PRL GLOBAL LTD — Annual Report 2013

Sep 17, 2013

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18 September 2013

Company Announcements Platform Australian Securities Exchange Level 8, Exchange Plaza 2 The Esplanade PERTH WA 6000

PHOSPHATE RESOURCES ANNOUNCEMENT

CI Resources Limited (ASX code: CII) advises that the Board of Phosphate Resources Limited (PRL), in which CI Resources Limited holds a 63.05% stake, has released their Annual Report year ending 30 June 2013.

Please find attached the Annual Report for Phosphate Resources Limited (PRL) for the year ended 30 June 2013, lodged on 18 September 2013 with ASIC. PRL is the principal subsidiary of CI Resources Limited (CII).

CII will release its Annual Report for the year ended 30 June 2013 prior to the deadline for lodgment on 30 September 2013.

Yours faithfully,

David Somerville Chairman CI Resources Limited

CI Resources Limited ABN 70 006 788 754 Postal address: 12, Lyall Street, South Perth WA 6151 Telephone: +61 8 9489 4444

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PHOSPHATE RESOURCES LIMITED ACN 009 396 543

ANNUAL REPORT 30 JUNE 2013

TABLE OF CONTENTS

Letter from the Chairman	Page i
Managing Director’s Report	Page ii
Contact List	Page iv
Board of Directors	Page v
Directors’ Report	Page 1
Financial Statements	Page 7

LETTER FROM THE CHAIRMAN

Dear Shareholder

The Company’s financial performance in the 2012-2013 financial year was again excellent.

However, as the Managing Director has observed there are continuing challenges facing our future viability.

Regrettably, one of those challenges continues to be gaining approval to clear land on our mining lease. In previous annual reports we have pointed out the vagaries of obtaining clearing permits to clear land on our environmentally approved mining lease. Our efforts to resolve this unsatisfactory situation seemed to have met with some success last year when we finally arrived at an agreement with government about the processes and standards that would be applied to assessing our clearing permits applications. Rather distressingly, that agreement was disregarded without consultation earlier this year and the imbroglio of the clearing permit process has returned with a vengeance.

While we are grateful the former Minister approved an extension of our mining lease to 2034, the medium term plans we should now be able to make are once again being thwarted by uncertainties over access to our resource base. We remain hopeful however that the incoming government, with its commitment to the removal of unnecessary red tape, will see the merits of us not being prohibited from mining on our environmentally approved mining lease.

The intended downsizing of the refugee intake by the new Government will inevitably lead to a decline in economic activity and the population on Christmas Island. In such a scenario, any unnecessary restrictions placed on our mining operations will only serve to exacerbate the economic fortunes of the Island and the Island community.

We will continue to support research into alternative economic developments for the Island and to this end remain committed to assisting Murdoch University in its studies of the potential for high value agricultural use of exhausted mining areas.

Notwithstanding our interest, the company is unlikely at present to be prepared to invest in any other economic development on the Island. The time and costs involved in obtaining approvals, in our judgement, are likely to remove any prospect of any new project being commercially viable.

Our approach would be more positive if the whole of Executive Government was prepared to promulgate its support of economic development on the Island and the reservation of sufficient areas of Crown Land for those purposes.

In the absence of government recognising the significance of social and economic pursuits on the Island, then it is unlikely that there will be any meaningful resident population on the Island post mining. We hope that other sectors of the Island community will join us in continuing to press the government to provide proper endorsement of development on the Island to ensure people’s rights to have an economic livelihood are protected.

There is reason to be hopeful the incoming government will listen to the views of the Island community and endorse a plan that facilitates economic and social development outside the sixty four percent of the island that is reserved for preservation purposes in the national park.

i

While this report has focused on the key challenge facing our mining operations, it should be viewed in the context of the company’s achievements over the past year. These included delivering a very healthy profit, an extension of our mining lease and an opportunity for shareholders to participate in the share buy- back scheme. These achievements have been possible due to a forward thinking Board, astute management and the cooperation and commitment of our employees, contractors and professional advisers.

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Clive BROWN Chairman

17 September 2013

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MANAGING DIRECTOR’S REPORT

Dear Shareholder

It is with pleasure that I table the Phosphate Resources Limited Annual Report for the financial year ending 30 June 2013.

FINANCIAL PERFORMANCE AND PRODUCTION OVERVIEW

The company has managed to achieve an after tax profit from mining alone of some $20.9 million. During the year the company was able to provide its shareholders with an opportunity to realise the benefits of profitability and growth of the company over the past five years.

The company was able to offer a buy back opened on an equal access basis to all shareholders at $20 per share for up to 20% of the issued shares. At the close of that offer the total acceptances that were received allowed the cancellation of some 16% of our issued shares.

Our mining operation shipped a slightly improved 672,000 tonnes of phosphate product in FY 2013.

Total output for the year was impacted by the need to have an extended shutdown for installation of the first phase of the cascade loading system which should ultimately increase loading rates as well as improve the environmental outcomes. An abnormal extended wet season also hampered production in the last quarter

Although we have had good results over the past two years it would be unwise to be complacent about our ongoing viability.

Our market share in Malaysia and Indonesia is under pressure from Middle Eastern, North African and South American producers. Downward pressure on prices has resulted and this has been further compounded by a very weak market in palm oil. Fortunately, to date, this has been largely offset by the downward trend of the Australian dollar.

However, we have to recognise that if we are to survive as a high cost producer constrained by comparatively high Australian costs and taxation levels all direct or indirect participants in our operations have to continuously strive to upgrade their efficiency. This applies to all parties from the mine sites through to those providing assistance with shipping and particularly includes those involved in maintenance and essential plant and equipment upgrades.

GROUP DEVELOPMENTS

The Consolidated result was recorded as a profit after tax for FY 2013 of $ 24.2million.

Our subsidiary CK Plantations Sdn Bhd achieved a profit after tax of $2.1 million. The result was disappointing due to a major slump in CPO prices. Fortunately plantation yields have returned to a normal level and more fruit has been available for purchase by our mill.

We remain confident, however, that the investment will continue to provide a reasonable return to the Company for the foreseeable future.

Our subsidiary, CI Maintenance Services Pty Ltd (CIMS), which provides accommodation management and maintenance services to the Commonwealth Department of Immigration

and Citizenship on the Island continued to perform strongly. Our contracts were renewed for a further 3 years after we succeeded in winning a new competitive tender for the work.

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RESOURCES AND PROJECTS

The Minister has approved a renewed lease for a further 21 years extending our tenure on our primary lease until 2034. In addition our available resources have been increased by some further clearing permit approvals but as the Chairman has indicated some problems remain in these areas.

The Company is continuing a major structural upgrade of all our plant and facilities including upgrades of our fuel farm to ensure we remain as efficient as practicable and compliant with current statutory requirements. We are also hopeful of being able to upgrade the burner systems in our dryers in the coming year and finalise the cantilever loading improvements.

THE YEAR AHEAD

Weather and markets permitting we are confident of being able to sustain production at current or slightly improved levels.

We will continue to press the Commonwealth government to play its part in ensuring a viable community is sustained by making proper provision for infrastructure for the Island. In particular, we believe planning and provision for a proper marine crane facility at the port should be undertaken as a matter of urgency.

In closing I would thank the Board members for their ongoing support and my senior managers and employees for their continued efforts which have enabled us to maintain a viable operation in good condition for the challenges ahead.

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LAI Ah Hong

Managing Director 17 September 2013

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CONTACT LIST

REGISTERED AND HEAD OFFICE

12 Lyall Street South Perth, Western Australia 6151 PO Box 1194, South Perth WA 6951 Telephone: +618 9474 6811 Facsimile: +618 9474 6877 Email: info@cirp.com

Operations Office

Christmas Island PO Box 104, Christmas Island Indian Ocean WA 6798 Telephone: +618 9164 8400 Facsimile: +618 9164 8404 Email: info@cirp.com.au

WEB SITE

www.cirp.com

COMPANY AUDITORS

Ernst & Young 11 Mounts Bay Road Perth, Western Australia 6000

COMPANY BANKERS

Westpac Banking Corporation 109 St George’s Terrace Perth, Western Australia 6000

National Australia Bank 100 St George’s Terrace Perth, Western Australia 6000

Cheekah-Kemayan Plantations Sdn Bhd

209 Block A, Kelana Business Centre 97 Jalan SS7/2, Kelana Jaya, 47301 Petaling Jaya, Selangor, Malaysia Telephone: +60 3 7880 4911 Facsimile: +60 3 7880 5877 Email: info@cirp.com

Phosphate Resources (Singapore) Pte Ltd

8 Liang Seah Street #02-06 Liang Seah Court Singapore 189029 Telephone: +65 6332 0961 Facsimile: +65 6332 0962 Email: info@cirp.com

Phosphate Resources (Malaysia) Sdn Bhd

209 Block A, Kelana Business Centre 97 Jalan SS7/2, Kelana Jaya, 47301 Petaling Jaya, Selangor, Malaysia Telephone: +60 3 7880 4911 Facsimile: +60 3 7880 5877 Email: info@cirp.com

CI Maintenance Services Pty Ltd

The Royal Bank of Scotland NV One Raffles Quay South Tower Singapore 048583

Standard Chartered Bank (Hong Kong) Ltd 15F Standard Charter Tower 388 Kwun Tong Road Hong Kong

Hong Leong Bank Berhad 63 & 65 SS 23/15 Taman Sea, 47400 Petaling Jaya, Selangor Darul Ehsan Malaysia

OCBC Bank 65 Chulia Street OCBC Centre Singapore 049513

OCBC Bank (Malaysia) Berhad 18[th] Floor, Menara OCBC, Jalan Tun Perak, 50050 Kuala Lumpur

Christmas Island PO Box 104, Christmas Island Indian Ocean WA 6798 Telephone: +618 9164 8400 Facsimile: +618 9164 8404 Email: info@cirp.com.au

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BOARD OF DIRECTORS

Mr Clive Brown

Non-Executive Chairman

Mr Brown is the former Minister for State Development in Western Australia. He was previously a director of Phosphate Resources Ltd from 1992 to 1999.

Mr LAI Ah Hong

Managing Director

Mr Lai has had extensive experience in private enterprise on Christmas Island as well as with the union movement. Mr Lai is a former president of the Union of Christmas Island Workers and has been involved in the phosphate industry for 27 years. He was also a founding director of Phosphate Resources Limited in 1991.

Mr CHAN Khye Meng

Non-Executive Director

Mr Chan is active in the Christmas Island community as a member of the Poon Saan Club and the Chinese Literary Association. Mr Chan, who has lived on Christmas Island for 29 years, is the managing director of his own company on Christmas Island.

TEE Lip Sin

Non-executive Director

Mr Tee Lip Sin holds a Diploma in Business from Curtin University and a Diploma in Plantation Management from the University of Malaya. He has been employed in senior management for the past 10 years and is currently an Executive Director of several companies. He is also a Director of CI Resources Ltd.

of Amanah Saham Pahang Berhad and YTL Cement Berhad. He is also a director of CI Resources Limited.

Phua Siak Yeong

Executive Director Projects

Mr Phua Siak Yeong graduated from the University of Malaysia with first class honours degree in Chemical Engineering. He obtained his MBA from the same university in 1990. He worked at Esso Singapore after graduation and then as a Marketing Executive for Bulk Chemicals Sdn Bhd from 1979 to 1983. He joined the Hong Leong Group in Malaysia in 1983, involved in motorcycle manufacturing. Mr Phua retired in 2008 from the Hong Leong Group.

TEE Lip Jen

Non-executive Director

Mr Tee holds a Bachelor of Mechanical Engineering from the Royal Melbourne Institute of Technology (RMIT).

He is currently the Assistant Chief Engineer in charge of overseeing engineering and production activities in seven palm oil mills with an estimated production output of 350,000 metric tonnes of crude palm oil per year. Apart from managing the daily activities in palm oil mills, he is also in charge of overseeing three palm oil plantation estates located in Negeri Sembilan, Malaysia with an estimated acreage of 3,400 acres. He is also a director of CI Resources Ltd.

Dato Kamaruddin bin Mohammed

Non-executive Director

Dato' Kamaruddin is a business and finance graduate and a Senior Fellow of Financial Services Institute of Australasia. He has had an extensive business career with Amanah Saham MARA Berhad retiring as Group Managing Director in 2008. He has had considerable experience with the palm oil industry and is currently chairman of the Malaysian listed palm oil group Far East Holdings Berhad. He is also the Chairman of Pascorp Paper Industries Berhad and Pasdec Resources South Africa Ltd and is a Director

vi

FINANCIAL STATEMENTS

For the year ended 30 June 2013

Index
Directors' Report	Page 1
Income Statement	Page 7
Statement of Comprehensive Income Page 8
Statement of Financial Position	Page 9
Statement of Changes in Equity	Page 10
Cash Flow Statement	Page 11
Notes to the Financial Statements	Page 12
Directors' Declaration	Page 55
Independent Audit Report	Page 56
Auditor’s Independence Declaration Page 58

DIRECTORS REPORT

For the year ended 30 June 2013

Your Directors submit their report for the year ended 30 June 2013.

DIRECTORS – CURRENT

The names of the Company’s Directors in office during the financial year and until the date of this Annual Report are as follows. Directors were in office for the entire period unless otherwise stated.

• providing earthmoving, fuel, pilotage, maintenance and stevedoring services to other Christmas Island organisations.

• running a palm oil estate, processing and sale of palm oil products.

REVIEW AND RESULTS OF OPERATIONS

Clive Brown Chairman LAI Ah Hong Managing Director

CHAN Khye Meng Non-Executive Director

Non-Executive Director CHENG Hang OAM (resigned: 23 Nov 2012)

Dato Kamaruddin Non-Executive Director bin Mohammed (appointed: 21 Sep 2012)

Non-Executive Director PHUAR Kong Seng (resigned: 23 Nov 2012)

TEE Lip Sin Non-Executive Director Non-Executive Director TEE Lip Jen (appointed: 28 Feb 2013)

Phua Siak Yeong Executive Director Projects

COMPANY SECRETARY

Kevin Edwards B.Juris, LL.B

Mr Edwards has been the Company Secretary since 12 December 2006 and is also a practicing barrister & solicitor. He has been retained as an Advisor to The Board of Directors since 2004 and as Chief Operating Officer from 2 December 2009.

PRINCIPAL ACTIVITIES

During the year, the principal activities of entities within the consolidated entity were:

• mining, processing and sale of phosphate rock, phosphate dust and chalk; and

The consolidated entity recognised for members of the parent a profit after tax of $24.2 million [2012: $23.3 million].

The chief entity has approximately 126 shareholders (2012: 175) of whom 56.56% are Christmas Island Residents holding 16.91% of the total shares issued. CI Resources Ltd (ASX listed entity) has a controlling interest in the chief entity at 63.05% of the total shares issued.

Following are other key highlights of the operations during the current year:

• Sales of phosphate products increased to 672,000 tonnes;

• Operational profit of mine was $20.9 million after tax which is in line with the prior year;

• Tenure on the main mining lease was extended until 2034:

• First stage of mine loading facilities upgrade completed;

• Increased production in palm oil subsidiary offset by a major slump in prices for crude palm oil;

• CIMS, the subsidiary providing maintenance services to the Department of Immigration was successful in winning a tender for the provision of services for a further 3 years.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

During the year the Company bought back 555,200 shares at $20 per share. This was done by way of an equal access share buyback that was open to all shareholders on an equal basis.

The buy back offer to acquire a maximum of 684,702 shares or 20% of the company’s issued capital was approved by an

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Extraordinary General Meeting on the 16[th] May 2013.

The Company received offers to buy-back 555,200 shares from eligible shareholders. On 12 June 2013, the company bought back these shares at $20 per share resulting in a payment to shareholders of $11.1 million. The buy-back price of $20, comprised of a capital return of $1.31 (amounting to $727,312) and the balance of purchase of $18.69 (amounting to $10,376,688) issued for tax purposes on a fully franked basis.

As a result of the share buy-back the Company’s number of issued shares has reduced to 2,868,307 from 3,423,507 shares prior to the share buy back

There was no other significant change in the state of affairs of the company or its controlled entities during the financial year other than that referred to in the financial statements or notes thereto.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

No matters or circumstances have arisen since the end of the financial year which significantly, or may significantly, affect the operations or the state of affairs of the economic entity in future financial years.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

The Directors note that current strategies suggest that the 2013 financial year will see the Company remain profitable.

Further information on likely developments in the operations of the consolidated entity and the expected results of those operations have not been included in this report because the Directors believe that it would be likely to result in unreasonable prejudice to the Company.

ENVIRONMENTAL REGULATION & PERFORMANCE

Phosphate Resources Limited holds various licenses regulating its mining and exploration activities on Christmas Island.

Cheekah-Kemayan Plantations Sdn Bhd also holds environmental licences from the operation of a palm oil mill issued by Malaysian Government.

Licenses issued by the Commonwealth Government of Australia and Malaysian Government include general environmental conditions, air pollution control conditions and water control conditions. These conditions regulate the management of mining waste and restoration, dust, liquid chemical storage, and water monitoring.

There have been no significant known breaches of the consolidated entity’s licences.

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

During or since the financial year the Company has paid premiums in respect of a contract insuring all the Directors of Phosphate Resources Limited against costs incurred in defending proceedings for conduct involving:

• a wilful breach of duty or

• a contravention of Sections 182 or 183 of the Corporations Act 2001 , as permitted by Section 199B of the Corporations Act 2001 .

The total amount of insurance contract premiums paid was $6,612

AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES

No amounts have been paid during the year or are payable to the auditor for non-audit services.

The auditor’s independence declaration is included on page 58 of the financial report.

DIRECTORS’ MEETINGS HELD DURING THE

YEAR ENDED 30 JUNE 2013

	Director	Directors Meetings Attended	Number Held While in Office
	Clive Brown	5	5
	Lai Ah Hong	5	5
	Chan Khye Meng	5	5
	Cheng Hang	1	1
	Phuar Kong Seng	-	1
	Tee Lip Sin	5	5
	Phua Siak Yeong	5	5
	Dato Kamaruddin
	bin Mohammed	5	5
	Tee Lip Jen	2	2

AUDIT COMMITTEE

The members of the Audit Committee are Mr. Clive Brown, Mr. Phua Siak Yeong and Mr Tee Lip Jen. Mr. Cheng Hang and Mr. Phuar Kong Seng were previously members of the

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audit committee and resigned as Directors on 23 November 2012. Mr. Tee Lip Jen was appointed on 28 February 2013 as a member of the Audit Committee.

There were 2 audit committee meetings held during the year and all members attended each meeting except Mr. Phuar Kong Seng who was absent for the 20 September 2012 meeting.

ROUNDING

The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where rounding is applicable) under the option available to the Company under the ASIC Class Order 98/0100 . The Company is an entity to which the Class Order applies.

DIVIDENDS

During the year ended 30 June 2013, the Company paid $2.054 million as a dividend. The Company’s management have not recommended or declared any dividend since the last dividend paid.

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REMUNERATION REPORT

The remuneration report outlines the director and executive remuneration arrangements of the Company and the Group in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of this report Key Management Personnel (KMP) are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the parent company.

For the purposes of this report the term executive encompasses the executive directors, senior executives and Company Secretary of the Parent and the Group.

Remuneration Philosophy

The Board of Directors is responsible for reviewing and making recommendations on compensation arrangements for the directors and the executive team. The Board assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic basis. The overall objective is the retention of a high quality board and executive team to maximise value of the shareholders’ investment. Such officers are given the opportunity to receive their emoluments in a variety of forms including cash and fringe benefits, such as motor vehicles and expense payments. It is intended that the manner of payment chosen will be the most beneficial for the recipient without creating additional cost to Phosphate Resources Limited.

A discretionary bonus scheme for the executive team based on the consolidated profit after tax was continued for the current year.

Non-Executive Director Remuneration

Fees and payments to non-executive directors reflect the demands made on, and the responsibilities of, the directors.

Executive Remuneration

The remuneration of executives is generally reviewed annually with the review taking into consideration the contribution of the individual commensurate with the performance of the group and comparable employment market conditions. The executive salary can be packaged and includes a cash component and other remuneration including salary sacrificed superannuation and non-cash benefits such as motor vehicles. The combination of these comprises the executive’s total remuneration. No component of the executive salary is at risk.

Executives are given short term incentive in the form of cash bonus which is calculated based on the profit after tax for the year and is ultimately at the discretion of the Board of Directors.

Employment Contracts

Remuneration and other terms of employment for the executive directors and the executives are formalised in services agreements. These agreements have a fixed term of three years.

Details of Key Management Personnel

The following persons acted as directors or senior management during or since the end of the financial year:

Directors

Clive Brown Lai Ah Hong Chan Khye Meng Cheng Hang Phuar Kong Seng Tee Lip Sin Dato Kamaruddin bin Mohammed Phua Siak Yeong Tee Lip Jen

Non-Executive Chairman Managing Director Non-Executive Director Non-Executive Director (resigned: 23 Nov 2012) Non-Executive Director (resigned: 23 Nov 2012) Non-Executive Director Non-Executive Director (appointed: 21 Sep 2012) Executive Director Projects Non-Executive Director (appointed: 28 Feb 2013)

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REMUNERATION REPORT (continued)

Executives

Kevin Edwards Alfred Chong Allan Robartson

Company Secretary / Chief Operating Officer Resident Manager / Director (subsidiary) Financial Controller

There were no changes to key management personnel between the reporting date and the date this financial report was authorised for issue.

Remuneration of Key Management Personnel

Year ended 30 June 2013

	Short Term Post Salary & Fees Bonus Non- cash Benefits Employment Super- annuation Contribution Other Total Perform- ance Related $ $ $ $ $ $ %
Directors Clive Brown Lai Ah Hong Chan Khye Meng Cheng Hang Phuar Kong Seng Tee Lip Sin Phua Siak Yeong Dato Kamaruddin bin Mohammed Tee Lip Jen Executives Mr. Kevin Edwards Mr. Alfred Chong Mr. Allan Robartson	148,462 - - 10,281 - 158,743 - 454,863 217,160 61,614 73,944 - 807,581 26.9% 46,731 - - 5,140 - 51,871 - 19,904 - 12,775 2,189 - 34,868 - 18,750 - - - - 18,750 - 56,333 - - - - 56,333 - 143,721 63,315 - 12,442 - 219,478 28.8% 46,333 - - - - 46,333 - 26,333 - - - - 26,333 - 275,233 136,820 8,178 - - 420,231 32.6% 277,812 151,670 7,457 47,243 - 484,182 31.3% 204,149 119,400 16,447 35,590 - 375,586 31.8%
	1,718,624 688,365 106,471 186,829 - 2,700,289 -

The cash bonus is based on the results for the financial year ending 30 June 2012 and in accordance with a determination at the discretion of the Board of Directors. 100% of the total bonus was paid in the current financial year ending 30 June 2013.

Year ended 30 June 2012

	Short Term Post Salary & Fees Bonus Non- cash Benefits Employment Super- annuation Contribution Other Total Perform- ance Related $ $ $ $ $ $ %
Directors Clive Brown Lai Ah Hong Chan Khye Meng Cheng Hang Phuar Kong Seng Tee Lip Sin Phua Siak Yeong Executives Mr. Kevin Edwards Mr. Alfred Chong Mr. Allan Robartson	147,692 - 4,934 12,946 - 165,572 - 397,697 67,400 65,893 51,161 - 582,151 11.6% 58,846 - - 6,473 - 65,319 - 58,846 - 16,387 6,473 - 81,706 - 57,500 - - - - 57,500 - 57,500 - - - - 57,500 - 142,979 34,642 - 10,679 - 188,300 18.4% 252,789 54,168 10,558 - - 317,515 17.1% 260,537 54,000 12,443 34,599 - 361,579 14.9% 186,957 42,600 17,319 25,251 - 272,127 15.7%
	1,621,343 252,810 127,534 147,582 - 2,149,269 -

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SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE BOARD OF DIRECTORS:

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Clive Brown Chairman

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LAI Ah Hong Managing Director

Dated: 17 September 2013

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INCOME STATEMENT

For the year ended 30 June 2013

Notes Continuing operations Sale of goods Rendering of services Other revenue Revenue 5(a) Cost of sales 5(b) Gross profit Other income 5(c) Other expenses 5(d) Finance costs 5(e) Change in fair value of biological assets Profit before income tax Income tax expense 6 Net profit for the period	Consolidated 2013 2012 $’000s $’000s 145,164 126,858 8,623 9,459 799 852
	154,586 137,169 (102,822) (87,272)
	51,764 49,897 801 1,115 (15,988) (13,940) (1,048) (1,511) (1,021) (1,059)
	34,508 34,502 (10,322) (11,168)
	24,186 23,334

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STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 June 2013

Profit for the year Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign operations Other comprehensive income, net of tax Total comprehensive income for the year, net of tax	Consolidated 2013 2012 $’000s $’000s 24,186 23,334
	5,037 (324)
	5,037 (324)
	29,223 23,010

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STATEMENT OF FINANCIAL POSITION

As at 30 June 2013

Consolidated

Notes	2013 $’000s 2012 $’000s
CURRENT ASSETS Cash and cash equivalents 22(b) Trade and other receivables 8 Inventories 9 Income tax receivable Other 10 TOTAL CURRENT ASSETS NON-CURRENT ASSETS Term Deposits 11 Property, plant and equipment 13 Goodwill 14 Biological assets 28 Deferred tax assets 6 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 15 Interest-bearing loans and borrowings 16 Income tax payable Provisions 17 TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Interest-bearing loans and borrowings 18 Deferred tax liabilities 6 Provisions 19 TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Equity attributable to equity holders of the parent Contributed equity 20 Retained earnings Reserves 21 Parent interests Non-controlling interests TOTAL EQUITY	39,606 34,232 22,994 28,524 9,918 12,106 - 121 2,768 1,211
	75,286 76,194
	14,855 13,015 51,526 45,003 7,158 7,158 11,231 11,135 7,831 6,549
	92,601 82,860
	167,887 159,054
	10,397 9,989 5,904 5,599 428 6,307 6,636 5,814
	23,365 27,709
	5,446 9,863 10,337 10,424 17,778 16,162
	33,561 36,449
	56,926 64,158
	110,961 94,896
	3,782 4,509 102,421 90,666 4,758 (279)
	110,961 94,896 - -
	110,961 94,896

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STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2013

Notes	Contributed equity Retained earnings Foreign currency translation reserve Share Option Reserve Total $’000s $’000s $’000s $’000s $’000s
CONSOLIDATED At 1 July 2012 Profit / (Loss) for the period Other comprehensive income Total comprehensive income for the period Transactions with owners in their capacity as owners: Buy back of shares 4 Dividend paid At 30 June 2013 At 1 July 2011 Profit / (Loss) for the period Other comprehensive income Total comprehensive income for the period Transactions with owners in their capacity as owners: Dividend paid At 30 June 2012	4,509 90,666 (736) 457 94,896
	- 24,186 - - 24,186 - - 5,037 - 5,037
	- 24,186 5,037 - 29,223 (727) (10,377) - - (11,104) - (2,054) - - (2,054)
	3,782 102,421 4,301 457 110,961
	4,509 70,071 (412) 457 74,625
	- 23,334 - - 23,334 - - (324) - (324)
	- 23,334 (324) - 23,010 - (2,739) - - (2,739)
	4,509 90,666 (736) 457 94,896

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CASH FLOW STATEMENT

For the year ended 30 June 2013

Notes	Consolidated 2013 $’000s 2012 $’000s
CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Finance costs paid Income tax paid NET CASH FLOWS FROM OPERATING ACTIVITIES 22(a) CASH FLOWS FROM INVESTING ACTIVITIES Net deposits in term deposit Payments for acquisition of property, plant and equipment NET CASH FLOWS USED IN INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Repayments of borrowings Finance lease principal paid Payment for buy back of shares Equity dividend paid NET CASH FLOWS USED IN FINANCING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of period Impact of foreign exchange CASH AND CASH EQUIVALENTS AT END OF PERIOD 22(b)	176,128 132,189 (123,893) (95,601) 799 438 (1,048) (908) (17,889) (7,640)
	34,097 28,478
	(1,840) (2,827) (11,387) (1,757)
	(13,227) (4,584)
	(3,936) (13,685) (175) (1,345) (11,104) - (2,054) (2,739)
	(17,269) (17,769)
	3,601 6,125 34,232 27,356 1,773 751
	39,606 34,232

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NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

1. CORPORATE INFORMATION

The financial report of Phosphate Resources Limited for the year ended 30 June 2013 was authorised for issue in accordance with a resolution of the directors on 17 September 2013.

Phosphate Resources Limited (the parent) is a company limited by shares and incorporated in Australia. The Group is a for profit entity and the nature of the operations and principal activities of the Group are described in the Directors' Report.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

The financial report is a general-purpose financial report which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The financial report has also been prepared on a historical cost basis except for derivatives and biological assets, which have been measured at fair value.

The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars (“$’000”), unless otherwise stated.

(a) Compliance with IFRS

The financial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS).

(b) New accounting standards and interpretations

(i) Changes in accounting policy and disclosures.

The accounting policies adopted are consistent with those of the previous financial year.

• 12 –

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(b) New accounting standards and interpretations (continued)

(ii) Accounting Standards and Interpretations issued but not yet effective. Australian Accounting Standards and interpretations that have recently been issued or amended but are not yet effective have not been adopted for the annual reporting period ended 30 June 2013. These are outlined in the table below:

Ref	Title	Summary	Application date of standard	Impact on Group financial report	Application date for Group
AASB 10	Consolidated Financial Statements	AASB 10 establishes a new control model that applies to all entities. It replaces parts of AASB 127_Consolidated and Separate Financial_ Statements_dealing with the accounting for consolidated financial statements and UIG-112 _Consolidation-Special Purpose Entities. The new control model broadens the situations when an entity is considered to be controlled by another entity and includes new guidance for applying the model to specific situations, including when acting as a manager may give control, the impact of potential voting rights and when holding less than a majority voting rights may give control. Consequential amendments were also made to this and other standards via AASB 2011-7 and AASB 2012-10.	1 January 2013	No material impact on group.	1 July 2013
AASB 11	Joint Arrangements	AASB 11 replaces AASB 131_Interests in Joint_ Ventures_and UIG-113_Jointly- controlled Entities - Non-monetary Contributions by Ventures. AASB 11 uses the principle of control in AASB 10 to define joint control, and therefore the determination of whether joint control exists may change. In addition it removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, accounting for a joint arrangement is dependent on the nature of the rights and obligations arising from the arrangement. Joint operations that give the venturers a right to the underlying assets and obligations themselves is accounted for by recognising the share of those assets and obligations. Joint ventures that give the venturers a right to the net assets is accounted for using the equity method. Consequential amendments were also made to this and other standards via AASB 2011-7, AASB 2010-10 and amendments to AASB 128.	1 January 2013	No material impact on group.	1 July 2013

• 13 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

Ref	Title	Summary	Application date of standard	Impact on Group financial report	Application date for Group
AASB 12	Disclosure of Interests in Other Entities	AASB 12 includes all disclosures relating to an entity's interests in subsidiaries, joint arrangements, associates and structured entities. New disclosures have been introduced about the judgments made by management to determine whether control exists, and to require summarised information about joint arrangements, associates, structured entities and subsidiaries with non-controlling interests.	1 January 2013	No material impact on group.	1 July 2013
AASB 13	Fair Value Measurement	AASB 13 establishes a single source of guidance for determining the fair value of assets and liabilities. AASB 13 does not change when an entity is required to use fair value, but rather, provides guidance on how to determine fair value when fair value is required or permitted. Application of this definition may result in different fair values being determined for the relevant assets. AASB 13 also expands the disclosure requirements for all assets or liabilities carried at fair value. This includes information about the assumptions made and the qualitative impact of those assumptions on the fair value determined. Consequential amendments were also made to other standards via AASB 2011-8.	1 January 2013	No material impact on group.	1 July 2013
AASB 119	Employee Benefits	The main change introduced by this standard is to revise the accounting for defined benefit plans. The amendment removes the options for accounting for the liability, and requires that the liabilities arising from such plans is recognised in full with actuarial gains and losses being recognised in other comprehensive income. It also revised the method of calculating the return on plan assets. The revised standard changes the definition of short-term employee benefits. The distinction between short-term and other long-term employee benefits is now based on whether the benefits are expected to be settled wholly within 12 months after the reporting date. Consequential amendments were also made to other standards via AASB 2011-10.	1 January 2013	No material impact on group.	1 July 2013

• 14 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

Ref	Title	Summary	Application date of standard	Impact on Group financial report	Application date for Group
AASB 2012- 2	Amendments to Australian Accounting Standards - Disclosures - Offsetting Financial Assets and Financial Liabilities	AASB 2012-2 principally amends AASB 7 _Financial Instruments: Disclosures_to require disclosure of the effect or potential effect of netting arrangements, including rights of set-off associated with the entity's recognised financial assets and recognised financial liabilities, on the entity's financial position, when all the offsetting criteria of AASB 132 are not met.	1 January 2013	No material impact on group.	1 July 2013
AASB 2012- 5	Amendments to Australian Accounting Standards arising from Annual Improvements 2009-2011 Cycle	AASB 2012-5 makes amendments resulting from the 2009-2011 Annual Improvements Cycle. The standard addresses a range of improvements, including the following: ► Repeat application of AASB 1 is permitted (AASB 1) Clarification of the comparative information requirements when an entity provides a third balance sheet (AASB 101_Presentation of_ Financial Statements).	1 January 2013	No material impact on group.	1 July 2013
AASB 2012- 9	Amendment to AASB 1048 arising from the withdrawal of Australian Interpretation 1039	AASB 2012-9 amends AASB 1048_Interpretation_ of Standards_to evidence the withdrawal of Australian Interpretation 1039_Substantive Enactment of Major Tax Bills in Australia.	1 January 2013	No material impact on group.	1 July 2013
AASB 2011- 4	Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements [AASB 124]	This amendment deletes from AASB 124 individual key management personnel disclosure requirements for disclosing entities that are not companies. It also removes the individual KMP disclosure requirements for all disclosing entities in relation to equity holdings, loans and other related party transactions.	1 July 2013	No material impact on group.	1 July 2013

• 15 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

Ref	Title	Summary	Application date of standard	Impact on Group financial report	Application date for Group
AASB 1053	Application of Tiers of Australian Accounting Standards	This standard establishes a differential financial reporting framework consisting of two tiers of reporting requirements for preparing general purpose financial statements: (a) Tier 1: Australian Accounting Standards (b) Tier 2: Australian Accounting Standards - Reduced Disclosure Requirements Tier 2 comprises the recognition, measurement and presentation requirements of Tier 1 and substantially reduced disclosures corresponding to those requirements. The following entities apply Tier 1 requirements in preparing general purpose financial statements: (a) For-profit entities in the private sector that have public accountability (as defined in this standard) (b) The Australian Government and State, Territory and Local governments The following entities apply either Tier 2 or Tier 1 requirements in preparing general purpose financial statements: (a) For-profit private sector entities that do not have public accountability (b) All not-for-profit private sector entities (c) Public sector entities other than the Australian Government and State, Territory and Local governments. Consequential amendments to other standards to implement the regime were introduced by AASB 2010-2, 2011-2, 2011-6, 2011-11, 2012-1, 2012-7 and 2012-11.	1 July 2013	No material impact on group.	1 July 2013
AASB 2012- 3	Amendments to Australian Accounting Standards - Offsetting Financial Assets and Financial Liabilities	AASB 2012-3 adds application guidance to AASB 132_Financial Instruments: Presentation_to address inconsistencies identified in applying some of the offsetting criteria of AASB 132, including clarifying the meaning of "currently has a legally enforceable right of set-off" and that some gross settlement systems may be considered equivalent to net settlement.	1 January 2014	The impact on the group has not yet been assessed	1 July 2014

• 16 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

Ref	Title	Summary	Application date of standard	Impact on Group financial report	Application date for Group
AASB 9	Financial Instruments	AASB 9 includes requirements for the classification and measurement of financial assets. It was further amended by AASB 2010-7 to reflect amendments to the accounting for financial liabilities. These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of AASB 139. The main changes are described below. (a) Financial assets that are debt instruments will be classified based on (1) the objective of the entity's business model for managing the financial assets; (2) the characteristics of the contractual cash flows. (b) Allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument. (c) Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities, or recognising the gains and losses on them, on different bases. (d) Where the fair value option is used for financial liabilities the change in fair value is to be accounted for as follows: ► The change attributable to changes in credit risk are presented in other comprehensive income (OCI) ► The remaining change is presented in profit or loss If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect of the changes in credit risk are also presented in profit or loss. Consequential amendments were also made to other standards as a result of AASB 9, introduced by AASB 2009-11 and superseded by AASB 2010-7 and 2010-10.	1 Jan 2015	The impact on the group has not yet been assessed	1 July 2015

The Group has not elected to early adopt any new standards or amendments that are issued but not yet effective.

• 17 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

(c) Basis of consolidation

The consolidated financial statements comprise the financial statements of Phosphate Resources Limited and its subsidiaries and as at and for the period ended 30 June each year (the Group). Interests in associates are equity accounted and are not part of the consolidated Group.

Subsidiaries are all those entities over which the Group has the power to govern the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether a group controls another entity.

The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. In preparing the consolidated financial statements, all intercompany balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends have been eliminated in full.

All controlled entities have a June financial year-end with the exception of the companies domiciled in China which have a December year-end.

Subsidiaries are fully consolidated from the date on which control is obtained by the Group and cease to be consolidated from the date on which control is transferred out of the Group.

Investments in subsidiaries held by Phosphate Resources Limited are accounted for at cost in the separate financial statements of the parent entity less any impairment charges. Dividends received from subsidiaries are recorded as a component of other revenues in the separate income statement of the parent entity, and do not impact the recorded cost of the investment. Upon receipt of dividend payments from subsidiaries, the parent will assess whether any indicators of impairment of the carrying value of the investment in the subsidiary exist. Where such indicators exist, to the extent that the carrying value of the investment exceeds its recoverable amount, an impairment loss is recognised.

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. The acquisition method of accounting involves recognising at acquisition date, separately from goodwill, the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. The identifiable assets acquired and the liabilities assumed are measured at their acquisition date fair values.

The difference between the above items and the fair value of the consideration (including the fair value of any pre-existing investment in the acquiree) is goodwill or a discount on acquisition.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquire are assigned to those units.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Non-controlling interests are allocated their share of net profit after tax in the statement of comprehensive income and are presented within equity in the consolidated statement of financial position, separately from the equity of the owners of the parent.

Losses are attributed to the non-controlling interest even if that results in a deficit balance. A change in the ownership interest of a subsidiary that does not result in a loss of control, is accounted for as an equity transaction.

• 18 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

(d) Income tax

The charge for current income tax expense is based on the profit for the year adjusted for any nonassessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

(e) Inventories

Inventories are measured at the lower of cost and net realisable value. The cost of mining stocks includes direct materials, direct labour, transportation costs and variable and fixed overhead costs relating to mining activities. Overheads are applied on the basis of normal operating capacity. Costs are assigned on the basis of weighted average costs.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

(f) Property, plant and equipment

Each class of property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses.

Property

Freehold land and buildings are measured at cost less accumulated depreciation on buildings.

Plant and equipment

Plant and equipment are measured on the cost basis less accumulated depreciation and any impairment losses.

The carrying amount of plant and equipment is reviewed annually by the directors to ensure it is not in excess of the recoverable amount from these assets (refer to note 2(l) for accounting policy on recoverable amount).

The cost of fixed assets constructed within the economic entity includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.

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 the income statement during the financial period in which they are incurred.

• 19 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

Depreciation

The depreciable amount of all fixed assets including building and capitalised lease assets, but excluding freehold land are depreciated on a straight line or diminishing balance basis over their useful lives to the economic entity commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. The depreciation rates used for each class of depreciation assets are:

iation assets are:
Class of Fixed Asset	Depreciation Rate
Leasehold and strata title properties	Shorter of the
	lease and 2%
Plant and equipment under lease:
- the shorter of the lease term and life span	20 – 30%
Plant and equipment	13 – 40%
Mine properties	Life of mine

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the income statement.

(g) Mining tenements and exploration expenditure

Costs incurred during exploration and evaluation activities related to an area of interest are accumulated at cost.

Such costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area of interest, or alternatively its sale, or where activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active operations are continuing.

Accumulated costs in relation to abandoned areas of interest are written off in full in the year in which the decision to abandon the area is made.

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

(h) Mine properties

Costs incurred prior to the start up of operations or mining assets acquired are accumulated at cost. Such costs are only carried forward to the extent that they are expected to be recouped through the successful exploitation of the known reserves.

Impairment

The carrying amount of mine properties is reviewed annually by the directors to ensure it is not in excess of the recoverable amount of these assets (refer to note 2(l) for accounting policy on recoverable amount).

• 20 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

(i) Restoration

Estimated rehabilitation expenditure is recognised as a provision when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

If the effect of the time value of money is material, the amounts are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

The amortisation or ‘unwinding’ of the discount applied in establishing the net present value of provision is charged to the income statement in each accounting period, and is disclosed as a financing cost.

Other changes in the measurement of an existing restoration obligation that result from changes in the estimated timing or amount of future costs, or a change in the discount rate, are recognised as an adjustment to the restoration asset.

(j) Leases

Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership that are transferred to entities in the economic entity are classified as finance leases.

Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.

Leased assets are depreciated on a straight-line basis over their estimated useful lives where it is likely that the economic entity will obtain ownership of the asset or over the term of the lease.

Lease payments of operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred.

Lease incentives under operating leases are recognised as a liability and amortised on a straightline basis over the life of the lease term.

(k) Derivative financial instruments

Derivative financial instruments are used by the Group to provide an economic hedge of exposures to exchange rates. The consolidated entity does not apply hedge accounting and accordingly all fair value movements on derivative financial instruments are recognised in the Income Statement.

Derivative financial instruments are stated at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. Derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative. The resulting gain or loss is recognised in profit or loss immediately.

The fair values of forward currency contracts are calculated by reference to current forward exchange rates for contracts with similar maturity profiles.

(l) Impairment of non-financial assets other than goodwill

At each reporting date, the company assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Company makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.

Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset, unless the asset’s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those

• 21 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

from other assets or groups of assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

In assessing 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.

(m) Intangibles

Goodwill

Goodwill is initially recorded at the amount by which the purchase price for a business or for an ownership interest in a controlled entity exceeds the fair value attributed to the identifiable net assets at the date of acquisition.

Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.

Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Impairment losses recognised for goodwill are not subsequently reversed.

Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Research and Development

Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised only when technical feasibility studies indicate that the project will deliver future economic benefits and these benefits can be measured reliably.

(n) Foreign currency transactions and balances

Functional and presentation currency

The functional currency of each of the group’s entities is determined by reference to the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in the income statement.

Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the income statement.

• 22 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

Group companies

The financial results and position of foreign operations whose functional currency is different from the group’s presentation currency are translated as follows:

• Assets and liabilities are translated at year-end exchange rates prevailing at that reporting date.

• Income and expenses are translated at average exchange rates for the period.

Exchange differences arising on translation of foreign operations are transferred directly to the group’s foreign currency translation reserve in the balance sheet. These differences are recognised in the income statement in the period in which the operation is disposed.

(o) Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with banks, other shortterm highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the balance sheet.

(p) Trade and other receivables

Trade receivables, which generally have 30 to 90 day terms, are carried at nominal amounts due less an allowance for any uncollectible amounts. An allowance for doubtful debts is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written-off when identified.

Receivables from related parties are recognised and carried at the nominal amount due. An estimate for doubtful debts is determined based on the net assets of the related party.

(q) Trade and other payables

Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services.

(r) Segment reporting

An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), whose operating results are regularly reviewed by the entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available. This includes start up operations which are yet to earn revenues. Management will also consider other factors in determining operating segments such as the existence of a line manager and the level of segment information presented to the board of directors.

Operating segments have been identified based on the information provided to the chief operating decision makers — being the executive management team.

The group aggregates two or more operating segments when they have similar economic characteristics, and

the segments are similar in each of the following respects:

• Nature of the products and services

• Nature of the production processes

• Type or class of customer for the products and services

• Methods used to distribute the products or provide the services, and if applicable

• Nature of the regulatory environment

• 23 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

Operating segments that meet the quantitative criteria as prescribed by AASB 8 are reported separately.

However, an operating segment that does not meet the quantitative criteria is still reported separately where information about the segment would be useful to users of the financial statements.

Information about other business activities and operating segments that are below the quantitative criteria are combined and disclosed in a separate category for “all other segments”.

(s) Business Combination

Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination shall be measured at fair value, which shall be calculated as the sum of the acquisition date fair values of the assets transferred by the acquirer, the liabilities incurred by the acquirer to former owners of the acquiree and the equity issued by the acquirer, and the amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree's identifiable net assets.

Acquisition-related costs are expensed as incurred, and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the Group’s operating or accounting policies and other pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with AASB 139 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity.

(t) Revenue

Sale of goods

Revenue is recognised when there has been a passing of the significant risks and rewards of ownership, which means the following:

• The product is in a form suitable for delivery and no further processing is required by or on behalf of the consolidated entity;

• The quantity and quality of the product can be determined with reasonable accuracy;

• The product has been despatched to the customer and is no longer under the physical control of the consolidated entity;

• The selling price can be measured reliably;

• It is probable that the economic benefits associated with the transaction will flow to the consolidated entity; and

• The costs incurred, or expected to be incurred, in respect of the transaction can be measured reliably.

Interest

Revenue is recognised as the Interest accrues using the effective interest rate method (which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument to the net carrying amount of the financial asset).

Rendering of services

Revenue from a contract to provide services is recognised by reference to the stage of completion of the contract.

• 24 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

Dividends

Revenue is recognised when the right to receive a dividend has been established.

(u) Government grants

Government grants are recognised when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with.

When the grant relates to an expense item, it is recognised as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate.

When the grant relates to an asset, the fair value is credited to a deferred income account and is released to the income statement over the expected useful life of the relevant asset by equal annual instalments.

(v) Employee benefits

Provision is made for the company’s liability for employee benefits arising from services rendered by employees up until balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.

(w) Provisions

Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

(x) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare 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 income during the period in which they are incurred.

(y) Plantation development costs

Costs incurred on land clearing are capitalised as plantation development costs and is amoritsed over the economic useful life of the asset (25 years). Costs on the concession lease with a term of 60 years are capitalised and amortised over the remaining term of lease.

(z) Biological assets

Biological assets which include mature and immature oil palm plantations are stated at fair value less estimated point of sale costs except when the fair value cannot be measured reliably. In this instance, the biological assets are measured at cost less any accumulated depreciation and any accumulated impairment losses until such time as its fair value can be reliably measured.

Fresh fruit bunches (which are subsequently milled to become palm oil) is the harvested product of a biological asset and is measured at its fair value less estimated point of sale costs at the point of harvest.

Net movement in fair value less estimated point of sale costs of biological assets are included in the statement of comprehensive income in the year they arise.

• 25 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

JUDGEMENTS IN APPLYING ACCOUNTING POLICIES AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Significant accounting judgements

In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements.

Assessment of mine life on Christmas Island

The Financial statements have been prepared on the basis that the resource supports continued operations for at least 5 years on the current market parameters and expectations.

Determination of mineral resources and ore reserves

The Group’s policy for estimating its mineral resources and ore reserves requires that the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2004 (the ‘JORC code’) be used as a minimum standard. The information on mineral resources and ore reserves were prepared by or under the supervision of Competent Persons as defined in the JORC code. The amounts presented are based on the mineral resources and ore reserves determined under the JORC code.

There are numerous uncertainties inherent in estimating mineral resources and ore reserves and assumptions that are valid at the time of estimation may change significantly when new information becomes available.

Changes in the forecast prices of commodities, exchange rates or production costs may change the economic status of resources and may, ultimately, result in the resources being restated. Such changes in resources could impact on depreciation and amortisation rates, asset carrying values and provisions for decommissioning and restoration.

The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are:

Impairment of property, plant and equipment

Property, plant and equipment is reviewed for impairment if there is any indication that the carrying amount may not be recoverable. Where a review for impairment is conducted, the recoverable amount is assessed by reference to the higher of ‘value in use’ (being the net present value of expected future cash flows of the relevant cash generating unit) and ‘fair value less costs to sell’.

In determining value in use, future cash flows are based on:

• Estimates of the quantities of ore reserves and mineral resources;

• Future production levels;

• Future commodity prices and foreign exchange rates; and

• Future cash costs of production and capital expenditure.

Variations to the expected future cash flows, and the timing thereof, could result in significant changes to any impairment losses recognised, if any, which could in turn impact future financial results.

Provisions for decommissioning and restoration costs

Decommissioning and restoration costs are a normal consequence of mining and the majority of this expenditure is incurred at the end of a mine’s life. In determining an appropriate level of provision consideration is given to the expected future costs to be incurred, the timing of these expected future costs (largely dependent on the life of the mine), the appropriateness of the discount rate and the estimated future level of inflation.

The ultimate cost of decommissioning and restoration is uncertain and costs can vary in response to many factors including changes to the relevant legal requirements or the emergence of new restoration techniques. The expected timing of expenditure can also change, for example in response to changes in reserves or to production rates.

• 26 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

Changes to any of the estimates could result in significant changes to the level of provisioning required, which would in turn impact future financial results.

Fair value of biological assets

The fair value of the oil palm plantations is estimated by reference to independent professional valuations using the discounted cash flows of the underlying biological assets. The expected cash flows from the whole life cycle of the oil palm plantations is determined using the market price and the estimated yield of the agricultural produce, being FFB, net of maintenance and harvesting costs and any costs required to bring the oil palm plantations to maturity. The estimated yield of the oil palm plantations is dependent on the age of the oil palm trees, location of the plantations, soil type and infrastructure. The market price of FFB is largely dependent on the prevailing market prices of crude palm oil and palm kernel.

3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s principal financial instruments comprise receivables, payables, finance leases, cash and short-term deposits, long-term deposits, interest bearing loans and borrowings and foreign exchange derivatives.

Market, liquidity and credit risk (including foreign exchange, commodity price and interest rate risk) arise in the normal course of the Group’s business.

The Group manages its exposure to key financial risks, including interest rate, currency and commodity risk in accordance with the Group's risk management procedures. The overall objective of these procedures is to:

• Ensure that net cash flows are sufficient to meet all financial commitments as and when they fall due.

• Support the delivery of the Group's financial targets whilst protecting future financial security.

• Minimise the potential adverse effects resulting from volatility on financial markets.

The Group continually monitors its forecast financial position against these criteria.

It is, and has been throughout the period under review, Group policy that no speculative trading in financial instruments be undertaken.

Risk Exposures and Responses

a) Credit risk

Credit risk is the risk that a contracting entity will not complete its obligation under a financial instrument that will result in a financial loss to the Group. The carrying amount of financial assets represents the maximum credit exposure.

Financial instruments that potentially subject the consolidated entity to concentrations of credit risk consist principally of cash deposits and receivables. The Group places its cash deposits and derivatives with high credit-quality financial institutions. Receivables balances are monitored on an ongoing basis with the results that the Parent’s and Group’s exposure to bad debts is not significant.

There are no significant concentrations of credit risk within the Group.

• 27 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

b) Market risk

i) Interest rate risk

The Group’s exposure to market interest rates relates primarily to the Group’s long term debt obligations. Interest rate risk on cash and short term deposits is not considered to be a material risk due to the short term nature of these financial instruments.

The interest rates for term deposits are fixed and there is no material risk for interest bearing assets. There is no other financial asset or liability bearing interest rate risk except for interest bearing loans and borrowings, the sensitivity of which is disclosed below.

The following sensitivity analysis is based on the interest rate risk exposures in existence at the reporting date:

At 30 June 2013, if interest rates had moved, as illustrated in the table below, with all other variables held constant, post tax profit and other comprehensive income would have been affected as follows:

			Other comprehensive	income
	Profit higher/(lower)		higher/(lower)
	2013	2012	2013	2012
	$000	$000	$000	$000
1% (100 basis points)	431	318	431	318
-1% (100 basis points)	(431)	(318)	(431)	(318)

Reasonable possible movements in interest rates were determined based on the Group’s mix of debt in Australia and foreign countries, relationship with financial institutions and review of last two years’ historical movements and economic forecaster’s expectations.

c) Liquidity risk

The Group’s liquidity position is managed to ensure that sufficient funds are available to meet its financial commitments in a timely and cost effective manner.

Management monitors the Group’s liquidity reserve on the basis of expected cash flow. The table below reflects a balanced view of cash inflows and outflows and shows the implied risk based on those values. Trade payables and other financial liabilities originate from the financing of assets used in the Group’s ongoing operations. These assets are considered in the Group's overall liquidity risk.

Management continually reviews the Group liquidity position including cash flow forecasts to determine the forecast liquidity position and maintain appropriate liquidity levels.

• 28 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

c) Liquidity risk (continued)

Maturity analysis of financial assets and liabilities based on undiscounted contractual cash flows

Consolidated

Year ended 30 June	≤6 months	6-12	1-5 years	>5 years	Total
2013		months
	$’000	$’000	$’000	$’000	$’000
Financial assets
Cash	39,606	-	-	-	39,606
Trade and other
receivables	22,994	-	-	-	22,994
Term deposits	14,855	-	-	-	14,855
Financial liabilities
Non-derivatives
Trade and other
payables	8,948	-	-	-	8,948
Interest bearing loans
and borrowings	356	5,717	5,277	-	11,350
Derivatives
Foreign exchange
contracts (gross settled)
- (Inflow)	(16,756)	(2,637)			(19,393)
- Outflow	18,151	2,691			20,842
Net foreign exchange
contracts	1,395	54			1,449
Year ended 30 June	≤6 months	6-12	1-5 years	>5 years	Total
2012		months
	$’000	$’000	$’000	$’000	$’000
Financial assets
Cash	34,232	-	-	-	34,232
Trade and other
receivables	28,524	-	-	-	28,524
Term deposits	-	13,015	-	-	13,015
Financial liabilities
Non-derivatives
Trade and other
payables	9,989	-	-	-	9,989
Interest bearing loans
and borrowings	3,039	3,013	10,290	-	16,342
Derivatives
Foreign exchange
contracts (gross settled)
- (Inflow)	(12,389)	(5,316)			(17,705)
- Outflow	12,148	5,173			17,321
Net foreign exchange
contracts	(241)	(143)			(384)

• 29 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

d) Derivative instruments

The Group’s future revenues are exposed to movements in foreign exchange rates, particularly the US dollar/Australian dollar rate. The Group may from time to time enter into foreign exchange derivative instruments to manage this exposure.

The Group has, as outlined in note 15, forward currency contracts designated as held for trading that are subject to fair value movements through profit or loss as foreign exchange rates move.

At 30 June 2013, had the Australian Dollar moved, as illustrated in the table below, with all other variables held constant, post-tax profit and equity would have been affected as follows:

Judgements of reasonably	Post tax	profit	Equity
possible movements:	Higher/Lower		Higher/Lower
	2013	2012	2013	2012
	$’000s	$’000s	$’000s	$’000s
Consolidated
AUD/USD + 10%	(1,910)	(1,707)	(1,910)	(1,707)
AUD/USD - 10%	1,706	1,552	1,706	1,552
Parent
AUD/USD + 10%	(1,901)	(1,707)	(1,910)	(1,707)
AUD/USD - 10%	1,706	1,552	1,706	1,552

Management believe the balance date risk exposures are representative of the risk exposure inherent in the financial instruments.

e) Fair values

The Directors have performed a review of the financial assets and liabilities as at 30 June 2013 and have concluded that the fair value of those assets and liabilities are not materially different to book values. The methods and assumptions used to estimate the fair value of financial instruments were:

• Cash - The carrying amount is fair value due to the liquid nature of these assets.

• • Receivables/payables - due to the short term nature of these financial rights and obligations, and/or market interest received/paid, their carrying values are estimated to represent their fair values.

• Derivatives - The fair values of forward currency contracts are calculated by reference to current forward exchange rates for contracts with similar maturity profiles.

• Finance lease liability – The fair value is the present value of minimum lease payments.

• • Bank loan – All the bank loans of the Group are interest bearing with floating interest rates which move in accordance with the market interest rates. Therefore the fair value of the bank loans approximates their carrying value.

• 30 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

4. SHARE BUY-BACK

During the year the Company bought back 555,200 shares at $20 per share. This was done by way of an equal access share buy-back that was open to all eligible shareholders on an equal basis. On the 17th April the Company invited eligible shareholders to participate in the buy back and offered to buy-back a maximum aggregate number of 684,702 shares, representing approximately 20% of the Company’s issued share capital as at that date.

The Company received offers to buy back 555,200 shares from eligible shareholders. On 12 June 2013, the company bought back these shares at $20 per share resulting in a payment to shareholders of $11.1 million. The buy-back price of $20, comprised of a capital return of $1.31 (amounting to $727,312) and the balance of purchase of $18.69 (amounting to $10,376,688) issued for tax purposes on fully franked basis.

As a result of the share buy-back the Company’s number of issued shares has reduced to 2,868,307 from 3,423,507 shares prior to the share buy back.

• 31 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

Consolidated

2013 2012 $’000s $’000s

5. REVENUES AND EXPENSES

(a) Revenue Sale of goods Phosphate sales Oil sales Palm Oil product sales Rendering of services Stevedoring Facilities management Other Other revenue Finance revenue – interest (b) Cost of sales Cost of production: Production costs Royalties Insurance Shipping and marketing costs: Shipping charges Port charges Levy Commission Depreciation: Plant and equipment Total cost of sales	101,556 92,626 833 735 42,775 33,497
	145,164 126,858 1,578 1,749 6,741 7,232 304 478 799 852
	154,586 137,169
	75,819 62,246 1,554 1,420 1,863 1,780
	79,236 65,446
	16,195 15,302 2,272 1,615 1,354 1,258 - 141
	19,821 18,316
	3,765 3,510
	102,822 87,272

• 32 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

Consolidated

5. REVENUES AND EXPENSES (CONTINUED) (c) Other income Net gain/(loss) on disposal of assets Foreign exchange gain (d) Other expenses Administration Bad debt expense Redundancy expense Allowance for inventory obsolescence Depreciation Foreign exchange loss Impairment of goodwill	2013 $’000s 2012 $’000s
	15 6 786 1,109
	801 1,115
	13,363 12,418 1,739 1 738 923 84 25 53 34 11 117 - 422
	15,988 13,940

An outstanding amount is owed by Fertiliser Futures Ltd for the acquisition of the company’s interest in Phosphate Resources (HauLi) Ltd. The payment of remaining consideration by Fertiliser Futures Ltd was based on the ability of Fertiliser Futures Ltd to consolidate its mining license with that of an adjoining mine. So far Fertiliser Futures Ltd has not been able to reach agreement with the other mine owner on the terms of a consolidation and has been prevented from mining by the Chinese Government until the consolidation of these mines is finalised. Based on these facts the Company’s management have assessed that the receipt of the remaining consideration seems unlikely and consequently have written off the amount owing as a bad debt expense of $1.739 million.

(e) Finance costs Interest expense Accretion on demolition provision Finance lease	448 904 600 600 - 7
	1,048 1,511

• 33 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

6. INCOME TAX The major components of income tax are: Income statement Current income tax Current income tax charge Adjustments in respect of current income tax of previous years Deferred income tax Relating to origination and reversal of temporary differences Adjustments in respect of deferred tax of previous years Income tax expense reported in the income statement A reconciliation between tax expense and the product of accounting profit before income tax multiplied by the Group’s applicable income tax rate is as follows: Accounting profit before income tax At the Group’s statutory income tax rate of 30% (2012: 30%) Income/expenditure not allowable for income tax purposes: Add: - Adjustments in respect of current income tax of previous years - Expenditure not allowable for income tax purposes - Prior year adjustment in respect of temporary difference - Deferred tax asset not brought to account - Difference in global tax rates Aggregate income tax expense	Consolidated 2013 $’000s 2012 $’000s
	11,745 13.461 (54) 11 (1,369) (2,611) - 307
	10,322 11,168
	34,508 34,502
	10,352 10,351 (54) 11 47 618 - 307 126 131 (149) (250)
	10,322 11,168

• 34 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

6. INCOME TAX (CONTINUED) Deferred income tax Deferred income tax at 30 June relates to the following: CONSOLIDATED Deferred tax liabilities Consumables Accelerated depreciation – fixed assets Forward currency contracts Gross deferred income tax liabilities Deferred tax assets Provisions and accruals Depreciation – fixed assets Forward currency contracts Receivables Gross deferred income tax assets Deferred tax (income)/expense	Balance Sheet 2013 $’000s 2012 $’000s	Income Statement 2013 $’000s 2012 $’000s
	(1,207) (1,624) (9,130) (8,685) - (115)	(417) 272 445 (405) (115) (1,477) (338) (640) (278) (132) (435) 78 (231)
	(10,337) (10,424)
	5,412 5,074 1,625 1,347 435 - 359 128
	7,831 6,549
		(1,369) (2,304)

This deferred tax asset will only be obtained if:

• (a) future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised;

(b) the conditions for deductibility imposed by tax legislation continue to be complied with; and (c) no changes in tax legislation adversely affect the consolidation entity in realising the benefit.

The parent entity has made non-current provisions for demolition of $8,704,000 (2012: $8,104,000) and employee redundancies of $8,052,000 (2012: $7,282,000). The future income tax benefit relating to the provision for restoration and demolition and the provision for employee redundancy is not probable of being completely recovered, as it is believed that when the provisions are required the parent entity may not have future taxable income to utilise the full tax benefit.

Phosphate Resources Limited and its wholly owned controlled entities have not entered into a tax consolidation agreement.

• 35 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

Consolidated

DIVIDENDS Dividends proposed  Franked dividend Dividends paid or provided for during the year Current year interim  Franked dividend Previous year final  Franked dividend Franking credits balance The amount of franking credits available for the subsequent financial year are:  franking account balance as at the beginning of the financial year at 30% (2012: 30%)  franking credits arose from the payment to ATO  franking credits reduced due to payment of dividends	2013 $’000s 2012 $’000s
	- -
	- 1,369 2,054 1,370
	2,054 2,739
	51,539 45,073 17,889 7,640 (5,327) (1,174)
	64,101 51,539

7. DIVIDENDS

(a) Dividends proposed

(b) Dividends paid or provided for during the year

(c) Franking credits balance

The tax rate at which paid dividends have or will be franked is 30% (2012: 30%).

• 36 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

8. TRADE AND OTHER RECEIVABLES (CURRENT) Trade debtors Other debtors	Consolidated 2013 $’000s 2012 $’000s
	22,977 28,514 17 10
	22,994 28,524

Trade debtors are non-interest bearing and are generally on 30-90 day terms. As at 30 June 2013, no trade receivables were considered impaired (2012: nil).

9. INVENTORIES (CURRENT) Consumable materials and stores at cost Finished goods at cost 10. OTHER (CURRENT) Prepayments Forward currency contracts – held for trading(a) 11. TERM DEPOSITS (NON-CURRENT) Trust fund term deposit Demolition and restoration bonds Other term deposits	3,249 4,726 6,669 7,380
	9,918 12,106
	2,768 827 - 384
	2,768 1,211
	6,091 5,235 2,326 2,186 6,438 5,594
	14,855 13,015

Under the terms of the current Workplace Agreement between the Union of Christmas Island Workers and Phosphate Resources Limited a trust fund term deposit to meet employee entitlements is maintained. This trust fund may only be used to meet employee entitlements but may be drawn down as they arise. It is supplemented by a minimum amount of $500,000 annually. The trust fund term deposit currently stands at $6,091,000 (2012: $5,235,000). The interest earned on the term deposit of $356,513 (2012: $288,675) has been added to the term deposit.

Other term deposits have varying maturities all greater than 12 months and earn interest at commercial rates.

• 37 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

12. INTERESTS IN SUBSIDIARIES

The financial statements include the financial statements of the Group and the subsidiaries listed in the following table:

Name Country of Incorporation Percentage of equity interest held by the consolidated entity 2013 2012 % %	Investment 2013 2012 $’000s $’000s
- CI Maintenance Services Pty Ltd (ii) Australia 100 100 - Phosphate Resources Properties Pty Ltd (ii) Australia 100 100 - Indian Ocean Stevedores Pty Ltd (ii) Australia 100 100 - Phosphate Resources (Singapore) Pte Ltd (i) Singapore 100 100 - Indian Ocean Oil Company Pty Ltd (ii) Australia 100 100 - Indian Ocean Mechanical Services Pty Ltd (ii) (iii) Australia 100 100 - Phosphate Resources Laos Pty Ltd (ii) (iii) Australia 100 100 - Phosphate Resources (China) Ltd (i) Hong Kong 100 100 - Phosphate Resources Plantations Pty Ltd (ii) (iii) Australia 100 100 - Phosphate Resources (Malaysia) Sdn Bhd (i) (ii) Malaysia 100 100 - Cheekah-Kemayan Plantation Sdn Bhd (i) Malaysia 100 100	- - - - 901 901 504 504 - - - - - - 1 1 - - - - 48,296 48,296
	49,702 49,702

(i) Overseas controlled entities carry on business in the country of incorporation.

(ii) These companies meet the definition of a small proprietary limited company as set out in the Corporations Act 2001. Ernst & Young has not issued separate audit opinions in respect of these entities.

(iii) Dormant company.

• 38 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

13. PROPERTY, PLANT AND EQUIPMENT Leasehold Land At cost Accumulated depreciation Leasehold buildings At cost Accumulated depreciation Land and buildings At cost Accumulated depreciation Strata title properties At cost Accumulated depreciation Plant and equipment At cost Accumulated depreciation and impairment Plant and equipment under lease At cost Accumulated depreciation Construction in progress Total property, plant and equipment At cost Accumulated depreciation and impairment Net carrying amount	Consolidated 2013 2012 $000’s $’000s
	31,665 26,645 (3,415) (471)
	28,250 26,174
	5,432 4,869 (2,243) (2,093)
	3,189 2,776
	383 383 (146) (146)
	237 237
	1,341 1,215 (264) (227)
	1,077 988
	66,795 55,897 (50,399) (44,941)
	16,396 10,956
	1,359 4,079 (355) (2,576)
	1,004 1,503
	1,374 2,369
	108,348 95,457 (56,822) (50,454)
	51,526 45,003

(a) Assets pledged as security:

Included in all balances above are assets of Phosphate Resources Limited and, Phosphate Resources Properties Pty Ltd over which first and second mortgages have been granted as security. The terms of the mortgages preclude the assets being sold or being used as security for further mortgages without the permission of the first mortgage holder. The shares in Cheekah-Kemayan Plantation Sdn Bhd are pledged as a security on a USD bank loan and the assets of Cheekah-Kemayan Plantation Sdn Bhd are pledged as a security over a bank overdraft facility. The net book values of the assets pledged are $54,998,000 (2012: $56,138,000).

• 39 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

13. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

(b) Reconciliations

Reconciliations of the carrying amounts of property, plant and equipment at the beginning and end of the current financial year.

Leasehold Land Carrying amount at beginning Depreciation expense Foreign exchange difference Leasehold buildings Carrying amount at beginning Transfer from construction in progress Additions Disposals Depreciation expense Foreign exchange difference Land and buildings Carrying amount at beginning Strata title properties Carrying amount at beginning Depreciation expense Foreign exchange difference Plant and equipment Carrying amount at beginning Transfer from construction in progress Additions Transfer from/(to) equipment under lease Disposals Depreciation expense Foreign exchange difference Plant and equipment under lease Carrying amount at beginning Additions Transfer from construction in progress Transfer (to)/from plant and equipment Depreciation expense Foreign exchange difference	Consolidated 2013 2012 $’000s $’000s
	26,174 26,767 (549) (399) 2,625 (194)
	28,250 26,174
	2,776 2,865 30 91 217 12 (1) - (102) (183) 269 (9)
	3,189 2,776
	237 237
	237 237
	988 980 (13) (12) 102 20
	1,077 988
	10,956 11,130 6,054 1,549 436 291 1,341 - (10) (13) (3,019) (1,925) 638 (76)
	16,396 10,956
	1,503 2,413 - 30 965 (1,341) - (134) (937) 11 (3)
	1,004 1,503

• 40 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

(b) Reconciliations (continued) Construction in progress Carrying amount at beginning Additions Transferred to plant and equipment 14. GOODWILL Carrying amount at beginning Impairment Impact of foreign exchange	Consolidated 2013 2012 $’000s $’000s
	2,369 1,201 6,054 2,809 (7,049) (1,641)
	1,374 2,369
	7,158 7,635 - (422) - (55)
	7,158 7,158

Goodwill acquired through business combination has been allocated to the Farming CGU, which is also a reporting and operating segment for impairment testing. The net carrying amount of Goodwill at 30 June 2013 was 7,158,000 (2012: 7,158,000) which includes an accumulated impairment charge of Nil during the year (2012: 422,000).

The recoverable amount of the Farming CGU has been determined using a value in use calculation using cash flow projections prepared as part of an external valuation of the plantation. The pre-tax discount rates applied to cash flow projections is 11% (2012: 11%) and the cash flows are forecast for 60 years using a Fresh Fruit Bunch (FFB) price of RM604 (2012: RM726) and an annual inflation rate of 1,6% (2012: 3.2%).

• 41 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

15. TRADE AND OTHER PAYABLES (CURRENT) Trade Creditors(a) Foreign exchange contracts(b)	Consolidated 2013 2012 $’000s $’000s
	8,948 9,989 1,449 -
	10,397 9,989

• (a) Trade creditors are non-interest bearing and are normally settled on 30-60 day terms.

• (b) Forward currency contracts – held for trading

The Group has entered into forward exchange contracts which are economic hedges but do not satisfy the requirements for hedge accounting.

	Notional amounts	Notional amounts	Average	exchange rate
		$AUD
	2013	2012	2013	2012
	$’000s	$’000s
Sell US$/buy Australian $
Consolidated
Sell US$ maturity 0 to 12 months	20,842	17,321	0.9836	0.9815

These contracts are fair valued by comparing the contracted rate to the market rates for contracts with the same length of maturity. All movements in fair value are recognised in profit or loss in the period they occur. The net fair value losses on foreign currency derivatives during the year were $1.833 million for the Group (2012: gain of $0.093 million).

The group uses various methods in estimating the fair value of a financial instrument. The methods comprise:

Level 1: the fair value is calculated using quoted price in active markets; Level 2: the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the assets or liability, either directly (as price) or indirectly (derived from prices); and Level 3 : the fair value is estimated using inputs for the assets or liability that are not based on observable market data.

Forward currency contracts – held for trading	Level 1 ‘000 Level 2 ‘000 Level 3 ‘000 Total ‘000 - (1,449) - (1,449)
	- (1,449) - (1,449)

Transfer between categories:

There were no transfers between level 1 and level 2 during the year.

• 42 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

16. INTEREST-BEARING LOANS AND BORROWINGS (CURRENT)

Notes Bank loan 16 (a),(b), (c),(d) Lease liability 27(a)	Consolidated 2013 2012 $’000s $’000s
	5,391 4,906 513 693
	5,904 5,599

(a) Interest rate risk and liquidity risk

Details regarding interest rate risk and liquidity risk are disclosed in Note 3.

(b) Fair value

The carrying amount of the borrowings approximates their fair value as the borrowings are at floating interest rates which move in accordance with market rates.

(c) Defaults and breaches

During the current there were no defaults or breaches on any of the loans.

(d) Financing facilities available

At reporting date, the following financing facilities had been negotiated and were available :

Total facilities Facilities utilised at reporting date Facility unused at reporting date 17. PROVISIONS (CURRENT) Employee entitlements 18. INTEREST-BEARING LOANS AND BORROWINGS (NON-CURRENT) Bank loan 16 (a),(b), (c),(d) Lease liabilities 27(a) 19. PROVISIONS (NON-CURRENT) Redundancy (a) Employee entitlements Decommissioning and restoration (b)	11,282 15,219 (10,782) (14,719)
	500 500
	6,636 5,814
	5,391 9,813 55 50
	5,446 9,863
	8,052 7,282 1,022 776
	9,074 8,058 8,704 8,104
	17,778 16,162

• 43 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

(a) Provision for redundancy

The amounts employees are entitled to receive if made redundant in accordance with their employment agreements are fully provided. The redundancy provision was increased by a net amount of $770,000 during the year ended 30 June 2013 (2012: $783,000).

(b) Provision for decommissioning and restoration

Based on the Mining Lease Agreement between the Commonwealth Government and Phosphate Resources Limited a provision for decommissioning and restoration has been recognised for costs associated with:

• Demolition of all improvements specified for the removal of all debris resulting from demolition, removal of plant and equipment and leaving the leased land in a safe, clean and tidy condition at the expiry of the lease.

Estimates of the decommissioning and restoration obligations are based on anticipated technology and legal requirements and future costs, which have been discounted to their present value. In determining the decommissioning and restoration provision, the entity has assumed no significant changes will occur in the relevant Federal and State legislation in relation to demolition or restoration of such mines in the future.

(c) Movement in provisions Provision for decommissioning and restoration: Carrying amount at the beginning of the financial year Additional provision - Credited to profit or loss Carrying amount at the end of the financial year 20. CONTRIBUTED EQUITY Ordinary shares on issue (a) Movements in ordinary shares on issue Balance at the beginning of the year Share buy-back (Note 4) Balance at the closing of the year	Consolidated 2013 2012 $’000s $’000s 8,104 7,504 600 600 8,704 8,104 Consolidated 2013 $’000s 2012 $’000s 2013 Number on issue 2012 Number on issue 3,782 4,509 2,868,307 3,423,507 $’000s Number on issue 4,509 3,423,507 (727) (555,200) 3,782 2,868,307	Consolidated 2013 2012 $’000s $’000s
		8,104 7,504 600 600
		8,704 8,104
	3,782 4,509

• 44 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

(b) Terms and conditions of contributed equity

Ordinary shares

Ordinary shares have the right to receive dividends as declared and, in the event of winding up the Company, to participate in the proceeds from the sale of all assets less payment of liabilities in proportion to the number of fully paid shares held.

Each ordinary share entitles their holder to one vote, either in person or by proxy, at a meeting of the Company.

21. RESERVES (a) Foreign currency translation reserve Foreign currency translation reserve Nature and purpose of reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations. (b) Share option reserve Share option reserve Nature and purpose of reserve The Share Option Reserve is used to record the fair value of share based payments provided to employees of the Group.	Consolidated 2013 $’000s 2012 $’000s
	4,301 (736) 457 457
	4,758 (279)

• 45 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

Consolidated

2013	2012
$000	$000

22. CASH FLOW STATEMENT

• (a) Reconciliation of the operating profit after tax to the net cash flows from operations

Profit after tax Non-Cash Items Depreciation and amortisation Unrealised foreign exchange (gain) / loss Gain on disposal of non-current assets Impairment Accretion of demolition provision Bad debts Change in fair value of biological asset Changes in assets and liabilities Decrease)/(increase) in trade and other receivables Movement in deferred tax balances Decrease/(increase) in inventories Increase/(decrease) in trade creditors and accruals Increase in provisions Increase in prepayments (Decrease)/increase in tax payable Net cash flow from operating activities (b) Reconciliation of cash Cash balance comprises: Cash at bank	24,186 23,334 3,818 3,544 1,358 2,239 - 6 - 422 600 600 1,739 - 1,021 1,059 5,530 (4,980) (1,369) (2,304) 2,188 (194) 408 (1,278) 2,438 2,743 (1,941) (63) (5,879) 3,350
	34,097 28,478
	39,606 34,232

(c) The chief economic entity has a bank overdraft facility available to the extent of $500,000 (2012: $500,000) with an option to increase the facility by a further $500,000 during the swell season (December to March). The bank overdraft facility is secured against the prevailing first mortgage on the assets of the Company. The facility was unused at year end. Average interest rate for the year was 9.92% (2012: 10.94%).

• 46 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

23. EMPLOYEE ENTITLEMENTS, REDUNDANCY AND SUPERANNUATION COMMITMENTS Employee Entitlements The aggregate employee entitlement liability is comprised of: Accrued wages, salaries, bonus and on costs Provisions (current) Provisions (non-current)	Consolidated 2013 2012 $000 $000
	- 760 6,636 5,814 9,074 8,058
	15,710 14,632

Retirement and superannuation payments

The percentage amounts of base salaries and wages paid to superannuation funds by the economic entity is 11% (2012: 11%) for permanent employees and 9% (2012: 9%) for casual employees. The amount required by the Superannuation Guarantee Scheme is 9% (2012: 9%).

24. RELATED PARTY TRANSACTIONS

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

Other related party transactions with directors of the chief entity

• (i) Mr Lai Ah Hong is the owner of property MQ 77 on Christmas Island leased to Indian Ocean Stevedores Pty Ltd for three years ending 10 April 2016. Mr Lai Ah Hong received a total rent of $31,200 during the year (2012: $31,200).

• (ii) Mr Chan Khye Meng is the sole proprietor of Meng Chong trading based on Christmas Island. Meng Chong Trading provided such goods as toilet requisites and groceries totalling $10,021 (2012: $10,721) during the year.

Transactions with related parties in the wholly owned group

• (i) Management services are provided to Phosphate Resources Limited by Phosphate Resources (Singapore) Pte Ltd on commercial terms. Total services provided for the year were $422,893 (2012: $500,645).

• (ii) Management services are provided to Phosphate Resources Ltd by Phosphate Resources (Malaysia) Sdn Bhd on commercial terms. Total services provided for the year were $941,274 (2012: $772,899).

• (iii) Rent was paid to Phosphate Resources Properties Pty Ltd by Phosphate Resources Limited on normal commercial terms and conditions. Total rent for the year was $62,400 (2012: $54,600).

• (iv) Indian Ocean Oil Company Pty Ltd provides fuel to Phosphate Resources Limited under commercial terms and conditions. Total fuel sales for the year were $7,205,084 (2012: $7,264,791).

• (v) Accounting fees were paid to Phosphate Resources Limited by Phosphate Resources Properties Pty Ltd under commercial terms and conditions. Total accounting fees paid for the year were $1,200 (2012: $1,200).

• 47 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

RELATED PARTY TRANSACTIONS (CONTINUED)

Transactions with related parties in the wholly owned group (continued)

• (vi) Accounting fees were paid to Phosphate Resources Limited by Indian Ocean Stevedores Pty Ltd under commercial terms and conditions. Total accounting fees paid for the year were $42,000 (2012: $42,000).

• (vii) Accounting fees were paid to Phosphate Resources Limited by CI Maintenance Services Pty Ltd under commercial terms and conditions. Total accounting fees paid for the year were $60,000 (2012: $60,000).

• (viii) Accounting and management fees were paid to Phosphate Resources Limited by Indian Ocean Oil Company Pty Ltd on normal commercial terms. Total accounting and management fees paid for the year were $64,800 (2012: $64,800).

• (ix) Stevedoring services are provided to Phosphate Resources Limited by Indian Ocean Stevedores Pty Ltd a controlled entity, on normal commercial terms. Total services provided for the year were $57,000 (2012: $33,910).

• (x) Stevedoring services are provided to Indian Ocean Oil Company Pty Ltd by Indian Ocean Stevedores Pty Ltd on normal commercial terms. Total services provided for the year were $2,000 (2012: $1,000).

• (xi) Phosphate Resources Ltd provided fuel to CI Maintenance Services Pty Ltd on normal commercial terms. Total fuel sales for the year were $13,914 (2012: $10,813).

• (xii) CI Resources Limited is the ultimate controlling entity.

• 48 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

25. DIRECTOR AND EXECUTIVE DISCLOSURES

(a) Compensation by category: Key Management Personnel

Consolidated

Short-term Post-employment	2013 $ 2012 $
	2,513,460 2,001,687 186,829 147,582
	2,700,289 2,149,269

(b) Shareholdings of Key Management Personnel (consolidated)

30 June 2013	Fully Paid Ordinary Shares
	Held at 1 July 2012 Net change other Held at 30 June 2013
Directors Lai Ah Hong Chan Khye Meng Cheng Hang Phua Siak Yeong Phuar, Kong Seng Tee Lip Sin Tee Lip Jen Executives Kevin Edwards Alfred Chong Allan Robartson Total	55,001 (45,000) 10,001 1 - 1 55,000 (50,000) 5,000 11,000 - 11,000 19,000 (19,000) - - 18,600 18,600 17,500 13,000 30,500 6,500 (5,000) 1,500 2,000 - 2,000 3,500 (3,500) -
	169,502 (90,900) 78,602

30 June 2012	Fully Paid Ordinary Shares
	Held at 1 July 2011 Net change other Held at 30 June 2012
Directors Lai Ah Hong Chan Khye Meng Cheng Hang Phua Siak Yeong Phuar, Kong Seng Executives Kevin Edwards Alfred Chong Allan Robartson Total	55,001 - 55,001 1 - 1 55,000 - 55,000 11,000 - 11,000 - 19,000 19,000 5,000 1,500 6,500 2,000 - 2,000 2,000 1,500 3,500
	130,002 22,000 152,002

• 49 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

DIRECTOR AND EXECUTIVE DISCLOSUREs (CONTINUED)

All equity transactions with key management personnel have been entered into under terms and conditions no more favourable that those the Group would have adopted if dealing at arm’s length.

(c) Loans to key management personnel

There were no loans to key management personnel during the period.

(d) Other transactions and balances with key management personnel

There were no other transactions or balances with key management personnel.

(d) Other transactions and balances with key management personnel There were no other transactions or balances with key management personnel.
26. AUDITORS’ REMUNERATION Amounts received or due and receivable by Ernst & Young (Australia) for: - audit of the financial report of the parent entity and the consolidated entity - review of the half year financial report of the consolidated entity - other services Amounts received or due and receivable by related practices of Ernst & Young (Australia) for the audit of the financial statements Amounts received or due and receivable by auditors other than Ernst & Young for: - an audit or review of the financial report of a controlled entity	Consolidated 2013 2012 $ $
	150,000 150,000 50,000 43,000 - -
	200,000 193,000 45,200 33,150
	245,200 226,150 - -
	245,200 226,150

• 50 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

Consolidated	Consolidated
2013	2012
$’000s	$’000s

27. EXPENDITURE COMMITMENTS

• (a) Lease expenditure commitments

Operating leases - not later than one year - later than one year and not later than five years - total minimum payments	469 374 521 235
	990 609

Operating leases are entered into as a means of providing residential accommodation and office premises for Phosphate Resources Limited; residential accommodation for Indian Ocean Stevedores Pty Ltd and office equipment for Phosphate Resources (Singapore) Pte Ltd.

Finance leases CONSOLIDATED Within one year After one year but not more than five years Total minimum lease payments Less amounts representing future finance charges Present value of minimum lease payments	2013 2012 Minimum Lease Payments Present Value of Lease Payments Minimum Lease Payments Present Value of Lease Payments $’000s $’000s $’000s $’000s 543 513 716 693 62 55 58 50
	605 568 774 743 (37) - (31) -
	568 568 743 743

Finance leases are entered into as a means of financing the acquisition of plant and equipment.

• (b) The Company provides a guarantee and indemnity to the Commonwealth Government of Australia (Commonwealth) to ensure the performance of Indian Ocean Oil Company Pty Ltd’s obligations under the terms of a 20 year fuel lease arrangement.

• (c) The Company has committed to undertake various environmental management targets and objectives as detailed in the Christmas Island Phosphates Environmental Management Plan.

• (d) The Company has provided a bank guarantee of $1 million to the Commonwealth Government under the terms of the Mining Lease Agreement.

• (e) The Company has capital commitments of $0.059 million (2012: $0.65 million) for items of plant on order but not yet delivered.

• 51 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

28. BIOLOGICAL ASSETS

Carrying amount at beginning of period Harvest/amortisation Effect of foreign exchange Fair value adjustment Carrying amount at end	Consolidated 2013 2012 $’000s $’000s 11,135 12,332 - (88) 1,117 (50) (1,021) (1,059) 11,231 11,135

Biological assets consist of mature oil palm trees.

The Group grows oil palm trees to produce palm oil. The plantation is located in Malaysia.

At 30 June 2013 the group held oil palm trees on approximately 1,643 hectares of land.

A valuation was conducted by Jones Lang Wootton, an independent professional valuer, on a subsidiary's oil palm estate development comprising land, ancillary facilities and biological assets, for the purposes of revaluing the biological assets of the subsidiary as at 30 June 2013. Significant assumptions applied in the determination of fair value are:

applied in the determination of fair value are:
	2013	2012
Average remaining life of oil palm trees (years)	10	11
Average annual yield per hectare	21	22
Average life span of trees (years)	25	25
Pre tax discount rate	11%	11%
Fresh Fruit Bunch (FFB) price (RM per tonne)	604	726
Annual rate of inflation	1,2%	3,2%

The Group is exposed to risks in respect of agricultural activity. The agricultural activity of the Group consists of the plantation development and cultivation of palm products.

The primary risk associated with this activity occurs due to the length of time between expending cash on the purchase of planting and maintenance of oil palm plantation and in harvesting, and ultimately receiving cash from sale of palm oil to third parties. The Group's strategy to manage this risk is to stage the replanting (20-30 year replanting cycle) to reduce the effect on the cash flow.

• 52 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

29. SEGMENT REPORTING

The Group has identified its operating segments based on the internal reports that are reviewed and used by the executive management team (the chief operation decision makers) in assessing performance and in determining the allocation of resource.

The Group has identified its operating segments to be Mining and Farming based on the different operating businesses within the Group. Discrete financial information about each of these operating segments is reported to the chief operation decision makers on a monthly basis.

The Mining operating segment primarily involves mining, processing and sale of phosphate rock, phosphate dust and chalk

The Farming operating segment primarily involves oil palm cultivation and palm oil processing

The accounting policy used by the Group in reporting segments internally are the same as those contained in Note 2 to the accounts.

Revenue Revenue from external customers Interest income Stevedoring Rendering of services Other sales Total segment revenue Result Segment net operating profit after tax (attributable to parent) Depreciation and amortisation Income tax expense Assets and Liabilities Segment assets Segment liabilities	Year ended 30 June 2013 Year ended 30 June 2012
	Mining Farming All Other Segments Total Mining Farming All Other Segments Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
	101,556 42,775 - 144,331 92,626 33,497 - 126,123 624 - 175 799 657 - 195 852 - - 1,578 1,578 - - 1,784 1,784 - - 7,045 7,045 - - 7,710 7,710 - - 833 833 - - 700 700
	102,180 42,775 9,631 154,586 93,283 33,497 10,389 137,169 20,884 2,078 1,224 24,186 21,076 3,370 (1,112) 23,334
	2,470 1,074 221 3,765 2,116 618 810 3,554 8,614 1,122 586 10,322 9,554 1,242 372 11,168 91,224 65,254 11,409 167,887 93,493 56,410 9,151 159,054
	40,351 13,568 3,007 56,926 49,359 8,128 6,671 64,158

• 53 -

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 June 2013

30. INFORMATION RELATING TO PHOSPHATE RESOURCES LIMITED (“THE PARENT ENTITY”)

Current assets Total assets Current liabilities Total liabilities Issued capital Retained earnings Share option reserve Profit or loss for the parent entity Total comprehensive income of the parent entity	2013 2012 $’000s $’000s
	54,822 60,206 136,282 136,599 18,072 22,534 41,318 49,359 3,782 4,509 90,725 82,274 457 457
	94,964 87,240
	20,884 21,076 20,884 21,076

31. CONTINGENT ASSETS AND CONTINGENT LIABILITIES

There are no other contingent assets or liabilities as at the date of this report.

32. SUBSEQUENT EVENTS

No matter or circumstance has arisen that has significantly affected, or may significantly affect, the operations of Phosphate Resources Limited and its controlled entities, the results of those operations or the state of affairs of Phosphate Resources Limited and its controlled entities in subsequent years that is not otherwise disclosed in this report or the consolidated financial statements.

• 54 -

DIRECTORS’ DECLARATION

PHOSPHATE RESOURCES LIMITED

FOR THE YEAR ENDED 30 JUNE 2013

In accordance with a resolution of the Directors of Phosphate Resources Limited, we state that:

• (1) In the opinion of the Directors:

• (a) the financial statements and notes of the Company and of the consolidated entity are in accordance with the Corporations Act 2001 , including:

  • (i) giving a true and fair view of the Company’s and consolidated entity’s financial position as at 30 June 2013 and of their performance for the year ended on that date; and

  • (ii) complying with Accounting Standards (including Australian Accounting Interpretations) and Corporations Regulations 2001 ;

• (b) the financial statement and notes also comply with International Financial Reporting Standards as disclosed in Note 2; and

• (c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

SIGNED ON BEHALF OF THE BOARD:

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Clive Brown Chairman

LAI Ah Hong Managing Director

Dated: 17 September 2013

• 55 -

Ernst & Young Tel: +61 8 9429 2222 11 Mounts Bay Road Fax: +61 8 9429 2436 Perth WA 6000 Australia ey.com/au GPO Box M939 Perth WA 6843

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Independent audit report to members of Phosphate Resources Ltd

Report on the financial report

We have audited the accompanying financial report of Phosphate Resources Limited, which comprises the consolidated statement of financial position as at 30 June 2013, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the year's end or from time to time during the financial year.

Directors' responsibility for the financial report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the directors determine are necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards.

Auditor's responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity's preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit we have complied with the independence requirements of the Corporations Act 2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the directors’ report.

• 56 -

RC:DR:PRL:043

~~A member firm of Ernst & Young Global Limited~~ Liability limited by a scheme approved under Professional Standards Legislation

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RC:DR:PRL:043

~~A member firm of Ernst & Young Global Limited~~ Liability limited by a scheme approved under Professional Standards Legislation

Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843

Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au

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• 58 -

RC:DR:PRL:044

~~A member firm of Ernst & Young Global Limited~~ Liability limited by a scheme approved under Professional Standards Legislation