A N N UA L R E P O R T

Transcription

1 2014 ANNUAL REPORT

2 MANAGING DIRECTOR S MESSAGE 4 DIRECTORS REPORT 6 DIRECTORS STATEMENT 9 CONSOLIDATED STATEMENT OF PROFIT OR LOSS 10 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 11 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 12 CONSOLIDATED STATEMENT OF CASH FLOWS 13 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 14 NOTES TO THE FINANCIAL STATEMENTS 15 AUDIT REPORT 41 THIESS PTY LTD AND ITS CONTROLLED ENTITIES NON-STATUTORY SPECIAL PURPOSE FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2014

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4 A MESSAGE FROM BRUCE MUNRO IMAGE OF MAGAGING DIRECTOR TBA 2014 was a memorable year for Thiess on many fronts the company recorded its best ever financial performance, celebrated its 80th anniversary and began the transition to the world s largest contract miner, while continuing to improve safety across all our sites. 20 We closed out the year with revenue of $6.5 billion, $10.5 billion work-in-hand and $1 billion profit before tax a record result delivered against a challenging industry backdrop; declining resources sector, limited infrastructure opportunities and fierce competition. Our multidiscipline expertise across the construction, mining and services sectors enabled us to leverage our diverse capabilities to provide safe, innovative and value-add solutions across the project life cycle. Over the course of the year we worked on 224 construction, mining and services contracts throughout Australia, Indonesia, India, New Zealand and New Caledonia. The Recordable Injury Frequency Rate (RIFR) of 3.3 was a 6 per cent reduction compared with our 2013 result and directly reflects the efforts of all Thiess employees throughout the organisation. The high standard Thiess sets across all of our projects was also recognised with an impressive collection of more than 30 industry awards, including the international Silver Stevie Award for our safety program. Our Oothungs Sisters in Mining Program was also acknowledged throughout Queensland and nationally for setting a new benchmark for diversity programs within the mining industry. STRATEGIC FOCUS Importantly, a Strategic Review led by our parent company CIMIC Group Limited ( CIMIC Group ) (formerly Leighton Holdings Limited) saw the mining expertise of Thiess, Leighton Contractors, HWE and Leighton Asia Mining, consolidated under one brand in mid CIMIC Group also sold the Thiess Services business, as part of a wider divestment involving the sale of Leighton Contractors Services business, to a joint venture owned 50 per cent by CIMIC Group and 50 per cent by Apollo Global Management. The new company will be a sectorfocused independent business led by a dedicated experienced board and executive team.

5 5 We are charting a new course in our history as a global contract miner. BRUCE MUNRO PROJECT IMAGE TBA 14 As a result of the consolidation Our expanded mining of the mining business under operations include a diverse the one brand, in 2015 Thiess range of commodities such as became now a truly global thermal and metallurgical coal, employer with more than lignite, iron ore, nickel, gold 12,000 people operating across and diamonds. Mining services 24 mines in six countries, provided to our clients cover including Australia, Indonesia, all mine planning, fixed and New Zealand, the Philippines, mobile plant operation and Mongolia and Botswana. Thiess maintenance, drill and blast strength in the resources sector services, continuous mining, and has increased significantly, in-pit crushing and conveying positioning us well for future systems. We continually opportunities in existing and challenge and refine our mine new markets. planning to optimise our operations, while utilising our Our geographic Five Pillar scale and expertise to deliver approach will focus on Australia, our clients greater certainty and Asia, Southern Africa, and maximum value. North and South America to take advantage of these new Our flexible and scalable opportunities. This reduces approach provides our clients sovereign risk and opens with the ability to adjust to possibilities for establishing continuing market challenges. long-term relationships with a suite of new clients. We continue to drive performance through engineering and innovation excellence which are core to our future growth and success. We constantly assess new technologies and how they can be applied to further streamline processes and increase efficiencies. As has happened many times over the past eight decades, management is again focused on reshaping and repositioning the company as a global contract miner, starting another exciting chapter in the Thiess history. MANAGING DIRECTOR S MESSAGE

6 THIESS PTY LTD AND ITS CONTROLLED ENTITIES NON-STATUTORY SPECIAL PURPOSE FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2014 DIRECTORS REPORT The directors present their report, together with the consolidated financial report of the Consolidated Entity, being Thiess Pty Ltd ( the Company ) and its controlled entities ( the Group ). DIRECTORS The directors of the Company at any time during or since the end of the financial year are: CONSOLIDATED RESULT The consolidated profit for the year attributed to the members of Thiess Pty Ltd was: Mr Bruce A Munro Managing Director Director since 15 August 2011 Mr Stefan Camphausen Chief Financial Officer Director since 8 August 2014 Mr Adolfo V Martinez Director since 25 March 2015 Mr Marcelino F Verdes Director since 14 April 2014 (Resigned 25 March 2015) Mr Javier Loizaga Director since 14 April 2014 (Resigned 25 March 2015) Ms Theresa Mlikota Director since 4 April 2014 (Resigned 8 August 2014) Ms Susan J Palmer Director since 15 August 2011 (Resigned 4 April 2014) Mr Peter A Gregg Director since 4 February 2011 (Resigned 13 March 2014) Mr Hamish Tyrwhitt Director since 14 December 2011 (Resigned 13 March 2014) Net profit from ordinary activities after tax from continuing operations Net profit from ordinary activities after tax from discontinued operations 2014 $ $ , , ,490 (60,452) Minority interest (124) (110) Net profit after tax attributable to members of Thiess Pty Ltd 703, ,048 REVIEW OF OPERATIONS The 2014 performance was a strong result delivered against a declining resources sector, limited infrastructure opportunities and fierce competition. The Consolidated Entity delivered a net profit before tax of $1,007 million. The continued focus on working capital management, fleet utilisation and delivery of significant construction projects have been the key contributors to this result. During the year a Strategic review, led by our parent CIMIC Group resulted in the divestment of the Group s services business, this sale resulted in a profit on disposal of $189.5 million. PRINCIPAL ACTIVITIES In the 2014 financial year, the Group s principal activities were construction, mining and services in Australia and selected international markets incuding New Zealand, Indonesia, New Caledonia and India. In June 2014, a Strategic Review led by our parent company CIMIC Group saw the mining expertise of Thiess, Leighton Contractors, HWE and Leighton Asia Mining, consolidated under one brand in mid As a result of the consolidation of the mining business under the one brand, in 2015 Thiess became now a truly global employer with more than 12,000 people operating across 24 mines in six countries, including Australia, Indonesia, New Zealand, the Philippines, Mongolia and Botswana. Operating revenue Work in hand $ 000 $ 000 Mining 1,900,446 6,334,206 Construction 3,584,293 2,153,147 Other 32, ,061 Total revenue from continuing operations 5,517,485 8,759,414 Revenue/work in hand from discontinued operations 934,350 1,730,701 Total revenue/work in hand 6,451,835 10,490,115 CIMIC Group also sold the Thiess Services business, as part of a wider divestment involving the sale of Leighton Contractors Services business, to a joint venture owned 50 per cent by CIMIC Group and 50 per cent by Apollo Global Management.

7 7 DIVIDENDS Dividends paid or declared by the Company to members in respect to the 2014 financial year was; ORDINARY DIVIDENDS AMOUNT $ 000 $ 000 Date of payment: 20 March , ,000 Dividend declared since the end of the financial year - $450 million paid 28 January STATE OF AFFAIRS Significant changes in the state of affairs of the group during the 2014 financial year were as follows: Reorganisation of the CIMIC Group business model into four specialised Operating Companies, with the Group now operating as a global contract miner in Australia, New Zealand, Asia, Mongolia and Southern Africa. Divestment of the Group s Services Business which resulted in the Group disposing 100% of its share in Thiess Services Group. ENVIRONMENTAL REGULATION The Group is committed to ensuring that all its projects employ environmentally responsible practices and, as a minimum, comply with all applicable environmental laws and regulations. We are focused on instilling a culture that seeks to go beyond compliance to deliver positive environmental outcomes that add value to our projects and produce mutually beneficial outcomes for our clients, the environment and the communities in which we operate. Our construction, mining and services businesses each maintained and operated under an Environmental Management System that is certified to the international standard ISO This system provides a framework for identifying and proactively managing potential environmental risks and places an emphasis on the continual improvement of our environmental performance. The system is the subject of regular internal auditing as well as being annually tested by an independent third party certification body to ensure ongoing certification against the international standard. HEALTH AND SAFETY In 2014 Thiess achieved a recordable injury frequency rate (RIFR) of 3.3. This is the lowest RIFR in Thiess history, and an improvement of 6% compared with the previous year Recordable Injuries Recordable Injury Frequency Rate Lost Time Injuries Lost Time Injury Frequency Rate Lost Time Injury Severity Rate Compliance with Leading Indicators 88% 98% Note: Joint arrangements percentage has been applied to all incident data This achievement was supported by our lag-to-lead safety transformation programme which was awarded a Silver Stevie at the 2014 International Business Awards. This programme incorporated a range of initiatives, including: Industry specific lead indicators, Our inaugural Safety Leaders Forum, The implementation of our Synergy HSE database, The piloting of our engagement program, Project ALFA, and Our Thiess Executive mentoring programme. These programs, and the focus placed on safety at Thiess, have contributed to our ongoing improvements in safety culture and outcomes. Sadly, a fatal incident occurred in May 2014 on the Boggabri Coal Expansion Project in NSW. The incident involved a Thiess employee using an elevated work platform to tighten bolts in the structural beams. Thiess has worked in collaboration with our client and the regulator to fully understand the circumstances of the incident and define actions that can prevent such events from reoccurring. This included supporting and promoting the introduction and industry acceptance of a new style of secondary protection device for EWPs that were not previously available in Australian prior to the incident. DIRECTORS REPORT During 2014 there were no prosecutions for breaches of environmental legislation brought against the Group.

8 DIRECTORS REPORT CONTINUED HEALTH AND SAFETY CONTINUED During 2014, Thiess entered into an enforceable undertaking in response to a fatality that occurred on the Airport Link project in September The incident involved a worker who was cutting redundant steelwork which moved and trapped the worker. A range of actions have already been implemented following the acceptance of the undertaking, improving work conditions and contributing to the community at large. During 2014 all improvement notices were formally closed out to the satisfaction of the regulator. Improvement Notices/Mine Directives Prohibition Notices Infringement Notices OHS Convictions Services Construction Australian Mining International EVENTS SUBSEQUENT TO BALANCE DATE Dividend of $450 million has been declared after 31 December The financial effect of the above transaction has not been brought to account in the financial statements for the year ended 31 December LIKELY DEVELOPMENTS The Group will concentrate on the significant opportunities in the mining sector in Australia, and international markets including Asia, Southern African and North and South America. DIRECTORS BENEFITS Since the end of the previous financial year no director of the Company has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of remuneration received or due and receivable by directors as disclosed in the accounts) by reason of a contract made by the Company, its controlled entities or a related body corporate with a director or with a firm of which the director is a member, or with an entity in which the director has a substantial financial interest. INDEMNIFICATION OF OFFICERS The Company has agreed under Clause 71.2 of its Constitution to indemnify the current and past Officers of the Company against all liabilities to another person and reasonable legal defence costs that may arise from their position as Officers of the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith. Dated at Brisbane this 12th day of May Signed in accordance with a resolution of the directors. On 31 March 2015, the Group entered into an agreement to sell 100% of its share in PT Solo Ngawi Jaya and Pt Ngawi Kertosono Jaya. Completion of the sale agreements is subject to relevant regulatory approvals. No other items have arisen in the interval between the end of the financial year and the date of this report any item, transaction or event 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. BA Munro Director S Camphausen Director

9 9 DIRECTORS STATEMENT DIRECTORS DECLARATION 1. As detailed in the notes to the financial statements, the Consolidated Entity is not a reporting group as the Company and its significant Australian domiciled subsidiaries joined the CIMIC Group Limited Deed of Cross Guarantee dated the 19th December Pursuant to ASIC Class order 98/1418 dated 13 August 1998, relief was granted to the CIMIC Group Limited Class Order Companies from the Corporations Act 2001 requirements for preparation, audit and publication of the Consolidated Entities financial statements. The directors of the Consolidated Entity have elected to prepare non-statutory special purpose financial statements for the year ending 31 December (a) the financial statements and notes set out on pages 10 to 40, are in accordance with the basis of accounting as described in Note (a), so as to present fairly the financial position of the Consolidated Entity as at 31 December 2014 and of its performance, as represented by the results of its operations and its cash flows, for the year ended on that date; and (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 2. Dated at Brisbane this 12th day of May Signed in accordance with a resolution of the directors. BA Munro S Camphausen Director Director DIRECTORS STATEMENT

10 CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 DECEMBER 2014 Note $'000 $'000 (Restated)^ CONTINUING OPERATIONS Revenues and income 1 5,517,485 6,027,928 Expenses 2 (4,756,858) (5,453,166) Finance costs 3 (23,438) (28,078) Share of net (losses)/profits of associates and joint venture entities 25 3,302 8,294 PROFIT BEFORE TAX 740, ,978 Income tax expense (218,812) (171,368) PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS 521, ,610 DISCONTINUED OPERATIONS PROFIT/(LOSS) FOR THE YEAR FROM DISCONTINUED OPERATIONS ,490 (60,452) Profit for the year 703, ,158 Profit for the year attributable to non-controlling interests (124) (110) PROFIT FOR THE YEAR ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT ENTITY 703, ,048 The consolidated statement of profit or loss is to be read in conjunction with the notes to the financial statements set out on pages 15 to 40. ^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2013 and have been represented to separately show those operations classified as discontinued in the current year, as detailed in Note 28: Acquisitions, Disposals and Discontinued Operations.

11 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER $'000 $ 000 (Restated)^ PROFIT FOR THE YEAR 703, ,158 Other comprehensive income Items that may be subsequently reclassified to profit or loss: Effective portion of changes in fair value of cash flow hedges (net of tax) - 89 Net fair value gain on available-for-sale assets 4,410 9,590 Non-controlling interest 2,963 (140) Exchange difference on the translation of foreign operations 23,892 29,927 NET OTHER COMPREHENSIVE INCOME RECOGNISED DIRECTLY IN EQUITY 31,265 39, TOTAL COMPREHENSIVE INCOME FOR THE YEAR 734, ,624 Continuing operations 553, ,323 Discontinued operations 180,862 (59,699) TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO: - Equity holders of the Consolidated Entity 731, ,503 - Non-controlling interest 3, , ,624 The consolidated statement of comprehensive income is to be read in conjunction with the notes to the financial statements set out on pages 15 to 40. ^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2013 and have been represented to separately show those operations classified as discontinued in the current year, as detailed in Note 28: Acquisitions, Disposals and Discontinued Operations. CONSOLIDATED STATEMENT OF FINANCIAL POSITION

12 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2014 Note $ 000 $ 000 CURRENT ASSETS Cash and cash equivalents 5 460,516 1,475,975 Trade and other receivables 6 2,160,500 1,451,776 Inventories 7 72,206 91,593 2,693,222 3,019,344 Assets classified as held-for-sale 8 253, ,104 TOTAL CURRENT ASSETS 2,946,381 3,240,448 NON-CURRENT ASSETS Other assets 9 20,000 35,209 Investments in joint venture entities 10 19,849 19,704 Available-for-sale financial assets 11 60,000 53,700 Property, plant and equipment , ,241 Intangible assets 13 2,959 32,349 Deferred taxes 211, ,952 TOTAL NON-CURRENT ASSETS 695, ,155 TOTAL ASSETS 3,641,746 4,073,603 CURRENT LIABILITIES Trade and other payables 14 1,381,371 2,016,186 Borrowings 15-6,140 Provisions , ,839 1,524,491 2,222,165 Liabilities directly associated with assets classified as held-for-sale 8 93, ,056 TOTAL CURRENT LIABILITIES 1,618,304 2,327,221 NON-CURRENT LIABILITIES Trade and other payables , ,453 Provisions 18 81,998 87,687 TOTAL NON-CURRENT LIABILITIES 332, ,140 TOTAL LIABILITIES 1,951,070 2,852,361 NET ASSETS 1,690,676 1,221,242 EQUITY Share capital 400, ,000 Reserves 19 25,424 (2,878) Retained earnings 1,261, ,409 TOTAL PARENT ENTITY INTEREST 1,686,878 1,220,531 Non-controlling interest 3, TOTAL EQUITY 1,690,676 1,221,242 The consolidated statement of financial position is to be read in conjunction with the notes to the financial statements set out on pages 15 to 40.

13 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2014 Note $'000 $ 000 CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts in the course of operations 7,330,045 7,168,107 Cash payments in the course of operations (6,281,424) (6,028,577) Dividend received 8,466 - Interest received 23,698 11,726 Income tax paid (270,737) (72,066) Finance costs paid (23,568) (29,748) NET CASH FROM OPERATING ACTIVITIES ,480 1,049,442 CASH FLOWS FROM INVESTING ACTIVITIES Cash acquired from acquisition of investment in controlled entities and businesses - (19,929) Payment for property, plant and equipment and intangibles (237,276) (451,477) Proceeds from sale of non-current assets 17,243 21,020 Decrease/(increase) in associates and joint venture entities (10,683) 5,142 Cash disposed from sale of investment in controlled entitites (144,958) - NET CASH USED IN INVESTING ACTIVITIES (375,674) (445,244) CASH FLOWS FROM FINANCING ACTIVITIES Loans to related entities (1,095,306) (193,943) Proceeds from finance lease liability facilities - 186,351 Proceeds from borrowings ,671 Finance lease payments (63,777) (106,730) Repayment of borrowings (6,140) (14,380) Dividends paid (265,000) (135,000) CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME NET CASH USED IN FINANCING ACTIVITIES (1,430,079) (248,031) NET (DECREASE)/INCREASE IN CASH HELD (1,019,273) 356,167 NET CASH AT THE BEGINNING OF THE PERIOD 27 1,475,975 1,115,176 Effects of exchange rate fluctuations on the balances of cash held in foreign currencies 3,814 4,632 CASH AT THE END OF THE FINANCIAL YEAR ,516 1,475,975 The consolidated statement of cash flows is to be read in conjunction with the notes to the financial statements set out on pages 15 to 40.

14 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2014 Share capital* Reserves Retained earnings Attributable to equity holders Noncontrolling interest Total equity $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 BALANCE AT 1 JANUARY ,000 (42,333) 635, , ,618 Profit for the year , , ,158 Other comprehensive income - 39,455-39, ,466 Dividends - - (135,000) (135,000) - (135,000) BALANCE AS AT 31 DECEMBER ,000 (2,878) 823,409 1,220, ,221,242 BALANCE AT 1 JANUARY ,000 (2,878) 823,409 1,220, ,221,242 Profit for the year , , ,169 Other comprehensive income - 28,302-28,302 2,963 31,265 Dividends - - (265,000) (265,000) - (265,000) BALANCE AS AT 31 DECEMBER ,000 25,424 1,261,454 1,686,878 3,798 1,690,676 * Consists of 400,000,000 fully paid ordinary shares, which carry the right to one vote per share and receive a dividend. The consolidated statement of changes in equity is to be read in conjunction with the notes to the financial statements set out on pages 15 to 40.

15 NOTES TO THE FINANCIAL STATEMENTS SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Thiess Pty Ltd is a Company domiciled in Australia and is a for-profit entity. The Consolidated Entity is not a reporting group as the Company and its significant Australian domiciled subsidiaries joined the CIMIC Group Deed of Cross Guarantee dated the 19th December Pursuant to ASIC Class order 98/1418 dated 13 August 1998, relief was grant to the CIMIC Group Class Order Companies from the Corporations Act 2001 requirements for preparation, audit and publication of the Consolidated Entities financial statements. The Financial Report has been prepared on a non-statutory special purpose basis. The Financial Report was authorised for issue by the directors on 12 May Except as noted above, the accounting policies set out below have been applied consistently to all periods presented in the financial report. The preparation of the financial report requires management to make judgements, estimates and assumptions that effect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. The financial statements have been prepared on an accruals basis and are based on historical costs modified by the revaluation of selected non-current assets and financial instruments for which the fair value basis of accounting has been applied a) BASIS OF PREPARATION The financial statements have been prepared in accordance with the recognition and measurement requirements specified by all Australian Accounting Standards and Interpretations, and the disclosure requirements of Accounting Standards AASB 101 Presentation of Financial Statements, AASB 107 Statement of Cash Flows, AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors and AASB 1054 Australian Additional Disclosures. The financial report does not include the disclosure requirements of the following pronouncements having a material effect: AASB 124 Related Party Disclosures AASB 7 Financial instruments: Disclosures New and amended standards adopted by the Company In the current year, the Company has applied a number of new and revised accounting standards and amendments that are mandatorily effective for an accounting period that begins on or after 1 January 2014, as follows:» AASB Amendments to Australian Accounting Standards Offsetting Financial Assets and Financial Liabilities;» AASB Amendments to AASB 136 Recoverable Amount Disclosures for Non-Financial Assets;» AASB 1031 Materiality (December 2013); and» AASB Amendments to Australian Accounting Standards Conceptual Framework, Materiality and Financial Instruments (Part B). While these standards introduced new disclosure requirements, they do not affect the Group s accounting policies or any of the amounts recognised in the financial statements. Judgements made in the application of AASBs that could have a significant effect on the financial report and estimates with a risk of adjustment in the next year are as follows:» Construction and mining contracting projects: - determination of stage of completion; - estimation of total contract revenue and contract costs; - assessment of the probability of customer approval of variations and acceptance of claims; - estimation of project completion date; and - assumed levels of project execution productivity.» Lease classification» Asset disposals: - Controlled entities and businesses: determination of loss of control and fair value of consideration; - Other assets: determination as to whether the significant risks and rewards of ownership have transferred;» Estimation of the economic life of property, plant and equipment and intangibles;» Asset impairment testing, including assumptions in value in use calculations;» Assessment of the fair value of available-for-sale assets and derivatives; Note 23 contains detailed analysis of the foreign exchange exposure of the Consolidated Entity and risks in relation to foreign exchange movements. NOTES TO FINANCIAL STATEMENTS

16 a) BASIS OF PREPARATION CONTINUED List of Standards and Interpretations in issue not yet effective At the date of authorisation of the financial statements, the Standards and Interpretations listed below were in issue but not yet effective. b) BASIS OF CONSOLIDATION Subsidiaries Subsidiaries are entities controlled by the Group. The Group controls an entity when it 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. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. STANDARD/INTERPRETATION AASB Amendments to Australian Accounting Standards Part A: Annual Improvements and Cycles Part B: Defined Benefit Plans: Employee Contributions (Amendments to AASB 119) Part C: Materiality AASB Amendments to Australian Accounting Standards Clarification of Acceptable Methods of Depreciation and Amortisation AASB Amendments to Australian Accounting Standards Equity Method in Separate Financial Statements AASB Amendments to Australian Accounting Standards Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Effective for annual reporting periods beginning on or after Expected to be initially applied in the financial year ending 1 July December January January January December December December 2016 Loss of control When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related non controlling interest and other components of equity. Any resulting gain or loss is recognised in profit or losses. Any interest retained in the former subsidiary is measured at fair value when control is lost. Non-controlling interest Non-controlling interests are measured at the proportionate share of the acquiree s identifiable net assets at the acquisition date. Changes in the Group interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions Discontinued operations A discontinued operation is a component of the Group s business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which: represents a separate major line of business or geographical areas of operation; is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or is a subsidiary acquired exclusively with a view to re-sale. Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held-for-sale. When an operation is classified as a discontinued operation, the comparative statement of profit and loss and other comprehensive income (OCI) is re-presented as if the operation had been discontinued from the start of the comparative year. AASB Amendments to Australian Accounting Standards Annual Improvements to Australian Accounting Standards Cycle 1 January December 2016 Investments in joint operations A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

17 BASIS OF CONSOLIDATION CONTINUED When the Consolidated Entity undertakes its activities under joint operations, the Consolidated Entity as a joint operator recognises in relation to its interest in a joint operation: its assets, including its share of any assets held jointly; its liabilities, including its share of any liabilities incurred jointly; d) REVENUE RECOGNITION Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances. i. Construction contracts its revenue from the sale of its share of the output arising from the joint operation; its share of the revenue from the sale of the output by the joint operation; and its expenses, including its share of any expenses incurred jointly. When the Consolidated Entity transacts with a joint operation in which the Consolidated Entity is a joint operator (such as a sale or contribution of assets), the Consolidated Entity is considered to be conducting the transaction with the other parties to the joint operation, and gains and losses resulting from the transactions are recognised in the Consolidated Entity s financial statements only to the extent of other parties interests in the joint operation. C) BUSINESS COMBINATIONS The acquisition method of accounting is used to account for all business combinations. The consideration for the acquisition of a controlled entity comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any pre-existing equity interest in the controlled entity. Acquisition related costs are expensed as incurred. Identifiable assets acquired and liabilities assumed in a business combination are measured at their fair values at the acquisition date. On an acquisitionby acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest s proportionate share of the acquiree s net identifiable assets. The excess of the consideration transferred over the fair value of the Group s share of the net identifiable assets acquired is recorded as goodwill. Where the consideration is less than the fair value of the net identifiable assets of the controlled entity acquired the difference is recognised directly in the income statement as a gain on acquisition of a controlled entity. When the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs, except where this would not be representative of the stage of completion. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. When contract costs incurred to date plus recognised profits less recognised losses exceed progress billings, the surplus is shown as amounts due from customers for contract work. For contracts where progress billings exceed contract costs incurred to date plus recognised profits less recognised losses, the surplus is shown as the amounts due to customers for contract work. Amounts received before the related work is performed are included in the statement of financial position, as a liability, as advances received. Amounts billed for work performed but not yet paid by the customer are included in the statement of financial position under trade and other receivables. ii. Revenue from mining, telecommunications, environmental and utilities services is recognised on an accruals basis. iii. Interest revenue is recognised as it accrues NOTES TO FINANCIAL STATEMENTS iv. Dividends are recognised when declared.

18 e) INCOME TAX Income tax on profit for the period comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is charged in equity. Current tax is expected tax payable on the taxable income for the period and any adjustment to tax payable in respect of previous years. The Consolidated Entity adopts the balance sheet liability method, providing for temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities. 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. i. Tax consolidation The immediate parent, CIMIC Group, is the head entity in the tax consolidated group comprising all the Australian wholly-owned subsidiaries. The tax consolidated group has entered into a tax funding agreement that requires whollyowned subsidiaries to make contributions to the head entity for current tax assets and liabilities occurring after implementation of tax consolidation. Under the tax funding agreement, contributions are calculated on a stand-alone basis so that the contributions are equivalent to the current tax balances generated by transactions entered into by the wholly-owned subsidiaries. The contributions are payable as set-out in the agreement and reflect the timing of the head entity s obligation to make payments for tax liabilities to relevant authorities. f) CASH ASSETS Cash assets include cash on hand, cash at bank and funds on deposit. For the purpose of the statement of cash flows, cash includes cash on hand, at bank and short term deposits at call, net of outstanding overdrafts. All cash assets are held with high credit quality financial institutions. G) GOODS AND SERVICES TAX Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). In these circumstances GST is considered part of the cost of acquisition of the asset or as part of an item of expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the balance sheet. Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financial activities which are recoverable from, or payable to, the ATO are classified as operating cash flows. h) FOREIGN CURRENCIES i. Presentation currency The consolidated financial statements are presented in Australian dollars, which is the presentation currency of Thiess Pty Ltd. ii. Transactions Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transaction. Exchange differences arising on settlement or restatement are brought to account in the income statement except where deferred in equity as qualifying cash flow hedges. iii. Translation of controlled foreign entities Assets and liabilities of controlled foreign entities are translated into the presentation currency at the rate of exchange at reporting date and the income statement is translated at the weighted average exchange rates for the period. The resulting exchange differences are taken directly to a separate component of equity. i) RECEIVABLES Trade receivables include all receivables and the progressive valuation of work completed on construction contracts represented by amounts billed to and from clients less cash received. The valuation of work completed is established after bringing to account a proportion of the estimated contract profits available after recognising all known losses. Receivables are generally settled within two months of billing. All receivables are stated at amortised cost less impairment losses. j) INVENTORIES Raw materials and stores are carried at the lower of cost and net realisable value. Costs are assigned to individual items of inventory on the basis of weighted average and include expenditure incurred in acquiring the inventories and bringing them to their existing condition and location.

19 k) PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at historical cost less accumulated depreciation and any impairment in value. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Costs may include transfers from equity of any gains/losses on qualifying cash flows and hedges of foreign currency purchases of plant and equipment. The fair value of plant and equipment recognised as a result of a business combination is based on market values. The market value of plant and equipment and fixtures and fittings is based on the quoted market prices of similar items. An impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined if no impairment loss had been recognised. The Consolidated Entity has established an allowance for impairment that represents the estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific losses component that relates to individually significant exposures, and a collective loss component that relates to a group of similar assets in respect of losses that have been incurred but not yet identified. The collective loss is based on historical data from payment statistics. Depreciation and amortisation is calculated so as to write off the net book value of property, plant and equipment over their estimated effective useful lives. The depreciation period and methods for each class of asset for current and prior years are as follows: Buildings straight line method over 40 years; Leasehold improvements straight line method over 10 years; Major plant and equipment the current cumulative number of hours worked typically over 5 to 8 years; Other equipment straight line method typically over 1 to 5 years. Finance leases are capitalised at the lease s inception at the present value of the minimum lease payments. The corresponding lease obligations net of finance charges are included in current and non-current payables. Each lease payment is allocated between the liability and finance cost. Payments made under operating leases are expensed on a straight line basis over the term of the lease. m) INVESTMENTS AND OTHER FINANCIAL ASSETS i. Investments in associates and joint venture entities Interests in associates and joint venture entities are accounted for using the equity accounting principles. The Consolidated Entity s share of profits or losses is recognised in the income statement, and the share of movement in reserves is recognised in reserves in the balance sheet. ii. Other investments Available for sale assets are initially recognised at cost, being the fair value of the consideration given and including acquisition charges associated with the asset. After initial recognition available for sale assets are measured at fair value. Changes in fair value are recognised in the fair value reserve. The fair value of available for sale financial assets is determined by reference to their quoted market price for listed entities and internal valuations for unlisted entities NOTES TO FINANCIAL STATEMENTS l) IMPAIRMENT Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recovered. An impairment loss is recognised for the amount by which the assets carrying amount exceeds its recoverable amount. Any impairment is expensed in the reporting period in which it occurs. When the asset is sold, collected, disposed or impaired, the cumulative gain or loss previously recorded in equity is included in the statement of profit or loss. Where a group of assets working together supports the generation of cash inflows, recoverable amount is assessed in relation to that group of assets. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.

20 n) DERIVATIVE FINANCIAL INSTRUMENTS ii. Software Derivatives are initially recognised at fair value on the date the derivative contract is entered and are subsequently remeasured to fair value. The method of recognition depends on whether the derivative is designated as a hedging instrument. The Consolidated Entity has designated hedges of highly probable transactions as cash flow hedges. i. Hedging The Consolidated Entity documents at inception show the relationship between the hedging instrument and the hedging item as well as the risk management objective. At each reporting date the Consolidated Entity assesses whether the derivatives have been, and will continue to be, highly effective in offsetting the changes in fair values or cash flows of the hedged items. The effective portion of changes in the fair value of cash flow hedges is recognised in equity in the hedging reserve. The gain or loss on the ineffective portion is recognised immediately in the income statement. When a hedging instrument expires or is sold or terminated amounts accumulated in equity are transferred to the income statement in the periods when the hedged item affects profit or loss. When the forecast transaction results in the recognition of a non-financial asset or liability, the gains or losses previously deferred in equity are included in the measurement of the initial cost or carrying amount of the asset or liability. The fair value of forward exchange contracts is determined using forward exchange market rates at balance sheet date. Costs incurred in acquiring software and developing systems that will contribute to future period financial benefits are capitalised. Amortisation is calculated on the straight line method typically over 1-5 years. iii. Contracts The Consolidated Entity has an intangible asset which was acquired from the purchase of a construction contract. The amortisation of this intangible is based on the contract s stage of completion. p) PAYABLES Liabilities are recognised for amounts to be paid in the future for goods and services received which represents amortised cost. Trade accounts payable are generally to be settled within two months. q) EMPLOYEE ENTITLEMENTS A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave, and sick leave when it is probable that settlement will be required and they are capable of being measured reliably. Liabilities recognised in respect of short-term employee benefits, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement. Liabilities recognised in respect of long term employee benefits are measured as the present value of the estimated future cash outflows to be made by the Consolidated Entity in respect of services provided by employees up to reporting date. o) INTANGIBLES i. Goodwill Goodwill represents the excess purchase consideration over the fair value of the identifiable net assets acquired of controlled entities and businesses at the date of acquisition. Goodwill is tested annually for impairment or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash generating units that are expected to benefit from the synergies of the combination. r) CAPITAL MANAGEMENT The Consolidated Entity is 100% owned by CIMIC Group Limited (formerly Leighton Holdings), a publicly listed entity. Management of capital takes into account the operational requirements and future plans of the Consolidated Entity. Surplus capital is distributed by way of dividends to CIMIC Group Limited (formerly Leighton Holdings). s) COMPARATIVE INFORMATION Certain comparative information has been reclassified to conform with current year presentation.

21 Note $ 000 $ 000 (Restated) 1 REVENUES AND INCOME Construction and mining 5,484,739 6,015,863 REVENUE FROM EXTERNAL CUSTOMERS 5,484,739 6,015,863 Income from related entities - (2,875) Interest: - Related entities 19,741 8,576 - Other entities 11,215 2,895 Net gains on disposal of property, plant and equipment 1,790 3, OTHER INCOME 32,746 12,065 TOTAL REVENUES AND INCOME FROM CONTINUING OPERATIONS 5,517,485 6,027,928 The Consolidated Entity s share of revenue from associates and joint venture arrangements accounted for under the equity method is excluded from Revenues noted above and from the Income Statement in accordance with Australian Accounting Standards. Details of the Consolidated Entity s share of joint arrangements revenues is provided as additional information below. Revenue from external customers 5,484,739 6,015,863 Revenue from associates and joint ventures 86,947 96,713 TOTAL REVENUE FROM EXTERNAL CUSTOMERS, ASSOCIATES AND JOINT VENTURES 5,571,686 6,112,576 Other income 32,746 12,065 REVENUES FROM EXTERNAL CUSTOMERS, ASSOCIATES AND JOINT VENTURES 5,604,432 6,124,641 NOTES TO FINANCIAL STATEMENTS 2 EXPENSES Materials 481, ,245 Subcontractors 1,444,054 1,284,747 Plant 509, ,800 Labour* 1,729,529 1,909,249 Depreciation and amortisation 3, , ,393 Operating lease payments 3 142, ,529 Technical advice 59,906 28,818 Sundry expenses 162, ,385 TOTAL EXPENSES 4,756,858 5,453,166 *Includes $95,128,645 (2013: $92,180,298) in contributions to defined contribution superannuation plans paid by the Consolidated Entity.

22 $ 000 $ 000 (Restated) 3 PROFIT BEFORE INCOME TAX EXPENSE Profit before income tax expense includes the following specific expenses: Finance costs: - Interest - related entities 12,749 7,617 - Interest - finance lease liabilities 10,579 20,179 - Interest - other TOTAL FINANCE COSTS 23,438 28,078 Depreciation of: - Buildings Plant and equipment 224, ,557 TOTAL DEPRECIATION 224, ,604 Amortisation of: - Leasehold improvements TOTAL AMORTISATION Amount charged to provisions: - employee entitlements 188, ,713 Operating lease rental expense: - minimum lease payments 142, ,529 Net foreign exchange loss 193 4,284 4 AUDITOR S REMUNERATION* $ $ AUDITOR OF THE COMPANY: DELOITTE AUSTRALIA - Audit and review of financial reports 675, ,251 - Taxation services - 22,500 - Control assurance services - 98,670 - Other services 43,764 23,186 NETWORK FIRM OF THE COMPANY AUDITOR - Audit and review of financial reports 106, ,815 AUDIT SERVICES: OTHER - Audit and review of financial reports 34,366 75,093 * Rounded to the nearest dollar