NEWCASTLE PORT CORPORATION · 2019-02-12 · ANNUAL REPORT 2001 ~ 2002 page 4 The Port of Newcastle was Australia's first commercial export port, sending a shipload of coal to Bengal

N E W C A S T L E P O R T

C O R P O R A T I O N

A N N U A L R E P O R T

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C O N T E N T S

Chairman’s Message 2

CEO’s Message 3

Purpose 4

Australia’s Premier Commercial Port 4

The Year in Review 5

Summary of Results 5

Business and Trade 6

Community and Environment 8

Shipping 9

People and Safety 9

Equal Employment Opportunity Training 10

Compliance and Risk Management 10

Statutory Information

Letter to the Voting Shareholders 13

Statutory Information 14

Index 30

Financial Statements

Directors’ Statement 32

Independent Audit Report 33

Statement of Financial Performance 34

Statement of Financial Position 35

Statement of Cash Flows 36

Notes to and forming part of the Financial Statements 37

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C H A I R M A N ’ S M E S S A G E

The Board has pursued its twin

objectives of trade expansion

and diversification throughout

the past year with pleasing

results in a challenging and

volatile market.

Coal exports reached a new record of more than

69 million tonnes, while imports of iron and steel grew

by more than 100,000 tonnes. The expansion of the

Kooragang coal loading facility this year led to a record

monthly throughput of 6.645 million tonnes in January

2002 and that record continues to be threatened

monthly.

Significant progress has been made with major projects

to enhance the Port and improve its facilities. A

submission prepared for Government consideration

proposes to test the market for a private consortium to

construct and operate a Multi-Purpose Terminal on the

ex-BHP Steelworks site. A harbour deepening and

improvement project is being developed to allow the

larger ships to carry more coal from the Port.

As well as these projects, the Corporation has been

very active in supporting the development of the

Austeel and Protech steel projects and testing the

potential port requirements. Several initiatives are also

being pursued to improve the Port's grain handling

facilities.

These results and the pursuit of new developments

have been achieved with an appreciation of the needs

of the surrounding port communities and a strong drive

towards improving the economic prosperity of the

region.

During the year there has been a change of Chief

Executives following Glen Oakley's decision not to

extend his contract. I would like to commend Glen for

his tireless efforts and the results he has achieved as

CEO, particularly in raising the profile of the

Corporation and restructuring the workforce.

I look forward to the contribution of the new Chief

Executive, Chris Oxenbould, who joins following a

distinguished career in the Navy and more recently in

the NSW Premier's Department.

The contribution of all Corporation employees has been

integral to this year's success and, on behalf of the

Board, I express appreciation of those efforts.

WILTON AINSWORTHChairman

GAYE HARTDirector

JOHN FITZGERALDDirector

JOHN McNAUGHTONDirector

DOUG HICKLINGStaff Director

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C E O ' S M E S S A G E

I am very pleased to join an

organisation that is running

smoothly and performing well,

with another record year.

Without doubt the past year

has been busy and successful for the Corporation. The

future is also very bright with a number of exciting

projects emerging and at very interesting and

demanding stages of their development.

The major projects present a considerable challenge to

ensure they are managed properly and that the

necessary support and approvals are obtained.

A small strategic projects team has been established to

develop the Multi-Purpose Terminal and harbour

improvement projects. It will also monitor the steel

projects and maintain the Port's commitment to them.

The team's worth is already evident in preparing sound

business cases and submissions for consideration by

shareholders and Government.

With over a year's experience of the new staff

structure, effort has concentrated on strategic business

planning and a clear definition and understanding of

the Corporation's goals and the contribution of each

staff member to them. This is a natural progression of

the earlier staff rationalisation and aimed at

strengthening the Corporation's teamwork and

productivity.

The task before the Corporation is exciting and the

rewards and potential benefits for the Hunter Region

are significant. I look forward to working with the

Newcastle Port Corporation team, to meet the

challenges that lie before us.

CHRIS OXENBOULD AO Chief Executive Officer

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The Port of Newcastle was Australia's first commercial

export port, sending a shipload of coal to Bengal in

1799. It is also one of Australia's largest tonnage ports,

and is the world's largest coal exporting port.

A major focus for the Newcastle Port Corporation in

recent years has been to diversify trade through the

Port, and so alleviate our current reliance on coal. The

Corporation has been working hard to increase the

movement of general cargoes and also other bulk

cargoes through the Port. There has been considerable

success with the addition of cargoes such as vegetable

oils, cottonseed and iron and steel.

The construction of a joint venture agriterminal by P&O

and GrainCorp, has resulted in the export of bulk

cottonseed through Newcastle, with various other more

specialist grains expected.

Record steel imports signify a historic change in the use

of the Port, from that of steel exporter. Use of the

Eastern Basin Distribution Centre and the Basin

warehouse demonstrates good relationships between

port service providers, importers and the Corporation.

The Port has had regular visits by liner service vessels

such as Austral Asia Line, (AAL), New Guinea Pacific

Line (NGPL), Gearbulk, Western Bulk Carriers (WBC)

and Clipper Elite Carriers (CEC).

Attendance and displays at agricultural shows such as

AgQuip in Gunnedah, and the Moree Cotton Show,

helped the Corporation to better understand the needs

of our customers, and helped to establish links with

agricultural exporters.

A U S T R A L I A ’ S P R E M I E RC O M M E R C I A L P O R T

The purpose of the Corporation is to enhance the

economic development of the Hunter Region and NSW

by providing an efficient, effective and environmentally

sustainable maritime gateway to the region.

P U R P O S E

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T H E Y E A R I N R E V I E W

S U M M A R Y O F R E S U L T S

Trade throughput for the Port of Newcastle for the

Financial Year 2001/2002 was 75.5 million tonnes.

This is a 2% increase on last year, and the second

highest throughput tonnage in the Port's 203 year

history.

Imports of 3.4 million tonnes through the Port were

slightly down on the previous year, mainly due to a

decline in the transhipment of coal carried by the vessel

Wallarah.

Exports of coal were a record 69.3 million tonnes,

aided by the completion of Port Waratah Coal Services'

Kooragang Coal Terminal expansion. Other exports

gave a total export figure for the year of 72.1 million

tonnes, a 2% increase on the 2000/01 year.

While several commodities such as aluminium and

timber had throughput that was below budget for the

year, overall general cargo throughput was 12.7%

above budget. This was particularly aided by increases

in zinc and lead exports. Specialised bulk throughput

was above budget by 12.6%, with wheat throughput

some 450,000 tonnes above budget.

2000/01 2001/02

Operating Surplus ($m after tax) 7.608 5.757

Total assets ($m) 140.59 138.45

Return on assets 6.4% 8.4%

Total trade (million mass tonnes) 73.87 75.498

Total trade (million revenue tonnes) 74.33 75.888

Total vessel GRT (million tonnes) 50.80 53.20

Average vessel size (Dwt) 58,680 64,276

Vessel visits 1,514 1,473

Average port management charge

per tonne of cargo $0.47 $0.47

Average port management charge

per vessel ($000) 22.94 24.30

Revenue per employee ($000) 351 414

Number of employees 103 94

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B U S I N E S S A N D T R A D E

• Central to the Corporation's strategy to diversify

trade through the Port has been the redevelopment

of the former BHP Steelworks site into a Multi-

Purpose Terminal (MPT).

Established deep water frontage land is a rarity

in Australia and indeed the world, and this

makes the 150 hectares, which includes transport

infrastructure, a valuable asset ready for

redevelopment.

The Corporation set up a Strategic Projects Branch

with four staff. They have been working on the

proposed redevelopment, which is currently at

business case and expression of interest stages. The

proposed redevelopment includes:

~ a post panamax vessel sized container facility of over

500,000 teu (average container size) capacity;

~ a general cargo terminal with over half a million

tonnes capacity;

~ rail based infrastructure; and

~ extensive backup land for related development.

The Strategic Projects Branch was also involved in

the detailed assessment of Project Newport, a

proposal to deepen and widen the Port.

• Port Waratah Coal Services completed its $345 million

Stage 3 expansion, which was officially opened in

March 2002. The expansion has increased capacity

at Kooragang Coal Terminal by 12 million tonnes per

annum, giving a combined Kooragang and

Carrington capacity of 90 million tonnes per annum.

The Stage 3 expansion involved a third rail receival

point; an additional stockyard stacking conveyor,

reclaimer and 500,000 tonne storage pad; and a

third ship loader and linking conveyors. The

construction involved six major construction

contractors from the Hunter Valley, and employed

1500 people.

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• The Globex grain loading proposal has been shelved

due to a proposed alliance between GrainCorp

(NSW) and GrainCo (Queensland) for the operation

of bulk grain loading terminals. This will avoid

duplication of capital investment and allows the

sharing of knowledge, skills and intellectual

property. The alliance, in the form of a new joint

venture company named Bulk Terminals Australia

(BTA), is now planning to improve grain delivery to

the existing GrainCorp site at West Basin 3. Other

grain handling enhancements for the Port are being

investigated.

• Australian Defence Industries (ADI) launched the

last of six minehunters in January 2002. The

minehunters were produced for the Royal Australian

Navy, and about 850 local businesses contributed to

the project, which at its peak employed 580 people.

ADI is bidding for a much larger project to build

patrol boats for the Navy using advanced

composites.

• A join venture agriterminal used for the storage and

loading of cottonseed and other seeds and grains,

was completed in June 2002 adjacent to No. 2

Kooragang berth. The joint venture, between P&O

and GrainCorp, involves two silos holding a nominal

20,000 tonnes of cottonseed each and a shared

conveyor system. A loading arm was refurbished to

handle the cottonseed and other commodities.

• The Eastern Basin Distribution Centre (EBDC) has

been experiencing good throughput of trade, with

ongoing liner visits by AAL, NGPL, NBC, CEC and

Gearbulk. Aluminium, steel and timber have formed

the majority of goods handled by the EBDC, with

various other goods making up the balance. In

September 2001, the EBDC established a container

record, with 300 containers loaded onto the NGPL

vessel Chekiang.

• At the end of August 2001, the Corporation again

participated in Australia's largest agricultural field

days and rural exhibition – AgQuip at Gunnedah.

The field days attract over 100,000 visitors from

across the country to see the latest in agricultural

equipment, products and services. Newcastle Port

Corporation exhibits at AgQuip to raise awareness

of its port facilities and the services which benefit

importers and exporters located in the State's west

and north west.

The Corporation was also represented at the Moree

Cotton Show in May 2002. Cotton and cottonseed

are products which are increasingly exported

through the Port. The Corporation is ensuring that

cotton farmers and exporters are aware of our

facilities.

• During the financial year the Corporation's wharf

restoration program (comprising concrete spalling

repairs and the installation of cathodic protection

systems) continued with works undertaken on the

Eastern Basin and Western Basin wharves.

Restoration work on the Western Basin wharf

commenced in 1998 with the repair of concrete

failures.

The subsequent installation of a cathodic protection

system in areas of significant deterioration was the

final element of work to provide the wharf with an

additional lifespan of approximately 30 years.

Cathodic installation work on the Eastern Basin

wharf will be completed by May 2003.

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C O M M U N I T Y A N D E N V I R O N M E N T

• The Corporation was again involved in the

Newcastle Port Corporation National Maritime

Festival as naming rights sponsor. More than

100,000 people attended the festival weekend,

which included visits from ships such as the James

Craig, dragon boat races, a cross-harbour swim,

canoe polo and a range of other activities. The

Maritime Festival is run by the Newcastle Maritime

Museum, and plans are underway for a bigger and

better festival in 2003.

• The Corporation was a major sponsor of

EnergyAustralia Surfest, the major surfing event in

Newcastle attracting international competitors.

• The Corporation sponsored the Emerging Exporter

category of the Hunter Export Awards in August

2001. The category ties in well with the

Corporation's goal of diversifying the Port's

throughput. PCWI Pty Ltd of Cardiff was the winner

of the Emerging Exporter category.

• Various school and community groups took tours of

the Port and presentations were given at the meetings

of service clubs, schools and other community

groups. The tours and presentations help to explain

to the community the purposes and functions of the

Port and the Newcastle Port Corporation.

• The Corporation has taken part in discussions with

the Carrington community in order to ensure a good

relationship between residential and industrial

neighbours.

• On 7 August 2001, Newcastle Port Corporation

conducted a Shoreline Assessment and Cleanup

Course at the Holiday Inn Newcastle.

Representatives of several State Government

agencies attended the course. A similar course was

conducted by Newcastle Port Corporation in Ballina

on the State's north coast. The annual Marine Oil

and Chemical Spill course was held in Newcastle

during May 2002. The Corporation also attended the

Mid North Coast and Northern Rivers District

Emergency Management Committee meetings as

part of its Port Safety Operating Licence

requirements.

• Stage 2 of the port access road was planned and

completed during the latter part of 2001, and

included community consultation and visits to the

site. The major reason for the project was to reduce

truck movements close to the residential area of

Carrington. The Carrington Heavy Vehicle Bypass

was opened on 20 December 2001.

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S H I P P I N G

• The new vessel traffic information centre (VTIC)

improves the efficiency of ship handling

arrangements through the Port, by centralising vessel

traffic arrangements, shipping communications and

the Corporation's operations branch staff, such as

Pilots and Port Officers, in one location.

• Dredging is undertaken five days per week.

Newcastle Port Corporation contracted the use of

a sweep bar to complement the dredging work of

the dredger, “David Allan.” The sweeping campaign

successfully levelled out the bed of the harbour to

design depths.

• The Corporation continued the development of a

project for the deepening and widening of the Port's

main navigation channels. Following endorsement

of the project by the Cabinet Standing Committee

on the Budget in November 2001, an inter-agency

steering committee was established and work

commenced on the preparation of documentation

for a Call for Detailed Proposals. This has required

detailed consideration of engineering, financial and

legal issues, as well as the impacts on the Port's

customers, the environment and the Port's operating

procedures, which consumed the remainder of the

year. Following completion of this work, the

Corporation will report back to Government early in

the new financial year on the best options.

• The Corporation was involved in planning the

relocation of the Hunter Towage Services’ tugs to

Dyke Point. This should take place early in the next

financial year.

• During the year the Port was visited by 1473

commercial and naval vessels. Coal berths loaded

796 vessels, the largest being the Pacific Triangle

which is 300 metres long with a cargo carrying

capacity of 184,000 tonnes.

• There were 3086 shipping movements with 2691

using a pilot. In January 2002, there were 296

pilotage movements which is a record for a single

month. Over 70% of pilotage movements during the

year used a helicopter to deliver Pilots.

P E O P L E A N D S A F E T Y

The Corporation remains committed to sustaining an

equal employment opportunity workplace through the

continued use of flexible work practices supported by a

range of policies that both protect and support staff's rights.

There were no industrial disputes during the

2001/2002 financial year. As well, productivity and

innovation were encouraged through the introduction

of an integrated performance management system.

Project management training has also been given a

high priority, with thirty-one Port Corporation staff

undergoing a one-day project management course.

Follow up discussion groups looked at several pilot

projects.

During the financial year, lost time injuries increased

from three to six, however the number of working days

lost declined from 153 to 54 due to the success of the

injury management plan. As well, the Corporation

celebrated a twelve month period with no lost time

injuries, from November 2000 to October 2001.

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C O M P L I A N C E A N D R I S KM A N A G E M E N T

During the 2001/2002 year the Corporation:

• Began upgrading the certified quality assurance

system to comply with the ISO 9000:2000 series of

quality standards;

• Addressed the requirements of the revised

Occupational Health and Safety legislation and

related Regulations, which have a compliance date

of 1 September 2002;

• Conducted OH&S consultation training and OH&S

risk management training for supervisors/managers;

• Held a full review of insurance risk and amended

policies to incorporate appropriate deductible

amounts and insurance value limits;

• Conducted a full review of the requirements of the

Workers Compensation Premium Discount Scheme;

formulated and implemented action plans;

• Replaced computer hardware, such as server and

desktops, to improve the reliability of delivery of the

Corporation's information technology. This also

made systems more robust and serviceable.

Internal auditors and independent external auditors

reviewed operating and administrative systems with no

material matters of concern.

The Corporation will continue to develop and

implement risk management strategies throughout the

coming year. We will:

• Invite the members of the "Port User Group" to

attend Occupational Health and Safety awareness

sessions outlining roles and responsibilities within

the Port;

• Further progress risk management profiles within

the Corporation;

• Review compliance with the Treasurer’s Directions

and Premier's Department Guidelines; and

• Install a radio link to the Port precinct so that the

information technology network can be accessed

from remote sites.

E Q U A L E M P L O Y M E N TO P P O R T U N I T Y T R A I N I N G

The merit principle was applied to all recruitment,

relieving and development opportunities. Staff

participating on selection panels attended recruitment

and selection committee training and staff who have

not attended a course in the last three years will have

a refresher course. Harassment prevention courses

were conducted for non-supervisory staff.

Recruitment and selection procedures were reviewed

to include anti-discrimination changes reflecting

employers' and carers' responsibilities, and a people

maintenance program is being introduced. Its aim is to

incorporate health and wellbeing strategies into the

Corporation's current flexible working strategies, to

provide a better approach to balancing the work and

family lives of our employees.

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N E W C A S T L E P O R T

C O R P O R A T I O N

STATUTORY INFORMATION AND FINANCIAL STATEMENTS

Newcastle Port Corporation Annual Report for the year ending 30 June 2002

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C O N T E N T S

Letter of Submission 13

Charter 14

Aims 14

Objectives and Outcomes 14

Management and Structure 18

Summary Review of Operations 21

Improvement Plans 21

Funds Granted to Non-Government Community Organisations 21

Legal Change 22

Heritage 22

Economic or Other Factors 22

Research and Development 22

Employee Relations 23

Community Access and Responsibilities 25

Miscellaneous Port Activities 25

Exemptions 26

Consultants 27

Promotions – Publications 27

Customer Response 27

Guarantee of Service 28

Risk Management and Insurance 28

Subordinate Legislation 29

Auditor General Matters 29

Disclosure of Controlled Entities 29

Freedom of Information 29

Annual Report 29

Credit Card Use 29

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Dear Treasurer and Assistant Treasurer,

We present the Annual Report of the Newcastle Port Corporation for the year ending 30 June 2002. The report is in

accordance with the Annual Reports (Statutory Bodies) Act 1984, the applicable provisions of the Public Finance and

Audit Act 1983 and the State Owned Corporations Act 1989. It is submitted for presentation to Parliament.

The Board wishes to record its appreciation of the contribution of the senior managers and all staff to this year's

excellent result.

Wilton Ainsworth Chris Oxenbould AO

Chairman Chief Executive Officer

The Hon M R Egan MLC The Hon John J Della Bosca MP

Treasurer Assistant Treasurer

Governor Macquarie Tower Governor Macquarie Tower

Level 33, 1 Farrer Place Level 33, 1 Farrer Place

SYDNEY NSW 2000 SYDNEY NSW 2000

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1 CHARTER

Following the NSW State Election in March 1995, the Premier, Mr Bob Carr, announced plans to corporatise the

Port of Newcastle as part of the corporatisation of the State's ports.

Legislation was passed in June of that year and the Newcastle Port Corporation was established under the

provisions of the Ports Corporatisation and Waterways Management Act, 1995.

Newcastle Port Corporation is an autonomous Statutory Corporation whose voting shareholders (the Treasurer and

Assistant Treasurer) represent the Government of NSW.

The Annual Report is presented in accordance with the Annual Reports (Statutory Bodies) Act 1984, the Annual

Reports (Statutory Bodies) Regulation 2000, the applicable provisions of the Public Finance and Audit Act 1983,

and the State Owned Corporations Act 1989.

2 AIMS

Newcastle Port Corporation aims to:

~ provide marine safety, navigation and traffic management services;

~ successfully manage wharf facilities;

~ successfully manage port-related property; and

~ be a leading commercially viable port whose port-related business development benefits the Corporation and

broader community.

3 OBJECIVES AND OUTCOMES

The Corporation succeeded in meeting the objectives in all key areas this year.

Key Result Area

Trade Development

Safety

Equity

Finance

Objective

To maximise profitable port throughput.

To provide a safe working environment

for all port users.

To provide a workplace culture which at

all times displays fair practices and

behaviours.

To improve Shareholder Value Add.

Outcome

Total trade increased by 2.2%. There were

record coal exports and iron and steel

imports.

Lost time injuries increased from 3 to 6 but

the number of working days lost declined

from 153 to 54 due to the success of the

Injury Management Plan.

No industrial disputes occurred.

The SVA was above budget, despite

increased spending on maintenance of the

wharves.

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Key Result Area

Finance

Operations

Liaise and Consult

Objective

To reduce risk and exposure to a single

commodity.

To improve overall asset performance.

To provide a high value shareholder

return.

To improve the efficiency of port

operations.

To improve the quality of operations

and service delivery.

To develop and implement a waste

reduction program.

To improve links with customers.

To develop strategic alliances with

partners.

Outcome

There were record steel imports due to

competitiveness of general cargo facilities

at Newcastle. Above budget throughput of

miscellaneous bulks. The Corporation

promoted development of the Multi-

Purpose Terminal on the former BHP site.

Return on assets was 8.81%, which was

above target, and higher than 2000/2001.

The dividend to shareholders for the

financial year was $9 Million.

The introduction of revised traffic management

services and implementation of an

integrated performance management

system has improved productivity and

service to customers.

The revised arrangements at the Vessel

Traffic Information Centre improved service

delivery. Quality audits of port procedures

ensured compliance with port safety

operating licence requirements.

A waste reduction and purchasing policy

was implemented to reduce, reuse and

recycle waste.

Regular liaison with and visits to customers

were undertaken. The Corporation consulted

with ship agents on port projects, such as

Project Newport.

Corporation officers assisted Globex

regarding the proposed grain terminal

project at Dyke wharves and liaised with

P&O regarding the possible construction of

additional bulk berth (K1). There was

ongoing joint promotion of Eastern Basin

Distribution Centre.

3 OBJECIVES AND OUTCOMES (continued)

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Key Result Area

Corporate Governance

Operating Licence

Objective

To provide a risk management strategy

for prudent management of all risks.

To conform to all aspects of the

operating licence.

Outcome

Strategies were implemented to ensure

identification of risks and compliance with

relevant standards and legislation. Audits

and reviews of operating and administrative

systems did not identify any matters for

concern.

The Corporation met all performance

standards in accordance with the port

safety operating licence. Officers liaised

with the Transport Safety Bureau, together

with other Port Corporations, regarding the

potential for improvements in performance

standards.

3 OBJECIVES & OUTCOMES (continued)

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STAFF

UNIONS GOVERNMENTDept of Transport

MinisterTreasurer

Assistant Treasurer

SPECIAL SITESProjectsTenders

CUSTOMERSShippingExportersImporters

GENERAL PUBLIC SERVICE PROVIDERSProvidoresStevedores

Towage CompaniesMooring Services

Transport ProvidersCustoms

MEDIA

SUPPLIERSMajor Suppliers

Outsourced ServiceProviders

OTHER STAKEHOLDERSHEDC

CouncilPlanning NSWPremier’s Dept.

NEWCASTLE PORT CORPORATION'S BROADER COMMUNITY

NewcastlePort

Corporation

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4 MANAGEMENT AND STRUCTURE

BOARD OF DIRECTORS

The current Board of Directors, with the exception of Mr Hickling, was reappointed by the Governor of New South

Wales on 4 December 2001 for a period of three years.

Wilton Ainsworth BS (Hons) Chairman, former Chief Executive of Commonwealth Steel Company.

John Fitzgerald BS Director, former Chief Executive and Director of A Goninan and Co Limited.

John McNaughton AM Director, former Lord Mayor of Newcastle, reappointed December 1998.

Gaye Hart AM, BA, MEd, Director, Director of the Hunter Institute of Technology.

Doug Hickling Survey Technician within the Corporation’s Marine Section, re-elected

Staff Director in July 1999.

DIRECTORS’ MEETINGS

There were thirteen meetings of the Newcastle Port Corporation’s Board during the year. The number of meetings

attended by the Directors were:

W Ainsworth 13

J Fitzgerald 13

J McNaughton 12

G Hart 11

D Hickling 13

SIGNIFICANT SUB–COMMITTEES OF BOARD

Audit Sub–Committee John Fitzgerald (Chair)

Wilton Ainsworth

Gaye Hart

Environment Sub–Committee John McNaughton (Chair)

Doug Hickling

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Compliance and Corporate

Governance

Corporate Reporting

Quality

Audit

Insurance

OH&S

Legal

Corporate Strategic Planning

Secretariat

Finance

Purchasing

Employee Relations

Information Systems

Property

MANAGEMENT STRUCTURE AND EXECUTIVE REMUNERATION

CHIEF EXECUTIVE OFFICERChris Oxenbould AO

ComplianceStatutory powers

Pilotage Port Safety Operating Licence

Pilotage Support Services

Vessel Traffic Management

Wharf Services

Survey

Dredging

Project and Capital Works

Maintenance

Incident Response Management

Environment Management

Business Develpment

External Relations

Logistic/Supply Line Development

Marketing/Promotions

Forecasting

Research

Business Analysis

BOARD

GENERAL MANAGER –OPERATIONS

Gary Webb

EXECUTIVE MANAGER –BUSINESS DEVELOPMENT

Bill Norrie

GENERAL MANAGER –COMMERCIALSteve Edmonds

Input into Corporate plans

HARBOUR MASTERTimothy Turner

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4 MANAGEMENT AND STRUCTURE (continued)

Dr Glen Oakley BMed Sc (Hons), Grad Dip Ed, Chief Executive Officer

(to 18 November 2001) MBA, PhD, FAICD FASCPA, FAIM,

AMP

Chris Oxenbould AO FAICD Chief Executive Officer

(from 19 November 2001)

Gary Webb BSurv (Hons), Grad Dip Ed, General Manager – Operations

Registered Surveyor, MAICD, MDP

Steve Edmonds BEc, MBA Corporate Secretary /

General Manager – Commercial

Timothy Turner Master Mariner, MDP Harbour Master / Senior Pilot

Timothy Ryan Grad Dip Ed, Dip Exp Mgt, Business Relations Manager

(to September 2001) Grad Dip Tran Mgt

Bill Norrie Executive Manager, Business Development

(from January 2002)

As at 30 June 2002 the total remuneration package for the CEO was $225,000 including salary, income tax,

superannuation, motor vehicle costs and fringe benefits tax. In addition the CEO has an "at risk" salary incentive of

$25,000 that is subject to performance against set objectives. Three other executives were paid the equivalent of SES

Level 1 or above.

EXTERNAL COMMITTEES

During 2001/2002 NPC officers participated in the following external committees.

Agribusiness Taskforce Bill Pope

Chartered Institute Of Transport – Hunter Chapter Steve Edmonds, Bill Norrie

Coal Chain Transport Planning Group Gary Webb

Hunter District Emergency Management Committee Gary Webb

Hunter Valley Coal Chain Council Gary Webb

Mid North Coast District Emergency Management Committee Gary Webb

Newcastle and Hunter Business Chamber – Regional Infrastructure Committee Steve Edmonds

Newcastle Port Users Group Gary Webb

Northern Rivers District, Emergency Management Committee Gary Webb

NSW National Plan Technical Working Group Gary Webb

NSW Sea Freight Council Bill Norrie

Technical and Operations Committee AAPMA Tim Turner

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4 MANAGEMENT AND STRUCTURE (continued)

Committees disbanded:

NSW Grains Industry Consultative Committee

NSW State Marine Committee

Port Security Committee

5 SUMMARY REVIEW OF OPERATIONS

See Section 1 of the Annual Report.

6 IMPROVEMENT PLANS

The Corporation's business planning is an interactive process based on reviewing previous performance, revising

strategies and updating targets. Within this planning process there are external reviews of quality, safety and

environmental performance specified to ensure compliance with quality accreditation and the port safety operating

licence. There is also an internal audit process aimed at these areas. This is in addition to the internal and external

financial audit process.

A Business Development Branch, headed by the Executive Manager – Business Development, was created and

functions relating to marketing, public relations, trade forecasting, logistics analysis and business development

were transferred to this branch. This branch is also involved in the business planning and review process.

An Integrated Performance Management System, linked to a performance bonus, was developed and introduced

for staff, to encourage productivity improvement and innovative work practices.

Rationalisation of traffic management services occurred mid-June 2001. The upgraded and enhanced Vessel Traffic

Information System was implemented and provides superior information and management capabilities. This

resulted in improved vessel safety, enhanced data exchange with port customers and facilitated vessel turnaround.

7 FUNDS GRANTED TO NON-GOVERNMENT COMMUNITY ORGANISATIONS

There were no grants to non-government community organisations during the year.

SPONSORSHIP

The Newcastle Port Corporation has a sponsorship and donations program, which aims to:

~ present the Corporation as a responsible corporate citizen;

~ provide support to institutions which directly or indirectly provide market intelligence information;

~ create a positive environment in which port-related and public sectors can operate; and

~ increase awareness of the Corporation's identity across a wide cross-section of the community.

With these objectives in mind, the Corporation, during the 2001/2002 financial year, committed $181,895 in

sponsorship pledges.

None of these items appeared on the Government Budget Papers.

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8 LEGAL CHANGE

The introduction of the new Occupational Health & Safety Regulations 2000 required review of risk assessment

and management procedures. This review commenced during the year and action required is to be progressively

implemented.

9 HERITAGE

The Corporation's main heritage listing is the Hydraulic Pump House originally used for housing pumps which

supplied power to the cranes loading vessels at the Dyke berths. Following repairs to the Pump House the area was

secured to minimise vandalism. Tenders were called for to find a use for the occupation of the building that

conformed to the State Owned Heritage Management principles. Work continued on the compilation of a Heritage

and Conservation Register to conform with the Heritage Act 1977.

10 ECONOMIC OR OTHER FACTORS

Total trade through the Port of Newcastle in 2001/2002 increased by 2.2% to 75.5 million tonnes. Strong growth

in thermal coal demand, especially in the Asian region, resulted in an increase in coal exports by 3.1% to 67.2

million tonnes. Despite strong competition from coal exported from China, the Port was able to achieve a record

in coal shipments for the year.

The $340 million expansion of the Kooragang Coal Terminal, owned by Port Waratah Coal Services, contributed to

the record coal throughput. The Port now has a capacity to load 90 million tonnes of coal per annum.

The rapid expansion in coal exports from China resulted in increased stocks at Hunter Valley mines. These excess

stocks resulted in lower spot prices for coal and the larger mines then cut back production. The domestic price of

coal in Southern China rose and consequently coal was exported to this area from Newcastle. Australian producers

resisted seeking volume at the expense of price.

A favourable season in rural areas of north-west NSW resulted in 1.5 million tonnes of grain exports. The

aluminium smelters at Tomago and Kurri Kurri continued full production despite the bleak world economic climate

and relatively low commodity prices. As a result, 1.1 million tonnes of alumina was imported. Aluminium metal

exports declined due to more frequent shipping and competitive container freight rates out of Sydney Ports. Iron

and steel imports have increased dramatically as Japanese steel makers exported more of their product.

11 RESEARCH AND DEVELOPMENT

Research and development activities centred on several potential port development projects. The simulator at the

Australian Maritime College was used to investigate the handling of container vessels under cross wind conditions

in the Steelworks Channel for the proposed Multi-Purpose Terminal, and the passage of vessels up the Hunter

River's North Arm channel for the proposed Austeel project, including parameters for passing Stockton Bridge.

Modelling the conditions of tides, wind and currents in conjunction with vessel and berth characteristics enables

more objective decision making in relation to port operations and developments.

The Corporation trialed the reduction of the number of tugs used on certain general cargo vessels fitted with bow

thrusters.

The two stroke outboard motors on the pilot tender were replaced with four stroke motors to improve fuel economy

and reduce impact on the environment.

Development work was carried out on a Strategic Vessel Plan to determine the Corporation's future harbour craft

requirements.

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12 EMPLOYEE RELATIONS

All staff have team or individual performance agreements which include mutually agreed performance indicators

and development plans. The Consultative Committee, which has Union and employee representation, meets

regularly to discuss the Corporation's performance, continuous improvement initiatives, organisational change and

policies. Performance management plans for all staff are to be linked to team and individual bonus payments.

The Corporation remains committed to sustaining an Equal Employment Opportunity workplace through the

continued use of flexible work practices supported by a range of policies that both protect and support staff's rights.

To further underpin this commitment the Corporation continues to provide a range of Employee Assistance

Programs supplied by service providers who continue to offer the most effective specialist counselling services.

These services remain complemented with regular weekly field visits from an industrial Chaplain.

The Corporation has joined with the University of Newcastle in two scholarship programs that span over six years.

These programs provide students with experience in the workplace. This enables high quality students to remain

longer with the Corporation than they could previously with the one-year trainee scheme.

The Corporation is in the process of developing a People Maintenance Program aimed at incorporating the current

flexible work strategies with health and wellbeing strategies. The Corporation also continues to subsidise gym

memberships for all staff to promote a healthy lifestyle.

CODE OF CONDUCT

The Corporations Code of Conduct and Ethics describes the standard of behaviour and ethical requirements

expected of all employees in the performance of daily business. There were no changes to the Code of Conduct

during the year.

Newcastle Port Corporation employees' employment actions are governed by the following Acts, Regulations and Policies:

~ Ports Corporatisation and Waterways Management Act 1995;

~ State Owned Corporations Amendment Act 1995;

~ State Owned Corporations Act 1989;

~ Anti-discrimination Act 1977;

~ Crimes Act 1900;

~ Freedom of Information Act 1989;

~ Independent Commission Against Corruption Act 1988;

~ Protected Disclosures Act 1994;

~ Workers Compensation Act 1987;

~ Workplace Injury Management and Workers Compensation Act 1998;

~ Occupational Health & Safety Act 2000;

~ Industrial Relations Act 1996;

~ Ombudsman Act 1974; and

~ Public Finance and Audit Act 1983

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12 EMPLOYEE RELATIONS (continued)

Relevant Newcastle Port Corporation Policies:

~ EEO Policy Statement and Plan;

~ Ethnic Affairs Priority Statement;

~ Grievance Handling and Dispute Resolution Procedures;

~ Harassment Prevention;

~ Protected Disclosures Act 1994 Internal Reporting Policy;

~ Communications/Electronic Equipment Policy;

~ Policy on the Acceptable Use of Internet and Electronic Mail;

~ Procurement Policy;

~ Occupational Health, Safety and Rehabilitation Policy;

~ Alcohol & Other Drugs Policy; and

~ Non smoking Policy.

MAJOR EEO OUTCOMES ACHIEVED DURING THE YEAR

~ The merit principle was applied to all recruitment.

~ Recruitment and Selection Committee training, including EEO principles, was conducted for staff participating

on selection panels.

~ Further EEO refresher training courses will be conducted for staff who have not attended a course in the last

three years.

~ Recruitment and selection procedures were reviewed to include anti-discrimination changes reflecting

employer's and carer's responsibilities.

ACTION PLAN FOR WOMEN 2001/02

The Corporate objectives remain to:

~ Promote safety and prevent violence against women;

~ Promote workplaces that are equitable, safe and responsive to all aspects of women's lives;

~ Promote access to learning and life skills for women, and successful outcomes from this education; and

~ Improve and maintain women's health.

The Corporation's achievements in the past year include:

~ Continued commitment to the elimination of discrimination against women by adherence to EEO policy.

~ Continued flexible working conditions to enable women to better balance work and family life;

~ Participation in "springboard" training programs for women; and

~ Continued participation in the Spokeswomen Program.

~ Harassment Prevention courses were conducted for non-supervisory staff.

OVERSEAS VISITS BY EMPLOYEES

There were no overseas visits by Corporation staff during the financial year.

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13 COMMUNITY ACCESS AND RESPONSIBLITIES

The Corporation continues to maintain community amenities surrounding the Port, including the northern

breakwater, Macquarie Pier and fishing access in Carrington.

Disabled Group employer, Delando Crescent remains our major contractor for gardening and lawn services.

The Corporation is to set up a video library for access by all staff who require assistance in caring for or dealing

with individual disabilities such as diabetes, dementia and Parkinson's disease.

ETHNIC AFFAIRS POLICY

The Corporation abides by the NSW Charter of Principles for a Culturally Diverse Society.

Initiatives include:

~ Signs and notices around the Port and waterways use international symbols to ensure the safety of the general public;

~ Tide Charts and other literature available to local and international customers include languages other than English.

~ Staff in direct contact with the public have training in communicating with people from diverse backgrounds;

~ Ethnic affairs policy awareness principles are included in all position descriptions.

14 MISCELLANEOUS PORT ACTIVITIES

NEWCASTLE PORT CORPORATION LAND DISPOSAL

There were no land disposals by the Newcastle Port Corporation during 2001/02 year.

WASTE REDUCTION AND PURCHASING POLICY (WRAPP)

The use of electronic communication has reduced paper generation and flow between departments.

The Corporation has recycling bins for paper, emptied daily by cleaning contractors and forwarded to recyclers.

Used toner cartridges are recycled.

Summer Hill Waste Management Centre is used for green waste (approx. 2 tonnes p.a.) Mulch is also used for

landscaping (approx. 2 tonnes p.a.).

The Corporation has used broken concrete and soil produced by building activities to reclaim additional land

adjacent to East Basin. This action has increased the available wharf stacking area.

CONTRACTING AND MARKET TESTING

The Corporation continues to outsource cleaning, payroll, maintenance tasks, pilotage delivery tasks; some

security; and information technology functions.

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14 MISCELLANEOUS PORT ACTIVITIES (continued)

CAPITAL WORKS

The major capital works for the year were the second stage of the Vessel Traffic Information System (VTIS), the

Hunter River (South Arm) Dredging Master Plan and the amplification of services on Dyke Point.

Stage Two of the VTIS is the complementary improvement of the system's vessel safety functions through the

introduction of marine pilot's portable information units. After the VTIS was commissioned in June 2001, the

Corporation evaluated the emerging technological developments of pilot "carry-on" information units.

Preparation of the Dredging Master Plan (and Environmental Impact Statement) for the future dredging of the

South Arm of the Hunter River progressed during 2001/02. The Plan will ensure that future strategic port

development requiring statutory approvals for capital dredging activities will be streamlined.

Investigation of future utility service requirements at Dyke Point and Carrington continued during the financial year.

Preliminary designs have been formulated to cater for the future expansion of facilities in the Port area.

15 EXEMPTIONS

The Treasurer has granted Newcastle Port Corporation exemptions from some areas of the Annual Reports

(Statutory Bodies) Act on the basis of Commercial in Confidence matters.

The following matters are exempt but require report in this summarised form.

S41B(c) Financial Statements

~ Preparation of Manufacturing and Trading Statements.

~ Material items of income and expenditure on a program or activity basis.

~ Summary Review of operations.

~ Management activities – Schedule 1 ARSBR.

~ Consultants – Schedule 1 ARSBR.

~ Consumer response – Schedule 1 ARSBR.

~ Risk Management – Schedule 1 ARSBR.

The following matters are exempt as they are no longer required for performance assessment and accountability.

Schedule 1 Part 1

~ Amounts set aside for renewal or replacement of fixed assets.

~ Amounts set aside to any provision for known commitments.

~ Amount appropriated for repayment of loans.

Schedule 1 Part 3

~ Schedule of outstanding public borrowings or other repayable advances.

~ Non-current asset value exceeds replacement costs.

~ Performance in Payment of Accounts – Schedule 1 ARSBR.

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15 EXEMPTIONS (continued)

The following items are exempt on a Commercial in Confidence basis.

~ Budgets – outline and detail – S.7(1)(a)(iii)ARSBA/Schedule 1 ARSBR.

~ Significant Judicial Decisions – S.9(1)(f) ARSBA/Schedule 1 ARSBR.

~ Research and Development – Schedule 1 ARSBR.

~ Human Resources – Schedule 1 ARSBR.

~ Land Disposal – Schedule 1 ARSBR.

~ Investment Management Performance – Cl.12 ARSBR/TCG 1991/5.

~ Liability Management Performance – Cl.12 ARSBR/TCG 1991/5.

16 CONSULTANTS

Major items for which Consultants were employed included:

~ Financial and technical advice relating to the proposed widening and deepening project (Project Newport) and

the proposed Multi-Purpose Terminal;

~ Legal advice regarding the maintenance contracting proposal.

A total of $167,909 was spent on Consultants.

17 PROMOTION – PUBLICATIONS

The following publications were made free of charge to customers and the general public during the year:

~ Annual Report 2000/01

~ Eastern Basin Distribution Centre Brochure

~ Guarantee of Service Statement

~ Port Facilities Brochure

~ Port Information Sheets

~ Tide Chart and Information Handbook

~ Scuttlebutt, the Corporation's Quarterly Newsletter.

18 CUSTOMER RESPONSE

Complaints were received regarding faults or inadequacies relating to the Corporation's website. These were

investigated and rectified. The website will be redesigned in 2002/2003.

Residents adjacent to a main navigation aid expressed concern regarding the impact on their amenity of planned

maintenance work. Following discussions with the residents, the work was carried out in stages at times suitable

to the residents.

A complaint was received regarding the base of the removable breakwater access barrier on Macquarie Pier. This

was investigated and it was found that a Corporation contractor did not replace the barrier pole after entering the

breakwater. An apology was forwarded to the person concerned.

Minor complaints were received regarding transfer of vessel traffic information, which were investigated and

responded to.

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19 GUARANTEE OF SERVICE

The Newcastle Port Corporation has a Guarantee of Service. The published statement lists the categories of

Corporation's customers; the services and assets provided by the Corporation; and the measurements of service

standards. Operational service and assets are available 24 hours per day, 7 days per week. The Head Office

operates between 8.30am and 5.00pm weekdays.

Pilots, vessel traffic management, emergency response and communications are available 24 hours per day, 7 days

per week.

Contact names and numbers are listed to enable easy access to the Corporation for suggestions and complaints.

20 RISK MANAGEMENT AND INSURANCE ACTIVITIES

COMPLIANCE AND RISK MANAGEMENT

The Board and Management continue to acknowledge the need for a risk management framework within the

Corporation.

A Compliance and Risk Branch was established in November 2000 with the objective of centralising the

administration and management of risk issues. While many day-to-day risks remain under the control of the

associated line managers, the Compliance and Risk section assists them to coordinate the following areas:

~ Occupational Health and Safety;

~ Quality Assurance and associated Port Safety Operating Licence;

~ General Insurance;

~ Statutory financial reporting;

~ Taxation compliance; and

~ Information Technology support and contingencies.

The Corporation continued to implement risk management strategies throughout the 2001/02 year, including:

~ Upgrading the certified Quality Assurance system to comply with the ISO 9000:2000 series of Quality

Standards;

~ Addressing the requirements of the revised Occupational Health and Safety Legislation and related

Regulations, which have a compliance date of 1 September 2002;

~ Amending insurance policies to incorporate appropriate deductible amounts and insurance value limits;

~ Conducting a full review of the requirements of the Worker's Compensation Premium Discount Scheme;

~ Formulating and implementing action plans; and

~ Replacing computer hardware, to improve the reliability of delivery of the Corporation's information

technology.

Independent external and internal auditors reviewed various operating and administrative systems with no material

matters of concern.

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21 SUBORDINATE LEGISLATION

There were no significant departures from the Subordinate Legislation Act.

22 RESPONSE TO MATTERS RAISED BY THE AUDITOR GENERAL

There were no significant issues raised by the Auditor General which require comment.

23 DISCLOSURE OF CONTROLLED ENTITIES

The Corporation has no controlled entities.

24 FREEDOM OF INFORMATION

There were no requests for information received as outlined in the Freedom of Information Act 1989.

Enquiries for access to documents under the Freedom of Information Act may be made to The General Manager –

Commercial, Newcastle Port Corporation.

25 ANNUAL REPORT COST

1,000 copies of the 2001/02 Annual Report have been produced on CD–ROM with a limited number of printed

copies for statutory purposes. A copy of the Annual Report is also available on the Corporation's website at

www.newportcorp.com. Production cost per copy is $25.48.

26 CREDIT CARD USE

Credit card use was in accordance with the Premier's Memoranda and Treasurer's Directions together with the

provisions of the State Owned Corporations Act.

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INDEX

A Aims 14

Annual Report Cost 29

Action Plan for Women 24

B Board of Directors 18

C Capital Works 26

Charter 14

Code of Conduct 23

Committees – Board 18

– External 20

Community Access and Responsibilities 25

Consultants 27

Contracting and Market Testing 25

Controlled Entities 29

Credit Card Use 29

Customer Response 27

D Directors’ Meetings 18

E Economic or Other Factors 22

Employee Relations 23

Equal Employment Opportunity 24

Ethnic Affairs 25

Exemptions 26

Executive Remuneration 20

F Freedom of Information 29

Funds Granted 21

G Guarantee of Service 28

H Heritage 22

I Improvement Plans 21

L Land Disposal 25

Legal Change 22

M Management and Structure 18

Miscellaneous Port Activities 25

O Objectives and Outcomes 14

Organisation Chart 17

Overseas Visits 24

P Promotion – Publications 27

Performance/Results 5

R Research and Development 22

Risk Management and Insurance 28

Response to Auditor General 29

S Sponsorship 21

Subordinate Legislation 29

Summary Review of Operations 21

W Waste Reduction and Purchasing Policy 25

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N E W C A S T L E P O R T C O R P O R A T I O N

Financial Statements for the year ended 30 June 2002

Contents

1. Directors’ Statement 32

2. Independent Audit Report 33

3. Statement of Financial Performance 34

4. Statement of Financial Position 35

5. Statement of Cash Flows 36

6. Notes to and forming part of the Financial Statements 37

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D I R E C T O R S ’ S T A T E M E N T

In accordance with a resolution of the Directors of the Newcastle Port Corporation, Clause 14 of the Public Finance

and Audit Regulation 2000, and pursuant to Section 41C(1B) and 41C(1C) of the Public Finance and Audit Act 1983,

in the opinion of the Directors:

1. the accompanying financial statements exhibit a true and fair view of the financial position of the Corporation

as at 30 June 2002 and transactions for the year then ended;

2. the statements have been prepared in accordance with the provision of the Public Finance and Audit Act 1983,

the Public Finance and Audit Regulation 2000 and relevant Treasurer’s Directions.

Further, we are not aware of any circumstances which would render any particulars included in the financial

statements to be misleading or inaccurate.

Wilton Ainsworth John Fitzgerald

Chairman Director

Dated: 23rd October 2002

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S T A T E M E N T O FF I N A N C I A L P E R F O R M A N C Efor the financial year ended 30 June 2002.

Note 2002 2001

$000 $000

Revenue from Ordinary Activities

Port Management 2 35,788 34,739

Interest on Deposits 628 825

Other 3 2,241 2,014

Total Revenue from Ordinary Activities 38,657 37,578

Expenses from Ordinary Activities

Salaries, Wages and Related Costs 8,154 10,722

Superannuation 5 1,913 3,790

Repairs and Services 6,502 4,249

Utilities and Communications 683 681

Port Fee and Licence 2,846 2,647

Administration 2,378 2,009

Consultants 98 34

Depreciation 11 4,123 4,135

Borrowing Costs 2,332 2,389

Audit Fees – external 75 72

Directors’ Emoluments 4 164 131

Loss on Sale of Non-Current Assets 11 138 47

Total Expenses from Ordinary Activities 29,406 30,906

Profit from Ordinary Activities before Income Tax Expense 9,251 6,672

Income Tax Expense Relating to Ordinary Activities 6 (3,494) 936

Net Profit from Ordinary Activities after Income Tax Expense 5,757 7,608

Increase in Asset Revaluation Reserve Arising on

Revaluation of Non-Current Assets - 2,549

Total Revenues, Expenses and Valuation Adjustments

Recognised Directly in Equity - 2,549

Total Change in Equity Other Than Those Resulting

from Transactions with Owners as Owners 5,757 10,157

The accompanying notes form part of these financial statements

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S T A T E M E N T O FF I N A N C I A L P O S I T I O Nas at 30 June 2002.

Note 2002 2001

$000 $000

Current Assets

Cash Assets 7 17,589 16,190

Receivables 8 3,548 2,822

Inventories 9 47 62

Other 10 641 459

Total Current Assets 21,825 19,533

Non-Current Assets

Property, Plant and Equipment 11 104,180 107,606

Future Income Tax Benefit 1,473 1,435

Other 12 10,972 12,012

Total Non-Current Assets 116,625 121,053

Total Assets 138,450 140,586

Current Liabilities

Payables 13 4,305 4,856

Interest Bearing Liabilities 14 2,900 5,242

Tax Liabilities 15 1,179 247

Other Provisions 16 10,182 10,268

Total Current Liabilities 18,566 20,613

Non-Current Liabilities

Interest Bearing Liabilities 14 27,777 25,298

Deferred Tax Liabilities 15 4,704 4,102

Other Provisions 16 3,255 3,182

Total Non-Current Liabilities 35,736 32,582

Total Liabilities 54,302 53,195

Net Assets 84,148 87,391

Equity

Contributed Equity 17 62,283 62,283

Reserves 18 19,868 19,868

Retained Profits 19 1,997 5,240

Total Equity 84,148 87,391


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S T A T E M E N T O FC A S H F L O W Sfor the financial year ended 30 June 2002.

Note 2002 2001

$000 $000

Inflows/ Inflows/

(Outflows) (Outflows)

Cash Flows from Operating Activities

Receipts from Customers 41,253 40,603

Payments to Suppliers and Employees (26,370) (23,879)

Interest Received 628 826

Interest Paid (2,255) (2,290)

Income Tax Equivalent Paid (1,999) (4,174)

Net Cash Provided by Operating Activities 24(b) 11,257 11,086

Cash Flows from Investing Activities

Payments for Property, Plant and Equipment (1,072) (2,267)

Proceeds from Sale of Property, Plant and Equipment 198 253

Newcastle Harbour Deepening Account 16 17

Net Cash Used in Investing Activities (858) (1,997)

Cash Flows from Financing Activities

Dividends Paid (9,000) (9,000)

Net Cash Used in Financing Activities (9,000) (9,000)

Net Increase in Cash Held 1,399 89

Cash at the Beginning of the Financial Year 16,190 16,101

Cash at the End of the Financial Year 1(a) 24(a) 17,589 16,190


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N O T E S T O A N D F O R M I N G P A R TO F T H E F I N A N C I A L S T A T E M E N T Sfor the financial year ended 30 June 2002.

Background

Newcastle Port Corporation (NPC) is a Statutory State Owned Corporation under the State Owned Corporations Act 1989

(as amended), responsible for the Port of Newcastle.

1. Statement of Significant Accounting Policies

The following summary explains the significant accounting policies that have been adopted in the preparation of the

accounts.

Basis of Accounting

As required by Section 41B(1) of the Public Finance and Audit Act, 1983, the accompanying Financial Statements form a

General Purpose Financial Report and have been prepared in accordance with applicable Australian Accounting Standards,

other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and Urgent Issues Group (UIG)

Consensus Views to exhibit a true and fair view of the financial position and transactions of NPC.The Financial Statements

also incorporate financial reporting requirements specified in the Public Finance and Audit Regulation 2000 and relevant

Treasurer's Directions.

Proper accounts and records for all of NPC's operations have been kept as required under Section 41(1) of the Public

Finance and Audit Act, 1983.

Cost is based on the fair value of the consideration given in exchange for assets. The fair value of cash consideration with

deferred settlement terms is determined by discounting any amounts payable in the future to their present value as at the

date of acquisition. Present values are calculated using rates applicable to similar borrowing arrangements of the

Corporation.

The form of presentation of the Financial Statements has been on the basis of full accrual accounting using historical cost

accounting conventions, except for certain items which, as noted, are at valuation. The accounting policies adopted are

consistent with those of the previous year except where noted.

Statement of Significant Accounting Policies

(a) Cash in the Statement of Cash Flows

For the purposes of the Statement of Cash Flows, cash includes cash on hand and in banks (net of any outstanding

bank overdraft) and highly liquid investments with short periods to maturity with insignificant risk of changes in value.

Cash at the end of the financial year, as shown in the Statement of Cash Flows, is reconciled to the item "Cash" in

the Statement of Financial Position at note 24(a).

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1. Statement of Significant Accounting Policies (continued)

(b) Valuation of Property, Plant and Equipment

The property, plant and equipment of NPC was initially valued at the date of incorporation on 1 July 1995. The

"Deprival" value concept was the basis of valuation used to introduce the assets at "fair value". The value of the

property, plant and equipment was recognised as "Net Assets Acquired on Corporatisation" together with the

remaining net assets introduced upon corporatisation. The Corporation's accounting policy will require it to undertake

a revaluation of property, plant and equipment at least every five years.

In accordance with Australian Accounting Standard AAS10, "Recoverable Amount of Non-Current Assets",

a recoverable amount test was performed as at 30 June 2002 to ensure that the asset's carrying values did not

exceed recoverable amounts. As at the abovementioned date the asset's carrying value did not exceed expected

recoverable amounts. Expected net cash flows included in determining recoverable amounts of non-current assets are

discounted to the present values using an appropriate, risk adjusted discount rate. The potential capital gains tax

effect has not been included in the revalued carrying amount of the assets as such a liability is not expected to

crystalise.

(c) Capitalisation of Property, Plant and Equipment

All capital expenditure on land, reclamations, buildings, workshops, roadways, wharves, jetties and breakwaters, and

plant of $300 or more are capitalised. Only those assets completed and ready for service are taken to Property, Plant

and Equipment accounts. The remaining capital expenditures are carried forward as construction in progress but

included in Property, Plant and Equipment in the Statement of Financial Position. Additions are initially brought to

account at cost.

(d) Depreciation of Property, Plant and Equipment

Depreciation has been calculated on depreciable assets, using rates estimated to write off the assets over their

remaining economic lives for the Corporation on a straight line basis in accordance with Australian Accounting

Standard AAS4, “Depreciation.” Land and reclamation assets have been treated as non-depreciable. Straight line

depreciation rates used for each class of fixed assets are in the following ranges:

Buildings 2-7%

Roads 6-9%

Wharves and jetties 3-8%

Breakwaters 1%

Plant 5-50%

(e) Inventories

Inventories have been recorded at cost price on acquisition and charged on issue at the weighted cost of each stock

line. A perpetual inventory system is adopted and is supported by annual stocktakes. The extent of stock deterioration

and obsolescence is also being reviewed regularly. Stock write-downs as a result of stocktakes and obsolescence are

charged directly to operating expense.

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(f) Bad and Doubtful Debts

Bad Debts are written off against the Provision for Doubtful Debts after thorough investigation and exhaustion of

recovery processes. A review was carried out during the year to determine the adequacy of the level of the Provision

for Doubtful Debts.

(g) Employee Entitlements

Benefits for long service leave, annual leave and superannuation have been provided on the basis of emerged

entitlements for recognised service for long service leave (five years and over) and quantum due at balance date for

annual leave. During the year ended 30 June 2002, NPC continued to provide fully for all employee entitlements in

accordance with Australian Accounting Standard AAS30, "Accounting for Employee Entitlements." Long service leave

is measured on a nominal basis. It is considered that this measurement technique produces results not materially

different from the estimate determined by using the present value basis of measurement.

The average sick leave taken by employees, based on past experience, is less than the entitlement accruing each

period. It is considered improbable that existing accumulated entitlements will be used and therefore no liability has

been recognised.

(h) Assets

The assets of NPC are unencumbered.

(i) Leases

Operating lease payments are charged as an expense in the period in which they are incurred, as this represents

the pattern of benefits derived from the leased assets.

(j) Rounding Amounts to Nearest $000

In the financial statements, all amounts are rounded to the nearest thousand dollars.

(k) Taxation Equivalent Regime

The Tax Equivalent regime requires NPC to make tax equivalent payments to the NSW Government's Consolidated

Fund and involves income tax and capital gains tax.

Tax effect accounting principles have been adopted whereby income tax expense has been calculated on pre tax

accounting profit after adjustments for permanent diffferences. The tax effect of timing differences, which occur when

items are included or allowed for income tax purposes in a period different to that for accounting, is shown at current

taxation rates in provision for deferred income tax and future income tax benefit, as applicable.

(l) Discount on Borrowings

The difference between the debt’s long-term face value and the non-current value shown in the Statement of

Financial Position is taken up as a Discount on Borrowings. The discount will be amortised over the life of

the loans.

(m) Investments

Deposits are shown at cost. Hourglass funds are at valuation. Interest is taken to income as earned.

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(n) Receivables and Payables

Trade accounts receivable are generally settled within 15 days and are carried at amounts due. Trade accounts

payable including accruals not yet billed, are recognised when the Corporation becomes obliged to make future

payments as a result of purchase of assets or services. Trade accounts payable are generally settled within

30 days.

(o) Net Fair Values of Financial Assets and Liabilities

Net fair values of financial instruments are determined on the following basis:

Monetary financial assets and liabilities which are not traded in an organised financial market –

cost basis carrying amounts of trade debtors, trade account payable and accruals;

Fixed rate loans, floating rate loans – current risk adjusted market rates;

Investments in term deposits and commercial bills – current market rates.

(p) Revenue Recognition

Revenue is recognised for the major business activities as follows:

Charges on vessels – revenue is recognised at the completion of the vessel movement;

Berth charges – revenue is recognised when the vessel departs the berth;

Rental income – revenue is recognised on a monthly basis in accordance with lease agreements;

Interest income – revenue is recognised as earned on a daily basis and not at maturity of the underlying

investment.

(q) Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:

1) where the amount of GST incurred is not recoverable from the Taxation Office it is recognised as part of

the cost of the acquisition of an asset or as part of an item of expense;

2) for receivables and payables which are recognised inclusive of GST. GST payable to and recoverable from

the Taxation Office is recognised as a payable and receivable respectively in the Statement of Financial

Position.

(r) Segment Reporting

The Corporation operates predominately in one business segment, that being Port Management, and within one

geographical segment, being Newcastle, NSW, Australia.

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2002 2001

$000 $000

2. Port Management

Charges on Vessels 28,369 27,010

Berth Services 7,419 7,729

35,788 34,739

3. Other Income

Non Port Related Lease / Rental 1,823 1,713

Other 418 301

2,241 2,014

4. Directors’ Emoluments

Directors’ Emoluments 164 131

Remuneration paid to Directors is in accordance with

rates determined by the Premier’s Office. The Directors

received no loans nor any other benefits.

5. Significant Item – Superannuation

Decrease in the amount of overfunded superannuation due to:

- Increase in fund liability 225

- Negative returns on superannuation funds invested. Funds

are under the control of the SAS Trustee Corporation (STC). 1,427 1,652 -

Contributions and decrease in the amount of overfunded

superannuation due to an increase in member liability base

following a review of actuarial assumptions by the

Government Actuary - 3,574

Accumulation fund contributions 261 216

1,913 3,790

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2002 2001

$000 $000

6. Income Tax Equivalent

Income Tax Expense

The difference between income tax expense provided in the

financial statements and the prima facie income tax expense

is reconciled as follows:

Profit from Ordinary Activities before Tax Equivalents 9,251 6,672

Prima facie tax thereon at 30% (34% in prior year) 2,775 2,268

Add tax effect of permanent and other differences:

Non-deductible expenses 269 122

Non-deductible depreciation 138 152

Writeback of tax effect of overfunded superannuation 312 (3,490)

Amount underprovided in prior year - 26

Restatement of deferred tax balances due to changes in the tax rate - (14)

Total income tax expense attributable to operating profit 3,494 (936)

Total income tax expense comprises movements in:

Provision for income tax 2,931 2,947

Provision for deferred income tax 602 (4,157)

Future income tax benefit (39) 274

3,494 (936)

7. Cash Assets At Cost At Cost

Cash assets at 30 June 2002 consist of:

Cash on Hand 3 3

Cash at Bank 294 95

T Corp Hourglass Facility trust 16,937 15,750

Fixed Term Deposit 355 342

17,589 16,190

Investments at both 30 June 2002 and 30 June 2001 are very short term, hence market value approximates cost.

(a) Net Fair Value

The Corporation considers the carrying amount of investments approximates their net fair values.

(b) Significant Terms and Conditions

There are no significant terms and conditions relating to investments.

(c) Credit Risk

The Corporation considers it does not have any significant risk exposure for investments. The maximum credit risk is

considered to be the net fair value.

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2002 2002

$000 $000

8. Receivables

Current

Trade Debtors 2,169 1,681

Accrued Income 357 240

Other Debtors 1,022 934

3,548 2,855

Less: Provision For Doubtful Debts - (33)

3,548 2,822

(a) Provision for Doubtful Debts

Opening Balance 33 32

Less: Bad debts written off (33) 1

Closing Balance - 33

(b) Net Fair Value

The Corporation considers the carrying amount of debtors approximate their net fair value.

(c) Significant Terms and Conditions

Trade debtors are required to be settled within 7 days.

(d) Credit Risk

The Corporation does not have any significant exposure to any individual customers or counterparty. The maximum

credit risk is considered to be the net fair value.

Major concentrations of credit risk that arose from the Corporation’s receivables in relation to the industry

categories and location of the customers by the percentage of the total receivables from customers are:

%

Mining industry 73

Manufacturing industry 13

Agricultural industry 14

%

Asia 84

Australia 4

Other 12

2002 2001

$000 $000

9. Inventories

Consumable Store Items 47 62

Reviews of all store items have been carried out during the year ended

30 June 2002 to determine stock obsolescence and stock on hand adjustments.

Stores are valued at the lower of cost and net realisable value.

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2002 2001

$000 $000

10. Other Current Assets

Prepayments 641 459

11. Property, Plant and Equipment

Property, Plant and Equipment (at cost or valuation) 116,208 115,660

Accumulated depreciation (12,856) (9,106)

Construction in progress 828 1,052

104,180 107,606

Land and Buildings

At cost 827 821

At valuation 32,699 32,049

33,526 32,870

Accumulated depreciation at cost 57 33

Accumulated depreciation at valuation 1,019 697

1,076 730

Written Down Value 32,450 32,140

Roads

At cost 2,655 2,643


4,819 4,808


Accumulated depreciation at valuation 399 278

826 573


Wharves and Jetties

At cost 344 271


45,594 45,521


Accumulated depreciation at valuation 5,695 3,799

5,723 3,820


Breakwaters

At cost - -


13,377 13,377

Accumulated depreciation at cost - -

Accumulated depreciation at valuation 167 34

167 34


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2002 2001

$000 $000

11. Property, Plant and Equipment (continued)

Plant

At cost 1,747 1,366


18,892 19,084


Accumulated depreciation at valuation 4,801 3,896

5,064 3,949


Total Property Plant and Equipment in Operation 103,352 106,554

Construction in Progress

Land and Buildings 525 775

Wharves & Jetties 227 134

Plant 76 143

Total 828 1,052

Disposals

Proceeds from Sale 197 253

Written Down Value (335) (300)

Net Amount included in the Statement of Financial Performance (138) (47)

Reconciliation of the carrying amounts of each class of property plant and equipment at the beginning and end of the

current year are set out below:

30 June 2002 Land and Wharves & Construction in

Buildings Roads Jetties Breakwaters Plant Progress Total

Carrying amount at start of year 32,140 4,235 41,701 13,343 15,135 1,052 107,606

additions - - - - - 1,072 1,072

disposals - - - - (335) (40) (375)

transfer to asset register 656 12 72 - 516 (1,256) -

depreciation expense (346) (254) (1,902) (133) (1,488) - (4,123)

Carrying amount at end of year 32,450 3,993 39,871 13,210 13,828 828 104,180

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11. Total Property Plant and Equipment in Operation (continued)

Land and Buildings, Roads and Wharves and Jetties were revalued as at 30 June 1999. A revaluation of material

Breakwaters, Navigation Aids and Plant was brought to account as at 1 April 2001. Assets deemed immaterial and not

subject to revaluation are recognised at cost. Assets acquired during the year were not subject to revaluation and are

shown at cost.

The "Deprival Value" concept was the basis of valuation and guidance during the valuation process was obtained using

current valuation methodology.

While the relationship between deprival value and fair value is being examined by the Australian Accounting Standards Board,

the Corporation is permitted, in accordance with the AAS38 (10.7) transitional provision, to apply the revaluation basis used

for the immediately preceding reporting period. This transitional provision is available for any reporting period beginning on

or before 30 June 2002.

2002 2001

$000 $000

12. Other Non-Current Assets

Overfunded Superannuation (a) 10,972 12,012

Movement in Overfunded Superannuation Balance on Charge to Balance

30-Jun-01 Revenue Payments 30-Jun-02

$000 $000 $000 $000

Superannuation 12,012 (1,652) 612 10,972

(a) Overfunded Superannuation

Future Retirement Benefits under the State Superannuation Scheme, the State Authorities Superannuation Scheme

and State Authorities Non-Contributory Superannuation Scheme have been provided as under:

2002 2001

Liability Funding Net Asset Net Asset

$000 $000 $000 $000

State Superannuation Scheme (8,973) 18,033 9,060 10,222

State Authorities Superannuation Scheme (4,090) 5,489 1,399 1,267

State Authorities Non-Contributory

Superannuation Scheme. (1,003) 1,516 513 523

(14,066) 25,038 10,972 12,012

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12. Other Non-Current Assets (continued)

Mercer Ltd has completed an assessment of the Gross Superannuation liabilities for the defined benefits schemes

administered by the SAS Trustee Corporation for the financial year ending 30 June 2002. These schemes include the

funds listed above.

The 2002 assessment is based on the full requirements of AAS25. This requires that a "market determined risk

adjusted discount rate" be applied as the valuation interest rate in the calculation of the value of accrued benefits. A

review of the interest rate assumptions used in the 2001 valuation has confirmed that the interest rate of 7% per

annum should remain unchanged for the 2002 liability calculations. The assumptions that were applied for the 2001

calculations have been replaced by the rates in the following table

2002/03 2003/04 2004/05

% % %

Rate of investment return 7.0 7.0 7.0

Rate of general salary increase 6.5 4.0 4.0

Rate of increase in CPI 2.5 2.5 2.5

2002 2001

$000 $000

13. Payables

Payables comprise:

Trade Creditors 1,623 2,213

Accrued Financial Expenses 614 537

Port Cargo Access Charge (a) 415 359

Accrued Salaries and Wages 548 326

Harbour Deepening Account (b) 359 343

Other Creditors and Accruals 746 1,078

4,305 4,856

(a) Relates to the port cargo access charge collected, on behalf of the Consolidated Fund from Port users, but not yet

remitted. A management fee is retained by NPC.

(b) Under an agreement with Newcastle Shippers of coal to overseas destinations and importers of ores, the former

MSB was provided from 1 May 1976 to 31 May 1982 with funds by means of a special levy of $1 per tonne on

such goods to finance the cost of deepening the Port’s channel to 15.3 metres. Work on this project was completed

in 1984 / 85 at a total cost of $104.242 million of which $86.242 million was funded by contributions from the

levy.

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13. Payables (continued)

Upon completion of the project, it was decided by mutual agreement between the Coal Representatives and the

MSB that the balance of funds available in the Levy Account as at 1 July 1985 and any future income earned on

those funds would be applied to a Newcastle Harbour Study Fund to investigate the possibility of large ship

movements within the Port.

Movements in the Levy Account are as shown below:

2002 2001

$000 $000

Opening Balance 343 325

Add – Interest on funds invested 16 20

Less – Expenditure on channel development - (2)

Closing Balance 359 343

(c) Net Fair Values

The Corporation considers the carrying amounts of trade and

other accounts payable approximate their net fair values.

(d) Significant terms and conditions

Trade accounts payable are generally settled in 30 days.

14. Interest Bearing Liabilities

NSW Treasury Corp Borrowings 30,677 30,540

Classification of liability

Current - Face value 2,900 5,242

Non-Current - Face value 28,072

- Discount on purchase (295)

27,777 25,298

30,677 30,540

(a) Net Fair Value

The Corporation considers the market value of the borrowings

approximate their fair net value. 31,670 32,247

(b) Significant Terms and Conditions

Borrowings consist of NSW Treasury Corporation floating and fixed rate loans. NSW Treasury Corporation

loans are based upon instalment payments of interest only and repayment or rollover of principal at

maturity. All borrowings are secured by Government Guarantee.

Total loans are repayable as follows :

Within 1 year 7,078 8,197

Later than 1 year and not later than 5 years 12,562 14,018

Later than 5 years 11,037 8,325

30,677 30,540

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2002 2001

Note $000 $000

15. Tax Provisions

Current Non-Current Current Non-Current

Income Tax Equivalent (a) 1,179 - 247 -

Deferred Income Tax - 4,704 - 4,102

1,179 4,704 247 4,102

Movement in Tax Provisions Balance on Charge to Less Balance


$000 $000 $000 $000

Income Tax Equivalent 247 2,931 (1,999) 1,179

Deferred Income Tax 4,102 602 - 4,704

4,349 3,533 (1,999) 5,883

(a) Income Tax Equivalent

Provision for Income Tax is calculated by adjusting Income Tax Expense for timing differences using a tax rate

of 30%. (Also refer note 6.)

16. Other Provisions

Current Non-Current Current Non-Current

Dividend (a) 9,000 - 9,000 -

Annual Leave (b) 1,182 - 1,268 -

Long Service Leave (c) - 2,094 1,984

Dredging (d) - 1,161 - 1,198

10,182 3,255 10,268 3,182

Movement in Other Provisions Balance on Charge to Less Balance


$000 $000 $000 $000

Dividend 9,000 9,000 (9,000) 9,000

Annual Leave 1,268 723 (809) 1,182

Long Service Leave 1,984 295 (185) 2,094

Dredging 1,198 - (37) 1,161

13,450 10,018 (10,031) 13,437

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16. Other Provisions (continued)

(a) Dividend

A dividend of $9million was negotiated between the Corporation’s Board of Directors and the Voting Shareholders.

(b) Annual Leave

NPC’s liability for annual leave, calculated at 30 June 2002 wage rates and entitlement of personnel, has been

assessed as $1.2million and is fully provided.

(c) Long Service Leave

NPC’s liability for long service leave, calculated at 30 June 2002 wage rates and entitlement of personnel, has been

assessed as $2.1million and is fully provided. This figure excludes allowance for personnel still subject to completion

of service conditions.

(d) Dredging

The Port of Newcastle lies at the mouth of the Hunter River and as such is vulnerable to large amounts of silt

deposits during times of heavy rains. The Provision for Dredging is required due to the Corporation’s obligation

under the Port Safety Operating Licence to ensure safe channel depths in the Port. The provision is calculated

by costing the removal of the likely amount of silt to be deposited in an average flood period. Mr B Druery BE Dip

Sc(Geol) M AppSc MIEAust of Patterson Britton & Partners Consulting Engineers was consulted to carry out

this study.

(e) Net Fair Value

The Corporation considers the carrying amount of provisions approximate their net fair value.

2001 2000

$000 $000

17. Contributed Equity

Ordinary Share Capital (a) 62,283 62,283

(a) Share Capital

The State Owned Corporations Act 1989 (as amended) requires the Corporation to have two voting shareholders;

the Treasurer, Mr M Egan, and one other Minister, being the Special Minister of State, Mr J J Della Bosca. Each

shareholder must at all times have an equal share in the equity of the Corporation. As at 30 June 2002 each

shareholder held a $1 share.

There has been no movement in Contributed Equity during the year.

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2002 2001

$000 $000

18. Reserves

Asset Revaluation Reserve 19,868 19,868

19,868 19,868

Asset Revaluation Reserve

Balance at the Beginning of the Financial Year 19,868 17,319

add Revaluation (refer note 11) - 2,549

Balance at the End of the Financial Year 19,868 19,868

19. Retained Profits

Balance at the Beginning of the Financial Year 5,240 6,632

add Net Profit 5,757 7,608

less Dividend provided for or paid (9,000) (9,000)

Balance at the End of the Financial Year 1,997 5,240

20. Contingent Liabilities

A contingent liability existed as at 30 June 2002. It relates to an insurance claim and the maximum exposure

to the Corporation is $25,000.

(2001 – $15,000 )

21. Commitments

Capital Expenditure

Forward obligations of NPC under major contracts committed as at 30 June 2002 but not otherwise brought

to account have been assessed as follows (GST inclusive):

Not later than one year 586 430

Operating Leases

Minimum future lease payments payable for non-cancellable operating leases are as follows:

Not later than one year 40 -

Later than one and not later than five years 78 -

118 -

22. Events Occurring After Reporting Date

There are no known events occurring after balance date that materially affect the financial statements.

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23. Leases 2002

$000

Land and Buildings Wharves and Jetties Plant

Gross book value of leased assets 15,936 15,649 1,450

Accumulated depreciation on leased assets 503 1,982 1,199

Depreciation expense on leased assets for the year 158 605 106

2001

$000

Land and Buildings Wharves and Jetties Plant

Gross book value of leased assets 15,553 15,576 1,450

Accumulated depreciation on leased assets 409 1,322 1,083

Depreciation expense on leased assets for the year 204 659 85

2002 2001

$000 $000

Lease commitments receivable as at 30 June 2002 31,851 34,408

(inclusive of GST)

Minimum future lease payments receivable from

non-cancellable operating leases are as follows:

Not later than one year 3,760 3,902

Later than one and not later than five years 12,183 12,942

Later than five years 15,908 17,564

Lease income consists of a combination of base and throughput rents.

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2002 2001

$000 $000

24. Notes to the Statement of Cash Flows

(a) Reconciliation of Cash

Cash on Hand 3 3

Cash at Bank 294 95

Current Investments 17,292 16,092

17,589 16,190

(b) Reconciliation of Profit from Ordinary Activities after Income

Tax Equivalents to Net Cash Flows from Operating Activities

Profit from Ordinary Activities after Income Tax Equivalent 5,757 7,608

Depreciation 4,123 4,135

Harbour deepening research - 2

Write-off opening Construction in Progress 40 -

(Profit) / loss on sale of non-current assets 138 47

10,058 11,792

Changes in Assets and Liabilities

(Increase) / Decrease in Receivables (631) 329

(Increase) / Decrease in Recoverables (96) (93)

(Increase) / Decrease in Inventories 15 26

(Increase) / Decrease in Superannuation Overfunding 1,040 2,831

(Increase) / Decrease in Other Current Assets (182) 402

(Decrease) / Increase in Creditors (429) 1,741

(Decrease) / Increase in Provisions 1,482 (5,942)

Net Cash from Operating Activities 11,257 11,086

(c) Financing Facilities

The Corporation has approved access to NSW

Treasury Corporation’s “come and go” facility.

Amount used - -

Amount unused 20,000 20,000

20,000 20,000

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25. Additional Financial Instrument Disclosures

(a) Interest Rate Risk

The Corporation’s exposure to interest rate risk and the effective interest rates on financial instruments on balance

date are:

Weighted

average

effective Floating Fixed interest rate Non-

interest interest less than 1 to 5 Over 5 interest

rate rate 1 year years years bearing Total

$000 $000 $000 $000 $000 $000

30 June 2002

Assets

Cash 4.02% 294 - - - 3 297

Trade receivables - - - - 2,169 2,169

Investments 4.63% 17,292 - - - - 17,292

Interest rate swaps (1,000) - 1,000 - - -

Total financial assets 16,586 - 1,000 - 2,172 19,758

Liabilities

Trade payables - - - - 1,623 1,623

Borrowings 7.13% - 7,078 12,562 11,037 - 30,677

Interest rate swaps (1,000) - 1,000 - - -

Total financial liabilities (1,000) 7,078 13,562 11,037 1,623 32,300

Net financial assets / (liabilities) 17,586 (7,078) (12,562) (11,037) 549 (12,542)

30 June 2001

Assets

Cash 4.50% 95 - - - 3 98

Trade receivables - - - - 1,681 1,681

Investments 5.99% 16,092 - - - - 16,092

Total financial assets 16,187 - - - 1,684 17,871

Liabilities

Trade payables - - - - 2,213 2,213

Borrowings 7.38% - 8,197 14,018 8,325 - 30,540

Total financial liabilities - 8,197 14,018 8,325 2,213 32,753

Net financial assets / (liabilities) 16,187 (8,197) (14,018) (8,325) (529) (14,882)

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25. Additional Financial Instrument Disclosures (continued)

(b) Credit risk

All financial assets are unsecured.

The carrying amount of financial assets included in the Statement of Financial Position represents the Corporation’s

maximum exposure to credit risk in relation to these assets. Where the Corporation has a right of set-off and intends

to settle on a net basis, this set-off has been reflected in the financial statements in accordance with accounting

standards.

(c) Derivative Financial Instruments

The nature of Newcastle Port Corporation's business gives rise to gaps in maturity of its cashflows and to exposures

arising from possible changes in the repricing of financial positions upon their maturity. The Corporation has identified

the risks that arise from such gaps and exposures and has established policies to prudentially monitor and limit those

risks. In managing such risks, the Corporation may be involved in derivative financial instruments. A derivative financial

instrument is a contract or agreement whose value is derived from the value of the underlying instrument, reference

rate or index. Derivative financial instruments are used to alter and modify the natural risks inherent in the Statement

of Financial Position. The Corporation uses futures contracts and interest rate swaps to hedge financial exposures

arising from its borrowing portfolio thereby limiting the risk that changes in interest rates will adversely affect profit.

Gains or losses on derivative transactions are brought to account when realised

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25. Additional Financial Instrument Disclosures (continued)

Net Exposure

The market value of the Corporation’s derivative financial instruments outstanding at year end are as follows:

i) Interest Rate Swap Contract

Assest and liability swaps in place at 30 June 2002 have fixed interest rates ranging from between 5.5% and 6.3%

and variable rates that range between 4.4% and 4.6%. As at 30 June 2002 the notional principal amounts and

periods of expiry of the interest rate swap asset and libilities are as follows:

2002 2001

$000 $000

2-3 years 600 -

4-5 years 400 -

2-3 years* (600) -

4-5 years* (400) -

* The negative amounts represent asset interest rate swap contracts.

ii) Interest Rate Futures

Derivative Financial Instruments Receivable

Interest Futures 513 494

The futures position at the end of the financial year is as follows:

Total

Delivery Contracts Value

Month Sold $000

3 year bond futures Sept 2002 (14) 1,400

10 year bond futures Sept 2002 2 200

END OF AUDITED FINANCIAL STATEMENTS

Newcastle Port Corporation

Newcomen Street PO Box 663 Newcastle NSW 2300 Australia

Phone: (02) 4985 8222 International Phone: 61 2 4985 8222 Toll Free: 1800 048 205 (NSW)

Telex: AA 28761 Facsimile: (02) 4926 4596 International Fax: 61 2 4926 4596

Internet: http://www.newportcorp.com Email: [email protected]

Business hours: 5 days per week, 9.00 am – 5.00 pm

Service hours: 7 days per week, 24 hours per day Peac

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NEWCASTLE PORT CORPORATION · 2019-02-12 · ANNUAL REPORT 2001 ~ 2002 page 4 The Port of Newcastle was Australia's first commercial export port, sending a shipload of coal to Bengal