National HealthCare Corporation
Annual Report 2014

Plain-text annual report

NEW HOPE CORPORATION LIMITED AND CONTROLLED ENTITIES CORPORATE DIRECTORY PRINCIPAL ADMINISTRATION & REGISTERED OFFICE 3/22 Magnolia Drive BROOKWATER QLD 4300 Telephone: (07) 3418 0500 Facsimile: (07) 3418 0355 WEBSITE ADDRESS www.newhopegroup.com.au SHARE REGISTER Computershare Investor Services Pty Limited 117 Victoria Street WEST END QLD 4101 Telephone: 1300 552 270 www.computershare.com ASX Code: NHC DIRECTORS Robert D. Millner Chairman of Directors Peter R. Robinson Non Executive Director David J. Fairfull Non Executive Director William H. Grant Non Executive Director Sue J. Palmer Non Executive Director Ian M. Williams Non Executive Director CHIEF EXECUTIVE OFFICER Shane O. Stephan COMPANY SECRETARY Justin W. Hogg AUDITORS PricewaterhouseCoopers Level 15, Riverside Centre 123 Eagle Street BRISBANE QLD 4000 CONTENTS CHAIRMAN’S LETTER FINANCIAL SUMMARY DIRECTORS’ REPORT AUDITOR’S INDEPENDENCE DECLARATION CORPORATE GOVERNANCE STATEMENT FINANCIAL REPORT DIRECTORS’ DECLARATION INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF NEW HOPE CORPORATION LIMITED SHAREHOLDER INFORMATION i 1 2 25 26 31 76 77 79 CHAIRMAN’S REVIEW New Hope Corporation Limited and Controlled Entities Financial Summary Dear Shareholders, Despite the continued challenging conditions for the coal industry over the past 12 months, I am pleased to report that New Hope Corporation has achieved a respectable profit for the financial year ended 31st July 2014. The company is the stand out performer against its Australian peers, reporting in positive territory. Financial Performance Net profit after tax and non- recurring items for the year ended 31st July 2014 was $58.4 million which included $10.8 million from coal mining, marketing and logistics operations. This is a remarkable feat in an environment where the deflated coal price, coupled with a stubbornly high Australian dollar, has pushed other coal and infrastructure businesses into the red. Congratulations must go to our management team for acting decisively to meet the tough market conditions by minimising costs and maximising business and operational efficiencies. Productivity improvements were achieved through a cost structure review which resulted in some difficult decisions being taken, including making a number of positions redundant and the reduction in work hours for production employees. The review however, had no impact on production at the company’s operations with production increasing 1.5%, and sales of 6.0 million tonnes being achieved, which equates to the same period last year. Diversification of our energy interests has also ensured a solid outcome for the Group. Our Oil operations, through Bridgeport Energy, achieved a profit of $3.4 million, and a further $44.3 million profit was achieved through company investments. New Hope maintains its enviable record of dividend payment to shareholders. Directors have declared a final dividend of 2.0 cents per share (2013 – 5.0 cents per share) and a special dividend of 3.5 cents per share (2013 – 5.0 cents per share). Both of these dividends are fully franked and payable on 4 November 2014 to shareholders registered as at 21 October 2014. Significant milestones Leadership and accountability functions have now been combined across both the New Acland and West Moreton coal operations. This has improved synergies and streamlined costs to ensure our coal operations function at maximum efficiency. During the year QBH, New Hope Corporation’s 100% owned coal terminal at the Port of Brisbane, exported 7.86 million tonnes of coal on 100 vessels despite the difficult market conditions imposed on QBH’s customer base. Bridgeport continued to progress organic growth in its exploration and production portfolio. Planning is underway for an additional six development wells during the year and further growth is anticipated. safety culture model of People, Practices and Environment and this has seen a 6.7% reduction in Total Recordable Injury’s, a 15.4% reduction in Lost Time Injury’s and 50% reduction in High Potential Incidents from 2012/13. The revised New Acland Coal Mine Stage 3 Project continues to make good progress with an Environmental Impact Statement submitted to the Queensland Office of the Coordinator- General. We now await the Coordinator-General’s report and approval decision expected late 2014. The New Acland Mine has robust support on the Darling Downs and the revised Project would take the life of the operation through until 2029, delivering significant economic and social benefits. Sustainability Our social licence to operate is vital to our company’s success. We understand that our operations must work hand in hand with our local communities as a good neighbour and a respected partner. This is achieved through genuine engagement, interaction and support. Importantly, our employees are also locals, with more than 80% of our people living and contributing to the communities in the vicinity of our operations. As farmers, we also respect the land on which we operate. We know that we have environmental impacts and work tirelessly through our Acland Pastoral Company to rehabilitate the disturbed land and return it to a condition as close as possible from whence it came. Our extensive rehabilitation efforts at Acland and West Moreton, and associated cattle grazing trials, have drawn wide interest and acclaim. Our People The safety of our people is paramount and continues to be our priority. We continue to improve in the elements of the This year the company successfully transitioned its leadership from long serving Managing Director and CEO Rob Neale. Incoming CEO Shane Stephan and his new executive team have brought a renewed energy to the management of the Group and I have every confidence in their combined experience to lead New Hope into the next phase. Outlook With the outlook for coal prices in the short term to remain relatively flat, New Hope is anticipating another tough year ahead. Some assistance may be provided if the forecast for the Australian dollar to stay consistently below US$0.90, proves correct. The current soft market, combined with our strong balance sheet, provides the ability to take advantage of acquisition opportunities which support the long term profitability of the company and we are active in this space. Concurrently we will continue to develop our portfolio, ensuring prudent expenditure continues on exploration and approvals work to allow new projects to be brought on line when market conditions improve. Conclusion I would like to take this opportunity to thank my board colleagues for their efforts and commitment during the year. I would also like to thank the management and staff of the company for their hard work in a challenging market and congratulate them on their successes. And finally I would like to thank you, the shareholders, for your continued support. R D Millner Chairman 2014 $000 2013 $000 2012 $000 2011 $000 Total revenue 548,959 652,097 767,525 662,404 Profit before tax Income tax and petroleum resource rent tax expense Profit after tax Loss attributable to minority interests Net profit attributable to NHCL members 71,047 (12,598) 58,449 (1) 58,450 121,984 (47,856) 74,128 (1) 74,129 198,819 (31,694) 167,125 (1) 167,126 719,097 (215,998) 503,099 (135) 503,234 Profit after tax from continuing operations 58,449 74,128 167,125 503,099 Total assets employed Shareholders' funds 2,185,842 1,973,859 2,268,564 2,016,456 2,459,419 2,252,916 2,749,248 2,367,383 Dividends paid during the financial year 132,928 257,466 215,871 197,180 2014 2013 2012 2011 Weighted average shares on issue Net profit attributable to NHCL members as a % of shareholders' funds 830,836,913 2.96% 830,551,140 3.68% 830,335,876 7.42% 830,127,809 21.26% Earnings per share (cents) Earnings per share (cents) from continuing operations Normal dividends per share (cents) Special dividends per share (cents) 7.0 7.0 8.00 3.50 8.9 8.9 11.00 5.00 20.1 20.1 11.00 20.00 60.6 60.6 10.25 15.00 Net tangible asset backing per share (cents) 234.55 239.66 268.80 278.55 i i 1 1 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014 DIRECTORS’ REPORT 31 JULY 2014 New Hope Corporation Limited and Controlled Entities Directors Report - 31st July 2014 New Hope Corporation Limited and Controlled Entities Directors Report - 31st July 2014 Your Directors present their report on the consolidated entity consisting of New Hope Corporation Limited and the entities it controlled at the end of, or during, the year ended 31 July 2014. Throughout the report, the consolidated entity is referred to as the Group. Directors The following persons were Directors of New Hope Corporation Limited during the whole of the financial year and up to the date of this report: Dividends Dividends paid to members during the financial year were:    A final dividend for the year ended 31 July 2013 of 5.00 cents per share paid on 4 November 2013 A special dividend for the year ended 31 July 2013 of 5.00 cents per share paid on 4 November 2013 An interim ordinary dividend for the year ended 31 July 2014 of 6.0 cents per share paid on 5 May 2014 $000 41,536 41,536 49,856 Mr R.D. Millner Mr P.R. Robinson Mr D.J. Fairfull Mr W.H. Grant Ms S.J. Palmer Mr I.M. Williams Mr R.C. Neale was a Director until his retirement on 31 January 2014. Consolidated results Revenue from operations Profit before income tax (before non regular items)* Gain on sale of WICET Subscription Gain on sale of Westside Corporation Limited Gain on sale of Quantex Impairment of investment in associate Impairment of available for sale investments Profit before income tax (after non regular items) Profit from ordinary activities after income tax (before non regular items)* Gain on sale of WICET Subscription Gain on sale of Westside Corporation Limited Gain on sale of Quantex Impairment of investment in associate Impairment of available for sale investments Tax Benefit from DTL recognised on acquisition Profit from ordinary activities after income tax (after non regular items) Non-controlling interests Profit attributable to New Hope Shareholders Basic earnings per share (cents) (before non regular items)* Gain on sale of WICET Subscription Gain on sale of Westside Corporation Limited Gain on sale of Quantex Impairment of investment in associate Impairment of available for sale investments Basic earnings per share (cents) (after non regular items) 2014 $000 2013 $000 % Change 548,959 652,097 - 15.8% 53,665 - 17,133 249 - - 71,047 41,490 - 16,710 249 - - - 58,449 (1) 58,450 5.0 - 2.0 - - - 7.0 172,575 786 - - (13,286) (38,091) 121,984 124,955 550 - - (13,286) (38,091) - 74,128 (1) 74,129 15.0 0.1 - - (1.6) (4.6) 8.9 - 68.9% - 41.8% - 66.8% - 21.2% - 66.8% - 21.5% * The profit before non regular items and the earnings per share before non regular items contained within this Directors' Report have not been audited in accordance with Australian Auditing Standards. Principal activities The principal continuing activities of the Group consisted of:     Investments. Coal mining - exploration, development, production and processing; Oil and gas - exploration, development, production and processing; Marketing and logistics; and       In addition to the above dividends, since the end of the financial year, the Directors have declared a final ordinary dividend of 2.0 cents per share and a special dividend of 3.5 cents per share. Both of these dividends are fully franked, to be paid on 4 November 2014 out of retained profits at 31 July 2014, the record date for such dividend to be 21 October 2014. This will provide shareholders of New Hope with total dividends for the year of 11.5 cents per share (6.0 cents interim) compared with total dividends for the 2013 year of 16.00 cents per share, including a special dividend of 5.0 cents per share. Review of operations The Group has reported a net profit after tax and non regular items of $58.4 million for the year ended 31st July 2014. The result comprises $10.8 million from coal mining, marketing and logistics operations, $3.4 million from oil and gas operations and $44.3 million from treasury and investments. The result is down 21.2% on the 2013 result of $74.1 million. Before non regular items, basic earnings for 2014 were 5.0 cents per share, compared to 15.0 cents per share in 2013. After non regular items basic earnings were 7.0 cents per share for 2014 against 8.9 cents in 2013. Directors have declared a final dividend of 2.0 cents per share (2013 – 5.0 cents per share) and a special dividend of 3.5 cents per share (2013 – 5.0 cents per share). Both of these dividends are fully franked and payable on 4 November 2014 to shareholders registered as at 21 October 2014. Compared to the previous corresponding period, the 2014 full year result was affected by:      Improved health and safety performance across all operations; Lower revenues from continuing operations (down 15.8%), as a result of continued soft coal prices and a strong AUD; Lower clean coal production (down 3.2%); A non regular gain on the sale of Westside Corporation Limited; and Impairments taken against unsuccessful oil exploration wells drilled during the year. Mining operations As anticipated, production for the year was down as a result of cessation of mining at New Oakleigh following the recovery of all economic coal reserves in the previous financial year. Production for the year was 5.6 million tonnes compared to the 5.8 million tonnes produced during 2013. Excluding the New Oakleigh mine, New Acland and Jeebropilly production was up a combined 1.5% on 2013 production. Sales for 2014 were 6.0 million tonnes (inclusive of trade coal sales of 0.3 million tonnes), which equalled the 6.0 million tonnes sold in 2013 (inclusive of trade coal sales of 0.1 million tonnes). New Acland Coal Mine The New Acland open cut mine produced 4.9 million tonnes of product coal in 2014. This was an increase of 0.2 million tonnes compared to 2013. Production for the majority of the year was capped by approved production and transportation limits. Key activities undertaken in 2014 have included:   All full time and regular contractors attended i-Safe/We-Safe safety cultural change program. A change to the mine plan allowed for additional product tonnes to be mined in 2014 with a reduction in total bcm movement and the cost per clean coal tonne of 2.7%. This allowed the mine to shut down over Christmas. Implementation of cost effectiveness initiatives including, change of operational structure in production and a reduction in work hours for 132 production employees. Reduction in stockpile levels at Jondaryan to allay community concerns over perceived dust issues. New Acland Community Reference Group continued providing further opportunities for community engagement and allocating funds through the Community Infrastructure Fund to local community projects. New Acland hosted numerous site visits by community, business and industry groups, as well as representatives from educational, environmental and agricultural organisations. New Acland Mine site has been granted EA approval to mine and transfer from site 5.2 million tonnes of product coal per year. Further productivity improvement and cost reductions are underway including the trial of a Wirtgen 4200 Surface Miner. 2 3 2 3 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014DIRECTORS’ REPORT - 31 JULY 2014 New Hope Corporation Limited and Controlled Entities Directors Report - 31st July 2014 New Hope Corporation Limited and Controlled Entities Directors Report - 31st July 2014 West Moreton Mines West Moreton operations, comprising Jeebropilly Mine plus New Oakleigh and Chuwar rehabilitation sites, produced 0.7 million tonnes of product coal in 2014 against 1.1 million tonnes produced in 2013. The 2013 production comprised of 0.87 million tonnes from Jeebropilly and 0.27 million tonnes from New Oakleigh. Key activities at West Moreton in 2014 included:       Expansion of the i-Safe/We-Safe safety culture change program to major West Moreton contractor managers and supervisors. A full organisational review that led to operational changes and reduction in workforce numbers. A staff restructuring that combined leadership and accountability functions across both West Moreton and New Acland operations. A review of all contractors and contracts to optimise cost with the service provided. Completion of mine plan revisions that optimise the mine with current market conditions. Continued rehabilitation of the New Oakleigh and Chuwar sites with further work to be undertaken in 2015. Queensland Bulk Handling (QBH) QBH, the Group's 100% owned coal terminal at the Port of Brisbane, exported 7.9 million tonnes of coal on 100 vessels. This result was down on last year by approximately 0.86 million tonnes, predominantly caused by the closure of Peabody's Wilkie Creek mine and resultant reduction in throughput. QBH remains essentially a demurrage free port. Key activities at QBH in 2014 have included:   Twenty six months lost time injury free safety milestone achieved. Commencement of engineering and other studies required for upgrades of existing infrastructure and to allow for future expansion potential.  Targeted business improvement programs aimed at reducing costs and improving operational efficiencies were commenced with several key projects completed. New Hope Exploration The Group continues an active exploration program utilising two drilling rigs plus contract rigs as required. The exploration focus during 2014 has continued with resource definition in the Bowen Basin (Lenton, Bee Creek and Yamala) and Surat Basin (MDL244 for the revised New Acland Coal Mine Stage 3 Project) as well as Colton in the Maryborough Basin. Exploration on the mineral tenures has been focused on the eastern edge of the Mount Isa block and the Laura Basin. The exploration programs consisted of seismic, aeromagnetic, gravity, electro-magnetic and geochemical surveys in addition to drilling. The drilling program consisted of 25 water monitoring bore holes, 153 open holes and 65 core holes, totalling 22,104 metres. The current group Resources and Reserves are tabled below. These tables have not been updated since they were originally reported in July/August 2013. Deposit New Acland 1 Ownaview West Moreton 3 Lenton Bee Creek Elimatta Yamala Maryborough Ashford 5 4 2 Status Mine Exploration Mine Exploration Exploration Exploration Exploration Exploration Exploration Inferred 2 38 11 524 104 50 187 60 5 981 Coal Resources (million tonnes) (Coal resources are inclusive of the reserves reported below) Measured 440 - 44 83 - 108 13 - - 687 2013 Total 832 157 127 741 104 259 223 76 13 2,532 Indicated 390 119 72 134 - 101 23 16 8 864 2012 Total 857 157 129 693 104 259 223 76 13 2,511 Notes: 1 Mining has depleted 12 million tonnes from Measured Resource. 2 Mining has depleted 1 million tonnes from Measured Resource. 3 Figures shown are 100% of total resources. New Hope share is 90%. 4 Figures shown are 100% of total resources. New Hope share is 70%. 5 Figures shown are 100% of total resources. New Hope share is 50%. Deposit New Acland 1 Lenton 2 Elimatta Maryborough (Colton) Total Status Mine Exploration Exploration Exploration Notes: 1 Mining has depleted 12 million tonnes from Measured Reserves. 2 Figures shown are 100% of total resources. New Hope share is 90%. Small differences are due to rounding. Coal Reserves (million tonnes) Probable 149 31 40 11 231 Proved 292 21 100 - 413 Total 2013 441 52 139 11 643 Total 2012 495 52 191 15 753 JORC Declaration - Coal Resources The estimates of coal resources herein have been prepared in accordance with the guidelines of the “Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Resources – The JORC Code". These resources are inclusive of the reserves reported in the Reserves Statement. The work has been undertaken internally and reviewed by Mr Patrick Tyrrell who is a Member of AusIMM. Mr Tyrrell has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking, to qualify as a Competent Person as defined in the 2004 Edition of the JORC Code. Mr Tyrrell consents to the inclusion in this report of the matters based on this information in the form and context in which it appears. JORC Declaration – Coal Reserves The information in this Coal Reserves Statement that relates to coal reserves is based on information compiled by Mr Brett Domrow, who is a Member of AusIMM. Mr Domrow is a full time employee of New Hope Corporation Limited. Mr Domrow has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent person as defined in the 2004 Edition of the "Australian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves". Mr Domrow consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Details of the 2014 exploration program are as follows: Lenton (EPC 766, EPC 865, EPC1675 and ML 70337) Exploration throughout the period focused on ground water studies across the project. A total of 17 water monitoring holes were undertaken to better understand the hydrology of the area. Further drilling is planned to explore the shallow multiple seam repeat area adjacent to the previous 3D seismic area. New Acland (MDL 244, ML 50216 and EPC 919) While wet weather had a minor impact on drilling, six water monitoring bore holes, 117 open holes and 39 core holes were drilled during the year totalling 2,347 metres. This allowed improved resource definition for the revised New Acland Coal Mine Stage 3 Project. Darling Downs (EPC’s 758, 759, 760, 761, 763, 918, 970, 1154 and 1158) The uncertainty surrounding the State Government’s finalisation of Strategic Cropping Land and the Darling Downs Statutory Regional Plan legislation has resulted in work programs on these tenures being minimised. Maryborough (Colton) (EPC 923 and EPC 1082) Exploration focused on ground water studies across the project. A near surface moisture monitoring survey included the installation of Vibrating Water Piezometers (VWPs) and conversion of deeper exploration holes to monitoring piezometers. The development of seventeen water monitoring holes was undertaken to better understand the hydrology of the area. Bee Creek (EPC777) The first round of site reconnaissance and cultural heritage surveys were conducted at Bee Creek in preparation for drilling activities. The 2014 campaign was designed to target the relatively shallow Rangal Coal Measures (Elphinstone and Hynds Seams). Drilling predominately targeted the north of the lease on both the eastern and western limb of the Hail Creek Syncline. Elimatta (EL6526) The exploration program consisted of geotechnical boreholes drilled to facilitate planning of surface water management. 4 5 4 5 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014DIRECTORS’ REPORT - 31 JULY 2014New Hope Corporation Limited and Controlled Entities Directors Report - 31st July 2014 New Hope Corporation Limited and Controlled Entities Directors Report - 31st July 2014 Yamala (EPC929 and MDLA 434) The drilling program was designed to increase JORC classification to finalise the MDLA. The successful exploration program confirmed simple Rangal geology with no basalt cover. In the Northern area of the tenure, the seams were slightly deeper than anticipated while in the Southern area seams were intercepted shallower than predicted. Finalisation of the JORC report will complete the MDLA. Mineral Tenures: Yanko and Sherwood (EPM 18582 and EPM 18592) Drilling on the Yanko and Sherwood tenures were undertaken in tandem during the 2014 year. The drilling program was designed to test magnetic anomalies across the tenures. Geophysical modelling of magnetics predicated a shallow basement. The drilling program was stopped as the basement was substantially deeper than predicted with no evidence of mineralisation. Moonamarra (EPM 18589) The drilling program was designed to test both magnetic and gravity anomalies across the tenure. The four hole program was technically successful encountering visible mineralisation in two of the four holes. Once the entire core from the program is analysed a review of the project will be undertaken and a further exploration program designed. Courtenay and Courtenay West (EPM 18581 and EPM 19581) The tenement is located close to the Ernest Henry Mine. The drill program was based on existing gravity and geochemical surveys. The drill hole program was technically successful encountering visible mineralisation in one of the two holes. Once the entire core from the program is analysed a review of the project will be undertaken and a further exploration program designed. Laura (EPM 19342) The tenure was granted on 25 September 2013. The exploration program consisted of an aeromagnetic survey that was conducted to facilitate more precise drill hole placement of the targets across the tenure. The survey data will facilitate the remodelling of the regional magnetics and a drill program developed for drilling to commence in the 2015 dry season. Pastoral Operations A comprehensive five year plan has been developed for Acland Pastoral in conjunction with Resource Consulting Services Pty Ltd (RCS). RCS is one of the leading consulting firms in the agriculture sector and have focused on regenerating the Australian agriculture landscape over the last twenty five years. This plan is based on time controlled grazing and implementation has commenced. Drought conditions in the region have limited the cropping activity. A pivot irrigation system has been commissioned to improve the consistency and yields of the cropping activities. Lenton Exploration and project development work on the Lenton Coking Coal Project continued throughout 2013/14. Development of the EIS progressed with the completion of Base Line studies and receipt of the Final Terms of Reference for MLA 70456. The Impact modelling assessment component of the EIS is still to be completed. Project work has included updating the geological model, revising the mine plan, mine site infrastructure locations and overall economic model. Colton Remaining exploration activities from the 2012-2013 programs were completed. Project development work on the Colton open cut coking coal project continued during 2014. A revision to the Environmental Management Plan was submitted to the Department of Environment and Heritage Protection in May. This included reporting required for the Queensland Biodiversity Offset Legislation. Elimatta Project development work on the Elimatta project has continued during 2014. The revised EIS (Supplementary EIS) was submitted during the year and was accepted, after assessment by the Department of Environment and Heritage Protection. Work has commenced on an update to the Environmental Management Plan for the project, which is planned for submission during 2015. Carbon Conversion Projects Work has continued on the Coal to Liquids Proof of Concept Plant at Jeebropilly with Gasification, Gas Clean-up and Intermediate Pressure units all now commissioned. The only outstanding item left to commission is the Gas Generator which is planned to be finalised before the end of September. The final component of the plant is the Liquefaction Module which has been designed but will not be constructed without further approval premised upon the outcome of the Plant and Process audit, which is currently underway. This audit report is expected to be delivered by the end of October 2014. During the year, the decision was taken to separate from Quantex and to establish a wholly owned laboratory to develop and bench test various coal/carbon conversion technologies. The separation from Quantex was finalised by the end of the first quarter 2014 and a premises in Pittsburgh was secured. This building has now been fitted out as a testing laboratory and trials have commenced on developing the best process to employ in this venture. Technical results to date have been encouraging with the expectation that the initial trials will be finalised by the end of 2014. Bridgeport Bridgeport continued to progress organic growth in its exploration and production portfolio and integrate the assets acquired from Arrow Energy into its portfolio. Acland Pastoral’s cattle herd has decreased in size from 2,460 to 1,894 head due to the dry conditions. During the year, 1,948 head were sold and 1,335 head purchased. During the year Bridgeport had no lost time injuries, moving lost time injury free months to thirty two and LTIFR dropped below the industry average level of 8 which is a pleasing outcome considering the amount of work and activities undertaken in the field across Bridgeport. Acland Pastoral has successfully continued the cattle trials on rehabilitated mine land with further analysis in the following areas:    Soil structure and water holding capacity; Volume, diversity and quality of pastures; and Various age of pastures. The results of these trials are encouraging with all cattle gaining weight in spite of the dry conditions. Development Projects Approvals (mining and environmental) for the Group’s portfolio of coal projects continues to be progressed. These include the brownfield revised New Acland Coal Mine Stage 3 Project and greenfield projects at Lenton, Colton and Elimatta. The current status of these projects is discussed below. New Acland Development of the Environmental Impact Statement (EIS) progressed with the public comment period on the EIS concluded in March 2014. The Group’s response to public and agency feedback on the EIS has been provided to the Coordinator-General for his consideration in preparation of his decision and Evaluation Report. Project front end engineering and design (FEED) studies on mine site infrastructure have been completed in preparation for construction activities to start in 2016, subject to State and Federal approvals. Development drilling was undertaken throughout the year in Bridgeport production assets with two new wells in the Utopia field (Bridgeport interest 60%) during the last quarter of 2013 and four new wells in the Cuisinier field (Bridgeport interest 15%) during the second quarter of 2014. One well (Utopia 16 an appraisal well) was unsuccessful. The small service rig owned by Bridgeport was kept busy on well maintenance and repair as well as completing and testing the new wells drilled in operations during the year. A substantial amount of exploration work was carried out on the Bridgeport portfolio with seismic surveys acquired in one of the Victorian tenements and one of the Cooper Basin tenements which will provide data for future exploration drilling activities. Additionally five exploration wells were drilled in four Cooper Basin tenements; two of which were plugged and abandoned and three which are suspended for future testing subject to rig and equipment schedules. Planning is under way for an additional six development wells during the year, four in the Cuisinier field and two in the operated fields. In addition, 3D seismic is planned on the South Australian Cooper acreage and ongoing technical work to progress targets to drilling status across the portfolio. 6 7 6 7 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014DIRECTORS’ REPORT - 31 JULY 2014New Hope Corporation Limited and Controlled Entities Directors Report - 31st July 2014 New Hope Corporation Limited and Controlled Entities Directors Report - 31st July 2014 Environmental compliance During the 2014 financial year, the Group has not been prosecuted for any breach of environmental laws. Environmental performance The majority of the Group’s operations, which include coal mining operations and exploration tenements, the rail loading facilities, the QBH coal export port facility and oil and gas operations, are in Queensland. The key piece of environmental legislation in Queensland is the Environmental Protection Act 1994 (EP Act). The EP Act protects our environment with a focus on ecologically sustainable development. The Group’s operations have proactively undertaken initiatives to improve their financial performance. An expanded monitoring program at QBH to includes areas further from the QBH boundary, including within the suburb of Wynnum North and conducting rehabilitation trials at New Acland give focus to environmental performance. Environmental systems During the 2014 financial year the Group’s operations have continued to make improvements to the Environmental Management System (EMS). The EMS assists the Group to improve its environmental performance by increasing environmental awareness, optimising operational control, monitoring compliance and facilitating continuous improvement. Environmental reporting The Group’s operational sites have submitted reports under the National Pollutant Inventory program. For the purposes of National Greenhouse and Energy Reporting and the Energy Efficiency Opportunities program the Group reports as part of the corporate group of Washington H. Soul Pattinson and Company Limited. Bridgeport executed a number of landowner access agreements through the year including Cultural Heritage Management Agreements and Landowner Access Agreement on new permits acquired through the period (for example in South Australia). Bridgeport operates all its permits under an Environmental Management System prepared and issued in accordance with legislation. Each exploration (ATP) and production (PL) permit is also operated in accordance with the Environmental Authorities issued at the time permits were or are awarded or transferred to the entity. This includes regular produced water monitoring and ongoing remediation activities at all our sites. Outlook During the current year, the coal industry in Australia and internationally, has experienced significant challenges in remaining profitable. With the outlook for coal prices in the short term to remain relatively flat, New Hope is anticipating another tough year ahead. Some improved revenues may be seen if the Australian dollar were to soften against the US dollar during the 2015 financial year. New Hope’s focus for 2015 remains on safe production and active management of risks to ensure ongoing cost effectiveness. The approval of the Acland expansion is a key issue. Once approved, it will provide certainty for New Hope, our employees and the local community. If the Acland expansion is not approved, current reserves would be depleted during 2017 at current mining rates. Operationally, group production for 2015 is anticipated to be similar to the 2014 year, with potential for modest increases at Acland. Rehabilitation work currently underway at the West Moreton operations will continue during 2015. Acquisition opportunities are being actively investigated by New Hope, with a focus on open cut operations. The current soft coal market, combined with our strong balance sheet, provides the ability to take advantage of acquisition opportunities which support the long term profitability of the Group. Concurrently we will continue to develop our portfolio, ensuring prudent expenditure continues on exploration and approvals work to allow new projects to be brought on line when market conditions improve. Insurance of officers In accordance with the provisions of the Corporations Act 2001 , New Hope Corporation Limited (the Company or parent entity) has a Directors' and Officers' Liability policy covering Directors and Officers of the Group. The insurance policy prohibits disclosure of the nature of the liability insured against and the amount of the premium. Proceedings on behalf of the Corporation No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Corporation, or to intervene in any proceedings to which the Corporation is a party, for the purpose of taking responsibility on behalf of the Corporation for all or part of those proceedings. No proceedings have been brought or intervened in on behalf of the Corporation with leave of the Court under section 237 of the Corporations Act 2001 . Significant changes in the state of affairs Except as disclosed in the review of operations, there has not arisen any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the parent entity, to affect substantially the operations or results of the consolidated entity in subsequent financial years. Matters subsequent to the end of financial year Since the end of the financial year no matters or circumstances not referred to elsewhere in this report have arisen that have or will significantly affect the operations of the consolidated entity, the results of those operations or the state of affairs of the consolidated entity in subsequent financial years. Likely developments and expected results of operations The activities of the continuing operations in the consolidated entity in the next financial year are expected to be similar to those of the financial year just ended. The consolidated entity will continue to pursue a policy of increasing its strength in its major business sectors including the development and operation of additional mineral resource projects in Australia and is regularly reviewing potential new opportunities. The Group will disclose further information on likely developments in the operations of the consolidated entity and the expected results of operations as appropriate. However, Directors are mindful that premature release of information may be prejudicial to the best interests of the Company and its shareholders. 8 9 8 9 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014DIRECTORS’ REPORT - 31 JULY 2014New Hope Corporation Limited and Controlled Entities Directors Report - 31st July 2014 New Hope Corporation Limited and Controlled Entities Directors Report - 31st July 2014 Information on Directors Mr R.D. MILLNER (Non-executive Chairman) Experience Information on Directors (continued) Mr D.J. FAIRFULL - BCom, ACIS, CPA, ASIA (Non-executive Director) Experience Mr Millner is Chairman of the Company's holding company, Washington H. Soul Pattinson and Company Limited. Mr Millner joined the Board of New Hope Corporation Limited in 1995 and was appointed Chairman in 1998. Mr Fairfull has extensive experience in finance, investment and merchant banking. He was appointed to the New Hope Corporation Limited Board in 1997. Other current Directorships Washington H. Soul Pattinson and Company Limited TPG Telecom Limited Brickworks Limited (includes Bristile Limited) BKI Investment Company Limited (includes PSI Limited) Australian Pharmaceutical Industries Limited Milton Corporation Limited (includes Choiseul Investments Limited) Appointed 1984 Appointed 2000 Appointed 1997 Appointed 2003 Appointed 2000 Appointed 1998 Former Directorships in last 3 years Souls Private Equity Limited Northern Energy Corporation Limited Special responsibilities Chairman of the Board. Interests in shares and options Appointed 2004 Resigned 2012 Appointed 2011 Resigned 2012 3,681,962 ordinary shares in New Hope Corporation Limited Nil options or rights over ordinary shares in New Hope Corporation Limited Mr P.R. ROBINSON - BCom (Non-executive Director) Experience Mr Robinson is Executive Director of Washington H. Soul Pattinson and Company Limited. He commenced with Washington H. Soul Pattinson and Company Limited in 1978 and was appointed as a Director in 1984. He joined the Board of New Hope Corporation Limited in 1997. Other current Directorships Washington H. Soul Pattinson and Company Limited Clover Corporation Limited Australian Pharmaceutical Industries Limited Appointed 1984 Appointed 1997 Appointed 2000 Former Directorships in last 3 years Northern Energy Corporation Limited Appointed 2011 Resigned 2012 Special responsibilities Member of the Remuneration Committee and Nomination Committee. Interests in shares and options 119,234 ordinary shares in New Hope Corporation Limited Nil options or rights over ordinary shares in New Hope Corporation Limited Other current Directorships Washington H. Soul Pattinson and Company Limited Souls Private Equity Limited Shinewing Hall Chadwick National Association Heritage Brands Limited Former Directorships in last 3 years Northern Energy Corporation Limited Drill Torque Limited Appointed 1997 Appointed 2004 Appointed 2009 Appointed 2008 Appointed 2011 Resigned 2012 Appointed 2011 Resigned 2013 Special responsibilities Member of the Audit Committee and Remuneration Committee. Interests in shares and options 11,000 ordinary shares in New Hope Corporation Limited Nil options or rights over ordinary shares in New Hope Corporation Limited Mr W.H. GRANT - OAM, FAICD, ALGA (Non-executive Director) Experience Mr Grant has over 35 years experience in project management, corporate and fiscal governance, local government administration and strategic planning. He was the CEO of the South Bank Corporation in Brisbane from 1997 to 2005 and prior to that he was the General Manager/CEO of the Newcastle City Council from 1992 to 1997. He joined the Board of New Hope Corporation Limited in 2006. Other current Directorships Brisbane Development Association Brisbane Airport Corporation - Chairman Northern Energy Corporation Limited Bridgeport Energy Limited Former Directorships in last 3 years Appointed 2006 Appointed 2007 Appointed 2011 Appointed 2012 Queensland Performing Arts Centre Trust (QPAC) Appointed 2006 Resigned 2013 Special responsibilities Chairman of the Remuneration and Chairman of the Nomination Committee and a member of the Audit Committee. Interests in shares and options 30,000 ordinary shares in New Hope Corporation Limited Nil options or rights over ordinary shares in New Hope Corporation Limited 10 11 10 11 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014DIRECTORS’ REPORT - 31 JULY 2014New Hope Corporation Limited and Controlled Entities Directors Report - 31st July 2014 New Hope Corporation Limited and Controlled Entities Directors Report - 31st July 2014 Information on Directors (continued) Ms S.J. PALMER - BCom (Non-executive Director) Experience Ms Palmer is a Chartered Accountant with over 30 years of extensive experience in the financial and resources fields. Ms Palmer brings a financial reporting, risk management and corporate current knowledge to the New Hope board in all aspects of accounting, finance, governance. Ms Palmer was appointed to the New Hope Corporation Limited Board on 1 November 2012. Information on Directors (continued) Mr R.C. NEALE - BSc.(Hons) MAICD, MAIMM (retired as Managing Director) Experience Mr Neale retired on 31 January 2014. Mr Neale has more than 40 years experience in the mining and exploration industries covering coal, base metals, gold, synthetic fuels, bulk materials shipping, and power generation. He joined New Hope Corporation Limited in 1996 as 2008. General Manager, and has been Chief Executive Officer since 2005. He was appointed to the New Hope Corporation Limited Board in Other current Directorships Australian Coal Association Australian Coal Research Limited Australian Coal Association Low Emissions Technologies Ltd Planet Gas Limited Westside Corporation Limited Queensland Resources Council Appointed 2005 Appointed 2005 Appointed 2006 Appointed 2009 Appointed 2010 Appointed 2009 Former Directorships in last 3 years Bridgeport Energy Limited Northern Energy Corporation Limited Appointed 2011 Resigned 2014 Appointed 2011 Resigned 2014 Special responsibilities Managing Director and Chief Executive Officer (retired). Interests in shares and options upon retirement 2,591,159 ordinary shares in New Hope Corporation Limited Nil rights over ordinary shares in New Hope Corporation Limited Other current Directorships RCR Tomlinson Ltd Former Directorships in last 3 years MSF Sugar Thiess Pty Ltd Special responsibilities Chairman of the Audit Committee. Interests in shares and options Appointed 2014 Appointed 2008 Resigned 2012 Appointed 2011 Resigned 2014 15,000 ordinary shares in New Hope Corporation Limited Nil options or rights over ordinary shares in New Hope Corporation Limited Mr I.M. WILLIAMS - BEc, LLB (Non-executive Director) Experience As a legal and strategic adviser to International investors in the energy and resources sectors, Mr Williams has been involved in every aspect of the Australian coal industry. Mr Williams was appointed to the New Hope Corporation Limited Board on 1 November 2012. Other current Directorships Australia Japan Business Cooperation Committee Australia Korea Business Council Appointed 2001 Appointed 2013 Former Directorships in last 3 years Ashurst Special responsibilities Member of the Remuneration Committee. Appointed 2011 Resigned 2014 Interests in shares and options 16,650 ordinary shares in New Hope Corporation Limited Nil options or rights over ordinary shares in New Hope Corporation Limited Company Secretary Justin Hogg was appointed to the role of Company Secretary on 1 February 2014. Starting his career at Rio Tinto, Mr Hogg has held senior finance positions in a broad range of industry sectors, including petroleum, financial services and aviation. He joined New Hope Corporation Limited in 2011 in the position of Finance Manager. Mr Hogg is a member of CPA Australia and Governance Institute of Australia. 12 13 12 13 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014DIRECTORS’ REPORT - 31 JULY 2014New Hope Corporation Limited and Controlled Entities Directors Report - 31st July 2014 Remuneration Report (continued) b. Executive remuneration policy and framework (continued) The detail of each component is as follows: Base remuneration It comprises a cash salary, superannuation and Base remuneration for senior executives is fixed annually by the Remuneration Committee. other non-cash benefits such as a company vehicle. Executives may elect to take a vehicle allowance in lieu of a company vehicle and may salary sacrifice a portion of their cash salary into superannuation or other benefits. Short Term Incentives STIs are designed to motivate and reward senior executives to achieve the short term goals of the Company as set by the Board. Maximum allowable STIs are provided for in senior executive employment contracts and are paid in the form of an annual cash bonus. At the end of each period the Remuneration Committee will award executives a percentage of their maximum allowable STIs having regard to the the executive and the Company during the period. The Key Performance Indicators (KPIs) set by the Remuneration performance of Committee and their respective weightings are detailed below. Short Term Incentives KPIs Group Profit, Sales and Investment Performance Group Compliance – Safety, Environment and Risk Management Group Production Cost, Project Development and M&A Activities Weighting 55% 25% 20% Each of the Short Term Incentive KPIs is made up of qualitative and quantitative measures with the quantitative measures set annually by the Remuneration Committee. Based on the achievements of the Company this year, the remuneration committee determined that executives had achieved 52% of their maximum STI. In making this assessment, the committee considered the following factors:     An improvement to the overall safety performance at the Company during the year. A net profit after tax before non regular items of $41.5m. Sales, excluding trade sales, of 5.7 million tonnes. Production of 5.6 million tonnes. As part of the Remuneration Committee’s annual review process, the weighting for the Short Term Incentive KPIs have been modified slightly for the 2015 financial year as detailed below. Short Term Incentives KPIs - 2015 financial year Group Profit, Sales and Investment Performance Group Compliance – Safety, Environment and Risk Management Group Production Cost, Project Development and M&A Activities Weighting 60% 20% 20% Long Term Incentives LTIs are designed to motivate and reward senior executives to achieve the strategic goals set by the Board, align shareholder and executive objectives and to retain the services of senior executives. Maximum allowable LTIs are provided for in senior executive employment contracts. At the end of each period the Remuneration Committee will award executives a percentage of their maximum allowable LTI having regard to the performance of the executive and the Company during the period. LTIs are paid in the form of Performance Rights at the discretion of the Remuneration Committee. The value of an executive’s LTI is converted into Performance Rights by reference to the five day volume weighted average share price of the Company over the five days immediately preceding issue. The Remuneration Committee has the discretion to select alternative equity instruments for the award of LTIs in the event that Performance Rights do not align to the strategic goals set by the Remuneration Committee or Board. 14 15 15 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014DIRECTORS’ REPORT - 31 JULY 2014New Hope Corporation Limited and Controlled Entities Directors Report - 31st July 2014 New Hope Corporation Limited and Controlled Entities Directors Report - 31st July 2014 Remuneration Report (continued) b. Executive remuneration policy and framework (continued) Performance Rights are issued subject to performance and service conditions. The service condition requires that the executive remain an employee of the Company for the duration of the three year vesting period. The performance conditions attaching to the rights are measured over three years. The Remuneration Committee will determine the percentage of rights that will vest based on the performance of the executive and the Company during the three year period. The Key Performance Indicators (KPIs) set by the Remuneration Committee and their respective weightings are detailed below. Long Term Incentives KPIs Shareholder Value Project Development and M&A Activities Strategic Plan (including Succession Planning and Stakeholder Management) Weighting 50% 25% 25% The Shareholder Value KPI compares the total shareholder return (TSR) of the Company against the ASX 200 TSR over the three year period. The details of the amount of rights vesting, given the relative TSR performance, are detailed below: % of 3 year Company TSR vs ASX 200 TSR < 100% 100% 105% 110% 115% 120% > 125 % % Vesting 0% 25% 30% 35% 40% 45% 50% Subject to the employee satisfying the above service and performance conditions, a percentage of the Performance Rights will vest three years after their grant date in accordance with the above table. c. Consequences of performance on shareholder wealth The Company's performance is not only impacted by market factors, but also by employee performance. The financial performance for the last five years is shown below. Net profit attributable to shareholders Profit after tax from continuing operations Dividends paid during the year Share price as at 31 July Shareholders' funds A$000's A$000's cents/share $/share A$000's Year ended 31 July 2014 58,450 58,449 16.00 3.00 1,973,859 2013 74,129 74,128 31.00 3.76 2,016,456 2012 167,126 167,125 26.00 4.07 2,252,916 2011 503,234 503,099 23.75 5.37 2,367,383 2010 183,832 183,832 82.25 4.71 2,339,525 d. Non-executive director remuneration policy It is intended that remuneration paid to Non-executive Directors reflects the demands and responsibilities of Directors. Non-executive Directors fees are reviewed annually after taking into consideration the Company’s performance, market rates and level of responsibility. Non-executive Directors receive a fixed fee that is paid within an aggregate limit as approved by the shareholders from time to time. The current maximum aggregate is set at $1,750,000 (2013 - $1,750,000) per annum. There is no proposal to increase Directors’ Fees for the 2015 financial year. e. Voting made at the company’s 2013 Annual General Meeting The Company received 98% “yes” votes on its remuneration report for the 2013 financial year. Remuneration report (continued) f. Details of remuneration Details of remuneration of Directors and the key management personnel of New Hope Corporation Limited are set out below for the current and previous financial years. Short-term employee benefits Cash bonus7 $ Cash salary and fees $ Non cash benefits8 $ Long-term benefits Post employment benefits Share based payments LSL $ Super- annuation $ Termination Benefits $ Rights $ Total $ 2014 Non-executive Directors Mr R.D. Millner Mr P.R. Robinson Mr D.J. Fairfull Mr W.H. Grant6 Ms S.J. Palmer5 Mr I.M. Williams Total Non-executive Directors Executive Directors Mr R.C. Neale 1 Key Management Personnel Mr S.O. Stephan 2 Mr B.D. Denney Mr M.J. Busch 3 Total Key Management Personnel 293,000 135,000 135,000 150,000 160,000 135,000 1,008,000 - - - - - - - - - - - - - - - - - - - - - 17,836 12,516 12,516 13,906 14,833 12,516 84,123 - - - - - - - - - - - - - - 310,836 147,516 147,516 163,906 174,833 147,516 1,092,123 702,688 285,000 96,936 13,123 8,887 176,315 421,744 1,704,693 905,621 592,280 456,003 1,953,904 433,175 340,813 201,863 975,851 114,269 24,555 83,535 222,359 65,376 1,838 47,005 114,219 18,074 18,027 18,873 54,974 - - - - 107,571 87,605 67,055 262,231 1,644,086 1,065,118 874,334 3,583,538 Total Remuneration - 2014 3,664,592 1,260,851 319,295 127,342 147,984 176,315 683,975 6,380,354 2013 Non-executive Directors Mr R.D. Millner Mr P.R. Robinson Mr D.J. Fairfull Mr W.H. Grant6 Ms S.J. Palmer 4, 5 Mr I.M. Williams 4 Total Non-executive Directors Executive Directors Mr R.C. Neale Key Management Personnel Mr S.O. Stephan Mr B.D. Denney Mr M.J. Busch Total Key Management Personnel 293,000 135,000 135,000 150,000 120,000 101,250 934,250 - - - - - - - - - - - - - - - - - - 16,579 12,178 12,178 13,531 10,833 9,141 74,440 1,443,559 550,000 44,631 24,074 16,579 596,942 611,770 416,114 1,624,826 201,375 191,250 106,250 498,875 2,873 22,941 28,964 54,778 99,409 - - 6,981 6,981 16,579 16,579 16,579 49,737 31,055 140,756 - - - - - - - - - - - - - - - - - - 309,579 147,178 147,178 163,531 130,833 110,391 1,008,690 808,244 2,887,087 192,730 142,927 115,469 451,126 1,010,499 985,467 690,357 2,686,323 1,259,370 6,582,100 Total Remuneration - 2013 4,002,635 1,048,875 Mr M.J. Busch previously held the position of Financial Controller and Company Secretary and was promoted to the position of CFO from 1 February 2014. 1 Mr R.C. Neale retired from the position of Managing Director and CEO as of 31 January 2014. 2 Mr S.O. Stephan previously held the position of CFO and was promoted to the position of CEO from 1 February 2014. 3 4 Appointed 1 November 2012. 5 Chairman of the Audit and Risk Committee. 6 Chairman of the Remuneration Committee and Chairman of the Nominations Committee. 7 Cash Bonus for 2014 represents 2013 at risk STI and 2014 STI based on new STI KPI measures, both expensed in the 2014 financial year. 8 Non Cash Benefits include movements in annual leave provisions. 16 17 16 17 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014DIRECTORS’ REPORT - 31 JULY 2014 New Hope Corporation Limited and Controlled Entities Directors Report - 31st July 2014 New Hope Corporation Limited and Controlled Entities Directors Report - 31st July 2014 Remuneration report (continued) f. Details of remuneration (continued) The relative proportions of remuneration that are linked to performance and those that are fixed are as follows: Name Mr R.C. Neale Mr S.O. Stephan Mr B.D. Denney Mr M.J. Busch Fixed Remuneration 2014 2013 53% 58% 61% 67% 66% 60% 68% 69% At Risk - STI At Risk - LTI 2014 17% 26% 32% 23% 2013 28% 19% 15% 17% 2014 25% 7% 8% 8% 2013 19% 20% 19% 15% Since the LTIs are provided exclusively by way of rights, the percentages disclosed reflect the value of remuneration consisting of rights, based on the value of rights expensed during the year. g. Employment contracts The agreements with the senior executives provide for a cash salary, superannuation and a fully maintained motor vehicle. Executives may elect to take a vehicle allowance in lieu of a company vehicle and may salary sacrifice a portion of their cash salary into superannuation or other benefits. Name Term of agreement and notice period 1 Mr R.C. Neale Managing Director and Chief Executive Officer (retired 31 January 2014) Mr S.O. Stephan Chief Executive Officer (promoted from 1 February 2014) 4 Mr B.D. Denney Chief Operating Officer Mr M.J. Busch Chief Officer Financial (promoted from 1 February 2014) No fixed term 2 months' notice period No fixed term 6 months' notice period No fixed term 3 months' notice period No fixed term 3 months' notice period Base remuneration including Superannuation 2 $ 1,500,000 Termination Payments 3 $200,000 index by CPI from 1996 $ 1,300,000 6 months’ base remuneration $ 750,000 3 months’ base remuneration $ 600,000 3 months’ base remuneration 1 This notice applies equally to either party. 2 Base remuneration quoted is for the year ended 30 June 2014; they are reviewed annually by the remuneration committee. 3 Base salary payable if the company terminates employees with notice, and without cause (e.g. for reasons other than unsatisfactory performance). The contract with Mr Denney includes provision for a separation payment in the event of his termination as a result of takeover or merger of the Company. The allowance is for less than one year’s remuneration. 4 18 Remuneration report (continued) h. Details of share based compensation Rights Rights are granted under the New Hope Corporation Limited Employee Performance Share Rights Plan (Rights Plan). Membership of the Rights Plan is open to those senior employees and those Directors of New Hope Corporation Limited, its subsidiaries and associated bodies corporate whom the Directors believe have a significant role to play in the continued development of the Group’s activities. Rights will be granted for no consideration. Rights to be granted in accordance with the Rights Plan will be allotted at the sole discretion of the Directors of the Company and in accordance with the Group’s reward and retention strategy. Rights will vest and automatically convert to ordinary shares in the Company following the satisfaction of the relevant performance and service conditions. Performance and service conditions applicable to each issue of Rights are determined by the board at the time of grant. The assessed fair value at grant date of Rights granted to the individuals is allocated equally over the period from grant date to vesting date and the amount will be included in the remuneration of the executive. Fair values at grant date are determined by reference to the relevant volume weighted average price as determined by the Directors. The terms and conditions of each grant of rights affecting remuneration of key management personnel in the previous, this or future reporting periods and the associated pricing model inputs are as follows: Performance Period to which LTI relates Grant Date Vesting Date October 2011 October 2011 October 2011 December 2011 December 2011 December 2011 December 2011 December 2012 November 2013 November 2013 December 2012 November 2013 December 2012 December 2012 August 2013 August 2013 August 2014 August 2012 August 2013 August 2014 August 2015 August 2013 December 2013 January 2014 August 2014 January 2015 August 2015 August 2016 Value of a Right at Grant Date ($) 5.17 5.17 5.17 6.02 6.02 6.02 6.02 4.03 4.03 4.03 4.03 4.03 4.03 4.03 No rights were awarded for the 2013 financial year 2009 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2012 2012 2012 2013 Rights granted under the plan carry no dividend or voting rights. Deferred award of outstanding LTI entitlements to CEO At the Company’s Annual General Meeting in November 2012, shareholders approved the issue of Performance Rights to Mr Neale in respect of outstanding LTI performance payments relating to the 2011 financial year. The payments had been deferred pending shareholder approval at the Annual General Meeting. At the Company’s Annual General Meeting in November 2013, shareholders approved the issue of Performance Rights to Mr Neale in respect of outstanding LTI performance payments relating to the 2012 financial year. The payments had been deferred pending shareholder approval at the Annual General Meeting. CEO Retirement With the retirement of Mr Neale, the Board considered the outstanding contribution Mr Neale has made to the company during his tenure as CEO and Managing Director and it was agreed that upon his retirement all outstanding performance rights would vest. In addition, it was agreed that Mr Neale’s STI entitlement for the 2012/13 financial year would be paid in one instalment on or before his retirement date of 31 January 2014. 18 19 19 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014DIRECTORS’ REPORT - 31 JULY 2014New Hope Corporation Limited and Controlled Entities Directors Report - 31st July 2014 New Hope Corporation Limited and Controlled Entities Directors Report - 31st July 2014 Remuneration report (continued) h. Details of share based compensation (continued) The deferral of the Performance Right issue, re-alignment of vesting conditions and the vesting of Performance Rights on retirement has had an effect on the quantum of Share Based Payment Expense recognised in the remuneration report, and is summarised as follows: Remuneration report (continued) h. Details of share based compensation (continued) Name Grant Date Vesting Date Number Granted Value per Share ($) Number Vested Vested Percentage Number Forfeited Forfeited Percentage Maximum value yet to vest Period to which LTI relates Date Performance Rights Issued 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2012 2012 2012 September 2011 September 2011 September 2011 September 2011 September 2011 September 2011 September 2011 September 2011 September 2011 September 2011 September 2011 September 2011 November 2012 November 2012 November 2012 November 2013 November 2013 November 2013 Number of Performance Rights Issued 30,775 30,775 30,775 30,775 24,601 24,601 24,601 24,601 24,398 24,398 24,398 24,398 36,537 36,537 36,538 52,317 52,317 52,317 Vesting Date in the Ordinary Course Amended Vesting Date 1 August 2009 1 August 2010 1 August 2011 1 August 2012 1 August 2010 1 August 2011 1 August 2012 1 August 2013 1 August 2011 1 August 2012 1 August 2013 1 August 2014 1 August 2012 1 August 2013 1 August 2014 1 August 2013 1 August 2014 1 August 2015 1 January 2012 1 January 2012 1 January 2012 No change 1 January 2012 1 January 2012 No change No change 1 January 2012 No change No change 31 January 2014 1 December 2012 No change 31 January 2014 1 December 2013 1 January 2014 31 January 2014 Impact on 2013 Share Based Payment Expense ($) Impact on 2014 Share Based Payment Expense ($) - - - - - - - 69,375 - - 68,803 44,519 73,318 131,972 82,485 140,558 129,746 67,468 808,244 - - - - - - - - - - - 44,519 - - 82,485 70,279 81,091 143,370 421,744 Details of Rights over ordinary shares in the Company as at 31 July 2014, provided as remuneration to each Director of New Hope Corporation Limited and each of the key management personnel of the Group are set out below. Upon satisfaction of the service and performance conditions each right will automatically vest and convert into one ordinary share in New Hope Corporation Limited. The minimum value of the rights yet to vest is nil, as the rights will be forfeited if the vesting conditions are not met. The maximum value of the rights yet to vest has been determined as the amount of the grant date fair value of the right that is yet to be expensed. Mr R.C. Neale Mr S.O. Stephan Mr B.D. Denney Mr M.J. Busch 27 Oct 11 27 Oct 11 17 Dec 11 17 Dec 11 15 Nov 13 15 Nov 13 15 Nov 13 27 Oct 11 27 Oct 11 17 Dec 11 17 Dec 11 17 Dec 11 17 Dec 12 17 Dec 12 17 Dec 12 17 Dec 12 17 Dec 11 17 Dec 11 17 Dec 11 17 Dec 12 17 Dec 12 17 Dec 12 17 Dec 12 27 Oct 11 27 Oct 11 17 Dec 11 17 Dec 11 17 Dec 11 17 Dec 12 17 Dec 12 17 Dec 12 17 Dec 12 01 Aug 13 31 Jan-141 01 Aug 13 31 Jan-141 01 Dec 13 01 Jan 14 31 Jan-141 01 Aug 13 01 Aug 14 01 Aug 13 01 Aug 14 01 Aug 15 01 Aug 13 01 Aug 14 01 Aug 15 01 Aug 16 01 Aug 13 01 Aug 14 01 Aug 15 01 Aug 13 01 Aug 14 01 Aug 15 01 Aug 16 01 Aug 13 01 Aug 14 01 Aug 13 01 Aug 14 01 Aug 15 01 Aug 13 01 Aug 14 01 Aug 15 01 Aug 16 48,999 5.17 24,398 5.17 36,537 6.02 36,538 6.02 52,317 4.03 52,317 4.03 52,317 4.03 10,040 5.17 10,040 5.17 8,432 6.02 8,432 6.02 8,432 6.02 11,211 4.03 11,211 4.03 11,211 4.03 11,210 4.03 8,010 6.02 8,010 6.02 8,010 6.02 11,211 4.03 11,211 4.03 11,211 4.03 11,210 4.03 5,020 5.17 5,020 5.17 4,005 6.02 4,005 6.02 4,005 6.02 8,408 4.03 8,408 4.03 8,408 4.03 8,408 4.03 48,999 24,398 36,537 36,538 52,317 52,317 52,317 10,040 - 8,432 - - 11,211 - - - 8,010 - - 11,211 - - - 5,020 - 4,005 - - 8,408 - - - 100% 100% 100% 100% 100% 100% 100% 100% 0% 100% 0% 0% 100% 0% 0% 0% 100% 0% 0% 100% 0% 0% 0% 100% 0% 100% 0% 0% 100% 0% 0% 0% - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 13,844 - - 16,943 24,642 - - 13,151 - - 16,943 24,642 - - - - 6,575 - - 12,707 18,482 1 Rights for Mr R.C. Neale vested upon retirement as decided by the Board. The fair value of the rights is determined based on the market price of the Company’s shares at the grant date. i. Equity instruments held by Key Management Personnel The tables on the following page show the number of rights and shares in the Company that were held during the financial year by key management personnel of the Group, including their close family members and entities related to them. There were no shares granted during the reporting period as remuneration. Rights holdings Name Mr R.C. Neale Mr S.O. Stephan Mr B.D. Denney Mr M.J. Busch Balance at the start of the year 303,423 90,219 68,873 55,687 Granted as remuneration Vested - - - - (303,423) (29,683) (19,221) (17,433) Balance at the end of the year - 60,536 49,652 38,254 Unvested - 60,536 49,652 38,254 20 21 20 21 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014DIRECTORS’ REPORT - 31 JULY 2014 New Hope Corporation Limited and Controlled Entities Directors Report - 31st July 2014 New Hope Corporation Limited and Controlled Entities Directors Report - 31st July 2014 Remuneration report (continued) i. Equity instruments held by Key Management Personnel Share holdings Name Mr R.D. Millner Mr P.R. Robinson Mr D.J. Fairfull Mr W.H. Grant Ms S.J. Palmer Mr I.M. Williams Mr R.C. Neale Mr S.O. Stephan Mr B.D. Denney Mr M.J. Busch Balance at the start of the year Purchased / (sold) Received on the vesting of rights Other changes during the year1 3,681,962 119,234 11,000 30,000 - - 2,287,736 42,712 8,010 664,045 - - - - 15,000 16,650 - - - - - - - - - - - - - - - - 303,423 29,683 19,221 17,433 (2,591,159) - - - Balance at the end of the year 3,681,962 119,234 11,000 30,000 15,000 16,650 - 72,395 27,231 681,478 1 Other changes for Mr R.C. Neale represent balance of final holdings upon retirement. j. Other transactions with Key Management Personnel Mr R.D. Millner and Mr P.R. Robinson are Directors of New Hope Corporation Limited and Pitt Capital Partners Limited. Pitt Capital Partners Limited acted as financial advisor to the Group for various corporate transactions during the 2014 and 2013 financial years. All transactions are at normal commercial terms. Mr K.P. Standish is a Director of certain subsidiaries of New Hope Corporation Limited. Mr Standish is a partner in the firm Campbell Standish Partners Solicitors which has provided legal services to New Hope Corporation Limited and its subsidiaries for several years. All transactions are at normal commercial terms. Aggregate amounts of each of the above types of transactions with key management personnel were as follows: Legal advice Financial advice $ $ 1,013,354 409,627 Shares issued on the vesting of rights Since the end of the financial year 66,337 rights have been granted and converted to ordinary shares in the Company. Loans to directors and executives There were no loans to directors and executives granted during the reporting period, nor were there any outstanding loans as at balance date. Non-audit services The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor's expertise and experience with the Company are important. Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers) for non-audit services provided during the year are set out below. The Board of Directors has considered the position and in accordance with the advice received from the Audit Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 . The Directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:   The types of non-audit services have been reviewed by the Audit Committee to ensure they do not impact the impartiality and objectivity of the auditor; None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants . During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non- related audit firms (refer note 32): Audit services PricewaterhouseCoopers Australian firm for audit and review of financial reports and other audit work under the Corporations Act 2001 Non PricewaterhouseCoopers audit firms for the audit or review of financial reports of any entity in the Group Total remuneration for audit services Non-audit services PricewaterhouseCoopers Australian firm: Transaction tax and advisory services General advisory services Tax compliance services Tax compliance services - MRRT Tax compliance services - PRRT Research and development compliance services Non PricewaterhouseCoopers firms: Taxation services Total remuneration for non-audit services Total auditors remuneration Consolidated 2014 2013 448,066 355,629 1,045 449,111 - 355,629 435,664 56,920 94,907 1,500 43,354 223,534 421,090 63,397 160,752 192,670 43,795 270,348 - - 855,879 1,152,052 1,304,990 1,507,681 Auditor's independence declaration A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 25. Rounding of amounts The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to the "rounding off" of amounts in the Directors' report. Amounts in the Directors' report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar. 22 23 22 23 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014DIRECTORS’ REPORT - 31 JULY 2014 DIRECTORS’ REPORT - 31 JULY 2014 New Hope Corporation Limited and Controlled Entities Directors Report - 31st July 2014 Meetings of Directors The following table sets out the number of meetings of the Company's Directors held during the year ended 31 July 2014 and the number of meetings attended by each Director: Mr R.D. Millner Mr P.R. Robinson Mr D.J. Fairfull Mr W.H. Grant Ms S.J. Palmer Mr I.M. Williams Mr R.C. Neale (retired 31 January 2014) Full meetings of Directors Held 14 14 14 14 14 14 7 Attended 13 14 14 13 13 14 6 Audit Committee Held - - 3 3 3 - - Attended - - 3 2 3 - - Remuneration Committee Nomination Committee Held - 2 - 2 - 2 - Attended - 2 - 2 - 2 - Held - 1 - 1 - 1 - Attended - 1 - 1 - 1 - Signed at Sydney this 22nd day of September 2014 in accordance with a resolution of Directors. R.D. Millner Director S.J. Palmer Director 24 24 25 25 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014CORPORATE GOVERNANCE STATEMENT New Hope Corporation Limited Corporate Governance Statement New Hope Corporation Limited Corporate Governance Statement This Corporate Governance Statement has been summarised into sections in line with the eight core corporate governance principles as specified the Corporate Governance Principles and in the Australian Securities Exchange (ASX) Corporate Governance Council's 2nd Edition of Recommendations . In the discharge of their duties and responsibilities, the Directors individually (as well as the Board) have the right to seek independent professional advice at the Company's expense. However, for advice to individual Directors, prior approval of the Chairman is required, which is not to be unreasonably withheld. Foundations for management and oversight In discharging this responsibility, the Board The Board is ultimately responsible for the operations, management and performance of the Company. delegates to senior management, whose role is to manage the Company in accordance with the directions and policies set by the Board. The Board monitors the activities of senior management in the performance of their delegated duties. It is the responsibility of the Board to determine policies, practices, management and the operations of the Company and to ensure that the Company is compliant with statutory, legal and other regulatory obligations. Details of these policies can be accessed through the Company Secretary. Responsibilities of the Board include the following:   Determining corporate strategies, policies and guidelines for the successful performance of the Company in the present and the future; Monitoring the Company's overall performance and financial results, adopting annual budgets and approving New Hope Corporation Limited's financial statements; Accountability to shareholders; Ensuring that risk management procedures and compliance and control systems are in place and operating effectively; Monitoring the performance and conduct of senior management and ensuring adequate succession plans are in place; and Ensuring the Company continually builds an honest and ethical culture.     The performance of Non-executive Directors is reviewed by the Remuneration Committee with any unsatisfactory performance referred to the remainder of the Board. This review was undertaken during the year. The efficiency, effectiveness and operations of the Board are continuously subjected to informal monitoring by the Remuneration Committee, Nomination Committee and the Board as a whole. The performance of senior management was reviewed by the Remuneration Committee during the year in accordance with its established procedures. Board structure At the date of this report the Board consists of six Non-executive Directors. Details of the Directors of the Company, their experience, expertise, qualifications, and attendance at meetings are set out in the Directors' Report. Key elements of the Board composition include:      The size of the Board and membership represents an appropriate balance between Directors with experience and knowledge of the Group and In accordance with the Company's Constitution, the Board should comprise no less than three or more than ten Directors. The Chairman of the Board is a Non-executive Director. The Non-executive Chairman and Chief Executive Officer roles are separate. The Board comprises a mix of Directors from different backgrounds with complementary skills and experience. Directors with an external perspective. The Company has not strictly complied with ASX corporate governance principles in that the Board does not consist of a majority of independent Non-executive Directors . Mr Robert Millner (Chairman), Mr Peter Robinson and Mr David Fairfull are Directors of New Hope Corporation Limited's major shareholder, Washington H. Soul Pattinson and Company Limited. Ms Sue Palmer, Mr Ian Williams and Mr William Grant are considered independent. Whilst all the Non-executive Directors cannot be considered "independent" in accordance with the ASX corporate governance principles, all Directors are expected to bring their independent views and judgement to the Board and, in accordance with the Corporations Act 2001 , must inform the Board if they have any interest that could conflict with those of the Company. Where the Board considers that a significant conflict exists, it may exercise its discretion to determine whether the Director concerned may be present at the meeting while the item is considered. Also, the Board considers that due to the extensive experience and knowledge that these Directors have of the business, it would be contrary to shareholders' best interests if the Directors were precluded from holding the position of Director on these grounds. The Nomination Committee consists of Non-executive Directors who periodically review the membership and performance of the Board having regard to the Company's particular needs, both present and future. These periodic reviews are conducted at least annually or more frequently if deemed appropriate. The Board sets goals and objectives for the Board, its Committees and Directors. Performance is measured against these goals and objectives in such manner deemed appropriate by the Board. The performance of the Board and its Committees was reviewed during the year in accordance with established procedures. Directors are initially appointed by the full Board, subject to election by shareholders at the next Annual General Meeting. Under the Constitution, one third of the Board (excluding any Managing Director) retire from office each year and if eligible submit themselves for re-election by shareholders at the Annual General Meeting. Ethical and responsible decision making The Company has an established Code of Conduct dealing with matters of integrity and ethical standards. The code is designed to comply with the legal and other obligations of legitimate stakeholders and other interested parties and to foster a culture of compliance. All Directors, executives and employees are expected to abide by the code of conduct and specific policies in place, and to bring to the attention of senior management or the Board instances of unethical practices. The code and policies cover:         Professional conduct; Ethical standards; Standards of workplace behaviour and equal opportunity; Relationships with customers, suppliers and competitors; Confidentiality and continuous disclosure; Anti-discrimination and harassment; Trading in Company securities; and The environment. The Company addresses diversity via the Code of Conduct, the Equal Employment Opportunity Policy, and the Recruitment and Selection Policy. Through these principles based documents the Company aims to foster a workplace where employees feel that they are a valued member of the organisation; that they are treated fairly and that inappropriate behaviour does not take place. The Company is also committed to ensuring that employees and all other individuals involved in its operations are provided with equal opportunity in all aspects of recruitment, selection and employment. It is the Company’s policy that when recruiting and selecting staff that the best person for the position is chosen in each case. This is achieved by basing selection decisions on the merit principle whereby individuals shall be selected based on their capability to meet the requirements of the position and who have the right position related attributes. Unlawful discrimination of either a positive or negative bias (including gender) is not tolerated. The Company is an equal opportunity employer and is committed to ensuring that all applicants for selection (employees, Officers and Directors) are not unlawfully discriminated against. The Company seeks to attract and retain employees across a broad experience base relevant to the individuals to reach their full potential, whilst Company. The Company aims to remunerate people fairly and provide opportunities for all understanding the need to be flexible to each individual’s personal circumstances. 26 27 27 26 27 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014New Hope Corporation Limited Corporate Governance Statement New Hope Corporation Limited Corporate Governance Statement The Company believes that the most appropriate measurable objectives in addressing gender diversity will deliver outcomes that are aligned to the principles outlined above. The following table outlines the Company’s measurable objectives in achieving diversity. Measurable Objective Progress Achieved Develop a culture that embraces diversity that is supported by corporate policy. Policies are in place and readily available to all employees at all times. Policies are formally communicated to employees during their induction and periodic formal refresher training is also conducted. The Company’s recruitment processes and documents ensure the Company appeals to, and targets, a diverse pool of potential employees. Formal recruitment procedures are in place that necessitates the involvement of the Human Resources Department in all stages of the recruitment process which ensures that corporate policy is adhered to and that the recruitment and selection process is free from unlawful bias. Ensure policies, procedures and guidelines support the delivery of a flexible, tolerant and accommodating work environment. Through various policies and guidelines (Education Assistance, Training and Development, Leave, Parental Leave, Salary Packaging, Flexibility and Wellbeing) the Company has acknowledged the need for, and provides opportunities for employees to achieve, flexibility in their work environment. to pay A commitment equity whereby remuneration is set based on the market based data and each individual’s qualifications and experience. This includes flexible working arrangements for new parents returning to work in the form of:  The ability to work from home;  The option to have non-standard working hours; and  The ability to work part-time for a period before returning to full time work. Remuneration is initially set (and reviewed at least annually) by reference to independent market data which accounts for both the skills required for the role, the industry, and employment location. This is further linked to each employee’s qualifications and experience. Procedures dictate that the Human Resources Department are involved in all steps of the remuneration setting process, including the final executive review and annual “norming” process which ensures that all employees are remunerated fairly, reasonably and without fear of undue bias. The following table shows the proportion of women employed by the Company. Role Directors Senior executives Total employees Number of women Number of men Total employees Female percentage 1 5 71 6 43 495 7 48 566 14% 10% 13% Integrity in financial reporting New Hope Corporation Limited has an established Audit Committee, which has its own charter outlining the committee's function, composition, authority, responsibilities and reporting. The current members of the Audit Committee are Non-executive Directors Ms S.J. Palmer (Chairperson), Mr W.H. Grant and Mr D.J. Fairfull. The Company's Non-executive Chairman Mr R.D. Millner is not a member of the Audit Committee. The Non- executive Chairman and other Directors, CEO, CFO, Company Secretary and the internal auditor may attend Audit Committee meetings by invitation. Further details of the Directors' qualifications, terms of office, and attendance at Audit Committee meetings are set out in the Directors' report on pages 10 to 13 and 24. The external auditors (PricewaterhouseCoopers) are requested by the Audit Committee to attend the appropriate meetings to report on the results of their review and audit for the half year and full year respectively. The external and internal auditors both have direct access to the Audit Committee. The function of the Audit Committee is to assist the Board in fulfilling its statutory and fiduciary responsibilities relating to:   The external reporting of financial information, including the selection and application of accounting policies; The independence and effectiveness of the external auditors. The Audit Committee regularly evaluates the performance of its external auditors, considers the appropriateness of the external audit engagement partners including their rotation, and considers the need and timing for putting the external audit role out to tender; The effectiveness of internal control processes and management information systems; Compliance with the Corporations Act 2001 , ASX Listing Rules and any other applicable requirements; and The application and adequacy of risk management systems within the Company.    The CEO and CFO are required to state in writing to the Board, by submission to the Audit Committee, that the Company's financial statements present a true and fair view, in all material respects, of the Company's financial position and operational results and that they are in accordance with relevant accounting standards. Timely and balanced disclosure The Company has a Continuous Disclosure Policy to ensure compliance with the ASX Listing Rules and Corporations Act 2001 continuous disclosure requirements. The policy requires timely disclosure through the ASX company announcement platform of information concerning the Company that a reasonable person would expect to have a material effect on the price or value of the Company's securities. The Board is responsible for determining disclosure obligations and the Company Secretary is the nominated Continuous Disclosure Officer for the Company. Respect the rights of shareholders The Board is committed to ensuring that shareholders, the stock market and other interested parties are fully informed of all material matters affecting the Company. The dissemination of information is mainly achieved as follows:    An annual report is available to be distributed to shareholders in October each year and is placed on the Company's website; Where possible, significant information is posted on the Company's internet website as soon as it is disclosed to the market; and The external auditor is requested to attend the Annual General Meeting to answer shareholders' questions about the conduct of their audit and the content of the auditor's report. Risk recognition and management The Company is committed to identifying and managing areas of significant business risk to protect shareholders, employees, earnings and the environment. The framework to achieve this objective is promulgated in the Company's Risk Management policy. The Risk Management and Internal Audit function within the Company is responsible for the oversight and monitoring of performance of the policy. Arrangements in place, as set out in the company's Risk Management policy, include:       Regular detailed financial, budgetary and management reporting; Procedures to manage financial, operational, strategic, market, and regulatory risks; Established organisational structures, procedures and policies dealing with the areas of health and safety, environmental issues, industrial relations and legal and regulatory matters; Comprehensive insurance and risk management programs; Procedures requiring Board approval for all borrowings and capital expenditure beyond minor levels; and Where applicable, the utilisation of specialised staff and external advisors. The CEO and CFO are required to state in writing to the Board, by submission to the Audit Committee, that the risk management and internal control compliance systems implemented by the Board are operating efficiently and effectively and that the directors declaration given under section 259A Corporations Act 2001 is founded on a sound system of risk management and control. The required statement has been received from the Chief Executive Officer and Chief Financial Officer relative to the year of income. Remunerate fairly and responsibly The Remuneration Committee consists of Non-executive Directors who are responsible for reviewing and proposing remuneration and other terms of employment for Non-executive Directors. Details of the attendance at meetings of the Remuneration Committee is included on page 24 of the Directors' report. Non-executive Directors' fees are reviewed annually after taking into consideration the Company's performance, market rates and level of responsibility. The aggregate amount of fees which may be paid to non-executive Directors is subject to the approval of shareholders at the Annual General Meeting and is currently set at $1,750,000 (2013 - $1,750,000) per annum. 28 29 29 28 29 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014New Hope Corporation Limited Corporate Governance Statement Remuneration of senior executives is reviewed annually by the Remuneration Committee, taking into consideration the Company's performance, market rates and levels of responsibility. Further information of Directors' and executives' remuneration is set out in the Directors Report and in the Notes to the Financial Statements. The Company’s Share Trading Policy has been disclosed to the market via the ASX Company Announcement Platform. The policy provides that:  Trading is prohibited when Directors and employees are in possession of price sensitive information which is not available to the public;  Trading is prohibited during the period of four weeks prior to the announcement of the Company’s half year and full year results;;  The Company has established the following share trading windows each for a period of six weeks commencing from:  The release of the Company's annual result to the Australian Securities Exchange;  The release of the Company's half yearly result to the Australian Securities Exchange;  The date of the Annual General Meeting; and  The release of a prospectus.  At times other than those referred to above, Directors and employees may trade after seeking approval from the Chairman of the Board, or in his absence, two directors of New Hope Corporation Limited. ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 31 JULY 2014 ANNUAL FINANCIAL REPORT Annual Financial Report FOR THE YEAR ENDED 31 JULY 2014 for the year ended 31st July 2014 New Hope Corporation Limited and Controlled Entities Contents Financial Report Consolidated Statement of Comprehensive Income Consolidated Balance Sheet Consolidated Statement of Changes in Equity Consolidated Cash Flow Statement Notes to the financial statements Directors' declaration Independent audit report to the members Page 32 33 34 35 36 76 77 The financial report is the consolidated financial statements of the consolidated entity consisting of New Hope Corporation Limited and its subsidiaries. The financial report is presented in the Australian currency. New Hope Corporation Limited is a company limited by shares on the Australian Securities Exchange (ASX). The Company is incorporated and domiciled in Australia and its registered office and principal place of business is: New Hope Corporation Limited 3/22 Magnolia Drive BROOKWATER QLD 4300 A description of the nature of the consolidated entity's operations and its principal activities is included in the Directors' report on pages 2 to 9, which is not part of this financial report. The financial report was authorised for issue by the Directors on 22 September 2014. The Company has the power to amend and reissue the financial report. Through the use of the internet, the Company has ensured that corporate reporting is timely, complete and available globally at minimum cost to the Company. All financial reports and other announcements to the ASX are available on the Investor Relations pages of the website: www.newhopegroup.com.au. 30 31 30 31 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 JULY 2014 BALANCE SHEET AS AT 31 JULY 2014 STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 JULY 2014 Consolidated Statement of Comprehensive Income for the year ended 31st July 2014 New Hope Corporation Limited and Controlled Entities BALANCE SHEET AS AT 31 JULY 2014 Consolidated Balance Sheet as at 31st July 2014 New Hope Corporation Limited and Controlled Entities Revenue from continuing operations Other income Expenses Cost of sales Marketing and transportation Administration Other expenses Impairment of assets Share of net loss of associate Profit before income tax Petroleum resource rent tax benefit Income tax expense Profit after income tax for the year Profit attributable to: New Hope Shareholders Non-controlling interests Other comprehensive income Items that may be reclassified to profit and loss: Changes to the fair value of cash flow hedges, net of tax Transfer to profit and loss for cash flow hedges, net of tax Changes to the fair value of available for sale financial assets, net of tax Other comprehensive income for the year, net of tax Total comprehensive income for the year Total comprehensive income attributable to: New Hope Shareholders Non-controlling interests Notes 5 6 7 37 8 8 27 27 27 2014 $000 2013 $000 548,959 17,484 566,443 (336,949) (134,802) (12,208) (7,072) (4,365) - 71,047 7,317 (19,915) 58,449 652,097 4,328 656,425 (319,933) (139,327) (16,213) (7,205) (51,377) (386) 121,984 1,509 (49,365) 74,128 58,450 (1) 58,449 74,129 (1) 74,128 14,477 13,958 4,046 32,481 90,930 90,931 (1) 90,930 (39,824) (10,431) (4,729) (54,984) 19,144 19,145 (1) 19,144 Current assets Cash and cash equivalents Receivables Inventories Held to maturity investments Held for sale financial assets Current tax assets Other Total current assets Non-current assets Receivables Available for sale financial assets Derivative financial instruments Property, plant and equipment Exploration and evaluation assets Intangible assets Total non-current assets Total assets Current liabilities Accounts payable Current tax liabilities Derivative financial instruments Provisions Total current liabilities Non-current liabilities Deferred tax liabilities Provisions Derivative financial instruments Total non-current liabilities Total liabilities Net assets Earnings per share for profit attributed to ordinary equity holders of the Company Basic earnings per share (cents/share) Diluted earnings per share (cents/share) 34 34 7.0 7.0 8.9 8.9 The above statement of comprehensive income should be read in conjunction with the accompanying notes. Equity Contributed equity Reserves Retained profits Capital and reserves attributable to New Hope Shareholders Non-controlling interests Total equity Notes 10 11 12 13 16(a) 14 15 16(b) 35 17 18 20 21 35 24 23 25 35 26 27(a) 27(b) 2014 $000 2013 $000 57,015 51,430 56,519 1,067,241 27,183 3,693 271 1,263,352 2,576 2,256 2,447 784,998 105,332 24,881 922,490 2,185,842 42,504 - 3,255 28,125 73,884 85,197 52,902 - 138,099 211,983 1,973,859 95,119 27,400 1,851,289 1,973,808 51 1,973,859 21,564 57,905 58,673 1,229,608 - - 614 1,368,364 2,775 30,215 - 764,037 77,210 25,963 900,200 2,268,564 46,758 18,924 29,721 32,148 127,551 67,733 45,117 11,707 124,557 252,108 2,016,456 93,342 (3,988) 1,925,767 2,015,121 1,335 2,016,456 The above balance sheet should be read in conjunction with the accompanying notes. 32 33 32 33 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 JULY 2014 CASH FLOW STATEMENT FOR THE YEAR ENDED 31 JULY 2014 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 JULY 2014 Consolidated Statement of Changes in Equity for the year ended 31st July 2014 New Hope Corporation Limited and Controlled Entities CASH FLOW STATEMENT FOR THE YEAR ENDED 31 JULY 2014 Consolidated Cash Flow Statement for the year ended 31st July 2014 New Hope Corporation Limited and Controlled Entities Notes 2014 $000 2013 $000 Contributed Equity Notes $000 Reserves $000 Retained Earnings Non-controlling Interests $000 $000 Total $000 Cash flows from operating activities Receipts from customers inclusive of GST Payments to suppliers and employees inclusive of GST Balance at 1 August 2012 92,509 50,570 2,109,104 733 2,252,916 Income taxes paid Net cash inflow from operating activities 33 Profit for the year Other comprehensive income Total comprehensive income for the year Transactions with owners in their capacity as owners Dividends provided for or paid Special dividend paid Transfer from share based payment reserve to equity Net movement in share based payment reserve Share of non-controlling interests equity contributions Balance at 31 July 2013 Profit for the year Other comprehensive income Total comprehensive income for the year Transactions with owners in their capacity as owners Dividends provided for or paid Special dividend paid Transfer from share based payment reserve to equity Net movement in share based payment reserve Share of non-controlling interests equity contributions 9 9 27 27 9 9 27 27 - - - - - 833 - - 833 - (54,984) (54,984) 74,129 - 74,129 - - (833) 1,259 - 426 (91,360) (166,106) - - - (257,466) (1) - (1) - - - - 603 603 74,128 (54,984) 19,144 (91,360) (166,106) - 1,259 603 (255,604) 93,342 (3,988) 1,925,767 1,335 2,016,456 - - - - - 1,777 - - 1,777 - 32,481 32,481 - - (1,777) 684 - (1,093) 58,450 - 58,450 (91,392) (41,536) - - - (132,928) (1) - (1) 58,449 32,481 90,930 - - - - (1,283) (1,283) (91,392) (41,536) - 684 (1,283) (133,527) Balance at 31 July 2014 95,119 27,400 1,851,289 51 1,973,859 The above statement of changes in equity should be read in conjunction with the accompanying notes. Cash flows from investing activities Payments for property, plant and equipment Payments for exploration and evaluation activities Payments for purchase of subsidiary, net of cash acquired Payments for available for sale financial assets Payments for investments in associates Refunds of/(payments for) security and bond guarantees Proceeds from held to maturity investments Proceeds from sale of property, plant and equipment Net proceeds from sale of non-current assets Interest received on held to maturity investments Net cash inflow from investing activities Cash flows from financing activities Joint venture partner contributions Dividends paid Net cash outflow from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the financial year The above cash flow statement should be read in conjunction with the accompanying notes. 520,558 (426,311) 94,247 (29,935) 64,312 (81,119) (31,587) - (9,298) - 344 160,793 504 23,000 42,479 105,116 560,422 (425,439) 134,983 (42,345) 92,638 (106,584) (21,175) (44,260) - (730) (55) 216,901 936 5,813 61,060 111,906 108 (132,928) (132,820) 601 (257,466) (256,865) 36,608 21,564 (1,157) 57,015 (52,321) 70,990 2,895 21,564 10 34 35 35 34 35 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014 NOTES TO THE FINANCIAL STATEMENTS Notes to the financial statements FOR THE YEAR ENDED 31 JULY 2014 for the year ended 31st July 2014 New Hope Corporation Limited and Controlled Entities New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial report covers New Hope Corporation Limited and its subsidiaries as the consolidated entity and together are referred to as the Group or the consolidated entity in this financial report. a. Basis of preparation of accounts This general purpose financial pronouncements of the Australian Accounting Standards Board, Australian Accounting Interpretations and the Corporations Act 2001. report has been prepared in accordance with Australian Accounting Standards, other authoritative The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period. Comparative information has been reclassified where appropriate to enhance comparability. (i) Compliance with International Financial Reporting Standards (IFRS) The consolidated financial statements of the Group also comply with IFRS as issued by the International Accounting Standards Board (IASB). (ii) Historical cost convention These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available for sale financial assets and derivative instruments carried at fair value. (iii) Critical accounting estimates The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3. b. Principles of consolidation (i) Subsidiaries The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of New Hope Corporation Limited (Company or parent entity) as at 31 July 2014 and the results of all subsidiaries for the year then ended. Subsidiaries are all those entities (including special purpose entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group (note 1(h)). Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income statement, statement of comprehensive income, statement of changes in equity and balance sheet respectively. (ii) Associates Associates are all entities over which the Group has significant influence but not control or joint control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting, after initially being recognised at cost. The Group's share of its associates' post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition other comprehensive income is recognised in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Dividends receivable from associates are recognised as reduction in the carrying amount of the investment. b. Principles of consolidation (continued) (ii) Associates (continued) When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group. As the Group only has significant influence, it is unable to obtain reliable information at year end on a timely basis. The results of associates are equity-accounted from their most recent audited annual financial statements or unaudited interim financial statements, all within three months of the year end of the Group. Adjustments are made to the associates’ financial results for material transactions and events in the intervening period. (iii) Joint Arrangements Under AASB 11 Joint Arrangements , investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. The Group has both joint operations and joint ventures. Joint Operations The Group recognises its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses. These have been incorporated in the financial statements under the appropriate headings. Details of the joint operations are set out in note 38. Joint Ventures The proportionate interests in the assets, liabilities and expenses of a joint venture activity have been incorporated in the financial statements under the appropriate headings. Details of the joint ventures are set out in note 38. c. Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as comprising of the Board, Chief Executive Officer (CEO), Chief Operating Officer (COO) and Chief Financial Officer (CFO). d. Foreign currency translation (i) Functional and presentation currency Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in Australian dollars, which is New Hope Corporation Limited's functional and presentation currency. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges. Translation differences on non-monetary items, such as equities held at fair value through profit or loss, are reported as part of the fair value gain or loss. Translation differences on non-monetary items, such as equities classified as available for sale financial assets, are included in the fair value reserve in equity. 36 37 37 36 37 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) d. Foreign currency translation (continued) (iii) Group companies The results and financial position of all of the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:   Assets and liabilities for each balance sheet presented are translated at the closing rates at the date of that balance sheet; Income and expenses for each income statement and statement of comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and All resulting exchange differences are recognised in other comprehensive income.  On consolidation, exchange differences arising from the translation of any net in foreign entities, are recognised in other comprehensive income. When a foreign operation is sold, a proportionate share of such exchange differences is reclassified to profit or loss as part of the gain or loss on sale where applicable. investment e. Revenue recognition Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties. The Group recognises revenue where the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group's activities as described below. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. Revenue is recognised for the major business activities as follows:  Coal sales revenue is recognised at the time the risks and benefits of ownership have been transferred to the customer in accordance with the sales terms. For export sales this is normally at the time of loading the shipment, and for domestic sales this is generally at the time the coal is delivered to the customer. Oil sales revenue is recognised at the time the risks and benefits of ownership have been transferred to the customer in accordance with the sales terms. For oil sales this is normally when the oil is delivered to the customer. Service fee income and management fee income is recognised as the services are performed. Interest income is recognised as it accrues using the effective interest method. Rental income is recognised on a straight line basis over the lease term. Dividend income is taken into profit when the right to receive payment is established. This applies even if they are paid out of pre- acquisition profits. However, the investment may need to be tested for impairment as a consequence (note 1(i)).      f. Income tax The income tax expense or revenue for the period is the tax payable on the current period's taxable income, based on the national income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences, and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates It establishes provisions positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for the deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. f. Income tax (continued) Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the company is able to control the timing of the reversal of the temporary difference and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. Tax consolidation legislation New Hope Corporation Limited and its wholly owned Australian controlled entities implemented the tax consolidation legislation as of 1 August 2003. The head entity, New Hope Corporation Limited, and the controlled entities in the tax consolidation group account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidation group continues to be a stand alone tax payer in its own right. In addition to its own current and deferred tax amounts, the Company also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the Group. Details about the tax funding agreement are disclosed in note 8. Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities. Exploration and evaluation expenditure Exploration, evaluation and relevant acquisition costs are accumulated separately for each area of interest. They comprise acquisition costs, direct exploration and evaluation costs and an appropriate portion of related overhead expenditure. Costs are carried forward only if they relate to an area of interest for which rights of tenure are current and such costs are expected to be recouped through successful development and exploitation or from sale of the area. Exploration and evaluation expenditure which does not satisfy these criteria is written off. Business combinations The acquisition method of accounting is used to account for all business combinations regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured at fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree's net identifiable assets. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any If those amounts are previous equity interest in the acquiree over the fair value of the net identifiable assets acquired is recorded as goodwill. less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which similar borrowings could be obtained from an independent financier under comparable terms and conditions. Contingent consideration is classified either as equity or a financial remeasured to fair value with changes in fair value recognised in profit or loss. liability. Amounts classified as a financial liability are subsequently g. h. 38 39 39 38 39 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014New Hope Corporation Limited and Controlled Entities New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 Notes to the financial statements for the year ended 31st July 2014 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) i. j. k. a. 36 b. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES New Hope Corporation Limited and Controlled Entities Comparative information has been reclassified where appropriate to enhance comparability. report has been prepared in accordance with Australian Accounting Standards, other authoritative Notes to the financial statements for the year ended 31st July 2014 The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group (note 1(h)). The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period. (i) Compliance with International Financial Reporting Standards (IFRS) The consolidated financial statements of the Group also comply with IFRS as issued by the International Accounting Standards Board (IASB). Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income statement, statement of comprehensive income, statement of changes in equity and balance sheet respectively. Basis of preparation of accounts This general purpose financial pronouncements of the Australian Accounting Standards Board, Australian Accounting Interpretations and the Corporations Act 2001. (ii) Historical cost convention These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available for sale financial assets and derivative instruments carried at fair value. Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. The Group's share of its associates' post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition other comprehensive income is recognised in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Dividends receivable from associates are recognised as reduction in the carrying amount of the investment. The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial report covers New Hope Corporation Limited and its subsidiaries as the consolidated entity and together are referred to as the Group or the consolidated entity in this financial report. Principles of consolidation (i) Subsidiaries The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of New Hope Corporation Limited (Company or parent entity) as at 31 July 2014 and the results of all subsidiaries for the year then ended. (iii) Critical accounting estimates The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3. (ii) Associates Associates are all entities over which the Group has significant influence but not control or joint control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting, after initially being recognised at cost. Subsidiaries are all those entities (including special purpose entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Impairment of assets Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less cost to sell and its value in use. For the purposes of assessing impairment under value in use testing, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash- generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period. Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held at call with financial institutions and other short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value, excluding funds on deposit for which there is no short term identified use in the operating cash flows of the Group. Trade receivables Trade receivables are recognised initially at fair value and subsequently at amortised cost, less provision for doubtful debts. Trade receivables are due for settlement no more than thirty days from the date of recognition. Collectability of trade debtors is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. An allowance account (provision for impairment of trade receivables) is used when there is objective evidence that the Group will not be able to collect all of the amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the impairment loss is recognised in profit or loss within other expenses. When a trade receivable for which an impairment allowance has been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in profit or loss. l. Inventories Coal stocks are valued at the lower of cost and net realisable value in the normal course of business. Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Inventories of consumable supplies and spare parts expected to be used in production are valued at weighted average cost. Work in progress is stated at the lower of cost and net realisable value. m. Non-current assets held for sale and discontinued operations Non-current assets (or disposal groups) are classified as held for sale and stated at the lower of their carrying amount and fair value less cost to sell if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. An impairment loss is recognised for any initial or subsequent write down of the asset (or disposal group) to fair value less cost to sell. A gain is recognised for any subsequent increases in fair value less cost to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition. Assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from other assets in the balance sheet. A discontinued operation is a component of the entity that has been disposed of, or is classified as held for sale and that represents a separate major line of the business or geographical area of operations, is part of a single coordinated plan to dispose of such a line of the business or area of operations, or a subsidiary acquired exclusively with the view to resale. The results of discontinued operations are presented separately in the income statement. n. Available for sale financial assets Investments and other financial assets The Group classifies its financial assets in the following categories: (i) Available for sale financial assets, comprising principally marketable securities, are non-derivatives that are either designated in this category or not classified in any other category. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date. Available for sale financial assets are initially recognised at fair value. Unrealised gains and losses arising from changes in the fair value of non- monetary securities classified as available for sale are recognised in equity in the available for sale investments revaluation reserve. When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments are included in the income statement as gains and losses from investment securities. (ii) Held to maturity investments Held to maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group's management has the positive intention and ability to hold to maturity. Held to maturity investments are carried at amortised cost using the effective interest method. (iii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are initially recognised at fair value, and subsequently at amortised cost less provisions for doubtful debts. They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non-current assets. Loans and receivables are included in trade and other receivables (note 11) and receivables (note 14) in the balance sheet. Impairment The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a "loss event") and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the assets are impaired. (iv) Assets classified as available for sale If there is objective evidence of impairment of available for sale financial assets, the cumulative loss, measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss, is removed from equity and recognised in profit or loss. Impairment losses on equity instruments that were recognised in profit or loss are not reversed through profit or loss in a subsequent period. o. Derivatives - Forward foreign exchange contracts Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates derivatives as hedges of highly probable forecast transactions (cash flow hedges). The Group documents at the inception of the transaction, the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows of hedged items. The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in the hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss. 40 41 41 40 41 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014New Hope Corporation Limited and Controlled Entities New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 Notes to the financial statements for the year ended 31st July 2014 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) o. Derivatives - Forward foreign exchange contracts (continued) Amounts accumulated in equity are recycled in the income statement in the periods when the hedged item will affect profit or loss (for instance when the forecast sale that is hedged takes place). However, when the forecast transaction that is hedged, results in the recognition of a non- financial asset (for example, inventory) or a non-financial liability, the gains and losses previously deferred in equity are transferred from equity and included in the measurement of the initial cost or carrying amount of the asset or liability. When a hedging instrument expires, is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately reclassified to profit or loss. p. Fair value estimation The fair value of financial assets and financial liabilities must be estimated for recognition and measurement for disclosure purposes. The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date. The fair value of forward exchange contracts is determined using forward exchange market rates at the balance sheet date. The carrying value less the estimated credit adjustments of trade receivables and payables is assumed to approximate their fair values due to their short term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. q. Property, plant and equipment Property, plant and equipment, excluding investment property, is stated at historical cost less applicable depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Cost may also include transfers from equity of any gains/losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss during the financial period in which it is incurred. Depreciation is calculated so as to write off the cost of each item of property, plant and equipment during its expected economic life to the consolidated entity. Each item's useful life has due regard both to its own physical life limitations and to present assessments of economically recoverable resources of the mine property at which the item is located. Estimates of residual values and remaining useful lives are made on an annual basis. Straight line method is predominately used. The expected useful life of plant and equipment is 4 to 20 years, buildings is 25 to 40 years and motor vehicles is 4 years. Land is not depreciated. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its recoverable amount (note 1(i)). Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss. r. Mine properties, mine development costs, mining reserves and mining leases Development expenditure incurred by the consolidated entity is accumulated separately for each area of interest in which economically recoverable mineral resources have been identified to the satisfaction of the Directors. Direct development expenditure, pre-operating mine start-up costs and an appropriate portion of related overhead expenditures are capitalised as mine development costs up until the relevant mine is in commercial production. Mining reserves, leases and mine development costs are amortised over the estimated productive life of each applicable mine on either a unit of production basis or years of operation basis, as appropriate. Amortisation commences when a mine commences commercial production. The cost of acquiring mineral reserves and mineral resources are capitalised on the statement of financial position as incurred. s. t. u. v. w. Deferred stripping costs The Group does not recognise any deferred stripping costs. Based on the nature of the Group's mining operations and the stripping ratio for the components of its operations, the recognition criteria of a deferred stripping asset are not satisfied. Further, it is anticipated that the In the operations will maintain a consistent stripping ratio at the component level and as such no overburden in advance should be recognised. event that a stripping campaign is undertaken in the future a deferred stripping asset will be recognised at that time and amortised in accordance with the requirements of IFRIC 20. An asset will be recognised for stripping activity where the following criteria are met:    It is probable that the future economic benefit (improved access to the ore body) associated with the stripping activity will flow to the entity; The entity can identify the component of the ore body for which access has been improved; and The costs relating to the stripping activity associated with that component can be measured reliably. IT development and software Intangible assets (i) Costs incurred in developing products or systems and costs incurred in acquiring software and licenses that will contribute to future period financial benefits through revenue generation and/or cost reduction are capitalised to software and systems. Costs capitalised are external direct costs of materials and services. Amortisation is calculated on a straight line basis over periods generally ranging from 3 to 5 years. (ii) Goodwill is measured as described in note 1(h). Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on Goodwill acquisitions of associates is included in investments in associates. Goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains or losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. is not amortised. Instead, goodwill Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or Groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose, identified according to operating segments (note 4). Trade and other payables These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. The amounts are unsecured and usually paid within forty five days of recognition. Borrowing costs Borrowing costs incurred for the construction of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are recognised as expenses in the period in which they are incurred. Employee benefits (i) Short-term obligations Liabilities for wages and salaries, including non-monetary benefits, annual leave and vesting sick leave expected to be settled within twelve months after the end of the period in which the employees render the related service are recognised in respect of employees' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liability of annual leave and accumulating sick leave is recognised in the provision for employee benefits. All other short-term employee benefit obligations are presented as payables. (ii) Other long-term employee benefit obligations The liability for long service leave and annual leave which is not expected to be settled within twelve months after the end of the period in which the employees render the related service is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the end of the reporting period on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. 42 43 43 42 43 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014New Hope Corporation Limited and Controlled Entities New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 Notes to the financial statements for the year ended 31st July 2014 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) w. Employee benefits (continued) (iii) Share-based payments Share-based compensation benefits are provided to employees via the New Hope Corporation Limited Employee Share Option Plan and the New Hope Corporation Ltd Employee Performance Rights Share Plan. Information relating to these schemes is set out in note 36. The fair value of options granted under the New Hope Corporation Limited Employee Share Option Plan and the New Hope Corporation Ltd Employee Performance Rights Share Plan is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employee becomes unconditionally entitled to the options or rights. Options and rights are exercisable by current employees during the nominated vesting period or by Directors' consent. Detailed vesting conditions are set out in the Directors' report. The fair value of rights at grant date is calculated as the number of rights offered at the share price at offer date. The fair value of options at grant date is independently determined using a monte carlo option pricing model that takes into account the exercise price, the term of the option, the vesting criteria, the impact of dilution, the non-tradeable nature of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option. The fair value of the options granted is adjusted to reflect the market vesting condition, but excludes the impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each reporting date, the entity revises its estimate of the number of options that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate. The impact of the revision to the original estimates, is recognised in profit or loss with a corresponding adjustment to equity. Contributed equity Ordinary shares are classified as equity. deduction net of tax, from the proceeds. The amounts of any capital returns are applied against contributed equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a Dividends Provision is made for the amount of any dividend declared on or before the end of the financial year but not distributed at balance date. Rounding of amounts The Company is of a kind referred to in Class Order 98/0100, issued by the Australian Securities and Investment Commission, relating to the "rounding off" of amounts in the financial statements. Amounts in the financial statements have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar. x. y. z. aa. Earnings per share (i) Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the year, adjusted for bonus element in ordinary shares issued during the year. (ii) Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financial costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. ab. Restoration, rehabilitation and environmental expenditure Provisions are raised for restoration, rehabilitation and environmental expenditure as soon as an obligation exists, with the cost being charged to profit or loss in respect of ongoing rehabilitation. Where the obligation relates to decommissioning of assets and restoring the sites on which they are located, the costs are carried forward in the value of the asset and amortised over its useful life. Provisions are measured at the present value of expected future cash outflows with future cash outflows reassessed on a regular basis. The present value is determined using an appropriate discount rate. The obligations include profiling, stabilisation and revegetation of the completed area, with cost estimates based on current statutory requirements and current technology. ac. Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. ad. ae. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet. Cash flows are presented on a gross basis. The GST component of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows. Leases Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight line basis over the period of the lease.  New and amended standards adopted by the Group The Group has applied the following standards and amendments for first time in their annual reporting period commencing 1 August 2013:  AASB 10 Consolidated Financial Statements , AASB 11 Joint Arrangements and AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards ; AASB 2012-10 Amendments to Australian Accounting Standards – Transition Guidance and other Amendments which provides an exemption from the requirement to disclose the impact of the change in accounting policy on the current period; AASB Interpretation 20 (IFRIC 20), Stripping Costs in the Production Phase of a Surface Mine; AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13 ; AASB 119 Employee Benefits (September 2011) and AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 119 (September 2011) ; AASB 2012-5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009–2011 Cycle ; and AASB 2012-2 Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial Liabilities .      The adoption of AASB 10, AASB 11, AASB 13 and IFRIC 20 did not affect any of the amounts recognised in the current period or any prior periods. The standards only affected the disclosures in the notes to the financial statements. The revised standard AASB 119 Employee Benefits has changed the accounting for the group’s annual leave obligations. However, the impact of this change was not material. af. New accounting standards and interpretations not yet adopted Certain new accounting standards and interpretations have been published that are not mandatory for 31 July 2014 reporting periods and have not been early adopted by the Group. The Group’s assessment of the impact of these new standards and interpretations is set out below. (i) IFRS 15 Revenue from Contracts with Customers - IFRS 15 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. It supersedes current revenue recognition guidance including IAS 18 Revenues, IAS 11 Construction Contracts and related Interpretations. The core principle is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This standard also allows costs associated with obtaining a contract to be capitalised and amortised over the life of the new contract. The Group has not yet assessed how its own revenue recognition would be affected by the new rule. The Group does not intend on adopting the new standard before its operative date, which means that it would be first applied in the annual reporting period ending 31 July 2018. 44 45 45 44 45 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) af. New accounting standards and interpretations not yet adopted (continued) (ii) AASB 9 Financial Instruments - AASB 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities. Since December 2013, it also sets out new rules for hedge accounting. There will be no impact on the Group's accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the Group does not have any such liabilities. The new hedging rules align hedge accounting more closely with the Group's risk management practices. As a general rule, it will be easier to apply hedge accounting going forward. The new standard also introduces expanded disclosure requirements and changes in presentation. The Group has not yet assessed how its own hedging arrangements would be affected by the new rules and it has not yet decided whether to adopt any parts of AASB 9 early. The Group does not intend on adopting the new standard before its operative date, which means that it would be first applied in the annual reporting period ending 31 July 2018. There are no other standards that are not yet effective and that are expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future transactions. ag. Parent entity financial information The financial information for the parent entity, New Hope Corporation Limited, disclosed in note 39 has been prepared on the same basis as the consolidated financial statements, except as set out below. (i) (ii) Investments in subsidiaries, associates and joint ventures Investments in subsidiaries, subsidiaries and joint ventures are accounted for at cost in the financial report of New Hope Corporation Limited. Dividends received from subsidiaries are recognised in the parent entity’s income statement rather than being deducted from the carrying amount of these investments. Tax consolidation legislation New Hope Corporation Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation as of 1 August 2003. The head entity, New Hope Corporation Limited, and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a stand alone taxpayer in its own right. In addition to its own current and deferred tax amounts, New Hope Corporation Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group. The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate New Hope Corporation Limited for any current tax payable assumed and are compensated by New Hope Corporation Limited for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to New Hope Corporation Limited under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-­owned entities’ financial statements. The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as current amounts receivable from or payable to other entities in the group. Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities. ah. Comparative Figures When required, comparative figures have been adjusted to conform to changes in presentation for the current financial year. 2. FINANCIAL RISK MANAGEMENT The Group's activities expose it to a variety of financial risks: market risk (including currency risk, price risk and interest rate risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses derivative financial instruments such as foreign exchange contracts to hedge certain risk exposures. Derivatives are used exclusively for hedging purposes, i.e. not as trading or other speculative instruments. The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks and aging analysis for credit risk. Risk management is carried out in accordance with written policies approved by the Board of Directors. These written policies cover specific areas, such as mitigating foreign exchange, interest rate and credit risks, use of forward exchange contracts and investment of excess liquidity. The Group holds the following financial instruments: Financial assets 2014 Cash and cash equivalents Trade and other receivables Available for sale financial assets Held to maturity investments Held for sale financial assets Derivative financial instruments Other financial assets 2013 Cash and cash equivalents Trade and other receivables Available for sale financial assets Held to maturity investments Other financial assets Financial liabilities 2014 Trade and other payables Derivative financial instruments 2013 Trade and other payables Derivative financial instruments Held for Sale $000 Available for Sale $000 Derivatives used for hedging $000 - - - - 27,183 - - 27,183 - - - - - - - - - - - - - - 2,256 - - - - 2,256 - - 30,215 - - 30,215 - - - - - - - - - - - 2,447 - 2,447 - - - - - - - 3,255 3,255 - 41,428 41,428 Financial assets / liabilities amortised at cost $000 57,015 54,006 - 1,067,241 - - 271 1,178,533 21,564 60,680 - 1,229,608 614 1,312,466 42,504 - 42,504 46,758 - 46,758 Total $000 57,015 54,006 2,256 1,067,241 27,183 2,447 271 1,210,419 21,564 60,680 30,215 1,229,608 614 1,342,681 42,504 3,255 45,759 46,758 41,428 88,186 a. Market risk (i) Foreign exchange risk Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the entity's functional currency. The Group is exposed to foreign exchange risk arising from currency exposures to the US dollar. Forward contracts are used to manage foreign exchange risk. Senior management is responsible for managing exposures in each foreign currency by using external forward currency contracts. Contracts are designated as cash flow hedges. External foreign exchange contracts are designated at Group level as hedges of foreign exchange risk on specific future transactions. 46 47 47 46 47 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014 New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 2. FINANCIAL RISK MANAGEMENT (continued) a. Market risk (continued) (i) Foreign exchange risk (continued) The Group's risk management policy is to hedge up to 65% of anticipated transactions (export coal sales) in US dollars for the subsequent year, up to 57% of anticipated revenue beyond a year but less than two years and up to 50% for revenue beyond two years but less than three years. All hedges of projected export coal sales qualify as "highly probable" forecast transactions for hedge accounting purposes. The Group's exposure to foreign currency risk at the reporting date was as follows: Cash and cash equivalents Trade receivables Forward exchange contracts - sell foreign currency (cash flow hedges) Trade payables 2014 USD $000 26,596 13,203 168,000 12 2013 USD $000 5,927 18,617 412,000 - Group sensitivity Based on the trade receivables, cash and trade payables held at 31 July 2014, had the Australian dollar weakened/strengthened by 10% against the US dollar with all other variables held constant, the Group's post-tax profit for the year would have increased/(decreased) by $3,321,000/($2,717,000) (2013 - $2,112,000/($1,728,000)), mainly as a result of foreign exchange gains/losses on translation of US dollar receivables and cash balances as detailed in the above table. The Group's equity as at balance date would have increased/(decreased) by the same amounts. Based on the forward exchange contracts held at 31 July 2014, had the Australian dollar weakened/strengthened by 10% against the US dollar with all other variables held constant, the Group's equity would have increased/(decreased) by $20,314,000/($16,569,000) (2013 - $41,820,000/($46,003,000)). There is no effect on post-tax profits. Equity in 2014 is less sensitive to movements in the Australian dollar/USD exchange rates than in 2013 due to the decreased value of forward exchange contracts in 2014. 2. FINANCIAL RISK MANAGEMENT (continued) b. Credit risk Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposure to export and domestic customers, including outstanding receivables and committed transactions. The Group has no significant concentrations of credit risk. The Group has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history. The majority of customers, both export and domestic have long term relationships with the Group and sales are secured with long term supply contracts. Sales are secured by letters of credit when deemed appropriate. Derivative counterparties, held to maturity investments and cash transactions are limited to financial institutions with a rating of at least BBB. The Group has policies that limit the maximum amount of credit exposure to any one financial institution. Credit risk further arises in relation to financial guarantees given to certain parties (see note 22). Such guarantees are only provided in exceptional circumstances and are subject to specific board approval. The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to historical counterparty default rates. The table below summarises the assets which are subject to credit risk. information about Trade receivables Cash at bank and short term bank deposits Held to maturity investments Derivative financial instruments 2014 $000 51,430 57,015 1,067,241 2,447 2013 $000 57,905 21,564 1,229,608 - c. Liquidity risk Prudent liquidity risk management is adopted through maintaining sufficient cash and marketable securities, the ability to borrow funds from credit providers and to close-out market positions. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Surplus funds are generally only invested in instruments that are tradeable in highly liquid markets. (ii) Price risk The Group is exposed to equity securities price risk arising from certain investments held by the Group and classified on the balance sheet as available for sale and held for sale. (i) Financing arrangements The Group has no current need of external funding lines. The majority of the Group's equity investments are publicly traded and are included in the All Ordinaries Index. The table below summarises the impact of increases/decreases in the index on the Group's equity as at balance date. The analysis is based on the assumption that the equity index had increased/decreased by 10% with all other variables held constant and all the Group's equity instruments moved according to the historical correlation with the index. Index All Ordinaries - 10% increase All Ordinaries - 10% decrease Impact on post-tax profit 2014 $000 - (150) 2013 $000 - (3,099) Impact on equity 2014 $000 3,518 (3,368) 2013 $000 3,518 (420) The price risk for unlisted securities is immaterial in terms of the possible impact on total equity. sensitivity analysis. It has therefore not been included in the (iii) Fair value interest rate risk Refer to (e) below. d. e. Maturity of financial liabilities Non-derivative financial liabilities of the Group all mature within one year. The maturity groupings of derivative financial instruments are detailed in note 35. Cash flow and fair value interest rate risk The Group currently has significant interest-bearing assets which are placed with reputable investment counterparties for up to 12 months. The Group has a treasury investment policy approved by the Board which stipulates the maximum dollar exposure to each financial institution, and the maximum percentage of funds that can be invested with an individual institution. Significant changes in market interest rates may have an effect on the Group's income and operating cash flows. The Group manages its cash flow interest rate risk by placing excess funds in term deposits and other fixed interest bearing assets. Refer to note 13 for details. Based on the deposits held at balance date, the sensitivity to a 1% increase or decrease in interest rates would increase/(decrease) after tax profit by $7,394,000 (2013 - $9,225,000). As the Group has no significant borrowings, its income statement and operating cash flows are substantially independent of changes in market interest lending rates. f. Fair value measurements The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. 48 49 49 48 49 AASB 7 Financial Instruments: Disclosures requires disclosure of fair value measurements by level of the following fair value measurement hierarchy: a. b. Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1); Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2); and Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3). c. ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014 New Hope Corporation Limited and Controlled Entities New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 Notes to the financial statements for the year ended 31st July 2014 2. FINANCIAL RISK MANAGEMENT (continued) f. Fair value measurements (continued) The following table presents the group's assets measured and recognised at fair value as at 31 July 2014 and 31 July 2013. 2014 Assets Derivatives used for hedging Held for sale financial assets Equity securities Available for sale financial assets Equity securities Total assets Liabilities Derivatives used for hedging Total liabilities 2013 Assets Available for sale financial assets Equity securities Total assets Liabilities Derivatives used for hedging Total liabilities Level 1 $000 Level 2 $000 Level 3 $000 Total $000 - 2,447 - 2,447 27,183 - - 27,183 2,256 29,439 - 2,447 - - 2,256 31,886 - - 3,255 3,255 - - 3,255 3,255 Level 1 $000 Level 2 $000 Level 3 $000 Total $000 30,215 30,215 - - - - 30,215 30,215 - - 41,428 41,428 - - 41,428 41,428 The fair value of financial instruments traded in active markets (such as available for sale securities) is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Group is the last sale price. The fair value of forward exchange contracts is determined using forward exchange market rates at the reporting date. The carrying value less impairment provisions of trade receivables and payables are assumed to approximate their fair values due to their short term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. 3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Group and that are believed to be reasonable under the circumstances. a. Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (i) Rehabilitation The Group makes estimates about the future cost of rehabilitating tenements which are currently disturbed, based on legislative requirements and current costs. Cost estimates take into account past experience and expectations of future events that are expected to alter past experiences. Any changes to legislative requirements could have a significant impact on the expenditure required to restore these areas. 3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued) a. Critical accounting estimates and assumptions (continued) (ii) Determination of coal reserves and coal resources The Group estimates its coal reserves and coal resources based on information compiled by Competent Persons as defined in accordance with the Australasian Code for Reporting of Mineral Resources and Ore Reserves of December 2004 (the “JORC code”). Reserves determined in this way are used in the calculation of depreciation, amortisation and impairment charges, the assessment of mine lives and for forecasting the timing of the payment of decommissioning and restoration costs. (iii) Impairment The Group considers annually whether there have been any indicators of impairment and then, if indicators exist, tests whether non-current assets, including goodwill, have suffered any impairment, in accordance with the accounting policy stated in note 1(i). The recoverable amounts of assets and cash generating units have been determined based on fair value less costs to sell and is estimated based on recent market transaction information. These calculations require the use of assumptions. Refer to notes 16, 17, 18 and 20 for further details on the carrying amounts of non-current assets subject to impairment testing. (iv) Mineral Resource Rent Tax (MRRT) The MRRT legislation, effective from 1 July 2012, has resulted in deferred tax balances were recognised. The MRRT has been repealed with an effective date yet to be confirmed. Judgement is required in assessing whether deferred tax assets and deferred tax liabilities arising from MRRT are recognised on the balance sheet. Deferred tax assets are recognised only when it is considered probable that they will be recovered. Recoverability is dependent on the generation of sufficient future taxable profits. Assumptions about the generation of future taxable profits depend on management’s estimates of future cash flows. These in turn depend on estimates of future sales volumes, operating costs, capital expenditure and government royalties payable. Judgements are also required about the application of the MRRT tax legislation for example in relation to the hypothetical valuation point. The judgements and assumptions made by management are subject to risk and uncertainty; hence, there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities recognised on the balance sheet. In such circumstances, some or all of the carrying amounts of recognised deferred tax assets and liabilities may require adjustment, resulting in a corresponding credit or charge to the income statement. (v) Petroleum Resource Rent Tax (PRRT) As a result of the 100% acquisition of Bridgeport Energy Limited during 2013, the Group is subject to PRRT effective 1 July 2012 being the date of the extension of the PRRT to onshore petroleum projects. The Group accounted for the current and deferred tax impact of PRRT in accordance with the requirements outlined above in relation to income tax. As such, the Group has recorded current and deferred tax assets and liabilities relating to PRRT at the prevailing PRRT rate at 31 July 2014 and 31 July 2013. New Hope Corporation Limited, as head company of the income tax consolidated has made a PRRT consolidation election and as such the Group currently includes two PRRT consolidated groups at 31 July 2014 and 31 July 2013. The Group has accounted for its PRRT tax balances in accordance with the stand alone taxpayer method in alignment with its tax funding agreement. b. Critical judgements in applying the entity's accounting policies (i) Exploration and evaluation expenditure During the year the entity capitalised various items of expenditure to the mine development and exploration expenditure asset account. The relevant items of expenditure were deemed to be part of the capital cost of developing future mining operations, which would then be amortised over the useful life of the mine. The key judgement applied in considering whether the costs should be capitalised, is that costs are expected to be recovered through either successful development or sale of the relevant mining interest. (ii) Impairment of available for sale financial assets In the 2013 financial statements, the Group made a significant judgement about the impairment of a number of its available for sale financial assets. The Group follows the guidance of AASB 139 Financial Instruments: Recognition and Measurement financial asset is impaired. This determination requires significant judgement. factors, the duration and extent to which the fair value of an investment is less than its cost. to determine when an available for sale In making this judgement, the Group evaluates, among other 50 51 51 50 51 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 4. FINANCIAL REPORTING SEGMENTS a. Description of segments The Group has four reportable segments, namely Coal mining (including mining related exploration, development, production and processing), Oil and gas (including oil and gas related exploration, development, production and processing), Marketing and logistics (transport infrastructure and marketing activities) and Treasury and investments (including cash, held to maturity investments and available for sale financial assets). Operating segments have been determined based on the analysis provided in the reports reviewed by the Board, CEO, COO and CFO (being the Chief Operating Decision Maker (CODM)). The reportable segments reflect how performance is measured, and decisions regarding allocations of resources are made by the CODM. Other immaterial coal mining and related operations that do not meet the quantitative thresholds requiring separate disclosure in AASB 8 Operating Segments have been combined with the current coal mining operations. Segment information is presented on the same basis as that used for internal reporting purposes. Sales between segments are carried out at arm’s length and are eliminated on consolidation. b. Segment information Coal mining Oil and gas $000 $000 Marketing and logistics $000 Treasury and investments $000 4,169 207,000 211,169 16,359 (172) (45,818) (29,631) - (29,631) 7,831 - (21,800) 20 (172) (45,818) - 14,153 - 14,153 200 - (2,440) (2,240) - (2,240) (1,662) 7,317 3,415 114 - (2,440) - 489,888 - 489,888 58,126 - (11,577) 46,549 - 46,549 (13,965) - 32,584 22 - (11,577) - 40,749 - 40,749 38,987 - - 38,987 17,382 56,369 (12,119) - 44,250 40,749 - - - Total $000 548,959 207,000 755,959 113,672 (172) (59,835) 53,665 17,382 71,047 (19,915) 7,317 58,449 40,905 (172) (59,835) - Notes 5 5 7 37 Year ended 31 July 2014 Revenue from external customers Intersegment revenue Total revenue EBITDA Interest expense Depreciation and amortisation Profit before tax (before non regular items) Non regular items before tax Profit before tax (after non regular items) Less Income tax benefit/(expense) Less Petroleum resource rent tax benefit Profit after tax (after non regular items) Total segment profit before tax includes: Interest revenue Interest expense Depreciation and amortisation Share of net loss of associate Reportable segment assets Total segment assets includes: Additions to non-current assets 4. FINANCIAL REPORTING SEGMENTS (continued) b. Segment information (continued) Year ended 31 July 2013 Revenue from external customers Intersegment revenue Total revenue EBITDA Interest expense Depreciation and amortisation Profit before tax (before non regular items) Non regular items before tax Profit before tax (after non regular items) Less Income tax benefit/(expense) Less Petroleum resource rent tax benefit Profit after tax (after non regular items) Total segment profit before income tax includes: Interest revenue Interest expense Depreciation and amortisation Share of net loss of associate Reportable segment assets Total segment assets includes: Additions to non-current assets Coal mining Oil and gas $000 $000 Marketing and logistics $000 Treasury and investments $000 11,279 305,184 316,463 101,094 (13) (37,871) 63,210 - 63,210 (15,865) - 47,345 - (13) (37,871) - 6,369 - 6,369 (581) - (1,293) (1,874) - (1,874) 108 1,509 (257) - - (1,293) - 569,746 - 569,746 56,928 - (9,334) 47,594 - 47,594 (14,278) - 33,316 - - (9,334) - 64,703 - 64,703 63,645 - - 63,645 (50,591) 13,054 (19,330) - (6,276) 60,594 - - (386) Notes 5 5 7 37 Total $000 652,097 305,184 957,281 221,086 (13) (48,498) 172,575 (50,591) 121,984 (49,365) 1,509 74,128 60,594 (13) (48,498) (386) 689,524 105,117 192,536 1,281,387 2,268,564 145,270 38,177 9,964 - 193,411 c. Other segment information (i) Segment revenue Total segment revenue Japan Taiwan/China Chile Korea Australia 2014 $000 2013 $000 177,430 252,676 14,034 5,943 58,127 508,210 40,749 548,959 195,088 316,195 4,390 5,995 65,726 587,394 64,703 652,097 714,639 163,817 180,874 1,126,512 2,185,842 Investment income - Australia 58,097 44,971 9,092 - 112,160 52 52 53 53 53 Included within revenue for the marketing and logistics segment are customers that represent more than 10 per cent of the Group's total revenue. For the year ended 31 July 2014, one customer contributed $252,676,000 (2013 - $308,467,000) in sales revenue , whilst another customer contributed $66,656,000 (2013 - $65,560,000) in sales revenue. A further customer in 2013 contributed $71,153,000 but was below 10 per cent of the Group's total revenue for the year ended 31 July 2014. Sales between segments are carried out at arm's length and are eliminated on consolidation. The revenue reported from external parties is measured in a manner consistent with that in the income statement. (ii) Segment assets The amounts provided to the CODM with respect to total assets are measured in a manner consistent with that of the financial statements. These assets are allocated based on the operations of the segment. All non-current assets are located in Australia. ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014 New Hope Corporation Limited and Controlled Entities New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 Notes to the financial statements for the year ended 31st July 2014 2014 $000 2013 $000 8. INCOME TAX EXPENSE a. Tax consolidation legislation New Hope Corporation Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation as of 1 August 2003. The accounting policy in relation to this legislation is set out in note 1(f). On adoption of the tax consolidation legislation, the entities in the tax consolidated group entered into a tax sharing agreement which, in the opinion of the Directors, limits the joint and several liability of the wholly-owned entities in the case of a default by the head entity, New Hope Corporation Limited. The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate New Hope Corporation Limited for any current tax payable assumed and are compensated by New Hope Corporation Limited for any tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to New Hope Corporation Limited under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities financial statements. The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments. The funding amounts are recognised as current intercompany receivables or payables. 5. REVENUE From continuing operations Sales revenue Sale of goods Services Other revenue Property rent Interest Sundry revenue 6. OTHER INCOME Gain on sale of Westside Corporation Limited Gain on sale of Quantex Gain on Bridgeport previously held interest Gain on sale of WICET Subscription Gain/(loss) on sale of property, plant and equipment 7. EXPENSES Profit before income tax includes the following specific expenses: Foreign exchange gains and losses Net foreign exchange losses/(gains) Depreciation Buildings Plant and equipment Amortisation Mining reserves and mine development Software Oil producing assets Other charges against assets Impairment of investment in associates Impairment of available for sale investments Impairment of oil producing and exploration assets Exploration costs expensed Employee benefits expensed Operating lease costs expensed 478,138 25,766 503,904 800 40,905 3,350 548,959 17,133 249 - - 102 17,484 560,211 26,092 586,303 750 60,594 4,450 652,097 - - 4,109 786 (567) 4,328 1,157 (2,895) 557 52,166 52,723 3,499 1,625 1,988 7,112 - - 4,365 4,365 413 40,716 41,129 5,033 1,285 1,051 7,369 13,286 38,091 - 51,377 18,195 13,419 93,571 96,624 4,377 4,171 b. Income Tax Expense Current tax Deferred tax Adjustments for current tax of prior periods Petroleum resource rent tax benefit Deferred income tax expense/(revenue) included in income tax expense comprises: (Increase)/decrease in deferred tax assets (note 19) Increase/(decrease) in deferred tax liabilities (note 23) c. Numerical reconciliation of income tax expense to prima facie tax payable Profit from continuing operations before income tax Income tax calculated at 30% (2013 - 30%) Tax effect of amounts which are not deductible (taxable) in calculating taxable income: Foreign tax loss not recognised Sale of Investments Share based payment expense Impairment expense Income tax on Petroleum resource rent tax Non-deductible expenses Sundry items Under/(over) provided in prior year Petroleum resource rent tax benefit Income tax expense d. Tax expense relating to items of other comprehensive income Cash flow hedges (note 27(a)) Available for sale financial assets (note 27(a)) 2014 $000 7,241 12,595 79 (7,317) 12,598 2013 $000 48,593 6,587 (5,815) (1,509) 47,856 (656) 5,934 5,278 1,135 3,943 5,078 71,047 121,984 21,314 36,595 292 (4,791) (190) - 2,195 158 351 19,329 586 (7,317) 12,598 (12,186) - (12,186) 164 - 131 15,413 453 - (412) 52,344 (2,979) (1,509) 47,856 21,537 105 21,642 55 55 54 54 55 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014 New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 9. DIVIDENDS - New Hope Corporation Limited a. Ordinary dividend paid 2012 final dividend at 5.00 cents per share - 100% franked at a tax rate of 30% (paid on 6 Nov 2012) 2012 special dividend at 20.00 cents per share - 100% franked at a tax rate of 30% (paid on 6 Nov 2012) 2013 interim dividend at 6.0 cents per share - 100% franked at a tax rate of 30% (paid on 1 May 2013) 2013 final dividend at 5.00 cents per share - 100% franked at a tax rate of 30% (paid on 4 Nov 2013) 2013 special dividend at 5.00 cents per share - 100% franked at a tax rate of 30% (paid on 4 Nov 2013) 2014 interim dividend at 6.00 cents per share - 100% franked at a tax rate of 30% (paid on 5 May 2014) Total dividends paid 2014 $000 2013 $000 - - - 41,536 41,536 49,856 132,928 41,526 166,106 49,834 - - - 257,466 b. Proposed dividends In addition to the above dividends, since the end of the financial year, the Directors have declared a final dividend of 2.0 cents and a special dividend of 3.5 cents per fully paid share, (2013 - 5.0 cents per share and 5.0 cents per share respectively). Both dividends are fully franked based on tax paid at 30%. The aggregate amount of the proposed dividend expected to be paid on 4 November 2014 but not recognised as a liability at year end is $45,705,000 (2013 - $83,072,000). c. Franked dividends The franked portions of the final dividends recommended after 31 July 2014 will be franked out of existing franking credits or out of franking credits arising from the payment of income tax in the year ending 31 July 2014. 2014 $000 2013 $000 Franking credits available for subsequent financial years based on a tax rate of 30% (2013 - 30%) 515,854 565,512 The above amounts represent the balances of the franking accounts as at the end of the financial year, adjusted for franking debits that will arise from the refund of income tax, franking debits that will arise from the payment of dividends recognised as a liability at the reporting date and franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date. The impact on the franking account of the dividend recommended by the Directors since year end, but not recognised as a liability at year end, will be a reduction in the franking account of $19,588,000 (2013 - $35,602,000). d. Dividend reinvestment plans There were no dividend reinvestment plans in operation at any time during or since the end of the financial year. 11. CURRENT ASSETS - Receivables Trade receivables (a) Other receivables (b) Prepayments 2014 $000 29,515 18,357 3,558 51,430 2013 $000 35,801 16,072 6,032 57,905 a. Past due but not impaired As of 31 July 2014, trade receivables were past due but not impaired was $nil. These relate to customers who have no recent history of default. b. Other receivables These amounts relate to long service leave payments recoverable from the Coal Mining Industry Long Service Leave Fund, diesel fuel rebates receivable and GST refunds receivable. None of these receivables are impaired or past due but not impaired. c. Foreign exchange and interest rate risk Information about the Group's exposure to foreign currency risk and interest rate risk in relation to trade and other receivables is provided in note 2. d. Fair value and credit risk Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value. Information about the Group's exposure to fair value and credit risk in relation to trade and other receivables is provided in note 2. 12. CURRENT ASSETS - Inventories Coal stocks at cost Raw materials and stores at cost Inventory expense a. Inventories recognised as an expense during the year ended 31 July 2014 amounted to $225,616,000 (2013 - $240,732,000). Write-downs of inventory to net realisable value recognised as an expense during the year amounted to . $585,000 (2013 - $nil) 30,160 26,359 56,519 34,308 24,365 58,673 10. CURRENT ASSETS - Cash and cash equivalents Cash at bank and on hand 2014 $000 57,015 57,015 2013 $000 21,564 21,564 13. CURRENT ASSETS - Held to maturity investments Term Deposits The term deposits are held to their maturity of less than one year and carry a weighted average fixed interest rate of 3.44% (2013 - 4.54%). Due to their short-term nature the carrying value is assumed to approximate fair value. Information about the Group's exposure to credit risk is disclosed in note 2. 1,067,241 1,067,241 1,229,608 1,229,608 a. Cash at bank and on hand Cash at bank and on hand includes deposits for which there is a short term identified use in the operating cash flows of the Group, and attracts interest at rates between 0% and 2.65% (2013 - 0% to 2.75%). 14. CURRENT ASSETS - Other Security deposits b. Risk exposure Information about the Group's exposure to foreign exchange risk and credit risk is detailed in note 2. 15. NON-CURRENT ASSETS - Receivables Prepayments Other receivables 56 56 57 271 271 729 1,847 2,576 614 614 1,244 1,531 2,775 57 57 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014 New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 15. NON-CURRENT ASSETS - Receivables (continued) Interest rate risk a. In both the current and prior year all non-current receivables are non-interest bearing. b. Fair value of receivables The fair value of receivables approximates their carrying amounts. None of the non-current receivables are impaired or past due but not impaired. 16. ASSETS - Available for sale and Held for sale financial assets a. CURRENT ASSETS - Held for sale financial assets Listed securities Equity securities It is noted that the Held for sale financial assets relate to the reclassification during the year of equity securities held in Dart Energy Limited. NON-CURRENT ASSETS - Available for sale financial assets b. Listed securities Equity securities Unlisted securities Equity securities There were no impairment expenses on equity securities held during the year (2013 - $38,091,000). 17. NON-CURRENT ASSETS - Property, plant and equipment Land and buildings - non-mining Freehold land at cost Buildings at cost Accumulated depreciation Leasehold improvements Accumulated depreciation Total land and buildings - non-mining Land and buildings - held for mining Freehold land at cost Buildings at cost Accumulated depreciation Total land and buildings - held for mining Plant and equipment Plant and equipment at cost Accumulated depreciation Motor vehicles Motor vehicles at cost Accumulated depreciation 2014 $000 2013 $000 17. NON-CURRENT ASSETS - Property, plant and equipment (continued) Mining reserves and leases Mining reserves and leases at cost Accumulated amortisation Mine properties, mine development Mine properties, mine development at cost Accumulated amortisation 27,183 27,183 - - Oil producing assets Oil producing assets at cost Accumulated amortisation 2,253 30,212 3 2,256 3 30,215 1,049 10,158 (1,754) 8,404 419 (200) 219 9,672 141,729 4,680 (779) 3,901 145,630 567,088 (295,646) 271,442 6,392 (4,197) 2,195 1,049 8,930 (1,099) 7,831 384 (80) 304 9,184 132,766 5,495 (997) 4,498 137,264 551,031 (251,801) 299,230 6,784 (3,765) 3,019 Plant and equipment under construction Total Property, plant and equipment Reconciliations Land and buildings - non-mining Carrying amount at beginning of year Additions Disposals Depreciation Transfers in/(out) Carrying amount at end of year Land and buildings - held for mining Carrying amount at beginning of year Additions Disposals Depreciation Transfers in/(out) Carrying amount at end of year Plant and equipment Carrying amount at beginning of year Additions Additions on acquisition of subsidiary Disposals Depreciation Transfers in/(out) Carrying amount at end of year Motor vehicles Carrying amount at beginning of year Additions Disposals Depreciation Transfers in/(out) Carrying amount at end of year 2014 $000 2013 $000 228,297 (8,180) 220,117 63,738 (50,655) 13,083 94,113 (3,039) 91,074 230,710 (7,713) 222,997 59,286 (47,623) 11,663 62,483 (1,051) 61,432 31,785 19,248 784,998 764,037 9,184 188 - (431) 731 9,672 137,264 9,087 (12) (126) (583) 145,630 299,230 21,457 - (70) (50,952) 1,777 271,442 3,019 709 (340) (1,214) 21 2,195 9,168 383 (40) (340) 13 9,184 132,516 4,946 (165) (73) 40 137,264 261,715 22,512 1,118 (880) (39,432) 54,197 299,230 2,766 - (160) (1,284) 1,697 3,019 58 59 59 58 59 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014 New Hope Corporation Limited and Controlled Entities New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 Notes to the financial statements for the year ended 31st July 2014 17. NON-CURRENT ASSETS - Property, plant and equipment (continued) 2014 $000 2013 $000 Reconciliations (continued) Mining reserves and leases Carrying amount at beginning of year Additions Amortisation Transfers in/(out) Carrying amount at end of year Mine properties and mine development Carrying amount at beginning of year Additions Amortisation Transfers in/(out) Carrying amount at end of year Oil producing assets Carrying amount at beginning of year Additions Additions on acquisition of subsidiary Amortisation Impairment of asset Transfers in/(out) Carrying amount at end of year Plant and equipment under construction Carrying amount at beginning of year Additions Transfers in/(out) Carrying amount at end of year 18. NON-CURRENT ASSETS - Exploration and evaluation Exploration and evaluation at cost Reconciliation Carrying amount at beginning of year Additions Additions on acquisition of subsidiary Impairment of asset Transfers in/(out) Carrying amount at end of year 222,997 - (534) (2,346) 220,117 11,663 2,039 (2,965) 2,346 13,083 61,432 32,429 - (1,988) (900) 101 91,074 19,248 16,482 (3,945) 31,785 105,332 105,332 77,210 29,769 - (3,465) 1,818 105,332 ` 220,918 2,412 (333) - 222,997 16,363 - (4,700) - 11,663 - 14,971 47,512 (1,051) - - 61,432 15,756 61,575 (58,083) 19,248 77,210 77,210 39,228 21,175 16,807 - - 77,210 19. NON-CURRENT ASSETS - Deferred tax assets The balance comprises temporary differences attributed to : Amounts recognised in profit and loss Accrued expenses Employee benefits Mine site rehabilitation provision Arising on Petroleum resource rent tax Tax losses Other Amounts recognised directly in equity Cash flow hedges Set-off of deferred tax liabilities pursuant to set-off provisions (note 23) Net deferred tax assets Movements Carrying amount at beginning of year Credited/(charged) to the income statement (note 8(b)) (Credited)/charged to equity Amounts recognised on acquisition of subsidiary Carrying amount at end of year Deferred tax assets to be recovered after more than 12 months Deferred tax assets to be recovered within 12 months 20. NON-CURRENT ASSETS - Intangibles Software Software at cost (i) Accumulated amortisation Goodwill Goodwill at cost Total Intangibles Reconciliation Software (i) Carrying amount at beginning of year Additions Transfers in/(out) Amortisation (ii) Carrying amount at end of year (i) Software includes capitalised development costs, being an intangible asset. (ii) Amortisation is included in cost of sales in profit or loss. 60 60 61 2014 $000 2013 $000 904 8,562 15,788 2,614 9,321 221 37,410 916 9,634 13,545 - 9,563 3,096 36,754 242 12,428 (37,652) - (49,182) - 49,182 656 (12,186) - 37,652 27,186 10,466 37,652 12,853 (9,996) 2,857 22,024 22,024 24,881 3,939 463 80 (1,625) 2,857 31,199 (1,135) 12,428 6,690 49,182 44,208 4,974 49,182 12,538 (8,599) 3,939 22,024 22,024 25,963 2,932 156 2,136 (1,285) 3,939 61 61 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014 New Hope Corporation Limited and Controlled Entities New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 Notes to the financial statements for the year ended 31st July 2014 20. NON-CURRENT ASSETS - Intangibles (continued) Reconciliation (continued) Goodwill (i) Carrying amount at beginning of year Acquisition of subsidiary Carrying amount at end of year 2014 $000 2013 $000 22,024 - 22,024 17,867 4,157 22,024 (i) Brought forward goodwill relates to the acquisition of Queensland Bulk Handling Pty Ltd, Northern Energy Corporation Limited (NEC) and Bridgeport Energy Limited. The recoverable amount of the NEC cash generating units has been based on fair values less cost to sell. This assessment is determined under Level 2 of the fair value hierarchy based on observable external market data for reserve and resource transaction multiples, rather than quoted prices. The transaction multiples observed have included recent transactions only and included similar Australian coal exploration projects, with respect of coal type to the NEC assets. 23. NON-CURRENT LIABILITIES - Deferred tax liabilities The balance comprises temporary differences attributed to: Amounts recognised in profit and loss Other accounts receivable Inventories Capitalised exploration Property, plant and equipment Mine reserves Arising on Petroleum resource rent tax Other Amounts recognised directly in other comprehensive income Property, plant and equipment Total deferred tax liabilities 42,504 42,504 46,758 46,758 Set-off of deferred tax assets pursuant to set-off provisions (note 19) Net deferred tax liabilities 21. CURRENT LIABILITIES - Accounts payable Trade payables and accruals 22. CURRENT LIABILITIES - Financing Arrangements a. Financing arrangements Unrestricted access was available at balance date to the following lines of credit: Total facilities Other facilities (i) Used at balance date Other facilities Unused at balance date Other facilities (i) Other facilities are only in relation to bank guarantees, are unsecured, for no fixed term and bear variable rates. b. Guarantees The parent entity has given unsecured guarantees in respect of: (i) Mining restoration and rehabilitation The liability has been recognised by the consolidated entity in relation to its rehabilitation obligations. See notes 24, 25 and 1(ab). 100,000 100,000 63,936 63,936 36,064 36,064 75,000 75,000 63,101 63,101 11,899 11,899 39,054 38,230 (ii) Statutory body suppliers 24,882 24,871 No liability was recognised by the consolidated entity in relation to these guarantees as no losses are foreseen on these contingent liabilities. Movements Carrying amount at beginning of year Charged/(credited) to the income statement (note 8(b)) Charged/(credited) to other comprehensive income (note 8(d)) Amounts recognised on acquisition of subsidiary Carrying amount at end of year Deferred tax liabilities to be settled after more than 12 months Deferred tax liabilities to be settled within 12 months 24. CURRENT LIABILITIES - Provisions Employee benefits (c) Mining restoration and rehabilitation (note 1(ab)) Native title claim a. Mining restoration and rehabilitation Current Non-current Movements Carrying amount at beginning of year Additional provision recognised Charged/(credited) to profit and loss - additional provisions recognised Charged to profit and loss - unwinding of discount Carrying amount at end of year 62 62 63 2014 $000 2013 $000 379 7,185 20,216 18,574 66,028 - 3,307 115,689 295 5,989 14,789 14,951 66,899 4,701 2,131 109,755 7,160 7,160 7,160 7,160 122,849 116,915 (37,652) 85,197 (49,182) 67,733 116,915 5,934 - - 122,849 115,092 7,757 122,849 25,084 2,904 137 28,125 2,904 49,582 52,486 48,508 4,480 (2,295) 1,793 52,486 114,116 3,943 (9,215) 8,071 116,915 110,631 6,284 116,915 25,616 6,415 117 32,148 6,415 42,093 48,508 38,027 4,726 4,854 901 48,508 63 63 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014 New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 24. CURRENT LIABILITIES - Provisions (continued) b. Amounts not expected to be settled within the next 12 months Long service leave obligations expected to be settled after 12 months 2014 $000 2013 $000 6,414 6,619 c. The current provision for employee benefits includes accrued annual leave, vested sick leave and long service leave for all unconditional settlements where employees have completed the required period of service and also those where employees are entitled to pro-rata payment in certain circumstances. The entire amount is presented as current, since the group does not have an unconditional right to defer settlement. However, based on past experience, the Group does not expect all employees to take the full amount of accrued long service leave or require payment within the next 12 months. 25. NON-CURRENT LIABILITIES - Provisions Employee benefits Mining restoration and rehabilitation (note 1(ab)) Native title claim 3,310 49,582 10 52,902 3,004 42,093 20 45,117 26. CONTRIBUTED EQUITY (continued) e. Capital risk management The Group's objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or source debt to fund growth projects. Note 2014 $000 2013 $000 27. RESERVES a. Reserves Capital profits Available for sale/Held for sale investments revaluation Property, plant and equipment revaluation Hedging Share-based payment Premium paid on non-controlling interest acquisition a. 26. CONTRIBUTED EQUITY Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy is entitled to one vote, and upon a poll each share is entitled to one vote. Movements Capital profits Carrying amount at beginning of year Carrying amount at end of year Ordinary shares have no par value and the company does not have a limited amount of authorised capital. Available for sale/Held for sale investments revaluation b. Rights Information relating to the New Hope Corporation Employee Performance Rights Share Plan, including details of rights granted, vested and lapsed during the financial year and rights outstanding at the end of the financial year, is set out in note 36. c. Share Capital Issued and paid up capital d. Movements in share capital 2014 No. of shares 2014 2013 $000 No. of shares 2013 $000 830,933,112 95,119 830,563,352 93,342 Date Details 1 August 2012 Opening Balance 1 August 2012 1 December 2012 31 July 2013 Vesting of performance rights Vesting of performance rights Transfer from SBP reserve to Equity (note 27(a)) 31 July 2013 Balance 1 August 2013 1 December 2013 1 January 2014 31 January 2014 31 July 2014 Vesting of performance rights Vesting of performance rights Vesting of performance rights Vesting of performance rights Transfer from SBP reserve to Equity (note 27(a)) 31 July 2014 Balance Issue Price $0.0000 $0.0000 $0.0000 $0.0000 $0.0000 $0.0000 Number of Shares 830,411,534 115,281 36,537 830,563,352 151,873 52,317 52,317 113,253 830,933,112 $000 92,509 - - 833 93,342 - - - - 1,777 95,119 Carrying amount at beginning of year Revaluation - gross Revaluation - deferred tax Carrying amount at end of year Property, plant and equipment revaluation Carrying amount at beginning of year Carrying amount at end of year Hedging Carrying amount at beginning of year Transfer to net profit - gross Transfer to net profit - deferred tax Revaluation - gross Revaluation - deferred tax Carrying amount at end of year Share-based payment Carrying amount at beginning of year Share based payment expense Transfer to contributed equity Carrying amount at end of year Premium paid on non-controlling interest acquisition Carrying amount at beginning of year Carrying amount at end of year 64 64 65 1,343 4,690 27,412 (565) 549 (6,029) 27,400 1,343 1,343 644 4,046 - 4,690 1,343 644 27,412 (29,000) 1,642 (6,029) (3,988) 1,343 1,343 5,373 (4,834) 105 644 27,412 27,412 27,412 27,412 (29,000) 19,940 (5,982) 20,681 (6,204) (565) 1,642 684 (1,777) 549 (6,029) (6,029) 21,255 (14,901) 4,470 (56,891) 17,067 (29,000) 1,216 1,259 (833) 1,642 (6,029) (6,029) 65 65 8(d) 8(d) 8(d) 30(a) 26(d) ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014 New Hope Corporation Limited and Controlled Entities New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 Notes to the financial statements for the year ended 31st July 2014 27. RESERVES (continued) a. Reserves (continued) Nature and purpose of reserves Capital profits This reserve represents amounts allocated from retained profits that were profits of a capital nature. Available for sale investments revaluation Changes in the fair value of investments classified as available for sale financial assets are taken to this reserve, as described in note 1(n). Amounts are recognised in profit and loss when the associated assets are sold or impaired. Property, plant and equipment revaluation This reserve represents the revaluation arising on the fair value uplift of property, plant and equipment on the initial holding of Queensland Bulk Handling Pty Ltd further to the acquisition of the remaining 50% of this company. Hedging The hedging reserve is used to record the gains and losses on a hedging instrument in a cash flow hedge that are recognised directly in equity, as described in note 1(o). Amounts are recognised in profit and loss when the associated hedged transaction affects profit and loss. Share based payment reserve The share based payment reserve is used to recognise the fair value of options and rights issued, but not yet exercised. Premium paid on non-controlling interest acquisition The premium paid on non-controlling interest acquisition is used to recognise any excess paid on the acquisition of a non-controlling interest in a subsidiary. b. Retained profits Carrying amount at beginning of year Net profit after income tax Dividends paid (note 9) Carrying amount at end of year 2014 $000 2013 $000 1,925,767 58,450 (132,928) 1,851,289 2,109,104 74,129 (257,466) 1,925,767 29. COMMITMENTS b. Lease commitments: Group as lessee (i) Non-cancellable operating leases The Group leases port facilities under non-cancellable operating leases expiring within one to fifteen years. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated. Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows: Within one year Later than one year but not later than five years Later than five years 30. KEY MANAGEMENT PERSONNEL DISCLOSURES a. Directors The following persons were Directors of New Hope Corporation Limited during the financial year: 2014 $000 2013 $000 4,249 18,554 48,847 71,650 3,497 15,508 48,012 67,017 Chairman - Non-executive Mr R.D. Millner Non-executive Directors Mr P.R. Robinson Mr D.J. Fairfull Mr W.H. Grant Ms S.J. Palmer Mr I.M. Williams Executive Directors Mr R.C. Neale Chief Executive Officer and Managing Director (retired 31 January 2014) 28. CONTINGENT LIABILITIES Details and estimates of maximum amounts of contingent liabilities for which no provision is included in the accounts, are as follows: b. Other key management personnel The following persons also had authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, during the financial year: Controlled entities The bankers of the consolidated entity have issued undertakings and guarantees to the Department of Natural Resources and Mines, Statutory Power Authorities and various other entities. The bankers of the consolidated entity have issued undertakings and guarantees in relation to stages 1 and 2 of the Wiggins Island Coal Export Terminal expansion project and expansion of rail facilities. No losses are anticipated in respect of any of the above contingent liabilities. 14,832 14,822 10,049 10,049 29. COMMITMENTS a. Capital commitments Capital expenditure contracted for at the reporting date but not recognised as liabilities is as follows: Property plant and equipment Within one year Later than one year but not later than five years Later than five years 10,014 - - 10,014 9,885 - - 9,885 Name Mr S.O. Stephan Mr B.D. Denney Mr M.J. Busch Position Chief Executive Officer (promoted 1 February 2014) Chief Operations Officer Chief Financial Officer (promoted 1 February 2014) c. Key management personnel compensation Short-term employee benefits Long-term employee benefits Post employment benefits Termination benefit Share based payment Employer New Hope Corporation Limited New Hope Corporation Limited New Hope Corporation Limited 2014 $ 2013 $ 5,244,738 127,342 147,984 176,315 683,975 6,380,354 5,150,919 31,055 140,756 - 1,259,370 6,582,100 Detailed remuneration disclosures can be found in sections (a) to (j) of the remuneration report on pages 14 to 22. 66 67 67 66 67 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014 New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 30. KEY MANAGEMENT PERSONNEL DISCLOSURES (continued) d. Other transactions of key management personnel Mr R.D. Millner and Mr P.R. Robinson are Directors of New Hope Corporation Limited and Pitt Capital Partners Limited. Pitt Capital Partners Limited acted as financial advisor to the Group for various corporate transactions during the 2014 and 2013 financial years. All transactions are at normal commercial terms. 32. REMUNERATION OF AUDITORS During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms: Mr K.P. Standish is a Director of certain subsidiaries of New Hope Corporation Limited. Mr Standish is a partner in the firm Campbell Standish Partners Solicitors which has provided legal services to New Hope Corporation Limited and its subsidiaries for several years. All transactions are at normal commercial terms. Aggregate amounts of each of the above types of transactions with key management personnel were as follows: a. Audit services PricewaterhouseCoopers Australian firm for audit and review of financial reports and other audit work under the Corporations Act 2001 Non PricewaterhouseCoopers audit firms for the audit or review of financial reports of any entity in the Group Total remuneration for audit services Legal advice Financial advice e. Loans to key management personnel No loans have been made available to the key management personnel of the Group. 2014 $ 1,013,354 409,627 2013 $ 900,885 579,871 31. RELATED PARTY TRANSACTIONS a. Parent entities The parent entity within the Group is New Hope Corporation Limited. The ultimate Australian parent entity and controlling entity is Washington H. Soul Pattinson and Company Limited (WHSP) which at 31 July 2014 owned 59.66% (2013 - 59.68%) of the issued ordinary shares of New Hope Corporation Limited. b. Key management personnel Disclosures relating to key management personnel are set out in note 30. c. Transactions with related parties Other transactions Dividends paid to ultimate Australian controlling entity (WHSP) 2014 $ 2013 $ 79,311,427 153,665,890 d. Outstanding balances arising from sales/purchases of goods and services No provision for impairment of receivables has been raised to any outstanding balances. An impairment expense of $nil (2013 - $nil) has been recognised in the books of the parent entity in respect of amounts owing from subsidiaries. This has no effect on the Group result. e. Terms and conditions Transactions relating to dividends were on the same terms and conditions that applied to other shareholders. b. Other services PricewaterhouseCoopers Australian firm Transaction tax and advisory services General advisory services Tax compliance services Tax compliance services - MRRT Tax compliance services - PRRT Research and development compliance services Total remuneration for other services Total auditors' remuneration 33. RECONCILIATION OF NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES TO PROFIT AFTER INCOME TAX Profit after income tax Depreciation and amortisation Non-cash employee benefit expense - share based payments Impairment costs of associates Impairment costs of available for sale assets Impairment costs of oil producing assets Net foreign exchange (gain)/loss Fair value adjustment on acquisition of subsidiary Net profit on sale of held for sale assets Net profit on sale of non-current assets Investment interest income Income taxes paid Income tax expense in accounts Share of losses of associates Changes in operating assets and liabilities (Increase)/decrease in debtors Increase/(decrease) in creditors (Increase)/decrease in other receivables (Increase)/decrease in other assets (Increase)/decrease in inventories Increase/(decrease) in provisions and employee entitlements (Increase)/decrease in prepayments Net cash provided by operating activities 68 68 69 2014 $ 2013 $ 448,066 355,629 1,045 - 449,111 355,629 435,664 56,920 94,907 1,500 43,354 223,534 855,879 421,090 63,397 160,752 192,670 43,795 270,348 1,152,052 1,304,990 1,507,681 2014 $000 2013 $000 58,449 59,835 684 - - 4,365 1,157 - (17,382) (102) (40,905) (29,935) 12,598 - 10,857 (6,143) 1,762 200 2,154 4,244 2,474 64,312 74,128 48,498 1,259 13,286 38,091 - (2,895) (4,109) - (219) (60,594) (42,345) 47,856 386 (33,739) 750 (3,385) 1,406 974 16,156 (2,866) 92,638 69 69 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014 New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 34. EARNINGS PER SHARE a. b. Basic earnings per share from continuing operations attributable to ordinary equity holders of the Company Diluted earnings per share from continuing operations attributable to ordinary equity holders of the Company c. Reconciliation of adjusted profits Profit from continuing operations attributable to the ordinary equity d. Weighted average number of shares used as the denominator Weighted average number of ordinary shares (basic) Rights Weighted average number of ordinary shares (diluted) Earnings per share (cents) 2013 2014 7.0 7.0 8.9 8.9 Basic and Diluted 2014 $000 2013 $000 58,450 74,129 Consolidated 2014 2013 830,836,913 244,641 831,081,554 830,551,140 326,839 830,877,979 e. Rights granted to employees are considered to be potential ordinary shares and have been included in the determination of diluted earnings per share to the extent to which they are dilutive. The rights have not been included in the determination of basic earnings per share. Details relating to the rights are set out in note 36. 35. DERIVATIVE FINANCIAL INSTRUMENTS NON-CURRENT ASSETS Forward foreign exchange contracts CURRENT LIABILITIES Forward foreign exchange contracts NON-CURRENT LIABILITIES Forward foreign exchange contracts 2014 $000 2013 $000 2,447 - 3,255 29,721 - 11,707 a. Instruments used by the Group New Hope Corporation Limited and certain controlled entities are parties to derivative financial instruments in the normal course of business in order to hedge exposure to fluctuations in foreign exchange rates. These instruments are used in accordance with the Group's financial risk management policies (refer to note 2). The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised directly in equity. When the cash flows occur, the Group reclassifies the gain or loss into the income statement. At balance date these contracts represented a liability with a fair value of $808,000 (2013 - liability with a fair value of $41,428,000). At balance date the details of outstanding contracts are: 35. DERIVATIVE FINANCIAL INSTRUMENTS (continued) b. Credit risk exposures Credit risk also arises from the potential failure of counterparties to meet their obligations under the respective contracts at maturity. A material exposure arises from forward exchange contracts and the consolidated entity is exposed to loss in the event that counterparties fail to deliver the contracted amount. At balance date $182,170,000 (2013 - $427,815,000) was receivable (AUD equivalents). 36. SHARE-BASED PAYMENTS Rights are granted under the New Hope Corporation Limited Employee Performance Rights Share Plan. Membership of the Plans is open to those senior employees and those Directors of New Hope Corporation Limited, its subsidiaries and associated bodies corporate whom the Directors believe have a significant role to play in the continued development of the Group's activities. Rights are granted for no consideration. Rights will vest and automatically convert to ordinary shares in the company following the satisfaction of the relevant service conditions. Service conditions applicable to each issue of rights are determined by the board at the time of grant. Total expense arising from rights issued under the employee performance share rights plan during the financial year was $684,000 (2013 - $1,259,000). Rights Set out below are the summaries of rights granted under the plan: As at 1 August Granted during the year Exercised during the year As at 31 July 2014 2013 Average price per share Number of rights Average price per share Number of rights $4.774 - $4.806 $4.694 518,202 - (369,760) 148,442 $5.587 $4.030 $5.489 $4.774 389,751 280,269 (151,818) 518,202 The weighted average share price at the date of exercise of rights vested during the 2014 year was $3.56 (2013 - $4.02). Share rights outstanding at the end of the year have the following expiry date and fair value at grant date: Grant Date 27 Oct 2011 27 Oct 2011 17 Dec 2011 17 Dec 2011 17 Dec 2011 17 Dec 2012 17 Dec 2012 17 Dec 2012 17 Dec 2012 15 Nov 2013 15 Nov 2013 15 Nov 2013 Total Vesting Date Value of Right at Grant Date Share rights 2014 2013 1 Aug 2013 1 Aug 2014 1 Aug 2013 1 Aug 2014 1 Aug 2015 1 Aug 2013 1 Aug 2014 1 Aug 2015 1 Aug 2016 1 Dec 2013 1 Jan 2014 1 Jan 2015 $5.170 $5.170 $6.020 $6.020 $6.020 $4.030 $4.030 $4.030 $4.030 $4.030 $4.030 $4.030 - 15,060 - 20,447 20,447 - 30,830 30,830 30,828 - - - 148,442 64,059 39,458 56,984 56,985 20,447 30,830 30,830 30,830 30,828 52,317 52,317 52,317 518,202 Maturity 0 to 6 months 6 to 12 months 1 to 2 years 2 to 5 years 70 Buy Australian Dollars Average exchange rate Weighted average remaining contractual life of rights outstanding at end of period 0.8 years 0.9 years 2014 $000 93,974 42,242 45,954 - 182,170 2013 $000 129,884 121,122 130,854 45,955 427,815 2014 2013 0.95771 0.92325 0.84867 - 1.00090 0.98250 0.94760 0.84870 70 71 71 71 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014 New Hope Corporation Limited and Controlled Entities New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 Notes to the financial statements for the year ended 31st July 2014 37. INVESTMENTS IN ASSOCIATES a. Movements in carrying amounts Carrying amount at the beginning of the financial year Additions Share of loss after income tax Impairment Transfer due to business combination Carrying amount at the end of the financial year 38. INTERESTS IN JOINT VENTURES a. Lenton Joint Venture 2014 $000 2013 $000 - - - - - - 32,530 49,615 (386) (13,286) (68,473) - A subsidiary of New Hope Corporation Limited has entered into a joint venture to develop the Lenton project. The subsidiary has a 90% participating interest in this joint venture and is entitled to 90% of the output of the Lenton project. The Group's interests employed in the joint venture are included in the balance sheet, in accordance with the accounting policy described in note 1(b). b. Yamala Joint Venture In March 2007, a subsidiary of New Hope Corporation Limited entered into a joint venture in relation to its Yamala (EPC927) project on the following terms: An external company will earn a 30% Joint Venture interest in the Yamala project (EPC927) through sole funding a three- stage $5.80 million exploration and evaluation programme designed to take the project from its current status as an exploration target to completion of a bankable feasibility study for establishment of a mine within the tenement. On completion of the funding of the $5.80 million farm-in, the external company will have the option to acquire a further 19% joint venture interest for $6.65 million. As at 31 July 2014, the concept study for the establishment of a mine within the tenement had been completed along with the funding of the $5.80 million farm-in and the external company had earned a 30% interest in the project. The external company is currently reviewing the option to acquire a further 19% interest in the joint venture. At 31 July 2014, $nil is carried as exploration expenditure in relation to EPC927. c. Utopia Joint Venture A subsidiary of New Hope Corporation Limited has a 60% interest in the Utopia Joint Venture. The principal activity of this joint operation is to extract oil from PL214 of which the subsidiary is entitled to 60% of the output. The joint venture also conducts oil exploration on ATP560 of which the subsidiary is entitled to 60% of the output. The Group’s interests in the joint operation are included in the balance sheet in accordance with the accounting policy described in note 1(b). d. Cuisinier Joint Venture During the year, a subsidiary of New Hope Corporation Limited entered into a joint operation in relation to the Cuisinier project. The principal activity of this joint operation is to extract oil from PL303. This project also includes the Barta project which conducts oil exploration on ATP752 Barta and the Wompi project which conducts oil exploration on ATP752 Wompi. The subsidiary has a 15% participating interest in the Cuisinier and Barta projects and 17.5% in the Wompi project and is entitled to 15% and 17.5% of the output respectively. The Group’s interests in the joint operation are included in the balance sheet in accordance with the accounting policy described in note 1(b). 39. PARENT ENTITY FINANCIAL INFORMATION a. Summary financial information The individual financial statements for the parent entity show the following aggregate amounts: Balance Sheet Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Shareholders' equity Issued capital Reserves Share-based payment Retained earnings Profit for the year Total comprehensive income b. Guarantees entered into by parent entity Bank guarantees issued in relation to rehabilitation and utility obligations 2014 $000 2013 $000 2,097,438 1,988,175 55,820 51,848 2,153,258 2,040,023 718,273 520,899 989 938 719,262 521,837 95,119 93,342 549 1,338,328 1,433,996 1,642 1,423,202 1,518,186 48,054 33,078 48,054 33,078 39,054 39,054 38,230 38,230 The parent entity has given unsecured guarantees in respect of mining restoration and rehabilitation. The liability has been recognised by the parent entity in relation to its rehabilitation obligations. See notes 24, 25 and 1(ab). Further guarantees are provided in respect of statutory body suppliers with no liability being recognised by the parent entity as no losses are foreseen on these contingent liabilities. c. Contingent liabilities of the parent entity Details and estimates of maximum amounts of contingent liabilities for which no provision is included in the accounts, are as follows: Controlled entities The bankers of the consolidated entity have issued undertakings and guarantees to the Department of Natural Resources and Mines, Statutory Power Authorities and various other entities. No losses are anticipated in respect of any of the above contingent liabilities. For information about guarantees given by the parent entity, please see above. 2014 $000 2013 $000 14,832 14,822 d. Contractual commitments for the acquisition of property, plant and equipment As at 31 July 2014, the parent entity had contractual commitments for the acquisition of property, plant or equipment totalling $3,000 (2013 - $95,000). These commitments are not recognised as liabilities as the relevant assets have not yet been received. 72 73 73 72 73 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014 New Hope Corporation Limited and Controlled Entities New Hope Corporation Limited and Controlled Entities Notes to the financial statements for the year ended 31st July 2014 Notes to the financial statements for the year ended 31st July 2014 40. DEED OF CROSS GUARANTEE During 2012, a number of entities within the Group entered into a deed of cross guarantee. New Hope Corporation Limited, Jeebropilly Collieries Pty Ltd, Acland Pastoral Co. Pty Ltd, New Oakleigh Coal Pty Ltd, New Acland Coal Pty Ltd, New Lenton Coal Pty Ltd, Andrew Wright Holdings Pty Ltd, Arkdale Pty Ltd and Queensland Bulk Handling Pty Ltd are parties to a deed of cross guarantee under which each company guarantees the debts of the others. By entering into the deed, the wholly-owned entities have been relieved from the requirement to prepare a financial report and directors' report under Class Order 98/1418 (as amended) issued by the Australian Securities and Investments Commission. a. Consolidated statement of comprehensive income The above companies represent a "closed group" for the purposes of the Class Order, and as there are no other parties to the deed of cross guarantee that are controlled by New Hope Corporation Limited, they also represent the "extended closed group". Set out below is the consolidated statement of comprehensive income for the year ended 31 July 2014 for the closed group consisting of New Hope Corporation Limited, Jeebropilly Collieries Pty Ltd, Acland Pastoral Co. Pty Ltd, New Oakleigh Coal Pty Ltd, New Acland Coal Pty Ltd, New Lenton Coal Pty Ltd, Andrew Wright Holdings Pty Ltd, Arkdale Pty Ltd and Queensland Bulk Handling Pty Ltd. Revenue from continuing operations Other income Expenses Cost of sales Marketing and transportation Administration Other expenses Profit before income tax Income tax expense Profit after income tax for the year Other comprehensive income Items to be reclassified to profit and loss Changes in the fair value of cash flow hedges, net of tax Transfer to profit and loss for cash flow hedges, net of tax Other comprehensive income for the year, net of tax Total comprehensive income for the year 2014 $000 2013 $000 548,695 114 548,809 (340,235) (134,743) (12,208) - 61,623 (19,338) 42,285 610,852 - 610,852 (282,870) (139,314) (13,287) - 175,381 (52,015) 123,366 14,477 13,958 28,435 70,720 (39,824) (10,431) (50,255) 73,111 40. DEED OF CROSS GUARANTEE (continued) b. Consolidated balance sheet Set out below is a consolidated balance sheet as at 31 July 2014 of the closed group consisting of New Hope Corporation Limited, Jeebropilly Collieries Pty Ltd, Acland Pastoral Co. Pty Ltd, New Oakleigh Coal Pty Ltd, New Acland Coal Pty Ltd, New Lenton Coal Pty Ltd, Andrew Wright Holdings Pty Ltd, Arkdale Pty Ltd and Queensland Bulk Handling Pty Ltd. Current assets Cash and cash equivalents Trade and other receivables Inventories Held to maturity investments Other Total current assets Non-current assets Receivables Other financial assets Derivative financial instruments Property, plant and equipment Exploration and evaluation assets Deferred tax assets Intangible assets Total non-current assets Total assets Current liabilities Trade and other payables Current tax liabilities Provisions Derivative financial instruments Total current liabilities Non-current liabilities Provisions Derivative financial instruments Total non-current liabilities Total liabilities Net assets Equity Contributed equity Reserves Retained earnings Total equity 2014 $000 2013 $000 50,244 355,031 56,393 1,066,922 62 1,528,652 2,576 248,183 2,447 381,994 40,540 32,351 8,204 716,295 2,244,947 108,169 40,641 26,733 3,255 178,798 44,916 - 44,916 223,714 2,021,233 91,023 36,453 1,893,757 2,021,233 18,746 331,158 58,604 1,228,995 106 1,637,609 2,775 248,183 - 405,809 29,295 38,752 9,411 734,225 2,371,834 123,102 54,258 28,434 29,721 235,515 41,853 11,707 53,560 289,075 2,082,759 89,246 9,112 1,984,401 2,082,759 41. EVENTS OCCURRING AFTER THE REPORTING PERIOD On 9 May 2014, an acquisition of Dart Energy Limited was initiated by IGas Energy Plc via an Australian Scheme of Arrangement on a share exchange basis. Prior to 31 July 2014, FIRB approval had been obtained and the scheme booklet released. Subsequent to 31 July 2014, a shareholder vote of IGas Energy Plc shareholders and Dart Energy Limited shareholders has been undertaken in respect of approving this Scheme of Arrangement at which the relevant voting thresholds were met for each. The disposal of the shares held by the Group in Dart Energy Limited remains subject to final administrative approvals of the Scheme of Arrangement. 74 75 75 74 75 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014 DIRECTORS’ DECLARATION INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF NEW HOPE CORPORATION LIMITED New Hope Corporation Limited and Controlled Entities Directors Declaration In the Directors' opinion: a. the financial statements and notes set out on pages 31 to 75 are in accordance with the Corporations Act 2001 , including: (i) (ii) complying with Accounting Standards , requirements; and the Corporations Regulations 2001 and other mandatory professional reporting giving a true and fair view of the consolidated entity's financial position as at 31 July 2014 and of their performance, for the financial year ended on that date; and b. there are reasonable grounds to believe that the Company will be able to pay its debts, as and when they become due and payable; and Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. The Directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the Corporations Act 2001. This declaration is made in accordance with a resolution of the Directors. R.D. Millner Director S.J. Palmer Director Sydney 22 September 2014 76 76 77 77 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF NEW HOPE CORPORATION LIMITED SHAREHOLDER INFORMATION AS AT 19 SEPTEMBER 2014 SHAREHOLDER INFORMATION AS AT 19 SEPTEMBER 2014 New Hope Corporation Limited Shareholder Information as at 19 September 2014 As at 19 September 2014 there were 8,566 holders of ordinary shares in the Company. Voting entitlement is one vote per fully paid ordinary share. Distribution of equity securities 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over Number of shareholders 2,140 3,264 1,933 1,142 87 8,566 Fully paid ordinary shares 1,103,103 9,611,702 13,703,590 27,742,634 778,838,420 830,999,449 Number of rights holders Ordinary rights - - - - 3 3 - - - 82,105 - 82,105 Holding less than a marketable parcel 502 36,982 The names of substantial shareholders as disclosed in substantial shareholder notices received by the Company: Shareholder Washington H Soul Pattinson And Company Limited Mitsubishi Materials Corporation Perpetual Limited and subsidiaries 20 largest shareholders as disclosed on the share register as at 19 September 2014 Farjoy Pty Ltd J P Morgan Nominees Australia Limited 1 Washington H Soul Pattinson And Company Limited 2 Mitsubishi Materials Corporation 3 4 RBC Investor Services Australia Nominees Pty Limited (Pi Pooled A/C) 5 Domer Mining Co Pty Limited 6 7 BKI Investment Company Limited 8 HSBC Custody Nominees (Australia) Limited 9 Ubs Nominees Pty Ltd 10 Citicorp Nominees Pty Limited 11 National Nominees Limited 12 Taiheiyo Kouhatsu Inc 13 BNP Paribas Noms Pty Ltd (Drp) 14 BNP Paribas Nominees Pty Ltd (Agency Lending Drp A/C) 15 Robert Charles Neale 16 RBC Investor Services Australia Nominees Pty Limited (PIIC A/C) 17 J S Millner Holdings Pty Limited 18 RBC Investor Services Australia Nominees Pty Ltd (Piselect A/C) 19 Milton Corporation Limited 20 Dixson Trust Pty Limited Number of shares 495,696,418 91,490,000 76,051,988 495,696,418 93,240,000 31,695,082 23,440,585 17,844,960 15,500,000 14,810,452 14,798,194 13,534,998 8,564,891 8,329,608 4,054,000 2,560,299 2,538,367 2,185,659 2,128,650 2,009,197 1,587,330 1,290,107 1,225,596 757,034,393 % 59.65% 11.01% 9.15% 59.65% 11.22% 3.81% 2.82% 2.15% 1.87% 1.78% 1.78% 1.63% 1.03% 1.00% 0.49% 0.31% 0.31% 0.26% 0.26% 0.24% 0.19% 0.16% 0.15% 91.11% 78 79 79 Unquoted equity securities Rights issued under the New Hope Corporation Limited Employee Performance Rights Share Plan to take up ordinary shares Number on issue Number of holders 82,105 3 ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014ANNUAL REPORT & FINANCIAL STATEMENTS 2014 

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