STATEMENT OF CORPORATE INTENT 2016 / 2017

Issued 31 May 2016

FAR NORTH PORTS CORPORATION LIMITED (TRADING AS PORTS NORTH)

This document contains highly confidential material relating to the business affairs of Far North Queensland Ports Corporation Limited (trading as Ports North). Release of its contents is subject to the provisions of the Right to Information Act 2009. Any unauthorised disclosure of material contained in this statement may diminish the commercial value of that information and would have an adverse effect on the business, commercial and financial affairs of Ports North.

Contents

1. Scope / Policy Position ...... 1 INTRODUCTION ...... 1 1.1 MAIN UNDERTAKINGS ...... 1 1.2 Corporate AND OPERATIONAL Performance Outcomes ...... 1 Performance Drivers ...... 3

2. Mandatory Matters ...... 5 2.1 Financial KEY PERFORMANCE INDICATORS (KPI’s) ...... 5 2.2 Non-Financial KPI’s ...... 6 2.3 REVENUE AND TRADE VOLUME ESTIMATION PROCESS ...... 6 2.4 Assumptions ...... 7 2.5 Community Service Obligations (CSO) ...... 8 2.6 Employment and Industrial Relations (E&IR) Plan ...... 8

3. Additional Matters ...... 9 3.1 Financials ...... 9 3.1.1 Group ...... 9 3.2 major Undertakings and business ...... 12 3.3 CAPITAL EXPENDITURE PROGRAM ...... 12 3.4 Major Initiatives Being Undertaken by Ports North ...... 12 3.5 Sponsorship, Advertising, Corporate Entertainment, Donations and Other Arrangements...... 13 3.6 Other ...... 13 3.6.1 Prudential Financial Information ...... 13 3.6.2 Dividend Policy and Payment ...... 13 3.6.3 Government Policies ...... 14 shareholder information ...... 20 Performance Agreement ...... 15

Attachment 1 – List of Financial and Non-Financial Target Definitions ...... 16

Attachment 2 – Employment and Industrial Relations Plan ...... 19

Attachment 3 – Sponsorship, Advertising, Corporate Entertainment, Donations and Other Arrangements ...... 24

PORTS NORTH – Statement of Corporate Intent 2016/17

1. SCOPE / POLICY POSITION

INTRODUCTION This Statement of Corporate Intent (SCI) for Far North Queensland Ports Corporation Limited, trading as Ports North for the financial year ending 30 June 2017, has been prepared in accordance with the Government Owned Corporations Act 1993 (GOC Act). This SCI is to be read in conjunction with the Ports North’s 2016-21 Corporate Plan.

1.1 MAIN UNDERTAKINGS Ports North’s core business is the following:

 Manage the Port infrastructure and operations at the trading Ports of , Cape Flattery, Karumba, Mourilyan, Skardon River and Community Ports of Quintell Beach and and the Cityport precinct and oversee non-trading Ports of Cooktown and ;  Manage operations and develop opportunities for general cargo and other bulk products;  Develop, manage and lease Strategic Port Land;  Manage services and functions that support the core business; and  Facilitate economic development in the region by facilitating trade.

1.2 CORPORATE AND OPERATIONAL PERFORMANCE OUTCOMES Ports North key corporate objectives for 2016/17 are:

Objective 1 - Identify and develop new trade and business opportunities and grow existing business to provide value to Ports North and its shareholders Strategy KPI KPI Measure Target Strategy 1 Implement Business Development Strategy ongoing and implemented Six monthly presentation to Identify and develop trade and Strategy for individual Ports to Board on implementation business opportunities increase throughput, better utilise existing assets and grow revenues Maritime revenue growth 5% by 30 June 2017 Grow existing maritime and reef tourism business Achieve Marina occupancy 66% occupancy by 30 June 2017

Reef Passenger numbers growth 9% by 30 June 2017 Work with proponents and regional Promotion of Ports North’s Ports to 3 potential customers economic agencies to facilitate new potential customers provided with commercial trade and business opportunities offers with Port capacity and logistics information Target additional cruise shipping Cruise Marketing Strategy Strategy implemented and visits and home porting opportunities implemented milestones reported to the Board every six months

Cruise Ship numbers 43 ship visits

Complete Cairns Shipping Development Within timelines set by the Project’s EIS and seek approval Coordinator General Support the regional economy by Work with proponents and regional Ongoing facilitating growth in trade and economic agencies to facilitate growth business opportunities in the region Increase in cargo throughput 2% growth by 30 June 2017 excluding zinc and lead trade at Karumba Support the regional economy by Work with cruise, reef companies and Ongoing supporting the tourism industry the regional tourism body to facilitate through provision of facilities tourism growth through the Port of Cairns

1 PORTS NORTH – Statement of Corporate Intent 2016/17

Objective 2 - Manage and develop Port property to provide sustainable commercial return to Ports North and its shareholders Strategy KPI KPI Measure Target Strategy 2 Tingira Street and Liberty Street land Land released to market based on the 2 development sites released Develop property plans and commercially developed Tingira Street Land Development Plan to the market subject to delivery strategy to maximise market demand property value and effectively Statutory review of Regional Ports Mourilyan Land Use Plan updated June 2017 manage property portfolio Land Use Plans Karumba Land Use Plan updated June 2017

Thursday Island Land Use Plan updated June 2017 Cityport Masterplan review Plan reviewed and endorsement June 2017 completed sought from Cairns Regional Council prior to shareholding Ministers approval No material adverse audit reports on Number of reports Nil property matters without appropriate Management response Objective 3 - Plan, develop and manage Port infrastructure and assets to improve Port efficiency, meet the needs of customers and contribute to sustainable regional development Strategy KPI KPI Measure Target Strategy 3 Assets maintained in accordance with Maintenance regimes in place Ongoing Maintain and operate Port Maintenance Program infrastructure considering safety, Safety incidences on port facilities Number of incidences No incidents or injuries to environment, efficiency and cost members of the public due to effectiveness Ports North’s facilities or activities Effective operational cost Delivery of service levels within budget Achieve budget management cost allowances Strategy 4 New Masterplan developed for Masterplan awarded with target Target completion date Identify and develop strategic Cairns and Mourilyan reflecting the completion date December 2017 December 2017 plans and deliver infrastructure intent of the Queensland Port projects for future Port Masterplanning Guidelines developments to meet trade Capital projects delivered on time On time and within budget The time and budget to be in growth in a sustainable manner and within budget accordance with SCI and as approved by shareholding Ministers Objective 4 – Maintain organisational capability and governance system to deliver the business requirements and maintain the organisation’s reputation Strategy KPI KPI Measure Target Strategy 5 Robust Corporate Governance No material adverse audit reports Ongoing Establish best practice arrangements are in place without appropriate Management Corporate Governance system response including robust risk, business Finance reporting processes Reporting processes in place Ongoing and financial management and developed and implemented Comply with Quarterly Report Quarterly Reports issued complete and Quarterly reporting systems requirements, including key on time performance indicators Port Pricing Strategy in place Port Pricing Strategy developed and an In place implementation program in place Risk Management System in place Risk Management outcomes to be in No material adverse audit with regular review accordance with requirements of the reports without appropriate Audit and Risk Committee and Board management response Effective emergency management Exercise program implemented and Annual exercise plans with regular exercise program undertaken Effective security plans with audits Exercise and audit program No adverse findings without and exercise program implemented appropriate Management response Strategy 6 Minimise environmental impacts Environmental Management System in Ongoing Identify and implement through effective environmental place and updated initiatives that promote management of port operations Environmental incidences No environmental incidences excellence within environmental related to Ports North’s management activities Karumba Lead Contamination Strategy implemented Biannual meetings with MMG Strategy implemented and DEHP

Reporting regimes maintained

2 PORTS NORTH – Statement of Corporate Intent 2016/17

Objective 4 – Maintain organisational capability and governance system to deliver the business requirements and maintain the organisation’s reputation Strategy KPI KPI Measure Target Strategy 7 Percent of positions advertised and Percentage 100% Attract, develop and retain filled motivated employees Employee turnover Percentage <15% Implementation of Performance and Staff participation in annual reviews 100% staff participation Development Review System Training plans developed for all staff Percentage training delivered >80% planned training achieved A safe working environment Level of Lost Time Injuries Zero Lost Time Injuries Implementation of the Safety Extent of safety policy breaches Progress is maintained with Management System zero breaches of safety policy Strategy 8 Customer Engagement Strategy Strategy implemented Ongoing Engage and support implemented stakeholders and communities Community information needs are High quality website in place with Ongoing in which the Ports operate met through provision of high quality feedback opportunities website Plans, developments and initiatives Regular events and news items are Quarterly are effectively communicated to the published Community Active engagement of customers, Engagement undertaken Two major stakeholder regional development bodies and engagement events with key potential mining companies industry stakeholders in significant Ports Be proactively involved in regional Effective participation in economic Represented on all key regional economic forums and Boards forums and Boards economic forums and Boards

PERFORMANCE DRIVERS The key business drivers and issues that have the potential to impact on performance of the Corporation include:

 The key Strategic Risks as identified in the Corporate Plan.  The strength of the Cairns regional economy and tourism market which has a flow on effect on the business performance of the Marina, Reef Fleet, property and petroleum imports. Changes to the regional economy are likely to impact future developments and outer year revenues with lower impact on the 2016/17 year revenues.  The commodity prices and market conditions of sugar and magnetite which will drive cargo volumes. The price for sugar is likely to impact future volumes due to decisions by growers on planting of sugar. Short term volumes will not be impacted. The price for magnetite will impact the decision of the miner to recommence this project in the long term.  Any deterioration of the property market has the potential to impact rentals and future property developments. Changes to the property market are likely to impact future developments and outer year revenues with lower impacts on the 2016/17 year revenues.  Cairns cruise shipping numbers to the Port of Cairns have grown in recent years with home porting vessels and new vessel approvals. The Cairns Shipping Development Project’s EIS to be completed and approvals sought from the Coordinator General with target approval date of June 2017.  Increased environmental activism and its impact on Port dredging. This ongoing issue needs careful management by Ports North in consultation with Queensland Ports Association and the State and Federal Governments. Increased regulatory controls and conditions have delayed and added costs to capital projects. Any changes to sea disposal for maintenance dredging will have significant impact on the company.  Delivering on efficiencies through management of operational expenses including recent restructure of senior Executives.  Marine Pilots revenues and expenditure are based on projected Pilot numbers, Pilot movements and fee for service arrangements with Government. Any changes to the current fee for service pricing arrangements will impact on the revenues of this business.

3 PORTS NORTH – Statement of Corporate Intent 2016/17

 The MMG Century Zinc mine ceased operations and the last exports of zinc and lead through the Port of Karumba was in early 2016. The Port Operating Agreement is suspended until an alternative bulk export commodity is established. During this time the Karumba channel dredging will also be suspended which will progressively impact on cattle exports through Karumba.

External Influences

The key external influences that increase the risk to the organisation include the following:

Reef 2050 Long Term Sustainability Plan includes a number of actions that have the potential to significantly impact on Ports North’s business. Actions related to maintenance dredging could potentially have significant impacts on the business if the outcomes of the Maintenance Dredging Strategy leads to increased conditions, limits or land disposal.

Risks

The following represents a summary of the Key Strategic Risks for the organisation. Ports North has a comprehensive Risk Management Framework that is overseen by the Board and Audit and Risk Committee which includes mitigation actions to address these risks.

 Staff, Contractor and Public Safety  Loss of trade volume at any of the company’s Ports or economic downturn affects revenue  Major environmental incident or environmental issue impacts on the company  Any extreme event that has significant effect on the business  Inadequate Shareholder and Stakeholder Engagement  Regulation and Compliance  Delivery of the Cairns Shipping Development Project (CSD Project)  Government Review of Government Owned Ports  Asset Failure  Failure to Attract and Retain Essential Skills  Loss of Sea Dumping Dredge Permit

4 PORTS NORTH – Statement of Corporate Intent 2016/17

2. MANDATORY MATTERS In accordance with section 119(3) of the GOC Act, the Board of Ports North undertakes that the financial and non-financial targets in sections 2.1 and 2.2 and the financial statements in section 3.1 will form the basis for assessment of quarterly outcomes as reported to shareholding Ministers. Definitions for the financial and non-financial SCI targets are provided in Attachment 1 and are consistent with the Key Performance Indicator (KPI) definitions included in the Corporate Plan and quarterly reporting templates submitted by Ports North to shareholding Ministers. 2.1 FINANCIAL KEY PERFORMANCE INDICATORS (KPI’S) In accordance with the above Corporate and Operational Objectives, the Board of Ports North undertakes to achieve at least the following performance targets in 2016/17:

FY2017 Forecast Quarter FY2015 FY2016 FY2016 FY2017 Sep Dec Mar Jun Financial KPIs Actual Budget Est. Act. Forecast $'000 $'000 $'000 $'000 773 3,333 2,345 3,267 Earnings Before Interest and Tax ($'000) 16,990 13,026 11,512 9,718 2,078 4,638 3,649 4,572 EBITDA ($'000) 21,568 17,508 16,716 14,936 471 2,261 1,572 2,217 Net Profit After Tax ($'000) 12,030 9,016 7,811 6,521 (3,409) (1,609) (2,308) (1,687) Economic Profit ($'000) (6,226) (5,732) (8,245) (8,986) 0.23% 0.97% 0.69% 0.95% Return on Assets 5.28% 4.28% 3.37% 2.83% 0.23% 0.99% 0.69% 0.96% Return on Operating Assets 5.31% 4.33% 3.39% 2.86% 0.00% 0.00% 0.00% 0.00% Debt to Debt + Equity 0.00% 0.00% 0.00% 0.00% 0.18% 0.87% 0.61% 0.86% Return on Equity 4.65% 3.82% 3.02% 2.52% 0% 0% 0% 0% Interest Cover 0% 0% 0% 0% 3.58 4.06 4.06 4.06 Current Ratio 2.96 3.25 3.56 4.06 1,018 1,392 1,695 2,502 Capital Expenditure ($'000) 4,724 5,020 927 6,607 100% 100% 100% 100% Planned Maintenance Performed (%) 100% 100% 100% 100% The reduction in EBIT over the years shown above is mostly due to a combination of the following factors:

 FY2015 EBIT was boosted by a gain of $3.23M arising from the revaluation of Property, Plant and Equipment (PPE). No gains have been assumed for FY2016 or FY2017.  The FY2015 profit included a $2.46M gain on revaluation of Investment Property. The gain in FY2016 and FY2017 has been assumed to be $2.0M.  Income from the Port of Karumba usage fee from MMG was $1.43M in FY2015, $0.83M in FY2016 and Zero in FY2017. This reduction is consequent to the ending during FY2016 of zinc and lead export from the Port of Karumba.  Maintenance expense is planned to increase significantly over the three years with an additional $0.87M in FY2016 compared with FY2015 and a further $2.60M increase FY2017. This includes increased channel maintenance costs due to a combination of the inclusion of activity deferred from previous years and long term maintenance strategy including major spending on electrical systems, wharves and Marina.

The above factors more than offset the positive contribution to EBIT from the 5% price increases which have applied to most maritime and marina activity and are anticipated to apply from 1 January 2017.

5 PORTS NORTH – Statement of Corporate Intent 2016/17

2.2 NON-FINANCIAL KPI’S In accordance with the above Corporate and Operational Objectives, the Board of Ports North undertakes to achieve the following non-financial performance targets in 2016/17:

FY2017 Forecast Quarter Non Financial KPIs FY2015 FY2016 FY2016 FY2017 Sep Dec Mar Jun Actual Budget Est. Act. Forecast Operational 1,249,838 1,048,548 940,296 983,094 Trade (tonnes) 4,997,153 4,628,466 4,508,170 4,221,776 497 507 462 472 No. of Vessels to Port (including cruise) 2,045 1,937 1,981 1,938 32 39 48 29 No. of Cruise Vessels to Port 129 147 150 148 71% 69% 61% 64% Marina Berth Occupancy (%) 67% 67% 67% 66% Reputation 0 0 0 0 No. of Environmental - reportable breaches 0 0 0 0 0 0 0 0 No. of Security issues reported 3 0 0 0 0 0 0 0 Lost Time Injury Frequency Rate (LTIFR) 8.56 0 0 0 0 0 0 0 Lost Time Injury Duration Rate (LTIDR) 20 0 0 0 < 15% < 15% < 15% < 15% Staff Turnover (annualised %) 4.17% < 15% < 15% < 15% 69 69 69 69 No. of Net FTE Staff numbers 72 74 69 69 <10 <10 <10 <10 No. of Community Complaints 9 <10 <10 <10 100% 100% 100% 100% Compliance with Reporting Requirements (%) 100% 100% 100% 100% The decline in trade volume in FY2016 and FY2017 is due to the ending of lead and zinc exports from the Port of Karumba. Trade volume, excluding zinc and lead, has increased slightly over the period.

As a result of organisational changes, five positions have been removed from the organisation’s structure.

2.3 REVENUE AND TRADE VOLUME ESTIMATION PROCESS The process described below has been followed by Ports North in arriving at the Trade volumes shown in Section 2.4 Assumptions. These volumes are used in calculating the revenue levels assumed in Ports North’s FY2017 Forecast Statement of Comprehensive Income.

 Consult key customers about likely trade volumes. This includes mining, sugar, fuel, reef fleet and cruise shipping.  Analyse historic trends for revenue and volumes of business.  Analyse current business environment for relevant income streams.  Consider advice from industry about likely volumes in the context of Ports North’s trend analysis and relevant economic and other circumstances.  Form a view about likely business volumes.  Engage in further discussions with customers.  Finalise volume projections.

6 PORTS NORTH – Statement of Corporate Intent 2016/17

2.4 ASSUMPTIONS Ports North’s undertaking to achieve its performance outcomes is predicated upon the following assumptions:

FY2015 FY2016 FY2016 FY2017 Assumptions Actual Budget Est. Act. Forecast

Economic Indices CPI n/a 2.0% 2.0% 1.7% Wages Growth 3.0% 3.0% 3.0% 3.0% Interest Rates n/a n/a n/a n/a Price Increases Maritime Revenue (exc Thursday Island) 5.0% 5.0% 5.0% 5.0% Maritime Revenue (Thursday Island) 5.0% 5.0% 3.0% 3.0% Marina Revenue 5.0% 5.0% 5.0% 5.0% Passenger Levies 5.0% 5.0% 5.0% 5.0% Electricity Revenue 10.0% 5.0% 5.0% 5.0% Revenue ($'000) 53,587 50,910 47,930 50,394 Operating Expenses ($'000) 36,597 37,884 36,418 40,676 Cairns Activity Sugar ( Tonnes) 389,872 320,000 320,000 320,000 Molasses ( Tonnes) 84,616 80,000 80,000 80,000 Petroleum ( Tonnes) 551,334 593,103 529,980 562,813 LPG ( Tonnes) 15,280 16,455 16,455 16,500 Fertiliser ( Tonnes) 49,483 44,748 44,748 45,000 General Cargo ( Tonnes) 218,254 207,220 203,947 273,842 Total Cargo Throughput ( Tonnes) 1,308,839 1,261,526 1,195,130 1,298,155 Marlin Marina Passengers (#) 819,477 873,657 873,657 976,163 Marina Average Occupancy (%) 67% 67% 67% 66% Regional Ports Karumba Activity Livestock ( Tonnes) 13,186 9,002 9,002 9,193 General Cargo ( Tonnes) 6,020 5,160 5,160 7,500 Zinc and Lead ( Tonnes) 988,563 382,966 382,966 - Thursday Island Activity General Cargo ( Tonnes) 83,649 79,812 79,812 81,928 Mourilyan Activity Sugar ( Tonnes) 527,778 540,000 638,000 650,000 Molasses ( Tonnes) 63,346 70,000 70,000 75,000 Minerals (Tonnes) - 300,000 - - Cape Flattery Activity Silica Sand ( Tonnes) 2,004,300 1,980,000 2,128,100 2,100,000 Quintell Beach Activity General Cargo ( Tonnes) 1,472 - - - Total Cargo Throughput ( Tonnes) 3,688,314 3,366,940 3,313,040 2,923,621 Total Cargo Throughput ( Tonnes)- All Ports 4,997,153 4,628,466 4,508,170 4,221,776

Trade Volume

Major cargo revenue – sugar, petroleum, sand and general cargo. Trade volumes are largely beyond the company’s influence and driven by market, weather and economic conditions.

Cairns general cargo growth in FY2017 is due to the Amrum project. 7 PORTS NORTH – Statement of Corporate Intent 2016/17

Karumba general cargo and livestock are minor volumes that fluctuate from year to year and are difficult to predict.

Zinc and lead export from Karumba ceased in January 2016.

Mineral exports from Mourilyan have been deferred until improvements in commodity prices.

Property

Property rental revenue is based on existing contractual arrangements and is not dependent on additional economic growth. A gain of $2M from an increase in Investment Property values is assumed for FY2017.

Marina

Growth in passenger numbers reflect the anticipated increase in international flights.

Port Pilotage

In relation to Port Pilotage, the FY2016 estimated actual and FY2017 forecast are prepared on the basis that there is no change to the volume of business and the present network pricing arrangements are continued.

2.5 COMMUNITY SERVICE OBLIGATIONS (CSO) No CSOs have been identified for Ports North in 2016/17.

2.6 EMPLOYMENT AND INDUSTRIAL RELATIONS (E&IR) PLAN An E&IR Plan meeting the requirements of Section 149 of the GOC Act is provided to shareholding Ministers as Attachment 2 to this SCI.

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3. ADDITIONAL MATTERS

3.1 FINANCIALS 3.1.1 Group STATEMENT OF COMPREHENSIVE INCOME (CONSOLIDATED)

FY2017 Forecast Quarter FY2015 FY2016 FY2016 FY2017 Sep Dec Mar Jun Actual Budget Est. Act. Forecast $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

4,388 4,017 3,699 3,547 Maritime (1)(2) 15,420 16,209 15,007 15,651 1,133 1,092 853 987 Marina (3) 3,402 3,645 3,645 4,064 417 421 402 343 Passenger Levies (2) 1,175 1,361 1,360 1,583 2,753 2,718 2,739 2,774 Property Rentals (4) 10,675 10,951 10,951 10,984 914 1,100 1,049 968 Electricity Recoverable (2) 4,177 4,632 3,924 4,031 - 951 - - Dredging Recoverable (5) 3,413 1,573 473 951 2,574 1,967 1,900 1,889 Pilotage (2) 7,694 8,087 8,087 8,330 - - - - Fair Value Adjustment to PPE (6) 771 ------2,000 Fair Value Adjustment to Investment Property (6) 2,457 2,000 2,000 2,000 749 652 743 656 Other Revenue (7) 4,403 2,452 2,483 2,800 12,928 12,917 11,385 13,164 Total Revenue 53,587 50,910 47,930 50,394

2,928 3,113 2,907 2,955 Labour (8) 11,134 11,967 11,668 11,903 762 791 769 750 Energy & Land Rates 2,711 3,175 3,025 3,072 60 38 57 36 Marketing & Business Development 159 167 167 191 4,497 1,443 1,325 2,954 Maintenance, Stores & Materials (10) 6,767 8,382 7,641 10,219 1,749 1,949 1,576 1,073 Administration & Consultants (11) 4,790 4,519 4,952 6,347 1,304 1,305 1,304 1,305 Depreciation (12) 4,578 4,482 5,204 5,218 855 945 1,102 824 Recoverables / Other Expenses (9) 6,458 5,192 3,761 3,726 12,155 9,584 9,040 9,897 Total Expenses 36,597 37,884 36,418 40,676 773 3,333 2,345 3,267 Earnings Before Interest & Tax 16,990 13,026 11,512 9,718 - - - - Interest - - - - 773 3,333 2,345 3,267 Net Profit Before Tax 16,990 13,026 11,512 9,718 302 1,072 773 1,050 Income Tax 4,960 4,010 3,701 3,197

471 2,261 1,572 2,217 Net Profit after Tax 12,030 9,016 7,811 6,521 (1) Maritime revenue includes Karumba Port usage fee $1.43M in FY2015, $0.83M in FY2016 and zero in FY2017 due to close down of MMG Century facility. (2) Variations in revenue are due to a combination of price increases, volume changes and other comments contained in Section 2.4 Assumptions. (3) Marina Revenue increases in FY2016 and FY2017 are mostly due to Super Yacht growth, reef fleet growth and price increases. (4) Property revenue similar to last year with reductions in Mourilyan being offset by increases in Cairns. (5) Dredging recoverable reduces in FY2016 and FY2017 due to the reduced program in Karumba associated with the ending of Zinc export in FY2016. (6) The $0.771M and $2.457M income in FY2015 resulted from the independent revaluation of Property, Plant and Equipment and Investment Property that occurred that year. (7) Other Revenue includes interest revenue, security charges and grant revenue. (8) Labour Increase is mostly due to EBA impacts. FY2016 includes the full year effect of staff number increases associated with Ports North taking over the pilotage transfer service in Weipa. (9) Recoverables and Other Expenses include electricity cost of sales, dredging recoverable and other expenses. Decrease in FY2016 Forecast is in relation to recoverable dredging in Karumba and contractor services for Pilotage business area. (10) Maintenance costs increase in FY2017 due to a combination of the inclusion of activity deferred from previous years and long term maintenance strategy including major spending on electrical systems, wharves and Marina. (11) Consultants increase is due to the inclusion of Cairns Shipping Development Project Environmental Impact Statement costs. Other major consultancy activity includes Port Masterplanning, systems review, various engineering and environmental consultancies and audit costs. (12) Depreciation similar to FY2016 forecast, well up on FY2015 due to impact of revaluation carried out at 30 June 2015.

9 PORTS NORTH – Statement of Corporate Intent 2016/17

STATEMENT OF FINANCIAL POSITION (CONSOLIDATED)

FY2017 Forecast YTD FY2015 FY2016 FY2016 FY2017 Sep Dec Mar Jun Actual Budget Est. Act. Forecast $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Current Assets 43,719 42,040 41,920 41,548 Cash assets (6) 41,446 40,113 45,503 41,548 7,363 7,122 6,926 7,208 Receivables (4) 6,071 6,199 6,161 7,208 55 55 55 55 Inventories 54 35 54 55 1,300 900 1,103 413 Other Current Assets 278 345 270 413 52,438 50,117 50,004 49,224 47,849 46,692 51,988 49,224

Non-Current Assets 137,929 137,077 136,262 135,255 Property, Plant & Equipment (2) 143,482 109,353 138,855 135,255 151,713 152,653 153,858 158,063 Investment Property (3) 148,723 150,188 151,073 158,063 - - - - Receivables - - - - 971 994 990 981 Deferred Tax Assets (1) 973 1,014 1,000 981 - - - - Other Assets - - - -

290,613 290,724 291,110 294,299 293,178 260,555 290,928 294,299 343,051 340,841 341,114 343,523 Total Assets 341,027 307,247 342,916 343,523

Current Liabilities 2,941 3,486 2,573 2,656 Payables 2,594 2,279 2,358 2,656 - - - - Current Interest Bearing Liabilities ------Current Tax Liabilities (7) 1,531 478 340 - 9,411 6,438 7,462 6,912 Current Provisions (5) 9,731 9,225 9,512 6,912 2,309 2,418 2,295 2,551 Other Current Liabilities 2,325 2,392 2,392 2,551 14,661 12,342 12,330 12,119 16,181 14,374 14,602 12,119

Non-Current Liabilities - - - - Non-Current Interest Bearing Liabilities - - - - 39,075 39,026 39,030 39,556 Deferred Tax Liabilities (1) 38,484 28,540 39,004 39,556 726 755 785 814 Non Current Provisions 781 802 835 814

39,801 39,781 39,815 40,370 39,265 29,342 39,839 40,370

54,462 52,123 52,145 52,489 Total Liabilities 55,446 43,716 54,441 52,489

288,589 288,718 288,969 291,034 Net Assets 285,581 263,531 288,475 291,034

Equity 187,178 187,178 187,178 187,178 Contributed Equity 187,178 187,178 187,178 187,178 71,282 71,282 71,282 71,282 Reserves 71,282 48,772 71,282 71,282 30,015 30,015 30,015 30,015 Opening Retained Profits 20,324 23,326 27,121 30,015 114 243 494 2,559 Current Year Result 6,797 4,255 2,894 2,559

288,589 288,718 288,969 291,034 Shareholder's Equity 285,581 263,531 288,475 291,034 (1) In the FY2015 Annual Report Deferred Tax Assets of $0.973M have been offset against Deferred Tax Liabilities of $38.484M giving final balance of $37.511M. (2) Increase in FY2016 Est. Act. due to reversal of impairment and valuation movements at 30 June 2015. (3) Increase in FY2017 includes $2M gain with the remaining increase being due to capital works program. (4) Increase to FY2017 due to increased tax instalments resulting in current tax receivable of $664K. (5) The large reduction in FY2017 is due to the expected completion of major works at Green Island. These works are funded by a levy collected by Ports North for the purpose of managing the Green Island assets. The assets belong to Department of Transport and Main Roads not Ports North. (6) Increase in cash balance is due to lower capital activity relative to other years. (7) Increased tax instalment rate results in more tax paid during the year and nothing being due at year end. 10 PORTS NORTH – Statement of Corporate Intent 2016/17

STATEMENT OF CASH FLOWS (CONSOLIDATED)

FY2017 Forecast Quarter FY2015 FY2016 FY2016 FY2017 Sep Dec Mar Jun Actual Budget Est. Act. Forecast $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Cash Flows From Operating Activities 12,037 12,567 11,231 11,080 Receipts From Customers (1) 47,454 47,867 44,499 46,915 (11,943) (7,509) (9,262) (8,420) Payments to Suppliers and Employees (2) (30,465) (33,289) (31,340) (37,134) 364 360 342 338 Interest Received 1,648 1,356 1,391 1,404 - - - - Dividends Received ------Interest and Other Finance Costs Paid ------Grants Received - - - - 635 767 522 691 GST Received From ATO 2,250 2,394 2,323 2,615 (1,193) (1,241) (1,191) (1,078) GST Paid to ATO (5,106) (4,827) (4,790) (4,703) 1,241 1,256 1,104 1,082 GST Received From Customers 5,180 4,751 4,824 4,683 (837) (585) (583) (744) GST Paid to Suppliers (2) (2,283) (2,362) (2,382) (2,749) 304 5,615 2,163 2,949 Net Cash Flows From Operating Activities 18,678 15,890 14,525 11,031

Cash Flows From Investing Activities - - - - Proceeds From Sale of Shares - - - - 14 28 - - Proceeds From Sale of PPE and Investment Property (3) 67 - - 42 (1,019) (1,424) (1,463) (2,576) Payments for PPE and Investment Property (4) (4,695) (4,785) (835) (6,482) (1,005) (1,396) (1,463) (2,576) Net Cash Flows From Investing Activities (4,628) (4,785) (835) (6,440)

Cash Flows From Financing Activities - - - - Repayment of Borrowings ------Proceeds from Borrowings ------Net Cash Flows From Financing Activities - - - -

Cash Flows From Government - - - - Proceeds From Share Issue ------Share Buyback ------Government Grant - EIS 2,012 - - - (4,916) Dividend Paid (6,410) (3,477) (5,233) (4,916) (1,082) (983) (820) (745) Income Tax (Equivalent) Paid (5,146) (4,305) (4,400) (3,630) (1,082) (5,899) (820) (745) Net Cash Flows From Government (9,544) (7,782) (9,633) (8,546) (1,783) (1,680) (120) (372) Net Increase/(Decrease) in Cash Held 4,506 3,323 4,057 (3,955) 45,503 43,720 42,040 41,920 Cash at the Beginning of the Year 36,940 36,790 41,446 45,503

43,720 42,040 41,920 41,548 Cash at the End of the Year 41,446 40,113 45,503 41,548 (1) Decreases in FY2016 Est. Act. receipts due to not having Magnetite exports at Mourilyan, lower Petroleum Imports in Cairns and no recoverable dredging at Karumba. (2) Large increase in FY2017 due to increased maintenance activities, payments for the Cairns Shipping Development Project Environmental Impact Statement and Green Island asset management program. (3) FY2015 and FY2017 includes sale of motor vehicles and minor computer equipment. (4) This line shows the actual cash payments made for capital projects in each year. The amounts vary from year to year in line with the volume of capital activity and the timing of milestone payments. The above figures differ from the amounts shown in 3.3 on page 14 because of the timing of accruals and the fact that the cash payments include payments relating to activity budgeted and carried out in FY2015 but paid for in FY2016. Other years similarly affected.

FY2015 FY2016 FY2016 FY2017 Equity Injections/Withdrawals Actual Budget Est. Act. Forecast $'000 $'000 $'000 $'000 Equity Injections - - - - Equity withdrawals - - - - Net Equity - - - -

FY2015 FY2016 FY2016 FY2017 Dividends, Tax Equivalent Payments(TEPs) and Community Service Obligation(CSOs) Actual Budget Est. Act. Forecast $'000 $'000 $'000 $'000 Dividends provided (1) 5,233 4,761 4,916 3,962 Income Tax Expense/(Benefit) 4,960 4,010 3,701 3,197 CSO Receipts - - - - (1) Dividends provided are calculated in accordance with the Ports North Dividend Policy - refer Section 3.6 This includes a deduction from Net Profit after Tax in relation to Community Ports and changes in the value of Investment Property. Consequently, dividends provided will differ from Net Profit after Tax.

11 PORTS NORTH – Statement of Corporate Intent 2016/17

3.2 MAJOR UNDERTAKINGS AND BUSINESS There are no plans for significant disposals or acquisitions of assets during 2016/17.

3.3 CAPITAL EXPENDITURE PROGRAM

Budgeted FY2016 FY2017 Expected Asset Total Cost Est. Act. Forecast Completion $'000 $'000 $'000 Date

Assets Under Construction Shareholding Minister approved C5 - Foreshore Development 22,092 - 1,640 FY2020 C14 - Cityport Commercial allowance 3,870 100 200 FY2021 C20/C22 - Marina Expansions 3,870 - 100 FY2021 Subtotal 100 1,940 Capital expenditure yet to be approved S3 - Tingira Street Development 32,521 250 2,500 FY2021 SP3 - Tingira Street Warehouse 5,750 - 250 FY2021 S7 - General Cargo Consolidation 12,800 50 400 FY2023 C6 - Site Decontamination 1,600 - 400 FY2020 S12/M2 - Lease Acquisitions (1) 250 - 250 FY2017 T5/T6 - Horn Island Cargo Wharf & Access Road 1,700 - - FY2019 M3 - Mourilyan Land Development 4,865 100 350 FY2020 Minor Capital Works Ongoing 427 517 FY2017 Subtotal 827 4,667 TOTAL 927 6,607

3.4 MAJOR INITIATIVES BEING UNDERTAKEN BY PORTS NORTH A summary of the Major Initiatives are:

 The Cityport Masterplan Review.  Seeking expanded trade opportunities out of Cairns and Mourilyan. Examine infrastructure requirements to meet additional trade needs.

 Explore long term development options for Karumba considering the closure of the MMG Century export facility.

 Commence the Cairns and Mourilyan Masterplans.

12 PORTS NORTH – Statement of Corporate Intent 2016/17

3.5 SPONSORSHIP, ADVERTISING, CORPORATE ENTERTAINMENT, DONATIONS AND OTHER ARRANGEMENTS Consistent with Government issued Corporate Entertainment and Hospitality Guidelines 2008 and Ports North’s Corporate Entertainment and Hospitality Policy, Ports North has budgeted the following total amounts for Sponsorship, Advertising, Corporate Entertainment, Donations and Other Arrangements for 2016/17. Full details of the budgeted expenditure are provided in Attachment 3 to the SCI.

Total for ALL Expenditure Items (over and under $5,000)

FY2016 FY2016 FY2017 Activity Budget Est. Act. Budget $'000 $'000 $'000 Sponsorship 42.5 42.5 42.5

Advertising 6.0 6.0 7.0

Corporate Entertainment 15.2 15.2 17.5

Donations 0.0 0.0 0.0 Strategic Community and Stakeholder 138.4 138.4 148.6 Engagement Activities (1) Total 202.1 202.1 215.6

(1) Increase in FY2017 budget is due to an increase in Ports Australia $8,400, increase in Advance Cairns estimate and $1,800 increase in items below $5,000.

3.6 OTHER

3.6.1 Prudential Financial Information The Board will ensure Ports North takes full responsibility to ensure that prudent financial practices will be applied both within the corporation and within its subsidiaries (whether fully controlled or otherwise). Without limiting the obligations imposed on the Board and the Chief Executive Officer by the GOC Act and, where applicable, the Corporations Act 2001 (Cth), this includes a commitment to:

 abide by the Code of Practice for Government Owned Corporations’ Financial Arrangements (Code of Practice), as issued by the ; and

 establish, maintain and implement appropriate financial risk management practices and policies required and as specified in the Code of Practice.

3.6.2 Dividend Policy and Payment

Ports North’s Policy is to recommend and pay a dividend amount equivalent to 100% (or the percentage approved by shareholding Ministers, if different) of Ports North’s adjusted consolidated profit for 2016/17. The adjusted profit is defined as the total of the income less expenses (including income tax equivalent expense), excluding the components of other comprehensive income, adjusted for material non-cash items including any associated tax credit or expense and excluding the profits from Community Ports.

13 PORTS NORTH – Statement of Corporate Intent 2016/17

Forecast FY2017 $'000

Net Profit after Tax 6,521

Less: Increase in the Value of Investment Property (2,000) Less: Community Ports Net Profit after Tax (559) Adjusted Net Profit for Dividend Calculations 3,962

Dividend Payable at 100% (FY2015 80%) 3,962

3.6.3 Government Policies

Ports North will comply with all relevant Government Policies and Guidelines as advised by shareholding Ministers from time to time.

14 PORTS NORTH – Statement of Corporate Intent 2016/17

Performance Agreement

DIRECTORS’ STATEMENT AND AGREEMENT OF SHAREHOLDING MINISTERS

This SCI and all attachments, for the financial year 2016/17, are presented in accordance with Chapter 3, Part 8 of the Government Owned Corporations Act 1993 (GOC Act).

In accordance with Chapter 1, Part 3, Section 7 of the GOC Act, the SCI represents a formal performance agreement between the Board of Ports North and its shareholding Ministers, with respect to the financial and non-financial performance targets specified for the financial year. The SCI also represents an acknowledgement of an agreement to major activities, objectives, undertakings, policies, investments and borrowings of Ports North for 2016/17.

This SCI is consistent with Ports North’s 2016 to 2021 Corporate Plan submitted to, and agreed to by, shareholding Ministers in accordance with Chapter 3, Part 7 of the GOC Act.

In signing the document the Board of Ports North undertakes to ensure that the document, and all reports to shareholding Ministers, are prepared with accuracy and timeliness.

In signing this document Ports North’s Board undertakes to achieve the targets proposed in the SCI for 2016/17.

Major changes to key assumptions and outcomes detailed in this SCI, and which come to the Board’s attention during the year, will be brought to the attention of shareholding Ministers. Any modifications to this SCI will be dealt with in accordance with the GOC Act.

This SCI is signed by the Chairman on behalf of all the Directors in accordance with a unanimous decision of the Board of Ports North:

Russell Beer (Chairman) / /2016

/ /2016 / /2016

The Hon Curtis Pitt MP The Hon Mark Bailey MP Treasurer, Minister for Aboriginal and Torres Strait Minister for Main Roads, Road Safety and Ports Islander Partnerships and Minister for Sport and Minister for Energy, Biofuels and Water Supply

15 PORTS NORTH – Statement of Corporate Intent 2016/17

Attachment 1

List of financial and non-financial target definitions

16 PORTS NORTH – Statement of Corporate Intent 2016/17

DEFINITIONS

KPI Use Definition

Capital Expenditure Measures spending on capital Amount incurred by Ports North on capital projects to the projects end of the reporting period. Compliance with Indicates performance of Compliance with Statutory Reporting Timeframes and Data Reporting Deadlines Ports North regarding Submission and Reporting Requirements in Treasury reporting requirements Financial Circulars (%). For clarity, Number of deadlines complied with / Total number of deadlines. Current Ratio Indicates ability of Ports North Current assets / current liabilities. to meet debts as they fall due. Customer Indicates level of customer Overall percentage satisfaction with port services based on Satisfaction Index (%) satisfaction with Ports North an annual survey of key customers and stakeholders. Note: to be reported annually. [OGOC / QT to confirm requirement on ports to complete these surveys.] Debt to Debt + Equity Measures financial leverage Debt divided by the total of debt and equity (using balances Ratio current as at the end of the reporting period). EBIT Group Earnings Before Interest and Tax

EBITDA Group Earnings Before Interest, Tax, Depreciation and Amortisation. Measures the group earnings in terms of cash-related items only. Economic Profit Measures financial Financial performance of the company based on residual performance based on wealth calculated by deducting the cost of capital from its residual value created after operating profit. Measured by EBIT- Notional tax expense - deducting cost of capital (i.e. (Capital Invested*Cost of Capital) where Capital Invested = minimum expected rate of Total Assets - non interest bearing liabilities and Notional return) tax expense = EBIT * 30%. Note the cost of capital is a post tax WACC. Environmental – Measures environmental Number of reportable breaches of the Environmental Reportable performance of Port. Protection Act (1994). Environmental Qualitative information on Protection Act (EPA) response to breaches to be breaches (#) included in quarterly report Interest Cover Measures ability to service Earnings before Interest and Tax (but after any abnormal or debt extraordinary items) divided by interest cost (for clarity - includes capitalised interest, but excludes finance charges) Lost Time Injury Indicates average duration of Total days of lost time for injury and disease for every Duration Rate (LTIDR) injuries million hours worked. Calculated as number of working days lost to injuries X 1,000,000/ number of injury occurrences. Calculated for employees and contractors directly employed by the Port (ie this excludes services sub- contracted to external service providers eg. port security) Lost Time Injury Indicates average frequency The number of lost time occurrences of injury or disease for Frequency Rate of injuries every million hours worked. Calculated as number of lost (LTIFR) time injury occurrences X 1,000,000/ employee hours. Calculated for employees and contractors directly employed by the Port (ie this excludes services sub- contracted to external service providers eg. port security)

17 PORTS NORTH – Statement of Corporate Intent 2016/17

KPI Use Definition

Marina Berth Indicates the level of Measures Ports North’s marina occupancy. Measured as ∑ Occupancy Rate occupancy of marina berths number berth occupied or leased days in the period / number of available berths * days in the period Net FTE staff Measures number of FTEs Measures Ports North’s efforts at hiring and maintaining numbers employed by Ports North the budgeted staff numbers\as set in the Establishment Plan. Reported as net number of staff full time equivalents employed by Ports North at the end of the period. Number of Security Measures security issues. Number of security events as defined in the Maritime Issues Reported Qualitative report on serious Transport and Offshore Facilities Security Act 2003 (Cth) security threats or breaches reported during the period. to be incorporated into quarterly report NPAT Measures profitability Group Net Profit After Tax.

Planned Measures the performance of Total number of planned maintenance activities weighted Maintenance maintenance tasks planned. by cost completed / scheduled maintenance activities for Performed (%) To be considered with the period weighted by cost. Expressed as a percentage. qualitative reporting in the Calculated as: quarterly report [ ∑ maintenance completed * budgeted cost of maintenance activities completed] / [ ∑ maintenance planned * budgeted cost of maintenance planned] Return on Equity Group Operating Profit after tax (but before any abnormal or extraordinary items) divided by the average contributed equity plus asset revaluation reserve. Return on Assets Measures return generated Group Operating Profit before Interest and tax (but after on asset base. Measures any abnormal or extraordinary items), divided by the total affected by asset average assets. revaluations, asset age, legacy agreements Return on Operating Measures return on operating Group Earnings before Interest and Tax (but after any Assets assets of the entity abnormal or extraordinary items), less income from investments, divided average of group operating assets (for clarity this excludes legacy assets and less assets under construction but includes strategic port land) Staff Turnover Indicator of loss of human The annualised number of staff leaving the GOC in the capital to the entity period divided by the total number of full time equivalent staff at the end of the period. Trade Measures the volumes that Total trade of both inbound and outbound during the are moving through the port period. To be presented separately for bulk: tonnes, Container: Tonne Equivalent Units (TEUs), Cars: units. Vessels to Port Measures vessel traffic Number of commercial vessels that berth at the port for the through the port purpose of loading or unloading during the period.

18 PORTS NORTH – Statement of Corporate Intent 2016/17

Attachment 2

Employment and Industrial Relations Plan

19 PORTS NORTH – Statement of Corporate Intent 2016/17

SHAREHOLDER INFORMATION 1. Employment and Industrial Relations Direction

Ports North is committed to being an employer of choice with a work environment that attracts, develops and retains motivated capable people who can deliver on the business objectives.

Ports North recognises the need to have plans and systems in place that support this commitment and minimise risks associated with employment related issues in the workplace. To assist in this area a Human Resources Management Plan is developed annually based on the model below, with strategies and key performance indicators aimed at achieving positive outcomes for the business and its employees.

Ports North’s Board of Directors have a Human Resources Committee which monitors the implementation of the Human Resources Management Plan and discusses the development of policies, procedures and systems consistent with this Plan.

Positive Workplace Culture

Policies linking Effective Employee Responsive business and people Communicatio involvement and inclusive employee management n Strategy leadership needs systems

2. Significant and Emerging Issues

A significant issue for Ports North during the Plan period will be the re-negotiation of the three Enterprise Agreements (Ports North Administrative and Technical Enterprise Agreement 2014 and Ports North Operations and Maintenance Enterprise Agreement 2014 which both expire on 30 June 2017 and the Ports North Marine Pilots Enterprise Agreement 2014 which expires on 31 October 2017). Ports North will commence planning for the negotiations in late 2016 and will be seeking to engage Unions early in 2017 with a view to having the negotiations concluded prior to their nominal expiry dates.

Ports North continues to work on retaining and developing the necessary skills and experience required in the organisation. While the organisation’s activities are diverse and span a large geographic area, the workforce is small. As a result, there is a need for many of the positions, in particular Management roles, to be multi-skilled. This multi-skilled requirement can prove difficult in recruiting suitable candidates, therefore, it will be necessary for the organisation to continue with its succession planning and training and development programs to up-skill and develop existing employees.

Retaining appropriately qualified Marine Pilots is a key focus for the organisation as is sourcing replacement Pilots in a timely manner. Retention is a challenge with the risk of Pilots moving to higher paying private ports and the significant cost and time involved in training Pilots before they are fully skilled and approved for all vessel sizes and individual ports. To assist in this area Ports North has introduced an Expression of Interest recruitment process for Marine Pilots in an effort to identify suitable candidates for future employment in the Cairns Region. This has been a very effective and timely approach to filling vacancies as they arise and the process will continue to be implemented during 2016/2017.

20 PORTS NORTH – Statement of Corporate Intent 2016/17

3. Senior Executive Remuneration (FY2016)

Employer Total Fixed Performance CEO / Base Salary 1 Superannuation Remuneration 3 Payment Made Senior Executives Contribution 2 4 Mr Chris Boland 279,727 34,999 314,726 36,569 Chief Executive Officer Mr Michael Colleton 208,205 26,546 234,751 27,016 General Manager Commercial Mr Alan Vico 202,522 25,821 228,343 24,739 General Manager Planning and Infrastructure Ms Kerry Egerton 180,358 22,995 203,353 23,554 General Manager Corporate Services Mr Nick Good 173,867 16,953 190,820 21,202 Chief Financial Officer

Notes: 1. Includes salary sacrifice items plus cash salary 2. Employer contributions to superannuation (other than by salary sacrifice) 3. Sum of Columns 1 and 2 4. This is the actual payment made in the year immediately preceding the Plan year relating to performance in the financial year two years prior to the Plan period.

4. Employment Conditions

Ports North’s main industrial instruments are its Enterprise Agreements (Ports North Administrative and Technical Enterprise Agreement 2014, Ports North Operations and Maintenance Enterprise Agreement 2014 and Ports North Marine Pilots Enterprise Agreement 2014) and Individual Flexibility Agreements in accordance with the Port Authorities Award 2010. Employment conditions included in the Agreements are summarised in the table below.

Award/Agreement Conditions Employees Expiry Date

Ports North  36.25 hrs/week 27 Employees 30 June 2017 Administrative and  5 weeks AL  Administration Technical Enterprise  15 days sick leave  Clerical Agreement 2014  13 weeks after 10 years LSL  Overtime / Time off in Lieu  Aggregated salary arrangement Ports North Operations  38 hours/week 20 Employees 30 June 2017 and Maintenance  5 weeks AL / 6 weeks for shift Enterprise Agreement worker  Tradesperson 2014  15 days sick leave  Seaport Officers  13 weeks after 10 years LSL  Labourers  Overtime / Time of in Lieu  Plant Operators  Aggregated salary arrangement Port Authorities Award  24 hour 8/6 roster 6 Employees IFA can be terminated 2010 and an  5 weeks AL by either party at any  Master and  10 days sick leave time by providing 13 Individual Flexibility Deckhand boat  13 wks after 10 years LSL weeks’ notice in writing Agreement (IFA) crew to the other party, or at any time as agreed between the parties.

21 PORTS NORTH – Statement of Corporate Intent 2016/17

Award/Agreement Conditions Employees Expiry Date

Ports North Marine  24 hour x 7 day/week roster 12 Employees 31 October 2017 Pilots Enterprise  5 weeks AL  Marine Pilots Agreement 2014  10 days sick leave  13 weeks after 10 years LSL  Medical reimbursement  Gym membership reimbursement  Paid public holidays (11 pa)  Paid days off in lieu

In respect of the Ports North Administrative and Technical Enterprise Agreement and Ports North Operations and Maintenance Enterprise Agreement, the Port Authority Award 2010 would have application but for the operation of the organisation’s Agreements, and is utilised for the “better off overall test” for the Agreements under the Fair Work Act 2009.

In the case of the Pilot Transfer Service operating in the Port of Weipa, Ports North has six employees employed on Individual Flexibility Arrangements in accordance with the Port Authority Award 2010. This was necessary to provide the flexibility required to perform the transfer operation in the Port. This flexibility was not available under the Ports North Operations and Maintenance Enterprise Agreement. Ports North also has five employees (Senior Executives) engaged on Employment Contracts. 5. Enterprise Bargaining Ports North Enterprise Agreements are due to expire in 2017 and planning for negotiations will commence in late 2016 with a view to engaging Unions early in 2017. The workplace does not have any industrial issues or claims and no matters have been raised by employees at this stage for inclusion in the next round of negotiations. A key focus for the organisation during the negotiation will be identifying and agreeing productivity savings. Ports North has had productivity initiatives in place for a number of years and the organisation continually reviews business efficiencies and makes appropriate adjustments accordingly. This has already led to a significant reduction in employee numbers and costs and Ports North will pursue further productivity initiatives, organisational improvements and changes to business practices and operations as part of negotiating new agreements. 6. Workforce Planning Ports North has a workforce of 72 positions (69 FTEs) as at 30 January 2016. Employment policies are underpinned by a clear recognition of the need for a skilled and viable workforce which takes into account the need for ongoing renewal and appropriate training to ensure there is sufficient capacity within the organisation to replace retiring or departing employees. Ports North has limited opportunities for apprentices and trainees due to the size and composition of the workforce. Below is a summary of the workforce by employment category.

Employment Category 30 January 2016 Permanent Full Time 58 Permanent Part-time 7 Temporary Part-time - Casuals 2 Other Contract - Senior Executive Contract 5 Apprentices and Trainees -

Total Directly Employed Workforce 72

22 PORTS NORTH – Statement of Corporate Intent 2016/17

7. Workplace Health & Safety

All employees are responsible for safety in the workplace, however, the Board and Management are ultimately accountable for ensuring that risk of injury in Ports North’s workplaces is controlled. The effectiveness of Ports North’s Safety Management Framework and associated systems are under continuous review by Management and the Safety Committee. The Framework is reviewed and approved by the Board every two years.

8. Equal Employment Opportunity and Anti-Discrimination

Under section 148 of the GOC Act, Ports North is a relevant Equal Employment Opportunity (EEO) agency for the Public Service Act 2008, Chapter 2. In accordance with section 31 of the Public Service Act 2008, Ports North provides the Public Service Commissioner with a report about the outcome of actions required under section 30 of the Public Service Act 2008 during the financial year.

9. Job Security

Ports North’s direct employed workforce is small and relatively static. This is not expected to change significantly over the next few years as business growth remains steady.

Should business requirements change and the organisation requires greater flexibility in order to achieve its goals and objectives, Ports North does provide the following redundancy provisions:

 Notice period for ordinary termination as outlined in the Enterprise Agreement;  4 weeks’ severance pay for more than one year of continuous service (but less than two);  3 weeks’ pay pro-rata for every additional year of continuous service cumulative to a maximum of 52 weeks;  Pro-rata long service leave; and  Outplacement and financial advice support.

10. Superannuation

Ports North is prescribed by regulation to remit employer superannuation contributions to QSuper Limited. The terms of the Ports North Enterprise Agreements confirm that QSuper arrangement. Accordingly, Ports North does not offer further Choice of Fund to employees.

11. Consultation and Reporting

Ports North has undertaken consultation on this Plan with Queensland Treasury, Public Sector Industrial Relations, Office of Industrial Relations and consults with relevant industrial organisations as part of the enterprise bargaining process.

23 PORTS NORTH – Statement of Corporate Intent 2016/17

Attachment 3

Sponsorship, Advertising, Corporate Entertainment, Donations and Other Arrangements

24 PORTS NORTH – Statement of Corporate Intent 2016/17

The following Tables provide a breakdown on planned expenditure FY2017 and comparison with budget and estimated actual expenditure FY2016, including details of specific activities above $5K and a summary of Corporate Entertainment activities below $5K. TABLE 1: Sponsorship, Advertising, Corporate Entertainment, Donations and Other Activities Details of Individual Expenditure Items

Quarter 2016/17 FY2017 FY2016 FY2016 FY2017 $’000 Per Head Activity Description / Benefit Budget Est. Act. Forecast Sept Dec Mar Jun Budget $’000 $’000 $’000 $’000 SPONSORSHIP Individual entity over $5,000 Cairns Indigenous Art Fair 10 10 10 0 0 0 10 Total over $5,000 10 10 10 0 0 0 10 Other (total) below $5,000 32.5 32.5 32.5 14.5 6.0 6.0 6.0 TOTAL (1) 42.5 42.5 42.5 14.5 6.0 6.0 16.0 ADVERTISING Total over $5,000 0 0 0 0 0 0 0 Other (total) below $5,000 6.0 6.0 7.0 1.75 1.75 1.75 1.75 TOTAL (2) 6.0 6.0 7.0 1.75 1.75 1.75 1.75 CORPORATE ENTERTAINMENT Total over $5,000 0 0 0 0 0 0 0 Other (total) below $5,000 15.2 15.2 17.5 3.9 9.0 2.2 2.4 TOTAL (3) 15.2 15.2 17.5 3.9 9.0 2.2 2.4 DONATIONS Total over $5,000 0 0 0 0 0 0 0 Other (total) below $5,000 0 0 0 0 0 0 0 TOTAL (4) 0 0 0 0 0 0 0

.....continued

25 PORTS NORTH – Statement of Corporate Intent 2016/17

Quarter 2016/17 FY2017 FY2016 FY2016 FY2017 $’000 Per Head Activity Description / Benefit Budget Est. Act. Forecast Budget $’000 $’000 $’000 Sept Dec Mar Jun $’000 STRATEGIC COMMUNITY AND STAKEHOLDER ENGAGEMENT ACTIVITIES Membership over $5,000 Advance Cairns 45 45 45.5 0 45.5 0 0 Membership over $5,000 TTNQ 18 18 18 18 0 0 0 Membership over $5,000 Ports Australia 23 23 31.4 31.4 0 0 0 Membership over $5,000 Queensland Ports Association 9 9 9 0 9 0 0 Membership over $5,000 Cruise Downunder 6.5 6.5 6.7 0 0 0 6.7 Membership over $5,000 Gulf Savannah 15 15 20 15 5 0 0 Total over $5,000 116.5 116.5 130.6 64.4 59.5 0 6.7 Other (total) below $5,000 21.9 21.9 18 1.7 5.6 9.75 0.95 TOTAL (5) 138.4 138.4 148.60 66.1 65.1 9.75 7.65 TOTAL (1) + (2) + (3) + (4) + (5) 202.1 202.1 215.6 86.25 81.85 19.7 27.8

TABLE 2: Corporate Entertainment

Details of Total Forecast Expenditure under $5,000

FY2016 FY2017 FY2017 Quarter 2016/17 FY2016 Budget Activity Est. Act. No. of Forecast $’000 $’000 $’000 Activities $’000 Sept Dec Mar Jun Corporate Entertainment Total  Staff Functions 7.5 7.5 6 8.0 0.5 7.0 0 0.5  Business Development 3.2 3.2 10 2.4 0.85 0.5 0.55 0.5  Stakeholder and Community Engagement 4.5 4.5 30 7.1 2.55 1.5 1.65 1.4 TOTAL UNDER $5,000 15.2 15.2 46 17.5 3.9 9.0 2.2 2.4

26 PORTS NORTH – Statement of Corporate Intent 2016/17