Directors Report 2 Auditor s Independence Declaration 5 Consolidated Statement of Profit or Loss 6. Comprehensive Income 7. of Financial Position 8

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3 CONTENTS Directors Report 2 Auditor s Independence Declaration 5 Consolidated Statement of Profit or Loss 6 Consolidated Statement of Profit or Loss and Other Comprehensive Income 7 Consolidated Statement of Financial Position 8 Consolidated Statement of Changes in Equity 9 Consolidated Statement of Cash Flows 10 Notes to the Consolidated Financial Statements 11 Directors Declaration 33 Independent Auditor s Report 34 1

4 Directors report The Directors present their report on the consolidated entity consisting of John Holland Pty Ltd ( the Company ) and the entities it controlled (together, the Group ) at the end of, or during, the year ended 31. DIRECTORS The following persons were Directors of John Holland Pty Ltd during the whole of the year and up to the date of this report unless otherwise indicated: G.M. Palin, BAppSc, GradDipBuild, GradDipAppFin&Invest, MAICD (Chairman) Mr Palin is the Chief Executive Officer and has held various senior management roles in Queensland, Victoria and New South Wales since joining the Company in 1993, with both regional and national responsibility. He was appointed Group Managing Director in July 2009 and, subsequently, Chief Executive Officer in June Mr Palin was President of the Australian Constructors Association from November 2012 to November D.A. Ray, BCom, CA, CMA, MAICD Mr Ray is Chief Financial Officer and Company Secretary and has over 20 years experience in the construction industry. Initially in the chartered accounting profession, he joined the Company in He has responsibility for finance and tax, treasury, information and communication technology, governence and compliance, legal and company secretarial matters. R.J. Cuttler, Diploma of Engineering Mr Cuttler is Executive General Manager People & Policy with over 30 years experience in the construction and engineering industry. He has held various senior management roles on major projects and operating business units, as well as national and international responsibility since joining the Company in He has responsibility for health, safety and environment, workers compensation, human resources, remuneration and benefits and corporate communications. G. Cain, Certificate of Technology Mechanical Design Mr Cain is Executive General Manager Operational Risk and has over 30 years experience in the construction industry both in Australia and overseas. He has held a number of positions during his 27 years service with John Holland. He has responsibility for pre-contracts and risk, commercial, people performance, HSE systems and compliance and operational system and process improvement. PRINCIPAL ACTIVITIES During the year, the principal activities of the consolidated entity included construction contracting for long-term construction and engineering projects and operation and maintenance of rail infrastructure (through investments in associates). Geographically, the consolidated entity operates primarily in the Australian, New Zealand and South East Asia markets. CONSOLIDATED RESULTS The consolidated loss for the year attributable to the owner of John Holland Pty Ltd was: Year ended Year ended Profit (loss) before income tax benefit 43,648 (249,504) Income tax benefit 53,863 70,714 Profit (loss) attributable to the owner of John Holland Pty Ltd 97,511 (178,790) REVIEW OF OPERATIONS On 11, CIMIC Group Limited ( CIMIC, formerly Leighton Holdings Limited) entered a binding Share Sale Agreement for the sale of John Holland Group Pty Ltd (which owns 100% of the shares in John Holland Pty Ltd) to CCCC International Holding Limited (CCCI), a whollyowned subsidiary of China Communications Construction Company Ltd (CCCC) (the Sale Agreement ). On 20 April 2015, the sale, and associated transfer of ownership, of John Holland Group Pty Ltd from CIMIC to CCCI was completed. Immediately following completion of the sale, the consolidated entity was re-capitalised by John Holland Group Pty Ltd by way of a cash contribution of $390,000,000. Further, the consolidated entity also entered into an agreement with John Holland Holdings Pty Ltd (the CCCI entity which acquired the shares in John Holland Holdings Pty Ltd) relating to several projects which were subject to specific conditions in the Sale Agreement (the Special Arrangement Projects ), resulting in a payment of $198,522,000 to the consolidated entity by John Holland Holdings Pty Ltd. This resulted in the consolidated entity having, immediately following completion of the sale transaction, additional cash assets of $588,522,000 and additional net current assets of $390,000,000. Following completion of the sale, the Company has, with the support of its parent company, agreed on a new business strategy which has seen the development of a new business model to achieve its key objectives, being growth, vertical integration and the ability to generate project opportunities through development, investment and acquisition. The Directors consider 2015 to have been a transitional year, reflecting finalisation of the sale of the Company to CCCI, and expect 2016 to be an investment year with the launch of the new business model and associated investment therein, before the full revenue benefits of the new business model are realised in subsequent years. 2

5 Directors Report (continued) The consolidated entity has reported a profit after tax of $97,511,000 on revenue of $2,235,030,000. The current year financial result reflects: a project result that was impacted by the resolution of a number of legacy matters; investment in the business of approximately $15,000,000, including costs in respect of the roll-out of a new business model and associated organisational re-structure (as noted above), and other costs in respect of the integration with CCCI; a one-off gain of $20,213,912 relating to an agreement with John Holland Pty Ltd, effective shortly after completion of the sale, relating to several legacy projects; and a significant tax benefit, largely resulting from the agreements entered into with John Holland Holdings Pty Ltd relating to several projects, and the application of tax consolidation provisions (further to the sale of the Comapny to CCCI). The prior year financial result was impacted by the sale process and recognition of write-downs on a number of projects, an increase in the level of provisioning held against the year-end balance of contract debtors and the recognition of an onerous lease provision in respect of certain operating lease commitments. The underlying business remains strong with work in hand of $4.1 billion, including the Royal Hobart Hospital Redevelopment and Tonkin Highway Grade Separation projects awarded early in January, and a solid pipeline of projects being tendered. In addition, the Canberra Metro Consortium, of which the Company is a party, has been advised that it is the preferred tenderer in respect of the Canberra Metro light rail project (with formal award of the project expected in late March 2016). Net cash at balance date is $566,204,000 (31 : $292,270,000), net assets are $657,588,000 (31 : $170,872,000) and net current assets of $468,832,000 (31 : deficiency of $95,026,000). The significant increase in the consolidated entity s cash balance during the current year largely reflects the impacts of: re-capitalisation by John Holland Group Pty Ltd (as noted above); Special Arrangement Projects transaction with John Holland Holdings Pty Ltd (as noted above); partly offset by: payments made to John Holland Group Pty Ltd to facilitate: (1) additional dividends paid by John Holland Group Pty Ltd to CIMIC on 16 April 2015 pursuant to relevant conditions of the Sale Agreement; and (2) loans made by John Holland Group Pty Ltd to its immediate parent entity. The current period operating net cash outflows of $39,360,000 was impacted by the resolution during the year of a number of project legacy matters. The significant decrease in the consolidated entity s cash balance during the prior year largely reflected dividends and other payments made to John Holland Group Pty Ltd to facilitate payments to CIMIC of $327,714,661 pursuant to relevant conditions of the Sale Agreement. In addition, payments were made to John Holland Group Pty Ltd to facilitate a dividend payment from John Holland Group Pty Ltd to CIMIC of $140,000,000 in respect of the financial year ended 31 December The considerable increase in the consolidated entity s net assets and net current assets as at 31, compared to the balances reported as at 31, was primarily due to the re-capitalisation by John Holland Group Pty Ltd and the profit after tax recorded for the year. In the opinion of the Directors, the consolidated entity s Statement of Financial Position is very well positioned to enable investment in the business, including acquiring plant and equipment, to support future growth. DIVIDENDS Dividends paid, declared or determined by the Company to the owner were: $ per share Total amount Dividends paid in respect of the financial year ended 31 Amount paid on ,000,000 No dividends have been paid, declared or determined by the Company in respect of the year ended 31. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS Sale of John Holland Group Pty Ltd to CCCI As noted above, on 11, CIMIC entered a binding Share Sale Agreement for the sale of John Holland Group Pty Ltd (which owns 100% of the shares in John Holland Pty Ltd) to CCCI, a wholly-owned subsidiary of CCCC. On 20 April 2015, the sale, and associated transfer of ownership, of John Holland Group Pty Ltd from CIMIC to CCCI was completed. The Directors consider John Holland Group Pty Ltd and CCCC to be an excellent fit, through a shared dedication to technical engineering and innovation and pride in corporate history and values. CCCC values John Holland Group Pty Ltd as one of Australia s leading construction and engineering companies and this acquisition fits with CCCC s corporate strategy to be a global transportation infrastructure company. The intention of CCCI is to invest in and grow the Company s business and explore significant opportunities for expertise and capability sharing between the two companies. Importantly, CCCI will provide John Holland Group Pty Ltd with access to capital when tendering for the range of major projects emerging in Australia and internationally across the rail, building and infrastructure sectors. There were no other significant changes in the state of affairs of the consolidated entity that occurred during the year under review or subsequent to year-end. 3

6 Directors Report (continued) EVENTS SUBSEQUENT TO BALANCE DATE There are no transactions or events subsequent to balance date of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity, in future financial years. LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS Information on likely developments in the operations of the consolidated entity and the expected results of the operations have not been included in this report because the Directors believe it would result in unreasonable prejudice to the consolidated entity. ENVIRONMENTAL REGULATION The consolidated entity is subject to significant environmental regulation in respect of its principal activities. Most sites require certain licence(s) to be obtained in respect of these regulations. To the best of the Directors knowledge, all activities have been undertaken in compliance with these regulations in all material respects. During the financial year, one John Holland Pty Ltd project incurred an infringement under the Singapore Control of Vectors and Pesticides Act (Chapter 59). Since 1995, the consolidated entity has implemented environmental practices on all its sites to Australian and International Standards AS/NZS ISO14001:2004 Environmental Management Systems. The activities of all business units of the consolidated entity are certified as complying with the requirements of AS/NZS ISO14001:2004 by third party certifier Davis Langdon Certification Services (DLCS). The scope of certification is reviewed at each audit to ensure it remains current and comprehensive. All project operations produce monthly reports on environmental performance covering issues such as environmental incidents, non-compliances, infringements and complaints. Reported issues remain on record until declaration that they are rectified and/or resolved. Each quarter, an Environmental Compliance Report is compiled, signed off by the Chief Executive Officer and submitted to the Board. To date, no conviction for an environmental offence has been incurred by John Holland Group Pty Ltd or its controlled entities. Regular environmental audits are planned and conducted by personnel independent of the operations and third party auditors to evaluate the effectiveness of environmental practices. The audits examine the environmental issues and their potential impacts on operations, compliance with legislative requirements and the effectiveness of established environmental controls. Items identified for actions and improvements are reported to senior management, and each issue is addressed and closed out. The consolidated entity is subject to the reporting requirements of the National Greenhouse and Energy Reporting Act 2007, which requires it to report its annual greenhouse gas emissions and energy use. The consolidated entity has implemented systems and processes for the collection and calculation of the data required and submitted its 2014/15 report to the Clean Energy Regulator prior to 30 October INSURANCE OF DIRECTORS AND OFFICERS During the year, John Holland Group Pty Ltd paid a premium to insure the Directors and Officers of the controlled entity for the 12 months to 31. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the Directors and Officers in their capacity as Directors and Officers of entities in the consolidated entity, and any other payments arising from liabilities incurred by the Directors and Officers in connection with such proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of duty by the Directors and Officers or the improper use by the Directors and Officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Company. It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities. ROUNDING OF AMOUNTS TO NEAREST THOUSAND DOLLARS The consolidated entity is of a kind referred to in Class Order 98/0100, issued by the Australian Securities and Investments Commission, relating to the rounding off of amounts in the Directors report and financial report. Amounts in the Directors report and financial report have been rounded off in accordance with that Class Order to the nearest thousand dollars or, in certain cases, to the nearest dollar. AUDITOR S INDEPENDENCE DECLARATION The auditor of the consolidated entity is Deloitte Touche Tohmatsu. A copy of the auditor s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 5. This report is made in accordance with a resolution of the Directors. 4 D.A. Ray Director Melbourne, 21 March 2016 G. Cain Director

7 Auditor s independence declaration Deloitte Touche Tohmatsu ABN Bourke Street Melbourne VIC 3000 GPO Box 78 Melbourne VIC 3001 Australia Tel: Fax: The Board of Directors John Holland Pty Ltd Level 5, 380 St Kilda Road Melbourne VIC March 2016 Dear Board Members John Holland Pty Ltd In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of John Holland Pty Ltd. As lead audit partner for the audit of the financial statements of John Holland Pty Ltd, I declare that to the best of my knowledge and belief, there have been no contraventions of: (i) The auditor independence requirements of the Corporations Act 2001 in relation to the audit (ii) Any applicable code of professional conduct in relation to the audit. Yours sincerely DELOITTE TOUCHE TOHMATSU T Simkin Partner Chartered Accountants Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited 5

8 Consolidated Statement of Profit or Loss Notes Year ended Year ended Revenue 3 2,235,030 2,852,689 Expenses 5 (2,231,200) (3,120,015) Operating loss before other income, interest, foreign exchange gains (losses), share of profits of associates and income tax benefit 3,830 (267,326) Other income 4 23,023 1,358 Interest income 4,869 5,619 Interest expense (3,345) (3,963) Net foreign exchange losses (4) (24) Share of net profits of associates accounted for using the equity method* 31 15,275 14,832 Profit (loss) before income tax benefit 43,648 (249,504) Income tax benefit 6 53,863 70,714 Profit (loss) for the year 97,511 (178,790) Profit (loss) attributable to the owner of John Holland Pty Ltd 97,511 (178,790) * Indirect overheads of the consolidated entity have not been allocated to share of associates. 6 The consolidated statement of profit or loss is to be read in conjunction with the accompanying notes.

9 Consolidated Statement of Profit or Loss and Other Comprehensive Income Year ended Year ended Profit (loss) for the year 97,511 (178,790) Other comprehensive income Items that may be reclassified subsequently to profit or loss: Exchange difference on translation of foreign operations (795) 924 Other comprehensive (loss) income for the year, net of tax (795) 924 Total comprehensive income (loss) for the year 96,716 (177,866) Total comprehensive income (loss) for the year is attributable to: Owner of John Holland Pty Ltd 96,716 (177,866) The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes. 7

10 Consolidated Statement of Financial Position as at 31 Notes Current assets Cash and cash equivalents 7 566, ,270 Account receivables 8 54,974 96,468 Other receivables 9 380, ,971 Inventories , ,721 Prepayments 13,474 7,432 Assets held for sale 11 2,200 Total current assets 1,150,132 1,099,062 Non-current assets Long-term receivables 12 9,750 9,750 Investments accounted for using the equity method 13 12,508 13,134 Available-for-sale financial assets 6 6 Property, plant and equipment , ,005 Property, plant and equipment construction in progress 15 1,936 4,099 Deferred tax assets 16 49,426 79,089 Goodwill 17 9,200 9,200 Intangible assets 18 14,217 16,973 Total non-current assets 216, ,256 Total assets 1,366,558 1,399,317 Current liabilities Account payables , ,565 Advances from customers 182, ,264 Payroll payables 20 10,767 13,678 Tax payables 21 7,061 54,780 Provisions 22 9,213 6,802 Total current liabilities 681,300 1,194,088 Non-current liabilities Long-term payables 488 Provisions 24 27,670 33,869 Total non-current liabilities 27,670 34,357 Total liabilities 708,970 1,228,446 Net assets 657, ,872 Equity Issued capital , ,000 Reserves Accumulated losses (32,557) (130,068) Total equity 657, ,872 8 The consolidated statement of financial position is to be read in conjunction with the accompanying notes.

11 Consolidated Statement of Changes in Equity Issued capital Foreign currency translation reserve Retained profits (accumulated losses) Total equity Balance at 1 January , , ,738 Payment of dividends (245,000) (245,000) Loss for the year (178,790) (178,790) Other comprehensive income for the year, net of income tax Total comprehensive income (loss) income for the year 924 (178,790) (177,866) Balance at , (130,068) 170,872 Balance at 1 January , (130,068) 170,872 Profit for the year 97,511 97,511 Other comprehensive loss for the year, net of income tax (795) (795) Total comprehensive (loss) income for the year (795) 97,511 96,717 Issue of ordinary shares 390, ,000 Balance at , (32,557) 657,588 The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes. 9

12 Consolidated Statement of Cash Flows Note Year ended Year ended Cash flows from operating activities Receipts from customers (inclusive of goods and services tax) 2,406,188 3,426,077 Payments for goods and services (inclusive of goods and services tax) (2,453,344) (3,516,801) Dividends received from associates 15,901 13,225 Interest received 4,869 5,619 Interest paid (3,345) (3,973) Amounts paid under tax consolidation arrangements (9,629) (31,071) Net cash outflow from operating activities (39,360) (106,924) Cash flows from investing activities Payments for property, plant and equipment (1,704) (20,697) Payments for intangible assets (242) Proceeds from sale of property, plant and equipment 11,249 4,230 Net cash inflow (outflow) from investing activities 9,544 (16,709) Cash flows from financing activities Proceeds from issuance of ordinary shares 390,000 Payment of dividends to immediate parent entity (245,000) Intercompany cash advances (86,249) (217,266) Net cash inflow (outflow) from financing activities 303,751 (462,266) Net increase (decrease) in cash and cash equivalents held 273,935 (585,899) Cash and cash equivalents at the beginning of the period 292, ,169 Cash and cash equivalents at reporting date 7 566, , The consolidated statement of cash flows is to be read in conjunction with the accompanying notes.

13 Notes to the consolidated financial statements 1. Summary of significant accounting policies The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of John Holland Pty Ltd and its controlled entities. For the purposes of preparing the consolidated financial statements, the consolidated entity is a for-profit entity. All amounts are presented in Australian dollars, unless otherwise noted. Sale of John Holland Group Pty Ltd On 11, CIMIC Group Limited ( CIMIC, formally Leighton Holdings Limited) entered a binding Share Sale Agreement for the sale of John Holland Group Pty Ltd (which owns 100% of the shares in John Holland Pty Ltd) to CCCC International Holding Limited (CCCI), a wholly-owned subsidiary of China Communications Construction Company Ltd (CCCC) (the Sale Agreement ). On 20 April 2015, the sale, and associated transfer of ownership, of John Holland Group Pty Ltd to CCCI was completed. The CCCI entity which acquired the shares in John Holland Group Pty Ltd from CIMIC is John Holland Holdings Pty Ltd. (a) Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards Reduced Disclosure Requirements and Interpretations issued by the Australian Accounting Standards Board, the Corporations Act 2001 and comply with other requirements of law. The consolidated financial statements were approved by the Board of Directors on 21 March The Directors have the power to amend and reissue the financial statements. Compliance with Australian Accounting Standards Reduced Disclosure Requirements The consolidated financial statements of John Holland Pty Ltd comply with Australian Accounting Standards Reduced Disclosure Requirements as issued by the Australian Accounting Standards Board (AASB). Historical cost convention These consolidated financial statements have been prepared under the historical cost basis. Critical accounting estimates The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the consolidated entity s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2. Rounding of amounts The consolidated entity is of a kind referred to in Class Order 98/0100, issued by the Australian Securities and Investments Commission, relating to the rounding off of amounts in the financial statements. Amounts in the consolidated financial statements have been rounded off in accordance with that Class Order to the nearest thousand dollars or, in certain cases, to the nearest dollar. Financial statement presentation The significant accounting policies adopted in the preparation of the financial report are set out below. These policies have been applied consistently to all periods presented in the financial report. The consolidated entity has made a number of changes to the presentation of its financial statements for the current year, so as to more closely align them to the presentation adopted by its new parent entity further to the sale of John Holland Group Pty Ltd to CCCI. The most significant of these changes are in respect of the presentation of the statement of financial position and are detailed below: Receivables are now classified as (1) account receivables, which reflect debtor balances certified by clients as due and payable to the consolidated entity; and (2) other receivables. Inventories now include Contract work due from customers, reflecting construction work in progress whereby cost plus profit recognised to date based on the value of work completed, less certified progress billings and less provision for foreseeable losses constitutes a debit (ie. asset) balance. Property, plant & equipment construction in progress, representing assets under construction and not yet completed, is now separately disclosed. Advances from customers, reflecting construction work in progress whereby cost plus profit recognised to date based on the value of work completed less certified progress billings and less provision for foreseeable losses constitutes a credit (ie. liability) balance, is now separately disclosed. Payroll payables, reflecting amounts payable in respect of employee benefits is now separately disclosed. Tax payables, as separately disclosed, now includes tax payable (receivable) in respect of income tax, goods and services tax, payroll tax, fringe benefits tax and group tax. Certain comparative amounts have been reclassified to conform with the current year s presentation, with a view to providing more clarity to the users of this financial report. Adoption of new and revised accounting standards The consolidated entity has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current financial year. New and revised Standards and amendments thereof and Interpretations effective for the current financial year include: AASB (Part A) Amendments to Australian Accounting Standards Annual Improvements and Cycles. AASB (Part C) Amendments to Australian Accounting Standards Materiality. AASB Amendments to Australian Accounting Standards Financial Reporting Requirements for Australia Groups with a Foreign Parent. The new and revised Standards has not resulted in any changes to the consolidated entity s accounting policies and has not affected the amounts reported for the current or prior periods. The following standards, amendments to standards and interpretations are relevant to current operations. They are available for early adoption but have not been applied by the Group in this Financial Report. The Group has not yet determined the potential effect of these standards on the Group s future Financial Report. AASB Amendments to Australian Accounting Standards Clarification of Acceptable Methods of Depreciation and Amortisation. AASB Amendments to Australian Accounting Standards Accounting for Acquisitions of Interests in Joint Operations. AASB 15 Revenue from Contracts with Customers AASB Amendments to Australian Accounting Standards arising from AASB 15. AASB 9 Financial Instruments (). 11

14 (b) Principles of consolidation (i) Controlled entities The consolidated financial statements incorporate the assets and liabilities of all controlled entities of John Holland Pty Ltd ( parent entity ) as at 31, and the results of all controlled entities for the reporting period. John Holland Pty Ltd and its controlled entities together are referred to in this financial report as the consolidated entity. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Controlled entities are fully consolidated from the date on which control is transferred to the consolidated entity. They are deconsolidated from the date that control ceases. The acquisition method of accounting is used to account for the acquisition of controlled entities by the consolidated entity. The effects of all transactions between entities in the consolidated entity are eliminated in full. (ii) Associates Associates are all entities over which the consolidated entity exercises significant influence, but not control or joint control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting, after initially being recognised at cost. Under this method, the consolidated entity s share of the post-acquisition profits or losses of associates is recognised in the consolidated income statement and its share of post-acquisition movements is adjusted against the carrying amount of the investment. When the consolidated entity s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured long-term receivables, the consolidated entity does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. Unrealised gains and losses from transactions between the consolidated entity and associates are eliminated to the extent of the consolidated entity s interest. (iii) Joint arrangements Investments in joint arrangements are accounted for as set out in note 1(n). (c) Income tax Income tax expense represents the sum of the tax currently payable and deferred tax. Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax reported in the consolidated statement of profit or loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The consolidated entity s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax Deferred income tax is provided in full, using the balance sheet method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current and deferred tax for the year Current and deferred tax is recognised in the consolidated statement of profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. Tax consolidation legislation On 20 April 2015, the consolidated entity joined the CCCI Australia Pty Ltd income tax consolidated group, with CCCI Australia Pty Ltd as the head entity. Under this arrangement, the head entity and the group members continue to account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the income tax consolidated group continued to be a stand-alone taxpayer in its own right. In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (assets) and the deferred tax liabilities (assets) arising from unused tax losses and unused tax credits assumed from controlled entities in the income tax consolidated group. In the books of John Holland Pty Ltd and its wholly-owned Australian controlled entities, the current income tax liability (asset) is recognised as a payable to (receivable from) the head entity of the CCCI Australia Pty Ltd income tax consolidated group. Assets or liabilities arising under tax funding agreements with the head entity of the CCCI Australia Pty Ltd income tax consolidated group are recognised as amounts receivable from or payable to the head entity of the CCCI Australia Pty Ltd income tax consolidated group. Details about the CCCI Australia Pty Ltd tax funding agreement are disclosed in note 6. Before joining the CCCI Australia Pty Ltd income tax consolidated group, John Holland Pty Ltd and its wholly-owned Australian controlled entities were part of the CIMIC Group Limited income tax consolidated group. John Holland Pty Ltd exited the CIMIC Group Limited income tax consolidated group just prior to joining the CCCI Australia Pty Ltd income tax consolidated group on 20 April

15 (d) Foreign currency translation (i) Functional currency and presentation currency Items included in the financial statements of the consolidated entity s controlled entities, associates and joint ventures are measured using the currency of the primary economic environment in which the entity operates ( the functional currency ). The consolidated financial statements are presented in Australian dollars, which is John Holland Pty Ltd s functional and presentation currency. (ii) Transactions and balances Foreign currency transactions are initially translated into Australian dollars at the rate of exchange at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at reporting date exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when they are deferred in equity as qualifying cash flow hedges. (iii) Foreign operations The results and financial position of all the consolidated entity s controlled entities (which do not have the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: assets and liabilities for the consolidated statement of financial position presented are translated at the closing rate at the date of the consolidated statement of financial position; and income and expenses for the consolidated statement of profit or loss and the consolidated statement of profit or loss and other comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions). All resulting exchange differences are recognised in other comprehensive income. (e) Derivatives and hedging activities The consolidated entity holds derivative financial instruments to hedge its foreign currency risk exposure. Derivatives are initially recognised at fair value on the date on which the derivative contract is entered. Attributable transaction costs are recognised in the consolidated statement of profit or loss when incurred. Subsequent to initial recognition, derivatives are measured at fair value at the end of each reporting period and changes therein are accounted for as described below. The consolidated entity only enters into hedges of the cash flows of recognised assets and liabilities, firm commitments and highly probable forecast transactions (cash flow hedges). The consolidated entity documents at the inception of hedging transactions the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The consolidated entity also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in the cash flows of hedged items. Movements in the hedge reserve in other comprehensive income are shown in the consolidated statement of changes in equity. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Cash flow hedge The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated in reserves in equity. The gain or loss relating to the ineffective portion is recognised immediately in the consolidated statement of profit or loss within other income or other expenses. Amounts accumulated in equity are reclassified in the consolidated statement of profit or loss in the periods when the hedged item affects profit or loss (for instance when the forecast purchase that is hedged takes place). The gain or loss relating to the effective portion of forward foreign exchange contracts hedging foreign denominated expenses or receipts is recognised in the consolidated statement of profit or loss within expenses. The gain or loss relating to the effective portion of forward foreign exchange contracts hedging income is recognised in the consolidated statement of profit or loss within revenue. However, when the forecast transaction that is hedged results in the recognition of a nonfinancial asset (for example, fixed assets) or a non-financial liability, the gains and losses previously deferred in equity are reclassified from equity and included in the initial measurement of the cost or carrying amount of the asset or liability. The deferred amounts are ultimately recognised in the consolidated statement of profit or loss as expenses in the case of inventory, or as depreciation or impairment in the case of fixed assets. When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the consolidated statement of profit or loss, or upon the initial recognition of a non-financial asset or liability. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately reclassified to the consolidated statement of profit or loss. (f) Investments and other financial assets The consolidated entity classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at the end of each reporting date. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months from the end of the reporting period, which are classified as non-current assets. Loans and receivables are included in receivables (note 8 and 9) and non-current receivables (note 12) in the consolidated statement of financial position. Loans and receivables are carried at amortised cost using the effective interest method. Impairment The consolidated entity assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. If there is evidence of impairment for any of the consolidated entity s financial assets carried at amortised cost, the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows, excluding future credit losses that have not been incurred. The cash flows are discounted at the financial asset s original effective interest rate. The loss is recognised in the consolidated statement of profit or loss. 13

16 14 (g) Issued capital (i) Ordinary shares Ordinary shares are classified as issued capital. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from issued capital, net of any tax effects. (ii) Dividends Dividends are recognised as a liability in the period in which they are declared. (h) Revenue recognition Revenue is recognised at the fair value of the consideration received or receivable net of the amount of goods and services tax (GST). (i) Construction work in progress Refer to note 1(i). (ii) Other services The provision of other services is recognised in the accounting period in which the services are rendered. (iii) Interest income Interest income is recognised as it accrues. (iv) Dividends Dividends are recognised as revenue when the right to receive payment is established. (i) Construction work in progress (i) Valuation Construction work in progress is carried at cost plus profit recognised to date based on the value of work completed, less certified progress billings and less provision for foreseeable losses, allocated between contract work due from customers (in respect of contracts whereby the amount constitutes a debit (i.e. asset) balance) and advances from customers (in respect of contracts whereby the amount constitutes a credit (i.e. liability) balance). Cost includes variable and fixed costs directly related to specific contracts, costs related to contract activity in general which can be allocated to specific contracts on a reasonable basis and other costs specifically chargeable under the contract. Costs expected to be incurred under penalty clauses and rectification provisions are also included. Costs incurred in securing contracts are included when they can be separately identified and measured reliably, and where it is probable that the contract will be obtained. (ii) Recognition of profit Contract revenue and expenses are recognised on an individual contract basis using the percentage of completion method when the stage of contract completion can be reliably determined, costs to date can be clearly identified, and total contract revenue and costs to complete can be reliably estimated. Stage of completion is measured by reference to an assessment of total costs incurred to date as a percentage of estimated total costs for each contract. Where the outcome of a contract cannot be reliably estimated, contract costs are expensed as incurred. Where it is probable that the costs will be recovered, revenue is recognised to the extent of costs incurred. An expected loss is recognised immediately as an expense. (j) Goods and services tax Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the Australian Taxation Office (ATO). In this case, it is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the consolidated statement of financial position. Cash flows are included in the consolidated statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows. (k) Impairment of assets Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events and circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset s fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal at each reporting date. (l) Cash and cash equivalents For the purposes of presentation in the consolidated statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions and term deposits held with financial institutions. (m) Receivables Account receivables reflect trade debtor balances certified by clients as due and payable to the consolidated entity. Collectability of other receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by reducing the carrying amount directly. An allowance account (provision for doubtful debts) is used when there is objective evidence that the consolidated entity will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the receivable is impaired. The amount of the impairment allowance is the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial. The amount of the impairment loss is recognised in the consolidated statement of profit or loss within other expenses. When a receivable for which an impairment allowance had been recognised becomes uncollectable in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the consolidated statement of profit or loss.

17 (n) Joint arrangements Under AASB 11 there are only two types of joint arrangements joint operations and joint ventures. The classification of joint arrangements under AASB 11 is determined based on the rights and obligations of parties to the joint arrangements by considering the structure and legal form of the arrangement, the contractual terms agreed by the parties to the arrangement, and, where relevant, other facts and circumstances. (i) Joint ventures A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint venturers) have rights to the net assets of the arrangement. The interests in joint venture entities are accounted for using the equity method after initially being recognised at cost. Under the equity method, the share of the profit or loss of the joint venture entities is recognised in the consolidated statement of profit or loss, and the share of postacquisition movements in reserves is recognised in other comprehensive income. Amounts owing from (to) joint venture entities at balance date are expected to be settled within 12 months and, as a result, are presented as current assets (liabilities) in the consolidated statement of financial position. Profits or losses on transactions establishing the joint venture partnership and transactions with the joint venture are eliminated to the extent of the consolidated entity s ownership interest until such time as they are realised by the joint venture partnership on consumption or sale. (ii) Joint operations A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint operators) have rights to the assets, and obligations for the liabilities, relating to the arrangement. The interests in joint operations are accounted for such that each joint operator recognises in its financial statements its share of assets, liabilities, revenue and expenses of the joint operation in accordance with applicable Accounting Standards. Details relating to the joint operations are set out in note 30. (o) Inventories Inventories comprise contract work due from customers and consumables at cost. Contract work due from customers is detailed in note 1(i)(i). Inventories comprising consumable stores and finished goods are valued at the lower of cost and net realisable value. The cost of inventory is assigned by using the weighted average cost formula. (p) Property, plant and equipment (i) Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. Costs may also include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. (ii) Depreciation Depreciation is recognised in the income statement on a straight-line basis to allocate the cost net of the residual value over the estimated useful life of each part of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the consolidated entity will retain ownership by the end of the lease term. Land is not depreciated. Buildings Plant and equipment Leased plant and equipment Straight-line method, useful life of 40 years Straight-line method, useful life of 3-10 years Straight-line method, useful life of 3-10 years The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An asset s carrying amount is written down immediately to its recoverable amount if the asset s carrying amount is greater than its estimated recoverable amount (note 1(k)). Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the consolidated statement of profit or loss as other income or other expenses. (iii) Leasehold improvements The cost of improvements to or on leasehold properties is amortised over the unexpired period of the lease or the estimated useful life of the improvement to the consolidated entity, whichever is the shorter. Leasehold improvements held at the reporting date are being amortised over periods ranging from three to ten years. (iv) Leased assets A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased non-current assets; and operating leases, under which the lessor effectively retains substantially all such risks and benefits. Upon initial recognition, of a finance lease, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Other leases are operating leases, and the leased assets are not recognised in the consolidated entity s consolidated statement of financial position. Operating lease payments are charged to the consolidated statement of profit or loss in the periods in which they are incurred, as this represents the pattern of benefits derived from the leased assets. (q) Property, plant and equipment construction in progress Items of property, plant and equipment that are under construction and not yet completed, are classified as property, plant and equipment construction in progress and measured at cost. When an item of property, plant and equipment construction in progress is completed, its cost is transferred to property, plant and equipment and is subsequently measured at cost less accumulated depreciation and accumulated impairment losses. 15