QSL: Working for YOU Annual Report FINAL_0.pdfQSL’s best-performing in-season pool was the 2015...

QSL: Working for YOUQUEENSLAND SUGAR LIMITED ANNUAL REPORT 2015/16

QUEENSLAND SUGAR LIMITED ANNUAL REPORT 2015/16

CONTENTS

Key Achievements 1

Chairman’s Report 2

Managing Director and Chief Executive Officer’s Report 3

Value Offering 4

Value Snapshot 6

Marketing 7

Logistics 9

Environment, Health and Safety 10

Pricing 11

Financing 13

QSL Members 14

Our People 15

Leadership Team 16

Corporate Governance 19

Remuneration Report 21

Statutory Financial Report 22

CAIRNS

MOURILYAN

LUCINDA

TOWNSVILLE

MACKAY

BUNDABERG

BRISBANE

QSL MembersTHIRTY REPRESENTATIVES OF AUSTRALIAN SUGAR MILLS AND CANE GROWERS

Leadership Team

GREG BEASHELMANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER

DAMIAN ZIEBARTHGENERAL MANAGER OPERATIONS

ROBERT HINESCHIEF FINANCIAL OFFICER

JOANNE NUGENT GENERAL MANAGER HUMAN RESOURCES

AARON SEARLEFINANCIAL CONTROLLER

SUSAN CAMPBELLCOMPANY SECRETARY AND LEGAL COUNSEL

BRYCE WENHAMFINANCE MANAGER, SUPPLIER RELATIONS

ANDREW HARRISONTECHNICAL MARKETING MANAGER

MIKE PANKETERMINAL MANAGER – MACKAY AND BUNDABERG

STEPHEN STONETREASURER

DOUGALL LODGEGENERAL MANAGER TRADING AND RISK

QSL Board of DirectorsGUY COWAN SARAH SCALES GREG BEASHEL

OUR LOCATIONS

1QUEENSLAND SUGAR LIMITED ANNUAL REPORT 2015/16

ABOUT QSL

KEY ACHIEVEMENTSFOR 2015/2016

Meeting our ‘5 for 5’ multi-year safety target, with a Total Recordable Injury Frequency Rate (TRIFR) of 5 as at 30 June 2016.

Maximised returns through the strategic use of innovative price risk management products and tactical risk management, with 2015-Season QSL-managed pools outperforming the market benchmark on a weighted average basis by $19.61 per tonne IPS (International Polarisation Scale) net.

Coordinated the successful receipt of $1.9 billion in customer payments, with 98% of shipments delivered in full and on time.

Secured enhanced marketing returns above the Free On Board (FOB) physical market premium average and maintained our position as the largest marketer of Queensland sugar.

Reduced our funding costs by entering into a US$200 million syndicated inventory financing agreement and leveraging flexibility within our core $500 million syndicated credit agreement to reduce line fees.

Expanded grower payment and pricing options via delivery of an accelerated Advance payments schedule for the Guaranteed Floor Pool, with plans to introduce 10-tonne minimum orders for our Target Price Contract product and a longer in-season Fixed Contract pricing window from the 2017 Season.

Maintained our strong environmental record, with no reportable offences during the reporting period.

Introduced use of Near Infrared Spectroscopy in export quality management.

Received industry recognition for QSL’s commitment to youth training and noted improvements in QSL’s annual Women’s Gender Equality Agency compliance report.

Delivered the Cairns Bulk Sugar Terminal Shed 2 re-roofing project safely, on time and under budget.

Undertook our inaugural measurement of QSL’s organisational culture using the Human Synergistics Organisational Cultural Inventory.

Implemented the use of advanced coatings to extend the life of the Bulk Sugar Terminals’ marine concrete structures to potentially 100 years.

Successfully executed the second year of our Korean Long Term Contract.

GOAL: To create prosperity for growers

and millers by maximising the

pool price

PURPOSE: To serve the interests of growers and millers for the

long-term prosperity of the Queensland

sugar industry

2 QUEENSLAND SUGAR LIMITED ANNUAL REPORT 2015/16

CHAIRMAN’S REPORTGUY COWAN

The past year has proven to be a pivotal one for our business, with significant developments regarding Marketing Choice set to lay the foundations of a new era for QSL and the Queensland sugar industry as a whole.

In spite of challenging negotiations, the implementation of Marketing Choice provides a unique opportunity for industry to work together to shape the way forward.

As the saying goes, the secret of change is to focus all your energy, not on fighting the old, but on building the new. And QSL is well and truly focused on building the new.

As a fixture of the Queensland sugar industry for nearly a century, it may be tempting to dismiss QSL as a relic of the pre-deregulation era, somehow wedded to the ways of the past. But to do so fails to recognise our history of innovation. We are the masters of reinvention.

Since our origins as the Queensland Sugar Board back in 1923, through to our emergence as the Queensland Sugar Corporation in 1991, and subsequent evolution as QSL in 2000, we have been at the forefront of a raft of significant industry advancements for our state. From the first bulk sugar cargoes, to the Advance payments system and grower pricing options envied around the world, we look upon this new era of Marketing Choice as not only the next chapter in the history of our industry, but the next stage of our own corporate evolution.

Driven by our constitutional requirement to serve the interests of growers and millers for the long-term prosperity of the Queensland sugar industry, we see ourselves as our industry’s trusted partner, with this enduring focus also reflected in our corporate values:

�Build partnerships

�Be Real

�Aim High

�Be the Solution

�Believe T.E.A.M. (Trust, Empathy, Accountability, Morals) works

These values were created by our people and reflect not only their aspirations, but QSL’s wider business approach. And I am proud to say that the turmoil of the past few years has failed to dull our team’s efforts in this regard. They remain a key element of QSL’s success as well as a great source of support for the Board, and I thank them for their ongoing commitment and service.

So as the long-awaited global raw sugar deficit gathers momentum and our international competitors jockey for position, our industry must be at its best if we are to take the next step and capture the full potential of the opportunities at hand.

We are off to a positive start for the 2016 Season, with the QSL pricing team already securing impressive returns from the recent uplift in ICE 11 prices, despite the production risk considerations associated with the current wet harvest.

QSL continues to enjoy strong relationships with our Raw Sugar Supply Agreement (RSSA) signatories Bundaberg Sugar, Isis Central Mill and Mackay Sugar, and we look forward to working with them well into the future. We also remain committed to providing quality logistics, pricing and financing to our other miller members, with new On-Supply Agreements set to supplement our current contracted RSSA tonnages with Grower Economic Interest in sugar (GEI in sugar) nominations from next season.

I am also pleased to advise that we are having positive negotiations with Sugar Terminals Limited (STL) for an ongoing operating agreement for the six bulk sugar terminals. Such an arrangement would help to protect and maximise the immense strategic value of these important assets, as well as providing our industry with stability regarding their future management and use.

We continue to innovate across our pricing, marketing, financing and logistics streams in response to the needs of our members and the industry we serve, with new products, services and contractual arrangements evidence of why we remain a leader in our field.

Our unique value proposition is unparalleled and at the industry’s disposal, so we ask you to consider how you can better tap in to our strengths and expertise to further your own business objectives.

QSL does not fear the future. To the contrary, we are eager to embrace it and we call upon the rest of the industry we serve to join our efforts to capitalise on the promise ahead.


The 2015/16 Financial Year was another watershed one for our business, with a strong financial performance setting the company up well for expected stronger competition.

The bear market experienced for much of the year brought the important work of the QSL team to the fore, with our decision to use discretion and lock in prices early in a falling market proving to be the right call. And while the efforts of our marketing and pricing teams often bear the weight of performance expectations for those millers and growers using our services, it is truly a combined effort in delivering well on all our service offerings and contractual undertakings to clients that ultimately results in the returns passed back to the industry we serve.

On the pricing front, the continuing global raw sugar surplus saw early pricing opportunities above US13 c/lb slip away, with the ICE 11 falling below US 11 c/lb during the first half of the year, before a tightening of trade flows in 2016 rallied prices. These tumultuous market conditions resulted in a Passive Management Benchmark (PMB) outcome (see PMB definition page 12) of $A369.06 per tonne IPS net.

Despite this undeniably tough year on the markets, I am pleased to advise that QSL surpassed the PMB during the reporting period, securing a weighted average return of $A388.67 per tonne IPS net, some $19.61 per tonne IPS net above the benchmark. This result was no small feat and is the fifth year that QSL’s weighted average return for its managed pools has surpassed the PMB.

QSL’s best-performing in-season pool was the 2015 QSL Actively Managed

Pool, which returned $412.93 per tonne IPS net, $43.87 above the PMB. Our 3-Season Pool was the best-performing QSL-managed pool overall, returning $440.71 per tonne IPS net, $71.65 above the PMB.

These pricing results were underpinned by the work of the QSL marketing team, which, despite volatile physical and freight market environments, was able to secure enhanced premiums above the Free On Board physical premium average. Through their efforts QSL was also able to retain our preferred supply position with many of our key customers and maintain access to reliable counterparties.

Much of the credit for our enduring relationships with our most valued customers is also attributable to the great work of the QSL logistics team. Their efficient and effective operation of Sugar Terminal Limited’s six bulk sugar terminals ensured the Queensland sugar industry retained its long-standing reputation and competitive advantage as the most reliable raw sugar export system in the world. During the past year the QSL logistics team worked closely with our Miller Members and their appointed marketing companies, including QSL, to coordinate 112 ship loadings and the shipment of over 4 million tonnes of Queensland raw sugar, ensuring 98% of these shipments were delivered in full and on time. This work was achieved within our safety target of a Total Recordable Injury Frequency Rate of 5 as of 30 June 2016. We also maintained our impressive environmental performance, with our strong and ongoing commitment to our environmental operating conditions

resulting in no environmental offences during the reporting period.

QSL’s logistics team also oversaw the faultless receipt of $1.9 billion in customer payments, working closely with our customers to expedite the payment process by promoting speed of document execution and payment.

QSL’s finance team made an invaluable contribution to our final result as well, securing a new US$200 million Syndicated Inventory Facility and temporarily reducing the limit on our existing $500 million core syndicated credit agreement during non-peak times to capture savings in funding costs and line fees.

QSL Finance also increased payment and pricing options for both growers and millers using QSL’s pricing products, delivering an accelerated Advance payments schedule for the Guaranteed Floor Pool and increasing forward pricing options by reducing minimum orders to 50 tonnes for our Target Price Contract product.

It is efforts such as these throughout the entire QSL business that contribute to our overall success, and ultimately help to determine the value we subsequently pass back to the industry we serve. As we work to implement Marketing Choice arrangements for the coming season, our performance during the past year and our ability to deliver in the future will be in the spotlight like never before. We welcome this new challenge and remain confident that the QSL value proposition will continue to remain compelling as the new Queensland sugar industry landscape takes shape in the year to come.

MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER’S REPORTGREG BEASHEL


Queensland Sugar Limited (QSL) is a not-for-profit, income tax-exempt organisation owned by the Queensland sugar industry. Its membership is structured to have equal representation between growers and millers, with all net value returned to the industry we serve.

QSL is focused on maximising returns while reducing overall costs. It does this by moving Queensland raw sugar exports through an end-to-end supply chain model, providing a significant advantage in managing risks and seeking to outperform market benchmarks. Considerable value is achieved and economies of scale are reached when Queensland’s raw sugar exports are moved through this industry-collaborative system.

QSL has seven Mill Owner Members and 23 Grower Representative Members who represent 4000 growers across the state.

We provide four main value offerings: pricing, financing, marketing and logistics.

PRICING QSL offers a range of pricing products to millers and growers tailored to different risk appetites. These options include QSL-managed pools, individual forward pricing and miller-managed

pricing pools. Our experienced and professional pricing team actively monitors the sugar futures and foreign exchange markets. Their pricing decisions are based on this market knowledge and the unique risk parameters set for each QSL pool product.

This team has a track record of out-performing market benchmarks.

FINANCINGQSL provides ongoing cost-effective financing to millers throughout the season who subsequently pass this on to growers. This payment is on receipt of sugar at a bulk sugar terminal (BST) and is often in advance of the sugar being sold or the payment received from the customer. Incremental payments are made throughout the season based on a proportional amount of QSL’s current estimate of the final weighted average pool price that the miller will receive for raw sugar supplied under the RSSA. QSL draws on a syndicated facility agreement to fund the Advances Program.

MARKETING (SELLING) QSL has long-term relationships with customers who value its producer-seller model. Its marketing strategy platform is based on developing long-term and sustainable relationships with high-

returning customers and having strong supply chain relationships where value can be optimised. This approach puts the customer first and has a focus on reliably delivering high-quality sugar best suited to each customer’s operations. QSL sells the majority of Queensland’s export raw sugar into the Asian market.

LOGISTICS QSL manages the highly effective storage, handling and shipping of bulk raw sugar, providing logistics services for QSL’s export tonnage and sales arranged by our milling suppliers. It operates six bulk sugar terminals (BSTs) under a lease with Sugar Terminals Limited, and takes delivery of raw sugar, blends it to achieve the quality that meets customers’ needs and then loads all shipments leaving Queensland’s shores. QSL has a strong on-time and in-full delivery track record, collectively managing the terminals to keep costs down while maximising shipping flexibility. Throughout the operations process the key focus remains the safety of our people, with our BST teams working collectively to maximise safety learnings across the business.

VALUE OFFERING

4

QUEENSLAND SUGAR LIMITED ANNUAL REPORT 2015/16 5

SNAPSHOT OF VALUE OFFERING

Operate safe and efficient storage and shipping

of raw sugar

GROWERSSell cane to Millers

MILLERSCrush to raw sugar

Sell to domestic market and have option to sell their economic interestsugar internationally

POOLS

MILLERS

GROWERS

Obtain financing from banks at

low interest rateSell to

International MarketKnowledge, expertise and experience

in pricing and managing Futures Market

QSL Harvest Pool

QSL Guaranteed Floor Pool

QSL Actively Managed Pool

QSL 2-Season Forward Pool

Supplier Pools

US Quota Pool

Monitoring, analysing and hedging –

ICE11 and ICE16

$/t

$

$

QSLMaximise net returns that are

passed through to millers and growers

• Priced collectively

• Costs and revenues shared

Raw sugar supply agreement (RSSA) with QSL

• Access to low-cost financing

• Access to A$500m syndicated debt facility and US$200m syndicated inventory facility

• Stable, ongoing income through regular advance payments.

International customersAsia/USA/Europe

TERMINALS

Cairns LucindaBundaberg

Mourilyan TownsvilleMackay

• Strong relationships with high-returning customers in Asia Pacific region

• Target customers who will pay a premium (eg value Australian sugar) above ICE11

• Seek to outperform market benchmarks

• Generate revenue streams through Other-Origin sugar trading

• Manage counter-party risks (ensuring customer meets terms of contract).

• Knowledge and expertise in sugar market trading

• Competitive forward pricing versus other alternatives

• Seek to outperform market benchmarks

• Offer a range of pooling options to price sugar based on market risks and returns

• Manage international market risks including:

• Sugar price falls • Foreign exchange changes.

PRICING MARKETINGMARKETING(SELLING) LOGISTICSFINANCING

$

• Reduce risks in changes to crop estimates (eg disease, weather) by combining tonnage to meet sales commitments

• Ensure reliable delivery of shipments with access to six terminal and storage facilities

• Flexibility in managing quality of sugar (eg colour and filterability) with options to blend or separate sugar as required

• Match sugar quality to customer preference through access to bulk tonnage

• Reduce logistics costs (eg freight rates) by combining tonnage and shipping in large vessels

• Attractive freight rates through bundling shipping orders

• Strong relationship with ship owners providing flexibility in movement and access to vessels

• Cost efficiences through operating six terminals as one.

Note: Information current as at September 2016 and may change.


VALUE SNAPSHOT KEY HIGHLIGHTS 2015/2016

The information in the graphs and tables and in the pricing and marketing updates is of a general or summary nature and, whilst care is taken in their preparation, the reliability, accuracy or completeness of them is not guaranteed. The updates on marketing and pricing activities do not constitute financial product or investment advice. You should seek your own financial advice. Past performance is provided for reference only and may not be indicative of future performance. Costs and charges may vary from year to year. QSL cannot guarantee the performance of any pool.

COMPONENTS OF TOTAL QSL-MANAGED ICE 11 POOLS VERSUS THE PASSIVE MANAGEMENT BENCHMARK FOR THE 2015 SEASON

OVERALL VALUE CREATED IN THE QSL-MANAGED ICE 11 POOLS

$A/T

ONNE

IPS

Valueaddedabovebenchmark

PassiveManagementbenchmark

$0

$370

$380

$390

$400

$440

$360

$350

$410

$420

$430

$390.09

Gross CFRPremium

+$38.98

+$13.96

Storage andHandling

-$20.88

-$1.69

Quality & Brand Costs

-$3.70Finance Costs

-$23.54

$369.06

$19.61

PolarisationPremium

Freight andExecution

Costs

SharedServices

Costs

-$0.84 +$0.58

SharedServices Rebate Shared

Pool

-$4.29 -$1.42

Gross ICE 11Pools

MarketingServices

Costs Net ICE 11Pools

$388.67

This graph shows the components that make up the QSL ICE 11 Shared Pool and highlights the value created above the Passive Management Benchmark (see page 12 for PMB definition). Overall QSL secured strong 2015 Season pool price returns and outperformed the market by an average of $19.61 per tonne IPS for QSL-managed pools.

(To convert “tonne IPS” to “tonne actual” multiply by a conversion factor of 1.037)

�QSL outperformed the market benchmark for QSL-managed pools by a weighted average of $19.61 per tonne IPS net

�The Shared Pool allocation was -$1.42 per tonne

�2.181 million tonnes of raw sugar were marketed by QSL during the 2015/16 Financial Year

�4.211 million tonnes of raw sugar were handled through the Bulk Sugar Terminals during the reporting period

�QSL loaded 112 vessels during the year

�98% of deliveries were made in full and on time

�A total of 53,914 trucks were unloaded during the period at the Cairns, Mourilyn, Mackay and Bundaberg Bulk Sugar Terminals

�A total of 51,348 train wagons were unloaded during the period at the Lucinda, Townsville and Mackay Bulk Sugar Terminals

�QSL’s weighted average cost of funds was 2.85% (excluding line fees)


MARKETING

The 2015 Season delivered a volatile physical market, with historical levels for Free On Board (FOB) Queensland physical premiums equivalent to levels from Thailand or Brazil during the period. The US$50 per metric tonne range in values illustrated in the graph below reflects a shift in the global supply-and-demand picture from a multi-year surplus to a deficit. Indonesia’s tariff disparity for ASEAN-origin raw sugar (i.e. sugar produced by Association of Southeast Asian Nations – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam) at a preferential import tariff rate versus other origin meant that Thai FOB premiums for raw sugar were supported during the second half of the season and have continued to remain firm while this difference exists. These values traded between being at a discount to a premium of approximately US$25 per metric tonne. The freight market was also very unstable during the reporting period, falling to levels not seen since the Global Financial Crisis back in 2008.

Despite this challenging marketing environment, QSL was able to maintain access to reliable counterparties and retain our preferred supply position into many of our key customers in Asia. We appreciate this ongoing support from our long-term customer refinery partners and remain committed to meeting their needs in the future.

However, the range of potential outcomes during the past financial year highlights the significance of the QSL marketing team’s contribution to the overall pool results and the importance of having clear benchmarks to understand a marketer’s performance in this area.

As the Queensland raw sugar industry starts to transition into the new era of Marketing Choice for the 2017 Season, it is timely to recap some of the key elements of the QSL marketing package that not only underpin our strong reputation in the marketplace but also help to differentiate the QSL offering from our competitors.

In order to achieve optimal results in pricing pool returns, raw sugar marketing must be more than just about selling raw sugar to a refinery customer. The process must start with the raw sugar product to be sold and the quality of that sugar. A strong knowledge of each customer market and its different tariff levels, quality requirements and customs regulations for raw sugar imports is also essential. QSL has been managing this supply and demand relationship on behalf of the industry we serve for up to 50 years in some markets, managing through multiple challenges during this time. It is within this environment that the Queensland sugar industry’s collaborative raw sugar quality scheme developed, covering a number of target specifications at a mill level to ensure that the product delivered to the bulk sugar terminals will maintain its quality over the expected storage period. This incoming sugar quality is then coupled with strong oversight and flexible management of quality by the QSL logistics team across each of the six terminals along the Queensland coast, so that we can respond to each customer quality requirement. There is no other producer in the world that has this level of quality oversight and flexibility.

KEY ACHIEVEMENTS

�Secured enhanced marketing returns above the FOB physical market premium average

�Maintained position as largest marketer of Queensland origin sugar

�Successfully executed the second year of Korean Long Term Contract

PHYSICAL PREMIUMS (FOB QLD EQUIVALENT)

-150

-100

-50

0

50

100

150

27/0

2/15

27/0

3/15

27/0

4/15

27/0

5/15

27/0

6/15

27/0

7/15

27/0

8/15

27/0

9/15

27/1

0/15

27/1

1/15

27/1

2/15

27/0

1/16

27/0

2/16

27/0

3/16

27/0

4/16

This graph illustrates recent strength in the cash premium for raw sugars. Tighter sugar availability in the far-east combined with a growing statistical deficit has underpinned cash values. See disclaimer on page 6.

Thais Brazil

Poin

ts (1

00pt

s =

US$

22.0

4)


MARKETING CONTINUED

The second primary element of difference in the QSL marketing offering is the delivery. Each refinery customer has a different discharge port and storage capability at their receiving location. QSL currently manages all of its sales to export markets on a Cost and Freight (CFR) basis, chartering approximately 70 vessels per year. We do this for three key reasons:

1. We need to manage the timing of the ship arrival to ensure we stay within our storage footprint in the terminals. This is particularly important in conditions such as the 2015 Season, where we had extra sugar production towards the end of the season.

2. We generate value for our customers through a just-in-time delivery service. Our customers know that once QSL has despatched the sugar it will arrive at their ports within the designated time to help manage their stock levels.

3. We leverage our direct participation in the freight market and ability to maintain a scale of chartering and partnership with ship owners. The short turnaround time at the QSL ports and our strong performance history make us an attractive customer for international shipping companies, which we use to secure competitive freight rates.

And finally, QSL’s level of service and sustainability is second to none. As a marketer of Queensland raw sugar to some of our key customers for nearly half a century, we have a proud history of meeting our customers’ needs and helping them to create value in their own businesses. As a new generation of customers become increasingly interested in the sustainability credentials of the Queensland raw sugar product, QSL is working closely with the Smartcane BMP program and is well positioned to maintain access to our blue-chip customers.

When QSL is negotiating with existing and potential customers regarding raw sugar supply, all of the elements outlined above comprise QSL’s value proposition as a reliable producer-seller. By comparison, many of our global trade house competitors will buy their sugar from multiple producers or other trade houses with the aim to set minimum quality standards in their contracts. They tend to have a separate agreement with refiners to supply sugar from a number of different origins, such as Thailand, Brazil, Guatemala, Cuba or Queensland. Refiners are usually only prepared to give this level of flexibility to the traders at a discount to the market.

In contrast, some refinery customers are keen to secure access to a reliable supply of Queensland raw sugar via longer-term agreements with QSL, and willing to pay a premium for this. We expect that this will remain an important part of our marketing opportunities well into the future and look forward to providing unmatched value to our refinery customers in the years to come.


LOGISTICS

QSL retained its reputation as a world-class logistics operator during the 2015/16 financial year, producing a 98% Delivered In-Full On-Time (DIFOT) performance result. In a constantly-changing operations environment affected by multiple external factors beyond our control, this was no easy feat and was only achieved by seamless communications between our customers and QSL’s marketing team, quality and logistics manager and terminal operations teams.

One of QSL’s strengths is our after-sales service and faultless receipt of $1.9 billion in customer payments. We continue to ensure payment before ships arrive at their destination by presenting documentation with no discrepancies for customs clearance and no interbank transfer errors. All too often within international trade houses, documentation can be delayed due to problems with discrepancies, negotiations and the multiple parties involved in the sales chain. QSL works closely with our customers to expedite this process by promoting speed of document execution and payment.

The recently negotiated Japan-Australia Economic Partnership Agreement opened up even greater opportunities to sell Australian sugar to our longstanding customer, Japan. The Japanese raw sugar market comes with exacting standards on quality to meet their needs. During the reporting period QSL introduced the use of Near Infrared Spectroscopy (NIR) to control raw sugar blending when loading ships, which provides accurate results for Pol, moisture and other quality information within a minute of loading the sample into the machine.

Also at the terminals, Cairns Bulk Sugar Terminal’s Shed 2 was successfully re-roofed during the 2015/16 financial year. This project, which was completed in September 2015 in readiness to store the last of the 2015-Season Cairns-district crop, was part of QSL’s wider and ongoing roof replacement program which has already seen work completed at the Mackay and Lucinda bulk sugar terminals. Each individual project in this program must be completed in the short window between the end of the cyclone season each year and a mid-point in the annual harvest. But despite this added challenge, QSL has secured the safe and timely delivery of all of these projects undertaken to date within their allocated budgets.

The Townsville BST achieved Phytosanitary certification during the reporting period. This export quality standard is a prerequisite for export to China and is administered by the Australian Federal Department of Agriculture and Water Resources. The Townsville terminal now joins our Lucinda and Mourilyan operations with this special ability, making 60% of Queensland’s raw sugar production capable of being shipped to China if required.

In addition to expanding terminal capabilities, during the past two years QSL operations has turned its mind to extending the life of the terminal facilities. The concrete marine structures at the six bulk sugar terminals are exposed to the extremes of Queensland’s climate. QSL hopes to extend the viability of these structures to up to 100 years through the use of advanced coating products designed to reduce the ingress of chlorine and oxygen, and retard the associated degradation of the core reinforcing steel.

KEY ACHIEVEMENTS

� 98% of shipments delivered in full and on time

� Cairns Shed 2 re-roofing project delivered safely, on time and under budget

� Faultless receipt of $1.9 billion in customer payments

� Introduction of Near Infrared Spectroscopy in export quality management

� Advanced coatings used to extend the life of BST marine concrete structures to potentially 100 years

TONNES HANDLED THROUGH THE BULK SUGAR TERMINALSLAST 5 SEASONS

0

1,000

2,000

3,000

4,500

4,000

500

1,500

2,500

3,500

TOTA

L TON

NES

ACTU

AL (’

000)

Storage and handling (domestic)

RSSA

2014201320122011 2015

This graph reflects the tonnage of raw sugar handled at the six bulk sugar terminals over the last five seasons. It shows the amount that is handled through storage and handling agreements and the Raw Sugar Supply Agreements. QSL achieves cost reductions in the area of chartering by managing the majority of Queensland’s export raw sugar in bulk and optimising the flexibility provided through the six bulk sugar terminals it manages. In the 2015/16 Financial Year, QSL handled 4.211 million tonnes of raw sugar. See disclaimer on page 6.


INTRODUCTION OF PHYSICAL, PSYCHOLOGICAL AND SOCIAL RISK PROGRAM AND TOOLSAs QSL’s risk maturity developed, an enhanced way of understanding and communicating risk was created through the use of specialised tools, training and practice. Traditional risk assessment focuses on physical risk and neglects the importance of how psychological and social risk plays a part in how we manage risk in our daily activities. The implementation of this program assists by further enhancing how we make decisions about risk.

ROOT CAUSE ANALYSIS PROGRAMThe Root Cause Analysis Program was implemented across all QSL operational sites to provide an opportunity to analyse and discuss opportunities for enhancement. This tool is used for a range of operational activities, with learnings shared across the business.

THE QSL WAYIn line with our focus on integrating tools to support our people, we developed The QSL Way. The program includes key EHS information for all QSL employees in a familiar language, with the training material provided in eight components that scaffold each employee’s knowledge as they become ready to progress. It is delivered internally through the use of competent and approved QSL employees and is integrated with the QSL learning management system.

ENVIRONMENT, HEALTH AND SAFETY

KEY ACHIEVEMENTS

�Development and implementation of Safety Leadership Resilience Program

�Review of 2012-2015 EHS Strategy and implementation of 2016-2018 Strategy

�Introduction of Physical, Psychological and Social Risk Program and tools

�Development and implementation of “QSL Way” Training program

�TRIFR result of 5 as at 30 June 2016, in line with a TRIFR of ‘5 for 5 years’ target

�No environmental offences during reporting period

ROLLING 12-MONTH INCIDENT STATISTICS FOR THE PERIOD ENDING JUN 2016

4.84.84.84.7

5555

5 5 5

7.47.2

5.1

7.2 7.4

5 5

5

Jul Aug Sep Oct Nov Dec JanMonths

TRIFRs

Feb Apr May Jun

10

8

6

4

2

0Mar

5 5 5

This year saw the culmination of QSL’s 2012-2015 Environment Health and Safety (EHS) Strategy, with a Total Recordable Injury Frequency Rate (TRIFR) result for the year of 5 (calculated at per million hours worked, as per Australian standard), meeting our TRIFR target of ‘5 for 5’ (i.e. TRIFR of 5 or less for five years).

Following this success, the strategy was subsequently reviewed across the business as an opportunity to reflect, learn and develop the next phase of our EHS risk maturity via the development of the 2015-2018 EHS Strategy. Our Safety Leadership Team provided specialised insights to assist with the strategy’s future implementation, with a continued focus on developing people through language, leadership and learning.

QSL appreciates that the TRIFR target is only a symbol of our success and that it provides a tool to help communicate how we have been progressing. We also implemented a number of programs and tools during the past financial year to progress our EHS education efforts, including:

SAFETY LEADERSHIP RESILIENCE PROGRAMThis program focused on understanding individual leadership and communication capabilities with progression into developing group skills. Participants then completed structured operational exercises to assist with development.

Target 12 month rolling average


PRICING

SUGARThe 2015/16 Financial Year saw a season characterised by increasing price volatility, yet the overhang of sugar stocks at destination continued to weigh on prices. Market participants grappled with the negative market sentiment reflective of a five-year surplus cycle. As the season progressed, however, the market became increasingly aware that production forecasts were indicating a much tighter sugar trade balance ahead.

The influence of a broadly weaker Brazilian currency again had a profound effect on ICE 11 raw sugar futures as Brazilian suppliers rushed to hedge current and future production, given the advantage of their lower currency. Each attempt by prices to move higher was met with waves of Brazilian producer selling. The impact of Brazil’s currency devaluation effectively extended the price effect of a sugar surplus cycle by a further season. Ironically, the Real has now seemingly reversed its fortunes which is feeding into more positive sentiment.

Despite the highly regulated nature of the sugar market which has somewhat insulated production from weaker world prices, sentiment in the latter half of the 2015 Season was more reflective of a move to a period of deficit. Demand was certainly a factor, with global consumption stronger than anticipated. The main driver, however, has been the eventual production response to the extended period of weaker sugar prices. With a two-year global deficit for 2015-17 forecast at circa 15 million tonnes, dry growing conditions in the Northern Hemisphere and aging cane in Brazil have increasingly fuelled the positive market sentiment.

The 2015 Season closed with the turning of the tide for sugar market sentiment. Prices will now have to rise to levels incentivising increased production or where the release of strategic inventory levels becomes economic. Whilst analysts now suggest a minimum of two seasons will be required to address the production deficit, we believe sugar futures will also see increased levels of investor support as global interest rates track historical lows, forcing investors to seek higher returns elsewhere.

CURRENCYThe Australian dollar again provided some relief to sugar export prices during the 2015 Season. Our currency averaged a level of US75 cents during the period, after commencing the season closer to the US86 cents level. Unfortunately the Brazilian Real devaluation more than offset the cost of production benefit the Australian sugar industry enjoyed from weaker currency levels.

Looking ahead, it appears likely that economic conditions will continue to see a benign environment for the Australian dollar. Recovering commodity prices are reflective of a more positive outlook for Chinese economic growth, and in turn, Australia’s terms of trade. More broadly, however, forecasts for US growth remain generally upbeat and will drive a stronger US$ and higher US interest rate macro environment. Such competing drivers are likely to result in less volatility for currency markets, with a range of US70-80 cents forecast for the 2016 Season.

KEY ACHIEVEMENTS

�QSL-managed pools for the 2015 Season outperformed the market benchmark on a weighted average basis by $19.61 per tonne IPS net

�The 3-Season Forward Pool produced the highest return with $440.71 per tonne net

�The Actively Managed Pool was the strongest performing in-season pool at $412.93 per tonne IPS net

�QSL’s use of innovative price risk management products and tactical risk management played a key role in maximising returns

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RAW SUGAR ICE 11 15/16 FINANCIAL YEAR

This graph represents the trend of the raw sugar ICE 11 price for the prompt futures contract for the 2015/16 Financial Year. The average sugar price for the 2015/16 Financial Year was US 14.35 c/lb. See disclaimer on page 6.


PRICING CONTINUED

QSL POOL PRICES FOR 2015 SEASON15/16 FINANCIAL YEAR

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$43.87

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$381.54QSL HARVESTPOOL

$369.06

$71.65

$440.71QSL FORWARDSEASON POOL(3 YEAR)

$406.24QSL GUARANTEEDFLOOR POOL $388.67

TOTAL QSL MANAGEDICE11 POOLS

This graph presents the net pool performance above the benchmark for the QSL-Managed Pools for the 2015 Season. The Passive Management Benchmark is the price achieved if no market view was taken by following an evenly spread sales pattern, adjusted for applicable constraints such as infrastructure, storage and time available to price. This performance above the benchmark highlights the dollar value per QSL-managed pool that QSL provides to suppliers (millers) and growers. In the 2015 Season, QSL outperformed the market benchmark on a weighted average basis by $19.61 per tonne IPS. The Guaranteed Floor Pool achieved a net price of $406.24 per tonne IPS however this pool has not been benchmarked as the price was locked-in at the start of the season. The US Quota Pool, which was priced on the ICE16, achieved a net price of $614.84 per tonne IPS. See disclaimer on page 6.*After Shared Pool allocation

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AUD/USD CURRENCY 15/16 FINANCIAL YEAR

This graph shows the trend of the Australian dollar against the United States dollar for the 2015/16 Financial Year. The average Australian dollar price for the 2015/16 Financial Year was US 73.35 cents (weekly close). See disclaimer on page 6.


FINANCING

DEBT PROFILE15/16 FINANCIAL YEAR

This graph reflects QSL’s outstanding debt balance during the financial year. QSL pays Advance payments to suppliers (millers) on receipt of raw sugar, who pass payments onto growers, before it is sold or payment is received from the customer. Therefore the debt profile fluctuates throughout the year depending on the receipt and sale of sugar. Sugar was held for longer this financial year due to significant market carry, resulting in this debt profile. See disclaimer on page 6.

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During the past financial year, QSL expanded its funding options by entering into a US$200 million Syndicated Inventory Facility (SIF) with its current funding banks. This facility is a sale-and-repurchase arrangement using sugar inventory at the terminal, giving QSL additional access to short-term committed funding. It is cost effective as funding costs are lower because the funding is secured against the value of the inventory. This facility is in addition to the A$500m syndicated credit agreement which has been the core committed facility agreement for many years. This core syndicated credit agreement has the flexibility to temporarily reduce the limit in non-peak times when funding requirements are lower. The limit was decreased during the past financial year, saving the industry $300,000 in line fees.

QSL’s Guaranteed Floor Pool offering for the 2016 Season incorporated an accelerated Advances Program. This pool will advance 90% of its estimated value by December 2016 compared to approximately 75% for the other QSL-managed pools. QSL has been able to offer an alternative payment arrangement on this pool due to the price certainty and the ease of passing on the additional costs of finance. The Guaranteed Floor Pool is different to other QSL pools in that it has a guaranteed minimum rate of return locked in,

known as ‘the floor’. Final returns for this pool may in fact be higher than the floor because participants receive 50 cents for every dollar achieved above a nominated ‘Strike Price’, but regardless of this, the pool has a known minimum return. Using these guaranteed returns, QSL has been able to alter the Advances schedule for this pool in order to provide our Suppliers with the ability to access an increased rate of Advances prior to Christmas.

Following on from the introduction of reduced minimum order sizes for the Target Price Contract during the 2015 Season (which allowed the Supplier the flexibility to price in 50.8025 metric tonne or 1 lot increments) QSL made preparations to further improve its forward pricing products. The minimum nomination for the Target Price Contract will be further reduced to 10 tonnes from the 2017 Season, providing even more opportunities for Suppliers and their growers to lock in smaller quantities of target prices up to three years in advance of the current season.

QSL also intends to extend the in-season Fixed Contract pricing window from the 2017 Season, moving from a closing date of 15 September each year to 15 April of the following year, giving Suppliers an additional seven months to complete their nominated pricing in this pool.

KEY ACHIEVEMENTS

� Entered into a US$200m Syndicated Inventory Financing agreement

� Faster Advances schedule for the Guaranteed Floor Pool

� 10-tonne minimum Target Price Contract orders and a longer in-season Fixed Contract pricing window planned for the 2017 Season


QSL MEMBERS

QSL works on behalf of its members to promote the development of the sugar industry. Under its constitution, QSL has two types of members – Mill Owner Members and Grower Representative Members.

MILL OWNER MEMBERSQSL currently has seven Mill Owner Members:

�Bundaberg Sugar Limited

�Isis Central Sugar Mill Company Limited

�Mackay Sugar Limited

�Wilmar Sugar Australia Ltd

�MSF Sugar Limited

�Tully Sugar Limited

�W H Heck & Sons Pty Limited

GROWER REPRESENTATIVE MEMBERSQSL has a total of 23 Grower Representative Members.

Under QSL’s Constitution, Grower Representative Members consist of one representative from each single mill area, and where a mill area is part of a mill group (eg. Mackay), a number of representatives from the mill area equal to the number of mills in the mill group.

QSL currently has 21 Elected Holders who began their current three-year term in August 2014. Burdekin Elected Holder Ramon Poli stood down from his position in April 2016 and has been replaced by Denis Pozzebon.

In addition to these elected Grower Representative Members, there is a representative from both CANEGROWERS and the Australian Cane Farmers Association (ACFA).

The current ACFA-appointed member is ACFA Chairman Don Murday.

The current CANEGROWERS-appointed member is CANEGROWERS Queensland Chairman Paul Schembri.

Region Mill Area Grower Representative

Mossman Mossman Mill Gerard Puglisi

Tableland Tableland Mill Nirmal Chohan

Mulgrave Mulgrave Mill Jeffrey Day

Northern South Johnstone Mill Barry Stubbs

Tully Tully Mill Thomas Harney

Herbert River Victoria and Macknade mills Michael Pisano and Vince Russo

Burdekin Kalamia, Invicta, Pioneer and Inkerman mills Russell Jordan, Roger Piva, David Lando, Denis Pozzebon

Proserpine Proserpine Mill Mark Blair

Central Farleigh, Marian and Racecourse mills Anthony Ross, Frank Perna, Philip Deguara

Plane Creek Plane Creek Mill Kevin Borg

Southern Bingera and Millaquin mills Tony Castro and Kelvin Griffin

Isis Isis Mill Joe Russo

Maryborough Maryborough Mill Jeffrey Atkinson

Rocky Point Rocky Point Mill Richard Skopp

Note: CANEGROWERS and ACFA each occupy one Grower Representative Member position (2)


OUR PEOPLE

QSL completed the second year of its current three-year People and Culture plan during the past financial year. The plan focuses on ensuring QSL can pursue its future business strategy with confidence by knowing our people have the right skills and are supported by the right systems to make it happen. This strategy is built around three key principles.

� Our culture and values are unique. They are, and will continue to be, a source of competitive advantage. We strive to be envied by the industry, and valued by our staff for the way we can leverage our culture to achieve new levels of performance.

� We have leaders worth following and our technical capability is unrivalled. Working in small, highly productive teams across our six bulk sugar terminals and our Brisbane office, we continue to invest in our people to ensure they are ready, willing and able to maximise returns, outperform the market and enhance our operational productivity in a challenging and complicated environment.

� Our work is worth doing. Our business vision and purpose focuses on goals greater than ourselves. Our full team feels connected to our future strategy and can see how they can be personally and professionally rewarded by it.

OUR QSL VALUES Our QSL values continued to underpin our success and performance during the year. They represent the behaviours and principles that have been the foundation of our success in the past and that should not be compromised in how we respond to challenges in the future. Informed by discussions with our people and inputs from our members and customers alike, our five core values define and inform how we think, act and behave. They are important to us personally and we see them as a source of competitive advantage in the future.

RECOGNISING COMMITMENT AND TALENTQSL is proud of its long-standing ability to grow and nurture talent. This year saw three QSL team members celebrate 35 years of service with our business. QSL values and celebrates this enduring commitment made by our people and recognises Ray Balanzategui, Mark Rassmussen and Ron Horton for their outstanding contribution to our business during this time. The trio now joins the 6% of our team who have previously achieved this milestone.

During the reporting period a number of our apprentices also achieved industry recognition for outstanding performance and commitment:

� Mitch Vermeer, a fourth-year apprentice at the Cairns terminal, won the Dale Kennedy Memorial Award for electrical apprentices

� Jye Thomas, a second-year apprentice based at our Lucinda terminal, was awarded the ‘Most Outstanding Engineering Apprentice’ in his year

� Aiden Tennet, a third-year electrical apprentice based at the Lucinda Terminal, was nominated for ‘Most Outstanding Electrical Apprentice’ for his second year performance

In addition to these individual awards, QSL was honoured to receive an award from East Coast apprenticeships (Bundaberg) as Host Employer of the Year in recognition of our commitment to youth training.

FOSTERING INDUSTRIAL HARMONYQSL maintains working relationships with the three unions that represent our team members at the six bulk sugar terminals.

� The Australian Workers Union (AWU);

� The Electrical Trades Union (ETU); and

� The Australian Manufacturing Workers Union (AMWU)

During the past financial year, QSL worked with the in-house union delegates and representatives from their unions to identify areas for greater harmonisation and consistency of application of the QSL Bulk Terminals Agreement (EBA) across all sites. This work and constructive debate has been critical in supporting the recent implementation of QSL’s enhanced ‘time-and-attendance’ system.

QSL ENGAGEMENT AND RETENTIONEmployee voluntary turnover remained at a characteristically low level of 6.96% for the 12 months ended 30 June 2016, against broader industry benchmarking of approximately 15%. While turnover is an important metric to gauge performance, it is also valuable to understand what our retention performance looks like. Over 48% of our team has worked with QSL for at least five years. In fact, over 16% of our team has been with QSL for over 20 years.

With such a stable pipeline of both leaders and talent within the business, QSL believes it is in a strong position, despite the complexity of current industry arrangements. QSL remains committed to the engagement of our people, and that our people themselves remain motivated and committed to change and build QSL for the future.

KEY ACHIEVEMENTS

�Undertook inaugural measurement of our organisational culture using the Human Synergistics Organisational Cultural Inventory (OCI)

�Strengthened the quality of internal communications across the business, with monthly ‘CEO Unplugged’ video hook-ups and the “QSL Turbinado” internal magazine

�Received industry recognition for QSL’s commitment to youth training

�Noted improvements in QSL’s annual Women’s Gender Equality Agency compliance report


LEADERSHIP TEAM

GREG BEASHELMANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER

Greg joined QSL in June 2000. Prior to being appointed as Managing Director and Chief Executive Officer in February 2012, Greg was responsible for QSL’s operations including port terminal management, capital and maintenance management, shipping operations, chartering and trade finance.

Before joining QSL, Greg spent seven years with CSR in a range of roles including operations, sugar marketing, hedging and trading. He has extensive experience in sugar refining and a strong understanding of customer perspectives and requirements.

Greg is responsible for overseeing the strategic direction of the business with the goal of maximising pool returns for members.

QUALIFICATIONS: Bachelor of Chemical Engineering (Hons)

Graduate of the Australian Graduate School of Management MBA Executive Program

Graduate of the Australian Institute of Company Directors.

ROBERT HINESCHIEF FINANCIAL OFFICER

Rob joined QSL in April 2013, having more than 26 years’ experience working in corporate finance. His breadth of experience covers mergers and acquisitions, capital funding, strategic financial advice, liquidity management, and corporate and financial risk management.

Prior to joining QSL, Robert was a Director, CFO Advisory at KPMG and held CFO roles with several leading Queensland companies including QIC Limited, Bank of Queensland Limited, Energex Retail, Tarong Energy and Suncorp.

Rob is responsible for the accounting, financial risk management, reporting, and information and technology functions of QSL.

QUALIFICATIONS/MEMBERSHIPS:Bachelor of Financial Administration

Graduate Diploma of Advanced Accounting

Graduate Diploma in Applied Finance and Investment

Senior Fellow of FINSIA and Fellow of the Australian Institute of Company Directors, Chartered Accountants Australia and New Zealand and Australian Society of CPAs.

SUSAN CAMPBELLCOMPANY SECRETARY AND LEGAL COUNSEL

Susan Campbell joined QSL as Company Secretary and Legal Counsel in October 2013 and is responsible for QSL’s corporate governance functions and the management of QSL’s legal issues. Susan has held a number of equivalent positions in other companies, including with North Queensland Bulk Ports Corporation.

Prior to QSL, Susan held the role of General Counsel and Company Secretary at Ergon Energy, having developed from the role of Group Legal Counsel. Susan brings more than 25 years’ experience in private practice and corporate in-house roles, specialising in commercial and corporate law.

QUALIFICATIONS:Bachelor of Commerce

Bachelor of Laws (Hons)

Graduate Diploma Securities Institute of Australia

Graduate Diploma Applied Corporate Governance

Graduate Certificate Business Administration


ANDREW HARRISONTECHNICAL MARKETING MANAGER

Andrew joined QSL in February 2003, having worked in senior technical roles in a refinery and several Queensland sugar mills. Andrew works within the Marketing Team as Technical Marketing Manager and is responsible for relationships with QSL’s customers in Japan, China, Taiwan, USA and New Zealand, as well as providing technical assistance across all other markets.

Previous to this role, Andrew was the Manager Quality and Logistics at QSL and was responsible for ensuring the quantity and quality of supply received across QSL’s terminals matched customers’ expectations while optimising storage to maximise pool returns.

QUALIFICATIONS:Sugar Technologist

DOUGALL LODGEGENERAL MANAGER TRADING AND RISK

Dougall has been involved in the global sugar market for around 20 years across a variety of roles within both producers and sugar users. He joined QSL in March 2014 after around 15 years of working within Coca-Cola’s global procurement teams in Australia and Asia. Dougall started his career with CSR Raw Sugar Marketing.

Dougall manages QSL’s Marketing and Treasury functions and is responsible for the delivery of pool returns.

QUALIFICATIONS:Bachelor of International Business

Diploma in Export Management

MIKE PANKETERMINAL MANAGER (MACKAY AND BUNDABERG)

Mike joined QSL in July 2012, having worked in senior roles in the fertiliser, chemical and hi-tech manufacturing industries.

Mike is responsible for the management of the Mackay and Bundaberg bulk sugar terminals and the highly effective handling, storage and shipping of bulk sugar at those terminals.

QUALIFICATIONS:Military Engineer

Registered Quality Systems Auditor

JOANNE NUGENTGENERAL MANAGER HUMAN RESOURCES

Joanne joined QSL in May 2014. With experience in the infrastructure, engineering, construction and finance sectors, Joanne has a track record in change management, human resource management and building people capability in a project and professional services environment.

Her past achievements have resulted from being an influential people manager driving commercial performance, continuous improvement and employee alignment and engagement to the achievement of business strategy. She has significant experience in HR leadership, implementing major organisational change initiatives, organisational design and restructuring programs, due diligence and integration planning for mergers and acquisitions and organisational and culture development.

Joanne focuses on the People and Culture strategy for QSL. With her team, she is responsible for fostering a diverse and dynamic culture within the business that reflects the business’s values, drives superior performance and enhances the potential of the business and our people.

QUALIFICATIONS:Diploma in Company Directorship (Australian Institute of Company Directors)

Graduate Certificate in Change Management

Bachelor of Business: Advanced major in Human Resource Management


AARON SEARLEFINANCIAL CONTROLLER

Aaron joined QSL in June 2010, having extensive experience in audit, accounting and finance roles in a range of industries including manufacturing, property and financial services.

Aaron is responsible for a number of the finance and accounting functions within the organisation including management and statutory reporting, indirect taxes, non-pooling activities and project work. He is also responsible for management accounting and reporting in relation to bulk sugar terminals. Recently Aaron has been responsible for the commercial management of the non-sugar related storage activities.

QUALIFICATIONS:Bachelor of Economics

Bachelor of Commerce

Chartered Accountant, Chartered Accountants Australia and New Zealand

Graduate Diploma of Applied Finance

Master of Applied Finance

STEPHEN STONETREASURER

Steve joined QSL in March 2010, having extensive experience working in Australia and internationally in a number of trading and risk management roles in the banking industry.

Steve uses his experience in managing risk and in-depth knowledge of risk management products to deliver solid returns for the QSL-managed pools.

QUALIFICATIONS:Bachelor of Commerce

Master of Commerce

BRYCE WENHAMFINANCE MANAGER, SUPPLIER RELATIONS

Bryce has a long history of working in the sugar industry in marketing and finance roles. Bryce has been with QSL for 16 years in various senior roles including: Marketing Manager, Commercial Services Manager and Financial Manager - Supplier Relations.

Bryce manages the direct relationship with QSL’s suppliers and maintains an in-depth understanding of growers’ needs. He is responsible for the negotiation and management of Raw Sugar Supply Agreements with suppliers and providing pooling and loan products, and general support to members.

QUALIFICATIONS:Bachelor of Business

Graduate Diploma of Applied Finance and Investment

DAMIAN ZIEBARTHGENERAL MANAGER OPERATIONS

Damian joined QSL in May 2012. He is an operations professional with over 25 years’ experience in heavy manufacturing industries.

Prior to joining QSL, Damian worked as the Australian Operations Manager for Incitec Pivot Ltd. His breadth of experience includes 11 years in milling and refining operations domestically for Bundaberg Sugar and internationally with Tate & Lyle Sugars.

Damian is responsible for overseeing QSL’s integrated storage, shipping and logistics management to ensure the reliable delivery of raw sugar that meets customer requirements.

QUALIFICATIONS:Bachelor in Mechanical Engineering

Masters of Engineering

LEADERSHIP TEAM CONTINUED


Queensland Sugar Limited (QSL) is a public company limited by guarantee, incorporated under the Corporations Act 2001. The principal object of the company, without limiting its powers under the law, is to promote the development of the sugar industry.

The company has 30 members representing the Australian sugar industry, consisting of:

� seven Mill Owner Members

� 23 Grower Representative Members, comprising:

– 21 elected holders, who are growers elected to represent the 21 sugar-growing regions in Queensland

– two representatives, one appointed by each of the organisations representing cane growers, Australian Cane Farmers Association Limited and Queensland Cane Growers Organisation Limited.

The voting rights of members are outlined in QSL’s Constitution. A copy of QSL’s Constitution is available at QSL’s website at www.qsl.com.au/about-qsl/corporate-structure/qsl-constitution

THE QSL BOARD OF DIRECTORS

ROLE OF THE BOARDThe Board has in place a Board Charter that sets out its role and responsibilities, with the objective of promoting the development of the sugar industry. The Board is responsible to QSL’s members for the strategic direction of QSL, monitoring of risk and governance, and overall performance of QSL. Other responsibilities of the Board include guiding the culture of QSL; strategy, planning and policy development; oversight of QSL’s management; monitoring compliance and risk management; health & safety and wellbeing of employees and

contractors; and stakeholder liaison and communication. The Board Charter is available at QSL’s website at www.qsl.com.au/about-qsl/governance.

In addition, a key function of the Board includes monitoring, reviewing and overseeing risk management, in particular financial risk. Policies and procedures are in place to manage QSL’s strategic, financial and operational risks. A key QSL policy regarding risk management is the Corporate Risk Management Policy. Specific policies are in place to govern the management of sugar price and foreign exchange risk. Speculative transactions are not permitted and hedging is only permitted within policy parameters.

As part of QSL’s commitment to managing exposure to significant business risk, the company also has policies and procedures in place covering areas such as Fraud and Corruption and Whistle blower policies, Code of Ethics and Conduct, Appropriate Workplace Behaviour and Privacy; Competition and Consumer law compliance and Work Health & Safety Policy and an Environmental Policy.

COMPOSITION OF THE BOARDThere are currently three Directors on the Board of QSL. QSL’s Constitution provides for a Board of a maximum of four independent Non-Executive Directors (and a minimum of three independent Directors), plus a Managing Director/CEO. There is an option in QSL’s Constitution for Mill Owner Members and Grower Representative Members to elect Mill Owner Directors and Grower Directors respectively, but this option has not been exercised. At general meetings of QSL members held on 8 December 2015 and 5 July 2016, resolutions were put to QSL members to amend the industry director appointment process, as detailed in the respective

notices of meetings sent to QSL members. The proposed constitutional changes considered and passed at both these meetings are currently before the Federal Court and if validated by the Court, it may be that industry directors will be appointed to the QSL Board. The constitutional changes proposed at the 5 July 2016 meeting do not change the position in the QSL Constitution that there must be a minimum of three independent Directors on the QSL Board.

There are currently two independent Non-Executive Directors on the QSL Board, being Guy Cowan (Chairman) and Sarah Scales. Chris Leon resigned as an independent Non-Executive Director on the QSL Board on 4 July 2016 and a process is now underway to fill that vacancy. Once this vacancy is filled, the membership of the Committees (described below) will be reviewed.

Greg Beashel is the Managing Director/CEO of QSL. Details about the current Directors are in the Directors’ Report in the Financial Statements.

APPOINTMENT OF DIRECTORSIndependent Non-Executive Directors are appointed to the QSL Board by QSL’s Board Selection Committee. The Board Selection Committee comprises four members: two members elected for a three-year term by Mill Owner Members and two members elected for a three-year term by Grower Representative Members.

Under the Constitution, when selecting independent Non-Executive Directors, the Board Selection Committee has regard to the mix of skills required for the Board to properly meet the company’s objectives, as well as the independence of the candidate.

CORPORATE GOVERNANCE


BOARD COMMITTEESThere are currently three Board committees to assist the Board to carry out its functions: the Audit and Risk Committee, the Trading Risk Committee, and the People & Operations Committee. Each Committee has authority from the Board to review and investigate any matter within the scope of its Charter and make recommendations to the Board.

Copies of QSL’s Board Committee Charters, which sets out each Committee’s area of responsibilities, are available at QSL’s website at www.qsl.com.au/about-qsl/governance.

AUDIT AND RISK COMMITTEEThe Audit and Risk Committee assists the Board to discharge its responsibilities via oversight of the enterprise risk management, control and compliance framework established by the Board and QSL management;

and review of QSL’s risk management, finance and audit reporting.

The current members of the Audit and Risk Committee are Guy Cowan (Committee Chair) and Sarah Scales (previously included Chris Leon). The Managing Director, the Chief Financial Officer, Risk & Compliance Manager and representatives of the external and internal auditors attend meetings of this Committee by invitation.

TRADING RISK COMMITTEEThe Trading Risk Committee assists the Board to discharge its responsibilities via oversight of risk management, control and compliance measures established by the Board and management relating to commodity and foreign currency hedging, marketing and sale of sugar and chartering activities.

The current members of the Trading Risk Committee are Sarah Scales (Committee Chair) and Guy Cowan.

The Managing Director, the Chief Financial Officer, GM Trading & Risk and representatives of external and internal auditors attend meetings of this Committee by invitation.

PEOPLE AND OPERATIONS COMMITTEEThe People & Operations Committee assists the Board to discharge its responsibilities relating to workplace health & safety, environmental compliance as well as people issues.

The current member of the People and Operations Committee is Guy Cowan, with Chris Leon previously being on this Committee as Chair, prior to his resignation on 4 July 2016. The Managing Director, Company Secretary, GM Human Resources and GM Operations are invited to attend meetings as appropriate.

From left: Guy Cowan, Sarah Scales, Greg Beashel

CORPORATE GOVERNANCE CONTINUED


QSL’s Total Reward Framework is designed around the following principles:

� Remuneration is an investment. QSL is committed to spending remuneration resources wisely in pursuit of the implementation of our strategy.

� It must be powerful enough to source, engage, reward and retain high-quality people who are capable of achieving challenging performance targets and generating superior results for our members. It must contribute to establishing a stable pipeline of both leaders and talent, so there is no perceived or actual risk with our performance.

� Credibility is key. Our Reward and Remuneration framework must be regarded as fair, reasonable and rewarding by our members and employees alike. It must be defined by its simplicity, transparency and market relevance.

QSL completed a full internal review of its Total Reward and Remuneration framework in the 2014/15 financial year. This review identified that QSL’s framework is competitive and credible, both for fixed and variable pay. Ongoing changes implemented

in the last financial year have ensured that remuneration decisions for Fixed Annual Reward and Short Term Incentives are now directly aligned to achievement of organisational strategy and levels of personal performance. Following the 2015/16 remuneration review, QSL is confident that staff are remunerated conservatively yet competitively to market, mitigating possible risks of loss of critical talent and capability, while also ensuring costs are sustainable for the future.

QSL continues to be informed by market research from Korn Ferry Hay Group for independent industry benchmarking data.

DIRECTOR REMUNERATIONQSL engaged Korn Ferry Hay Group in November 2015 to provide relevant market reference points to consider when assessing board fees for non-executive directors. The benchmarking received considered the size and diversity of Queensland Sugar, the impact of Government and its requirements on the Board, the demands on Directors imposed by other corporate governance requirements as well as the strategic direction and business overview role of the Board.

This independent insight has enabled the Board to have greater confidence that QSL Director Board fees reflect market practices.

THE ROLE OF THE BOARDThe Board People and Operations Committee, under its charter, has oversight into the design and effectiveness of QSL’s Total Reward and Remuneration framework, including specific details of remuneration packages for the CEO and MD, Executives and Directors. The Committee continues to strengthen the Reward and Remuneration framework. The Board makes all final decisions in relation to salary, incentive plans, eligibility criteria and ensuring strong alignment to organisational performance.

REMUNERATION REPORT


STATUTORY FINANCIAL REPORT

CONTENTSDirectors’ Report 23

Auditor’s Independence Declaration 27

Consolidated Statement of Comprehensive Income 28

Consolidated Statement of Financial Position 29

Consolidated Statement of Changes in Equity 30

Consolidated Statement of Cash Flows 31

Notes to the Financial Statements 32

Independent Auditor’s Report 50


DIRECTORS’ REPORTFOR THE YEAR ENDED 30 JUNE 2016 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES

The Directors of Queensland Sugar Limited (‘QSL’ or ‘Parent Entity’) present their report on QSL and its Controlled Entities (‘Consolidated Entity’) for the year ended 30 June 2016 and the auditor’s report thereon.

DIRECTORS

The names and details of QSL’s Directors in office during the financial year and until the date of this report are as follows. Directors were in office for the entire period unless otherwise stated.

GUY COWAN BSc (Hons), FCA (UK), MAICD

CHAIRMAN OF THE BOARD, CHAIRMAN OF THE AUDIT & RISK COMMITTEE, MEMBER OF THE TRADING RISK COMMITTEE AND MEMBER OF THE PEOPLE & OPERATIONS COMMITTEE

Guy joined the QSL Board on 1 January 2009 and was appointed Chairman at QSL on 1 January 2015. Guy has had nine years’ experience as a chartered accountant with Price Waterhouse (now PricewaterhouseCoopers) and KPMG, in addition to 23 years’ international experience in commercial and finance roles in the oil and gas industry.

Prior to February 2005, he was Chief Financial Officer (CFO) of Shell Oil in the USA, and from February 2005 until February 2009, Guy was CFO of Fonterra Co-operative Group Limited, the New Zealand-based world leading exporter of dairy products that accounts for more than one third of the international dairy trade.

In addition to his role on the QSL Board, Guy holds directorships with UGL (formerly United Group Limited), Santos Limited, Winson Group Pty Ltd and Beak and Johnston Pty Ltd.

SARAH SCALES BAgSc, GAICD

NON-EXECUTIVE DIRECTOR OF THE BOARD, CHAIRMAN OF THE TRADING RISK COMMITTEE AND MEMBER OF THE AUDIT & RISK COMMITTEE

Sarah joined the QSL Board as a Non-Executive Director on 1 January 2013. Sarah’s term expired on 31 December 2015, and she was then reappointed on 29 January 2016 for a further 12 month period expiring on 28 January 2017.

Sarah brings to the role more than 20 years of senior management experience working in domestic and international agribusiness. This includes six years working as the General Manager AWB International Limited looking after the Single Desk wheat business for AWB Limited.

Sarah has extensive experience in business strategy development and soft commodity marketing with specific skills in the area of managing pools and price risk, including foreign exchange and commodity derivatives. Through her company, Clear Point Consulting, Sarah provides strategic management advice to agribusinesses and new entrants to the Australian agriculture sector.

Sarah’s non-executive directorships include The Pastoral Pork Company Pty Ltd, Agracom Pty Ltd, Aroona Holdings Pty Ltd and InterGrain Pty Ltd. Sarah was the Chairman of Goulburn Murray Water Corporation during the year, however, resigned effective from 31 August 2016.

GREG BEASHEL BE Chem (Hons), MBA, GAICD

MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER

Greg joined QSL in June 2000. Prior to being appointed as Managing Director and Chief Executive Officer on 1 February 2012, Greg was responsible for operations including port terminal management, capital and maintenance management, shipping operations, chartering and trade finance.

Before joining QSL, Greg spent seven years with CSR in a range of roles including operations, sugar marketing, hedging and trading. He has extensive experience in sugar refining and a strong understanding of customer perspectives and requirements. Greg is a graduate of the AGSM MBA Executive program and has a Bachelor of Chemical Engineering (Hons) from the University of New South Wales.

CHRIS LEON BSc, MEngSc, FAICD NON-EXECUTIVE DIRECTOR OF THE BOARD, CHAIRMAN OF THE PEOPLE & OPERATIONS COMMITTEE AND MEMBER OF THE AUDIT & RISK COMMITTEE (RESIGNED EFFECTIVE 4 JULY 2016)

Chris held the position of Director of QSL from 15 February 2014, resigning from his position effective 4 July 2016. Chris has extensive experience in international business and driving the strategic direction of private and publicly listed and unlisted companies across a range of industries including logistics, agribusiness, manufacturing and mining. He is currently a Non-Executive Director and member of the Remuneration and Nominations Committee at Tassal Group Ltd and has held various Board Member positions throughout the last two decades including at Cement Australia and its associated companies. Chris is a Fellow of the Australian Institute of Company Directors and a Member of the Institute of Engineers Australia.

In his most recent executive role as Managing Director and Chief Executive Officer at Cement Australia (2003 – 2012), Chris was instrumental in bringing together two companies and driving the newly formed team to success, ensuring Cement Australia became the nation’s largest producer and distributor of cement, fly ash and slag. His other executive roles were in the industrial gases, HVACR (heating, ventilating, air-conditioning and refrigeration) and fertiliser industries.


DIRECTORS’ REPORT CONTINUED

FOR THE YEAR ENDED 30 JUNE 2016 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES

COMPANY SECRETARY

SUSAN CAMPBELL BComm, LLB (Hons), GradDip Sec Institute, GradDip App Corp Gov, GradCert Bus Admin

COMPANY SECRETARY AND LEGAL COUNSEL

Susan Campbell joined QSL as Company Secretary and Legal Counsel in October 2013 and is responsible for QSL’s corporate governance functions and the management of QSL’s legal issues. Susan has held a number of equivalent positions in other companies, including with North Queensland Bulk Ports Corporation.

Prior to QSL, Susan held the role of General Counsel/Company Secretary at Ergon Energy, having developed from the role of Group Legal Counsel. Susan brings more than 25 years’ experience in private practice and corporate in-house roles, specialising in commercial and corporate law.

DIRECTORS’ MEETINGS

The number of meetings of QSL’s Directors (including meetings of Committees of Directors) and the number of meetings attended by each Director during the financial year were:

BOARD OF DIRECTORS

AUDIT & RISK COMMITTEE

(A&RC)

TRADING RISK COMMITTEE

(TRC)

PEOPLE, SAFETY & ENVIRONMENT

COMMITTEE2 (PS&EC)

PEOPLE AND OPERATIONS

COMMITTEE (POC)2

HE

LD1

ATTE

ND

ED

HE

LD1

ATTE

ND

ED

HE

LD1

ATTE

ND

ED

HE

LD1

ATTE

ND

ED

HE

LD1

ATTE

ND

ED

Guy Cowan 29 28 4 4 4 4 4 4 3 3

Sarah Scales3 29 28 4 4 4 4 4 1 3 1

Chris Leon4 29 28 4 4 4 4 4 4 3 3

Greg Beashel5 29 28 4 4 4 4 4 4 3 3

1 Represents the number of meetings held during the time the Director held office during the 2015/16 year.2 PS&EC was renamed to POC and held its first meeting on 23 December 2015.3 Sarah Scales was not a member of the PS&EC or POC but attended two meetings by invitation.4 Chris Leon is not a member of the TRC but attended the meetings by invitation.5 Greg Beashel is not a member of the Board Committees, but attends meetings by invitation.


SIGNIFICANT CHANGES

There were no significant changes in the state of affairs or in the nature of QSL’s or its Controlled Entity’s principal operations during the year.

PRINCIPAL OPERATIONS AND OBJECTIVES

The principal operations of the Consolidated Entity are the marketing of raw sugar, the management of financial risk in connection with such marketing, financing of the advances program and transport and logistics services. In pursuing its short and long term objectives the company seeks to maximise the returns to members through revenues generated from pooling activity, enhancing its product and service offering to members and focusing on adding value for the benefit of members. The company’s strategy of maximising pool returns is achieved by keeping a tight control of costs, efficient and safe operation of the terminals, outperforming relevant benchmarks, offsetting shared services costs with other revenue using surplus terminal capacity to generate additional revenue and optimising pool returns by purchasing and selling raw sugar from other origins.

The company measures its performance against key performance indicators. The most significant key performance indicator is in relation to the revenues generated for members from pooling activity against relevant benchmarks.

REVIEW OF OPERATIONS AND RESULTS

A review of the Consolidated Entity’s operations and results for the year ended 30 June 2016 is set out below:

MARKETING ACTIVITIES

The 2016 financial year saw QSL provide raw sugar export marketing services to six Queensland milling companies (‘Suppliers’) (2015: six) under Raw Sugar Supply Agreements (‘RSSAs’) and subsequently sell 3.7 million tonnes of Australian raw sugar (2015: 3.5 million tonnes). QSL had seven (2015: seven) RSSAs with Suppliers during the year.

Mackay Sugar Limited, Bundaberg Sugar Limited, Isis Central Sugar Mill and WH Heck & Sons Pty Ltd retain the term of their supply agreement with QSL until at least the end of the 2019 financial year (2018 season). Wilmar Sugar Australia Limited, Tully Sugar Limited and MSF Sugar Limited provided a termination notice in relation to their RSSA prior to 30 June 2014 which will result in those Suppliers marketing their export raw sugar beyond 30 June 2017 (2016 Season).

The Sugar Industry (Real Choice in Marketing) Amendment Act was passed by Queensland State Parliament in December 2015. This legislation requires marketing choice to be given to growers and QSL is working to operationalise growers’ choice in the best interests of the Queensland sugar industry.

REVENUES

QSL recorded sales revenue from Australian raw sugar for the 2016 financial year of $1,810.9 million, an increase of $83.2 million from the previous year’s revenue of $1,727.7 million. The higher sales revenue number compared to the prior year is primarily a result of a greater quantity of export RSSA tonnage. All pools have outperformed the passive management benchmark, establishing strong returns for QSL’s members. Consistent with prior years, QSL continues to be focused on marketing raw sugar to Asian markets to obtain the highest net return for members.

QSL operates an other origin sugar business to complement the existing marketing program by allowing pool sales to be fulfilled through either supplying Queensland sugar or by supplying sugar from other destinations. Other origin sugar sales and purchases were transacted during the 2016 financial year with QSL selling and purchasing 105,000 tonnes of non-Australian raw sugar (2015: 306,000 tonnes), in order for QSL to meet customer demand and maintain its marketing presence in a growing Asian market. The other origin sugar opportunities were not as prevalent as prior years, resulting in a lower contribution to net pool returns. QSL will continue to buy and sell other origin sugar in future financial years as opportunities arise.

EXPENSES

Payments to Suppliers for the year ended 30 June 2016 were $1,632.1 million, an increase of $61.8 million from the prior year’s payments to Suppliers of $1,570.3 million. This was predominately the result of increased RSSA tonnage of 212,000 tonnes compared to the prior year.

Freight and brokerage costs were up by $9.2 million this year compared to the previous year primarily due to more tonnage shipped on a Cost, Insurance, and Freight (CIF) or Cost and Freight (CFR) basis. Operating lease rental costs increased by $1.9 million to $49.1 million due to an inflationary increase in the base rental of the lease with STL for the six BSTs and a higher capital adjustment to the base rental due to the replacement of shed roofs.

Borrowing costs decreased by $5.1 million to $16.3 million from the prior year due to an earlier shipping program this year compared to the last year. This was due to a favourable market structure resulting in a lesser requirement to finance sugar inventories. Additionally, $0.5 million (2015: $1.0 million) was funded to the sugar industry for research and development related expenditure.

NET SURPLUS

QSL’s pooling and non-pooling activities delivered a nil (2015: nil) surplus for the Consolidated Entity with all net returns being passed back to RSSA participants through the Shared Pool in the 2016 financial year. QSL will continue to maximise pool returns and pass as much of the net pool returns through to the Queensland sugar industry.

BANKING AND FINANCING

The Advances Program was funded during the year from the committed and uncommitted facilities. QSL’s funding requirements are met by the limits contained in the committed facilities.

The committed facilities comprise of a $500.0 million syndicated credit facility and a US$200.0 million Syndicated Inventory Facility (SIF). The syndicated credit facility has a facility term until 30 June 2017 to match the term of the RSSAs at the time. This facility allows QSL to have access to the facility limit of $500.0 million for the whole period with a step-down in facility limit during the off-season to allow a reduction in line fees. In addition, QSL entered into a SIF in December 2015 with a US$200.0 million limit as at 30 June 2016. This facility is a sale and repurchase arrangement using sugar inventory at the terminal with an initial expiry date of December 2016 and structured as an annual revolving facility. The SIF was not drawn down at 30 June 2016. QSL retains access to various uncommitted funding facilities with a range of financial institutions in order to obtain funds at the lowest possible funding cost.


EVENTS AFTER REPORTING DATE

Other than the items reported in Note 20 of the financial report, no matter or circumstance has arisen since the end of the reporting period that has significantly affected or may significantly affect:

� The Consolidated Entity’s operations in future financial years

� The result of those operations in future financial years

� The Consolidated Entity’s state of affairs in future financial years.

LIKELY DEVELOPMENTS

The Consolidated Entity will continue to provide marketing of raw sugar, the management of financial risk in connection with such marketing and transport and logistics services.

While a number of Suppliers have provided a termination notice in respect of supply of export raw sugar beyond 30 June 2017, QSL will endeavour to provide as many marketing services to the Queensland sugar industry as possible.

GUARANTEE AMOUNT BY MEMBERS

The Company has 30 members representing the Australian sugar industry. These members consist of:

� seven Mill Owner Members; and

� 23 Grower Representative Members

For each class of membership in the Company the amount which a member of that class is liable to contribute if the Company is wound up is $100 per member. The total amount that Mill Owner Members and Grower Representative Members of the Company are liable to contribute if QSL is wound up is $700 and $2,300 respectively, totalling $3,000.

ENVIRONMENTAL REGULATION

The Consolidated Entity’s operations are subject to significant environmental regulation under Commonwealth and Queensland law, particularly with regard to air, noise, water, waste management and site contamination at its bulk sugar terminal operations.

Directors are not aware of any significant breaches of environmental regulation during the reporting period.

INDEMNITIES AND INSURANCE

The Constitution of QSL provides that the company, to the extent permitted by law, must indemnify each person who is, or has been, a Director or Secretary of the company against any liability (resulting directly or indirectly from facts or circumstances relating to the person serving in that capacity in relation to the company):

� To any person (other than the company) which does not arise out of conduct involving the lack of good faith or conduct known to the person to be wrongful

� For costs and expenses incurred by the person in defending proceedings, whether civil or criminal, in which judgement is given in favour of the person or in which the person is acquitted, or in connection with any application in relation to such proceedings in which the court grants relief to the person under the Corporations Act 2001.

The Constitution of the company also provides that the Board of Directors may authorise the company to, and the company may, enter into any insurance policy for the benefit of any person who is, or has been, a Director, Secretary, auditor, employee or other officer of the company. The obligation of the company to indemnify persons as set out in the preceding paragraph is reduced to the extent that a person is entitled to an indemnity in respect of that liability under a contract of insurance. The company has paid, or has agreed to pay, premiums in respect of contracts insuring against liability, persons who are or have been officers of the company, namely, any past, present or future Director or officer of the company. The contracts prohibit disclosure of the extent of the cover and amounts of the premium.

AUDITOR INDEPENDENCE

The auditor’s independence declaration is set out on page 27 and forms part of the Directors’ Report for the year ended 30 June 2016.

ROUNDING OF AMOUNTS

Unless otherwise shown in the financial report, amounts have been rounded to the nearest $1,000 (where rounding is applicable and where noted ($’000)) under the option available to the Controlled Entities under ASIC CO 98/0100. QSL is a company to which the Class Order applies.

The Directors’ Report is signed for and on behalf of the Directors in accordance with a resolution of the Board of Directors of QSL.

Guy Cowan Chairman

15 September 2016

DIRECTORS’ REPORT CONTINUED



AUDITOR’S INDEPENDENCE DECLARATION FOR THE YEAR ENDED 30 JUNE 2016 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

Ernst & Young 111 Eagle Street Brisbane QLD 4000 Australia GPO Box 7878 Brisbane QLD 4001

Tel: +61 7 3011 3333 Fax: +61 7 3011 3100 ey.com/au

Auditor’s independence declaration to the directors of Queensland Sugar Limited As lead auditor for the audit of Queensland Sugar Limited for the financial year ended 30 June 2016, I declare to the best of my knowledge and belief, there have been:

a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

b) no contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Queensland Sugar Limited and the entities it controlled during the financial year.

Ernst & Young

Paula McLuskie Partner Brisbane 15 September 2016


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 30 JUNE 2016 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES

Note2016 $’000

2015 $’000

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

REVENUES FROM CONTINUING OPERATIONSSales of Australian raw sugar 1,810,911 1,727,724

Sales of non-Australian raw sugar 113,556 138,021

Net foreign currency exchange gain/(loss) (13,460) 3,706

Interest income 1,119 2,115

Dividend income 3 2,383 2,039

Other revenues 1,526 1,658

1,916,035 1,875,263

EXPENSES FROM CONTINUING OPERATIONSPayments to Suppliers for Australian raw sugar 1,632,141 1,570,273

Purchases of non-Australian raw sugar 103,645 129,622

Freight and brokerage 4 65,438 56,240

Operating lease rental 4 49,086 47,190

Salaries and employee benefits 21,075 20,983

Borrowing costs 4 16,317 21,437

Depreciation 2,810 2,158

Research funding to the sugar industry 4 465 976

Other expenses 5 25,058 26,384

1,916,035 1,875,263

NET SURPLUS ATTRIBUTABLE TO MEMBERS OF QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES - -

OTHER COMPREHENSIVE INCOME FOR THE YEAR

Items that may be reclassified subsequently to profit or lossNet gain on available-for-sale financial assets 175 432

TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO MEMBERS OF QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES 175 432

The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.


CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAS AT 30 JUNE 2016 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES

Note

2016 $’000

2015 $’000

ASSETS

CURRENT ASSETSCash and cash equivalents 15 1,024 156,934

Trade and other receivables 6 79,814 49,607

Inventories 7 235,667 336,078

Prepayments 4,708 3,970

Other financial assets 8 126,144 59,346

TOTAL CURRENT ASSETS 447,357 605,935

NON-CURRENT ASSETSAvailable-for-sale financial assets 9 24,168 23,818

Property, plant and equipment 10 19,356 18,681

Other financial assets 8 18,122 18,051

TOTAL NON-CURRENT ASSETS 61,646 60,550

TOTAL ASSETS 509,003 666,485

LIABILITIES

CURRENT LIABILITIESTrade and other payables 11 91,794 231,625

Other financial liabilities 12 84,635 114,839

Interest bearing liabilities 13 260,527 250,000

Provisions 14 5,472 5,124

TOTAL CURRENT LIABILITIES 442,428 601,588

NON-CURRENT LIABILITIESTrade and other payables 12 19,610 18,157

Provisions 14 1,528 1,478

TOTAL NON-CURRENT LIABILITIES 21,138 19,635

TOTAL LIABILITIES 463,566 621,223

NET ASSETS 45,437 45,262

EQUITYReserves 25,095 24,920

Retained surpluses 20,342 20,342

TOTAL EQUITY 45,437 45,262

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.


CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 30 JUNE 2016 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES

RETAINED SURPLUSES

RESERVES TOTAL EQUITY

Capital Available-for-sale$’000 $’000 $’000 $’000

BALANCE AT 1 JULY 2014 20,342 23,242 1,246 44,830

Net surplus - - - -

Other comprehensive income - - 432 432

Total comprehensive income - - 432 432

BALANCE AT 30 JUNE 2015 20,342 23,242 1,678 45,262

BALANCE AT 1 JULY 2015 20,342 23,242 1,678 45,262

Net surplus - - - -

Other comprehensive income - - 175 175

Total comprehensive income - - 175 175

BALANCE AT 30 JUNE 2016 20,342 23,242 1,853 45,437

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.


CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 30 JUNE 2016 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES

2016 2015NOTE $’000 $’000

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers (inclusive of GST) 2,140,743 1,859,916

Payments to Suppliers for Australian raw sugar (inclusive of GST) (2,156,530) (1,614,320)

Payments to third party sugar suppliers for non-Australian raw sugar (inclusive of GST) (103,645) (129,622)

Payments to suppliers and employees (inclusive of GST) (298,038) (147,696)

GST recovered 156,380 154,649

Interest and other borrowing costs paid (16,317) (21,437)

Interest received 1,119 2,115

Cash settlements of derivative instruments 100,321 57,469

Other receipts 8,654 4,883

NET CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES (167,313) 165,957

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of available-for-sale financial assets (194) (201)

Purchase of property, plant and equipment (3,484) (3,402)

Proceeds from sale of property, plant and equipment 32 320

Dividends received 2,383 2,039

NET CASH FLOWS USED IN INVESTING ACTIVITIES (1,263) (1,244)

CASH FLOWS FROM FINANCING ACTIVITIES

Other loan repayments from Suppliers 2,137 819

NET CASH FLOWS FROM FINANCING ACTIVITIES 2,137 819

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (166,439) 165,532

Cash and cash equivalents at beginning of the year (93,066) (258,801)

Effects of exchange rate changes on the cash and cash equivalents 2 203

CASH AND CASH EQUIVALENTS AT END OF YEAR 15 (259,503) (93,066)

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.


1 CORPORATE INFORMATION

The financial report of QSL and its Controlled Entities for the year ended 30 June 2016 was authorised for issue in accordance with a resolution of the Directors on 15 September 2016.

QSL is a company limited by guarantee incorporated in Australia. The Consolidated Entity’s principal activity is the sale of raw sugar for export. The operations of the Parent Entity include the management of the six bulk sugar terminals located in Queensland as well as the marketing of raw sugar for export to an existing and mature customer base.

QSL’s Controlled Entities comprise of QSL Investments (No1) Pty Ltd and QSL Investments (No2) Pty Ltd.

The registered office of QSL is located at Level 14, 348 Edward Street, Brisbane, Queensland.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) BASIS OF PREPARATION

The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The financial report has also been prepared under the historical cost convention, except for inventory, derivative financial instruments and available-for-sale investments, which have been measured at fair value.

The financial report includes consolidated financial statements of QSL and its Controlled Entities with supplementary information about the Parent Entity included in Note 23 to the financial statements.

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

(B) BASIS OF CONSOLIDATION

The consolidated financial statements comprise the financial statements of QSL and its Controlled Entities as at 30 June 2016. Under the Corporations Amendment (Corporate Reporting Reform) Act 2010 supplementary information about the Parent Entity is included in Note 23 to the financial statements.

The financial statements of the Controlled Entities are prepared for the same reporting period as the Parent Entity, using consistent accounting policies. In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and surplus and losses resulting from intra-group transactions have been eliminated in full.

(C) STATEMENT OF COMPLIANCE

The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards – Reduced Disclosure Requirements and other authoritative pronouncements of the Australian Accounting Standards Board. The Consolidated Group is a not for profit entity for financial reporting purposes under Australian Accounting Standards. Therefore, the consolidated financial statements for the Group are tier 2 general purpose financial statements which have been prepared in accordance with Australian Accounting Standards – Reduced Disclosure Requirements (AASB-RDRs).

The Consolidated Entity prepares one set of consolidated financial statements and provides supplementary information about the Parent Entity, QSL in Note 23 of the financial statements.

New and amended standards and interpretations

QSL has adopted the following new and amended Australian Accounting Standard as of 1 July 2015:

� AASB 2015-2 – Amendments to Australian Accounting Standards - Disclosure Initiative [AASB 101]

The adoption of this standard and amendment had no material financial impact on the current period or any prior period and is not likely to affect future periods. The nature and the impact of this new standard and amendment is described below:

AASB 2015-2 – Amendments to Australian Accounting Standards - Disclosure Initiative [AASB 101]

The amendments make clear that materiality applies to the whole of the financial statements and that the inclusion of immaterial information can inhibit the usefulness of financial disclosures. The amendments also clarify that companies should use professional judgement in determining where and in what order information is presented in the financial disclosures. The Consolidated Entity has adopted the Reduced Disclosure Requirements which have in conjunction with this amendment improved transparency.

Australian Accounting Standards and AASB Interpretations that have recently been issued or amended but are not yet effective and have not been adopted by the Consolidated Entity for the annual reporting period ended 30 June 2016 are outlined below:

� AASB 9 – Replaces AASB139 – Financial Instruments

The nature and the impact of this new standard and amendment is described below:

AASB 9 Financial Instruments – Classification and Measurement of Financial Assets and Liabilities

The standard addresses simplifies the classification and measurement of financial assets and measures financial liabilities using the fair value option. This new standard also introduces a new expected-loss impairment model that will require more timely recognition of expected credited losses. This standard has no impact on the Consolidated Entity. The Consolidated Entity is currently considering the impact of this new and amended standards and interpretations.

(D) CASH AND CASH EQUIVALENTS

Cash in the Consolidated Statement of Financial Position includes cash on hand and at bank, which are subject to insignificant risk of changes in value.

(E) REVENUE RECOGNITION

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Consolidated Entity and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes. The specific recognition criteria described below must also be met before revenue is recognised.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES


2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(E) REVENUE RECOGNITION CONTINUED

(i) Sales of raw sugar

Sales to customers are made on commercial terms with settlement generally on a cash against documents or letter of credit basis, predominantly in United States (‘US’) dollars. Sales are recognised when the transfer of title and risk occurs and it is probable that the economic benefits will flow to the Consolidated Entity and can be reliably measured. Sales revenue also includes transactions relating to foreign exchange, sugar futures and options operations and is net of rebates, discounts and allowances. Sales revenue and derivatives are presented on a net basis as the derivatives are entered into to hedge expousure on sales contracts resulting in offsetting that accurately reflects the substance of the transaction.

(ii) Dividend Income

Revenue is recognised when the Consolidated Entity’s right to receive the payment is established.

(iii) Interest Income

Interest income is recorded using the effective interest rate method.

(F) FUTURES AND OPTIONS MARKET HEDGING

Transactions in sugar futures and options are carried out as part of the range of pricing mechanisms for physical sales of sugar. The results of such transactions are linked with the appropriate sugar sales contracts and are thus included in sales revenue. At reporting date, those relating to future years are accounted for as derivatives (refer Note 2(h)).

(G) FOREIGN CURRENCY TRANSLATION

The US dollar is the principal currency in which sugar is traded. The financial statements are presented in Australian dollars, which is the Consolidated Entity’s functional and presentation currency.

Transactions denominated in foreign currencies are initially recorded in the functional currency at the exchange rates prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of foreign currency denominated monetary assets and liabilities using rates applicable at reporting date are recognised in the Consolidated Statement of Profit or Loss.

Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date.

(H) DERIVATIVES

Derivative instruments are used by the Parent Entity to manage commodity and foreign currency exposures connected with the sale of each season’s Australian raw sugar production and purchases and sales of non-Australian third party sugar. The Parent Entity does not trade in derivatives. In accordance with the Parent Entity’s Financial Risk Management Policy, derivatives are entered into to manage defined sugar price and currency exposures. These exposures relate to known or anticipated sales of raw sugar. Derivatives are stated at fair value with any gains or losses arising from changes in fair value taken directly to the Consolidated Statement of Profit or Loss.

Forward foreign currency and sugar swap contract terms do not exceed five years. Sugar futures and option contracts are entered into with terms no greater than three years. Details of open contracts at reporting date are provided in Note 24.

Amounts receivable or payable at reporting date under sugar futures and options and foreign currency transactions relating to future pools’ production are recognised as amounts owing to or amounts owing from future pools, and are included in the Statement of Financial Position on a net basis (netting performed in accordance with AASB132) with gains or losses arising from changes in the value of amounts owing to or amounts owing from future pools taken directly to the Consolidated Statement of Profit or Loss (refer to Notes 8 and 12).

In relation to the fair value hierarcy, exchange traded instruments are valued using Level 1 inputs while Over-the-Counter (OTC) instruments are valued using Level 2 inputs.

(I) FAIR VALUE MEASUREMENT

QSL measures financial instruments, such as, derivatives, and non-financial assets, at fair value at each reporting date date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

� In the principal market for the asset or liability, or

� In the absence of a principal market, in the most advantageous market for the asset or liability

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

QSL uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For the purpose of fair value disclosures, QSL has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

(J) TRADE AND OTHER RECEIVABLES

(i) Trade Receivables

Trade receivables, which are generally settled against documents when each vessel is loaded, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts.


NOTES TO THE FINANCIAL STATEMENTS CONTINUED



(J) TRADE AND OTHER RECEIVABLES CONTINUED

(ii) Amounts Owing from Suppliers

Relates to loans to Suppliers for pre-crop financing (refer to Note 6).

An allowance for doubtful debts is made when there is objective evidence that the Consolidated Entity will not be able to collect the debts. Bad debts are written off as incurred.

(K) INVENTORIES

Materials and general store items used for maintenance at bulk sugar terminals are expensed in the year in which they are incurred.

Raw sugar stock on hand at reporting date has been valued at the lower of cost and net realisable value. The cost of stock on hand in respect of each season’s production has been determined as the respective weighted average of pool prices payable to Suppliers as calculated in accordance with RSSAs.

In respect of the following season’s stock on hand, where the final pool price has not been established, the cost has been determined on the basis of the weighted average of forecast pool prices at reporting date. Where sales of the following season’s production are made prior to reporting date, those stocks are valued on the basis of the net proceeds expected to be received from those shipments.

Raw sugar on hand comprises stock on hand at bulk sugar terminals at reporting date. Sugar stocks are recognised when sugar is received and property to the sugar passes to the Consolidated Entity. In relation to the determination of pool prices each season, any raw sugar on hand at reporting date is valued as follows:

(i) Sugar priced - valued at the lower of cost and net realisable value and converted to Australian dollars at the exchange rate ruling at reporting date.

(ii) Sugar unpriced - valued at reporting date on the basis of the Intercontinental Exchange (‘ICE’) No 11 or No 16 futures settlement price for the quoted positions or market day average prices in respect to specific contracts of sale and converted to Australian dollars at the exchange rate ruling at reporting date.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

(L) CURRENT ASSETS

Current assets comprise cash at bank and on hand, term deposits, debtors, other receivables relating to the pre-crop loans, prepayments, raw sugar stock on hand, amounts owing from future pools, unrealised gains on foreign currency transactions and unrealised gains on sugar futures and options contracts that are expected to be realised within 12 months from reporting date. The Consolidated Entity classifies all other assets as non-current.

(M) PROPERTY PLANT AND EQUIPMENT

Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Such costs include the costs of replacing parts that are eligible for capitalisation when the cost of replacing the part is incurred.

(i) Depreciation

Depreciation is provided on a straight-line basis on all property, plant and equipment, other than freehold and leasehold land, over the estimated useful life of the assets as follows:

Asset Class 2016 2015

Freehold buildings 50 years 50 years

Leasehold improvements lease term lease term

Plant and equipment 4 to 25 years 4 to 25 years

The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each reporting date.

(ii) Impairment

The carrying values of plant and equipment are reviewed for impairment at each reporting date, with the recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired.

The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in use. Impairment exists when the carrying value of an asset or cash-generating unit exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount.

(iii) Derecognition and disposal

An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Consolidated Statement of Profit or Loss in the year the asset was derecognised.

Freehold buildings are valued at the cost to the Consolidated Entity at the time of purchase.

(N) IMPAIRMENT OF ASSETS

The Consolidated Entity assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Consolidated Entity makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use determined for the individual asset, unless the asset does not generate cash inflows that are largely independent of those from the other assets and the asset’s value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of the asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at the revalued amount (in which case the impairment loss is treated as a revaluation decrease).



(N) IMPAIRMENT OF ASSETS CONTINUED

An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in the prior years. Such reversal is recognised in the Consolidated Statement of Profit or Loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future years to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

(O) OTHER NON-CURRENT ASSETS

Expenditure carried forward

Significant items of carry forward expenditure having a benefit or relating to more than one year are written off over the years to which such expenditure relates.

(P) LEASED ASSETS

Operating leases

Operating leases are those where the lessor effectively retains substantially all the risks and benefits incidental to ownership of the leased property. Lease payments of this type are not capitalised and rental payments are expensed each year as incurred. Disclosure of these lease commitments is made in Note 17.

(Q) CURRENT LIABILITIES

Current liabilities comprise all amounts owing at reporting date and payable within 12 months, including amounts due to Suppliers. The Consolidated Entity classifies all other liabilities as non-current.

(R) TRADE AND OTHER PAYABLES

Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Consolidated Entity prior to the end of the financial year that are unpaid and arise when the Consolidated Entity becomes obliged to make future payments in respect of the purchase of those goods and services.

(S) INTEREST BEARING LOANS AND BORROWINGS

All loans and borrowings are initially recognised at fair value of the consideration received less directly attributable transaction costs.

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

(T) PROVISIONS

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

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability.

When discounting is used, the increase in provision due to the passage of time is recognised in finance costs.

(U) EMPLOYEES LEAVE BENEFITS

(i) Wages, salaries, annual leave and sick leave

Liability for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable.

(ii) Long service leave

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

(V) POST-EMPLOYMENT BENEFITS

Defined Benefit Plan

The Consolidated Entity contributes to one defined benefit superannuation plan on behalf of certain eligible employees.

In respect of QSL’s defined benefit superannuation plan, any contributions made to the superannuation plan by the Consolidated Entity are recognised against surpluses when due.

Employees of QSL who have a defined benefit plan are members of QSuper (refer Note 18).

For employees who are members of QSuper, the Treasurer of Queensland, based on advice received from the State Actuary, determines employer contributions for superannuation expenses.

No liability is recognised for accruing the above superannuation benefit in these financial statements; the liability being held on a whole-of-government basis and reported in the whole-of-government financial report prepared pursuant to AAS 31 - Financial Reporting by Governments.





(W) NATURE AND PURPOSE OF RESERVES

(i) Capital reserve

The capital reserve represents the value of equity transferred from Queensland Sugar Corporation in 2000, which was deducted from pool proceeds to fund purchases of property, plant and equipment.

(ii) Available-for-sale reserve

Changes in the fair value of equity investments, classified as available-for-sale financial assets, are taken to the available-for-sale reserve in the Consolidated Statement of Other Comprehensive Income. Amounts are recognised in the Consolidated Statement of Profit or Loss when the associated assets are sold or impaired.

(X) INCOME TAX

Parent Entity

In accordance with sections 50-1 and 50-40 of the Income Tax Assessment Act 1997, QSL is exempt from income tax.

Controlled Entities

The Controlled Entities are income tax paying entities. However, the Controlled Entities have made tax losses as a result of excess franking credits from the dividends from their holding in STL G class shares. These Controlled Entities continue to carry forward their tax losses to offset their taxable income. No deferred tax asset has been recognised in relation to these tax losses.

(Y) DEFERRED INCOME AND EXPENSES

Income and expenses have been carried forward only in circumstances relating to future sales proceeds, the receipt of which is reasonably assured.

(Z) GOODS AND SERVICE TAX

Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax (‘GST’), except:

(i) Where the amount of GST incurred is not recoverable from the Australian Taxation Office (‘ATO’), it is recognised as part of the cost of the acquisition of an asset or as a part of the item of expense; or

(ii) For receivables or payables, which are recognised inclusive of GST, the net amount of GST recoverable from or payable to the ATO is shown under current receivables or payables.

(AA) BORROWING COSTS

Borrowing costs are recognised as an expense when incurred.

(AB) MAKE GOOD PROVISION

Provision has been made for the present value of anticipated costs of future restoration of leased office premises. The provision includes future cost estimates associated with office dismantling. The calculation of this provision requires assumptions such as the applicable environmental legislation and engineering cost estimates. These uncertainties may result in future actual expenditure differing from the amounts currently provided. The provision recognised is reviewed annually and updated based on the facts and circumstances available at the time. Changes to the estimated future costs are recognised in the Consolidated Statement of Financial Position by adjusting both the expense and provision. The related carrying amounts are disclosed in Note 14.

(AC) RENTAL INCENTIVE

Provision has been made for the present value of fit-out incentive benefit of the leased office premises as specified in the Incentive Deed between Harburg Investments Pty Ltd and QSL which concludes on 30 April 2018. The provision represents the present value of the total incentive benefit of $1,048,800 over the remaining period of the lease in accordance with Interpretation 115. The related carrying amounts are disclosed in Note 14.

(AD) COMPARATIVES

Where necessary, comparative information has been reclassified to achieve consistency in disclosure with current financial year amounts and other disclosures.


2016 $’000

2015 $’000

3 DIVIDEND INCOME

Dividend income

Dividends from STL G class shares 2,383 2,039

TOTAL DIVIDEND INCOME 2,383 2,039

4 EXPENSES FROM CONTINUING OPERATIONS

Freight and brokerage

Sea freight 65,438 56,240

TOTAL FREIGHT AND BROKERAGE 65,438 56,240

Operating lease rental

Minimum lease payments

Bulk sugar terminals (to STL) 48,522 46,650

Other property 564 540

TOTAL OPERATING LEASE RENTAL 49,086 47,190

Borrowing costs expense

Interest expense 11,700 16,855

Facility fees and bank charges 4,617 4,582

TOTAL BORROWING COST EXPENSE 16,317 21,437

Research funding to the sugar industry 465 976

TOTAL RESEARCH FUNDING TO THE SUGAR INDUSTRY 465 976

5 OTHER EXPENSES FROM CONTINUING OPERATIONS

Other Expenses 25,058 26,384 These expenses predominately relate to net operating expenditure incurred in operating the bulk sugar terminals. This amount includes a recovery of expenses by QSL under the Storage and Handling (‘S&H’) Agreements for users of the bulk sugar terminals for storage, handling and outloading of raw sugar. Included in the Other Expenses figure above are these off-setting S&H recovery amounts of $7.9 million (2015: $6.4 million).




2016 2015$’000 $’000

6 TRADE AND OTHER RECEIVABLES

CURRENTTrade debtors 43,562 13,975

Other debtors

Futures margins and deposits 2,306 2,752

GST receivable 29,611 22,268

Other loans to Suppliers 319 2,456

Receivables – STL a 3,800 5,142

Other 216 3,014

36,252 35,632

TOTAL TRADE AND OTHER RECEIVABLES (CURRENT) 79,814 49,607

a Under the sub-lease agreement with STL, QSL purchases capital items on behalf of STL. These receivables relate to these capital purchases.

2016 2015

$’000 $’000

7 INVENTORIES

Bulk Australian raw sugar 235,667 336,078

TOTAL INVENTORIES 235,667 336,078

At 30 June 2016, 369,485 tonnes of 2015 season raw sugar and 129,700 tonnes of 2016 season raw sugar remained on hand totalling 499,185 tonnes of inventory. At 30 June 2015, 589,249 tonnes of 2014 season and 219,339 tonnes of 2015 season raw sugar remained on hand totalling 808,588 tonnes of inventory. The quantity of inventory on hand was less than the prior year due to the structure of the sugar market and the attractiveness to ship early and maximise sale proceeds.

2016 2015

$’000 $’000

8 OTHER FINANCIAL ASSETS

CURRENTUnrealised gains on derivatives:

Sugar futures and option contracts - 59,346

Deferred expenditure relating to the next year:

Amounts owing to future pools a 126,144 -

TOTAL OTHER FINANCIAL ASSETS (CURRENT) 126,144 59,346

NON-CURRENTUnrealised gains on derivatives:

Foreign currency contracts 4,739 -

Sugar futures and option contracts - 18,051

Amounts owing to future pools a 13,383 -

TOTAL OTHER FINANCIAL ASSETS (NON-CURRENT) 18,122 18,051

a Represents unrealised losses on sugar hedges, foreign exchange hedges and option contracts which will be allocated against next year’s raw sugar sales.


2016 2015$’000 $’000

9 AVAILABLE-FOR-SALE FINANCIAL ASSETS

NON-CURRENT

Shares at fair value a 24,168 23,818

a QSL holds 14.8% (2015: 14.7%) of the G (Grower) class of share capital of STL, a company that owns bulk raw sugar storage facilities in Queensland. QSL has a sub-lease agreement with STL, to operate and maintain these facilities until 31 December 2018. The STL G class shares are traded on the National Stock Exchange of Australia. Given the illiquid or thinly traded market in STL G class shares, QSL’s investment in STL has been valued using a Directors’ Valuation to determine a fair value pursuant to AASB 139 Financial Instruments: Recognition and Measurement. QSL has determined that fair value for the investment in STL is cost, consistent with the prior year. These investments have been classified as Level 3 in terms of the fair value hierarchy as inputs are unobservable.

QSL also holds shares in the Intercontinental Exchange, Inc which is listed on the New York Stock Exchange. These shares are classified as Level 1 in relation to the the fair value hierarchy as the value of the shares are based on quoted market prices.

Available-for-sale investments consist of investments in ordinary shares, and therefore have no fixed maturity date or coupon rate.

2016 2015$’000 $’000

10 PROPERTY, PLANT AND EQUIPMENT

Freehold land:

At cost 512 512

Leasehold improvements:

At cost 1,209 1,209

Accumulated depreciation (752) (661)

457 548Buildings on freehold land:

At cost 1,769 1,769

Accumulated depreciation (1,670) (1,595)

99 174Plant and equipment:

At cost 23,405 20,059

Accumulated depreciation (5,117) (2,612)

18,288 17,447

TOTAL PROPERTY, PLANT AND EQUIPMENT 19,356 18,681




2016 2015$’000 $’000

10 PROPERTY, PLANT AND EQUIPMENT CONTINUED

Reconciliations

Reconciliations of the carrying amounts of freehold land, leasehold land, leasehold improvements, buildings on freehold land and plant and equipment at the beginning and end of the financial year are set out below.

Freehold land:

Carrying amount at the beginning of the year 512 512

Leasehold land:

Carrying amount at the beginning of the year - 195

Disposals - (195)

Carrying amount at the end of the year - -

Leasehold improvements:


Depreciation expense (91) (82)

Carrying amount at the end of the year 457 548

Buildings on freehold land:


Additions - 6

Depreciation expense (75) (55)

Carrying amount at the end of the year 99 174

Plant and Equipment:

Carrying amount at the beginning of the year 17,447 16,138

Additions 3,652 3,395

Disposals (167) (65)

Depreciation expense (2,644) (2,021)

Carrying amount at the end of the year 18,288 17,447

TOTAL PROPERTY, PLANT AND EQUIPMENT 19,356 18,681


2016 2015$’000 $’000

11 TRADE AND OTHER PAYABLES

CURRENTCreditors

Sugar Mills 69,866 207,958

Trade creditors 15,620 18,700

Other 6,308 4,967

TOTAL TRADE AND OTHER PAYABLES 91,794 231,625

12 OTHER FINANCIAL LIABILITIES

CURRENTUnrealised losses on derivatives:

Sugar futures and option contracts 75,118 -

Foreign currency contracts 3,588 29,092

Deferred income relating to the next year:

Amounts owing to future pools a - 64,393

Prepaid income 5,929 21,354

TOTAL OTHER FINANCIAL LIABILITIES (CURRENT) 84,635 114,839

a Represents unrealised and deferred gains on sugar hedges, foreign exchange hedges and option contracts which will be allocated against next year’s raw sugar sales.

NON-CURRENT Unrealised losses on derivatives:

Sugar futures and option contracts 19,610 10,066

Deferred income relating to a future year:

Amounts owing to future pools b - 8,085

Other - 6

TOTAL OTHER FINANCIAL LIABILITIES (NON-CURRENT) 19,610 18,157

b Represents unrealised gains on sugar hedges, foreign exchange hedges and option contracts which will be allocated against future years’ raw sugar sales.

13 INTEREST BEARING LIABILITIES

CURRENTUnsecured

Syndicated credit facility agreement b 200,000 150,000

Short-term facility c 60,527 100,000

TOTAL INTEREST BEARING LIABILITIES (CURRENT) 260,527 250,000

a Represents funding for advances to Suppliers, sugar futures settlements and margins under a committed bank facilityb Uncommitted short-term facility providing funding for advances to Suppliers, sugar futures settlements and margins

under various uncommitted bank facilities




14 PROVISIONS MAKEGOOD a

RENTAL INCENTIVE

STAFF INCENTIVE

ANNUAL LEAVE

LONG SERVICE

LEAVE

SICK LEAVE b

TOTAL

$’000 $’000 $’000 $’000 $’000 $’000 $’000

BALANCE AT 1 JULY 2014 175 486 1,350 1,388 1,936 31 5,366

Arising during the year 26 - 2,149 1,306 280 28 3,789

Utilised - (131) (1,072) (1,204) (120) (37) (2,564)

Discount rate adjustment - 11 - - - - 11

BALANCE AT 30 JUNE 2015 201 366 2,427 1,490 2,096 22 6,602

REPRESENTED AS:Current - 131 1,687 1,490 1,794 22 5,124

Non-Current 201 235 740 - 302 - 1,478

TOTAL 201 366 2,427 1,490 2,096 22 6,602

BALANCE AT 1 JULY 2015 201 366 2,427 1,490 2,096 22 6,602

Arising during the year 18 - 2,359 1,232 162 27 3,798

Utilised - (131) (1,825) (1,361) (121) (21) (3,459)

Discount rate adjustment - 5 - - 54 - 59

BALANCE AT 30 JUNE 2016 219 240 2,961 1,361 2,191 28 7,000

REPRESENTED AS:Current - 131 2,029 1,361 1,923 28 5,472

Non-Current 219 109 932 - 268 - 1,528

TOTAL 219 240 2,961 1,361 2,191 28 7,000

a In May 2010 the Parent Entity commenced a lease agreement with Harburg Investments Pty Ltd, which concludes on 30 April 2018. In accordance with the lease agreement the Parent Entity must restore its leased premises to the original condition upon expiry of the agreement. The provision has been calculated using a rate per square metre giving a provision of $219,000. During the financial year, the provision was increased by $18,000.

b QSL provides sick leave for a small number of eligible terminal employees as outlined in the QSL Bulk Terminals Agreement dated 12 December 2014.


2016 2015$’000 $’000

15 CASH AND CASH EQUIVALENTS

For the purposes of the statement of cash flows, cash and cash equivalents comprise the following at 30 June:

Cash and cash equivalents balance comprises:

Cash on hand 1,024 156,934

Short-term facilities (uncommitted) (60,527) (100,000)

Syndicated credit facility agreement (committed) (200,000) (150,000)

TOTAL CASH AND CASH EQUIVALENTS (259,503) (93,066)

(A) FINANCING FACILITIES AVAILABLE

At reporting date, the following financing facilities had been negotiated and were available:

(i) Committed Facilities

Syndicated credit facility agreement

During the year, QSL continued to have access to a $500.0 million Australian dollar syndicated credit facility. As at 30 June 2016, $200.0 million (2015: $150.0 million) had been drawn against the facility. The facility expires on 30 June 2017. During the year QSL used the flexibility of the facility to temporarily reduce the limit to $200.0 million on 1 May 2016 when funding requirements are lower, thus reducing funding costs.

Syndicated Inventory Financing agreement (SIF)

QSL entered into a SIF in December 2015. This facility is structured as an annual revolving facility and comprises of a sale and repurchase arrangement using sugar inventory at the terminal and the agreement matures on 22 December 2016. The SIF has a US$200.0 million limit which was undrawn at 30 June 2016.

(ii) Uncommitted Facilities

Other funding facilities

At 30 June 2016, the Parent Entity had additional available facilities with various financial institutions of $77.0 million (2015: $248.0 million). As at 30 June 2016, $60.5 million was drawn down against uncommitted facilities (2015: $100.0 million). These facilities were available but are generally uncommitted and used as an alternative to the syndicated facilities when it is economical to do so. The Parent Entity does not rely on these facilities as they are uncommitted funding facilities.

Letter of credit issuance facility

The Parent Entity has in place a committed letter of credit issuance facility which matures on 31 October 2016. The facility is utilised for issuing standby letters of credit in lieu of performance bonds in connection with contract tender terms. At 30 June 2016, nil US dollars (2015: nil) had been drawn against the facility of US$10.0 million (2015: US$10.0 million).




2016 2015$’000 $’000

16 CAPITAL EXPENDITURE COMMITMENTS Estimated capital expenditure contracted for at reporting date, but not provided for, payable

Not later than one year 325 84

17 LEASE EXPENDITURE COMMITMENTS Operating leases (non-cancellable):

Minimum lease payments

Not later than one year 50,496 48,200

Later than one year but not later than five years 74,197 122,529

AGGREGATE LEASE EXPENDITURE CONTRACTED FOR AT REPORTING DATE 124,693 170,729

Amounts not provided for:

Rental commitments – STL a 123,553 169,001

Other property 1,140 1,728

124,693 170,729

Aggregate lease expenditure contracted for at reporting datea The Parent Entity executed a 5 year lease agreement with STL effective from 1 January 2014. The terms of the agreement include an annual increase in

the base rental. The key features are:

- Base rental starting at $44.9 million per annum (subject to quantum of capital expenditure and an annual increase of 2.5%)

- Capital expenditure above or below a set threshold adding to or reducing the base rental

- STL has an option to terminate the lease agreement as of 1 July 2017 due to RSSA tonnage likely to fall below a predetermined tonnage level. STL are required to formally exercise the option to terminate by 31 January 2017

2016 2015$’000 $’000

18 EMPLOYEE BENEFITS AND SUPERANNUATION COMMITMENTSEMPLOYEE BENEFITS

Accrued wages, salaries and on-costs 374 415

Provisions for employee benefits (current) 5,341 4,993

Provisions for employee benefits (non-current) 1,200 1,042

TOTAL EMPLOYEE BENEFITS AND SUPERANNUATION COMMITMENTS 6,915 6,450

AMOUNT CONTRIBUTED BY QSL TO THE QSUPER DEFINED BENEFIT PLAN 92 89

19 CONTINGENT LIABILITIES

On 23 June 2015, Wilmar Sugar Australia Limited (Wilmar) commenced legal proceedings against QSL in relation to certain costs associated with the 2010 sugar production season, claiming damages of $60.860 million plus interest and costs. QSL rejects Wilmar’s claims and intends to vigorously defend them. On that basis, no liability has been recorded in the financial statements.

20 SUBSEQUENT EVENTS

There are no known events of a material nature that have occurred after 30 June 2016.


2016 2015$ $

21 DIRECTOR AND EXECUTIVES DISCLOSURES

Compensation of Key Management Personnel and Directors

Key Management Personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Consolidated Entity, directly or indirectly, including any Director. The Directors, the Chief Executive Officers and the General Managers of the Consolidated Entity have been classified as Key Management Personnel

TOTAL COMPENSATION 3,218,534 2,895,199

22 RELATED PARTY DISCLOSURES

Under raw sugar supply contracts with a number of milling companies in Queensland, which first came into effect on 1 January 2006 and new supply agreements entered into in 2013, QSL purchases those milling companies’ (Suppliers) sugar production destined for the export market. Under the terms of contracts with Suppliers, sugar on receival becomes the absolute property of QSL, free of all encumbrances or adverse claims. In return Suppliers receive a right of payment for the sugar delivered, to be calculated in accordance with the pricing options and other provisions within the contracts. The amount in respect to each season’s production is determined by QSL, following the sale and pricing of that season’s production on commercial terms, and progressive payments are made in accordance with the terms of the contracts. The final payment to each Supplier is made in July each year in respect to sugar production in the previous calendar year. All transactions with related parties for the purchase of sugar are recorded in the “Payments to Suppliers for Australian raw sugar” in the Consolidated Statement of Profit or Loss and receivables and payables with related parties have been recognised in the notes to the Financial Statements.

Suppliers in turn make payments to cane growers for cane delivered to their mill, based on cane payment formulas incorporated into the local collective agreement for each area and advance payments received from QSL. Where applicable, the pool price forms part of the cane payment formulas. All other related party transactions are on normal commercial terms and conditions.




23 PARENT ENTITY INFORMATION AND CONTROLLED ENTITIES

(A) CONTROLLED ENTITIES

CONTROLLED ENTITY COUNTRY OF INCORPORATION

PRINCIPAL ACTIVITIES OWNERSHIP

QSL Investments (No1) Pty Ltd Australia Holding company for STL G class shares

QSL Investments (No2) Pty Ltd Australia Holding company for STL G class shares

(B) PARENT ENTITY DISCLOSURES

2016 2015$’000 $’000

Information relating to QSL:

Current assets 458,094 614,909

TOTAL ASSETS 504,537 660,256Current liabilities 443,360 597,942

TOTAL LIABILITIES 463,566 621,223

Retained surpluses 15,876 14,113

Reserves 25,095 24,920

TOTAL EQUITY 40,971 39,033

NET SURPLUS / (LOSS) 1,763 (1,399)

TOTAL COMPREHENSIVE INCOME / (LOSS) 1,938 (967)

Commitments

All expenditure commitments in Note 16 and 17 relate to the Parent Entity.

Contingent Liabilities

There are no contingent liabilities that relate to the Parent Entity, other than as disclosed in Note 19.

Guarantees

The Parent Entity guarantees all the debts of the Controlled Entities.


24 FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value measurement for assets as at 30 June:

The following table provides the fair value measurement of the Consolidated Entity financial assets and liabilities:

2016 2015$’000 $’000

FINANCIAL ASSETS

FOREIGN EXCHANGE INSTRUMENTSCurrency Options

Purchased AUD Call against USD b - 135

Purchased AUD Put against USD b - 437

COMMODITY INSTRUMENTSSugar futures contracts a - 2,085

Sugar options

Purchased Puts a 690 -

Purchased Calls a 1,316 -

Sugar swaps

Australian dollars b - 357

US dollars b - 78,059

OTHER FINANCIAL INSTRUMENTSAvailable-for-sale: shares at fair value 24,168 23,818

TOTAL 26,174 104,891

a Exchange Traded b Over-The-Counter (OTC)

Exchange traded futures and options are valued using fair values of exchange traded futures and options determined by reference to the corresponding published price quotations in an active market (Level 1 inputs).

Over-the-Counter (OTC) instruments are valued using fair values of OTC instruments (swaps and options) determined by reference to the observable forward curve for commodity instruments or spot rate for foreign currency instruments (Level 2 inputs).

Available-for-sale instruments:

- Shares in STL G class shares are based on a valuation technique as there is no observable market for these shares (Level 3)

- Shares in the ICE are based on quoted market prices on an active market via an exchange (Level 1).




24 FAIR VALUE OF FINANCIAL INSTRUMENTS CONTINUED

Fair value measurement for assets as at 30 June:

The following table provides the fair value measurement of the Consolidated Entity financial assets and liabilities:

2016 2015$’000 $’000

FINANCIAL LIABILITIES

FOREIGN EXCHANGE INSTRUMENTSForward exchange rate contracts

Sell USD b (7,694) (44,007)

Currency options

Sold AUD Call against USD b (820) (2)

Sold AUD Put against USD b (1,177) (2,450)

COMMODITY INSTRUMENTSSugar futures contracts a (28,217) -

Sugar options

Purchased Puts a (367) -

Purchased Calls a (900) -

Sugar swaps

Australian dollars b (509) -

US dollars b (95,732) -

TOTAL (135,416) (46,459)

a Exchange Traded b Over-The-Counter (OTC)

Exchange traded futures and options are valued using fair values of exchange traded futures and options determined by reference to the corresponding published price quotations in an active market (Level 1 inputs).

Over-the-Counter (OTC) instruments are valued using fair values of OTC instruments (swaps and options) determined by reference to the observable forward curve for commodity instruments or spot rate for foreign currency instruments (Level 2 inputs).


DIRECTORS’ DECLARATIONFOR THE YEAR ENDED 30 JUNE 2016 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES

In accordance with a resolution of the Directors’ of Queensland Sugar Limited, I state that:

In the opinion of the Directors:

(a) The financial statements and notes set out on pages 28 to 48 for the year ended 30 June 2016 are in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2016 and of its performance for the financial year ended on that date

(ii) complying with Accounting Standards (including the Australian Accounting Interpretations) and Corporations Regulations 2001.

(b) There are reasonable grounds to believe that the Consolidated Entity and Company will be able to pay its debts as and when they become due and payable.

This declaration is made on behalf of the Board.

Guy Cowan Chairman

15 September 2016


INDEPENDENT AUDITOR’S REPORTFOR THE YEAR ENDED 30 JUNE 2016 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

Ernst & Young 111 Eagle Street Brisbane QLD 4000 Australia GPO Box 7878 Brisbane QLD 4001

Tel: +61 7 3011 3333 Fax: +61 7 3011 3100 ey.com/au

Independent auditor's report to the members of Queensland Sugar Limited

Report on the financial report We have audited the accompanying financial report of Queensland Sugar Limited, which comprises the consolidated statement of financial position as at 30 June 2016, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the year's end or from time to time during the financial year.

Directors' responsibility for the financial report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards – Reduced Disclosure Requirements and the Corporations Act 2001 and for such internal controls as the directors determine are necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error.

Auditor's responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity's preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit we have complied with the independence requirements of the Corporations Act 2001. We have given to the directors of the company a written auditor’s independence declaration, a copy of which is included in the directors’ report.


Opinion

In our opinion the financial report of Queensland Sugar Limited is in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the financial position of the consolidated entity as at 30 June 2016

and of its performance for the year ended on that date; and (b) complying with Australian Accounting Standards – Reduced Disclosure Requirements and the

Corporations Regulations 2001.

Ernst & Young

Paula McLuskie Partner Brisbane 15 September 2016

Queensland Sugar Limited ABN 76 090 152 211

Level 14 348 Edward Street Brisbane Queensland 4000

GPO Box 891 Brisbane Queensland 4001 Australia

Telephone +61 7 3004 4400 Facsimile +61 7 3004 4499

[email protected] www.qsl.com.au

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