STATEMENT OF CORPORATE INTENT · 2017-09-20 · 2016/17 Statement of Corporate Intent. 1. Meeting...

Prepared by the Directors and Management of Stanwell Corporation Limited for shareholding Ministers:

The Hon. Curtis Pitt MP

Treasurer and Minister for Trade and Investment

The Hon. Mark Bailey MP

Minister for Main Roads, Road Safety and Ports and Minister for Energy, Biofuels and Water Supply

Stanwell Corporation Limited - ABN 37 078 848 674

STATEMENT OF CORPORATE INTENT

2016/17

with deletions of commercially sensitive material

TABLE OF CONTENTS

Performance Agreement ............................................................................................................... 3

Business overview ......................................................................................................................... 4

Shareholder Mandate .................................................................................................................... 5

Stanwell’s response to the Shareholder Mandate ..................................................................... 7

Key performance indicators ....................................................................................................... 12

Financial statements ................................................................................................................... 13

Additional requirements .............................................................................................................. 16

Appendix A: Strategy implementation plan ............................................................................ 18

Appendix B: Sponsorship, advertising and corporate entertainment ................................. 24

Appendix C: Weighted average cost of capital ...................................................................... 26

Appendix D: Employment and Industrial Relations Plan ...................................................... 29

Appendix E: Definitions ............................................................................................................ 35

Appendix F: Quarterly financial statements ........................................................................... 36

Commercial-in-Confidence

This document contains confidential information relating to the business affairs of Stanwell Corporation Limited. Release of its content is subject to the provisions of the Right to Information Act 2009. Any unauthorised disclosure of material contained in this document may diminish the commercial value of that information and may have an adverse impact on the business, commercial and financial affairs of Stanwell Corporation Limited.

Statement of Corporate Intent 2016/17 Commercial-in-Confidence 2

PERFORMANCE AGREEMENT

This Statement of Corporate Intent and all attachments are presented in accordance with Chapter 3, Part 8 of the Government Owned Corporations Act 1993 (Qld) (GOC Act).

In accordance with Chapter 1, Part 3, Section 7 of the GOC Act, the Statement of Corporate Intent represents a formal performance agreement between the Board of Stanwell Corporation Limited (Stanwell) and its shareholding Ministers with respect to the financial and non-financial performance targets specified for the financial year. The Statement of Corporate Intent represents an acknowledgment of, and agreement to major activities, objectives, undertakings, policies, investments and borrowings of Stanwell for 2016/17.

This Statement of Corporate Intent is consistent with Stanwell’s Corporate Plan 2016/17 to 2020/21 submitted to shareholding Ministers, and agreed 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 Statement of Corporate Intent for 2016/17.

Major changes to key assumptions that underpin the performance outcomes detailed in this Statement of Corporate Intent, and which come to the Board’s attention during the year, will be brought to the attention of shareholding Ministers. Any modifications to this Statement of Corporate Intent will be dealt with in accordance with the GOC Act.

This Statement of Corporate Intent is signed on behalf of all the directors in accordance with a unanimous decision of the Board of Stanwell.

………………………………….

Dr Ralph Craven

Non-Executive Chairman

Date:

………………………………….

The Hon Curtis Pitt MP

Treasurer and Minister for Trade and Investment

Date:

………………………………

The Hon Mark Bailey MP

Minister for Main Roads, Road Safety and Ports and Minister for Energy, Biofuels and Water Supply

Date:


BUSINESS OVERVIEW

Stanwell is a diversified energy business.

We own coal, gas and water assets, which we use to generate electricity; we sell electricity directly to business customers; and we trade gas, coal and electricity products.

With a generating capacity of more than 4,000 megawatts (MW), Stanwell is the largest electricity generator in Queensland. Stanwell has the capacity to supply approximately 45 per cent of the State’s peak electricity requirements through its coal, gas and hydro generation assets.

Our values – safe, responsible and commercial – shape how we lead and operate our business.

Stanwell’s portfolio of energy assets include:


SHAREHOLDER MANDATE

On 19 July 2016, Stanwell received the Shareholder Mandate. The mandate articulates shareholding Ministers’ expectations regarding strategic direction and performance of the business, as well as areas of potential growth and development of Stanwell.

In line with the Shareholder Mandate, Stanwell will operate its business as efficiently and effectively as possible to extract value from its portfolio of energy assets. Stanwell will focus on delivering stable and commercial cash returns to shareholders.

Stanwell will continue the provision of thermal generation and play a role in an increasing renewables market without the need to develop, invest or own new conventional or renewable generation capacity. These opportunities include:

• providing market services that assist in maintaining the stability and efficiency of the electricity system as more renewable sources of generation come online;

• implementing trading strategies to create value from the likely increased daily volatility through having generation fleet that is flexible enough to respond to both high and low load periods;

• providing land and access to connections for large scale renewables; and

•

In the retail electricity market, Stanwell will continue to operate in the large and medium size C&I market.

Specific areas for improvement Stanwell will focus on the following areas of improvement, consistent with the Shareholder Mandate. Specific detail on how Stanwell will deliver on these priorities is contained in the 2016/17 Statement of Corporate Intent.

1. Meeting or exceeding efficiency saving targets as detailed in the 2015/16 Mid-Year Review

2. Optimising support functions spend to a level that is commensurate with industry peers

3. Determining optimal information technology requirements to support the corporate strategy and establishing an information technology roadmap

Please refer to page 7 for specific initiatives to address these areas for improvement.

Additional opportunities Stanwell will consider the following opportunities to further enhance the value of its business:

• Trading model and value creation – Stanwell will optimise the value of its trading strategy from a whole of portfolio perspective. Stanwell will also explore additional trading opportunities under an appropriate trading model, taking into consideration likely future market opportunities.

• Asset management – Business cases will assess the future value from investing capital in asset reliability and integrity in changing market conditions. Stanwell will also investigate opportunities to reduce expenditure associated with scheduled outages, including overhaul scope, frequency, duration and best practice project/contract management.

• Operations and maintenance – Stanwell will examine opportunities to reduce expenditure on operations and maintenance in light of changing life and operating requirements.


• Working capital performance – Stanwell will continue to apply a commercial approach to complement its operational focus on inventory management and payments.

• Asset flexibility – Stanwell will investigate opportunities to improve flexibility in its existing fleet of assets in a transitioning market to enable faster load changes and lower minimal load.


STANWELL’S RESPONSE TO THE SHAREHOLDER MANDATE

Stanwell’s business transformation process Stanwell is acutely aware of the need to transform its business over the next four years, in order to ensure the business’ continued profitability in a radically more competitive and dynamic future energy industry.

With this in mind, Stanwell has launched a business transformation process, to ensure its change process has the support and ownership of its people at all levels of the business and to achieve more rapid and sustainable results.

At the same time, Stanwell will fulfil the requirements of the Shareholder Mandate, specifically:

1. meeting or exceeding efficiency saving targets as detailed in Government’s 2015/16 Mid-Year Review;

2. optimising support functions spend to a level that is commensurate with industry peers; and

3. determining optimal information technology requirements to meet corporate strategy and establishing an information technology roadmap.

Achievements to date

Exceeding efficiency saving targets

In 2015/16, Stanwell made significant progress towards the efficiency savings targets outlined in the mandate, achieving $ million towards the five year target of $111.0 million. This is summarised in the table below against four priority areas (compared with the baseline budget contained in Stanwell’s 2016/17 to 2020/21 Corporate Plan):

Efficiency saving target ($m) Revenue

Support and operating costs

Capital expenditure

TOTAL 2015/16

Total by 2019/20 111.0

The business achieved a Net Profit after Tax of $170.2 million for 2015/16 against a target of $ million. The generation business contributed $ million to this result following significant changes to the business over the past five years, including rigorous cost management and business streamlining.

Key drivers of this outcome are:

• Revenue (measured as Gross Profit): $ million higher than budget. Major areas of achievement were:

– National Electricity Market Electricity Gross Profit was in line with full year targets;

– gas sales were more than $ million higher than budget; and

– environmental certificates were more than $ million higher than budget;

• Support and operating costs: $ .0 million favourable to budget. Further detail is provided in the following section titled ‘Optimising support function expenditure’; and


• Capital expenditure: $ million less than budget.

Optimising support functions expenditure:

The reduction in support costs includes material savings in relation to labour and consultant costs, predominantly information technology related service contracts and consultant spend.

Determining optimal information technology requirements:

A business capability assessment process is expected to be finalised by the end of September 2016, to determine Stanwell’s information technology priorities and investment agenda for the next five years.

The process will assess our current state as well as each business unit’s future plans, reviewing business drivers and capabilities, information technology needs and opportunities for systems to increase workplace efficiency. Outputs will be used to determine the business’ information technology demand, and to inform design of a fit for purpose information technology supply model and longer term strategy.

Planned opportunities Stanwell is establishing a four-year pipeline of opportunities which ensure it is fit for the future and exceeds the requirements outlined in the Shareholder Mandate. To date, opportunities include the following (consistent with Appendix A: Strategy implementation plan):

• continued management of Stanwell Energy’s retail load, focusing on the retention of high quality commercial and industrial load;

• pursuit of best value whole-of-portfolio fuel outcomes. In terms of gas, this includes a decision on the future of Swanbank E Power Station which is currently in cold storage. From a coal perspective, this includes a resolution of the current Wesfarmers legal dispute,

• pursuit of additional long-term wholesale deals with key industrial customers to provide revenue security and also ensure continued security of supply and affordable electricity in Queensland;

• liaison with proponents of large-scale renewable projects to understand their needs and build Stanwell’s industry knowledge and capability, to inform future initiatives in relation to renewable projects (in line with mandate guidelines);

• a review of all work conducted at corporate offices, to assess value and alignment in relation to Stanwell’s new business strategy. Work which does not align to the strategy will no longer be conducted. Workforce structures and resourcing plans will be reviewed in line with the findings of this assessment. Some workforce changes will be progressed over a number of years, and others will be more immediate;

•

• a focus on capital, operating and maintenance cost optimisation across all sites, including challenging the value from investing in asset reliability and integrity;

• optimisation of overhaul and maintenance costs on work performed during scheduled outages;

• outage strategy review, including safety standards, overhaul scope, frequency, duration and project execution;


• re-assessment of plant efficiency opportunities (including potential modifications to reduce auxiliary power consumption);

• assessment of opportunities to achieve best whole-of-portfolio value from maintenance expenditure; and

• inventory optimisation.

Stanwell has established an in-house project management office which is responsible for recording, prioritising, driving and reporting on transformation initiative progress.


Stanwell’s business strategy

At the same time as focusing on meeting or exceeding the requirements of the Shareholder Mandate, Stanwell has developed a long-term business strategy in the following context:

• To ensure security of electricity, in view of the intermittent nature of supply and demand.

• To safeguard the value of the business, on behalf of its owners, the people of Queensland.

• To ensure sustainable dividends to the Queensland Government.

Stanwell’s strategic focus for the short term is to capitalise on the forecast growth in electricity demand in Queensland.

Our long term strategy is to protect and increase the value of our business while the economy transitions to a different energy portfolio with a higher proportion of renewables.

Stanwell’s strategy is structured around four themes:

Innovative energy products

Flexible and competitive portfolio

• Deliver commercial value through the Stanwell Energy retail business

• Manage Stanwell’s underlying exposure to global commodity markets

• Develop expanded commodity trading in line with customer requirements

• Investigate retail opportunities through partnerships and wholesale support

• Develop products and energy solutions to facilitate new or existing load growth

• Ensure a flexible generation plant that meets market demand

• Optimise plant costs

• Reduce fuel and mine costs

• Secure commercial water supply arrangements

• Realise best value from our coal portfolio

• Realise best value from our gas portfolio


Participate in renewable energy

Enablers

A detailed strategy implementation plan for 2016/17 is provided in Appendix A.

• Achieve operational efficiencies

• Provide a safe workplace

• Engage and retain a high performing workforce

• Ensure compliance with applicable laws, regulations and company policies

• Ensure Stanwell’s environmental right to operate

• Improve and simplify business systems

• Secure ongoing support for Stanwell’s strategy and operations

• Engage in the transition to lower emissions from the electricity industry and protect long term market share

• Explore opportunities to be a facilitator, manager or aggregator of market interface for renewable projects

• Negotiate with renewable project proponents in relation to providing land, operations and maintenance, and other support services


KEY PERFORMANCE INDICATORS

The Board of Stanwell is committed to achieving the following financial and non-financial targets in 2016/17, consistent with the Shareholder Mandate. Please refer to Appendix E for definitions.

Shareholder key performance indicators The Shareholder Mandate has confirmed two financial measures for the business: Return on Gross Fixed Assets and Free Cash Flow Yield. These two financial measures are complementary and designed to incentivise cash returns in line with shareholder expectations. Return on Gross Fixed Assets measures operating returns generated from invested capital and is measured against a target of greater than Stanwell’s pre-tax cost of capital. Free Cash Flow Yield measures cash flow returns from that same invested capital base, with free cash flow defined as cash available for tax, interest, dividends and other financing cash flows payments. Free Cash Flow Yield is measured against targets calculated using forward looking projections.

Sep 2016

Dec 2016

Mar 2017

Jun 2017

Indicator 2014/15 actual*

2015/16 actual*

2016/17 benchmar

k

> > > > Return on Fixed Assets (%) >

Free Cash Flow Yield (%) )

* The indicators are as contained in the Shareholder Mandate received in July 2016. The Shareholder Mandate applies from 2016/17 until 30 June 2019, unless it is amended or revoked. Indicators will be calculated each quarter on an annualised basis.

Sub measures

Sep 2016

Dec 2016

Mar 2017

Jun 2017

Measure 2014/15 actual

2015/16 actual

2016/17 target

44.8 126.7 280.0 315.9 Operating Profit ($M) 167.6 287.0 315.9

54.4 144.8 305.9 350.0 EBIT ($M) 436.8 319.8 350.0

83.3 205.1 401.6 480.0 EBITDAIF ($M) 389.7 467.8 480.0

25.4 75.4 174.7 192.3 Net Profit/(Loss) After Tax ($M) 254.9 170.2 192.3

33.7 88.6 223.5 307.1 Free Cash Flow ($M) 17.3 118.3 307.1

54.2 106.1 159.7 189.8 Capital Expenditure ($M) 143.3 203.3 189.8

2.0 5.9 13.1 15.5 Return of Equity (%) 18.4 12.9 15.5

0 0 0 0 Total Recordable Injury Frequency Rate 7.67 10.11 0

0 0 0 0 Environmental Enforcement Actions 0 1 0


FINANCIAL STATEMENTS

Income statement

2014/15 2015/16 2016/17Sep-16 Dec-16 Mar-17 Jun-17 Actuals Actuals Target

Electricity pool sales revenue Contract revenue/(payments) ) )

( ) Fuel Costs ) (- - - - Carbon Costs 1.2 - -

122.0 284.1 527.6 653.1 474.9 581.1 653.1

0.1 0.1 0.3 0.5 Coal Export Sales 2.6 0.7 0.5 Gas Sales Environmental Certificates - -

(6.0) (12.0) (17.6) (23.3) Other Revenue/(Expenses) (12.8) (5.4) (23.3)127.0 295.8 543.5 673.8 508.3 633.3 673.8

8.2 16.4 20.7 25.0 Net Mica Creek Gross Profit 39.3 28.5 25.0135.2 312.2 564.2 698.8 547.6 661.8 698.8

Operations & Site Support CostsCorporate Support CostsDepreciation & Amortisation

(90.7) (186.2) (285.3) (384.3) (381.1) (374.3) (384.3)

(0.5) (0.9) (1.3) (1.8) (2.1) (2.7) (1.8)

0.8 1.6 2.4 3.2 3.2 2.2 3.2

44.8 126.7 280.0 315.9 167.6 287.0 315.9

Non Operating Revenue/(Expense) Fixed Water Grid Costs

- - - - Restructure Costs - Coal Rebate - - - - Fair Value Movements - Derivatives -

54.4 144.8 305.9 350.0 436.8 319.8 350.0

(18.1) (37.1) (56.3) (75.3) Net Interest Expense (71.6) (76.7) (75.3)(10.9) (32.3) (74.9) (82.4) Income Tax (110.3) (72.9) (82.4)

25.4 75.4 174.7 192.3 255.0 170.2 192.3

- - - (192.3) Dividends Provided for Current Year (89.9) (311.6) (192.3)

25.4 75.4 174.7 - 165.0 (141.4) -

Other Operating Revenue

Year to date 2016/17 Income StatementEscalated $M

GROSS PROFIT

OPERATING EXPENSES

NET MINING EXPENSES

NEM Electricity Gross Profit

NEM Gross Profit

OPERATING PROFIT

EARNINGS BEFORE INTEREST & TAX

NET PROFIT AFTER TAX

PROFIT AFTER TAX & DIVIDENDS


sniblock

Sticky Note

Rejected set by sniblock

Balance sheet

Balance Sheet 2014/15 2015/16 2016/17Sep-16 Dec-16 Mar-17 Jun-17 Escalated $M Actuals Actuals Target

ASSETS

329.5 36.8 132.9 168.2 Cash and cash equivalents 184.9 217.9 168.2 205.8 231.0 259.2 203.9 Trade and other receiveables 142.8 229.2 203.9 160.9 157.2 158.7 162.1 Inventories 214.6 173.8 162.1 146.9 145.6 138.1 131.9 Other assets 122.5 122.5 131.9 66.2 66.2 66.2 66.2 Derivative assets 73.5 105.5 66.2 1.8 1.8 1.8 1.8 Derivative premiums 1.9 0.7 1.8

84.3 84.3 84.3 84.3 Financial assets (SFE Collateral) 61.3 158.7 84.3 995.4 722.9 841.2 818.4 Total Current Assets 801.5 1,008.3 818.4

32.9 32.9 32.9 32.9 Derivative assets 32.9 48.7 32.9 2,397.9 2,403.1 2,405.9 2,385.2 Property, plant and equipment 2,364.4 2,327.2 2,385.2

15.5 16.1 16.8 17.4 Exploration and evaluation assets 12.9 12.9 17.4 63.9 63.9 63.9 63.9 Other assets 63.9 49.7 63.9

143.4 136.1 136.1 136.1 Deferred Tax Assets 179.9 - 136.1 103.9 104.9 106.5 108.8 Intangible Assets 92.0 97.9 108.8

2,757.5 2,757.0 2,762.1 2,744.3 Total Non-Current Assets 2,746.0 2,536.4 2,744.3

3,752.9 3,479.9 3,603.3 3,562.7 TOTAL ASSETS 3,547.5 3,544.7 3,562.7 LIABILITIES

216.0 224.4 240.4 219.2 Trade and other payables 150.6 215.1 219.2 109.5 109.5 109.5 109.5 Derivative liabilities 109.5 283.2 109.5

9.7 9.7 9.7 9.7 Derivative premiums 9.7 4.2 9.7 343.3 34.1 34.1 226.4 Provisions 124.0 338.2 226.4

7.8 7.8 7.8 7.8 Other liabilities 7.8 3.2 7.8 34.7 19.7 29.3 3.9 Current tax payable (1.8) 47.7 3.9 17.0 18.7 16.5 4.4 Borrowings 10.6 25.9 4.4

738.0 423.9 447.3 580.9 Total Current Liabilities 410.4 917.5 580.9

826.1 822.2 822.2 822.2 Borrowings 802.5 826.7 822.2 817.2 812.2 812.9 813.4 Provisions 838.3 508.3 813.4 36.0 36.0 36.0 36.0 Derivative liabilities 36.1 115.4 36.0 1.9 1.9 1.9 1.9 Derivative premiums 1.9 - 1.9

1,681.2 1,672.3 1,673.0 1,673.5 Total Non-Current Liabilities 1,678.8 1,450.4 1,673.5

2,419.2 2,096.2 2,120.3 2,254.4 TOTAL LIABILITIES 2,089.2 2,368.0 2,254.4

1,333.7 1,383.7 1,483.0 1,308.3 NET ASSETS 1,458.3 1,176.7 1,308.3

EQUITY1,214.7 1,214.7 1,214.7 1,214.7 Issued Share Capital 1,214.7 1,214.7 1,214.7

117.6 167.6 266.9 92.2 Retained earnings 242.2 93.4 92.2 1.4 1.4 1.4 1.4 Deferred (gains) losses on derivatives 1.4 (131.4) 1.4

1,333.7 1,383.7 1,483.0 1,308.3 TOTAL EQUITY 1,458.3 1,176.7 1,308.3

(46.4) (46.4) (46.4) (46.4) Net derivative assets (liabilities) (39.2) (244.4) (46.4)

2016/17


Cash flow statement

Budgeted capital expenditure for 2016/17 (for projects greater than $15 million)

Project 2016/17 ($m)

Total project target ($m)

Shareholder approval received

Stanwell Power Station Unit 2 major overhaul

24.3 26.6

Stanwell Power Station Unit 3 major overhaul

2.0 27.0

Tarong Power Station Unit 1 major overhaul

19.6 20.0

Stanwell Power Station Control System Upgrade

15.7 68.0

Stanwell Power Station Mid Life Condenser Retube

8.5 30.7

Cash Flow Statement 2014/15 2015/16 2016/17Sep-16 Dec-16 Mar-17 Jun-17 Escalated $M Actuals Actuals Target

Cash flows from operating activities378.1 802.2 1,328.5 1,778.7 Cash receipts in the course of operations 1,489.8 1,975.7 1,778.7 (275.8) (579.5) (904.3) (1,227.6) Cash payments in the course of operations (1,264.0) (1,592.2) (1,227.6)

- - - - Cash payments for carbon liability - - -(13.0) (25.8) (39.8) (53.6) Net financing costs paid (52.9) (62.8) (53.6)(9.0) (46.1) (81.8) (117.5) Income tax paid (59.0) (34.3) (117.5)80.3 150.8 302.6 380.0 Net cash provided by operating activities 113.9 286.5 380.0

Cash flows from investing activities- - - - Proceeds from/(payment for) the disposal of assets 7.7 7.0 -- - - - Payments for intanglible assets (14.1) (12.6) -

(54.2) (106.1) (159.7) (189.8) Payments for property, plant and equipment (187.4) (208.0) (189.8)(54.2) (106.1) (159.7) (189.8) Net cash used in investing activities (193.8) (213.6) (189.8)

Cash flows from financing activities(9.4) (11.5) (13.6) (25.6) Drawdown/(Repayment) of borrowings 250.9 50.1 (25.6)

- (150.0) (150.0) (150.0) Special Dividend paid - - (150.0)- (159.2) (159.2) (159.2) Dividends paid (96.5) (89.9) (159.2)

(9.4) (320.7) (322.8) (334.8) Net cash provided by/ (used in) financing activities 154.4 (39.9) (334.8)

16.7 (276.0) (179.9) (144.6) Net increase/ (decrease) in cash held 74.5 33.0 (144.6)217.9 217.9 217.9 217.9 Cash at the beginning of the period1 110.4 184.9 312.8 234.6 (58.1) 38.0 73.3 Cash at the end of the period 184.9 217.9 168.2

Year to date 2016/17

1 The 2016/17 "Cash at the beginning of the period" figures does not reconcile to the closing 2015/16 balance as the budget was prepared before the 2015/16 actuals were finalised.


ADDITIONAL REQUIREMENTS

Government owned corporation legislation

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

Dividends In accordance with s131 of the GOC Act or limited by the Corporations Act 2001, Stanwell intends to recommend a dividend of 100 per cent of Net Profit after Tax for the financial year, adjusted to exclude any unrealised gains from the revaluation of Stanwell’s financial instruments, any year end asset impairment adjustments that may arise during the testing of asset carrying values, any adjustments relating to rehabilitation and any other relevant adjustments resulting in unrealised gains that may arise.

Employment and Industrial Relations Plan An Employment and Industrial Relations Plan meeting the requirements of s149 of the GOC Act and the GOC Wages Policy 2015 is provided in Appendix D.

Government owned corporation policies The Board acknowledges and has put in place governance mechanisms to ensure compliance with all prescribed government owned corporation policies.

Specific statements of compliance are made as follows:

Code of Practice for Government Owned Corporations’ Financial Arrangements The Board will ensure Stanwell takes full responsibility to ensure that prudent financial practices will be applied within the business and its subsidiaries (whether fully controlled or otherwise). Without limiting the obligations imposed on the Board and the Chief Executive Officer 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.

Corporate governance guidelines Stanwell has adopted all of the recommendations in the Corporate Governance Guidelines. Stanwell’s governance framework reflects the Board’s commitment to best practice governance arrangements that enhance Stanwell’s effectiveness while ensuring the appropriate degree of accountability and transparency to stakeholders.

Corporate Entertainment and Hospitality Please refer to Appendix B.

Cost of capital principles (weighted average cost of capital) Stanwell’s Board-approved weighted average cost of capital calculation is included in Appendix C.


Shareholder approval threshold – Renewable Power Purchase Agreements (PPAs) On 20 October 2016, Stanwell received written notification from Queensland Treasury that Stanwell can invest in PPAs of up to and including five years and 50 MW, without shareholding Minister approval.

When entering into these PPAs, Stanwell will continue to focus on leveraging off its existing assets to play a portfolio optimiser/aggregator role in the market.

Any PPAs larger or longer than these thresholds will be submitted for shareholding Minister approval.


APPENDIX A: STRATEGY IMPLEMENTATION PLAN

In order to deliver on its short term goal and to position the business for its long term future, Stanwell will commence implementation of the activities detailed below.

These initiatives have been prioritised as either:

• Priority 1: Core; or

• Priority 2: Investigative work required to inform commercial and operational decisions/develop business case.

Innovative energy products

Objectives Priority

Initiatives 2016/17 outcome

Deliver commercial value through the Stanwell Energy retail business

1 Organic growth of Stanwell’s retail business, targeting a broader range of customer types and

1 Monitor changing industrial landscape and take value creation opportunities

1 Customised and niche retail offering based on customer requirements and commercial benefit to Stanwell

Manage Stanwell's underlying exposure to global commodity markets

1 Participation in commodity markets where we have an underlying exposure, as appropriate

Develop expanded commodity trading in line with customer requirements

1 Provide commercial packaged offering to customers –

Develop products and energy solutions to facilitate new or existing load growth

2 Target commercial medium to long-term retail and wholesale contracts. This will include existing major and potential new loads

2 Explore alternate commercial energy solutions,

1 Customers that use equal to or greater than 2.5 GWh per year (at an aggregate customer level). 2 Within the agreed definition of customers that use equal to or greater than 2.5 GWh per year (at an aggregate

customer level).


Flexible and competitive portfolio

Objectives Priority Initiatives 2016/17 outcome

Ensure flexible generation plant that meets market demand

2 Investigate and evaluate opportunities to improve generation plant ramping rates and load ranges

2 Investigate the cost and complexity of energy storage to provide ramp rate boost for existing machines

1 Investigate seasonal plant shutdowns: •

2 Investigate change in operating regimes and alternate start up approaches

2 Revise asset life planning

Optimise plant costs

2 Re-assess plant efficiency opportunities

2 Reduce operating costs through increased automation

1 Optimise overhaul costs

Reduce fuel and mine costs

1 Secure fuel supplies for future operations

2 Optimise operations at Tarong/Meandu for changing generation profile



Secure commercial water supply arrangements

1 Implement strategies to secure a commercial water supply for Stanwell’s generation assets

1 Investigate options for Bulk Water Supply Agreement for Swanbank and Tarong power stations with Seqwater

Negotiate commercial terms for long-term water supply agreement

Realise best value from our coal portfolio

1 Monitor and develop opportunities for export coal sales

1 Seek commercial resolution of Wesfarmers amended coal supply agreement dispute

Ongoing implementation of strategies to resolve coal rebate dispute with Wesfarmers

Realise best value from our gas portfolio

1 Assess longer term generation strategy for Swanbank E Power Station

1 Monitor and develop opportunities for sales of gas into domestic or LNG gas market


Participate in renewable energy


Engage in the transition to lower emissions from the electricity industry and protect long-term market share

1 Identify and evaluate sources of large scale generation certificates

1

Explore opportunities to be a facilitator, manager or aggregator of market interface for renewable projects

1 Identify Stanwell's value to renewable projects

2 Identify and implement external projects

Negotiate with renewable project proponents in relation to providing land, operations and maintenance, and other support services for a commercial return

1 For each potential project, evaluation of commercial attractiveness, project timing and interaction with the market and with Stanwell’s portfolio


Enablers

Stanwell’s strategy is supported by an ongoing commitment to the following business enablers, all of which are Priority 1 initiatives.

Objectives Initiatives

Achieve operational efficiencies

Achieve annual efficiency savings, targeting $111.0 million over the five year period from 2015/16 to 2019/20

Provide a safe workplace Continue to improve safety culture, performance, systems and processes

Reduce our Total Recordable Injury Frequency Rate compared to the 2015/16 result

Deliver improvement in contractor safety through the facilities, overhauls and asset maintenance and management contract

Engage and retain a high performing workforce

Maintain engagement in Stanwell’s values (Safe, Responsible and Commercial) and associated behaviours

Ensure our behaviour, practices and processes are aligned to deliver on business strategy

Deliver initiatives that increase efficiency and commercial returns, and progress towards cultural improvement and alignment

Ongoing support and development of leaders to assist them in retaining and engaging a high performing workforce

Ongoing review and optimisation of the organisational structure to support delivery of business objectives with minimal industrial relations activity

Ensure compliance with applicable laws, regulations and company policies

Ensure ongoing compliance with applicable legislation, standards and licences, with no material breaches

Ensure Stanwell’s environmental right to operate

Ensure compliance with applicable legislation, standards and licences, with no material breaches

Improve and simplify business systems

Commence implementation of five-year information technology strategy to:

• maintain cost effective business system platforms that are fit-for-purpose

• maintain a prioritised schedule of work to reduce the risk, cost and complexity of information and business systems

• maintain assets (hardware and software) in line with vendor maintenance and support agreements


Objectives Initiatives

Secure ongoing support for Stanwell’s strategy and operations

Secure support for our activities by proactively communicating Stanwell’s business model and associated requirements to shareholding Ministers and ensure no negative feedback on Stanwell's communication of business issues, key projects, operations or strategy

Build each asset’s links with its local community to ensure our key opinion leaders: • have a relationship of trust with the management of their local

Stanwell asset • perceive the asset benefits the community

Maintain a positive relationship with traditional owners to reduce the possibility of disruptions to Stanwell’s operations

Secure environmental approvals that align with commercial operating requirements

Monitor and lobby for changes to the National Electricity Market that support the business’ strategy



APPENDIX B: SPONSORSHIP, ADVERTISING AND CORPORATE ENTERTAINMENT

Note: Stanwell does not provide donations.

2015/16

Actuals

2016/17

TargetYear to date Quarter 2016/17

($)

($) ($) Sep-16 Dec-16 Mar-17 Jun-17

SPONSORSHIP

Community Partnership Funds / Sponsorships

Support for community projects and activities that contribute to a

vibrant, prosperous, inclusive community that make a genuine 'quality

of life' contribution to the communities that host Stanwell assets.

268,300 350,000 87,500 175,000 262,500 350,000

Employee EngagementSupport for employees to engage with one another while participating in

charity fundraising events that benefit our local communities. 4,224 25,000 6,250 12,500 18,750 25,000

TOTAL SPONSORSHIP 272,524 375,000 93,750 187,500 281,250 375,000

ADVERTISING

Other (total) advertising below $5,000 4,457 2,500 625 1,250 1,875 2,500

TOTAL ADVERTISING 4,457 2,500 625 1,250 1,875 2,500

CORPORATE ENTERTAINMENT

Events over $5,000

Energy Trading and Commercial Strategy Bowls Day Industry networking event - Queensland 5,053 6,000 - 6,000 6,000 6,000

Total over $5,000 5,053 6,000 - 6,000 6,000 6,000

Other (total) below $5,000 17,325 33,200 9,800 13,600 23,400 33,200

TOTAL CORPORATE ENTERTAINMENT 22,378 39,200 9,800 19,600 29,400 39,200

Corporate Entertainment and Advertising - Details of Total Targeted and Actual Total Expenditure under $5,000

2015/16

Actuals

2016/17

TargetYear to date Quarter 2016/17

($)

($) ($) Sep-16 Dec-16 Mar-17 Jun-17

Corporate Entertainment Total

Staff & Stakeholder Functions 17,325 33,200 9,800 13,600 23,400 33,200

Total UNDER $5,000 17,325 33,200 9,800 13,600 23,400 33,200

Activity Description/Benefit

Activity Description/Benefit


APPENDIX C: WEIGHTED AVERAGE COST OF CAPITAL

Stanwell will present investment proposals to shareholding Ministers in accordance with the Cost of Capital Principles – Government Owned Corporations (CoCP). However, in addition a ‘Market Approach’ is used for the purposes of asset impairment testing and for evaluating proposals in a competitive market process. This ensures consistency with the practices of other market participants.

Details of Stanwell’s Weighted Average Cost of Capital (WACC) calculations are provided below.

Methodology

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

V

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

V

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

Tc = Corporate Tax rate (30%)


In February 2015, Stanwell engaged Ernst & Young (EY) to determine an appropriate cost of capital for its business. In February 2016, Stanwell performed a review of this calculation and determined that minor changes to the Market Approach input parameters had no impact on the resultant WACC. Therefore, the Market Approach WACC calculated in March 2015 has been retained for 2016/17. EY’s findings in respect to input parameters and the resultant WACC for Stanwell are shown in the ‘Market Approach’ column in the table above.

In carrying out its review, EY provided detailed consideration to the stabilising effect that the coal rebate revenue stream and vertical integration through retailing activities has on the Stanwell business compared to that of a typical merchant generator, and the appropriateness of certain parameters:


APPENDIX D: EMPLOYMENT AND INDUSTRIAL RELATIONS PLAN

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

1. Employment and industrial relations philosophy and direction

Industrial relations strategy

Stanwell’s strategic focus for the short term is to capitalise on the forecast growth in electricity demand in Queensland, with a long-term strategy to be profitable and to ensure security of electricity supply as Queensland’s energy mix changes. In order to deliver on its short-term goals and to position the business for its long term future, Stanwell has structured its strategic approach around three key themes to: deliver innovative energy products; operate a flexible and competitive portfolio; and participate in renewable energy.

Enterprise agreements

Enterprise agreements remain the principal source of terms and conditions for employees. There are seven enterprise agreements currently operating at Stanwell. All enterprise agreements include productivity increases, incentive payments and effective training systems to ensure a focus on Stanwell’s strategic outcomes. All enterprise agreements have been approved by the Fair Work Commission.

Stanwell renegotiated its seven enterprise agreements in 2015. The new enterprise agreements and their expiry dates are described further below. The Swanbank Power Station enterprise agreement is to be renegotiated in 2016. Bargaining will occur within the context of Stanwell’s strategy and the Government’s wages policy.

2. Remuneration arrangements

Chief Executive Officer and senior executives’ remuneration as at 1 January 2016

Senior executive remuneration complies with senior executive remuneration guidelines.

Chief Executive Officer / Senior Executives

Base salary 1

Employer superannuation contributions 2

Other allowances included in TFR 3

Richard Van Breda (Chief Executive Officer)

$606,653.00 $60,665.30

Jenny Gregg (Executive General Manager Business Services)

$313,142.00 $31,314.20

Michael O’Rourke (Chief Financial Officer) $317,390.00 $31,739.00

Ian Gilbar (Acting Executive General Manager Safety and Asset Services) $273,090.00 $29,964 $26,546



Base salary 1

Employer superannuation contributions 2

Other allowances included in TFR 3

Phillips David (Acting Executive General Manager Production) $310,511.00 $32,773

$17,215

Steve Quilter (Executive General Manager Trading and Commercial Strategy)

$240,966.00 $29,532 $54,356


Total fixed remuneration 4 Other benefits 5 6

2014/15 performance payment made 7

Richard Van Breda (Chief Executive Officer)

$667,318 $5,936.40 $87,196.00

Jenny Gregg (Executive General Manager Business Services)

$344,456 $6,162.00 $45,375.00

Michael O’Rourke (Chief Financial Officer)

$349,129 $5,594.80 $46,883.00

Ian Gilbar (Acting Executive General Manager Safety and Asset Services)

$329,600 $41,402.00

Phillips David (Acting Executive General Manager Production)

$360,500 10,188.90 $40,237.00

Steve Quilter (Executive General Manager Trading and Commercial Strategy)

$324,854 $34,111.00

1. Includes cash salary plus salary sacrifice items. 2. Employer superannuation contribution is calculated on 10% of base salary and on any higher duties allowance, if

applicable. Note: the employer superannuation contribution for Phillips David is displayed as 10% of base salary and is the maximum to be paid this financial year. As a defined benefit fund member, the current employer superannuation contribution is 6% on his base salary; however this is subject to change based on a tri-annual audit review (next due in July 2016). The employer superannuation contribution on the higher duties allowance is paid at 10%.

3. Higher Duties Allowance currently paid (per annum) 4. Total Fixed Remuneration (TFR) is the sum of columns 1 to 4. 5. Other benefits paid including, but not limited to, Private Health Insurance reimbursement. 6. Access provided to a pool car park. 7. This is the actual payment made in September 2015, relating to performance in the preceding financial year. Employer

superannuation is paid on this amount.

3. Employment conditions and workforce planning

Sources of employment conditions

Employment conditions for employees are derived from a number of sources. These include:

• Legislation, for example: the Fair Work Act 2009 (Cth), the Government Owned Corporations Act 1993 (Qld) and the Electricity Act 1994 (Qld),

• Enterprise Agreements,

• Alternative Employment Arrangements which are provided for under Enterprise Agreements,

• The Electrical Power Industry Award 2010,


• Common law contracts, and

• Stanwell policies and procedures.

Workforce numbers

The workforce numbers below are as at 1 July 2016.

Employment Category: 1 July 2016

Standard Hour Permanent Full Time (full time equivalent) 361

Permanent Part-time (full time equivalent) 27

Other Contract (alternative employment arrangements) (full time equivalent)

299

Senior Executive Contract 4

Graduates (In House) 4

Apprentices (In House) 1

Trainees (In House) 0

Casual Employees (full time equivalent) 0

Total Directly Employed Workforce: 696

Apprentices (Group) 28

Trainees (Group) 5

Total: 729

Enterprise agreements

The table below sets out the awards or enterprise agreement applying to Stanwell and the number of employees covered by each enterprise agreement:

Award/ agreement

Scope (as at 1 January 2016)

Expiry date Jurisdiction Current status

Electrical Power Industry Award

Employees classified Not applicable Federal The modern award is currently used to apply the “Better Off Overall Test” for the approval of the enterprise agreements.

Stanwell Power Station Enterprise Agreement 2015

Stanwell Power Station employees (149 employees)

1 March 2019 Federal A new enterprise agreement was negotiated and approved in 2015.

Stanwell Corporation Limited Corporate Offices Enterprise Agreement 2015

Corporate Office employees (256 employees)

18 August 2018 Federal A new enterprise agreement was negotiated and approved in 2015.


Award/ agreement

Scope (as at 1 January 2016)

Expiry date Jurisdiction Current status

Kareeya Power Station – Enterprise Agreement 2015

Kareeya Power Station employees (11 employees)

1 April 2019 Federal A new enterprise agreement was negotiated and approved in 2015.

Barron Gorge Power Station – Enterprise Agreement 2015

Barron Gorge Power Station employees (11 employees)

1 April 2019 Federal A new enterprise agreement was negotiated and approved in 2015.

Mica Creek Enterprise Agreement 2015

Mica Creek Power Station mechanical and technical employees, trades and water treatment (8 employees)

1 March 2019 Federal A new enterprise agreement was negotiated and approved in 2015.

Swanbank Power Station Enterprise Agreement 2015

Swanbank Power Station (9 employees)

11 March 2016 Federal Stanwell has commenced negotiations for a replacement to this enterprise agreement.

Tarong Power Stations Enterprise Agreement 2015

Tarong Power Station and Tarong North Power Station (216 employees)

1 August 2018 Federal A new enterprise agreement was negotiated and approved in 2015.

Productivity initiatives

Each of the seven enterprise agreements contains productivity initiatives. Stanwell reports to the relevant shareholding Ministers on a quarterly basis with respect to the outcome of each enterprise agreement’s productivity initiatives.


Other employment conditions

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

Part-time arrangements Employees have the ability to apply for reduced working hours following parental leave under their applicable Enterprise Agreement and the National Employment Standards.

Flexible work hours Compressed hours are available so that employees are able to work a nine-day fortnight or a four-day week, depending on the Enterprise Agreement applicable to the employee. Further flexible work arrangements are provided through Stanwell procedures. Employees may also manage their own start and finish times with the agreement of management.

Reduced working year Purchased leave arrangements are provided in Stanwell purchased leave procedures with the ability to purchase leave (between two and four weeks per year).

Paid maternity/ paternity/adoption leave

Employees are able to apply for periods of paid and unpaid leave under the National Employment Standards and under their applicable Enterprise Agreement with 14 weeks paid maternity leave (on top of the Federal Government paid 18 weeks).

Telecommuting (work from home)

Stanwell provides the ability to work from home with the agreement of management.

Other policies and practices include:

• job-sharing;

• 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; and

• phased-in retirement.

4. Workplace health and safety

Stanwell complies with all relevant health and safety legislation, including the Work Health and Safety Act 2011 (Qld) and related standards, codes of practice, Australian standards and industry guidelines.

5. Equal employment opportunity and anti-discrimination

Stanwell complies with the equal employment opportunity and anti-discrimination provisions in accordance with Public Service Act 2008 (Qld) through its various policies and procedures, such as procedures detailing the recruitment, selection and promotion of staff and formal and informal processes for resolving issues of discrimination and harassment.

6. Redundancy provisions

All of Stanwell’s enterprise agreements contain redundancy provisions. Stanwell currently has a redundancy agreement that focuses on redeployment and retraining but provides for the following in case of retrenchment:


• A minimum of four weeks notice of retrenchment (five weeks depending on age and continuous service);

• three 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; and

• outplacement and retraining support.

The Tarong Power Stations Enterprise Agreement 2015 provides for a further four weeks’ pay in addition to the above.

Currently, Stanwell’s enterprise agreements provide for ‘no forced retrenchments’.

7. Superannuation

Stanwell contributes a minimum of 9.5 per cent of Ordinary Time Earnings in accordance with current Superannuation Guarantee legislation. Standard contribution rates into Defined Contribution funds may vary depending on underpinning employment contract arrangements and enterprise agreements. For employees covered under a Stanwell Alternative Employment Arrangement contract and legacy Tarong employees, the standard employer contribution is 10 per cent. For legacy Stanwell and CS Energy Swanbank employees who contribute 5 per cent, the employer contribution is 10 per cent. For legacy CS Energy Mica Creek employees who contribute 4 per cent, the employer contribution is 11 per cent.

Stanwell currently contributes 6 per cent for Energy Super Defined Benefit members where employees contribute 5 per cent. Any surplus from defined benefit funds that may arise from time to time remains within the fund. The company will continue to follow advice as received from actuarial reviews. The Final Average Salary for Defined Benefit members is averaged over the final year of service.

Stanwell will ensure that further increases in the minimum Superannuation Guarantee will be passed on to employees.

8. Consultation

Stanwell has undertaken consultation on this plan with employees, relevant unions, Shareholder and Structural Policy Division within Queensland Treasury and Trade, the Department of Energy and Water Supply and the Office of Industrial Relations.

The Employment and Industrial Relations Plan is supported by the relevant Government agencies.


APPENDIX E: DEFINITIONS

Term Definition

Capital Expenditure Amount incurred by Stanwell on capital projects to the end of the reporting period

EBIT Earnings before interest and tax

EBITDAIF Earnings before interest, tax, depreciation, amortisation, impairment and fair value movements; and excluding coal rebate revenue

Environmental Enforcement Action

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

Free Cash Flow Operating cash flow (including working capital movements but excluding coal rebate revenue) less capital cash flow. Free cash flow is defined as cash flow available to pay tax and returns to debt/equity holders.

Free Cash Flow Yield Free cash flow / Fair value + Net additions + Net working capital

Net Profit After Tax Group net profit after tax

Operating Profit (Loss) Earnings Before Interest and Tax, excluding fair value movements on derivatives, coal rebate revenue, one-off transactions, the fixed cost portion of the grid water contracts and organisational restructure costs

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

Return on Fixed Assets EBITDAIF / Fair value + Net additions + Net working capital

Total Recordable Injury Frequency Rate (TRIFR)

Recordable injuries in the period/number of hours worked in the period X 1,000,000. TRIFR is a combination of Lost Time and Medical Treatment Injuries. Includes employees, contractors and third party sites


APPENDIX F: QUARTERLY FINANCIAL STATEMENTS

Income statement

2014/15 2015/16 2016/17

Sep-16 Dec-16 Mar-17 Jun-17 Actuals Actuals Target

Electricity pool sales revenue

Contract revenue/(payments)

Fuel Costs )

- - - - Carbon Costs - -

122.0 162.1 243.5 125.5 474.9 581.1 653.1

0.1 - 0.2 0.2 Coal Export Sales 2.6 0.7 0.5

10.3 11.8 8.8 9.9 Gas Sales 43.6 56.9 40.80.6 0.9 0.8 0.4 Environmental Certificates - - 2.7

(6.0) (6.0) (5.6) (5.7) Other Revenue/(Expenses) (12.8) (5.4) (23.3)

127.0 168.8 247.7 130.3 508.3 633.3 673.8

8.2 8.2 4.3 4.3 Net Mica Creek Gross Profit 39.3 28.5 25.0

135.2 177.0 252.0 134.6 547.6 661.8 698.8

Operations & Site Support Costs

Corporate Support Costs

Depreciation & Amortisation

(90.7) (95.5) (99.1) (99.0) (381.1) (374.3) (384.3)

Coal Mining -Depreciation & Amortisation Mining -

(0.5) (0.4) (0.4) (0.5) (2.1) (2.7) (1.8)

0.8 0.8 0.8 0.8 3.2 2.2 3.2

44.8 81.9 153.3 35.9 167.6 287.0 315.9

) Non Operating Revenue/(Expense)

Fixed Water Grid Costs- - - - Restructure Costs -

Coal Rebate

- - - - Fair Value Movements - Derivatives -

54.4 90.4 161.1 44.1 436.8 319.8 350.0

(18.1) (19.0) (19.2) (19.0) Net Interest Expense (71.6) (76.7) (75.3)

(10.9) (21.4) (42.6) (7.5) Income Tax (110.3) (72.9) (82.4)

25.4 50.0 99.3 17.6 255.0 170.2 192.3

- - - (192.3) Dividends Provided for Current Year (89.9) (311.6) (192.3)

25.4 50.0 99.3 (174.7) 165.0 (141.4) -PROFIT AFTER TAX & DIVIDENDS

NET MINING EXPENSES

Other Operating Revenue

OPERATING PROFIT

EARNINGS BEFORE INTEREST & TAX

NET PROFIT AFTER TAX

Quarter to date 2016/17 Income Statement

Escalated $M

NEM Electricity Gross Profit

NEM Gross Profit

GROSS PROFIT

OPERATING EXPENSES


Balance sheet

Balance Sheet 2014/15 2015/16 2016/17

Sep-16 Dec-16 Mar-17 Jun-17 Escalated $M Actuals Actuals Target

ASSETS

329.5 36.8 132.9 168.2 Cash and cash equivalents 184.9 217.9 168.2

205.8 231.0 259.2 203.9 Trade and other receiveables 142.8 229.2 203.9

160.9 157.2 158.7 162.1 Inventories 214.6 173.8 162.1

146.9 145.6 138.1 131.9 Other assets 122.5 122.5 131.9

66.2 66.2 66.2 66.2 Derivative assets 73.5 105.5 66.2

1.8 1.8 1.8 1.8 Derivative premiums 1.9 0.7 1.8

84.3 84.3 84.3 84.3 Financial assets (SFE Collateral) 61.3 158.7 84.3

995.4 722.9 841.2 818.4 Total Current Assets 801.5 1,008.3 818.4

32.9 32.9 32.9 32.9 Derivative assets 32.9 48.7 32.9

2,397.9 2,403.1 2,405.9 2,385.2 Property, plant and equipment 2,364.4 2,327.2 2,385.2

15.5 16.1 16.8 17.4 Exploration and evaluation assets 12.9 12.9 17.4

63.9 63.9 63.9 63.9 Other assets 63.9 49.7 63.9

143.4 136.1 136.1 136.1 Deferred Tax Assets 179.9 - 136.1

103.9 104.9 106.5 108.8 Intangible Assets 92.0 97.9 108.8

2,757.5 2,757.0 2,762.1 2,744.3 Total Non-Current Assets 2,746.0 2,536.4 2,744.3

3,752.9 3,479.9 3,603.3 3,562.7 TOTAL ASSETS 3,547.5 3,544.7 3,562.7

LIABILITIES

216.0 224.4 240.4 219.2 Trade and other payables 150.6 215.1 219.2

109.5 109.5 109.5 109.5 Derivative liabilities 109.5 283.2 109.5

9.7 9.7 9.7 9.7 Derivative premiums 9.7 4.2 9.7

343.3 34.1 34.1 226.4 Provisions 124.0 338.2 226.4

7.8 7.8 7.8 7.8 Other liabilities 7.8 3.2 7.8

34.7 19.7 29.3 3.9 Current tax payable (1.8) 47.7 3.9

17.0 18.7 16.5 4.4 Borrowings 10.6 25.9 4.4

738.0 423.9 447.3 580.9 Total Current Liabilities 410.4 917.5 580.9

826.1 822.2 822.2 822.2 Borrowings 802.5 826.7 822.2

817.2 812.2 812.9 813.4 Provisions 838.3 508.3 813.4

36.0 36.0 36.0 36.0 Derivative liabilities 36.1 115.4 36.0

1.9 1.9 1.9 1.9 Derivative premiums 1.9 - 1.9

1,681.2 1,672.3 1,673.0 1,673.5 Total Non-Current Liabilities 1,678.8 1,450.4 1,673.5

2,419.2 2,096.2 2,120.3 2,254.4 TOTAL LIABILITIES 2,089.2 2,368.0 2,254.4

1,333.7 1,383.7 1,483.0 1,308.3 NET ASSETS 1,458.3 1,176.7 1,308.3

EQUITY

1,214.7 1,214.7 1,214.7 1,214.7 Issued Share Capital 1,214.7 1,214.7 1,214.7

117.6 167.6 266.9 92.2 Retained earnings 242.2 93.4 92.2

1.4 1.4 1.4 1.4 Deferred (gains) losses on derivatives 1.4 (131.4) 1.4

1,333.7 1,383.7 1,483.0 1,308.3 TOTAL EQUITY 1,458.3 1,176.7 1,308.3

(46.4) (46.4) (46.4) (46.4) Net derivative assets (liabilities) (39.2) (244.4) (46.4)

2016/17


Cash flow statement

Cash Flow Statement 2014/15 2015/16 2016/17

Sep-16 Dec-16 Mar-17 Jun-17 Escalated $M Actuals Actuals Target

Cash flows from operating activities

378.1 424.1 526.3 450.2 Cash receipts in the course of operations 1,489.8 1,975.7 1,778.7

(275.8) (303.7) (324.8) (323.3) Cash payments in the course of operations (1,264.0) (1,592.2) (1,227.6)

- - - - Cash payments for carbon liability - - -

(13.0) (12.8) (14.0) (13.8) Net financing costs paid (52.9) (62.8) (53.6)

(9.0) (37.1) (35.7) (35.7) Income tax paid (59.0) (34.3) (117.5)80.3 70.5 151.8 77.4 Net cash provided by operating activities 113.9 286.5 380.0

Cash flows from investing activities

- - - - Proceeds from/(payment for) the disposal of assets 7.7 7.0 -

- - - - Payments for intanglible assets (14.1) (12.6) -

(54.2) (51.9) (53.6) (30.1) Payments for property, plant and equipment (187.4) (208.0) (189.8)(54.2) (51.9) (53.6) (30.1) Net cash used in investing activities (193.8) (213.6) (189.8)

Cash flows from financing activities

(9.4) (2.1) (2.1) (12.0) Drawdown/(Repayment) of borrowings 250.9 50.1 (25.6)

- (150.0) - - Special Dividend paid - - (150.0)

- (159.2) - - Dividends paid (96.5) (89.9) (159.2)(9.4) (311.3) (2.1) (12.0) Net cash provided by/(used in) financing activities 154.4 (39.9) (334.8)

16.7 (292.7) 96.1 35.3 Net increase/(decrease) in cash held 74.5 33.0 (144.6)

217.9 234.6 (58.1) 38.0 Cash at the beginning of the period1

110.4 184.9 312.8 234.6 (58.1) 38.0 73.3 Cash at the end of the period 184.9 217.9 168.2

Quarter to date 2016/17

1 The 2016/17 "Cash at the beginning of the period" figures does not reconcile to the closing 2015/16 balance as the budget was prepared before the 2015/16 actuals were

finalised.

STATEMENT OF CORPORATE INTENT · 2017-09-20 · 2016/17 Statement of Corporate Intent. 1. Meeting...

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