establish the potential direction for the boundaries while sitting sustainably alongside the Great Barrier Reef. development of Hay Point for the next ten years. Included in this plan is the development of Dudgeon Point. Our team has been working closely The Port of Hay Point will establish planning direction to meet the high with preferred proponents the Adani Group and DBCT Management to demand for quality Queensland coal and we look forward to leading address their business needs and balance these with the environmental by example through our community engagement program and our and social needs of the area. This Master Plan will illustrate the commitment to sustainable development. potential for Hay Point to be the largest coal export port in Australia. We have laid the groundwork for the Port of Mackay to grow its We were again at the mercy of Mother Nature with throughput of goods business, make the best use of its resources and become a model for a to our ports impacted by the Queensland floods and the coastline growing community port. battered by back to back cyclones. The spirit of the NQBP team shone Many talented individuals and teams make NQBP, and this past year we its brightest as the Mackay and Bowen staff stepped in to support have found strength in our diversity and furthered NQBP’s commitment Brisbane when the office was forced to close. Brisbane staff were able to our customers, and our commitment to be recognised as a global to return the favour as their northern colleagues were preparing for the leader for bulk ports. tropical cyclone onslaught.

Brad Fish Chief Executive Officer

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 15 NQBP | YEAR IN REVIEW

Board of Directors

Leonie Taylor Graham Davies AM Julie Bignell Kasper Kuiper R.O.N Chairman First Appointed: NQBP on BA, Grad. Dip. IR/HRM, GAICD M. Mariner FG + ext. M, BBus, FCA, CFP, FAICD, FTIA 7 May 2009; PCQ on 7 August 2009; First Appointed: NQBP on Grad Dip, OSD First Appointed: NQBP on MPL on 1 July 1999 19 June 2009; PCQ on 1 July 2001; First Appointed: NQBP on 7 May 2009; PCQ on 1 July 1994; Term of Office – MPL on 7 August 2009 19 June 2009; PCQ on 1 July 2001; MPL on 7 August 2009 to 30 September 2012 Term of Office – MPL on 7 August 2009 Term of Office – Member Human Resources and to 30 September 2012 Term of Office – to 30 September 2012 Industrial Relations Committee Chairman Human Resources and to 30 September 2011 Appointed as Chairman of the Board Graham Davies has more Industrial Relations Committee Member Audit and Financial Risk of: NQBP on 19 June 2009; PCQ on than 30 years’ experience as a Member Corporate Governance Management Committee 1 July 1999; MPL on 7 August 2009 non-executive Director on sugar and Planning Committee Kasper Kuiper‘s expertise in port Member Audit and Financial Risk boards, various companies and Julie Bignell is the Branch construction and reclamation Management Committee co-operatives. Secretary of the Central and includes involvement in some of Member Human Resources and Mr Davies held the position of Southern Queensland Branch of the largest port and underwater Industrial Relations Committee Chairman of the Mackay Sugar the Australian Services Union constructions in the world — Co-operative for 16 years, and as well as the Assistant General Saudi Arabia, Kuwait, India, Member Corporate Governance Pakistan and The Netherlands. and Planning Committee until recently was the Chairman of Secretary of Together Queensland. the Queensland Rural Adjustment In these roles she has executive He relocated to Brisbane Leonie Taylor is the Chairman of Authority. He is a Board Director responsibility within the union for for the construction of the the NQBP group of companies (Hon.) of the Cerebral Palsy overseeing the development and Brisbane International Airport in and has been Chairman of PCQ League of Queensland. implementation of industrial and 1980–1983, and has worked for since 1999. Mr Davies owns and operates organising strategies to further the the Woodside Project in Cape The Partner-In-Charge of sugar farms in the Mackay and interests of professional, clerical, Lambert and Port Headland, Corporate Governance and Quality Burdekin districts and has a cattle administrative, customer service Western Australia. Accreditation at leading Brisbane property in the Mackay district and call centre workers in the Captain Kuiper is Branch Master financial and accounting firm hinterland. He was appointed a private and public sectors. for Queensland of the Company Bentleys, Ms Taylor specialises Member of the Order of Australia Ms Bignell is also Vice President of Master Mariners and a member in providing tax and business in June 2011. of the Queensland Council of the Board of Governors advice to Queensland businesses. of Unions and a Director of and Chairman of the Board of She assists businesses with Workplace Health and Safety Management of the “Duyfken management and corporate Queensland. 1606 Replica Foundation”. governance issues and is well He is Honorary Consul of versed in all facets of financial The Netherlands in Queensland management and the Australian and was decorated as a Knight in tax regime. the Order of Oranje-Nassau by Ms Taylor is also a Director of Queen Beatrix of The Netherlands Queensland Police Citizens Youth in May 2006. Welfare Association. She holds a Bachelor of Business and is a Fellow of the Institute of Chartered Accountants, The Taxation Institute of Australia and The Institute of Company Directors.

16 Achievements of the Board During the year, the Board focused on: • proceeding with the development of additional coal terminals at the Port of Abbot Point, including welcoming Peter Tait Stephen Golding AM, RFD Robynne Dudley the first ship at the Terminal 1 BCom, M Info Systems, BE, MEngSc, BEcon, Hon FIE BBus, FCA X50 expansion; FCA GAICD Aust, FCILT, FAIM, FITE, FAICD, First Appointed: NQBP on CPEng, RPEQ • facilitating the lease of First Appointed: NQBP on 19 June 2009; PCQ on 7 August 2009; Abbot Point Terminal 1 19 June 2009; PCQ on 7 August 2009; First Appointed: NQBP on MPL on 1 July 1999 to Mundra Port; MPL on 1 October 2007 19 June 2009; PCQ on 7 August 2009; Term of Office – MPL on 1 July 2005 • further developing the Term of Office – to 30 September 2012 organisation to ensure it to 30 September 2011 Term of Office – Chairman Audit and Financial remains capable of continued Member Audit and Financial Risk to 30 September 2011 Risk Management Committee successful delivery of Management Committee future projects; Chairman Corporate Governance Member Corporate Governance Peter Tait has been practising in and Planning Committee and Planning Committee • restructuring the NQBP chartered accountancy for over leadership team to refocus Member Human Resources and Robynne Dudley has strong 20 years for SH Tait and Co. This the business on future Industrial Relations Committee ties with the Mackay business large regional practice operates sustainability; Stephen Golding has had a long community and is a partner with in central Queensland providing and distinguished career with Shepherd and Dudley Chartered • ensuring that NQBP’s accounting, taxation, audit and the Queensland Department Accountants. She has been customers and other general business services to a of Main Roads. From 1970 to an accountant for more than stakeholders remain its wide range of diverse industries. his retirement in March 2005, 30 years. Mrs Dudley holds a highest priority; and Mr Tait is a registered company Mr Golding held a number of Bachelor of Business and is a • further improving our risk auditor providing audit services key management positions and Fellow of the Institute of Chartered management and project to a variety of unlisted public in July 2000 was appointed Accountants and a CPA. governance processes. and private companies. Other Director-General of Main Roads. areas of work include advising Mr Golding is active in four on restructuring, finance professional associations applications, succession planning including an Honorary Fellow and litigation support, including of the Institution of Engineers business valuations. (Australia) and has served Dedicating his time and talent to on a number of panels and the community, Mr Tait has been committees. He is a Director and Honorary Treasurer of the George Chair of Transport Certification Street Neighbourhood Centre Australia Ltd and a Board Member Association Inc in Mackay and of Queensland Manufactured Honorary Treasurer of Mackay Water Authority. Children’s Contact Service Inc He has enjoyed a long career in since 2001. the Army Reserve enlisting as a private soldier in the Queensland University Regiment in 1963. In June 1998, Mr Golding was appointed a Member of the Order of Australia for outstanding service to the Army Reserve.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 17 NQBP | YEAR IN REVIEW

Executive Leadership Team

Brad Fish Jeff Stewart-Harris Bernie Wilson Susan Campbell Martin McAdam CHIEF EXECUTIVE DEPUTY CHIEF Chief financial COMPANY SECRETARY/ Executive general OFFICER EXECUTIVE OFFICER officer GENERAL COUNSEL manager major In conjunction with the Jeff oversees the key Bernie is responsible for Susan is responsible for projects Board, Brad’s primary revenue-producing developing and driving the corporate governance Martin’s key responsibility role is to develop the business activities the strategic financial functions at NQBP, is to take potential strategic direction for of NQBP through the direction for NQBP to including the provision projects that meet the the organisation and Commercial, Operational, ensure the organisation of company secretarial needs of existing and to provide leadership Engineering, Planning and is structured for success. support to the Board as new port users and bring to ensure its effective Environmental functions. He oversees the Financial, well as responsibility them to reality. The role delivery both internally Together with the CEO, Information Technology for the management of includes planning for and externally. In Jeff shares the oversight and Management, NQBP’s legal issues. potential demand and of the development of the addition, his role is to Human Resources and 2011-12 Susan’s core developing relationships future NQBP business. facilitate the development Industrial Relations focus is to continue to with key industries and In addition to the role of and expansion of the and Risk and Insurance assist NQBP in managing industry players. Chief Executive Officer business while providing functions within NQBP. its governance and legal 2011-12 Martin’s focus of MPL, he provides a supportive environment 2011-12 Bernie’s issues, with a particular will be to execute and high level leadership for staff to deliver focus will be to develop focus on NQBP’s major manage the BHP Billiton through strategic planning, superior outcomes for our a long term financial projects, including further Limited and Hancock Coal organisational development, various stakeholders. strategy for NQBP and development of NQBP’s Framework Agreements change management, 2011-12 Brad will to ensure it has the project governance and assist in subsequent consultative and business continue to deliver high resources and capability and major projects development of T2 and improvement processes. quality planning for all to capture business compliance frameworks. T3 at Abbot Point. He of our ports, facilitate the 2011-12 Jeff will growth opportunities will assist in enabling ongoing development of continue to drive and build sustainable the MCF project for the those ports and ensure integration, commercial, value for the State. marine infrastructure for all projects continue to operational reform and This includes working T2 and T3 and finalise the be delivered on time, productivity initiatives. across his portfolio T4 Master Plan including within budget and to He will oversee the of responsibilities to the Expression of Interest agreed quality standards. evaluation and allocation identify and implement process to progress its He will focus on providing processes for Terminals business improvement development - subject a working environment 4-7 at Abbot Point, strategies. As CFO, Bernie to DIP and shareholder for staff that encourages together with the will be working with the requirements. Martin them to strive for superior development of long Executive Leadership will also continue to outcomes for both term port development Team to continue the investigate new trades themselves personally plans for all four ports development of a single for Abbot Point such as and NQBP as a whole. in keeping with the commercially focused and iron ore exports, LNG and National Ports Strategy. customer responsive team minerals. He will continue across NQBP. to oversee master planning for Dudgeon Point, the refinement of asset management plans for all ports and NQBP’s strategic planning processes, and contribute highest level governance for business development projects.

18 NQBP’s management structure consists of a Senior Management Team responsible for the strategic management, planning and operations of the ports. Senior Management Team

Tina Marsh Gary Campbell Graham Rawlings Martin Norman EXECUTIVE CO-ORDINATOR AND GENERAL MANAGER PORT GENERAL MANAGER COMMERCIAL GENERAL MANAGER COMMERCIAL ASSISTANT COMPANY SECRETARY DEVELOPMENT ABBOT POINT (ABBOT POINT) (HAY POINT, MACKAY, WEIPA)

Bob Brunner Simona Duke Anton van Staden Gary Riches GENERAL MANAGER PLANNING GENERAL MANAGER ENVIRONMENT GENERAL MANAGER ENGINEERING GENERAL MANAGER OPERATIONS HAY POINT AND PLANNING

Lily Boscariol Mary Steele Philip Crawford Bruce Fisher GROUP FINANCIAL CONTROLLER MANAGER CORPORATE RELATIONS MANAGER Human Resources INFORMATION TECHNOLOGY MANAGER and Industrial Relations

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 19 NQBP | OPERATIONAL PERFORMANCE

Our major cargoes include coal, bauxite, sugar, molasses, fuel, petroleum, grain, ethanol, fertiliser and magnetite. Over half of Queensland’s exports by tonnage pass through NQBP’s ports.

20 Operational Performance

Our Customers Our Trade Our customers are integral to our business success. We continue to NQBP is responsible for five port locations which handle a variety of cargoes: focus on delivering outstanding customer service and to provide a • the trading ports of Hay Point, Mackay, Abbot Point, and Weipa; and value added approach with both new and existing customers. • the non-trading port of Maryborough. Adding value to customers The trading ports handle bulk export commodities and the non-trading port is held for strategic purposes, should a commercial need arise. We work to provide a cost efficient, high quality port infrastructure and operations management service at all of our port locations. Because Almost 128 million tonnes of cargo passed through these ports this year. we value our relationships so highly, we need to be adaptable to the At each port, NQBP is responsible for strategic planning, operational issues, changing needs of our customers. We regularly meet our customers at infrastructure development, security and emergency response planning, the ports and at Port Advisory Group meetings to informally discuss protection of the environment, and maintaining navigable port depths. port issues and infrastructure improvements. Pilotage and port navigation is controlled by Maritime Safety Queensland. Multi cargo handling Our Port Infrastructure Our port facilities export various major products which are transported As the port authority responsible for developing both the infrastructure and to more than 40 countries. Our major cargoes include coal, bauxite, new business at our ports, we have operational plans at all our port locations, sugar, molasses, fuel, petroleum, grain, ethanol, fertiliser and magnetite. aimed at maximising trade and generating income at the ports. Preparation Cement, scrap metal, machinery, motor vehicles and general cargo also of a master plan for future development of the Port of Hay Point has pass through our ports. Over half of Queensland’s exports by tonnage commenced and master planning for our other ports will follow in response pass through NQBP’s ports. to commodity demand and in alignment with the National Ports Strategy. Coal is our largest export commodity. Thermal coal is produced to fuel This year’s report outlines the key projects and trading figures that we the boilers of power stations in countries such as China, Taiwan, Korea have delivered. While we have focused on generating new business and India. Coking coal is used in iron production mills in locations and improving infrastructure at all of our ports, the continued focus has including Japan, India, Italy and France. been on developing Abbot Point, which has become one of the major development sites in Queensland. Engaging with our customers Land use planning We strive to engage with our customers on all relevant port-related Land use planning is a requirement of the Transport Infrastructure Act activities. NQBP recently undertook a comprehensive customer and 1994 (TIA) to facilitate the appropriate and sustainable development of stakeholder survey which has given us some strong feedback on how our ports. Land Use Plans regulate port development and provide the we can continue to provide service excellence. following benefits: Enhancing our customers’ knowledge • give assurances to port users that sufficient area is available for essential port services and infrastructure so that they can develop their businesses; To keep our customers informed with current and future port activities • protect areas with special environmental and cultural values; and services, we use a variety of communication channels including: • provide certainty to communities in the vicinity of the port regarding • regular meetings at port locations; the location of future development; • our NQBP website; • foster the integration of local, regional and State planning • our Annual Report; considerations; and • our quarterly Abbot Point stakeholder newsletters; • consider public expectations regarding the sustainability of • monthly newspaper columns; and future development. • monthly throughput figures on our website. This is achieved by allocating strategic port land into designations which reflect its attributes, desired function and NQBP’s development intent, Our stakeholder feedback has provided some additional information and producing guidelines against which development will be assessed. on ways our customers would like to be kept informed and we will be seeking to implement these suggestions over the coming year. It has been a significant year for NQBP planning with the shareholding Minister’s approval being granted for both the Port of Hay Point Land Our Chief Executive Officer, Deputy Chief Executive Officer and Use Plan (July 2010) and the Port of Abbot Point Land Use Plan leadership team maintain regular contact with customers by phone, (March 2011). The approval of these Land Use Plans is a significant email, face-to-face meetings and port visits. During 2010-11, our Chief milestone for NQBP as it has allowed additional land and sea areas to Executive Officer delivered a series of presentations to our customers, be designated as Strategic Port Land. This has provided greater certainty outlining the activities and future plans for each of our ports. for planned port expansions such as coal terminal developments at Dudgeon Point (Port of Hay Point) and the Multi Cargo Facility and T2 and T3 coal terminal developments (Port of Abbot Point). NQBP is currently progressing with the review of the Port of Weipa Land Use Plan, with expected completion in 2012.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 21 NQBP | OPERATIONAL PERFORMANCE

Situated about 40 kilometres south of Mackay, the Port of Hay Point is one of the largest coal export ports in the world.

22 Port of Hay Point

The Port of Hay Point comprises two separate coal export terminals, Dudgeon Point development Dalrymple Bay Coal Terminal (DBCT) leased from the State Government by DBCT Management Pty Ltd and the BHP Billiton Mitsubishi The site recommended for the port expansion in the development Alliance-owned and operated Hay Point Coal Terminal (HPCT), which master planning studies is at Dudgeon Point, approximately five together service the mines of central Queensland. The mines are linked kilometres north-west of the existing two coal terminals. NQBP holds to the port terminals through an integrated rail-port network. around 1400 ha at Dudgeon Point, principally as freehold land. Around half of the site is zoned for port use and the remainder is being retained Both terminals have purpose-built, rail inloading facilities, onshore by NQBP as environmental or general buffer purposes. stockpile yards and offshore wharves. The offshore wharves are serviced by conveyor systems, supported on jetties, which run out to Planning for the port expansion involves up to three new coal terminals sea and allow loading in deep water. in the port, with an estimated combined capacity of between 120 to 150 Mtpa. The expected construction cost of the new terminals The total throughput for the port was 87,805,164 tonnes, comprising is AUD $8 to $10 billion, to be funded by industry. The project is 54,664,876 tonnes through DBCT and 33,140,288 tonnes through expected to include new coal stockyards, up to eight new ship berths, HPCT. A total of 892 bulk carriers visited the port in 2010-11. a new rail connection from the Goonyella system to Dudgeon Point, as well as an expansion of the existing Tug Harbour at Half Tide. Expansion projects underway If approved, the new terminals would be expected to export the first Following DBCT Management Pty Ltd’s expansion of DBCT to 85 Mtpa coal around 2016. last year, NQBP is considering potential for further expansion which will be included in the Hay Point Development Master Plan. Hay Point dust and noise monitoring BHP Billiton Mitsubishi Alliance (BMA) is progressing the approved Monthly reports are prepared based on four primary sites located in the expansion of its HPCT from 44 Mtpa to 55 Mtpa (known as HPX3). The surrounding residential areas for continuous dust and noise monitoring HPX3 terminal expansion will include a new offshore jetty and berth, and 19 secondary sites for dust deposition. The reports provide the entailing dredging and removal of rocky material from the seabed, results of real time airborne dust, noise and meteorological conditions. some land reclamation and quarrying activity on port land. NQBP, together with the terminal operators, Hay Point Services Pty Ltd and DBCT Management Pty Ltd, has recently completed upgrades to The HPX3 expansion preliminary works have commenced. They will be the monitoring system. NQBP, with our terminal operators, are also followed by a two-year construction phase. investigating an expansion of the monitoring program to account Planning for future port expansion for future port growth at Hay Point and Dudgeon Point, as well as capturing activities at the Port of Mackay. Investigation of further major expansion of the port is well underway. Following an Expression of Interest (EOI) process in 2009, NQBP announced in July 2010 that the Adani Group and DBCT Management Louisa Creek land purchases Pty Ltd were the preferred proponents to work with NQBP to develop Louisa Creek is a small community on the north-west boundary a Development Master Plan for required new coal export facilities in of DBCT. Due to the community’s close proximity to the port, PCQ the port. Master planning and environmental studies commenced for initiated a voluntary property buying program in 1996 which has this expansion in January 2011. A draft Development Master Plan is allowed residents who wished to leave the area to do so, with the expected in late 2011 and a draft Environmental Impact Statement (EIS) knowledge that they had a potential buyer for their properties. for the proposed project is expected to be published in mid 2012. During the 2010-11 financial year, NQBP purchased a further three properties at Louisa Creek. As at 30 June 2011 NQBP owns 50 houses in Louisa Creek which it rents to support the accommodation needs of the local community.

Hay Point Caravan Park closure The Hay Point Caravan Park was closed in January 2011. It will be replaced by a vegetated buffer area with walking trails accessible to the public.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 23 NQBP | OPERATIONAL PERFORMANCE

The Port of Mackay is located five kilometres north of the city of Mackay. It is a multi- cargo port which historically has had close links to the sugar and grain industries in the Mackay region.

24 Port of Mackay

The Port of Mackay comprises an artificial harbour formed by rock Blue Diamond diesel storage facility breakwaters. The predominant import cargo is petroleum products and the predominant exports are sugar and grain. Blue Diamond Australia, an industry leader in the area of project consultancy for fuel-related storage terminals, has commenced Land areas behind the port accommodate over 100 industrial and building a state of the art diesel storage facility at the Port of Mackay. commercial businesses with substantial areas of vacant land suitable With the ground lease signed, site civil works commenced in for further development. May 2011. This project will provide a benefit to local employment with The Port of Mackay handled a total of 175 vessels in 2010-11 carrying a focus on engaging as many local contractors as possible. As well, the following cargo for import and export: component parts manufactured in Brisbane will be delivered to Mackay for assembly. THROUGHPUT CARGO TONNES 2010-11 Hardstand upgrade Tallow 5,677 Several sites have been identified as likely lay down areas for break bulk imports or other short term storage opportunities. The emphasis is Raw sugar 575,522 on being prepared to take advantage of growth in mine expansions and Petroleum 1,044,895 other infrastructure projects. Grain – sorghum 350,056 Breakwater repairs Logs 40,114 At a cost of nearly $9.5 million, repairs to the damaged breakwater Ethanol 3,196 caused by Cyclone Ului were completed in May 2011. A total of Fertiliser 44,218 130,000 tonnes of rock was used to complete the repairs over a nine Molasses 42,505 month period. A shortage of readily available suitable armour rock in the region meant that rock was sourced from as far away as Bowen to Cement 23,032 complete the job. Scrap metal 32,729 Magnetite 35,040 Harbour Road upgrade Other goods 32,854 Progress on this project was severely affected by the high rainfall experienced in the area since November 2010, and the project Sulphuric acid 7,515 completion was extended to June 2011. Now complete, Harbour Road Refined sugar 312,271 provides an improved and important dual carriageway between the port entrance and Ron Searle Drive. Machinery 2,000 Motor vehicles 363 Mount Bassett Quarry Total 2,551,987 The Mount Bassett Quarry operation has recommenced under a commercial agreement with Crushing Industries Australia (CIA). Port pricing policy The Quarry delivered nearly 40,000 tonnes of armour rock for the breakwater repair project within the first few months of the Following the port pricing review in 2009, NQBP implemented a staged five-year agreement. price increase over four years to align port revenues more closely with return requirements. The review provided for annual increases in prices for dry bulk commodities and ship-related charges of 9% per year during the implementation period.

Rent review A market rent review process of several port property leases began in October 2009 and found that since the previous market rent reviews were conducted in 2005, there were increases in property values within the precinct. NQBP commissioned an independent valuer to complete a separate valuation of 52 leases, addressing the review criteria and mechanisms within the lease agreements. After a considerable amount of consultation with port lessees in 2010, agreement has been reached with all lessees.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 25 NQBP | OPERATIONAL PERFORMANCE

The Port of Abbot Point is one of Australia’s most significant emerging bulk ports and is undergoing a major transformation into a port precinct of global importance.

26 Port of Abbot Point

NQBP has been actively planning for large scale growth for the Port of Multi Cargo Facility (MCF) Abbot Point, by identifying sites for industrial development and master planning for supporting marine infrastructure. The negotiation of the framework agreements with the preferred developers for T2 and T3 is expected to provide a further catalyst to the This potential growth is underpinned by the declaration of 16,230 development of a MCF. In early 2011, NQBP conducted an EOI process hectares of land as the Abbot Point State Development Area (APSDA), for Early Contractor Involvement (ECI) in the Stage 1 development of coupled with advanced planning for the development of a sheltered the MCF, with a view to appointing a design and construct contract in breakwater harbour capable of handling up to 12 capesize vessels, in late 2011, subject to commercial and development approvals. Stage 1 addition to the offshore wharves. involves four berths and a common user tug facility for the T2 and T3 The Port is located 25 kilometres north of Bowen and is located at terminals. Stage 2 could involve an additional eight berths for the T4-7 the northern end of the Bowen and Galilee coal basins. The Port is terminals and other cargo. connected to the Newlands/Collinsville coal rail network and during The MCF EIS process is well underway, and is currently waiting on 2011-12 QR National is expected to complete the Goonyella to Abbot Federal Government approval. Point Port Expansion Project connecting the port to the Goonyella coal rail network. Terminal 2 and Terminal 3 development sites A number of proponents are also currently planning for the development of standard gauge coal rail network/s from the Galilee In April 2010, NQBP awarded BHP Billiton Limited and Hancock Coal Basin to the Port of Abbot Point. Pty Ltd preferred developer status for the development of two separate coal terminals at Abbot Point. The Port of Abbot Point achieved throughput this year of 15,063,943 tonnes. A total of 190 bulk carriers visited the port in 2010-11. The new coal terminals are expected to provide the capacity to export at least 30 Mtpa per site. Subject to investigations and approvals, the proponents have expressed interest in optimising the area to enable Abbot Point Terminal 1 including X50 expansion exports of potentially up to 60 Mtpa per site. In June 2011, NQBP finalised the long term lease of Terminal 1 to During the year both entities progressed their feasibility studies for Mundra Port as part of the State’s Renewing Queensland program. these developments. Framework Agreements between NQBP and each The transaction included the right for Mundra Port to investigate the entity which underpin the planning and development of these terminals feasibility of further expansion of the Terminal utilising land areas are progressing in accordance with shareholder requirements. adjacent to the eastern boundary of the terminal. Terminal 1 comprises two rail inloading facilities, coal handling Abbot Point Terminal 4 planning and stockpiling areas and a 2.8 kilometre trestle jetty and conveyor connecting to two offshore berths and two shiploaders. Unparalleled interest in the development of additional coal export capacity through the Port of Abbot Point has led to the selection of an The Terminal’s nominal capacity is set to progressively increase from additional coal terminal location within the APSDA. In association with 21 Mtpa (X21) to 50 Mtpa (X50) during the 2011 calendar year. During the Queensland Government, NQBP has developed plans to facilitate 2010-11 NQBP witnessed the first coal through Inloader 1 Upgrade the development of four additional separate tranches, each nominally (November 2010); Stacker Reclaimer 5 (November 2010); Stacker 30 Mtpa of coal terminal capacity. These four tranches are referred to as Reclaimer 6 (June 2011) and Shiploader 2 (May 2011). During the Terminals 4-7 and T4, T5, T6 and T7. remainder of 2011, it is expected that the new Terminal lessee Mundra Port (supported by project management services provided by NQBP), To assess preliminary demand for additional terminals at T4-7, will complete the balance of the X50 works including commissioning in December 2010 NQBP held a customer forum to outline the the remaining two stacker reclaimers (SR4 and SR2A), completing the proposed development and invited indicative EOI for terminal outloading 1 system upgrade and constructing a stormwater return dam capacity from users. With the high level of indicative demand, (subject to being granted relevant environmental approvals). NQBP commenced a formal EOI process in May 2011. NQBP expects to announce preferred proponents towards the end of 2011, The terminal is currently operated by Abbot Point Bulkcoal Pty Ltd. subject to shareholder and Board approvals. APPLIS Alongside the construction of the port infrastructure, there has been a major project to upgrade the Abbot Point Planning and Logistics Information Systems (APPLIS). Matrikon Pty Ltd was appointed the head contractor for the Logistics and Information Technology platform, with Quintiq Pty Ltd subcontracted to provide the planning tools solution. NQBP has appointed a dedicated project team (including operator personnel) to manage and support the project. This team has been transferred to Mundra Port to ensure unhindered continuity of the project.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 27 NQBP | OPERATIONAL PERFORMANCE

The Port of Weipa is located on the north- west coast of Cape York Peninsula. The port primarily facilitates the export of bauxite from the Rio Tinto Aluminium (RTA) mines. RTA also operates the bauxite loading facilities.

28 Port of Weipa

The Port of Weipa has onshore bauxite handling, processing and Maintenance dredging stockpiling facilities and conveyors running to Lorim Point wharf for shiploading. Maintenance dredging started on 18 July 2010 and was successfully completed on 26 August 2010, with the declared depths in the Inner There are also general purpose and fuel wharves at Weipa and Harbour achieved and the South Channel insurance profile restored. stockyards for live cattle export through the port. A total of 832,779 m³ of material was removed from the South Channel The Port of Weipa handled 397 ships in 2010-11, carrying and Inner Harbour which was then relocated to the Albatross Bay 22,235,783 tonnes of bauxite, 47,225 tonnes of fuel, and 39,638 disposal ground. tonnes of general cargo. The final project cost for the 2010 maintenance dredging campaign was more than $4 million. This 15 kilometre-long South Channel is subject to ongoing siltation from the natural movement of the seabed material in Albatross Bay. The shipping channel requires annual maintenance dredging to ensure the declared depth is maintained year round.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 29 NQBP | SOCIAL PERFORMANCE

“We have leaders who bring commitment, integrity, and a sense of value to their work: people who are not afraid to take on the challenges to ensure we have a strong business into the future. At NQBP, we continue to work hard to earn the respect of not only our customers, stakeholders and communities, but of each other.”

Bev Russell HR Advisor

30 Social Performance Summary

Our Objectives Indicators 2010-11 NQBP Group Our workforce profile Number of employees 111 Employee turnover 15.78% Valuing diversity Percentage of women on the Board 43% NQBP is committed to the principles of Percentage of women in the workforce 47% Equal Employment Opportunity (EEO) and the values of merit, equity and impartiality Percentage of women in the leadership team 29% in recruitment and selection. We exercise Percentage of women in middle management 33% impartiality in all areas of employment Percentage of women covered by the collective agreement MPL Federal & State 31% PCQ 73%

Number of formal EEO complaints reported to management 0

Number of formal harassment complaints reported to management 1

Number of days lost through industrial disputes 0 Understanding what our Conduct regular staff briefing sessions employees value most Regular discussions on and reaffirmation of NQBP core values with all employees

Leadership team performance indicators based on the corporate values Developing our people Training expenditure total $154,034 NQBP is committed to the professional Training expenditure per employee $1,426 and personal development of our people Training expenditure as a percentage of base salaries paid 1.96%

Number of employees receiving support for accredited courses 0

Percentage of employees rated “good performer” or above 95% in their annual performance review Health, safety and wellbeing Number of lost time injuries 4 NQBP is committed to providing and Lost time injury frequency rate 23.86 maintaining a safe and healthy working Percentage of eligible employees who participated in an annual environment for all employees, visitors 29% and members of the public health check Percentage of eligible employees who participated in gym 30% membership reimbursement

Number of health and safety committee members who are 10 employee representatives Our community Amount spent on community support (donations, sponsorships) $99,065 Our aim is to become a role-model Amount spent on community support as a percentage of pre-tax 0.19% (excluding AP T1 sale) corporate citizen profit, less re-valuations

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 31 NQBP | SOCIAL PERFORMANCE

People

Reaching our business objectives cannot be done without the efforts of our people. NQBP continues to look for ways to improve on what we do and that includes our staff. It is important that employees feel valued, supported and encouraged to perform and develop their knowledge, competencies and skills.

Through the development and growth of our employees, NQBP is In addition, NQBP provides an employee assistance program (EAP), able to create an environment where objectives are met and business that is, a confidential, short-term external counselling service to help success is expected. This leads to work that is rewarding and attracts employees with work or personal issues that impact on their ability high quality employees. to perform. Ultimately, the role of an EAP is to provide practical short term counselling as an early intervention to tackle problems. NQBP Responsiveness has engaged an independent provider to deliver this valuable service to our employees. At NQBP we understand the importance of emerging business priorities. Therefore, through our people and systems we are always Equal opportunity and our work environment aware and responsive to ways we can improve to meet these new demands. This includes the need to bring on new teams quickly to NQBP continues to invest in business processes that will assist us to meet the short and long term requirements of major projects. become a preferred employer. NQBP reviews and modifies its policies to ensure they are up to date Promoting health and wellbeing and reflective of the culture it strives to create. Regular policy refresher NQBP continues to demonstrate a commitment to the health and training for our employees has enabled us to emphasise the importance wellbeing of our people, specifically identifying improvements that of keeping the workplace free from discrimination, harassment and may be made. bullying, as well as creating awareness around cultural equity. Current initiatives include: We employ a merit-based recruitment policy and adopt formal interview processes to ensure equal opportunity across all positions. • rostered days off for many employees for a better work-life balance; NQBP has invested in the development of new induction processes. • flexible working hours; Its implementation included training of employees and managers in the • promoting individual personal development; responsibilities of inducting new personnel into the corporation. • health and fitness assessments; When seeking to engage contractors, consultants and training providers, NQBP first explores opportunities to work with regional • first aid training; organisations to ensure local talent is utilised. • flu vaccinations; • subsidised gym memberships (for eligible employees); and • annual health checks (for eligible employees).

32 “Business as usual is not enough in today’s global market. Throughout the organisation, we are always looking for new and different ways to take our business forward in leaps, not just baby steps.” Alan Guthrie Contracts Technician

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 33 NQBP | SOCIAL PERFORMANCE

“At NQBP, commitment to safety is not just something we say – it’s something we do, every day. It’s important to me that every member of my team can say goodbye to their family in the morning, knowing that they’ll be back home safely for dinner or for footy practice that night.”

Jeff Sadler Works Coordinator

34 management systemswhenvisitingNQBPworkplaces. staff, aswellexternalstakeholders,haveconfidenceinthesafety NQBP’s healthandsafetyfocusisdirected atensuringmembersof Health andsafetyapproachinitiatives of performance. in theworkplaceisamajorcontributingfactortothishighstandard The recognitionbyallNQBPstaffoftheimportancesafepractices a safetyeducationandawarenesscampaign acrossthebusiness. a corporategoalofzeroinjuriesandtoachieve thisgoal,NQBPhasdeveloped NQBP hasanexcellentsafetyperformanceacrossallofitsworksites.We have Health andSafety

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED

Photo courtesy of Mackay Daily Mercury progress ofthoseconcernspreviouslyidentified. Committees meetregularlytodiscusssafetyissuesandmonitor Site-specific Workplace HealthSafetyandEnvironment(WHS&E) • • • • • • Some initiativesthroughouttheyearinclude: however, potential physicalrisksintheworkplaceswereassessed. Safety Act 1995.Nosignificantsafetyissueswereraisedinanyaudit; were compliantwiththerequirementsofWorkplace Healthand were beingwellmanagedtoachieveahighstandardofsafetyand The annualauditofallourfacilitiesconfirmedthatworkplaces appropriate controlswheretaskredesigncannoteliminatetherisk. approach toidentifypotentialworkplacerisks,implementing are met.NQBPhasmaintainedtheuseofarisk-basedmanagement in theworkplaceandtoensurelegislativepolicyrequirements and proceduresareinplacetoeffectivelymanagehealthsafety Management System.ThisOHSSystemensurespolicies Standard 4801:2001OccupationalHealthandSafety(OHS) NQBP hasspentthisyearstrivingtomeettheAustralian/New Zealand direction forongoingsafetyinitiatives. developing anintegratedSecureSafeProgramthatprovidesthe and SafetyLegislation; initial planningforthepossibleintroductionofHarmonisedealth developing aNQBPstandardinductionprotocol; review andupdateoftheJobHazardAnalysisdocumentation; Handling Guideline; the developmentandimplementationofaShipsLine a totalreviewofallStandardOperatingProcedures; | ANNUAL REPORT 2010–2011 |

35 NQBP | SOCIAL PERFORMANCE

Community

NQBP demonstrates its commitment to its port communities by supporting them in diverse ways through the Corporate Communities Program.

NQBP’s Corporate Communities Program and sponsorship commitments • Mackay Surf Life Saving Club – Boardies Day support; are reviewed regularly to ensure that they are relevant to NQBP’s • Whitsunday Connected Communities Forum; community investment strategy and represent the best value for NQBP, our shareholders and the local communities. • Bowen Woodworkers and Woodturners Association; and A variety of local initiatives and requests are funded by NQBP, including • 42nd Infantry Battalion Association Mackay Reunion. environmental research, such as the monitoring of sea turtles in Bowen In kind support included: through to providing resources to local community groups such as • Mackay Surf Life Saving Club – loan of 4WD mule for North portable shade covers for a Weipa school. Australian Surf Life Saving Championship; and At the heart of NQBP’s commitment to supporting communities is the • Australian Offshore Superboat Championship. opportunity to form partnerships with organisations which enable us to connect in a positive way with our customers, communities and The Corporate Communities Program contributed almost $100,000 to stakeholders, particularly if it results in bringing long term benefits to the port communities of Weipa, Abbot Point, Mackay and Hay Point. the communities in which we operate. The program has proven successful in building positive relationships within these communities and in fact, the partnerships have enabled Assistance may be provided for events, programs or initiatives which NQBP to improve its support in the local port communities and at the meet one of four criteria: environment, employment, youth and same time led to the achievement of shared outcomes. business and regional development. Over the past year NQBP has continued to demonstrate its commitment Adding value to our corporate by providing support for the following local organisations within four of our port locations: communities program • Mulherin Park re-opening celebration in Mackay: NQBP is committed to ensuring its port communities and stakeholders are informed of its future plans and progress on developments. This • Regional Indigenous Employment Program - providing employment information is communicated in a variety of ways. For instance, port services and identifying and cultivating job opportunities; advisory committee meetings are held regularly in the ports of Abbot • sponsorship support for local festivals including the Coal to Coast Point, Mackay and Hay Point. We involve the port communities in Festival, and the River to Reef Festival; environmental initiatives, such as teaching Bowen school children how to monitor the quality of water. • funding support for local Regional Economic Development Corporations; In addition, NQBP convenes regular community reference group • Sarina State High School Scholarship; meetings in the ports of Mackay and Hay Point. These meetings • equipment and coordination of volunteer staff for the Flagstaff provide a forum where information is provided to the community and Hill Upgrade in Bowen; their input is sought on issues of relevance and concern relating to the • sponsorship of the Bowen Show; operational, development and planning activities within these ports. • information communication technology resources for Alligator NQBP also produces a number of newsletters aimed at the interests of Creek State School; each of its port communities. For the Abbot Point area, the Abbot Point Portal is produced quarterly and distributed to interested stakeholders. • 20th International Maritime Pilots Association Congress; Likewise the Bowen Portal is distributed to the Bowen community • Women in Mining and Safety Training course in Bowen; through the local newspaper. The community in Mackay is kept informed through their local newspaper with NQBP’s regular monthly • lions Club of Collinsville; column. The communities of Hay Point receive copies of the Hay Point • Mackay Art on Show Award; Portal quarterly. In addition, a regular monthly column appears in the • Western Cape College, Weipa – provision of portable shade covers; local newspapers. • Australian Society of Sugar Cane Technologists Conference;

36 “NQBP is planning for, and delivering critical port capacity for the benefit of all Queenslanders. I am focused on negotiating strong commercial outcomes which contribute to the development of the coal industry in Queensland, and it gives me a strong sense of satisfaction knowing that I am helping to shape the strategic direction of some of the biggest ports in the world.” Rebecca Landon Commercial Consultant

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 37 NQBP | ENVIRONMENTAL AND SUSTAINABILITY PERFORMANCE

Environmental and Sustainability Performance

NQBP strives for sustainable operation and development of its ports through a structured and cost-effective program involving environmental management, monitoring and improvement. This reflects our commitment to protect the natural environment, the implementation of best practice environmental management measures and effective community consultation.

Our highlights Port of Abbot Point NQBP’s environmental performance against its targets for the year is The Federal Department of Sustainability, Environment, Water, reported separately in the Financial Performance of this Annual Report. Population and Community (SEWPaC) is currently assessing an Some of the important achievements in the year are noted below. application by NQBP to construct a Stormwater Return Dam as part of the existing Abbot Point Terminal 1. Construction of the dam would more than double the capacity of onsite rainwater storage to ISO 14001 certification renewal approximately 983ML, decreasing the frequency of discharge from In every third year of an ISO 14001 certification period, a third existing onsite storage dams and reducing reliance on ground water party audit is undertaken on NQBP’s accredited Environmental supplies. The assessment documents were issued for public display Management System (EMS) in its entirety. This year Det Norske during May 2011. Veritas (DNV) undertook the comprehensive recertification audit of NQBP has been working closely alongside the preferred developers NQBP’s EMS which was successfully renewed for a further three year of T2 and T3, BHP Billiton and Hancock Coal, to progress the certification period. environmental approvals to develop both the onshore and offshore aspects of this project. Environmental Management Plans The approval process for the proposed Multi Cargo Facility is well Port specific Environmental Management Plans have now been adopted underway with the public consultation phase of the EIS complete and and published for each of the NQBP trading ports. currently with the Federal Government for sign-off.

Licences and approvals Port of Mackay Effective 1 January 2010, the Queensland State Government introduced The Port of Mackay offers a diverse mix of public open space, protected an Environmentally Relevant Activity (ERA) 16 - Extractive and areas, residential environments, and port-related industry precincts - Screening Activities (this previously did not apply to port operators). offering recreational opportunities, biodiversity and economic growth. NQBP has successfully gained an ERA16 Permit from the State A landscape plan for the Port of Mackay is being developed to assist Department of Environment and Resource Management (DERM) to in the management and protection of these values by integrating sound undertake maintenance dredging at its ports in Weipa, Abbot Point, landscape principles within the port precinct. Mackay and Hay Point. NQBP was actively involved with DERM, In May 2011, NQBP commenced a sand migration study to quantify alongside other Queensland port authorities, in developing a standard sediment movements around the Port of Mackay. The study has been set of approval conditions for this ERA. designed to provide evidence on whether: Port of Weipa • sand is moving along the coast from south to north, bypassing the port; • the port has any effect in this process; Since 2000, NQBP has been undertaking a seagrass monitoring program in a collaborative project with Fisheries Queensland in the • any proportion of near coast silty sandy material moves north, Port of Weipa. To further enhance our understanding of the natural entering and then remaining in the port; and variation in seagrass density and distribution, NQBP has sponsored the • there are any engineering (sedimentation in the port/marina) or ongoing maintenance of Photosynthetic Active Radiation (PAR) meters environmental (beach erosion) concerns. installed by Fisheries Queensland. This initiative began in September 2010 as part of an improved ongoing monitoring program. Traditionally, hydrodynamic modelling has been used to estimate sediment migration patterns and is reliant on the accuracy of a range of environmental assumptions of coastal processes. NQBP has engaged an international consultant offering unique environmentally benign non-toxic fluorescent tracing particles that mimic the movements of natural sediment. Real-time sampling of the sediments around the port will provide data on the spatial and temporal distribution of the tracer particles and a greater confidence in our understanding of migration patterns.

38 “Our ports are located on some of the most beautiful and biologically diverse coastal ecosystems in Australia. For the NQBP environment team, it is a privilege to lead the charge in minimising our ecological footprint across our business. We have high expectations of our environmental performance and we extend that to all Port partners.”

Kevin Kane Group Manager Environment

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 39 NQBP | ENVIRONMENTAL AND SUSTAINABILITY PERFORMANCE

40 Environmental and Sustainability Performance (continued)

Port of Hay Point Greenhouse gas reduction NQBP owns approximately 6526 hectares of strategic port land (SPL) NQBP continued the implementation of the Energy Management and at Hay Point, including an area of 2.1194 hectares previously leased Carbon Reduction Plan throughout the 2010-11 financial year. as the site of the Hay Point Caravan Park. This site is to be set aside as This Plan defines NQBP’s mandatory obligations under various Federal open space and revegetated, to buffer the surrounding community from and State legislations including the following: port operations. The local community has been invited to provide input into two proposed landscape options, both of which maximise use of • QFleet Climate Smart Policy; local native flora species, minimise maintenance needs and costs and • Queensland Government Carbon Offsets Air Travel Policy; and provide for passive recreational use of the area. • Strategic Energy Efficiency Policy for Queensland Government Buildings and the associated Carbon Reduction Strategy for Our environmental management system Government Office Buildings. As part of our commitment to sustainable operations and responsible This Plan also provides for voluntary measures nominated by NQBP for environmental management, we have continued to maintain and the reduction of our emission footprint. improve our Environmental Management System (EMS), which is Under this plan, all air travel is to be carbon neutral and carbon offsets certified under AS/NZS ISO14001:2004. are purchased to achieve this. Similarly, carbon offsets are to be The EMS provides a methodical framework to minimise the purchased from July to August 2011 to achieve a reduction target for environmental impacts of our operations. It outlines NQBP’s the 2010-11 year of 5% for building power and lighting use and 15% procedures and individual environmental responsibilities to ensure that for vehicle fuel use. Energy-saving measures are considered in all a high standard of environmental performance is maintained across our projects. the business. NQBP will continue to monitor and report greenhouse gas emissions, This year we were successful in renewing our EMS certification under promote awareness and education, reduce energy usage and AS/NZS ISO14001:2004. greenhouse gas emissions and ensure compliance with policy and legislation. Our environment and sustainability NQBP’s greenhouse emissions for 2010-11 are reported in Table 1. NQBP’s Environmental Policy, together with our Sustainability Policy defines our commitment to sustainable development and minimising our ecological footprint across our business. Our policies are communicated to all employees and contractors through a continual program of staff training and development of environmental management plans. NQBP has continued to focus efforts to manage and reduce greenhouse gas emissions from our activities. We have implemented a corporate- wide Energy Management and Carbon Reduction Plan. This Plan defines NQBP’s commitments to both mandatory, required under both State and Federal policies for government owned corporations, and voluntary greenhouse gas reduction and offset obligations. Under this Plan, we are offsetting all of our air travel emissions through a carbon provider certified by the Federal Department of Climate Change and Energy Efficiency. This plan also includes a number of green initiatives, such as the purchasing of only fuel efficient cars for the NQBP car fleet and setting minimum energy efficiency requirements for future new buildings.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 41 NQBP | ENVIRONMENTAL AND SUSTAINABILITY PERFORMANCE

Environmental and Sustainability Performance (continued)

1 Table 1 – NQBP Greenhouse Gas Emissions in Tonnes of CO2 equiv Estimated Purchased Source 2009-10 2010-11 Carbon Offsets2 Net 2010-11 Port Operations and Management

Electricity for power and lighting 1,207 1, 288 146 1,1423 Electricity, gas and fuel for Abbot Point construction camp at Merinda 2,094 3,224 3,224 0

Fuel for fleet vehicles4 142 156 78 78

Fuel for hire cars 16 22 15 7

Fuel for boats, mowers, plant 65 98 0 98

Fuel in flights5 75 251 2516 0

Fuel for dredging (Mackay) 9 0 0 0 Vegetation Impacts/Benefits Vegetation clearing at Abbot Point for X50 expansion construction project7 0 0 0 0 Vegetation clearing for administration building construction7 25 0 0 0 Estimated greenhouse gas take-up through NQBP vegetation sequestration8 - 1,449 -1,325 - -

Total Nqbp Emissions 2,184 3,714 3,714 0

As can be seen from the table, extensive revegetation of the Port of Hay Table Notes – Point offsets a large portion of greenhouse gases generated by NQBP’s 1. Calculations based on EPA Ecobiz converter (May 2007). direct activities. Continued landscaping and revegetation schemes are 2. Carbon offsets for 2010-11 are to be purchased in August 2011, following expected to add to our Port’s ecosystem’s ability to take up greenhouse calculation of emissions for the year. 3. Carbon offsets to be purchased to reduce to a target of 1142t for 2010-11. gas emissions. Carbon offsets are to be purchased in July/August 2011 4. offset Target for 2010-11 is 50% of CO2 equivalent. to reduce net greenhouse gas generation to zero from NQBP’s direct 5. Greenhouse gas emissions from commercial flights calculated using the Australian emissions (excludes contractor emissions) and to meet other corporate Greenhouse Office conversion factor. Flights include commercial and chartered flights. reduction targets. 6. Carbon offsets are being purchased to ensure all air travel is carbon neutral.

7. Emissions for tree clearing are an estimate only based on 50t CO2 - equivalent per hectare. 8. Based on revegetation previously planted at Hay Point. Sequestration reportable extent calculated for 2010-11 based on age of plantings.

42 Emissions from NQBP contractors Water management NQBP uses contractors to manage some of its activities. These NQBP’s water usage is largely confined to public amenities, including contractors are likely to report any greenhouse emissions from boat ramps, jetties, offices and workplaces. NQBP does supply water to their activities separately in their own reporting. For transparency, port tenants and visiting ships. these emissions are detailed below. NQBP has not sought to offset The table below summarises NQBP’s water usage across NQBP ports. these emissions. Table 3 – Water Usage in kilolitres across NQBP Ports12 Table 2 – NQBP contractor greenhouse emissions in tonnes of CO2 equiv Port 2009-10 2010-11 Source 2009-10 2010-11 Bowen 737 747

Abbot Point Terminal 19 Abbot Point (X50) 11 10 (operated by Abbot Point Bulkcoal Pty Ltd) 30,187 29,455 Hay Point13 19 18 Hay Point Quarantine Waste Facility10 Mackay 200,363 198,405 (operated by JJ Richards) 171 165 Total 201,130 199,180 Dredging and Bed Levelling (operated by various contractors)11 1,064 1,521 Table Notes – 12. Water usage in the Brisbane and Mackay offices is not metered separately to other Total Contractor Emissions 31,422 31,141 users in the buildings. Usage, however, is expected to be low. 13. Water usage does not include tenants oncharged for usage such as the quarantine Table Notes – waste facility and Tug Harbour facilities. 9. Includes NQBP X50 construction site electricity consumption. As can be seen in Table 3, water usage across some NQBP sites as 10. Includes gas consumption, but excludes any fuel used in road transport vehicles and electricity. compared to others remains quite high. Some reductions have been 11. Includes Weipa and Hay Point dredging. realised through conservation measures implemented throughout the year. Not all Port of Mackay water usage is metered and oncharged and The threshold for greenhouse gas reporting under Federal legislation it is likely that the high readings within Mackay relate to this. is 25,000 tonnes CO2 equiv although it is expected that the emissions from the Abbot Point Terminal will be reported by the terminal operator NQBP has submitted an application to build a 565ML stormwater (Abbot Point Bulkcoal Pty Ltd) under the National Greenhouse and return dam at the Port of Abbot Point to assist in water management Energy Reporting System. and reduce the reliance on groundwater supplies. Emission from dredging and bed levelling undertaken by external Sustainable design contractors is relatively low, as no capital dredging was carried out in the year. As part of our commitment to sustainable design, we have included water sensitive urban design in the upgrade of Harbour Road in the Port of Mackay. The design has included vegetated swales and bioretention swales, which provide flow retardation and trap particulates/nutrients in stormwater before discharge into the stormwater system. The principles of water sensitive design will also be reflected in the landscape plans currently being developed for this port, with an expectation to roll out these values to each of our ports. NQBP has completed construction of a new administration building at Abbot Point. It features a range of energy saving measures incorporated into the architectural design, as well as water and electrical installations. This building forms part of Abbot Point Terminal 1 leased to Mundra Port.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 43 NQBP | ENVIRONMENTAL AND SUSTAINABILITY PERFORMANCE

Environmental and Sustainability Performance (continued)

Effective implementation In many of our regional ports, local councils do not currently offer recycling facilities. However, our port staff have adopted innovative ways ‘EcoPorts’ program of reusing and recycling waste materials. For example, in one port office used paper is shredded and provided to local farmers for compost use. Our ‘EcoPorts’ Program provides practical actions to achieve NQBP’s environmental goals and commitments. This program documents a In 2010-11, NQBP continued to support the Aussie Recycling Program clear and structured work plan for the financial year for the achievement initiative to recycle mobile phones. Proceeds from this program assist of NQBP management objectives and long term strategic direction the Cerebral Palsy League of Queensland. and outcomes. Protecting the marine environment To achieve the goals of the EcoPorts program, NQBP continues extensive environmental monitoring across our ports, including Seagrass monitoring seagrass, coral, marine fauna and water quality, providing both a baseline for some ports and long term monitoring results for other ports. NQBP continues to financially support annual seagrass monitoring by Fisheries Queensland (DEEDI) at the ports of Weipa, Hay Point and Dredging Abbot Point. NQBP is responsible for carrying out maintenance dredging and As part of the long-term management of potential dredging impacts in bed levelling of its ports to ensure the navigational safety of ships. the Port of Weipa, seagrass monitoring was undertaken in November, In 2010-11, no capital dredging was carried out in any NQBP ports, 2010 and March 2011 to identify any potential impacts from dredging but maintenance dredging was undertaken in the Port of Weipa, from activities. Results from the survey show that seagrasses in the Port 19 July to 26 August 2010. No environmental incidents were recorded of Weipa are in a reasonable, but vulnerable condition. Seagrass during the dredging campaign. Monitoring of large areas of seagrass changes observed were likely to be associated with natural shifts in the port environment was undertaken as part of the environmental in tidal exposure combined with changing light and temperature monitoring associated with the activity. associated with local climate. The September 2010 monitoring showed Maintenance dredging was undertaken at the Port of Hay Point from several meadows that had shown a long term declining trend since 30 August to 7 September 2010. The dredging program was not monitoring began in 2000, recorded a significant increase for the first completed due to an internal industrial dispute within the dredge time. The monitoring report concluded that seagrasses appear to have contracting company. been resilient to the impact associated with regular port maintenance dredging during the life of the monitoring program, although some Flora and fauna specific species remain vulnerable. NQBP regularly undertakes weed management of land surrounding Since 2008, NQBP has partnered with Fisheries Queensland on a its ports and will be formalising this into port-specific weed and pest research program on seagrasses at the Port of Abbot Point. The management plans. A weed management plan was developed for the program incorporates baseline mapping of seagrass for port planning Port of Abbot Point and implementation commenced in May 2010. purposes; ongoing monitoring of the health of the various seagrass NQBP is working with the Queensland National Parks and Wildlife meadow types found within the port; an assessment of the value and Service and Whitsunday Regional Council on feral pig management at productivity of the different seagrass meadows; and the seagrass’s the Port of Abbot Point. Fifteen feral pigs have since been eradicated as resilience to impacts and their ability to recover. The most recent a result of this program. assessments were carried out in March 2011. Results of the first three years of research and monitoring have found that seagrass Due to the high presence of snakes at our ports, NQBP has a number meadows in Abbot Point were highly productive and supported a range of employees fully trained to enable them to safely catch and release of commercially important fisheries species. The distribution and snakes that cause disruption around NQBP work sites. New snake abundance of seagrass meadows varied seasonally, as well as being handling equipment purchased for our snake handlers ensures all a result of extreme weather events. The results of the program provide snakes can be safely released away from work areas. key information as a platform to protect these habitats in the future.

Waste management A survey of seagrass in the Port of Hay Point was carried out in October 2010 by the Marine Ecology Group of Fisheries Queensland. Both BMA The amount of paper recycled in the Brisbane office for 2010-11 was and NQBP contributed towards the cost of the survey. This survey was estimated at 2.48 tonnes, compared with 3.63 tonnes in the previous designed to update information from previous surveys carried out in year, effectively saving 6.21T of carbon equivalent emissions. At port waters in 2004 and 2005 and it also builds on ongoing research the Mackay office, paper is recycled with other cardboard and paper on seagrass in the region. In conjunction with the seagrass survey, products, or reused in gardens as mulch. In our corporate offices, most NQBP commissioned the Marine Ecology Group to survey the algae ports and project offices, NQBP uses Reflex recycled Australian paper, and benthic macro-invertebrate community in port waters off Dudgeon which has 50% recycled content. This paper is sourced from Australian Point to assist in planning for the location of marine facilities for paper mills which are certified under AS/NZS ISO 9001 for Quality proposed port expansions. Management and AS/NZS ISO14001 for Environment Management.

44 Other programs Environmental performance NQBP has a range of initiatives to add to our understanding and NQBP has implemented a comprehensive Environment Program preservation of various turtle species visiting and interacting across all our ports, which included environmental monitoring, with our ports. NQBP provides support to Mackay District Turtle compliance auditing, community consultation and environmental Watch Association on research into nesting turtles on the beaches enhancement. Across the 2010-11 financial year, one Environmental surrounding Mackay. We have also helped fund a monitoring program Impact Statement for an NQBP project (MCF) was published and all undertaken by the Queens Beach Action Group in Bowen, which is four port Environmental Management Plans were finalised. In addition, using transponders to track breeding turtles that frequent the local environmental and planning approvals were obtained for a range of beaches. ‘Turtle-friendly’ low pressure sodium (LPS) lights have NQBP projects and activities. been incorporated into the design of the offshore jetties for the X50 The comprehensive environmental audit program, which included expansion project. This non-invasive lighting is designed to minimise ports and projects, involved a total of 38 separate compliance audits by the impact on egg laying activity in the immediate area. NQBP staff. NQBP deploys larval monitoring plates in its ports as a method Three formal non-compliances which involved NQBP activities of monitoring for the introduction of marine pests. The NQBP occurred in the Port of Abbot Point, where NQBP is carrying out Operations Superintendent has enhanced the design of these plates extensive construction activities. Each of these is identified as a to accommodate rough, offshore sea conditions. Over the past year, technical non-compliance with operational permits, and have been the newly designed plates have performed well as a monitoring tool, investigated and reported in accordance with the permit requirements. which will ultimately increase the dataset obtained by NQBP from the monitoring. NQBP is responsible for first-strike oil spill response in its ports. Ongoing training and maintenance has continued in this area in accordance with government requirements. A major training exercise was held at the Port of Weipa in November 2010 and June 2011 and at the Port of Mackay in February 2011.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 45 NQBP | CORPORATE GOVERNANCE

Corporate Governance

Corporate structure The independence of directors is a key issue in ensuring the Board exercises independent judgement. At NQBP, materiality in relation to In late 2008, the Queensland Government announced a review of the the independence of directors is assessed on a case by case basis, Queensland Port Network Structure. As a result of that review, a new taking into account the particular circumstances. NQBP’s Governance company, NQBP, was formed and on 2 July 2009, Ports Corporation Procedure sets out some assessment criteria to provide the Board with Queensland (PCQ) and Mackay Ports Limited (MPL) became wholly guidance on the assessment of director independence. This includes owned subsidiaries of NQBP. NQBP is a company Government taking account of relationships that the director currently has, or had in Owned Corporation (GOC) incorporated under the Corporations the past, with NQBP or any organisation with which it does business. Act 2001 (Corporations Act) and subject to the requirements of the Government Owned Corporations Act 1993 (GOC Act). PCQ and MPL Although NQBP does not have any fixed materiality thresholds in are companies incorporated under the Corporations Act and are also place to determine whether a conflict of a director exists (a departure subject to the GOC Act as subsidiaries of a GOC. from the Government Governance Guidelines notified to the Office of Government Owned Corporations (OGOC) and the Department of The Queensland Government is the owner of all shares in NQBP, which Transport and Main Roads (DTMR)), the Board has comprehensive are held by two shareholding Ministers: the Minister for Main Roads, criteria which are applied on a case by case basis to determine any Fisheries and Marine Infrastructure and the Minister for Finance, potential conflict situation. The Board considers those criteria provide Natural Resources and The Arts. NQBP owns all of the shares in PCQ an effective way to comprehensively assess director independence. and MPL. PCQ owns the port assets at Abbot Point, Hay Point, Weipa and Maryborough. MPL owns the port’s assets at Mackay. All of the directors are considered by each Board to be independent.

Corporate governance practices Role of the Board The three companies in the NQBP Group, being NQBP, PCQ and MPL, A Board Charter is in place that sets out the key roles and functions of have the same Board of Directors (the group being referred to in this our Board. A copy of the charter is included on NQBP’s website. section as NQBP). At NQBP, our Board of Directors is responsible for The collective role of our Board is to: the corporate governance of the organisation and is accountable to the • set corporate direction and goals; shareholding Ministers for NQBP’s performance. • oversee the plans of management to achieve these goals; and Corporate governance at NQBP encompasses a number of functions, including authority, accountabilities, risk management, leadership, • review progress at regular intervals. performance monitoring and internal control systems. Our Board The Board’s functions include: recognises the importance of applying effective corporate governance practices and is committed to a high level of integrity throughout • responsibility for NQBP’s commercial policy and management; its operations. • ensuring that, as far as possible, NQBP achieves and acts in To this end, the Board has adopted the governance principles set out accordance with its Statement of Corporate Intent; in the Queensland Government’s Corporate Governance Guidelines for • accounting to NQBP’s shareholders for its performance as required GOCs (Government Governance Guidelines), and this is contained in by the GOC Act and other laws applying to NQBP; and NQBP’s Governance Policy. This policy is reviewed on an annual basis • ensuring that NQBP otherwise performs its functions in a proper, to improve, where appropriate, NQBP’s compliance with these Guidelines. effective and efficient way. A copy of NQBP’s Governance Policy is included on NQBP’s website, As the NQBP companies are incorporated under the Corporations Act, with the key aspects of this policy described within this section. the statutory duties imposed on directors under that legislation also apply to our Board. The Board has observed the terms of its Charter Board of Directors and has had due regard to relevant legislation, relevant binding policies Details of our Board, including their terms of office as well as their skills, of the Queensland Government, as well as NQBP’s policies. experience and expertise, are outlined on pages 16 and 17 of this report. The Board has delegated various functions to management but has reserved certain matters to the Board. This allocation of responsibility Appointment is set out in an Instrument of Delegation approved by the Board. A copy of the Instrument of Delegation is included on NQBP’s website. Directors of NQBP are appointed by the Governor-in-Council. The directors of PCQ and MPL are appointed by NQBP with the approval of shareholding Ministers. All of the directors are non- executive directors. The Board assesses the independence of each of the directors on a regular basis. Directors are subject to NQBP’s Policy on Disclosure and Conflicts of Interests and the Code of Conduct and are required to disclose potential or actual conflicts of interest as soon as they arise. If a director discloses a conflict of interest regarding a matter that is considered material by the Board, that director will not participate in any discussion or decision making on that matter.

46 Board Meetings Membership of the Board The Board meets monthly (except in December), and in addition to this, Collectively, members of the Board should possess: they meet at other times should the need arise. This financial year, the • a thorough understanding of the core activities of NQBP and the Board met 12 times. Directors also met for committee meetings and to environment in which it operates to make informed decisions; discuss strategic planning. • a commitment to the continual improvement of NQBP operations, The Chairman and the Chief Executive Officer meet prior to each strategic direction and policy framework; Board meeting to discuss current issues as well as the agenda, which includes the following: • strong business acumen, management skills and financial and operational reporting; • monthly reports on non-financial performance; • a high level of understanding of best practice employee relations, • monthly financial performance reports; industrial relations and remuneration and motivation concepts; • commercial and governance decisions requiring a Board • an inquiring attitude, objectivity and independence; and resolution; and • a strong, demonstrated sense of probity and ethical conduct. • commercial projects performance reports. The Chairman of NQBP has around 15 years experience as a director After scheduled Board meetings, key stakeholders and shareholder of PCQ and brings a wealth of financial, commercial and accounting representatives are regularly invited to attend an informal lunch which experience to our business. The other directors provide a broad range is held after the meeting. This provides an opportunity for the directors of skills and experience covering maritime operations, finance and to discuss relevant port-industry topics, while also developing and accounting, engineering, regional matters, agriculture, transport and maintaining important relationships. industrial relations.

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Corporate Governance (continued)

Director induction and education These policies require directors and employees to disclose potential or actual conflicts of interest as soon as they arise, so that the issue A comprehensive induction is carried out for new directors, whereby can be reviewed and managed in an appropriate and transparent way they are familiarised with their responsibilities as a director, as well as to promote integrity within NQBP’s operationsew. These policies also key corporate documents such as the Board Charter, Code of Conduct, require directors and employees to act honestly and comply with the Committee Charters and other applicable NQBP policies. This is law and to restrict share trading activities where inside information is supplemented by inductions provided to new members on committees an issue. From 1 January 2010, NQBP came within the jurisdiction of as well. The Chairman, relevant Board Committee Chairs, Chief the Crime and Misconduct Commission (CMC), and is now required to Executive Officer and other senior executives participate throughout the report any “official misconduct” by NQBP staff to the CMC. induction to ensure a thorough briefing is achieved. In addition, directors and employees are required to protect NQBP’s A Directors’ Handbook has been developed, providing directors with a interests in any actions which may affect NQBP’s business, as well as detailed overview of corporate and government policies, the role and NQBP’s confidential information and intellectual property. strategic direction of our organisation and a detailed briefing on each of the NQBP ports and the key commodities handled at each port. The Code of Conduct, Integrity Framework Policy (Official Misconduct and Public Interest Disclosures), Whistleblower Protection Policy Directors are required to acquire and maintain the skills and knowledge and Fraud Control Policy outlines a process for the investigation of to perform their role as a NQBP director. Each director has a duty to allegations of official misconduct and fraud. Copies of these polices are comply with the law and binding government and NQBP policies. included on NQBP’s website. The Board supports the ongoing development of individual directors as appropriate, so that the Board has the skills and knowledge to Communications with shareholding Ministers effectively perform its role in relation to NQBP. Annual training is provided to the Board on key areas such as competition law, The key disclosure requirements under the GOC Act require NQBP to environmental and safety laws, as well as conflicts of interest. reasonably inform shareholding Ministers about its operations and financial matters as well as material risk factors. Directors are also kept advised of the various workshops, seminars and conferences on offer to update their skills and knowledge so that Regular communications are initiated with key stakeholders, including they can undertake their role effectively. The Board has also approved a shareholding Ministers and government representatives. Detailed quarterly training plan for directors to assist in this process. reports are provided to shareholding Ministers and their representatives, as well as individual ministerial briefings on specific issues. Independent advice and access to information The Chairman and the Chief Executive Officer meet with shareholding Ministers and their representatives on a regular basis. NQBP It is the Board’s policy (in the Board Charter and each Committee management also meets with representatives of OGOC and DTMR each Charter) that directors are able to seek independent professional month after the Board meeting to update them on relevant issues. advice at NQBP’s expense to assist in the performance of their duties. In addition, directors must be provided with all necessary access to NQBP’s policies do not prescribe the type and level of disclosure to internal documents, reports and records in pursuit of its mandate. shareholding Ministers. The Board and NQBP management team exercise their judgement on a case-by-case basis as to what matters should be The Chairman has weekly briefings from the Chief Executive Officer, and disclosed in order to comply with the GOC Act disclosure requirements. also with managers as required, on all relevant aspects of our activities and performance. Detailed verbal and written briefings on various issues are provided to the Chairman and/or Board as necessary. Review of Board performance As noted above, NQBP has a Governance Policy in place, and Ethical behaviour and decision making this document outlines the process for evaluation of Board and Committee performance, reflecting the requirements of the Government NQBP is committed to promoting ethical decision making. Our Governance Guidelines. business is dependent on good relationships and fair treatment of our customers, employees and the public, with due consideration of the NQBP policy requires that a review of Board performance is conducted operating requirements of the business. annually, with an external review being undertaken every second year. In September 2010, an external review of NQBP Board performance The principles defining the work performance and ethical conduct was undertaken by an independent governance expert. This review expected of all directors and employees are: covered such matters as the role of the Board, including in relation to • respect for the law and the system of government; strategy, the effectiveness of the Board in monitoring organisational performance and its oversight of risk management and compliance, • respect for persons internal and external to the organisation; as well as stakeholder communication and networking. Other items • integrity; reviewed include policy framework, board papers/agendas, meeting • diligence; and dynamics and committee structure. Various matters were implemented during the 2010–11 financial year arising from the recommendations of • economy and efficiency. this external review, including further streamlining of Board reporting, These principles are contained in various NQBP Policies which apply to introduction of a Board level framework for strategy development and directors and all NQBP group employees and include the Code of Conduct, monitoring, consideration of KPIs to monitor strategy implementation Trading (Securities) Policy, the Policy on Disclosure and Conflicts of and the enhancement of risk reporting to the Board. Interest as well as the Integrity Framework Policy (Official Misconduct and Public Interest Disclosures) and the Whistleblower Protection Policy.

48 The Corporate Governance and Planning Committee is the relevant Remuneration recommendations for executives are reviewed annually committee to review and make recommendations to the Board in by the Human Resources and Industrial Relations Committee, before relation to improvement of Board processes. consideration and approval by the Board. Remuneration for executives In September 2011, an internal review of NQBP Board performance is due in 2010–11 was determined in accordance with the Queensland to be undertaken, which will review similar matters to those noted above. Government’s Government Owned Corporations Governance Arrangements for Chief and Senior Executives, as reflected in NQBP’s policies and NQBP policy also requires that directors’ skills and competencies be procedures: Chief and Senior Executives - Remuneration, Chief and reviewed on an annual basis. Directors complete a Career Inventory Senior Executives – Performance Pay and Recruitment and Selection. which assists in determining additional training for directors. The Human Resources and Industrial Relations Committee is the relevant Details of the remuneration paid to NQBP’s senior executives are Committee that reviews development needs and opportunities in contained in the Notes to the Financial Statements on page 98. relation to directors. The Board keeps shareholding Ministers informed of the remuneration In addition, each committee (in accordance with their charters) arrangements of senior executives on a regular basis. This advice is addresses competency and performance issues at least annually, provided in writing and details the nature and amount of the remuneration as well as their information needs. The Board then reviews the and the way in which the remuneration has been determined. performance of each committee on an annual basis. This was done in The Board is required to submit any significant amendments or May and June 2011. variations to NQBP’s remuneration policies to shareholding Ministers. Shareholding Ministers are informed of any key issues arising out of the performance reviews. The Chairman will also raise any material Review of performance for management and concerns about Board performance directly with the shareholding employees (HR) Ministers if need be. The Chief Executive Officer participates in a performance pay scheme with agreed targets of profit, operational and environmental Remuneration arrangements for Directors performance set by the Board. The proposed performance payments for Remuneration for directors is determined by the Queensland the 2010–11 year have not been approved or paid at the reporting date. Government. Details of the remuneration paid to directors are contained The Chief Executive Officer’s performance payment for 2009-10 was in the Notes to the Financial Statements on page 97. This amount paid in September 2010. excludes travel and associated expenses incurred in the course of NQBP operates a performance pay scheme for senior executives. undertaking their duties. Directors do not receive performance related The performance pay comprises two components: payments. Directors do not receive retirement benefits other than the compulsory superannuation required under the Superannuation • 70% based on group performance; and Guarantee (Administration) Act 1992. • 30% based on individual performance. The following pre-agreed (at the start of the financial year) Appointment of Chief Executive Officer performance criteria is used to determine the level of the group and senior executives component of the payment. The Chief Executive Officer and senior executives are appointed in accordance with the GOC Act by the Board. The appointment of the Weighting for Chief Executive Officer also requires the prior written approval of the Performance Indicator Management Bonus shareholding Ministers. For the GOC Board to appoint the senior executive, the Board must follow the processes set out in relevant Deliver a value adding growth for NQBP Queensland Government policies and advise shareholding Ministers of ports ensuring sustainable returns while the details of the appointments. minimising risk 25% Deliver and maintain timely and cost Remuneration arrangements for effective port capacity that is fit for purpose 20% management and employees Deliver sustainable port development The Chairman reviews the performance of the Chief Executive Officer and operations and critical incident and reports to the Board through the Human Resources and Industrial management capability that minimises Relations Committee. environmental and social impacts The Chief Executive Officer is appointed by an outer limit employment of NQBP activities and those of our agreement which expires on 30 June 2012 with severance payments commercial partners 15% agreed to be two weeks superannuable salary for each year of Deliver leadership and a working recognised service. Long standing executives, excluding the Chief environment that enables NQBP Executive Officer, are appointed as tenured employees and have as employees to excel 25% a minimum entitlement, redundancy payments equivalent to those available to employees under industrial legislation or agreements, most Financial Targets 15% particularly the Ports Corporation of Queensland Limited Enterprise Agreement 2010-11. There are no redundancy payments for new tenured Total 100% senior executive appointees under the governance arrangements.

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Corporate Governance (continued)

The recommended payments are determined by the Board after the end The membership of the Committee consists of at least three directors of the financial year and paid and reported to shareholding Ministers in appointed by the Board. NQBP’s Board Chairman may be appointed accordance with current guidelines. The proposed performance payments to the Committee, but may not sit as the Chairman of the Committee. for the 2010–11 year have not been approved or paid at the reporting date. To maintain independence, the membership of the Committee will not The 2009–10 year performance payments were paid in September 2010. include representatives from internal audit, or the Queensland Audit Office (QAO), although those representatives may be invited to attend The performance pay scheme applicable to other employees is based Committee meetings at the discretion of the Committee. on preset individual targets that are linked to the individual’s position description and their required contributions to the current goals and The charter of the AFRMC is supplied to newly appointed directors to objectives of their section. The scheme is not mandatory and involves the Board as part of their general induction. The AFRMC Chairman is a performance payment pool for the 2011–12 financial year of 6% of to make sure that, on appointment as a new member to the Committee, the salaries of participants. Individual payments are up to a maximum the appointee is familiar with the current charter of the Committee and 7.5% of a participant’s salary. Not all of the 6% pool was distributed is briefed on key current issues. relating to the 2009–10 year. This scheme is recognised within the The Committee has observed the terms of its charter and had due approved enterprise agreement. regard to relevant financial legislation and standards, and relevant Relevant remuneration policies are disclosed on NQBP’s website and binding policy of the State Government, as well as NQBP policies. are listed on page 49 of this report. The Board considers the effectiveness of AFRMC meetings, the appropriateness of its charter and the composition of the Committee on Board committees an annual basis. During the 2010-11 financial year, there were three Board committees Achievements in 2010-11 to assist the Board in discharging its duties. Each of these committees has a charter in place that sets out their role. • Review and finalisation of the annual financial statements. A copy of these charters is included on NQBP’s website. • Review and actioning of external audit results and reports. A general description of the role and achievements of each of our three • Review and finalisation of the annual budget and five year plans. committees is outlined below. Details of the qualifications of members • Setting the internal audit program, review of the findings of the internal of each of the three committees, along with the number of meetings auditor and making recommendations as to appropriate actions. held by each of the committees and names of attendees, are included on pages 66 through to 68 respectively of this report. • Review of the annual insurance program, including a related risk review. Audit and Financial Risk Management Committee • Review of asset valuations for appropriateness and compliance with accounting standards. Chairman: Robynne Dudley Members: Leonie Taylor, Peter Tait, Kasper Kuiper • Review of the financial risks impacting on NQBP, including key Secretary: Bernie Wilson (Chief Financial Officer) suppliers/customers. NQBP’s Audit and Financial Risk Management Committee (AFRMC) • Review of NQBP’s capital structure and borrowings. provides independent and expert advice and support, to assist the • Review of NQBP’s financial policies, and updating these policies, Board to discharge its financial and risk management responsibilities. as required. The Committee does not replace or replicate established management • Review of taxation issues on an ongoing basis. responsibilities and delegations, the responsibilities of other executive management groups within NQBP, or the reporting lines • Review of credit ratings, including undertaking the annual credit review. and responsibilities of either internal audit or external audit functions. The AFRMC is empowered only to make recommendations to the Board Human Resources and Industrial and does not have power to make decisions in its own right. Relations Commitee The AFRMC: Chairman: Julie Bignell • monitors external reporting requirements; Members: Leonie Taylor, Graham Davies, Stephen Golding Secretary: Jeff Stewart-Harris (Deputy Chief Executive Officer) • reviews the annual budget and five year projections and financial risk management policies before consideration by the Board; NQBP’s Human Resources and Industrial Relations Committee (HRIRC) provides independent and expert advice to assist the Board to • reviews the annual financial statements before final sign-off by discharge its employee and industrial relations responsibilities. the Board; The committee does not replace or replicate established management • oversees all internal audit functions, and reviews findings, responsibilities and delegations or the responsibilities of other recommendations and the implementation progress; executive management groups within NQBP. The HRIRC is only • reviews reports and other information from the Auditor-General; empowered to make recommendations to the Board and does not have • monitors the internal control and financial risk management power to make decisions in its own right. environment within the organisation; and, • monitors matters and transactions which may have a material effect on the financial position of NQBP.

50 The HRIRC: The Committee has observed the terms of its charter and had due • reviews NQBP’s human resource and industrial relations policies; regard to industrial and other relevant legislation, relevant binding policy of the State Government, as well as NQBP’s policies. • annually reviews the Chief Executive Officer’s remuneration package and proposals by the Chief Executive Officer in relation to the The Board considers the effectiveness of HRIRC meetings, the remuneration packages of NQBP’s senior executives; appropriateness of its charter and the composition of the Committee on an annual basis. • evaluates Chief Executive Officer and senior management performance and the appropriateness of performance pay schemes Achievements in 2010-11 including the targets and criteria for assessment; • Assisted in the review of HR/IR issues associated with the • reviews the appropriateness of NQBP’s industrial agreements and establishment of NQBP, including ongoing work in relation to the reviews proposals for change considering binding government negotiation of the NQBP Enterprise Agreement. policy and effectiveness in enhancing the achievement of NQBP’s objectives through its award and non-award employees; • Reviewed and made recommendations to the Board in relation to key policies. • considers directors’ and officers’ liability issues and the mechanisms to mitigate risks; • Started the process of implementation of diversity in the workplace through HR policies, systems and process incorporating diversity • studies current industry practices in relation to employee targets, staff development programs and succession planning. management, remuneration and industrial relations environment as it applies to NQBP and its customers; • Investigated the feasibility and value of organisational cultural enhancement programs in the areas of risk management, • reviews any re-organisational proposal where it entails forced compliance and alignment of culture to strategy. redundancies or the diminishing of employee benefits; • Undertook a review of the senior management team’s performance. • reviews the appropriateness of succession plans; • Reviewed non-executive salary arrangements. • evaluates or audits NQBP’s handling of conflict of interest issues; and, • Reviewed and made recommendations to the Board in relation to the • reviews the appropriateness of NQBP’s Employment and Industrial Employment and Industrial Relations Plan. Relations Plan. • Monitored the key risks for NQBP in relation to HRIR matters. The Committee consists of at least three directors appointed by the Board. NQBP’s Board Chairman may be appointed to the Committee but may not sit as the Chairman of the Committee. The charter of the HRIRC is supplied to newly appointed NQBP directors as part of their general induction. The HRIRC Chairman is to make sure that, on appointment to the Committee, the appointee is familiar with the current charter of the Committee and is briefed on key current issues.

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Corporate Governance (continued)

Corporate Governance and Planning Committee • oversight of issues arising from new/changed relevant laws, such as developments relating to the proposed harmonised Workplace Chairman: Stephen Golding Health & Safety Act 1995 and the new requirements in relation to Members: Leonie Taylor, Julie Bignell, Robynne Dudley integrity and accountability, including the Integrity Act 2009 and the Secretary: Susan Campbell (Company Secretary / General Counsel) Public Interest Disclosure Act 2010. The Corporate Governance and Planning Committee (CGAPC) • Review of policies related to corporate governance, risk and has been established to provide independent and expert advice to planning, including introduction and revision of policies in relation assist the Board to discharge its corporate governance and strategic to governance (diversity issues), whistleblower procedures and planning responsibilities. The Committee does not replace or replicate project governance for major projects. established management responsibilities and delegations or the responsibilities of other executive management groups within NQBP. • oversight and review in relation to a new risk management system The CGAPC is only empowered to make recommendations to the Board for the NQBP Group, including a proposed new compliance and does not have power to make decisions in its own right. procedure for major projects. The CGAPC: • Review of commercial approaches in relation to the major projects. • reports to the Board on the adequacy of the corporate • Review of the IT functions and systems as well as the document governance system; management systems for NQBP. • monitors NQBP’s adherence to policies related to corporate The Committee has observed the terms of its charter and had due governance and instilling a culture of compliance; regard to relevant legislation, relevant binding policy of the State Government and NQBP policies, as well as contemporary planning • reviews pricing proposals and commercial negotiating frameworks processes. The Board considers the effectiveness of CGAPC meetings, which impact on NQBP’s return; the appropriateness of its charter and the composition of the Committee • monitors the risk management systems; on an annual basis. • reports to the Board on the adequacy of the planning system as proposed by the Chief Executive Officer and the content of strategic Risk management and corporate plans and where required their suitability for NQBP has a risk management policy that provides the strategic circulation to shareholding Ministers; framework for risk management, as well as detailing roles • articulates information gained from individual Board members to and responsibilities. assist the Chief Executive Officer in developing NQBP’s plans; and As part of the integration of PCQ and MPL into NQBP, the Board • requests the Chief Executive Officer to consider or further consider approved the introduction of a revised risk management system in any strategic issue relevant to NQBP. January 2010. The membership of the Committee consists of at least three directors The purpose of the risk management system is to: appointed by the Board. NQBP’s Board Chairman may be appointed to the • minimise and control any risk to health and safety of staff, Committee but may not sit as the Chairman of the Committee. The charter stakeholders and the public; of the CGAPC is supplied to newly appointed NQBP directors as part of their general induction. The CGAPC Chairman is to make sure that, on • minimise and control any risk to the environment introduced by appointment to the Committee, the appointee is familiar with the current port operations or developments; charter of the Committee and is briefed on key current issues. • ensure a suitable reliability and continuity of operations for stakeholders; Achievements in 2010-11 • minimise the risk of damage introduced by port operations to NQBP • Review of key strategic and corporate plans for the Company, including and port user assets; the 2010-11 Statement of Corporate Intent and the Corporate Plan. • provide suitable recovery plans to most efficiently continue • oversight and review of the outcomes of the Strategic Planning operations after a disaster; and Workshop held in September 2010. • put in place suitable financial mechanisms (such as foreign exchange • oversight of the process in relation to the evaluation of Board hedging and provision of financial guarantees of throughput performance, including consideration of the recommendations of by users) to fund any losses that may occur without relying on governance expert, Effective Governance. unbudgeted allocations from state and federal governments. • Review of the Company’s compliance with the OGOC Corporate Under the revised system, senior management continue to be Governance Guidelines. responsible for identifying changes in the business environment • oversight and review of the legal compliance system, including the that may generate new risks or require a change to risk rankings or annual update of the key legislation risk matrix and provision of controls. The organisation’s risk profile is also under constant review training to directors and staff on key legal topics. by the NQBP Leadership Team and the Board and all of NQBP’s identified risks are renewed annually.

52 The risk management system, including detailed procedures for risk Legal compliance management, is documented in a risk management manual that has been developed based on the Australian Standard for risk management, NQBP’s legal compliance framework is designed to ensure that NQBP AS/NZS 4360. This risk management system has been integrated with Group employees remain up to date and aware of the key legal NQBP’s other policies and management systems. The risk management requirements under Federal and State laws, regulation, policies and system has been aligned with corporate and operational objectives through guidelines that impact on NQBP’s business. active consideration of business risks in strategic planning activities. NQBP’s compliance approach is to assign compliance of a statutory The risk management system includes a program of regular internal requirement to the relevant business unit within NQBP, which then has and external audits of various aspects of the business, such as accountability within the scope of the particular statutory requirement, legal compliance, projects, asset management, human resources, as that business unit is best equipped to identify and address environment, health and safety, emergency planning, business compliance issues. The key obligations are included in NQBP’s risk continuity planning, and information management. management processes where appropriate, and are reviewed regularly. Risks are managed through a detailed process of identification and In addition, on an annual basis, an independent legal adviser reviews quantification of the risks, followed by determination of appropriate and NQBP’s key legislative risk matrix to reaffirm existing, and to identify cost-effective risk controls. Control measures are then implemented new, legal and statutory obligations relevant to NQBP. The resulting to mitigate the risk to acceptable levels. Identified risks are ranked to report is then considered by the management team, with outcomes ensure appropriate attention to the higher risks of the business. then captured in NQBP’s risk management processes as appropriate. In addition, monthly legal updates are provided to all NQBP Group staff For major projects, a comprehensive risk workshop is held with a on key legislative changes. multi-disciplinary team to identify risks and to determine appropriate controls. The Board reviews the risk assessment for a project before Internal audit an approval is given for funding. On a monthly basis the Board also reviews mitigation measures in place for the top business risks to NQBP has contracted out its internal audit function to Deloitte Touche ensure a high level of accountability. Tohmatsu for 2010-11 to 2012-13 inclusive. The role of internal Individual risks and controls are documented in a risk register. Each audit is to assist the Board of Directors and management in the risk is assigned to a senior manager for implementation of controls. effective discharge of their responsibilities. Internal audit activities are Each risk is also assigned to a Board committee for overview. The conducted in accordance with the Internal Audit Charter and contract Board committees review their assigned risks on a three-monthly for audit services. These include: basis. The ongoing effectiveness of the risk management system is also • completing an overall risk assessment and appraisal in formulating reported to the Board quarterly. the audit plan, having regard to the audit criteria identified for each The risk management and control system that NQBP has in place now, risk category as documented in the risk manual; and its predecessor, has operated efficiently and effectively during the • providing impartial and independent advice on whether activities are year. Internal compliance controls were in place to implement Board effectively and economically managed; policies. Scheduled audits to ensure compliance with approvals and • providing advice on any deficiencies identified and recommending project management plans have been carried out during the year. There remedial action; were no material breaches of risk management or compliance policies during 2010-11. • evaluating compliance with relevant legislation and policies; and NQBP also has a Fraud Control Strategy that puts in place processes to • determining the effectiveness of financial and operational practices identify and report fraud early, and then to investigate and manage any and systems in meeting goals. fraudulent activities in a way that minimises potential loss and acts as The 2010–11 audit program included reviews of: a deterrent to recurrence of fraud by others. NQBP’s Code of Conduct • contract management; and the Integrity Framework Policy (Official Misconduct and Public Interest Disclosures) also reinforce the Board’s commitment to ethical • capital projects and project management; behaviour. • asset management — maintenance programs; NQBP’s website includes a copy of NQBP’s Risk Management Policy. • records management information standards; • follow up of prior audit results; and • financial statements.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 53 NQBP | ADDITIONAL INFORMATION

Additional Information

Capital Structure Policy All FX exposures greater than $1 million are hedged unless the Board explicitly determines otherwise. The Capital Structure Policy outlines the NQBP Group policy for the determination of its appropriate capital structure range. In establishing its capital structure range and positioning the balance sheet at a target General Borrowing Policy debt to debt plus equity level, we have two objectives: An estimated borrowing requirement for the succeeding year is • establish the capital structure to minimise its cost of capital while included in the Statement of Corporate Intent. NQBP works closely with maintaining an appropriate credit rating; and QTC to obtain state borrowing approval. In accordance with Government Policy, NQBP borrows from QTC for ordinary requirements. • maintain flexibility for current and future infrastructure opportunities. Government policies applicable to NQBP Dividend Policy NQBP is to comply with the following Government policies in addition The NQBP Group Dividend Policy takes into account the return its to State and Federal legislative requirements: shareholders expect on their investments, along with the funding of future capital requirements and maintenance of the Group’s approved •• Biannual Reporting: Guidelines for the Preparation of Interim capital structure. Reports (2009) Dividends of $220.3 million have been provided for the 2010-11 •• Code of Practice for Government Owned Corporations’ Financial financial year, which is 58% of the NQBP Group’s net profit after Arrangements (2009) tax, excluding any upwards revaluations of non current assets. •• Community Service Obligations – A Policy Framework (1999) The dividend includes a special dividend of $200 million related to •• Corporate Entertainment and Hospitality Guidelines (2008) proceeds from the sale of Abbot Point Terminal 1. Dividend payments must be made in accordance with Sections 131 and 132 of the •• Corporate Governance Guidelines for Government Owned Government Owned Corporations Act 1993. Corporations (2009) •• Cost of Capital Principles – Government Owned Investments Policy Corporations (2006) Cash at bank or on hand, not currently required by the NQBP Group, •• Government Owned Corporations Air Travel Policy (2009) is invested in Board-approved investments in the Queensland Treasury •• Government Owned Corporations Bargaining Guidelines (2010) Corporation (QTC) Cash Fund. The NQBP Group monitors cashflows daily and invests any surplus funds. Comprehensive internal controls •• Government Owned Corporations Governance Arrangements for are maintained in relation to investments. Chief and Senior Executives (2009) •• Government Owned Corporations Guidelines for the Preparation of Foreign Exchange and Derivative Policy Statements of Corporate Intent and Corporate Plans (2010) NQBP seeks to have all agreements, tenders and contracts denominated •• Government Owned Corporations Release of Information in Australian dollars. Every month the Board is advised on any Arrangements (2009) Foreign Exchange (FX) exposure or derivative transactions exceeding •• Government Owned Corporation Subsidiaries - Key Shareholder $100,000 and whether the exposures are hedged or unhedged. Full Requirements for Constitutions (2006) details of any hedges placed, or derivative transactions completed •• Government Owned Corporations Wages Policy (2010) since the last Board meeting, are also advised to the Board monthly.

54 •• Guidance for Chief Executive Officers - Agreement Making and Summary of directions and notifications given to Industrial Relations in Government Owned Corporations (2010) the Board by NQBP’s shareholding Ministers •• Guidelines for the Development of Employment and Industrial There were no directions or notifications issued by shareholding Relations Plans in Government Owned Corporations (2009) Ministers under the GOC Act for the 2010-11 financial year. •• Guidelines for Export of Services by Government Owned Corporations (2001) Community Service Obligations (CSO) •• Guidelines for Preparing Forecast Reports (2010) There were no Community Service Obligations identified •• Investment Guidelines for Government Owned Corporations (2009) during 2010-11. •• Local Industry Policy: A Fair Go for Local Industry (2008) Employment and Industrial Relations Plan •• Minimum Disclosure Requirements for Directors and Chief and Senior Executives of Government Owned Corporations (2009) NQBP’s Employment and Industrial Relations Plan 2010-11 establishes •• Minimum Employment, Industrial Relations and Job Security the corporation’s intent with respect to directors’ and staff remuneration Principles for Government Owned Corporation Employees (2009) and employment conditions and human resource priorities such as staff attraction and retention initiatives. Achievements and delivery of •• Purchasing Carbon Offsets for Queensland Government Air the plan are summarised throughout this report. Travel (2008) •• QFleet ClimateSmart Policy (2008) Corporate entertainment and hospitality •• Queensland Code of Practice for the Building and Construction The NQBP Group did not hold any events throughout 2010-11 that Industry (2009) were over $5,000. •• Sport and Recreation Sponsorship Policy (2009) •• State Procurement Policy (2008) Right to information •• Guidelines for the Issue of Harbour Towage Licences (2002) NQBP received six requests for information under the Right to Information Act 2009 during 2010-11. Three of these were completed, one is under •• Queensland Port Government Owned Corporations - Local review by the Information Commissioner and two remain active. Government General Rates Equivalents Regime: Guidelines for Assessment, Collection & Payment (2000) Statement of Corporate Intent •• Transport Portfolio Code of Practice for Closed Circuit Television Systems (2007) NQBP’s SCI for 2010-11 is summarised on pages 6 to 9 of this report.

There were no commercial impacts of major significance identified Modifications to the SCI by the NQBP Group in adopting any revised policy positions. The implementation of the Right to Information Arrangements resulted in The original SCI from NQBP to shareholding Ministers for 2010-11 the NQBP Group needing ongoing resources directed to this activity. reported in Table 2.1 – Financial targets, showed that the budgeted return on net assets was 0.76%. This was a typographical error and was subsequently amended to read 3.05%.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 55 NQBP | PORTS AT A GLANCE

Port of Mackay

Established: 1939 Weipa Latitude: Port Area: 800 ha 21° 07’ S Operating Berths: 4 Longitude:

abbot point 149° 16’ E Distance to airport: 12.5 km Mackay MACKAY HAY POINT Location: Principal Commodities: Sugar and sugar products, 950 km north of Brisbane grain and petroleum BRISBANE Population: 113,000

56 Port of Weipa

Latitude: Established: 1965 Weipa 12° 40’ s Port Area: 9,573 ha Longitude: 141° 52’ e Operating Berths: 4 abbot point MACKAY Location: Distance to airport: 6.2 km to Weipa HAY POINT North-west Commodities: Bauxite, fuel, general cargo coast of Cape

BRISBANE York Peninsula Population: 2,830 approx.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 57 NQBP | PORTS AT A GLANCE

Port of Abbot Point

Weipa Latitude: 19° 07’ S N Longitude: abbot point 149° 16’ E MACKAY HAY POINT Location: 25 km north of Bowen BRISBANE

Established: 1984 Port Area: 5,350 ha Operating Berths: 2 Distance to airport: 95.7 km to Proserpine Commodity: Coal Population: Closest city Bowen 12,400

58 Port of Hay Point

Weipa Latitude: 21° 15’ s N Longitude: abbot point 149° 19’ e MACKAY HAY POINT Location: 40 km south of Mackay BRISBANE

Established: 1971 Port Area: 6,526 ha Operating Berths: 6 Distance to airport: 36.2 km to Mackay Commodity: Coal Population: Closest city Mackay 113,000

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 59 60 Financial Performance 2010-2011

North Queensland Bulk Ports Corporation Limited ACN 136 880 218 Financial Statements for the Year Ended 30 June 2011 Directors’ Report 62 Auditor’s Independence Declaration 70 Statement of Comprehensive Income 71 Statement of Financial Position 72 Statement of Changes in Equity 73 Statement of Cash Flows 75 Notes to and Forming Part of the Financial Statements 76 Directors’ Declaration 102 Independent Auditor’s Report 103

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 61 NQBP | Directors’ Report for the Year Ended 30 June 2011

Directors’ Report for the Year Ended 30 June 2011

The Board of Directors of North Queensland Bulk Ports Corporation While demand for coal export capacity has been high, abnormal wet Limited (NQBP) present their report of NQBP and the entity (the Group) weather conditions in the second half of the year have been problematic for the year ended 30 June 2011. for coal miners and have reduced coal exports out of Abbot Point and Hay Point by 20-25%. Many of the weather-related issues are now Directors resolved and we anticipate a significant pick up in throughput next financial year. The names of the directors in office at any time during, or since the end of, the year are: Operating Results Ms Leonie Taylor Mr Graham Davies The profit of the consolidated Group for the financial year after Ms Julie Bignell providing for income tax equivalents amounted to $454,927,088, Ms Robynne Dudley representing an increase of $436,856,070 from the previous year. Mr Stephen Golding The operating result includes a net gain on sale of Terminal 1 at Abbot Mr Kasper Kuiper Point of $331,354,336. Mr Peter Tait The Group has continued its major capital works program spending more than $173 million in the year, including for the purposes of the Review of Operations ongoing development of the X50 expansion project. NQBP was formed on 7 May 2009 and became the holding company The Group has ensured the sustainable operation and development for the wholly owned subsidiaries of Ports Corporation of Queensland of the ports through a structured and cost effective environmental Limited (PCQ) and Mackay Ports Limited (MPL) on 2 July 2009. management, monitoring and improvement program, which reflects NQBP is a public company incorporated under the Corporations the Group’s strong commitment to best practice, effective community Act 2001. It is also a Government Owned Corporation (GOC) under consultation and environmental protection. The Group maintained the Queensland Government Owned Corporations Act 1993 and a external certification of its Environmental Management System Port Authority under the Transport Infrastructure Act 1994. Each of the for the Ports of Hay Point, Abbot Point, Mackay and Weipa to subsidiaries, PCQ and MPL, are public companies incorporated under AS/NZS IS14001:2004. the Corporations Act 2001 and are subsidiaries of a GOC under the Government Owned Corporations Act 1993. Principal Activities The 2010-11 financial year saw NQBP continue the integration of MPL During the year the principal continuing activities of entities within the and PCQ. This integration is now considered complete which will Group consisted of: enable NQBP to consider rolling up the MPL and PCQ subsidiaries to (a) port operation and management; further streamline operations. These efficiencies are important to build a foundation stone for developing the business as we seek to respond (b) strategic port planning and port infrastructure development; and to the increasing demand for the export of bulk product. (c) trade facilitation and port marketing. NQBP has actively sought to respond to market demand by progressing negotiations for new coal terminal capacity with BHP Billiton Limited Dividends and Hancock Coal Pty Ltd at Abbot Point. These two terminals, T2 and A dividend of $13.632 million was paid during the year as T3, will increase potential capacity from 50 Mtpa to at least 110 Mtpa. recommended in last year’s report. NQBP is also progressing negotiations with DBCT Management Pty Ltd and the Adani Group at Dudgeon Point. The directors of NQBP have recommended payment of a dividend of $20.3 million in relation to the financial year ended 30 June 2011 Demand for coal terminal infrastructure at Abbot Point has been based on full year forecast as at the end of April 2011. The Board overwhelming and has resulted in NQBP commencing a further has subsequently recommended payment of a full year dividend of Expression of Interest phase for Terminals 4-7 which may see a $27.3 million in relation to NQBP’s full year results, which has not further increase in terminal capacity of up to 120 million tonnes. been paid. This would increase the total capacity of Abbot Point to in excess of 300 million tonnes. A special dividend of $200 million was also recommended and paid as part of the repatriation of proceeds back to the State for the sale During the year, the Group entered into the sale and 99 year lease of and 99 year lease of Abbot Point Terminal 1. A second dividend of Terminal 1 (X50) at Abbot Point with Mundra Port Pty Ltd (Mundra) for $3.9 million for the repatriation in relation to the final purchase price $1.829 billion with a further purchase price adjustment of $3.9 million. adjustment was recommended but not paid. This transaction has enabled NQBP to capture and return to the Queensland Government the significant value that NQBP has generated No options over issued shares or interests in the Group were granted through its investment in Terminal 1 at Abbot Point. NQBP continues during or since the end of the financial year and there were no options to look for further investment opportunities that will enable it to use its outstanding at the date of this report. significant operational and commercial experience to generate value for NQBP and the State. One such opportunity is the Multi Cargo Facility.

62 Significant Changes in the State of Affairs The payment of the first dividend was not subject to specific shareholder approval and was recommended to be paid by the Board During the year, the Group divested Terminal 1 at Abbot Point to on 30 June 2011. Consequently a provision for $200 million has been Mundra through the sale and 99 year lease of Terminal 1. Consequently recognised in the 30 June 2011 financial statements. This amount was the Group will no longer be receiving terminal infrastructure payments subsequently paid to the shareholders on 6 July 2011. as owner of the terminal. NQBP will continue to own the land on which Terminal 1 is constructed, perform the role of Port Authority and receive The second dividend was recommended by the Board on 23 August 2011. lease rental and port statutory charges. As detailed in Note 29 of the Notes to the Financial Statements, Event after Balance Date, resulted in capital reduction of $1,534,448,682 Matters Subsequent to the End of the Financial Year not being recognised in the 30 June 2011 financial statements as shareholder approval was not obtained until 5 July 2011. The capital Sale of Abbot Point – Purchase Price Adjustment reduction was considered to be at the discretion of NQBP and its On 3 May 2011 the State announced that Mundra had been the shareholders as at 30 June 2011. The capital reduction was approved successful bidder in the sale and lease of Terminal 1 at Abbot Point by NQBP’s shareholders on 5 July 2011 and was subsequently paid by for $1.833 billion. On 1 June 2011 the transaction was completed NQBP on 6 July 2011. for $1.829 billion with a further $3.9 million paid by Mundra on Sale of Merinda Workers Camp 4 August 2011 as a purchase price adjustment. At balance date, the Board approved the sale of the Merinda Workers The transaction consisted of the following main components: Camp located at Merinda. A sale contract has been signed with a buyer, $’000 subject to a number of pre-conditions being met and is expected to be completed by the end of October 2011. Management considers that the Sale of shares in APCT #1 Pty Ltd – criteria to reclassify the relevant non-current assets or disposal group (plant and equipment, working capital) 388,988 as ‘held for sale’ in accordance with AASB 5 Non current Assets Held 99 year lease and other fees 1,365,176 for Sale and Discontinued Operations has been met. Return of Capital Likely Developments and Expected Results of Operations Sale of Abbot Point Terminal 1 Based on the reasonable assumption of continuing strong demand As part of the Abbot Point sale and lease transaction, the State for port infrastructure in the Galilee and Bowen Basins, the Group has announced that the proceeds of sale would be repatriated in its continued to develop capacity to support the industry growth on a entirety back to the State and the proceeds would be used in the flood commercially sustainable basis over the long term. reconstruction programme. On 30 June 2011, the Treasurer issued a project direction to repatriate the proceeds of the aforementioned Abbot Point Coal Terminal Expansion disposal by: Terminal 1 • payment of a first dividend of $200 million; NQBP has granted a right to Mundra to investigate the potential for • payment to the State of direct transaction costs of $15.7 million; further expansion to the east of the existing T1 Terminal which was • recommending to the shareholders of NQBP a capital reduction of leased to Mundra. $1,534,448,682 to be paid if and when the shareholders approve the Terminal 2 to 3 capital reduction; and In December 2009, NQBP called for Expressions of Interest from • payment of a second dividend in relation to the purchase price coal companies to develop two onshore terminals (T2 – Abbot Point adjustment of $3.9 million. Terminal 2 and T3 – Abbot Point Terminal 3) to increase coal export The direct transaction costs have been recognised in the 30 June 2011 capacity adjacent to the existing Terminal 1. These development sites financial statements of the Group. were initially designated X80 and X110, but have been renamed T2 and T3 to describe appropriately the future assets.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 63 NQBP | Directors’ Report for the Year Ended 30 June 2011

BHP Billiton Limited and Hancock Coal Pty Ltd were selected as the Dudgeon Point Expansion preferred developers of T2 and T3. NQBP has been working with On 9 July 2010, NQBP announced that DBCT Management Pty Ltd and BHP Billiton and Hancock Coal to progress the development of these the Adani Group were the preferred proponents for the development sites, including through financial support for the Early Contractor of new coal export infrastructure at Dudgeon Point. The proposed Involvement (ECI) process for the MCF, the establishment of an development has the potential to double the export capacity of the port, Indigenous Land Use Agreement (ILUA) for the MCF and T2-T7 with at least two new coal terminals located at Dudgeon Point. sites and feasibility studies. In January 2011, NQBP commissioned consultants to commence NQBP is working with both preferred developers to finalise Framework master planning studies for the expansion of the Port of Hay Point. Agreements and progress designs and approvals to enable construction A draft Master Plan for the Port of Hay Point is expected to be to proceed, subject to all regulatory and commercial approvals completed in the second half of 2011. Consultants were also engaged associated with these large scale projects. to carry out supporting environmental studies of the proposed Terminals 4 to 7 development area and to prepare a draft EIS. The draft EIS is expected to be completed in mid 2012. As a result of additional demand for coal capacity through the Port of Abbot Point, investigations for the development of additional coal Expected results terminals within the Abbot Point State Development Area (APSDA) Disclosure of other information regarding likely developments in the has now been identified and development of new terminals is being operations of the Group in future financial years and the expected considered. In association with the State Government, NQBP has results of those operations, is likely to result in unreasonable prejudice developed plans to facilitate the development of four additional to the consolidated entity. Accordingly, this information has not been separate tranches, each nominally 30 Mtpa, of coal terminal capacity. included in this report. These four tranches are termed T4, T5, T6 and T7 projects (T4-7). In response to the high level of interest shown in the project, a Request Environmental Regulation for Expressions of Interest (EOI) was advertised in major local and national newspapers on 28 May 2011. The Request for EOI period NQBP is subject to significant environmental regulation in respect to closed on 1 August 2011 and NQBP is currently undertaking evaluation its activities. of the EOI submissions. A public announcement on the successful Dredging bidder/s is subject to approval by NQBP’s Board and shareholders, Dredging was carried out in the ports of Weipa and Hay Point and expected towards the end of 2011. during the year in accordance with approvals obtained under the Abbot Point Multi Cargo Facility Commonwealth’s Environment Protection (Sea Dumping) Act 1981 NQBP’s vision for the Port of Abbot Point includes the construction and Queensland’s Sustainable Planning Act 1997. of a MCF to support the expansion of additional coal export terminals Applications were submitted during the year to the Department of (T2-7) and other exports and import facilities. This would involve Sustainability, Environment, Water, Population and Communities the construction of a sheltered harbour at Abbot Point with up to (SEWPaC) under the Environment Protection (Sea Dumping) twelve berths capable of handling different types of cargoes and Act 1981 for a one year sea dumping permit for the Port of Mackay ships up to capesize. The MCF can be developed in stages to meet pending a decision on the ten-year submission lodged in 2010. customer demand. Based on SEWPaC internal amendments to assessment guidelines The MCF has the potential to accommodate new trade requirements, for sea dumping permits, NQBP is to replace the one-year approval such as LNG, in the long term, thereby easing the pressure for new submission with a five-year approval submission. port locations to be established in that trade catchment area. This will Amendments to definitions within the Environmental Protection also allow for optimum port development at Abbot Point while avoiding Act 1994 has allowed NQBP to apply for, and be granted, approval encroachment into the Great Barrier Reef Marine Park. for dredging under Environmentally Relevant Activities for all relevant NQBP is progressing the MCF with tenders due to be lodged in Ports throughout the year. late 2011. The Environmental Impact Statement was lodged in Port Operations and Development November 2010 with State and Federal Governments. Expansion of the Abbot Point Coal Terminal (APCT) to 50 Mtpa NQBP has continued to liaise and cooperate with the Department (X50 Expansion) was continued pursuant to approvals obtained in of Employment, Economic Development and Innovation (DEEDI). 2008 under the Integrated Planning Act 1997. Earlier, this project Discussions continue with a number of potential anchor customers, had been referred to the Commonwealth under the Environment the most likely initial requirement being for coal exports from Protection and Biodiversity Conservation Act 1999 (EPBC Act) and it Abbot Point. had been designated “not a controlled action” (EPBC 2005/2154 and EPBC 2007/3884).

64 Previously, a project proposing further expansion of the APCT to Through its own monitoring and auditing processes, the NQBP Group 110 Mtpa (T2-3) had been made a “controlled action” under the EPBC identified the following non-compliances. No environmental harm was Act (EPBC 2008/4468). Commonwealth assessment was required by identified from any of the non-compliances, and no enforcement style preliminary documentation. The required documentation was published action has been taken by any regulatory authority against NQBP for the for comment in November 2009. The preferred proponents for this non-compliance. expansion have since been identified as BHP Billiton and Hancock For MPL: Coal. Transfer of the EPBC referral to Hancock Coal is currently underway. BHP Billiton will be submitting its own Commonwealth No non-compliances were identified for Port of Mackay operations. EPBC referral. NQBP will progress the approvals for the capital For NQBP: dredging component of this new expansion project. Last year it was identified that a sewage plant constructed to support The construction of a Stormwater Return Dam at Abbot Point the X50 Expansion project was being operated without the required was determined to be a “controlled action” under the EPBC Act planning approval. The plant was subsequently shut down and the (EPBC 2010/5561). Commonwealth assessment was required by untreated sewage transported to a licensed treatment plant. Approvals preliminary documentation. Given the sale of Abbot Point Coal to commence operation of the plant were being sought at the time and Terminal 1 to Mundra, the assessment has been successfully the process for obtaining approvals is continuing. transferred to Mundra as the new proponent. During a severe rainfall period in March 2011, the holding tanks at A project proposing construction of the MCF in the Port of Abbot Point this site were compromised resulting in overflow. Access to the site was previously made a “controlled action” under the EPBC Act, with was restricted for several days before untreated sewage could be assessment by environmental impact statement (EPBC 2009/4837). transported to a licensed treatment facility. No environmental harm was An Environmental Impact Statement (EIS) has been developed to identified. DERM was notified of the non-compliance and repairs were assess the possible environmental impacts and to propose appropriate made to the tanks. No further action was required. measures to manage any impacts. The EIS was subsequently published In early 2011, during the X50 Expansion project, a review was in May 2010 for public comment with the revised EIS lodged in conducted which identified low residual chlorine levels in the discharge November 2010 addressing responses. NQBP continues to await a effluent of an on-site sewage plant. The system was determined to be decision on this referral. operating as designed and the residual chlorine was merely a sampling Breaches of Approval Conditions artefact. DERM was notified and no further action was required. No actions were commenced by statutory agencies against the Group During geotechnical investigations for the MCF, an NQBP contractor for possible breaches of approval conditions. cleared a small path of vegetation between two bore hole sites without However, the Department of Environment and Resource Management appropriate approvals under the Nature Conservation Act 1992. (DERM) continued an action against a contractor of PCQ, the John DERM was notified of the non-compliance and no further action has Holland Group. The contractor had been contracted by PCQ to been advised. construct the offshore wharf for the X50 Expansion project at Abbot Point. It is alleged the contractor contravened development approval conditions and caused environmental harm in this project and another non-related project in Queensland. There were several exceedances related to the Abbot Point Terminal 1 as identified below. All were reported to DERM and none were considered to have caused environmental harm and no further action was required. • Non-compliant discharge of stormwater in December 2010 due to extreme weather events. • Non-compliant discharge of stormwater in March 2011 due to extreme weather events. • Spill of diesel on land occurred at APT1. The spill was cleaned and the area remediated.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 65 NQBP | Directors’ Report for the Year Ended 30 June 2011

Information on Directors

Name and qualifications Experience, special responsibilities and other directorships Leonie Taylor Leonie Taylor is the Chairman of the NQBP group of companies and has been Chairman of Chairman PCQ since 1999. BBus, FCA, CFP, FAICD, FTIA The Partner-In-Charge of Corporate Governance and Quality Accreditation at leading First Appointed: NQBP on 7 May 2009; Brisbane financial and accounting firm Bentleys, Ms Taylor specialises in providing tax and PCQ on 1 July 1994; MPL on 7 August 2009 business advice to Queensland businesses. She assists businesses with management and Term of Office – to 30 September 2012 corporate governance issues and is well versed in all facets of financial management and the Australian tax regime. Appointed as Chairman of the Board of: NQBP on 19 June 2009; PCQ on 1 July 1999; Ms Taylor is also a Director of Queensland Police Citizens Youth Welfare Association. MPL on 7 August 2009 She holds a Bachelor of Business and is a Fellow of the Institute of Chartered Accountants, The Taxation Institute of Australia and The Institute of Company Directors. • Member Audit and Financial Risk Management Committee • Member Human Resources and Industrial Relations Committee • Member Corporate Governance and Planning Committee Graham Davies AM Graham Davies has more than 30 years’ experience as a non-executive Director on sugar First Appointed: NQBP on 7 May 2009; boards, various companies and co-operatives. PCQ on 7 August 2009; MPL on 1 July 1999 Mr Davies held the position of Chairman of the Mackay Sugar Co-operative for 16 years Term of Office – to 30 September 2012 and until recently, was the Chairman of the Queensland Rural Adjustment Authority. He is a Board Director (Hon.) of the Cerebral Palsy League of Queensland. • Member Human Resources and Industrial Relations Committee Mr Davies owns and operates sugar farms in the Mackay and Burdekin districts and has a cattle property in the Mackay district hinterland. He was appointed a Member of the Order of Australia in June 2011. Julie Bignell Julie Bignell is the Branch Secretary of the Central and Southern Queensland Branch BA, Grad. Dip. IR/HRM, GAICD of the Australian Services Union as well as the Assistant General Secretary of Together First Appointed: NQBP on 19 June 2009; Queensland. In these roles she has executive responsibility within the union for overseeing PCQ on 1 July 2001; MPL on 7 August 2009 the development and implementation of industrial and organising strategies to further the interests of professional, clerical, administrative, customer service and call centre workers in Term of Office – to 30 September 2012 the private and public sectors. • Chairman Human Resources and Ms Bignell is also Vice President of the Queensland Council of Unions and a Director of Industrial Relations Committee Workplace Health and Safety Queensland. • Member Corporate Governance and Planning Committee Kasper Kuiper R.O.N Kasper Kuiper’s expertise in port construction and reclamation includes involvement in some M. Mariner FG + ext. M, Grad Dip, OSD of the largest port and underwater constructions in the world — Saudi Arabia, Kuwait, India, First Appointed: NQBP on 19 June 2009; Pakistan and The Netherlands. PCQ on 1 July 2001; MPL on 7 August 2009 He relocated to Brisbane for the construction of the Brisbane International Airport in Term of Office – to 30 September 2011 1980-1983, and has worked for the Woodside Project in Cape Lambert and Port Headland, Western Australia. • Member Audit and Financial Risk Management Committee Captain Kuiper is Branch Master for Queensland of the Company of Master Mariners and a member of the Board of Governors and Chairman of the Board of Management of the “Duyfken 1606 Replica Foundation”. He is Honorary Consul of The Netherlands in Queensland and was decorated as a Knight in the Order of Oranje-Nassau by Queen Beatrix of The Netherlands in May 2006.

66 Information on Directors (cont.)

Name and qualifications Experience, special responsibilities and other directorships Peter Tait Peter Tait has been practising in chartered accountancy for over 20 years for SH Tait and Co. BCom, M Info Systems, FCA GAICD This large regional practice operates in central Queensland providing accounting, taxation, First Appointed: NQBP on 19 June 2009; audit and general business services to a wide range of diverse industries. PCQ on 7 August 2009; MPL on 1 October 2007 Mr Tait is a registered company auditor providing audit services to a variety of unlisted Term of Office – to 30 September 2011 public and private companies. Other areas of work include advising on restructuring, finance applications, succession planning and litigation support, including business valuations. • Member Audit and Financial Risk Management Committee Dedicating his time and talent to the community, Mr Tait has been Honorary Treasurer of the George Street Neighbourhood Centre Association Inc in Mackay and Honorary Treasurer of Mackay Children’s Contact Service Inc since 2001. Stephen Golding AM, RFD Stephen Golding has had a long and distinguished career with the Queensland Department BE, MEngSc, BEcon, Hon FIE Aust, of Main Roads. From 1970 to his retirement in March 2005, Mr Golding held a number of FCILT, FAIM, FITE, FAICD, CPEng, RPEQ key management positions and in July 2000 was appointed Director-General of Main Roads. First Appointed: NQBP on 19 June 2009; Mr Golding is active in four professional associations including an Honorary Fellow of the PCQ on 7 August 2009; MPL on 1 July 2005 Institution of Engineers (Australia) and has served on a number of panels and committees. Term of Office – to 30 September 2011 He is a Director and Chair of Transport Certification Australia Ltd and a Board Member of Queensland Manufactured Water Authority. • Chairman Corporate Governance and Planning Committee He has enjoyed a long career in the Army Reserve enlisting as a private soldier in the Queensland University Regiment in 1963. In June 1998, Mr Golding was appointed • Member Human Resources and Industrial Member of the Order of Australia for outstanding service to the Army Reserve. Relations Committee Robynne Dudley Robynne Dudley has strong ties with the Mackay business community and is a partner BBus. FCA with Shepherd and Dudley Chartered Accountants. She has been an accountant for more First Appointed: NQBP on 19 June 2009; than 30 years. Mrs Dudley holds a Bachelor of Business, and is a Fellow of the Institute of PCQ on 7 August 2009; MPL on 1 July 1999 Chartered Accountants and a CPA. Term of Office – to 30 September 2012 • Chairman Audit and Financial Risk Management Committee (appointed 28 July 2009) • Member Corporate Governance and Planning Committee

Appointment dates for PCQ and MPL relate to the entity or its predecessor.

Company Secretary

Name and qualifications Experience, special responsibilities and other directorships Susan Campbell Susan Campbell joined PCQ as Company Secretary/General Counsel in May 2008, coming BCom/LLB(Hons), GradDip Sec Instit Aust, from Ergon Energy, where she held that role since June 2007, and before that, the role of GradDip Coy Sec Prac, ACIS Group Legal Counsel. Appointed: NQBP on 1 July 2009; Ms Campbell has over 20 years’ experience in private practice and corporate in-house roles, PCQ on 12 May 2008; MPL on 1 July 2009 specialising in commercial and corporate law. Prior to joining Ergon Energy, Ms Campbell was a Senior Associate at national law firms Corrs Chambers Westgarth and Mallesons Stephen Jaques. Tina Marsh Tina Marsh has an 18 year history with the Group and prior to assuming the role of Appointed: NQBP on 1 July 2009; Company Secretary, was extensively involved in the corporate administration of PCQ and PCQ on 1 July 2007; MPL on 1 July 2009 executive support to the Board.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 67 NQBP | Directors’ Report for the Year Ended 30 June 2011

Meetings of Directors in 2010-11 The number of meetings of directors for NQBP and its subsidiary companies (including meetings of committees of directors) held during the year, and the number of meetings attended by each director, were as follows:

Board Meetings NQBP PCQ MPL Eligible to Number Eligible to Number Eligible to Number Director Attend Attended Attend Attended Attend Attended

L Taylor Chairman 16 16 16 16 11 11 G Davies 16 16 16 16 11 11 K Kuiper 16 15 16 15 11 11 J Bignell 16 9 16 9 11 6 R Dudley 16 14 16 14 11 10 S Golding 16 15 16 15 11 11 P Tait 16 13 16 13 11 9

Committee Meetings Audit and Financial Corporate Governance Human Resources and Risk Management Committee and Planning Committee Industrial Relations Committee Eligible to Number Eligible to Number Eligible to Number Director attend attended attend attended attend attended

L Taylor Chairman 4 4 4 4 4 4 G Davies 1 1 - - 4 3 K Kuiper 4 4 - - - - J Bignell 1 - 4 1 4 4 R Dudley 4 3 4 2.5 - - S Golding 1 - 4 4 4 4 P Tait 4 4 - - - -

68 Deeds of Indemnity and Insurance Contract of Insurance The constitution of each of NQBP, PCQ and MPL provides that, to the The Group has paid a premium in respect of a contract insuring the extent permitted by law: directors and officers of each of NQBP, MPL and PCQ against liabilities. • each such company must indemnify every person who is, or has The directors have not included details of the nature of the liabilities been, a director or secretary of NQBP against any liability incurred covered or the amount of the premium paid in respect of the directors’ by that person as a director or secretary of NQBP; and officers’ liability insurance, as such disclosure is prohibited under • each such company may make a payment in respect of legal the terms of the contract. costs incurred in defending an action for a liability incurred by that person as a director or secretary of NQBP; and Proceedings on Behalf of the Group • each such company may pay a premium to insure a director or No person has applied to the Court under section 237 of the secretary against certain liability incurred by the director or secretary Corporations Act 2001 for leave to bring proceedings on behalf of acting in that capacity. any of NQBP, PCQ and MPL, or to intervene in any proceedings to which NQBP, PCQ and/or MPL is a party, for the purpose of taking Each of NQBP, PCQ and MPL entered into a separate Deed of responsibility on behalf of the relevant company for all or part of Indemnity in June 2009 for the benefit of persons who are or become those proceedings. Directors, Secretaries or CEO and certain other key decision making persons of any of those companies (“Officers”) during the term of the No proceedings have been brought or intervened in on behalf of any of Deed. Under this Indemnity, each of NQBP, PCQ and MPL agrees to NQBP, PCQ and MPL with leave of the Court under section 237 of the indemnify such persons against any liabilities (including costs and Corporations Act 2001. expenses) incurred by such persons as an Officer during the term of the Indemnity. The Indemnity operates until revoked by the relevant Board. Non-Audit Services The Indemnity does not apply in respect of: The Group’s auditor has not provided the Group any non-audit services. • any liability to NQBP, PCQ or MPL (as applicable) or to any subsidiary of those companies; Rounding of Amounts • any liability which arises out of the conduct by the Officer involving The Company is of a kind referred to in Class Order 98/100, issued lack of good faith; by the Australian Securities and Investments Commission, relating • any liability which is not permitted to be indemnified under the to the “rounding off” of amounts in the directors’ report. Amounts in Corporations Act 2001 (Cth), Trade Practices Act 1974 (Cth) and the Directors’ Report have been rounded off in accordance with that any other applicable law; and Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar. • any liability where, and to the extent that the Officer is indemnified under a policy of insurance or otherwise. Auditor’s Independence Declaration Repayment obligations apply if NQBP, PCQ and/or MPL (as applicable) has paid an amount to an Officer under the Indemnity, and the Officer is A copy of the Auditor’s Independence Declaration as required under no longer entitled to be indemnified. section 307C of the Corporations Act 2001 is set out on page 70. Each of NQBP, PCQ and MPL is required to effect insurance in relation This report is signed in accordance with a resolution of directors. to these liabilities (other than for legal costs), except for liabilities arising out of wilful breach of duty or the breach of certain provisions of the Corporations Act 2001. No liability has arisen under these Indemnities as at the date of this report. The Group has not entered into any agreement to indemnify its auditors.

LL Taylor Chairman North Queensland Bulk Ports Corporation Limited 31 August 2011 Brisbane

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 69 NQBP | Auditor’s Independence Declaration

Auditor’s Independence Declaration

To the Directors of North Queensland Bulk Ports Corporation Limited This auditor’s independence declaration has been provided pursuant to s.307C of the Corporations Act 2001.

Independence Declaration As lead auditor for the audit of North Queensland Bulk Ports Corporation Limited for the year ended 30 June 2011, I declare that, to the best of my knowledge and belief, there have been – a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b) no contraventions of any applicable code of professional conduct in relation to the audit.

M R HYMAN CA Queensland Audit Office As Delegate of the Auditor‑General of Queensland Brisbane

70 NQBP | Statement of Comprehensive Income for the Year Ended 30 June 2011

Statement of Comprehensive Income for the Year Ended 30 June 2011

Consolidated Parent 2011 2010 2011 2010 Note $’000 $’000 $’000 $’000

Income from Operations Revenue 6 159,355 135,343 49,932 43,961 Other income 6 371,495 152 348,992 -

Expenses from Operations Repairs and maintenance 51,341 38,297 158 14 Depreciation and amortisation expense 7 17,964 31,682 24 - Employee benefits expense 12,122 10,962 4,235 2,124 Finance costs 7 13,846 9,482 66 - Impairment losses/write-offs 7 19,539 6,460 105,007 - Cost of sale of non current asset 17,637 - 17,637 - Property expenses 5,450 3,429 525 114 Consultancies 1,104 2,317 19 57 Land tax 1,918 1,986 - 117 Other expenses 2,293 1,852 1,098 272 Quarantine waste expenses 906 1,062 - - Insurance 799 805 800 534 Dynamic underkeel clearance expense 848 768 - - Travelling expenses 600 645 297 122 Legal expenses 330 494 12 52 Promotional expenses 290 351 82 64 Profit before income tax 383,863 24,903 268,964 40,491 Income tax refund/(expense) 8 71,064 (6,832) (4,976) (12,149) Profit for the year 454,927 18,071 263,988 28,342

Other comprehensive income for the year, net of tax 20 75,291 51 - -

Total comprehensive income for the year 530,218 18,122 263,988 28,342

The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 71 NQBP | Statement of Financial Position As at 30 June 2011

Statement of Financial Position As at 30 June 2011

Consolidated Parent 2011 2010 2011 2010 Note $’000 $’000 $’000 $’000

Assets Current assets Cash and cash equivalents 9 1,812,409 13,560 1,812,409 13,560 Trade and other receivables 10 20,654 24,126 10,362 4,936 Inventories 11 1,164 1,228 - - Other current assets 12 335 282 218 187 1,834,562 39,196 1,822,989 18,683 Assets classified as held for sale 13 1,700 - - - Total current assets 1,836,262 39,196 1,822,989 18,683 Non-current assets Receivables 10 4,147 4,472 - - Inter-company loans 10 - - 108,662 81,038 Investments in subsidiaries 22 - - 117,120 222,352 Property, plant and equipment 15 250,561 1,410,677 837 - Investment properties 14 39,942 40,453 - - Total non-current assets 294,650 1,455,602 226,619 303,390 Total assets 2,130,912 1,494,798 2,049,608 322,073

Liabilities Current liabilities Trade and other payables 16 41,133 47,453 22,876 8,471 Current income tax equivalent liabilities 2,302 7,286 2,302 12,407 Provisions 18 222,446 14,641 221,222 13,947 Total current liabilities 265,881 69,380 246,400 34,825 Non-current liabilities Trade and other payables 16 795 6 789 - Interest-bearing liabilities 17 67,218 787,593 67,218 - Deferred income tax equivalent liabilities (assets) 8 38,126 103,886 30 (258) Provisions 18 1,337 1,024 93 444 Total non-current liabilities 107,476 892,509 68,130 186 Total liabilities 373,357 961,889 314,530 35,011 Net assets 1,757,555 532,909 1,735,078 287,062 Equity Issued capital 19 1,187,080 272,352 1,676,680 272,352 Other reserves 20 64,382 254,471 - - Retained earnings 21 506,093 6,086 58,398 14,710 Total equity 1,757,555 532,909 1,735,078 287,062

The above Statement of Financial Position should be read in conjunction with the accompanying notes.

72 NQBP | Statement of Changes in Equity for the Year Ended 30 June 2011

Statement of Changes in Equity for the Year Ended 30 June 2011

Issued Retained Revaluation Capital earnings surplus Total Note $’000 $’000 $’000 $’000

Consolidated Entity Balance at 1 July 2009 - - - - Transfer in from PCQ and MPL 222,352 1,647 254,420 478,419

Total comprehensive income for the year Net profit for the year 21 - 18,071 - 18,071 Other comprehensive income Increase in fair value of land and buildings 20 - - 51 51 Total comprehensive income for the year - 18,071 51 18,122 Transactions with owners in their capacity as owners Contributions of equity, net of transaction costs 19 272,352 - - 272,352 Dividends provided for or paid 21 - (13,632) - (13,632) Transfer of equity in subsidiaries 19 (222,352) - - (222,352) 50,000 (13,632) - 36,368

At 30 June 2010 272,352 6,086 254,471 532,909

Total comprehensive income for the year Net profit for the year 21 - 454,927 - 454,927 Other comprehensive income Increase in fair value of land and buildings 20 - - 75,291 75,291 Total comprehensive income for the year - 454,927 75,291 530,218 Transactions with owners in their capacity as owners Contributions of equity, net of transaction costs 19 914,953 - - 914,953 Transfer from/(to) equity 20, 21 - 265,380 (265,380) - Dividends provided for or paid 21 - (220,300) - (220,300) Transfer of equity to shareholder 19 (225) - - (225) 914,728 45,080 (265,380) 694,428

At 30 June 2011 1,187,080 506,093 64,382 1,757,555

The accompanying notes form part of these financial statements.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 73 NQBP | Statement of Changes in Equity for the Year Ended 30 June 2011

Statement of Changes in Equity for the Year Ended 30 June 2011

Issued Retained Revaluation Capital earnings surplus Total Note $’000 $’000 $’000 $’000 Parent Balance at 1 July 2009 - - - -

Total comprehensive income for the year Net profit for the year 21 - 28,342 - 28,342 Other comprehensive income - - - - Total comprehensive income for the year - 28,342 - 28,342 Transactions with owners in their capacity as owners Contributions of equity, net of transaction costs 19 272,352 - - 272,352 Dividends provided for or paid 21 - (13,632) - (13,632) 272,352 (13,632) - 258,720

At 30 June 2010 272,352 14,710 - 287,062

Total comprehensive income for the year Net profit for the year 21 - 263,988 - 263,988 Other comprehensive income - - - - Total comprehensive income for the year 263,988 - 263,988 Transactions with owners in their capacity as owners Contributions of equity, net of transaction costs 5,19 1,404,553 - - 1,404,553 Dividends provided for or paid 21 - (220,300) - (220,300) Transfer of equity to shareholder 19 (225) - - (225) 1,404,328 (220,300) - 1,184,028

At 30 June 2011 1,676,680 58,398 - 1,735,078 The accompanying notes form part of these financial statements.

74 NQBP | Consolidated Statements Of Cash Flows As at 30 June 2011

Statement of Cash Flows As at 30 June 2011

Consolidated Parent 2011 2010 2011 2010 Note $’000 $’000 $’000 $’000

Cash flows from operating activities Cash receipts from customers 152,529 173,484 46,258 46,988 Cash paid to suppliers and employees (81,944) (109,306) (9,445) (1,992) GST refund by (remitted to) ATO (1,018) 32,057 (1,920) (4,248) Interest paid (13,846) (10,674) (66) - Income tax equivalents received (paid) 320 (9,209) (291) - Net cash inflow/(outflow) from operating activities 23 (ii) 56,041 76,352 34,536 40,748

Cash flows from investing activities Interest received 2,126 947 169 3,850 Acquisition of subsidiary, net of cash acquired - - - - (222,352) Purchase of property, plant and equipment (190,697) (426,950) - - Purchase of investment property - (78) - - Stamp duty paid (78,824) - (78,824) - Proceeds from sale of property, plant and equipment 1,829,000 163 1,829,000 - Proceeds from sale of fixed assets 482 - - - Loans to related parties - - (39,618) (81,038) Net cash inflow/(outflow) from investing activities 1,562,087 (425,918) 1,710,727 (299,540)

Cash flows from financing activities Proceeds from issue of shares - 50,000 - 272,352 Proceeds from borrowings 194,353 300,207 67,218 - Dividends paid to company shareholders (13,632) (12,036) (13,632) - Net cash inflow/(outflow) from financing activities 180,721 338,171 53,586 272,352

Net increase (decrease) in cash and cash equivalents 1,798,849 (11,395) 1,798,849 13,560 Cash and cash equivalents at beginning of period 13,560 24,955 13,560 - Cash and cash equivalents at end of period 9 1,812,409 13,560 1,812,409 13,560 The above Statement of Cash Flows should be read in conjunction with the accompanying notes.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 75 NQBP | Notes to and Forming Part of the Financial Statements for the Year Ended 30 June 2011

Notes to and Forming Part of the Financial Statements for the Year Ended 30 June 2011

1. Corporate Information 2. Summary of Significant Accounting Policies North Queensland Bulk Ports Corporation Limited (NQBP) was i) Basis of Preparation declared a Company Government Owned Corporation on 19 June 2009 General under the provisions of the Government Owned Corporations Act 1993 and related Regulations, having been originally established on The consolidated financial statements include the financial statements 7 May 2009. of NQBP, and the consolidated financial statements of NQBP and its subsidiaries PCQ and MPL. The statements are for general purpose in NQBP is a public company limited by shares, incorporated under the nature and reflect the whole of the financial activities of the Group. Corporations Act 2001 and domiciled in Australia. The financial report has been prepared in accordance with the The company’s issued capital is controlled by the State of Queensland. requirements of the Corporations Act 2001, Australian Accounting NQBP’s registered office is: Standards and other authoritative pronouncements of the Australian Level 1 Wellington House, 181 Victoria Street Accounting Standards Board. The financial report also complies with Mackay QLD 4740 applicable provisions of the Financial Accountability Act 2009 and the The directors of NQBP, PCQ and MPL have resolved to take advantage Financial and Performance Management Standard 2009. of the relief offered by ASIC Class Order 98/1418. Under Class Order The accounts of the subsidiaries are prepared using the same reporting 98/1418, PCQ and MPL are relieved from preparing, having audited, period as the parent company and using consistent accounting lodging and distributing financial reports under the Corporations policies. In preparing the consolidated financial statements, all Act 2001. intercompany balances and transactions, income and expenses and To satisfy the conditions of the Class Order, each member of the Group profits and losses resulting from intergroup transactions have been entered into a Deed of Cross Guarantee on 9 June 2010 (Deed). The eliminated in full. effect of the deed is that each member of the Group has guaranteed the The financial report has been prepared on an accrual basis using the payment of any debt owed to a creditor of the group in accordance with historical cost convention except where specifically stated. the Deed. The Deed becomes enforceable in respect of the debt of a The financial statements are presented in Australian dollars, which is member of the Group: the Group’s functional and presentation currency. Foreign currency – upon the winding up of the member of the Group where that member transactions are translated into the functional currency using the is insolvent, has applied to the court to be wound up, upon the exchange rates prevailing at the dates of the transactions. report of ASIC that the company cannot pay its debts or under a The financial statements were authorised for issue by the Board on voluntary winding up; or 31 August 2011. – in any other case – if six months after a resolution or order for the winding up of the member of the Group any debt of a creditor of the ii) Recognition of Revenue and Expenses member of the Group has not been paid in full. Revenue is recognised to the extent that it is probable that the NQBP is required to comply with the requirements of the Corporations economic benefits will flow to the Group and the revenue can be Act 2001. Under the terms of Section 118 of the Government reliably measured. Revenue is only recognised where control of the Owned Corporations Act 1993, specified sections of the Financial right to be compensated and the stage of completion can be reliably Accountability Act 2009 apply as if NQBP were a statutory body. measured. Where the contract outcome cannot be reliably measured, Since 1 July 2009, NQBP has been responsible as a Port Authority revenue is only recognised to the extent that costs have been incurred. under the Transport Infrastructure Act 1994 for the management and An expense is recognised to the extent that it is probable that the control of the following prescribed harbours: consumption or loss of future economic benefits has occurred and the • Abbot Point • Weipa • Hay Point • Maryborough • Mackay expenditure can be reliably measured. Revenues and expenses arising from a cost recovery reimbursement are recognised in the financial years in which the service is rendered. The profit or loss on disposal of Property, Plant and Equipment is determined as the difference between the net book value at the time of disposal and the proceeds of disposal and is included in the Statement of Comprehensive Income in the year of disposal. iii) Grants and Contributions Grants and contributions that are non reciprocal in nature are recognised as revenue where there is a reasonable assurance that the grant will be received and are matched to the related expense.

76 2. Summary of Significant Accounting viii) Non current assets held for sale Policies (cont.) Non current assets and disposal groups are classified as held for sale and measured at the lower of their carrying amount and fair value iv) Impairment of Assets less costs to sell if their carrying amount will be recovered principally Property, Plant and Equipment and other assets are reviewed for through a sale transaction instead of use. They are not depreciated or impairment whenever events or changes in circumstances indicate amortised. For an asset or disposal group to be classified as held for that the carrying amount may not be recoverable. An impairment sale, it must be available for immediate sale in its present condition loss is recognised for the amount by which the asset’s carrying value and its sale must be highly probable. exceeds its recoverable amount. The recoverable amount is the higher A gain is recognised for any subsequent increases in fair value less of an asset’s fair value less costs to sell and value in use. In assessing costs to sell an asset, but not in excess of any cumulative impairment impairment, assets are grouped at the lowest cash generating unit, loss previously recognised. A gain or loss not previously recognised based on the lower of geographical location and separately identifiable by the date of the sale of the non-current asset is recognised at the date agreements over facilities. of derecognition. v) Receivables ix) Leases Trade debtors are recognised at the nominal amounts due at the time of Leases of property, plant and equipment where the Group has sale or service delivery, with settlement generally being required within substantially all the risks and rewards of ownership are classified 30 days from the invoice date. as finance leases and capitalised at inception of the lease at the fair The ability of receivables to be collected is assessed periodically with value of the leased property, or if lower, at the present value of the provision being made for impaired debts. minimum lease payments. Lease payments are apportioned between Loan receivables are measured at amortised cost less any the finance charges and reduction of the lease liability so as to achieve impairment losses. a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss over the lease period vi) Inventories so as to produce a constant periodic rate of interest on the remaining Inventories are measured at the lower of cost and net realisable value. balance of the liability for each period. The cost of inventories is based on the first-in first-out principle, and Capitalised leased assets are depreciated over the shorter of the includes expenditure incurred on acquiring inventories, production or estimated useful life of the asset or the lease term. conversion costs, and other costs incurred in bringing them to their Leases where the lessor retains substantially all the risks and rewards existing location and condition. of ownership of the net asset are classified as operating leases. Net realisable value is the estimated selling price in the ordinary Payments made under operating leases (net of incentives received from course of business, less the estimated costs of completion and the lessor) are charged to profit or loss on a straight-line basis over the selling expenses. period of the lease. vii) Property, Plant and Equipment When assets are leased out under finance leases, the present value of The recording threshold for non current assets is $1000. Assets are the lease payments is recognised as a lease receivable. The difference only recognised if it is probable that future economic benefits from the between the gross receivable and the present value of the receivable is item will flow to the Group. recognised as unearned finance income. Lease income is recognised over the lease term using the net investment method which reflects a Land, Channels and Infrastructure, including buildings, are shown at constant periodic rate of return. fair value based on periodic revaluations. Independent revaluations are performed at least every five years and interim revaluations are Lease income from operating leases is recognised in profit or loss on performed annually, based on appropriate indices where there has been a straight-line basis over the lease term. Initial direct costs incurred a material variation in the index. Any accumulated depreciation at the in negotiating operating leases are added to the carrying value of the date of revaluation is eliminated against the gross carrying amount leased asset and recognised as an expense over the lease term on the of the asset and the net amount is restated to the revalued amount of same basis as the lease income. the asset. Increases in asset values on revaluation are credited, net of tax, to reserves in equity. To the extent that the increase reverses a decrease previously recognised as an expense in profit and loss, the increase is first recognised in profit and loss. Decreases that reverse previous increases of the same asset are first charged against revaluation reserves directly in equity to the extent of the remaining reserve attributable to the asset, with all other decreases charged to the Statement of Comprehensive Income. Plant and Equipment and Capital Work in Progress is stated at cost, less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the item.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 77 NQBP | Notes to and Forming Part of the Financial Statements for the Year Ended 30 June 2011

2. Summary of Significant Accounting Where temporary differences on property, plant and equipment give Policies (cont.) rise to unrealised capital losses, a deferred tax equivalent asset is not recognised unless sufficient foreseeable taxable gains exist against x) Investment Properties which the unrealised losses may be claimed. Investment property, which is property held to earn rentals and/or for An election has been made to participate in the tax consolidation regime. capital appreciation, is initially recognised at cost including transaction costs. Where investment property is acquired at no or nominal value it Tax Consolidation legislation is recognised at fair value. Investment property is subsequently carried North Queensland Bulk Ports Corporation Limited (NQBP) and its at fair value, based on periodic revaluations. Fair value is based on the wholly-owned Australian Controlled entities have implemented the tax selling prices in an active property market adjusted, if necessary, to reflect consolidation legislation. the nature, location or condition of the specific investment property. The head entity, NQBP, and the controlled entities in the tax Independent revaluations are performed at least every five years and consolidated group account for their own current and deferred tax interim revaluations are performed annually, based on appropriate indices amounts. These tax amounts are measured as if each entity in the tax where there has been a material variation in the index. consolidated group continues to be a standalone taxpayer in its own Gains or losses arising from changes in the fair value of investment right. In addition to its own current and deferred tax amounts, NQBP property are included in the Statement of Comprehensive Income for also recognises the current tax liabilities (or assets) and the deferred the period in which they arise. tax assets arising from unused tax losses and unused tax credits When the use of a property changes such that it is reclassified assumed from controlled entities in the tax consolidated group. as property, plant and equipment, its fair value at the date of Assets or liabilities arising under tax funding agreements with the reclassification becomes its cost for subsequent accounting. tax consolidated entities are recognised as amounts receivable from or payable to other entities in the Group. Any difference between the xi) Depreciation amounts assumed and amounts receivable or payable under the tax Depreciation is calculated on a straight line basis to write off the net funding agreement are recognised as a contribution to (or distribution cost or revalued amount of each item of Property, Plant and Equipment from) wholly-owned tax consolidated entities. (excluding land), less its residual value, over its expected useful life. Estimates of useful lives and residual values are reviewed on an annual xiii) Payables basis for all assets. Payables are recognised for amounts payable in the future for goods Capital Work in Progress is not depreciated until it reaches service and services received, whether or not invoices have been received. delivery capacity. Creditors are generally unsecured, not subject to interest charges and are normally settled within 30 days of invoice receipt. The expected useful lives for major assets are as follows: Channels 38 – 54 years xiv) Borrowings Infrastructure and Major Plant & Equipment 8 – 40 years Borrowings are recognised at amortised cost. Borrowings are removed Plant and Equipment 3 – 25 years from the Statement of Financial Position when the obligation specified in the contract is discharged, cancelled or expired. Major spares purchased specifically for particular plant are capitalised and depreciated on the same basis as the plant to which they relate. Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (i.e. an asset that necessarily takes a xii) Income Tax Equivalent substantial period of time to get ready for its intended use or sale) are The Group is exempt from income tax under section 23(d) of the capitalised as part of the cost of that asset. All other borrowing costs are Income Tax Assessment Act but is subject to the provisions of the expensed in the period they occur. Borrowing costs consist of interest National Tax Equivalent Regime (NTER) in accordance with Part 2 of the and other costs incurred in connection with the borrowing of funds. Treasurer’s Tax Equivalents Manual and pursuant to Section 129 of the xv) Provisions Government Owned Corporations Act. Provisions are recognised when the Group has a legal, equitable Under tax effect accounting the income tax equivalent expense in the or constructive obligation to make a future settlement of economic Statement of Comprehensive Income represents the tax equivalent benefits to other entities as a result of past transactions or other past on the pre-tax equivalent accounting profit adjusted for income and events, and it is probable that a future sacrifice of economic benefits expenses never to be assessed or allowed for taxation equivalent will be required and a reliable estimate can be made of the amount of purposes. The deferred income tax equivalent liability and the deferred the obligation. income tax equivalent asset include the tax equivalent effect of temporary differences between income and expense items recognised A provision for dividends is not recognised as a liability unless the in different accounting periods for book and tax equivalent purposes, dividends are declared, determined or publicly recommended on or calculated at the tax equivalent rates expected to apply when the before the reporting date. differences reverse. The benefit arising from estimated carry forward tax equivalent losses has been recorded in the deferred income tax equivalent asset account where realisation of such benefit is considered to be probable.

78 2. Summary of Significant Accounting xix) Critical Accounting Estimates and Judgements Policies (cont.) Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of xvi) Employee Benefits future events that may have a financial impact on the entity and that are Liabilities for wages and salaries and annual leave are recognised, believed to be reasonable under the circumstances. and are measured as the amount unpaid at the reporting date in respect The Group makes estimates and assumptions about the future. of employees’ service up to that date, having regard to expected future The resulting accounting estimates will, by definition, seldom equal employee remuneration rates and on costs. the related actual results. The estimates and assumptions that have Prior history indicates that on average, sick leave taken each reporting a significant risk of causing a material adjustment to the carrying period is less than the entitlement accrued. This is expected to recur amounts of assets and liabilities within the next financial year are in future periods. Accordingly, it is unlikely that existing accumulated discussed below. entitlements will be used by employees and no liability for unused sick leave entitlements is recognised. As sick leave is non-vesting, (i) Income Taxes an expense is recognised for this leave as it is taken. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination A liability for long service leave is recognised, and is measured as the is uncertain. The Group recognises liabilities for anticipated tax audit present value of expected future payments to be made in respect of issues based on estimates of whether additional taxes will be due. services provided by employees up to the reporting date, having regard Where the final tax outcome of these matters is different from the to expected employee remuneration rates and on costs. amounts that were initially recorded, such differences will impact The Group’s employees are members of QSuper and various other the current and deferred tax provisions in the period in which such superannuation plans. Contributions to employee superannuation plans determination is made. are charged as an expense as the contributions are paid or become payable. For employees in QSuper, the Treasurer of Queensland, based (ii) Fair Value on advice from the State Actuary, determines employer contributions The Group has made a significant judgement about the impairment for superannuation expenses. No liability is recognised for accruing of its Property, Plant and Equipment. Future oriented estimates are superannuation benefits as this liability is held on a whole of necessary to measure the recoverable amount of classes of property, Government basis and reported in the whole of Government financial plant and equipment in the absence of recently observed market prices. statements prepared pursuant to AASB 1049 Whole of Government These estimates involve assumptions about items such as the risk and General Government Sector Financial Reporting. adjustment to cashflows or discount rates used, and future changes in prices affecting both revenues and other costs. Refer Note 15 (a) xvii) Non-reciprocal transactions for details of the methodology and assumptions applied in performing Transfers of assets and/or liabilities via transfer notices are accounted impairment testing. for as a transfer under Interpretation 1038 Contributions by Owners Made to Wholly Owned Public Sector Entities or in accordance with xx) New Accounting Standards and Interpretations the Office of Government Owned Corporation’s Accounting Policy for The following standards, amendments to standards and interpretations are non-reciprocal liability and net liability transfers. mandatory for the first time for the financial year beginning 1 July 2010: xviii) Goods and Services Tax • AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project Revenues and expenses are recognised net of GST except where GST incurred on a purchase of goods and services is not recoverable from • AASB 2009-8 Amendments to Australian Accounting Standards – the taxation authority, in which case the GST is recognised as part of Group Cash-settled Share-based Payment Transactions the cost of acquisition of the asset or as part of the expense item. • AASB 2009-10 Amendments to Australian Accounting Standards – Receivables and payables are stated with the amount of GST included. Classification of Rights Issues The net amount of GST recoverable from, or payable to, the taxation • AASB Interpretation 19 Extinguishing Financial Liabilities with authority is included as part of receivables or payables in the statement Equity Instruments and related amendments; and of financial position. • AASB 2010-3 Amendments to Australian Accounting Standards Cash flows are included in the statement of cash flows on a gross arising from Annual Improvements Project. basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, The adoption of these standards and interpretations did not have any the taxation authority is classified as operating cash flows. material impact on the current or any prior period and is not likely to materially affect future periods. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 79 NQBP | Notes to and Forming Part of the Financial Statements for the Year Ended 30 June 2011

2. Summary of Significant Accounting The amendments made to AASB 112 Income Taxes provide a practical Policies (cont.) approach for measuring deferred tax liabilities and deferred tax assets when investment property is measured using the fair value model. xxi) New and amended standards and interpretations Under AASB 112, the measurement of deferred tax liabilities and not yet adopted deferred tax assets depends on whether an entity expects to recover A number of new standards, amendments and interpretations are an asset by using it or by selling it. However, it is often difficult and effective for annual periods beginning after 1 July 2011, and have not subjective to determine the expected manner of recovery when the been applied in preparing these financial statements. None of these is investment property is measured using the fair value model. To provide expected to have a significant effect on the financial statements, except a practical approach in such cases, the amendments introduce a for the following: rebuttable presumption that an investment property is recovered entirely through sale. The Consolidated Entity does not plan to adopt this (i) AASB 9 Financial Instruments (effective from 1 January 2013) amendment early and the extent of the impact has not been determined. AASB 9 Financial Instruments addresses the classification, In addition to the above, new and amended standards dealing with measurement and de-recognition of financial assets and financial Consolidated Financial Statements, Separate Financial Statements, Joint liabilities. It simplifies the approach for classification and measurement Arrangements, Disclosure of Interests in Other Entities and Fair Value of financial assets compared with the requirements of AASB 139. Measurement have recently been released. These standards are effective Financial assets are to be classified based on (a) the objective of from 1 January 2013. The Consolidated Entity does not plan to adopt the entity’s business model for managing the financial assets; and these standards early nor has the extent of their impact been determined. (b) the characteristics of the contractual cash flows. This replaces the numerous categories of financial assets in AASB 139. The xxii) Comparative Figures Consolidated Entity does not plan to adopt this standard early and When required by Accounting Standards, comparative figures the extent of the impact has not been determined. have been adjusted to conform to changes in presentation for the (ii) AASB 2010-6 Amendments to Australian Accounting Standards current financial year. The comparative period is for 19 June 2009 to – Disclosures on transfers of Financial Assets (effective from 30 June 2010 as NQBP elected to extend its first period of financial 1 July 2011) reporting pursuant to section 323D of the Corporations Act 2001. Amendments made to AASB 7 Financial Instruments: Disclosures xxiii) Rounding introduce additional disclosures in respect of risk exposures arising In accordance with ASIC Class Order 98/100 and unless otherwise from transferred financial assets. The amendments will affect stated, amounts included in the financial statements have been particularly entities that sell, factor, securitise, lend or otherwise rounded to the nearest thousand dollars. transfer financial assets to other parties. The Consolidated Entity has not yet determined the extent of the impact on its disclosures. (iii) AASB 2010-8 Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets (effective from 1 January 2012)

80 3. Financial Risk Management The Group has Board approved financial policies for overall risk management including the mitigation of foreign exchange, interest rate, liquidity and credit risks. i) Foreign Exchange Risk The Group seeks to have all agreements, tenders and contracts denominated in Australian dollars. The Board requires all foreign exchange exposures greater than $1 million to be hedged unless explicitly determined otherwise. Forward foreign exchange contracts have been used to manage foreign exchange rate risk if any. There was no exposure to Foreign Exchange Risk at balance date (2010: nil). ii) Interest Rate Risk Financial Assets The Group holds interest bearing assets with Queensland Treasury Corporation (QTC) and the Commonwealth Bank. As at the reporting date, the Group had the following variable rate financial assets:

Consolidated Parent 2011 2011 Interest Balance Interest Balance Rate $’000 Rate $’000

Commonwealth Bank - Operating Account 4.60% 553 4.60% 553 Queensland Treasury Corporation - Cash Fund 5.57% 61,677 5.57% 61,677 Commonwealth Bank - Abbot Point Sale Account* - 1,750,176 - 1,750,176

*This is a non interest bearing account

2010 2010 Interest Balance Interest Balance Rate $’000 Rate $’000

Commonwealth Bank - Operating Account 4.35% 6,548 4.35% 6,541 Queensland Treasury Corporation - Cash Fund 5.27% 7,009 5.27% 7,009 Sensitivity At 30 June 2011, if interest rates had changed by +/- 100 basis points from the year end rate with all other variables held constant, pre tax profit would have not been materially affected as a result of higher/lower interest income. Financial Liabilities The Group’s main interest rate risk arises from long term borrowings. Loan borrowings provided by QTC are held within debt pools specific to NQBP. The debt pools comprise both fixed and floating rate debt instruments and, as a result, the overall interest rates on the pools can vary with changes in market interest rates. An annual book rate review is undertaken by QTC as at 1 July each year. A Competitive Neutrality Fee is also applied by QTC to the value of the debt, in order to reflect the true stand alone cost of debt for the Group. The Group seeks to match interest rate risks with revenue streams resultant from assets. For long term pricing agreements the Group seeks to adjust revenue for movements in interest rates on at least a five yearly basis.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 81 NQBP | Notes to and Forming Part of the Financial Statements for the Year Ended 30 June 2011

3. Financial Risk Management (cont.) ii) Interest Rate Risk (cont.) As at the reporting date, the Group had the following variable rate borrowings:

Consolidated Parent Weighted 2011 Weighted 2011 Interest Balance Interest Balance Rate $’000 Rate $’000

Queensland Treasury Corporation - book value 6.42% 67,218 6.42% 67,218 Queensland Treasury Corporation - market value 67,742 67,742

Weighted 2010 Weighted 2010 Interest Balance Interest Balance Rate $’000 Rate $’000

Queensland Treasury Corporation - book value 7.57% 787,593 - - Queensland Treasury Corporation - market value 795,317 - - Sensitivity At 30 June 2011, if interest rates had changed by +/- 100 basis points from the year end rate with all other variables held constant, the Group’s pre tax profit would have been $99,819 (2010:$1,556,793) lower/higher as a result of higher/lower interest expense. The results of this sensitivity analysis are based on a portfolio with an average modified duration of 2.58 years. The analysis has been performed on a net debt basis. The increase/decrease in interest cost is the result of periodic rebalancing over the year. (iii) Credit Risk The Board has approved policies to ensure that agreements are entered into with both customers of sufficient financial substance and with appropriate credit history. For some trade receivables the Group may also obtain security in the form of bank or other guarantees, which can be called upon if the counterparty is in default under the terms of the agreement. Derivative counterparties and cash transactions are limited to QTC or other high credit quality financial institutions as arranged through the Queensland Government. At balance date, the exposure to credit risk is materially equal to the carrying value of financial assets in the Statement of Financial Position, and collateral held was immaterial. Impaired debts relating to trade debtors have been provided for as disclosed in Note 10, and are not material. A provision for impaired loan has also been recognised as detailed in Note 10. Included in financial assets are debtors with a carrying amount of $380,367 (2010:$522,944) which are past due, and not impaired, at the reporting date. No collateral is held over these balances, however, the Group believes they are recoverable. The credit quality of financial assets that are neither past due nor impaired has been assessed as recoverable by reference to external credit ratings (if available) or to historical information about counterparty default rates.

82 3. Financial Risk Management (cont.) (iv) Liquidity Risk The Group manages liquidity risk by monitoring forecast and actual cash flows and matching these to approved borrowing levels, as detailed in the Statement of Corporate Intent, through QTC. The Group also has access to a working capital facility with QTC to a limit of $15 million (2010:$15 million), however this facility has not been used. An analysis of financial liabilities by remaining contractual maturity is as follows:

0 to 1 year 1 to 5 years Over 5 years Total $’000 $’000 $’000 $’000

Consolidated 2011 Trade and other payables 41,922 6 - 41,928 Queensland Treasury Corporation Borrowings 4,354 17,382 68,002 89,738 46,276 17,388 68,002 131,666

Parent 2011 Trade and other payables 23,665 - - 23,665 Queensland Treasury Corporation Borrowings 4,354 17,382 68,002 89,738 28,019 17,382 68,002 113,403

Consolidated 2010 Trade and other payables 47,453 6 - 47,459 Queensland Treasury Corporation Borrowings 32,264 247,201 800,107 1,079,572 79,717 247,207 800,107 1,127,031

Parent 2010 Trade and other payables 8,471 - - 8,471 Queensland Treasury Corporation Borrowings - - - - 8,471 - - 8,471 The repayment profile for borrowings is interest only with no fixed repayment date for the principal component. For the purposes of producing this report, the amount allocated to the over five years’ time band is the principal amount plus interest and fees for one quarter. All borrowing rates include administration charges and incorporate book rate reviews effective 1 July 2011. (v) Fair Value Estimation The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short term nature. The fair value of borrowings is determined by QTC using discounted cash flow analysis and the effective interest rate.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 83 NQBP | Notes to and Forming Part of the Financial Statements for the Year Ended 30 June 2011

4. Capital Risk Management The Group manages its capital to ensure that it continues as a going concern, in order to continue providing returns to shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce its cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The capital structure is monitored using the gearing ratio. The ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings less cash and cash equivalents. Total capital is calculated as equity as shown in the Statement of Financial Position plus net debt. The Group’s policy is to annually review its capital structure and review the appropriateness of the capital structure when major investments are proposed. The targeted gearing ratio is to a maximum 50%, based on a target credit rating of investment grade (BBB). The Group’s gearing ratio calculation is shown in the table below:

Consolidated Parent 2011 2010 2011 2010 $’000 $’000 $’000 $’000

Total borrowings 67,218 787,593 67,218 - Less: Cash and cash equivalents* 62,233 13,560 62,233 13,560 Net debt 4,985 774,033 4,985 - Total equity 1,757,555 532,909 1,735,078 287,062 Total capital 1,762,540 1,306,942 1,740,063 287,062 Gearing ratio 0.28% 59.22% 0.29% - * Note: Cash at Note 9 includes $1.75 billion to be repatriated, hence, underlying cash position for the Group is $62.233 million.

5. Transfer of Assets and/or Liabilities To facilitate the disposal of APCT #1 Pty Ltd and related assets by way of finance lease as disclosed in Note 23(iv), North Queensland Bulk Ports Corporation Ltd (NQBP) and Ports Corporation Queensland (PCQ) transferred various assets and or liabilities within and outside of the wholly owned group pursuant to project directions and transfer notices identified in Note 5(a) to (c). All the transfers were for no consideration and designated and accounted for in accordance with AASB Interpretation 1038, Contributions by Owners Made to Wholly-Owned Public Sector Entities and the Office of Government Owned Corporation’s Accounting Policy of Non-Reciprocal Liability/Net Liability Transfers. a) Transfer of Debt of PCQ to the State Government (Non Intra Group Transfer) – 2011 On 31 May 2011, the QTC debt owing by PCQ (relating to the Abbot Point Coal Terminal and its expansion capital works) of $914,953,119 was transferred from PCQ to the State. The contributed equity of PCQ was increased by a corresponding amount. b) Transfer of PCQ Assets and Liabilities to NQBP (Intra Group Transfer) – 2011 On 31 May 2011, various assets, liabilities and other legal rights relating to the Abbot Point Coal Terminal and its expansion capital works with a value of $1,404,552,937 were transferred from PCQ to NQBP. There was a corresponding increase in NQBP contributed equity and a reduction in PCQ’s contributed equity and retained earnings. The Treasurer determined the value of these assets to be transferred which resulted in a revaluation increment of $75,566,647. c) Transfer of NQBP Assets and Liabilities to APCT #1 Pty Ltd (Intra Group Transfer) – 2011 On 31 May 2011, various assets, liabilities and other legal rights relating to the Abbot Point Coal Terminal and its expansion capital works with a value of $385,000,000 were transferred from NQBP to APCT #1 Pty Ltd. The assets and liabilities transferred to APCT #1 Pty Ltd excluded those assets which were subject to the onshore and offshore leases identified in Note 23(iv). APCT #1 Pty Ltd recognised a net increase in contributed equity of $384,999,998 and NQBP recognised an increase in its investment in APCT #1 Pty Ltd for $384,999,998.

84 6. Revenue and Other Income Consolidated Parent 2011 2010 2011 2010 $’000 $’000 $’000 $’000 Revenue Port Charges Vessel income 41,801 39,700 40,664 39,593 Port usage income 59,901 52,530 - - Operating and maintenance recoveries 35,163 31,721 - - Rental income from investment properties 9,226 8,269 463 408 Interest 2,126 1,227 169 3,849 Other miscellaneous revenue 10,813 1,896 8,636 111 Royalties 325 - - - 159,355 135,343 49,932 43,961

Other Income Net gain on disposal of property, plant and equipment 369,547 132 348,992 - Government grants 1,948 20 - - 371,495 152 348,992 -

7. Profit Before Income Tax Equivalent Expense (i) Profit before income tax for the year includes the following specific expenses:

Consolidated Parent 2011 2010 2011 2010 $’000 $’000 $’000 $’000

Depreciation expense Channels 2,821 3,066 - - Infrastructure and major plant and equipment 13,372 26,130 - - Plant and equipment 1,771 2,486 24 - 17,964 31,682 24 -

Finance Costs Interest paid/payable 48,104 38,786 66 - Amount capitalised (34,258) (29,304) - - Total finance costs expensed 13,846 9,482 66 -

Impairment/Write off Write-down of inventories to net realisable value 243 491 - - Impairment losses/write offs 18,785 5,417 105,007 - Change in fair value of investment property 511 552 - - 19,539 6,460 105,007 -

(ii) Auditor’s Remuneration* Amounts received, or due and receivable, by the Queensland Audit Office for auditing the accounts 103,000 123,000 103,000 123,000 Amounts received, or due and receivable, by Deloitte for providing internal audit services 54,360 53,146 54,360 53,146 *There are no non-audit services included in this amount.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 85 NQBP | Notes to and Forming Part of the Financial Statements for the Year Ended 30 June 2011

8. Income Tax Equivalent Consolidated Parent 2011 2010 2011 2010 $’000 $’000 $’000 $’000

(i) Recognised in the Statement of Comprehensive Income

Current tax expense Current tax expense 7,603 12,586 12,457 12,407 (Over)/Under provisions prior year (12,907) (226) (7,768) - Adjustments for previous years - (801) - - Deferred tax asset (DTA) 1,955 (755) (65) (264) Deferred tax liability (DTL) (67,715) (3,972) 352 6 Total current income tax (income)/expense (71,064) 6,832 4,976 12,149

(ii) Numerical Reconciliation between Tax Expense and Pre-Tax Net Profit

Prima facie income tax equivalent calculated at 30% on the profit before tax 115,159 7,471 80,689 12,147

Increase in income tax expense due to: Accounting depreciation on non taxable assets - 18 - - Sundry items 85 131 115 2 Revaluation decrement to profit – non-tax deductible items - 238 - - Non deductible entertainment 1 2 1 - Others – including capitalised interest, Abbot Point Terminal 1 sale/lease (4,986) - 5,291 - Impairment of investment in subsidiary – non deductible - - 31,502 - Derecognition of DTA 1,272 - - - Recognition of DTL from prior year MPL acquisition 5,972 - - -

Decrease in income tax expense due to: Project pools deductions - (1) - - Misc. income – gain on sale/lease of Abbot Point T1 (104,810) - (104,810) - Accrued income – Abbot Point T1 sale/lease (270) - (270) - Overprovision for income tax (12,907) - (7,768) - Derecognition of DTL due to Abbot Point T1 sale/lease (70,580) - - - DTL on land for onshore lease - - 226 - Prior year adjustments - (1,027) - - Income tax expense on pre-tax net profit (71,064) 6,832 4,976 12,149

86 8. Income Tax Equivalent (cont.) Consolidated Parent 2011 2010 2011 2010 $’000 $’000 $’000 $’000

(iii) Deferred Income Tax Equivalent Assets

Recognised deferred tax assets Property, plant and equipment 6 628 6 - Accounts payable and other liabilities 1,432 1,142 18 36 Provisions 1,077 1,912 305 228 Tax assets 2,515 3,682 329 264

Opening balance 3,682 2,927 264 - Prior year adjustments 788 - - - (Charge)/credit to Statement of Comprehensive income (1,955) 755 65 264 Closing balance 2,515 3,682 329 264

(iv) Deferred Income Tax Equivalent Liabilities

Recognised deferred tax liabilities Property, plant and equipment 40,094 107,177 - - Accounts receivable and other assets 198 23 359 6 Trading stock 349 368 - - Tax liabilities 40,641 107,568 359 6

Deferred income tax equivalent liabilities Recognised directly in equity - 104,341 - - Recognised in Statement of Comprehensive income 40,641 3,227 359 6 40,641 107,568 359 6

Opening balance 107,568 114,533 6 - Prior year adjustments 788 - - - (Charge)/credit to Statement of Comprehensive income (67,715) (6,987) 353 6 Amount taken directly to equity - 22 - - Closing balance 40,641 107,568 359 6

Deferred tax balances are presented in the statement of financial position as follows:

Deferred income tax equivalent assets 2,515 3,682 329 264 Deferred income tax equivalent liabilities 40,641 107,568 359 6 Deferred income tax equivalent liabilities (assets) 38,126 103,886 30 (258)

Given the Group is subject to the NTER with no retail shareholders, details of the franking account have not been disclosed.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 87 NQBP | Notes to and Forming Part of the Financial Statements for the Year Ended 30 June 2011

9. Cash and Cash Equivalents Consolidated Parent 2011 2010 2011 2010 $’000 $’000 $’000 $’000

Cash at bank and in hand 1,812,409 13,560 1,812,409 13,560

Apart from the Commonwealth Bank - Abbot Point Sale Account (refer to Note 3 (ii)), bank accounts held by NQBP are interest bearing accounts. Interest rates for these accounts are between 4.6% and 5.6% (2010: 2.5% and 4.5%) Cash for Parent in 2010 has been restated to show the actual cash held in bank by NQBP. The balances represented the net inter-company loan balances from PCQ and MPL as at prior year balance date.

10. Trade and Other Receivables Consolidated Parent 2011 2010 2011 2010 $’000 $’000 $’000 $’000

Current Trade receivables 15,566 22,825 8,416 5,350 Provision for impaired debts (106) (255) (2) - 15,460 22,570 8,414 5,350 GST receivables 2,550 1,532 1,506 (414) Other receivables 2,644 24 442 - 20,654 24,126 10,362 4,936

Non Current Inter-company loans1 - - 108,662 81,038

Loan-Graincorp Ltd 8,388 8,557 - - Provision for impaired loan (4,241) (4,085) - - 4,147 4,472 - - 1. These are the net inter-company loan balances owing by PCQ and MPL as at balance date. Under a loan agreement with Graincorp Ltd, MPL (or predecessor) constructed a grain loading facility at Mackay. The terms of the loan agreement stipulated that repayments would be proportional to the volume of grain shipped. Current predictions of grain shipments indicate that it is unlikely that repayments will extinguish the debt by the end of the agreement and the agreement provides for the balances of the debt to the end of the agreement to be shared between MPL and Graincorp Ltd. A provision for impaired loan has been established as a result, based on the present value of the estimated balances of the loan at the end of the agreement having taken into account forecast loan repayments.

88 11. Inventories Consolidated Parent 2011 2010 2011 2010 $’000 $’000 $’000 $’000

Quarry rock and raw materials 1,164 1,228 - -

12. Other Current Assets Consolidated Parent 2011 2010 2011 2010 $’000 $’000 $’000 $’000

Prepayments 335 282 218 187

13. Assets Held for Sale Consolidated Parent 2011 2010 2011 2010 $’000 $’000 $’000 $’000

Asset classified as held for sale 1,700 - - -

This is the book value for Merinda Camp which had been reclassified from non-current assets to assets held for sale. On 28 June 2011, the Board of PCQ resolved to sell Merinda Camp, and has subsequently entered into a sale contract subject to a number of approval conditions being received. It is expected that the sale will be concluded by the end of October 2011.

14. Investment Properties Consolidated Parent 2011 2010 2011 2010 $’000 $’000 $’000 $’000

At fair value Balance at beginning of year 40,453 40,927 - - Acquisitions - 78 - - Fair value adjustments (511) (552) - - Balance at end of year 39,942 40,453 - -

The last full revaluation was performed as at 30 June 2009 by P Ellis (AAPI) and JP Messenger (GAPI) of Rushton AssetVal Pty Ltd. A revaluation was performed at 30 June 2011 taking into account (a) index provided by the Queensland Department of Environment and Resource Management (State Valuation Service) and in accordance with the accounting policies as detailed in Notes 2(x), and (b) reduction in the service potential of land improvements during the period.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 89 NQBP | Notes to and Forming Part of the Financial Statements for the Year Ended 30 June 2011

15. Property, Plant and Equipment Consolidated Parent 2011 2010 2011 2010 $’000 $’000 $’000 $’000

Land and buildings At fair value 74,011 73,412 820 - Accumulated depreciation - - - - Accumulated impairments (2,082) (794) - - 71,929 72,618 820 -

Channels At fair value 114,168 119,159 - - Accumulated depreciation (18,209) (15,493) - - 95,959 103,666 - -

Infrastructure and major plant and equipment At fair value 107,700 476,621 - - Accumulated depreciation (68,161) (65,710) - - 39,539 410,911 - -

Plant and equipment At cost 18,837 22,158 40 - Accumulated depreciation (15,440) (14,035) (23) - 3,397 8,123 17 -

Capital work in progress – at cost 44,359 819,981 - - Accumulated depreciation - - - - Accumulated impairments (4,622) (4,622) - - 39,737 815,359 - -

Total non-current property, plant and equipment 250,561 1,410,677 837 -

(a) The last full revaluation of PCQ assets was performed as at 30 June 2007 by A McCowan (AAPI) and JP Messenger, (BE (Mech), Dip Eng Prac, GAPI) of Rushton AssetVal Pty Ltd. The last full revaluation of MPL assets was performed as at 30 June 2009 by P Ellis (AAPI) and JP Messenger (GAPI) of Rushton AssetVal Pty Ltd. Since the last full valuation, indexation has been applied annually where material to Land, using appropriate Australian Bureau of Statistics indices and indices provided by the Queensland Department of Environment and Resource Management (State Valuation Service) and in accordance with the accounting policies as detailed in Note 2(vii). For all other classes of property, plant and equipment (PPE) measured at fair value, fair value has been determined using a discounted cashflow model, which is also adopted for the impairment assessment. Each year the Group reviews the present value of the net cashflows (recoverable amount) associated with assets carried at valuation, where no active market exists in accordance with the accounting policies (refer Note 2(iv) and 2(xix)). The recoverable amount of a cash generating unit (CGU) is determined based on value-in-use calculations. These calculations use cash flow projections based on financial budgets approved by management covering a five year period. Cash flows beyond the five year period are extrapolated using an estimate of CPI. A discount rate of 11% has been applied for each CGU, with any specific risk reflected through the cash flows. Impairment losses are recognised where the recoverable amount for the relevant CGU is insufficient to support the existing asset base of the CGU in accordance with AASB 136. Impairment losses relating to Capital Work In Progress relate to costs incurred for capital projects that are no longer being continued. (b) The Group has excluded a number of facilities which do not meet the asset recognition criteria in accordance with the accounting policies detailed in Note 2(vii). These include certain contributed facilities and assets which are analogous to leasehold improvements whereby the leaseholder is considered to control the future economic benefits to the facilities.

90 15. Property, Plant and Equipment (cont.) (i) Reconciliation Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of the current and previous financial year are set out below:

Infrastructure Capital and Major Plant Plant & Work in Land Channels & Equipment Equipment Progress Total 2011 Consolidated $’000 $’000 $’000 $’000 $’000 $’000

Carrying amount at opening balance 72,618 103,666 410,911 8,123 815,359 1,410,677 Additions 1,290 18 4,657 1,636 193,653 201,254 Disposals (690) (4,904) (1,387,490) (5,653) (18,671) (1,417,408) Transfer between asset categories - - 950,604 - (950,604) - Impairment losses/write-offs recognised in P&L (1,289) - - - - (1,289) Depreciation expense - (2,821) (13,372) (1,771) - (17,964) Revaluations on sale assets - - 74,229 1,062 - 75,291 Carrying amount at balance date 71,929 95,959 39,539 3,397 39,737 250,561 In 2011, NQBP owns land of $819,738 at fair value and net plant and equipment of $17,028 at balance date. Included in disposals are the transfer of assets subject to finance lease and transfer to APCT#1 Pty Ltd.

Infrastructure Capital and Major Plant Plant & Work in Land Channels & Equipment Equipment Progress Total 2010 Consolidated $’000 $’000 $’000 $’000 $’000 $’000

Carrying amount at opening balance 72,579 105,740 386,662 9,532 485,989 1,060,502 Additions 790 992 50,379 1,078 333,992 387,231 Disposals (29) - - (2) - (31) Revaluations reserve 72 - - - - 72 Impairment losses/write-offs recognised in P&L (794) - - - (4,622) (5,416) Depreciation expense - (3,066) (26,130) (2,485) - (31,681) Carrying amount at balance date 72,618 103,666 410,911 8,123 815,359 1,410,677 *All assets are held by the subsidiaries.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 91 NQBP | Notes to and Forming Part of the Financial Statements for the Year Ended 30 June 2011

16. Trade and Other Payables Consolidated Parent 2011 2010 2011 2010 $’000 $’000 $’000 $’000

Current Trade payables 27,409 14,063 19,476 604 Contract creditors 5,302 21,660 108 - Lease rentals received in advance 1,296 358 8 - Other revenue in advance 6,670 11,372 3,284 7,867 Interest payable – QTC 442 - - - Others 14 - - - 41,133 47,453 22,876 8,471

Non Current Contract creditors 6 6 - - Lease rentals received in advance 789 - 789 - 795 6 789 -

17. Borrowings Consolidated Parent 2011 2010 2011 2010 $’000 $’000 $’000 $’000

Non-Current Queensland Treasury Corporation Loans – unsecured 67,218 787,593 67,218 -

During the year, total debt transfer from the Group to the State Government was $915 million in relation to the Abbot Point assets sale.

18. Provisions Consolidated Parent 2011 2010 2011 2010 $’000 $’000 $’000 $’000

Current Employee benefits 2,146 1,009 922 315 Dividends 220,300 13,632 220,300 13,632 222,446 14,641 221,222 13,947

Non-Current Long term employee benefits 237 1,024 93 444 Provision for rehabilitation 1,100 - - - 1,337 1,024 93 444

Employee Benefits Current employee benefits includes short term employee benefits like annual leave, current portion of the long service leave and provision for rostered days off. Dividend The dividend provision is created to allow for the accounting of dividends declared and payable as at the balance date.

92 18. Provisions (cont.) Long term Employee Benefits A provision has been recognised for employee benefits relating to long service leave for employees. In calculating the present value of future cash flows in respect of long service leave, the probability of long service leave being taken is based upon historical date. The measurement and recognition criteria for employee benefits have been included in Note 2 (xvi). Rehabilitation A provision for rehabilitation is for the future makegood of Merinda Camp.

19. Issued Capital Consolidated Parent 2010 2010 2010 2010 No of shares $’000 No of shares $’000

Share capital Opening balance 222,352,000 222,352 - - Shares transferred to NQBP (Refer Note 22) (222,352,000) (222,352) - - Fully paid 272,351,582 272,352 272,351,582 272,352 Closing balance 272,351,582 272,352 272,351,582 272,352 Shares issued at 30 June 2010 were 272,351,582 ordinary shares. The Queensland Government was allotted 272,351,582 shares at $1 each in 2009-10

2011 2011 2011 2011 No of shares $’000 No of shares $’000

Opening Balance 272,351,582 272,352 272,351,582 272,352 Distribution to owners - (225) - (225) Contribution by owners - 914,953 - 1,404,553 Closing balance 272,351,582 1,187,080 272,351,582 1,676,680 The contributions by owners represent the adjustments to contributed equity made as a consequence of the transfers details in Note 5.

20. Reserves Consolidated Parent 2011 2010 2011 2010 $’000 $’000 $’000 $’000

Asset Revaluation Surplus

Opening balance 254,471 254,420 - - Revaluation increments net of tax 75,291 51 - - Transfer to and from reserve (265,380) - - - Closing balance 64,382 254,471 - -

The asset revaluation surplus is used to record increments and decrements on the revaluation of non current assets.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 93 NQBP | Notes to and Forming Part of the Financial Statements for the Year Ended 30 June 2011

21. Retained Earnings Consolidated Parent 2011 2010 2011 2010 $’000 $’000 $’000 $’000

Retained earnings at the beginning of the financial year 6,086 1,647 14,710 - Net Profit/(Loss) for the period 454,927 18,071 263,988 28,342 Transfer from asset revaluation surplus 265,380 - - - Dividend provided for (220,300) (13,632) (220,300) (13,632) Retained earnings at the end of the financial year 506,093 6,086 58,398 14,710

22. Investments in Controlled Entities Investments are held in the following controlled companies:

Parent Investment Equity 2011 2010 Subsidiary Name Interest $’000 $’000

Mackay Ports Limited 100% 74,720 74,720

Ports Corporation of Queensland Limited 100% 147,407 147,632 Less accumulated impairment * (105,007) 42,400 147,632

117,120 222,352

* The value of the investment is in excess of the value of net assets in the subsidiary. The Directors have chosen to impair the investment to the value of net assets of the subsidiary. NQBP acquired 100% of the shares of Ports Corporation of Queensland Limited (PCQ) and Mackay Ports Limited (MPL) on 2 July 2009. PCQ holds assets associated with the ports of Abbot Point, Hay Point, and Weipa, while MPL holds assets associated with the port of Mackay. Financial information relating to these controlled entities is as follows:

Profit(Loss) Total before income Total Assets Liabilities Total Revenue Tax Equivalents Subsidiary Name $’000 $’000 $’000 $’000

2011 Mackay Ports Limited 120,362 23,164 17,128 (2,120) Ports Corporation of Queensland Limited 131,186 88,785 122,478 12,012

2010 Mackay Ports Limited 123,019 17,150 7,316 (12,478) Ports Corporation of Queensland Limited 1,275,446 913,115 84,217 (3,110) Pursuant to Class Order 98/1418, relief has been granted to PCQ and MPL from the Corporations Act 2001 requirements for the preparation, audit and lodgement of their financial reports. The closed group’s financial performance and financial position is the same as that disclosed for the consolidated entity in the Statement of Financial Performance and Statement of Financial Position.

94 23. Notes to the Statement of Cash Flows i) Reconciliation of Cash and Cash Equivalents For the purposes of the Statement of Cash Flows, cash includes cash on hand and at call deposits or loan offset accounts with banks and other financial institutions. Cash at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items in the Statement of Financial Position as follows:

Consolidated Parent 2011 2010 2011 2010 $’000 $’000 $’000 $’000

Balances per statement of cash flows 1,812,409 13,560 1,812,409 13,560

(ii) Reconciliation of profit after income tax to net cash flow from operating activities

Net Profit for the year 454,927 18,071 263,988 28,342 Depreciation and amortisation 17,964 31,682 24 - Interest received classified as investing activities (2,126) (947) (169) (3,850) Provision for impaired debts - 209 - - Loss on sale of fixed assets 125 - - - Net (gain) on sale of property, plant and equipment (380,685) (132) (348,992) - Sale costs and impairment 36,666 - 105,007 - Fair value adjustment to investment property 511 552 - - Write back provision for rehabilitation - (36) - - Decrement in value of property, plant and equipment - 5,416 - - Change in operating assets - Decrease (increase) in trade and other receivables 1,941 16,787 (5,012) (4,937) - Decrease (increase) in inventories 63 594 - - - Decrease (increase) in other current assets (53) (8) (32) (187) - Decrease (increase) in foreign derivative asset - 2,231 - - - Decrease (increase) in deferred tax equivalent asset 1,167 - 264 - - Increase (decrease) in trade and other payables (3,999) 6,379 14,779 8,472 - Increase in other provisions 1,451 185 257 759 - (Decrease) in foreign derivative liability - (2,231) - - - Increase (decrease) in current tax equivalent liabilities (4,984) 5,342 4,399 12,407 - Increase (decrease) in net deferred tax equivalent liabilities (66,927) (7,742) 23 (258) Net cash flow from operating activities 56,041 76,352 34,536 40,748

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 95 NQBP | Notes to and Forming Part of the Financial Statements for the Year Ended 30 June 2011

23. Notes to the Statement of Cash Flows (cont.) (iii) Financing Facilities Loan facilities are provided by QTC with any new borrowings approved pursuant to the annual Statement of Corporate Intent. The Group also has access to a working capital facility with QTC amounting to $15 million (2010:$15million). As at the balance date, this facility has not been used. iv) Disposals of Investment in APCT #1 Pty Ltd and 99 Year Lease of Assets On 3 May 2011, the State, NQBP, and Mundra entered into a Sale and Purchase Agreement for the sale of NQBP’s shares in APCT #1 Pty Ltd (an entity established by NQBP for effecting the sale as detailed in Note 5(c)) and for the entering into of three leases pursuant to the Sale and Purchase Agreement). The effective date of the sale of the shares and execution of the three leases was 1 June 2011. The three leases executed were for the onshore land, offshore land and a short term lease. The first two leases are for a period of 99 years and contain elements of both finance and operating leases within each of those three leases. Cash Consideration Received Total cash consideration from Mundra of $1,832,987,750 was attributed as follows: $’000

Sale of Shares – cash received 385,000 Purchase Price Adjustment (received 4 August 2011) 3,988 Leases and other fees 1,365,176 Stamp Duty * 78,824 Total Cash Consideration 1,832,988 $1.829 billion was paid on 1 June 2011 and a subsequent $3.9 million was paid on 4 August 2011 in relation to the purchase price adjustment. *NQBP received the stamp duty on behalf of the State and immediately remitted this amount to the Queensland Office of State Revenue following the transaction. Leases and other fees include the offshore, onshore and short term leases as well as an Expansion Feasibility Agreement. The leases include land and assets affixed to the land and have been determined as operating and finance leases respectively. NQBP has allocated the initial lease premium on the basis of the proportionate values of the underlying assets subject to both of those leases immediately prior to sale. Repatriation of Proceeds On 30 June 2011, the Treasurer issued a project direction to repatriate the proceeds of the aforementioned disposals by: • Paying to the State the direct transaction costs; • Paying dividends to the shareholders of NQBP; and • Recommending to the shareholders of NQBP a capital reduction. The transaction costs and dividends are reflected in the financial statements. As detailed in Note 29 Event after Balance Date, the capital reduction of $1,534,448,682 was subject to the requirements of the Corporations Act 2001 (Cth) and not recognised in the 30 June 2011 financial statements. Shareholder approval for the reduction was not obtained until 5 July 2011 and effected by NQBP on 6 July 2011.

96 24. Key Management Personnel Disclosures (i) Key Management Personnel Compensation

Consolidated Parent 2011 2010 2011 2010 $’000 $’000 $’000 $’000

Short term benefits 1,470 1,405 1,470 1,405 Post employment benefits 163 142 163 142 Other long term benefits 34 - 34 - 1,667 1,547 1,667 1,547

(ii) Compensation - Directors

Short term Post employee employment benefits (a) benefits (b) Total Name Position $’000 $’000 $’000

2011 L Taylor Chairman 55 5 60 G Davies Director 24 - 24 J Bignell Director 31 3 34 R Dudley Director 31 3 34 S Golding Director 25 2 27 K Kuiper Director 31 3 34 P Tait Director 25 2 27 222 18 240

2010 L Taylor Chairman 54 5 59 G Davies Director 27 - 27 J Bignell Director 30 3 33 R Dudley Director 30 3 33 S Golding Director 30 3 33 K Kuiper Director 24 2 26 P Tait Director 24 2 26 219 18 237 (a) Total employment cost (as determined by the Governor-in-Council) which includes packaged benefits, and fees for committee work as determined by shareholding Ministers. (b) This represents the minimum level statutory payments pursuant to the Commonwealth Superannuation (Administration) Act 1992 and includes other amounts from salary sacrifice arrangements. (c) Directors received no additional remuneration for their role as Director in relation to subsidiary companies.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 97 NQBP | Notes to and Forming Part of the Financial Statements for the Year Ended 30 June 2011

24. Key Management Personnel Disclosures (cont.) (iii) Compensation – Other Key Management Personnel

Post Other Short term employment long term Termination Total benefits (a) benefits (b) benefits Benefits (C & D) POSITION $’000 $’000 $’000 $’000 $’000

2011 Chief Executive Officer 374 41 18 - 433 Deputy Chief Executive Officer 316 25 16 - 357 Company Secretary/General Counsel 220 25 - - 245 Executive General Manager – Major Projects 234 25 - - 259 Chief Financial Officer* 104 29 - - 133 1,248 145 34 - 1,427

2010 Chief Executive Officer 308 37 17 - 362 Deputy Chief Executive Officer 252 22 13 - 287 Company Secretary/General Counsel 185 23 - - 208 General Manager Corporate Strategy# 180 22 6 - 208 General Manager Financial# 158 19 8 - 185 1,083 123 44 - 1,250 * The Chief Financial Officer (CFO) is a newly created position in NQBP. The CFO commenced employment from February 2011. # These two positions of NQBP have been changed and replaced by the position of Chief Financial Officer during the year of 2011. 2010 Other long term benefits has been restated to include unused long service leave accruals. (a) Total employment cost which includes packaged benefits (such as salary sacrifice relating to employer provided motor vehicles used by an employee for private purposes, additional superannuation, professional memberships and any exempt benefits). Also included in this category is a car parking benefit provided to meet work requirements. The amount represents the grossed up statutory formula fringe benefit amount. Unused annual leave and bonuses for 2010 are included. (b) This represents the minimum level statutory payments pursuant to the Commonwealth Superannuation (Administration) Act 1992. (c) Executives may also earn performance based at-risk incentives which are determined at the discretion of the Board of Directors and paid in the year subsequent to the performance period and therefore form part of the compensation in that subsequent period. (d) Executives received no additional remuneration for their role as Executives in relation to subsidiary companies. (iv) Compensation Principles Directors are paid in accordance with rates approved by Government or in accordance with Government guidelines. The CEO and Deputy CEO are appointed by contracts which expire on 30 June 2012 with severance payments agreed to be a maximum value of two weeks’ superannuable salary for each year of continuous service until contract termination date, up to a maximum 52 weeks’ salary or 13 weeks’ salary. Executives, excluding the CEO and Deputy CEO, have a minimum redundancy entitlement of two weeks’ salary for each year of continuous service (to a maximum of 52 weeks) or four weeks salary. Remuneration recommendations for executives are reviewed annually by the Human Resources and Industrial Relations Committee, before consideration and approval by the Board. Remuneration for executives in 2010-11 was determined in accordance with the Queensland Government’s Government Owned Corporation Governance Arrangements for Chief and Senior Executives, as reflected in NQBP’s policies and procedures for Recruitment and Selection, Chief and Senior Executives – Remuneration and Chief and Senior Executive – Performance Pay.

98 24. Key Management Personnel Disclosures (cont.) (v) Aggregate Performance Payments

Consolidated Parent 2011 2010 2011 2010 $’000 $’000 $’000 $’000

Aggregate performance bonuses paid* 479 435 350 305

Total salaries paid (employees receiving a performance payment) 5,986 5,175 3,142 2,102

No. of employees who received a performance payment 62 54 21 13

(vi) Categories of Performance Related Payments *Directors do not receive performance related payments. The CEO participates in a performance pay scheme with agreed targets of profit, operational and environmental performance set by the Board. The proposed performance payments for the 2010-11 year have not been approved or paid at reporting date. Other Key Management Personnel NQBP operates a performance pay scheme for executives. The performance pay comprises two components: • Group performance based on agreed targets may be drawn from financial performance, environment/safety performance, corporate governance, community relations and effective management of assets; and • Individual performance. The recommended payments are determined by the Board after the end of the financial year and paid and reported to shareholding Ministers in accordance with current guidelines. The proposed performance payments for the 2010-11 year have not been approved or paid at reporting date. Other Employees PCQ operates a performance pay scheme for other employees with performance pay based on individual employee performance. The recommended payments are reviewed by a moderating committee (comprising three managers) and approved by the CEO. The scheme is voluntary. The performance payments for the 2010-11 year were in two components with the first approved on 10 December 2010 and paid on the fortnight ended 17 December 2010, and the second approved on 20 June 2011 and paid on the fortnight ended 1 July 2011.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 99 NQBP | Notes to and Forming Part of the Financial Statements for the Year Ended 30 June 2011

25. Commitments Consolidated Parent 2011 2010 2011 2010 $’000 $’000 $’000 $’000

Capital expenditure contracted for at balance date is payable as follows: - not later than one year 10,539 123,952 - - - later than one year and not later than five years - 1,934 - - 10,539 125,886 - -

Operating expenditure contracted for at balance date is payable as follows: - not later than one year - 41,700 - - - later than one year and not later than five years - 253,700 - - - 295,400 - -

Operating lease expenditure contracted for at balance payable as follows: - not later than one year 852 642 - - - later than one year and not later than five years 1,088 1,387 - - 1,940 2,029 - -

Operating expenditure was related to an operation and maintenance recovery lease which is longer applicable after the sale of Abbot Point Terminal asset. The Group leases various premises under non-cancellable operating leases expiring between 1 and 5 years. All leases have annual CPI escalation clauses. The above commitments do not include any turnover rentals which are contingent upon the various Group companies achieving defined sales levels. Nor do they include commitments for any renewal option on leases. Lease conditions do not impose any restrictions on the ability of NQBP and its subsidiaries from borrowing further funds or paying dividends.

26. Contingent Assets and Liabilities Contingent Assets The Group holds a number of bank guarantees for security over defects in construction contracts and for future liabilities of port operators. These have not been recorded as assets in the Statement of Financial Position as amounts are immaterial. Contingent Liabilities The Group has no material contingent liabilities.

27. Native Title Claim Native title claims have been made to various interests of the Group (including the ports of Hay Point, Abbot Point, Weipa, Mackay and Maryborough), which are in various stages of resolution. In relation to its dealings, the Group applies a range of procedures developed by the State of Queensland and the Group to address Native Title. However, there may be an unknown and contingent liability to the Group in terms of the impact of some of its activities on native title rights and interests.

100 28. Related Party Transactions 29. Events after Balance Date Ultimate Parent Entity Return of Sale/Lease Proceeds NQBP is a Company Government Owned Corporation. All shares are As part of the sale and 99 year lease of Abbot Point Terminal 1 to held by representatives of the Queensland Government. Movements Mundra, the State announced that the proceeds of sale would be in the issued capital held by these representatives are disclosed in repatriated in its entirety back to the State and the proceeds would be Note 19. Details of dividends provided for are detailed in Note 21. used in the flood reconstruction programme. On 30 June 2011, the As disclosed in Note 2(xii), income tax equivalents are paid to the Treasurer issued a project direction to repatriate the proceeds of the Queensland Government. Refer to Note 8 for details of income tax aforementioned disposal by: equivalent transactions and balances. • payment of dividends; Controlled Entities • payment of the State’s direct transaction costs; and As disclosed in Note 22, NQBP owns 100% of the shares in PCQ • recommending to the shareholders of NQBP a capital reduction. and MPL. The aggregate issued capital of these companies is The direct transaction costs of this amount have been recognised in the $222.352 million, which was purchased on 2 July 2009. No dividends 30 June 2011 financial statements of the Group. have been provided for by the controlled entities at balance date. Each entity in the Group has waived the recovery/collection of any A first dividend of $200 million was recommended by the Board on other expenses/revenues it has incurred/received on behalf of the other 30 June 2011 and was subsequently paid to the shareholders on members of the Group. 6 July 2011. A second dividend was recommended by the Board on 23 August 2011. Entities Under Common Control The capital reduction of $1,534,448,682 has not been recognised The Group has dealt with various other Queensland Government in the 30 June 2011 financial statements as shareholder approval entities in arm’s length transactions under normal commercial was not obtained until 5 July 2011. The capital reduction was at the terms and conditions for various purposes in the ordinary course of discretion of NQBP’s directors and shareholders at 30 June 2011 and business. The material parties in this category are QTC for investments, the requirements of the Corporations Act 2001 (Cth) had not been met. borrowings and derivative transactions, Queensland Treasury for land The capital reduction was recommended by directors to shareholders tax and payroll tax, Queensland Transport for hydrographic surveys, on 1 July 2011, approved by NQBP’s shareholders on 5 July 2011 dredging support and rentals, Port of Brisbane Corporation for the and was subsequently effected by NQBP on 6 July 2011 with payment provision of dredging services, and Ergon Energy for electricity charges to shareholders. and minor contract works. Details of transactions and balances with QTC are provided in Notes 5, Sale of Merinda Workers Camp 6, 9, 17 and 19. QTC borrowings are unsecured. At balance date, the Board approved the sale of the Merinda Workers Payments to other related parties during the year totalled $11.9 million Camp located at Merinda. A sale contract has been signed with a buyer, (2010:$8.2 million). Amounts totalling $2.3 million (2010:$0.1 million) subject to a number of pre-conditions being met and is expected to be were owing to other related parties at balance date. Amounts received completed by the end of October 2011. Management considers that the from other related parties during the year, and amounts owing from criteria to reclassify the relevant non-current assets or disposal group other related parties at balance date, were not material. No amounts as ‘held for sale’ in accordance with AASB 5 Non current Assets Held have been recognised in respect of bad or impaired debts from these for Sale and Discontinued Operations has been met. related parties. Key Management Personnel Key Management Personnel Disclosures are in Note 24. Post-Employment Benefit Plans Payments made by the Group to superannuation schemes in respect of employees for the year were $1.57 million.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 101 NQBP | Directors’ Declaration For the Year Ended 30 June 2011

Directors’ Declaration For the Year Ended 30 June 2011

In the directors’ opinion: (a) The financial statements and notes set out on pages 71 to 101 are in accordance with the Corporations Act 2001, including: (i) complying with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and (ii) giving a true and fair view of NQBP and the consolidated entity’s financial position as at 30 June 2011 and of their performance for the financial year ended on that date; and (b) there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable, including any obligations or liabilities to which the Company and the controlled entities may become subject to by virtue of the Deed of Cross Guarantee, pursuant to ASIC Class Order 98/1418. Made in accordance with a resolution of the directors.

LL Taylor Chairman North Queensland Bulk Ports Corporation Limited 31 August 2011 Brisbane

102 NQBP | Independent Auditor’s Report To the Members of North Queensland Bulk Ports Corporation Limited

Independent Auditor’s Report To the Members of North Queensland Bulk Ports Corporation Limited

Report on the Financial Report In conducting the audit, the independence requirements of the Corporations Act 2001 have been complied with. I confirm that the I have audited the accompanying financial report of North Queensland independence declaration required by the Corporations Act 2001, Bulk Ports Corporation Limited, which comprises the statements of provided to the directors of the Group on 24 August 2011, would be financial position as at 30 June 2011, the statements of comprehensive in the same terms if provided to the directors as at the date of this income, statements of changes in equity and statements of cash flows Auditor’s report. for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the Opinion directors’ declaration of the company and the consolidated entity In my opinion – comprising the company and the entities it controlled at the year’s end or from time to time during the financial year. (a) The financial report of North Queensland Bulk Ports Corporation Limited is in accordance with the Directors’ Responsibility for the Financial Report Corporations Act 2001, including – The directors of the company are responsible for the preparation of (i) giving a true and fair view of the company’s and the financial report that gives a true and fair view in accordance with consolidated entity’s financial position as at 30 June 2011 Australian Accounting Standards and the Corporations Act 2001, and and of their performance for the year ended on that date; and for such internal control as the directors determine is necessary to (ii) complying with Australian Accounting Standards and the enable the preparation of the financial report that is free from material Corporations Regulations 2001. misstatement, whether due to fraud or error. Other Matters – Electronic Presentation of the Auditor’s Responsibility Audited Financial Report My responsibility is to express an opinion on the financial report This auditor’s report relates to the financial report of North Queensland based on the audit. The audit was conducted in accordance with the Bulk Ports Corporation Limited and the consolidated entity for the Auditor-General of Queensland Auditing Standards, which incorporate year ended 30 June 2011. Where the financial report is included the Australian Auditing Standards. Those standards require compliance on North Queensland Bulk Ports Corporation Limited’s website with relevant ethical requirements relating to audit engagements and the company’s directors are responsible for the integrity of that the audit is planned and performed to obtain reasonable assurance North Queensland Bulk Ports Corporation Limited’s website and I about whether the financial report is free from material misstatement. have not been engaged to report on the integrity of North Queensland An audit involves performing procedures to obtain audit evidence about Bulk Ports Corporation Limited’s website. The auditor’s report refers the amounts and disclosures in the financial report. The procedures only to the subject matter described above. It does not provide an selected depend on the auditor’s judgement, including the assessment opinion on any other information which may have been hyperlinked of the risks of material misstatement of the financial report, whether to/from these statements or otherwise included with the financial due to fraud or error. In making those risk assessments, the auditor report. If users of the financial report are concerned with the inherent considers internal control relevant to the entity’s preparation of the risks arising from publication on a website, they are advised to financial report that gives a true and fair view in order to design audit refer to the hard copy of the audited financial report to confirm the procedures that are appropriate in the circumstances, but not for the information contained in this website version of the financial report. purpose of expressing an opinion on the effectiveness of the entity’s These matters also relate to the presentation of the audited financial internal control. An audit also includes evaluating the appropriateness report in other electronic media including CD Rom. of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. I believe that the audit evidence obtained is sufficient and appropriate to provide a basis for my audit opinion. Independence The Auditor-General Act 2009 promotes the independence of the M R HYMAN CA Auditor‑General and all authorised auditors. The Auditor-General is the auditor of all Queensland public sector entities and can only be (As Delegate of the Queensland Audit Office removed by Parliament. Auditor‑General of Queensland) Brisbane The Auditor-General may conduct an audit in any way considered appropriate and is not subject to direction by any person about the way in which audit powers are to be exercised. The Auditor-General has for the purposes of conducting an audit, access to all documents and property and can report to Parliament matters which in the Auditor‑General’s opinion are significant.

NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 103 NQBP | Glossary of terms

Glossary of Terms

Adani Adani Mining Pty Ltd HPX3 Hay Point Coal Terminal expansion resulting in group throughput capacity from 44 Mtpa to 55 Mtpa AFRMC Audit and Financial Risk Management Committee HRIRC Human Resources and Industrial Relations (Board committee) Committee (Board committee) APBC Abbot Point Bulkcoal Pty Ltd (terminal operator) ILUA Indigenous Land Use Agreement APT1 Abbot Point Coal Terminal 1 infrastructure JHA Job Hazard Analysis

APCT #1 Entity established to effect sale of terminals LAT Lowest Astronomical Tide Pty Ltd LTI Lost Time Injury APSDA Abbot Point State Development Area MCF Multi Cargo Facility BMA BHP Billiton Mitsubishi Alliance MPL Mackay Ports Limited (wholly owned subsidiary CGPC Corporate Governance and Planning Committee of NQBP) (Board committee) Mtpa million tonnes per annum CRG Community Reference Group Mundra Mundra Port Pty Ltd (and includes CSO Community Service Obligations or Mundra associated entities) Port DBCT Dalrymple Bay Coal Terminal (terminal) NQBP North Queensland Bulk Ports Corporation Limited DBCT DBCT Management Pty Ltd (Parent company Management Brookfield Infrastructure Partners L.P.) OGOC Office of Government Owned Corporations DBCT Pty Ltd Dalrymple Bay Coal Terminal Pty Ltd OHS Occupational Health and Safety (terminal operator) PCQ Ports Corporation of Queensland Limited DEEDI Department of Employment, Economic Development (wholly owned subsidiary of NQBP) and Innovation QAO Queensland Audit Office DERM Department of Environment and QRN QR National Resource Management QSL Queensland Sugar Limited DIP Department of Infrastructure and Planning QTC Queensland Treasury Corporation DORC Depreciated Optimised Replacement Cost RDO Rostered Day Off DTMR Department of Transport and Main Roads RTA Rio Tinto Aluminium DUKC® Dynamic Under Keel Clearance – software technology to monitor in real time the under keel SCI Statement of Corporate Intent clearance of vessels T1 Terminal 1 – Abbot Point Terminal which recently DWT Dead Weight Tonnes underwent expansion works to increase capacity to 50 Mtpa (X50) EEO Equal Employment Opportunity T2 Terminal 2 – Proposed expansion to EAP Employee Assistance Program increase throughput capacity to 80 Mtpa (Port of Abbot Point) EOI Expressions of Interest T3 Terminal 3 – Proposed expansion to EIS Environmental Impact Statement increase throughput capacity to 110 Mtpa (Port of Abbot Point) EMS Environmental Management System T4 Terminal 4 – Proposed expansion to increase EOI Expression of Interest throughput capacity to 230 Mtpa (Port FX Foreign Exchange of Abbot Point) – can be used to include terminals 4 through 7 (T4 –7). GAP Goonyella to Abbot Point Expansion Project (rail project) User User agreements in place at some of NQBP facilities Agreement between operators and NQBP HPCT Hay Point Coal Terminal (terminal) X50 Expansion resulting in increased capacity from HPSPL Hay Point Services Pty Ltd 25 Mtpa to 50 Mtpa (Port of Abbot Point)

104 NQBP | Feedback Form NQBP Annual Report 2010-11

Feedback Form NQBP Annual Report 2010-11

As part of our aim to continuously improve our communications to stakeholders, we would appreciate your feedback and comments. We will use this feedback to improve on next year’s report so that we meet the needs and expectations of our stakeholders.

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NORTH QUEENSLAND BULK PORTS CORPORATION LIMITED | ANNUAL REPORT 2010–2011 | 105 North Queensland Bulk Ports Corporation Limited

About the Report

North Queensland Bulk Ports Corporation Limited ACN 136 880 218

ABN 36 136 880 218

Ports Corporation of Queensland Limited ACN 126 302 994 Celebrating Diversity ABN 49 657 447 879

Mackay Ports Limited ACN 131 965 707 Annual Report ABN 69 131 965 707 2010–2011