stanwell - Queensland Parliament · Stanwell Corporation Statement of Corporate Intent 2013/14 I...

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1,0 Performance agreement

This Statement of Corporate Intent (SCI) and all attachments are presented in accordance with Chapter3, Part 8 of the Government Owned Corporations Act 1993 (GOC Act).

In accordance with Chapter 1, Part 3, Section 7 of the GOC Act, the SCI represents a formalperformance agreement between the Board of Stanwell Corporation Limited (Stanwell) and itsshareholding Ministers with respect to the financial and non-financial performance targets specified forthe financial year. The SCI represents an acknowledgment of, and agreement to major activities,objectives, undertaking, policies, investments and borrowings of Stanwell for 2013/14.

To perform its functions in accordance with the GOC Act's requirements to act commercially, the coreundertakings of the business are to operate coal-fired electricity generation plant at Stanwell PowerStation (SPS), Tarong Power Station (-I-PS) and Tarong North Power Station (TNPS), gas fired generationplant at Swanbank E Power Station (Swanbank E), Mackay Power Station and Mica Creek Power Stationand the hydro generation plant at Kareeya, Barron Gorge, Koombooloomba and Wivenhoe (small) powerstations and operating the Meandu Mine and managing other critical sources of fuel to support theneeds of the generation portfolio.

This SCI is consistent with Stanwell's 2013/14 to 2017/18 Corporate Plan submitted to, and agreed toby, shareholding Ministers in accordance with Chapter 3, Part 8 of the GOC Act.

In signing this document Stanwell's Board undertakes to achieve the targets proposed in the SCI for2013/14.

Major changes to key assumptions and outcomes detailed in this SCI, and which come to the Board'sattention during the year, will be brought to the attention of shareholding Ministers. Any modifications tothis SCI will be dealt with in accordance with the GOC Act.

This SCI is signed by the Chairman on behalf of all the Directors in accordance with a unanimousdecision of the Board of Stanwell.

............................ °.o°.,°,,

The Hon. Warwick Parer AMChairman

Date:

The Hon Tim Nicholls MPTreasurer and Minister for Trade

°° °o° °,° °o,,.,,,......,,,,., °,.°,,,.

The Hon Mark McArdle MPMinister for Energy and Water Supply

Date: Date:

Stanwell Corporation Statement of Corporate Intent 2013/14 I Commercial-in-Confidence Page 3 of 31

2.0 Objectives and initiatives

The Queensland electricity market is significantly oversupplied. Electricity demand has remainedsubdued over the past two years and the latest forecasts by the Australian Energy Market Operatorsuggest low demand growth for the next five years. Wholesale electricity prices are at similar levels tothose in 2001 and vertically integrated competitors are increasingly dominant.

As a result of all these factors, average wholesale electricity prices have decreased for the past fourconsecutive years and are now at a 12 year low; well below Stanwell's long run average cost (theaverage cost to the business to produce each MWh, over the life of the portfolio).

In response to the poor market conditions, Stanwell undertook two major initiatives during 2012, to takecosts out of the business:

corporate review: Identified capital and operating cost reductions over the next five years bydeferring capital expenditure, reducing internal labour (104 corporate positions) and reducingdiscretionary spend (advertising, travel, consultant and contractors); and

cold storage of two units at Tarong Power Station: Identified capital and operating cost reductionsby reducing capital expenditure, reducing 64 positions and reducing Stanwell's carbon liability.

Despite these initiatives being implemented and costs decreasing in accordance with expectations, theelectricity market has continued to be challenging. Further cost reform is required to assist thegeneration business to withstand market shocks and to ensure the budgeted $3.8 million net profit aftertax is achieved during 2013/14.

Stanwell has therefore implemented a major and fundamental review of workforce structure and workpractices across its generation and mining sites. Through the review, Stanwell management aims toachieve $40 million1 in annual expenditure savings. This review will require a major change to workpractices and procedures and the overall approach to operational and maintenance risk philosophies.Accordingly, the benefits from this review will ultimately be realised over a number of years from2013/14. The detail supporting these benefits will become better defined as the review progresses.

This stretch target will be measured against the operational costs contained within the 2013/14 budget.The figure of $40 million is based upon existing budget assumptions and represents the differencebetween the 2012/13 forecast net profit after tax and the 2012/13 budgeted net profit after tax.

Given Stanwell's diverse plant portfolio and the current market requirements of the portfolio, Stanwell isprepared to accept more operational risk. In light of this, the review at each site will:

• examine how to use technology better, to manage plant and operational risk and increase efficiency;

• critically examine all the work that is done to find areas where we can do less; and

• improve operations and maintenance work processes to reduce waste and increase productivity.

While a degree of improvement in the financial performance of the core generation business can beachieved through cost reform, the greatest driver of profitability for Stanwell is electricity revenue,Stanwell will endeavour to secure its forecast revenue by capitalising on opportunities that arise withinits key areas of strength (i.e. providing wholesale/retail hedging solutions to large industrials as well asdelivering value through trading opportunities across energy spreads).

Stanwelrs corporate objectives support its short term challenge of returning the core electricitygeneration business to profitability. These objectives can be summarised in three themes:

Simplify and streamline our business;Sell our energy for the best return; andSecure our future.

Progress against this stretch target will be reported in the 2013/14 Quarterly Reports to Shareholders

Stanwell Corporation Statement of Corporate Intent 2013/14 J Commercial-in-Confidence Page 4 of 31

Theme one: Simplify and streamline our business

Objective: Create value from the way we operate the generation portfolio

Initiative

Achieve best gross margin from the portfolio.

Deliver commercial returns from business operations

Manage asset integrity in line with marketrequirements

Outcome

-, Continue studies ofunit standby / storage options(and implementation if economically viable)Implement longer term flexible operation mode at

k Swanbank E p_ending outcomes of 2013 trialReview of capital expenditure program and continueto progress opportunities identified in the CapitalOptimisation Process (including unit overhaul scopereview at all sites, TPS and TNPS overhaul cycleoptimisation and optimisation of the mine operatingfleet requirements consistent with mine plan).Achieve a 10 per cent reduction in operatingexpenditure through reduced corporate support anddiscretionary expenditure to deliver costcommitments contained within the 2013/14 budget(against the 2012/13 budget).Continue to deliver against consolidated strategicprocurement plan with savings contained within the2013/14 budget:

Sustain progress to rationalise site servicecontracts across the generation portfolio.New facilities management and outage servicescontracts finalised and in place at all sites by 31December 2013.

Improve production cost effectiveness:Detailed plans and schedule in place to delivertargeted $40 million operational cost reductionagainst the 2013/14 budget2.Operations review - majority of reviewoutcomes implemented by 30 June 2014.

Continue to seek short term debt managementinitiatives to improve trading returns and contributeto reduced corporate debt liabilities.Reduce overall funding costs and minimise overalldebt.Executive managers' key performance indicatorsand incentive payments will continue to be linked tothe financial performance of the core generationbusiness.Implement asset management strategies andlifecycle plans that ensure asset integrity whileachieving required commercial outcomes:

NEM portfolio availability 92.1 per centNEM portfolio forced outage rate 3.2 per cent

Plant and equipment overhauls and sustainingcapital projects at power stations and minecompleted within approved cost and durationwindows.

Reduce fuel costs

Deliver lower cost coal to TPS and TNPS:By 30 June 2014:o New life of TPS and TNPS mine plan approved

(incorporating the development of the BoundaryPit)

o New life of mine plan implementationproceeding within approved schedule and costprojections.

o Fuel budgets based on new life of mine plan.

2 Progress against this stretch target will be reported within the 2013/14 Quarterly Reports to Shareholders


Manage water costs

Prefeasibility study completedÿ

- Secure commercial water supply agreement for TPSI and TNPSI

- Develop lowest cost to shareholder solution forBoondooma Dam spillway repairs.

Advocate for replacement of Water Grid contractswith commercial contracts.Ensure that appropriate emergency back up watersupply (price and volume) is available fromWivenhoe Dam.

Maximise value of Mica Creek Power Station in linewith finalised customer offtake contracts.

Continue to rationalise gas investments in line withCorporate and Gas Strategy.

Recover net-book value of gas investments.


Theme two: Sell our energy for the best return

Objective: Optimise trading revenue

Initiative Outcome

Optimise gross margin across the operations portfolio_ ÿ Develop and execute integrated spot, contract andfuel trading strategies that improve short and longterm revenue performance.Implementation of a carbon trading strategy whichaims to minimise the cost of carbon and utilises lowcost options (both domestically and internationally)to manage carbon ungertainty3.

Objective: Seek alternative outlets for our energy

Expand retail channels to market

Develop retail alliances.

Execute commercial long term hedging contracts.

increased volume of direct sales ÿ per cent oftargeted new customers won and• per cent ofexisting customers retained (where commerciallyviable to do so).

: Development of a retail alliance strategy includingthe assessment of key strategic retail partnerships.4

Implementation of processes to support tradingportfolio value extraction.

Effective risk, settlements, funding and accountingprocesses in place to meet trading requirements.

Objective: Diversify the revenue mix

Expand trading activities in line with Stanwell'sapproved trading & risk management policies.

Maximise value of the fuel portfolio

3 For the 2013/14 budget and five year financial plan, Stanwell has assumed that a long term carbon scheme is inplace with a fixed price until 2014/15 and a floating price from 2015/16 which is assumed to trend towardsEuropean Union prices.

4 The Queensland Government has announced arrangements for Stanwell to enter into wholesale energy contractingarrangements with Ergon Energy Queensland. Under this arrangement, Stanwell will contract modest volumes ofwholesale electricity to Ergon Energy Queensland from 1 July 2014 for up to four years. This will not have any majorimpact on our generation portfolio or our trading strategy.


Theme three: Secure our future

Objective: Provide a safe work place (where zero harm is the target)

Initiative

Continue to improve OH&S initiatives take up by theworkforce.

Continue to improve safety systems and processes.

OutcomeNumber of new safety initiatives identified - whole ofcorporation.Number of Zero Harm interactions complete - whole ofcorporation (5,000).Overall reduction in TRIFR and AIFR from the 2012/13result.

Rationalise systems of work Single Safe System of Work solution identifiedimplementation plan developed and key implementationmilestones being achieved by 30 June 2014.

Objective: Engage and retain a high performing workforce (with an optimised organisational structure)

Initiative

Deliver Cultural and Leader Development.

Prepare for the expiry of the Transition Principles

Outcome

Develop and deliver a Cultural Definition andEngagement Plan and Leader Framework.

, Develop new organisational policies and proceduresahead of the expiration of the Transition Principles on30 June 2014.

Negotiate Stanwell's Enterprise Bargaining Agreements Stanwell Power Station - by 31 March 2014

_ , m

Optimise organisation structure (to support the delivery Deliver cost commitments contained within the 20-13/i4of business objectives), budget

Objective: Secure ongoing support for Stanwell's operations and corporate direction

Initiative

Secure shareholding Ministers' ongoing support forStanwell's preferred corporate direction

Secure Stanwell's social licence to operate

Outcome

Communicate Stanwell's business model andassociated requirements to shareholding Ministers.

No negative feedback on Stanwell'scommunication of issues, key projects, operationsor corporate strategy.State Government policy decision makers andinfluencers understand the implications of keypolicy changes on Stanwell.

Build each asset's links with its local community toensure our key opinion leaders:

Have a relationship of trust with the management oftheir local Stanweil asset

- Believe the asset benefits the community.

In relation to Meandu Mine:No disruption to mining operations as a result ofrelationships with traditional owners.

Initiative

Govern the organisation for agility and Compliance

outcomeEnsure ongoing compliance with national legislation,standards and licences:

Zero material compliance breachesZero environmental enforcement actions.


Improve and simplify systems to support the business

Advocate for commercial mandate and further reductionin red tape with key regulatory submissions:

Regulatory reports and compliance submissionsdelivered within Commercial Monitoring timeframesand Stanwell resource constraints.Increased industry presence - Active engagement,both independently and as a member of industrybodiesRemove unnecessary regulation, improvegovernment policy and remove market distortions.

Develop a framework to identify key business functionsand supporting business processes, applications andtechnology platforms and evaluate the risk, cost andcomplexity of maintaining them:

Develop a prioritised schedule of work to reducethe risk, cost and complexity in the key areasidentified. Consolidate and improve processes andsystems to support the business.

Stanwell Corporation Statement of Corporate Intent 2013/14 [ Commercial-in-Confidence Page 9 of 31

Key performance indicators

2.1 Financial and non-financial key performance indicatorsRefer Appendix A for definition of the key performance indicators in this section.

Year to date 2013/14Sep Dec Mar Jun

0 0 0 00 0 0 00 0 0 00 0 0 00 0 0 0

1,250 2,500 3,750 5,000

58.6 122.9 206.4 277.5

7.0 15.5 29.5 39.5

9.4 23.5 57.4 75.7

(27.3) (9.6) (57.2) (75.4)(7.3) (3.1) 1.6 3.8

4.0% 3.9% 4.4% 4.2%

(9.0)% (8.1)% (6.3)% (6.2)%(2.4)% (1.7)% 0.2% 0.3%35.3% 32.4% 30.2% 37.2%

4.7 5.0 5.4 5.8

9.7 90.5 125.3 182.0

Key Perfomance Indicators

Safety & Environment Performance

Lost ]3me Injury Frequency Rate (LTIFR)Total Recordable Injury Frequency Rate (TRIFR)

All Injury Frequency Rate (A1FR)Notifiable Safety IncidentsEnvironmental Enforcement Actions

Zero Harm InteractionsFinancial

EBITDA ($M)Generation Operating Profit (Loss) ($M)Eamings/(Loss) Before Interest and Taxation ($M)Net Profit/(Loss) After Tax - Generation ($M)

Net Profit!(Loss) After Tax ($M)Retum on Operating AssetsRetum on Equity - Generation

Return on EquityGearingEBITDA interest cover - times

Capital Expenditure ($M)Gross Profit Indicators (NEM)

Realised Price per MWh sold (nodal) ($/MWh)Costs ($/MWh sold)

perational Performance

NEM generators

2012/13Forecast

2013/14Budget

87.9% 89.7% 91.2% 92.1% Availability (%)

3.2% 3.2% 3.2% 3.2% Forced outage factor (%)Generation and site support costs ($/MWh sold)

........................................................................... Creek

93.0% 93.8% 93.7% 93.9% Availability (%)

3.0% 3.0% 3.0% 3.0% Forced outage factor (%)People

908 908 908 908 Net FTE personnel numbersN/A N/A N/A N/A Contractor numbers

306.4 277.5

51.7 39.5

117.2 75.7

(81.4) (75.4)31.9 3.8

6.0% 4.2%

(6.7)% (6.2)%2.6% 0.3%

36.5% 37.2%6.4 5.8

182.0 182.0

0 00 00 00 00 0

5,000 5,000

89.9% 92.1%3.2% 3.2%

90.2% 93.9%3.0% 3.0%

922 908N/A N/A


3.0 Financial Information

3.1 Income statement

Year to date 2013/14 2012/13 2013/14Sep Dec Mar Jun Forecast Budget

113.4 228.3 346.5 470.2 501.9 470.2

$'M EscalatedElectricity Pool Sales RevenueContract RevenueFuel CostsCarbon PermitsOther RevenueGross Profit

(107.8) (215.7) (321.5) (435.4) (450.1) (435.4)

Operations & Site Support CostsCorporate SupportDepreciation & AmortisationOperating Expenses

Coal MiningDepreciation & Amortisation Mining

(0.3) (0.5) (0.8i " (2.4) Net Contributions from Subsidiaries ...... (5.7) (2.4)

1.7 3.5 5.3 7.1 Other Operating Revenue 5.5 7.1

7.0 15.5 29.5 39.5 Generation Operating Profit (Loss) 51.7 39.5

9.4 23.5 57.4 75.7 117.2 75.7

(19.9) (38.3) (55.2) (70.5) (71.8) (70.5)3.2 4.5 (0.5) (1.4) (13.4) (1.4)

(16.7) (33.8) (55.7) (71.9) (85.3) (71.9)(7.3) (10.3) 1.6 3,8 31.9 3.8

Non Operating Revenue/(Expense)Fixed Water CostsRestructure Costs

Impairment ExpenseCoal RebateFair Value Movements - Derivatives

Earning Before Interest & TaxNet Interest ExpenseIncome TaxInterest and Tax

Profit (Loss) After Tax

- - - (3.0) Dividends Provided for Current Year (25.5) (3.0)(7.3) (10.3) 1.6 0.8 Profit (Loss) After Tax & Dividends 6.4 0.8

Employee ordinary time and oncosts included in Income Statement:(32.2) (64.1) (96.1) (136.7) Employee ordinary time and oncosts (143.5) (136.7)

Through Stanwell's review of its operational sites, management aims to achieve $40 million in annual expenditure savings. Thisreview will require a major change to work practices and procedures and the overall approach to operational and maintenance riskphilosophies. Accordingly, the benefits from this review will ultimately be realised over a number of years from 2013/14. The detailsupporting these benefits will become better defined as the review progresses.

Transactions with ownersYear to date 2013/14 2012/13 2013/14

Sep Dec Mar Jun $'M Forecast Budget0.0 0.0 0.0 3.0 Dividends 25.5 3.07.7 14.8 20.7 26.2 Tax Payments (9.6) 26.2

- - - Equity Injections

Stanwell Corporation Corporate Plan 2013/14 - 2017/18 1 Commercial-in-Confidence Page 12 of 31

3.2 Balance sheet

Year to date 2013/14Sep Dec Mar Jun $'M Escalated

Current Assets46.3 46.3 46.3 46.3 Cash

129.5 127.6 113.9 122.7 Receivables120.0 120.7 121.5 123.1 Inventories53.1 38.6 43.3 29.6 Derivative Assets - Current

149.3 145.8 142.2 138.6 Other498.2 479.0 467.1 460.4 Total Current Assets

2012/13Forecast

46.3106.2119.365.6

138.6476.1

2013/14Budget

189.9 179.8 179.3 189.8 Creditors283.3 358.6 365.1 188.4 Provisions19.8 15.8 16.7 13.3 Derivatives - Current6.1 6.1 6.1 6.1 Other Current

499.1 560.4 567.2 397.7 Total Current Liabilities

1,843.8 1,806.4 1,764.5 1,793.3 Total Liabilities

1,260.0 1,251.7 1,266.1 1,262.6 Net Assets

1,214.7 1,214.7 1,214.7 1,214.7 Capital12.0 6.8 9.4 6.5 Reserves33.3 30.2 42.0 41.4 RetainedEarnings

1,260.0 1,251.7 1,266.1 1,262.6 Total Equity

733.7 645.4 592.9 793.9 Borrowings591.2 588.1 588.4 585.9 Provisions

2.9 (0.3) 3.8 4.7 Income Tax Payable2.6 2.6 2.6 2.6 Other

14.2 10.4 9.6 8.6 Derivatives - Non Current1,344.7 1,246.1 1,197.3 1,395.6 Total Non-Current Liabilities

3,103.8 3,058.2 3,030.6 3,056.0 Total Assets

2,362.442.388.130.765.7

2,589.2

3,065.2

174.4192.220.9

6.1393.6

777.5593.7

8.72.6

18.21,400.6

1,794.2

1,271.0

1,214.715.540.8

1,271.0

2,379.9 2,352.9 2,337.4 2,356.7 Property, Plant and Equipment42.3 42.3 42.3 42.3 Exploration Eval & Development88.1 88.1 88.1 88.1 Intangibles16.3 3.4 3.2 1.0 Derivatives - Non Current79.0 92.5 92.6 107.5 Other

2,605.6 2,579.2 2,563.5 2,595.6 Total Non-Current Assets

46.3122.7123.129.6

138.646O.4

2,356.742.388.1

1.0107.5

2,595.6

3,056.0

189.8188.413.3

6.1397.7

793.9585.9

4.72.68.6

1,395.6

1,793.3

1,262.6

1,214.76.5

41.41,262.6


3.3 Cash flow statement

Year to Date 2013/14Sep Dec Mar Jun

450.7 909.5 1,345.6 1,770.3(327.3) (616.6) (946.0) (1,497.0)(14.4) (30.1) (43.9) (56.6)(7.7) (14.8) (20.7) (26.2)

101.3 248.0 334.9 190.5

$'M EscalatedCash Flows from Operating ActivitiesCash Receipts in the Course of OperationsCash Payments in the Course of OperationsBorrowing Costs PaidIncome Tax PaidNet Cash Provided by Operating Activities

2012/13Forecast

1,673.5(1,297.8)

(53.7)9.6

331.6

- (o.o) (o.o) (o.0)46.3 46.3 46.3 46.346.8 46.3 46.3 46.3

(43.8) (132.2) (184.6) 16.4- (25.5) (25.5) (25.5)

(43.8) (157.7) (210.1) (9.1)

Cash Flows from Financing ActivitiesDrawdown/(Repayment) of BorrowingsDividends PaidNet Cash Provided by (Used in)

Net Increase (Decrease) In Cash HeldCash at the Beginning of the PeriodCash at the End of the Period

Cash Flows from Investing ActivitiesPayments for Property, Plant and EquipmentNet Cash Used in Investing Activities

(57.5) (90.3) (124.8) (181.4)(57.5) (90.3) (124.8) (181.4)

(273.0)(273.0)

5.3(63.9)(58.6)

(0.0)46.346.3

2013/14Budget

1,770.3(1,497.0)

(56.6)(26.2)190.5

(181.4)(181.4)

16.4(25.5)

(9.1)

0.0

46.346.3


4.0 Compliance with GOC legislation and policies

4.1 GOC legislation

Community Service ObligationsStanwell does not have any community service obligations as defined by s112 of the GOC Act.

DividendsStanwell intends to recommend a dividend of 80% of Net Profit after Tax unless otherwise agreed withshareholding Ministers in accordance with s131 of the GOC Act or limited by the Corporations Act 2001.

Employment and Industrial Relations (E&IR) PlanAn E&IR Plan meeting the requirements of s149 of the GOC Act and the GOC Wages Policy 2012 isprovided in Appendix D.

4.2 GOC policiesThe Board acknowledges and has put in place governance mechanisms to ensure compliance with GOCpolicies including:

Code of Practice for Government owned Corporations' Financial Arrangements (2009)Corporate Entertainment and Hospitality Guidelines (2008)Corporate Governance Guidelines for Government Owned Corporations (2009)Cost of Capital Principles - Government Owned Corporations (2006)Key Shareholder Requirements for Constitutions (2006)Government Owned Corporations Wages Policy (2012)Guidelines for Export of Services by Government Owned Corporations (2001)Investment Guidelines for Government Owned Corporations (2011)Government Owned Corporations Guidelines for Joint Venture Arrangements (2011)

Specific statements of compliance are made as follows:

The Board will ensure Stanwell takes full responsibility to ensure that prudent financial practices will beapplied 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, whereapplicable, the Corporations Act 2001, this includes a commitment to:

Abide by the Code of Practice for Government Owned Corporations" Financial Arrangements (Codeof Practice), as issued by the Queensland Government; andEstablish, maintain and implement appropriate financial risk management practices and policiesrequired and as specified in the Code of Practice.

Stanwell has adopted all the recommendations in the Corporate Governance Guidelines.

The Board notes the shareholding Ministers' approval threshold for capital projects of $15 million andwill submit such projects for shareholder approval following Board approval. In order to ensurecertainty, reduce overall cost and risk, Stanwell will seek an annual approval of its statutory overhaulprogram. The Board notes the notification threshold for capital projects of $10 million.

Stanwell's Board-approved weighted average cost of capital calculation is included in Appendix C.


Appendix A Definitions

Item Definition

All Injury Frequency Rate(AIFR)

Availability factor

All injuries in the period/number of hours worked in the period X 1,000,000.YTD figures are based on a 12 month moving average. Includes first aid,medical treatment and lost time injuries. Includes employees, contractorsand third party sites

Measures the percentage of total plant capacity that is actually available toproduce power, reported as a percentage.

[Installed plant capacity (MW) x 8760 - MWh losses due to outages] x 100%Installed plant capacity (MW) x 8760MWh losses can be attributed to all causes (planned, maintenance andforced).

Average Realised Price perMWh Sold - nodal ($/MWh)

Capital Expenditure

Calculated as the sum of electricity sales revenue from NEM generatorsdivided by total energy sold on the NEM.

Amount incurred by the GOC on capital projects to the end of the reportingperiod.

EBIT 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.

EBITDA Interest Cover Earnings before Interest, Tax, Depreciation and Amortisation (but after anyabnormal or extraordinary items) divided by interest cost (for clarity - includescapitalised interest, but excludes interest unwind related to provisions).

Energy sent out

Environmental EnforcementAction

Measures total production of the generator, net of power used internally (inboth unit and station auxiliaries). For clarity net of imports. Measured in GWh.

--.

Includes the issue by an Environmental Regulator of an infringement notice,an environmental protection order, a program notice, a notice requiring thepreparation and submission of a draft environmental management program,or the institution of any court proceedings. Environmental ImpactAssessment processes are excluded from this definition.

Forced outage factor

Full Time Employeeequivalent (FTE)

Proportion of plant capacity that is unavailable due to forced outage.MWh out of service due to forced outage x 100%

Installed Plant Capacity (MW) x 8760

The headcount percentage measure determined by comparing the number ofhours an employee is paid, against the hours an employee is paid on a fulltime arrangement which has a FTE of 1. Most full time arrangement hours areeither 36.25 or 40 hours/week. Some employees (particularly at Mica Creek)have slightly higher hours/week.

Fuel Cost Total fuel costs or energy inputs expenses

Gearing Debt / Debt + Equity

Generation and site supportcosts ($/MWh sold)

Operations and site support costs ($/MWh sold) is calculated as operationsand site support costs, divided by electricity sold. Fuel, carbon, portfoliorenewal, marketing and trading tem costs and corporate support costs areexcluded.

Generation Operating Profit(Loss)

Earnings Before Interest and Tax, excluding fair value movements onderivatives, coal rebate revenue, one-off transactions, the fixed cost portionof the grid water contracts and organisational restructure costs.

Gross Profit Includes all Energy sales, including electricity, fuel sales, renewable energycertificates, market charge.


Item Definition

Lost Time Injury FrequencyRate (LTIFR)

The number of lost time injuries in the period / number of hours worked in theperiod X 1,000,000. YTD figures are based on a 12 month moving average.Includes employees, contractors and third party sites

Notifiable Safety Incidents

Net Profit After Tax -Generation

Net Profit After Tax

Health and safety events that are notifiable to:1. Workplace Health and Safety QId in accordance with the requirementsunder the Workplace Health and Safety Act 1995 and associated Regulation.2. The Electrical Safety Office in accordance with the requirements under theElectrical Safety Act 2002 and associated Regulation.

3. The Petroleum and Gas Inspectorate in accordance with the requirementsunder the Petroleum and Gas (Production and Safety) Act 2004 andassociated Regulation.

Group net profit after tax excluding the coal rebate revenue.

Group net profit after tax.

O&M Expenditure(excluding fuel) $/MWh Sold

Return on Equity

Operation and maintenance costs excluding fuel divided by the MWh sold.

...

Group net profit after tax (but before any abnormal or extraordinary items)divided by the average contributed equity.

Return on Operating Assets Group Earnings before Interest and Tax (but after any abnormal orextraordinary items), less income from investments, divided average of groupoperating assets.

Total Recordable InjuryFrequency Rate (TRIFR)

Recordable injuries in the period/number of hours worked in the period X1,000,000. TRIFR is a combination of Lost Time and Medical TreatmentInjuries. Includes employees, contractors and third party sites.

Zero Harm Interactions An 'interaction' is a direct conversation between two staff in which theobserver provides feedback on any appropriate (for example - 'safe')behaviour and seeks commitment to change any inappropriate (for example -'unsafe') behaviour.


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Appendix C Weighted average cost of capital

Stanwell will present investment proposals to shareholding Ministers in accordance with the Cost ofCapital Principles - Government Owned Corporations. However, in addition a 'Market Approach' is usedfor the purposes of asset impairment testing and for evaluating proposals in a competitive marketprocess. This ensures consistency with the practices of other market participants.

Details of Stanwelrs Weighted Average Cost of Capital (WACC) calculations are provided below.

Assumptions

Risk free rate

Market risk premium

Debt margin

Asset beta

Equity beta

Corporate gamma

Corporate tax rate

OGOC MarketApproach Approach

m mmF

30% 30%

Cost of debt (pre-tax)

Credit rating

Debt to capital

Cost of equity (pre-tax)

WACC

Pre-tax nominal

Post-tax nominal !

The WACC figures have been calculated using the post tax nominal methodology which is of the form:

kd * (1-Tc) * (D/V) + ke* [(1-Tc) / (1-Tc(1-y))] * (E/V)

Where kd = cost of debt

ke = cost of equity

y = Gamma

DVEV

= Market value of debt as a proportion of the market value of equity and debt

= Market value of equity as a proportion of the market value of equity and debt, (1-D/V)

Tc = Corporate Tax rate (30%)

Stanwell Corporation Corporate Plan 2013/14 - 2017/18 I Commercial-in-Confidence Page 20 of 31

Methodology- OGOC approachReturn on Equity

As proposed by OGOC, Stanwell has used the Capital Asset Pricing Model ('CAPM') as a basis fordetermining return on equity as an input to the WACC model.

The inputs into the CAPM have been calculated as follows:

Risk Free Rate

Market Risk Premium

Beta

The derivation of asset, equity and debt betas is inevitably a subjective exercise. As is common for allGOCs, equity betas cannot be directly observed necessitating the analysis of comparable entities.Accordingly, Stanwell has obtained a sample of appropriate firms and used this as a surrogate for anequity beta. This is in accordance with the Cost of Capital principles.

Cost of Debt

The cost of debt be defined as the inal rate at which an can raise debt financing.

Pre or Post Tax

As reflected in the methodology section above, Stanwell has adopted a post tax WACC methodology. Inaddition, the current statutory tax rate of 30% has been used in arriving at a post tax return. This is inaccordance with the OGOC principles.

Dividend Imputation

OGOC has recommended that GOCs use a dividend imputation of zero on the basis that Government,as owner, is not able to obtain the tax benefits of dividend imputation. As a result, by default the OGOCprinciple and the methodology adopted by Stanwell agree.

Capital Structure

Company gearing berate.

through use of an actual rate or the adoption of a target or

Real or Nominal WACC

Review Process

Stanwell reviews its WACC annually due to the potential volatility of the various parameters. This alignswith the proposed review period included in the Cost of Capital principles.

Methodology - Market ApproachThe market approach more closelÿthe debt markets.

ns to actual term of funding which is available to cor

All other parameters remain as per the OGOC approach.


Appendix D Employment and Industrial Relations plan

Stanwell Co,poral:ion LimitedEmployment and Industrial Relai:ions Plan 2013-2014

This Employment and Industrial Relations Plan applies to Stanwell and its subsidiary companies.

1. E&IR philosophy/direction:

Stanwell is currently operating in a very competitive, oversupplied electricity market with decliningdemand. This challenging climate necessitated immediate action in which a review of our operatingmodel and team functions was undertaken to ensure the best organisational structure is in place toachieve our objectives. During this challenging time we continue to promote our mission, vision andthree core values of being safe, responsible and commercially focussed.

There are seven Enterprise Agreements that outline conditions of employment for Stanwell employees.All agreements include productivity increases, incentive payments and effective training systems to ensure afocus on Stanwell's strategic outcomes. Stanwell is committed to the productivity initiatives agreed to inthe Enterprise Agreements and continues to focus on finding further efficiency gains across theCorporation to improve the business and ensure a strong, viable future.

2. Significant and emerging issues:

Review of Stanwell operating model and team functions

Stanwell commenced a review of its operating model and team functions in July 2012 in response to theimpact on the generation side of the business of the falling electricity demand and intense competition.The review initially focussed on the corporate division's workforce requirements and later a review of theworkforce requirements at TPS.

The review of TPS workforce requirements arose from a decision to place two Units into cold storage.Both the review of the corporate divisions and TPS workforce requirements has resulted in a number ofemployees exiting the business through Voluntary Redundancy. The review is an ongoing process toensure we have the right organisational structure in place to deliver on our corporate strategy.

Learning and development

The Board and the Executive Leadership Team have adopted a long-term approach to Stanwell's humanresource strategy to ensure it is capable of meeting future technical, operational and senior managementrequirements. As an owner and operator of a high-cost asset in a competitive market, however, thecompany is also committed to developing our people through cost-effective and targeted developmentstrategies.

For 2013/14, this will mean a renewed focus on learning initiatives within the workplace, supported byindividual development. This practice aims to ensure that any investment in development initiativesrigorously considers the requirement to build organisational capability, retain skilled individuals whilemeeting our legislative requirements.

Attraction and retention

The Corporation continues to seek to ensure that it has the appropriate skills to operate and maintain itsplant, to effectively participate in the electricity market, to maintain compliance with the relevantlegislation, regulations and standards pursuant to the electricity industry and to manage the businesssafely and efficiently.

The recent review to optimise the workforce structure, supported by a significant reduction in turnoverfor the 2012/13 period, has shifted our attention from external attraction activity to our internal talentmanagement. We are expecting that 2013/14 will require a renewed focus on retaining the skills,experience and expertise required to meet the strategic objectives of the organisation.

Stanwell Corporation Corporate Plan 2013/14 - 2017/18 I Commercial-in-Confidence Page 22 of 31

3. CEO and senior executives' remuneration

Senior executive remuneration complies with Senior Executive remuneration guidelines.

CEO and senior executives as at I January 2013

Richard Van Breda(Chief Executive Officer)Wayne Collins (ChiefOperating Officer)Jenny Gregg (EGMBusiness Services)

511,863

334,871

233,743

51,186

33,487

29,758 34,080 3,704*

Michael O'Rourke (Chief 268,870 29,874Financial Officer) j* Private Hospital Insurance included as a result of contract extension that references that Tarong EnergyRemuneration Policy

Richard Van Breda(Chief Executive Officer)Wayne Collins (ChiefOperating Officer)Jenny Gregg (EGMBusiness Services)Michael O'Rourke (ChiefFinancial Officer)

563,049 51,421

368,358 45,331

,297,581 35,696

298,745 39,465

1. Includes salary sacrifice items plus cash salary.2. Employer contributions to superannuation (other than by salary sacrifice).3. Value of a motor vehicle for business and personal use (other than by salary sacrifice).4. Have access to pool car park.5. Includes, but is not limited to, general/expense allowances, subscriptions, home telephone/communication expenses, FBT

not elsewhere included, etc. (other than by salary sacrifice).6. Sum of columns 1 to 5.7. Include the value of non-personal benefits provided to the Executive to assist in the performance of their duties.8. This is the actual payment made in the year immediately preceding the plan year relating to performance in the financial

year two years prior to the plan period.

4. Employment conditions

Stanwell is required to comply with the minimum employment standards contained in the Fair Work Act2009 (Cth) (Fair Work Act) and reflected in the National Employment Standards (NES).

This Employment and Industrial Relations Plan meets the requirements of s.149 of the GOC Act 1993.

Enterprise agreements

The table below sets out the awards or industrial instruments applying to Stanwell and the number ofemployees covered by each Enterprise Agreement. Most recently, the Tarong Power Stations EnterpriseAgreement 2012 was approved on 1 November 2012 and was operative from 8 November 2012.

Stanwell Corporation Corporate Plan 2013/14 - 2017/18 i Commercial-in-Confidence Page 23 of 31

Electrical Power EmployeesIndustry Award classified

Stanwell PowerStationEnterpriseAgreement 2011StanwellCorporationLimitedCorporateOfficesEnterpriseAgreement 2011Kareeya PowerStationEnterpriseAgreement 2011Barron GorgePower Station -EnterpriseAgreement 2011

Mica CreekEnterpriseAgreement2011

Stanwell PowerStation employees(191 employees)

Not applicable Federal

Barron GorgePower Stationemployees(19 employees)Mica Creek PowerStation mechanicaland technicalemployees, tradesand watertreatment(26 employees)

SwanbankPower StationEnterpriseAgreement 2011

Tarong PowerStationsEnterpriseAgreement 2012

Swanbank PowerStation(59 employees)

Tarong PowerStation andTarong NorthPower Station(286 employees)

Kareeya PowerStation employees(14 employees)

31 March 2014

30 October 2014

23 December2014

23 December2014

31 August 2014

11 March 2015

29 July 2015

Corporate Officeemployees(227 employeeswhich includeslegacy TarongEBA employees)

Federal

Federal

Federal

Federal

Federal

Federal

Federal

The modern award will be usedto apply the "Better Off OverallTest" for the approval of theEnterprise Agreements. Themodern award will apply whenit is referenced in an EnterpriseAgreement.

New Agreement approved byFair Work Australia.

New Agreement to includelegacy Tarong and CS Energycorporate office staff.New Agreement approved byFair Work Australia.





New Agreement approved byFair Work Commission.

Productivity initiatives

Below are the productivity initiatives outlined in the following Agreements:

Swanbank Power Station Enterprise Agreement 2011

ProductivityProgram

Callout andAvailabilityArrangements

Source ofproductivityinitiativeAttachment4 ofEnterpriseAgreement

Target

Implement a revised Swanbank Callout Roster with reduction of the number ofemployees and time on-call from four employees to two employees.

Stanwell Corporation Corporate Plan 2013/14 - 2017/! 8 1 Commercial-in-Confidence Page 24 of 31

ProductivityProgram

Permit To WorkSystem

Delivery ofInternal Training

Source ofproductivityinitiativeAttachment4 ofEnterpriseAgreementAttachment4 ofEnterpriseAgreement

Target

E-Recruitment

E-Learning

EmergencyResponse

Attachment4 ofEnterpriseAgreement


Increase flexibility in role requirements to include all aspects of the PTW systemacross all Swanbank assets.These changes are designed to improve both safety and the efficiency of the PTWSystem.Utilising existing 'remaining employees' (those employees who do not have aspecified role at Swanbank but have not accepted voluntary redundancy) todeliver internal training to employees - this will reduce the need to source externaltraining companies.Stanwell will require at least two of the remaining employees to undertake aworkplace training and assessment program to allow them to undertake criticaland mandatory internal training of employees in matters such as confined spacespermit to work and working at heights.Stanwell will establish an internal recruitment function with an E-Recruitmentplatform. Once established, vacancies will be managed through the E-Recruitmentsystem. This initiative will result in a reduction in the cost of recruiting. Allemployees will be required to use the E-Recruitment system. This initiative willalso streamline the recruitment process and allow employees to remain focussedon operational duties.

During the life of the agreement, targeted training programs will be deliveredonline and this will reduce the number of hours that employees are engaged inface-to-face programs. This flexibility will allow an employee to undertake trainingat suitable times so they can remain focussed on their operational duties.This initiative will result in the transition of the Swanbank Power Station incidentresponse from Emergency Rescue Team to a First Response Group and will leadto reduced training requirements. The change will remove the need for 8 hourstraining every two weeks for the six personnel.The intention of these changes is to provide additional training to selectedSwanbank employees to provide First Response to incidents and assistQueensland Fire and Rescue Service with the coordination of response activities.

Mica Creek Power Station Enterprise Agreement 2011

ProductivityProgram

ImprovedAvailability

Clarification ofpublic holidaypayments

Source ofproductivityinitiativeAttachment6 ofEnterpriseAgreement


Target

Existing maintenance staff will be placed on overhaul rosters to ensure adequatecoverage for overhauls. This will result in increased skill development foremployees and less use of contractors. It will also improve the capacity of the Siteto manage and optimise the operation and output of new plant. Flexibly coverwork peaks with staff who are already versed in the priorities involved inmothballing exhausted plant.The types and numbers of contractors that will be reduced are as follows:

> Overhaul Planners (2);Overhaul Execution(I); andOverhaul Contractor Managers (3)

The Agreement will include a clause to include further clarification oncompensation for working public holidays including 4 scenarios and this will resultin savings in HR, Management and employee time in seeking clarification of publicholiday penalties and payments. This will result in employees and management'stime being freed to concentrate on operational duties. Further detail is provided inClause 5.2 of the Agreement.

Barron Gorge Power Station Enterprise Agreement 2011

ProductivityProgram

Hydro CleanSweep

PMSD and SDReviews

Employees will commit to:• Undertaking one area audit at least fortnightly on a rotating basis through

Clean Sweep areas;• Follow the actions (from the hydro clean sweep) within the designated time

set out in the action; and• Maintaining the level 5 standards as provided for by the audits.Employees will commit to:• Participate in the review of the Plant Management Strategy Documents

(PMSD);• Feed back information on the effectiveness of Service Definitions (SD)

reviews; and• Book work history, the time allocated to a job, complete check sheets and

close out work orders (within 7 days for non outage work and within 30 daysfor major activities).

Source ofproductivityinitiativeClause 3.2.8of EnterpriseAgreement

Clause 3.2.8of EnterpriseAgreement

Target


Kareeya Power Station Enterprise Agreement 2011

ProductivityProgram

Hydro CleanSweep

Source ofproductivityinitiativeClause 3.2.7of EnterpriseAgreement

Target

Reviews

Employees will commit to:• Undertaking one area audit at least fortnightly on a rotating basis through

Clean Sweep areas;• Follow the actions (from the hydro clean sweep) within the designated time

set out in the action; and• Maintaining the level 5 standards as provided for by the audits.Employees will commit to:• Participate in the review of the Plant Management Strategy Documents

(PMSD);• Feed back information on the effectiveness of Service Definitions (SD)

reviews; and• Book work history, the time allocated to a job, complete check sheets and

close out work orders (within 7 days for non outage work and within 30 daysfor major activities).

of EnterpriseAgreement

Clause 3.2.7PMSD and SD

Stanwell Power Station Enterprise Agreement 2011

ProductivityProgram

Training Day

Common RDO

Source ofproductivityinitiativeClause 4.8of EnterpriseAgreement

Clause 4.2.1of EnterpriseAgreement

Target

Two additional rostered attendances per year will be introduced for the purposesof training. The parties commit to ensuring that full employee attendance isachieved in order to deliver the productivity benefits associated with this initiative.Employees will be required to attend two training days per year on what wouldnormally be Rostered Days Off (RDOs). Stanwell Power Station shall commit toscheduling training days at various times during the year to ensure opportunitiesexist for individuals to retain training currency, maximise attendance and realisethe productivity benefits from consolidated and streamlined scheduling of trainingdays.An employee who cannot attend a scheduled training day will be required to meetthe commitment of the two training days per year by attending an alternatetraining day/s.Category A Roster Minimum / Maximum Teams will be implemented during the2011 Enterprise Agreement. The majority of employees will move to an agreedRDO, while a small team is identified and developed for alternate RDO coverage.

Stanwell Corporation Limited Corporate Offices Enterprise Agreement 2011

ProductivityProgram

E-Recruitment

E-Learning

On-linePerformanceReviews

Source ofproductivityinitiativeClause 3.2.6of theEnterpriseAgreement

Clause 3.2.6of theEnterpriseAgreement

Clause 3.2.6of theEnterpriseAgreement

Target

Stanwell will establish an internal recruitment function with an E-Recruitmentplatform. Once established, vacancies will be managed through the E-Recruitment system. This initiative will result in a reduction in the cost ofrecruiting.All employees will be required to use the E-Recruitment system.

This initiative will also streamline the recruitment process and allow employees toremain focussed on operational duties.

During the life of the Agreement, targeted training programs will be deliveredonline and this will reduce the number of hours that employees are engaged inface-to-face programs.

This flexibility will allow an employee to undertake training at suitable times sothey can remain focussed on their work duties.

The current Stanwell Performance Review system for corporate employees ismanual and paper-based. As a result significant productivity time is lost throughthe physical administration of the system both by employees, managers,administration and human resources staff.

Stanwell proposes to review and implement in the life of the Agreement an on-linePerformance Review program. It is anticipated this program will be delivered in thelast year of the Agreement.


Tarong Power Stations Enterprise Agreement 2012

ProductivityProgram

Reduction inContractor Use

Source ofproductivityinitiativeClause 3.2.4 ofthe EnterpriseAgreement

Target

Reduction ofAccess PTWs atTPS and TN

Five SImplementation

Common StartTime

The greater efficiencies available as a result of the Tarong control systems refitwill allow for the release of TPS operators to be trained at Tarong North PowerStation (TNPS). This will allow these operators to supplement rosterrequirements at TNPS when necessary. The need to bring in contract operatorswill then be minimised. Under this agreement, employees across all workgroups at TPS agree to be available for and assist in the reduction ofcontractors use at TNPS.

A review of the permit to work program has been undertaken to ensure moreproductive operations particularly in the Production and Maintenance areasacross Tarong Power Station and Tarong North Power Station.Under this Agreement employees agree to a change of work practises to reducethe number of Access Permits to Work. Guidelines will be developed to outlinethe changes in work practices for the issue of Access PTWs.Under this agreement employees commit to effective implementation of 5Sprocess with work areas and processes being progressively sorted, cleaned,made orderly and organised, creating a safe and efficient work place. Theoutcomes of implementation will improve site safety as well as make work areasand storage location more organised. This will ensure that all items are storedand placed appropriately, providing significant productivity increases in timeutilisation and removal of wasted space and materials.This initiative should allow more productive time for Stanwell employees with areduction of the maintenance backlog. The initiative will be measured throughthe 5S audit process which includes measuring for improvements.

During the life of the Agreement, targeted training programs will be deliveredonline and this will reduce the number of hours that employees are engaged inface-to-face programs.

This flexibility will allow an employee to undertake training at suitable times sothey can remain focussed on their work duties.

E-Learning modules will incorporate adult learning principles to ensure trainingeffectiveness. Training objectives will be reviewed by internal subject matterand learning and development specialists to ensure the suitability of an e-learning delivery mode. Alternative support or training facilitation options will beimplemented for employees who have special learning needs or other learningimpediments.Elements of a course may require face to face while other elements could bepart of an on-line component. Examples of where on-line would not beappropriate include:

Confined Space Level 2 or Confined Space Level 3 in the first instance- Conflict Resolution / Communication Skills / Leadership Development

Slinging Awareness- Working safely with heights / awareness- Control, containment & clean-up of Oil Spills- Switching Officer in the first instance

Switching Sheet Writer in the first instance- PTW Officer in the first instance

Breathing Apparatus (incl. refreshers)

The current Stanwell Performance Review system is manual and paper-based. As a result significant productivity time is lost through the physicaladministration of the system both by employees, managers, administrationand HR staff.

Stanwell proposes to review and implement in the life of the Agreement an on-line Performance Review program. It is anticipated this program will bedelivered in the last year of the AgreementUnder this Agreement employees agree to implement a common start time atTarong Power Station (TPS) and Tarong North Power Station (INPS). PreviouslyTarong site day employees commence work at 0730 with the shift peoplestarting at 0700. Employees commit to a start time of 0700 at TPS and TNPS.This initiative would generate productivity gains to allow synchronised start-upmeetings for all site people, a more efficient pick-up process for work permits,more 'daylight' at the end of the day to finish work/start up plant. It would alsoallow closer alignment with contractors who will be required to start at 0700 andwill lead to improved availability of some plant (for example the coal and ashplants).Employees whose personal circumstances prevent them from starting at 0700will be able to continue to commence at 0730. This will be managed through theflexible work policy.

On-linePerformanceReviews

Clause 3.2.4 ofthe EnterpriseAgreement





E-Learning

Stanwell Corporation Corporate Plan 2013/14 - 2017/181 Commercial-in-Confidence Page 27 of 31

Other employment conditions

Stanwelrs enterprise agreements provide for Individual Flexibility Arrangements which include provisionssuch as the ability to take Long Service Leave and Paid Maternity Leave at half pay and the ability toextend the period of Parental Leave.

The following work practices are also available to employees of Stanwell and may provide employeeswith the flexibility to manage the balance between work, family and lifestyle:

Part-time arrangements

Flexible work hours

Reduced working year

Paid maternity / paternity /adoption leave

Telecommuting (work fromhome)

Employees have the ability to apply for reduced working hours followingparental leave under their applicable Enterprise Agreement and theNational Employment Standards.Compressed hours are available so that employees are able to work a 9day fortnight or a 4 day week depending on the Enterprise Agreementapplicable to the employee. Further flexible work arrangements areprovided through Stanwell and legacy Tarong policies or procedures.Employees may also manage their own start and finish times with theagreement of management;Purchased leave arrangements are provided in Stanwell and legacy Tarongflexible work arrangement policies with the ability to purchase leave(between two and 4 weeks depending on their legacy arrangements);Employees are able to apply for periods of paid and unpaid leave under theNational Employment Standards and under their applicable EnterpriseAgreement with 14 weeks paid maternity leave (on top of the FederalGovernment paid 18 weeks).Stanwell provides the ability to work from home with the agreement ofmanagement

Other )olicies and practices include:• Job-sharing;• Provision of a child care referral service for employees;• Time off in lieu of payment for overtime;• Paid part-time study leave;• Leave without pay at the discretion of the company;• A range of special leave arrangements based on individual circumstances at the discretion of

the company;• Phased-in retirement.

5. Workforce planning

The workforce numbers have been developed from Stanwell's initial workforce planning process and areinclusive of employees in Stanwell's subsidiary companies. The workforce numbers are inputs to the2013/14 budget approved at the February 2013 Board meeting.


Standard Hour Permanent Full Time (FTEs)Permanent Part-time (FTE)Other Contract (alternative employment arrangements)(FTE)Senior Executive Contract

Graduates (In House)Apprentices (In House)Trainees (In House)Casual Employees (FTE)Total Directly Employed Workforce:

53911

342

47212

9O8

Apprentices (Group) 45Trainees (Group) 8Total: 961

6. Workplace health & safety

Stanwell complies will all relevant health and safety legislation (including the Work Health and Safety Act2011) and related standards, codes of practice, Australian standards and industry guidelines.

7. Equal employment opportunity and anti-discrimination

Stanwell complies with the Equal Employment Opportunity and Anti-Discrimination provisions as per thePublic Service Act 2008 through its various policies and procedures, such as procedures detailing therecruitment, selection and promotion of staff and formal and informal processes for resolving issues ofdiscrimination and harassment.

Under section 148 of the Government Owned Corporations Act, Stanwell Corporation Limited is arelevant EEO agency for the Public Service Act 2008, Chapter 2. Therefore, in accordance with section31 of the Public Service Act 2008, Stanwell Corporation Limited must for each financial year give thePublic Service Commissioner a report about the outcome of its actions required under section 30 of thePublic Service Act 2008 during the financial year. This report will be provided no later than three (3)months after financial year end.

8. Redundancy provisions

All of Stanwell's Enterprise Agreements contain redundancy provisions. The Corporation has aredundancy agreement that focuses on redeployment and retraining but provides for the following in case ofretrenchment:

• A minimum of 4 weeks notice of retrenchment (5 weeks depending on age and continuous service)• 3 weeks per year of service severance payment limited to 75 weeks• 13 weeks early separation payment• Pro rata long service leave for each year of service• Payment of accrued annual leave• Outplacement and retraining support

The Tarong Power Stations Enterprise Agreement 2012 provides for a further 4 weeks pay in addition tothe above.

9. Superannuation

The Corporation currently contributes 12% of salary in response to employee contributions of 5% forEnergy Super Defined Benefit members. Any surplus from defined benefit funds that may arise fromtime to time remains within the fund. The company will continue to follow advice as received from

5 Full time employee equivalent (FTE): The headcount percentage measure determined by comparing the number ofhours an employee is paid, against the hours an employee is paid on a full time arrangement which has a FTE of 1.Most full time arrangement hours are either 36.25 or 40 hours/week. Some employees (particularly at Mica Creek)have slightly higher hours/week.

Stanwell Corporation Corporate Plan 2013/14 - 2017/181 Commercial-in-Confidence Page 29 of 31

Actuarial reviews. The Final Average Salary for Defined Benefit members is averaged over the final yearof service.

Standard contribution rates into Defined Contribution funds are between 0% and less than 5% foremployees matched by 9% by the Corporation and for employees contributing 5% or more, theCorporation increases its contribution to 10%. Contributions will depend on underpinning enterpriseagreements. The Corporation contributes 9% in accordance with current Superannuation GuaranteeCharge legislation. For legacy Tarong employees their enterprise agreement provides contributions are10%. The Mica Creek enterprise agreement provides contributions are 11% where an employeecontributes 4%. Generally for other employees those who contribute 5% the employer will contribute10%.

Stanwell will ensure that the Federal Government's amendments to the required contribution byemployers to employees superannuation of 9% to 12 %, will be passed on to employees.

10. Consultation

The Corporation has undertaken consultation on this plan with staff, principal unions, CommercialMonitoring within Queensland Treasury and Trade, the Department of Energy and Water Supply and thePublic Service Commission.

Stanwell Corporation Corporate Plan 2013/14 - 2017/18 J Commercial-in-Confidence Page 30 of 31

11. Reporting

Stanwell will provide shareholding Ministers with quarterly reports on the implementation and progressof the productivity initiatives included in Stanwell's Enterprise Bargaining Agreements.


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