TASPORTS ANNUAL REPORT...the world’s largest container shipping company, Maersk Line, to bring a...

TAS P ORTS AN N UAL R E P ORT

The story of Tasmania’s ports, places & people.

2016 – 2017

MAKIN G OU R P ORTS WOR K FOR YOU

8 ABOUT US

18 BUILDING

5 CEO MESSAGE

10 TASPORTS’ PEOPLE

TASPORTS ANNUAL REPORT 2016 – 2017

2

CONTE NTS

4 CHAIRMAN ’S REPORT

5 CEO MESSAGE

7 OUR COMPANY

8 ABOUT US

9 WHERE WE OPER ATE

10 TASPORTS’ PEOPLE

12 TASPORTS FACTS

15 OUR STORY

16 OUR ACHIEVEMENTS

18 BUILDING

23 SECURING

24 CONNECTING

29 OUR BOT TOM LINE

30 BOARD OF DIRECTORS

32 CORPOR ATE LEADERSHIP

35 KE Y RESULTS

36 FREIGHT STATISTICS

38 FREIGHT VOLUMES

40 COMMODITIES STATEWIDE

43 STATISTICS CHARTS

44 CORPOR ATE GOVERNANCE

DISCLOSURES

47 BUY LOCAL AND PAYMENT

OF ACCOUNTS GUIDELINES

49 AT TENDANCE AT BOARD

AND BOARD COMMIT TEE

MEETINGS

51 F INANCIAL STATEMENTS

FRONT COVER IMAGE :

TASPORTS P ILOT BOAT PARINGA

51 FINANCIAL STATEMENTS

23 SECURING

24 CONNECTING

3

TasPorts exists to improve the lives of everyone in Tasmania by facilitating trade for our island home. It’s all about the trade and the people. The Board and Management also focused on the commercial drivers of the business. Pleasingly, TasPorts and its controlled entities reported a consolidated after tax profit of $3.2 million. The consolidated profit comprised a TasPorts profit of $4.8 million and a loss in Bass Island Line (BIL) of $1.7 million. The TasPorts profit (excepting the BIL loss) represented a 320% increase on the 2016 profit of $1.5 million.

Facilitating trade requires a modern fleet of tugs, pilot launches and workboats and TasPorts’ Fleet Renewal Program is upgrading our fleet. This year the $2.5 million state-of-the-art pilot vessel, Hellyer, came into service in Burnie. The powerful $4.1 million Yandeyarra tug was also purchased this year and will be a significant addition in support of the trend to larger vessels when it joins the Hobart fleet later in 2017. Further investments are expected, including a third $3 million pilot vessel and an additional

$4 million tug later in 2017. This is arguably the most significant refresh of the marine fleet in a generation. The support of the Marine Team has been thoughtful and invaluable.

Southern Export Terminals (SET), a joint venture log export terminal between TasPorts and Qube Ports, started this year for a five year period. The first shipment of 11,000 tonnes took place in April. SET has worked to meet community expectations by operating peak hour curfews. TasPorts is providing certainty for the southern forestry industry and volumes continue to grow. There was a trade need and it is being met.

At the other end of our island, TasPorts successfully set up the Bass Island Line (BIL) shipping service to support the King Island community. BIL, a wholly-owned subsidiary of TasPorts, was established at the request of the State Government following limited private sector commercial interest. BIL began operating in April 2017 and has provided a safe and reliable service, despite some initial challenges and the Bass Strait weather. This is a challenging

assignment which is being regularly reviewed to make appropriate improvements.

I would like to thank my fellow Directors, the Chief Executive Officer Paul Weedon, the management team and all TasPorts staff for their outstanding work over the past year and their ongoing enthusiasm and dedication for the organisation.

STEPHEN BR ADFORD

Chairman

Stephen Bradford, Chairman

CHAIR MAN ’ S R E P ORT


4

CEO M E SSAG E

Paul Weedon, Chief Executive Officer

TasPorts puts people first. Above all else, we serve the people of Tasmania by facilitating trade through our ports. Protecting people was also at the forefront of our mind with the development and implementation of a new integrated approach to managing emergency and crisis incidents. Our aim is to protect life, property and the environment to the very best of our abilities at the most testing of times. Our commitment to people was also highlighted by the roll out of Care Factor - an innovative safety behaviour program focussed on building an exceptional safety culture.

Focussing on people also means building and maintaining strong customer relationships and helping our customers to grow their business with TasPorts. This year saw impressive developments in container shipping services. Swire and Mediterranean Shipping Company (MSC) expanded their services into Hobart and Bell Bay and we helped the world’s largest container shipping company, Maersk Line, to bring a new weekly container service into Bell Bay.

Building the business and investing in its future means planning ahead as well. During this financial year, we progressed our Port Master Plan project which will deliver detailed strategic plans for each of the ports we manage and operate in Tasmania. This follows on from the vision articulated in our 30-year port plan, TasPorts 2043. This work should give the market and communities the confidence that we are future proofing TasPorts.

As well as thinking ahead, we also have to maintain and renew our assets and facilities now. TasPorts takes this responsibility very seriously. That’s why we invested $21 million in over 100 land and marine infrastructure maintenance and remediation projects state-wide during the 2016-2017 financial year. Our Fleet Renewal Program progressed this year with the delivery of a new state-of-the-art pilot vessel, Hellyer, into service in Burnie. Further investments in our tug fleet are in the pipeline. During the year, a major body of work also began to improve Strategic Asset Management process and capability

while work continued to revitalise the important community assets at Sullivans Cove in Hobart, Strahan, Inspection Head and Stanley.

I am, of course, very pleased that in the process of delivering these achievements we have secured a consolidated after tax profit of $3.2 million. These terrific results were underpinned by an increase in freight volumes - particularly forest product exports and follows several years of significant expenditure on infrastructure remediation and renewal, which inevitably affected the bottom line. This is now the second year in a row that the company has delivered a profit.

Finally, I want to thank all of TasPorts’ employees. Your dedication and service to TasPorts, to one another, to our customers, stakeholders and the people of Tasmania as a whole is outstanding.

PAUL WEEDON

Chief Executive Officer

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6

OU R COM PANY

7

WHO WE ARE

Tasmanian Ports Corporation Pty Ltd (TasPorts) is a state-owned company responsible for ten Tasmanian ports and the Devonport Airport. We run a diverse range of operations across the state with the purpose of facilitating trade for the benefit of Tasmania, through the commercial provision of infrastructure and services.

WHAT WE DO

TasPorts is responsible for the management and maintenance of essential infrastructure in Tasmania, which includes forestry terminal operations in Burnie and Bell Bay, all associated infrastructure at the Devonport Airport as well as maintenance of port berths, channels, wharves, landside assets, marine fleet and key navigational aids.

TasPorts ensures the safe control and security of all major ports and delivers critical pilotage services as well as provision of towage, slipway and refuelling facilities, supply of floating plant and equipment for marine engineering projects, and construction and coastal haulage.

In addition, we maintain community-use waterfront assets in Sullivan’s Cove, Stanley, Inspection Head, Strahan and King Island.

CORPORATE INTENTIONS

Our Safety and Environmental Commitment – TasPorts is committed to conducting its business activities in a safe and environmentally responsible manner. Our Community Assets – TasPorts will maintain assets for the benefit of the community.Our Assets – TasPorts will manage and develop our commercial assets for the benefit of customers and stakeholders.

Our Commercial Focus – TasPorts will be a financiallysustainable business with a focus on profitability andproductivity to ensure we are responsive to changes in our markets.Our Customers – TasPorts will deliver a safe, efficient andreliable service that meets the current and emerging tradeand business needs of our customers.Our People – TasPorts will invest in the development of our people to deliver value-added outcomes for customers and stakeholders.Our Brand – TasPorts will be recognised by our employees, stakeholders and the community as a customer focused, reputable and socially responsible organisation.

TASPORTS VALUES

Our corporate intentions are supported by a set of valuesthat guide employees to achieve agreed business objectives.• Protect the health and safety of employees and others

affected by operations.• Provide customers with a responsive and quality service.• Be trustworthy and honest.• Act fairly in all dealings.• Have courage to do the right thing.• Respect for individuals.

Through our values and aligned business objectives,TasPorts aims to:• Protect and support an engaged workforce.• Exceed customer expectations.• Rise to challenges presented by external market

influences.• Continue to deliver on key infrastructure

developments and operational requirements to meet our customers’ needs.

ABO UT US

Objectives and direction


8

WH E R E WE OPE R ATE

Major Ports, Community Ports, Cargo Ports & Airports

PORT L AT TA

9

MA JOR PORTS

COMMUNIT Y PORTS

CARGO PORTS

AIRPORT

CURRIE

GR ASSY

STANLE Y

BURNIE

DEVONPORT

BELL BAY

DEVONPORT AIRPORT

INSPECTION HEAD

HOBART

STR AHAN

L ADY BARRON

TAS P ORTS’ PEOPLE

Some finer details about the people behind TasPorts

PART TIME

17CASUAL

57FULL TIME

198

SUPPORT

57PROFESSIONAL

24OPER ATIONAL

67MARINE

67

10


TAS P ORTS FAC TS

About TasPorts 2016 - 2017


12

14+MILLION TONNES

moved through TasPorts

4 BARGES

5PILOT

L AUNCHES

9TUGS

8PUNTS

10WORK

BOATS35VESSELS

in the TasPorts fleet

272EMPLOYEES

at TasPorts

Approximately

90MARINE ASSETS

maintained by TasPorts

11TASMANIAN

ports

38commercial shippingBERTHS

OVER 780THOUSAND SQUARE

METRES OF WATERFRONT

assets owned by TasPorts

280TENANTED

PROPERTIES

managed by TasPorts

348M IS THE LONGEST SHIP

that TasPorts handled

2,000+TOTAL SHIP

movements annually

Total QantasLinkFLIGHTS AT

DEVONPORT

AIRPORT

1,337

145,368PASSENGERS

at Devonport airport this year

13


14

OU R STORY

15

OU R ACH IE VE M E NTS

Exceeding expectations in 2016 - 2017

16


16

17

63%INCREASE

in cruise ship visits

95CRUISE SHIP VIS ITS

to Tasmania with over

230,000passengers and crew

TOTAL FREIGHT

VOLUMES

grew by

3.6%

3%INCREASE IN

property revenue

1REPL ACEMENT TUG

and

1NEW PILOT L AUNCH

$6.6 MILLION

investment in fleet renewal

Top 3 commodities in tonnes:1 .WOODCHIPS

2 ,987,676 2 .GENER AL CARGO

1 ,568,0643. CEMENT

1 ,568,904

Employees achieved the

TOP LEVELOF PROACTIVESAFETY HAZARD

reports in history

320%INCREASE ON

2016 profit of $1.5 million

TasPorts NET PROFIT OF

$4.8MILLION

MARINE ASSETSmaintained by TasPorts includeWHARVES , P IERS ,

BERTHS AND

BARGES

32PUBLIC

EVENTS

held on TasPorts land

$21MINVESTED IN 100+

infrastructure maintenance projects

ESTABLISHED

JOINT venture withSouthern Export Terminals

Set new shipping service forKING ISLAND BASS ISLAND LINE

1 ,565 jobs completed by our TOWAGE TEAMS

17

B U ILDIN G

TasPorts is responsible for the operation and management of all ports in Tasmania, including through the commercial provision of infrastructure and services. TasPorts provides pilotage, towage and other marine operations, ensuring a safe and reliable service to customers. We also manage and develop our assets for the benefit of customers and stakeholders.

PORT MASTER PL ANNING

TasPorts embarked on a major initiative to develop detailed plans for each of the ports we manage and operate. The Port Master Planning follows our 30-year port plan, TasPorts 2043. The plans will allow better understanding of infrastructure initiatives and future land use while increasing confidence for port stakeholders, investors and surrounding communities.

FLEET RENEWAL

Further progress was made against the TasPorts Fleet Renewal Program to update and renew vessels in the TasPorts fleet of tugs, pilot launches and workboats. This Program ensures the safety of employee and port assets and improves customer services. A new addition to the Hobart towage fleet was purchased this year: the Yandeyarra. This $4.1m investment will arrive in Hobart later in 2017 and is a modern, powerful and manoeuvrable tug to support Tasman Bridge transits and larger cruise ships. This year TasPorts also delivered intensive out-of-water maintenance on seven tugs.

SAFE NAVIGATION

After the major flood event in June 2016, TasPorts worked to quickly restore normal operating depths for shipping in Devonport port. Hydrographic surveys were conducted, sedimentation was redistributed and normal operating depths were achieved.

BURNIE CHIP EXPORT TERMINAL

A total of 1.5 million tonnes of product was exported through the Burnie Chip Export Terminal, a 30% increase from the previous financial year. TasPorts made a significant investment in maintenance and new equipment to support the increased trade at the terminal.

COMMUNIT Y ASSETS

TasPorts maintains assets for the benefit of the community. A key achievement this year was the commencement of the rebuild of Strahan Wharf. Stage 1 of this project was successfully completed.

Franklin Wharf Stage 1 remediation works were also completed. This $2.5 million investment will allow for community use of the area for the next 25 years and ensure Sullivans Cove remains a vibrant heart of the Hobart waterfront. A major upgrade to the under-wharf services at Inspection Head was successfully completed as well.

PROPERT Y

TasPorts manages over 280 tenancies across Tasmania. During the year we experienced steady growth in property rental income including lease rental, car parking and casual storage.

A major development on port land was celebrated in June 2017 when VOS Nominees Pty Ltd completed Federal Group’s new MACq 01 Hotel. The former TasPorts goods shed is now a stunning hotel.

EVENTS AND SPONSORSHIP

TasPorts proudly supports events and activities. This year we again hosted the Rolex Sydney Hobart Yacht Race, Taste of Tasmania and Dark Mofo and supported smaller community events, including the King Island ANZAC Day celebration.

DEVONPORT AIRPORT

Devonport Airport continued to experience steady growth in passenger numbers. This year 1,337 QantasLink flights carried 145,368 passengers in and out of Devonport. Roadways were upgraded and work was started to improve pedestrian walkways and traffic management.

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HELLYERFACTSLENGTH

16 metres

TOP SPEED

28 knots (or 50 km)

MA XIMUM DR AF T

Just 1.4 metres

BUILD

70 boat-builders 10 months to complete

19

HELLYER COMES INTO SERVICE Trade through Tasmania’s ports received a significant boost with the launch of the $2.5 million, state-of-the-art pilot vessel, Hellyer. The vessel was unveiled in May 2017 to service the port of Burnie. The arrival of the vessel ensures the fast, reliable and safe transfer of Marine Pilots in all weathers, 365 days a year.

The Hellyer is equipped with a self-righting capability so it can automatically return to an upright position if it capsizes. It has a top speed of 28 knots and state-of-the-art infrared cameras to identify smaller vessels or recover people from the water in the event of man overboard. The vessel also has a wave-piercing beak bow

which reduces stress and fatigue for the crew in rough waters. It was built in Australia by Hart Marine. The Hellyer joins sister vessel Paterson which services Bell Bay.


20

LOG EXPORTS TasPorts and Australian stevedore, Qube Ports, entered into a joint venture this year to establish a log export terminal for a five year period at the Port of Hobart. The operation of Southern Export Terminals (SET) Pty Ltd means sustainably sourced logs are now being exported from Hobart Port for the first time in five years. The first shipment of 11,000 tonnes occurred in April 2017.

The terminal is an open access facility, allowing all southern exporters a cost efficient and direct gateway to international markets for southern timber resources. The terminal manages all bulk and containerised log storage and export activities within the port of Hobart. SET also ensures log exporting is balanced with the expectations of the community by using state-of-the-art technology and by meeting stringent environmental standards.

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22

S ECU RIN G

TasPorts safeguards the health and safety of staff and others affected by our operations. We ensure the security and responsible environmental management of our ports. In pursuit of these goals, TasPorts delivers a wide range of initiatives.

OUR SAFET Y CULTURE

TasPorts puts people first. That’s why our safety culture is our highest priority. We always strive to work better, safer and smarter. An example of this was the major upgrades carried out this year to machine guarding across our slipways and the Burnie Chip Export Facility. This improved the safety of our employees and other port users by delivering physical protection around conveyors and other moving machine parts.

PROTECTING AIR QUALIT Y

TasPorts is committed to the responsible environmental management of its ports. This year we delivered a revised Environmental Management Plan for the Burnie Chip Export Terminal. The benefits of the Plan include a real time instrument-based monitoring system to replace the previous visual inspection approach, improved community protection and more efficient responses to community concerns. The Plan was endorsed by the Environment Protection Authority (EPA).

PORT SECURIT Y

During the financial year, TasPorts embarked on a full review of all its security arrangements state-wide. The aim was to deliver the most efficient and effective security measures across all of our facilities. Port security is a major priority for TasPorts. An important initiative delivered this year was the transition for all port users from the existing TasPorts Port Identification Pass to the nationally-recognised and regulated Maritime Security Identification Card (MSIC). The MSIC card is used by the maritime industry across Australia for identity and port access. This change has cut the time and cost of obtaining access to our secure sites and also improved security outcomes.

CARE FACTOR TasPorts successfully delivered an innovative program this year to build the safety culture at every level of the organisation. The program, called Care Factor, was delivered to all leaders and staff through six modules of training. It helped participants improve safety thinking and behaviours. The aim was to ensure that everyone is equipped to have a positive impact on safety performance and culture.

The Care Factor program draws from recent research into Positive Psychology and the experiences of organisations considered “best in class” for safe operations. Care Factor presenters are safety psychologists and/or HSE professionals with wide industry experience.

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CON N EC TIN G

TasPorts helps customers to grow their businesses with TasPorts, builds new customer opportunities and supports existing business relationships. Our internal teams support the operational divisions of the company to deliver on corporate objectives for the benefit of customers and stakeholders.

CONTAINERS

TasPorts helped introduce new and/or improved container shipping services into Tasmania. Swire and Mediterranean Shipping Company (MSC) continued to grow cargo support for their relatively new services into Hobart and Bell Bay respectively. In December 2016 MSC upgraded its weekly call into Bell Bay to twice weekly sailings with Melbourne. In February 2017 TasPorts welcomed the introduction of a new weekly Maersk Line container service into Bell Bay. Maersk Line is the world’s largest container shipping company.

KING ISL AND SHIPPING

This year TasPorts established and delivered a safe and reliable shipping service for the people of King Island. Bass Island Line (BIL), a wholly-owned subsidiary, was set up following a request by the State Government after the withdrawal of the previous service provider and limited private sector commercial interest. BIL began operating on 7 April 2017 with the Investigator II. Setting up BIL in a short timeframe was demanding. Since then, BIL

has been responsive to business and community needs, despite early challenges, including ramping up to meet the peak fertiliser season and accommodating livestock movements on a different route to the previous service. All cargo booked with BIL and delivered to Devonport port was moved to King Island in a timely fashion. From the start of the service on 7 April 2017 to the end of the financial year BIL:• Completed 74 voyages.• Moved 590 containers, including

240 containers (or 6,000 tonnes) of fertiliser.

• Completed 14 livestock sailings out of Grassy to mainland Tasmania.

• Shipped 4,700 head of cattle.

FORESTRY PRODUCTSTasPorts’ forestry business continued to grow. During the financial year it represented 23% of the corporate gross revenue. Total forestry export volumes increased by 21%, or 642,480 tonnes, to 3,740,850 tonnes. This included woodchips, logs and veneer, including 11,000 tonnes of logs through the new Southern Export Terminal, the new joint venture between TasPorts and Qube. The Burnie Chip Export Terminal’s (BCET) volumes increased by 35%, or 383,488 tonnes.

TasPorts continues its BCET infrastructure upgrades and logistics supply chain improvements. Log export volumes grew by 55% to 636,364 tonnes. TasPorts completed significant maintenance works in the main log yard at Burnie for Timberlands Pacific Pty Ltd to provide for all-weather operations and increased annual volumes. Export Veneer volumes increased by 61% to 116,810 tonnes, primarily from additional shipments through Burnie.


24

USING SMART TECHNOLOGY TasPorts rolled out an innovative project with iPads to improve staff safety and boost efficiency. The iPads were issued to field staff around the State to carry out risk assessments using an app before starting a new job. The assessments are called STAR, which stands for Stop, Think, Assess, Respond.

The iPad app, which replaced a paper system, allows employees in the field to send immediate notifications and images to supervisors, without needing to wait until they return to the office. This allows supervisors to send quicker responses, speeding up the work and improving safety.

The next stage is to allow incident reporting through the iPads. The project is part of a wider move to further improve the safety culture at TasPorts.


26

CRUISING TO SUCCESS The cruise ship sector continued to grow rapidly during the year with the booming industry showing no signs of slowing down. Cruise is now the fastest growing tourism sector in Tasmania. The number of cruise ship visits to Tasmania increased from 58 in 2015-2016 to 95 in 2016-2017, bringing in more than 230,000 passengers and crew. A total of 129 cruise ship visits are already booked for 2017-2018 representing an increase in calls of more than 120% in just three years.

The growth is being driven by larger cruise ships. TasPorts responded by upgrading infrastructure and services. TasPorts spent over $10 million in cruise terminal development, mooring bollards, fenders and gangway infrastructure. These

upgrades saw the arrival in Hobart for the first time of mega vessels over 300 metres, including Celebrity Solstice and Ovation of the Seas. In Burnie, the completion of a mooring dolphin will enable cruise ships up to 315 metres to berth – a significant increase on the previous limit of 245 metres.

Tasmania also welcomed its first ever cruise visit in the middle of winter with a visit by Pacific Jewel during the June 2017 Dark MOFO event. Visits continued to destinations other than ports, with 22 calls at the historic Port Arthur site, six to iconic Wineglass Bay and one to Flinders Island.

During the year it was decided to remove certain historic pricing concessions with effect for the next season.

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28

OU R BOT TOM

L INE

29

DARIO TOMAT

Director

Dario is a professional engineer with over 30 years of experience in the building, electricity, manufacturing and asset management areas. Dario is a Director at Whetstone Pty Ltd, responsible for project delivery, quality assurance and occupational health and safety. Key project clients include Compass Group, Forestry Tasmania and Ta Ann Tasmania.

Dario holds bachelor degrees in Engineering and Business and a Masters of Business Administration. He is a Fellow of the Australian Institute of Company Directors and Engineers Australia and a Registered Professional Engineer.

Dario is currently Chair of Brain Injury Association of Tasmania, Chair of the Assessment Committee for the Registered Professional Engineer Scheme and the previous Chair of the National Trust of Australia, Tasmania.

STEPHEN BR ADFORD

Chairman

Stephen has a portfolio of non-executive roles. He is the Chairman of the Australian Cruise Association and a Director of Napier Port (NZ). He is also Senior Advisor to Flagstaff Partners on Infrastructure assets.

Previously Stephen was the CEO of Port of Melbourne Corporation, 2004-13. He oversaw the approval and completion of the Channel Deepening Project and instigated Webb Dock capacity expansion.

Prior to that he was the CEO of Great Southern Railway and managing Director of Serco Australia Transport.

SALLY DARKE

Director

Sally is currently Chairperson of the Tasmanian Community Fund, Chairperson of Scotch Oakburn College and Non Executive Director of TasWater. She is a past Chairperson, Director and Adviser to the Board of B&E.

Sally has more than 25 years’ experience in human resources and corporate governance in the financial, infrastructure, education, sporting and community sectors with an emphasis on regulated industries. She had 10 years as a Director in the advisory practice of KPMG.

“ Focussing on people, also means building and maintaining strong customer relationships and helping our customers to grow their business with TasPorts.”

BOAR D OF D IR EC TORS

Steering us into the future


30

TR ACY MAT THEWS

Director

Tracy is a Fellow of the Australian Institute of Company Directors and of Chartered Accountants Australia and New Zealand with broad sector and industry experience and core skills in the areas of accounting, governance, audit and risk, business and strategic planning.

Tracy is currently a Non-Executive Director of the Public Trustee Tasmania, Chair of the Tasmanian Building and Construction Industry Training Board; Vice Commodore of the Royal Yacht Club of Tasmania; and Director of a private Philanthropic Foundation and Family Group. Previous directorships include Metro Tasmania, Tasplan Super, Colony 47 and the Printing Authority of Tasmania.

CATHERINE MURDOCH

Intern Director

The TasPorts Board welcomed Catherine Murdoch to the newly created role of Intern Director. The internship runs for 12 months and aims to support aspiring non-executive directors. Catherine is the Director of Northern Cities. Her previous roles include General Manager Environment and People at Tasmanian Irrigation, Policy Manager at the Tasmanian Farmers and Graziers Association and CEO at NRM North.

LUCY GREGG

Director

Lucy has over 15 years’ experience in project management, brand development and supply chain and freight logistics experience particularly with the Asian market.

Lucy is currently Manager, Marketing & Business Development at Reid Fruits, she is on the Strategic Industry Advisory Panel for the national cherry industry and was the inaugural Chair of the Primary Industry Biosecurity Action Alliance.

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COR P OR ATE LE ADE RS H IP

PAUL WEEDON

Chief Executive Officer

ANTHONY DONALD

Chief Operating Officer

MAT THEW JOHNSTON

General Manager Marine Services

GEOFF DUGGAN

Chief Financial Officer


32

34


TARGET ACTUAL COMMENT

2016 - 17 2016 - 17

FINANCIAL RETURNS TO GOVERNMENT

Dividends paid ($m) 1.3 1.3 Dividend paid in relation to the 2016 fy

Guarantee fees ($m) 0.4 0.4 No variance

Tax equivalents paid ($m) 0.8 1.0 Variance due to timing of tax payments

TOTAL 2.5 2.7

FINANCIAL TARGETS

Operating profit before interest, tax depreciation & maintenance ($m)

41.1 40.2 Variance due to above budget operating costs

Commercial asset maintenance ($m) 14.6 13.3 Variance due to projects delayed until 2018 fy

Community asset maintenance ($m) 7.6 6.8 Variance due to projects delayed until 2018 fy

Operating profit after tax ($m) 3.7 4.8 Variance due to lower maintenance costs (refer above)

Operating costs (% increase on prior year) 1.3 10.6 Higher employment costs, external consultancy costs for major projects & utility costs

Capital expenditure ($m) 26.8 13.2 Fleet replacement and infrastructure projects deferred until 2018 fy

Return on assets (%) 1.4 1.8 Above budget profitability

Return on equity (%) 1.8 2.3 Above budget profitability

Gearing (%) 12.0 12.0 No variance

Interest cover (EBIT) 4.1 4.9 Above budget profitability

Interest cover (EBITDA) 10.5 11.1 Above budget profitability

NON - FINANCIAL TARGETS

Lost time injury frequency rate - 5.1 Carry forward from 2016 fy and two incidents in 2017 fy

Pilotage arrival (%) 98 98 No variance

Marine fleet availability (%) 97 97 No variance

Unsecured tenancies 22 50 Accelerated negotiation

K E Y R E S U LTS

The table below sets out TasPorts achievement against the targets set out in the 2017 Statement of Corporate Intent. The targets are agreed with TasPorts shareholders and are for the Operating Company.

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TASMANIAN - FREIGHT STATISTICS - 2016/2017

YEAR

TONNES CHANGE FROM

FY2006

TEUsNO.

SHIPS

AVG. CARGO

PER SHIPIMPORT GROWTH EXPORT GROWTH TOTAL GROWTH INWARD OUTWARD TOTAL

05/06* 5,112,865 - 9,681,748 - 14,794,613 - - 224,621 225,452 450,073 2,187 6,76506/07 4,985,676 -2.49% 10,209,748 5.5% 15,195,424 2.7% 2.7% 221,446 228,974 450,420 2,046 7,42707/08 5,517,080 10.66% 10,705,453 4.9% 16,222,533 6.8% 9.7% 246,331 245,154 491,485 2,102 7,71808/09 5,285,411 -4.20% 9,568,919 -10.6% 14,854,330 -8.4% 0.4% 235,596 238,589 474,185 1,996 7,44209/10 4,822,976 -8.75% 8,602,367 -10.1% 13,425,343 -9.6% -9.3% 230,291 230,666 460,957 1,873 7,16810/11 5,074,191 5.21% 8,463,833 -1.6% 13,538,024 0.8% -8.5% 233,113 230,234 463,347 1,973 6,86211/12 4,729,623 -6.79% 6,556,943 -22.5% 11,286,566 -16.6% -23.7% 229,681 227,144 456,825 1,770 6,37712/13 4,862,850 2.82% 6,439,284 -1.8% 11,302,134 0.1% -23.6% 230,879 228,474 459,353 1,794 6,30013/14 4,980,686 2.42% 7,589,447 17.9% 12,570,134 11.2% -15.0% 226,828 224,476 451,304 1,774 7,08614/15 5,127,519 2.95% 7,635,800 0.6% 12,763,319 1.5% -13.7% 232,514 229,051 461,565 1,844 6,92215/16 5,364,702 4.63% 8,385,800 9.8% 13,750,502 7.7% -7.1% 236,215 232,392 468,607 1,915 7,18016/17 5,284,095 -1.5% 8,968,231 6.9% 14,252,327 3.6% -3.7% 239,765 235,398 475,163 2,071 6,882

* TasPorts commenced operation on 1/1/06. Therefore the previous 6 months relate to figures from the former regional port companies.Excludes Stanley and Flinders Island volumes.

BELL BAY - FREIGHT STATISTICS - 2016/2017

YEAR

TONNES TEUsNO.

SHIPS

AVG. CARGO


05/06* 1,512,356 - 3,424,957 - 4,937,313 - 42,779 46,211 88,990 403 12,25106/07 1,417,049 -6.30% 3,829,923 11.8% 5,246,972 6.3% 43,443 45,857 89,300 413 12,70507/08 1,646,474 16.19% 3,866,118 0.9% 5,512,592 5.1% 46,372 43,086 89,458 445 12,38808/09 1,598,558 -2.91% 3,105,760 -19.7% 4,704,318 -14.7% 45,339 46,587 91,926 385 12,21909/10 1,262,014 -21.05% 2,523,076 -18.8% 3,785,090 -19.5% 22,246 24,117 46,363 310 12,21010/11 1,519,945 20.44% 2,514,306 -0.3% 4,034,251 6.6% 24,689 23,001 47,690 377 10,70111/12 1,160,359 -23.66% 1,172,498 -53.4% 2,332,857 -42.2% 2,412 3,473 5,885 207 11,27012/13 1,226,603 5.71% 1,190,124 1.5% 2,416,727 3.6% 849 434 1,283 171 14,13313/14 1,310,605 6.85% 1,920,509 61.4% 3,231,114 33.7% 1,643 1,899 3,542 170 19,00714/15 1,339,905 2.2% 1,907,453 -0.7% 3,247,358 0.5% 3,115 3,015 6,130 174 18,66315/16 1,368,210 2.1% 2,101,772 10.2% 3,469,983 6.9% 6,439 6,758 13,197 220 15,77316/17 1,387,383 1.4% 2,221,682 5.7% 3,609,065 4.0% 7,888 7,544 15,432 278 12,982

* TasPorts commenced operation on 1/1/06. Therefore the previous 6 months relate to figures from the former regional port companies.

DEVONPORT - FREIGHT STATISTICS - 2016/2017

YEAR

TONNES TEUsNO.

SHIPS

AVG. CARGO


05/06* 1,297,773 - 1,842,299 - 3,140,072 - 90,243 75,854 166,097 968 3,24406/07 1,317,496 1.5% 1,805,453 -2.0% 3,122,949 -0.5% 80,204 76,260 156,464 875 3,56907/08 1,375,408 4.4% 1,888,480 4.6% 3,263,888 4.5% 87,913 83,123 171,036 849 3,84408/09 1,327,270 -3.5% 1,865,337 -1.2% 3,192,607 -2.2% 86,782 82,282 169,064 847 3,76909/10 1,359,929 2.5% 1,907,112 2.2% 3,267,041 2.3% 93,840 90,902 184,742 849 3,84810/11 1,349,652 -0.8% 1,853,380 -2.8% 3,203,031 -2.0% 93,282 90,759 184,041 856 3,74211/12 1,385,711 2.7% 1,971,614 6.4% 3,357,326 4.8% 101,341 99,353 200,695 829 4,05012/13 1,344,913 -2.9% 2,109,886 7.0% 3,454,799 2.9% 98,883 97,244 196,127 826 4,18313/14 1,413,393 5.1% 2,136,787 1.3% 3,550,181 2.8% 100,616 98,529 199,146 827 4,29314/15 1,458,430 3.2% 2,181,075 2.1% 3,639,505 2.5% 105,074 102,814 207,888 845 4,30715/16 1,462,018 0.2% 2,088,754 -4.2% 3,550,772 -2.4% 100,839 97,802 198,641 872 4,07216/17 1,681,616 15.0% 2,063,440 -1.2% 3,745,055 5.5% 106,742 102,361 209,103 939 3,988


FR E IG HT STATISTIC S


36

BURNIE - FREIGHT STATISTICS - 2016/2017

YEAR

TONNES TEUsNO.

SHIPS

AVG. CARGO


05/06* 1,251,495 - 2,899,227 - 4,150,722 - 91,475 103,031 194,506 549 7,56106/07 1,260,495 0.7% 3,016,948 4.1% 4,277,443 3.1% 97,659 106,369 204,028 508 8,42007/08 1,357,817 7.7% 3,099,244 2.7% 4,457,061 4.2% 109,970 117,267 227,237 545 8,17808/09 1,291,547 -4.9% 2,874,827 -7.2% 4,166,374 -6.5% 103,475 109,720 213,195 503 8,28309/10 1,280,401 -0.9% 2,821,438 -1.9% 4,101,839 -1.5% 114,205 115,646 229,851 437 9,38610/11 1,161,080 -9.3% 2,819,162 -0.1% 3,980,242 -3.0% 115,142 116,473 231,615 457 8,71011/12 1,238,958 6.7% 2,505,391 -11.1% 3,744,349 -5.9% 121,776 120,508 242,284 440 8,51012/13 1,264,739 2.1% 2,371,866 -5.3% 3,636,605 -2.9% 126,986 126,847 253,833 452 8,04613/14 1,299,671 2.8% 2,751,950 16.0% 4,051,621 11.4% 121,205 120,931 242,136 435 9,31414/15 1,356,681 4.4% 2,900,399 5.4% 4,257,080 5.1% 119,946 119,308 239,254 423 10,06415/16 1,436,622 5.9% 3,466,489 19.5% 4,903,111 15.2% 124,435 123,601 248,036 428 11,45616/17 1,303,653 -9.3% 4,028,166 16.2% 5,331,819 8.7% 120,936 120,430 241,366 443 12,036


HOBART - FREIGHT STATISTICS (INCLUDING TRIABUNNA) - 2016/2017

YEAR

TONNES TEUsNO.

SHIPS

AVG. CARGO


05/06* 1,051,241 - 1,515,265 - 2,566,506 - 124 356 480 267 9,61206/07 990,636 -5.8% 1,557,424 2.8% 2,548,060 -0.7% 140 488 628 250 10,19207/08 1,137,381 14.8% 1,851,611 18.9% 2,988,992 17.3% 2,076 1,678 3,754 263 11,36508/09 1,068,036 -6.1% 1,722,995 -6.9% 2,791,031 -6.6% 0 0 0 261 10,69409/10 920,632 -13.8% 1,350,741 -21.6% 2,271,373 -18.6% 0 1 1 277 8,20010/11 1,043,514 13.3% 1,276,986 -5.5% 2,320,500 2.2% 0 1 1 283 8,20011/12 910,069 -12.8% 870,332 -31.8% 1,780,401 -23.3% 0 0 0 248 7,17912/13 995,750 9.4% 719,163 -17.4% 1,714,913 -3.7% 0 0 0 253 6,77813/14 927,585 -6.8% 744,917 3.6% 1,672,503 -2.5% 0 0 0 224 7,46714/15 937,410 1.1% 606,200 -18.6% 1,543,610 -7.7% 26 12 38 256 6,03015/16 1,062,411 13.3% 696,176 14.8% 1,758,588 13.9% 297 229 526 270 6,51316/17 876,314 -17.5% 613,821 -11.8% 1,490,135 -15.3% 1,033 844 1,877 262 5,688


KING ISLAND - FREIGHT STATISTICS - 2016/2017

YEAR

TONNES TEUsNO.

SHIPS

AVG. CARGO


11/12* 34,525 0.0% 37,108 - 71,633 - 4,152 3,809 7,961 46 1,55712/13 30,845 -10.7% 48,245 30.0% 79,090 10.4% 4,161 3,949 8,110 92 86013/14 29,432 -4.6% 35,283 -26.9% 64,715 -18.2% 3,364 3,116 6,480 118 54814/15 35,093 19.2% 40,673 15.3% 75,766 17.1% 4,352 3,903 8,255 146 51915/16 35,440 1.0% 32,608 -19.8% 68,049 -10.2% 4,205 4,002 8,207 125 54416/17 35,129 -0.9% 41,123 26.1% 76,253 12.1% 3,166 4,219 7,385 149 512

37

FR E IG HT VO LU M E S

FY 2017 IMPORT TONNES

FY 2017 TONNES %

Bell Bay 1,387,383 27.2%Devonport 1,492,196 29.3%Burnie 1,303,654 25.6%Hobart 876,314 17.2%King Island 35,129 0.7%

TOTAL 5,094,676 100%

FY 2017 EXPORT TONNES

FY 2017 TONNES %

Bell Bay 2,221,682 24.3%Devonport 2,252,860 24.6%Burnie 4,028,165 44.0%Hobart 613,821 6.7%King Island 41,123 0.4%

TOTAL 9,157,651 100%

FY 2017 TOTAL TONNES

FY 2017FREIGHT TONNES %

Bell Bay 3,609,065 25.3%Devonport 3,745,055 26.3%Burnie 5,331,819 37.4%Hobart 1,490,135 10.5%King Island 76,253 0.5%

TOTAL 14,252,327 100%


38

FY 2017 INWARD TEUs

FY 2017 TEUs %

Bell Bay 7,888 3.3%Devonport 106,742 44.5%Burnie 120,936 50.4%Hobart 1,033 0.4%King Island 3,166 1.3%

TOTAL 239,765 100%

FY 2017 OUTWARD TEUs

FY 2017 TEUs %

Bell Bay 7,544 3.2%Devonport 102,362 43.5%Burnie 120,430 51.2%Hobart 844 0.4%King Island 4,219 1.8%

TOTAL 235,399 100%

FY 2017 TOTAL TEUs

FY 2017 TEUs %

Bell Bay 15,432 3.2%Devonport 209,104 44.0%Burnie 241,366 50.8%Hobart 1,877 0.4%King Island 7,385 1.6%

TOTAL 475,164 100%

FY 2017 TOTAL SHIPS

FY 2017 SHIPS %

Bell Bay 278 13.4%Devonport 939 45.4%Burnie 443 21.4%Hobart 262 12.6%King Island 149 7.2%

TOTAL 2,071 100%

39

FY 2017 - TOP TWENTY COMMODITIES - TEUs

COMMODITY TOTAL

General Cargo 163,799Empty 109,405Foods - other 42,273Beverages 30,487Newsprint 17,969Dairy Products 12,572Hazardous 10,398Timber Products 10,259Zinc 10,040Aluminium Ingots & Block 6,696Paper Products 6,320Metals - Other 5,312Cattle 5,215Vegetables 5,058Meat 4,034Wheat 3,841Fruit 3,483Fertiliser 3,451Scrap Metal 3,155Grains - Other 2,741

FY 2017 - TOP TWENTY COMMODITIES - TONNES

COMMODITY TOTAL

Woodchips 2,987,676General Cargo 1,568,064Cement 1,412,904Logs 641,327Zinc Concentrate 578,531Met Fines 557,676Foods - Other 405,778Beverages 393,134Alumina 375,301Empty 368,671Diesel 361,532Unleaded Fuel 300,488Sulphuric Acid 273,070Newsprint 263,560Zinc 253,859Fe & Si Manganese 252,997Fertiliser 248,449Tourist Vehicles 243,167Magnetite 225,169Dairy Products 183,938

819=545=422=305=179=126=104=102=100=67=63=53=52=50=40=38=35=34=31=27=

545=

819=

CO M M O DITI E S STATE WI D E

1000=568=412=

987=1000=1000=1000=641=578=557=405=393=375=368=361=300=273=263=253=252=248=243=225=183=

40



42

REVENUE

2007 $92,129,3032008 $97,035,7642009 $87,275,0192010 $80,582,6352011 $76,777,6812012 $72,897,9752013 $74,578,0702014 $82,381,6442015 $86,895,7202016 $94,669,6552017 $104,597,092

NET PROFIT AFTER TAX

2007 $8,615,1832008 $11,741,4652009 $5,781,9332010 $1,186,2102011 $297,2692012 ($6,665,097)2013 ($1,392,491)2014 ($168,778)2015 ($8,548,962)2016 $1,217,9932017 $3,166,404

CAPITAL EXPENDITURE

2007 $21,098,8122008 $29,019,4712009 $14,463,9082010 $3,972,4322011 $3,436,4322012 $5,395,4982013 $8,317,2712014 $11,994,3262015 $13,230,2542016 $14,577,7042017 $16,704,058

MAINTENANCE

2007 $4,622,5672008 $6,842,4242009 $8,524,5602010 $7,576,3422011 $10,391,0802012 $10,001,3192013 $8,597,5752014 $14,120,5772015 $26,461,2962016 $23,002,4532017 $16,909,905

RETURN ON EQUITY

2007 5.57%2008 9.36%2009 4.60%2010 0.96%2011 0.16%2012 (3.78%)2013 (0.80%)2014 (0.09%)2015 (4.53%)2016 0.61%2017 1.32%

RETURNS TO GOVERNMENT

2007 $3,945,923 $2,745,8842008 $3,498,617 $5,435,9052009 $1,275,756 $3,617,1512010 $134,591 $684,3662011 $117,440 $02012 $32,152 $02013 $534,911 $02014 $784,227 $02015 $49,428 $02016 $394,327 $1,370,0482017 $3,874,597 $2,815,131

Gross tax payable from

current year’s profit

Dividend payable from

current year’s profit

43

STATISTIC S CHARTS

TasPorts was established pursuant to the Tasmanian Ports Corporation Act 2005 (the Act) and is 100% owned by the Tasmanian Government. The Shareholder Ministers are the Minister responsible for Infrastructure and the Minister responsible for administering the Government Business Enterprise Act 1995.

The Act states that TasPorts’ principle objectives are to:• Facilitate trade for the benefit of Tasmania; and• Operate its activities in accordance with sound

commercial practice.Shareholder expectations in relation to TasPorts’

objectives, performance, reporting, financial and other matters are documented in the Shareholders’ Statement of Expectations.

In October 2008 the Shareholders issued a Governance Framework Guide for Tasmanian Government Businesses and State Owned Companies. The Guide referenced the eight core principles underlining good corporate governance as recommended by the ASX Corporate Governance Council for listed companies.

While noting that the principles were not mandated, the Shareholder Ministers expressed an expectation that the core principles, where relevant, would be adopted by the Boards of Government Businesses and State Owned Companies.

In addition to the Corporate Governance Principles noted below, the Department of Treasury and Finance has issued a Governance Framework and Guidelines in relation to:• Board appointments;• Appointing the Chief Executive Officer as a member

of the Board;• Director induction, education and training;• Assessing Board performance;• Director and Executive remuneration;• Overseas travel;• Reporting;• Corporate planning;• Capital investment; and

• Subsidiary companies and joint ventures.TasPorts has adopted applicable practices in compliance

with the Governance Framework and Guidelines. TasPorts’ position on the eight core principles outlined

in the Governance Framework Guide is as follows.

L AY SOLID FOUNDATIONS FOR MANAGEMENT

AND OVERSIGHT BY THE BOARD

The Board operates under a formal Charter and Code of Conduct that details its duties and responsibilities. The primary roles of the Board are to:• Set the strategic direction of TasPorts;• Ensure appropriate processes are in place for risk assessment and management;• Ensure accountability to the Shareholders; and• Appoint and review the performance of the Chief

Executive Officer.The Charter also addresses the relationship between

the Board and management. The CEO is responsible for the general administration and management of TasPorts comprising:• Conducting day to day business in accordance with

relevant legislation, the Constitution, the Shareholders’ Statement of Expectations and policies endorsed by the Board;

• Advising the Board, on a regular basis, on operational and financial performance; and

• Immediately advising the Board of any material matter likely to seriously impact TasPorts.A delegations policy details limits of delegated

authority to management and reserved functions for the Board. In order to assist the Board perform its duties, an Audit and Risk Management Committee and a Human Resources and Remuneration Committee have been established. Each Committee operates under its own Charter, which is reviewed regularly.

Performance management processes have been established for all staff including management. The process involves assessment of capabilities and


44

CO R P O R ATE G OVE R NAN CE D ISCLOS U R E S

performance against determined key performance indicators. The assessment process also addresses development and training requirements.

The Board is also subject to a regular performance evaluation.

STRUCTURE THE BOARD TO ADD VALUE

The composition of, and appointments to, the Board are prescribed by the Act. The Act requires the Board to consist of Directors who have the skills and experience necessary to enable TasPorts to achieve its objectives.

Directors are encouraged to undertake ongoing education relevant to their role as Director. The Chairman and all other Directors are independent Non-Executive Directors.

The Board has adopted the process recommended in the Guidelines for the selection and appointment of new Directors to the Board and for the reappointment of Directors whose terms are up for renewal. This process involves a performance evaluation for those Directors seeking reappointment.

In the event that a new appointment is made, the new Director undertakes a comprehensive induction program, including briefings from the Chief Executive Officer and senior management.

PROMOTE ETHICAL AND RESPONSIBLE

DECIS ION MAKING

TasPorts has adopted a set of values and a Code of Conduct in relation to its internal and external dealings.

The Board, via the Company Secretary, maintains a register of declarations of interests which is updated regularly. Executive meetings also require a declaration of interests by attendees.

TasPorts’ policies address the issue of conflict of interest and include procedures for dealing with conflicts of interests should they arise.

SAFEGUARD INTEGRIT Y IN F INANCIAL REPORTING

The Chief Executive Officer and the Chief Financial Officer provide written undertakings to the Board providing assurances that TasPorts’ financial reports present a true and fair view and are in accordance with relevant accounting standards.

The Board has established an Audit and Risk Management Committee. The internal audit function is provided by an external resource and this appointment is reviewed every three years.

TasPorts external auditor is the Auditor-General of Tasmania. The Auditor-General or his representatives attend meetings of the Audit and Risk Management Committee from time to time.

MAKE TIMELY AND BAL ANCED DISCLOSURE

TasPorts is not a company listed on the Australian Stock Exchange (ASX) and therefore is not subject to the ASX Listing Rules which include continuous disclosure requirements to the ASX. TasPorts reports to its Shareholders in accordance with statutory obligations, Shareholder directions and obligations provided in TasPorts’ Constitution.

The Chairman and Chief Executive Officer regularly meet with Shareholders to provide briefings on key issues and developments.

RESPECT THE RIGHTS OF SHAREHOLDERS

TasPorts complies with formal reporting obligations under its Constitution, applicable legislation and the Guidelines, and also provides regular briefings to its Shareholders. TasPorts recognises its relationship with the wider community as it strives to meet its objective of facilitating trade for the benefit of Tasmania.

RECOGNITION AND MANAGEMENT OF RISK

TasPorts manages its operational, financial and compliance risks in accordance with a Risk Management Framework. The framework and supporting policies have

45

been prepared in accordance with relevant standards and are approved by the Audit and Risk Management Committee.

A formal risk assessment process, to document the organisational strategic risk profile, has been undertaken and this profile is subject to annual review.

TasPorts has established a fraud risk register and policy which is regularly reviewed by management and reported to the Audit and Risk Management Committee.

REMUNER ATE FAIRLY AND RESPONSIBLY

The Board has established a Human Resources and Remuneration Committee which is responsible for ensuring that remuneration policies and practices are fair and responsible. Under its Charter, the Committee is responsible for the following:• Maintaining an understanding of current

organisational planning, employment management practices and regulatory obligations;

• Reviewing and making recommendations to the Board on succession planning for the Chief Executive Officer and Executive;

• Reviewing the adequacy of employment and workplace management policies;

• Recommending remuneration for the Chief Executive Officer and reviewing annual performance against targets;

• Reviewing compensation arrangements (including incentives and other benefits) for management and performance target outcomes;

• Reviewing and recommending for Board approval policies for employee remuneration generally;

• Reviewing superannuation arrangements; and• Examining any matters referred to it by the Board.

PUBLIC INTEREST DISCLOSURES ACT

As required under the Public Interest Disclosures Act 2002, TasPorts has developed a system for reporting disclosures of improper conduct, corrupt conduct, or detrimental action by TasPorts, its officers or employees.

The procedures are available at www.tasports.com.au or by contacting the Protected Disclosure Officer, TasPorts, GPO Box 202, Hobart, Tasmania 7001.

No reports were made in 2016-17 under this regime.

RIGHT TO INFORMATION ACT

TasPorts is committed to complying with the Right to Information Act 2009. Details about the Act and the company’s obligations under it are available at www.tasports.com.au or by contacting the Right to Information Officer, TasPorts, GPO Box 202, Hobart, Tasmania, 7001.

During 2016-17, four formal applications for assessed disclosures were received and responded to.

PERSONAL INFORMATION PROTECTION ACT

TasPorts is subject to the Personal Information Protection Act 2004 which prescribes personal information protection principles for Tasmania.

During 2016-17 there were no complaints received under this regime.

OVERSEAS TR AVEL

No overseas travel was undertaken by the Directors during the 2016-2017 financial year. The Commercial Manager (Marine & Antarctic) travelled to Goa, India in August 2016 for the Council of Managers of National Antarctic Programs conference. The cost for this trip was $5,324. The CEO and General Manager Marine Services travelled to Kuala Lumpur, Malaysia in June 2017 to assess a vessel candidate for Bass Island Shipping. The total cost for this trip was $8,648. The total cost for the three trips in 2016-17 was $13,972.

SUPER ANNUATION

TasPorts complied with its obligations under the Superannuation Guarantee (Administration) Act 1992 (Cth) in respect of employees of TasPorts who are members of complying superannuation schemes.


46

B U Y LOCAL AN D PAY M E NT O F ACCO U NTS G U I D E LI N E S

BACKGROUND

The Treasurer has approved the following Guidelines for Tasmanian Government Businesses:1. Buy Local - which encourages purchasing from

Tasmanian suppliers and increased disclosures on the use of consultants; and

2. Payment of Accounts - which requires implementation of appropriate policies and procedures to ensure that all accounts are paid on time and, if not, interest is paid for late payments.

BUY LOCAL

A “Tasmanian business” is defined as a business operating in Tasmania, which has a permanent office or presence in Tasmania and employs Tasmanian workers.

For the last three financial years, purchases from Tasmanian businesses were as follows:

PURCHASES FROM TASMANIAN BUSINESSES 2017 2016 2015

Percentages of purchases from Tasmanian businesses 84% 84% 81%

Value of purchases from Tasmanian businesses $65,782,647 $63,210,327 $57,545,949

Purchases are defined to include operating expenses (excluding employment expenses, finance expenses and depreciation) together with capital expenditure. Purchases from non-Tasmanian businesses constitute equipment, goods and services not available from Tasmanian businesses.

CONSULTANCIES

The guidelines provide the following definitions:

CONTR ACTOR

A “Contractor” is an individual or organisation engaged under a contract (other than as an employee) to provide goods and/or services to an entity. A contractor will usually work under the supervision of an entity manager.

CONSULTANT

A “Consultant” is a particular type of contractor who is engaged to provide recommendations or specialist or professional advice (or more generally non-manual services) to assist or influence an entities decision making. CONSULTANCIES VALUED AT MORE THAN $50,000

(EX GST) TO 30 J UNE 2017:

NAME OF CONSULTANT LOCATION DESCRIPTION AMOUNT

GHD Pty Ltd TasmaniaEngineering

services $709,144Sprott Planning & Environment Pty Ltd Queensland Port Master Plans $283,153Black Quay Consulting Victoria

Port Development Plans $271,331

Ironside Risk Partners Pty Ltd Queensland Security Review $241,303

OMC International VictoriaTasman bridge

safety $195,020Port & Transport Infrastructure Victoria

Engineering Services $157,971

Searson Buck TasmaniaRecruitment

Services $136,628

Russell Reynolds Associates Australia Pty Ltd NSW

Recruitment Services $118,066

MAST Tasmania Pilot Audit $96,000

Assetval Queensland Asset Valuations $92,486

Project Services & Advisory Group Victoria


KPMG Australia Tasmania Financial advice $78,100

Pitt & Sherry TasmaniaEngineering

Services $70,061

Taplin Consulting Tasmania Precinct Planning $59,440

Blue Arcadia NSWCommunication

advice $54,619

Emma Riley & Associates Tasmania Precinct Planning $53,516

Grosvenor Management Consulting Pty Ltd NSW

Procurement Maturity $53,456

Tasmanian consulting Services Tasmania


KPMG Australia Victoria Advisory Services $52,908

TOTAL $2,868,555

Consultants – Individually less than $50,000 (74) $1,058,951

TOTAL PAYMENT TO CONSULTANTS $3,927,506

Above amounts are totalled by supplier and may include a number of discrete projects

47

PAYMENT OF ACCOUNTS

The Tasmanian Government has issued a Guideline which requires Government owned businesses: • To implement appropriate policies and procedures to

ensure that all accounts are paid on time and, if not, interest is paid for late payments;

• Pay invoices of less than $50,000 within 30 days, or if a shorter term has been agreed, within the shorter term; and

• Pay invoices of $50,000 and above in accordance with agreed terms and by the due date.The expectation is to pay all invoices correctly

rendered by suppliers within the period specified by the supplier, or where the contract is silent on payment requirements, within 30 calendar days of the date of a correctly rendered invoice.

To ensure TasPorts is able to pay suppliers within 30 days of the invoice date the invoices must be correctly rendered and received by TasPorts on a timely basis.

Set out below is detail for the previous three financial years.

INVOICES DUE OR PAIDMEASURE 2017 2016 2015

Average creditor days 25 26 26

Number of accounts due for payment 15,682 14,198 14,860

Number of accounts paid on time 13,595 (87%) 12,082 (85%) 12,149 (82%)

Amount due for payment $87,547,999 $86,151,110 $78,125,341

Amount paid on time $82,259,183 $81,842,901 $72,684,431

Number of payments for interest on overdue accounts Nil Nil Nil

Interest paid on overdue accounts Nil Nil Nil

REASONS FOR DEL AYS

• Invoices issued in advance of services or goods being received or complete.

• Dispute as to the price of goods or services, additional documentation requirement, timeliness of delivery or incorrect goods or services provided.

• Vendors not providing sufficient detail on the invoice for TasPorts to recognise the validity of the invoice.There has been no instance where, since the date of

application of the Guidelines, that interest is payable in relation to any invoice.

DETAIL S OF ACTION TAKEN

TO IMPROVE PERFORMANCE

TasPorts has implemented the following actions to improve payment terms of invoices:• Increased uptake of the asset management system

to improve contract management and vendor relationships; and

• Negotiation with vendors to ensure invoices are sent to TasPorts electronically in a timely and complete manner.


48

DIRECTOR APPOINTEDTERM EXPIRED BOARD

AUDIT & RISK COMMITTEE

HUMAN RESOURCES COMMITTEE

MEETINGS HELD ATTENDED



Stephen Bradford 9 Dec 2015 12 12 5 5 2 2

Barry Berwick 20 Nov 2008 17 Nov 2016 5 5

Tracy Matthews 9 Dec 2015 12 12 5 5

Dario Tomat 9 Dec 2015 12 12 1 1 2 2

Lucy Gregg 22 Aug 2016 10 10 4 4

Sally Darke 22 Aug 2016 10 10 2 2

49

AT TE N DAN CE AT BOAR D AN D BOAR D CO M M IT TE E M E E TI N G S


50

FINAN CIAL STATE M E NTS

For the year ended 30 June 2017

51

51 DIRECTORS’ REPORT

55 AUDITOR ’S INDEPENDENCE DECL AR ATION

56 DIRECTORS’ DECL AR ATION

57 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

58 STATEMENT OF F INANCIAL POSITION

59 STATEMENT OF CHANGES IN EQUIT Y

60 STATEMENT OF CASH FLOWS

61 NOTES TO THE F INANCIAL STATEMENTS

92 INDEPENDENT AUDITOR ’S REPORT

DI R EC TO RS’ R E P O RT

The Directors present their report on TasPorts and its controlled entities (“the Economic Entity”) for the year ended 30 June 2017. The names of the Directors in office at any time during or since the end of the year are:

STEPHEN BR ADFORD

Non-Executive Director and Chairman - since 9 December 2015

TR ACY MAT THEWS

Non-Executive Director - since 9 December 2015

DARIO TOMAT

Non-Executive Director - since 9 December 2015

SALLY DARKE

Non-Executive Director - since 22 August 2016

LUCY GREGG

Non-Executive Director - since 22 August 2016

BARRY BERWICK

Non-Executive Director - to 17 November 2016

Catherine Murdoch was appointed an intern director of TasPorts on 1 January 2017. The appointment is for a one year period and is part of TasPorts’ initiative to provide governance experience to emerging business leaders.

In addition to TasPorts, the companies that comprise the Economic Entity are:

BASS ISL AND LINE PT Y LTD 100% owned by TasPorts Incorporated in February 2017 to operate the King Island shipping service.

SOUTHERN EXPORT TERMINAL S PT Y LTD 50% owned by TasPorts and 50% by Qube Ports Incorporated in December 2016 to operate the forestry export terminal in Hobart.

KING ISL AND PORT CORPOR ATION PT Y LTD 100% owned by TasPorts Non trading.

FLINDERS ISL AND PORT CORPOR ATION PT Y LTD 100% owned by TasPorts Non trading.

TasPorts reported a net profit of $4.832 million in 2017 compared to a net profit of $1.522 million in 2016. The Economic Entity reported a net profit of $3.166 million compared to a net profit of $1.218 million in 2016.

The net profit of the Economic Entity was affected by the net after tax loss of Bass Island Line of $1.704 million. Bass Island Line was established by TasPorts at the request of the Tasmanian State Government to provide a shipping service between King Island (Grassy) and mainland Tasmania (Devonport and Stanley). This followed the service withdrawal of the long-term shipping service provider and the limited private sector interest in providing an alternative service. The primary contributors

52


to the operating loss were non recovery of transshipment costs and the costs to establish the service with standalone landside stevedoring and receival and delivery activities.

The improved result of TasPorts was underpinned by an increase in freight volumes, particularly forest product exports. Freight volumes for 2017 of 14.3 million tonnes was the highest since 2009. The continued improvement in profitability follows several years of losses due to the planned increase in infrastructure remediation and renewal including dredging at the Port of Devonport, remediation of the Devonport Airport runway and significant wharf and hardstand remediation.

TasPorts continued its commitment to the infrastructure remediation and renewal program outlined in the 10-year infrastructure plan. This includes a remediation program of $27 million over five years on community port infrastructure on the Hobart Waterfront (Sullivans Cove), Strahan, Inspection Head and Stanley. The spend in 2017 was $6.807 million and the total expenditure at the end of the fourth year of the program was $24.405 million. This program is assisted by a $17.5 million shareholder equity contribution over the 2014 to 2017 financial years.

TasPorts views these community assets as non-commercial as their function and usage provide limited capacity to derive a commercial financial return. This maintenance commitment emphasises TasPorts’, and its shareholders’, recognition of the importance of these assets to their local communities and in particular their tourism value. The benefit of this program is being experienced in Strahan where the wharf remediation is nearing completion. The wharf remediation will allow upgrades to the cruise terminal to provide improved amenity and customer experience for the many visitors

to the region.TasPorts’ management of the Burnie Woodchip

Export Terminal as a multi-user facility has been key to improving export access and confidence in the forestry industry. In southern Tasmania, TasPorts responded to the industry by creating a joint venture, Southern Export Terminals, to provide a cost effective, industry benchmarked log export facility enabling the reintroduction of log exports from the port of Hobart.

TasPorts continues to focus on improving productivity and the efficient use of resources. The divestment of landside moorings services allows our employees to focus on delivering core business services with increased productivity. The divestment of the Limesand Mine and cattle transport infrastructure on King Island also enables a greater focus on core port business.

TasPorts’ fleet renewal program is creating an efficient and reliable fleet of tugs, pilot vessels and workboats. The construction of Paterson and Hellyer, state-of-the-art pilot launches, are the first vessels of their kind in Tasmania and operate from Bell Bay and Burnie. A third pilot launch is in construction for delivery to Hobart in late 2017.

Plans for a new international container terminal at the port of Burnie are in the feasibility phase. The feasibility study is being jointly undertaken with Australia’s largest stevedore, DP World Australia and is expected to handle the equivalent of 300,000 TEUs per annum.

Detailed port master plans for each major port in Tasmania are in development and reflect the vision of TasPorts’ 30 Year Port Plan. The port plans for Burnie, Devonport, Bell Bay and Hobart will focus on the next 10–15 years. The aim is to highlight specific infrastructure needs to support existing customer

TasPorts reported a net profit of

$4.832MILLION

in 2017 compared to a net profit of $1.522 million in 2016

53

growth and to attract new customers and trade across a variety of commodity types.

TasPorts reviews the valuation of infrastructure assets on a three-year cycle. These assets were revalued in 2017 resulting in a net $43.8 million increase in the infrastructure asset valuation across the Economic Entity. This increase is supported by the continued improvement in TasPorts profitability and further supports the efforts of the Board and management to create a sustainable business model. TasPorts’ financial position remains stable with sound liquidity levels to meet current operational needs, known short and medium term maintenance commitments and recurrent capital expenditure. Capital investment to satisfy potential demand for additional infrastructure capacity to meet the needs of emerging export ventures will require development of an acceptable funding strategy.

TasPorts continues to make a significant investment in safety culture and mobile technology to improve safety performance and workforce participation.During the year the principal activities of the Economic Entity were owning and operating the following facilities and services:• Operational port infrastructure and properties at

Burnie, Devonport, Hobart, Bell Bay and King Island (Grassy);

• Other port infrastructure and properties at Strahan, Smithton, Stanley, King Island (Currie) and Flinders Island (Whitemark and Lady Barron);

• Shipping services between mainland Tasmania and King Island;

• State-wide towage services;• State-wide pilotage services;• Airport facilities and related properties at

Devonport Airport;• Transport and plant hire at Burnie, Devonport,

Hobart, Launceston, Bell Bay, Burnie, King Island and Flinders Island;

• Fuel distribution at Hobart, King Island and Flinders Island; and

• Vessel slipping services at Hobart, Strahan, Flinders Island and King Island.

TasPorts is committed to achieving a high standard of environmental performance. The establishment of an integrated environmental and safety management system is ongoing to monitor risk and ensure compliance with statutory requirements. No statutory breaches were notified during the financial year.

The Economic Entity has paid insurance premiums for the year of $37,400 in respect of directors’ and officers’ liability, for current and former directors. The insurance premiums relate to:• Costs and expenses incurred by relevant officers in

defending proceedings, whether civil or criminal and whatever their outcome; and

• Other liabilities that may arise from their position, with the exception of conduct involving a wilful breach of duty or improper use of information or position to gain a personal advantage.

TasPorts has entered into a deed of access, indemnity and insurance with directors and officers. Pursuant to the deed TasPorts undertakes to:• Maintain certain documents and to provide directors

and officers access to those documents;• Indemnify the directors and officers for certain

liabilities; and• Maintain an insurance policy covering the directors

and officers.

During or since the end of the financial year the Economic Entity has not indemnified or made a relevant agreement to indemnify an auditor of the company against a liability incurred. In addition, TasPorts has not paid, or agreed to pay, a premium in respect of a contract insuring against a liability incurred by an auditor.

No person has applied for leave of Court to bring proceedings on behalf of the Economic Entity or intervene in any proceedings to which the Economic Entity is a party for the purpose of taking responsibility on behalf of the Economic Entity for all or any part of those proceedings. The Economic Entity was not a party to any such proceedings during the year.

AUDITOR ’S INDEPENDENCE DECL AR ATION

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 55.

Signed in accordance with a resolution of the Board of Directors:

MR STEPHEN BR ADFORD

Non-Executive Director and Chairman 9 August 2017

MS TR ACY MAT THEWS

Non-Executive Director9 August 2017

54


AU DITO R ’ S I N D E P E N D E N CE D ECL AR ATIO N


do not delete, auditor

page number text links here.

55

DI R EC TO RS’ D ECL AR ATIO N

THE DIRECTORS DECL ARE THAT:

(a) The attached financial statements and notes thereto comply with Australian Accounting Standards and Australian Accounting Interpretations adopted by the Australian Accounting Standards Board;

(b) The attached financial statements and notes thereto give a true and fair view of the financial position and performance of the Economic Entity;

(c) In the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001 (Cth);

(d) In the Directors’ opinion, there are reasonable grounds to believe that the Economic Entity will be able to pay its debts as and when they become due and payable; and

(e) The Directors have been given declarations as set out in Section 295A of the Corporations Act 2001 (Cth) from the Chief Executive Officer and Chief Financial Officer for the year ended 30 June 2017.

Signed in accordance with a resolution of the Directors made pursuant to section 295(5) of the Corporations Act 2001 (Cth). On behalf of the Directors.

MR STEPHEN BR ADFORD

Non-Executive Director and Chairman 9 August 2017

MS TR ACY MAT THEWS

Non-Executive Director9 August 2017

56


57

NOTE ECONOMIC ENTITY

2017

$

2016

$

REVENUES

Trade revenues 2 103,632,614 94,288,324

Other revenues 2 964,478 381,331

TOTAL REVENUES 104,597,092 94,669,655

EXPENSES

Cost of goods sold (8,448,919) (7,758,985)Employee benefits (35,536,784) (33,217,477)Property costs (6,302,074) (5,808,171)Equipment hire (552,239) (230,786)Maintenance (16,909,905) (23,002,453)Operational expenditure (3,920,911) (999,740)Administration (6,348,554) (3,915,041)Finance (1,802,787) (1,859,233)Depreciation and amortisation 3 (11,540,478) (11,385,720)Current year impairment of community asset projects 12 (3,436,020) - Current year revaluation decrement of infrastructure assets 12 (1,790,262) - Prior revaluation decrements of infrastructure assets reversed 12 2,891,449 -

Other expenses (4,508,835) (4,398,806)

TOTAL EXPENSES (98,206,319) (92,576,412)

PROFIT/(LOSS) BEFORE INCOME TAX 6,390,773 2,093,243

Income tax (expense)/credit 4 (3,169,445) (875,250)

Share of profit/(loss) of equity accounted investee, net of tax 27 (54,924) -

PROFIT/(LOSS) AFTER INCOME TAX 3,166,404 1,217,993

OTHER COMPREHENSIVE INCOME

Items that will not be classified to profit or loss

Increase/(decrease) in asset revaluation surplus 12 43,841,661 -

Income tax (expense)/benefit on asset revaluation (12,082,243) -

Other comprehensive income/(loss) for the year, net of tax 31,759,418 -

TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR 34,925,822 1,217,993

The accompanying notes form part of these financial statements.

STATE M E NT O F P RO FIT O R LOSS & OTH E R

CO M PR E H E N S IVE I N CO M E


2017

$

2016

$

ASSETS

Current assets

Cash and cash equivalents 6 39,302,644 34,299,740

Trade and other receivables 7 10,084,561 10,106,596

Inventories 8 813,171 667,178

Other current assets 9 1,627,297 1,152,322

Assets classified as held for sale 10 290,223 -

TOTAL CURRENT ASSETS 52,117,896 46,225,836

NON-CURRENT ASSETS

Property, plant and equipment 12 254,416,291 208,370,613 Goodwill 13 2,800,516 2,800,516 Deferred tax asset 14 2,885,693 3,574,078

Total non-current assets 260,102,500 214,745,207

TOTAL ASSETS 312,220,396 260,971,043

LIABILITIES

Current liabilities

Trade and other payables 15 9,061,188 12,092,245

Current tax liability 16 3,306,569 461,880

Short-term borrowings 17 - 250,000

Short-term provisions 18 5,407,712 5,568,942

TOTAL CURRENT LIABILITIES 17,775,469 18,373,067

NON-CURRENT LIABILITIES

Long-term borrowings 17 27,333,663 27,333,663

Deferred tax liability 14 25,501,160 14,761,508

Long-term provisions 18 1,191,930 1,140,405

TOTAL NON-CURRENT LIABILITIES 54,026,753 43,235,576

TOTAL LIABILITIES 71,802,222 61,608,643

NET ASSETS 240,418,174 199,362,400

EQUITY

Issued capital 19 135,427,387 127,927,387

Reserves 19 130,577,968 98,827,350

Retained earnings/(accumulated losses) 19 (25,587,181) (27,392,337)

TOTAL EQUITY 240,418,174 199,362,400


58


STATE M E NT O F F I NAN CIAL

P OS ITIO N

ISSUED CAPITAL

NOTEORDINARY

SHARES EQUITY

RETAINED EARNINGS/

(ACCUMULA-TED LOSSES) RESERVES TOTAL

$ $ $ $ $

ECONOMIC ENTITY

Balance at 1 July 2015 2 118,427,385 (28,907,602) 99,124,622 188,644,407

Profit/(loss) attributable to members - - 1,217,993 1,217,993

Disposal of revalued assets transferred from reserves to retained earnings/(accumulated losses)

- - 297,272 (297,272) -

Equity contribution - 9,500,000 - - 9,500,000

BALANCE AT 30 JUNE 2016 2 127,927,385 (27,392,337) 98,827,350 199,362,400

Profit/(loss) attributable to members - - 3,166,404 - 3,166,404

Total other comprehensive income/(loss) for the year

- - - 31,759,418 31,759,418

Dividends paid - - (1,370,048) - (1,370,048)

Disposal of revalued assets transferred from reserves to retained earnings/(accumulated losses)

- - 8,800 (8,800) -

Equity contribution - 7,500,000 - - 7,500,000

BALANCE AT 30 JUNE 2017 19 2 135,427,385 (25,587,181) 130,577,968 240,418,174


STATE M E NT O F CHAN G E S I N

EQ U IT Y

59

STATE M E NT O F CA S H FLOWS

60



2017

$

2016

$

CASH FLOWS FROM OPERATING ACTIVITIES

Cash receipts from customers 108,320,766 102,096,062

Cash paid to suppliers and employees (90,810,991) (90,418,523)

Interest received 860,499 677,618

Income tax paid (978,962) (49,725)

NET CASH FROM OPERATING ACTIVITIES 20 17,391,312 12,305,432

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of equity accounted investee (1) -

Acquisition of property, plant and equipment (16,704,058) (14,577,708)

Proceeds from sale of property, plant and equipment 438,485 3,273,348

NET CASH FROM/(USED IN) INVESTING ACTIVITIES (16,265,574) (11,304,360)

CASH FLOWS FROM FINANCING ACTIVITIES

Advance to equity accounted investee (199,999) -

Loan repayment (250,000) (300,000)

Finance costs (1,802,787) (2,120,762)

Equity contribution 7,500,000 9,500,000

Dividends paid (1,370,048) -

NET CASH FROM/(USED IN) FINANCING ACTIVITIES 3,877,166 7,079,238

Net increase/(decrease) in cash held 5,002,904 8,080,310

Cash at beginning of financial year 34,299,740 26,219,430

CASH AT END OF FINANCIAL YEAR 6 39,302,644 34,299,740


N OTE S TO TH E F I NAN CIAL

STATE M E NTS

NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements were authorised for issue by the Directors on 9 August 2017.(A) STATEMENT OF COMPLIANCE

The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards (AASB’s) and Australian Accounting Interpretations adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001.The financial statements comprise the consolidated financial statements of the Economic Entity. Financial information for the parent entity is reported in Note 25. Financial information for the subsidiaries is reported in Note 26. Financial information for the Joint Venture is reported in Note 27.Accounting Standards include Australian Accounting Standards. Compliance with Australian Accounting Standards ensures that the financial statements and notes of the Economic Entity comply with International Financial Reporting Standards (‘IFRS’).The following is a summary of the material accounting policies adopted in the preparation of the financial statements. The accounting policies have been consistently applied, unless otherwise stated.(B) BASIS OF PREPARATION

The financial statements are presented in Australian dollars.The financial statements have been prepared on an accruals basis. Infrastructure assets have been measured at fair value. All other assets and liabilities have been measured at historical cost.There have been no new or revised standards and interpretations issued by the Australian Accounting Standards Board that are relevant or have had a material impact on operations for the 2017 annual reporting period. The Economic Entity has applied AASB 11 ‘Joint Arrangements’ and AASB 128 ‘Investments in Associates and Joint Ventures’ this year due to TasPorts’ investment in the Southern Export Terminals Pty Ltd. In addition the Economic Entity has componentised classes of infrastructure assets for the first time in 2017 as referenced in AASB 116 ‘Property, Plant and Equipment’. The Economic Entity has elected not to adopt the following new or amended Accounting Standards in advance of their operative date. A full assessment of the impact of these future standards is being performed.

AASB AMENDMENT

AFFECTED STANDARD

NATURE OF CHANGE TO ACCOUNTING POLICY

ISSUE DATE

APPLIES TO ANNUAL REPORTING PERIODS BEGINNING ON OR AFTER

AASB 15 “Revenue from Contracts with Customers”

The core principle is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This is standard practice for the Economic Entity. There is an increased disclosure requirement but no impact to the financial statements.

October 2015 January 2018

AASB 16 Leases “The new standard abolishes the concept of the operating lease for lessees and effectively treats all leases as finance leases. The result is that all leases will be recognised as liabilities on the balance sheet, rather than as commitments in the notes to the financial statements. The only exemption to this requirement is for short term leases of durations of 12 months or less, and for leases of low-value assets, such as office furniture or computers. The standard largely retains the existing accounting requirements for lessors whereby leases are classified as operating leases or finance leases. The changes will result in the obligation to make lease payments listed on the balance sheet as a liability (amortised on a discount basis) and asset representing the right to use the asset (amortised on a straight line basis). There are also exemptions to the standard ie. low value or short-term leases.

January 2016 January 2019

61

NOTE 1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(C) PRINCIPLES OF CONSOLIDATION

A controlled entity is any entity over which TasPorts has the power to control the financial and operating policies so as to obtain benefits from its activities.A list of controlled entities is contained within note 11 (a) and 11 (b) to the financial statements. All controlled entities have a June year-end.All inter-company balances and transactions with subsidiary companies in the Economic Entity have been eliminated on consolidation. The accounting policies of controlled entities are consistent with those policies applied by TasPorts.TasPorts’ interest in equity accounted investees comprise an interest in a Joint Venture (Southern Export Terminals Pty Ltd). A Joint Venture is an arrangement in which TasPorts has joint control, whereby TasPorts has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities.The interest in the Joint Venture is accounted for using the equity method. It is initially recognised at cost. Subsequent to initial recognition, the consolidated financial statements include TasPorts’ share of the profit or loss and other comprehensive income of the equity accounted investee.(D) GOODS AND SERVICES TAX (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the Statement of Financial Position are shown inclusive of GST.Cash flows are presented in the Statement of Cash Flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the Australian Taxation Office.(E) COMPARATIVE FIGURES

The previous period’s figures are provided in the financial statements for comparative purposes. The 2016 comparatives do not include Bass Island Line Pty Ltd (incorporated February 2017) and Southern Export Terminals Pty Ltd (incorporated December 2016). Where there has been reclassification of items in the financial statements, the prior year comparatives have also been reclassified to ensure comparability with the current reporting period.(F) CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Estimates and judgments incorporated into the financial statements are based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and internally.

NOTE 2 REVENUES

ECONOMIC ENTITY

2017$

2016$

TRADE REVENUES

Sale of goods 9,941,874 9,217,665

Seaport 80,693,376 74,485,951

Airport 3,601,422 3,449,747

Rent and operating leases 7,376,745 7,134,961

Freight revenue 2,019,197 -

TOTAL TRADE REVENUES 103,632,614 94,288,324

OTHER REVENUES

Net gain/(loss) on disposal of property, plant and equipment 103,979 (313,197)

Investment interest received 860,499 694,528

TOTAL OTHER REVENUES 964,478 381,331

TOTAL REVENUES 104,597,092 94,669,655

RECOGNITION AND MEASUREMENT

Revenues from services rendered is recognised in proportion to the stage of completion of the transaction at the reporting date. Rental income is recognised on a straight line basis over the term of the lease.Income from operating leases, where substantially all the risks and benefits remain with the lessor, are credited as income in the periods in which they are earned.Interest revenue is recognised as earned.All revenues are stated net of the amount of goods and services tax (GST).

62


NOTE 3 EXPENSES

ECONOMIC ENTITY

2017$

2016$

DEPRECIATION

Depreciation and amortisation of non-current assets

Buildings 1,224,812 1,243,180

Land infrastructure 1,512,115 1,403,003

Harbour improvements 591,749 593,370

Wharves 4,182,668 4,189,547

Floating plant 1,279,841 1,192,998

Capital dredging 173,265 174,501

Plant and equipment 2,576,028 2,589,121

TOTAL DEPRECIATION AND AMORTISATION 11,540,478 11,385,720

The useful life used for each class of depreciable assets is:

Infrastructure assets (fair value) USEFUL LIFE

Buildings 10 to 60 years

Land infrastructure (incl. roads, port hardstands and airport runways) 20 to 300 years

Wharves 40 to 80 years

Harbour improvements 50 to 75 years

Other fixed assets (cost)

Floating plant 8 to 35 years

Capital dredging (channels, swing basins and berth pockets) 12 to 99 years

Plant and equipment 2 to 69 years


All assets are depreciated on a straight line basis over their useful lives commencing from the date asset is held ready for use. Where an item of property, plant and equipment comprises individual components for which different useful lines are appropriate, then each component is depreciated separately.

63

NOTE 4 INCOME TAX

ECONOMIC ENTITY

2017$

2016$

(A) RECONCILIATION OF INCOME TAX EXPENSE

Current income tax relating to prior years 290,856 173,464

Current income tax expense 4,638,696 1,823,301

Decrease/(increase) in deferred tax asset (41,595) 289,278

Decrease/(increase) in deferred tax liability 10,414,678 (1,410,793)

Movement posted direct to equity (12,133,190) -

IMPLIED INCOME TAX EXPENSE 3,169,445 875,250

(B) RECOGNISED IN THE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Current tax expense

Current period 4,000,977 494,167

Adjustments for prior periods (126,380) (99,840)

3,874,597 394,327

Deferred tax expense

Decrease/(increase) in deferred tax asset 632,943 1,617,757

Increase/(decrease) in deferred tax liability (1,755,330) (1,410,793)

Adjustments for prior periods 417,235 273,959

IMPLIED INCOME TAX EXPENSE IN THE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (705,152) 480,923

3,169,445 875,250

Attributable to:

CONTINUING OPERATIONS 3,169,445 875,250

(C) NUMERICAL RECONCILIATION BETWEEN TAX EXPENSE AND PRE-TAX ACCOUNTING PROFIT

Profit/(loss) for the period 6,390,773 2,093,243

INCOME TAX USING THE TAX RATE OF 30% 1,917,231 627,973

Add/(deduct) tax effect of differences

Permanent depreciation and disposal on non-temporary assets 470,668 86,358

Tax depreciation (26,788) (36,740)

Non-deductible expenses 6,419 24,195

Unrecognised tax losses 511,280 -

Prior period over/(under) provision 290,635 173,464

INCOME TAX EXPENSE 3,169,445 875,250


The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or non-deductible items. It is calculated using tax rates that have been enacted at the reporting date.

64


NOTE 5 AUDITORS’ REMUNERATION

ECONOMIC ENTITY

2017$

2016$

AUDITORS’ REMUNERATION

Auditing of the financial statements 102,410 83,740

Internal audit 52,090 51,899

154,500 135,639

NOTE 6 CASH AND CASH EQUIVALENTS

CURRENT

Cash at bank and on hand 9,302,644 9,299,740

Short-term bank deposits 30,000,000 25,000,000

39,302,644 34,299,740

The effective average interest rate on cash and cash equivalents for the year was 2.3% (2016: 2.4%).RECOGNITION AND MEASUREMENT

Cash and cash equivalents include cash on hand and deposits held at call with financial institutions.

NOTE 7 TRADE AND OTHER RECEIVABLES

CURRENT

Trade and other receivables 9,892,210 10,111,444

Less: Impairment of receivables (7,648) (4,848)

9,884,562 10,106,596

Loan - Southern Export Terminals Pty Ltd 199,999 -

10,084,561 10,106,596


Trade and other receivables are stated at their cost less impairment adjustments. The loan to Southern Export Terminals Pty Ltd is unsecured and interest free.

NOTE 8 INVENTORIES

CURRENT

INVENTORIES AT COST 813,171 667,178


Inventories are measured at the lower of cost and net realisable value. Costs are assigned on the first-in first-out principle.

65

NOTE 9 OTHER CURRENT ASSETS

ECONOMIC ENTITY

2017$

2016$

Accrued revenue 1,174,360 595,323

Prepayments 452,937 556,999

1,627,297 1,152,322

NOTE 10 ASSETS HELD FOR SALE

ASSETS CLASSIFIED AS HELD FOR SALE 290,223 -

The assets held for sale in the Economic Entity are the assets of the Loorana Limesand Mine and freehold land on Riflerange Road on King Island. Both assets are currently owned by King Island Ports Corporation Pty Ltd.

NOTE 11 (A) CONTROLLED ENTITIES - SUBSIDIARIES

Tasmanian Ports Corporation Pty Ltd: (100% owned by the Tasmanian Government)

WHOLLY CONTROLLED ENTITIES CONSOLIDATEDCOUNTRY OF

INCORPORATION PERCENTAGE

OWNED (%)

2017 2016

Subsidiaries of Tasmanian Ports Corporation Pty Ltd:

King Island Ports Corporation Pty Ltd Australia 100 100

Flinders Island Ports Company Pty Ltd Australia 100 100

Bass Island Line Pty Ltd Australia 100 -

Flinders Island Ports Company Pty Ltd is an entity which did not trade during the year.King Island Ports Corporation Pty Ltd retains ownership of infrastructure and operational assets. These assets are leased to TasPorts.Bass Island Line Pty Ltd was established in February 2017 to provide shipping services to King Island.

NOTE 11 (B) CONTROLLED ENTITIES - JOINT VENTURES

JOINTLY CONTROLLED ENTITIES CONSOLIDATEDCOUNTRY OF

INCORPORATION PERCENTAGE

OWNED (%)

2017 2016

Joint Ventures of Tasmanian Ports Corporation Pty Ltd:

Southern Export Terminals Pty Ltd Australia 50 -

Southern Export Terminals Pty Ltd is a joint venture in which TasPorts has 50% control. Qube Ports No 1 Pty Ltd has the remaining 50% control. The Joint Venture operates a forestry logistics business within the Macquarie Point wharf precinct in Hobart.

66


NOTE 12 PROPERTY, PLANT AND EQUIPMENT

ECONOMIC ENTITY

2017$

2016$

LAND AND BUILDINGS

Land

At fair value 29,848,789 28,388,081

TOTAL LAND 29,848,789 28,388,081

Buildings

At fair value 31,451,355 30,698,775

Accumulated depreciation - (2,560,457)

Accumulated impairment losses - (490,178)

TOTAL BUILDINGS 31,451,355 27,648,140

TOTAL LAND AND BUILDINGS 61,300,144 56,036,221

Land infrastructure (incl. roads, port hardstands and airport runways)

At fair value 20,062,344 18,959,359


TOTAL LAND INFRASTRUCTURE 20,062,344 16,169,056

Harbour improvements

At fair value 30,216,587 15,623,450


TOTAL HARBOUR IMPROVEMENTS 30,216,587 14,438,332

Wharves

At fair value 87,370,349 73,345,070


TOTAL WHARVES 87,370,349 65,011,045

Floating plant

At cost 29,236,905 23,039,946

Accumulated depreciation (10,622,840) (9,788,493)

Accumulated impairment losses (500,799) (500,799)

TOTAL FLOATING PLANT 18,113,266 12,750,654

Capital dredging

At cost 17,637,099 17,637,100


TOTAL CAPITAL DREDGING 10,834,098 11,007,363

Plant and equipment

At cost 50,091,426 52,589,674



TOTAL PLANT AND EQUIPMENT 19,733,530 17,640,792

Capital works in progress 6,785,973 15,317,150

TOTAL CAPITAL WORKS UNDER CONSTRUCTION AT COST 6,785,973 15,317,150

Total property, plant and equipment

At cost 103,751,403 108,583,870

At fair value 198,949,424 167,014,735


Accumulated impairment losses (1,017,612) (1,507,790)

TOTAL PROPERTY, PLANT AND EQUIPMENT 254,416,291 208,370,613

67

NOTE 12 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

MOVEMENT IN THE CARRYING AMOUNTS FOR EACH CLASS OF PROPERTY, PLANT AND EQUIPMENT BETWEEN THE BEGINNING AND THE END OF THE CURRENT FINANCIAL YEAR.

MOVEMENTS IN CARRYING AMOUNTS

FAIR VALUE COST

LAND$

Level 2

LAND$

Level 3

BUILDINGS$

LEVEL 2

BUILDINGS$

LEVEL 3

LAND INFRA-

STRUCTURE$

LEVEL 3

HARBOUR IMPROVE-

MENTS $

LEVEL 3

WHARVES $

LEVEL 3

FLOATINGPLANT

$

PLANT ANDEQUIPMENT

$

CAPITALDREDGING

$WIP

$TOTAL

$

Economic Entity:

OPENING BALANCE 1 JULY 2015

20,516,968 8,652,795 15,303,560 15,230,569 17,329,299 15,031,702 68,288,227 10,250,847 18,658,266 11,181,864 8,321,073 208,765,170

Additions - - - 8,791 - - 54 1,933,837 1,647,195 - 10,987,831 14,577,708

Disposals (781,682) - (1,367,665) (283,935) - - - (941,722) (211,541) - - (3,586,545)

WIP capitalised - - - - 242,760 - 908,911 2,672,295 121,613 - (3,945,579) -

WIP expensed - - - - - - 3,400 28,395 14,380 - (46,175) -

Depreciation expense - - (530,072) (713,108) (1,403,003) (593,370) (4,189,547) (1,192,998) (2,589,121) (174,501) - (11,385,720)

BALANCE AT 30 JUNE 2016 19,735,286 8,652,795 13,405,823 14,242,317 16,169,056 14,438,332 65,011,045 12,750,654 17,640,792 11,007,363 15,317,150 208,370,613


19,735,286 8,652,795 13,405,823 14,242,317 16,169,056 14,438,332 65,011,045 12,750,654 17,640,792 11,007,363 15,317,150 208,370,613

Additions 219,876 - - 184,576 13,819 - 5,625 23,052 2,854,453 - 13,289,560 16,590,961

Disposals - - - - - - - (74,248) (147,162) - - (221,410)

WIP capitalised - - - 339,029 9,390,564 - - 6,693,649 1,961,073 - (18,384,315) -

WIP expensed - - - - - - - - 402 - (402) -

Depreciation expense - - - (1,224,812) (1,512,115) (591,749) (4,182,668) (1,279,841) (2,576,028) (173,265) - (11,540,478)

Current year impairment of community asset projects

- - - - - - - - - - (3,436,020) (3,436,020)

Current year revaluation decrement of infrastructure assets

- - - 304,985 226,422 - 2,360,042 - - - - 2,891,449

Prior revaluation decrement of infrastructure assets

(476,066) - - (446,490) (251,101) - (616,605) - - - - (1,790,262)

Increase/(decrease) in asset revaluation Surplus

2,720,473 (732,086) 871,894 3,774,033 (3,974,301) 16,370,004 24,792,910 - 18,734 - - 43,841,661

Transfer (to)/from assets held for sale

(271,489) - - - - - - - (18,734) - - (290,223)

BALANCE AT 30 JUNE 2017 21,928,080 7,920,709 14,277,717 17,173,638

20,062,344 30,216,587 87,370,349 18,113,266 19,733,530 10,834,098 6,785,973 254,416,291


REVALUATIONS OF INFRASTRUCTURE ASSETS

The Economic Entity conducted a fair value assessment of infrastructure assets as at 30 June 2017.Infrastructure assets refer to land, land infrastructure, buildings, wharves and harbour improvements and are all stated at fair value. Infrastructure assets included in the revaluations are reported at fair value less accumulated depreciation and any impairment. The fair value of infrastructure assets purchased subsequent to the revaluation date is at cost less accumulated depreciation and any impairment.If an asset’s carrying amount decreased as a result of a revaluation the decrease is recognised in the Statement of Profit or Loss and Other Comprehensive Income as an expense except to the extent that it reverses a revaluation increase for the same asset previously recognised in the asset revaluation reserve, in which case the decrease is debited to the asset revaluation reserve to the extent of the increase previously recognised.If an asset’s carrying amount increased as a result of a revaluation, the increase is disclosed in the Statement of Profit or Loss and Other Comprehensive Income under ‘other comprehensive income’ and credited directly to the asset revaluation reserve in equity under the heading of reserves, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in profit or loss, in which case the increase is credited to profit or loss to the extent of the decrease previously recognised. In this exception the resultant carrying amount of the asset will not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no revaluation decrease had previously been recognised.Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amounts of the asset and the net amounts are restated to the revalued amounts of the asset.Floating plant, capital dredging and plant and equipment, are stated at cost less accumulated depreciation and impairment losses. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Economic Entity and the cost of the item can be measured reliably. All repairs and maintenance costs are charged to the Statement of Profit or Loss and Other Comprehensive Income during the financial period in which they are incurred.Construction work in progress is stated at cost.

68



MOVEMENT IN THE CARRYING AMOUNTS FOR EACH CLASS OF PROPERTY, PLANT AND EQUIPMENT BETWEEN THE BEGINNING AND THE END OF THE CURRENT FINANCIAL YEAR.

MOVEMENTS IN CARRYING AMOUNTS

FAIR VALUE COST

LAND$

Level 2

LAND$

Level 3

BUILDINGS$

LEVEL 2

BUILDINGS$

LEVEL 3

LAND INFRA-

STRUCTURE$

LEVEL 3

HARBOUR IMPROVE-

MENTS $

LEVEL 3

WHARVES $

LEVEL 3

FLOATINGPLANT

$

PLANT ANDEQUIPMENT

$

CAPITALDREDGING

$WIP

$TOTAL

$

Economic Entity:


20,516,968 8,652,795 15,303,560 15,230,569 17,329,299 15,031,702 68,288,227 10,250,847 18,658,266 11,181,864 8,321,073 208,765,170

Additions - - - 8,791 - - 54 1,933,837 1,647,195 - 10,987,831 14,577,708

Disposals (781,682) - (1,367,665) (283,935) - - - (941,722) (211,541) - - (3,586,545)

WIP capitalised - - - - 242,760 - 908,911 2,672,295 121,613 - (3,945,579) -

WIP expensed - - - - - - 3,400 28,395 14,380 - (46,175) -

Depreciation expense - - (530,072) (713,108) (1,403,003) (593,370) (4,189,547) (1,192,998) (2,589,121) (174,501) - (11,385,720)

BALANCE AT 30 JUNE 2016 19,735,286 8,652,795 13,405,823 14,242,317 16,169,056 14,438,332 65,011,045 12,750,654 17,640,792 11,007,363 15,317,150 208,370,613


19,735,286 8,652,795 13,405,823 14,242,317 16,169,056 14,438,332 65,011,045 12,750,654 17,640,792 11,007,363 15,317,150 208,370,613

Additions 219,876 - - 184,576 13,819 - 5,625 23,052 2,854,453 - 13,289,560 16,590,961

Disposals - - - - - - - (74,248) (147,162) - - (221,410)

WIP capitalised - - - 339,029 9,390,564 - - 6,693,649 1,961,073 - (18,384,315) -

WIP expensed - - - - - - - - 402 - (402) -

Depreciation expense - - - (1,224,812) (1,512,115) (591,749) (4,182,668) (1,279,841) (2,576,028) (173,265) - (11,540,478)


- - - - - - - - - - (3,436,020) (3,436,020)

Current year revaluation decrement of infrastructure assets

- - - 304,985 226,422 - 2,360,042 - - - - 2,891,449

Prior revaluation decrement of infrastructure assets

(476,066) - - (446,490) (251,101) - (616,605) - - - - (1,790,262)

Increase/(decrease) in asset revaluation Surplus

2,720,473 (732,086) 871,894 3,774,033 (3,974,301) 16,370,004 24,792,910 - 18,734 - - 43,841,661

Transfer (to)/from assets held for sale

(271,489) - - - - - - - (18,734) - - (290,223)

BALANCE AT 30 JUNE 2017 21,928,080 7,920,709 14,277,717 17,173,638

20,062,344 30,216,587 87,370,349 18,113,266 19,733,530 10,834,098 6,785,973 254,416,291


REVALUATIONS OF INFRASTRUCTURE ASSETS

The Economic Entity conducted a fair value assessment of infrastructure assets as at 30 June 2017.Infrastructure assets refer to land, land infrastructure, buildings, wharves and harbour improvements and are all stated at fair value. Infrastructure assets included in the revaluations are reported at fair value less accumulated depreciation and any impairment. The fair value of infrastructure assets purchased subsequent to the revaluation date is at cost less accumulated depreciation and any impairment.If an asset’s carrying amount decreased as a result of a revaluation the decrease is recognised in the Statement of Profit or Loss and Other Comprehensive Income as an expense except to the extent that it reverses a revaluation increase for the same asset previously recognised in the asset revaluation reserve, in which case the decrease is debited to the asset revaluation reserve to the extent of the increase previously recognised.If an asset’s carrying amount increased as a result of a revaluation, the increase is disclosed in the Statement of Profit or Loss and Other Comprehensive Income under ‘other comprehensive income’ and credited directly to the asset revaluation reserve in equity under the heading of reserves, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in profit or loss, in which case the increase is credited to profit or loss to the extent of the decrease previously recognised. In this exception the resultant carrying amount of the asset will not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no revaluation decrease had previously been recognised.Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amounts of the asset and the net amounts are restated to the revalued amounts of the asset.Floating plant, capital dredging and plant and equipment, are stated at cost less accumulated depreciation and impairment losses. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Economic Entity and the cost of the item can be measured reliably. All repairs and maintenance costs are charged to the Statement of Profit or Loss and Other Comprehensive Income during the financial period in which they are incurred.Construction work in progress is stated at cost.

69


DERECOGNITION

On the sale or retirement of a revalued infrastructure asset, the attributable revaluation surplus remaining in the asset revaluation reserve is transferred directly to retained earnings/(accumulated losses). The difference between the sale value and the carrying value of the asset is recognised in the Statement of Profit or Loss and Other Comprehensive Income.ASSESSING FOR IMPAIRMENT

The Economic Entity assesses impairment at each reporting date by evaluating conditions specific to the group that may lead to impairment of assets. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Value in use calculations performed in assessing recoverable amounts incorporate a number of key estimates. Any excess of the asset’s carrying value over its recoverable amount is expensed to the Statement of Profit or Loss and Other Comprehensive Income. Where it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash generating unit to which the asset belongs.IMPAIRMENT LOSSES

The total property, plant and equipment impairment loss recognised for the year amounted to $3,436,020 (2016: nil).

ECONOMIC ENTITY

2017$

2016$

IMPAIRMENT OF CURRENT YEAR COMMUNITY ASSET PROJECTS 3,436,020 -


Projects completed or in progress as part of the community asset remediation program that are of a capital nature are capitalised and impaired as costs are incurred. Impairment occurs due to TasPorts generating minimal or no income return on these assets.ASSET COMPONENTISATION

The components of major assets that have materially different useful lives are accounted for as separate assets and are depreciated separately.VALUATION

A valuation of the infrastructure assets of the Economic Entity is periodically undertaken for financial reporting purposes in accordance with Australian Accounting Standards. The effective date of the most recent valuation was 30 June 2017.Infrastructure assets include land, buildings, land infrastructure, harbour improvements and wharves. The fair value assessment is based upon the following:• Independent assessment of market value where a market value is readily identifiable;• Independent assessment of depreciated replacement cost; or• Where the asset’s net cash flows do not support either the market value or the depreciated replacement cost then the asset is valued using the

discounted cash flow method (income valuation methodology/value in use). FAIR VALUE HIERARCHY

The Economic Entity is required to classify infrastructure assets into a fair value hierarchy that reflects the significance of the inputs used in determining their fair value. The fair value hierarchy is made up of the following three levels:• Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities that the Economic Entity can access at the measurement date;• Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and• Level 3 - inputs that are unobservable for particular assets or liabilities.The Economic Entity has classified infrastructure assets as follows:• Level 1 - no infrastructure assets are classified at level 1;• Level 2 - land and buildings outside port precinct boundaries; and• Level 3 - land, buildings, land infrastructure, harbour improvements and wharves within port precinct boundaries.There were no transfers between levels in the year.

70


VALUATION TECHNIQUES AND INPUTS

Level 2 - valuation techniques and inputs

Valuation Technique: An independent valuer was used to value land and buildings outside port precinct boundaries using a market approach that reflects recent transaction prices for similar properties and buildings (comparable in location and size).Inputs: Prices and other relevant information generated by market transactions involving comparable land and buildings were considered.

Level 3 - valuation techniques and inputs

Valuation Technique: Land (within port precinct boundaries) • Where there is no active market or Land is subject to significant restrictions as to use and/or sale, is valued through the market approach

although less market evidence is available.• The land was valued by an independent valuerLand infrastructure, buildings, wharves and harbour improvements Are considered specialised assets and valued using the depreciated replacement cost method. Where the asset’s net future cash flows do not support either the market value or the depreciated replacement cost then the asset is valued using the discounted cash flow method (value in use/income valuation methodology).Inputs: • In determining the market value of land and buildings, restrictions on sale or use.• In determining depreciated replacement cost of buildings, land infrastructure, harbour improvements and wharves regard was given to

the age and condition of the assets, their estimated replacement cost and current use.• In determining the value in use of buildings, land infrastructure, harbour improvements and wharves, the estimated net future operating

cash flows are discounted to their present value. Cash flow inputs are summarised below.

UNOBSERVABLE INPUT

INPUT USED

RELATIONSHIP OF UNOBSERVABLE INPUTS TO FAIR VALUE

Discount rate An independent assessment of the nominal pre-tax weighted average cost of capital (discount rate) of 13.4 per cent per annum. The risk free rate at this time was a 10 year average of the 10 year Australian Commonwealth bond rate of 2.61%.

The higher the discount rate, the lower the fair value.

Terminal value Twenty year discount period with a terminal value equal to the (recurring cash flow in year 20 divided by the discount rate less the expected growth rate) discounted to the present value by the year 20 discount factor.

The lower the discount period, the lower the fair value.

Expected growth rate and cost increases

Based on current and forecast budgets and the corporate plan. All other revenue growth and cost increases over the discounting period are forecast at an average of 2.0% per annum.

The higher the revenue growth rate, the higher the fair value. The higher the average cost increase, the lower the fair value.

Renewal capital expenditure Based on current and forecast budgets and the corporate plan over the discounting period.

The higher the renewable capital spend, the lower the fair value.

7 1


LEVEL 3 SIGNIFICANT VALUATION INPUTS AND RELATIONSHIP TO FAIR VALUE

DESCRIPTION

ECONOMIC ENTITYFAIR VALUE $ AT 30 JUNE 2017

VALUATION TECHNIQUE(S)

SIGNIFICANT UNOBSERVABLE INPUTS USED IN VALUATION

RELATIONSHIP OF UNOBSERVABLE INPUTS TO FAIR VALUE

Land• Within port precinct boundaries

where there is not an active market

• Subject to restriction as to use and/or sale

7,920,709 Market approach Market valuation reflects specialised land

Value of specialised land increases/decreases fair value

Buildings 17,173,638 Depreciated Replacement Cost (DRC)

Consumed economic benefit/ obsolescence of asset

For DRC an increase or decrease in the estimated useful life of the asset or the construction cost of the asset would result in higher or lower valuation

• Within port precinct boundaries where there is not an active market

• Subject to restriction as to use and/or sale

• Specialised buildings with limited alternative uses and/or substantial customisation e.g. airport terminal

Construction cost per square metre floor area (m2)

Income valuation Estimates of cash flows and discount rate

For Income valuations fluctuations in cash flows and discount rate would result in higher or lower fair value

Land Infrastructure

• Roads, port hardstands and airport runway and apron

20,062,344 Depreciated Replacement Cost (DRC)

Consumed economic benefit/ obsolescence of assetConstruction cost per square metre floor area (m2)




Harbour Improvements

• Breakwaters and channels 30,216,587 Depreciated

Replacement Cost (DRC)

Consumed economic benefit/ obsolescence of assetConstruction cost




Wharves 87,370,349 Depreciated Replacement Cost (DRC)

Consumed economic benefit/ obsolescence of assetConstruction cost




TOTAL LEVEL 3 INFRASTRUCTURE ASSETS 162,743,627

72


For comparison purposes, infrastructure assets that are carried at their revalued amounts have been measured at cost less accumulated depreciation and impairment and disclosed below.

ECONOMIC ENTITY

2017$

2016$

LAND AND BUILDINGS

Land

At cost 23,724,348 23,504,472

Accumulated impairment losses - (1,488,764)

TOTAL LAND 23,724,348 22,015,708

Buildings

At cost 29,516,454 28,992,850



TOTAL BUILDINGS 15,923,978 16,003,375

Land infrastructure (incl. roads, port hardstands and airport runways)

At cost 28,656,390 19,252,005



TOTAL LAND INFRASTRUCTURE 15,577,435 5,749,369

Harbour improvements

At cost 10,353,708 10,353,708



TOTAL HARBOUR IMPROVEMENTS 2,132,361 2,258,416

Wharves

At cost 73,761,218 73,755,593



TOTAL WHARVES 25,436,655 26,630,422

Total infrastructure assets

At cost 166,012,118 155,858,628



TOTAL INFRASTRUCTURE ASSETS 82,794,777 72,657,290

NOTE 13 GOODWILL

NET CARRYING AMOUNT 2,800,516 2,800,516


Goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired. Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to a cash-generating unit and is not amortised but tested annually for impairment. This cost is based upon an assessment of the value in use of goodwill compared to its carrying value.Value in use is the present value of the projected cash flows of the cash generating unit over a 20-year period using an estimated growth rate. The cash flows are based on a pre-tax discount rate equal to the weighted average cost of capital plus a margin for business risk. The key assumptions regarding the value in use calculations were budgeted growth in revenues, budgeted gross profit margins and the discount rate.

73

NOTE 14 DEFERRED TAX ASSET AND LIABILITY

RECONCILIATION OF DEFERRED TAX ASSET AND LIABILITY.

BALANCE

30 JUNE 2015$

PRIOR YEAR (UNDER)/OVER

PROVISION$

RECOGNISED IN INCOME

STATEMENT$

BALANCE

30 JUNE 2016$


PROVISION$


STATEMENT $

RECOGNISED IN

EQUITY $

BALANCE

30 JUNE 2017 $

DEFERRED TAX ASSET

Tax losses 2,308,108 100,493 (1,329,136) 1,079,465 38,925 (637,721) - 480,669

Property plant & equipment - - - - - 12,522 - 12,522

Employee provisions 1,815,230 - (121,260) 1,693,970 - 46,705 - 1,740,675

Accounting costs capitalised for tax 201,074 - (15,903) 185,171 - 76,923 - 262,094

Prepaid revenue 639,185 - (123,536) 515,649 - 7,043 - 522,692

Provisions 4,675 - (3,220) 1,455 - 19,676 - 21,131

Payables - - - - - (72,630) - (72,630)

Deferred income - - - - - (48,521) - (48,521)

Other 123,072 - (24,704) 98,368 (131,185) (122) - (32,939)

5,091,344 100,493 (1,617,759) 3,574,078 (92,260) (596,125) - 2,885,693

BALANCE

30 JUNE 2015$


PROVISION$


STATEMENT$

BALANCE

30 JUNE 2016$


PROVISION$


STATEMENT $

RECOGNISED IN

EQUITY $

BALANCE

30 JUNE 2017 $

DEFERRED TAX ASSET

Property, plant and equipment 15,855,102 273,957 (1,416,051) 14,713,008 325,630 (1,739,149) 12,133,190 25,432,679

Prepayments/receivables 42,587 - 5,913 48,500 (655) 11,376 - 59,221

Other - - - - - 9,260 - 9,260

15,897,689 273,957 (1,410,138) 14,761,508 324,975 (1,718,513) 12,133,190 25,501,160


Deferred tax is accounted for using the liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the Statement of Profit or Loss and Other Comprehensive Income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised. Where controlled entities have incurred operating losses no deferred tax asset in respect of those losses has been recognised as there is no certainty of recovery.The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in the income taxation legislation and the anticipation that the Economic Entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

74


NOTE 14 DEFERRED TAX ASSET AND LIABILITY

RECONCILIATION OF DEFERRED TAX ASSET AND LIABILITY.

BALANCE

30 JUNE 2015$


PROVISION$


STATEMENT$

BALANCE

30 JUNE 2016$


PROVISION$


STATEMENT $

RECOGNISED IN

EQUITY $

BALANCE

30 JUNE 2017 $

DEFERRED TAX ASSET

Tax losses 2,308,108 100,493 (1,329,136) 1,079,465 38,925 (637,721) - 480,669

Property plant & equipment - - - - - 12,522 - 12,522

Employee provisions 1,815,230 - (121,260) 1,693,970 - 46,705 - 1,740,675

Accounting costs capitalised for tax 201,074 - (15,903) 185,171 - 76,923 - 262,094

Prepaid revenue 639,185 - (123,536) 515,649 - 7,043 - 522,692

Provisions 4,675 - (3,220) 1,455 - 19,676 - 21,131

Payables - - - - - (72,630) - (72,630)

Deferred income - - - - - (48,521) - (48,521)

Other 123,072 - (24,704) 98,368 (131,185) (122) - (32,939)

5,091,344 100,493 (1,617,759) 3,574,078 (92,260) (596,125) - 2,885,693

BALANCE

30 JUNE 2015$


PROVISION$


STATEMENT$

BALANCE

30 JUNE 2016$


PROVISION$


STATEMENT $

RECOGNISED IN

EQUITY $

BALANCE

30 JUNE 2017 $

DEFERRED TAX ASSET

Property, plant and equipment 15,855,102 273,957 (1,416,051) 14,713,008 325,630 (1,739,149) 12,133,190 25,432,679

Prepayments/receivables 42,587 - 5,913 48,500 (655) 11,376 - 59,221

Other - - - - - 9,260 - 9,260

15,897,689 273,957 (1,410,138) 14,761,508 324,975 (1,718,513) 12,133,190 25,501,160


Deferred tax is accounted for using the liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the Statement of Profit or Loss and Other Comprehensive Income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised. Where controlled entities have incurred operating losses no deferred tax asset in respect of those losses has been recognised as there is no certainty of recovery.The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in the income taxation legislation and the anticipation that the Economic Entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

75

NOTE 15 TRADE AND OTHER PAYABLES

ECONOMIC ENTITY

2017$

2016$

CURRENT

Trade payables 220,336 1,283,792

Other payables 7,274,895 9,200,194

7,495,231 10,483,986

Revenue received in advance 1,565,957 1,608,259

9,061,188 12,092,245


Trade and other payables are non-interest bearing and are stated at amortised cost.

NOTE 16 CURRENT TAX LIABILITY

Opening balance 461,880 17,438

Tax paid in respect of prior years (561,890) (17,450)

Tax paid in respect of current year (417,072) (32,275)

Over/(under) provision of tax in prior years (177,326) -

Current year tax provision 4,000,977 494,167

CLOSING BALANCE 3,306,569 461,880

NOTE 17 BORROWINGS

CURRENT

Interest bearing liabilities - 250,000

NON-CURRENT

Interest bearing liabilities 27,333,663 27,333,663

TOTAL BORROWINGS 27,333,663 27,583,663

The Economic Entity has an external loan facility of $34.5 million with a maximum borrowing term of 10 years (2016: $34.5 million) with Tascorp. As at 30 June 2017, $7.2 million of the facility was unused (2016: $7.2 million). Following an assessment by Tascorp of TasPorts’ financial performance, the formal support provided by a letter of comfort for $7.5 million from the shareholder was no longer required and was revoked.


All loans are measured at the principal amount. Interest is charged as an expense as it accrues over the life of the related financial instrument and taken to the Statement of Profit or Loss and Other Comprehensive Income as part of finance costs.

76


NOTE 18 PROVISIONS

ECONOMIC ENTITY

2017$

2016$

CURRENT

Employee benefits 5,321,054 5,407,207

Deferred revenue 31,735 161,735

Provision for Joint Venture Loss 54,923 -

5,407,712 5,568,942

NON-CURRENT

Employee benefits 1,064,988 981,727

Deferred revenue 126,942 158,678

1,191,930 1,140,405


Employee benefits are measured as the present value of estimated future cash outflows based on the market yields on high quality corporate bonds, estimates of future salary and wage levels and employee periods of service.Liabilities for employee benefits for wages, salaries, annual leave, long service leave or other leave entitlements that are due to be settled within 12 months of the reporting date represent present obligations resulting from employees’ services provided to reporting date, are calculated at undiscounted amounts based on remuneration wage and salary rates expected to be paid as at reporting date.The net obligation in respect of long-term service benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. The obligation is calculated using expected future increases in wages, representing a change in calculating the estimate of employee benefits.A provision has been recognised for employee entitlements relating to annual and long service leave. In calculating the present value of future cash flows in respect of long service leave, the probability of long service leave being taken is based upon historical data.The contributions to employee superannuation funds are charged as expenses when incurred.Provisions are recognised when there is a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

NOTE 19 ISSUED CAPITAL, RESERVES AND RETAINED EARNINGS/(ACCUMULATED LOSSES)

ISSUED CAPITAL

Equity 112,342,385 112,342,385

Issued capital 2 2

Equity contribution post formation 23,085,000 15,585,000

135,427,387 127,927,387

During the 2013 financial year the State Government approved an equity contribution of $17.5 million to assist with the renewal of community based infrastructure. $500,000 was received in the 2014 financial year, $1 million was received in the 2015 financial year, $8.5 million was received in the 2016 financial year and $7.5 million was received in the 2017 financial year.

78


NOTE 19 ISSUED CAPITAL, RESERVES AND RETAINED EARNINGS/(ACCUMULATED LOSSES) (CONTINUED)

ECONOMIC ENTITY

2017$

2016$

RESERVES

Infrastructure asset revaluation reserve

Opening balance 98,827,350 99,124,622

Revaluation of infrastructure assets 31,759,418 -

Disposal of revalued assets transferred from reserves to retained earnings/(accumulated losses) (8,800) (297,272)

CLOSING BALANCE 130,577,968 98,827,350

RETAINED EARNINGS/(ACCUMULATED LOSSES)

Opening balance (27,392,337) (28,907,602)

Profit/(loss) attributable to members 3,166,404 1,217,993

Disposal of revalued assets transferred from reserves to retained earnings/(accumulated losses) 8,800 297,272

Dividends Paid (1,370,048) -

CLOSING BALANCE (25,587,181) (27,392,337)

VALUE OF INFRASTRUCTURE ASSET REVALUATION RESERVE BY ASSET CLASSIFICATION:

Freehold land 17,639,214 16,207,207

Buildings 20,025,657 16,643,129

Land infrastructure 9,793,740 12,632,120

Harbour improvements 23,983,057 12,180,284

Wharves 59,136,300 41,164,610

130,577,968 98,827,350


The asset revaluation reserve was established to capture the movements in asset valuations upon the periodic revaluation of the Economic Entity’s infrastructure assets.Where infrastructure assets are disposed of and have been previously valued upwards, the revalued amount is transferred to retained earnings/(accumulated losses).Where infrastructure assets have been previously valued upwards and are impaired, the amount in reserves is to be offset against the impairment prior to impairment through the Statement of Profit or Loss and Other Comprehensive Income.

79


80

NOTE 20 CASH FLOW INFORMATION

ECONOMIC ENTITY

2017$

2016$

(A) RECONCILIATION OF CASH FLOW FROM OPERATIONS WITH PROFIT AFTER INCOME TAX

Profit/(loss) for the year 3,166,404 1,217,993

Adjustments for:

Depreciation and amortisation 11,540,478 11,385,720


3,436,020 -

Prior revaluation decrements of infrastructure assets reversed (2,891,449) -

Revaluation decrement of infrastructure assets 1,790,262 -

Finance charges 1,802,787 2,120,763

Share of (profit)/loss from equity accounted investee, net of tax 54,924 -

Net (gain)/loss on disposal of property, plant and equipment (103,979) 313,197

(Increase)/decrease in trade receivables 195,085 (685,183)

(Increase)/decrease in other current assets (759,029) 534,399

(Increase)/decrease in inventories (145,993) 446,790

(Increase)/decrease in interest receivable 26,838 (16,910)

Increase/(decrease) in non-current liabilities 257,213 -

Increase/(decrease) in income taxes payable 2,844,690 444,442

Increase/(decrease) in employee benefits (2,892) 130,654

Increase/(decrease) in trade and other payables (3,165,841) (3,967,516)

Increase/(decrease) in deferred taxes payable (654,206) 381,083

NET CASH FROM OPERATING ACTIVITIES 17,391,312 12,305,432

NOTE 21 CAPITAL AND LEASING COMMITMENTS

(A) OPERATING LEASE COMMITMENTS-LESSEE

Non-cancellable operating leases contracted for but not capitalised in the financial statements

Payable — minimum lease payments

Less than one year

Office accommodation 378,073 373,412

Land 41,096 34,619

Other 716,262 126,367

TOTAL 1,135,431 534,398

Between one and five years

Office accommodation 923,606 1,285,634

Land 153,334 271,158

Other 171,659 257,403

TOTAL 1,248,599 1,814,195

More than five years

Office accommodation 690,950 975,326

Land 583,526 696,432

Other 88,909 125,757

TOTAL 1,363,385 1,797,515

TOTAL OPERATING LEASE COMMITMENTS-LESSEE 3,747,415 4,146,108

81

NOTE 21 CAPITAL AND LEASING COMMITMENTS (CONTINUED)

ECONOMIC ENTITY

2017$

2016$

(B) OPERATING LEASE COMMITMENTS-LESSOR

Non-cancellable operating leases for infrastructure, land, wharves, buildings and equipment contracted for, but not capitalised in the financial statements.

Receivable — minimum lease receipts

Less than one year 8,034,220 7,413,985

Between one and five years 26,999,720 24,897,693

More than five years 77,245,304 76,961,909

112,279,244 109,273,587

(C) CAPITAL EXPENDITURE COMMITMENTS

Capital expenditure commitments contracted for:

Plant and equipment 5,582,761 1,504,420

5,582,761 1,504,420

Payable

Within one year 5,582,761 1,504,420

5,582,761 1,504,420

The commitment for plant and equipment expenditure relates to the new pilot cutter vessel under construction and the purchase of a tug vessel.

NOTE 22 CONTINGENT LIABILITIES

No contingent liabilities are noted.

NOTE 23 RELATED PARTY TRANSACTIONS

The ultimate owner of the Economic Entity is The Crown in Tasmania.Transactions and obligations between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.Transactions and obligations with related parties during the year ended 30 June 2017 are as follows:(A) KEY MANAGEMENT PERSONNEL AND DIRECTOR TRANSACTIONS AND OBLIGATIONS

There were no related party transactions with Key Management Personnel (KMP) (including Directors, Executives and Cabinet Ministers), or their Close Family Members (CFM) or entities that are controlled or jointly controlled by KMP or CFM in 2017 (2016 $0).(B) SUBSIDIARIES AND JOINT VENTURES

The business conducted by King Island Ports Corporation Pty Ltd (KIPC) was transferred into Tasmanian Ports Corporation Pty Ltd (TasPorts) effective from 1 July 2011. The ownership of property, plant and equipment purchased by KIPC prior to 30 June 2011 remains within KIPC. TasPorts leases these assets from KIPC at an amount equal to the depreciation on these assets. For 2017 the amount of rent paid was $262,010 (2016: $325,432).Bass Island Line Pty Ltd (Bass Island Line) is a fully owned subsidiary of TasPorts established in February 2017 to provide shipping services to King Island. TasPorts charges Bass Island Line for the following services at commercial rates:

2017$

Tonnage fees 31,544

Wharfage fees 199,729

Mooring fees 32,024

Stevedoring fees 72,699

Infrastructure levy 12,000

Administration services 6,517

Equipment hire 14,269

TOTAL 368,782

82


Southern Export Terminals Pty Ltd (SET) was established in December 2016 as a Joint Venture between TasPorts (50%) and Qube Ports No 1 Pty Ltd (50%). SET operates a forest logistics business from the Hobart wharf precinct. TasPorts charges SET for the following marine services at commercial rates:

2017$

Casual storage fees 7,714

Facility fees 70,156

Wharfage fees 29,999

Rental income 7,500

Administration and expense recoveries 93,300

TOTAL 208,669

(C) REMUNERATION PRINCIPLES

Directors’ remuneration

Directors are appointed by the Shareholder Ministers. Each instrument of appointment is for a maximum period of three years and prescribes the relevant remuneration provisions. Directors can be re-appointed. Directors are remunerated by way of fixed fees and superannuation payments are paid at the appropriate rate as prescribed by superannuation guarantee legislation. Directors’ remuneration is reviewed annually to determine the appropriate levels of fees for Board and Committee members based on advice from the Department of Premier and Cabinet. The company also paid insurance premiums for Directors in relation to death and permanent disability. These policies ceased at 30 June 2017. No other leave, termination or retirement benefits are accrued or paid to directors. Directors are entitled to reimbursement of reasonable expenses incurred while attending to Board business. Directors’ remuneration is reviewed periodically with increases subject to approval by the Shareholder Ministers.

Executive remuneration

Remuneration levels for Executives are set in accordance with Treasury’s Director and Executive Remuneration Guidelines, dated December 2014. Under these Guidelines, the CEO’s Remuneration Band is determined by the Government Business Executive Remuneration Panel and remuneration for other senior executives is set with reference to the CEO’s remuneration. The Board consults with the Government Business Executive Remuneration Advisory Panel when determining the CEO’s remuneration package. In order to assist the Board to perform its duties a Human Resources and Remuneration Committee has been established. The Committee operates under its own Charter, which is reviewed regularly. The Committee has approved a remuneration framework. This framework takes into account external factors such as consumer price index, wages price index, local, national and industry factors, individual and Tasports’ performance. The framework applies to Executives, senior management and specific professional or expert technical positions. All Executives are appointed under common law employment agreements. Executive performance based payments are based on performance targets set at an organisational, divisional and individual level. Performance targets are established and assessed annually. The CEO’s performance against targets is reviewed by the Board annually.

Remuneration of Directors

The following tables disclose the total aggregate remuneration for each person that received remuneration in their capacity as a non-executive Director of the Economic Entity during the current and previous financial year.

2017 NAME

DIRECTORS' FEES

COMMITTEE FEES

SUPER-ANNUATION1

OTHER BENEFITS6

TOTAL 2017

$ $ $ $ $

S G Bradford - Chairman 80,679 10,815 8,692 - 100,186

T B Matthews 40,341 7,328 4,529 413 52,611

D C Tomat 40,341 6,568 4,456 58 51,423

S A Darke (from 22 August 2016) 34,201 4,050 3,634 286 42,171

L A Gregg (from 22 August 2016) 34,201 4,050 3,634 322 42,207

B K Berwick (to 17 November 2016) 16,118 2,928 1,809 1,342 22,197

TOTAL 245,881 35,739 26,754 2,421 310,795

2016NAME

DIRECTORS' FEES

COMMITTEE FEES

SUPER-ANNUATION1

OTHER BENEFITS6

TOTAL 2017

$ $ $ $ $

S G Bradford - Chairman (from 9 December 2015)

45,743 5,885 4,059 - 55,687

T B Matthews (from 9 December 2015) 22,872 3,988 2,420 - 29,280

D C Tomat (from 9 December 2015) 22,873 2,942 2,175 - 27,990

B K Berwick 40,824 7,613 4,602 - 53,039

D T Norton AO - Chairman (to 9 December 2015)

38,600 3,692 4,018 1,599 47,909

O F Williams (to 9 December 2015) 18,780 4,922 2,252 3,885 29,839

E R Rolley (to 9 December 2015) 19,973 4,828 2,356 1,115 28,272

J F Bennett (to 30 April 2016) 35,040 5,396 3,841 - 44,277

TOTAL 244,705 39,266 25,723 6,599 316,293

83

NOTE 23 RELATED PARTY TRANSACTIONS (CONTINUED)

Remuneration Executives

The following tables discloses the total aggregate remuneration for Executives of the Economic Entity during the current and previous financial year.

2017 NAME

BASE SALARY1

SHORT TERM INCENTIVE

PAYMENTS2 SUPERANNUATION3 VEHICLE4 OTHER

BENEFITS5

OTHER NON-MONETARY

BENEFITS6

TOTAL 2017

$ $ $ $ $ $ $

Mr R P Weedon, Chief Executive Officer 418,774 59,612 45,447 15,570 3,348 5,535 548,287

Mr A Donald, Chief Operating Officer 259,388 12,750 28,228 25,000 6,731 6,965 339,062

Mr G W Duggan, Chief Financial Officer 244,397 20,583 27,548 25,000 4,016 21,060 342,604

Mr M Johnston, General Manager Marine Services (from 4 July 2016) 197,010 - 20,876 24,039 2,736 5,031 249,691

TOTAL 1,119,569 92,945 122,099 89,609 16,831 38,591 1,479,644

2016 NAME

BASE SALARY1



BENEFITS5

OTHER NON-MONETARY

BENEFITS6

TOTAL 2016

$ $ $ $ $ $ $



Ms S Jones, General Manager People & Performance and Acting General Manager Marine Services

199,510 14,073 22,757 28,531 1,236 8,050 274,157

Ms S Grace, General Manager, Security Safety & Environment 197,308 14,250 22,564 28,237 1,236 (8,365) 255,230

Mr A Donald, General Manager Assets & Facilities (from 1 March 2016) 82,385 - 8,365 5,673 1,236 6,693 104,352

Mr P K Cooke, General Manager Infrastructure & Maintenance (to 16 October 2015) 70,973 20,249 9,405 10,576 4,218 - 115,421

TOTAL 1,198,191 121,937 132,508 109,243 15,952 19,996 1,597,827

1 Base salary includes all forms of consideration paid and payable for services rendered, compensated absences during the period and salary sacrifice amounts.2 Short term incentive payments are non-recurrent payments which depend on achieving specified performance targets within specified timeframes. 3 Superannuation is contributions to the superannuation fund of the individual. 4 Vehicle includes allowances and the grossed up taxable value of any fringe benefit. 5 Other benefits includes the grossed up taxable value of the other non-cash fringe benefits. 6 Other non-monetary benefits includes annual and long service leave movements and death and disability insurance premiums for Directors. Salaries are based on cash paid. In 2016 there were 27 pay periods in the financial year compared to 26 in 2017.

NOTE 24 FINANCIAL INSTRUMENTS

(A) LIQUIDITY RISK MANAGEMENT The risk that the Economic Entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Liquidity risk is managed through the maintenance of rolling 12 month cash flow budgets and maintaining minimum cash reserves at a level sufficient to satisfy short term financial liabilities and commitments.

ECONOMIC ENTITY:MATURING

WITHIN 1 YEARMATURING 1 TO

5 YEARS

MATURING GREATER THAN

5 YEARS

TOTAL

2017 2017 2017 2017

FINANCIAL LIABILITIES:

Borrowings - 22,833,663 4,500,000 27,333,663

Trade payables 7,495,231 - - 7,495,231

7,495,231 22,833,663 4,500,000 34,828,894

2016 2016 2016 2016


Borrowings 250,000 18,238,663 9,095,000 27,583,663

Trade payables 10,483,986 - - 10,483,986

TOTAL 10,733,986 18,238,663 9,095,000 38,067,649

84


NOTE 23 RELATED PARTY TRANSACTIONS (CONTINUED)

Remuneration Executives

The following tables discloses the total aggregate remuneration for Executives of the Economic Entity during the current and previous financial year.

2017 NAME

BASE SALARY1



BENEFITS5

OTHER NON-MONETARY

BENEFITS6

TOTAL 2017

$ $ $ $ $ $ $


Mr A Donald, Chief Operating Officer 259,388 12,750 28,228 25,000 6,731 6,965 339,062


Mr M Johnston, General Manager Marine Services (from 4 July 2016) 197,010 - 20,876 24,039 2,736 5,031 249,691

TOTAL 1,119,569 92,945 122,099 89,609 16,831 38,591 1,479,644

2016 NAME

BASE SALARY1



BENEFITS5

OTHER NON-MONETARY

BENEFITS6

TOTAL 2016

$ $ $ $ $ $ $



Ms S Jones, General Manager People & Performance and Acting General Manager Marine Services

199,510 14,073 22,757 28,531 1,236 8,050 274,157

Ms S Grace, General Manager, Security Safety & Environment 197,308 14,250 22,564 28,237 1,236 (8,365) 255,230

Mr A Donald, General Manager Assets & Facilities (from 1 March 2016) 82,385 - 8,365 5,673 1,236 6,693 104,352

Mr P K Cooke, General Manager Infrastructure & Maintenance (to 16 October 2015) 70,973 20,249 9,405 10,576 4,218 - 115,421

TOTAL 1,198,191 121,937 132,508 109,243 15,952 19,996 1,597,827

1 Base salary includes all forms of consideration paid and payable for services rendered, compensated absences during the period and salary sacrifice amounts.2 Short term incentive payments are non-recurrent payments which depend on achieving specified performance targets within specified timeframes. 3 Superannuation is contributions to the superannuation fund of the individual. 4 Vehicle includes allowances and the grossed up taxable value of any fringe benefit. 5 Other benefits includes the grossed up taxable value of the other non-cash fringe benefits. 6 Other non-monetary benefits includes annual and long service leave movements and death and disability insurance premiums for Directors. Salaries are based on cash paid. In 2016 there were 27 pay periods in the financial year compared to 26 in 2017.

NOTE 24 FINANCIAL INSTRUMENTS

(A) LIQUIDITY RISK MANAGEMENT The risk that the Economic Entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Liquidity risk is managed through the maintenance of rolling 12 month cash flow budgets and maintaining minimum cash reserves at a level sufficient to satisfy short term financial liabilities and commitments.

ECONOMIC ENTITY:MATURING

WITHIN 1 YEARMATURING 1 TO

5 YEARS

MATURING GREATER THAN

5 YEARS

TOTAL

2017 2017 2017 2017


Borrowings - 22,833,663 4,500,000 27,333,663

Trade payables 7,495,231 - - 7,495,231

7,495,231 22,833,663 4,500,000 34,828,894

2016 2016 2016 2016


Borrowings 250,000 18,238,663 9,095,000 27,583,663

Trade payables 10,483,986 - - 10,483,986

TOTAL 10,733,986 18,238,663 9,095,000 38,067,649

85

NOTE 24 FINANCIAL INSTRUMENTS (CONTINUED)

(B) MARKET RISK MANAGEMENT Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The primary market risk is exposure to interest rate risk. The major exposure for the Economic Entity is its borrowings, all of which are all borrowed at fixed rates. This mitigates the Economic Entity’s exposure to price risk. Variable interest rate investments expose the Economic Entity to fluctuations in return and cash flow. The net fair value of long-term borrowings is determined by valuing them at their carrying amount as the carrying amount approximate fair value. All long term borrowings are borrowed at fixed interest rates. The net fair value of cash, investments, trade receivables and trade and other payables are determined by valuing them at their carrying amounts. Due to their short-term maturity, their carrying amounts approximate their fair values. The market interest rates used to discount estimated cash flows for borrowings are based on the Tasmanian Public Finance Corporation yield curve at the reporting date. Changes in variable and fixed interest rates of one per cent (100 basis points) would have the following effect on the Economic Entity’s profit or loss and equity at reporting date if the financial instruments were to be re-financed.

SENSITIVITY ANALYSIS ECONOMIC ENTITY: INTEREST RATE RISK

-1% +1%

CARRYING AMOUNT FAIR VALUE IMPACT ON PROFIT IMPACT ON EQUITY IMPACT ON PROFIT IMPACT ON EQUITY

2017 $

2017 $

2017 $

2017 $

2017 $

2017 $

FINANCIAL ASSETS:

Cash and cash equivalents 39,302,644 39,302,644 (393,026) (393,026) 393,026 393,026

Trade receivables 9,884,562 9,884,562 - - - -

Investment in Joint Venture 199,999 199,999 - - - -

49,387,205 49,387,205 (393,026) (393,026) 393,026 393,026


Borrowings 27,333,663 29,444,272 (926,995) (926,995) 888,809 888,809

Trade payables 7,495,231 7,495,231 - - - -

34,828,894 36,939,503 (926,995) (926,995) 888,809 888,809

2016 $

2016 $

2016 $

2016 $

2016 $

2016 $

FINANCIAL ASSETS:



44,406,336 44,406,336 (342,997) (342,997) 342,997 342,997


Borrowings 27,583,663 30,586,006 1,221,231 1,221,231 (1,161,401) (1,161,401)

Trade payables 10,483,986 10,483,986 - - - -

38,067,649 41,069,992 1,221,231 1,221,231 (1,161,401) (1,161,401)

(C) FOREIGN CURRENCY RISK MANAGEMENT The Economic entity does not hold any foreign currency bank accounts or have any amounts payable or receivable in foreign currencies at balance date.

86



(B) MARKET RISK MANAGEMENT Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The primary market risk is exposure to interest rate risk. The major exposure for the Economic Entity is its borrowings, all of which are all borrowed at fixed rates. This mitigates the Economic Entity’s exposure to price risk. Variable interest rate investments expose the Economic Entity to fluctuations in return and cash flow. The net fair value of long-term borrowings is determined by valuing them at their carrying amount as the carrying amount approximate fair value. All long term borrowings are borrowed at fixed interest rates. The net fair value of cash, investments, trade receivables and trade and other payables are determined by valuing them at their carrying amounts. Due to their short-term maturity, their carrying amounts approximate their fair values. The market interest rates used to discount estimated cash flows for borrowings are based on the Tasmanian Public Finance Corporation yield curve at the reporting date. Changes in variable and fixed interest rates of one per cent (100 basis points) would have the following effect on the Economic Entity’s profit or loss and equity at reporting date if the financial instruments were to be re-financed.

SENSITIVITY ANALYSIS ECONOMIC ENTITY: INTEREST RATE RISK

-1% +1%

CARRYING AMOUNT FAIR VALUE IMPACT ON PROFIT IMPACT ON EQUITY IMPACT ON PROFIT IMPACT ON EQUITY

2017 $

2017 $

2017 $

2017 $

2017 $

2017 $

FINANCIAL ASSETS:



Investment in Joint Venture 199,999 199,999 - - - -

49,387,205 49,387,205 (393,026) (393,026) 393,026 393,026


Borrowings 27,333,663 29,444,272 (926,995) (926,995) 888,809 888,809

Trade payables 7,495,231 7,495,231 - - - -

34,828,894 36,939,503 (926,995) (926,995) 888,809 888,809

2016 $

2016 $

2016 $

2016 $

2016 $

2016 $

FINANCIAL ASSETS:



44,406,336 44,406,336 (342,997) (342,997) 342,997 342,997


Borrowings 27,583,663 30,586,006 1,221,231 1,221,231 (1,161,401) (1,161,401)

Trade payables 10,483,986 10,483,986 - - - -

38,067,649 41,069,992 1,221,231 1,221,231 (1,161,401) (1,161,401)

(C) FOREIGN CURRENCY RISK MANAGEMENT The Economic entity does not hold any foreign currency bank accounts or have any amounts payable or receivable in foreign currencies at balance date.

87


(D) CREDIT RISK MANAGEMENT The Economic Entity does not have any significant credit risk exposure to any single counterparty. The Economic Entity does not expect any counterparty to fail to meet its obligations. There is no collateral regarding financial assets, in respect of existing arrangements.The carrying amount of the financial assets recorded in the financial statements, net of any provisions for impairment, represents the maximum exposure to credit risk. Investments are held either with an Australian bank or Tascorp.The following tables analyse financial assets that are past due but not impaired:

ECONOMIC ENTITY:

PAST DUE 15 TO 44

DAYS

PAST DUE 45 TO 60

DAYS

PAST DUE 61 TO 90

DAYS

PAST DUE 91 DAYS

AND OVER TOTAL

2017$

2017$

2017$

2017$

2017$

TRADE RECEIVABLES 1,653,302 21,556 5,917 32,638 1,713,413

2016$

2016$

2016$

2016$

2016$

TRADE RECEIVABLES 2,327,279 233,903 24,338 64,458 2,649,978

(E) CATEGORIES OF FINANCIAL INSTRUMENTS

ECONOMIC ENTITY:

2017 2016

FAIR VALUE HIERARCHY

LEVELCARRYING

AMOUNTFAIR

VALUECARRYING

AMOUNTFAIR

VALUE

$ $ $ $ $

FINANCIAL ASSETS:

Cash and cash equivalents 2 39,302,644 39,302,644 34,299,740 34,299,740

Trade receivables 2 9,884,562 9,884,562 10,106,596 10,106,596

49,187,206 49,187,206 44,406,336 44,406,336


Borrowings - Tascorp 2 27,333,663 29,444,272 27,333,663 30,309,606

Borrowings - Other 3 - - 250,000 276,400

Trade payables 2 7,495,231 7,495,231 10,483,986 10,483,986

34,828,894 36,939,503 38,067,649 41,069,992

Borrowings are measured at amortised cost with interest recognised in profit or loss when incurred. The fair value of borrowings from Tascorp (level 2) is provided by Tascorp. The fair value of previously utilised other borrowings (level 3) was an estimate based on Tascorp rates.The carrying amount of trade receivables and trade payables are assumed to approximate their fair values due to their short-term nature (level 2).(F) CAPITAL RISK MANAGEMENT The Economic Entity’s objective is to have an appropriate capital structure that ensures financial flexibility and fiscal discipline and therefore ongoing viability to continue to provide returns for shareholders.The Economic Entity monitors key financial ratios to ensure an appropriate capital structure is maintained.The debt to equity ratios are as follows:

ECONOMIC ENTITY

2017$

2016$

Debt 27,333,663 27,583,663

Equity 240,418,174 199,362,400

TOTAL DEBT TO EQUITY RATIO 11.4% 13.8%

(i) Debt is defined as long and short term borrowings (ii) Equity includes all capital and reserves

88


NOTE 25 PARENT ENTITY INFORMATION - TASMANIAN PORTS CORPORATION PTY LTD

The accounting policies of the Company, which have been applied in determining the financial information shown below, are the same as those applied in the financial statements of the Economic Entity. Refer to note 1 for a summary of the significant accounting policies relating to the Economic Entity.

FINANCIAL POSITION

2017$

2016$

Current assets 52,708,102 46,224,034

Non-current assets 255,243,828 210,739,821

TOTAL ASSETS 307,951,930 256,963,855

Current liabilities 16,866,119 18,377,695

Non-current liabilities 57,309,941 46,571,051

TOTAL LIABILITIES 74,176,060 64,948,746

NET ASSETS 233,775,870 192,015,109

Issued capital 135,427,387 127,927,387

Asset revaluation reserve 126,845,579 96,055,762

Retained earnings (28,497,096) (31,968,040)

TOTAL SHAREHOLDER'S EQUITY 233,775,870 192,015,109

FINANCIAL PERFORMANCE

Total revenue 102,772,536 94,935,042

Total expenses (95,806,489) (92,565,830)

Asset revaluation adjustments 890,916 -

Profit/(loss) before tax 7,856,963 2,369,212

Tax Expense (3,024,775) (846,936)

PROFIT/(LOSS) AFTER TAX 4,832,188 1,522,276

OTHER COMPREHENSIVE INCOME

ITEMS THAT WILL NOT BE CLASSIFIED TO PROFIT OR LOSS

Increase/(decrease) on asset revaluation surplus 42,695,198 -

Income tax (expense)/benefit on revaluation (11,896,581) -

OTHER COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR, NET OF TAX 30,798,617 -

TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR 35,630,805 1,522,276

89

NOTE 26 SUBSIDIARY INFORMATION - BASS ISLAND LINE PTY LTD

The accounting policies of the Subsidiary, which have been applied in determining the financial information shown below, are the same as those applied in the Economic Entity. Refer to note 1 for a summary of the significant accounting policies relating to the Economic Entity. Bass Island Line Pty Ltd was incorporated on 16 February 2017, therefore there are no comparative figures.FINANCIAL SUPPORT

TasPorts as the Parent Entity has undertaken to provide financial support to the Subsidiary.

FINANCIAL POSITION

2017$

Current assets 1,864,107

Non-current assets 30,711

TOTAL ASSETS 1,894,818

Current liabilities 3,577,645

Non-current liabilities 21,338

TOTAL LIABILITIES 3,598,983

NET ASSETS (1,704,165)

Issued capital 100

Retained earnings/(losses) (1,704,265)

TOTAL SHAREHOLDER'S EQUITY (1,704,165)

FINANCIAL PERFORMANCE

Total revenue 2,156,663

Total expenses (3,860,928)

Profit/(loss) before tax (1,704,265)

Tax (expense)/benefit -

PROFIT/(LOSS) AFTER TAX (1,704,265)

TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR (1,704,265)

NOTE 27 INTEREST IN EQUITY ACCOUNTED INVESTEES - SOUTHERN EXPORT TERMINALS PTY LTD

Southern Export Terminals Pty Ltd (SET) is a Joint Venture in which TasPorts has joint control. The accounting policies of the Joint Venture, which have been applied in determining the financial information shown below, are the same as those applied in the Economic Entity. Refer to note 1 for a summary of the significant accounting policies relating to the Economic Entity. The Joint Venture was incorporated on 9 December 2016, therefore there are no comparative figures.

PERCENTAGE OWNERSHIP INTEREST 50%

2017$

Current assets 362,493

Current liabilities 472,339

NET ASSETS (109,846)

TASPORTS' SHARE OF NET ASSETS/(LIABILITIES) (50%) (54,923)

Revenue 407,941

Expenses (517,789)

Net profit/(loss) before tax (109,848)

Income tax (expense)/benefit -

NET PROFIT/(LOSS) AFTER TAX (109,848)

TASPORTS' SHARE OF TOTAL COMPREHENSIVE PROFIT/(LOSS) (50%) (54,924)

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NOTE 28 COMPANY DETAILS

THE REGISTERED OFFICE

OF THE COMPANY IS:

48 Formby Road Devonport Tasmania 7310

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Independent Auditor’s Report To the Members of Tasmanian Ports Corporation Pty Ltd Report on the Audit of the Consolidated Financial Report Opinion I have audited the financial report of the Tasmanian Ports Corporation Pty Ltd (the Company) and its subsidiaries (the Group) which comprises the consolidated statement of financial position as at 30 June 2017, the consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended, notes to the financial statements, including a summary of significant accounting policies and the directors’ declaration. In my opinion, the accompanying financial report of the Group is in accordance the Corporations Act 2001, including:

(a) giving a true and fair view of the Group’s financial position as at 30 June 2017, and its financial performance for the year then ended

(b) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion I conducted the audit in accordance with Australian Auditing Standards. My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of my report. I am independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to my audit of the financial report in Australia. I have also fulfilled my other ethical responsibilities in accordance with the Code. The Audit Act 2008 further promotes the independence of the Auditor-General. The Auditor-General is the auditor of all Tasmanian public sector entities and can only be removed by Parliament. The Auditor-General may conduct an audit in any way considered appropriate and is not subject to direction by any person about the way in which audit powers are to be exercised. The Auditor-General has for the purposes of conducting an audit, access to all documents and property and can report to Parliament matters which in the Auditor-General’s opinion are significant. I confirm that the independence declaration required by the Corporations Act 2001, provided to the directors of the Group on 9 August 2017 and included in the Directors’ Report, would be in the same terms if provided to the directors at the time of this auditor’s report.

IN DE PE N DE NT AU DITOR ’ S

R E P ORT


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I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Key Audit Matters Key audit matters are those matters that, in my professional judgement, were of most significance in my audit of the financial report of the current period. These matters were addressed in the context of my audit of the financial report as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters. Why this matter is considered to be one of the most significant matters in the audit

Audit procedures to address the matter included

Valuation of Port Infrastructure Refer to note 12

TasPorts’ asset portfolio amounted to $254.42m and accounted for over 80% of total assets.

Management engaged an expert to provide a valuation of infrastructure, land and buildings as at 30 June 2017. Infrastructure, land and buildings are measured at fair value which involves significant judgement and estimation.

Useful lives of assets and consequent depreciation policies can have a significant impact upon annual financial results. Useful lives and associated depreciation is subject to the nature, purpose, expected usage, environmental and latent conditions and requires estimation.

Infrastructure assets were assessed for impairment which involves a complex model with a degree of subjectivity to ensure assets were not carried in excess of their fair value.

Work-In-Progress for capital and infrastructure projects at 30 June 2017 amounted to $6.79m. The classification of work – in – progress as an asset as opposed to expenditure involves subjectivity.

Evaluating expert valuation report and inputs and assumptions used in forming an opinion on fair value.

Evaluating the reasonableness of the valuation when compared to the prior year.

Challenging management’s assessment of useful lives.

Performing detailed analytical review over the depreciation calculation for each class of asset

Evaluating management’s assessment of impairment.

Testing capital work-in-progress to ensure that active projects will result in usable assets and that assets commissioned are transferred out in a timely manner.

Other Information

The directors are responsible for the other information. The other information comprises the information included in the Company’s Directors’ Report for the year ended 30 June 2017, but does not include the financial report and my auditor’s report thereon.

My opinion on the financial report does not cover the other information and accordingly I do not express any form of assurance conclusion thereon.

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In connection with my audit of the financial report, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or my knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards, and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report My objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, I exercise professional judgement and maintain professional scepticism throughout the audit. I also:

• Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify my opinion. My conclusion is based on the audit evidence obtained up to the date of my auditor’s

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report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. I am responsible for the direction, supervision and performance of the Group audit. I remain solely responsible for my audit opinion.

I communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit. I also provide the directors with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on my independence, and where applicable, related safeguards. From the matters communicated with the directors, I determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. I describe these matters in my auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Ric De Santi Deputy Auditor-General Delegate of the Auditor-General Tasmanian Audit Office 10 August 2017 Hobart

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Tasmanian Ports Corporation Pty LtdABN 82 114 161 938Phone 1300 366 742www.tasports.com.au

REGISTERED OFFICE

48 Formby Road, DevonportPO Box 478Devonport, Tasmania 7310

LAUNCESTON OFFICE

Suite 12, Level 187 Brisbane Street, LauncestonPO Box 1060Launceston, Tasmania 7250

HOBART OFFICE

Level 13, Trafalgar Building110 Collins Street, HobartGPO Box 202Hobart, Tasmania 7001

BURNIE OFFICE

Port Road, BurniePO Box 216Burnie, Tasmania 7320

BELL BAY OFFICE

Mobil RoadBell BayPO Box 221George Town, Tasmania 7253

KING ISLAND OFFICE

285 Grassy Harbour RoadGrassy, King Island PO Box 341Currie, King Island, Tasmania 7256

FLINDERS ISLAND OFFICE

Lady BarronFlinders Island, Tasmania 7255

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