THE RIGHT DIRECTION - Stanwell

1 Annual Report 2010. THE RIGHT . DIRECTION . Through continued strong financial performance and ongoing development to reduce emissions and prepare for the future, Stanwell is leading the energy industry in the RIGHT DIRECTION . 2010 HIGHLIGHTS. Commenced our Fitness For Duty Maintained triple certification Maintained our record of no Level program and our zero harm Safety against Australian standards 4 or 5 environmental incidents. Performance Action Plan across all for our quality, health and safety Environmental performance page 35. our sites and offices. and environmental management Health and safety page 18. systems. Finalised the renegotiation of Health and safety page 20 and the Interconnection and Power Recorded a net profit after tax Environmental performance page 35. Pooling Agreement for of $ million, $ million Gladstone Power Station.

2 Above budget. Commenced a feasibility study into Market trading page 31. Economic performance page 37. a hydro power station on the Burdekin Falls Dam in North Queensland. Installed low NOx burners Delivered cost savings Project development page 33. on Unit 3 at Stanwell Power required under operational Station to reduce Nitrous efficiencies savings target. Undertook a major overhaul Oxide emissions. Economic performance page 38. of Stanwell Power Station's Unit 3, Environmental performance page 34. including upgrading the low pressure turbine and generator to deliver a improvement in efficiency. Operations page 26. ABOUT THIS REPORT. Our Annual Report reflects how we are The report also provides information on implementing our strategy and focusing other important business process such as on our key objectives. our approach to corporate governance and The report provides an accurate and risk management.

3 Detailed review of the company's financial Stanwell is responsibly managing our and non-financial performance in 2009 10 business to deliver value to our against our strategy, objectives and targets shareholders and, ultimately, to the people detailed in our Statement of Corporate of Queensland. Our stakeholders include, Intent (SCI). but are not limited to, shareholders, Our strategy, which we report against, is employees, contractors, customers, local categorised into six key areas: communities, suppliers and prospective business partners. RIGHT people, RIGHT markets, To assist in reading our annual report, RIGHT fuels, we have included a glossary of terms RIGHT plant, and an index at the back of the report. RIGHT organisation, and Electronic versions of this and previous RIGHT locations. years' annual reports are available online at or contact Stanwell For a detailed review of our strategy, refer Corporate Communications for a hard copy.

4 To Strategic DIRECTION page 4. Stanwell Corporate Communications For each of the reporting sections, we GPO Box 773. have summarised our performance against Brisbane QLD 4001. both SCI and departmental indicators and Ph: +61 7 3335 7448. outlined our objectives for 2010 11. email: freecall: 1800 303 116. GPO Box 773. Brisbane Qld 4001. Stanwell Annual Report 2010. Brisbane office (registered office) Printed using environmentally Level 12, Waterfront Place friendly waterless printing. 1 Eagle Street Printed on Mega recycled . Brisbane Qld 4000 50% recycled (post consumer waste). T (07) 3335 7444. F (07) 3335 7477. Rockhampton office Suite 1 and 3, 74 Victoria Parade Rockhampton Qld 4700. T (07) 4931 3000. F (07) 4931 3050. Stanwell Power Station T (07) 4930 3444. F (07) 4930 3272. Barron Gorge Hydro T (07) 4036 6955.

5 Pictured on Front Cover: Electrical Superintendent F (07) 4036 6950 Tim Hogan at Stanwell Power Station Pictured on Outer (front) Fold: Boilermaker Kareeya Hydro Daryl Schreiweis at Stanwell Power Station T (07) 4036 6822 Pictured at left: Mechanical Technician F (07) 4035 0200 Jeff Clayton at Stanwell Power Station IN THIS REPORT. About this report 1 Chairman's statement 10 Business performance 26. Highlights 1 Denis Byrne, Stanwell 's Chairman, Developing, operating and trading A strong profit result and the largest reflects on the strategic achievements generation assets are our key strengths. maintenance project in the history of of the year. In this section, we examine the Stanwell Power Station are among our challenges and achievements for Chief Executive Officer's review 12 the year in the three areas of: highlights for 2009 10.

6 Wayne Collins, Stanwell 's Acting Chief Executive Officer, provides a summary of Operations 26. Who we are 2 Market trading 30 Stanwell trades more than 30% of the corporate and operational outcomes of 2009 10. Project development 32. Queensland's electricity requirements. This section explains our core business, Environmental performance 34. Executive Management Team 14. shareholders and corporate and Reducing our environmental impact is This section provides biography operational strategies. crucial to our operations. In this section details for Stanwell 's Executive we assess our performance in areas Strategic DIRECTION 4 Management Team. such as emissions reductions and Our vision is to reduce our carbon Board of Directors 16 water usage. intensity, capitalise on the opportunities This section provides biography details presented by emerging industry Economic performance 37.

7 For Stanwell 's Board of Directors. challenges and generate competitive In 2009 10 Stanwell achieved a strong rates of return for our shareholders. Social performance 18 after tax profit of $ million and Stanwell is committed to providing a strong revenue and cash flow results. Year in review 5 safe, equitable and socially responsible Our achievements and challenges in Corporate governance 40. work environment, to ensure the best 2009 10 are summarised against our This section outlines Stanwell 's outcomes for our employees, six key strategic objectives. corporate governance processes, contractors and the communities in which comply with the Corporate Performance overview 2009 10 6 which we operate. In this section we Governance Guidelines for Government We measure our performance for the report against the three areas of: Owned Corporations.

8 Year against the strategies outlined in Health and safety 18 our Statement of Corporate Intent. Employee relations 21 Financial report 2010 49. Community relations 24 Glossary 106. Year ahead 2010 11 8. This section provides an overview Abbreviations 107. of our key strategies for 2010 11, Index 108. which will assist us in achieving our corporate objectives. FINANCIAL HIGHLIGHTS. Actual annual Indicator change (%) 2009 10 2008 09 2007 08 2006 07 2005 06. Total revenue ($'000) ( ) 662,995 670,367 540,949 515,357 424,193. Operating profit before income tax equivalent ($'000) ( ) 205,527 265,903 167,621 222,926 103,842. Operating profit after income tax equivalent ($'000) ( ) 149,462 195,605 135,590 155,762 72,889. Dividends declared ($'000) ( ) 116,700 148,944 92,105 122,301 60,617. Total assets ($'000) 1,981,966 1,930,734 1,916,386 2,626,402 1,692,790.

9 Total liabilities ($'000) 1,302,045 973,779 1,183,414 2,291,046 667,087. Total shareholders' equity ($'000) ( ) 679,921 956,955 732,972 335,356 1,025,703. Return on total assets* (%) ( ) Return on total equity** (%) ( ) Earnings per share (cents) ( ) * Earnings before interest and tax/average total assets ** Operating profit after tax/average total equity. Reduction of $380 million due to capital repatriation in December 2009. Stanwell ANNUAL REPORT 2010 : IN THIS REPORT; FINANCIAL HIGHLIGHTS 1. Who we are Stanwell Corporation Limited ( Stanwell ) is a Queensland Government Owned Corporation with an energy portfolio comprising coal, hydro and wind generation facilities across Queensland and in Western Australia. We trade more than 30% of Core business Our shareholders Queensland's electricity requirements. Stanwell bids its available generating Stanwell was formed on 1 July 1997.

10 Our plant portfolio includes: capacity into the NEM, a wholesale under the Government Owned tanwell Power Station, S market for the supply and purchase of Corporations Act (Qld) 1993 and Central Queensland 1,434 MW; electricity managed by the Australian registered under the Corporations Act Energy Market Operator. (Cth) 2001. The State of Queensland Kareeya Hydro, Far North holds all of our shares and we contribute Queensland MW; Within the NEM, electricity generators to the fast-growing Queensland Barron Gorge Hydro, Far North compete for the RIGHT to generate economy by providing dividends and Queensland 60 MW; electricity into a central pool by income tax equivalents to the Mackay Gas Turbine, submitting competitive price bids to Queensland Government. Stanwell 's North Queensland 32 MW; supply nominated quantities of dividend to its Shareholding Ministers, generation in certain timeslots Koombooloomba Hydro, relating to the 2009 10 year, will be throughout the day.