Gladstone Ports Corporation Annual Report 2010/11

Fisherman’s Landing North reclamation

Western Basin dredging

APLNG QCLNG GLNG

In 2010/11 we began the journey to expand and diversify our facilities at the Port of Gladstone. The industry that is driving this growth – Liquefied Natural Gas (LNG) – is now in the early stages of infrastructure development on the southern tip of Curtis Island. This report relates the work we have undertaken to facilitate these projects, our continued role in the coal export industry and our strong commitment to supporting and informing our community through this growth period. It also presents the corporate, environmental and social outcomes of our operations at the Port of Gladstone, Port Alma and the Port of Bundaberg. The report does this in a manner that enables us to be compared to our past performance and measured against our peers.

In addition, it profiles some of those people who have been on or are just beginning their own personal journey at GPC. They include retirees, established characters and young, fresh faces who will take us into the future by positioning our operational facilities to advance Central Queensland and the State’s economic development.

We have a policy of transparent operation and full disclosure – our report exceeds the legislative requirements of the Government Owned Corporations Act 1993 and the Financial Accountability Act 2009.

Gladstone Ports Corporation Annual Report 2010/11

FeedbackWe welcome your feedback as it assists us to improve our reporting standards and meet your information needs. You are encouraged to provide comments or suggestions about this annual report to our Communications department on:

Phone: +61 7 4976 1333 or via our website – www.gpcl.com.au (Feedback and Suggestions).

Contact detailsThis report (2010/11), past reports and various other GPC publications are available on our website – www.gpcl.com.au

GLNG

RG Tanna Coal Terminal

Arrow

Vision, Mission and Values 1Highlights and Challenges 2

01 | YEAR IN REVIEW 4Performance Summary 6Chairman’s Review 10Chief Executive Officer’s Review 13Commercial Manager’s Review 16

02 | buSINESS 22Our Customers and Markets 24Our Trade 28Our Operations 34Our Port Security 37

03 | INfRASTRuCTuRE 40Our Projects 42

04 | ENVIRONMENT 48Our Environmental Management 50Energy and Greenhouse Gases 55

05 | COMMuNITY 58Our Community Involvement 60

06 | PEOPlE 64Our Employees 66Our Safety 72Our Health 76

07 | CORPORATE GOVERNANCE 80Our board of Directors 82Our Management Team 86Corporate Governance Practices 88

OuR jOuRNEY 94

08 | fINANCIAlS 96Index to financial Statements 98Index 151Glossary of Terms 153

Contents

07

01

04

02

03

05

07

08

0102

03

04

01

0609

0506 07

08

0203

09

0405

06

ISlANDS01 Stuart Oil Shale Project

02 Cement Australia

03 Gas Station

04 Rio Tinto Aluminium Yarwun Refinery

05 Orica

06 Gladstone Power Station

07 Queensland Alumina Refinery

08 Boyne Smelters Limited

09 State Development Area

10 APLNG

11 QCLNG

12 GLNG

13 Arrow

MAjOR INDuSTRY

01 Fisherman’s Landing Wharves

02 RG Tanna Coal Terminal

03 Auckland Point Wharves

04 Barney Point Wharf

05 South Trees Wharf

06 Boyne Wharf

07 Port Alma Shipping Terminal

08 Bundaberg Port

GPC INfRASTRuCTuRE

ROCKHAMPTON

BruceHighway

North CoastRailway Line

Arch Rock

Cape Keppel

ROCKHAMPTONPILOTAGE LIMIT

CattlePoint

Connor Bluff

PORT ALMASHIPPING TERMINAL LIMIT

GLADSTONE PILOTAGE LIMIT

PORT OFGLADSTONELIMIT

Port Curtis

East EndRailway Line

GasPipeline

MouraRailway Line Monto

Railway Line

NorthCoastRailwayLine

DawsonHighway

GlADSTONE

Clark Point

11

08North CoastRailway Line

buNDAbERG

01 Peak Island

02 Mud Island

03 Casuarina Island

04 Balaclava Island

05 Curtis Island

06 Wiggins Island

07 Quoin Island

08 Facing Island

09 Wild Cattle Island

10 Hummock Hill Island

11 Barrubra Island

10

13

11 12

DuRING 2010/11, NEARLY 1,300 CARGO vESSELS vISITED THE PORT OF GLADSTONE

i | AbOuT uS | Gladstone Ports Corporation | Annual Report 2010/11

Who we areGladstone Ports Corporation Limited (GPC) is a Company Government Owned Corporation that manages and operates three port precincts – Port of Gladstone, Port Alma Shipping Terminal and Port of Bundaberg.

• Port of Gladstone began operation in 1914 as the Gladstone Harbour Board; Port Alma Shipping Terminal commenced in 1896 (as the Rockhampton Harbour Board). The Port of Bundaberg also dates back to 1896 when the Bundaberg Harbour Board was formed. All three boards became port authorities in 1987

• Gladstone and Port Alma became Government Owned Corporations in 1994 and 1995 respectively; subsequently merging on 1 July 2004 to form the Central Queensland Ports Authority (CQPA)

• On 13 March 2008, CQPA was renamed Gladstone Ports Corporation, and on 1 July 2008 became a Company Government Owned Corporation (GOC). Constituted under the Government Owned Corporations Act 1993 (GOC Act), we were renamed Gladstone Ports Corporation Limited (GPC). Port Alma also assumed a new trading name, Port Alma Shipping Terminal

• The Port of Bundaberg, previously a wholly-owned subsidiary of the Port of Brisbane, merged with GPC on 1 November 2009.

Across the three precincts we employ 674 people to carry out our operations, including ship loading and unloading, harbour works, quarry operations, reclamation works, general maintenance and administration.

We value safety everywhere and, as we strive for continuous improvement to our safety performance in all operational areas, are moving from the NSCA 5-star safety rating system to adopt the AS4801 safety certification system.

Where we areThe Port of Gladstone is located 525 km north of Brisbane, with port land and facilities at various sites within the precinct. A total of 4,321 ha of land falls under our control, including more than 700 ha of reclaimed land. Port Alma Shipping Terminal lies 62 km east of Rockhampton in the Fitzroy River delta, while the Port of Bundaberg, which covers 507 ha, is just over 19 km south of the city of Bundaberg.

What we doOur ports handle the export of resources from Central Queensland, the import of raw materials, and the export of finished products from local industries (see map on pages 31-32). The Port of Gladstone is Queensland’s largest multi-commodity port, featuring the world’s fourth largest coal export terminal (by throughput). Our customers are vital to the success of our business and our relationships with them are highly valued.

Our environmentOur port facilities and services are located in estuarine environments of high conservation value. We have developed, and actively perform our work, under an Environmental Management System (EMS) designed to maintain and improve, wherever possible, the social and ecological values of all three precincts. Our EMS is certified to ISO 14001:2004.

Our communityWe believe that open and regular communication with the communities we work in is essential to maintaining our status as a good corporate citizen. We regularly inform our communities and other stakeholders of our plans and initiatives, and actively support community groups in the Central Queensland region.

More informationFurther details about our business (pages 22-39), infrastructure (pages 40-47), environmental approach (pages 48-57), community involvement (pages 58-63), people (pages 64-79), governance (pages 80-93) and our financial position (pages 96-148) can also be found on our website at www.gpcl.com.au

About us

SHIP ARRIvAL LIMIT 4NM RADIuS FROM FAIRwAy BuOy

10

Connor Bluff

GLADSTONE PILOTAGE LIMIT

PORT OFGLADSTONELIMIT

Port Curtis

NGSDACitiesRoadRail

10km0

PORT OF BuNDABERGLIMIT

Clark Point

South Head

buNDAbERG

ii | AbOuT uS | Gladstone Ports Corporation | Annual Report 2010/11

Vision, mission and values | Gladstone Ports Corporation | Annual Report 2010/11 | 1

Our visionTo ensure the Port of Gladstone, Port Alma and the Port of Bundaberg operate effectively, efficiently and on a commercial basis for the continuing benefit of port users, the Central Queensland community and the State of Queensland.

Our missionWe will achieve our vision by focusing on managing, operating and developing effective and efficient port facilities and services.

This requires us to provide appropriate infrastructure, adopt a values-driven approach to sustainable planning, development, management and maintenance of new and existing facilities and commercial and recreational port land.

Gladstone Ports Corporation Limited (GPC) plays an integral role in planning the future of our port precincts. We take a strategic approach to planning and consulting the community, industry and government when setting our short and long-term goals. Our one-year plan (Statement of Corporate Intent) and five-year plan (Corporate Plan 2011-2016) provide the required planning tools, and our 50-year plan (Strategic Plan 2008-2058) forms the strategic framework that underpins our vision of effective, efficient and commercially viable operations at our port precincts.

Our valuesWe will be:• Environmentally responsible –

maintaining the environmental integrity of our operations in line with community and stakeholder expectations

• Governance focused – providing the vision and direction to promote and develop business opportunities whilst ensuring legal and contractual compliance

• Improvement focused – retaining, increasing and diversifying trade through our ports, while operating in accordance with world’s best practice

• Commercially sound – earning commercial rates of return on shareholders’ funds, generating funds to meet port infrastructure requirements, retaining current and developing future business opportunities and maintaining a sound financial position

• Supportive of our employees – supporting, developing and maintaining a skilled, motivated, fulfilled and safe workforce

• A good corporate citizen – actively involving ourselves in the community through programs that provide benefit to both ourselves and the regional community in which we exist.

Vision, mission and values

GPC - committed to growth, prosperity and the community

PICTURED: EnvIROnmEnTAL ADvISOR ChRISTIAn CROSBy OvERSEES AIR AnD WATER QUALITy mOnITORInG On SITE

2 | Highlights and challenges |Gladstone Ports Corporation | Annual Report 2010/11

Achieved a 19% increase in after tax profit (page 16)

Provided a dividend of $42.08 million (2009/10: $38.0 million) for our shareholders (pages 16-17)

Achieved 6.6% EBIT return on assets (pages 17-18)

Received Federal Government approval for Western Basin EIS (pages 13 and 51)

Achieved record throughput of 323,500t (2009/10: 285,415t) at Port Alma – 29.4% above forecast (page 30)

Increased trade at the Port of Bundaberg by 4.6% on 2009/10 (page 30)

Achieved a 41.7% increase in caustic soda throughput at Fisherman’s Landing 5 (page 29)

Total cargo handled at Fisherman’s Landing 1 and 2 was 8.6% above forecast (page 31)

Exceeded grain tonnage forecasts for Auckland Point 2 by 4.1% (page 29)

Reduced LTIs by 3 (page 73)

Maintained a low staff turnover rate of 4.75% (page 67)

Provided $133,799 in community support (page 62)

Achieved 4,200 registrations for inaugural Botanic to Bridge event (page 62)

Highlights

PICTURED: GPC BUILDInG SERvICES SUPERvISOR hEnRy WARD IS PASSInG On hIS knOWLEDGE AnD ShAPInG ThE fUTURE Of yOUnG APPREnTICE PLUmBER mIChAEL hARRIS

Highlights and challenges | Gladstone Ports Corporation | Annual Report 2010/11 | 3

Returning coal throughput to budgeted levels in 2011/12 (page 11)

To assist LNG companies with dredging works and reclamation projects (page 11)

Improving our safety culture and LTI performance (page 15 and 73)

Managing the environmental impacts of port expansion in accordance with regulatory and community expectations (page 11)

To make the Port of Bundaberg a profitable business centre following its temporary closure due to flooding (page 11)

Challenges

4 | YEAR IN REVIEW | Gladstone Ports Corporation | Annual Report 2010/11

It has been a year of economic highs and lows. Now a transformation is underway at the Port of Gladstone due to the LNG industry

PICTURED: ThE BUnD WALL AT fIShERmAn’S LAnDInG hAS A CREST WIDTh Of SIx mETRES TO ALLOW COnSTRUCTIOn EQUIPmEnT AnD vEhICLES TO OPERATE SImULTAnEOUSLy

YEAR IN REVIEW | Gladstone Ports Corporation | Annual Report 2010/11 | 5

Performance summary 6

Chairman’s review 10

Chief Executive Officer’s review 13

Commercial General Manager’s review 16

01 YEAR IN REVIEW

01 | YEAR IN REVIEW

6 | YEAR IN REVIEW | Performance summary | Gladstone Ports Corporation | Annual Report 2010/11

Performance summarySummary of Statement of Corporate Intent The Statement of Corporate Intent (SCI) outlines strategies that will be implemented each year and forms part of the longer term Corporate Plan providing a five-year strategic direction for achieving the Corporate vision.

BusinessOBJECTIVE: To carry out port operations in accordance with world’s

best practice.

Targets 2010/11 OutcomesAchieve 20% improvement in LTIFR from 2009/10 Achieved

Implement logistical software to enhance operational Partially efficiencies and maintenance windows achieved

Identify $2 million in operational savings Achieved

Complete strategic planning and business Partially development process for Port of Bundaberg achievedover next 18 months

Achieve total port throughput of 90.3Mt at NotPort of Gladstone, Port Alma and Port of Bundaberg achieved

Achieve total port throughput of 89.8Mt at NotPort of Gladstone achieved

Achieve coal exports of 67.2Mt through NotPort of Gladstone achieved

Increase port trade at Port Alma to 250,000t achieved

Achieve average loading rate in berth of 3,200tph Not achieved

Achieve train unloading rate of 3,200tph Exceeded

Achieve zero complaints from customers Achieved

Targets 2011/12Commence analysis for introduction of Port wide vessel management system

Ensure dredging program with LNG companies meets schedule and all environmental compliances/Government initiatives

Develop a Master Plan for Port Alma, including Sea Hill investigations

Continue strategic planning and business development for Port of Bundaberg

YEAR IN REVIEW | Performance summary | Gladstone Ports Corporation | Annual Report 2010/11 | 7

01 | YEAR IN REVIEW

PICTURED TOP: PRInCIPAL, OPERATIOnS ExCELLEnCE, BERnIE mUIR InSPECTInG fEEDERS In DUmP STATIOn 3 AT RGTCT

PICTURED BELOW: WASTE OPERATOR PETER SmALL OvERSEES ThE ‘COOkInG PROCESS’ Of ShIPS’ WASTE USInG An AUTOCLAvE

Targets 2011/12Maintain AS/NZS ISO 14001:2004 Environmental Standards accreditation

Targets 2011/12Facilitate establishment of a coal exporting terminal at Balaclava Island in Port Alma middle harbour

Complete hand over of WICT project to WICET Group

Continue construction of stockpile 22 at RGTCT

Commence construction of new tug terminal

Continue EIS process for Channel duplication and Boyne River marina

Commence work on additions to city car park facility and office space

Targets 2010/11 OutcomesFinalise operational approvals for Northern Reclamation Project at Fisherman’s Landing Achieved

Finalise EIS approvals process for Western Basin Dredging and Disposal Project Achieved

Finalise operational approvals for Western Basin Dredging and Disposal Project Achieved

Continue EIS process for development of outer channels, including new marina facility at Boyne River Ongoing

Complete hand over of WICT project to WICET Group Not achieved

Undertake a Master Plan for Port Alma Partially achieved

Targets 2010/11 OutcomesAchieve re-certification of AS/NZS ISO 14001:2004 Ongoing

Implement agreed recommendations of RGTCT and BPCT benchmarking studies Achieved

Continue energy usage evaluation process and examine and implement projects to reduce GPC’s energy use Achieved

InfrastructureOBJECTIVE: To facilitate and provide import and export shipping

infrastructure to the Central Queensland region.

EnvironmentOBJECTIVE: To maintain the environmental integrity of the Port of

Gladstone, Port Alma and the Port of Bundaberg in line with community and stakeholder expectations.

8 | YEAR IN REVIEW | Performance summary | Gladstone Ports Corporation | Annual Report 2010/11

Targets 2011/12Host Port Open Day and Botanic to Bridge events

Commence construction of Stage 1 of Auckland Inlet foreshore (East Shores) development

Continue EIS process for development of outer channels, including new Boyne River marina

Continue construction for Stage 3 of marina boat ramp facility

Targets 2011/12Commence negotiations for 2012 Enterprise Bargaining Agreement

Continue implementation of Stop Sun Spots program

Continue implementation of action plan following employees’ survey

Targets 2010/11 OutcomesHost inaugural Botanic to Bridge event in August 2010 Achieved

Respond to Corporate Image Study findings and implement action plan Ongoing

Complete Stage 1 of new marina boat ramp Achieved

Commence development for Auckland Inlet Notforeshore (East Shores) development achieved

Targets 2010/11 OutcomesDeliver commitments in the 2009–12 PartiallyCertified Agreement achieved

Implement action plan for employees for Corporate Image Study Ongoing

Continue implementation of Random Drug Testing and Fatigue Risk Management Achieved

Continue implementation of Stop Sun Spots program Ongoing

CommunityOBJECTIVE: To actively involve ourselves in the community through

programs that provide benefit to both ourselves and the regional community in which we operate.

PeopleOBJECTIVE: To support, develop and maintain a safe workplace and a

skilled, motivated, fulfilled workforce.

YEAR IN REVIEW | Performance summary | Gladstone Ports Corporation | Annual Report 2010/11 | 9

01 | YEAR IN REVIEW

Targets 2011/12Introduce a CIS to provide a more rigorous framework for evaluating and managing new capital investments

Targets 2011/12Identify $3 million in operational efficiency savings

Commence implementation of replacement commercial systems

Targets 2010/11 OutcomesAchieve 100% compliance with ASIC requirements Achieved

Undertake conflict of interest training and Partiallyprobity training across organisation achieved

Introduce Capital Investment System (CIS) to provide more rigorous framework for evaluating and Notmanaging new capital investments achieved

Targets 2010/11 OutcomesAchieve after tax profit of $42.8 million Achieved

Provide dividend of $34.3 million (80% of after tax profit) Achieved

Achieve 5.9% EBIT return on assets Achieved

Corporate GovernanceOBJECTIVE: To provide the vision and direction to promote and develop

business opportunities whilst ensuring compliance with legal and contractual obligations.

FinancialsOBJECTIVE: To earn commercial long-term rates on shareholders’

funds; generate funds to meet port infrastructure requirements; retain current and develop future business opportunities; and maintain a sound financial position.

PICTURED: mOvInG ALOnGSIDE ThE DREDGE ‘BIG BOSS’ AS IT WORkS In ThE WESTERn BASIn Of GLADSTOnE’S hARBOUR

10 | YEAR IN REVIEW | Chairman's review | Gladstone Ports Corporation | Annual Report 2010/11

We have delivered a sound financial performance at the end of a year of fluctuating business conditions. While the summer floods dramatically reduced our coal trade during 2010/11 by 13 million tonne (mt), we achieved a net profit after tax of $55.28 million against a budget of $42.8 million. At the same time, the Port of Gladstone began a major transformation due to the LnG industry. See our Commercial General manager’s review (page 16) for more information.

Chairman’s review

A decade of growthThe year has been a challenging one for the corporation in dealing with a decline in coal throughput due to flooded mines. This setback came in the middle of the financial year when our performance was on track for another strong outcome.

We will now look to a recovery by the coal industry and a return to normal growth trends in 2011/12. Our total trade for 2010/11 through the Port of Gladstone was 76.4mt compared to 83.4mt in the previous year. During the year ahead, we will work to recover and grow our trade position and to maximise our coal handling facilities for the benefit of our stakeholders.

Looking even further ahead, the corporation is forecasting massive growth in our trade volumes from more than 80mt at present to 181mt by 2020. That includes a near doubling of coal exports from 67mt to 124mt, taking into account the development of the proposed Wiggins Island Coal Exporters Terminal (WICET). This project is now awaiting its final Investment Decision in late 2011.

During 2011/12, the corporation will also be focusing on facilitating another coal exporting facility at Balaclava Island in Port Alma’s middle harbour.

Our ongoing efforts in expanding and diversifying the Port of Gladstone are currently centred on the facilitation of the LnG industry, which is expected to contribute 25mt of export product in the next decade.

During the year we witnessed the start of the most significant industrial growth period in our history. We moved from preparation for the LnG industry to visible activity in the harbour marking the beginning of a decade of growth in port facilities. This industrial diversification will ensure further economic prosperity for the Central Queensland region, the state and the country.

Our infrastructure work focused on several projects that will help to facilitate the LnG industry as well as expand existing port facilities. Construction of the bund wall to further develop the fisherman’s Landing facility made considerable progress during the year, and several land based areas were completed to allow for the movement of bulk materials, machinery and people to Curtis Island where the LnG export hub is now under construction. See Infrastructure (page 41) for more information.

PICTURED: IAn BRUSASCO Am, ChAIRmAn

YEAR IN REVIEW | Chairman's review | Gladstone Ports Corporation | Annual Report 2010/11 | 11

01 | YEAR IN REVIEW

ThE WESTERn BASIn Of ThE hARBOUR WhERE ThE PORT Of GLADSTOnE IS BEGInnInG A mAjOR TRAnSfORmATIOn

As work began on the plants for QCLnG and GLnG we continued to work alongside their representatives and other stakeholders, such as maritime Safety Queensland, to monitor the work’s progress.

All of this expansion is taking place in the Western Basin where dredging activity is now underway.

Meeting community expectationsWe recognise the Gladstone community as a significant stakeholder and continue to engage and inform residents about our operational and growth activities. The results of our Corporate Image Study’s community survey in 2010 revealed residents’ awareness of our efforts to increase communication. This growth in information distribution continued during 2010/11 when construction and dredging activities began in the Western Basin. We have issued regular media updates and are ensuring the community is kept informed on all aspects of this expansion using traditional as well as online media.

As one of the major drivers of industrial development in Gladstone, we are conscious of the community and other stakeholders’ expectations in terms of how we balance growth with environmental responsibility. Our Environmental management System (EmS) guides us to achieve a

responsible and sustainable approach to the environment in the course of pursuing our operations. This system, along with comprehensive requirements for us to monitor and report on environmental conditions and impacts due to our expansion activities, will see us reporting on air, land and water quality more than ever before. See Environment (page 52) for more information.

GPC recognises the invaluable role that community groups and not for profit organisations play in a growing region such as Gladstone and nearby centres. They contribute to the energy and character of a town or city, and for that reason we continue to provide sponsorships and donations to support and enable them to flourish. During the year, we provided $133,799 to a range of groups who contribute to the arts, education and lifestyle of our community. See Community (page 62) for more information.

Two of the corporation’s major projects that have engaged the Gladstone community are our Botanic to Bridge fun run and the history book series. The Botanic to Bridge is now well established as a community event to promote healthy living and assist in funding our local schools along with a selected not for profit organisation. In the year ahead, we will produce the second of a five part series covering the history of the Port of Gladstone.

The year aheadDuring 2011/12, our priorities will focus on returning our coal export trade to budgeted levels and striving for further efficiencies to achieve our business targets. The other major focus will be to assist the LnG companies with dredging works and reclamation projects.

We will also continue to manage the environmental impacts of port expansion in accordance with regulatory and community expectations.

The corporation will seek to build on our Corporate Image Study results by maintaining strong relationships with our customers and the community, as well as addressing our employees‘ concerns through business and communications initiatives.

We will seek to turn the Port of Bundaberg into a profitable business centre following its temporary closure due to flooding.

We believe we will consolidate our economic contribution to the region and the state through growth in employment opportunities, trade and infrastructure growth as we progress through this major growth phase.

12 | YEAR IN REVIEW | Chairman's review | Gladstone Ports Corporation | Annual Report 2010/11

PICTURED: DURInG ThE yEAR AhEAD WE WILL fOCUS On RETURnInG OUR COAL ExPORT TRADE TO BUDGETED LEvELS

AcknowledgementsIt has been a demanding year for everyone connected with the corporation as our management and employees have been called on to meet major challenges in their daily work. These challenges are setting the organisation up for a period of prosperity and growth that will underpin the economic health of the region and the state well into the future.

I thank every member of our GPC workforce for their commitment during the year and their contribution towards realising that prosperity during the next decade.

Thank you to our shareholding ministers for 2010/11 – the minister for main Roads, fisheries and marine Infrastructure, the honourable Craig Wallace mP and the minister for finance, natural Resources and The Arts, the honourable Rachel nolan mP, for their guidance and support in our ports’ operations.

I would also like to thank my fellow Board Directors for their work and look forward to achieving more positive and productive outcomes in the year ahead.

We have come through a challenging 12 months but there is still a long distance to travel on this journey as we seek to establish Gladstone as the major industrial port precinct on Australia’s eastern seaboard.

Ian Brusasco AMChairman

We have come through a challenging 12 months but there is still a long distance to travel on this journey

YEAR IN REVIEW | Chief Executive Officer's review | Gladstone Ports Corporation | Annual Report 2010/11 | 13

01 | YEAR IN REVIEW

The year 2010/11 was one of extreme economic highs and lows.It was the year in which the economic future of Gladstone Ports Corporation gained a major boost with two LnG projects, the Queensland Curtis LnG plant and the Gladstone LnG plant, receiving the green light from their owners.On the other hand, the devastating summer floods wreaked havoc on Gladstone’s coal exports with some 13mt of export being lost in the second half of the financial year causing port trade to retreat for the first time in living memory.

This dredging project is a major component of the Western Basin Dredging and Disposal Project Approval for 46 million cubic metres granted by the Australian Government in October 2010. The approval is the largest ever granted in Australia and its strict conditioning is intended to ensure the dredging project is a model for future dredging projects in terms of its mitigation of environmental impacts, its strict monitoring and its suite of environmental offsets.

Enhancing the harbourThe development of Western Basin port facilities will be accompanied by a harbour enhancement package to ensure the expansion is sustainable. During the year, we developed and received approval for measures to avoid or minimise the environmental impacts of dredging and assist in maintaining the harbour as a viable recreational and commercial fishery. A $250 million management plan was developed to reduce the impact of dredging activities on seagrass meadows. Other measures included $17 million in funding to support projects that enhance the local fish habitat and fisheries, protects marine mega fauna and migratory sea birds; rehabilitates wetlands; enhances and restores endangered species habitats and preserves in perpetuity 5,000ha of Strategic Port Land at Port Alma. This land is adjacent to the State marine Park and protected terrestrial areas and is a valued nursery for many marine species. See Our environmental management (page 51) for further information.

Improving safety trendA committed and proactive approach to safety at our three precincts – the Port of Gladstone, Port Alma and the Port of Bundaberg – has resulted in an improving safety trend.

This improvement came too late to prevent our safety management system rating from being downgraded to four stars at the end of 2009/10. Accreditation for our AS4801 Safety management System in the coming year will provide further impetus to improve our safety record.

We experienced 5 LTIs during 2010/11, giving us a Lost Time Injury frequency Rate (LTIfR) of 3.49 compared to 4.90 in 2009/10. Our goal for 2011/12 is to reduce LTI’s to zero in line with our commitment to ‘Zero harm’. See Our safety (page 72) for more information.

Developing the Western BasinThe Western Basin master Plan outlines a 30 year development plan which facilitates up to 30 berths making it the most important future port industry sea basin on the eastern seaboard of Australia.

The announcements by QCLnG and GLnG during 2010/11 of their projects to construct four (4) LnG production trains costing some $16 billion has resulted in associated activity to develop the Western Basin.

A $1.4 billion dredging project to develop construction docks, material off-load facilities, berth pockets, swing basins and shipping channels for the LnG industry has commenced. A total of 25 million cubic metres of material will be removed from the harbour with 20 million cubic metres placed in the fisherman’s Landing reclamation area and 5 million cubic metres in the East Banks dredging spoil area.

Chief Executive Officer’s review

PICTURED: LEO ZUSSInO, ChIEf ExECUTIvE OffICER

14 | YEAR IN REVIEW | Chief Executive Officer's review | Gladstone Ports Corporation | Annual Report 2010/11

PICTURED: PRInCIPAL, OPERATIOnS ExCELLEnCE, BERnIE mUIR BRInGS 34 yEARS Of ExPERIEnCE TO hIS POSITIOn AT RGTCT

Historic trade downturnfor the first time in living memory we experienced a downturn in trade through the Port of Gladstone compared to the previous year, due to the major Central Queensland flooding in December and january. We recorded a fall in coal exports of 7.2mt compared with 2009/10, which was down 13.4mt on forecasts. The impact of the floods and the resulting mine and rail closures was significant. In December 2010, we exported almost 5.7mt of coal while in january 2011 our throughput had dropped to 1.8mt. Our total port throughput was 76.4mt, down 13.4mt on forecasts and 7.0mt down from 2009/10 figures.

Both Port Alma and the Port of Bundaberg recorded increased throughput figures for the year, with Port Alma achieving a new record of 323,500t. See Our trade (page 28) for more information.

Our environmental performanceWe work to continually improve our environmental performance through

the application of our EmS. This system will undergo a complete re-certification audit in 2012 to assist us in furthering our ability to identify, understand and manage the environmental impacts of our operations. During the year, we came to the understanding that our air quality monitoring results at Barney Point Coal Terminal (BPCT) was not an accurate indication of impacts on the community. Department of Environment and Resource management (DERm) is in agreement with GPC and together we are looking to resolve this issue.

See Our environmental management (page 50) for more information.

Operating efficientlyDuring 2010/11, we continued to focus on reviewing our processes to deliver further operational efficiency and responsible environmental outcomes. We coordinated projects and initiatives such as planned shutdowns with our customers and stakeholder groups to ensure we met their requirements. During the year we developed outage schedules looking ahead two years to assist in facilitating projects such as

the process control technology upgrade. The dramatic decline in coal exports in the first five months of 2011 created the opportunity to perform significant planned and future maintenance work ahead of time. See Our operations (page 34) for more information.

Communication with our customers is vital to ensure they are well informed on our daily operations and future plans. This will be enhanced further in 2011/12 when we implement a web-based operational performance metric and measurement system to provide customers with accurate, responsive reporting. See Our customers and markets (page 24) for further details.

Retaining our workforceOur employee numbers remained constant during the year as we faced the challenge of retaining skilled workers in a highly competitive employment market. As at 30 june 2011, we employed 674 people at our three port precincts. A record 74 percent of our workforce participated in our biennial Corporate Image Study last year. They indicated areas within the organisation that we need to

Year in review | Chief Executive Officer's review | Gladstone Ports Corporation | Annual Report 2010/11 | 15

01 | Year in review

improve on and a site wide process is now underway to comprehensively address their concerns. GPC introduced an Indigenous Employment Policy in late 2010 setting specific targets for the training and employment of Indigenous workers. The policy is part of our Reconciliation Action Plan which has a goal of achieving a five percent Indigenous employment rate by 2020. See Our employees (page 66) for further information.

engaging the communityIn August 2010, GPC held its Inaugural Botanic to Bridge Family Run and Healthy Living Expo. The event was an outstanding success with over 4,000 participants. The family run/walk from the Tondoon Botanic Gardens to Gladstone’s Marina, followed by a healthy living expo at the Marina encouraged a focus on healthy active lifestyles and reducing obesity in our society. Almost $50,000 was provided to Gladstone’s schools and the Tannum Sands Lifesavers to promote healthy living. Work on the second edition of our five part history series also continued during the year, while regular

updates about the port’s growth and activities in the Western Basin |were communicated to the public through local media. See Our community involvement (page 60) for more information.

The year aheadGPC is heading into a heightened period of port development to facilitate the LNG projects. It is also a period of substantial port planning as we prepare for the development of a second shipping channel for the Port of Gladstone and plan the long-term future for Port Alma and the Port of Bundaberg.

We will continue to maintain open communication on the port’s activities, including inviting residents to travel with us to the Western Basin to |witness the development first hand.

Other continuing priorities will be to improve our safety culture and LTI record, in addition to improving those aspects of the organisation our employees have highlighted as essential for better business performance.

acknowledgementsI would like to thank each and every member of our workforce for their commitment to GPC in 2010/11. Our expansion and planning activities during the year have required energy, diligence and care and as we proceed through this significant growth period over the coming decade the skills of our workforce will be fully employed.

I also thank our shareholding Ministers’ departments for their important contribution to our business.

Finally, I would like to thank our Chairman, Ian Brusasco AM, for his strong leadership of the Board at this time and our Directors for the experience and knowledge they bring to their duties of guiding the Gladstone Ports Corporation through this dramatic period of expansion.

Leo ZussinoChief executive Officer

16 | Year in review | Commercial General Manager's review | Gladstone Ports Corporation | Annual Report 2010/11

Commercial General Manager’s review

Targets 2011/12achieve an after tax profit of $48.0 million

Provide for a $39.0 million dividend

achieve an 5.9% return on equity

achieve a 6.6% return on assets

Outcomes 2010/11achieved after tax profit of $55.3 million (2009/10: $46.5 million)

Provided for a $42.1 million dividend (2009/10: $35.1 million)

achieved 8.2% return on equity (2009/10: 6.6%)

achieved 6.6% return on assets (2009/10: 5.9%)

Despite the mid-financial year impacts of flooding in Queensland, GPC’s financial performance for the year has exceeded the targets set in the annual Statement of Corporate Intent.

Combined imports and export tonnages in the financial year totalled 77.0 million, 76.4 million through the Gladstone Port, 0.3 million through Port Alma, and 0.3 million through the Bundaberg Port.

The flooding seriously impacted coal tonnages, with exports at 53.2Mt, well below the budgeted 67Mt, and 7.0Mt below the 2009/10 figure.

Other imports and exports totalling 23.8Mt remained stable and consistent with expectations, although growth appears subdued due to world economic conditions.

The development of the LNG industry within Gladstone presented opportunities throughout the year for the establishment of additional land-based infrastructure to support construction requirements and dredging works to support associated marine construction activity. Our project teams undertook a series of structured recoverable works tasks, which has resulted in an increase in revenue and equivalent expense

Revenue for the financial year was $492.1 million. $186.6 million of this was derived from the recoverable contract works referred to above, with normal trading revenue amounting to $299.6 million. Trading revenue improved by 3.9%.

The flooding in December 2010 and January 2011 caused an estimated $7 million of damage, mainly to shipping channels in Port Alma and Bundaberg with minimal impact in Gladstone.

The cost impact of the flood in the financial year amounted to $2.1 million, with approximately $4.9 million of channel and bund restoration works still to be incurred next financial year.

Earnings before interest and tax amounted to $113.5 million (2009/10: $95.1 million). Net gains and losses from revaluations and impairments amounted to a $1.0 million loss. This is an improvement over last year where GPC suffered a net $6.7 million loss from revaluations and impairments. Net profit after tax was $55.3 million.

PICTURED: MIkE GALT, COMMERCIAL GENERAL MANAGER

YEAR IN REVIEW | Commercial General Manager's review | Gladstone Ports Corporation | Annual Report 2010/11 | 17

01 | YEAR IN REVIEW

Assets$34.2 million of capital was re-invested in the business with the major items being:

• $3.3 million – design and preliminary work for a new stockpile at the RG Tanna Coal Terminal (RGTCT)

• $5.6 million – process control upgrades

• $4.4 million – replacement dozer units

• $1.9 million – the development of a new boat ramp

• $4.0 million – land acquisitions

• $1.4 million – environmental improvement projects.

A further $6.8 million was expended on continued facilitation of works and approvals for the planned new coal terminal at Golding Point in the Gladstone region. The project, Wiggins Island Coal Terminal, is underwritten by a consortium of eighteen coal companies and has incurred expenditure of $113.8 million to date.

Revaluation of land under the requirements of AAS13140 Investment Properties had a net profitable effect of $3.9 million.

Asset value impairments and impairment reversals for the financial year netted to a $4.9 million loss, including a further impairment of the Port of Bundaberg of $3.3 million. Since the acquisition of Bundaberg in november 2009, $12.9 million has been written down (impaired) due to the lack of trade for this business centre.

Cash assets at the end of the period were $132.6 million, due to the funding mechanisms in place for both the Wiggins Island Coal terminal and the LnG recoverable works projects. These agreements, which allow for payment in advance of works being undertaken, will inflate GPC’s cash assets during the term of the programs.

GPC reached agreement with the LnG industry over its works funding mechanism during the financial year.

Property, plant and equipment assets for the 2011 financial year totalled $1,324.5 million ($1,350.0 million in 2010). Total assets were $1,822.6 million.

Shareholder transactionsA dividend of $42.1 million, equivalent to 80% of after tax profit (after arrangements for revaluations), has been provided for in the 2011 accounts. The dividend is in line with policy and is consistent with prior years.

Our return on equity is 8.2%.

Our return on assets is 6.6%.

The return on assets is impacted by the inclusion and the accounting treatment of the Wiggins Island Coal Terminal project facility and the funding arrangements in place for dredging works for the LnG industry.

Objectives Indicators 2007 2008 2009 2010 2011Change 2010 to

2011 (%)Target

Variance actual to

target (%)maximise shareholder return through the provision of quality commercial facilities and services

Operating revenue ($m)

224.1 265.5 292.2 337.9 492.1 45.7 303.0 62.3

EBIT ($m) 53.6 81.8 110.9 95.1 113.5 19.3 92.7 22.4

Total assets ($m) 1,252.2 1,443.8 1,611.0 1,613.1 1,822.6 13.3 1,529.0 19.5

Return on assets (%)

4.7 6.1 7.3 5.9 6.6 11.9 5.9 11.9

Capital investments ($m)

407.8 139.9 109.5 78.6 34.2 (56.5) 119.0 (71.3)

Dividends ($m) 5.0 26.9 33.2 38.0 42.1 10.8 34.0 23.8

Taxes paid to all taxing authorities

($m) excluding GST3.9 13.3 19.9 19.8 33.3 68.2 19.0 75.3

Maximising shareholder returns

Our purchasing policy continues to support local businesses, regionally and within Queensland

PICTURED: ThIS TABLE fEATURES SOmE Of OUR kEy fInAnCIAL PERfORmAnCE InDICATORS fOR 2010/11

18 | YEAR IN REVIEW | Commercial General Manager's review | Gladstone Ports Corporation | Annual Report 2010/11

Key Performance Indicators – 2011 financial year

Actual result SCI Target Variance actual

to target (%)Revenue ($m) 496.7 305.9 62.4

Operating expenses (including depreciation) ($m)

417.7 213.2 95.9

EBIT ($m) 113.5 92.7 22.4

Cash from operations ($m) 107.8 91.2 18.0

Return on assets % 6.6 5.9 11.9

Return on equity % 8.2 5.2 57.7

Debt/equity ratio % 41.3 37.2 11.0

Current ratio (times) 1.4 1.1 45.5

Interest cover (times) 3.3 2.9 27.3

Tonnes (million) 77.0 90.4 (14.8)

The table below depicts financial information against our 2011 Statement of Corporate Intent:

Statement of Corporate Intent (SCI) 2010/11

Revenue

Revenue has increased significantly in 2010/11. All categories of commercial shipping revenue remained steady in 2010/11. Recoverable works increased significantly as a result of several LnG industry related projects undertaken on behalf of various LnG proponents.

EBIT

EBIT was 22% higher than budget in 2010/11. This was due to movements in revenue and expenses as depicted in the graphs below.

Revenue

Expenses

Expenses have increased significantly in 2010/11, primarily as a result of the cost of undertaking recoverable works for several LnG related projects. finance costs also increased following a reset of GPC’s competitive neutrality fee with QTC.

Expenses

250

200

150

100

50

0

250

200

150

100

50

0

$m

3.57

9

1.496

Oth

er

Carg

o ha

ndlin

g21

5.16

2

212.

983

Actual

Budget

Actual

Budget

Actual

Budget

39.0

69

42.4

46ve

ssel

ha

ndlin

g

har

bour

du

es37

.922

39.14

2

Rec

over

able

w

orks

186.

113

0.60

6

Rev

alua

tions

3.90

3

05.44

2

6.33

5Pr

oper

ty

inco

me

5.55

8

2.89

3In

tere

st

Revenue category

Oper

atio

nal

244.

610

Empl

oyee

89.15

5

86.3

06

77.8

63

fina

nce

34.4

72

31.5

00

Depr

ecia

tion

44.4

64

49.0

57

4.99

6

0 0 0

Expense category

Impa

irmen

t

Othe

r

$m

Profitability

$m

160

140

120

100

80

60

40

20

0

2011

157.9

87

141.7

37

EBITDA

113.

523

92.6

80

EBIT

YEAR IN REVIEW | Commercial General Manager's review | Gladstone Ports Corporation | Annual Report 2010/11 | 19

01 | YEAR IN REVIEW

Financial performance 5-year analysis

EBIT

The upward trending EBIT continued in 2010/11. Whilst additional assets were impaired at Port of Bundaberg this was offset by upward revaluations of investment properties.

EBIT

Return on assets

following a decline in 2009/10 due to net impairments and revaluations, return on assets increased in 2010/11.

Return on assets

NPAT

nPAT continued its 5 year upward trend in 2010/11 following abnormal results in 2008/09 and 2009/10. The 2010/11 profits were not significantly impacted by either revaluations or impairments and reflect profits from normal business trading.

NPAT

Return on equity

Return on equity increased in 2010/11 following a decline in 2009/10. This was a result of increased profitability and no changes in share capital and minor movements in reserves for the year.

Return on equity

Capital expenditure

Capital expenditure continued to decrease in 2010/11 as a result of the completion of detailed design for stage 1 of the Wiggins Island Coal Terminal project. Increased capital spending is forecast in the next five years as new industry projects come on line in Gladstone.

Capital expenditure

Total assets

Total assets increased significantly in 2010/11 as a result of monies invoiced and received in advance in relation to the LnG dredging recoverable works being undertaken by GPC on behalf of various LnG proponents.

Total assets

120

100

80

60

40

20

0

$m

2007

53.6

06

2008

81.7

63

2009

110.

937

year

95.0

82

113.

523

2010

2011

2011

2011

year

60

50

40

30

20

10

0

$m

2007

27.3

98

2008

39.0

32

2009

55.6

20

46.4

82

55.2

80

2010

year

1,800

1,600

1,400

1,200

1,000

800

600

200

0

$m

2007

1,252

.200

2008

1,443

.803

2009

1,610

.996

1.613

.131

1822

.641

2010

2011

year

450

400

350

300

250

200

150

100

50

0

$m

2007

407.8

00

2008

139.

949

2009

109.

538

78.6

41

34.2

02

2010

year

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

$m

2007

4.70

0

2008

6.06

5

2009

7.263

5.89

8

6.59

9

2010

2011

year

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

$m

2007

3.70

0

2008

5.56

8

2009

7.662

6.64

3

8.20

7

2010

2011

20 | YEAR IN REVIEW | Commercial General Manager's review | Gladstone Ports Corporation | Annual Report 2010/11

Dividends and taxes

Interest bearing liability

GPC normal trading loan remained steady with prior years. The Wiggins Island Coal Terminal Project was reduced by $7m following a capital repayment from stage 1 proponents.

Interest bearing liability

Shareholder equity

Contributed equity remained static in 2010/11 and the asset revaluation reserve reduced by $0.4m following the reclassification of some land as investment property. Retained profits have continued to rise steadily over the last 5 years to $98.4m

Shareholder equity

Year

700

600

500

400

300

200

100

0

$M

2007

346.

769

2008

454.

769

2009

547.9

94

591.5

23

584.

723

2010

2010

year

1,000

900

800

700

600

500

400

300

200

100

0

$m

2007

2008

2009

2010

2011

• Issued capital • Asset revaluation reserve • Retained profits

41.28940.583 60.909

61.049 60.634

41.69253.924 76.672

85.157 98.354

675.943 725.943 725.943 673.558 673.558

Dividends and taxes

The 2010/11 dividend showed an increase of $4.1m on the previous year. Our income tax payable continues to increase as GPC profits increase.

2.104

3.785

1.0692.623

year

80

60

50

40

30

20

10

0

$m

4.9800.200

26.880

7.806

13.39513.487 24.828

0.6490.713

3.0680.038

3.2510.281

3.6083.9025

2.467

2.990

33.24337.997 42.083

2007

2008

2009

2010

2011

• Dividends

• Income tax payable

• Land tax

• Payroll tax

• Competitive neutrality fee

Operating expensesOur single largest expense in the financial year was contractor costs, due to the infrastructure and dredging works for the LnG industry and facilitation of the Wiggins Island Coal Terminal.

Operationally, our largest expense was labour at $89.15 million, an increase of 4.1% on the 2010 year. The number of full Time Equivalent employees totalled 668 (2009/10: 678).

Suppliers, local purchasesOur purchasing policy continues to support local businesses, regionally and within the State of Queensland.

Total procurement for the year amount to $112.3 million, $82.0 million or 73% was directed towards regional suppliers.

YEAR IN REVIEW | Commercial General Manager's review | Gladstone Ports Corporation | Annual Report 2010/11 | 21

01 | YEAR IN REVIEW

2011$M

2010$M

2009$M

2008$M

2007$M

Income statement

Operating revenue 496.748 337.929 307.317 265.543 224.059

Operating expenses including employee expenses

333.765 193.615 148.980 142.471 119.236

Depreciation 44.464 42.624 43.397 37.255 24.862

Impairment/devaluations 4.996 6.022 3.960 3.771 26.246

EBIT 113.523 95.082 110.937 81.763 53.606

finance costs 34.472 30.136 31.648 26.031 14.473

Income tax expense 23.771 18.464 23.669 16.480 11.735

nPAT 55.280 46.482 55.620 39.032 27.398

Dividends 42.083 37.997 33.243 26.880 4.980

Balance sheet

Total assets 1,822.641 1,613.131 1,610.996 1,443.803 1,252.200

Total liabilities 994.845 793.367 747.500 623.300 493.300

net assets/shareholders equity 832.546 819.764 863.500 820.500 758.900

Revenue composition

harbour dues 37.922 38.879 34.098 31.437 30.036

Tonnage rates 31.877 32.536 29.985 26.283 20.121

Other shipping 7.192 7.594 7.348 6.690 5.527

handling charges 215.162 201.920 202.029 173.272 123.094

Property income 5.442 5.483 4.854 2.889 2.946

Small craft 2.050 1.873 1.754 1.585 2.920

Interest 5.558 4.415 6.963 2.420 7.193

Recoverable 186.113 44.591 4.721 8.900 1.200

Other 1.529 0.638 0.816 2.231 0.783

Revaluations 3.903 - 14.749 9.836 30.239

Total 496.748 337.929 307.317 265.543 224.059

Trade creditors at year end were $57.0 million, an increase on the prior year (2009/10: $13.0 million) largely as a consequence of the recoverable works project activity for the LnG and coal industries.

LoansLoans with the Queensland Treasury Corporation reduced marginally. A partial repayment of the loan associated with the Wiggins Island Coal Terminal facility resulted in the balance of these Ioans decreasing from $591.5 million to $584.7 million. no new loans were transacted during the year.

The year aheadThe year ahead will see us continue to aid the development of the proposed WICT and to continue to undertake

infrastructure works for the LnG industry.

A number of potential new industry growth proposals will present challenges to the financial structuring necessary to support new industry infrastructure.

Our operations and export/import trade is expected to return to normal growth patterns following the coal industry’s recovery from the 2010/11 weather events.

Our key challenges for 2012 are to:

• continue to increase tonnage throughput to generate improved cost outcomes on coal assets

• contribute to maximisation strategies to ensure the best possible throughput is achieved for GPC

• continue to facilitate port trade opportunities for existing and new customers to improve both their revenues and ours

• maintain efficient cost structures and achieve our financial targets as established in our 2011/12 Statement of Corporate Intent.

Mike GaltCommercial General Manager

22 | BUSINESS | Gladstone Ports Corporation | Annual Report 2010/11

This period of expansion and trade diversification will see us strengthen our position as one of Australia’s leading ports

BUSINESS | Gladstone Ports Corporation | Annual Report 2010/11 | 23

02 BUSINESS

Our customers and markets 24

Our trade 28

Our operations 34

Our Port security 37

02 | BUSINESS

PICTURED: RGTCT hAS fOUR BERThS WAITInG TO RECEIvE ThESE mASSIvE COAL ShIPS

24 | BUSINESS | Our customers and markets | Gladstone Ports Corporation | Annual Report 2010/11

Our customers and market

Targets 2011/12Implement web-based operational performance metric and measurement system to provide accurate, responsive reporting for customers and stakeholders about train unloading and ship loading

Continue implementation of Continuous Improvement Program and Capricorn Coal Chain Maximisation Project, with specific focus on coal throughput growth and dozer efficiency/cost control

Continue planning for operational readiness for Wiggins Island Coal Terminal around improving existing supply chain. Includes modelling impact of third railway line between Gladstone and Rockhampton

Outcomes 2010/11Improved reporting for coal customers about port performance via Port Operations Working Group

Reduced number of very dry coal trains by 80% through mine/terminal cooperation consequently improving unloading time.

Implemented enhanced data capture system for trains and ships to improve quality of information to stakeholders

Improved ship vetting process to reduce delays caused by seaworthiness inspections

Received positive customer feedback in Corporate Image Study

Port and customers working togetherOur port operations not only benefit our customers but also facilitate the growth of Queensland’s economy. We aim to deliver business efficiency and assist growth in the export and import of products through the development of good relationships with our customers and by aligning our services with their needs. In pursuing this goal, our continued focus is on maximising the entire supply chain from mine to port.

however, in 2010/11 no amount of work with our customers could offset the impacts of wet weather.

Coal exports continued growing from 2009/10 into 2010/11 with tonnages running at 66 million tonnes per annum (mtpa) from july through to December. Rain from September through to mid-December impacted slightly on mine production, but paled into insignificance when the rain warnings issued on 23 December proved accurate.

We worked with our customers to achieve an 80 % reduction in the number of dry coal trains

BUSINESS | Our customers and markets | Gladstone Ports Corporation | Annual Report 2010/11 | 25

02 | BUSINESS

Around 500mm of rain fell across Central Queensland with all coal mines struggling to deal with the deluge. At our end of the supply chain this resulted in almost empty coal stockpiles at the Port of Gladstone and a 13mt drop in coal exports.

As the weather affected all Queensland coal exporters, buyers sourced coal from other countries with the United States of America increasing its exports by approximately 20mt in the first half of 2011. Caution about Queensland’s mines recovering from the flooding has seen many buyers continue to source coal from other markets. A return to 2010 coal export levels is not expected until after October 2011.

Existing and potential customers regularly visit and tour the Port. This provides an opportunity for them to inspect our handling facilities and experience our capabilities first hand. The tours help us to foster open and

transparent relationships and provide a platform for informal discussions about existing and potential business opportunities.

During the year, 688 of our customers (2009/10: 103) from 105 (2009/10:14) companies visited the Port of Gladstone to meet with management and tour our facilities.

We continue to work closely with our coal customers and rail operators through our Continuous Improvement Program and Capricorn Coal Chain maximisation Project. These two initiatives are vital to reviewing and improving our operational practices, level of service, efficiencies, cost structures and coal loading facilities.

Consultation with our customers during the year helped to achieve an 80% reduction in the number of very dry coal trains. These trains need water added during unloading to eliminate dust which slows down the unloading time.

mine/terminal cooperation around this issue that involved our unloading supervisors and our Quality Assurance team was successful in reducing the number of non-conformances.

We also improved our ship vetting process during the year to reduce delays caused by seaworthiness inspections. GPC uses RightShips to check each vessel against more than 100 criteria such as age, crew competence, incidents and structural integrity. In 2010, we added 20 additional criteria regarding recent loading performance at the Port of Gladstone and other ports. We are working with other Australian coal ports to align the criteria to create a national bulk loading standard.

Our 2010 Corporate Image Study gave us valuable feedback about our services and facilities. Twenty two customers and stakeholders, including coal and non-coal customers, shipping agents and other operators were interviewed about their relationship with GPC and our overall reputation. They regarded our performance as higher than average compared with other Port authorities.

Their feedback highlighted the strength of our relationships with customers, as well as the value of our strategic and long term planning for growth of the Port. They also acknowledged our strong operational performance and contribution to the Gladstone community.

The main concern for customers and stakeholders was GPC’s ability to manage growth projects while continuing to provide a positive level of performance.

PICTURED: COAL TOnnAGES WERE DOWn DURInG 2010/11 BUT ARE ExPECTED TO RETURn TO ThE PREvIOUS yEAR’S ExPORT LEvELS LATER In 2011

26 | BUSINESS | Our customers and markets | Gladstone Ports Corporation | Annual Report 2010/11

UnloadingDS1Total Tonnes 532Tonnes per hour 283

DS2Total Tonnes 830Tonnes per hour 5199

DS3Total Tonnes 0

Tonnes per hour 0

LoadingSL1Total Tonnes 6951Tonnes per hour 0

SL2Total Tonnes 0Tonnes per hour 0

SL3Total Tonnes 0

Tonnes per hour 0

Consulting with our customersDuring 2010/11, we consulted with our customers and agreed on using new, operational performance metrics and measures. In the coming year we intend to improve our performance transparency using web-based systems that provide customers with a dynamic view of our performance metrics. A computer graphic, which has been undergoing development and testing during the year, will show train unloading and shiploading rates live as they’re happening so customers can see how their product is being handled.

Informing our customersWe communicate with our customers about current and future port activities and plans using a variety of communication tools, such as:

• Weekly shipping status reports

• Bi-monthly port performance meetings with shipping companies

• Quarterly customer executive meetings

• Our website www.gpcl.com.au• Our quarterly newsletter Port Talk

• Our Annual Report.

The POWG consists of port and shipping company representatives and has contributed to improved reporting of GPC’s performance to our coal customers. It discusses issues occurring at the port and how they impact on local coal company representatives. The problems may be elevated to a higher level to be solved if necessary. The group also discusses the measures and performance reports that are required and is always looking to the future.

next year we aim to improve the quality of data around train unloading and ship loading for stakeholders. Our operators in the control room will be able to validate data as these stages happen, by editing and inserting comments about any incidents or delays that may occur during the process. This allows the information to be all in the one place in relation to our business network and for customers to receive accurate information about performance.

Our customers also have access to Port Information handbooks for the Port of Gladstone, Port Alma and Port of Bundaberg, a Coal Port brochure and a Port of Gladstone brochure. Each publication is available in hard copy from our Communications department and on our website - www.gpcl.com.au

Our website continues to evolve as a key tool to improve our communications via a medium that is accessible to our existing and prospective customers, the communities we work within, the general public and our employees. The website’s contemporary and user friendly design provides easy access to information on our operations including current shipping schedules; port charges; statistics; trade performance; tides and weather; port access card applications; procurement information; details of various cargoes handled; corporate and community publications and the latest news. To improve business relationships and understanding with our key international customers, hyperlinks to japanese, korean and Chinese versions of the website will be available via our site’s homepage in the coming year.

Our managers maintain regular contact with customers by telephone, email and through personal meetings.

We also host a number of informal gatherings annually. These gatherings provide a forum for existing and prospective customers to meet with members of our management team and other port customers and discuss issues regarding our ports.

ThIS COmPUTERISED GRAPhIC IS BEInG DEvELOPED TO PROvIDE REAL TImE DATA fOR CUSTOmERS AnD STAkEhOLDERS ABOUT COAL TRAIn UnLOADInG AnD ShIP LOADInG RATES. IT ShOWS WhICh COAL IS COmInG fROm WhICh STOCkPILE AnD ThEn ThE RATE IT IS BEInG LOADED OnTO ThE ShIP In BERTh

BUSINESS | Our customers and markets | Gladstone Ports Corporation | Annual Report 2010/11 | 27

02 | BUSINESS

Looking ahead2011/12As the world looks to Australia to meet its energy needs, demand on the existing Central Queensland export infrastructure will continue to grow.

During 2011/12, we will focus on maximising the supply chain system interfaces, working closely with mines, Queensland Rail and Pacific national to optimise existing assets, while expanding and developing new ones.

Strategic groups developed over the past year for each of these areas face the mammoth task of managing the coming changes, amidst the added challenges of competing projects occurring in the Gladstone area.

PICTURED: On AvERAGE, 28 TRAInS ARE UnLOADED EACh DAy AT OUR TWO COAL TERmInALS – RGTCT AnD BPCT

28 | BUSINESS | Our trade | Gladstone Ports Corporation | Annual Report 2010/11

Our trade

Targets 2011/12Achieve coal exports of 67.0Mt through Port of Gladstone

Achieve total port throughput of 93.8Mt at Port of Gladstone

Achieve total port throughput of 300,000t at Port Alma

Achieve total port throughput of 300,000t at Port of Bundaberg

Outcomes 2010/11Achieved total coal exports of 53.2Mt (2009/10: 60.4Mt) at Port of Gladstone (Forecast 2010/11: 67.0Mt)

Achieved total port throughput of 76.4Mt (2009/10: 83.4Mt) at Port of Gladstone (Forecast 2010/11: 89.8Mt)

Achieved total port throughput of 323,500t (2009/10: 285,415t) at Port Alma (Forecast 2010/11: 250,000t)

Achieved total port throughput of 313,094t at Port of Bundaberg (Forecast 2010/11: 299,000t)

Achieved actual budgeted throughput of 77.0Mt at Port of Gladstone, Port Alma and Port of Bundaberg

Historic downturn During 2010/11 we experienced a reduction in total tonnes handled for the first time in the Port of Gladstone's history. A total of 76.4mt of cargo was handled, down 13.4mt on forecasts and 7.0mt down from 2009/10 figures.

Analysis of actual figures after the first six months of trade showed the port to be online to achieve throughput of 87.4mt of cargo, marginally less than the original target. It seemed our confidence in our forecasting ability would be supported by performance. Then the rain started …

Extreme weather events – three cyclones (preceded, accompanied and followed, by) flooding rains provided challenges across much of Queensland.

It particularly affected our industry customers and supply chain … between flooded mine sites, de-stabilised road networks and washed out rail lines the Summer of 2011 will be memorable not only for its ability to create an historic downturn for our port, but for its ability to create history for Queensland.

Despite these challenges, which caused disruptions not only to producers but also to the road and rail networks supplying cargo to the Port of Gladstone, our coal exports, whilst severely disrupted, accounted for 69.6% of total port throughput; and the alumina industry continued to provide strong support to overall figures with total tonnes representing 24.4% of total port throughput.

Port industriesPort of GladstonePort of Gladstone has 6 main wharf centres comprising 16 wharves:

GPC - Owned and operated

1. BPCT – one wharf

2. RGTCT – four wharves

3. Auckland Point – four wharves GPC-owned and operated by others

4. Boyne Wharf operated by Boyne Smelters – one wharf

5. South Tree wharves operated by Queensland Alumina Limited – two wharves

6. fisherman’s Landing operated by multiple companies – four wharves.

BUSINESS | Our trade | Gladstone Ports Corporation | Annual Report 2010/11 | 29

02 | BUSINESS

RGTCT continues to lead the Port of Gladstone’s wharf centres with a total of 49.3mt of coal exported through the facility. Though this represents an 11.4% decrease on 2009/10, the terminal was on target to experience record coal exports of approximately 58.7mt before the Queensland floods occurred.

Our wharf centres handle diverse products. Generally those that did not rely on products sourced from weather-affected areas returned improved results.

• South Trees East wharf handled approximately 3.3mt of alumina and associated products in 2010/11. This amounted to total throughput 16.0% above forecasts

• South Trees West wharf handled over 10.0mt of bauxite and associated products. This represented an increase of 3.0% on 2009/10 but a shortfall of 7.1% on original forecasts for 2010/11

• South Trees Wharves combined handled a total 13.6mt of cargo throughout 2010/11, 2.3% below expectation

• Boyne Wharf achieved 0.6mt throughput during 2010/11, up 5.0% on last year’s figures. All products handled through this facility experienced an increase in tonnes on the previous year’s figures with aluminium exports leading the way

• fisherman’s Landing Wharf centre comprises four wharf facilities

• fisherman’s Landing Wharves #1 and 2 handled 5.4mt of cargo during 2010/11. Strong increases in

bauxite and caustic soda imports combined with higher alumina exports saw total cargo handled increase by 0.3mt on the previous year, 8.6% above forecast

• fisherman’s Landing Wharf #4 achieved 1.4mt throughput during 2010/11. An increase in cement exports of 14.7% helped offset weaker cement clinker exports which were down 26.7% on the previous year. Overall, total tonnes for 2010/11 were 3.1% below forecast

• Auckland Point comprises four, commodity specific wharves

• Auckland Point Wharf #1 handled 190,727t during the financial year. Despite a strong increase in deadburn magnesia exports (up 51%), total tonnes for the year were down 2.1% as a result of the flood impacts on calcite production

• At Auckland Point Wharf #2 tonnes handled exceeded 2010/11 forecasts by 4.1%. This result was due to consistent Asian market demands for chick pea, sorghum and wheat

• Auckland Point Wharf #3 handled 0.8mt of cargo during 2010/11. This represented a 1.8% decrease from the previous year which can be attributed to the reduced demand for diesel supplies from the mining sector due to the floods

• Auckland Point Wharf #4 achieved 0.3mt throughput during 2010/11, up 66.6% on 2009/10 figures and 45.6% above forecast. These strong results are expected to continue in coming years as this wharf handles project cargo required for the construction of LnG plants on Curtis Island

PICTURED: ThE EnGInE ROOm Of ThE DREDGE, 'BIG BOSS' IS A mAZE Of PIPES AnD hOSES

l Coal industry

l Aluminium industry

l Cement industry

l Other cargoes

l Petroleum industry

l Aluminium industry

l Grain industry

Financial year 2010/11 throughput by industry

ALUMINIUM INDUSTRY 0.8%PETROLEUM INDUSTRY 1.3%

OTHER CARGOES 1.8%

CEMENT INDUSTRY 1.8%COAL INDUSTRY 69.6%

ALUMINIUM INDUSTRY 24.4%

GRAIN INDUSTRY 0.3%

30 | BUSINESS | Our trade | Gladstone Ports Corporation | Annual Report 2010/11

• Barney Point Wharf handled 4.0mt of coal during 2010/11. Coal exports through Barney Point were also severely disrupted by the weather events of early 2011. This contributed to a 21.5% below forecast result in total tonnes exported and 0.8mt down on 2009/10 figures.

Port Alma’s record throughput

Port Alma Shipping Terminal has three wharf facilities. Berths 1 and 2 are suitable for general cargo operations whilst berth 3 is dedicated to tallow/fuel cargoes.

Ammonium nitrate throughput accounted for 53.3% of the total port tonnes in 2010/11. Petroleum imports continued to increase with 67,146t handled, up 132.9% from 2009/10. A record 323,500t of cargo was recorded for the financial year which represents a new record for the Port Alma Shipping Terminal, 29.4% above forecast.

Port Alma was closed to commercial vessels as a result of the flooding in the fitzroy River in late December, early january. This event forced maritime Safety Queensland (mSQ) to conduct surveys to ascertain the extent of siltation in the channel before commercial traffic could recommence navigating the waterways. The fitzroy River flooding resulted in the closure of Port Alma to all commercial vessels for a period in excess of one month during the financial year.

Port of Bundaberg

The Port of Bundaberg is serviced by two main wharves:

• Sir Thomas hiley Wharf

• john T. fisher Wharf

The Sir Thomas hiley Wharf exported 280,071t of sugar for the financial year

2010/11. This figure was comparable with 2009/10 tonnages.

The john T. fisher Wharf imported 33,023t of molasses during 2010/11, which represented an increase of 93.3% on the previous year.

The combined tonnages from both wharves saw the Port of Bundaberg record a total throughput of 313,094t for the financial year 2010/11, an increase of 4.6% on the previous year.

The Port of Bundaberg suffered significant siltation in the Burnett River following on from Cyclone yasi and localised flooding in the region. As a result, a major dredging program has been undertaken to remove around 350,000m3 of dredge material which will allow the Port of Bundaberg to continue operating at forecast capacity. Despite this disruption, the port still managed to achieve a higher than expected result for the financial year.

Coal exportsCoal exports for 2010/11 were impacted significantly following the flooding that resulted from Queensland’s one in 100 year event with many coal mining operations declaring force majeure. Total coal exports fell by 7.1mt (12.0%) on the previous year but are expected to rebound strongly in 2011/12.

Coal exports to Gladstone’s largest world markets decreased significantly during 2010/11 because of the downturn in coal production. Exports to Asia decreased by 7.5mt (13.4%) with japan (whilst still remaining the number one importer of coal) experiencing a decrease of 3.5mt (15.6%). European markets recorded a decrease of 0.2mt (9.5%) in coal tonnes for the fourth year in a row while South American markets defied the trend to record an increase of 0.4mt (18.7%) for the financial year.

With coal exports decreasing by 7.1mt (12.0%) during the financial year, vessel numbers to RGTCT and BPCT were similarly affected. vessel numbers fell by 121 (16.0%) which indicated the size of coal vessels chartered during the past 12 months had increased. The average tonnes loaded onto a coal vessel during 2010/11 was 83,499t an increase of 3,829t (4.8%) on the previous year.

Port of Gladstone

The coal industry accounted for 69.7% of the port’s total throughput, with total exports of 53.2mt. The port yet again demonstrated its cargo handling flexibility:

• Alumina industry cargoes from Queensland Alumina Limited (QAL) and the Rio Tinto Alumina yarwun refinery contributed 24.8% of the port’s throughput. Bauxite showed modest gains with imports of 13.5mt, whilst alumina exports decreased by 0.4mt (10.0%) to 3.8mt for 2010/11. Caustic soda imports associated with the alumina industry of 1.5mt were up 4.2% on 2009/10 figures

• Cement Australia’s cargoes contributed 1.8% of total port throughput which represented a decrease of 3.7% from the previous year. Cement clinker exports decreased by 0.2mt (26.7%) but were offset through increases in cement exports 0.1mt (14.7%)

• An increase in ‘other cargoes’ of 28.5% was achieved in 2010/11 thanks mainly to caustic soda throughput at fisherman’s Landing 5, which saw an increase of 41.7% on the previous year.

Port Alma

The ammonium nitrate industry represented 53.3% of total cargo throughput at Port Alma in 2010/11, with 172,415t handled through the port.

Petroleum imports contributed 20.8% of total port throughput which represented an increase of 132.9% (38,313t) on 2010/11 figures.

Port of Bundaberg

Bulk sugar exports accounted for 89.5% of the port’s total throughput in 2010/11. Sugar exports totalled 280,071t which remained constant with 2009/10 figures.

molasses imports jumped by 193.3% in 2010/11to reach 33,024t.

PICTURED: DISCUSSInG ThE DAy’S WORk AhEAD On BOARD ThE ‘BIG BOSS’ DREDGE

Fisherman’s Landing #5

Bulk liquids

(Liquid ammonia/caustic soda)

Barney Point

Coal

South Trees East

Alumina

South Trees West

Bauxite

Boyne Smelter

Aluminium

Fisherman’s Landing #1/2

Bauxite

Alumina

Fisherman’s Landing #4

Cement products

RG Tanna Coal Terminal

Coal

Auckland Point

#1 Calcite/DBM

#2 Grain

#3 Petroleum

#4 Breakbulk/containers

2007Actual

2008Actual

2009Actual

2010Actual

2010Vessel No.

2011Actual

2011Vessel No.

2011Forecast

2011 Variance

2012 Forecast

Operations (Tonnes)Auckland Point #1 185,930 199,762 166,506 194,009 13 189,905 15 220,000 (13.7)% 175,000

Barney Point 6,294,954 4,683,307 3,806,303 4,794,105 81 3,977,559 64 5,070,000 (21.5)% 4,500,000RGTCT 45,213,331 49,447,054 52,396,680 55,602,406 678 49,269,928 576 62,000,000 (20.5)% 62,500,000Total operations 51,694,215 54,330,123 56,369,489 60,590,520 772 53,437,392 655 67,290,000 20.6% 67,175,000

Other Port (Tonnes)Auckland Point #1 6,673 - - 820 N/A 822 N/A - N/A -Auckland Point #2 156,269 22,318 446,449 239,292 14 260,218 17 250,000 116.8% 250,000

Auckland Point #3 863,809 929,112 992,602 863,114 89 847,353 91 891,000 (13.8)% 891,000Auckland Point #4 273,394 257,032 277,807 201,940 32 336,332 56 231,000 (1.1)% 231,000Boyne Smelter 611,393 589,194 625,706 575,431 58 604,255 59 620,000 (2.5)% 620,000

South Trees East 3,819,375 3,801,146 3,951,254 4,046,415 107 3,363,073 108 2,900,000 16.0% 2,900,000South Trees West 10,052,547 9,813,474 10,026,137 9,919,007 143 10,220,088 140 11,000,000 (7.1)% 11,000,000Fisherman’s Landing #1, 2 4,983,031 5,092,604 4,894,387 5,052,830 103 5,388,759 107 4,960,000 8.6% 4,960,000Fisherman’s Landing #4 1,584,589 1,446,305 1,273,383 1,409,355 85 1,357,088 88 1,400,000 (9.5)% 1,400,000Fisherman’s Landing #5 172,964 198,774 289,044 466,947 37 589,305 41 300,000 194.7% 300,000Total other 22,524,044 22,149,959 22,776,769 22,775,151 668 22,967,293 707 22,552,000 1.5% 22,552,000

Total Port of Gladstone 74,218,259 76,480,082 79,146,258 83,365,671 1,440 76,404,685 1362 89,842,000 (15.0)% 89,727,000

Port of Gladstone

BUSINESS | Our trade | Gladstone Ports Corporation | Annual Report 2010/11 | 31

Berths 1 and 2 – ammonium nitrate, explosives and containers

Berth 3 – tallow and petroleum products

* Individual cargoes are not budgeted for Port Alma

2007Actual

2008Actual

2009Actual

2010Actual

2010Vessel No.

2011Actual

2011Vessel No.

2011Forecast

2011Variance

2012Forecast

Commodities (tonnes)Petroleum - - 4,059 28,833 - 67,146 - -Ammonium nitrate 121,193 124,995 178,696 221,161 - 172,415 - -Explosives 7,735 7,295 11,017 6,289 - 11,445 - -Tallow 32,420 29,822 33,498 25,834 - 26,678 - N/A - N/ASalt - - - - - 41,639 - -General 5,474 6,000 816 3,298 - 4,177 - -Total Port Alma 166,822 168,112 228,086 285,415 81 323,500 82 250,000 29.4% 300,000

PORT ALMA

* On 1 October 2007, the Port of Bundaberg was transferred from the Bundaberg Port Authority to the Bundaberg Port Corporation Pty Ltd, a wholly-owned subsidiary of Port of Brisbane Corporation.

# On 1 November 2009, the Port of Bundaberg was transferred to the Gladstone Ports Corporation Limited (GPC) and operates as a business unit of GPC trading under the business name ‘Port of Bundaberg’.

2007Actual

2008Actual

2009Actual

2010Actual

2010Vessel No.

2011Actual

2011Vessel No.

2011Forecast

2011Variance

2012Forecast

Commodities (tonnes)Bulk sugar 223,654 248,938 98,488 183,836 9 280,071 17 - - -Molasses 34,705 17,254 - 17,086 1 33,023 4 - - -Total Port of Bundaberg 258,359 266,192 98,488 200,922 10 313,094 21 299,000 4.7% 300,000

PORT OF BUNDABERG

Burnett Heads Boat Harbour includes a five-lane public boat ramp and boat trailer park and small marina

Bundaberg Port Marina and Trawler Base has 160 marina and trawler berths

John T Fisher Wharf – bulk liquids wharf, currently used for the import of molasses

Sir Thomas Hiley Wharf – dry bulk commodities wharf, currently used for the shipment of sugar

Bulk Sugar Terminal – storage capacity 300,000t

Tug Wharf

Oil storage facility – capacity 24,650t and the bulk molasses terminal with a capacity of 36,641t

32 | BUSINESS | Our trade | Gladstone Ports Corporation | Annual Report 2010/11

BUSINESS | Our trade | Gladstone Ports Corporation | Annual Report 2010/11 | 33

02 | BUSINESS

Looking ahead2011/12During 2011/12, the Port of Gladstone is forecast to handle 93.8mt of cargo, representing an increase of 17.4mt (22.8%) on 2010/11. Trade growth in 2011/12 is expected to come primarily from the coal industry as coal mines recover from the flooding events of 2010/11. Coal exports are forecast at 67.0mt compared to the 53.2mt achieved in 2010/11.

Port Alma Shipping Terminal trade is forecast to remain steady in 2011/12 at 300,000t of cargo.

Port of Bundaberg trade is also forecast to remain constant at 300,000t of cargo in 2011/12.

We are entering into a phenomenal period of industrial development and expansion which will see us strengthen our position as one of Australia’s leading ports. We will continue to work with industry representatives and government to facilitate new opportunities in an effort to increase and diversify trade through the Port of Gladstone and regional centres. The Port of Gladstone will continue to assist LnG) and major industry construction projects which will support the region’s economy.

PICTURED: OnE Of ThE TEAm COnSTRUCTInG ThE LnG fACILITIES On CURTIS ISLAnD WAITS AT ThE BOTTOm Of A BARGE RAmP fOR AnOThER DELIvERy fROm ThE mAInLAnD

34 | BUSINESS | Our operations | Gladstone Ports Corporation | Annual Report 2010/11

Our operations

Targets 2011/12Complete Stage 1 of RGTCT wharf spillage upgrade project

Complete construction of BPCT wind barrier

Complete upgrade and replacement of RGTCT CC1F and 1D trippers

Complete Stage 3 of RGTCT Control and Technology Upgrade

Complete integration of additional stockpile #22 and associated infrastructure at RGTCT

Outcomes 2010/11Completed Stage 2 of RGTCT Process Control and Technology Upgrade

Completed major maintenance and high priority structural refurbishment of Shiploader 2 and three stockpile reclaim tunnels

Completed rehabilitation of RGTCT’s settlement dams removing 25,000t of waste material

Commenced implementation of medium term dust mitigation strategies from the Benchmarking Study recommendations including stockyard misting sprays

Began design works for additional stockpile (#22) and associated infrastructure at RGTCT with construction to commence in 2011/12 – construction not achieved in 2010/11

Completed detailed design work and community consultation for BPCT wind barrier, with construction to commence by last quarter 2011

Our wharf facilitiesPort of Gladstone comprises six wharf centres:

GPC – owned and operated

1. BPCT

2. RGTCT

3. Auckland Point

GPC – owned and operated by others

4. Boyne Wharf operated by Boyne Smelters

5. South Trees wharves operated by Queensland Alumina Limited

6. fisherman’s Landing operated by multiple companies

Port Alma Shipping Terminal comprises one wharf centre:

GPC – owned and operated

Port of Bundaberg comprises two wharf centres:

GPC – owned and operated

1. Bundaberg Liquids Wharf

GPC – owned and operated by others

2. Bundaberg Sugar Wharf operated by Bundaberg Sugar

Accommodating the world’s fleetThe Port of Gladstone can accommodate vessels up to 300m in length and 220,000 dead weight tonnes (DWT). Port Alma, due to its location, is restricted to vessels under 180m in length. Port of Bundaberg can accommodate vessels up to 200m in length.

During 2010/11, 1,298 (2009/10: 1,440) cargo handling vessels visited the Port of Gladstone while 89 (2009/10: 81) visited Port Alma Shipping Terminal and 21 entered the Port of Bundaberg.

Challenges from reduced tonnages became opportunities to address maintenance works

BUSINESS | Our operations | Gladstone Ports Corporation | Annual Report 2010/11 | 35

02 | BUSINESS

Delivering reliablyWe are committed to delivering on stakeholder expectations and meeting our customers’ requirements – we recognise that this will ensure the sustainability of our operations. Throughout 2010/11 we focussed on improving operational efficiency; further reducing the risks inherent in our operation; and delivering environmental improvement initiatives.

The coordination of projects and initiatives in these areas will continue through 2011/12 and will rely on cooperation from, and planning with, our customer and stakeholder groups.

Planned outages support our performancePlanned shutdowns of our operations are essential to ensuring that we meet the performance expectations of our stakeholders. Shutdowns across RGTCT and BPCT completed in 2010/11 were in line with the schedules developed through consultation with our customers and rail operators.

The challenges that arose from reduced tonnages due to the flooding in and around the mines in early 2011 were turned to advantage by creating opportunities to carry out major maintenance works. These works were a combination of jobs in the 2010/11 plan and others that were identified for future years.

During the year we worked with stakeholders to develop outage schedules with a two-year look ahead to ensure minimal impact on trade through the Port of Gladstone. These outages will facilitate future major maintenance and improvement project

activities including the five-year capital project to upgrade process control technology.

Optimising asset performanceOperational performance reviews continue to identify projects with the potential to deliver further operational efficiencies and environmental improvements. These improvements are prioritised and incorporated in our business plan for scheduling and execution. One of the major activities identified was the upgrade of the inloading trippers and tripper conveyors – with two of these scheduled for completion in 2011/12.

Two projects that were addressed during the year and will contribute to environmental improvements were medium term dust mitigation strategies involving stockyard misting sprays and the BPCT wind barrier. for further information please see Infrastructure – Our projects (page 42).

The rehabilitation of RGTCT’s settlement dams and progress achieved on the additional stockpile #22 are also addressed in Our projects (page 42).

Our Reliability Centred maintenance (RCm) process focuses on improving plant availability and reliability through the elimination of recurring plant issues and continual review of preventive maintenance strategies. Embedding the RCm principles established over recent years is a priority for 2011/12 to ensure operational performance standards are maintained and improved.

The optimisation of inventory holdings in 2010/11 was achieved through rationalisation of our operational and rotating spares management

within our Centralised maintenance management System (CmmS) ensuring the availability of critical plant spares. The evolution of our work management system will continue in 2011/12, with emphasis on the upgrade or replacement of CmmS software to cater for our growth forecast.

Saving energy with dozer fleetIn line with our dozer fleet replacement strategy, two new Caterpillar D11T dozers were purchased and two older models disposed of during 2010/11 to maintain our total fleet of 23 at RGTCT. We now have six D11T dozers in the fleet with plans to replace the older models over coming years. The D11T machines are delivering a lower maintenance cost, through an extended service period and a substantially lower fuel usage.

The new Caterpillar D11T was quoted as delivering a minimum of 5% reduction in fuel usage from the older D11R; however, we are achieving approximately 7% less fuel usage than the older D11R performing the same work at RGTCT. This equates to a saving of 35,840 litres of diesel per annum per machine as well as a reduction in greenhouse gas emissions of 96.7t per annum per machine.

Providing optimum unloading and loading rates RGTCT’s gross train unloading rate increased to 3,876 tonnes per hour (tph) in 2010/11 (2009/10: 3,793tph). The shiploading streams gross loading rates increased to 3,003tph (2009/10: 2,956).

facility utilisation at BPCT increased from 28% (2009/10) to 38% for the period from july to December and the terminal was on track to achieve 6mt for the year. flooding in December however saw the total tonnes finish the year at 4mt and utilisation at 26%. Shiploading rates for the year remained the same at 1,512tph.

key Performance Indicators (kPIs) for train unloading delays at both RGTCT and BPCT were achieved in 2010/11 with a performance of 9% against a target of 14%. Wet coal and ship delays were the key areas impacting the shiploading delay performance in 2010/11 with an outcome of 19.86% achieved against a target of 20%.

PICTURED: RGTCT SUPERvISOR, DAvE WInTER, UnDER A SECTIOn Of ThE OvERhEAD GAnTRIES

36 | BUSINESS | Our operations | Gladstone Ports Corporation | Annual Report 2010/11

Looking ahead2011/12With the assistance of our customers, we will maintain the emphasis on continuous improvement throughout the year ahead and will review operational practices, levels of service, efficiencies, cost structures and coal loading facilities at both RGTCT and BPCT.

Asset life plans using RCm principles will be embedded as part of our continuous improvement process over the coming years, and be used as one of the pillars to support our long–range major maintenance forecast.

2011/12 will see the start of a program of upgrading the inloading trippers and tripper conveyors that will continue through to 2014. The project will ensure the structural integrity of ageing equipment and improve the reliability of the inloading system.

PICTURED: EARThWORkS AnD COnSTRUCTIOn fOR ThE LnG PROjECTS ARE UnDERWAy AT SEvERAL LOCATIOnS On CURTIS ISLAnD

BUSINESS | Our port security | Gladstone Ports Corporation | Annual Report 2010/11 | 37

02 | BUSINESS

Our port security

Targets 2011/12Continue implementation of internal audit plan

Implement continuous improvement plan

Submit updated maritime security plans for Port Alma, Port of Bundaberg and Port of Gladstone

Submit the MSIC Issuing Body Plan

Continue developing security arrangements for LNG projects and Fisherman’s Landing

Rationalise maritime security zones at Port Central

Upgrade and implement CCTV and additional security protocols at Port Alma and Port of Gladstone

Outcomes 2010/11Completed risk assessments for Port Alma and Port of Gladstone to inform revised maritime security plans

Mapped security zones for these plans

Conducted internal audit on Port of Brisbane Maritime Security Identification Card (MSIC) Plan to comply with agent requirements

Drafted MSIC Issuing Body Plan

Commenced renewal of MSICs for employees and general contractors/port users

Tested maritime security plans at Port Alma and Port of Gladstone

Established access control at Fisherman’s Landing for LNG projects

Reporting incidents and eventsWe must report security incidents and events to the Commonwealth Office of Transport Security (OTS). The table on page 38 summarises reports made to OTS over the past three years.

Issuing MSICsWe act as an agent for the Port of Brisbane in issuing maritime Security Identification Cards (mSIC). mSIC cards provide the cardholder with access to maritime security zones relevant to their work requirements. In 2010/11 our Security Department processed and issued 1,110 cards (2009/10:494), bringing the total issued since the implementation of the marine Transport and Offshore facilities Act in 2006 to 6,563.

During the year, we began working towards becoming an independent mSIC issuing body. In doing so we took steps to meet the needs of an increasing number of maritime-based industries in the Gladstone region.

PICTURED: BLUE mETAL ROCk hAS BEEn USED TO COnSTRUCT ThE BUnD WALL AS IT mEETS EnvIROnmEnTAL STAnDARDS

38 | BUSINESS | Our port security | Gladstone Ports Corporation | Annual Report 2010/11

Work began on a detailed plan to comply with the requirements in the maritime Transport and Offshore facilities Security Act and Regulations 2003. The plan will be finalised and submitted to OTS in the coming year.

We continue to provide large numbers of site inductions to external parties (contractors and port users) to allow them access to our facilities. The increase is due to the number of people required to undertake work on LnG project sites, but is also influenced by our requirement that people attend refresher inductions every two years. During 2010/11, 1,367 people (2009/10: 1,315) attended these sessions.

Site specific induction packages have been developed and implemented for Port Central areas, LnG earthworks sites and fisherman’s Landing.

We reviewed and revised our emergency evacuation procedures during the year. This resulted in existing procedures and mapping updated and ensuring all our sites have correct evacuation information.

Our employees again participated in a statewide project to prepare contingency plans to counter protest

action by issue-motivated groups. They worked with state regulators, police and the operators of other critical infrastructure to develop standardised responses to protest action. The project assisted these groups to understand their roles, responsibilities and activities which can be lawfully undertaken, in accordance with rights and without disruption to infrastructure.

Testing securityDuring the year, both imaginary and real life exercises were used to test our maritime security and provide our employees with opportunities for ongoing improvement.

Desktop exercises used scenarios based on someone being seen taking photos and then later trying to breach a security zone. Representatives from the maritime industry participated in these exercises to give port employees as realistic a view as possible of a potential security breach. These practical role-play scenarios benefited employees by showing them what they could have missed and how they could improve.

Exercise ‘Wallaby’ involved the Singapore Army testing port security as well as our ability to ensure smooth offloading of equipment at Auckland Point 4 and explosives at Port Alma.

SECURITY EVENTS AND INCIDENTS

REPORT TYPE 2008/09 No.

2009/10 No.

2010/11 No.

Security events* 9 22 18

Security incidents# 0 0 0

* A security event is a situation where there has been a breach of the maritime Security Act or Security Plan

# A security incident is a situation where an unlawful interference with maritime transport is made and is, or is likely to be, a terrorist act.

PICTURED: OnE Of ThREE ShIPLOADERS AT RGTCT SERvICInG fOUR BERThS. A ShIPLOADER hAS ThE CAPABILITy TO LOAD UP TO 6,000 TOnnES Of COAL – PER hOUR, PER ShIP

BUSINESS | Our port security | Gladstone Ports Corporation | Annual Report 2010/11 | 39

02 | BUSINESS

Looking ahead2011/12In 2011/12, we will submit new maritime security plans to OTS to apply for the next five years. Our current plans will be completely updated to take into account all the lessons that have been learnt in the last five years. They will be streamlined so they are more manageable and reflect the port’s current operational environment.

PICTURED: AT PRESEnT, ThE PORT Of GLADSTOnE hAS SIx WhARf CEnTRES WITh 16 BERThS COvERInG mORE ThAn 30km Of COASTLInE

40 | INFRASTRUCTURE | Gladstone Ports Corporation | Annual Report 2010/11

Our major projects this year focused on environmental performance, operational efficiency and LNG preparation

03 INFRASTRUCTURE

Our projects 42

INFRASTRUCTURE | Gladstone Ports Corporation | Annual Report 2010/11 | 41

PICTURED: ThE DEvELOPmEnT Of ThE PORT Of GLADSTOnE’S WESTERn BASIn WILL SEE InDUSTRIAL ACTIvITy REmOvED TO ThE nORTh-WEST Of GLADSTOnE CITy

03 | INFRASTRUCTURE

42 | INFRASTRUCTURE | Our projects | Gladstone Ports Corporation | Annual Report 2010/11

Our projects

Targets 2011/12Complete Stage 3 of Control and Technology Upgrade

Complete construction of BPCT Wind Barrier

Complete EIS for Outer Harbour Channel Duplication

Undertake strategic assessment of Port Alma in alignment with National Port Strategy

Outcomes 2010/11Completed dredging for rehabilitation of RGTCT environmental settlement dams removing 25,000t of waste material

Continued projects associated with 2007/08 Coal Dust Benchmarking Report with significant progress on wind barriers and dust mitigation

Completed Stage 2 of Control and Technology Upgrade

Began design works for additional stockpile (#22) and achieved Board approval to proceed – construction not achieved in 2010/11

Facilitated LNG projects through the development of Port lands adjacent to proposed marine infrastructure

Expanded small craft facilities to cater for marine traffic growth

Extended Auckland Point No. 4 Berth to cater for increased trade

Undertook maintenance dredging to account for impacts of extreme weather conditions

Upgraded stormwater facilities to improve quality of discharge into the harbour

Cargo handling operationsImproving performance

In 2010/11 our major projects focused on environmental performance and optimising operational facilities.

Our efforts to create sustained environmental improvement continue to be measured through a multitude of systems including dust and water monitoring, which are publicly available in real–time, web-based reporting.

Projects that achieved milestones this year included:

• Wind Barrier

The construction of a 15m high, 500m long wind barrier at BPCT is a key environmental initiative for the operation. Comprehensive modelling, wind tunnel testing and geotechnical analysis enabled a detailed design to be completed in 2010/11. Construction will commence in the fourth quarter of 2011.

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PICTURED: OnE Of ThE LAnD BASED SITES GPC hAS DEvELOPED AS A CAR PARk AnD LAy DOWn fACILITy fOR COnSTRUCTIOn COnTRACTORS WORkInG On LnG PROjECTS

• Dust mitigation misting Sprays

As part of our dust mitigation program, the trialling of various misting spray designs throughout 2010/11 enabled us to select the most effective solution for adoption at RGTCT. Installation throughout RGTCT has commenced and will continue through 2011/2012.

• Settlement Dam Rehabilitation

following the detailed planning undertaken in 2009/2010, the dredging of settlement dams at RGTCT was undertaken this year resulting in the removal of approximately 25,000 tonne of material. This increase in dam capacity will support the site water management capability over coming years.

Optimising performance and pursuing operating excellence continued to be a focal point for our projects, which included the following key initiatives in 2010/2011:

• E-Train development

The E-Train hardware installed in 2009/10 was further developed and now covers all unloading facilities providing us with live information for every train and wagon unloaded at GPC facilities. This effectively increases the efficiency of our operation and eliminates errors associated with the manual transfer and handling of information.

• Remnant coal detection

Ensuring that all coal is extracted during the unloading process has both environmental and operational benefits. Traditionally this has been a manual process. During the year, trials were successfully completed in one unloading system using laser scanners to detect coal remaining in the wagons and preventing carry back of coal along the rail system. Work to further develop this technology will continue in 2011/2012.

• measurement and information systems

Through projects such as the E-Train development, remnant coal detection and control and technology upgrades, we now have more automated, real time information about our operational performance. To support the timely, productive use of the data generated, work to further develop applications for stakeholders to retrieve this data and communication of the information will continue in 2011/2012.

• Completed Stage 2 of Control and Technology Upgrade

RGTCT’s Control and Technology System Upgrade saw Stage 2 of the 5-stage project completed to plan. The work was dominated by the hardware upgrade of several areas of the RGTCT facility and the commissioning of key control software. The results have built on the gains made last year in operational efficiencies and improved asset reliability.

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• Stockpile 22

GPC’s Board approved a recommendation in December 2010 to complete design work on Stockpile 22 and commence construction. While construction did not begin during the year, a contract strategy and procurement plan was developed and the procurement process was completed. further geotechnical work was performed to confirm the construction methodology. Construction will begin in the coming year.

Wiggins Island

Work on finalising the WICT arrangements continued during 2101/11. GPC will be the operator of the terminal as indicated in the framework agreement.

Constructing the Fisherman’s Landing bund wall

Construction of the perimeter bund wall at fisherman’s Landing began in

December 2010 and was completed in early August at 5.2 metres off the sea bed. Dredge material will be placed in the area behind the wall during the coming year to create 170ha of reclaimed land. This reclamation project will provide six additional wharf sites to cater for the future industrial developments within the Gladstone State Development Area.

Developing the LNG industry

During 2010/11, we had a significant focus on providing infrastructure for the LnG projects as QCLnG and GLnG committed to construct their respective plants, while both Australia Pacific LnG and Arrow LnG undertook their investigation studies. The four projects are being developed on Curtis Island with no bridge access available.

All personnel and construction materials are transferred from the mainland to the island by ferries and barges. This needs to occur in an

environment that has not required significant waterfront access for other than large commercial activities or for the smaller tourist transfers to the Great Barrier Reef.

Each LnG proponent needs to shift up to 2,000 workers per day, millions of tonnes of construction materials and equipment for their project’s duration. The program for the development of the plants required us provide infrastructure to service the increasing demand for access during the year.

We reclaimed a total of 20ha of land at Port Central and RGTCT to create waterfront access for two ferry and four barging facilities for QCLnG and GLnG. These facilities accommodate personnel ferries carrying 400 workers, roll-on roll-off barges and dumb barges to transfer trucks and bulk materials such as aggregate and rock. The land areas enable vehicle marshalling before embarkation and the storage of materials for transfer.

In total, more than 200,000m3 of underlying soft material was removed from these sites and in excess of 1.5 million m3 of fill was imported and compacted on these sites. While the extreme weather conditions of the summer impacted the infrastructure development program, GPC completed the work through a combination of internal workforce and contracted operations.

The LNG development on Curtis Island has provided a legacy for small craft activities within the Marina

PICTURED: ThIS IS An ARTIST’S ImPRESSIOn Of WhAT ThE 15 mETRE hIGh WInD BARRIER AT BPCT WILL LOOk LIkE WhEn IT IS fInIShED

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At fisherman’s Landing, we began a similar process to provide barge and ferry access for APLnG. These works should be completed in August 2011.

Construction work by the LnG proponents at their own sites is not expected to commence until December 2011.

Providing small craft facilities

We completed a number of projects during the year providing new infrastructure for small craft and maintaining existing infrastructure.

O’Connell Wharf in Auckland Creek has been the mainstay for Charter Boat operators travelling to the Great Barrier Reef and fishermen after the elusive catch.

The wharf had reached the end of its useful life but its design made it difficult to repair, so we replaced its structures during the year.

The fixed deck wharf was replaced with a combined service wharf and pontoon system, reflecting the change in vessel usage from charter boats to recreational fishermen launching runabouts on the weekend. The structures were designed to compliment proposed development of the East Shores Precinct along Auckland Inlet.

2010/11 also saw the refurbishment of some pontoon systems in the Gladstone marina. first constructed in the late 1980’s, the marina pens have survived the ravages of time with impacts from numerous vessels visiting the port and the harsh marine environment. The works were conducted around the need for the marina to remain fully functional. This refurbishment should see the marina remaining functional for another two decades.

The LnG development on Curtis Island has provided a legacy for small craft activities within the marina. The existing facilities of both GPC and marina tenants could not cater for the temporary demand for ferry access and the associated parking facilities for personnel movements.

Through contributions from the LnG companies, a pontoon system was developed to utilise the spare capacity of the fishermen’s Base jetty within the marina. hardstand areas have been provided for parking and access to the ferries and an additional barge ramp developed to cater for demand until the companies complete permanent facilities. Once operations revert to the permanent site, the general public will be able to use the parking area and boat ramp. The volunteer marine Rescue operations will also be relocated during the coming year to reflect the increased use of this new facility.

Auckland Point No. 4 Berth

The growth of industry in Gladstone and its hinterland has caused unprecedented demand for a wharf capable of handling general cargo associated with construction materials.

Currently, GPC has two berths capable of readily handling general cargo. Auckland Point no. 4 Berth provides heavy lift capacity, however its limited length restricts the size of vessel that may be serviced.

We began work during the year to extend this wharf to allow Panamax vessels to operate in the future. This expansion has required that the construction be undertaken while the berth remains operational, so work has been undertaken between operations.

The works are planned for completion by the end of 2012.

Strategic Planning

The projected growth in the gas and minerals sector has resulted in a significant demand for berths to cater for the export of product from the Central Queensland region.

The rapid introduction of LnG industries has resulted in four wharf centres being identified for product export. This growth, combined with two major industries associated with steel and nickel, has identified the need for planning to be brought forward for the

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expansion of Gladstone harbour and the identification of alternative port facilities in Port Alma and Bundaberg.

While plans have been produced to identify the growth potential around fisherman’s Landing, strategic planning has been brought forward to cater for long term growth in the various port precincts.

• Gladstone

In Gladstone, the limitation on the footprint of the reclamation in the Western Basin has resulted in all berths being allocated to industries currently undergoing feasibility studies.

future growth in Gladstone has been identified at hamilton Point on Curtis Island where vessels in excess of 150,000DWT could be berthed at land backed facilities. This would allow diversified products such as dry bulk, general cargo and containers to be handled. Planning has commenced around the balance between the need to minimise the impact of the environmental footprint and optimise the ability to cater for effective cargo handling.

The combination of growth in the coal trade with the development of Wiggins Island Coal Terminal and the commencement of LnG industries together with the growth of other future industries, has identified the need to undertake the duplication of the shipping channels in the outer harbour. The existing configuration with a single channel has limitations on the capacity to handle multiple deep draft vessels simultaneously. Through the provision of a second channel, it is possible to separate inbound and outbound vessels with the resultant increase in capacity while maintaining enhanced safety through separation and the mitigation of business disruption in the extreme event of a vessel grounding in the channel.

During the past year, GPC has progressed the design of the channel to allow the progressive execution of the work as required by port expansion. Seismic investigations have been undertaken over the footprint to assess the nature of material to be dredged.

We have now progressed into obtaining the necessary approvals for the dredging and disposal of the material removed. It is expected that the Environmental Impact Study will be completed during the coming year.

• Port Alma

Industry has shown significant interest in the development of additional coal exporting facilities. While the combined capacity of RGTCT and WICT will be in excess of 150mtpa, the demand for export capacity has resulted in the investigation of alternative coal terminals at Port Alma.

xstrata has commenced studies on the development of the Balaclava Island Coal Export Terminal (BICET) with the potential for up to 35mtpa of coal being exported in Panamax vessels. GPC has combined with xstrata to explore the possibility for further terminals to be developed for the handling of other cargos in adjacent facilities with the potential to share infrastructure.

fitzroy Terminals have also commenced investigations into a barge transhipment facility to cater for up to 10mtpa of coal through Port Alma.

As the demand increases for the development of facilities at Port Alma, we have initiated planning to assess its overall potential. This planning is being aligned with the federal Government’s national Port Strategy and the Strategic Assessment provisions of the EPBC Act. When these studies are completed, it will be feasible to identify the potential for the development of Port Alma and to ensure that the environmental sensitivities of the area are not impacted. Base lines studies of the

existing environment have commenced to establish the quality of the study area. In addition, seismic investigations have been undertaken to assess any limitations if dredging of shipping channels is required. The study will be continued during the coming year.

• Bundaberg

We are also reviewing the Port of Bundaberg’s potential for future development to increase servicing of Bundaberg and its hinterland.

The port’s development is limited due to its capacity to handle vessels within a river port environment. Such development would be limited to handimax and coastal trading vessels. The recent impacts from flooding within the Burnett River further highlighted the limitations on its development.

The draft report has been finalised and will be provided for review in the latter half of 2011.

Flooding impacts on Port operations

The extreme weather encountered over the summer of 2010/11 resulted in significant flooding of rivers feeding into our port precincts.

While this flooding was widespread, only Bundaberg suffered significantly from siltation with in excess of 1.4 million cm2 of sands and gravels deposited in the shipping channels. Through delays associated with approvals to dredge, the port has been operating at reduced draft conditions. Immediately following the floods, cargo was required to be handled by barging operations.

maintenance dredging was undertaken and was being finalised six months after the floods.

Port Alma and Gladstone recorded only minor increases in siltation and experienced no significant impacts to operations as a result of the flooding.

Environmental control systems

We undertook works designed to enhance the quality of stormwater discharges into Port Curtis during the year. Additional retention ponds and control systems were developed to increase the capacity of stormwater systems to cater for increased weather events.

PICTURED: ’hUnGRy BOARDS’ kEEP ThE LOAD SECURE On An AGGREGATE BARGE SITUATED In ThE WESTERn BASIn Of GLADSTOnE hARBOUR

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Looking ahead2011/12Stage Three of the RGTCT Control and Technology System Upgrade will be undertaken, continuing the roll out of new technology and improved safety and process control across the site. This work will continue to integrate and complement the ongoing work to improve process information management across the business.

We will continue to implement infrastructure associated with our Environmental Improvement Program, as well as continuing the rehabilitation of the settlement dams at both RGTCT and BPCT.

2011/12 will see the completion of Stockpile 22, increasing our stockpile capacity to close to 7mt. It is expected this project will be completed in late 2011.

We will look to complete the EIS for the Outer harbour Channel Duplication and undertake a strategic assessment of Port Alma to comply with the national Port Strategy.

PICTURED: ThE GAnTRIES LOOkInG OvER ThE COAL STOCkPILES AT RGTCT GIvE A vIEW BEyOnD ThE TERmInAL TO ThE ExPAnSIvE hARBOUR

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PICTURED: ThE ORAnGE GLOW Of SUnRISE AT BARnEy POInT BEACh

We want to ensure that the biggest phase of Port development in our history does not come at the expense of the recreational and commercial fisheries of Port Curtis

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Our environmental management 50

Energy and greenhouse gases 55

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50 | ENVIRONMENT | Our environmental management | Gladstone Ports Corporation | Annual Report 2010/11

Our environmentalmanagement

Targets 2011/12Implement new incident reporting and recording system to support timely environmental actions

Work with lessees to promote and support a beyond-compliance approach towards environmental management

Develop an organisation-wide data monitoring system to support environmental management decisions and planning

Continue to develop collaborative research and monitoring partnerships to ensure programs meet stakeholder requirements

Continue implementation of Environmental Improvements Program based on benchmarking studies

Implement the environmental offsets package to compensate for impacts of dredging and reclamation activities

Outcomes 2010/11Maintained EMS certification to AS/NZS ISO 14001:2004

Received approval for environmental offsets package to compensate for impacts of dredging and reclamation activities

Expanded the harbour health monitoring program for dredging and sea disposal and increased involvement in collaborative research partnerships

Extended the dust monitoring and management program to align with supply chain stakeholders

Maintained safe and navigable shipping channels whilst adhering to stringent environmental conditions following flooding of Fitzroy and Burnett Rivers

Management system assists performanceWe operate under an EmS that enables us to identify, understand and manage the environmental impacts of our operations, and to continually improve our environmental performance. Our EmS is certified to the internationally recognised standard AS/nZS ISO 14001:2004, with a full re-certification audit due in early 2012.

The EmS continues to drive change across our operating terminals to achieve sound environmental outcomes and promote a beyond-compliance approach.

Heightening staff environmental awarenessOur Learning and Development Department offers a structured program of environmental training for staff and contractors covering statutory obligations, environmental performance and responsibilities. As part of our commitment to continual improvement, our employee induction process is being reinvigorated to emphasise our expectations of them, and our commitment to ensuring minimal environmental impact.

Environmental performance discussions at weekly review meetings and daily operational forums help inform management and support their decisions. These forums address areas such as environmental incidents, complaints and project requirements.

Executive management Reviews are held quarterly to review the progress of issues, and performance against targets. The outcomes of these reviews are communicated to the Board and the workforce.

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Collaborating on research and monitoringWe continue to seek opportunities for partnerships and collaboration to improve outcomes in research and monitoring. An example of this is our extensive water quality and sea grass monitoring program undertaken in partnership with the Port Curtis Integrated monitoring Program (PCImP), which includes the DERm, Central Queensland University (CQU), the Department of Employment, Economic Development and Innovation (DEEDI) the fitzroy Basin Association (fBA) and other Gladstone industries. This optimises the efforts of all parties to provide more comprehensive monitoring programs in Port Curtis.

Balancing port development and sustainable fisheriesDuring 2010/11 we commenced the biggest phase of Port development in our history. While facilitating this development, we want to ensure that it does not come at the expense of the recreational and commercial fisheries of Port Curtis. To ensure that expansion is undertaken in a sustainable manner, we have developed a harbour enhancement package. Its key components are the addition of a marine scientist to our staff and the allocation of $5 million over ten years, in addition to the offsets requirements, to support projects which enhance the local fish habitat and fisheries. We are also updating the Curtis Coast Resource Inventory, last done in 1993, to ensure that relevant baseline information is available for measuring the success of our projects.

Major projects Western Basin Dredging and Disposal Project

The Western Basin development project includes:

• Capital and maintenance dredging associated with the deepening and widening of existing channels and swing basins, and creation of new channels, swing basins and berth pockets. An estimated 42.3 million cubic metres of material will be relocated during this project

• Construction of a bunded reclamation area of approximately 235ha at fisherman’s Landing

• In October 2010, we received federal Government approval for the Western Basin Dredging and Disposal Project. This followed the approval granted by the State Coordinator General in july 2010. These approvals are subject to detailed conditions that are designed to avoid or minimise the environmental impacts of dredging

• Compensating for losses - Offsets program and strategy

• The Western Basin approvals require a comprehensive environmental offsets package to compensate for unavoidable impacts arising from the project.

Features of the Offsets program and strategy include:

• 5,000ha of Strategic Port Land at Port Alma will be surrendered and protected in perpetuity. This land is adjacent to the State marine Park and protected terrestrial areas and is a critical nursery area for a large number of marine species

• We will contribute $5 million from 2011/12 to fisheries Queensland to support future research/studies which have practical and tangible outcomes for fisheries habitat and productivity within the region

• We must mitigate all reasonable financial losses to existing commercial fishing operators caused by the dredging and reclamation activities in the Western Basin.

52 | ENVIRONMENT | Our environmental management | Gladstone Ports Corporation | Annual Report 2010/11

We will provide:

• $1 million for new/upgraded recreational fishing infrastructure within the Gladstone region and $0.5 million for upgrading public boat ramps within the Western Basin.

$2 million funding or in kind support for:

• Enhancing understanding of key marine fauna (e.g. turtles, dolphins and dugong)

• Species protection programs

• habitat enhancement and restoration actions in the region.

A panel of independent scientific experts will oversee the facilitation of an Environmental Research and monitoring Program (ERmP). We must provide:

• $5 million dollars over a ten year period to fund research and monitoring on marine megafauna, e.g. dugong, dolphins, whales, turtles

• $2 million over the same period for monitoring and research of migratory shorebirds

• We must provide $5 million to fund a Biodiversity Offset Strategy to offset unavoidable impacts to the values of the Great Barrier Reef World heritage Area and national heritage place, and listed threatened and migratory species.

In addition to the offsets prescribed in the State and Commonwealth approvals, we have committed to:

• The surrender of an additional 7,000 ha of land at Port Alma as an advanced offset for future development.

Monitoring water qualityThe Western Basin Project approvals set very stringent conditions for monitoring water quality and ensuring that mechanisms are in place to respond immediately if poor results are detected.

The main objective of the water quality monitoring program is to protect sensitive marine ecosystems. Some of the key requirements set by the approvals are:

• The establishment of a comprehensive monitoring strategy consistent with the national Water Quality Guidelines and Great Barrier Reef marine Park water quality guidelines

• A requirement for the monitoring network to include areas directly adjacent to dredging operations and reference sites in sensitive areas

• monitoring must be undertaken for a period six months prior to, during and for a specified period after the dredging finishes

• The establishment of critical levels which, if reached, trigger immediate management action.

The water quality monitoring program is overseen by a technical reference panel of regulators and independent scientific and technical experts, including a scientific expert in seagrass and benthic habitat research and management, and one technical expert in dredging.

Port user management – Assessment management system/ outcomes We assess development that occurs on Strategic Port Land. This ensures we play our part in mitigating any potential environmental impacts caused through construction or operation. This function is carried out through powers issued under the Sustainable Planning Act 2009 and Transport Infrastructure Act 1994.

This is achieved by the Port issuing development approvals with conditions and the implementation of environmental management plans that determine how the proposed development will be constructed and operated. We also assess development on Port land to ensure that it is consistent with the Port’s Land Use Plan.

PICTURED: ThE TASk Of mOnITORInG ThE hEALTh Of GLADSTOnE’S hARBOUR hAS ExPAnDED AS OnE Of ThE REQUIREmEnTS fOR ThE DREDGInG AnD DISPOSAL PROjECT nOW UnDERWAy

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Shipping channels - dredging and management of dredged material Gladstone

We are responsible for ensuring that the Port of Gladstone’s existing shipping channels are maintained to allow for safe navigation of shipping under the Transport Infrastructure Act 1994. maintenance dredging was conducted in Gladstone during the year by the Trailer Suction hopper Dredge Brisbane. The material was relocated to our approved Sea Disposal site known as the East Banks. The dredging and disposal of material is conducted in strict accordance with environmental approvals issued by DERm and the Department of Sustainability, Environment, Water, Population, and Communities.

Port Alma

The devastating flooding of the fitzroy River in early 2011 resulted in the Port securing an emergency permit under the Sustainable Planning Act 2009 to conduct maintenance dredging at Port Alma. We were applying for new dredging approvals to cover future activities when the floods hit.

To ensure the channels of Port Alma were safe and navigable, the emergency provisions of existing legislation were implemented by DERm. This allowed us to conduct dredging while still

allowing DERm to implement stringent environmental controls. We have now lodged the appropriate environmental approval under the Environmental Protection Act 1994 to allow longer term dredging at Port Alma.

Bundaberg

The flooding of the Burnett River impacted heavily on Port operations in Bundaberg, with the Port closing due to siltation at the river mouth. Our permits did not allow for dredging to recover from such a devastating impact so with DERm’s approval, we applied for a Transitional Environmental Program (TEP) under the Environmental Protection Act 1994. This allowed us to get the Port operational again in a relatively short period.

The dredging occurred during the preferred months for such activities so there was no impact on marine life. Turbidity was monitored to ensure levels met with regulatory criteria and no dredged material was exposed to the air. As a result, the risk posed by potential acid sulphate soils was removed.

The TEP conditions required GPC to seek amendments to the existing approval to ensure that it could legally undertake emergency dredging should this situation arise again.

Environmental complianceTerminal operations

During 2009/10, the Port of Gladstone and DERm reviewed and amended RGTCT’s Development Approval (DA) to develop clear and enforceable conditions by aligning operational requirements with new environmental legislation, polices and standards. These amendments require commitment to more stringent environmental performance standards and include the application of new technology and monitoring concepts.

The amended DA took effect in October 2010 and monitoring to date indicates improvement opportunities in stormwater management. In the coming year, we intend to conduct a full review of RGTCT’s stormwater catchment practices, suitability of environmental protection infrastructure and risk mitigation opportunities.

The continued roll out and implementation of our Dust management Continuous Improvement Program at RGTCT appears to have offset the DA’s more stringent environmental performance standards, resulting in zero compliance related air quality issues for the 2010/11 reporting period.

PICTURED: USInG A vIBRATIOn DATA AnALySER, COnDITIOn mOnITORInG TEChnICIAn, DAmIAn AhERn, TAkES vIBRATIOn READInGS Of A COnvEyOR DRIvE TO TEST ThE COnDITIOn Of ITS GEARBOx

54 | ENVIRONMENT | Our environmental management | Gladstone Ports Corporation | Annual Report 2010/11

We have extended the dust monitoring and management program throughout the supply chain to ensure all users are aligned to achieve optimal outcomes. This includes communication around coal moisture content, dust monitoring data and the systematic tracking of dusty events. This strategy has achieved a significant reduction in visible dust events from 13 in 2009/10 to zero in 2010/11.

The Port has sought to amend BPCT’s DA in a similar manner by negotiating clear and enforceable conditions and aligning operational requirements with new environmental legislation, policies and standards. An amended DA is yet to be received from DERm.

Several air quality exceedances were recorded at BPCT during the year, however, independent modeling and data analysis indicated the majority did not impact on the community. It is anticipated that the application of conditions aligned with the new legislation will better represent the suspended particulate levels currently reported as air quality exceedances.

A commitment to more stringent environmental performance standards at BPCT coupled with significant capital improvements, including the scheduled

installation of a 15 metre wind barrier and misting sprays, will ensure we continue to aim for the highest environmental standards.

Monitoring – water quality Port Curtis Integrated Monitoring Program

We continue to be a major sponsor and participant in PCImP. The program, which was originally launched in 2002, fosters coordination of harbour monitoring activities and plays an important role in the sharing and dissemination of information amongst key stakeholders. This improves the overall capacity to sustainably manage natural resources in Port Curtis.

PCImP recently expanded its water quality monitoring activities to include measurement of water clarity, metals and nutrients, algae and invertebrates. more than 200 monitoring devices were deployed at over 170 sites in and around Gladstone harbour for a two month winter program.

PCImP has been monitoring nine specific zones from the inner harbour to coastal areas since 2006. The ongoing program, which includes seagrass assessment, intertidal and mangrove mapping and water quality monitoring, culminates every three years in the release of the Port Curtis Ecosystem Report Card. The last EcoCard was

issued in 2008, with the 2011 report due for release later this year.

The previous Report Card showed very positive results in all nine zones.

Inventory of Port emissions - National Pollutant Inventory (NPI)

We are required by law to prepare and submit annual nPI reports summarising our emissions to DERm who then publish this data on the Internet, where it is available to the public.

The 2010/2011 data is being collated and analysed, and will be provided in next year’s Annual Report.

Changes in emissions for the 2009/2010 year include increases in Antimony, Boron, fluoride Compounds, Oxides of nitrogen, Particulate matter < 10.0µm Pm10, Particulate matter < 2.5µm Pm2.5, Polycyclic aromatic hydrocarbons and Sulphur Dioxide, as can be seen in the below graph. These increases are the result of an increase in distance travelled by our vehicles, the number of trips and the number of vehicles between our sites and projects due to increased construction activity.

During the year, as part of our compliance obligations, we completed a comprehensive review of our operations, activities, emission sources, emissions estimation techniques and reporting processes to ensure precise emission data reporting. This review improved our ability to more accurately meet those obligations.

2008/09 total emissions kg/yr* unless otherwise stated2009/10 total emissions kg/yr* unless otherwise stated

1,300,0001,200,0001,100,000

1,000,000900,000800,000700,000600,000500,000400,000300,000200,000100,000

0,000

Antimony and compounds fluoride compounds Particulate matter10.0µm Pm10* tonne

Polycyclic aromatichyrdocarbons

Comparison 2008/09 and 2009/10 emissions

PICTURED GRAPh: ChAnGES In EmISSIOnS fOR ThE 2009/10 yEAR WERE DUE TO InCREASED TRAvEL By OUR vEhICLES BETWEEn SITES DUE TO mORE COnSTRUCTIOn ACTIvITy

Electricity 67.36%

Automotive diesel oil (diesel) 31.99%

Unleaded petrol, LPG and acetylene gas 0.66%

Electricity 36.8%

Automotive diesel oil (diesel) 61.8%

Unleaded petrol, LPG and acetylene gas 1.3%

Greenhouse gas emissions CO2-eby energy types and sources

Energy types and sources

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Energy andgreenhouse gasesOur Energy and Climate group has continued to meet regularly to ensure we meet our requirements under the various federal and State acts. These include:

• national Greenhouse and Energy Reporting (nGER) Act

• Energy Efficiency Opportunities (EEO) Act

• national Pollutant Inventory

• Qfleet Climate Smart Policy

• Queensland Government Carbon Offsets Air Travel Policy

The continuing theme of 2010/11 – the significant flood event that affected much of Queensland in late December/january – also impacted our energy consumption and emissions levels, as the substantial drop in coal throughput reduced activity at the Port of Gladstone.

Our two main energy and emissions sources are electricity and diesel fuel. GPC’s total electricity usage for 2010/11 was 260Tj (Tena-joules) whilst our diesel consumption was 437Tj. This resulted in Greenhouse gas emissions for the year of 96 kilo-tonnes.

Energy and climate initiativesTwo hundred and ten Ion Enterprise meters were installed at RGTCT, the marina and our two main administration buildings (kullaroo house and yarroon Street) during the year to measure our energy usage.

Energy mass Balance (EmB) Assessments have commenced at RGTCT, with a conveyor system (CC29) being the first piece of equipment assessed to understand its operational energy flows and losses. further EmB Assessments are planned for equipment at RGTCT, the marina and two administration buildings to meet our legislated requirements.

The Energy and Climate group also actively engaged staff by inviting them to generate their own ideas to improve energy savings or reduce emissions across the site. A number of suggestions were submitted and one

has resulted in the Engineering section investigating the installation of a solar hot water system at the marina.

In late 2010, we purchased two Toyota Camry hybrids as part of our commitment to reduce our vehicles’ CO2

emissions. We are aiming to achieve a 25% percent reduction in our 2006/07 CO2 levels by 2012 and a 50% reduction by 2017.

All new vehicles purchased or leased must meet the green vehicle guide Greenhouse rating of 5.5 for passenger vehicles and 3.5 for light commercial vehicles.

PICTURED: ThE OCCUPATIOnAL hEALTh TEAm - PAm mACkIE (RIGhT) AnD jACQUI BULBROOk (LEfT) hAvE USE Of OnE Of TWO GPC hyBRID vEhICLES AS PART Of OUR PLAn TO REDUCE CO2 EmISSIOnS

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PICTURED: COAL COnvEyORS TRAvEL AT ABOUT fIvE mETRES PER SECOnD

Refining reporting processAn assurance report of the nGER Scheme was conducted in August 2010 by our internal auditors (Deloitte Touche Tohmatsu) for our 2009/10 data. This identified some recommendations for streamlining our data extraction approach. We began implementing these recommendations to refine the reporting process and in january 2011 began capturing monthly data.

Energy efficiency opportunity Identified Trials continued throughout 2010/11 on the alternative cabin cooling system project. As the trials progressed, issues were identified regarding the initial design’s durability and serviceability. The units were being damaged by the dozer conditions and the original location of the units made them

difficult to service. As a result of this feedback it was decided to reduce the number of trial units to one until the reliability of the system had increased.

Issues the team had to overcome were the harshness of the environment that the dozer’s work in and the safe servicing of the system. Thus the batteries, compressors and control unit were moved from the roof of the dozer to the side of the cabin above the fuel tank to reduce vibration. The compressor brackets were required to be redesigned to handle the harshness of the dozer movement while the compressors have been sent back to the OEm for failure mode analysis. The alternator size was also increased to cope with the maximum current demand to run the system and charge the batteries from a near flat condition.

These are the known issues and they are being presently addressed. This reduction in the trial numbers, new design and relocation of the unit has substantially increased the reliability of the system. It is anticipated that when the above issues are resolved in the coming months, GPC will reach the desired reliability level for expanding the trial within the D11 fleet.

The focus will then move to the behavioural and educational elements for the operators ensuring they are aware of the enhancements and the reasons for switching the dozer’s engine off whilst idling. This will be the focus over the next 12 months along with determining firm cost proposals for transitioning the remainder of the fleet. This remains an exciting project for GPC as the benefits to GPC and the broader community are very promising.

For further information on EEO please see our public reports available via our website www.gpcl.com.au

ENVIRONMENT | Energy and greenhouse gases | Gladstone Ports Corporation | Annual Report 2010/11 | 57

04 | ENVIRON

MEN

T

Looking ahead2011/12

In the coming year, we will prepare our assessment and reporting schedule for a new five year EEO cycle. We will seek to further streamline our emissions and energy data to simplify our quarterly reports to the Board. We will also investigate using solar hot water systems at the marina and reducing the glare and energy use of our lighting towers at RGTCT.

PICTURED: ThE vIEW fROm ThE REDEvELOPED O’COnnELL WhARf In AUCkLAnD InLET

58 | COMMUNITY | Gladstone Ports Corporation | Annual Report 2010/11

PICTURED: A CROWDED AnD COLOURfULSTART LInE fOR ThE 8km EvEnT, PART Of ThE InAUGURAL BOTAnIC TO BRIDGE fUn RUn

The Botanic to Bridge – a new event to galvanise the Gladstone community

COMMUNITY | Gladstone Ports Corporation | Annual Report 2010/11 | 59

05COMMUNITY

Our community involvement 60

05 | COMM

UNITY

60 | COMMUNITY | Our community involvement | Gladstone Ports Corporation | Annual Report 2010/11

Our communityinvolvement

Community and growthStrengthening our relationship with the community is an ongoing priority especially during this significant growth period. At a time when port facilities are expanding and change is occurring, we aim to inform the public with regular and open communication and show them first hand the developments in the harbour. Support for community events and non-profit groups as well as encouraging public use of the marina parklands continues to be a focus.

Communicating our plansDuring 2010/11, we built on our efforts to inform our community about port activities and future plans. The emphasis in our communications moved from outlining preparations for infrastructure expansion to providing regular updates on the work as it happened, as well as explaining, among other things, roadworks and safety and exclusion zones set up in the harbour. This information and other GPC related news have been communicated in a range of mediums including:

• General media coverage generated from media releases

• Regular newspaper updates about work at land based facilities as well as dredging in the Western Basin

• Radio and television interviews

• Port Talk – a quarterly newsletter for the Gladstone region featuring information on port development, environmental initiatives and community activities which reaches more than 24,000 household

• Annual Report – a detailed report of our ports’ activities and performance during the financial year

• Corporate website (www.gpcl.com.au) – general information on port facilities, publications, news, environmental activities,

Targets 2011/12Improve internal communications across all port precincts

Establish a web site with environmental data relating to harbour monitoring

Host second Botanic to Bridge Fun Run

Host Port Open Day

Commence redevelopment of Auckland Creek foreshores

Outcomes 2010/11Reported results of Corporate Image Study in July 2010

Hosted inaugural Botanic to Bridge event and Healthy Living Expo in August 2010

Researched and wrote second edition of Koongo Yallarm. Still to be completed

Facilitated further planning for Auckland Creek foreshore development

Refurbished Marina’s K and L rows

PICTURED: AT A COmmUnITy COnSULTATIOn mEETInG, EnGInEER TOny BERnABEI ExPLAInS hOW ThE PROPOSED WInD BARRIER fOR BPCT WILL WORk

COMMUNITY | Our community involvement | Gladstone Ports Corporation | Annual Report 2010/11 | 61

05 | COMM

UNITY

employment opportunities, corporate governance, the marina parklands and port tours

• Annual stakeholder and community presentations – an update provided by our CEO

• Brochures featuring information on how ports and coal terminals function, as well as career opportunities for school leavers

• Port handbooks covering technical aspects of the harbour, wharves and shiploaders.

In the year ahead, we will continue to build on communication about the Western Basin Dredging and Disposal project via a specially designed web site that will convey a range of environmental monitoring data and dredging management plans.

Our Community Working Group met on four occasions during the year to hear presentations on environmental management and monitoring at the Port of Gladstone as well as be informed on plans for the LnG projects and other proposed port expansion works. The group’s aim is to enhance collaboration between the Port and the community on these aspects of our operations. Its membership includes an independent chairperson with representatives from the community, local government, special interest groups and GPC employees.

Touring the portWe provide a free weekly tour of port facilities each Tuesday from 10.00am – 11.30am for visitors to Gladstone and community members.

During 2010/11, 451 people joined our weekly industry tours (2009/10: 536). Other tours for 222 school/higher education students (2009/10: 169) and 64 community members (2009/10: 50) saw a further 286 (2009/10: 219) visit the port, taking the total number of tour participants for 2010/11 to 737 (2009/10: 755).

Writing port historyWork on the second edition of our five part port history series, koongo yallarm, continued during the year focusing on research, writing and layout design. This edition will cover the period from 1935 to 1954, highlighting the role that the harbour played during the second World War and also the beginning of the coal export industry at the Port of Gladstone.

koongo yallarm are traditional Indigenous words from the region’s two Indigenous nations – the Byellee and Gooreng Gooreng. koongo is a Byellee word meaning ‘place of water’ and yallarm, a Gooreng Gooreng word meaning ‘place of shells’. Each edition of the history series will be given to every schoolchild in the Gladstone region and will be available from our main office in kullaroo house.

PICTURED ABOvE: ThE fROnT COvER Of ThE fIRST EDITIOn Of GPC’S hISTORy SERIES – kOOnGO yALLARm

PICTURED: mORE ThAn 4,000 PEOPLE PARTICIPATED In ThE InAUGURAL BOTAnIC TO BRIDGE RUn/WALk In 2010

62 | COMMUNITY | Our community involvement | Gladstone Ports Corporation | Annual Report 2010/11

ThIS IS An InDICATIvE vIEW Of PART Of ThE EAST ShORES PRECInCT LOOkInG fROm AUCkLAnD InLET TOWARDS ThE PARkLAnD. IT fEATURES WATER PLAy fACILITIES, ShADED LAnDSCAPE SETTInGS AnD A WATERSIDE PROmEnADE

Supporting our communityIn 2010/11, our Community Support Program continued to provide financial and in-kind assistance to a range of community groups and non-profit organisations throughout the region. The program supports art, music and cultural activities, education, health and welfare, environmental initiatives and major events.

We provided $133,799 in sponsorships and donations during 2010/11 (2009/10: $76,980 assisting 41 organisations with their community events, projects and research initiatives.

We continue to provide in-kind support in the form of below market tenancies in GPC buildings to 12 organisations to the value of $471,710 (2009/10: $455,595). Current tenants include the Gladstone maritime museum, Genealogical Society Gladstone District Inc., Gladstone municipal Band, Roseberry youth Services and the volunteer marine Rescue Service headquarters.

In August 2010, we staged the inaugural Botanic to Bridge fun run and healthy Living Expo to encourage the region’s residents, especially schoolchildren, to adopt a healthy and active lifestyle. more than 4,000 people registered to participate in the event with money raised going back to local

primary and secondary schools, as well as a non-profit organisation. nearly $50,000 was shared between the schools and the Tannum Sands Surf Lifesaving Club.

Responding to community concernsWe received four complaints about environmental issues in 2010/11 (2009/10: 22). Of these complaints two were related to dust (2009/10: 15) but there were none relating specifically to coal dust (2009/10:13). Of the remaining complaints, one was about light coming from RGTCT’s light towers and another related to stormwater discharge.

In the coming year, environmental complaints will be logged in the incident and action database as part of the upgrade of our Incident management System.

The results of our 2010 Corporate Image Study revealed that the community was mostly positive about GPC’s overall reputation and performance. more than 90% of people believed we made an important contribution to the community through providing facilities, supporting events and providing employment opportunities. Residents’ main concern related to environmental issues and our need to address those concerns.

Enjoying the waterfrontResidents and visitors continued to enjoy our 35ha of recreational waterfront parklands at the Gladstone marina and Spinnaker Park during 2010/11. The versatility of these areas is such that they are popular for family gatherings, corporate celebrations and large scale community events such as the annual Gladstone harbour festival.

Construction of a new boat ramp at the marina was completed during the year to assist with LnG related vessel movements. Once these operations revert to a permanent site at Port Central, the general public will be able to use this facility.

Planning for the Auckland Creek foreshore development progressed during the year. The Gladstone East Shores precinct, as it will be known, represents an opportunity to create a world-class waterfront for Gladstone as a result of funding from WICET. This evolution will eventually see the foreshore area developed into a vibrant linear precinct that supports the city centre, offering residents and visitor the chance to engage with the waterfront in a variety of ways – from family activities and fishing to visiting an Interpretive Centre focusing on the port’s maritime history.

COMMUNITY | Our community involvement | Gladstone Ports Corporation | Annual Report 2010/11 | 63

05 | COMM

UNITY

Looking ahead2011/12Our plans for the coming year will continue to centre on improving communication, both internally within GPC and externally to the wider community. External communication will focus on developments in the Western Basin and making environmental monitoring results available to the public via a specially designed website.

We will again open the Port of Gladstone to the public on Port Open Day and commence work on the East Shores precinct – another example of our commitment to providing quality recreational facilities for local residents and visitors.

64 | PEOPLE | Gladstone Ports Corporation | Annual Report 2010/11

Our people – sharing the past and shaping the future to meet growth challenges

PEOPLE | Gladstone Ports Corporation | Annual Report 2010/11 | 65

06people

Our employees 66

Our safety 72

Our health 76

PICTURED: ThIRD yEAR ELECTRICAL APPREnTICE mATThEW vARkER IS OnE Of 64 APPREnTICES AnD TRAInEES LEARnInG ThEIR TRADE AT GPC

06 | PEOPLE

66 | PEOPLE | Our employees | Gladstone Ports Corporation | Annual Report 2010/11

Our employees

Targets 2011/12Prepare for and complete 2012/14 Certified Agreement negotiations by 1 November 2012

Implement Production Stream Reclassification Structure

Address ongoing opportunities from Employee survey – next survey due in mid-2012

Retain skilled employees in competitive labour market

Complete employee induction to incorporate history and culture for roll out in 2012

Launch a redeveloped Intranet in January 2012

Outcomes 2010/11Benefited from Human Resources Information System in learning and development, training records, scheduling and compiling statistics. Currently commissioning complementary payroll system

Conducted Employee survey with record participation

Responded to survey results with evolving approach to business planning, purchasing and internal communications

Approved Indigenous Employment Policy

Implemented key Certified Agreement initiatives in line with a commitment to service all during the life of the Agreement.

Reviewed and rolled out the Equal Employment Opportunity (EEO) policy

Developed and implemented competency based training/assessment in operations

PICTURED: LnG COnSTRUCTIOn WORkERS OvERSEE A COLLECTIOn Of PILES ThAT ARE USED In BUILDInG mATERIAL Off-LOAD fACILITIES fOR ThE CURTIS ISLAnD PROjECTS

people | Our employees | Gladstone Ports Corporation | Annual Report 2010/11 | 67

06 | people

At 30 June 2011, we employed 674 people (2009/10: 684) across a range of management, trade, technical and administrative roles. They are spread across three different locations at Gladstone, Port Alma and Bundaberg working in Commercial; Project; Port Planning and Development; Operations Support; Port Operations and Corporate Relations departments. Of these, 593 are full time employees (2009/10: 601) and 81 are job share/casual/temporary (2009/10: 83).

Meeting changing demandsOur workforce adapted to the changing operational environment and needs of our business during 2010/11. Flooded coal mines and washed out rail networks during the year reduced coal tonnages arriving at both RGTCT and BPCT, creating a downturn in work opportunities.

As a result, employees from our Earthworks section who rotate to work on coal as a function of their roster were redeployed to work on reclamation activities at Fisherman’s Landing for the recently approved LNG projects. The employees’ adaptive skills and willingness to embrace new roster arrangements and a new location allowed GPC to meet the time frames within budgets.

Attracting and retaining employeesThe growth of LNG and other industries in Gladstone has created unprecedented competition for skilled employees in the region. Whiles sustaining a less than 5% turnaround in 2010/11, it has challenged us to develop new strategies to retain our valued employees and continue to attract additional skilled workers to facilitate our growth.

Compounding this situation is the aging profile of our workforce, especially in the Operations area.

During the year we completed benchmark remuneration surveys in relation to other industries including LNG, to assist in the development of attraction and retention strategies aimed at our workforce. In order to compete effectively in an over-heated employment market we also reviewed rosters, work arrangements and benefits and explored diverse factors that may appeal to the different demographics. These included females being actively promoted into traditional male roles, additional apprentice and trainee placements and ways to prolong

PICTuRED: ThIS GRAPh CLEARLy DEmONSTRATES hOW OuR WORkFORCE IS AGEING AND ThE ISSuE ThAT POSES IN A COmPETITIvE EmPLOymENT mARkET

Age profile by DepArtMent June 2011

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

port operations - Cargo Handling

port planning and Development

Corporate relations

Commercial

18<23 23<28 28<33 33<38 38<43 43<4848<53 53<58 58<63 63<68

37 19 46 34 66 73 86 61 46 20

2 4 6 5 5 4 3 1

17 6 6 9 10 6 10 7 1 1

2 8 5 12 12 10 15 10 7 3

68 | people | Our employees | Gladstone Ports Corporation | Annual Report 2010/11

electrical apprentices

Mechanical apprentices

building apprentices

Horticulture apprentices

School-based

apprentices

trainees (all

disciplines)total

2011 Intake 4 6 1 1 9 21

Total apprentices and trainees

20 22 3 3 2 14 64

PICTuRED: OuR APPRENTICES AND TRAINEES ARE ThE BASIS OF OuR FuTuRE WORkFORCE AND WE CONTINuE TO hAvE A STRONG FOCuS ON ThEIR TRAINING

retirement plans of valued long serving employees to manage any loss of expertise and experience.

Over the past year GPC has been able to accommodate a significant increase in the number of female employees wishing to access a return to part time work arrangements following maternity leave, which has assisted many families to achieve a better work/life balance.

industrial instrumentsIn this, the second year of the 2009/12 Certified Agreement, we pursued the benefits of the (negotiated) productivity and efficiencies. many additional opportunities to improve workforce conditions have been identified as we prepare to negotiate the next Enterprise Bargaining Agreement beginning in 2012. Several long-standing unresolved issues were referred to Fair Work Australia for arbitration by mutual consent, to gain clarity and decisions to move forward.

Corporate image surveyIn may and June of 2010, we conducted our biennial survey of employees, customers and the community to determine how all three stakeholders viewed GPC’s performance.

Our employees responded strongly with a record 74% participating in the survey. They highlighted several key areas that the organisation needs to address to deal with the period of growth now underway. The focus areas identified were communication, workplace accountability, continuous improvement, information technology, corporate behaviours and safety.

The survey indicated there was a strong need for us to focus on our internal processes to support and complement our external focus and projected growth. This has evolved into an ongoing continuous improvement initiative that aims to engage all levels within the organisation and leverage pockets of excellence through cross-functional focus groups.

Developing future skillsDuring 2010/11 we again demonstrated our commitment to addressing the region’s future skill needs with the largest intake of apprentices and trainees in our history. We are providing career opportunities for 9 new trainees and 12 new apprentices. This brings the total number of apprentices and trainees to 64.

In addition to the apprentices and trainees we have employed directly, we are maintaining our commitment to the

ongoing placement of Gladstone Area Group Apprentices Limited (GAGAL) apprentices, thereby assisting the smooth delivery of community-based development. We are currently hosting three full-time GAGAL apprentices within our Trades areas.

We have committed to a pilot program of hosting an apprentice for the LNG industry. The program will be a partnership between an apprentice organisation, an LNG company and GPC to facilitate training for the LNG project. This will see an apprentice working with our trades people to develop the necessary skills and then joining the LNG company at some later stage of their plant construction (approximately 3-4 years time). All wages and on-costs will be covered by the external parties while GPC will provide the on-the-job training and supervision.

During the year, our apprentices excelled in the regional WorldSkills competition, winning Gold and Bronze medals in heavy vehicle mechanics and a Gold medal in Electrical Control Systems. Our two Gold medal winners then competed at the national WorldSkills Australia competition winning a Bronze medal in Electrical Control Systems.

there is a strong need for us to focus on our internal processes to support our external focus and projected growth

PEOPLE | Our employees | Gladstone Ports Corporation | Annual Report 2010/11 | 69

06 | PEOPLE

PICTURED: DREDGInG Of ThE hARBOUR IS COnTInUInG 24 hOURS A DAy TO AChIEvE ThE GOALS Of hELPInG TO fACILITATE ThE LnG InDUSTRy On CURTIS ISLAnD

Training for excellenceOur employees play a vital role in ensuring we meet our business objectives. We provide a variety of training initiatives to enhance their skills and knowledge, improving both their futures and ours. Professional development programs were a focus in 2010/11 with 45,611 hours of training provided to our employees.

Internal trainingWe completed the development of skills profiles for all our employees during the year. These profiles will allow us to more formally address their skills needs and provide enhanced career

opportunities. To facilitate this we are proposing to engage internal subject matter experts to deliver training specific to our workplace. It is proposed this concept will also be employed as part of our operations reclassification to facilitate future growth in our operations workforce and to train staff in our systems, such as Accounting, Payroll, Electronic Document Storage, Purchasing and Assetmanagement systems.

In 2011 GPC took the first steps towards online learning with successful launching of the harassment, Bullying and Discrimination modules employing this methodology.

Developing our womenOur annual Women’s forum provides a chance for our female employees to network and gain valuable self-development opportunities. This year’s event was the first of its kind with a ‘Girls night In’ fund raiser for cancer. With GPC matching funds from the auction the night netted $7,867 for the charity.

Our Women’s Leadership Program provides our female employees with the opportunity to gain leadership skills. The program, designed to build the foundations for a successful career in management, identifies strengths and opportunities for personal growth; enhancing personal skills as well as supporting confident workplace interactions. This year’s recipient of the ‘Realise your Potential’ initiative was Sarah hunter, Planning Officer within Corporate Services. Training

Hours

Training hours

Total Training Hours - Yearly

60000

50000

40000

30000

20000

10000

0

2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11

PICTURED: TOTAL TRAInInG hOURS REmAInED AT A hIGh LEvEL DURInG ThE yEAR

PICTURED: SARAh hUnTER

70 | PEOPLE | Our employees | Gladstone Ports Corporation | Annual Report 2010/11

Creating equal employment opportunitiesIndigenous employment initiatives were put in place at the Port during the year with the introduction of an Indigenous Employment Policy in late 2010. The policy is a result of target three of GPC’s RAP which is designed to increase opportunities for Indigenous people within the organisation.

We are working to establish recruitment and career development programs for Indigenous people to increase access to employment opportunities and to improve retention and career advancement performance. The goal is to increase employment to be representative of the Indigenous population in the region by 2015 and to have an Indigenous employment rate of five percent by 2020.

Our future Directions Indigenous Liaison Group will consult with Indigenous people and community groups to include and involve them in the development, decision making and implementation of the Employment policy. We seek to show leadership in the broader community by introducing innovative employment practices.

Employees in the communityWe encourage our individual employees to have a strong community focus and volunteer to participate in projects that take them beyond their daily working environment. We actively support this work by allowing them to use corporate tools such as email to communicate their requests for support from the wider organisation.

Causes that our employees continue to support include:

• Clean Up Australia Day

• The million Paws Walk to support the RSPCA

• movember – a month of fund raising for Prostate Cancer.

monthly employee barbecues at RGTCT and BPCT have also been used to raise money for a local youth shelter, Roseberry house.

Our people as partnersInternal communications was identified in our Employee survey as an area that needed to be addressed at all levels in the organisation. In the year ahead, we will address the flow of information within the Port and the use of communication tools within and across departments to achieve improvements.

We plan to launch a redeveloped Intranet in january 2012 to provide our employees with a more efficient way of accessing information and communicating with each other.

During the year, information campaigns were developed and communications support was provided to various departments to promote fitness for work, drug and alcohol testing and Indigenous reconciliation, as well as encouraging employees to participate in our major community event – the Botanic to Bridge. Similar campaigns will be developed in the coming year to promote health initiatives such as skin screening.

Giving our employees a voiceOur employees can report complaints and concerns using a confidential, free call hotline. The number links directly to a call centre provided independently by our internal auditors. Each call is logged and details of the complaint or concern are directed to appropriate personnel to be addressed.

Employees can always report matters of concern to their line supervisors and managers, but they are encouraged to use this confidential process to report any suspicions of fraud or misconduct. There were three calls made to the hotline during 2010/11,

PICTURED: ThE vIEW fROm ThE OPERATInG CABIn Of ThE ‘BIG BOSS’ DREDGE

PEOPLE | Our employees | Gladstone Ports Corporation | Annual Report 2010/11 | 71

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Looking ahead2011/12The next year will see a parallel focus as GPC assists in the facilitation of the burgeoning gas industry and other external entities entering the Gladstone area whilst maintaining a strong internal capability. This will be achieved by reinforcing the history of security at the Port, personal growth, and innovative ways to ensure employees continue to have a work life balance option.

We will consolidate a philosophy of continuous improvement and engagement of the entire workforce through effective communication, business planning, accountability and enhanced systems such as Aurion Payroll, Cintellate and others to position the port for the future including Wiggins Island operational readiness.

We will enter negotiations of a new industrial agreement with the intent of achieving a balance between remaining an employer of choice and enhancing productivity through increased efficiencies.

PICTURED: AWAy fROm DIRECTInG ThE ShIPPInG TRAffIC, OPERATIOnS PLAnnER, PETER hEnInG IS ThE ‘BARBECUE kInG’ AT GPC WhO EnjOyS COOkInG REGULAR fEASTS fOR hUnGRy EmPLOyEES AnD RAISInG mOnEy fOR LOCAL CAUSES

72 | PEOPLE | Our safety | Gladstone Ports Corporation | Annual Report 2010/11

Our safety

Targets 2011/12Attain AS/NZS 4801:2001 accreditation for our Safety Management System

Implement and embed behavioural-based Zero Harm safety program

Implement new incident management system

Continue development of Fatigue Risk Management program

Outcomes 2010/11Achieved four star rating in NSCA audit

AS/NZS 4801:2001 accreditation not achieved – gap analysis for transition from NSCA 5 Star system completed

Purchased Cintellate – a new software program to replace ‘Site Safe’ system – and having developed it to suit our needs, began implementation project

Developed new injury/illness classification system for July 2011 introduction

Implemented random drug and alcohol testing program

Reviewed work hours and prepared for Fatigue Risk Management training

Promoted use of safety conversations/observations to embed behavioural safety

PICTURED: A PROACTIvE APPROACh TO SAfETy IS AChIEvInG BETTER OUTCOmES

PEOPLE | Our safety | Gladstone Ports Corporation | Annual Report 2010/11 | 73

06 | PEOPLEPICTURED: STURDy STEEL CAPS – An ESSEnTIAL PART Of PERSOnAL PROTECTIOn On SITE

Improving safety trendChanges in our workforce make-up during 2010/11 saw more contractors engaged, and an increase of 6,299 hours in total hours worked for the year. Our safety performance shows an improving trend on both a per person and hours worked basis.

We use lost time injury frequency rates (LTIfR) – a ‘lag indicator’ – as the primary indicator of our safety performance. Our LTIfR at the end of the year was 3.49 compared to 4.90 in 2009/10. This downward trend saw a corresponding upward trend in medical treatment injuries and can be directly attributed to better post injury management including return to work programs. Despite

this improvement, our LTI and Lost Time statistics for 2009/10 impacted negatively on our nSCA audit and our safety management system rating was downgraded from a five to a four star rating.

An analysis of our injuries indicated that the majority are attributable to the risk taking behaviours demonstrated by individuals rather than physical factors that need to be mitigated or designed out of the workplace. This is in line with international findings, and a driver of our Zero harm program.

We believe that by taking a proactive approach to safety we will achieve the best outcomes. We are increasing our focus on lead indicators such as hazard identification, Safety Observations and

other visual safety leadership programs. This proactive activity encourages and rewards staff for identifying and taking immediate steps to control hazards. It is supported by developing long term solutions to particular problems, undertaking routine inspections and audits, and increasing safety interactions.

Safety performance is discussed and analysed in daily operational, weekly review and monthly Board meetings. These performance discussions inform and support the framework designed to achieve improvements in our safety management approach. In the coming year, we will be developing systems and processes in line with AS/nZS 4801:2001 and focusing on improving our safety culture using a behavioural, safety-based approach.

2006/07 2007/08 2008/09 2009/10 2010/11

number of LTIs 7 5 7 7 5

hours worked 1,159,524 1,246,680 1,371,068 1,427,162 1,433,461

Days lost 58 42 149 35 43

LTIfR 6.04 4.01 5.11 4.90 3.49

LTIDfR 8.29 8.40 21.29 5.00 9.20

TIR 87 57 109 127 113.00

TIfR 75.03 45.72 79.50 88.99 78.83 LTI – Lost Time InjuryLTIfR - Lost Time Injury frequency RateLTIDfR – Lost Time Injury Duration frequency Rate TIR – Total Injury RateTIfR – Total Injury frequency Rate

GPC’s safety performance

74 | PEOPLE | Our safety | Gladstone Ports Corporation | Annual Report 2010/11

Employees embracing safety strategiesDuring the year we made changes within our Safety sector to drive improvements in our safety management approach.

Two new roles were created:

• Safety Compliance and System Specialist

• Safety Specialist.

The Safety Compliance and System role has responsibility for developing, monitoring and managing our safety management system. It will ensure we comply with relevant safety legislation and accreditation requirements.

A major function of the role is to ensure our safety management system is well placed to comply with the new harmonised Occupational health and Safety (OhS) laws expected to take effect on 1 january 2012. A key component of this is to ensure than

an Occupational health monitoring program is planned and implemented to effectively mitigate our business risk.

The Safety Specialist role has responsibility for managing the implementation of our safety management system across the organisation. This will be hands on, providing assistance to our managers and employees through coaching, mentoring, auditing and advisory services. A key focus of this work is to ensure that safety is a shared responsibility right across GPC.

key advances made in the management of safety over the past year have involved the review and implementation of systems, including:

• hazardous Substances and Dangerous Goods

• Isolation Regulations and Guidelines

• Drug and Alcohol program

• Emergency Preparedness and Response Plan

• Induction for contractors/visitors, employees and various site locations

• PORT booklet (personal risk management tool)

• Confined Space management.

Development of fatigue risk management included a review of hours of work that may lead to fatigue and gathering information in preparation for future fatigue training and fatigue risk workshops. These workshops will involve assessing the fatigue risk associated with specific tasks and roles and establishing relevant risk tolerance thresholds. This information will provide the basis for developing management approaches to mitigate fatigue derived risk.

Effort has also been directed to up-skilling our middle managers and supervisors through Certificate Iv training in OhS and other specific safety training.

PICTURED: CRIB ROOm ‘PEGGy’ ShELLEy BRODIE ChECkS OUT SUPPLIES In ThE WAREhOUSE. IT APPEARS ThE TERm ‘PEGGy’ IS A nICknAmE OR SLAnG fOR A CREW’S mESSmAn

PICTURED: GLOvES, PROTECTIvE hEARInG EQUIPmEnT AnD hIGh vIZ CLOThInG ARE ALL ESSEnTIAL TO BEInG SAfE On An InDUSTRIAL WORk SITE

PICTURED: DAnIEL BARLETTA hAS BEGUn hIS CAREER jOURnEy AT GPC AS A fIRST yEAR ELECTRICAL APPREnTICE

PEOPLE | Our safety | Gladstone Ports Corporation | Annual Report 2010/11 | 75

06 | PEOPLE

PEOPLE | Our safety | Gladstone Ports Corporation | Annual Report 2010/11 | 75

Looking ahead2011/12In the coming year, we will transition from the nSCA five Star Safety management System to AS/nZS 4801:2001 Occupational health and Safety management System Accreditation. This will provide a more robust management system and allow better integration between our other quality systems.

As part of our continual improvement program, our contractor and employee inductions are being reviewed to reflect our commitment to and expectation of compliance with our safety approach and zero harm goal.

The development of a fatigue Risk management process will continue in the coming year.

Our 2010 Corporation Image Survey highlighted an opportunity to enhance our safety culture at all levels. A dedicated behavioural-based safety program that centres on Zero harm is being developed to address this from both top down and bottom up perspectives. The program targets safety leadership, highlighting the benefits of a strong safety culture within the workplace. The outcome will be ongoing programs that embed safety into everything we do. The bottom up approach targets hazard identification/reporting, ownership of safety issues and a proactive approach to safety within the workplace.

Our Safety management processes will be enhanced when Cintellate, a new incident and action management system, is commissioned in August 2011.

PICTURED: BEInG SAfE On BOARD A DREDGE AnD knOWInG WhERE yOU CAn’T GO IS AS ImPORTAnT AS BEInG SAfE On LAnD.

76 | PEOPLE | Our health | Gladstone Ports Corporation | Annual Report 2010/11

Targets 2011/12Consolidate hearing preservation program and M5 men’s health initiative

Implement a range of health programs including:

• Stop Sun Spots• Safe Spine

Further develop and formalise role specific pre-employment screening checklists

Outcomes 2010/11Commenced Stage 1 of hearing preservation program – audiometric screening

Formalised contractual arrangements with Occupational Physician

Promoted M5 Men’s Health Initiative

Developed Safe Spine Pilot Program

Developed Stop Sun Spots Skin Screening Program

Commenced development of formalised role specific pre-employment screening

Secured funding for Automated Defibrillation Units across sites

OUR AUDIOmETRIC SCREEnInG PROGRAm WILL BE COnSOLIDATED In ThE COmInG yEAR WITh ThE AIm Of RECOmmEnDInG CUSTOm fITTED hEARInG PROTECTIOn

Our health

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PICTURED: fIShERmAn’S LAnDInG IS A mULTI-USER fACILITy SET TO BECOmE GPC’S mAjOR WhARf CEnTRE In ThE nExT DECADE

Improving safety trendOur Occupational health team is committed and dedicated to supporting employee health and wellbeing, providing a range of services to employees for both work and non-work related health issues. GPC’s health focus is further supported by employee benefit programs which include:

• health and Wellbeing Program –employees are reimbursed for health-related items or activities approved under the program, such as weight management programs or gym gear

• Employee health Check – annually, employees over 40 receive a free medical check-up with a doctor of their choice; this is available to those under 40 every two years

• medical Scheme top-up – employees with private health insurance can access a top-up for out of pocket medical expenses

• fluvax Immunisation - employees have access to a free fluvax immunisation program each year.

Managing injury and illnessWe assist employees to manage both work and non-work related injury and illness. Return to work planning in conjunction with the employee’s treating General Practitioner and GPC’s appointed Occupational Physician is the cornerstone of successful rehabilitation. The health Team has developed strong relationships with WorkCover and QSuper to further support our injured and ill workers.

Screening for hearing problemsOnsite audiometric screening was introduced in RGTCT’s Operational area during the year, with 30 employees screened in the three months since inception. The screening process is the first step in developing the Port’s hearing Preservation Program. further steps to be introduced include Occupational Physician review and referral, hearing attenuation testing and then recommendations on the use of custom fitted hearing protection.

ThE m5 mEn'S hEALTh InITIATIvE WILL BE AnOThER hEALTh PROGRAm TO BE DEvELOPED AnD PROmOTED fURThER In 2011/12

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Health educationWe regularly offer a range of health education and promotional activities for employees, including:

• Be healthy – providing employees with blood pressure, weight and blood sugar monitoring along with education and referral where required

• Give It Up – assisting employees to give up smoking.

• y-fronts – Why me, Lets front the Problem – focusing on Prostate, Bowel and Testicular Cancer.

Our health team has promoted a number of health initiatives including:

• Secret men’s Business - envelopes of sensitive health information

• A nuts and Bolts Competition to celebrate men’s health Week

• free men’s health Assessment which included BP, BSL, Girth and Weight measurement to introduce the m5 Project

• Girl’s morning Tea for women in the operational area to celebrate Women’s health Week.

Supplying First Aid kitsThe Occupational health team is responsible for distributing first Aid supplies across our multiple sites. During 2010/11, a kit exchange program was introduced to streamline kit restocking and replacement. This had an environmental component involving reusable carry bags to reduce the use of plastic. Out of date stock was donated to the Royal Society for the Prevention of Cruelty to Animals (RSPCA).

funding was secured to provide automated external defibrillation units to our multiple sites, as early access to defibrillation has been shown to improve health outcomes for people suffering cardiac arrest. The health team is in the process of introducing the units into all workplaces.

PICTURED: ThE BUnD WALL IS BEInG BUILT TO RETAIn DREDGE mATERIAL fROm ThE mAjOR DREDGInG WORkS In ThE WESTERn BASIn

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Looking ahead2011/12In 2011/12, our health team will provide a scheduled clinic approach to the delivery of services.

Our main focus in preventative health will be to implement our Stop Sun Spots - skin screening and sun safety education program on site. This is a Board initiative and will be provided by a local medical practice that specialises in skin screening.

Within our maintenance Department, we will deliver a Safe Spine back care program, to address the sprains and strains sustained in the workforce. The program will commence mid year and is aimed at pre-start warm up exercises and stretches, which are important in an ageing workforce.

With the expected growth in the Port’s employees, we have commenced work on developing role specific pre-employment screening processes as they are an effective and essential aspect of future injury management. These processes include the development of various job Banks of functional requirements for tasks, assessments specific to the role and identification of potential health risks.

PICTURED: BUILDInG SERvICES SUPERvISOR hEnRy WARD hAS WORkED 25 yEARS AT ThE PORT Of GLADSTOnE – A mAn fOR ALL SEASOnS AnD A mEnTOR fOR OUR APPREnTICES

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Our governance structure underpins not only conformance and procedures but also drives enhanced performance

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governanceOur Board of Directors 82

Our Management team 86

Corporate Governance practices 88

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PICTURED: ThESE DUmP TRUCkS hAvE BEEn ThE WORkhORSES On SITE DURInG ThE COnSTRUCTIOn Of

ThE BUnD WALL AT fIShERmAn’S LAnDInG

82 | CORPORATE GOVERNANCE | Our Board of Directors | Gladstone Ports Corporation | Annual Report 2010/11

Our Board of Directors

Ian is currently Chairman of WorkCover Queensland, Chairman of foodbank (Qld) Pty Ltd and has served as a Director on the Queensland Investment Corporation Board. Ian is a pharmaceutical chemist and partner in two pharmacies. he has had extensive commercial and community involvement through numerous directorships and executive roles over the last 45 years. Awarded member, General Division of the Order of Australia (Am) in 1988, Ian also received the Centenary medal in 2003. In 2008 he was named as a Queensland Living Great. Ian was inaugurated into the Australian Soccer hall of fame in 1999 after serving in numerous roles within the sport including: Chairman of Australian Soccer federation, President of Queensland Soccer federation, vice President and Executive member of Oceania football Confederation, and Chairman of Olympic football Taskforce. In addition to being Chairman of the GPC Board, Ian also chairs the human Resources Committee and is a member of the Audit and Compliance Committee.

Appointed as Chairman from 1 February 2007 until 31 January 2009. Reappointed from 2 February 2009 until 30 September 2010. Reappointed from 1 October 2010 to 30 September 2013. *Ian Brusasco was appointed as Chairman on 1 February 2007.

Ian Brusasco, AM Chairman*

Charles is a legal consultant in a private legal practice in Central Queensland. he previously served as Chair of the Rockhampton Port Authority and has held several Board positions in the corporatised Queensland electricity supply industry. Charles is a member of the Board of Professional Engineers of Queensland and the Residential Tenancies Authority. he is also Deputy Chancellor of Central Queensland University. Charles holds undergraduate degrees in Arts and Law and masters Degrees in Business and Law. he holds a current practising certificate as a solicitor. Charles is a member of the human Resources Committee.

Appointed 1 July 2004 until 30 June 2007. Re-appointed on 1 July 2007 until 30 September 2010. Re-appointed on 1 October 2010 to 30 September 2013. ** Charles Ware assumed the role of Deputy Chairman on 27 September 2007.

Charles Ware Deputy Chairman**

Peter has over 20 years experience in local government, having completed his fourth term as mayor of Gladstone before standing down in march 2008 to concentrate on his own business interests. As a business proprietor he has a record of extensive commercial and community involvement. Peter was awarded member, General Division of the Order of Australia (Am) in january 2009 and also received the Centenary medal in january 2001. he is a member of the Gladstone Economic and Industry Development Board, and of the CQ University Australia Council. he is also Chairman of Gladstone Area Promotion and Development Limited and of Gladstone Area Group Apprentices Limited. Peter is a member of the human Resources Committee.

He has served on the Ports Corporation Board since his first appointment on 18 July 1996 and his current tenure extends until 30 September 2012.

Peter Corones, AM Director

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Tony is currently Deputy Chairman of Brisbane markets Limited and a former Chairman of the Brisbane Lions AfL football Club. he has been involved in the fresh produce industry for over 20 years including long term directorships of both the Queensland and Australian Chamber of Wholesalers. Tony holds a Bachelor of Laws degree from the University of Queensland. Tony is a member of the Audit and Compliance Committee.

Appointed 11 October 2007 until 30 September 2009. Re-appointed from 1 October 2009 until 30 September 2012.

Tony Kelly Director

Gail has held management roles in a number of areas for over 30 years and is currently General manager Disability Services and Community Engagement for Endeavour foundation and a Board of Advice representative for the Gladstone foundation. She has been involved in the disability sector for nearly 20 years, having previously worked in the hospitality and health sectors. Gail is also a member of the Complaints management Quality Committee advising the minister for Disability Services and has been a member of the Disability Council of Queensland, the Gambling Community Benefit fund, under Treasury, and was the Inaugural Chair of the Regional Disability Council of Central Queensland. She is a member of the Australian Institute of Company Directors. Gail is a member of the human Resources Committee.

Appointed 1 October 2008 until 30 September 2011.

Gail Davidson Director

Judy Reynolds Director

judy is a chartered accountant with over 20 years experience in public accounting and is a director of Sothertons Chartered Accountants. She has extensive experience in business development and strategic growth strategies working with small and medium entities (SmEs) over a wide range of sectors. judy has chaired the national Sothertons Board and is a member of the Gladstone Economic and Industry Development Board and an advisor to the Gladstone foundation. She has a Bachelor of Business and is a fellow of the Taxation Institute of Australia. judy is Chairman of the Audit and Compliance Committee.

Appointed 1 October 2008 until 30 September 2011.

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helen is partner of strategic management consultancy Corporate Context, Associate fellow of the Australian Institute of management, and a member of the Australian Institute of Company Directors. She holds Bachelors and masters degrees in business from QUT.

helen has spent 28 years as a strategic management/ marketing consultant with broad knowledge of market research methods, including stakeholder engagement processes; business and market strategy frameworks; organisation diagnostic frameworks and written communication methods for complex concepts. helen has expertise in governance processes and has worked with a broad range of public and private sector clients from large public companies, government entities, not-for-profit organisations and SmEs.

Currently, helen is a director, and previously Chair of the Audit Committee, of WorkCover Queensland. She is also director and Chair of the Audit and Risk Committee of help Enterprises in the disability services sector. helen has also previously chaired the advisory boards of two medium sized professional services firms in the property sector.

Appointed 1 October 2010 until 30 September 2013.

Helen Skippen Director

Glen is the managing partner of the private legal firm, Baker O’Brien & Toll. Glen’s practice comprises predominantly advice upon property and commercial law. he previously served as a Director of Bundaberg Port Authority from 1 june 1999 until 30 june 2001. he then served as Chairman of the Bundaberg Port Authority from 1 july 2001 until 30 September 2007. Glen was subsequently appointed as a director of the Port of Brisbane Corporation from 23 August 2007 until 30 September 2009 following its merger with Port of Bundaberg. he holds a Bachelor of Commerce and Bachelor of Laws (honours) from the University of Queensland and is admitted to practice as a Solicitor of the Supreme Court of Queensland and the high Court of Australia. he has held numerous executive and honorary positions with local sporting and community organisations. Glen is a member of the Audit and Compliance Committee.

Appointed 1 October 2009 until 30 September 2012.

Glen Toll Director

PICTURED: EARThWORkS ARE UnDERWAy fOR ThE DEvELOPmEnT Of ThE LnG InDUSTRy On ThE SOUThERn TIP Of CURTIS ISLAnD

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PICTURED: An EmPTy DUmP TRUCk hEADInG Off TO RETRIEvE mORE BLUE mETAL ROCk fOR ThE BUnD WALL

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Our Management team

The focus for the project group in 2011/12 will be on completion of major bunding works in the Western Basin and managing the harbour dredging program for the LnG industry and the proposed Wiggins Island Coal Terminal.

Operations will focus on the continuous improvement of our coal terminals’ throughput capabilities and efficiencies. In addition, active involvement in the Coal Chain maximisation Project will improve inloading capacity of the supply chain. Enhancements to the Reliability Centred maintenance system will also be a focus.

Corporate Relations will continue to improve communication services internally and externally for GPC. A major focus will be ensuring the safety and well being of our employees and visitors remains paramount and that our obligation towards the environment continues to strive towards best practice. Discussions with employees on the renewal of our Enterprise Bargaining Agreement will also be undertaken.

Leo’s main focus is on directing and controlling our business and operational activities, providing leadership by developing plans and strategies to ensure short and long term objectives are achieved.

In 2011/12, Leo’s main focus will be on ensuring the strategic planning and the development of additional port facilities is conducted in a manner which meets the needs of the State, the region and the expanding industries in Central Queensland whilst ensuring the ecological health of GPC’s ports is maintained.

Leo Zussino Chief Executive Officer

mike is principal financial adviser to the CEO and Board, and is responsible for managing our commercial strategy, governance and risk management functions. his department also manages the port property portfolio, information systems, procurement, marina, Port of Bundaberg and new business functions.

In 2011/12, mike’s focus will be on establishing long term commercial contracts with new and existing Port customers to ensure stable and secure commercial outcomes into the future. Improving efficiency and governance will also be a priority, as will be the investigation into the introduction of a new business system.

Mike Galt Commercial General Manager

Ian is responsible for all activities undertaken by the Port Planning and Development department which include the full spectrum of Engineering Services associated with planning, project development and asset management of port infrastructure as well as the earthworks operational activities.

In 2011/12, Ian’s focus will include the full spectrum of engineering and planning associated with development of the Port’s existing and future port infrastructure as well as the earthworks operational activities. In addition, planning for expansion of the Gladstone channel and infrastructure for services to shipping will be a major focus.

Ian Drury Port Planning Development General Manager

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In 2010/11 mark was responsible for the Wiggins Island Coal Terminal Project and the oversight of other major GPC projects. mark has since left GPC to take a position with QAL.

In 2011/12, this role will focus on increasing the Port of Gladstone’s throughput capacity by delivering infrastructure associated with the proposed Wiggins Island Coal Terminal Project, ongoing expansion at RGTCT and LnG industry infrastructure.

Mark Greenaway Project Manager

Management challenges in 2011/12 will centre on the expansion of port facilities, operational efficiency, sound environmental performance, employee safety and improved communications

In 2010/11 Craig was responsible for managing all cargo handling activities and associated infrastructure, including operating capability and performance, terminal asset management and maintenance, engineering support and service delivery improvement. Craig has since left GPC to take a position with QR national.

In 2011/12, this role will continue to focus on operational capability and performance through the Continuous Improvement Program and Capricorn Coal Chain maximisation Project. It will also oversee the implementation of operational support systems and the integration and optimisation of port expansion assets, embedding our asset management plan and reliability centered maintenance system.

Craig Walker Port Operations General Manager

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Organisational structure

BOARD

CEO

COMMERCIALPORT OPERATIONS PROJECTS

PORT PLANNING AND DEVELOPMENTCORPORATE RELATIONS

SHAREHOLDING MINISTERS

INTERNAL AUDIT

ExTERNAL AUDIT

AUDIT AND COMPLIANCE COMMITTEE

HUMAN RESOURCES COMMITTEE

GENERAL MANAGERS

CUSTOMERS EMPLOYEES COMMUNITY

Corporate governancepracticesGPC’s corporate governance structure underpins not only our conformance with policies and procedures, but also our performance. It sets the standards and provides the direction that GPC’s Directors and employees use in their conduct of the company’s affairs, and in their relationships with our shareholding ministers and other stakeholders.

Our governance framework endorses good governance practices and sets the bar for an organisation-wide commitment to high standards of legislative compliance and financial and ethical behaviour that GPC requires to:

• Attain our vision

• Undertake our mission

• Uphold our values

• Efficiently and effectively achieve our goals and objectives.

GOC’s operate under the second edition of the Corporate Governance Guidelines for Government Owned Corporations published in 2010. These guidelines are based upon the eight principles set out in the ASx Corporate Governance Principles and Recommendations. GPC has set out this section of our annual report using each of the eight principles to demonstrate how we perform against those standards.

Our Corporate Governance policies are available at: www.gpcl.com.au/corporate.html

PRInCIPLE 1: LAy SOLID fOUnDATIOnS fOR mAnAGEmEnT AnD OvERSIGhTOur BoardCQPA was renamed the Gladstone Ports Corporation (GPC) on 13 march 2008. GPC converted to a Company Government Owned Corporation (GOC), constituted under the provision of the Government Owned Corporations Act 1993 (GOC Act) on 1 july 2008, and became Gladstone Ports Corporation

Limited as part of this process. As at 30 june 2011, the shareholding ministers were the minister for finance, natural Resources and The Arts and the minister for main Roads, fisheries and marine Infrastructure.

Our Directors are appointed by the Governor in Council, pursuant to the GOC Act, on the recommendation of the shareholding ministers. GPC is required to have a minimum of three directors and any director may be removed at any time by Governor in Council. no director is subject to retirement by rotation.

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A structure that adds valueThe criteria for Board membership are in accordance with the GOC Act. This states that in appointing a person as a Director, the Governor in Council must have regard to that person’s ability to make a contribution to the statutory GOC’s commercial performance and implementation of its Statement of Corporate Intent (SCI).

All Directors are non-executive Directors. The Corporation is committed to ensuring that all new members of the Board receive an effective induction to their Board and Committee responsibilities as well as an overview of the structure, operations, policies and processes of GPC. Directors are appointed for a term of no more than five years, but may be reappointed after that time.

Role of the BoardOur Board assumes overall responsibility for corporate governance practices within GPC and monitors the performance of the organisation, its management and employees. The Board, in conjunction with the Chief Executive Officer (CEO), establish and implement our operational, financial and strategic direction as outlined in our one year (Statement of Corporate Intent 2011–2012), five year

(Corporate Plan 2011–2016) and long term (50 year Strategic Plan 2008–2058) plans. Ongoing government, customer, community and employee consultation assists the Board to enact the corporate objectives defined in these plans.

Induction of new members and continuing professional developmentA comprehensive Directors’ induction is carried out for new Directors appointed to the Board. Information and briefings provided to Directors includes enabling legislation, corporate planning documents, relevant policies and detail on Board administrative arrangements.

A site visit is also carried out to familiarise Directors with our operations. new Directors are provided with an opportunity to attend the GOC Directors’ forum organised by the Office of Government Owned Corporations. This forum is usually held on an annual basis and provides an overview of the issues, processes and practices which are specific to GOCs and with which Directors should be familiar in order to fulfil their role effectively.

Directors are kept advised of relevant industry related seminars and conferences on offer to update their skills and knowledge. Directors are

also encouraged to attend workshops and seminars as part of a continuing professional development policy to enable them to undertake their role effectively.

PRInCIPLE 2 - STRUCTURE ThE BOARD TO ADD vALUEBoard meetingsA total of eight Board meetings were held during the year. The table on page 93 provides details of each Director’s attendance at those meetings.

The Chairman and Chief Executive Officer discuss and finalise the agenda for each meeting, standing items include:

• monthly reports on GPC’s financial performance

• monthly reports on GPC’s non-financial performance (through a Chief Executive Officer’s Report detailing the activities of each division)

• Commercial and governance decisions requiring resolution

• monthly reports on expansion projects and new infrastructure

• Declaration of any conflict of interest.

meetings may include presentations by GPC employees or invited guests. Board papers are circulated in paper format one week before the meeting to provide sufficient time for review of agenda items and enable Directors to request additional information to support them in their decision making.

Board committeesThe Board may delegate its powers to a committee of Directors. GPC has two committees, the Audit and Compliance Committee and the human Resources Committee. Each Committee comprises four directors, one of whom is appointed Chairman by the Chairman of the Board. Other relevant management personnel attend these meetings as required.

Director independenceEach Director must declare their interests external to GPC to allow for the identification of any areas of activity that may lead to a conflict of interest. A declaration of Directors’ other interests is a standing agenda

PICTURED: COnSTRUCTIOn DOCkS hAvE BEEn BUILT AT EACh LnG SITE On CURTIS ISLAnD TO ALLOW PEOPLE AnD vEhICLE ACCESS

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PICTURED: ThESE PILES hAvE BEEn USED TO CREATE A mATERIAL Off-LOAD fACILITy AT OnE Of ThE LnG PROjECT SITES On CURTIS ISLAnD

item at the commencement of every ordinary Board meeting. Directors absent themselves from meetings while any matters of potential conflict of interest are discussed, and all reference to these matters is removed from copies of their minutes and papers. In accordance with its Charter, the Board at least annually ensures that the independence criterion as set out in the Charter is satisfied for each Director.

The following materiality thresholds apply to the above definition of independence:

• A material professional advisor or consultant is one whose fees to GPC in a financial year exceed $100,000

• A material supplier is one whose sales to GPC in a financial year exceed 2 percent of the value of GPC’s total purchases including capital expenditure

• A material customer is one whose purchases from GPC in a financial year exceed 2 percent of GPC’s gross revenue

• A material contractual relationship, other than any of those described above, is one in respect of which the consideration payable under the contract exceeds $100,000.

materiality is assessed on a case by case basis from the perspective of both GPC and the relevant Director having regard to the Director’s individual circumstances.

Gaining independent adviceIndependent professional advice at GPC’s expense is available to the Board and individual Directors to assist them in carrying out their designated duties.

Board performance reviewThe Board, as part of its governance process, has committed to ensure a regular process of review is in place. The Chairman conducts a review of the skills around the Board table and identifies any skills that may be required in the future. Whilst the Chairman does not himself have the right to appoint Directors, it is acknowledged that shareholding ministers take skill requirements into account when appointing Directors.

Performance of the Board, its Committees and individual Directors is reviewed and evaluated on a regular basis. The review involves individual sessions between the Chairman and each Director. In addition, from time to time, an external consultant may be engaged to assist with the evaluation and review of board performance. Directors’ attendance at 2010/11 Board meetings was in accordance with their individual terms of appointment to the Board.

PRInCIPLE 3 – PROmOTE EThICAL AnD RESPOnSIBLE DECISIOn mAkInGGPC’s ethical standards such as the Code of Conduct, fraud, Corruption and Official misconduct Policy, Whistleblowers and Risk management Policy, and the means by which we implement them, form part of the induction policy for all new Board members and employees. Updates are provided as new policy developments occur and as part of our CEO’s annual business update sessions. Policies are available on the GPC internal website as well as at: www.gpcl.com.au/leaseOfInformationPublicationScheme.html

Code of conductA comprehensive Code of Conduct has been developed and formally adopted by the Board. The code gives

detailed advice on the responsibility and accountability of individuals for reporting and investigating reports of unethical practices. It also provides comprehensive examples to illustrate application of the code. Employees are reminded of their obligations under the code during annual business update sessions presented by the CEO. Our code reflects the requirements of the Public Sector Ethics Act 1994.

Fraud and corruption prevention policyGPC’s fraud and Corruption Prevention Policy applies to all Board Directors and our employees. The policy was developed to assist management and employees in the discharge of their responsibilities by setting out the procedures for managing fraud, and corruption. The Company Secretary is the fraud Control Officer for the purposes of the policy. All incidences of theft and related activity are reported to the Audit Committee by the fraud Control Officer on a regular basis for consideration of fraud control initiatives. Employees are also reminded of their obligations under this policy at the annual business update sessions.

Policy on reporting misconduct and wrongdoingOn 1 january 2010, the Public Interest Disclosures Act 2010 (the Act) came into effect. The Act creates an obligation

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on GPC to implement reasonable procedures to deal with PIDs (defined as maladministration and official misconduct).

GPC has an obligation to deal with wrongdoing, and aspires to an organisational culture where all staff feel confident and comfortable about making a disclosure of wrongdoing. Disclosing wrongdoing is in accordance with GPC’s ethical culture, in particular, acting with integrity. The Company Secretary is the fraud Control Officer for the purposes of the policy. All PIDs and related activity are reported to the Audit Committee by the fraud Control Officer on a regular basis for consideration. Employees are also reminded of their obligations under this policy at the annual business update sessions.

WhistleblowersUnder our Code of Conduct, all GPC employees are required to report any reasonably based suspicion of fraud, corruption and/or maladministration to their manager, another appropriate officer of GPC, a member of the Board or through the GPC hotline (1800 063 408). This is consistent with the requirements of the Whistleblowers Protection Act 1994. While the GPC hotline is intended primarily to be a service for employees, contractors and

customers of GPC, the same reporting channel is available for the community to raise issues and concerns. no calls to the hotline will be dismissed on the basis of their source. The service is provided by our internal auditors. no fraud, corruption or maladministration matters were received on our hotline during the year. One (1) environmental report and two (2) misconduct reports were received during the year and the relevant departments are attending to these. Where calls were received about other matters, these were redirected to the relevant departments for action.

The Capital Investment System, to improve decision making and management of capital projects, commenced implementation. This was originally a target for 2009/10, but will now be completed 2011/12.

PRInCIPLE 4 – SAfEGUARD InTEGRITy In fInAnCIAL REPORTInGAudit and compliance committeeThe Audit and Compliance Committee comprises judy Reynolds (Chair), Ian Brusasco, Tony kelly and Glen Toll.

The qualifications of the members have been included in Directors biographies on pages 82 to 84. The Committee is assisted by the CEO and the Commercial General manager. The internal and external auditors are invited to attend Committee meetings to present relevant reports and to openly discuss any concerns with the Committee, without management influence. The responsibilities of the Audit and Compliance Committee include, but are not limited to:

• following the internal audit charter, and overseeing the internal audit and compliance functions of GPC

• making recommendations on the results of various Internal Audit Reviews carried out throughout the year

• making recommendations based upon the reports of the external auditors

• Reviewing and approving the annual financial statements

• Overseeing the ethical conduct and governance functions of GPC.

The Audit and Compliance Committee operates under a charter established by GPC’s Board. During 2010/11, the Audit Committee observed the terms of its charter and had due regard to Queensland Treasury’s Audit Committee Guidelines.

External audit arrangementsGPC, in accordance with the Government Owned Corporations Act 1993 and the Financial Accountability Act 2009, uses the Queensland Audit Office as its external auditor.

Internal auditThe Audit and Compliance Committee defines the internal auditors’ scope of work through establishment of an annual internal audit plan. It also reviews the reports of the internal auditors, and assesses their quality of work. Deloitte Touche Tohmatsu was appointed GPC’s internal auditors for a period of three years, ending 31 December 2011. Internal audit is an independent function that assists the Board and management in the effective discharge of their responsibilities.

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In ThE COmInG yEAR WE WILL COmmEnCE COnSTRUCTIOn Of A nEW TUG TERmInAL

The Audit and Compliance Committee has monitored management’s performance and internal audit reports from Deloitte Touche Tohmatsu. The following internal audit reports were tabled during the year:

• Wiggins Island Coal Terminal Project

• National Greenhouse and Energy Reporting Act 2007

• follow Up of Prior Audit findings

• Payroll Process

• Cash management

• Internal vulnerability Assessment

• Privacy and Right to Information

• Risk management follow-up

• Crisis management and Business Continuity

• minor Procurement Audit

• Recruitment Process

• Capital Works Review

• Budget Process.

The audit reports were submitted to the Audit and Compliance Committee for consideration and assessed for subsequent implementation of their recommendations.

Dividend policy GPC’s dividend policy takes into account the return that shareholders expect from their investment and the ongoing capital investment requirements of our business. In 2010/11, the Board recommended to shareholders a dividend payment of 80% of after tax profit, adjusted for any unrealised movements from the revaluation of non-current assets.

Records managementGPC is aware of its responsibilities under the Public Records Act 2002 and is formulating strategies in line with ISO 40 Record keeping used under the Financial Accountability Act 2009 to improve recordkeeping practices. This will ensure that operational business needs, legal, evidential and accountability requirements are met and stakeholder expectations are fulfilled.

Summary of directions and notifications given to the board by shareholding MinistersThere were no directions and notifications issued by shareholding ministers under the GOC Act for the 2010/11 financial year.

PRInCIPLE 5 – mAkE TImELy AnD BALAnCED DISCLOSURECorporate planning and disclosureGPC presents a 12-month Statement of Corporate Intent (SCI) and 5-year Corporate Plan to shareholding ministers annually. The SCI forms the basis of the contract between GPC and shareholding ministers. Status reports are presented quarterly to shareholding ministers and reports against key performance indicators are provided to the Board on a monthly basis.

In addition the CEO regularly advises shareholding ministerial departments on developing projects and GPC’s proposed actions. This is also done through written briefings as required.

GPC complied fully with all ASIC requirements during 2010/11.

PRInCIPLE 6 – RESPECT ThE RIGhTS Of ShAREhOLDERSThis principle requires GOCs to respect the rights of shareholding ministers and their representatives, having regard to the requirements of responsible government. As a GOC, GPC at all times seeks not only to comply with statutory and legal requirements but to go beyond where relevant.

PRInCIPLE 7 – RECOGnISE AnD mAnAGE RISkOur Board retains ultimate responsibility for risk management and for determining the appropriate level of risk that the Board is willing to accept in the conduct of our business activities. The CEO provides the interface between the business units and the Board. Overall, the CEO has the ultimate responsibility for maintaining a Board-endorsed, robust corporate risk management system within GPC that through transparency in reporting reflects the true state of exposures to our business. GPC is committed to:

• Behaving as a responsible corporate citizen, protecting employees, customers, contractors and their property, as well as the community and the broader environment from unnecessary injury, loss or damage

• Achieving our business objectives by minimising the impact of risks we can meaningfully and realistically control which would otherwise significantly affect our assets and earnings

• finding the right balance between the cost of control and the risks we are willing to accept as the legitimate grounds for earning reward.

Supervisors are required to ensure that as new risks are identified, or current risks are removed, the Business Risk Database is updated and that risks are communicated to their respective business units. A formal review of each business unit’s risks must also be conducted by supervisors at least once

CORPORATE GOVERNANCE | Corporate governance practices | Gladstone Ports Corporation | Annual Report 2010/11 | 93

07 | CORPORATE GOVERN

ANCE

a year as part of the business planning and budgeting process. These reviews consider the completeness of the risks identified, the accuracy of assessments, and review the effectiveness and continued operation of identified controls and accountabilities.

The principles behind this policy are based on AS/nZS 4360: 2004 Risk management.

PRInCIPLE 8 – REmUnERATE fAIRLy AnD RESPOnSIBLyHuman resources committeeThe human Resources Committee comprises Ian Brusasco (Chairman), Charles Ware, Peter Corones and Gail Davidson. The Committee composition was restructured from 1 june 2010, following an internal review of the skills required by the Committee. The Committee was assisted by the CEO and the Commercial General manager.

The Committee’s responsibilities include, but are not limited to:

• monitoring and implementing recommendations relating to salaries and enterprise agreements

• Reviewing reports and overseeing the implementation of recommendations arising from audits and reviews of systems and processes

• Providing strategic direction for human resource management, training, planning and development

• making recommendations to the Board on remuneration issues.

The human Resources Committee continued to review and approve

GPC’s strategic plans for health and Safety. The progress of working groups developed as part of the Certified Agreement negotiations has been monitored by the committee along with the progress of training and development initiatives throughout GPC.

Remuneration for the BoardDirectors’ remuneration is determined by shareholding ministers, and the 2010/11 details of Directors’ remuneration are disclosed in the notes to the Accounts in accordance with GOCs’ remuneration disclosure requirements (see note 25).

Remuneration for senior managementSenior Executive remuneration is approved by the Board in accordance with the Government Owned Corporations Governance Arrangements for chief and Senior Executives (february 2009).

Proposed remuneration is reviewed and approved by the Board and shareholding

ministers are notified. Remuneration packages are constructed to attract, retain and motivate high quality senior executives to ensure operational effectiveness and efficiency. Senior executive remunerations and associated responsibilities are benchmarked against the market by an independent human Resources consulting firm approved by Queensland Government. Details of Senior executives’ remuneration are disclosed in the notes to the Accounts in accordance with GOC’s remuneration disclosure requirements (see note 25).

Performance based payments for senior managementUntil 30 june 2010 senior management was eligible for performance based payments. The performance based payment for 2009/10 was made in August 2010.

Corporate entertainmentGPC did not incur any expenses in excess of $5,000 on any event during 2010/11.

Board (10 held)

Audit and Compliance Committee

(5 held)

Human Resources Committee

(4 held)

Ian Brusasco am 10 4 4

Charles Ware 10 4

Peter Corones am 9 2 (out of 2) 4

judy Reynolds 8 4

Tony kelly 7 3

Gail Davidson 7 3

Glen Toll 9 3

helen Skippen 6 (out of 7)

DIRECTORS ATTENDANCE AT BOARD AND COMMITTEE MEETINGS

PICTURED: (L TO R) WALLy WATERS, BILL SCARBOROUGh, DOn WILSOn

PICTURED: mATThEW vARkER PICTURED: ShELLEy BRODIE

PICTURED: PETE SmIThPICTURED: BEn mCCLATChIEPICTURED: GRAhAm fLEETWOOD

94 | OUR JOURNEY | Gladstone Ports Corporation | Annual Report 2010/11

Ourjourney

PICTURED: ROGER mILLER

PICTURED: (L TO R) Ann-mARIE STEWART, ZOE jEffREy, REnE PAvIER, ChRISTInE LInWOOD

PICTURED: mIChAEL hARRIS (fOREGROUnD) WITh hEnRy WARD (BACkGROUnD)

OUR JOURNEY | Gladstone Ports Corporation | Annual Report 2010/11 | 95

There have been many stories to tell about the work and the people that have performed it at GPC during 2010/11 – far too many to make it into this Annual Report.

One of the themes of our reporting at the end of this financial year has been about the journey that the organisation and its people are set to embark on, as we undertake a decade of major expansion.

This final photographic montage captures a range of faces who have either retired, worked at the port for more than 25 years or have joined more recently to begin their own personal journeys in their chosen careers.

Those people who have spent considerable time in the organisation may say that it has lost that sense of ‘family’ as it’s grown, although in some ways the word ‘family’ still applies with at least two generations working together here and there.

Something it hasn’t lost is the camaraderie amongst work mates.

for those young apprentices who have just joined GPC, their journey ahead has been described by henry Ward, Building Services supervisor and a mentor with 25 years of service, as an experience ‘that will put them in good stead for the rest of their lives’.

henry says GPC tries to mould its young employees ‘into the best people they can be’ and instill in them respect for the older tradesmen who are passing on their skills.

Those skills and energy will be fully employed in the coming decade as the organisation expands into the most significant industrial port precinct on the eastern seaboard of Australia.

The knowledge of the past will be drawn on to shape the future. That will be everyone’s journey.

OUR JOURNEY

96 | FINANCIALS | Gladstone Ports Corporation | Annual Report 2010/11

An estimated 42.3 million cubic metres of dredge material will be removed from the harbour during the life of the Western Basin Dredging and Disposal project

FINANCIALS | Gladstone Ports Corporation | Annual Report 2010/11 | 97

08financials

Financial index 98

Directors’ report 100

Financial statements 106

08 | FINAN

CIALS

98 | FINANCIALS | Financials index | Gladstone Ports Corporation | Annual Report 2010/11

Financials indexPurpose and scope 99

Directors’ report for the year ended 30 june 2011 100

Auditor’s independence declaration for the year ended 30 june 2011 105

Statement of comprehensive income for the year ended 30 june 2011 106

Statement of financial position as at 30 june 2011 107

Statement of changes in equity for the year ended 30 june 2011 108

Statement of cash flows for the year ended 30 june 2011 109

notes to the financial statements for the year ended 30 june 2011

1. General 110

2. Summary of significant accounting policies 110

3. Profit from operating activities 119

4. Income tax equivalent 121

5. Cash and cash equivalents 123

6. Trade and other receivables 123

7. Inventories of maintenance and operations spares 124

8. Property, plant and equipment 125

9. Intangible assets 130

10. Investment properties 131

11. Trade and other payables 131

12. Loans and borrowings 132

13. Provisions 132

14. Employee benefits 133

15. Provision for demolition 133

16. Dividends 133

17. Contribution for maintenance received in advance 134

18. Derivative financial assets and liabilities at fair value through profit and loss 134

19. Contributed equity 134

20. notes to the statement of cash flows 135

21. financial risk management objectives and policies 135

22. Derivative financial instruments 138

23. Commitments 139

24. Auditor’s remuneration 140

25. key management personnel disclosures 140

26. Aggregate performance payments 144

27. Segment information 144

28. Contingent assets and liabilities 144

29. Wiggins island coal terminal project 145

30. number of employees 146

Certification of Gladstone Ports Corporation Limited 147

Directors’ declaration 148

Independent auditor’s report 149

financials | Purpose and scope | Gladstone Ports Corporation | Annual Report 2010/11 | 99

Purpose and scopeGladstone Ports Corporation Limited (GPC) is a Company Government Owned Corporation (GOC), constituted on 1 July 2004 under the provisions of the Government Owned Corporations Act 1993 (the Act). GPC converted to a company GOC on 1 July 2008, under the provisions of the Act. Under the terms of s128 of the Act, the Financial Accountability Act 2009 applies to GPC as if it were a statutory body.

These statements have been prepared to:

(i) Comply with the provisions of the Corporations Act 2001, and other prescribed requirements;

(ii) Comply with the provisions of the Financial Accountability Act 2009 and other prescribed requirements;

(iii) Communicate information concerning GPC’s financial performance for the year and its financial position at year end.

The statements are general purpose in nature and provide a full presentation of all of the financial activities of GPC. The financial report of Gladstone Ports Corporation Limited for the year ended 30 June 2011 was authorised for issue to shareholding Ministers in accordance with a resolution of the Directors on 25 August 2011.

100 | financials | Directors’ report | Gladstone Ports Corporation | Annual Report 2010/11

Directors’ report

The Board comprises non-executive directors who have a diversity of business experience as well as community responsibilities. The criteria for membership of the Board are in accordance with the Act. The Act requires that, in appointing a person as Director, the Governor in Council must have regard to that person’s ability to contribute to the Corporation’s commercial performance and implementation of its Statement of Corporate Intent (SCI). Directors are appointed for a term of not more than five years but may be reappointed.

In order to comply with the provisions of the Corporations Act 2001 the Directors submit their report for the year ended 30 June 2011.

DirectorsThe names and details of the Company’s directors in office during the financial year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated.

chairmanian Brusasco aM, PHcIan Brusasco was appointed as Chairman on 1 February 2007 until 31 January 2009; reappointed from 2 February 2009 until 30 September 2010; reappointed from 1 October 2010 until 30 September 2013. In addition to being Chair of the Board, Ian is also Chair of the Human Resources Committee and a member of the Audit and Compliance Committee.

Ian is currently Chairman of WorkCover Queensland, Chairman of Foodbank (Qld) Pty Ltd and has served as a Director on the Queensland Investment Corporation Board. Ian is a pharmaceutical chemist and partner in two pharmacies. He has extensive commercial and community involvement through numerous directorships and executive roles over the last 45 years. Ian was awarded Member, General Division of the Order of Australia (AM) in 1988, honoured with a Foodbank Hall of Fame Award in 2011, received the Centenary Medal in 2001 and in 2008 was named as a Queensland Living Great. He was also inaugurated into the Australian Soccer Hall of Fame in 1999 after serving in numerous roles within the sport including: Chairman of Australian Soccer Federation, President of Queensland Soccer Federation, Vice President and Executive Member of Oceania Football Confederation, and Chairman of Olympic Football Taskforce.

Deputy chairman charles Ware, Ba ll.B (Hons), MBus (Pub Mgt) ll.M, faicD, MlGMaCharles Ware assumed the role of Deputy Chairman on 27 September 2007. Appointed 1 July 2004 until 30 June 2007; reappointed on 1 July 2007 until 30 September 2010; reappointed on 1 October 2010 until 30 September 2013. Charles is a member of the Human Resources Committee.

Charles is a legal consultant in a private legal practice in Central Queensland. He previously served as Chair of the Rockhampton Port Authority and has held several Board positions in the corporatised Queensland electricity supply industry. Charles is a member of the Board of Professional Engineers of Queensland and the Residential Tenancies Authority. He is also Deputy Chancellor of Central Queensland University. Charles holds undergraduate degrees in Arts and Law and Masters Degrees in Business and Law. He holds a current practising certificate as a solicitor.

Peter corones aMAppointed 1 July 1994 for two years and extended to 30 June 1999. Re-appointed in 1999 until 30 June 2003; re-appointed in 2003 to 30 June 2005; re-appointed in 2005 to 30 September 2007, re-appointed in 2007 to 30 September 2009 and re-appointed to 30 September 2012. Peter is a member of the Human Resources Committee.

Peter has over 20 years’ experience in local government. Recently he retired after two (2) terms as a Councillor and four (4) terms as Mayor of Gladstone City Council.

A business proprietor and company director for more than 30 years, he has a long track record of extensive business and community involvement. He is a member of the Gladstone Economic and Industry Development Board, and a member of the Council of CQ University Australia. Peter is also Chairman of Gladstone Area Promotion and Development Limited and Chairman of Gladstone Area Group Apprentices Limited.

Peter received the Centenary Medal in January 2001 and was awarded Member, General Division of the Order of Australia (AM) in January 2009.

fOR THE YEaR EnDED 30 JUnE 2011

financials | Directors’ report | Gladstone Ports Corporation | Annual Report 2010/11 | 101

Directors’ report (cont)fOR THE YEaR EnDED 30 JUnE 2011

Tony Kelly, ll.BAppointed 11 October 2007 until 30 September 2009; re-appointed from 1 October 2009 to 30 September 2012. Tony is a member of the Audit and Compliance Committee.

Tony is also currently Deputy Chairman of Brisbane Markets Limited. He has been involved in the fresh produce industry for over 20 years including long term directorships of both the Queensland and Australian Chamber of Wholesalers. Tony holds a Bachelor of Laws degree from the University of Queensland.

Gail Davidson, GaicDAppointed 1 October 2008 until 30 September 2011. Gail is a member of the Human Resources Committee.

Gail has held management roles in a number of areas for over 30 years and is currently General Manager Disability Services Operations and Community Engagement – State Operations for Endeavour Foundation. Gail has been involved in the disability sector for nearly 20 years, having previously worked in the hospitality and health sectors. She is also a member of the Complaints Management Quality Committee advising the Minister for Disability Services, a newly appointed member of the Gladstone Foundation Board of Advice and has been a member of the Disability Council of Queensland, the Gambling Community Benefit Fund, under Treasury, and was the Inaugural Chair of the Regional Disability Council of Central Queensland. Gail is a member of the Australian Institute of Company Directors and is currently continuing her Masters studies through the University of Newcastle.

Judy Reynolds, B.Bus, ca, fTia, MaicDAppointed 1 October 2008 until 30 September 2011. Judy is currently Chairman of the Audit and Compliance Committee.

Judy is a chartered accountant with over 20 years experience in public accounting and is a director of Sothertons Chartered Accountants. She has extensive experience in business development and strategic growth strategies working with small and medium entities (SME’s) over a wide range of sectors. Judy has chaired the National Sothertons Board and is a member of the Gladstone Economic and Industry Development Board. She has a Bachelor of Business and is a Fellow of the Taxation Institute of Australia.

Glen Toll, B. comm, ll.B (Hons)

Appointed 1 October 2009 until 30 September 2012. Glen is currently a member of the Audit and Compliance Committee.

Glen is the managing partner of the private legal firm, Baker O’Brien & Toll. Glen’s practice comprises predominantly advice upon property and commercial law. He previously served as a Director of Bundaberg Port Authority from 1 June 1999 until 30 June 2001. He then served as Chairman of the Bundaberg Port Authority from 1 July 2001 until 30 September 2007. Glen was subsequently appointed as a director of the Port of Brisbane Corporation from 23 August 2007 until 30 September 2009 following its merger with Port of Bundaberg.

Glen is the holder of a Bachelor of Commerce and Bachelor of Laws (Honours) from the University of Queensland and is admitted to practice as a Solicitor of the Supreme Court of Queensland and the High Court of Australia. He has held numerous executive and honorary positions with local sporting and community organisations.

Helen skippen, B Bus, MBa, MaicD, afaiMAppointed 1 October 2010 until 30 September 2013.

Helen is a partner of strategic management consultancy Corporate Context, Associate Fellow of the Australian Institute of Management, and a member of the Australian Institute of Company Directors.

Helen has spent 28 years as a strategic management/marketing consultant with broad knowledge of market research methods, including stakeholder engagement processes, business and market strategy frameworks, organisation diagnostic frameworks and written communication methods for complex concepts. Helen has expertise in governance processes and has worked with a broad range of public and private sector clients from large public companies, government entities, not for profit organisations and SME’s. Helen is also a director of WorkCover Queensland, and Help Enterprises in the disability services sector.

102 | financials | Directors’ report | Gladstone Ports Corporation | Annual Report 2010/11

Directors’ report (cont)fOR THE YEaR EnDED 30 JUnE 2011

company secretaryMariette lansdell, B com (Hons), MBaDuring the past seventeen years Mariette has participated in the banking, marketing, telecommunications and marine industries in Australia, Europe and Africa. She has been engaged in several of GPC’s projects during the past three years. She was appointed by the Board as Company Secretary of GPC in March 2011.

Principal activitiesOur primary role is to:

(a) Provide import and export shipping infrastructure to the Central Queensland region through the Port of Gladstone, Port Alma Shipping Terminal and Port of Bundaberg, and encourage the use of these facilities for the economic benefit of stakeholders

(b) Manage cargo handling facilities for coal and other bulk products at Port Alma Shipping Terminal, RG Tanna Coal Terminal, Barney Point Coal Terminal and Auckland Point facilities

(c) Develop, manage and lease land and other assets for port related purposes

(d) Manage ancillary services and functions which support core business activities.

Operating results for the yearThe Corporation’s net profit after income tax is $55.280 million (2010: $46.482 million) representing an increase of 18.9% from the previous year. All profits are from continuing operations. The 2011 results included upwards revaluations of $3.903M (2010: devaluations of $0.291M). In addition net impairment losses of $4.996M were identified in 2011 compared to $5.731M in 2010. This was primarily the result of assets being impaired at the Port of Bundaberg.

auditor independenceA copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on page 105.

DividendsDividends paid to shareholders during the financial year were as follows:

Dividends paid from prior year profits

Dividend per share

In addition to the above dividends, Directors recommended the payment of a final dividend at 80% of profits, as adjusted for revaluations. The final dividend amounts to $42.083M (10.47 cents per share).

2011 2010

$’000 $’000

35,098 36,142

cents per share cents per share

8.73 8.99

financials | Directors’ report | Gladstone Ports Corporation | Annual Report 2010/11 | 103

Directors’ report (cont)fOR THE YEaR EnDED 30 JUnE 2011

Review of financial conditions and likely developments2010/11 saw a reduction in coal throughput as a result of several severe weather events impacting coal production and delivery to the port. This did not significantly impact the financial results for GPC due to take-or-pay contracts and the coal pricing mechanism that are in place with customers. It is anticipated that coal, GPC’s major cargo, will see an increase in export tonnages during the year ended 30 June 2012 as the effects of the severe weather events begin to ease and following continued growth of markets. Other port trade is expected to grow compared to that achieved in 2010/11. Significant recoverable works (being invoiced at cost) continued into 2010/11. This increased revenue by $141.522M. This will continue to increase in 2011/12.

significant changes in the state of affairsThere were no significant changes in the state of affairs of GPC.

Environmental regulationGPC’s operations are subject to significant environmental regulations under both Commonwealth and State legislation. Refer to comments under the heading ‘Our Environmental Management’ of the 2010/11 Annual Report.

indemnification and insurance of directors and officersDuring the financial year GPC indemnified all directors in respect of Directors and Officers liability and company reimbursement insurance. The premium paid amounted to $73,689.22.

Under the policy the insurer agrees to pay:

(a) All losses which each insured person becomes legally obligated to pay on account of any claims for wrongful acts

(b) All losses for which the company may grant indemnification to each insured person.

Directors’ attendance at board and committee meetings

Directors’ interestsThe directors have no interest in any shares of GPC as all shares are held for the benefit of the State of Queensland by Ministers of the Crown.

Board (10 held)

audit and compliance committee

(5 held)

Human Resources

committee(4 held)

Ian Brusasco AM 10 4 4

Charles Ware 10 4

Peter Corones AM 9 2 (out of 2) 4

Judy Reynolds 8 4

Tony Kelly 7 3

Gail Davidson 7 3

Glen Toll 9 3

Helen Skippen 6 (out of 7)

104 | financials | Directors’ report | Gladstone Ports Corporation | Annual Report 2010/11

Directors’ report (cont)fOR THE YEaR EnDED 30 JUnE 2011

Risk managementGPC, in carrying out its business, maintains a risk management philosophy that appropriately:

(a) Protects the wellbeing of GPC’s workforce, the wider community in which it operates and its physical environment

(b) Manages threats that could adversely affect GPC’s ability to meet its corporate objectives, its growth in shareholder value and its stewardship of company assets.

committee membershipAt the date of this report GPC had an Audit and Compliance Committee and a Human Resources Committee.

audit and compliance committee: Human Resources committee:Judy Reynolds – Chair Ian Brusasco AM – ChairIan Brusasco AM Peter Corones AMTony Kelly Charles WareGlen Toll Gail Davidson

Rounding of amountsThe company is of a kind referred to in ASIC Class Order 98/0100 dated 10 July 1998 and in accordance with that class order, amounts in the financial report and directors’ report have been rounded to the nearest one thousand dollars, unless otherwise stated.

Note 2 confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.

The Directors’ Report is signed in accordance with a resolution of the directors made pursuant to s298(2) of the Corporations Act 2001. On behalf of the directors:

ian BRUsascO aMcHaiRManDaTED: 25 aUGUsT 2011

To the Directors of Gladstone Ports Corporation Limited:

This audit independence declaration has been provided pursuant to s.307C of the Corporations Act 2001.

independence DeclarationI declare that, to the best of my knowledge and belief, during the year ended 30 June 2011 there have been:

(a) No contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit

(b) No contraventions of any applicable code of professional conduct in relation to the audit.

BP Worrall, FCADelegate of the Auditor-General of Queensland

Brisbane

Dated 25 August 2011

financials | Auditor’s independence declaration | Gladstone Ports Corporation | Annual Report 2010/11 | 105

auditor’s independence declarationfOR THE YEaR EnDED 30 JUnE 2011

Note 2011 2010

$’000 $’000

continuing operations

Revenue 3(a) 299,645 288,285

Other income 3(a) 192,504 49,644

Net profit on disposal of non-current assets 696 109

Fair value revaluation of investment properties 3,903 -

Total income 496,748 338,038

Employee expenses (89,155) (85,616)

Operational expenses 3(b) (244,610) (107,999)

Depreciation/amortisation expenses 3(b) (44,464) (42,624)

Finance costs 3(b) (34,472) (30,136)

Fair value revaluation of land and investment buildings 8(d) - (291)

Impairment (net of impairment reversals) 8(e), (4,996) (5,731)

9(b)

Loss on transfer of Port of Bundaberg - (695)

Profit from continuing operations before income tax 79,051 64,946

Income tax expense 4(a) (23,771) (18,464)

Profit for the year 55,280 46,482

Other comprehensive income

Revaluation of property, plant and equipment 8(d) (593) 201

Income tax relating to components of other comprehensive income 178 (61)

Other comprehensive income for the year, net of tax (415) 140

Total comprehensive income for the year 54,865 46,622

Profit attributable to:

Owners of Gladstone Ports Corporation Limited 55,280 46,482

Total comprehensive income for the year is attributable to:

Owners of Gladstone Ports Corporation Limited 54,865 46,622

The accompanying notes form part of these financial statements.

106 | financials | Statement of comprehensive income | Gladstone Ports Corporation | Annual Report 2010/11

statement of comprehensive incomefOR THE YEaR EnDED 30 JUnE 2011

Note 2011 2010

assets $’000 $’000

current assets

Cash and cash equivalents 5 132,609 100,032

Trade and other receivables 6 256,416 59,788

inventories of maintenance and operations spares 7 7,937 9,472

Prepayments 869 921

Derivative financial instruments 18 - 209

Total current assets 397,831 170,422

non-current assets

Trade and other receivables 6 794 1,023

Property, plant and equipment 8 1,324,505 1,350,008

Deferred tax assets 4(d) 8,728 11,451

Intangible assets 9 3,113 3,022

Investment properties 10(a) 87,670 75,069

Total non-current assets 1,424,810 1,440,573

Total assets 1,822,641 1,610,995

liabilities

current liabilities

Trade and other payables 11 220,891 26,714

Short-term borrowings 12 122,487 -

Short-term provisions 13 53,984 45,385

income tax payable 4(c) 7,080 5,040

Derivative financial instruments 18 409 -

Total current liabilities 404,851 77,139

non-current liabilities

Long-term borrowings 12 462,236 591,523

Long-term provisions 13 16,656 17,432

Deferred tax liabilities 4(e) 106,352 105,137

Total non-current liabilities 585,244 714,092

Total liabilities 990,095 791,231

net assets 832,546 819,764

Equity

issued capital 19 673,558 673,558

Reserves 60,634 61,049

Retained profits 98,354 85,157

Total equity 832,546 819,764The accompanying notes form part of these financial statements.

statement of financial positionas aT 30 JUnE 2011

financials | Statement of financial position | Gladstone Ports Corporation | Annual Report 2010/11 | 107

Note contributed equity

asset revaluation

reserve

Retained profits

Total

$’000 $’000 $’000 $’000

Balance 1 July 2009 725,943 60,909 76,672 863,524

Total comprehensive income attributable to owners of the equity - 140 46,482 46,622

Transactions with owners in their capacity as owners

Additional dividends paid 16 - - (2,899) (2,899)

Dividends proposed 16 - - (35,098) (35,098)

Additional shares issued 19 29,615 - - 29,615

Return of capital 19 (82,000) - - (82,000)

Balance 30 June 2010 673,558 61,049 85,157 819,764

Total comprehensive income attributable to owners of the equity - (415) 55,280 54,865

Transactions with owners in their capacity as owners

Dividends provided for or paid 16 - - (42,083) (42,083)

Balance 30 June 2011 673,558 60,634 98,354 832,546

The accompanying notes form part of these financial statements.

statement of changes in equityfOR THE YEaR EnDED 30 JUnE 2011

108 | financials | Statement of changes in equity | Gladstone Ports Corporation | Annual Report 2010/11

Note 2011 2010

$’000 $’000

cash flows from operating activities

Receipts from customers 481,116 372,669

Tax equivalents paid to Queensland Treasury (17,615) (21,167)

GST paid to ATO (31,004) (15,678)

Payments to suppliers and employees (297,298) (214,362)

Interest received 4,921 3,980

Interest paid/competitive neutrality fee (32,385) (30,136)

net cash flows from operating activities 20(a) 107,734 95,306

cash flows from investing activities

Proceeds from sale of property, plant and equipment 1,157 263

Purchase of property, plant and equipment (32,529) (85,068)

Purchase of investment properties (781) -

Purchase of intangibles (554) (126)

net cash flows used in investing activities (32,707) (84,931)

cash flows from financing activities

Return of capital - (82,000)

Proceeds from borrowings - 43,000

Repayment of borrowings (7,352) (1,866)

Dividends paid (35,098) (36,142)

net cash flows from financing activities (42,450) (77,008)

net increase/(decrease) in cash and cash equivalents 32,577 (66,633)

cash acquired from Port of Bundaberg - 1

cash and cash equivalents at beginning of the financial year 100,032 166,664

cash and cash equivalents at the end of the financial year 5 132,609 100,032The accompanying notes form part of these financial statements.

statement of cash flowsfOR THE YEaR EnDED 30 JUnE 2011

financials | Statement of cash flows | Gladstone Ports Corporation | Annual Report 2010/11 | 109

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

Title

Operative for reporting

periods beginning

on/after

AASB 9: Financial Instruments 1 January 2013

AASB 2009-11: Amendments to Australian Accounting Standards arising from AASB 9 [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 121, 127, 128, 131, 132, 136, 139, 1023 and 1038 and interpretations 10 and 12 ]

1 January 2013

AASB 124 (revised): Related Party Disclosures 1 January 2011

AASB 2009-12: Amendments to Australian Accounting Standards [AASBs 5, 8, 108, 110, 112, 119, 133, 137, 139, 1023 and 1031 and interpretations 2, 4, 16, 1039 and 1052]

1 January 2011

AASB 2009-14: Amendments to Australian Accounting Interpretation – Prepayments of a Minimum Funding Requirement

1 January 2011

AASB 1053: Application of Tiers of Australian Accounting Standards 1 July 2013

AASB 2010-2: Amendments to Australian Accounting Standards arising from reduced disclosure requirements

1 July 2013

AASB 2010-4: Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 1, AASB 7, AASB 101 and AASB 134 and Interpretation 13]

1 January 2011

AASB 2010-5: Further Amendments to Australian Accounting Standards [ AASB 1, 3, 4, 5, 101, 107, 112, 118, 119, 121, 121, 132, 133, 134, 137, 139, 140, 1023 and 1038 and Interpretations 112, 115, 127, 132, and 1042]

1 January 2011

AASB 2010-6: Amendments to Australian Accounting Standards – Disclosures on Transfer of Financial Assets [AASB 1 and AASB 7]

1 July 2011

110 | financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11

1. General Gladstone Ports Corporation Limited (GPC) is a public company incorporated and operating in Australia. GPC’s registered

office and principal place of business is:

40 Goondoon Street, Gladstone QLD 4680. Tel: (07) 4976 1333

2. summary of significant accounting policies (a) Basis of accounting

General These financial statements are a general purpose financial report and have been prepared in accordance with the

Corporations Act 2001, the Financial Accountability Act 2009, applicable Australian Accounting Standards and Interpretations.

This financial report has been prepared under the historical cost convention, except for some classes of property, plant and equipment, investment properties and derivative financial instruments, which have been measured at fair value. The financial statements are presented in Australian Dollars which is the entity’s functional currency.

The financial report complies with Australian Accounting Standards, Australian Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board. The financial statements of Gladstone Ports Corporation Limited also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

GPC has not adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective for the annual reporting period ended 30 June 2011. These are outlined in the table below.

Title Operative for reporting

periods beginning on/

after

AASB 2010-7: Amendments to Australian Accounting Standards – Disclosures arising from AASB 9 (December 2010) [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 and 1038 and Interpretations 2, 5, 10, 12, 19 and 127]

1 January 2013

AASB 2010-8: Amendments to Australian Accounting Standards – deferred Tax; Recovery of Underlying Assets [AASB 12]

1 January 2012

AASB 2011-1: Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Project [AASB 1, 5, 101, 107, 108, 121, 128, 132, and 134 and Interpretations 2, 112 and 113]

1 July 2011

AASB 2011-2: Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Project [AASB 101 and AASB 1054]

1 July 2013

AASB 2011-3: Amendments to Australian Accounting Standards- Orderly Adoption of Changes to the ABS GFS Manual and Related Amendments [AASB 1049]

1 July 2012

AASB 2011-4: Amendments to Australian Accounting Standards to Remove Individual Key management personnel Disclosure Requirements [AASB 124]

1 July 2013

AASB 112 Income Taxes 1 January 2011

AASB 118 Revenue 1 January 2011

AASB 137 Provisions, Contingent Liabilities and Contingent Assets 1 January 2011

AASB 1023 General Insurance Contracts 1 January 2011

AASB 1031 Materiality 1 January 2011

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

2. summary of significant accounting policies (cont) (a) Basis of accounting (cont)

financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11 | 111

It is anticipated that the above Standards and Interpretations are either not applicable to GPC or adoption of them in future periods will have no material financial impact on GPC’s financial statements.

accounting policies

Unless otherwise stated, all accounting policies applied are consistent with those of the prior year. Where appropriate, comparative figures have been amended to accord with the current year’s presentation and disclosure.

classification between current and non-current

In the determination of whether an asset or liability is current or non-current, consideration is given to the time when each asset or liability is expected to be realised or paid. The asset or liability is classified as current if it is expected to be turned over within the next twelve months, being GPC’s operational cycle. Items are classified as current unless there is a legal right to defer receipt or payment.

Rounding of amounts

The company is of a kind referred to in ASIC Class Order 98/0100 dated 10 July 1998 and in accordance with that class order, amounts in the financial report and directors’ report have been rounded to the nearest one thousand dollars, unless otherwise stated.

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

112 | financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11

2. summary of significant accounting policies (cont) (b) Revenue recognition

Revenue is recognised when services are delivered and is measured at the fair value of the consideration received or receivable to the extent that it is probable that the economic benefits will flow to GPC and the revenue can be reliably measured. Revenue has been calculated based on existing signed contracts. For specific LNG recoverable works revenue is billed in advance in accordance with the terms of each contract. This is based upon future expectations of works to be undertaken for that project at the time of invoicing.

Lease income from investment properties is recognised in income on a straight-line basis over the term of the lease. Interest income is recognised as interest accrues using the effective interest method.

(c) sale of assets

The profit or loss on sale of an asset is determined when control has passed to the buyer. In accounting for the sale of non-current assets, the net gains/losses on sale of assets sold are included in the Statement of Comprehensive Income.

(d) cash and cash equivalents

For purposes of the Statement of Cash Flows, cash includes cash on hand, deposits at call and term deposits with banks and Queensland Treasury Corporation where maturity is no more than 90 days.

(e) Receivables

Trade debtors are recognised at the nominal amounts due at the time of sale or service delivery, with settlement being required within 30 days from month end.

The likelihood of collection of receivables is assessed on an ongoing basis with provision being made for impaired debts. Debts which are regarded as not recoverable are written off.

Other debtors generally arise from transactions outside the usual operating activities of GPC and are recognised at their assessed values.

(f) inventories of maintenance and operations spares

Inventories held for use are valued at the lower of cost or net realisable value. Costs are assigned to individual items of stock on the basis of weighted average costs.

(g) Property, plant and equipment

Property, plant and equipment are stated at cost or fair value, less accumulated depreciation and any impairment losses.

The purchase method of accounting is used for all acquisitions of assets, being the fair value of the assets provided as consideration at the date of acquisition plus any incidental costs attributable to the acquisition.

The cost of non-current assets constructed by GPC includes the cost of all materials used in construction, direct labour on the project and an appropriate proportion of variable and fixed overheads.

Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Similarly, when each major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement only if it is eligible for capitalisation. All other repairs and maintenance are recognised in the Statement of Comprehensive Income as incurred.

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

2011 2010

Buildings 2.50%-10.00% 2.50%-10.00%

Channels, swing basins and berth pockets 2.50%-3.51% 2.50%-3.51%

Commercial wharves 2.50%-20.00% 2.50%-20.00%

Recreational and fishing wharves 2.50%-20.00% 2.50%-20.00%

Roads and services 2.00%-15.40% 2.00%-15.40%

Plant 2.50%-20.00% 2.50%-20.00%

Furniture 10.00%-27.02% 10.00%-27.02%

financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11 | 113

2. summary of significant accounting policies (cont) (g) Property, plant and equipment (cont)

Depreciation is provided on a straight line basis on all non-current assets, except land, at rates based on the expected economic lives of assets. The depreciation rates used for major assets in each class are as follows:

Where assets have separately identifiable components, these components are assigned useful lives distinct from the asset to which they relate.

Any expenditure that increases the originally assessed capacity or service potential of an asset is capitalised and the new depreciable amount is depreciated over the remaining useful life of the asset to GPC.

Work-in-progress (WIP) is not depreciated until it reaches service delivery capacity.

The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end.

Revaluations

Any revaluation increment is credited to the asset revaluation reserve included in the equity section of the Statement of Financial Position, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in the Statement of Comprehensive Income, in which case the increase is recognised in the Statement of Comprehensive Income.

Any revaluation decrease is recognised in profit and loss, except to the extent that it offsets a previous revaluation increase for the same asset, in which case the decrease is debited directly to the asset revaluation reserve to the extent of the credit balance existing in the revaluation reserve for that asset.

Additionally, any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amounts of the assets and the net amounts are restated to the revalued amounts of the assets.

Upon disposal or de-recognition, any revaluation reserve relating to a particular asset being sold is transferred to retained earnings.

Non-current physical assets measured under ‘fair value principles’ are independently revalued at least once every five years, with interim valuations being otherwise performed where the change would be material to that class of assets.

The following classes of assets are valued using ‘fair value principles’: land, buildings, channels, swing basins and berth pockets, commercial wharves, recreational and fishing wharves, plant, furniture and fittings and roads and services (structural improvements).

An asset recording threshold of one thousand dollars has been adopted and applies to all assets acquired with a useful life of more than one year.

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

114 | financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11

2. summary of significant accounting policies (cont) (g) Property, plant and equipment (cont)

impairment

Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or groups of assets (cash generating units). Assets are tested for possible reversal of the impairment whenever events or changes in circumstances indicate that the impairment may be reversed.

Disposal

An item of property, plant and equipment is de-recognised upon disposal or when no further economic benefits are expected from its use or disposal.

Any gain or loss arising on de-recognition of the asset is included in the Statement of Comprehensive Income in the year the asset is de-recognised.

(h) intangible assets

Intangible assets with a cost or other value greater than $100,000 are recognised in the financial statements, items with a lesser value being expensed. Each intangible asset is amortised over its estimated useful life, less any anticipated residual value. The residual value is assumed to be zero for all intangible assets.

It has been determined that there is not an active market for any of the intangible assets. As such, the assets are recognised at their initial cost and carried at cost less accumulated amortisation less accumulated impairment. Work-in-progress (WIP) is not depreciated until it reaches service delivery capacity.

Intangible assets are tested annually for impairment. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or groups of assets (cash generating units). Assets are tested for possible reversal of the impairment whenever events or changes in circumstances indicate that the impairment may be reversed.

software

Costs associated with the development of computer software systems have been recognised as an intangible asset and are to be amortised on a straight-line basis over a period of 2.5 years for commercial systems and 10 years for operational systems.

(i) investment properties

Investment properties are measured initially at cost. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the Statement of Financial Position date. Gains or losses arising from changes in the fair values of investment properties are recognised in the Statement of Comprehensive Income in the year they arise.

Investment properties are derecognised either when they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in the Statement of Comprehensive Income in the year of retirement or disposal.

Transfers are made to investment property when, and only when, there is a change in use, as evidenced by ending of owner occupation, commencement of an operating lease to another party or ending construction or development. Transfers are made from investment property when, and only when, there is a change in use, evidenced by commencement of owner occupation or commencement of development with a view to sale.

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11 | 115

2. summary of significant accounting policies (cont) (j) leased non-current assets

Operating lease payments are representative of the pattern of benefits derived from the leased assets and accordingly are charged as an expense in the periods in which they are incurred.

(k) Payables

Payables are recognised for amounts payable in the future for goods and services received, whether or not billed to GPC. Creditors are generally unsecured, not subject to interest charges and are normally settled within 30 days of month end.

(l) loans and borrowings

All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. Borrowings are subsequently measured at amortised cost.

Borrowings are classified as current liabilities unless GPC has an unconditional right to defer settlement of the liability for at least 12 months after the Statement of Financial Position date. Borrowing costs are expensed as incurred as per the provisions of AASB123.

The competitive neutrality fee is a fee payable to the State to ensure the loan from Queensland Treasury Corporation (QTC) reflects market rates on a stand-alone basis, rather than on the strength of any implied State support.

(m) Employee leave benefits

(i) Wages and salaries, annual leave, sick leave and non-monetary benefits

Liabilities for wages and salaries, annual leave, vested sick leave and accumulated time off are recognised and are measured as the amount unpaid at the reporting date at pay rates anticipated on settlement in respect of employees’ services, including related on-costs.

(ii) Long service leave

The provision has been calculated using anticipated wage and salary rates including related on-costs and expected settlement dates based on usage patterns and is discounted using rates attaching to national government securities at balance date which most closely match the terms of the maturity of the related liabilities.

(iii) Current and non-current employee benefits

Employees’ benefits for annual leave, long service leave and vested sick leave are classified as current and non-current based on usage patterns identified from historical data.

(iv) Performance payments

Performance payments for GPC’s executive officers are based on a percentage of the annual salary package provided under their contract(s) of employment. A liability is recognised and is determined as an estimate of the amount due for the period to date.

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

116 | financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11

2. summary of significant accounting policies (cont) (m) Employee leave benefits (cont) (v) Superannuation

All GPC employees are members of QSuper. QSuper operates both a defined benefit and defined contribution fund. Existing employees may remain in either fund but cannot transfer into the defined benefit fund. Existing members can transfer from the defined benefit fund to the defined contribution fund. New employees must join the defined contribution fund.

The defined benefit fund is open to many employees across Queensland State Government departments, agencies and government business enterprises. There is insufficient information for GPC to apply defined benefit accounting.

The Treasurer of Queensland, based upon advice received from the State Actuary, determines employer contributions and the amount of this contribution is recognised as an expense.

No liability is recognised for accruing superannuation benefits as this liability is held on a whole of Government basis and reported in the whole of Government financial statements prepared in terms of AAS31 Financial Reporting by Governments.

(n) Provisions

Provisions are recognised when there is a legal, equitable or constructive obligation to make a future sacrifice of economic benefits to other entities as a result of past transactions or other past events and it is probable that a future sacrifice of economic benefits will be required and a reliable estimate can be made of the amount of the obligation.

Dividends

A provision for dividends is recognised at the reporting date where the dividends have been declared, determined or recommended prior to the reporting date.

(o) Taxation

As a GOC, GPC is required to pay income tax equivalents under the National Tax Equivalents Regime (NTER).

The deferred tax assets or deferred tax liabilities represent the net cumulative effect of items of income and expense, which have been brought to account for tax and accounting purposes in different periods.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be used.

The carrying amount of deferred income tax assets is reviewed at each Statement of Financial Position date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax to be used.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the Statement of Financial Position date.

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11 | 117

2. summary of significant accounting policies (cont) (p) Goods and services tax

Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax (GST), except where the amount of GST incurred is not recoverable from the ATO. In these circumstances, the GST is recognised as part of the cost of acquisition or part of the item of expense.

Receivables and payables are stated with the amount of GST included.

The gross amount payable to the ATO is included as a current liability and the gross amount recoverable is included as a current asset.

Cash flows are included in the Statement of Cash Flows on a gross basis. The GST components of cash flows arising from investing and financing activities that are recoverable from or payable to the ATO, are classified as operating cash flows.

(q) financial assets and liabilities

Recognition

Financial assets and financial liabilities are recognised in the Statement of Financial Position when GPC becomes party to the contractual provisions of the financial instrument.

classification

Financial instruments are classified and measured as follows:

- Cash and cash equivalents – held at fair value through profit or loss

- Receivables – held at amortised cost

- Payables – held at amortised cost

- Borrowings – are held at amortised cost.

Where GPC is exposed to the risk of fluctuations in foreign currency exchange rates, GPC enters into derivative financial instrument arrangements to reduce this exposure. Financial derivatives may be held to cover a known exposure but only to the extent of the exposure and not for speculative purposes. Unrealised exchange gains or losses resulting from these transactions are recognised at 30 June each year. The balance of the gain or loss on the transaction is recognised on settlement of the transaction.

(r) foreign currency transactions

In preparing the financial statements, transactions in currencies other than the entity’s functional currency are recorded at the rates of exchange prevailing on the dates of the transactions. At each Statement of Financial Position date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the Statement of Financial Position date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

(s) security deposits

Security deposits may be held on certain contracts and are repayable after the satisfactory completion of the contractual terms.

(t) critical accounting judgements, estimates and assumptions

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

GPC makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

118 | financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11

2. summary of significant accounting policies (cont) (t) critical accounting judgements, estimates and assumptions (cont)

(i) Income taxes

There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

(ii) Fair value

Judgements are made in respect of the reasonableness of revaluation indices applied to investment property, financial assets and property, plant and equipment for management valuations.

(iii) Impairment of non-financial assets

GPC assess impairment of all assets at each reporting date by evaluating conditions specific to GPC and to the particular asset that may lead to impairment. If an impairment trigger exists the recoverable amount of the asset is determined. This involves value in use calculations, which incorporate a number of key estimates and assumptions. For more information on the 2011 impairment calculations refer to note 8(e).

(iv) Sick leave and long service leave provision

As discussed in note 2(m) (i) and (ii), the liability for sick leave and long service leave is recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at Statement of Financial Position date. In determining the present value of the liability, attrition rates and pay increases through promotion and inflation have been taken into account.

(v) Recovery of deferred tax assets

Deferred tax assets are recognised for deductible temporary differences as management considers that it is probable that future taxable profits will be available to use those temporary differences.

(vi) Estimation of useful lives

The estimation of the useful lives of assets has been based upon historical experience as well as manufacturers’ warranties (for plant and equipment), lease terms (for leased equipment) and turnover policies (for motor vehicles). In addition, the condition of the assets is assessed at least once per year and considered against the remaining useful life. Adjustments to useful life are made when considered necessary.

(vii) Provision for rehabilitation and demolition

Provision is made where GPC has a present obligation for the rehabilitation or demolition of an asset. An estimate of the expenditure for each circumstance is evaluated with third party assistance where possible. Where third party assistance is not available management make a reasonable estimate based upon the information available. The related carrying amounts are disclosed in note 15.

(viii) Provision for obsolete inventories

Due to the large volume of inventories, this assessment is based on supportable past obsolescence history and write offs. The provision is estimated by multiplying the gross inventory figure by the average rate of obsolescence identified during regular reviews of the inventories.

(ix) Provision for impaired debts

Where receivables are beyond normal trading terms, the likelihood of the recovery of these receivables is assessed by management. All receivables are assessed on an individual basis. The provision is outlined in note 6.

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

2011 2010

$’000 $’000

Revenues

Harbour dues 37,922 38,879

Tonnage rates 31,877 32,536

Other shipping charges 7,192 7,594

Cargo handling charges 215,162 201,920

Property revenue 5,442 5,483

Smallcraft services 2,050 1,873

Total 299,645 288,285

Other income

Interest received 5,558 4,415

Recoverable works 186,113 44,591

Workers compensation refunds 65 21

Apprenticeship rebates 107 94

Traineeship allowances 175 262

Other 486 261

Total 192,504 49,644

financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11 | 119

3. Profit from operating activities (a) Revenue

Revenue from operating activities before related income tax equivalent expense includes:

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

3. Profit from operating activities (b) Expenses

Expenses from ordinary activities before related income tax equivalent expense includes:

Note 2011 2010

$’000 $’000

Depreciation expense

Property, plant and equipment 8 44,244 42,408

Intangibles 9 331 330

Reallocated to capital expenses (111) (114)

Total 44,464 42,624

Operational expenses

Contractors 183,140 52,340

Services and consultants 8,570 6,556

Indirect taxes and government charges 5,429 4,130

Materials and supplies 16,450 16,961

Energy 17,914 17,361

Insurance 2,571 2,397

Other 10,536 8,254

Total 244,610 107,999

finance costs

Interest 29,956 28,561

Competitive neutrality fee 2(l) 3,784 2,104

Financial instrument (profit)/loss 504 (529)

(Gains) or losses on exchange 228 -

Total 34,472 30,136

120 | financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

4. income tax equivalent (a) income tax equivalent expense

The overprovision in income tax in 2010 was a result of research and development deductions and investment allowance deductions being finalised after the completion of the financial statements.

(b) amounts charged or credited directly to equity

(c) income tax payable

2011 2010

$’000 $’000

Profit before income tax equivalents 79,051 64,946

Prima facie tax at 30% 23,715 19,484

Non-deductible expenses 28 414

Deductible expenses - (198)

Overprovision re prior year 28 (1,236)

Income tax expense 23,771 18,464

Comprises

Deferred tax asset 2,723 (2,084)

Deferred tax liability 1,393 7,052

Income tax payable 19,655 14,732

2011 2010

$’000 $’000

Deferred income tax related to items charged or credited directly to equity

Net gain on revaluation of property plant and equipment 25,986 26,164

Deferred income tax reported in equity 25,986 26,164

2011 2010

$’000 $’000

Opening balance 5,040 12,720

Charged to income 19,655 13,487

Payments (17,615) (21,167)

closing balance 7,080 5,040

financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11 | 121

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

2011 2010

$’000 $’000

Long service leave 3,165 3,098

Sick leave 1,591 1,591

Annual leave 3,290 3,207

Accumulated time off 136 295

Provision for doubtful debts - 1

Provision for deferred maintenance 376 125

Obsolete maintenance spares provision 27 29

Accrued expenses 20 21

Unrealised loss on financial instruments 123 -

Impairment of WIP - 3,084

Balance at 30 June 8,728 11,451

2011 2010

$’000 $’000

Inventory 894 866

Accrued income 446 303

Research and development in WIP 10 313

Unrealised gain on financial instruments - 63

Accelerated depreciation: plant and equipment 105,002 103,592

Balance at 30 June 106,352 105,137

2011 2010

$’000 $’000

Opening balance 105,137 94,997

Transfer in re Port of Bundaberg transfer - 3,027

Amount charged to Statement of Comprehensive Income 1,393 7,052

Amount (charged)/credited direct to equity (178) 61

closing balance 106,352 105,137

2011 2010

$’000 $’000

Opening balance 11,451 9,077

Transfer in re Port of Bundaberg transfer - 299

Amount credited to Statement of Comprehensive Income (2,723) 2,084

Prior year adjustment - (9)

closing balance 8,728 11,451

4. income tax equivalent (cont) (d) Deferred tax asset

(e) Deferred tax liability

122 | financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

5. cash and cash equivalents

6. Trade and other receivables

Note 2011 2010

$’000 $’000

Cash non-interest bearing 4 3

Cash at bank 34,412 8,927

Queensland Treasury Corporation - cash on call 98,193 91,102

Total 21(d) 132,609 100,032

2011 2010

$’000 $’000

current

Trade debtors 254,690 58,567

Less: provision for impaired trade debtors - (2)

254,690 58,565

Accrued interest 1,487 1,010

Term debtors 229 212

Other debtors 10 1

Total 256,416 59,788

non-current

Term debtors 794 1,023

Cash at bank earns interest at floating rates based upon daily bank deposit rates. The carrying amount of cash and cash equivalents represents fair value.

Money market investments are limited to investments in bank-backed securities or short-dated securities guaranteed by the Commonwealth or the State. Credit risk exposure on these investments is minimised by the short-term nature of the investment.

Cash at bank and on call includes restricted amounts. A balance of $7,397,000 (2010: $13,390,000) relates to the Wiggins Island Coal Terminal project and can only be used to fund that project. In addition, $24,400,000 relates to LNG projects and may only be used to fund those projects.

Term debtors are of a longer term nature which falls outside the normal debtor trading terms. Interest is charged at commercial rates until the debt is extinguished.

financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11 | 123

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

6. Trade and other receivables (cont) Reconciliation of impaired debts:

7. inventories of maintenance and operations spares

2011 2010

$’000 $’000

Opening balance 2 348

Impaired debts written off (4) (347)

Impaired debts recovered - (3)

Movement in provision 2 4

closing balance - 2

2011 2010

$’000 $’000

current

Inventories 8,026 9,569

Less: provision for obsolete stock (89) (97)

Total 7,937 9,472

not due Overdue < 1 year

Overdue 1–5 years

Overdue >5 years

2011 $’000 $’000 $’000 $’000

Debtor balance 237,013 18,698 2 -

Impaired debt provision - - - -

237,013 18,698 2 -

not due Overdue < 1 year

Overdue 1–5 years

Overdue >5 years

2010 $’000 $’000 $’000 $’000

Debtor balance 50,420 9,380 2 -

Impaired debt provision - (2) - -

50,420 9,378 2 -

Sensitivity analysis of trade and term debtor balances at 30 June:

The major component of debtor exposure is to coal producers using the Port of Gladstone for the export of product and LNG industry proponents. Coal producers are mostly major listed companies or their related companies and account for 27% (2010: 65%) of trade debtors at balance date. Credit is only available to established customers on 30 day terms except in the case of coal exporters who may be required to make payment within 14 days of receipt of monthly statements. 2010/11 includes balances to several LNG industry proponents (2011: 69%, 2010 18%). These are all multi-national entities and are on terms of either 20 working days or 30 working days dependent upon the contract.

Credit risk exposure is minimised in the case of term leases where personal guarantees are required from directors of small private companies. In addition, receivable balances are monitored on an ongoing basis with the result that GPC’s exposure to bad debts is not significant.

124 | financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

8. Property, plant and equipment (a) schedule of values

2011

cost or valuation

accumulated depreciation

net book value

$’000 $’000 $’000

Land 84,922 - 84,922

Buildings 25,651 (3,152) 22,499

Channels, swing basins and berth pockets 140,947 (10,763) 130,184

Commercial wharves 232,975 (12,467) 220,508

Recreational and fishing wharves 340 (17) 323

Roads and services (structural improvements) 100,850 (11,116) 89,734

Plant 646,270 (61,646) 584,624

Furniture and fittings 184 (83) 101

Capital works in progress 191,610 - 191,610

Total 1,423,749 (99,244) 1,324,505

2010

cost or valuation

accumulated depreciation

net book value

$’000 $’000 $’000

Land 87,477 - 87,477

Buildings 25,257 (909) 24,348

Channels, swing basins and berth pockets 140,947 (4,255) 136,692

Commercial wharves 231,242 (4,798) 226,444

Recreational and fishing wharves 340 (8) 332

Roads and services (structural improvements) 91,699 (2,199) 89,500

Plant 635,066 (29,596) 605,470

Furniture and fittings 184 (41) 143

Capital works in progress 179,602 - 179,602

Total 1,391,814 (41,806) 1,350,008

financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11 | 125

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

8. Property, plant and equipment (cont) (b) Reconciliations

Reconciliations of the carrying amount for each class of property, plant and equipment at 30 June 2011 are set out below:

carrying amount at 1 July 2010

WiP additions

Transfers to/from

WiP

Disposals Transfers to investment

Properties

Depreciation impairment carrying amount at

30 June 2011

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Land 87,477 - 9,428 - (8,761) - (3,222) 84,922

Buildings 24,348 - 135 (1) - (1,169) (814) 22,499

Channels, swing basins and berth pockets

136,692 - - - - (4,043) (2,465) 130,184

Commercial wharves

226,444 - - - - (6,524) 588 220,508

Recreational and fishing wharves

332 - - - - (9) - 323

Roads and services (structural improvements)

89,500 - 8,770 - - (2,742) (5,794) 89,734

Plant 605,470 - 12,451 (147) - (29,715) (3,435) 584,624

Furniture and fittings

143 - - - - (42) - 101

Capital works in progress

179,602 32,514 (30,784) - - - 10,278 191,610

Total 1,350,008 32,514 - (148) (8,761) (44,244) (4,864) 1,324,505

126 | financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

8. Property, plant and equipment (cont) (b) Reconciliations (cont)

Reconciliations of the carrying amount for each class of property, plant and equipment at 30 June 2010 are set out below:

carrying amount at 1 July 2009

WiP additions

Transfers to/from

WiP

Disposals Revaluations Depreciation impairment carrying amount

at 30 June 2010

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Land 78,528 - 8,636 - 313 - - 87,477

Buildings 23,573 - 1,648 - - (1,132) 259 24,348

Channels, swing basins and berth pockets

136,410 - 4,611 - (327) (4,002) - 136,692

Commercial wharves

228,128 - 3,022 - - (6,439) 1,733 226,444

Recreational and fishing wharves

340 - - - - (8) - 332

Roads and services (structural improvements)

91,377 - 323 - - (2,580) 380 89,500

Plant 619,192 - 15,611 (153) - (28,206) (974) 605,470

Furniture and fittings

178 - 6 - - (41) - 143

Capital works in progress

117,572 103,016 (33,857) - - - (7,129) 179,602

Total 1,295,298 103,016 - (153) (14) (42,408) (5,731) 1,350,008

financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11 | 127

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

8. Property, plant and equipment (cont) (c) carrying amounts if assets were measured at cost less accumulated depreciation

If assets were measured using the cost model the carrying amounts would be as follows:

(d) Valuations

There was no valuation performed as at 30 June 2011. A full valuation of land and investment properties was conducted by Mr Geoff Pyman, B.Bus, M.B.Env (ProjMgt), FAPI of AON Valuation Services as at 30 June 2010. Land and buildings were valued at market value. Where impairment calculations allowed, assets were revalued upwards. All devaluations have been reflected in the financial statements.

A full valuation of all GPC assets was conducted by Mr Geoff Pyman, B.Bus, M.B.Env (ProjMgt), FAPI and Michael Pankhurst AAPI of AON Valuation Services as at 30 June 2009. A revaluation review of land was carried out in March 2008 by independent valuers. Previously a comprehensive revaluation of assets except for plant, furniture and fittings at the Port of Gladstone was performed by independent valuers as at 30 June 2004 in accordance with the policy to independently value assets at least every five years. All other assets were independently valued at 1 January 2001.

Where possible fair value is calculated using active market valuations. Where no active market exists, fair value is calculated using depreciated replacement costs and evaluating against net realisable value based upon future cash flows of respective business units. The reconciliation of revaluations is shown below:

2011 2010

net book value

net book value

$’000 $’000

Land 64,691 66,463

Buildings 21,543 22,878

Channels, swing basins and berth pockets 109,460 115,550

Commercial wharves 192,891 199,508

Recreational and fishing wharves 532 561

Roads and services (structural improvements) 99,037 93,817

Plant 572,863 597,518

Furniture and fittings 83 135

Total 1,061,100 1,096,430

Note 2011 2010

$’000 $’000

Property, plant and equipment revaluations 8(b) - (14)

Investment property revaluations 10(a) 3,310 (76)

3,310 (90)

Revaluation of non-current assets – Statement of Comprehensive Expenses 3,903 (291)

Revaluation of non-current assets – asset revaluation reserve (593) 201

3,310 (90)

128 | financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

8. Property, plant and equipment (cont) (e) impairment

An impairment review was carried out at 30 June 2011. The assets were separated into cash generating units based upon wharf centres and other income earning centres. In 2010 and prior years, impairment reviews had been carried out on larger cash generating units based upon types of income received. Fair value for all assets except land was based upon value in use. Land was valued at fair value less costs to sell as independent market valuations were available. The discount rate used was 13.29% (2010: 12.21%). The impairment losses identified are disclosed in note 8(b). The impairments were recognised due to known income streams for the relevant cash generating unit being insufficient to support the existing asset base of the relevant cash generating unit. Future incomes were estimated from known sources and anticipated future tonnages. Expenses were estimated from past history making adjustments for estimated future tonnages with CPI increases. The major item impaired in the 2010 financial statements was the Wallace Creek Bridge, which was built for the Bundaberg community and will not generate a revenue stream for GPC. The reconciliation of impairments is shown below:

Note 2011 2010

$’000 $’000

Impairment charged to Statement of Comprehensive Income 8(b) 4,864 5,731

Total 4,864 5,731

financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11 | 129

9. intangible assets (a) asset values at cost

(b) Reconciliation

Reconciliation of the carrying amount for Intangible assets at 30 June 2011:

Reconciliation of the carrying amount for Intangible assets at 30 June 2010:

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

2011

cost accumulated depreciation

net book value

$’000 $’000 $’000

Intangible assets 5,601 (3,208) 2,393

Capital WIP 720 - 720

6,321 (3,208) 3,113

2010

cost accumulated depreciation

net book value

$’000 $’000 $’000

Intangible assets 5,600 (2,744) 2,856

Capital WIP 166 - 166

5,766 (2,744) 3,022

carrying amount at

1 July

WiP additions

additions Depreciation impairment carrying amount at

30 June

$’000 $’000 $’000 $’000 $’000 $’000

Intangible assets 2,856 - - (331) (132) 2,393

Capital WIP 166 554 - - - 720

3,022 554 - (331) (132) 3,113

carrying amount at

1 July

WiP additions

additions Depreciation impairment carrying amount at

30 June

$’000 $’000 $’000 $’000 $’000

Intangible assets 2,944 - 242 (330) 2,856 2,856

Capital WIP 40 126 - - 166 166

2,984 126 242 (330) 3,022 3,022

130 | financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11

10. investment properties (a) investment properties

Investment properties are carried at fair value, which has been determined based on independent valuations by Mr Geoff Pyman, B.Bus, M.B.Env (ProjMgt), FAPI of AON Valuation Services as at 30 June 2011, in accordance with the policy to independently value assets at least every five years.

The fair value represents the amount at which the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm’s length transaction at the date of valuation, in accordance with Australian Valuation Standards.

Investment properties may only be disposed of after obtaining approval from the Portfolio Minister for Transport.

(b) assets subject to operating leases as lessor

Due to the short term nature of these payables, their carrying value is assumed to approximate to their fair value. Trade creditors are usually 30 days from the last day of the month in which an invoice is received. GST is payable on the 21st day following the period to which it relates.

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

Note 2011 2010

$’000 $’000

Opening balance 75,069 65,273

Additions 781 -

Transfers from Land 8(b) 8,761 -

Transfer from Port of Bundaberg - 9,872

Revaluations 3,310 (76)

Disposals (251) -

closing balance 87,670 75,069

2011 2010

Operating lease revenue $’000 $’000

Due not later than one year 7,293 5,785

Due later than one year and not later than five years 32,473 19,335

Due later than five years 54,191 46,737

Total 93,957 71,857

These leases relate to the GPC’s business of providing facilities for stevedoring operators as well as land and buildings for industrial use for other business purposes.

11. Trade and other payables2011 2010

current $’000 $’000

Trade creditors 57,069 13,490

Revenue received in advance 149,760 8,367

GST payable 12,458 3,469

Other 1,604 1,388

220,891 26,714

financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11 | 131

12. loans and borrowings

13. Provisions

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

2011 2010

$’000 $’000

current

Queensland Treasury Corporation loans 122,487 -

non-current

Queensland Treasury Corporation loans 462,236 591,523

Note 2011 2010

$’000 $’000

current

Employee benefits 14 11,063 10,287

Contribution for maintenance received in advance 838 -

Dividends 16 42,083 35,098

Total 53,984 45,385

non-current

Employee benefits 14 16,210 17,016

Contribution for maintenance received in advance 17 446 416

Total 16,656 17,432

2011 2010

carrying amount

fair value

carrying amount

fair value

$’000 $’000 $’000 $’000

Queensland Treasury Corporation loans 584,723 602,068 591,523 611,961

The Queensland Treasury Corporation loans comprise advances made under two client specific pool arrangements (CSP). The CSP will comprise a combination of bonds and Floating Rate Debt so that the weighted average term of the underlying cash flows of these instruments matches the weighted average term of the underlying cash flows of GPC’s loans.

One CSP with a book value of $462,236,145 is used for GPC’s normal operations. The second CSP is specifically designed to fund the Wiggins Island Coal Terminal (WICT) Feasibility and Detailed Design project. The full amount of this WICT loan ($122,486,671) is guaranteed by coal companies and has a maximum facility of $140 million.

fair values

Unless disclosed below the carrying amount (book value) of GPC’s current and non-current borrowings approximate to their fair value. The fair values have been calculated by discounting the expected future cash flows at prevailing market interest rates.

132 | financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11

14. Employee benefits Employee benefits comprise of long service leave, annual leave, sick leave and rostered day off provisions. Aggregate

liability for employee benefits including on costs:

15. Provision for demolition Aggregate liability for demolition costs on existing structures:

16. Dividends Dividends provided calculations are based on 80% of net profit after an adjustment for upwards revaluations, and a

reduction to account for transactions relating to the purchase of Marley Brown Oval. The effective comparable percentages are 2011 @ 80% and 2010 @ 80%. All dividends are unfranked.

Dividends provided or paid

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

Note 2011 2010

$’000 $’000

Current 13 11,063 10,287

Non-current 13 16,210 17,016

27,273 27,303

2011 2010

$’000 $’000

Balance of provision at 1 July 27,303 24,893

Payment of provisions (20,290) (10,630)

Movement in provision calculation 20,260 13,040

Balance of provision at 30 June 27,273 27,303

2011 2010

$’000 $’000

Balance of provision at 1 July - 1,382

Reduction in provision from demolitions undertaken - (1,382)

Increase in provision - -

Balance of provision at 30 June - -

Note 2011 2010

$’000 $’000

Balance of provision at 1 July 35,098 33,243

Additional provision for 2009 dividend - 2,899

Dividends paid (35,098) (36,142)

Dividends provided for 42,083 35,098

Balance of provision at 30 June 13 42,083 35,098

financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11 | 133

17. contribution for maintenance received in advance (a) aggregate liability for maintenance received in advance:

18. Derivative financial assets and liabilities at fair value through profit and loss Unrealised gains/(losses) on foreign currency hedges:-

19. contributed equity Unrealised gains/(losses) on foreign currency hedges:

In 2010 29,614,848 additional shares were issued for $29,614,847.32 to extinguish a shareholder loan transferred to GPC as a result of the transfer of Port of Bundaberg from Port of Brisbane. The return of capital on 31 December 2009 did not result in the cancellation of any shares.

(b) accumulated funds received for future maintenance and rehabilitation costs from customers:

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

Note 2011 2010

$’000 $’000

Current 13 838 -

Non-current 13 446 416

1,284 416

Note 2011 2010

$’000 $’000

Balance of contribution received in advance at 1 July 416 385

Amounts received 868 31

Balance of contribution received in advance at 30 June (a) 1,284 416

2011 2010

$’000 $’000

Balance of provision at 1 July 209 (320)

Movements on settlement (209) 320

Fair value movements at period end (409) 209

Balance of financial asset/(liability) at 30 June (409) 209

2011 2010

contributed equity no. no.

Authorised – ordinary shares 1,000,000,000 1,000,000,000

Issued – ordinary shares fully paid 402,066,818 402,066,818

2011 2010

Movements $’000 $’000

Balance at 1 July 673,558 725,943

Return of capital - 31 December 2009 - (82,000)

Share issue to extinguish shareholder loan – 8 April 2010 - 29,615

Balance at 30 June 673,558 673,558

134 | financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11

20. notes to the statement of cash flows (a) Reconciliation of profit from ordinary activities after income tax equivalent to net cash provided by

operating activities

(b) Working capital facility

Gladstone Ports Corporation Limited has access to a $30,000,000 (2010: $30,000,000) working capital facility provided through Queensland Treasury Corporation. This facility has not been drawn upon during the financial year.

21. financial risk management objectives and policies GPC’s principal financial instruments comprise receivables, payables, bank loans, cash and short term deposits and derivatives.

GPC manages its exposure to key financial risks, including interest rate and currency risk, in accordance with its financial policies. The objectives of the policies are to support the delivery of GPC’s financial targets whilst protecting future financial security.

GPC enters into derivative transactions, principally forward currency contracts. The purpose is to manage the currency risks arising from GPC’s operations. These derivatives provide economic hedges, but do not qualify for hedge accounting and are based upon limits set by the Board.

The main risks arising from GPC’s financial instruments are credit risk, interest rate risk, foreign currency risk and liquidity risk. GPC uses different methods to measure and manage different types of risks to which it is exposed. These include monitoring levels of exposure to interest rate and foreign exchange risk and assessments of market forecasts for interest rate, foreign exchange and commodity prices. Ageing analysis and monitoring of specific credit allowances are undertaken to manage credit risk. Liquidity risk is monitored through the development of future rolling cash flow forecasts.

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

2011 2010

$’000 $’000

Profit from ordinary activities after income tax 55,280 46,482

Depreciation 44,464 42,623

Revaluation of non-current assets (3,903) 291

Impairment of non-current assets 4,996 5,731

Net profit or loss on sale or property, plant and equipment (696) (109)

Loss on transfer of Port of Bundaberg - 695

change in assets and liabilities

Decrease in receivables (195,913) (551)

(Increase)/ decrease in other assets (434) 181

Decrease/(increase) in inventories 1,535 (401)

Decrease/(increase) in deferred tax asset 2,723 (2,075)

Increase/(decrease) in trade creditors 44,991 (2,078)

Increase in other liabilities 150,598 5,325

Increase/(decrease) in provisions 838 (180)

Increase/(decrease) in income tax creditor 2,040 (7,680)

Increase in provision for deferred tax liability 1,215 7,052

net cash provided by operating activities 107,734 95,306

financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11 | 135

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

21. financial risk management objectives and policies (cont) The Board reviews and agrees policies for managing each of the risks summarised below:

(a) credit risk exposure

Credit risk arises from the financial assets of GPC, which comprise cash and cash equivalents and trade and other receivables. GPC is exposed to credit risk from the possibility of counter parties failing to perform their obligations. Credit risk exposure on financial assets other than cash at bank and at call has been recognised in the Statement of Financial Position, with the carrying amount stated net of any provision for impaired debts.

GPC does not hold any credit derivatives to offset its credit exposure. The level of exposure is disclosed in note 6.

(b) foreign currency risk

GPC has transactional currency exposures in relation to capital purchases in currencies other than Australian dollars. GPC requires management to examine eliminating currency exposure on any individual transactions in excess of $500,000. It is GPC’s policy not to enter into forward contracts until a firm commitment is in place and to negotiate the terms of the hedge derivatives to exactly match the terms of the hedged item to maximise hedge effectiveness. As at 30 June 2011 GPC did not have any exposure to foreign currency that is not designated in note 22. GPC receives revenue from LNG proponents in Euro dollars to offset the requirement to pay a contractor in Euro dollars. GPC only receives those amounts required to meet its contractor obligations and only pays this credit after the Euro have been received from the LNG proponents. Therefore GPC does not believe that any exchange rate risk exposure occurs in relation to these contracts. At 30 June 2011, the Australian Dollar value of Euro trade debtors is $62,528,000 (2010: $0) and Australian Dollar value of Euro trade creditors is $25,781,000 (2010:$0).

(c) liquidity risk

GPC’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans and finance leases.

The table below reflects all contractually fixed pay-offs and receivables for settlement, repayments and interest resulting from recognised financial assets and liabilities, including derivative financial instruments as at 30 June 2011. For derivative financial instruments the market value is presented, whereas for the other obligations the respective undiscounted cash flows are presented. Cash flows for financial assets and liabilities without fixed amount or timing are based upon the conditions existing at 30 June 2011.

136 | financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

21. financial risk management objectives and policies (cont) (c) liquidity risk (cont)

Maturity analysis of financial assets and financial liabilities based upon management’s expectations

Year ended 30 June 2011 < 1 year 1 – 5 years

> 5 years

Total

$’000 $’000 $’000 $’000

financial assets

Cash and cash equivalents 132,609 - - 132,609

Trade and other receivables 261,166 794 - 261,960

393,775 794 - 394,569

financial liabilities

Trade and other payables 225,641 - - 225,641

Interest bearing loans and borrowings 122,487 - 462,236 584,723

Derivatives 409 - - 409

348,537 - 462,236 810,773

net maturity 45,238 794 (462,236) (416,204)

Year ended 30 June 2010 < 1 year 1 – 5 Years

> 5 years

Total

$’000 $’000 $’000 $’000

financial assets

Cash and cash equivalents 100,032 - - 100,032

Trade and other receivables 61,924 1,023 - 62,947

Derivatives 209 - - 209

162,165 1,023 - 163,188

financial liabilities

Trade and other payables 28,850 - - 28,850

Interest bearing loans and borrowings 129,641 - 461,882 591,523

158,491 - 461,882 620,373

net maturity 3,674 1,023 (461,882) (457,185)

The risks implied in the table above reflect a balanced view of cash inflows and outflows.

Leasing obligations, trade payables and other financial liabilities mainly originate from the financing of assets used in our ongoing operations such as property, plant and equipment and investments in working capital such as inventories and trade receivables. These assets are considered in GPC’s overall liquidity risk.

To monitor existing financial assets and liabilities as well as to enable an effective controlling of future risks, GPC has established comprehensive risk reporting that reflects expectations of management of settlement of financial assets and liabilities.

GPC monitors rolling forecasts of liquidity reserves on the basis of expected cash flow. At balance date GPC had available $30 million of unused credit facilities available for use.

financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11 | 137

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

21. financial risk management objectives and policies (cont) (d) interest rate risk exposure

GPC’s exposure to interest rate risk relates primarily to GPC’s long term debt obligations. The level of debt is disclosed in note 12.

At 30 June 2011 GPC had the following mix of financial assets and liabilities exposed to variable interest rate risk that are not designated as cash flow hedges:

(e) net fair value

Cash at bank and at call are valued as the amount of the deposit or the purchase price of the underlying security. Receivables are carried at the nominal amount due, less provision for impaired debts which represents the assessed credit risk.

Liability to trade creditors is recognised on receipt of goods and services at nominal value. Payment would normally occur within 30 days.

Borrowings outstanding at 30 June 2011 have been valued at book using long term interest rates negotiated with Queensland Treasury Corporation.

22. Derivative financial instruments During 2011 GPC entered into agreements to purchase mobile plant with the purchase price denominated in a foreign

currency. In order to protect against exchange rate movements, GPC entered into forward exchange contracts to purchase United States dollars. The agreements are expected to be finalised by March 2012.

In 2010 a contract to buy Australian dollars was entered into to match a sell contract where early delivery of plant was accepted by GPC.

GPC’s policy is to manage its finance costs using a mix of fixed and variable rate debt. GPC constantly analyses its interest rate exposure where consideration is given to the mix of fixed and variable interest rates.

The following sensitivity analysis is based upon the interest risk exposures in existence at the Statement of Financial Position date. At 30 June 2011, if interest rates had moved, as illustrated in the table below, with all other variables held constant, post tax profit and equity would have been affected as follows:

2011 2010

$’000 $’000

financial assets

Cash and cash equivalents 132,609 100,032

financial liabilities

Interest bearing loans and borrowings 584,723 591,523

Post tax profit Equity

2011 2010 2011 2010

$’000 $’000 $’000 $’000

+1% (100 basis points) (442) (566) 442 566

-1% (100 basis points) 442 566 (442) (566)

138 | financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

22. Derivative financial instruments (cont) At balance date, the details of the outstanding contracts are (in Australian dollar equivalents):

23. commitments capital expenditure commitments contracted but not provided for:

Operating leases as lessee

These contracts are fair valued by comparing the contracted rate to market rates for contracts with the same length of maturity. All movements in fair value are recorded in the profit or loss in the period they occur. The net fair value losses on foreign currency derivatives during the year were $504,221 (2010: $529,350 loss). GPC did not reclassify any derivative financial instruments during the year.

The recognised fair values of financial assets and liabilities are classified according to the following fair value hierarchy that reflects the significance of the inputs used in making these measurements:

•Level1–fairvaluesthatreflectunadjustedquotedpricesinactivemarketsforidenticalassets/liabilities

•Level2–fairvaluesthatarebasedoninputsthataredirectlyorindirectlyobservablefortheasset/liability(otherthanunadjusted quoted prices)

•Level3–fairvaluesthatarederivedfromdatanotobservableinamarket.

According to the above hierarchy GPC only had derivative financial instrument liabilities of $3,624,000 (2010: liabilities of $5,445,000, and assets of $1,881,000) which are Level 2 instruments.

sell australian dollars average exchange rate

2011 2010 2011 2010

$’000 $’000

Maturity:

0 – 6 months 1,801 3,593 0.9295 0.879225

6 – 12 months 1,823 1,852 0.9183 0.852900

Buy australian dollars average exchange rate

0 – 6 months - 1,881 - 0.839380

2011 2010

$’000 $’000

Due not later than one year 12,362 21,696

2011 2010

$’000 $’000

Due not later than one year 1,393 1,149

Due later than one year and not later than five years 610 547

2,003 1,696

financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11 | 139

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

24. auditor’s remuneration These are amounts (excluding GST) paid or payable to the Auditor-General of Queensland for audit of the financial

statements. No other benefits were received by the auditors:

2011 2010

$ $

Remuneration 103,048.50 89,181.13

The remuneration calculation is the estimated fee for the audit for the year ended 30 June with an adjustment for the under or over provision of the prior year estimate.

25. Key management personnel disclosuresDirectors

Directors’ emoluments are set by the State Government with other fees and allowances determined on the basis of meetings attended and expenditure incurred in performing their roles. Directors do not receive performance related remuneration.

specified executives

The Human Resources Committee recommend executive remuneration to the Board. The committee uses market and industry surveys to ascertain an appropriate level of remuneration to attract appropriately skilled staff. The remuneration policy is subject to State Government guidelines and changes to executive remuneration are approved by the Board and advised to shareholding Ministers.

GPC’s remuneration policy is based on a total employment cost (TEC) concept. The TEC concept ensures all benefits including salary, superannuation, motor vehicle etc. are included in the remuneration package cost.

Short-term benefits are disclosed as the gross salary package (excluding bonuses) and may be taken either as salary or salary sacrificed by the director or employee. Amounts paid on separation are included as a short term benefit.

All disclosed items relate to amounts received by each senior executive for the full financial year irrespective of when they commenced their role listed above. Other benefits are listed as taxable fringe benefits amounts. These may include benefits that are available to all employees of GPC and are not specific to the listed roles.

Until 30 June 2010, senior executives were eligible for an at risk performance payment based on the achievement of specific organisational goals and individual performance. The performance indicators included financial, operational, safety and customer satisfaction targets. No at risk performance payments are payable for periods after 30 June 2010.

The initial targets were set by the Board and are developed from the key goals contained within the Statement of Corporate Intent. The ‘at risk’ payment is totally contingent upon the Board’s assessment of GPC’s performance and in line with Government requirements. The maximum at risk payment available was 15% of total remuneration. Payments are made in cash, or if appropriate notice has been provided, paid into the employee’s superannuation fund on a salary sacrifice basis.

From 2004 all new senior executive appointments are for fixed three year terms.

Other senior executives employed prior to this date are employed on tenure, otherwise their terms and conditions of employment are the same. All senior executives’ remuneration levels increase in line with the market assessments up to a maximum of 10% per annum where remuneration remains below the market median. Where remuneration is above market median annual increases are restricted to CPI increases.

Separation benefits, in the event of termination by GPC, other than for misconduct, are allowed for in the agreements. The Chief Executive Officer is entitled to three months notice, or payment in lieu of notice as well as a separation payment of the lesser of 12 months pay and the amount which would otherwise be paid between the determination date and the end of the contract term. Senior executives are entitled to four weeks notice or payment in lieu. In the event of a position being made redundant the executive is entitled to eight weeks pay plus three weeks pay for each year of service, up to a maximum of 52 weeks. In accordance with Ministerial guidelines details of directors and the seven senior executives of the entity with the greatest authority in office at 30 June 2011 are as follows:

140 | financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

25. Key management personnel disclosures (cont)short Term

Benefits Post Employment Benefits Other Benefits TOTal

$’000 $’000 $’000 $’000 $’000

Directors Directors’ fees

superannuation Retirement benefits

Brusasco AM, I (Chairman1)2011 58 - - - 582010 51 - - - 51Corones AM, P2 2011 25 2 - - 272010 24 2 - - 26Ware, C1

2011 25 2 - - 272010 24 2 - - 26Skippen, H3

2011 16 1 - - 172010 - - - - -Scott, R4

2011 - - - - -2010 5 - - - 5Crawford, T5

2011 - - - - -2010 22 2 - - 24Staines, A6

2011 - - - - -2010 22 2 - - 24Toll, G8

2011 25 2 - - 272010 16 1 - - 17Kelly, A2

2011 25 2 - - 272010 24 2 - - 26Davidson, G7

2011 25 2 - - 272010 21 2 - - 23Reynolds, J7

2011 26 2 - - 282010 26 2 - - 28

Total remuneration: Directors -2011 225 13 - - 2382010 235 15 - - 250

1 Reappointed 1 October 2010 2 Reappointed 1 October 20093 Appointed 1 October 2010

4 Ceased 30 September 20095 Re-appointed 1 October 2008, Resigned

7 May 2010

6 Re-appointed 1 October 2008, Resigned 21 May 2010

7 Appointed 1 October 20088 Appointed 1 October 2009

Transactions of a similar nature are disclosed in aggregate except when separate disclosure is necessary and material.

financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11 | 141

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

25. Key management personnel disclosures (cont)contract

Expiry Date

short Term Benefits Other Benefits TOTal

$’000 $’000 $’000 $’000 $’000 $’000 $’000

specified Executives salary separation Payments

super-annuation

Motor Vehicle

Other

Zussino, LCEO 31-Aug-102011 342 - 61 11 5 4192010 310 - 39 6 9 364Galt, MCommercial GM 18-Mar-112011 245 - 49 9 2 3052010 223 - 28 9 3 263Drury, I Port Planning and Development GM5

Tenured

2011 118 - 22 6 5 1512010 170 - 21 7 1 199Greenaway, MProject GM3 21-Nov 112011 210 75 37 6 2 3302010 193* - 25 9 5 232Carter, G Acting Port Planning and Development GM 1

2011 29 - 7 1 - 372010 - - - - - -Kirkby, ECorporate Relations GM2 15-Jan-132011 121 71 15 10 - 2172010 78 - 10 4 1 93Walker, CPort Operations GM4 15-Jan-122011 212 62 38 12 4 3282010 211 - 27 11 4 253

Total remuneration: specified Executives2011 1,277 208 229 55 18 1,7872010 1,185 - 150 46 23 1,404

1 Appointed Acting GM from 1 March 2011.

2 Appointed 15 January 2010 and resigned 25 March 2011.

3 Resigned 24 June 2011.

4 Resigned 27 May 20115 On leave from 1 March 2011

until retirement in 2012.

*In addition M Greenaway received a payment of $82,643.25 for payout of RDOs.

142 | financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

25. Key management personnel disclosures (cont)Related party disclosure

Gladstone Ports Corporation Limited is a company GOC owned by the Queensland Government and established as a body corporate under an act of Parliament. GOC’s operate in a commercial environment and deliver a range of services across diverse industries such as energy, transport and funds management. All payments made or received between GPC and other government entities are on an arm’s length commercial basis and shown below:

agency nature 2011 2010

$’000 $’000

Revenue

Queensland Rail Christmas Dinner 1 -

Expenses

Australian Maritime Safety Authority Overseas Calls 6 -

Bundaberg Regional Council Rates 49 28

Ergon Energy Electricity 995 1,037

Queensland Audit Office Audit fees 118 123

Department of Employment and Economic Development

Applications 27 16

Department of Environmental and Resource Management

Permits 165 516

Gladstone TAFE Training 83 444

Office of State Revenue Land tax and payroll tax 3,928 4,386

Ports Australia Membership 11 84

Queensland Department of Natural Resources Purchase of land 118 -

Queensland Department of State Development Training - 5

Queensland Department of Transport and Main Roads

Including survey work, dredging and registrations 793 1,004

Visits

Gladstone Area Water Board Water and capital contributions 567 606

Port of Brisbane Corporation Dredging and MSIC applications 2,066 4,486

Queensland Police Service Amberjack exercise 2 5

Queensland Rail PICOW training - 16

Queensland Treasury Corporation Loan interest, competitive neutrality fee & rates 43,053 38,113

Queensland Fire and Rescue Fire alarm call outs 55 22

QSuper Superannuation contributions 13,130 12,361

WorkCover Queensland Workers’ compensation insurance 903 2,081

The Co-ordinator General Gladstone Infrastructure Study Stage 1 and 2 - 222

Gladstone Regional Council Rates 1,848 1,796

Central Queensland University Rent and environmental monitoring 123 140

financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11 | 143

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

26. aggregate performance payments at-risk performance payments

27. segment informationGPC operates in a single industry, namely the Maritime Port Industry, in Central Queensland at three locations - the Port of Gladstone, Port Alma and Port of Bundaberg.

28. contingent assets and liabilitiesAs at the date of these accounts, the Board is not aware of any material contingent assets or liabilities.

2011 2010

$’000 $’000

Aggregate performance payments provided for executive employees 77 152

The executive performance payment represents the provision for the bonuses to be paid for the year ended 30 June plus or minus any adjustment for prior year over or under provisions.

Total salaries and wages (including bonuses) paid or payable to executive employees

1,668 1,412

2011 2010

no. of employees

no. of employees

Number of executive employees who received a performance payment 6 5

The following categories of employees are eligible for at-risk performance incentive remuneration:

•ChiefExecutiveOfficer

•SeniorExecutives

2011 2010

$’000 $’000

Total salaries and wages paid or payable to all employees 73,379 70,044

Superannuation paid or payable for all employees 7,980 7,570

144 | financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

29. Wiggins island coal Terminal project GPC is currently undertaking a Full Feasibility Study and Detailed Design for Wiggins Island Coal Terminal project (WICT). It is anticipated that this project will be handed over to a third party for completion during the 2012 financial year. The balances that relate to this project that are included in the Statement of Financial Position are:

2011 2010

$’000 $’000

assets

Cash and cash equivalents 7,397 13,390

Trade and other receivables – trade debtors 1,550 2,062

Trade and other receivables - GST receivable 8 369

Property, plant and equipment - WIP 113,784 115,692

122,739 131,513

liabilities

Long term borrowings 122,487 129,641

Trade and other payables 252 1,872

122,739 131,513

financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11 | 145

notes to the financial statementsfOR THE YEaR EnDED 30 JUnE 2011

30. number of employees2011 2010

no. no.

Number of employees at year end (Full Time Equivalent) 668 678

The number of employees represents the total number of people employed (Full Time Equivalent) by GPC as at 30 June, irrespective of whether they are employed on a full or part time basis or are permanent or temporary employees.

146 | financials | Notes to the financial statements | Gladstone Ports Corporation | Annual Report 2010/11

certification of Gladstone Ports corporation limitedThese general purpose financial statements have been prepared pursuant to section 62(1) of the Financial Accountability Act 2009 (the Act), relevant sections of the Financial and Performance Management Standard 2009 and other prescribed requirements. In accordance with section 62(1)(b) of the Act we certify that in our opinion:

(a) The prescribed requirements for establishing and keeping the accounts have been complied with in all material respects

(b) The statements have been drawn up to present a true and fair view, in accordance with prescribed accounting standards, of the transactions of the Gladstone Ports Corporation Limited for the financial year ended 30 June 2011 and of the financial position of the Corporation at the end of that year.

l M Zussino Dated: 25 August 2011chief Executive Officer

M a Galt Dated: 25 August 2011commercial General Manager

Gladstone

financials | Certification of Gladstone Ports Corporation Limited | Gladstone Ports Corporation | Annual Report 2010/11 | 147

148 | financials | Directors’ declaration | Gladstone Ports Corporation | Annual Report 2010/11

Directors’ declarationThe Directors declare that:

i. In the Directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable;

ii. In the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the company.

Note 2 confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act 2001.

On behalf of the Directors

i Brusasco aM Dated: 25 August 2011chairman

J Reynolds Dated: 25 August 2011Director

Gladstone

To the Members of Gladstone Ports corporation limited

Report on the financial Report

I have audited the accompanying financial report of Gladstone Ports Corporation Limited which comprises the Statement of Financial position as at 30 June 2011, and the Statement of Comprehensive income, Statement of Changes in Equity and Statement of Cash Flows for the year then ended, a summary of significant accounting policies and other explanatory notes, and the directors’ declaration.

Directors’ responsibility for the Financial Report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards.

Auditor’s responsibility

My responsibility is to express an opinion on the financial report based on the audit. The audit was conducted in accordance with the Auditor-General of Queensland Auditing Standards, which incorporate the Australian Auditing Standards. Those standards require compliance with relevant ethical requirements relating to audit engagements and that the audit is planned and performed to obtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness 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 Auditor-General and all authorised auditors. The Auditor-General is the auditor of all Queensland public sector entities and can only be removed by Parliament.

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.

In conducting the audit, the independence requirements of the Corporations Act 2001 have been complied with. I confirm that the independence declaration required by the Corporations Act 2001, which was given to the directors of Gladstone Ports Corporation Limited on 25 August 2011, would be in the same terms if given to the directors as at the time of this auditor’s report.

independent auditor’s report

financials | Independent auditor’s report | Gladstone Ports Corporation | Annual Report 2010/11 | 149

independent auditor’s report (cont)Opinion

In my opinion:

(a) The financial report of Gladstone Ports Corporation Limited is in accordance with the Corporations Act 2001, including:

(i) Giving a true and fair view of the company’s financial position as at 30 June 2011 and of its performance for the year ended on that date

(ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001

(b) The financial report also complies with International Financial Reporting Standards as disclosed in note 2.

Other matters – electronic presentation of the audited financial report

This auditor’s report relates to the financial report of Gladstone Ports Corporation Limited for the year ended 30 June 2011. Where the financial report is included on Gladstone Ports Corporation Limited’s website the company’s directors are responsible for the integrity of Gladstone Ports Corporation Limited’s website and I have not been engaged to report on the integrity of Gladstone Ports Corporation Limited’s website. The auditor’s report refers only to the subject matter described above. It does not provide an opinion on any other information which may have been hyperlinked to/from these statements or otherwise included with the financial report. If users of the financial report are concerned with the inherent risks arising from publication on a website, they are advised to refer to the hard copy of the audited financial report to confirm the information contained in this website version of the financial report.

These matters also relate to the presentation of the audited financial report in other electronic media including CD Rom.

B P Worrall, fcaDelegate of the auditor-General of Queensland

Brisbane, 28 August 2011

150 | financials | Independent auditor’s report | Gladstone Ports Corporation | Annual Report 2010/11

index

financials | Index | Gladstone Ports Corporation | Annual Report 2010/11 | 151

About us ii

auditExternal 88,91Internal 37, 88,91Audit and Compliance 82 - 84, 88-89,91-93BICET (Balaclava Island Coal Export Terminal) 46Botanic to Bridge 2,8,11,15,58, 60,62,70Dredging 3,6,7, 11,13,16,17,19-20,30, 42-43,46, 50–53,60-62,69,78,86,96

Board and governanceChairman’s Review 10–12Chief Executive Officer’s Review 13–15Code of Conduct 90,91Commercial General Manager’s Review 16– 21

committeesHuman Resources 82,83,89, 93Communication Objective i

corporateGovernance 9, 61, 80,81,82–93Directors 82–84Corporate Image Study 8, 11,14, 24,25,60,62

fraud, corruption and official MisconductPolicy 90Remuneration 67,93Risk Management 8,72,74-75,86,90,92-93Role of the Board 89Customers, 6, 11, 14, 21,23-26,28,35,68,86,88,91-92Complaints 6,50,62,70,83Compliance 1,9Environment 50,53,54Environmental Performance 14, 40,42, 50, 53-54,87Safety 74-75PCIMP 51, 54Seagrass 13,52, 54

financialHighlights and Challenges 2–3Performance 10,16, 17,19,89Review 16Statements 91,97,98-150Koongo Yallarm 60, 61LNG 3,4,6,10, 11,13, 15-21,29, 33, 36-38,40,42-46,61,66-69,84,86,87,89-90Vision, mission and values 1

PerformanceCoal exports 6,10,13-14,24-25,28- 30, 33Gladstone Port Central 37, 38,44Imports 16, 29, 30Industry cargoes 30Maintenance management 35Port Alma 1, 2, 6, 7, 13-16, 26,28-30, 33-34,37-38,42,46-47,51-53,67RG Tanna Coal Terminal 7,14,17, 27-30,34-36,38,42-44,46,47,53,55,57,67,70,87Throughput 2, 3,6, 10, 14, 21,24, 28-30,55,86,87Wharf centres 28,29,34, 39,45Reclassification 20,66, 69

index (cont)

152 | financials | Index | Gladstone Ports Corporation | Annual Report 2010/11

Remuneration arrangementsBoard 93Senior management 93

securityPlan 38, 39Community 60Community Support Program 62Gladstone Marina and Spinnaker Park 62Port Open Day 8, 60People 66Enterprise Bargaining Agreement 8,68,86Equal Employment Opportunity 66Health and Safety 72–79, 93People 64–71Training 9,15, 50,66, 68-69, 72, 74,93Western Basin 2, 7,11,13,15,46,51-52,60,61,86,96WICT 7,21, 44,46WICET 7, 10, 34,44

Table indexApprentice distribution 68Board and committee meeting attendance 93Income Statement, Balance Sheet, Revenue Composition 21Lost Time Injuries Frequency Rate 73Maximising Shareholder Returns 17NPI data 54Port of Bundaberg throughput by industry 32Port Alma throughput by industry 32Port of Gladstone throughput by industry 31Security events and incidents 38

Diagram indexEnergy types and sources 55Greenhouse gas emissions 55Organisational structure 88Port of Bundaberg 32Port Alma 32Port of Gladstone 31Port of Gladstone/Port Alma/Port of Bundaberg map iiiThroughput by Industry 29Unloading, loading graphic 26

Graph indexAge profile by department 67Annual training hours delivery 69Capital expenditure 19EBIT 5-year summary 19Expenses 18Interest bearing liability 5-year summary 20NPAT 5-year summary 19Profitability 18Return on assets 5-year summary 19Return on equity 5-year summary 19Revenue 18Shareholder equity 20Taxes and dividends 5-year summary 20Throughput by industry 29Total assets 19

Glossary of termsADCPAcoustic Doppler Current Profiler

APLNG Australia Pacific LNG

ASIC Australian Securities and Investments Commission

ATSIAboriginal and Torres Strait Islander

BICETBalaclava Island Coal Export Terminal

BPCTBarney Point Coal Terminal

Bulk cargoCargo moved in bulk form, such as coal (dry bulk) or naphtha (liquid bulk)

CIPContinuous Improvement Program

CISCapital Investment System

CMMSCentralised Maintenance Management System

CQU Central Queensland University

CSGCoal Seam Gas

DADevelopment Approval

DBMDead Burn Magnesia

DEEDI Department of Employment, Economic Development and Innovation

DERMDepartment of Environment and Resource Management

DEWHADepartment of the Environment, Water, Heritage and the Arts

DWTDead weight tonnes. A measurement of a ship’s tonnage indicating the actual carrying capacity of the ship

EBAEnterprise Bargaining Agreement

EBITEarnings before interest and tax

EEODepending on context:

Equal Employment Opportunity Energy Efficiency Opportunities

EISEnvironmental Impact Statement

EMB Energy mass balance

EMSEnvironmental Management System

EPAEnvironmental Protection Agency

EPBCEnvironmental Protection and Biodiversity and Conservation Act

ERMP Environmental research and monitoring program

FBA Fitzroy Basin Association

FID Final investment decision

FL5 Fisherman’s Landing Wharf 5

GAGALGladstone Area Group Apprentices Ltd

GFCGlobal Financial Crisis

Gladstone Port CentralIncludes Barney Point and Auckland Point facilities

GLNG Gladstone LNG

GOCGovernment Owned Corporation

GPCGladstone Ports Corporation

Gross shiploading rate

Total tonnes loaded

Total time taken to load including delays

Gross train unloading rateTotal tonnes unloaded

Total time taken to unload including delays

GSDAGladstone State Development Area

haHectares

ISO 14001An international standard for environmental management systems – specification with guidance for use

kmKilometres

KPIKey Performance Indicator

LNGLiquefied Natural Gas

LTILost Time Injury

LTIFRLost Time Injury Frequency Rate – number of work-related injuries resulting in a lost time injury, per million hours worked

MSICMaritime Security Identification Card

MSQ Maritime Safety Queensland

MSPMaritime Security Plan

MtMillion tonnes

MtpaMillion tonnes per annum

NGERNational Greenhouse and Energy Reporting Act

NPINational Pollutant Inventory

NSCANational Safety Council of Australia

OHS Occupational Health and Safety

OTS Office of Transport Security

PCIMP

Port Curtis Integrated Monitoring Program

POWG Port Operations Working Group

PPEPersonal Protection Equipment

QALQueensland Alumina Limited

QCLNG Queensland Curtis LNG

QRQueensland Rail

QTC Queensland Treasury Corporation

RAP Reconciliation Action Plan

RCMReliability Centred Maintenance

RGTCTRG Tanna Coal Terminal

RSPCARoyal Society for the Prevention of Cruelty to Animals 

SEWPAC Department of Sustainability, Environment, Water, Population and Communities

Summary of Statement of Corporate IntentSummarises our statement of corporate intent. The statement of corporate intent is a document created under chapter 3, part 8 of the Government Owned Corporations Act. It specifies our financial and non-financial performance targets for activities in the relevant financial year, and is consistent with our corporate plan The statement of corporate intent represents an agreement between the GPCs board of directors and our shareholding Ministers

tTonnes

TACCTechnical Advisory Consultative Committee

tphTonnes per hour

WICETWiggins Island Coal Export Terminal

WICTWiggins Island Coal Terminal (For further information please refer to the website www.wict.com.au)

This report is printed on Impress Satin and Impress DM Matt - ISO12647-2 and sustainable green print certified L2/0006.2010Cert no. L2/0006.2010

Gladstone Ports Corporation Limited 40 Goondoon Street, PO Box 259 Gladstone, Qld, 4680 Australia

T +61 7 4976 1333 F +61 7 4972 3045 www.gpcl.com.au