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1
Port Waratah Coal Services Limited A.C.N. 001 363 828
Financial Report for the year ended 31 December 2010
Directors General Manager
M Harvey Chairman G N Davidson
M K Allen
W H Champion Company Secretaries
M Iwami G V Crowe
R S Light J A Oliver
A W Mason
Y Nakata
G Okamatsu
A E Pitt
J E Richards
Contents Page
Chairman’s Report 2
Directors’ Report 3
Auditor’s Independence Declaration 9
Performance Overview 10
Year in Review 11
Statement of Comprehensive Income 17
Statement of Financial Position 18
Statements of Changes in Equity 19
Statement of Cash Flows and Notes 20
Notes to the Financial Statements 22
Directors’ Declaration 38
Independent Audit Report 39
Auditor
Deloitte Touche Tohmatsu
Chartered Accountants
This financial report covers both Port Waratah Coal Services Limited as an individual entity and the
consolidated entity consisting of Port Waratah Coal Services Limited and the entity it controlled during
2010. Port Waratah Coal Services Limited is a company limited by shares, incorporated and
domiciled in Australia. Its principal place of business is:
Port Waratah Coal Services Limited
Curlew Street
Kooragang Island, Newcastle
New South Wales, Australia
Telephone (02) 4907 2000
A description of the nature of the company’s operations and its principal activities is included in the review of operations and activities in the Directors’ Report commencing on page 3. PWCS’ annual report is available on PWCS’ website www.pwcs.com.au.
2
Chairman’s Report 2010 has been another year of growth for Port Waratah Coal Services. PWCS loaded a record 95.1 million tonnes of coal, a 2.4% increase on 2009. PWCS continues to deliver expansion capacity to meet export demand and remains the largest coal export terminal in the world. Safety remains the absolute priority for everyone at PWCS and 2010 saw an increase in total injuries and the lost time injury frequency rate. The Board and Management team remain committed to improving our safety performance in 2011 and will substantially review our safety initiatives to curb this trend. Our investment in new terminal capacity has continued. The $670 million expansion of the Kooragang Terminal (known as Project MPC - Master Plan Completion) approved by the Board in February 2010 is on track to increase nameplate capacity to 133 million tonnes by the end of 2011. On 13 December 2010, the Commonwealth Government granted Major Project Facilitation status to the proposed Terminal 4 facility. PWCS continues to work closely with the coal industry, government and local community stakeholders to deliver the Terminal 4 project in the quickest timeframe for the benefit of the coal industry. Terminal 4 will be developed in tranches to deliver capacity to meet demand from PWCS customers. The extensive expansion program is a direct result of the introduction of the Long Term Commercial Framework implemented in 2009. In November 2010, PWCS was awarded the world’s best specialist dry bulk terminal at the International Bulk Journal 2010 awards. This is an excellent achievement and one that all PWCS employees and stakeholders should be proud of. On behalf of the Board, I would like to thank the PWCS management team, all employees and contractors for their continued improvement in operational performance and in making 2010 a successful year of continued growth for PWCS.
MICHAEL HARVEY CHAIRMAN
3
Directors’ Report
In respect of the financial year the Directors of Port Waratah Coal Services Limited (the company) submit the following report:
Directors’ Details
The Directors of the company in office at the date of this report are detailed below. Directors holding office for part of the financial year are detailed in Note 19. M Harvey Bachelor of Science (Industrial Studies), Honours Chief Operating Officer, Rio Tinto Marine Director, Rio Tinto Shipping Pty Limited Chairman, Rio Tinto Shipping (Asia) Pte Ltd Chairman, PWCS since August 2009
M K Allen Bachelor of Commerce Graduate Diploma in Finance and Investment Fellow, Financial Services Institute of Australasia General Manager Infrastructure Strategy, Anglo Coal Australia
Pty Limited Alternate Director, Newcastle Coal Shippers Pty Limited
W H Champion Bachelor of Science (Chemical Engineering), Bachelor of Science (Biological Sciences) Managing Director, Coal and Allied Industries Limited Director, Newcastle Coal Shippers Pty Limited Director, Queensland Coal Pty Limited Director, Queensland Resources Council Director, Rio Tinto Coal Australia Pty Limited Member, Australian Coal Association Member, National Low Emissions Coal Council Member, New South Wales Clean Coal Council Member, New South Wales Minerals Council Ltd Member, Queensland Clean Coal Council Representative, Sustainable Minerals Institute Director, PWCS since February 2009
M Iwami Bachelor of Commercial Science Director, Japan Coal Development Co., Ltd Director, J.C.D. Australia Pty Limited Director, PWCS since July 2009
R S Light Bachelor of Economics Diploma in Applied Finance and Investment Chartered Accountant Associate Member, Australian Institute of Company Directors Chief Strategic Development Officer, Rio Tinto Coal Australia Chairman, Dalrymple Bay Coal Terminal Pty. Ltd. Chairman, Half-Tide Marine Pty Ltd Director, Black Hill Land Pty Ltd Director, Catherine Hill Bay Land Pty Ltd Director, Comalco Light Alloys Inc. Director, Gwandalan Land Pty Ltd Director, Lower Hunter Land Holdings Pty Ltd Director, Minmi Land Pty Ltd Director, Nords Wharf Land Pty Ltd Director, PWCS since March 2010
A W Mason Bachelor of Arts Diploma in Financial Management Diploma in Applied Finance and Investment General Manager Finance and Commercial, Xstrata Coal (NSW) Pty Limited
Director, Austral Coal Limited and its related companies Director, Bargo Collieries Pty Limited Director, Bulga Coal Management Pty Limited and its related companies Director, Cumnock Coal Pty Limited and its related companies Director, Liddell Collieries Pty Limited and its related companies Director, Narama Investments Pty Limited Chairman, Newcastle Coal Shippers Pty Limited Director, Oakbridge Pty Limited and its related companies Director, OCAL Macquarie Pty Limited Director, Port Kembla Coal Terminal Limited Director, Resource Pacific Holdings Pty Limited and its related companies Director, The Wallerawang Collieries Limited Director, Ulan Coal Mines Limited Director, Xstrata Coal (NSW) Pty Limited and its related companies Director, PWCS since February 2008
Y Nakata Bachelor of Law Managing Director, Nippon Steel Australia Pty Ltd Director, PWCS since May 2009
G Okamatsu Bachelor of Economics Managing Director, Toyota Tsusho Investment (Australia) Pty.
Limited Managing Director, Toyota Tsusho Mining (Australia) Pty.
Limited Director, Integra Coal Operations Pty Ltd Director, Integra Coal Sales Pty Ltd. Director, Navidale Pty Limited Director, RHA Pastoral Company Pty. Limited Director, Toyota Tsusho Coal (Australia) Pty Ltd Director, Toyota Tsusho Gas E&P Australia Pty Ltd Director, Toyota Tsusho Gas E&P Browse Pty Ltd Director, Toyota Tsusho Gas E&P Trefoil Pty Ltd Director, PWCS since November 2009
A E Pitt Bachelor of Commerce, Honours General Manager Commercial, Xstrata Coal Pty Limited Director, Xstrata Rail (NSW) Pty Limited Director, Hunter Valley Coal Chain Coordinator Limited Director, The Newcastle Wallsend Coal Co Pty Ltd Director, PWCS since January 2010
J E Richards Bachelor of Rural Science, Honours 1 Managing Director, The Bloomfield Group of companies Director, Bloomfield Collieries Pty Ltd and its related companies Director, Bickham Coal Company Pty. Limited Director, PWCS since September 2010
Alternate Directors
H Asada (for G Okamatsu) Bachelor of Law General Manager, Brisbane Office, Mitsui & Co. (Australia) Ltd. General Manager, First Energy Division, Mitsui & Co. (Australia) Ltd.
4
S R Bridger (for A W Mason and A E Pitt) Bachelor of Engineering (Civil), Honours Master of Engineering Science (Project Management) Director, Longstride Pty. Limited Director, Newcastle Coal Shippers Pty Limited Director, Surat Basin Rail Pty Ltd Director, Wicet Holdings Pty Limited Director, Wiggins Island Coal Export Terminal Pty Limited
A Hasumoto (for M Iwami) Bachelor of Social Science Director and Secretary, J.C.D. Australia Pty Limited
M Heaton (for M K Allen) Bachelor of Engineering (Civil), Honours General Manager (Open Cut Operations), Anglo American plc Group Alternate Director, Newcastle Coal Shippers Pty Ltd
B F Lewis (for J E Richards) Bachelor of Engineering (Electrical), Honours Master of Business Administration General Manager (Marketing), Bloomfield Collieries Pty Ltd Director, Bloomfield Collieries Pty Ltd and its related companies Director, Corky’s Carbon and Combustion Pty Ltd Director, Hunter Valley Coal Chain Coordinator Limited
T Maeno (for Y Nakata) Bachelor of Politics Managing Director, JFE Steel Australia Resources Pty Ltd
R H McCullough (for G Okamatsu) Bachelor of Engineering (Civil), Honours Master of Business Administration Director, Astron Limited Director, Greenpower Energy Limited Director, Oakbridge Pty Limited
K Nakazato (for Y Nakata) Bachelor of Commerce Managing Director, Sumitomo Metal Australia Pty Limited
T Okada (for G Okamatsu) Bachelor of Business Administration Company Secretary, Navidale Pty. Limited Company Secretary, RHA Pastoral Company Pty Ltd Company Secretary, Toyota Tsusho Group and related
companies
T J S Renwick (for W H Champion) Bachelor of Engineering (Mechanical), Honours Master of Business Administration Director, Integrated Logistics Company Pty Ltd Director, Hunter Valley Coal Chain Coordinator Limited
A Taniguchi (for M Iwami) Bachelor of Law Master of Business Administration Managing Director, J.C.D. Australia Pty Limited Director, Blair Athol Coal Pty Limited Director, Clermont Coal Mines Limited
G J Walker (for R S Light) Bachelor of Engineering (Mechanical), Honours Master of Business Administration General Manager Coal Chain and Operations Support, Rio Tinto Coal Australia
P A Wilkes (for A W Mason and A E Pitt) Bachelor of Business (Accounting) Financial Controller, Xstrata Coal (NSW) Pty Limited Director, Oceanic Coal Australia Pty Limited Director, Ravensworth Coal Terminal Pty Limited and its
related companies Director, Resource Pacific Holdings Pty Limited Director, Resource Pacific Pty Limited Director, Tahmoor Coal Pty Limited Director, Xstrata Cumnock Management Pty Limited Director, Xstrata Mangoola Pty Limited
5
Directors’ Meetings The number of meetings of the company’s Board of Directors and Sub-Committees of the Board of Directors held during the financial year were:
Board of Directors 8
HSE Committee 4
Audit & Risk Committee 4
The attendance details of Directors at Board meetings and Sub-Committees of the Board of Directors held throughout the financial year are as follows: Meetings held Meetings whilst in office attended Board of Directors Directors M Harvey 8 8 W E Cant 4 3 W H Champion 8 5 M D Coulter 1 1 R H Elliott 2 - M D Heaton 6 2 M Iwami 8 - R S Light 7 7 A W Mason 8 7 Y Nakata 8 7 G Okamatsu 8 2 A E Pitt 8 7 J E Richards 4 4 Alternate Directors M K Allen 8 3 H Asada 6 - S R Bridger 8 1 J Fujiwara 3 3 A Hasumoto 8 4 B F Lewis 6 1 T Maeno 8 - R H McCullough 8 5 K Nakazato 8 - T Okada 8 - P C Taylor 4 - A Tanaguchi 5 1 C N Tziolis 1 - P A Wilkes 8 - Health, Safety and Environment Committee M Harvey 4 4 W E Cant 3 2 D McLachlan 3 3 J E Richards 1 1
Meetings held Meetings whilst in office attended
Audit & Risk Committee
A W Mason 4 4 M Harvey 4 3 R S Light 3 2 P C Taylor 4 4
Company Secretaries The company secretaries are: Mr G V Crowe. Mr Crowe was appointed to the position of company secretary in July 2008. Mr Crowe is a member of CPA Australia. Mr J A Oliver. Mr Oliver was appointed to the position of company secretary in February 2008. Mr Oliver is a member of the Institute of Chartered Accountants in Australia and CPA Australia. Principal Activities
The principal activities of the company were the provision of coal receival, blending, stockpiling and shiploading services in the Port of Newcastle. Trading Results The net profit of the consolidated entity for the financial year was $60.2 million after an income tax expense of $25.6 million. Dividends Total dividends paid during the financial year were as follows: $ Importer & Exporter Class Shares Final 2009 dividend and First Interim 2010 dividend paid 30 March 2010. Fully Franked $14,600,000 Importer & Exporter Class Shares Second Interim 2010 dividend paid 27 September 2010. Fully Franked $14,600,000 $29,200,000
6
Review of Operations During the financial year the company handled 95.1 million tonnes of coal through its Carrington and Kooragang Terminals (2009, 92.8 million tonnes). The above mentioned tonnage was loaded aboard 1,067 vessels (2009, 1,077 vessels), representing increased tonnage of 2.4% on the previous year. Steaming coal exports increased by 0.8% with shipments for the year totalling 76.2 million tonnes (2009, 75.6 million tonnes). Coking coal exports increased by 9.9% with shipments for the year totalling 18.9 million tonnes (2009, 17.2 million tonnes). The charge for coal handling services remained at $3.75 per tonne throughout 2010. At the end of the financial year there were 394 people (31 December 2009, 431 people) employed by the company. Changes in State of Affairs There have been no significant changes in the state of affairs of the company during the financial year. Future Developments and Results The company has continued to expand its coal handling facilities in the Port of Newcastle in order to meet continued demand for Hunter Valley export coal. Kooragang Terminal expansion works continued on Project MPC during 2010. These works remain on schedule to increase nameplate capacity to 133 Mtpa by the end of 2011.
Prefeasibility work for the proposed Terminal 4 development is progressing on schedule.
In the opinion of Directors, there are no other developments likely to significantly affect the future results of the company. Directors’ Interests Each of the Directors has given a standing notice under sub-section 192(1) of the Corporations Act 2001 stating that he is a Director or member of certain specified corporations and as such is to be regarded as having an interest in any contract which may be made between the company and those corporations. Other than contracts of a routine nature between the company and associated corporations no Director has an interest in any contract or proposed contract made with the company since 24 March 2010 (being the date of the previous year’s Directors’ Report) and the date of this report. No Director holds shares in the company or related bodies corporate as at the date of this report.
7
Environmental Regulation The NSW State Government has Acts and Regulations that the company’s operations are subject to. They are principally covered by the requirements of the: � Environmental Planning and Assessment Act (1979) and Regulations; and � Protection of the Environment Operations Act (1997) and Regulations.
The NSW Department of Planning and the NSW Department of Environment, Climate Change and Water are the primary Government authorities responsible for the issuing of and administration of approvals, licences and permits in accordance with the requirements of the Acts and Regulations and in relation to the company’s operation. During the financial year the company complied with all environmental requirements. All external reporting requirements associated with the National Greenhouse and Energy Reporting Act (2007) and other legislation were undertaken. Directors’ Benefits No Director of the company has, since the end of the previous financial year, received or become entitled to receive a benefit (other than a benefit included in the total amount of emoluments received or due and receivable by Directors shown in the financial report) by reason of a contract made by the company or a related body corporate with a Director or with a firm of which he or she is a member, or with an entity in which he or she has a substantial financial interest. Indemnities and Insurance During the financial year, the company paid a premium for an insurance policy insuring any past or present Director, Secretary, Executive Officer or employee of the company against certain liabilities. The insurance policy prohibits disclosure of the terms of the policy including the nature of the liability insured against and the amount of the premium. In accordance with the Constitution of the company, the company must indemnify on a full indemnity basis, and to the full extent permitted by law, the following persons: (a) Each person who is or has been a Director, Alternate Director, General Manager or Secretary of the
company; (b) Other officers or former officers of the company or of its related bodies corporate as the Directors in
each case determine; and The indemnities so provided apply for all losses or liabilities incurred by the person as an officer or Auditor of the company or of a related body corporate including, but not limited to, a liability for negligence or for reasonable costs and expenses incurred: (a) in defending proceedings in which judgement is given in favour of the person or in which the person is
acquitted; or (b) in connection with an application, in relation to such proceedings, in which the Court grants relief to
the person under the Corporations Act 2001. The indemnities so provided operate only to the extent that the loss or liability is not covered by insurance.
8
Proceedings on behalf of the company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party, for the purpose of taking responsibilities on behalf of the company for all or part of those proceedings. No proceedings have been brought or intervened in on behalf of the company with leave of the Court under section 237 of the Corporations Act 2001. Auditor’s independence declaration The auditor’s independence declaration is included on page 9 of the annual report. Rounding of Amounts The company is a company of the kind referred to in Class Order 98/0100 issued by the Australian Securities and Investments Commission, relating to the “rounding off” of amounts in the Directors’ Report and financial report. Amounts in the Directors’ Report and financial report have been rounded off to the nearest thousand dollars in accordance with that Class Order unless otherwise stated. Dated at Newcastle this 22nd day of March 2011. Signed in accordance with a resolution of the Directors.
M Harvey Director
Liability limited by a scheme approved under Professional Standards Legislation Member of Deloitte Touche Tohmatsu Limited
9
22 March 2011 Dear Directors
Port Waratah Coal Services Limited In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Port Waratah Coal Services Limited. As lead audit partner for the audit of the financial statements of Port Waratah Coal Services Limited for the financial year ended 31 December 2010, I declare that to the best of my knowledge and belief, there have been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit. Yours sincerely DELOITTE TOUCHE TOHMATSU R G Saayman Partner Chartered Accountants
The Directors Port Waratah Coal Services Limited Curlew St Kooragang Island NEWCASTLE NSW 2294
Deloitte Touche Tohmatsu ABN 74 490 121 060 Grosvenor Place 225 George Street Sydney NSW 2000 PO Box N250 Grosvenor Place Sydney NSW 1219 Australia DX: 10307SSE Tel: +61 (0) 2 9322 7000 Fax: +64 (0)2 9322 7001 www.deloitte.com.au
10
2005 80.3
2006 79.8
2007 84.8
2008 91.4
2009 92.8
2010 95.1
Japan 57%
Korea 16%
Taiwan 12%
China 9%
Other 6%Steaming coal 80% - Coking Coal 20%
2005 957
2006 918
2007 973
2008 1056
2009 1077
2010 1067
VESSELS LOADED
Shiploading in millions of tonnes
THROUGHPUT
EXPORT DESTINATIONS
Destinations in %
Performance OVERVIEW
11
Safety
The PWCS Journey to ZERO INJURIES continued with poor safety performance involving ten injuries for 2010. The ten injuries comprised five lost time injuries (three LTI’s in 2009) and five medical treatment injuries (six MTI’s in 2009).
Key Health and Safety initiatives and highlights for 2010 include:
� Carrington Terminal Electricians achieved ten years LTI/MTI free on 23 February 2011. This team remains injury free;
� A Crisis Management Exercise was conducted with the Management Team;
� The PWCS Health Safety and Environment systems were audited to the Rio Tinto Standards resulting in a commendation for the Carrington Dust Improvement Program;
� Commencement of a Water Quality Monitoring Program for both potable and process water;
� A review of the existing PWCS Alcohol and Other Drugs Procedure and training package was conducted. All employees undertook training and competency training was conducted for Security Personnel;
� Both Terminals participated in 22 emergency drills for the year - 10 Emergency Evacuations and 12 Initial Response Drills were conducted;
� An asbestos audit was conducted which confirmed PWCS was compliant with NSW Legislation; and
� Occupational hygiene, dust, noise, welding, diesel and vibration sampling across both Terminals was undertaken, with over 115 samples collected.
In addition to the above initiatives, wages employee participation in planned job observations and the Take 5 process increased in comparison to 2009.
PWCS continued the safety suggestion scheme which was instigated in 2007. Approved safety suggestions allow an employee to nominate a charity of their choice to receive a donation. PWCS donated $9,600 to charities in 2010 as a result of employee safety suggestions.
Year in REVIEW
Lost Time Injury Frequency Rate (per 1,000,000 hours)
2.31.5
9.4
3.0
5.8
6.9
8.5
3.4
0.7
0.0
2.0
4.0
6.0
8.0
10.0
2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
Total Injury Frequency Rate (per 1,000,000 hours)
14.1
4.5
4.6
7.8
6.02.83.4
13.713.3
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
12
Organisation During the year a sub-committee of the management team was formed (known as ExCo). ExCo was established to provide a business and industry wide perspective, develop and execute business strategy and perform business level decision making. The ExCo team have identified four key strategic goals: � Grow with the market (Develop and deliver a market driven growth plan); � Realise full supply chain potential (Realise the full potential throughput of the supply chain); � Align the commercial model (Align all aspects of the industry commercial model); and � Organise to succeed (Rewire the organisation to realise programs and vision). Commercial The long term commercial framework developed by the Hunter Coal Industry and the NSW Government came into effect on 1 January 2010. PWCS is now embarking on an unprecedented capacity expansion program to meet Customer demand underpinned by long term ship or pay contracts. PWCS has undertaken significant work with the Hunter Coal Industry during 2010 to give effect to the contractual alignment principles in the long term commercial framework. This work will continue in 2011. Cash operating costs for the year were $12.9 Million below the 2010 budget, principally due to below budget throughput. Environment PWCS’ operations were conducted in compliance with licence and consent conditions during the year. During 2010 development and implementation of the Environmental Management System (EMS) continued and independent certification to the ISO 14001 standard was maintained. People The total number of PWCS employees reduced significantly from 431 at the end of 2009 to 394 at the end of 2010. There was a turnover of 82 employees, which equates to a turnover rate of 20.8%. This turnover rate includes employees leaving PWCS as a result of an Early Retirement Scheme. An Enterprise Agreement Implementation Team coordinated the implementation of agreed changes contained in the PWCS Enterprise Agreement 2009 (“the 2009 EA”) which commenced operation on 6 October 2009. The 2009 EA included a number of major work practice changes and an Early Retirement Scheme for employees aged between 55 and 65 years. Fifty one employees left PWCS during 2010 as a result of the work practice changes and Early Retirement Scheme. A new short term incentive payment (STIP) program was rolled out for staff employees in 2010, with payments scheduled for the first quarter of 2011. PWCS conducted the following significant training programs in 2010: � Frontline Leaders Development Program – to enhance technical skills and provide improved career path
opportunities for future leaders. 22 participants completed the program during 2010. A fourth program is scheduled to begin in July 2011; and
� 2009 Enterprise Agreement Training Program for PWCS Operations & Maintenance – as at 31 December 2010, all training outlined in the Training Matrix in the 2009 Enterprise Agreement had been successfully developed and delivered to all operators and maintenance employees at both Terminals.
PWCS continued with its Apprenticeship Scheme hosting a total of 17 Apprentices during 2010. The High School and University Scholarship programs also continued with Scholarship commitments to 21 students. PWCS also continued Traineeships for university students in the accounting, IT and engineering fields.
13
Community PWCS continued to be an active member of the community throughout 2010, donating $437,000 to charities and local community organisations. Significant donations were made to Vision Australia, Newcastle Surf Lifesaving Club, Aspect Hunter School, Oz Harvest, Hunter Prostate Cancer Alliance, Newcastle Seafarers Mission and Soul Cafe. PWCS remains committed to being an active member of the local community during 2011.
Project Implementations Major project works were conducted during the year, including projects linked to implementation of the Enterprise Agreement. This work was above the normal amount of project work scheduled and was progressed aggressively to ensure capacity was accessed during 2010 and to enable implementation of the Enterprise Agreement. Significant projects undertaken in 2010 included:
Carrington Terminal � Rail receival plant automation and control room upgrade;
� Fibre optic network upgrade;
� Lighting system upgrade;
� Installation of real-time dust monitoring system;
� Painting of Reclaimer 2;
� Structural repairs and painting of Dyke 4;
� Structural repairs to walkways, buildings and conveyor structures;
� Removal of redundant conveyor gantry TC15; and
� Installation of sampler carousel for RC14 receival conveyor.
Kooragang Terminal � Rail receival plant automation and control room upgrade;
� Shiploader operational ergonomics upgrade;
� Fibre optic network upgrade;
� Power system upgrade;
� Stockpile Pad A drainage improvement;
� Painting of 4.27 conveyor structure;
� Painting of 7.09 shiploader tripper structure;
� Replacement of luffing ropes and sheaves on 7.09 shiploader;
� Regrouting of K6 berth shiploader rails;
� Sample station improvements and upgrade; and
� Specialised conveyor belt turning station for belt replacement.
Throughput Throughput for 2010 was 95.1 Mtpa, against a budget of 106.6 Mtpa and nameplate capacity of 113 Mtpa. This result represented an increase of 2.4% on the 2009 year result of 92.8 Mtpa. The difference between actual throughput and nameplate capacity represents interface and performance issues associated with the operation of the Hunter Valley Coal Chain.
14
Expansion In February 2010 approval was given to proceed with the Kooragang Terminal expansion master plan (Project MPC) at an estimated capital cost of $670 Million. The scope of this project includes the construction of a fourth shiploading berth, the upgrade of the original Stage 1 Kooragang Terminal stacking and rail receival stream and the full extension to stockpile Pads C and D. Approximately 40% of this work was completed during 2010 including dredging at the berth and completion of the upgraded rail receival stream. PWCS continues to progress future expansion to meet the coal industry capacity requirements. The Prefeasibility Study for Terminal 4 (T4) was approved by the Board in April 2010 at a capital cost of $18.5 Million. Additional land was purchased during the year to be used as part of the T4 site. Engineering studies and investigation of the environmental, commercial and market related issues concerning the development of T4 have been undertaken in 2010. Extensive terminal and port modelling has been conducted to establish possible tonnage and stockpile options. A Preliminary Environmental Assessment for T4 was lodged with the Department of Planning and a Planning Focus Meeting conducted in December 2010. The Federal Government granted Major Project Facilitation status to the T4 project in December 2010 in recognition of the size and complexity of the project and number of government departments that will be involved in the approval process. The NSW Minister for Planning declared T4 as a Major Project in January 2011. Work to date on T4 remains on schedule and within budget.
GRAHAM DAVIDSON
GENERAL MANAGER
15
PWCS in the COMMUNITY
PWCS has provided sponsorship to Newcastle Surf Life Saving Club (NSLSC) since 2008. This support has assisted with the purchase of equipment including radios, shade structures, rescue equipment and resuscitation equipment. During 2010, PWCS announced it will continue its support of NSLSC for a further 3 years, providing $30,000 per annum to the Club.
During 2010 PWCS committed $50,000 to a 3 year sponsorship arrangement with Autism Spectrum Australia for the Hunter Aspect School. Children aged from 0 - 13 years with an autism spectrum disorder attend the school.
Children from Mayfield East Public School enjoyed a visit to Carrington Terminal to gain an understanding of PWCS and its operations.
Hunter children who are blind or have low vision will benefit from PWCS’ sponsorship partnership with Vision Austraila. PWCS has committed $38,000 to fund programs for local children to develop their confidence, abilities and physical skills.
16
In response to increasing worldwide demand, favourable coal prices and the need for increased capacity, the evaluation study of a new terminal at PWCS (T4) has commenced. Currently in the prefeasibility stage, T4 has been declared as a Major Project by the NSW Minister for Planning.
The Energy Efficient Opportunity
(EEO) Program was implemented
to investigate and report on how
energy is used at PWCS, whilst
identifying potential opportunities
for saving energy. Conveyor
systems are major consumers of
energy, making them a key area of
focus in the EEO Program.
Vessel vetting, Loading Plan Reviews and Vessel Performance Reviews are undertaken to increase the efficiency of vessel loading at PWCS. Vessel Performance Management is critical to efficient loading and the ongoing success of PWCS.
Project 3Exp was finalised in 2010. Project MPC is well under way, including dredging for a new berth and completion of the upgraded rail receival stream.
Future FOCUS
Port Waratah Coal Services Limited
17
Statement of Comprehensive Incomefor the financial year ended 31 December 2010
Consolidated Company
Note 31-Dec-10 31-Dec-09 31-Dec-10 31-Dec-09
$'000 $'000 $'000 $'000
Continuing operations
Revenue 2 360,803 329,377 360,803 329,377
Other income 2 8,422 6,453 8,422 6,453
Share of profits of associates accounted for using the 24 303 - - -
equity method
Employee benefit expenses (74,964) (64,444) (74,964) (64,444)
Depreciation and amortisation expenses 2 (72,025) (62,097) (72,025) (62,097)
Finance costs 2 (37,999) (25,835) (37,999) (25,835)
Materials and services (77,134) (71,755) (77,134) (71,755)
Other expenses (21,581) (19,808) (21,581) (19,808)
Profit before income tax expense 85,825 91,891 85,522 91,891
Income tax expense 3 (25,612) (27,191) (25,612) (27,191)
Profit for the year 17 60,213 64,700 59,910 64,700
Other comprehensive income - - - -
Total comprehensive income for the year 60,213 64,700 59,910 64,700
Notes to the financial statements are included on pages 22 to 37.
Port Waratah Coal Services Limited
18
Statement of Financial Position as at 31 December 2010
Consolidated Company
Note
31-Dec-10 31-Dec-09 31-Dec-10 31-Dec-09
$'000 $'000 $'000 $'000
CURRENT ASSETS
Cash and cash equivalents 4 2,331 206,918 2,331 206,918 Trade and other receivables 5 19,378 21,348 19,378 21,348
Inventories 6 7,462 8,134 7,462 8,134 Other 7 3,726 1,676 3,726 1,676
TOTAL CURRENT ASSETS 32,897 238,076 32,897 238,076
NON-CURRENT ASSETS
Other financial assets 8 3,138 2,835 2,835 2,835
Property, plant and equipment 9 1,382,849 1,149,763 1,382,849 1,149,763 Other 10 6,418 814 6,418 814
TOTAL NON-CURRENT ASSETS 1,392,405 1,153,412 1,392,102 1,153,412
TOTAL ASSETS 1,425,302 1,391,488 1,424,999 1,391,488
CURRENT LIABILITIES
Trade and other payables 11 45,398 34,470 45,398 34,470 Borrowings 12 71,396 71,388 71,396 71,388
Current tax payables 3 9,165 16,739 9,165 16,739 Provisions 13 28,715 30,046 28,715 30,046
TOTAL CURRENT LIABILITIES 154,674 152,643 154,674 152,643
NON-CURRENT LIABILITIES
Borrowings 14 795,459 802,780 795,459 802,780
Deferred tax liabilities 3 88,600 90,853 88,600 90,853 Provisions 15 46,386 36,042 46,386 36,042
TOTAL NON-CURRENT LIABILITIES 930,445 929,675 930,445 929,675
TOTAL LIABILITIES 1,085,119 1,082,318 1,085,119 1,082,318
NET ASSETS 340,183 309,170 339,880 309,170
EQUITY
Issued capital 16 139,868 139,868 139,868 139,868 Retained earnings 17 200,315 169,302 200,012 169,302
TOTAL EQUITY 340,183 309,170 339,880 309,170
Notes to the financial statements are included on pages 22 to 37.
Port Waratah Coal Services Limited
19
Statements of Changes in Equityfor the financial year ended 31 December 2010
Consolidated
Share Capital Retained Earnings Total
Note
$'000 $'000 $'000
Balance at 31 December 2009 16, 17 139,868 169,302 309,170
Profit for the period - 60,213 60,213
Dividends paid 18 - (29,200) (29,200)
Balance at 31 December 2010 16, 17 139,868 200,315 340,183
Company
Share Capital Retained Earnings Total
$'000 $'000 $'000
Balance at 31 December 2009 16, 17 139,868 169,302 309,170
Profit for the period - 59,910 59,910
Dividends paid 18 - (29,200) (29,200)
Balance at 31 December 2010 16, 17 139,868 200,012 339,880
Consolidated
Share Capital Retained Earnings Total
$'000 $'000 $'000
Balance at 31 December 2008 16, 17 139,868 132,502 272,370
Profit for the period - 64,700 64,700
Dividends paid 18 - (27,900) (27,900)
Balance at 31 December 2009 16, 17 139,868 169,302 309,170
Company
Share Capital Retained Earnings Total
$'000 $'000 $'000
Balance at 31 December 2008 16, 17 139,868 132,502 272,370
Profit for the period - 64,700 64,700
Dividends paid 18 - (27,900) (27,900)
Balance at 31 December 2009 16, 17 139,868 169,302 309,170
Notes to the financial statements are included on pages 22 to 37.
Port Waratah Coal Services Limited
20
Statement of Cash Flowsfor the financial year ended 31 December 2010
Consolidated Company
Note 31-Dec-10 31-Dec-09 31-Dec-10 31-Dec-09
$'000 $'000 $'000 $'000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 397,049 358,825 397,049 358,825Payments to suppliers and employees (201,385) (184,458) (201,385) (184,458)
Dividends received 2 967 925 967 925Interest received 5,489 3,542 5,489 3,542
Interest and other costs of finance paid (39,071) (35,902) (39,071) (35,902)Income tax paid (35,440) (17,642) (35,440) (17,642)
NET CASH FLOWS FROM
OPERATING ACTIVITIES (iii) 127,609 125,290 127,609 125,290
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment (296,771) (148,464) (296,771) (148,464)
Proceeds from sale of property, plant and equipment 1,088 565 1,088 565
NET CASH FLOWS USED IN
INVESTING ACTIVITIES (295,683) (147,899) (295,683) (147,899)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of borrowings (72,313) (30,296) (72,313) (30,296)
Proceeds from borrowings 65,000 280,000 65,000 280,000Dividends paid 18 (29,200) (27,900) (29,200) (27,900)
NET CASH FLOWS FROM
FINANCING ACTIVITIES (36,513) 221,804 (36,513) 221,804
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (204,587) 199,195 (204,587) 199,195
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
FINANCIAL YEAR 206,918 7,723 206,918 7,723
CASH AND CASH EQUIVALENTS AT THE END OF THEFINANCIAL YEAR (i) 2,331 206,918 2,331 206,918
Notes to the financial statements are included on pages 22 to 37.
Included in the $39,071,000 disclosed as 'Interest and other costs of finance paid' is $9,085,000 of interest which has been capitalised in plant and equipment.
Port Waratah Coal Services Limited
21
Notes to the Statement of Cash Flowsfor the financial year ended 31 December 2010
Consolidated Company
31-Dec-10 31-Dec-09 31-Dec-10 31-Dec-09
$'000 $'000 $'000 $'000
(i) CASH AT THE END OF THE FINANCIAL YEAR
For the purposes of the Statement of Cash Flows, cash
includes cash on hand and in banks and investments inmoney market instruments for the parent entity only,
net of outstanding bank overdrafts.
Cash and cash equivalents at the end of the financial year as shown in the cashflow statement is reconciled to the related
items in the Statement of Financial Position as follows:
Cash and cash equivalents 2,331 206,918 2,331 206,918
(ii) FINANCING FACILITIES
The parent entity has access to:
866,855 874,168 866,855 874,168
335,000 - 335,000 -1,201,855 874,168 1,201,855 874,168
(iii) RECONCILIATION OF PROFIT FOR THE PERIOD TO
NET CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the period 60,213 64,700 59,910 64,700
Depreciation expense 72,025 62,097 72,025 62,097
Amortisation of borrowing costs 399 222 399 222Profit on sale of plant & equipment (345) (527) (345) (527)
Share of profits of associates not received as dividends or distributions (303) - - - Capitalised interest (9,085) (10,164) (9,085) (10,164)
Provision for restoration and rehabilitation recognised 7,000 444 7,000 444Interest unwinding on rehabilitation provision 3,560 3,241 3,560 3,241
Changes in assets & liabilities:Increase/(decrease) in income tax payable (7,574) 11,823 (7,574) 11,823
(Increase)/decrease in trade debtors 1,970 (1,843) 1,970 (1,843)(Increase)/decrease in other assets & prepayments (8,053) (1,006) (8,053) (1,006)
(Increase)/decrease in inventory 672 (1,252) 672 (1,252)Increase/(decrease) in deferred taxes (2,253) (2,273) (2,253) (2,273)
Increase/(decrease) in trade creditors & provisions 9,383 (172) 9,383 (172)
Net cash flows from operating activities 127,609 125,290 127,609 125,290
Amount usedAmount unused
Secured bank loan facilities with various maturity dates
Port Waratah Coal Services Limited
22
Notes to the financial statementsfor the financial year ended 31 December 2010
NOTE 1 SUMMARY OF ACCOUNTING POLICIES USED IN THE FINANCIAL STATEMENTS
Summary of Accounting Policies
Statement of Compliance
• AASB 107 Statement of Cashflows
• AASB 127 Consolidated and Separate Financial Statements
• AASB 128 Investments in Associates
Basis of Preparation
Standards and Interpretations in issue not yet adopted
The company is of a kind referred to in Class Order 98/0100, issued by the Australian Securities and Investments Commission,
relating to the "rounding off" of amounts in the financial report. Amounts in the financial report have been rounded off in accordance
with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.
The principal accounting policies adopted in preparing the financial report of the parent entity, Port Waratah Coal Services Limited, and the consolidated financial report of the consolidated entity comprising the parent entity, and the entities it controlled, are stated
to assist in a general understanding of these financial reports. These policies have been consistently applied by entities in the consolidated entity except as otherwise noted.
The financial report includes the separate financial statement of the company and the consolidated financial statements of the Group.
The financial statements were authorised for issue by the Directors on 22 March 2011.
In the current year, the company has adopted all of the new and revised standards and interpretations issued by the Australian
Accounting Standards Board (the AASB) that are relevant to it’s operations and effective for the company’s annual reporting period.
New and revised standards and interpretations effective for the current reporting period that are relevant to the company included:
• AASB 3 Business Combinations
• AASB 101 Presentation of Financial Statements
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the
concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.
These Standards and Interpretations will be first applied in the financial report of the Group that relates to the annual reporting period beginning after the effective date of each pronouncement, which in all cases will be the Company’s annual reporting period
beginning on 1 January 2011 or later.
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material financial impact on the financial statements of the company or the Group, as the issue of the above noted Interpretations do not affect its
present policies and operations.
31 December 2011
The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001, Accounting Standards and Urgent Issues Group Interpretations, and complies with other requirements of the law.
AASB 2010-5 Amendments to Australian Accounting Standards
31 December 2011
Initial application of the following Standards and Interpretations is not expected to have any material impact to the financial report of the consolidated entity and the company:
Standard/Interpretation Expected to be initially applied in
the financial year ending
AASB 124 Related Party Disclosures (2009), AASB 2009-12 Amendments to Australian Accounting
Standards
The financial report has been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented
in Australian dollars, unless otherwise noted.
Effective for annual reporting
periods beginning on or after
1 January 2011
1 January 2011
Port Waratah Coal Services Limited
23
Notes to the financial statementsfor the financial year ended 31 December 2010
NOTE 1 SUMMARY OF ACCOUNTING POLICIES USED IN THE FINANCIAL STATEMENTS (continued)
Principles of Consolidation
Financial Assets
Other financial assets are classified into the following specified categories:
- loans and receivables - financial assets at cost.
Interest and dividends
The consolidated financial statements include the information and results of each subsidiary from the date on which the company
obtains control and until such time as the company ceases to control such entity. Control is achieved where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
Loans and receivables
Subsequent to initial recognition, investments in subsidiaries are measured at cost. Subsequent to initial recognition, investments in associates are accounted for under the equity method in the consolidated financial statements and the cost method in the company
financial statements.
Interest and dividends are classified as expenses or as distributions of profit consistent with the Statement of Financial Position classification of the related debt or equity instruments.
Trade receivables, loans, and other receivables are recorded at amortised cost less impairment.
In preparing the consolidated financial statements, all intercompany balances and transactions, and unrealised profits arising within the consolidated entity are eliminated in full.
The consolidated financial statements are prepared by combining the financial statements of all the entities that comprise the
consolidated entity, being Port Waratah Coal Services Limited (the parent entity) and its subsidiaries as defined in Accounting Standard AASB 127 ‘Consolidated and Separate Financial Statements’. A list of subsidiaries appears in Note 25 to the financial
statements. Consistent accounting policies are employed in the preparation and presentation of the consolidated financial statements.
Financial assets at cost
The consolidated entity has classified certain shares in other corporations at cost. This is because the fair value of the shares cannot be measured reliably due to the lack of an actively trading market.
Investments are recognised and derecognised on trade date where purchase or sale of an investment is under a contract whose
terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs.
On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill.
If, after reassessment, the fair values of the identifiable net assets acquired exceeds the cost of acquisition, the deficiency is credited to profit and loss in the period of acquisition.
Port Waratah Coal Services Limited
24
Notes to the financial statementsfor the financial year ended 31 December 2010
NOTE 1 SUMMARY OF ACCOUNTING POLICIES USED IN THE FINANCIAL STATEMENTS (continued)
Income Tax
Current tax
Deferred tax
Current and deferred tax for the period
Tax consolidation
Payables
Borrowings
Borrowing Costs
All other borrowing costs are recognised in the profit and loss in the period in which they are incurred.
Cash and Cash Equivalents
Subsequent to initial recognition, borrowings are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit and loss over the period of the borrowing using the effective interest rate
method.
Borrowings are recorded initially at fair value.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted
by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the
manner in which the consolidated entity expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax is recognised as an expense or income in the Statement of Comprehensive Income, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises
from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill or excess.
The company and all its wholly-owned Australian resident entities are part of a tax-consolidated group under Australian taxation law. Port Waratah Coal Services Limited is the head entity in the tax-consolidated group. Tax expense/income, deferred tax liabilities and
deferred tax assets arising from temporary differences of the members of the tax-consolidated group are recognised in the separate financial statements of the members of the tax-consolidated group using the ‘separate taxpayer within group’ approach. Current tax
liabilities and assets and deferred tax assets arising from unused tax losses and tax credits of the members of the tax-consolidated group are recognised by the company (as head entity in the tax-consolidated group).
Trade payables and other accounts payable are recognised when the consolidated entity becomes obliged to make future payments
resulting from the purchase of goods and services.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates except
where the consolidated entity is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated
with these investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax
loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by the reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable).
Deferred tax is accounted for using the Statement of Financial Position liability method. Temporary differences are differences between the tax base of an asset or liability and its carrying amount in the Statement of Financial Position. The tax base of an asset
or liability is the amount attributed to that asset or liability for tax purposes.
In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the
extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences
giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profit.
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until
such time as the assets are substantially ready for their intended use or sale.
Cash and cash equivalents comprise cash on hand, cash in banks (including short term deposits) and investments in money market
instruments, net of outstanding bank overdrafts.
Port Waratah Coal Services Limited
25
Notes to the financial statementsfor the financial year ended 31 December 2010
NOTE 1 SUMMARY OF ACCOUNTING POLICIES USED IN THE FINANCIAL STATEMENTS (continued)
Property, Plant and Equipment
Land is recognised at cost.
10 - 25 yearsPlant and equipment 1 - 25 years
Inventories
Employee Benefits
Defined contributions plans
Revenue Recognition
Dividend and interest revenue
Buildings
Provision is made for benefits accruing to employees in respect of wages and salaries, short term incentive payments, annual leave,
long service leave, and sick leave when it is probable that settlement will be required and they are capable of being measured
reliably.
Major spares purchased specifically for particular items of plant and equipment are included in the cost of plant and equipment.
Property, plant and equipment consolidated lives are limited to 25 years reflecting commercial obsolescence.
Revenue from Ship or Pay charges received is recognised when the Long Term Ship or Pay Agreement conditions for qualification
are met.
The following estimated useful lives are used in the calculation of depreciation:
Revenue from operating activities represents revenue from coal handling and related activities and includes accrued income in relation to coal remaining on stockpiles at the end of the financial year. Revenue from outside the operating activities includes
dividends received from other corporations, interest income, and proceeds from the disposal of property, plant and equipment.
Prepaid revenue is not recognised as revenue until the coal handling services have been performed.
Dividend revenue is recognised on a receivable basis. Interest revenue is recognised on a time proportionate basis that takes into
account the effective yield on the financial asset.
Maintenance stores are valued at the lower of cost and net realisable value. Costs are assigned to inventory on hand by the method most appropriate to each particular class of inventory, with the majority being valued on a first in first out basis. Net realisable value
represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
Contributions to defined contribution superannuation plans are expensed when employees have rendered service entitling them to
the contributions.
Revenue from operating activities is recognised when the services are provided and includes accrued income in relation to coal remaining on stockpiles and partly loaded coal at the end of the financial year.
Buildings, plant and equipment and leasehold improvements are stated at cost less accumulated depreciation and impairment. Cost
includes expenditure that is directly attributable to the acquisition of the item. In the event that settlement of all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present value as at
the date of acquisition.
Depreciation is provided on property, plant and equipment, including freehold buildings but excluding land. Depreciation is calculated on a straight line basis so as to write off the net cost or other revalued amount of each asset over its expected useful life to its
estimated residual value. Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the straight line method. The estimated useful lives, residual values and depreciation method is reviewed at the
end of each annual reporting period.
Provisions made in respect of employee benefits which are not expected to be settled within 12 months are measured as the present value of the estimated future cash outflows to be made by the consolidated entity in respect of services provided by
employees up to reporting date.
Provisions made in respect of employee benefits expected to be settled within 12 months, are measured at their nominal values
using the remuneration rate expected to apply at the time of settlement.
Port Waratah Coal Services Limited
26
Notes to the financial statementsfor the financial year ended 31 December 2010
NOTE 1 SUMMARY OF ACCOUNTING POLICIES USED IN THE FINANCIAL STATEMENTS (continued)
Goods and Services Tax
i.
ii. for receivables and payables which are recognised inclusive of GST.
Provisions
Provision for restoration and rehabilitation
Foreign currency
The financial statements are presented in its functional currency, being Australian dollars. Transactions in currencies other than the
entity's functional currency are recorded at the rates of exchange prevailing on the dates of the transactions. At each Statement of Financial Position date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the Statement of
Financial Position date.
Leased Assets
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.
Cash flows are included in the Statement of Cash flows on a gross basis. The GST component of cash flows arising from investing
and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that recovery will be received and the amount of the receivable can be
measured reliably.
where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of
acquisition of an asset or as part of an item of expense; or
The initial estimate of the restoration and rehabilitation provision relating to removing facilities and restoring the affected areas is
capitalised into the related asset and amortised over the expected life of plant. Changes in the estimate of the provision for restoration and rehabilitation are treated in the same manner, except that the unwinding of the effect of discounting on the provision
is recognised as a finance cost rather than being capitalised into the cost of the related asset.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting
date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cashflows estimated to settle the present obligation, its carrying amount is the present value of those cashflows.
At each reporting date, the consolidated entity reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the consolidated entity estimates the recoverable amount of the cash-generating
unit to which the asset belongs.
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised in profit or loss immediately.
A provision for restoration and rehabilitation is recognised when there is a present obligation as a result of port operations
undertaken, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the provision can be measured reliably. The estimated future obligations include the costs of removing facilities and restoring the
affected areas at the expiry of the relevant land operating leases. The provision for the future restoration costs is the best estimate of the present value of the expenditure required to settle the restoration obligation at the reporting date, based on independent cost
estimates. Future restoration estimates are reviewed periodically and any changes in the estimate are reflected in the present value
of the restoration provision at each reporting date.
Impairment of Assets
Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Provisions are recognised when the consolidated entity has a present obligation (legal or constructive) as a result of a past event,
the future sacrifice of economic benefits is probable, and the amount of the provision can be measured reliably.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount
of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value (in which case the impairment loss is treated as a revaluation
decrease).
Port Waratah Coal Services Limited
27
Notes to the financial statementsfor the financial year ended 31 December 2010
Consolidated Company
31-Dec-10 31-Dec-09 31-Dec-10 31-Dec-09
$'000 $'000 $'000 $'000
NOTE 2 Profit from Operations
(a) Revenue
Revenue from the rendering of Coal Handling Services 360,803 329,377 360,803 329,377
(b) Other Income
Dividends from other corporations 967 925 967 925
Interest received 5,975 4,478 5,975 4,478
Other 1,135 523 1,135 523
345 527 345 527
8,422 6,453 8,422 6,453
Total Revenue and Other Income 369,225 335,830 369,225 335,830
(c) Profit before income tax
Depreciation of property, plant and equipment 72,025 62,097 72,025 62,097
Borrowing costs:Interest and finance charges paid/payable 34,439 22,594 34,439 22,594
Interest unwinding on rehabilitation provision 3,560 3,241 3,560 3,24137,999 25,835 37,999 25,835
Defined contribution superannuation expense 4 6 4 6
Rental expense relating to operating leases 3,271 2,301 3,271 2,301
NOTE 3 INCOME TAX
27,865 29,464 27,865 29,464
(2,253) (2,273) (2,253) (2,273)
25,612 27,191 25,612 27,191
85,825 91,891 85,522 91,89125,747 27,567 25,656 27,567
458 - 458 -
144 (95) 144 (95)(91) - - -
(232) (162) (232) (162)
(415) (119) (415) (119)25,612 27,191 25,612 27,191
Deferred tax expense relating to the origination and
reversal of temporary differences
The prima facie income tax expense on pre-tax
accounting profit from operations reconciles to the income tax expense in the financial statements as
follows:
Capital loss
Investment allowance
Add/(Less):
Profit from continuing operations
Income tax expense calculated at 30%
Total tax expense
(a) Income tax recognised in profit or loss
Current tax expense
Tax expense comprises:
Profit before income tax has been arrived at after charging the following expenses. The line items below
combine amounts attributable to continuing operations:
Revenue from continuing operations consisted of the
following items:
Franking credits
Non-deductible expensesShare of profit from associate
Gain on disposal of property, plant and equipment
Port Waratah Coal Services Limited
28
Notes to the financial statementsfor the financial year ended 31 December 2010
Consolidated Company
31-Dec-10 31-Dec-09 31-Dec-10 31-Dec-09
$'000 $'000 $'000 $'000
NOTE 3 INCOME TAX (continued)
9,165 16,739 9,165 16,739
11,051 9,528 11,051 9,528
(11,051) (9,528) (11,051) (9,528)
- - - -
(99,651) (100,381) (99,651) (100,381)
11,051 9,528 11,051 9,528
(88,600) (90,853) (88,600) (90,853)
Balance at Balance at Balance at
31-Dec-08 31-Dec-09 31-Dec-10
$'000 $'000 $'000 $'000 $'000
(2,065) (375) (2,440) 201 (2,239)
(377) (118) (495) (199) (694)(252) 182 (70) 58 (12)
(98,091) 855 (97,236) 1,268 (95,968)- (140) (140) (599) (739)
(100,785) 404 (100,381) 730 (99,651)
6,168 401 6,569 (116) 6,45377 (18) 59 (24) 35
Rehabilitation asset and interest unwinding 1,414 1,486 2,900 1,663 4,563
7,659 1,868 9,528 1,523 11,051
(93,126) 2,273 (90,853) 2,253 (88,600)
Relevance of tax consolidation to the consolidated entity
As a consequence, Port Waratah Coal Services Limited, as the head entity in the tax consolidated group, recognises currentand deferred tax amounts relating to transactions, events and balances of controlled entities in this group as if those transactions,
events and balances were its own, in addition to the current and deferred tax amounts arising in relation to its own transactions, events and balances.
Other accruals
The company and its wholly-owned Australian resident entity have formed a tax-consolidated group with effect from 1 January 2003
and are therefore taxed as a single entity from that date. The head entity within the tax-consolidated group is Port Waratah Coal Services Limited. The members of the tax-consolidated group are identified at Note 25.
Parent entity and entities in the tax consolidated group
Consolidated and Company
Charged to
income
Work in progress
Gross deferred tax liabilities:
Deferred tax liabilities comprise:
Temporary differences
Temporary differences
Inventories
Charged to
income
Other receivables
Provisions
Taxable and deductible temporary differences arise
from the following:
(b) Current tax payables:
Gross deferred tax assets:
Other assets
Property, plant and equipment
Deferred tax assets comprise: (c) Deferred tax balances
Income tax payable attributable to:
Setoff to deferred tax liabilities
Setoff from deferred tax assets
Port Waratah Coal Services Limited
29
Notes to the financial statementsfor the financial year ended 31 December 2010
Consolidated Company
31-Dec-10 31-Dec-09 31-Dec-10 31-Dec-09
$'000 $'000 $'000 $'000
NOTE 4 CASH AND CASH EQUIVALENTS
Cash on hand and short term deposits 2,331 206,918 2,331 206,918
NOTE 5 TRADE AND OTHER RECEIVABLES
Trade debtors and accrued income 17,068 20,616 17,068 20,616
Other debtors 2,310 732 2,310 73219,378 21,348 19,378 21,348
NOTE 6 INVENTORIES
Maintenance stores and supplies 7,462 8,134 7,462 8,134
NOTE 7 OTHER CURRENT ASSETS
Prepayments 3,726 1,676 3,726 1,676
NOTE 8 NON CURRENT - FINANCIAL ASSETS
Shares at cost - other corporations 2,835 2,835 2,835 2,835
Shares in associates (Note 24) 303 - - - 3,138 2,835 2,835 2,835
Shares at cost represent investment in:
Newcastle Coal Shippers Pty Limited (NCS), a company which is not quoted on a stock exchange. The principal activity of NCS during the year was investment in Port Waratah Coal Services Limited.
At 31 December 2010 the parent entity held 2,835,000 (31 December 2009: 2,835,000) ordinary shares in NCS which represented
8.964% of the issued capital of NCS.
For the year ended 31 December 2010 NCS contributed an amount of $1 million in dividends (31 December 2009: $0.9 million) to the pre tax profit of the parent entity and the consolidated entity.
Shares are shown at cost as the fair value of the shares cannot be reliably measured due to the lack of a liquid market for the sale of
the shares.
The average credit period for customers is 14 days. No interest is charged on trade debtors for the first 14 days from the date of invoice. Thereafter, interest is charged at an appropriate overdraft indicator rate on the outstanding balance. In determining the recoverability of trade debtors the company
considers any change in the credit quality of the trade debtor from the date credit was initially granted up to the reporting date. The Directors believe that there is no doubtful debt provision required for trade debtors.
Port Waratah Coal Services Limited
30
Notes to the financial statementsfor the financial year ended 31 December 2010
NOTE 9 PROPERTY, PLANT AND EQUIPMENT
Land Buildings
Plant and
equipment Total
Consolidated Entity and Company $'000 $'000 $'000 $'000
8,250 20,149 1,828,547 1,856,946- - 235,559 235,559
- - (76,751) (76,751)(89) - (33,255) (33,344)
8,161 20,149 1,954,100 1,982,41012,752 684 218,481 231,917
- - 73,939 73,939- (174) (55,037) (55,211)
20,913 20,659 2,191,484 2,233,055
- 9,216 794,460 803,676
- - (33,125) (33,125)
- 908 61,189 62,097- 10,124 822,525 832,649
- (174) (54,294) (54,468)- 1,004 71,021 72,025
- 10,954 839,252 850,206
8,161 10,025 1,131,576 1,149,76320,913 9,705 1,352,232 1,382,849
Consolidated Company
31-Dec-10 31-Dec-09 31-Dec-10 31-Dec-09
$'000 $'000 $'000 $'000
Buildings 1,004 908 1,004 908
Plant and Equipment 71,021 61,189 71,021 61,189
72,025 62,097 72,025 62,097
NOTE 10 NON-CURRENT ASSETS - OTHER
Capitalised borrowing costs 7,549 1,546 7,549 1,546
Less Accumulated Amortisation (1,131) (732) (1,131) (732)
6,418 814 6,418 814
NOTE 11 CURRENT TRADE AND OTHER PAYABLES
Trade payables 28,656 24,590 28,656 24,590
Accruals 16,742 9,880 16,742 9,880
45,398 34,470 45,398 34,470
The average credit period on purchases of goods and services is 45 days.
Accumulated depreciation
Aggregate depreciation allocated, whether recognised as an expense or capitalised as part of the carrying
amount of other assets during the year:
Balance at 31 December 2010
As at 31 December 2010
Disposals
Disposals
Gross carrying amount
Balance at 1 January 2009
As at 31 December 2009
Disposals
Disposals
Balance at 31 December 2010
Balance at 1 January 2009
Net book value
Depreciation expense
Depreciation expense
Additions
Additions
Under construction at cost
Balance at 1 January 2010
Under construction at cost
Balance at 1 January 2010
Port Waratah Coal Services Limited
31
Notes to the financial statementsfor the financial year ended 31 December 2010
Consolidated Company
31-Dec-10 31-Dec-09 31-Dec-10 31-Dec-09
$'000 $'000 $'000 $'000
NOTE 12 CURRENT BORROWINGS
Bank loans - secured (i) 71,396 71,388 71,396 71,388
(i) Bank loans are fully secured by a first ranking fixed and floating charge over all the assets and undertakings of the parent entity.
NOTE 13 CURRENT PROVISIONS
Provision for restoration and rehabilitation 9,929 9,250 9,929 9,250Employee Benefits 18,785 20,796 18,785 20,796
28,715 30,046 28,715 30,046
NOTE 14 NON-CURRENT BORROWINGS
Bank loans - secured (i) 795,459 802,780 795,459 802,780
All loans are denominated in Australian dollars.
NOTE 15 NON-CURRENT PROVISIONS
Provision for restoration and rehabilitation 44,823 34,942 44,823 34,942Employee Benefits 1,563 1,100 1,563 1,100
46,386 36,042 46,386 36,042
Employee benefits
Balance at beginning of the year 21,896 20,558 21,896 20,558
Additional employee provisions recognised 8,655 7,971 8,655 7,971Reductions arising from payments of employee provisions (10,202) (6,633) (10,202) (6,633)
20,349 21,896 20,349 21,896
Current (Note 13) 18,785 20,796 18,785 20,796Non-current (Note 15) 1,563 1,100 1,563 1,100
20,349 21,896 20,349 21,896
Provision for restoration and rehabilitation
Balance at beginning of the year 44,192 40,507 44,192 40,507
Unwinding of discount 3,560 3,241 3,560 3,241Provision recognised 7,000 444 7,000 444
54,752 44,192 54,752 44,192
Current (Note 13) 9,929 9,250 9,929 9,250
Non-current (Note 15) 44,823 34,942 44,823 34,942
54,752 44,192 54,752 44,192
NOTE 16 ISSUED CAPITAL
93,376,250 Coal Exporter class shares 98,663 98,663 98,663 98,66339,241,250 Coal Importer class shares 41,205 41,205 41,205 41,205
139,868 139,868 139,868 139,868
Each class of share has equal voting and dividend rights.
Effective 1 July 1998, the Corporations legislation abolished the concepts of authorised capital and par value shares. Accordingly the
Company does not have authorised capital nor par value in respect of its issued capital.
The loans mature in December 2012, September 2014 and March 2017 and bear a weighted average floating rate of interest as set out in Note 26.
(i) Bank loans are fully secured by a first ranking fixed and floating charge over all the assets and undertakings of the parent entity.
Balance at 31 December 2010
Balance at 31 December 2010
Port Waratah Coal Services Limited
32
Notes to the financial statementsfor the financial year ended 31 December 2010
Consolidated Company
31-Dec-10 31-Dec-09 31-Dec-10 31-Dec-09
$'000 $'000 $'000 $'000
NOTE 17 RETAINED EARNINGS
Retained earnings at the beginning of the financial year 169,302 132,502 169,302 132,502Net profit attributable to members 60,213 64,700 59,910 64,700
Dividends provided for or paid (Note 18) (29,200) (27,900) (29,200) (27,900)
Retained earnings at the end of the financial year 200,315 169,302 200,012 169,302
2010 2009
NOTE 18 DIVIDENDS
Cents 31-Dec-10 Cents 31-Dec-09
per share $'000 per share $'000
11.01 14,600 10.48 13,900
11.01 14,600 10.56 14,000
22.02 29,200 21.04 27,900
Consolidated Company
31-Dec-10 31-Dec-09 31-Dec-10 31-Dec-09
$'000 $'000 $'000 $'000
Adjusted franking account balance 49,106 23,274 49,106 23,274
NOTE 19 RELATED PARTY DISCLOSURES
Remuneration of Key Management Personnel
(a) Compensation of Directors of the Consolidated Entity
Total
$
- 2010 - - - -
E J Doyle* 2009 421,667 8,250 - 429,917
* No other Director received compensation for services rendered. E J Doyle retired on 31 July 2009.There are no key management personnel other than Directors.
(b) Other Directors Compensation Disclosures
(c) Other Transactions and Balances With Directors
Income paid or payable or otherwise made available to all Directors of the parent entity, directly or indirectly, by the entity or by any related party, in connection with the management of affairs of the parent entity or its controlled entities.
SuperannuationDirectors' Fees
There were no other transactions by the company with Directors during the period.
Recognised amounts
Fully paid ordinary shares
There is no scheme for the payment of bonuses, options, additional retirement benefits, loans or any other form of incentive
payment to Directors.
$
Final 2009 dividend and first interim 2010 dividend:
Post Employment
Second interim 2010 dividend:Franked to 30% (Prior year: 30%)
Franked to 30% (Prior year: 30%)
Short Term Retirement
Benefits Accrued
$ $
Port Waratah Coal Services Limited
33
Notes to the financial statementsfor the financial year ended 31 December 2010
NOTE 19 RELATED PARTY DISCLOSURES (continued)
Transactions with other related parties
Ownership interests
Ownership interests are contained in Notes 24 and 25.
Directors
Directors Resigned
R H Elliott 31 May 2010
W E Cant 26 August 2010
Alternate Directors
J Fujiwara 25 June 2010
P C Taylor 26 August 2010
NOTE 20 REMUNERATION OF AUDITORS
Remuneration of Auditors 31-Dec-10 31-Dec-09
$ $
Amounts received or due and receivable by the auditors for:
Auditing the financial report 72,500 70,000
Other services 85,512 -
158,012 70,000
The auditors received no benefits other than amounts shown.
The parent entity paid insurance premiums to Rio Tinto Services Limited during the year, to the value of $8.6 million. In addition the parent entity paid consulting services to Rio Tinto Technology & Innovation of $0.1 million and Rio Tinto Shipping Pty Limited of $0.1
million.
Included in the balance of Trade and Other Payables (Note 11) is $0.4 million payable to Coal & Allied in respect of services
provided to the parent company.
The parent entity received services from Coal & Allied Operations Pty Limited for which Coal & Allied Operations Pty Limited was
paid a fee of $1.4 million pursuant to an agreement between the parent entity and Coal & Allied approved by the Board of Directors of the parent entity. In addition, the parent entity reimbursed Coal & Allied $0.8 million in respect of the secondment of employees to
PWCS.
Included in the balance of Trade and Other Receivables (Note 5) is $3.3 million receivable from Coal & Allied Operations Pty Limited
in respect of coal handling services provided by the parent entity.
Company
The Directors named in the attached Directors' Report each hold office as a Director of the parent entity as at the date of this report.
In addition, the following persons held office as a Director at various times during the year.
Port Waratah Coal Services Limited
34
Notes to the financial statementsfor the financial year ended 31 December 2010
NOTE 21 COMMITMENTS FOR EXPENDITURE Consolidated and
Capital expenditure commitments 31-Dec-10 31-Dec-09
$'000 $'000
Payable within one year 166,514 42,895Payable later than one year but not later than five years 5,000 75
Payable later than five years 2,667 -
174,181 42,970
Consolidated and
31-Dec-10 31-Dec-09
Operating Lease Commitments $'000 $'000
Due within 1 year 3,329 2,440Due within 1-5 years 10,661 10,456
Due after 5 years 1,836 1,943
Total 15,826 14,839
Operating Leases
Land - Kooragang Conveyor Corridor and Berth Area
Land - Carrington Stockpile and Berth Area
Other Commitments
Due within 1 year 7,472 6,808
Total 7,472 6,808
Foreign Currency Commitments
Included within Capital Commitments above are the following commitments in foreign currency:
Euro $A Euro $A
$'000 $'000 $'000 $'000
Euro - Payable within one year - - 6,144 9,845
NOTE 22 SUPERANNUATION COMMITMENTS
NOTE 23 SEGMENT INFORMATION
Various contracts in respect of expansion projects and plant and equipment for which no provision has been made in the financial statements at the end of the financial year.
The parent entity contributes to superannuation funds which provide accumulated benefits to employees who are members of the funds on their retirement, resignation, disability or death. The rights of members and/or their dependants are protected by the rules of the funds.
20092010
Dec 2014 Yes
10 YearsYes
Minimum lease payments in relation to land lease rentals and office equipment are as follows:
10 Years
Dec 2032
Company
Date
Completion Option
Period
Renewal
Option
The consolidated entity operates in the coal handling industry in New South Wales, Australia. The company operates in one geographic and operating segment.
Company
Port Waratah Coal Services Limited
35
Notes to the financial statementsfor the financial year ended 31 December 2010
NOTE 24 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Name of Company Principal Activity
2010 2009
% %
Logistics Planning Services Pty Limited Software development 50 50
LPS has a reporting date of 30 June. The carrying amount of the investment in LPS is $50 (2008: $50).
LPS Commitments
31-Dec-10 31-Dec-09
$'000 $'000
872 877- 1,050
872 1,927
265 190
- 1,737265 1,927
606 -
890 1,941
606 -
NOTE 25 CONTROLLED ENTITY INFORMATION
The parent entity holds a 100% interest in PWCS Refinancing Pty Limited, a company incorporated in Australia. The book value of the parent entity's investment in the controlled entity is $2.
Logistics Planning Services Pty Limited (LPS) was incorporated on 18 October 2004. LPS was placed into member's voluntary liquidation on 26 November 2010. The principal activity of LPS was to develop and manage a system for the planning and logistics services for the movement of coal in the Hunter Valley of New South Wales.
As at 31 December 2010 the parent entity held 50 ordinary shares in LPS, which represented 50% of the issued capital of
LPS.
For the year ended 31 December 2010, LPS contributed $0.3 million (2009: $0) to the pre tax profit of the consolidated
entity.
Current liabilities
Net assets
Non-current assets
Net profit/(loss)
Investments in associates are accounted for in the financial statements using the equity method of accounting and are carried at cost by the parent (see Notes 1 and 8). Information relating to the associate is set out below.
Ownership Interest
The consolidated entity's share of LPS' capital commitments in relation to expenditure contracts in existence at the reporting date but not recognised as liabilities, payable within one year, amount to $0 (2009: $30,000).
Current assets
The consolidated entity's share of LPS' operating commitments in relation to expenditure contracts in existence at the reporting date but not recognised as liabilities, payable within one year, amount to $0 (2009: $112,000).
Summarised Financial Information of Associates
Non-current
Revenue
Port Waratah Coal Services Limited
36
Notes to the financial statementsfor the financial year ended 31 December 2010
NOTE 26 FINANCIAL INSTRUMENTS
(i) Interest Rate Risk
The parent entity's exposure to interest rate risk and the effective interest rates on financial instruments at balance date are:
Weighted
average
effective Floating Fixed interest rate maturities Non-
interest interest 1 year 2 to 5 over 5 interest
rate rate or less years years bearing Total
% $'000 $'000 $'000 $'000 $'000 $'000
31 December 2010
Assets
Cash 4.5% 2,331 - - - - 2,331Debtors - - - - - 17,068 17,068
Other receivables - - - - - 2,310 2,310Shares in other corporations - - - - - 2,835 2,835Total financial assets 2,331 - - - 22,213 24,544
Liabilities
Trade and other payables - - - - - 45,398 45,398Secured bank loans 5.7% 866,855 - - - - 866,855Total financial liabilities 866,855 - - - 45,398 912,253
Net financial (liabilities) (864,524) - - - (23,185) (887,709)
31 December 2009Assets
Cash 4.6% 206,918 - - - - 206,918Debtors - - - - - 20,616 20,616Receivables - - - - - 732 732
Shares in other corporations - - - - - 2,835 2,835Total financial assets 206,918 - - - 24,183 231,101
Liabilities
Trade and other payables - - - - - 34,470 34,470
Secured bank loans 4.5% 874,168 - - - - 874,168Total financial liabilities 874,168 - - - 34,470 908,638
Net financial (liabilities) (667,250) - - - (10,287) (677,537)
(ii) Credit Risk Management
(iii) Net Fair Values
The carrying amount of financial assets and financial liabilities recorded in the financial statements approximates their fair values, unless stated expressly.
(iv) Capital risk management
The company continues to adopt a policy of only dealing with creditworthy counterparties.Ongoing credit evaluation is performed on the financial condition of trade debtors and where appropriate, services are not performed until payment in advance of services to be rendered occurs.
The capital structure of the company consists of debt, which includes borrowings disclosed in note 12 and 14, cash and cash equivalents, disclosed in Note 4 and equity attributable to equity holders of the parent, comprising issued capital and retained earnings as disclosed in notes 16 and 17.
The carrying amounts of financial assets included in the consolidated Statement of Financial Position represent the parent entity's maximum exposure to credit risk in relation to these assets. The parent entity holds no security in relation to financial assets.
Port Waratah Coal Services Limited
37
Notes to the financial statementsfor the financial year ended 31 December 2010
NOTE 26 FINANCIAL INSTRUMENTS (Continued)
(v) Financial risk management objectives
Management reports monthly to the Board on borrowings.
The company has no hedge or derivative financial instruments at the date of reporting.
(vi) Foreign currency risk management
The carrying amount of the company's foreign currency denominated assets and liabilities at year end is:
2010 2009 2010 2009
$'000 $'000 $'000 $'000
Euro - 841 - 841
United States Dollar - 81 - -
(vii) Interest rate management
(viii) Liquidity risk management
Less than 6 months 1- 5 years Total
2010 $'000 $'000
Borrowings 795,459 866,855
2009
Borrowings 802,780 874,168
NOTE 27 SUBSEQUENT EVENTS DISCLOSURE
NOTE 28 ADDITIONAL COMPANY INFORMATION
Port Waratah Coal Services Limited Port Waratah Coal Services Limited
Kooragang Island, Newcastle Carrington & Kooragang Island, Newcastle
NSW Australia NSW Australia
4.5% 35,11336,275
35,809 35,5875.7%
Ultimate responsibility for the liquidity risk management rests with the Board, who have built an appropriate liquidity risk management
framework for the management of the company's short, medium and long term funding requirements. The company manages liquidity
risk by maintaining adequate reserves, banking facilities and by continuously monitoring forecast and actual cashflows. Management
report to the Board on a monthly basis for cashflow forecasting.
The company is exposed to interest rate risk as the company borrows funds at floating rates.
The table below includes the weighted average effective interest rate and a reconciliation to the carrying amount in the Statement of
Financial Position for borrowings.
Weighted average interest
rate
All of the consolidated entity's borrowings excluding repayments are subject to interest rate repricing in the next 12 months. The Board
considers that the carrying amounts of the financial assets and financial liabilities recognised at amortised cost in the financial
statements approximate their fair values.
The company has entered certain supplier agreements denominated in foreign currencies, hence exposure to exchange rate
fluctuations arise. Exchange rate exposures are managed within Board approved policies.
The company seeks to minimise these risks by using a number of financial institutions, fixed interest rate periods and borrowings in
Australian dollars only. The company has a Treasury Policy Statement which is Board approved and provides written procedures over
borrowing limits, payments, cash management and approvals. Compliance to the Treasury Policy Statement is reviewed by the internal
auditors on a continuous basis.
Management provide treasury support to the business, co-ordinates access to financial markets and manages financial risks relating to
the company. These risks include market risk (including currency risk, fair value interest rate risk and price risk), liquidity risk and
cashflow interest rate risk.
Liabilities Assets
Registered office Principal places of business
A 1% increase or decrease is used when reporting interest rate sensitivity risk to key management and the Board. At reporting date, if
interest rates had been 1% higher or lower and all other variables were held constant, the company's' net profit would decrease/increase
$6.1 Million (2009: $6.2 Million) based on the level of borrowings at 31 December 2010, mainly due to the company's exposure on its
variable rate borrowings.
PWCS is an unlisted public company, incorporated and operating in Australia.
No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect
the operations of the entity, the results of those operations, or the state of affairs of the entity in future financial years.
% $'000
Greater than 6 months and
less than 1 year
$'000
38
Directors’ Declaration
The Directors declare that the financial statements and notes set out on pages 17 to 37: (a) comply with the Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements; and (b) give a true and fair view of the Company’s and consolidated entity’s financial position as at
31 December 2010 and of their performance, as represented by the results of their operations and their cash flows, for the financial year ended on that date.
In the Directors’ opinion:
(a) the financial statements and notes are in accordance with the Corporations Act 2001; and (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable.
Dated this 22nd day of March 2011.
Signed in accordance with a resolution of the Directors made pursuant to s295(5) of the Corporations Act 2001.
M Harvey Director
Liability limited by a scheme approved under Professional Standards Legislation
Member of Deloitte Touche Tohmatsu Limited
39
Independent Auditor’s Report to the members of Port Waratah Coal Services
Limited We have audited the accompanying financial report of Port Waratah Coal Services Limited, which comprises the statement of financial position as at 31 December 2010, the statement of comprehensive income, the statement of cash flows and the statement of changes in equity for the year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end as set out on pages 17 to 38. Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control, relevant to the entity’s preparation of the financial report that gives a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Deloitte Touche Tohmatsu A.B.N. 74 490 121 060 Grosvenor Place 225 George Street Sydney NSW 2000 PO Box N250 Grosvenor Place Sydney NSW 1220 Australia DX 10307SSE Tel: +61 (0) 2 9322 7000 Fax: +61 (0) 2 9322 7001 www.deloitte.com.au
40
Auditor’s Independence Declaration In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. Opinion In our opinion, the financial report of Port Waratah Coal Services Limited is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the company’s and consolidated entity’s financial position as at 31 December 2010 and of its performance for the year ended on that date; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
DELOITTE TOUCHE TOHMATSU R G Saayman Partner Chartered Accountants Sydney, 22 March 2011