NQBP STATEMENT OF CORPORATE INTENT 2010-2011

E11/30804

NQBP STATEMENT OF CORPORATE INTENT

2010-2011

May 2010

Prepared by the Directors and Management of North Queensland Bulk Ports Corporation Limited ACN 136 880 218 for the shareholding Ministers • The Treasurer and Minister for Employment and Economic Development; and • The Minister for Transport

Table of Contents Scope/Policy Position ................................................................................................................... 1

1.1 Core Business................................................................................................................... 1 1.2 Corporate Objectives ........................................................................................................ 2 1.3 Corporate Strategies......................................................................................................... 2 1.4 Corporate Performance Outcomes .................................................................................. 3 1.5 Operational Objectives ..................................................................................................... 7 1.6 Performance Drivers ......................................................................................................... 8

2 Mandatory Matters........................................................................................................................10

2.1 Financial Targets .............................................................................................................10 2.2 Non-Financial Performance Targets ...............................................................................11 2.3 Assumptions ....................................................................................................................12 2.4 Community Service Obligations (CSOs) .........................................................................12 2.5 Employment and Industrial Relations (E&IR) Plan .........................................................12

3 Additional Matters ........................................................................................................................13

3.1 Financials .........................................................................................................................13 3.1.1 Group ...................................................................................................................13 3.1.2 Financials: Selected Subsidiaries or Major Business Divisions .......................18

3.2 Main Undertakings and Businesses ...............................................................................18 3.3 Capital Expenditure Program ..........................................................................................19

3.3.1 Repairs, Maintenance and Renewals..................................................................19 3.3.2 Business Development (Material expenses on projects being considered).....19 3.3.3 Assets Under Construction ................................................................................20 3.3.4 Approved Capital Expenditure Not Yet Undertaken ..........................................20 3.3.5 Proposed Capital Expenditure expected to be approved in 2010/11 ................21

3.4 Major Initiatives Being Undertaken by NQBP .................................................................21 3.5 Sponsorship, Advertising, Corporate Entertainment, Donations and Other

Arrangements ..................................................................................................................22 3.6 Other .................................................................................................................................23

3.6.1 Prudential Financial Information ........................................................................23 3.6.2 Capital Structure .................................................................................................23 3.6.3 Weighted Average Cost of Capital (WACC)........................................................24 3.6.4 Dividend Policy and Payment .............................................................................24 3.6.5 Corporate Governance Guidelines for Government Owned Corporations .......24 3.6.6 Risk Management ................................................................................................24 3.6.7 Compliance with Government Policies ..............................................................25

4 Performance Agreement ..............................................................................................................26

5 ATTACHMENTS ............................................................................................................................27

List of Financial and Non-Financial Target Definitions ..............................................................27

Employment and Industrial Relations Plan .................................................................................30

Sponsorship, Advertising, Corporate Entertainment, Donations and Other Arrangements.....31

WACC Calculations ............................................................................. Error! Bookmark not defined.

Compliance with Government Policies .......................................................................................35

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1 Scope/Policy Position Resulting from the Queensland Government’s restructuring of the Queensland Port Network, the North Queensland Bulk Ports Corporation Limited (NQBP) ACN 136 880 218 (a company Government Owned Corporation) was created. Post 1 July 2009 NQBP became the port authority for the Ports of Abbot Point, Hay Point, Mackay, Maryborough and Weipa. As Ports Corporation Queensland (PCQ) and Mackay Ports Limited (MPL) are now wholly owned subsidiaries of NQBP, this Statement of Corporate Intent (SCI) presents a consolidated position for the group (NQBP, PCQ and MPL) and references to NQBP are to be read as references to the group. In June 2009, the Queensland Government announced that the Abbot Point X50 Coal terminal will be leased through a competitive bidding process, for a 99 year term, with the Government retaining ownership of all existing land and port infrastructure. NQBP is working closely with the Queensland Government with respect to the proposed lease of the Abbot Point X50 Coal Terminal. Post 1 July 2009 Ports Corporation of Queensland Limited (PCQ) ACN 126 302 994 continues as a company but not a Government Owned Corporation (GOC), holding the assets relating to the Ports of Abbot Point, Hay Point, Maryborough and Weipa. Post 1 July 2009 Mackay Ports Limited (MPL) ACN 131 965 707 continues as a company but not a GOC, holding the assets relating to the Port of Mackay. From 2 July 2009 NQBP assumed the ownership of PCQ and MPL. Significant progress has been made during our first year of operation in integrating the operations of PCQ and MPL and forming a corporate identity and culture for NQBP. These activities will continue during the life of this plan. Although we have some assets and liabilities held at the NQBP level and the senior executives are now all direct NQBP employees, we are positioning ourselves to roll up all PCQ and MPL assets and liabilities to NQBP level as of 1 July 2010 or soon thereafter. An enterprise agreement for the NQBP group is a key element of the integration strategy and is targeted to operate from 1 July 2010. Our plans will have all staff employed at the NQBP corporate level around the time the agreement negotiations are finalised. NQBP’s SCI outlines strategies that will be implemented in 2010/11 forming part of the longer-term Corporate Plan five-year strategic direction to achieving the corporate vision over the period 2010/11 to 2014/15. The 2010/2011 forecast for NQBP is a loss position as a result of the major capital expansion at Abbot Point coming to completion (incurring significant financing costs and commencement of new asset depreciation). The revenue streams from the expansion are forecast to ramp up over time (subject to the proposed long term lease of the coal terminal). 1.1 Core Business NQBP’s core business, including its port authority functions and powers, is: • Port Operational Management

- Develop our organisation and its people - Operation of ports on a commercial basis - Commercial development of property assets - Port security - Port workplace health and safety

• Trade Facilitation, Port Promotion and Marketing - Developing the vision for each port - Expanding existing trades - Seeking diversified trades in existing ports - Developing greenfield opportunities - Understanding our customers and their needs - Building and promoting NQBP’s good corporate image - Provide appropriate community benefits to contribute to the long term sustainability of the ports - Corporate citizenship (creating and maintaining a value adding legacy)

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• Strategic Port Planning

- Land use planning - Port master planning and infrastructure planning - Assessment manager for strategic port land - Asset manager for NQBP land portfolio

• Port Infrastructure

- Lifecycle asset management - Port infrastructure development (including wharves and terminals, channels and breakwaters)

• Environmental & Emergency Management

- Sustainable development - Project environmental and planning approvals - Emergency and oil spill response

1.2 Corporate Objectives Consistent with the medium to long-term corporate objectives as detailed in the 2010/11-2014/15 Corporate Plan, NQBP’s corporate objectives for 2010/11 are to:

• deliver value adding growth for NQBP ports ensuring sustainable returns while minimising risks • deliver and maintain timely and cost effective port capacity that is fit for purpose • deliver sustainable port development and operations by minimising environmental and social impacts

of NQBP activities and those of our commercial partners • deliver leadership and a working environment that enables NQBP employees to excel 1.3 Corporate Strategies NQBP’s key corporate strategies for achieving its corporate objectives for 2010/11 are: 11. Deliver a value adding growth for NQBP ports ensuring sustainable returns while minimising

risks.

1.1 Progress X80,X110, X230, Multi Cargo Facility (MCF) and Dudgeon Point Projects and Mackay Port Land Developments 1.2 Seek opportunities to expand existing trades 1.3 Identify potential new customers and partner with them to establish new business opportunities 1.4 Ensure only proposals which provide favourable return for risk and align with business objectives

are pursued 1.5 Implement pricing reforms 1.6 Foster a commercially astute organisation which respects our customer’s business needs

2. Deliver and maintain timely and cost effective port capacity that is fit for purpose. 2.1 Deliver life cycle asset management 2.2 Add value to the business outcomes of NQBP’s customers 3. Deliver sustainable port development and operations and critical incident management

capability that minimises environmental and social impacts of NQBP activities and those of our commercial partners.

3.1 Maintain an effective Environmental Management systems for NQBP Ports 3.2 Facilitate improved environmental performance by NQBP, NQBP tenants and service providers.

1 For consistency the numbers used in this document for the Objectives, Strategies and Measures of Performance reflect those used within the Corporate Plan.

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3.3 Implement effective strategies to address environmental issues such as greenhouse emissions, global warming and rising sea levels

3.4 Maintain an effective whole of port critical incident management capability (environmental emergency, security etc)

3.5 Develop and implement a Corporate Citizen strategy 4. Deliver leadership and a working environment that enables NQBP employees to excel.

4.1 Maintain an effective Safety management system for NQBP Ports 4.2 Ensure all NQBP employees have access to training and development that will enable them to

excel 4.3 Ensure the integration of MPL and PCQ results in an organisation whose structure and culture

delivers sustainable gains in efficiency and effectiveness 4.4 Enhance NQBP governance by continuously improving planning, financial management, project

management and performance reporting capability 4.5 Maintain a cost-effective suite of business systems that enable NQBP to achieve its corporate

mission 4.6 Continuously improve NQBP’s marketing and corporate relations processes

1.4 Corporate Performance Outcomes In accordance with the above corporate objectives, NQBP undertakes to achieve the following corporate performance outcomes in 2010/11:

STRATEGY No. 1.1 Progress X80,X110, X230, Multi Cargo Facility (MCF) and Dudgeon Point Projects and Mackay Port Developments

CRITICAL SUCCESS FACTOR

KPI KPI MEASURE TARGET

Accurate and timely project planning with all stakeholders

Project phases are satisfactorily progressed

% completion of project phases

Framework Agreements for X80/X110 by Jan 2011 Master planning with DIP for X230 completed by August 2010 with subsequent invitation for Expressions of Interest to take project forward Dudgeon Point Development Studies 50% completed by end of 2010/11 MCF approvals progressed and development integrated with Framework Agreements being negotiated with the preferred developers of X80/X110 Mackay Port land development planning 70% completed by end of 2010/11

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STRATEGY No. 1.2 – Seek Opportunities to Expand Existing Trades



Maintaining/improving market share

Port throughput

Commodity tonnages shipped

100% of budgeted tonnages are achieved or exceeded

STRATEGY No. 1.3 - Identify Potential New Customers and Partner with Them to Establish New Business Opportunities



Effective engagement with potential new customers

Recognition as an effective provider of bulk port solutions

Positive responses from stakeholders

100% customer acceptance of engagement process

STRATEGY No. 1.4 – Ensure Only Proposals Which Provide Favourable Return for Risk and Align with Business Objectives are Pursued.



Accurate and timely business analysis and planning

Risk/return hurdle ratio

Project completion

Project returns meet requirements

% of projects completed on time and on budget

100% of approved proposals meet return requirements at project commitment and post delivery

100% of projects completed on time and on budget

STRATEGY No. 1.5 - Implement Pricing Reforms



Competitive and sustainable pricing

All business areas meet required rate of return

Return targets met 100% of business areas meet targeted return as per pricing policy

STRATEGY No. 1.6 – Foster a Commercially Astute Organisation Which Respects Our Customers Business Needs



An enabling organisation driven to perform commercially

Strong customer service delivery achieves required outcomes

Corporate values in action

100% of staff consistently demonstrate corporate values

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STRATEGY No. 2.1 – Deliver Life Cycle Asset Management



Delivery of asset/project or service at lowest lifecycle cost

Asset management plans Project completion

Asset management plans in place for NQBP infrastructure % of projects completed on time and on budget

Comprehensive and integrated asset management plans operating in all NQBP ports 100% of projects completed on time and on budget

STRATEGY No. 2.2 - Add Value to the Business Outcomes of NQBP’s Customers



Customer sustainability enhanced by NQBP services

Customer value for money from NQBP services

Customer retention 100% customer retention within agreed terms

STRATEGY No. 3.1 – Maintain effective Environmental Management Systems for NQBP Ports



Systematic protection of the environment

Environmentally sustainable port development and operations

External certification to AS/ISO 14001:2004

100% compliance with legislation and standards

STRATEGY No. 3.2 - Facilitate Improved Environmental Performance by NQBP Tenants and Service Providers



Whole of port approach to environmental performance


Level of compliance with environmental licensing requirements

100% compliance with NQBP licensing requirements

STRATEGY No. 3.3 - Implement Effective Strategies to Address Environmental Issues Such as Greenhouse Emissions, Global Warming and Rising Sea Levels



Operations and developments address environmental issues

Reduced environmental footprint

Strategies developed and implemented within agreed timeframes

100% compliance to timeframes

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STRATEGY No 3.4 - Maintain an Effective Whole of Port Critical Incident Management Capability (Environmental Emergency, Security etc.)



Systematic protection of the environment and port operations


Compliance with Legislation and standards


STRATEGY No. 3.5 – Develop and Implement a Corporate Citizen Strategy.



Community acceptance of NQBP

Local NQBP communities proactively engaged

Strategies to be developed and implemented

Positive perception of NQBP by port communities

STRATEGY No. 4.1 - Maintain an Effective Safety Management System for NQBP Ports



Systematic protection of NQBP employees and visitors to NQBP workplaces

Safe workplaces and practices

Compliance with legislation and standards


STRATEGY No. 4.2 – Ensure all NQBP Employees Have Access to Training and Development That Will Enable Them to Excel.



All employees have the necessary knowledge and skills to contribute effectively to the achievement NQBP goals and objectives

Opportunities to attend training and development

Number of employees attending training

100% of employees receive necessary training and development

STRATEGY No. 4.3 - Ensure the Integration of MPL and PCQ Results in an Organisation Whose Structure and Culture Delivers Sustainable Gains in Efficiency and Effectiveness.



Integrated single culture of achievement

Productive industrial harmony

EB agreement implemented

EB agreement outcomes achieved

STRATEGY No. 4.4- Enhance NQBP Governance by Continuously Improving Planning, Financial Management, Project Management and Performance Reporting Capability



Implementation of Government Policies and Guidelines for GOC’s

Effectiveness of implementation

Level of compliance with Government Policies and Guidelines for GOC’s

100% compliance with relevant Policies and Guidelines

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STRATEGY No. 4.5 - Maintain an Effective Suite of Business Systems That Enable NQBP to Achieve its Corporate Mission



Availability and reliability of enabling business systems

Business needs are supported

Business systems developed, implemented and maintained within agreed timeframes

Business needs of all NQBP functional areas are supported

STRATEGY No. 4.6 - Continuously Improve NQBP’s Marketing and Corporate Relations Processes



Informed positive and professional corporate image

Proactive engagement of stakeholders

Corporate relations strategy developed and implemented

Corporate relations strategies implemented in all NQBP locations with no surprises

1.5 Operational Objectives The following operational objectives will contribute to the achievement of the corporate objectives outlined above: Capital Development – As per Section 3.3 • Dudgeon Point Master Planning • Abbot Point X25 Expansion • Abbot Point X50 Expansion • Abbot Point X110 Environmental & Planning Approvals • Abbot Point X 230 Planning Studies • Abbot Point Multi Cargo Facility Project – Master Planning • Mackay Port Capital Projects – Asset Renewal and Enhancement Maintenance

• Program maintenance audits for the period – develop and implement a maintenance audit program for 2010/11

• Carry out maintenance in a cost-effective manner to ensure facilities remain safe to operate and fit for purpose

Environment

• Establish NQBP's reputation as an environmentally responsible developer and operator of port infrastructure. No harm is to be caused to the natural environment

• Ensure a high standard of environmental performance • Maintain an effective Environmental Management System – maintain ISO 14001 certification for Hay

Point, Abbot Point, Mackay and Weipa • Implement effective sustainability measures Workplace Health and Safety

• Minimise lost time and medical injuries • Develop and maintain an effective safety management system Security

• Ensure an effective security regime is in place in each port

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Customer /Stakeholder Service

• Maintain effective community and local industry consultation • Keep Shareholding Ministers and local MPs adequately informed • Positive or improved customer relations Increase Trade Through Ports and Facilitate New Trade Opportunities

• Increase existing trades through ports • Continue to consult with stakeholders in relation to needs for additional declared ports in the Cape

York bauxite province. Staff Management

• Ensure all NQBP staff are motivated and effective in their roles in NQBP • Complete new enterprise agreement before the end of 2010/11 financial year Implement Government Reforms

• Complete the effective integration of PCQ & MPL • Optimise capital expenditure through a review of project timing and expenditure • Continue to liaise with the Treasury Commercial Transactions Team in relation to the future sale of

Abbot Point Coal Terminal Governance & Risk Management

• Maintain an appropriate corporate governance framework, including a legal compliance system Port Operations

• Ensure effective emergency response plans are in place • Ensure an effective response to oil spills in the ports • Ensure effective security arrangements are in place • Continue repairs to Port of Mackay to ensure the port is both operational and safe following Tropical

Cyclone Ului. Repairs include: breakwaters, revetment walls and other infrastructure.

Land Use Planning

• Complete land use plans for Hay Point, Abbot Point and Mackay • Commence preparation of a new land use plan for Weipa 1.6 Performance Drivers Key market Issues

• Increased demand for commodities. Customers’ advice, expert industry data (Wood Mackenzie Coal Market Service) and QR’s Network Planning Report (October 2009) all indicate continuing growth in demand for Australia’s high quality coal and other bulk commodities through NQBP ports. This is increasing pressure for timely provision of bulk export infrastructure, particularly for coal exports through Abbot Point and Hay Point.

• Increased debt margins emerging. Non fixed rate industry debt is subject to increased interest costs. NQBP therefore continues to maintain a debt portfolio which has a diversified maturity portfolio with a mix of fixed and floating rate debt.

• Sustainability of customers subsequent to global financial crisis. While the sustainability of many NQBP customers may be improving subsequent to GFC, some customers may have insufficient financial capacity to meet obligations to NQBP. Consequently NQBP continues to monitor customers for early signs of any financial stress.

Business Risks

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• Failure of other infrastructure to match port demand. The throughput of the transport logistics chain is limited by the inability of other/external infrastructure to match port demand. NQBP will therefore continue to work with other infrastructure providers to align capacity and other operational parameters.

• Capacity of port infrastructure. To minimise the risk of limited port capacity into the future NQBP is progressing master planning for all its ports.

• Increased environmental controls . Increased environmental controls e.g. dredging etc. has the potential to delay or prevent project development. NQBP is therefore ensuring regulatory requirements are being adequately addressed in all phases of project planning and continuing to liaise with regulatory authorities and other stakeholders.

• Attracting and retaining key staff with critical skills as economy improves. Improving economic conditions in the resources sector could see NQBP competing in the labour market for key people with necessary skills/knowledge. Therefore NQBP is developing a succession plan for key positions and addressing staff retention issues through the Employment & Industrial Relations Plan.

• Increase in number and intensity for extreme weather events. Extreme weather events have the potential to cause extended interruptions to port operations. NQBP has therefore factored such events into the life cycle management of its infrastructure and will maintain effective business continuity and emergency response capability.

• Illegal interference with port operations. Special interest groups are becoming more active and less predictable in causing disruptions to coal exports in NQBP ports. In response port security arrangements are constantly being tested and strengthened and a close liaison maintained with port users and Queensland Police Service including transparent information sharing and engaging with local communities to foster a trusting relationship.

Emerging Issues

• Galilee Basin coal users seeking large scale port capacity. Additional port infrastructure will be required to meet expected increase in demand at NQBP ports as Galilee Basin coal miners seek increased large scale port capacity. In response NQBP is progressing expressions of interest for X80 and X110 Expansions of Abbot Point Coal Terminal and the investigation of X230.

• Development of Townsville-Bowen-Mt Isa Economic Triangle and Abbot Point’s role as future economic hub. Port infrastructure will be needed to support new industries wishing to establish in the Abbot Point State Development Area in addition to the planned development of the Townsville – Bowen – Mt. Isa Economic Triangle.

• Potential impact of climate change initiatives on key trades. As coal exports may decline in the long term because of their greenhouse contributions the potential capital risk of coal infrastructure will be minimised by the use of customer funding of future projects where possible.

• Port capacity constraints inhibiting coal mine development expected to return (at conclusion of global financial crisis). As the global financial crisis abates it is anticipated that there will be increased pressure for timely provision of bulk port infrastructure. NQBP will continue to liaise with all stakeholders to seek an integrated logistics solution to capacity constraints.

• Increasing more stringent environmental requirements on new projects will increase project costs and the time required to obtain government approvals. New environmental requirements include tighter noise and dust controls to protect community amenity; legislation making clearing of any native vegetation difficult; increasing protection for offshore marine areas making dredging, offshore spoil disposal and reclamation problematic; and the requirement for environmental offsets for any impacts on the natural environment which will add significantly to project costs.

• Lack of Australian capacity to develop projects to meet demand. Lack of Australian capacity to develop sufficient infrastructure projects to meet demand may result in the inability to deliver infrastructure to meet growing global demand. In response NQBP is maintaining close liaison with key stakeholders during all phases of strategic master planning for its ports.

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2 Mandatory Matters In accordance with section 119(3) of the Government Owned Corporations Act 1993, the board of NQBP undertakes that the financial and non-financial targets in sections 2.1 and 2.2 and the financial statements in section 3.1 will form the basis for assessment of quarterly outcomes as reported to shareholding Ministers. Definitions for the financial and non-financial SCI targets are provided in Attachment 1 and are consistent with the key performance indicator definitions included in the quarterly reporting templates submitted by NQBP. 2.1 Financial Targets In accordance with the above corporate objectives, the board of NQBP undertakes to achieve at least the following performance targets in 2010/2011:

Financial Targets agreed with shareholding Ministers

2010/2011 Budget

2008/2009 Actual Note 1

2009/2010 Budget

2009/2010 Est Actual

EBITDA $82.47m $62.22m $63.45m EBIT $18.00m $29.94m $31.59m NPAT ($39.4m) $11.79m $11.64m Economic Profit (Loss) ($105.164m) ($57.565m) ($55.879m) Return on Operating Assets 1.58% 3.34% 2.74% Return on Net Assets 3.05% 1.35% 2.66% Return on Equity 3.1% 5.8% 6.1% Current Ratio 1.06 3.49 0.68 Debt to Debt + Equity Ratio 0.63 0.60 0.59 Interest Cover 0.258 0.64 0.66 Capital Expenditure $123.3m $392.8m $373.6m

Note 1 – 2008/2009 Actuals are not provided as NQBP was established at 1 July 2009. NQBP is progressively completing the Abbot Point X50 expansion project. Interest on loans is being capitalised until practical completion dates, and thereafter expensed for accounting purposes. Revenue associated with the expansion will progressively come on stream in future years and the loss in 2010/2011 reflects a timing mismatch issue between capital and financing costs incurred for Abbot Point expansion work and the resultant revenue from using the Abbot Point facilities. NQBP’s NPAT & Return on Equity deterioration reflects the loss of revenue contracts resulting from the delay in QR’s Goonyella to Abbot Point expansion project. Mackay Port Assets continue to be reviewed to establish sustainable revenue streams, and assets have been impaired as a result of expected level of revenue. Costs continue to be reviewed for potential savings.

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2.2 Non-Financial Performance Targets In accordance with the above corporate objectives, the board of NQBP undertakes to achieve the following non-financial performance targets in 2010/2011:

Non-Financial Targets agreed with shareholding Ministers

2010/2011 Budget


2009/2010 Budget


Environment • Reportable EPA Breaches (#)

Nil Nil 3

No. of security issues reported 4 Nil 4 Safety • Lost time injury frequency rate (LTIFR) • Lost time injury duration rate (LTIDR)

0 N/A

0 N/A

33.0 4.5

Employees • Staff Turnover (annualised) (note 2) • Net FTE Staff Numbers

15% 105

15% 110

10% 102.61

Compliance with Reporting Requirements (%) 100% 100% 100% Customer Satisfaction Index (%) (see note 3) 100% Planned Maintenance Performed %

100% 100% 100%

For Capital Projects > SHM Approved Threshold.

Cost Performance Index for Abbot Point and SR Upgrade 1 1 1

Schedule Performance Index for Abbot Point and SR Upgrade 1 1 1

Note 1 – 2008/2009 Actuals are not provided as NQBP was established at 1 July 2009. Note 2 - The target reflects the level of staff turnover expected in 2009-10 which NQBP believes will continue into 2010 -11 Note 3 - As a result of the merger a new Customer Management Framework is being created. The first stage of the framework which defines NQBPs stakeholders and NQBPs profile with stakeholders will be complete on 30 June 2010. The second stage will be a CRM system to be established by October 2010.

Non-Financial Targets agreed with shareholding Ministers

2010/2011 Budget

2008/2009 Actual

2009/2010 Budget


Trade (million tonnes) Coal Abbot Point (Note 1) 20.5 14.4 17.7 16.8 Hay Point (Note 2) 105.0 83.5 95.0 101.6 Sugar (Mackay) 1.1 0.7 1.1 1.1 Bauxite (Weipa) 20.5 20.5 15.0 20.9 Grain 0.2 0.3 0.1 0.2 Petroleum 0.9 0.9 0.9 0.9 Other 0.3 0.5 0.3 0.3 Vessels to Port (Number) Abbot Point 250 176 216 222 Hay Point 1,215 966 1,099 1,206 Mackay 176 179 172 175 Weipa 370 396 289 376

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Average Berth Utilisation Factor (Note3) Abbot Point Hay Point Mackay Weipa

NQBP does not directly control trade activity. Note 1 Take or Pay arrangements exist at Abbot Point that protect revenue at the port from reductions in commodity being shipped. Note 2 Notional port capacity is 130mt, but rail capacity does not match this. The budget for 2010/2011 is based on 67mt at DBCT and 38mt at Hay Point Services terminals which is considered reasonable (and is under port user projections). Note 3 System being established to record data, targets yet to be determined. 2.3 Assumptions NQBP’s undertaking to achieve its performance outcomes is predicated upon the following assumptions:

Business Assumptions 2010/2011 Budget

2008/2009 Actual (Note 1)

2009/2010 Budget


Economic Indices • CPI • Wages Growth • Long term interest rates

3% 3.5%8.1%

3%

4.5%8.3% 2.5%

4.5%8.1% Revenue Total $164.1m $138.3m $137.3m Operating Expenses Total $146.1m $108.4m $105.7m

Note 1: 2008/2009 Actuals are not provided as NQBP was established at 1 July 2009. CPI and Long term interest rates are determined through discussion with Queensland Treasury Corporation and Wages Growth from expected enterprise bargaining position. 2.4 Community Service Obligations (CSOs) No Community Service Obligations have been identified for NQBP in 2010/11. 2.5 Employment and Industrial Relations (E&IR) Plan An E&IR Plan meeting the requirements of Section 149 of the GOC Act and the Guidelines for the Development of Employment and Industrial Relations Plans in Government Owned Corporations (E&IR Plan Guidelines) is provided to shareholding Ministers as Attachment 2 to this SCI. The remuneration arrangements for the Directors, Chief Executive Officer and all senior executives of (GOC), in line with the E&IR Plan Guidelines, are also detailed in the E&IR Plan provided as Attachment 2 to the SCI.

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3 Additional Matters 3.1 Financials

3.1.1 Group

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(1) Equity movement excludes Port Review changes as a result of divestment of ports at 1 July 2009. Note: 2008/2009 Actuals are not provided as NQBP was established at 1 July 2009 Note 2: No dividend is expected to be provided for 2010/2011 due to the forecast loss. Note 3: Depreciation in 2010/11 reflects the progressive take-on of completed Abbot Point construction assets.

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Equity injections/(Withdrawals) ($M)

2010/2011 Budget


2009/2010 Budget


Equity Injections Nil $50m $50m Equity Withdrawals Nil Note 2 Note 2

Net Equity Nil $50m $50m

Note 1 – 2008/2009 Actuals are not provided as NQBP was established at 1 July 2009. Note 2 – Excludes equity change as a result of Port Review transfers which occurred on 1 July 2009.

Dividends, Tax Equivalent Payments (TEPs) and Community Service Obligations (CSOs) ($M)

2010/2011 Budget


2009/2010 Budget


Dividends Provided (Note 2) Nil $9.4m $9.3m Current TEPs Expense Nil $5.0m $4.9m CSO Receipts Nil Nil Nil

Note 1 – 2008/2009 Actuals are not provided as NQBP was established at 1 July 2009. Note 2 – No dividend is expected to be provided in 2010/2011 due to the forecast loss.

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3.1.2 Financials: Selected Subsidiaries or Major Business Divisions

Subsidiary Ownership Nature of Business

Ports Corporation of Queensland Limited 100% Port

Mackay Ports Limited 100% Port

Financial statements provided represent the group position. Separate results are not shown for subsidiaries as it is not meaningful due to the group structure (eg the port authority income is earned by NQBP but the assets are owned by the subsidiaries). Financial reports provided each quarter in reporting to shareholding Ministers are on a port by port as well as consolidated basis. 3.2 Main Undertakings and Businesses Consistent with NQBP’s core business NQBP has the following major assets:

Port Asset Ownership Details

Abbot Point Coal terminal – onshore and offshore, land

100% Capacity 25 million tonnes per annum (mtpa) currently undergoing expansion

Bowen wharves, workshop, land

100% Primary use – tug harbour

Hay Point Tug Harbour, pontoons, buildings, land

100% Leased to coal terminals

Water pipeline, dam, land

100% Subject to commercial agreement with users

Land, buildings, caravan park

100% Buffer lands including Louisa Creek; leased caravan park

Departure path, Quarantine Waste Facility

100% Subject to commercial agreement with users

Weipa Lorim Point wharf 100% Leased to Rio Tinto Aluminium (RTA) for bauxite exports

Humbug wharf 100% Leased to RTA for general cargo

Evans Landing wharf and buildings

100% Leased to RTA for fuel importation

Land 100% Leased to RTA

Channel 100% 15 km entrance channel

Mackay Seaport 100% Maximum throughput to date 2.5 mtpa. Notional maximum throughput capacity with current infrastructure configuration 5.5 mtpa

Land 100% 812 hectares Strategic Port Land (SPL) 29 hectares Non-SPL

Maryborough Land 100% Non trading port

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3.3 Capital Expenditure Program 3.3.1 Repairs, Maintenance and Renewals

Description Budgeted Total Cost

Budgeted Cost

2010/2011 Purpose and Objective Project Status

Expected Completion

Date

Minor Capital Works – Abbot Point

Ongoing minor works completed by Abbot Point Coal Terminal

Annual Board approval required for ongoing amounts

30 June 2011

Other minor works Refurbishment at various ports

Budget is approved by the Board, actual contracts to be approved as required in accordance with delegations

30 June 2011

TOTAL

3.3.2 Business Development (Material expenses on projects being considered)

Description Budgeted Total Cost

Total Expenses

to 30/06/10

Budgeted Cost

2010/2011 Purpose and

Objective Project Status Expected

Completion Date

Abbot Point X80/X110 expansion

Note 1 Current approval $16m

$14m $2.0m Increase coal terminal capacity to 110mtpa

Preliminary design, purchase of land, environmental studies, preliminary investigations and negotiations with DIP

Note 2

Abbot Point X230 expansion

Note 1 $1.7m $4.0m Increase coal terminal capacity to 230mtpa

Masterplan, Corridor study, environmental studies, geotechnical work, surveys, aerial photography and associated works

Note 2

Abbot Point Multi Cargo Facility

Note 1 $7.5m Nil Note 3

Multi berth shipping facility for import and export cargoes

Preliminary planning and environmental approvals

Note 2

Hay Point Master Plan

Note 1 $0.3m $1.8m Development of Dudgeon Point

Preliminary planning and environmental approvals

Note 2

Land Acquisition Dudgeon Point Access Corridor

Note 1 Nil $2.0m Development of Dudgeon Point

Under consideration Note 2

Mackay land development

Note 1 Nil $0.3m Future commercial land development

Under consideration Note 2

TOTAL $23.5m $10.1m

All capital expenditure proposals in excess of $7.5m will be submitted for shareholding Minister approval in accordance with Treasury’s “Investment Guidelines for GOC’s” Note 1: Total project costs are yet to be determined. Full feasibility study and economic evaluation will be prepared for shareholding

Minister approval should these projects continue. Where initial investigation costs exceed Board approval levels, shareholding Minister approval will also be sought.

Note 2: Completion dates for projects will be dependent on total project approval and commencement. Note 3: Subsequent to budget approval, the Board has approved $1.4m expenditure in 2010/11.

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3.3.3 Assets Under Construction

Asset Budgeted Total Cost

Total Estimated Expenditure to 30 June 2010

Budget 2010/2011 Project Status

Expected Completion

Date

Abbot Point X50 Expansion

$818.0m $758.5m $53.5m All major contracts have been awarded and are scheduled for completion during 2010/2011

June 2011

Abbot Point X25 Expansion

$95.0m $95.0m Nil Minor items only being completed

June 2011

Abbot Point Stockyard Renewal

$68.3m $28.7m $39.6m Replacement of SR2 contract awarded

March 2011

Abbot Point Administration Building

$5.0m $1.5m $3.5m

Mackay High Voltage/Low Voltage Assets

$2.9m $2.5m $0.4m

Mackay Harbour Road Development

$6.0m $1.5m $3.6m

Various Ports – Minor Projects for Port Development

$0.6m $0.2m $0.4m

TOTAL $995.5m $887.9m $101.0m 3.3.4 Approved Capital Expenditure Not Yet Undertaken

Asset Project Status

Budgeted Total Cost

Budget 2010/2011

Expected Date of Completion

Louisa Creek land acquisitions Ongoing Original Grant Note: Ongoing expenditure not in this budget

$1.5m Ongoing, but grant expected to be fully utilised by 30 June 2012, Future funding requirements will be met from port revenue

Bowen Fenders Tug Berth/Bed levelling

Proposed

Corporate Office Computer equipment

Planned June 2011

Mackay – Berth3 pocket and swing basin

Proposed

Mackay Port development – minor projects

Proposed June 2011

Other ports – minor projects Proposed June 2011

TOTAL

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3.3.5 Proposed Capital Expenditure expected to be approved in 2010/11

Asset Project Status Budgeted Total Cost

Budget (SCI Year)

Expected Date of Completion

Nil

TOTAL 3.4 Major Initiatives Being Undertaken by NQBP • Abbot Point Proposed Lease of X50 Coal Terminal – NQBP is providing the Government with assistance

as necessary, to offer a 99 year lease, with the sale process planned to commence in late 2010 • AP X80/X110 – BHP Billiton and Hancock Coal have been awarded Preferred Developer status and

NQBP will be liaising with them to develop and execute Framework Agreements by February 2011 • AP X230 – NQBP is developing a master plan in conjunction with Department of Infrastructure and

Planning, which is due for completion by August 2010 which will be followed by an invitation for Expressions Of Interest in a process similar to that for X80/110

• Abbot Point MCF - NQBP is progressing the approvals process and plans to integrate development with Framework Agreements being negotiated with the preferred developers of X80/X110

• Dudgeon Point Development – NQBP is conducting Development Studies which are planned to be 50% completed by end of 2010/11

• Mackay Port land use – NQBP in consultation with stakeholders, is progressing development planning which is planned to be 70% completed by end of 2010/11

Revenue and Cargo Forecasts NQBP’s financial position is reliant on revenues forecast from cargo throughput volumes through its ports. These cargo volumes are determined by customers, not NQBP, and will be affected by the economic environment. If necessary, where possible, prices are increased to offset reductions in volumes of cargo throughput. In the Port of Abbot Point the majority of revenue is derived from take or pay contracts with customers, now renegotiated to 15 year take or pay contracts (previously 10 year) and users assuming the risk that QR’s Goonyella to Abbot Point Expansion project will be built and is on time. Target

Capital Expenditure Reviews

NQBP requires ongoing consideration of business need and expected returns for all projects/capital expenditure, while continuing to meet commercial customer requirements. Surplus and Non-Core Assets

NQBP has reviewed all property holdings and has identified some land holdings in Mackay which hold long term strategic purpose but are currently in use for non-port specific purposes. No items are currently identified as surplus and saleable.

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Capital Structure NQBP will prudently manage the financing of its existing business and new business developments. As an integral part of the financing of NQBP, the overall debt will be managed to ensure that NQBP maintains the appropriate credit rating or other rating as directed by shareholding Ministers. QTC is continuing to review equity requirements for NQBP in light of the status of Abbot Point construction projects and proposed long term lease. Port User Charges in Port of Mackay

The increase in charges will contribute to the planned expenditure on the commercial seaport and bring port dues in line with other comparable regional ports. Port Review Implementation

Through the ongoing port review implementation process NQBP will continue to seek further opportunities for increased efficiency through the integration and application of support systems, corporate policies and operational procedures. 3.5 Sponsorship, Advertising, Corporate Entertainment, Donations and Other

Arrangements Consistent with the Corporate Entertainment and Hospitality Guidelines and NQBP’s Corporate Entertainment and Hospitality Policy NQBP has budgeted the following total amounts for Sponsorship, Advertising, Corporate Entertainment, Donations and Other Arrangements for 2010/2011. Full details of the budgeted expenditure are provided in Attachment 3 to the SCI.

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Activity1 2009/2010

Budget 2009/2010

Est Actuals 2010/2011

Budget Sponsorship $135,000 $170,000 $170,000 Advertising² $ 22,000 $ 22,000 $ 30,000 Corporate Entertainment $ 59,000 $ 59,000 $ 63,490 Donations $ 30,000 $ 30,000 $ 30,000 Other Related Activities³ – Corporate publications/marketing/website

$283,000 $365,000 $340,000

Total $529,000 $646,000 $633,490 1Includes all activities both above and below $5,000. ²Advertising Includes: 2009/2010 2010/2011 North Partners Editorial $ 7,000 $10,000 Advertising $15,000 $20,000 ³Other Related Activities Include:

2009/2010 2010/2011 Publications: Newsletters $ 45,000 $ 50,000 Annual Report $ 80,000 $ 60,000 Brochures $ 50,000 $ 50,000 Marketing: Re-Brand $150,000 New Collateral $100,000 Website/Intranet $ 40,000 $ 80,000 NQBP will provide details of any significant changes to the listed commitments in quarterly reports to shareholding Ministers and will notify shareholding Ministers of any significant proposed sponsorship arrangements prior to the signing of a binding contract. 3.6 Other As part of its performance agreement with shareholding Ministers, the board of NQBP provides the following additional undertakings: 3.6.1 Prudential Financial Information The board will ensure NQBP takes full responsibility to ensure that prudent financial practices will be applied both within the corporation and within its subsidiaries (whether fully controlled or otherwise). Without limiting the obligations imposed on the board and the CEO by the GOC Act and, where applicable, the Corporations Act 2001, this includes a commitment to:

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

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

3.6.2 Capital Structure The board will prudently manage the financing of NQBP’s existing business and new business developments. As an integral part of the financing of the Corporation, the overall debt will be managed to ensure that NQBP maintains the appropriate credit rating or other rating as directed by shareholding Ministers. NQBP’s board will ensure NQBP complies with this.

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3.6.3 Weighted Average Cost of Capital (WACC) The board will ensure that NQBP reviews its WACC on an annual basis. As part of the SCI negotiation process, NQBP’s beta and optimal capital structure have been determined in consultation with shareholder representatives. Separate WACCs have been calculated for those parts of NQBP’s operations that face differing business risk profiles. Other than the annual review process, in the event NQBP encounters a significant change to the risk profile of its business, its WACC will be recalculated in consultation with shareholder representatives. Details of NQBP’s WACC calculations are provided in Attachment 4 to the SCI. 3.6.4 Dividend Policy and Payment While the dividend process is governed by the GOC Act, the board will also ensure that NQBP’s dividend policy takes into account the return its shareholders expect on their investments. The board of NQBP will recommend a dividend amount equivalent to 80% of NQBP’s applicable profit for 2010/2011. The board will adopt such a recommendation on the basis of its shareholders agreeing to provide the necessary funding for projects which have received board and shareholding Ministers’ approval or for the maintenance of NQBP’s approved capital structure or for ensuring the operational viability of NQBP. NQBP’s board undertakes to ensure the dividend policy is adhered to. The dividend payment recommendation provided by the Board will be in the form of a percentage of consolidated profit after provision has been made for income tax (net profit after tax, NPAT), adjusted for the net impact of non-cash transactions. The recommendation will be accompanied by an estimate of NPAT and will include detailed information on any proposed or likely adjustments to NPAT, including a statement of the amount and reasons for any adjustments. When determining the final dividend to be declared at the end of the period, the Board will ensure shareholder departments are consulted with and that written agreement is received from shareholder departments for any material changes to the adjustments identified, or any subsequent adjustments in the dividend recommendation agreed to by shareholding Ministers. As the 2010/2011 result is expected to be a loss, no dividend is expected to be provided or paid in relation to the 2010/2011 year.

3.6.5 Corporate Governance Guidelines for Government Owned Corporations The board of NQBP undertakes to continually monitor and review its corporate governance arrangements to reflect good practice, having regard to the Corporate Governance Guidelines for Government Owned Corporations (Corporate Governance Guidelines). NQBP has adopted all the recommendations in the Corporate Governance Guidelines other than in relation to putting in place defined materiality thresholds regarding assessment of Director independence. Instead, the Board assesses materiality on a case by case basis and considers this as being a flexible way to more comprehensively assess director independence.

3.6.6 Risk Management The board of NQBP has ultimate responsibility for the management of all potential internal and external risks for the Corporation. The Corporation's risk identification and management process is monitored by the Audit and Financial Risk Management (AFRM) Committee, the Human resources and Industrial Relations (HRIR) Committee and/or the Corporate Governance and Planning (CGAP) Committee, which are subcommittees of the board and which report to the board on a regular basis. The risk management framework is designed to ensure that all potential financial, operational and other risks are regularly identified, assessed, monitored and reported to the subcommittees and the NQBP board, along with appropriate risk mitigation and management plans. In particular, potential security risks have been considered and identified and a framework to respond to security threats has been developed. The board will continually monitor security risks and update NQBP’s response framework as necessary. Risk management plans have been incorporated in NQBP’s budgetary and strategic planning processes.

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3.6.7 Compliance with Government Policies The board of NQBP and its subsidiaries will comply with all relevant Government policies and guidelines as set out in Attachment 6. In particular, NQBP and its subsidiaries will comply with the approval, notification, reporting and other requirements of those policies and guidelines.

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4 Performance Agreement DIRECTORS' STATEMENT AND AGREEMENT OF SHAREHOLDING MINISTERS This SCI and all attachments, for 2010/2011, are presented in accordance with Chapter 3, Part 8 of the GOC Act. In accordance with Chapter 1, Part 3, Section 7 of the GOC Act, the SCI represents a formal performance agreement between the board of NQBP and its shareholding Ministers, The Treasurer and Minister for Employment and Economic Development and the Minister for Transport with respect to the financial and non-financial performance targets specified for the financial year. The SCI also represents an acknowledgment of and agreement to major activities, objectives, undertakings, policies, investments and borrowings of NQBP for 2010/11. This SCI represents a formal performance agreement between the board of NQBP and its shareholding Ministers. In signing the document the board of NQBP undertakes to ensure that the document, and all reports to shareholding Ministers, are prepared with accuracy and timeliness. In signing this document NQBP’s board undertakes to achieve the targets proposed in the SCI for 2010/11. Major changes to key assumptions and outcomes detailed in this SCI, and which come to the board’s attention during the year, will be brought to the attention of shareholding Ministers. Any modifications to this SCI will be dealt with in accordance with the GOC Act. This SCI is signed by all Directors in accordance with a unanimous decision of the board of NQBP. …………………………… Acting Chairman

Date:

…………………………… Director

Date:


Date:


Date:


Date:


Date:

……………………………………………………………. Minister for Transport

Date:

……………………………………………………………. Treasurer and Minister for Employment and Economic Development

Date:

* Leonie Taylor, Chairman, is on annual leave overseas at the time of signing.

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4 5 ATTACHMENTS Attachment 1 List of Financial and Non-Financial Target Definitions

KPI Use Definition Average Berth Utilisation Factor

Measures usage of berths based on occupancy. It demonstrates the potential for throughput increases without additional capital investment based on increased berth usage. Other operational efficiencies (e.g. loading rates) can also deliver port throughput growth without capital investment

Average time that all berths within the ports control are occupied measured as: ∑ (Time berth is occupied * percentage of berth occupied) / ∑ Time berth is available for occupation. Shown as a %. Available time for occupation excludes time for planned and unplanned outages. Percentage of berth occupied is relevant for regional ports where two smaller ships may be able to occupy one berth. Percentage of berth occupied is 100% if there is no available room for another ship to safely and practically use the berth. If there is room for another ship to safely and practically use the berth, percentage of berth occupied is calculated: length of ship / length of berth. If not practical for further ships to use berth, assume berth is 100% utilised. (Ports to consider if they are able to capture this % of berth utilised.)

Average Loading Rate in Berth

Measures efficiency of stevedoring operations

Efficiency of loading operations, calculated as: ∑ Total tonnes loaded / ∑ Time berth is occupied. Measured as tonnes per hour

Average Number of Vessels in Queue

Indicator of capacity restrictions

Average daily number of ships in queue waiting to enter the port. Note: excludes “dead ships”, ships that are waiting as the cargo to be loaded is not in the port.

Average Operating Cost per Tonne

Indicator of operating efficiency

Average operating cost for the quarter divided by number of tonnes throughput for the quarter by Port operations (ie. excludes throughput for which the Port is not the operator/stevedore).

Average Operating Revenue per Tonne

Average operating revenue for the quarter divided by the number of tonnes throughput for the quarter by Port operations (ie. excludes throughput for which the Port is not the operator/stevedore).

Average Ship Delays - Controllable (hrs)

Indicator of overall port inefficiency

Average hours each ship is delayed due to reasons controllable by the port.

Berth Availability

Measures the actual capacity of the port to accept ships into berth

∑ Time that a berth is available for use / ∑ Time in the period.

Capital Expenditure

Measures spending on capital projects.

Amount incurred by the GOC on capital projects to the end of the reporting period

Cost Performance Index

Used with Schedule Performance Index to indicate whether a major capital project is over budget (if > 1) or schedule measured over project life. Scope variations are incorporated into the denominator only when approved by Board and Shareholding Minister. Qualitative reporting on project progress is to be implemented in the quarterly report.

Indicates the level of cost over or under expenditure relating to the actual work performed. Calculated as budgeted cost of work to be performed in the period divided by the actual cost of work performed in the period (for approved capital projects only).

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KPI Use Definition Compliance with Reporting Deadlines

Indicates performance of GOC regarding reporting requirements

Compliance with Statutory Reporting Timeframes and Data Submission and Reporting Requirements in Treasury Financial Circulars (%). For clarity, Number of deadlines complied with / Total number of deadlines.

Current Ratio Indicates ability of GOC to meet debts as they fall due.

Current assets / current liabilities

Customer Satisfaction Index (%)

Indicates level of customer satisfaction with GOC

Overall percentage satisfaction with Port services based on an annual survey of key customers and stakeholders. Note: to be reported annually

Debt to Debt + Equity Ratio

Measures financial leverage

Debt divided by the total of debt and equity (using balances current as at the end of the reporting period)

EBIT Group Earnings before Interest and Tax

EBITDA Group Earnings before Interest, Tax, Depreciation and Amortisation. Measures the group earnings in terms of cash-related items only.

Economic Profit

Measures financial performance based on residual value created after deducting cost of capital (i.e. minimum expected rate of return)

Financial performance of the company based on residual wealth calculated by deducting the cost of capital from its operating profit. Measured by EBIT- Notional tax expense - (Capital Invested*Cost of Capital) where Capital Invested = Total Assets - non interest bearing liabilities and Notional tax expense = EBIT * 30%. Note the cost of capital is a post tax WACC.

Environmental – Reportable EPA breaches (#)

Measures environmental performance of Port. Qualitative information on response to breaches to be included in quarterly report.

Number of reportable breaches of the Environmental Protection Act.

Interest Cover Measures ability to service debt.

Earnings before Interest and Tax (but after any abnormal or extraordinary items) divided by interest cost (for clarity - includes capitalised interest, but excludes finance charges)

Lost Time Injury Duration Rate (LTIDR)

Indicates average duration of injuries

Total days of lost time for injury and disease for every million hours worked. Calculated as number of working days lost to injuries X 1,000,000/ number of injury occurrences. Calculated for employees and contractors directly employed by the Port (ie this excludes services sub-contracted to external service providers eg. port security)..

Lost Time Injury Frequency Rate (LTIFR)

Indicates average frequency of injuries

The number of lost time occurrences of injury or disease for every million hours worked. Calculated as number of lost time injury occurrences X 1,000,000/ employee hours. Calculated for employees and contractors directly employed by the Port (ie this excludes services sub-contracted to external service providers eg. port security)...

Marina Berth Occupancy Rate

Indicates the level of occupancy of marina berths.

Measures the GOC’s marina occupancy. Measured as ∑ number berth occupied or leased days in the period / number of available berths * days in the period

Missed Sailing Windows

Indicator of delays incurred by ships due to port operations

Number of vessel departure slots missed due to controllable causes (including tug and pilot delays, channel passing restrictions).

Net FTE staff numbers

Measures number of FTEs employed by the GOC

Measures the GOC's efforts at hiring and maintaining the budgeted staff numbers\as set in the Establishment Plan. Reported as net number of staff full time equivalents employed by the GOC at the end of the period.

No of Security Issues Reported

Measures security issues. Qualitative report on serious security threats or breaches to be incorporated into quarterly report.

Number of security events as defined in the Maritime Transport and Offshore Facilities Security Act 2003 (Cth) reported during the period.

NPAT Measures profitability Group net profit after tax

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KPI Use Definition Planned Maintenance Performed (%)

Measures the performance of maintenance tasks planned. To be considered with qualitative reporting in the quarterly report

Total number of planned maintenance activities weighted by cost completed / scheduled maintenance activities for the period weighted by cost. Expressed as a percentage. Calculated as: [ ∑ maintenance completed * budgeted cost of maintenance activities completed] / [ ∑ maintenance planned * budgeted cost of maintenance planned]

Return on Equity

Group Operating Profit after tax (but before any abnormal or extraordinary items) divided by the average contributed equity plus asset revaluation reserve

Return on Assets

Measures return generated on asset base. Measures affected by asset revaluations, asset age, legacy agreements.

Group Operating Profit before Interest and tax (but after any abnormal or extraordinary items), divided by the total average assets

Return on Operating Assets

Measures return on operating assets of the entity.

Group Earnings before Interest and Tax (but after any abnormal or extraordinary items), less income from investments, divided average of group operating assets (for clarity this excludes legacy assets and less assets under construction but includes strategic port land)

Schedule Performance Index

Indicates performance against schedule of capital projects

Scheduled performance index gives and indication of the level of work actually performed to work scheduled to be performed in terms of cost. Actual cost of work performed in the period divided by the budgeted cost of work scheduled for the period. It provides information on whether the project is ahead of schedule or if there is slippage (for approved capital projects only)

Ship Loading Delays (%)

Indicator of delays incurred by ships due to port operations

[Gladstone Port Corporation to confirm definition]

Staff Turnover Indicator of loss of human capital to the entity

The annualised number of staff leaving the GOC in the period divided by the total number of full time equivalent staff at the end of the period.

Throughput (TEUs) per hectare

Measure of density of the storage system and reflects the ability of the terminal container storage area to transfer containers from ship to shore

This is the quantity of container cargo, measured in TEUs, which passes through the port container terminals divided by the total quay area in hectares. Quay area should include only the area allocated to container storage and throughput.

Throughput (TEUs) per quayline metre

Indicator of container port stevedoring efficiency by measuring the container movements through berths.

This is the quantity of container cargo, measured in TEUs, which passes through the port container terminals divided by the total quay length in metres. Quay length should include only those quay allocated to container throughput.

Time in Berth Measures average time a vessel spends in berth

Average time a vessel spends in berth. Measured in hours

Time in Port Indicates average time a vessel spends in port

Average time a vessel spends in port. Measured in hours

Time in Queue

Indicator of capacity restrictions. Also indicates demurrage costs being incurred.

Total ship time in queue divided by number of ships loaded in the period.

Trade Measures the volumes that are moving through the port

Total trade of both inbound and outbound during the period. To be presented separately for bulk: tonnes, Container: TEUs, Cars: units.

Train unloading delays (%)

Indicator of delays incurred due to train unloading operations

[Gladstone Port Corporation to confirm definition]

Truck Turn Time (mins)

Measure of port efficiency The average time taken for a truck to complete the receival or delivery of its cargo. Measured from the time the truck enters to the time the truck leaves the terminal measured in minutes.

Vessels to Port

Measures vessel traffic through the port

Number of commercial vessels that berth at the port for the purpose of loading or unloading during the period.

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ATTACHMENT 2 Employment and Industrial Relations Plan

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ATTACHMENT 3 Sponsorship, Advertising, Corporate Entertainment, Donations and Other Arrangements

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Table 1: Sponsorship, Advertising, Corporate Entertainment, Donations and Other Activities

Details of Individual Expenditure Items

Activity Description/ Benefit

2009/2010 Budget

($)

2009/2010 Est. Actuals

($)

2010/2011 Budget

($) Quarter (2010/2011)

($) (2010/2011) Per Head

Budget ($)

Sept Dec Mar Jun SPONSORSHIP Support for Indigenous Apprenticeships

Build relationships with local business

20,000 20,000 20,000 5,000 5,000 5,000 5,000

Flagstaff Hill Upgrade (Bowen)

Demonstrate commitment to grow regional business (tourism) in area

10,000 10,000 20,000 5,000 5,000 5,000 5,000

Bowen Show Long term sponsorship and community involvement opportunity for staff

10,000 10,000 10,000 - - 10,000 -

Mackay/Whitsunday Regional Economic Development Corporation (REDC)

Demonstrate commitment to grow regional business/membership

5,000 15,000

5,000 1,250 1,250 1,250 1,250

Whitsunday Enterprise REDC

Membership 5,000 5,000 5,000 1,250 1,250 1,250 1,250

Townsville Enterprise REDC

Membership 5,000 5,000 5,000 1,250 1,250 1,250 1,250

Regional Economic Development Grant

Demonstrate commitment to grow regional business

- 25,000 (See note)

25,000 6,250 6,250 6,250 6,250

Mackay Lifesavers Financial assistance to local port residents to enhance corporate image

15,000 15,000 - - - - -

Total over $5,000 70,000 105,000 90,000 20,000 20,000 30,000 20,000 Other (total) below $5,000 65,000 65,000 80,000 20,000 20,000 20,000 20,000 TOTAL (1) 135,000 170,000 170,000 40,000 40,000 50,000 40,000

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2009/2010 Budget

($)


($)

2010/2011 Budget

($) Quarter (2010/2011)

($) (2010/2011) Per Head

Budget ($)

ADVERTISING Create industry awareness through editorial opportunities

North Partners – Editorial 7,000 7,000 10,000 2,500 2,500 2,500 2,500 Total over $5,000 7,000 7,000 10,000 2,500 2,500 2,500 2,500 Other (total) below $5,000 15,000 15,000 20,000 5,000 5,000 5,000 5,000 TOTAL (2) 22,000 22,000 30,000 7,500 7,500 7,500 7,500 CORPORATE ENTERTAINMENT

Total over $5,000 - - - - - - - Other (total) below $5,000 59,000 59,000 63,490 15,872 15,872 15,872 15,872 TOTAL (3) 59,000 59,000 63,490 15,872 15,872 15,872 15,872 DONATIONS Louisa Creek Water Rebate

Good corporate citizenship acknowledging impact unique to coal port communities

6,000 6,000 6,000 1,500 1,500 1,500 1,500

Total over $5,000 6,000 6,000 6,000 1,500 1,500 1,500 1,500 Other (total) below $5,000 24,000 24,000 24,000 6,000 6,000 6,000 6,000 TOTAL (4) 30,000 30,000 30,000 7,500 7,500 7,500 7,500 OTHER RELATED ACTIVITIES

Mackay Portal Communicates activities of the port to enhance profile and provide opportunities to increase business

15,000 15,000 15,000 - 7,500 - 7,500

Annual Report 50,000 80,000 60,000 60,000 - - -

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2009/2010 Budget

($)


($)

2010/2011 Budget

($) Quarter (2010/2011)

($) (2010/2011) Per Head

Budget ($)

Website Enhance profile and provide opportunities to increase business

20,000 20,000 50,000 12,500 12,500 12,500 12,500

ADVERTISING Create industry awareness through editorial opportunities

Intranet Provide a useful tool for staff

20,000 20,000 30,000 7,500 7,500 7,500 7,500

Total over $5,000 105,000 135,000 155,000 80,000 27,500 20,000 27,500 Other (total) below $5,000 178,000 230,000 185,000 46,250 46,250 46,250 46,250 TOTAL (5) 283,000 365,000 340,000 85,000 85,000 85,000 85,000 TOTAL (1)+(2)+(3)+(4)+(5) 529,000 646,000 631,490 155,372 155,372 165,372 155,374 Note - NQBP is undertaking a community investment program within the communities we operate to raise the profile of NQBP and enhance credibility. The beneficiaries of the Regional Economic Development Grants are the local REDC's: Mackay/Whitsunday REDC, Townsville Enterprise and Whitsunday Enterprise. Grants must be applied for and approved by the NQBP Board and must demonstrate support of economic development in the region.

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Table 2: Corporate Entertainment

Details of Total Budgeted Expenditure under $5,0006,7

Activity 2009/2010

Budget ($)

2009/2010 Est Actuals

($)

2010/2011 No. of

Activities

2010/2011 Budget

($)

Quarter 2010/20118 ($)

Sept Dec Mar Jun

Corporate Entertainment Total • Staff Functions 39,000 39,000 50 43,490 10,872 10,872 10,872 10,874 • Business Development 10,000 10,000 40 10,000 2,500 2,500 2,500 2,500 • Stakeholder and Community

Engagement 10,000 10,000 25 10,000 2,500 2,500 2,500 2,500

TOTAL UNDER $5,000 59,000 59,000 63,490 15,872 15,872 15,872 15,874 6All expenditure to be GST exclusive 7Cells shaded in grey do not need to be populated 8These figures are not cumulative

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NQBP WACC

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ATTACHMENT 5 NQBP has adopted all the recommendations in the Corporate Governance Guidelines, other than in relation to putting in place defined materiality thresholds regarding assessment of Director independence. Instead, the Board assesses materiality on a case by case basis and considers this as being a flexible way to more comprehensively assess director independence. OGOC have been advised of this departure.

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ATTACHMENT 6 Government Policies and Guidelines • Biannual Reporting: Guidelines for the Preparation of Interim Reports (2009) • Code of Practice for Government Owned Corporations’ Financial Arrangements (2009) • Community Service Obligations – A Policy Framework (1999) • Corporate Entertainment and Hospitality Guidelines (2008) • Corporate Governance Guidelines for Government Owned Corporations (2009) • Cost of Capital Principles – Government Owned Corporations (2006) • Government Owned Corporations Air Travel Policy (2009) • Government Owned Corporations Bargaining Guidelines (2010) • Government Owned Corporations Governance Arrangements for Chief and Senior Executives

(2009) • Government Owned Corporations Guidelines for the Preparation of Statements of Corporate

Intent and Corporate Plans (2010) • Government Owned Corporations Release of Information Arrangements (2009) • Government Owned Corporation Subsidiaries - Key Shareholder Requirements for

Constitutions (2006) • Government Owned Corporations Wages Policy (2010) • Guidance for Chief Executive Officers - Agreement Making and Industrial Relations in

Government Owned Corporations (2010) • Guidelines for the Development of Employment and Industrial Relations Plans in Government

Owned Corporations (2009) • Guidelines for Export of Services by Government Owned Corporations (2001) • Investment Guidelines for Government Owned Corporations (2009) • Local Industry Policy: A Fair Go for Local Industry (2008) • Minimum Disclosure Requirements for Directors and Chief and Senior Executives of

Government Owned Corporations (2009) • Minimum Employment, Industrial Relations and Job Security Principles for Government Owned

Corporation Employees (2009) • Purchasing Carbon Offsets for Queensland Government Air Travel (2008) • QFleet ClimateSmart Policy (2008) • Queensland Code of Practice for the Building and Construction Industry (2009) • Sport and Recreation Sponsorship Policy (2009) • State Procurement Policy (2008) • Guidelines for the Issue of Harbour Towage Licences (2002) • Queensland Port Government Owned Corporations - Local Government General Rates

Equivalents Regime: Guidelines for Assessment, Collection & Payment (2000) • Transport Portfolio Code of Practice for Closed Circuit Television Systems (2007)

NQBP STATEMENT OF CORPORATE INTENT 2010-2011

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