Centennial Coal Company Limited

ABN: 30 003 714 538

ANNUAL FINANCIAL REPORT
Year ended 30 June 2010

Directors’ Report
The Directors of Centennial Coal Company Limited (“Centennial”) present the Annual Financial Report for the financial year ended 30 June 2010. In accordance with the provisions of the Corporations Act 2001, the Directors report as follows: DIRECTORS The names and particulars of the Directors of the Company in office during or since the end of the financial year are: Kenneth J. Moss AM, BE (Hons), PhD, Hon.FIEAust, CPEng, FAICD Chairman (Non-Executive Director). Appointed 9 August 2000. Dr Moss graduated in mechanical engineering at the University of Newcastle and worked for BHP’s northern collieries and equipment suppliers to the mining industry. He commenced his highly successful career with Howard Smith Limited in 1974. He held senior positions both in Australia and overseas with Howard Smith Limited before becoming managing director in 1993 until August 2000. He is the past non-executive chairman of Boral Limited and GPT Group Limited and a director of several other companies and organisations, including the Australian Brandenburg Orchestra. Robert G. Cameron BE (Hons), MBA, GradDip Geoscience, FAusIMM, FAIM, FAICD Managing Director. Appointed 29 June 1989. Mr Cameron holds engineering and business management qualifications. He has had a long career as a senior manager in the coal industry and has been Managing Director of Centennial Coal since 1989. He is a past chairman of the NSW Minerals Council and the Australian Coal Association. He is also a director of Port Kembla Coal Terminal Limited. Bruce S. Allan FAusIMM, CP(Mining), MAICD Non-Executive Director. Appointed 19 December 2007. Mr Allan is a mining engineer who has some 47 years experience working at senior levels in the Australian resources industry, having held senior coal industry management positions within Rio Tinto and BHP Billiton before retiring in 2004 to form his own consulting business. In particular, he has extensive underground coal mining experience, having held the positions of General Mine Manager at each of Kembla Coal & Coke Pty Ltd and BHP Illawarra and the Chief Executive’s position at Springvale Colliery. In addition, he has held a variety of coal development, technical services and marketing roles, travelling extensively overseas representing the mining industry and Government. He has also served as chairman of the Australian Coal Association – Research Committee. He is Currently Chairman of the Queensland Mines Rescue Service Limited as well as a non executive director of Transpacific Industries Group Limited and the Illawarra Retirement Trust. Catherine M. Brenner BEc, LLB, MBA Non-Executive Director. Appointed 6 October 2005. Ms Brenner is a non-executive director of Coca-Cola Amatil Limited, AMP Limited, AMP Life Limited and the Australian Brandenburg Orchestra. She is a Trustee of the Sydney Opera House Trust. She is a former managing director in the investment banking division of ABN AMRO. Prior to becoming an investment banker, she was a corporate lawyer. Ms Brenner is a member of the Takeovers Panel. Richard J. Grellman AM, FCA Non-Executive Director. Appointed 21 February 2008. Mr Grellman is a fellow of the Institute of Chartered Accountants in Australia, having spent 32 years with KPMG, retiring as a partner in 2000. He is a director of AMP Limited and chairman of AMP Life Limited. He is also chairman of the audit and compliance committee for AMP Limited and a director of Bisalloy Steel Group Limited, also chairing its audit committee. In addition, Mr Grellman is chairman of the Association of Surfing Professionals (International) Limited. Paul J. Moy BA (Hons), Dip Ed, PhD Non-Executive Director. Appointed 18 March 2003. Dr Moy is a Managing Director at UBS Global Asset Management. He has wide-ranging experience in utility reform including the power industry, and extensive experience in both investment banking at UBS and public policy in his former role as deputy secretary of the NSW Treasury. Dr Moy was previously chairman of the Electricity Distribution Reform Group in NSW and a member of the Queensland Electricity Industry Reform Task Force. He is also a former member of the National Competition Council. Dr Moy is a former non-executive director of Transgrid, Western Power Corporation, Diversified Utility and Energy Trust and Railcorp. Neville W. Sneddon BE (Syd), ME (UNSW), MAIMM, MAICD Non-Executive Director. Appointed 19 February 2008. Resigned 17 February 2010 Mr Sneddon is a mining engineer with over 37 years experience in the Australian Mining Industry, including senior operational roles with Coal & Allied, Shell Coal, Anglo American and the NSW Mines Inspectorate. He is currently chairman of Stanmore Coal Limited and is a director of Envirogen Pty Limited and chairman of CSM Energy Limited.

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Directors’ Report (Continued)
DIRECTORSHIPS OF OTHER LISTED COMPANIES Directorships of other listed companies held by Directors in the three years immediately before the end of the financial year are as follows: Director Kenneth J. Moss Company Boral Limited GPT Management Limited Macquarie Capital Alliance Group Limited AMP Limited Cryosite Limited Coca-Cola Amatil Limited Trafalgar Corporate Group Limited Transpacific Industries Group Ltd AMP Limited Bisalloy Steel Group Limited Trafalgar Corporate Group Limited Cryosite Limited Stanmore Coal Limited Period of directorship 1999 – 2010 2000 – 2010 2005 – 2008 2010 – Present 2006 – 2008 2008 – Present 2003 – 2008 2006 – Present 2000 – Present 2003 – Present 2002 – 2008 2002 – 2008 2009 – Present

Catherine M. Brenner

Bruce S. Allan Richard J. Grellman

Neville W. Sneddon COMPANY SECRETARY

Tony Macko BA in Accountancy, ACA (ICAEW), CA, SA Fin, FTA, Dip Inv Relations (AIRA) Company Secretary. Appointed 6 October 1994. Mr Macko is a dual qualified chartered accountant, with over 24 years in the minerals industry. He began his career in resources with a mining finance house, specialising in the provision of corporate, management and accounting services to the independent resource sector. His association with Centennial commenced in 1989, during his time as chief accountant for Centennial’s UK based major shareholder. In 1994, he took up the role of General Manager: Finance & Administration of Centennial and assisted with its IPO. He has extensive experience in corporate finance, treasury and general management. In 2006, he assumed the role of General Manager: Corporate Affairs, with particular responsibility for investor relations. Mr Macko has been the Group Company Secretary since 1994. PRINCIPAL ACTIVITIES The Group’s principal activities in the course of the financial year were the mining and marketing of coal to Australian and export markets. During the financial year there was no significant change in the nature of those activities. RESULTS The consolidated profit for the year attributable to equity holders of the parent is $51.5 million (30 June 2009: $71.2 million). DIVIDENDS The dividends paid during the financial year were in respect of ordinary shares. Such dividends amounted to $21.9 million (30 June 2009: $88.6 million) and were paid as follows: October 2009 April 2010 Total cash dividends paid to Shareholders $M 10.3 11.6 21.9 Being a final fully franked dividend in respect of the financial year ended 30 June 2009 Being an interim 50% franked dividend in respect of the financial year ended 30 June 2010

In addition to the cash dividend paid, a further $8.9 million was allocated pursuant to Shareholder elections under the Company’s Dividend Reinvestment Plan (“DRP”). Such Shareholder elections resulted in the issue of 2,442,097 ordinary shares at a discount of 2.5%. This discount is calculated as the five-day weighted average share price commencing with the date that the Company’s shares are quoted “ex-dividend” and concluding on the fifth day thereafter. Since the end of the 2010 financial year, the Directors have declared the payment of a 40% franked final dividend in respect of the financial year ended 30 June 2010 amounting to $15.8 million, equivalent to $0.04 per ordinary share (30 June 2009: $15.0 million, equivalent to $0.04 per ordinary share fully franked) payable on 8 October 2010. In accordance with Australian Equivalents to International Financial Reporting Standards (“A-IFRS”), the final dividend has not been accounted for in these Financial Statements as it was not declared prior to 30 June 2010.

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With all three longwalls operating at full production over the last 6 weeks of the June 2010 Quarter. with record performances from Mandalong. resulted in a $42. saleable production on a like-for-like basis was 8% higher. at 13. while sales under management were 17. partly offset by an improved hedging result and a 6% increase in export sales volumes to 4. including the underperforming Myuna and Mannering operations. resulting in two reportable operating segments. export sales were up 6% on the previous year. export sales are anticipated to be approximately 5.8 million tonnes for the year.Directors’ Report (Continued) REVIEW OF OPERATIONS Centennial’s equity share of ROM production was 14. However. Export infrastructure constraints led to an increase in closing stocks. As Clarence is predominantly an export-orientated mine. principally as a result of the production difficulties at Springvale (0.5 million tonnes for the full-year. 6% above the previous year. (For the 2011 financial year. The Group achieved total sales of 13. transport logistics were under pressure.8 million (inclusive of hedging) decline in profits from the export-orientated Western Operations when compared to the prior year.0 million tonnes for the full-year.8 million compared to the previous year.1 million. Nevertheless. The suspension of operations at Newstan in April 2009 and production difficulties at several export-orientated mines (in part offset by improved performances at Angus Place and Mandalong) constrained the Group’s ability to achieve its targeted increase in exports for the 2010 year. the closure of Newstan has resulted in an overall reduction in both absolute and cash cost per tonne terms (both across the Northern Operations and the Group). ROM production was 17.9 million tonnes below the previous year. combined with lower export coal prices. the result of some poorer than expected mining conditions experienced in 314 development panel and the delayed delivery and start-up of the Flexible Conveyor Train (“FCT”). with engineering modifications to its new longwall now delivering consistently strong production (having encountered commissioning issues.4 million tonnes.000 tonnes on the previous year.0 million tonnes (100% basis) for the year. Angus Place finished strongly returning a record year. On a tonnes under management basis. As a consequence of lower than planned exports and lower export coal prices. For management purposes. Centennial’s equity share of saleable production. Mandalong returned a strong result as it produced a record 5.2 million tonnes for the year ended 30 June 2010.0 million). a decrease of 10% (2009: $886.5 million tonnes. the Group’s Northern Operations recorded a profit decline of $23.7 million tonnes for the full-year. (Tonnes under management exclude Newstan and Berrima. which was 234.8 million tonnes were down 4% on the previous year. Consequently. 4% down on the previous year.7 million tonnes). This lost production from Springvale and Charbon had a direct impact on export sales which. adjusting for saleable production of 1.000 tonnes at June-end.000 tonnes (approximately) higher than expected. 5% above the previous year. and poor conditions. was down 3% against the previous year. Despite the increase in costs suffered at Mannering and Myuna.5 million tonnes for the year and entered the export market for the first time.1 million tonnes below expectations. Western Operations: ROM production from the Company’s Western Operations.) Group cash cost of mining per saleable tonne decreased by 5% compared with the previous financial year following the closure of Newstan in April 2009. sales on a full-year basis at 13. reducing Mandalong’s planned exports for the year.4 million tonnes for Newstan and Berrima in the previous year. In addition to Angus Place’s improved contribution. at 6. offset in part by Mandalong’s record performance. also a new annual record. This was achieved despite increased costs at several mines. up 222. Sales revenue from operations for the year ended 30 June 2010 was $800. consistent with the Group’s strategy that market-priced sales form a greater proportion of overall sales. Clarence produced 2.3 million tonnes). was 0. Importantly.3 million tonnes) and mining lease extension delays at the Charbon Open-cut (0.0 million tonnes was marginally above the previous year although below plan. Angus Place and Clarence. the Group is organised into two geographic based business units.2 million tonnes. closing stocks were 611. Mandalong is targeting over one million tonnes of exports for the 2011 financial year. The decrease in revenue is principally the result of a combination of lower US$ export coal prices and an appreciation of the Australian dollar.) 3 . Northern Operations: ROM production from the Company’s Northern Operations. 25% up on the 2010 financial year. Despite best efforts. at 8. when it was initially installed last year). this lower than expected production negatively impacted export sales. principally as a result of the cessation of mining operations at Newstan in April 2009 (1. this was approximately 0.

Accordingly.J. The profit is derived after taking into account an unrealised foreign exchange hedge accounting loss of $2. or in the Financial Statements or notes thereto. the operations of the Group. Grellman P. or the state of affairs of the Group in future financial years.5 million (treated as a significant item in financial statements).8 million ($82. disclosure of information regarding likely developments in the operations of the Group in future financial years and the expected results of those operations is likely to result in unreasonable prejudice to the Group. EARNINGS PER SHARE Details of Earnings per Share are set out in Note 7 to the Financial Statements. FUTURE DEVELOPMENTS In the opinion of the Directors. the number of meetings held and attended by Directors was as follows: Number of meetings held 14 3 3 Directors’ meetings Eligible Attended to attend 13 14 14 14 11 14 14 14 14 14 13 14 5 5 Audit & Risk Committee meetings Eligible Attended to attend 3 3 3 3 3 3 Remuneration Committee meetings Eligible Attended to attend 3 3 3 3 1 1 2 2 Directors’ meetings Audit & Risk Committee meetings Remuneration Committee meetings Attendance at meetings was as follows: K. Underlying earnings before interest & tax (“EBIT”) dropped 48% to $67.W.averaging US$76 per tonne and the 8% appreciation in the Australian dollar. depreciation & amortisation (“EBITDA”) dropped 23% to $170. there was no significant change in the state of affairs of the Group other than that referred to in this report.3 million after tax) compared to the prior year of $110.M Brenner R. SUBSEQUENT EVENTS There has not been any other matter or circumstance.5 million compared to the previous year. underlying earnings before interest.Directors’ Report (Continued) REVIEW OF OPERATIONS Consequently.8 million ($53. Cameron B. This loss relates to the expensing of the time value of the Group’s foreign currency collar options as a result of the increase in option volatility arising from the depreciation of the A$ versus US$ at June year-end. This loss is unrealised and will reverse as options mature. Allan C. tax. or may significantly affect.0 million after tax). that has arisen since the end of the financial year that has significantly affected. the results of those operations. the review of operations. a 23% reduction compared to the previous year .J. or sooner if option volatility returns to more normal lower levels.G. Centennial returned a profit before tax of $51. CHANGES IN STATE OF AFFAIRS During the financial year.8 million. Moss R. this information has not been disclosed in this report. On a normalised basis. MEETINGS OF DIRECTORS During the financial year. Details of movements in the number of shares issued during the year are set out in Note 27 to the Financial Statements. Moy N. Centennial returned a profit of $49.J. other than that referred to in the Financial Statements or notes thereto.4 million for the 2009 financial year. Sneddon 4 .S. On a pre-tax level.3 million for the 2010 financial year compared to $95. compared to $129.4 million for the previous year Both underlying EBITDA and EBIT were negatively impacted by the prevailing lower export prices during the year.

J.020 13. the exercise price has been similarly reduced to $0.90 (previously $2. (d) On 11 December 2009.384 6.G. Cameron B. 2.2014 2.000 - 2011 .Directors’ Report (Continued) DIRECTORS’ INTERESTS IN SHARES AND OPTIONS OF THE COMPANY Particulars of Directors’ interests in ordinary shares.168 39. being the Company’s Total Shareholder Return (“TSR”) as measured against the S&P/ASX 200 Accumulation Index. In addition. Such options are exercisable on a sliding scale and only on the achievement of the performance hurdle. being the Company’s Total Shareholder Return (“TSR”) as measured against the S&P/ASX 200 Accumulation Index. (b) On 25 January 2008. 221. 5 .000 - 2011 . Grellman P. each performance right under the Performance Plan entitles the holder to one ordinary share in the capital of the Company following the achievement of this same TSR performance hurdle.000.88 per share capital return.751. Moss R.000 share performance rights were issued to the Managing Director of the Company under Centennial’s Performance Plan.000 options were issued to the Managing Director of the Company under Centennial’s new Performance Rights and Options Plan (“Performance Plan”).522 43.78).2014 1.661 5. Each option under the 1999 Option Scheme entitles the holder to acquire one ordinary share in the capital of the Company following the achievement of a performance hurdle.J.730 Exercise period Employee options (b) Exercise period Employee performance share rights (c) Exercise period Employee performance share rights (c) Exercise period K.818 share performance rights were issued to the Managing Director of the Company under Centennial’s Performance Plan. (c) On 25 January 2008. Allan C. Similarly.000.000 - 2011 . 1. Such options are exercisable on a sliding scale and only on the achievement of the performance hurdle.000 options were issued to the Managing Director of the Company under Centennial’s 1999 Senior Executive and Director Share Option Plan (“1999 Option Scheme”).J.900.S. each option under the Performance Plan entitles the holder to acquire one ordinary share in the capital of the Company following the achievement of a performance hurdle.M Brenner R. at an exercise price of $2. 400. adopted by Shareholders at the 2007 Annual General Meeting. Following a $1. Moy 2009 – 2011 400.2014 221. options and performance share rights to acquire ordinary shares of the Company at the date of this report are as follows: Employee options (a) Ordinary shares 402.90.900.818 - Details of the employee options are as follows: (a) On 21 December 2006.

Sneddon Position Held Chairman Managing Director & Chief Executive Officer Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director (Resigned 7 February 2010) The term Senior Executive(s) used in this Remuneration Report refers to the following persons: Name R. This Remuneration Report forms part of the Directors’ Report.J. Grellman P. Macko D.J. The disclosures in this Remuneration Report cover the Non-Executive Directors and the Senior Executives of Centennial.S.Directors’ Report (Continued) 2010 REMUNERATION REPORT 1 Introduction The Directors present the Remuneration Report prepared in accordance with section 300A of the Corporations Act for the Company and the Consolidated Entity for the year ended 30 June 2010. including the five executives of the Company and of the Consolidated Entity receiving the highest remuneration for the year. Cameron L. Cameron B. Brenner R.M. this Remuneration Report outlines the remuneration arrangements for Centennial’s Directors and Senior Executives in accordance with the requirements of the Corporations Act. The following persons acted as Directors of the Company during or since the end of the 2010 financial year: Name K J.W.J. Williams Position Held Managing Director & Chief Executive Officer General Counsel Chief Financial Officer General Manager: Corporate Affairs and Company Secretary Chief Operating Officer General Manager: Financial Control General Manager: Marketing The named persons held their current position for the whole of the 2010 financial year and since the end of the financial year. Baldwin R.G.J. 6 . which include the Managing Director & Chief Executive Officer (“MD / CEO”) and all other Key Management Personnel (“KMP”) having the authority and responsibility for planning. Moy N. Accordingly. Moss R. Allan C. Dougall T.J. directing and controlling the activities of Centennial.G. Moult P.M. The information provided in this Remuneration Report has been audited as required by section 308 (3C) of the Corporations Act. Parry I.W.

performance. with 50% vesting upon achievement of the 50th percentile. against budgeted targets and individual Key Performance Indicators (“KPIs”) specific to the individual executive’s responsibilities (including safety & environmental KPIs controllable by the individual). • Participation in the Company’s STI programme gives Senior Executives (and other executives) an opportunity to earn a cash bonus. Summary • Remuneration for Senior Executives comprises three components: a) Fixed annual remuneration (“FAR”) comprising base salary. References to “Senior Executive” remuneration should therefore be treated as applying to the MD / CEO except where otherwise indicated. • Performance Share Rights and Options. b) Short term incentive (“STI”). subject achievement of a performance hurdle before vesting. • Details of Performance Share Rights and Options issued to Senior Executives. being Total Shareholder Return (“TSR”) measured against the S&P / ASX 200 over a three to five year vesting period. a high level summary) of the remuneration arrangements applicable during the 2010 financial year and any changes that have been made since the 2010 financial year. 100% vesting upon achievement of the 75th percentile and straightline vesting between the 50th to 75th percentile. and having regard to the Senior Executive’s responsibilities. • Performance is measured against Group Net Profit After Tax.e. qualifications and experience. • Determined by the Board Remuneration Committee by reference to appropriate benchmark information. Section 13 7 . superannuation and fringe benefits. and c) Long term incentive (“LTI”). The LTI vests upon achievement of a TSR of 50% or greater. The remuneration snapshot is cross referenced to appropriate section(s) of the Remuneration Report for more detailed information. (v) Long Term Incentive (“LTI”) • Participation in the Company’s LTI programme gives Senior Executives (and other executives) the opportunity to acquire shares in the Company where they succeed in achieving outcomes linked to the creation of long-term sustainable growth for Shareholders.Directors’ Report (Continued) 2 Remuneration Snapshot This section of the Remuneration Report provides a snapshot (i. • The components of the MD / CEO’s remuneration package are substantially the same as those of the Company’s other Senior Executives. • Annual cash bonus comprising a maximum of between 30 60% of fixed remuneration (or 70% of fixed remuneration for the Managing Director & Chief Executive Officer). to Section 13 Section 6 & 7 Reference Remuneration Report Section 5 Remuneration Snapshot Executive Remuneration (i) Remuneration Structure (ii) MD / CEO Snapshot Section 5 & 11 (iii) Fixed Remuneration Section 5 (iv) Short Term Incentive (“STI”) Section 6 & 7 Section 8 • Performance hurdles are market based.

653 178. Including the Value of Options / Performance Share Rights Vested During the Year The following table shows the total cash remuneration from the above accounting standard derived remuneration tables and adds the deemed value of employee share options and performance share rights that have met the performance hurdles and have actually vested during the financial year and are capable of being converted into value by the executive. Cameron Managing Director/CEO L. Baldwin General Counsel R.203 386.111. this calculation derives a pre-tax value to the executive). Macko General Manager: Corporate Affairs and Company Secretary D.920 679. Moult Chief Operating Officer P. Parry General Manager: Financial Control I.015 5.920 679. The Company’s performance relative to its peer group (S&P / ASX 200) and the remuneration outcomes achieved by the Senior Executives over the past five years demonstrates a strong connection between remuneration and performance.080 341. 8 . 21) (2) Options granted in December 2006 under the 1999 Option Scheme vested on 21 December 2009.J.690.080 341.695 Options/Rights vested in 2010 (2) 993.486 413.943 Notes: (1) Totals from remuneration tables (pages 20. Williams General Manager: Marketing 5.262 357.486 413.132 811.710.364 370.044 474. • Full details of Senior Executives’ remuneration for the 2010 financial year.e.G.020.592. less any cost to the executive (i. The Directors consider this to more fairly represent the value to the executive rather than the theoretical accounting-based value of share options and / or performance share rights issued in the year that are yet to achieve their respective performance hurdles and vest.015 4. This is calculated as the number of share options and / or performance share rights that have vested in the period x the prevailing share price at the date of vesting.653 357. Consequently.592.521 Total cash Payment 2009 (1) 2.044 474.899 1.843. less any cost to the executive.778.W. The value as at the date of vesting is calculated as (the number of share options that have vested in the period) x (the prevailing share price at the date of vesting).J.763 409.025 766. These service agreements do not have a fixed term and also deal with notice periods and entitlements upon termination.J.401 Options/Rights vested in 2009 (3) 2009 Adjusted Total 2.952 465. Total cash Payment 2010 (1) 1.952 465.850.826 2010 Adjusted Total 2.401 (vi) Service Agreements Section 10 (vii) Remuneration Outcomes Section 11 Section 11 Adjusted remuneration received R.M. Dougall Chief Financial Officer T. • The Board strongly believes that performance should be the fundamental driver behind remuneration.246 693.507 773. no value was derived from previously issued LTIs during the 2009 financial year.291 921.653 357.132 811.638 563.653 417.844 728.854 416.763 3.180 7. Details of Total Cash Remuneration Received.Directors’ Report (Continued) 2 Remuneration Snapshot (continued) • The remuneration and other terms of employment for Senior Executives are formalised in service agreements.856 565. (3) No previously issued share options or performance share rights vested during the year.480 357.778.

• provide a common interest between executives and Shareholders by aligning the rewards that accrue to executives to the creation of value for Shareholders. However with effect from 1 January 2006.e. including performance related bonuses and other terms of employment annually. motivate and retain high-calibre executives of sufficient calibre to facilitate the efficient and effective management of the Company’s operations. More specifically. including Company shares purchased under fee sacrifice arrangements. • support and encourage a culture of employee ownership and act as a retention incentive. comprising three independent Non-Executive Directors. 9 .e. i. reviews executive remuneration.Directors’ Report (Continued) 2 Remuneration Snapshot (continued) Non-Executive Directors’ Remuneration (i) Directors’ Fees • Non-Executive Directors receive a fixed fee. and • be competitive in order to attract. remuneration policies and practices generally. In addition the policy aims for: • all elements of remuneration to be set at an appropriate level having regard to market practice for similar roles. Non-Executive Directors are no longer required to make any sacrifice of fees for the purposes of acquiring Company shares. Section 4 (iii) No Retirement Benefits 1 Section 4 (iv) Remuneration Outcomes Section 11 1 Non-Executive Directors appointed prior to 1 January 2006 are entitled to retirement benefits under the Company’s legacy retirement benefits scheme. no element of Non-Executive Director remuneration is at-risk. it is not based on the performance of the Company. • Determined by the Board by reference to appropriate benchmark information. relevant comparative information and independent expert advice. Section 4 (ii) Salary Sacrifice for Shares • Following changes announced in the 2009 Federal Budget. makes specific recommendations on the remuneration package and other terms of employment of the Senior Executives and Non-Executive Directors. The Board’s policy on executive remuneration is designed to reward executives for increasing Shareholder value and for achieving financial targets and business strategies. in addition to the existing superannuation entitlements). medium and long-term financial targets and business strategies of the Company as set out in the strategic business plan endorsed by the Board. • Full details of Non-Executive Directors’ remuneration for the 2010 financial year. • In order to maintain independence and impartiality. which includes superannuation contributions in satisfaction of the company’s statutory superannuation obligations. • No additional benefits are paid to Non-Executive Directors upon their retirement from office (i. and having regard to the NonExecutive Director’s Board Committee responsibilities. 3 Remuneration Principles The Remuneration Committee. the remuneration policy aims to: • reinforce the short. reviews on behalf of the Board. The Committee. and • incentives to be used to differentiate reward for high performers and to encourage continuous improvements in performance levels. entitlements under the Company’s Non-Executive Directors’ Retirement Benefits Scheme have been frozen. having regard to performance against goals set at the start of the year. with only one Non-Executive Director now remaining as a beneficiary under the scheme.

all eligible Directors entered into a Retirement Deed Termination Agreement confirming these arrangements.902 of accrued interest was incurred on outstanding entitlements with respect to the 2010 financial year (2009: $9.Directors’ Report (Continued) 4 Non-Executive Director Remuneration Remuneration of Non-Executive Directors is determined by the Board by reference to:- • the responsibilities and risks attaching to the role of Non-Executive Director.5 million approved by Shareholders at the 2008 Annual General Meeting. with the committee chairman receiving $20. and . Board Committee Fees: Non-Executive Directors will be recompensed for committee work as follows: . Environment and Community “HSEC” Committee. i. plus interest accrued at the Company’s bank deposit rate.$8. the Company’s Chairman. Presently. Non-Executive Directors’ Retirement Benefits Scheme (“Retirement Scheme”): With effect from 1 January 2006. only Dr Moss. remains a beneficiary under this arrangement.202). Therefore. On 1 January 2006. Fees are within the maximum amount approved by Shareholders from time to time.e. (This Retirement Scheme was originally adopted by shareholders at the 1999 Annual General Meeting. • No Performance Related Bonuses: The Board undertakes an annual review of its performance and the performance of its Committees. the Board believes that the maintenance of Non-Executive Director independence and impartiality is paramount to the workings of an efficient Board and its relationship with the Company’s Senior Executives. while performance related bonuses are available to executives. at which point this frozen entitlement.000 per annum for general committee membership of Audit & Risk. 10 .000 per annum. Non-Executive Director remuneration is not based on the performance of the Company and consequently.$10. Non-Executive Directors are no longer required to make any sacrifice of fees for the purposes of acquiring Company shares. with the current aggregate fee pool for Non-Executive Directors of $1. $6. The Chairman receives a higher standard fee of $214. entitlements will only be paid out to Non-Executive Directors upon retirement. a Non-Executive Directors’ Retirement Benefits Scheme (“Retirement Scheme”) was “grandfathered” and all benefits frozen. and • appropriate benchmark information. Non-Executive Directors’ remuneration is set out in Section 11 of this Remuneration Report. notwithstanding that he may not be a member of that committee. no element of Non-Executive Director remuneration is at-risk. • the time commitment expected of a Non-Executive Director.000 per annum. Fee Sacrifice for Centennial Shares: Following changes announced in the 2009 Federal Budget. As a result of this decision to “grandfather” the Retirement Scheme.000 plus compulsory superannuation contributions. will be paid. All Non-Executive Directors are members of at least one Board Committee.500 per annum for general committee membership of each of the Remuneration Committee and the Health. bonuses are not payable to Non-Executive Directors. Remuneration Structure for Non-Executive Directors: • Standard Non-Executive Director Fee: The standard Non-Executive Director fee is $100. with the respective committee chairman receiving $10.) Under the grandfathering arrangement. In addition. The Chairman is not entitled to additional committee fees. The higher fees paid in respect of the Audit & Risk Committee reflect the additional responsibilities and time commitment involved relative to membership of other committees. Safety.800 plus compulsory superannuation contributions in recognition of the Chairmain’s additional duties and involvement in the affairs of the Company’s various committees.

the Index’s TSR).1) 0.60 2. the Directors are of the opinion that executive remuneration has been appropriately set to achieve the remuneration objectives outlined in the guiding principles (set out above) and accordingly adopted as part of the Board’s remuneration policy. both in terms of day-to-day operations. The obtaining of development approval for Anvil Hill (under difficult and challenging circumstances).2) 50.7 0. qualifications and experience.92 % % $ $ $ $ $51. 11 . including the Mandalong Haul Road linking it to Newstan’s export facilities and the new Airly mine. and Uninterrupted dividend payment stream since listing in 1994. and Long-Term Incentive (“LTI”) .2 (53.6 204. The subsequent sale of Anvil Hill at a significant profit.92 1.88 1. Shareholder wealth has increased at an annualised 85% per annum over the past year compared to the S&P / ASX 200 Accumulation Index (i. A $1.short-term cash bonus. (2) Share prices have been adjusted to reflect the $1.8 0. All prior year dividends included in the above table were unfranked.08 2.e. effectively accelerating profits to the benefit of Shareholders. Coal mining is a long-term investment proposition and capital-intensive business and without the necessary hard work and dedication of Company personnel.9 76.88 per share.47 (1) 2010 dividends averaged 45% franking.08 1.21 1. Accordingly.long-term equity incentives through the issue of Performance Rights and / or Options under the Company’s Performance Rights and Option Plan (“Performance Plan”) with appropriate performance hurdles.13 3.1 (34. performance. the Directors believe that strong Management performance has resulted in many significant achievements: • • • • • • • The successful construction of the world-class Mandalong longwall mine – on time and on budget and now a major contributor to Group profitability.87 2006 $17. enabling the Group to benefit from the improved export coal market both immediately and into the future. The acquisition of an 86% interest in Tahmoor. forward planning and the execution thereof.0 16. Remuneration packages are currently structured via a combination of: • • • Fixed Remuneration comprising base salary.4 0. its much improved systems and processes and its eventual sale at a significant profit. capital return following the sale of the Anvil Hill Project and of the investment in Austral Coal Limited.5 85. superannuation and fringe benefits.3 0.6 0.87 5.00 1.60 2007 $3.8 26. The Company’s earnings and Total Shareholder Return (“TSR”) over the past five years is summarised in the following table: 2010 Profit for the year attributable to equity holders of the parent Total Shareholder Return (“TSR”) Annualised five year TSR Dividends per share (Interim and Final)(1) Capital return per share Share price at beginning of the financial year(2) Share price at end of the financial year(2) Notes: (millions) 2009 $71. The following table illustrates the proportions of the various elements of the Senior Executives’ remuneration packages : Fixed Remuneration FAR MD/CEO Senior Executives 43% 47 to 67% At risk – performance based Short term incentive 31% 20 to 29% Long term incentive 26% 13 to 24% 6 Relationship Between Remuneration Policy and the Company’s Performance 6a Company Performance Over recent years.Directors’ Report (Continued) 5 Executive Remuneration Structure Remuneration packages for Senior Executives are determined by the Board Remuneration Committee by reference to appropriate benchmark information. The on-going installation of increased export production capacity and infrastructure at various mines. again effectively accelerating profits to the benefit of Shareholders. Short-Term Incentive (“STI”) .46 4. the returns achieved for the Company’s Shareholders would not have occurred. 2008 and 2009 dividends are fully franked.46 2008 $288. and having regard to the Senior Executive’s responsibilities. which has grown by an annualised 16%.88 capital return paid in January 2008.11 5.

It is possible to achieve an STI greater than these percentages if exceptional “stretch” results are achieved. The target STI is: 70% of base salary for the MD / CEO. with an additional 25% applied to the target STI amounts. It is also provided with details of the performance review of each of the MD / CEO’s direct reports (i. If cessation is due to death or redundancy. If a Senior Executive ceases employment with the Company before the STI targets are achieved.e the other Senior Executives) and the various departmental heads. profit and other commercial targets as well as a discretionary element to reward exceptional effort and achievement. through incremental but important steps necessary for the creation of longer-term value. cost. The achievement of budgeted Group net profit after tax comprises in the order of 50% of the STI potential for Senior Executives. the Remuneration Committee is provided with relevant financial and operational information to assist in the assessment of the performance of the MD / CEO. The KPIs selected reflect Centennial’s short-term corporate objectives and take into consideration the need to build strong business foundations. Senior Executives (and other employees). The MD / CEO’s short-term incentive is dependent on corporate performance.Directors’ Report (Continued) 7 Short-term Incentives (“STI”) Summary of the STI Programme What is the STI programme ? Who participates in the STI programme ? Why does the Board consider the STI programme to be an appropriate incentive ? What percentage of base salary does the STI represent ? An annual cash bonus incentive linked to the achievement of specific annual targets. Who assesses the performance conditions for the Senior Executives ? What if a Senior Executive ceases employment ? 12 . Following the end of the financial year. 30% to 60% of base salary for other Senior Executives. The objectives for other Senior Executives typically include individual KPIs and Company/Group safety. or where the Board consents. then the Senior Executive will generally not be entitled to receive any STI bonus. Why have these performance conditions been selected ? The performance objectives are carefully selected for each executive to focus their efforts on the achievement of the Group’s overall business strategy. environment and profit as measured against budgeted targets and the development of appropriate strategies to enhance long-term Shareholder value. production. The STI programme is designed to put a significant proportion of the executive’s remuneration at-risk. What are the performance conditions ? Performance objectives for each executive are set at the beginning of each year and compared with actual performance as part of that individual’s annual performance review. the Senior Executive may receive all / or a part of their STI at the Board’s discretion (having regard to pro-rata performance). both through their individual efforts and as part of working within a team. including safety. together with the MD / CEO’s recommendation for the Remuneration Committee’s consideration. thereby linking bonus payments to the achievement of certain business related targets. Non-Executive Directors are not permitted to participate in the STI programme.

The target LTI represents 60% of base salary for the MD / CEO and 20% to 50% of base salary for other Senior Executives. however no new issues have been made under this plan since December 2006. Who participates in the LTI programme ? Why does the Board consider the LTI programme to be an appropriate incentive ? Senior Executives and other senior staff / executives. and attract and retain highly skilled executives. • Provide a common interest between executives and Shareholders by aligning the rewards that accrue to executives to the creation of value for Shareholders. consistent with that utilised under the 1999 Option Scheme for many years. which is designed to facilitate retention of key senior / professional staff. Non-Executive Directors are not permitted to participate in the Performance Plan. continues in operation. but have not been fully exercised by the participants at the date of this report. Both of the outstanding tranches have vested. which replaces the 1999 Option Scheme (it is not intended to issue any further options under this scheme). being the 1999 Senior Executive and Director Share Option Scheme (“1999 Option Scheme”). The Performance Plan is sufficiently flexible to allow the use of external and internal performance hurdles. given the worldwide shortage of professional mining executives and professionals with the necessary mining knowledge and skills required to manage the demands of modern coal mining in Australia. the Directors determined that a market based TSR should be retained as the most appropriate performance hurdle. in the form of the Deferred Incentive Share Plan (“Retention Plan”). The importance of this last point has grown in recent times. The Performance Plan is designed to enable the use of both Performance Share Rights and Options (“Performance Share Right Component” and “Option Component”). a Deferred Employee Share Plan (“Deferred Plan” or “DESP”). support and encourage a culture of employee ownership. With respect to the first two issues of equity incentives under the Performance Plan. with the first issue of incentives made in January 2008.000 Exempt Employee Share Plan (“Exempt Plan” or “EESP”). align the interests of executives with those of Shareholders over the longer term. and an expanded Deferred Plan. The following equity incentive plans are currently in operation: • the Centennial Coal Performance Rights & Option Plan (“Performance Plan”). What is the Performance Plan LTI programme ? A long-term equity incentive rewarding corporate achievement as measured against the S & P / ASX 200 which is considered to represent a reasonable comparator group of companies from which investors may choose to invest as an alternative to their investment in Centennial. The LTI programme is designed to: • Put a significant proportion of the executive’s remuneration at-risk. a $1. Equity incentives are granted by way of Performance Rights and / or Options under the Company’s Performance Plan with appropriate performance hurdles. • • • A fifth plan.Directors’ Report (Continued) 8 Long-term Incentives – Share-based Incentives 8a Review of the Equity Incentive Plans The intention of the Group’s Plans is to: • • • • encourage sustainable continuous improvements in performance levels. • Support and encourage a culture of employee ownership and act as a retention incentive. Participating Senior Executives derive no actual value from their LTI grants unless challenging performance hurdles over a three to five year period are achieved and vesting conditions are satisfied. thereby rewarding corporate achievement and the creation of long-term sustainable growth for Shareholders with the opportunity for the executive to acquire shares in the Company. 13 What percentage of base salary does the LTI represent ? . 8b Summary of the Performance Plan LTI Programme Long-term Incentives – Performance Plan The Centennial Coal Performance Rights & Option Plan (“Performance Plan”) was adopted by Shareholders at the November 2007 AGM. being a plan which allows for the issue of both share performance rights and options.

If an executive ceases employment with the Company before the LTI performance hurdle is achieved. including pro-rata performance). Banpu Pcl has also made an offer to all holders of Centennial performance share rights to have each of their Centennial performance share rights cancelled for cash consideration equal to the Offer price of $6. Banpu Pcl has made an offer to all holders of Centennial Options to have each of their Centennial Options cancelled for cash consideration equal to the difference between the Offer price of $6. The S&P/ASX 200 is considered to represent a reasonable comparator group of companies from which investors may choose to invest as an alternative to their investment in Centennial. Both Options and Performance Share Rights are subject to achievement of performance conditions before vesting. being Total Shareholder Return (“TSR”) measured against the S&P / ASX 200 over a three to five year vesting period. the Senior Executive may receive all or a part of their LTI at the Board’s absolute discretion (having regard to all relevant circumstances.20 per Centennial performance share right. What is the difference between an Option and a Performance Share Right ? What rights are attached to the Options and Performance Share Rights? A Performance Share Right is a right to acquire an ordinary share for no cost to the employee. no equity incentives shall vest if the TSR is below 50% of the S&P / ASX 200 Accumulation Index. In the event of a change of control event. Accordingly. the LTI benefit will vest at the end of the applicable performance period. any rights the executive is entitled to with respect to an LTI benefit will continue beyond the cessation of employment on the relevant terms. subject to the inherent performance hurdle(s) being achieved. Options and Performance Share Rights do not carry any voting or dividend rights. 14 . The Company Secretary (as secretary to the Remuneration Committee) monitors the performance of equity incentives issued under the LTI programme. thereby directly linking above average Company performance to the achievement of employee long-term incentives. with 50% vesting upon achievement of the 50th percentile.Directors’ Report (Continued) What are the performance conditions ? Performance hurdles are market based. TSR has been selected as it is considered to be the most appropriate measure of returns to Shareholders. In the event of a pro-rata rights issue or bonus issue to all Shareholders. The LTI vests upon achievement of a TSR of 50% or greater. taking independent advice as considered appropriate before advising the Remuneration Committee of the result of each testing period for each of the outstanding tranches. however shares allocated upon exercise of Options or vesting of Performance Share Rights will carry the same rights as other ordinary shares. unless the Board in its absolute discretion determines otherwise. 100% vesting upon achievement of the 75th percentile and straightline vesting between the 50th to 75th percentile. the exercise price and/or the number of units will be adjusted in accordance with the ASX Listing Rules so that equity is maintained between the executive and the Company. Why has the TSR been selected as a performance measure ? Who assesses the performance conditions for the Senior Executives ? What if a Senior Executive ceases employment ? Banpu Pcl Takeover As a result of the takeover offer by Banpu Pcl dated 29 July 2010.20 per share and the exercise price for the relevant Centennial Option. whereas an Option requires the employee to pay a pre-determined exercise price per option to acquire an ordinary share. Under the adopted TSR performance hurdle.

the plan trustee will determine whether to accept any offer received for the shares. If cessation is due to death or redundancy.au – via the Corporate Governance section.Directors’ Report (Continued) Retention Plan The Retention Plan is designed to facilitate the retention of key senior / professional staff who do not participate in the Performance Plan. Details of awards granted under these equity incentive schemes are set out in Section 12 of this Remuneration Report. • Except for the salary sacrifice component of the Deferred Plan (and the Exempt Plan). 15 . or where the Board consents. The Performance Plan Option Component requires the employee to pay for the shares upon exercise whereas no payment is required under the Performance Plan Share Performance Rights component. subject to the completion of a three-year period of employment. Shares (and voting and dividend rights) are delivered upfront under the Deferred Plan (subject to loss in certain circumstances) whereas share delivery only occurs after a number of years and satisfaction of Company performance criteria under the Performance Plan. (Note: All current Centennial equity incentive plan rules are available for download from the Company’s website at www. but is considered as part of the total remuneration package. the participant may receive all or a part of their Retention Plan allocation at the Board’s discretion. with any unvested shares returned to a pool and available for future grants. 8c Overview of Performance Plan and Deferred Plan A summary of the Performance Plan and the Deferred Plan rules are provided in the table below. • In the event of a change of control event.) The key variations between these two incentive plans are as follows: • • The Performance Plan uses performance criteria to determine whether and how many Share Performance Rights or Options vest whereas the Deferred Plan principally uses time vesting as its focus in the retention of key staff. with a proportion of the grant vesting in each of the three years (Year 1= 25%. • Participants also receive the attaching dividend. • Shares are issued under the Retention Plan. participation is by invitation of the Board. Participation in the Performance Plan and the Deferred Plan retention component is not by way of additional remuneration.com. Year 2 = 25% and Year 3 = 50%).centennialcoal. Entitlement to participate in these equity incentive plans (Performance Plan and the Deferred Plan retention component) by executives and senior / professional staff is dependent on achieving their respective performance criteria and the Company’s overall performance. Retention Plan awards are subject to the rules of the Deferred Plan outlined below. • Share entitlements lapse upon cessation of employment. even though the shares may not have vested.

new shares may be issued or existing shares may be purchased on market Nil for performance share rights Option Component Options If / when vested.Directors’ Report (Continued) Summary of the key elements of the Performance Plan and the Deferred Plan Performance Plan Share Performance Rights Component What is offered Source of shares Performance Share Rights If / when vested. performance criteria . if Board so decides. e. for fraud or other serious breach Yes.g.g. death or disablement Vesting pro rata to the proportion of the performance period elapsed irrespective of the performance conditions Unvested options lost unless cessation is for a “qualifying reason”. for fraud or other serious breach Yes. 16 . only available when shares delivered after vesting Yes (as salary sacrificed for the shares they vest immediately) Yes Yes. e.g. if Board so decides. e. e. if Board so decides. rights.TSR as described elsewhere in this Remuneration Report Sacrifice of salary (equivalent to market value) but no cash payment by employee No (as salary sacrificed for the shares) Nil for retention shares and no salary sacrifice Conditions to vesting (The Board has a discretion to set and waive conditions) Dividends and voting rights for employee immediately following grant? Forfeiture after vesting Yes. performance criteria . only available when shares delivered after vesting No. death or disablement Shares are not lost if cessation is in “special circumstances”. options and unvested shares (excluding salary sacrifice) must not exceed 7% of the Company’s issued capital at the time of the calculation.g.g.TSR as described elsewhere in this Remuneration Report Yes. e. following cessation of employment for fraud or other serious breach Plan trustee has discretion to accept or reject any takeover offer Yes. payable upon exercise of options Yes. death or disablement All outstanding incentive plan offers. new shares may be issued or existing shares may be purchased on market Nil for options Salary Sacrifice Component Shares New shares may be issued or existing shares may be purchased on market N/A Deferred Plan Retention Component Shares New shares may be issued or existing shares may be purchased on market N/A Cost to employee: performance share rights / options Cost to employee: shares Nil for shares Prevailing market price calculated at the time of issue of options. e. e.g. e. time vesting to enhance retention of staff No.g. if Board so decides. following cessation of employment for fraud or other serious breach Plan trustee has discretion to accept or reject any takeover offer Upon a change of control (takeover) Vesting pro rata to the proportion of the performance period elapsed irrespective of the performance conditions Unvested performance share rights lost unless cessation is for a “qualifying reason”.g. death or disablement Cessation of employment Shares are not lost if cessation is in “special circumstances”.

For grants beginning in the 2007 financial year the first test is conducted on the third anniversary of the grant of options. or in the case of an executive Director. 100% vests for achieving 75th percentile ranking. If a participant ceases employment due to retirement. the Company Secretary obtains TSR information from an external source for the purposes of determining the status of outstanding option grants. 17 . redundancy. or in the case of an executive Director. Grants prior to and including the 2007 financial year Market priced options purchased by participants with acquisition cost funded by an interest free non-recourse loan. equity incentives lapse. Under a change of control (as defined in the 1999 Option Scheme rules) or if certain events occur in relation to a takeover offer for Centennial. Service criteria If a participant ceases employment due to retirement. the participant ceases to be a Director. TSR was selected as the performance measure for both the Performance Plan and the preexisting Option Scheme to directly link executive rewards to the returns received by Shareholders. To ensure the independence of calculation. the participant ceases to be a Director. Performance schedule How is TSR performance measured and why? Vesting period 50% vests if 50th percentile ranking achieved. disablement or other circumstances as determined by the Board. the testing period will be conducted on a rolling 12-month period thereafter to the maximum five-year life of the option. vesting is pro rata to the proportion of the performance period elapsed irrespective of the performance conditions. For grants prior to the 2007 financial year the first test is conducted on the second anniversary of the grant of options. disablement or other circumstances as determined by the Board. redundancy. the testing period will accumulate with each passing quarter thereafter to the maximum five-year life of the option. any options issued under the 1999 scheme may be exercised within a specified period. For grants prior to 2007 financial year the first date options can be exercised is the second anniversary of grant subject to meeting the performance hurdle. Grants beginning with the 2008 financial year Form of award Market priced options and share performance rights with nil exercise price.Directors’ Report (Continued) 8d Summary of Performance Share Rights and Option Plan (“Performance Plan”) and the 1999 Option Scheme The following table summarises the Performance Plan as it applies to grants beginning in the 2008 financial year and the 1999 Option Scheme for grants prior to and including the 2007 financial year. Performance period Following the first test conducted on the third anniversary of the grant of options. equity incentives may be exercised within 60 days. Change of control Under a change of control (as defined in the Performance Plan rules). the testing period will be extended with each passing half year thereafter to the maximum five-year life of the option or performance share right. On death of a participant. the vesting / exercising of equity incentives granted under the Performance Plan may be determined by the Board. If a participant ceases employment in other circumstances. For grants beginning in the 2007 financial year the first date options can be exercised or when performance share rights can vest is the third anniversary of grant subject to meeting the performance hurdle. Performance measure TSR measured against companies in the S&P/ASX 200 index at the date of grant. equity incentives may be exercisable subject to Board approval. with straight-line vesting between 50th percentile and 75th percentile.

or is of unsound mind or neglectful of his/her duties under the Service Agreement. in whole or in part. Margin Lending Policy: Centennial does not prohibit the use of borrowed funds to acquire shares in the Company. However. upon termination. During the 2009 financial year. Disclosure Under s205G of the Corporations Act: If the executive is required to make a disclosure under s205G of the Corporations Act 2001 (primarily a director of a listed entity). for all or a part of the notice period. is declared bankrupt. each Director was required to disclose to the Board any borrowings associated with their holding of Centennial shares.au. failure to adhere to the Company’s hedging policy may result in disciplinary action. termination can occur due to unremedied poor performance. 18 . Hedging Policy: Employees are prohibited to hedge pre-vested entitlements. the Board adopted a new Securities Trading Policy. Executives may make their own choice regarding hedging of their shareholdings subsequent to vesting. Other Clauses The service agreements also contain clauses regarding protection of the Company’s intellectual property and requirements governing the behaviour of the executive during his / her employment. including non-competition with the Company. at its sole discretion.com. Termination with cause The Company may terminate employment immediately for cause. not require the Senior Executive to carry out his/her duties and attend the Company’s premises.Directors’ Report (Continued) 9 Securities Trading During the 2009 financial year. Employment may also be terminated in the case of a sustained period of sickness or disability. The vesting of LTI awards upon termination are determined in accordance with the relevant LTI plan rules. including termination of employment. including the Managing Director and Chief Executive Officer are formalised in service contracts and do not have a fixed term. As a founding Shareholder of the Company and a beneficiary under the Company’s LTI programme. 10 Service Agreements Applying to Key Management Personnel Remuneration and other terms of employment for the Senior Executives. A summary of the LTI plan rules is contained in section 8c and 8d of the remuneration report. In the case of the MD/CEO’s service agreement only. STI & LTI upon termination The Board has a general discretion to make an STI payment. On termination with cause only the accrued FAR and statutory entitlements are payable. The MD/CEO advised that he has some such borrowings.centennialcoal. then that individual will be required to disclose such arrangements in a Form 3Y to be lodged with the Australian Securities Exchange (“ASX”). Termination Clauses Termination without cause Employment may be terminated without cause at any time by the Company on 12 months notice. All Directors are required to keep the board informed of any material change to the previously disclosed position. The Company may elect to make a payment of 12 months fixed annual remuneration (FAR) in lieu of the notice on termination together with any accrued FAR and statutory entitlements payable at the date of termination. On such termination only the accrued FAR and statutory entitlements are payable at the date of termination. The MD/CEO is entitled to a payment equal to 12 months FAR together with any accrued FAR and statutory entitlements payable at the date of termination. but remain on foot and will vest or lapse in due course depending on whether the original performance conditions are achieved. including if the Senior Executive is in serious breach of his/her service agreement. Each Director has entered into an agreement with the Company to provide the necessary information to the Company Secretary on a timely basis to facilitate the disclosure of any change in interest on a timely basis. a copy of which can be downloaded from the Company’s website (Corporate Governance section) at www. The Company may. the MD / CEO has the largest individual holding among the Directors and Senior Executives. The MD / CEO’s borrowing was considered to be immaterial relative to the total issued capital of the Company. the default position for LTI grants is that unvested awards do not vest or lapse on cessation of employment. Termination by Senior Executive Termination by the Senior Executive requires 6 months notice to be given. As noted above. Centennial does recommend that employees exercise caution when using so called “margin lending” arrangements as the decision to sell the executive’s securities can be taken in certain circumstances (such as where the executive does not pay a margin call) that could result in the sale of the executive’s shares at a time when the executive possesses inside information and be considered to be in breach of the Insider Trading Laws.

This sacrificed amount is included in Salary and Fees.634 108.783 116. Moss Chairman B.301 9.078 9.900 81. As the Retirement Scheme was frozen with effect from 1 January 2006.533 164. As the Retirement Scheme was frozen with effect from 1 January 2006.J. Remuneration Packages of the Non Executive Directors of the Company: 2010 Financial Year Short-term Benefits Salary and Fees Cash Bonus $ Nonmonetary $ Post-employment Benefits Other (Directors’ Retirement Scheme) $ Termination Benefits $ $ K.M.W.926 9.J.525 36.902 - 241.215 829.150 Notes: (1) Non-Executive Directors are required to salary sacrifice a minimum of 10% of their fee for the purchase of Company shares.647 - - 17.067 110.140 101.171 119. Moss Chairman B.600 80.034 123.866 118.283 40.165 134.124 797.900 34.011 6.000 47.351 (1) Entitlement to a benefit under the Directors’ Retirement Scheme is limited to those Non-Executive Directors in office at December 2002.399 93.783 116. 19 .149 7. (2) Entitlement to a benefit under the Directors’ Retirement Scheme is limited to those Non-Executive Directors in office at December 2002.665 11.500 75.J.093 110.202 9.S. Moy N. Moy N.J. these amounts represent interest earned on entitlements at the Company’s deposit rate of interest.268 110. Brenner R.438 Notes: Superannuation $ Total $ - - 19. these amounts represent interest earned on entitlements at the Company’s deposit rate of interest.332 20.M. Sneddon (Resigned Feb10) 214.800 103.125 117. Brenner R.J. Directors and Senior Executives) of the Company and the Group for each of the 2010 and 2009 financial years are set out below.591 623. Allan (Appointed Dec 07) C.866 129. Grellman P.500 123.668 17. Grellman (Appointed Feb 08) P.W.202 - 226. Sneddon (Appointed Feb 08) 199.179 717.036 105.000 10.J.e.S.Directors’ Report (Continued) 11 Remuneration and Fees Paid Details of the remuneration of Key Management Personnel (i. 2009 Financial Year Short-term Benefits Salary and Fees $ Cash NonBonus monetary $ $ Post-employment Benefits Other (Directors’ Retirement Scheme) $ Termination Benefits $ Superannuation $ Total $ K.902 6. Allan C.

364 370.854 298.690.Directors’ Report (Continued) Remuneration packages paid to the Senior Executives that met the definition of Key Management Personnel of the Company and the Group: 2010 Financial Year Short-term Benefits Name and title R.960 15.M.960 50.J.553 143.203 - 50.722 693. (4) The amount shown in the share based payment column represents the accounting value for the 2010 financial year of the performance share rights and options reflecting the estimated accounting value at grant date amortised over the three year vesting period.739.048.519 500.800 101. Parry General Manager: Financial Control I.000 - - 2.373 84.217 463.764 60.850.638 563.118 4.000 56.term Benefits $ Termination Benefits $ Share -based Payment (4) Share Rights and Options $ Total $ Total Cash Payment $ NonSupermonetary annuation $ $ 1. Cameron Managing Director / CEO L.638 88. 20 .225.765 416.029 706.690 31.G.819 25.048.763 59.J. (2) The above executives have entered into service contracts with the Company. It does not represent the cash value of performance share rights and options to the executive and any cash value to the executive will be conditional on meeting performance hurdles associated with the LTI as detailed in section 12. the Company will be required to compensate the executive for loss of income based on a specified notice period of 12 months.054 18.136 493.017 864.695 - 50. As a result.246 534. (3) The assumptions supporting the value of Share Performance Rights and Options in the 2010 financial year are set out on page 28.141 79.J. Macko General Manager: Corporate Affairs and Company Secretary D.391 143.763 409.996 - - 354.000 - - 84. Dougall Chief Financial Officer T.040 415.996 325.W.278 7.240 294. Moult Chief Operating Officer P.912 386.273 234. Baldwin General Counsel R.203 280.972 1.041 4.004 108.763 Notes: (1) Centennial operates a total cost to the Company approach with respect to executive remuneration.505 450.300.400 10. Williams General Manager: Marketing Salary and Fees $ Cash Bonus $ Post-employment Benefits Other Long.695 3.448.000 429.519 1. which stipulate that in the event that the Company terminates their service contract early. base salary is net of superannuation guarantee levy payments.075.004 24.000 - - 77.737 60.920 3.

140 305. It does not represent the cash value of performance share rights and options to the executive and any cash value to the executive will be conditional on meeting performance hurdles associated with the LTI as detailed in section 12.933 2.677 8.219 246.952 125.163. (4) The amount shown in the share based payment column represents the accounting value for the 2009 financial year of the performance share rights and options reflecting the estimated accounting value at grant date amortised over the three year vesting period.401 3.401 - 50.889 4.000 85.960 15.925 129.J.G.J.424 1.486 413.044 265.M.000 34.928 101.132 454.556 474.781 - - 351.826 428. Williams General Manager: Marketing (Effective 1 Jun 08) Salary and Fees $ Cash Bonus $ Post-employment Benefits Other Long.424 559.054.072 550.000 - - 85. (3) The assumptions supporting the value of Share Performance Rights and Options in the 2009 financial year are set out on page 28.040 29.592. Macko General Manager: Corporate Affairs and Company Secretary D.952 465.778.960 80.344 810.600 60. Parry General Manager: Financial Control I.W. which stipulate that in the event that the Company terminates their service contract early.797 341.701 2.640 282.167 50.222. Dougall Chief Financial Officer T.J.396 394.762.799 97.440 330. (2) The above executives have entered into service contracts with the Company.807 203. the Company will be required to compensate the executive for loss of income based on a specified notice period of 12 months. As a result.090.Directors’ Report (Continued) 2009 Financial Year Share -based Payment (4) Share Rights and Options $ Total $ Total Cash Payment $ Short-term Benefits Name and title R.962. Cameron Managing Director / CEO L.504 811.000 - - 53. base salary is net of superannuation guarantee levy payments.015 Notes: (1) Centennial operates a total cost to the Company approach with respect to executive remuneration.740. Moult Chief Operating Officer P.170.860 - 100.080 10.120 85.486 499.920 679.000 - - 2.170.920 207.486 113. 21 .000 61.692 5.400 1.317 1.681 2.424 131. Baldwin General Counsel R.080 230.term Benefits $ Termination Benefits $ NonSupermonetary annuation $ $ 1.

000 Min $nil - - Notes: (1) Bonuses paid during the 2010 financial year relate to the previous financial year (2) Annual reviews with respect to the 2010 financial year are yet to be completed. Williams General Manager: Marketing - Max $1.000 Min $nil Max $186. with an additional 25% applied to the target STI amounts.065. Moult Chief Operating Officer P.400 Min $nil Max $93. However. Macko General Manager: Corporate Affairs and Company Secretary D.000 Min $nil Max $105.G.W.J. Parry General Manager: Financial Control I.Directors’ Report (Continued) STI and Other Cash Bonus Details Relating to Senior Executives are as follows: % of bonus paid/vested 2010 (1&3) 40% 65% 47% 57% 37% 56% 57% % of bonus forfeited 2010 (1) 60% 35% 53% 43% 63% 44% 43% Subsequent financial years in which bonus payable Max/Min value of bonus payable in subsequent financial years (2) Cash bonus payment details R.000 Min $nil Max $99.M. Cameron Managing Director/CEO L.000 Min $nil Max $106. Baldwin General Counsel R. Dougall Chief Financial Officer T. 22 . the maximum bonus potential amounts for 2010 have been included in the maximum value of bonus payable in the 2010 financial year.J. (3) It is possible to achieve an STI greater than 100% if exceptional “stretch” results are achieved.500 Min $nil Max $351.J.

001 161.000 1.000 th th The percentage of options which become exercisable is 0% 50% Issue date 15 Dec 05 21 Dec 06 No. (2) Share Performance Rights and Options issued under this tranche are subject to a further modified performance hurdle testing regime.Directors’ Report (Continued) 12 Summary of issued equity incentives The following tranches of equity incentives (primarily options as the sole instrument under the 1999 Option Scheme) have been granted and remain on issue.000 415.190.000 23 Feb 09(2) 496.603.000 No.448 $1.778.006 751. of performance rights issued Exercise price Status of performance hurdle Not achieved Tested semi annually from 25 Jan 11 Not achieved Tested semi annually from 24 Feb 12 Not achieved Tested semi annually from 11 Dec 12 Status of vesting No. of options issued 2.448 Issue date No. 23 . The applicable sliding scale is set out below: If at any time during the exercise period of the options the TSR of the Company Does not reach the 50th percentile of the TSR of the S&P / ASX 200 Index Reaches the 50th percentile of the TSR of the S&P / ASX 200 Index Straight-line vesting between 50 percentile and 75 percentile Reaches or exceeds the 75th percentile of the TSR of the S&P / ASX 200 Index 100% Balance as at 30-Jun-10 335.90 (1) Status of performance hurdle Fully achieved Fully achieved Not achieved Tested semi annually from 25 Jan 11 Not achieved Tested semi annually from 24 Feb 12 Status of vesting Vested Vested No.000 25 Jan 08 (2) 3.333 1. paid to all Shareholders in January 2008.000 Exercise price $1.625.000 23 Feb 09(2) 192.000 505. of options exercised 1.197 N/A Not vested - 31.532 (1) Following a $1.000 2.895 Not vested No.90 Not vested - 150.435.595.89 (1) $0. of options lapsed 535.538 N/A Not vested - 23.196 11 Dec 09 Notes: 774. Share Performance Rights vest and equity is issued upon achievement of this same TSR performance hurdle. Options under both the Performance Plan and the 1999 Option Scheme are exercisable on a sliding scale and only on the achievement of the performance hurdle being the Company’s Total Shareholder Return (“TSR”) as measured against the S&P/ASX 200 Index.585. Thereafter. the exercise price of these pre-existing options (issued under the 1999 Option Scheme) were reduced by the amount of the capital return.000 N/A Not vested - 30.333 3. of performance rights lapsed Balance as at 30-Jun-10 25 Jan 08 (2) 2. with the first test carried out upon the third anniversary of the date of grant.000 3. of performance rights converted to shares 81. the testing period will accumulate with each passing half year to the maximum five-year life of the option or right.88 per share capital return.473.000 $2.473.

89 $0.538 Expiry date 11 Dec 14 (ii) Equity incentives granted during the 2009 Financial Year Fair value per option/right $0.625.000 496.00 Fair value per option/right $2.197 Start date of exercise period 23 Feb 12 23 Feb 12 Expiry date 23 Feb 14 23 Feb 14 Exercise price $1.895 Share performance rights Number vested and converted Date issued 25 Jan 2008 23 Feb 2009 - Number unvested 2.000 667.000 192. (b) Equity Incentives Granted (i) Equity incentives granted during the 2010 financial year Date issued 11 Dec 09 Start date of exercise period 11 Dec 12 Exercise price $0.566.90 $1.448 Expiry date 14 Dec 09 15 Dec 10 21 Dec 11 25 Jan 13 23 Feb 14 Exercise price (1) $1.567.895 $0.00 Note: (1) The exercise price shown is after an adjustment arising from the $1.17 Date issued 23 Feb 09 23 Feb 09 Type Options Rights Number 496.00 $0.Directors’ Report (Continued) 12 Summary of issued equity incentives (continued) (a) Balance at the beginning of the 2010 financial year Options Number vested and exercisable 405.90 $2.448 6.98 $1.197 2.072.817.000 3.505.448 192.500 Number vested and not exercisable Start date of vesting and exercise period 14 Dec 06 15 Dec 07 21 Dec 09 25 Jan 11 23 Feb 12 Date issued 14 Dec 2004 15 Dec 2005 21 Dec 2006 25 Jan 2008 23 Feb 2009 Number unvested 2.88 capital return paid in January 2008.63 Type Rights Number 774.197 Start date of vesting period 25 Jan 11 23 Feb 12 Expiry date 25 Jan 13 23 Feb 14 Exercise price $0.47 $1.500 1.00 24 .

Directors’ Report (Continued)
(c) Options Exercised (i) Options (all 1999 options) exercised during the 2010 financial year Exercise price per share* $ 2.428 2.327 2.428 2.327 2.428 2.428 2.327 2.327 2.327 1.2183 2.327 1.2183 1.2183 1.2183 2.327 1.2183

Exercise date Sep 09 Sep 09 Oct 09 Oct 09 Nov 09 Dec 09 Dec 09 Jan 10 Feb 10 Feb 10 Mar 10 Mar 10 Apr 10 May 10 Jun 10 Jun 10

Number of options exercised 17,500 25,000 40,000 10,000 60,000 287,500 52,500 15,000 67,500 577,000 60,000 619,000 24,000 84,000 67,500 42,000 2,048,500

Date options issued 14-Dec-04 15-Dec-05 14-Dec-04 15-Dec-05 14-Dec-04 14-Dec-04 15-Dec-05 15-Dec-05 15-Dec-05 21-Dec-06 15-Dec-05 21-Dec-06 21-Dec-06 21-Dec-06 15-Dec-05 21-Dec-06

Expiry date 14-Dec-09 15-Dec-10 14-Dec-09 15-Dec-10 14-Dec-09 14-Dec-09 15-Dec-10 15-Dec-10 15-Dec-10 21-Dec-11 15-Dec-10 21-Dec-11 21-Dec-11 21-Dec-11 15-Dec-10 21-Dec-11

Number of shares issued 17,500 25,000 40,000 10,000 60,000 287,500 52,500 15,000 67,500 577,000 60,000 619,000 24,000 84,000 67,500 42,000 2,048,500

Cash received $ 42,490 58,175 97,120 23,270 145,680 698,050 122,168 34,905 157,073 702,959 139,620 754,128 29,239 102,337 157,073 51,169 3,315,456

(ii) Options exercised during the 2009 financial year Number of options exercised 10,000 40,000 30,000 50,000 100,000 255,000 90,000 120,000 6,000 160,000 861,000 Number of shares issued 10,000 40,000 30,000 50,000 100,000 255,000 90,000 120,000 6,000 160,000 861,000 Exercise price per share * $ 2.33 1.49 2.33 2.43 1.49 2.33 2.43 1.22 1.49 1.49 Cash received $ 23,270 59,600 69,810 121,400 149,000 593,385 218,520 146,196 8,940 238,400 1,628,521

Exercise date Jul 08 Aug 08 Aug 08 Aug 08 Sep 08 Sep 08 Sep 08 Nov 08 May 09 Jun 09

Date options issued 15 Dec 05 15 Jun 04 15 Dec 05 14 Dec 04 15 Jun 04 15 Dec 05 14 Dec 04 21 Dec 06 15 Jun 04 15 Jun 04

Expiry date 15 Dec 10 15 Jun 09 15 Dec 10 14 Dec 09 15 Jun 09 15 Dec 10 14 Dec 09 21 Dec 11 15 Jun 09 15 Jun 09

(*)

Exercise price per share includes initial cost of option

(d) Options and Performance Share Rights Lapsed (i) Options and Performance Share Rights lapsed during the 2010 financial year 246,000 options issued to executives lapsed during the 2010 financial year. 84,007 rights issued to executives lapsed during the 2010 financial year. (ii) Options and Performance Share Rights lapsed during the 2009 financial year 130,000 options issued to executives lapsed during the 2009 financial year. Nil rights issued to executives lapsed during the 2009 financial year.

25

Directors’ Report (Continued)
(e) Balance at the end of the 2010 financial year Options Number vested and exercisable 335,000 1,190,000 1,525,000 Number vested and not exercisable Start date of vesting and exercise period 15 Dec 07 21 Dec 09 25 Jan 11 23 Feb 12

Date issued 15 Dec 2005 21 Dec 2006 25 Jan 2008 23 Feb 2009

Number unvested 3,435,000 415,448 3,850,448

Expiry date 15 Dec 10 21 Dec 11 25 Jan 13 23 Feb 14

Exercise price (1) $1.89 $0.90 $2.90 $1.895

Share performance rights Number vested and converted Date issued 25 Jan 2008 23 Feb 2009 11 Dec 2009 -

Number unvested 2,595,000 161,196 751,532 3,507,728

Start date of vesting period 25 Jan 11 23 Feb 12 11 Dec 12

Expiry date 25 Jan 13 23 Feb 14 11 Dec 14

Exercise price $0.00 $0.00 $0.00

Note: (1) The exercise price represents the adjusted price following the payment of a $1.88 capital return in January 2008. There were no other changes to the terms of the options prior to the capital return. The exercise price was adjusted to ensure the optionholders were placed in the same position following the capital return being made.

(f)

Employee expenses Consolidated 2009 2010 $M $M 0.9 0.4 3.3 3.2 0.1 0.3 0.7 4.6 4.3 Company 2009 2010 $M $M 0.9 0.4 3.3 3.2 0.1 0.3 0.7 4.6 4.3

Share options granted in 2007 Performance share rights and options granted in 2008 Performance share rights and options granted in 2009 Performance share rights and options granted in 2010 Total share-based payments expense recognised as employee costs

26

Directors’ Report (Continued)
13 Options and Performance Share Rights Issued to Senior Executives (a) Value of Performance Share Rights and Options issued to Senior Executives The following table discloses the value of share performance rights and options granted, exercised or lapsed during the 2010 financial year:
Equity Incentives Granted Value at Grant Date $ R.G. Cameron Managing Director/CEO L.M. Baldwin General Counsel R.J. Dougall Chief Financial Officer T. Macko General Manager: Corporate Affairs and Company Secretary D.J. Moult Chief Operating Officer P.W. Parry General Manager: Financial Control I.J. Williams General Manager: Marketing 583,381 64,372 137,938 91,958 137,938 91,958 Options Exercised Value at Exercise Date $ 343,253 473,595 484,462 379,253 Options Lapsed Value at Time of Lapse $ Total Value of Equity Incentives Granted, Exercised and Lapsed (1) $ 583,381 407,625 611,533 91,958 622,400 471,211 Value of Equity Incentives Included in Remuneration for the Year $ 2,225,141 79,391 143,118 84,519 354,373 84,519 Percentage of Total Remuneration for the Year that Consists of Equity Incentives % 54.6% 17.6% 20.2% 16.9% 33.8% 17.1%

137,938

63,100

-

201,038

77,217

16.6%

Notes: (1) The total value of equity incentives granted, exercised and lapsed are calculated based on the fair value of the equity instrument at grant, exercise and lapsed date respectively multiplied by the number of equity instruments granted exercised and lapsed during the year. The value of equity instruments granted is an accounting value only and has been calculated in accordance with AASB 2 Sharebased Payment.

27

The calculations used in the valuation have been prepared by an independent third party remuneration specialist.089 32.266 32. Cameron Executives . Williams 2.400.000 676.00 55% 5 years 4.00 37% 5 years 5.37 $0. Moult . Rights vested during year No. Directors . (c) Share Options Issued Under the Centennial Performance Rights and Option Plan and Previously Under the Centennial Coal Company Limited Senior Executive and Director Share Option Scheme to Senior Executives Balance at beginning of year No.874.012 229. Parry .988 271.000 518.988 229. Directors .050 Granted as remuneration No.000 850.W.J.988 221.J.P. Macko .99% 2009 $2. Cameron Executives . 221. 400.300.000 69.T.000 144.216.231 56.J. Parry . - Exercised No.R.000 174.790 2.074 4. 168.000 72.448 473.000 1.75% Note: (1) The expected volatility is based on the historic volatility of the Company’s share price (which is calculated over the weighted average remaining life of the equity instrument) adjusted for any expected changes to future volatility arising from publicly available information.000 168.000 Exercised No.266 34.568 Balance at end of year No.M.000 (d) Share Performance Rights Issued Under the Centennial Performance Rights and Option Plan to Senior Executives Balance at beginning of year No.000 668.000.221.050 Balance Vested but not vested at end of year exercisable No. Baldwin .000 144. Dougall .000 500.R.1% 6.448 34.J.J.537 67. Williams 2.D. 400.G.818 52.965 24.000 50.677 Granted as remuneration No.988 229.988 85. Balance at end of year No.W.818 252.options Exercise price – performance share rights Expected volatility Option and share performance right life Dividend yield Risk-free interest rate 2010 $3.476 52.90 $2.000 676.R.000 144.P.L.000 144.245 Balance Vested but not vested at end of year exercisable No.238 2.000 144.Directors’ Report (Continued) (b) Valuation Assumptions Used in the Calculation of the Value of Share Options and Performance Share Options The fair value of services received in return for share performance rights and options granted are measured by reference to the fair value of the equity instruments granted. Baldwin . Vested and exercisable No.597.448 121.000 144.074 3. No.448 52.266 32. - 28 .965 34.000 132.I.G.L.000 344. 2.000 144. 2.D. No. Moult .000 200.000 132. Assumptions Used in the Valuation Model Share price at grant date Exercise price .T.M.000 144. 400.300.I.R. Dougall . Macko .231 67.742 87.012 229.988 85.000 Options vested during year No.J.90 $0.447.0% 4.000 Vested and exercisable No.

375. the DPI-MR has a regulatory standard for mines that have the potential to cause subsidence. a total of 5. over unissued ordinary shares of Centennial granted during or since the end of the financial year. Rehabilitation security bonds. Baldwin General Counsel R. granted to Senior Executives of the Company and Group as part of their remuneration packages were as follows: Share Performance Rights Exercise period 2012-2014 Number R. the Department of Primary Industries . on the anniversary of grant. These bonds are returned upon the Company satisfying the DPI-MR that the mine site has been satisfactorily rehabilitated. representing 2. Parry General Manager: Financial Control 221. A number of Centennial sites had their bonds reviewed during the reporting period. Key environmental regulators in NSW include the Department of Environment and Climate Change (“DECC”). This Subsidence Management Plan (“SMP”) requires detailed and early environmental investigation. J. legislation and governmental requirements covering each of its mining operations.448 share options and 3. The DPI-MR.448 34. A further 524.Mineral Resources (“DPI-MR”) and the Department of Planning (“DoP”).Directors’ Report (Continued) (e) Share Options and Performance Rights Granted to the Senior Executives Share options and share performance rights. Moult Chief Operating Officer P. ENVIRONMENTAL REGULATIONS Centennial is subject to a number of environmental controls.448 General Manager: Marketing Notes: (1) Under Centennial’s equity incentive plans.476 52. in discussion with the Company.000 shares were issued under the Company’s Deferred Incentive Share Plan to certain members of staff. Cameron Managing Director L.965 I. Senior Management and the Managing Director of the Company. No other equity incentives are outstanding at the date of this report. In addition to security bonds. have been issued to Executives. Centennial has committed significant time and resources on gaining appropriate approvals and thereby contributing to a sustainable minerals industry.728 performance rights.J.J. Macko General Manager: Corporate Affairs and Company Secretary D.M. determines an appropriate level for each bond on a case-by-case basis. This process provides the community with assurance that the rehabilitation obligations of mining operations are adequately fulfilled. administered by the DPI-MR.G.2% of the Company’s issued share capital as at 30 June 2010.W.448 34. The Federal Government’s proposed Carbon Pollution Reduction Scheme and associated Emissions Trading Scheme legislation has been delayed and the final form of the legislation is uncertain at this point in time.965 52. 29 .818 24.507. Williams 52. are required to be lodged by Centennial as a condition of each lease held by a Group company to cover the rehabilitation liability of each mine site. Such shares vest over three years. Legislative framework Legislative controls principally relate to emission and discharge standards and environmental planning requirements. Dougall Chief Financial Officer T. risk assessments and community consultation.

in its professional judgment. 30 . including reviewing or auditing the auditor’s own work. for the following reasons: a) b) all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor. economic and social outcomes. is satisfied that the provision of the non-audit services during the period is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are of the opinion that the services as disclosed below do not compromise the external auditor’s independence. The Company maintains an active approach in keeping Shareholders and local communities informed of our activities. and none of the services undermine the general principles relating to auditor independence as set out in the Institute of Chartered Accountants in Australia and CPA Australia’s “Section 290: Independence – Assurance Engagements” of APES 110. based on advice received from the Audit & Risk Committee. acting as advocate for the Company or jointly sharing economic risks and rewards.Directors’ Report (Continued) Stakeholder communications Centennial is fully aware of its environmental obligations and the expectations of government and the community. The Audit & Risk Committee reviews the independence of the external auditor on an annual basis. in accordance with the advice of the Audit & Risk Committee. the Company is increasingly engaging the local communities in which the Group operates to provide a better understanding of Centennial’s activities. AUDITOR’S INDEPENDENCE AND NON-AUDIT SERVICES Centennial is committed to audit independence. We have an open and transparent approach to environmental management and keep regulatory authorities fully informed of our activities. it may only provide services that are consistent with the role of the Company’s auditor. acting in a management or decision-making capacity for the Company. which assists in meeting our corporate goal of balanced environmental. In addition. To ensure that there is no potential conflict of interest in work undertaken by the external auditor (Deloitte Touche Tohmatsu). it is independent of the Centennial Group. The following fees for non-audit services were paid/payable to the Company’s auditors during the year ended 30 June 2010: 2010 A$’000 Tax services Other 119 119 2009 A$’000 142 34 176 The auditor’s independence declaration is set out on page 32. This process includes confirmation from the auditor that. The Board of Directors has considered the position and.

The contract of insurance prohibits the disclosure of the amount of the premium paid and the liability covered. ROUNDING OFF OF AMOUNTS The Company is a company of the kind referred to in ASIC Class Order 98/0100. indemnified or agreed to indemnify an Officer or Auditor of the Company or of any related body corporate against a liability incurred as such an Officer or Auditor.Directors’ Report (Continued) INDEMNIFICATION OF OFFICERS AND AUDITORS During the financial year. In addition to the above. Signed in accordance with a resolution of the Directors. unless otherwise indicated. the Company paid an insurance premium in respect of a Directors and Officers liability policy covering all Directors and Officers of the Company and of any related body corporate against a liability incurred as a Director or Officer to the extent permitted by the Corporations Act 2001. during or since the end of the financial year. dated 10 July 1998. In return.J. On behalf of the Directors K. the Directors and certain Officers of the Company have entered into a Deed of Indemnity and Access confirming the Company’s obligation to maintain an adequate Directors and Officers liability policy and confirming the individual Director’s and Officer’s right to access Board papers and other Company documents. Moss Chairman Dated at Sydney this 9th day of September 2010 R. and in accordance with that Class Order amounts in the Directors’ Report and the Financial Statements are rounded off to the nearest hundred thousand dollars.G. Cameron Managing Director 31 . The Company has not otherwise. made pursuant to section 298(2) of the Corporations Act 2001. the individual Director and Officer have agreed to allow the Company to conduct the case for the defence should the event arise.

com.deloitte.N. BT Tower 1 Market Street Sydney NSW 2000 9 September 2010 Dear Board Members Auditor’s Independence Declaration to Centennial Coal Company Limited In accordance with section 307C of the Corporations Act 2001. 74 490 121 060 Grosvenor Place 225 George Street Sydney NSW 2000 PO Box N250 Grosvenor Place Sydney NSW 1220 Australia DX 10307SSE Tel: +61 (0) 2 9322 7000 Fax: +61 (0) 2 9322 7001 www. I declare that to the best of my knowledge and belief.au The Board of Directors Centennial Coal Company Limited Level 18. I am pleased to provide the following declaration of independence to the directors of Centennial Coal Company Limited. As lead audit partner for the audit of the financial statements of Centennial Coal Company Limited for the financial year ended 30 June 2010.Deloitte Touche Tohmatsu A.B. and (ii) any applicable code of professional conduct in relation to the audit. there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit. Yours sincerely DELOITTE TOUCHE TOHMATSU G Couttas Partner Chartered Accountants Liability limited by a scheme approved under Professional Standards Legislation. 32 .

6) (25.5 (88.0 (0.8 886.Basic .6) 109.8) 95.Diluted 7 7 13.3) 239.4 (24.5 13.7 14.1 (560.5 93.8 12.3 (16.3 (9.1) 3 4 49.6 4.6 71.5 Other comprehensive income Share based payment reserve Cash flow hedges Income tax on items of other comprehensive income Total comprehensive income for the year attributable to owners of the Company 4.4) (34.7 (14.6 3.7 (82. 33 .9 Cents 19.9) 58.8) 3.1) (58.9) (14.3 (0.3 48.3) (31.3) (0.5) (0.6) (20.2 4.6 (1.2 51.3 2.5) 56.3 51.2 0.4) (2.2) 302.Centennial Coal Company Limited Statement of Comprehensive Income for the financial year ended 30 June 2010 Consolidated Note 2010 $M 2009 $M 2010 $M 2009 $M Company Revenue Cost of sales Gross profit Other income Share of profits of associates and jointly controlled entities accounted for using the equity method Distribution expenses Royalties Administration expenses Finance costs Allowance against intercompany receivables Other significant items Other expenses Profit before income tax Income tax (expense)/benefit Profit for the year 3 800.2) 71.5 12.6) 71.6) - 3 (2.5) (35.3) (39.6 4.8 Notes to the Financial Statements are included on pages 39 to 85.3 3 15 8.3 (3.0 (583.4) 51.2 72.5 18.5) (55.1 (6.4) (15.9 Cents Earnings per share .1) (22.9) 1.6 22.2 22.8) 5.8) 3 (16.5 134.

20 21 4 22 12 13 14 15 17 4 18 2009 $M 2010 $M 2009 $M Company 39 9 4 10 11 45.6 943.3 4.8 34 .9 25.2 1.5 71.3 118.0 9.2 13.4 430.5 879.3 3.6 292.4 323.0 748.1 76.7 383.3 528.3 925.9 330.5 305.9 264.6 660.6 3.Centennial Coal Company Limited Statement of financial position as at 30 June 2010 Consolidated Note 2010 $M CURRENT ASSETS Cash and cash equivalents Trade and other receivables Income tax receivable Inventories Other Total current assets NON-CURRENT ASSETS Trade and other receivables Other financial assets Inventories Investments accounted for using the equity method Property.0 9.5 15.0 21.9 36.5 9.2 663.8 56.2 2.3 13.8 223.066.9 748.3 15.9 309.9 22.9 2.8 38.1 998.0 305.5 12.7 5.7 73.8 336.1 110.7 25.1 22.7 18.8 748.7 98.0 2.8 1.2 (7.3 1.2 2.6 64.9 269.9 221.7 383.0 9.5 2.1 22.1 1.9 818.5 12.5 26.0 1.5 12.9 25.5 6.3 869.6 6.1 37.3 0.8 673.411.2 5.1 660.3 1.7 54.9 439.6) 285.7 23 4 24 26 27 28 430.1 50.5 219.8 5.3 22.5 47.9 24.8 218.189.4 33.8 748.8 127.9 23.2 673.3 285.8 0.4 30.4 368.0 12. plant and equipment Deferred tax assets Other Total non-current assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Borrowings Current tax liability Employee benefits Other Total current liabilities NON-CURRENT LIABILITIES Trade and other payables Borrowings Deferred tax liabilities Provisions Other Total non-current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Retained earnings TOTAL EQUITY Notes to the Financial Statements are included on pages 39 to 85.0 58.9 15.9 212.1 9.8 104.119.0 3.117.1 2.063.9 35.

6 4.0) 660.0) 285.7 Notes to the Financial Statements are included on pages 39 to 85.8) 305.5 (7.9 (49.9 71.5 Hedging reserve $M (15.2 (88.5) 15.8 Balance as at 1 July 2009 Net profit for the year Other comprehensive income Total comprehensive income for the year Shares issued Option premium Convertible notes equity component Dividends to Shareholders Balance as at 30 June 2010 Balance as at 1 July 2008 Net profit for the year Other comprehensive income Total comprehensive income for the year Shares issued Convertible notes equity component Option premium Dividends to Shareholders Balance as at 30 June 2009 313. 35 .6) (30.6) 34.5 76.2 3.7 1.2 (2.5 20.1 569.3 (88.5) 301.2 38.8) 748.5 15.1) 0.1 34.4 71.9 4.Centennial Coal Company Limited Statement of changes in equity for the financial year ended 30 June 2010 Consolidated Share Share based capital payments $M $M 383.6 48.5 Retained earnings $M 285.4 109.5 51.7 1.5 (30.1) 0.3 4.6 76.1 51.1 71.8 Total equity $M 660.5 7.2 (2.1 (15.2 71.3 7.6 4.6) 430.2 48.7 51.6 12.3 383.5 (7.

5 (30.2 48.5 6.Centennial Coal Company Limited Statement of changes in equity for the financial year ended 30 June 2010 Company Share capital $M 383.8) 305.6) (30. 36 .1 (2.6 72.6) 2.3 7.6 4.3 4.7 58.3 383.5) Retained earnings $M 285.2 51.2 3.5 Hedging reserve $M (2.9 0.1 (0.7) (2.3 (88.7 1.7 Notes to the Financial Statements are included on pages 39 to 85.9 76.3 (88.5 (7.9 4.7 1.1) 0.8) 748.2 619.6) 301.5 (7.7) (2.3 1.6) 430.9 Total equity $M 673.1) 0.1 71.2 (2.0) 285.9 71.6 4.0) 673.4 Balance as at 1 July 2009 Net profit for the year Other comprehensive income Total comprehensive income for the year Shares issued Option premium Convertible notes equity component Dividends to Shareholders Balance as at 30 June 2010 Balance as at 1 July 2008 Net profit for the year Other comprehensive income Total comprehensive income for the year Shares issued Convertible notes equity component Option premium Dividends to Shareholders Balance as at 30 June 2009 313.6 12.5 Share based payments $M 7.1 2.2 48.7 51.3 71.5 76.2 (2.5 51.

1 1.0 (5.2 3.0 1.7) 73.0 141.9) (0.6) 0.3) 108.7 (21.1) (16.9) (47.1) 109.8 39(b) 2010 $M 873.2) 149. plant and equipment Loans advanced to subsidiaries Net cash provided by/(used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issues of equity securities Dividends paid Payment for borrowing costs Proceeds from borrowings Repayment of lease liabilities Net cash (used in)/provided by financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year 39(a) 3.8) 68.6) 5.6 (279.1) (61.6) 2009 $M 13.7 (21.9 (268.2 0.2 (11.6) (42.2) 136.4) 120.7) (11.4) 160.0 (82.4) 9.2) (13.6) (177.0 56.9) (0.3) (11.7) (86.9 Notes to the Financial Statements are included on pages 39 to 85.0 33.6) (12. 37 .2) (16.6 (0.8 45.8) (105.4 (8.8 0.3 (751.6 (88.2 0.4) (44.0 (47. plant and equipment Proceeds from sale of property.8 (174.5 0.6) 5.3 (11.9 25.0) (75.6 (88.7) 2009 $M 979.3) (47.9 (169.4) 160.Centennial Coal Company Limited Statement of cash flows for the financial year ended 30 June 2010 Consolidated Note CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest and other costs of finance paid Income taxes paid Net cash provided by/(used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES Dividends received Interest received and bill discounts Payments for property.1) 164.0 3.0 (4.7) Company 2010 $M 27.7) 56.2 3.7 (728.9) 33.3 (1.7) (92.

Notes to the Financial Statements for the financial year ended 30 June 2010 Note 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 Contents Summary of Accounting Policies Operating Segments Profit before Income Tax Income Taxes Remuneration of Key Management Personnel Remuneration of Auditors Earnings Per Share Dividends Current Trade and Other Receivables Current Inventories Other Current Assets Non-Current Trade and Other Receivables Other Non-Current Financial Assets Non-Current Inventories Investments Accounted for Using the Equity Method Joint Venture Operations Property. Plant and Equipment Other Non-Current Assets Assets Pledged as Security Current Trade and Other Payables Current Borrowings Other Current Liabilities Non-Current Borrowings Non-Current Provisions Provisions Other Non-Current Liabilities Issued Capital Reserves Capitalised Borrowing Costs Commitments for Expenditure Superannuation Long Service Leave Contingent Liabilities Leases Economic Dependency Subsidiaries Related Party Disclosures Subsequent Events Notes to the Cash Flow Statement Financial Instruments 38 .

Notes to the Financial Statements for the financial year ended 30 June 2010 1. in the relevant notes to the financial statements. Subsidiaries are 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. estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. In the current year. The accounting policies set out below have been applied consistently in preparing the financial statements for all periods presented in these financial statements and have been applied consistently by Group entities. Compliance with A-IFRS ensures that the financial statements and notes of the Group and Company comply with International Financial Reporting Standards (“IFRS”). Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability. the Group has adopted all of the new and revised standards and interpretations issued by the Australian Accounting Standards Board (“AASB”) that are relevant to its operations and effective for the current annual reporting period. management is required to make judgments. All intercompany balances and transactions. thereby ensuring that the substance of the underlying transactions or other events is reported. have been eliminated in full. The carrying values of recognised assets and liabilities that are hedged with fair value hedges are adjusted to record changes in the fair values attributable to the risks that are being hedged. where applicable. Acquisition-related costs are recognised in profit for loss as incurred. (c) Basis of consolidation The consolidated financial statements comprise the financial statements of Centennial Coal Company Limited and its subsidiaries (“the Group”). The consideration for each acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given. In the application of A-IFRS. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Accounting Standards include Australian equivalents to International Financial Reporting Standards (“A-IFRS”). (b) Basis of preparation The financial report has been prepared on a historical cost basis. Actual results may differ from these estimates. the results of which form the basis of making the judgments. The financial statements of subsidiaries are prepared for the same reporting period as the parent company. In a business combination. There was no impact on the financial position and performance from the adoption of the new Accounting Standards. liabilities incurred or assumed. and equity instruments issued by the Group in exchange for control of the acquiree. 39 . acquisitions of subsidiaries and businesses are accounted for using the acquisition method. using consistent accounting policies. (a) SUMMARY OF ACCOUNTING POLICIES Statement of compliance The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001. The estimates and underlying assumptions are reviewed on an ongoing basis. except for derivative financial instruments and share-based payments that have been measured at fair value. including unrealised profits arising from intra-group transactions. Accounting Standards and Interpretations and complies with other requirements of the law. The Financial Statements were authorised for issue by the Directors on XX September 2010. Judgments made by management in the application of A-IFRS that have significant effects on the financial statements and estimates with a significant risk of material adjustments in the next year are disclosed.

or in relation to. and active and significant operations in. Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the transaction. The estimated useful lives. Cost includes expenditure that is directly attributable to the acquisition of the item. (d) SUMMARY OF ACCOUNTING POLICIES (Continued) Investment in associates The Group’s investment in its associates is accounted for under the equity method of accounting in the consolidated financial statements. evaluation. at the reporting date. or alternatively. the area of interest are continuing. If any such indication exists. development and restoration costs Exploration and evaluation expenditures in relation to separate areas of interest are capitalised in the year in which they are incurred and are carried at cost less accumulated impairment losses where the following conditions are satisfied: (i) (ii) the rights to tenure of the area of interest are current. Where an impairment loss subsequently reverses. and which are neither a subsidiary nor a joint venture. but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years. plant and equipment and equipment under finance lease are stated at cost less accumulated depreciation and impairment. (h) Exploration. by its sale. plant and equipment and are recognised net within “other income” in profit or loss. is reflected in profit and loss. Foreign currency Both the functional and presentation currency of Centennial Coal Company Limited and its subsidiaries is Australian dollars (A$). which are recognised directly in comprehensive income. including freehold buildings but excluding land. cost is determined by discounting the amounts payable in the future to their present value as at the date of acquisition. Foreign exchange differences arising on translation are recognised in the profit and loss. Depreciation is calculated on either a straight-line or units of production basis so as to write off the depreciable amount of each asset over its expected useful life to its estimated residual value. residual values and depreciation method are reviewed at the end of each annual reporting period. the share of liabilities incurred in relation to the joint ventures and the share of any expense incurred in relation to the joint ventures in their respective classification categories. but not control. and at least one of the following conditions is also met: • • the exploration and evaluation expenditures are expected to be recouped through successful development and production from the area of interest. plant and equipment. reached a stage that permits a reasonable assessment of the existence or otherwise of economically recoverable reserves.Notes to the Financial Statements for the financial year ended 30 June 2010 1. (e) Interests in joint ventures Interests in jointly controlled assets and operations where the Group is a venturer are reported in the financial statements by including the Group’s share of assets employed in the joint ventures. plant and equipment Land and buildings. The investments in the associates are carried in the consolidated statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the associates. the carrying amount of the asset is increased to the revised estimate of its recoverable amount. 40 . In the event that settlement of all or part of the purchase consideration is deferred. The Group’s share of the results of operations of the associates. less any impairment in value. the recoverable amount of the capitalised exploration costs is estimated to determine the extent of the impairment loss (if any). Capitalised exploration costs are reviewed each reporting date as to whether an indication of impairment exists. (f) (g) Property. The following estimated useful lives are used in the calculation of depreciation: • • Plant and equipment Equipment under finance lease 5-20 years 5-15 years Gains and losses on disposal of an item of property. except for differences arising on the retranslation of qualifying cash flow hedges. plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property. These are entities in which the Group has significant influence. monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at that date. or exploration and evaluation activities in the area of interest have not. Depreciation is provided on property. At the end of each reporting period.

then they are classified as held-tomaturity. evaluation. These assets are amortised using the unit of production basis over the economically recoverable reserves. The carrying amount of replaced parts is derecognised and the loss included in profit and loss. Financial assets at fair value through profit or loss Financial assets subject to fair value calculation are classified as assets and are stated at fair value. “held-to-maturity” investments. accumulated expenditure is tested for impairment. 41 . If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount. repair costs and minor renewals are charged as expenses as incurred. Where the economic benefit of major overhauls will be realised over more than one accounting period. the Group assesses whether there is any indication that an asset may be impaired. Where the asset does not generate cash flows that are independent from other assets. Borrowing costs Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. the estimated future cash flows (unadjusted for risk) 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. In assessing value in use. in which case the impairment loss is treated as a revaluation decrease. Recoverable amount is the greater of fair value less costs to sell and value in use. Held-to-maturity investments are measured at amortised cost using the effective interest method. Investments in subsidiaries are measured at cost in the Company financial statements. Amortisation starts from the date when commercial production commences. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. evaluation and development expenditure carried forward relating to areas where production has commenced. unless the relevant asset is carried at a revalued amount. whichever is the shorter.Notes to the Financial Statements for the financial year ended 30 June 2010 1. (i) (j) (k) (l) Impairment of assets At each reporting date. Mining and development properties Mining and development properties include the cost of acquiring and developing mining properties. and transferred to mining and development properties. The capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted average interest rate applicable to the entity’s outstanding borrowings during the period. and other receivables are recorded at amortised cost less impairment. the carrying amount of the asset (or cash generating unit) is reduced to its recoverable amount. and then amortised over the life of the reserves associated with the area of interest once mining operations have commenced. “available-for-sale” financial assets. Other financial assets are classified into the following specified categories: financial assets “at fair value through profit or loss”. development and restoration costs (continued) Where a decision is made to proceed with development. (h) SUMMARY OF ACCOUNTING POLICIES (Continued) Exploration. for which estimates of future cash flows have not been adjusted. Loans and receivables Trade receivables. Investments in associates are accounted for under the cost method in the Company’s financial statements. less any impairment losses. and are initially measured at fair value. and “loans and receivables”. the Group makes a formal estimate of recoverable amount. Other borrowing costs are expensed. (m) Financial assets Investments are recognised and derecognised on trade date where purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned. Held-to-maturity investments If the Group has the positive intent and ability to hold debt securities to maturity. loans. An impairment loss is recognised immediately in profit or loss. Where an indicator of impairment exists. mineral rights and exploration. the costs are capitalised and amortised over the life of the asset or until the next major overhaul. Major plant overhauls Maintenance. with any resultant gain or loss recognised in profit or loss.

Notes to the Financial Statements for the financial year ended 30 June 2010 1. (n) SUMMARY OF ACCOUNTING POLICIES (Continued) Cash and cash equivalents Cash and short-term deposits in the statement of financial position comprise cash at bank and in hand and shortterm deposits with an original maturity of three months or less. cash and cash equivalents consist of cash and cash equivalents as defined above. Deferred costs include all direct and indirect costs incurred during the full period of the changeovers and are amortised over the life of the next longwall block on a unit of production basis. (p) (q) Deferred mining costs Longwall changeovers Costs incurred during longwall changeovers are deferred. A regular and ongoing review is undertaken to establish the extent of surplus items. Coal stocks Cost comprises average mining cost under normal mining conditions or actual purchase price and where applicable. Open-cuts Costs incurred in the removal of overburden ahead of coal recovered are deferred and amortised on a unit of production basis and included in the cost of production as the underlying coal is recovered. and a write down is recognised for any potential loss on their disposal. (o) Trade and other receivables Trade and other receivables. Interest bearing loans and borrowings All loans and borrowings are initially recognised at fair value net of transaction costs. When production commences. fixed and variable overhead costs and transportation costs. (s) 42 . (r) Trade and other payables These amounts represent liabilities for goods and services provided to the Group prior to the end of financial period which are unpaid. coal preparation expenditure. which generally have less than 30 day terms. the accumulated costs for the relevant area are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves on a unit of production basis. net of outstanding bank overdrafts. Inventories Inventories are valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and condition is accounted for as follows: Stores Cost comprises average cost and associated charges. The amounts are unsecured and are usually paid within 30 days of recognition. Net realisable value is the estimated selling price in the ordinary course of business. Items that are not expected to be utilised in the next 12 months are classified as non-current stores. For the purposes of the statement of cash flows. After initial recognition. interest bearing loans and borrowings are measured at amortised cost using the effective interest method. are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. less the estimated costs of completion and the estimated costs necessary to make the sale. Deferred longwall development costs Costs associated with the development of future longwall blocks ahead of production are deferred.

Defined contribution plans Contributions to defined contribution superannuation plans are expensed when incurred. the increase in the provision due to the passage of time is recognised as a finance cost. long service leave and sick leave when it is probable that settlement will be required and they are capable of being measured reliably. Where the settlement of employee benefit liabilities gives rise to the payment of employment on-costs. updated cost estimates. Mine site rehabilitation Mine site rehabilitation costs include the dismantling and demolition of infrastructure and the removal of residual materials and remediation of disturbed areas. annual leave. 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. the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. Other movements in the provision for mine site rehabilitation. (t) SUMMARY OF ACCOUNTING POLICIES (Continued) Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event. based on the net present value of estimated future costs. These costs are then depreciated over the lives of the assets to which they relate. plant and equipment. The only on-cost determined to arise upon the settlement of employee benefits is payroll tax. Where the Group expects some or all of a provision to be reimbursed. The amortisation of the discount is shown as a financing cost. The amortisation or “unwinding” of the discount applied in establishing the net present value of provisions is charged to profit or loss in each accounting period. for example under an insurance contract. The expense relating to any provision is presented in profit or loss net of any reimbursement. The costs are estimated on the basis of a closure plan. including those resulting from new disturbance. If the effect of the time value of money is material. whether this occurs during the mine development or during the production phase. Additional long service leave payments are made monthly to the Coal Mining Industry (Long Service Leave Funding Corporation) based on the eligible monthly payroll of employees involved in the mining of black coal. (u) Employee benefits A liability is recognised for benefits accruing to employees in respect of wages and salaries. The liability recognised in respect of employee benefits that have vested. where appropriate. Where discounting is used.Notes to the Financial Statements for the financial year ended 30 June 2010 1. are measured at their nominal values using the remuneration rate expected to apply at the time of settlement. The liability recognised in respect of employee benefits which have not vested and are not expected to settle within 12 months are measured as the present value of the estimated future cash outflows to be made by the Group in respect of services provided by employees up to reporting date. Mine site rehabilitation costs are provided for in the accounting period when the obligation arising from the related disturbance occurs. An asset for the amount recoverable from the Coal Mining Industry (Long Service Leave Funding Corporation) is recognised in the statement of financial position. Reimbursement is sought from the fund when long service leave is paid to employees involved in the mining of black coal. 43 . a liability is recognised for those on-costs as well as for the employee benefits. The cost estimates are calculated annually during the life of the operation to reflect known developments and are subject to formal review at regular intervals. provisions 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. changes to the lives of operations and revisions to discount rates are capitalised within property. rather than as an operating cost. the risks specific to the liability.

Notes to the Financial Statements for the financial year ended 30 June 2010
1. SUMMARY OF ACCOUNTING POLICIES (Continued)

(v)

Share-based transactions The Group provides benefits to employees (including Executive Directors) of the Group in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares (“equitysettled transactions”). Currently, the Group operates two equity incentive plans, being the Performance Rights and Option Plan (“PROP”) and the 1999 Senior Executive and Director Share Option Scheme (“1999 Option Scheme”), which provides benefits to the Managing Director and senior executives. Equity incentives granted after 7 November 2002 which vest after 1 January 2005, are measured at fair value at the date of grant. Fair value is measured by using the Black-Scholes option pricing model. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straightline basis over the vesting period, based on the Group’s estimate of shares that will eventually vest. There is no expense recognised in respect of equity incentives that were granted before 7 November 2002 and/or vested before 1 January 2005. Shares issued following the exercise of options are recognised at that time and the proceeds received allocated to share capital. When the Company grants equity incentives over its shares to employees of subsidiaries, the fair value at grant date is recognised as an increase in the investments in subsidiaries, with a corresponding increase in equity over the vesting period of the grant.

(w)

Leases Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income. Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term. Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term.

(x)

Revenue Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: Sale of coal Revenue is recognised when the significant risks and rewards of ownership of the coal have passed to the buyer and can be measured reliably. Risk and rewards are considered passed to the buyer at the time of delivery of the coal to the customer and the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the coal sold. Interest Revenue is recognised as the interest accrues (using the effective interest 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. Dividends Revenue is recognised when the Group’s right to receive the payment is established.

(y)

Income tax Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss for the period. It is calculated using the tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable). Deferred income tax is accounted for using the comprehensive balance sheet liability method, with certain limited exceptions, in respect of all temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

44

Notes to the Financial Statements for the financial year ended 30 June 2010
1.
(y)

SUMMARY OF ACCOUNTING POLICIES (Continued)
Income tax (continued) Deferred tax liabilities are recognised for all taxable temporary differences except: (i) where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or (ii) in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax credits and unused tax losses can be utilised except:

(i) where the deferred income tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or (ii) in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the end of the reporting period. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company/Group intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax is recognised as an expense or income in profit or loss, except when it relates to items credited or debited outside profit or loss (whether in other comprehensive income or directly in equity), in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill or excess. Tax consolidation The Company and all its wholly-owned Australian resident entities are part of a tax-consolidated group under Australian taxation law with effect from 1 July 2003. Centennial Coal Company Limited is the head entity in the taxconsolidated group. Tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax-consolidated group are recognised in the separate financial statements of the members of the tax-consolidated group using the ”separate taxpayer within group” approach. Current tax liabilities and assets and deferred tax assets arising from unused tax losses and tax credits of the members of the tax-consolidated group are recognised by the Company (as head entity in the tax-consolidated group). Nature of tax funding arrangements and tax sharing agreements Entities within the tax-consolidated group have entered into a tax funding arrangement and a tax-sharing agreement with the head entity. Under the terms of the tax funding arrangement, Centennial Coal Company Limited and each of the entities in the tax-consolidated group has agreed to pay a tax equivalent payment to or from the head entity, based on the current tax liability or current tax asset of the entity. Such amounts are reflected in amounts receivable from or payable to other entities in the tax-consolidated group. . The tax sharing agreement entered into between members of the tax-consolidated group provides for the determination of the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. No amounts have been recognised in the financial statements in respect of this agreement as payment of any amounts under the tax sharing agreement is considered remote.

45

Notes to the Financial Statements for the financial year ended 30 June 2010
1.
(z)

SUMMARY OF ACCOUNTING POLICIES (Continued)
Goods and Services Tax (“GST”) Revenues, expenses and assets are recognised net of the amount of GST except:

(i) where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in
which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and (ii) receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. (aa) Derivative financial instruments The Group uses derivative financial instruments such as foreign currency forwards and options and interest rate swaps to hedge its risk associated with foreign currency and interest rate fluctuations. Such derivative financial instruments are stated at fair value. The fair value of forward exchange contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles. The fair value of foreign currency options and interest rate swap contracts is determined by reference to market values for similar instruments. For the purposes of hedge accounting, hedges are classified as either fair value hedges when they hedge the exposure to changes in the fair value of a recognised asset or liability; or cash flow hedges where they hedge exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a forecasted transaction. In relation to fair value hedges which meet the condition for hedge accounting, any gain or loss from remeasuring the hedging instrument at fair value is recognised immediately in profit or loss. Any gain or loss attributable to the hedged risk on remeasurement of the hedged item is adjusted against the carrying amount of the hedged item and recognised in profit or loss. Where the adjustment is to the carrying amount of a hedged interest bearing financial instrument, the adjustment is amortised to profit or loss such that it is fully amortised by maturity. In relation to cash flow hedges to hedge forecast transactions which meet the conditions for hedge accounting, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised directly in other comprehensive income and the ineffective portion is recognised in profit or loss. When a hedged forecast transaction results in the recognition of an asset or a liability, then, at the time the asset or liability is recognised, the associated gains or losses that had previously been recognised in equity are included in the initial measurement of the acquisition cost or other carrying amount of the asset or liability. For all other cash flow hedges, the gains or losses that are recognised in comprehensive income are transferred to profit or loss in the same period in which the hedged forecast transaction affects the profit and loss, for example when a future sale actually occurs. For derivatives that do not qualify for hedge accounting, any gains or losses arising from changes in fair value are taken directly to profit or loss. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. At that point in time, any cumulative gain or loss on the hedging instrument recognised in equity is kept in comprehensive income until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in comprehensive income is transferred to profit or loss.

46

On initial classification as held for sale. This amount is recorded as a liability on an amortised cost basis until extinguished on conversion or upon the instruments reaching maturity. adjusted for bonus elements in ordinary shares issued during the year. The equity component initially brought to account is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument.Notes to the Financial Statements for the financial year ended 30 June 2010 1. AASB 2007-3 ‘Amendments to Australian Accounting Standards arising from AASB 8’ AASB 2009-2 Amendments to Australian Accounting Standards – Improving Disclosures about Financial Instruments AASB 101 (September 2007) has introduced terminology changes (including revised titles for the financial statements) and changes in the format and content of the financial statements. Discontinued operations and non-current assets held for sale A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale. Standards and Interpretations affecting amounts reported in the current period (and/or prior periods) The following new and revised Standards and Interpretations have been adopted in the current period: Standard Effect on financial statements (ag) • AASB 101 ‘Presentation of Financial Statements’ (revised September 2007). net of income tax effects and is not subsequently remeasured. (ad) (ae) (af) Financial instruments issued by the Company Compound instruments The component parts of compound instruments are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. AASB 2007-8 ‘Amendments to Australian Accounting Standards arising from AASB 101’. by the weighted average number of ordinary shares outstanding during the financial year. from the proceeds. The Group has elected not to provide comparative information for these expanded disclosures in the current year in accordance with the transitional reliefs offered in these amendments. if earlier. Incremental costs directly attributable to the issue of new shares or other equity instruments are shown in equity as a deduction. • 47 . Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. • AASB 8 is a disclosure Standard that has resulted in a redesignation of the Group’s reportable segments (refer note 2) The amendments to AASB 7 expand the disclosures required in respect of fair value measurements and liquidity risk. are included in the cost of the acquisition as part of the purchase consideration. such non-current assets are recognised at the lower of carrying amount and fair value less costs to sell. Earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to equity holders of the parent. Classification of a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale. (ab) SUMMARY OF ACCOUNTING POLICIES (Continued) Issued capital Ordinary shares are classified as equity. excluding any costs of servicing equity other than ordinary shares. for the acquisition of a business. (ac) Dividends Provision is made for the amount of any dividend declared on or before the end of the financial period but not distributed at the end of the reporting period. This is recognised and included in equity. Incremental costs directly attributable to the issue of new shares or other equity instruments. AASB 2007-10 ‘Further Amendments to Australian Accounting Standards arising from AASB 101’ AASB 8 ‘Operating Segments’. net of tax. At the date of issue.

but will change the disclosures presently made in relation to the Group and the Company’s financial report. AASB 2009-12 Amendments to Australian Accounting Standards AASB 9 Financial Instruments. Initial application of the following Standards/Interpretations is not expected to have any material impact on the financial report of the Group and the Company: Expected to be initially applied in the financial year ending Standard/Interpretation AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project AASB 2009-8 Amendments to Australian Accounting Standards – Group Cash-Settled Share-based Payment Transactions AASB 2009-10 Amendments to Australian Accounting Standards – Classification of Rights Issues AASB 124 Related Party Disclosures (revised December 2009). AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 AASB 2009-14 Amendments to Australian Interpretation – Prepayments of a Minimum Funding Requirement Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments Effective for annual reporting periods beginning on or after 1 January 2010 30 June 2011 1 January 2010 30 June 2011 1 February 2010 30 June 2011 1 January 2011 30 June 2012 1 January 2013 30 June 2014 1 January 2011 30 June 2012 1 July 2010 30 June 2011 48 . a number of Standards and Interpretations were in issue but not yet effective.Notes to the Financial Statements for the financial year ended 30 June 2010 1. Initial application of the following Standards will not affect any of the amounts recognised in the financial report. SUMMARY OF ACCOUNTING POLICIES (Continued) (ag) Standards and Interpretations issued not yet effective (continued) At the date of authorisation of the financial report.

3 2. For management purposes. following the adoption of AASB 8. mines and processes coal which is sold to domestic and export customers principally for power generation.7) 95.1 83.6) (2. the Group is organised into business units based on geographic regions and has two reportable operating segments as follows: • The Northern segment explores for. Transfer prices between operating segments are on arm’s length basis in a manner similar to transactions with third parties. AASB 8 requires operating segments to be identified on the basis of internal reports and components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance.1) 75.6) 20. 2010 Revenue External customers Total revenue Results EBITDA Depreciation and amortisation Segment result Other income Administrative expenses Finance costs Significant items Other expenses Profit before income tax Income tax benefit Net profit for the year North $M 385.5 49 . with the entity’s ‘system of internal financial reporting to key management personnel’ serving only as the starting point for the identification of such segments. the predecessor Standard (AASB 114 Segment Reporting) required an entity to identify two sets of segments (business and geographical).5) (0. develops. west of Sydney.2 51.3 West $M 414.Notes to the Financial Statements for the financial year ended 30 June 2010 2. Amounts reported for the prior period have been restated to conform to the requirements of AASB 8. develops. Segment performance is evaluated based on operating profit or loss and is measured consistently with operating profit or loss in the consolidated financial statements.8 Unallocated $M - Consolidated $M 800.1 800.3 (62. The Western segment explores for. The Western region encompasses mines.8 414.8 8. using a risks and rewards approach. As a result. The accounting policies of the new reportable segments are the same as the Group’s accounting policies.5 (35.1) 49. the Group’s financing (including finance costs and finance income) and income taxes are managed on a group basis and are not allocated to operating segments. In contrast.5 (102.8) (16. However. the identification of the Group’s reportable segments has changed.1 - 198.3 385. OPERATING SEGMENTS The Group has adopted AASB 8 Operating Segments and AASB 2008-3 Amendments to Australian Accounting Standards arising from AASB 8 as of 1 July 2009. processing and transport infrastructure between Lithgow and Mudgee. north of Sydney and south of Newcastle.2 (40. Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. mines and processes coal which is sold to domestic and export customers principally for power generation.7 115. • No operating segments have been aggregated to form the above reportable operating segments. The Northern region encompasses mines. processing and transport infrastructure around Lake Macquarie.

4 419.8 159.2 124.2) 71.2 Unallocated(1) $M Consolidated $M 1.0 104. Australia.1 Consolidated $M 886.1 710.2 459.6 178.0 55.Notes to the Financial Statements for the financial year ended 30 June 2010 2.8 310.9 - 254.4) (15.5 149.2 West $M 576.8 110.3 528. 50 .0 430.8) 162.4 74.5) 44.2 1.4 12.2 (91.9 157.6 93.8 663.3) 117.1 2009 $M 449.5 58.1) (22.8) 95.2 135.0 886.2 119.7 107.2 (32.3 million (2009: $187.4 North $M 459.1 Unallocated relates to non-regional parent entity balances Geographic information The operations of the Group are located in only one geographic location.8 426.4) (2.8 101.411. New South Wales.7 Japan Korea Taiwan Other 108. Revenues from external customers based on the location of the customer: 2010 $M 411.189.0 Domestic (NSW) Export – – – – Total revenue per consolidated statement of comprehensive income Included in revenues for the North segment are revenues of $206.1 120.0 (59.8 Unallocated(1) $M 51.0 47.4 million) from the Group’s second largest customer.7 (39. OPERATING SEGMENTS (Continued) 2010 Segment assets Segment liabilities Other disclosures Capital expenditure 2009 Revenue External customers Total revenue Results EBITDA Depreciation and amortisation Segment result Other income Administrative expenses Finance costs Significant items Other expenses Profit before income tax Income tax expense Net profit for the year Segment assets Segment liabilities Other disclosures Capital expenditure Note: (1) North $M 784.0 2.4 (24.0 297.6 million (2009: $223.3 84.0 800.5 West $M 426.5 150.7 1.2 886.6 million) from the Group’s largest customer and included in both segments are revenues of $174.

0 0.1 886.3 3.0 22.2 24. PROFIT BEFORE INCOME TAX The profit before income tax includes the following items of revenue and expense: (a) Revenue Coal sales Other income Dividends: Associates Subsidiaries Management fees: Subsidiaries and joint ventures Interest revenue – loans and receivables Other entities Subsidiaries Net foreign exchange gain – other financial liabilities Gain on disposal of plant and equipment Convertible note discount unwind Other operating income Expenses Depreciation and amortisation: Plant and equipment Mining and development properties Equipment under finance lease Company 2009 2010 $M $M 800.8 0.4 0.8 3.2 1.8 6.3 19.8 1.6 2.9 0.0 3.6 0.7 3.7 69.0 2.3 (b) 0.5 0.2 2.4 91.3 1.0 1.8 12.5) (8.4) - - 51 .3 93.1 102.5) (2.9 20.2 1.4 0.2 2.5) (6.7 73.3 (c) 77.5 19.5 0.6 108.5 1.0 1.7 5.9 3.0 134.4 0.Notes to the Financial Statements for the financial year ended 30 June 2010 Consolidated 2009 2010 $M $M 3.2 0.6 8.4 - Operating lease rental expenses Net foreign exchange loss Inventory write down to NRV (d) Significant items Costs incurred on suspension of production at the Group’s Newstan coal mine Unrealised foreign exchange hedge accounting loss (2.7 26.4 1.3 13.6 24.0 18.2 1.4 0.8 1.4 - 1.5 1.6 1.5 Net transfers: Employee entitlements Mine site rehabilitation 19.9) (15.

2 (1.2 (11.9 4. There has been no change in the corporate tax rate when compared with the previous reporting period.3 (14.4 0.6 32.3 16.6 4. PROFIT BEFORE INCOME TAX (Continued) (e) Finance costs Other entities (other financial liabilities) Finance charges on leased assets Total interest expense Amortisation of deferred borrowing costs Unwind of discounts relating to provisions Company 2009 2010 $M $M 12.3 12.9 2.6) (2.4 (24.6 2.4 0.1) 0.2 0.4 14.6 22.1 16.6 167.7 12.4 (28.3 15.9 32.0) 0.Notes to the Financial Statements for the financial year ended 30 June 2010 Consolidated 2009 2010 $M $M 3.3 1.3 4.6 13.4 (13.6) (24.2 (15.8) 1.8 1.4 12.7 0.1 0.8) (1.9 4.2 22.2 95.9) 2.3 56.7 1.4 0.6 49.8 4.4 1.0) (2.9) 1.6 10.3) 5.6 16.4) (1.7 14.4 0.6 (f) Employee benefit expense Post employment benefits: Defined contribution plans Share-based payments: Equity settled share-based payments Other employee benefits: Salaries and wages 27.5 16.0 211.3 1.2) (4.2 2.2) 51.3 16.3 2.0 4.3 4.3 12.2) 0.3 0.3 20.8 14.4 18.4 14.1) 3.7) (0. INCOME TAXES (a) Income tax recognised in profit or loss Tax (expense)/income comprises: Current tax (expense)/income Adjustments recognised in the current year in relation to the current tax of prior years Deferred tax (expense)/income relating to the origination and reversal of temporary differences Total tax (expense)/benefit The prima facie income tax expense on pre-tax accounting profit from operations reconciles to the income tax expense in the financial statements as follows: Profit from operations Income tax (expense)/benefit calculated at 30% Non-deductible expenses Other deductible expenses Investment allowance credits Non-assessable income – Dividends from within the tax-consolidated group Research and Development deductions Over/(under) provision of income tax in previous year Total income tax (expense)/benefit in the income statement 1.6 The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on taxable profits under Australian tax law.7 (17.8 0.3 174. 52 .4 199.1 (6.2 2.

4 1.9 3.2) 0.0) 14.0) 14.8 29.9 - - 12.9 18.6 (d) Deferred tax balances 35.9 24.4 48.6 - 12. driven by operational performance and continuing high export coal prices.7) (1.4 - The expected utilisation of the carried-forward tax losses is supported by improved profitability.6 98.0 59.8 98.6 2.3 Deferred tax assets comprise: Tax losses – revenue Tax losses – capital Temporary differences Deferred tax liabilities comprise: Temporary differences 118.2 18.8 118.1 (1.2) 2. INCOME TAXES (Continued) (b) Income tax recognised in other comprehensive income Deferred tax: Arising on income and expenses recognised in other comprehensive income: Revaluations of financial instruments treated as cash flow hedges Reclassifications from equity to profit or loss: Relating to cash flow hedges Total income tax recognised in other comprehensive income (c) Current tax assets and liabilities Current tax assets: Tax refund receivable Current tax liabilities: Income tax payable attributable to: Entities in the tax-consolidated group Company 2009 2010 $M $M (8.9 - 2.9 2.9 2.6 30.6 1.5 25.2 35.6 12.6 12.9 1.8 6.3 39.6 (16. 53 .6 6.5 (2.Notes to the Financial Statements for the financial year ended 30 June 2010 Consolidated 2009 2010 $M $M 4.

3) (3.4 0.4) (50.9) (58.4 16.9 (0.0 15.6 1.5 18.1 17.0) 1.6) 0.0 15.4 22.8 1.3) (3.1 (4.1) (0.1 1.6) - (113.9) (58.0) (10.6) (14.8 (22.4 1.6 1.9 (58.8) (14.9) (2.7 3. plant and equipment Inventories and consumables Other items Gross deferred tax assets: Accrued expenses Borrowings Provisions Foreign currency monetary items Cash flow hedges Other Tax value of losses carried-forward Net tax liabilities Balance sheet disclosure: Deferred tax assets Deferred tax liabilities Credited/ (charged) to income $M Credited/ (charged) to equity $M Acquisitions / disposals $M Closing balance $M (92.0) (13.4) 54 .8) - (92.2) (0.9) (2.0) 1.3) (3.5 6.1 0.0) 1.3) (3.5 4.5) (0.1) (2.4) 1.8) (3.5) 17.7 3.9) (6.6) (6.8 0.4 1.8 (50.1 (1.9) Consolidated – 2009 Opening balance $M Gross deferred tax liabilities: Property. plant and equipment Inventories and consumables Other items Gross deferred tax assets: Accrued expenses Borrowings Provisions Foreign currency monetary items Cash flow hedges Other Tax value of losses carried-forward Net tax liabilities Balance sheet disclosure: Deferred tax assets Deferred tax liabilities Credited/ (charged) to income $M Credited/ (charged) to equity $M Acquisitions / disposals $M Closing balance $M (81.0 35.9) 0. INCOME TAXES (Continued) Reconciliation of the opening to closing balance of deferred tax arising from temporary differences and carriedforward tax losses: Consolidated – 2010 Opening balance $M Gross deferred tax liabilities: Property.0 0.5 6.6 (0.0 (0.1 1.9) 1.4) (21.6) 0.5 18.Notes to the Financial Statements for the financial year ended 30 June 2010 4.4) (50.6 2.8 (50.7 21.0 0.

0 0.8 (1.807 143.2 0.8 2.328 864.931 593.553 2.455 3.1 8.9 1.002 Termination benefits $ Share based payments $ 3.278 2.826 (b) Individual Directors’ and executives’ compensation disclosures Apart from the details disclosed in this note.392 9.2 0. Credited/ (charged) to income $M Credited/ (charged) to equity $M Transfers $M Closing balance $M 22. Remuneration packages are reviewed and determined with due regard to current market rates and are benchmarked against comparable industry salaries. (a) Total remuneration of key management personnel Short-term benefits Salary Cash Nonand fees bonus monetary $ $ $ Post-employment Superannuation $ 339.568. 55 .Notes to the Financial Statements for the financial year ended 30 June 2010 4.3 (0.7) 5.273 203.9) (0.3 (1.3 REMUNERATION OF KEY MANAGEMENT PERSONNEL The Remuneration Committee reviews the remuneration packages of all Directors and executives that meet the definition of key management personnel on an annual basis and makes recommendations to the Board.0) 18.714.8 Company – 2009 Opening balance $M Gross deferred tax assets: Tax value of losses carried-forward Accrued expenses Provisions Cash flow hedges Other Net tax assets/(liabilities) 5.5) (1.842 Directors and Executives Year ended 30 June 2010 Year ended 30 June 2009 4.1 1.8 0.0) (4.1 4.6 29.9 1.2010 Opening balance $M Gross deferred tax liabilities: Foreign exchange Gross deferred tax assets: Tax value of losses carried-forward Accrued expenses Provisions Cash flow hedges Other Net tax assets Credited/ (charged) to income $M Credited/ (charged) to equity $M Transfers $M Closing balance $M 18.0 0.3 25.4) 35. no Director has entered into a material contract with the Company or the Group since the end of the previous financial year and there were no material contracts involving Directors’ interests existing at year-end.2 0.202 Total $ 8.537. INCOME TAXES (Continued) Reconciliation of the opening and closing balance of deferred tax arising from temporary differences and carry forward tax losses: Company .6 2.165.902 9.4) 9.6 37.5 1.962.8 0.3 25. Refer also to the additional disclosures in the Remuneration Report included in the Directors’ Report.0 0.054.9 0.048.9) 8.7 1.1 (2.5) (4.1 (1.677 Other $ 6.1 4.3 0.8 0. adjusted by a performance factor to reflect changes in the performance of the Company and the individual.2 1.

000 142.735 338.2 2.5 51. 000s 364.735 670.5 71.000 142.735 210.5 51. 2010 $M Diluted earnings per share The earnings and weighted average number of ordinary and potential ordinary shares used in the calculation of diluted earnings per share are as follows: (c) Earnings (see basic earnings per share above) Convertible note interest add back Earnings used in the calculation of diluted EPS 51.379 33.705 846. Where dilutive. EARNINGS PER SHARE Basic earnings per share Diluted earnings per share 13.000 118.705 386.879 Equity incentives are considered to be potential ordinary shares and are therefore excluded from the weighted average number of ordinary shares used in the calculation of basic earnings per share.9 2010 $M Basic earnings per share The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows: (a) Profit from operations Earnings used in the calculation of basic EPS 51.5 12.1 73. REMUNERATION OF AUDITORS Auditor of the parent entity Audit or review of the financial report Taxation services Other services 670.2 71.735 788.2 19. 000s (b) Weighted average number of ordinary shares used in basic EPS 383.084 220. potential ordinary shares are included in the calculation of diluted earnings per share (see below).Notes to the Financial Statements for the financial year ended 30 June 2010 Consolidated 2009 2010 $ $ 6.3 2009 $M 56 .379 33.049 2009 No.084 Company 2009 2010 $ $ Consolidated 2009 2010 cents cents 7.5 18.000 118.8 2009 $M 2010 No.5 71.

8 15.9 As described in Note 1(ac) dividends are recognised when the Directors have declared.0 4.068 (ii) The following potential ordinary shares are not dilutive and are therefore excluded from the weighted average number of ordinary shares and potential ordinary shares used in the calculation of diluted earnings per share: Employee options 3. DIVIDENDS 2010 cents per share Partially franked: Interim dividend paid (50% franked) Final dividend proposed (40% franked) (unrecognised) Fully franked: Interim dividend paid Final dividend proposed (unrecognised) 2009 cents per share $M $M 4.391 1.0 15. 000s 390.8 8.Notes to the Financial Statements for the financial year ended 30 June 2010 7.8 million declared by the Directors on 27 July 2010 has not been provided for in the Financial Statements.7 2009 $M 3.771 16.879 2.0 31.6 7.068 383.0 4.0 11.079 390.0 15.493 11. EARNINGS PER SHARE (Continued) 2010 No. determined or publicly recommended the dividend.129 399.370 8.7 3.0 Consolidated 2009 2010 $M $M Adjusted franking account balance @ 30% (tax paid basis) 5. 57 . 000s (d) Weighted average number of ordinary shares and potential ordinary shares (i) Weighted average number of ordinary shares and potential ordinary shares used in the calculation of diluted earnings per share reconciles to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows: Weighted average number of ordinary shares used in the calculation of basic EPS Outstanding employee equity incentives Converted employee options and convertible notes Effect of convertible notes on issue Weighted average number of ordinary shares and potential ordinary shares used in the calculation of diluted EPS 399.049 5.671 364.0 41.9 Company 2010 $M 5.0 26.671 2009 No. the 2010 final dividend of $15.339 6. Accordingly.

7 12.5 10.132.6 22.1 1.1 818.8 (137.) Consolidated Company 2009 2009 2010 2010 $M $M $M $M 10.2 1. There are no material trade receivables aged past the normal due date of 30 days as at 30 June 2010 (30 June 2009: no past due).5 0.5 104.2 110.1 Movement in the allowance for doubtful debts: Balance at the beginning of the year Impairment losses recognised on receivables Balance at the end of the year - - 137.6 2.4 24.8 0.8) 817.2 98.4 2.5 0.4 million. There are no other significant credit risk exposures to any single counterparty or group of counterparties having similar characteristics.9 23.6 57.5 0.9 12. CURRENT TRADE AND OTHER RECEIVABLES Trade receivables Goods and services tax recoverable Amounts receivable from wholly owned subsidiaries Long service leave coal industry fund receivable 69.4 19.5 11.5 1.7 15.7 15. CURRENT INVENTORIES Stockpiles of coal: At cost At net realisable value Consumable supplies and spare parts: At cost 21.7 12.0 1.8 998.5 137.8 The amounts receivable from wholly-owned subsidiaries are mainly interest bearing and have no fixed terms for repayment.4 31.6 0.1 - - 11.4 36.8) 995.3 25.6 5.6 35.1 3.8 15.Notes to the Financial Statements for the financial year ended 30 June 2010 Consolidated 2009 2010 $M $M 9. 30 June 2010 (30 June 2009: nil.1 13.5 76.6 4.0 26.3 Company 2010 $M 2009 $M The Group has credit risk exposures to NSW Government Statutory entities being Delta Electricity and Eraring Energy totalling $28. In addition. OTHER CURRENT ASSETS Deferred mining costs Prepayments and sundry debtors 67.8 112. no impairment has been recognised against outstanding trade receivables at the end of the reporting period.7 23.1 3. 58 .8 137. NON-CURRENT TRADE AND OTHER RECEIVABLES Amounts receivable from wholly-owned subsidiaries Allowance against intercompany receivables Royalty receivable Other 12.9 954.2 67.9 (137.4 31.6 3.

3 9. 59 .67%. The Company has not taken up its share of this profit as the accumulated equity accounted loss is in excess of the original cost of the investment.0 0. Consolidated 2009 2010 $M $M Movement in investment in associates: Equity accounted amount of investment at the beginning of the financial year Share of profits before income tax Equity accounted amount of investment at the end of the financial year - The associate company Port Kembla Coal Terminal Limited made an operating profit of $1.0 2.0 2.67 50 20 Consolidated carrying amount 2009 2010 $M $M - Name of entity Springvale Coal Sales Pty Limited Port Kembla Coal Terminal Limited Notes: (a) (b) Principal activity Coal Mining Coal Loading Terminal Balance date 31 December 30 June The above companies are incorporated in Australia. On 21 July 2009 the Company reduced its shareholding in Port Kembla Coal Terminal Limited to 16.0 2. The Group’s investment in the Springvale Joint Venture is accounted for through its wholly-owned subsidiary.1 22.2 22. OTHER NON-CURRENT FINANCIAL ASSETS Shares at cost: In other corporations (non-quoted) In subsidiaries (non-quoted) 14.5 - - INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD Ownership interest 2009 2010 % % 50 16.1 22.3 9. Company 2010 $M 2009 $M 2.2 22. NON-CURRENT INVENTORIES Consumable supplies and spare parts: At cost 15. Springvale Coal Sales Pty Limited is jointly owned by the joint venture parties.Notes to the Financial Statements for the financial year ended 30 June 2010 Consolidated 2009 2010 $M $M 13. The investment continues to be equity accounted as the Company still has its representatives on the Board of directors of Port Kembla Coal Terminal Limited.0 million after income tax for the year. Centennial Springvale Pty Limited.1 million.3 0. The cumulative unrecognised share of losses is $0.

plant and equipment Other Total non-current assets Total assets Contingent liabilities.1 (1.2 60 .0 338.0 30.1) (1.0 252.7 33.0 62.Notes to the Financial Statements for the financial year ended 30 June 2010 15.0 26. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (Continued) Consolidated 2009 2010 $M $M Summarised financial position of associated entities: Current assets Non-current assets Total Assets Current liabilities Non-current liabilities Total Liabilities Net Liabilities Group’s share of associates’ net liabilities Share of reserves attributable to associates Accumulated losses: At the beginning of the financial year At the end of the financial year 9.4 10.8 5.5 15.8 17.3 10.4 20.5 27.3 10.7 283.6 17. 33 and 34 respectively.2) (4. The amounts are included in the Consolidated Financial Statements under their respective asset categories: Consolidated 2009 2010 $M $M Current assets Cash and cash equivalents Trade and other receivables Inventories Other Total current assets Non-current assets Property.8 (1.2 367.1 25.1 16.1 304.5 23.7) 13. 1. capital commitments and operating lease commitments arising from the Group’s interest in joint venture operations are disclosed in Notes 30. capital commitments and operating lease commitments The contingent liabilities.6 13. JOINT VENTURE OPERATIONS The Group has an interest in the following unincorporated joint ventures: Interest 2009 2010 % % 95 95 85 85 50 50 50 50 Charbon Joint Venture Clarence Joint Venture Springvale Joint Venture Angus Place Joint Venture Principal activity Coal Mining Coal Mining Coal Mining Coal Mining The Group’s interest in the assets employed in the above joint venture operations is detailed below.3 30.7 30.2) (0.1 14.8) 16.8) (0.8 55.2 279.

8) 10.2 - (240.4) (2.1) (3.4) 33.5 245. PROPERTY.123.8) (387.5 11.1 39.6) 431.6) (337.1 480.6 641.7 - (5.5 10.7 26.5) (6.1 3.9) (88.2) (7.6) 0.1 (34.1 (23.1 178.0 405.Notes to the Financial Statements for the financial year ended 30 June 2010 17.6 1.540.2 66. 61 .4) 17.5 0.7) 0.066.0 (0.1 (102.4 1.6) 979.2 322.8) 10.5) 11.3 (1.3 (1.3) 32.6 1.3 470.9 (0.4 (33.5 0.4) 0.1 (77.7 (20.266.6) - 4. PLANT AND EQUIPMENT Consolidated Mining and development properties at cost $M Equipment under finance lease at cost $M Land at cost $M Gross carrying amount Balance at 1 July 2008 Additions Disposals Balance at 1 July 2009 Additions Disposals Balance at 30 June 2010 Accumulated depreciation/amortisation Balance at 1 July 2008 Disposals Depreciation expense Balance at 1 July 2009 Disposals Depreciation expense Balance at 30 June 2010 Net book value As at 30 June 2010 As at 30 June 2009 Plant and equipment at cost $M Total $M 48.7) (1.1 3.1) (1.4 18.3) 69.9 Company Plant and equipment at cost $M 10.6 69.6 1.7) 17.8 (69.5) (108.9) (277.2) (24.4 (1.0 130.6) 0.7) (473.6 (0.7) 0.4 8.6) 1.1 338.4 9.0) (132.6 (0.5) 1.5) (6.2 661.9 (0.0 Land at cost $M Gross carrying amount Balance at 1 July 2008 Additions Disposals Balance at 1 July 2009 Additions Disposals Balance at 30 June 2010 Accumulated depreciation Balance at 1 July 2008 Disposals Depreciation expense Balance at 1 July 2009 Disposals Depreciation expense Balance at 30 June 2010 Net book value As at 30 June 2010 As at 30 June 2009 - Total $M 10.5) 11.9) 757.9 4.7 297.6 2.9 Aggregate depreciation allocated during the year is recognised as an expense and is disclosed in Note 3.6) (5.1 (23.1 21.2 66.4 (1.2) (7.2) (329.0 3.2) (0.9 879.5 (91.7 18.

6 5. The credit terms on trade payables varies from seven to 30 days.0 15.0 2.8 9. OTHER NON-CURRENT ASSETS Deferred mining costs 19.2 22. ASSETS PLEDGED AS SECURITY The Group is partly financed by the Company’s bank loans through a Senior Facility Agreement and Standby Facility both of which are unsecured.0 3.1 0.1 4.2 12. CURRENT TRADE AND OTHER PAYABLES Trade payables Other payables and accruals Goods and Services Tax payable 48.9 127.5 9.5 18. No interest is charged on trade payables if paid within credit terms.4 0.Notes to the Financial Statements for the financial year ended 30 June 2010 Consolidated 2009 2010 $M $M 18.2 21.coal price .interest rate swaps 1.7 50. OTHER CURRENT LIABILITIES Derivative hedge payable .2 7.3 13. Consolidated 2009 2010 $M $M 20. The Group does not hold title to equipment under finance leases pledged as security.3 13.refer Note 19 15.1 0.3 64.9 1.3 3. CURRENT BORROWINGS Unsecured – at amortised cost: Bank loan Secured – at amortised cost: Finance lease liabilities (Note 21(a) and Note 34) (a) Secured by the assets leased .8 9.4 75.1 1.6 5.0 15.5 Company 2009 2010 $M $M 25.4 3.5 2.3 13.1 4.3 Company 2009 2010 $M $M 21.5 1.foreign exchange .0 - 22.8 0.5 62 .2 22. The Group has procedures in place to ensure payables are paid within the respective credit timeframe.5 118.

OTHER NON-CURRENT LIABILITIES Derivative hedge payable .3 (7.interest rate .5 180.1 220.0 180.9 6.4) 5.7 6.7 36.1 (2.2 1.0 34.at amortised cost: Bank loans 6.1 (2.6 Balance at 1 July 2009 Reductions arising from payments/other sacrifices of future economic benefits Increases resulting from remeasurement Unwinding of discount and effect of changes in the discount rate Balance at 30 June 2010 Non-current (Note 24) (a) Total $M 30.0 34.5) 323.0 24.7 6. the estimates calculated could differ to actual costs due to changes in legislation and changes in cost estimates.1 325.2% Subordinated Convertible notes Secured: Finance lease liabilities (Note 21(a) and Note 34) Deferred borrowing costs Accumulated amortisation Company 2010 $M 2009 $M 325.4 (7.2) 1. waste disposal. 26. In determining the provision. PROVISIONS Consolidated Mine site rehabilitation $M 30.4) 5.6 30.5) 336.5 (3.1 (0.Notes to the Financial Statements for the financial year ended 30 June 2010 Consolidated 2009 2010 $M $M 23.9 3.3 6.9 6.3 214.3) 218.3) 212. it has been assumed no significant changes will occur in relevant State and Federal legislation. Over time.1 (0.9 63 . plant closure and other costs associated with the restoration of a mining site.2 9.9 3.0 325.5 337.0 12.4) 5. NON-CURRENT PROVISIONS Mine site rehabilitation 36.2 1. NON-CURRENT BORROWINGS Unsecured .4) 5.6 36.2) 1.7 (1.1 - 25.0 (3.6 36.2 9.9 6.7 36.6 The provision for restoration of mine sites represents the present value of the costs for reclamation.foreign exchange 6.7 (1.

8 3.1 378.1 2009 No. 64 .819 $2.4 2.9 2.2700 Conversion of notes Balance at the end of the financial year 2.097 Average issue price $3.0 426.5 8.1 395.5 2.9 0.5 378.793.7 430.2100 Conversion of notes Convertible note equity component $3.Notes to the Financial Statements for the financial year ended 30 June 2010 Consolidated 2009 2010 $M $M 27.3 62.000 .4996 Exercise of employee options 198.834 $2.442.3 373. Changes to the then Corporations Law abolished the authorised capital and par value concept in relation to share capital from 1 July 1998.8 Fully paid ordinary shares carry one vote per share and carry the right to dividends.5 0.2 27.000 .5 378.5 36.2 426.6 383.000 $1.2549 Exercise of employee options 199.6199 2010 No. Therefore.048. the Company does not have a limited amount of authorised capital and issued shares do not have a par value. ISSUED CAPITAL 394. Millions 373.Deferred shares incentive plan 16.5 2.8 $M 378. Millions 341.356.4616 Shareholder elections 3.306) Premium to subscribe for ordinary shares in the Company arising from the issue of equity incentives Subordinated Convertible Notes equity component Company 2010 $M 2009 $M 426.515.8 3.6 $M 301.1 2.8 13.109 under the Dividend Reinvestment Plan 861.2 16.6 383.7 430.998.1 1.737 fully paid ordinary shares (2009: 373.Deferred shares incentive plan 27.8 3.8 0.6 Basis of issue Shareholder elections under the Dividend Reinvestment Plan 2.774.500 $1.2 Fully paid ordinary shares Balance at the beginning of the financial year Number of shares issued 2.1 2.1 0.

Further information about share-based payments to employees is disclosed in the Remuneration Report.5 (2.5 12.3% 0.2) 1.9 (7.6) 12.6 12.5) 0.9 4.0 7.5) (2. COMMITMENTS FOR EXPENDITURE Capital expenditure commitments Property.Notes to the Financial Statements for the financial year ended 30 June 2010 Consolidated 2009 2010 $M $M 28.1 (1.5) 11.0 - - Finance lease liabilities and non-cancellable operating lease commitments are disclosed in Note 34. CAPITALISED BORROWING COSTS Borrowing costs capitalised to qualifying assets during the financial year Weighted average capitalisation rate on funds borrowed generally 30.6 4.9 5. The cumulative deferred gain or loss on the hedge is recognised in profit or loss when the hedged transaction impacts the profit or loss.1 (6.3 5.3 7.5 7.5 3. plant and equipment: Not longer than one year Longer than one year but less than three years Company 2010 $M 2009 $M - (15.2 0.6 4.6) 12.9 4.2% - - 69.6 12.6 (3.2 7.3 7. RESERVES Hedging reserve: The hedging reserve represents hedging gains and losses recognised on the effective portion of cash flow hedges.8) (15.9 4. consistent with applicable accounting policy.2 - Joint venture operations: Not longer than one year Lease commitments 8.6 5.8 69.9 7.3 (15. Total reserves Hedging reserve: Balance at beginning of financial year Gain/(loss) recognised on cash flow hedges Foreign exchange contracts Coal swap contracts Interest rate contracts Income tax related to gains/(losses) recognised Transferred to subsidiaries Balance at end of financial year Employee equity settled benefits reserve: Balance at beginning of financial year Share-based payment expense Balance at end of financial year 29.8 146.6) 7.8 3.0 3.5 12.6) 3.0 0.9) 94. Employee equity settled benefits reserve: The employee equity settled benefits reserve arises on the grant of equity to executives under the Company’s equity incentive plans.8) (14.5) (0.5) (2.6) (41. 65 . Amounts are transferred out of the reserve and into issued capital when options are exercised.0 149. or is included as a basis adjustment to the non-financial hedged item.6) - (49.5 3.6 31.1 (4.0) (0.

6 30. In the unlikely event of a default by the Group of its specific obligations to third parties.0 3. SUPERANNUATION The Group provides for superannuation as follows: (a) Industry scheme Under the terms of the Coal and Oil Shale Mine Workers (Superannuation) Act 1941. and as such an actuarial review is not required.8 29. The aggregate amount that would be paid out if these contracts were terminated at reporting date is disclosed above. The trustees are of the opinion that all vested benefits are covered by the available assets in the event of termination of the plans. the Company is required to make contributions to the Coal Mining Industry Long Service Leave Scheme for long service leave payments to employees under the terms of various coal mining industry awards. the Company contributed to several accumulation benefit funds. LONG SERVICE LEAVE Under the Coal Mining Industry (Long Service Leave Funding) Act 1992.6 30.1 25. the Company will be required to compensate the executive for loss of income based on a specified notice period of 12 months. 32. Consolidated 2009 2010 $M $M 33. with the amount not subject to uncertainty.8 Company 2009 2010 $M $M 39. the contingent liability would be realised. The rate of contribution to the funds by the Group in respect of each member in any one year is such amount as the Company determines from time to time within prescribed limitations. Company schemes In addition to the industry scheme. (b) The Group has a legal obligation to contribute as set out in each of the trust deeds governing the schemes noted in 31(a) and 31(b) above.8 29.Notes to the Financial Statements for the financial year ended 30 June 2010 31.6 (a) (b) 29. death or disability. given to government departments as required by statute Guarantees provided in respect of employee entitlements inherited as part of the acquisition of Powercoal Pty Limited Contingent liabilities arising from service contracts (a) (a) 39.0 3. withdrawal. These funds are superannuation funds with a lump sum benefit on retirement. 66 . the Group is required to make contributions to the industry superannuation fund on behalf of employees engaged at the Group’s mine sites.7 29. CONTINGENT LIABILITIES Performance guarantees provided to external parties Guarantees provided in respect of the cost of restoration of certain mining leases.0 3.1 25. which stipulate that in the event that their service contracts are terminated early by the Company.8 (a) 33. and the right to vary the rate of or terminate contributions upon giving notice as prescribed in such deeds accordingly.0 3.7 (b) The guarantees provided are for a specified amount.6 33. voluntary termination of employment or compulsory termination of employment of each employee. Specified senior executives have entered into service contracts with the Company.

5 12.9 5.8 1. The Group does not have an option to purchase the leased asset at the expiry of the lease period.3) 8.0 2. The Group has options to purchase the leased assets at the residual values on the expiry of the leases.2 3.7 19.4) 16.7 6.5 16.4 (3. 67 .1 8.1 - - 1.1 Company 2010 $M - 2009 $M - 3.4 2.2 0.2 35.0 2.4 5.4 2.Notes to the Financial Statements for the financial year ended 30 June 2010 34.4 6.0 6. LEASES Finance leases Leasing arrangements: Finance leases relate to plant and equipment with lease terms between one and five years. There are no contingent lease payments and no restrictions imposed on leasing arrangements.7 9. ECONOMIC DEPENDENCY A significant volume of the Group’s coal is sold into long-term contracts with the NSW Government statutory bodies. Non-cancellable operating lease payments: Not longer than one year Longer than one year and not longer than five years 5.1 0. Consolidated 2009 2010 $M $M Finance lease liabilities: No later than one year Later than one year and not later than five years Minimum finance lease payments Deduct future finance charges Present value of minimum lease payments Included in the Financial Statements as: Current borrowings (Note 21) Non-current borrowings (Note 23) Operating leases Leasing arrangements: Operating leases relate to haul road usage and office facilities.7 13.4 (1. Delta Electricity and Eraring Energy.8 0.

Previously Japan Energy (Australia) Pty Limited. Previously ACN 125 670 288 Pty Limited. The above noted wholly-owned subsidiaries have entered into a deed of cross guarantee with Centennial Coal Company Limited pursuant to ASIC Class Order 98/1418 and are relieved from the requirement to prepare and lodge an audited financial report.Notes to the Financial Statements for the financial year ended 30 June 2010 36. Previously Airly Coal Pty Limited. The consolidated statement of comprehensive income and statement of financial position of the entities party to the deed of cross guarantee are materially the same as the Group statement of comprehensive income and statement of financial position for the 2010 financial year. All 100% owned subsidiaries are members of the Centennial Coal tax-consolidated group. SUBSIDIARIES Country of incorporation Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 50 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 50 Ownership interest 2009 2010 % % Name of entity Parent entity Centennial Coal Company Limited (a) Subsidiaries ACN 120 159 051 Pty Limited Berrima Coal Pty Limited Centennial Airly Pty Limited (c) Centennial Angus Place Pty Limited Centennial Clarence Pty Limited (d) Centennial Coal Infrastructure Pty Limited Centennial Coal Sales and Marketing Pty Limited Centennial Fassifern Pty Limited Centennial Hunter Pty Limited Centennial Mandalong Pty Limited Centennial Mannering Pty Limited Centennial Munmorah Pty Limited Centennial Myuna Pty Limited Centennial Newstan Pty Limited Centennial Northern Coal Services Pty Limited (e) Centennial Springvale Holdings Pty Limited Centennial Springvale Pty Limited Charbon Coal Pty Limited Clarence Coal Investments Pty Limited Clarence Coal Pty Limited Clarence Colliery Pty Limited Coalex Pty Limited Hartley Valley Coal Company Pty Limited Ivanhoe Coal Pty Limited Preston Coal Pty Limited Springvale Coal Pty Limited Springvale Coal Sales Pty Limited Powercoal Pty Ltd Group: Collieries Superannuation Pty Limited Elcom Collieries Pty Limited Huntley Colliery Pty Limited Mandalong Pastoral Management Pty Limited Powercoal Employee Entitlements Company Pty Limited Powercoal Pty Limited Powercoal Superannuation Pty Limited (a) (b) (c) (d) (e) Australia Australia Australia Australia Australia Australia Australia 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Centennial Coal Company Limited is the head entity within the tax-consolidated group. 68 .

880 571.000 in the reporting period: Balance at beginning of year $ Directors R.105 3.488 13. Cameron Executives R.996 21.413 16. in Group 1 2 3 98.480 379.648 Pursuant to the 1999 Senior Executive and Director Share Option Scheme.648 Interest not charged $ 5. 69 . Loans are provided for a maximum period of five years.572 (c) 2010 financial year Directors Executives Total 2009 financial year Directors Executives Total No. RELATED PARTY DISCLOSURES (a) (i) (ii) (b) Equity interests in related parties Equity interests in subsidiaries Details of the percentage of ordinary shares held in subsidiaries are disclosed in Note 36.800 95.069 473.772 224.949 4.549 Interest not charged $ 5. Equity interests in associates and joint ventures Details of interests in associates and joint ventures are disclosed in Note 15 and Note 16.800 Highest in period $ 128.800 134. Dougall 98.069 281. interest free option loans (as disclosed in the Remuneration Report section of the Directors’ Report) have been provided to a Director and Executives as set out above. Key management personnel compensation Details of specified Directors’ and Executives’ remuneration are disclosed in Note 5 and the Remuneration Report section of the Directors’ Report. Loan disclosures Balance at beginning of year $ 98.549 1 4 5 Individuals with loans above $100.Notes to the Financial Statements for the financial year ended 30 June 2010 37.069 134.593 Balance at end of year $ 128.105 8.409 98.030 Balance at end of year $ 128.480 379.G.J.069 281.

RELATED PARTY DISCLOSURES (d) Key management personnel equity holdings in fully paid ordinary shares issues by Centennial Coal Company Limited Balance at beginning of year No.074 4.98 (80.I.714 429.000 144.050 - 144.L.M. Dougall .P.988 174.90 1.132) 144.844 155.W. Dougall .000 1. Parry . Moy .168 399.020 5.L.018 41.J.184 8.S. Williams 13.050 144.T.J.300. Options vested during year No.89 0.D.502 473.G.000) (101.012 229.000 168.074 3. Moss .000 - 400.I.751. 13.90 1.M.J. No.J.R.000 50.863 6.000 850.000 - 400.000 144. Balance Vested but vested at not end of year exercisable No.000 - - - 2. Balance at end of year No.000 85. Baldwin .000 344.J.Notes to the Financial Statements for the financial year ended 30 June 2010 37.J.000 144.000 85. - Option exercise price Net other change No.522 42. Moult .R. Moy Executives .000 144.M.C. Brenner .597. No.R.988 221.000 50.J.T.000 72.J. Vested and exercisable No.000 168.168 402.000 - 144. Directors .000 - - 400.S.000 144.B.300.W.K.J.000 344.502 473.000 - .R. Macko .000 70 .384 39. Grellman .000 850.012 229. Cameron . Williams 229. Cameron .989.447.R.751.D.018 91. Directors .730 880 32. Allan .J.000) (25. Sneddon Executives 2. Parry .000 676. Baldwin .J.240.216. Grellman .880 296.730 Received on exercise of options No. Moult .J. 798 3.000 229.P.759 144. Exercised No.988 271.714 572.988 668.627 (e) Share options issued under the Centennial Coal Company Limited Senior Executive and Director Share Option Scheme Balance at Granted as beginning of year remuneration No.G.C. Allan .000 168.988 518.000 0.020 5.000 676.90 0.N.000 132.522 43. Moss .R.W.070 - Balance at end of year No. Brenner .B.844 11.184 8.P.661 6.K.000 144.000 132.P.M.314 39.988 500. Macko .

W.742 121.J.T.231 252.266 69. There has not been any other matter or circumstance that has arisen since the end of the financial year that has significantly affected. Directors . the results of those operations.J. declared on 27 July 2010 at $0.874.965 52.818 56.M.266 200.000 and $18.P. Rights vested during year No. Brenner .B.D.965 52.238 2. Details of interest revenue and expense from other related parties are disclosed in Note 3. partly owned subsidiaries. The Company and its subsidiaries maintain intercompany balances. the operations of the Group. Aggregate amounts receivable from other related parties are disclosed in Note 9 and Note 13.677 221. associates and key management personnel of related parties and their related entities.W. Macko . SUBSEQUENT EVENTS The final dividend relating to the year ended 30 June 2010 has not been included as a provision in the financial statements because the dividend was declared after balance date. Balance at end of year No. 38.448 34.G.500.089 32.I.537 67. (h) Transactions within the wholly-owned group The wholly-owned group includes the ultimate parent entity in the wholly-owned group. These intercompany balances are disclosed in Note 9 and Note 13 and details of the interest charged are disclosed in Note 3.J.448 34.J. Allan . or the state of affairs of the Group in the future. Parry .476 52. No.221. Baldwin .04 cents per share amounted to $15.400.448 473.785. Exercised No.P.J.M. Moss .K.361 respectively).231 87.749 in management fees (2009: $108. Sneddon . Cameron . Balance Vested but not vested at end of year exercisable No. Moult .J.000 in dividends from its subsidiaries and received $19.674. Grellman Executives 2. wholly-owned subsidiaries and other entities in the wholly-owned group.000.R.000 32.000 32. Vested and exercisable No. Moy . or may significantly affect.L.Notes to the Financial Statements for the financial year ended 30 June 2010 37. the Company received $73. Granted as remuneration No.C.266 34.245 - - - - .R. Interest is charged on specific items within these balances.000. The final dividend 40% franked. RELATED PARTY DISCLOSURES (Continued) (f) Performance Share rights issued under the Centennial Coal Company Limited Performance Rights and Option Plan Balance at beginning of year No.790 2.N.S.818 24. Williams (g) Transactions with other related parties Other related parties include the parent entity. Dougall .448 67.R.8 million. During the current financial year.568 - 2. 71 .

5 (0. cash includes cash on hand and in banks and investments in money market instruments net of outstanding bank overdrafts and short-term commercial bills.2) (4.5 164.5) (44.7) (2.5 (2.1 56.4) (0.2 51.7 1.3) (3.7 2.2) (7.2 (3.1 10.2 (4.9 0.7) 71.2 1. plant and equipment Finance lease liability drawdown 10.8 25.5 - - 72 . the Group acquired property.9 During the financial year.3) 2.3) 4.6) (0.5) 0.3 29.8) 4.1 3.Notes to the Financial Statements for the financial year ended 30 June 2010 Consolidated 2009 2010 $M $M 39.1) (61.1) (32.0) 25.6) (5.3 0.6 4.3 1.5 3.7) (9.4) (21.9) 10.4 (15.7 (10.3) (12.5) 4. plant and equipment 51.1 (37.2) (0.8 71. plant and equipment which was financed through the draw down of finance leases. NOTES TO THE CASH FLOW STATEMENT (a) Reconciliation of cash For the purposes of the cash flow statement.4 120.5 102.0 33. The amounts are as follows: Aggregate value of property.8) 28.8) 3.5) 0.1 14.2 (15.8 4.5 (37.5) 12.4 8. The finance lease portion of the asset acquisition is not reflected in the cash flow statement.6) (1.2 91.5 1.6) (1. Cash at the end of the financial year as shown in the cash flow statement is reconciled to the related item in the balance sheet as follows: Cash and cash equivalents (b) Reconciliation of net cash provided by operating activities to operating profit after income tax Profit for the year Depreciation and amortisation Amortisation of deferred borrowing costs (Profit)/loss on sale of property.2 (73.3) Company 2009 2010 $M $M 45.5) (0.7) (3.3 (108. plant and equipment Dividend income Interest capitalised on qualifying assets Allowance against intercompany receivables Interest income Changes in assets and liabilities: (Increase)/decrease in current receivables (Increase)/decrease in other financial assets (Increase)/decrease in inventories (Increase)/decrease in other current assets (Increase)/decrease in non-current receivables (Increase)/decrease in other non-current assets (Increase)/decrease in deferred tax assets Increase/(decrease) in current payables Increase/(decrease) in current provisions Increase/(decrease) in current tax liabilities Increase/(decrease) in other liabilities Increase/(decrease) in deferred tax payable Net cash provided by/(used in) operating activities (c) Non-cash financing and investing activities (i) Property.9 (7.5 (3.

9 13.9 13.5 62.5 62. Shareholders elected to accept new shares in the Company in lieu of receiving dividends 8.1 8. convertible noteholders elected to convert notes into new shares in the Company 36.Notes to the Financial Statements for the financial year ended 30 June 2010 Consolidated 2009 2010 $M $M 39. NOTES TO THE CASH FLOW STATEMENT (Continued) Company 2009 2010 $M $M (ii) Dividend Reinvestment Plan During the financial year.1 (iii) Convertible notes During the financial year.1 73 .1 36.

The notes convert into ordinary shares at any time during the conversion period which concludes 10 days prior to the maturity date. NOTES TO THE CASH FLOW STATEMENT (Continued) The Group’s finance facilities are summarised below: (i) Facility amount: Senior Facility Agreement – Term loan – Revolving credit Standby facility 6. be redeemed at their principal amount on maturity. 6.2% per annum and will. dividends (above a 4. The maturity date for the Senior Facility Agreement is 18 December 2011 and for the Standby Facility 20 March 2011.6 (ii) Unused facilities: Senior Facility Agreement – Term loan – Revolving credit Standby facility 6.0 466.0 36. unless previously converted.0 195.0 150. The lease finance facility includes lease agreements in relation to mining equipment and motor vehicles.1 25.0 85. The Company manages its exposure to floating rate debt by hedging a proportion of its exposure with interest rate swaps.0 10.0 150.0 10. Centennial also had the right to redeem all outstanding notes at any time on or after 15 March 2010.0 150. if on each of more than 20 dealing days during any period of 30 consecutive dealing days the closing price for an ordinary share exceeded 125% of the conversion price.0 10. The five year notes carried a coupon of 6.0 90.0 10.0 36.0 419.0 16. All notes have been converted to ordinary shares as at 30 June 2010.0 10. subdivision or consolidation of shares.0 466.0 150. change of control.1 25.0 25. 74 .0 419.6 175.0 25.0 145.0 195.5 23.5 23.21 per ordinary share as at 30 June 2009.0 175.Notes to the Financial Statements for the financial year ended 30 June 2010 Consolidated 2009 2010 $M $M 39. trade receivable finance facility and 11am bank facility are renewable annually at the discretion of the facility providers.0 10. Standby Facility. the Company issued subordinated convertible notes in the amount of $165 million due 15 March 2012. trade receivable finance facility and 11am bank facility.0 15.2% Subordinated Convertible notes Lease finance facility Trade receivable finance facility 11am bank facility 75.0 145.0 10. The other facilities.75% of market capitalisation threshold) bonus issues and other dilutive events in accordance with customary market practice.0 25.0 175.0 90.0 15. among other things.0 25.0 16.0 85.2% Subordinated Convertible Notes Lease finance facility Trade receivable finance facility 11am bank facility Company 2009 2010 $M $M 175. The conversion price was subject to adjustment for. The conversion price of the notes has been amended as a result of the capital return and dividends to A$2.0 Interest rates are variable under the Senior Facility Agreement. including the lease finance facility.0 10.2% Subordinated Convertible Notes On 15 March 2007.0 75.

The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. market risk (including foreign exchange risk. (i) (ii) 75 . foreign exchange forward and option contracts to hedge exchange rate risk arising on export revenues denominated in US dollars. The Group does not enter into or trade derivative financial instruments for speculative purposes. liquidity risk and capital management. comprise bank loans. including: coal swap and option contracts to mitigate the risk of falling export thermal coal prices. finance leases.Notes to the Financial Statements for the financial year ended 30 June 2010 40. evaluate and monitor the financial risks in close co-operation with the Group’s operating units. from its operations. The Group’s principal financial instruments. such as foreign exchange risk (including hedging activities) interest rate risk. These methods include sensitivity analysis in the case of interest rate. The Group has written policies covering specific areas. The Group has various other financial instruments such as trade debtors and trade creditors. The Group uses different methods to measure different types of risk to which it is exposed. The Group’s treasury and credit risk activities operate under policies approved by the Board of Directors. and (iii) interest rate swaps and option contracts to mitigate the risk of rising interest rates. in respect of credit risk. The Group’s treasury and credit risk activities are designed to identify. credit risk and liquidity risk. are carried out by the Group’s finance department. other than derivatives. Risk management is carried out by the Group’s finance department for interest rate risk. convertible notes. The Group uses a range of derivative financial instruments to hedge these risk exposures. commodity price risk. liquidity risk and credit risk and they are summarised further below. and ageing analysis for credit risk. foreign exchange exposures. interest rate risk and coal price risk). FINANCIAL INSTRUMENTS (a) Financial risk management objectives Financial instruments The Group’s activities expose it to a variety of financial risks. cash and short-term deposits. coal price risk. which arise directly. The main purpose of these financial instruments is to raise finance for the Group’s operations. Risk management activities. coal price and foreign exchange risk.

0 1.0 12.3 8.4 million loss).Foreign currency risk . The Group has entered into forward foreign exchange contracts and foreign exchange option contracts to hedge a proportion of the exchange rate risk arising from these anticipated future transactions.Notes to the Financial Statements for the financial year ended 30 June 2010 40.Interest rate risk (i) Hedges of anticipated future transactions The Group has export sales contracts to supply coal to overseas customers.8 36.2 - 2009 $M 33.0 180. All such transactions are carried out within the guidelines set by the Board. (b) Categories of financial instruments Consolidated 2009 2010 $M $M Financial assets Cash and cash equivalents Loans and receivables Trade receivables Royalty receivable Other receivables Long service leave receivable Amounts receivable from wholly-owned subsidiaries Available-for-sale financial assets Derivative instruments in designated hedge accounting relationships Company 2010 $M 25.6 12.0 12.8 1.1 69. while optimising the return on risk. the Group seeks to apply hedge accounting in order to manage volatility in profit or loss. the price of which is denominated in US dollars. A proportion of interest rate risk on debt has been hedged with interest rate swaps and options. Generally.8 67.1 31.6 340. As at the reporting date the aggregate amount of unrealised gains/(losses) under forward foreign exchange contracts. foreign exchange option contracts.7 114.1 3.Coal price risk . The Group buys and sells derivatives in the ordinary course of business.1 0. and also incurs financial liabilities. such as foreign exchange rates.4 1. FINANCIAL INSTRUMENTS (Continued) Details of the significant accounting policies and methods adopted.8 0.0 16. The Group has identified the following key market risks: .8 340.4 13.0 - 56. interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments.4 The magnitude of each type of financial risk that has arisen over the year is discussed below.6 3. interest rate swaps and options relating to anticipated future transactions is a loss of $12.6 12. the basis of measurement and the basis on which revenues and expenses are recognised.6 180. Also.7 million (2009: $32.0 - Financial liabilities Amortised cost Trade and other payables Senior Facility Agreement Subordinated Convertible Notes Finance lease liabilities Derivative instruments in designated hedge accounting relationships 123.2 - 45. (c) Market risk Market risk is the risk that changes in market prices. 76 .0 34. including the criteria for recognition.7 9.5 2.9 0. The objective of market risk management is to manage and control market risk exposures within acceptable parameters.9 0.0 34.3 32. Such unrealised losses will only be realised during the next three financial years if the 2010 financial year-end A$/US$ exchange rate.2 2. liability and equity instrument are disclosed in Note 1.1 1. coal price and interest rate prevails at the time when the anticipated future transactions take place. a proportion of the coal price risk has been hedged with coal swap and option contracts.1 32.4 954.9 0. coal swap contracts and coal option contracts. in order to manage market risks. in respect of each class of financial asset.132.

0) 90.0 Exchange rate 2009 2010 A$1 = US$ A$1 = US$ Year end rates used in calculating deferred unrealised gain/(loss) Sensitivity analysis – coal price risk 0. The analysis is also performed on the same basis for 2009.8512 0.0 Fixed price 2009 2010 US$/Mt US$/Mt Coal swaps – sold Less than one year Coal swaps – bought Less than one year Net total 52. remain constant. This analysis assumes that all other variables. FINANCIAL INSTRUMENTS (Continued) (ii) Coal price risk Centennial’s major commodity price exposure is to the price of coal.Notes to the Financial Statements for the financial year ended 30 June 2010 40. the objective of which is to avoid or minimise possible adverse financial effects of downward price movements in future export thermal coal sales. Gains or losses on such hedging transactions are deferred in the hedging reserve up to the date of sale and then included in the measurement of sales when they occur.00 - - (8. but opposite effect to the amounts shown above (on the basis that all other variables remain constant).0 60. in particular interest rates. The Group has a policy of coal price hedging over a three year period that is in the range of 0% to 25% of its export sales per year. 77 .50 82.0 60. Hedging – coal price At balance date.1) (0.0 150.50 82.0 Fair value 2009 2010 $M $M 60.8135 120.0 (1. These coal options and swap contracts are specifically designated to forecast export thermal coal sales tonnages at the inception of the hedge contracts. no additional coal hedging is being entered into as the Group’s objective is to have an increased proportion of market priced sales.0 (60. Effect in $M Consolidated Equity Profit or loss (1. The Group entered into coal options and swap contracts to sell specified tonnages of export thermal coal in the future at a fixed US dollar price per metric tonne.A$ sold Call .26 A 20% strengthening of the coal price at 30 June would have decreased equity and pre-tax profit or loss by the amounts shown below being the change in valuation of the coal swaps. A change in the coal price can have a significant positive or adverse effect on revenues.A$ bought Put 103.50 103.50 82.8) 2009 US$/Mt 70.1) Equity Company Profit or loss - 30 June 2010 30 June 2009 A 20% weakening of the coal price at 30 June would have had the equal. Currently.A$ bought Put Greater than one year < two years . the details of outstanding coal options and swap contracts are: Consolidated Metric tonnes 2009 2010 Mt ’000 Mt ’000 150.A$ sold Call .50 Consolidated Metric tonnes 2009 2010 Mt ’000 Mt ’000 60.50 Price 2010 US$/Mt 99.5) Fixed price 2009 2010 A$/Mt A$/Mt Coal option collars Less than one year .50 103.4) (3.00 Fair value 2009 2010 $M $M - 137.

7 (259. Exchange gains or losses on such hedging transactions are deferred in the hedging reserve up to the date of sale and then included in the measurement of sales. using forward foreign exchange contracts and foreign exchange option contracts.8812 2009 0.Notes to the Financial Statements for the financial year ended 30 June 2010 40.8712 (2009: A$1=US$0. The Group enters into forward foreign exchange contracts and foreign exchange option contracts to sell specified amounts of US dollars in the future at stipulated exchange rates.4 (588.8512 A$1 = US$ Centennial’s current policy of utilising forward foreign exchange contracts and foreign exchange option contracts to hedge its US dollar export sales revenue has resulted in such revenue.0) The following significant exchange rates applied during the year: Average rate 2010 0.6 1. being converted to Australian dollars at an average exchange rate of A$1=US$0.8 17.7477 Reporting date mid spot rate 2009 2010 0.8) Company 30 June 09 30 June 10 US$M US$M 5. The objective is to avoid or minimise possible adverse financial effects of movements in exchange rates on future sales of coal denominated in US dollars. primarily US dollars (USD).8135 0. The Group’s current policy is to hedge within a range of 40% to 90% of forecast US dollar export sales on a rolling 12 months basis. 78 .5) 11.6 28.0) (553.0) 11.0) (581.9 (588. during the financial year. and a range of 20% to 60% out to two years and then 0% to 30% out to three years. FINANCIAL INSTRUMENTS (Continued) (iii) Foreign currency risk management The Group is exposed to currency risk on sales and purchases that are denominated in a currency other than the respective functional currencies of the Group. Exposure to currency risk The Group’s exposure to foreign currency risk-based on notional amounts.5) (229.9 (259. is as set out below: Consolidated 30 June 09 30 June 10 US$M US$M Cash and cash equivalents Trade receivables Foreign exchange derivative contracts Net balance sheet exposure 5.5) (247.8 0. The remainder of export sales are converted at the prevailing A$/US$ exchange rate.8202). These hedging contracts are specifically designated to forecast US dollar export sales at the inception of the hedge contracts.

9079 0.8) 8.3) Company 2010 $M Consolidated 2009 2010 $M $M The amount of unrealised foreign exchange gains/(losses) in respect of open forward foreign exchange contracts and foreign exchange option contracts at balance date are: Unrealised deferred exchange gain/(loss) Year end exchange rate A$/US$ used in calculating deferred unrealised exchange gain/(loss) 2009 $M (11.9009 0. remain constant.1 (2.8820 0. less than three years Sold US$ call options Less than one year Greater than one year.5 268.0 174. less than two years Greater than two year.3) 0.7894 0.8080 0.8) 10.8177 0. The analysis is performed on the same basis for 2009.Notes to the Financial Statements for the financial year ended 30 June 2010 40. Sensitivity analysis – Foreign exchange risk A 20% change in the Australian dollar at 30 June would have changed equity and pre-tax profit or loss by the amounts shown below.9075 0. FINANCIAL INSTRUMENTS (Continued) In addition.20% 92.5 9.0) (19.0 186.8920 0.5 588.8135 These unrealised gains/(losses) have been deferred in the hedging reserve to the extent the hedge is effective.8276 0.8323 0.8512 0.0 Fair value 2010 2009 $M $M 0.0 64.20% 30 June 2009 USD + 20% . Exchange gains or losses on such hedging transactions are deferred up to the date of purchase and then included in the measurement of the equipment purchased.4) 2.1 (5.9016 0.5 94. This analysis assumes that all other variables.8932 0.0 64.8135 0.5 (74.0 312.0 259. Effect in A$M Consolidated Equity Profit or loss 30 June 2010 USD + 20% .8098 0.0 112.9075 376.0) (19. the details of outstanding forward foreign exchange contracts and foreign exchange option contracts for the Group are: Average exchange rate 2009 2010 A$1 = US$ A$1 = US$ Forward contracts – sell US$ Less than one year Greater than one year. less than three years 0. less than two years Greater than two years.9079 0.0) (19.7 Equity Company Profit or loss (1.8196 0.5 9. less than three years Bought US$ put options Less than one year Greater than one year.1) 42.7582 0.7965 0. Hedging – foreign exchange At balance date.2 (142.5 67.8512 0.5 9.5 12.8875 0.5 (11.0 174.0 64.8984 0. in particular interest rates. less than three years Total effective hedging (at worst case rate) Less than one year Greater than one year.0 32.4) 3.0 45.7 79 . less than two years Greater than two year.2) (6.7900 Notional amount 2009 2010 US$M US$M 64.5 22.5 22. less than two years Greater than two years.0 144.3) (11. forward foreign exchange contracts are entered into from time to time to fix a portion of the purchase price of imported mining equipment contracted in foreign currencies.8698 0.

6) (1.% 30 June 2009 Interest rates + 1. in particular foreign currency rates. The analysis is performed on the same basis for 2009.11 7.Notes to the Financial Statements for the financial year ended 30 June 2010 40. but opposite effect to the amounts shown above (on the basis that all other variables remain constant).0 Fair value 2009 $M 2010 $M (0. The following table details for the Group. Sensitivity analysis .11 7.7) These unrealised gains/(losses) have been deferred in the hedging reserve at a consolidated level to the extent the hedge is effective.1 (0. The risk is managed by the Group maintaining a balanced mix between fixed and floating interest rates.1 0.0.8) (3.6 (0.3) (1. Under interest rate swap contracts.0 (0.2) Equity 0. FINANCIAL INSTRUMENTS (Continued) (iv) Interest rate risk management The Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and floating interest rates.0 38.3) (0. 80 .9) 8. This is achieved through fixed rate debt or by entering into interest rate derivative contracts. Such contracts enable the Group to mitigate the risk of rising interest rates. the Group agrees to exchange the difference between fixed and floating interest rate amounts calculated on agreed notional principal amounts. This analysis assumes that all other variables.6 (0.0 88. Effect in $M Consolidated Equity Profit or loss 30 June 2010 Interest rates +1. which is the risk that a financial instrument’s value and interest payments on floating rate debt will fluctuate as a result of changes in market interest rates.18 8. Hedging activities are evaluated regularly to align with interest rate views.0 88.0 50.7) 0. remain constant.18 50.2) Company Profit or loss (0.60 Notional amount 2009 $M 2010 $M 38.interest rate risk An increase of 100 basis points in interest rates at the reporting date would have increased equity and pre-tax profit or loss for the Group and Company by the amounts shown below. by the use of interest rate swap contracts and interest rate derivative contracts. the notional amounts and remaining terms of interest rate swap contracts outstanding as at the reporting date: Average interest rate 2009 % 2010 % Swap contracts One to three years Option collars One to three years – cap – floor 7.0% 0.7) A decrease of 100 basis points in interest rates at 30 June would have had the equal.60 7. The Group has an exposure to interest rate risk. The Group adopts a policy of ensuring that its exposure to changes in interest rates on borrowings is on a fixed rate basis for a range of 50-90% of forecast floating rate debt over two years and a range of 0-50% of floating rate debt between 3 and 5 years.

Notes to the Financial Statements for the financial year ended 30 June 2010 40. as far as possible. The Group’s approach to managing liquidity is to ensure. (e) Liquidity risk management Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. and arises principally from the Group’s receivables from customers and investment securities. Due to the dynamic nature of the underlying business. Transactions involving derivative financial instruments are with Board approved counterparties with whom the Group has a signed netting agreement as well as having sound credit ratings. The Group manages liquidity risk by maintaining adequate reserves. Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. banking facilities and reserve borrowing facilities. Credit risk on derivatives is minimised with all counterparties being financial intermediaries (including the Group’s lending banks). The table below analyses the Group’s financial liabilities and net settled derivative financial instruments into relevant maturity based on the remaining period at the reporting date to the contractual maturity date. Given their high credit ratings. 81 . that it will always have sufficient liquidity to meet its liabilities when due. The amounts disclosed in the table are the contractual undiscounted cash flows and include future interest payments. FINANCIAL INSTRUMENTS (Continued) (d) Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. by continuously monitoring forecast and actual cash flows and matching maturity profiles of financial assets and liabilities. The maximum credit exposure relating to any one counterparty as at 30 June 2010 was $nil (2009: $ nil). Prudent liquidity risk management implies maintaining sufficient cash and marketable securities. the Group does not expect any counterparty to fail to meet its obligations. under both normal and stressed conditions. without incurring unacceptable losses or risking damage to the Group’s reputation. the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Refer to Note 39 for details of finance facilities. the Group aims to maintain flexibility in funding by keeping committed credit lines available.

8 1-3 years 1.Notes to the Financial Statements for the financial year ended 30 June 2010 40.0 4.3 127.3 15.0 53.1 5.8 155.7 67.2 Financial assets Cash and cash equivalents Trade receivables Long service leave receivable Other loans Royalty receivable Available for sale financial assets Financial liabilities Trade and other payables Derivative hedge payable Subordinated convertible notes Finance lease liabilities Senior Facility Agreement 8.8 2.5 8.5 156.0 5.6 359.1 23.8 More than 5 years 53.7 7.0 - less than one year 46.0 55.6 31.6 36.1 8.2 2.5 372.5 42.8 185.8 1-3 years 3.7 7.2 73.8 4.8 15.0 3.2 - 82 .4 5.2 2.8 5.2 2.2 118.8 3-5 years 4.7 6.1 3.2 Financial assets Cash and cash equivalents Trade receivables Long service leave receivable Other loans Royalty receivable Available for sale financial assets Financial liabilities Trade and other payables Derivative hedge payable Finance lease liabilities Senior and Standby Facility Agreements 7.1 4.0 5.2 151.1 3-5 years 4.6 154.0 4.0 69.0 - less than one year 57.1 - Consolidated $M 30 June 2009 Weighted average effective interest rate % 3.6 10.1 1.4 183.0 More than 5 years 51. FINANCIAL INSTRUMENTS (Continued) Maturity Table Consolidated $M 30 June 2010 Weighted average effective interest rate % 4.3 7.

6 0.4 0.8 - 83 .5 1-3 years 3.2 Financial assets Cash and cash equivalents Trade receivables Other loans Long service leave receivable Available for sale financial assets Financial liabilities Trade and other payables Derivative hedge payable Senior and Standby Facility Agreements 5.5 23.2 0.7 7.8 3-5 years - More than 5 years 0.8 3.8 183.3 13.6 43.5 42.3 10.2 9.1 1.8 183.8 0.9 6.5 1.0 3.1 15.4 27.0 less than one year 25. FINANCIAL INSTRUMENTS (Continued) Maturity Table Company $M 30 June 2010 Weighted average effective interest rate % 4.6 1-3 years 1.0 15.0 less than one year 34.9 - - Company $M 30 June 2009 Weighted average effective interest rate % 3.5 366.8 35.2 7.Notes to the Financial Statements for the financial year ended 30 June 2010 40.2 0.1 3-5 years - More than 5 years 0.4 359.2 67.2 Financial assets Cash and cash equivalents Trade receivables Other loans Long service leave receivable Available for sale financial assets Financial liabilities Trade and other payables Derivative hedge payable Subordinated convertible notes Senior Facility Agreement 8.7 4.4 35.

The Group’s target is to achieve a return on Shareholders’ equity above 10% on average across a commodity cycle. (iii) The fair value of derivative instruments included in hedging assets and liabilities are calculated using quoted prices. cash and cash equivalents and equity attributable to equity holders of the parent. The Board of Directors encourages the employees of the Group to hold the Company’s ordinary shares.7) (12. reserves and retained earnings as disclosed in the balance sheet. (iii) Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).7) (12. such equity comprising issued capital. The Directors seek to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position. employees hold approximately 3% of ordinary shares.7) Level 2 $M Level 3 $M Total $M (h) Capital management The capital structure of the Group comprises debt. The Directors like to maintain a strong capital base so as to sustain the future development of the business. derived from prices). including the return on total Shareholders’ equity.3%). the return was 6. (ii) Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability.e.Notes to the Financial Statements for the financial year ended 30 June 2010 40.e. There were no changes in the Group’s approach to capital management during the year. At present. (i) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. FINANCIAL INSTRUMENTS (Continued) (f) Fair value The fair values of financial assets and financial liabilities are determined as follows: (i) The fair values of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices. (12. which includes the borrowings disclosed in Notes 21 and 23. and the proportion of earnings retained in the Group. grouped into Levels 1 to 3 based on the degree to which the fair value is observable. the level of dividends to ordinary Shareholders. either directly (i.8%). 84 . The Board of Directors monitors certain items.9% (2009: 10.3% (2009: 5. Where such prices are not available. Level 1 $M Financial liabilities at FVTPL Other derivative financial liabilities Total There were no transfers between Level 1 and 2 in the period. In 2010. and by way of comparison the weighted average interest expense on interest bearing borrowings before tax was 6.7) (12. (g) Fair value measurements in the statement of financial position The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value. use is made of discounted cash flow analysis using the applicable yield curve for the duration of the instruments. as prices) or indirectly (i. (ii) The fair value of other financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow theory.

1 673.7 20.4 748.5 (45. which is determined as the proportion of net debt to net debt plus equity.9% From time to time.3 660. FINANCIAL INSTRUMENTS (Continued) Gearing ratio The Group’s Board of Directors reviews the capital structure on a regular basis.7 19.5 748. new share issues and share buy-backs as well as the issue of new debt on the redemption of existing debt. The gearing ratio at year end was as follows: Consolidated 2010 $M 2009 $M Company 2010 $M 2009 $M Debt (borrowings) Less: Cash and cash equivalents Net debt Equity Net debt to net debt plus equity ratio Purchase of own shares 354.0) 313.2% 220. As a part of this review the Board considers the cost of capital and the risks associated with each class of capital.5 (25.1 (56.4 29.8) 163.8 29. 85 .Notes to the Financial Statements for the financial year ended 30 June 2010 40.5% 212.1) 309. The Group has a targeted gearing range of 25-35% in line with the industry norm.8% 338. the shares bought back are only used for issuing shares under the Group’s employee share purchase scheme. The Group balances its overall capital structure through the payment of dividends.9) 178.0 (33. The Company does not have a defined share buy-back plan. the Company may purchase its own shares on the market. Historically.

as detailed in Note 36 to the Financial Statements will. and (d) the Directors have been given the declarations required by section 295A of the Corporations Act 2001. the Company is within the class of companies affected by ASIC Class Order 98/1418. (b) the attached financial statements are in compliance with International Financial Reporting Standards. be able to meet any obligations or liabilities to which they are. and give a true and fair view of the financial position and performance of the Company and the Consolidated entity. as stated in note 1 to the financial statements. or may become. as a group.Directors’ Declaration for the financial year ended 30 June 2010 The Directors declare that: (a) in the Directors’ opinion. there are reasonable grounds to believe that the Company and the companies to which the ASIC Class Order applies. In the Directors’ opinion. Signed in accordance with a resolution of the Directors made pursuant to section 295(5) of the Corporations Act 2001. On behalf of the Directors K. subject by virtue of the deed of cross guarantee.G. At the date of this declaration. Cameron Managing Director 86 . including compliance with accounting standards. Moss Chairman Dated at Sydney this 9th day of September 2010 R.J. The nature of the deed of cross guarantee is such that each Company that is party to the deed guarantees to each creditor payment in full of any debt in accordance with the deed of cross guarantee. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. (c) in the Directors’ opinion. the attached financial statements and notes thereto are in accordance with the Corporations Act 2001.

74 490 121 060 Grosvenor Place 225 George Street Sydney NSW 2000 PO Box N250 Grosvenor Place Sydney NSW 1220 Australia DX 10307SSE Tel: +61 (0) 2 9322 7000 Fax: +61 (0) 2 9322 7001 www. Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit.B. selecting and applying appropriate accounting policies. In Note 1 the directors also state. We conducted our audit in accordance with Australian Auditing Standards. and the statement of comprehensive income. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.deloitte. Liability limited by a scheme approved under Professional Standards Legislation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.Deloitte Touche Tohmatsu A. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement. 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. notes comprising a summary of significant accounting policies and other explanatory information. and making accounting estimates that are reasonable in the circumstances.N. but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. including the assessment of the risks of material misstatement of the financial report. whether due to fraud or error. the auditor considers internal control 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. in accordance with Accounting Standard AASB 101 Presentation of Financial Statements. 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 as set out on pages 33 to 86. complies with International Financial Reporting Standards. 87 . which comprises the statement of financial position as at 30 June 2010. that compliance with the Australian equivalents to International Financial Reporting Standards ensures that the financial report. In making those risk assessments. whether due to fraud or error. the statement of cash flows and the statement of changes in equity for the year ended on that date. comprising the financial statements and notes.au Independent Auditor’s Report to the members of Centennial Coal Company Limited Report on the Financial Report We have audited the accompanying financial report of Centennial Coal Company Limited.com. The procedures selected depend on the auditor’s judgement. Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001.

9 September 2010 88 . The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001.Auditor’s Independence Declaration In conducting our audit. DELOITTE TOUCHE TOHMATSU G Couttas Partner Chartered Accountants Sydney. based on our audit conducted in accordance with Australian Auditing Standards. Auditor’s Opinion In our opinion: (a) the financial report of Centennial Coal Company Limited is in accordance with the Corporations Act 2001. Auditor’s Opinion In our opinion the Remuneration Report of Centennial Coal Company Limited for the year ended 30 June 2010. Report on the Remuneration Report We have audited the Remuneration Report included in pages 6 to 29 of the directors’ report for the year ended 30 June 2010. we have complied with the independence requirements of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report. and (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001. and (b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1. including: (i) giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2010 and of their performance for the year ended on that date. complies with section 300A of the Corporations Act 2001.

is as follows: If at any time during the exercise period of the options the TSR of the Company Does not reach the 50th percentile of the TSR of the S&P/ASX 200 Index Reaches the 50th percentile of the TSR of the S&P/ASX 200 Index Reaches or exceeds the 75th percentile of the TSR of the S&P/ASX 200 Index The percentage of options which become exercisable is 0% 50%* 100% * The percentage of options which become exercisable increases from the 50th percentile up to the 75th percentile by 2% for each 1% increase in the percentile of the TSR of Centennial.080 Shareholders. 89 .Centennial Coal Company Limited Shareholder Information as at 31 August 2010 CAPITAL STRUCTURE (a) Ordinary share capital 395. as measured against the S&P/ASX 200 Index.737 fully paid ordinary shares are held by 10. All issued ordinary shares carry one vote per share and carry the right to receive dividends when declared. compared to the TSR of the S&P/ASX 200 Index. (b) Senior executive and director options All of the following option tranches are subject to a Performance Hurdle which requires that the options can only be exercised if the Total Shareholder Return (“TSR”) over an initial three-year period from the date of issue.028.

000 employee options are held by 20 individual optionholders. The performance criteria for this tranche has been met. being the date of original grant.000 retention shares are held by 94 individuals.160. being the date of original grant of such options. dependent on the continued employment of the employee. provided that the TSR Performance hurdle noted above is achieved over an initial three-year period.89 on the second anniversary of their issue and up to five years from 15 December 2005. • 751. • 1.Centennial Coal Company Limited Shareholder Information as at 31 August 2010 (Continued) • 335. Executive options to subscribe for one ordinary share exercisable at $0. Performance rights to subscribe for one ordinary share exercisable on the third anniversary of their issue and up to five years from 11 December 2009. with testing each six months for the subsequent two years to expiry. provided that the TSR Performance hurdle noted above is achieved over an initial three-year period. Executive options to subscribe for one ordinary share exercisable at $1.595.000 performance rights are held by 34 individuals. with testing each six months for the subsequent two years to expiry. being the date of original grant. with testing each six months for the subsequent two years to expiry. • 161.435. Performance rights to subscribe for one ordinary share exercisable on the third anniversary of their issue and up to five years from 23 February 2009.196 performance rights are held by 36 individuals. with testing each six months for the subsequent two years to expiry.90 on the third anniversary of their issue and up to five years from 21 December 2006. The performance criteria for this tranche has been met. Retention shares have been issued to a number of the Company’s professional staff.532 performance rights are held by 40 individuals.000 performance options are held by 34 individuals. Dividends are payable as announced and act as an additional incentive despite the fact that the retention shares may have yet to vest. with testing each six months for the subsequent two years to expiry. being the date of original grant of such options. The retention shares vest over a period of three years.000 employee options are held by 34 individual optionholders. Performance options to subscribe for one ordinary share exercisable at $2. • 415. being the date of original grant. being the date of original grant. being the date of original grant. Performance rights to subscribe for one ordinary share exercisable on the third anniversary of their issue and up to five years from 25 January 2008. provided that the TSR Performance hurdle noted above is achieved over an initial three-year period. An employee option does not entitle the holder to a vote in respect of that option nor participate in dividends until such time as the option is exercised and subsequently registered as an ordinary share. • 3. 90 . (c) Performance Rights and Option Plan • 2. Performance options to subscribe for one ordinary share exercisable at $1.90 on the third anniversary of their issue and up to five years from 25 January 2008.895 on the third anniversary of their issue and up to five years from 23 February 2009. provided that the TSR Performance hurdle noted above is achieved over an initial three-year period.448 performance options are held by 36 individuals. (d) Deferred Shares Incentive Plan • 524. provided that the TSR Performance hurdle noted above is achieved over an initial three-year period.

057.000 5.61 0.001 .364 1.193.015 93 10.000 100.000.504.879.Centennial Coal Company Limited Shareholder Information as at 31 August 2010 (Continued) STATEMENT REGARDING SHAREHOLDERS OF THE COMPANY AS AT 31 AUGUST 2010 Distribution analysis Size of holding 1 .000 6.26% 6.069.454.000.35 0.594.233 326.656 6.008.961.51 0.381.38 0.731 8.412.458 2.574 Percentage (%) 19.37 0.001 .5.385.672.935.100.93% 6.389.854 1.314 1.1.361 48.080 722 26% Number of shares 78.310 32.138 26.740 2.37 0.582.48 0.737 5.636.20 11.000 1.000.89% 8.75 0.298.42 1.217 1.001 and over Total holders Holdings less than a marketable parcel Dividend Reinvestment Plan take-up Substantial Shareholders (as advised) Banpu Public Company Limited (Banpu) UBS AG Credit Suisse Holdings (Australia) Limited JPMorgan Chase & Co (and its affiliates) National Australia Bank Limited Note: Does not necessarily take account of recent changes in the Company’s share capital.855 3.436 (%) 25.785 2.000 1.001 .391 4.41 8.080 1.347 45.958 32.354 27.109.455.871 1.31 82.231.334.03 1.58% List of the Top 20 Shareholders of the Company – Ordinary shares Shareholder’s name JP Morgan Nominees Australia Limited ANZ Nominees Limited <Cash Income A/C> National Nominees Limited HSBC Custody Nominees (Australia) Limited Citicorp Nominees Pty Limited Neweconomy com au Nominees Pty Limited <SBL Account> Pan Australian Nominees Pty Limited Mr Stephen Craig Jermyn HSBC Custody Nominees (Australia) Limited – A/C 3 Neweconomy com au Nominees Pty Limited <900 Account> Cogent Nominees Pty Limited HSBC Custody Nominees (Australia) Limited – A/C 2 HSBC Custody Nominees (Australia) Limited-GSCO ECA Mr Patrick John Hogan AMP Life Limited Argo Investments Limited Mr Robert Graham Cameron <Cameron Fam Super Plan A/C> ANZ Margin Services Pty Ltd <Robert Graham Cameron> Croftwell Pty Ltd UBS Nominees Pty Ltd Top 20 Total Number of shares 101.321 1.78 0.10.61 91 .000 5.26 12.13 2.27% 8.52 1.000 10.408.34 0.548 32.80 12. Number of shareholders 3.62 1.783 48.

8 10.8 50.066 18.4 15.5 4.983.975 15.052 14.565 16.9 193.151 15.526 16.9 110.243 3.140 13.1 1.3 38.2 27. (1) = 50% franked.0+ (+ = unfranked).5 12.611 14.2 115.1 4.651 13.Centennial Coal Company Limited 10 Year History – Key Statistics for the Group FY01 Tonnes under management ROM coal production Saleable coal production Sales 000’s 000’s 000’s 3.3 5.142 11.0+ .302 17.5 18.5 17.763 FY06 17.176 13.669 16.7 35.5 13.5+ 8.0 79.5 13.461 18.615 15.227.9 5.361 15.5+ 8.6 1.485 12.7 29.2 187.7 21.8 129.0+ 903.074 4.299 3.8 168.978 11.4 731.0 569.892 17.final cents 4.8 92 .0 17.981 A-IFRS FY08 FY09 20.0 9.3 161.295 FY07 20.605 FY10 17.806 4.260 17.0 49.7 22.4 7.5 (19.0+ 252.3 396.483 2.1 6.4 71.0+ 4.9 17.2 46.556 FY05 16.341 15.081 12.0+ 5.8 101.9 6.interim cents 2.2 29.583 AGAAP FY03 FY04 13.189.505 3.767 FY02 5.9 40.7 1.diluted $M $M $M cents cents 22.8 6.3 51.667 10.4 30.0 660.520 12.7 10.0+ 380.9 43.2 17.0+ 795.9 4.3 10.369 14.5 28.1 26.908 13.0+ 7.0(1) 4.769 16.2 19.825 11.440 3.1 15.6 95.797 MMH 40 39 33 38 35 26 23 22 13 12 Note: MMH = Measured in millions of man hours Financial information EBITDA Profit before income tax Profit after income tax EPS .5 203.755 18.0+ 890.5 151.805 3.0(2) 748.7 0.6 178.637 14.9 25.476 15.245 17. (2) = 40% franked Net assets Total assets Return on equity at 30 June $M $M % 95.006 14.2 92.216 18.0 52.1 1.656 16.851 15.517 11.5 51.0+ 7.021 Company’s share of tonnes under management ROM coal production 000’s Saleable coal production 000’s Sales 000’s Safety record Lost Time Injury Frequency Rate (LTIFR) 2.0 4.632 2.3) 2.2 2.9 Dividends fully franked .0 29.622 14.2 1.077.0+ 7.4 1.411.1 4.8 6.877.290 17.801 18.250 15.0 287.749 13.8 1.basic .8 5.7 928.1 1.0 29.

Centennial Coal Company Limited Corporate Directory DIRECTORS Chairman Dr Kenneth J. Grellman Dr Paul J.com OPERATIONS David Moult Chief Operating Officer Steve Bracken General Manager: Northern Operations Steve Burgess General Manager: Engineering & Procurement Donna Dryden General Manager: Environment & Sustainable Development Mark Levey General Manager: Health & Safety Andrew Myors General Manager: Business Support Beau Preston General Manager: Projects & Business Development Richard Tacon General Manager: Western Operations 93 . 60 Carrington Street Sydney NSW 2000 Tel: 1300 855 080 (Investor Enquiries) Fax: (61-2) 8235 8150 Website: www. 1 Market Street Sydney NSW 2000 Australia Tel: (61-2) 9266 2700 Fax: (61-2) 9261 5533 Email: cey1@centennialcoal. Brenner Mr Richard J. Moss Managing Director & Chief Executive Officer Mr Robert G.au Website: www. Moy COMPANY SECRETARY Mr Tony Macko REGISTERED AND COMPANY OFFICE Centennial Coal Company Limited Level 18.com.computershare. Cameron Non-Executive Directors Mr Bruce S.centennialcoal. BT Tower. Allan Ms Catherine M.au SENIOR MANAGEMENT CORPORATE AND ADMINISTRATION Robert Cameron Managing Director & Chief Executive Officer Louise Baldwin General Counsel Katie Brassil Group Manager: External Affairs Robert Dougall Chief Financial Officer John Hempenstall Chief Risk Officer Tony Macko General Manager: Corporate Affairs and Company Secretary Peter Parry General Manager: Financial Control MARKETING Ian Williams General Manager: Marketing Brendon Wilson Deputy General Manager: Marketing STRATEGY AND DEVELOPMENT Michael Ngo Group Manager: Strategy and Development AUSTRALIAN SECURITIES EXCHANGE Listing Code: Ordinary Shares – CEY SHARE REGISTRY Computershare Investor Services Pty Limited Level 3.com.

centennialcoal. where you can view and update your holding information online for any shares that Computershare acts as registrar.Centennial Coal Company Limited Corporate Directory EASY ACCESS TO INFORMATION See our website at www. The Investor Centre website is secure and your investor confidentiality is protected. – 94 . and graphs showing volumes traded over a requested period. updating your personal details and accessing dividend history and statements.au for regular quarterly reports and semi-annual financial updates. This service can be accessed either through Centennial’s website or directly via the Computershare website. No one can access your data without your Security Reference Number (SRN) or Holder Identification Number (HIN) and specific information relating to your holding. Through the Computershare website you can access Investor Centre. – Current Shareholders can access information and services relevant to their holding. graphs showing market prices over a requested period with an accompanying range of financial indices if so desired. Shareholders or interested parties can register to receive emailed updates shortly after the Company makes any regular or major announcement.com. These services include viewing your current holding. including: • • • details of the closing share price of the Company’s securities. Anyone who visits the Investor Centre website can access a range of information about a particular security. Additionally.

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