STATEMENT OF CORPORATE INTENT2010/11

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STATEMENT OF CORPORATE INTENT2010/11

Chairman's Foreword

As the major world economies are struggling to emerge from the effects of the globalfinancial crisis, positive signs are heralding change ahead of others for Australia andsome of its major Asian partners. However, it is the timing and rate of change whichremains unpredictable in fragile global markets. Western Australia has historicallybeen a star perfoiiiier and it is envisaged that, as trade with our Asian partners againstrengthens and other world economies recover, Fremantle Ports will be well placed toservice the upturn in imports and exports.

Fremantle Ports continues to focus on adding value to its customers and making apositive contribution to its stakeholders. Stringent cost control and focus on drivingour assets efficiently continues whilst planning and preparing for opportunities andnew initiatives to take advantage of improved future economic conditions andstronger trade growth is also a priority.

Major capital works are well underway for berth upgrades as part of the project todeepen the Fremantle Inner Harbour and create additional land at Rous Head fromdredge spoil. This project with a total investment of over $250M is critical in order toremain sustainable and competitive and to attract new trade. The upgraded portinfrastructure and facilities will also contribute to the needs of vessels bringing goodsto the State for the various expanding resource projects in the State's North West.

Ports form the backbone of a nation's trading economy. Government has recognisedthat investment in port infrastructure and facilities continues to be of high priority andcritical for sustainable State and national growth. Fremantle Ports' future planning andinvestment program continues to target the necessity to be responsive to customerneeds and opportunities such as projects for the upgrade and replacement of portinfrastructure and assets in the Outer Harbour. It is essential to recognise that suchinvestment provides sustainable longer term returns rather than short to medium teiingains. This is evident in Fremantle Ports forecasting moderate returns in the near teiiiiwhich result from a combination of the recent impact of global financial conditionsand an expanding asset base for sustained growth and longer teim returns.

Fremantle Ports is well prepared to face challenges and embrace growth opportunities,remaining profitable and competitive, continuing to make a positive contribution toWestern Australia, and to help shape Australia in leading economic recovery in theworld.

Alan BirchmoreCHAIRMAN

Chairman's Foreword

As the major world economies are struggling to emerge from the effects of the globalfinancial crisis, positive signs are heralding change ahead of others for Australia andsome of its major Asian partners. However, it is the timing and rate of change whichremains unpredictable in fragile global markets. Western Australia has historicallybeen a star performer and it is envisaged that, as trade with our Asian partners againstrengthens and other world economies recover, Fremantle Ports will be well placed toservice the upturn in imports and exports.

Fremantle Ports continues to focus on adding value to its customers and making apositive contribution to its stakeholders. Stringent cost control and focus on drivingour assets efficiently continues whilst planning and preparing for opportunities andnew initiatives to take advantage of improved future economic conditions andstronger trade growth is also a priority.

Major capital works are well underway for berth upgrades as part of the project todeepen the Fremantle Inner Harbour and create additional land at Rous Head fromdredge spoil. This project with a total investment of over $250M is critical in order toremain sustainable and competitive and to attract new trade. The upgraded portinfrastructure and facilities will also contribute to the needs of vessels bringing goodsto the State for the various expanding resource projects in the State's North West.

Ports form the backbone of a nation's trading economy. Government has recognisedthat investment in port infrastructure and facilities continues to be of high priority andcritical for sustainable State and national growth. Fremantle Ports' future planning andinvestment program continues to target the necessity to be responsive to customerneeds and opportunities such as projects for the upgrade and replacement of portinfrastructure and assets in the Outer Harbour. It is essential to recognise that suchinvestment provides sustainable longer term returns rather than short to medium term.gains. This is evident in Fremantle Ports forecasting moderate returns in the near termwhich result from a combination of the recent impact of global financial conditionsand an expanding asset base for sustained growth and longer term returns.

Fremantle Ports is well prepared to face challenges and embrace growth opportunities,remaining profitable and competitive, continuing to make a positive contribution toWestern Australia, and to help shape Australia in leading economic recovery in theworld.

Alan BirchmoreCHAIRMAN

INTRODUCTION

This is the fourteenth Statement of Corporate Intent prepared by the Fremantle PortAuthority, trading as Fremantle Ports, and is submitted under the provisions of thePort Authorities Act 1999 (the Act).

The Act sets out a clear role for Port Authorities in facilitating trade in a commerciallyresponsible manner and establishes clear lines of accountability with the StateGovernment. The Act requires that each Port Authority is to submit a Statement ofCorporate Intent to the Minister for approval each year by a date detei mined by theMinister in agreement with the Treasurer. This Statement of Corporate Intent outlinesFremantle Ports' intended key achievements over the 2010/11 financial year.

Major Works 2010/11

Fremantle Ports' Mission is to facilitate trade in a sustainable way and its Vision is tobe valued by its customers and the community for its leadership and excellence.Fremantle Ports' focus for the future is to work with customers and stakeholders toensure the successful progression of major projects and planned developments neededto achieve its Mission and Vision.

Works related to the deepening of the Inner Harbour in response to the global trend tolarger, deeper-draft vessels in the container trade are in progress and it is expectedthat the first stage will be completed in 2010/11. The deepening also involves anupgrade in infrastructure and facilities to handle the larger vessels and also thereclamation of additional land at Rous Head using dredge spoil.

In order to increase transport efficiencies and facilitate continuing growth in thecontainer trade, a greater share of the transport task is being progressively moved torail. Strategies to increase the rail share of the freight task will be continued in20 10/11.

At the western end of Victoria Quay the key elements of the Fremantle WaterfrontMaster Plan endorsed by the Western Australian Planning Commission will continueto be implemented.

In the Outer Harbour, a number of new bulk trade opportunities are emerging andcapital expenditure is planned to provide for improvements to existing facilities. Theapprovals process will continue to be progressed for the Kwinana Quay developmentto handle growth in the container and break-bulk trades beyond the capacity of theInner Harbour.

Fremantle Ports recognises its responsibilities to the community and the environmentto ensure the ongoing sustainability of the Port and will continue to engagestakeholders in its plans for the future.

Services and Facilities

Fremantle Ports provides services and facilities for shipping in the Inner Harbour atFremantle and the Outer Harbour at Kwinana. The Inner Harbour handles containertrade, break bulk cargo, livestock exports and motor vehicle imports and alsoaccommodates cruise ships and visiting naval vessels. The Outer Harbour handles

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INTRODUCTION

This is the fourteenth Statement of Corporate Intent prepared by the Fremantle PortAuthority, trading as Fremantle Ports, and is submitted under the provisions of thePort Authorities Act 1999 (the Act).

The Act sets out a clear role for Port Authorities in facilitating trade in a commerciallyresponsible manner and establishes clear lines of accountability with the StateGovernment. The Act requires that each Port Authority is to submit a Statement ofCorporate Intent to the Minister for approval each year by a date determined by theMinister in agreement with the Treasurer. This Statement of Corporate Intent outlinesFremantle Ports' intended key achievements over the 2010/11 financial year.

Major Works 2010/11

Fremantle Ports' Mission is to facilitate trade in a sustainable way and its Vision is tobe valued by its customers and the community for its leadership and excellence.Fremantle Ports' focus for the future is to work with customers and stakeholders toensure the successful progression of major projects and planned developments neededto achieve its Mission and Vision.

Works related to the deepening of the Inner Harbour in response to the global trend tolarger, deeper-draft vessels in the container trade are in progress and it is expectedthat the first stage will be completed in 2010/11. The deepening also involves anupgrade in infrastructure and facilities to handle the larger vessels and also thereclamation of additional land at Rous Head using dredge spoil.

In order to increase transport efficiencies and facilitate continuing growth in thecontainer trade, a greater share of the transport task is being progressively moved torail. Strategies to increase the rail share of the freight task will be continued in2010/11.

At the western end of Victoria Quay the key elements of the Fremantle WaterfrontMaster Plan endorsed by the Western Australian Planning Commission will continueto be implemented.

In the Outer Harbour, a number of new bulk trade opportunities are emerging andcapital expenditure is planned to provide for improvements to existing facilities. Theapprovals process will continue to be progressed for the Kwinana Quay developmentto handle growth in the container and break-bulk trades beyond the capacity of theInner Harbour.

Fremantle Ports recognises its responsibilities to the community and the environmentto ensure the ongoing sustainability of the Port and will continue to engagestakeholders in its plans for the future.

Services and Facilities

Fremantle Ports provides services and facilities for shipping in the Inner Harbour atFremantle and the Outer Harbour at Kwinana. The Inner Harbour handles containertrade, break bulk cargo, livestock exports and motor vehicle imports and alsoaccommodates cruise ships and visiting naval vessels. The Outer Harbour handles

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bulk cargoes including grain, petroleum, alumina, cement clinker, caustic soda, ironore, coal, fertilisers and sulphur.

The Port of Fremantle is a mixture of facilities and services managed by FremantlePorts and private operators. Fremantle Ports provides and maintains shippingchannels, navigation aids, cargo wharves at common user areas and leased terminals,the Overseas Passenger Teiiiiinal, road and rail transport infrastructure within the portarea, moles and seawalls and other port infrastructure such as storage sheds, water,power and public amenities.

Three of the jetties in the Outer Harbour are operated by private companies, generallyunder Special Agreement Acts with the State. They are the Alcoa, BP and CBHjetties. The Kwinana Bulk Jetty and the Kwinana Bulk Teiininal are operated byFremantle Ports.

Services provided directly by Fremantle Ports include ship scheduling, berthingallocations, port communications, mooring (in the Inner Harbour and at somefacilities in the Outer Harbour), bulk stevedoring at the Kwinana Bulk Berths,emergency response, hazardous cargo services and quarantine and waste disposalservices. Pilotage is provided under a contract arrangement with the Fremantle PilotCompany. Pilot transport over water is provided by Fremantle Ports.

Services provided by the private sector include container and general stevedoring,towage, line boats, ships' bunkering and ships' providoring. Towage is carried outunder non-exclusive licence agreements which expire on 1 June 2013. The twocontainer stevedoring companies, Dubai Ports World and Patrick, operate under long-term leases with Fremantle Ports and their perfoiiiiance is monitored under the termsof the lease agreements.

Fremantle Ports manages tenanted properties in the port area for port relatedpurposes, including container parks.

Fremantle Ports also cooperates with Commonwealth Government agenciesresponsible for customs, quarantine, maritime safety and security.

The Port of Fremantle makes a major contribution to the Western Australianeconomy. Total trade handled through the Inner Harbour and Outer Harbour iscurrently valued at $26.1 billion per annum.

Scope of the Business

Under the Port Authorities Act, Fremantle Ports has exclusive control of the Port ofFremantle subject to any direction given by the Minister. It has a duty to act oncommercial principles and has the powers to perfoiiii its functions under the Act,including the power to hold, dispose of and develop port land, carry out port works,provide port services, enter into business arrangements, issue licences and charge forits services.

Vision, Mission and Values

Fremantle Ports' Vision is "To be valued by our customers and the community forour leadership and excellence ".

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bulk cargoes including grain, petroleum, alumina, cement clinker, caustic soda, ironore, coal, fertilisers and sulphur.

The Port of Fremantle is a mixture of facilities and services managed by FremantlePorts and private operators. Fremantle Ports provides and maintains shippingchannels, navigation aids, cargo wharves at common user areas and leased terminals,the Overseas Passenger Terminal, road and rail transport infrastructure within the portarea, moles and seawalls and other port infrastructure such as storage sheds, water,power and public amenities.

Three of the jetties in the Outer Harbour are operated by private companies, generallyunder Special Agreement Acts with the State. They are the Alcoa, BP and CBHjetties. The Kwinana Bulk Jetty and the Kwinana Bulk Terminal are operated byFremantle Ports.

Services provided directly by Fremantle Ports include ship scheduling, berthingallocations, port communications, mooring (in the Inner Harbour and at somefacilities in the Outer Harbour), bulk stevedoring at the Kwinana Bulk Berths,emergency response, hazardous cargo services and quarantine and waste disposalservices. Pilotage is provided under a contract arrangement with the Fremantle PilotCompany. Pilot transport over water is provided by Fremantle Ports.

Services provided by the private sector include container and general stevedoring,towage, line boats, ships' bunkering and ships' providoring. Towage is carried outunder non-exclusive licence agreements which expire on 1 June 2013. The twocontainer stevedoring companies, Dubai Ports World and Patrick, operate under long-term leases with Fremantle Ports and their performance is monitored under the termsof the lease agreements.

Fremantle Ports manages tenanted properties in the port area for port relatedpurposes, including container parks.

Fremantle Ports also cooperates with Commonwealth Government agenciesresponsible for customs, quarantine, maritime safety and security.

The Port of Fremantle makes a major contribution to the Western Australianeconomy. Total trade handled through the Inner Harbour and Outer Harbour iscurrently valued at $26.1 billion per annum.

Scope of the Business

Under the Port Authorities Act, Fremantle Ports has exclusive control of the Port ofFremantle subject to any direction given by the Minister. It has a duty to act oncommercial principles and has the powers to perfoiiii its functions under the Act,including the power to hold, dispose of and develop port land, carry out port works,provide port services, enter into business arrangements, issue licences and charge forits services.

Vision, Mission and Values

Fremantle Ports' Vision is "To be valued by our customers and the community forour leadership and excellence".

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Fremantle Ports' Mission is "To facilitate trade in a sustainable way"

Fremantle Ports sees its People, Customers, Environment, Community and Success asimportant. In recognising this, the values agreed by Fremantle Ports' staff are:

o Respect and Integrity

o Safely and Wellbeing

o Responsiveness and Delivery

o Continuous Improvement andInnovation

o Sustainability

GOALS AND MAJOR PLANNED ACHIEVEMENTS

Fremantle Ports aims to facilitate trade by being competitive and responsive to itscustomers and to look forward by enhancing capability for the future. Its objectivesand major planned achievements for 2009/10 are as follows:

Objective 1: Service delivery

o Providing exceptional services that exceed customer expectations.

Adding Value to Customers

Fremantie Ports works closely with customers and joint service providers to monitorcustomer satisfaction, identify improvement opportunities and provide for futureneeds. In the Inner Harbour the main challenge for 2010/11 will be planning andproviding for the service requirements of the larger deep draft vessels post harbourdeepening, including pilotage, towage and new generation container handlingequipment. In the Outer Harbour further work will be carried out with bulk importersand exporters to identify value adding opportunities and improve operationalperformance.

Infrastructure Development

Investment in port infrastructure and facilities is important to sustain economicgrowth. Investment is formulated by analysing future trade levels and assetrequirements based on customer needs. The investment is required to:

o meet specific identified trade opportunities;

o meet statutory requirements (e.g. environmental, occupational health andsafety);

o meet growth in trade and demand for services;

o improve the level of service provision consistent with identified needs;

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Fremantle Ports' Mission is "To facilitate trade in a sustainable way"

Fremantle Ports sees its People, Customers, Environment, Community and Success asimportant. In recognising this, the values agreed by Fremantle Ports' staff are:

o Respect and Integrity

o Safety and Wellbeing

o Responsiveness and Delivery

o Continuous Improvement andInnovation

o Sustainability

GOALS AND MAJOR PLANNED ACHIEVEMENTS

Fremantle Ports aims to facilitate trade by being competitive and responsive to itscustomers and to look forward by enhancing capability for the future. Its objectivesand major planned achievements for 2009/10 are as follows:

Objective 1: Service delivery

o Providing exceptional services that exceed customer expectations.

Adding Value to Customers

Fremantle Ports works closely with customers and joint service providers to monitorcustomer satisfaction, identify improvement opportunities and provide for futureneeds. In the Inner Harbour the main challenge for 2010/11 will be planning andproviding for the service requirements of the larger deep draft vessels post harbourdeepening, including pilotage, towage and new generation container handlingequipment. In the Outer Harbour further work will be carried out with bulk importersand exporters to identify value adding opportunities and improve operationalperformance.

Infrastructure Development

Investment in port infrastructure and facilities is important to sustain economicgrowth. Investment is formulated by analysing future trade levels and assetrequirements based on customer needs. The investment is required to:

o meet specific identified trade opportunities;

o meet statutory requirements (e.g. environmental, occupational health andsafety);

o meet growth in trade and demand for services;

o improve the level of service provision consistent with identified needs;

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o replace existing assets or upgrade assets to improve operating efficiency andproductivity; and

o provide support facilities to improve efficiency.

The major works during 20 10/11 in the Inner Harbour include the completion of thedeepening of the Inner Harbour and approach channel to handle vessels of up to 13.5metres draft. Funding has also been provided for the upgrade, strengthening,underpinning and stabilisation of various berths and facilities on North Quay to enablethe Harbour to handle the larger vessels.

Works will also focus on providing services such as roads, power and water to thenewly reclaimed land area at Rous Head and marketing the land for lease for portservices and operations to support the future growth in trade through the port.

Funds have also been provided for the replacement and upgrading of infrastructureand equipment for the Outer Harbour Bulk Business.

Infrastructure Maintenance

Fremantle Ports must ensure its assets sustain service delivery requirements and aremaintained, operated and utilised appropriately. All major assets are monitoredregularly within a rolling maintenance program, with detailed analysis of planned,project and unplanned works compared to budget. This information, along withcondition inspection reports, is used to identify existing and future maintenancerequirements with the objective of ensuring these assets are retained in, or restored to,conditions that are specific to their required service delivery.The rolling maintenance program is designed to:

Implement a perpetual maintenance program based on current financialinformation with alignment to budget;Prioritise asset maintenance based on pre-determined criteria i.e.legislative requirements, health and safety issues, customer requirementsand condition reporting;Identify funding requirements for unbudgeted works, and consideralternatives and prioritise according to the outcome; andUse data trends compiled in the maintenance program to facilitate decisionmaking with regard to future maintenance and/or analysis to maintain,upgrade, replace or dispose of assets.

For 2010/11 the total asset maintenance budget is $21M of which approximately 55%is routine (and unplanned maintenance allowances ) maintenance and 45% is allocatedto significant project works. The significant allocations of the asset budget go to theinterface structures ( seawalls, berth repairs etc ) which constitute approximately 20%of the overall budget and cargo handling equipment (at Kwinana Bulk Terminal andKwinana Bulk Jetty) which is allocated a similar percentage of the overall assetbudget allocation. The on going asset program for the interface structures is focussedon repair of storm damaged armour rock layers in the seawalls , pile wrapping underberths to protect against corrosion, concrete repair of the berth deck structures andsheet pile repair at the rear of the berths.

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o replace existing assets or upgrade assets to improve operating efficiency andproductivity; and

o provide support facilities to improve efficiency.

The major works during 2010/11 in the Inner Harbour include the completion of thedeepening of the Inner Harbour and approach channel to handle vessels of up to 13.5metres draft. Funding has also been provided for the upgrade, strengthening,underpinning and stabilisation of various berths and facilities on North Quay to enablethe Harbour to handle the larger vessels.

Works will also focus on providing services such as roads, power and water to thenewly reclaimed land area at Rous Head and marketing the land for lease for portservices and operations to support the future growth in trade through the port.

Funds have also been provided for the replacement and upgrading of infrastructureand equipment for the Outer Harbour Bulk Business.

Infrastructure Maintenance

Fremantle Ports must ensure its assets sustain service delivery requirements and aremaintained, operated and utilised appropriately. All major assets are monitoredregularly within a rolling maintenance program, with detailed analysis of planned,project and unplanned works compared to budget. This information, along withcondition inspection reports, is used to identify existing and future maintenancerequirements with the objective of ensuring these assets are retained in, or restored to,conditions that are specific to their required service delivery.The rolling maintenance program is designed to:

• Implement a perpetual maintenance program based on current financialinformation with alignment to budget;

• Prioritise asset maintenance based on pre-determined criteria i.e.legislative requirements, health and safety issues, customer requirementsand condition reporting;

• Identify funding requirements for unbudgeted works, and consideralternatives and prioritise according to the outcome; and

• Use data trends compiled in the maintenance program to facilitate decisionmaking with regard to future maintenance and/or analysis to maintain,upgrade, replace or dispose of assets.

For 2010/11 the total asset maintenance budget is $21M of which approximately 55%is routine (and unplanned maintenance allowances ) maintenance and 45% is allocatedto significant project works. The significant allocations of the asset budget go to theinterface structures ( seawalls, berth repairs etc ) which constitute approximately 20%of the overall budget and cargo handling equipment (at Kwinana Bulk Terminal andKwinana Bulk Jetty ) which is allocated a similar percentage of the overall assetbudget allocation. The on going asset program for the interface structures is focussedon repair of storm damaged armour rock layers in the seawalls , pile wrapping underberths to protect against corrosion, concrete repair of the berth deck structures andsheet pile repair at the rear of the berths.

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Maritime Security

Fremantle Ports will continue to work with industry to deliver efficient and effectivesecurity outcomes consistent with the Maritime Transport and Offshore FacilitiesSecurity Act and Regulations and the International Ship and Port Facility Security(ISPS) Code.

Fremantie Ports is an approved Issuing Body under the Maritime Transport andOffshore Facilities Security Regulations 2003 for the purpose of receiving, processingand printing the Maritime Security Identification Card (MSIC). The singleAccess/MSIC issued by Fremantle Ports is capable of being programed for use in anyWestern Australian port. A significant increase in volumes processed due to renewalrequests is expected in 2010/11.

Automatic Identification System

Since 2004 international marine safety conventions have required all ocean-goingvessels to carry Automatic Identification System (AIS) radio transponders. Thisequipment continually sends out key infoiiiiation about the ship, including its identity,course, speed and position. This information is received aboard all other ships andsuitably equipped shore-stations within VHF radio range. The system is designed toimprove the traffic information available to those in control of ships, and thoseresponsible for safe marine operations.

Fremantle Ports will continue to work with Federal Government authorities in2010/11 on the use of AIS data to enhance maritime security and safety awareness.

Traffic Management

Fremantle Ports will continue its program to monitor and respond to traffic matters inthe Inner Harbour. Fremantle Ports has extended its CCTV network to trafficcorridors to monitor traffic and respond more effectively to emerging issues.

Several additional initiatives that are being considered include:establishing communication networks with stevedores and tenants;

o review of traffic directions;increasing CCTV Coverage to additional strategically located points at RousHead and North Quay; andreviewing road signage and markings;

Objective 2: Capability for the future

o Ensuring sound planning for all aspects of our business including resources,services and infrastructure.

Port Planning Inner Harbour

Port planning for the Inner Harbour continues to take a long teiin perspective toensure the ultimate sustainable capacity of the Inner Harbour can be achieved throughadopting the triple bottom line approach to planning and development.

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Maritime Security

Fremantle Ports will continue to work with industry to deliver efficient and effectivesecurity outcomes consistent with the Maritime Transport and Offshore FacilitiesSecurity Act and Regulations and the International Ship and Port Facility Security(ISPS) Code.

Fremantle Ports is an approved Issuing Body under the Maritime Transport andOffshore Facilities Security Regulations 2003 for the purpose of receiving, processingand printing the Maritime Security Identification Card (MSIC). The singleAccess/MSIC issued by Fremantle Ports is capable of being programed for use in anyWestern Australian port. A significant increase in volumes processed due to renewalrequests is expected in 2010/11.

Automatic Identification System

Since 2004 international marine safety conventions have required all ocean-goingvessels to carry Automatic Identification System (AIS) radio transponders. Thisequipment continually sends out key infolination about the ship, including its identity,course, speed and position. This information is received aboard all other ships andsuitably equipped shore-stations within VHF radio range. The system is designed toimprove the traffic information available to those in control of ships, and thoseresponsible for safe marine operations.

Fremantle Ports will continue to work with Federal Government authorities in2010/11 on the use of AIS data to enhance maritime security and safety awareness.

Traffic Management

Fremantle Ports will continue its program to monitor and respond to traffic matters inthe Inner Harbour. Fremantle Ports has extended its CCTV network to trafficcorridors to monitor traffic and respond more effectively to emerging issues.

Several additional initiatives that are being considered include:• establishing communication networks with stevedores and tenants;

review of traffic directions;• increasing CCTV Coverage to additional strategically located points at Rous

Head and North Quay; and• reviewing road signage and markings;

Objective 2: Capability for the future

o Ensuring sound planning for all aspects of our business including resources,services and infrastructure.

Port Planning – Inner Harbour

Port planning for the Inner Harbour continues to take a long tern perspective toensure the ultimate sustainable capacity of the Inner Harbour can be achieved throughadopting the triple bottom line approach to planning and development.

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Fremantle Ports finalised the Inner Harbour Port Development Plan in 2000. ThePlan is a strategic document setting the framework for future port development overthe next 30 years. Since 2000 the plan has provided a basis for making coordinatedland-use and transport decisions.

The various elements of the plan are being progressively implemented, including theupgrading of the North Quay berths and the deepening of the harbour. Other prioritiesinclude improving the efficiency and capacity of the common user areas to provide forthe requirements of break-bulk cargo trade such as imported motor vehicle imports.

Fremantle Ports will continue to work with State and local government authorities andindustry bodies on land use planning issues. An important issue in this context is tocontinue to progress initiatives that will support the protection of freight corridors toexisting and planned port facilities.

To facilitate continued implementation of the Port Development Plan, twocomplementary studies will continue to be progressed - the Rous Head PlanningStudy and Inner Harbour Port Development Strategy, both of which have a long termview on land use strategies and transport planning.

Fremantle Ports will also work with relevant State Government Agencies to assistimplementation of initiatives arising from the Report of the Fremantle Ports OptimumPlanning Group, as endorsed by Government.

Deepening of the Inner Harbour

Deepening of the Inner Harbour is a strategic investment to maintain compatibilitywith other national container ports and to ensure global shipping lines can continue tocall at Fremantle.

The deepening project commenced in 2008/09 and is scheduled to be completed inlate 2010. The project involves strengthening existing berths, deepening the accesschannels and the Inner Harbour to accommodate 13.5 metres draft vessels andcompleting the reclamation at Rous Head.

Port Planning Outer Harbour

Further port development is needed in the Outer Harbour to handle growth incontainerised and general cargo trade beyond the capacity of the Fremantle InnerHarbour. Planning work undertaken to date has included investigation of suitablelocations for future container port facilities and the application of StrategicAssessment Guidelines for the assessment of four options in the KwinanaJNaval Basearea to determine the optimum option. Current work involves preparing the necessarydocumentation for seeking the necessary statutory approvals for the preferred portoption, an offshore facility connecting to an extension of Rowley Road.

It is intended that the statutory approvals for the Kwinana Quay development will beprogressed in 2010/11, subject to and in accordance with any relevantrecommendations adopted by Government following conclusion of the work being

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Fremantle Ports finalised the Inner Harbour Port Development Plan in 2000. ThePlan is a strategic document setting the framework for future port development overthe next 30 years. Since 2000 the plan has provided a basis for making coordinatedland-use and transport decisions.

The various elements of the plan are being progressively implemented, including theupgrading of the North Quay berths and the deepening of the harbour. Other prioritiesinclude improving the efficiency and capacity of the common user areas to provide forthe requirements of break-bulk cargo trade such as imported motor vehicle imports.

Fremantle Ports will continue to work with State and local government authorities andindustry bodies on land use planning issues. An important issue in this context is tocontinue to progress initiatives that will support the protection of freight corridors toexisting and planned port facilities.

To facilitate continued implementation of the Port Development Plan, twocomplementary studies will continue to be progressed - the Rous Head PlanningStudy and Inner Harbour Port Development Strategy, both of which have a long termview on land use strategies and transport planning.

Fremantle Ports will also work with relevant State Government Agencies to assistimplementation of initiatives arising from the Report of the Fremantle Ports OptimumPlanning Group, as endorsed by Government.

Deepening of the Inner Harbour

Deepening of the Inner Harbour is a strategic investment to maintain compatibilitywith other national container ports and to ensure global shipping lines can continue tocall at Fremantle.

The deepening project commenced in 2008/09 and is scheduled to be completed inlate 2010. The project involves strengthening existing berths, deepening the accesschannels and the Inner Harbour to accommodate 13.5 metres draft vessels andcompleting the reclamation at Rous Head.

Port Planning — Outer Harbour

Further port development is needed in the Outer Harbour to handle growth incontainerised and general cargo trade beyond the capacity of the Fremantle InnerHarbour. Planning work undertaken to date has included investigation of suitablelocations for future container port facilities and the application of StrategicAssessment Guidelines for the assessment of four options in the Kwinana/Naval Basearea to determine the optimum option. Current work involves preparing the necessarydocumentation for seeking the necessary statutory approvals for the preferred portoption, an offshore facility connecting to an extension of Rowley Road.

It is intended that the statutory approvals for the Kwinana Quay development will beprogressed in 2010/11, subject to and in accordance with any relevantrecommendations adopted by Government following conclusion of the work being

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undertaken by the Fremantle Ports Optimum Planning Group on behalf of theMinister for Transport.

It is also proposed to review long teiiii port development plans for the Outer Harbourto confn in the capacity of existing and proposed developments to cater for futuretrade growth.

Other significant port planning issues for the Outer Harbour are:

o deteimination of future land requirements for port and transport related uses inthe Kwinana area and the Hope Valley! Wattleup redevelopment area;

o Planning by the Department of Planning for an Intermodal terminal in theKwinana region;

o the further development of facilities and infrastructure at the Kwinana BulkTeiiiiinal and Kwinana Bulk Jetty to cater for customer needs; and

o ensuring that long term key road and rail freight access requirements areprovided for in planning schemes;

Objective 3: Trade and Business Growth

Promoting and facilitating trade and business growth opportunities

Trade Forecasts

Trade volumes at Fremantie port have declined recently as a result of the globaleconomic downturn, with lower trade levels being recorded in the container trade,steel imports, motor vehicle imports, scrap metal exports and other break bulk trades.1-lowever, there are signs that the downturn will bottom out in 2009/10 and a modestrecovery in trade volumes is predicted for 2010/Il. The budget for 2010/11 reflects asmall growth in trade volumes.

Whilst the global economic downturn had a marked impact on the Inner Harbourcontainer trade, current trade volumes are still almost five times the level in 1990/91.This represents an average annual growth rate of 9.5% over this period.

Total port trade reached 26.6 millions tonnes in 2008/09, but lower volumes areforecast for 2009/10, due mainly to negative growth for the container trade and in thebulk and break-bulk trades. In 2010/11, growth of 2.2% is forecast which includesgrowth in the container trade and bulk trade, but with continued negative growth inthe break-bulk trades.

Options for expansion of the capacity of the Kwinana Bulk Terminal are beingdeveloped in response to approaches from several customers undertaking feasibilitystudies for resource related projects. Trade volumes through this facility could trebleby 2011/12 if these projects are successful.

Road and Rail Transport

Land transport linkages in the Inner Harbour are very important from an economicand community impact point of view. Previous reliance on road transport for haulage

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undertaken by the Fremantle Ports Optimum Planning Group on behalf of theMinister for Transport.

It is also proposed to review long term port development plans for the Outer Harbourto confir m the capacity of existing and proposed developments to cater for futuretrade growth.

Other significant port planning issues for the Outer Harbour are:

o determination of future land requirements for port and transport related uses inthe Kwinana area and the Hope Valley/ Wattleup redevelopment area;

o Planning by the Department of Planning for an Intermodal terminal in theKwinana region;

o the further development of facilities and infrastructure at the Kwinana BulkTerminal and Kwinana Bulk Jetty to cater for customer needs; and

o ensuring that long term key road and rail freight access requirements areprovided for in planning schemes;

Objective 3: Trade and Business Growth

® Promoting and facilitating trade and business growth opportunities

Trade Forecasts

Trade volumes at Fremantle port have declined recently as a result of the globaleconomic downturn, with lower trade levels being recorded in the container trade,steel imports, motor vehicle imports, scrap metal exports and other break bulk trades.However, there are signs that the downturn will bottom out in 2009/10 and a modestrecovery in trade volumes is predicted for 2010/11. The budget for 2010/11 reflects asmall growth in trade volumes.

Whilst the global economic downturn had a marked impact on the Inner Harbourcontainer trade, current trade volumes are still almost five times the level in 1990/91.This represents an average annual growth rate of 9.5% over this period.

Total port trade reached 26.6 millions tonnes in 2008/09, but lower volumes areforecast for 2009/10, due mainly to negative growth for the container trade and in thebulk and break-bulk trades. In 2010/11, growth of 2.2% is forecast which includesgrowth in the container trade and bulk trade, but with continued negative growth inthe break-bulk trades.

Options for expansion of the capacity of the Kwinana Bulk Terminal are beingdeveloped in response to approaches from several customers undertaking feasibilitystudies for resource related projects. Trade volumes through this facility could trebleby 2011/12 if these projects are successful.

Road and Rail Transport

Land transport linkages in the Inner Harbour are very important from an economicand community impact point of view. Previous reliance on road transport for haulage

8

of virtually all container freight to and from the Inner Harbour resulted in increasingcongestion problems at and around the wharves, leading in turn to reduced transportefficiency.

With the construction of the Rail Loop to North Quay in 2006 and Governmentfunding to encourage the use of rail, the volumes transported by rail have grownsubstantially since earlier in the decade. However, the economic downturn has hit railhard and initiatives to rebuild rail's market share and move towards the target of a30% share will continue to be a priority for the Port in 2010/11. Initiatives will focuson development of inland inteiinodal terminal facilities, upgrading the capacity of therail line servicing the Port and improving interface arrangements between rail and keyfacilities at the Port.

Even with growth in rail, road transport will continue to be the dominant mode oftransport to and from the Port, due to the geographical nature and servicingrequirements of the market. Improving efficiency in road transport will thereforeremain a key priority with a focus on reducing the extent of empty truck trips andreducing the need for truck trips to the port to pick up and drop off empty containers.

Work has also been undertaken on identifying and evaluating alternative sites for anew inteiinodal terminal development in the Kwinana area. This facility willultimately be necessary to provide for growing interstate trade but will also serve theproposed new Kwinana Quay port development.

The increasing volume, complexity and speed of transactions in the container supplychain is also placing focus on the need for greater use of Infoiination CommunicationsTechnology. Fremantle Ports will be participating with other ports and parties in thesupply chain to promote development of nationally based "Port Community Systems"which are designed to provide integrated infoiiiiation and messaging capability acrossthe chain. While well established in a number of large ports overseas, these systemsare yet to be developed in Australia.

Fremantle Waterfront Master Plan

Fremantle Ports is progressing key elements of the Fremantle Waterfront Masterplanat the western end of Victoria Quay.

Development approval for the new Commercial Precinct has been obtained and it isexpected that the first stage of the development will be progressed in 2010/11.

Works on a new common-use ferry teiiiiinal in the eastern portion of B Shedcommenced in late 2009 and will be completed in 2010/11. Planning for thedevelopment of the remainder of the Fremantle Waterfront area is also beingprogressed with community and stakeholder input.

(4) Support services

Our Objective

o Ensuring appropriate and cost effective resources, processes and systems tosupport service delivery

9

of virtually all container freight to and from the Inner Harbour resulted in increasingcongestion problems at and around the wharves, leading in turn to reduced transportefficiency.

With the construction of the Rail Loop to North Quay in 2006 and Governmentfunding to encourage the use of rail, the volumes transported by rail have grownsubstantially since earlier in the decade. However, the economic downturn has hit railhard and initiatives to rebuild rail's market share and move towards the target of a30% share will continue to be a priority for the Port in 2010/11. Initiatives will focuson development of inland intennodal terminal facilities, upgrading the capacity of therail line servicing the Port and improving interface arrangements between rail and keyfacilities at the Port.

Even with growth in rail, road transport will continue to be the dominant mode oftransport to and from the Port, due to the geographical nature and servicingrequirements of the market. Improving efficiency in road transport will thereforeremain a key priority with a focus on reducing the extent of empty truck trips andreducing the need for truck trips to the port to pick up and drop off empty containers.

Work has also been undertaken on identifying and evaluating alternative sites for anew intennodal terminal development in the Kwinana area. This facility willultimately be necessary to provide for growing interstate trade but will also serve theproposed new Kwinana Quay port development.

The increasing volume, complexity and speed of transactions in the container supplychain is also placing focus on the need for greater use of Infonnation CommunicationsTechnology. Fremantle Ports will be participating with other ports and parties in thesupply chain to promote development of nationally based "Port Community Systems"which are designed to provide integrated infoiniation and messaging capability acrossthe chain. While well established in a number of large ports overseas, these systemsare yet to be developed in Australia.

Fremantle Waterfront Master Plan

Fremantle Ports is progressing key elements of the Fremantle Waterfront Masterplanat the western end of Victoria Quay.

Development approval for the new Commercial Precinct has been obtained and it isexpected that the first stage of the development will be progressed in 2010/11.

Works on a new common-use ferry tenninal in the eastern portion of B Shedcommenced in late 2009 and will be completed in 2010/11. Planning for thedevelopment of the remainder of the Fremantle Waterfront area is also beingprogressed with community and stakeholder input.

(4) Support services

Our Objective

o Ensuring appropriate and cost effective resources, processes and systems tosupport service delivery

9

Information Technology

Fremantle Ports has a technology infrastructure that supports the integration ofbusiness processes to achieve its strategic goals. Corporate infoiivation systemsprimarily provide infoiination required to support administrative, operational andbusiness processes. Key projects planned for 2010/11 include the following:

upgrading and enhancing the internet and intranet sites;updating the suite of Microsoft platform software used for server and desktopoperating systems;continued upgrading of personal computers and server hardware;further development of security systems to control access to the port and processapplications for Marine Security Identity Cards;further enhancement of the Voyager dangerous cargo system;review of business improvement systems;improving the corporate budgeting system;Further development of systems supporting the Bulk Business;Strategic migration and consolidation of key databases onto the Microsoft SQLserver 2008 database platform;

o establishment of a mobile computing strategy and remote access to FremantlePort's business systems; and

o active engagement in an industry community portal and shared services initiativesaimed at providing a national Infomation Technology and Communications (ITC)framework to streamline the country's export/import supply chain operations.

Employee Development

Fremantle Ports will continue to be a high perfoiiiiance learning organisation with acoordinated approach to people development. Strategies and arrangements will becontinued to ensure that all employees have the appropriate skills and understandingand are empowered to contribute to achievement of organisational goals.

A comprehensive People Plan will continue to be reviewed and implemented in2010/11 to ensure workforce sustainability and address future requirements. Keyelements of the Plan include a strong organisational focus on:

a constructive high perfoiiiiance team culture;the People Performance System;development of leaders to ensure alignment with values;

o behaviours and goals to drive high perfoiiiiance culture; ando ongoing strategies to promote a healthy work / life balance.

Objective 5 Business Excellence and Sustainabthty

o Ensuring business sustainability through our excellent performance in allareas, innovation, business improvement and community and stake holderengagement.

10

Information Technology

Fremantle Ports has a technology infrastructure that supports the integration ofbusiness processes to achieve its strategic goals. Corporate inforniation systemsprimarily provide information required to support administrative, operational andbusiness processes. Key projects planned for 2010/11 include the following:

• upgrading and enhancing the internet and intranet sites;• updating the suite of Microsoft platform software used for server and desktop

operating systems;• continued upgrading of personal computers and server hardware;• further development of security systems to control access to the port and process

applications for Marine Security Identity Cards;• further enhancement of the Voyager dangerous cargo system;• review of business improvement systems;• improving the corporate budgeting system;• Further development of systems supporting the Bulk Business;• Strategic migration and consolidation of key databases onto the Microsoft SQL

server 2008 database platform;• establishment of a mobile computing strategy and remote access to Fremantle

Port's business systems; and• active engagement in an industry community portal and shared services initiatives

aimed at providing a national Information Technology and Communications (ITC)framework to streamline the country's export/import supply chain operations.

Employee Development

Fremantle Ports will continue to be a high performance learning organisation with acoordinated approach to people development. Strategies and arrangements will becontinued to ensure that all employees have the appropriate skills and understandingand are empowered to contribute to achievement of organisational goals.

A comprehensive People Plan will continue to be reviewed and implemented in2010/11 to ensure workforce sustainability and address future requirements. Keyelements of the Plan include a strong organisational focus on:

• a constructive high performance team culture;• the People Performance System;• development of leaders to ensure alignment with values;• behaviours and goals to drive high performance culture; and• ongoing strategies to promote a healthy work / life balance.

Objective 5: Business Excellence and Sustainability

o Ensuring business sustainability through our excellent performance in allareas, innovation, business improvement and community and stakeholderengagement.

1 0

Port Pricing

In accordance with the requirements of the Port Authorities' Financial Policy,Fremantle Ports is required to achieve a long term rate of return of between 5% and8%. However, in view of the current global economic crisis and despite theexpenditure adjustments made and the price increases that have been necessary a rateof return in this range will not be achievable in 2010/11 and a rate of return of 3.3% isexpected.

An average price increase of 2.5% on the rates and charges for ships and cargo hasbeen budgeted for 2010/11. The need to increase prices is a result of lower tradeprojections, growing business costs, including substantially increased maintenancecosts, and a significant increase in the replacement value of assets.

Fremantle Ports focuses on ensuring that prices remain competitive with those ofother Australian capital city ports. Pricing strategies will continue to be reviewed andnew targets set each year in the context of changing competitive conditions, tradelevels, projected operating results and the need to fund significant infrastructureprojects.

Sustainabili4'

Frernantle Ports' approach to strategic planning is driven by sustainability. Businessprinciples have been developed to ensure that decision making is based on the needsof customers and stakeholders and the need to protect people and the environment.

Fremantle Ports' Environmental, Safety and Quality Management Systems have beencertified to meet the rigorous standards of ISO 14001, ASiZS 4801 and ISO 9001.Regular surveillance audits have and will continue to be conducted by an independentcertifying body to ensure accreditation remains in place and systems and processes aremaintained and remain effective.

Fremantle Ports has also strived to develop a culture in which risk management isinherent in all port activities. It has successfully applied founal risk management tooperations involving the import and export of hazardous cargoes and there is nowample evidence of its application to new projects and activities. This process hasbeen expanded to cover environmental, safety and other business risks, throughapplying a risk management policy and framework in accordance with AustralianStandard AS4360.

in accordance with the requirements of the Port Authorities Act 1999, the MarineSafety and Environment Plan was reviewed and resubmitted for approval in 2008.

In keeping with its commitment to sustainability, Fremantle Ports will continue toimplement an extensive program of community consultation. The Inner and OuterHarbour Community Liaison Groups established by Fremantle Ports continue to meetquarterly. Fremantle Ports will continue to consult with local authorities in the portarea on a regular basis, with industry bodies and with relevant State and FederalGovernment agencies. The community sponsorship program will also be continued.

111

Port Pricing

In accordance with the requirements of the Port Authorities' Financial Policy,Fremantle Ports is required to achieve a long term rate of return of between 5% and8%. However, in view of the current global economic crisis and despite theexpenditure adjustments made and the price increases that have been necessary a rateof return in this range will not be achievable in 2010/11 and a rate of return of 3.3% isexpected.

An average price increase of 2.5% on the rates and charges for ships and cargo hasbeen budgeted for 2010/11. The need to increase prices is a result of lower tradeprojections, growing business costs, including substantially increased maintenancecosts, and a significant increase in the replacement value of assets.

Fremantle Ports focuses on ensuring that prices remain competitive with those ofother Australian capital city ports. Pricing strategies will continue to be reviewed andnew targets set each year in the context of changing competitive conditions, tradelevels, projected operating results and the need to fund significant infrastructureprojects.

Sustainability

Fremantle Ports' approach to strategic planning is driven by sustainability. Businessprinciples have been developed to ensure that decision making is based on the needsof customers and stakeholders and the need to protect people and the environment.

Fremantle Ports' Environmental, Safety and Quality Management Systems have beencertified to meet the rigorous standards of ISO 14001, AS/NZS 4801 and ISO 9001.Regular surveillance audits have and will continue to be conducted by an independentcertifying body to ensure accreditation remains in place and systems and processes aremaintained and remain effective.

Fremantle Ports has also strived to develop a culture in which risk management isinherent in all port activities. It has successfully applied faunal risk management tooperations involving the import and export of hazardous cargoes and there is nowample evidence of its application to new projects and activities. This process hasbeen expanded to cover environmental, safety and other business risks, throughapplying a risk management policy and framework in accordance with AustralianStandard A S4360.

In accordance with the requirements of the Port Authorities Act 1999, the MarineSafety and Environment Plan was reviewed and resubmitted for approval in 2008.

In keeping with its commitment to sustainability, Fremantle Ports will continue toimplement an extensive program of community consultation. The Inner and OuterHarbour Community Liaison Groups established by Fremantle Ports continue to meetquarterly. Fremantle Ports will continue to consult with local authorities in the portarea on a regular basis, with industry bodies and with relevant State and FederalGovernment agencies. The community sponsorship program will also be continued.

11

Business Excellence Australia

Fremantle Ports has adopted the Business Excellence Australia Framework as itsoverarching strategy for innovation and continuous improvement. Fremantle Portswas recognised at the Gold level in the Australian Business Excellence Awardsprocess in June 2007.

Fremantle Ports will continue to apply the Framework as part of its normal businesspractices. Current and planned priorities include identification, review, benchmarkingand improvement of critical processes; business improvement through simplification;value chain analysis with strategic customers; stakeholder analysis and developmentand implementation of management plans for key stakeholders; and whole-of-processauditing.

12

Business Excellence Australia

Fremantle Ports has adopted the Business Excellence Australia Framework as itsoverarching strategy for innovation and continuous improvement. Fremantle Portswas recognised at the Gold level in the Australian Business Excellence Awardsprocess in June 2007.

Fremantle Ports will continue to apply the Framework as part of its normal businesspractices. Current and planned priorities include identification, review, benchmarkingand improvement of critical processes; business improvement through simplification;value chain analysis with strategic customers; stakeholder analysis and developmentand implementation of management plans for key stakeholders; and whole-of-processauditing.

12

OPERATING BUDGET FORECASTS

Fremantle Ports' Operating Budget for 2010/11 is prepared in accordance withAustralian Accounting Standards and shows an after tax profit of $6.5 million.

Operating Budgets 201 0/11 and 2009/10

Shipping and cargo volumes, on which 2010/il revenue estimates are determined, arebased on consultation with major customers.

CAPITAL WORKS PROGRAM

Fremantle Ports capital works program for 2010/11 provides for expenditure of$88.69 million on approved capital projects. Major expenditure includes:

North Quay -Berth Upgrades (Western Stage)Seawall Construction (Rous Head Extension 2' Stage)Inner Harbour DeepeningKwinana Bulk Terminal Infrastructure & Equipment Replacement &Upgrade

It is planned to finance the capital works program through a combination ofborrowings and internal funds, and for a small proportion to be financed throughequity injection or third party contributions. These funding arrangements complywith approved Net Debt limits.

DIVIDEND POLICY

in accordance with the Port Authorities' Financial Policy, Fremantle Ports is obligedto pay dividends to the State on profits derived after tax and significant items.

Dividends have been budgeted in accordance with Australian Accounting Standardsand Government's dividend requirements.

13

2010/11SM

2009/10SM

Total Revenue 130.6 122.1

Total Expenditure 120.9 106.6

Operating Profit before Income Tax 9.7 15.5

Income Tax Expense 3.2 5.0

Operating Profit after Tax 6.5 10.5

Ordinary Dividend 5.3 6.9

OPERATING BUDGET FORECASTS

Fremantle Ports' Operating Budget for 2010/11 is prepared in accordance withAustralian. Accounting Standards and shows an after tax profit of $6.5 million.

Operating Budgets 2010/11 and 2009/10

2010/11SM

2009/10SM

Total Revenue 130.6 122.1

Total Expenditure 120.9 106.6

Operating Profit before Income Tax 9.7 15.5

Income Tax Expense 3.2 5.0

Operating Profit after Tax 6.5 10.5

Ordinary Dividend 5.3 6.9

Shipping and cargo volumes, on which 2010/11 revenue estimates are determined, arebased on consultation with major customers.

CAPITAL WORKS PROGRAM

Fremantle Ports" capital works program for 2010/11 provides for expenditure of$88.69 million on approved capital projects. Major expenditure includes:

• North Quay -Berth Upgrades (Western Stage)• Seawall Construction (Rous Head Extension 2 nd Stage)• Inner Harbour Deepening• Kwinana Bulk Terminal - Infrastructure & Equipment Replacement &

Upgrade

It is planned to finance the capital works program through a combination ofborrowings and internal funds, and for a small proportion to be financed throughequity injection or third party contributions. These funding arrangements complywith approved Net Debt limits.

DIVIDEND POLICY

In accordance with the Port Authorities' Financial Policy, Fremantle Ports is obligedto pay dividends to the State on profits derived after tax and significant items.

Dividends have been budgeted in accordance with Australian Accounting Standardsand Government's dividend requirements.

13

RATE OF RETURN

Government's Financial Policy includes requirements relating to Rate of Returntargeting and reporting. Under the policy, WA Ports are required to calculate a rate ofreturn based on the deprival value of non-current assets (excluding gifted assets), witha formal valuation to be carried out every three years. The policy requires WA ports toachieve a long-term average target range of between 5% and 8% on total assets. Inview of the current global economic downturn with trade growth less than anticipated,a targeted rate of return of 3.3% has been adopted in the budget for 2010/11.

FINANCIAL AND ACCOUNTING POLICIES

These budgets and financial statements have been prepared as a general purposefinancial report in accordance with Australian Accounting Standards (AASB5)(including Australian Interpretations) adopted by the Australian Accounting StandardsBoard (AASB) and the financial reporting provisions of the Port Authorities Act1999.

The financial statements have been prepared on an accrual accounting basis and inaccordance with the historical cost convention.

INFORMATION TO BE REPORTED TO THE MINISTER

Fremantle Ports is obliged to provide financial information to the Department ofTreasury and Finance under the Government Financial Responsibility Act 2000.

Fremantle Ports will provide the Minister Transport with the information necessary toallow adequate assessment of Fremantle Ports' perfoiiiiance during the year. Thiswill include an Annual Report, half-yearly budget forecasts and a half-yearly reportincluding financial infoiination and comments on perfoiinance as consideredrelevant.

The Annual Report for 2010/11 will comply with the requirements of the PortAuthorities Act 1999 and will include the following infoiiiiation:

o a report on the major operations and activities of Fremantle Ports during theyear;

o a review and assessment of performance against the Statement of CorporateIntent targets;

o financial statements; ando other infoiixiation required by the legislation to be included in the Annual

Report such as the particulars of any direction given by the Minister.

PROVISION OF FINANCIAL INFORMATION

Relevant annual infoimation will be provided to enable Treasury to meet itsbudgetary responsibilities. Such infoniiation will include forecasts of dividend andtax equivalent payments plus financial information for the budget year and thesubsequent four out-years.Quarterly financial information required for whole of government reporting under theTreasury Information Management System will also be provided.

14

RATE OF RETURN

Government's Financial Policy includes requirements relating to Rate of Returntargeting and reporting. Under the policy, WA Ports are required to calculate a rate ofreturn based on the deprival value of non-current assets (excluding gifted assets), witha formal valuation to be carried out every three years. The policy requires WA ports toachieve a long-term average target range of between 5% and 8% on total assets. Inview of the current global economic downturn with trade growth less than anticipated,a targeted rate of return of 3.3% has been adopted in the budget for 2010/11.

FINANCIAL AND ACCOUNTING POLICIES

These budgets and financial statements have been prepared as a general purposefinancial report in accordance with Australian Accounting Standards (AASBs)(including Australian Interpretations) adopted by the Australian Accounting StandardsBoard (AASB) and the financial reporting provisions of the Port Authorities Act1999.

The financial statements have been prepared on an accrual accounting basis and inaccordance with the historical cost convention.

INFORMATION TO BE REPORTED TO THE MINISTER

Fremantle Ports is obliged to provide financial information to the Department ofTreasury and Finance under the Government Financial Responsibility Act 2000.

Fremantle Ports will provide the Minister Transport with the information necessary toallow adequate assessment of Fremantle Ports' performance during the year. Thiswill include an Annual Report, half-yearly budget forecasts and a half-yearly reportincluding financial information and comments on performance as consideredrelevant.

The Annual Report for 2010/11 will comply with the requirements of the PortAuthorities Act 1999 and will include the following information:

o a report on the major operations and activities of Fremantle Ports during theyear;

o a review and assessment of performance against the Statement of CorporateIntent targets;

o financial statements; ando other information required by the legislation to be included in the Annual

Report such as the particulars of any direction given by the Minister.

PROVISION OF FINANCIAL INFORMATION

Relevant annual information will be provided to enable Treasury to meet itsbudgetary responsibilities. Such information will include forecasts of dividend andtax equivalent payments plus financial information for the budget year and thesubsequent four out-years.Quarterly financial information required for whole of government reporting under theTreasury Information Management System will also be provided.

14

KEY PERFORMANCE TARGETS

The perfoiiiiarice targets shown in Table 1 are used by Fremantle Ports to monitorservice delivery, to identify and respond to emerging trends in trade development,measure our capability for the future, monitor the financial performance of ouroperations and ensure business excellence and sustainability.

Fremantle Ports will continue to carry out customer surveys to monitor levels ofcustomer satisfaction for services provided by Fremantle Ports and the private sector.Recent surveys have shown a customer satisfaction rate of 89% for Frernantle Portsand 84% for the private sector. Customer satisfaction levels are targeted to remainwithin or exceed the target range of 80-90%.

Community satisfaction surveys will also continue to be carried out in the Inner andOuter Flarbours. Surveys carried out in 2009 showed that 78% of respondents in theInner Harbour and 71% in the Outer Harbour indicated that they were either verysatisfied or quite satisfied with Fremantle Ports' overall performance. The targetsatisfaction range for the future is 70% to 80%.

In relation to safety, Fremantle Ports has set a target of a 20% reduction in its LostTime Injury Frequency Rates over coming years. Continued ISO 14001 accreditationshould ensure that Fremantle Ports continues to maintain a high standard ofenvironmental perfoi mance.

Frernantle Ports has budgeted a rate of return of 3.3% on deprival value of assets for2010/] 1, with provisions for payments to the State Government in the form ofdividends, income tax equivalent payments, land tax and local government rateequivaier1t payments.

15

KEY PERFORMANCE TARGETS

The perfoiniance targets shown in Table 1 are used by Fremantle Ports to monitorservice delivery, to identify and respond to emerging trends in trade development,measure our capability for the future, monitor the financial performance of ouroperations and ensure business excellence and sustainability.

Fremantle Ports will continue to carry out customer surveys to monitor levels ofcustomer satisfaction for services provided by Fremantle Ports and the private sector.Recent surveys have shown a customer satisfaction rate of 89% for Fremantle Portsand 84% for the private sector. Customer satisfaction levels are targeted to remainwithin or exceed the target range of 80-90%.

Community satisfaction surveys will also continue to be carried out in the Inner andOuter Harbours. Surveys carried out in 2009 showed that 78% of respondents in theInner Harbour and 71% in the Outer Harbour indicated that they were either verysatisfied or quite satisfied with Fremantle Ports' overall performance. The targetsatisfaction range for the future is 70% to 80%.

In relation to safety, Fremantle Ports has set a target of a 20% reduction in its LostTime Injury Frequency Rates over coming years. Continued ISO 14001 accreditationshould ensure that Fremantle Ports continues to maintain a high standard ofenvironmental performance.

Fremantle Ports has budgeted a rate of return of 3.3% on deprival value of assets for2010/11, with provisions for payments to the State Government in the form ofdividends, income tax equivalent payments, land tax and local government rateequivalent payments.

15

Table 1. PERFORMANCE TARGETS

16

Customer Satisfaction with Fremantle Ports' services ('%,) 80-90 80-90 89

Customer Satisfaction with other Port services (%)

o CAPABILITY FOR THE FUTURE

80-90 80-90 84

Berthing DelaysInner Harbour - Container vessels

Unavailability of berthspercentage of total vessels affected3 <12 <12 12

average hours per delay <20 <20 18Kwinana Bulk Terminal

Unavailability of berthspercentage of total vessels affected3 <25 <25 37average hours per delay3 <80 <80 66

Kwinana Bulk JettyUnavailability of berths

percentage of total vessels affected3 <25 <25 28average hours per delay

i TRADE AND BUSINESS GROWTH

<50 <50 48

Total Port Trade - Annual growth rate (%)7 2.2 0.3 1.8

Container Trade - Annual growth rate (%)7 2.0 -4.5 -2.6

Market share (%) 10 10 10

Number of Ship Visits ''

o BUSINESS EXCELLENCE AND

1,855 1,765 1,830

SUSTAINABILITYProfit after tax ($M) 6.5 10.5 13.7

o SERVICE DELIVERY

Berthing DelaysInner Harbour Container vessels

Unavailability of services 2

percentage of total vessels affected <1 < 1 0average hours per delay <5 <5 0

Kwinana Bulk TerminalUnavailability of services

percentage of total vessels affected <1 <1 0average hours per delay <5 <5 0

Kwinana Bulk JettyUnavailability of services

percentage of total vessels affected <2 <2 0average hours per delay <5 <5 0

Crane Rates containers per net crane hour 28 28 27

Performance Targets /Forecasts 2010/11 2009/10 2008/09Budget / Budget / Actualtarget 1 tar et

Tablel. PERFORMANCE TARGETS

Performance Targets /Forecasts 2010/11 2009/10 2008/09Budget / Budget / Actualtarget t target

q SERVICE DELIVERY

Berthing DelaysInner Harbour - Container vessels

Unavailability of services 2

percentage of total vessels affectedaverage hours per delay

Kwinana Bulk TerminalUnavailability of services

percentage of total vessels affectedaverage hours per delay

Kwinana Bulk JettyUnavailability of services

percentage of total vessels affected <2average hours per delay <5

Crane Rates - containers per net crane hour 28

< 1 0<5 0

<1 0<5 0

<2 0<5 028 27

Customer Satisfaction with Fremantle Ports' services N 80-90 80-90 89

Customer Satisfaction with other Port services (%) 80-90 80-90 84

q CAPABILITY FOR THE FUTURE

Berthing DelaysInner Harbour - Container vessels

Unavailability of berthspercentage of total vessels affected 3 <12 <12 12average hours per delay 3 <20 <20 18

Kwinana Bulk TerminalUnavailability of berths

percentage of total vessels affected 3 <25 37average hours per delay 3 <80 <80 66

Kwinana Bulk JettyUnavailability of berths

percentage of total vessels affected 3 <25 <25 28average hours per delay 3 <50 <50 48

q TRADE AND BUSINESS GROWTH

Total Port Trade - Annual growth rate NI 2.2 0.3 1.8

Container Trade - Annual growth rate (%) 7 2.0 -4.5 -2.6Market share 4 (%) 10 10 10

Number of Ship Visits 5' 7 1,855 1,765 1,830

q BUSINESS EXCELLENCE ANDSUSTAINABILITY

Profit after tax ($M) 5 6.5 10.5 13.7

16

Expected outcome based on year to date figures and forecasts provided by major customers.Services include pilotage, towage and mooring.Figures include vessels that arrive ahead of scheduleNumber of containers through Fremantle as a percentage of Australian capital city ports (excludingHobart).Includes commercial, non-trading and fishing vessels.Figures represent the rate of return on assets using deprival valuation methodology.

17

Rate of return on assets 6,7 (%) 3.3 3.5 5.3

Community Satisfaction - Inner Harbour (%) 70-80 70-80 78

- Outer Harbour (%) 70-80 70-80 71

Performance Targets /Forecasts 2010/11 2009/10 2008/09Budget! Budget / Actualtarget' target

Performance Targets /Forecasts 2010/11 2009/10 2008/09Budget / Budget / Actualtarget 1 target

Rate of return on assets 67 (%) 3.3 3.5 5.3

Community Satisfaction - Inner Harbour (%) 70-80 70-80 78

- Outer Harbour (%) 70-80 70-80 71

. Expected outcome based on year to date figures and forecasts provided by major customers.2. Services include pilotage, towage and mooring.3. Figures include vessels that arrive ahead of schedule.4. Number of containers through Fremantle as a percentage of Australian capital city ports (excluding

Hobart).5. Includes commercial, non-trading and fishing vessels.6. Figures represent the rate of return on assets using deprival valuation methodology.

17