Port of Geelong

The Port of Geelong (the Port) is a bulk and break bulk seaport located in western Victoria. The Port predominantly handles petroleum and oil products, as well as fertiliser, steel, timber and forestry products. The Port is the second largest in Victoria, and is well-located for access by the Shell oil refinery and the timber industry.

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 in the Unit Trust. The Port remits a monthly base rental fee, turnover fee and profit share to the Unit Trust. The rental fee, which makes up over half of the Unit Trust's revenue, is not dependent on either the throughput or profitability of the Port.

Performance highlights 2011

In the 12 months to 30 June 2011, the Port handled a total of 9.8 million tonnes of cargo, an increase of 16.6 percent on the prior financial year, generating revenue of $26.9million(1), an increase of 58.5 percent on the prior financial year. The Unit Trust received total fees, net of the operating fee paid to the operator, of $12.0 million, an increase of 27.3 percent on the prior financial year.

The strong performance of the Port in the year to 30 June 2011 was underpinned by strong fertiliser volumes, with tonnage almost twice that of the prior year, driven by the high levels of precipitation in South-East Australia and the re-opening of Incitec Pivot's superphosphate plant in Geelong. While crude oil volumes were also approximately 31.9 percent above the prior year, this was offset by petroleum volumes, which were approximately 19.2 percent below the prior year as the strong Australian dollar caused a greater proportion of the petroleum volumes to be consumed domestically rather than being exported.

Woodchip volumes continued to be negatively affected by the uncertain global economic conditions as well as the recent earthquakes in Japan, which caused a fall in demand from pulp mills in this key export market. While volumes for the year to 30 June 2011 were approximately 9.6 percent below the prior year, the take-or-pay arrangements with Midway Pty Limited have ensured that the Port has not been disadvantaged by the poor market conditions.

Steel, sulphuric acid and other general cargo were all above the volumes achieved in the prior year.

Performance outlook

In February 2011, the Minister for Ports for the State of Victoria (the State) announced a feasibility study into relocating the export and import of cars to the Port. While cars are currently imported and exported through the Port of Melbourne, there is increasingly pressure on land availability in and around the Port of Melbourne and transport congestion in Melbourne's western suburbs. The Port is an attractive alternative, with secure berths, back-up land capacity and strong road and rail links. The study is being undertaken in close consultation with the Port, and is expected to be completed in December 2011.

Port of Geelong
Financial and operational performance

* CAGR: Compound Annual Growth Rate
(1) Total Cargo revenue only.
(2) Trust Revenue comprises fee income received by Ports Pty Limited (the vehicle through which AIX holds its interest in Geelong), net of fees paid to the operator of Port of Geelong.
(3) Trust EBITDA comprises the EBITDA of Ports Pty Limited normalised to exclude the effect of non-cash unrealised gains/losses on interest rate hedging.