SYDNEY PORTS CORPORATION 2009 10

2009 10SYDNEY PORTS CORPORATION

ANNUAL REPORT

13 October 2010

Dear Mr Hatzistergos and Mr Lynch,

This Annual Report covers Sydney Ports Corporation’s operations and statement of accounts for the year ended 30 June 2010, in accordance with the provisions of the Annual Report (Statutory Bodies) Act 1984 and the applicable provisions of the Public Finance and Audit Act 1983 and the State Owned Corporations Act 1989, and is submitted for presentation to Parliament.

Yours faithfully,

Mr Bryan T. Smith Mr Grant Gilfillan Chairman Chief Executive Officer

The Hon. John Hatzistergos, BEc LLM MLC Governor Macquarie Tower Level 33, 1 Farrer Place SYDNEY NSW 2001

The Hon. Paul Lynch, MP, BA(Hons) LL.B Governor Macquarie Tower Level 34, 1 Farrer Place SYDNEY NSW 2001

TABLE OF CONTENTSOverview 2

HigHligHts 4

summary review Of OperatiOns 6

trade HigHligHts 8

CHairman’s repOrt 10

CHief exeCutive OffiCer’s repOrt 14

BOard Of direCtOrs 20

exeCutive team 23

visiOn, rOles and values 25

Key rOles, OBjeCtives and results 26

pOrt BOtany expansiOn 30

pOrt BOtany landside imprOvement strategy (pBlis) 36

BulK liquids BertH 2 39

enfield intermOdal lOgistiCs Centre (ilC) 40

Cruise 42

future uses – gleBe island, wHite Bay and BarangarOO 44

COOKs river 46

trade and transpOrt lOgistiCs 48

nsw rOad and rail linKs 52

metrOpOlitan rOad and rail linKs 53

marine serviCes 54

sydney pilOt serviCe 58

safety and envirOnment 60

sustainaBility and Heritage 62

seCurity 65

finanCial repOrts 66

sydney pOrts COrpOratiOn 66

sydney pilOt serviCe pty ltd 119

statutOry disClOsures 148

index 164

glOssary iBC

Sydney PortS CorPoration annual rePort 2009/10 1

OVERVIEW

Sydney PortS iS a leader in world-claSS, efficient and SuStainable PortS and logiSticS networkS.

2 Sydney PortS CorPoration annual rePort 2009/10

We manage the commercial ports of sydney – located in sydney harbour and botany bay – and invest in neW infrastructure to ensure these vital economic assets continue to meet the trade needs of nsW.

combined, our ports handle more than $50 billion Worth of trade each year, contribute about $2.5 billion to the nsW economy, and generate employment for more than 17,000 people.

our role is to facilitate trade by keeping the ports safe for shipping, kind to the environment, secure for everyone and ready for the future.


> ninth conSecutive record year in total container trade for Sydney PortS

> third container terminal oPerator at Port botany, hutchinSon Port holdingS, announced

> auStralia’S firSt Performance management Scheme for PortS beginS imPlementation at Port botany through the Port botany landSide imProvement Strategy (PbliS)

> Sydney PortS’ oPerationS centre at Port botany oPenS

> Planning and conStruction early work for the enfield intermodal logiSticS centre undertaken

> final deSign for a Second bulk liquidS berth at Port botany comPleted

> three global cruiSe induStry awardS for Sydney, including ‘beSt cruiSe Port’ in the world

> domeStic cruiSe market grew by more than 11 Per cent

HIGHLIGHTS

total Container trade (teus)

1.928

m8.

1%


total trade (maSS tonneS)

28.2

m

total full Container

imPortS (teus)

951,0

00total full Container

eXPortS (teus)

443,

000

STEA

DY

teus moVed By rail

317,0

003.

8%

8.6%

1.5%


SUMMARY REVIEW OF OPERATIONS

our commitmentsydney’s ports have been crucial to the economic development of australia since they became the country’s first major trade gateways more than 200 years ago. today, they are an economic powerhouse, handling more than $50 billion of international and domestic trade annually. each year sydney’s ports:

Contribute more than $2.5 billion to the nsw economy

support more than 17,000 jobs

Handle nearly one-third of australia’s total containerised trade

support increasing amounts of trade

On average, contribute $1 million in revenue to port-related businesses for each ship visiting sydney


the ports of sydney are our gateWay to the World. sydney harbour and port botany each year make a significant contribution to the health of our economy in Ways that sustain our modern lifestyles.Overseeing their operation is sydney ports – a world-class business which brings a sharp commercial focus, customer responsiveness, and planning expertise to the international shipping and transport networks of new south wales.

sydney ports provides leadership in guiding and delivering all aspects of port-related logistics, infrastructure and business operations.

we build, manage and develop port facilities and services to cater for existing and future trade; provide competitive advantage to importers, exporters and the port-related supply chain; manage the navigational, security and safety needs of commercial shipping; and strive for profitable business growth.

Our professional team of about 300 people work in a diverse range of specialities to ensure our ports are efficient, profitable and sustainable. we achieve this by fostering strong relationships with our employees and customers, all levels of government, and the community.

as a good corporate citizen we will continue to seek new efficiencies for industry, protect the environment and respect our community – proving that sustainability, social responsibility and financial success are interdependent.

the main roles of sydney ports corporation are to:

manage, develop and operate port facilities and services to cater for existing and future trade needs

facilitate and co-ordinate improvements in the efficiency of the port-related supply chain

manage the navigational, pilotage, security and operational safety needs of commercial shipping

protect the environment and have regard to the interests of our community

deliver profitable business growth


TRADE HIGHLIGHTS

total trade in

maSS tonneS

2004/05 to 2009/10

2000

/01

2001

/02

2002

/03

2003

/04 20

09/1

0

2008

/09

2007

/08

2006

/07

2005

/06

2004

/05

total Container trade 2000/01 to 2009/10 (teus)

total 1,498

July 2009: 126

august 2009: 137

september 2009: 127

october 2009: 128

november 2009: 122

december 2009: 127

January 2010: 129

february 2010: 116

march 2010: 122

april 2010: 117

may 2010: 117

June 2010: 130

chargeable vessel visits to port botany 2009/10

990,485

1,009,296

1,161,316

1,270,153

1,376,239

1,445,318

1,620,114

1,778,370

1,784,017

1,927,507


In a challengIng economIc envIronment, Sydney PortS StIll delIvered a SolId fInancIal Performance. total revenue IncreaSed by 5 Per cent to $220 mIllIon and net ProfIt after tax IncreaSed by 4 Per cent to $59 mIllIon.

total 442

July 2009: 37

august 2009: 32

september 2009: 33

october 2009: 36

november 2009: 41

december 2009: 48

January 2010: 31

february 2010: 39

march 2010: 48

april 2010: 35

may 2010: 32

June 2010: 30

2004/05

total Bulk liquidS,

gaS and oil trade in maSS tonneS

2004/05 to 2009/10

2005/062006/072007/08

2008/092009/10

chargeable vessel visits to sydney harbour 2009/10

12,386,65212,720,24712,516,76413,383,64211,882,01412,104,665


CHAIRMAN’S REPORT

the PaSt fInancIal year haS been one of contInuIng change for Sydney PortS corPoratIon – on our board, among our management team, and In the role Sydney PortS PlayS In SecurIng a robuSt economIc future for new South waleS.

Bryan t. Smith

CHAIRMAN’S REPORT


i Would firSt like to thank Paul BinSted our Chairman oVer the PaSt four yearS. i WaS honoured to take oVer the ChairmanShiP in marCh 2010, folloWing Paul’S term and We WiSh him Well for the future.

trevor robertson also left the Board this year after four years of service. the Board thanks trevor for his guidance as a director and we also wish him well.

with each farewell there is a welcome, and sydney ports is happy to gain the expertise of two new directors – john Brogden and talal yassine. Both men bring significant public and private sector experience to sydney ports.

these changes mean we have a refreshed Board, with directors with wide and varied professional backgrounds to help steer sydney ports on its new course into the future.

finanCial Summaryduring 2009/10 there was a significant recovery from the global financial Crisis (gfC) and associated downturn in world trade. for the nine months commencing October 2009, sydney ports’ monthly container trade throughput was at record levels – relative to prior comparative months – and reached over 1.928 million teus for the year, an increase of 8 per cent on 2008/09.

australia has fared much better than other developed nations, largely as a result of our strong trading relationship with asia, and particularly China, where economic performance was relatively impressive. sydney ports’ leading import regions for containers are east asia (46 per cent), south east asia (15 per cent) and europe (15 per cent).

total trade for the financial year was 28.2 million mass tonnes, an increase of 1.5 per cent compared to last year.

within such a challenging economic environment, it is extremely pleasing to report that we were still able to deliver a solid financial performance. total revenue increased by 5 per cent to $220 million and net profit after tax increased by 4 per cent to $59 million. a strong trade performance was the main driver of this result.

dividends to the nsw government continue to be suspended during the period of sydney ports’ major capital investment program, which includes the port Botany expansion, and until relevant financial ratios return to levels that are acceptable to the Board. accordingly, nil dividends were paid during 2009/10 – pertaining to the year ended 30 june 2009 – and nil dividends were provided for the year ended 30 june 2010.

total assets increased 25 per cent to $1.8 billion. with a continued focus on the provision of new infrastructure, sydney ports invested $280 million in new capital projects, and we plan to spend another $565 million over the next five years.


inVeStment in PortS infraStruCturePorts are our economic gateway to the world and the role they play in our State’s prosperity cannot be overestimated. So continued port growth is vital to building a strong future for NSW.

As the world economy continues to recover and trade conditions improve, Sydney Ports will seek to accommodate future growth by developing major infrastructure projects, such as the expansion of Port Botany, the Enfield Intermodal Logistics Centre (ILC), and a second bulk liquids berth at Port Botany.

Port Botany Expansion is our premier project. Sydney Ports, together with the operator of the new third container terminal, is investing more than

$1 billion to improve and upgrade infrastructure at the State’s major container port in order to meet the growing service demands of the NSW economy.

Developing a third container terminal at Port Botany underpins more than 500 construction jobs. When complete, the expansion will establish Port Botany’s position as one of the most important container ports in Australia. Due to be operating in 2012, it is expected the new terminal will deliver 9,000 jobs and boost the State’s economy by $16 billion over the next 20 years.

In December 2009, the NSW Government announced Hutchison Port Holdings as the operator of the new third container terminal. Hutchison is one of the world’s largest port operators. It controls 308 berths

in 51 ports around the world, with interests in 25 countries throughout Asia, the Middle East, Africa, Europe, the Americas and Australia.

Sydney Ports’ second major strategic initiative is establishing an Intermodal Logistics Centre (ILC) at the disused rail marshalling yards at Enfield. Sydney Ports is investing approximately $200 million in the project, which is designed to improve the port-related transport chain.

The NSW State Government has a target to move 40 per cent of freight by rail. Investing in the Enfield ILC will allow containers to be transferred more efficiently by train to and from Port Botany and support the Government to meet its rail freight target.

chairman’s report (continued)


Our third major port investment is a second bulk liquids berth at Port Botany. Sydney Ports recognises the significance of the bulk liquids trade and the existing bulk liquids berth to our customers operating bulk liquid storage terminals on port land. We also appreciate how important bulk liquids such as LPG and refined fuel are to the NSW economy.

We want to ensure NSW has adequate berth capacity to satisfy future demands for the trade of these bulk liquids. The existing facility is the only one of its kind in NSW and a second berth at Port Botany will help to secure the State’s energy supply.

During the year, the Corporation vacated Darling Harbour 8 and relocated to an interim terminal at Barangaroo 5, whilst the planning and development of the new cruise passenger terminal at White Bay 5 is completed by 2012.

The Corporation is working with industry, community and government stakeholders regarding the development of this new cruise passenger terminal at White Bay 5. This development will ensure Sydney Harbour continues to be the cruise capital of Australia.

Port Botany landSide imProVement StrategyThe Board has spent a lot of time developing the Port Botany Landside Improvement Strategy (PBLIS) to ensure world’s best practice movement of containers through Port Botany.

We feel comfortable that the strategy we have set with PBLIS is the right one for Sydney Ports, and the best way for NSW to improve efficiency from its port assets, such as the terminals, and their rail and road linkages.

It is important that road and rail services at Port Botany match shipping and port operators’ timelines, as is the case elsewhere in Australia and the world.

We are playing the lead role in instituting major reforms that are designed to reduce congestion at Port Botany, with industry feedback overwhelmingly positive. It is in everyone’s interest that Sydney Ports continues its drive to achieve an efficient, transparent and world-class landside operation at the port.

inVeStmentS in SafetyTo complement our major infrastructure investments Sydney Ports also needs to ensure safe navigation of shipping through our ports.

In February 2010, we signed a contract to deliver a state-of-the-art vessel surveillance system for both Port Botany and Port Jackson (Sydney Harbour).

The new $12 million Vessel Traffic Services (VTS), will be based at Port Botany and be operational by May 2011. This is a critical project for Sydney Ports because it will improve safety for the more than 5,000 vessel movements a year through our ports.

This year we also completed our new Sydney Ports Operations Centre at Port Botany, which will provide more efficient shipping services and facilities for our port customers. The $14 million centre will concentrate control of all commercial shipping for both Sydney ports, including navigation, pilotage, communications and other functions needed to manage shipping safely.

A critical component of our business is the safe passage of commercial ships and a safe working environment for all our customers using our facilities at Port Botany and Sydney Harbour. We have 24-hour operations with respect to safety and marine services for our commercial shipping customers and the provision of these services is world-class.

The safety of our staff is paramount in a business that operates across marine services through to the construction of major infrastructure. I am pleased that safety is a priority within our business.

As the industry develops, our landside programs through PBLIS will also further build an enhanced safe working environment for all port users.

All of these service enhancements could not be achieved without the professionalism of Sydney Ports’ dedicated staff, led by our CEO, Grant Gilfillan and our executive management team.

CorPorate goVernanCeThe Board of Sydney Ports has the responsibility of setting sound policy and ensuring the highest standards of corporate governance within our operations, which we conduct with a commercial focus. In addition, Sydney Ports must also meet other objectives relating to safe navigation, regional development and environmental responsibility.

Sound corporate governance creates and sustains an ethical and legal environment that recognises the interests of all our stakeholders. The Board of Sydney Ports has created, and will continue to develop, a strong corporate governance culture at Sydney Ports.

the year aheadWith our major initiatives and new responsibilities, we have plenty to do.

This past year has been a challenging but rewarding time for Sydney Ports, with progress on major infrastructure and logistics projects, and an increase in trade being the highlights.

As the traditional roles of port owners and operators evolve, Sydney Ports will continue to refine our leading role in areas such as transport logistics, landside efficiency and regional development.

As and when the world emerges from the economic downturn it is our intention to ensure Sydney Ports is positioned to meet any future financial, environmental or social challenge, and to secure continued trade growth for the benefit of everyone in NSW.


a focuS on delIvery In a tIme of contInuIng change

grant gilfillan

CHIEF EXECUTIVE OFFICER’S REPORT

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3540

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reVenue – 2009/10 ($ million)

oPerating eXPenditure – 2009/10 ($ million)


Sydney PortS iS inVolVed in half a dozen one-in-30 year ProjeCtS. ProjeCtS like the third Container terminal, a SeCond Bulk liquidS Berth, the enfield intermodal logiStiCS Centre, Port Botany landSide imProVement Strategy and our neW oPerationS Centre at Port Botany.

it is ambitious to attempt such a program in the timeframe we have set ourselves – 3 to 5 years – but our projects are well advanced. these are all projects you can plan because with infrastructure it is clear what you need to do. with other projects, the way forward is not always so definite.

sydney ports has met many milestones on some big projects and there are others close to completion. as a number near fruition, we have, as a business, needed to prioritise the funding requirements of the major projects. this will have some impact in the future, with some project timelines being altered to ensure sydney ports has financial flexibility to manage its commitments.

the expansion of port Botany is a $1 billion investment in the future of nsw. this major infrastructure project is well underway – on time and on budget; Hutchison port Holdings was appointed as the operator of the new third container terminal; and the technically-challenging second bulk liquids berth at port Botany will soon be put to tender.

sydney ports has endured the global financial Crisis while maintaining the infrastructure and service development schedule across our business.

gloBal finanCial CriSiSwhen we came into this current financial year, we were in the middle of the global financial Crisis (gfC) and it was difficult to frame a budget. projecting trade volumes in such an environment proved to be challenging, and the business took a conservative long term view.

fortunately, the gfC finished with an upward trade trend for sydney ports and from October 2009, we saw a dramatic upturn of trade in and out of australia. Container trade experienced a growth rate of 8.1 per cent for 2009/10.

finanCial PerformanCesydney ports generated revenue of $220.2 million, with a net profit after tax of $59.1 million for 2009/10. the government has continued to suspend dividend payments during sydney ports’ Capital investment program. total debt is at $603.0 million, well within the approved borrowing limit of $900.0 million. sydney ports’ stand alone credit rating was independently assessed by moody’s investors service in may 2010 and maintained its “investment grade”.

in our financial performance on the port Botany landside improvement strategy (pBlis), we had projected additional income, but this did not eventuate because the pBlis implementation was delayed when we were unable to secure a voluntary solution with the stevedores. at the same time, some pBlis expenditure was also delayed. Overall, pBlis revenue is only intended to recover its direct costs.

a year ago, we SaId we were goIng to become an organISatIon focuSSed on delIvery. thIS year, we became that organISatIon.


chief eXecutive officer’s report (continued)

another reCord yearstrong import demand and a resilient export sector have once again pushed port Botany’s container trade numbers to unprecedented levels. we have now seen nine years of consecutive annual growth records for the port.

Container trade through port Botany increased 8 per cent in the 2009/10 financial year to reach 1.928 million teus (containers measured as twenty-foot equivalent units) – a great result. this is equivalent to about $50 billion worth of trade. Of special note is that asia accounted for 62 per cent of all container trade into and out of port Botany.

full container imports reached 951,000 teus, up 8.6 per cent from 2008/09. demand for products from east asia (46 per cent), south-east asia (15 per cent) and europe (15 per cent) was especially high. full container exports also reached a new record of 442,600 teus.

Higher exports of cereals, cotton, non-ferrous metals and paper products were the primary drivers of the growth. Countries such as China, new Zealand, japan and the united states continue to be the main consumers of our local products.

Cereal exports (including wheat and barley) from the north west and Central west regions of nsw were up 19.1 per cent on last financial year. demand for cotton also soared, with exports increasing by almost 140 per cent.

these results reveal that trade growth is being shared across nsw. this is one of the reasons sydney ports is investing in new infrastructure such as the port Botany expansion – to be well-placed to maximise the port’s efficiency and be prepared for long-term future growth.

strong import demand and a resilient eXport sector have once again pushed port botany’s container trade numbers to unprecedented levels

eXPort CommoditieS (in teus) 2009/10

fy 2009/10

Chemicals 47,506Cereals 42,374Machinery & Transport Equipment

39,488

Paper & Paper Products 35,904Miscellaneous Manufactured Articles

31,757

Non-ferrous Metals 28,928Waste Paper 24,906Iron & Steel 19,995Timber 18,242Meat 13,425Other 140,042tOtal 442,567

imPort CommoditieS (in teus) 2009/10

fy 2009/10

Machinery & Transport Equipment

206,357

Miscellaneous Manufactured Articles

196,433

Chemicals 122,805Paper & Paper Products 77,946Textile Fabrics & Yarns 56,339Non-metallic Minerals 43,787Food Preparations 40,611Iron & Steel 26,393Beverages & Tobacco 21,082Timber 14,992Other 144,282tOtal 951,027


monthly Container trade 2004/05 to 2009/10 (teus)

jul aug SeP oCt noV deC jan feB mar aPr may jun total

Exports 2009/10 71,397 75,435 74,179 81,548 92,567 89,201 78,855 72,933 79,223 73,250 76,602 86,102 951,292

Imports 2009/10 77,602 80,178 79,928 95,373 88,952 87,160 80,830 73,846 69,884 80,343 75,882 86,237 976,215

Total 2009/10 148,999 155,613 154,107 176,921 181,519 176,361 159,685 146,779 149,107 153,593 152,484 172,339 1,927,507

Total 2008/09 159,698 165,266 165,333 167,102 168,411 159,315 144,261 117,557 135,083 138,605 141,317 122,069 1,784,017

Total 2007/08 134,239 152,412 146,579 157,924 155,402 159,968 148,189 139,238 144,007 143,209 147,599 149,604 1,778,370

Total 2006/07 122,688 135,284 141,588 143,164 144,617 147,920 135,659 132,075 128,539 125,980 135,640 126,960 1,620,114

Total 2005/06 113,602 124,030 129,212 133,288 130,453 120,575 118,758 102,591 112,110 114,898 122,275 123,526 1,445,318

Total 2004/05 110,694 118,371 120,741 122,849 122,972 122,320 113,163 106,560 107,348 111,589 113,807 105,825 1,376,239

groWing the PerformanCe of our PeoPleOur progress goes back to the start of the financial year and our move to new premises in Walsh Bay. This embodies what the year was like – a focus on delivery in a time of continuing change.

In my early days at Sydney Ports, there was much talk about transforming the organisation into one that delivers significant projects, and building on our professional services that support the commercial shipping industry. We have now crossed over from talking to doing, and we continue to make progress on everything we do. Some of this work is groundbreaking.

PBliS: eStaBliShing Sydney PortS aS a leader in landSide logiStiCSPerhaps our most significant leadership project this past year has been the Port Botany Landside Improvement Strategy (PBLIS) – a bold scheme to reduce port congestion, improve efficiency and ease landside freight delays at Port Botany’s stevedoring terminals.

There is a stark difference from where we are now to where we were last year with PBLIS, which will bring economic benefits to Sydney and NSW.

Today, we are seen as the leader of a vital reform process by the transport industry that operates at Port Botany and by most of our tenants at the port. We are comfortable in our leadership role and we get constant positive feedback from industry.

Our agenda through PBLIS is to produce a set of standards for performance that is balanced. The industry knows we understand the issues, and that we will take a fair position. This is a massive leap forward for Sydney Ports.

Sydney Ports is determined that PBLIS will produce new efficiency in a supply chain that is facing growing demand.

today, We are Seen aS the leader of a Vital reform ProCeSS By the tranSPort induStry that oPerateS at Port Botany and By moSt of our tenantS at the Port.


CruiSingAs part of the announcement about the future of Barangaroo, the State Government decided to relocate the cruise passenger terminal from East Darling Harbour and establish a new purpose-built terminal at White Bay 5. This will provide certainty for the cruise ship industry and help protect Sydney’s status as a world-class tourism destination.

The location of the cruise passenger terminal followed the Bays Precinct Community Reference Group and industry consultation through the Cruise Passenger Terminal Steering Committee. Planning for the new terminal started in December 2009, with construction expected to start in early 2011.

The decision to build a terminal of a much better quality than originally planned poses a challenge for Sydney Ports because it means we are taking on a more valuable asset than we had anticipated. As a corporation, we must generate a certain return on our assets to ensure we have a sustainable cruise business segment within Sydney Ports.

The challenge for Sydney Ports is how to balance the interest between our business and supporting a growing cruise industry within the iconic Sydney Harbour. It has been difficult. The process has tested our ability to influence other parties and to work with government in a way that we meet our core financial objectives, and at the same time support a positive outcome for the industry, for the government and for NSW.

It is another one of those issues where we have to be a financially oriented company, yet consider the broader interests of the community and the New South Wales Government. We have achieved this very well.

inVeStment in neW Pilot CutterSSydney Ports has commenced a pilot vessel replacement program to purchase two new pilot vessels based on a proven working design. The average age of the current fleet is 27 years.

The purchase of new, purpose-built pilot cutters will ensure the continued safety and operational comfort of both marine pilots and cutter crews. The two cutters are expected to be complete and commissioned during 2011/12.

a Safe PaSSage for all CommerCial ShiPSSydney Ports continues to deliver a professional service to our shipping lines – this is a critical part of our core business. In the last year, we had over 5,000 vessel movements in and out of Sydney. Our marine services cover pilotage, emergency services and engineering services for safe passage through our two harbours – Port Jackson and Port Botany.

In addition, we help our maritime colleagues in Sydney’s two harbours and around Australia to manage oil spills when they occur, by sending professional marine officers to the site of any accident.

Container trade By region 2009/10imPort eXPort total Change

full Change emPty full Change emPty

East Asia 440,577 14.6% 3,313 121,448 –1.5% 230,458 795,796 8.1%South East Asia 139,835 6.7% 530 73,254 –4.5% 120,818 334,437 15.1%Oceania 75,378 –3.3% 2,815 157,847 2.1% 141,975 378,015 5.5%Europe 141,799 –2.0% 1,061 12,834 –0.2% 1,973 157,667 –2.5%North America 102,634 16.1% 85 17,142 –6.4% 12,356 132,217 12.9%South Asia 14,455 18.8% 0 23,687 23.6% 334 38,476 21.8%Middle East 11,952 10.3% 687 10,092 –7.3% 75 22,806 2.1%Pacific Ocean Islands 2,100 –6.0% 8,489 18,095 –3.5% 369 29,053 12.5%Africa 10,259 –21.7% 8,004 5,199 7.3% 3 23,465 –6.0%South America 6,804 –2.1% 203 1,731 –6.3% 233 8,971 0.5%Central America 5,234 16.3% 1 1,226 5.4% 131 6,592 1.3%Other Countries 0 –100.0% 0 12 –25.0% 0 12 –50.0%TOTAL 951,027 8.6% 25,188 442,567 0.0% 508,725 1,927,507 8.0%

chief eXecutive officer’s report (continued)


more Change, neW horizonSSydney Ports is only part way through what is a massive transition.

Managing a State Owned Corporation and a diverse business can sometimes create tensions between policy and commercial directions. The management team at Sydney Ports are pushing boundaries, and at times across the year, this meant we had to take stock of where we were and slow things down when there was pressure on us to speed things up.

This experience has helped guide us through the major infrastructure projects, and it has established Sydney Ports as an industry leader in PBLIS reform – the first of its kind in the world, and a model for how to remove inefficiency from the whole port logistics chain.

Part of developing a high performing culture at Sydney Ports is learning to be adaptable, being able to do things quickly, and becoming comfortable working in such a way.

leaderShiP at Sydney PortS We started an initiative at the beginning of 2010 called Managerial Leadership Training (MLT). This is not traditional training about getting technically better or improving systems of work. The focus is on understanding yourself, understanding others, and learning how to work better with people.

About 50 Sydney Ports people have completed the training so far. Most say it has been life changing for them and the positive effects have started to filter through our organisation.

MLT cuts straight to one of our corporate goals – fostering a high-performing culture. Sydney Ports has always been an organisation with great depth and substance – in our people and in what we do. But to become a standout organisation we each needed to have more emphasis on understanding our role and how we contribute to Sydney Ports’ overall performance.

MLT builds new ways to conduct our business, ensures all our groups are able to work together easily, and eliminates duplicated effort through open communication. The training shows how it is leadership, not management, which increases employee engagement and breeds sustainable high performance.

There are two things that make an organisation great – its head and its heart. We have focussed on the head at Sydney Ports for some time, but the heart needed to be brought to life.

We have started that process and we will continue to use our heads and our hearts to keep a balance as we work to make Sydney Ports a remarkable business.


BOARD OF DIRECTORS

Bryan t. Smith, rfd, maiCdChairman

Chairman, Port Botany Landside Improvement Strategy Committee

Bryan t. smith was appointed as a director of sydney ports Corporation in march 2009 and was then appointed as the Chairman in march 2010. mr smith was also Chairman of sydney pilot service pty ltd, a subsidiary of sydney ports Corporation, from 16 december 2009 until 15 june 2010.

as a master mariner, mr smith spent his early years at sea and in operational management roles within the shipping industry. for over 18 years, he worked in senior management positions in the australian stevedoring industry, before moving to asia with p&O ports in 1999. until august 2008, mr smith resided in the philippines, where he served as regional director, east asia for p&O ports, and then as vice president and managing director, south east asia for dp world.

mr smith has extensive experience as a director and Chairman of the board for numerous ports, terminal and stevedoring companies and is a member of the australian institute of Company directors. He was previously a director of the p&O senior executive Board in london and Chairman of asia terminals inc, and is currently the senior independent director for global ports investments limited.


miChael Braham, B.Com, fCa (nz)direCtor

Chairman, Audit and Risk Committee Member, Remuneration, HR and Governance Committee

Mr Braham was appointed a Director of Sydney Ports Corporation in February 2006 and was Presiding Director from December 2009 to March 2010.

He is currently Chairman of the D&D Technology Group, Home Appliances Pty Ltd, and Silk Road Capital Group Ltd and was formerly Chairman of the listed Galileo Shopping America Trust and a Non-Executive Director of Neptune Orient Lines Australia and several other companies.

He was Regional Commissioner for New South Wales for the Australian Securities Commission (1990-95) and an Executive Director with investment bank Schroders Australia (1978-90). Previously, he was a World Bank consultant in Sri Lanka and for many years a chartered accountant in public practice as a New Zealand partner of Arthur Young (now Ernst & Young). He has been President of Glaucoma Australia since 1998.

grant gilfillandireCtor

Grant Gilfillan joined Sydney Ports Corporation as its Chief Executive Officer in January 2008 and was appointed as a Director in April 2009.

Prior to joining Sydney Ports, Mr Gilfillan worked in Africa, the Middle East and Europe (Romania) as a Senior Vice President, Managing Director and General Manager for DP World. Prior to this, he had served as Director of Operations for P&O Ports, Australia and New Zealand and as Managing Director of CSX World Terminals in Australia.

Mr Gilfillan also sits on the Executive Committee of the International Association of Ports and Harbors (IAPH) as its Vice President for the Asia/Oceania region.

In an earlier life, Mr Gilfillan was a mining engineer and mine manager in the NSW Hunter Valley and the North-West of Western Australia.

rene Van der looS, gaiCddireCtor

Chairman, Remuneration, HR and Governance Committee Member, Audit and Risk Committee

Miss van der Loos is a member of the Australian Institute of Company Directors and has held senior executive positions in the transport and banking sectors with Qantas, Commonwealth Bank, St George Bank and NRMA Motoring & Services.

As well as experience with these major Australian businesses, Miss van der Loos has extensive experience in project management, strategic marketing and organisational structures.

She is also currently a Director and convenor of the Remuneration and Nomination Committee for the Gateway Credit Union.


john Brogden, mPa, maiCddireCtor

Member, Remuneration, HR and Governance Committee Member, Audit and Risk Committee

John Brogden was appointed as a Director of Sydney Ports Corporation in March 2010.

Mr Brogden is the CEO of the Financial Services Council and has previously served as CEO of Manchester Unity and Independent Chairman of Abacus Australian Mutuals. Mr Brogden is also a Director of Lifeline Australia, Patron of Lifeline NSW and has previously been a Director of the Australian Health Insurance Association and Australian Friendly Societies Association.

Mr Brogden was the Member for Pittwater in the NSW Parliament from 1996 to 2005 and Leader of the Opposition from 2002 to 2005.

He is a Member of the Australian Institute of Company Directors and holds a Master of Public Affairs from the University of Sydney.

talal yaSSine oamdireCtor

Member, Audit and Risk Committee Member, Port Botany Landside Improvement Strategy Committee

Talal Yassine was appointed as a Director of Sydney Ports Corporation in March 2010.

Mr Yassine has held a number of Executive and Non-Executive roles during his career. He is currently Chief Commercial Officer of Better Place (Australia) as well as Chairman of Platinum Hearing Pty Limited and Deputy Chairman of NSW Casino Control Authority & NSW Casino Liquor & Gaming Authority.

Previously, Mr Yassine has held the positions of Director at Babcock & Brown Limited, Director/Lawyer at PricewaterhouseCoopers and a Solicitor in the Corporate Practice at Dunhill Madden Butler.

On Australia Day 2010, Mr Yassine was awarded a Medal of the Order of Australia (OAM) for his service to business and to the community through a range of education, health and multicultural organisations.

miChael SulliVan, aaiCdStaff direCtor

Mr Sullivan was elected to the position of Staff Director by the staff of the Corporation in July 2002 and subsequently re-elected in 2005 and 2008. He joined the Maritime Services Board in 1977 and has held a variety of positions within head office until transferring to marine operations in 1991 as a port officer. Mr Sullivan’s extensive operational and head office experience provides a sound basis for his contribution as Staff Director to the Board.

board of directors (continued)


eXeCutiVe general manager, marine SerViCeS & harBour maSter

CaPtain SteVen young

marine operations

Safety, Security & environment

Pilot Service

Vessel traffic Services

Survey Services

eXeCutiVe general manager, Planning & infraStruCture

annette WoodS

Projects & development

Property & asset management

Planning

eXeCutiVe general manager, induStry relationS & logiStiCS

laChlan BenSon

Port Botany landside improvement Strategy (PBliS)

logistics & trade

Corporate affairs

eXeCutiVe general manager, human reSourCeS

riChard Venn (aCting)

learning & development

recruitment

Performance management

Compensation & Benefits

employee/industrial relations

Chief eXeCutiVe offiCer grant gilfillan

Sydney PortS CorPoration Board

Chief finanCial offiCer

arthur gillen

finance

information technology

Business analysis

Company Secretary & administration

Corporate Planning & Performance reporting

grant gilfillanChief eXeCutiVe offiCerSee page 21 for biography

arthur gillen, BCom, mec, fCPa, fCiS, ffin, faiCdChief finanCial offiCer

Arthur has over 25 years’ experience at senior executive level in both the private sector (including ASX and AIM listed companies) and the public sector as CFO, Executive Director, and Executive General Manager.

His experience spans mining and construction, telecommunications and utilities, and the ICT sector, where he has worked internationally across a range of corporations and joint ventures ranging from start-ups through to large multinationals. In addition to his extensive skills as CFO, Arthur has considerable experience in strategic planning, business transformation and the design and implementation of information systems.

Arthur was appointed CFO of Sydney Ports Corporation in April 2008 and heads the Finance & IT Division which encompasses the departments of Finance, Corporate Planning, Information Technology, Business Analysis, Internal Audit, Company Secretariat and Administration. Arthur is also the Chief Risk Officer for the Corporation.

SteVen youngeXeCutiVe general manager, marine SerViCeS and harBour maSter

Captain Steven Young joined Sydney Ports in August 2009 as Harbour Master & General Manager Navigation Services. He was appointed Executive General Manager, Marine Services and Harbour Master in December 2009. His responsibilities include marine operations, navigation services, Harbour Master, Pilot Service, safety, security, environment and community.

Prior to joining Sydney Ports, Captain Young had over 30 years’ experience in the UK marine and ports industry. He has held a number of senior management operational and commercial roles including; Port Manager at a number of ports and Deputy to the Port Director at Associated British Ports, Port of Southampton, England. He has also been Harbour Master at the Port of Southampton and has extensive experience in navigation safety, vessel traffic services, oil pollution and incident management as well as the leadership of strategic port development projects.

In his earlier career, Captain Young, a Master Mariner, served at sea with the P&O Group on General Cargo, Container, Tanker and Cruise Shipping.

EXECUTIVE TEAM


annette WoodS, Be (CiVil) mieausteXeCutiVe general manager, Planning & infraStruCture

Annette Woods joined Sydney Ports Corporation in September 2008. Her responsibilities include property development and commercial leasing, statutory planning approvals and compliance, long-term port and logistics infrastructure planning, capital works delivery, asset management and maintenance. Annette is Project Director for the Port Botany Expansion Project.

Prior to joining Sydney Ports, Annette was Executive Manager Strategic Projects and General Manager Planning & Development at Newcastle Port Corporation. Projects under her guidance included the redevelopment of the former BHP steelworks site for port use, delivery of the third coal loader, delivery of a port and channel master plan and investigations into channel deepening. Annette has held senior project management, geotechnical engineering and contamination remediation roles with Parsons Brinckerhoff, and has worked with the Northern Territory Government Department of Transport and Works in strategic planning.

Annette is a Chartered Member of Engineers Australia.

laChlan BenSon, CmilteXeCutiVe general manager, induStry relationS & logiStiCS

Lachlan Benson joined Sydney Ports Corporation in November 2008. His responsibilities include leading the Corporate Affairs Team as well as Trade and Logistics where he oversees the Port Botany Landside Improvement Strategy.

Prior to joining Sydney Ports, Mr Benson worked as Manager, Industry Relations for AWB Limited, where he was responsible for the management of supply chain issues for road, rail and ports and managing key government and industry stakeholders. Earlier in his career, Mr Benson developed and implemented process improvements for ports and freight as Senior Policy Officer within the Industry Reforms Division of the NSW Ministry of Transport.

Mr Benson has extensive experience working with government at a Ministerial level and has forged strong relationships within the port, freight and transport industries in Australia.

riChard VennaCting eXeCutiVe general manager, human reSourCeS

Richard Venn joined Sydney Ports Corporation in February 2008. His responsibilities include leadership and organisational development and, industry and employee relations through recruitment, compensation and benefits.

Prior to joining Sydney Ports, Richard spent five years at Eaton Electric Systems Pty Ltd as Senior Human Resources Manager reporting to the MD Aust/SE Asia. In this role Richard played a significant role in turning around the culture within the company through global staff survey results. Mr Venn was on the project team that successfully merged two large company acquisitions and developed a graduate program which saw a 90 per cent employment conversion rate. In Richard’s earlier career he spent seven years with Mattel Pty Ltd as a Human Resources Consultant where he developed a local Occupational Health and Safety program, oversaw the implementation of salary packaging and established HR budgeting processes.

Richard has extensive experience in consulting, compensation, performance management, advisory and senior management Human Resources roles within a number of key industries.

eXecutive team (continued)


VISION, ROLES AND VALUESSydney PortS corPoratIon brIngS a SharP commercIal focuS and cuStomer reSPonSIveneSS to the InternatIonal ShIPPIng and tranSPort networkS of new South waleS.

We ProVide leaderShiP in Planning, inVeSting and deliVering all aSPeCtS of Port-related logiStiCS, infraStruCture and BuSineSS oPerationS.

ViSionsydney ports is a leader in world-class, efficient and sustainable ports and logistics networks. we deliver this vision by:

■■ being a champion of the ports of sydney

■■ providing leadership in planning and executing all aspects of port-related logistics, infrastructure and operating models, in ways that optimise efficiency for industry and enhance social outcomes for citizens

■■ developing objectives and processes which better integrate political, social and technical outcomes

■■ delivering projects to enhance the state of nsw’s net investment in port infrastructure

■■ demonstrating to its stakeholders that it is continuing to meet their short and long term objectives

■■ seeking to increase its market share of contestable trade

■■ delivering operational effectiveness

roleSsydney ports’ main roles are to:

■■ manage, develop and operate port facilities and services to cater for existing and future trade needs

■■ facilitate and co-ordinate improvements in the efficiency of the port-related supply chain

■■ manage the navigational, pilotage, security and operational safety needs of commercial shipping

■■ protect the environment and have regard to the interests of our community

■■ deliver profitable business growth

ValueSsydney ports appreciates the importance of being a good corporate citizen and we value the relationships we share with our customers, government, our employees and the community.

as an employer, we respect individual worth, value the contribution of all our people, and provide them with a safe working environment.

in servicing customers, sydney ports is always reliable, professional and courteous.

as an organisation we are progressive, we encourage alternative solutions to complex issues, and we always strive to exceed expectations.


key PerformanCe indiCatorS1

finanCial indiCatorS2009/10

aCtual ($m)2009/10

Budget ($m)2008/09

aCtual ($m)2

Profit before income tax equivalent expense 85.1 82.2 81.0Income tax equivalent expense 26.0 25.3 24.1Net profit after income tax equivalent expense 59.1 56.9 57.0Income tax equivalent payable 22.9 18.6 27.6Dividend payable Nil Nil NilDebt level 603.0 637.7 350.0

oPerational indiCatorS2009/10aCtual

2009/10Budget

2008/09aCtual

Total trade (million mass tonnes)3 28.2 27.9 27.8Total trade annual growth rate (%) 1.5 0.6 (4.7)Container trade (million TEUs) 1.928 1.709 1.784Container trade annual growth rate (%) 8.1 (4.2) 0.3Number of chargeable vessel visits 1,940 2,063 2,275Chargeable vessel gross tonnage (million gross tonnes) 61.0 61.9 67.7

human reSourCe indiCatorS2009/10aCtual

2009/10Budget

2008/09aCtual

Lost-Time Injury Frequency Rate (number of Lost-Time Injuries per million hours worked)4

5.7 4.0 (max.) 4.5

Staff numbers (Full-Time Equivalent) 299.5 327.8 287.2

1 Numbers quoted in this table may be affected by rounding, but without material impact.

2 2008/09 comparatives in the “Financial Indicators” section of this table have been restated to reflect the reclassification of assets from “Investment Property” to “Property, Plant & Equipment”. This is in accordance with Sydney Ports’ revised accounting policy on classification of “Investment Property”.

3 “Total trade” includes trade via both Sydney Ports Corporation-owned berths and privately-owned berths.

4 The calculation of this measure excludes Sydney Pilot Service Pty Ltd.

KEY ROLES, OBJECTIVES AND RESULTS


oBjeCtiVe 2009/10 target reSultS

finanCialMaximise shareholder value Return on Equity Sydney Ports’ return on Average Equity of 6.6% for

2009/10 met the target set in the organisation’s Statement of Corporate Intent.

Credit Rating In line with the Corporation’s expectation, Sydney Ports maintained a credit rating at “investment grade”. This rating was assessed by an independent credit rating agency in May 2010.

Organise new stevedore leases■■ Have Terminal 3 (T3) lease signed

■■ Have Patrick lease signed■■ Review and update other leases

as expired

An agreement to lease T3 was signed with Hutchison Port Holdings on 18 December 2009. The T3 lease will be signed upon handover in 2012.Lease under negotiationSydney Ports signed a new lease with DP World on 8 July 2009.

Maximise capacity for dividends

Achieve budget EBIT (Earnings Before Interest and Taxes)

Sydney Ports’ EBIT of $99.6M for 2009/10 was 5.5% above the target set in the organisation’s Statement of Corporate Intent.

StakeholderSImprove efficiency of port logistics chain

Implement PBLIS ■■ All initiatives in the NSW

Government response to IPART in place by 30 June 2010

The voluntary agreement and implementation of PBLIS (Phase 1) could not be achieved with all industry stakeholders. Because of this, regulations for PBLIS (Phase 2) were announced by the Minister in April 2010. The regulations are due to be in place by the end of 2010. The full implementation of road Operational Performance Management is planned to be in place by 30 June 2011.

Engage effectively with stakeholders, and understand their needs, to ensure efficient delivery of services, technology and infrastructure

Achieve a customer satisfaction result of 7.4 or better

This measure was included in the 2010 stakeholder survey, which achieved a result of 7.4 out of 10.

Implement the business segment strategy ■■ Deliver the Cruise segment

strategy■■ Deliver the Bulk Liquids

and Gas segment strategy■■ Define the Container and

Dry Bulk segment strategy

The marketing and business development plan is complete.Segment marketing strategy for Cruise complete.Bulk liquids marketing strategy complete.Dry bulk marketing strategy complete.

Improve competitiveness of regional and rural logistics networks

Increase trade volumes, regional and rural

The Sydney Ports-led working group facilitated increased trade volumes of cotton from the North West NSW contestable area. The group supported the correction of rail window access into the port, which will reverse export volumes from Brisbane to Sydney.

Have first train to Sydney from Southern and Riverina regions by June 30, 2010

Sydney Ports is working closely with rail operators on Riverina and Southern NSW train services to Port Botany, in preparation for the delayed opening of the Australian Rail Track Corporation’s Southern Sydney Freight Line in 2012.

Enable effective decisions by engaging and managing external stakeholders

Achieve a stakeholder satisfaction survey result of 7.4 or better

Stakeholder satisfaction survey rating of 7.4 /10 achieved. The survey was completed by 67 senior management executives from stakeholder and commercial companies.



internal ProCeSSeSMaintain Port Safety Operating Licence

Maintain licence Licence maintained. PSOL annual audit shows no major or minor non-conformances.

Maintain existing infrastructure to meet business needs

Maintenance Plan ■■ Achieve 95% of maintenance

carried out as planned Achieved 96% of maintenance carried out as planned.

Berth facilities availability ■■ Maintain availability of 97%

Berth facilities availability at 100%.

Provide for port infrastructure capacity to meet short term and long term demand

Develop a Port Master Plan that incorporates road, rail and port optimisation over the short and long term■■ Master Plan developed

and internally agreed

Further work is being undertaken to define trade forecasts. This information will be integrated into a 30 Year Vision plan that addresses future infrastructure needs.

Integrate Moorebank as supporting a Port Strategy

■■ Moorebank incorporated in Port IMT Strategy

Sydney Ports has supported the Federal Government’s Moorebank Project Office with the undertaking of a series of feasibility studies to evaluate the development of an intermodal terminal.

Delivery of PBE■■ Construction on plan■■ Procure operator by

31 December 2009

PBE project was on-time, in-scope and within budget. Hutchison Port Holdings was appointed operator of the third terminal in December 2009.

Delivery of Enfield ILC■■ Procurement of tenant and

operator

Evaluation of Tenant/operator proposals completed in March 2010. Negotiations with the Preferred proponent for Intermodal Terminal and Empty Container Storage Areas is ongoing.

Delivery of BLB2■■ Delivery of construction on plan

Detailed design completed in March 2010. Further studies required to resolve technical issues with pile driving. Consequently, the start of construction has been delayed by 8 months.

Provide for long-term environmentally sustainable management of ports

Use of Green Port Guidelines for all developments

Green Port Guidelines checklists were completed for all port developments.

“Green Star” Office or Industrial rating of 4.5 or more for Sydney Ports’ developments

The Operations Centre was designed and constructed in line with the Green Building Council of Australia’s requirements for a 4.5 star building. Sydney Ports is seeking the certification of the new Operations Centre.

Landlord and tenant compliance with development approvals at 95% or higher

> 95%, with only minor non-conformances identified through auditing.

Provide effective business processes and support systems

Delivery of agreed systems, processes and procedures, within agreed timeframe and budget■■ Internal audit – 85% compliance■■ Implementation on time and

budget■■ User satisfaction scores

of 80% or higher

Several ‘transformational’ projects, involving key systems, processes and procedures, were implemented during 2009/10 within agreed timeframes and budgets.

key roles, obJectives and results (continued)



PeoPle and CultureTransform Sydney Ports to a high performance culture

Using Katzenbach’s 10 High Performance measures, ensure 50% of departments achieve an average rating of no less than 3 out of 5

9 out of 17 departments achieved a rating greater than 3.The average overall rating was 3.11 out of 5.

Maintain an average overall End of Year performance rating of 3.4 or more out of 5

The average overall End of Year performance rating was 4 out of 5.

Grow our safety culture LTIFR of less than or equal to 4 11.3 LTIFR. The results for Sydney Ports and Sydney Pilot Service were combined for the first time this year. The higher risk profile of Sydney Pilots resulted in a significant increase in the LTIFR.

At least 4 safety inspections carried out and reported by staff

54 managers participated in the program. Many constructive observations and suggestions for improvements were shared with the manager controlling the observed area.


Our pBe project will establish five new shipping berths along a new 1.85 kilometre wharf; create dedicated road and rail access to the port; and rehabilitate the estuarine environment in Botany Bay.

State Wide eConomiC BenefitSsydney ports expects the third container terminal to create 9,000 new jobs and boost the state’s economy by $16 billion over the next 20 years.

Construction companies and workers across nsw have already reaped the rewards from the infrastructure upgrade at the state’s premier container port. for example, construction on the 63 hectare third terminal began in may 2008. since then, about 400 people have been on site working at port Botany every day.

and there have been several other positive impacts on the nsw economy. many of the materials used at port Botany have come from across the state, including 62,000 tonnes of gravel from peats ridge and emu plains; 34,000 tonnes of sand from the nepean and Kurnell; 24,000 tonnes of cement from various locations around nsw; and 340,000 tonnes of basalt rock from Kiama.

this is why sydney ports, together with the operator of the new third container terminal, is investing more than $1 billion expanding port Botany, one of the state’s most important commercial assets. we are building a better port to better service the growing needs of the nsw economy.

the port Botany expansion (pBe), one of the most extensive and innovative port infrastructure projects ever undertaken in australia, will double the handling capacity at the port.

total container trade through port Botany increased again in 2009/10 – the ninth consecutive record year. in december 2009 alone, an average of 5,600 shipping containers passed through port Botany every day.

Constructing a third container terminal at port Botany will not only increase the state’s import and export capacity, but it will also sustain more than 500 construction jobs.

PORT BOTANY EXPANSIONbuIldIng the future ProSPerIty of nSwports are economic gateWays to the World. they play a role in building prosperity that cannot be overstated. continued port groWth is critical if We Want to ensure a strong future for nsW.


O

P

Q

0 200 400 600 800

Metres

N

port Botany tenantsa aCfsB vopak terminals C qenosd elgase terminals f Origin energyg patrick port servicesH p&O trans australiai dp worldj patrick stevedoresK Caltex australia l svitzer

m australian Customs service

n warehouse solutions international

O pB towagep vacantq aCfs/tyne

1 Berth numbers

port botany port facilities

port botany expansion site


Port ExpansionFootprint1300

m

550m

130m

Boat ramp and jetty

Mill Streamlookout

Access road

Penrhyn Estuaryenhancement works

Foreshore Roadpedestrian bridge

Grade separationover rail lines

Zone substation

BrothersonDock

Patrick Stevedores Terminal

DP World

Bulk liquids berth

port botany expansion

0 200 400 600 800

Metres

N

ConStruCtion ProgreSSall CounterfortS in PlaCethe seven-storey high concrete blocks which form the 1.85 kilometres of new wharf face for the new terminal have all been placed. when used in port construction these types of walls provide a vertical face for ships to berth against. these “counterfort units” are made from high quality, durable reinforced concrete designed for a 100 year life.

this phase of the building program saw one of these counterforts placed in the bay every day – a massive engineering feat given each one weighs 640 tonnes. the outer wall of the new wharf will comprise 199 counterforts, each 20 metres high, with another 17 used for the tug wharves.

the counterforts were built at a casting yard on site by construction contractors Baulderstone, who also built on site a concrete batch plant, to reduce the impact of truck movements on the community and the port. delivering fresh concrete to

the site to produce the counterforts would have required as many as 50 truck trips a day. locating the concrete batch plant on site cut the number of truck trips to fewer than 20 a day.

each counterfort was transported to a temporary wharf, taken by barge to its final location and then lowered onto a compacted sand and gravel bed to form the new wharf wall. the last of the 216 counterforts was cast in april 2010 and placed in august 2010. the counterfort precast yard was dismantled in may 2010.


dredgingDredging continued this past year at the Port Botany site, with the dredger Nu Bounty joined by the De Bougainville through to August 2009, then the Marco Polo from August 2009 to April 2010. Over 11 million cubic metres have been dredged, with 8 million cubic metres used to reclaim the 63 hectare container terminal and the 2 hectare boat ramp facility.

neW terminal oPeratorIn December 2009, the State Government announced Hutchison Port Holdings as the operator of the third container terminal (T3) at Port Botany.

Hutchison – one of the world’s largest port operators – controls 308 berths in 51 ports around the world, with interests in 25 countries throughout Asia, the Middle East, Africa, Europe, the Americas and Australia.

T3 will increase competition in the sector with the two existing stevedores at Port Botany. Our economy needs world-class facilities and international operators to be competitive in global trade. Sharper competition will benefit NSW businesses and residents by reducing cargo handling charges for goods that come through the port.

Base construction work on the terminal will continue until the middle of 2011. The site will then be handed to Hutchison for fit-out and to prepare for the start of its operations in 2012.

enVironmental PerformanCeFor two years running, our Port Botany Expansion has earned the tick of approval from independent audits which examined the project’s environmental and planning impacts.

Both audits show that the work is going beyond simply meeting minimum requirements – it is now achieving positive environmental outcomes. This proves Sydney Ports is not just building a more efficient port, but we are also creating infrastructure that considers the local community.

The environmental work to enhance Penrhyn Estuary was singled out as a major improvement to this important ecosystem in Botany Bay. The most recent audit, conducted in May 2010, also found that the water conservation measures on the project are using about 75 per cent less water than initially predicted.

The auditor, JA Dickson and Associates, applauded the combined efforts of our construction partners, Baulderstone Hornibrook and Jan De Nul, as well as Sydney Ports, for the high level of environmental monitoring and resources that have been dedicated to the site.

These results prove that it is possible to develop port infrastructure that will cater for long-term trade growth in an environmentally responsible way.

The PBE passed its first compulsory annual environmental audit in August 2009, exceeding all compliance requirements and winning an unqualified endorsement for many of its environmental initiatives.

port botany eXpansion (continued)


This initial audit found a high level of compliance with the conditions of approval set by the Minister, as well as with the Department of Environment, Climate Change and Water (DECCW) environmental protection licences, and other permits and approvals. The auditor also confirmed there were no non-compliances and no major areas where environmental performance was sub-standard.

The availability of a large amount of monitoring data, and our regular reports to statutory authorities and the community also contributed to this positive audit.

According to auditor JA Dickson and Associates: “The overall outcome of the audit was very positive with a high level of compliance to all requirements.” The auditor also noted that our environmental performance on the project “goes well beyond compliance with project approvals or legislation.”

Sydney Ports and its partners Baulderstone and Jan De Nul have invested a large amount of resources to ensure the T3 project meets its environmental licence requirements.

This includes employing eight dedicated on-site environmental staff supported by a team of specialists, such as marine scientists, bird experts, soil and landscape advisors, and noise and vibration engineers. Parsons Brinckerhoff, the independent project verifier, also employs an environmental specialist full time on site.

Other environmental initiatives at Port Botany include marine pest inspections and certification for all plant and equipment used on the project; water quality monitoring programs; a turbidity management program; seagrass and salt marsh management and monitoring programs; expansion and protection of Penrhyn Estuary; and extensive landscaping and vegetation management.

Penrhyn eStuary rehaBilitationSydney Ports is investing $8 million to enhance the environment at Port Botany, including our upgrade of Foreshore Beach and Penrhyn Estuary. Both projects were substantially completed in 2010.

Rehabilitating and enhancing Penrhyn Estuary is necessary after years of pressure from mangrove encroachment, contaminated surface and ground water, and increased disturbance from public recreational usage.

This year, Sydney Ports built an estuary lookout and a shorebird habitat for migratory birds, and expanded the saltmarsh and seagrass habitats to attract fish and other marine life. The contractor has already planted about 230,000 saltmarsh seedlings.

Penrhyn Estuary has become the only viable feeding and roosting habitat site for locally significant shorebirds on the northern side of Botany Bay. As part of our habitat enhancement for the estuary, we created 2.4 hectares of additional saltmarsh habitat and planted a mix of saltmarsh species.

Saltmarsh is an important component within the estuary because it plays a critical role in stabilising banks, filtering surface run off, and reducing nutrients. It helps to provide a habitat for shorebirds and other fauna that use the estuary.

As part of our consent conditions for Port Botany, we also developed a comprehensive estuary flushing plan to ensure the estuary remained healthy. We built a flushing channel to ensure adequate flushing of the Pehrhyn Estuary, and we have also started a program which will monitor water quality and the estuary’s flushing characteristics pre- and post-construction.

Working With the loCal CommunitySydney Ports is investing more than $30 million in community facilities associated with the Port Botany Expansion.

One component of this support was a $3 million community enhancement fund to build a new gymnasium at J.J. Cahill Memorial High School in Mascot. This 650 square metre, state-of-the-art gym was opened in May 2010. It can hold 600 students and features seating for 50, two sporting equipment storage rooms, a first-aid room, disabled toilet, showers and change room.

port botany eXpansion (continued)


This year, we completed the Mill Stream Groyne – a stone structure that extends from the shore into the bay to prevent beach erosion. We also finished building the Mill Stream Lookout and car park; a shared pathway along Foreshore Road; and a lookout at Penrhyn Estuary which will allow the public to view shorebirds.

Other community projects we finished this year include a new pedestrian bridge linking Sir Joseph Banks Park with Foreshore Beach; a four-lane boat ramp with two pontoons, and environmental enhancement works at Foreshore Beach, including new native vegetation.

Community ConSultationSydney Ports established the Port Botany Expansion Community Consultative Committee (PBECCC) in August 2006 to work with the local community during the project. The PBECCC continues to meet regularly.

In September 2009, Sydney Ports co-ordinated a public information session on the Banksia Street Overpass. More than 40 residents attended the meeting and viewed photomontages of the proposed pedestrian bridge. A public display for recreational boat users was also held at the Penrhyn Road boat ramp in October 2009 prior to its opening a month later.

looking aheadAs Port Botany continues to set record trade figures, Sydney Ports is getting on with the job of improving its infrastructure and revolutionising the port-related supply chain to cater for increased activity and trade over the next 30 years.

These efforts and investments will create more jobs, help Sydney Ports and its port tenants provide better services, and support continued economic growth.


PORT BOTANY LANDSIDE IMPROVEMENT STRATEGY (PBLIS)IntroducIng faIrneSS and equIty to land tranSPort at Port botany


the Port Botany landSide imProVement Strategy (PBliS) iS auStralia’S firSt PerformanCe management SCheme for Container PortS.

This landmark reform will ease truck congestion and freight delays at NSW’s leading container port, making the entire land supply chain safer, more efficient, and more transparent for road and rail operators. Ultimately, congestion is a financial cost to road and rail transport operators, stevedores and everyone who uses Port Botany. It also impacts consumers and the final price we pay for goods.

Sydney Ports has been working with industry since 2008 to establish a voluntary reform plan to unlock port congestion. In particular, we have been dealing with stevedores to secure their support for PBLIS.

We were unable to reach such a final voluntary agreement with stevedores this past year and as a result, the NSW Minister for Ports and Waterways, Paul McLeay, announced new regulations in April 2010 which will make landside transport arrangements at Port Botany fairer and more equitable. The clear majority of feedback from industry peak bodies about PBLIS has been overwhelmingly positive.

trade groWth and the need to imProVe Port logiStiCSPort Botany is the largest container port in NSW and the centre of Australia’s most significant logistics supply chain. As container trade at the port continues to grow each year, Sydney Ports is investing $1 billion to meet the challenges this growth will present. But infrastructure is only part of the supply chain equation; efficient use of port facilities and surrounding transport links is equally important.

Sydney Ports commissioned an independent economic consulting firm which assessed that the PBLIS reform package will deliver cost benefits over 10 years on net present value (NPV) of $27.9 million.

hoW the PBliS reformS Will Work at Port BotanyUsing a staged approach, Sydney Ports will take a lead role with industry to co-ordinate supply chain improvements and collect performance data. We encourage the industry to embrace the changes needed to reduce land based congestion and improve port efficiency in phase one of PBLIS.

These reforms feature a new operational performance management (OPM) agreement between stevedores and road transport carriers at Port Botany. This will include binding service performance standards for truck companies and stevedores, and penalties that go both ways for the first time for failure to meet agreed benchmarks. Such measures will produce a clear commercial relationship between stevedores and road freight carriers.

For example, stevedores will pay road carriers $25 for every 15-minute delay and $100 if the road carrier’s slot is cancelled within two hours of its appointed time. Road carriers will also continue to pay $50 for late or wrong zone arrivals and $100 for a no-show.

Six to 12 months following the implementation of PBLIS Stage 1, a review will be undertaken to assess its impact across the port supply chain and the need to move to Stage 2. This will include selected government intervention, such as introducing a rail OPM agreement, and as required, regulation of empty container park service levels and operating hours. Stage 2 may also include a demand management system (formerly known as peak period pricing) to encourage a more even spread of truck activity across a 24-hour period.

the role of Sydney PortSSydney Ports will oversee the new OPM and penalty regime.

An improved monitoring system, supported by new truck tracking technology, will generate independent analysis of stevedore and transport carrier service performance at Port Botany and help to ensure that landside operations are more transparent. Under PBLIS regulation, operational data will be required to be provided to Sydney Ports by the stevedores which will be independently validated against the truck tracking system.

In June 2010, the Sydney Ports Board approved the investment in the new technology needed to help monitor the operational performance at Port Botany. We will call for tenders in September 2010, based on a shortlist of technology providers, after conducting an expression of interest process in late 2009.

There will also be a new truck marshalling area at Port Botany, including amenities for drivers, to provide a place for transport carriers waiting to access stevedore terminals. This will help to manage congestion if it occurs. Exploration of potential sites is underway.

As of 1 July 2010, Sydney Ports increased the wharfage charge to $10 per TEU on full import and export containers to fund PBLIS and to keep the program cost neutral. Non-containerised cargo, empty containers, transhipment and coastal cargo are all exempt from this increase.

Building on rail imProVementSThe NSW Government has identified a target of achieving 40 per cent of all container movements to and from Port Botany by rail to help reduce the number of heavy vehicle movements on Sydney’s metropolitan roads.

In 2009/10, the modal share of TEUs carried by rail was 18.8%.


We have already seen improved rail supply chain operations at Port Botany as part of the PBLIS reform package. Rail freight volumes have more than doubled over the past 10 years and our Port Botany Rail Team (PBRT) continues to focus on delivering better rail supply operations as part of its continuing work with PBLIS.

Sydney Ports recognises the improved cooperation by the majority of rail stakeholders at Port Botany over the last 12 months in delivering transparent performance reporting for rail. Sydney Ports and the rail stakeholders will continue to work together to improve rail performance.

road and rail taSkforCeSSydney Ports is a member of two working groups that are seeking to institute the PBLIS supply chain reforms – the Port Road Taskforce and the Port Botany Rail Team (PBRT).

The Port Road Taskforce is a forum to develop and implement transport-related efficiency improvements in the Port Botany precinct. This taskforce includes representatives from Australian Container Freight Services, Australian Trucking Association NSW, the Custom Brokers and Forwarders Council of Australia, DP World, J&J Robertson & Sons, empty container parks, Patrick Terminals and 1-Stop Connections.

The Port Botany Rail Team includes representatives from Australian Rail Track Corporation, DP World, Freightliner, Independent Rail, Patrick Terminals, Patrick PortLink, P&O Trans Australia, Southspur, Railcorp and Transport NSW. The rail team works to enhance rail performance and transport chain visibility, and support a shift to rail in line with NSW Government policy. The PBRT meets monthly.

The PBRT also holds regular workshops throughout the year. The focus of the work is to enhance the performance reporting of rail operators at Port Botany, get a better understanding of the nature of the rail supply chain, and to develop strategies to improve efficiency for rail servicing the port such as rail path and stevedore window alignment.

The PBRT made significant progress this past year in the area of performance reporting. Sydney Ports will continue its work with the PBRT to help improve this reporting.

induStry BriefingSSydney Ports provides briefings to industry throughout the year on the progress of PBLIS. These updates explain issues relevant to the project, and allow industry to feedback to members of the Port Road Task Force and the Port Botany Rail Team on their progress.

In May 2010, Sydney Ports hosted an industry briefing attended by several hundred port stakeholders to announce the regulated road performance standards and to provide an update on PBLIS rail progress.

Working together at Port Botany for long term SuCCeSSSydney Ports believes all users of Port Botany must work together to meet the challenges of a container trade that continues to grow year on year. Stevedores, rail operators and truck carriers cannot operate in isolation of each other in the supply chain that services the major container port in NSW.

PBLIS will allow all parties to get a fair deal and ensure that everyone co-operates in this critical reform process. Sydney Ports will continue to work with everyone in the stevedore, road and rail transport sectors to implement the PBLIS reforms.

port botany landside improvement strategy (pblis) (continued)


demand for Bulk liquidS, eSPeCially refined fuel, ContinueS to groW.

Our existing bulk liquids berth has reached occupancy levels of more than 65 per cent in recent years and a second berth will allow this trade to continue to expand in order to help secure the state’s energy supplies.

the existing common user bulk liquids berth is the only one of its kind in nsw. the new berth, worth about $74 million, will accommodate vessels up to 120,000 dwt and 270 metres in length. it comprises a main working platform, an access bridge, and mooring and berthing structures.

Known as BlB2, its design ensures the two bulk liquids berths are able to operate independently and there will be minimum disruption at the existing berth during construction.

ProgreSS to tender Stagethis year sydney ports completed the preliminary, detailed and final design phases of BlB2. the final design was delivered in march 2010 – a milestone for the project.

along with the marine structures and associated onshore support facilities, sydney ports is also responsible for the services at BlB2, such as power, water, stormwater management systems, security systems and fire fighting infrastructure.

since finalising the design, we have been conducting various technical studies to manage the possible impacts that construction of BlB2 might have on the property and infrastructure of its neighbours.

the tender for construction of BlB2 – a two-phase process – is also underway. the first phase, from november to december 2009, was a call for registrations of interest. after evaluating several responses, in march 2010 sydney ports selected the successful shortlisted companies to proceed to the request for tender stage.

we plan to issue the request for tenders to these parties in the fourth quarter of the 2010 calendar year.

BULK LIQUIDS BERTH 2

ProvIdIng for the future demandS of a growIng economysydney ports is developing a second bulk liQuids berth at port botany to ensure there is adeQuate berth capacity to meet future levels of trade in bulk liQuids such as lpg, refined fuel and chemicals. these resources are vital to the nsW economy.


ENFIELD INTERMODAL LOGISTICS CENTRE (ILC)

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ready to buIld: Sydney’S neweSt freIght termInalsydney ports is developing an intermodal logistics centre (ilc) at enfield to help move more containers by rail to and from port botany.


the ilC Will inClude a neW intermodal terminal, emPty Container Storage, WarehouSeS, and light induStrial and CommerCial areaS. it Will Be Part of a netWork of neW and eXiSting intermodal terminal faCilitieS in Sydney. Sydney PortS’ inVeStment in thiS ProjeCt iS aPProXimately $200 million.

Throughout the year, Sydney Ports reached many construction, community and environmental milestones and preparation work at the 60 hectare Enfield ILC is now complete.

Once we finished remediating the land, we completed the detailed design for the centre’s base infrastructure and received approval for the updated design from the NSW Department of Planning.

We submitted plans for external utility services such as electricity, water and sewerage to Energy Australia and Sydney Water; and presented designs to the Roads and Traffic Authority to improve traffic flow at the major intersection of Norfolk and Roberts Roads.

We also completed demolition of all existing site infrastructure. The south sidings rail lines were decommissioned after the re-routed north sidings rail corridor, which provides access to the wheel lathe facility, commenced operations. This involved constructing 600 metres of rail track using part of the 9km of rails recovered from the site. We finished this relocation without affecting the current tenant, Pacific National.

In 2009/10 we completed $6.6 million worth of physical and design works.The project’s design consultant, Maunsell AECOM, prepared tender documents for the main construction contract. We are now evaluating tenders for construction of the base infrastructure and we expect this work to start in 2010.

We negotiated agreements with many authorities and with our rail stakeholders to ensure the project can be properly integrated into the rail network. We have also started to relocate the site’s rail network power.

Community/ induStry ConSultationSydney Ports operates two community liaison groups for the Enfield ILC. One, the Community Liaison Committee, is community-based and the other, the Road Transport Coordination Group, is a local government and authority-based body. We ensured both groups were always informed about the project this past year, and all issues raised were addressed to the satisfaction of the attendees. Copies of the minutes of the community meetings are published on Sydney Ports’ project website.

We established an 1800 number, and a website to keep people informed. We have received no formal complaints to date.

We also make quarterly visits to both Bankstown and Strathfield Councils; provide quarterly reports to the Department of Environment, Climate Change and Water; and produce quarterly reports for the Department of Planning. We have continued to provide our government stakeholders with updates about progress of the Enfield ILC.

Sydney Ports has professionally managed the site preparation in order to prepare it for physical works for its new life as an intermodal logistics centre, and to identify potential tenants to operate the terminal.


another reCord CruiSe SeaSonCruise is the fastest growing segment of global tourism, with annual growth of more than 7 per cent. The Australian cruise market has experienced remarkable growth over recent years, increasing by more than 35 per cent between 2008 and 2010.

In the last financial year, ship visits remained steady at 119, generating on average about $1 million per visit in economic activity. In total, about 250,000 passengers visited Sydney. According to industry figures, economic contribution of the tourism-related port activity in NSW was estimated to be $192 million in direct expenditure and $374 million in total expenditure (source CDU Economic Impact Study 2008/09, p25).

This cruise season Sydney welcomed four maiden visits into port – Princess Danae, Balmoral, Seabourn Odyssey, and Pacific Jewel.

The highlight of the calendar was the third visit to Sydney by one of the world’s most famous ships, Queen Mary 2. The largest ocean liner in the world – at 151,400 tonnes and 345 metres in length – returned to Sydney in March 2010 carrying 2,500 passengers. The Queen Mary 2 is the biggest ship ever to visit Sydney.

The busy season meant increased activity for Sydney Ports, which provides cruise vessels with 24-hour services such as security, traffic management and gangway supervision to ensure passenger safety. Sydney Ports recognises that cruise shipping is important to the NSW economy and we are committed to working with the industry to promote further growth.

the groWing domeStiC marketCruise shipping to and from Sydney consists of three operating segments with different seasonal calling patterns.

Vessels in the home port segment are based in Sydney and their calling pattern is steady across the year. Vessels in the seasonal segment are also based in Sydney for regional cruises, typically between October and April with more frequent calls in January and February. Seasonality is most pronounced in the round the world cruise segment, where the majority of visits are in the peak summer months.

In the last 12 months, the domestic cruise market has grown by over 11 per cent, which indicates that more Australians see cruising as an alternative to other types of holidays. Cruises are becoming more popular because they offer fixed accommodation costs, with all meals and entertainment included, and travellers unpack only once while visiting multiple destinations.

World-ClaSS faCilitieSSydney is the only city in Australia with two international standard cruise terminals.

The Overseas Passenger Terminal caters primarily to international cruise vessels. It is equipped with three lifts, two escalators and three gangways. Other tenants at the terminal include several restaurants, a licensed hotel and other entertainment venues.

Sydney Ports was once again recognised by the industry as having the world’s ‘Best Turnaround Port Operations’. This award, from Dream World Cruise Destinations Magazine, is given to ports judged as the most reliable and efficient for cruise ship passenger exchanges. It is the third time in five years Sydney has won this award, which surveys the world’s top cruise lines as well as cruise ship captains and passengers.

CRUISE

Sydney IS an IconIc cIty and It haS become a muSt See cruISe deStInatIon for Some of the world’S leadIng luxury lInerS.


Sydney was also awarded ‘Best Venue of the Year’ for the Overseas Passenger Terminal at the BT Publishing e-Awards for excellence in events.

Finally, in December 2009 Sydney beat Venice and Vancouver for the ‘Best Cruise Port’ in the World, as voted by Cruise Passenger Magazine.

CruiSe PaSSenger terminalSIn December 2008, the Minister for Planning announced that the Wharf 8 Passenger Terminal at East Darling Harbour would be permanently removed to accommodate the Barangaroo development.

Continued operation of a passenger terminal at this site was incompatible with the Barangaroo construction program. It would severely interrupt cruise ship operations and the customs and migration exclusion zones would not be suited to an area that would soon become a development site.

In May 2009, the Minister for Planning established a Passenger Cruise Terminal Steering Committee to recommend not only a preferred location for a replacement passenger terminal west of the Harbour Bridge, but also to investigate options for another passenger terminal east of the bridge.

After considering many options, the Committee decided White Bay 5 was the best location for a replacement passenger terminal west of the bridge. Compared to other sites, White Bay 5 offers many benefits, including existing deep water quayside infrastructure; the ability to manoeuvre and berth two cruise vessels end-on-end; and a dedicated traffic management solution using James Craig Road as access to avoid cruise related vehicles needing to use local roads.

As the new terminal will not be operational until 2012, the Passenger Cruise Terminal Steering Committee chose Darling Harbour 5, renamed Barangaroo 5, as an interim location for cruise ships docking west of the bridge. A fully-equipped, interim passenger terminal has now been erected at Barangaroo 5, which will be used as a temporary facility during the White Bay 5 construction. The first vessel to use this terminal, the Pacific Jewel, berthed on the 26 June 2010.

the SeaSon aheadAfter recording strong growth in 2009/10 cruise passengers, ship visits to Sydney will increase from 119 visits in 2009/10 to over 154 vessel visits in 2010/11. This represents over a 30 per cent increase in vessel visits in one season.

More ships are likely to base themselves in Sydney in the 2010/11 summer season with P&O Cruises’ Pacific Pearl to begin cruising from Sydney in December 2010 on a home port basis offering cruises to the South Pacific. This is in addition to the other Carnival ships the Pacific Jewel and the Pacific Sun which are already based in Sydney year round.

Royal Caribbean Cruises also announced that its vision class vessel the Radiance of the Seas will join Rhapsody of the Seas in Sydney from October 2011. This will lead to an expected increase in passenger and crew expenditure for the NSW economy.


FUTURE USESglebe island, White bay and barangaroo

maIntaInIng a vIbrant workIng Portsydney harbour has been a prosperous Working port for more than 220 years. today, it caters for international and domestic cruise ships, crude oil and bulk trades, as Well as emergency response services.

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Sydney harBour PreCinCtS and tenantSa Overseas passenger terminalB Harbour Control C Barangaroo 5 passenger terminald moores wharf – sydney ports Corporation

marine Operationse gypsum resources australiaf sugar australiag Cement australiaH glebe island – sydney ports Corporation

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Sydney PortS BelieVeS it iS imPortant to keeP dry Bulk, CruiSe and other maritime funCtionS aS Part of a Working harBour – not only for the Benefit of the nSW eConomy, But alSo to helP maintain Sydney’S identity aS a maritime City.

dry Bulk tradeThe economic value of the dry bulk trade at Glebe Island/White Bay is vital to Sydney and NSW.

While there has been a decline in throughput at Glebe Island/White Bay, it is the only dry bulk facility in Sydney. It performs the crucial role of supplying the local construction market with cement and gypsum. It also handles salt, sugar and vegetable oil.

Throughout the year we had many enquiries about operating new dry bulk facilities at Glebe Island, and Sydney Ports is keen to explore such possibilities at what has become our last remaining operational port area in Sydney Harbour to be able to cater for such products.

BayS PreCinCtSydney Ports manages 40 hectares of land in the Bays Precinct, including leases over some of Sydney Harbour’s last remaining deep water berths at White Bay and Glebe Island.

Since the departure of container terminal operations from White Bay in 2004 and the exit of the vehicle trade from Glebe Island in 2008, the facilities in this part of the harbour have been used as lay-up berths for ships requiring maintenance or inspection. They are also used as a staging area for construction projects that require waterfront access, or as support to special events, such as barges and equipment for the New Year’s Eve and Australia Day fireworks.

The Bays Precinct consultation process, launched by the NSW Government in June 2009, continues to look at how best to use Glebe Island and White Bay. Sydney Ports is represented on the Bays Precinct Steering Committee and we have firm views about the site’s future.

Sydney Ports continues to support long-term retention of Glebe Island and White Bay for port and maritime uses as part of a working harbour. Such functions are of great value to Sydney.

This is one of the reasons Sydney Ports continues to invest in infrastructure at Glebe Island. This past year we conducted wharf maintenance at Wharf 7 and Wharf 8, and replaced the lifts at the Glebe Island silos. More significant investment is planned for the silos this financial year.

White Bay CruiSe PaSSenger terminalIn December 2009, the NSW Government announced that the permanent future site of the domestic cruise passenger terminal west of the Harbour Bridge would be at White Bay, subject to planning approval.

The Minister’s decision about the cruise passenger terminal followed a report in November 2009 from the Passenger Cruise Terminal Steering Committee, a State Government initiative established in May 2009 to look at where the domestic cruise passenger terminal should be located. Sydney Ports was represented on that committee.

This year, Sydney Ports has been working on the planning application and the environmental assessment for a new permanent domestic cruise passenger terminal facility at White Bay.

We have been moved from our other passenger terminal facility at Darling Harbour 8 into a temporary facility at Darling Harbour 5 – now known as Barangaroo 5 – to allow for construction works at Barangaroo, and until we build a new facility at White Bay.

White Bay refuelling faCilityThe Baileys Marine Fuels Australia refuelling facility for commercial and recreational boats, approved in June 2009, is due to commence construction at White Bay 6 and become operational in early 2011. This $8 million facility will also offer temporary berthing for smaller vessels, repairs and maintenance – services that are not currently available but are important to Sydney’s continued role as a working harbour.

Community liaiSon CommitteeThe Glebe Island/White Bay Community Liaison Group is part of Sydney Ports’ regular commitments, such as our other community activities at Port Botany and Enfield.

Comprised of eight community representatives – two from local councils and others from businesses operating at the port – this group meet regularly throughout the year to exchange information about port activities, environmental impacts, and other issues that affect the community.


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a StrategIc aSSet that now PromISeS greater returnSsydney ports acQuired the cooks river rail yard in october 2005. since that time We have Worked to develop this 17 hectare facility for port-related interests and to improve our commercial return.

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today, CookS riVer – oPerated By maritime Container SerViCeS (mCS) – rePreSentS aBout 20 Per Cent of the emPty Container Storage in Sydney. the Current CaPaCity at CookS riVer iS aBout 11,500 teuS, WhiCh makeS it Sydney’S largeSt Container Park.

The last 12 months has seen an increase in throughput at Cooks River, due in part to the decision by Patrick to close its container park at Camellia.

maritime Container SerViCeS’ deVeloPment PlanMCS plans to transform the Cooks River site into a fully-functional intermodal terminal. As the land owner, Sydney Ports sees potential in the initiative of extending the rail sidings on the site to be able to receive optimal length trains of 600 metres plus locomotives. This would see the site become a premium intermodal rail facility, without losing any empty container storage capacity.

The Port Botany Rail Taskforce, is working with stevedores, rail operators and infrastructure owners to have train lengths standardised to 600 metres for all port-related services.

Sydney Ports will continue to work with MCS, GrainCorp and industry to enhance the Cooks River facility, augment empty container storage and handling, and improve efficiency for the Port Botany supply chain.


TRADE AND TRANSPORT LOGISTICSfrom trade facIlItator to Port-related SuPPly chaIn leadermoving containers through sydney’s ports in Ways that protect and groW What has become a $50 billion a year trade depends on the co-operation of all participants in the port supply chain. sydney ports noW plays a leading role in this vital logistics netWork.


In recent years, Sydney Ports has focused on helping to increase the volume of full container exports from NSW, especially from regional areas. For example, in the 2009/10 financial year, total containers transferred through Port Botany reached a record 1.928 million. The record throughput of 442,567 million full export containers helped mitigate the effects of the global economic slowdown.

Regional exporters have played their part in Port Botany’s success. Some of the main agribusiness exports from NSW out of Port Botany in 2009/10 included wheat (20,198 TEU); meat (13,425 TEU); cotton (10,217 TEU); vegetables and legumes (9,671 TEU); wool (6,119 TEU) and dairy products and eggs (4,641 TEU).

The infrastructure and business process improvements by Sydney Ports are designed to meet the commercial and logistical needs of regional exporters by removing supply chain constraints.

For example, the $1 billion Port Botany container terminal expansion will provide additional capacity for exports and better access to shipping lines for regional exporters. Also, the Port

our aim iS to eStaBliSh – for the Benefit of all Port uSerS, BuSineSSeS and ConSumerS – ComPetitiVe Port oPerationS, a more ProduCtiVe tranSPort Chain, and a SeCure and SuStainaBle future for our PortS.

We have divided the market into four segments – bulk liquids, cruise, dry bulk and containers – and we have separate strategies for each on how we will develop and increase these market segments through Sydney’s ports.

reaChing out to regional eXPorterSSydney Ports has built, managed and developed world-class port facilities and services to provide NSW with a commercially-focused, efficient logistics chain.

Senior representatives from Sydney Ports visited many regions in NSW this past year as part of our ‘paddock to port’ strategy to discuss initiatives aimed at assisting regional exporters. Visiting the regions gives us the opportunity to connect with our customers by briefing local exporters and agribusiness on our port and trade developments.

Botany Landside Improvement Strategy (PBLIS) – which will make the road and rail supply chain more efficient – will improve reliability, reduce delays and therefore cut costs, and deliver significant benefits to regional exporters.

Working more closely with regional communities, exporters and transport networks, we will increase future opportunities to grow regional businesses and support the NSW economy. In particular, we are working with rail operators to improve regional rail services and get more containers onto rail to help meet the NSW Government’s 40 per cent rail target.

We now have a much greater presence in regional NSW and a marketing team which visits the key export regions of the Riverina, central west and north west NSW on a regular basis. We undertake briefing sessions on key export logistics matters at regional conferences and road shows, and in the past year we visited Dubbo, Forbes, Narrandera, Griffith, Wagga Wagga, Narrabri and Moree.

diSCoVering Where ContainerS are PaCked and unPaCked and the routeS that eXPortS and imPortS take Will ProduCe ValuaBle information for Sydney PortS and the nSW goVernment in their StrategiC infraStruCture Planning, PartiCularly in road and rail tranSPort.


origin and deStination StudyThis year, Sydney Ports commissioned a new study to investigate the movement of shipping containers to and from Port Botany – research that will directly benefit everyone involved in using the port.

Discovering where containers are packed and unpacked and the routes that exports and imports take will produce valuable information for Sydney Ports and the NSW Government in their strategic infrastructure planning, particularly in road and rail transport.

The primary objectives of the study are to determine the ultimate origins and destinations of import and export containers within the port precinct, Sydney metropolitan area and regional NSW; the routes and transport modes used to move containers to and from Port Botany; the location, significance and volume of intermodal terminals, empty container parks, and container freight stations; the breakdown of peak, non-peak and weekend vehicle movements on Sydney’s roads; where containers are packed and unpacked; and where cargo origins and destinations are located.

Sydney Ports has sought wide industry support for the study. Data was sourced from transport operators, stevedores, rail operators, empty container parks, intermodal terminals, container freight stations, the Australian Trucking Association (NSW), Shipping Australia, Customs Brokers and Freight Forwarders Council Australia, Australian Quarantine and Inspection Service and the Australian Customs and Border Protection Service.

Sydney Ports will assess the study’s findings and release a summary to industry in 2010/11.

hale Street eXtenSion at Port BotanySydney Ports invests in infrastructure not only inside our ports, but also in their vicinity to help manage trade growth. This year, we contributed to developing a new road next to a key port industrial estate to connect Hale Street Port Botany to Foreshore Road.

The project – the result of efforts over the past five years between Botany Bay City Council, Caltex, Energy Australia, ING Industrial Fund, the NSW Roads and Traffic Authority, Sydney Airports Corporation, Sydney Ports, Sydney Water, and local residents – extends the western end of Hale Street to meet Foreshore Road at a new intersection.

The extension allows safer and more efficient access for all road users. It will ensure better traffic movements for businesses servicing the port through improved connectivity and for local residents by easing congestion on residential streets. Up to 1,100 truck movements per day will be removed from Botany Road.

ING Industrial Fund’s 114,000 square metre PortAir Industrial Estate will also benefit since it can now offer tenants easier access, and extend its operations within newly approved parameters without affecting residents.

Efficient access to the PortAir Industrial Estate will help improve the supply chain at one of Australia’s main international trade gateways. It is a vital project for the area that will have real benefits for the local community and businesses.

traffiC managementSydney Ports focuses on managing traffic on its roads in the Port Botany precinct to improve safety, alleviate congestion and speed truck turnaround times. We have been involved in many initiatives this past year to improve traffic management and minimise the impact on public roads.

Sydney Ports employed the TTM Group to assist in traffic marshalling at Penrhyn Road with specific instructions to keep the roundabout clear from any queuing vehicles, shift illegally parked vehicles and to ensure the Caltex entry exit remains clear.

To help alleviate truck queues, we are working to develop a truck marshalling area – with driver amenities – which will accommodate a significant number of trucks. A designated area also exists on Simblist Road for trucks accessing DP World and improved driver amenities have been placed on Simblist Road until more permanent facilities are built.

As a result of traffic studies undertaken by ARUP, a jersey curb placement strategy has also been put in place to protect vehicles and staff entering and exiting port tenant properties. We also helped to institute a speed mitigation strategy in conjunction with NSW Police in 60km/h zones around the port.

All port users have access to Sydney Ports’ TruckCam system for up-to-date information on traffic movements around the port. The TruckCams take a new image every 15-30 seconds to assure real time information about the state of the roads and the images can be viewed on the Sydney Ports website.

Sydney Ports also works with tenants, such as DP World, Origin Energy, Elgas and Caltex, on specific traffic issues and we will continue to monitor other safety initiatives.

trade and transport logistics (continued)


Port Botany rail teamIn May 2010, members of Sydney Ports’ Port Botany Rail Team (PBRT) conducted a preliminary rail trial to assess the establishment of performance benchmarks for trains in the Port Botany rail supply chain.

The PBRT is the primary industry forum for containerised rail freight movements through the port. Its members include rail network operators (Australian Rail Track Corporation, RailCorp); stevedores (Patrick, DP World); rail operators (Independent Rail, P&O Trans Australia, Pacific National, and Freightliner); and Transport NSW.

To carry out the trial, the PBRT requested three categories of information from port users – rail on-time-running, rail utilisation, and rail window utilisation. Overall, this meant collecting information on departures from intermodal terminals, arrivals at stevedores, departures from stevedores, service cancellations, and unplanned changes to rail windows, container lift rates, and rail window utilisation levels.

While some of this information is reported through the Sydney Ports website, the trial presented an opportunity to verify alternate data sources and to test the current capabilities of port users to provide accurate information.

It was also the first time that utilisation statistics have been requested for individual train sets, which will allow Sydney Ports to assess current system performance in order to improve operational efficiency based on existing infrastructure.

Sydney Ports has documented several gaps in the data and we will work with members of the PBRT to prepare for a future trial. Some contributors said many existing processes are captured manually and they have proposed solutions to rectify these issues. Sydney Ports is also investigating options to improve the technology used to capture rail supply chain data.

Port Botany landSide imProVement StrategyAs mentioned elsewhere in this report, we have been working closely with stevedores, truck operators, empty container park operators, custom brokers, freight forwarders and others in the transport sector to improve operational performance at Port Botany. We have also been working with all parties to improve communications within the port-related supply chain.

Stevedores and empty container park operators now provide updates about any congestion at Port Botany every few hours via the web to all the trucking companies. The information assists truck operators where possible to make informed decisions on when to send trucks to the port in order to avoid any delays or contingencies.

Our work with PBLIS also means we are devising a strategy to seamlessly connect Port Botany to the Enfield Intermodal Logistics Centre (ILC) in order to increase rail mode share.

We are considering dedicated port shuttles between Enfield and Port Botany – where all cargo would be held at Enfield and full trains sent to each stevedore on a dedicated basis. At the moment, trains come into Enfield and are broken up for separate transport to DP World and Patrick. Sending a whole train to individual stevedores will save time and money.

looking aheadThe recent strong growth in container trade through Sydney’s ports is expected to continue. Our focus for the next 12 months then, is to promote PBLIS and engage and educate all stakeholders about its benefits; work with our customers and leaseholders to help them improve their operations and remove costs from the supply chain; and continue to develop our presence in regional markets.


Nyngan

Dubbo

CANBERRA

SYDNEY

CobarWilcannia

Bourke

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Armidale

Tamworth

Kew

MuswellbrookGulgong

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ParkesOrange

Forbes

CowraWest Wyalong

Narrandera

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Booligal

Griffith

GoulburnYoung

WaggaWagga

Katoomba

TenterfieldCasino

GraftonInverell Glen

Innes

CoffsHarbour

Moree

NarrabriWee Waa

PortMacquarie

Gunnedah

Coonabarabran

MELBOURNE

BRISBANE

Walgett

Tibooburra

Broken Hill

Menindee

Ivanhoe

Swan Hill

Echuca

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WodongaAlbury

Nowra

WollongongPort Kembla

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Newcastle

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(Proposed) Kew Intermodal Terminal


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CANBERRA

SYDNEY

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Bourke

HebelGoondiwindi

Armidale

Tamworth

Kew

MuswellbrookGulgong

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ParkesOrange

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CowraWest Wyalong

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Innes

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Coonabarabran

MELBOURNE

BRISBANE

Walgett

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Broken Hill

Menindee

Ivanhoe

Swan Hill

Echuca

Jindabyne

WodongaAlbury

Nowra

WollongongPort Kembla

Gosford

Newcastle

Cooma

Queanbeyan

Tocumwal

Mildura

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Kingsgrove

Seven Hills

Kings Park

Doonside

Eastern Creek

Rooty HillArndell Park

Riverstone

SouthWindsor

Sydney Harbour

Botany Bay

Bate Bay

Paddington

Randwick

Maroubra

La Perouse

TarenPoint

Rockdale

Botany

Hurstville

Sutherland

LaneCove

Mosman

Bondi

Ryde

Liverpool

Bankstown

Ingleburn

Lane CoveWest

Moorebank

WarwickFarm

Emu Plains

Villawood

Broken Bay

Leichhardt

Marrickville

Merrylands

Yennora

GuildfordProspect

CastleHill

ManlyBrookvale

Mona Vale

Palm Beach

St Marys

Castlreagh

Campbelltown

Fairfield

Strathfield

Blacktown

Chatswood

Parramatta

Windsor

HornsbyRichmond

Penrith

Camden

Minto

WetherillPark

Normanhurst

Asquith

MountKu-ring-gai

Alexandria

Smeaton Grange

Dural

Glenorie

BerowraWaters

TerreyHills

FrenchsForest

Cowan

Box Hill

Glenwood

Chullora Enfield

Erskine Park

Clyde

Camellia

Epping

Georges River

Parramatta River

Hawkesbury River

Peakhurst

WhiteBay

GlebeIsland

SydneyAirport

PortBotany

DarlingHarbour SYDNEY

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Motorways

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Shared passenger/freight rail lines

(Planned) Southern Sydney Freight Line

Intermodal Terminals

Industrial zones

Port facilities

(Planned) Enfield Intermodal Logistics Centre

(Proposed) Moorebank Intermodal Terminal

(Proposed) Eastern Creek Intermodal Terminal

Port Botany development area


neW oPerationS Centre at Port Botanyat the end of june 2010, sydney ports’ marine staff relocated from moores wharf at millers point to a new purpose-built operations centre at port Botany. the move reflects sydney ports’ continued focus to develop port Botany as a result of its increasing prominence in sydney’s trade.

the sydney ports Operations Centre will centralise control of commercial shipping for sydney’s ports, and the new building offers many advantages. it has brought together the Harbour master, pilots, survey services, navigation services, marine operations and port security – including our maritime security identification Card service centre – and other functions needed to ensure safe and efficient shipping in port Botany and sydney Harbour.

the four-storey, 2,300 square metre building is environmentally sustainable with the equivalent of a 4.5 green star rating. Harbour control staff will stay in our Harbour Control tower until the new vessel traffic services (vts) system is installed in a dedicated control room at the port Botany operations centre in the first half of next year.

the Start of a new era

MARINE SERVICES


neW VeSSel traffiC SerViCeS SyStemIn February 2010, Sydney Ports signed a contract to deploy a new state-of-the-art Vessel Traffic Services (VTS) system for Port Botany and Sydney Harbour.

Leading marine technology firm SOFRELOG will supply the $12 million VTS system, which will be based at Port Botany and be operational by May 2011. This investment will improve surveillance and tracking of all vessels including more than 5,000 ship movements a year in Sydney.

The new VTS will help improve the safety and efficiency of commercial vessel movements, and better protect the marine environment by reducing the risk of navigational incidents such as groundings or collisions. It will also support the future growth of trade at the expanded Port Botany.

The VTS will be far more capable than the current tracking system and will comply with international standards. It will combine information derived from multiple sensors, including radars, AIS, CCTV, and VHF, displayed in an integrated image with full record and playback capability.

SOFRELOG was selected from a shortlist of tenders following a trial of new systems in September 2008. While SOFRELOG has the world-class technology and software we need, much of the work on the new VTS will be carried out by Australian contractors Wave1, Daronmont and C4i.

harBour maSterSydney Ports appointed Captain Steven Young in August 2009 as Harbour Master for the Ports of Sydney and Botany and he combines that role with Executive General Manager Marine Services. The Harbour Master, a position which dates back to 1811, is responsible for the navigation safety and management of the Sydney Pilot Service and Navigation Services in Sydney Harbour and Botany Bay. The role includes overseeing the navigational aspects of the Port Botany Expansion and the second bulk liquids berth, ensuring safe operations during the cruise season, and providing safe navigation for about 2,500 ship visits per year.

Captain Young is a Master Mariner and an experienced Harbour Master, having worked at Southampton, one of the UK’s busiest container ports, where he was Harbour Master and more recently Deputy to the Port Director. Southampton is also the UK’s busiest cruise ship port, handling one million passengers and 300 cruise ship visits per year.

3d maPPing of the harBour floorOn land we have detailed maps and images that chart the intricacies of the terrain, yet below the sea surface records are much less precise – until now. For the first time, the navigable waters of Sydney Harbour and Port Botany are being mapped in 3D.

This year, Sydney Ports introduced hydrographic survey equipment for full sea floor mapping. The $750,000 multi-beam echo sounder (MBES) system will help to maintain accurate records of movements on the sea floor and changes in the depth of the Harbour – primarily for navigational safety, but also to observe environmental changes. The MBES includes a multi-beam sonar, data acquisition software, and vessel motion sensors.

In Sydney Harbour alone there is more than 5,000 hectares of navigable waterways and a combined foreshore of 270 kilometres. Things are far more complex than they appear on the surface. Submerged land dips and peaks, there are rock formations and shipwrecks – and it all affects tides and currents.

Detailed 3D imaging will enable Sydney Ports to map the bed of the Harbour with stunning accuracy. Being able to monitor variations of submerged terrain provides valuable information that can be used in many ways, such as where to place navigation aids and buoys, asset maintenance, project planning, and environmental assessments.

Big ShiP ViSitIn March 2010, Sydney Ports welcomed the largest capacity container vessel to visit Australia, the Xin Yan Tai. A Post-Panamax vessel of 69,225 gross tonnes, the Xin Yan Tai carried a record 5,688 TEUs and exchanged 2,750 containers while at Port Botany.

In the past, Sydney has received similar sized vessels to remove empty containers, but the Xin Yan Tai was loaded with full containers. With about 48 per cent of the vessel’s imports bound for the Sydney market, this latest venture by the ship’s owner, China Shipping Container Lines, was a welcome addition to Sydney’s trade. With the Port Botany expansion designed to accommodate vessels of 8,000 TEU such large vessel visits are expected to become a common occurrence.

eXerCiSe Big diPPerPort Jackson is a working port and Sydney Ports must be prepared for any emergency. We have responsibility for responding to emergency situations 24/7 and we employ an experienced team of 150 marine services personnel to ensure the safety of port users and to protect the environment.


In October 2009 Sydney Ports staged ‘Exercise Big Dipper’, a simulated oil spill designed to test the emergency response capabilities of Sydney Ports and Shell to a ‘Tier 2’ spill, defined as between ten and 1,000 tonnes of oil. The two-day simulation involved the scenario of a crude oil tanker running aground at Gore Cove on Sydney Harbour, spilling 40 tonnes of oil.

The operation began as a desktop exercise, with a practical activity that followed in November 2009. The aims of the event were to ensure containment of any spilled oil, the safe operation of all Sydney Ports’ plant and equipment, and the effective response of both Sydney Ports and Shell staff.

Over the two days about 30 Sydney Ports marine operations personnel were involved, and during the practical exercise in November we used a range of equipment, such as containment booms, skimmers and specialised oil recovery vessels.

The exercise also tested Sydney Ports’ communications with Shell, and with all agencies involved in the NSW State Waters Marine Oil and Chemical Spill Contingency Plan.

‘Exercise Big Dipper’ followed ‘Exercise Woe-B-Tide’, held in August 2009, which tested the response of Sydney Ports and Caltex to a simulated oil spill off Kurnell in Botany Bay.

As well as holding regular emergency exercises, Sydney Ports also conducts random safety audits to minimise the chance of such incidents.

During the 2009/10 financial year, Sydney Ports’ officers carried out 4,272 audits on vessels transferring bulk oil, gas and chemicals. There were 955 work permits on vessels and 242 site and electronic dangerous goods terminal audits undertaken. In addition, last year Sydney Ports responded to 308 reported incidents of marine pollution, and attended 15 marine-related fires.

oPeration SPlaShIn May 2010, Sydney Ports played a major supportive role in a NSW Police exercise designed to test the response of emergency services to an aircraft that had ditched into Botany Bay.

‘Operation Splash’ involved many agencies, including NSW Water Police, NSW Fire Brigade, NSW Ambulance Service, Polair, Coastguard, NSW Maritime, NSW Fisheries and the Westpac Lifesaver Helicopter.

Given Sydney Airport’s proximity to Botany Bay, it is important that all agencies, including Sydney Ports, train for any emergency. The exercise was a solid test of the new boat ramp at Foreshore Road as a primary evacuation point. This ramp was built as part of our Port Botany Expansion.

ComPlianCe With PSolSydney Ports’ major navigation, shipping, communications, emergency response and environmental responsibilities are outlined in our Port Safety Operating Licence (PSOL). Issued by NSW Maritime, the licence includes stringent performance standards and an annual external audit. Sydney Ports once again met all the requirements of its PSOL for Sydney Harbour and Port Botany and no non-conformances were reported.

emergenCy reSPonSeSAs part of our responsibilities under Australia’s National Plan to Combat Pollution of the Sea by Oil and Other Noxious and Hazardous Substances (NATPLAN), Sydney Ports was involved in two national emergency events this past year.

montara/WeSt atlaS oil rig BloW-out and SPillBetween August and November 2009, Sydney Ports made a significant contribution to the National Response Team (NRT) by sending 21 skilled emergency response personnel to the West Atlas incident, 400 nautical miles off the West Australian coast.

In late August 2009, the West Atlas drilling rig began losing oil into the Timor Sea following a capping mishap. PTTEP Australasia and Alert Well Control intercepted the leaking well in November, but during the process the platform caught fire, which hampered any further response. Early in November 2009, PTTEP performed a successful ‘kill’ to stop the oil leaking from the well by injecting heavy mud from the West Triton rig located nearby.

In total, about 300 people, 17 vessels, nine aircraft, and tonnes of response equipment were deployed during the cleanup operation.

Sydney Ports’ staff played integral roles, such as incident controller, operations managers, team leaders and specialised equipment operators. Our people were part of the response for about 300 man days on numerous weekly rotations, joining other NRT members to help protect the waters and coastlines in the region.

marine services (continued)


Shen neng 1On Easter Sunday, 2010, Sydney Ports received a call from the Australian Maritime Safety Authority (AMSA) requesting the services of trained marine personnel when the Shen Neng 1 spilled oil after being grounded on Douglas Shoal in the Great Barrier Reef, north-east of Gladstone.

As part of NATPLAN, we were also asked to supply equipment and personnel to assist Maritime Safety Queensland. Marine Operations’ staff were placed on immediate standby at our Glebe Emergency Response Team base. We put two weir skimmers, power packs and hose reels onto overnight transport and the following day, 20,000 litres of oil dispersant was loaded and transported to Gladstone.

Four Sydney Ports staff were also sent to Gladstone to provide environmental protection for the reef, due to oil escaping the Shen Neng 1. The vessel was re-floated on April 12 and taken to anchor. When the initial Sydney Ports crew completed its rotation on this project it was replaced by another Sydney Ports team.

All our people were deployed at sea on the response vessels, which were used to capture oil that escaped the ship and to deploy offshore air inflated oil booms. They then operated oil-skimming equipment to recover any free floating oil.

Thanks to the help and skill of many people, including our highly trained staff, one of Australia’s national treasures was rescued from further damage.

imProVing SafetyMost people look at Sydney Harbour and see its beauty. They won’t notice a highly-skilled Sydney Ports team of 150 marine services personnel, including master mariners, marine pilots, hydrographic surveyors and harbour control (VTS) officers working 24/7 to keep the harbour and Port Botany safe.

Many of our operations are critical for the safe passage of ships through our ports. This year, we further enhanced our efforts by instituting new procedures and a dedicated large vessel escort service to ensure commercial ship operations are not impeded by recreational vessels and other craft on the harbour. This represents a big commitment for Sydney Ports – in both manpower and vessels. Sydney Ports is committed to an ongoing process of marine risk assessment and review of its risk mitigation measures.

maritime trainee ProgramSeven years ago, Sydney Ports instigated a trainee program to bring young people into the maritime industry to help meet the growing need for traditional skills, such as seamanship, boat handling and safety on the water.

This year, we broadened the focus of this training to provide our five trainees with more experience. They have been spending extra time at sea on ships – tankers in particular – to help them appreciate what is expected of professional seamen.

During the traineeships our people gain exposure to maritime skills such as inspections, auditing, work permits, berthing services, boat handling and general seamanship, as well as operating and maintaining Sydney Ports’ plant and equipment.

This program is important for Sydney Ports because we have an ageing workforce, like many companies in many industries, and we need an influx of young people to move into maritime careers over the next 10-15 years.


SYDNEY PILOT SERVICE

maIntaInIng a ProfeSSIonal PIlot ServIcesydney pilot service (sps) provides World-class pilotage to commercial ships entering and leaving sydney harbour and botany bay. as a Wholly-oWned subsidiary of sydney ports, sps supports more than $50 billion in trade each year through our ports.


SPS emPloyS 21 PilotS – all highly trained and eXPerienCed maSter marinerS, With time in Command of a CommerCial VeSSel an entry qualifiCation. they offer detailed knoWledge of loCal WaterS and ShiP handling SkillS to the CaPtainS of ViSiting ShiPS.

Last year, over 3,700 pilotage movements occurred on ships visiting the ports of Sydney and Botany, including 245 cruise ship movements.

ChangeS to Pilotage ChargeSTo help maintain an efficient and financially sustainable, world-class service for this growing trade, Sydney Ports made some structural changes to the pilot boarding arrangements and introduced new pilotage charges that became effective from 1 April 2010.

While these adjustments were necessary, we will continue to monitor operational procedures with a view to minimising the cost of pilotage services in Sydney’s ports. The last increase to pilotage charges was in 2006.

In April 2010, the boarding charge of $300 was increased to $450 and amalgamated with the minimum charge for ships under 4,000 GT ($350) into a new boarding fee of $800 (ex GST) per pilotage service. This excludes the $25 fuel surcharge.

All other components of the pilotage charge increased by the three-year cumulative Consumer Price Index (CPI) (7.5 per cent). All SPS charges will continue to be adjusted by CPI on an annual basis from 1 July 2010 (excluding the $25 fuel surcharge).

These changes follow consultation in 2009 with the peak industry body Shipping Australia Limited (SAL). Sydney Ports advised SAL of the effective dates and wrote to customers to inform them of the changes.

Pilot trainingSydney Ports continues to enhance the skills of our pilots with world-leading ship simulation training, bridge resource management and competency auditing techniques. Our aim is to have all of our pilots able to offer world-class professional services to any size of ship, to any berth, as safely as possible.

On 1 September 2010, we integrated the wholly-owned Sydney Pilot Service (SPS) subsidiary with Sydney Ports Corporation in order to align management and resources within the Corporation.


SAFETY AND ENVIRONMENTenSurIng the Safe PaSSage of all Port uSerS


Safe oPerationSEnsuring the safety of our staff, contractors, tenants and visitors is paramount to Sydney Ports, and this year we made it a priority to continue to build a safety culture across our operations.

During the year, we introduced a behavioural safety program for all managers. They now complete four safety observations per year – a requirement that is included in each manager’s key performance indicators. They are also encouraged to provide positive feedback about safety practices that are working well and identify opportunities for improvement when they visit Sydney Ports’ operational sites.

We also did significant work to raise the profile of occupational health and safety throughout the organisation by making all safety documents more accessible via the Sydney Ports intranet.

Moving the Sydney Ports head office from Kent Street to the Bond One building at Walsh Bay in mid August 2009 involved a lot of careful planning, as did moving our Marine Services to the new Operations Centre at Port Botany.

In both instances we had to establish systems, conduct inductions, assess and explain risks, and ensure our new premises were fit for purpose. These relocations also involved updating induction packages across the organisation, including the general induction and environment and sustainability sections.

Sydney Ports also has a corporate risk management system that is tailored to the unique responsibilities of managing the ports of Sydney Harbour and Port Botany. Each year we conduct project and operational risk assessments that include compliance, risk minimisation and maintaining a focus on safety.

maintaining our Working PortSDuring the year, technical consultants GHD started a five-year program to inspect all our marine structures in Sydney Harbour and Port Botany. It is essential to conduct detailed visual inspections and test our marine assets, and to assess the condition

and structural integrity of the port facilities, wharves, jetties, moorings and berthing platforms.

About $140 million worth of goods pass through Sydney’s busy ports each day. Assessing and maintaining the marine structures that aid the ports’ operations and keep them efficient is vital to helping us build a strong future for NSW.

The work will be undertaken in locations across Sydney Harbour and Port Botany, including White Bay, Glebe Island, Moores Wharf, the Overseas Passenger Terminal at Circular Quay, Brotherson Dock at Port Botany, and the Bulk Liquids Berth at Port Botany.

The program will identify degradation, structural damage, corrosion, and underwater conditions such as scouring of the seabed. It will also help Sydney Ports continue to ensure safe passage for the hundreds of thousands of cruise passengers that visit Sydney Harbour each year.

This program is in addition to the existing regular maintenance inspections undertaken by the Sydney Ports Asset and Maintenance team.

enVironmental management Sydney Ports plays a significant role in managing two precious natural resources – Sydney Harbour and Botany Bay. We protect these assets and recognise the interdependence between our operations, local communities and the environment.

Our goal is to minimise impacts on the community and the environment by identifying and quantifying potential risks; developing procedures to minimise risk; monitoring operations; applying best practice environmental protection measures; maintaining communication with our various port communities; and complying with all relevant legislation.

Sydney Ports’ publication, Green Port Guidelines, encourages port developers and operators to adopt sustainable business approaches, and provides advice on environmentally-friendly design and port management activities.

By taking a proactive approach to environmental measures, such as reducing energy consumption and careful material selection, Sydney Ports is able to minimise our impact on local communities and contribute to making our ports a greener place.

Port Botany deVeloPment CodeSydney Ports wants to ensure that the Port Botany precinct is developed and managed in line with our strategic vision to be a leader of world-class, efficient, and sustainable ports and logistics networks.

This year, we prepared and implemented the Port Botany Development Code to help achieve this vision and promote sustainable development at Port Botany.

The code outlines the design and operational requirements for all new development in a consolidated document; sets minimum standards for design and operation of new development; and provides a guide for consent authorities to assess and determine new development.

Developing the code involved formalising many Sydney Ports’ environmental and sustainability requirements for all new development at Port Botany.

For port developers this includes completing a Green Port Guidelines checklist, which applies throughout the entire planning process. There is a formal project application meeting at the start of the project, where Sydney Ports highlights all the planning and environmental requirements and aspects of the proposed development.

Sydney Ports has been involved in many large infrastructure projects this past financial year that include environmental aspects, such as the Port Botany Expansion, the Enfield Intermodal Logistics Centre, and the second Bulk Liquids Berth at Port Botany. In each project, we minimise the impacts of construction and operational activities on the surrounding environment and community.


creatIng a balance between Short-term gaInS and long-term benefItS our approach at sydney ports is to make sustainability a value that is integral to all our business decisions. as We develop and manage efficient ports and logistics netWorks, We Will also continue to preserve our environment for future generations.

SUSTAINABILITY AND HERITAGE


oPerationS CentreThis past year, we completed the fit out of our new Operations Centre at Port Botany, which includes many building features that will improve its long-term environmental performance.

Sydney Ports designed and constructed the Operations Centre in line with the Green Building Council of Australia’s requirements for a 4.5-star building. It has a chilled beam air-conditioning system, a water harvesting system on the roof for amenities, landscape irrigation and a wash down area, solar panels that supplement the energy requirements of the building, an interactive display panel to increase staff awareness of power usage, movement sensors in meeting rooms and amenities, and landscaping using drought-tolerant native plants.

Sydney Ports’ Marine Services staff moved into the new Operations Centre in June 2010.

Bond oneSydney Ports’ head office moved from Kent Street to the new Bond One building in August 2009. Bond One is a four-star green building with modern facilities that help to reduce Sydney Ports’ environmental footprint through reduced energy consumption, fewer greenhouse gas emissions and reduced water usage.

Green initiatives at Bond One include measures to minimise and recycle waste, collect rainwater for supplementary use throughout the building and reduce energy and water use.

Clean uP auStralia dayWhile the nation joined Clean Up Australia Day 2010 on Sunday 7 March, Sydney Ports took part in Business Clean Up Australia Day on Friday 5 March.

A team of about 25 staff, contractors, tenants and residents went to Yarra Bay to collect and remove more than 26 bags of general waste and eight bags of recyclable material from the shoreline, parks and roads. It is pleasing to note that we fill fewer bags each year at this site, which is adjacent to Port Botany. Next year we hope to include other sites in our contribution to Clean Up.

earth hourNearly 100 iconic landmarks in 1,000 cities and towns around the world switched off their lights to show their commitment to the environment at 8.30pm on Saturday 27 March 2010 for Earth Hour. Sydney Ports joined the international action on global warming by switching off all non-essential lights and equipment.

All Sydney Ports and Sydney Pilot Service staff members ensured that lights and equipment at work stations were switched off before leaving work on the Friday before the event. All non-essential lights were switched off at Bond One, Moores Wharf, the Overseas Passenger Terminal, Wharf 8, Harbour Control Tower and Port Botany.

eVery droP CountSIn 2008, Sydney Ports joined the Every Drop Counts Business Program – an initiative by Sydney Water that helps organisations to get the most from the water they buy and reduce demand that can be sustained over the long term. It includes a variety of activities, such as staff awareness campaigns, water management diagnostic sessions and audits of large water use sites.

At the start of the program, Sydney Water audited Sydney Ports to determine the star rating of our water management procedures. Our initial rating was 1 star. After two years in the program we have improved our rating to 2 stars, doubling our achievement score from 15 per cent to 31 per cent.

Community ConSultationSydney Ports always has regard for the interests of the communities in which our ports are located. We are involved in many initiatives, including community and port stakeholder consultative committees.

gleBe iSland/White Bay Community liaiSon grouPSydney Ports established the Glebe Island/White Bay Community Liaison Group in 2006 to help balance the needs and interests of port users with those of the local businesses and communities in which the ports operate. Comprised of representatives from local councils, State Government agencies, businesses operating at the port, and local residents, this group meets quarterly to exchange information about port user activities, environmental impacts and other issues that affect the community.

The Community Liaison Group met three times in 2009/10 to discuss the Bays Precinct Master Plan, the proposed Cruise Passenger Terminal at White Bay 5, port business activities, complaints, bulk shipping at the common user berths, and general port operations.

enfield intermodal logiStiCS Centre Community liaiSon CommitteeSydney Ports established the Enfield Intermodal Logistics Centre Community Liaison Committee in May 2009 to promote communication between Sydney Ports and the community about the construction and future operation of the Enfield Intermodal Logistics Centre.

The committee comprises representatives from Sydney Ports, the local community, and local businesses, and has an independent chairperson. In 2009/10, the committee met three times to discuss various issues, including remediation and construction progress, environmental management plans and monitoring, and traffic around the site.


Port Botany eXPanSion Community ConSultatiVe CommitteeSydney Ports established the Port Botany Expansion Community Consultative Committee in 2006 to discuss all aspects of the Port Botany Expansion with the local community and to meet one of the project’s conditions of approval.

This committee comprises representatives from Sydney Ports, Baulderstone, Randwick and Botany Bay Councils, community groups, and local business. It is chaired by an independent chairperson, who was appointed by the NSW Department of Planning.

Due to the fast pace of the construction works, the committee met seven times last year – almost double the frequency required under the project’s conditions of approval – to discuss issues such as planning, construction, and environmental management.

Port Botany neighBourhood liaiSon grouPThe Port Botany Neighbourhood Liaison Group is a port-wide consultation forum established in 2008 to share information about port activities among port lessees, the community and special interest groups.

The group is designed to exchange information about port operations and activities at Port Botany, discuss port lessee activities, and talk about issues that concern local residents.

During 2009/10, the group met five times. The topics that dominated discussions included Sydney Ports’ development activities within the Port precinct, Tenant Part 5 Development Applications, and environmental management of the port.

For details about Sydney Ports’ community involvement, please refer to the Community section of Sydney Ports’ website at www.sydneyports.com.au

SuStainaBility rePortFor details about Sydney Ports’ sustainability activities, please refer to the Sustainability section of Sydney Ports’ website at www.sydneyports.com.au

heritagePreSerVing a riCh maritime traditionOne of Sydney Ports’ major responsibilities is to keep the maritime heritage of Sydney and its ports alive, so current and future generations can appreciate and respect their rich history.

Sydney Ports maintains a Heritage and Conservation Register – which lists all the heritage items we own or occupy.

The number of items on our heritage register fluctuates as responsibility for items moves between government agencies or when we unearth new items.

For example, this past year we commissioned evaluations for three new items on our register: two timber cabinets which were dated at over 100 years old, and an old Maritime Services Board autograph book containing some famous names.

The goatskin leather book in naval blue was located during Sydney Ports’ recent move from Kent Street to Walsh Bay. The book covers the period from October 1966 to February 1989 and contains the signatures of former NSW Governor Arthur Roden Cutler, former NSW Premier Sir Robert Askin, former Prime Minister Harold Holt, former United States President Lyndon Johnson and Queen Elizabeth II.

We updated our heritage register to include these three items and our goal is to get our register re-endorsed by the Heritage Branch of the Department of Planning this coming year.

Sydney Ports also undertook heritage works at the site of the Intermodal Logistics Centre at Enfield. A pedestrian footbridge that once traversed the entire site was identified as being of local heritage significance. We transferred this bridge to the Dorrigo Steam Train Museum where it will be preserved. We also moved an old water tank at the Enfield site to a more prominent location.

Sydney Ports’ maintenance crews make frequent inspections of all our heritage items to ensure they are in a satisfactory condition.

Also this year we put our heritage register on our website and we intend to make it more comprehensive, with photographs, so people can get more involved in Sydney’s maritime heritage.

Over the next 12 months we will finalise our heritage manual, which will be a guide for Sydney Ports’ people about managing our heritage assets.

sustainability and heritage (continued)


in late 2009, Sydney PortS ConduCted a full reVieW of our SeCurity ProViderS, WhiCh reSulted in Some ContraCtS Being rationaliSed.

a new two-year contract was awarded to aCg Corporate services in an arrangement which covers both cruise vessel operations, guarding at our glebe island and white Bay facilities, and port precinct security patrols.

this year, we installed an integrated electronic access control system across a number of our port facilities, including the existing Bulk liquids Berth at port Botany and the Overseas passenger terminal at Circular quay.

we also started upgrading our port security CCtv system, including full integration of all networks onto a single platform; provided support for cruise vessel operations, including visits by major ships such as Queen Mary 2, Queen Victoria, and Pacific Jewel; reviewed and updated our security doctrine, including maritime security plans, security policies and procedures; and met all the requirements of the Maritime Transport and Offshore Facilities Security Act.

finally, we introduced a revolutionary electronic visitor pass system at sydney’s cruise passenger terminals. this system, which helps to manage access for users at both facilities, was recognised with an “innovation in maritime security award” at the australian shipping and transport awards in november 2009.

SECURITY

contInued dIlIgence through mutual co-oPeratIonensuring our ports are secure is fundamental to the nation’s economy, With 99 per cent of australia’s international trade by volume being transported by sea. it is therefore crucial that sydney ports plays its part in securing such vital commercial gateWays.


66 Sydney PortS CorPoration finanCial rePort 2009/10

Statement of comprehenSive income 67

Statement of financial poSition 68

Statement of changeS in equity 69

Statement of caSh flowS 71

noteS to the financial StatementS 72

note 1. corporate information 72

note 2. Summary of Significant accounting policieS 72

note 3. revenue 82

note 4. expenSeS 82

note 5. income tax equivalent 83

note 6. caSh and caSh equivalentS 85

note 7. trade and other receivableS 86

note 8. derivativeS 87

note 9. inveStment in SubSidiary 88

note 10. property, plant and equipment 89

note 11. intangible aSSetS 92

note 12. trade and other payableS 92

note 13. proviSionS 93

note 14. intereSt-bearing loanS and borrowingS 94

note 15. equity 95

note 16. defined benefit Superannuation Scheme 95

note 17. financial riSk management objectiveS and policieS 100

note 18. commitmentS 107

note 19. contingent aSSetS and contingent liabilitieS 108

note 20. conSultancy feeS 108

note 21. related party diScloSure 109

note 22. key management perSonnel 110

note 23. eventS after the reporting period 110

note 24. prior period error 111

directorS’ declaration 115

independent auditor’S report 116

Statement of land holdingS 118

Sydney PortS CorPoration

Financial StatementSFor the year ended 30 June 2010

Sydney PortS CorPoration finanCial rePort 2009/10 67

BeGinninG oF audited FinanCiaL StateMentSSydney PortS CorPoration

StateMent oF CoMPrehenSive inCoMeFor the year ended 30 June 2010

ConSolidated CorPoration

note2010$000

2009reStated*

$0002010$000

2009reStated*

$000

revenueRevenues from operating activities 3 186,764 176,636 177,687 166,606Other revenue 3 33,410 32,879 34,844 34,679total revenue 220,174 209,515 212,531 201,285

expensesEmployee benefits expense 4 (38,651) (36,234) (32,313) (29,509)Depreciation and amortisation expense 4 (19,283) (18,098) (18,998) (17,718)Other expenses 4 (62,604) (63,538) (59,846) (61,343)Finance costs 4 (14,489) (10,613) (14,489) (10,613)total expenses (135,027) (128,483) (125,646) (119,183)Profit before income tax equivalent expense 85,147 81,032 86,885 82,102Income tax equivalent expense 5 (26,018) (24,075) (26,539) (24,409)net profit for the year 59,129 56,957 60,346 57,693

other comprehensive income/(expense)Fair value revaluation of property, plant and equipment 10(d) 42,584 14,355 42,584 14,355Change in fair value of cash-flow hedges 8(b) (7,995) (18,269) (7,995) (18,269)Transferred to finance costs – construction in progress 8(b) 1,452 403 1,452 403Superannuation actuarial gains/(losses) 16(e) (5,293) (19,895) (5,293) (19,895)Superannuation adjustment for limit on net assets 16(e) – 4,682 – 4,682Income tax on items of other comprehensive income 5 (9,274) 5,804 (9,274) 5,804other comprehensive income/(expense) for the year, net of tax 21,474 (12,920) 21,474 (12,920)total comprehensive income for the year 80,603 44,037 81,820 44,773

* Further details on the restatement are provided in note 24.

The accompanying notes form an integral part of the financial statements.



StateMent oF FinanCiaL PoSitionaS at 30 June 2010


note2010$000

2009 reStated*

$000

aS at 1 July 2008

reStated* $000

2010$000

2009 reStated*

$000

aS at 1 July 2008

reStated* $000

aSSetScurrent assets

Cash and cash equivalents 6 249,255 113,367 97,684 248,970 111,771 95,942Trade and other receivables 7 24,912 34,996 30,062 24,071 34,333 29,276total current assets 274,167 148,363 127,746 273,041 146,104 125,218

non-current assetsReceivables 7 93,486 96,688 96,688 93,486 96,688 96,688Derivatives 8 – 5,484 10,462 – 5,484 10,462Investment in subsidiary 9 – – – 1,120 1,120 1,120Property, plant and equipment 10 1,421,661 1,187,192 992,837 1,419,490 1,184,928 990,355Intangible assets 11 3,356 1,442 300 3,352 1,436 300Deferred tax equivalent assets 5 17,188 12,029 7,050 16,665 11,448 6,600Other non-current assets 16(a) – 50 4,371 – 50 4,371total non-current assets 1,535,691 1,302,885 1,111,708 1,534,113 1,301,154 1,109,896total assets 1,809,858 1,451,248 1,239,454 1,807,154 1,447,258 1,235,114

liaBilitieScurrent liabilities

Trade and other payables 12 59,702 59,212 37,530 58,932 58,468 36,940Interest-bearing loans and borrowings 14 3,698 – – 3,698 – –Income tax equivalent payable 4,438 5,645 29,441 4,438 5,645 29,441Provisions 13 12,826 13,248 31,816 11,940 12,180 30,925total current liabilities 80,664 78,105 98,787 79,008 76,293 97,306

non-current liabilitiesPayables 12 2,030 143 63 2,030 143 63Interest-bearing loans and borrowings 14 599,287 350,018 172,261 599,287 350,018 172,261Deferred tax equivalent liabilities 5 176,791 159,051 161,288 176,765 159,044 161,267Provisions 13 5,903 4,075 418 5,693 3,933 345Other non-current liabilities 16(a) 14,573 9,849 – 14,573 9,849 –total non-current liabilities 798,584 523,136 334,030 798,348 522,987 333,936total liabilities 879,248 601,241 432,817 877,356 599,280 431,242net assets 930,610 850,007 806,637 929,798 847,978 803,872

eQuityContributed equity 15 125,542 125,542 125,542 125,542 125,542 125,542Reserves 15 420,167 395,109 398,016 420,167 395,109 398,016Retained earnings 15 384,901 329,356 283,079 384,089 327,327 280,314total equity 930,610 850,007 806,637 929,798 847,978 803,872

* Further details on the restatement are provided in note 24.




StateMent oF ChanGeS in equity For the year ended 30 June 2010

note

ContriButed eQuity

$000

aSSet revaluation

reServe$000

CaSh flow hedge

reServe$000

retained earningS

$000total$000

ConSolidatedBalance at 1 July 2008 125,542 168,461 7,323 505,680 807,006Correction of prior period error 24 – 222,232 – (222,601) (369)restated total equity at 1 july 2008 125,542 390,693 7,323 283,079 806,637profit for the year after tax – – – 56,957 56,957

other comprehensive income/(expense)Fair value revaluation of property, plant and equipment – 14,355 – – 14,355Change in fair value of cash-flow hedges 8(b) – – (18,269) – (18,269)Transferred to finance costs – construction in progress 8(b) – – 403 – 403Superannuation actuarial gains/(losses) 16(e) – – – (19,895) (19,895)Superannuation adjustment for limit on net assets 16(e) – – – 4,682 4,682Income tax on items of other comprehensive income 5 – (4,120) 5,360 4,564 5,804total other comprehensive income/(expense) – 10,235 (12,506) (10,649) (12,920)total comprehensive income/(expense) for the year – 10,235 (12,506) 46,308 44,037

transactions with owners in their capacity as ownersDecrease in net assets from equity transfers – (636) – (31) (667)Dividends provided for – – – – –balance at 30 june 2009 125,542 400,292 (5,183) 329,356 850,007profit for the year after tax – – – 59,129 59,129

other comprehensive income/(expense)Fair value revaluation of property, plant and equipment 10(d) – 42,584 – – 42,584Transfer from assets revaluation reserve on assets written-off 2(h)(v) – (121) – 121 –Change in fair value of cash-flow hedges 8(b) – – (7,995) – (7,995)Transferred to finance costs – construction in progress 8(b) – – 1,452 – 1,452Superannuation actuarial gains/(losses) 16(e) – – – (5,293) (5,293)Income tax on items of other comprehensive income 5 – (12,825) 1,963 1,588 (9,274)total other comprehensive income/(expense) – 29,638 (4,580) (3,584) 21,474total comprehensive income/(expense) for the year – 29,638 (4,580) 55,545 80,603

transactions with owners in their capacity as ownersDividends provided for – – – – –balance at 30 june 2010 125,542 429,930 (9,763) 384,901 930,610




StateMent oF ChanGeS in equity (Continued)For the year ended 30 June 2010

note

ContriButed eQuity

$000

aSSet revaluation

reServe$000

CaSh flow hedge

reServe$000

retained earningS

$000total$000

CorPorationbalance at 1 july 2008 125,542 168,461 7,323 502,915 804,241Correction of prior period error 24 – 222,232 – (222,601) (369)restated total equity at 1 july 2008 125,542 390,693 7,323 280,314 803,872profit for the year after tax – – – 57,693 57,693

other comprehensive income/(expense)Fair value revaluation of property, plant and equipment – 14,355 – – 14,355Change in fair value of cash-flow hedges 8(b) – – (18,269) – (18,269)Transferred to finance costs – construction in progress 8(b) – – 403 – 403Superannuation actuarial gains/(losses) 16(e) – – – (19,895) (19,895)Superannuation adjustment for limit on net assets 16(e) – – – 4,682 4,682Income tax on items of other comprehensive income 5 – (4,120) 5,360 4,564 5,804total other comprehensive income/(expense) – 10,235 (12,506) (10,649) (12,920)total comprehensive income/(expense) for the year – 10,235 (12,506) 47,044 44,773

transactions with owners in their capacity as ownersDecrease in net assets from equity transfers – (636) – (31) (667)Dividends provided for – – – – –balance at 30 june 2009 125,542 400,292 (5,183) 327,327 847,978profit for the year after tax – – – 60,346 60,346

other comprehensive income/(expense)Fair value revaluation of property, plant and equipment 10(d) – 42,584 – – 42,584Transfer from assets revaluation reserve on assets written-off 2(h)(v) – (121) – 121 –Change in fair value of cash-flow hedges 8(b) – – (7,995) – (7,995)Transferred to finance costs – construction in progress 8(b) – – 1,452 – 1,452Superannuation actuarial gains/(losses) 16(e) – – – (5,293) (5,293)Income tax on items of other comprehensive income 5 – (12,825) 1,963 1,588 (9,274)total other comprehensive income/(expense) – 29,638 (4,580) (3,584) 21,474total comprehensive income/(expense) for the year – 29,638 (4,580) 56,762 81,820

transactions with owners in their capacity as ownersDividends provided for – – – – –balance at 30 june 2010 125,542 429,930 (9,763) 384,089 929,798




StateMent oF CaSh FLowSFor the year ended 30 June 2010


note2010$000

2009$000

2010$000

2009$000

net cash flows from operating activitiesReceipts from customers 253,502 220,961 245,601 211,841Payments to suppliers and employees (148,843) (114,142) (139,231) (104,994)Interest received 16,546 10,385 16,510 10,289Borrowing costs paid (12,168) (9,062) (12,168) (9,062)Income tax equivalent received from/ (paid to) subsidiary – – (519) 54Income tax equivalent paid (23,919) (49,282) (23,919) (49,282)net cash flows from operating activities 6(c) 85,118 58,860 86,274 58,846

net cash flows used in investing activitiesPurchase of property, plant and equipment (295,970) (187,454) (295,800) (187,294)Proceeds from sale of property, plant and equipment 97,191 1,046 97,176 1,046net cash flows used in investing activities (198,779) (186,408) (198,624) (186,248)

net cash flows from financing activitiesProceeds from borrowings 249,549 163,443 249,549 163,443Dividends paid – (20,212) – (20,212)net cash flows from financing activities 249,549 143,231 249,549 143,231Net increase in cash and cash equivalents 135,888 15,683 137,199 15,829Cash and cash equivalents at the beginning of the financial year 113,367 97,684 111,771 95,942cash and cash equivalents at the end of the financial year 6 249,255 113,367 248,970 111,771



noteS to the FinanCiaL StateMentS


note 1. CorPorate information

The financial statements of Sydney Ports Corporation (“the Corporation”) for the year ended 30 June 2010 were authorised for issue in accordance with a resolution of the directors on 13 October 2010.

Sydney Ports Corporation was incorporated by the New South Wales State Government under the State Owned Corporations Act 1989 and is domiciled in New South Wales. The Corporation assessed its status and determined that it is a “for profit” public sector entity from 1 July 2005 for financial reporting purposes.

The Corporation had one controlled entity during the year ended 30 June 2010, being Sydney Pilot Service Pty Ltd (the subsidiary), which is a wholly owned subsidiary.

The Corporation operates in a single business and geographical segment – the management of port facilities for the shipping community including the provision of navigational and operational safety needs of commercial shipping in the geographical location of New South Wales, Australia with its principal office at 20 Windmill Street, Walsh Bay NSW 2000.

note 2. Summary of SignifiCant aCCounting PoliCieS

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated.

(a) basis of preparation

The financial statements are general purpose financial statements which have been prepared in accordance with:

(i) Australian Accounting Standards and Australian Accounting Interpretations;

(ii) the Public Finance and Audit Act 1983;

(iii) the Public Finance and Audit Regulation 2010;

(iv) the State Owned Corporations Act 1989; and

(v) NSW Treasurer’s Directions*.

* NSW Treasurer’s Directions are available from the NSW Treasury website (www.treasury.nsw.gov.au).

The financial statements have been prepared on an accrual accounting basis using historical cost accounting conventions except for non-current physical assets and derivative financial instruments which are measured at fair value, and defined benefit superannuation schemes which are measured at actuarially assessed present value.

Except when an Australian Accounting Standard permits or requires otherwise, comparative information is disclosed in respect of the previous period for all amounts reported in the financial statements.

The NSW Treasurer has exempted the consolidated entity from certain reporting requirements under the Public Finance and Audit Act 1983 and the Public Finance and Audit Regulation 2010. These include exemptions from disclosing amounts appropriated for repayment of loans, advances, debentures and deposits.

The financial statements are presented in Australian dollars and all values are rounded to the nearest thousand dollars ($000) unless otherwise stated.

(b) compliance with ifrS

The financial statements comply with Australian Accounting Standards and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.


(c) new accounting standards and interpretations

Australian Accounting Standards and Interpretations, issued by the Australian Accounting Standards Board (AASB), that have recently been issued or amended but are not yet effective have not been adopted by the consolidated entity for the annual reporting period ending 30 June 2010. These are outlined in the table below.

referenCe title Summary

aPPliCation date of Standard*

aPPliCation date for

ConSolidated entity*

AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project (AASB 5, 8, 101, 107, 117, 118, 136 & 139)

The amendments to some Standards result in accounting changes for presentation, recognition or measurement purposes.

1 January 2010 1 July 2010

AASB 9 Financial Instruments AASB 9 includes requirements for the classification and measurement of financial assets resulting from the first part of Phase 1 of the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement (AASB 139 Financial Instruments: Recognition and Measurement).


AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9

The revised Standard introduces a number of changes to the accounting for financial assets.


AASB 124 (Revised)

Related Party Disclosures (December 2009)

The revised AASB 124 simplifies the definition of related party, clarifying its intended meaning and eliminating inconsistencies from the definition.


AASB 2009-12 Amendments to Australian Accounting Standards (AASBs 5, 8, 108, 110, 112, 119, 133, 137, 139, 1023 & 1031 and Interpretations 2, 4, 16, 1039 & 1052)

This amendment makes numerous editorial changes to a range of Australian Accounting Standards and Interpretations.


AASB 2009-14 Amendments to Australian Interpretation – Prepayments of a Minimum Funding Requirement

These amendments arise from the issuance of Prepayments of a Minimum Funding Requirement (Amendments to IFRIC 14). The requirements of IFRIC 14 meant that some entities that were subject to minimum funding requirements could not treat any surplus in a defined benefit pension plan as an economic benefit.


AASB 1053 Application of Tiers of Australian Accounting Standards

This Standard establishes a differential financial reporting framework consisting of two tiers of reporting requirements for preparing general purpose financial statements.

1 July 2013 1 July 2013

AASB 2010-2 Amendments to Australian Standards arising from reduced disclosure requirements

The Standard gives effect to Australian Accounting Standards – Reduced Disclosure Requirements. AASB 1053 provides further information regarding the differential reporting framework and the two tiers of reporting requirements for preparing general purpose financial statements.

1 July 2013 1 July 2013

AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project (AASB 1, AASB 7, AASB 101, AASB 134 and Interpretation 13)

Emphasises the interaction between quantitative and qualitative AASB 7 disclosures and the nature and extent of risks associated with financial instruments.


* designates the beginning of the applicable annual reporting period unless otherwise stated.




note 2. Summary of SignifiCant aCCounting PoliCieS (Continued)

(c) new accounting standards and interpretations (continued)

The impact of these new Accounting Standards and Interpretations in future periods on the financial statements are still being assessed and not known at the date of the financial statements.

(d) basis of consolidation

The consolidated financial statements comprise the financial statements of Sydney Ports Corporation, being the parent entity, and its wholly owned subsidiary, Sydney Pilot Service Pty Ltd.

Controlled entities are all those entities over which the Corporation has the power to govern the financial and operating policies so as to obtain benefits from its activities. All inter-entity balances and transactions between entities in the consolidated entity, including any unrealised profits or losses, have been eliminated in preparing the consolidated financial statements. Accounting policies of the subsidiary have been changed where necessary to ensure consistency with policies applied by the parent entity.

Investment in the subsidiary entity is accounted for at cost in the separate financial statements of the parent entity.

(e) cash and cash equivalents

Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and funds on deposit in NSW Treasury Corporation’s (TCorp) Hour-Glass Cash Facility Trust.

For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above.

The value of the funds on deposit in TCorp Hour-Glass Cash Facility Trust can increase or decrease depending on market conditions and is marked to market through the statement of comprehensive income.

(f) trade and other receivables

Trade receivables are on 21 to 28 day terms while other receivables range from 7 to 21 day terms. Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less an allowance for impairment.

An allowance for impairment of receivables is established when there is objective evidence that the consolidated entity will not be able to collect all amounts due. Financial difficulties of the debtors and default of payments are considered objective evidence of impairment. Bad debts are written off as incurred against the provision for impairment.

(g) derivative financial instruments and hedging

The consolidated entity uses derivative financial instruments such as interest rate fixed forward contracts, futures contracts and interest rate swaps to manage its debt portfolio and to hedge risks associated with interest rate fluctuations. Such derivative financial instruments are stated at fair value on the date on which the derivative contract is entered into and subsequently remeasured to fair value at the balance date.

TCorp manages derivative contracts on behalf of the consolidated entity and, at each balance date, provides details of the fair value of these instruments. Derivatives managed by TCorp for the consolidated entity are for debt management purposes only and their use is controlled by the consolidated entity’s Board policies.

Derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative.

Any gains or losses arising from changes in the fair value of derivatives (except for those that qualify as cash-flow hedges) are taken directly to profit or loss for the year. The consolidated entity only held cash-flow hedges during the comparative financial year.

The consolidated entity’s cash-flow hedges are attributable to fixed interest rate borrowings.

The fair values of interest rate fixed forward contracts are calculated by reference to applicable current forward interest rates for similar contracts with similar maturity profiles.

For the purposes of hedge accounting, hedges are classified as:

■■ fair value hedges when they hedge the exposure to changes in the fair value of a recognised asset or liability;

■■ cash-flow hedges when they hedge the exposure to variability in cash flows that is attributable either to a particular risk associated with a recognised asset or liability or to a forecast transaction.


Hedges that meet the strict criteria for hedge accounting are accounted for as follows (cash-flow hedges only):

Cash-flow hedges are hedges of the consolidated entity’s exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability that is a firm commitment and that could affect profit or loss. The effective portion of the gain or loss on the hedging instrument is recognised directly in equity, while the ineffective portion is recognised in profit or loss.

Amounts taken to equity are transferred out of equity and included in the measurement of the hedged transaction (finance costs) when the forecast transaction occurs.

The consolidated entity tests each of the designated cash-flow hedges for effectiveness on a 6-monthly basis both retrospectively and prospectively. If the testing falls within the 80:125 range (100 being fully effective), the hedge is considered highly effective and continues to be designated as a cash-flow hedge.

At each balance date, the consolidated entity measures ineffectiveness. For interest rate cash-flow hedges, any ineffective portion is taken to other expenses in the statement of comprehensive income.

If the forecast underlying transaction is no longer expected to occur, amounts recognised in equity are transferred to the statement of comprehensive income.

If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked (due to it being ineffective), amounts previously recognised in equity remain in equity until the forecast transaction occurs.

Derecognition of financial instruments

The derecognition of a financial instrument takes place when the consolidated entity no longer controls the contractual rights that comprise the financial instrument, which is normally the case when the instrument is sold, or all the cash flows attributable to the instrument are passed through to an independent third party.

(h) property, plant and equipment

Property, plant and equipment is initially recognised at acquisition cost, including any costs directly attributable to the asset and any restoration costs associated with the asset. Cost is the amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire the asset at the time of its acquisition or construction or, where applicable, the amount attributed to that asset when initially recognised in accordance with the specific requirements of other Australian Accounting Standards. Assets acquired at no cost or for nominal

consideration are initially recognised at their fair value at the date of acquisition.

Fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.

All repairs and maintenance are recognised in the statement of comprehensive income as incurred.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount. These are included in the statement of comprehensive income.

Land and buildings held to provide a port facility to facilitate trade and commerce are accounted for as Property, Plant and Equipment infrastructure assets under AASB 116, notwithstanding that the land and buildings are leased to external parties. Land and buildings that are not integral or associated with port activities and leased with the principal objective of earning rentals or for capital appreciation, or both, are accounted for as investment properties under AASB 140.

(i) Valuation of property, plant and equipment

Property plant and equipment, is valued at fair value in accordance with Australian Accounting Standards and the NSW Treasury Policy Paper on Valuation of Physical Non-Current Assets. Property, plant and equipment is measured on an existing use basis where there are no feasible alternative uses in the existing natural, legal, financial and sociopolitical environment. However, in the limited circumstances where there are feasible alternative uses, assets are valued at their highest and best use.

Fair value of property, plant and equipment is determined based on the best available market evidence, including current market selling prices for the same or similar assets. Where there is no available market evidence, the asset’s fair value is measured at its market buying price, the best indicator of which is replacement cost of the asset’s remaining future economic benefits. Where an asset is specialised, or the market buying price and market selling price differ materially because the asset is usually bought and sold in different markets, or the asset would only be sold as part of the sale of the cash-generating operation of which the asset is a part, fair value is measured at market buying price. The best indicator of an asset’s market buying price is the replacement cost of the asset’s remaining future economic benefits. Non-specialised assets with short useful lives are measured at depreciated historical cost, as a surrogate for fair value.





(ii) Valuation of land

Land is valued at fair value having regard to its highest and best use. However, where there are natural, legal and socio-political restrictions on the use of land such that there is no feasible alternative use in the near future, such land is valued at market value for its existing use, because that is its highest and best use.

(iii) Valuation of specialised plant and infrastructure

Specialised plant and infrastructure is measured at market buying price, the best indicator of which is the replacement cost of the asset’s remaining future economic benefits. Infrastructure assets include roads, wharves, jetties and breakwaters.

(iv) Valuation of buildings

Non-specialised buildings, which include commercial and general purpose buildings for which there is a secondary market, are valued at fair value. Specialised buildings are designed for a specific, limited purpose. Where there are no feasible alternative uses for such buildings, they are valued at market buying price, the best indicator of which is replacement cost of the remaining economic benefits. Heritage buildings are valued at fair value. Fair value is represented by market value for existing use, because there are few or no feasible alternative uses for such buildings.

(v) Revaluation of property, plant and equipment

Revaluations are made with sufficient regularity to ensure that the carrying amount of property, plant and equipment does not materially differ from fair value at the reporting date. Where the Corporation revalues non-current assets by reference to current prices for assets newer than those being revalued (adjusted to reflect the present condition of the assets), the gross amount and accumulated depreciation are separately restated.

Revaluation increments are credited directly to the asset revaluation reserve, except that, to the extent that an increment reverses a revaluation decrement for an asset previously recognised as a loss in profit and loss, the increment is recognised as a gain in profit and loss. Revaluation decrements are recognised immediately in profit and loss, except that they are debited directly to the asset revaluation reserve to the extent that a credit exists in the asset revaluation reserve in respect of the asset. Assets acquired or constructed since the last revaluation are valued at cost.

Any revaluation reserve amount in respect of an item of property, plant and equipment is transferred directly to retained earnings on disposal.

The most recent revaluation of property, plant and equipment by the Corporation was completed at 30 June 2010 and was based on independent assessments.

The revaluation included the following guidelines:

■■ Assets acquired within 12 months of the revaluation date were assumed to have current values and were excluded from the revaluation process.

■■ Where one asset in a class was revalued, all assets in that class were revalued.

■■ Property, plant and equipment (excluding land) was valued based on the estimated depreciated replacement cost of the most appropriate modern equivalent replacement facility having a similar service potential to the existing asset.

■■ Land is valued on an existing-use basis, subject to any restrictions or enhancements since acquisition.

(vi) Impairment

The consolidated entity assesses at each reporting date whether there is any indication that a cash generating unit, or an asset within a cash generating unit, may be impaired. If such an indication exists, the consolidated entity estimates the recoverable amount. An impairment loss is recognised where the carrying amount of the asset or cash-generating unit exceeds the recoverable amount. Impairment losses are recognised profit and loss except for assets under revaluation as the impairment loss will first be recognised through each asset’s revaluation reserve prior to recognition in profit and loss.

(i) intangible assets

Intangible assets acquired separately are initially measured at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment loss. The consolidated entity’s intangible assets relate to software and easements.

Easements relate to the consolidated entity’s interest in land. Easements are recognised using the historic cost method rather than fair value, assuming there is no active market.

In house software development costs are capitalised, while other costs (including research costs) are expensed in the statement of comprehensive income in the year in which the expenditure is incurred. Useful lives are examined on an annual basis and adjustments, where applicable are made on a prospective basis. The consolidated entity’s software intangible assets have finite lives and are amortised on a straight line basis.


(j) depreciation and amortisation of assets

Depreciation and amortisation has been calculated on depreciable assets, using rates estimated to write-off the assets over their remaining useful lives on a straight-line basis. Land assets have been treated as non-depreciable. The useful lives of assets were reassessed during the year with no material changes required. The expected depreciable lives of new depreciable assets at 30 June 2010 and 2009 are:

■■ Buildings 10 to 50 years

■■ Roadways 20 to 40 years

■■ Wharves, jetties and breakwaters 10 to 100 years

■■ Plant 2 to 50 years

■■ Intangibles – software 4 years

(k) capitalisation of assets

Assets in excess of $1,000 are capitalised where they are expected to provide future economic benefits for more than one reporting period. Only those assets completed and ready for service are taken to the property, plant and equipment or intangible asset accounts. The remaining capital expenditures are carried forward as construction in progress and are included in property, plant and equipment or intangible assets in the statement of financial position.

(l) recoverable amount of assets

At each reporting date, the consolidated entity assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the consolidated entity makes a formal estimate of recoverable amount.

Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written-down to its recoverable amount. Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset, unless the asset’s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

(m) channel dredging cost

The consolidated entity has incurred costs to dredge Botany Bay thereby creating a channel for ships to enter the wharf area in connection to its Port Botany expansion project.

The consolidated entity is applying the accounting treatment agreed with NSW Treasury, relevant Port Corporations and NSW Maritime in 2008. Under the accounting treatment costs incurred for capital dredging (harbour deepening) of channels are recognised as a prepaid licence fee with the licensor being NSW Maritime (a NSW Government Authority). This prepayment will be amortised over the period of the licence.

(n) leases

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

(i) Operating leases

Where the consolidated entity is the lessee, operating lease payments are recognised as an expense in the statement of comprehensive income on a straight-line basis over the lease term.

Where the consolidated entity is the lessor, leases in which the consolidated entity retains substantially all the risks and benefits of ownership of the leased asset are classified as operating leases. Operating lease rental receipts are recognised as revenue in the statement of comprehensive income on a straight-line basis over the lease term.

(ii) Finance leases

The consolidated entity had no finance lease arrangements in 2010 and 2009.

(iii) Lease incentives

All incentives for the agreement of a new or renewed operating lease are recognised as an integral part of the net consideration agreed for the use of the leased asset, irrespective of the incentive’s nature or form or the timing of payments.

In the event that lease incentives are received or given to enter into operating leases, such incentives are recognised as a liability or asset. The aggregate benefits of incentives are recognised as a reduction of rental expense or income on a straight-line basis.





(o) trade and other payables

Trade and other payables are carried at amortised cost and due to their short-term nature they are not discounted. They represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year that are unpaid and arise when the consolidated entity becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 28 days of recognition.

(p) interest-bearing loans

All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net of issue costs associated with the borrowing. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement. Gains and losses are recognised in the statement of comprehensive income when the liabilities are derecognised.

(q) borrowing costs

Borrowing costs are expensed as incurred within finance costs in the statement of comprehensive income unless they relate to qualifying assets, in which case they are capitalised as part of the cost of those assets. Qualifying assets are assets that take a substantial period of time to be ready for their intended use.

Capitalisation of borrowing costs is undertaken where a direct relationship can be established between the borrowings and the relevant projects giving rise to the qualifying assets. Where funds are borrowed specifically for the acquisition, construction or production of a qualifying asset, the amount of borrowing costs capitalised is net of any interest earned on those borrowings.

(r) provisions

Provisions are recognised when the consolidated entity has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Where the consolidated entity expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is probable and can be measured reliably. The expense relating to any provision is recognised in the statement of comprehensive income net of any reimbursement. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

Onerous contracts

An onerous contract is considered to exist where the consolidated entity has a contract under which the unavoidable cost of meeting the contractual obligations exceeds the economic benefits estimated to be received. Present obligations arising under onerous contracts are recognised as a provision to the extent that the present obligation exceeds the economic benefits estimated to be received.

(s) employee benefits

(i) Wages and salaries and annual leave

Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within twelve months of the reporting date are recognised in respect of employees’ service up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

(ii) Long service leave

The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on New South Wales Government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.


(iii) Retirement benefits obligations

The consolidated entity contributes to employee superannuation funds in addition to contributions made by employees. Such contributions are paid to nominated funds. The Corporation contributes to defined benefit plans and defined contribution plans. The subsidiary company contributes to accumulation schemes only.

A liability or asset for the defined benefit superannuation plans is recognised in the statement of financial position, and is measured as the present value of the defined benefit obligations at the reporting date less the fair value of the superannuation fund’s assets at that date and any unrecognised past service cost. The present value of the defined benefit obligations is based on expected future payments which arise from membership of the fund to the reporting date, calculated annually by independent actuaries using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.

Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period which they occur, outside profit or loss directly in other comprehensive income.

Past service costs are recognised immediately in profit and loss unless the changes to the superannuation fund are conditional on the employees remaining in service for a specified period of time in the vesting period. In this case, the past service costs are amortised on a straight-line basis over the vesting period.

Contributions to the defined contribution plans are recognised as an expense as they become payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

(iv) Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The consolidated entity recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy.

Benefits falling due more than 12 months after statement of financial position date are discounted to present value.

(t) contributed equity

Ordinary shares are classified as equity.

The State Owned Corporations Act 1989 requires the consolidated entity to have two voting shareholding Ministers. Each shareholder must, at all times, have an equal number of shares in the consolidated entity. At 30 June 2010, the shares were held by the Treasurer (The Hon. E. Roozendaal, MLC) and the Minister for Transport (The Hon. J. Roberston, MLC). At the date of this report the voting shareholders were the Attorney General (The Hon. J. Hatzistergos, MLC) and the Minister of Public Sector Reform (The Hon. P. Lynch, MP).

(u) revenue recognition

Revenue is recognised and measured at the fair value of the consideration or contribution received or receivable to the extent it is probable that the economic benefits will flow to the consolidated entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

(i) Port revenue

Port revenue from pilotage and navigation services, wharfage, site occupation charges, mooring fees and other services are recognised on delivery of the service to the customer.

(ii) Rental revenue

Rental revenue is accounted for on a straight-line basis over the lease term.

(iii) Interest revenue

Interest revenue is recognised on an accrual basis using the effective interest method.

(iv) Increase in retirement benefits

Any net increase in superannuation asset surpluses during the year is recognised as revenue in the statement of comprehensive income.

(v) Sale of assets

Revenue from sale of assets is recognised as revenue when the consolidated entity transfers the significant risks and rewards of ownership of the assets.

(vi) Assets received free of charge

Assets received at no cost are recognised at the fair value of the asset on the date of receipt.





(v) income tax equivalent and other taxes

Income tax equivalent is required to be paid to the NSW Government in accordance with section 20T of the State Owned Corporations Act 1989. The payments are equivalent to the amounts that would be payable under the normal income tax law of the Commonwealth. The National Tax Equivalent Regime was established on 1 July 2001, with the Australian Taxation Office administering the tax equivalent scheme across Australia.

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the current period’s taxable income. The tax rates and the tax laws used to compute the amount are those that are enacted or substantively enacted by the statement of financial position date.

Deferred income tax is provided on all temporary differences at the statement of financial position date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences:

■■ Except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

■■ In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised:

■■ Except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

■■ In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the statement of financial position date. Income taxes relating to items recognised directly in equity are recognised in equity and not in the profit or loss.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity.

Tax consolidation

The consolidated entity entered the tax consolidation regime at 1 July 2003. As a consequence, the Corporation, as the head entity in the consolidated tax group, recognises current tax payable for the tax group. Amounts receivable or payable under a tax sharing agreement between the tax consolidated entities, are recognised as tax related amounts receivable or payable. Expenses and revenues arising under the tax sharing agreement are recognised as a component of income tax expense.

Other taxes

Revenues, expenses, assets and liabilities are recognised net of the amount of GST except:

■■ where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

■■ receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.


Cash flows are included in the cash flow statement on a gross basis and the GST component of cash flows arising from investing and financing activities which is recoverable from or payable to the taxation authority, are classified as operating cash flows. Contingencies are disclosed net of GST.

Commitments and accrual items that are shown in the statement of financial position are inclusive of GST where applicable.

(w) dividend

The consolidated entity reviews its financial performance for the accounting period and recommends to its shareholders an appropriate dividend payment in light of the current financial position and longer-term financial commitments. Under NSW Treasury’s Financial Distribution Policy for Government Businesses, the consolidated entity prepares a Statement of Corporate Intent which is an agreement between the relevant Ministers and the Board. This agreement includes dividend targets for the year ahead and is signed before the end of the financial year to which it relates. This creates a valid expectation that a dividend will be paid. Consequently the dividend for the financial year, if any, is set aside as a provision in the statement of financial position.

(x) contingent assets and contingent liabilities

Contingent assets and contingent liabilities are not recognised in the statement of financial position, but are disclosed by way of a note and, if quantifiable, are measured at nominal value.

(y) Significant accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, revenue and expenses. Management bases its judgements and estimates on historical experience and on other various factors it believes to be reasonable under the circumstances, the result of which form the basis of the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions.

The nature of these assumptions and conditions are found in the relevant notes to the financial statements.

Management has identified the following critical accounting policies for which significant judgements, estimates and assumptions are made.

(i) Impairment of non-financial assets

The consolidated entity assesses impairment of all assets at each reporting date by evaluating conditions specific to the consolidated entity and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined.

(ii) Valuation of property, plant and equipment

The gross fair value measurement of property, plant and equipment is determined by independent specialist valuers and the remaining useful lives of each asset are determined by the consolidated entity’s qualified engineers.

(iii) Superannuation

Various actuarial assumptions are required to quantify the net position of the defined benefit funds. The determination of superannuation obligations is dependent on an annual actuarial assessment in accordance with the accounting policy.

(iv) Taxation

Judgement is required in assessing whether deferred tax assets and certain deferred tax liabilities are recognised in the statement of financial position. Deferred tax assets, including those arising from temporary differences, are recognised only where it is considered more likely than not that they will be recovered, which is dependent on the generation of sufficient future taxable profits. Assumptions about the generation of future taxable profits depend on management’s estimate of future cash flows. These depend on estimates of future revenues, operating costs, capital expenditure and dividends.




note 3. revenue


note2010$000

2009$000

2010$000

2009$000

revenue from operating activitiesPort revenue 137,477 127,598 128,247 117,387Rental revenue 49,287 49,038 49,440 49,219

186,764 176,636 177,687 166,606

other revenueInterest from Barangaroo Delivery Authority 7(c) 8,103 7,532 8,103 7,532Interest from bank and other 6,521 4,589 6,485 4,496Increase in retirement benefits 16(d) 509 1,018 509 1,018Land tax recovered from tenants 9,200 9,163 9,200 9,163Other recoveries 6,572 7,200 6,735 7,492Other revenue 2,505 3,377 3,812 4,978

33,410 32,879 34,844 34,679total revenue 220,174 209,515 212,531 201,285

note 4. exPenSeS


note2010$000

2009$000

2010$000

2009$000

employee benefits expenseSalaries and wages 32,322 29,869 27,373 24,681Annual leave 13 2,577 2,378 2,093 1,809Long-service leave 13 1,188 1,565 1,053 1,399Retirement benefits – defined benefit 16(d) 54 44 54 44Retirement benefits – accumulation 2,510 2,378 1,740 1,576

38,651 36,234 32,313 29,509

depreciation and amortisation expenseDepreciation 10 18,583 17,811 18,300 17,431Amortisation 11 700 287 698 287

19,283 18,098 18,998 17,718

other expensesService contractors 21,673 19,472 20,793 19,060Indirect taxes 15,490 15,453 15,096 15,036Utilities and communications 3,876 3,283 3,869 3,270Insurance 2,774 2,420 2,105 2,040Legal costs 1,834 2,304 1,834 2,297Materials 1,944 2,035 1,436 1,446Minimum lease payments – operating leases 2,719 1,509 2,707 1,471Revaluation decrements – property, plant and equipment 10(d) 554 426 554 426Directors’ remuneration 22 311 315 291 292Auditors’ remuneration 202 175 176 153Impairment of trade receivables 7(a) 62 2 62 2Consultants’ fees 20 197 2,062 197 2,062Net loss on sale of property, plant and equipment 86 81 86 81Channel fees 3,203 3,207 3,203 3,207Onerous contract expense 1,928 4,926 1,928 4,926Other operations and services 5,751 5,868 5,509 5,574

62,604 63,538 59,846 61,343

finance costsFinance costs 14,489 10,613 14,489 10,613total expenses 135,027 128,483 125,646 119,183


note 5. inCome tax eQuivalent


2010$000

2009$000

2010$000

2009$000

(a) income tax expense Major components of income tax equivalent expense for the periods ended 30 June 2010 and 30 June 2009 are:

charged to profit and loss Current income tax Current income tax equivalent charge 22,803 27,453 23,401 27,648Adjustments in respect of current income tax equivalent of previous years (92) (1,967) (92) (1,973)Deferred income tax Relating to origination and reversal of temporary differences 3,307 (1,411) 3,230 (1,266)income tax equivalent expense charged to profit and loss in the statement of comprehensive income 26,018 24,075 26,539 24,409

(b) amounts charged or credited directly to equity Deferred income tax

Defined benefit superannuation (1,588) (4,564) (1,588) (4,564)Net gain on revaluation of land and buildings 12,825 4,120 12,825 4,120Financial instruments (1,963) (5,360) (1,963) (5,360)income tax equivalent amount charged directly to items in other comprehensive income in the statement of comprehensive income 9,274 (5,804) 9,274 (5,804)

(c) numerical reconciliation between aggregate tax expense recognised in profit and loss in the statement of comprehensive income and tax expense calculated per the statutory income tax rate A reconciliation of income tax equivalent expense applicable to accounting profit before income tax equivalent at the statutory income tax equivalent rate to income tax equivalent expense at the consolidated entity’s effective income tax equivalent rate for the periods ended 30 June 2010 and 30 June 2009 is as follows: accounting profit before income tax equivalent 85,147 81,032 86,885 82,102At the statutory income tax equivalent rate of 30% (2009: 30%) 25,545 24,310 26,066 24,631Adjustment in respect of current income tax of previous years (92) (1,967) (92) (1,973)Derecognition/recognition of temporary differences 165 1,270 165 1,276Non deductible expenditure 15 28 15 27Investment allowance (133) (88) (133) (74)Property, plant and equipment 518 522 518 522at effective income tax equivalent rate of 31% (2009: 30%) 26,018 24,075 26,539 24,409income tax equivalent expense reported in profit and loss in the statement of comprehensive income 26,018 24,075 26,539 24,409




note 5. inCome tax eQuivalent (Continued)

Statement of finanCial PoSition Profit and loSS

2010 $000

2009 $000

aS at 1 July 2008 reStated

$0002010

$0002009

$000

(d) recognised deferred tax assets and liabilitiesDeferred income tax equivalent at 30 June relates to the following:

consolidated(i) Deferred income tax equivalent liabilitiesDepreciation (175,676) (157,815) (155,578) 5,036 (1,882)Income receivable (676) (798) (873) (122) (62)Financial instruments – – (3,139) – –Defined benefits superannuation – – (1,311) – (1,270)Other (439) (438) (387) 1 39gross deferred income tax equivalent liabilities (176,791) (159,051) (161,288)(ii) Deferred income tax equivalent assetsDepreciation 79 74 33 (5) (41)Provisions for employee entitlements 3,706 3,719 3,464 13 (255)Financial instruments 4,184 2,221 – – –Accrued expenditure 4,800 3,010 1,199 (1,790) (1,811)Defined benefits superannuation 4,372 2,940 – 156 1,583Other 47 65 2,354 18 2,288gross deferred income tax equivalent assets 17,188 12,029 7,050 deferred income tax equivalent charge 3,307 (1,411)

corporation(iii) Deferred income tax equivalent liabilitiesDepreciation (175,676) (157,815) (155,578) 5,036 (1,882)Income receivable (650) (798) (852) (148) (54)Financial instruments – – (3,139) – –Defined benefits superannuation – – (1,311) – (1,270)Other (439) (431) (387) 8 44gross deferred income tax equivalent liabilities (176,765) (159,044) (161,267)(iv) Deferred income tax equivalent assetsProvisions for employee entitlements 3,377 3,356 3,175 (21) (181)Financial instruments 4,184 2,221 – – –Accrued expenditure 4,695 2,875 1,082 (1,820) (1,793)Defined benefits superannuation 4,372 2,940 – 156 1,583Other 37 56 2,343 19 2,287gross deferred income tax equivalent assets 16,665 11,448 6,600 deferred income tax equivalent charge 3,230 (1,266)

tax consolidation

Sydney Ports Corporation and its subsidiary, Sydney Pilot Service Pty Ltd are a tax consolidated group. The head entity of the tax consolidated group is Sydney Ports Corporation.

Sydney Ports Corporation and Sydney Pilot Service Pty Ltd have entered into a tax sharing agreement in order to allocate income tax equivalent expense to the subsidiary company. In addition, the agreement provides for the allocation of income tax equivalent liabilities between the entities should the head entity default on its tax payment obligations. No amounts have been recognised in the financial statements in respect of this agreement on the basis that the possibility of default is remote.


note 6. CaSh and CaSh eQuivalentS


2010$000

2009$000

2010$000

2009$000

Cash at bank and in hand 2,689 3,207 2,484 2,985TCorp Hour-Glass Cash Facility Trust 246,566 110,160 246,486 108,786cash and cash equivalents at the end of the financial year 249,255 113,367 248,970 111,771

(a) reconciliation to the cash flow statement

For the purpose of the cash flow statement, cash and cash equivalents includes cash on hand and in banks and funds on deposit in the TCorp Hour-Glass Cash Facility Trust. Cash and cash equivalents at 30 June 2010 and 2009, as shown in the cash flow statement, are reconciled to these items in the statement of financial position.

(b) tcorp hour-glass cash facility trust

The consolidated entity has placed funds on deposit in TCorp Hour-Glass Cash Facility Trust. These funds are represented by a number of units in the managed facility. TCorp appoints and monitors fund managers and establishes and monitors the application of appropriate investment guidelines. These funds are generally able to be redeemed with up to 24 hours prior notice. The value of the funds on deposit represents the share of the value of the underlying assets of the facility and is stated at net fair value. The value of the funds held can increase or decrease depending on market conditions and is marked to market through the statement of comprehensive income.

(c) reconciliation from the net profit after income tax equivalent to the net cash flows from operating activities:


2010$000

2009$000

2010$000

2009$000

Net profit after income tax equivalent 59,129 56,957 60,346 57,693

adjustments forDepreciation 18,583 17,811 18,300 17,431Amortisation of intangible assets 700 287 698 287Amortisation of discount on interest-bearing loans and borrowings 658 633 658 633Net (gain)/loss on sale of interest-bearing loans and borrowings 374 555 374 555Revaluation decrements – property, plant and equipment

554 426 554 426Net loss on sale of property, plant and equipment 86 81 86 81Property, plant and equipment written off 447 75 447 68Property, plant and equipment written on (4) (392) (4) (392)

80,527 76,433 81,459 76,782

changes in assets and liabilities applicable to operating activities(Increase)/decrease in trade and other receivables 9,650 (4,571) 9,971 (4,802)(Increase)/decrease in deferred tax equivalent assets (1,608) 1,764 (1,666) 1,896(Increase)/decrease in other assets – (378) – (381)(Decrease)/increase in deferred tax equivalent liabilities 4,915 (3,175) 4,896 (3,162)(Decrease)/increase in income tax equivalent payable (1,207) (23,796) (1,207) (23,796)(Decrease)/increase in trade and other payables (7,711) 8,325 (7,845) 8,297(Decrease)/increase in provisions 1,072 5,301 1,186 5,055(Decrease)/increase in other liabilities (520) (1,043) (520) (1,043)net cash flows from operating activities 85,118 58,860 86,274 58,846




note 7. trade and other reCeivaBleS


note2010$000

2009$000

2010$000

2009$000

currentTrade receivables 11,148 9,641 10,354 8,899Other receivables 10,555 12,268 10,516 12,292

21,703 21,909 20,870 21,191Allowance for impairment loss (a) (65) (4) (65) (4)

21,638 21,905 20,805 21,187Prepayments 873 1,101 843 1,077Related party receivables (b) – – 108 120Lease incentive receivables 35 – 35 –Accrued income 2,366 11,990 2,280 11,949

24,912 34,996 24,071 34,333

non-currentReceivable from Barangaroo Delivery Authority (c) – 96,688 – 96,688Prepaid licence fee 2(m), 10(d)(iii) 93,194 – 93,194 –Lease incentive receivables 292 – 292 –

93,486 96,688 93,486 96,688

(a) allowance for impairment loss

Trade receivables are on 21 to 28 day terms and are interest-bearing if not paid within these terms. Other receivables are non-interest bearing and range from 7 to 21 day terms.

An allowance for impairment loss is recognised when there is objective evidence that an individual receivable is impaired. An impairment charge of $62,395 (2009: $2,293) has been recognised by the consolidated entity and by the Corporation during the year. These amounts have been included in other expense items.

Movements in the provision for impairment loss were as follows:


2010$000

2009$000

2010$000

2009$000

At 1 July 4 41 4 41Current year’s chargeRecovery of impaired amounts

62–

2(39)

62–

2(39)

Amounts written off (1) – (1) –at 30 june 65 4 65 4

At 30 June, the ageing analysis of trade and other receivables is as follows:

total$000

notdue

$000

0–30 daySPdni*$000

0–30 dayS

Ci^$000

31–60 daySPdni*$000

31–60 dayS

Ci^$000

60+ daySPdni*$000

60+ dayS

Ci^$000

2010 Consolidated 21,703 16,982 2,612 – 1,844 – 200 65Corporation 20,870 16,294 2,487 – 1,827 – 197 65

2009 Consolidated 21,909 18,259 2,238 – 296 – 1,112 4Corporation 21,191 17,644 2,141 – 295 – 1,107 4

* Past due not impaired (‘PDNI’)

^ Considered impaired (‘CI’)


Trade and other receivables past due but not considered impaired are: consolidated entity $4.656 million (2009: $3.646 million); Corporation $4.511 million (2009: $3.543 million). Payment terms on these amounts have not been re-negotiated but direct contact has been made with the relevant debtors to ensure that payment will be received in full.

Other balances within trade and other receivables do not contain impaired assets and are not past due. It is expected that these other balances will be received when due.

(b) related party receivables

For terms and conditions of related party receivables refer to note 21.

(c) receivable from barangaroo delivery authority

In accordance with a NSW Government policy decision, the consolidated entity transferred its East Darling Harbour (Barangaroo) site assets to Sydney Harbour Foreshore Authority (SHFA) on 20 December 2007. The disposal price of $96.688 million was equivalent to the assets’ 30 June 2007 carrying values.

In March 2009 the responsibility for the redevelopment of Barangaroo was transferred from SHFA to the Barangaroo Delivery Authority (BDA). BDA paid the full amount of the receivable in May 2010.

(d) fair value and credit risk

Due to the short term nature of the current receivables, their carrying value is assumed to approximate their fair value.

The maximum exposure to credit risk is the fair value of the receivables. Collateral is not held as security.

note 8. derivativeS


2010$000

2009$000

2010$000

2009$000

non-current assetsInterest rate fixed forward contracts – cash-flow hedges – 5,484 – 5,484

(a) instruments used by the consolidated entity

Derivative financial instruments are used by the consolidated entity in the normal course of business in order to hedge exposure to fluctuations in interest rates.

The consolidated entity has committed to a fixed rate borrowing facility in order to finance major project expenditure. As a result, the consolidated entity was exposed to interest rate fluctuations until the fixed rate debt instruments were drawn down.

No interest rate fixed forward derivative contracts were entered into in 2010.

In order to protect against future interest rate fluctuations, the consolidated entity entered into interest rate fixed forward derivative contracts for $262.353 million in 2009. These interest rate fixed forward derivative contracts were embedded into the finance facility, and fixed 100% of the interest payable and expired when the underlying debt instrument was drawn down. The interest rates were in the range 5.90% to 6.51%. The embedded derivative contracts hedged highly probable forecast interest yields and were timed to mature when the underlying debt finance facility was drawn down. The impact of the hedge on finance costs occurs from the first debt draw down date on 1 July 2009 until expected final debt repayment on 15 April 2039.

At the statement of financial position date, the notional principal amounts and period of expiry of the interest rate fixed forward derivative contracts are as follows:


2010$000

2009$000

2010$000

2009$000

0-1 years – 262,353 – 262,353– 262,353 – 262,353

The interest rate fixed forward derivative contracts were considered to be highly effective hedges as the derivative settlement dates coincided with the dates on which the underlying fixed rate debt instruments were drawn down.




note 8. derivativeS (Continued)

(b) fair value

The derivatives were measured at fair value and all gains and losses attributable to the hedged risk were taken directly to equity and, as the underlying fixed rate debt instruments fund qualifying assets, transferred to construction in progress (property, plant and equipment) when the underlying fixed rate debt instrument finance costs are recognised as capitalised borrowing costs.

(c) classification of derivative financial instruments

As the interest rate fixed forward derivative contracts were embedded in loans that have maturity dates greater than 12 months later than statement of financial position date, the derivative financial instruments were classified as non-current.

movement in interest rate fixed forward contract cash-flow hedge reserve


2010$000

2009$000

2010$000

2009$000

Opening balance (5,183) 7,323 (5,183) 7,323Charged to equity (net of tax effect) Transferred to finance costs –

construction in progress 1,017 282 1,017 282 Change in fair value (5,597) (12,788) (5,597) (12,788)closing balance (9,763) (5,183) (9,763) (5,183)

(d) interest rate risk and credit risk

Information regarding interest rate risk and credit risk exposure is set out in note 17.

note 9. inveStment in SuBSidiary


2010$000

2009$000

2010$000

2009$000

Investment in Sydney Pilot Service Pty Ltd – at cost – – 1,120 1,120

The Corporation established a wholly owned subsidiary, Sydney Pilot Service Pty Ltd, on 26 October 2002 to carry out pilotage services in Sydney Harbour and Botany Bay. An injection of capital was made at that time of $1.120 million in order to purchase assets and fund working capital of the subsidiary.


note 10. ProPerty, Plant and eQuiPment

(a) carrying amounts of property, plant and equipment at fair value


at fair value2010$000

2009$000

aS at 1 July 2008

reStated$000

2010$000

2009$000

aS at 1 July 2008

reStated$000

Land and buildings (gross carrying amount) 693,577 685,986 672,643 693,577 685,986 672,643Accumulated depreciation (55,433) (46,857) (41,501) (55,433) (46,857) (41,501)at fair value 638,144 639,129 631,142 638,144 639,129 631,142Roadways (gross carrying amount) 32,511 31,489 26,562 32,511 31,489 26,562Accumulated depreciation (22,042) (19,202) (15,472) (22,042) (19,202) (15,472)at fair value 10,469 12,287 11,090 10,469 12,287 11,090Wharves, jetties and breakwaters (gross carrying amount) 732,188 606,674 563,568 732,188 606,674 563,568Accumulated depreciation (468,040) (373,127) (325,937) (468,040) (373,127) (325,937)at fair value 264,148 233,547 237,631 264,148 233,547 237,631Plant (gross carrying amount) 54,599 47,666 43,065 50,909 43,962 39,510Accumulated depreciation (27,216) (25,991) (23,393) (25,506) (24,551) (22,320)at fair value 27,383 21,675 19,672 25,403 19,411 17,190Construction in progress 481,517 280,554 93,302 481,326 280,554 93,302total property, plant and equipment at fair value (net carrying amount) 1,421,661 1,187,192 992,837 1,419,490 1,184,928 990,355

(b) revaluation of property, plant and equipment

The Land and Property Management Authority provided gross values for land and buildings at 30 June 2010.

A quantity and construction cost consultant, MDA Australia Pty Ltd, provided gross values for roadways and wharves, jetties and breakwaters at 30 June 2010.

The Corporation’s qualified engineers assessed remaining useful lives of each asset.

Based on these assessments, all assets are recorded at fair value. The assets that were not revalued due to materiality are also shown at fair value as the written-down value approximates fair value. A recoverable-amount test was performed to ensure asset carrying values did not exceed recoverable-amounts.




note 10. ProPerty, Plant and eQuiPment (Continued)

(c) carrying amounts if property, plant and equipment were measured at cost less accumulated depreciation

If property, plant and equipment were measured using the cost model, the carrying amounts would be as follows:


at CoSt2010$000

2009$000

aS at 1 July 2008

reStated$000

2010$000

2009$000

aS at 1 July 2008

reStated$000

Land and buildings (gross carrying amount) 276,456 276,340 275,426 276,456 276,340 275,426Accumulated depreciation (8,818) (7,833) (7,095) (8,818) (7,833) (7,095)

267,638 268,507 268,331 267,638 268,507 268,331Roadways (gross carrying amount) 12,581 12,748 12,594 12,581 12,748 12,594Accumulated depreciation (6,082) (5,691) (5,175) (6,082) (5,691) (5,175)

6,499 7,057 7,419 6,499 7,057 7,419Wharves, jetties and breakwaters (gross carrying amount) 147,222 146,517 142,281 147,222 146,517 142,281Accumulated depreciation (53,951) (50,612) (47,356) (53,951) (50,612) (47,356)

93,271 95,905 94,925 93,271 95,905 94,925Plant (gross carrying amount) 54,593 47,659 43,056 50,903 43,956 39,502Accumulated depreciation (27,007) (25,587) (23,344) (25,297) (24,147) (22,272)

27,586 22,072 19,712 25,606 19,809 17,230Construction in progress 481,517 280,554 93,302 481,326 280,554 93,302total property, plant and equipment (at cost) 876,511 674,095 483,689 874,340 671,832 481,207

(d)(i) Movement in property, plant and equipment – Consolidated

note

land and BuildingS

$000roadwayS

$000

wharveS, JettieS and

BreakwaterS$000

Plant$000

total$000

Balance at 1 July 2009 149,427 12,259 189,867 18,777 370,330Correction of prior period error 24 489,702 28 43,680 2,898 536,308restated balance at 1 july 2009 639,129 12,287 233,547 21,675 906,638Revaluation increments 2(h)(v) 1,392 64 41,128 – 42,584Revaluation decrements 2(h)(v) (25) (529) – – (554)Transfers from construction in progress 74 27 704 9,952 10,757Write-ons 4 – – – 4Additions – – – 343 343Reclassification 13 – – (13) –

640,587 11,849 275,379 31,957 959,772Depreciation charge (2,443) (1,285) (11,231) (3,624) (18,583)Disposals – – – (598) (598)Write-offs – (95) – (352) (447)balance at 30 june 2010 638,144 10,469 264,148 27,383 940,144


(d)(ii) Movement in property, plant and equipment – Corporation

note

land and BuildingS

$000roadwayS

$000


BreakwaterS$000

Plant$000

total$000

Balance at 1 July 2009 149,427 12,259 189,867 16,513 368,066Correction of prior period error 24 489,702 28 43,680 2,898 536,308restated balance at 1 july 2009 639,129 12,287 233,547 19,411 904,374Revaluation increments 2(h)(v) 1,392 64 41,128 – 42,584Revaluation decrements 2(h)(v) (25) (529) – – (554)Transfers from construction in progress 74 27 704 9,938 10,743Write-ons 4 – – – 4Additions – – – 343 343Reclassification 13 – – (13) –

640,587 11,849 275,379 29,679 957,494Depreciation charge (2,443) (1,285) (11,231) (3,341) (18,300)Disposals – – – (583) (583)Write-offs – (95) – (352) (447)balance at 30 june 2010 638,144 10,469 264,148 25,403 938,164

(d)(iii) Movement in construction in progress


note2010$000

2009$000

aS at 1 July 2008

$0002010$000

2009$000

aS at 1 July 2008

$000

Balance at 1 July 2009 280,554 93,302 31,925 280,554 93,302 31,919Additions 307,298 201,131 67,222 307,093 200,971 67,166

587,852 294,433 99,147 587,647 294,273 99,085Transfers to property, plant and equipment (10,757) (12,836) (5,716) (10,743) (12,680) (5,654)Transfers to intangible assets (2,384) (1,043) (129) (2,384) (1,039) (129)Transfer to prepaid licences 2(m), 7 (93,194) – – (93,194) – –balance at 30 june 2010 481,517 280,554 93,302 481,326 280,554 93,302

Additions during the year for the consolidated entity and the Corporation include capitalised borrowing costs of $27.348 million (2009: $4.022 million).




note 11. intangiBle aSSetS


2010$000

2009$000

2010$000

2009$000

carrying amounts (at fair value)Software 6,330 3,946 6,323 3,939Accumulated amortisation (3,204) (2,504) (3,201) (2,503)

3,126 1,442 3,122 1,436Easements 230 – 230 –total intangible assets at fair value (net carrying amount) 3,356 1,442 3,352 1,436

movement in intangible assets


2010$000

2009$000

2010$000

2009$000

Balance at 1 July 2009 1,442 300 1,436 300Transfers from construction in progress 2,384 1,043 2,384 1,039Additions 230 – 230 –Transfers from property, plant and equipment – 386 – 384

4,056 1,729 4,050 1,723Amortisation charge (700) (287) (698) (287)balance at 30 june 2010 3,356 1,442 3,352 1,436

note 12. trade and other PayaBleS

ConSolidated CorPoration2010$000

2009$000

2010$000

2009$000

currentTrade payables 723 1,339 717 1,152Port Cargo Access Charge (b) 770 576 770 576Accrued employee benefits 3,045 2,516 2,569 2,072Accrued borrowing costs 20,514 7,966 20,514 7,966Accrued land tax – 12,505 – 12,505Other payables and accruals 29,211 29,262 28,724 28,983Related party payables (c) – – – 46Tax related payable to subsidiary – – 199 120Lease incentive liability 254 – 254 –Income received in advance 5,185 5,048 5,185 5,048

59,702 59,212 58,932 58,468

non-currentLease incentive liability 2,030 143 2,030 143

2,030 143 2,030 143

(a) fair value

Due to the short term nature of the current payables, their carrying value is assumed to approximate their fair value.

(b) port cargo access charge

This relates to the port cargo access charge collected on behalf of Transport NSW (previously Department of Transport and Infrastructure) not yet remitted at the statement of financial position date.

(c) related party payables

For terms and conditions relating to related party payables refer to note 21.

(d) interest rate and liquidity risk

Information regarding interest rate and liquidity risk exposure is set out in note 17.


note 13. ProviSionS


2010$000

2009$000

2010$000

2009$000

currentEmployee benefits 11,675 11,906 10,789 10,838Provision for onerous contract 1,151 1,342 1,151 1,342

12,826 13,248 11,940 12,180

non-currentEmployee benefits 679 491 469 349Provision for onerous contract 4,855 3,584 4,855 3,584Provision for make good 369 – 369 –

5,903 4,075 5,693 3,933

employee benefits

Employee benefits relates to annual leave, long-service leave, termination and other employee benefits. Refer to note 2(s) for the relevant accounting policy and discussion of the significant estimations and assumptions applied in the measurement of this provision.

provision for onerous contract

The provision for onerous contract arises from a non-cancellable lease where the unavoidable costs of meeting the lease contract exceed the economic benefits to be received from it as at the statement of financial position date.

provision for make good

A provision was raised during the year in respect of the consolidated entity’s obligation to remove leasehold improvements from its leased office premises. The leasehold improvements are included in the plant asset grouping within property, plant and equipment.

movement in provisions – consolidated

BalanCe30 June 2009

$000

Current Charge to Profit and

loSS$000

PaymentS made

$000

Current Charge to

ConStruCtion ProgreSS

$000

BalanCe 30 June

2010$000

currentEmployee benefits Annual leave 3,987 2,577 (2,810) 95 3,849 Long-service leave 7,919 1,000 (1,142) 49 7,826Provision for onerous contract

1,342 360 (551) – 1,15113,248 3,937 (4,503) 144 12,826

non-currentEmployee benefits Long-service leave 491 188 – – 679Provision for onerous contract 3,584 1,271 – – 4,855Provision for make good – 369 – – 369

4,075 1,828 – – 5,903




note 13. ProviSionS (Continued)

movement in provisions – corporation

BalanCe30 June 2009

$000

Current Charge to Profit and

loSS$000

PaymentS made

$000

Current Charge to

ConStruCtion ProgreSS

$000

BalanCe 30 June

2010$000

currentEmployee benefits Annual leave 3,287 2,093 (2,173) 95 3,302 Long-service leave 7,551 933 (1,046) 49 7,487Provision for onerous contract 1,342 360 (551) – 1,151

12,180 3,386 (3,770) 144 11,940

non-currentEmployee benefits Long-service leave 349 120 – – 469Provision for onerous contract 3,584 1,271 – – 4,855Provision for make good – 369 – – 369

3,933 1,760 – – 5,693

note 14. intereSt-Bearing loanS and BorrowingS


2010$000

2009$000

2010$000

2009$000

currentNSW TCorp borrowings 3,698 – 3,698 –

non-currentNSW TCorp borrowings 599,287 350,018 599,287 350,018

(a) repayments

Borrowings consist of NSW TCorp fixed rate loans. NSW TCorp loans are based upon payments of coupon interest only and repayment or rollover of principal at maturity. The maturity dates of the loans are between 30 July 2010 and 15 April 2039. All borrowings are secured by NSW Government Guarantee. No assets have been pledged as security for interest-bearing loans and borrowings.

(b) fair value

Details regarding fair value, interest rate and liquidity risks are disclosed in note 17.

(c) financial facilities available

The Corporation had the following financing facilities in place at 30 June 2010:

■■ A total loan facility of $900 million with NSW TCorp approved on 30 September 2009 of which $614.248 million (2009: $351.146 million) has been drawn down.

■■ A bank guarantee facility for $5.100 million with the Commonwealth Bank of Australia.

■■ A credit card facility for $0.060 million with the Commonwealth Bank of Australia.

■■ A purchasing card facility of $0.500 million with the Commonwealth Bank of Australia.


note 15. eQuity


2010$000

2009$000

aS at 1 July 2008

$0002010$000

2009$000

aS at 1 July 2008

$000

Contributed equity 125,542 125,542 125,542 125,542 125,542 125,542Asset revaluation reserve 429,930 400,292 390,693 429,930 400,292 390,693Cash flow hedge reserve (9,763) (5,183) 7,323 (9,763) (5,183) 7,323Retained earnings 384,901 329,356 283,079 384,089 327,327 280,314

930,610 850,007 806,637 929,798 847,978 803,872

asset revaluation reserve

The asset revaluation reserve is used to record increments and decrements, to the extent that they offset one another, in the fair value of property, plant and equipment.

cash flow hedge reserve

This reserve records the portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined to be an effective hedge.

note 16. defined Benefit SuPerannuation SCheme

The Corporation has three defined benefit superannuation schemes covering certain employees, all of which require contributions to be made to separately administered funds.

The Pooled Fund holds in trust the investments of the closed NSW public sector superannuation schemes, in which the Corporation participates:

■■ State Authorities Superannuation Scheme (SASS)

■■ State Authorities Non-Contributory Superannuation Scheme (SANCS)

■■ State Superannuation Scheme (SSS)

These schemes are all defined benefit schemes – at least a component of the final benefit is derived from a multiple of member salary and years of membership. All the Schemes are closed to new members.

(a) reconciliation of the assets and liabilities recognised in the statement of financial position

aS at 30 June 2010SaSS$000

SanCS$000

SSS$000

total$000

Present value of partially funded defined benefit obligation 17,711 3,672 62,950 84,333Fair value of Fund assets (17,127) (3,528) (49,105) (69,760)net (asset)/liability recognised in the statement of financial position 584 144 13,845 14,573

aS at 30 June 2009SaSS$000

SanCS$000

SSS$000

total$000

Present value of partially funded defined benefit obligations 16,003 3,388 55,893 75,284Fair value of Fund assets (15,966) (3,438) (46,081) (65,485)net (asset)/liability recognised in the statement of financial position 37 (50) 9,812 9,799

There are no unrecognised past service cost, unrecognised (gain)/loss and adjustment for limitation of net asset in 2010 and 2009.




note 16. defined Benefit SuPerannuation SCheme (Continued)

(a) reconciliation of the assets and liabilities recognised in the statement of financial position (continued)

Amounts in the statement of financial position – Consolidated and Corporation

2010$000

2009$000

Other non-current liabilities 14,573 9,849Other non-current asset – (50)net liability 14,573 9,799

(b) reconciliation of the present value of the defined benefit obligation

year ended 30 June 2010SaSS$000

SanCS$000

SSS$000

total$000

Opening present value of partially funded defined benefit obligation 16,003 3,388 55,893 75,284Current service cost 437 157 365 959Interest cost 843 178 3,070 4,091Contributions by Fund participants 234 – 410 644Actuarial (gains)/losses 1,198 164 5,526 6,888Benefits paid (1,004) (215) (2,314) (3,533)closing present value of partially funded defined benefit obligation 17,711 3,672 62,950 84,333


SanCS$000

SSS$000

total$000

Opening present value of partially funded defined benefit obligation 14,454 3,134 48,029 65,617Current service cost 393 157 274 824Interest cost 893 191 3,084 4,168Contributions by Fund participants 214 – 411 625Actuarial (gains)/losses 707 24 7,080 7,811Benefits paid (658) (118) (2,985) (3,761)closing present value of partially funded defined benefit obligation 16,003 3,388 55,893 75,284

(c) reconciliation of the fair value of fund assets


SanCS$000

SSS$000

total$000

Opening fair value of Fund assets 15,966 3,438 46,081 65,485Expected return on Fund assets 1,293 278 3,878 5,449Actuarial gains/(losses) 612 27 956 1,595Employer contributions 26 – 94 120Contributions by Fund participants 234 – 410 644Benefits paid (1,004) (215) (2,314) (3,533)closing fair value of fund assets 17,127 3,528 49,105 69,760



SanCS$000

SSS$000

total$000

Opening fair value of Fund assets 17,234 3,937 53,498 74,669Expected return on Fund assets 1,334 302 4,272 5,908Actuarial gains/(losses) (2,180) (684) (9,220) (12,084)Employer contributions 22 – 104 126Contributions by Fund participants 214 – 411 625Benefits paid (658) (117) (2,984) (3,759)closing fair value of fund assets 15,966 3,438 46,081 65,485

(d) total (income)/expense recognised in profit and loss in the statement of comprehensive income


SanCS$000

SSS$000

total$000

Current service cost 437 157 365 959Interest cost 843 178 3,070 4,091Expected return on Fund assets (net of expenses) (1,293) (278) (3,878) (5,449)Transfers to construction in progress (18) (3) (35) (56)expense/(income) recognised (31) 54 (478) (455)


SanCS$000

SSS$000

total$000

Current service cost 393 157 274 824Interest cost 893 191 3,084 4,168Expected return on Fund assets (net of expenses) (1,335) (302) (4,272) (5,909)Transfers to construction in progress (17) (2) (38) (57)expense/ (income) recognised (66) 44 (952) (974)

The superannuation expense recognised in profit and loss in the statement of comprehensive income is included in the line item “Employee benefits expense” (2010: $0.054 million; 2009: $0.044 million). The superannuation gain recognised in profit and loss in the statement of comprehensive income is included in the line item “Other revenue” (2010: $0.509 million; 2009: $1.018 million). Superannuation actuarial losses and adjustment for limit on net assets of $5.293 million (2009: $15.213 million) are separately identified in the statement of comprehensive income under other comprehensive income.

(e) amounts recognised in other comprehensive income in the statement of comprehensive income


SanCS$000

SSS$000

total$000

Superannuation actuarial (gains)/losses 585 137 4,571 5,293Adjustment for limit on net assets – – – –total recognised in other comprehensive income 585 137 4,571 5,293


SanCS$000

SSS$000

total$000

Superannuation actuarial (gains)/losses 2,888 707 16,300 19,895Adjustment for limit on net assets (1,438) (415) (2,829) (4,682)total recognised in other comprehensive income 1,450 292 13,471 15,213

The cumulative amount of superannuation actuarial (gains)/losses and adjustment for limit on net assets recognised in profit and loss in the statement of comprehensive income since 1 July 2004 is $20.368 million loss (2009: $15.075 million loss).





(f) fund assets

The percentage invested in each asset class at the statement of financial position date:

30 June 2010 30 June 2009

Australian equities 31.0% 32.1%Overseas equities 26.8% 26.0%Australian fixed interest securities 6.1% 6.2%Overseas fixed interest securities 4.3% 4.7%Property 9.5% 10.0%Cash 9.6% 8.0%Other 12.7% 13.0%

(g) fair value of fund assets

All Fund assets are invested by the SAS Trustee Corporation at arm’s length through independent fund managers.

(h) actual return on fund assets

SaSS$000

SanCS$000

SSS$000

total$000

year ended 30 june 2010Actual return on Fund assets (1,477) (305) (4,178) (5,960)

year ended 30 june 2009Actual return on Fund assets (1,681) (382) (5,240) (7,303)

(i) expected rate of return on assets

The expected return on assets assumption is determined by weighting the expected long-term return for each asset class by the target allocation of assets to each class. The returns used for each class are net of investment tax and investment fees.

(j) valuation method and principal actuarial assumptions at the statement of financial position date

(i) Valuation method

The Projected Unit Credit (PUC) valuation method was used to determine the present value of the defined benefit obligations and the related current service costs. This method sees each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to calculate the final obligation.

(ii) Economic assumptions

30 June 2010 30 June 2009

Discount rate 5.17% pa 5.59% paExpected rate of return on assets 8.6% 8.13%Salary increase rate (excluding promotional increases) 3.5% pa 3.5% paRate of CPI increase 2.5% pa 2.5% pa

(iii) Demographic assumptions

The demographic assumptions at 30 June 2010 are those that were used in the 2009 triennial actuarial valuation. The triennial review report is available from the NSW Treasury website.


(k) funding arrangements for employer contributions

(i) Surplus/deficit

The following is a summary of the 30 June 2010 and 2009 financial position of the Fund calculated in accordance with AAS 25 Financial Reporting by Superannuation Plans.

SaSS$000

SanCS$000

SSS$000

total$000

year ended 30 june 2010Accrued benefits 16,362 3,377 43,977 63,716Net market value of Fund assets (17,127) (3,528) (49,105) (69,760)net (surplus)/deficit (765) (151) (5,128) (6,044)

year ended 30 june 2009Accrued benefits 14,985 3,143 41,049 59,177Net market value of Fund assets (15,966) (3,438) (46,081) (65,485)net (surplus)/deficit (981) (295) (5,032) (6,308)

(ii) Funding method

The method used to determine the employer contribution recommendations at the last actuarial review was the Aggregate Funding method. The method adopted affects the timing of the cost to the employer.

Under the Aggregate Funding method, the employer contribution rate is determined so that sufficient assets will be available to meet benefit payments to existing members, taking into account the current value of assets and future contributions.

Contribution rates are set after discussions between the Corporation, NSW Treasury and SAS Trustee Corporation.

(iii) Economic assumptions

The economic assumptions adopted for the actuarial review of the Fund were:

weighted-average aSSumPtionS 30 June 2010 30 June 2009

Expected rate of return on Fund assets backing current pension liabilities 8.3% pa 8.3% paExpected rate of return on Fund assets backing other liabilities 7.3% pa 7.3% paExpected salary increase rate 4.0% pa 4.0% paExpected rate of CPI increase 2.5% pa 2.5% pa

(l) nature of asset/liability

If a surplus exists in the employer’s interest in the Fund, the employer may be able to take advantage of it in the form of a reduction in the required contribution rate, depending on the advice of the Fund’s actuary.

Where a deficiency exists, the employer is responsible for any difference between the employer’s share of Fund assets and the defined benefit obligation.

(m) expected employer contributions

No employer contributions are expected to be paid to any of the schemes in the next reporting period.





(n) historical information

SaSS$000

SanCS$000

SSS$000

total$000

year ended 30 june 2010Present value of defined benefit obligation 17,711 3,672 62,950 84,333Fair value of Fund assets (17,127) (3,528) (49,105) (69,760)(Surplus)/deficit in Fund 584 144 13,845 14,573Experience adjustments – Fund liabilities 1,198 164 5,526 6,888Experience adjustments – Fund assets (612) (27) (956) (1,595)

year ended 30 june 2009Present value of defined benefit obligation 16,003 3,388 55,893 75,284Fair value of Fund assets (15,966) (3,438) (46,081) (65,485)(Surplus)/deficit in Fund 37 (50) 9,812 9,799Experience adjustments – Fund liabilities 707 24 7,080 7,811Experience adjustments – Fund assets 2,180 684 9,220 12,084

year ended 30 june 2008Present value of defined benefit obligation 14,454 3,134 48,029 65,617Fair value of Fund assets (17,234) (3,937) (53,498) (74,669)(Surplus)/deficit in Fund (2,780) (803) (5,469) (9,052)Experience adjustments – Fund liabilities (1,630) 203 2,320 893Experience adjustments – Fund assets 2,819 612 7,475 10,906

year ended 30 june 2007Present value of defined benefit obligation 16,245 3,161 44,220 63,626Fair value of Fund assets (20,125) (4,773) (58,043) (82,941)(Surplus)/deficit in Fund (3,880) (1,612) (13,823) (19,315)Experience adjustments – Fund liabilities 424 (118) (2,106) (1,800)Experience adjustments – Fund assets (1,377) (291) (3,851) (5,519)

year ended 30 june 2006Present value of defined benefit obligation 15,486 3,096 44,608 63,190Fair value of Fund assets (18,362) (4,332) (51,550) (74,244)(Surplus)/deficit in Fund (2,876) (1,236) (6,942) (11,054)

note 17. finanCial riSk management oBJeCtiveS and PoliCieS

The consolidated entity’s principal financial instruments comprise cash, funds on deposit in TCorp Hour-Glass Cash Facility Trust, receivables, payables, loans and derivatives. These financial instruments arise directly from the consolidated entity’s operations or are required to finance the consolidated entity’s operations.

The consolidated entity uses derivative financial instruments such as interest rate fixed forward derivative contracts to hedge certain risk exposures. The main purpose of these instruments is to manage the interest rate risks arising from the loan portfolio. These hedges qualify for hedge accounting. The entity does not enter into or trade financial instruments for speculative purposes.

The consolidated entity’s main risks arising from financial instruments are outlined below, together with the consolidated entity’s objectives, policies and processes for measuring and managing risk. Further quantitative and qualitative disclosures are included throughout the financial statements.

The consolidated entity manages its exposure to key financial risks, including interest rate, credit and liquidity risks in accordance with the consolidated entity’s risk and treasury management policies. The objective of these policies is to support the delivery of the consolidated entity’s financial targets whilst protecting future financial security.

The Corporation’s Board is responsible for the establishment and oversight of risk management activities and reviews and agrees policies for managing each of these risks. The risk and treasury management policies are established to identify and analyse the risks faced by the consolidated entity, to set risk limits and controls and to monitor risks. Compliance with policies is reviewed by the Board on a continuous basis.


(a) financial instrument categories


note Category2010$000

2009$000

2010$000

2009 $000

financial assetsCash and cash equivalents 6 N/A* 249,255 113,367 248,970 111,771Trade and other receivables

Loans and receivables measured at amortised cost 21,107 29,791 20,346 29,136

Receivable from BDA 7 Loans and receivables measured at amortised cost – 96,688 – 96,688

Lease incentive receivable 7 N/A 327 – 327 –Derivatives 8 N/A – 5,484 – 5,484

270,689 245,330 269,643 243,079

financial liabilitiesTrade and other payables

Financial liabilities measured at amortised cost 51,108 37,513 50,294 36,728

Lease incentive liability 12 N/A 2,284 143 2,284 143Interest-bearing loans and borrowings 14

Financial liabilities measured at amortised cost 602,985 350,018 602,985 350,018

656,377 387,674 655,563 386,889

* Not applicable (N/A).

Trade and other receivables exclude statutory receivables and prepayments. Trade and other payables exclude statutory payables and unearned income. Therefore the amounts disclosed above will not reconcile with the statement of financial position.

(b) market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The consolidated entity’s exposures to market risk are primarily through interest rate risk on the consolidated entity’s loans and other price risks associated with the movement in the unit price of the TCorp Hour-Glass Cash Facility Trust. The consolidated entity has no exposure to foreign currency risk and does not enter into commodity contracts.

The effect on profit and equity due to a reasonably possible change in risk variable is outlined in the information below for interest rate risk and other price risk. A reasonably possible change in risk variable has been determined after taking into account the economic environment in which the consolidated entity operates and the time frame for the assessment (i.e. until the end of the next annual reporting period).

The sensitivity analysis is based on risk exposures in existence at the statement of financial position date. The analysis is performed on the same basis for 2009. The analysis assumes that all other variables remain constant.

Interest rate risk

Exposure to interest rate risk arises primarily through the consolidated entity’s interest bearing loans. This risk is minimised by entering into fixed rate loans with TCorp. The consolidated entity does not account for any fixed rate loans at fair value through profit or loss or as available-for-sale. Therefore, for these loans, a change in interest rates would not affect profit or loss or equity.

The consolidated entity enters into derivative financial instruments, when considered appropriate; to hedge exposure to fluctuation in interest rates on future committed loans in accordance with the consolidated entity’s treasury management policy. The objective is to lock in market interest rates on the date loans are committed to rather than on the date of physical draw down. The interest rate fixed forward derivative financial instruments qualify for hedge accounting.

A reasonably possible change of +/- 1% is used, consistent with current trends in interest rates. The basis is reviewed annually and amended where there is a structural change in the level of interest rate volatility.

At balance date, the consolidated entity’s exposure to interest rate risk is set out below.




note 17. finanCial riSk management oBJeCtiveS and PoliCieS (Continued)

Consolidated

+1% (100 BaSiS PointS) -1% (100 BaSiS PointS)

Carrying amount

$000

PoSt tax imPaCt on

Profit$000

eQuity$000

PoSt tax imPaCt on

Profit$000

eQuity$000

at 30 june 2010Financial assets Cash and cash equivalents 249,252 1,745 – (1,745) –Trade and other receivables 1,307 9 – (9) – 250,559 1,754 – (1,754) –Financial liabilities

Interest-bearing loans and borrowings 602,985 – – – –net exposure (352,426) 1,754 – (1,754) –

at 30 june 2009 Financial assets Cash and cash equivalents 113,364 794 – (794) –Trade and other receivables 1,612 11 – (11) –Receivable from BDA 96,688 677 – (677) –Derivatives 5,484 – 14,477 – (14,477) 217,148 1,482 14,477 (1,482) (14,477)Financial liabilities

Interest-bearing loans and borrowings350,018 – – – –

net exposure (132,870) 1,482 14,477 (1,482) (14,477)

Corporation

+1% (100 BaSiS PointS) -1% (100 BaSiS PointS)

Carryingamount

$000

PoSt tax imPaCt on

Profit$000

eQuity$000

PoSt tax imPaCt on

Profit$000

eQuity$000

at 30 june 2010Financial assets

Cash and cash equivalents 248,968 1,743 – (1,743) –Trade and other receivables 1,307 9 – (9) – 250,275 1,752 – (1,752) –Financial liabilities

Interest-bearing loans and borrowings 602,985 – – – –net exposure (352,710) 1,752 – (1,752) –

at 30 june 2009 Financial assets Cash and cash equivalents 111,769 782 – (782) –Trade and other receivables 1,612 11 – (11) –Receivable from BDA 96,688 677 – (677) –Derivatives 5,484 – 14,477 – (14,477) 215,553 1,470 14,477 (1,470) (14,477)Financial liabilities

Interest-bearing loans and borrowings 350,018 – – – –net exposure (134,465) 1,470 14,477 (1,470) (14,477)


Other price risk – TCorp Hour-Glass Cash Facility Trust

Exposure to “other price risk” primarily arises through the investment in the TCorp Hour-Glass Cash Facility Trust, which is held for strategic rather than trading purposes. The consolidated entity has no direct equity investments. The consolidated entity holds units in the following TCorp Hour-Glass facilities:

faCilityinveStmentSeCtorS

inveStment horizon

2010$000

2009$000

consolidatedTCorp Hour-Glass Cash Facility Trust

Cash, money market instruments

Up to 1.5 years 246,566 110,160

corporationTCorp Hour-Glass Cash Facility Trust


Up to 1.5 years 246,486 108,786

The unit price of the facility is equal to the total fair value of the net assets held by the facility divided by the number of units on issue. Unit prices are calculated and published daily.

TCorp is trustee for the above facility and is required to act in the best interest of the unit holders and to administer the trust in accordance with the trust deed. As trustee, TCorp has appointed external managers to manage the performance and risks of the facility in accordance with a mandate agreed by the parties. However, TCorp acts as manager for part of the facility. A significant portion of the administration of the facility is outsourced to an external custodian.

TCorp provides sensitivity analysis information for the facility, using historically based volatility information collected over a ten year period, quoted at two standard deviations (i.e. 95% probability). The facility is designated at fair value through profit or loss and therefore any change in unit price impacts directly on profit. A reasonably possible change is based on the percentage change in unit price, as advised by TCorp, multiplied by the redemption value as at 30 June each year for each facility.

imPaCt on PoSt tax Profithigher/(lower)

Change in unit PriCe

2010$000

2009$000

consolidatedTCorp Hour-Glass Cash Facility Trust +/-1% 1,726 771

corporationTCorp Hour-Glass Cash Facility Trust +/-1% 1,725 761

(c) credit risk

Credit risk arises when there is the possibility of the consolidated entity’s debtors defaulting on their contractual obligations, resulting in a financial loss to the consolidated entity. The maximum exposure to credit risk is generally represented by the carrying amount of the financial assets (net of any allowance for impairment).

Credit risk arises from the financial assets of the consolidated entity, which comprise cash and cash equivalents, trade and other receivables, and derivative instruments. The consolidated entity has not granted any financial guarantees.

Credit risk associated with the consolidated entity’s financial assets, other than trade and other receivables, is managed through the selection of creditworthy counterparties and recognised financial intermediaries as a means of mitigating against the risk of financial losses from defaults. In addition, only highly liquid marketable securities are used for investment purposes.

The consolidated entity trades only with recognised creditworthy third parties. Trade customers who wish to transact on credit terms are subject to credit verification procedures which may result in obtaining bank guarantees. In addition, receivable balances are monitored on an ongoing basis to minimise the exposure to bad debts.

The consolidated entity is not materially exposed to a concentration of credit risk to a single trade debtor. The largest single trade debtor included in receivables totals $1.532 million (2009: $1.378 million) and is 0.57% of total consolidated financial assets (2009: 0.56%).





(d) liquidity risk

Liquidity risk is the risk that the consolidated entity will be unable to meet its payment obligations when they fall due. The consolidated entity continuously manages liquidity risk through monitoring future cash flows and maturities planning to ensure adequate holding of high quality liquid assets. The aim of liquidity risk management is to ensure that the consolidated entity has sufficient funds available to meet its obligations both on a day to day basis and in the longer term. That is, its aim is to ensure that new funding and refinancing can be obtained when required and without undue concentration at times when financial markets might be strained. Provided that these aims are met, the policy also aims to minimise net finance costs.

During the current and prior years, there were no defaults or breaches on any loans payable. No assets have been pledged as collateral. The consolidated entity’s exposure to liquidity risk is deemed insignificant based on prior periods’ data and a current assessment of risk.

Liabilities are recognised for amounts due to be paid in the future for goods or services received, whether or not invoiced at balance date. Amounts owing to suppliers (which are unsecured) are settled in accordance with trade terms. If trade terms are not specified, payment is made within 28 days of recognition.

The following table summarises the maturity profile of the consolidated entity’s financial liabilities, together with the interest rate exposure.

The maturity profile is based on the remaining contractual maturity period at the reporting date. The nominal amounts are the contractual undiscounted cash flows (includes both interest and principal cash flows) of each class of financial liabilities and therefore will not reconcile to the statement of financial position.

Consolidated

intereSt rate exPoSure ContraCtual maturity dateS

weighted average

effeCtive intereSt

rate

nominal amount

$000

fixed intereSt

rate$000

variaBle intereSt

rate $000

non–intereSt Bearing

$000< 1 year

$0001–5 yearS

$000> 5 yearS

$000

as at 30 june 2010Financial liabilities

Trade and other payables N/A 51,108 – – 51,108 51,108 – –Lease incentive liability N/A 6,502 – – 6,502 977 4,002 1,523Interest-bearing loans and borrowings 6.36% 973,839 973,839 – – 38,616 187,564 747,659

1,031,449 973,839 – 57,610 90,701 191,566 749,182


Trade and other payables N/A 37,513 – – 37,513 37,513 – –Lease incentive liability N/A 2,455 – – 2,455 982 1,473 –Interest-bearing loans and borrowings 6.38% 507,313 507,313 – – 20,029 105,158 382,126

547,281 507,313 – 39,968 58,524 106,631 382,126


Corporation


weighted average

effeCtive intereSt

rate

nominal amount

$000

fixed intereSt

rate$000

variaBle intereSt

rate $000

non-intereSt Bearing

$000< 1 year

$0001-5 yearS

$000> 5 yearS

$000


Trade and other payables N/A 50,294 – – 50,294 50,294 – –Lease incentive liability N/A 6,502 – – 6,502 977 4,002 1,523Interest-bearing loans and borrowings 6.36% 973,839 973,839 – – 38,616 187,564 747,659

1,030,635 973,839 – 56,796 89,887 191,566 749,182


Trade and other payables N/A 36,728 – – 36,728 36,728 – –Lease incentive liability N/A 2,455 – – 2,455 982 1,473 –Interest-bearing loans and borrowings 6.38% 507,313 507,313 – – 20,029 105,158 382,126

546,496 507,313 – 39,183 57,739 106,631 382,126

(e) fair value compared to carrying amount

Financial instruments are generally recognised at cost, with the exception of the TCorp Hour-Glass Cash Facility Trust and derivatives, which are measured at fair value. The value of the TCorp Hour-Glass Cash Facility Trust is based on the consolidated entity’s share of the value of the underlying assets of the facility, based on the market value.

Except where specified below, the amortised cost of financial instruments recognised in the statement of financial position approximates the fair value, because of the short-term nature of many of the financial instruments. The TCorp Hour-Glass Cash Facility Trust and derivatives are all measured at fair value. The following table details the financial instruments where the fair value differs from the carrying amount:

2010 Carrying

amount$000

2010fair

value$000

2009Carrying

amount$000

2009 fair

value$000

consolidatedFinancial liabilities

NSW TCorp borrowings 602,985 623,434 350,018 342,823

corporationFinancial liabilitiesNSW TCorp borrowings 602,985 623,434 350,018 342,823

The fair values have been calculated by discounting the expected future cash flows at prevailing market rates varying from 4.67% to 5.79% (2009: 3.71% to 6.22%).





(f) fair value recognised in the statement of financial position

The consolidated entity uses the following hierarchy for disclosing the fair value of financial instruments by valuation technique:

■■ Level 1 – Derived from quoted prices in active markets for identical assets/liabilities.

■■ Level 2 – Derived from inputs other than quoted prices that are observable directly or indirectly.

■■ Level 3 – Derived from valuation techniques that include inputs for the asset/liability not based on observable market data (unobservable input).

The fair values of the financial instruments as well as the method used to estimate the fair value are summarised in the table below.

level 1$000

level 2$000

level 3$000

2010total$000

consolidatedFinancial assets at fair value

TCorp Hour-Glass Cash Facility Trust – 246,566 – 246,566

corporationFinancial assets at fair valueTCorp Hour-Glass Cash Facility Trust – 246,486 – 246,486

No financial liabilities were measured at fair value in the statement of financial position for the period ended 30 June 2010.

There were no transfers between level 1 and 2 during the period ended 30 June 2010.

Capital management

The consolidated entity manages its capital to ensure it will be able to continue as a going concern, while maximising the return to stakeholders through optimisation of the debt and equity balance.

There are no externally imposed capital requirements.

The Board reviews and agrees policies for managing the capital structure when considering each major project investment and following consultation with NSW Treasury. In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to shareholders.

The consolidated entity monitors capital on the basis of the gearing ratio, debt cover (years) and interest cover (times).

The ratios based on operations at 30 June 2010 and 2009 were as follows:

Gearing ratio


2010$000

2009$000

2010$000

2009$000

Total debt 602,985 350,018 602,985 350,018Total debt and total equity 1,533,595 1,200,025 1,532,783 1,197,996gearing ratio 39.3% 29.2% 39.3% 29.2%


Debt cover


2010$000

2009$000

2010$000

2009$000

Total debt 602,985 350,018 602,985 350,018Less Cash and cash equivalents 249,255 113,367 248,970 111,771net debt 353,730 236,651 354,015 238,247EBITDA* 118,919 109,743 120,372 110,433debt cover (years) 3.0 2.2 2.9 2.2

Interest cover


2010$000

2009$000

2010$000

2009$000

EBITDA* 118,919 109,743 120,372 110,433Finance costs^ 41,837 14,635 41,837 14,635interest cover (times) 2.8 7.5 2.9 7.6

* Represents earnings before interest, taxes, depreciation and amortisation (includes interest income but excludes interest expense). The 2009 comparative is adjusted to reflect the decrease in profit for the year resulting from the prior period error outlined in note 24.

^ Represents borrowing costs expensed and capitalised for accounting purposes and the NSW Government Guarantee Fee.

note 18. CommitmentS

(a) capital expenditure commitments

Forward obligations under major contracts committed at 30 June 2010 but not otherwise brought to account have been assessed at $122.024 million including GST (2009: $378.950 million including GST). The $122.024 million includes input tax credits of $11.093 million (2009: $34.450 million) that are expected to be recoverable from the Australian Taxation Office.

Commitments contracted at 30 June, for both the consolidated entity and the Corporation, are as follows:

land and BuildingS

$000roadwayS

$000


BreakwaterS$000

Plant$000

total$000

30 june 2010Not later than one year 38,075 5,097 39,119 14,732 97,023Later than one and not later than five years 17,934 746 5,739 582 25,001Later than five years – – – – –total including gSt 56,009 5,843 44,858 15,314 122,024

30 june 2009Not later than one year 65,100 7,875 213,858 19,362 306,195Later than one and not later than five years 23,618 1,670 44,734 2,733 72,755Later than five years – – – – –total including gSt 88,718 9,545 258,592 22,095 378,950




note 18. CommitmentS (Continued)

(b) operating lease commitments

Operating lease commitments – as lessee

The future minimum lease payments under non-cancellable operating leases as at the statement of financial position date not recognised in the financial statements are payable as follows:


PayaBle2010$000

2009$000

2010$000

2009$000

Not later than one year 1,560 1,628 1,560 1,628Later than one and not later than five years 19,121 15,350 19,121 15,350Later than five years 12,212 17,281 12,212 17,281total including gSt 32,893 34,259 32,893 34,259

The above total includes GST input tax credits of $2.967 million (2009: $3.102 million) that are expected to be recoverable from the Australian Taxation Office. The expenditure commitment relates to rental of office premises, motor vehicles, computers and office equipment, and also includes expenditure commitments on a lease contract that has become onerous. These leases have an average life of between two and ten years. The lease of office premises has a renewal option included in the contract.

Operating lease commitments – as lessor

The future minimum lease receivable under non-cancellable operating leases as at the statement of financial position date not recognised in the financial statements are receivable as follows:


reCeivaBle2010$000

2009$000

2010$000

2009$000

Not later than one year 46,646 59,342 46,646 59,342Later than one and not later than five years 173,165 200,837 173,165 200,837Later than five years 382,934 433,980 382,934 433,980total including gSt 602,745 694,159 602,745 694,159

The above total includes GST output tax of $54.947 million (2009: $63.105 million) that is expected to be paid to the Australian Taxation Office. These lease receivables relate to property leases with remaining terms of between one and thirty years.

Leasing arrangements

All receivable leases are entered into at commercial rates and terms. Regular market valuations and tendering processes are carried out to ensure commercial arrangements are maintained.

note 19. Contingent aSSetS and Contingent liaBilitieS

The consolidated entity has no contingent assets and contingent liabilities at 30 June 2010 and 2009.

note 20. ConSultanCy feeS

Total fees paid and payable to consultants relating to economic analysis and strategic planning services during the year were $0.197 million (2009: $2.062 million).


note 21. related Party diSCloSure

(a) Subsidiary

The consolidated financial statements include the financial statements of its controlled entity. The financial years for the controlled entity are the same as those for the parent entity.

eQuity intereSt inveStment

nameCountry of inCorPoration

2010%

2009%

2010$000

2009$000

Sydney Pilot Service Pty Ltd Australia 100 100 1,120 1,120

(b) ultimate parent

Sydney Ports Corporation is the ultimate parent of the consolidated entity.

(c) key management personnel

Details relating to key management personnel, including remuneration paid, are included in note 22.

(d) transactions with related parties

(i) Transactions with subsidiary

The following table provides outstanding balances and the total amount of transactions which have been entered into with Sydney Pilot Service Pty Ltd for the relevant financial year.

related Party

SaleS to related

Party$000

PurChaSeS from

related Party

$000

related Party

reCeivaBleS $000

related Party

PayaBleS$000

related Party tax

reCeivaBle$000

related Party tax

PayaBle$000

Sydney ports corporation 2010 2,518 – 108 – – 1992009 2,942 – 120 46 – 120

Sydney pilot Service pty ltd2010 – 2,518 – 108 199 –2009 – 2,942 46 120 120 –

Terms and conditions of transactions with the related party

Sales to and purchases from the related party are made at arm’s length at normal market prices and on normal commercial terms. Expenditure paid by the Corporation on behalf of the subsidiary company was recovered at cost. Management, accounting, human resources, information technology and other services were provided to the subsidiary company for a management fee based on cost recovery.

Outstanding balances at year-end are unsecured and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables.

For the years ended 30 June 2010 and 2009, the consolidated entity has not raised any allowance for impairment relating to amounts owed by the related party as all amounts are settled in full monthly.

(ii) Transactions with Director related entities

Mr Grant Gilfillan is currently a Director of Sydney Ports Corporation. During the year Sydney Ports Corporation paid membership subscriptions, seminars and conferences payments to Ports Australia of $8,673 (2009: $55,972) and International Association of Ports and Harbours of $20,575 (2009: $nil), both entities of which Mr Gilfillan was also a Director. There are no outstanding balances at 30 June 2010 and 2009.

Mr Llew Russell is a Director of Sydney Pilot Service Pty Ltd until 15 June 2010. In the 2010 financial year Tradegate Australia Limited, a company of which Mr Russell was also a Director, provided transport code repository services on an arm’s length commercial basis to Sydney Ports Corporation for consideration of $1,320 (2009: $1,320). There are no outstanding balances at 30 June 2010 and 2009.




note 22. key management PerSonnel

The consolidated entity defines key management personnel as those having authority and responsibility for planning, directing and controlling the activities of the entity, including any directors.

compensation for key management personnel


Benefit2010$000

2009$000

2010$000

2009$000

Short term employee benefits 2,197 2,189 2,129 2,098Post employment benefits 209 248 205 241Other long term benefits – 170 – 170Termination benefits 135 860 135 860Share based payments – – – –total 2,541 3,467 2,469 3,369

Directors’ remuneration includes emoluments and other benefits paid, or due and payable, to Directors but does not include amounts paid as salary to full-time Directors. Directors’ remuneration for the Corporation for the year was $0.291 million (2009: $0.292 million). Directors’ remuneration for the subsidiary company for the year was $0.020 million (2009: $0.023 million).

During the year no loans were made to Directors. Transactions between the consolidated entity and Director related entities are disclosed in note 21.

note 23. eventS after the rePorting Period

(a) discontinued operation of the controlled entity

In May 2010 the Board of Directors of Sydney Ports Corporation authorised and approved the transfer of the vessel pilotage business from Sydney Pilot Service Pty Ltd to Sydney Ports Corporation effective after receipt of written approval from the voting shareholding Ministers of Sydney Ports Corporation. In August 2010 the voting shareholding Ministers of Sydney Ports Corporation gave approval to the transfer and the subsequent winding up of Sydney Pilot Service Pty Ltd.

All employees of Sydney Pilot Service Pty Ltd were transferred to Sydney Ports Corporation on 1 July 2010.

The vessel pilotage business of Sydney Pilot Service Pty Ltd was transferred to Sydney Ports Corporation on 1 September 2010. The consideration was equivalent to the carrying values of the transferred assets and liabilities at 31 August 2010.

(b) assets and liabilities of Sydney pilot Service pty ltd transferred after balance date

As detailed in note 23(a), the following assets and liabilities of Sydney Pilot Service Pty Ltd were transferred to Sydney Ports Corporation after balance date.

$000

Prepayments and other receivables 135Property, plant and equipment 2,118Intangible assets 3Deferred tax equivalent assets 549total assets 2,805Other payables 890Deferred tax equivalent liabilities 31Provisions 1,096total liabilities 2,017net assets and liabilities transferred 788

The consolidated entity has not identified any other events or transactions after the statement of financial position date that are material to require adjustments or disclosures in the financial statements.


note 24. Prior Period error

On adoption of Australian equivalents to International Financial Reporting Standards (AIFRS) for the 30 June 2006 financial statements, the consolidated entity recognised assets that were subject to a lease and are not occupied by the consolidated entity as investment property. The Audit Office of NSW issued an unqualified audit opinion on the consolidated entity’s 30 June 2006 financial statements and in subsequent years.

The consolidated entity has now identified that these assets are not held with the principal objective of earning rental income or for capital appreciation, rather they are held by the consolidated entity to provide a port facility to facilitate trade and commerce. Therefore, these assets are to be correctly classified as property, plant and equipment. The consolidated entity corrected its recognition of these assets as a prior period error with retrospective adjustments from 1 July 2005.

The correction of prior period error decreased consolidated 2010 net profit after tax for the year from $71.843 million to $59.129 million (2009: from $59.203 million to $56.957 million), by excluding from profit a gain of $12.561 million for the investment property revaluation gain/(loss) line item (2009: a loss of $2.560 million), increasing depreciation and amortisation expense by $5.602 million (2009: $5.602 million) and increasing other expenses by $nil (2009: $0.166 million) along with the associated and offsetting income tax benefit of $5.449 million (2009: $0.962 million). Relevant extracts of the restated prior year financial statements as a result of the prior period error are provided below.

The necessary corrections have been made as required by AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors as follows:

■■ the amount of the correction for each financial statements line item affected; and

■■ the amount of the correction at the beginning of the earliest prior period presented.




note 24. Prior Period error (Continued)

for the year ended 30 June 2009 ComParative year

(a) restatement of Statement of comprehensive income for the year ended 30 june 2009

Financial Statement Line Items Impacted by the Prior Period Error


PreviouSly rePorted

2009$000

Prior Period error

$000

reStated aCtual 2009

$000

PreviouSly rePorted

2009$000

Prior Period error

$000

reStated aCtual 2009

$000

revenueRevenues excluding investment property revaluation gain/(loss) 209,515 – 209,515 201,285 – 201,285Investment property revaluation gain/(loss) (2,560) 2,560 – (2,560) 2,560 – total revenue 206,955 2,560 209,515 198,725 2,560 201,285

expensesEmployee benefits expense (36,234) – (36,234) (29,509) – (29,509)Depreciation and amortisation expense

(12,496)

(5,602) (18,098)

(12,116)

(5,602) (17,718)

Other expenses (63,372) (166) (63,538) (61,177) (166) (61,343) Finance costs (10,613) – (10,613) (10,613) – (10,613)total expenses (122,715) (5,768) (128,483) (113,415) (5,768) (119,183) profit before income tax equivalent expense 84,240 (3,208) 81,032 85,310 (3,208) 82,102 Income tax equivalent expense (25,037) 962 (24,075) (25,371) 962 (24,409) net profit for the year 59,203 (2,246) 56,957 59,939 (2,246) 57,693

other comprehensive income/(expense)Fair value revaluation of property, plant and equipment 11,495

2,860 14,355 11,495

2,860 14,355

Other comprehensive income/(expense) (33,079) – (33,079) (33,079) – (33,079)Income tax on items taken directly to or transferred from equity 6,662 (858) 5,804 6,662 (858) 5,804 other comprehensive income/ (expense) for the period net of tax (14,922) 2,002 (12,920) (14,922) 2,002 (12,920) total comprehensive income for the year 44,281 (244) 44,037 45,017 (244) 44,773



(b) restatement of Statement of financial position as at 30 june 2009



PreviouSly rePorted

2009$000

Prior Period error

$000

reStated aCtual

2009$000

PreviouSly rePorted

2009$000

Prior Perioderror

$000

reStatedaCtual

2009$000

total current assets 148,363 – 148,363 146,104 – 146,104Property, plant and equipment 650,884 536,308 1,187,192 648,620 536,308 1,184,928 Investment properties 537,184 (537,184) – 537,184 (537,184) – Other non-current assets 115,693 – 115,693 116,226 – 116,226total non-current assets 1,303,761 (876) 1,302,885 1,302,030 (876) 1,301,154 total assets 1,452,124 (876) 1,451,248 1,448,134 (876) 1,447,258

total current liabilities 78,105 – 78,105 76,293 – 76,293Deferred tax equivalent liabilities 159,314 (263) 159,051 159,307 (263) 159,044 Other non-current liabilities 364,085 – 364,085 363,943 – 363,943

total non-current liabilities 523,399 (263) 523,136 523,250 (263) 522,987 total liabilities 601,504 (263) 601,241 599,543 (263) 599,280

net assets 850,620 (613) 850,007 848,591 (613) 847,978 Contributed equity 125,542 – 125,542 125,542 – 125,542Reserves 170,875 224,234 395,109 170,875 224,234 395,109 Retained earnings 554,203 (224,847) 329,356 552,174 (224,847) 327,327 total equity 850,620 (613) 850,007 848,591 (613) 847,978

(c) restatement of Statement of changes in equity as at 30 june 2009



PreviouSly rePorted

2009$000

Prior Period error

$000

reStated aCtual

2009$000

PreviouSly rePorted

2009$000

Prior Period error

$000

reStated aCtual

2009$000

Contributed equity 125,542 – 125,542 125,542 – 125,542Asset revaluation reserve 176,058 224,234 400,292 176,058 224,234 400,292Cash flow hedge reserve (5,183) – (5,183) (5,183) – (5,183)Retained earnings 554,203 (224,847) 329,356 552,174 (224,847) 327,327total equity 850,620 (613) 850,007 848,591 (613) 847,978





1 July 2008 Comparative Year Opening Balances

(d) restatement of Statement of financial position as at 1 july 2008



PreviouSly rePorted

2008$000

Prior Period error

$000

reStated aCtual

2008$000

PreviouSly rePorted

2008$000

PriorPeriod error

$000

reStated aCtual

2008$000

total current assets 127,746 – 127,746 125,218 – 125,218Property, plant and equipment 461,181 531,656 992,837 458,699 531,656 990,355 Investment properties 532,183 (532,183) – 532,183 (532,183) – Other non-current assets 118,871 – 118,871 119,541 – 119,541total non-current assets 1,112,235 (527) 1,111,708 1,110,423 (527) 1,109,896 total assets 1,239,981 (527) 1,239,454 1,235,641 (527) 1,235,114

total current liabilities 98,787 – 98,787 97,306 – 97,306Deferred tax equivalent liabilities 161,446 (158) 161,288 161,425 (158) 161,267 Other non-current liabilities 172,742 – 172,742 172,669 – 172,669

total non-current liabilities 334,188 (158) 334,030 334,094 (158) 333,936 total liabilities 432,975 (158) 432,817 431,400 (158) 431,242

net assets 807,006 (369) 806,637 804,241 (369) 803,872 Contributed equity 125,542 – 125,542 125,542 – 125,542Reserves 175,784 222,232 398,016 175,784 222,232 398,016Retained earnings 505,680 (222,601) 283,079 502,915 (222,601) 280,314 total equity 807,006 (369) 806,637 804,241 (369) 803,872

(e) restatement of Statement of changes in equity as at 1 july 2008



PreviouSly rePorted

2008$000

Prior Period error

$000

reStated aCtual

2008$000

PreviouSlyrePorted

2008$000

Prior Period error

$000

reStated aCtual

2008$000

Contributed equity 125,542 – 125,542 125,542 – 125,542Asset revaluation reserve 168,461 222,232 390,693 168,461 222,232 390,693Cash flow hedge reserve 7,323 – 7,323 7,323 – 7,323Retained earnings 505,680 (222,601) 283,079 502,915 (222,601) 280,314total equity 807,006 (369) 806,637 804,241 (369) 803,872

end oF audited FinanCiaL StateMentS



direCtorS’ deCLaration

In the opinion of the Directors of Sydney Ports Corporation:

1. Pursuant to section 41C of the Public Finance and Audit Act 1983, the accompanying financial statements and notes:

(a) exhibit a true and fair view of the financial position of the Corporation and the consolidated entity at 30 June 2010 and of their performance, as represented by the results of their operations and their cash flows for the year ended on that date.

(b) comply with applicable Australian Accounting Standards and Australian Accounting Interpretations, other mandatory and statutory reporting requirements including the Public Finance and Audit Act 1983, the Public Finance and Audit Regulation 2010 and the State Owned Corporations Act 1989.

2. There are reasonable grounds to believe that the Corporation will be able to pay its debts as and when they become due and payable; and

3. We are not aware of any circumstances at the date of this declaration that would render any particulars included in the financial statements to be misleading or inaccurate.

Signed in accordance with a resolution of the Directors.

b. t. Smith m. j. braham Chairman Director Date: 13 October 2010 Date: 13 October 2010



indePendent auditor’S rePort




StateMent oF Land hoLdinGSaS at 30 June 2010

Land is disclosed in the financial statements under the asset grouping “Land and buildings” within “Property, plant and equipment”. In the following summary, land has been separated from buildings and other non-current assets to show land value in terms of the statement of financial position valuations.


2010$000

2010$000

land and buildingsLand 584,738 584,738Buildings 53,406 53,406total land and buildings 638,144 638,144

other Roadways 10,469 10,469Wharves, jetties and breakwaters 264,148 264,148Plant 27,383 25,403Construction in progress 481,517 481,326total other 783,517 781,346total property, plant and equipment (as per the statement of financial position) 1,421,661 1,419,490

Sydney PiLot ServiCe Pty Ltd

StateMent oF ChanGeS in equityFor the year ended 30 June 2010

Sydney Pilot ServiCe Pty ltd finanCial rePort 2009/10 119


Financial StatementSFor the year ended 30 June 2010

directorS’ report 120

Statement of comprehenSive income 121

Statement of financial poSition 122

Statement of changeS in equity 123

Statement of caSh flowS 124

noteS to the financial StatementS 125

note 1. corporate information 125

note 2. Summary of Significant accounting policieS 125

note 3. revenue 131

note 4. expenSeS 131

note 5. income tax equivalent 132

note 6. caSh and caSh equivalentS 133

note 7. trade and other receivableS 134

note 8. property, plant and equipment 135

note 9. intangible aSSetS 136

note 10. trade and other payableS 137

note 11. proviSionS 137

note 12. equity 138

note 13. financial riSk management objectiveS and policieS 138

note 14. commitmentS 142

note 15. contingent aSSetS and contingent liabilitieS 142

note 16. conSultancy feeS 142

note 17. related party diScloSure 142

note 18. key management perSonnel 143

note 19. eventS after the reporting period 143

note 20. aSSetS and liabilitieS tranSferred after balance date 143

directorS’ declaration 144

auditor’S independence declaration 145

independent auditor’S report 146

120 Sydney Pilot ServiCe Pty ltd finanCial rePort 2009/10


direCtorS’ rePortFor the year ended 30 June 2010

to the ShareholderS:

The Board of Directors of Sydney Pilot Service Pty Ltd (“the Company”) have the pleasure of submitting the financial statements of the Company, in respect of the year ended 30 June 2010, as follows:

direCtorS

The names of directors in office at any time during or since the end of the financial year are:

T. Robertson (resigned 15 December 2009)

P. Weedon (resigned 15 December 2009)

L. Russell (resigned 15 June 2010)

B. T. Smith (appointed 9 December 2009, resigned 15 June 2010)

G. Gilfillan (appointed 15 June 2010)

A. Gillen (appointed 15 June 2010)

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.

reSultS for year

The net loss of the Company for the financial year after providing for income tax amounted to $1.217 million (2009: net loss of $0.736 million).

review of oPerationS

During the year, the Company continued to engage in its principal activity, the results of which are disclosed in the attached financial statements.

SignifiCant ChangeS in State of affairS

No significant changes in the state of affairs of the Company occurred during the financial year.

PrinCiPal aCtivitieS and SignifiCant ChangeS in the nature of aCtivitieS

The principal activity of the Company during the financial year was the provision of pilotage services in the ports of Sydney Harbour and Botany Bay in the single geographical location of NSW. No significant change in the nature of these activities occurred during the year.

likely develoPmentS

Other than the events after the reporting period below, there are no other likely developments in the Company’s operations.

SignifiCant eventS after the rePorting Period

The vessel pilotage business of Sydney Pilot Service Pty Ltd was transferred to Sydney Ports Corporation on 1 September 2010. The consideration was equivalent to the carrying values of the transferred assets and liabilities as at 31 August 2010.

No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years.

environmental rePorting

The Company’s operations are regulated by environmental regulation under the Ports and Maritime Administration Act 1995 and the State Owned Corporations Act 1989.

dividendS and diStriButionS

No dividends were paid or declared since the start of the financial year. No recommendation for payment of dividends has been made.

indemnifiCation of offiCerS and auditorS

The directors of the Company are covered by a Directors and Officers Liability policy taken out by its parent entity, Sydney Ports Corporation.

The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify a current or former officer or auditor of the Company.

rounding of amountS

The financial statement is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($000). Where the amount is $500 or less, this is indicated by a “–” unless otherwise specifically stated.


BeGinninG oF audited FinanCiaL StateMentSSydney PiLot ServiCe Pty Ltd

StateMent oF CoMPrehenSive inCoMeFor the year ended 30 June 2010

note2010$000

2009$000

revenue 3 10,160 11,172

expensesEmployee benefits expense 4 (7,642) (8,333)Depreciation and amortisation expense 4 (285) (380)Other expenses 4 (3,971) (3,529)total expenses 4 (11,898) (12,242)Loss before income tax equivalent benefit (1,738) (1,070)Income tax equivalent benefit 5 521 334net loss for the year (1,217) (736)

other comprehensive incomeOther comprehensive income – –Income tax on items of other comprehensive income – –other comprehensive income for the year, net of tax – –total comprehensive income for the year (1,217) (736)




StateMent oF FinanCiaL PoSitionaS at 30 June 2010

note2010$000

2009$000

aSSetScurrent assets

Cash and cash equivalents 6 285 1,596Trade and other receivables 7 1,151 1,001Property, plant and equipment 8, 20 2,171 –Intangible assets 9, 20 4 –Deferred tax equivalent assets 5 523 –total current assets 4,134 2,597

non-current assetsProperty, plant and equipment 8 – 2,264Intangible assets 9 – 6Deferred tax equivalent assets 5 – 581total non-current assets – 2,851total assets 4,134 5,448

liaBilitieScurrent liabilities

Trade and other payables 10 1,080 1,082Provisions 11 1,096 1,068Deferred tax equivalent liabilities 5 26 –Total current liabilities 2,202 2,150

non-current liabilities

Deferred tax equivalent liabilities 5 – 7Provisions 11 – 142total non-current liabilities – 149

total liabilities 2,202 2,299

net assets 1,932 3,149

eQuityContributed equity 12 1,120 1,120Retained earnings 12 812 2,029total equity 1,932 3,149




StateMent oF ChanGeS in equity For the year ended 30 June 2010

attriButaBle to eQuity holderS of the Parent

ContriButed eQuity

$000

retained earningS

$000total$000

Balance at 1 July 2008 1,120 2,765 3,885Loss for the year after tax – (736) (736)Other comprehensive income – – –total comprehensive income for the year – (736) (736)transactions with owners in their capacity as owners:

Dividends provided for – – –balance at 30 june 2009 1,120 2,029 3,149Loss for the year after tax – (1,217) (1,217)Other comprehensive income – – –total comprehensive income for the year – (1,217) (1,217)Transactions with owners in their capacity as owners:Dividends provided for – – –balance at 30 june 2010 1,120 812 1,932




StateMent oF CaSh FLowSFor the year ended 30 June 2010

note2010$000

2009$000

net cash flows from/(used in) operating activitiesReceipts from customers 11,057 12,382Payments to suppliers and employees (12,768) (12,410)Interest received 36 96Income tax equivalent paid to/(received from) parent entity 519 (54)net cash flows from/(used in) operating activities 6(c) (1,156) 14

net cash flows used in investing activitiesPurchase of property, plant and equipment (170) (160)Proceeds from sale of property, plant and equipment 15 –net cash flows used in investing activities (155) (160)

net cash flows used in financing activities – –Net increase/(decrease) in cash and cash equivalents (1,311) (146)Cash and cash equivalents at the beginning of the financial year 1,596 1,742cash and cash equivalents at the end of the financial year 6 285 1,596



note 1. CorPorate information

The financial statements of Sydney Pilot Service Pty Ltd (“Sydney Pilots”) for the year ended 30 June 2010 were authorised for issue in accordance with a resolution of the Directors on 11 October 2010.

Sydney Pilots commenced operations on 26 October 2002 as a wholly owned subsidiary of Sydney Ports Corporation and is domiciled in New South Wales. Sydney Pilots assessed its status and determined that it is a ‘for profit’ public sector entity from 1 July 2005 for financial reporting purposes.

Sydney Pilots operates in a single business and geographical segment – providing pilotage services in the ports of Sydney Harbour and Botany Bay in the single geographical location of New South Wales, Australia with its principal office at 20 Windmill Street, Walsh Bay NSW 2000.

note 2. Summary of SignifiCant aCCounting PoliCieS

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated.

(a) discontinuation of operations

The financial statements have been prepared on the basis that Sydney Pilots discontinued its operations on 1 September 2010.

In May 2010 the Board of Directors of Sydney Ports Corporation authorised and approved the transfer of the vessel pilotage business from Sydney Pilot Service Pty Ltd to Sydney Ports Corporation effective after receipt of written approval from the voting shareholding Ministers of Sydney Ports Corporation, the parent entity. In August 2010 the voting shareholding Ministers of Sydney Ports Corporation gave approval to the transfer and the subsequent winding up of Sydney Pilot Service Pty Ltd.

All employees of Sydney Pilots were transferred to Sydney Ports Corporation on 1 July 2010.

The vessel pilotage business of Sydney Pilots was transferred to Sydney Ports Corporation on 1 September 2010. The consideration was equivalent to the carrying values of the transferred assets and liabilities as at 31 August 2010, as detailed in note 20.

(b) basis of preparation

The financial statements are general purpose financial statements which have been prepared in accordance with:

(i) the Corporations Act 2001;

(ii) Australian Accounting Standards and Australian Accounting Interpretations;

(iii) the Public Finance and Audit Act 1983;

(iv) the Public Finance and Audit Regulation 2010;

(v) the State Owned Corporations Act 1989; and

(vi) NSW Treasurer’s Directions*.

* NSW Treasurer’s Directions are available from the NSW Treasury website (www.treasury.nsw.gov.au).

The financial statements have been prepared on an accrual accounting basis using historical cost accounting conventions except for non-current assets classified as held for transfer which are measured at fair value.

Except when an Australian Accounting Standard permits or requires otherwise, comparative information is disclosed in respect of the previous period for all amounts reported in the financial statements.

Sydney Pilots, because of the scale of its operations, is a small proprietary company under the Corporations Act 2001 and is not required under this Act to prepare general purpose financial statements. As Sydney Pilots is controlled by a State Owned Corporation it must comply with the State Owned Corporations Act 1989, the Public Finance and Audit Act 1983 and the Public Finance and Audit Regulation 2010. Accordingly, the Public Finance and Audit Act 1983 requires Sydney Pilots to prepare general purpose financial statements.

The financial statements are presented in Australian dollars and all values are rounded to the nearest thousand dollars ($000) unless otherwise stated.

(c) compliance with ifrS

The financial statements comply with Australian Accounting Standards and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.







(d) new accounting standards and interpretations

Australian Accounting Standards and Interpretations, issued by the Australian Accounting Standards Board (AASB), that have recently been issued or amended but are not yet effective have not been adopted by Sydney Pilots for the annual reporting period ending 30 June 2010. These are outlined in the table below.

referenCe title Summary

aPPliCation date of Standard*

aPPliCation date for the entity*

AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project (AASB 5, 8, 101, 107, 117, 118, 136 & 139)

The amendments to some Standards result in accounting changes for presentation, recognition or measurement purposes.


AASB 9 Financial Instruments AASB 9 includes requirements for the classification and measurement of financial assets resulting from the first part of Phase 1 of the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement (AASB 139 Financial Instruments: Recognition and Measurement).


AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9

The revised Standard introduces a number of changes to the accounting for financial assets.


AASB 124 (Revised)

Related Party Disclosures (December 2009)

The revised AASB 124 simplifies the definition of related party, clarifying its intended meaning and eliminating inconsistencies from the definition.


AASB 2009-12 Amendments to Australian Accounting Standards (AASBs 5, 8, 108, 110, 112, 119, 133, 137, 139, 1023 & 1031 and Interpretations 2, 4, 16, 1039 & 1052)

This amendment makes numerous editorial changes to a range of Australian Accounting Standards and Interpretations.


AASB 1053 Application of Tiers of Australian Accounting Standards

This Standard establishes a differential financial reporting framework consisting of two Tiers of reporting requirements for preparing general purpose financial statements.

1 July 2013 1 July 2013

AASB 2010-2 Amendments to Australian Standards arising from reduced disclosure requirements

The Standard gives effect to Australian Accounting Standards – Reduced Disclosure Requirements. AASB 1053 provides further information regarding the differential reporting framework and the two tiers of reporting requirements for preparing general purpose financial statements.

1 July 2013 1 July 2013

AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project (AASB 1, AASB 7, AASB 101, AASB 134 and Interpretation 13)

Emphasises the interaction between quantitative and qualitative AASB 7 disclosures and the nature and extent of risks associated with financial instruments.


* Designates the beginning of the applicable annual reporting period unless otherwise stated.

The impact of these new Accounting Standards and Interpretations in future periods on the financial statements are still being assessed and not known at the date of the financial statements.


(e) cash and cash equivalents

Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and funds on deposit in NSW Treasury Corporation’s (TCorp) Hour-Glass Cash Facility Trust.

For the purposes of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above.

The value of the funds on deposit in TCorp Hour-Glass Cash Facility Trust can increase or decrease depending on market conditions and is marked to market through the statement of comprehensive income.

(f) trade and other receivables

Trade receivables are on 21 day terms while other receivables range from 7 to 21 day terms. Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less an allowance for impairment.

An allowance for impairment of receivables is established when there is objective evidence that Sydney Pilots will not be able to collect all amounts due. Financial difficulties of the debtors and default of payments are considered objective evidence of impairment. Bad debts are written off as incurred against the provision for impairment.

(g) property, plant and equipment

Property, plant and equipment is initially recognised at acquisition cost, including any costs directly attributable to the asset and any restoration costs associated with the asset. Cost is the amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire the asset at the time of its acquisition or construction or, where applicable, the amount attributed to that asset when initially recognised in accordance with the specific requirements of other Australian Accounting Standards. Assets acquired at no cost or for nominal consideration are initially recognised at their fair value at the date of acquisition.

Fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.

All repairs and maintenance are recognised in the statement of comprehensive income as incurred.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount. These are included in the statement of comprehensive income.

Impairment

Sydney Pilots assesses at each reporting date whether there is any indication that a cash generating unit, or an asset within a cash generating unit, may be impaired. If such an indication exists, Sydney Pilots estimates the recoverable amount. An impairment loss is recognised where the carrying amount of the asset or cash-generating unit exceeds the recoverable amount. Impairment losses are recognised in profit and loss.

(h) intangible assets

Intangible assets acquired separately are initially measured at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment loss. All of Sydney Pilots’ intangible assets relate to software. In house software development costs are capitalised, while other costs (including research costs) are expensed in the statement of comprehensive income in the year in which the expenditure is incurred.

Useful lives are examined on an annual basis and adjustments, where applicable are made on a prospective basis. Sydney Pilots’ intangible assets have definite lives and are amortised on a straight line basis.

(i) depreciation and amortisation of assets

Depreciation and amortisation has been calculated on depreciable assets, using rates estimated to write-off the assets over their remaining useful lives on a straight-line basis. The useful lives of assets were reassessed during the year with no material changes required. The expected design lives of new depreciable assets at 30 June 2010 and 2009 are:

■■ Plant 2 to 15 years

■■ Intangibles – software 4 years

(j) capitalisation of assets

Assets in excess of $1,000 are capitalised where they are expected to provide future economic benefits for more than one reporting period. Only those assets completed and ready for service are taken to the property, plant and equipment or intangible asset accounts. The remaining capital expenditures are carried forward as construction in progress and are included in property, plant and equipment or intangible assets in the statement of financial position.





(k) recoverable amount of assets

At each reporting date, Sydney Pilots assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, Sydney Pilots makes a formal estimate of recoverable amount.

Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written-down to its recoverable amount. Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset, unless the asset’s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

(l) trade and other payables

Trade and other payables are carried at amortised cost and due to their short-term nature they are not discounted. They represent liabilities for goods and services provided to Sydney Pilots prior to the end of the financial year that are unpaid and arise when Sydney Pilots becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 28 days of recognition.

(m) provisions

Provisions are recognised when Sydney Pilots has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Where Sydney Pilots expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is probable and can be measured reliably. The expense relating to any provision is recognised in the statement of comprehensive income net of any reimbursement. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

(n) employee benefits

(i) Wages and salaries and annual leave

Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within twelve months of the reporting date are recognised in respect of employees’ service up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

(ii) Long service leave

The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on New South Wales Government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

(iii) Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. Sydney Pilots recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after statement of financial position date are discounted to present value.

(o) contributed equity

Ordinary shares are classified as equity.


(p) revenue recognition

Revenue is recognised and measured at the fair value of the consideration or contribution received or receivable to the extent it is probable that the economic benefits will flow to Sydney Pilots and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

(i) Rendering of services

Revenue from pilotage is recognised on delivery of the service to the customer.

(ii) Interest revenue

Interest revenue is recognised on an accrual basis using the effective interest method.

(iii) Sale of assets

Revenue from sale of assets is recognised as revenue when Sydney Pilots transfers the significant risks and rewards of ownership of the assets.

(iv) Assets received free of charge

Assets received at no cost are recognised at the fair value of the asset on the date of receipt.

(q) income tax equivalent and other taxes

Income tax equivalent is required to be paid to the NSW Government in accordance with section 20T of the State Owned Corporations Act 1989. The payments are equivalent to the amounts that would be payable under the normal income tax law of the Commonwealth. The National Tax Equivalent Regime was established on 1 July 2001, with the Australian Taxation Office administering the tax equivalent scheme across Australia.

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the current period’s taxable income. The tax rates and the tax laws used to compute the amount are those that are enacted or substantively enacted by the statement of financial position date.

Deferred income tax is provided on all temporary differences at the statement of financial position date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

The carrying amount of deferred income tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the statement of financial position date. Income taxes relating to items recognised directly in equity are recognised in equity and not in the statement of comprehensive income.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity.

Tax Consolidation

Sydney Pilots and its parent, Sydney Ports Corporation, entered the tax consolidation regime at 1 July 2003. As a consequence, Sydney Ports Corporation, as the head tax entity in the consolidated group, recognises current tax payable for the group. Amounts receivable or payable under an accounting sharing agreement between the tax consolidated entities, are recognised as tax-related amounts receivable or payable. Expenses and revenues arising under the tax-sharing agreement are recognised as a component of income tax expense.





(q) income tax equivalent and other taxes (continued)

Other taxes

Revenues, expenses, assets and liabilities are recognised net of the amount of GST except:

(i) where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

(ii) receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

Cash flows are included in the cash flow statement on a gross basis and the GST component of cash flows arising from investing and financing activities which is recoverable from or payable to the taxation authority, are classified as operating cash flows. Contingencies are disclosed net of GST.

Commitments and accrual items that are shown in the statement of financial position are inclusive of GST where applicable.

(r) dividend

Sydney Pilots reviews its financial performance for the accounting period and recommends to its shareholder, if applicable, an appropriate dividend payment in light of the current financial position and longer-term financial commitments.

(s) contingent assets and contingent liabilities

Contingent assets and contingent liabilities are not recognised in the statement of financial position, but are disclosed by way of a note and, if quantifiable, are measured at nominal value.

(t) Significant accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, revenue and expenses. Management bases its judgements and estimates on historical experience and on other various factors it believes to be reasonable under the circumstances, the result of which form the basis of the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions.

The nature of these assumptions and conditions are found in the relevant notes to the financial statements.

Management has identified the following critical accounting policies for which significant judgements, estimates and assumptions are made.

Impairment of non-financial assets

Sydney Pilots assesses impairment of all assets at each reporting date by evaluating conditions specific to Sydney Pilots and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined.

Taxation

Judgement is required in assessing whether deferred tax assets and certain deferred tax liabilities are recognised in the statement of financial position. Deferred tax assets, including those arising from temporary differences, are recognised only where it is considered more likely than not that they will be recovered, which is dependent on the generation of sufficient future taxable profits. Assumptions about the generation of future taxable profits depend on management’s estimate of future cash flows. These depend on estimates of future revenues, operating costs, capital expenditure and dividends.


note 3. revenue

2010$000

2009$000

revenue from operating activities

Pilotage 9,818 10,8639,818 10,863

other revenue

Interest 36 93Recoveries 185 71Other 121 145

342 309total revenue 10,160 11,172

note 4. exPenSeS

note2010$000

2009$000

employee benefits expenseSalaries and wages 6,254 6,796Annual leave 11 483 569Long-service leave 11 134 166Retirement benefits 771 802

7,642 8,333

depreciation expenseDepreciation 8 283 380Amortisation 9 2 –

285 380

other expensesMaterials 856 952Insurance 684 414Service contractors 880 412Indirect taxes 478 522Minimum lease payments – operating leases 190 219Utilities and communications 7 13Auditors’ remuneration 26 22Directors’ remuneration 18 20 23Other operations and services 830 952

3,971 3,529total expenses 11,898 12,242




note 5. inCome tax eQuivalent

2010$000

2009$000

(a) income tax expenseMajor components of income tax equivalent expense for the periods ended 30 June 2010 and 30 June 2009 are:charged to profit and lossCurrent income tax

Current income tax equivalent chargeAdjustments in respect of current income tax equivalent of previous years

Deferred income tax

Relating to origination and reversal of temporary differences

(598)–

77

(195)6

(145)income tax equivalent expense/(benefit) charged to profit and loss in the statement of comprehensive income (521) (334)

(b) amounts charged or credited directly to equityCurrent income tax – –Deferred income tax – –income tax equivalent amount charged directly to equity in the statement of comprehensive income – –

(c) numerical reconciliation between aggregate tax expense recognised profit and loss in the statement of comprehensive income and tax expense calculated per the statutory income tax rateA reconciliation of income tax equivalent expense applicable to accounting profit before income tax equivalent at the statutory income tax equivalent rate to income tax equivalent expense at Sydney Pilots’ effective income tax equivalent rate for the periods ended 30 June 2010 and 30 June 2009 is as follows:accounting loss before income tax equivalent (1,738) (1,070)At the statutory income tax equivalent rate of 30% (2009: 30%) (521) (321)Adjustments in respect of current income tax of previous years – 6Recognition of temporary differences – (6)Non-deductible expenditure – 1Investment allowance – (14)at effective income tax equivalent rate of 30% (2009: 31%) (521) (334)income tax equivalent expense/(benefit) reported in profit and loss in the statement of comprehensive income (521) (334)

Statement of finanCial PoSition Profit and loSS

2010$000

2009$000

2010$000

2009$000

(d) recognised deferred tax assets and liabilitiesDeferred income tax equivalent at 30 June relates to the following:(i) Deferred income tax equivalent liabilities

Income receivable (26) – 26 –Other – (7) (7) (14)gross deferred income tax equivalent liabilities (26) (7)(ii) Deferred income tax equivalent assets

Depreciation 79 74 (5) (41)Provisions for employee entitlements 329 363 34 (74)Accrued expenditure 105 135 30 (18)Other 10 9 (1) 2gross deferred income tax equivalent assets 523 581deferred income tax equivalent charge 77 (145)


tax consolidation

Sydney Pilot Service Pty Ltd and its parent, Sydney Ports Corporation, are a tax consolidated group. The head entity of the tax consolidated group is Sydney Ports Corporation.

Sydney Ports Corporation and Sydney Pilot Service Pty Ltd have entered into a tax sharing arrangement in order to allocate income tax equivalent expense to the subsidiary company on a pro-rata basis. In addition, the agreement provides for the allocation of income tax equivalent liabilities between the entities should the head entity default on its tax payment obligations. No amounts have been recognised in the financial statements in respect of this agreement on the basis that the possibility of default is remote.

note 6. CaSh and CaSh eQuivalentS

2010$000

2009$000

Cash at bank and in hand 205 222TCorp Hour-Glass Cash Facility Trust 80 1,374cash and cash equivalents at the end of the financial year 285 1,596

(a) reconciliation to the cash flow statement

For the purpose of the cash flow statement, cash and cash equivalents includes cash on hand and in banks and funds on deposit in the TCorp Hour-Glass Cash Facility Trust. Cash and cash equivalents at 30 June 2010 and 2009, as shown in the statement of cash flows, are reconciled to this item in the statement of financial position.

(b) tcorp hour-glass cash facility trust

Sydney Pilots has placed funds on deposit in TCorp Hour-Glass Cash Facility Trust. These funds are represented by a number of units in the managed facility. TCorp appoints and monitors fund managers and establishes and monitors the application of appropriate investment guidelines. These funds are generally able to be redeemed with up to 24 hours prior notice. The value of the funds on deposit represents the share of the value of the underlying assets of the facility and is stated at net fair value. The value of the funds held can increase or decrease depending on market conditions and is marked to market through the statement of comprehensive income.

(c) reconciliation of the net profit after income tax equivalent to the net cash flows from operating activities:

2010$000

2009$000

Net loss after income tax equivalent (1,217) (736)adjustments for

Depreciation 283 380Amortisation of intangible assets 2 –Property, plant and equipment written off – 7

(932) (349)changes in assets and liabilities applicable to operating activities

(Increase)/decrease in trade and other receivables (150) 220(Increase)/decrease in deferred tax equivalent assets 58 (131)(Increase)/decrease in other assets – 3(Decrease)/increase in deferred tax equivalent liabilities 19 (14)(Decrease)/increase in trade and other payables (37) 39(Decrease)/increase in provisions (114) 246net cash flows from (used in) operating activities (1,156) 14




note 7. trade and other reCeivaBleS

2010$000

2009$000

currentTrade receivables 794 742Other receivables 41 28

835 770Allowance for impairment loss (a) – –

835 770Prepayments 30 24Accrued income 87 41Tax related receivable from parent 199 120Related party receivables (b) – 46

1,151 1,001

(a) allowance for impairment loss

Trade receivables are non-interest bearing and are on 21 day terms.

An allowance for impairment loss is recognised when there is objective evidence that an individual receivable is impaired. An impairment loss charge of $nil (2009: $nil) has been recognised by Sydney Pilots during the year. These amounts have been included in other expense items.

Movements in the provision for impairment loss were as follows:

2010$000

2009$000

At 1 July – –Write back for the year – –amounts written off – –at 30 june – –

At 30 June, the ageing analysis of trade receivables is as follows:

total$000

notdue

$000

0-30 daySPdni*$000

31-60daySPdni*$000

60+daySPdni*$000

2010 835 691 124 17 32009 770 666 98 1 5

* Past due not impaired (PDNI).

Trade receivables past due but not considered impaired are $0.144 million (2009: $0.104 million). Payment terms on these amounts have not been re-negotiated but direct contact has been made with the relevant debtors to ensure that payment will be received in full.

Other balances within trade and other receivables do not contain impaired assets and are not past due. It is expected that these other balances will be received when due.

(b) related party receivables

For terms and conditions of related party receivables refer to note 17.

(c) fair value and credit risk

Due to the short term nature of the current receivables, their carrying value is assumed to approximate their fair value.

The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as security.


note 8. ProPerty, Plant and eQuiPment

2010$000

2009$000

currentProperty, plant and equipment 2,171 –

non-currentProperty, plant and equipment – 2,264

At 30 June 2010 the carrying amounts of property, plant and equipment were classified as current in the statement of financial position, as detailed in note 20.

carrying amounts of property, plant and equipment at fair value

2010$000

2009$000

carrying amountsPlant (gross carrying amount) 3,690 3,704Accumulated depreciation (1,710) (1,440)At fair value 1,980 2,264Construction in progress 191 –total property, plant and equipment at fair value (net carrying amount) 2,171 2,264

movement in property, plant and equipment:

2010$000

2009$000

plantOpening balance 2,264 2,482Transfers from construction in progress 14 156Transfers from inventory – 15

2,278 2,653Depreciation charge (283) (380)Transfers to intangible assets – (2)Disposals (15) –Write-offs – (7)closing balance 1,980 2,264

movement in construction in progress:

2010$000

2009$000

Opening balance – –Acquisitions 205 160

205 160Transfers to property, plant and equipment (14) (156)Transfers to intangible assets – (4)closing balance 191 –




note 9. intangiBle aSSetS

2010$000

2009$000

currentIntangible assets – software 4 –

non-currentIntangible assets – software – 6

At 30 June 2010 the carrying amounts of intangible assets were classified as current in the statement of financial position, as detailed in note 20.

2010$000

2009$000

carrying amountsSoftware 7 7Accumulated amortisation (3) (1)total 4 6

movement in intangible assets

2010$000

2009$000

Opening balance 6 –Amortisation charge (2) –Transfers from construction in progress – 4Transfers from property, plant and equipment – 2closing balance 4 6


note 10. trade and other PayaBleS

2010$000

2009$000

currentTrade payables 6 187Accrued employee benefits 475 444Other payables and accruals 491 331Related party payables (b) 108 120Tax related payable to parent – –

1,080 1,082

(a) fair value

Due to the short term nature of these payables, their carrying value is assumed to approximate their fair value.

(b) related party payables

For terms and conditions relating to related party payables refer to note 17.

(c) interest rate and liquidity risk

Information regarding interest rate and liquidity risk exposure is set out in note 13.

note 11. ProviSionS

2010$000

2009$000

currentEmployee benefits 1,096 1,068

1,096 1,068

non-currentEmployee benefits – 142

– 142

Employee benefits relates to annual leave and long-service leave. Refer to note 2(m) for the relevant accounting policy and discussion of the significant estimations and assumptions applied in the measurement of this provision.

At 30 June 2010 the carrying amounts of employee benefits were classified as current in the statement of financial position, as detailed in note 20.

Movement in provisions

BalanCe30 June 2009

$000

Current Charge to

Profit and loSS$000

PaymentSmade$000

reClaSSifiCation$000

BalanCe 30 June 2010

$000

currentEmployee benefits Annual leave 700 483 (637) – 546 Long-service leave 368 66 (94) 210 550

1,068 549 (731) 210 1,096

non-currentEmployee benefits Long-service leave 142 68 – (210) –

142 68 – (210) –




note 12. eQuity

2010$000

2009$000

Contributed equity 1,120 1,120Retained earnings 812 2,029

1,932 3,149

note 13. finanCial riSk management oBJeCtiveS and PoliCieS

Sydney Pilots’ principal financial instruments comprise cash, funds on deposit in TCorp Hour-Glass Cash Facility Trust, receivables and payables. These financial instruments arise directly from Sydney Pilots’ operations or are required to finance Sydney Pilots’ operations.

Sydney Pilots’ main risks arising from financial instruments are outlined below, together with Sydney Pilots’ objectives, policies and processes for measuring and managing risk. Further quantitative and qualitative disclosures are included throughout the financial statements.

Sydney Pilots manages its exposure to key financial risks, including interest rate, credit and liquidity risks in accordance with the consolidated entity’s risk and treasury management policies. The objective of these policies is to support the delivery of the consolidated entity’s financial targets whilst protecting future financial security.

The Board is responsible for the establishment and oversight of risk management activities.

(a) financial instrument categories

note Category2010$000

2009$000

financial assetsCash and cash equivalents 6 N/A* 285 1,596Trade and other receivables Loans and receivables

measured at amortised cost 872 8211,157 2,417

financial liabilitiesTrade and other payables Financial liabilities measured

at amortised cost 925 951925 951

* Not applicable (N/A).

Trade and other receivables exclude statutory receivables and prepayments. Trade and other payables exclude statutory payables and unearned income. Therefore the amounts disclosed above will not reconcile with the statement of financial position.

(b) market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Sydney Pilots’ exposures to market risk are primarily through interest rate risk and other price risks associated with the movement in the unit price of the TCorp Hour-Glass Cash Facility Trust. Sydney Pilots has no exposure to foreign currency risk and does not enter into commodity contracts.

The effect on profit and equity due to a reasonably possible change in risk variable is outlined in the information below for interest rate risk and other price risk. A reasonably possible change in risk variable has been determined after taking into account the economic environment in which Sydney Pilots operates and the time frame for the assessment (i.e. until the end of the next annual reporting period).

The sensitivity analysis is based on risk exposures in existence at the statement of financial position date. The analysis is performed on the same basis for 2009. The analysis assumes that all other variables remain constant.


Interest rate risk

A reasonably possible change of +/– 1% is used, consistent with current trends in interest rates. The basis is reviewed annually and amended where there is a structural change in the level of interest rate volatility.

At statement of financial position date, Sydney Pilots’ exposure to interest rate risk is set out below.

+1% (100 BaSiS PointS) –1% (100 BaSiS PointS)

Carryingamount

$000

PoSt tax imPaCt on

Profit$000

eQuity$000

PoSt tax imPaCt on

Profit$000

eQuity$000

as at 30 june 2010Financial assets Cash and cash equivalents 284 2 – (2) –

284 2 – (2) –Financial liabilities – – – – –net exposure 284 2 – (2) –

as at 30 june 2009Financial assets

Cash and cash equivalents 1,595 11 – (11) –1,595 11 – (11) –

Financial liabilities – – – – –net exposure 1,595 11 – (11) –

Other price risk – TCorp Hour-Glass Cash Facility Trust

Exposure to ‘other price risk’ primarily arises through the investment in the TCorp Hour-Glass Cash Facility Trust, which is held for strategic rather than trading purposes. Sydney Pilots has no direct equity investments. Sydney Pilots holds units in the following TCorp Hour-Glass facility:

faCilityinveStmentSeCtorS

inveStmenthorizon

2010$000

2009$000

TCorp Hour-Glass Cash Facility Trust


Up to 1.5 years 80 1,374

The unit price of the facility is equal to the total fair value of the net assets held by the facility divided by the number of units on issue. Unit prices are calculated and published daily.

TCorp is trustee for the above facility and is required to act in the best interest of the unit holders and to administer the trust in accordance with the trust deed. As trustee, TCorp has appointed external managers to manage the performance and risks of the facility in accordance with a mandate agreed by the parties. However, TCorp acts as manager for part of the facility. A significant portion of the administration of the facilities is outsourced to an external custodian.

TCorp provides sensitivity percentages for the facility, derived from historically based volatility information calculated over a ten year period, quoted at two standard deviations (i.e. 95% probability). The facility is designated at fair value through profit or loss and therefore any change in unit price impacts directly on profit. A reasonably possible change is based on the percentage change in unit price, as advised by TCorp, multiplied by the redemption value as at 30 June each year for each facility.

imPaCt on PoSt tax Profithigher/(lower)

Change in unit PriCe

2010$000

2009$000

TCorp Hour-Glass Cash Facility Trust +/–1% 1 10





(c) credit risk

Credit risk arises when there is the possibility of Sydney Pilots’ debtors defaulting on their contractual obligations, resulting in a financial loss to Sydney Pilots. The maximum exposure to credit risk is generally represented by the carrying amount of the financial assets (net of any allowance for impairment).

Credit risk arises from the financial assets of Sydney Pilots, which comprise cash and cash equivalents and trade and other receivables. Sydney Pilots has not granted any financial guarantees.

Credit risk associated with Sydney Pilots’ financial assets, other than trade and other receivables, is managed through the selection of creditworthy counterparties and recognised financial intermediaries as a means of mitigating against the risk of financial losses from defaults. In addition, only highly liquid marketable securities are used for investment purposes.

Sydney Pilots trades only with recognised creditworthy third parties. Trade customers who wish to transact on credit terms are subject to credit verification procedures which may result in obtaining bank guarantees. In addition, receivable balances are monitored on an ongoing basis to minimise the exposure to bad debts.

Sydney Pilots is not materially exposed to a concentration of credit risk to a single trade debtor. The largest single debtor included in receivables totals $0.124 million (2009: $0.098 million) and is 11% of total financial assets (2009: 4%). Revenues from transactions with four external customers amounting to 10 per cent or more represent approximately 47% of Sydney Pilots’ total revenues for the year (2009: 34% from three customers).

(d) liquidity risk

Liquidity risk is the risk that Sydney Pilots will be unable to meet its payment obligations when they fall due. Sydney Pilots continuously manages liquidity risk through monitoring future cash flows and maturities planning to ensure adequate holding of high quality liquid assets. The aim of liquidity risk management is to ensure that Sydney Pilots has sufficient funds available to meet its obligations both on a day to day basis and in the longer term. That is, its aim is to ensure that new funding and refinancing can be obtained when required and without undue concentration at times when financial markets might be strained. Provided that these aims are met, the policy also aims to minimise net finance costs.

Sydney Pilots’ exposure to liquidity risk is deemed insignificant based on prior periods’ data and a current assessment of risk.

Liabilities are recognised for amounts due to be paid in the future for goods or services received, whether or not invoiced at balance date. Amounts owing to suppliers (which are unsecured) are settled in accordance with trade terms. If trade terms are not specified, payment is made within 28 days of recognition.

The following table summarises the maturity profile of the entity’s financial liabilities, together with the interest rate exposure.

The maturity profile is based on the remaining contractual maturity period at the reporting date. The nominal amounts are the contractual undiscounted cash flows (includes both interest and principal cash flows) of each class of financial liabilities and therefore will not reconcile to the statement of financial position.


weighted average

effeCtive intereSt

rate

nominal amount

$000

fixed intereSt

rate$000

variaBle intereSt

rate $000

non-intereSt Bearing

$000< 1 year

$0001-5 yearS

$000> 5 yearS

$000

as at 30 june 2010Financial liabilitiestrade and other payables n/a (925) – – (925) (925) – –

as at 30 june 2009Financial liabilitiestrade and other payables n/a (951) – – (951) (951) – –


(e) fair value

Financial instruments are generally recognised at cost, with the exception of the TCorp Hour-Glass Cash Facility Trust, which is measured at fair value. The value of the TCorp Hour-Glass Cash Facility Trust is based on Sydney Pilots’ share of the value of the underlying assets of the facility, based on the market value.

The amortised cost of financial instruments recognised in the statement of financial position approximates the fair value, because of the short-term nature of the financial instruments. The TCorp Hour-Glass Cash Facility Trust is measured at fair value.

(f) fair value recognised in the statement of financial position

Sydney Pilots uses the following hierarchy for disclosing the fair value of financial instruments by valuation technique:

■■ Level 1 – Derived from quoted prices in active markets for identical assets/liabilities.

■■ Level 2 – Derived from inputs other than quoted prices that are observable directly or indirectly.

■■ Level 3 – Derived from valuation techniques that include inputs for the asset/liability not based on observable market data (unobservable input).

The fair values of the financial instruments as well as the method used to estimate the fair value are summarised in the table below.

level 1$000

level 2$000

level 3$000

2010total$000

financial assets at fair valueTCorp Hour-Glass Cash Facility Trust – 80 – 80

No financial liabilities were measured at fair value in the statement of financial position for the period ended 30 June 2010.

There were no transfers between level 1 and 2 during the period ended 30 June 2010.

Capital management

Sydney Pilots manages its capital to ensure it will be able to continue as a going concern, while maximising the return to stakeholders through optimisation of the debt and equity balance.

There are no externally imposed capital requirements.

The Board reviews and agrees policies for managing the capital structure when considering each major project investment.

The consolidated entity monitors capital on the basis of the gearing ratio, debt cover (years) and interest cover (times).

The ratios based on operations at 30 June 2010 and 2009 were as follows:

Gearing ratio

2010$000

2009$000

Total debt – –Total debt and total equity 1,932 3,149gearing ratio nil% nil%





Debt cover

2010$000

2009$000

Total debt – –Less Cash and cash equivalents 285 1,596net debt (285) (1,596)EBITDA* (1,453) (690)debt cover (years) n/a n/a

Interest cover

2010$000

2009$000

EBITDA* (1,453) (690)Finance costs – –interest cover (times) n/a n/a

* Represents earnings before interest, taxes, depreciation and amortisation (includes interest income but excludes interest expense).

note 14. CommitmentS

Sydney Pilots has no operating or capital expenditure commitments as at 30 June 2010 and 2009.

note 15. Contingent aSSetS and Contingent liaBilitieS

Sydney Pilots has no contingent assets and no contingent liabilities as at 30 June 2010 and 2009.

note 16. ConSultanCy feeS

No fees were paid or payable to consultants for the period ended 30 June 2010 and 2009.

note 17. related Party diSCloSure

The following table provides outstanding balances and the total amount of transactions that were entered into with Sydney Ports Corporation for the relevant financial year.

related Party

SaleS to related

Party$000

PurChaSeS from related

Party$000

related Party

reCeivaBleS $000

related Party

PayaBleS$000

related Party tax

reCeivaBle$000

related Party tax

PayaBle$000

Sydney ports corporation 2010 2,518 – 108 – – 1992009 2,942 – 120 46 – 120

Sydney pilot Service pty ltd2010 – 2,518 – 108 199 –2009 – 2,942 46 120 120 –

terms and conditions of transactions with the related party

Sales to and purchases from the related party are made at arm’s length at normal market prices and on normal commercial terms. Expenditure paid by the parent entity on behalf of Sydney Pilots was recovered at cost. Management, accounting, human resources, information technology and other services were provided to Sydney Pilots by the parent entity for a management fee based on cost recovery.

Outstanding balances at year-end are unsecured and settlement occurs in cash.

There have been no guarantees provided or received for any related party receivables.

For the years ended 30 June 2010 and 2009, Sydney Pilots has not raised any allowance for impairment relating to amounts owed by the related party as all amounts are settled in full monthly.


note 18. key management PerSonnel

Sydney Pilots defines key management personnel as those having authority and responsibility for planning, directing and controlling the activities of Sydney Pilots, including any Directors.

compensation of key management personnel

Benefit2010$000

2009$000

Short term employee benefits 68 91Post employment benefits 4 7Other long term benefits – –Termination benefits – –Share based payments – –total 72 98

Directors’ remuneration includes emoluments and other benefits paid or due and payable to Directors but does not include amounts paid as salary to full-time Directors. Directors’ remuneration for the year was $0.020 million (2009: $0.023 million).

During the year no loans were made to Directors and no transactions occurred between Sydney Pilots and director-related entities.

note 19. eventS after the rePorting Period

In May 2010 the Board of Directors of Sydney Ports Corporation authorised and approved the transfer of the vessel pilotage business from Sydney Pilot Service Pty Ltd to Sydney Ports Corporation effective after receipt of written approval from the voting shareholding Ministers of Sydney Ports Corporation, the parent entity. In August 2010 the voting shareholding Ministers of Sydney Ports Corporation gave approval to the transfer and to the subsequent winding up of Sydney Pilot Service Pty Ltd.

All employees of Sydney Pilots were transferred to Sydney Ports Corporation on 1 July 2010.

The vessel pilotage business of Sydney Pilots was transferred to Sydney Ports Corporation on 1 September 2010. The consideration was equivalent to the carrying values of the transferred assets and liabilities as at 31 August 2010.

Sydney Pilots has not identified any other events or transactions after the statement of financial position date that are material to require adjustments or disclosures in the financial statements.

note 20. aSSetS and liaBilitieS tranSferred after BalanCe date

As detailed in note 19, the following assets and liabilities were transferred to Sydney Ports Corporation after balance date.

$000

Prepayments and other receivables 135Property, plant and equipment 2,118Intangible assets 3Deferred tax equivalent assets 549total assets 2,805Other payables 890Deferred tax equivalent liabilities 31Provisions 1,096total liabilities 2,017net assets and liabilities transferred 788

end oF audited FinanCiaL StateMentS



direCtorS’ deCLaration

In the opinion of the Directors of Sydney Pilot Service Pty Ltd:

1. Pursuant to section 41C of the Public Finance and Audit Act 1983, the accompanying financial statements and notes:

a) exhibit a true and fair view of the financial position of Sydney Pilot Service Pty Ltd at 30 June 2010 and of its performance, as represented by the results of its operations and its cash flows for the year ended on that date.

b) comply with applicable Australian Accounting Standards and Australian Accounting Interpretations, other mandatory and statutory reporting requirements including the Public Finance and Audit Act 1983, the Corporations Act 2001, the Public Finance and Audit Regulation 2010 and the State Owned Corporations Act 1989.

2. There are reasonable grounds to believe that Sydney Pilot Service Pty Ltd will be able to pay its debts as and when they become due and payable; and

3. We are not aware of any circumstances at the date of this declaration that would render any particulars included in the financial statements to be misleading or inaccurate.

Signed in accordance with a resolution of the Directors.

g. gilfillan a. gillen Chairman Director Date: 11 October 2010 Date: 11 October 2010



auditor’S indePendenCe deCLaration



indePendent auditor’S rePort



BaLanCe SheetaS at 30 June 2010


charter, aimS and objectiveS 149

guarantee of Service – port Safety operating licence 149

relevant legiSlation 149

legal changeS and Subordinate legiSlation 149

factorS affecting achievement of operational objectiveS 150

2009/10 performance relative to the Statement of corporate intent 150

exemptionS for the reporting period proviSionS 150

freedom of information 151

feeS and coStS 152

corporate governance 152

the role of the board 152

code of conduct 153

board committeeS 153

riSk management 154

inSurance activitieS 155

board compoSition 155

chief executive officer 155

board independence 156

independent profeSSional advice 156

conflictS of intereSt 156

other board memberShipS 156

board meetingS and their conduct 156

eeo report 158

Salary reporting 159

occupational health and Safety (oh&S) 160

multicultural policieS and ServiceS 160

overSeaS travel by Sydney portS corporation employeeS – 1 july 2009 to 30 june 2010 161

fundS granted to non-government community organiSationS – 2009/10 162

conSultancy feeS 162

publicationS 162

annual report coSt 162

waSte reduction and purchaSing policy (wrapp) 162

land diSpoSal 163

tranSfer of eaSt darling harbour aSSetS from Sydney portS corporation to barangaroo delivery authority 163


Statutory DiScloSureS2009/10


Charter, aimS and oBJeCtiveS

Sydney Ports’ principal objectives are set out in Section 9 of the Ports and Maritime Administration Act 1995 and are:

(a) to be a successful business and, to this end:

i. to operate at least as efficiently as any comparable business;

ii. to maximise the net worth of the State’s investment in the Port Corporation;

iii. to exhibit a sense of social responsibility by having regard to the interests of the community in which it operates and by endeavouring to accommodate those interests when able to do so;

(b) to promote and facilitate trade through its port facilities; and

(c) to ensure that its port safety functions are carried out properly.

Sydney Ports’ objectives were recently amended by the Ports and Maritime Administration Amendment (Port Competition and Co-ordination) Act 2008 No 89 (which was assented to on 19 November 2008) to include the following two additional objectives:

(d) to promote and facilitate a competitive commercial environment in port operations; and

(e) to improve productivity and efficiency in its ports and the port-related supply chain.

Sydney Ports’ principal functions are to:

(a) establish, manage and operate port facilities and services in its ports;

(b) exercise the port safety functions for which it is licensed in accordance with its operating licence; and

(c) facilitate and co-ordinate improvements in the efficiency of the port-related supply chain.

guarantee of ServiCe – Port Safety oPerating liCenCe

Under section 12 (2) of the Ports and Maritime Administration Act 1995, the NSW Government has granted Sydney Ports Corporation a Port Safety Operating Licence (PSOL) to carry out the port safety functions required in its area of operations – Sydney Harbour and Botany Bay. This includes maintenance of channel and berth depths, dangerous goods handling, emergency response, navigation aids operation, pilotage and exemptions from pilotage and port communications.

The current PSOL was issued by the Minister for Ports and Waterways on 21 December 2006 and covers the five-year period 1 January 2007 to 31 December 2011. All the performance standards of the PSOL were complied with during 2009/10 with no non conformances recorded during an independent accreditation audit of the PSOL Quality Management System conducted in August 2009.

relevant legiSlation

Sydney Ports Corporation is a statutory State Owned Corporation established under the State Owned Corporations Act 1989 and Ports and Maritime Administration Act 1995, and operates in accordance with those Acts.

Other significant legislation affecting the Corporation includes:

■■ Occupational Health and Safety Regulation 2001 – Schedule 3;

■■ Marine Pollution Act 1987 and associated regulation;

■■ Management of Waters and Waterside Lands Regulations – NSW;

■■ Marine Pilotage Licensing Act 1971 and associated regulation;

■■ Maritime Services Act 1935;

■■ Navigation Act 1901;

■■ Protection of the Environment Operations Act 1997;

■■ Maritime Transport and Offshore Facilities Security Act 2003 (Commonwealth);

■■ Marine Safety Act 1998; and

■■ Government Information (Public Access) Act 2009

legal ChangeS and SuBordinate legiSlation

There have been no material legal changes or changes to subordinate legislation or significant judicial decisions that have had any effect on the operations of Sydney Ports Corporation.


faCtorS affeCting aChievement of oPerational oBJeCtiveS

There were no unanticipated factors during the year, which have not already been mentioned that led to any material effect on the achievement of Sydney Ports’ operational objectives.

2009/10 PerformanCe relative to the Statement of CorPorate intent

Sydney Ports Corporation’s performance for the year was favourable in comparison to the key financial targets set in its 2009/10 Statement of Corporate Intent. This was due largely to the combined effect of:

(i) higher than expected container trade throughput; and

(ii) under-expenditure compared to budget in a number of areas, mainly arising from timing differences related to Sydney Ports’ Port Botany Landside Improvement Strategy Program.

Sydney Ports’ debt position, financial leverage, cash flow adequacy and liquidity ratios as at 30 June 2010 were all either favourable or on par with targets, due mainly to the fact that capital expenditure during the year was lower than had been budgeted for. This was due largely to timing differences related to capital expenditure on the Port Botany Expansion Project, the Enfield Intermodal Logistics Centre, the new Cruise Passenger Terminal at White Bay 5 and minor projects.

exemPtionS for the rePorting Period ProviSionS

Section 41B(1)(c)(va) of the Public Finance and Audit Act 1983 and Clause 19 of the Annual Reports (Statutory Bodies) Regulation 2010 require a statutory body to include in its annual report statements of all exemptions, omissions, modifications and variations from reporting provisions which have been granted by the Treasurer and which apply to the statutory body.

As a statutory body in competition, the Corporation is exempt from some areas of the Annual Reports (Statutory Bodies) Act 1984 (ARSBA), the Annual Reports (Statutory Bodies) Regulation 2010 (ARSBR), the Public Finance and Audit Regulation 2010 (PF&AR), the Public Finance and Audit Act 1983 (PF&AA) and Public Finance and Audit (General) Regulation 1995 (PF&AGR).

The following matters are exempt but require reporting in a summarised form:

reQuirementS legiSlative SourCe of reQuirementS

Preparation of manufacturing and trading statements Section 41B(1) (c) PF&AA Income and expenditure on a program or activity basis Schedule 1 Part 1 Clause 13 PF&AGRSummary review of operations Clause 7 Section 7(1)(a)(iv) ARSBA and Schedule 1 ARSBRManagement and activities Schedule 1 ARSBR Consultants Schedule 1 ARSBR Consumer response Schedule 1 ARSBR Human resources Schedule 1 ARSBR Controlled entities Schedule 1 ARSBR Financial statements of controlled entities Section 7(1)(a)(ia) ARSBA Risk management Schedule 1 ARSBR

The following matters are exempt:

exemPtionS legiSlative SourCe of reQuirementS

Significant judicial decisions Schedule 1 ARSBR Amounts appropriated for repayment of loans etc. Schedule 1 Part 1 Clause 6 PF&AGR Budgets – outline and details Section 7(1)(a)(iii) ARSBA and Clause 6 ARSBR Research and development Schedule 1 ARSBR Land disposal Schedule 1 ARSBR Payment of accounts including time for payment of accounts

Schedule 1 ARSBR and Clause 13 PF&AR

Investment management performance Clause 12 ARSBR Liability management performance Clause 13 ARSBR

These exemptions, omissions, modifications and variations arise from a review of the External Reporting Framework for Statutory State owned corporations and Particular Statutory Bodies by the NSW Treasury and are based on among other things commercial sensitivities. A number of exemptions relate to financial reporting requirements that are redundant or not considered essential for performance assessment and accountability purposes.


Statutory diSCLoSureS2009/10 (Continued)


There have otherwise been no exemptions, omissions, modifications or variations for the reporting period.

freedom of information

Sydney Ports Corporation is required to report annually on its administration of the applications it receives under the Freedom of Information Act 1989 (NSW). The following tables detail statistics required to be reported under the Act for the period 1 July to 30 June for the financial years 2008/09 and 2009/10.

During the reporting period, there were no discontinued FOI applications and no requests were transferred to another organisation or agency.

No requests were carried forward to the reporting period 2009/10.

foi applications and applications

PerSonal other total2008/09 2009/10 2008/09 2009/10 2008/09 2009/10

New 1 0 2 7 3 7Completed 1 0 2 7 3 7Granted in full 0 0 1 3 1 3Granted in part 0 0 0 2 0 2Refused (reason = exempt) 1 0 1 2 2 2Information sought not held (application fees refunded) 0 0 0 0 0 0total processed 1 0 2 7 3 7

Documents granted in full or in part were provided to the applicant. Documents found to be exempt were exempt due to falling within the definition of 13(a) Schedule 1 of the FOI Act – Documents which contain information, disclosure of which would be found to be a breach of confidence.

days to process foi applications

PerSonal otherelaPSed time 2008/09 2009/10 2008/09 2009/100-21 days 0 0 1 622-35 days 0 0 0 1Over 35 days 1 0 1 0

processing time

PerSonal otherProCeSSing hourS 2008/09 2009/10 2008/09 2009/100-10 hours 0 0 1 711-20 hours 0 0 0 0Greater than 20 hours 1 0 1 0

number of reviews

numBer of ComPleted reviewShow many reviewS were finaliSed? 2008/09 2009/10Internal reviews 0 0Ombudsman reviews 0 0ADT reviews 0 0




freedom of information (Continued)

days to process foi applications (continued)

The Corporation’s compliance with the Act did not raise any major issues in the reporting period, nor did compliance with the Act have any significant impact on Sydney Ports Corporation’s activities. There were no investigations of Sydney Ports under the FOI Act.

From 1 July 2010 Sydney Ports’ obligations with respect to making information available to the public will be governed by the Government Information (Public Access) Act.

During the reporting period no Ministerial Certificates were issued, no formal consultations were requested, and there were no amendments or notations to personal records made.

The processing time for 1 application was greater than 21 days. This application was determined as a deemed refusal pursuant to the Act and reported accordingly. Sydney Ports has taken appropriate action to ensure future applications are processed within a 21 day period.

feeS and CoStS

aPPliCationaPPliCation

feeProCeSSing

ChargeS

Application 1 $30 –Application 2 $30 –Application 3 $30 –Application 4 $30 –Application 5 $30 –Application 6 $30 –Application 7 $30 –

CorPorate governanCe

Good corporate governance creates and sustains an ethical and legal environment which recognises the interests of all stakeholders in a Corporation. The Board of Sydney Ports is responsible for overall corporate governance of the Corporation and has adopted corporate governance practices and procedures that are appropriate to manage Sydney Ports in the best interests of the Shareholding Ministers and other stakeholders.

The Board has adopted the NSW Treasury Guidelines for Boards of Government Businesses (Guidelines) and this corporate governance section outlines Sydney Ports’ governance practices during 2009/10. Sydney Ports complies with each of the recommendations.

the role of the Board

The Board is responsible for overseeing the business and commercial affairs of Sydney Ports including:

■■ approving the strategy;

■■ approving the business and financial objectives;

■■ monitoring business and financial performance;

■■ reviewing performance and remuneration of executive management;

■■ reviewing the risk management and internal control framework;

■■ recommending to the Portfolio Minister the appointment and removal of the Chief Executive Officer; and

■■ reviewing any reporting to Shareholding Ministers.

The Chief Executive Officer is responsible for the day to day management of the operation of Sydney Ports in accordance with the general policies and specific directions of the Board. It is the responsibility of the Board to oversee the activities of management in carrying out these delegated duties.

The Board’s role and responsibilities to each key stakeholder are set out in the Sydney Ports’ Board Charter which is available on the Corporate Governance section of the Sydney Ports’ website.


Code of ConduCt

Sydney Ports’ Code of Conduct outlines the general business ethics and acceptable standards of professional behaviour we expect of all our Directors, employees and contractors. The Code of Conduct, which is given to all new staff as part of their induction, makes everyone at Sydney Ports accountable for their own decisions and conduct. The Code of Conduct covers general behaviour expectations, fraud and corruption responsibilities, including policies on acceptance of gifts and benefits and ethics and conflicts of interest requirements. Staff are encouraged to report any suspected breaches and, if they do so, will be protected as detailed in Sydney Ports’ Protected Disclosures Policy.

The Code of Conduct was reviewed during the year and a new Code of Conduct was released in February 2010. The Code is available to all staff on the Sydney Ports intranet. The Code also interacts with other more detailed policies concerning Reporting Fraud and Corruption, Disciplinary Policy, Protected Disclosures Policy and Sponsorship, Gifts and Memberships Policy.

The Board receives a summary of any breaches and resulting actions on an annual basis, however any significant breaches must be immediately reported to the Chairman.

A copy of the Code of Conduct is available on the Corporate Governance section of the Sydney Ports’ website.

Board CommitteeS

To assist the Board in discharging its functions and to allow a more detailed analysis of the specialised areas of finance, risk, audit, human resources, governance, remuneration and special projects, the following committees have been established:

■■ Audit and Risk Committee;

■■ Remuneration, Human Resources and Governance Committee; and

■■ Port Botany Landside Improvement Strategy Committee.

Each Committee has a clear Charter setting out the Committee’s roles, responsibilities and delegated authority from the Board. The Charter of the Board and all Board Committee Charters are reviewed on a regular basis and updated as required. During the year, the Audit and Risk Committee and Port Botany Landside Improvement Strategy Committee charters were updated.

audit and risk committee

The Chairman of the Audit and Risk Committee is Michael Braham. Michael is an independent Non-executive Director, who is not the Chairman of the Board. Other members of the Committee are John Brogden, Rene van der Loos and Talal Yassine, who are each independent, Non-executive Directors. Paul Binsted was a member of the Committee prior to his retirement in December 2009 and he was an independent, Non-executive Director.

Each of the members of the Committee is financially literate and has knowledge of the business. Michael Braham has qualifications and experience in accounting. The Board considers the mix of skills and experience on the Audit Committee appropriate to meet the responsibilities of its Charter.

The Committee is responsible for oversight and review of:

■■ financial control and reporting;

■■ risk management;

■■ debt structure and debt instruments;

■■ accounting policies;

■■ the evaluation of all major capital expenditure proposals;

■■ business ethics, policies and practices;

■■ internal controls;

■■ compliance with taxation and other applicable laws and regulations;

■■ integrity and performance of the internal audit function, including appointing the Internal Auditor;

■■ external auditor’s audits, management letter and management’s responses; and

■■ corporate governance.

The Committee met nine times during 2009/10.

A copy of the Audit and Risk Committee Charter is available on the Corporate Governance section of Sydney Ports’ website.




Board CommitteeS (Continued)

remuneration, human resources & governance committee

The Chairman of the Remuneration Human Resources & Governance Committee is Rene van der Loos. Rene is an independent Non-executive Director, who is not the Chairman of the Board. Other members of the Committee are Michael Braham and John Brogden, who are each independent, Non-executive Directors. Paul Binsted and Trevor Robertson were members of the Committee prior to their retirement in December 2009. Both were independent, Non-executive Directors.

The Remuneration, Human Resources and Governance Committee is responsible for assisting the Board in fulfilling its corporate governance responsibilities in regard to:

■■ recommendations regarding Board composition, taking into account the future skills needs of the Board;

■■ co-ordinating the performance review of the Board;

■■ overall remuneration strategy and remuneration policies for the Chief Executive Officer and Executive Management, including review of remuneration trends across the marketplace;

■■ performance of the Chief Executive Officer and Executive Management; and

■■ employment terms and conditions of the Chief Executive Officer and Executive Management.

During the year the Remuneration Human Resources & Governance Committee met five times and reviewed executive salaries and performance arrangements, including the Chief Executive Officer and assisted in the recruitment of key executives.

A copy of the Remuneration Human Resources & Governance Committee Charter is available on the Corporate Governance section of the Sydney Ports’ website.

port botany landside improvement Strategy committee

The Port Botany Landside Improvement Strategy Committee was established in April 2009. It is responsible for monitoring the implementation of the Port Botany Landside Improvement Strategy (PBLIS) project.

The Chairman of the Port Botany Landside Improvement Strategy Committee is Bryan T. Smith. Bryan is an independent Non-executive Director. The other member of the Committee is Talal Yassine, who is an independent, Non-executive Director. Talal was appointed a member of the Committee on his appointment in March 2010. Trevor Robertson, an independent Non-executive Director, was a member of the Committee prior to his retirement in December 2009.

During the year the Port Botany Landside Improvement Strategy Committee met four times and reviewed progress of the PBLIS project, the PBLIS business plan, costs and resources,

A copy of the Port Botany Landside Improvement Strategy Committee Charter is available on the Corporate Governance section of the Sydney Ports’ website.

riSk management

Sydney Ports has adopted an Enterprise Risk Management system to ensure risks are identified and managed in a considered and timely manner. This system encompasses all the activities Sydney Ports is responsible for under the Ports & Maritime Administration Act 1995 in addition to corporate-wide strategic risks.

The Enterprise Risk Management system is consistent with the Australian/New Zealand Standard of Risk Management (AS/NZS 4360:2004 and subsequently AS/NZS/ISO 31000:2009) and is underpinned by a risk management policy and a risk management procedure. The risk management policy and procedure were revised in 2009/10 with support from Ernst & Young’s advisory team. The revisions have:

■■ allowed the inclusion of Sydney Ports’ revised strategy and business objectives;

■■ more clearly defined key risk indicators and responsibilities for risk mitigation actions; and

■■ provided a linkage between risk management activities at the strategic and operational levels with the strategic planning and budgeting processes, control assurance and monitoring activities (i.e. Internal Audit and Business Continuity Management) and other risk management activities at the operational level, including capital project risk and OH&S risk.

Sydney Ports has implemented online Enterprise Risk Management software to assist with embedding a risk management culture within the business. This software (Enterprise Risk Assessor, from Methodware) was fully operational in August 2009 and is used to facilitate the update of Sydney Ports’ strategic and operational risk registers. It is also used for reporting purposes.


Strategic risks are identified through a formalised risk assessment process which is:

■■ co-ordinated by the Chief Risk Officer (the Chief Risk Officer for the Corporation is the Chief Financial Officer);

■■ managed by the Executive Management Team; and

■■ overseen, in the first instance, by the Audit & Risk Committee and subsequently by the Board.

The strategic risk profile is reviewed monthly by the Executive Management Team and annually by the Audit & Risk Committee on a formal basis to:

■■ assess the effectiveness of risk mitigation strategies;

■■ ensure that any new or emerging risks are identified and captured; and

■■ ensure that any previously identified strategic risks and mitigating actions are monitored.

Operational risks are reviewed through a formalised risk assessment process that is conducted within Divisions and co-ordinated by the Departmental Risk Management Representatives and assessed by the Chief Risk Officer prior to being reported to the Executive Management Team and the Board.

The operational risks are monitored dynamically by the Enterprise Risk Management system and the risk profiles are reviewed monthly by the Executive Management Team to ensure that any new or emerging operational risks are identified and captured and that any previously identified risks and mitigating actions are monitored.

inSuranCe aCtivitieS

In conjunction with the Risk Management System, Sydney Ports maintains an annual Insurance Program renewed on 30 June each year utilising the services of its insurance broker, currently Jardine Lloyd Thompson Pty Ltd, for an annual assessment of risk exposure and coverage level and for sourcing underwriters to renew policies.

In 2009/10 Sydney Ports undertook a comprehensive gap analysis of its insurance risks and participated in an insurance strategy review in conjunction with Jardine Lloyd Thompson Pty Ltd. The recommendations arising from the review will be considered and implemented throughout 2010/11.

The key policies within the insurance program provide comprehensive coverage across all the corporation’s operations including Industrial Special Risks, Public Liability, Marine Hull Commercial and Protection, Workers Compensation, Trade Credit, and financial loss policies such as professional indemnity.

Board ComPoSition

Under the State Owned Corporations Act (NSW) 1989 Sydney Ports Board is required to have a minimum of three (3) Directors and a maximum of seven (7) Directors. One of these Directors is required to be a staff Director, elected by the staff of Sydney Ports. Directors are appointed by the Governor, on the recommendation of the Voting Shareholders.

The Voting Shareholders appoint the Chairman, who is currently Bryan T. Smith. Bryan is an independent Director and his role is clearly separated from the role of the Chief Executive Officer, Grant Gilfillan. Bryan is currently on the board of one (1) other organisation, which is not a government board. Bryan was appointed Chairman of the Board on 25 March 2010, following the retirement of Paul Binsted on 3 December 2009. In the interim period between 3 December 2009 and 25 March 2010, Michael Braham was elected by the Board as the presiding Director and chaired the meetings of the Board in this capacity. Michael is also an independent Director.

The Chairman is responsible for leading the Board and facilitating its effective functioning.

Chief exeCutive offiCer

The Chief Executive Officer, Grant Gilfillan, was appointed in January 2008. As set out in the State Owned Corporations Act (NSW) 1989, the Chief Executive Officer was appointed by the Governor on the recommendation of the Portfolio Minister, following a recommendation from the Board. The Board’s recommendation of Grant Gilfillan came after an extensive recruitment process.

The Chief Executive Officer is responsible for the day to day management of the operation of Sydney Ports in accordance with the general policies and specific directions of the Board.




Board indePendenCe

All Directors are expected to exercise independent judgment when making Board decisions. It is the approach and attitude of each Non-executive Director which is critical to determining independence and this must be considered in relation to each Director while taking into account all other relevant factors, which will include an assessment against the independence recommendations in the guidelines which cover whether the Director:

■■ is employed, or has been employed in a senior management position by the business, and there has not been a period of at least three years between ceasing that employment and serving on the Board;

■■ has within the last three years been a principal of a material professional adviser or consultant to the business, or an employee materially associated with the service provided;

■■ is a material* supplier or customer of the business, or an officer of or otherwise associated directly or indirectly with a material supplier or customer; or

■■ has a material* contractual relationship with the business other than as a Director of the business.

* Material means greater than 5% of the Corporation’s gross revenues.

Michael Sullivan is the staff elected Director, and due to his employment by Sydney Ports is not considered independent. All other Directors are considered independent.

indePendent ProfeSSional adviCe

Each Director has the right of access to all Sydney Ports’ information and employees. Further, the Board and each individual Director, subject to informing the Chairman, has the right to seek independent professional advice from a suitably qualified advisor, at Sydney Ports’ expense, to assist them to carry out their responsibilities. Where appropriate, a copy of this advice is to be made available to all other members of the Board.

ConfliCtS of intereSt

Sydney Ports maintains a conflicts register which registers any interests of Directors which may potentially conflict with their duties as a Director of Sydney Ports, including, other board positions. Directors are required to update this register on an ongoing basis as circumstances change.

In addition, Directors are required to advise NSW Treasury of any interests or changes in interest. Directors advise Treasury of any potential conflicts on appointment and the Company Secretary provides Treasury with any updates to these details.

In relation to specific Board decisions, the Board complies with Clause 2, Schedule 10 of the State Owned Corporations Act (NSW) 1989. A Director cannot take part in discussions or vote on a matter is which that Director has a material personal interest, unless the Board resolves that the interest does not disqualify the Director. There have been no related-party transactions between Sydney Ports and any Director during the year.

other Board memBerShiPS

The guidelines recommend that Directors should not hold directorships of more than three Government boards. None of Sydney Ports’ Directors have exceeded this limit. Directors inform the Chairman prior to accepting any new appointments.

Board meetingS and their ConduCt

The Board of Directors of Sydney Ports meets on a monthly basis and more regularly as circumstances require. During 2009/10, the Board met 17 times.

The Company Secretary is responsible for providing administrative and corporate governance support to the Board of Directors. This includes ensuring that the Board receives papers for Board and Committee meetings in advance of each meeting and attendance at Board and Committee meetings to take minutes. The Company Secretary is appointed and removed by resolution of the Board. Sally Palmer, (Solicitor, Dip Law, ACIS, MAICD) is currently the Company Secretary of Sydney Ports Corporation.

The attendance by Directors at Board and Committee meetings during the year is as follows:


attendance at board meetings

regular Board meetingS

a B term of aPPointment

B. T. Smith 17 17 20 March 2009 – 24 March 2013P. Binsted 8 8 4 December 2006 – 3 December 2009 (retired at 3 December 2009)M. Braham 17 17 15 February 2009 – 14 February 2012J. Brogden 4 4 1 April 2010 – 31 March 2013G. Gilfillan 17 16 20 March 2009 – 19 March 2011R. van der Loos 17 17 15 February 2009 – 14 February 2012T. Robertson 8 7 15 December 2006 – 15 December 2009 (retired at 15 December 2009)M. Sullivan 17 16 18 February 2009 – 30 September 2011T. Yassine 5 4 1 March 2010 – 28 February 2013

A = Number of meetings eligible to attend during year.

B = Number of meetings attended.

attendance at committee meetings

Directors who are not members of Committees are invited to attend Committee meetings and are entitled to receive papers of Committee meetings on request. Attendance below only includes attendance of appointed Committee members and does not reflect attendance at meetings by Directors who are not Committee members.

audit & riSk Committeeremuneration, hr &

governanCe CommitteePort Botany landSide

imProvement Committee

a B a B a B

B. T. Smith – – 2 2 4 4P. Binsted 4 4 2 2 – –M. Braham 9 8 3 3 – –J. Brogden 2 2 1 1 – –G. Gilfillan – – – – – –R. van der Loos 9 9 5 5 – –T. Robertson – – 2 2 2 2M. Sullivan – – – – – –T. Yassine 2 1 – – 1 1

A = Number of meetings eligible to attend during year.

B = Number of meetings attended.




Board meetingS and their ConduCt (Continued)

director appointment and education

When appointed, Directors are provided with a letter of appointment from the Voting Shareholders specifying their term of appointment and remuneration. In addition, Sydney Ports provides new Directors with a more specific appointment letter setting out expectation of Directors and including a pack of information to assist them in understanding Sydney Ports’ business and the requirements of the role. Information provided includes:

■■ previous Board minutes;

■■ copies of relevant legislation;

■■ Code of Conduct;

■■ most recent annual report;

■■ Board profiles and contact details;

■■ Board and Committee charters; and

■■ Statement of Corporate Intent and Corporate Plan.

The remuneration for Directors of Sydney Ports is determined by the Voting Shareholders.

In addition, new Directors are provided with access to an induction program which includes a series of meetings with the Chairman, Chief Executive Officer and key executives to gain an understanding of Sydney Ports’:

■■ strategy, objectives and business;

■■ industry in which it operates;

■■ corporate governance practices;

■■ current financial and business performance;

■■ key executives;

■■ remuneration strategy; and

■■ risk management framework.

All other Directors are encouraged to continue their education and the Board has approved a continuing education program for 2010/11 covering practical director skills courses, site visits and briefing on issues relevant to Sydney Ports’ operations. During the year, the Directors’ continuing education program included:

■■ an Enterprise Risk Management workshop;

■■ a Corporate Governance Workshop – Duties of Directors and Officers;

■■ attendance by several directors at the AICD Public Sector Governance Conference.

In addition, Sydney Ports funds Directors’ membership of the Australian Institute of Company Directors and attendance at specific courses or conferences if appropriate.

board performance

The Board believes it is important to evaluate its own performance and that of each Director on a regular basis. To facilitate this, the Chairman provides regular informal feedback to individual Directors. In addition, in 2008/09, the Board engaged an external provider to conduct a performance evaluation of the Board. This evaluation involved a series of interviews with each Director and Executive Management, a discussion paper and workshop to develop an action plan. The Board continued to progress those actions during 2009/10.

During 2009/10 NSW Treasury conducted an extensive review of State Owned Corporation boards. It is expected the NSW Treasury report will be released in the second half of 2010 and will provide feedback on the performance of the Sydney Ports Board and its governance practices.

With the changes to the Board’s composition during the year and the Treasury Board Review process, the Board decided not to conduct a separate Board performance review process during 2009/10.

The Board will consider the need for a performance evaluation during 2010/11 when the outcomes and recommendations of the Treasury Board Review have been received.

eeo rePort

Sydney Ports is an equal employment opportunity employer. We have an Equal Opportunity Policy that defines our commitment to providing a set of fair and equitable business practices. The EEO policy is complemented by the Discrimination, Harassment and Workplace Violence policy that encourage an environment free from harassment, discrimination and vilification.

Importantly, we also have a Grievance policy and procedure to ensure the confidential, timely and effective resolution of any workplace grievance or dispute. All of these documents are regularly updated for currency and are made available to all employees via the Sydney Ports intranet. A single grievance was received in July 2009 and was amicably resolved in a short period of time.

The tables below show statistical information on EEO target groups within Sydney Ports. The Benchmark/targets are common NSW Government targets across all Agency and State Owned Corporation businesses.


The data is obtained from the EEO Report produced by the Workforce Profile Team of the NSW Department of Premier and Cabinet as part of the Annual data collection. The Workforce Profile collects demographic information on age, gender, EEO group membership as well as employment information such as hours worked, leave patterns, remuneration and mobility within the NSW public sector.

As the Workforce Profile collects information on individual employees (in the NSW public sector), it is essential to guarantee anonymity and confidentiality. All employees are advised of the proposed inclusion of their data in the Workforce Profile and employees have the right to request to have their data withheld from the collection. Approximately 30% of employees of Sydney Ports have requested that their data be withheld.

Where there is insufficient information supplied or the numbers too low, “N/A” is displayed.

% of total Staff at 30 June (exCluding CaSual Staff)

eeo grouPBenChmark/

target 2007 2008 2009 2010

Women 50% 27% 21% 32% 31%Aboriginal people & Torres Strait Islanders 2.6% by 2015 0.7% 0.7% 1.1% 1.0%People whose first language was not English 19% 22% 22% 22% 21%People with a disability 12% N/A N/A 1% N/APeople with a disability requiring work-related adjustment 7% N/A N/A N/A N/A

diStriBution index (exCluding CaSual Staff)

eeo grouPBenChmark/

target* 2007 2008 2009 2010

Women 100 76 78 82 81Aboriginal people & Torres Strait Islanders 100 N/A N/A N/A N/APeople whose first language was not English 100 92 96 96 94People with a disability 100 N/A N/A N/A N/APeople with a disability requiring work-related adjustment 100 N/A N/A N/A N/A

* A distribution index of 100 indicates that the centre of distribution of the EEO group across salary levels is equivalent to that of other staff. Values less than 100 mean that the EEO group tends to be more concentrated at lower salary levels than is the case for other staff. The more pronounced this tendency is, the lower the index will be. An index more than 100 indicates that the EEO group is less concentrated at the lower salary levels.

For the 2009/10 year, all of Sydney Ports’ Human Resources policies were overhauled for currency and compliance to legislation and to ensure that policies are easily accessible via our Intranet.

For the 2010/11 financial year Sydney Ports will be required to renegotiate the two major Industrial Agreements that expire on 30 June 2010. Sydney Ports will be required to renegotiate these agreements with the framework of the NSW Wages Policy. The two Industrial Agreements covers all employees of the organisation with the exception of approximately 50 management staff.

Salary rePorting

In reporting salaries, the following is provided for the year ended June 2010.

Bandtotal PoSitionS aS at 30 June 2009

total emPloyment CoSt range

inCentive range SuBJeCt to PerformanCe againSt Set oBJeCtiveS

1 1 $320,000–$420,000 $50,000–$80,0002 4 $220,000–$320,000 $20,000–$50,000




oCCuPational health and Safety (oh&S)

During 2009/10 Sydney Ports continued its commitment to providing a safe and healthy work environment for staff, contractors and visitors. The OH&S performance for 2009/10 was:

Sydney ports (includes Sydney pilots) ohS kpis for 2009/10

2009/10 target aCtual

No of LTI 2* 6*LTIFR 5 11.3

* There was no target for LTI (the aim is always zero) these figures are the number of LTIs that would produce the target LTIFR.

rePorting Period 2006/07 2007/08 2008/09 2009/10

Sydney PortS

Sydney Pilot

ServiCeSydney

PortS

Sydney Pilot

ServiCeSydney

PortS

Sydney Pilot

ServiCeSydney

PortS

Sydney Pilot

ServiCe

Number of lost time injuries 8 0 1 3 2 0 3 3

A strategy to engage managers in safety was implemented in this period. Managers were required to complete a minimum of four “Safety Observations” within the financial year. Implementation was facilitated by offering opportunities for coaching in small groups. The first year was very successful with a high participation rate and many constructive observations actioned.

The OHS Contractor Management system and supporting documents have been completely revised and feedback from user groups incorporated.

Training initiatives targeting managers were implemented this year, these addressed Contractor Management as well as refresher training with a focus on risk management.

Sydney Ports undertook a successful OHS management system audit against achievement towards the NSW State Government “Working Together” strategy. Constructive feedback is being incorporated into system improvements.

Sydney Ports’ theme for Safety Week this year was sun exposure, and employees across Sydney Ports enthusiastically participated, making it a great success.

multiCultural PoliCieS and ServiCeS

Sydney Ports supports the principles of multiculturalism. We recognise that our employees and the community are drawn from different linguistic, religious, racial and ethnic backgrounds.

To demonstrate our commitment to cultural diversity, Sydney Ports operates a recruitment, selection and promotion strategy based solely on merit. This year, we recruited from a broad range of ethnic and cultural backgrounds with 13.3% of our new employees being of a non-English speaking heritage.

Over the coming years Sydney Ports will introduce its Aboriginal Employment Strategy. This strategy will focus on ensuring that local Aboriginal Communities are aware of employment vacancies at Sydney Ports with a particular focus on Marine Traineeships.

We also offer all staff attractive employment conditions, including flexible hours of work. These arrangements accommodate cultural and religious differences by providing a day’s leave per calendar year to cover National Aboriginals Day or religious holidays.

Other initiatives that demonstrate Sydney Ports’ commitment to cultural diversity include translating material and signage into various languages to enhance our relationship with our multicultural community; and engaging with communities adjacent to major port activity via community liaison groups, newsletters and open days.

Sydney Ports provides an Employee Assistance Program, which includes interpreter services to ensure that the program’s benefits are accessible to all employees and their immediate families.


overSeaS travel By Sydney PortS CorPoration emPloyeeS – 1 July 2009 to 30 June 2010

name date deStination PurPoSe

R. WestwoodA. HansenS. ChellK. WhitemanMarine Pilots (4)

7-10 Sep 2009 Port Klang, Malaysia To attend Port Botany Expansion study and electronic simulation emergency procedures course.

A. AmosM. WhiteA. WitcombeP. AnsellMarine Pilots (4)

28 Sep – 1 Oct 2009 Port Klang, Malaysia To attend Port Botany Expansion study and electronic simulation emergency procedures course.

Annette Woods, Executive General Manager, Development and Planning

11-17 Oct 2009 Wakatipu Basin (close to Queenstown) New Zealand.

To attend the Strategic Leadership Program conducted by the New Zealand Institute for Leadership.

S. Major M. StannardA. HummerstonD. SealMarine Pilots (4)

29 Nov – 2 Dec 2009 Port Klang, Malaysia To attend Port Botany Expansion study and electronic simulation emergency procedures course.

Grant Gilfillan, CEO 16-18 Nov 2009 Hamburg, Germany To attend the International Association of Ports and Harbours (IAPH) Regional Officer’s meeting and Europe/Africa Regional Conference.

N. FarmerC. KestevenR. BrownetteM. KellyMarine Pilots (4)

15-18 Dec 2009 Port Klang, Malaysia To attend Port Botany Expansion study and electronic simulation emergency procedures course.

Grant Gilfillan, CEOShane Hobday, General Manager, Safety, Security and Environment Tony Navaratne, Manager Port Planning

3-5 Feb 2010 Bandung, Indonesia To attend the International Association of Ports and Harbours (IAPH) Asia/Oceania Regional Meeting and Port Forum.

Grant Gilfillan, CEOShane Hobday, General Manager, Safety, Security and Environment

7-9 Jun 2010 Savannah, Georgia, US To attend the International Association of Ports and Harbours’ 2010 Mid-term Board Meeting and Technical Committee Meeting.

Grant Gilfillan, CEO 10-11 Jun 2010 Vancouver, Canada Visit and tour Port Metro, Vancouver and visit the offices of Delta Materials Corporation.


ConSultanCy feeS

Total fees paid and payable to consultants relating to the provision of economic analysis and strategic planning services during 2009/10 were $0.197 million ($2.062 million in 2008/09).

PuBliCationS

During the year, in addition to the annual report, Sydney Ports published the following publications:

hardcopy publications

■■ Delivering Prosperity is Sydney Ports’ corporate overview publication used to outline the services provided by Sydney Ports and the projects underway to maximise port infrastructure.

■■ Trade Report 2008/09 outlines trade performance during the 2008/09 financial year.

■■ Logistics Review 2008/09 provides detailed information on a range of initiatives that support land-based logistics operations to benefit port users, stakeholders and the community.

electronic publications

■■ Statement of Corporate Intent 2009/10 provides an outline of Sydney Ports Corporation’s vision, values, strategic direction and targets for 2009/10.

■■ Port Procedures Guide (Sydney Harbour & Port Botany) provides detailed information on port procedures for Sydney’s ports.

■■ Schedule of Port Charges (from 1 July 2010) is a summary of port charges applicable to the commercial use of Sydney’s ports effective 1 July 2010.

■■ Dangerous Goods Management Guidelines provides information on the management of dangerous goods within Sydney’s ports. This publication is updated regularly and was most recently updated in May 2010.

■■ e-Current is Sydney Ports’ monthly electronic newsletter sent to industry stakeholders via email.

The Sydney Ports’ website www.sydneyports.com.au is updated regularly to provide information for our stakeholders and the public.

annual rePort CoSt

The total external cost incurred in the production of 600 copies of the Sydney Ports Corporation 2009/10 Annual Report, including the Sydney Pilot Service’s Financial Report, was $73,464. The report is available at www.sydneyports.com.au/corporation/publications.

waSte reduCtion and PurChaSing PoliCy (wraPP)

As a State Owned corporation, Sydney Ports is required to comply with the NSW Government’s Waste Reduction and Purchasing Policy (WRAPP), where waste reduction and purchasing is cost effective and in line with sound business practices.

Sydney Ports has developed a WRAPP plan in accordance with Premier’s Memoranda 99-9 and 97-30. WRAPP Progress Reports are submitted to the NSW Department of Environment and Climate Change on a bi-annual basis, addressing a number of key result areas including:

(a) Reducing the generation of waste;

(b) Resource recovery; and

(c) Use of recycled materials.

In the 12 months to June 2010, action has been taken in the following areas:

(a) reducing the generation of waste

Sydney Ports has a number of strategies in place to reduce the generation of printed materials:

Publications for public stakeholders are made available in electronic format on the Corporation’s website. Where printed publications are required, they are produced on recyclable material where possible.

Considerable use is made of the Sydney Ports’ intranet:

■■ Sydney Ports’ intranet provides access links to a range of policies, procedures and other information for Sydney Ports’ staff.

■■ Employee Self Service (ESS) provides online access to employees’ pay details, leave details and online leave applications.

■■ Email remains the preferred means of documented communication both internally and with our external stakeholders.



fundS granted to non-government Community organiSationS – 2009/10

organiSation’S name amount $

United Way Sydney 40,558The George Gregan Foundation 4,090The Cancer Council NSW 878

45,526


In moving into Sydney Ports’ new head offices at Bond One, Walsh Bay, measures have been introduced to the workplace to reduce waste, such as:

■■ Nominating and labelling a section of cupboards in Bond One for storage of office supplies (folders, files, etc) which can be re-used.

■■ Centralising paper purchased for all business units through a refill supply system.

■■ Creation of a shared stationery cupboard for basic office supplies, thereby managing consumption, by reducing storage of office supplies in each work area.

(b) resource recovery

Materials owned or purchased by Sydney Ports are recovered for re-use or recycling where possible.

For example, office waste is separated into paper and cardboard, co-mingled glass, aluminium and plastics and non-recyclable waste. Paper waste generated is collected and recycled by a private contractor. The quantity of paper/cardboard recycled via Sydney Ports’ secure destruction service provider during 2009/10 was 3.358 tonnes. Used toner cartridges are collected by third parties for recycling from office areas where copiers are located.

In the area of construction and related activities, contractors engaged by Sydney Ports are required to ensure that all activities on site minimise the generation of waste by encouraging the recycling of all potential waste material.

At the Port Botany Expansion site, Sydney Ports adopted various techniques to reduce waste and re-use available materials, including the capture and treatment of runoff for reuse in dust suppression activities, the reuse of wooden formwork and the reuse of all waste concrete within the construction site. A total of 95.25% of all waste generated on site in 2009/10 has been either reused or recycled.

Sydney Ports also recycles demolition and construction generated material, including concrete, timber, steel, asphalt and vegetation waste including in the construction of the Operations Centre where waste materials were sorted and either reused or recycled.

At the Intermodal Logistics Centre site at Enfield, 12,000 tonnes of waste concrete, 40 tonnes of sleepers and 380 tonnes of rail track and turnouts were recycled during 2009/10. The pedestrian footbridge on the site will be relocated to the Dorrigo Rail and Steam Museum for reinstatement. The project has been designed so that treated runoff from the developed site will be used as the water supply to the proposed frog ponds, to avoid the use of potable water. The ILC Early Works Contractor is required to prepare a Waste, Reuse and Recycling Management Plan as part of their Construction Environmental Management Plan, to be approved by the Department of Planning prior to the commencement of the works.

(c) the use of recycled material

It is Sydney Ports’ policy to purchase low-waste products and products with recycled content where it is consistent with sound commercial practice and such products meet technical and operating standards.

Measures taken by Sydney Ports to increase the purchase of recycled content paper and other office products have been successful over the last 12 months. White A4 paper with recycled content purchased during 2009/10 totalled 3,878 reams, representing 99.87% of all white copy paper purchased, up from 81% in the previous year. Further, there was reduction of 110 reams (3%) in the volume of white A4 paper purchased during 2009/10 (3,878 reams) against the previous 12 months (3,988 reams in 2008/09).

Other paper and cardboard based products with recycled content purchased during 2009/10 included note books and pads (56%), suspension files (21%) and diaries (20%).

land diSPoSal

Sydney Ports did not dispose of any land assets for the reporting period 1 July, 2009 to 30 June, 2010.

tranSfer of eaSt darling harBour aSSetS from Sydney PortS CorPoration to Barangaroo delivery authority

In accordance with the NSW Government Planning Committee decision of July 2006, Sydney Ports transferred its East Darling Harbour site assets (Barangaroo site) to Sydney Harbour Foreshore Authority (SHFA) in December 2007. Under the terms of the transfer of the Barangaroo site assets to SHFA, SHFA also acquired Sydney Ports’ existing Passenger Cruise Terminal located at Barangaroo. Following the establishment of Barangaroo Delivery Authority (BDA), the entitlements and obligations relating to the existing Passenger Cruise Terminal were transferred to BDA. In the event the Passenger Cruise Terminal at Barangaroo is required by BDA for redevelopment, Sydney Ports is required to relocate from the existing Passenger Cruise Terminal.

In December 2008, the Minister of Planning announced that the Passenger Terminal at East Darling Harbour would be permanently removed to accommodate the Barangaroo development. In December 2009, the NSW Government announced that the permanent future site of the domestic cruise terminal west of the Harbour Bridge would be at White Bay. Under the terms of the transfer of the Barangaroo site, BDA will be required to reimburse Sydney Ports for the cost of relocation and construction of any new Passenger Cruise Terminal (subject to certain conditions). Sydney Ports is not able to reliably measure any possible future reimbursement in respect of the new passenger terminal as the size, cost and timing cannot be reliably determined as at the date of this report. Consequently, no asset has been included in the financial report.


Annual Report Cost 162

Bulk Liquids Berth 2 (BLB2) 13, 39

Board of Directors 20

Attendance at Board meetings 157

Attendance at Committee meetings 157

Audit and Risk Committee 153

Board Committees 153

Board composition 155

Board independence 156

Board meetings and their conduct 156

Board performance 158

Director appointment and education 158

Independent professional advice 156

Other board memberships 156

Port Botany Landside Improvement Strategy Committee 154

Remuneration, Human Resources & Governance Committee 154

Role of the Board 152

CEO’s Report 14

Chairman’s Report 10

Charter 149

Code of Conduct 153

Conflicts of Interest 156

Consultancy Fees 162

Cooks River 46

Corporate Governance 13, 152

Cruise 42

EEO Report 158

Enfield 12, 40

Exemptions for the reporting period provisions 150

Factors affecting achievement of operational objectives 150

Freedom of Information 151

Funds granted to non-government community organisations 162

Future Uses – Glebe Island, White Bay and Barangaroo 44

Glossary IBC

Guarantee of Service – PSOL 149

Highlights 4

Insurance Activities 155

Key Roles, Objectives and Results 26

Land Disposal 163

Legal changes and subordinate legislation 149

Marine Services 54

Multicultural Policies and Services 160

Occupational Health and Safety 160

Overseas Travel July 2009 – June 2010 161

Overview 2

Port Botany Landside Improvement Strategy (PBLIS) 13, 17, 36, 51

Port Botany Expansion 12, 15, 30

Publications 162

Relevant Legislation 149

Risk Management 154

Safety and Environment 60

Salary Reporting 159

Security 65

Summary Review of Operations 6

Sustainability and Heritage 62

Sydney Pilot Service 58

Trade and Transport Logistics 48

Vision, Roles and Values 25

Waste Reduction and Purchasing Policy (WRAPP) 162

2009/10 performance relative to the Statement of Corporate Intent 150


indeX

aiS Automatic Identification System

blb Bulk Liquids Berth (at Port Botany)

cctv Closed Circuit Television

ceo Chief Executive Officer

cpi Consumer Price Index

da Development Application

dwt Tons Deadweight

ea Environmental Assessment

eeo Equal Employment Opportunity

foi Freedom of Information

gfc Global Financial Crisis

ilc Intermodal Logistics Centre (at Enfield)

imt Intermodal Terminal

intermodal A terminal for interchange of containers on/off trucks/trains

ipart Independent Pricing and Regulatory Tribunal

it Information Technology

ltifr Lost Time Injury Frequency Rate

m million/millions

mSic Maritime Security Identification Card

neSb Non English Speaking Background

nSw New South Wales (eastern state of Australia)

oh&S Occupational Health & Safety

opm Operational Performance Management

pbliS Port Botany Landside Improvement Strategy

pbrt Port Botany Rail Team

pSol Port Safety Operating Licence

rta Roads and Traffic Authority

ShipS Sydney’s Integrated Port System

SpS Sydney Pilot Service Pty Ltd

Sydney harbour The commercial port areas of Glebe Island and White Bay, Darling Harbour and the Overseas Passenger Terminal at Circular Quay

t3 Third container terminal (at Port Botany)

teu /teus Twenty-foot Equivalent Unit

vhf Very High Frequency

vtS Vessel Traffic Services


GLoSSary

corporate office and address l4, 20 windmill Street walsh bay nSw 2000 australia

telephone +61 2 9296 4999facsimile +61 2 9296 [email protected]

abn 95 784 452 933

office hours 8.30am – 5.30pm monday to friday

postal addresspo box 25 millers point nSw 2000 australia

consistent with Sydney ports’ commitment to sustainability, this report is printed on an fSc mixed Sources certified paper, which ensures all virgin pulp is derived from well-managed forests and controlled sources. the paper is 55% recycled and is certified carbon neutral by an independent third party. it contains elemental chlorine free (ecf) bleached pulp and is manufactured by an iSo 14001 certified mill. the printer of this report has forest Stewardship council (fSc), chain of custody certification.