TABLING VERSION NEWCASTLE PORT CORPORATION Delivering Opportunity STATEMENT OF CORPORATE INTENT NEW SOUTH WALES STATE OWNED CORPORATIONS PERIOD: YEAR ENDING 30 JUNE 2008 The Hon Michael Costa, .. Chairman Treasurer Newcastle Port Corporation Voting Shareholder On behalf of the Board Newcastle Port Corporation Gary Webb The Hon John Watkins, MP C ef Executive Officer Minister for Finance Newcastle Port Corporation Voting Shareholder Newcastle Port Corporation TABLING VERSION Newcastle Port Corporation Statement of Corporate Intent 2007-08 TABLE OF CONTENTS Page No. 1 EXECUTIVE SUMMARY 1 2. OBJECTIVES OF THE CORPORATION 2 3 NATURE AND SCOPE OF OPERATIONS 4 4 STRATEGIC DIRECTIONS 4 5 FINANCIAL PERFORMANCE TARGETS 6 6 CAPITAL PROGRAM 8 7 SOCIAL PROGRAMS AND NON-COMMERCIAL ACTIVITIES 9 8 FINANCIAL ASSET AND LIABILITY MANAGEMENT 9 9 STATEMENT ADDRESSING SHAREHOLDER ISSUES 10 10 HALF YEARLY REPORT 10 11 QUARTERLY REPORT 10 12 OTHER INFORMATION TO TREASURY 10 13 REPRESENTATION AND COMMITMENT STATEMENT 11 o TABLING VERSION Newcastle Port Corp oration Statement of Corp orate Intent 2007~0 8 Acronym Description AAL Austral Asia Line AWB AWB Limited BP Business Plan Cape Vessel A large cargo vessel that is greater than 55,000 gross tonnes EBDC Eastern Basin Distribution Centre EBIT Earnings Before Interest and Tax AIFRS Australian Equivalent International Financial Reporting Standards K2 Kooragang No 2 Berth K3 Kooragang No 3 Berth KBF Kooragang Bulk Facilities Mt rnillion tonnes Mtpa million tonnes per annum NPC Newcastle Port Corporation NSW New South Wales Panamax Vessel A mid size cargo vessel that is between 35,000 and 55,000 gross tonnes Ports Act Ports and Maritime Administration Act 1995 PSOL Port Safety Operating Licence PWCS Port Waratah Coal Services RLMC Regional Land Management Corporation ROA Return on Assets SOC Act State Owned Corporations Act 1989 SCI Statement of Corporate Intent SVA Shareholder Value Add $A Australian Dollar $US United States of America Dollar TAMS Total Asset Management Strategy TCorp NSW Treasury Corporation TEU Twenty Foot Equivalent Unit tpa Tonnes Per Annum Treasury NSW Treasury WB3 West Basin No 3 Berth WACC Weighted Average Cost of Capital TABLING VERSION Newcastle Port Corpora ti on Statement of Corporate Intent 2007-08 1 EXECUTIVE SUMMARY Newcastle Port Corporation is a statutory State Owned Corporation established by the Ports and Maritime Administration Act 1995. The Port of Newcastle is one of the largest coal export port in the world. The Port also handles a diverse range of bulk, break bulk and general cargoes. Newcastle Port Corporation also controls significant portside lands including lands at Carrington that it is developing as a Marine Precinct. Purpose The purpose of Newcastle Port Corporation is to provide safe, effective and sustainable port operations and to deliver port development that enhances the economic growth of the Hunter Region and New South Wales. Priorities Newcastle Port Corporation has identified the following as its priorities for the period of this Statement of Corporate Intent: • Safety; • Delivering Opportunity for the Hunter Region; • Grow Trade; • Optimise Return on Commercial Property; and • Staff Sustainability. Key Strategic Initiatives Newcastle Port Corporation has identified the following key strategic initiatives for the period of this Statement of Corporate Intent from 2007 to 2010: • implement a safety culture improvement program to deliver improved safety performance and a strong safety culture; • develop the Mayfield No 4 Berth on the Mayfield site to provide facilities to grow general cargo, break bulk and bulk trade; • grow non-coal bulk trade through expanding facilities on Walsh Point and at the Dyke Berths at Carrington; • facilitate growth in coal trade through planning, technical and operational support to the expansion of Port Waratah Coal Services Kooragang coal loader and the proposed Newcastle Coal Infrastructure Group coal loader; • further develop Port projects for growing coal trade throughput including; • continue port master planning; and • advance the development of the Marine Precinct on Dyke Point and Carrington. Financial Performance Goals Newcastle Port Corporation has identified the following financial performance goals for the period of this Statement of Corporate Intent: • improve total revenue; • improve non-coal revenue; • control and minimise expenditure through improved efficiency particularly relating to resourcing for strategic projects; • maximise utilisation of assets including improving re venue from NPC commercial property assets; TABLING VERSION Newcastle Port Corporation Statement of Corporate Intent 2007-08 • target capital investment that will deliver long term benefits to the Corporation; • achieve an agreed overall return on assets and dividend to Government; • achieve equal to or better than the TCorp cash hourglass facility benchmark return on funds invested; and • limit exposure to debt interest rate risk. Financial Performance Targets Newcastle Port Corporation has identified the following financial performance targets for the period of the Statement of Corporate Intent: 2006-07 2007-08. ,-,.,»i;"'''; !·2001!-09 .·; 20~!,)-J O ,> " ,. Forecast ' SCI , ... Forecast ,', Forecast EBIT ($M) 12.48 12.80 17.20 19.25 Operating profit before 13.07 13.36 17.31 18.43 ---_.income tax ($M) Target dividend ($M) 3,8 1 4.66 6.19 6.54 Return on assets (%) 7.5 7.4 9,5 10 ,2 Return on equity (%) 8.5 8.2 10.2 10.4 - 2 OBJECTIVES OF THE CORPORATION 2.1 Purpose The purpose of Newcastle Port Corporation is to provide safe, effective and sustainable port operations and to deliver port development that enhances the economic growth of the Hunter Region and New South Wales. 2.2 Objectives The principal objectives of Newcastle Port Corporation are prescribed in the Ports Act and the SOC Act as: • to be a successful business and, to this end: o to operate at least as efficiently as any comparable businesses, and o to maximise the net worth of the State's investment in the Port Corporation, and o to exhibit a sense of social responsibility by having regard to the interests of the community in which it operates and by endeavouring to accommodate these when able to do so, • to promote and facilitate trade through its port facilities, • to ensure that its port safety functions are carried out properly; • to conduct its operations in compliance with the principles of ecologically sustainable development, and • to exhibit a sense of responsibility towards regional development and decentralisation in the way in which it operates. TABLING VERSION Newcastle Port Corporation Statement of Corporate Intent 2007-08 2.3 Priorities The Board of Directors of the Newcastle Port Corporation has identified the following priorities for the period from 2007 to 2010: priority 1 - Safety By 2010 Newcastle Port Corporation will have: • had no fatalities; • a zero lost time injury frequency rate; • a strong safety culture that is: o readily identified by staff; and o identified through benchmarking with other ports and other non port businesses. priority 2 - Delivering Opportunity for the Hunter Region By 2010 Newcastle Port Corporation wi ll have: • completed and published a Strategic Development Plan for the Port; • established a successful and vibrant Carrington Marine Precinct; • established a port facility on the Mayfield Site; • secured the long term future for Cruise Hunter; and • enhanced community interaction with the Port through a strategy involving: education; information; Port access and information points; and Port tours. priority 3 - Grow Trade By 2010 Newcastle Port Corporation will have: • expanded the coal throughput capacity for the Port that ensures port capacity remains ahead of the coal chain capacity; • grown general cargo and container trade; • grown non coal bulk trade; and • completed a sustainability assessment of the Port's trade and operations and implemented a sustainability strategy. priority 4 - Optimise Return on Commercial Property By 2010 Newcastle Port Corporation will have: • developed and implemented a Real Property Strategy for each vacant and expired lease site; • achieved market rates of return for all new leases, lease renewa ls and market reviews; and • identified and acquired property holdings in the Port that will increase shareholder value. priority 5 - Staff Sustainability By 2010 Newcastle Port Corporation will have implemented a staffing sustainability strategy that provides for the identification, development and training of NPC staff to: • effectively implement the Statement of Corporate Intent and Business Plan; and • provide for future leadership roles in the organisation. TABLING VERSION Newcastte Port Corp orati on Statement of Corporate Intent 2007-08 3 NATURE AND SCOPE OF OPERATIONS Newcastle Port Corporation provides the following interrelated services in the Port of Newcastle to port users and other stakeholders: • Port operations - o provide and maintain Port navigation infrastructure - breakwaters, navigation aids and channels; o manage vessel movements in the Port; o provide port services required for compliance with regulatory obligations; o provide pilotage services as and when required; and o provide and maintain wharf facilities and provide wharf services as required by users. • Port development- o promote investment in projects for the enhancement of the Port to attract new business and to provide better services to existing customers; and o acquire and manage strategic property holdings