DBCT Management Pty Limited

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DBCT MANAGEMENT PTY LIMITED CONSOLIDATED FINANCIAL REPORT - DECEMBER 2018 1

DBCT Management Pty Limited

ACN 097 698 916

Annual Report for the financial year ended 31 December 2018

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DIRECTORS’ REPORT

The Directors of DBCT Management Pty Limited (the ‘Company’ or ‘DBCT Management’) submit herewith the consolidated annual financial report of the Company for the financial year ended 31 December 2018. The DBCT Management Consolidated Group (‘the Group’) comprises DBCT Management Pty Ltd, DBCT Finance Pty Ltd and DBCT Trust.

In order to comply with the provisions of the Corporations Act 2001, the directors report as follows.

The names and particulars of the directors of the Company during or since the end of the financial year are:

 Mr J W Kendrew

 Mr J Coates

 Mr R J Neill

 Mr M C Cook

 Mr D Hamill (appointed 13 November 2018)

 Mr J Sellar (appointed 1 January 2019)

Principal activities

The Group’s principal activity in the course of the financial year was the provision of capacity to independent customers to ship coal through the Dalrymple Bay Coal Terminal (‘DBCT’), which is located at the Port of Hay Point, south of Mackay in Queensland. There have been no changes in the principal activities during the current financial year.

Distributions and Dividends

The shares of DBCT Management and the units in DBCT Trust are combined and issued as Stapled Securities. In the year ended 31 December 2018, distributions of $47,622 thousand were declared and paid by DBCT Investor Services Pty Ltd (as the trustee for DBCT Trust) (2017: $63,676 thousand), and DBCT Management declared and paid a dividend of $42,000 thousand (2017: $43,000 thousand).

Review of operations

During the financial year, the Group made a net operating profit after income tax of $94,433 thousand (2017: $95,449 thousand).

The terms and conditions of access to the terminal are regulated by the Queensland Competition Authority (‘QCA’) and set out in an approved Access Undertaking (‘AU’). The QCA approved DBCT Management’s new access undertaking (‘2017 AU’) on 16 February 2017, however the updated pricing was backdated to 1 July 2016. This 2017 AU will be operational until 30 June 2021.

Changes in state of affairs

There was no significant change in the state of affairs of the Group during the financial year.

Environmental regulations

The operations of DBCT are subject to compliance with applicable Commonwealth and Queensland State environmental laws and development approvals/undertakings agreed with the Queensland State Government under the terminal lease agreements. North Queensland Bulk Ports (‘NQBP’) has broad responsibility for environmental management of the port in its capacity as the statutory Port Authority. The ongoing development of DBCT (expansions) is subject to Development Approvals controlled by the State and Commonwealth.

DBCT Management received approval from DBCT Holdings for its Environmental Management Strategy for 2016-2021 which covers the development and operation of the terminal and is consistent with the NQBP environmental strategy and Land Use Plan. The independent terminal Operator - DBCT Pty Ltd, holds the holds Environmental Authority (‘EA’), negotiated with the Department of Environment and Science (formerly the Queensland Department of Environment and Heritage Protection) and therefore has responsibility for implementation and operation of environmental management systems and accountability for the daily environmental performance of the terminal.

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DIRECTORS’ REPORT

ESG at DBCT Management

DBCT Management’s sustainability approach puts health, safety, environment and community at the forefront of decision-making and daily operations. DBCT Management is committed to Environmental, Social and Governance (ESG) practices which have a positive impact on the communities in which we operate. Our ESG principles are embedded in our operations to help ensure our business will be sustainable well into the future. Strong ESG principles benefit the environment, our communities, stakeholders and investors through efficiency of operations and reduced operational and reputational risk.

Our key ESG principles are to:

• Ensure the well-being and safety of employees

• Be good stewards in the communities in which we operate through community engagement and philanthropy

• Mitigate impacts of our operations on the environment

• Conduct business according to the highest ethical and legal/regulatory standards

DBCTM continues to seek to improve its ESG practices. Please contact us for further information regarding our ESG initiatives.

Subsequent events

On 1 January 2019, an internal restructure of DBCT Management was effected whereby DBCT Management’s parent company became BPIH Coal Terminal Holdings Pty Ltd, replacing BPIH. This reorganization of ownership structure did not change the ultimate parent which remains Brookfield Infrastructure Partners LP.

Other than that, there has not been any matter or circumstance occurring subsequent to the end of the financial year that has significantly affected, or may significantly affect, the operations of the consolidated entities, the results of those operations, or the state of affairs of the Group in future financial years.

Future developments

DBCT Management is required to submit to DBCT Holdings Pty Limited (a wholly owned Queensland Government entity which owns DBCT and leases the terminal to DBCT Management and DBCT Trust), a Master Plan that addresses any changes to DBCT in respect to circumstances, demand, technology or other relevant matters each year, unless there is no change to the previous year’s Master Plan.

A copy of the DBCT Master Plan is available on DBCT Management’s website, www.dbctm.com.au Indemnification of officers and auditors

During the financial year, a related entity to the Group paid premiums to insure certain officers of the Group (as named above), and all the Executive Officers of the Group entities, against a liability incurred as such a Director, Secretary or Executive Officer to the extent permitted by the Corporations Act, 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. The Group has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the Group or of any related body corporate against a liability incurred as such an officer or auditor.

Auditor’s independence declaration

The auditor’s independence declaration is included on page 5 of the financial report.

Rounding off of amounts

The Company is a company of the kind referred to in ASIC Corporations (Rounding in Financials/Directors’ Reports) Instrument 2016/191, dated 24 March 2016, and in accordance with that Corporations Instrument amounts in the Directors’ Report and the Financial Statements are rounded off to the nearest thousand dollars, unless otherwise indicated.

Signed in accordance with a resolution of the Directors of the Company made pursuant to s.298(2) of the Corporations Act 2001.

On behalf of the Directors

Jonathon Sellar Sydney, 25 March 2019

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Liability limited by a scheme approved under Professional Standards Legislation.

Member of Deloitte Touche Tohmatsu Limited

5 Deloitte Touche Tohmatsu

A.B.N. 74 490 121 060 Grosvenor Place 225 George Street Sydney NSW 2000

PO Box N250 Grosvenor Place Sydney NSW 1220 Australia DX 10307SSE

Tel: +61 (0) 2 9322 7000 Fax: +61 (0) 2 9322 7001 www.deloitte.com.au

25^th March 2019

Dear Board Members

DBCT Management Pty Limited

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of DBCT Management Pty Limited.

As lead audit partner for the audit of the financial statements of DBCT Management Pty Limited for the financial year ended 31 December 2018, I declare that to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

(ii) any applicable code of professional conduct in relation to the audit.

Yours sincerely

DELOITTE TOUCHE TOHMATSU

Yvonne van Wijk Partner

Chartered Accountants The Board of Directors

DBCT Management Pty Limited Level 15, Waterfront Place 1 Eagle Street

Brisbane Qld 4000

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DIRECTORS’ DECLARATION

The directors declare that:

a) in the directors’ opinion, there are reasonable grounds to believe that the consolidated entity and company will be able to pay its debts as and when they become due and payable;

b) in the directors’ opinion, the attached financial statements are in compliance with International Financial Reporting Standards, as stated in Note 3 to the financial statements and;

c) in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the consolidated entity;

Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act 2001.

On behalf of the Directors

Jonathon Sellar

Sydney, 25 March 2019

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

for the year ended 31 December 2018

Consolidated

Note

Dec 2018

$’000

Dec 2017

$’000

Revenue 5 411,297 391,965

Other income 5 25,038 21,918

Total income 436,335 413,883

Depreciation and amortisation charge 8 (24,850) (24,380)

Finance costs 7 (73,453) (75,129)

Operating and management (handling) charges (212,451) (196,759)

Other expenses 8 (10,227) (7,108)

Total expense (320,981) (303,376)

Profit before income tax expense 115,354 110,507

Income tax expense 9(a) (20,921) (15,058)

Profit for the year 94,433 95,449

OTHER COMPREHENSIVE INCOME

Items that may be reclassified subsequently to profit or loss:

Gain / (Loss) on cash flow hedges taken to equity 17 128,233 (89,372)

(Gain)/Loss on cash flow hedges transferred to income 17 (138,197) 74,902

Income tax benefit relating to components of other comprehensive

income 9(b) 2,989 4,341

Other comprehensive loss for the year (6,975) (10,129)

Total comprehensive income for the year 87,458 85,320

Notes to the Financial Statements are included on pages 11 to 46

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 31 December 2018

Consolidated

Note Dec 2018

$’000 Dec 2017

$’000 CURRENT ASSETS

Cash and cash equivalents 1,211 1,434

Trade and other receivables 10 46,924 46,562

Other financial assets 11 57 35

Total current assets 48,192 48,031

NON-CURRENT ASSETS

Other financial assets 11 1,050,407 910,731

Intangible assets 12 2,060,418 2,056,522

Other 1,177 1,107

Total non-current assets 3,112,002 2,968,360

Total assets 3,160,194 3,016,391

CURRENT LIABILITIES

Trade and other payables 13 36,464 42,074

Employee Provisions 1,564 1,537

Total current liabilities 38,028 43,611

NON-CURRENT LIABILITIES

Borrowings 14 2,328,496 2,199,539

Other financial liabilities 15 38,569 26,156

Deferred tax liabilities 9 263,449 253,201

Employee Provisions 1,464 1,532

Total non-current liabilities 2,631,978 2,480,428

Total liabilities 2,670,006 2,524,039

Net assets 490,188 492,352

EQUITY

Issued capital 16 146,328 146,328

Reserves 17 (3,795) 3,180

Retained earnings 18 347,655 342,844

Total equity 490,188 492,352

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Notes to the Financial Statements are included on pages 11 to 46 Consolidated

Issued capital

$’000

Hedge reserve

$’000

Retained earnings

$’000 Total

$’000

Balance at 31 December 2016 146,328 13,309 354,071 513,708

Profit for the year - - 95,449 95,449

Amounts recognised in the current year - (14,470) - (14,470)

Income tax relating to components of other

comprehensive income - 4,341 - 4,341

Total comprehensive income for the

year - (10,129) 95,449 85,320

Distributions paid - - (63,676) (63,676)

Payment of dividends - - (43,000) (43,000)

Total equity at 31 December 2017 146,328 3,180 342,844 492,352

Profit for the year - - 94,433 94,433

Amounts recognised in the current year - (9,964) - (9,964)

Income tax relating to components of other

comprehensive income - 2,989 - 2,989

Total comprehensive income for the

year - (6,975) 94,433 87,458

Distributions paid - - (47,622) (47,622)

Payment of dividends - - (42,000) (42,000)

Total equity at 31 December 2018 146,328 (3,795) 347,655 490,188

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CONSOLIDATED STATEMENT OF CASH FLOWS

Consolidated

Note

Dec 2018

$’000

Dec 2017

$’000 CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers 453,036 418,975

Payments to suppliers and employees (270,264) (225,870)

Interest received 1,211 1,198

Interest and other costs of finance paid (70,058) (69,104)

Net cash provided by operating activities 25(a) 113,925 125,199 CASH FLOWS FROM INVESTING ACTIVITIES

Payment for property, plant & equipment (56) (28)

Payment for intangibles (28,615) (11,124)

Net loans advanced to related parties (24,953) (10,733)

Payment for deposits (8) (7)

Net cash used in investing activities (53,632) (21,892)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings 30,000 4,000

Loan establishment costs paid (894) -

Distributions & dividends paid 18 (89,622) (106,676)

Net cash used in financing activities (60,516) (102,676)

NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS (223) 631 Cash and cash equivalents at the beginning of the financial year 1,434 803

Cash and cash equivalents at the end of the financial year 1,211 1,434

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL INFORMATION

2. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS 3. SIGNIFICANT ACCOUNTING POLICIES

4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY 5. REVENUE

6. SEGMENT INFORMATION 7. FINANCE COSTS

8. PROFIT FOR THE YEAR 9. INCOME TAXES

10. TRADE AND OTHER RECEIVABLES 11. OTHER FINANCIAL ASSETS 12. INTANGIBLE ASSETS

13. TRADE AND OTHER PAYABLES 14. BORROWINGS

15. OTHER FINANCIAL LIABILITIES 16. ISSUED CAPITAL

17. RESERVES

18. RETAINED EARNINGS

19. COMMITMENTS FOR EXPENDITURE 20. CONTINGENT ASSETS AND LIABILITIES 21. SUBSIDIARIES

22. KEY MANAGEMENT PERSONNEL REMUNERATION 23. RELATED PARTY DISCLOSURES

24. AUDITOR’S REMUNERATION

25. NOTES TO THE STATEMENT OF CASH FLOWS 26. FINANCIAL INSTRUMENTS

27. PARENT ENTITY INFORMATION 28. SUBSEQUENT EVENTS

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL INFORMATION

The DBCT Management Consolidated Group (‘the Group’) comprises DBCT Management Pty Limited (‘the Company’ or

‘DBCT Management’), DBCT Finance Pty Limited (‘DBCT Finance’) and DBCT Trust. The ultimate parent entity of the Group is Brookfield Infrastructure Partners L.P.

The shares of DBCT Management and the units in DBCT Trust are combined and issued as Stapled Securities. The shares in the Company and the units in DBCT Trust cannot be traded separately and can only be traded together as Stapled Securities. The shares in the Company and the units of the Trust will remain stapled until the earlier of the Company ceasing to exist or being wound up, or the Trust being dissolved in accordance with the provisions of the Trust Constitution.

The addresses of the Group’s registered office and principal place of business are as follows:

Registered Office:

Level 22 135 King Street

Sydney, New South Wales 2000 Australia Telephone: (02) 9322 2000

Principal Place of Business:

Level 15, Waterfront Place 1 Eagle Street

Brisbane, Queensland 4000 Australia Telephone: (07) 3002 3100

The Group’s principal activity is the provision of capacity to independent customers to ship coal through the Dalrymple Bay Coal Terminal (‘DBCT’) located at the Port of Hay Point, south of Mackay in Queensland, Australia.

2. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS

In the current period, the Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are relevant to its operation and effective for the current reporting period. Details of the impact of these new accounting standards are set out in the individual accounting policy notes below.

(a) Standards and Interpretations affecting amounts reported in the current period Impact of initial application of AASB 9 Financial Instruments

In the current year, the Group has applied AASB 9 Financial Instruments (as revised in July 2014) and the related consequential amendments to other AASB Standards that are effective for an annual period that begins on or after 1 January 2018.

AASB 9 introduced new requirements for:

1) The classification and measurement of financial assets and financial liabilities, 2) Impairment of financial assets, and

3) General hedge accounting.

The new hedge accounting rules under AASB 9 Financial Instruments align hedge accounting more closely with common risk management practices and as a result it is expected hedge accounting will be easier to apply going forward. The new standard also introduces expanded disclosure requirements and changes in presentation. Enhanced disclosure requirements about the Group’s risk management activities have also been introduced.

There has been no impact, including no reclassification or remeasured as a result of implementing AASB 9 to the Group’s consolidated financial statements as at 31 December 2018.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS (CONTINUED) Impact of initial application of AASB 15 Revenue from Contracts with Customers

In the current year, the Group has applied AASB 15 Revenue from Contracts with Customers (as amended in April 2016) which is effective for an annual period that begins on or after 1 January 2018. AASB 15 introduced a 5 step approach to revenue recognition. Far more prescriptive guidance has been added in AASB 15 to deal with specific scenarios.

There has been no impact to the Group’s consolidated financial statements as a result of the application of AASB 15.

Details of other Standards and Interpretations adopted in these Financial Statements but that have had no effect on the amounts reported are set out in Note 2(b).

(b) Standards and Interpretations adopted with no effect on the Financial Statements There has been no other new standards adopted.

(c) Standards and Interpretations in issue not yet effective

Standard

Effective for annual reporting periods beginning on or after

Expected to be initially applied in the financial

year ending

AASB 16 Leases 1 January 2019 31 December 2019

AASB 2018-1 Amendments – Annual Improvements 2015–2017 Cycle

1 January 2019 31 December 2019

AASB Interpretation 23 Uncertainty Over Income Tax Treatments, AASB 2017-4 Amendments to Australian Accounting Standards – Uncertainty over Income Tax Treatments

1 January 2019 31 December 2019

AASB 16 Leases

General impact of application of AASB 16 Leases

AASB 16 provides a comprehensive model for the identification of lease arrangements and their treatment in the financial statements for both lessors and lessees. AASB 16 will supersede the current lease guidance including AASB 17 Leases and the related Interpretations when it becomes effective for accounting periods beginning on or after 1 January 2019.

The date of initial application of AASB 16 for the Group will be 1 January 2019.

The Group has chosen the modified retrospective (cumulative) application of AASB 16 in accordance with AASB 16:C5(b).

Consequently, the Group will not restate the comparative information.

In contrast to lessee accounting, AASB 16 substantially carries forward the lessor accounting requirements in AASB 17.

Impact of the new definition of a lease

The change in definition of a lease mainly relates to the concept of control. AASB 16 distinguishes between leases and service contracts on the basis of whether the use of an identified asset is controlled by the customer. Control is considered to exist if the customer has:

1)The right to obtain substantially all of the economic benefits from the use of an identified asset; and 2)The right to direct the use of that asset.

The Group will apply the definition of a lease and related guidance set out in AASB 16 to all lease contracts entered into or modified on 1 January 2019 (whether it is a lessor or a lessee in the lease contract). In preparation for the first time application of AASB 16, the Group has carried out an implementation project. The project has identified a few operating leases that will be recognised on the balance sheet as at 1 January 2019.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS (CONTINUED) Impact on Lessee Accounting

Operating leases

AASB 16 will change how the Group accounts for leases previously classified as operating leases under AASB 17, which were off‑balance sheet.

On initial application of AASB 16, for all leases (except as noted below), the Group will:

a) Recognise right of use assets and lease liabilities in the consolidated statement of financial position, initially measured at the present value of the future lease payments;

b) Recognise depreciation of right of use assets and interest on lease liabilities in the consolidated statement of profit or loss;

c) Separate the total amount of cash paid into a principal portion (presented within financing activities) and interest (presented within operating activities) in the consolidated cash flow statement.

Lease incentives (e.g. rent-free period) will be recognised as part of the measurement of the right-of-use assets and lease liabilities whereas under AASB 17 they resulted in the recognition of a lease liability incentive, amortised as a reduction of rental expenses on a straight-line basis.

Under AASB 16, right-of-use assets will be tested for impairment in accordance with AASB 36 Impairment of Assets. This will replace the previous requirement to recognise a provision for onerous lease contracts. For short-term leases (lease term of 12 months or less) and leases of low-value assets (such as personal computers and office furniture), the Group will opt to recognise a lease expense on a straight-line basis as permitted by AASB 16.

As at 31 December 2018, the Group has non-cancellable operating lease commitments of $770 thousand.

These arrangements relate to leases other than short-term leases and leases of low-value assets, and hence the Group will recognise a right-of-use asset of $770 thousand and a corresponding lease liability of $770 thousand in respect of all these leases. The impact on profit or loss is to decrease other expenses by $643 thousand, to increase depreciation by $621 thousand and to increase interest expense by $22 thousand. Lease liability incentives of $150 thousand previously recognised in respect of the operating leases will be derecognised and the amount factored into the measurement of the right-to-use assets and lease liabilities.

Under AASB 17, all lease payments on operating leases are presented as part of cash flows from operating activities. The impact of the changes under AASB 16 would be to reduce the cash generated by operating activities and to increase net cash used in financing activities by the same amount.

Finance leases

The main differences between AASB 16 and AASB 17 with respect to assets formerly held under a finance lease is the measurement of the residual value guarantees provided by the lessee to the lessor. AASB 16 requires that the Group recognises as part of its lease liability only the amount expected to be payable under a residual value guarantee, rather than the maximum amount guaranteed as required by AASB 17.

Based on an analysis of the Group’s finance leases as at 31 December 2018 on the basis of the facts and circumstances that exist at that date, the directors of the Company have assessed that the impact of this change will not have an impact on the amounts recognised in the Group’s consolidated financial statements.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3. SIGNIFICANT ACCOUNTING POLICIES STATEMENT OF COMPLIANCE

These Financial Statements are General Purpose Financial Statements which have been prepared in accordance with the Corporations Act 2001, Accounting Standards and Interpretations and other requirements of the law.

The Financial Statements comprise the consolidated Financial Statements of the Group. For the purposes of preparing the consolidated financial statements the Group is a for-profit entity.

Accounting Standards include Australian Accounting Standards. Compliance with Australian Accounting Standards ensures that the financial statements and notes of the Company and the Group comply with International Financial Reporting Standards (‘IFRS’).

The Financial Statements were authorised for issue by the Directors on 25 March 2019.

BASIS OF PREPARATION

The consolidated financial statements have been prepared on the basis of historical cost, except for certain non-current assets and financial instruments that are measured at revalued amounts or fair values, as explained in the accounting policies below. Historical cost is generally based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of AASB 2 Share-based Payments, leasing transactions that are within the scope of AASB 117 Leases, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in AASB 102 Inventories or value in use in AASB 136 Impairment of Assets.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

• Level 3 inputs are unobservable inputs for the asset or liability.

The Company is a company of the kind referred to in Australian Securities and Investment Commission (ASIC) Corporations (Rounding in Financials/Directors’ Reports) Instrument 2016/191 dated 24 March 2016 and in accordance with that Corporations Instrument amounts in the Directors’ Report and the Financial Statements are rounded off to the nearest thousand dollars, unless otherwise indicated.

These Financial Statements cover the period from 1 January 2018 to 31 December 2018. The comparative period covers the year from 1 January 2017 to 31 December 2017.

(a) Basis of consolidation

The consolidated Financial Statements incorporate the assets and liabilities of all subsidiaries of the DBCT Management Group as at 31 December 2018 and the results of all subsidiaries for the period then ended.

Subsidiaries are all those entities (including special purpose entities) controlled by the Company (its subsidiaries) (referred to as ‘the Group’ in these Financial Statements). Control of a subsidiary is achieved where the Company is exposed, or has rights, to variable returns from its involvement with the subsidiary and the ability to affect those returns through its power over the subsidiary as defined by AASB 10 Consolidated Financial Statements.

The shares of DBCT Management and the units in DBCT Trust are combined and issued as Stapled Securities. Pursuant to AASB 10 Consolidated Financial Statements, DBCT Trust meets the definition a controlled entity and its results and equity have been consolidated with the Group in these Financial Statements.

Where necessary, adjustments are made to the Financial Statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Intangible assets

The Group recognises an intangible asset arising from a service concession arrangement at cost less accumulated amortisation and accumulated impairment losses under IFRIC 12 Service Concession Arrangements.

Intangible assets acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses.

Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

Intangibles assets classified under IFRIC 12 are amortised over the total lease period available to the DBCT Group (99 years from September 2001 to September 2100). The total lease period available comprises a 50 year lease with an option for a 49 year extension.

Costs incurred in the evaluation and purchases of major capital projects are deferred to future periods to the extent that they are expected beyond reasonable doubt to be recoverable.

(c) Impairment of long-lived assets excluding goodwill

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at fair value, in which case the reversal of the impairment loss is treated as a revaluation increase.

(d) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(e) Leased assets

Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the leased asset to the lessee. All other leases are classified as operating leases.

Group as lessee

Operating lease payments are recognised as an expense on a straight line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

(f) Trade and other payables

Trade and other payables are recognised when the Group becomes obliged to make future payments resulting from the purchase of goods and services.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (g) Employee benefits

A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave when it is probable that settlement will be required and they are capable of being measured reliably.

Liabilities recognised in respect of short-term employee benefits, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement.

Liabilities recognised in respect of long-term employee benefits are measured as the present value of the estimated future cash outflows to be made by the Group in respect of services provided by employees up to reporting date.

Defined contribution plans

Amounts paid to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions payable to their respective plans.

(h) Financial assets

Recognition, initial measurement and derecognition

The date of initial application (i.e. the date on which the Group has assessed its existing financial assets and financial liabilities in terms of the requirements of AASB 9) is 1 January 2018. Accordingly, the Group has applied the requirements of AASB 9 to instruments that continue to be recognised as at 1 January 2018 and has not applied the requirements to instruments that have already been derecognised as at 1 January 2018. Comparative amounts in relation to instruments that continue to be recognised as at 1 January 2018 have been restated where appropriate.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred.

Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with AASB 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).

Classification and subsequent measurement of financial assets

Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as fair value through profit and loss (‘FVPL’)):

• they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows

• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding

For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are classified at amortised costs.

All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses.

Subsequent measurement financial assets Financial assets at amortised cost

After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.

(18)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (h) Financial assets (continued)

Impairment of Financial assets

AASB 9’s impairment requirements use more forward looking information to recognize expected credit losses - the ‘expected credit losses (ECL) model’. Instruments within the scope of the new requirements included loans and other debt-type financial assets measured at amortised cost and fair value though other comprehensive income (‘FVOCI’), trade receivables, contract assets recognised and measured under AASB 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss. The Group recognises a loss allowance for expected credit losses on investments in debt instruments that are measured at amortised cost, lease receivables, trade receivables and contract assets, as well as on financial guarantee contracts. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.

The Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

In applying this forward-looking approach, a distinction is made between:

• financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (‘Stage 1’) and

• financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk has increased significantly (‘Stage 2’).

‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date.

‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’ are recognised for the second category.

The expected credit losses on these financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.

Trade and other receivables and contract assets

The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets and records the loss allowance at the amount equal to the expected lifetime credit losses. In using this practical expedient, the Group uses its historical credit loss experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix.

(i) Borrowings

Borrowings are recorded initially at fair value, net of transaction costs.

Subsequent to initial recognition, borrowings are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit and loss over the period of the borrowing using the effective interest rate method. Fees paid on the establishment of loan facilities, which are not an incremental cost relating to the actual draw-down of the facility, are recognised as prepayments and amortised on a straight-line basis over the term of the facility.

After initial recognition for those interest-bearing borrowings where fair value hedge accounting is applied, the borrowings are adjusted for gains and losses attributable to the risk being hedged.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

(j) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

(19)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (k) Revenue recognition

Revenue arises mainly from Terminal Infrastructure charges and Handling charges.

To determine whether to recognise revenue, the Group follows a 5-step process:

1. Identifying the contract with a customer 2. Identifying the performance obligations 3. Determining the transaction price

4. Allocating the transaction price to the performance obligations 5. Recognising revenue when/as performance obligation(s) are satisfied.

Revenue is recognised either at a point in time or over time, when (or as) the Group satisfies performance obligations by transferring the promised goods or services to its customers.

The Group does not recognises contract liabilities for consideration received in respect of unsatisfied performance obligations as this situation does not arise from the customer contracts, nor does the Group satisfies a performance obligation before it receives the consideration. All Customer contracts require payment in 30 days and no variable considerations exist.

Rendering of services

Revenue from a contract to provide services is recognised as follows:

Terminal Infrastructure Charge

Terminal Infrastructure Charge (‘TIC’) is charged at a set rate per tonne of coal based on each Producer’s annual contracted reference tonnage and is recognised as revenue on a pro-rata basis each month. The total TIC revenue for the financial year is approved by the Queensland Competition Authority (‘QCA’) and is also known as the Annual Revenue Requirement or Revenue Cap.

Handling charges (fixed)

DBCT Management sub-contracts the operations and maintenance of the terminal to an independent third-party operator owned by a majority of the customers of the terminal. Handling charges (fixed) are based on the independent operator’s fixed operating costs and are recognised as revenue at the end of each month on a pro-rata basis and are trued-up annually in line with the terminal operator’s quarterly reconciliations.

Handling charges (variable)

Handling charges (variable) are based on the independent operator’s variable operating costs and are recognised as income at the end of each month on a pro-rata basis and are trued-up annually in line with the terminal operator’s quarterly reconciliations.

Interest income

Interest income is recognised when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

(l) Derivative financial instruments

The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risk, including foreign exchange forward contracts, interest rate swaps and cross currency interest rate swaps.

Further details of derivative financial instruments are disclosed in Note 26.

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 the end of each reporting period. As a result of the introduction of AASB 13, the Group includes a credit value adjustment which represents credit risk in the valuations for the current year. The resulting gain or loss is recognised in profit and loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

The Group designates certain derivatives as either:

− hedges of the fair value of recognised assets or liabilities or firm commitments (fair value hedges); or

− hedges of highly probable forecast transactions or hedges of foreign currency risk of firm commitments (cash flow hedges).

(20)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (l) Derivative financial instruments (continued)

A derivative with a positive fair value is recognised as a financial asset; a derivative with a negative fair value is recognised as a financial liability. A derivative is presented as a non-current asset or non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.

Hedge accounting

The Group designates certain derivatives as hedging instruments in respect of foreign currency risk and interest rate risk in fair value hedges, cash flow hedges, or hedges of net investments in foreign operations. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges. At the inception of the hedge relationship, the Group documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument is effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk, which is when the hedging relationships meet all of the following hedge effectiveness requirements:

• there is an economic relationship between the hedged item and the hedging instrument;

• the effect of credit risk does not dominate the value changes that result from that economic relationship; and

• the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.

If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio but the risk management objective for that designated hedging relationship remains the same, the Group adjusts the hedge ratio of the hedging relationship (i.e. rebalances the hedge) so that it meets the qualifying criteria again.

Note 26 sets out details of the fair values or the derivative instruments used for hedging purposes.

Fair value hedges

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The change in the fair value of the hedging instrument and the change in the hedged item attributable to the hedged risk are recognized in the line of the Statement of Profit or Loss and Other Comprehensive Income relating to the hedged item.

The Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the qualifying criteria (after rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised. The discontinuation is accounted for prospectively. The fair value adjustment to the carrying amount of the hedged item arising from the hedged risk is amortised to profit or loss from that date.

Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are deferred in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss as part of expenses or income.

Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item is recognised in profit or loss, in the same line of the Statement of Profit or Loss as the recognised hedged item. However, when the forecast transaction that is hedged results in the recognition of a non- financial asset or a non-financial liability, the gains and losses previously accumulated in equity are included in the initial measurement of the cost of the non-financial asset or non-financial liability.

(21)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (l) Derivative financial instruments (continued)

Any gain or loss accumulated 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 gain or loss accumulated in equity is recognised immediately in profit or loss.

(m) Income tax

Income tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax as reported in the statement of profit or loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company’s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. Adjustments are made for transactions and events occurring within the multiple entry consolidated group that do not give rise to a tax consequence for the Group or that have a different tax consequence at the level of the Group.

Deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Adjustments are made for transactions and events occurring within the multiple entry consolidated group that do not give rise to a tax consequence for the Group or that have a different tax consequence at the level of the Group.

Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax for the period

Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

(22)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (m) Income tax (continued)

Multiple Entry Consolidated Group

The Company and its wholly-owned Australian resident entities are members of a multiple entry consolidated group under Australian tax law. BPIH Pty Ltd is the provisional head company within the multiple entry consolidated group. In addition to its own current and deferred tax amounts, BPIH Pty Ltd also recognises the current tax liabilities and assets and deferred tax assets arising from unused tax losses and relevant tax credits of the members of the multiple entry consolidated group.

Amounts payable or receivable under the tax-funding arrangement between the Company and the entities in the multiple entry consolidated group are determined using a ‘separate taxpayer within group’ approach to determine the tax contribution amounts payable or receivable by each member of the multiple entry consolidated group. This approach results in the tax effect of transactions being recognised in the legal entity where that transaction occurred, and does not tax effect transactions that have no tax consequences to the Group. The same basis is used for tax allocation within the multiple entry consolidated group.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Tax consolidation

The Company and its wholly-owned corporate entities are part of a multiple entry consolidated group. Refer Note 9(e).

(n) Goods and services tax

Revenues, expenses, liabilities and assets are recognised net of the amount of goods and services tax (GST), except:

− where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or

− for receivables and payables which are recognised inclusive of GST.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.

Cash flows are included in the Statement of Cash Flows on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.

(o) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received, and the amount of the receivable can be measured reliably.

Onerous contracts

Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Group has a contract under which the unavoidable cost of meeting the obligations under the contract exceed the economic benefits estimated to be received under it.

Provision for restoration and rehabilitation

A provision for restoration and rehabilitation is recognised when there is a present obligation, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the provision can be measured reliably.

The estimated future obligations include the costs of removing the facilities and restoring the affected areas (refer to Note 4 for further detail).

(23)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (p) Foreign currencies

The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group entity are expressed in Australian dollars (‘$’), which is the functional currency of the Company and the presentation currency for the consolidated financial statements.

In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences on monetary items are recognised in profit or loss in the period in which they arise except for:

• exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings;

• exchange differences on transactions entered into in order to hedge certain foreign currency risks; and

• exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary items.

4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In applying the Group’s accounting policies, as described in Note 3, the Directors are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Significant judgments, estimates and assumptions made by the Directors in the preparation of these Financial Statements are outlined below:

Intangible assets with finite lives and impairment

Useful lives of intangible assets with finite lives are reviewed annually. Any reassessment of useful lives in a particular year will affect the amortisation expense (either increasing or decreasing) through to the end of the reassessed useful life for both the current and future years.

The carrying amount of intangible assets with finite lives at the statement of financial position date was $2,060 million (December 2017: $2,057 million). No impairment loss was recognised in the current financial year from the operations (December 2017: nil).

Asset retirement obligations

The likelihood of restoration and rehabilitation is assessed by management and a provision recognised when there is an obligation under the lease agreements, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount can be measured reliably.

There are three trigger events under the Group’s lease documents which may give rise to rehabilitation obligations. These include the lessor (DBCT Holdings Pty Limited, a wholly owned Queensland Government entity) giving 5 years notice prior to expiration of the lease term (99 years as the 49 extension is at the Group’s option); The Group defaults but only after 20 years into the lease; and if the Group surrenders the lease and the lessor accepts the surrender subject to rehabilitation.

The Directors have assessed the likelihood of rehabilitation as being extremely remote due to demand for the deep-water nature of the port, which is rare and extremely expensive to build and subject to ever more stringent environmental approvals. This is coupled with the supporting rail infrastructure servicing the port, vacant surrounding land to support future expansion / industrialisation, geographical proximity to major equatorial shipping lanes and sheltered waters. These factors are taken against the backdrop of extensive coal reserves in the Bowen Basin servicing the current use for the terminal. It is therefore the opinion of the Directors that the likelihood of the Queensland Government requiring the facility to be decommissioned and removed is extremely remote. Accordingly, no provision has been made in the Financial Statements.

DBCT Management Pty Limited