Annual Report 2014-15 and SUNRAYSIA
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MELBOURNE OFFICE Street address Level 4 530 Collins Street | Melbourne Victoria 3000 | Australia Postal address GPO Box 261 | Melbourne VIC 3001 | Australia Tel: 1300 857 662 | Fax: (03) 9683 1570 Email: [email protected] | Website: www.portofmelbourne.com SOUTH AUSTRALIA NEW SOUTH WALES TASMANIA Report 2014-15 Annual of Melbourne Corporation Port AND SUNRAYSIA Postal address Postal address Postal address GPO Box 261 PO Box 8804 PO Box 2141 Melbourne VIC 3001 Kooringal Howrah TAS 7018 Australia Wagga Wagga NSW 2650 Australia Australia Tel: +61 3 9683 1300 Tel: +61 2 6925 9672 Tel: +61 3 6245 1890 Fax: +61 3 9683 1570 Mob: +61 (0)428 024 161 Fax: +61 3 6245 1890 Annual Report Authorised by the Victorian Government. This publication is produced by Port of Melbourne Corporation. Proudly designed and produced by abCreative productions. Tel: +61 3 9500 2266 www.abCreative.com Cover photo by Ric Wallis www.ricwallis.com Printed on recycled paper. Letter to the Ministers The Hon Luke Donnellan MP Minister for Ports 1 Spring Street Melbourne Victoria 3000 The Hon Tim Pallas MP Treasurer 1 Treasury Place Melbourne Victoria 3000 Dear Ministers, Port of Melbourne Corporation 2014-15 Annual Report I have much pleasure in submitting to you the Annual Report of Port of Melbourne Corporation (PoMC) for the period 1 July 2014 to 30 June 2015, in accordance with the provisions of the Transport Integration Act 2010 (Vic) and the Financial Management Act 1994 (Vic). Yours sincerely, Mark Birrell Chairman 21 September 2015 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2014-15 1 2 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2014-15 Table of contents Letter to the Ministers 1 From the Chairman 4 From the Chief Executive Officer 5 Vision, goals and values 6 Key achievements of 2014-15 6 The Port of Melbourne – overview 7 Corporate governance 8 Board of Directors 9 Board and Committee meetings 12 Executive Management Team 13 Organisational structure 14 Our people 15 Trade performance 16 Finance in brief 18 Financial summary 20 Port of Melbourne Lease Transaction 21 Port operations 22 Port Capacity Project 23 Port pricing 24 Statement of Corporate Intent 25 Additional information 34 Transport Integration Act 2010 (Vic) 34 Significant legislative changes 36 National Competition Policy 36 Victorian Industry Participation Policy 36 Victorian Government Risk Management Framework 37 Assets 37 Building and maintenance compliance 37 Protected disclosure 37 Privacy 38 Freedom of Information 38 Consultancies 39 Availability of additional information 39 Financial statements 40 Certification of financial statements 107 Auditor-General’s Report 108 Disclosure index 110 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2014-15 3 From the Chairman In an historic era of transition for the Port of Melbourne, This additional tranche of capacity is being delivered the Board has worked closely with the shareholder and at a time when the port’s solid trade performance in its advisers to facilitate the Victorian Government’s 2014-15 was underpinned by record container intention to seek a lease for the commercial operations throughput of 2,579,214 TEUs which exceeded the of one of the state’s key economic assets. previous benchmark set in 2011-12. The Board’s strong focus on overseeing a successful The positive trade environment, together with prudent transition reflects the fact the port lease transaction oversight of operating costs and diligent project is arguably the most significant reform to state-based management, has reinforced the commercial strength of port management since the former Melbourne Harbor PoMC’s balance sheet, with earnings before interest and Trust was established in 1877 as an authority to plan tax (EBIT) of $121 million. An underlying profit of $77.7 and develop the port as a trade gateway for the young million was influenced by port lease transaction costs Victorian colony. and debt repayment to record an actual after tax profit of $45.9 million. In addition, a dividend of $33 million Across every facet of the business, extensive planning was paid to the Victorian Government. and preparation has been undertaken to ensure the current high levels of customer service and capability In a year of significant achievement in laying the are maintained, particularly with regard to the Victorian foundations for the port’s future success, I would Ports Corporation (Melbourne), the state entity like to thank my fellow Directors for their thoughtful which is being created to manage residual functions contributions throughout the year in Board and and activities including Station Pier, vessel traffic and Committee meetings. emergency management. On behalf of the Board, I would also like to thank Chief Importantly, PoMC has established a robust platform for Executive Officer, Nick Easy, for his leadership in guiding the emerging state and private entities to carry forward PoMC’s management and staff through a period of by maintaining a strong focus on maximising the significant change. economic and financial outcomes for all Victorians. During the year, the Corporation’s significant investment in port infrastructure of $311.1 million gave further impetus to the Port Capacity Project which is on schedule and within budget to provide additional capacity in the Port of Melbourne well into the future. Mark Birrell Chairman 4 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2014-15 From the Chief Executive Officer In a year which has been inevitably shaped by the port In 2014-15, PoMC continued to embrace a growing lease transaction and the need to prepare and plan for community appetite to learn more about all aspects of a future separation of the business in terms of assets, the port’s operations from dredging to infrastructure functions, systems and people, PoMC has maintained development in order to foster a greater understanding a strong focus on its operations which has delivered a of the port’s role. The Port Education Centre attracted series of key achievements for our customers and users a record 7,500 students and community members on of the port. the strength of its tailored curriculum programs. PoMC also maintained its strong support for a diverse range of PoMC continued to strengthen its track record for eligible community events and festivals with a maritime infrastructure delivery with excellent progress on theme, together with ongoing support for seafarer the Port Capacity Project, the maintenance dredging welfare agencies. program, wharf remediation at Swanson Dock East and pile rehabilitation at Victoria Dock. In total, Reflecting Australia’s strongest contemporary trade capital expenditure of $48 million was invested in port relationships, during the year PoMC hosted the Tianjin infrastructure, excluding the Port Capacity Project. and Melbourne Business Engagement Forum and senior delegations from the Chinese Ministry of Transport, To enhance the port’s competitive position in Australia Tokyo Port and Harbor Transportation Business and our customer offering, in May PoMC also Cooperative Association, Nagoya Port Authority and the announced the introduction of differential pricing which Port of Kitakyushu. will see no change to loaded international container export charges for 2015-16 while loaded container In October, PoMC marked the 40th anniversary of its imports will increase by CPI only. Sister Port relationship with the Port of Osaka by hosting a delegation from the Port and Harbor Bureau from the With total revenue of $381.7 million, PoMC’s solid City of Osaka. financial performance for 2014-15, together with its net asset base of $3.4 billion, was influenced by a range I would like to thank the Chairman, Mark Birrell, and of factors. PoMC undertook a scheduled five-yearly the Board of Directors for their support and strategic revaluation of fixed assets and utilised new data and leadership throughout the year and commend the information inputs for port land and channels. The Executive Management Team and staff of PoMC for their net asset position also benefitted from the repayment ongoing commitment and understanding as we work of outstanding debt. PoMC’s income tax payable was through a period of transition together. reduced by a significant Research and Development expense related to technical and environmental aspects of design and construction for the Port Capacity Project. The Port Capacity Project has visibly taken shape as extensive works have continued at the container and automotive facilities at Webb Dock West and Nick Easy Webb Dock East respectively. Automotive berths at Chief Executive Officer Webb Dock West 1 and 2 were set to host their first vessel arrival while significant community amenity developments include a new observation deck, a network of boardwalks, extensive native landscaping and improvements to bike paths. PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2014-15 5 Vision, goals and values Our vision is for the Port of Melbourne to be Australia’s best connected port. Our goals are focused on achieving the corporate vision and are responsive to PoMC’s charter ensuring a balanced and sustainable approach to the development and management of the Port of Melbourne. They include: • Delivering world class port facilities and services • Ensuring sustainable business performance • Driving integrated freight transport outcomes • Nurturing a shared port-city vision • Enhancing Australian and international trading activities • Developing talented and committed people Our values are a shared understanding of what we stand