Annual Report2004 - Parliament of NSW

Sydney Ports CorporationAnnual Report 2004

Contents

1 2003–04 Highlights

4 Chairman’s and

Chief Executive Officer’s report

10 Fostering the State’s trade

18 Facilitating trade

24 Ensuring safe navigation

and operations

28 Stepping up security

30 Protecting the environment

32 Working with industry,

government and the community

36 Investing in our people

38 Board of Directors

40 Management structure

Maps

42 Sydney Harbour port facilities

43 Port Botany port facilities

44 NSW road and rail links

45 Metropolitan road and rail links

46 Port Botany

47 Port Botany proposed expansion

Key roles, objectives and results

49 Key roles, objectives and results

50 Key performance indicators

51 Environment indicators

53 Port users and stakeholders

54 Safety and navigation

55 Environment and community

55 Finance

56 People

57 Business operations

Financial Statements

58 Sydney Ports Corporation


90 Sydney Pilot Service


111 Statutory disclosures

119 Appendices

122 Glossary

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2003–04 2002–03 % change

Financial (million)

Revenue from port operations 124.5 113.9 9

Pre-tax profit 51.8 41.2 26

Income tax payable 16.7 15.1 11

Capital expenditure 12.0 23.2 48

Dividend payable 17.6 13.2 33

Shareholder value added 12.8 11.5 11

Trade

Total cargo (mass tonnes) 25.1 23.6 6

Total container trade (TEU’s) 1,270,216 1,160, 747 9

Volume of containers moved by rail (to and from Port Botany) 250,000 255,000 2

Shipping

Total commercial vessel visits 2,408 2,331 3

Gross Tonnage (GT – million) 64.1 60.0 7

TEU = Twenty Foot Equivalent Unit% change reporting year against 2002–03, nearest %

2003–04 Highlights– Successful PSOL audit with no non-conformances,

maintaining our international safety standards

– NSW Ports Growth Plan announced in October 2003

– New and unprecedented security arrangements introduced

– Record container trade of 1.27 million TEUs

– A new record set for motor vehicle imports of 220,775

– Growth in bulk and break bulk trade

– All financial targets were achieved and increasedshareholder value

– Environmental Impact Statement for proposed Port Botany expansion lodged

– Spirit of Tasmania III service launched

SYDNEY PORTS CORPORATION ABN 95 784 452 933

Level 8, 207 Kent Street Sydney NSW Australia 2000

PO Box 25 Millers PointSydney NSW Australia 2000

Telephone +61 2 9296 4999

Facsimile + 61 2 9296 4742

www.sydneyports.com.au31 October 2004

The Hon MR Egan, MLC The Hon JJ Della Bosca, MP

Treasurer Special Minister of State

Minister for State Development, and Minister for Commerce

Vice President of the Executive Council Minister for Industrial Relations

Governor Macquarie Tower Assistant Treasurer and

Level 33, 1 Farrer Place Minister for the Central Coast

Sydney NSW 2000 Governor Macquarie Tower

Level 33, 1 Farrer Place

Sydney NSW 2000

Dear Messrs Egan and Della Bosca

This annual report covers Sydney Ports Corporation’s operations and statement of accounts for the year ended 30 June

2004, 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 David LP Field Mr Greg J Martin

Chairman Chief Executive Officer

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The 2003 –04 financial year was a defining period for Sydney Ports Corporation. The NSW

Government announced medium and long-term policies. These provided direction for future

operational, planning, investment and environmental activity in Sydney Harbour and Port Botany.

During the year, trade through the port continued to grow,

reaching new records.

New and unprecedented security arrangements were

implemented during the year, bringing the ports up to national

and international standards.

These developments took place in parallel with significant

operational changes in Sydney Harbour and continuing prepar-

ation for berth and terminal expansion at Botany.

The Corporation continued its mission of evolving into a multi-

faceted and strategic trade facilitator, balancing economic,

social and environmental responsibilities to ensure efficiency

along the logistics chain.

Our efforts in devising and delivering innovative trade

solutions, by working closely with industry, government and

community stakeholders, produced positive results.

The Corporation passed a significant milestone: in May 2004

the Sydney Ports Board held its 100th meeting since corp-

oratisation in 1995.

A defining year: strong tradeand a firm sense of direction

Chairman’s and Chief Executive Officer’s report

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Record container volumes underpin strong

trade growth

The 2003–04 period produced strong trade growth with

record volumes through the port, particularly in container and

motor vehicle trades. A 9.5 per cent increase in container

trade lifted volumes to a new high of 1.27 million TEUs. This

growth, which followed a 15 per cent increase in the previous

year, was largely fuelled by the continuing surge in import cargo.

Containerised exports also exceeded the previous year’s

volumes despite a stronger Australian dollar and continuing

drought in regional areas.

Cargo throughput for the year totalled more than 25 million

mass tonnes, another record. The terminals at Glebe Island (AAT)

and Darling Harbour (Patrick Autocare) handled 220,775

motor vehicle imports, increasing Sydney Harbour’s important

role in this trade.

Delivering value for shareholders

With the strong trade throughput, the Corporation achieved a

consolidated pre-tax profit of $51.8 million, up some 26 per cent

on 2002–03. Total revenues were $140.5 million, an increase

of $15.8 million over the previous year. This enabled the

Corporation to declare a dividend of $17.6 million, up 33 per

cent on 2002–03.

Shareholder value increased to $12.8 million, up 11 per cent on

2002–03 which meant the three key financial indicators,

profit, dividend, and shareholder value all exceeded budget.

The Corporation reinvested $12 million in its capital program

during 2003–04. Projects included the purpose-built wharf

for the TT Line’s Spirit of Tasmania III service, expansion of

the Glebe Island car terminal, and computer system improve-

ments. At Port Botany we finalised development plans and

new lease arrangements.

Sydney Ports’ subsidiary company, Sydney Pilot Service Pty Ltd

(SPS), produced a modest pre-tax profit of $374,000 and made

a substantial capital investment in the major refit of two of

its pilot vessels.

Revenue 2004 as a proportion of total revenue (%) Expenditure 2004 as a proportion of total expenditure (%)

salaries and wages 28%

depreciation 15%

other 18%

service contractors 14%

financial expenses 15%

administration 10%

wharfage 42%

leases/rental 22%

other 11%

site occupation 1%

pilotage 6%

navigation 17%

Pictured on opposite page –

David Field, Chairman and Greg Martin, Chief Executive

Officer touring Sunrice’s facility in Leeton, NSW.

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The NSW Ports Growth Plan

During the year, the NSW Government made a major policy

announcement which provided a clear long term strategy for

future port development in the State.

The NSW Ports Growth Plan, unveiled in October 2003 by

Premier Bob Carr, provides port operators and the maritime in-

dustry with a framework for future development and investment.

The Ports Growth Plan establishes a framework for the future

of Sydney’s two ports including:

– Port Botany is to remain the State’s major container port

until it reaches capacity. The Government decided that the

Corporation’s proposed 60 hectare terminal expansion should

be referred for review to an independent Commission of

Inquiry (COI), established in January 2004. The COI will make

recommendations to the Minister for Infrastructure, Planning

and Natural Resources.

– The examination of how to increase the proportion of containers

moved by rail to and from the ports to intermodal terminals in

both the Sydney metropolitan area and regional NSW.

– The Plan allows for a phasing-out of containers and general

cargo trade in Port Jackson after stevedoring leases expire

in 2006.

Sydney Harbour will remain a working port. Passenger ships

and other port cargoes such as dry bulk, oil, bulk liquid and

motor vehicle imports will continue to move through the port

until current leases, with options to 2017 or in some cases

2020, expire. Cruise shipping would continue to be a major

user of the Harbour over the long term.

The Corporation has been working closely with shipping lines

affected by these changes, to assist them in the transition to

other facilities.

An important objective of the Ports Growth Plan is to move

more containers onto rail to improve freight transport efficiency

and ease the environmental and social impacts of road

transport. To achieve the Corporation’s goal of moving 40 per

cent of containers by rail by 2010, Sydney Ports still sees a

need to consider development options for intermodal facilities

across Sydney, including the Enfield site.

A Parliamentary Inquiry into Port Infrastructure in NSW by the

Legislative Council Standing Committee on State Development

was established in October 2003. Sydney Ports Corporation

appeared before this Inquiry in April 2004.

The Corporation looks forward to presenting to the COI during

October 2004, following the adjournment in May 2004, to pursue

approval to expand Port Botany.

Container trade is expected to grow to around 3.5 million TEUs

by 2025, with existing facilities anticipated to reach capacity

by around 2010. It is therefore crucial for the Corporation to

obtain planning approval so that construction can commence

during 2005 – 06.

Trade by total cargo (mass tonnes – millions)

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Mass tonnes (m)

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The obligation for the Corporation to be prepared for increasing

trade has never been greater. This was underlined during the

year by MSC, one of the world’s largest container shipping

companies, which expressed strong interest in upgrading

services to Sydney and vying for space at Port Botany if

expansion is approved.

Other important Federal and State policy decisions during the

year will provide medium-term benefits to Port Botany.

One is the agreement between the Commonwealth and

the NSW Government to lease the interstate rail network

(managed by the Australian Rail Track Corporation(ARTC)).

This will enable vital work to commence on the important

Sefton Park to Macarthur Southern Sydney Freight Line. The

line will facilitate the movement of cargo from south-western

Sydney and the Riverina region to Port Botany, avoiding

passenger rail curfews.

The Federal Government’s AusLink road and rail improve-

ment initiative, announced in June 2004, was an encouraging

step towards improving cargo movement across Sydney and

other parts of the State.

The NSW Government announced a preferred option for the

extension of the M4 to the City West Link. This development

would ease freight movements from the west. It will benefit

transport operators, as will the construction of the $1.5 billion

Western Sydney Orbital (M7), which commenced early in 2004.

Security measures a high priority

The threat of a terrorist attack on port facilities and other

significant infrastructure has become an inescapable reality.

The onus is on the owners of all essential infrastructure to

provide an appropriate level of security.

The Corporation, to meet its security obligations, is complying

with the Australian Maritime Transport Security Act 2003, which

came into effect on 1 July 2004. The Act fulfils the require-

ments of the International Maritime Organisation’s International

Ship and Port Facility Security (ISPS) Code. The code is

intended to create security parity between ports worldwide.

Complying with the new measures involved a phase of

intense preparation and planning. Sydney Ports prepared a

series of risk assessments and security plans that required

Commonwealth approval. Significantly, we achieved the required

outcomes by June 2004, just six months after Australia’s new

Maritime Transport Security Act 2003 received assent in

December 2003.

The Corporation is committed to working with the Common-

wealth and all interested bodies to ensure that the plans

work in practice. The financial impost of complying with the

new security arrangements will be significant, in the initial

capital expenditure required and in annual operating costs.

The Federal Government has made it clear – security is a

cost of doing business. Therefore Sydney Ports will need to

levy port users to recover costs in a revenue neutral manner.

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Pictured right – P&O’s Pacific Princess approaching

Wharf 8 Cruise Terminal in Darling Harbour

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Safe navigation through the ports

Another important achievement during the year was the

successful audit certification of our Port Safety Operating

Licence for the ninth consecutive time. The Corporation has

consistently and professionally met all safety benchmark

requirements under the licence since corporatisation in 1995.

Vessel visits during the year to Sydney’s ports reached 2,408,

a three per cent increase on the previous year.

The largest container ship to ever visit Sydney, the MSC

Fabienne, which has a 5,050 TEU capacity, sailed into Port

Botany in April to collect a cargo of empty containers.

The Corporation warmly welcomed the start of the new

regular ferry service between Sydney and Devonport, with the

Spirit of Tasmania III embarking on her maiden voyage in

January 2004. The service added a new dimension to ship-

ping in Sydney Harbour.

Cruise shipping activity was strong, with 81 vessel visits

throughout the year.

A second tug service, Australian Maritime Services (AMS),

commenced operations in Port Botany in October 2003 and

stimulated towage competition. It also laid the foundations for

a second lines service operator, Ausport Marine, to com-

mence operations in Port Botany from July 2004.

Promoting the ports through co-operation with users

The Board and the Corporation’s staff upheld our key objective

of maintaining close working relationships with port users,

other interest groups and trade organisations. In October

2003 the Board and senior trade staff strengthened relations

with rural stakeholders by holding meetings in Bathurst,

Orange and Manildra.

In March 2004 Sydney Ports Corporation signed an important

agreement with the Port of Los Angeles, an arrangement that

provides a mutually valuable liaison between the Corporation

and one of the world’s largest ports.

Our dedicated staff

To celebrate the important contributions of Sydney Ports’

staff members, the Corporation launched a new program in

May 2004 – the ‘Bravo!’ awards, which recognise the most

significant contributions by staff members each quarter.

As well, we introduced a valuable new program to foster leader-

ship qualities among executive staff and senior managers.

This program will continue into 2004–05.

Enterprise bargaining negotiations, commenced in early 2004

for the 2004–07 Sydney Ports Enterprise Agreement. The

parties had reached agreement with the formalities of

the agreement to be concluded soon after the end of the

reporting period.

Sydney’s Pilots are negotiating a new three-year enterprise

agreement with their employer, Sydney Pilot Service Pty Ltd

(SPS), a subsidiary company of Sydney Ports Corporation. At

the time of reporting, negotiations were nearing a successful

conclusion. Negotiations were underway at the time of reporting

for a new Launch Crew Agreement.

Pictured right – David Solomons, Senior Project Engineer,

Sydney Ports’ inaugural ‘Bravo!’ winner.

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Planning and working for future service and safety

The year ahead will be a critical period building on the policies

and strategies of 2003 –04. Being prepared to build on the

strong growth of 2003 –04 will be our key challenge. We will

need to maintain our high level of commitment and dedication

to service and safety to ensure that we meet the expectations

of our customers and all other interested parties.

In planning the successful future of Port Botany, we will

continue to co-operate fully with the COI, in the interests of

ensuring that all of the important aspects of proposed

development at the port are discussed fairly, thoroughly

and transparently.

Future uses of Darling Harbour – where stevedoring leases

expire in 2006 – will be subject to a master plan, which is

expected to maintain the long-term interests of cruise shipping

in Sydney Harbour.

Maintaining the efficiency of the transport chain will be

essential. Pivotal to this will be the development of the NSW

Metropolitan Intermodal Freight Strategy, expected to be

released by the Department of Infrastructure Planning and

Natural Resources (DIPNR) during 2004–05. The strategy

will aim to follow the direction provided by the Ports Growth

Plan. As mentioned above, Sydney Ports proposes that

Enfield should be considered as a part of the planned

solution, to facilitate the movement of more containers by rail.

The proposed purchase of the Cooks River rail yards would

help us to manage the surplus of empty containers in Sydney.

Another of our key priorities will be improving regional trade

development by working with exporters and service providers,

and by improving transport links to the Riverina and to the

State’s central west and north-west.

To accommodate continued growth in the bulk liquid trade,

we are investigating the future capacity of the existing

bulk liquids facility. The Corporation will consider the need to

construct a second bulk liquids berth at Port Botany.

We will continue to pay close attention to security matters,

fulfilling our obligation to ensure that we comply with the

Maritime Transport Security Act 2003 and the new ISPS

code. This will involve close interaction with all interested

parties to implement and maintain whole-of-port security

arrangements, including the introduction of maritime

security identification cards.

An issue that demands close attention is the age profile of

our port pilots and the need for appropriate succession

planning. SPS will continue to work closely with the pilots to

devise and implement succession and training plans to

ensure efficient ongoing pilotage services.

AcknowledgementsIt is important to record our thanks to the portfolio Minister,The Hon. Michael Costa, MLC, who, despite his othersignificant commitments in the Transport portfolio, quicklycame to grips with the need to resolve future strategies forthe State’s ports, leading to the preparation of the NSW PortsGrowth Plan.

We are also grateful for the assistance and support of

our shareholding Ministers – The Hon. Michael Egan, MLC,

Treasurer and Minister for State Development, and The Hon.

John Della Bosca, MLC, Special Minister of State, Minister for

Industrial Relations and Assistant Treasurer.

As Chairman and CEO, we would especially like to acknow-

ledge our fellow Board members for collectively steering the

Corporation through this important and eventful year with

foresight, expertise and professionalism.

We greatly appreciate the dedication and commitment of the

Corporation’s staff in achieving the successes of 2003– 04.

The capability and dedication they have shown across all

areas of the organisation has been of a particularly

high standard.

We also wish to record the Corporation’s thanks to all our

stakeholders including our customers, industry, government

and community leaders who work closely with us to help us

provide timely and practical solutions and to maximise

opportunities to improve port operations.

Mr David LP Field Mr Greg J Martin

Chairman Chief Executive Officer

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In a year of continuing growth and strong consumer demand, Sydney Ports played a leadership role in

overseeing the efficient delivery of goods and commodities used in households and industries across

New South Wales. Trade activity was strong overall, breaking many records during the year.

Pictured right –

Patrick Corporation’s container

handling facility at Port Botany

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Breaking total trade records

Trade statistics reveal the record volumes of freight that

flowed through the ports. During the year:

– Total cargo was 25.1 million mass tonnes, an increase

of 6.4%.

– Total imports rose by 6.0%.

– Total exports increased by 7.5%.

– Non-containerised cargo was 14.2 million mass tonnes, a

rise of 6.2%.

Handling the growth in container trade

In 2003 – 04 container trade rose to 1, 270, 216 TEUs,

a 9.5 per cent increase on 2002– 03. Over the past two

financial years container trade expanded by 25 per cent. Full

container imports during 2003–04 were 643,016 TEUs –

9.7 per cent higher than in the previous year. Full container

exports this year were 303,539 TEUs, a 3.3 per cent increase

on the previous year.

The trade boost was fuelled by imports from North-East Asia

(up 13.8 per cent), New Zealand (increased by 18.2 per cent)

and the United States (15 per cent higher).

Exports of containerised cereal products such as wheat, flour

and rice rose by 59.4 per cent. Iron and steel exports

increased by 15.9 per cent.

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TEUsSep Oct Nov Dec Jan Feb Mar Apr May Jun

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Container trade per month (TEUs) (‘000) 12 months ending June 2004 compared with 2003

Container trade per month (TEUs) 12 months ending June 2004 compared with previous five years

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Total

Exports 47,079 51,331 46,549 52,866 53,798 55,828 49,146 48,017 51,406 49,172 52,356 57,871 615,419

Imports 50,375 53,282 57,179 58,049 58,802 55,264 54,988 45,909 55,071 57,804 52,359 55,715 654,797

Total 2003 – 04 97,454 104,613 103,728 110,915 112,600 111,092 104,134 93,926 106,477 106,976 104,715 113,586 1,270,216

Total 2002 – 03 93,675 96,529 98,237 103,123 100,026 104,857 103,769 81,736 99,031 92,845 94,880 92,039 1,160,747

Total 2001 – 02 82,526 86,925 89,128 88,783 90,991 83,960 77,533 75,602 85,298 82,510 87,553 78,533 1,009,342

Total 2000 – 01 92,491 93,413 83,032 90,888 89,963 86,503 78,066 72,321 79,831 70,700 77,327 76,119 990,654

Total 1999 – 00 80,934 84,168 80,952 95,035 95,358 90,249 84,241 79,787 81,886 79,011 82,477 82,303 1,016,401

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Non-containerised trade expands strongly

Increasing consumer demand produced strong motor vehicle

imports, with 220,775 motor vehicles delivered to Sydney

during the year. The trade grew to 347,143 tonnes, a 12.1 per

cent increase. The results maintained Sydney’s 33 per cent

market share of Australia’s motor vehicle imports.

In the dry bulk sector, overall tonnage rose by 6.7 per cent

to 1.57 million mass tonnes. Strong residential, commercial

and industrial building activity increased cement imports by

11.9 per cent and aggregates by 19.1 per cent. In the break

bulk sector, iron and steel imports rose by 32.9 per cent and

machinery imports by 22.8 per cent.

Refined-oil import shipments increased by 79.9 per cent to

2.4 million mass tonnes, spurred by supermarket chains

entering the petrol market. Bulk chemical and gas shipments

grew by 33.1 per cent, partly in response to gas supply dis-

ruptions caused by South Australia’s Moomba facility fire in

December 2003.

Keeping Sydney’s ports at the forefront

During the year, 2408 vessels visited Sydney – 1,269 berthing

in Port Botany and 1,139 in Sydney Harbour. This was a three

per cent increase over 2002 –03.

Over 40 international shipping services call into Sydney’s ports

year-round, with about 200 sailings per month to and from

300 overseas ports.

Visiting vessels totalled 64.1 million gross tonnes (GT), an

increase of seven per cent. Port Botany recorded 36.1 million

GT (up eight per cent) and Sydney Harbour reached 28.0 million

GT (up five per cent).

At the close of the reporting period five new weekly container

services were being progressively introduced between North

and East Asia and Australia, consolidating the reputation of

Sydney as an essential trade destination. The new services

are likely to add 35 per cent to container capacity between the

two regions.

Large vessels with capacity at and above 4,100 TEUs regularly

visited Sydney during the year. Port Botany is able to serve

large vessels and will be able to handle ships of 6,000 to

8,000 TEU capacity.

Sydney – a global cruise destination

Affirming Sydney’s status as a reliable and world-class cruise

destination, the Port hosted 81 passenger ships during 2003 –

04. The 54 domestic and 27 international vessels carried more

than 140,000 passengers.

Sydney’s international cruise season began with the arrival of

P&O’s Star Princess, the largest cruise vessel to visit Sydney –

109,000 tonnes and 290 metres long. The liner made her

first visit to Sydney in November and returned three times

over the season.

Other inaugural visits included Radisson’s Seven Seas Voyager,

P&O’s Adonia and Fred Olsen Lines’ Black Watch. In February,

21 cruise ships visited, 15 of them overseas liners. For all but

six days of the month, cruise vessels were berthed at one

or both of Sydney’s dedicated passenger terminals, Darling

Harbour and Circular Quay.

12 0

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1994–95 1995–96 1996–97 1997–98 1998–99 1999–00 2000–01 2001–02 2002–03

750,000

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1,000,000

500,000

2003–04 TEUs

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Annual container trade (TEUs) 1994–95 to 2003–04

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During the year the Corporation spent $148,000 on

improving Sydney’s four passenger gangways at Circular

Quay and Darling Harbour, following the $1.4 million spent on

the terminals in 2002 –03. Those investments, with better

maintenance and training practices, lifted gangway availability

to 100 per cent.

Further trade related information can be viewed in

our Commerce and Logistics Review 2003–04, at

www.sydneyports.com.au/Trade and Logistics.

Launching the Spirit of Tasmania III service

The commencement of tri-weekly Spirit of Tasmania III ferry

services between Sydney and Devonport on 13 January 2004

added another exciting dimension to Sydney Harbour. To

support the new service, consistent with the working harbour

philosophy, Sydney Ports invested $2.5 million in a purpose-

built berthing facility at Darling Harbour, next to the Wharf 8

Cruise Terminal. The facility, completed on budget and ahead

of schedule, caters for the transfer of up to 600 passengers,

240 motor vehicles and multiple freight vehicles per berthing.

The Corporation also assisted with the development of a

dedicated passenger lounge and administration service area

for the ferry.

Keeping port pricing viable and competitive

A review of pricing in 2003 confirmed that Sydney Ports’

wharfage charges had not increased in real terms for more

than a decade. Indeed, during that period real prices fell

by almost 50 per cent. To keep pace with costs and to fund

new investments, Sydney Ports plans to increase wharfage

fees. The Corporation will seek approval in 2005 from the

NSW Government to increase charges whilst continuing to

remain competitive.

A pricing change during the reporting year was halving the

motor vehicle coastal trade charge to one dollar per revenue

tonne, to stimulate domestic vehicle sea trade and improve

manufacturers’ access to Sydney. This initiative, with the

development of the AAT car terminal at Glebe Island,

demonstrates Sydney Ports’ commitment to promoting coastal

trade around Australia and securing Sydney’s status as a

reliable hub for car imports.

Recovering the costs of security

On 1 July 2004, Sydney Ports, as required by Commonwealth

legislation, introduced new security plans for designated areas

within Sydney Harbour and Botany Bay to comply with the

Maritime Transport Security Act 2003. The measures include

increased signage, electronic surveillance, patrols, and enforce-

ment of restriction zones around berthed vessels.

The costs of implementing the security measures will be

significant. The Corporation has carefully considered ways to

recover the costs that fall under our jurisdiction. Following

consultation with industry participants and with the NSW

Government, we have nominated small cargo and vessel-

based levies as a transparent and effective means to recover

security costs. At the time of reporting we were considering

the introduction of such levies by 1 January 2005.

Pictured above – Spirit of Tasmania III, maiden voyage to Sydney,

led by Sydney Ports’ fire tug.

Investing in and redeveloping the ports

Extending Port Botany

Development of specific sites at Port Botany has been

extensive over the year. At Molineux Point, P&O Trans

Australia completed and opened its 10 hectare facility, which

includes a covered warehouse. MT Movements opened a 2.5

hectare park for empty containers. At the former Bunnerong

Power Station site, the Corporation signed long-term leases

with Warehouse Solutions International for a three hectare

container freight facility and warehouse.

Sydney Ports signed an agreement with Randwick City Council

that will allow the Council to move its waste-recycling facility

from Yarra Bay to an unused precinct at the Bunnerong site

in early 2005. The Yarra Bay site will be turned into park-land.

In late 2003 Patrick obtained development approval from

the NSW Department of Infrastructure, Planning and Natural

Resources (DIPNR) to redevelop its container terminal on 2.5

hectares of land released by Sydney Ports. This enabled site

layout improvements and supported the transfer of con-

tainers onto rail. Both stevedores, Patrick and P&O Ports, have

proposals to provide two additional post-panamax ship-to-

shore cranes.

Improving the Bulk Liquids Berth and planning for

future needs

As bulk liquid and gas imports rise in volume, Sydney Ports

has completed a preliminary capacity assessment of the Bulk

Liquids Berth (BLB) at Port Botany to determine whether and

when a second berth will be needed. We will consider this

further during 2004–05. The Corporation will proceed with

BLB refurbishment works during 2004 –05.

Dealing with the empty containers

Because imports dominate Sydney’s trade, almost half of

the containers arriving with cargo leave the ports empty.

Given this imbalance, Sydney Ports is continually reviewing

strategies to ensure better management of empty containers

along the supply chain. This includes increasing the space

for storing empty containers away from the immediate port

area. The move will optimise the use of waterfront land and

maximise transport flexibility.

Significantly, the State Rail Authority (SRA) proposes to divest

17 hectares of land known as the Cooks River Rail Yards, next

to the dedicated freight rail line, linking Port Botany to

Enfield/Chullora. The site, now used as a rail serviced depot

for full and empty containers, could become a hub for storage

and transfer of empty containers.

The Corporation is negotiating with the SRA and expects to

conclude the purchase of this site in 2004–05.

Expanding Port Botany

The proposed 60 hectare Port Botany expansion would com-

prise five new shipping berths capable of handling an extra

1.6 million TEUs per year. This would meet Sydney’s require-

ments for container port capacity until 2025. By then, the

expanded facility would be injecting an additional $1. 3 billion

dollars into the New South Wales economy each year and

would be supporting some 9,000 jobs.

Sydney Ports completed a comprehensive Environmental

Impact Statement (EIS) in late 2003. The process involved

thorough consultation with all interested parties, including

industry, residents, community and environment groups.

Our efforts to factor environmental considerations into the

expansion have been exhaustive. The EIS includes more than

30 environmental and social impact studies which show that

the effects of the development will be minimal. Indeed, as

part of the proposal, $20 million would be invested to sig-

nificantly improve the Penrhyn Estuary and Foreshore Beach.

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The justification for expanding Port Botany is strong. The

development would be economically, environmentally and

socially sustainable.

The EIS was lodged with DIPNR in November 2003. The

Minister directed that a Commission of Inquiry (COI) be

established. The COI, however, was adjourned on 31 May

2004 after the Minister ordered further investigation of layout

options at Port Botany.

At the time of reporting, Sydney Ports was finalising its

response to the additional term of reference and expected to

return to the COI in October 2004.

Maintaining Sydney’s working harbourTo maintain Sydney Harbour’s status as a working harbour,

Sydney Ports continued development, service and activity at

several key sites. The Corporation has now invested some

$24 million in redeveloping Glebe Island.

Developing Glebe Island

Sydney Ports, in a move that secured Sydney’s reputation as

an international car importing centre, leased 12 hectares of

Glebe Island to Australian Amalgamated Terminals (AAT) –

the Patrick & P&O joint venture. The Corporation invested

$2.5 million in upgrading the AAT site, which was formally

opened by the Transport Services Minister, The Hon. Michael

Costa, MLC.

Sydney Ports contributed $1.34 million for infrastructure

improvements to support the consolidation of dry bulk

activity at Glebe Island. In June 2004 gypsum operations

moved from Darling Harbour to Glebe Island following the

completion of a 30,000 tonne importing facility by Gypsum

Resources Australia.

The Corporation assisted Cement Australia with the relocation

of loading facilities and pipelines from Wharf 7 to Wharf 8, a

change that effectively halved cement unloading times.

Following the completion of $2.5 million road works to

improve traffic flows and efficiency at Glebe Island, the Corp-

oration introduced a comprehensive Traffic Management

Plan. The initiatives reduced queuing and improved traffic flows

within the precinct.

The Corporation improved electricity, water and telecom-

munications facilities to enhance services for tenants.

Sydney Ports introduced a greening program at Glebe Island.

A landscaped lookout was constructed as a new home for

the monument commemorating the site where United States

Armed Forces came ashore in Sydney on 28 March 1942.

White Bay and Darling Harbour

P&O Ports vacated their leased container handling facility

at White Bay and now operate from a facility shared with

Patrick Corporation at Darling Harbour, where they will remain

until 2006.

Sydney Ports is pursuing alternative maritime tenants for its

White Bay site in line with the Ports Growth Plan and State

Government planning legislation. To ensure that shipping

services and business repositioning is as smooth as possible,

we have maintained close contact with our customers

and other industry participants, providing them with the

latest information.

Pictured on opposite page – Visual simulation of Sydney Ports’

proposed terminal expansion at Port Botany

Pictured right – New gypsum unloading facility at Glebe Island

Non-ferrous metals 535,130

Chemicals 437,101

Iron and steel 365,112

Paper products 316, 355

Meat 194,705

Cotton 191,957

Animal foods 217,476

Cereals 318,594

Food preparations 130,402

Manufactures 191,423

Beverages and tobacco 130,537

Others 1,137,153

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12

3

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Mass tonnes (m)

6

1999–00 2000–01 2001–02 2002–03 2003–04

Total bulk liquids trade (mass tonnes – millions)

Import commodities in containers 2003–04 (mass tonnes)

Export commodities in containers

2003–04 (mass tonnes)

Pictured left – Vessel berthed at the Bulk Liquids Berth in Port Botany

Chemicals 999,361

Manufactures 857,211

Machinery 722,921

Paper products 717,010

Non-metallic minerals 355,632

Food preparations 250,689

Iron and steel 210,990

Beverages and tobacco 195,423

Textiles 174,969

Timber 145,540

Others 1,414,020

Total 6,043,767

0

750,000

Dry bulk

600,000

300,000

1999–00 2000–01 2001–02 2002–03 2003–04

450,000

150,000

Total dry bulk (mass tonnes – ‘000)

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3

1999–00 2000–01 2001–02 2002–03 2003–04

Total break bulk trade (mass tonnes – millions)

Container trade by country 2003– 04 (TEUs) 12 months to June 2004

0

250,000

Units

200,000

150,000

100,000

50,000

1999–00 2000–01 2001–02 2002–03 2003–04

Motor vehicle imports (units ‘000)

*Over the same period as last year ** Includes empty containers *** Includes Hong Kong

Country Imports Exports Total trade**

Full % Change* Empty Full % Change* Empty % Change

China*** 184,219 17 1,563 46,749 29 77,865 310,396 21

New Zealand 49,473 19 3,199 52,786 9 29,036 134,494 20

United States 64,311 15 1,167 23,210 -11 4,291 92,979 4

Japan 24,402 0 276 29,987 -8 11,874 66,539 -13

Singapore 19,690 0 146 8,684 -11 49,547 78,067 6

Australia 4,876 74 583 23,012 5 41,567 70,038 14

Korea, Republic of 30,012 24 609 10,398 -10 32,864 73,883 28

Malaysia 28,159 6 22 8,269 20 22,617 59,067 15

Indonesia 22,481 -6 2 19,851 8 2,617 44,951 0

Thailand 24,060 3 2 8,489 -2 1,632 34,183 -14

Others 191,337 2 4,166 72,074 -1 38,000 305,577 3

Total 643,020 10 11,735 303,509 3 311,910 1,270,174 9

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Facilitating trade2Sydney Ports adopts a commercial approach to its operations. We focus on meeting the expectations of

our customers, shareholders and stakeholders. Our role in supporting the supply chain, which includes

promoting co-operation between all port users, is crucial.

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Increasing port efficiency

Sydney’s quay crane performance was solid during a year of

record activity. Crane lifts per hour averaged 28.0* in the

September 2003 quarter, the highest average to that date,

settling to 27.5* in the June 2004 quarter. The results place

Sydney ahead of the Federal Government’s benchmark of 25

lifts per hour and on par with the national five-port-average.

Net ship lift-rates – the number of lifts from ships with one or

more cranes operating – peaked at an average of 51.8* per

hour during the September 2003 quarter, this was above the

quarterly five-port-average of 48.3 per hour. Lift-rates settled

to 47.7* per hour by the June 2004 quarter.

The median time that vessels spent in port from July to

December 2003 decreased by four hours to 32* hours com-

pared with July to December 2002. The port turn-around time

remained the same for January to June 2004.

* Source: Australian Government Department of Transport and RegionalServices, Bureau of Transport and Regional Economics, Waterline, March 2004.

See www.btre.gov.au/wline.htm

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Pictured on opposite page – Dedicated freight rail line to Port Botany

Pictured right – P&O Ports’ container handling facility at Port Botany

0

30

25

20

15

10

5

20042003200220012000

Average crane rates for Sydney and Port Botany*(container lifts per hour)

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Improving transport to meet demandIn early 2003 Sydney Ports met senior freight transport

industry representatives to examine ways of better managing

increasing trade activity, particularly during the peak season.

We agreed on several initiatives. At Port Botany, for example,

a daily operations rail plan was introduced, allowing the Rail

Infrastructure Corporation and RailCorp to test a new system

of managing freight train movements. Early indications show

significant improvements in running times. The work of the

forum continues.

At the time of reporting, planning was well under way for an

operational level transport workshop, scheduled for July 2004.

The goal of the workshop was to allow port cargo represent-

atives to share ideas and, in particular, to plan smoother

freight movement through 24 hour supply-chain operations.

Servicing our ports by Rail

Container movements through Port Botany by rail during the

year were steady at 250,000 TEUs compared with the

previous reporting year’s 255,000. This year, 150,000 TEUs

moved by rail within metropolitan Sydney – 60 per cent of

total rail volumes.

The increased rail freight movements in metropolitan Sydney

offset some of the decline in volumes from regional areas

which had been brought about by continuing drought and the

cessation of Riverina freight rail services in September 2003.

At the time of reporting Sydney Ports expected rail volumes

to increase as rural exports recover and Riverina services

recommence.

At the end of the reporting period, Pacific National announced

that it would withdraw its container rail services from Port

Botany to redeploy locomotives to coal and grain-handling in

other parts of the State. Other rail operators, including Patrick

Portlink and Silverton Rail, showed interest in replacing the ser-

vices. Sydney Ports is confident of a smooth transition, with

no disruptions to freight movement.

With the continuing rail network and operational improve-

ments, the Corporation’s goal of achieving 40 per cent modal

share remains firmly in sight.

DIPNR’s Metropolitan Intermodal Freight Strategy (MIFS), a

framework that will provide a more efficient network of

intermodal rail freight, is expected to be released during

2004–05. Sydney Ports remains committed to using Enfield

as a key operational site within an integrated network. The

Corporation is working closely with DIPNR, with the Ministry

of Transport and with Treasury to advance the case for

developing Enfield.

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The Botany Rail Steering Group (BRSG), which comprises

representatives from the stevedores, rail operators, inter-

modal facilities, RailCorp, the NSW Ministry of Transport and

Sydney Ports, met in November 2003 and considered a

range of important issues. These included the impact of the

NSW Ports Growth Plan, progress on the ARTC lease of

the NSW interstate network, Sydney Ports’ plans for Cooks

River and Enfield, and rail windows for the Port Botany

container terminals.

In April 2004 rail stakeholders agreed on new train time-

tabling and scheduling at Botany. The realignment of rail

windows supports the competitive new environment in which

seven rail organisations operate, and has produced valuable

improvements in operational efficiency.

Servicing our ports by road

Despite record trade, truck turn-around times at Port Botany

remained steady at 50 – 55 minutes on average, gate-to-

gate. To assist with movement efficiency, Patrick and P&O

Ports introduced 24 hour truck receival and delivery, and

Saturday operations. This is a positive move, which the

Corporation hopes the transport industry will support.

Sydney Ports, to maintain its commitment to monitoring traffic

in the area, engaged a consultant to prepare a traffic

management plan for the southern Port Botany precinct.

This area accommodates P&O Ports’ container terminal,

various container parks and the bulk liquid facilities. We are

working closely with tenants and other stakeholders to form-

ulate a plan that will minimise impacts within the port precinct

and on the local road system.

Improving transport through investment

On 7 June 2004, the Deputy Prime Minister and Minister for

Transport and Regional Services, John Anderson, announced

AusLink, an initiative to upgrade Australia’s road and rail

systems. Importantly, AusLink will contribute funds to improve

freight rail links in the Sydney metropolitan area, including the

Port Botany and Chullora /Enfield connections.

In May 2004 the NSW Government signed an agreement

with the Commonwealth, covering the lease of the NSW

interstate and Hunter Valley rail network for 60 years. The

agreement includes an $872 million rail investment

program, including $180 million to construct the Southern

Sydney Freight Line from Macarthur to Chullora.

These developments are highly significant for the management

of increasing trade and for promoting the movement of freight

by rail. The initiatives will enable Sydney Ports to further

facilitate freight movement. They will also help us to link

Sydney’s key south-western industrial areas to Port Botany.

We will continue to work closely with ARTC to ensure that

protocols for rail access to Port Botany meet our perform-

ance objectives.

21

Pictured on opposite page – Warehousing operations at Port Botany

0

300,000

250,000

200,000

150,000

100,000

20042003200220012000

50,000

TEUs

Port Botany rail volume (TEUs ‘000)

Implementing improved IT solutionsSydney Ports continues to use technology to streamline

operations. Consistent with this principle, the Corporation has

worked to increase the rate of electronic lodgement of

manifests by shipping companies. The rate has risen to 87

per cent – a two per cent increase on the previous financial

year and a seven per cent increase on the 2001–02 period.

ShIPS – Sydney’s Integrated Port System that facilitates

management, on-line booking and the capture of vital trade

statistics – remains the benchmark in providing advanced

e-commerce solutions for the port community and transport

chain. We established a framework supporting the commercial-

isation of the product during the year and commenced

discussions with parties interested in purchasing the technology.

Improved tracking and handling for dangerous goods

On 8 September 2003 we introduced new arrangements for

the electronic lodgment with Sydney Ports of Dangerous Goods

(DGs) information. Approximately four per cent of containers

carry DGs. The onus is on container terminal facilities operators

and on shippers to manage these goods in accordance with

regulations. All DG information is now being handled by

electronic delivery of information (EDI) through our ShIPS

system. This ensures easy access by relevant authorities such

as Customs, AQIS and AMSA and allows the information to

be captured and processed more quickly – streamlining the

safety process and enabling better incident response.

The Department of Transport and Regional Services is pursuing

an industry framework for the safe and secure management

of DGs. Sydney Ports is contributing to ensure beneficial results

for the port transport chain.

The Corporation, as the regulator of DGs through our ports,

conducts random audits to ensure that all port users conform

to the highest levels of safety.

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Operations and shipping personnel utilise IT systems to ensure safety

and efficiency at our ports

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Investing in our IT system

Sydney Ports upgraded its in-house computer systems and

applications to improve customer service. The investment

included the cyclical replacement of critical servers, desktops

and related hardware. This improved information storage and

handling has enabled us to accommodate critical applications

and information more readily.

The Corporation strengthened protection of its IT network to

minimise security breaches. For example, we improved web

and email filtering and installed a new firewall to limit the spread

of any virus damage and prevent unauthorised systems access.

The new applications we implemented in 2003 – 04 included

RODIS – the Corporation’s wind, wave and tide monitoring

system – and a new records management system. We also

made progress on developing new HR and business in-

telligence systems, using data warehousing, reporting and

analytical tools. These systems will improve our com-

munication with customers and provide more timely access to

trade data.

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Ensuring safe navigation and operations3Sydney Ports maintains a 24 hour commitment to ensuring safe navigation of commercial

vessels through Sydney Harbour and Port Botany. We deploy highly skilled staff and use modern

equipment to provide strategic responses to safety and environmental incidents. Our responsive-

ness provides consistent, reliable and safe movement of cargo and passenger vessels, in line with

international standards.

Fulfilling licence requirements and protecting

our waters

Sydney Ports upheld all requirements of its Port Safety

Operating Licence (PSOL) – the NSW Government licence

that maintains maritime safety standards. An external audit

of our activities, carried out in June 2004 resulted in no

non-conformances.

To further minimise the chances of serious incidents, the Corp-

oration increased random safety audits during the year, up-

holding our responsibilities under Dangerous Goods legislation.

We carried out 3,331 audits on vessels transferring bulk

oil, gas and chemicals, ensuring that we upheld State,

national and international standards and codes. We inspected

1, 228 refuelling operations and conducted 586 container

terminal audits.

Sydney Ports has issued many more dangerous goods penalty

infringements – 169 in 2003 –04 – following the introduction

of the Penalty Infringement Notice system in early 2002.

We responded to 216 reported incidents of marine pollution,

98 per cent of them caused by recreational vessels, land debris

and urban run-off. We issued two Penalty Infringement

Notices under the Protection of the Environment Operations

Act 1997. At the end of the reporting period we had com-

pleted three oil spill prosecutions under the Marine Pollution

Act 1987 and another 11 were in progress.

During the year our emergency response team assisted

28 ships experiencing difficulty in bad weather, and seven

recreational vessels with fires on board. We invested $11 million

in emergency preparedness, equipment and training.

The Corporation spent $400,000 on refurbishing two of Sydney

Harbour’s navigation lighthouses. The work will ensure that

the lighthouses function as part of the modern network of

Harbour navigational aids.

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1994–95 1995–96 1996–97 1997–98 1998–99 1999–00 2000–01 2001–02 2002–03 2003–04 Vessels

0

1,000

500

1,500

2,000

2,500

Total vessel visits to Sydney’s ports 1994–95 to 2003–04

Sydney Ports maintains a network of navigation aids and provides

emergency response services in Sydney Harbour and Port Botany

24 hours a day

Securing the oil tanker Eurydice

The oil tanker Eurydice was scheduled to unload 85,000

tonnes of light crude oil at the Shell Terminal at Gore Bay on

14 February 2004, but reported oil seepage as it approached

Sydney. We instructed the vessel to remain outside the Harbour

and co-ordinated a response to the incident.

We worked closely with the ship’s representatives, the Depart-

ment of Environment and Conservation, the Australian Maritime

Safety Authority and Shell. We deployed divers to inspect the

vessel’s hull and carefully considered all repair options and

assessed the risks of each. We ensured that the small crack

in Eurydice’s hull was repaired before allowing the tanker to

enter the Harbour on 19 February. The tanker safely discharged

its cargo and departed Sydney on 23 February.

Facilitating a new Port Botany tug service

Sydney Ports oversaw the introduction by Australian Maritime

Services (AMS) tug operations in Port Botany in October

2003. AMS’s two new tugs, Peng Chau and Shek-O, are

based at Brotherson Dock’s Berth1. Their presence has already

contributed to a more competitive environment.

Ausport Marine, a second lines service was preparing to

commence operations at Port Botany at the time of reporting.

Developing a world-class pilot service

Sydney Pilot Service (SPS) is a subsidiary company of Sydney

Ports Corporation. Since forming in October 2002, SPS has

continually reviewed its operations to ensure that it provides

a cost-effective, sustainable and world-class pilotage service.

During the year SPS spent $1.5 million on refurbishing two

pilot vessels. In November 2003 SPS raised the pilotage service

fee by $150, the first such increase by SPS or its predeces-

sors in 17 years. The increased revenue will support the long-

term viability of the service and contribute to further capital

investment.

During the second half of the year pilots entered extensive

remuneration negotiations with SPS management. The

Australian Industrial Relations Commission facilitated

conciliation between the parties and, at the time of

reporting, negotiations were nearing a successful

conclusion.

SPS, as with other Australian port operators, must deal with

the ageing of its pilots as they near retirement. The challenge

is how to best replace these skilled professionals with suitably

qualified and trained pilots. Sydney Ports supports an Associa-

tion of Australian Port and Marine Authorities (AAPMA)

approach that encourages collaborative solutions between

industry, educational institutions and government agencies.

These will help establish new, shorter and more flexible train-

ing arrangements for pilots. SPS will devise the most practical

ways to implement the new approach.

Advanced pilot training continued throughout the year. Five

pilots participated in competency audit courses at the Star

Cruises’ Port Klang facility in Malaysia; another completed

a manned-model training course at Port Revell in France.

Numerous training activities were undertaken locally.

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Pictured right – Pilot vessel in Sydney Harbour

Pictured on opposite page – Sydney Ports’ Overseas Passenger

Terminal at Circular Quay

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0

120

Jul 2003

Aug2003

60

100

80

40

Botany Sydney

VesselsSep

2003Oct

2003Nov

2003Dec

2003Jan

2004Feb

2004Mar

2004Apr

2004May

2004Jun

2004

20

Vessel visits to the two ports for the 12 months ending June 2004

Cruise vessel visits to Sydney Harbour (5 years)

Year Calls Number of vessels Sydney based International Passengers

2003–04 81 23 3 20 140,000

2002–03 88 24 3 21 115,000

2001–02 59 18 1 17 71,000

2000–01 73 26 3 23 83,000

1999–00 83 18 2 16 100,000

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Stepping up security 4Throughout 2003– 04 Sydney Ports successfully complied with the most significant program of

port security improvements in Australian maritime history.

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As part of a concerted international response to the threat of

terrorism, the Corporation developed a comprehensive set of

security plans to comply with Australia’s Maritime Transport

Security Act 2003 and to be consistent with the International

Maritime Organisation’s International Ship and Port Facility

Security (ISPS) code.

The Corporation developed the plans in consultation and

co-operation with port and industry stakeholders. The Common-

wealth Government approved the plans ahead of the 1 July

2004 implementation deadline.

Under an implementation program scheduled for completion

by the end of 2005, Sydney Ports’ security plans focus on:

– Port of Sydney Harbour

– Port Botany (including the Bulk Liquids Berth)

– Passenger terminals (Overseas Passenger Terminal, Circular

Quay and Wharf 8, Darling Harbour)

– Glebe Island/ White Bay bulk materials facilities and common-

user berths, and

– Sydney Pilot Service.

Central to the plans are tightened restrictions on access to

facilities by people and vessels, including a 100 metre clear-

ance zone from tanker berths and a 30 metre clearance from

berthed cruise vessels.

Improved patrols, fencing, signage, lighting, CCTV coverage

and intelligence sharing between port users are all funda-

mental to the plans. Sydney Ports’ staff will do more waterside

patrols. Support responses by the NSW Water Police will form

an integral part of the new measures.

Each port facility and service provider has individual security

plans. Nevertheless, industry participants must work collabor-

atively with us to ensure that together we achieve and sustain

a fully integrated approach to port security. The Corporation’s

Port Security Committee will continue to meet regularly to

achieve this co-ordinated approach.

Importantly, the Corporation will play a leading role to

minimise the effect of the new security arrangements on

business operations.

The security measures will include a program of review

and audit as well as regular security threat exercises. These

measures will escalate if the level of threat increases.

In adopting and implementing the new security regime,

Sydney Ports will recover the continuing costs incurred, as

outlined earlier in this report.

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Pictured right – Sydney Ports’ marine operations unit located at

Moore’s Wharf provide waterside security patrols

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Protecting the environment 5Sydney Ports, in contributing to the State’s economic health, recognises its extensive respon-

sibilities for the well-being of the environment. Sustainable development and trade through

Sydney Harbour and Botany Bay are closely tied to the protection of these natural assets. This is

recognised in our Ports Vision, in which we state our intention to be an internationally respected

environmental manager of port facilities.

Pictured right – Monitoring by Sydney Ports’

Survey team

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Managing environmental risk

To track and improve environmental performance, the Corp-

oration undertook an environmental audit of its operations

and facilities in 2003, as part of its overall environment

management plan. The audit concluded that Sydney Ports

had achieved an overall high standard of environmental

performance. It also identified the management of hazardous

materials and industrial wastes as key risk areas. In response,

the Corporation scheduled future environmental assessments

to be undertaken in line with regular workplace inspections,

an approach that will further minimise the risk of environ-

mental incidents.

We reviewed key activities undertaken by our customers at

port facilities according to their level of environmental risk. We

developed measures to address those risks where possible

through, for example, regulatory enforcement procedures, lease

and hire arrangements, and emergency response preparations.

The Corporation will continue to work closely with port

customers to review and improve these arrangements. At the

time of reporting, we were planning a further environmental

audit for 2004 – 05. This will review the success of the

measures we developed and implemented during 2003–04.

Exercises that prepare us for emergencies

During the year Sydney Ports participated in a number of marine

response exercises and operations. These included a tug

refuelling spill exercise in Sydney Harbour in November 2003

and the enactment of an oil spill in Botany Bay in April 2004.

In December 2003 we worked closely with the Navy and neigh-

bouring port operators to consider refuge options in the event

of a tanker leaking oil off Jervis Bay. We made substantial

preparations for Exercise James Cook, scheduled for

September 2004, bringing together industry stakeholders

and more than a dozen agencies from around Australia in

response to a staged incident on Botany Bay.

Our Survey Services protect coastal waters

Sydney Ports’ Survey Services team continued to monitor the

impacts of port operations and development along the coastal

zone during the year. The team expanded its charter to

include environmental programs within Botany Bay, where it

now focuses on dry and wet weather water sampling, ground

water level monitoring and beach photography. We use all

data collected by the team to identify potential environmental

impacts and to determine appropriate remediation or mitigation

works – such as the Lady Robinsons Beach restoration project.

As part of our continuing commitment to safe navigation, we

upgraded our Real-time Oceanographic Data Information

System (RODIS). The improved version now provides real-

time wave, wind and tide information to internal clients and

the public through a dedicated page on the Sydney Ports

web site.

See www.sydneyports.com.au/Wave, Wind and Tide

The Corporation also provided Sydney University’s Centre for

the Ecological Impact on Coastal Cities with $10,000 to aid

marine environment research and protection in Sydney Harbour.

Managing the restoration of Lady Robinsons Beach

We are managing a major operation to stabilise and restore

the northern section of Lady Robinsons Beach at Ramsgate.

The project commenced in March 2004, following extensive

negotiations with the funding agents and relevant govern-

ment agencies. DIPNR, Sydney Airport Corporation, NSW

Maritime Authority and Rockdale City Council are funding the

$8.4 million project.

The project will complement successful restoration work

at the southern end of the beach, completed in 1997. It

involves pumping 310,000 cubic metres of sand from Taylor

Bar, off Dolls Point, to build up the northern beach

zone. The construction of five 100 metre rock groynes, the

transplanting of 6000 square metres of seagrass and a

landscaping program will further protect and restore the area.

The work is scheduled for completion in February 2005.

Recognition given to our environmental programs

As a positive example of recycling, the NSW Department of

Environment and Conservation selected Sydney Ports

Corporation’s project for the removal of the Sommerville Road

ramp at Glebe Island. The project, which recycled more than

37,000 tonnes of sandstone and concrete, was to be featured

in the Department’s next Waste Reduction and Purchasing

Policy Report (WRAPP).

The Corporation received a City of Botany Bay Business

Excellence Award, following a submission based on a

dynamic marine protection and emergency response plan

devised for Botany Bay. The plan includes substantial

investment by the Corporation in marine pollution control

and prevention.

See www.sydneyports.com.au/Environment

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Working with industry,government and the community6

Sydney Ports, to achieve its corporate objectives efficiently and co-operatively, takes into account

the views of all interested parties through forums, meetings and regular interaction.

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Applying strategies to develop the State’s trade

Sydney Ports applies clear strategies to develop trade in metro-

politan and regional areas. We maintain a customer alliance

program, work with participants in each trade sector, identify

business opportunities and reduce trade impediments.

In April 2004, Corporation executives visited Europe, meeting

senior managers of P&O Ports and most of the shipping lines

headquartered in Europe. The key issues discussed were the

Ports Growth Plan, security, and operational matters such as

pilots and tugs. We strengthened relationships and planned

for continuing information exchange.

In September 2003 a Sydney Ports delegation visited container

lines, car carriers and port operators in Hong Kong, Singa-

pore, Shanghai and Japan, building productive links.

Our sister-port partnership with the Port of Los Angeles,

established in March 2004, should prove beneficial. The Port

of Los Angeles is of course much bigger than Sydney’s ports,

but we have similar roles within the different scale of our

markets. The Corporation also has sister-port agreements

with Georgia Ports and Yokkaichi Port Authority. Sydney

Ports’ executives visited Yokkaichi Port in October 2003.

In October 2003, the Board and senior representatives from

the Corporation met manufacturers, exporters, importers and

transport operators in Bathurst, Orange and Manildra. The

visit was part of Sydney Ports’ Customer Strategic Alliance

Program, providing an opportunity for us to brief rural clients

on local and international shipping developments.

Because half of Sydney’s exports are sourced from regional

and rural areas of the State, the Corporation’s Commerce and

Logistics team will continue to visit key regional areas on a

regular basis.

33

Pictured on opposite page – Sydney Ports has worked closely with

the community and government to progress the restoration of

Lady Robinsons Beach

Pictured right – Rice is being loaded into a container at Sunrice’s

Leeton facility

The value of consulting with port users

The Sydney Ports Users Consultative Group (SPUCG), a repre-

sentative body of the Sydney ports industry community, meets

regularly to discuss strategic and operational matters. During

the year SPUCG examined:

– port infrastructure development

– pilotage, towage and lines services

– stevedoring performance

– road transport issues

– rail and intermodal terminal operations and infrastructure

– customs and quarantine topics, and

– increased security planning.

SPUCG made a submission and presentation to the NSW

Legislative Council Inquiry into Port Infrastructure in NSW in

favour of retaining Glebe Island’s automotive facility in the

long term. SPUCG called for the early release of the Metro-

politan Intermodal Freight Strategy (MIFS).

The Sydney Ports Cargo Facilitation Committee, a sub-commit-

tee of SPUCG, continued to meet monthly to discuss and

manage day-to-day operations matters.

One of the main issues the sub-committee addressed in

2003–04 was the surplus of empty containers occupying

valuable storage space in Sydney, a situation caused by the

imbalance of import containers over exports.

In response to the high demand for empty containers in Asia,

several vessels visited Sydney to collect empty containers.

The Cargo Facilitation Committee encouraged shipping lines

to make regular retrievals. Overall, 312,000 empty containers

were collected during the year, with timely retrievals during

late 2003 and early 2004.

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How the Corporation supports the community

Sydney Ports maintained its social, educational, environmental,

heritage and sponsorship activities during the year.

In late 2003 the Corporation sponsored the Australian National

Maritime Museum’s Sydney Working Harbour Exhibition, the

popular Festival of Kurnell (now in its eighth year), and three

sailing teams from Air Services Australia Fire Fighting Unit in

the NSW Police Games Yacht Racing Event on Sydney Harbour

in February.

In March 2004 thousands of Sydney siders enjoyed the Harbour

Week we sponsor, with more than 40 events staged. We

continue to sponsor Australia Day activities, with audiences this

year appreciating the Sydney Ports Jazz on the Water concert.

Following the success of the Play for Playgrounds trivia night

at Balmain Town Hall in August 2003 (which raised $40,000

for Balmain and Rozelle primary schools) we planned to support

a similar event in August 2004.

The Corporation spent more than $400,000 on community

and industry sponsorship. The funds were channelled to organ-

isations and events that support local communities and high-

light the important role shipping trade plays in serving New

South Wales.

Since the Corporation’s Community Care Program entered a

partnership with United Way on 1 January 2003, our staff have

given their time and donated more than $16,000 to a range

of causes for disadvantaged communities.

Sydney Ports continued to support local organisations. These

included the Shell Gore Bay Community Consultative Committee,

the Botany and Eastern Region Environment Protection Assoc-

iation, the White Bay/Glebe Island Noise Reference Committee,

the Port Botany Neighbourhood Consultative Committee, the

Botany Bay Business Enterprise Centre and Coastal Manage-

ment Committees. As well, we continue to support Randwick

City Council’s Business Excellence Awards.

In July 2003, the Corporation joined the Australian Red Cross

Corporate Donor Program. We encourage our staff to make

regular blood donations.

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Pictured on oppposite page – The Marit Maersk was specifically

deployed to Sydney to pick up empty containers bound for Asia

Pictured right – Sydney Ports’ Jazz on the Water concert celebrating

Australia Day 2004

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Investing in our people 7Sydney Ports is a multi-disciplinary organisation. The Corporation’s 199 permanent staff provide

diverse professional, technical and operational skills. These include all engineering disciplines; marine

operations expertise to ensure safe vessel navigation and provide emergency response services;

and broad management skills.

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Programs to recognise and reward staff achievement

Because our staff contribute to Sydney Ports’ success, the

Corporation has introduced initiatives to maintain and boost

employee recognition, development and morale.

The Corporation, acting on results from an Employee Climate

Survey we conducted in 2002–03, launched the quarterly

‘Bravo!’ reward and recognition program in May 2004. The first

‘Bravo!’ winner was Senior Project Manager David Solomons,

nominated for outstanding work in developing the $2.5 million

bow ramp for Spirit of Tasmania III at Darling Harbour. He

managed the completion of the project on budget and weeks

ahead of schedule.

The ‘Bravo!’ winner for the April –June 2004 period was Mike

Gartenfeld from the Marine Operations Unit, nominated for

developing and implementing a training program for the safe

and effective operation of the Bulk Liquids Berth at Port

Botany – another outstanding achievement.

During the year we congratulated a marine operations

administration officer who has served the Corporation and its

predecessors for 40 years and other employees recorded

30 years of service.

Developing our leadership qualities

Sydney Ports worked with external consultants in early 2004

to provide executives and senior managers with a leadership

program. More of our managers and supervisors will part-

icipate in similar programs during 2004–05.

The Corporation is initiating ways to improve its mentoring

culture by encouraging staff to share information, experience

and advice.

We substantially increased spending on learning and develop-

ment initiatives during the year. We surpassed the Corporation’s

benchmark average investment per employee in 2003 – 04.

Measures to ensure a safe working environment

During the financial year five lost-time injuries were recorded –

two more than in the previous year. Employees of our sub-

sidiary company, Sydney Pilots Service, also recorded five

such incidents during the year. The incidents were thoroughly

investigated and we acted immediately to minimise the risk

of recurrences.

Unannounced blood-alcohol-level testing continued as an

active measure to maintain and improve workplace safety

standards. We conducted 241 tests among Sydney Ports’

operations staff, recording only one positive result (a reading

over 0.02). The unannounced tests on pilots produced no

positive results.

The Corporation’s commitment to safety was recognised

and rewarded under the NSW Government’s voluntary OH&S

Premium Discount Scheme, which provides insurance dis-

counts for organisations demonstrating outstanding OH&S

practices and results. During 2003 – 04, Sydney Ports and

Sydney Pilots Service together saved almost $100,000 in

workers compensation premiums because of our solid

commitment to OH&S principles. We are on track to receive

further discounts in 2004 –05.

Sydney Ports continues to address the needs of its

employees and encourage the highest level of service and

safety, as targeted in our statement of corporate values.

Working towards a new Enterprise Agreement

In early 2004, Sydney Ports commenced negotiations with

staff and unions over the 2004–07 Enterprise Agreement.

The main issues being resolved include:

– flexible leave packages

– roster reviews

– commitment to introducing drug-testing

– workplace fitness

– team performance, and

– superannuation contributions.

At the close of the reporting period, negotiations were on

track for a successful conclusion.

Diligent management of risk in the ports

Sydney Ports has in place a corporate Risk Management

System, tailored to the unique responsibilities of managing the

two ports of Sydney Harbour and Port Botany.

The system, which is consistent with AS/NZS 4360:1999,

is audited internally and externally. Every nine months it is

reviewed by the external certification auditors Bureau Veritas

Quality International.

The 2003–04 internal and external assessments were

satisfactory and confirmed that our risk strategies are

relevant and appropriate to our objectives for the successful

management of the ports.

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Pictured on opposite page – Facility Officer at the Bulk Liquids Berth

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David Field FAICD

Chairman

Mr. Field has extensive Board Chairmanship, Non Executive

Director (NED) and Chief Executive experience gained from

a 30 year career within the International Trade/Shipping

Industry. He has had wide commercial experience at both

International and National level.

Mr. Field was appointed by the NSW Government as Chair-

man of the Board of the Sydney Ports Corporation in 1998 and

was reappointed in December 2001. He is Chairman of the

Corporation’s Remuneration Committee and a member of the

Audit and Risk Management Committee. He is also a Non

Executive Director of Sydney Pilot Service Pty Ltd.

Other Board appointments include Non Executive Director,

Safe Effect Technologies Limited, The Merchant Navy War

Memorial Fund Limited, the Royal Exchange of Sydney and a

Trustee of the Sydney Bethel Union.

He is a Group Chairman within the CEO Circle and the CIO

Circle that brings together Chief Executives and Heads of

Divisions of large organisations for mutual advice and to

share experience.

Mr. Field is also Executive Director of the Australian and Asia

Pacific Search and Selection Company Carmichael Fisher and

specialises in Executive Search, Interim Executive and Board

of Director Appointments.

From June 2001 to mid 2003 David was Australian Head of the

Interim Executive Practice of another International Executive

Search firm. He also joined the Board of Director Practice in

late 2002. From Nov 2002 to Jan 2003 he was simultaneously

Managing Partner of that firm’s two Korean offices during a

period of structural change.

In his former corporate career he was with the UK owned

Swire Group for 20 years based in Australia and the Far East.

He left Swire’s to join Blue Star Line (Aust) Pty Ltd, a sub-

sidiary of The Vestey Group, UK. In 1996 he was appointed

Managing Director/CEO of Blue Star Line (Aust) Pty Limited

and Chairman of Blue Star Line (Asia) Pty Limited. Respon-

sibilities covered: Australia, Far East, South East Asia, Sub-

Continent, and the Middle East and shared responsibility for

the company’s substantial East and West Coast North American

shipping interests.

He is a Fellow (FAICD) of the Australian Institute of Company

Directors and is a member or closely associated with a range

of business organisations including State Chamber of

Commerce, NSW Technology Showcase, Australian Human

Resources Institute (AHRI), Australian National Maritime

Museum and Shipping Australia Limited. He has recently

been invited by The Conference Board based in New York to

take up an offer of Management Associate.

Greg Martin BE (Civil), BCom, ASIA, FAICD

Chief Executive Officer and Managing Director

Mr Martin was appointed Chief Executive Officer of Sydney

Ports Corporation and took office on 15 April 1996. From

1990 to 1996 he was Chief Executive Officer of the Port of

Brisbane Corporation and is President of the Association of

Australian Ports and Marine Authorities Inc. He is a Director

of the International Association of Ports and Harbours and

United Way Sydney. He is Chairman of the Sydney Pilot Service

Pty Ltd and is a mem-ber of the Audit and Risk Management

Committee of Sydney Ports Corporation.

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Board of Directors

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Sibylle Krieger LLB (Hons), LLM (Columbia University,

New York), GAICD

Director

Ms Krieger is a commercial lawyer with over twenty years

experience. During that time she has undertaken corporate

advisory and dispute resolution work and has also spent

several years involved with professional staff selection,

induction and evaluation in two large commercial law firms. In

more recent years Ms Krieger has been involved with regulated

industries, government agencies and government-owned

corporations as an outside adviser. Ms Krieger was appointed

to the Sydney Ports Corporation Board in late 2002 and is a

member of the Remuneration Committee of the Board.

Ken Murray

Director

Mr Murray was the Executive Director of Casino World Austral-

asia, the Australian licensee company of US based computer

technology provider Casino World Holdings Ltd. He is Man-

aging Director of property and investment company Yarrum.

K Holdings, Director of BM Computer Solutions, President of

a major registered licensed club and a Member of the Rand-

wick Racecourse Trust Board. Mr Murray is Deputy Chairman

of the Sydney Pilot Service Pty Ltd and has 34 years ex-

perience in the stevedoring industry.

Vic Smith MAICD

Director

Mr Smith is a government relations consultant and a former

Mayor of South Sydney City Council. He is a Director of Cricket

NSW and a former Director of NRMA. He is the former Vice-

Chairman of South Sydney Development Corporation and a

former Director of the Southern Sydney Waste Board. He is

a Paul Harris Fellow of Rotary International, given for services

to the community and is a member of the Australian Institute

of Company Directors. He is a member of the Audit and Risk

Management Committee of Sydney Ports Corporation and a

member of the Remuneration Committee of the Board.

Michael Sullivan AAICD

Staff Director

Mr Sullivan was elected to the position of Staff Director by

the staff of the Corporation in July 2002. He joined the Maritime

Services Board in 1977 where he was initially employed in the

statistical section. He has held a variety of positions since

then within the office environment. He transferred to marine

operations in 1991 as a port officer and has held this role since

then. Mr Sullivan is also president of The Ports Golf Club.

Arlene Tansey FAICD

Director

Ms Tansey joined ANZ Banking Group in July 1999 as Sector

Head, Telco, Media and Entertainment, and Executive Director,

Corporate Finance. She is now a Director, Corporate Portfolio

Management, and handles some of the largest restructuring

opportunities for ANZ. She spent over four years at Macquarie

Bank working in the Project and Structured Finance Division.

She holds a Doctor of Jurisprudence in law from the University

of Southern California Law Center, a Masters in Business

Administration from New York University, with a major in finance

and international business, and a Bachelors degree in Business

and is also a Director of Snowy Hydro Limited. Ms Tansey

was appointed to the Sydney Ports Corporation Board in late

2002. She is the Chair of the Audit and Risk Management

Committee of Sydney Ports Corporation.

Michael Sullivan, Arlene Tansey, David Field, Greg Martin, Sibylle Krieger, Vic Smith and Ken Murray – Board visit to the Riverina region

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Management structure

Finance andAdministration

George LaraGeneral Manager

Secretary and General Counsel

Barbara Filipowski

Marine Operations

Shane HobdayGeneral Manager

Responsibility

– In-house legal counsel

– Board of Directors’ secretary

– Internal audit

Objectives

– Delivery of appropriate legal advice to the Board and Corporation

– Ensure efficient operation of the business of the Board

– Advise on corporategovernance matters

Human Resources

Pat CatanachGeneral Manager

– Financial management

– Budgeting and planning

– External reporting and compliance

– Administration

– Procurement process

– Revenue processing

– IT services and business systems

Objectives

Commerce and Logistics

Simon BarneyGeneral Manager

– Port services including emergencyresponse and dangerous goodsmanagement

– Navigation services including Harbour Master

– Executive responsibility for Sydney Pilot Service Pty Ltd

– Develop port assets

– Major projects (eg. proposed Port Botany expansion)

– Engineering services

Responsibility

– Employee relations

– Performance management

– HR policy and administration

– Learning and development

– OH&S

– Payroll

– Recruitment and selection

– Community program

– Media relations

– Publications

– Sponsorships

– Promotional advertising

– Events management

– Corporate planning

– Environment

– Statutory planning

– Port security

– Risk management includingbusiness continuity

– PSOL compliance responsibility

– Hydrographic survey

– Promote and market trade throughSydney’s ports

– Commercial and logistics planning

– Manage alliances with importersand exporters, stevedores, shippinglines and transport providers

– Property management includingmaintenance

– Create value for the Corporation byeffectively managing financial,administrative and reportingrequirements

– Deliver IT requirements

– Ensure the performance standards of the PSOL are met in relation todangerous goods, emergencyresponse, navigation aids, harbourcontrol and pilotage

– Ensure development of port facilitiesis undertaken in a suitable andresponsible manner

– Create value by managing human resource requirements of theCorporation

– Raise public awareness of SydneyPorts’ roles and responsibilities, and its importance to Sydney/NSWeconomy

– Ensure performance standards of PSOLfunctions are met

– Compliance with environmentalobligations

– Provisions of expert advice andsolutions on marine environment issues

– Manage the identification and treatmentof Corporation-wide risks

– Increase trade

– Develop business opportunities

– Improve the transport chain

– Commercial management of propertyassets

Chief ExecutiveOfficer

Greg Martin

Projects

Colin RuddGeneral Manager

CorporateCommunications

Polly BennettGeneral Manager

Environment and Planning

Murray FoxGeneral Manager

The last container vessel to load cargo at White Bay

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KEY

A Overseas Passenger Terminal

B Patrick Corporation

C Wharf 8 Passenger Terminal

D White Bay

E Penrice Soda Products

F Australian Amalgamated Terminals

G Cement Australia

H Sugar Australia

I Gypsum Resources Australia

Berth Numbers

Sydney Ports’ Property

1

Sydney Harbour port facilities

CockatooIsland

Balls Head

Birchgrove

BallastPoint

Balmain

White Bay

Glebe Island Bridge

RozelleBay

DarlingHarbour

BlackwattleBay

McMahons Point

Walsh Bay

Sydney Cove

Berrys Bay

Goat Island

PyrmontGlebe Island

Sydney HarbourBridge

G

F

HE

D

C

A

I

B

D65

4

32

1

8

72

1

8

7

5

4

3

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KEY

A P&O Trans Aust. Holdings Ltd

B Vopak Terminals

C Orica Australia Pty Ltd

D Elgas

E Terminals Pty Ltd

F Origin Energy LPG Limited

G Patrick Port Services

J P&O Ports

K Patrick Corporation

L Caltex Petroleum Pty Ltd

M Australian Customs Services

N Warehouse Solutions International Pty Ltd

O Randwick City Council

Berth Numbers

Sydney Ports’ Property

Port Botany port facilities

1

G

Foreshore Road

Bulk Liquids Berth

Brotherson Dock

FrenchmansBay

BumborahPoint

Molineux Point

Airport Runway

Airport Runway

Silver Beach Groynes

Yarra Bay

Quibray Bay

Kurnell

Caltex Refineries P/L

BF

F

M

O

N

ED

C

E

A

G

K

L

B

1

Banksmeadow

J

2

3

4

5

6

August 2004

A

A

G

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Main roads

Rail lines

Regional Intermodal Terminals

NSW road and rail links

Nyngan

Dubbo

CANBERRA

SYDNEY

0 50 100 150 200 250 300 350 400

Kilometres

CobarWilcannia

Bourke

HebelGoondiwindi

Armidale

Tamworth

MuswellbrookGulgong

Warren

Mudgee

Bathurst

LithgowBlayney

ParkesOrange

Forbes

CowraWest Wyalong

Narrandera

Hay

Tumut

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

Jindabyne

WodongaAlbury

Nowra

Wollongong

Port Kembla

Gosford

Newcastle

Cooma

Queanbeyan

Tocumwal

Mildura

200 k

m

400 k

m

600 k

m

800 km

1,000

km

TasmanSea

N

Cootamundra

PRIN

CESS

HIGHW

AY

BARRIER HIGHWAY

HUME HIGHWAY

STURT HIGHWAY

SILV

ERCI

TYH

IGHW

AY

PACIFI

C HIGHWAY

MITCHELL

HIGHWAY

MID

W

ESTERN HIGHWAY

COBBHIGH

WAY

SNO

WY

MOUNTAINSHWY

NEW

ENG

LAN

D

HIGHWAY

NEWELL

HIG

HW

AY

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Motorways

Main roads

Rail lines

Dedicated rail freight line

Intermodal Terminals

Industrial zones

Port facilities

Enfield site

Proposed Port Botany development area

Western Sydney Orbital (under construction)

Metropolitan road and rail links

20 km

30 km

40 km

50 k

m

10 km

Kurnell

TempeCooksRiver

Kingsgrove

Seven Hills

Kings Park

Doonside

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

Hawkesb ury River

Middle Harbour

Peakhurst

WhiteBay

GlebeIsland

SydneyAirport

PortBotany

DarlingHarbour

SydneyCBD

0 2 4 6 8 10

Kilometres

SYDNEY

N

M 5

PRIN

CES

HIG

HWAY

M4GREAT WESTERN HIGHWAY

M2

HUME HIGH WAY

PENN

AN

TH

ILLS

ROAD

CU

MB

ERLA

ND

HIGH

W

AY

PACIFIC HIGHWAY

SYDN

EY–

NEW

CAS

TLE

FREE

WA

Y

G NRL

HOLM

EDR

EAST

ERN

DIS

TRIB

UTO

R

STHERN

CROSS DR

GOREHILL FREEWA

Y

PARRAMATTA ROAD

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Port Botany

Port Botany proposed expansion

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Sydney Ports Corporation in brief

Sydney Ports Corporation was established in 1995, under the

Ports Corporatisation and Waterways Management Act

1995, to give a greater focus to commercial port operations

and enhance competition in the provision of services to the

shipping and cargo industries.

In doing so, we aim to be a successful business and serve the

needs of our customers while providing an appropriate return

to our shareholders, the two Ministers who represent the

NSW Government.

Our objective is to facilitate trade growth and ensure that port

development is economically sustainable and environmentally

responsible, in keeping with standards of safety and

environmental protection acceptable to the local community

and international standards.

Stating our vision

Sydney Ports’ vision is to be an internationally respected

commercial port manager in all operational and environmental

aspects, and to provide facilities to promote and support trade

growth for the benefit of the New South Wales economy.

Implementing our values

Sydney Ports is committed to:

– Service to our customers through reliable, professional and

courteous attention

– Excellence by being progressive and encouraging alternative

solutions to complex issues

– Respect for the individual worth and honest contribution of

all employees

– Vigilance in promoting a safe environment for personnel and

the community

– Integrity through nurturing the highest standards of conduct

and ethics

– Challenge barriers and impediments to progress, and

– Exceed expectation.

The key roles we play

Sydney Ports’ main functions are to:

– Manage and develop port facilities and services to cater for

existing and future trade needs

– Facilitate trade by providing competitive advantage to

importers, exporters and the port-related supply chain

– Manage the navigational and operational safety needs of

commercial shipping*

– Protect the environment and have regard to the interests of

the community, and

– Deliver profitable business growth.

* The Corporation holds a Port Safety Operating Licence with responsibilities forchannel depths, dangerous goods, emergency response, navigation aids,pilotage and port communications.

Key roles, objectives and results

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Sydney Ports Corporation’s Board of Directors and voting shareholders negotiate an annual agreement, titled the Statement ofCorporate Intent, which lists the Corporation’s key financial performance targets for the coming financial year. Comparison ofperformance in 2003–04 against the targets for the year and the results for 2002–03 reveals:

2003–04 2003–04 2002–03actual target actual

$M $M $M

Financial indicators

Shareholder Value Added (SVA) +12.8 +6.7 +11.5

Debt level 170.3 191.7 169.4

Operating profit before income tax equivalent 51.8 41.1 41.2

Tax equivalent expense 16.6 14.3 14.9

Operating profit after income tax equivalent 35.2 26.8 26.3

Income tax equivalent payable 16.7 15.5 15.1

Dividend payable 17.6 13.4 13.2

Operational indicators

Throughput (million mass tonnes) 25.1 24.1 23.6

Per cent of trade growth 6.4% n/a -3%

TEUs (‘000) 1,270 1,235 1,161

Per cent of TEU growth 9.4% n/a 15.1%

Ship visits 2,408 2,230 2,331

Total gross tonnage (millions) 64.1 58.9 60.0

Customer perception ranking n/a1 n/a1 7.6

Staff numbers3 199 199 199

Average sick leave per employee 2.34 2.5 2.402

Staff training ($’000) 406 387 368

Number of lost time work accidents 5 3 3

1. (no survey during period)2. (excluding long-term illness)3. (excluding SPS)

Sydney Ports CorporationKey performance indicators

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Sydney Ports CorporationEnvironment indicators

Number of pollution incidentsgenerated from Sydney Ports’ ownactivities

Nil Nil During 2003–04 Sydney Ports developed aprocess for conducting workplace inspections,to identify and prevent the occurrence of safetyand environmental incidents. This inspectionprogram will be implemented during 2004–05.

Number of port-related pollutionincidents per 100 vessel visits in:

– Sydney Harbour:

– Botany Bay:

Incidents/100 visits:

5.4

3.9

0

0

The occurrence of pollution incidents fromcommercial vessels – although outside thecontrol of Sydney Ports – is an importantindicator of the sustainability of port operations.These incidents could include marine pollution,air emissions, littering or other occurrences.

Total annual number of pollutionincidents attended by Sydney Ports,in Sydney Harbour and Botany Bay

216 No target to beset3

Sydney Ports has an important role in cleaningup marine pollution events, regardless ofwhether the pollution is sourced from theabove port-related pollution incidents, orpollution arising from land run-off, commercialor recreational vessels. During 2003–04Sydney Ports invested some $11 million inemergency response preparedness andequipment to prevent pollution and protect themarine environment.

Port-related pollution incidents, as apercentage of total annual marinepollution reports2

2% 0 Five of the above incidents were thought torelate to port-generated marine pollution, whichwere primarily sourced from minor maintenanceon berthed vessels.

Number of annual emergencyresponse exercises

2 2 These exercises ensure emergency response,environmental protection and safety measuresare maintained at the highest level. They areundertaken in conjunction with port tenants, theNSW Police Service, NSW Fire Brigade andother emergency service organisations.

Number of EPA penalty actionstaken against Sydney’s portcustomers

Nil Nil A number of port users hold environmentprotection licenses from the EPA for cargohandling and storage activities. These licensesimpose a range of monitoring requirements and performance standards which are regularlyreviewed.

Regulatory complianceNumber of regulatory notices/actionstaken against Sydney Ports

Nil Nil During 2004–05, Sydney Ports will be seekingto obtain further environment protection licensesfrom the EPA, to allow the handling of bulkcargoes through White Bay port facilities.

Incident management andresponseNoise complaints per 100 vesselvisits at:

– Darling Harbour:

– Glebe Island/White Bay:

– Botany Bay:

Complaints/100 visits:

2

28

1

Baseline year1 Noise complaints are distributed for responseand investigation as required, and trends aremonitored by Sydney Ports. This will continueduring 2004–05, in which noise complaintsfrom White Bay are expected to decrease dueto the relocation of container vessel activity.

The environmental performance of Sydney Ports during 2003–04 is shown in the following table. These environmentalperformance measures reflect Sydney Ports’ regulatory risk management performance. During 2004–05, further measures willbe introduced which will address Sydney Ports’ management of its priority environmental impacts.

Indicator Achieved 2003–04 Target Comments

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Sydney Ports CorporationSydney Ports CorporationEnvironment indicators continued

1. 2003–04 was the first year that this indicator was established and hence no performance target has been set.

2. Reports of marine pollution within Sydney Harbour and Botany Bay, received by Sydney Ports as part of our incident and marine pollution response role.

3. As Sydney Ports is obliged to respond to all incidents of marine pollution – whether sourced from land, commercial or recreational vessels – it is not appropriateto establish a target to limit our response.

Dangerous Goods audits conductedby Sydney Ports at containerterminals

586 auditsundertaken at

terminal facilities

Terminals auditedas standardprocedure

Approximately 4 per cent of all containers carry dangerous goods. Sydney Ports auditscontainer terminal facilities to ensure that thesegoods are managed in accordance withregulations. During 2003–04, Sydney Portsissued 169 penalty notices for infringements of dangerous goods requirements.

Inspections undertaken by SydneyPorts for all refuelling activities

1,228 inspectionscompleted

All refuellinginspected as

standardprocedure

The inspections aim to ensure standardprocedures are implemented to prevent water pollution from the refuelling ofcommercial vessels.

Percentage successful prosecutions,per annual cases determined

100% 100% During 2003–04, Sydney Ports launched nonew prosecutions under the Marine PollutionAct; and two penalty infringement notices wereissued for marine pollution incidents. All casesin judgement was received during 2003/041

were determined in Sydney Ports’ favour. As at1 July 2004, 11 prosecutions previouslylaunched by Sydney Ports remained pending.

Monitoring and regulatoryenforcementSafety audits conducted by SydneyPorts on all bulk oil, gas andchemical vessels

3,331 auditsundertaken (all

relevant vessels)

All vesselsaudited asstandard

procedure

These audits are conducted to prevent safetyand water pollution incidents by ensuring State,national and international Standards and codesare implemented.

Indicator Achieved 2003–04 Target Comments

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Sydney Ports CorporationTo support the achievement of the business goals, prominence is given to creating an outcome-based culture focused onfulfiling the organisations key roles and goals as identified in the 2003–2006 Corporate Plan.

Port users and stakeholdersKey Role No.1 – Manage and develop port facilities to cater for existing and future trade needs

Goal Strategy Key performance indicators Results

Delivery of major projects

Port Botany expansion Lodgement of EIS Lodge with DIPNR by end of November 2003 Implementedto meet trade growth

Manage approval process Effectively manage Commission of Inquiry In progress, COI (COI) process recommences

October 2004

GI/WB upgrade to meet Completion of capital works Capital works program to be completed by Implementedchanging trade requirements agreed time on budget and to meet tenant

requirements

Complete remainder of site works in accordance Under review, pending with agreed timeframe requirements

New tenants identified to meet trade New tenancy leases finalised which In progressrequirements and maximise facility meet financial and trade goalsreturns

Enfield intermodal terminal Revitalise project Recommendations to Government Under review, pending NSWdeveloped to improve the to commence EIS process Metropolitan Freightport/land interface (also Strategy announcementcontributes to Key Role No.2) 2004–2005

Update strategic land use plan for Land use plan developed and submitted Pending MFS outcomesthe site for approval so EIS can proceed

Prepare and lodge Enfield EIS Manage preparation of Enfield EIS in Pending MFS outcomesaccordance with agreed C&L timeframeand budget

To undertake strategic land To identify potential land for acquisition Due diligence is completed and properties In progress, negotiations, acquisitions/disposals/ eg Cooks River terminal, Alcatel acquired if relevant criteria are satisfied due diligence progressingdevelopments which enhance (Port Botany) 2004–05the value of the port

To identify potential land for Development proposals assessed against No activitydevelopment and prepare appropriate performance measures and developed wherecase for financial expenditure all relevant criteria are satisfied

Effective management of SPC Continue to build strong relations Stakeholder survey To be completed leaseswhich acknowledge the with tenants 2004–05requirements of trade, tenants, environment and financial

Proactive management of lease issues Introduction of PAMS by 12 December 2003 Implemented

Clear objectives for the outcome of Completion of lease review by Implementedlease negotiations Ernst & Young 8 August 2003

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Sydney Ports CorporationPort users and stakeholders continued

Key Role No. 2 – Facilitate trade by providing competitive advantage to importers,exporters and the port related supply chain


Effective relationship Provide information that is responsive Undertake a stakeholder survey by June 2004 To be completed with industry to the business needs of lessees and 2004–05

shipping companies in a timely manner

Prioritise and target visitation program Visitation program completed Implemented

Implement recommendations from the Recommendations implemented according ImplementedTrade Development Performance and to scheduleEvaluation review

Improve efficiencies of the Work closely with rail operators road Complete empty container management Implementedtransport chain transport providers, stevedores, depot strategy by August 2003

operators, shipping lines to overcome inefficiencies in transport chain

Pilot study for rail operation performance Implementedis implemented by September 2003

Follow up the actions arising from the ImplementedTransport Forum by December 2003

Trade market share retained Implemented

Commercial pricing that takes Complete pricing review Pricing review completed by August 2003 Implementedinto account trade forecasts, financial targets and competitive Submitted to Govt for approval Implementedissues. Price changes implemented with Under Review

appropriate notification 2004–05

Communication strategy implemented Under Review 2004–05

Safety and navigationKey Role No. 3 – Manage the navigational and operational safety needs of commercial shipping


Provide a high quality Effective pilot service No delays to shipping through pilotage One four hour stop worksustainable pilotage service meeting causing shipping delays

Upgrade vessels PV4, PV11 and PV3 upgraded by July 2003, Achieved, PV3 scheduledFebruary 2004, June 2004 respectively for 2004–05

Develop succession planning strategies Review finalised Ongoing preparation of strategies 2004–05

Compliance with PSOL Satisfactory PSOL performance Meet the performance measures in the licence Achievedrequirements and the requirements of relevant legislation

Maintain quality system to support the No major non conformances from audit Achievedabove strategy

Provide effective & interactive Implement replacement RODIS system System operates in a secure and Implementedsystems to support navigation reliable fashion by end of September 2003and shipping responsibilities

Develop ShIPS system to meet SPC System available in accordance with Implementedand port user requirements Service level agreement

Delivery of module enhancements in Achieved and accordance with publicised dates enhancements ongoingeg. Dangerous Goods EDI

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Sydney Ports CorporationEnvironment and communityKey Role No. 4 – Protect the environment and have regard to the interest ofthe community


Ensure all SPC's environmental Implementation and ongoing review EMP is implemented and published by Implementedresponsibilities as defined in of an Environmental Management July 2003the Environmental Plan (EMP) as a platform for the EMSManagement Plan are fulfilled

Broaden the content of the EMS fully operational/current and utilised Under reviewEnvironmental Management System by SPC business units by June 2004 completion 2004–05(EMS) to include all SPC's responsibilities

Actively work with port users in Develop and implement progressive Achieved, implementationresponding to environmental and environmental guidelines for port ongoingregulatory obligations development by September 2004

Strengthen relationship with Review and implement Community Feedback demonstrates success of the Implementedneighbours and community Awareness Program implementation of the Community

Awareness Program

Provide feedback to Environmental Report Published September 2003 including Achievedstakeholders on mechanism for customer feedbackenvironmental performance

Review of SPC website for Website reviewed by December 2003 Implemented, websiteenvironmental information updated

FinanceKey Role No.5 – Deliver profitable business growth


Sustainable business model Implement Pilot pricing strategy Submitted for Ministerial approval Implementedfor Pilotage services Continual review of cost structure

Price changes implemented with Implementedappropriate notification

Communication strategy implemented Implemented

Effective asset management Manage the assets to maximise return Maintenance program is in place and Implementedand to enhance shareholder value adhered to

To appropriately insure assets Insurance program is in place Implemented

Acquire assets which provide Acquisition of assets meet return on Implementedacceptable return on acquisition investment and other hurdle rates

Consistent use of Total Asset Management Implemented(TAM) procedures

Shareholder value optimised Financial and economic evaluation SVA target achieved Achievedof investment proposals against agreed financial hurdles

Ongoing management of balance Other agreed financial targets achieved Achievedsheet, profit and loss and cashflow including profitability, returns on equity and including: debt servicing ratios– ongoing pricing reviews– Budgetary and other cost controls– Working capital and debt management

Achieve an acceptable capital Review and determine optimal capital Formulate recommendations and advise Achievedstructure position that will help structure, including the ongoing as to desired financial benchmarks and meet the financial commitments refinement of financial models and capital positionof the business assessing funding arrangements

for approved major projects

Achieve suitable credit ratings Achieved

Agreed on a distribution and capital structure Implementedframework with Treasury, acceptable to the shareholders and the future requirements of SPC

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Sydney Ports CorporationPeopleKey Role No. 6 – Learning and growth – our people


Satisfied and committed staff To be recognised as an employer Positive staff feedback In progressto deliver business results of choice

Growing professional skills Project management disciplines utilised Under review 2004–05eg. project management in all business projects

Objectives established with Bi annual performance review feedback Implementedemployees – link to Business and sessions in placeCorporate Plan

Individual training plans in place Payment of At Risk Performance Pay Implemented

Average $ spent per person Implemented

Average hrs per person for Operational Unit Implemented

Career Development Policy Developed Increased awareness by employees Implemented and Published of opportunities

Improved internal Review and implement internal Positive staff survey feedback To be completedcommunications communications program 2004–05

Implement Document Information is easily available and used by staff To be implemented Management system in 2004–05

Enterprise Agreement Develop Strategy – align to Executive, Board and Staff endorsement Negotiations completed,2004–2007 business requirements pending vote and

certification

Establish Negotiation Team Negotiated outcomes are within financial budgetand budget

Provides flexibility to meet changing business needs

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Sydney Ports CorporationBusiness operationsKey Role No.7– Business operations


Good corporate governance Compliance with all applicable legal Risk Management strategy in place and Implementedrequirements (eg. SOC Act, PCWM Act, periodically auditedPF&A Act) and government policies in respect of SOC's supported by Crisis management plan in place Implementedappropriate plans and policies. and periodically tested.

Internal audit program in place Implemented

No breaches of the applicable laws of ImplementedGovernment policies identified

No material adverse findings in respect of Implementedcorporate governance made by the external auditor

Provide IT services that add Business system and information Implement document management and Ongoing to bevalue to and meet business needs identified, prioritised and portal solution implemented needs delivered as agreed, in order to facilitate 2004–05

processes and provide/build the information assets

Implement records management system Implemented

Implement new property management and Implementedmaintenance system

Deliver/expand data warehousing and/ Ongoing, to beor reporting capabilities implemented 2004–05

Upgrade or deliver new HR and Ongoing to beFinancial systems implemented 2004–05

Provide infrastructure that supports Implement/maintain infrastructure platforms Implementedagreed business applications suitable for the delivery of agreed business solutions

Provide acceptable support and Upgrade of DRP Implementedmaintenance for both infrastructure and applications Roll-out help desk processes and procedures Implemented

Provisions of support services to agreed Implementedlevels of standard Implemented

Explore opportunities for the provision Recommend e-commerce solutions and Ongoing 2004–05of e-commerce services to industry services that may provide further business stakeholders and customers opportunities

Pursue opportunities for selling ShIPS system Under review

Port Security Establish Port Facilities Security Plans In place by July 2004 consistent with Implementedat SPC Facilities IMO requirements

Facilitate completion of security plans In place by July 2004 consistent with Achieved, ongoingand upgrading measures at leases IMO requirements implementation ofPort facilities security measures

in 2004–05

Compliance with OH&S Develop Risk Assessment Framework AchievedAct 2000 and Regulations 2001

Develop Contractor Management

Framework

Workplace Inspections conducted regularly

Hazards and Ladder Registrars in place OH&S Policy and Management Plan developed Satisfactory external OH&S Audit. Entry to PDS scheme

Sydney Ports CorporationFinancial Statementsfor the year ended 30 June 2004

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Contents

Statement of Financial Performance 59

Statement of Financial Position 60

Statement of Cash Flows 61

Notes to and forming part of the financial statements 62

1 Summary of significant accounting policies 62

2 Revenue from ordinary activities 65

3 Expenditure from ordinary activities 66

4 Taxation 67

5 Receivables 69

6 Inventories 70

7 Other financial assets 70

8 Other current assets 70

9 Other non-current assets 71

10 Property, plant and equipment 72

11 Payables 74

12 Interest-bearing liabilities 75

13 Tax equivalent liabilities 75

14 Provisions 76

15 Equity 77

16 Financial instruments 78

17 Capital expenditure commitments 81

18 Operating lease commitments 82

19 Contingent liabilities and contingent assets 82

20 Consultancy fees 82

21 Notes to the statement of cash flows 83

22 Controlled entity 84

23 Directors’ remuneration and loans 84

24 Related party transactions 84

25 Events occurring after reporting date 84

26 Segment reporting 84

27 International financial reporting standards 85

Directors’ Statement 87

Independent audit report 88

Statement of land holdings 89

58

Beginning of audited financial statements

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Sydney Ports CorporationStatement of Financial Performance for the year ended 30 June 2004

Consolidated Consolidated Corporation CorporationNote 2004 2003 2004 2003

$000 $000 $000 $000

Revenue from ordinary activities 2 140,489 124,664 132,374 119,723

Borrowing costs expense 3 13,423 13,716 13,423 13,716

Other expenses from ordinary activities 3 75,277 69,718 67,536 64,896

Total expenditure from ordinary activities 88,700 83,434 80,959 78,612

Profit from ordinary activities before income tax equivalent expense 51,789 41,230 51,415 41,111

Income tax equivalent expense relating to ordinary activities 4 (a) 16,610 14,915 16,498 14,866

Net profit attributable to members of Sydney Ports Corporation 35,179 26,315 34,917 26,245

Net increase in asset revaluation reserve 15 — 162,501 — 162,501

Total revenues, expenses and valuation adjustments attributable to members of the parent entity and recognised directly in equity — — — —

Total changes in equity other than those resulting from transactions with owners as owners 15 35,179 188,816 34,917 188,746

Note: The wholly owned subsidiary, Sydney Pilot Service Pty Ltd (SPS), commenced operations on 26 October 2002.

SPS Revenue from Ordinary Activities for the year was $9.096 million ($5.643 million in 2002–03) which represented 6.5% (4.5% in 2002–03) of ConsolidatedRevenue from Ordinary Activities. SPS net profit after income tax equivalent expense was $0.262 million ($0.070 million in 2002 –03).

The accompanying notes form an integral part of these financial statementsThe accompanying notes form an integral part of these financial statements

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Sydney Ports CorporationStatement of Financial Position as at 30 June 2004


$000 $000 $000 $000

Current assets

Cash assets 21 (a) 1,658 2,245 1,554 1,677

Receivables 5 13,849 15,205 13,298 14,613

Inventories 6 29 62 — —

Other financial assets 7 56,434 30,356 56,236 30,168

Other 8 1,045 1,361 717 1,269

Total current assets 73,015 49,229 71,805 47,727

Non-current assets

Receivables 5 274 412 289 412

Property, plant and equipment 10 728,719 730,613 726,505 729,332

Deferred tax equivalent assets 4 (c) 5,488 5,340 5,488 5,131

Other 9 8,400 6,169 10,070 7,289

Total non-current assets 742,881 742,534 742,352 742,164

Total assets 815,896 791,763 814,157 789,891

Current liabilities

Payables 11 23,787 21,790 22,821 20,728

Interest-bearing liabilities 12 — 31,694 — 31,694

Current tax equivalent liabilities 4 (b) & 13 4,009 5,152 4,009 4,990

Provisions 14 21,160 16,663 20,962 16,475

Total current liabilities 48,956 75,299 47,792 73,887

Non-current liabilities

Payables 11 — — 260 —

Interest-bearing liabilities 12 170,255 137,714 170,255 137,714

Deferred tax equivalent liabilities 4 (d) & 13 4,219 4,371 4,219 4,364

Provisions 14 6,330 5,797 5,827 5,414

Total non-current liabilities 180,804 147,882 180,561 147,492

Total liabilities 229,760 223,181 228,353 221,379

Net assets 586,136 568,582 585,804 568,512

Equity

Contributed equity 15 125,542 125,542 125,542 125,542

Reserves 15 342,721 342,721 342,721 342,721

Retained profits 15 117,873 100,319 117,541 100,249

Total equity 15 586,136 568,582 585,804 568,512

Note: The wholly owned subsidiary, Sydney Pilot Service Pty Ltd, commenced operations on 26 October 2002.

The accompanying notes form an integral part of these financial statements

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Sydney Ports CorporationStatement of Cash Flows for the year ended 30 June 2004


$000 $000 $000 $000inflow/ inflow/ inflow/ inflow/

(outflow) (outflow) (outflow) (outflow)

Cash flows from operating activities

Cash receipts in the course of operations 156,252 137,914 147,345 132,536

Cash payments in the course of operations (75,007) (68,725) (66,739) (63,904)

Interest received 1,938 1,090 1,930 1,070

Borrowing costs (12,232) (12,325) (12,232) (12,325)

Income tax equivalent paid 13 (18,053) (14,394) (17,821) (14,394)

Net cash provided by operating activities 21 (b) 52,898 43,560 52,483 42,983

Cash flows from investing activities

Payments for property, plant and equipment (14,842) (19,910) (13,423) (18,969)

Proceeds from sale of property, plant and equipment 592 824 592 824

Investment in subsidiary — — — (1,120)

Loan to subsidiary — — (550) —

Net cash used in investing activities (14,250) (19,086) (13,381) (19,265)

Cash flows from financing activities

Proceeds from borrowings — — — —

Repayment of borrowings — (100) — (100)

Dividends paid 14 (13,157) (8,540) (13,157) (8,540)

Net cash used in financing activities (13,157) (8,640) (13,157) (8,640)

Net increase / (decrease) in cash held 25,491 15,834 25,945 15,078

Cash at the beginning of the financial year 32,601 16,767 31,845 16,767

Cash at the end of the financial year 21 (a) 58,092 32,601 57,790 31,845

Note: The wholly owned subsidiary, Sydney Pilot Service Pty Ltd, commenced operations on 26 October 2002.


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The following summary explains the significant accountingpolicies that have been adopted in the preparation of thefinancial statements.

(a) Basis of AccountingThe financial statements are a general purpose financialreport which has been prepared in accordance with AustralianAccounting Standards, other authoritative pronouncements ofthe Australian Accounting Standards Board, Urgent IssuesGroup Consensus views and the Public Finance and Audit Actand Regulation 2000.

In this financial report, Sydney Ports Corporation will bereferred to as ‘the Corporation’. Its subsidiary company SydneyPilot Service Pty Ltd will be referred to as ‘the subsidiarycompany’. The economic entity, comprising the Corporationand its controlled entity, will be collectively referred to as ‘theconsolidated entity’.

The financial report has been prepared on the basis of fullaccrual accounting using historical cost accountingconventions except for non-current physical assets, which areshown at valuation, and superannuation, which is shown atactuarially assessed present value. The accounting policiesadopted are consistent with those of the previous year.Comparative information is reclassified where appropriate toenhance comparability. As the subsidiary companycommenced operations on 26 October 2002, consolidatedcomparative information does not cover a whole financial yearfor the subsidiary company’s operations.

The NSW Treasurer has exempted the consolidated entityfrom certain reporting requirements under the Public Financeand Audit Act 1983 and the Public Finance and AuditRegulation 2000. The exemptions are from disclosing amountsset aside to any provision for known commitments, theamount appropriated for repayment for loans, advances,debentures and deposits, material items of income andexpenditure on a program or activity basis (summary required),and where non-current asset values exceed replacement cost.

The Corporation had one controlled entity during the yearended 30 June 2004, being the Sydney Pilot Service Pty Ltd,which commenced operations on 26 October 2002 as awholly owned subsidiary. The operating results of the SydneyPilot Service Pty Ltd have been included in the consolidatedStatement of Financial Performance since that date.

(b) Principles of ConsolidationThe financial report of the consolidated entity includes thefinancial report of the Corporation, being the parent entity, andits 100 per cent controlled entity, Sydney Pilot Service Pty Ltd.The transactions and results of the controlled entity areincluded only from the date control commenced. The balancesand effects of transactions between entities in theconsolidated entity have been eliminated.

(c) Cash in the Statement of Cash FlowsFor the purposes of the Statement of Cash Flows, cashincludes cash on hand and in banks (net of any outstandingbank overdraft) and short-term investments in securities withthe NSW Treasury Corporation, which are classified undercurrent assets. Cash at the end of the period, as shown in theStatement of Cash Flows, is reconciled to the relevant items inthe Statement of Financial Position (refer to note 21a).

(d) Bad and doubtful debtsBad debts are written off against the provision for doubtfuldebts after thorough investigation and exhaustion of recoveryprocesses. Regular reviews were conducted during the year todetermine the adequacy of the level of the provision fordoubtful debts.

(e) InventoriesInventories have been valued at the lower of cost and netrealisable value on an item-by-item basis.

(f) Other financial assets (investments)Investments are carried at net fair value. Interest revenue isrecognised when receivable.

(g) Operating leasesOperating lease assets are not capitalised and rentalpayments are recognised as an expense in the period inwhich they are consumed.

(h) Valuation of property, plant and equipmentIn accordance with Australian Accounting Standard AASB 1041, Revaluation of Non-Current Assets, all property,plant and equipment (subject to materiality) is reviewedregularly to ensure that the carrying amount of each asset in the class does not differ materially from its fair value at the reporting date.

The most recent comprehensive revaluation by theCorporation was completed at 30 June 2003 and was basedon an independent assessment. The revaluation complied withAustralian Accounting Standard AASB 1041, Revaluation ofNon-Current Assets as well as the Guidelines for theValuation of Physical Non-Current Assets at Fair Value issuedby NSW Treasury.

The revaluation included the following guidelines:

– No less than 95 per cent in value of the total physical non-current assets were valued based on values at 30 June 2002.

– Assets acquired within 12 months of the revaluation datewere assumed to have current values and were excludedfrom the revaluation process.

– Where one asset in a class is revalued, all assets in thatclass are revalued.

– Property, plant and equipment (excluding land) are valuedbased on the estimated written-down replacement cost ofthe most appropriate modern equivalent replacement facilityhaving a similar service potential to the existing asset. Landis valued on an existing-use basis, subject to anyrestrictions or enhancements since acquisition.

The State Valuation Office valued land and buildings. A quantity and construction cost consultant, MDA AustraliaPty Ltd, valued roadways and wharves, jetties andbreakwaters. Based on the latest revaluation, all assets arenow recorded at fair value. The assets that were not revalueddue to materiality are also shown at fair value as the written-down value approximates fair value. A recoverable-amounttest was performed to ensure asset carrying values did notexceed recoverable amounts.

Sydney Ports CorporationNotes to and forming part of the financial statements

Note 1. Summary of significant accounting policies

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(i) Capitalisation of property, plant and equipmentProperty, Plant and Equipment in excess of $1000 iscapitalised where it is expected to provide future economicbenefits for more than one reporting period. Only those assetscompleted and ready for service are taken to the property,plant and equipment accounts. The remaining capitalexpenditures are carried forward as construction in progressand are included in property, plant and equipment in the Statement of Financial Position.

(j) Depreciation of property, plant and equipmentDepreciation has been calculated on depreciable assets,using rates estimated to write off the assets over theirremaining useful lives on a straight-line basis in accordancewith Australian Accounting Standard AAS4, Depreciation of Non-Current Assets. Land assets have been treated as non-depreciable. The remaining useful lives of assets werereassessed during the year with no changes required. The expected design lives of new depreciable assets at 30 June 2004 are:

– Buildings 10 to 50 years

– Roadways 5 to 20 years

– Wharves, jetties and breakwaters 10 to 100 years

– Plant 2 to 40 years

(k) Retirement benefits (superannuation)The consolidated entity contributes to employee superannuationfunds in addition to contributions made by employees. Suchcontributions are paid to Pillar Administration and otheremployee-nominated funds. The Corporation contributes todefined-benefit schemes and accumulation schemes. Thesubsidiary company contributes to accumulation schemesonly. Payments are applied towards the accruing liability foremployee superannuation and are charged against revenue.

(l) Interest-bearing liabilitiesInterest-bearing liabilities are carried at their face value afterdeducting any unamortised discount or adding anyunamortised premium. Any discount or premium is deferredand amortised over the term of the loan.

(m) Employee benefitsBenefits for annual leave have been provided at the amountexpected to be paid when the liabilities are settled.Appropriate on-costs are included. Benefits for long-serviceleave have been measured using the present value ofexpected future payments to be made for services providedby employees up to the reporting date. Consideration is givento expected future wage and salary levels, experience ofemployee departures and periods of service. Expected futurepayments are discounted using market yields at the reportingdate on national government bonds and terms to maturity thatmatch, as closely as possible, the estimated future cashoutflows. Appropriate on-costs are included. The portionexpected to be settled within 12 months of the reporting dateis recognised as the current provision; the portion expected tobe settled more than 12 months from the reporting date isrecognised as the non-current provision. The average sickleave taken by employees based on past experience is lessthan the entitlement accruing each period. It is consideredimprobable that existing accumulated sick leave entitlementswill be used, and therefore no liability has been recognised.

(n) Revenue recognitionRevenue is recognised to the extent that it is probable thatthe economic benefits will flow to the entity and the revenuecan be reliably measured. The following specific recognitioncriteria must also be met before revenue is recognised:

– Revenue from the rendering of a service is recognised onthe delivery of the service to the customer.

– Interest revenue is recognised when receivable.

– The Corporation’s superannuation liabilities are currently inan over-funded position (refer note 9). Any increase in over-funding during a year is recognised as revenue in theStatement of Financial Performance.

– Proceeds from the sale of assets are recognised upon thedelivery of the assets to the purchaser.

– Government capital grant revenue is recognised whenreceived.

– Assets received at no cost are recorded at their fair valuewhen received, and this amount is included in revenue.

– Goods or services exchanged that are of a different natureand value are recognised at fair value when the followingcriteria have been met:

– the entity has passed control of the goods or otherassets to the consolidated entity

– it is probable that the economic benefits comprising theconsideration will flow to the consolidated entity, and

– the amount of revenue can be measured reliably.

(o) Income Tax EquivalentIncome tax equivalent is required to be paid to the NSWGovernment in accordance with section 20T of the StateOwned Corporations Act 1989. The payments are equivalentto the amounts that would be payable under normal incometax law of the Commonwealth. The National Tax EquivalentRegime was established on 1 July 2001, with the AustralianTaxation Office administering the tax equivalent schemeacross Australia.

The financial statements apply the principles of tax-effectaccounting. The income tax equivalent expense in theStatement of Financial Performance represents the taxequivalent on the pre-tax accounting profit adjusted forincome and expenses never to be assessed or allowed fortaxation equivalent purposes. The deferred tax equivalentassets and liabilities include the tax equivalent effect ofdifferences between income and expense items recognised indifferent accounting periods for book and tax equivalentpurposes. These are calculated at the tax equivalent ratesexpected to apply when the differences reverse. Thecomponents of the deferred tax equivalent assets andliabilities are shown in note 4.

The Corporation and its wholly owned Australian controlledentity have decided to implement the tax consolidationlegislation from 1 July 2003. The Australian Taxation Officehas not been notified of this decision but will be advised whenthe consolidated tax return is lodged in December 2004. As aconsequence, the Corporation, as the head entity in theconsolidated group, recognises current and deferred taxamounts relating to transactions, events and balances of the wholly owned Australian controlled entity in this groupas if those transactions, events and balances were its own, in addition to the current and deferred tax amounts arising in relation to its own transactions, events and balances.


Note 1. Summary of significant accounting policies continued

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(o) Income Tax Equivalent continued

Amounts receivable or payable, under an accounting sharing agreement between the tax consolidated entities, are recognised separately as tax-related amounts receivableor payable. Expenses and revenues arising under the tax-sharing agreement are recognised as a component of income tax expense.

(p) DividendThe consolidated entity reviews its financial performance forthe accounting period and recommends to its shareholders anappropriate dividend payment in light of the current financialposition and longer-term financial commitments. Under NSWTreasury’s Financial Distribution Policy for GovernmentBusinesses, the Corporation prepares a Statement ofCorporate Intent (SCI) which is an agreement between therelevant Minister and the Board. This agreement includesdividend targets for the year ahead and is signed before theend of the financial year to which it relates. This creates avalid expectation that a dividend will be paid. Consequently, inaccordance with Australian Accounting Standard AASB1044Provisions, Contingent Liabilities and Contingent Assets, andNSW Treasury’s Financial Distribution Policy for GovernmentBusinesses, the dividend for the financial year is set aside asa provision in the Statement of Financial Position.

(q) Financial instrumentsFinancial instruments give rise to positions that are financialassets of either the consolidated entity or its counterparty andfinancial liabilities (or equity instruments) of the other party.These include cash, receivables, investments, creditors,interest-bearing liabilities and derivative financial instruments(futures contracts). In accordance with AAS33, Presentationand Disclosure of Financial Instruments, information isdisclosed in note 16 for the credit risk and interest rate risk offinancial instruments. All such amounts are carried in theaccounts at net fair value unless otherwise stated. Thespecific accounting policy for each class of such financialinstrument is stated as follows:

Classes of instruments recorded at cost comprise:

– cash

– receivables

– payables, and

– interest-bearing liabilities.

Classes of instruments recorded at market or net fair valuecomprise:

– investments, and

– derivative financial instruments.

All financial instruments, including revenue, expenses or othercash flows arising from instruments, are recognised on anaccrual basis.

(r) Goods and services taxRevenues, expenses and assets are recognised net of theamount of Goods and Services Tax (GST), except where theamount of GST incurred is not recoverable from theAustralian Taxation Office (ATO). In these circumstances theGST is recognised as part of the cost of acquisition of theasset or as part of an expense item. Receivables andpayables are stated with the amount of GST included. Accrualitems are also shown in the Statement of Financial Positioninclusive of GST where applicable.

The net amount of GST owing to the ATO, or refundable fromthe ATO, is shown as a Payable or Receivable in theStatement of Financial Position. Cash flows are included inthe statement of cash flows on a gross basis. The GSTcomponent of cash flows arising from investing and financingactivities that is recoverable from or payable to the ATO isclassified as operating cash flows.

(s) Rounding amounts to the nearest thousand dollars

In the financial statements, all amounts are recorded inAustralian Dollars and have been rounded to the nearestthousand dollars (shown as $000).



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Note 2. Revenue from ordinary activities

Consolidated Consolidated Corporation Corporation2004 2003 2004 2003$000 $000 $000 $000

Revenue from operating activities

Port revenue 93,319 85,016 85,035 79,934

Rental revenue 31,196 28,878 31,415 29,028

124,515 113,894 116,450 108,962

Other Revenue

Interest received 1,938 1,092 1,930 1,070

Net gain on sale of property, plant and equipment — 3 — 3

Asset contributions — 70 — 70

Increase in retirement benefits 2,404 — 2,404 —

Land tax recovered 4,941 4,393 4,941 4,393

Other recoveries 4,537 3,354 4,625 3,456

Miscellaneous sources 2,154 1,858 2,024 1,769

15,974 10,770 15,924 10,761

Total revenue from ordinary activities 140,489 124,664 132,374 119,723

Port Revenue comprises income from pilotage, navigation services, wharfage, site occupation charges and mooring fees.

Sydney Ports CorporationNotes to and forming part of the financial statements continued

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Note 3. Expenditure from ordinary activities


$000 $000 $000 $000

Salaries and wages 21,019 18,216 16,205 15,170

Employee benefits expense:

Annual leave 14 2,044 1,907 1,486 1,569

Long-service leave 14 1,053 1,327 912 1,220

Retirement benefits (superannuation) – defined benefit 9 173 3,340 173 3,340

Retirement benefits (superannuation)– accumulation 636 527 416 387

Other expenses from ordinary activities:

Service contractors 11,978 8,729 11,576 8,464

Utilities and communications 2,204 1,585 2,182 1,571

Indirect taxes 8,920 7,629 8,477 7,438

Depreciation 10 13,270 12,326 13,157 12,286

Doubtful debts 5 (b) & (c) (9) (24) (10) (36)

Auditors’ remuneration from review ofthe financial reports 127 122 110 107

Directors’ remuneration 23 314 255 295 237

Consultants’ fees — 93 — 93

Rental on operating leases 1,852 1,882 1,742 1,809

Net loss on sale of property, plant and equipment 29 — 29 —

Insurance 2,321 2,059 1,980 1,888

Materials 1,232 1,427 923 1,179

Other operations and services 8,114 8,318 7,883 8,174

Other expenses from ordinary activities 75,277 69,718 67,536 64,896

Borrowing costs expense 13,423 13,716 13,423 13,716

Total expenditure from ordinary activities 88,700 83,434 80,959 78,612


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Note 4. Taxation


(a) Income tax equivalent expense

The difference between income tax equivalent expense provided in the financial statements and the prima facie income tax equivalent expense is reconciled as follows:

Profit on ordinary activities before income tax equivalent 51,789 41,230 51,415 41,111

Prima facie tax thereon at 30% 15,537 12,369 15,425 12,333

Add/(less) tax effect of permanent and other differences:

Entertainment expenses 28 49 28 49

Depreciation not deductible 1,461 1,535 1,461 1,535

Superannuation not deductible (669) 1,002 (669) 1,002

Other 253 (40) 253 (53)

Total income tax equivalent attributable to operating profit 16,610 14,915 16,498 14,866

Total income tax equivalent comprises movements in:

Current tax equivalent liabilities 16,910 15,097 16,910 14,935

Deferred tax equivalent liabilities (152) 451 (152) 444

Deferred tax equivalent assets (148) (722) (148) (513)

Deferred tax equivalent assets generated on acquisition — 89 — —

Tax equivalent related to subsidiary — — (112) —

16,610 14,915 16,498 14,866


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Note 4. Taxation continued


$000 $000 $000 $000

(b) Current tax equivalent liabilities

Opening balance 5,152 4,449 4,990 4,449

Income tax equivalent paid (18,053) (14,394) (17,821) (14,394)

Over provision for income tax equivalent in prior years 251 (76) 251 (76)

Transfer in from subsidiary — — 85 —

Income tax equivalent payable on operating profit 16,659 15,173 16,504 15,011

Closing balance 13 4,009 5,152 4,009 4,990

(c) Deferred tax equivalent assets

Attributable to timing differences:

Provisions for employee entitlements 2,870 2,646 2,749 2,619

Accrued expenditure 833 1,577 710 1,492

Other 1,785 1,117 1,769 1,020


5,488 5,340 5,488 5,131

(d) Deferred tax equivalent liabilities


Depreciation 3,645 3,800 3,647 3,800

Income receivable 574 523 557 516

Pre-paid expenditure — 48 — 48


13 4,219 4,371 4,219 4,364

Tax ConsolidationThe Corporation and its wholly owned Australian controlled entity have decided to implement the tax consolidation legislationfrom 1 July 2003. The Australian Taxation Office has not been notified of this decision but will be advised when theconsolidated tax return is lodged in December 2004. As a consequence, the Corporation, as the head entity in the consolidatedgroup, recognises current and deferred tax amounts relating to transactions, events and balances of the wholly ownedAustralian controlled entity in this group as if those transactions, events and balances were its own, in addition to the currentand deferred tax amounts arising in relation to its own transactions, events and balances. Amounts receivable or payable, underan accounting sharing agreement between the tax consolidated entities, are recognised separately as tax-related amountsreceivable or payable. Expenses and revenues arising under the tax-sharing agreement are recognised as a component ofincome tax expense.


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Note 5. Receivables


Current

Trade debtors 7,274 6,575 6,638 5,987

Other debtors 4,189 4,444 4,349 4,476

Accrued income (a) 2,576 4,392 2,488 4,344

14,039 15,411 13,475 14,807

Less: Provision for doubtful debts (b) (190) (206) (177) (194)

13,849 15,205 13,298 14,613

Non-Current

Trade debtors 280 420 280 420

Other debtors — — 15 —

280 420 295 420

Less: Provision for doubtful debts (c) (6) (8) (6) (8)

274 412 289 412

Based on a review of debtors, an appropriate provision is carried for doubtful debts.

(a) Accrued income comprises:

Operating income 2,575 4,390 2,488 4,344

Bank interest 1 2 — —

Total accrued income 2,576 4,392 2,488 4,344

(b) Provision for doubtful debts – Current

Opening balance 206 241 194 241

Add: Current year’s charge (7) (21) (8) (33)

199 220 186 208

Less: Bad debts written off (9) (14) (9) (14)

Closing balance 190 206 177 194

(c) Provision for doubtful debts – Non-current

Opening balance 8 11 8 11

Add: Current year’s charge (2) (3) (2) (3)

6 8 6 8

Less: Bad debts written off — — — —

Closing balance 6 8 6 8


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Note 6. Inventories


Stores and materials:

– at cost 29 62 — —

29 62 — —

Inventory is classified as current as all items are expected to be consumed in the next financial year.

Note 7. Other financial assets

Consolidated Consolidated Corporation Corporation2004 2003 2004 2003

Net Fair Net Fair Net Fair Net FairValue Value Value Value$000 $000 $000 $000

The investments are:

Cash Facility Trust 56,434 22,518 56,236 22,330

Cash Plus Facility Trust — 7,838 — 7,838

56,434 30,356 56,236 30,168

The consolidated entity has investments in NSW Treasury Corporation’s (TCorp) Hour-Glass Cash Facility Trust. Investments are represented by a number of units in the managed facility. TCorp appoints and monitors fund managers and establishes andmonitors the application of appropriate investment guidelines. These investments are generally able to be redeemed with up to24 hours prior notice. The value of the investments held can increase or decrease depending on market conditions. The valuethat best represents the maximum credit risk exposure is the net fair value. The value of the above investments represents theshare of the value of the underlying assets of the facility and is stated at net fair value.

Note 8. Other current assets


Prepayments

Operating expenditure prepayments 1,045 1,361 717 1,269

1,045 1,361 717 1,269


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Note 9. Other non-current assets


Retirement benefits (superannuation) 8,400 6,169 8,400 6,169

Investment in subsidiary company — — 1,120 1,120

Loan to subsidiary — — 550 —

8,400 6,169 10,070 7,289

Retirement Benefits (superannuation)

At 30 June 2004, the Corporation’s superannuation position for defined benefit schemes is:

2004 2004 2004 2003 2003 2003Total Total Net Total Total Net

Liability Funding Asset Liability Funding Asset$000 $000 $000 $000 $000 $000

State Superannuation Scheme 26,767 33,925 7,158 25,505 30,259 4,754

State Authorities Superannuation Scheme 8,114 9,040 926 7,272 8,359 1,087

State Authorities Non-Contributory Superannuation Scheme 2,733 3,049 316 2,463 2,791 328

37,614 46,014 8,400 35,240 41,409 6,169

The 30 June 2004 superannuation liability assessment was undertaken by the SAS Trustee Corporation’s (STC) actuary (Mercer)and is based on actual membership data at 31 March 2004 (for all funds) extrapolated to 30 June 2004. The actuary has met the requirements of Australian Accounting Standard AAS25, Financial Reporting by Superannuation Plans, by applying a‘market-determined, risk-adjusted discount rate’ as the valuation interest rate in the calculation of the value of accrued benefits.

Assumptions adopted by the actuary in the valuation of the funds are:

2004–05 2005–06and thereafter

% %

Rate of investment return 7.0 7.0

Rate of salary increase 4.0 4.0

Rate of increase in CPI 2.5 2.5

The STC approved a contribution holiday for employer contributions for the State Superannuation Scheme, the State AuthoritiesSuperannuation Scheme and the State Authorities Non-Contributory Superannuation Scheme due to the over-funded position.The contribution holiday is effective until 30 June 2004. An application has been made for a continuance of the funding holidayto 30 June 2005. The funding holiday does not apply to certain employees.


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Note 10. Property, plant and equipment


Carrying Amounts

Land and buildings (at fair value) 511,801 505,727 511,801 505,727

Less: Accumulated depreciation (2,930) (4) (2,930) (4)

508,871 505,723 508,871 505,723

Roadways (at fair value) 9,077 6,191 9,077 6,191

Less: Accumulated depreciation (643) (70) (643) (70)

8,434 6,121 8,434 6,121

Wharves, jetties and breakwaters (at fair value) 183,849 180,681 183,849 180,681

Less: Accumulated depreciation (6,177) — (6,177) —

177,672 180,681 177,672 180,681

Plant (at fair value) 36,250 31,873 33,940 31,102

Less: Accumulated depreciation (15,306) (12,317) (15,154) (12,277)

20,944 19,556 18,786 18,825

Construction in progress 12,798 18,532 12,742 17,982

Total property, plant and equipment 728,719 730,613 726,505 729,332

Land Roadways Wharves, Plant 2004and Jetties and Total

Buildings Breakwaters$000 $000 $000 $000 $000

Movement in property, plant and equipment – Consolidated

Opening balance 505,723 6,121 180,681 19,556 712,081

Add: Revaluation — — — — —

Acquisitions — — — — —

From construction in progress 6,074 2,956 3,167 5,544 17,741

511,797 9,077 183,848 25,100 729,822

Less: Depreciation charge (2,926) (643) (6,176) (3,525) (13,270)

Disposals — — — (621) (621)

Write-offs — — — (10) (10)

Transfers — — — — —

Closing balance 508,871 8,434 177,672 20,944 715,921


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Note 10. Property, plant and equipment continued

Land Roadways Wharves, Plant 2004and Jetties and Total

Buildings Breakwaters$000 $000 $000 $000 $000

Movement in property, plant and equipment – Corporation

Opening balance 505,723 6,121 180,681 18,825 711,350

Add: Revaluation — — — — —

Acquisitions — — — — —

From construction in progress 6,074 2,956 3,167 4,001 16,198

511,797 9,077 183,848 22,826 727,548

Less: Depreciation charge (2,926) (643) (6,176) (3,412) (13,157)

Disposals — — — (621) (621)

Write-offs — — — (7) (7)

Transfers — — — — —

Closing balance 508,871 8,434 177,672 18,786 713,763

Consolidated Corporation2004 2004$000 $000

Movement in construction in progress

Opening balance 18,532 17,982

Add: Acquisitions 12,007 10,958

30,539 28,940

Less: To property, plant and equipment (17,741) (16,198)

Closing balance 12,798 12,742


Sale of property, plant and equipment:

Property, plant and equipment 961 1,025 961 1,025


621 821 621 821

Less: Proceeds from sale (592) (824) (592) (824)

Net loss/(profit) on sale 29 (3) 29 (3)


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Note 10. Property, plant and equipment continued


Assets leased to external parties under operating leases:

Land and buildings 286,946 322,021 286,946 322,021


Wharves, jetties and breakwaters 58,833 69,246 58,833 69,246


Plant 668 772 668 772


Total carrying value of leased assets 342,076 391,689 342,076 391,689

Note 11. Payables


Current

Trade creditors 1,171 169 1,117 154

Other creditors 14,586 16,490 13,674 15,443

Income received in advance 8,030 5,131 8,030 5,131

23,787 21,790 22,821 20,728

Non-current

Creditors — — 260 —

— — 260 —


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Note 12. Interest-bearing liabilities


Current

Unsecured loans from NSW Treasury Corporation — 31,694 — 31,694

Non-current

Unsecured loans from NSW Treasury Corporation 170,255 137,714 170,255 137,714

Total interest-bearing liabilities 170,255 169,408 170,255 169,408

Repayment of these loans is guaranteed by the Crown. Amounts shown are capital values.

Amount payable for interest-bearing liabilities:

Payable no later than one year — 31,694 — 31,694

Payable later than one, not later than five years 56,133 73,214 56,133 73,214

Payable later than five years 114,122 64,500 114,122 64,500

Total interest-bearing liabilities 170,255 169,408 170,255 169,408

The Corporation received Executive Council approval on 12 December 2001 to raise additional borrowings of $40 million,under the Public Authorities (Financial Arrangements) Act 1987, for capital acquisitions. At 30 June 2004, $15 million of the$40 million had been drawn down ($15 million of the $40 million at 30 June 2003).

Note 13. Tax equivalent liabilities


$000 $000 $000 $000

Current

Current tax equivalent liabilities 4 (b) 4,009 5,152 4,009 4,990

Non-current

Deferred tax equivalent liabilities 4 (d) 4,219 4,371 4,219 4,364

Movement in tax liabilities Balance Current Payments Balance(Consolidated) 30 June charge to 30 June

2003 revenue 2004$000 $000 $000 $000

Current

Current tax equivalent liabilities 5,152 16,910 (18,053) 4,009

Non-current

Deferred tax equivalent liabilities 4,371 (152) — 4,219


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Note 14. Provisions


$000 $000 $000 $000

Current

Dividend 15 17,625 13,157 17,625 13,157

Employee benefits, including on-costs 3,535 3,506 3,337 3,318

21,160 16,663 20,962 16,475

Non-current

Employee benefits, including on-costs 6,330 5,797 5,827 5,414

6,330 5,797 5,827 5,414

Movement in provisions Balance Current Payments Other Balance(Consolidated) 30 June charge to transfers 30 June

2003 revenue 2004$000 $000 $000 $000 $000

Current

Dividend 13,157 17,625 (13,157) — 17,625

Employee benefits, including on-costs:

Annual leave 2,594 2,044 (2,118) 114 2,634

Long-service leave 650 527 (474) — 703

Voluntary separations 261 10 (73) — 198

16,662 20,206 (15,822) 114 21,160

Non-current

Employee benefits, including on-costs:

Long-service leave 5,797 526 — 7 6,330

5,797 526 — 7 6,330


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Note 15. Equity

The State Owned Corporations Act 1989 requires the Corporation to have two voting shareholders: the Treasurer and anotherMinister. Each shareholder must, at all times, have an equal number of shares in the Corporation.

The shares are held by each of the Corporation’s voting shareholders: The Hon. M.R. Egan, MLC, and The Hon. J. Della Bosca, MLC.


$000 $000 $000 $000

Equity

Contributed equity 125,542 125,542 125,542 125,542

Reserves 342,721 342,721 342,721 342,721

Retained profits 117,873 100,319 117,541 100,249

Total equity at the end of the financial year 586,136 568,582 585,804 568,512

Movement in contributed equity

Opening balance 125,542 125,542 125,542 125,542

Add/less movement — — — —

Closing balance 125,542 125,542 125,542 125,542

Movement in asset revaluation reserve

Opening balance 342,721 180,220 342,721 180,220

Add: Revaluation — 162,501 — 162,501

Closing balance 342,721 342,721 342,721 342,721

Movement in retained profits

Opening balance 100,319 87,161 100,249 87,161

Add: Net profit after income tax 35,179 26,315 34,917 26,245

135,498 113,476 135,166 113,406

Less: Dividends provided for or paid 14 (17,625) (13,157) (17,625) (13,157)

Closing balance 117,873 100,319 117,541 100,249


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Note 16. Financial instruments

a) Interest rate riskInterest rate risk is the risk that the value of the financial instrument will fluctuate due to changes in market interest rates. The consolidated entity’s exposure to interest rate risk and the effective interest rates of financial assets and liabilities, bothrecognised and unrecognised at the reporting date, are as follows:

2004 Fixed Interest rate maturing in:

Financial instruments Floating 1 year Over More Non- Total Weightedinterest or less 1 to than interest carrying average

rate 5 years 5 years bearing amount effectiveas per the intereststatement rate*

of financialposition

$000 $000 $000 $000 $000 $000 %

Financial assets

Cash 1,656 — — — 2 1,658 4.54%

Receivables 1,337 — — — 11,957 13,294 2.81%

Investments 56,434 — — — — 56,434 5.23%

Total financial assets 59,427 — — — 11,959 71,386

Financial liabilities

Payables — — — — 14,268 14,268 n/a

Interest-bearing liabilities — — 56,133 114,122 — 170,255 7.27%

Total financial liabilities — — 56,133 114,122 14,268 184,523

Off-balance-sheet financial instruments

Derivative financial instruments ** — — — — — —

Interest rate swaps nominal value — — 2,100 — — —

* Weighted average effective interest rate was computed on a monthly basis.** Notional principal amounts for futures contracts.


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Note 16. Financial instruments continued





$000 $000 $000 $000 $000 $000 %

Financial assets

Cash 2,243 — — — 2 2,245 4.20%

Receivables 1,312 — — — 12,994 14,306 3.51%

Investments 30,356 — — — — 30,356 4.85%

Total financial assets 33,911 — — — 12,996 46,907


Payables — — — — 14,622 14,622 n/a

Interest-bearing liabilities 2,744 28,950 73,214 64,500 — 169,408 7.48%

Total financial liabilities 2,744 28,950 73,214 64,500 14,622 184,030


Derivative financial instruments – receivable ** — — (400) (1,200) — —

Interest rate swaps

nominal value — 2,100 — — — —

* Weighted average effective interest rate was computed on a monthly basis.** Notional principal amounts for futures contracts


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b) Credit riskCredit risk is the risk of financial loss arising from another party to a contract or financial position failing to discharge theirfinancial obligation. The maximum exposure to credit risk is represented by the carrying amounts of the financial assetsincluded in the Statement of Financial Position.

Trade debtors are due within 28 days of service date. Pilotage debtors are due within 21 days of invoice date. Miscellaneousdebtors are due within seven days of invoice date. Lease rental payments are payable on or before the due date as stated ineach lease agreement. Trade and other creditors are settled within 28 days of invoice date.

Credit risk by classification of counter-party:

Governments Banks Other Total

2004 2003 2004 2003 2004 2003 2004 2003$000 $000 $000 $000 $000 $000 $000 $000

Financial assets

Cash 564 421 1,094 1,824 — — 1,658 2,245

Receivables 543 219 1 2 12,750 14,085 13,294 14,306

Investments 56,434 30,356 — — — — 56,434 30,356

Total financial assets 57,541 30,996 1,095 1,826 12,750 14,085 71,386 46,907

The only significant concentration of credit risk arises from investments with NSW TCorp, which represent 79% of totalfinancial assets (65% at 30 June 2003). The largest single debtor included in receivables totals $0.619 million ($0.440 millionat 30 June 2003) and is 1% of total financial assets (1% at 30 June 2003).

c) Net fair valueAll financial instruments are carried at net fair value unless stated otherwise. The aggregate net fair values of financial assetsand financial liabilities, both recognised and unrecognised, which are carried at balance date on a basis other than net fair value,are as follows:

Total carrying amount Aggregateas per the statement net fair valueof financial position

2004 2003 2004 2003$000 $000 $000 $000

Financial assets

Cash 1,658 2,245 1,658 2,245

Receivables 13,294 14,306 13,294 14,306

Investments 56,434 30,356 56,434 30,356

Total financial assets 71,386 46,907 71,386 46,907


Creditors 14,268 14,622 14,268 14,622

Interest-bearing liabilities 170,255 169,408 177,837 185,622

Total financial liabilities 184,523 184,030 192,105 200,244


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d) Derivative financial instrumentsThe nature of the consolidated entity’s business gives rise to gaps in maturity of its cash flows and to exposures arising frompossible changes in the re-pricing of financial positions on their maturity.

The identifiable risks that arise from such gaps, exposures and policies have been established to prudentially monitor and limitthose risks. In managing such risks, derivative financial instruments have been used. These instruments are managed by NSWTreasury Corporation.

A derivative financial instrument is a contract or agreement whose value is derived from the value of the underlying instrument,reference rate or index. Derivative financial instruments (futures contracts) are used to alter and modify the natural risksinherent in the statement of financial position.

Futures contracts are used to hedge financial exposures arising from interest-bearing liabilities, thereby limiting the risk thatchanges in interest rates will adversely affect profit. These are managed and executed by NSW Treasury Corporation.

Net exposureThe market values of transactions in derivative financial instruments outstanding at year-end are as follows:


Derivative financial instruments(payable)/receivable

Exchange traded futures (mark to market) — 59 — 59

Note 17. Capital expenditure commitments

Forward obligations under major contracts committed at 30 June 2004 but not otherwise brought to account have beenassessed at $0.049 million including GST ($0.781 million including GST at 30 June 2003). The $0.049 million includes inputtax credits of $0.004 million ($0.071 million at 30 June 2003) that are expected to be recoverable from the AustralianTaxation Office. They are payable as follows:

Not later than Later than Later thanone year one and not five years

later than five years

$000 $000 $000

Land and buildings 49 — —

Roadways — — —

Wharves, jetties and breakwaters — — —

Plant — — —

Total including GST 49 — —


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Note 18. Operating lease commitments


Payable

Operating lease expenditure commitments contracted for at balance date, but not recognised in the financial statements,are payable as follows:

Not later than one year 1,594 1,473 1,591 1,470

Later than one and not later than five years 4,599 5,288 4,594 5,281

Later than five years — 407 — 407

Total including GST 6,193 7,168 6,185 7,158

The above total includes input tax credits of $0.563 million ($0.632 million at 30 June 2003) that are expected to berecoverable from the Australian Taxation Office. The expenditure commitments relate to rent, computers and office equipment.


Receivable

Operating lease minimum income commitments for non-cancellable leases not recognised in the financial statements are receivable as follows:

Not later than one year 24,363 25,219 24,363 25,219

Later than one and not later than five years 78,054 74,025 78,054 74,025

Later than five years 161,882 155,598 161,882 155,598

Total including GST 264,299 254,842 264,299 254,842

The above includes GST output tax of $24.027 million ($23.167 million at 30 June 2003) that is expected to be paid to theAustralian Taxation Office. The income commitments relate to rent leases.

Leasing arrangementsAll receivable leases are entered into at commercial rates and terms. Regular market valuations and tendering processes arecarried out to ensure commercial arrangements are maintained.

Note 19. Contingent liabilities and contingent assets

The estimated value of liability claims against the consolidated entity at 30 June 2004 is $0.310 million ($0.430 million at 30 June 2003). The estimated recovery of these claims (contingent assets) is $0.060 million ($0.430 million as at 30 June 2003).It is anticipated that negotiated solutions will be possible for these claims.

Note 20. Consultancy fees

Total fees paid and payable to consultants engaged in capital and operating projects during the year was nil ($0.093 million in 2002–03).


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Note 21. Notes to the statement of cash flows

(a) Reconciliation of cashFor the purpose of the Statement of Cash Flows, cash includes cash on hand and in banks (net of any outstanding bank overdraft)and short-term investments in money market instruments which are classified as current assets. Cash at 30 June 2004, asshown in the Statement of Cash Flows, is reconciled to the related items in the Statement of Financial Position as follows:


Cash assets 1,658 2,245 1,554 1,677

Other financial assets (current investments) 56,434 30,356 56,236 30,168

Cash at the end of the financial year 58,092 32,601 57,790 31,845

(b) Reconciliation of profit on ordinary activities after income tax equivalent to net cash provided by operating activities

Profit on ordinary activities after income tax equivalent 35,179 26,315 34,917 26,245

Depreciation 13,270 12,326 13,157 12,286

Amortisation of discount on interest-bearing liabilities 505 874 505 874

Net loss/(profit) on sale of interest-bearing liabilities 342 25 342 25

Net loss/(profit) on sale of non-current assets 29 (3) 29 (3)

Assets written off 10 1,372 7 1,372

49,335 40,909 48,957 40,799

Net movement in assets and liabilities applicable to operating activities

(Increase)/decrease in receivables 1,012 (497) 1,000 41

(Increase)/decrease in inventories 33 (62) — —

(Increase)/decrease in other assets (2,071) 1,612 (2,036) 1,913

(Decrease)/increase in payables 5,314 (1,109) 5,256 (1,737)

(Decrease)/increase in provisions (725) 2,707 (694) 1,967

Net cash provided by operating activities 52,898 43,560 52,483 42,983

The Corporation had the following credit facilities in place at 30 June 2004:

– A guarantee facility for $100,000 with the Commonwealth Bank of Australia.

– A credit card facility for $60,000 with the Commonwealth Bank of Australia.


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Note 22. Controlled entity

The consolidated financial statements at 30 June 2004 include the following controlled entity. The financial years for thecontrolled entity are the same as those for the parent entity.

Name of Controlled Entity Notes Place of Incorporation Percentage of shares held at 30 June 2004

Sydney Pilot Service Pty Ltd (a) Australia 100

(a) The Sydney Pilot Service Pty Ltd commenced operations on 26 October 2002 as a wholly owned subsidiary to carry out pilotage services in Sydney Harbour and Botany Bay.

(b) Key figures for the Corporation and its controlled entity:

Total revenue from Profit from ordinary Total assetsordinary activities activities before at 30 June

income tax expense

2004 2003 2004 2003 2004 2003$000 $000 $000 $000 $000 $000

Sydney Ports Corporation 132,374 119,723 51,415 41,111 726,505 729,332

Sydney Pilot Service Pty Ltd 9,096 5,643 374 119 2,214 1,281

Note 23. Directors’ remuneration and loans

Directors’ remuneration includes emoluments and other benefits paid, or due and payable, to Directors but does not includeamounts paid as salary to full-time Directors. Directors’ remuneration for the Corporation for the year was $0.295 million($0.237 million in 2002–03). Directors’ remuneration for the subsidiary company for the year was $0.019 million ($0.018million in 2002–03). Three Directors of the Corporation were also Directors of the subsidiary company. During the year noloans were made to Directors.

Note 24. Related party transactions

Wholly Owned GroupThe Corporation established a wholly owned subsidiary, Sydney Pilot Service Pty Ltd, which commenced operations on 26 October 2002 to carry out pilotage services in Sydney Harbour and Botany Bay. An injection of capital was made, at thattime, of $1.120 million in order to purchase assets and fund working capital of the subsidiary. Thirty-eight employees wereemployed by the subsidiary company. During 2003–04 a loan of $0.550 million was given to the subsidiary company by theCorporation.

Other TransactionsDuring the financial year a number of transactions occurred between the Corporation and the subsidiary company. Expenditurepaid by the Corporation on behalf of the subsidiary company was recovered at cost. Management, accounting, humanresources, information technology and other services were provided to the subsidiary company for a management fee based oncost recovery.

DirectorsDetails of Directors’ remuneration are set out in Note 23. No transactions occurred by the consolidated entity with Director-related entities. Three Directors of the Corporation were also Directors of the subsidiary company.

Note 25. Events occurring after reporting date

In accordance with Australian Accounting Standard AAS8, Events Occurring After Reporting Date, there are no known eventsoccurring after the reporting date that materially affect the financial statements.

Note 26. Segment reporting

In accordance with AASB1005, Segment Reporting, the following information is provided:

Business segments: The consolidated entity operates in a single business segment – the management of port facilities for theshipping community including the provision of navigational and operational safety needs of commercial shipping.


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Geographical segments: The consolidated entity operates in the single geographical location of NSW.

Note 27. AASB 1047 Disclosing the impacts of adopting Australian equivalents to internationalfinancial reporting standards

The Corporation will apply the Australian Equivalents to International Financial Reporting Standards (AIFRS) from the reportingperiod beginning 1 July 2005. The Corporation is managing the transition to the new standards by allocating internal resourcesand engaging consultants to analyse the pending standards and Urgent Issues Group Abstracts to identify key policies,procedures, systems and financial impacts affected by the transition.

As a result of this exercise, the Corporation has taken the following steps to manage the transition to International AccountingStandards (IAS):

– A project team has been established and is overseeing the transition. The Financial Accountant is the project manager andmeets regularly with the project team to discuss progress against the plan.

– The following phases that need to be undertaken have been identified:

– A detailed diagnostic review of all accounting policies and procedures to identify differences between current accountingstandards and IAS

– Advising the Board of progress throughout the project and of the major areas of impact identified

– Preparing a balance sheet at 1 July 2004 under IAS for comparative purposes

– Preparing financial statements under IAS for 2004–05 for comparative purposes

– Identifying the system changes required

– Meeting NSW Treasury target dates for the completion of certain tasks, and

– Providing staff with internal and external training.

– To date, the following progress has been made:

– A detailed diagnostic review of all accounting policies and procedures to identify differences between current accountingstandards and IAS has been completed by Ernst & Young.

– The Board was advised at the June 2004 Board meeting of work carried out to date and of the major areas of impact thathave been identified. The Board will continue to receive regular updates throughout the project.

– A draft opening balance sheet at 1 July 2004 under IAS has been prepared, based on information known to date.

– System changes have been identified and will be continually reviewed throughout the project.

– To date, all NSW Treasury target dates have been met. A draft opening balance sheet at 1 July 2004 under IAS is requiredto be sent to NSW Treasury by 15 December 2004.

– Ernst & Young has conducted internal training courses for relevant staff on specific areas of change. Staff members havealso attended external training courses. Training will continue and will be widened to ensure that all areas of theCorporation affected will be appropriated covered.

NSW Treasury is assisting Government agencies to manage the transition by developing policies, including mandates of options;presenting training seminars to all agencies; providing a website with up-to-date information to keep agencies informed of any newdevelopments; and establishing an IAS Agency Reference Panel to facilitate a collaborative approach to managing the change.

The Corporation has identified a number of significant differences in accounting policies that will arise from adopting AIFRS.Some differences arise because AIFRS requirements are different from existing AASB requirements. Other differences couldarise from options in AIFRS. To ensure consistency at the whole-of-government level, NSW Treasury has advised the options itis likely to mandate, and will confirm these during 2004–05. This disclosure reflects these likely mandates.

The Corporation’s accounting policies may also be affected by a proposed standard designed to harmonise accountingstandards with Government Finance Statistics (GFS). This standard is likely to change the impact of AIFRS and significantlyaffect the presentation of the income statement. However, the impact is uncertain because it depends on when this standard isfinalised and whether it can be adopted in 2005–06.

Based on current information, the following key differences in accounting policies are expected to arise from adopting AIFRS:

– AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards requires retrospectiveapplication of the new AIFRS from 1 July 2004, with limited exemptions. Similarly, AASB 108 Accounting Policies, Changesin Accounting Estimates and Errors requires voluntary changes in accounting policy and correction of errors to be accountedfor retrospectively by restating comparatives and adjusting the opening balance of accumulated funds. This differs fromcurrent Australian requirements because such changes must be recognised in the current period through profit or loss,unless a new standard mandates otherwise.


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Note 27. AASB 1047 Disclosing the impacts of adopting Australian equivalents to internationalfinancial reporting standards continued

– AASB 110 Events after the balance sheet date states that only dividends ‘declared’ or appropriately ‘authorised’ before thereporting date can be recognised. This is more restrictive than the current approach which is based on ‘valid expectations’.However, this change is not expected to impact on dividend recognition as the signing of the Statement of Corporate Intentbefore the reporting date to which it relates ‘authorises’ the dividend, and any change in the amount of the dividend after thereporting date constitutes an ‘adjusting event after the reporting date’.

However, the amount of the dividend may be affected by other AIFRS, such as AASB 139 Financial Instrument Recognitionand Measurement and AASB 119 Employee Benefits (refer below) as these standards may impact on retained earnings (onfirst adoption) and the amount and volatility of profit/loss.

– AASB 112 Income Taxes requires a balance sheet approach where the entity must identify differences between theaccounting and tax value of assets and liabilities. The previous approach was to account for tax by adjusting accounting profit for temporary and permanent differences to derive taxable income. The AASB 112 approach might alter the quantumof tax assets and liabilities recognised.

In addition, the income tax expense and deferred tax assets and liabilities might be affected by other AIFRS to the extent that they impact on the balance sheet and profit or loss.

– AASB 116 Property, Plant and Equipment requires the cost and fair value of property, plant and equipment to be increased toinclude restoration costs, where restoration provisions are recognised under AASB 137 Provisions, Contingent Liabilities andContingent Assets.

The Corporation must account for asset revaluation increments and decrements on an individual asset basis, rather than on a class basis. This change may decrease accumulated funds.

– AASB 119 Employee Benefits requires the defined benefit obligation to be discounted using the government bond rate ateach reporting date, rather than the long-term expected rate of return on plan assets. This will increase the amount and thefuture volatility of the unfunded superannuation liability and the volatility of the employee benefit expense.

– AASB 132 Financial Instrument Disclosure and Presentation prohibits in-substance defeasance. The Corporation can nolonger offset financial assets and financial liabilities when financial assets are set aside in trust by a debtor for the purposesof discharging an obligation, without assets having been accepted by the creditor in settlement of the obligation. This willhave the effect of increasing assets and liabilities but will have no net impact on equity.

– AASB 136 Impairment of Assets requires an entity to assess at each reporting date whether there is any indication that an asset (or cash-generating unit) is impaired and if such indication exists, requires the entity to estimate the recoverableamount. However, the effect of this Standard should be minimal because all of the substantive principles in AASB 136 arealready incorporated in Treasury’s policy Valuation of Physical Non-Current Assets at Fair Value.

– AASB 139 Financial Instrument Recognition and Measurement results in the recognition of financial instruments that werepreviously off balance sheet, including derivatives. The standard adopts a mixed measurement model and requires financialinstruments held for trading and available for sale to be measured at fair value, and requires valuation changes to berecognised in profit or loss or equity, respectively. Previously they were recognised at cost. This may increase the volatility ofthe operating result and balance sheet. The standard also includes stricter rules for the adoption of hedge accounting, andwhere these are not satisfied, movements in fair value will impact the income statement.

To achieve full harmonisation with GFS, entities would need to designate all financial instruments at fair value through profitor loss. However, at this stage it is unclear whether this option will be available under the standard and, if available, whetherTreasury will mandate this option for all agencies.

– AASB 140 Investment Property requires investment property to be measured at cost or fair value. NSW Treasury is likely to mandate the adoption of fair value. In contrast to the current treatment as an asset classified within property, plant andequipment, investment property recognised at fair value is not depreciated and changes in fair value are recognised in theincome statement.

End of audited financial statements


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In the opinion of the Directors of Sydney Ports Corporation:

1 The 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 2004 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 Accounting Standards, Urgent Issues Group Consensus Views and other mandatory andstatutory reporting requirements including Part 3 of the Public Finance and Audit Act 1983 and the associatedrequirements of the Public Finance and Audit Regulation 2000

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 theFinancial Statements to be misleading or inaccurate.

Signed in accordance with a resolution of the Directors.

D.L.P. Field G.J. MartinChairman Chief Executive Officer

Date: 14 October 2004 Date: 14 October 2004

Sydney Ports CorporationDirectors’ Statement

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Land is disclosed in the financial statements under the asset grouping ‘Land and buildings’ within property, plant andequipment. In the following summary, land has been separated from buildings and other non-current assets to show land value and usage in terms of the statement of financial position valuations.

Consolidated Corporation2004 2004$000 $000

Land and buildings

Land 447,730 447,730

Buildings 70,208 70,208

Total 517,938 517,938

Other property, plant and equipment

Roadways 9,041 9,041

Wharves, jetties and breakwaters 178,019 178,019

Plant 23,721 21,507

Total property, plant and equipment (as per statement of financial position) 728,719 726,505

Sydney Ports CorporationStatement of land holdings at 30 June 2004

Sydney Pilot Service Pty LtdFinancial Statementsfor the year ended 30 June 2004

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Contents

Statement of Financial Performance 91

Statement of Financial Position 92

Statement of Cash Flows 93

Notes to and forming part of the financial statements 94

1 Summary of significant accounting policies 94

2 Revenue from ordinary activities 96

3 Expenditure from ordinary activities 96

4 Taxation 97

5 Receivables 98

6 Inventories 99

7 Other financial assets 99

8 Other current assets 99

9 Property, plant and equipment 100

10 Payables 100

11 Interest-bearing liabilities 101

12 Tax equivalent liabilities 101

13 Provisions 102

14 Equity 102

15 Financial instruments 103

16 Capital expenditure commitments 105

17 Operating lease commitments 105

18 Contingent liabilities and contingent assets 105

19 Consultancy fees 106

20 Notes to the statement of cash flows 106

21 Directors’ remuneration and loans 106

22 Related party transactions 107

23 Events occurring after reporting date 107

24 Segment reporting 107

25 International financial reporting standards 107

Directors’ Statement 109

Independent audit report 110

Beginning of audited financial statements

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Note 2004 2003$000 $000

Revenue from ordinary activities 2 9,096 5,643

Borrowing costs expense 3 20 0

Other expenses from ordinary activities 3 8,702 5,524

Total expenditure from ordinary activities 8,722 5,524

Profit from ordinary activities before income tax equivalent expense 374 119

Income tax equivalent expense relating to ordinary activities 4 (a) 112 49

Net profit attributable to members of Sydney Pilot Service Pty Ltd 262 70

Total changes in equity other than those resulting from transactions with owners as owners 14 262 70

Note: Sydney Pilot Service Pty Ltd commenced operations on 26 October 2002.

Sydney Pilot Service Pty LtdStatement of Financial Performance for the year ended 30 June 2004


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Note 2004 2003$000 $000

Current assets

Cash assets 20 (a) 104 568

Receivables 5 733 685

Inventories 6 29 62

Other financial assets 7 198 188

Other 8 328 92

Total current assets 1,392 1,595

Non-current assets

Receivables 5 260 —

Property, plant and equipment 9 2,214 1,281

Deferred tax equivalent assets 4 (c) — 209

Total non-current assets 2,474 1,490

Total assets 3,866 3,085

Current liabilities

Payables 10 1,148 1,155

Current tax equivalent liabilities 4 (b) & 12 — 162

Provisions 13 198 188

Total current liabilities 1,346 1,505

Non-current liabilities

Payables 10 15 —

Interest-bearing liabilities 11 550 —

Deferred tax equivalent liabilities 4 (d) & 12 — 7

Provisions 13 503 383

Total non-current liabilities 1,068 390

Total liabilities 2,414 1,895

Net assets 1,452 1,190

Equity

Contributed equity 14 1,120 1,120

Reserves 14 — —

Retained profits 14 332 70

Total equity 14 1,452 1,190


Sydney Pilot Service Pty LtdStatement of Financial Position as at 30 June 2004


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Note 2004 2003$000 $000

Inflow/ Inflow/(Outflow) (Outflow)

Cash flows from operating activities

Cash receipts in the course of operations 9,864 5,987

Cash payments in the course of operations (9,225) (5,430)

Interest received 28 20

Borrowing costs (20) —

Income tax equivalent paid 12 (232) —

Net cash provided by operating activities 20 (b) 415 577

Cash flows from investing activities

Payments for property, plant and equipment (1,419) (941)

Proceeds from sale of property, plant and equipment — —

Proceeds from parent entity — 1,120

Net cash used in investing activities (1,419) 179

Cash flows from financing activities

Loan from parent entity 550 —

Repayment of borrowings — —

Dividends paid — —

Net cash used in financing activities 550 —

Net increase /(decrease) in cash held (454) 756

Cash at the beginning of the financial year 756 —

Cash at the end of the financial year 20 (a) 302 756


Sydney Pilot Service Pty LtdStatement of Cash Flows for the year ended 30 June 2004


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The following summary explains the significant accountingpolicies that have been adopted in the preparation of thefinancial statements.

(a) Basis of accountingThe financial statements are a general-purpose financial reportwhich has been prepared in accordance with AustralianAccounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent IssuesGroup Consensus views and the Public Finance and Audit Actand Regulation 2000.

Sydney Pilot Service Pty Ltd commenced operations on 26 October 2002 as a wholly owned subsidiary of SydneyPorts Corporation. In this financial report, Sydney Pilot ServicePty Ltd will be referred to as ‘SPS’; Sydney Ports Corporationas ‘the Corporation’. The economic entity comprising SPS andthe Corporation will be collectively referred to as ‘theconsolidated entity’.

The financial report has been prepared on the basis of full accrual accounting using historical cost accountingconventions. The accounting policies adopted are consistentwith those of the previous period. Because SPS onlycommenced operations on 26 October 2002, comparativeinformation does not cover a whole financial year.

SPS, because of the scale of its operations, is a smallproprietary company under the Corporations Act 2001 and is not required under this Act to prepare a general-purposefinancial report. SPS is controlled by a State OwnedCorporation (SOC), so the company must comply with SOC Acts and the Public Finance and Audit Act 1983.Accordingly, the Public Finance and Audit Act 1983 requiresSPS to prepare a general-purpose financial report.

(b) Cash in the Statement of Cash FlowsFor the purposes of the Statement of Cash Flows, cashincludes cash on hand and in banks (net of any outstandingbank overdraft) and short-term investments in securities withthe NSW Treasury Corporation, which are classified undercurrent assets. Cash at the end of the period, as shown in theStatement of Cash Flows, is reconciled to the relevant itemsin the Statement of Financial Position (refer to note 20a).

(c) Bad and doubtful debtsBad debts are written off against the provision for doubtfuldebts after thorough investigation and exhaustion of recoveryprocesses. Regular reviews were conducted during the yearto determine the adequacy of the level of the provision fordoubtful debts.

(d) InventoriesInventories have been valued at the lower of cost and netrealisable value on an item-by-item basis.

(e) Other financial assets (investments)Investments are carried at net fair value. Interest revenue isrecognised when receivable.

(f) Operating leasesOperating lease assets are not capitalised and rentalpayments are recognised as an expense in the period inwhich they are consumed.

(g) Valuation of property, plant and equipmentAll property, plant and equipment have been acquired atmarket value since the commencement of operations (26October 2002). All property assets and items of plant andequipment are recorded at fair value because the written-down value approximates fair value.

(h) Capitalisation of property, plant and equipmentProperty, plant and equipment in excess of $1000 arecapitalised where they are expected to provide futureeconomic benefits for more than one reporting period. Onlythose assets completed and ready for service are taken intothe property, plant and equipment accounts. The remainingcapital expenditures are carried forward as construction-in-progress and are included in property, plant and equipment inthe Statement of Financial Position.

(i) Depreciation of property, plant and equipmentDepreciation has been calculated on depreciable assets,using rates estimated to write off the assets over theirremaining useful lives on a straight-line basis in accordancewith Australian Accounting Standard AAS4, Depreciation of Non-Current Assets. The remaining useful lives of assetswere reassessed during the year with no changes required.The expected design life of new depreciable assets as at 30 June 2004 is:

– Plant 2 to 40 years

(j) Retirement benefits (superannuation)SPS contributes to employee superannuation funds inaddition to contributions made by employees. Allsuperannuation funds are accumulation schemes. Paymentsare applied towards the accruing liability for employeesuperannuation and are charged against revenue.

(k) Interest-bearing liabilitiesInterest-bearing liabilities consist of a loan from the parententity. The loan has no maturity date and interest is chargedat the official cash rate.

(l) Employee benefitsBenefits for annual leave have been provided at the amountexpected to be paid when the liabilities are settled.Appropriate on-costs are included. Benefits for long-serviceleave have been measured using the present value ofexpected future payments to be made for services providedby employees up to the reporting date. Consideration is givento expected future wage and salary levels, experience ofemployee departures and periods of service. Expected futurepayments are discounted using market yields at the reportingdate on national government bonds and terms to maturity thatmatch, as closely as possible, the estimated future cashoutflows. Appropriate on-costs are included. The portionexpected to be settled within 12 months of the reporting dateis recognised as the current provision; the portion expected tobe settled more than 12 months from the reporting date isrecognised as the non-current provision. The average sickleave taken by employees based on past experience is lessthan the entitlement accruing each period. It is consideredimprobable that existing accumulated sick leave entitlementswill be used and therefore no liability has been recognised.

Sydney Pilot Service Pty LtdNotes to and forming part of the financial statements

Note 1. Summary of significant accounting policies

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(m) Revenue recognitionRevenue is recognised to the extent that it is probable thatthe economic benefits will flow to the entity and the revenuecan be reliably measured. The following specific recognitioncriteria must also be met before revenue is recognised:

– Revenue from the rendering of a service is recognised uponthe delivery of the service to the customer.

– Interest revenue is recognised when receivable.

– Proceeds from the sale of assets are recognised upon thedelivery of the assets to the purchaser.

– Assets received at no cost are recorded at their fair valuewhen received, and this amount is included in revenue.

– Goods or services exchanged that are of a different natureand value, are recognised at fair value when the followingcriteria have been met:

– the entity has passed control of the goods or otherassets to SPS

– it is probable that the economic benefits comprising theconsideration will flow to SPS, and

– the amount of revenue can be measured reliably.

(n) Income Tax EquivalentSPS and its Australian parent, the Corporation, have decidedto implement the tax consolidation legislation from 1 July2003. The Australian Taxation Office has not been notified ofthis decision but will be advised when the consolidated taxreturn is lodged in December 2004. As a consequence, theCorporation, as the head entity in the consolidated group,recognises current and deferred tax amounts relating totransactions, events and balances of SPS as if thosetransactions, events and balances were its own, in addition tothe current and deferred tax amounts arising in relation to itsown transactions, events and balances. Amounts receivable orpayable, under an accounting sharing agreement between thetax consolidated entities, are recognised separately as tax-related amounts receivable or payable. Expenses andrevenues arising under the tax-sharing agreement arerecognised as a component of income tax expense.

(o) DividendSPS reviews its financial performance for the accountingperiod and recommends to its shareholder, if applicable, anappropriate dividend payment in light of the current financialposition and longer-term financial commitments.

(p) Financial instrumentsFinancial instruments give rise to positions that are financialassets of either SPS or its counterparty and financial liabilities(or equity instruments) of the other party. These include cash,receivables, investments, creditors, interest-bearing liabilitiesand derivative financial instruments (futures contracts). Inaccordance with AAS33, Presentation and Disclosure ofFinancial Instruments, information is disclosed in note 15about credit risk and interest rate risk of financial instruments.All such amounts are carried in the accounts at net fair valueunless otherwise stated. The specific accounting policy foreach class of such financial instruments is stated as follows:

Classes of instruments recorded at cost comprise:

– cash

– receivables, and

– payables.

Classes of instruments recorded at market or net fair value comprise:

– investments, and

– derivative financial instruments.

All financial instruments, including revenue, expenses or othercash flows arising from instruments, are recognised on anaccrual basis.

(q) Goods and Services TaxRevenues, expenses and assets are recognised net of theamount of Goods and Services Tax (GST), except where theamount of GST incurred is not recoverable from the AustralianTaxation Office (ATO). In these circumstances the GST isrecognised as part of the cost of acquisition of the asset or aspart of an expense item. Receivables and payables are statedwith the amount of GST included. Accrual items are alsoshown in the Statement of Financial Position inclusive of GST where applicable.

The net amount of GST owing to the ATO, or refundable from the ATO, is shown as a Payable or Receivable in theStatement of Financial Position. Cash flows are included inthe statement of cash flows on a gross basis. The GSTcomponent of cash flows arising from investing and financingactivities which is recoverable from or payable to the ATO isclassified as operating cash flow.

(r) Rounding amounts to the nearest thousand dollarsIn the financial statements, all amounts are recorded inAustralian Dollars and have been rounded to the nearestthousand dollars (shown as $000).

Sydney Pilot Service Pty LtdNotes to and forming part of the financial statements continued


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Note 2. Revenue from ordinary activities

2004 2003$000 $000

Revenue from operating activities

Pilotage revenue 8,871 5,524

8,871 5,524

Other revenue

Interest received 28 22

Miscellaneous sources 197 97

225 119

Total revenue from ordinary activities 9,096 5,643

Note 3. Expenditure from ordinary activities

Note 2004 2003$000 $000

Salaries and wages 4,814 3,046

Employee benefits expense:

Annual leave 558 338

Long-service leave 13 141 107

Retirement benefits (superannuation) – accumulation 220 140

Other expenses from ordinary activities:

Service contractors 402 265

Utilities and communications 22 14

Indirect taxes 443 191

Depreciation 9 113 40

Doubtful debts 5 (b) 1 12

Auditors’ remuneration from review of the financial reports 17 15

Directors’ remuneration 21 19 18

Consultants’ fees — —

Rental on operating leases 330 223

Insurance 341 171

Materials 464 358

Other operations and services 817 586

Other expenses from ordinary activities 8,702 5,524

Borrowing costs expense 20 —

Total expenditure from ordinary activities 8,722 5,524


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Note 4. Taxation

Note 2004 2003$000 $000

(a) Income tax equivalent expense

The difference between income tax equivalent expense provided in the financial statements and the prima facie income tax equivalent expense is reconciled as follows:

Profit on ordinary activities before income tax equivalent 374 119

Prima facie tax thereon at 30% 112 36

Add/(less) tax effect of permanent and other differences:

Other — 13

Total income tax equivalent attributable to operating profit 112 49

Total income tax equivalent comprises movements in:

Current tax equivalent liabilities 155 162

Deferred tax equivalent liabilities 8 7

Deferred tax equivalent assets (51) (209)

Deferred tax equivalent assets generated on acquisition — 89

112 49

(b) Current tax equivalent liabilities

Opening balance 162 —

Income tax equivalent paid (232) —

Over provision for income tax equivalent in prior years — —

Transfer out to parent entity (85) —

Income tax equivalent payable on operating profit 155 162

Closing balance 12 — 162

(c) Deferred tax equivalent assets


Provisions for employee entitlements 121 27

Accrued expenditure 123 85

Other 16 97


— 209

(d) Deferred tax equivalent liabilities


Depreciation (2) —

Income receivable 17 7


12 — 7

The tax balances have been transferred to the parent entity because of the transition to tax consolidation. Therefore the tax balances will be nil in future years.


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Note 4. Taxation continued

Tax consolidation

SPS and its Australian parent, the Corporation, have decided to implement the tax consolidation legislation from 1 July 2003.The Australian Taxation Office has not been notified of this decision but will be advised when the consolidated tax return islodged in December 2004. As a consequence, the Corporation, as the head entity in the consolidated group, recognises currentand deferred tax amounts relating to transactions, events and balances of SPS as if those transactions, events and balanceswere its own, in addition to the current and deferred tax amounts arising in relation to its own transactions, events and balances.Amounts receivable or payable, under an accounting sharing agreement between the tax consolidated entities, are recognisedseparately as tax-related amounts receivable or payable. Expenses and revenues arising under the tax-sharing agreement arerecognised as a component of income tax expense.

Note 5. Receivables

2004 2003$000 $000

Current

Trade debtors 636 588

Other debtors 10 54

Accrued income (a) 100 55

746 697

Less: Provision for doubtful debts (b) (13) (12)

733 685

Non-current

Debtors 260 —

260 —

(a) Accrued income comprises:

Operating income 99 53

Bank interest 1 2

Total accrued income 100 55

(b) Provision for doubtful debts – current


Add: Current year’s charge 1 12

13 12

Less: Bad debts written off — —

Closing balance 13 12

Based on a review of debtors, an appropriate provision is carried for doubtful debts.


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Note 6. Inventories

2004 2003$000 $000

Stores and materials:

– at cost 29 62

29 62

Inventory is classified as current as all items are expected to be consumed in the next financial year.

Note 7. Other financial assets

2004 2003Net Fair Net Fair

Value Value$000 $000

The investment is:

Cash Facility Trust 198 188

198 188

SPS has investments in NSW Treasury Corporation’s (TCorp) Hour-Glass Cash Facility Trust. Investments are represented by a number of units in the managed facility. TCorp appoints and monitors fund managers and establishes and monitors theapplication of appropriate investment guidelines. These investments are generally able to be redeemed with up to 24 hoursprior notice. The value of the investments held can increase or decrease depending on market conditions. The value that bestrepresents the maximum credit risk exposure is the net fair value. The value of the above investments represents the share ofthe value of the underlying assets of the facility and is stated at net fair value.

Note 8. Other current assets

2004 2003$000 $000

Prepayments

Operating expenditure prepayments 212 86

Annual leave (paid in advance) 116 6

328 92


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Note 9. Property, plant and equipment

2004 2003$000 $000

Carrying Amounts

Plant (at fair value) 2,310 771

Less: Accumulated depreciation (152) (40)

2,158 731

Add: Construction in progress 56 550

Total property, plant and equipment 2,214 1,281

Movement in property, plant and equipment:

Plant


Add: From construction in progress 1,543 771

2,274 771

Less: Depreciation charge (113) (40)

Disposals — —

Write-offs (3) —

Closing balance 2,158 731

Movement in construction in progress:


Add: Acquisitions 1,049 1,321

1,599 1,321

Less: To property, plant and equipment (1,543) (771)


Note 10. Payables

2004 2003$000 $000

Current

Trade creditors 54 15

Other creditors 1,094 1,140

1,148 1,155

Non-current

Creditors 15 —

15 —


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Note 11. Interest-bearing liabilities

2004 2003$000 $000

Non-current

Loan from parent entity 550 —

550 —

During the year SPS received a $550,000 loan from the parent entity. There is no maturity date for this loan.

Note 12. Tax equivalent liabilities

2004 2003$000 $000

Current

Current tax equivalent liabilities — 162

Non-current

Deferred tax equivalent liabilities — 7

Movement in tax liabilities Balance Current Payments Transfers* Balance30 June charge to 30 June

2003 revenue 2004$000 $000 $000 $000 $000

Current

Current tax equivalent liabilities 162 155 (232) (85) —

Non-current

Deferred tax equivalent liabilities 7 8 — (15) —

* The tax balances have been transferred to the parent entity following the implementation of the tax consolidation legislation from 1 July 2003.


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Note 13. Provisions

2004 2003$000 $000

CurrentEmployee benefits, including on-costs 198 188

198 188

Non-currentEmployee benefits, including on-costs 503 383

503 383

Movement in provisions Balance Current Payments Other Balance30 June charge to transfers 30 June

2003 revenue 2004$000 $000 $000 $000 $000

CurrentEmployee benefits, including on-costs:

Long-service leave — 21 (21) — —

Voluntary separations 188 10 — — 198

188 31 (21) — 198

Non-currentEmployee benefits, including on-costs:

Long-service leave 383 120 — — 503

383 120 — — 503

Annual leave – refer note 8 for prepayment.

Note 14. Equity

SPS was established as a wholly owned subsidiary of the Corporation on 30 July 2002, commenced operations on 26 October 2002 and has one shareholder; Sydney Ports Corporation.

2004 2003$000 $000

EquityContributed equity 1,120 1,120

Reserves — —

Retained profits 332 70

Total equity at the end of the financial year 1,452 1,190

Movement in contributed equityOpening balance 1,120 —

Add /less movement — 1,120

Closing balance 1,120 1,120

Movement in retained profitsOpening balance 70 —

Add net profit after income tax 262 70



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Note 15. Financial instruments

a) Interest rate risk

Interest rate risk is the risk that the value of the financial instrument will fluctuate because of changes in market interest rates.SPS’s exposure to interest rate risk and the effective interest rates of financial assets and liabilities, both recognised andunrecognised at the reporting date, are as follows:





$000 $000 $000 $000 $000 $000 %

Financial assets

Cash 103 — — — 1 104 4.39%

Receivables — — — — 724 724 n/a

Investments 198 — — — — 198 5.23%

Total financial assets 301 — — — 725 1,026


Payables — — — — 810 810 n/a

Interest-bearing liabilities 550 — — — — 550 5.11%

Total financial liabilities 550 — — — 810 1,360



Interest rate swap nominal value — — — — — —

* Weighted average effective interest rate was computed on a monthly basis.** Notional principal amounts for futures contracts.


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$000 $000 $000 $000 $000 $000 %

Financial assets

Cash 568 — — — — 568 4.15%

Receivables — — — — 631 631 n/a

Investments 188 — — — — 188 4.85%

Total financial assets 756 — — — 631 1,387


Payables — — — — 1,079 1,079 n/a

Interest-bearing liabilities — — — — — — n/a

Total financial liabilities — — — — 1,079 1,079



Interest rate swap nominal value — — — — — —

* Weighted average effective interest rate was computed on a monthly basis.** Notional principal amounts for futures contracts

b) Credit riskCredit risk is the risk of financial loss arising from another party to a contract or financial position failing to discharge theirfinancial obligation. The maximum exposure to credit risk is represented by the carrying amounts of the financial assetsincluded in the Statement of Financial Position.

Trade debtors are due within 21 days of invoice date. Miscellaneous debtors are due within seven days of invoice date. Tradeand other creditors are settled within 28 days of invoice date.

Credit risk by classification of counter-party:

Governments Banks Other Total

2004 2003 2004 2003 2004 2003 2004 2003$000 $000 $000 $000 $000 $000 $000 $000

Financial assets

Cash 1 — 103 568 — — 104 568

Receivables 68 27 1 2 655 602 724 631

Investments 198 188 — — — — 198 188

Total financial assets 267 215 104 570 655 602 1,026 1,387

The only significant concentration of credit risk arises from cash held with NSW Treasury Corporation, which is 19% of totalfinancial assets (41% with Commonwealth Bank at 30 June 2003). The largest single debtor included in receivables totals$0.075 million ($0.060 million at 30 June 2003) and is 7% of total financial assets (4% at 30 June 2003).


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c) Net fair valueAll financial instruments are carried at net fair value unless stated otherwise. The aggregate net fair values of financial assetsand financial liabilities, both recognised and unrecognised, which are carried at balance date on a basis other than net fair value,are as follows:

Total carrying amount Aggregateas per the statement net fair valueof financial position

2004 2003 2004 2003$000 $000 $000 $000

Financial assets

Cash 104 568 104 568

Receivables 724 631 724 631

Investments 198 188 198 188

Total financial assets 1,026 1,387 1,026 1,387


Creditors 810 1,079 810 1,079

Interest-bearing liabilities 550 — 550 —

Total financial liabilities 1,360 1,079 1,360 1,079

Note 16. Capital expenditure commitments

Forward obligations under major contracts committed at 30 June 2004 but not otherwise brought to account have beenassessed at nil ( nil at 30 June 2003).

Note 17. Operating lease commitments

2004 2003$000 $000

Payable

Operating lease expenditure commitments contracted for at balance date, but not recognised in the financial statements are payable as follows:

Not later than one year 3 3

Later than one and not later than five years 5 7

Later than five years — —

Total including GST 8 10

The above total includes input tax credits of $673.00 ($923.00 at 30 June 2003) that are expected to be recoverable from theAustralian Taxation Office. The expenditure commitments relate to office equipment.

Note 18. Contingent liabilities and contingent assets

The estimated value of liability claims against SPS at 30 June 2004 is nil (nil at 30 June 2003).


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Note 19. Consultancy fees

No fees were paid or payable to consultants during the year (nil in 2002–03).

Note 20. Notes to the statement of cash flows

(a) Reconciliation of cashFor the purpose of the Statement of Cash Flows, cash includes cash on hand and in banks (net of any outstanding bankoverdraft) and short-term investments in money market instruments which are classified as current assets. Cash at 30 June 2004as shown in the Statement of Cash Flows is reconciled to the related items in the Statement of Financial Position as follows:

2004 2003$000 $000

Cash assets 104 568

Other financial assets (current investments) 198 188

Cash at the end of the financial year 302 756

(b) Reconciliation of profit on ordinary activities after income tax equivalent to net cash provided by operating activities

Profit on ordinary activities after income tax equivalent 262 70

Depreciation 113 40

Amortisation of discount on interest-bearing liabilities — —

Net loss/(profit) on sale of interest-bearing liabilities — —

Net loss/(profit) on sale of non-current assets — —

Assets written off 3 —

378 110

Net movement in assets and liabilities applicable to operating activities

(Increase)/decrease in receivables (352) (631)

(Increase)/decrease in inventories 33 (62)

(Increase)/decrease in other assets (27) (301)

(Decrease)/increase in payables 422 721

(Decrease)/increase in provisions (39) 740

Net cash provided by operating activities 415 577

Note 21. Directors’ remuneration and loans

Directors’ remuneration includes emoluments and other benefits paid or due and payable to Directors but does not includeamounts paid as salary to full-time Directors. Directors’ remuneration for the year was $0.019 million ($0.018 million in 2002–03). Three Directors of SPS were also directors of the Corporation. During the year no loans were made to Directors.


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Note 22. Related party transactions

Wholly owned groupSydney Ports Corporation established a wholly owned subsidiary, Sydney Pilot Service Pty Ltd, on 30 July 2002 to carry out pilotageservices in Sydney Harbour and Botany Bay. SPS commenced operations on 26 October 2002. An injection of capital was made of$1.120 million in order to purchase assets and fund working capital of the subsidiary. Thirty-eight employees were employed by thesubsidiary company. During 2003–04 a loan from the Corporation (the parent entity) was received for $0.550 million.

Other transactionsDuring the financial year a number of transactions occurred between SPS and the Corporation. Expenditure paid by theCorporation on behalf of SPS was recovered at cost. Management, accounting, human resources, information technology andother services were provided to SPS through a management fee based on cost recovery. This amount is included within ‘OtherOperations and Services’ in Note 3.

DirectorsDetails of Directors’ remuneration are set out in Note 21. No transactions occurred between SPS and Director related entities.Three Directors of SPS were also Directors of the Corporation.

Note 23. Events occurring after reporting date

In accordance with Australian Accounting Standard AAS8, Events Occurring After Reporting Date, there are no known eventsoccurring after the reporting date that materially affect the financial statements.

Note 24. Segment reporting

In accordance with AASB1005, Segment Reporting, the following information is provided:

Business segments: SPS provides some of the services under the business segment of the consolidated entity. This segment isthe management of port facilities for the shipping community including the provision of navigational and operational safetyneeds of commercial shipping.

Geographical segments: SPS operates in the single geographical location of NSW.

Note 25. AASB 1047, Disclosing the impacts of adopting Australian equivalents to internationalfinancial reporting standards

SPS will apply the Australian Equivalents to International Financial Reporting Standards (AIFRS) from the reporting periodbeginning 1 July 2005. SPS is managing the transition to the new standards by allocating internal resources and engagingconsultants to analyse the pending standards and Urgent Issues Group Abstracts to identify key areas of policies, procedures,systems and financial impacts that are affected by the transition.

As a result of this exercise, SPS has taken the following steps to manage the transition to International Accounting Standards (IAS):

– A project team has been established and is overseeing the transition. The Financial Accountant is the project manager andmeets regularly with the project team to discuss progress against the plan.

– The following phases that need to be undertaken have been identified:

– A detailed diagnostic review of all accounting policies and procedures to identify differences between current accountingstandards and IAS

– Advising the Board of progress throughout the project and of the major areas of impact identified

– Preparing a balance sheet as at 1 July 2004 under IAS for comparative purposes

– Preparing financial statements under IAS for 2004–05 for comparative purposes

– Identifying the system changes required

– Meeting NSW Treasury target dates for the completion of certain tasks, and

– Providing staff with internal and external training.


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Note 25. AASB 1047, Disclosing the impacts of adopting Australian equivalents to internationalfinancial reporting standards continued

– To date, the following progress has been made:

– A detailed diagnostic review of all accounting policies and procedures to identify differences between current accountingstandards and IAS has been completed by Ernst & Young.

– The Board was advised at the June 2004 Board meeting of work carried out to date and of the major areas of impact thathave been identified. The Board will continue to receive regular updates throughout the project.

– A draft opening balance sheet at 1 July 2004 under IAS has been prepared, based on information known to date.

– System changes have been identified and will be continually reviewed throughout the project.

– To date, all NSW Treasury target dates have been met. A draft opening balance sheet at 1 July 2004 under IAS is requiredto be sent to NSW Treasury by 15 December 2004.

– Ernst & Young has conducted internal training courses for relevant staff on specific areas of change. Staff members havealso attended external training courses. Training will continue and will be widened to ensure that all affected areas of SPSwill be appropriated covered.

NSW Treasury is assisting Government agencies to manage the transition by developing policies, including mandates of options;presenting training seminars to all agencies; providing a website with up-to-date information to keep agencies informed of anynew developments; and establishing an IAS Agency Reference Panel to facilitate a collaborative approach to managing the change.

SPS has identified a number of significant differences in accounting policies that will arise from adopting AIFRS. Somedifferences arise because AIFRS requirements are different from existing AASB requirements. Other differences could arisefrom options in AIFRS. To ensure consistency at the whole-of-government level, NSW Treasury has advised the options that it islikely to mandate and will confirm these during 2004–05. This disclosure reflects these likely mandates.

SPS’s accounting policies may also be affected by a proposed standard designed to harmonise accounting standards withGovernment Finance Statistics (GFS). This standard is likely to change the impact of AIFRS and significantly affect thepresentation of the income statement. However, the impact is uncertain, because it depends on when this standard is finalisedand whether it can be adopted in 2005–06.

Based on current information, the following key differences in accounting policies are expected to arise from adopting AIFRS:

– AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards requires retrospectiveapplication of the new AIFRS from 1 July 2004, with limited exemptions. Similarly, AASB 108 Accounting Policies, Changesin Accounting Estimates and Errors requires voluntary changes in accounting policy and correction of errors to be accountedfor retrospectively by restating comparatives and adjusting the opening balance of accumulated funds. This differs fromcurrent Australian requirements because such changes must be recognised in the current period through profit or loss unlessa new standard mandates otherwise.

– AASB 112 Income Taxes requires a balance-sheet approach where the entity must identify difference between theaccounting and tax values of assets and liabilities. The previous approach was to account for tax by adjusting accountingprofit for temporary and permanent differences to derive taxable income. The AASB 112 approach might alter the quantumof tax assets and liabilities recognised.

In addition, the income tax expense and deferred tax assets and liabilities might be affected by other AIFRS to the extent thatthey impact on the balance sheet and profit or loss.

– AASB 116 Property, Plant and Equipment requires the cost and fair value of property, plant and equipment to be increased toinclude restoration costs, where restoration provisions are recognised under AASB 137 Provisions, Contingent Liabilities andContingent Assets.

SPS must account for asset revaluation increments and decrements on an individual asset basis, rather than on a class basis.This change may decrease accumulated funds.

– AASB 136 Impairment of Assets requires an entity to assess at each reporting date whether there is any indication that anasset (or cash-generating unit) is impaired and, if such indication exists, the entity must estimate the recoverable amount.However, the effect of this Standard should be minimal because all of the substantive principles in AASB 136 are alreadyincorporated in Treasury’s policy Valuation of Physical Non-Current Assets at Fair Value.

End of audited financial statements


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In the opinion of the Directors of Sydney Pilot Service Pty Ltd:

1. The Financial Statements and Notes:

a) Exhibit a true and fair view of the financial position of Sydney Pilot Service Pty Ltd at 30 June 2004 and of itsperformance, as represented by the results of its operations and its cash flows for the year ended on that date.

b) Comply with applicable Accounting Standards, Urgent Issues Group Consensus Views and other mandatory andstatutory reporting requirements including Part 3 of the Public Finance and Audit Act 1983 and the associatedrequirements of the Public Finance and Audit Regulation 2000.

2. There are reasonable grounds to believe that Sydney Pilot Service Pty Ltd will be able to pay its debts as and when theybecome 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 theFinancial Statements to be misleading or inaccurate.

Signed in accordance with a resolution of the Directors.

G.J. Martin S.D. HobdayChairman Director

Date: 15 October 2004 Date: 15 October 2004

Sydney Pilot Service Pty LtdDirectors’ Statement

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Sydney Ports CorporationStatutory disclosures 2004

Funds granted to non-government community organisations

The following payments were made to non-government community organisations in 2003–04:

$

La Perouse Precinct Committee 500.00

Malcolm Sargent Cancer Fund for Children 1,000.00

The Cancer Council of NSW 725.00

St Vincents & Mater Health Sydney (Cancer Research) 1,000.00

Mission to Seafarers 2,710.00

Australian Red Cross 404.00

MSB RSL Sub Branch 500.00

United Way Sydney 200.00

2004 Annual Report

The total external cost incurred in the production of 2,000 copies of the Sydney Ports Corporation 2004 Annual Reportincluding incorporation of the Sydney Pilot Service’s (SPS) financial statements was $60,000.

The report is available in non-printed formats via website www.sydneyports.com.au

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 2000 require a statutory body to include in its annual report statements of all exemptions, omissions, modificationsand variations from reporting provisions which have been granted by the Treasurer under section 41BA of that Act andRegulation and which apply to the statutory body and a summary of the reasons for them.

As a statutory body in competition, the following exemptions, omissions, modifications and variations apply to SydneyPorts Corporation.

Requirements Legislative source Exemption and conditionsof requirements

Financial reporting

Format of financial statements Public Finance and Audit Act 1983(PF&AA)

Financial statements Section 41B(c) PF&AA Exempt from preparing manufacturing,trading and profit and loss statements

Required to prepare a summarisedoperating statement (ie. summarising majorcategories of revenues and expenses)

Notes: Income and expenditure Public Finance & Audit Regulation2000 (PF&AR): Schedule 1, Part 1

Amount charged or set aside for renewalor replacement of fixed assets

Clause 2

Amount set aside to any provision forknown commitments

Clause 4

Amount appropriated for repayment ofloans/advances/debentures/deposits

Clause 6

Material items of income and expenditureon a program or activity basis

Clause 13 Required to summarise the material itemsof revenues and expenses on a program oractivity basis

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Research and development – completed research including resources

allocated

– continuing research including resourcesallocated

– continuing development activitiesincluding resources allocated

Schedule 1 ARSBR

Management and activities– nature and range of activities

– measures and indicators of performance

– internal and external performancereviews

– benefits from management and strategyreviews

– management improvement plans andachievements

– major problems and issues

– major works in progress, cost to date,estimated dates of completion and costoverruns

– reasons for significant delays to majorworks or programs

Schedule 1 ARSBR Exempt subject to the condition thatcomments and information relating tomanagement and activities are to bedisclosed in a summarised form

Exempt subject to the condition thatcomments and information relating to thesummary review of operations are to bedisclosed in a summarised form

Excess of non-current asset value overreplacement cost

Clause 13

Notes: Additional information PF&AR: Schedule 1, Part 3

Annual reporting exemptions

Budgets Annual Reports (Statutory Bodies)Act 1984 (ARSBA) and AnnualReports (Statutory Bodies)Regulation 2000 (ARSBR)

– detailed budget for the year reported on

– outline budget for next year

Section 7(1)(a)(iii) ARSBA

Section 7(1)(a)(iii) ARSBA

– particulars of material adjustments todetailed budget for the year reported on

Clause 6 ARSBR

Report of operations

Summary review of operations– narrative summary of significant

operations

– selected financial and other quantitativeinformation associated with theadministration of programs or operations

Section 7(1)(a)(iv) ARSBA andSchedule 1 ARSBR


Requirements from which Legislative source Conditions (if any) attaching we are exempt of requirements to exemption

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Human resources– number of employees by category and

comparison to prior three years

– exceptional movements in employeewages, salaries or allowances

– personnel policies and practices

– industrial relations policies and practices

Schedule 1 ARSBR Exempt subject to the condition thatoverseas visits with the main purposeshighlighted are required to be disclosed

Consumer response– extent and main features of complaints

– services improved/changed in responseto complaints/suggestions

Schedule 1 ARSBR Exempt subject to the condition thatcomments and information relating toconsumer response are to be disclosed ina summarised form

Land disposalProperties disposed of during the year:

– total number

– total value

If value greater than $5,000,000 and notby public auction or tender:

– list of properties

– for each case, name of person whoacquired the property and proceeds from disposal

– details of family or business connectionsbetween the purchaser and the personresponsible for approving the disposal

– purposes for which proceeds were used

– statement indicating that access to thedocuments relating to the disposal canbe obtained under the Freedom ofInformation Act 1989

Schedule 1 ARSBR

ConsultantsFor each engagement costing greater than $30,000:

– name of consultant

– title of project

– actual cost

For each engagement costing less than $30,000:

– total number of engagements

– total cost

If applicable, a statement that noconsultants were engaged

Schedule 1 ARSBR Exempt subject to the condition that thetotal amount spent on consultants is to bedisclosed along with a summary of themain purposes of the engagements

Payment of accounts– performance in paying accounts,

including action to improve paymentperformance

Schedule 1 ARSBR

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These exemptions, omissions, modifications and variations arise from a review of the External Reporting Framework forStatutory State Owned Corporations and Particular Statutory Bodies by the NSW Treasury and are based on among otherthings commercial sensitivities. A number of exemptions relate to financial reporting requirements that are redundant or notconsidered essential for performance assessment and accountability purposes.

Response to significant issues raised by the Auditor General

There were no significant issues raised by the Auditor General in his 2003–04 report.

2003–04 Performance relative to the Statement of Corporate Intent

The material deviations from targets in the 2003–04 Statement of Corporate Intent are:

Increased Shareholder Value Added (SVA) as a result of Net Operating Profit After Tax (NOPAT) increasing due to growth in trade volumes.

Freedom of Information

Sydney Ports Corporation is required to report annually on its administration of the applications it receives under the Freedom ofInformation 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 2002–03 and 2003–04.

During the reporting period, no requests were transferred to another organisation or agency. No requests were carried forwardto the reporting period 2003–04.

No reviews were requested either internally, to the Ombudsman or to the District Court during the reporting period.


Time for payment of accounts– reasons for late payments

– interest paid due to late payments

Schedule 1 ARSBR

Clause 18 [PFAR]

Report on risk management andinsurance activities

Schedule 1 ARSBR Exempt subject to the condition that thecomments and information are to bedisclosed in a summarised form

Disclosure of controlled entities– details of objectives, operations,

activities of controlled entities andmeasures of performance

Schedule 1 ARSBR Exempt subject to the condition that thenames of the controlled entities are to bedisclosed along with a summariseddisclosure of the controlled entities’objectives, operations, activities andmeasures of performance

Investment performance Clause 12 ARSBR

Liability management performance Clause 13 ARSBR

Financial statements ofcontrolled entities

Section 7(1)(a)(ia) ARSBA Exempt from preparing manufacturing andtrading statements

Required to prepare a summarisedoperating statement (summarising majorcategories of revenues and expenses)

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FOI applications and applications determined

Personal Other Total2003 2004 2003 2004 2003 2004

New 0 0 1 1 1 1

Completed 0 0 1 1 1 1

Granted in full 0 0 1 0 1 0

Refused (Exempt) 0 0 0 0 0 0

Information sought not held/information previously provided to applicant (application fees refunded) 0 0 0 1 0 1

Total processed 0 0 1 1 1 1

Days to process FOI applications

Time elapsed Personal Other2003 2004 2003 2004

0 –21 days 0 0 0 0

22–35 days 0 0 0 0

Over 35 days 0 0 1 1

Processing time

Processing hours Personal Other2003 2004 2003 2004

0 –10 hours 0 0 0 1

11–20 hours 0 0 0 0

Greater than 20 hours 0 0 1 0

During the period no Ministerial Certificates were issued, no formal consultations requested, no amendments or notations torecords made.

The Corporation’s compliance with the Act did not raise any major issues in the reporting period, nor did compliance with theAct have any significant impact on Sydney Ports Corporation’s activities.

Code of ConductThe Corporation has a Code of Conduct which is observed by all staff and prescribes standards of behaviour and moralrequirements expected of employees. There were no changes to the Code of Conduct during the year.

Legal changes and subordinate legislationThere have been no material legal changes or changes to subordinate legislation or significant judicial decisions that have hadany significant effect on the operations of Sydney Ports Corporation.

Factors affecting achievement of operational objectives There were no unanticipated factors which have not already been mentioned during the year that led to any material affect onthe achievement of Sydney Ports Corporation’s operational objectives.


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EEO Report

Sydney Ports Corporation is an equal employment opportunity employer. Equal employment opportunity (EEO) links with thelearning and growth goals of the Corporate Plan. The Corporation also has in place an EEO policy and the SPC Code ofConduct which asks SPC employees to honour the Corporation’s commitment to EEO. These documents are easily available to all employees. Vacant positions are advertised internally and externally where appropriate, and selection is based on fair,equitable and non-discriminatory principles.

The table below shows overall employee numbers, the total number of female employees, the number of vacancies foremployment in the organisation, the number of female employees appointed to the vacancies, and the number of employeesfrom a Non-English-speaking background (NESB) appointed to these vacancies as at 30 June 2004.

Overall Total number Number of Number Number of employee of female vacancies of females NESB number employees appointed appointments appointments

199 (100%) 45 (22.61%) 16 6 3

Of the 45 women in permanent employment within the Corporation as at 30 June 2004, three hold executive positions. The remaining 42 women are employed in managerial, professional/technical, supervisory or administrative roles.

A number of practices support the employment relationship of all employees, including women and employees from NESB.These include flexible hours of work, aged and dependent care leave, generous sick leave supported by income protectioninsurance, personal leave, and part-time work when returning from maternity leave or based on the nature of work, studyassistance and support to attend training programs.

Female employees attended a total of 1414.3 hours of training during the 2003–04 financial year. This is an average of 26.68 hours per female employee taking into account all female employees in employment throughout the year, inclusive of agency and temporary staff who received training. NESB employees, excluding female NESB employees, attended a total of 1596.85 hours of training during the same period. This training included operational training and averages 49.90 hours oftraining per male.

Total training cost for the Corporation was $406,025.65. Training cost for female employees was $100,306.12 and $66,137.43for male NESB employees. This is a total of $166,443.55 for female and NESB employees for the year. The total training costsfor female and NESB employees account for 40.99% of the total training costs.

Individual training plans are prepared for employees as part of the Corporation’s performance management system applicableto contract and professional technical staff, manager’s assessment of training needs and identification of skill gaps.

A number of women and NESB employees are studying towards tertiary qualifications. The Corporation’s study assistancepolicy supports these studies.

Human resource policies are readily available to employees through the central Employee Information Link.

Occupational Health and Safety

Sydney Ports has a commitment to providing a safe workplace for its employees, raising awareness of workplace occupationalhealth and safety issues, and effectively linking the strategic needs of the business with the Corporation’s vision and values.

This is achieved through workplace consultation with employees, hazard identification and risk assessment, and theimplementation of programs to improve workplace safety and return to work strategies for injured workers.

A major initiative undertaken by Sydney Ports Corporation in 2003–04 has been voluntary participation in the PremiumDiscount Scheme (PDS), a New South Wales Government initiative. In order to achieve this objective Sydney Ports Corporationcommissioned an independent WorkCover accredited auditor to conduct the occupational health and safety audits required toenter PDS.

Successful achievement of the audits has resulted in significant savings on Sydney Ports Corporation workers compensationpremium but the achievement of PDS benchmark criteria has had a longer term impact on business, encouraging innovativework practices and consultation between management and employees, and fostering a company wide culture of continuousimprovement of occupational health and safety and safer work practices.


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Five lost time injuries were sustained during the 2003–04 reporting period.

Reporting period 2001–02 2002–03 2003–04

Number of lost time injuries 3 3 5

There has been an increase in the number of lost time injuries during the reporting period. This has meant that Sydney PortsCorporation did not achieve one of the organisational performance measures, namely no more than 3 lost time injuries.However, Sydney Ports Corporation actively follows through in its commitment to the health and safety of employees and ineach instance there has been an investigation and risk to employees has been addressed. There were no work related illnessesduring the reporting period

There has been one prosecution, which is being defended, under the Occupational Health and Safety Act during the year,relating to an accident that occurred in 2001.

The Occupational Health and Safety Consultative Committee continued its meetings on a regular basis, to monitor the overallperformance of occupational health and safety initiatives, policies, procedures, processes and training, and to identifyopportunities for the promotion and improvement of safe work practices.

Status Report on Ethnic Affairs Priority Statement

The Corporation’s Ethnic Affairs Policy supports The NSW Charter of Principles for a Culturally Diverse Society. In 2003–04, the Corporation:

– Continued to pay a number of its staff, Community Language Classification Allowance to use, read and interpret anotherlanguage.

– Engaged in merit based recruitment practices.

– Provided Employee Assistance program for the use of its staff.

– Provided for operational activities that include cultural and religious differences through the provision of religious and cultural holidays.

The Corporation will continue to support cultural diversity throughout 2004–05. In addition, and where required, translationservices will be available to Assist in communicating with the community.

Waste Reduction and Purchasing Policy (WRAPP)

Sydney Ports is a State-owned corporation and as such is required to comply with the Government’s Waste Reduction andPurchasing Policy (WRAPP) where it is cost effective and in line with sound business practices.

The Corporation has developed a WRAPP plan in accordance with Premier’s Memoranda 99–9 and 97–30.

The plan details strategies for:

(a) reducing the generation of waste (waste avoidance and minimisation)

(b) resource recovery (waste reuse and recycling)

(c) use of recycled materials (purchase of recycled content material) and

(d) establishing a benchmark quantifying waste generated and recycled.

(a) Reducing the generation of waste (waste avoidance and minimisation)– Sydney Ports has a number of strategies in place to reduce the generation of pre-printed forms such as purchase orders

and some invoices.

– Installation of document centres thereby reducing the number of individual desk printers and associated consumables suchas toner cartridges.

(b) Resource recovery (waste re-use and recycling)– Sydney Ports is actively involved in recycling activities undertaken by the building managers whereby waste produced by

employees on a daily basis is separated into paper and other (food etc) and recycled.

– Other paper waste generated is collected and recycled by a private contractor.

– 85% of toner cartridges are recycled.

In the area of construction and related activities, contractors engaged by the Corporation are required to ensure that allactivities on site minimise the generation of waste by encouraging the recycling of all potential waste material.


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(c) The use of recycled material (purchase of recycled – content materials)Sydney Ports Corporation purchases low-waste products and products with recycled content where it is consistent with soundcommercial practice and such products meet technical and operating standards.

Envelopes and folders with recycled contents purchased by the Corporation during the year represent 100% of envelopes and folders purchased. Other materials with recycled content purchased during the year include ink cartridges, toners andsuspension files. These purchases represent 12% to 42% of total purchases of these materials.

Paper purchased with recycled content accounted for 1% of the total plain paper purchased during 2003–04. The lowpercentage of recycled content paper purchased is due to a price differential of 15.62% per Ream for 60% recycled content to 45.20% for 80% recycled content between recycled content paper and virgin paper.

(d) Establishing a benchmark for quantifying waste generated and recycledSydney Ports undertook a Waste Audit during August 2003 to establish a benchmark for future measurement of wastegenerated and recycled. The Waste Audit Report was submitted to Resources NSW as part of the 2001–2003 WRAPP Report.

PublicationsDuring the year, in addition to the Annual Report 2004, Sydney Ports Corporation printed and distributed the followingpublications:

– Port Focus (a newsletter outlining Corporation and customer activities distributed three times per year)

– Current (a quarterly electronic newsletter outlining Corporation and customer activities)

– Corporate Plan 2004–2008

– Environment Report (a report on the Corporations environmental responsibilities and activities)

– The Economic Contribution of Sydney’s Ports (a report on the economic contribution of port activity to New South Wales)

The Sydney Ports Corporation website www.sydneyports.com.au was upgraded to include more information for customersand the general public.

Consultancy feesTotal fees paid and payable to consultants engaged in capital and operating projects by Sydney Ports Corporation during2003–04 amounted to nil ($0.093 million in 2002–2003).

Relevant legislationSydney Ports Corporation is a statutory State-owned corporation established under the State Owned Corporations Act 1989and Ports Corporatisation and Waterways Management Act 1995, and operates in accordance with those Acts.

Other significant legislation affecting the Corporation includes:

– Dangerous Goods (General) Regulation 1999;

– Marine Pollution Act 1987 and associated regulation;

– Management of Waters and Waterside Lands Regulations – NSW;

– Marine Pilotage Licensing Regulations;

– Maritime Services Act 1935;

– Navigation Act 1901;

– Protection of the Environment Operations Act 1997; and

– Maritime Transport Security Act 2003.


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Sydney Ports CorporationAppendices 2004

Corporate Governance

Good corporate governance creates and sustains an ethical and legal environment which recognises the interests of all thestakeholders in a corporation.

The Role of the BoardThe Board oversees the business and commercial affairs of the Corporation, approves the business and financial objectives andstrategies proposed by and subsequently implemented by management and monitors performance and policy.

Apart from participating in regular Board and committee meetings, the Directors from time to time visit the Corporation’soperations and informally meet port users and staff.

The composition and procedures of the Board The Board generally consists of seven Directors – five non-executive Directors (one of whom is the Chairman), the ChiefExecutive Officer and Staff Director who are selected in accordance with the procedures set out in the Ports Corporatisationand Waterways Management Act 1995. The Directors are appointed by the Governor on the recommendation of the votingshareholders. The proceedings and certain procedures of the Board are governed by the State Owned Corporations Act 1989and the Articles of Association of the Corporation.

Board remuneration Non-executive Directors and the Staff Director are remunerated by fees determined by the voting shareholders from time totime. These fees are comparable with those paid to directors of similarly constituted and similarly sized corporations.

Board committeesSeveral committees support the Board –

– The Audit and Risk Management Committee considers internal accounting controls and procedures, the activities of theinternal and external auditors, the relationship between management and the external auditors, the financial statements ofthe Corporation and risk management.

– The Remuneration Committee considers remuneration policies and practices, the remuneration of the executive managementgroup and merit recognition arrangements.

The majority of the Corporation’s staff are remunerated on the basis of an Enterprise Agreement, which was registered on 26 November 2001. This agreement is in force until 30 June 2004.

In line with developments in the employment market, executive and senior management are remunerated by base salariescoupled with at-risk performance incentives.

Attendance at Board meetings

Regular Board meetings Term of appointmentA B

D.L.P. Field 11 11 4 December 2001 – 3 December 2004

S. Kreiger 11 11 16 October 2002 – 15 October 2005

G.J. Martin 11 11 15 April 2001 – 15 April 2004 & 12 May 2004 – 15 April 2007

K.A.J. Murray 11 11 9 March 2002 – 8 March 2004 & 9 March 2004 – 8 March 2006

V.J. Smith 9 9 4 December 2001 – 3 December 2003 &24 February 2004 – 31 December 2005

M. Sullivan 11 11 1 October 2002 – 30 September 2005

A.Tansey 11 11 16 October 2002 – 15 October 2005

A = Number of meetings eligible to attend during term or since appointment announced

B = Number of meetings attended

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Salary Reporting

In reporting salaries for SES level 5 and above, the following information is provided for the year ended 30 June 2004.

Band Total positions Fixed salary At-risk salary incentive rangeat 30 June 2004 package range subject to performance

against set objectives

1 1 $289,430 – $339,900 $60,000 – $85,000

2 1 $212,180 – $289,430 $40,000 – $60,000

3 6 $154,500 – $212,180 $25,000 – $40,000

4 4 $128,750 – $154,500 $15,000 – $25,000

5 12 $115,875 – $128,750 $10,000 – $15,000

Overseas travel July 2003 – June 2004

Name Date Destination Purpose

Simon Barney 8-19.09.03 Singapore, China, Japan Trade Development Visit

Phil Rosser 8-19.09.03 Hong Kong, Singapore, China, Japan Trade Development Visit

David Field 21-25.10.03 Japan Yokkaichi Sister Port Seminar

Murray Fox 21-25.10.03 Japan Yokkaichi Sister Port Seminar

Simon Barney 17-29.04.04 Europe Trade Development Visit

Greg Martin 17.04-01.05.04 Europe, USA Trade Development Visit (Europe)IAPH Conference (USA)

Bart Pacheco 22-29.05.04 Germany 4th Congress of the InternationalHarbour Masters Association

AAPMA and sub-committeesGreg Martin President from October 2002

Australia Day CouncilBart Pacheco Operations AdvisorJenny Jones Operations Co-ordinator

Botany and Eastern Regional Environment ProtectionAssociationLisa Smith

Botany Bay Business Enterprise Centre Shane Hobday Director

Botany Bay Coastal Management CommitteeColin RuddBruce Royds

Botany Rail Steering Group Simon Barney ChairmanMorgan Noon

Bulk Liquids Industry AssociationMurray Fox

Caltex Australia Limited/Sydney Ports Co-ordination CommitteeRoy GarthBart Pacheco

Commercial Vessels Users GroupBart Pacheco

Cruise Down Under Phil Rosser Deputy Chairman

Interagency Transport Planning Committee Colin Rudd

Internal committeesExecutive Committee Occupational Health and Safety CommitteeSydney Ports Corporation Consultative CommitteeGangway Steering Committee

International Association of Ports and Harbours Greg Martin DirectorTony Navaratne Ports and Planning Construction Committee

International Harbour Masters AssociationBart Pacheco

Major Hazard Inter-Agency CommitteeRoy Garth

Maritime Industry GroupBart Pacheco

Navigators and Navigation Pilotage CommitteeBart Pacheco

Staff who are Members of External Committees


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New Year’s Eve CommitteeBart Pacheco Jenny Jones

NSW Chamber of Commerce – International TradeCommittee Phil Rosser Chair

Orica Groundwater Community Liaison CommitteeLisa SmithChrista Sams

Permanent Committee on Tides and Mean Sea LevelGary Batman

PIANC Congress Organising CommitteeBruce Hudson

Port Botany Emergency Plan Committee and sub-committeesShane Hobday ChairmanJim Pullin

Port Botany Neighbourhood Consultative GroupMurray FoxPolly BennettColin RuddLisa Smith

Sea Freight CouncilSimon Barney

Shell Gore Bay Community Consultative CommitteeMurray Fox

Standards Australia Committee on Maritime StructuresTony Navaratne

Standards Australia Committee ME 018 – The handlingand transport of dangerous cargoes in port areasRoy Garth

State Committee of the National Plan to CombatPollution of the Sea by OilBart Pacheco

Sydney Cruise Industry Forum Phil Rosser ChairmanJenny Jones

Sydney Harbour Executive Murray FoxMarika Calfas

Sydney Harbour Planning Control GroupGreg Martin

Sydney-to-Hobart Yacht Race CommitteeBart Pacheco

Sydney Ports Cargo Facilitation CommitteeMorgan NoonJenny Jones

Sydney Ports Security CommitteeMurray FoxShane HobdaySarah HartsonKim BaileyJim PullinJenny JonesBart Pacheco

Sydney Ports Users Consultative GroupGreg MartinSimon BarneyPhil Rosser

The Export Centre Management Committee Gerry McCormack

The Missions to Seafarers Greg Martin DirectorShane Hobday Director

White Bay/Glebe Island Noise Reference CommitteeLisa Smith ChairmanPolly BennettChrista Sams

Staff who are Members of External Committees continued

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AAPMA Association of Australian Port and Marine Authorities

AAT Australian Amalgamated Terminals Pty Ltd

AMS Australian Maritime Services

AMOU Australian Maritime Officer’s Union

APESMA Association of Professional Engineers, Scientists and Managers Australia

ARTC Australian Rail Track Corporation

AQIS Australian Quarantine Inspection Service

BLB Bulk Liquids Berth

BRSG Botany Rail Steering Group

CEO Chief Executive Officer

COI Commission of Inquiry

CPI Consumer Price Index

DG’s Dangerous Goods

DIPNR Department of Infrastructure, Planning and Natural Resources

EDI Electronic Data Interchange

EIS Environmental Impact Statement

GT Gross Tonne

ha hectares

IAPH International Association of Ports and Harbors

ISPS International Ship and Port Facility Security Code

IT Information Technology

M million/millions

MUA Maritime Union of Australia

MIFS/MFS Metropolitan Intermodal Freight Strategy

NSW New South Wales (Eastern State of Australia)

NOPAT Net Operating Profit After Tax

OH&S Occupational Health and Safety

PIANC Permanent International Association of Navigation Congresses (International Navigation Association)

PSOL Port Safety Operating Licence

RTA Roads and Traffic Authority

RIC Rail Infrastructure Corporation

SCI Statement of Corporate Intent

ShIPS Sydney’s Integrated Port System

SPS Sydney Pilot Service Pty Ltd

SPUCG Sydney Ports Users Consultative Committee

SVA Shareholder Value Added

Sydney Harbour The commercial port areas of Glebe Island and White Bay, Darling Harbour, and the overseas passenger Terminal at Circular Quay (formally know as Port Jackson)

TCC Transport Co-ordination Committee

TEU/TEUs Twenty-foot equivalent unit

Glossary

Copyright © 2004 Sydney Ports Corporation. All rights reserved.

Disclaimer The information contained in this publication is produced in good faith and according to the knowledge available to Sydney Ports Corporation at the time of publication. No warranty is given or representation made as to its accuracy.

Principal office and address Level 8, 207 Kent Street Sydney NSW 2000 Australia

Postal addressPO Box 25, Millers PointNSW 2000 Australia

Telephone 612 9296 4999Facsimile 61 2 9296 [email protected]

ABN 95 784 452 933

Annual Report2004 - Parliament of NSW

Documents

Transcript of Annual Report2004 - Parliament of NSW