Port of Geelong

The Port of Geelong (the Port) is a bulk and break bulk seaport located in western Victoria. The Port predominantly handles fertiliser, steel, timber, forestry and petroleum products.

The Port is wholly owned by the Port of Geelong Unit Trust (the Unit Trust), the vehicle through which AIX and its co-investors hold their equity interests. The Port is operated
by a subsidiary of Asciano Limited, with Asciano also holding a minority ownership interest via the Unit Trust. The Port remits a monthly base rental fee, turnover fee and profit share to the Unit Trust. The rental fee is not dependent on either throughput or profitability of the Port.

Performance highlights 2009

In the year to 30 June 2009, the Unit Trust received total fees of $9.7 million, a decline of 3.7 percent on the previous financial year. The Port handled a total of 9.1 million tonnes of cargo during the year, a decrease of 8.0 percent on the previous financial year.

Woodchip and log volumes were adversely affected by the declining global economy, as demand from pulp mills in the key Japanese market softened during the year. However, volumes are expected to recover over the short to medium term, as pulp mill stocks decline.

Fertiliser volumes also declined as drought conditions in south-eastern Australia again worsened. In May 2009, Incitec Pivot Limited announced that it would be closing its Geelong plant. While fertiliser volumes are expected to increase in the medium term, throughput is unlikely to recover to the high volumes experienced during the prior five years due to the changed weather conditions.

Performance outlook

Volumes are expected to continue to soften over the next year, with weak economic conditions and continued drought dampening throughput. However, volumes are expected to improve in the medium term.

During the year, the Port commenced construction of a new wharf facility for the exclusive use of Midway Limited, who has entered into a long-term take or pay arrangement for its woodchip volumes. The capital cost of the facility is expected to be wholly debt-funded, with a $27.5 million facility currently in place. Construction is expected to be complete in March 2010, from which time the Unit Trust will start receiving fees.

Port of Geelong
Financial and operational performance

* CAGR: Compound Annual Growth Rate
(1) Trust EBITDA is fees received by the Port of Geelong Unit Trust net of port operator fees and the Trust's own operating expenses.