Port Waratah Coal Services Limited

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Notes to the financial statementsfor the financial year ended 31 December 2011NOTE 1 SUMMARY OF ACCOUNTING POLICIES USED IN THE FINANCIAL STATEMENTS (continued)Standards and Interpretations in issue not yet adoptedInitial application of the following Standards and Interpretations is not expected to have any material impact to the financial report ofthe consolidated entity and the company:Standard/InterpretationAASB 2010-6 'Amendments to Australian AccountingStandards - Disclosures of Transfers of FinancialAssets'AASB 2010-8 'Amendments to Australian AccountingStandards - Deferred Tax: Recovery of UnderlyingAssets'Effective for annual reportingperiods beginning on or after1 July 20111 January 2012Expected to be initially appliedin the financial year ending31 December 201231 December 2012The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material financialimpact on the financial statements of the company or the Group, as the issue of the above noted Interpretations do not affect itspresent policies and operations.These Standards and Interpretations will be first applied in the financial report of the Group that relates to the annual reportingperiod beginning after the effective date of each pronouncement, which in all cases will be the Company’s annual reportingperiod beginning on 1 January 2012 or later.Principles of ConsolidationThe consolidated financial statements are prepared by combining the financial statements of all the entities that comprise theconsolidated entity, being Port Waratah Coal Services Limited (the parent entity) and its subsidiaries as defined in AccountingStandard AASB 127 ‘Consolidated and Separate Financial Statements’. A list of subsidiaries appears in Note 26 to thefinancial statements. Consistent accounting policies are employed in the preparation and presentation of the consolidatedfinancial statements.On acquisition, the assets, liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date ofacquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised asgoodwill. If, after reassessment, the fair values of the identifiable net assets acquired exceeds the cost of acquisition, thedeficiency is credited to profit and loss in the period of acquisition.The consolidated financial statements include the information and results of each subsidiary from the date on which thecompany obtains control and until such time as the company ceases to control such entity. Control is achieved where thecompany has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.In preparing the consolidated financial statements, all intercompany balances and transactions, and unrealised profits arisingwithin the consolidated entity are eliminated in full.Financial AssetsInvestments are recognised and derecognised on trade date where purchase or sale of an investment is under a contract whoseterms require delivery of the investment within the timeframe established by the market concerned, and are initially measured atfair value, net of transaction costs.Subsequent to initial recognition, investments in subsidiaries are measured at fair value. Subsequent to initial recognition,investments in associates are accounted for under the equity method in the consolidated financial statements and the costmethod in the company financial statements.Other financial assets are classified into the following specified categories:- loans and receivables- financial assets at cost.Loans and receivablesTrade receivables, loans, and other receivables are recorded at amortised cost less impairment.Interest and dividendsInterest and dividends are classified as expenses or as distributions of profit consistent with the Statement of Financial Positionclassification of the related debt or equity instruments.Shares at fair valueThe company has an investment in an unlisted entity whose shares are not traded in an active market. This investment hasbeen classified as 'shares at fair value - other corporations' (because the Directors consider that the fair value can be reliablymeasured). Fair value has been determined in accordance with generally accepted pricing models based on discountedcashflows. Gains and losses arising from changes in fair value are recognised in other comprehensive income and accumulatedin the fair value of equity instruments reserve. Where the investment is disposed of or is determined to be impaired, thecumulative gain or loss previously accumulated in the fair value of equity instruments reserve is not reclassified to profit or loss.Dividends on shares held at fair value are recognised in profit or loss when the company's right to receive dividends isestablished.23
Notes to the financial statementsfor the financial year ended 31 December 2011NOTE 1 SUMMARY OF ACCOUNTING POLICIES USED IN THE FINANCIAL STATEMENTS (continued)Income TaxCurrent taxCurrent tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit ortax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by thereporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (orrefundable).Deferred taxDeferred tax is accounted for using the Statement of Financial Position liability method. Temporary differences are differencesbetween the tax base of an asset or liability and its carrying amount in the Statement of Financial Position. The tax base of anasset or liability is the amount attributed to that asset or liability for tax purposes.In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to theextent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences orunused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if thetemporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of abusiness combination) which affects neither taxable income nor accounting profit.Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associatesexcept where the consolidated entity is able to control the reversal of the temporary differences and it is probable that thetemporary differences will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differencesassociated with these investments and interests are only recognised to the extent that it is probable that there will be sufficienttaxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in theforeseeable future.Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset andliability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantivelyenacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that wouldfollow from the manner in which the consolidated entity expects, at the reporting date, to recover or settle the carrying amount ofits assets and liabilities.Current and deferred tax for the periodCurrent and deferred tax is recognised as an expense or income in the Statement of Comprehensive Income, except when itrelates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, orwhere it arises from the initial accounting for a business combination, in which case it is taken into account in the determinationof goodwill or excess.Tax consolidationThe company and all its wholly-owned Australian resident entities are part of a tax-consolidated group under Australian taxationlaw. Port Waratah Coal Services Limited is the head entity in the tax-consolidated group. Tax expense/income, deferred taxliabilities and deferred tax assets arising from temporary differences of the members of the tax-consolidated group arerecognised in the separate financial statements of the members of the tax-consolidated group using the ‘separate taxpayerwithin group’ approach. Current tax liabilities and assets and deferred tax assets arising from unused tax losses and tax creditsof the members of the tax-consolidated group are recognised by the company (as head entity in the tax-consolidated group).PayablesTrade payables and other accounts payable are recognised when the consolidated entity becomes obliged to make futurepayments resulting from the purchase of goods and services.BorrowingsBorrowings 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 recognisedamount and the redemption value being recognised in profit and loss over the period of the borrowing using the effective interestrate method.Borrowing CostsBorrowing costs directly attributable to the acquisition, construction or production of a qualifying asset, which are assets thatnecessarily 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 the profit and loss in the period in which they are incurred.Cash and Cash EquivalentsCash and cash equivalents comprise cash on hand, cash in banks (including short term deposits) and investments in moneymarket instruments, net of outstanding bank overdrafts.24
Page 1 and 2: Port Waratah Coal Services LimitedA
Page 3 and 4: Chairman’s ReportPort Waratah Coa
Page 5 and 6: Alternate DirectorsS R Bridger (for
Page 7 and 8: Review of OperationsDuring the fina
Page 9 and 10: Proceedings on behalf of the compan
Page 11 and 12: PerformanceOVERVIEWShiploading in m
Page 13 and 14: EnvironmentPWCS’ operations were
Page 15 and 16: In April 2011 the Board approved $2
Page 17 and 18: PWCS - industryLEADERPWCS won a num
Page 19 and 20: Statement of Financial Positionas a
Page 21 and 22: Statement of Cash Flowsfor the fina
Page 23: Notes to the financial statementsfo
Page 27 and 28: Notes to the financial statementsfo
Page 39 and 40: Directors’ DeclarationThe Directo
Page 41 and 42: Auditor’s Independence Declaratio

Port Waratah Coal Services Limited

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