Newcastle Port Corporation 2012-13 Annual Report · Newcastle Port Corporation Annual Report 2012-13 5 Improvements to the air conditioning system at the Corporation’s Newcomen

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Newcastle Port Corporation

2012-13 Annual Report

Newcastle Port Corporation Annual Report 2012-13 1

Contents Page

Letter to Shareholders 2

Chairman’s Message 3

CEO’s Message 4

Purpose of the Corporation 6

About this Report 7

Safety and People 10

Growing Trade – Exporting the Region’s Coal Resources 12

Growing Trade - Meeting the Needs of a Diverse Customer Base 15

Our Environment and Community 18

Corporate Governance 20

Statutory Requirements 29

Index 38

Glossary 39

Contact Details 41 Attachment - Financial Statements 42


The Hon. Mike Baird The Hon. Andrew Constance Treasurer and Minister for Finance and Services Minister for Industrial Relations

Level 36 Level 36 Governor Macquarie Tower Governor Macquarie Tower 1 Farrer Place 1 Farrer Place SYDNEY NSW 2000 SYDNEY NSW 2000

Dear Ministers

We present the Annual Report of the Newcastle Port Corporation for the year ending 30 June 2013. The report is in accordance with the Annual Reports (Statutory Bodies) Act 1984, the applicable provisions of the Public Finance and Audit Act 1983 and the State Owned Corporations Act 1989.

It is submitted for presentation to Parliament.

P.E. Jeans Gary Webb Chairman Chief Executive Officer


Chairman’s Message

Newcastle Port Corporation and the Port of Newcastle achieved another record year of trade in 2012-13, with trade volume increasing almost 16% to 148.87 million tonnes.

This represents the 13th consecutive year of growth for the port, an achievement of which the Corporation and the port community can be proud. The value of trade in 2012-13 was $19.10 billion. Newcastle Port Corporation’s earnings before interest and tax for 2012-13 totalled $39.81 million, compared to the previous year of $36.24 million.

The Port of Newcastle is recognised as one of the world’s leading coal export ports, with long term contracts underpinning exports to the Asian market. In 2012-13, the port recorded a new coal export milestone of 142.64 million tonnes, representing a 17 per cent increase on the previous year. The value of coal exports was $15.25 billion.

The port’s coal terminals are positioned to accommodate the anticipated growth in coal trade in the years ahead. In 2012-13 Newcastle Coal Infrastructure Group (NCIG) commissioned its Kooragang 10 berth, and is ramping up operations towards its maximum capacity to export 66 million tonnes of coal per annum. The final stage of its terminal is due to be completed in late 2013. In May, planning approval was granted for the NCIG rail flyover on Kooragang Island, which will enhance coal rail capability as coal chain volumes increase. Port Waratah Coal Services continues to progress planning approvals for Terminal 4, which will provide industry with the opportunity to continue to grow coal exports through the Port of Newcastle.

The Corporation values diversity in trade and continues its efforts to attract industries to available portside land. A concept plan for the 90-hectare Mayfield site, part of the former BHP Steelworks site, was approved by the Department of Planning and Infrastructure in July 2012.

At the western end of the site, Stage 1 of the Stolthaven Bulk Liquids Storage Facility is well advanced, and is on track for commissioning towards the end of 2013. At the eastern end of the site, Independent Cement and Lime (ICL) has been granted planning approval to construct a cement storage and distribution plant.

The Newcastle Agri Terminal grain import/export facility is taking shape at Carrington. Stage 1 includes five new silos with a combined capacity of 60,000 tonnes. The facility is expected to be operational towards the end of 2013.

Cruise Hunter marked its 10th anniversary with another successful cruise season. In the past decade, 60 cruise ships have visited the port, bringing 115,000 visitors to the Hunter Region, and an economic boost to the local tourism industry.

In 2013-14 the Corporation will continue to grow port activity, while supporting the NSW Government’s scoping study for the long term lease of the Port of Newcastle.

I would like to thank my Board colleagues for their commitment and significant contribution and thank all Corporation employees for their professionalism and dedication to making Newcastle a safe and efficient port. Special appreciation goes to Dr Mark Sargent who completed his term of seven years as a Board member in December.

I would also like to recognise the contribution of Newcastle Port Corporation’s CEO Gary Webb, who advised the Board of his plan to retire from the Corporation on 30 September 2013. Gary has overseen significant improvements in the Corporation’s management systems, particularly those involving safety, played a key role in the management of the Hunter Valley Coal Chain, and successfully pursued new diversified business for the port.

P.E. Jeans CHAIRMAN


CEO’s Message

The Port of Newcastle again proved its importance as an economic driver for the Hunter Region in 2012-13 through record trade volume and increased port activity.

The record trade volume of 148.87 million tonnes led to the port handling 4,631 ship movements; an increase of 483 on the previous financial year.

While facilitating growth in trade, Newcastle Port Corporation maintained its focus on a strong safety culture. The port community met regularly, via the Port of Newcastle Working Safe Group, to collaborate on initiatives, share learnings and focus on a whole of port safety culture. An external audit of the Corporation’s Work Health and Safety Management System was undertaken in October 2012. The Corporation achieved an excellent 91% rating in the audit which was a similar result to that achieved in the last audit in 2010.

Investment in port infrastructure in 2012-13 will support the growth and development of the port. Construction of the Bulk Liquids Precinct access road and infrastructure on the Mayfield site commenced in January and is well advanced.

Stage 1 of the Western Basin 3 and 4 refurbishment was completed, which saw concrete patch remediation work carried out. This three year project will preserve the life of the wharves for another 30 years.

The Corporation committed $450,000 to upgrade its hydrographic survey capability. A new survey vessel will be built to replace John Shortland, which has been a visible craft on the harbour for the past 23 years.

The $3.5 million Port Centre was officially opened by the Minister for Roads and Ports, the Honourable Duncan Gay, in August 2012. It houses state of the art maritime vessel tracking systems and provides greater functionality for port operations.

The innovation of the Corporation’s workforce continued to deliver results for customers. The movement of four cape sized vessels on a tide happened often and improved vessel scheduling resulted in minimal delays. The Kooragang 2.5 berth commenced operation in February. This has reduced the waiting time for berthing as three vessels can now berth at Kooragang 2, Kooragang 2.5 and Kooragang 3 at any one time.

In March 2013, the Corporation implemented an intensive dredging program to remove accumulated silt, following heavy rains and flood conditions that impacted the Hunter River. The David Allan dredger operated 24 hours a day over an extended period to restore the depth of the port’s main shipping channel.

The port welcomed new shipping providers to the port in 2012-13. Wallenius Wilhelmsen Logistics now makes monthly visits, handling heavy equipment and complex cargoes such as rail cars, mining equipment and yachts. Austral Asia Line introduced a new shipping service to provide Newcastle exporters with an alternative to connect with New Zealand for bulk, break bulk and oversize cargoes.

A second tug operator, PB Towage, joined the port in June 2013; while the port’s existing operator, Svitzer, committed two new assets to the fleet.

In February and March, the Corporation outlined its vision for the long term development of the port via an extensive stakeholder consultation program. Information sessions regarding the Draft Strategic Development Plan were held in Newcastle, Mayfield, Carrington and Stockton and the plan was made available online, with submissions invited.

Environmental protection remains a priority. In accordance with oil spill prevention procedures, containment booms were swiftly deployed when a fishing trawler sank near Queens Wharf in June 2013. A focus on reducing berth dust emissions resulted in the installation of a dust suppression system on the No. 17 loader at the Kooragang 2 berth.


Improvements to the air conditioning system at the Corporation’s Newcomen Street office will result in an estimated 50% power saving in the coming year. Changes to lighting will generate further energy savings.

The Corporation takes pride in supporting projects that benefit the community. A helping hand was provided to a number of organisations which have an association with the port. This included assisting Nobbys and Stockton Surf Life Saving Clubs to purchase equipment and supporting Conservation Volunteers Australia to remove bitou bush and regenerate native plants at Macquarie Pier.

On a personal note, in March I informed the Board of my intention to retire from the Corporation. I would like to take this opportunity to acknowledge members of Newcastle’s port community, and the Corporation’s Board and workforce who have made the port an enjoyable and satisfying place to work. I am proud of what we have achieved for the Hunter Region and New South Wales.

Gary Webb CHIEF EXECUTIVE OFFICER


Purpose of the Corporation The purpose of Newcastle Port Corporation is to provide safe, effective and sustainable port operations and to deliver efficient port development that enhances the economic growth of the Hunter Region and New South Wales.

Statutory Objectives

Newcastle Port Corporation’s principal objectives under the State Owned Corporations Act 1989 and the Ports and Maritime Administration Act 1995 are:

to be a successful business and, to this end:

o to operate at least as efficiently as any comparable businesses; o to maximise the net worth of the State’s investment in the Port Corporation; and o to exhibit a sense of social responsibility by having regard to the interests of the

community in which it operates and by endeavouring to accommodate these when able to do so.

to promote and facilitate trade through its port facilities;

to promote and facilitate a competitive commercial environment in port operations;

to improve productivity and efficiency in its ports and the port-related supply chain;

to ensure that its port safety functions are carried out properly;

where its activities affect the environment, to conduct its operations in compliance with the principles of ecologically sustainable development contained in s6(2) of the Protection of the Environment Administration Act 1991; and

to exhibit a sense of responsibility towards regional development and decentralisation in the way in which it operates.

Statement of Corporate Intent

Newcastle Port Corporation’s Statement of Corporate Intent is its contract with its Government Shareholders. The Statement of Corporate Intent is tabled in Parliament and can be viewed on the Newcastle Port Corporation website.


About this Report

This report covers Newcastle Port Corporation’s financial performance, statutory obligations and corporate performance between 1 July 2012 and 30 June 2013.

The main body of this report (Pages 9 to 18) is an overview of the Corporation’s progress and achievements for the 2012-13 financial year.

This report is set out to reflect the priorities of the Corporation’s business in the past year:

Safety and People – at Page 9 the focus on safety measures and improved assets for the Corporation’s workforce is outlined;

Growing Trade - Exporting the Region’s Coal Resources – at Page 11 record coal exports and infrastructure development in the port and Hunter Region are discussed;

Growing Trade – Meeting the Needs of a Diverse Customer Base – at Page 14 details about non-coal throughput and new projects for the port are provided; and

Our Environment and Community – at Page 17 environmental initiatives and projects, and the Corporation’s engagement with the community, are highlighted.

Newcastle Port Corporation’s financial statements and statutory requirements appear from Page 28. The financial content of the Annual Report is externally audited by the NSW Auditor-General’s office (see Attachment).

Summary of Results

2012-13 2011-12

Financials

Revenue from Port Operations ($m) 97.24 84.30

Operating Surplus ($m after tax) 22.84 19.55

Total Assets ($m) 502.18 494.35

Return on Assets 8.0% 7.5%

Earnings Before Interest and Tax (EBIT – $m) 39.81 36.24

Trade

Total Trade (million mass tonnes) 148.87 128.61

Coal Export Trade (million mass tonnes) 142.64 121.90

General Cargo Trade (million mass tonnes) 0.80 0.87

Non Coal Bulk Trade (million mass tonnes) 5.43 5.84

Shipping

Total Vessel GRT (million tonnes) 101.68 86.52

Vessel Visits 2,204 1,937

Employees

Number of Employees 142 144

Comparison of Past Five Years

Year Trade (million tonnes)

Shipping Movements

Revenue from Port Operations ($m)

2008-09 95.8 3,498 44.77

2009-10 103.03 3,646 60.80

2010-11 114.57 3,878 70.88

2011-12 128.61 4,148 84.30

2012-13 148.87 4,631 97.24


Description of Newcastle Port Corporation’s Revenue Streams and a Comparison of the Past 10 Financial Years

Port management is a major revenue source for the funding of Newcastle Port Corporation’s operations, and is directly related to trade volumes at the port. It includes:

navigation service and pilotage revenues which are driven by ship visits, with charges based on the gross tonnage of vessels. In 2012-13 these charges amounted to 46% and 11% of the Corporation’s revenue respectively;

wharfage is charged for cargo loaded or unloaded at the port with revenues driven by tonnage throughput. In 2012-13 this amounted to 7% of the Corporation’s revenue; and

site occupation is charged at an hourly rate when a vessel occupies a berth. It also includes revenue from charges for short term storage of cargo in the wharf area. In 2012-13 this amounted to 5% of the Corporation’s revenue;

Port-related leases/rentals: charged for the occupation by tenants of Newcastle Port Corporation land, generally not directly related to trade volumes. In 2012-13 this amounted to 22% of the Corporation’s revenue.

Revenue from non-port related leases/rentals: Newcastle Port Corporation leases or rents a range of properties to businesses at the port (i.e. those that are not terminal operators), but can be indirectly related to the port operations. In 2012-13 this amounted to 4% of the Corporation’s revenue.

Other revenue includes items such as: security charge; ship utility charge; interest on deposits; commercial services; and crane hire. In 2012-13 this amounted to 5% of the Corporation’s revenue.

($m) 2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

Pilotage 6.2 6.3 6.3 6.2 6.8 7.0 7.7 8.6 9.5 11.3

Navigation 23.7 24.2 24.9 24.8 26.3 27.4 29.1 33.4 38.6 46.2

Wharfage 2.2 2.9 2.7 2.2 1.9 2.8 3.6 4.1 5.4 6.5

Site Occupation 1.1 1.8 1.5 1.5 1.4 2.4 2.4 2.9 4.3 5.2

Port-Related Leases/Rentals

3.7 3.2 4.0 4.3 4.6 4.9 17.1 21.0 21.9 22.0

Non-Port Leases/Rentals

2.0 1.9 2.2 2.4 2.6 3.1 3.2 3.5 3.2 3.6

Other 1.7 2.3 7.3 10.1 6.3 5.3 1.6 4.2 9.4 4.7

Total 40.6 42.6 48.9 51.4 49.9 52.9 64.7 77.7 92.3 99.5

Revenues achieved modest growth through 2003-04 to 2008-09. This reflects modest growth in coal trade and no changes in port charges.

High annual growth has been achieved in 2009-10 to 2012-13 through a range of contributing factors:

growth in port-related lease revenue from 2009-10 due to the transfer of government owned port-related land to Newcastle Port Corporation, including the Newcastle Coal Infrastructure Group (NCIG) and Port Waratah Coal Services leased sites;


growth in navigation services and pilotage revenue from 2009-10 due to growth in coal exports as a result of expansion in terminal capacity through the Hunter Coal Export Framework and the commencement of operations at the NCIG terminal; and

growth in revenue from port charges from 2011-12 due to a CPI increase in port charges.


Safety and People

Safety is the number one priority for Newcastle Port Corporation which continued to have a whole-of-port approach to the issue.

In 2012-13, the Port of Newcastle Working Safe Group met regularly to enhance safety within the port. The Working Group, which originally comprised representatives from Newcastle Port Corporation, the Maritime Union of Australia and stevedore companies, was expanded to include SVITZER, Varley, WorkCover and Australian Maritime Safety Authority (AMSA) representatives. With the addition of other port personnel, the Working Group has enriched itself with a wider industry representation committed to managing safety.

The Working Group provides an excellent mechanism where a large number of safety professionals come together regularly to consult about safety, initiatives and any perceived changes arising within the port environment.

In October 2012, an external audit of the Work Health and Safety Management System was undertaken as part of a two yearly review. The audit revealed that the Corporation attained the same rating of 91% as in 2010 which was an excellent result as new safety legislation was introduced in 2012.

In June 2013, the Corporation improved its incident reporting system by implementing a cloud-based software system that enables employees to enter, track and action incidents online. Known as ‘isystain’, the system replaces a hard copy reporting mechanism and benefits include:

email based notifications of events and actions for investigations, sign offs and review;

corrective and preventative action tracking reports, reminders and escalations;

creation of reports combining event data with frequency and other trending graphs, maps, targets and textual information; and

compliance with incident reporting requirements of AS/NZS 4801 Occupational Health and Safety Management Systems, AS/NZS ISO 14001 Environmental Management Systems, AS/NZS ISO 9001 Quality Management Systems and AS/NZS ISO 31000 Risk Management.

Employees undertook a training program and ‘isystain’ became fully functional in June 2013.

The Corporation’s Alcohol and Other Drugs Policy was expanded during the year to include the random testing of contractors engaged by the Corporation. Notification was delivered to all contractors in late 2012 and is reinforced at Level 1 Site Access Inductions. The random testing has been accepted as a proactive safety measure.

Despite the comprehensive safety focus, a Lost Time Injury occurred in August 2012 when a worker incurred a leg injury whilst descending a set of external stairs on board a vessel. The Corporation investigated the incident and implemented corrective actions to prevent re-occurrence. The actions included renewed anti-slip stair treads, a change of issued footwear and a review of descending/ascending movements with all vessel workers.

Unfortunately, a local stevedore was fatally injured in September 2012 whilst working in the hull of a cargo ship berthed at the Eastern Basin Distribution Centre. The fatality is a reminder to the port community about the need to maintain safety as the number one priority.

Welfare of Seafarers

Newcastle Port Corporation was one of a number of maritime related organisations that focussed on the welfare of seafarers in the port during November 2012 when it assisted AMSA and the International Transport Workers’ Federation during inspections of ships in the port.

Newcastle Port Corporation strongly supported seafarer welfare groups Mission to Seafarers and Apostle of the Sea (Stella Maris) based at Wickham. It also is a member of the Board of Newcastle Seafarers’ Centre Limited which is planning to build a world-class seafarers’ centre on Kooragang Island.


Port Centre

The Minister for Roads and Ports, the Hon. Duncan Gay MLC, visited Newcastle in August 2012 to open the $3.5 million Port Centre which incorporates state-of-the-art maritime vessel tracking systems.

The three-storey building, designed to provide greater functionality for operational activities and employees, houses the Vessel Traffic Information Centre, Marine Pilots’ office, Port Services offices, a training room, workshops and other facilities.

The Port Centre will assist Newcastle Port Corporation to maintain its operational excellence while handling increased exports and imports.

The new building replaced a two-storey operations centre that was constructed in 1959. The premises underwent a number of modifications but were no longer suitable to accommodate the operational services required by Newcastle’s growing port.


Growing Trade – Exporting the Region’s Coal Resources

In 2012-13, a record 142.64 million tonnes of coal was exported from the Port of Newcastle which eclipses the previous year’s exports by 17%.

This performance was the third consecutive year of double digit coal export growth in the port resulting from the implementation of the Hunter Coal Export Framework in 2009.

The framework has delivered continued growth by allowing coal producers and terminals to enter long-term contracts that underpin investment in terminal expansion capacity and provide producers with the requisite certainty for their commitment to expansion projects.

Growth Markets

The Port of Newcastle continues to be a major supplier of coal to Asia. In 2012-13 the port maintained its long-term distribution of about 80% thermal coal and 20% coking coal.

The port’s traditional coal export markets of Japan, Taiwan, South Korea and, in more recent years, China, accounted for more than 93.5% of coal exports. Compared to the 2011-12 financial year coal exports to:

Japan increased by about 14% from 61 million tonnes (Mt) to 69.5 Mt;

China increased by 24% from 22 Mt to 27.4 Mt;

South Korea increased by 27% to 23.9 Mt, an increase of 5 Mt; and

Taiwan increased by 12% to 12.8 Mt.


Coal Terminal Expansion

The expansion of the Port Waratah Coal Services (PWCS) Kooragang terminal continued in 2012-13 with the delivery of its Project 145 expansion program to complete the full development of its Kooragang terminal site, under current approvals.

Newcastle Coal Infrastructure Group (NCIG) continued its expansion program in 2012-13 which has provided continued expansion of the terminal since the commissioning of its Kooragang Island terminal (T3) in April 2010 with its 30 million tonnes per annum (Mtpa) Stage 1 development.

In July 2012 NCIG opened its $900 million Stage 2AA expansion which increased T3’s capacity to 53 Mtpa. This stage involved additional rail track infrastructure and a second rail unloading facility, a third stacker/reclaimer and two additional stockyards, additional conveyors, sample stations and a second ship loader. In December 2012, exports from NCIG’s terminal since initial commissioning passed the 50 Mt mark with a shipment of coal to South Korea. During 2012-13, NCIG continued construction of its $1 billion Stage 2F expansion to lift capacity to T3’s full approved capacity of 66 Mtpa with the addition of a fourth stacker/reclaimer, two more stockyards, a third berth and associated conveyors.

Terminal 4

Under the Hunter Coal Export Framework, PWCS is obligated to develop an additional coal export terminal on Kooragang Island known as Terminal 4 (T4). The initial stage of T4 is anticipated to cost approximately $5 billion and provide up to 70 Mtpa of coal export capacity, within a master plan with the potential to handle up to 120 Mpta.

In February 2010 PWCS formally commenced the planning assessment and approvals process for the T4 project with the lodgement of a project application and preliminary environmental assessment. During 2012-13, PWCS reviewed the submissions it received on its environmental assessment report for the project.

In May 2013, PWCS announced it had accepted voluntary reductions in contracted tonnages from Hunter Valley coal producers which eliminated the capacity shortfall and the current requirement for T4. PWCS is continuing to seek development approval for T4 to fulfil its obligations under the Hunter Coal Export Framework. Following development approval, construction would commence when there is sufficient industry demand to create a capacity shortfall at PWCS.

Coal Chain Expansion

The Hunter Valley Coal Chain is recognised as the largest coal export operation in the world, consisting of 35 coal mines owned by 13 coal producers, coal haulage distances of up to 380


kilometres, more than 27 points for loading coal onto trains and the three port coal export terminals. Newcastle Port Corporation works with all of the coal producers and service providers through the Hunter Valley Coal Chain Co-ordinator to plan and co-ordinate the transport of coal from mine to ship.

In June, the Australian Rail Track Corporation (ARTC) released its Hunter Valley Corridor 2013 - 2022 Capacity Strategy to update the 2012 - 2021 strategy. The strategy sets out ARTC’s plans for ensuring that rail capacity is sufficient to meet contracted demand.

In December 2012 Pacific National officially unveiled its $110 million Greta Train Support Facility which will cater for the refuelling of trains, routine train inspections and wagon maintenance work. The facility will help increase the efficiency of Pacific National’s coal haulage services in the Hunter Valley region and in turn, will improve the efficiency of the coal chain.

Aurizon in May 2012 announced plans for a $100 million rail facility at Hexham. The project will include a fuelling and maintenance centre and six coal train sidings on 30 hectares of a 255 hectare company site at Hexham. Aurizon is reviewing submissions received on the project’s Environmental Assessment as the planning assessment and approvals process is ongoing.


Growing Trade – Meeting the Needs of a Diverse Customer Base

In 2012-13 Newcastle Port Corporation continued its focus on growing and diversifying trade through the port and was committed to attracting new customers while supporting about 100 port-related businesses.

More than 40 commodities, including bulk, break bulk, bulk liquids, project cargo and containers, were imported or exported through the Port of Newcastle in 2012-13. Growth in throughput for mineral concentrates, fuels, fertiliser and steel product resulted in almost 6.23 million tonnes of commodities other than coal passing through the port.

The overall total of 6,225,795 tonnes was a decline of 479,925 tonnes on 2011-12. This reflected reduced imports of alumina following the closure of the Norsk Hydro Aluminium smelter at Kurri Kurri and a downturn in demand for woodchips resulting in Boral Timber’s decision to close its woodchip export business. Exports of wheat were an improvement on the previous year but other grain throughput was impacted by market factors.

In landside developments, Newcastle Port Corporation continued negotiations with its preferred proponent for the future development of the 90 hectare Mayfield site. The former BHP Steelworks site has prime riverfront development opportunities for trade in bulk liquids, general purpose cargo and bulk and general cargo.

New berthing infrastructure along Kooragang 2 and 3 berths was commissioned in February 2013 to improve capacity and also increase trade efficiency at Walsh Point. The Kooragang 2.5 project included a new dolphin to support piped cargoes from local companies, fender and bollard installation, and improved lighting.

The facility now provides additional capacity for the discharge of cement and vegetable oil while maintaining use of Kooragang 2 and 3 berths for other cargoes. Three vessels are able to berth simultaneously at Walsh Point.

One of the world’s largest shipping companies, Wallenius Wilhelmsen Logistics, added the Port of Newcastle to its international schedule in the second half of 2012. The company’s ships are making monthly visits as an enhancement to its ocean service from Europe and North America into the Oceania region.

Wallenius Wilhelmsen Logistics delivers innovative and sustainable global shipping and logistics solutions for manufacturers of cars, trucks, heavy equipment and specialised cargo. It also specialises in handling complex project cargoes such as rail cars, power generators, mining equipment and yachts.

Austral Asia Line (AAL) in late 2012 introduced a new shipping service to provide Newcastle exporters with an alternative to connect with New Zealand for bulk, break bulk, project and oversize cargoes.

AAL announced expansion of its liner service into New Zealand through its existing North Asia/Australia East Coast service. The rotation includes Xingang, Pusan, Shanghai, Kaohsiung, Brisbane, Newcastle, Melbourne, Timaru and Tauranga.

One of the port’s well-known ships, Star Bird, completed its 131st and final voyage to Newcastle in February 2013. The ship had been chartered by Moly-Cop for nine years and loaded about 337,000 tonnes of grinding media in that time as well as large tonnages of steel products and mining equipment. Star Bird’s last voyage was to Amamapare in Indonesia before it was replaced by another multi-purpose designed vessel, Sonja.

The diversity of the port’s cargoes was demonstrated in December when three large blocks were barged out of Newcastle for Adelaide as part of one of the country’s largest defence contracts. Forgacs is manufacturing 44 blocks at its Tomago shipyard for the Royal Australian Navy’s Hobart-class air warfare destroyer project.

A new export cargo was a product used as a carbon fuel source in cement and brick kilns. The first shipment of HiCal 40 Mineralising Carbon departed in May for the Philippines.


New Port Developments

Construction started during 2012-13 on two multi-million dollar projects in the Port of Newcastle which will add to the capability of the port in handling increased volumes of cargo.

Newcastle Agri Terminal (NAT) started work in the second half of 2012 on its $28 million grain export facility which will have a capacity of 60,000 tonnes. The port skyline began to change in early 2013 when the first of five grain silos started to rise from the construction site at Carrington. The 48 metre high structures include two 20,000 tonne silos and three 6,780 tonne silos.

The NAT facility is the first major grain port development in NSW for more than 25 years and includes new standards in safety, dust and noise management with fumigant capture technology being a first for export grain terminals in Australia. The project includes rail receival facilities, conveyors, shiploading facilities, a laboratory, inspection and sample rooms. It will use existing rail infrastructure and share access to the Dyke 2 berth at Carrington. NAT plans to start grain exports from Newcastle in late 2013.

In another major development, Stolthaven Australia Pty Ltd in late 2012 barged three fuel storage tanks from Tasmania for its new $30 million bulk liquid fuel storage facility at Mayfield. The tanks, each 17 metres high and weighing 430 tonnes, were moved onto Stolthaven’s three hectare site at Mayfield. The tanks each have capacity of 18 million litres which will increase fuel product imports to Newcastle. A 12 metre biodiesel tank, office and associated facilities have been constructed on the site with imports across Mayfield 4 berth planned for late 2013.

Independent Cement and Lime Pty Ltd is proposing to construct and operate a cement and slag receival and despatch facility on a 2.5 hectare site at Mayfield. The $37 million project is expected to employ 15 people and handle about 165,000 tonnes of cement product in its first year of operation.

The first stage of the facility will include ships unloading into a 35,000 tonne silo. A second silo will be constructed once demand is sufficient. Preliminary planning for the facility has been completed and, subject to final approvals, a start on construction is anticipated by the end of 2013.

Cruise Hunter

The growing interest in the Hunter Region as a cruise destination was reflected in 22,000 passengers visiting Newcastle on 10 cruise ships during the 2012-13 cruise season.

Cruise Hunter, the local organisation managed by Newcastle Port Corporation to develop the cruise shipping industry in Newcastle, introduced a number of initiatives to enhance the experience for passengers. These included:

Cruise Hunter partnering with the Hunter Arts Network to establish the Cruise Art Bazaar at Newcastle Museum for cruise ship visits;

a Cruise Hunter ‘phone app’ being introduced to communicate the best of the Hunter Region to cruise passengers as they arrive in Newcastle;

the emergence of new tourism experiences for cruise ship visitors, such as segway tours through the Hunter Wetlands; and

maiden visits by cruise ships Radiance of the Seas and Crystal Symphony.

Cruise Hunter also celebrated its 10th anniversary with the past decade resulting in more than 115,000 passengers visiting Newcastle on 60 cruise ships.

The regional enterprise has booked 11 cruise ship visits for the 2013-14 season which will result in about 22,000 passengers visiting the region. A highlight will be the visit by the largest cruise liner to berth in Newcastle. The 317 metre Celebrity Solstice will make her maiden visit in March 2014.


Historical Trends for Trade (Mass Millions of Tonnes) for the Past 10 Financial Years

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

Alumina 1.2 1.3 1.3 1.3 1.3 1.3 1.4 1.4 1.3 1

Aluminium 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.1

Concentrates 0.5 0.3 0.4 0.3 0.4 0.4 0.4 0.4 0.4 0.4

Fertiliser 0.4 0.4 0.3 0.3 0.3 0.3 0.3 0.3 0.4 0.4

Fuels 0 0 0 0 0 0 0.4 0.4 0.4 0.6

Grains 0.8 1.9 1.3 0.8 0.2 0.9 1.2 1.3 1.7 1.7

Grinding Media 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

Petroleum Coke 0.2 0.3 0.2 0.2 0.3 0.2 0.3 0.3 0.3 0.2

Timber 0 0 0 0 0 0 0 0.1 0 0

Iron & Steel 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3

Woodchips 0.2 0.2 0.2 0.2 0.3 0.3 0.3 0.3 0.3 0.1

Other Commodities

0.9 0.9 1 1 1.2 1.3 1 1.3 1.4 1.3

Total Non-Coal 4.8 5.9 5.1 5 4.3 5.3 5.9 6.3 6.7 6.3

Coal 77.7 77.7 80.3 80.8 89 90.5 97.1 108.3 121.9 142.6

Total Trade 82.5 83.6 85.4 85.8 93.3 95.8 103 114.6 128.6 148.9


Our Environment and Community

Newcastle Port Corporation continued its commitment during 2012-13 to the environment and sustainability, and to support the community in which it operates. In continually aiming to improve environmental performance, the Corporation introduced a number of environmental initiatives and projects to further strengthen its systems and policies.

The Environmental Management System (EMS) is well established and all employees have received EMS training to assist the Corporation in complying with relevant environmental legislation, government policies and industry best practice related to operations within the port. The Corporation also incorporated elements of the EMS into the Level 1 Site Access Induction program for employees, contractors and port users.

Newcastle Port Corporation is an active member of the Office of Environment and Heritage’s Sustainability Advantage Program (SAP). Involvement during 2012-13 included:

attending cluster group meetings that provide information and opportunities for networking with other businesses that are implementing sustainable practices;

participation in workshops promoting energy efficiency; and

completion of sustainability advantage modules.

SAP created 10 business cases for improvement, including the successful retrofit of lighting in the Newcomen Street offices. The retrofitting, along with the installation of a variable speed drive on the basement car park exhaust fan, saved 32% on energy consumption compared to the previous year.

Improvements to the Newcomen Street air conditioning system through replacement of the chilled and hot water pumps is estimated to result in a 50% saving on power consumption for the upcoming year.

During the year four automated water samplers were installed at the Mayfield 4 berth to assist in determining the quality of stormwater runoff, which is a requirement of the Environment Protection Authority’s Environmental Protection Licence. The Corporation also undertook a number of modifications to the stormwater management system to further improve stormwater quality.

A continued focus on reducing berth dust emissions during the year resulted in a review of bulk cargo management plans for common user berths. Dust mitigation measures for bulk cargoes at the Kooragang 2 berth were assessed and handling methods, such as hopper to truck discharge and the use of an agri-loader for loading operations, were examined.

A dust suppression system for hopper to truck discharge was installed on the No. 17 loader at the Kooragang 2 berth and its successful operation resulted in a second system being ordered for the No.16 gantry.

Response to Port Incident

Newcastle Port Corporation responded quickly in accordance with oil spill prevention procedures when a fishing trawler sank in the harbour after colliding with Queens Wharf in early June.

The Corporation placed containment booms around the vessel and later deployed additional booms to contain any oil leakage during salvage operations.

Also in June, the Land and Environment Court heard prosecutions by Newcastle Port Corporation under section 8 of the Marine Pollution Act 1987 (NSW) in relation to a spill of heavy fuel oil that occurred in the port in August 2010 and a spill of diesel fuel that occurred in May 2011. The defendants in both proceedings pleaded guilty and the court has reserved its decision in relation to penalty.


Our Community

Newcastle Port Corporation is proud of its community engagement, with connectivity between the port and the Hunter Region being very strong.

The Corporation undertakes an independent annual community awareness survey, self analysis of community and stakeholder projects, and assessment of informal contact with the community. Its sponsorship program allows the Corporation to be engaged with the community whilst providing benefit to local events and organisations.

The community was extensively engaged during February and March for discussion and comment on the Draft Strategic Development Plan for the Port of Newcastle. Briefing sessions for the community were held in Newcastle, Carrington, Mayfield and Stockton to complement meetings with business organisations and port customers. Submissions on the draft document closed in late March.

Sponsorships and community support included:

Australia Day National Maritime Festival which drew an estimated 40,000 people to the harbour foreshore;

Newcastle Maritime Centre for improved illumination of major exhibits;

Anzac Day Dawn Ceremony at Nobbys Beach;

Hunter Arts Network for the establishment of an art bazaar for passengers on cruise ships visiting the Hunter Region; and

William the Fourth for the restoration of an historic replica paddlewheel steamship.


Corporate Governance

Board

The Board of Newcastle Port Corporation is responsible for the overall corporate governance of the Corporation. The Board Charter is available on the Corporation’s website under the section ‘Corporate Governance’.

Board of Directors

The Directors of the Corporation are:

Paul Jeans

BE, FAICD

Paul was appointed as a Director of Newcastle Port Corporation in October 2002 and Chairman in May 2008. He is Chair of the Remuneration and Nominations Committee and a member of the Audit Committee. Paul was appointed Chancellor of the University of Newcastle from 1 July 2013.

Paul’s current three year term expires in October 2013.

Professor John Carter AM

DEng,

BE(Hons) PhD, GAICD

John was appointed a Director of Newcastle Port Corporation in May 2008 and is Chair of the Safety, Health and Environment Committee and is a member of both the Audit Committee and the Remuneration and Nominations Committee.

John is Emeritus Professor, Faculty of Engineering and Built Environment at the University of Newcastle. John is a Fellow of the Australian Academy of Technological Sciences and Engineering and a Fellow of the Australian Academy of Science. John is a Director of Advance Geomechanics Australia Pty Ltd.

John is a Member of the Order of Australia for his services to civil engineering and education.

John’s current three year term expires in May 2014.

Dr Eileen Doyle

BMath (Hons), MMath, PhD, FAICD

Eileen was appointed a Director of Newcastle Port Corporation in December 2012. Eileen is a member of the Safety, Health and Environment Committee, the Audit Committee and the Remuneration and Nominations Committee.

Eileen is Chairman of the Hunter Valley Research Foundation and Deputy Chair of the Commonwealth Scientific and Industrial Research Organisation. Eileen is a Director of Hunter Founders Forum, Boral Limited, Bradken Limited and GPT Group Limited.

Eileen’s current three year term expires in December 2015.

Shaun Kindleysides

BCompSC, GAICD

Shaun was appointed as a Staff Director in May 2012 with retrospective effect from October 2011. Shaun is a member of the Safety, Health and Environment Committee.

Shaun is the Information Manager for Newcastle Port Corporation and has been with Newcastle Port Corporation since 2007.

Shaun’s current three year term expires in September 2014.

Michelle McPherson

BBus (Accounting), CA, GAICD

Michelle was appointed a Director of Newcastle Port Corporation in April 2008 and is Chair of the Audit Committee and a member of the Remuneration and Nominations Committee.

Michelle is the Deputy Chief Executive Officer and Chief Financial Officer of nib Holdings Limited. She also is a Director of the Hunter Valley Research Foundation, the Hunter Valley Grammar School, the University of Newcastle


Foundation and Chair of the Advisory Board to the Faculty of Business and Law at the University of Newcastle.

Michelle’s current three year term expires in April 2014.

Gary Webb

BSurv. (Hons), Grad Dip. Ed., Grad Dip BA, FAICD

Gary was appointed a Director of Newcastle Port Corporation effective from December 2004. This follows his appointment as Chief Executive Officer in October 2004.

Gary is Chair of Ports Australia and Newcastle Seafarers’ Centre Pty Ltd, as well as a Director of Hunter Valley Coal Chain Co-ordinator and Hunter TAFE Foundation.

Gary’s current term expires in September 2013.

Mark Sargent completed his term as Director in December 2012.

Board Charter

Newcastle Port Corporation has a Board Charter that outlines its corporate governance policy and defines the respective roles, responsibilities and authorities of the Board of Directors, both individually and collectively, and management in setting the direction, the management and the control of the organisation.

A copy of the Board Charter is published on the Newcastle Port Corporation website.

Directors Meetings

There were nine meetings of the Newcastle Port Corporation’s Board during the year. The number of meetings attended by each Director was:

P Jeans 9 (of 9)

J Carter 9 (of 9)

E Doyle 4 (of 4)

S Kindleysides 8 (of 8)

M McPherson 8 (of 9)

M Sargent 4 (of 4)

G Webb 9 (of 9)

Committees of the Board

Audit Committee

The Audit Committee met on five occasions during the year. The number of meetings attended by each member was:

M McPherson (Chair) 5 (of 5)

J Carter (Member) 5 (of 5)

E Doyle (Member from January 2013) 2 (of 2)

P Jeans (Member) 5 (of 5)

The purpose of the Audit Committee is to provide Board oversight in relation to:

reporting of financial information;

accounting policy and practice;

treasury financial management;


internal controls identified for supervision by the committee;

information technology systems;

project management systems; and

compliance with applicable legislation, standards and best practice.

Safety Health and Environment Committee

The Safety Health and Environment Committee met on four occasions during the year. The number of meetings attended by each member was:

J Carter (Member then Chair from January 2013) 2 (of 2)


S Kindleysides (Member) 4 (of 4)

M Sargent (Chair to December 2012) 2 (of 2)

The purpose of the Safety, Health and Environment Committee is to provide Board oversight in relation to:

occupational health and safety;

employee relations;

port safety;

port security;

environmental management and heritage; and

monitoring systems adopted by management to ensure compliance.

Remuneration and Nominations Committee

The Remuneration and Nominations Committee met on five occasions during the year. The number of meetings attended by each member was:

P Jeans (Chair) 5 (of 5)

J Carter (Member from January 2013) 3 (of 3)


M McPherson (Member) 3 (of 5)

M Sargent (Member to December 2012) 2 (of 2)

The purpose of the Remuneration and Nominations Committee is to provide Board oversight in relation to:

the remuneration, conditions of employment and performance management of the Chief Executive Officer;

the remuneration of the Executive Management team and staff;

the succession planning for the Executive Management team;

the Corporation’s Industrial Relations;

identifying, evaluating and recommending candidates for appointment as non-executive directors; and

performance evaluation and effective operation of the Board, including its Committees and individual directors.


Evaluation of Performance

The Board is committed to regular evaluation of the Board and individual Directors. At each Board meeting the performance of the Board is evaluated by a Director on a rotating basis.

Executive Management

Number of Executive Officers with remuneration equal to or exceeding equivalent of SES Level 1

End of Current Reporting Year

Number of Executive Officers with remuneration equal to or exceeding equivalent of SES Level 1

End of Previous Reporting Year

5 5

At 30 June 2013 the Corporation had no female executive officers.

Executive Management Qualifications

Gary Webb Chief Executive Officer BSurv. (Hons), Grad Dip. Ed., Grad Dip BA, FAICD

David Callaghan General Manager Finance & Corporate Services BCom, CA, GAICD

Michael Dowzer General Manager Strategy, Efficiency & Governance LLB, Grad Dip Legal Practice, GAICD

Peter Francis General Manager Port Development MBus Gen Mgt. (Dist), Grad Dip Mgt., BA, MAICD

Tony Houlcroft Senior Human Resources Manager MHRMgt, FAHRI

Ron Sorensen General Manager Operations Marine Engineer – Class 2

Performance Statements – Senior Executives

Name Gary Webb

Position Chief Executive Officer

Total Remuneration Package $392,248

Period in Position from 1 October, 2004

Statement of Performance Performance review was undertaken by the Remuneration & Nominations Committee and assessed as outstanding. The assessment against the Annual Performance Agreement was in accordance with the Corporation’s Performance Management System. The objectives of the Annual Performance Agreement were determined having regard to the deliverables contained in the Corporation’s Business Plan.

The performance of each Senior Executive is assessed under the Corporation’s Performance Management System where performance objectives are linked to the Corporation’s Business Plan and behavioural values. Performance is assessed annually with a review undertaken mid-year.


Corporate Structure


2012-13 Statement of Corporate Intent and Business Plan

Voting Shareholders and the Board of Directors approved the 2012-13 Statement of Corporate Intent and 10 Year Business Plan.

Set out below is a report against Newcastle Port Corporation’s 2012-13 Business Plan. In the plan, major strategic initiatives that have major impact on the long term development of the Port of Newcastle are:

Newcastle Port Corporation’s Coal Export Strategy;

Executing Newcastle Port Corporation’s Mayfield Strategy;

Executing Newcastle Port Corporation’s Bulk Liquids Strategy;

Executing Newcastle Port Corporation’s Non-Coal Trade Strategy; and

Publishing the Strategic Development Plan.

The status of these tasks is reported below.

To Be A Sustainable Business

One of the objectives of Newcastle Port Corporation is to be a successful business and, to this end:

to operate at least as efficiently as any comparable businesses;

to maximise the net worth of the State’s investment in the Port Corporation; and

to exhibit a sense of social responsibility by having regard to the interests of the community in which it operates and by endeavouring to accommodate these when able to do so.

Safety – to look after the safety of our people

Key Task for 2012-13 was: Status

Implement Newcastle Port Corporation’s Work Health & Safety Strategic Plan 2011-14 by June 2013.

Achieved

Shareholder Value – to increase the value of the business and provide an appropriate return to shareholders


Engage with NSW Government on the long term commercial arrangements for the Channel agreement by December 2012.

This task is ongoing

Strategic Port Planning – to ensure the development of the port is managed to provide for long term operation and growth

Key Tasks for 2012-13 included: Status

Engage with NSW Government on its response to the National Port Strategy and National Freight Strategy by December 2012.

Achieved

Publish Strategic Development Plan for the Port of Newcastle by November 2012.

Consultation on draft plan was completed. Publication of final

subject to requirements of Scoping Study for long term of lease of the Port of Newcastle.

http://www.austlii.edu.au/au/legis/nsw/consol_act/pamaa1995352/s3.html#port_corporation


Human Resources – to ensure we have the people to deliver the Business Plan and to provide for long term operation and growth


Continue to implement Human Resources Strategic Plan by June 2013.

Achieved

Achieve a successful outcome of the 2013 NPC Enterprise Agreement negotiations by June 2013.

Resolution anticipated early in 2013-14 financial year

Assets – To ensure we have the assets and resources to deliver the business plan and to provide for long term operation and growth


Deliver TAMS maintenance and capital program on time and on budget and in particular the following key projects:

Achieved

Maintenance

West Basin 3 & 4 berth remediation project. Works for 2012-13 completed. Final completion due in 2014.

Carrington and Kooragang substation refurbishment by June 2013. Achieved

Dredger David Allan planned maintenance by June 2013. Achieved

Capital

OneSteel land acquisition by December 2012. Achieved

Mayfield site infrastructure services construction by June 2013. Achieved

Additional Kooragang 2 berth dolphin and fender construction by June 2013.

Achieved

Community Licence to Operate


Positive community engagement through the consultation and publication of the Draft Strategic Development Plan for the Port of Newcastle by November 2012.

Achieved

Compliance – to comply with legal responsibilities


Deliver TAMS capital compliance program on time and on budget and, in particular, the following key projects:

Achieved

Carrington Area Substation reconfiguration by June 2013. Achieved

David Allan Halon Fire System replacement by June 2013. Achieved

Lighting upgrade East Basin by March 2013. Achieved

Corporate Governance – to have good corporate governance


Positive engagement with Shareholders on Board appointments by December 2012.

Achieved


Growing Trade

Two of the objectives of Newcastle Port Corporation are to:

promote and facilitate trade through its port facilities; and

improve productivity and efficiency in its ports and the port-related supply chain

Grow Trade – Coal


Support the environmental assessment process for the Terminal 4 development.

Occurred

Carry out the cargo alignment project to seek an enhanced vessel booking system that reduces vessel queues and demurrage by June 2013.


Work co-operatively with industry through the Hunter Valley Coal Chain Coordinator to understand the operation of the coal chain and influence participants to improve the efficiency of the coal chain by June 2013.

Achieved

Advise the Minister where industry is not willing or able to adequately address efficiency issues, thus requiring Government to take regulatory action, by June 2013.

Achieved

Grow Trade – Mayfield


Pursue Newcastle Port Corporation’s Mayfield Strategy. This task is ongoing

Grow Trade – Bulk Liquids


Facilitating the commencement of construction of facilities by Stolthaven in the Bulk Liquids Precinct by June 2013.

Occurred

Secure contractual commitment to the development of the bulk liquids berth by September 2012.

Achieved

Conclude commercial negotiation with preferred proponent from the Bulk Liquids Precinct expression of interest process by June 2013.


Grow Trade – Non Coal Dry Bulk, General Cargo, Project & Speciality Cargo


Conduct review of all port charges across Newcastle Port Corporation’s common user berths by January 2013.

Achieved

Facilitate development of the Newcastle Agri Terminal grain terminal at Carrington by June 2013.

Occurred

Expand capacity at Kooragang 2 (K2) berth by enhancing the utilisation of the K2 mooring dolphins by June 2013.

Achieved

http://www.austlii.edu.au/au/legis/nsw/consol_act/pamaa1995352/s90.html#port

http://www.austlii.edu.au/au/legis/nsw/consol_act/pamaa1995352/s3.html#port

http://www.austlii.edu.au/au/legis/nsw/consol_act/pamaa1995352/s3.html#port-related_supply_chain


Port Safety

One of the objectives of Newcastle Port Corporation is to ensure that its port safety functions are carried out properly.


Maintain certification of AS9001 Port Safety Operating Licence system (December and June surveillance audits).

Achieved

Promoting Competition

One of the objectives of Newcastle Port Corporation is to promote and facilitate a competitive commercial environment in port operations.


Undertake a review of towage services in the port to seek to ensure that there are sufficient towage services in the port as the coal export task grows by June 2013.

Achieved

Compliance with Principles of Ecologically Sustainable Development

One of the objectives of Newcastle Port Corporation is, where its activities affect the environment, to conduct its operations in compliance with the principles of ecologically sustainable development contained in s6(2) of the Protection of the Environment Administration Act 1991.


Deliver Environmental Management System 2012-13 action plan by June 2013.

Achieved

Delivering Opportunity for the Hunter Region

One of the objectives of Newcastle Port Corporation under ‘being a successful business’ is to exhibit a sense of social responsibility by having regard to the interests of the community in which it operates and by endeavouring to accommodate these when able to do so.

Another of the objectives of Newcastle Port Corporation is to exhibit a sense of responsibility towards regional development and decentralisation in the way in which it operates.


Progress delivery of Cruise Hunter action plan by June 2013. Achieved

Heritage Assets Newcastle Port Corporation owns a significant number of heritage items around the port. The Corporation has a Heritage Register, pursuant to section 190 of the Heritage Act, which sets out the condition of Heritage assets and the maintenance strategy for each item.

Meeting Statutory and Compliance Requirements Newcastle Port Corporation had no adverse audit, regulatory or legal findings during the year.

Risk Management System Newcastle Port Corporation’s Risk Management System continues to be adaptable and effective in identifying, assessing and treating various risks within the Corporation’s operations. The risk register continues to be populated with assessed and controlled risks.

http://www.austlii.edu.au/au/legis/nsw/consol_act/pamaa1995352/s11.html#port_safety_functions


Statutory Requirements

Exemptions

The Treasurer has granted the Corporation exemptions from certain provisions of the Annual Reports (Statutory Bodies) Act and Regulation.

The following matters are exempt but require reporting in a summarised form:

Schedule 1 ARSBR

Summary Review of Operations;

Management activities;

Consultants;

Consumer response; and

Risk Management.

The following items are exempt on a Commercial in Confidence basis:

Budgets - outline and detail - S.7(1)(a)(iii)ARSBA/Schedule 1 ARSBR;

Human Resources - Schedule 1 ARSBR;

Investment Management Performance - Cl.12 ARSBR/TCG 1991/5;

Land Disposal - Schedule 1 ARSBR;

Liability Management Performance - Cl.12 ARSBR/TCG 1991/5;

Performance in Payment of Accounts - Schedule 1 ARSBR; and

Research and Development - Schedule 1 ARSBR.

Credit Card Use

Credit card use has been in accordance with the Premier’s Memoranda and Treasurer’s Directions.

Consumer Response

Newcastle Port Corporation considers its relationship with the Hunter Region community and port stakeholders to be very important and quickly manages comment and feedback.

Inquiries from the community are returned within 24 hours with the Corporation’s community relations procedure designed to provide effective provision of public information, benefit for the community and improved corporate profile. Newcastle Port Corporation focuses on the best possible outcome for all parties. Only a small number of residents raised concerns during 2012-13. Most concerns related to noise emanating from operations in and around the port.


Funds Granted to Non-Government Community Organisations

In 2012-13 the Corporation committed the following funds in charitable donations and sponsorships for community organisations and events.

Organisation Amount Purpose

The City of Newcastle $20,000 Australia Day National Maritime Festival (community)

Conservation Volunteers Australia

$12,000 Removal of invasive bitou bush and native plant regeneration at Nobbys Beach (environment)

Hunter Valley Research Foundation

$12,000 Sponsorship of Foundation (research)

Hunter Business Chamber $6,000 Sponsorship of Hunter Business Awards (business)

The City of Newcastle $6,000 ClimateCam for schools (education – environment)

Stockton Surf Life Saving Club $6,000 Sponsorship of beach equipment for Stockton SLSC (community)

Salvation Army $5,000 Red Shield Appeal (donation)

Australian Maritime College (University of Tasmania)

$5,000 Sponsorship of ship emission study (research)

The City of Newcastle $5,000 Clean Up Australia Day (community – environment)

Mission to Seafarers $5,000 Donation (port welfare services)

Nobbys Surf Life Saving Club $5,000 Sponsorship of new surfboat for Nobbys SLSC (community)

Tourism Hunter $5,000 Tourism development program (business)

William The Fourth $5,000 Restoration of replica local steam paddler (community)

The City of Newcastle/Friends of Victoria Lifeboat Association

$5,000 Sponsorship of commemorative memorial seat (community)

Newcastle Maritime Centre $4,000 Sponsorship of illustrated port map (community art project)

Fort Scratchley Historical Society

$3,000 Sponsorship for restoration and operation of replica field gun (community)

Hunter TAFE Foundation $3,000 Sponsorship of maritime medal (education)

BHP Cadets $2,000 Sponsorship of commemorative dinner (business)

City of Newcastle RSL Sub-Branch

$2,000 Anzac Day Dawn Service (community)

Newcastle Hunter Dragons Abreast

$1,500 Sponsorship of training equipment (community)

Australian Marine Environment Protection Association

$1,000 Bronze sponsorship (environmental education)

Hunter Arts Network $1,000 Foundation sponsorship to establish art bazaar for passengers from visiting cruise ships (community)


Samaritans Foundation $2,000 Christmas Appeal and Winter Appeal (donations)

HunterNet Co-operative $500 Sponsorship of Hunter Defence Conference (industry development)

Salvation Army $500 Christmas Appeal (donation)

Stockton Swimming Club $500 Sponsorship of new club equipment (community)

University of Newcastle (Industry Advisory Committee)

$500 Sponsorship of Human Resources prize (education)

Wesley Mission $500 Christmas Appeal (donation)

Total $124,000

None of these items appeared on the Government Budget Papers.

Subordinate Legislation

There were no departures from the Subordinate Legislation Act.

Disclosure of Controlled Entities

The Corporation has no controlled entities.

Government Information (Public Access)

Newcastle Port Corporation continued to comply with its obligations under the Government Information (Public Access) Act 2009 (GIPA Act) in 2012-13.

The Corporation conducted an information review under section 7(3) of the GIPA Act. The review was endorsed by the Chief Executive Officer. It reviewed the information that the Corporation already discloses proactively and considered whether there was a public interest in disclosing any additional information proactively.

The review indicated that the Corporation currently discloses information on its website, in Corporation offices and in publications such as the Annual Report, Tide Chart and Information Handbook, bi-monthly newsletter and corporate information brochures.

During 2012-13, the Corporation proactively disclosed its Draft Strategic Development Plan for the Port of Newcastle and engaged in extensive stakeholder consultation regarding the draft plan.

The Corporation received one formal access application under the GIPA Act during 2012-13. As at 30 June, 2013 the Corporation was considering the application.

GIPA tables are on the following pages.


Table A: Number of applications by type of applicant and outcome*

Access granted in full

Access granted in part

Access refused in full

Information not held

Information already available

Refuse to deal with application

Refuse to confirm/ deny whether information is held

Application withdrawn

Media 0 0 0 0 0 0 0 0

Members of Parliament

0 0 0 0 0 0 0 0

Private sector business

0 0 0 0 0 0 0 0

Not for profit organisations or community groups

0 0 0 0 0 0 0 0

Members of the public (application by legal representative)

0 0 0 0 0 0 0 0

Members of the public (other)

0 0 0 0 0 0 0 0

* More than one decision can be made in respect of a particular access application. If so, a recording must be made in relation to each such decision. This also applies to Table B.

Table B: Number of applications by type of application and outcome

Access granted in full

Access granted in part

Access refused in full

Information not held

Information already available

Refuse to deal with application

Refuse to confirm/ deny whether information is held

Application withdrawn

Personal information applications*

0 0 0 0 0 0 0 0

Access applications (other than personal information applications)

0 0 0 0 0 0 0 0

Access applications that are partly personal information applications and partly other

0 0 0 0 0 0 0 0

*A personal information application is an access application for personal information (as defined in clause 4 of Schedule 4 to the Act) about the applicant (the applicant being an individual).


Table C: Invalid applications

Reason for invalidity No of applications

Application does not comply with formal requirements (section 41 of the Act) 0

Application is for excluded information of the agency (section 43 of the Act) 0

Application contravenes restraint order (section 110 of the Act) 0

Total number of invalid applications received 0

Invalid applications that subsequently became valid applications 0

Table D: Conclusive presumption of overriding public interest against disclosure: matters listed in Schedule 1 to Act

Number of times consideration used*

Overriding secrecy laws 0

Cabinet information 0

Executive Council information 0

Contempt 0

Legal professional privilege 0

Excluded information 0

Documents affecting law enforcement and public safety 0

Transport safety 0

Adoption 0

Care and protection of children 0

Ministerial code of conduct 0

Aboriginal and environmental heritage 0

* More than one public interest consideration may apply in relation to a particular access application and, if so, each such consideration is to be recorded (but only once per application). This also applies in relation to Table E.

Table E: Other public interest considerations against disclosure: matters listed in table to section 14 of Act

Number of occasions when application not successful

Responsible and effective government 0

Law enforcement and security 0

Individual rights, judicial processes and natural justice 0

Business interests of agencies and other persons 0

Environment, culture, economy and general matters 0

Secrecy provisions 0

Exempt documents under interstate Freedom of Information legislation 0

Table F: Timeliness

Number of applications

Decided within the statutory timeframe (20 days plus any extensions) 0

Decided after 35 days (by agreement with applicant) 0

Not decided within time (deemed refusal) 0

Total 0


Table G: Number of applications reviewed under Part 5 of the Act (by type of review and outcome)

Decision varied

Decision upheld

Total

Internal review 0 0 0

Review by Information Commissioner* 0 0 0

Internal review following recommendation under section 93 of Act 0 0 0

Review by ADT 0 0 0

Total 0 0 0

*The Information Commissioner does not have the authority to vary decisions, but can make recommendations to the original decision-maker. The data in this case indicates that a recommendation to vary or uphold the original decision has been made by the Information Commissioner.

Public Interest Disclosures

Newcastle Port Corporation updated its Protected Disclosures Policy and Procedure in June 2013 (Policy).

In accordance with section 6E(1)(b) of the Public Interest Disclosures Act (PID), staff of the Corporation were made aware of the contents of the policy and the protections under the PID Act through making a copy of the Corporation’s policy available on the Corporation’s website.

The following table sets out the number of public interest disclosures (PIDs) the Corporation received for the period from July 2012 - June 2013.

Statistical information on Public Interest Disclosures (PIDs) received by the Corporation

July 2012 – June 2013

Number of public officials who made PIDs 0

Number of PIDs received 0

Of PIDs received, number primarily about: 0

Corrupt conduct 0

Maladministration 0

Serious and substantial waste 0

Government information contravention 0

Local government pecuniary interest contravention 0

Number of PIDs finalised 0

Economic or Other Factors Affecting Achievement of Operational Objectives

The Port of Newcastle recorded a 13th consecutive year of record trade volume during 2012-13 and there were no economic or unanticipated factors that affected the operational objectives of Newcastle Port Corporation.

Table H: Applications for review under Part 5 of the Act (by type of applicant)

Number of applications for review

Applications by access applicants 0

Applications by persons to whom information the subject of access application relates (see section 54 of the Act)

0


Equal Employment Opportunity

Equal Employment Opportunity (EEO) principles are included in the Newcastle Port Corporation’s agreements and policies. Mechanisms are also in place to ensure timely, effective and confidential resolution of workplace grievances.

The percentages of staff in defined EEO groups are as follows:

EEO Group % of Total Staff

Benchmark or Target

2008-09 2009-10 2010-11 2011-12 2012-13

Women 50 24 20 25 25 23

Aboriginal people and Torres Strait Islanders

2.6 1 1 0 0 0

People whose first language was not English

19 0 0 2 2 7

People with a disability 12 5 5 5 4 4

People with a disability requiring work-related adjustment

7 0 0 0 1 0

A number of the Corporation’s practices assist in eliminating discrimination in employment and promote equal employment opportunity. These include family and special leave, flexible hours of work, part-time work, study assistance and support to attend training.

Outcomes achieved in 2012-13 included:

recruitment and selection consistent with good practice recommendations, including:

o training of recruitment and selection panel members;

o participation of Human Resources Branch representatives in selection panels; and

o merit based selection.

regular Consultative Committee meetings held and outcomes communicated to staff;

provision of strategic advice and assistance in relation to EEO and other Human Resource issues;

recognition of service, academic, professional and community achievements of the staff; and

review of position titles for appropriateness, consistency and clarity.

The Corporation acknowledges and supports the objectives of Memorandum No. 2010-03, Strengthening Aboriginal Employment Opportunities and Community Partnerships.

Multicultural Policies and Services

The progress achieved by Newcastle Port Corporation in implementing its multicultural policies and services in 2012-13 was as follows:

KPI / Tasks to Achieve Goal Status

Maintenance of signs and notices around the port. Achieved

Sponsorship of the Mission to Seafarers. Achieved

Inclusion of cultural diversity principles in position descriptions. Achieved

Merit based recruitment. Achieved

Provision of Employee Assistance Program. Achieved

Working arrangements that accommodate individual differences. Achieved

Incorporation of non-discrimination clauses in agreements. Achieved


The following documents commit the Corporation to principles of multiculturalism and key objectives of the Community Relations Plan of Action 2012:

Code of Conduct and Ethics;

Equal Employment Opportunity Policy; and

Harassment Policy.

Newcastle Port Corporation proposes the following key multicultural strategies for 2013-14:

continued maintenance of signs and notices around the port to ensure the safety of the general public;

sponsorship of the Mission to Seafarers which provides services for crew members of visiting international vessels;

review of the statement in position descriptions committing the Corporation and staff to the principles of multiculturalism;

merit based recruitment practices;

provision of an Employee Assistance Program, which includes interpreter services;

working arrangements that accommodate cultural and religious differences through provision of individual flexibility agreements; and

incorporation of non-discrimination clauses in agreements.

Work Health & Safety

Newcastle Port Corporation continued its active involvement at all levels of the organisation to ensure compliance with legislative requirements of the Work Health and Safety Act/Regulation 2011.

Administration and operational personnel provided a concerted effort to ensure everyone conducted their work activities safely, but unfortunately one lost time injury (LTI) was recorded for 2012-13.

Newcastle Port Corporation was not subject to any WorkCover prosecution and/or fines under the New South Wales Work Health and Safety Act/Regulation 2011.

Fraud and Corruption Prevention

Newcastle Port Corporation will not tolerate fraudulent or corrupt conduct within the operations of the organisation. The Corporation will:

minimise the opportunities for corrupt conduct;

detect, investigate, discipline or prosecute corrupt conduct; and

take a risk management approach to the identification and management of corruption risks.

Waste Reduction and Purchasing Policy

Newcastle Port Corporation continued its commitment to reduce, re-use and/or recycle equipment and reviewed its Waste Reduction and Purchasing Policy (WRAPP) during the year. The project included site visits and a review of current waste streams and disposal methods which contributed to an updated policy document. Examples of WRAPP initiatives included:

mobile telephone and associated equipment recycling program – 39 mobile telephones, 13 charge leads, 10 phone/radio batteries, nine headsets/leads and two digital cameras donated to Taronga Conservation Society/Jane Goodall Institute ‘They’re Calling On You’ Campaign;


hard hat replacement - hard hats are replaced every two years to ensure compliance to AS/NZS 1800:1998 Occupational protective helmets – selection, care and use. More than 110 grey hard hats were distributed to replace orange hard hats nearing their expiry date. The orange hard hats were forwarded to a specialist plastics recycling company for production of high quality recycled plastic products;

installation of battery recycling bins – employees at the Newcomen Street office and the Port Centre were encouraged to use the bins for expired batteries (both home and office use) which go to a licensed facility for recycling instead of to landfill; and

induction hand booklet – a revised document was produced which reduced the previous 34-page A4 document to a 30-page A5 booklet printed on 100% recycled paper. The initiative also provided a substantial reduction in printing costs for the Corporation.

The Corporation continued its standard practices of:

purchasing 50% recycled paper and certified carbon neutral A3 paper;

providing co-mingled recycling reciprocals in all office areas and under the desk paper recycling boxes; and

ensuring any waste oil from its vessels is recycled responsibly.

Consultants

Total number of engagements: 16

Total Cost: $346,250

Categories:

Engineering Services – 12 engagements;

Information Technology – two engagements; and

Environmental – two engagements.

Consultancies greater than $50,000:

Nil.

Consultancies less than $50,000:

Engineering Services – 12 engagements - $255,000;

Information Technology – two engagements - $57,000; and

Environmental – two engagements - $34,250.

Overseas Travel

CEO, Gary Webb, and General Manager Operations, Ron Sorensen, visited Japan in March 2013 as members of a working group to continue discussions about ongoing development of a cargo alignment system for the coal export trade from the Port of Newcastle.

Harbour Master, Peter Dwyer, visited Portsmouth, England in June 2013 to attend an Active Escort and Dynamic Assist tug training course at the Seaways Training Academy.

Annual Report

The 2012-13 Annual Report has been produced in-house. The Annual Report can be viewed on the Corporation’s web site at www.newportcorp.com.au/Access to Information/Publications.

www.newportcorp.com.au/Access%20to%20Information/Publications


Index Page

Annual Report Production 37 Board Charter 21 Board of Directors 20

Appointment & Education 20

Attendance at Board Meetings 21 Committees of the Board 21 Business Plan 25 CEO’s Message 4 Chairman’s Message 3 Community 18 Consultants 37 Consumer Response 29 Corporate Governance 20 Corporate Structure 24 Credit Card Use 29 Cruise Hunter 16 Disclosure of Controlled Entities 31 Economic or Other Factors Affecting Achievement of Operational Objectives 34 Environment 16 Equal Employment Opportunities 35 Executive Management 23 Exemptions for Reporting Period 29 Financial Statements 42 Fraud and Corruption Prevention 36 Funds Granted to Non-Government Community Organisations 30 Government Information (Public Access) 31 Heritage Assets 28 Hunter Coal Export Framework 12 Multicultural Policies 35 Overseas Travel 37 Public Interest Disclosures 34 Port Centre 11 Purpose of the Corporation 6 Relevant Legislation 6 Risk Management System 28 Safety 10 Statement of Corporate Intent 6 & 25 Statutory Objectives 6 Statutory Requirements 29 Subordinate Legislation 31 Summary of Results 7 Trade 12 & 15 Waste Reduction and Purchasing Policy 36 Welfare of Seafarers 10 Work Health & Safety 36


Glossary

AAL Austral Asia Line AMSA Australian Maritime Safety Authority (AMSA) ARTC Australian Rail Track Corporation CEO Chief Executive Officer EEO Equal Employment Opportunity EMS Environmental Management System GIPA Government Information (Public Access) ICL Independent Cement and Lime K2 Kooragang 2 berth LTI Lost Time Injury Mt Million tonnes Mtpa Million tonnes per annum NAT Newcastle Agri Terminal NCIG Newcastle Coal Infrastructure Group NSW New South Wales OHS Occupational Health & Safety PID Public Interest Disclosures PWCS Port Waratah Coal Services SAP Sustainability Advantage Program T3 Newcastle Coal Infrastructure Group’s Kooragang Island coal terminal T4 Port Waratah Coal Services’ proposed Terminal 4 coal export facility TAMS Total Asset Management System WRAPP Waste Reduction and Purchasing Policy


The logo of the Newcastle Port Corporation reflects the Corporation's aims of efficiency and international competitiveness. The combination of features promotes Newcastle as a global port that is innovative, market focussed and world competitive.

Nobbys headland is dominant in the logo as it is the Port of Newcastle's most recognisable and prominent feature. The multiple horizontal lines represent the diversity of the Corporation.

The diamond shape represents the 'four corners of the world' with the triangle indicating a strong future direction. The triangle is also representative of navigational aids used in the port.

The colours of turquoise blue and bronze reflect our environmental elements.

The overall design represents the strength, efficiency, value and reliability of the Port of Newcastle - a leader in port management and a pacesetter for other ports.

Newcastle Port Corporation’s positioning statement Delivering Opportunity strongly focusses on the promise of benefit for current and future customers, businesses and the community.

Delivering Opportunity reflects a port that is creating opportunity for local, national and international businesses. This includes existing port customers, prospective port customers, regional organisations, government bodies and suppliers to the Newcastle Port Corporation.

Short, punchy and to the point, the statement coincides with continuing record trade throughput for the Port of Newcastle which continues to grow and diversify.

The port is an economic powerhouse for not only the Hunter Region but also New South Wales and Delivering Opportunity is designed to challenge the Newcastle Port Corporation to build its international reputation and to secure a sustainable future.

Newcastle Port Corporation has a sound, long-term strategy that guides its decision making. In delivering opportunity, the Corporation is making prudent use of public assets to encourage investment that benefits the Hunter Region.


Newcastle Port Corporation - Contact Details:

Registered Office: 6 Newcomen St, Newcastle NSW 2300

Post Address: PO Box 663, Newcastle NSW 2300 Australia

Telephone: (02) 4985 8222

International Telephone: 61 2 4985 8222

Toll Free: 1800 048 205 (NSW)

Facsimile: (02) 4925 0600

International Facsimile: 61 2 4925 0600

ABN: 50 825 884 846

Internet: www.newportcorp.com.au

Email: [email protected]

Business Hours: Monday to Friday 8.30am to 5.00 pm

Service Hours: Sunday to Saturday, 24 hours per day

http://www.newportcorp.com.au/

mailto:[email protected]


Attachment – Financial Statements

1 Newcastle Port Corporation Annual Report 2012–13

Newcastle Port Corporation Statutory Financial Statements

Directors’ Statement 2

Independent Auditor’s Report 3

Statement of Comprehensive Income 5

Statement of Financial Position 6

Cash Flow Statement 7

Statement of Changes in Equity 8

Notes to and forming part of the Financial Statements 9

For the year ended 30 June 2013

2Newcastle Port Corporation Annual Report 2012–13

Notes to the Financial Statements for the year ended 30 June 2013







for the financial year ended 30 June 2013Statement of Comprehensive Income

2013 2012

Note $000 $000

Revenue

Revenue from operating activities 2 97,236 84,297

Other income 3 2,239 7,987

Total revenue 99,475 92,284

Expenses

Employee benefits 4 22,416 20,727

Depreciation and amortisation 4 6,225 5,623

Finance costs 4 7,263 8,594

Other expenses 4 30,515 29,257

66,419 64,201

Profit before income tax 33,056 28,083

Income tax expense 5 (10,212) (8,530)

Profit after income tax 22,844 19,553

Profit attributable to owners 22,844 19,553

Other comprehensive income

Items that will not be reclassified to profit and loss:

Post employment benefit actuarial gain / (loss) 19 3,550 (8,711)

Income tax expense (income) on Post employment benefit actuarial gain / (loss)

19 (1,065) 2,613

Write back deferred tax liability on derecognition of plant 18, 19 50 –

Income tax expense / (income) on write back deferred tax liability on derecognition of plant

18, 19 (15) –

Other comprehensive income for the year, net of tax 2,520 (6,098)

Total comprehensive income for the year 25,364 13,455

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



as at 30 June 2013Statement of Financial Position

2013 2012

Note $000 $000

Current assets

Cash and cash equivalents 6 18,214 13,697

Trade and other receivables 7 6,532 10,320

Inventories 8 473 159

Total current assets 25,219 24,176

Non-current assets

Property, plant and equipment 10 467,409 461,907

Intangible assets 11 1,398 1,214

Post employment benefits 12 2,522 –

Deferred tax equivalent asset 5 5,634 7,049

Total non-current assets 476,963 470,170

Total assets 502,182 494,346

Current liabilities

Trade and other payables 13 26,307 28,833

Interest bearing borrowings 15 4,796 489

Income tax payable 5 3,974 2,729

Provisions 14 6,486 6,388

Total current liabilities 41,563 38,439

Non-current liabilities

Interest bearing borrowings 15 90,302 94,405

Deferred tax equivalent liabilities 5 53,910 54,598

Provisions 14 482 385

Post employment benefits 12 3,358 5,624

Other 16 1,067 1,116

Total non-current liabilities 149,119 156,128

Total liabilities 190,682 194,567

Net assets 311,500 299,779

Equity

Contributed equity 17 158,240 156,500

Reserves 18 115,517 115,599

Retained profits 19 37,743 27,680

Total equity 311,500 299,779

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



2013 2012

Note $000 $000

Cash flows from operating activities

Receipts from customers (inclusive of GST) 109,700 95,863

Payments to suppliers and employees (inclusive of GST) (66,807) (55,637)

Interest received 508 442

Interest paid (7,127) (7,805)

Income tax paid 5 (9,269) (9,295)

Net cash inflow from operating activities 25 27,005 23,568

Cash flows from investing activities

Purchase of property, plant and equipment 10 (9,324) (8,279)

Purchase of intangibles 11 (536) (888)

Proceeds from sale of property, plant and equipment 10 547 246

Net cash outflow from investing activities (9,313) (8,921)

Cash flows from financing activities

Repayments of borrowings 15 – (2,211)

Dividends paid 13 (13,175) (9,035)

Net cash outflow from financing activities (13,175) (11,246)

Net increase/(decrease) in cash and cash equivalents 4,517 3,401

Cash and cash equivalents at the beginning of the financial year 13,697 10,296

Cash and cash equivalents at the end of the financial year 1(a), 6 18,214 13,697

The above Cash Flow Statement should be read in conjunction with the accompanying notes.

for the financial year ended 30 June 2013Cash Flow Statement



for the financial year ended 30 June 2013Statement of Changes in Equity

Contributed Equity

Reserves

Retained Earnings

Total Equity

Note $000 $000 $000 $000

Balance as at 1 July 2011 149,715 115,599 27,400 292,714

Profit for the year – – 19,553 19,553

Other comprehensive income / (expense) net of tax – – (6,098) (6,098)

Profit for year plus other comprehensive income – – 13,455 13,455

Transactions with owners in their capacity as owners

Contribution of equity by owners 17 6,785 6,785

Dividend provided for or paid 13 – – (13,175) (13,175)

Balance as at 30 June 2012 156,500 115,599 27,680 299,779

Profit for the year – – 22,844 22,844

Other comprehensive income / (expense) net of tax – (82) 2,603 2,521

Profit for year plus other comprehensive income – (82) 25,447 25,365

Transactions with owners in their capacity as owners

Contribution of equity by owners 17 1,740 – – 1,740

Dividend provided for or paid 13 – – (15,384) (15,384)

Balance as at 30 June 2013 158,240 115,517 37,743 311,500

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.



for the year ended 30 June 2013Notes to the Financial Statements

Background

Newcastle Port Corporation (NPC or Corporation) is a Statutory State Owned Corporation under the State Owned Corporations Act 1989 (as amended), responsible for the Port of Newcastle.

The financial statements were approved for issue by the Directors on 18 September 2013.

1. Summary of significant accounting policies

The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all years presented, unless otherwise stated.

Basis of preparation

As required by Section 41B(1) of the Public Finance and Audit Act, 1983, the accompanying Financial Statements form a General Purpose Financial Report and have been prepared in accordance with applicable Australian equivalents to International Financial Reporting Standards, other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and Interpretations to exhibit a true and fair view of the financial position and transactions of NPC. The Financial Statements also incorporate financial reporting requirements specified in the Public Finance and Audit Regulation 2010 and relevant Treasurer’s Directions. Proper accounts and records for all of NPC’s operations have been kept as required under Section 41(1) of the Public Finance and Audit Act, 1983.

Cost is based on the fair value of the consideration given in exchange for assets. The fair value of cash consideration with deferred settlement terms is determined by discounting any amounts payable in the future to their present value as at the date of acquisition. Present values are calculated using rates applicable to similar borrowing arrangements of the Corporation.

The form of presentation of the Financial Statements has been on the basis of full accrual accounting using historical cost accounting conventions, except for certain items which, as noted, are at fair value. The accounting policies adopted are consistent with those of the previous year except where noted.

New accounting standards adopted by the Corporation

None of the new standards and amendments to standards that are mandatory for the first time for the financial year beginning 1 July 2012 affected any of the amounts recognised in the current period or any prior period and are not likely to affect future periods. However, amendments made to AASB 1 Presentation of Financial Statements affective 1 July 2012 now require the statement of comprehensive income to show the items of comprehensive income grouped into those that are not permitted to be reclassified to profit or loss in a future period and those that may have to be reclassified if certain conditions are met.

Early adoption

The Corporation has not elected to apply any pronouncements before their operative date in the annual reporting period beginning 1 July 2012.

(a) Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, at bank, in trust and funds invested in the NSW Treasury Corporation Cash Hourglass facility with original maturity of three months or less on funds at 24 hour call. Bank deposits are shown at cost. Hourglass funds are at fair value.

For the purpose of the Cash Flow Statement the amount of Cash and Cash Equivalents is reconciled in Note 6.

(b) Property, plant and equipment

Property, plant and equipment is measured at fair value less accumulated depreciation. Fair value is determined by reference to NSW Treasury policy and guidelines paper “Accounting Policy: Valuation of Physical Non-current Assets at Fair Value” (TPP07-1) April 2007. Fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction. Land related to long term lease is valued by Directors based on the present value of future lease income and residual value. The value is tested against independent assessment. Land not related to long term lease is valued by an independent valuer.

Property Plant and Equipment acquired during the year and controlled by the Corporation is initially recorded at cost. Cost is the amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire the asset at the time of its acquisition or construction.

Assets acquired at no cost, for nominal cost or contributed to the Corporation during the year are recognised at fair value at the date of acquisition as assessed by an independent valuer in accordance with NSW Treasury policy and guidelines paper “Accounting Policy: Valuation of Physical Non-current Assets at Fair Value” (TPP07-1) April 2007.

Fair value of Property Plant and Equipment is independently reassessed in full each five years. Property Plant and Equipment is tested for impairment annually and the value adjusted accordingly if material. Land is assessed for potential indexation in value each year based on market or economic conditions and adjusted accordingly if material.

Depreciation has been calculated on depreciable assets, using rates estimated to write off the assets over their remaining economic lives on a straight line basis. Land and reclamation assets have been treated as non-depreciable.

Straight line depreciation rates used for each class of fixed assets are in the following ranges:

Buildings 2 – 7 %

Roads 1.7 – 14 %

Wharves and jetties 2.5 – 10 %

Breakwaters 1 %

Plant 2.5 – 85 %

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.



1. Summary of significant accounting policies (continued)

All capital expenditure on land, reclamations, buildings, workshops, roadways, wharves, jetties and breakwaters, and plant of $1000 or more are capitalised. Only those assets completed and ready for service are taken to property, plant and equipment accounts. The remaining capital expenditures are carried forward as construction in progress but included in property, plant and equipment in the Statement of Financial Position. When minor components of an asset are replaced to retain the service level of the asset the amount is expensed in the year incurred rather than capitalised.

i) Revaluation

Material items of property, plant and equipment are subject to revaluations. If an asset’s carrying amount is increased as a result of a revaluation, the increase shall be credited directly to the revaluation reserve net of tax. However, the increase shall be recognised in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit and loss. Decreases that reverse previous increases of the same asset are first recognised in other comprehensive income to the extent of the remaining surplus attributable to the asset, all other decreases are recognised through profit and loss. Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Upon disposal, any revaluation reserve relating to the particular asset being disposed is transferred to retained earnings.

ii) Impairment

At the reporting date the Corporation assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Corporation makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount. Impairment losses are recognised as an expense.

Recoverable amount is the greater of the fair value less costs to sell and value in use. It is determined for individual assets, unless the asset’s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

iii) Derecognition and disposal

An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in profit or loss in the year the asset was derecognised.

iv) Maintenance

Day to day servicing costs or maintenance are charged as expenses as incurred, except where they relate to the replacement of a material part or component of an asset, in which case the costs are capitalised and depreciated.

(c) Significant accounting judgments, estimates and assumptions

The Corporation has made the following judgments in preparing these financial statements:

For Profit – the Corporation is a “for profit” entity.

The Corporation has made the following estimates and assumptions in preparing these financial statements:

i) Superannuation – various actuarial assumptions are required to quantify the net position of the defined benefits funds. These assumptions are disclosed in note 12.

ii) The classification and measurement of fair value of Property Plant and Equipment is based on predetermined criteria as disclosed in note 10.

(d) Derivatives

The Corporation uses derivative financial instruments such as interest rate swaps and futures to hedge its risks against interest rate fluctuations. Such derivative financial instruments are stated at fair value. The fair value of interest rate swap contracts is determined by reference to market values for similar instruments. Any gain or loss from measuring the instrument at fair value is recognised immediately in the profit or loss.

(e) Inventories

Inventories have been recorded at year end at the lower of cost and net realisable value. Consumption is charged on issue at the weighted cost of each stock line. A perpetual inventory system is adopted and is supported by annual stocktakes. The extent of stock deterioration and obsolescence is also reviewed regularly. Stock write-downs as a result of stocktakes and obsolescence are charged directly to operating expenses.

Net realisable value is the estimated selling price due to cessation of consumption in operations.

(f) Provisions

Provisions are recognised when a present obligation exists as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material then provisions are determined by discounting the expected future cashflows at a pre tax rate based on market assessments and the risks specific to the provision. When discounting is used the increase in the provision due to the passage of time is recognised as an expense.

(g) Employee benefits

i) Wages, salary, annual leave and sick leave

NPC provide fully for all employee entitlements. Wages, salary and annual leave expected to be settled within 12 months of the year-end are measured at their nominal amounts based on remuneration rates expected to be paid when the liability is settled.



Liabilities for non accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.

ii) Long service leave

Long service leave is provided based on the present value of estimated future cash outflows to be made in respect to services provided by employees up to the reporting date. The provision incorporates future increases in wages, on-costs and a history of staff turnover. A national government bond rate matching as closely as possible the terms to maturity of the related future cashflows is used to calculate the present value of expected future payments.

iii) Pension and other post employment benefits

The Corporation provides contributions to both accumulation funds and defined benefits funds. The cost of providing benefits under the defined benefits funds is determined for each plan using the projected unit credit actuarial valuation method. The over or underfunded position of the defined benefit funds is recognised in the Statement of Financial Position. Actuarial gains or losses and any change in surplus in excess of recovery available are recognised outside of profit and loss as other comprehensive income. Current service cost, interest cost and expected return on financial assets for the defined benefits schemes are recognised in the Statement of Comprehensive Income net of tax. Contributions to accumulation funds are recognised in the Statement of Comprehensive Income.

(h) Assets

The assets of NPC are unencumbered.

(i) Leases

Leases of plant and equipment are classified as operating leases. Operating lease payments are charged as an expense in the period in which they are incurred, as this represents the pattern of benefits derived from the leased assets.

(j) Rounding amounts to nearest $000

In the financial statements, all amounts are rounded to the nearest thousand dollars, except for auditors’ and key management remuneration.

(k) Income tax equivalents

The Tax Equivalent regime requires NPC to make tax equivalent payments to the NSW Government’s Consolidated Fund and involves income tax and capital gains tax.

The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the notional income tax rate and adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rate expected to apply when the assets are recovered or liabilities are settled. The tax rate is applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

(l) Dividends

Allowance is made for the amount of any dividend declared in accordance with NSW Treasury Financial Distribution Policy but not distributed at balance date.

(m) Interest bearing borrowings

Borrowings are measured using the effective interest method. Borrowings are initially recognised at cost, being the fair value of the consideration received net of issue costs associated with the borrowing. Subsequently, the difference between the debt’s long term face value and the current and non-current value shown in the Statement of Financial Position is taken up as a discount on borrowings. The discount will be amortised over the life of the loans.

(n) Finance costs

Finance costs are recognised as an expense when incurred.

(o) Trade receivables

Trade receivables are generally settled within 15 days and are carried at amounts due less a Provision for Impairment where there is objective evidence that the Corporation will not be able to collect the debt following thorough investigation and exhaustion of recovery processes. Bad debts are written off against the Provision for Impairment. A review was carried out during the year to determine the adequacy of the level of the Provision for Impairment. The amount of the impairment loss is recognised in the profit or loss within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the profit or loss.

(p) Trade payables

Trade payables including accruals not yet billed, are recognised when the Corporation becomes obliged to make future payments as a result of purchase of assets or services. Trade accounts payable are generally settled within 30 days.

(q) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Corporation and that revenue can be reliably measured as follows:

Charges on vessels – navigation revenue is recognised and accrued after completion of the inward vessel movement; pilotage revenue is generally recognised on departure however the inward movement is accrued if it occurred prior to year end.

Berth Services – wharfage revenue is recognised when the vessel departs the berth however site occupation is recognised and accrued if it occurred prior to year end.




Port related rental - relates to leases, and agreements for lease, of land and/or berths to facilitate trade over a berth and is recognised on a monthly basis in accordance with lease agreements.

Non port related rental income - revenue is recognised on a monthly basis in accordance with lease agreements.

Interest income – revenue is recognised as earned on a daily basis and not at maturity of the underlying investment.

Hourglass income – taken to income monthly based on the movement in the market value of the trust units held.

(r) Other taxes

Revenues, expenses, assets and liabilities are recognised net of the amount of goods and services tax (GST), except:

i) where the amount of GST incurred is not recoverable from the Taxation Office it is recognised as part of the cost of the acquisition of an asset or as part of an item of expense;

ii) for receivables and payables which are recognised inclusive of GST. GST payable to and recoverable from the Taxation Office is recognised as a payable or receivable respectively in the Statement of Financial Position; and

iii) the Cashflow Statement is inclusive of GST. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the Australian Taxation Office are classified as operating cash flows.

(s) Segment information

The Corporation operates predominantly in one business segment, that being Port Management, and within one geographical segment, being Newcastle, NSW, Australia. This is consistent with the internal reporting provided to the chief operating decision maker.

(t) Investment property

Land, buildings and infrastructure held by Newcastle Port Corporation to accommodate port facilities and industrial, maritime industrial and bulk storage premises that benefit from being close to port facilities shall be accounted for as Property, Plant and Equipment infrastructure assets under AASB 116 notwithstanding that the land, buildings and infrastructure are leased to external parties. Land and buildings that are not integral or associated with port activities and leased with the principal objective of earning rentals or for capital appreciation, or both, shall be accounted for as investment properties under AASB 140.

(u) Intangible assets

Intangible assets are limited to computer software. On acquisition they are capitalised at cost which equates to fair value. The computer software will have a finite life. Amortisation is to be charged to the Statement of Comprehensive Income based on the finite life of the asset. Intangible assets are tested for impairment where an indicator of impairment exists and useful lives are assessed on an annual basis.

(v) Contributed equity

Shares issued to the Voting Shareholders in accordance with the requirements of the State Owned Corporations Act 1989 are classified as equity.

Refer to note 17(a) for detail of injection of equity by Shareholders during the year ended 30 June 2013.

(w) Capital risk management

The Corporation’s objective when managing capital is to safeguard its ability to continue as a going concern, so as to continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Corporation may adjust the amount of dividends paid to shareholders, return of capital to shareholders or sell assets to reduce debt.

The Corporation monitors capital on the basis of the gearing ratio. This ratio is calculated as debt divided by total capital. Debt is calculated as Borrowings as shown in the Statement of Financial Position. Total capital is calculated as Equity as shown in the Statement of Financial Position plus net debt.

(x) Government Grants

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Corporation will comply with all attached conditions. Government grants relating to costs are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate. Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as unearned income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets.

(y) Critical Accounting Estimates

The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the companies accounting policies. In valuing land subject to long term leases, estimates are required to calculate the present value of the future lease income and residual value. Future lease income is estimated based on current lease income and increased for inflation or other rent review events. Residual value of land is calculated as the present value of the final year income of the lease into perpetuity.

(z) Equity and Reserves

The revaluation surplus is used to record increments and decrements on the revaluation of non-current assets. This accords with the Corporation’s policy on the revaluation of property, plant and equipment as disclosed in note 1(b)(i).

Accumulated funds includes all current and prior period retained funds.




(aa) New Accounting Standards and Interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2013 reporting periods and have not been early adopted by the Corporation. The Corporation’s assessment of the impact of these new standards and interpretations is set out below.

i) AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9, AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) and AASB 2012-6 Amendments to Australian Accounting Standards – Mandatory Effective Date of AASB 9 and Transition Disclosures (effective from 1 January 2015).

AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and financial liabilities. The standard is not applicable until 1 January 2015 but is available for early adoption.

There will be no impact on the Corporation’s accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the Corporation does not have any such liabilities. The derecognition rules have been transferred from AASB 139 Financial Instruments: Recognition and Measurement and have not been changed. The Corporation has not yet decided when to adopt AASB 9.

ii) AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13 (effective 1 January 2013)


2013 2012

Note $000 $000

2. Revenue

Revenue from operating activities

Charges on vessels 58,434 49,026

Berth services 13,242 10,224

Port related leases 22,003 21,896

Non port related lease 3,557 3,151

97,236 84,297

3. Other income

Interest on deposits 508 441

Post employment benefits income 12, (a) 1,238 1,046

Other (b) 493 6,500

2,239 7,987

(a) Post employment benefit income relates to the net of current service cost, interest cost and expected return on financial assets for the defined benefits superannuation schemes.

(b) The 2012 value includes $2.5m compensation paid by BHPB in relation to the Kooragang Island emplacement cell and $3.5m of contributed assets as detailed in note 10.

AASB 13 was released in September 2011. It explains how to measure fair value and aims to enhance fair value disclosures. The Corporation has yet to determine which, if any, of its current measurement techniques will have to change as a result of the new guidance. It is therefore not possible to state the impact, if any, of the new rules on any of the amounts recognised in the financial statements. The Corporation will adopt the new standard from its operative date, which means that it will be applied in the annual reporting period ending 30 June 2014.

(iii) Revised AASB 119 Employee Benefits and AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 119 (September 2011).

In September 2011, the AASB released a revised standard on accounting for employee benefits. It required the recognition of all remeasurements of defined benefit liabilities/assets immediately in other comprehensive income (removal of the so-called ‘corridor’ method), the immediate recognition of all past service cost in profit or loss and the calculation of a net interest expense or income by applying the discount rate to the net defined benefit liability or asset. This replaces the expected return on fund assets that is currently included in profit or loss. The standard also introduces a number of additional disclosures for defined benefit liabilities/assets and could affect the timing of the recognition of termination benefits. The amendments will have to be implemented retrospectively.



2013 2012

Note $000 $000

4 Expenses

Employee benefits

Salaries, wages and related costs 20,799 19,192

Superannuation contributions to accumulation funds 12 1,617 1,535

Depreciation and amortisation 10, 11 6,225 5,623

Finance costs 7,263 8,594

Repairs and services 16,450 16,666

Administration 11,660 10,961

Consultants 346 287

Net loss on disposal of Property, Plant and Equipment 10 56 110

Other 2,003 1,233

66,419 64,201

5. Income tax equivalent

Income tax expense

Current tax 10,515 8,407

Deferred tax, net of amount directly to equity (303) 123

Income tax expense 10,212 8,530

Deferred tax

Deferred income tax expense included in income tax expense comprises:

Decrease (increase) in deferred tax assets 349 (2,061)

(Decrease) increase in deferred tax liabilities (652) 2,183

(303) 123

Deferred tax equivalent asset

Initial repairs and other 913 959

Pooled infrastructure items 1,294 1,301

Underfunded superannuation 251 1,688

Provision for doubtful debts 725 698

Leave entitlements 2,091 2,032

Grant receipt 335 349

Sundry accruals 25 22

5,634 7,049

Deferred tax equivalent liability

Depreciation and revalued property 53,722 54,484

Accrued trading income 189 114

53,911 54,598



2013 2012

Note $000 $000

The difference between income tax expense provided in the financial statements and the prima facie income tax expense is reconciled as follows:

Profit before tax equivalents 33,056 28,083

Prima facie tax thereon at 30% 9,917 8,425

Add tax effect of items with differential accounting / tax treatment:

Non deductible expenses / (other deductable expense) (95) (223)

(Deductible depreciation) / not deductible depreciation 390 328

Total income tax expense attributable to operating profit 10,212 8,530

Net deferred tax debited (credited) directly to equity 1,031 (2,613)

Movement in Income tax equivalent payable

Balance at the beginning of the financial year 2,729 3,616

Charge to expense 10,515 8,407

Payments (9,270) (9,294)

Balance at the end of the financial year 3,974 2,729

Balance1 July 2012

$000

Chargeto income

$000

Chargeto equity

$000

Balance30 June 2013

$000

Movement in deferred tax asset

Initial repairs and other 959 (46) – 913

Pooled infrastructure items 1,301 (7) – 1,294

Underfunded superannuation 1,688 (371) (1,066) 251

Provision for doubtful debts 698 27 – 725

Leave entitlements 2,032 59 – 2,091

Grant receipt 349 (14) – 335

Sundry accruals 22 3 – 25

7,049 (349) (1,066) 5,634

Movement in deferred tax liability

Depreciation, revaluation and derecognition of property, plant and equipment

54,484 (727)

(35)

53,722

Overfunded superannuation – – – –

Accrued trading income 114 75 – 189

54,598 (652) (35) 53,911

5. Income tax equivalent (continued)



2013 2012

Note $000 $000

6. Cash and cash equivalents

Cash assets consist of:

Cash on hand 3 3

Cash at bank 605 1,727

T Corp Hourglass Facility Trust 17,606 11,967

18,214 13,697

Cash assets at both 30 June 2013 and 30 June 2012 are very short term, hence market value approximates cost.

(a) Net fair value

The Corporation considers the carrying amount of cash assets approximate their net fair values.

(b) Significant terms and conditions

There are no significant terms and conditions relating to cash assets.

(c) Details regarding credit risk, liquidity risk and market risk arising from financial instruments are further disclosed in note 26.

7. Trade and other receivables

Trade receivables 4,105 6,308

Provision for impairment of receivables (a) (147) (106)

3,958 6,202

Accrued income 1,353 787

Prepayments 952 1,061

Other receivables 269 2,270

6,532 10,320

(a) Impaired trade receivables

As at 30 June 2013 current trade receivables with a nominal value of $147,000 were impaired. The impaired receivables relate to rental and port management customers which are in difficult economic situations.

The aging of these impaired receivables is as follows:

0 to 3 months 51 1

3 to 6 months 27 28

Over 6 months 69 77

147 106



2013 2012

Note $000 $000

Movements in the provision for impairment of receivables are as follows:

Balance at the beginning of the financial year 106 47

Charge to expense 114 59

Receivables written off during the year as uncollectable (73) –

Balance at the end of the financial year 147 106

(b) Unimpaired trade receivables

As at 30 June 2013 current trade receivables with a nominal value of $3,958,000 were unimpaired. The unimpaired receivables relate to rental and port management.

The aging of these unimpaired receivables is as follows:

0 to 3 months 3,870 5,490

3 to 6 months 42 20

Over 6 months 46 692

3,958 6,202

(c) Net fair value

The Corporation considers the carrying amount of debtors approximate their net fair value.

(d) Significant terms and conditions

Trade receivables are required to be settled within 7 days.

(e) Details regarding credit risk, liquidity risk and market risk, including financial assets that are either past due or impaired are disclosed in note 26.

8. Inventories

Consumable store items – at cost 473 159

Inventory relates to fuel for vessels and dredger parts. A review of all inventory items was conducted as at 30 June 2013 and 30 June 2012 to determine stock obsolescence and stock on hand adjustments. There was no obsolete inventory. Stores are valued at the lower of cost and net realisable value.

The Corporation's dredger, David Allan, has extended its operating hours to seven days a week. During 2013, to ensure timely maintenance and to maximise the operating hours, an inventory of spares with long lead times has been identified and procured.

9. Derivative financial instruments

30 June 2013

There were no derivative financial instruments (futures contracts) as at 30 June 2013. The Corporation did however use derivative financial instruments during 2012 and 2013 until the retirement of the Strategic debt portfolio on 31 January 2013. The nature of Newcastle Port Corporation’s business gave rise to gaps in maturity of its cashflows and to exposures arising from possible changes in the repricing of financial positions upon their maturity. The Corporation used futures contracts and interest rate swaps to hedge financial exposures arising from its borrowing portfolio thereby limiting the risk that changes in interest rates would adversely affect profit. In managing such risks, the Corporation used derivative financial instruments. A derivative financial instrument is a contract or agreement whose value is derived from the value of the underlying instrument, reference rate or index. Derivative financial instruments were used to alter and modify the natural risks inherent in the Statement of Financial Position. Details regarding credit risk, liquidity risk and market risk arising from financial instruments are further disclosed in note 26.

7. Trade and other receivables (continued)



2013 2012

$000 $000

10. Property, plant and equipment

Property, plant and equipment at fair value 486,988 479,049

Accumulated depreciation (25,680) (20,032)

Construction in progress 6,101 2,890

467,409 461,907

Land and buildings

At fair value 358,170 354,127


Net carrying amount 356,708 353,062

Roads

At fair value 9,732 9,732



Wharves and jetties




Breakwaters


Accumulated depreciation (602) (455)


Plant




Total net carrying amount of property, plant and equipment in operation 461,308 459,017

Construction in progress

Land and Buildings 4,325 792

Wharves & jetties 180 387

Plant 1,596 1,711

6,101 2,890

9. Derivative financial instruments (continued)

Deliverymonth

Contractssold

Contractsbought

2012 Value $000 30 June 2012

10 year bond futures Sept 2012 53 – (5,300)

(5,300)

The outstanding sold futures positions are not on the Statement of Financial Position as they represent the nominal value of the underlying instrument. The market value (gain)/loss is included in the profit or loss. The 2012 gain was $37,000. Due to the short term nature of the instruments, the total dollar risk of a 0.01% change in interest rates was $98.

19


Newcastle Port Corporation Annual Report 2012–13

2013 2012

$000 $000

Disposals

Proceeds from sale 576 246

Written down value (632) (356)

Net amount included in the profit or loss (56) (110)

Reconciliation of the carrying amounts of each class of property, plant and equipment at the beginning and end of the current and previous financial year are set out below:

30 June 2013

Land and buildings Roads

Wharves and jetties

Break-waters Plant

Construction in progress Total

$000 $000 $000 $000 $000 $000 $000

Carrying amount at start of year

353,062

7,134

63,425

14,292

21,104

2,890

461,907

Additions – – – – – 12,014 12,014

Contribution of assets for nil consideration

1,740

–

–

–

50

(1,790)

–

Disposals (356) – – – (276) – (632)

Allocation from Construction in progress

2,672

–

2,266

–

2,075

(7,013)

–

Depreciation expense (410) (926) (2,260) (148) (2,136) – (5,880)

Carrying amount at end of year

356,708

6,208

63,431

14,144

20,817

6,101

467,409

30 June 2012

Land and buildings Roads

Wharves and jetties

Break-waters Plant

Construction in progress Total

$000 $000 $000 $000 $000 $000 $000

Carrying amount at start of year

342,813

7,508

64,112

14,439

14,957

5,762

449,591

Additions – – – – – 9,238 9,238

Contribution of assets for nil consideration

6,785 3,470 10,255

Disposals (110) (126) – – (121) (1,450) (1,807)

Allocation from Construction in progress

3,901

639

1,457

–

4,663

(10,660)

–

Depreciation expense (327) (887) (2,144) (147) (1,865) – (5,370)

Carrying amount at end of year

353,062

7,134

63,425

14,292

21,104

2,890

461,907

10. Property, plant and equipment (continued)



10. Property, plant and equipment (continued)

In accordance with the direction of the Budget Committee of Cabinet (BCC) a parcel of port related land on Kooragang Island was transferred from the Office of Environment and Heritage (OEH) to the Corporation during the year ended 30 June 2013. The BCC minute, and subsequent NSW Treasurer approval, noted that land not subject to a current lease was transferred as an injection of equity in accordance with NSW Treasury Accounting Policy TPP 09-3 Contributions by Owners made to wholly owned Public Sector Entities. The land has been recognised at fair value of $1.74m as assessed by J Etherington, Registered Valuer No 02232 of the NSW Land and Property Management Authority as at 11 March 2013. The Directors believe the value is still appropriate at 30 June 2013.

In accordance with the same direction of the Budget Committee of Cabinet (BCC) a number of parcels of land on Kooragang Island were transferred to NPC from Roads and Maritime Services (RMS) while parcels of adjoining NPC land was transferred to RMS. The transfers were conducted in accordance with the Treasuere approval and NSW Treasury Accounting Policy TPP 09-3 Contributions by Owners made to wholly owned Public Sector Entities. By agreement, nil consideration was paid or received by either party and there was no fair value increment or decrement to either party from the transaction as the fair value of the parcels were assessed by both parties as equal.

A parcel of plant was contributed to the Corporation during the year. NCIG contributed $50k of navigation aids to the Corporation on commissioning of the K10 berth in the extended south arm channel. The assets have been recognised at construction cost which is current and represents the best estimate of replacement cost.

Land not subject to long term lease was valued by M Henley Registered Valuer No 1710 of the NSW Land and Property Management Authority as at 30 June 2011. The directors believe this value is still appropriate at 30 June 2013, thus no valuation was carried out for this land during the current year.

Land related to long term lease has been valued by Directors as at 30 June 2011 based on the present value of future lease income and residual value. The values were tested against independent assessment. The Directors believe the value of these assets is still appropriate at 30 June 2013.

Buildings, roads, wharves and jetties, breakwaters and major items of plant were revalued as at 1 May 2009. These valuations are considered appropriate for determining the carrying value for the year ended 30 June 2013. Non land assets acquired since 1 May 2009 have been recognised at purchase price and therefore deemed as fair value. The revaluation covered 94% of the book value of assets in all classes. Assets deemed immaterial and not subject to revaluation were recognised at fair value based on the carrying

value as at 1 May 2009 projected to 30 June 2009. As in the prior year they are classified as fair value.

Commercial buildings were valued by M Henley Registered Valuer No 1710 of the NSW Land and Property Management Authority. Operational buildings, roads, wharves and jetties, breakwaters and major navigation aids were valued by Mr F Julier AAPI Senior Valuer, Property Services, of Rushton Valuers Pty Ltd. Floating plant was valued by A Hannah API (P&M) of Rushton Valuers Pty Ltd.

The Property, Plant and Equipment assets are valued at fair value in accordance with Australian Accounting Standard AASB 116 “Property, Plant and Equipment. “Fair value” is defined as “the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction”. Additional guidance regarding implementation of the principles of AASB 116 in the Public sector was gained from the New South Wales Treasury paper

“Accounting policy: Valuation of Physical Non-Current Assets at Fair Value (TPP 07-1)”

Carrying amounts if Property, Plant and Equipment were stated at cost:

2013 2012

$000 $000

Cost 335,511 329,423

Accumulated depreciation

(70,470)

(64,591)

Net carrying amount

265,041

264,832



2013 2012

$000 $000

11. Intangible assets


Accumulated amortisation (1,850) (1,498)

Net carrying value 1,398 1,214

Intangible assets consist of computer software which have a defined economic life of 5 years to 10 years.

Reconciliation of the net carrying amounts of intangible assets at the beginning and end of the current and previous financial year are set out below:

Carrying amount at start of year 1,214 579

Additions 529 888

Amortisation expense (345) (253)

Carrying amount at end of year 1,398 1,214

12. Post employment benefits

Overfunded defined benefits superannuation 2,522 –

Underfunded defined benefits superannuation (3,358) (5,624)

Net Liability (836) (5,624)

The Pooled Fund holds in trust the investments of the closed NSW public sector superannuation schemes:

State Authorities Superannuation Scheme (SASS)

State Superannuation Scheme (SSS)

State Authorities Non-contributory Superannuation Scheme (SANCS)

These schemes are all defined benefits schemes – at least a component of the final benefit is derived from a multiple of member salary and years of membership. All schemes are closed to new members.

The Corporation provided no employer contributions to the funds during the year due to a Trustee approved “funding holiday”.

a) Movement in net superannuation position

Balance at the beginning of the financial year (5,625) 2,040

Defined benefit actuarial gain / (loss) – recognised in Equity 19 3,550 (8,711)

Post employment benefits income – recognised in Income 3 1,238 1,046

Balance at the end of the financial year (836) (5,625)

Note



b) Superannuation position

2013 2013

SASS SANCS SSS Total

$000 $000 $000 $000

Present value of obligations 11,561 1,798 27,064 40,423

Fair value of plan assets (8,504) (1,497) (29,586) (39,587)

Deficit 3,057 301 (2,522) 836

Surplus in excess of recovery available – – – –

Net liability for disclosure 3,057 301 (2,522) 836

2012 2012


$000 $000 $000 $000

Present value of obligations (11,974) (1,969) (28,043) (41,986)

Fair value of plan assets 8,831 1,507 26,024 36,362

Deficit (3,143) (462) (2,019) (5,624)

Surplus in excess of recovery available – – – –

Net asset / (liability) for disclosure (3,143) (462) (2,019) (5,624)

c) Present value of defined benefit obligations

2013 2013


$000 $000 $000 $000

Defined benefit obligation at the beginning of the year

11,974

1,969

28,043

41,986

Current service cost 296 81 170 547

Interest cost 352 57 845 1,254

Contribution by fund participants 143 - 126 269

Actuarial (gains) / losses 436 (58) (1,272) (894)

Benefits paid (1,640) (251) (848) (2,739)

Defined benefit obligation at the end of the year

11,561

1,798

27,064

40,423

2012 2012


$000 $000 $000 $000

Defined benefit obligation at the beginning of the year

10,983

1,792

20,255

33,030

Current service cost 243 81 121 445

Interest cost 558 91 1,049 1,698


Actuarial (gains) / losses 914 134 7,521 8,569

Benefits paid (860) (129) (1,021) (2,010)

Defined benefit obligation at the end of the year

11,974

1,969

28,043

41,986

12. Post employment benefits (continued)



d) Fair value of fund assets

2013 2013


$000 $000 $000 $000

Fair value of fund assets at the beginning of the year

8,831

1,507

26,024

36,362

Expected return on fund assets 717 121 2,202 3,040

Actuarial gains / (losses) 453 120 2,081 2,654


Benefits paid (1,640) (251) (847) (2,738)

Fair value of fund assets at the end of the year

8,504

1,497

29,586

39,587

2012 2012


$000 $000 $000 $000

Fair value of fund assets at the beginning of the year

9,500

1,636

26,813

37,949

Expected return on fund assets 782 134 2,274 3,190

Actuarial gains / (losses) (726) (134) (2,160) (3,020)


Benefits paid (860) (129) (1,021) (2,010)

Fair value of fund assets at the end of the year

8,831

1,507

26,024

36,362

2013 2012

e) Amount in Statement of Comprehensive Income Note $000 $000

Defined benefit fund

Current service cost 547 446

Interest cost 1,254 1,698

Expected returns on fund assets 3 (3,039) (3,190)

Amount recognised in Statement of Comprehensive Income (1,238) (1,046)

Accumulation fund

Amount recognised in Statement of Comprehensive Income 4 1,617 1,535

f) Amounts recognised in Statement of Comprehensive Income

Defined benefits fund expense

Actuarial (gains) / losses (3,550) 11,589

Adjustment for limit on net assets – (2,878)

Amount recognised directly to equity (3,550) 8,711




2013 2012

g) Fair value of plan assets consists of: % %

Australian equities 31 28

Overseas equities 26 24

Australian fixed interest securities 7 5

Overseas fixed interest securities 2 2

Property 8 9

Cash 13 19

Other 13 13

100 100

h) Fair value of fund assets

All fund assets are invested at arm’s length through independent fund managers.

i) Expected rate of return

The expected return on asset assumption is determined by weighting the expected long term return for each class by the target allocation of assets to each class. The returns used for each class are net of investment tax and investment fees.

2013 2012

$000 $000

j) Actual return on fund assets 5,982 (6)

k) Expected contributions to be paid next financial year – –

l) Valuation method

The projected unit credit valuation method was used to determine the present value of the defined benefit obligations and the related current service costs. This method sees each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation.

m) Economic assumptions June 2013 June 2012

Salary increase rate 2013–14 to 2014–15 2.25% –

Salary increase rate 2015–16 to 2019–20 2.00% –

Salary increase rate 2020 onwards 2.50% –

Salary increase rate (general for 2012) – 2.50%

Rate of CPI increase 2.50% 2.50%

Expected rate of return on assets 8.60% 8.60%

Discount rate 3.80% 3.06%

n) Historical information 2013 2012 2011 2010 2009

$000 $000 $000 $000 $000

Present value of defined benefit obligation (40,423) (41,986) (33,030) (33,079) (29,913)

Fair value of fund assets 39,587 36,373 37,949 36,793 34,328

Surplus / (deficit) in fund (836) (5,613) 4,919 3,714 4,415

Experience adjustments – fund liabilities (895) 8,569 487 (2,014) (3,860)

Experience adjustments – fund assets (2,655) 3,020 (264) 487 (6,965)




2013 2012

Note $000 $000

13. Trade and other payables

Payables comprise:

Trade payables 2,245 6,575

T Corp RAFT Account – 812

Accrued financial expenses 2,550 2,618

Port cargo access charge (a) 839 809

Accrued salaries and wages 1,158 1,036

Other payables and accruals 4,131 3,808

Dividend 15,384 13,175

26,307 28,833

(a) Relates to the port cargo access charge collected, on behalf of the Consolidated Fund from port users but not yet remitted. A management fee is retained by NPC.

(b) Net fair values – The Corporation considers the carrying amounts of trade and other accounts payable approximate their net fair values.

(c) Significant terms and conditions – Trade accounts payable are generally settled in 30 days.

(d) Details regarding credit risk, liquidity risk and market risk arising from financial instruments are further disclosed in note 26.

2013 2012

Note $000 $000

14. Provisions Current Non-current Current Non-current

Annual leave (a) 1,851 – 1,921 –

Long service leave (b) 4,635 482 4,467 385

6,486 482 6,388 385

Movement in Provisions Annual Long service Annual Long service

Balance at the beginning of the financial year 1,921 4,852 1,796 4,593

Arising during the year 1,841 790 1,942 581

Utilised (1,911) (525) (1,817) (322)

Balance at the end of the financial year 1,851 5,117 1,921 4,852

(a) The entire obligation is presented as current since the Corporation does not have an unconditional right to defer settlement. However based on past experience the Corporation does not expect all employees to take the full amount of accrued leave within the next 12 months.

2013 2012

$000 $000

Annual leave obligation expected to be taken after 12 months 191 274

(b) The current provision for long service leave includes all unconditional entitlements where the Corporation does not have an unconditional right to defer settlement. The amount provided which relates to employees with service less than the qualifying period is disclosed as non current as there is no legal obligation to pay within 12 months.

Long service leave obligation expected to be taken within 12 months

1,260 480



2013 2012

Note $000 $000

15. Interest bearing borrowings Current Non-current Current Non-current

NSW Treasury Corporation borrowings 4,211 62,931 – 66,993

Deferred Settlements borrowings 585 27,371 489 27,412

4,796 90,302 489 94,405

Total Total

NSW Treasury Corporation borrowings (b) 67,142 66,993

Deferred Settlements borrowings (c) 27,956 27,901

95,098 94,894

Classification of liability

(a) Newcastle Port Corporation has Treasurer’s approval under the Public Authorities (Financial Arrangements) Act to borrow core debt from NSW Treasury Corporation (T Corp) to a global limit of $85m. Newcastle Port Corporation forms the view that the debt facility takes the nature of an enduring rolling facility whereby Newcastle Port Corporation has discretion to refinance debt within the global approval of the Treasurer and within the agreed terms of the Statement of Corporate Intent. Debt as at 30 June 2013 is classified in accordance with the payment profile agreed with the Voting Shareholders in the current Statement of Corporate Intent. Debt which is forecast to be repaid within 12 months of the reporting date is classified as current. Debt which is forecast to be refinanced within 12 months of the reporting date is disclosed as non-current as this matches the planned repayment profile of the debt. The nominal contractual cashflow maturity profile of the debt portfolio is disclosed in note 26(c).

(b) T Corp Non-current – Face value 66,576

– Premium on purchase 566 67,142 66,993

Significant terms and conditions

Borrowings consist of NSW Treasury Corporation floating and fixed rate loans. NSW Treasury Corporation loans are based upon instalment payments of interest only and repayment or rollover of principal at maturity. All borrowings are secured by Government Guarantee.

(c) In accordance with the direction of the Budget Committee of Cabinet (BCC) a number of parcels of port related land were transferred to NPC during the year ended 30 June 2010. The subsequent NSW Treasurer approval, noted that deferred settlement of the consideration would occur as follows:

i) An amount of $10m payable to State Property Authority be delayed for 5 years as a contingency against potential liabilities on Area 6A of the future coal lands. Interest is accrued at an annual rate of 5% pa and payable with the principal in July 2014.

ii) Consideration for the Carrington Coal Terminal will be paid to Department of Transport over a 16 year period based on the annual rent as at 1 July 2009 indexed by CPI. The effective interest rate on the deferred settlement is 9.04%.

(d) Details regarding credit risk, liquidity risk and market risk arising from financial instruments are further disclosed in note 26.



2013 2012

Note $000 $000

16. Non Current Liability

Unearned Income 1,067 1,116

A grant for $1.225m was received from the Department of Industry and Infrastructure during 2011 year towards the refurbishment of the Channel Berth for the accommodation of cruise and naval vessels. The amount will be amortised to Other Income over a 25 year period. There are no unfulfilled conditions or other contingencies attaching to these grants. The Corporation did not benefit directly from any other forms of government assistance.

17. Share capital

Ordinary share capital


Injection from land transfer (a) 1,740 6,785

Balance at the end of the financial year (b) 158,240 156,500

(a) In accordance with the direction of the Budget Committee of Cabinet (BCC) a parcel of port related land on Kooragang Island was transferred from the Office of Envronment and Heritage (OEH) to NPC during the year ended 30 June 2013. The BCC minute, and subsequent NSW Treasurer approval, noted that land not subject to a current lease was transferred as an injection of equity in accordance with NSW Treasury Accounting Policy TPP 09-3 Contributions by Owners made to wholly owned Public Sector Entities. Nil consideration was paid to OEH. The fair value of this land was assessed as $1.74m.

In accordance with the same direction of the Budget Committee of Cabinet (BCC) a number of parcels of land on Kooragang Island were transferred to NPC from Roads and Maritime Services (RMS) while parcels of adjoining NPC land were trans-ferred to RMS. The transfers were conducted in accordance with the Treasurer approval and NSW Treasury Accounting Policy TPP 09-3 Contributions by Owners made to wholly owned Public Sector Entities. By agreement, nil consideration was paid or received by either party and there was no fair value increment or decrement to either party from the transaction as the fair value of the parcels were assessed by both parties as equal.

(b) The State Owned Corporations Act 1989 (as amended) requires the Corporation to have two voting shareholders. As at 30 June 2013 they were the Treasurer, The Hon M Baird MP, and the Minister for Finance and Services The Hon G Pearce MLC. Each shareholder must at all times have an equal share in the equity of the Corporation. As at 30 June 2013 each shareholder held a $1 share.

Capital risk management

During the year the Corporations strategy, unchanged from 2012, was to maintain a gearing ratio within investment grade. The gearing ratio as at year end was as follows.

Total borrowings 15 95,098 94,894

Total equity 311,500 299,779

Total capital 406,598 394,673

Gearing ratio 23% 24%

18. Reserves

Asset revaluation reserve


Write back of revaluation reserve on derecognition of plant, net of tax

10

(83)

–




2013 2012

Note $000 $000

19. Retained profits


Net profit 22,844 19,553

Dividend provided for or paid (15,384) (13,175)

Post employment benefit actuarial gain / (loss) 12 3,550 (8,711)

Income tax expense on Post employment benefit actuarial (gain) / loss

(1,065)

2,613

Write back revaluation reserve and DTL on derecognition of plant

118

–


20. Contingent assets and contingent liabilities

No contingent assets were in existence as at 30 June 2013 (2012 – Nil)

A contingent liability exists as at 30 June 2013. A Memorandum of Understanding exists between the Newcastle Port Corporation and the NSW Office of Environment and Heritage (OEH) for the transfer of land to OEH. Most of the land to be transferred has been identified by NPC and agreed in principle with OEH as appropriate. The search for the remaining approriate land continues post 30 June 2013. As at 30 June 2013 the Corporation was in negotiations with the current private owners of the land however had not agreed on commercial terms. There were no contracts to purchase the identifed land as at 30 June 2013. Once commercial terms have been agreed the land will be acquired by the Corporation at the market rate and equity transferred to OEH. It is estimated that the cost of the land will be up to $3m. There is no possibility of subsequent reimbursement.

(2012 – Nil)

21. Commitments

Capital expenditure

Forward obligations of NPC under major contracts committed as at 30 June 2013 but not otherwise brought to account have as at 30 June 2013 but not otherwise brought to account have been assessed as follows (GST inclusive):

Within one year 655 62

Operating leases

Minimum future lease payments payable for non-cancellable operating leases are as follows:

Not later than one year 136 129

Later than 1 and not later than 5 years 86 149

22. Events after reporting period

There are no known events occurring after balance date that materially affect the financial statements.



24. Director and Executive disclosure

Details of key management personnel during the financial year.

i) Directors

Paul Jeans Chairman

Mark Sargent (ceased 3 December 2012) Director

Eileen Doyle (commenced 4 December 2012) Director

Michelle McPherson Director

John Carter Director

Shaun Kindleysides Staff Director

Gary Webb Chief Executive Officer

ii) Executives

Ron Sorensen General Manager – Operations

David Callaghan General Manager – Finance and Corporate Services

Peter Francis General Manager – Port Development

Michael Dowzer General Manager – Strategy Efficiency and Governance

Tony Houlcroft Human Resources Manager

Details of compensation paid to key management personnel during the financial year:

2013 2012

$ $

i) Total remuneration to key management personnel

– Short term employee benefits 1,353,992 1,392,602

– Post employment benefits 196,124 224,766

1,550,116 1,617,368

ii) Remuneration paid to Directors is in accordance with rates determined by the Premier’s Office.

Remuneration paid to the CEO and Executives is determined by the Corporation’s Remuneration Committee.

Key management personnel received no loans nor any other benefits during the year.

2013 2012

23. Remuneration of Auditors $ $

Fees paid or payable to the Audit Office of NSW for servicesprovided in accordance with the Public Finance and Audit Act. 117,800 105,000



2013 2012

$000 $000

25. Notes to the Cash Flow Statement

Reconciliation of profit from ordinary activities after income tax equivalents to net cash flows from operating activities.

Profit from ordinary activities after income tax equivalent 22,844 19,553

Depreciation and amortisation 6,225 5,623

Post employment benefit actuarial gain (1,238) (1,046)

Assets contributed for nil consideration (50) (3,470)

Write-off opening construction in progress – 1,129

(Profit) / loss on sale of non current assets 56 110

27,837 21,899

Changes in assets and liabilities

(Increase) / decrease in trade and other receivables 3,788 (2,144)

(Increase) / decrease in inventories (314) (75)

(Decrease) / increase in trade and other payables (5,580) 3,416

(Decrease) / increase in borrowings 136 853

(Decrease) / increase in tax payable 1,245 (887)

(Decrease) / increase in deferred tax (302) 122

(Decrease) / increase in leave provisions 195 384

Net cash from operating activities 27,005 23,568

26. Financial risk management

The Corporation’s principal financial instruments are outlined below. These financial instruments arise directly from the Corporation’s operations or are required to finance the Corporation’s operations. The Corporation does use derivative instruments to manage exposure to risk however does not use derivatives for speculative purposes.

The Corporation’s main risks arising from financial instruments are outlined below, together with the Corporation’s objectives, policies and processes for measuring and managing risk. Further quantitative and qualitative disclosures are included throughout this financial report.

The Board of Directors has overall responsibility for the establishment and oversight of risk management and reviews and agrees policies for managing each of these risks. Financial risk management is provided by NSW Treasury Corporation (T Corp) under a set of policies approved by the Corporation’s Board of Directors. The Board provides written principles for overall risk management, as well as written policies covering specific areas including liquidity risk, interest rate risk, foreign exchange risk, commodity risk, permitted instruments and counterparty credit risk. Compliance with policies is reviewed by the Audit Committee on a continuous basis.

The Corporation manages debt and investments within the framework of the Public Authorities (Financial Arrangements) Act 1987.



(a) Financial instruments held are as follows: 2013 2012

Note $000 $000

Financial asset

Cash 6 608 1,730

T Corp Hourglass facility 6 17,606 11,967

Trade receivables 7 3,958 6,202

Accrued income and other receivables 7 2,574 4,118

Total financial assets 24,746 24,017

Financial liabilities

Trade and other payables 13 26,307 28,833

Realised losses on Derivatives 13 – 812

Borrowings 15 67,142 66,993

Deferred Settlements 15 27,956 27,901

Total financial liabilities 121,405 124,539

(b) Credit risk

Credit risk arises when there is the possibility of the Corporation’s debtors defaulting on their contractual obligations, resulting in a financial loss to the Corporation. The maximum exposure to credit risk is generally represented by the carrying amount of the financial assets (net of any allowance for impairment).

Credit risk arises from the financial assets of the Corporation, including cash and trade and other receivables. No collateral is held by the Corporation. The Corporation has not granted any financial guarantees.

Credit risk associated with the Corporation’s financial assets, other than trade and other receivables, is managed through the selection of counterparties and establishment of minimum credit rating standards.

Cash and T Corp Hourglass facility

Cash comprises cash on hand and at bank with the Commonwealth Bank under the Government Banking division. Interest is earned on a daily bank balance basis and credited monthly. Deposits held in the NSW Treasury Corporation Cash Hourglass facility are guaranteed by the State of NSW and are AAA rated by Standard and Poors.

Trade receivables

All trade debtors are recognised as amounts receivable at balance date. Collectability of trade debtors is reviewed on an ongoing basis. Sound debt recovery procedures are established and followed to recover outstanding amounts, including letters of demand. Debts which are known to be uncollectible are written off. An allowance for impairment is raised when there is objective evidence that the Corporation will not be able to collect all amounts due. This evidence includes past experience, and current and expected changes in economic conditions and debtor credit ratings. Invoices are raised on 7 day terms. Interest may be charged on outstanding debt in accordance with the Ports and Maritime Administration Act.

The Corporation is not materially exposed to concentrations of credit risk to a single trade debtor, group of debtors or industry sector. Based on past experience, the Corporation has had limited exposure to impaired or bad debts. The majority of debts are paid within 15 days.

Major concentrations of credit risk that arose from the Corporation’s receivables during the year in relation to the industry categories and location of the customers by the percentage of the total revenues from customers are:

2013 2012

% %

Mining industry 82 78

Manufacturing industry 10 11

Agricultural industry 8 11

100 100

Asia 94 93

Australia 2 2

Other 4 5

100 100

26. Financial risk management (continued)



Trade Receivables is the only financial asset that has individual transactions that are past due or impaired. The transactions relate to port charges or rent. A summary of past due or impaired debtors is as follows:

2013 2012

$000 $000

Past due but not impaired > 30 days

< 3 months overdue 357 1,063

3 months – 6 months overdue 17 20

> 6 months overdue 64 691

438 1,774

The Corporation has policies in place to ensure that sales and services are made to customers with an appropriate credit history.

The Corporation has policies in place to ensure that cash deposits are held with counter parties with an appropriate credit rating.

(c) Liquidity risk

Liquidity risk is the risk that the Corporation will be unable to meet its payment obligations when they fall due. The Corporation continuously manages risk through monitoring future cash flows and maturities planning to ensure adequate holdings of high quality liquid assets.

The Corporation has Public Authorities Financial Arrangement Act approval of a T Corp borrowing limit of $85m of which $17.9m was unused as at 30 June 2013 ($17m unused as at 30 June 2012). The approval also provides for T Corp Come and Go facility of $30m and a bank overdraft facility limit of $500,000 to fund working capital. Planned future capital expenditure will be funded through T Corp borrowings. Future committed expenditure is disclosed in note 21.

While current liabilities are greater than current assets as at 30 June 2013 the Corporation continues to trade as a going concern. It is noted that the Corporation derives revenue from non-current assets. The T Corp Come and Go facility of $30m and a bank overdraft facility limit of $500,000 were unused as at 30 June 2013.

During the current and prior years, there were no defaults or breaches on any loans payable. No assets have been pledged as collateral. The Corporation’s exposure to liquidity risk is deemed insignificant based on prior periods data and current assessment of risk.

Liabilities are recognised for amounts due to be paid in the future for goods and services, whether or not invoiced. Amounts owing to suppliers are settled within trade terms. If trade terms are not specified, payment is made no later than the end of the month following the month in which an invoice is received.

The table below outlines the maturity analysis and interest rate exposure of the Corporation’s financial liabilities. Fair value represents market value which is the amount which would be repaid to retire the debt at 30 June 2013 at current market yields plus accrual interest.

Weighted average

effective interest rate

Noninterest bearing

Floating interest

rate

Fixed interest rate

< 1 year>1 – <5

years > 5 years

Total contractual

cash flowFair

Value

% $000 $000 $000 $000 $000 $000 $000

30 June 2013

Trade payables – 2,245 – – – – – –

Borrowings 5.79% – – 4,211 35,879 27,052 67,142 72,800

Deferred Settlements – SPA 5.00% – – – 12,763 – 12,763 12,065

Deferred Settlements – RIC 9.04% – – 1,997 8,503 15,740 26,240 15,891

Total financial liabilities 2,245 – 6,208 57,145 42,792 106,145 100,756

30 June 2012

Trade payables – 6,575 – – – – – –

Borrowings 5.95% – – 3,906 51,477 30,943 86,326 75,232

Deferred Settlements – SPA 5.00% – – – 12,763 – 12,763 11,490

Deferred Settlements – RIC 9.04% – – 1,953 8,312 17,979 28,244 16,410

Total financial liabilities 6,575 – 5,859 72,552 48,922 127,333 103,132




(d) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in the market price. The Corporation’s exposures to market risk are primarily through interest rate risk on the Corporation’s borrowings and other price risks associated with the movement in the unit price of the T Corp Hourglass investment facility. The Corporation has no exposure to foreign currency risk and does not enter into commodity contracts.

The effect on profit and equity due to a reasonably possible change in risk variable is outlined in the table below, for interest rate risk and other price risk. A reasonably possible change in risk variable has been determined after taking into account the economic environment in which the Corporation operates and the time frame for the assessment. The sensitivity analysis is based on risk exposures in existence at 30 June 2013. The analysis is performed on the same basis for 2012. The analysis assumes that all other variables remain constant.

Interest rate risk

Exposures to interest rate risk arises primarily through the Corporation’s interest bearing liabilities. The risk is minimised by undertaking mainly fixed rate borrowings with T Corp. The Corporation does not account for any fixed rate financial instruments at fair value through profit or loss or as available for sale. Therefore for these financial instruments a change in interest rates would not effect profit or loss or equity. A reasonably possible change of +/- 1% is used, consistent with current trends in interest rates. The basis will be reviewed annually and amended where there is a structural change in the level of interest rate volatility.

The Corporation’s exposure to interest rate risk is provided as follows:

Carrying amount

Profit

Equity

$000 $000 $000

30 June 2013

Assets

Cash at bank +/– 1% 605 6 6

Liabilities

Borrowings +/– 1% 95,098 951 951

30 June 2012

Assets

Cash at bank +/– 1% 1,727 17 17

Liabilities

Borrowings +/– 1% 94,894 949 949

Other price risk – NSW Treasury Corporation

Exposure to “other price risk” arises through the investment in the T Corp Cash Hourglass facility, which is held for strategic rather than trading purposes. The Corporation has no direct equity investments.

Funds were held in the T Corp Cash Hourglass facility for the years ended 30 June 2013 and 30 June 2012. The Cash facility is categorised as Investment Sector and consists of cash and money market instruments. The investment horizon is up to 2 years.

The unit price of the facility is equal to the total fair value of net assets held by the facility divided by the total number of units on issue for the facility. Unit prices are calculated and published daily.

T Corp as trustee for the facility is required to act in the best interest of the unit holders and to administer the trust in accordance with the trust deed. As trustee, T Corp has appointed managers to manage the performance and risks of the facility in accordance with a mandate agreed by the parties. However, T Corp, acts as manager for part of the Cash Hourglass facility. A significant portion of the administration of the facility is outsourced to an external custodian.

Investment in the T Corp Cash Hourglass facility limits the Corporation’s exposure to risk, as it is relatively short term, however allows diversification with different investment horizons and mix of investments.

T Corp provides sensitivity analysis information for the cash facility, using historically based volatility information. The T Corp Hourglass facility is recognised as cash and measured at fair value with any change in unit price impacting on profit rather than equity.




(d) Market risk

The Corporation’s exposure to price risk on the profit or loss is provided as follows:

Carrying amount Profit

$000 $000

30 June 2013

T Corp Hourglass cash facility +/– 1% 17,006 170

T Corp Hourglass medium term growth facility +/– 6% 600 36

30 June 2012

T Corp Hourglass cash facility +/– 1% 11,425 114

T Corp Hourglass medium term growth facility

+/–

6%

542

33

(e) Fair value

Financial instruments are generally recognised at cost, with the exception of the T Corp Cash hourglass facility and derivative financial instruments which are measured at fair value. The facility is valued using redemption pricing.

The Corporation considers the carrying amount of the financial instrument approximates its net fair values.

(f) Fair value recognised in the statement of financial position

The following hierarchy is used for disclosing the fair value of financial instruments by valuation technique:

Level 1 – derived from quoted prices in active markets for identical assets / liabilities.

Level 2 – derived from inputs other than quoted prices that are observable directly or indirectly.

Level 3 – derived from valuation techniques that include inputs for the asset / liabilities not based on observable market data (unobservable input).

The fair values of the financial instruments as well as the method used to estimate the fair value are summarised in the table below:

Level 1 Level 2 Level 3 Total

$000 $000 $000 $000

30 June 2013

Financial assets at fair value

T Corp Hourglass facility trust – 17,606 – 17,606

30 June 2012

Financial assets at fair value

T Corp Hourglass facility trust – 11,967 – 11,967

On 18 June 2013 the Treasurer of NSW announced that Treasury would proceed immediately to a scoping study towards offering a 99 year lease of Newcastle Port Corporation. The Treasurer stated that the 99 year lease would not proceed unless the scoping study confirmed value for money. The scoping study is due to be lodged with the Voting Shareholders for consideration by the end of October 2013. The scoping study process does not impact the financial position or performance of the Corporation for the year ended 30 June 2013.


End Of Audited Financial Statements

27. Long Term Lease Scoping Study