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Annual Report
2013
Leighton Holdings Limited ABN 57 004 482 982
Leighton Holdings Limited Annual Report 2013 Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
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Notice of Meeting
2013 Annual Report
NOTICE OF ANNUAL GENERAL MEETING 2014
LEIGHTON HOLDINGS LIMITED
ABN 57 004 482 982
To: The Shareholders
Notice is hereby given that the 53rd Annual General Meeting of the
members of Leighton Holdings Limited will be held in the:
Grand Ballroom, The Four Seasons Hotel
199 George Street, Sydney, New South Wales
on Monday 19 May 2014 at 10.00 am.
A separate Notice of Meeting and Proxy Form are enclosed. During
the course of the meeting, a short presentation on the Group’s
operations will be given by Mr Marcelino Fernández Verdes, Chief
Executive Officer. All present are invited to join the Directors for
light refreshments after the meeting.
This Annual Report is available in PDF format online on our website
www.leighton.com.au. Other shareholder communications,
including the Shareholder Updates, can also be downloaded from
our website.
Leighton Holdings encourages shareholders to receive notification
of all communications by email. Access to these documents is also
available on our website. This allows shareholders to receive timely
information and have the convenience of electronic delivery, which
is not only cost effective but environmentally friendly. Printed
copies of these documents are available on request by:
Phone: +61 2 9925 6636
Email: leighton@leighton.com.au
Contents
Notice of Meeting
Chairman’s Review (dated 18 March 2014)
Chief Executive’s Review (dated 18 March 2014)
Group executives (dated 18 March 2014)
Investments (dated 18 March 2014)
Corporate Governance Statement (dated 18 March
2014)
Directors’ Report (dated 20 February 2014)
Directors’ resumes (dated 20 February 2014)
Operating and Financial Review (dated 20 February
2014)
Remuneration Report (Audited) (dated 20 February
2014)
Financial Report (dated 20 February 2014)
Shareholdings (dated 18 March 2014)
Shareholder information (dated 18 March 2014)
5 Year statistical summary (dated 31 December 2013)
Directory and offices (dated 18 March 2014)
PAGE
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2
5
7
7
8
34
36
45
63
90
203
204
205
207
In this Annual Report a reference to ‘Group’, ‘we’, ‘us’
or ‘our’ is to Leighton Holdings Limited ABN 57 004 482 982
and the entities that it controls unless otherwise stated.
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
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Chairman’s Review
The Leighton Group has dealt with a number of challenges in 2013
to deliver a positive result for shareholders. Good progress has
been made on our strategies to improve the performance of the
business and to deliver long‐term, sustainable growth. In early
2014, our major shareholder, HOCHTIEF AG (HOCHTIEF), made a
proportional takeover offer to increase its stake to a maximum of
73.82% and to make changes to the Board and management of
the company.
FINANCIAL PERFORMANCE
I’m pleased to report that the Group reported a profit after tax
attributable to members of $509 million for 2013, a 13%
improvement on the prior year. Even more pleasing is that Leighton
recorded an Underlying Net Profit After Tax (UNPAT)1 of
$584 million, which is a 30% increase on 2012.
Recognising this performance, the Board has determined to pay out
61% of UNPAT as dividends, resulting in a total dividend of
105 cents per share. This is made up of a final dividend of 60 cents
per share, franked at 50%, to be paid in April 2014 and an interim
dividend of 45 cents per share, franked at 50%, which was paid on
3 October 2013.
A detailed overview of the company’s performance in 2013 is set
out in the Operating and Financial Review on pages 45 to 62. This
new requirement has been introduced by the Australian Securities
and Investments Commission (ASIC) to better meet the information
needs of shareholders and to set out information that would
reasonably be required to assess the company’s operations,
financial position, and business strategies and prospects for future
financial years.
FINANCIAL STRENGTH
A highlight of 2013 was the sale of the Group’s non‐core
telecommunications assets, which helped to strengthen our
balance sheet. As at 31 December 2013, the Group’s gearing had
improved to 29%, well within the Board’s target gearing range for
2013 of 25–35%. Having a strong balance sheet is essential for a
contractor and we are focused on having the financial resources
and capacity to fund and grow the business in the future.
The ratings agencies have recognised the Group’s balance sheet
strength. During the year, Standard & Poor’s affirmed its ‘BBB‐/A‐3’
rating of our company with a ‘Stable’ outlook while Moody’s
Investors Service also reiterated its ‘Baa2 issuer’ rating with a
‘Stable’ outlook.
THE BOARD AND MAJOR SHAREHOLDER
In June 2013, the Board appointed three independent, Non‐
executive Directors – Russell Higgins AO, Mike Hutchinson and
Vickki McFadden. Their varied talents have helped to refresh the
Board and I thank them sincerely for the contributions they have
made to‐date, particularly given some of the recent challenges the
Board has dealt with.
1
UNPAT is net profit after tax adjusted for non‐underlying items
including gains/losses on sale/acquisition of assets, impairments
and restructuring costs.
During the year, HOCHTIEF increased its stake in Leighton from
53.41% (as at 13 March 2013) to 58.77% (as at 17 March 2014),
which was subject to the relevant ‘creep’ provisions of the
Corporations Act 2001 (Cth). On 10 March 2014, HOCHTIEF
announced its intention to make a $22.15 cash per share
proportional offer for Leighton and to make Leighton Board
changes. On 14 March 2014, Leighton and HOCHTIEF entered into a
Bid Implementation Agreement, under which HOCHTIEF increased
its offer to Leighton shareholders to $22.50 per share for three out
of eight shares (the “Improved Offer”). The Improved Offer is the
outcome of negotiations between HOCHTIEF and Leighton’s
independent Directors. During the negotiations, the independent
Directors pressed HOCHTIEF to make a takeover offer for all shares
(rather than a proportional offer), however HOCHTIEF has declined
to do so.
The Improved Offer is unconditional, other than a requirement for
the Foreign Investment Review Board (FIRB) approval. Full details
of HOCHTIEF’s Improved Offer were set out in HOCHTIEF’s Bidder’s
Statement, which was released to the ASX on 14 March 2014 and is
expected to be dispatched to shareholders at the end of March.
Leighton shareholders on the Leighton Register on 21 March 2014
will be entitled to a 50% franked dividend of 60 cents per share.
This dividend will not be deducted from the Improved Offer price
payable to Leighton Shareholders who accept the Improved Offer.
The independent Directors’ recommendation in relation to the
Improved Offer will be provided in a Target's Statement, which will
also include an independent Expert’s Report. The independent
Directors recommend that minority shareholders accept the
Improved Offer in the absence of a superior proposal. Shareholders
are encouraged to read both of these documents and, if they
consider it appropriate, seek professional advice before deciding
how to respond to HOCHTIEF's Improved Offer.
Following HOCHTIEF’s announcement, both ratings agencies have
placed Leighton on a negative review for a potential downgrade.
In its initial proposal, HOCHTIEF stated that it intended to increase
its representation on the Board to reflect its shareholding,
irrespective of the outcome of the offer. Recognising that
HOCHTIEF could achieve Board and management control at our
forthcoming Annual General Meeting (AGM) on 19 May 2014, the
independent Directors also agreed to HOCHTIEF’S request to make
the following changes to its management and Board:
The employment of Chief Executive Officer (CEO) Hamish
Tyrwhitt and Deputy CEO and Chief Financial Officer Peter
Gregg was terminated and they both resigned from the Board.
Marcelino Fernández Verdes, the current CEO of HOCHTIEF, has
been appointed as CEO of Leighton.
Two Directors nominated by HOCHTIEF, Pedro López Jiménez
and José Luis del Valle Pérez have been appointed.
Looking forward:
Paula Dwyer will resign as a Director by no later than the
conclusion of the AGM;
Russell Higgins AO and Vickki McFadden will resign or retire as
Directors by no later than the conclusion of the AGM, and will
not stand for election at the AGM; and
Mike Hutchinson will stand for election at the AGM and I intend
to continue as Chairman after the AGM.
Leighton Holdings Limited Annual Report 2013
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CLASS ACTIONS
Two class actions were lodged against Leighton during the year.
The first, by Maurice Blackburn, was filed in the New South Wales
Registry of the Federal Court. The claim relates to the 11 April 2011
disclosure by Leighton of a revision of our profit forecast for the six‐
month financial period ended 31 December 2011. Leighton denies
the claim and is defending the action.
The second, filed by solicitor Mark Elliot, alleges that Leighton
breached its continuous disclosure obligations by failing to disclose
allegations relating to Iraq and the possible fraud (referred to
above). On 31 January 2014, Mr Elliott’s amended Statement of
Claim was struck out and he was ordered to pay Leighton’s costs.
Leighton denies there is a proper basis for the alleged claim and
will continue to defend the action, if it proceeds.
PEOPLE AND SAFETY
Our 55,990 people drive the performance of the Group. It is their
hard work, commitment, innovation and integrity that generate our
results and, ultimately, our returns to shareholders. I thank our
employees for their contribution in delivering projects that provide
solutions for clients. It is with great sadness, however, that I report
that five of our colleagues lost their lives in work‐related fatalities
in 2013. Any fatality is one too many. The Board is working closely
with management to eliminate fatalities and permanent disabling
injuries.
SUSTAINABILITY
This year the company has produced a stand‐alone Sustainability
Report detailing our commitment to the integration of
environmental, social and governance factors into our decision‐
making and our performance in this area. The 2013 Sustainability
Report is available on our website at www.leighton.com.au.
I am pleased to report that in 2013, Leighton’s sustainability
performance was recognised by its inclusion in two Dow Jones
Sustainability Indices (DJSI), the ‘DJSI Asia Pacific’ and the ‘DJSI
Australia’. Launched in 1999, the DJSI is a preeminent index that
tracks the leading sustainability‐driven companies worldwide. The
rating system provides a third party assessment of our corporate
practices and utilises a ‘best in class’ approach to benchmark us
against our industry peers. Inclusion in the DJSI acknowledges the
quality of the Group’s sustainability practices across a range of
different factors.
LEIGHTON HOLDINGS LIMITED
I thank the independent Directors for their support and counsel,
particularly during the trying circumstances of the recent offer, and
especially Paula, Russell and Vickki who will be leaving the Board. I
also welcome the new Directors and look forward to the Board
focusing on creating value for all shareholders.
With respect to our departing executives, Hamish and Peter have
both been outstanding leaders of our business, having successfully
brought Leighton through a period of stabilisation and set the
company on a pathway to growth by substantially rebasing our
operations. Employees, clients and shareholders have, and will
continue to, benefit from the value they have created, and the
Board and I sincerely thank them both for their contribution.
I am personally grateful for the dedication, drive and leadership
Hamish has shown during his 28 years of distinguished service with
the Group. I also recognise Peter’s excellent contribution to our
financial and strategic direction through a challenging time in the
company’s history. I am proud to have worked with them and I
wish them every success.
REMUNERATION
The company’s approach to responsible remuneration has been
further embedded during the year. The Board believes that its
remuneration framework enhances the alignment between
shareholder and executive interests, and rewards performance that
supports the Group’s business plans and our values of discipline,
integrity, safety and success.
I am pleased to note that the non‐binding vote on the Group’s
Remuneration Report at the 2013 AGM was overwhelmingly
supported by a ‘For’ vote of 98.9%. The support we have received,
both at the AGM and via shareholder feedback, indicates that we
are on the right track with our approach to remuneration.
MEDIA ALLEGATIONS
I also want to acknowledge the allegations made in the media in
late 2013 about the Group’s international business, our culture and
the performance of individual Directors and management.
Whilst we are deeply concerned about the suggestions of
impropriety, the Board and management believe these media
reports have been sensationalist in their representation of the
matters. The allegation relating to Iraq was self‐reported to the
Australian Federal Police (AFP) over two years ago, reflecting the
seriousness with which we took the matter. The AFP investigation
continues and the company is cooperating.
In an unrelated matter, a possible fraud has led to us taking court
proceedings against an ex‐employee.
It is important to note that no charges have been laid against any
person or entity, nor has the AFP investigation concluded. The
management personnel reported in the press as connected to
these two matters are no longer with the Group.
Leighton Holdings Limited Annual Report 2013
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LEIGHTON HOLDINGS LIMITED
CONCLUSION
I conclude by thanking my fellow Directors for their hard work and
valued counsel during the year. The independent Directors believe
that we have secured, under difficult circumstances, an improved
offer which is the best outcome for Leighton’s shareholders and
employees. The Improved Offer price and removal of all conditions
other than FIRB approval are important enhancements for minority
shareholders.
I also thank you, our shareholders, for your patience and support.
2013 was a year that presented a number of challenges, however
we achieved a solid result and made good progress with strategies
to further improve our operating performance.
I look forward to updating you further at the AGM on 19 May 2014.
Robert Humphris OAM
Chairman
18 March 2014
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
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Chief Executive’s Review
I am very proud to have recently been appointed the CEO of the
Leighton Group. This is a great honour as the Group is one of the
world’s leading international contractors with a heritage of
successfully delivering infrastructure, resources and property
projects across Australia and overseas.
In reviewing the year, I am reporting on the hard work of the
previous executives. Hamish and Peter leave the Group in a
significantly enhanced position and well placed to grow as we
leverage our footprint across Asia. I thank them for their great
contribution to the Group and wish them well in the future.
2013 was a successful year for the Group. We reported an UNPAT
of $584 million; our core markets are continuing to offer a good
range of new project opportunities and our $42.2 billion of work in
hand underpins a good level of profitability for the next few years.
During the year, we made good progress on our journey to
‘stabilise, rebase and grow’ the Group. We delivered positive
financial results for our shareholders, strengthened our balance
sheet, advanced a number of initiatives to improve our efficiency
and continued to invest in our people. The work done in 2013 has
set us up for a solid 2014 and a strong future.
PERFORMANCE OVERVIEW
The Group reported a 6% increase in revenue during 2013 to
$24.4 billion, despite the slowdown in the mining sector. This is
testament to the Group’s diversity.
We expanded our UNPAT margin to 2.4%, up from 1.9% in the prior
year. Our underlying result, up 30% to $584 million, demonstrates
the effectiveness of our short‐term strategy to transform the
business.
Work in hand during the year remained above $40 billion and was
$42.2 billion at year end. New awards, extensions and variations
totalled $23 billion, a 5% increase on the prior year against the
backdrop of the challenging contract mining environment and the
sale of the Group’s telecommunications business. This solid result is
a reflection of the diversity of the Group’s portfolio and how that
diversity helps to offset cyclical slowdowns in certain markets.
STRATEGY
Our fundamental objective is to earn long‐term, sustainable
shareholder returns by delivering value‐adding construction,
operations and maintenance services across six key industries:
mining and metals; oil and gas; transport infrastructure; power and
utilities infrastructure; social infrastructure; and complex urban
property projects. Our end‐game is a diversified portfolio of
projects that is balanced in terms of geography, market, activity,
customer, contract type and contract size. A balanced portfolio is a
key part of mitigating risk and will help to optimise our growth
potential, margins and returns on capital.
Over the past two and a half years, Leighton Holdings has
transformed into a Strategic Management Company. We develop
strategy across the Group, ensuring that we have appropriate spans
of control in place and determining where we allocate our capital.
The successful delivery of our more than 400 construction, mining
and services projects is currently the responsibility of the Operating
Companies who tender and deliver either individually, combined or
competitively, where they have the capabilities and resources to do
so.
I intend to work with my colleagues on the Board to complete the
broad‐based, general review of Leighton’s operating model that is
currently being undertaken by management. A particular focus of
the review is whether the existing operating business of Leighton
can be more efficiently structured. As the new CEO, I am keen to
speed up the pace of change at Leighton to reduce costs, recover
outstanding monies, repay debt and improve the efficiency of the
company’s assets. By doing so, we will improve returns to
shareholders and position the Group for sustainable growth.
I am also focused on the transfer of HOCHTIEF’s culture, business
knowledge and approach to risk management, and their application
to Leighton. There is much that is to be gained by applying a
consistent approach to the controlling and managing of risk.
Increasingly we have been encouraging collaboration between our
Operating Companies and the broader Actividades de Construcción
y Servicios (ACS)/HOCHTIEF group on major projects. This was
evidenced in the successful tender by Thiess, John Holland and
Dragados for the $1.15 billion tunnelling package for the North
West Rail project in Sydney and the formation of a consortium
consisting of Leighton Contractors, John Holland, Dragados and
Iridium to tender for the 18km East West Link cross‐city road in
Melbourne.
Our strategic focus is on delivering a better bottom line result by
driving cost savings, improving efficiency and effectiveness, and
harnessing the scale of the Group. We have made good progress
this year on driving organisational efficiencies through strategic
procurement to leverage the Group’s buying power and by the
restructuring of our management teams. We established an entity
(FleetCo) to centrally manage our extensive fleet of mining plant
and equipment. FleetCo will coordinate the purchase and
maintenance of fleet for the Group, thereby improving utilisation
rates and reducing our capital intensity.
A key initiative, and one that will be further progressed in 2014, is
Global Business Services. This initiative is about improving the cost
structure of our businesses by standardising certain business
processes and support functions, and leveraging the Group’s size
and scale.
We are focused on improving margins and profitability and, in the
near‐term, we have a clear set of priorities to stabilise and rebase
the Group. Beyond this, Leighton will seek to grow returns from
existing markets and export skills to new markets, while delivering
the best solutions for clients and driving sustainable growth for
shareholders.
Leighton Holdings Limited Annual Report 2013
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OUTLOOK
The Group is well positioned for the foreseeable future. The
countries of Asia are expected to continue to grow at the same rate
or faster than the rest of the world for a number of years as they
continue to urbanise and industrialise. We have exposure to Asia –
both directly and indirectly – and experience in operating in its
various markets. No other global competitor has our diversity in
this part of the world and our market presence is difficult to
replicate. We do however, have opportunities to leverage the
relationships, skills, intellectual property and experience of
HOCHTIEF and, in turn, those of their major shareholder, the ACS
Group, to further drive us forward.
We have a substantial level of work in hand, which underpins a
good level of profitability for the next few years. We are focused on
replenishing this work in hand with high quality projects that we
can successfully deliver to the benefit of our clients and our
shareholders. Our markets are offering a good range of new project
opportunities that are currently being tendered and we see the
outlook as positive for our construction, operations and
maintenance services.
I welcome the challenge of leading the Group through its next
phase of global growth, building on the solid foundations
established by previous management.
Marcelino Fernández Verdes
Chief Executive Officer
18 March 2014
LEIGHTON HOLDINGS LIMITED
INVESTMENTS
During the year, the Group sold 70.1% of its non‐core
telecommunications assets (consisting of Nextgen Networks,
Metronode and certain Infoplex assets) to Ontario Teachers’
Pension Plan. The sale resulted in a pre‐tax gain of $215 million
($115 million after tax) and the cash proceeds of $614 million that
have been used to strengthen the Group’s balance sheet. The
Group now owns 29.9% of the Nextgen Group, providing access to
any upside value under the new ownership structure.
The Group also agreed to purchase the Welspun Group’s 39.9%
stake in Leighton Welspun, our Indian‐based joint venture
established in 2010, for US$99 million to achieve 100% ownership
of this business. The opportunity arose from the decision by
Welspun to focus on its core businesses. Leighton continues to see
strong long‐term prospects in the Indian market for infrastructure,
especially public private partnerships, and specialised property‐
related projects. The move to full control of the Indian business will
allow for the integration of several of our business units, resulting
in both lower costs and greater business opportunities. The sale
was concluded in February 2014.
We continue to be represented in the Middle East through our 45%
investment in the Habtoor Leighton Group (HLG). HLG’s
performance improved during the year, with a broadly break‐even
result and the recovery of funds from some legacy projects. No
impairment was recorded during the year against the carrying
value of the investment. The decision by a Qatar‐based client to call
performance bonds on certain legacy projects prevented HLG from
making repayments on Leighton’s outstanding shareholder loans at
the end of June 2013. As a result of the bond calls, additional
Leighton guarantees were required to support an increased bank
facility. The situation remained unresolved at the end of December
2013. However, HLG continues to believe its legal position on the
matter is strong and is working to a resolution. ‘2016 IPO‐ready’
remains the strategic aim for HLG, contingent upon the further
recovery of outstanding receivables, the paying‐down of
outstanding shareholder loans from Leighton, and the ongoing
award of new work.
PEOPLE AND SAFETY
As the Chairman has noted, the safety of our people is a critically
important issue and one that the Board and management continue
to give their full attention. Fatalities are not acceptable. We have a
duty to our employees and their families to send them home safely
each day, and I consider this my personal responsibility.
On a positive note, I am pleased with the work that is being
undertaken to identify and foster the talent and capabilities of our
people. This year, we devoted considerable time and effort to the
development of the future leaders of the Group through intensive
training courses. Our Leighton Masters program, conducted in
conjunction with the University of New South Wales, is a good
example of how we are investing in the skills and further
development of our people.
We are a service‐based company and those services are delivered
by our people. I would like to acknowledge the efforts of those
55,990 people over the last year and thank them and their families
for their contribution. Be they digging tunnels in India, driving
excavators in Queensland, pouring concrete in Hong Kong or
maintaining water pipes in Victoria, their efforts are valued by the
company. Our employees can justifiably be proud of their role in
constructing, operating and maintaining much of Australasia’s
critical infrastructure and many of the region’s valuable resources
projects.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
Group executives
The information below is reported as at 18 March 2014.
ANNUAL REPORT ����
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MARCELINO FERNÁNDEZ VERDES (58)*
Chief Executive Officer
Leighton Holdings
BRUCE ALWIN MUNRO (60)~
Managing Director
Thiess
MALCOLM ROBERT ASHCROFT (40)^
Deputy Chief Financial Officer and Chief Financial Officer (Acting)
Leighton Holdings
CRAIG ALLEN LASLETT (52)~
Managing Director
Leighton Contractors
ADOLFO VALDERAS (43)
Chief Operating Officer
Leighton Holdings
MICHAEL JOHN ROLLO (54)
Chief Risk Officer
Leighton Holdings
DHARMA CHANDRAN (50)
Chief Human Resources and Corporate Services Officer
Leighton Holdings
IAN LESLIE EDWARDS (51)~
Managing Director
Leighton Asia, India and Offshore
MARK CHARLES GRAY (61)~
Managing Director
Leighton Properties
GLENN MICHAEL PALIN (56)~
Managing Director
John Holland Group
*
^
~
Hamish Gordon Tyrwhitt is the former Chief Executive Officer of Leighton Holdings.
Peter Allan Gregg is the former Deputy Chief Executive Officer and Chief Financial Officer of Leighton Holdings.
The Managing Directors of our Operating Companies have also been appointed as Associate Directors of Leighton Holdings.
Investments
The information below is reported as at 18 March 2014.
ENGINEEERING AND INFRASTRUCTURE
AquaSure
Thiess has a 5.2% equity share of the company that has contracted
to finance, design, build, operate and maintain the Victorian
Desalination Project.
Aspire Schools
Leighton Contractors has a 1.0% equity share of the consortium
that has contracted to finance, design, construct and maintain
seven schools in south‐east Queensland for 30 years.
BrisConnections (in voluntary administration)
Thiess and John Holland have invested $200 million in the company
that owns, operates and maintains the AirportlinkM7 project in
Brisbane.
Cross City Motorway (in voluntary administration)
Leighton Contractors has a 6.0% equity share of the company that
owns, operates and maintains the Cross City Tunnel in Sydney.
Habtoor Leighton Group
Leighton Holdings has a 45.0% equity share in the Middle East‐
based diversified contractor, Habtoor Leighton Group.
LCIP Co‐Investment Unit Trust
Leighton Contractors has a 24.8% equity share in the Leighton Co‐
Investment Unit Trust that invests funds into public private
partnership equity.
SA Health Partnership
Leighton Contractors has a 10.0% deferred equity commitment in
the consortium that has contracted to finance, design, construct
and maintain the new Royal Adelaide Hospital for 35 years.
TELECOMMUNICATIONS
Nextgen Group
Leighton Holdings has a 29.9% equity share in the
telecommunication infrastructure business Nextgen Group.
LISTED ENTITIES
Sedgman
Leighton Holdings owns 35.9% of the listed resources engineering
company.
Macmahon
Leighton Holdings owns 19.6% of the listed engineering and mining
contracting company.
Leighton Holdings Limited Annual Report 2013
Leighton Holdings Limited Annual Report 2013
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Corporate Governance
Statement
Leighton Holdings Limited Annual Report 2013 LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
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LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
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Corporate Governance
Statement
The Corporate Governance Statement (Statement) is dated
18 March 2014 and as at this date it reflects the current Boards’
commitment to corporate governance. The contents of the
Statement and our corporate governance model may change if
the proportional takeover offer by our major shareholder
HOCHTIEF AG (HOCHTIEF) is successful and consequential changes
to the Board are made.
INTRODUCTION
We believe that in order for the company to achieve its vision of
being renowned for excellence, it is necessary that the company
meet the highest standards of governance, business conduct,
safety and environmental performance, across all of its operations
in Australia and internationally. We are committed to fostering a
culture that values ethical behaviour, integrity and respect in order
to ensure the sustainability of our business. Our approach to
governance is based on the belief that high quality corporate
governance supports long‐term value creation.
As a listed entity we comply with both the Corporations Act 2001
(Cth) (Corporations Act) and the Australian Securities Exchange
(ASX) Listing Rules.
The model is based on a system of delegated authority. In line with
Our policies, codes and standards are designed to achieve high
our vision, these delegations balance effective oversight with
standards of corporate governance within the Group. Our
appropriate empowerment and accountability of management.
Operating Companies are:
Leighton Contractors (headquartered in Sydney, Australia);
John Holland Group (headquartered in Melbourne, Australia);
Thiess (headquartered in Brisbane, Australia);
Leighton Properties (headquartered in Sydney, Australia); and
Leighton Asia, India and Offshore (LAIO) (headquartered in
Hong Kong).
A detailed description of the overarching objectives of the
corporate governance bodies that play a role within the Group’s
corporate governance model is set out in the table overleaf.
This Statement addresses each of the eight ASX Corporate
Governance Council’s Corporate Governance Principles and
Recommendations (ASX Principles and Recommendations). A
checklist summarising our compliance with the ASX Principles and
Recommendations during the financial year ended 31 December
2013 (2013 Financial Year) is included at the end of this Statement.
We believe that we have followed all of the ASX Principles and
Recommendations for the 2013 Financial Year, other than
Recommendation 2.1 (being the recommendation that a majority
of the Board are independent Directors). The rationale for this
exception is set out in the Independence section of this Statement
on pages 13 to 15.
CORPORATE GOVERNANCE MODEL
ASX Principles and Recommendations 1.1, 5.1
Governance influences how the objectives of the company are set
and achieved, how risk is monitored and assessed, and how
performance is optimised. Our corporate governance model
(illustrated below) defines how we deliver our business objectives
whilst providing accountability and robust control systems
commensurate with the risks involved.
All authority to act is ultimately derived from our shareholders
through the company’s Constitution and our Board. Our corporate
governance model ensures that a robust system of responsibility
and accountability exists throughout Leighton and certain entities it
controls (together with Leighton, the Group).
The Board delegates authority to our standing Board Committees
for specific purposes (as mandated in the Charters of each Board
Committee) and to the Chief Executive Officer (CEO) for the day‐to‐
day management of the company.
The CEO further delegates authority within the business to our
senior executives as judged appropriate to achieve the company’s
objectives. These delegations are outlined in our annual business
plan, in senior executive position descriptions and letters of
appointment, and through formal performance reviews conducted
by the CEO.
Senior executive key responsibilities cover areas such as:
operating under approved budgets;
approving project tenders within the authority levels delegated
to management;
implementing strategies and making recommendations to the
Board on significant strategic initiatives;
establishing, maintaining and reporting on the Group’s systems
for risk management, internal control and ethical and legal
compliance;
managing and performing the business and operations;
providing information to the Leighton Holdings Continuous
Disclosure Committee (CDC) in a timely manner;
making recommendations for the appointment of senior
management, determining terms of appointment, evaluating
performance, and putting in place adequate succession plans
for senior management roles; and
establishing and maintaining effective risk management
frameworks.
The Board also regularly reviews the functions delegated to
management to ensure that the division of responsibilities between
the Board and management remains appropriate to the needs of
the Group.
9139 LHL Annual Report 2014.indd 9
4/04/2014 5:11 pm
Leighton Holdings Limited Annual Report 2013
ANNUAL REPORT ����
10
10
Our policies, codes and standards are designed to achieve high
standards of corporate governance within the Group. Our
Operating Companies are:
Thiess (headquartered in Brisbane, Australia);
Leighton Contractors (headquartered in Sydney, Australia);
John Holland Group (headquartered in Melbourne, Australia);
Leighton Properties (headquartered in Sydney, Australia); and
Leighton Asia, India and Offshore (LAIO) (headquartered in
Hong Kong).
A detailed description of the overarching objectives of the
corporate governance bodies that play a role within the Group’s
corporate governance model is set out in the table overleaf.
LEIGHTON HOLDINGS LIMITED
The model is based on a system of delegated authority. In line with
our vision, these delegations balance effective oversight with
appropriate empowerment and accountability of management.
All authority to act is ultimately derived from our shareholders
through the company’s Constitution and our Board. Our corporate
governance model ensures that a robust system of responsibility
and accountability exists throughout Leighton and certain entities it
controls (together with Leighton, the Group).
The Board delegates authority to our standing Board Committees
for specific purposes (as mandated in the Charters of each Board
Committee) and to the Chief Executive Officer (CEO) for the day‐to‐
day management of the company.
The CEO further delegates authority within the business to our
senior executives as judged appropriate to achieve the company’s
objectives. These delegations are outlined in our annual business
plan, in senior executive position descriptions and letters of
appointment, and through formal performance reviews conducted
by the CEO.
Senior executive key responsibilities cover areas such as:
operating under approved budgets;
approving project tenders within the authority levels delegated
to management;
implementing strategies and making recommendations to the
Board on significant strategic initiatives;
establishing, maintaining and reporting on the Group’s systems
for risk management, internal control and ethical and legal
compliance;
managing and performing the business and operations;
providing information to the Leighton Holdings Continuous
Disclosure Committee (CDC) in a timely manner;
making recommendations for the appointment of senior
management, determining terms of appointment, evaluating
performance, and putting in place adequate succession plans
for senior management roles; and
establishing and maintaining effective risk management
frameworks.
The Board also regularly reviews the functions delegated to
management to ensure that the division of responsibilities between
the Board and management remains appropriate to the needs of
the Group.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
CORPORATE GOVERNANCE STATEMENT
continued
ANNUAL REPORT ����
11
11
CORPORATE GOVERNANCE BODY
Leighton Holdings Board
Leighton Holdings Board
Committees
Leighton Holdings CDC
(Management Committee)
Operating Company Advisory
Boards
Operating Company Statutory
Boards
OBJECTIVES
Exercises the authority delegated to the Board by the Leighton Holdings Constitution
Is accountable to the company’s shareholders
Delegates parts of its authority to the Board Committees and to the Leighton CEO
Performs the roles and responsibilities of the Board as stipulated in the Board Charter
Have specific responsibilities delegated to them by the Board
Perform the roles and exercises the authorities stipulated in the terms of the Board’s
delegation and the relevant Committees’ Charters
Has specific responsibilities concerning the oversight of continuous disclosure of information
concerning Leighton that a reasonable person would expect to have a material effect on the
price or value of Leighton’s securities and determining whether such information should be
disclosed (unless the matter is reserved to the Board for its consideration)
Perform a purely advisory role by providing guidance to the Operating Company Managing
Director and executives based on business and industry experience
Are governed by the terms of the relevant Operating Company Advisory Board Charter
Do not exercise approval, decision‐making or other authority
Have responsibility for the discharge of the Operating Company’s statutory responsibilities
and have regard to Leighton Holdings’ interests
Do not otherwise have unfettered authority and must act in a manner consistent with any
applicable policies, codes, standards, rules and processes approved by the Leighton Holdings
Board that are in effect in the Group or in any business within the Group
Are governed by the terms of the relevant Operating Company Constitution and Operating
Company Statutory Board Charter
Are able to exercise approval, decision‐making and other authority limited to the extent that
it is appropriate and necessary to discharge their statutory responsibilities
Leighton Group Governance System
The Leighton Group Governance System establishes governance
guidelines and minimum operating standards for our Operating
Companies. The system covers the following key areas of business
activity:
managing strategic direction;
maintaining financial control;
managing project and contract risks;
managing whole‐of‐business risks;
developing group capabilities; and
handling investor relations and external affairs.
fulfilling secretarial and legal obligations;
Each area of business activity is supported by more detailed
operational guidelines or standards that articulate the objectives,
strategies for management, and control and reporting
requirements, which are then incorporated into each Operating
Company's individual work procedures and practices. Procedures
and practices are also regularly reviewed to monitor compliance
and encourage continuous improvement.
LEIGHTON HOLDINGS BOARD OF DIRECTORS
Roles and responsibilities
ASX Principles and Recommendations 1.1, 1.3
On 13 December 2013, the Board approved a formal Board Charter
to detail the Board’s role, authority, responsibilities, membership
and operations, including the interaction between the Board and
management.
► Our Board Charter is available on our website at:
www.leighton.com.au/our‐approach/board‐and‐
governance/corporate‐governance‐approach
The following matters are specifically reserved for the Board and
cannot be delegated to any other corporate governance body:
appointment of the Chairman;
approval of the appointment, removal, remuneration and
evaluation of performance of the CEO or Deputy CEO;
approval of the remuneration of Non‐executive Directors,
within the limits approved by shareholders;
approval of the appointment of a new Director to fill a vacancy
or as an additional Director;
establishment of Board Committees, their remuneration,
membership and delegated authorities;
approval of the dividend policy and the amount, nature and
timing of dividends to be paid;
approval of the delegation of authority framework;
review and approval of the Group’s corporate strategy and
direction, including new country approvals; and
calling of meetings of shareholders.
The key responsibilities of the Board are set out in the table
opposite.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
12
12
FUNCTIONS
Corporate Strategy
KEY RESPONSIBILITIES
Review and approve the Group’s Business Plan
Oversee the financial and human resources that the Group has in place to meet the determined strategic
Performance
Select, appoint and evaluate the performance of any Executive Director including any Operating
and business objectives
Financial and Risk
Management
Compliance
Company Managing Director
Oversee management’s performance in optimising the Group’s performance and achieving the strategic
and business objectives in accordance with any duties and obligations prescribed by law and the Leighton
Holdings Constitution and within a framework of prudent and effective controls that enable risk to be
assessed and managed
Approve the use of the capital of the company, including capital structures, capital returns and share
buy‐backs
Receive, consider and approve financial and other reports to shareholders
Review and monitor systems of risk management and internal control
Ensure the integrity of financial and other reporting
Set, review and monitor compliance with the Group’s values and standards of conduct
Set, review and monitor systems to inform the market and shareholders of the company’s performance
and major developments affecting its state of affairs in accordance with the company’s disclosure
obligations
Diversity
Promote diversity within all levels of the Group, including setting measurable objectives and annually
assessing the Group’s progress towards achieving them
Board meetings
The Board has ten scheduled meetings per year (including one
Board planning session), with additional meetings held as required.
In 2013, the Board met twelve times and special Board Committees
met eight times. Attendance at standing Board Committees is
detailed under the Board Committees section of this Statement on
pages 17 to 18. Senior executives, Operating Company Managing
Directors and other selected employees are invited to participate in
Board meetings where appropriate.
The Board convenes an annual planning session to discuss and
approve our overall strategic direction. Our Directors also attend
project site visits and safety briefings. These activities, some of
which occur at remote locations, help our Directors gain an
understanding of the opportunities and challenges that can arise
within our business and within the environments in which our
people work.
In addition to their roles as Board Directors, some of our Non‐
executive Directors serve as members of the Advisory Boards of our
Operating Companies.
Key achievements during the year
Key focus areas of the Board during the 2013 Financial Year
included:
approving policies to improve the Group’s system of corporate
governance, including the development and approval of a
formal Board Charter;
approving amendments to the Board Committee Charters and
Market Disclosure and Communications Framework (as
detailed in the Market Disclosure section of this Statement on
page 26), all of which have Group‐wide application; and
approving the sale of 70.1% of Leighton’s non‐core
telecommunications assets (consisting of the Nextgen
Networks, Metronode and certain Infoplex assets) to Ontario
Teachers’ Pension Plan resulting in a pre‐tax gain of
$215 million ($115 million after tax) and cash proceeds of
$614 million that have been used to strengthen the company’s
balance sheet.
Leighton Holdings Limited Annual Report 2013
ANNUAL REPORT ����
13
13
LEIGHTON HOLDINGS LIMITED
CORPORATE GOVERNANCE STATEMENT
continued
Independence
ASX Principles and Recommendations 2.1, 2.2, 2.3, 2.6, 4.2, 8.2
The Board assesses the independence of Non‐executive Directors
upon appointment and subsequently continuously reviews the
independence of each Non‐executive Director as required.
The Board has adopted a definition of independence that reflects
the definition set out in the ASX Principles and Recommendations.
Relationships that the Board will take into consideration when
assessing independence include whether the Director:
is a substantial shareholder of the company (as defined by the
Corporations Act) or an officer of, or otherwise associated
directly with, a substantial shareholder of the company;
is or has been employed in an executive capacity by the Group,
or been a Director after ceasing to hold any such employment,
within the last three years;
is or has been a principal of a material professional adviser or a
material consultant to the Group, or an employee materially
associated with the service provided, within the last three
years;
is a material supplier or customer of the Group, or an officer of
or a person who is otherwise associated directly or indirectly
with a material supplier or customer;
has a material contractual relationship with the Group other
than as a Director;
has close family ties with any person who may fall within any of
the categories above; and
has served on the Board for a period which could, or could
reasonably be perceived to, materially interfere with the
Director’s ability to act in the best interests of the company.
Materiality is assessed on a case‐by‐case basis with reference to
each Director’s individual circumstances rather than by applying
general thresholds.
As at the date of this Statement, five of our ten Directors are
independent Directors.
The Board’s assessment of the independence of each Director is set
out in the table opposite.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
Name
Non‐executive Directors
Robert D Humphris OAM1
Chairman
Paula J Dwyer2
Deputy Chairman
Russell A Higgins AO3
Michael J Hutchinson4
Vickki A McFadden5
David P Robinson
Peter W Sassenfeld
Pedro López Jiménez6
José Luis del Valle Pérez7
Executive Directors
Marcelino Fernández Verdes8
Managing Director and CEO
Alternate Directors
Robert L Seidler AM9
Alternate Director for Mr Marcelino Fernández Verdes
Former Directors
Stephen P Johns10
Former Chairman
Ian J Macfarlane AC11
Wayne G Osborn12
Hamish G Tyrwhitt13
Former Managing Director and CEO
Peter A Gregg14
Former Executive Director and Deputy CEO and Chief Financial Officer
ANNUAL REPORT ����
14
14
Independent/
Non‐independent
First appointed
Last elected by
shareholders
Independent
6 September 2004
20 May 2013
Independent
1 January 2012
22 May 2012
Independent
Independent
Independent
18 June 2013
18 June 2013
18 June 2013
See footnote 3
See footnote 4
See footnote 5
Non‐independent*
Non‐independent*
Non‐independent*
Non‐independent*
17 December 1990
20 May 2013
29 November 2011
22 May 2012
13 March 2014
13 March 2014
See footnote 6
See footnote 7
Non‐independent*
10 October 2012
20 May 2013
Non‐independent*
18 June 2013
N/A
Independent
21 December 2009
4 November 2010
Independent
Independent
1 June 2007
4 November 2010
6 November 2008
22 May 2012
Non‐independent
24 August 2011
11 November 2011
Non‐independent
23 December 2010
11 November 2011
*
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Representing our majority shareholder, HOCHTIEF.
Mr Humphris OAM was elected Chairman of the company on 24 March 2013.
Ms Dwyer was elected Deputy Chairman of the company on 24 March 2013. Ms Dwyer will resign as a Director by no later than the conclusion of the
company’s Annual General Meeting on 19 May 2014.
Mr Higgins AO was appointed as an independent Non‐executive Director on 18 June 2013. Mr Higgins AO will resign or retire as a Director by no later
than the conclusion of the company’s Annual General Meeting on 19 May 2014, and will not stand for election at the Annual General Meeting.
Mr Hutchinson was appointed as an independent Non‐executive Director on 18 June 2013. Mr Hutchinson will seek election at the company’s Annual
General Meeting on 19 May 2014.
Ms McFadden was appointed as an independent Non‐executive Director on 18 June 2013. Ms McFadden will resign or retire as a Director by no later
than the conclusion of the company’s Annual General Meeting on 19 May 2014, and will not stand for election at the Annual General Meeting.
Mr López Jiménez was appointed as a Non‐executive Director on 13 March 2014. He was also appointed as the Alternate Director for Mr Sassenfeld
on 18 June 2013. Mr López Jiménez will seek election at the company’s Annual General Meeting on 19 May 2014.
Mr del Valle was appointed as a Non‐executive Director on 13 March 2014. Mr del Valle will seek election at the company’s Annual General Meeting
on 19 May 2014.
Mr Fernández Verdes was appointed CEO on 13 March 2014.
Mr Seidler AM was appointed the Alternate Director for Mr Fernández Verdes on 18 June 2013. Mr Seidler AM was the Alternate Director for
Mr Robinson from 20 November 2012 to 18 June 2013 and has acted as an Alternate Director for other Non‐independent Directors since 28
November 2003. Mr Seidler AM has a standing invitation to attend all Board meetings when not acting in the capacity as Alternate Director to Mr
Fernández Verdes.
Mr Johns resigned as Chairman of the company on 22 March 2013.
Mr Macfarlane AC resigned as an independent Non‐executive Director of the company on 22 March 2013.
Mr Osborn resigned as an independent Non‐executive Director of the company on 22 March 2013.
The employment of former CEO Mr Tyrwhitt was terminated and he resigned as Managing Director of the company on 13 March 2014.
The employment of former Deputy CEO and Chief Financial Officer Mr Gregg was terminated and he resigned an Executive Director on 13 March
2014.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
CORPORATE GOVERNANCE STATEMENT
continued
At the time of this Statement, the Chairman of the Board is an
independent Director and is entitled to exercise a casting vote in
the event of a deadlock. Each of the Board’s Committees is chaired
by an independent Director and has a majority of members who
are independent Directors. In addition, all Directors are entitled to
seek independent professional advice and Non‐executive Directors
confer on an as‐needs basis without management in attendance in
order to better enable them to exercise independent judgment.
On 10 March 2014, HOCHTIEF announced its intention to make a
$22.15 cash per share proportional offer for Leighton (the “Offer”)
and its intention to increase its representation on the Leighton
Board to reflect its majority interest in Leighton. On 13 March
2014, Leighton and HOCHTIEF entered into a Bid Implementation
Agreement under which HOCHTIEF increased its offer to Leighton
shareholders to $22.50 per share for three out of eight shares (the
“Improved Offer”).
The Improved Offer was the outcome of negotiations between
HOCHTIEF and an Independent Board Committee. Given the voting
rights held by HOCHTIEF, and its stated intentions, the independent
Directors recognised that control of the Board and management
would pass to HOCHTIEF at the Annual General Meeting (AGM). As
part of the negotiations to secure the Improved Offer, Leighton
agreed to HOCHTIEF’S request to make changes to its management
and Board.
The Board acknowledges that HOCHTIEF’s Board representation
reflects its interest in the company’s shares as a majority
shareholder.
Although the composition of the Board does not strictly comply
with Recommendation 2.1 of the ASX Principles and
Recommendations, the Board believes that independent judgment
is achieved and maintained in respect of its decision‐making
processes through an appropriate balance between Directors who
have developed a deep insight and understanding of the company
and its operations and who can therefore provide an increasing
contribution to the Board as a whole, and the appointment of new
Directors who bring fresh ideas and viewpoints.
ANNUAL REPORT ����
15
15
Board skills and experience
ASX Principles and Recommendations 2.1, 2.6
The Board is balanced in its composition with our Directors bringing
a range of complementary skills and experience to the Group. The
composition of our Board has regard to the findings from our Board
performance assessment process (detailed in the Performance
review section of this Statement on page 16).
On 13 March 2014 the company announced the appointment of
José Luis del Valle Pérez as a Director. His resume is set out below.
MR JOSÉ LUIS DEL VALLE PÉREZ (63)
Non‐executive Director
LLB
Mr del Valle received a degree in law from the Universidad
Complutense de Madrid in 1971 and has been a member of the Bar
Association of Madrid since 1976.
Mr del Valle has previously held the following positions: Spanish
State Attorney providing services to government departments in
Spain including the Ministries for Finance, Health and Labour and
Social Security; Director for the Legal Consultancy for the Unión de
Centro Democrático; Member of Congress in the First Legislature;
and deputy minister for Territorial Administration.
Mr del Valle has also been a Director of and/or legal adviser to,
Spanish companies including Banesto (a subsidiary of Banco
Santander), Continental Industrias del Caucho (a subsidiary of
Continental AG), Fococafé and Continental Hispánica (a subsidiary
of Continental Grain Inc). Member of the Supervisory Board of
HOCHTIEF AG, since May 2011, and member of its Audit
Committee.
In 1989 Mr del Valle was appointed as a Director of ACS Actividades
de Construcción y Servicios SA (head of the ACS Group) and is
currently a Director and General Secretary of the ACS Group and
Secretary and/or Director of ACS Groups’ main subsidiaries and
affiliates.
Further details regarding the relevant skills, experience, tenure and
expertise of each other Director are set out in the Directors’ Report
on pages 36 to 38.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
16
16
Directors’ tenure, rights and obligations
ASX Principles and Recommendations 2.6
The tenure provisions as well as a number of the key rights and obligations of the Directors are set out in the table below.
Term of office
Conflict of interest
Access to information and advice
All Directors are required to disclose any
actual or potential conflict of interest at the
time of their appointment and are expected
to keep these disclosures up‐to‐date.
Directors who have a conflict of interest in
relation to a particular item of business
being considered by the Board or its
Committees must declare their potential
conflict and, where appropriate, absent
themselves from the Board or Committee
meeting before commencement of
discussion on the topic to ensure they take
no part in decision‐making on the matter.
All Directors have access to company
records and information, and receive
regular detailed financial information and
operational reports concerning our
Operating Companies.
In addition to the support the Directors
receive from the Board Committees,
Company Secretaries and the senior
executive team, Directors are able to seek
independent professional advice at the
company’s expense (subject to Board
approval) to enable them to better
discharge their duties.
The Chairman and Non‐executive Directors
regularly consult with the CEO, Deputy CEO
and Chief Financial Officer and other senior
executives, and may consult with, and
request additional information from, any of
our employees at any time.
The tenure of our Directors is governed by
our Constitution and the ASX Listing Rules.
In summary:
one‐third of the Directors (excluding the
CEO) must stand for election at each
AGM;
a Director (other than the CEO) must
not hold office for the longer of three
years or three successive AGMs without
seeking re‐election; and
a Director appointed by the Board
(either to fill a casual vacancy or as an
addition to existing Directors) will only
hold office until the next AGM or
general meeting after their
appointment.
Directors required to retire at a meeting, or
only hold office until a particular meeting,
are eligible for re‐election or election (as
appropriate) at that meeting.
Where incumbent Directors are to be
nominated for re‐election, their
performance is reviewed by the
Remuneration and Nominations
Committee. The Committee then makes
recommendations to the Board as to their
nomination for re‐election. The Board then
makes recommendations to shareholders in
the Notice of Meeting concerning the re‐
election of any Director.
Performance review
ASX Principles and Recommendations 2.5, 2.6
The Board is committed to formally evaluating its performance and
the performance of its Committees, as well as the governance
processes supporting the Board. Typically, the Board evaluates its
performance annually through a self‐assessment process where
each Director completes a questionnaire enabling them to evaluate
and comment upon the role and effectiveness of the Board and its
Committees.
The results of the questionnaire are then consolidated and
analysed in order to facilitate an assessment of:
the effectiveness of the Board in carrying out the key aspects of
its role; and
specific aspects of the Board’s effectiveness surrounding:
o
o
o
o
o
o
Board composition;
Board meetings and Board papers;
Board Committees;
Board communication and openness;
the relationship between the Board and CEO; and
the Chairman’s role and style.
Changes to the Board in June 2013 and more recently on 13 March
2014 have resulted in the postponement of the 2013 and 2014
Board performance assessments. A Board performance assessment
will be scheduled once the Board is embedded so that a more
meaningful review can take place.
Induction and training
ASX Principles and Recommendations 1.1
Upon appointment to the Board, Directors receive an induction
pack, which includes information about the Group’s business. The
induction pack also includes:
a letter of appointment, which refers to and summarises the
Securities Trading Policy and the Market Disclosure and
Communications Framework;
a copy of the Leighton Holdings Code of Ethics (Code of Ethics)
and the Leighton Group Code of Business Conduct (Code of
Business Conduct);
the company’s Constitution;
a Director’s interests disclosure agreement; and
a Deed of Indemnity, Insurance and Access.
At the time of appointment, new Directors are also introduced to
the senior executives and receive briefings about the Group’s
business, values, practices and governance arrangements.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
CORPORATE GOVERNANCE STATEMENT
continued
The Directors are also provided with a variety of ongoing learning
and training programs. These range from site visits to specific
subject training. For example, in 2013 the Board engaged in a
briefing session concerning the Code of Business Conduct and the
Board is currently undergoing training on the Code of Business
Conduct via the online training module.
THE CHAIRMAN
The role of the Chairman includes:
providing leadership to the Board in relation to all Board
matters;
acting as a conduit between management and the Board and
being the primary point of contact between the Board and the
CEO;
representing the views of the Board and the company to
shareholders;
overseeing Board performance, appraisal and succession;
guiding the Board agenda and conducting all Board meetings;
overseeing and conducting the company’s AGM and other
shareholder meetings; and
in conjunction with the Group Company Secretary, ensuring
that Board meetings are held regularly throughout the year.
Details regarding the Chairman, including his experience and
qualifications, are set out in the Directors’ Report on page 36.
THE CEO
ASX Principles and Recommendations 1.1
The CEO is accountable to the Board for the management of the
Group and has authority to approve capital expenditure and
business transactions within the levels prescribed by the Board.
Specific responsibilities of the CEO include:
leadership of the senior executive team;
providing strategic direction for the Group;
ensuring business development and tendering activities are in
accordance with the Group’s overall strategy and Group
tendering standards;
keeping the Board informed of all major project proposals by
way of specific reports; and
setting remuneration levels and bonus payments with the
assistance of the Chief Human Resources and Corporate
Services Officer (CHR&CSO) of all personnel, with the exception
of those senior executives reporting directly to him.
Details regarding the CEO, including his experience and
qualifications, are set out in the Directors’ Report on page 37.
ANNUAL REPORT ����
17
17
COMPANY SECRETARY
ASX Principles and Recommendations 1.1
Key accountabilities of the Group Company Secretary include:
being the interface between the Board and senior executives
with respect to corporate governance matters;
assisting the Board and Board Committees in the conduct of
meetings and Directors’ duties, governance obligations and
responsibilities, including providing advice to Directors
regarding compliance with ASX Listing Rules, relevant
legislation, regulations and corporate practices;
assisting senior executives in implementing best practice
corporate governance initiatives;
monitoring compliance with the continuous disclosure
requirements of the Corporations Act and the ASX Listing Rules;
and
overseeing key corporate actions including Annual Report,
AGM and ASX reporting and announcements.
Details regarding the Group Company Secretary, including her
experience and qualifications, are set out in the Directors’ Report
on page 38.
BOARD COMMITTEES
ASX Principles and Recommendations 2.4, 2.6, 4.1, 4.3, 4.4,
8.1, 8.4
We have four standing Board Committees:
Audit Committee;
Ethics and Compliance Committee;
Remuneration and Nominations Committee; and
Tender Review and Risk Committee.
Each Committee has a Charter detailing its role, duties and
membership requirements. The Committee Charters are reviewed
at least annually and updated as required.
► Our Board Committee Charters are available on our
website at: www.leighton.com.au/our‐approach/board‐and‐
governance/corporate‐governance‐approach
From time to time and as appropriate, special Board Committees or
Sub‐Committees are formed to enable the Board to give guidance
and provide oversight concerning specific matters.
Each Board Committee meets as frequently as required but not less
than four times a year.
A Director may attend any Committee meeting in an ex officio
capacity unless they have a material personal interest in a matter
being considered or information barrier‐related restrictions are in
place. Senior executives, other selected employees and external
advisors are also invited to attend Committee meetings as
required.
Each Board Committee regularly reports to the Board on matters
relevant to the Committee’s role and responsibilities and the
minutes of each Committee meeting are made available to all
Directors.
Attendance at Board and Board Committee meetings during the
2013 Financial Year is set out in the table opposite.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
18
18
Director attendance at Board and Board Committee meetings during the 2013 Financial Year
Board
Special
Board
Committee
One#
Special
Board
Committee
Two~
H
12
12
12
12
12
6
6
6
12
12
‐
‐
2
2
2
A
12
12
12
12
12
6
6
6
11
11
8*
12*
2
2
2
H
‐
1
1
1
1
‐
‐
‐
1
‐
‐
‐
1
‐
‐
A
‐
1
1
1
1
‐
‐
‐
1
‐
‐
1*
1
‐
‐
H
6
6
6
‐
‐
‐
‐
‐
6
‐
‐
6
‐
‐
‐
A
4
6
6
‐
‐
‐
‐
‐
6
‐
‐
6
‐
‐
‐
Special
Board
Committee
Three^
A
H
1
‐
‐
‐
‐
‐
‐
1
1
‐
‐
1
‐
‐
‐
1
‐
1+
1+
‐
‐
‐
1
1
‐
‐
1
‐
‐
‐
Audit
Committee
Special
Audit
Committee°
Ethics and
Compliance
Committee
H
2
9
‐
‐
‐
5
‐
5
9
5
‐
‐
2
‐
‐
A
2
9
9+
9+
‐
5
‐
5
9
5
‐
‐
2
‐
‐
H
‐
1
‐
‐
‐
1
‐
1
1
1
‐
‐
‐
‐
‐
A
‐
1
1+
1+
‐
1
‐
0
1
1
‐
‐
‐
‐
‐
H
6
‐
6
‐
0
4
4
‐
‐
‐
‐
6
‐
‐
1
A
5
‐
6
‐
0
4
4
‐
‐
‐
‐
6
‐
‐
1
Remuneration
and
Nominations
Committee
A
H
Tender
Review and
Risk
Committee
A
H
7
10
‐
‐
10
‐
‐
6
‐
‐
‐
10
3
‐
3
7
10
9+
‐
8
‐
‐
5
‐
‐
‐
10
3
‐
3
8
4
6
‐
0
0
4
‐
‐
0
4
8
‐
2
2
7
4
6
8+
0
0
4
‐
‐
0
3
7
‐
2
2
Robert D Humphris1
OAM
Paula J Dwyer
Hamish G Tyrwhitt2
Peter A Gregg
Marcelino Fernández
Verdes
Russell A Higgins AO3
Michael J Hutchinson
Vickki A McFadden
David P Robinson
Peter W Sassenfeld
Alternate Directors
Pedro López Jiménez
Robert L Seidler AM
Former Directors
Stephen P Johns
Ian J Macfarlane AC
Wayne G Osborn
H
A
#
~
^
°
*
+
1
2
3
Reflects the number of meetings held during the period the Director/Alternate Director was a member of the Board and/or Committee.
Reflects the number of meetings attended by the Director during the period the Director/Alternate Director was a member of the Board and/or
Committee.
Held to approve the results for the financial year ended 31 December 2012.
Held to oversee the replenishment of the Board.
Held to consider strategic options.
Held to consider fraud analytics.
Reflects the number of meetings attended by the Alternate Director in their capacity as an Alternate Director or as a standing invitee of the Board
and/or Committee.
Reflects the number of meetings attended by the Director as a standing invitee of the Committee.
In addition to the information supplied in the table above, Mr Humphris OAM also attended a further five Audit Committee meetings as a standing
invitee.
In addition to the information supplied in the table above, Mr Tyrwhitt also attended a further two Tender Review and Risk Committee meetings as a
standing invitee.
In addition to the information supplied in the table above, Mr Higgins AO also attended four Tender Review and Risk Committee meetings as a
standing invitee.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
19
19
CORPORATE GOVERNANCE STATEMENT
continued
AUDIT COMMITTEE
ASX Principles and Recommendations 4.1, 4.2
The Audit Committee assists the Board in fulfilling its corporate
governance and oversight responsibilities in relation to the integrity
of the Group’s financial statements, the adequacy and
effectiveness of the Group’s financial control systems and the audit
of those financial statements and financial control systems.
Financial knowledge
ASX Principles and Recommendations 4.4
All Audit Committee members have appropriate financial or
accounting experience and an understanding of the construction
and contracting industry, and therefore satisfy the composition
requirements under the ASX Principles and Recommendations.
Details regarding the membership and role of the Audit Committee
during the 2013 Financial Year are set out in the table below.
Member from 18 June 2013
Status
Chairman for whole period
Audit Committee membership and role during the 2013 Financial Year
Name/Position held
Paula J Dwyer (Chairman)1
Independent Non‐executive
Russell A Higgins AO1
Independent Non‐executive
Vickki A McFadden
Independent Non‐executive
David P Robinson1
Non‐executive
Peter W Sassenfeld1
Non‐executive
Robert D Humphris OAM
Independent Non‐executive
Stephen P Johns
Independent Non‐executive
Member from 24 March 2013
to 18 June 2013
Member to 22 March 2013
Member from 18 June 2013
Member from 18 June 2013
Member for whole period
Role
Monitor and review the:
o
o
o
o
o
integrity of the Group’s financial statements;
internal financial control systems;
objectivity and effectiveness of the internal auditors;
independence, objectivity and effectiveness of the
external auditors; and
formal policy on the provision of non‐audit services by
the external auditors; and
review and challenge, where necessary, the actions and
judgment of management in relation to full year and half
year financial reports, interim management statements and
any other announcements relating to the company’s financial
performance or to those reports prepared for release to the
ASX.
1
These Audit Committee Members also attended a Special Audit Committee meeting to consider fraud analytics held during the 2013 Financial Year.
Approach to financial reporting
The Audit Committee monitors Australian and international
developments in accordance with the following key principles:
that our financial reports reflect a true and fair view of the
Group;
that our accounting policies and procedures comply with
applicable accounting standards, rules and policies;
that our external auditor is independent and represents
shareholders' interests; and
that our internal auditor is independent of management.
External auditor
ASX Principles and Recommendations 4.4
Our external auditor is Deloitte Touche Tohmatsu (Deloitte) and
was appointed following our AGM on 22 May 2012.
Deloitte is invited to attend all Audit Committee meetings and all
Audit Committee papers are available to them. Deloitte is also
available to all Audit Committee members at any time. Deloitte
attends our AGM to answer any questions from shareholders.
As our external auditor, Deloitte is required to confirm its
independence and compliance with specified independence
standards. Our Charter of External Auditor Independence, revised
in March 2013, assists the Audit Committee, the Board and our
shareholders to be satisfied that Deloitte is independent at all
times. The Charter also sets out the circumstances in which Deloitte
can perform audit and non‐audit related services and the
procedures to be followed to obtain approval for those services
where they are permitted.
► Our Charter of External Auditor Independence is available
on our website at: www.leighton.com.au/our‐approach/board‐
and‐governance/corporate‐governance‐approach
The Audit Committee also provides oversight of the rotation of
external audit engagement partners every five years. If
circumstances arise where it becomes necessary to replace the
external auditor, the Audit Committee will recommend to the
Board the external auditor to be appointed to fill the vacancy.
Deloitte’s independence declaration is contained in the Directors’
Report on page 44.
Internal Audit
The Internal Audit function provides independent and objective
assurance on the adequacy and effectiveness of the Group’s
systems for risk management, internal control and governance
along with recommendations to improve the efficiency and
effectiveness of these systems and processes.
The function operates independently of management under a
mandate approved by the Audit Committee and has full access to
all functions, records, property and personnel of the Group. The
head of Internal Audit reports functionally to the Chairman of the
Audit Committee and provides the Committee with information
relevant to the Committee’s roles and responsibilities.
A risk‐based approach is used to focus assurance activities on high‐
risk and high‐value areas and audit plans are presented annually to
the Audit Committee for approval.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
20
20
ETHICS AND COMPLIANCE COMMITTEE
ASX Principles and Recommendations 3.1
The Ethics and Compliance Committee assists the Board in fulfilling
its corporate governance and oversight responsibilities by:
monitoring and reviewing:
making recommendations to the Board or any Operating
Company regarding changes to the Group’s standards,
practices, codes, policies, procedures and compliance activities
in each of these areas, or approving such changes that do not
require Board approval.
o
o
the ethical standards and practices generally within the
Group and compliance with our codes of ethics and
business conduct; and
compliance with applicable legal and regulatory
requirements and internal policies, procedures and
standards in the areas of work health and safety, the
environment, competition and consumer protection and
business conduct; and
Details regarding the membership and role of the Ethics and
Compliance Committee during the 2013 Financial Year are set out
in the table below.
Ethics and Compliance Committee membership and role during the 2013 Financial Year
Name/Position held
Russell A Higgins AO
(Chairman)
Independent Non‐executive
Robert D Humphris OAM
Independent Non‐executive
Status
Member from 18 June 2013
(Chairman from 5 September 2013)
o
Member for whole period
(Chairman from 24 March 2013 to
5 September 2013)
Member for whole period
Role
Seek and review reports on:
any notifiable incidents and work health and safety
performance including reports on all Class 1 incidents,
which comprise fatalities and permanent disabling
injuries; and
ethical standards and practices from Leighton and our
Operating Companies and make recommendations to
the Board as necessary;
o
Hamish G Tyrwhitt
Executive Director
Marcelino Fernández Verdes
Non‐executive
Michael J Hutchinson
Independent Non‐executive
Robert L Seidler AM1
Non‐executive Alternate
Director
Wayne G Osborn
Independent Non‐executive
Member from 13 December 2013
gain an understanding of the operations of Leighton and our
Member from 18 June 2013
Member to 13 December 2013
Member to 22 March 2013
(Chairman to 22 March 2013)
Operating Companies to monitor compliance with the
minimum expectations as set out in our Code of Ethics and
Code of Business Conduct, including in relation to tendering
practices;
oversee investigations of business conduct concerns,
including any reports made through the Leighton Ethics Line,
and other breaches (or potential breaches) of the Code of
Business Conduct; and
review reports on environmental performance and
compliance, competition and consumer laws, compliance
with information barrier‐related restrictions from Leighton
and our Operating Companies (excluding LAIO in respect of
information barrier‐related restrictions) and report to the
Board as necessary.
1
Mr Seidler AM will continue to attend Committee meetings as a standing invitee and also in the capacity of Alternate Director to Mr Fernández Verdes
in the event that Mr Fernández Verdes is unable to attend a Committee meeting.
Approach to ethics and compliance
ASX Principles and Recommendations 3.1
Our approach to ethics and compliance demands that all
employees observe the highest standards of conduct.
We expect our employees and business partners to:
always act with honesty, integrity and fairness in accordance
with our Code of Business Conduct (incorporating our Code of
Ethics) and our core values;
comply with the Leighton Group Governance System;
comply with all policies and procedures implemented by the
company or Operating Company as relevant; and
comply with all applicable laws wherever we operate.
Ethical and responsible decision‐making
ASX Principles and Recommendations 3.1, 3.5
Our commitment to ethical and responsible decision‐making is
encapsulated in our Code of Business Conduct, which sets out the
principles and values that guide our decisions and actions. This
framework aims to promote an organisational culture that enables
our employees to respond appropriately to situations and to be
accountable for their decisions.
► Our Code of Ethics and Code of Business Conduct are
available on our website at: www.leighton.com.au/our‐
approach/board‐and‐governance/group‐policies
Code of Business Conduct
ASX Principles and Recommendations 3.1
In August 2012, the Board adopted the Code of Business Conduct
alongside our existing Code of Ethics to reflect our values of
discipline, integrity, safety and success.
The Code of Business Conduct provides a decision‐making
framework by establishing the principles and values that guide our
decisions and actions, and promotes an organisational culture that
enables our employees to respond appropriately to situations and
to be accountable for their decisions. It clearly outlines the
responsibilities of those working for the Group, whether that be in
Australia or overseas, and includes matters such as:
people and safety;
environment and the community; and
ethical business practices (including consideration of bribery
and corruption risk).
Leighton Holdings Limited Annual Report 2013
ANNUAL REPORT ����
21
21
Dealing in securities
ASX Principles and Recommendations 8.4
Leighton Holdings has a Securities Trading Policy that sets out the
circumstances in which our Directors and employees are permitted
to deal in the company’s shares and restricts dealings by our
Directors and employees in the company’s shares during
designated prohibited periods and at any time that they are in
possession of price sensitive or ‘inside’ information. Our Directors
and employees are also prohibited from passing on or
communicating such information to other persons, including family
members and friends.
We provide briefing sessions on the Securities Trading Policy and
securities trading law for senior executives and employees as part
of our continuing employee education initiatives.
► Our Securities Trading Policy is available on our website at:
www.leighton.com.au/our‐approach/board‐and‐
governance/group‐policies
LEIGHTON HOLDINGS LIMITED
CORPORATE GOVERNANCE STATEMENT
continued
The Code of Business Conduct also provides clear direction on how
to raise a business conduct concern. Anyone who raises a
genuinely‐held business conduct concern will not be disadvantaged
as a result of reporting the matter. The Code of Business Conduct
applies to all people who work for the Group as an employee or
officer, or people working under contract.
In order to encourage a culture of openness, we have established
the Leighton Ethics Line, which provides all employees in the Group
worldwide access to an independent and confidential reporting
service to allow them to raise business concerns. Anyone who
makes a report in good faith will not be disadvantaged as a result of
using this service.
Promotion of ethical and responsible decision‐making throughout
the Group
ASX Principles and Recommendations 3.1
Our Operating Companies each have their own Ethics Committees
or Reportable Conduct Groups (as defined in our Code of Business
Conduct) to support the Board’s Ethics and Compliance Committee
in identifying enhancements to the ethics and compliance
framework that shapes the Group’s ethical policy direction and
reporting.
The Code of Business Conduct is actively promoted throughout the
Group and is easily accessible to new and existing employees
through the Group’s internal websites. It is a condition of
employment that our employees accept and adhere to both the
Code of Ethics and Code of Business Conduct.
The Group has rolled out training to all employees on the Code of
Business Conduct. Training has been tailored to the roles and
responsibilities of individuals to ensure appropriate levels of
understanding and awareness commensurate with risks. All new
employees are to undertake the training and all employees are to
have a refresher every two years. Non‐compliance with the training
requirements is addressed through the employee performance
review process.
The Group has also implemented an Ethical Dimension Reporting
system, which requires Leighton Holdings and each Operating
Company to submit a quarterly report to the Ethics and Compliance
Committee with the objective of maintaining ethical practices
within the Group and to achieve continual improvement in this
area. Breaches of the Code of Ethics and Code of Business Conduct
that are reported through this process or through the Leighton
Ethics Line are examined and appropriate action is taken, which
may include disciplinary measures.
The Code of Business Conduct will be reviewed in the first half of
2014 to ensure that it continues to meet the operational needs of
the Group and to ensure it remains at the forefront of industry best
practice.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
REMUNERATION AND NOMINATIONS COMMITTEE
ASX Principles and Recommendations 2.4, 2.6, 8.1, 8.2, 8.4
The Remuneration and Nominations Committee assists the Board
in fulfilling its corporate governance duties and responsibilities
concerning the appointment and remuneration of its Directors,
executives and employees, and establishing remuneration policies
and practices in each of these areas.
On 13 March 2014, Mr Fernández Verdes was appointed to the role
of CEO of the company. In recognition of Recommendation 8.2 of
the ASX Principles and Recommendations, Mr Fernández Verdes
will resign as a member of the Remuneration and Nominations
Committee on 15 April 2014, being the next scheduled Board
meeting following his appointment. Following his resignation as a
member of the Committee, Mr Fernández Verdes will have a
standing invitation to attend all Committee meetings as is the
current arrangement for the CHR&CSO and the Group General
Manager, Performance and Reward, however, they will not be
entitled to participate in any part of the meeting that relates to
their own remuneration.
ANNUAL REPORT ����
22
22
The Committee may seek input from senior executives on
remuneration policies, and the Chairman may request that any
person in attendance at a meeting not be present for part of the
meeting when a matter that may have the potential to be a conflict
of interest is being considered.
The Committee may engage the assistance of remuneration
consultants from time to time, and further details are contained in
the Remuneration Report on page 67.
Details regarding the membership and role of the Remuneration
and Nominations Committee during the 2013 Financial Year are set
out in the table below.
Member for whole period
Status
Chairman and member from 24 March
2013
Remuneration and Nominations Committee membership and role during the 2013 Financial Year
Name/Position held
Robert D Humphris OAM
(Chairman)
Independent Non‐executive
Paula J Dwyer
Independent Non‐executive
Marcelino Fernández Verdes
Non‐executive
Vickki A McFadden
Independent Non‐executive
Robert L Seidler AM1
Non‐executive Alternate
Director
Stephen P Johns
Independent Non‐executive
Wayne G Osborn
Independent Non‐executive
Member to 13 December 2013
Chairman to 22 March 2013
Member from 18 June 2013
Member to 22 March 2013
Member for whole period
Corporations Act.
Role
Enable the Group to attract, retain and motivate Directors,
executives and employees with the experience and skills
necessary to lead, manage and operate the company for the
benefit of shareholders;
reward executives having regard to financial and operational
performance, the performance of the executive and the
external economic and governance environment;
enable the Board to be comprised of individuals who are able
to discharge the responsibilities of Directors;
provide for effective development and succession planning
for Group executives and other senior leaders in key
positions; and
comply with the provisions of the ASX Listing Rules and
1
Mr Seidler AM will continue to attend Committee meetings as a standing invitee and also in the capacity of Alternate Director to Mr Fernández Verdes
in the event that Mr Fernández Verdes is unable to attend a Committee meeting.
Director selection, appointment and re‐election
ASX Principles and Recommendations 2.5
The Remuneration and Nominations Committee reviews the
composition of the Board having regard to the strategic direction of
the Group so that there is an appropriate mix of abilities,
experience and diversity of backgrounds to serve the interests of all
shareholders.
In assessing both the performance of incumbent Directors and the
suitability of new candidate(s), we also have regard to the
individual capabilities and attributes that contribute to an effective
Board dynamic (ie, strategic thinking, strong communication skills,
high ethical standards and sound judgment).
Independent consultants are engaged, where appropriate, to
identify possible new candidate(s) for the Board.
The Remuneration and Nominations Committee assesses
candidate(s) for the role and in doing so considers their
background, experience, personal qualities, diversity and
professional skills. Following this assessment, the Committee
provides its recommendation of the preferred candidate(s) to the
Board for consideration prior to the Board making an appointment.
In 2013, a special Board Committee was formed to assist the
Remuneration and Nominations Committee in the selection
process concerning the appointment of three new independent
Directors to the Board.
Senior executives
ASX Principles and Recommendations 1.2
Each Leighton Holdings senior executive and Operating Company
Managing Director has specified financial and other objectives,
which are reflected in their remuneration outcomes. These
objectives (which are described in more detail in the Remuneration
Report commencing on page 63) are reviewed and approved by the
Remuneration and Nominations Committee.
The CEO reviews the performance of all his direct reports by way of
formal and informal reviews as appropriate. As part of the review
process, the CEO considers the individual’s performance against
requisite standards, their business plans and their key performance
indicators, and actively monitors their contribution to all aspects of
the Group’s performance, culture and values.
The performance of the senior executives is reviewed in
accordance with this process.
Leighton Holdings Limited Annual Report 2013
ANNUAL REPORT ����
23
23
LEIGHTON HOLDINGS LIMITED
CORPORATE GOVERNANCE STATEMENT
continued
Comparison of remuneration structures
ASX Principles and Recommendations 8.3, 8.4
As disclosed in the Remuneration Report on pages 63 to 88, we
have designed our remuneration policy in such a way that it
motivates senior executives to pursue the long‐term growth and
success of the Group and demonstrates a clear relationship
between senior executives’ performance and remuneration.
Consistent with the requirements of the Corporations Act and our
Securities Trading Policy, senior executives are prohibited from
entering into any hedging arrangements or other transactions in
financial products that operate to limit the economic risk
associated with their entitlements under equity‐based
remuneration schemes.
The payment of equity‐based executive remuneration is made in
accordance with plans approved by shareholders.
The Board has established a minimum shareholding guideline to
apply to independent Non‐executive Directors, which encourages
those Directors to build and maintain a meaningful value of shares
in the company and thereby align the Directors’ interests with the
interests of shareholders. The independent Directors are
encouraged to accumulate a minimum shareholding in the
company’s shares equivalent in value to one year’s base fee after
allowing for tax.
Non‐executive Directors receive fees as remuneration for acting as
a Director and, if applicable, as a member of a Board Committee or
Sub‐Committee of the Board. In addition, Non‐executive Directors
who are members of one or more of the Advisory Boards of our
Operating Companies also receive fees for those roles. Non‐
executive Directors’ fees depend on the extent of each of the
Director’s responsibilities, but do not include shares, options or any
performance‐related incentives.
Non‐executive Directors appointed after 5 November 2003 are not
entitled to any retirement benefits other than superannuation in
accordance with our statutory superannuation obligations. Details
of Non‐executive Directors’ retirement benefits as at 31 December
2013 are set out in the Remuneration Report on page 83.
Further details regarding the remuneration of Non‐executive
Directors, Executive Directors and other senior executives are set
out in the Remuneration Report on pages 63 to 88.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
24
24
TENDER REVIEW AND RISK COMMITTEE
The Tender Review and Risk Committee assists the Board in
fulfilling its corporate governance and oversight responsibilities in
relation to the management of risk in the Group’s business with
specific focus on key projects.
In 2013, the Committee met eight times and reviewed eight
tenders with a total combined project value of $20 billion.
Details regarding the membership and role of the Tender Review
and Risk Committee during the 2013 Financial Year are set out in
the table below.
Role
Monitor and review:
Member from 9 April 2013
Member from 18 June 2013
Member from 13 December 2013
Status
Chairman for whole period
Tender Review and Risk Committee membership and role during the 2013 Financial Year
Name/Position held
Robert D Humphris OAM
(Chairman)
Independent Non‐executive
Paula J Dwyer
Independent Non‐executive
Hamish G Tyrwhitt
Executive Director
Russell A Higgins AO
Independent Non‐executive
Marcelino Fernández Verdes
Non‐executive
Michael J Hutchinson
Independent Non‐executive
Peter W Sassenfeld
Non‐executive
Robert L Seidler AM1
Non‐executive Alternate Director
Pedro López Jiménez
Non‐executive Alternate Director
Ian J Macfarlane AC
Independent Non‐executive
Wayne G Osborn
Independent Non‐executive
Member from 18 June 2013 to
13 December 2013
Member to 22 March 2013
Member from 13 December 2013
Member from 13 December 2013
Member to 13 December 2013
Member from 18 June 2013
Member to 22 March 2013
o
o
the Group’s overall risk tolerance and strategy;
the integrity, adequacy and utility of the Group’s risk
management systems, controls and metrics having
regard to the Group’s overall risk tolerance and
strategy; and
the identification, management and reporting of risks
inherent in its activities and operations;
approve proposals from management for the Group to
o
tender for key projects;
approve tender submissions by the Group for key projects;
for tenders subject to the Information Barrier Policy,
delegate to a Sub‐Committee, the Leighton CEO or Leighton
Deputy CEO the approval of such tender submissions as
appropriate;
where the Committee determines that it is appropriate, refer
approval of tenders for key projects to the Board;
monitor changes anticipated for the business environment,
including consideration of emerging trends and other factors
considered relevant to the Group’s risk tolerance and
strategy; and
meet with the Chairman of the Audit Committee to discuss
and review any relevant risk‐related matters that come to
the attention of the Committee.
1
Mr Seidler AM will continue to attend Committee meetings as a standing invitee and also in the capacity of Alternate Director to Mr Fernández Verdes
in the event that Mr Fernández Verdes is unable to attend a Committee meeting.
RISK FUNDAMENTALS
ASX Principles and Recommendations 7.1
Effective risk management is fundamental to our core objective of
delivering superior and sustainable returns for shareholders. At
Leighton, effective risk management means rigorous and timely
identification, assessment, treatment and reporting of key risks
(threats and opportunities) that have the potential to materially
impact our operations, our people, our reputation, the
environment and communities in which we work, and the financial
outcomes of the Group.
Throughout 2013, the Group has systematically developed and
implemented a number of key initiatives aimed at enhancing risk
management:
Culture – A strong risk awareness and management culture exists
across the Group, overseen by line management who are
responsible for setting the tone at the top, ensuring transparency,
facilitating training and development, and promoting quality and
timely risk reporting.
Structure – An enhanced Group organisational structure is now in
place that promotes clear governance through empowerment of
individuals with delegated authority, clearly defined risk‐taking
levels of authority and risk escalation criteria, appropriate
segregation of duties, and clear ownership and accountability for
risks at all levels of our business.
Systems – Our risk management systems have been harmonised
across the Group to ensure risk assessment and reporting is
consistent, efficient and effective. We aim to continually improve
our risk management processes to ensure they remain robust,
reliable and effective by regularly measuring our maturity in risk
management, both internally and by benchmarking ourselves
against global best practice.
Risk management framework
ASX Principles and Recommendations 7.1, 7.2
The Leighton Group risk management framework is based on the
relevant International Standard ISO 31000:2009 Risk management
– Principles and guidelines, and forms the basis for Leighton’s risk
management activities. Our approach to risk is mandated at the
highest level through the Leighton Group Risk Management Policy
and is supported by associated policies and minimum
requirements, which our Operating Companies are required to
comply with.
Consistent with our operating model, each Operating Company
incorporates the Group standards into its own internal systems and
controls, supplementing the Group standards where necessary (but
not derogating from them) to align them with the individual
Operating Company’s culture, operating framework and
commercial context.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
25
25
CORPORATE GOVERNANCE STATEMENT
continued
Responsibility for control and risk management is delegated to the
appropriate level of management within the Group, with the CEO,
CFO and Chief Risk Officer (CRO) having ultimate accountability to
the Board for the risk management and control framework. This
requirement cascades down to each Operating Company Managing
Director, who has direct accountability for effective
implementation of risk management with their company.
Our risk management framework is tailored to our business,
embedded largely within existing processes and aligned to our
objectives, both short and longer term. Key categories of risk where
Leighton seeks to identify, aggregate, assess and manage risks to
our objectives on a whole‐of‐business basis include:
Strategic Management – Risks of a strategic nature include those
relating to the specific strategic plans and initiatives, the markets in
which we operate, the clients for which we work, the products and
services we offer, the supply chain we rely on, our brand and
reputation as well as potential external events typically beyond our
control.
Financial Management – Risks to our financial performance (ie, our
objectives regarding balance sheet, profitability, liquidity,
investments and securities including those associated with our
project and investment performance), our credit rating, our gearing
ratio, potential currency and interest rate movements, cash flow,
asset valuation and liquidity and counterparty risk.
Operational Management – Risks of an operational nature that are
broad in nature, but no less important given the breadth and depth
of our business. Operational risks include those associated with the
safety of our people and the residents and businesses we work
alongside, the natural and man‐made environment in which we
work, the legal and regulatory requirements by which we must
abide, the assets, systems and technology on which we rely, the
internal compliance arrangements that support our success, and
the stakeholders impacted by or involved in our work.
The Group recognises that managing risk is an inherent and
necessary element of the Group’s strategic, financial and
operational activities. Whilst no risk management framework can
absolutely guarantee risk‐related issues will not arise, and that on
occasion they may be significant, the Group risk management
framework is intended to minimise the likelihood of significant
downside risk whilst also enabling the capture and execution of
opportunities as they arise.
Risk oversight
ASX Principles and Recommendations 7.2, 7.4
Management has primary responsibility for identifying, managing
and reporting key risks faced by the Group to the Board.
Management is also responsible for ensuring that risk management
is implemented and effective within all Operating Companies,
thereby providing the first line of defence in terms of risk oversight
and assurance.
Beyond the role of line management, additional lines of defence
exist in the form of Operating Company and Leighton tender and
project delivery review teams, Internal Audit and Deloitte, serving
to provide further risk oversight and assurance.
The Leighton Board is ultimately responsible for oversight of the
Group’s risk management and control framework. The Tender
Review and Risk Committee and Audit Committee assist the Board
in fulfilling their responsibilities in this regard by reviewing and
monitoring the financial and reporting aspects of the Group’s risk
management framework.
Arrangements currently in place by the Board to monitor risk
management include:
quarterly whole‐of‐business risk reports to the Tender Review
and Risk Committee and Audit Committee by the CRO that
include details of current and target risk management maturity
level and associated improvement initiatives;
regular reports to the Audit Committee by the Leighton
Holdings Delivery Assurance team concerning the program for,
and results of, project financial assurance reviews conducted
independently of the Operating Company;
regular reports to the Audit Committee by the head of Internal
Audit in relation to internal processes and internal control
systems;
quarterly reports to the Ethics and Compliance Committee by
Leighton Holdings and the Operating Companies concerning
compliance with laws and regulations and Group standards and
practices in the areas of work health and safety, the
environment and carbon, competition and consumer law, and
Code of Business Conduct;
reports to the Board by the Chairman of each of the Audit
Committee, the Ethics and Compliance Committee and the
Tender Review and Risk Committee, and circulation of minutes
of these Committee meetings to the Board;
attendance and reports by the Managing Directors of our
Operating Companies at Board meetings as required; and
presentations to the Board and its Committees throughout the
year by the CRO, senior executives and by other appropriate
members of the Group’s management team (and/or
independent advisers, where necessary) on the nature of
particular risks and details of the measures that are either in
place or can be adopted to manage or mitigate the risk.
The Board also maintains additional arrangements which allow it
to:
monitor the Group’s compliance with the continuous disclosure
requirements of the ASX Listing Rules (as discussed in the
Market Disclosure section of this Statement on page 26); and
assess the effectiveness of its risk management system and its
implementation.
In accordance with the systems and procedures outlined above,
management regularly reported to the Board as to the
effectiveness of the Group’s management of its material business
risks during the 2013 Financial Year.
In addition to the information provided above, further details on
the way risks arising from financial instruments are managed are
set out in the Financial Report commencing on page 90.
CEO and CFO assurance
ASX Principles and Recommendations 7.3
The former CEO and former Deputy CEO & CFO have given a
declaration to the Board concerning the Group’s financial
statements in accordance with section 295A of the Corporations
Act and Recommendation 7.3 of the ASX Principles and
Recommendations concerning financial reporting risks.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
26
26
STAKEHOLDER COMMUNICATION
ASX Principles and Recommendations 6.1, 6.2
The Board and management of Leighton values and respects the
perspectives of all of its stakeholders and strives for effective and
open communication with all of them so that the market has
sufficient information to make informed investment decisions on
our operations and results.
to appoint two Disclosure Officers, being the CEO and the CFO,
whom are ultimately responsible for all communication with
the ASX; and
to enable the CDC to appoint Information Disclosure Officers
within the Group (currently, there are designated Information
Disclosure Officers in Leighton and in each of our Operating
Companies).
► Our Group Policy for Shareholder Communications is
available on our website at: www.leighton.com.au/our‐
approach/board‐and‐governance/group‐policies
► Our Market Disclosure and Communications Framework is
available on our website at: www.leighton.com.au/our‐
approach/board‐and‐governance/group‐policies
We provide regular shareholder communications such as Quarterly
Shareholder Updates (for March and September quarters), Half
Yearly and Annual Reports, and the Group’s Financial Report.
This year, we have introduced a new report for all shareholders
titled the 2013 Annual Review. The 2013 Annual Review will
supplement this Annual Report and will provide shareholders with
key highlights and messages from the 2013 Financial Year.
We have also introduced a new online report for all shareholders
titled the 2013 Sustainability Report. The 2013 Sustainability Report
highlights the policies, standards and initiatives that go towards
representing how we have been strengthening the foundations of
the Group. It represents our cultural and business transformation
during the past two years, presented across a range of
sustainability categories and indicators.
We also provide shareholders with access to communications
through the use of information technology such as:
our website, which includes the above shareholder
communications as well as newsletters, media releases, ASX
announcements, significant group briefings and other
presentations to analysts;
webcasting of important events including financial results
presentations and the AGM; and
facilitating the electronic delivery of reports and updates to
shareholders through Computershare, our share registry.
Market disclosure
ASX Principles and Recommendations 5.1, 5.2
We are committed to providing information to shareholders and to
the market in a manner that is consistent with the meaning and
intention of the ASX Listing Rules.
In order to comply with these obligations, the Board has adopted a
Market Disclosure and Communications Framework, revised in June
2013. The key elements of the Market Disclosure and
Communications Framework are:
to assist with the identification of information that may be
market sensitive and warrant the company making a market
disclosure, by incorporating guidelines about the types of
information that the Board or the Leighton Holdings CDC may
consider market sensitive;
to establish the CDC which is responsible for:
o
establishing procedures for the mandatory notification to
the Committee of information that may be considered
market sensitive;
reviewing information for the purpose of determining
whether it should be disclosed;
o
o where the CDC considers it appropriate, requesting that a
Board meeting be convened to consider whether
particular information should be disclosed; and
overseeing compliance with Leighton’s continuous and
periodic disclosure requirements;
o
Participation at AGMs
ASX Principles and Recommendations 6.1
Our Board and senior executives believe that the AGM is an
important opportunity for us to engage and communicate with our
shareholders. We encourage shareholders to attend and actively
participate in our AGM to promote a high level of accountability
and understanding of the Group’s strategy and goals. Shareholders
who are unable to attend the AGM can lodge their proxies through
a number of channels described on the proxy form.
The proceedings of the AGM are also webcast live to maximise
communication with shareholders. A video of proceedings at the
AGM is made available on our website for viewing by shareholders
for a period of at least six months after the AGM.
DIVERSITY
ASX Principles and Recommendations 3.2, 3.3, 3.5
Group policy
In 2012, the Board adopted a revised Group policy for workforce
diversity, the Strength through Diversity Policy. This Policy acts as a
framework for the Group in building our diverse and inclusive
workforce and in developing initiatives aimed at specific
demographic segments. The main principles contained in this
framework have been adopted by each Operating Company
through their own policies, procedures and practices that reflect
their operating conditions.
► Our Strength through Diversity Policy is available on our
website at: www.leighton.com.au/our‐approach/board‐and‐
governance/group‐policies
The Strength through Diversity Policy outlines our intent to identify
and embrace the diverse thought and contributions of our people
and to be more innovative and relevant to the clients that we serve
and the communities in which we operate.
The five key objectives of the Strength through Diversity Policy
allow us to embrace the diverse contributions of our people. These
objectives are as follows:
to identify, foster and leverage diverse thinking in our teams;
to create, support and leverage a culture of inclusive practices
and behaviours;
to have a workforce that reflects the diversity of the clients we
serve and the broader communities in which we operate;
to make remuneration and promotion decisions that are fair
and free from bias; and
to measure the value that diversity and inclusion bring to the
business.
Meeting the objectives and setting performance targets is the
responsibility of the Board, which is supported by the
Remuneration and Nominations Committee, the senior executives
and the Group Heads of Diversity Forum (at which all Operating
Companies are represented).
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
27
27
CORPORATE GOVERNANCE STATEMENT
continued
The table below shows female participation across the Group at all
levels, in addition to executive and senior management.
In 2013, the Group Diversity Forum developed a three‐year
roadmap for driving aligned initiatives across the Group. The focus
areas for this are:
continuing to develop our use of metrics through a single
reporting framework;
continuing to build our leadership pipeline through developing
female talent; and
continuing to build the capability around the leadership of
diverse and flexible teams.
Our Operating Companies have set individual gender targets in line
with legislative requirements. In 2014, we seek to further improve
the robustness of our metrics for monitoring progress towards
achieving the Strength through Diversity Policy objectives.
Gender targets and progress
ASX Principles and Recommendations 3.3, 3.4
The Board has established the following measurable targets in
relation to female participation across the Group:
appointing at least two female Directors to the Board by 2016;
and
increasing the number of women in executive and senior
management positions at Leighton to 40% by 2016.
Over the 2013 Financial Year, our progress towards achieving these
targets was as follows:
our Board composition included two female independent Non‐
executive Directors; and
at Leighton, female participation at the executive and senior
management level increased from 29% at 31 December 2012 to
30% at 31 December 2013.
In 2013, we also made progress towards ensuring an equitable
remuneration process is in place. We conducted a pay equity
review to establish a baseline and identify areas where action was
required. In 2014, a more refined and extensive review will be
conducted.
No. of
women
Dec 2013
4
1
2
12
64
76
LEIGHTON HOLDINGS
Board
Employees
Executives and
management1
Other
Total employees
AUSTRALIAN OPERATIONS2
Operating Company
Statutory Boards
Operating Company
Advisory Boards
Employees
Executives and
management1
Other
4,771
Total employees
4,804
INTERNATIONAL OPERATIONS3
0
Operating Company
Statutory Boards
Operating Company
Advisory Boards
Employees
Executives and
management1
Other
Total employees
2,023
2,025
33
0
2
%
20
30
51
46
5
29
15
17
17
0
0
4
7
7
No. of
women
Dec 2012
1
8
55
63
1
%
10
29
48
47
6
3*
33*
25
4,829
4,854
0
0
2
1,917
1,919
13
17
17
0
0
3
7
7
*
1
2
3
Excludes Thiess Pty Ltd as the initial Advisory Board Members
were not appointed until 12 February 2013.
Executives and management at Leighton Holdings comprise
the Group executives, Executive General Managers, General
Managers and their equivalents; and at the Operating
Companies comprise the Executive Leadership Team (ELT) and
direct reports to the ELT who are General Managers, Business
Unit Managers, Functional Heads, Divisional Heads and their
equivalents.
Australian operations include New Zealand.
International operations exclude Habtoor Leighton Group.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
Checklist of the company’s compliance with the ASX Principles and Recommendations
ASX Principles and Recommendations
Reference
Principle 1
Lay solid foundations for management and oversight
ANNUAL REPORT ����
28
28
Compliance
(Y/N)
Establish the functions reserved to the board and
those delegated to senior executives and disclose
those functions.
Refer to the following sections of this Statement:
Corporate governance model on page 9
Leighton Holdings Board of Directors – Roles and
1.1
1.2
1.3
2.3
2.4
2.5
Disclose the process for evaluating the performance
of senior executives.
Companies should provide the following
information in the corporate governance statement
in the annual report:
an explanation of any departure from
Recommendations 1.1, 1.2 or 1.3;
whether a performance evaluation for senior
executives has taken place in the reporting
period and whether it was in accordance with
the process disclosed.
A statement of matters reserved for the board, or
the board charter or the statement of areas of
delegated authority to senior executives should be
made publicly available, ideally by posting it to the
company’s website in a clearly marked corporate
governance section.
Principle 2
2.1
Structure the Board to add value
A majority of the board should be independent
directors.
2.2
The chair should be an independent director.
The roles of chair and chief executive officer should
not be exercised by the same individual.
The board should establish a nomination
committee.
Responsibilities on page 11
The CEO on page 17
The Company Secretary on page 17
Induction and training on page 16
Refer to the Senior executives section of this Statement
on page 22
N/A
Refer to the Senior executives section of this Statement
on page 22
Our Board Charter can be found on our website at:
www.leighton.com.au/our‐approach/board‐and‐
governance/corporate‐governance‐approach
Refer to the following sections of this Statement:
Independence on page 13
Table assessing the independence of each Director
on page 14
Refer to the following sections of this Statement:
Independence on page 13
Table assessing the independence of each Director
on page 14
Refer to the Table assessing the independence of each
Director on page 14
Refer to the following sections of this Statement:
Board Committees on page 17
Table detailing Director attendance at Board and
Board Committee meetings held during the 2013
Financial Year on page 18
Remuneration and Nominations Committee on
page 22
Y
Y
N/A
Y
Y
N
Y
Y
Y
Y
Disclose the process for evaluating the performance
of the board, its committees and individual
directors.
Refer to the following sections of this Statement:
Performance review section on page 16
Director selection, appointment and re‐election on
page 22
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
CORPORATE GOVERNANCE STATEMENT
continued
ANNUAL REPORT ����
29
29
ASX Principles and Recommendations
Reference
Compliance
(Y/N)
2.6
Companies should provide the following
information in the corporate governance statement
in the annual report:
the skills, experience and expertise relevant to
the position of director held by each director in
office at the date of the annual report;
the names of the directors considered by the
board to constitute independent directors and
the company’s materiality thresholds;
the existence of any of the relationships listed
in Box 2.1 and an explanation of why the board
considers a director to be independent,
notwithstanding the existence of those
relationships;
a statement as to whether there is a procedure
agreed by the board for directors to take
independent professional advice at the expense
of the company;
a statement as to the mix of skills and diversity
for which the board of directors is looking to
achieve in membership of the board;
the period of office held by each director in
office at the date of the annual report;
the names of members of the nomination
committee and their attendance at meetings of
the committee;
whether a performance evaluation for the
board, its committees and directors has taken
place in the reporting period and whether it was
in accordance with the process disclosed;
an explanation of any departures from
Recommendations 2.1, 2.2, 2.3, 2.4, 2.5 or 2.6.
The following material should be made publicly
available, ideally by posting it to the company’s
website in a clearly marked corporate governance
section:
a description of the procedure for the selection
and appointment of new directors and the re‐
election of incumbent directors;
the charter of the nomination committee or a
summary of the role, rights, responsibilities and
membership requirements for that committee;
the board’s policy for the nomination and
appointment of directors.
Refer to the following sections:
Board skills and experience section of this
Statement on page 15
Refer to Directors’ resumes section of the Directors’
Report on pages 36 to 38
Refer to the Independence section of this Statement on
page 13
Refer to the following sections of this Statement:
Independence on page 13
Table assessing the independence of each Director
on page 14
Refer to the Table detailing tenure provisions on
page 16
Refer to the Board skills and experience section of this
Statement on page 15
Refer to the Table assessing the independence of each
Director on page 14
Refer to the following sections of this Statement:
Table detailing Director attendance at Board and
Board Committee meetings held during the 2013
Financial Year on page 18
Table detailing the Remuneration and Nominations
Committee membership and role on page 22
Refer to the Performance review section of this
Statement on page 16
Refer to the Independence section of this Statement on
page 13
Our procedures are disclosed in this Statement and can
be found on our website at:
www.leighton.com.au/investor‐and‐media‐
centre/publications
Our Remuneration and Nominations Committee
Charter can be found on our website at:
www.leighton.com.au/our‐approach/board‐and‐
governance/corporate‐governance‐approach
Although we do not have a specific Board policy for the
nomination and appointment of Directors, this
Statement sets out the Board’s principles in this regard
and can be found on our website at:
www.leighton.com.au/investor‐and‐media‐
centre/publications
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Part comply
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
30
30
ASX Principles and Recommendations
Reference
Principle 3
Promote ethical and responsible decision‐making
Compliance
(Y/N)
Refer to the following sections of this Statement:
Ethics and Compliance Committee on page 20
Approach to ethics and compliance on page 20
Ethical and responsible decision‐making on page 20
Code of Business Conduct on page 20
Promotion of ethical and responsible decision‐making
throughout the Group on page 21
Refer to the Diversity section of this Statement on page 26
Refer to the following sections of this Statement:
Diversity on page 26
Gender targets and progress on page 27
Refer to the Table showing female participation across the
Group on page 27
Y
Y
Y
Y
N/A
N/A
3.1
3.2
3.3
3.4
3.5
Establish a code of conduct and disclose the
code or a summary of the code as to:
the practices necessary to maintain
confidence in the company’s integrity;
the practices necessary to take into account
their legal obligations and the reasonable
expectations of their stakeholders; and
the responsibility and accountability of
individuals for reporting and investigating
reports of unethical practices.
Establish a policy concerning diversity and
disclose the policy or a summary of that policy.
Disclose in each annual report the measurable
objectives for achieving gender diversity set by
the board in accordance with the diversity policy
and progress towards achieving them.
Disclose in each annual report the proportion of
women employees in the whole organisation,
women in senior executive positions and women
on the board.
An explanation of any departure from
Recommendations 3.1, 3.2, 3.3, 3.4 or 3.5 should
be included in the corporate governance
statement in the annual report.
The following material should be made publicly
available, ideally by posting it to the company’s
website in a clearly marked corporate
governance section:
any applicable code of conduct or a
summary; and
the diversity policy or a summary of its main
provisions.
Principle 4
Safeguard integrity in financial reporting
4.1
Establish an audit committee.
Our Code of Business Conduct and Strength through
Diversity Policy can be found on our website at:
www.leighton.com.au/our‐approach/board‐and‐
governance/group‐policies
Refer to the following sections of this Statement:
Board Committees on page 17
Audit Committee on page 19
Table detailing the membership and the role of the
Audit Committee during the 2013 Financial Year on
page 19
Refer to the following sections of this Statement:
Table detailing the membership and the role of the
Audit Committee during the 2013 Financial Year on
page 19
Y
Y
Y
Y
Y
4.2
4.3
Structure the audit committee so that it:
consists only of non‐executive directors;
consists of a majority of independent
directors;
is chaired by an independent chair, who is
Table assessing the independence of each Director on
not chair of the board; and
has at least three members.
The audit committee should have a formal
charter.
page 14
Refer to the Board Committees section of this Statement
on page 17
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
CORPORATE GOVERNANCE STATEMENT
continued
ANNUAL REPORT ����
31
31
ASX Principles and Recommendations
Reference
Compliance
(Y/N)
4.4
Companies should provide the following
information in the corporate governance
statement in the annual report:
the names and qualifications of those
appointed to the audit committee and their
attendance at meetings of the committee;
the number of meetings of the audit
committee;
explanation of any departures from
Recommendations 4.1, 4.2, 4.3 or 4.4.
The following material should be made publicly
available, ideally by posting it to the company’s
website in a clearly marked corporate
governance section:
the audit committee charter;
information on procedures for the selection
and appointment of the external auditor,
and for the rotation of external audit
engagement partners.
Refer to pages 36 to 38 of this Annual Report regarding
qualifications, and the following sections of this
Statement:
Table detailing Director attendance at Board and
Board Committee meetings held during the 2013
Financial Year on page 18
Table detailing the membership and the role of the
Audit Committee during the 2013 Financial Year on
page 19
Refer to the Table detailing Director attendance at Board
and Board Committee meetings held during the 2013
Financial Year on page 18
N/A
Our Audit Committee Charter can be found on our website
at: www.leighton.com.au/our‐approach/board‐and‐
governance/corporate‐governance‐approach
Refer to the External auditor section of this Statement on
page 19
Principle 5 Make timely and balanced disclosure
5.1
5.2
Establish written policies designed to ensure
compliance with ASX Listing Rule disclosure
requirements and to ensure accountability at a
senior executive level for that compliance and
disclose those policies or a summary of those
policies.
An explanation of any departures from
Recommendations 5.1 or 5.2 should be included
in the corporate governance statement in the
annual report.
The policies or a summary of those policies
designed to guide compliance with Listing Rule
disclosure requirements should be made publicly
available, ideally by posting them to the
company’s website in a clearly marked corporate
governance section.
Refer to the following sections of this Statement:
Corporate governance model on page 9
Market disclosure on page 26
N/A
Our Market Disclosure and Communications Framework
can be found on our website at:
www.leighton.com.au/our‐approach/board‐and‐
governance/group‐policies
Y
Y
N/A
Y
Y
Y
N/A
Y
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
32
32
Compliance
(Y/N)
Y
N/A
Y
Y
Y
Y
ASX Principles and Recommendations
Reference
Principle 6
Respect the rights of shareholders
6.1
6.2
Design a communications policy for promoting
effective communication with shareholders and
encouraging their participation at general
meetings and disclose their policy or a summary
of that policy.
An explanation of any departure from
Recommendations 6.1 or 6.2 should be included
in the corporate governance statement in the
annual report.
The company should describe how it will
communicate with its shareholders publicly,
ideally by posting this information on the
company’s website in a clearly marked corporate
governance section.
Principle 7
Recognise and manage risk
Refer to the following sections of this Statement:
Stakeholder communication on page 26
Participation at AGMs on page 26
N/A
Our Group Policy for Shareholder Communications can be
found on our website at: www.leighton.com.au/our‐
approach/board‐and‐governance/group‐policies
7.1
7.2
7.3
7.4
Establish policies for the oversight and
management of material business risks and
disclose a summary of those policies.
The board should require management to design
and implement the risk management and
internal control system to manage the
company’s material business risks and report to
it on whether those risks are being managed
effectively. The board should disclose that
management has reported to it as to the
effectiveness of the company’s management of
its material business risks.
The board should disclose whether it has
received assurance from the chief executive
officer (or equivalent) and the chief financial
officer (or equivalent) that the declaration
provided in accordance with section 295A of the
Corporations Act is founded on a sound system
of risk management and internal control and
that the system is operating effectively in all
material respects in relation to financial
reporting risks.
The following material should be included in the
corporate governance statement in the annual
report:
an explanation of any departures from
Recommendations 7.1, 7.2, 7.3 or 7.4;
whether the board has received the report
from management under Recommendation
7.2;
whether the board has received assurance
from the chief executive officer (or
equivalent) and the chief financial officer (or
equivalent) under Recommendation 7.3.
The following material should be made publicly
available, ideally by posting it to the company’s
website in a clearly marked corporate
governance section:
a summary of the company’s policies on risk
oversight and management of material
business risks.
Refer to the following sections of this Statement:
Risk fundamentals on page 24
Risk management framework on page 24
Refer to the following sections of this Statement:
Risk management framework on page 24
Risk oversight on page 25
Refer to the CEO and CFO assurance section of this
Statement on page 25
N/A
Refer to the Risk oversight section of this Statement on
page 25
Refer to the CEO and CFO assurance section of this
Statement on page 25
N/A
Y
Y
Refer to the Risk management section of our website at:
www.leighton.com.au/our‐approach/risk‐management
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
CORPORATE GOVERNANCE STATEMENT
continued
ASX Principles and Recommendations
Reference
Principle 8
Remunerate fairly and responsibly
ANNUAL REPORT ����
33
33
Compliance
(Y/N)
8.1
8.2
8.3
8.4
Establish a remuneration committee.
The remuneration committee should be
structured so that it:
consists of a majority of independent
directors;
is chaired by an independent chair; and
has at least three members.
Clearly distinguish the structure of non‐executive
directors’ remuneration from that of executive
directors and senior executives.
The following material or a clear cross reference
to the location of the material should be
included in the corporate governance statement
in the annual report:
the names of the members of the
remuneration committee and their
attendance at meetings of the committee;
the existence and terms of any schemes for
retirement benefits, other than
superannuation, for non‐executive directors;
an explanation of any departures from
Recommendations 8.1, 8.2, 8.3 or 8.4.
The following material should be made publicly
available, ideally by posting it to the company’s
website in a clearly marked corporate
governance section:
the charter of the remuneration committee
or a summary of the role, rights,
responsibilities and membership
requirements for that committee;
a summary of the company’s policy on
prohibiting entering into transactions in
associated products which limit the
economic risk of participating in unvested
entitlements under any equity‐based
remuneration schemes.
Refer to the following sections of this Statement:
Board Committees on page 17
Remuneration and Nominations Committee on page 22
Refer to the following sections of this Statement:
Table detailing the membership and the role of the
Remuneration and Nominations Committee during the
2013 Financial Year on page 22
Table assessing the independence of each Director on
page 14
Refer to the Comparison of remuneration structures
section of this Statement on page 23
Y
Y
Y
Refer to the following sections of this Statement:
Table detailing the membership and the role of the
Remuneration and Nominations Committee during the
2013 Financial Year on page 22
Table detailing Director attendance at Board and
Board Committee meetings held during the 2013
Financial Year on page 18
Refer to the Comparison of remuneration structures
section of this Statement on page 23
N/A
Our Remuneration and Nominations Committee Charter
can be found on our website at:
www.leighton.com.au/our‐approach/board‐and‐
governance/corporate‐governance‐approach
Our Securities Trading Policy can be found on our website
at: www.leighton.com.au/our‐approach/board‐and‐
governance/group‐policies
N/A
Y
Y
Leighton Holdings Limited Annual Report 2013
Leighton Holdings Limited Annual Report 2013
34
34
Directors’ Report
Leighton Holdings Limited Annual Report 2013 LEIGHTON HOLDINGS LIMITED
Directors’ Report
TABLE OF CONTENTS
Directors’ resumes
Alternate Directors’ resumes
Company Secretary’s resume
Retired Directors during or since the 2013 Financial Year
Board meetings
Directors and Directors’ interests
Director and senior executive remuneration
CEO/CFO declaration
Principal activities
Dividends
Events after the end of the 2013 Financial Year
Likely developments
Environmental regulation
Review of operations and financial results
Significant changes
Leighton Senior Executive Option Plan
Interests arising from employee incentive schemes
Audit
Indemnity for Group Officers and Auditors
Insurance for Group Officers
Non‐audit services
Lead Auditor’s independence declaration under section 307C of the Corporations Act
Rounding off of amounts
Operating and Financial Review
Financial highlights
Profit and loss
Balance sheet
Strategic imperatives
Operational review by market
Risk management
The macro operating environment
Remuneration Report (Audited)
ANNUAL REPORT ����
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35
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45
63
Leighton Holdings Limited Annual Report 2013
ANNUAL REPORT ����
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36
ROBERT DOUGLAS HUMPHRIS OAM (71)
Chairman
ARSM, BSc (Eng) (Hons), CEng, FIMMM, FAIMM
An independent Non‐executive Director since September 2004.
Elected Chairman on 24 March 2013. Chairman of the Advisory
Board of Leighton Contractors and a member of the Advisory Board
of Leighton Asia, India and Offshore since November 2012.
Mr Humphris OAM is an Honours graduate in Mining Engineering
from the Royal School of Mines, Imperial College, London
University. Chairman of Ampcontrol Pty Limited. Former Managing
Director of Peabody Resources Pty Limited (previously Costain
Australia Limited). Former Chairman of Eroc Holdings Pty Limited,
New South Wales Mineral Council, Australian Coal Association and
Newcastle Coal Shippers Limited. Former Director of Australian
Coal Research Limited and Port Waratah Coal Services Limited.
Former Director of Leighton Contractors from February 2012 to
November 2012, former Director of Leighton Asia from November
2011 to September 2012, and former Director of Leighton
International from September 2007 to November 2011.
Mr Humphris OAM is a former Director of the following other ASX
listed entity: Australian Infrastructure Fund Limited from August
2006 to May 2013.
PAULA JANE DWYER (53)
Deputy Chairman and Non‐executive Director
BCom, FCA, FAICD, FFin
An independent Non‐executive Director since January 2012.
Elected Deputy Chairman on 24 March 2013. A member of the
Advisory Board of John Holland Group since December 2012.
Ms Dwyer is a graduate of the University of Melbourne ‐ Bachelor
of Commerce. She is a Fellow of the Institute of Chartered
Accountants in Australia, the Australian Institute of Company
Directors and a Senior Fellow of the Financial Services Institute of
Australasia. Ms Dwyer had an executive career in finance, holding
senior positions in investment management, investment banking
and chartered accounting with Ord Minnett (now JP Morgan) and
PricewaterhouseCoopers. Ms Dwyer is a member of The Takeovers
Panel, a Director of Lion Pty Ltd (since 2012), a member of the Kirin
Holdings International Advisory Board (since 2012), a Board
member of the Faculty of Business and Economics at the University
of Melbourne and a Member of the ASIC External Advisory Panel.
Ms Dwyer was formerly a Director of Suncorp Group Limited (from
2007 to 2012), Foster’s Group Limited (2011), Healthscope Limited
(2010) and Astro Japan Property Group Limited (2005 to 2011).
Ms Dwyer is a Director of the following other ASX listed entities:
Chairman of Tabcorp Holdings Limited since 2011 (Director since
2005), and Director of Australia and New Zealand Banking Group
Limited since 2012.
LEIGHTON HOLDINGS LIMITED
The Directors of Leighton Holdings Limited (the company) present
their report for the financial year ended 31 December 2013 (2013
Financial Year) in respect of the company and certain entities it
controlled (together with the company, the Group). This Directors’
Report has been prepared in accordance with the requirements of
Division 1 of Part 2M.3 of the Corporations Act 2001 (Cth)
(Corporations Act) and is dated 20 February 2014.
DIRECTORS’ RESUMES
The Directors during or at the end of the 2013 Financial Year are:
HAMISH GORDON TYRWHITT (50)
Managing Director and Chief Executive Officer (CEO)
BEng (Civil), FIE Aust, CPEng, MemIEHK, FTSE
An Executive Director and CEO since August 2011 and a Director of
each of the Group's Operating Companies. Mr Tyrwhitt started his
28 year career with the Leighton Group at John Holland and
subsequently worked for Leighton Contractors and Leighton Asia.
He was appointed Managing Director of Leighton Asia in 2007 and
in 2011 was given responsibility for the Indian and Offshore
operations of the Group. Much of his career has been in Asia
working across the region in the building, mining and infrastructure
sectors.
Mr Tyrwhitt holds a Bachelor of Engineering (Civil) from the
University of Western Australia. He is a Fellow of the Institution of
Engineers Australia, and a Fellow of the Australian Academy of
Technological Sciences and Engineering.
Mr Tyrwhitt is a Member of the Advisory Board of Infrastructure
Partnerships Australia, a Member of the College of Civil Engineers
Australia, and a Member of the Hong Kong Institution of Engineers.
He is also a Governor of the World Economic Forum’s (WEF)
Infrastructure and Urbanisation Group where he has a leading role
in driving the WEF’s Strategic Infrastructure Initiative. He was also
recently appointed to the Leadership Group of the Business 20, the
business advisory group for the G20.
PETER ALLAN GREGG (59)
Executive Director, Deputy Chief Executive Officer and Chief
Financial Officer (DCEO&CFO)
BEc, FFTA, MAICD
An Executive Director since December 2010 (formerly an
independent Non‐executive Director from July 2006 to October
2009), Deputy Chief Executive Officer since April 2013, and a
Director of each of the Group’s Operating Companies. A Director of
Leighton India Contractors Private Limited since April 2011 and an
Alternate Director of Habtoor Leighton Group for Mr Hamish
Tyrwhitt since November 2011. Mr Gregg holds a Bachelor of
Economics degree from the University of Queensland. Formerly a
Director of Qantas Airways Limited and Chief Financial Officer (CFO)
and Executive General Manager Strategy for the Qantas Group, he
was appointed CFO of Leighton Holdings in October 2009. Mr Gregg
is a Fellow of the Finance and Treasury Association, a Member of
the Australian Institute of Company Directors and recently retired
as a Commissioner of the Australian Rugby League Commission at
the end of February 2014.
Mr Gregg is a former Director of the following other ASX listed
entities: Skilled Group Limited and Skilled Rail Services Pty Ltd from
March 2009 to February 2011.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
DIRECTORS’ REPORT continued
DAVID PAUL ROBINSON (58)
Non‐executive Director
MCom, BEc, FCA, CTA
A Non‐executive Director since December 1990. A member of the
Thiess Advisory Board since June 2013. Alternate Director for
Mr Peter Sassenfeld since November 2011. A graduate of the
University of Sydney. Registered company auditor and tax agent. A
chartered accountant and principal of the firm Harveys Chartered
Accountants in Sydney. Adviser to local and overseas companies
with interests in Australia. Participates in construction industry
affairs. Chairman of Trustees of Mary Aikenhead Ministries, the
responsible entity for the health, aged care and education works of
the Sisters of Charity in Australia. A Director of HOCHTIEF Australia
Holdings Limited. A former Director of Leighton Properties from
May 2000 to August 2012.
Mr Robinson was formerly a Director of the ASX listed entity Valad
Property Group (from February 2010 to August 2011).
PETER‐WILHELM SASSENFELD (47)
Non‐executive Director
MBA
A Non‐executive Director since November 2011. Mr Sassenfeld
joined HOCHTIEF AG in November 2011 as the Chief Financial
Officer (CFO) and prior to this role he was CFO of Ferrostaal AG.
Mr Sassenfeld has also worked as CFO at Krauss Maffei AG and in
senior finance roles at Bayer AG and the Mannesmann Group.
Mr Sassenfeld graduated in 1991 from the University of Saarland,
Germany with an MBA (Diplom‐Kaufmann).
MARCELINO FERNÁNDEZ VERDES (58)
Non‐executive Director
A Non‐executive Director since October 2012. Member of the
Executive Board and Chief Executive Officer (CEO) of HOCHTIEF AG
(HOCHTIEF) in Essen since November 2012. Former Chief Operating
Officer of HOCHTIEF from April to November 2012. Mr Fernández
Verdes studied civil engineering at the University of Barcelona and
has held a variety of positions in the construction industry since
1984. In 1997, he became General Manager of ACS Proyectos,
Obras y Construcciónes, and then took over as Chairman and CEO
in 2000. Following the merger between Grupo ACS and Grupo
Dragados in 2003, Mr Fernández Verdes took office as Chairman
and CEO of Dragados S.A. in 2004. He served as Chairman and CEO
of Construction, Environment and Concessions at ACS Actividades
de Construcción y Servicios S.A. from 2006. Mr Fernández Verdes
was appointed to the Executive Committee of Grupo ACS in 2000,
and to the Board of ACS Servicios y Concesiones, S.L. (Chairman and
CEO) in 2006.
ANNUAL REPORT ����
37
37
RUSSELL ALLAN HIGGINS AO (64)
Non‐executive Director
BEc, FAICD
An independent Non‐executive Director since June 2013.
Mr Higgins AO has extensive experience both locally and
internationally in the resources and energy sectors and in economic
and fiscal policy.
Mr Higgins AO is a Director of the St James Ethics Foundation (since
2010). He is a former Chairman of the Global Carbon Capture and
Storage Institute, the Snowy Hydro‐Electric Scheme, the CSIRO’s
Energy Transformed Flagship Advisory Committee and the
Australian Government’s Management Improvement Advisory
Committee. He is a former Director of Ricegrowers Limited (trading
as SunRice), Australian Biodiesel Group Limited, Export Finance and
Insurance Corporation, CSIRO, Austrade, the Australian Industry
and Development Corporation, the Australian Tourist Commission
and the Australian Sports Commission as well as a member of the
Prime Ministerial Task Group on Emissions Trading (2006–7) and a
former member of Australian Government’s Joint Economic
Forecasting Group.
During his executive career he was Secretary and Chief Executive
Officer of the Department of Industry, Science and Resources from
1997 to 2002 and Executive Chairman of the Australian
Government’s Energy Task Force from 2003 to 2004.
Mr Higgins AO is a Director of the following other ASX listed
entities: APA Group (since 2004), Telstra Corporation Limited (since
2009) and Argo Investments Limited (since 2011).
MICHAEL JAMES HUTCHINSON (67)
Non‐executive Director
BSc (Civ Eng Hons 1)
An independent Non‐executive Director since June 2013.
Mr Hutchinson is a Chartered Professional Engineer in the United
Kingdom and Australia. He holds a first class honours degree in civil
engineering from the University of Newcastle upon Tyne, United
Kingdom and undertook postgraduate studies at Harvard Business
School. He was formerly an international transport engineering
consultant specialising in the assessment and planning of public
sector infrastructure projects in Europe, Asia, Africa and Australia.
He has extensive experience in the transport and communications
sectors, including as a senior official with the Australian
Government in the Transport, Communications, and Finance
portfolios. From 1996 to 1999 he was Chief Executive of the Federal
Government’s Office of Asset Sales, supervising an accelerated
$40 billion privatisation program. Mr Hutchinson is a former
Director of Hastings Funds Management Ltd, Westpac Funds
Management Ltd, Epic Energy Limited, Pacific Hydro Ltd, OTC Ltd,
the Australian Postal Corporation, Australian Infrastructure Fund
Ltd, and the Australian Graduate School of Management Ltd.
Mr Hutchinson is a Director of the following other ASX listed entity:
Chairman of Infigen Energy Group (since 2010) and a Director
(since 2009).
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
VICKKI ANNE MCFADDEN (54)
Non‐executive Director
BComm, LLB
An independent Non‐executive Director since June 2013.
Ms McFadden has a background in law and finance, with
experience in corporate finance transactions and the skilled labour
market across most industry sectors. Previously, Ms McFadden was
employed as a Director/Principal of Centaurus Corporate Finance
and Managing Director, Investment Banking, at Merrill Lynch in
Australia.
Ms McFadden is President (appointed 2013) of The Takeovers
Panel and has been a member of the Panel since 2008. She is an
experienced Company Director and is the Non‐executive Chairman
of Skilled Group and a Director (appointed 2011) of The Myer
Family Company Holdings, The Myer Family Investments, Sidney
Myer Custodian and The Myer Family Company. She is a member
(appointed 2000) of the Advisory Board and Executive Committee
of The Australian School of Business, the University of New South
Wales.
Ms McFadden is a Director of the following other ASX listed entity:
Chairman of Skilled Group (since 2010) and a Director since 2005.
ALTERNATE DIRECTORS’ RESUMES
PEDRO LÓPEZ JIMÉNEZ (71)
Alternate Director
Mr López Jiménez received a degree in civil engineering in 1965 and
an MBA by IESE Business School, Madrid, 1996.
During his career Mr López Jiménez has held the following
positions: he was previously an Alternate Director for Mr Peter
Sassenfeld since June 2013 on the Leighton Holdings Board,
General Director of Ports (Ministry of Public Works); Secretary of
State of Urban Affairs and Public Works; Board Member of INI
(State Owned Companies Holding); Manager of the Thermal Plant
Constructions in Hidroelectrica Española; Chief Executive Officer
(CEO) of Empresarios Agrupados (Thermal and Nuclear Plants
Engineering and Construction management); Chairman and CEO of
ENDESA; Board Member of UNION ELECTRICA and ENHER;
Chairman of UNION FENOSA; Vice‐Chairman of INDRA S.A.; Board
Member of CEPSA; Board Member of ENCE S.A and Board Member
of KELLER Group, PLC. Additionally, he was Founder of CEOE
(Confederation of Spanish Industries) and a member of its first
Executive Committee; Founder and first Chairman of FEIE
(Federation of Spanish Utility Companies) and Board Member of
Club Español de Energia (Spanish Energy Association).
As at 31 December 2013, Mr López Jiménez was Chairman of
TERRATEST Group, Board Member and Member of the Executive
Committee of ACS, S.A., since 1989. Chairman‐in‐Office of ACS
Servicios y Concesiones S.A., Vice‐Chairman of ACS Servicios,
Comunicaciones y Energía, Chairman‐in‐Office of DRAGADOS S.A.
and Board Member of GHESA since 1971. Member of the
Supervisory Board of HOCHTIEF AG since May 2011 and member of
the Executive Committee, the Strategy Committee, the Nomination
Committee and the Human Resources Committee.
Mr López Jiménez was also a Board Member of the Malaga Picasso
Museum, Board Member of Álcala University, Board Member of
the European Club Association and Vice‐Chairman of Real Madrid
Football Club. He was awarded the Grand Cross of Isabel La
Católica.
ANNUAL REPORT ����
38
38
ROBERT LESLIE SEIDLER AM (65)
Alternate Director
LLB
An Alternate Director for Mr Marcelino Fernández Verdes since
June 2013. Previously an Alternate Director for Mr David Robinson
from November 2012 to June 2013, for Dr Frank Stieler from May
2011 to November 2012, for Mr Manfred Wennemer from
November 2011 to October 2012, for Dr Herbert Lütkestratkötter
from July 2007 to May 2011 and for Dr Hans‐Peter Keitel from
November 2003 to July 2007. The Chairman of the Advisory Boards
of Leighton Properties and Leighton Asia, India and Offshore since
November 2012. A graduate of the University of Sydney. Former
partner of Blake Dawson (now Ashurst). Vice‐President of Australia
Japan Business Cooperation Committee and Chairman of Hunter
Philip Japan Limited. A former member of the Australian
Government’s Corporations and Markets Advisory Committee, and
the New South Wales Government’s Multicultural Business
Advisory Panel, and currently a member of the New South Wales
Government’s Export and Investment Advisory Panel. A Director of
HOCHTIEF Australia Holdings Limited since November 2011. The
former Chairman of Leighton Asia from November 2011
to September 2012 and a former Director of Leighton Properties
from May 2010 to August 2012. A former Director of Leighton
International from November 2009 to November 2011.
Mr Seidler AM was formerly a Director of the ASX listed entity
Valad Funds Management Limited from February 2005 to August
2011.
COMPANY SECRETARY’S RESUME
VANESSA ROBYN REES (44)
Group Company Secretary
Dip Law, FCIS
Ms Rees was appointed Group Company Secretary of Leighton
Holdings in August 2013. She was appointed Company Secretary of
the company in April 2009. She has a financial and legal background
and has previously held various listed company secretarial positions
with Ascalon Capital Managers Limited and Investa Property Group.
Ms Rees is a Fellow of the Governance Institute of Australia
(formerly the Chartered Secretaries Australia) and is on the
Governance Institute of Australia’s Legislative Review and New
South Wales Professional Development Committees.
RETIRED DIRECTORS DURING OR SINCE THE 2013
FINANCIAL YEAR
STEPHEN PAUL JOHNS (66)
Chairman
An independent Non‐executive Director from December 2009.
Elected Chairman in August 2011. Resigned as Chairman and
Director on 22 March 2013.
IAN JOHN MACFARLANE AC (67)
Non‐executive Director
An independent Non‐executive Director from June 2007. Resigned
as a Director on 22 March 2013.
WAYNE GEOFFREY OSBORN (62)
Non‐executive Director
An independent Non‐executive Director from November 2008.
Resigned as a Director on 22 March 2013.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
DIRECTORS’ REPORT continued
ANNUAL REPORT ����
39
39
BOARD MEETINGS
The number of Board and Committee meetings held, and the number of meetings attended by each Director, during the 2013 Financial Year are
set out in the table below.
Director attendance at Board and Board Committee meetings during the 2013 Financial Year
Board
Special
Board
Committee
One#
Special Board
Committee
Two~
Robert D Humphris1
OAM
Paula J Dwyer
Hamish G Tyrwhitt2
Peter A Gregg
Marcelino Fernández
Verdes
Russell A Higgins AO3
Michael J Hutchinson
Vickki A McFadden
David P Robinson
Peter W Sassenfeld
Alternate Directors
Pedro López Jiménez
Robert L Seidler AM
Former Directors
Stephen P Johns
Ian J Macfarlane AC
Wayne G Osborn
H
12
12
12
12
12
6
6
6
12
12
‐
‐
2
2
2
A
12
12
12
12
12
6
6
5
11
11
8*
12*
2
2
2
H
‐
1
1
1
1
‐
‐
‐
1
‐
‐
‐
1
‐
‐
A
‐
1
1
1
1
‐
‐
‐
1
‐
‐
1*
1
‐
‐
H
6
6
6
‐
‐
‐
‐
‐
6
‐
‐
6
‐
‐
‐
A
4
6
6
‐
‐
‐
‐
‐
6
‐
‐
6
‐
‐
‐
Special
Board
Committee
Three^
A
H
1
1
‐
‐
‐
‐
‐
‐
1
1
‐
‐
1
‐
‐
‐
‐
1+
1+
‐
‐
‐
1
1
‐
‐
1
‐
‐
‐
Audit
Committee
Special Audit
Committee°
Ethics and
Compliance
Committee
H
2
9
‐
‐
‐
5
‐
5
9
5
‐
‐
2
‐
‐
A
2
9
9+
9+
‐
5
‐
5
9
5
‐
‐
2
‐
‐
H
‐
1
‐
‐
1
‐
1
1
1
‐
‐
‐
‐
‐
A
‐
1
1+
1+
‐
1
‐
0
1
1
‐
‐
‐
‐
‐
H
6
‐
6
‐
0
4
4
‐
‐
‐
‐
6
‐
‐
1
A
5
‐
6
‐
0
4
4
‐
‐
‐
‐
6
‐
‐
1
Remuneration
and
Nominations
Committee
A
H
7
7
Tender
Review and
Risk
Committee
A
7
H
8
10
‐
‐
10
‐
‐
6
‐
‐
‐
10
3
‐
3
10
9+
‐
8
‐
‐
5
‐
‐
‐
10
3
‐
3
4
6
‐
0
0
4
‐
‐
0
4
8
‐
2
2
4
6
8+
0
0
4
‐
‐
0
3
7
‐
2
2
H
A
#
~
^
°
*
+
1
2
3
Reflects the number of meetings held during the period the Director/Alternate Director was a member of the Board and/or Committee.
Reflects the number of meetings attended by the Director during the period the Director/Alternate Director was a member of the Board and/or
Committee.
Held to approve the results for the financial year ended 31 December 2012.
Held to oversee the replenishment of the Board.
Held to consider strategic options.
Held to consider fraud analytics.
Reflects the number of meetings attended by the Alternate Director in their capacity as an Alternate Director or as a standing invitee of the Board
and/or Committee.
Reflects the number of meetings attended by the Director as a standing invitee of the Committee.
In addition to the information supplied in the table above, Mr Humphris OAM also attended a further five Audit Committee meetings as a standing
invitee.
In addition to the information supplied in the table above, Mr Tyrwhitt also attended a further two Tender Review and Risk Committee meetings as a
standing invitee.
In addition to the information supplied in the table above, Mr Higgins AO also attended four Tender Review and Risk Committee meetings as a
standing invitee.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
40
40
DIRECTORS AND DIRECTORS’ INTERESTS
The Directors in office at the date of this Directors’ Report are listed in the table below together with details of their relevant interest (and
related party interests) in the securities of Leighton Holdings at that date.
Name
Robert D Humphris OAM
Paula J Dwyer
Hamish G Tyrwhitt
Peter A Gregg
Marcelino Fernández Verdes4
Russell A Higgins AO
Michael J Hutchinson
Vickki A McFadden
David P Robinson
Peter W Sassenfeld5
Relevant interest
in ordinary shares
held
30,000
Related party
interests in
ordinary shares
‐
Total interest in
ordinary shares
held
30,000
5,000
1,110
3,652
2,745
6,090
5,000
‐
1,489
1,858
‐
1,000
‐
‐
‐
‐
‐
‐
‐
5,000
2,110
3,652
2,745
6,090
5,000
‐
1,489
1,858
No. of options
held
No. of share
rights held
‐
‐
80,0001
‐
‐
‐
‐
‐
‐
‐
‐
‐
244,0952
215,8253
‐
‐
‐
‐
‐
‐
1
2
3
4
5
Further details about the options held by Mr Tyrwhitt are set out in the Remuneration Report on page 86.
Further details about the share rights held by Mr Tyrwhitt are set out in the Remuneration Report on page 87.
Further details about the share rights held by Mr Gregg are set out in the Remuneration Report on pages 86 to 87.
Robert L Seidler AM is the Alternate Director for Mr Fernández Verdes and holds 100 ordinary shares, nil options and nil share rights.
Pedro López Jiménez is the Alternate Director for Mr Sassenfeld and holds 1,192 ordinary shares, nil options and nil share rights.
DIRECTOR AND SENIOR EXECUTIVE REMUNERATION
Details of our remuneration policy and remuneration paid in
respect of the Group’s Key Management Personnel are detailed in
the Remuneration Report on pages 63 to 88.
CEO/CFO DECLARATION
The Chief Executive Officer (CEO) and Chief Financial Officer (CFO)
have given a declaration to the Board concerning the Group’s
financial statements in accordance with section 295A of the
Corporations Act and Recommendation 7.3 of the Australian
Securities Exchange (ASX) Corporate Governance Council’s
Corporate Governance Principles and Recommendations.
PRINCIPAL ACTIVITIES
During the 2013 Financial Year there were no significant changes to
the nature of the Group’s principal activities, which were, and
continue to be, civil infrastructure, building construction, contract
mining, operations and maintenance and property development in
Australia and across selected geographies in Asia, the Middle East
and Africa.
DIVIDENDS
A final dividend of 60 cents per share, 50% franked, was announced
on 20 February 2014, and will be paid on 4 April 2014. An interim
dividend of 45 cents per share, 50% franked, was paid in October
2013, resulting in a total dividend of 105 cents per share for the
year.
EVENTS AFTER THE END OF THE 2013 FINANCIAL YEAR
The Directors are not aware of any specific developments not
outlined in this Annual Report that have arisen since the end of the
2013 Financial Year and that have or may have a significant effect
on the Group’s state of affairs, its operations or the results of those
operations in future financial years.
Note 42: Events subsequent to reporting date to the Financial
Report on page 200 outlines events that have occurred since the
end of the 2013 Financial Year, and states that subsequent to the
reporting date the Group:
declared a 50% franked final dividend of 60 cents per share;
and
on 7 February 2014, $110.0 million was paid to Welspun Infra
Projects Private Limited in relation to the deferred
consideration on the acquisition of the remaining 39.9%
interest in Leighton Welspun Contractors Private Limited
(LWIN).
LIKELY DEVELOPMENTS
Likely developments in the operations of the Group in future
financial years, and their anticipated results, are referred to in the
Operating and Financial Review on pages 45 to 62.
This Annual Report contains the information that shareholders
would reasonably require to make an informed assessment of the
Group’s operations, financial position, business strategies,
environmental, social and governance performance, and prospects
for future financial years.
Leighton Holdings Limited Annual Report 2013
ANNUAL REPORT ����
41
41
SIGNIFICANT CHANGES
Significant changes in the state of affairs of the Group during the
2013 Financial Year were as follows:
the sale of the Group’s telecommunications assets resulting in a
pre‐tax gain of $215 million ($115 million after tax);
the acquisition of the remaining 39.9% interest in LWIN for
$110 million resulting in a loss on acquisition of $78.3 million
($78.3 million after tax);
the acquisition of the remaining 50% interest in Silcar from
Siemens;
the payment of $200 million on the deferred equity
commitment in BrisConnections held by Thiess and John
Holland;
impairments of the Group’s property development and
property joint venture interests of Leighton Properties and
Devine of $81.2 million ($67.5 million after tax);
an impairment of property, plant and equipment in John
Holland’s Aviation Services business of $10 million ($7 million
after tax);
an impairment of $15 million ($15 million after tax) on the
equity accounted investment in associate Macmahon;
an impairment in the Group’s investment in Cross City Tunnel
of $18.5 million ($18.5 million after tax);
the active marketing of selected mining assets and associated
liabilities in Indonesia held for sale that is expected to complete
within one year, with the assets and associated liabilities now
classified as held for sale at 31 December 2013;
the entry into a syndicated cash advance facility in June 2013 of
$1 billion for a term of three years; and
the declaration of a final dividend of 60 cents per share, 50%
franked, for the 2013 Financial Year on 20 February 2014,
which is payable on 4 April 2014.
Further details regarding these significant changes in the state of
affairs and the activities of the Group are provided throughout this
Annual Report.
LEIGHTON HOLDINGS LIMITED
DIRECTORS’ REPORT continued
ENVIRONMENTAL REGULATION
Under s299(1)(f) of the Corporations Act, an entity is required to
provide a summary of its environmental performance in terms of
compliance with Australian environmental regulations.
We understand that meeting and maintaining environmental
regulatory compliance is the minimum requirement for doing
business. We are committed to delivering our projects, services and
all our business activities in a manner that both respects the
environment and contributes to the sustainability of our business.
Our approach to environmental management is aligned to
international standards ISO 14001 in which our Operating
Companies maintain certification, and we set our internal
requirements above regulatory compliance.
Our commitment to respecting the environment starts at the
Board‐ and CEO‐level. The CEO sets the Group’s Environmental
Policy and oversees the Group’s environmental performance. The
Board, through the Ethics and Compliance Committee, oversees
both the Group’s environmental policy and performance.
Our Operating Companies report their environmental performance
quarterly, which is reviewed by the CEO and Board. The Group’s
annual environmental performance, which includes environmental
regulatory compliance, is disclosed within the Sustainability section
of our website.
For the 2013 Financial Year, there were no material regulatory
compliance breaches and the second lowest total number reported
since the 12 months to 30 June 2008. This is a remarkable
achievement and demonstrates our strong commitment to
respecting the environment that we share with the communities
where we operate.
Please refer to our website and the 2013 Sustainability Report for
further information regarding environmental governance and
performance.
REVIEW OF OPERATIONS AND FINANCIAL RESULTS
A review of the Group’s operations and financial results for the
2013 Financial Year is contained in the Operating and Financial
Review on pages 45 to 62.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
LEIGHTON SENIOR EXECUTIVE OPTION PLAN (LSEOP)
The LSEOP was approved by shareholders at the Annual General
Meeting (AGM) held in 2006. Options over shares in the company
were first granted under the LSEOP in 2006 and subsequently in
2008 and 2009 (2009 Options). Each option entitles the holder to
one fully‐paid ordinary share upon exercise (subject to the
satisfaction of exercise conditions). The total number of options
over unissued ordinary shares in the company outstanding under
the LSEOP at the date of this Directors’ Report is detailed in the
table below.
Number of executives participating
Date of grant
Exercise price
Expiry date
Original grant
On issue 13 Feb 20133
Exercised since 13 Feb 2013
Vested since 13 Feb 2013
Lapsed since 13 Feb 2013
On issue 20 Feb 2014
2009 Options
3231
4 May 2009
$18.872
4 May 2014
Number of options
4,833,500
3,953,500
(71,000)
‐
(57,500)
3,825,000
1
2
3
Original number of participants options were awarded to.
The LSEOP Rules approved by shareholders on 9 November
2006 require that, in the event of a pro rata issue of shares,
the exercise price of options on issue be reduced in
accordance with the ASX Listing Rules. With effect from 1 July
2011, the amended exercise price for 2009 Options granted
under the LSEOP is as follows:
Grant Date
Original
Exercise Price
Adjusted Exercise Price
due to 1:9 Entitlement
Offer 11 Apr 2011
$18.87
4 May 2009
$19.49
Date of the Directors’ Report contained in the 2012 Concise
Annual Report.
Details of the exercise conditions of options under the LSEOP are
contained in the Remuneration Report on page 85.
The names of the persons who currently hold options under the
LSEOP are entered in the Register of Options kept by the company
pursuant to section 170 of the Corporations Act.
These options do not entitle the holder to participate in any share
issue prior to exercise.
There are no unissued shares in the company under option as at
the date of this Directors’ Report, other than those issued under
the LSEOP referred to in the table on this page.
No options have been issued since the end of the 2013 Financial
Year over unissued shares in the company.
INTERESTS ARISING FROM EMPLOYEE INCENTIVE SCHEMES
The following table outlines the interests in the company arising
from employee incentive schemes (other than the LSEOP). There
are no other classes of rights at the date of this Directors’ Report.
Holders of these rights receive no voting rights and are not entitled
to participate in any share or rights issue made by the company.
ANNUAL REPORT ����
42
42
Employee
incentive
scheme
Long‐Term
Incentive plan
(LTI)1 – 2011
Award
Equity Incentive
Plan (EIP)
Type of
instrument
Number
on issue*
Performance
rights
28,850
Number
of
holders*
1
Performance
rights
Deferred
share rights2
1,274,762
677,692
99
67
*
1
2
As at 20 February 2014.
LTI awards were made in 2011 to the Executive Directors at
that time (being Peter Gregg and David Stewart) under the
terms of their Executive Service Agreements.
Deferred share rights have been used for one‐off share rights
granted to selected employees, in addition to the deferred
component of the 2012 Short‐Term Incentive award. See note
37: Employee benefits to the Financial Report on pages 164 to
171 for further details.
AUDIT
The declaration by the Group’s external auditor, Deloitte Touche
Tohmatsu (Deloitte), to the Directors in relation to the auditor’s
compliance with the independence requirements of the
Corporations Act and any applicable code of professional conduct
for external auditors is set out in the Lead Auditor’s independence
declaration under section 307C of the Corporations Act section of
this Directors’ Report on page 44.
No person who was an officer of the company during the 2013
Financial Year was a director or partner of the Group’s external
auditor at a time the Group’s external auditor conducted its audit.
INDEMNITY FOR GROUP OFFICERS AND AUDITORS
Constitution
Our Constitution includes indemnities in favour of persons who are,
or have been, an ‘Officer’ or auditor of the company.
‘Officer’ for this purpose means any Director or Secretary and
includes any other person who is concerned, or takes part, in the
management of the company as defined in our Constitution.
To the extent permitted by law, we indemnify every person who is
or has been:
an Officer against any liability to any person (other than the
company or a related entity) incurred while acting in that
capacity and in good faith; and
an Officer or auditor of the company against costs and
expenses incurred by that person in that capacity in
successfully defending legal proceedings and ancillary matters.
The current Directors and Group Company Secretary of the
company are set out in the Directors’ Report on pages 36 to 38 and
our Group executives are set out in this Annual Report on page 7.
Leighton Holdings Limited Annual Report 2013
ANNUAL REPORT ����
43
43
The insurance contracts entered into by the company prohibit
disclosure of the specific nature of the liabilities covered by the
insurance contracts and the amount of the premiums.
NON‐AUDIT SERVICES
Details of the amounts paid or payable to our external auditor,
Deloitte, for non‐audit services provided during the year to entities
within the Group are set out in the table below.
The Board has considered the position and, in accordance with the
advice received from the Audit Committee, is satisfied that the
provision of non‐audit services during the 2013 Financial Year is
compatible with the general standard of independence for auditors
imposed by the Corporations Act. The Board is satisfied that the
provision of non‐audit services by Deloitte, as set out below, did
not compromise the auditor independence requirements of the
Corporations Act for the following reasons:
all non‐audit services were reviewed by the Audit Committee
and the Committee believes that they do not impact the
impartiality and objectivity of Deloitte because of the nature of
the services provided during the 2013 Financial Year and the
quantum of the fees which relate to non‐audit advisory services
compared with the overall fees;
the Directors believe that none of the services undermine the
general principles relating to auditor independence, including
reviewing or auditing Deloitte’s own work, acting in a
management or decision‐making capacity for the Group, acting
as advocate for the Group or jointly sharing economic risk and
rewards; and
these assignments were carried out in accordance with the
Charter of External Auditor Independence.
The non‐audit services supplied to entities within the Group by
Deloitte and the amount paid or payable by type of non‐audit
service during the 2013 Financial Year are as follows:
Non‐audit services
Other assurance services
Taxation and other services
Total
Amount paid/payable
$’000
143
45
188
LEIGHTON HOLDINGS LIMITED
DIRECTORS’ REPORT continued
Directors' Deeds
Consistent with the shareholder approval obtained at the 1999
AGM, we have entered into a Deed of Indemnity, Insurance and
Access (Directors’ Deed) with current and former Directors. These
Directors’ Deeds formalise the arrangements between the
company and the Directors as to indemnities, insurance and access
to Board records. Under each Directors’ Deed, the company
indemnifies the Director to the extent permitted by law against any
liability (including liability for legal defence costs) incurred by the
Director as an Officer or former Officer of the company or any
Operating Company, or while acting at the request of the company
or any Operating Company as an Officer of a non‐controlled entity.
Deeds of Indemnity for certain Officers
The company has entered into Deeds of Indemnity with particular
Officers or former Officers of the company and Operating
Companies. These Deeds give similar indemnities in favour of those
Officers or former Officers in respect of liabilities incurred by the
Officers while acting as an Officer of the company or any Operating
Company, or while acting at the request of the company or any
Operating Company as an Officer of a non‐controlled entity.
The Officers who have the benefit of such a Deed of Indemnity are,
or were at the time, a Secretary of the company, Directors of an
Operating Company, or a General Manager or Senior Manager
within the Group.
The Board has recently resolved to extend the Deeds of Indemnity
to any person that is or becomes:
a Director, Secretary, General Counsel or an executive (in a role
that has been approved by the CEO, CFO or Secretary) of the
company, an Operating Company or a subsidiary of an
Operating Company;
a Director, Secretary or an executive (in a role that has been
approved by the CEO, CFO or Secretary) of a non‐controlled
entity at the request of the company or Operating Company; or
a member of an Advisory Board of an Operating Company.
No claims under the Constitution, Directors’ Deeds or Deeds of
Indemnity have been made against the company during or since
the end of the 2013 Financial Year.
INSURANCE FOR GROUP OFFICERS
During and since the end of the 2013 Financial Year, the company
has paid or agreed to pay premiums in respect of contracts insuring
persons who are or have been a Group Officer against certain
liabilities (including legal costs) incurred in that capacity. Group
Officer for this purpose means any Director or Secretary of
Leighton Holdings or any subsidiary and includes any other person
who is concerned, or takes part, in the management of the
company or any of its subsidiaries.
Under the Directors’ Deeds or Deeds of Indemnity described above,
the company has undertaken to the relevant Officer or former
Officer that it will insure the Officer against certain liabilities
incurred in their capacity as an Officer of the company or any
subsidiary or as an Officer of a non‐controlled entity where the
office is, or was, held at the request of the company or any
subsidiary.
Leighton Holdings Limited Annual Report 2013
ANNUAL REPORT ����
44
44
LEIGHTON HOLDINGS LIMITED
LEAD AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION
307C OF THE CORPORATIONS ACT
In accordance with section 307C of the Corporations Act 2001, I am
pleased to provide the following declaration of independence to
the directors of Leighton Holdings Limited.
As lead audit partner for the audit of the financial report of
Leighton Holdings Limited for the financial year ended
31 December 2013, I declare that to the best of my knowledge and
belief, there have been no contraventions of:
(i)
(ii)
the auditor independence requirements of the
Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to
the audit.
Yours faithfully
DELOITTE TOUCHE TOHMATSU
G Couttas
Partner
Chartered Accountants
Sydney, 20 February 2014
ROUNDING OFF OF AMOUNTS
As Leighton Holdings is a company of the kind referred to in ASIC
Class Order 98/100 dated 10 July 1998, the Directors have chosen
to round off amounts in this Directors’ Report and the
accompanying Financial Report to the nearest hundred thousand
dollars, unless otherwise indicated.
Leighton Holdings Limited Annual Report 2013
Leighton Holdings Limited Annual Report 2013
45
45
Operating and Financial
Review
Leighton Holdings Limited Annual Report 2013 LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
46
46
Operating and Financial Review
FINANCIAL HIGHLIGHTS
PROFIT OR LOSS ITEMS ($M)
Revenue ‐ Group
‐ Joint ventures and associates
Total revenue
Earnings Before Interest, Taxes, Depreciation, and
Amortisation (EBITDA)
Depreciation of property, plant and equipment
Amortisation of intangibles
Earnings Before Interest and Taxes (EBIT)
Finance costs
Profit/(loss) before tax
Income tax
Profit/(loss) for the year
(Profit)/loss attributable to non‐controlling interests
Net Profit After Tax (NPAT) (attributable to members)
Of which ‐ Underlying Net Profit After Tax (UNPAT)2
‐ Net gain/(loss) on non‐underlying items
Net margin (UNPAT to total revenue)
Interest cover (EBITDA to finance costs)
EARNINGS PER SHARE AND DIVIDEND PER SHARE (CENTS)
Earnings per ordinary share (basic)
Dividends per ordinary share
UNPAT dividend payout ratio
CASH FLOW ITEMS ($M)
Net cash from operating activities
Net capital expenditure
BALANCE SHEET ITEMS ($M)
Total shareholders’ equity
Total liabilities
Total assets
Cash and cash equivalents
Total borrowings (interest bearing liabilities)
Net debt
Operating leases
Gearing3
Gearing pre‐operating leases
Undrawn loan facilities (excluding Devine)
Available committed bonding capacity
WORK IN HAND ($M)4
Value of work in hand
New contracts, extensions, variations and FX
12 months to
31 Dec 2013
22,565
1,846
24,411
1,924
(905)
(28)
991
(255)
736
(267)
469
40
509
584
(75)
2.4%
7.6
12 months to
31 Dec 2013
150.9
105
61%
12 months to
31 Dec 2013
803
815
As at
31 Dec 2013
3,246
8,830
12,076
1,721
2,125
404
934
29.2%
11.1%
1,231
768
As at
31 Dec 2013
42,171
23,096
12 months to
31 Dec 20121
20,830
2,297
23,127
1,838
(1,034)
(24)
780
(214)
566
(124)
442
8
450
448
2
1.9%
8.6
12 months to
31 Dec 2012
133.5
80
60%
12 months to
31 Dec 20121
1,176
1,123
As at
31 Dec 20121
2,917
8,800
11,717
2,008
2,761
753
610
31.9%
20.5%
987
913
As at
31 Dec 2012
43,486
22,053
Movement
8%
(20)%
6%
5%
(12)%
17%
27%
19%
30%
115%
6%
400%
13%
30%
‐
‐
(12)%
Movement
13%
31%
‐
Movement
(32)%
(27)%
Movement
11%
‐
3%
(14)%
(23)%
(46)%
53%
‐
‐
25%
(16)%
Movement
(3)%
5%
1
2
3
4
Restated to include the impact upon adoption of AASB 11 Joint Arrangements, as set out in note 40: Impact of the change in accounting policy on adoption
of AASB 11 Joint Arrangements to the Financial Report on pages 195 to 198.
UNPAT is NPAT adjusted for non‐underlying items including gains/losses on sale/acquisition of assets, impairments and restructuring costs. Please refer to
the Non‐underlying items section of this Operating and Financial Review on page 48 for reconciliation.
Gearing is expressed as the ratio of net debt and operating leases to net debt, operating leases and shareholder equity.
Including the Group’s share of joint ventures and associates.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
DIRECTORS’ REPORT continued
Operating and Financial Review continued
For the financial year ended 31 December 2013 (2013 Financial
Year), the Leighton Group recorded statutory Net Profit After Tax
(NPAT) of $509 million and Underlying Net Profit After Tax
(UNPAT)1 of $584 million.
This result represented an increase of 13% and 30% respectively in
the NPAT and UNPAT performance for the year ended
31 December 2012 (2012 Financial Year).
Highlights in the 2013 Financial Year were:
total revenue of $24 billion, an increase of 6%;
resilience through diversification with revenue growth in
construction exceeding the decline in contract mining;
UNPAT margin expanding from 1.9% to 2.4%;
a reduction in net debt of $0.35 billion or 46%;
gearing at 29.2% and 11.1% pre‐operating leases;
net capital expenditure of $0.8 billion, a reduction of 27%;
work in hand of $42 billion, with $23 billion of new contracts,
extensions, variations and FX;
progressive de‐risking of our portfolio of projects with new
projects on‐boarded under the enhanced risk management
regime; and
progressive implementation of initiatives under the ‘stabilise,
rebase and grow’ and the Five Fundamental Things (5FT)
strategic imperatives including:
o
the establishment of FleetCo and $500 million of fleet
transfers and re‐financings; and
$215 million in procurement and overhead cost savings.
o
PROFIT AND LOSS
REVENUE
Total revenue of $24.4 billion was recorded in the 2013 Financial
Year. Group revenue was $22.6 billion, an increase of 8% on the
2012 Financial Year. Revenue from joint ventures and associates
was $1.8 billion, a decline of 20% on the 2012 Financial Year,
resulting from movements in project joint ventures, including the
Silcar joint venture revenue transferring to Group revenue on
acquisition of a 100% interest in July 2013.
Revenue was earned from more than 400 active projects across the
Group, with revenue of $19.8 billion from domestic activities and
$4.6 billion from international activities.
Revenue may be analysed as follows:
ANNUAL REPORT ����
47
47
Total revenue in construction was $16 billion, an increase of
$1.8 billion or 13% in the 2013 Financial Year, with the growth
coming primarily from liquefied natural gas (LNG) projects in
Australia.
In contract mining, Group revenue decreased by $0.9 billion
reflecting the challenging environment for contract miners in the
2013 Financial Year. In response to this challenge, the Group is
improving its value proposition by working with clients to optimise
productivity, workforce rosters and overall mine planning; and by
leveraging the benefits of the Group’s size and scale to generate
savings from Strategic Procurement and Group Asset Management.
The major projects for the Leighton Group by annual revenue
included:
LNG‐related contracts in Western Australia on the Gorgon,
Wheatstone and Ichthys projects, and the Australia Pacific
LNG (APLNG) and Queensland Curtis LNG (QCLNG) projects in
Queensland;
contract mining at the Solomon iron ore mine, Lake Vermont
coal mine and Prominent Hill copper and gold mine in
Australia and Wahana in Indonesia;
substantial rail and road activities in Australia and Hong Kong,
including the Glenfield to Leppington Rail Line in south‐west
Sydney; and
the Wynn Cotai resort development in Macau.
EXPENDITURE
Recurring operational expenditure (consisting of materials, sub‐
contractors, plant and personnel costs) was $19.1 billion. Overall
this expenditure increased by 9% during the year, broadly in line
with Group revenue and including the impact of a ramp‐up on
significant projects such as Gorgon, Wheatstone, APLNG and Wynn
Cotai.
A total of $215 million has been taken out of the Group’s cost base
in the 2013 Financial Year, in line with the $200 million target
advised at the 2013 half year results, from a combination of:
$63 million in Strategic Procurement; and
$152 million in overheads and other savings achieved by the
Operating Companies.
For more information, refer to the Strategic Imperatives section of
this Operating and Financial Review on pages 50 to 52.
Depreciation of property, plant and equipment for the 2013
Financial Year was $905 million. This represented a 12% decrease in
the depreciation charge on the 2012 Financial Year, and primarily
reflects the decrease in contract mining revenue during the year.
Mining plant and equipment is depreciated based on cumulative
hours worked.
Finance costs rose due to the full year impact of the US$500 million
S144A2 costs, additional finance lease interest expense, and the
impact of the decline in the value of the Australian dollar on US‐
denominated debt. The average interest rate for the 2013 Financial
Year was 5.5%.
Repayments of short‐term debt facilities and the refinancing of
$0.5 billion of finance leases into operating leases under the
FleetCo initiative occurred in the latter part of the 2013 Financial
Year and the full year benefit will be seen in the financial year
ended 31 December 2014 (2014 Financial Year).
1
UNPAT is NPAT adjusted for non‐underlying items including gains/losses
on sale/acquisition of assets, impairments and restructuring costs. Please
refer to the Non‐underlying items section of this Operating and Financial
Review on page 48 for reconciliation.
2 10‐Year Fixed‐Rate Guaranteed Senior Notes.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
NON‐UNDERLYING ITEMS
The Group’s profit and loss account was impacted by a number of
non‐underlying items. These items included a $215 million pre‐tax
profit ($115 million after tax) on the sale of 70.1% of the Group’s
non‐core telecommunications assets in June 2013.
The profit and loss account was also impacted by a $78 million loss
on the acquisition of the remaining 39.9% interest in the Leighton
Welspun (LWIN) joint venture in December 2013. This loss primarily
resulted from the reclassification of the foreign currency
translation reserves from equity to profit and loss, following the
decline in the Indian rupee against the Australian dollar over the
period of the joint venture. The transaction completed in February
2014.
The profit and loss account was also negatively impacted by certain
non‐underlying impairment charges relating to:
property impairments to the inventories of Leighton
Properties and Devine of $4 million and $77 million
respectively;
impairments of $19 million and $15 million respectively
against the value of investments in the Cross City Tunnel and
Macmahon; and
impairments of $10 million against the property, plant and
equipment in John Holland Aviation Services.
The Group also recorded $59 million of pre‐tax restructuring costs
associated with its Business Transformation Program. For more
information, refer to the Strategic Imperatives section of this
Operating and Financial Review on pages 50 to 52.
The reconciliation of NPAT to UNPAT is as follows:
$M
Tax
Profit
before
tax
Minorities NPAT
Profit
after tax
736 (267) 469 40 509
Reported
Gains/losses on sale/acquisition
Telco
LWIN
Impairments
Property
impairments
Cross City Tunnel
Macmahon
John Holland
Aviation Services
Restructuring costs
Business
transformation
Underlying
(215) 100 (115) ‐ (115)
78 ‐ 78 ‐ 78
81 (14) 67 (32) 35
19 ‐ 19 ‐ 19
15 ‐ 15 ‐ 15
10 (3) 7 ‐ 7
59 (23) 36 ‐ 36
783 (207) 576 8 584
TAX
The Group reported a total tax expense for the 2013 Financial Year
of $267 million. This equated to a 36% effective tax rate compared
with a 22% rate for the 2012 Financial Year. It included a 47%
effective tax rate on the sale of the Group’s telecommunications
assets driven by the low tax cost base attributable to these assets.
In addition, no tax benefit was recognised on the aforementioned
LWIN, Cross City Tunnel and Macmahon impairments.
ANNUAL REPORT ����
48
48
The tax expense on underlying profit was $207 million, with an
effective tax rate of 26%. The rate for the 2012 Financial Year was
19%. The effective rate was the result of blended tax rates from the
various jurisdictions in which the Group operates, including a lower
profit contribution from overseas operations in the 2013 Financial
Year, and a reduction in the benefit of claims under the Research
and Development concession.
UNPAT MARGIN
Under the ‘stabilise, rebase and grow’ strategy, a target UNPAT
margin of 3–4% was set and the Group is working towards delivery
of this target.
To‐date, the Group’s UNPAT margin has expanded from 1.9% at
31 December 2012 to 2.2% at 30 June 2013 and to 2.4% at
31 December 2013.
This margin was delivered on a changing mix of the portfolio.
Notwithstanding the increased revenue from construction
replacing more capital‐intensive and notionally higher margin
contract mining revenue, the Group was also able to grow the
UNPAT margin.
DIVIDEND
The Board has determined to pay out 61% of UNPAT for the 2013
Financial Year. This results in a total dividend of 105 cents per share
for the full year.
A 45 cents per share interim dividend, franked at 50%, was paid in
October 2013. A 60 cents per share final dividend, franked at 50%,
has been approved by the Board and will be paid on 4 April 2014.
BALANCE SHEET
Strengthening the Group’s balance sheet is a critical objective of
the ‘stabilise, rebase and grow’ strategy. Progress during the year
has been delivered from treasury management, capital recycling
and disciplined management of capital expenditure. The timely
conversion of current receivables into cash continues to be a key
focus for the 2014 Financial Year.
LEVERAGE
Cash
Cash and cash equivalents at 31 December 2013 were $1.7 billion,
down $0.3 billion. This level of cash is the result of initiatives to
improve the Group’s liquidity position in the 2013 Financial Year
and the receipt of $614 million in cash from the sale of the
telecommunications assets, net of debt repayments during the
second half of the year.
Debt
Total borrowings, including limited recourse loans and finance
lease liabilities, was $2.1 billion at 31 December 2013, compared
with $2.8 billion at 31 December 2012.
During the year, the Group repaid $0.4 billion from its 2008 US
Private Placement maturing notes and from various finance leases.
It also repaid $0.4 billion of maturing short‐term facilities,
improving the debt maturity profile. It is anticipated that only
$0.1 billion of $0.6 billion maturing in the 2014 Financial Year will
need to be refinanced.
The Group refinanced a $0.6 billion Syndicated Cash Advance
Facility and increased the facility to $1 billion. In total, the Group
currently has $1.2 billion of working capital facilities which were
undrawn at 31 December 2013.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
DIRECTORS’ REPORT continued
Operating and Financial Review continued
Additionally, the Group has ample headroom on its banking
covenants.
Bonding
The Group has significant bonding and guarantee facilities available
that are integral to the successful delivery of current and future
work in hand. Bonds and guarantees in use at 31 December 2013
were $4.4 billion. An additional $1.1 billion was undrawn, of which
$0.8 billion was committed and $0.3 billion was uncommitted.
During the 2013 Financial Year the Group improved the
diversification of its bonding book, increasing the level of insurance
bonds in use from $0.7 billion to $1.3 billion and thereby reducing
its reliance on the banking sector.
Ratings
During the year, Standard & Poor’s affirmed its 'BBB‐/A‐3' rating
with a ‘Stable’ outlook. Moody’s Investors Service affirmed its
‘Baa2 issuer’ rating with a ‘Stable’ outlook.
Gearing
Gearing, including operating leases, was 29.2% at 31 December
2013, compared with 31.9% at 31 December 2012.
Gearing pre‐operating leases was 11.1% in the 2013 Financial Year
down from 20.5% in the 2012 Financial Year.
The improvement was driven by solid operating cash inflows during
the second half of the 2013 Financial Year, and a number of
balance sheet initiatives, in particular capital recycling.
The sustainability of lower gearing levels remains a key imperative
in the 2014 Financial Year, in particular through management of
working capital.
WORKING CAPITAL
Receivables
Current trade and other receivables, which include contract
debtors and underclaims, were $5.1 billion at 31 December 2013
compared with $3.8 billion at 31 December 2012, with growth due
to the progression of various projects, increased turnover and the
impact of foreign exchange movements on US dollar‐denominated
receivables.
An elevated receivables balance has become a feature of the
balance sheet due to an increasing proportion of private sector
projects in the portfolio in the 2012 Financial Year and the 2013
Financial Year, in particular domestic LNG projects. On these
projects, the Group has experienced:
lengthy payment cycles;
extensive scope growth; and
complex and time‐consuming valuation and negotiation
processes to agree variations to existing contracts.
In addition, underclaims in coal contract mining have arisen from
recovery of mine set‐up costs and, more recently, challenging
market conditions.
The timely conversion of current receivables into cash continues to
be a key focus for the 2014 Financial Year and detailed plans are in
place. However, the elevated levels of receivables will remain a
feature of the balance sheet until the current domestic LNG
ANNUAL REPORT ����
49
49
projects are completed and final agreements negotiated. These
projects, which total in excess of $13 billion, were around 70%
complete as at 31 December 2013.
Additionally, the Group has two oil pipeline projects in Iraq. Phase
one is 99% complete and the Sealine Project is approximately 80%
complete. Progress on delivery of these projects and on
negotiations to collect outstanding receivables continues but has
been hampered by the damage caused by the adverse media
campaign conducted by the Fairfax Group in 2013. Again,
receivables are likely to remain outstanding until the projects are
completed and final agreements negotiated.
Payables
Current trade and other payables were $5.5 billion at 31 December
2013, an increase of $0.5 billion compared with 31 December 2012,
reflecting the increase in recurring operational expenditure on
materials and sub‐contractors.
NON‐CURRENT ASSETS
Property, plant and equipment
At 31 December 2013, the total value of the Group’s property,
plant and equipment was $1.75 billion. Of this amount,
$1.25 billion was owned property, plant and equipment and
$0.5 billion was under finance leases. An additional $0.9 billion is
currently financed by the Group under operating leases.
Under the FleetCo initiative, $0.5 billion of our Australian‐based
fleet has been removed from the balance sheet with the associated
finance leases refinanced into operating leases in FleetCo. For more
information, refer to the Strategic Imperatives section of this
Operating and Financial Review on pages 50 to 52.
Property, plant and equipment purchases for the year totalled
$0.96 billion, while receipts from sales totalled $0.15 billion. The
net spend on capital equipment reduced by 27% compared with
the 2012 Financial Year as a result of strong capital management
and intra‐Group redeployment of equipment under the Group
Asset Management initiative. Refer to the Strategic Imperatives
section of this Operating and Financial Review on pages 50 to 52.
Depreciation of property, plant and equipment was $905 million.
As previously noted, the decrease in the depreciation charge
compared with the 2012 Financial Year primarily reflects the
decrease in contract mining activity in the year.
Intangibles
Intangibles totalled $0.6 billion at 31 December 2013 compared
with $0.3 billion in the 2012 Financial Year. The increase is primarily
the result of the recognition of $0.2 billion of goodwill on the
acquisition of the remaining 39.9% interest in the LWIN joint
venture.
INVESTMENTS
Habtoor Leighton Group
The Group’s total exposure to Habtoor Leighton Group (HLG) as at
31 December 2013 was $1.4 billion and comprised:
$345 million carrying value of the investment;
$632 million in loan receivables and accrued interest, within
non‐current receivables; and
$384 million in off‐balance sheet letters of credit and
guarantees.
No impairment was recorded during the 2013 Financial Year
against the carrying value of the investment.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
There was a $0.3 billion increase in the total exposure over the year
was due to the decline in the value of the Australian dollar
($0.2 billion) and the addition of further off‐balance sheet
guarantees ($0.1 billion).
HLG’s performance stabilised during the year as follows:
it recorded a profit of $1 million compared with an underlying
loss of $47 million in the 2012 Financial Year;
it succeeded in the recovery of aged receivables and the
return of bonds on a series of smaller legacy projects, enabling
it to manage its cash position without further funding from the
Group and to fund the previously announced call of bonds;
it refinanced its loan book negotiating an increased facility of
AED1.3 billion with a consortium of banks; and
it commenced retirement of an external facility with the initial
repayment in December 2013 and the next repayment
scheduled for March 2014. This facility needs to be retired
prior to any repayment of shareholder loans to the Group.
As previously mentioned, the decision of a Qatar‐based client to
call bonds on certain legacy projects at the end of June 2013
prevented HLG from making repayments on Leighton’s outstanding
shareholder loans. The situation remained unresolved
31 December 2013. However, HLG continues to believe its legal
position on the matter is strong and is working to a resolution.
The business is continuing to diversify its client and geographic
base through its contract wins in the year. For more information,
refer to the Operational review by market section of this Operating
and Financial Review on pages 52 to 56.
‘2016 IPO‐ready’ remains the key strategic aim for HLG, contingent
upon the further recovery of outstanding receivables, pay‐down of
the shareholder loans from Leighton, and the ongoing award of
new work. Notwithstanding ongoing near‐term challenges, the
Group continues to view its investment in HLG as offering long‐
term growth opportunities in the Middle East and North Africa.
Nextgen Group
During the first half of 2013, the Group sold 70.1% of its non‐core
telecommunications assets (consisting of Nextgen Networks,
Metronode and certain Infoplex assets) to Ontario Teachers’
Pension Plan. As previously mentioned, the sale resulted in a net
profit of $215 million pre‐tax ($115 million after tax). The cash
proceeds of $614 million have been used to strengthen the Group’s
balance sheet.
The Group now owns 29.9% of the Nextgen Group, providing
access to any upside value under the new ownership structure.
Leighton equity accounts for its joint venture interest in the
Nextgen Group.
Other investments
As at 31 December 2013, investments in listed entities by the
Group were:
Sedgman: Leighton owns 35.6% of the listed resources
engineering company, an increase of 2.9% in the 2013
Financial Year;
Macmahon: Leighton owns 19.6% of the listed mining
contracting company; and
Devine: Leighton owns 50.6% of the listed property
development company.
As at 31 December 2013, Devine is consolidated while the holdings
in Sedgman and Macmahon are equity‐accounted.
ANNUAL REPORT ����
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CASH FLOW
Operating activities
Net operating cash during the year totalled $0.8 billion. While
down on the 2012 Financial Year operating cash of $1.2 billion, the
second half of 2013 operating cash inflow of $0.8 billion
represented an improvement over the first half of 2013 cash
outflow of $0.01 billion.
Investing activities
Net capital expenditure outflow during the 2013 Financial Year
totalled $0.8 billion and comprised:
$0.96 billion in plant and equipment and in major component
parts for repairs and maintenance; net of
$0.15 billion in proceeds from sale of property, plant and
equipment.
Other investing activities totalled a net inflow of $0.3 billion and
comprised:
$0.6 billion in pre‐tax receipts from the telecommunications
assets sale; less
$0.2 billion cash outflow for the early payment of the deferred
equity commitment to Brisconnections; and
$0.1 billion cash outflow for other investing activities.
Financing activities
Net cash outflow from financing activities in the 2013 Financial Year
totalled $0.7 billion and comprised:
$0.6 billion outflow from the repayment of existing
borrowings;
$0.3 billion inflow from the proceeds of new borrowings;
$0.3 billion outflow from the payment of the 2012 Financial
Year final dividend and 2013 half year interim dividend; and
$0.1 billion net outflow from other financings.
STRATEGIC IMPERATIVES
STABILISE, REBASE AND GROW
The Leighton Group announced its ‘stabilise, rebase and grow’
strategy in 2012.
Strategic Management Company
Leighton Holdings has been transformed into a Strategic
Management Company. It develops strategy, provides governance
and minimum compliance standards, and determines capital
allocation across the Group.
Operating Companies
Successful delivery of more than 400 active projects remains the
responsibility of the Operating Companies who tender and deliver
projects, either individually, combined or competitively, where they
have the capabilities and resources to do so.
Collaboration on major projects, both within the Leighton Group
and accessing the skills of the wider Group, was evidenced during
the year in the successful tender by Thiess, John Holland, and
Dragados for the tunnelling package of the $1.15 billion North West
Rail project in Sydney and in the consortium formed for bidding on
the East West Link cross‐city road in Melbourne, consisting of
Leighton Contractors, John Holland, Dragados, and Iridium.
The strategic focus is to enhance the Operating Companies’
capacity to deliver as well as to remove inefficiencies across the
Group.
Capital recycling
The Group has undertaken a capital recycling program during the
past three years, divesting of selected capital intensive businesses.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
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DIRECTORS’ REPORT continued
Operating and Financial Review continued
Working capital improvement
Please refer to the Balance Sheet section of this Operating and
Financial Review on pages 48 to 50.
HWE Mining was sold in 2011, Thiess Waste Management was sold
in 2012 and the Group’s non‐core telecommunications assets were
sold in 2013. A total pre‐tax cash consideration of $1.2 billion was
generated by this program.
Portfolio alignment
The Group is progressively aligning its portfolio in order to focus
each Operating Company on its core competencies.
In the 2013 Financial Year, John Holland’s mining and
telecommunications activities were transferred to Leighton
Contractors.
The construction portfolio of Macmahon was acquired in the 2013
Financial Year and has been successfully amalgamated into John
Holland’s construction portfolio.
Late in 2013, the Group acquired the remaining 39.9% interest in
the LWIN joint venture and, in the 2014 Financial Year, will review
and implement integration synergies, cost savings and develop
business opportunities from its 100% ownership.
Balance sheet
Rebuilding the Group’s balance sheet is an integral part of the
‘stabilise, rebase and grow’ strategy.
As previously mentioned, capital recycling program has helped to
strengthen and de‐leverage the balance sheet.
More rigorous management and strategic allocation has delivered a
progressive decline in capital expenditure over the past three
years.
Net capital expenditure has dropped from $1.4 billion in the six‐
month financial period ended 31 December 2011 to $1.1 billion in
the 2012 Financial Year and $0.8 billion in the 2013 Financial Year.
FIVE FUNDAMENTAL THINGS (5FT)
The Group announced the 5FT initiative in the first half of the 2013
Financial Year, as part of the ‘stabilise, rebase and grow’ strategy.
The 5FT are:
1. Working capital improvement;
2.
Strategic Procurement;
3. Global Business Services (GBS; formerly Group Shared
Services);
4. Group Asset Management (including FleetCo); and
5. Management Structures.
By focusing the efforts of the Group, the 5FT initiative aims to
accelerate margin expansion towards a target UNPAT margin of
between 3–4% by leveraging the Group’s scale for greater
efficiency and effectiveness.
As previously mentioned, a total of $215 million has been removed
from the Group’s cost base in the 2013 Financial Year from a
combination of:
$63 million in Strategic Procurement; and
$152 million in overheads and other savings achieved by the
Operating Companies.
The Group will target an additional $260 million plus of savings in
the 2014 Financial Year across the 5FT.
Strategic Procurement
Strategic Procurement was established to maximise the benefits of
the Group’s size and scale.
At the AGM in May 2013, annualised savings of $45 million were
announced from the finalisation of purchasing agreements in heavy
equipment, fuel, explosives, travel and information and
communication technology during 2012 and early 2013.
Further agreements have been reached in 2013 for vehicle
purchase and hire, plant hire, tools of trade, insurance, and major
mining equipment parts including tyres. A total of $63 million in
Group purchasing savings have been realised in the 2013 Financial
Year.
Global Business Services
The aim of the Group’s GBS initiative is to deliver back‐office
support functions more efficiently and effectively. We are
progressing plans to develop a Group‐wide operating model, to
understand how and where functions can be better delivered,
including those that should remain at regional‐ and site‐specific
locations, and those that could be centralised. As part of this
initiative, we are establishing a Leighton‐owned and operated GBS
centre in Kuala Lumpur, Malaysia for the delivery of some of our
support activities.
Group Asset Management (including FleetCo)
The Group continues to progress the centralisation of its mining
fleet into a single Group Asset Management vehicle.
FleetCo was established in the third quarter of 2013. In the fourth
quarter of 2013, the first fleet transfers and financings were
negotiated. $500 million of Australian‐based fleet was removed
from the balance sheet and the associated finance leases were
refinanced into operating leases with FleetCo. The economic
benefit includes improved financing costs and terms, as well as a
reduction in the capital intensity of the Group’s balance sheet. A
further $500 million of fleet transfers are targeted for the 2014
Financial Year.
With the creation of FleetCo, a platform has been established to
further improve capital management of the Group’s portfolio of
equipment, with the initial focus on the Group’s significant mining
fleet.
Additionally, the Group is pursuing savings from lower maintenance
costs, improved asset utilisation and better spare parts
management. For example, during the 2013 Financial Year,
$31 million of idle fleet was transferred from Leighton Contractors
to Thiess. In addition, property services are now included in the
scope of Group Asset Management.
The Group is reviewing an initiative to remove FleetCo from the
balance sheet to enable it to be an independently‐owned, asset‐
backed business. Structured appropriately, this initiative could free
up significant capital.
Management Structures
A detailed review is being undertaken of the organisational
structures within Leighton Holdings and the Operating Companies
to ensure the appropriate number of layers and spans of control
are in place.
Leighton Holdings Limited Annual Report 2013
ANNUAL REPORT ����
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Win rate
The Group continues its focus on improving its tendering discipline
and on increasing its win rate to reduce tender costs. The overall
win rate improved from 19% to 27% in the 2013 Financial Year
(based on total bids tendered but excluding those pending
decision).
Pipeline
The total pipeline of tenders bid in the 2013 Financial Year was
around $76 billion. The current pipeline for those tenders closing in
the 2014 Financial Year stands at around this figure.
Diversification
Diversification is fundamental to the Group’s business model as it
acts to moderate the effects of cyclical downturns in certain
markets, providing a level of resilience to revenue.
The following breakdown of work in hand by markets at 31
December 2013 demonstrates the diversification of the Group’s
portfolio:
LEIGHTON HOLDINGS LIMITED
We have commenced significant organisational restructuring across
our businesses, which has resulted in pre‐tax restructuring costs of
$59 million being incurred in the 2013 Financial Year. Further costs
will be incurred in the 2014 Financial Year.
The Group’s overarching aim is to develop the most efficient and
effective operating structure with which it can service its markets in
Australia, Asia and elsewhere.
Successful delivery of the 5FT business improvement initiative will
help to position the Group for growth from a more sustainable cost
base.
Review and development of further initiatives is ongoing as the
Group progressively and continually refines its strategic
imperatives.
OPERATIONAL REVIEW BY MARKET
WORK IN HAND
Work in hand during the year remained above $40 billion and was
$42.2 billion at 31 December 2013. The net increase in new
contracts, extensions, variations and FX was $23.1 billion,
exceeding the 2012 Financial Year net increase of $22.1 billion
against the backdrop of the challenging contract mining
environment.
The movement from the 2012 Financial Year is as follows:
WORK IN HAND ($BN)
Closing work in hand (31 December 2012)
Less revenue delivered in 2013
Contract awards
Telecommunications assets sale
LWIN acquisition
FX benefit
Scope increases and variations
Plus
Closing work in hand (31 December 2013)
43.5
(24.4)
14.8
(0.7)
0.3
2.2
6.5
OCEANIA INFRASTRUCTURE
The near‐term economic outlook for Australia, and the Oceania
region more broadly, remains robust. Construction work reached
record levels in the 2012 Financial Year and 2013 Financial Year,
following more than a decade of consistent growth.
23.1
42.2
The total infrastructure market remains well above the long‐term
average although the country is experiencing falls in resource‐
related infrastructure in the short‐term.
Margin in hand
The Group’s blended margin in hand reduced from around 10% in
the 2012 Financial Year to around 9.5% in the 2013 Financial Year.
This was driven, in part, by challenging macroeconomic conditions
and by the current mix of the portfolio, with a reduction in work in
hand from contract mining of $4 billion, partially replaced by an
increase in construction of $2 billion and in property development
of $1 billion.
The Australian infrastructure market is expected to grow again in
the second half of the decade on the back of investment in urban
transport.
As at 31 December 2013, the Group’s work in hand in the
Australian and Oceania infrastructure market was $15.5 billion and
was diversified across a range of sectors, with transport
dominating.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
DIRECTORS’ REPORT continued
Operating and Financial Review continued
Transport
Major rail projects awarded to the Group during the 2013 Financial
Year included:
Package one of the $1.15 billion North West Rail Link project
in Sydney to a joint venture between Thiess (50%), John
Holland (25%) and Dragados (25%);
a $0.65 billion contract to Thiess to construct the 12.6km
Moreton Bay Rail Link in Brisbane; and
a $0.27 billion contract to an alliance including Leighton
Contractors (Leighton Contractors’ share is $0.12 billion) to
deliver 6km of new track and associated infrastructure in
Sydney.
Roads also remain a significant market and during the 2013
Financial Year Leighton Contractors was awarded:
a $0.9 billion alliance (Leighton Contractors’ share is
approximately $0.6 billion) to deliver the Gateway WA Perth
Airport and Freight Access Project;
in joint venture, a seven‐year road asset management contract
servicing southern Sydney valued at approximately $0.7 billion
(Leighton Contractors’ share is approximately $0.3 billion); and
a NZ$0.22 billion alliance project to deliver the Auckland
Causeway Upgrade.
ANNUAL REPORT ����
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Social infrastructure
Social infrastructure activity has returned to the long‐term average
after strong short‐term investment coming out of the Global
Financial Crisis period.
During the 2013 Financial Year, John Holland was awarded the
$0.37 billion joint venture redevelopment of the Royal Hobart
Hospital in Tasmania, and a $0.18 billion contract to build the
Business School at the University of Sydney in New South Wales.
Leighton Contractors was awarded further work to promote
remote housing for indigenous people in the Northern Territory.
OCEANIA RESOURCES
Over the last few years, Australia has played a significant role in the
global mining investment boom. The current decline being
experienced in new investment in the resources sector is a natural
result of this large capacity expansion.
Importantly, as a consequence of the mining investment boom,
production and export volumes are now growing strongly. The
majority of the Group’s resources work is contract mining‐related
and hence linked to production and export volumes rather than
new investment.
Only approximately 3% of current resources work in hand is driven
by investment in bulk commodities (primarily coal and iron ore),
the area where most of the decline has occurred.
An upturn in civil‐ and Government‐driven transport activity is
expected during the second half of the decade, as the Government
addresses the reported $300 billion of Australian infrastructure
backlog.
Importantly, 16% of the Group’s resources work in hand is from the
construction of oil and gas infrastructure (primarily LNG), an area
which is now seeing a substantial boom. Please refer to the
diagram below.
Procurement or delivery has already commenced on a number of
major metropolitan transport projects including:
the North West Rail, WestConnex and F3‐to‐M2 projects in
Sydney;
the East West Link (Stage 1) in Melbourne; and
the Toowoomba Second Range Crossing.
Telecommunications
In Australia, telecommunications expenditure has increased with
the roll‐out of the National Broadband Network (NBN) project and
with investment from Telstra, Optus and Vodafone Hutchison in
the 4G mobile network infrastructure. The peak in construction
work is expected in two to three years’ time.
During the 2013 Financial Year, telecommunications infrastructure
provided opportunities for Leighton Contractors and Silcar, with
more than $1.2 billion of construction and remediation work being
awarded by Telstra, Optus, NBN Co, Chorus and iiNet.
Power and utilities
New utilities infrastructure awards in the 2013 Financial Year
included Thiess’s provision of water operations and facilities
maintenance in Sydney and delivery of an upgrade to Perth’s
electricity network, both worth over $0.1 billion.
After a decade of growth, power and utilities construction is
expected to moderate. Water and wastewater construction has
already declined following the completion of the Victorian
Desalination Plant in the 2012 Financial Year.
Contract mining
In the 2013 Financial Year, the softer commodity prices created a
challenging environment for miners and contract miners. As a
result the Leighton Group experienced an overall net reduction in
contract mining work in hand of $4 billion or 22%. This decline
included the impact of client‐requested volume reductions in coal
contract mining in particular in Indonesia, the announced contract
losses of Collinsville and Peak Downs in Queensland, and the loss of
the Arutmin mines in Indonesia.
The Group is improving its value proposition by:
working with clients to optimise productivity, workforce
rosters and overall mine planning; and
leveraging the benefits of Leighton’s size and scale to generate
savings from Group procurement and Group asset
management, some of which are being passed onto the client
and improving Leighton’s value proposition, and some of
which are driving net margin expansion.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
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Pleasingly, headwinds experienced in the first half of the 2013
Financial Year abated in the second half of the 2013 Financial Year
when a number of contracts were awarded, including:
a $1.3 billion contract variation for Leighton Contractors to
mine the Kings iron ore deposit at the Solomon Hub for
Fortescue Metals Group in Western Australia;
a $0.57 billion contract extension for Thiess at the Curragh
coal mine in Queensland; and
a $0.55 billion contract expansion for Thiess at the Lake
Vermont coal mine in Queensland.
Contracts awarded during the 2013 Financial Year include:
a significant contract extension awarded to Thiess for the
construction of gas compression facilities for the QCLNG
project in the Surat Basin, taking the total value of the
contract to $2 billion;
a $0.212 billion contract to Thiess to deliver further civil works
on the Gorgon project in Western Australia; and
an expansion to the civil works provided by Leighton
Contractors for the Gorgon project by $0.975 billion to
$2.1 billion.
The diversification of the Group’s contract mining portfolio is
assisting to mitigate the effects of the downturn in coal contract
mining. The commodity diversification of the Group can be
illustrated as follows:
As noted previously, major Group projects in the 2013 Financial
Year included the Gorgon, Wheatstone and Ichthys projects in
Western Australia, and the APLNG and QCLNG projects in
Queensland. This trend is expected to continue in the 2014
Financial Year, with strong revenue being derived from LNG‐related
work across the Leighton Group.
OCEANIA PROPERTY
In the Australian property market, non‐residential construction
remains relatively stable.
Resources construction: coal and iron ore
As stated previously, only approximately 3% of current resources
work in hand is driven by investment in bulk commodities
(primarily coal and iron ore).
During the 2013 Financial Year, Leighton Properties has:
pre‐sold and commenced a $0.4 billion office tower in North
Sydney which will include offices for the Group;
sold the 55,000m2 premium‐grade office tower under
development at 567 Collins Street, Melbourne for
approximately $0.46 billion;
in joint venture, been chosen as the preferred developer for
the $5.2 billion Perth City Link project; and
commenced development of the Kings Square project in Perth,
featuring four office towers being constructed by John
Holland, Broad and Leighton Contractors.
INTERNATIONAL
Asia is expected to remain the world’s fastest growing region in
coming years, notwithstanding tighter external funding conditions,
weaker external demands as growth in China slows and local
structural impediments tapering growth expectations.
GDP growth expectations for developing Asia in the short‐ to
medium‐term are approximately 5–7% per annum.
All domestic infrastructure markets demonstrate strong growth
profiles with transport and mining in India and Indonesia standing
out as attractive segments.
The Group has a diverse geographic presence across Asia (as shown
by the mix of work in hand in the diagram below), and a strong
position in a number of the region’s growth markets.
Some construction contracts were secured in this sector in the
2013 Financial Year including:
a $0.257 billion contract for John Holland to construct 350km
of heavy haulage railway track for the Roy Hill iron ore project
in Western Australia; and
a $0.186 billion contract for a joint venture between Thiess
and Sedgman to design and construct a coal handling and
preparation plant at the Boggabri coal mine in New South
Wales.
Resources construction: LNG
Australia is currently the dominant player in the expansion of the
world’s LNG capacity, with unprecedented levels of investment
across the six major LNG facilities that are under construction. In
total, Australia accounts for half of all major LNG projects under
construction globally.
The Group is currently working on all of the major LNG and coal
seam methane projects around Australia including the Gorgon
project, Wheatstone, Ichthys, APLNG, QCLNG and Gladstone LNG.
Work in hand in respect of these projects at 31 December 2013
totalled approximately $3.9 billion ($1.7 billion within resources
and $2.2 billion classified within the infrastructure portfolio
discussed previously).
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
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DIRECTORS’ REPORT continued
Operating and Financial Review continued
In October 2013, Singapore’s Land Transport Authority announced
its plan to double the Singapore rail network to 360km by 2030,
which is comparable to London’s rail density.
Hong Kong and Macau
Hong Kong’s economic outlook remains strong, supported by its
position as a primary trading hub and gateway for entry into China.
Economic growth was 3% in 2013, and is forecast to rise to 4.4% in
2014, with a steady medium‐term outlook.
The infrastructure upsurge during the past five years has focused
on high‐value transport infrastructure. More recently, social
infrastructure projects have started to gain interest.
During the 2013 Financial Year, Leighton Asia, India and Offshore
(LAIO) secured contracts including:
a $0.66 billion contract to construct a component of Hong
Kong’s Shatin to Central Rail Link; and
a $0.37 billion contract to design and build, in joint venture, a
hospital in Tin Shui Wai, Hong Kong.
Macau has cemented itself as the premier gambling location.
Private sector investment remains strong and, in addition to casino
development, infrastructure projects are in the pipeline.
During the 2013 Financial Year, LAIO secured a US$2.6 billion
contract to design and build a luxury integrated hotel resort in
Macau for Wynn Resorts. The resort site covers a construction floor
area of more than 450,000m2.
Indonesia
Indonesia’s long‐term economic outlook is positive. As a populous
country, Indonesia’s urbanisation is driving growth. However, the
Government – to be elected in April – will need to address major
structural challenges to maintain this trend.
Indonesia’s transport and utilities markets will require significant
investment in coming years. The Indonesian Government
committed US$20 billion to the sector in 2013 and has further
increased the allocation for 2014. They remain attractive medium‐
term potential addressable markets for the Group.
As noted previously, in the 2013 Financial Year, the softer
commodity prices created a challenging environment for miners
and contract miners. As a result, the Group experienced an overall
net reduction in contract mining work in hand in Indonesia, due to
client‐requested volume reductions. In addition, work in hand on
the Arutmin mines was taken out in the first half of the 2013
Financial Year. Thiess has now resolved its dispute with PT Arutmin
Indonesia, the owners of the Senakin and Satui coal mines, and will
transfer selected assets (plant, equipment and inventories) and
liabilities to PT Arutmin Indonesia. The settlement will resolve an
outstanding claim that Thiess has against PT Arutmin Indonesia.
Over the medium‐term, coal production is forecast to deliver
growth in Indonesia. There are a number of new coal projects being
promoted in Indonesia by global mining companies, which may
offer the Group further contract mining opportunities.
Singapore
Singapore’s business operating environment remains favourable,
buoyed by its developed free‐market. To meet the needs of a
growing population, transport infrastructure is a key investment
focus.
LAIO is already playing a role and, in a joint venture with John
Holland, has been awarded a contract for $0.33 billion to construct
the Thomson Line project.
Singapore’s development plans also include:
discussions with Malaysia regarding a possible US$12 billion
high speed rail line from Singapore to Kuala Lumpur;
a redevelopment of Changi airport; and
a US$8 billion relocation and expansion of the container
terminal at Tanjong Pagar.
Malaysia
After growing significantly during the past five years, the Malaysian
construction industry is expected to slow modestly in 2014.
However, Malaysia’s population is expected to reach more than
33 million by 2020 and urbanisation, which is set to rise to more
than 70%, will sustain long‐term construction growth.
In the transport sector, construction is expected to continue to
grow but at a slower rate. Rail infrastructure will be a focus, with a
potential high speed connection between Kuala Lumpur and
Singapore and an expansion of the Mass Rapid Transport system.
Plans for road and port expansions are also being discussed.
The power and utilities sector is expected to continue to grow to
meet demand.
LAIO is currently undertaking a number of projects in Malaysia,
including the Northern Double Track project.
Mongolia
The Mongolian economy is expected to maintain double digit
growth in 2014 given its expansionary economic policies.
Mongolia’s large untapped resource base and ambitious
infrastructure plans will offer a range of mining and construction
opportunities.
India
In India, economic headwinds have accumulated and forecasts for
GDP growth have moderated to 5–6% per annum in the short‐ to
medium‐term.
The Government plans to double the country’s infrastructure
investment target to US$1 trillion, around half of which is expected
to be generated from the private sector. Power,
telecommunications and roads dominate the priorities.
In roads, the Government plans to achieve US$170 billion of road
infrastructure investment. The key feature is the improvement of
national highways, however progress has been limited. New
legislation may streamline some of the regulatory and
environmental approvals required to accelerate development.
India’s electricity deficit has improved but supply remains
inadequate and under pressure from population growth. The
Government’s large‐scale plans to address these deficiencies
underpin the strong growth outlook for the construction sector.
Leighton Holdings Limited Annual Report 2013
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RISK MANAGEMENT
Effective risk management is fundamental to the Group. Risk
management is defined as the identification, assessment,
treatment and reporting of key risks that have the potential to
materially impact our operations, our people, our reputation, the
environment and communities in which we work, and the financial
outcomes of the Group.
Throughout the 2013 Financial Year, the Group has systematically
developed and implemented a number of key initiatives aimed at
enhancing risk management:
Culture – a strong risk awareness and management culture exists
across the Group, overseen by management who are responsible
for setting the tone, ensuring transparency, facilitating training and
development, and promoting quality and timely risk reporting.
Structure – an enhanced Group organisational structure is in place
that promotes governance through empowerment of individuals
with delegated authority, defined risk‐taking levels of authority and
risk escalation criteria, appropriate segregation of duties, and
ownership and accountability for risks at all levels of our business.
Systems – risk management systems have been harmonised across
the Group to ensure risk assessment and reporting is consistent,
efficient and effective. We aim to continually improve our risk
management processes to ensure they are robust, reliable and
effective by regularly measuring our maturity in risk management,
both internally and by benchmarking against global best practice.
We are continuing to systematically and comprehensively enhance
the Group’s risk management culture, structure and systems, with
the aim of continually improving our overall risk management
maturity and thereby enhancing our risk resilience.
Risks to financial prospects
The diversity of our service offerings together with the breadth of
geographies and markets in which we operate mean there is a wide
range of risk factors that may ultimately impact the achievement of
our business objectives.
Risks that may impact our financial prospects and our approach to
managing those risks are set out in the table overleaf.
LEIGHTON HOLDINGS LIMITED
These opportunities in India’s infrastructure market underpinned
Leighton’s decision to purchase the Welspun Group’s 39.9% stake
in the Group’s Indian‐based joint venture, LWIN, during the year.
Leighton continues to see strong long‐term prospects in the Indian
market and, with 100% control of LWIN, the Group will be
positioned to integrate business units in order to lower costs and
provide greater business opportunities.
India’s urbanisation is also driving demand for quality
accommodation. LAIO was awarded the main contract to build a
super luxury residential development in Gurgaon, valued at $0.25
billion.
Middle East
The economic outlook for the Middle East and North Africa is for
GDP growth of 3.3% in 2014. From an infrastructure perspective,
growth is underpinned by mega transport projects, accommodation
and large one‐off projects associated with the 2022 FIFA World Cup
in Qatar and the 2020 World Expo in Dubai.
The property sector is expected to dominate construction activity,
supported by investments in regional transport, power and utility
infrastructure.
Development of the region’s oil and gas sector, particularly
downstream chemical and industrial production, will prevail as the
region diversifies away from oil dependence.
Saudi Arabia will lead investment in the region in the short‐term,
with growth underpinned by strong transport award volumes in the
second half of the 2013 Financial Year.
Activity in Qatar is set to accelerate, following strong construction
awards during the second half of the 2013 Financial Year under its
new leadership. Central to this will be the delivery of major
infrastructure and construction projects ahead of the World Cup.
Infrastructure growth in the United Arab Emirates is forecast to
improve. Abu Dhabi will continue its strong construction growth
through Government‐supported transport, energy and utilities
projects. In Dubai, the recently announced World Expo is expected
to drive a stronger recovery.
Contracts awarded to HLG include:
an AED 1.45 billion contract for the construction of a
residential project in Dubai, which is part of the Al Habtoor
City development where HLG is constructing the
AED 1.9 billion Al Habtoor City hotel, the Middle East’s largest
integrated resort;
an AED 0.6 billion contract for the construction of
infrastructure related to the Abu Dhabi International Airport
expansion;
an AED 0.28 billion contract for the construction of the next
phase of the Jafza One‐Jafza Convention Centre complex in
Jebel Ali; and
an AED 0.25 billion contract for the design and construction of
an accommodation camp for an Abu Dhabi oilfield
development.
In Iraq, construction growth will be largely driven by further
momentum in housing, power and oil and gas construction activity.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
DIRECTORS’ REPORT continued
Operating and Financial Review continued
ANNUAL REPORT ����
57
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Risk Description
FINANCIAL
Movements in exchange rates may impact
project margins and the A$ value of our
foreign currency debt and off‐shore assets,
thus impacting our A$ profit realisation,
gearing and liquidity ratios.
Counterparty credit risks may arise should our
customers, suppliers or financial
counterparties be unable to meet their
obligations.
Inadequate levels of liquidity may impact our
ability to successfully manage through the
cash flow cycle, absorb unexpected cash
impacts, or achieve planned expenditure.
The value of our assets, including equity
investments and property, plant and
equipment, may be impacted by a range of
factors that result in impairment, impacting
our financial prospects.
STRATEGIC
Our strategic plan may not be wholly
appropriate or sufficiently flexible to respond
to changes in future economic, political or
societal trends or unforeseen external events
and actions affecting financial prospects.
Our strategic initiatives may not be fully
effective in evolving our business to maintain
our competitive advantage and profitably and
win and deliver work in the future, affecting
financial prospects.
Reduction in global commodities demand
and/or price may cause our resource clients to
curtail or cease infrastructure capital
investment programmes or reduce mine
operations, impacting our contracts and our
future financial prospects.
Risk management approach
The Group has a Group‐wide foreign exchange risk management policy which governs the
management of currency risk at both the project and balance sheet level. The Group uses
non‐derivative financial instruments, such as borrowings in the foreign currencies, to hedge
its investments in foreign operations. Foreign currency risk is monitored and managed
centrally through our Group Treasury function.
The Group has a Board‐approved Credit Risk Management Policy mandating minimum
credit ratings for financial counterparties. The Group minimises concentrations of credit
risk by undertaking transactions with a large number of customers in various currencies.
Project‐related counterparty risks are assessed and monitored at both the Operating
Company‐level and Group‐level based on the delegated levels of authority within the
Group’s corporate governance model.
The Group seeks to maintain an investment grade credit rating and conservative gearing
ratios by taking a portfolio approach to financial risk management.
Our Board‐approved polices covering funding, liquidity and investments are designed to
ensure that the Group can manage its operations through the business cycle and deal with
unexpected shocks should they arise. As part of these policies, the Group ensures sufficient
levels of cash and committed credit facilities are maintained in order to meet working
capital requirements. The funding policy also places a limit on the amount of debt that can
mature in any one year to reduce refinancing risk.
Liquidity is monitored at a Group‐level through our centralised Treasury function and
senior management key performance indicators throughout the Group include a
component tied to delivery of cash targets.
The Group actively manages our equity investments to maximise returns, including
participation at Board‐level of our investment portfolio, and via regular performance
reviews at both the Operating Company‐level and centrally through the Investment,
Divestment and Acquisitions function at Leighton.
The Group actively manages its property, plant and equipment fleet to maximise
utilisation, both at Operating Company‐level and centrally through FleetCo. Additionally, a
comprehensive insurance program is maintained by the Group.
The Group maintains a diverse portfolio of projects and investments across a range of
markets and geographies. Underpinning this is our ‘stabilise, rebase and grow’ strategy.
The Group conducts regular and rigorous strategic reviews of the Group’s geographies,
industries, activities and competitors when assessing opportunities, options and associated
risks. The Group leverages a range of internal and external industry experts and
stakeholders across geographies and levels to gain valuable insights, develop options for
the Group, and validate implications and conclusions during this process.
The Group regularly engages with external stakeholder groups (including Government) to
inform debates and decisions around infrastructure and resources investment.
The Group continually identifies, develops and implements strategic initiatives. Strategic
reviews, risk assessments and external sources are used, among others, to begin the
scoping of initiatives. Teams consisting of internal and, where required, external experts
drive change, with dedicated resources to ensure successful delivery against target
outcomes.
The Group seeks to continually evolve by sharing knowledge, driving innovation and
working with strategic partners to prepare the Group for future business requirements.
The Group maintains a project, contract and investment portfolio that is diversified by
geography, market, activity and client in order to reduce the impact of volatility.
At a Group level, our 5FT are key initiatives in reducing our controllable costs and thereby
our value‐add for all Group clients.
In addition to focusing on delivering our services efficiently and effectively, we continually
review and evolve our value proposition to ensure our services are attractive to current
and future clients.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
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Risk Description
OPERATIONS
A workplace health and safety breach or
unplanned event may put our people and
financial prospects at risk.
The environment in which we work may be
affected by unplanned incidents or events on
our projects or contracts affecting financial
prospects.
Failure to attract, develop and retain suitable
and sufficient employees may impact our
ability to deliver and support our current
portfolio and strategic initiatives, affecting our
financial prospects.
Issues impacting our brand and reputation,
including a breach of our Code of Business
Conduct, may subsequently impact our ability
to secure future work opportunities,
investment, suppliers or joint venture
partners.
Work procurement issues and challenges may
impact our ability to maintain work in hand
comprising diverse, high quality projects and
contracts, and subsequently, our ability to
meet financial prospects.
Work delivery challenges, including inherent
uncertainties associated with construction
contracts and the nature of our industry, may
manifest in actual costs varying from our
earlier estimates (including but not limited to
weather events, pricing and availability of raw
materials and subcontractors, wage inflation,
productivity issues, and technical or
geotechnical problems) or issues in recovery
of variations and claims from clients, each of
which may result in impacts to future profits
or reductions or reversals of previously
recorded profits affecting financial prospects.
Risk management approach
The Group is committed to the highest standards of workplace health and safety in all its
endeavours. We apply our safety policies and standards consistently across the Group, and
we continually monitor to ensure our controls are both appropriate and effective.
Our safety performance is a Group‐wide responsibility. Clear responsibilities for safety are
outlined for individuals, line management, senior management and Operating Company
Executive Leadership Teams. We also invest in a wide range of workplace health and safety
initiatives to ensure safety remains top‐of‐mind for all of our employees.
Safety governance for the Group is provided by the Board and the Ethics and Compliance
Committee.
The Group is committed to the highest standards of environmental performance across our
portfolio of projects and contracts. Environmental policies and procedures exist in each of
our Operating Companies and are aligned under the Leighton Group Environmental Policy
and Standards. Should incidents occur, emergency response plans will be enacted in
accordance with Group Emergency and Crisis Management procedures. The Ethics and
Compliance Committee provides environmental performance oversight.
The Group policies and processes address recruitment and resource planning, diversity,
remuneration, leadership development and succession planning, thereby ensuring the
Group maintains a deep and diverse range of talent with a common, Leighton values driven
culture.
The Group remains committed to the highest standards of ethical conduct, and statutory
and regulatory compliance. This commitment is supported by a comprehensive range of
Group‐level policies and standards, and delivered by the corresponding management
systems in each of our Operating Companies.
Our Group’s corporate governance model promotes clear governance through the
empowerment of individuals with delegated authority, clearly defined risk‐taking levels of
authority and risk escalation criteria, appropriate segregation of duties, and clear
ownership, accountability and oversight for risks at all levels of our business.
Our Code of Business Conduct has been rolled out across the Group, as have our
significantly enhanced Work Procurement Standards complete with revised delegations of
authorities.
Across the Group we continue to work closely with key clients, suppliers and stakeholders
to communicate our new protocols, revised management structures and to provide
assurance as required.
The Group focuses on tender success rate strategies to secure high quality projects and
contracts with commensurate returns for the risks taken. The rigour of our Group Work
Procurement Standards and our five gate approval process (described below) ensures we
meet the minimum requirements and expectations of the Group when identifying
opportunities and procuring new work in accordance with approved business plans.
Each of our Operating Companies and Leighton Holdings have Pre‐Contracts Assurance
teams to provide appropriate assurance that tenders are rigorously prepared and
appropriately balance risk with return.
Oversight of key tenders is provided by the Tender Review and Risk Committee.
Our Operating Companies are structured and resourced to provide project delivery teams
with the necessary support and oversight to successfully achieve project and business
objectives.
In addition to monthly project performance reviews, our Operating Companies, together
with Leighton Holdings, review project and business performance on a quarterly basis
across the Group. Where necessary, revenue collection teams are established to drive
required outcomes.
Overlaying this, our Internal Audit teams work collaboratively with our Operating
Companies to prioritise, plan and conduct their activities in a manner that best supports
the achievement of our objectives.
The Audit Committee and the Tender Review and Risk Committee maintain oversight of
projects at risk.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
DIRECTORS’ REPORT continued
Operating and Financial Review continued
ANNUAL REPORT ����
59
59
Risk Description
Failure to innovate or evolve our products and
services with client future requirements can
lead to a loss of market share and/or
competitive advantage, thereby impacting
Group revenue and growth plans, affecting
financial prospects.
Interruption, compromise or failure of our
information and communication technology
and systems may adversely impact our ability
to operate effectively and efficiently, affecting
financial prospects.
Risk management approach
Group initiatives (including our 5FT) are yielding a leaner and more efficient operational
platform to support our future competitiveness.
The Group is continually developing the necessary competencies and knowledge in our
people to further enhance Group capability and capacity. Our Operating Companies each
have programs to drive innovation excellence across the Group, as does Leighton Holdings
through the annual Leighton Values Awards.
All Operating Companies are currently and collectively focused on key client relationships
to better understand future client directions and requirements.
The Group maintains appropriate information and communication technology systems,
resources, security devices and measures to ensure the security, integrity and availability of
data. Security crisis management, incident management, service continuity and disaster
recovery plans are established and tested as appropriate.
Tender risk
Sound procurement practices are essential to winning and
executing profitable contracts with an acceptable risk profile.
These practices include our five gate approval process:
1. Pursue a Prospect;
2. Submit a Proposal;
3. Prepare a Tender;
4. Submit a Tender; and
5. Execute a Contract.
Leighton requires visibility of prospects that the Operating
Companies are pursuing, which are within the delegations of
authority of the Tender Review and Risk Committee and the
Leighton CEO. This provides an understanding of the potential
aggregate risk profile at Group‐level.
Prospective projects with a contract value of $0.5 billion or more
are required to be approved by the Leighton CEO. Projects with a
value of more than $1 billion require review by the Tender Review
and Risk Committee, and the Tender Review and Risk Committee
may refer approval to the Board.
In addition, projects that require equity participation, involve
undertakings in new countries, or are outside the core
competencies of the bidding Operating Company may be treated as
high‐risk and subject to additional approvals.
All prospects must be tested against risk assessment criteria
including: client profile, strategic approach, financial limits,
contract terms and delivery obligations.
In the 2013 Financial Year, the Tender Review and Risk Committee
met eight times and reviewed tenders with a combined project
value of $20 billion.
Leighton Holdings Limited Annual Report 2013
ANNUAL REPORT ����
60
60
GROUP PROSPECTS
The prospects for individual markets are outlined previously. The
Group is well‐placed as a long‐term provider of construction,
mining and services in Australia and in many key Asian locations. As
a contractor, Leighton has exposure to these markets, both directly
by working in them, and indirectly as a supplier of services to
clients that are supplying to Asia.
Backing these market opportunities is a strong level of work in
hand with a healthy level of inherent profitability.
The Group remains focused on improving its margins and
profitability. In the near‐term there are a clear set of priorities to
stabilise and rebase the Group.
Beyond this time, Leighton will seek to grow returns from existing
markets and export skills to new markets, while delivering the best
solutions for clients and driving sustainable growth for
shareholders.
LEIGHTON HOLDINGS LIMITED
THE MACRO‐OPERATING ENVIRONMENT
Since the first half of the 2013 Financial Year, underlying
fundamentals appear to be regaining strength, particularly in
advanced economies, and global economic indicators are on the
rise.
ECONOMICS
Positive signs are emerging in advanced economies. The IMF
forecasts advanced economies to grow at 2.2% in 2014, up from
1.3% in 2013. The US economy has experienced solid private
demand and monetary policy is reaching a turning point. Growth in
the US is forecast to reach 2.8% in 2014 compared with 1.9% in
2013. In Europe, business confidence indicators suggest activity is
recovering in the core economies, and GDP growth is forecast to
reach 1% in 2014.
Emerging economies are forecast to grow at 5.1% in 2014 and 5.4%
in 2015, slightly below previous projections. The slowdown is
largely attributed to China’s economy transitioning to slower, albeit
more sustainable, growth levels of approximately 7.5% in 2014.
UNDERLYING MARKET DRIVERS AND DEVELOPMENTS
The long‐term underlying market drivers continue to support a
strong outlook for global infrastructure demand. Infrastructure
demand will be driven by multiple factors including population
growth, rapid urbanisation, increased energy and water
consumption, rising incomes and new technologies.
An estimated $5 trillion per annum in global infrastructure
investment is needed to support a global population of nine billion.
The United Nations estimates that Asia and Africa will account for
nearly 90% of the world’s future population growth until 2030 – an
additional 1.1 billion people. These regions will also experience a
rapid acceleration of their urbanisation rates (currently the lowest
in the world).
Against a backdrop of increased fiscal constraint, public private
partnerships and public concession models offer Governments
around the world, particularly those in emerging markets and with
higher debt levels, opportunities to deliver infrastructure solutions
efficiently and effectively. While at a relatively early stage of
development, emerging economies across the world are
developing plans and legislation to facilitate greater public and
private sector collaboration.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
DIRECTORS’ REPORT continued
Operating and Financial Review continued
OPERATING REVENUE ANALYSIS
FOR THE 2013 FINANCIAL YEAR
GROUP
BY COMPANY
Leighton Contractors
Thiess
John Holland
LAIO
HLG
Commercial and Residential Property
Corporate/Eliminations
TOTAL
GROUP
BY MARKET
Infrastructure
Resources
Property
Corporate/Eliminations
TOTAL
GROUP
BY ACTIVITY
Construction
Contract Mining
Services
Development
Corporate/Eliminations
TOTAL
AUSTRALIA/OCEANIA
BY MARKET
Infrastructure
Resources
Property
Corporate/Eliminations
TOTAL
INTERNATIONAL
BY COUNTRY
Indonesia
Hong Kong/Macau
Middle East
India
Mongolia
Other
TOTAL
ANNUAL REPORT ����
61
61
31 DECEMBER 2013
31 DECEMBER 2012
$M
7,941
6,863
4,755
3,267
499
642
444
24,411
33%
28%
19%
13%
2%
3%
2%
100%
$M
7,136
7,237
4,546
2,629
445
558
576
23,127
31 DECEMBER 2013
31 DECEMBER 2012
$M
13,440
8,490
2,037
444
24,411
55%
35%
8%
2%
100%
$M
11,863
9,143
1,545
576
23,127
31 DECEMBER 2013
31 DECEMBER 2012
$M
16,089
4,563
2,673
642
444
24,411
66%
19%
11%
2%
2%
100%
$M
14,295
5,429
2,269
558
576
23,127
31 DECEMBER 2013
31 DECEMBER 2012
$M
11,316
6,659
1,342
444
19,761
57%
34%
7%
2%
100%
$M
9,973
7,310
1,256
576
19,115
31 DECEMBER 2013
31 DECEMBER 2012
$M
1,535
1,459
772
279
162
443
4,650
33%
31%
17%
6%
3%
10%
100%
$M
1,552
786
978
179
203
314
4,012
31%
31%
20%
12%
2%
2%
2%
100%
51%
40%
7%
2%
100%
62%
24%
10%
2%
2%
100%
52%
38%
7%
3%
100%
39%
20%
24%
4%
5%
8%
100%
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
62
62
WORK IN HAND ANALYSIS
AS AT THE END OF THE 2013 FINANCIAL YEAR
GROUP
BY COMPANY
Thiess
Leighton Contractors
LAIO
John Holland
Commercial and Residential Property
HLG
TOTAL
GROUP
BY MARKET
Infrastructure
Resources
Property
TOTAL
GROUP
BY ACTIVITY
Construction
Contract Mining
Services
Development
TOTAL
AUSTRALIA/OCEANIA
BY MARKET
Infrastructure
Resources
Property
TOTAL
INTERNATIONAL
BY COUNTRY
Hong Kong/Macau
Indonesia
Middle East
Mongolia
India
Other
TOTAL
31 DECEMBER 2013
31 DECEMBER 2012
$M
12,415
12,112
8,644
5,347
2,391
1,262
42,171
29%
29%
20%
13%
6%
3%
100%
$M
15,538
11,977
6,365
6,413
1,004
2,189
43,486
31 DECEMBER 2013
31 DECEMBER 2012
$M
18,782
16,785
6,604
42,171
44%
40%
16%
100%
$M
16,902
23,040
3,544
43,486
31 DECEMBER 2013
31 DECEMBER 2012
$M
19,369
14,445
5,966
2,391
42,171
46%
34%
14%
6%
100%
$M
17,753
18,595
6,134
1,004
43,486
31 DECEMBER 2013
31 DECEMBER 2012
$M
15,455
11,251
3,187
29,893
52%
38%
10%
100%
$M
14,011
13,841
1,785
29,637
31 DECEMBER 2013
31 DECEMBER 2012
$M
4,062
3,639
1,412
1,173
935
1,057
12,278
33%
30%
11%
9%
8%
9%
100%
$M
1,430
7,184
2,402
1,206
782
845
13,849
36%
27%
15%
15%
2%
5%
100%
39%
53%
8%
100%
41%
43%
14%
2%
100%
47%
47%
6%
100%
10%
52%
17%
9%
6%
6%
100%
Leighton Holdings Limited Annual Report 2013
Leighton Holdings Limited Annual Report 2013
63
63
Remuneration Report
(Audited)
Leighton Holdings Limited Annual Report 2013 LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
64
64
Remuneration Report
(Audited)
MESSAGE FROM THE BOARD
We are pleased to present the Remuneration Report for the
financial year ended 31 December 2013 (2013 Financial Year) to
clearly explain to shareholders the remuneration framework and
outcomes for our senior executives and Non‐executive Directors
during 2013.
REMUNERATION FRAMEWORK
During the 2013 Financial Year, we continued to embed and refine
the new remuneration framework that was successfully
implemented in 2012. As described in last year’s Remuneration
Report, this new framework is designed to:
enhance the alignment between shareholder and executive
interests; and
reward performance that supports the Group’s business plans
and our values of discipline, integrity, safety and success.
In addition, as part of our Short‐Term Incentive (STI) plan, we
cascaded through additional levels of our senior executives
targeted financial and non‐financial performance measures aligned
with our Group strategies and business plans.
First grants under the new Long‐Term Incentive (LTI) plan were
made in 2012, and this year’s grants were made on a similar basis
with two performance measures applying to the share rights
(relative Total Shareholder Return (TSR) and absolute Earnings Per
Share (EPS) growth targets). These LTI grants will be tested in
accordance with the LTI plan rules at the end of the three‐year
performance period ending on 31 December 2015.
Looking ahead, as part of our process of continuous improvement,
we will introduce changes in 2014 to refine the performance
measures that apply to our STI. In particular, the scorecards will
place further emphasis on cash generation and debt reduction. In
addition to the existing Net Profit After Tax (NPAT) gateway, we will
be introducing a second gateway related to cash earnings,
specifically economic profit to emphasise the need for cash‐backed
profits.
For the Executive Directors (Chief Executive Officer (CEO) and
Deputy CEO and Chief Financial Officer (DCEO&CFO)) the STI
opportunity and STI Deferral will be adjusted to better reflect this
emphasis over the short‐ to medium‐term while maintaining our
commitment to market best practice. From 2014 their STI
opportunity will be 120% of Total Fixed Remuneration (TFR) with a
corresponding one‐year deferral of 30% of the achieved STI
amount. In order to maintain the current ratio of fixed to variable
remuneration, we will be reducing the LTI opportunity from 100%
to 80% of TFR.
These refinements will ensure that our remuneration framework
continues to challenge our senior executives to achieve outcomes
that are consistent with the Group’s strategic focus and are
designed to support the ‘rebase’ phase of our ‘stabilise, rebase and
grow’ strategy.
In alignment with the changes for Executive Directors, we will
reduce the deferral percentage for our other Key Management
Personnel (KMP) to 25% of the achieved STI amount.
2013 FINANCIAL YEAR
The financial Key Performance Indicators (KPIs) for Leighton
Holdings executives in the 2013 Financial Year were focused on
Underlying Net Profit After Tax (UNPAT), economic profit and
gearing ratio in addition to Underlying Profit Before Tax (UPBT) and
operating cash flow for Operating Company Managing Directors.
For the 2013 Financial Year, Leighton delivered an UNPAT result of
$584 million, which is at the upper end of the market guidance of
$520 to $600 million. This was achieved with the background of
both a softening market (referring in particular to the resources
sector) and the continuing impact of legacy projects.
In addition to the financial results, significant progress has been
made on key initiatives which form a part of our ‘stabilise, rebase
and grow’ strategy. These initiatives, which include:
improving management structures;
managing Group assets more effectively;
designing and implementing global business services; and
advancing strategic procurement,
will transform our business and position us for future growth.
improving the cash position of the business;
The STIs paid to senior executives for the 2013 Financial Year are
between 26.7% and 133.3% of the target opportunity, which
reflected Group and varied levels of Operating Company
performance. The Board is confident that these STIs are
representative of the overall performance of our senior leaders,
taking into account both financial and non‐financial performance
indicators.
KMP
The 2013 Financial Year saw the consolidation of some of our
senior executive roles, with Peter Gregg appointed to Deputy CEO
(in addition to his role as Chief Financial Officer (CFO)), and the
expansion of Dharma Chandran’s role as Chief Human Resources
Officer to encompass Corporate Services, specifically responsible
for the legal and internal communications functions in addition to
the human resources function.
We were also pleased to welcome three new independent Non‐
executive Directors during 2013 – Russell Higgins AO, Michael
Hutchinson and Vickki McFadden – who each bring fresh
perspectives to the Board as a result of their diverse backgrounds.
We invite you to read this Remuneration Report and welcome any
questions you may have at our Annual General Meeting (AGM) in
May 2014.
Robert Humphris OAM
Chairman
20 February 2014
Remuneration Report
(Audited)
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
DIRECTORS’ REPORT continued
Remuneration Report continued
TABLE OF CONTENTS
Section Title
Introduction
Remuneration governance
Executive remuneration
1
2
3
4
5
ANNUAL REPORT ����
65
65
Description
Describes the scope of the Remuneration Report and the individuals whose
remuneration details are disclosed.
Describes the role of the Board, the Remuneration and Nominations Committee, and
the use of external advisers when making remuneration decisions.
Outlines the executive remuneration framework, including an explanation of the
elements of remuneration and how remuneration is tied to performance. It also
includes a summary of service contract terms for senior executives and disclosure of
remuneration outcomes for the 2013 Financial Year.
Non‐executive Director remuneration
Provides details regarding the fees paid to the Non‐executive Directors.
Additional incentive plan disclosures
Provides additional incentive plan information required by the Corporations Act and
applicable accounting standards.
1.2 KMP FOR THE 2013 FINANCIAL YEAR
For the purposes of this Remuneration Report, the KMP are
referred to as either senior executives or Non‐executive Directors.
In addition to the KMP, disclosure is provided in relation to
Alternate Directors as applicable.
The senior executives and the Non‐executive Directors as at
31 December 2013 are set out in the table opposite.
1. INTRODUCTION
This section describes the scope of this Remuneration Report and
the individuals whose remuneration details are disclosed.
1.1 SCOPE
This Remuneration Report sets out, in accordance with the
Corporations Act 2001 (Cth) (Corporations Act) and relevant
accounting standard requirements, the remuneration
arrangements in place for the KMP of the Group during the 2013
Financial Year.
The information provided in this Remuneration Report has been
audited, with the exception of the table on page 78 setting out the
total remuneration realised in the 2013 Financial Year. This table is
not audited because the information within it is provided
voluntarily to supplement the audited disclosures made in the
statutory senior executive remuneration table in this Remuneration
Report on pages 79 to 80 which are in accordance with the
Corporations Act and accounting standards.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
KMP (as at 31 December 2013)
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Title (at 31 December 2013)
Change during the 2013 Financial Year
Chairman and independent Non‐executive Director
Deputy Chairman and independent Non‐executive Director Appointed Deputy Chairman 24 March 2013
Independent Non‐executive Director
Independent Non‐executive Director
Independent Non‐executive Director
Non‐executive Director
Appointed 18 June 2013
Appointed 18 June 2013
Appointed 18 June 2013
Appointed Chairman 24 March 2013
Name
Non‐executive Directors
Robert D Humphris OAM
Paula J Dwyer
Russell A Higgins AO
Michael J Hutchinson
Vickki A McFadden
Marcelino Fernández
Verdes
David P Robinson
Peter W Sassenfeld
Alternate Directors
Pedro López Jiménez
Robert L Seidler AM
Non‐executive Director
Non‐executive Director
Alternate Director for Peter W Sassenfeld
Alternate Director for Marcelino Fernández Verdes
Executive Directors
Hamish G Tyrwhitt
Peter A Gregg
Leighton Holdings executives
Dharma Chandran
CEO
Deputy CEO and CFO
Michael J Rollo
Adolfo Valderas
Operating Company Managing Directors
Ian L Edwards
Chief Human Resources and Corporate Services Officer
(CHR&CSO)
Chief Risk Officer (CRO)
Chief Operating Officer (COO)
Managing Director, Leighton Asia, India and Offshore
(LAIO)
Managing Director, Leighton Properties
Managing Director, Leighton Contractors
Managing Director, Thiess
Managing Director, John Holland
Mark C Gray
Craig A Laslett
Bruce A Munro
Glenn M Palin
Appointed 18 June 2013
Appointed 18 June 2013 (previously an Alternate
Director for David P Robinson from 12 November
2012 to 18 June 2013)
Appointed Deputy CEO 12 April 2013
Appointed CHR&CSO 22 May 2013 (previously
Chief Human Resources Officer)
Appointed COO 4 December 2013
KMP (departures during the 2013 Financial Year)
Name
Stephen P Johns
Ian J Macfarlane AC
Wayne G Osborn
Richard Willcock
Title
Chairman and independent Non‐executive Director
Independent Non‐executive Director
Independent Non‐executive Director
Group Company Secretary and General Counsel
Change during the 2013 Financial Year
Resigned 22 March 2013
Resigned 22 March 2013
Resigned 22 March 2013
Resigned 17 April 2013
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DIRECTORS’ REPORT continued
Remuneration Report continued
2. REMUNERATION GOVERNANCE
This section describes the role of the Board, the Remuneration and
Nominations Committee, and the use of external advisers when
making remuneration decisions.
2.1 ROLE OF THE BOARD AND THE REMUNERATION AND
NOMINATIONS COMMITTEE
The Board is responsible for the Group’s approach to
remuneration. Consistent with this responsibility, the Board has
established a Remuneration and Nominations Committee that
comprises a majority of independent Directors.
The role of the Remuneration and Nominations Committee is set
out in its Charter, which was last revised and approved by the
Board on 18 October 2013 (and is available on our website at
www.leighton.com.au/our‐approach/board‐and‐
governance/corporate‐governance‐approach). With respect to its
remuneration functions, its role is to:
review and approve the remuneration strategy and policies for
the Group;
consider and propose to the Board the remuneration of the
CEO and consider and approve the remuneration for all other
senior executives;
review and approve the Group’s STI and LTI plans, and the
amount, terms of grants and payments made to senior
executives under those plans;
determine and approve the treatment of equity awards when
senior executives cease employment; and
review and make recommendations to the Board regarding the
remuneration of Non‐executive Directors.
In making its decisions, the Remuneration and Nominations
Committee considers advice from the CEO and other members of
management (except in relation to their own remuneration) and
from external advisers.
Further information on the Remuneration and Nominations
Committee’s role, responsibilities and membership is contained in
the Corporate Governance Statement on pages 22 to 23.
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2.2 USE OF EXTERNAL ADVISERS
The Remuneration and Nominations Committee seeks and
considers advice from independent external advisers when
required. Such advice will typically cover Non‐executive Director
remuneration, senior executive remuneration and advice in
relation to the equity plans.
Ernst & Young has been approved by the Remuneration and
Nominations Committee to be the Group’s principal adviser on
executive remuneration. During the 2013 Financial Year, the main
focus of Ernst & Young’s role was:
providing market review information relating to remuneration
levels for Non‐executive Directors and senior executives;
providing employee equity‐related and general employment
taxation and compliance advice; and
assisting with calculating relative TSR performance.
During the 2013 Financial Year, no remuneration
recommendations, as defined by the Corporations Act, were
provided by Ernst & Young, nor were any other external advisers
engaged to provide such recommendations.
3. EXECUTIVE REMUNERATION
This section describes the remuneration approach that applied
during the 2013 Financial Year, as well as how performance is
linked to reward under the executive remuneration framework.
3.1 REMUNERATION PRINCIPLES
The key remuneration principles are to:
ensure that executives are rewarded on the basis of
performance measures that support the Group’s business plans
and strategy and are consistent with our values of discipline,
integrity, safety and success;
align the interests of executives and shareholders by focusing
on those characteristics that underpin growth in shareholder
value;
attract and retain key talent; and
provide a balance between:
o
o
o
fixed and performance‐based, variable remuneration;
remuneration paid in cash and through the issue of
equity; and
short‐ and long‐term performance horizons.
3.2 REMUNERATION COMPONENTS
Executive remuneration for the 2013 Financial Year was delivered
as a mix of fixed and variable remuneration, set out in the table
below. Variable remuneration is remuneration that moves up or
down to reflect Group and individual performance, and can be
earned through the STI and LTI components.
Fixed
Fixed remuneration
STI
Variable
LTI
Base salary, non‐monetary benefits and superannuation.
Annual variable remuneration delivered as a combination of cash and deferred equity,
subject to financial and personal performance measures.
Equity‐based award subject to performance hurdles measured over a three‐year
performance period.
How each of these components align with, and support, the Group’s business strategy is shown in the diagram opposite.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
Executive remuneration framework
Business strategy
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Our aim is to be renowned for excellence, delivered through our operating brands and the empowerment of our people. Our strategy is to
take our core competencies to selected markets and deliver value‐added services and projects for clients through our diversity, empowered
people and financial strength.
Remuneration framework
Fixed remuneration
Reviewed annually
Defined peer groups for
comparison
A defined policy
regarding how
remuneration should
compare to those peer
groups
Influenced by individual
performance
Outcomes
Market competitive
remuneration to attract
and retain executives
STI
Based on a mix of financial and non‐financial measures
LTI
The plan provides the Remuneration and
relevant to an executive’s specific role
Financial gateways are established at the start of the
performance period; if the gateways are met, the
scorecard is opened for assessment
Performance measured over a 12‐month period to
encourage the achievement of our annual targets and
business strategy; annual awards are possible
depending on performance achieved
Leighton Holdings executives’ financial performance is
based on Group performance; Managing Directors of
the Operating Companies’ financial performance is
based on Group and Operating Company performance
Paid as a combination of cash (50% for the CEO and
DCEO&CFO and 60% for all other senior executives)
and share rights that are deferred for a further two‐
year period
Subject to withholding or clawback at the judgment of
the Remuneration and Nominations Committee
Nominations Committee with the flexibility
to determine the nature, terms and
conditions of each grant each year
The 2013 grant operates as an award of
share rights, which is a right to receive a
share if specific performance measures are
met
Performance measures for the 2013 grant
are TSR measured against a group of peer
companies and compound annual EPS
growth measured against pre‐determined
targets. Both performance measures are
assessed over the same three‐year period
No retesting
Focuses executives on achieving a combination of
Group financial performance, Operating Company
financial performance and non‐financial performance
measures over a 12‐month period
Deferral into share rights ensures executives are only
rewarded if Group and Operating Company
performance is sustainable, assists with retention of
key executives and provides the Remuneration and
Nominations Committee with the ability to reduce the
deferred amount, if appropriate, with the benefit of
hindsight
Focuses executives on growing Group
earnings and shareholder returns over the
next three years
Creates ongoing alignment with
shareholders and enhances retention
Annual LTI grants result in continuing
exposure to the Group’s share price and a
focus on rolling performance periods,
thereby encouraging stable growth
3.3 TIMING OF REMUNERATION COMPONENTS
The different components of remuneration reflect a focus on both
short‐term and long‐term performance, and delivery of these
components over different time frames ensures that executives
remain focused over a multi‐year horizon.
Generally, if executives leave the Group before these awards vest,
they will forfeit their entitlement. The granting of equity to senior
executives under the STI and LTI plans also ensures senior
executives’ rewards are aligned with shareholder returns by having
ongoing exposure to the company’s share price.
Retention of executives is assisted by:
the deferral of a portion of any STI earned by the executives
during the year; and
the annual award and multi‐year performance period of the LTI
plan.
The diagrams overleaf outline the process and timing for
determining executive remuneration that applied during the 2013
Financial Year, and the layered retention effect created by the
design of the remuneration framework and the annual award cycle.
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3.4 APPROACH TO SETTING REMUNERATION
Individual remuneration is determined by reference to:
the policy remuneration mix, set out in the table below, applied
in accordance with the terms of senior executives’ Executive
Services Agreements;
available market data for comparable roles; and
consideration of factors specific to the individual.
The market data referenced in reviewing remuneration is for
comparable roles in similar‐sized Australian listed companies based
on market capitalisation, Group revenue and Operating Company
revenue, as relevant. Consideration is also given, where
appropriate, to employee numbers and specific peer companies.
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Fixed remuneration and total target remuneration is typically
positioned between the median and the 75th percentile of the
relevant market. The objective of this target positioning is to
facilitate the attraction and retention of the best talent in a
competitive market.
Actual market positioning for each individual may deviate (above or
below) from the positioning policy due to consideration of internal
relativities, experience, tenure in role and individual performance.
Remuneration levels are reviewed annually by the Remuneration
and Nominations Committee and upon change of an executive’s
position. The Board approves any changes to the CEO’s
remuneration arrangements following consideration by the
Remuneration and Nominations Committee.
2013 policy remuneration mix
ROLE
CEO and DCEO&CFO
Managing Directors of
Australian Operating
Companies
Managing Director of LAIO,
CHR&CSO and CRO
Fixed
remuneration
33.3%
Policy remuneration mix (% of total remuneration)
LTI (grant value)
Target STI (including deferral)
33.3% (ie, 100% of fixed remuneration)
33.3% (ie, 100% of fixed remuneration)
40.0%
30.0% (ie, 75% of fixed remuneration)
30.0% (ie, 75% of fixed remuneration)
45.4%
27.3% (ie, 60% of fixed remuneration)
27.3% (ie, 60% of fixed remuneration)
3.5 EXECUTIVE REMUNERATION COMPONENTS IN DETAIL
The details of the components of remuneration for senior
executives for the 2013 Financial Year are set out below.
In addition to the components of remuneration that were granted
to executives in 2013, there were prior year Medium‐Term
Incentives (MTI) and legacy LTI grants that were available for
vesting in the 2013 Financial Year. The outcomes of these grants
are disclosed in section 5: Additional incentive plan disclosures of
this Remuneration Report on pages 85 to 88 and any remuneration
realised by executives as a result of vesting of these awards are
included in section 3.6: Senior executive total remuneration of this
Remuneration Report on pages 78 to 80.
3.5.1 FIXED REMUNERATION
Fixed remuneration received by senior executives comprised of
base salary, superannuation and non‐monetary benefits.
Non‐monetary benefits included such items as one or more of:
company motor vehicles; car allowances; novated vehicle leases;
voluntary superannuation contributions; fringe benefits and other
salary‐sacrificed benefits as agreed from time to time. Expatriate
benefits were provided to senior executives in overseas locations.
In accordance with the terms of their Executive Services
Agreements, a review of each senior executive’s remuneration was
undertaken at the commencement of the 2013 Financial Year. As a
result of the review, Mr Tyrwhitt, Mr Chandran, Mr Rollo,
Mr Munro, Mr Laslett, Mr Palin, Mr Edwards and Mr Gray all
received increases to their fixed remuneration in line with market
positioning, effective from 1 January 2013.
Mr Chandran also received an increase to his fixed remuneration
during the 2013 Financial Year due to the expansion of his role
from Chief Human Resources Officer to Chief Human Resources and
Corporate Services Officer (CHR&CSO).
No other changes were made to fixed remuneration for senior
executive roles in the 2013 Financial Year compared with the
financial year ended 31 December 2012 (2012 Financial Year).
3.5.2 STI PLAN
The STI is designed to drive performance and directly align an
individual executive’s reward with the Group’s strategies and
business plans. The financial measures are customised to the senior
executive’s role in order to ensure a clear line of sight between
their day‐to‐day activities and STI measures, whilst critical
initiatives such as enhancing our approach to risk management and
improving the safety of our people are included in the non‐financial
component to ensure these are recognised and rewarded.
In 2013, two additional financial performance measures were
introduced:
1. economic profit, which emphasised the cash component of
profit and took into account the capital requirements of the
various business activities; and
2. gearing falling within a targeted range.
These additional measures aligned the remuneration of the senior
executives with our focus on optimising the allocation of capital,
managing operating cash flow and reducing net debt on our
balance sheet.
The diagram overleaf provides an illustration of how the 2013
Financial Year STI operated for senior executives, and further
details are set out in the table overleaf.
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Illustration of the 2013 Financial Year STI for senior executives
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Summary of 2013 STI
Who participated?
How much could
executives earn under
the 2013 Financial Year
STI?
All senior executives.
The amount of the STI opportunity is based on a percentage of the senior executive’s fixed remuneration, with
levels of reward for threshold, target and stretch performance.
The STI opportunities for 2013 were:
Role
Percentage of fixed remuneration
Over what period was
performance
measured?
What were the
performance
conditions?
Why were those
performance measures
chosen?
Threshold
60%
45%
Target
100%
75%
CEO and DCEO&CFO
Managing Directors of Australian Operating
Companies (excluding Leighton Properties)
Managing Director of Leighton Properties*
Managing Director of LAIO, CRO and CHR&CSO
* The Managing Director of Leighton Properties has a higher STI opportunity as he does not participate in the LTI.
The 2013 Financial Year.
150%
90%
100%
60%
60%
36%
Stretch
150%
112.5%
Financial measures
60% of the amount that could be earned as STI was
based on performance against financial measures and
targets.
For Leighton Holdings senior executives, this financial
component was based on Group UNPAT, economic
profit and gearing ratio targets. For the Managing
Directors of Operating Companies, 30% was based on
Group UNPAT, economic profit and gearing ratio
targets, and 30% was based on the relevant Operating
Company financial performance.
For Leighton Contractors, Thiess, John Holland and
LAIO, Operating Company financial performance was
measured by reference to UPBT and operating cash
flow. For Leighton Properties, Operating Company
financial performance was measured by reference to
Profit Before Tax (PBT) and a funds employed limit.
A penalty of up to 30% could be applied against either
the earned Operating Company financial component of
the STI for failure to adhere to capital expenditure
limits, or a net provisions limit.
Gateways
In addition, threshold Leighton Holdings financial
performance had to be met before any STI was paid
(unless the Remuneration and Nominations Committee
in its judgment determined otherwise). For 2013, the
Group financial threshold was set at $500 million
UNPAT. For Managing Directors of Operating
Companies, additional gateways related to Operating
Company financial performance also applied.
Individuals must also be considered to be “meeting
expectations” for the role in order to be eligible for an
STI.
The financial measures ensure that the executive
focuses on the key financial objectives of the Group
(and where applicable, the relevant Operating
Company) consistent with the Business Plan for the
relevant year and the Group’s strategic objectives.
Non‐financial measures
40% of the amount that could be earned as STI was
based on performance against non‐financial measures
and targets that were tailored to the role of the
relevant executive.
The measures typically focused on the Group’s strategic
priorities, safety and the management of our people.
For the 2013 Financial Year, these included:
key role‐specific strategic initiatives for the year,
consistent with the Group strategy and business
transformation;
demonstration of behaviours aligned with Leighton
Holdings and/or Operating Company values; and
safety measures, such as leadership, sharing of
safety learnings and Total Recordable Injury
Frequency Rate (TRIFR). As a penalty measure, a
10% reduction in total STI is applied where nil
fatalities is not achieved.
The non‐financial measures ensure a direct relationship
between the measures set and the individual
executive’s role. They also ensure that critical
initiatives, such as enhancing our approach to
managing risk, promoting safety and implementing our
leadership development program, are recognised and
rewarded.
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How was performance
against targets
assessed?
How is the STI paid?
What happens if there
is a change of control?
What happens if a
senior executive ceases
employment?
What is the clawback
policy?
Can senior executives
hedge the risk of their
share rights?
Performance against each of the gateways and against financial and non‐financial performance measures was
assessed following the end of the 2013 Financial Year to determine the actual STI payments for that year.
The Remuneration and Nominations Committee reviewed the performance of all senior executives against the
financial measures. The performance of senior executives (apart from the CEO) against the non‐financial measures
was assessed by the CEO, with additional feedback sought from other parties (such as peers and key stakeholders)
where relevant. The CEO recommended the STI payments for each senior executive to the Remuneration and
Nominations Committee for approval. The Remuneration and Nominations Committee and the Board also
reviewed and approved the performance of the CEO against both financial and non‐financial measures.
Notwithstanding performance against the targets, the Remuneration and Nominations Committee retains an
overriding ability to adjust the STI taking into account all relevant circumstances. If circumstances later justify
reducing the award, the Remuneration and Nominations Committee can reduce the share rights (as described
below).
Cash
60% of the STI earned by senior executives (50% for the CEO and DCEO&CFO) is paid in cash once the annual
financial statements of the Group have been finalised and audited for the 2013 Financial Year.
Deferred share rights
The remaining 40% (50% for the CEO and DCEO&CFO) is delivered as share rights, the vesting of which is deferred
for a further two years commencing at the end of the 2013 Financial Year and without any additional performance
measures. On vesting of the share rights, the senior executive receives one share for each share right that vests.
The share rights do not carry any voting or dividend rights. However, on vesting, the senior executive will receive a
payment equivalent to any dividends that would have been paid during the two‐year period on the shares as if
they had been granted at the start of the two‐year deferral period. It is intended that the dividend‐equivalent
payment will be delivered in cash; however, the Remuneration and Nominations Committee has the ability to
provide shares if considered appropriate.
If a change of control occurs, the Board may determine whether, and the extent to which, any unvested share
rights will vest, having regard to all relevant circumstances.
In general, if a senior executive resigns or is terminated for cause, then any unvested deferred share rights will
lapse.
If a senior executive leaves due to any other circumstances (for example, redundancy, retirement or total and
permanent disability), the unvested deferred share rights will continue on foot and vest at the end of the two‐year
deferral period, but will be paid to the senior executive in cash.
The Remuneration and Nominations Committee has the ability to reduce the number of shares a senior executive
receives (ie, clawback) if subsequent events show such a reduction to be appropriate. In making this
determination, the Remuneration and Nominations Committee may consider material changes or reversals in the
Group’s financial position or profitability from one period to the next.
No – the Group’s Securities Trading Policy (consistent with the Corporations Act) prohibits senior executives from
entering into hedging arrangements regarding both vested and unvested securities, which includes the deferred
share rights.
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STI outcomes for the 2013 Financial Year
STI payments for the 2013 Financial Year were determined based on senior executive performance against the applicable financial and non‐
financial targets, as described in the preceding table. The table below sets out the STI outcomes for the 2013 Financial Year, for each senior
executive, including STI as a percentage of target and maximum, as well as a brief summary of how each STI was determined and linked to
performance.
Percentage of available STI earned (inclusive of deferral) and link to performance
STI earned
(A$)
Percentage of
target STI
Percentage of
maximum STI
Link between STI award and performance1
Group financial
Non‐financial
Senior
executive
Leighton
Holdings
executives
H G Tyrwhitt
2,270,250
90.81%
60.54% Actual Group UNPAT and
Gearing were between Target
and Stretch. Economic profit
was below Threshold.
D Chandran
383,125
88.56%
59.04% Actual Group UNPAT and
Gearing were between Target
and Stretch. Economic profit
was below Threshold.
P A Gregg
1,816,200
100.90%
67.27% Actual Group UNPAT and
Gearing were between Target
and Stretch. Economic profit
was below Threshold.
M J Rollo
501,473
96.40%
64.27% Actual Group UNPAT and
Gearing were between Target
and Stretch. Economic profit
was below Threshold.
Strong leadership in building a strategic
management company, contribution to
rebuilding the balance sheet, and
continuing the rollout of the Business
Transformation Program. The 10%
fatality penalty was applied.
Successful delivery of initiatives to
improve leadership capability across
the Group, cascading the Group STI
plan to all critical executive roles and
delivering strategic plans for the
Human Resources, Internal
Communications and Legal functions
(in support of the Business
Transformation Program). The 10%
fatality penalty was applied.
Successful delivery of the 2013
milestones for the finance function
transformation, contribution to
rebuilding the balance sheet and
continuing the rollout of the Business
Transformation Program.
Successful design and implementation
of rigorous risk management and
assurance frameworks, policies,
standards and controls for managing
risk across the Group.
A Valderas
R Willcock
‐
‐
‐
‐
‐
‐
In accordance with the terms of the STI policy document, Mr Valderas will
become eligible for the STI in the 2014 Financial Year.
In accordance with the terms of the STI policy document, Mr Willcock
became ineligible to participate in the 2013 STI as a result of his
resignation during the performance year.
1
Threshold, Target and Stretch values for all of the financial KPIs are approved by the Remuneration and Nominations Committee at the start of the
year.
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STI earned
(A$)
Percentage of
target STI
Percentage of
maximum STI
Link between STI award and performance1
Group financial
Operating Company
financial
Non‐financial
Senior
executive
Operating
Company
Managing
Directors
I L Edwards
HKD
927,426
26.70%
17.80% Actual Group UNPAT
and Gearing were
between Target and
Stretch. Economic
profit was below
Threshold.
M C Gray
957,058
100.85%
C A Laslett
247,509
26.70%
B A Munro
1,236,000
133.33%
G M Palin
910,048
98.17%
67.23% Actual Group UNPAT
and Gearing were
between Target and
Stretch. Economic
profit was below
Threshold.
17.80% Actual Group UNPAT
and Gearing were
between Target and
Stretch. Economic
profit was below
Threshold.
88.89% Actual Group UNPAT
and Gearing were
between Target and
Stretch. Economic
profit was below
Threshold.
65.45% Actual Group UNPAT
and Gearing were
between Target and
Stretch. Economic
profit was below
Threshold.
UPBT threshold not
achieved due to legacy
issues including
contracts in Iraq.
Underlying
performance was
positive. These factors
are reflected in a
reduced STI payment.
UPBT target was
exceeded.
UPBT threshold not
achieved. The reduced
STI recognises efforts
to‐date in managing
legacy issues and
continued progress on
reducing overheads
and reshaping the
business. Underlying
performance was
positive.
UPBT and cash flow
stretch targets were
exceeded.
UPBT and cash flow
was on target.
Implementation of
risk management
processes, and
reduction in
overheads. The 10%
fatality penalty was
applied.
Developed future
work pipeline and
increased pool of
capital through
reduced reliance on
internal funding.
Strengthened
financial position
through reduced
overheads and
meeting work in
hand targets;
improved leadership
development
programs and made
significant
improvements in
year‐on‐year safety
results.
Significant
achievement in
exceeding stretch
safety targets. The
10% fatality penalty
was applied.
Strong leadership in
determining core
competencies, and
development of
centres of
excellence.
1
Threshold, Target and Stretch values for all of the financial KPIs are approved by the Remuneration and Nominations Committee at the start of the
year.
3.5.3 2013 LTI
As described in the 2012 Remuneration Report, first grants under the company’s new LTI plan were made during the 2012 Financial Year. The
terms of the LTI grants that were made to senior executives in the 2013 Financial Year are set out in the table opposite. It is anticipated that,
unless there is an identified business or market need to change, future LTI grants will also be share rights with a three‐year performance period
and include both EPS and TSR performance measures.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
76
76
Summary of 2013 LTI grants
Who participated?
What was granted?
What are the
performance
measures?
Over what period is
performance
measured?
How is TSR
performance
measured?
All senior executives apart from Mr Gray.
Senior executives were granted share rights with a face value equivalent to a percentage of their fixed
remuneration as set out in the policy remuneration mix in section 3.4: Approach to setting remuneration of this
Remuneration Report on page 70.
As the share rights form part of the executive’s remuneration, they are granted at no cost. No exercise price is
payable by the participant on vesting of the share right.
The share rights entitle the participant to receive one fully‐paid ordinary share in the company per right, subject to
meeting the vesting conditions (determined by the Remuneration and Nominations Committee) outlined below.
Parcel A (50%) will be tested against a relative TSR performance measure.
Parcel B (50%) will be tested against growth in EPS.
Three years, from 1 January 2013 to 31 December 2015.
TSR measures the growth in the company’s share price together with the value of dividends during that period,
assuming that those dividends are reinvested into new shares.
Relative TSR is measured as a percentile ranking compared with a comparator group of listed entities over the
performance period. The comparator group comprises the entities in the S&P/ASX100 Index as at 1 January 2013.
This comparator group was chosen as it represents the companies in which most of the company’s shareholders
could invest as an alternative to the company.
Awards vest based on the ranking against the comparator group companies, in accordance with the following
schedule:
Company’s TSR ranking in the comparator group
Below 51st percentile
At 51st percentile
Between 51st and 75th percentiles
At or above 75th percentile
% of Parcel A vesting
Nil
50%
Between 50% and 100% increasing on a straight line
basis
100%
How is the EPS
performance
measured?
The company’s annual compound EPS growth is measured over the performance period.
The portion of the 2013 grant that will vest is determined based on the results of testing against the EPS
performance measure which is assessed in accordance with the following schedule:
EPS growth per annum
Below 10%
Equal to 10%
Between 10% and 14%
14% or greater
% of Parcel B vesting
Nil
50%
Between 50% and 100% increasing on a straight line
basis
100%
The EPS targets were set taking into account the company’s business plan earnings forecasts, its historic EPS
performance, analyst expectations of the company’s earnings growth and the EPS growth targets that have been
set by other ASX 50 companies under their LTI plans.
To ensure alignment with shareholders and that sustainable performance is rewarded, if a financial loss occurs in
any of the years during the three‐year performance period, the Remuneration and Nominations Committee can
reduce (to zero, if appropriate) the number of EPS rights that vest, irrespective of performance against the above
targets.
The performance measures are aligned with the long‐term direction and strategy of the Group as the measures
encourage a focus on EPS growth and the achievement of stable top quartile shareholder returns.
TSR was chosen because it provides a direct link between senior executive reward and returns to shareholders.
Senior executives will not derive any benefit from that portion of the grants unless the company’s performance is
at the 51st percentile or above. In addition, TSR provides a relative, external, market‐based performance measure
against those companies with which the company competes for capital, customers and executives.
EPS was chosen because it encourages stable earnings growth over the relevant period.
Testing of performance for both Parcels A and B will occur once the financial results for the 2015 Financial Year are
known in February 2016.
There is no re‐testing of performance. Any share rights that do not vest will lapse.
The share rights do not carry any rights to dividends or voting.
Shares allocated upon vesting of share rights rank equally with other ordinary shares on issue.
If a change of control occurs, the Board may determine whether, and the extent to which, any unvested LTI will
vest, having regard to all relevant circumstances including performance to‐date and the nature of the change of
control.
Why were these
performance measures
chosen?
When will performance
be tested?
Do the share rights
attract dividends and
voting rights?
What happens if there
is a change of control?
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
DIRECTORS’ REPORT continued
Remuneration Report continued
ANNUAL REPORT ����
77
77
What if a senior
executive ceases
employment?
Can senior executives
hedge their risk under
the LTI?
In general, if a senior executive resigns or is terminated for cause, any unvested LTI grants will lapse.
If a senior executive leaves due to any other circumstances (for example, redundancy, retirement or total and
permanent disability), a pro rata portion of the senior executive’s LTI grant will remain on foot following their
termination and will vest, subject to satisfaction of the relevant performance hurdles at the usual vesting date. In
these circumstances, any amount payable on vesting will be paid in cash based on the share price at the date of
vesting.
No – the Group’s Securities Trading Policy (consistent with the Corporations Act) prohibits senior executives from
entering into hedging arrangements regarding both vested and unvested securities, which includes the share
rights.
2013 LTI grants to senior executives
Details of share rights granted to senior executives in the 2013 Financial Year are set out in the table below. All grants were made on the terms
summarised in the previous table.
Name
Grant date
Number
granted
Value at date of
award
(A$)
VWAP
at date
of
award
(A$)1
Test date
Fair Value
per right
(A$)2(EPS)
Fair Value
per right
(A$)2
(TSR)
Maximum
value of
grant4
H G
Tyrwhitt
D Chandran
I L Edwards
P A Gregg
C A Laslett
B A Munro
G M Palin
M J Rollo
R Willcock3
Total
1 January 2013
107,204
23.32
2,500,000
31 December 2015
14.87
9.41
1,301,457
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
17,368
18,708
77,186
39,752
39,752
39,752
22,308
18,010
380,040
23.32
23.32
23.32
23.32
23.32
23.32
23.32
23.32
405,000
HKD 3,473,505
1,800,000
927,000
927,000
927,000
520,200
420,000
11,899,705
31 December 2015
31 December 2015
31 December 2015
31 December 2015
31 December 2015
31 December 2015
31 December 2015
31 December 2015
14.87
14.87
14.87
14.87
14.87
14.87
14.87
14.87
9.41
9.41
9.41
9.41
9.41
9.41
9.41
9.41
210,848
227,115
937,038
482,589
482,589
482,589
270,819
218,641
4,613,686
1
2
3
4
The Volume Weighted Average Price (VWAP) of Leighton Holdings Limited securities over the five trading days following 13 February 2013 (the
announcement of the financial results for the 2012 Financial Year) was $23.32.
The fair value of equity instruments is determined as at the date of interest granted (in accordance with AASB 2) and is progressively expensed over
the vesting period. The amount included as remuneration expense in accordance with AASB 2 is not related to or indicative of the benefit (if any) that
senior executives may ultimately realise should the equity instruments vest.
As a result of his resignation from the company during the performance period, Mr Willcock forfeited all of his unvested share rights on 30 April 2013
in accordance with the terms of grant.
The maximum value of the grant has been estimated based on the fair value per share right for the TSR tranche and the fair value per share right for
the EPS tranche. The minimum total value of the grant, if the applicable performance conditions are not met, is nil.
Leighton Holdings Limited Annual Report 2013
94.6
77.5
78.7
65.0
54.7
December
2013
December
20123
December
2011
Transitional
Financial
Year4
June 2011
June 2010
June 2009
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
78
78
As required by the Corporations Act, the five‐year performance of the Group has been set out in the table below.
Year‐on‐year performance snapshot
Opening
share
price1
($)
17.90
Closing
share
price ($)
Share price
appreciation
(%)
16.11
(10.0)
TSR2
(%)
Dividend
per share
paid
($)
1.05 (38.79)
EPS
($)
PBT
($M)
NPAT
($M)
Return on
equity (%)
Cash flow
from
operations
($M)
1,115
Gross debt
to equity
ratio
(%)
65.5
19.25
17.88
20.99
19.04
(7.1)
(9.3)
1.51
736
566
509
450
0.80
(45.75)
1.33
0.60
(6.8)
1.01
475
340
17
16
13
1,274
328
28.63
23.46
49.86
20.85
28.95
23.50
(27.2)
23.4
(52.9)
0.60
1.50
1.15
(50.6)
(7.4)
15.8
(1.33)
2.05
1.50
(491)
843
585
(409)
612
440
(17)
25
23
1,700
1,987
1,302
1
2
3
4
The opening share price takes into account trades after market close on the last day of the relevant financial year.
TSR is determined over a rolling three‐year period.
Restated to include the impact upon adoption of AASB 11 Joint Arrangements, as set out in note 40: Impact of the change in accounting policy on
adoption of AASB 11 Joint Arrangements to the Financial Report on pages 195 to 198 for the 2013 Financial Year.
The December 2011 Transitional Financial Year relates to a six month financial period. As such, the information presented above is not entirely
comparable to the 2009 to 2011 and the 2012 and 2013 Financial Year information in this table.
3.6 SENIOR EXECUTIVE TOTAL REMUNERATION
This section details the Group’s senior executive remuneration in accordance with the Corporations Act and accounting standards.
However, we recognise that the required presentation of this information can make it difficult for shareholders to understand the actual value
senior executives derived from the various components of their remuneration. Accordingly, the table below sets out the value of fixed
remuneration, STI earned, the value of any LTI that vested, and any other payments received by the Group’s senior executives during the 2013
Financial Year. This includes the value of any prior year awards where the executive realised value from these awards in the 2013 Financial Year.
Disclosure of actual remuneration is provided voluntarily for increased transparency. This table provides additional information and is not
intended to reflect the disclosures that are made elsewhere in this Annual Report which have been prepared in accordance with the accounting
standards and the requirements of the Corporations Act. As a consequence, the table has not been audited.
Total remuneration realised for current senior executives during the 2013 Financial Year in Australian dollars (unaudited)
Other1
Name
Superannuation
Cash salary
STI earned
(and paid in
early 2014)2
LTI (value vested
during the 2013
Financial Year)4
H G Tyrwhitt
D Chandran
I L Edwards
M C Gray
P A Gregg
C A Laslett
B A Munro
G M Palin
M J Rollo
A Valderas
2,482,875
703,933
858,668
914,000
1,782,875
1,217,675
1,212,323
1,196,925
849,875
36,538
17,125
17,125
74,968
29,500
17,125
23,864
23,677
39,075
17,125
‐
262,276
12,228
426,771
10,476
21,259
21,195
322,648
81,851
3,531
250,000
1,135,125
229,875
79,267
574,235
908,100
148,505
741,600
546,029
300,884
‐
STI deferral (value
vested during the
2013 Financial
Year)3
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
Total
remuneration
for the 2013
Financial Year
3,897,401
963,161
1,439,674
1,528,211
2,729,359
1,411,239
2,300,248
1,863,880
1,171,415
286,538
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
1
2
3
4
Includes the value of fringe benefits which is inclusive of items such as car parking, installation and monitoring of home security, spousal travel, other
fringe benefits and fringe benefit tax (FBT) where applicable. Includes the value of the 2010 deferred bonuses paid to I Edwards, B Munro and G Palin,
and the relocation allowance paid to A Valderas during the 2013 Financial Year.
This amount represents the portion of STI earned for the 2013 Financial Year that is paid as cash.
No STI deferral vested in the 2013 Financial Year.
No LTI vested in the 2013 Financial Year.
Full details of total remuneration for the CEO and other senior executives are set out in the table overleaf. This table is prepared in accordance
with applicable accounting standards.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
Statutory senior executive remuneration table
Cash
salary
Bonuses (a)
SHORT‐TERM EMPLOYEE BENEFITS
Non‐
monetary
benefits (b)
ANNUAL REPORT ����
79
79
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
80
POST‐EMPLOYMENT
SUBTOTAL
Other(c)
Superannuation
benefits
Termination
benefits
LONG‐TERM EMPLOYEE BENEFITS
TOTAL
Cumulative
Percentage
Percentage
Share rights fair
Share rights fair
Options
Contract/
value (sign‐on
awards)(d)
value (LTI and
STI deferral) (d)
fair
retention accrued
value (d)
in period(e)
PAYMENTS
& ACCRUALS
contract/
retention
accrued(f)
of cash
bonuses
(STI) (g)
of share‐
based
incentive (h)
Current senior executives
H G Tyrwhitt
2013 Financial Year
2012 Financial Year
D Chandran
2013 Financial Year
2012 Financial Year
I L Edwards
2013 Financial Year
2012 Financial Year
M C Gray
2013 Financial Year
2012 Financial Year
P A Gregg
2013 Financial Year
2012 Financial Year
C A Laslett
2013 Financial Year
2012 Financial Year
B A Munro
2013 Financial Year
2012 Financial Year
G M Palin
2013 Financial Year
2012 Financial Year
M J Rollo
2013 Financial Year
2012 Financial Year
A Valderas1
2013 Financial Year
2012 Financial Year
Former senior executives
R Willcock2
2013 Financial Year
2012 Financial Year
703,933
633,870
858,668
572,158
914,000
887,496
1,782,875
1,733,872
1,217,675
1,155,266
1,212,323
1,183,877
1,196,925
1,149,653
849,875
694,834
36,538
‐
237,910
376,342
2,482,875
2,383,872
1,135,125
755,400
262,276
‐
‐
‐
12,228
‐
‐
‐
165,332
12,440
261,439
‐
10,476
12,815
‐
651,000
21,259
‐
‐
‐
21,195
24,971
‐
1,053,548
22,648
‐
300,000
‐
6,851
12,256
75,000
580,110
229,875
142,974
79,267
118,408
574,235
150,000
908,100
559,125
148,505
270,000
741,600
300,000
546,029
270,000
300,884
150,000
‐
‐
3,531
‐
‐
150,000
17,125
13,498
‐
‐
250,000
‐
‐
‐
17,125
16,128
17,125
16,128
74,968
54,918
29,500
38,000
17,125
16,128
23,864
38,636
23,677
16,123
39,075
50,347
‐
‐
3,897,401
3,155,400
‐
‐
963,161
792,972
‐
‐
1,439,674
757,924
‐
‐
1,528,211
1,739,311
‐
‐
‐
‐
2,729,359
2,309,125
1,411,239
2,542,421
‐
‐
2,300,248
1,500,000
‐
‐
‐
‐
‐
‐
1,863,880
2,062,366
1,171,415
1,008,332
286,538
‐
‐
77,321
19,646
‐
‐
‐
8,237
11,350
347,256
‐
613,049
465,013
‐
‐
‐
‐
‐
93,915
13.83%
16.80%
1
2
(a)
(b)
(c)
Mr Valderas was appointed COO on 4 December 2013. He was paid a one‐off relocation allowance of $250,000 to assist with his relocation to Sydney.
In accordance with his contractual terms, this allowance is repayable if his employment is terminated for any reason prior to the 12‐month
anniversary of his commencement date. Superannuation is not payable due to his exempt status.
Mr Willcock was appointed as Group Company Secretary and General Counsel on 12 June 2012 and resigned on 17 April 2013. He ceased employment
with the Group on 30 April 2013. His termination arrangements were as per his contractual terms and are summarised in section 3.7: Summary of
Executive Service Agreements of this Remuneration Report on page 81. In accordance with the terms of grant, all unvested share rights held by Mr
Willcock were forfeited upon his resignation.
This amount represents cash STI payments to the senior executive for the 2013 Financial Year to be paid in April 2014.
Non‐monetary benefits is inclusive of items such as car parking, installation and monitoring of home security, spousal travel, other fringe benefits and
fringe benefit tax (FBT) where applicable.
These amounts include the value of the 2010 deferred bonuses paid to I Edwards, B Munro and G Palin in the 2013 Financial Year.
‐
‐
1,502,541
690,347
100,900
100,900
‐
5,500,842
3,946,647
1,350,049
1,058,495
162,500
162,500
224,389
103,023
‐
‐
‐
‐
193,344
37,838
99,771
37,838
‐
1,729,581
940,378
160,941
33,333
44,144
44,144
‐
(837,437)
1,993,695
1,239,751
‐
1,724,389
‐
‐
‐
798,618
‐
4,453,748
3,107,743
20.64%
19.14%
17.03%
13.51%
4.58%
12.59%
28.80%
12.10%
20.39%
17.99%
7.18%
13.31%
22.83%
15.91%
20.70%
19.30%
20.68%
13.22%
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
29.15%
20.05%
28.66%
25.08%
16.76%
19.40%
23.35%
27.25%
38.72%
25.70%
31.77%
22.84%
29.18%
31.08%
29.34%
35.26%
19.49%
11.15%
‐
‐
418,298
224,434
556,764
231,100
506,637
224,434
283,644
126,508
31,531
31,531
31,531
31,531
63,063
63,063
‐
‐
‐
(977,230)
2,068,395
2,028,484
‐
(200,433)
3,247,802
1,885,532
‐
(1,156,946)
2,637,834
1,398,631
1,455,059
1,134,840
286,538
613,048
558,928
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
58,726
44,845
260,400
260,400
207,328
207,328
359,259
323,333
204,255
205,714
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
(d)
In accordance with the requirements of the accounting standards, remuneration includes a proportion of the fair value of equity compensation
granted or outstanding during the 2013 Financial Year (ie, options awarded under the Leighton Senior Executive Option Plan that remained unvested,
grants of STI deferred share rights and 2012 LTI grants as at 31 December 2013). The fair value of equity instruments is determined as at the grant
date and is progressively allocated over the vesting period. The amount included as remuneration is not related to or indicative of the benefit (if any)
that senior executives may ultimately realise should the equity instruments vest. The fair value of options and equities at the date of their grant has
been determined in accordance with AASB 2.
(e)
The amounts shown for contract/retention benefits are the amounts accrued during the 2012 Financial Year for benefits due under each senior
executive’s service contract, assuming the senior executive remains an employee for the whole retention period and earns their full benefit
entitlement. Where the contract/retention benefits have been exchanged for equity, a reversal in the 2012 Financial Year is shown. No further
contract/retention benefits were awarded in the 2013 Financial Year.
(f)
The amounts shown for contract/retention benefits to 31 December 2013 are the amounts accrued to 31 December 2013 from contract
commencement date. A nil balance indicates that the contract/retention has been paid out and there is no further cash contract/retention
Percentage calculation is based on the cash STI received in the 2013 Financial Year as a percentage of total payments and accruals.
The percentage of each senior executive’s remuneration for the 2013 Financial Year that consisted of equity as a percentage of total payments and
(g)
(h)
component.
accruals.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
80
80
LONG‐TERM EMPLOYEE BENEFITS
Share rights fair
value (sign‐on
awards)(d)
Share rights fair
value (LTI and
STI deferral) (d)
Options
fair
value (d)
Contract/
retention accrued
in period(e)
TOTAL
PAYMENTS
& ACCRUALS
Cumulative
contract/
retention
accrued(f)
Percentage
of cash
bonuses
(STI) (g)
Percentage
of share‐
based
incentive (h)
‐
‐
1,502,541
690,347
100,900
100,900
‐
‐
5,500,842
3,946,647
‐
‐
162,500
162,500
224,389
103,023
‐
‐
‐
‐
1,350,049
1,058,495
‐
‐
58,726
44,845
260,400
260,400
193,344
99,771
37,838
37,838
‐
‐
1,729,581
940,378
160,941
33,333
44,144
44,144
‐
(837,437)
1,993,695
1,239,751
‐
‐
1,724,389
798,618
‐
‐
‐
‐
4,453,748
3,107,743
418,298
224,434
556,764
231,100
506,637
224,434
31,531
31,531
31,531
31,531
63,063
63,063
‐
(977,230)
2,068,395
2,028,484
‐
(200,433)
3,247,802
1,885,532
‐
(1,156,946)
2,637,834
1,398,631
283,644
126,508
‐
‐
‐
‐
1,455,059
1,134,840
207,328
207,328
359,259
323,333
204,255
205,714
‐
‐
‐
‐
20.64%
19.14%
17.03%
13.51%
4.58%
12.59%
28.80%
12.10%
20.39%
17.99%
7.18%
13.31%
22.83%
15.91%
20.70%
19.30%
20.68%
13.22%
29.15%
20.05%
28.66%
25.08%
16.76%
19.40%
23.35%
27.25%
38.72%
25.70%
31.77%
22.84%
29.18%
31.08%
29.34%
35.26%
19.49%
11.15%
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
286,538
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
93,915
‐
‐
‐
‐
613,048
558,928
‐
‐
‐
13.83%
‐
16.80%
(d)
(e)
(f)
(g)
(h)
In accordance with the requirements of the accounting standards, remuneration includes a proportion of the fair value of equity compensation
granted or outstanding during the 2013 Financial Year (ie, options awarded under the Leighton Senior Executive Option Plan that remained unvested,
grants of STI deferred share rights and 2012 LTI grants as at 31 December 2013). The fair value of equity instruments is determined as at the grant
date and is progressively allocated over the vesting period. The amount included as remuneration is not related to or indicative of the benefit (if any)
that senior executives may ultimately realise should the equity instruments vest. The fair value of options and equities at the date of their grant has
been determined in accordance with AASB 2.
The amounts shown for contract/retention benefits are the amounts accrued during the 2012 Financial Year for benefits due under each senior
executive’s service contract, assuming the senior executive remains an employee for the whole retention period and earns their full benefit
entitlement. Where the contract/retention benefits have been exchanged for equity, a reversal in the 2012 Financial Year is shown. No further
contract/retention benefits were awarded in the 2013 Financial Year.
The amounts shown for contract/retention benefits to 31 December 2013 are the amounts accrued to 31 December 2013 from contract
commencement date. A nil balance indicates that the contract/retention has been paid out and there is no further cash contract/retention
component.
Percentage calculation is based on the cash STI received in the 2013 Financial Year as a percentage of total payments and accruals.
The percentage of each senior executive’s remuneration for the 2013 Financial Year that consisted of equity as a percentage of total payments and
accruals.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
DIRECTORS’ REPORT continued
Remuneration Report continued
3.7 SUMMARY OF EXECUTIVE SERVICE AGREEMENTS
Remuneration and other terms of employment for senior
executives are formalised in service agreements that were updated
and standardised in 2012.
The key standard terms of the service agreements for senior
executives are:
either party is able to terminate the agreement on six months’
remuneration is reviewed annually;
notice;
there is no specified term (ie, they are “evergreen” contracts);
there are no specified payments to be made to the senior
executive on termination (apart from any payments in lieu of
notice); and
a six‐month paid restraint period applies following termination
(or 12 months in the case of the CEO and DCEO&CFO).
As described in section 3.4: Approach to setting remuneration of
this Remuneration Report on page 70, the agreements also specify
ANNUAL REPORT ����
81
81
the policy remuneration mix that applies to a senior executive’s
remuneration package.
The entitlement of senior executives to unvested STI and LTI
awards on termination of their employment is dealt with under the
plan rules and the specific terms of grant.
3.8 DEPARTING SENIOR EXECUTIVE
Mr Willcock
Mr Willcock ceased to be the Group Company Secretary and
General Counsel on 17 April 2013 and ceased employment with the
Group on 30 April 2013.
Mr Willcock’s termination arrangements were in line with his
service agreement and comprised:
payment in lieu of notice (equal to six months’ fixed
remuneration) of $323,025 (plus statutory superannuation);
accrued annual leave totalling $10,069; and
a restraint payment of $24,231.
In accordance with the terms of grant, all unvested share rights
held by Mr Willcock under the LTI and STI were forfeited upon his
resignation. Mr Willcock did not receive any cash STI payment for
the 2013 Financial Year.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
82
82
4. NON‐EXECUTIVE DIRECTOR REMUNERATION
This section explains the remuneration arrangements for Non‐executive Directors. Details of the Non‐executive Directors and their Board
Committee memberships as at 31 December 2013 are set out in the table below.
Current Non‐executive Directors
Director
R D Humphris OAM
Position
Chairman and independent Non‐executive
Director
P J Dwyer
Deputy Chairman and independent Non‐
executive Director
R A Higgins AO1
Independent Non‐executive Director
M J Hutchinson
Independent Non‐executive Director
V A McFadden
Independent Non‐executive Director
M Fernández Verdes2
Non‐executive Director*
D P Robinson3
P W Sassenfeld4
R L Seidler AM5
P López Jiménez6
Non‐executive Director*
Non‐executive Director*
Alternate Director*
Alternate Director*
Board Committees (as at 31 December 2013)
Tender Review and Risk Committee – Chairman
Remuneration and Nominations Committee – Chairman
Ethics and Compliance Committee
Audit Committee – Chairman
Remuneration and Nominations Committee
Tender Review and Risk Committee
Ethics and Compliance Committee – Chairman
Tender Review and Risk Committee
Audit Committee
Ethics and Compliance Committee
Tender Review and Risk Committee
Audit Committee
Remuneration and Nominations Committee
Remuneration and Nominations Committee
Tender Review and Risk Committee
Ethics and Compliance Committee
Audit Committee
Audit Committee
Tender Review and Risk Committee
N/A
N/A
*
1
2
3
4
5
6
Representing our majority shareholder, HOCHTIEF Australia Holdings Limited.
Mr Higgins AO was appointed a Director on 18 June 2013. He was also appointed to the Audit Committee on 18 June 2013. He was appointed as a
member of the Ethics and Compliance Committee on 18 June 2013 and became Chairman of the Ethics and Compliance Committee on 5 September
2013. Mr Higgins AO was also a standing invitee of the Tender Review and Risk Committee from 13 August 2013 until 13 December 2013, when he
became a member of the Committee.
Mr Fernández Verdes was appointed to the Ethics and Compliance Committee and Tender Review and Risk Committee on 13 December 2013.
Mr Robinson is also the Alternate Director for Mr Sassenfeld.
Mr Sassenfeld was appointed to the Audit Committee on 18 June 2013 and to the Tender Review and Risk Committee on 13 December 2013.
Mr Seidler AM was appointed as the Alternate Director for Mr Fernández Verdes on 18 June 2013. He was previously the Alternate Director for Mr
Robinson from 20 November 2012 to 18 June 2013. Mr Seidler AM resigned as a member of the Ethics and Compliance Committee, Remuneration and
Nominations Committee and Tender Review and Risk Committee on 13 December 2013 but will remain a standing invitee to these Committees. Mr
Seidler AM will also continue to attend any respective Board or Committee meeting in the capacity of Alternate Director to Mr Fernández Verdes in
the event that Mr Fernández Verdes is unable to attend a Board or Committee meeting.
Mr López Jiménez was appointed as the Alternate Director for Mr Sassenfeld on 18 June 2013. He resigned as a member of the Tender Review and
Risk Committee on 13 December 2013 but will continue to attend any subsequent Committee meetings in the capacity of Alternate Director to Mr
Sassenfeld in the event that Mr Sassenfeld is unable to attend a Committee meeting.
4.1 SETTING NON‐EXECUTIVE DIRECTOR REMUNERATION
The Remuneration and Nominations Committee annually reviews
and makes recommendations to the Board regarding Non‐
executive Directors’ fees and Committee fees.
The Remuneration and Nominations Committee may seek advice
from independent external advisers in forming their
recommendations, as described in section 2.1: Role of the Board
and the Remuneration and Nominations Committee of this
Remuneration Report on page 67.
Remuneration for Non‐executive Directors is designed to ensure
that the Group can attract and retain suitably qualified and
experienced Directors. Fees are based on a comparison to market
for Director fees in companies of a similar size and complexity.
In recognition of the additional responsibilities and time
commitment of Committee Chairmen and members, additional
fees are paid to Directors for Committee membership, in line with
market practice.
Non‐executive Directors do not receive shares, options or any
performance‐related incentives.
4.2 FEE LEVELS AND FEE POOL
Directors’ fees have not been increased since 1 July 2010, with the
exception of the fees for the Deputy Chairman role, which were
increased from $225,000 to $250,000 on the appointment of Ms
Dwyer to the role.
The aggregate annual fees payable to the Non‐executive Directors
for their services as Directors are limited to the maximum annual
amount approved by shareholders. The maximum annual amount is
currently $4,500,000 (including superannuation contributions), as
approved by shareholders at the 2013 AGM.
The fees paid to Directors for the 2013 Financial Year are set out in
the table in section 4.7: Non‐executive Director remuneration of
this Remuneration Report on page 84 and total $2,150,100. In
addition to these fees, superannuation contributions will be made
for the benefit of all Non‐executive Directors, capped at the
maximum amount required under the Superannuation Guarantee
Legislation.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
DIRECTORS’ REPORT continued
Remuneration Report continued
Board and Committee fees
Board
Audit Committee
Ethics and Compliance
Committee
Remuneration and
Nominations
Committee
Tender Review and Risk
Committee2
Special Committees3
Chairman1
620,000
46,000
40,000
40,000
40,000
3,850
Deputy
Chairman
250,000
‐
‐
‐
‐
‐
Member
185,000
23,000
20,000
20,000
20,000
3,850
1
2
3
The Chairman of the Board, who is also the Chairman of the
Tender Review and Risk Committee, Chairman of the
Remuneration and Nominations Committee and a member of
the Ethics and Compliance Committee, receives no standing
Committee fees in addition to his Board fees.
This fee covers up to four meetings per year. Where more than
four meetings are held during the year, an additional fee of
$3,850 per meeting for the Chairman and $2,500 for members
is payable (capped at an additional four meetings). If the total
number of meetings held in a year significantly exceeds twelve
meetings, the Board can pay further fees.
This fee is payable to all Non‐executive Directors for each day
of service on a Special Committee.
Current Operating Company Advisory Board appointments
ANNUAL REPORT ����
83
83
4.3 MINIMUM SHAREHOLDING GUIDELINES
The Board has approved minimum shareholding guidelines for
independent Non‐executive Directors. Under these guidelines, all
independent Non‐executive Directors are encouraged to
accumulate a minimum shareholding in Leighton Holdings shares
equivalent in value to one year’s base fee after allowing for tax.
The minimum shareholding guidelines were implemented on
1 January 2013. All independent Non‐executive Directors are
expected to acquire the relevant number of shares over three years
from the later of the date of their appointment or the date of
implementation of the guidelines.
Details of individual Directors’ shareholdings are disclosed in the
Directors’ Report on page 40.
4.4 OPERATING COMPANY APPOINTMENTS
As described in the 2012 Remuneration Report on page 97, the
Operating Company Boards solely comprise of executives who
receive no fees for serving on the respective boards (Operating
Company Statutory Boards).
Certain Non‐executive Directors have been appointed to Operating
Company Advisory Boards, as set out in the table below, and
received additional fees for being a member of these Advisory
Boards. The fees have been set at $90,000 for the Chairman and
$75,000 for a member, plus superannuation. These fees are
included in the total fee pool described in section 4.2: Fee Levels
and Fee Pool of this Remuneration Report on pages 82 to 83.
Director
R D Humphris OAM
P J Dwyer
D P Robinson
R L Seidler AM
Operating Company
Leighton Contractors
LAIO
John Holland
Thiess
Leighton Properties
LAIO
Role
Chairman
Member
Member
Member
Chairman
Chairman
4.5 ALTERNATE DIRECTORS
Leighton Holdings does not pay fees for Board membership to
Alternate Directors. Financial arrangements for Alternate Directors
are a private matter between the Non‐executive Director and the
relevant Alternate Director.
During the 2013 Financial Year, Mr Seidler AM was a member of
the Board’s Remuneration and Nominations, Ethics and
Compliance, and Tender Review and Risk Committees, and received
Committee membership fees of $63,475 in respect of these roles
for the 2013 Financial Year. Mr Seidler AM resigned as a member of
these Committees on 13 December 2013 but will remain a standing
invitee. Mr Seidler AM will also continue to attend any respective
Board or Committee meeting in the capacity of Alternate Director
to Mr Fernández Verdes in the event that Mr Fernández Verdes is
unable to attend a Board or Committee meeting.
Mr Seidler AM is also the Chairman of the Advisory Boards of
Leighton Properties and LAIO since November 2012, for which he
received fees of $180,000 from the company and a further
payment of $29,500 relating to the 2012 Financial Year.
Mr López Jiménez was a member of the Tender Review and Risk
Committee during the 2013 Financial Year, and is due to receive
membership fees of $19,908. He resigned as a member of the
Tender Review and Risk Committee on 13 December 2013 but will
continue to attend any subsequent Board and Committee meetings
in the capacity of Alternate Director to Mr Sassenfeld in the event
that Mr Sassenfeld is unable to attend a Board or Committee
meeting.
4.6 NON‐EXECUTIVE DIRECTORS’ RETIREMENT BENEFITS
The company previously operated a Non‐executive Directors’
Retirement Plan that was approved by shareholders at the 1996
AGM. On 5 November 2003, the Board resolved to remove
retirement benefits for Non‐executive Directors who were
appointed after that date. All Non‐executive Directors appointed
from this date were paid increased Board fees as compensation for
the removal of the retirement benefits.
On 1 July 2008, the Board resolved to close the plan from that date
with the effect that there was no further increase in benefits
payable to the Non‐executive Directors remaining in the plan.
As at 31 December 2013, only one Non‐executive Director
remained in the plan, being Mr Robinson.
Mr Robinson will receive a maximum benefit on retirement limited
to his entitlement under the plan as if he had retired on 1 July
2008. This entitlement totals $363,495.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
84
84
4.7 NON‐EXECUTIVE DIRECTOR TOTAL REMUNERATION
Details of Non‐executive Directors’ remuneration in Australian dollars for the 2013 Financial Year and 2012 Financial Year are set out in the table
below.
Non‐executive Director remuneration
SHORT‐TERM BENEFITS
Board &
Committee
fees
Other
Operating
Company
Board fees
and extra
service fees(a)
Non‐
monetary
benefits
POST‐EMPLOYMENT BENEFITS
Superannuation
contributions
Termination
benefits
542,036
269,133
328,995
258,707
129,700
‐
128,382
‐
126,084
‐
Current Non‐executive Directors
R D Humphris OAM1
2013 Financial Year
2012 Financial Year
P J Dwyer2
2013 Financial Year
2012 Financial Year
R A Higgins AO3
2013 Financial Year
2012 Financial Year
M J Hutchinson3
2013 Financial Year
2012 Financial Year
V A McFadden3
2012 Financial Year
2013 Financial Year
M Fernández Verdes
2013 Financial Year
2012 Financial Year
D P Robinson4
2013 Financial Year
2012 Financial Year
P W Sassenfeld
2013 Financial Year
2012 Financial Year
Former Non‐executive Directors
S P Johns5,6
2013 Financial Year
2012 Financial Year
I J Macfarlane AC6
2013 Financial Year
2012 Financial Year
W G Osborn6
2013 Financial Year
2012 Financial Year
197,331
185,000
151,055
623,945
54,933
219,166
69,933
271,666
200,176
41,276
221,475
223,400
‐
‐
192,042
145,423
17,787
2,359
34,615
22,916
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
87,777
‐
‐
‐
‐
‐
‐
‐
28,795
‐
48,313
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
62,844
20,820
‐
‐
‐
20,609
‐
‐
102,375
24,767
‐
17,125
16,128
8,887
‐
8,887
‐
8,887
‐
19,196
3,715
17,125
16,128
17,125
16,128
4,119
17,839
4,225
16,128
‐
4,225
26,253
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
Total
Remuneration
for services
as a Non‐
executive
Director
786,480
439,832
433,897
274,835
138,587
‐
137,269
‐
134,971
‐
248,167
44,991
286,913
239,528
214,456
201,128
175,994
704,628
79,767
235,294
98,925
400,294
1
2
3
4
5
6
(a)
Mr Humphris OAM was appointed Chairman of the Board on 24 March 2013. The Advisory Board fees payable during the 2013 Financial Year to
Mr Humphris OAM comprised of $165,000 and a further payment of $27,042 relating to the 2012 Financial Year.
Ms Dwyer was appointed a Non‐executive Director on 1 January 2012, and was appointed Deputy Chairman of the Board on 24 March 2013. The
Advisory Board fees payable during the 2013 Financial Year to Ms Dwyer comprised of $81,866 and a further payment of $5,911 relating to the 2012
Financial Year.
Mr Higgins AO, Mr Hutchinson and Ms McFadden were appointed Non‐executive Directors on 18 June 2013.
Mr Robinson’s fees for the Thiess Advisory Board were paid to Harveys Consulting, being a related party to Mr Robinson.
Mr Johns’ Board fees for the 2012 Financial Year includes an overpayment of $3,945 that was deducted from Board fees paid for the 2013 Financial
Year.
Mr Johns, Mr Macfarlane AC and Mr Osborn resigned from the Board on 22 March 2013.
This amount represents the total fees paid to Operating Company Board members. The fees in relation to the 2013 Financial Year relate to services as
members of the Operating Company Advisory Boards. Please refer to section 4.4: Operating company appointments of this Remuneration Report on
page 83.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
DIRECTORS’ REPORT continued
Remuneration Report continued
ANNUAL REPORT ����
85
85
5. ADDITIONAL INCENTIVE PLAN DISCLOSURES
This section provides additional incentive plan information as required by the Corporations Act and applicable accounting standards.
5.1 LEGACY INCENTIVE PLANS
Overview of legacy incentive plans and outcomes
This tables outlines legacy incentive plans that were still in progress or that were tested during the 2013 Financial Year. All of these plans have
been discontinued and no new grants will be made under these plans. Full details of all grants made prior to the 2013 Financial Year can be
found in prior Remuneration Reports.
Plan
2010 MTI
Summary
As a result of MTI participation in the since‐discontinued
2010 MTI plan, Mr Edwards, Mr Palin and Mr Munro had
deferred cash bonuses under the 2010 MTI that became
payable on 31 July 2013.
The size of the cash bonus was determined based on
performance over a one‐year period (the 2010 Financial
Year). The bonus was then subject to a further three‐year
deferral period which could affect the size of the award.
The full terms of the MTI plan have been described in
previous Remuneration Reports.
The MTI is now closed to participation and no further
awards have been made. No further grants under the MTI
remain on foot.
2008 LSEOP
2009 LSEOP
2011 LTI
grant to Mr
Gregg
Share options were granted on 25 January 2008 under the
Leighton Senior Executive Option Plan (LSEOP) that were
subject to meeting a relative TSR against S&P/ASX 100
companies and a growth in EPS hurdle, as disclosed in
previous Remuneration Reports.
The first test date for these options was on 25 January
2011, which resulted in 20.3% of the tranche associated
with the EPS hurdle vesting. The TSR tranche did not meet
the hurdles on the first or subsequent test dates being
25 January 2011, 25 July 2011, 25 January 2012 and 25 July
2012.
Share options were granted on 4 May 2009 under the
LSEOP that were subject to meeting a relative TSR against
S&P/ASX 100 companies and a growth in EPS hurdle, as
disclosed in previous Remuneration Reports.
The TSR and EPS performance was measured last year at
the initial test date for the period 4 May 2009 to 4 May
2012. At this initial test date, 0% of the TSR tranche vested.
100% of the EPS tranche vested (ie, 50% of total 2009
Options). As the options subject to the TSR hurdle did not
vest at the initial test date, the options were available for
three re‐tests. These re‐tests occurred in six‐monthly
intervals following the initial test date.
Share rights were granted to Mr Gregg in 2011 (following
shareholder approval) for no cost in accordance with his
service agreement.
The rights are subject to a TSR against S&P/ASX 100
companies (excluding financial organisations and real
estate investment trusts) and growth in EPS target, as
disclosed in previous Remuneration Reports.
Outcomes
The following individuals received payments in the 2013
Financial Year as a result of the MTI granted in 2010 vesting
following the three‐year deferral period: Mr Edwards
(HKD1,835,300), Mr Palin (A$75,000) and Mr Munro
(A$300,000).
At the time the MTI was granted, additional performance
conditions were imposed on only some of the participants in
the plan. At the end of the deferral period, the Remuneration
and Nominations Committee determined that it was
equitable and appropriate to apply the same terms to all
2010 MTI participants and determined to pay the full
deferred amount to all participants, including Mr Edwards,
Mr Palin and Mr Munro. In making its determination, the
Remuneration and Nominations Committee also took into
account the efforts of Mr Palin and Mr Munro in rebasing and
reshaping the Operating Companies and, in respect of Mr
Edwards, the profit levels at LAIO over the deferral period,
which were higher than the base period.
All unexercised options lapsed on 25 January 2013. No
further awards under this grant remain on foot.
Re‐testing of the TSR parcel occurred on 4 May 2013 and
4 November 2013. TSR performance was below the median
company in the comparator group on these re‐test dates and
resulted in no vesting. All unvested or unexercised awards
are due to lapse on 4 May 2014.
The performance period for the 2011 grant to Mr Gregg
ended on 31 December 2013 and was tested on 10 February
2014. EPS and TSR performance was below the threshold
required for vesting, and this resulted in 25% of Mr Gregg’s
award lapsing immediately. The remaining unvested portion
of the grant will be re‐tested in the 2014 Financial Year.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
86
86
5.2 MOVEMENT IN RIGHTS AND OPTIONS DURING THE 2013 FINANCIAL YEAR
This section sets out the movement in share rights and options under the relevant incentive plans during the 2013 Financial Year, in accordance
with statutory requirements.
5.2.1 Movement in rights and options under legacy LTI plans
The following table sets out the movement in rights and options granted under the legacy plans during the 2013 Financial Year. No rights or
options were granted under these legacy LTI plans during the 2013 Financial Year.
Name
Plan
Balance at 31
Dec 2012
Vested
(number)
Vested
(value)
Exercisable
(number)4
Exercised
(number)
Exercised
(value)
Lapsed
(number)
Lapsed
(value)
H G
Tyrwhitt
I L Edwards
P A Gregg
M C Gray
C A Laslett
G M Palin
B A Munro
2008
LSEOP1
2009
LSEOP2
2009
LSEOP2
2011
LTI3
2008
LSEOP1
2009
LSEOP2
2009
LSEOP2
2009
LSEOP2
2009
LSEOP2
30,032
80,000
30,000
38,466
15,016
35,000
25,000
50,000
25,000
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
5,032
40,000
15,000
‐
2,516
17,500
12,500
25,000
12,500
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
Balance
at
31 Dec
2013
‐
30,032
1,348,737
‐
‐
‐
‐
80,000
‐
30,000
‐
38,466
15,016
674,369
‐
‐
‐
‐
‐
‐
35,000
‐
25,000
‐
50,000
‐
25,000
1
2
3
4
The 2008 LSEOP was granted on 25 January 2008. The exercise price was $45.53 on the grant date, but was amended as at 1 July 2011 as per the ASX
Listing Rule formula and notified to the ASX on 24 June 2011. The exercise price as at 31 December 2013 was $44.91. 20.13% of the EPS portion vested
in previous reporting periods. The TSR tranche of the 2008 LSEOP did not meet the hurdles on the first or subsequent test dates being 25 January 2011,
25 July 2011, 25 January 2012 and 25 July 2012. All options lapsed on 25 January 2013.
The 2009 LSEOP was granted on 4 May 2009. The exercise price was $19.49 on the grant date, but was amended as at 1 July 2011 as per the ASX Listing
Rule formula and notified to the ASX on 24 June 2011. The exercise price as at 31 December 2013 was $18.87. The EPS hurdle was met on 4 May 2012
and 100% of the EPS parcel vested. The TSR tranche did not meet the hurdles on the first or subsequent test dates being 4 May 2012, 4 November 2012,
4 May 2013 and 4 November 2013. The tranche is due to lapse on 4 May 2014.
Mr Gregg was appointed as CFO on 14 October 2009, an Executive Director on 23 December 2010 and Deputy CEO on 12 April 2013. He was entitled to
an annual award of securities under his previous executive contract based on 75% fixed remuneration divided by $33.14639 (VWAP). Shareholder
approval was received at the 2011 AGM for this award.
The options in this column represent the portion of the 2008 and 2009 LSEOP EPS parcel that vested in previous reporting periods, being 20.13% and
100% respectively.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
DIRECTORS’ REPORT continued
Remuneration Report continued
ANNUAL REPORT ����
87
87
5.2.2 Movements in rights under current LTI plan
The following table sets out the movement of share rights granted during the 2013 Financial Year under the current LTI plan, as well as the
movement during the year of rights granted in previous financial years.
Granted
(number)1
Granted
(value)
Vested
(number)2
Vested
(value)
Lapsed
(number)
Name
Award
Year
H G Tyrwhitt
D Chandran
I L Edwards
P A Gregg
C A Laslett
B A Munro
G M Palin
M J Rollo
R Willcock3
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
Balance
at 31 Dec
2012
104,499
‐
16,978
‐
17,504
‐
76,197
‐
39,182
‐
39,182
‐
39,182
‐
22,202
‐
18,284
‐
107,204
‐
17,368
‐
18,708
‐
77,186
‐
39,752
‐
39,752
‐
39,752
‐
22,308
‐
‐
2,500,000
‐
405,000
‐
436,260
‐
1,800,000
‐
927,000
‐
927,000
‐
927,000
‐
520,200
‐
‐
18,010
420,000
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
18,284
18,010
Lapsed
(value)
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
420,000
420,000
Balance at
31 Dec
2013
104,499
107,204
16,978
17,368
17,504
18,708
76,197
77,186
39,182
39,752
39,182
39,752
39,182
39,752
22,202
22,308
‐
‐
1
2
3
Rights were granted to senior executives in March and April 2013 as their 2013 LTI. Additional details regarding this grant are disclosed in section
3.5.3: 2013 LTI of this Remuneration Report on pages 75 to 78.
Performance hurdles for the 2012 and 2013 LTI are due to be tested in February 2015 and 2016 respectively. No rights vested under the 2012 or 2013
LTI during the 2013 Financial Year.
Mr Willcock resigned from the Group on 17 April 2013. As a result, and in accordance with the terms of grant, all unvested share rights held by
Mr Willcock were forfeited.
5.2.3 Deferred share rights under STI
In the 2013 Financial Year, share rights were awarded to senior executives based on the value of the deferred component of the 2012 STI award
(being 40% of the STI award for senior executives and 50% for the CEO and DCEO&CFO). These share rights will vest after a further two‐year
deferral period.
Name
Plan
Grant date
Vesting date
H G Tyrwhitt
D Chandran
I L Edwards
M C Gray
P A Gregg
C A Laslett
B A Munro
G M Palin
M J Rollo
R Willcock1
2012 STI
2012 STI
2012 STI
2012 STI
2012 STI
2012 STI
2012 STI
2012 STI
2012 STI
2012 STI
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
31 December 2014
31 December 2014
31 December 2014
31 December 2014
31 December 2014
31 December 2014
31 December 2014
31 December 2014
31 December 2014
31 December 2014
Number
granted
32,392
4,087
3,417
4,288
23,976
7,718
8,576
7,718
4,288
2,210
Fair value per
share right
23.32
23.32
23.32
23.32
23.32
23.32
23.32
23.32
23.32
23.32
% vested
% forfeited
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
1
Mr Willcock resigned from the Group on 17 April 2013. As a result, and in accordance with the terms of grant, all unvested share rights held by
Mr Willcock were forfeited.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
88
88
5.2.4 One‐off awards granted to senior executives in 2012
One‐off grants of share rights to some senior executives were made last year in order to transition to the new Executive Services Agreements.
The awards listed in the table below had approximately the same value as at the date of grant as the original service or retention payment that
was replaced. The deferred share rights were made subject to a continuing service condition, and the performance rights granted to Mr Laslett
were made on the same terms as the 2012 LTI grant, but assessing performance over a three‐year, four‐year and five‐year period.
Full details of these awards can be found in section 3.4.4: Service and retention awards of the 2012 Remuneration Report on page 90.
Name
Balance at
31 Dec 20121
VWAP at date of
award
(A$)2
Value at date of
award
(A$)
Vesting date
Fair Value of
grant in 2012
Financial Year
(A$)3
Balance at 31
Dec 2013
16,822
7,410
33,696
50,207
49,690
157,825
Deferred share rights awarded to senior executives
D Chandran
I L Edwards
M C Gray
B A Munro
G M Palin
Total
Performance rights awarded to senior executives
C A Laslett
C A Laslett
C A Laslett
Total
21,768
21,768
21,768
65,304
19.32
22.1918
19.32
19.32
19.32
22.97
22.97
22.97
325,000
164,433
651,000
970,000
960,000
3,070,433
500,000
500,000
500,000
1,500,000
1 January 2014
31 December 2014
30 June 2014
31 December 2014
31 August 2016
31 December 2014
31 December 2015
31 December 2016
162,500
58,726
260,400
359,259
204,255
1,045,140
91,353
65,712
50,262
207,327
16,822
7,410
33,696
50,207
49,690
157,825
21,768
21,768
21,768
65,304
1
2
3
Rights were granted to senior executives in the 2012 Financial Year.
The VWAP of Leighton Holdings Limited securities over the five trading days up to and including the grant dates of 1 January 2012 and 1 April 2012
was $19.32 and $22.1918 respectively. The VWAP of Leighton Holdings Limited securities over the five trading days following 14 February 2012 (the
announcement of the financial results for the December 2011 Transitional Financial Year) was $22.97.
The fair value of equity instruments is determined as at the date of interest granted (in accordance with AASB 2) and is progressively expensed over
the vesting period. The amount included as remuneration expensed in accordance with AASB 2 is not related to or indicative of the benefit (if any)
that senior executives may ultimately realise should the equity instruments vest.
The Leighton Holdings Limited Directors’ Report for the 2013 Financial Year is signed at Sydney on 20 February 2014 in accordance with a
resolution of the Directors.
Robert Humphris OAM
Chairman
Hamish
Chief
Tyrwhitt
Executive Officer
Leighton Holdings Limited Annual Report 2013
Leighton Holdings Limited Annual Report 2013
89
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Leighton Holdings Limited Annual Report 2013
Leighton Holdings Limited Annual Report 2013
90
90
Financial Report
Financial Report
TABLE OF CONTENTS
Consolidated Statement of Profit or Loss
Consolidated Statement of Profit or Loss and other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
1.
Summary of significant accounting policies
2. Revenue
3.
4.
Expenses
Items included in profit / (loss) before tax
5. Auditor’s remuneration
6.
Income tax (expense) / benefit
7. Cash and cash equivalents
8.
Trade and other receivables
9. Current tax assets
10. Inventories
11. Investments accounted for using the equity method
12. Other investments
13. Deferred taxes
14. Property, plant and equipment
15. Intangibles
16. Trade and other payables
17. Current tax liabilities
18. Provisions
19. Interest bearing liabilities
20. Equity
21. Reserves
22. Retained earnings
23. Dividends
24. Earnings per share
25. Associates
26. Joint venture entities
27. Joint operations
28. Reconciliation of property, plant and equipment carrying values
29. Reconciliation of profit / (loss) for the period to net cash from operating activities
30. Acquisitions and disposals of controlled entities and businesses
31. Held for sale
32. Segment information
33. Commitments
34. Contingent liabilities
35. Capital risk management
36. Financial instruments
37. Employee benefits
38. Related party disclosures
39. Leighton Holdings Limited and controlled entities
40. Impact of the change in accounting policy on adoption of AASB 11
41. New accounting standards
42. Events subsequent to reporting date
Directors’ Declaration
Independent Auditor’s Report to the Members of Leighton Holdings Limited
91
91
PAGE
92
93
94
95
96
97
97
107
108
109
110
111
112
112
113
114
114
115
115
116
117
119
120
120
121
122
123
124
125
126
127
131
136
139
140
141
144
146
149
151
152
152
164
171
184
195
199
200
201
202
Consolidated Statement of Profit or Loss
for the year ended 31 December 2013
92
12 months to
12 months to
December 2013
December 2012
$m
$m
^(restated)
Note
22,564.7
20,829.7
(21,583.1)
(20,123.4)
(255.4)
9.9
736.1
(267.2)
468.9
(214.2)
74.0
566.1
(124.0)
442.1
60.0¢
45.0¢
150.9¢
150.1¢
60.0¢
20.0¢
133.5¢
133.1¢
2
3
4
6
22
23
23
24
24
Share of profits / (losses) of associates and joint venture entities
Revenue
Expenses
Finance costs
Profit / (loss) before tax
Income tax (expense) / benefit
Profit / (loss) for the year
Dividends per share ‐ Final
Dividends per share ‐ Interim
Basic earnings per share
Diluted earnings per share
(Profit) / loss for the year attributable to non‐controlling interests
39.8
8.0
Profit / (loss) for the year attributable to members of the parent entity
508.7
450.1
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect
adjustments made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
The consolidated statement of profit or loss is to be read in conjunction with the notes to the consolidated financial statements.
Leighton Holdings Limited Annual Report 2013
Consolidated Statement of Profit or Loss
for the year ended 31 December 2013
92
92
Revenue
Expenses
Finance costs
Share of profits / (losses) of associates and joint venture entities
Profit / (loss) before tax
Income tax (expense) / benefit
Profit / (loss) for the year
(Profit) / loss for the year attributable to non‐controlling interests
Profit / (loss) for the year attributable to members of the parent entity
Dividends per share ‐ Final
Dividends per share ‐ Interim
Basic earnings per share
Diluted earnings per share
12 months to
December 2013
$m
12 months to
December 2012
$m
^(restated)
Note
2
3
4
6
22
23
23
24
24
22,564.7
20,829.7
(21,583.1)
(20,123.4)
(255.4)
9.9
736.1
(267.2)
468.9
(214.2)
74.0
566.1
(124.0)
442.1
39.8
8.0
508.7
450.1
60.0¢
45.0¢
150.9¢
150.1¢
60.0¢
20.0¢
133.5¢
133.1¢
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect
adjustments made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
The consolidated statement of profit or loss is to be read in conjunction with the notes to the consolidated financial statements.
Leighton Holdings Limited Annual Report 2013
Consolidated Statement of Profit or Loss and other
Comprehensive Income
for the year ended 31 December 2013
Consolidated Statement of Financial Position
as at 31 December 2013
93
93
94
Profit / (loss) for the year attributable to members of the parent entity
Other comprehensive income attributable to members of the parent entity:
Items that may be reclassified to profit or loss
-
Foreign exchange translation differences (net of tax)
- Effective portion of changes in fair value of cash flow hedges (net of tax)
- Change in fair value of available‐for‐sale assets (net of tax)
Items that will not be reclassified to profit or loss
- Change in value of equity reserves (net of tax)
12 months to
December 2013
$m
12 months to
December 2012
$m^
Note
508.7
450.1
21
21
21
21
180.4
12.5
9.6
‐
0.3
(47.9)
26.2
‐
‐
(11.4)
Other comprehensive income / (expense) for the year
202.8
(33.1)
Total comprehensive income / (expense) for the year
attributable to members of the parent entity
711.5
417.0
Total comprehensive income / (expense) for the year
attributable to members of the parent entity:
Total comprehensive income / (expense) for the year
Total comprehensive income / (expense) for the year
attributable to non‐controlling interests
Total comprehensive income / (expense) for the year
attributable to members of the parent entity
671.7
39.8
409.0
8.0
711.5
417.0
^ Following the adoption of AASB 11 Joint Arrangements by the Group, whilst comparative balances have required restatement
throughout the consolidated financial report as a result of a change in accounting policy, there was no restatement required in relation
to the consolidated statement of profit or loss and other comprehensive income.
Assets
Cash and cash equivalents
Trade and other receivables
Current tax assets
Assets held for sale
Total current assets
Inventories: consumables and development properties
Trade and other receivables
Inventories: development properties
Investments accounted for using the equity method
Liabilities associated with assets held for sale
Other investments
Deferred tax assets
Property, plant and equipment
Intangibles
Total non‐current assets
Total assets
Liabilities
Trade and other payables
Current tax liabilities
Provisions
Interest bearing liabilities
Total current liabilities
Trade and other payables
Provisions
Interest bearing liabilities
Total non‐current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity attributable to equity holders of the parent
Non‐controlling interests
Total equity
31 December 2013
31 December 2012
1 January 2012
$m
$m
$m
Note
^(restated)
^(restated)
7
8
9
10
31
8
10
11
12
13
14
15
16
17
18
19
31
16
18
19
20
21
22
1,720.7
5,051.1
20.9
556.0
229.4
7,578.1
803.0
364.4
825.6
92.7
86.3
1,752.6
573.3
4,497.9
51.3
477.0
589.5
105.1
6,771.4
344.8
178.1
1,535.6
2,058.5
2,007.7
3,760.6
10.1
569.8
672.8
7,021.0
675.8
487.7
861.8
97.0
246.0
2,071.8
255.7
4,695.8
85.3
406.5
634.3
174.3
6,302.3
197.7
173.7
2,126.2
2,497.6
1,606.0
2,961.4
92.6
489.3
4.6
5,153.9
786.7
432.7
979.8
63.6
307.3
2,521.1
269.1
5,360.3
66.7
331.0
669.8
‐
5,622.3
404.0
247.1
1,473.9
2,125.0
12,076.0
11,716.8
10,514.2
5,548.5
5,001.9
4,554.8
8,829.9
8,799.9
7,747.3
3,246.1
2,916.9
2,766.9
2,028.6
(9.7)
1,201.3
3,220.2
25.9
3,246.1
2,027.2
(229.4)
1,046.7
2,844.5
72.4
2,916.9
2,027.2
(209.3)
866.2
2,684.1
82.8
2,766.9
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the notes to the
consolidated financial statements.
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect adjustments
made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
The consolidated statement of financial position is to be read in conjunction with the notes to the consolidated financial statements.
Leighton Holdings Limited Annual Report 2013
Consolidated Statement of Financial Position
as at 31 December 2013
94
94
Assets
Cash and cash equivalents
Trade and other receivables
Current tax assets
Inventories: consumables and development properties
Assets held for sale
Total current assets
Trade and other receivables
Inventories: development properties
Investments accounted for using the equity method
Other investments
Deferred tax assets
Property, plant and equipment
Intangibles
Total non‐current assets
Total assets
Liabilities
Trade and other payables
Current tax liabilities
Provisions
Interest bearing liabilities
Liabilities associated with assets held for sale
Total current liabilities
Trade and other payables
Provisions
Interest bearing liabilities
Total non‐current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity attributable to equity holders of the parent
Non‐controlling interests
Total equity
31 December 2013
$m
31 December 2012
$m
1 January 2012
$m
Note
^(restated)
^(restated)
7
8
9
10
31
8
10
11
12
13
14
15
16
17
18
19
31
16
18
19
20
21
22
1,720.7
5,051.1
20.9
556.0
229.4
7,578.1
803.0
364.4
825.6
92.7
86.3
1,752.6
573.3
4,497.9
2,007.7
3,760.6
10.1
569.8
672.8
7,021.0
675.8
487.7
861.8
97.0
246.0
2,071.8
255.7
4,695.8
1,606.0
2,961.4
92.6
489.3
4.6
5,153.9
786.7
432.7
979.8
63.6
307.3
2,521.1
269.1
5,360.3
12,076.0
11,716.8
10,514.2
5,548.5
51.3
477.0
589.5
105.1
6,771.4
344.8
178.1
1,535.6
2,058.5
5,001.9
85.3
406.5
634.3
174.3
6,302.3
197.7
173.7
2,126.2
2,497.6
4,554.8
66.7
331.0
669.8
‐
5,622.3
404.0
247.1
1,473.9
2,125.0
8,829.9
8,799.9
7,747.3
3,246.1
2,916.9
2,766.9
2,028.6
(9.7)
1,201.3
3,220.2
25.9
3,246.1
2,027.2
(229.4)
1,046.7
2,844.5
72.4
2,916.9
2,027.2
(209.3)
866.2
2,684.1
82.8
2,766.9
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect adjustments
made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
The consolidated statement of financial position is to be read in conjunction with the notes to the consolidated financial statements.
Leighton Holdings Limited Annual Report 2013
Consolidated Statement of Changes in Equity
for the year ended 31 December 2013
Consolidated Statement of Cash Flows
for the year ended 31 December 2013
95
95
96
Share
Capital
$m
Reserves
$m
Retained
Earnings
$m
Attributable
to Equity
Holders
$m
Non‐controlling
Interests
$m
Total
Equity
$m
Total equity at 1 January 2012^
2,027.2
(209.3)
866.2
2,684.1
82.8
2,766.9
Profit for the year
Other comprehensive income
Transactions with owners in their
capacity as owners:
- Contributions of equity
- Dividends
-
Share based payments
- Other
Total transactions with owners
‐
‐
‐
‐
‐
‐
‐
‐
450.1
450.1
(8.0)
442.1
Cash flows from operating activities
(33.1)
‐
‐
13.0
‐
13.0
‐
‐
(33.1)
‐
(269.6)
(269.6)
‐
‐
13.0
‐
(269.6)
(256.6)
‐
‐
‐
‐
(2.4)
(2.4)
(33.1)
‐
(269.6)
13.0
(2.4)
(259.0)
Total equity at 31 December 2012^
2,027.2
(229.4)
1,046.7
2,844.5
72.4
2,916.9
Profit for the year
Other comprehensive income
Transactions with owners in their
capacity as owners:
- Contributions of equity
- Dividends
-
Share based payments
- Other
Total transactions with owners
‐
‐
1.4
‐
‐
‐
1.4
‐
508.7
508.7
(39.8)
468.9
202.8
‐
‐
16.9
‐
16.9
‐
‐
(354.1)
‐
‐
202.8
1.4
(354.1)
16.9
‐
(354.1)
(335.8)
‐
‐
‐
‐
(6.7)
(6.7)
202.8
1.4
(354.1)
16.9
(6.7)
(342.5)
Total equity at 31 December 2013
2,028.6
(9.7)
1,201.3
3,220.2
25.9
3,246.1
^ Following the adoption of AASB 11 Joint Arrangements by the Group, whilst comparative balances have required restatement
throughout the consolidated financial report as a result of a change in accounting policy, there was no restatement required in relation to
the consolidated statement of changes in equity.
Cash flows from operating activities
Cash receipts in the course of operations (including GST)
Cash payments in the course of operations (including GST)
Dividends received
Interest received
Finance costs paid
Income taxes received / (paid)
Net cash from operating activities
Cash flows from investing activities
Payments for intangibles
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments for investments in controlled entities and businesses
Proceeds from sale of investments in controlled entities and businesses
Cash acquired from acquisition of investments in controlled entities and businesses
Cash disposed from sale of investments in controlled entities and businesses
Proceeds from sale and finance leaseback of property, plant and equipment
Payments for other investments
Loans to associates
Net cash from investing activities
Cash flows from financing activities
Proceeds from share issues
Proceeds from borrowings
Repayment of borrowings
Repayment of finance leases
Dividends paid to non‐controlling interests
Dividends paid to owners of the Company
Net cash from financing activities
Net increase / (decrease) in cash held
Net cash at the beginning of the period
Effects of exchange rate fluctuations on cash held
Net cash at reporting date
12 months to
12 months to
December 2013
December 2012
$m
$m
^(restated)
Note
24,186.8
22,283.0
(23,072.0)
(21,008.8)
1,114.8
1,274.2
16.3
21.7
(231.5)
(118.4)
802.9
(53.6)
(964.5)
149.8
(34.9)
614.1
27.2
(18.4)
(200.0)
‐
1.4
254.1
(568.7)
200.4
(268.4)
(0.4)
(354.1)
(735.7)
(413.1)
2,007.7
126.1
1,720.7
19.1
36.5
(203.6)
49.6
1,175.8
(45.1)
(1,224.8)
102.1
(10.8)
172.4
‐
‐
(43.7)
(39.2)
‐
896.3
(542.6)
433.9
(173.9)
(3.4)
(269.6)
340.7
427.4
1,606.0
(25.7)
2,007.7
(480.3)
(1,089.1)
29
7
The consolidated statement of changes in equity is to be read in conjunction with the notes to the financial statements.
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect adjustments
made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Leighton Holdings Limited Annual Report 2013
Consolidated Statement of Cash Flows
for the year ended 31 December 2013
96
96
Cash flows from operating activities
Cash receipts in the course of operations (including GST)
Cash payments in the course of operations (including GST)
Cash flows from operating activities
Dividends received
Interest received
Finance costs paid
Income taxes received / (paid)
Net cash from operating activities
Cash flows from investing activities
Payments for intangibles
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments for investments in controlled entities and businesses
Proceeds from sale of investments in controlled entities and businesses
Cash acquired from acquisition of investments in controlled entities and businesses
Cash disposed from sale of investments in controlled entities and businesses
Payments for other investments
Loans to associates
Net cash from investing activities
Cash flows from financing activities
Proceeds from share issues
Proceeds from borrowings
Repayment of borrowings
Proceeds from sale and finance leaseback of property, plant and equipment
Repayment of finance leases
Dividends paid to non‐controlling interests
Dividends paid to owners of the Company
Net cash from financing activities
Net increase / (decrease) in cash held
Net cash at the beginning of the period
Effects of exchange rate fluctuations on cash held
12 months to
December 2013
$m
12 months to
December 2012
$m
^(restated)
Note
24,186.8
22,283.0
(23,072.0)
(21,008.8)
1,114.8
1,274.2
29
16.3
21.7
(231.5)
(118.4)
802.9
(53.6)
(964.5)
149.8
(34.9)
614.1
27.2
(18.4)
(200.0)
‐
19.1
36.5
(203.6)
49.6
1,175.8
(45.1)
(1,224.8)
102.1
(10.8)
172.4
‐
‐
(43.7)
(39.2)
(480.3)
(1,089.1)
1.4
254.1
(568.7)
200.4
(268.4)
(0.4)
(354.1)
(735.7)
‐
896.3
(542.6)
433.9
(173.9)
(3.4)
(269.6)
340.7
(413.1)
2,007.7
126.1
427.4
1,606.0
(25.7)
Net cash at reporting date
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect adjustments
1,720.7
2,007.7
7
made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Leighton Holdings Limited Annual Report 2013
Notes to the Consolidated Financial Statements
for the year ended 31 December 2013
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2013
97
97
98
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Statement of compliance
Leighton Holdings Limited (the “Company”) is a company domiciled in Australia. The consolidated financial statements of the Company
comprise the Company and its controlled entities (the “Consolidated Entity” or “Group”) and the Consolidated Entity’s interest in
associates and jointly controlled entities.
The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards
(“AASBs”) adopted by the Australian Accounting Standards Board (“AASB”) and in accordance with the Corporations Act 2001. The
financial report of the Consolidated Entity also complies with International Financial Reporting Standards (“IFRS”) as adopted by the
International Accounting Standards Board.
The standards, amendments to standards and interpretations available for early adoption at reporting date that have not been applied in
preparing this financial report are detailed in note 41: New accounting standards.
Basis of preparation
Presentation
The financial report is presented in Australian dollars which is the Company’s functional currency. All amounts disclosed in the financial
report relate to the Group unless otherwise stated. The financial report has been prepared on the historical cost basis, except for
available‐for‐sale assets and derivative financial instruments, which are measured at fair value.
The Company is a company of the kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order,
amounts in the financial report have been rounded off to the nearest hundred thousand dollars, unless otherwise stated.
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.
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 2013, as follows:
AASB 10 Consolidated Financial Statements (“AASB 10”), AASB 11 Joint Arrangements (“AASB 11”), AASB 12 Disclosure of
Interests in Other Entities (“AASB 12”), AASB 128 Investments in Associates and Joint Ventures, AASB 127 Separate Financial
Statements and AASB 2011‐7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint
Arrangements Standards;
AASB 2011‐9 Amendments to Australian Accounting Standards – Presentation of Other Comprehensive Income;
AASB 2012‐10 Amendments to Australian Accounting Standards – Transition Guidance and other Amendments which provides
an exemption from the requirement to disclose the impact of the change in accounting policy on the current period;
AASB 13 Fair Value Measurement and AASB 2011‐8 Amendments to Australian Accounting Standards arising from AASB 13;
AASB 119 Employee Benefits (September 2011) and AASB 2011‐10 Amendments to Australian Accounting Standards arising from
AASB 119 (September 2011);
AASB 2012‐2 Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial
Liabilities;
AASB 2012‐5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009‐2011 Cycle; and
AASB 2013‐6 Amendments to Australian Accounting Standards – Mandatory Effective Date of AASB 9 and Transition Disclosures.
Changes in accounting policies
Impact of the application of AASB 10
As a result of the adoption of AASB 10, the Company has changed its accounting policy with respect to determining whether it has control
over and consequently consolidates its investees. AASB 10 introduces a new control model that is applicable to all entities; among other
things, it requires the consolidation of an entity if the Company controls the investee on the basis of de facto circumstances. AASB 10
replaces the previous consolidation requirements in AASB 127 Consolidated and Separate Financial Statements and AASB Interpretation
112 Consolidation – Special Purpose Entities.
The revised control model broadens the situations when an entity is considered to be controlled by another entity and includes additional
application guidance. Under AASB 10, the Company controls an entity when the Company 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 Company has
reassessed its consolidation conclusions in light of the new control principles in AASB 10 and concluded that no changes are required.
Accordingly, the adoption of AASB 10 has not resulted in any adjustments to carrying amounts in the financial statements.
Impact of the application of AASB 11
AASB 11 replaces AASB 131 Interests in Joint Ventures and AASB Interpretation 113 Jointly ‐ Controlled Entities – Non‐monetary
Contributions by Venturers. AASB 11 uses the principle of control in AASB 10 to define joint control, and therefore the determination of
whether joint control exists may change. In addition, AASB 11 removes the option to account for jointly‐controlled entities using
proportionate consolidation. Instead, accounting for a joint arrangement is dependent on the nature of the rights and obligations arising
from the arrangement. Joint operations that give the venturers a right to the underlying assets and obligations for liabilities are
accounted for by recognising the share of those assets and liabilities. Joint ventures that give the venturers a right to the net assets are
accounted for using the equity method.
The adoption of AASB 11 has resulted in the Group changing its accounting policy to distinguish between accounting for joint
arrangements as either a joint operation or as a joint venture. As a joint operation the Group accounts for its right to the underlying
assets and obligations for liabilities by recognising the share of those assets and liabilities. As a joint venture the Group accounts for its
interests using the equity method, where the interests are initially recognised in the consolidated statement of financial position at cost
and adjusted thereafter to recognise the Group’s share of the post‐acquisition profits or losses and movements in other comprehensive
income in profit or loss and other comprehensive income respectively.
The adoption of AASB 11 has resulted in the Group determining that some joint arrangements that were previously accounted for using
the equity method are to be accounted for as joint operations. As required by AASB 11, the change in policy has been applied
retrospectively and, as a consequence, adjustments were recognised in the statement of financial position as of 1 January 2012. The
Group has derecognised its related investments in joint ventures at the beginning of the earliest period presented being 1 January 2012,
and has recognised the carrying amounts of the assets and liabilities under proportionate consolidation. The change in accounting policy
had no impact on the Group’s net assets, items of equity, profit for the period and earnings per share.
Impact of the application of AASB 12
AASB 12 Disclosure of interests in other entities is applicable to entities that have interests in subsidiaries, joint arrangements, associates
and unconsolidated structured entities. In general, the application of AASB 12 has resulted in more extensive disclosures in the
consolidated financial statements (please see notes 25, 26, 27, 39 and 40 for details).
Impact of the application of AASB 13
The Company has applied AASB 13 for the first time in the current year. AASB 13 establishes a single source of guidance for fair value
measurements and disclosures about fair value measurements. The scope of AASB 13 is broad; the fair value measurement requirements
of AASB 13 apply to both financial instrument items and non‐financial instrument items for which other accounting standards require or
permit fair value measurements and disclosures about fair value measurements, except for share‐based payment transactions that are
within the scope of AASB 2 Share‐base Payment, leasing transactions that are within the scope of AASB 117 Leases, and measurements
that have some similarities to fair value but are not fair value.
AASB 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the
principal (or most advantageous) market at the measurement date under current market conditions. Fair value under AASB 13 is an exit
price regardless of whether that price is directly observable or estimated using another valuation technique. AASB 13 also requires
extensive disclosure requirements.
AASB 13 requires prospective application from 1 January 2013. In addition, specific transitional provisions were given to entities such that
they need not apply the disclosure requirements set out in the Standard in comparative information provided for periods before the
initial application of the Standard. In accordance with these transitional provisions, the Group has not made any new disclosures required
by AASB 13 for the 2012 comparative period. Other than the additional disclosures, the application of AASB 13 has not had any material
impact on the amounts recognised in the consolidated financial statements.
AASB 119 Employee Benefits (as revised in 2011)
The most significant change required under AASB 119 relates to the accounting for defined benefit plans and termination benefits. The
amendments require the recognition of changes in defined benefit obligation and in the fair value of plan assets when they occur, and
hence eliminate the ‘corridor approach’ previously permitted under AASB 119 and accelerate that recognition of past service costs. All
actuarial gains and losses are recognised immediately through other comprehensive income in order for the net pension asset or liability
recognised in the consolidated balance sheet to reflect the full value of the plan deficit or surplus.
During the year, the remaining defined benefit plan, the ‘Leighton Superannuation Plan’ was formally wound‐up, with all remaining
employees transferred to defined contribution schemes. As such the application of the revised AASB 119 Standard is no longer relevant to
the Group. Any restatement of prior period balances as a result of retrospective application is not included in the comparative results of
the Group as any restatement is considered wholly immaterial.
Leighton Holdings Limited Annual Report 2013
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2013
98
98
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Impact of the application of AASB 11
AASB 11 replaces AASB 131 Interests in Joint Ventures and AASB Interpretation 113 Jointly ‐ Controlled Entities – Non‐monetary
Contributions by Venturers. AASB 11 uses the principle of control in AASB 10 to define joint control, and therefore the determination of
whether joint control exists may change. In addition, AASB 11 removes the option to account for jointly‐controlled entities using
proportionate consolidation. Instead, accounting for a joint arrangement is dependent on the nature of the rights and obligations arising
from the arrangement. Joint operations that give the venturers a right to the underlying assets and obligations for liabilities are
accounted for by recognising the share of those assets and liabilities. Joint ventures that give the venturers a right to the net assets are
accounted for using the equity method.
The adoption of AASB 11 has resulted in the Group changing its accounting policy to distinguish between accounting for joint
arrangements as either a joint operation or as a joint venture. As a joint operation the Group accounts for its right to the underlying
assets and obligations for liabilities by recognising the share of those assets and liabilities. As a joint venture the Group accounts for its
interests using the equity method, where the interests are initially recognised in the consolidated statement of financial position at cost
and adjusted thereafter to recognise the Group’s share of the post‐acquisition profits or losses and movements in other comprehensive
income in profit or loss and other comprehensive income respectively.
The adoption of AASB 11 has resulted in the Group determining that some joint arrangements that were previously accounted for using
the equity method are to be accounted for as joint operations. As required by AASB 11, the change in policy has been applied
retrospectively and, as a consequence, adjustments were recognised in the statement of financial position as of 1 January 2012. The
Group has derecognised its related investments in joint ventures at the beginning of the earliest period presented being 1 January 2012,
and has recognised the carrying amounts of the assets and liabilities under proportionate consolidation. The change in accounting policy
had no impact on the Group’s net assets, items of equity, profit for the period and earnings per share.
Impact of the application of AASB 12
AASB 12 Disclosure of interests in other entities is applicable to entities that have interests in subsidiaries, joint arrangements, associates
and unconsolidated structured entities. In general, the application of AASB 12 has resulted in more extensive disclosures in the
consolidated financial statements (please see notes 25, 26, 27, 39 and 40 for details).
Impact of the application of AASB 13
The Company has applied AASB 13 for the first time in the current year. AASB 13 establishes a single source of guidance for fair value
measurements and disclosures about fair value measurements. The scope of AASB 13 is broad; the fair value measurement requirements
of AASB 13 apply to both financial instrument items and non‐financial instrument items for which other accounting standards require or
permit fair value measurements and disclosures about fair value measurements, except for share‐based payment transactions that are
within the scope of AASB 2 Share‐base Payment, leasing transactions that are within the scope of AASB 117 Leases, and measurements
that have some similarities to fair value but are not fair value.
AASB 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the
principal (or most advantageous) market at the measurement date under current market conditions. Fair value under AASB 13 is an exit
price regardless of whether that price is directly observable or estimated using another valuation technique. AASB 13 also requires
extensive disclosure requirements.
AASB 13 requires prospective application from 1 January 2013. In addition, specific transitional provisions were given to entities such that
they need not apply the disclosure requirements set out in the Standard in comparative information provided for periods before the
initial application of the Standard. In accordance with these transitional provisions, the Group has not made any new disclosures required
by AASB 13 for the 2012 comparative period. Other than the additional disclosures, the application of AASB 13 has not had any material
impact on the amounts recognised in the consolidated financial statements.
AASB 119 Employee Benefits (as revised in 2011)
The most significant change required under AASB 119 relates to the accounting for defined benefit plans and termination benefits. The
amendments require the recognition of changes in defined benefit obligation and in the fair value of plan assets when they occur, and
hence eliminate the ‘corridor approach’ previously permitted under AASB 119 and accelerate that recognition of past service costs. All
actuarial gains and losses are recognised immediately through other comprehensive income in order for the net pension asset or liability
recognised in the consolidated balance sheet to reflect the full value of the plan deficit or surplus.
During the year, the remaining defined benefit plan, the ‘Leighton Superannuation Plan’ was formally wound‐up, with all remaining
employees transferred to defined contribution schemes. As such the application of the revised AASB 119 Standard is no longer relevant to
the Group. Any restatement of prior period balances as a result of retrospective application is not included in the comparative results of
the Group as any restatement is considered wholly immaterial.
Leighton Holdings Limited Annual Report 2013
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2013
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2013
99
99
100
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Amendments to AASB 7 disclosures – Offsetting financial assets and financial liabilities
The Group has applied AASB 2012‐2 Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and
Financial Liabilities relating to AASB 7 disclosure requirements for the first time in the current year. The amendments to AASB 7 requires
entities to disclose information about rights of offset and related arrangements (such as collateral posting requirements) for financial
instruments under an enforceable master netting agreement or similar arrangement. The amendments have been applied
retrospectively.
AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors requires that when there is a change in accounting policy, the
revised policy is applied retrospectively as if the new accounting policy had always been applied. Therefore certain amounts shown in the
financial report as at 31 December 2013 do not correspond to the financial report as at 31 December 2012 or to the financial report as at
31 December 2011 (which represents the 1 January 2012 earliest opening comparative balance).
The effect of the changes in accounting policies on individual line items, where applicable, in the consolidated statement of profit or loss,
the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of cash flows and the
consolidated statement of financial position is shown in more detail in note 40: Impact of the change in accounting policy on adoption of
AASB 11 Joint Arrangements. The adoption of AASB 11 was the only new accounting standard adopted which resulted in a material
restatement of prior period financial statements and related notes. All other standards and amendments adopted have impacted
disclosures within the financial statements only.
Accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of
future events that may have a financial impact on the entity and are believed to be reasonable under the circumstances. Revisions to
estimates are recognised in the period in which the estimate is revised and in any future period affected. 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.
It is reasonably possible on the basis of existing knowledge that actual outcomes within the next financial year that are different from
the estimates and assumptions in the areas listed above could require a material adjustment to the carrying amount of amounts due
from and due to customers (refer to note 8: Trade and other receivables) and amounts receivable from and payable to related parties
(refer to note 8: Trade and other receivables and note 16: Trade and other payables respectively);
Lease classification and asset disposals: determination as to whether the significant risks and rewards of ownership have transferred;
Estimation of the economic life of property, plant and equipment;
Asset impairment testing, including assumptions in value in use calculations;
Assessment of the fair value of available‐for‐sale assets and derivatives; and
Determination of the fair value for business combinations.
Basis of consolidation
Subsidiaries
The Company 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 from its involvement with the entity and has the ability to affect those returns through its power over the
entity.
Results of controlled entities are included in the consolidated statement of profit or loss from the date control is obtained and excluded
from the date the entity is no longer controlled. Intragroup balances and transactions, and any unrealised gains or losses arising from
intragroup transactions, are eliminated in preparing the consolidated financial statements.
The Group treats transactions with non‐controlling interests that do not result in a loss of control as transactions with equity owners of
the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non‐controlling
interests to reflect their relative interests in the controlled entity.
Any difference between the amount of the adjustment to non‐controlling interests and the fair value of the consideration paid or received
is recognised in the equity reserve. When the Group ceases to have control, any retained interest in the entity is remeasured to its fair
value with the change in carrying amount recognised in profit or loss.
Controlled entities
Investments in associates
another entity.
transaction costs.
Investments in controlled entities are carried in the Company’s financial statements at cost less impairment.
Associates are those entities in which the Company has significant influence, but not control or joint control, over the financial and
operating policies. Significant influence is presumed to exist when the Company owns between 20% and 50% of the voting power of
Investments in associates are accounting for using the equity method and recognised initially at cost. The cost of the investments includes
The consolidated financial statements include the Company’s share of the profit or loss and other comprehensive income of equity
accounted investments, after adjustments to align the accounting policies with those of the Company, from the date that significant
influence commences until the date that significant influence ceases.
When the Company’s share of losses exceeds its interest in an equity accounted investment, the carrying value of the investment,
including any long‐term interests that form part thereof, is reduced to zero, and the recognition of further loss is discontinued except to
the extent that the Company has an obligation or has made payments on behalf of the investee.
Unrealised gains on transactions between the Company and its associates are eliminated to the extent of the Company’s interest in the
associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Under AASB 11 Joint Arrangements investments in joint arrangements are classified as either joint operations or joint ventures depending
on the contractual rights and obligations each investor has, rather than the legal structure of the joint arrangement. The Company has
assessed the nature of its joint arrangements and determined to have both joint operations and joint ventures.
The Company recognises its direct right to the, and its share of jointly held assets, liabilities, revenues and expenses of joint operations.
These have been incorporated in the financial statements under the appropriate headings. Details of joint operations are set out in note
Joint arrangements
Joint operations
27: Joint operations.
Joint ventures
Interests in joint ventures are accounted for using the equity method. Under this method, the interests are initially recognised in the
consolidated balance sheet at cost and adjusted thereafter to recognise the group’s share of the post‐acquisition profits or losses and
movements in other comprehensive income in profit or loss and other comprehensive income respectively.
When the group’s share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long‐term
interests that, in substance, form part of the group’s net investment in the joint ventures), the group does not recognise further losses,
unless it has incurred obligations or made payments on behalf of the joint ventures.
Unrealised gains on transactions between the group and its joint ventures are eliminated to the extent of the group’s interest in the joint
ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Accounting policies of the joint ventures have been changed where necessary, to ensure consistency with the policies adopted by the
group.
Other investments
Other investments are accounted for as available‐for‐sale financial assets.
Leighton Holdings Limited Annual Report 2013
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2013
100
100
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
The Group treats transactions with non‐controlling interests that do not result in a loss of control as transactions with equity owners of
the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non‐controlling
interests to reflect their relative interests in the controlled entity.
Any difference between the amount of the adjustment to non‐controlling interests and the fair value of the consideration paid or received
is recognised in the equity reserve. When the Group ceases to have control, any retained interest in the entity is remeasured to its fair
value with the change in carrying amount recognised in profit or loss.
Controlled entities
Investments in controlled entities are carried in the Company’s financial statements at cost less impairment.
Investments in associates
Associates are those entities in which the Company has significant influence, but not control or joint control, over the financial and
operating policies. Significant influence is presumed to exist when the Company owns between 20% and 50% of the voting power of
another entity.
Investments in associates are accounting for using the equity method and recognised initially at cost. The cost of the investments includes
transaction costs.
The consolidated financial statements include the Company’s share of the profit or loss and other comprehensive income of equity
accounted investments, after adjustments to align the accounting policies with those of the Company, from the date that significant
influence commences until the date that significant influence ceases.
When the Company’s share of losses exceeds its interest in an equity accounted investment, the carrying value of the investment,
including any long‐term interests that form part thereof, is reduced to zero, and the recognition of further loss is discontinued except to
the extent that the Company has an obligation or has made payments on behalf of the investee.
Unrealised gains on transactions between the Company and its associates are eliminated to the extent of the Company’s interest in the
associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Joint arrangements
Under AASB 11 Joint Arrangements investments in joint arrangements are classified as either joint operations or joint ventures depending
on the contractual rights and obligations each investor has, rather than the legal structure of the joint arrangement. The Company has
assessed the nature of its joint arrangements and determined to have both joint operations and joint ventures.
Joint operations
The Company recognises its direct right to the, and its share of jointly held assets, liabilities, revenues and expenses of joint operations.
These have been incorporated in the financial statements under the appropriate headings. Details of joint operations are set out in note
27: Joint operations.
Joint ventures
Interests in joint ventures are accounted for using the equity method. Under this method, the interests are initially recognised in the
consolidated balance sheet at cost and adjusted thereafter to recognise the group’s share of the post‐acquisition profits or losses and
movements in other comprehensive income in profit or loss and other comprehensive income respectively.
When the group’s share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long‐term
interests that, in substance, form part of the group’s net investment in the joint ventures), the group does not recognise further losses,
unless it has incurred obligations or made payments on behalf of the joint ventures.
Unrealised gains on transactions between the group and its joint ventures are eliminated to the extent of the group’s interest in the joint
ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Accounting policies of the joint ventures have been changed where necessary, to ensure consistency with the policies adopted by the
group.
Other investments
Other investments are accounted for as available‐for‐sale financial assets.
Leighton Holdings Limited Annual Report 2013
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2013
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2013
101
101
102
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
a) Revenue recognition
Revenue from construction contracting services is recognised using the percentage complete method. Stage of completion is measured by
reference to costs incurred to date as a percentage of estimated total costs for each contract. Where the project result can be reliably
estimated, contract revenue and expenses are recognised in the statement of profit or loss as incurred. Where the project result cannot
be reliably estimated, profits are deferred and the difference between revenue and expenses is carried forward as either a contract
receivable or contract payable. Once the contract result can be reliably estimated, the profit earned to that point is recognised
immediately.
Revenue from mining contracts is recognised on the basis of the value of work completed.
Property development revenue includes sales of development properties, rental and fee income. Revenue from the sale of property
developments and land sales is recognised when the significant risks and rewards of ownership have been transferred. Rental income is
recognised on a straight line basis over the term of the lease. Other property development revenue is recognised as services are provided.
Revenue from other services, including telecommunications, environmental and utilities services, is recognised as services are provided.
Expected losses on all contracts are recognised in full as soon as they become apparent.
Interest revenue is recognised on an accruals basis.
Dividend income is recognised when the dividend is declared.
b) Finance costs
Finance costs are recognised as expenses in the period in which they are incurred, except where they are included in the costs of qualifying
assets. The capitalisation rate used to determine the amount of finance costs to be capitalised to qualifying assets is the weighted average
interest rate applicable to the entity’s outstanding borrowings during the period.
Finance costs include interest on bank overdrafts and short‐term and long‐term borrowings, amortisation of discounts or premiums
relating to borrowings, amortisation of ancillary costs incurred in connection with the arrangement of borrowings, finance lease charges
and certain exchange differences arising from foreign currency borrowings.
Income tax
c)
Income tax expense on the profit or loss for the period comprises current and deferred tax expense. Income tax expense is recognised in
the statement of profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in
equity. Current tax expense is the expected tax payable on the taxable income for the period, using tax rates enacted at the reporting
date, and any adjustment to tax payable in respect of previous years. The Group adopts the statement of financial position liability method
to provide for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes. Taxable temporary differences are not provided for the initial recognition of goodwill. The amount of
deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using
tax rates enacted at the statement of financial position date.
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. The Company is the head entity in the Tax Consolidated Group
comprising the Australian wholly‐owned subsidiaries. The head entity recognises all of the current tax assets and liabilities and deferred
tax assets in respect of tax losses of the Tax Consolidated Group (after elimination of intra‐group transactions). Deferred tax assets and
liabilities in respect of temporary differences are recognised in the subsidiaries’ financial statements.
The Tax Consolidated Group has entered into a tax funding agreement that requires wholly‐owned subsidiaries to make contributions to
the head entity for current tax assets and liabilities occurring after the implementation of tax consolidation. Under the tax funding
agreement, the contributions are calculated using the “group allocation” approach so that the contributions are equivalent to the
current tax balances generated by transactions entered into by wholly‐owned subsidiaries. The contributions are payable as set out in the
agreement and reflect the timing of the head entity’s obligations to make payments for tax liabilities to the relevant tax authorities. The
assets and liabilities arising under the tax funding agreement are recognised as intercompany assets and liabilities with a consequential
adjustment to current income tax.
Basic earnings per share is determined by dividing profit attributable to members of the parent entity, excluding any costs of servicing
equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the period, adjusted for bonus
d) Earnings per share
Basic earnings per share
elements in ordinary shares issued during the period.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income
tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of
shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
e) Non‐derivative financial instruments
Non‐derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash
equivalents, loans and borrowings, and trade and other payables. When acquired, non‐derivative financial instruments are recognised at
fair value. At subsequent reporting dates they are measured at amortised cost unless specifically mentioned below.
Cash and cash equivalents include cash on hand, cash at bank and call deposits. For the purposes of the statement of cash flows, net cash
includes cash on hand, at bank and short term deposits at call, net of bank overdrafts.
Cash and cash equivalents
Trade and other receivables
Contract and trade debtors include all net receivables from construction and other services, and property development. Included in
contract debtors is the progressive valuation of work completed. The valuation of work completed is made after bringing to account a
proportion of the estimated contract profits and after recognising all known losses.
Where payments received exceed the revenue recognised, the difference is recorded as a liability in the statement of financial position.
Other amounts receivable generally arise from transactions other than the provision of services and include amounts in respect of sales of
assets and taxes receivable. Interest may be charged at market rates based on individual debtor arrangements. Contract and trade
debtors are normally settled within 60 days of billing. Amounts receivable expected to be received after twelve months are discounted.
Recoverability is assessed at reporting date and provision made for any doubtful debts. Prepayments represent the future economic
benefits receivable in respect of economic sacrifices made in the current or prior reporting period.
Available‐for‐sale financial assets
Available‐for‐sale assets are initially recognised at cost, being the fair value of the consideration given and include acquisition costs.
Subsequently, available‐for‐sale assets are measured at fair value. Changes in fair value are recognised as a separate component of
equity in the fair value reserve. When the asset is sold, collected or otherwise disposed, or if the asset is determined to be impaired, the
cumulative gain or loss previously reported in equity is recognised in the statement of profit or loss.
All loans and borrowings are initially recognised at fair value, being the amount received less attributable transaction costs. After initial
recognition, interest bearing liabilities are stated at amortised cost with any difference between cost and redemption value being
recognised in the statement of profit or loss over the period of the borrowings on an effective interest basis.
Interest bearing liabilities
Trade and other payables
Liabilities are recognised for amounts to be paid for goods or services received. Trade payables are normally settled within 60 days.
f) Derivative financial instruments
Derivative financial instruments are stated at fair value, with changes in fair value recognised in the statement of profit or loss. Where
derivative financial instruments qualify for hedge accounting, recognition of changes in fair value depends on the nature of the item being
hedged. Hedge accounting is discontinued when the hedging relationship is revoked, the hedging instrument expires, is sold, terminated,
exercised, or no longer qualifies for hedge accounting.
Cash flow hedge
Changes in the fair value of designated and qualifying cash flow hedges are deferred in equity. Where it is expected that all or a portion
of a loss recognised directly in equity will not be recovered in future periods, that loss is recognised in the statement of profit or loss.
Amounts deferred are included in the initial measurement of the cost of the asset or liability where the forecast transaction being hedged
results in the recognition of a non‐financial asset or a non‐financial liability.
Leighton Holdings Limited Annual Report 2013
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2013
102
102
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
d) Earnings per share
Basic earnings per share
Basic earnings per share is determined by dividing profit attributable to members of the parent entity, excluding any costs of servicing
equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the period, adjusted for bonus
elements in ordinary shares issued during the period.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income
tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of
shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
e) Non‐derivative financial instruments
Non‐derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash
equivalents, loans and borrowings, and trade and other payables. When acquired, non‐derivative financial instruments are recognised at
fair value. At subsequent reporting dates they are measured at amortised cost unless specifically mentioned below.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, cash at bank and call deposits. For the purposes of the statement of cash flows, net cash
includes cash on hand, at bank and short term deposits at call, net of bank overdrafts.
Trade and other receivables
Contract and trade debtors include all net receivables from construction and other services, and property development. Included in
contract debtors is the progressive valuation of work completed. The valuation of work completed is made after bringing to account a
proportion of the estimated contract profits and after recognising all known losses.
Where payments received exceed the revenue recognised, the difference is recorded as a liability in the statement of financial position.
Other amounts receivable generally arise from transactions other than the provision of services and include amounts in respect of sales of
assets and taxes receivable. Interest may be charged at market rates based on individual debtor arrangements. Contract and trade
debtors are normally settled within 60 days of billing. Amounts receivable expected to be received after twelve months are discounted.
Recoverability is assessed at reporting date and provision made for any doubtful debts. Prepayments represent the future economic
benefits receivable in respect of economic sacrifices made in the current or prior reporting period.
Available‐for‐sale financial assets
Available‐for‐sale assets are initially recognised at cost, being the fair value of the consideration given and include acquisition costs.
Subsequently, available‐for‐sale assets are measured at fair value. Changes in fair value are recognised as a separate component of
equity in the fair value reserve. When the asset is sold, collected or otherwise disposed, or if the asset is determined to be impaired, the
cumulative gain or loss previously reported in equity is recognised in the statement of profit or loss.
Interest bearing liabilities
All loans and borrowings are initially recognised at fair value, being the amount received less attributable transaction costs. After initial
recognition, interest bearing liabilities are stated at amortised cost with any difference between cost and redemption value being
recognised in the statement of profit or loss over the period of the borrowings on an effective interest basis.
Trade and other payables
Liabilities are recognised for amounts to be paid for goods or services received. Trade payables are normally settled within 60 days.
f) Derivative financial instruments
Derivative financial instruments are stated at fair value, with changes in fair value recognised in the statement of profit or loss. Where
derivative financial instruments qualify for hedge accounting, recognition of changes in fair value depends on the nature of the item being
hedged. Hedge accounting is discontinued when the hedging relationship is revoked, the hedging instrument expires, is sold, terminated,
exercised, or no longer qualifies for hedge accounting.
Cash flow hedge
Changes in the fair value of designated and qualifying cash flow hedges are deferred in equity. Where it is expected that all or a portion
of a loss recognised directly in equity will not be recovered in future periods, that loss is recognised in the statement of profit or loss.
Amounts deferred are included in the initial measurement of the cost of the asset or liability where the forecast transaction being hedged
results in the recognition of a non‐financial asset or a non‐financial liability.
Leighton Holdings Limited Annual Report 2013
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2013
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2013
103
103
104
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Cash flow hedges relating to operating activities are recognised in profit or loss in the same period the hedged item is recognised in profit
or loss. When a forecast transaction is no longer expected to occur, the cumulative gain or loss deferred in equity is recognised
immediately in profit or loss.
Hedges of net investments in foreign operations
Gains or losses on the hedging instrument are recognised in the foreign currency translation reserve. Gains and losses deferred in the
foreign currency translation reserve are recognised in profit or loss upon disposal of the foreign operation.
Fair value hedge
Changes in the fair value of designated and qualifying fair value hedges are recorded in profit or loss, together with any changes in the
fair value of the hedged item that is attributable to the hedged risk. When hedge accounting is discontinued the adjustment to the
carrying amount of the hedged item arising from the hedged risk is amortised to profit or loss from that date. The gain or loss relating to
the ineffective portion is recognised immediately in profit or loss as part of other expenses or other income.
Inventories
g)
Inventories are carried at the lower of cost and net realisable value. Inventories comprise:
Property developments
Cost includes the costs of acquisition, development and holding costs such as rates, taxes and finance costs. Holding costs on property
developments not under active development are expensed as incurred.
Raw materials and consumables
Cost is based on the first‐in, first‐out principle and includes expenditure incurred in acquiring the inventories and bringing them to their
existing condition and location.
h) Assets held for sale and liabilities associated with assets held for sale
Assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction
rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount
and fair value less costs to sell.
An impairment loss is recognised for any initial or subsequent write‐down of the asset (or disposal group) to fair value less costs to sell. A
gain is recognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment
loss previously recognised.
Assets classified as held for sale are presented separately from the other assets in the statement of financial position. Assets are not
depreciated or amortised while they are classified as held for sale.
Liabilities associated with assets held for sale are presented separately from other liabilities in the statement of financial position.
Interest and other expenses attributable to the liabilities associated with assets held for sale continue to be recognised.
Property, plant and equipment
i)
Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value.
Depreciation and amortisation
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 as follows:
freehold buildings: straight line method ‐ up to 40 years;
major plant and equipment: cumulative number of hours worked ‐ up to 10 years;
major plant and equipment ‐ component parts: cumulative number of hours worked ‐ up to 10 years;
leased plant and equipment: cumulative number of hours worked ‐ up to 10 years;
waste management assets: straight line method, economic life of the waste operations ‐ up to 20 years;
office and other equipment: diminishing value method ‐ up to 10 years; and
leasehold buildings and improvements: straight line method, over the terms of the leases ‐ up to 40 years.
Subsequent costs
Subsequent costs are included in the carrying amount of property, plant and equipment only when it is probable that the associated
future economic benefits will flow to the Group. All other costs are recognised in the statement of profit or loss.
Leases under which the Group assumes substantially all the risks and benefits of ownership are classified as finance leases. Other leases
j)
Leased assets
are classified as operating leases.
Finance leases
incurred.
Operating leases
k) Business combinations
A lease asset and a lease liability equal to the lower of the fair value of the leased property and the present value of the minimum lease
payments is recorded at the inception of the lease. The finance lease liability is the net present value of future finance lease rentals and
residuals. Lease liabilities are reduced by repayments of principal. The interest components of the lease payments are expensed.
Contingent rentals, which are potential incremental lease payments not fixed in amount as they relate to future changes, are expensed as
Payments made under operating leases are expensed on a straight line basis over the term of the lease.
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 acquisition‐by‐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 statement of profit or loss as a gain on acquisition of a controlled entity.
l)
Intangible assets
(i) Goodwill
(ii) Brand name
estimated useful lives.
(iii) Customer contracts
(iv) IT systems
years.
Goodwill on acquisition of controlled entities is included in intangible assets. Goodwill on acquisition of associates is included in equity
accounted investments. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is not amortised but it is tested for impairment annually or more frequently if there is an indication that it might be impaired.
Goodwill is allocated to cash‐generating units for the purpose of impairment testing.
Brand names acquired as part of a business combination are recognised separately from goodwill. The brand names are carried at their
fair value at the date of acquisition less accumulated amortisation and any impairment losses. Where brand names’ useful lives are
assessed as indefinite, the brand names are not amortised but are tested for impairment annually, or more frequently whenever there is
an indication that it might be impaired. Where brand names’ useful lives are assessed as finite, the brand names are amortised over their
Customer contracts acquired as part of a business combination are recognised separately from goodwill. The customer contracts are
carried at their fair value at the date of acquisition less accumulated amortisation and any impairment losses. Where customer contracts’
useful lives are assessed as indefinite, the customer contract is not amortised but is tested for impairment annually, or more frequently
whenever there is an indication that it might be impaired. Where customer contracts’ useful lives are assessed as finite, the customer
contracts are amortised over their estimated useful lives.
Costs incurred in developing systems and costs incurred in acquiring software and licenses that will provide future period economic
benefits are capitalised to other intangibles. Costs capitalised include external direct costs of materials and services and direct payroll
and payroll related costs of employees’ time spent on the projects. IT systems are amortised over their estimated useful lives of up to 7
IT systems are carried at cost less accumulated amortisation and any impairment losses.
Leighton Holdings Limited Annual Report 2013
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2013
104
104
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Leased assets
j)
Leases under which the Group assumes substantially all the risks and benefits of ownership are classified as finance leases. Other leases
are classified as operating leases.
Finance leases
A lease asset and a lease liability equal to the lower of the fair value of the leased property and the present value of the minimum lease
payments is recorded at the inception of the lease. The finance lease liability is the net present value of future finance lease rentals and
residuals. Lease liabilities are reduced by repayments of principal. The interest components of the lease payments are expensed.
Contingent rentals, which are potential incremental lease payments not fixed in amount as they relate to future changes, are expensed as
incurred.
Operating leases
Payments made under operating leases are expensed on a straight line basis over the term of the lease.
k) 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 acquisition‐by‐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 statement of profit or loss as a gain on acquisition of a controlled entity.
Intangible assets
l)
(i) Goodwill
Goodwill on acquisition of controlled entities is included in intangible assets. Goodwill on acquisition of associates is included in equity
accounted investments. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is not amortised but it is tested for impairment annually or more frequently if there is an indication that it might be impaired.
Goodwill is allocated to cash‐generating units for the purpose of impairment testing.
(ii) Brand name
Brand names acquired as part of a business combination are recognised separately from goodwill. The brand names are carried at their
fair value at the date of acquisition less accumulated amortisation and any impairment losses. Where brand names’ useful lives are
assessed as indefinite, the brand names are not amortised but are tested for impairment annually, or more frequently whenever there is
an indication that it might be impaired. Where brand names’ useful lives are assessed as finite, the brand names are amortised over their
estimated useful lives.
(iii) Customer contracts
Customer contracts acquired as part of a business combination are recognised separately from goodwill. The customer contracts are
carried at their fair value at the date of acquisition less accumulated amortisation and any impairment losses. Where customer contracts’
useful lives are assessed as indefinite, the customer contract is not amortised but is tested for impairment annually, or more frequently
whenever there is an indication that it might be impaired. Where customer contracts’ useful lives are assessed as finite, the customer
contracts are amortised over their estimated useful lives.
(iv) IT systems
Costs incurred in developing systems and costs incurred in acquiring software and licenses that will provide future period economic
benefits are capitalised to other intangibles. Costs capitalised include external direct costs of materials and services and direct payroll
and payroll related costs of employees’ time spent on the projects. IT systems are amortised over their estimated useful lives of up to 7
years.
IT systems are carried at cost less accumulated amortisation and any impairment losses.
Leighton Holdings Limited Annual Report 2013
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2013
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2013
105
105
106
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
p) Share capital
Ordinary share capital
Dividends
distributed at reporting date.
q) Foreign currency translation
Functional and presentation currency
Transactions
Issued and paid up capital is recognised at the consideration received by the Company.
Provision is not made for dividends unless the dividend has been declared by the Directors on or before the end of the period and not
The consolidated financial statements are presented in Australian dollars, which is the Group’s functional and presentation currency.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transaction. 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 the statement of profit or loss.
Non‐monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the
Non‐monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value
date of the initial transaction.
was determined.
Translation of controlled foreign entities
Assets and liabilities of controlled foreign entities are translated into the presentation currency at the rates of exchange at reporting date
and the statement of profit or loss is translated at the rates approximating foreign exchange rates ruling at the dates of the transactions.
The resulting exchange differences are taken directly to the foreign currency translation reserve. Exchange gains and losses on
transactions which form part of the net investments in foreign controlled entities together with any related income tax effect are
recognised in the foreign currency translation reserve on consolidation. On disposal of a foreign entity, the deferred cumulative amount
recognised in equity relating to that particular foreign entity is recognised in the statement of profit or loss as part of the gain or loss on
Impairment
m)
The carrying amounts of the Group’s assets are reviewed at each reporting date to determine whether there is any indication of
impairment. If any such indication exists, the asset’s recoverable amount is estimated. The recoverable amount of goodwill and
indefinite lived intangible assets are reviewed at each reporting date irrespective of an indication of impairment.
An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is the
greater of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their
present value using a pre‐tax discount rate that reflects current market assessments of the time value of money and the risks specific to
the asset. The recoverable amount for an asset that does not generate largely independent cash flows is determined for the cash‐
generating unit to which the asset belongs.
Impairment losses are recognised in the statement of profit or loss unless the asset has been previously revalued, in which case the
impairment loss is recognised as a reversal to the extent of that previous revaluation with any excess recognised in the statement of profit
or loss. Reversals of impairment losses, other than in respect of goodwill and available‐for‐sale assets, are recognised in the statement of
profit or loss. Any increase above original cost of the asset is treated as a revaluation increase in equity.
n) Employee benefits
Liabilities in respect of employee benefits which are not due to be settled within twelve months are discounted using the rates attaching
to national government securities at reporting date, which most closely match the terms of maturity of the related liabilities.
Wages, salaries, annual and long service leave
The provision for employee entitlements to wages, salaries and annual and long service leave represents the amount which the Group has
a present obligation to pay resulting from employees’ services provided up to the reporting date. Provisions have been calculated based
on expected wage and salary rates and include related on‐costs. In determining the liability for these employee entitlements,
consideration has been given to estimated future increases in wage and rates, and the Group’s experience with staff departures.
Superannuation
Defined contribution superannuation plans exist to provide benefits for eligible employees or their dependants. Contributions by the
Group are expensed to the statement of profit or loss as incurred.
sale.
Share‐based payment transactions
Ownership based remuneration is provided to employees via the plans outlined in Note 37: Employee Benefits. The fair value of share
options and share rights are recognised as an expense over the vesting period.
Shares are recognised when either options are exercised and the proceeds received or shares are issued to settle share rights.
Retention arrangements
Retention arrangements are in place ranging from three years to retirement for certain key employees which are payable upon
completion of the retention period.
The provisions are accrued on a pro‐rata basis during the retention period and have been calculated based on salary rates, including
related on‐costs.
Annual bonus and deferred incentive arrangements
Annual bonuses and deferred incentives are provided at reporting date and include related on‐costs. The Group recognises a provision
where there is a contractual or constructive obligation.
o) Restoration provisions
Provisions for restoration represent restoration obligations in respect of landfills. The provisions are the best estimate of the present
value of the expenditure required to settle the restoration obligation at reporting date, based on current legal requirements and
technology. The amount of the provision for future restoration costs is capitalised as a waste management asset and amortised over the
asset life.
Leighton Holdings Limited Annual Report 2013
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2013
106
106
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
p) Share capital
Ordinary share capital
Issued and paid up capital is recognised at the consideration received by the Company.
Dividends
Provision is not made for dividends unless the dividend has been declared by the Directors on or before the end of the period and not
distributed at reporting date.
q) Foreign currency translation
Functional and presentation currency
The consolidated financial statements are presented in Australian dollars, which is the Group’s functional and presentation currency.
Transactions
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transaction. 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 the statement of profit or loss.
Non‐monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the
date of the initial transaction.
Non‐monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value
was determined.
Translation of controlled foreign entities
Assets and liabilities of controlled foreign entities are translated into the presentation currency at the rates of exchange at reporting date
and the statement of profit or loss is translated at the rates approximating foreign exchange rates ruling at the dates of the transactions.
The resulting exchange differences are taken directly to the foreign currency translation reserve. Exchange gains and losses on
transactions which form part of the net investments in foreign controlled entities together with any related income tax effect are
recognised in the foreign currency translation reserve on consolidation. On disposal of a foreign entity, the deferred cumulative amount
recognised in equity relating to that particular foreign entity is recognised in the statement of profit or loss as part of the gain or loss on
sale.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
2. REVENUE
Construction contracting services
Mining contracting services
Property development revenue
Other services revenue
Revenue from external customers
Interest
- Related parties
- Other parties
Unwinding of discounts on non‐current receivables
- Related parties
- Other parties
Dividends/ distributions
Other revenue
Total revenue
107
107
108
Notes continued
for the year ended 31 December 2013
12 months to
December 2013
$m
12 months to
December 2012
$m
^(restated)
Note
16,040.7
13,435.9
4,416.6
519.6
1,524.5
5,374.1
438.8
1,519.6
3. EXPENSES
Materials
Subcontractors
Plant costs
Personnel costs
22,501.4
20,768.4
Depreciation of property, plant and equipment
38 (e)
38 (e)
22.7
24.3
7.2
8.0
1.1
63.3
20.8
30.0
6.3
4.2
‐
61.3
32
22,564.7
20,829.7
Amortisation of intangibles
Net gain / (loss) on acquisition of controlled entities
Net gain / (loss) on sale of assets
Impairments
Property development ‐ cost of goods sold
Foreign exchange gains / (losses)
Operating lease payments ‐ plant and equipment
Operating lease payments ‐ other
Design, engineering and technical consulting fees
Other expenses
Total expenses
12 months to
12 months to
December 2013
December 2012
$m
$m
^(restated)
Note
4
4
4
4
4
(5,563.8)
(6,370.7)
(1,287.3)
(5,908.1)
(905.4)
(27.9)
(78.3)
234.2
(124.7)
(503.9)
(2.3)
(235.8)
(122.2)
(123.3)
(563.6)
(4,867.0)
(5,775.6)
(1,394.8)
(5,538.3)
(1,033.6)
(24.4)
‐
135.4
(98.0)
(416.8)
(3.3)
(244.1)
(116.5)
(204.6)
(541.8)
(21,583.1)
(20,123.4)
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 as a result of a change in
accounting policy. Refer to note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 as a result of a change in
accounting policy. Refer to note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
3. EXPENSES
Materials
Subcontractors
Plant costs
Personnel costs
Depreciation of property, plant and equipment
Amortisation of intangibles
Net gain / (loss) on acquisition of controlled entities
Net gain / (loss) on sale of assets
Impairments
Property development ‐ cost of goods sold
Foreign exchange gains / (losses)
Operating lease payments ‐ plant and equipment
Operating lease payments ‐ other
Design, engineering and technical consulting fees
Other expenses
Total expenses
108
108
12 months to
December 2013
$m
12 months to
December 2012
$m
^(restated)
Note
4
4
4
4
4
(5,563.8)
(6,370.7)
(1,287.3)
(5,908.1)
(905.4)
(27.9)
(78.3)
234.2
(124.7)
(503.9)
(2.3)
(235.8)
(122.2)
(123.3)
(563.6)
(4,867.0)
(5,775.6)
(1,394.8)
(5,538.3)
(1,033.6)
(24.4)
‐
135.4
(98.0)
(416.8)
(3.3)
(244.1)
(116.5)
(204.6)
(541.8)
(21,583.1)
(20,123.4)
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 as a result of a change in
accounting policy. Refer to note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
109
109
Notes continued
for the year ended 31 December 2013
4.
ITEMS INCLUDED IN PROFIT / (LOSS) BEFORE TAX
5. AUDITOR’S REMUNERATION
12 months to
December 2013
$m
12 months to
December 2012
$m
^(restated)
Note
12 months to
12 months to
December 2013
December 2012
$’000
$’000^
Finance costs
Interest
- Related parties
- Other parties
Finance charge for finance leases
Facility fees
- Bank guarantees, insurance bonds and letters of credit
- Other
Impact of discounting
- Related parties
- Other
Interest rate swap close out transferred from equity
Total finance costs
Depreciation of property, plant and equipment
- Buildings
-
Leasehold land, buildings and improvements
- Plant and equipment
Total depreciation of property, plant and equipment
Amortisation
-
Intangibles
Net gain / (loss) on acquisition of controlled entities
‐ Controlled entities
Net gain / (loss) on sale of assets
- Controlled entities and businesses
- Plant and equipment
Total gain / (loss) on sale of assets
Impairments
-
-
Investments in infrastructure toll road companies
Investments accounted for using the equity method
- Property development and property joint venture write‐downs
- Property, plant and equipment
Total impairments
38 (e)
38 (e)
28
15
30
30
36 (f)
25
28
(1.2)
(139.4)
(46.6)
(29.2)
(16.8)
(21.6)
(0.6)
‐
(1.0)
(130.6)
(30.9)
(39.3)
(8.9)
‐
(2.3)
(1.2)
(255.4)
(214.2)
(2.7)
(14.8)
(887.9)
(905.4)
(2.3)
(13.6)
(1,017.7)
(1,033.6)
(27.9)
(24.4)
(78.3)
‐
year paid in the 12 months to December 2013, of $576,000 and $32,000 respectively.
215.0
19.2
234.2
(18.5)
(15.0)
(81.2)
(10.0)
115.2
20.2
135.4
(63.0)
(35.0)
‐
‐
(124.7)
(98.0)
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 as a result of a change in
accounting policy. Refer to note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
110
3,221
955
382
4,558
338
‐
338
1,264
5
18
1,287
2,820
1,130
388
4,338
143
21
164
45
‐
41
86
Audit and review services
Deloitte Touche Tohmatsu (“Deloitte”)
- Audit and review of financial statements – Deloitte Australia#
- Audit and review of financial statements – related overseas firms
- Audit and review of financial statements – other auditors
Other auditors
Audit and review services
Other assurance services
Deloitte
- Other assurance services – Deloitte Australia#
Other auditors
- Other assurance services – other auditors
Other assurance services
In relation to taxation and other services – Deloitte Australia*
In relation to taxation and other services – related overseas firms*
Other services
Deloitte
-
-
Other auditors
Other services
- Other services – other auditors
^ Following the adoption of AASB 11 Joint Arrangements by the Group, whilst comparative balances have required restatement throughout
the consolidated financial report as a result of a change in accounting policy, there were no restatements required in relation to AASB 11
Joint Arrangements.
# The 12 months to December 2012 has been restated to include additional fees for audit services and other services relating to the prior
* The engagement and commencement of the procedures in relation to the provision of taxation and other services in the period to 31
December 2012 noted above occurred prior to the appointment of Deloitte as the statutory auditor of the Group on 22 May 2012.
The Group may use Deloitte on assignments in addition to their statutory audit duties to utilise their experience and expertise with the
Group. These assignments are carried out in accordance with the Group’s Charter of External Auditor Independence.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
5. AUDITOR’S REMUNERATION
Audit and review services
Deloitte Touche Tohmatsu (“Deloitte”)
- Audit and review of financial statements – Deloitte Australia#
- Audit and review of financial statements – related overseas firms
Other auditors
- Audit and review of financial statements – other auditors
Audit and review services
Other assurance services
Deloitte
- Other assurance services – Deloitte Australia#
Other auditors
- Other assurance services – other auditors
Other assurance services
Other services
Deloitte
-
-
In relation to taxation and other services – Deloitte Australia*
In relation to taxation and other services – related overseas firms*
Other auditors
- Other services – other auditors
Other services
110
110
12 months to
December 2013
$’000
12 months to
December 2012
$’000^
2,820
1,130
388
4,338
143
21
164
45
‐
41
86
3,221
955
382
4,558
338
‐
338
1,264
5
18
1,287
^ Following the adoption of AASB 11 Joint Arrangements by the Group, whilst comparative balances have required restatement throughout
the consolidated financial report as a result of a change in accounting policy, there were no restatements required in relation to AASB 11
Joint Arrangements.
# The 12 months to December 2012 has been restated to include additional fees for audit services and other services relating to the prior
year paid in the 12 months to December 2013, of $576,000 and $32,000 respectively.
* The engagement and commencement of the procedures in relation to the provision of taxation and other services in the period to 31
December 2012 noted above occurred prior to the appointment of Deloitte as the statutory auditor of the Group on 22 May 2012.
The Group may use Deloitte on assignments in addition to their statutory audit duties to utilise their experience and expertise with the
Group. These assignments are carried out in accordance with the Group’s Charter of External Auditor Independence.
Leighton Holdings Limited Annual Report 2013
111
111
112
Notes continued
for the year ended 31 December 2013
Notes continued
for the year ended 31 December 2013
6.
INCOME TAX (EXPENSE) / BENEFIT
7. CASH AND CASH EQUIVALENTS
Income tax (expense) / benefit recognised in the statement of profit or loss
Current tax expense
Deferred tax (expense) / benefit
(Under) / over provision in prior periods
Total income tax (expense) / benefit in statement of profit or loss
Deferred tax recognised directly in equity
Revaluation of cash flow hedges
Revaluation of available‐for‐sale assets
Total deferred tax (expense) / benefit recognised in equity
12 months to
December 2013
$m
12 months to
December 2012
$m
^(restated)
(115.0)
(159.7)
7.5
(267.2)
(6.0)
4.1
(1.9)
(87.5)
(35.9)
(0.6)
(124.0)
(2.2)
‐
(2.2)
Reconciliation of prima facie tax to income tax (expense) / benefit
Profit / (loss) before tax
736.1
566.1
Prima facie income tax (expense) / benefit at 30% (31 December 2012: 30%)
(220.8)
(172.3)
The following items have affected income tax (expense) / benefit for the year:
Entertainment and other non‐allowable items
Tax losses previously not recognised
Tax losses written off
Overseas income tax differential
Research and development credit
Movement in provision for taxes on retained earnings of controlled entities
Equity accounted and joint venture income tax differential
Asset impairments
Other
Current period income tax (expense) / benefit
(Under) / over provision in prior periods
Income tax (expense) / benefit
(9.8)
‐
(16.8)
(18.4)
34.6
(14.6)
(3.0)
(13.1)
(12.8)
(9.1)
32.1
‐
(5.0)
41.5
(15.0)
15.2
(10.5)
(0.3)
(274.7)
(123.4)
7.5
(0.6)
(267.2)
(124.0)
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect adjustments
made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Funds on deposit
Cash at bank and on hand
Total cash and cash equivalents
8. TRADE AND OTHER RECEIVABLES
Contract debtors
Trade debtors
Other amounts receivable
Prepayments
Derivative financial assets
Amounts receivable from related parties1
Non‐current tax asset2
Total trade and other receivables
Current
Non‐current
Total trade and other receivables
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 as a result of a change in
accounting policy. Refer to note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
December 2013
December 2012
$m
$m
^(restated)
799.2
921.5
1,720.7
313.3
1,694.4
2,007.7
December 2013
December 2012
$m
$m
^(restated)
Note
36 (a)
4,035.8
2,818.9
36 (b)
38 (e)
531.8
435.0
80.8
10.9
715.8
44.0
517.8
362.2
91.4
0.4
615.3
30.4
5,854.1
4,436.4
5,051.1
803.0
5,854.1
3,760.6
675.8
4,436.4
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 as a result of a change in
accounting policy. Refer to note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
7. CASH AND CASH EQUIVALENTS
Funds on deposit
Cash at bank and on hand
Total cash and cash equivalents
112
112
December 2013
$m
December 2012
$m
^(restated)
799.2
921.5
1,720.7
313.3
1,694.4
2,007.7
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 as a result of a change in
accounting policy. Refer to note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
8. TRADE AND OTHER RECEIVABLES
Contract debtors
Trade debtors
Other amounts receivable
Prepayments
Derivative financial assets
Amounts receivable from related parties1
Non‐current tax asset2
Total trade and other receivables
Current
Non‐current
Total trade and other receivables
December 2013
$m
December 2012
$m
^(restated)
Note
36 (a)
4,035.8
2,818.9
36 (b)
38 (e)
531.8
435.0
80.8
10.9
715.8
44.0
517.8
362.2
91.4
0.4
615.3
30.4
5,854.1
4,436.4
5,051.1
803.0
5,854.1
3,760.6
675.8
4,436.4
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 as a result of a change in
accounting policy. Refer to note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Leighton Holdings Limited Annual Report 2013
113
113
114
Notes continued
for the year ended 31 December 2013
Notes continued
for the year ended 31 December 2013
8. TRADE AND OTHER RECEIVABLES CONTINUED
10. INVENTORIES
Additional information on contract debtors
Amounts due from customers
Amounts due to customers
‐
‐
contract debtors
trade creditors
Net contract debtors
Net contract debtors excluding retentions
Retentions
Net contract debtors
Cash received to date
December 2013
$m
December 2012
$m
^(restated)
4,035.8
(987.0)
3,048.8
2,898.3
150.5
3,048.8
2,818.9
(695.2)
2,123.7
2,039.8
83.9
2,123.7
64,615.5
55,115.3
Total progressive value of all contracts in progress at reporting date
67,664.3
57,239.0
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 as a result of a change in
accounting policy. Refer to note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
1 The Group has the following trade and other receivables relating to Al Habtoor Leighton LLC (“HLG”):
loan receivables:
non‐current interest free shareholder loans provided to HLG of US$104.2 million (31 December 2012: US$117.2 million)
accounting policy. Refer to note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
equivalent to $115.7 million (31 December 2012: $112.7 million) maturing on 30 September 2017; and
non‐current interest bearing loans of US$415.0 million (31 December 2012: US$415.0 million) equivalent to $461.1
million (31 December 2012: $399.0 million) maturing on 30 September 2017; and
non‐current interest receivable of US$49.2 million (31 December 2012: US$30.1 million), equivalent to $54.7 million (31
December 2012: $28.9 million), is receivable from HLG on the interest bearing shareholder loans.
2 The non‐current tax asset of $44.0 million (31 December 2012: $30.4 million) represents the amount of income taxes recoverable from
the payment of tax in excess of the amounts due to the relevant tax authority not expected to be received within twelve months after
reporting date.
9. CURRENT TAX ASSETS
The current tax asset of $20.9 million (31 December 2012: $10.1 million) represents the amount of income taxes recoverable from the
payment of tax in excess of the amounts due to the relevant tax authority.
Associates
Joint venture entities
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 as a result of a change in
Finance costs capitalised to property developments during the period: $13.7 million (31 December 2012: $15.6 million). Property
developments pledged as security for interest bearing liabilities ‐ refer to note 36(j): Financial instruments ‐ Assets Pledged as Security.
11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Total investments accounted for using the equity method
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 as a result of a change in
accounting policy. Refer to note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Property developments
Cost of acquisition
Development expenses capitalised
Rates, taxes, finance and other costs capitalised
Total property developments
Other inventories
Raw materials and consumables at cost
Total other inventories
Total inventories
Current
Non‐current
Total inventories
December 2013
December 2012
$m
$m
^(restated)
396.8
196.9
29.9
623.6
296.8
296.8
556.0
364.4
920.4
479.8
208.7
55.5
744.0
313.5
313.5
569.8
487.7
1,057.5
920.4
1,057.5
Note
25
26
December 2013
December 2012
$m
$m
^(restated)
499.3
326.3
825.6
461.8
400.0
861.8
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
10. INVENTORIES
Property developments
Cost of acquisition
Development expenses capitalised
Rates, taxes, finance and other costs capitalised
Total property developments
Other inventories
Raw materials and consumables at cost
Total other inventories
Total inventories
Current
Non‐current
Total inventories
114
114
December 2013
$m
December 2012
$m
^(restated)
396.8
196.9
29.9
623.6
296.8
296.8
479.8
208.7
55.5
744.0
313.5
313.5
920.4
1,057.5
556.0
364.4
920.4
569.8
487.7
1,057.5
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 as a result of a change in
accounting policy. Refer to note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Finance costs capitalised to property developments during the period: $13.7 million (31 December 2012: $15.6 million). Property
developments pledged as security for interest bearing liabilities ‐ refer to note 36(j): Financial instruments ‐ Assets Pledged as Security.
11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Associates
Joint venture entities
Total investments accounted for using the equity method
Note
25
26
December 2013
$m
December 2012
$m
^(restated)
499.3
326.3
825.6
461.8
400.0
861.8
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 as a result of a change in
accounting policy. Refer to note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Leighton Holdings Limited Annual Report 2013
115
115
116
Notes continued
for the year ended 31 December 2013
Notes continued
for the year ended 31 December 2013
12. OTHER INVESTMENTS
14. PROPERTY, PLANT AND EQUIPMENT
Land
Buildings
Accumulated depreciation
Leasehold land, buildings and improvements
Accumulated depreciation
Plant and equipment
Accumulated depreciation
Total property, plant and equipment1
Non‐current
Total property, plant and equipment
December 2013
December 2012
$m
$m
^(restated)
Note
10.7
42.9
(17.6)
25.3
151.7
(79.6)
72.1
12.8
44.1
(16.0)
28.1
144.4
(69.1)
75.3
4,118.5
(2,474.0)
1,644.5
4,531.4
(2,575.8)
1,955.6
28
1,752.6
2,071.8
1,752.6
1,752.6
2,071.8
2,071.8
1 Plant and equipment of $535.1 million (31 December 2012: $854.0 million) is under finance lease.
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 as a result of a change in
accounting policy. Refer to note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Equity and stapled securities available‐for‐sale
Listed
Unlisted
Total equity and stapled securities available‐for‐sale
Current
Non‐current
Total other investments
Note
December 2013
$m
December 2012
$m^
36 (f)
1.6
91.1
92.7
‐
92.7
92.7
1.6
95.4
97.0
‐
97.0
97.0
^ Following the adoption of AASB 11 Joint Arrangements by the Group, whilst comparative balances have required restatement throughout
the consolidated financial report as a result of a change in accounting policy, there were no restatements required in relation to other
investments.
13. DEFERRED TAXES
Recognised deferred tax assets / (liabilities)
Deferred tax assets are attributed to the following:
Contract debtors
Property developments
Other inventories
Property, plant and equipment
Employee benefits
Contract profit differential
Withholding tax on retained earnings of non‐resident and controlled entities
Investment revaluations
(Gain) / loss on disposal / acquisition of controlled entities
Foreign exchange
Tax losses
Trade and other payables and other
Total deferred taxes
Unrecognised deferred tax assets
December 2013
$m
December 2012
$m^
69.4
48.9
1.8
94.8
207.3
(386.5)
(72.3)
78.3
(117.9)
8.0
160.8
(6.3)
86.3
53.6
27.6
1.5
153.3
172.0
(138.8)
(78.1)
102.3
(66.1)
3.8
24.4
(9.5)
246.0
Deferred tax assets which have not been recognised in respect of tax losses
2.3
2.0
^ Following the adoption of AASB 11 Joint Arrangements by the Group, whilst comparative balances have required restatement
throughout the consolidated financial report as a result of a change in accounting policy, there were no restatements required in
relation to deferred taxes.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
14. PROPERTY, PLANT AND EQUIPMENT
Land
Buildings
Accumulated depreciation
Leasehold land, buildings and improvements
Accumulated depreciation
Plant and equipment
Accumulated depreciation
Total property, plant and equipment1
Non‐current
Total property, plant and equipment
116
116
December 2013
$m
December 2012
$m
^(restated)
Note
10.7
42.9
(17.6)
25.3
151.7
(79.6)
72.1
12.8
44.1
(16.0)
28.1
144.4
(69.1)
75.3
4,118.5
(2,474.0)
1,644.5
4,531.4
(2,575.8)
1,955.6
28
1,752.6
2,071.8
1,752.6
1,752.6
2,071.8
2,071.8
1 Plant and equipment of $535.1 million (31 December 2012: $854.0 million) is under finance lease.
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 as a result of a change in
accounting policy. Refer to note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
Notes continued
for the year ended 31 December 2013
117
117
118
15. INTANGIBLES
15. INTANGIBLES CONTINUED
Note
Goodwill
$m
Other intangibles1
$m
Total
intangibles
$m
Cost
Balance at 31 December 2011
Transfers
Additions
Acquisitions through business combinations
30
Adjustment to the fair value of business combinations
Balance at 31 December 2012^
Balance at 1 January 2013^
Additions
Transfers
Acquisitions through business combinations
Adjustment to the fair value of business combinations
Balance at 31 December 2013
Amortisation and impairment
Balance at 31 December 2011
Amortisation
Transfers
Balance at 31 December 2012^
Balance at 1 January 2013^
Amortisation
Transfers
Balance at 31 December 2013
Carrying amounts
Balance at 31 December 2011
Balance at 31 December 2012^
Balance at 31 December 2013
1 Other intangibles include:
131.4
(35.5)
1.0
‐
‐
96.9
96.9
0.6
14.6
246.1
‐
358.2
(16.8)
(0.6)
‐
(17.4)
(17.4)
‐
(0.2)
(17.6)
114.6
79.5
340.6
188.4
‐
46.4
1.4
‐
236.2
236.2
59.6
3.2
19.5
‐
318.5
(33.9)
(23.8)
(2.3)
(60.0)
(60.0)
(27.9)
2.1
(85.8)
154.5
176.2
232.7
319.8
(35.5)
47.4
1.4
‐
333.1
333.1
60.2
17.8
265.6
‐
676.7
(50.7)
(24.4)
(2.3)
(77.4)
(77.4)
(27.9)
1.9
(103.4)
269.1
255.7
573.3
IT software systems of $183.4 million with a useful life of up to 7 years (31 December 2012: $145.2 million up to 7 years);
Devine Limited brand name of $24.0 million (31 December 2012: $24.0 million) with an indefinite useful life. The recoverable
amount is based on a value in use calculation, using five year cash flow projections based on forecast operating results. A pre‐
tax discount rate of 11% (31 December 2012: 10%) has been used in discounting the projected cash flows. The key assumptions
used are consistent with those used in goodwill impairment testing disclosed overleaf;
Customer contracts with useful lives of: up to 21 years ‐ $23.6 million (31 December 2012: indefinite ‐ $4.1m; 5 years ‐ $1.5m);
and
Wai Ming engineering license with useful life of: indefinite ‐ $1.7 million (31 December 2012: indefinite ‐ $1.4m).
Impairment tests for cash‐generating units containing goodwill
The following cash‐generating units have the following carrying amounts of goodwill:
Thiess Group
Leighton Asia, India & Offshore (“LAIO”) Group
John Holland Group
Leighton Contractors Group
Balance at reporting date
December 2013
December 2012
$m
$m
^(restated)
26.7
234.8
19.3
59.8
340.6
5.6
17.5
25.5
30.9
79.5
The recoverable amount of all cash‐generating units is based on value in use calculations, using five year cash flow projections based on
forecast operating results and the Leighton Holdings Group Business Plan. Pre‐tax discount rates within a range of 6%‐15% (31 December
2012: 7%‐15%) have been used in discounting the projected cash flows. The recoverable amount of each cash‐generating unit exceeds
The key assumptions and the approach to determining the recoverable amount of all cash‐generating units in the current and previous
its carrying amount.
period are:
Market / segment growth
Commodity price stability
Economic forecasts, taking into account the Group’s participation in each market
Analysis of price forecasts, adjusted for actual experience
Inflation / CPI rates and foreign currency rates World economic forecasts
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 as a result of a change in
accounting policy. Refer to note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Leighton Holdings Limited Annual Report 2013
118
118
Notes continued
for the year ended 31 December 2013
15. INTANGIBLES CONTINUED
Impairment tests for cash‐generating units containing goodwill
The following cash‐generating units have the following carrying amounts of goodwill:
Thiess Group
Leighton Asia, India & Offshore (“LAIO”) Group
John Holland Group
Leighton Contractors Group
Balance at reporting date
December 2013
$m
December 2012
$m
^(restated)
26.7
234.8
19.3
59.8
340.6
5.6
17.5
25.5
30.9
79.5
The recoverable amount of all cash‐generating units is based on value in use calculations, using five year cash flow projections based on
forecast operating results and the Leighton Holdings Group Business Plan. Pre‐tax discount rates within a range of 6%‐15% (31 December
2012: 7%‐15%) have been used in discounting the projected cash flows. The recoverable amount of each cash‐generating unit exceeds
its carrying amount.
The key assumptions and the approach to determining the recoverable amount of all cash‐generating units in the current and previous
period are:
Market / segment growth
Commodity price stability
Economic forecasts, taking into account the Group’s participation in each market
Analysis of price forecasts, adjusted for actual experience
Inflation / CPI rates and foreign currency rates World economic forecasts
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 as a result of a change in
accounting policy. Refer to note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
Notes continued
for the year ended 31 December 2013
119
119
120
16. TRADE AND OTHER PAYABLES
Trade creditors and accruals1
Other creditors
Amounts payable to related parties
Trade and other payables
December 2013
$m
December 2012
$m
^(restated)
Note
5,447.8
4,532.8
364.9
74.9
610.1
43.8
5,887.6
5,186.7
38 (e)
36 (b)
The current tax liability of $51.3 million (restated 31 December 2012: $85.3 million^) represents the amounts payable in respect of
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 as a result of a change in
accounting policy. Refer to note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
17. CURRENT TAX LIABILITIES
current and prior periods.
18. PROVISIONS
Derivative financial liabilities
36 (b)
5.7
12.9
Total trade and other payables
Current1
Non‐current
Total trade and other payables
5,893.3
5,199.6
Employee benefits
5,548.5
344.8
5,893.3
5,001.9
197.7
5,199.6
Provisions acquired during the reporting period through business combinations
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 as a result of a change in
accounting policy. Refer to note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
1 31 December 2013: includes $110.0 million in relation to deferred consideration on the acquisition of the remaining 39.9% interest in
Leighton Welspun Contractors Private Limited (“LWIN”) by Leighton International Limited, a controlled entity of the Company. Refer to
note 30: Acquisitions and Disposals of Controlled Entities and Businesses for further detail. This was paid subsequent to reporting date.
Refer to note 42: Events subsequent to reporting date for further detail.
Balance at beginning of reporting period
Provisions made during the reporting period
Disposals
Provisions used during the reporting period
Effect of movements in foreign exchange
Balance at reporting date
Site restoration
Balance at beginning of reporting period
Provisions made during the reporting period
Provisions used during the reporting period
Balance at reporting date
Total provisions
Current
Non‐current
Total provisions
December 2013
December 2012
$m
$m
^(restated)
580.2
557.4
35.2
‐
(530.1)
12.4
655.1
‐
‐
‐
‐
543.8
491.5
‐
(2.4)
(450.6)
(2.1)
580.2
34.3
(34.3)
‐
‐
655.1
580.2
477.0
178.1
655.1
406.5
173.7
580.2
The provision for employee benefits relates to wages and salaries, annual leave, long service leave, retirement benefits and deferred
bonuses. The provision for site restoration represents restoration obligations in respect of landfills, based on the Group’s best estimate
of the present value of the expenditure required to settle the restoration obligation.
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 as a result of a change in
accounting policy. Refer to note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
120
120
17. CURRENT TAX LIABILITIES
The current tax liability of $51.3 million (restated 31 December 2012: $85.3 million^) represents the amounts payable in respect of
current and prior periods.
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 as a result of a change in
accounting policy. Refer to note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
18. PROVISIONS
Employee benefits
Balance at beginning of reporting period
Provisions made during the reporting period
Provisions acquired during the reporting period through business combinations
Disposals
Provisions used during the reporting period
Effect of movements in foreign exchange
Balance at reporting date
Site restoration
Balance at beginning of reporting period
Provisions made during the reporting period
Provisions used during the reporting period
Balance at reporting date
Total provisions
Current
Non‐current
Total provisions
December 2013
$m
December 2012
$m
^(restated)
580.2
557.4
35.2
‐
(530.1)
12.4
655.1
‐
‐
‐
‐
543.8
491.5
‐
(2.4)
(450.6)
(2.1)
580.2
34.3
‐
(34.3)
‐
655.1
580.2
477.0
178.1
655.1
406.5
173.7
580.2
The provision for employee benefits relates to wages and salaries, annual leave, long service leave, retirement benefits and deferred
bonuses. The provision for site restoration represents restoration obligations in respect of landfills, based on the Group’s best estimate
of the present value of the expenditure required to settle the restoration obligation.
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 as a result of a change in
accounting policy. Refer to note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Leighton Holdings Limited Annual Report 2013
121
121
122
Notes continued
for the year ended 31 December 2013
Notes continued
for the year ended 31 December 2013
19. INTEREST BEARING LIABILITIES
20. EQUITY
Note
December 2013
$m
December 2012
$m^
Current
Interest bearing loans
Finance lease liabilities
Interest bearing liabilities ‐ limited recourse loans
Total current liabilities
Non‐current
Interest bearing loans
Finance lease liabilities
Interest bearing liabilities ‐ limited recourse loans
Total non‐current liabilities
Total interest bearing liabilities
Issued and fully paid share capital
Balance at beginning of reporting period
Issue of executive share rights for nil consideration1
Exercise of options2
Balance at reporting date
415.5
141.0
33.0
589.5
322.3
206.8
105.2
634.3
1,123.4
1,328.5
258.2
154.0
707.8
89.9
1,535.6
2,126.2
2,125.1
2,760.5
Share capital
36
36
36
^ Following the adoption of AASB 11 Joint Arrangements by the Group, whilst comparative balances have required restatement
throughout the consolidated financial report as a result of a change in accounting policy, there were no restatements required in
relation to interest bearing liabilities.
Balance at beginning of reporting period
Exercise of options
Balance at reporting date
Company
December 2013
December 2012
No. of shares
No. of shares
337,164,188
337,087,596
‐
76,592
71,000
‐
337,235,188
337,164,188
Company
12 months to
12 months to
December 2013
December 2012
$m
$m
2,027.2
2,027.2
1.4
‐
2,028.6
2,027.2
1 During the 12 month period to 31 December 2013 the Company did not issue shares (31 December 2012: 76,592 shares for $nil
2 During the year the Company issued 71,000 shares to satisfy options issued in 2009 under the LSEOP at an issue price of $18.87, resulting
consideration were issued).
in an increase in share capital of $1.4 million.
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at
shareholders’ meetings. In the event of winding up of the Company, ordinary shareholders rank after creditors and are fully entitled to
any proceeds of liquidation.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
20. EQUITY
Issued and fully paid share capital
Balance at beginning of reporting period
Issue of executive share rights for nil consideration1
Exercise of options2
Balance at reporting date
Share capital
Balance at beginning of reporting period
Exercise of options
Balance at reporting date
122
122
Company
December 2013
No. of shares
December 2012
No. of shares
337,164,188
337,087,596
‐
76,592
71,000
‐
337,235,188
337,164,188
Company
12 months to
December 2013
$m
12 months to
December 2012
$m
2,027.2
2,027.2
1.4
‐
2,028.6
2,027.2
1 During the 12 month period to 31 December 2013 the Company did not issue shares (31 December 2012: 76,592 shares for $nil
consideration were issued).
2 During the year the Company issued 71,000 shares to satisfy options issued in 2009 under the LSEOP at an issue price of $18.87, resulting
in an increase in share capital of $1.4 million.
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at
shareholders’ meetings. In the event of winding up of the Company, ordinary shareholders rank after creditors and are fully entitled to
any proceeds of liquidation.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
21. RESERVES
Foreign currency translation reserve
Balance at beginning of reporting period
Included in statement of comprehensive income1
Balance at reporting date
Hedging reserve
Balance at beginning of reporting period
Included in statement of comprehensive income2
Balance at reporting date
Fair value reserve
Balance at beginning of reporting period
Included in statement of comprehensive income
Balance at reporting date
Associates equity reserve
Balance at beginning of reporting period
Included in statement of comprehensive income
Balance at reporting date
Equity reserve
Balance at beginning of reporting period
Included in statement of comprehensive income
Balance at reporting date
Share based payments reserve
Balance at beginning of reporting period
Included in statement of profit or loss
Balance at reporting date
123
123
124
Notes continued
for the year ended 31 December 2013
21. RESERVES CONTINUED
Nature and purpose of reserves
Foreign currency translation reserve
Hedging reserve
relating to future transactions.
Fair value reserve
impaired.
Associates equity reserve
Equity reserve
22. RETAINED EARNINGS
Balance at beginning of reporting period
Included in statement of profit or loss
Dividends paid
Balance at reporting date
The foreign currency translation reserve comprises foreign exchange differences arising from the translation of the financial statements
of foreign operations where their functional currency is different to the presentation currency of the Group, as well as from the
translation of liabilities that hedge the Group’s net investment in foreign operations.
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments
The fair value reserve includes the cumulative net change in the fair value of available‐for‐sale assets until the asset is realised or
The associates equity reserve is used to record the Group’s share of the post‐acquisition increases in the reserves of associates.
The equity reserve accounts for the differences between the fair value of, and the amounts paid or received for, equity transactions with
non‐controlling interests (minority shareholders).
Share based payments reserve
The share based payments reserve is used to recognise the fair value of options issued to employees over the vesting period.
12 months to
12 months to
December 2013
December 2012
$m
$m^
Note
23
1,046.7
508.7
(354.1)
1,201.3
866.2
450.1
(269.6)
1,046.7
^ Following the adoption of AASB 11 Joint Arrangements by the Group, whilst comparative balances have required restatement throughout
the consolidated financial report as a result of a change in accounting policy, there were no restatements required in relation to retained
earnings.
12 months to
December 2013
$m
12 months to
December 2012
$m^
(280.5)
180.4
(100.1)
(6.8)
12.5
5.7
‐
9.6
9.6
21.2
‐
21.2
(17.6)
0.3
(17.3)
54.3
16.9
71.2
(232.6)
(47.9)
(280.5)
(33.0)
26.2
(6.8)
‐
‐
‐
21.2
‐
21.2
(6.2)
(11.4)
(17.6)
41.3
13.0
54.3
Total reserves at reporting date
(9.7)
(229.4)
1 Includes amounts reclassified and included in the statement of profit or loss in the year ended 31 December 2013 of a loss of $68.9
million (31 December 2012: $nil). Refer to note 30: Acquisitions and Disposals of Controlled Entities and Businesses for further detail.
2 Includes amounts reclassified and included in the statement of profit or loss in the period ended 31 December 2013 of $nil (31 December
2012 of $3.7 million).
^ Following the adoption of AASB 11 Joint Arrangements by the Group, whilst comparative balances have required restatement throughout
the consolidated financial report as a result of a change in accounting policy, there were no restatements required in relation to reserves.
Leighton Holdings Limited Annual Report 2013
124
124
Notes continued
for the year ended 31 December 2013
21. RESERVES CONTINUED
Nature and purpose of reserves
Foreign currency translation reserve
The foreign currency translation reserve comprises foreign exchange differences arising from the translation of the financial statements
of foreign operations where their functional currency is different to the presentation currency of the Group, as well as from the
translation of liabilities that hedge the Group’s net investment in foreign operations.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments
relating to future transactions.
Fair value reserve
The fair value reserve includes the cumulative net change in the fair value of available‐for‐sale assets until the asset is realised or
impaired.
Associates equity reserve
The associates equity reserve is used to record the Group’s share of the post‐acquisition increases in the reserves of associates.
Equity reserve
The equity reserve accounts for the differences between the fair value of, and the amounts paid or received for, equity transactions with
non‐controlling interests (minority shareholders).
Share based payments reserve
The share based payments reserve is used to recognise the fair value of options issued to employees over the vesting period.
22. RETAINED EARNINGS
Balance at beginning of reporting period
Included in statement of profit or loss
Dividends paid
Balance at reporting date
12 months to
December 2013
$m
12 months to
December 2012
$m^
Note
23
1,046.7
508.7
(354.1)
1,201.3
866.2
450.1
(269.6)
1,046.7
^ Following the adoption of AASB 11 Joint Arrangements by the Group, whilst comparative balances have required restatement throughout
the consolidated financial report as a result of a change in accounting policy, there were no restatements required in relation to retained
earnings.
Leighton Holdings Limited Annual Report 2013
125
125
126
Notes continued
for the year ended 31 December 2013
Notes continued
for the year ended 31 December 2013
23. DIVIDENDS
24. EARNINGS PER SHARE
2013 final dividend
Subsequent to reporting date the Company announced a 50% franked final dividend in
respect of the year ended 31 December 2013.† The dividend is payable on 4 April 2014. This
dividend has not been provided for in the statement of financial position.
Dividends recognised in the reporting period to 31 December 2013 †
30 June 2013 interim ordinary dividend 50% franked paid on 3 October 2013
31 December 2012 final ordinary dividend 50% franked paid on 28 March 2013
Dividends recognised in the reporting period to 31 December 2012 †
30 June 2012 interim ordinary dividend unfranked paid on 28 September 2012
31 December 2011 final ordinary dividend unfranked paid on 30 March 2012
† The unfranked portion of the dividend has been declared Conduit Foreign Income.
Cents per
share
$m
60.0
202.3
45.0
60.0
20.0
60.0
151.8
202.3
354.1
67.4
202.2
269.6
Company
December 2013
$m
December 2012
$m^
per share.
Dividend franking account
Balance of the franking account, adjusted for franking credits / debits which arise from the payment /
refund of income tax provided for in the financial statements
49.9
89.8
The impact of the 2013 final dividend, declared after reporting date, on the dividend franking account will be a reduction of $43.3 million
(2012: $43.3 million).
^ Following the adoption of AASB 11 Joint Arrangements by the Group, whilst comparative balances have required restatement throughout
the consolidated financial report as a result of a change in accounting policy, there were no restatements required in relation to
dividends.
12 months to
12 months to
December 2013
December 2012^
150.9¢
150.1¢
133.5¢
133.1¢
Basic earnings per share
Diluted earnings per share
earnings per share ($m)
Profit / (loss) attributable to members of the parent entity used in the calculation of basic and diluted
508.7
450.1
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in calculating basic earnings
337,222,530
337,106,520
per share
Weighted average effect of share options on issue1
Contingently issuable shares2
in calculating diluted earnings per share
Weighted average number of ordinary shares and potential ordinary shares used as the denominator
338,985,486
338,253,760
1 Share options are not dilutive for 31 December 2013 and 31 December 2012 as the average share price during the reporting period did
not exceed the exercise price of the options.
2 Contingently issuable shares relate to share rights under plans disclosed in note 37: Employee Benefits.
^ Following the adoption of AASB 11 Joint Arrangements by the Group, whilst comparative balances have required restatement throughout
the consolidated financial report as a result of a change in accounting policy, there were no restatements required in relation to earnings
‐
‐
1,762,956
1,147,240
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
24. EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
126
126
12 months to
December 2013
12 months to
December 2012^
150.9¢
150.1¢
133.5¢
133.1¢
Profit / (loss) attributable to members of the parent entity used in the calculation of basic and diluted
earnings per share ($m)
508.7
450.1
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in calculating basic earnings
per share
Weighted average effect of share options on issue1
Contingently issuable shares2
Weighted average number of ordinary shares and potential ordinary shares used as the denominator
in calculating diluted earnings per share
337,222,530
337,106,520
‐
‐
1,762,956
1,147,240
338,985,486
338,253,760
1 Share options are not dilutive for 31 December 2013 and 31 December 2012 as the average share price during the reporting period did
not exceed the exercise price of the options.
2 Contingently issuable shares relate to share rights under plans disclosed in note 37: Employee Benefits.
^ Following the adoption of AASB 11 Joint Arrangements by the Group, whilst comparative balances have required restatement throughout
the consolidated financial report as a result of a change in accounting policy, there were no restatements required in relation to earnings
per share.
Leighton Holdings Limited Annual Report 2013
127
127
128
Notes continued
for the year ended 31 December 2013
25. ASSOCIATES
The Group has the following investments in associates:
Notes continued
for the year ended 31 December 2013
25. ASSOCIATES CONTINUED
The Group’s share of associates’ results, assets and liabilities are as follows:
Name of entity
Principal activity
Country
Ownership interest
December 2013
%
December 2012
%
Al Habtoor Leighton LLC
Aurum Partnership Pty Limited1
Dunsborough Lakes Village Syndicate1
LCIP Co‐Investment Unit Trust
Macmahon Holdings Limited1
Metro Trains Melbourne Pty Limited1
Sedgman Limited1
Paradip Multi Cargo Berth2,3
Vizag General Cargo Berth Ltd2,3
United Arab Emirates
Construction
Australia
Investment
Australia
Development
Investment
Australia
Construction, Contract Mining Australia
Australia
Services
Construction, Contract Mining Australia
Development
Construction
India
India
45
‐
20
25
20
20
36
26
26
45
33
20
25
24
20
33
‐
‐
All associates have a statutory reporting date of 31 December with the following exceptions:
1
2
3
Entities have a 30 June statutory reporting date.
Entities have a 31 March statutory reporting date.
These entities were acquired as part of the acquisition of the remaining 39.9% interest in Leighton Welspun Contractors Private
Limited (“LWIN”) by Leighton International Limited, a controlled entity of the Group. Refer to note 30: Acquisitions and
Disposals of Controlled Entities and Businesses for further detail.
Al Habtoor Leighton LLC (“HLG”)
Revenue
Expenses
Profit / (loss) before tax
Income tax (expense) / benefit
Profit / (loss) for the period
Current assets
Non‐current assets
Total assets
Current liabilities
Non‐current liabilities
Total liabilities
During the reporting period, the carrying value of the Group’s investment in HLG increased from $297.7 million to $345.1 million
(equivalent to US$309.6 million and US$310.6 million). The increase was primarily attributable to a foreign exchange translation gain of
$46.4 million. The recoverable amount of the Group’s investment was calculated using a value in use calculation.
Equity accounted associates at reporting date1
12 months to
12 months to
December 2013
December 2012
$m
$m^
1,070.7
1,162.2
(1,045.1)
(1,185.2)
25.6
(7.4)
18.2
(23.0)
(7.5)
(30.5)
December 2013
December 2012
$m
$m^
1,225.1
761.7
1,986.8
891.7
595.8
1,009.4
720.6
1,730.0
766.8
501.4
1,487.5
1,268.2
499.3
461.8
The key assumptions used in the value in use calculation:
Discount rate
Growth rate
Legacy project receivables
Borrowings
Forecast cash flow
18% (31 December 2012: 16%)
3% (31 December 2012: 3%) for cash flows beyond five years. This rate does not exceed the
expected long‐term average growth rate for the Middle East & North Africa (“MENA”) region
There continues to be a delay in payment from clients in the MENA region, particularly for projects
in progress at the time the Group invested in HLG. It is assumed of the remaining unprovided legacy
project receivables, 50% will be collected within twenty‐four months and 50% collected
subsequently (31 December 2012: 49% and 51% respectively)
Borrowings obtained to fund working capital will be progressively repaid during the forecast period
The calculation uses five year cash flow projections based on forecasts provided by HLG’s
management, risk adjusted downward by the Group. Cash flows beyond five years are extrapolated
using the estimated growth rate
Refer to note 8: Trade and other receivables for further details relating to loans and other receivables provided to HLG.
The Group has pledged the following security against borrowings by HLG under two facilities totalling US$345.6 million (31
December 2012: two facilities totalling US$272.0 million):
letters of credit of US$68.0 million (31 December 2012: US$136.0 million), equivalent to $75.6 million (31 December 2012:
$130.8 million); and
guarantees of US$277.6 million (31 December 2012: US$136.0 million), equivalent to $308.4 million (31 December 2012:
$130.8 million).
1 Investments in listed associates for which there are published price quotations had a market value at reporting date of: $91.1 million
^ Following the adoption of AASB 11 Joint Arrangements by the Group, whilst comparative balances have required restatement
throughout the consolidated financial report as a result of a change in accounting policy, there were no restatements required in
(31 December 2012: $143.2 million).
relation to associates.
Impairments of investments in associates of $15.0 million arose due to a decline in the recoverable amount of the investments (31
December 2012: $35.0 million). Refer to note 4: Items included in profit / (loss) before tax. The recoverable amount of the investments
are based on value in use calculations. Pre‐tax discount rates within a range of 15%‐18% (31 December 2012: 15%‐16%) were used in
these calculations.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
25. ASSOCIATES CONTINUED
The Group’s share of associates’ results, assets and liabilities are as follows:
Revenue
Expenses
Profit / (loss) before tax
Income tax (expense) / benefit
Profit / (loss) for the period
Current assets
Non‐current assets
Total assets
Current liabilities
Non‐current liabilities
Total liabilities
Equity accounted associates at reporting date1
128
128
12 months to
December 2013
$m
12 months to
December 2012
$m^
1,070.7
1,162.2
(1,045.1)
(1,185.2)
25.6
(7.4)
18.2
(23.0)
(7.5)
(30.5)
December 2013
$m
December 2012
$m^
1,225.1
761.7
1,986.8
891.7
595.8
1,009.4
720.6
1,730.0
766.8
501.4
1,487.5
1,268.2
499.3
461.8
1 Investments in listed associates for which there are published price quotations had a market value at reporting date of: $91.1 million
(31 December 2012: $143.2 million).
^ Following the adoption of AASB 11 Joint Arrangements by the Group, whilst comparative balances have required restatement
throughout the consolidated financial report as a result of a change in accounting policy, there were no restatements required in
relation to associates.
Impairments of investments in associates of $15.0 million arose due to a decline in the recoverable amount of the investments (31
December 2012: $35.0 million). Refer to note 4: Items included in profit / (loss) before tax. The recoverable amount of the investments
are based on value in use calculations. Pre‐tax discount rates within a range of 15%‐18% (31 December 2012: 15%‐16%) were used in
these calculations.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
Notes continued
for the year ended 31 December 2013
129
129
25. ASSOCIATES CONTINUED
25. ASSOCIATES CONTINUED
Set out below are the associates of the group as at 31 December 2013 which, in the opinion of the directors, are material to the
group. The entities listed below have share capital consisting solely of ordinary shares, which are held directly by the Group. The
country of incorporation or registration is also their principal place of business, and the proportion of ownership interest is the
same as the proportion of voting rights held.
b)
Summarised financial information for material associates
The following table provides summarised financial information for HLG, and reconciles the carrying amount of the Group’s interest
in HLG and its share of profit and other comprehensive income of its equity accounted investment in HLG (net of tax).
Name of entity
Place of business / country of
incorporation
Measurement method
Nature of
relationship
Al Habtoor Leighton LLC1
United Arab Emirates
Equity method
Associate
1 There is no quoted market value for Al Habtoor Leighton LLC (“HLG”) as it is not a listed entity.
a)
Commitments and contingent liabilities in respect of material associates
Commitments ‐ Associates
Contingent Liabilities ‐ Associates
Letters of credit and guarantees
Ownership interest held by the
Company
December 2013
December 2012
%
45
%
45
December 2013
$m
December 2012
$m
15.4
16.5
384.0
261.6
130
$m
45%
711.9
553.5
(539.9)
(427.8)
297.7
444.7
(47.0)
(47.0)
‐
‐
December 2013
December 2012
$m
45%
995.9
612.7
(734.6)
(528.9)
345.1
498.6
1.1
1.1
‐
‐
December 2013
December 2012
$m
$m
154.2
164.1
17.1
16.5
Percentage of interest
Summarised balance sheet
Current assets
Non‐current assets
Current liabilities
Non‐current liabilities
Net assets
Revenue
Profit / (loss) for the period
Other comprehensive income
Total comprehensive income
Dividends received
Individually immaterial associates
Aggregate amounts of the Group’s carrying value:
Net assets
Aggregate amounts of the Group’s share of profit:
Profit / (loss) for the period
c)
Individually immaterial associates
In addition to the interests in associates disclosed above, the group also has interests in a number of individually immaterial
associates that are accounted for using the equity method.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
130
130
25. ASSOCIATES CONTINUED
b)
Summarised financial information for material associates
The following table provides summarised financial information for HLG, and reconciles the carrying amount of the Group’s interest
in HLG and its share of profit and other comprehensive income of its equity accounted investment in HLG (net of tax).
Percentage of interest
Summarised balance sheet
Current assets
Non‐current assets
Current liabilities
Non‐current liabilities
Net assets
Revenue
Profit / (loss) for the period
Other comprehensive income
Total comprehensive income
Dividends received
December 2013
$m
December 2012
$m
45%
45%
995.9
612.7
(734.6)
(528.9)
345.1
498.6
1.1
‐
1.1
‐
711.9
553.5
(539.9)
(427.8)
297.7
444.7
(47.0)
‐
(47.0)
‐
c)
Individually immaterial associates
In addition to the interests in associates disclosed above, the group also has interests in a number of individually immaterial
associates that are accounted for using the equity method.
Individually immaterial associates
Aggregate amounts of the Group’s carrying value:
Net assets
Aggregate amounts of the Group’s share of profit:
Profit / (loss) for the period
December 2013
$m
December 2012
$m
154.2
164.1
17.1
16.5
Leighton Holdings Limited Annual Report 2013
131
131
Notes continued
for the year ended 31 December 2013
26. JOINT VENTURE ENTITIES
The Group has the following joint venture entities:
Name of entity
Principal activity
Country
Ownership interest
December 2013
%
December 2012
%
400 George Street Partnership1
APM Group (Aust) Pty Ltd & Broad Construction Services
(NSW/VIC) Pty Ltd1
APN No. 19 Pty Ltd & Leighton Properties (VIC) Pty Ltd1
Applemead Pty Ltd
Auckland Road Maintenance Alliance (West)
Management JV1
Bac Devco Pty Limited1
Barclay Mowlem Thiess Joint Venture1
Bayview Project Noosa Partnership1
Brisbane Motorway Services Pty Limited1
City West Property Holding Trust (Section 63 Trust)
City West Property Holdings Pty Limited
City West Property Investment (No. 1) Trust
City West Property Investment (No. 2) Trust
City West Property Investment (No. 3) Trust
City West Property Investment (No. 4) Trust
City West Property Investment (No. 5) Trust
City West Property Investment (No. 6) Trust
City West Property Investments (No. 1) Pty Limited
City West Property Investments (No. 2) Pty Limited
City West Property Investments (No. 3) Pty Limited
City West Property Investments (No. 4) Pty Limited
City West Property Investments (No. 5) Pty Limited
City West Property Investments (No. 6) Pty Limited
Cockatoo Iron Ore1
Cockatoo Mining Pty Ltd1
Conneq Infrastructure Services (Australia) Pty Ltd and John
Holland Pty Ltd1
Copperstring Pty Ltd1
Cotter Googong Bulk Transfer Joint Venture1
Double One 3 Unit Trust
Erskineville Residential Project Pty Ltd
Fallingwater Trust1
Development
Construction
Australia
Australia
Development
Development
Australia
Australia
Construction
New Zealand
Development
Construction
Development
Services
Development
Development
Development
Development
Development
Development
Development
Development
Development
Development
Development
Development
Development
Development
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Contract Mining
Australia
Contract Mining
Australia
Services
Australia
Construction
Construction
Development
Construction
Development
Australia
Australia
Australia
Australia
Australia
‐
50
‐
50
50
33
50
‐
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
25
50
15
50
50
50
50
50
33
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
‐
‐
15
Name of entity
Principal activity
Country
Ownership interest
December 2013
December 2012
Notes continued
for the year ended 31 December 2013
26. JOINT VENTURE ENTITIES CONTINUED
Folkestone/Leighton JV Pty Limited1
Garlanja Joint Venture
Gateway Motorway Services Pty Limited1
Great Eastern Alliance
Green Square Consortium Pty Ltd1
Hassall Street Pty Ltd
Hassall Street Trust
Holland York Joint Venture1
Hollywood Apartments Pty Ltd
Hollywood Apartments Trust
HPAL Freehold Pty Limited
Infocus Infrastructure Management Pty Limited1
JM Joint Venture1
John Holland BRW Joint Venture1
John Holland Macmahon Joint Venture (Bell Bay) 1
John Holland McConnell Dowell Joint Venture1
John Holland Thames Water Joint Venture1
John Holland United Group Infrastructure Joint Venture1
Kentz E & C Pty Ltd1
Kings Square No.4 Unit Trust
Kings Square Pty Ltd
Kurunjang Development Pty Ltd1
Leighton Abigroup Joint Venture1
Leighton BMD JV1
Joint Venture1
Leighton Hsin Chong Joint Venture1
Leighton Infra 13 Joint Venture2
Leighton Kumagai Joint Venture (MetroRail) 1
Leighton/Ngarda Joint Venture (LNJV) 1
Leighton OSE Joint Venture‐ Indore2
Leighton OSE Joint Venture‐ Agra2
Development
Australia
Construction
Services
Construction
Australia
Australia
Australia
Development
Australia
Development
Australia
Development
Australia
Construction
Australia
Development
Australia
Development
Australia
Development
Australia
Services
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Development
Australia
Development
Australia
Investment
Australia
Construction
Australia
Construction
Australia
Construction
Hong Kong
Construction
India
Construction
Australia
Construction
Australia
Construction
Construction
India
India
UAE
Leighton Contractors & Baulderstone Hornibrook Bilfinger Berger
Construction
Australia
Leighton Services UAE LLC (formerly known as Thiess Services
Services
Middle East LLC)
Leighton Welspun Contractors Private Limited2, 3
Construction
India
John Holland Downer EDI Engineering Power Joint Venture1
Construction
Australia
132
%
50
75
50
75
50
50
50
50
‐
‐
50
50
50
50
65
80
50
50
47
50
‐
‐
50
50
50
50
50
‐
55
88
‐
‐
50
65
%
50
75
50
75
50
50
50
50
50
50
‐
50
50
50
65
80
50
50
47
50
50
50
50
50
50
50
‐
50
55
88
50
50
50
‐
Leighton Holdings Limited Annual Report 2013
132
132
Notes continued
for the year ended 31 December 2013
26. JOINT VENTURE ENTITIES CONTINUED
Name of entity
Principal activity
Country
Ownership interest
December 2013
December 2012
Folkestone/Leighton JV Pty Limited1
Garlanja Joint Venture
Gateway Motorway Services Pty Limited1
Great Eastern Alliance
Green Square Consortium Pty Ltd1
Hassall Street Pty Ltd
Hassall Street Trust
Holland York Joint Venture1
Hollywood Apartments Pty Ltd
Hollywood Apartments Trust
HPAL Freehold Pty Limited
Infocus Infrastructure Management Pty Limited1
JM Joint Venture1
John Holland BRW Joint Venture1
John Holland Downer EDI Engineering Power Joint Venture1
John Holland Macmahon Joint Venture (Bell Bay) 1
John Holland McConnell Dowell Joint Venture1
John Holland Thames Water Joint Venture1
John Holland United Group Infrastructure Joint Venture1
Kentz E & C Pty Ltd1
Kings Square No.4 Unit Trust
Kings Square Pty Ltd
Kurunjang Development Pty Ltd1
Leighton Abigroup Joint Venture1
Leighton BMD JV1
Leighton Contractors & Baulderstone Hornibrook Bilfinger Berger
Joint Venture1
Leighton Hsin Chong Joint Venture1
Leighton Infra 13 Joint Venture2
Leighton Kumagai Joint Venture (MetroRail) 1
Leighton/Ngarda Joint Venture (LNJV) 1
Leighton OSE Joint Venture‐ Indore2
Leighton OSE Joint Venture‐ Agra2
Leighton Services UAE LLC (formerly known as Thiess Services
Middle East LLC)
Leighton Welspun Contractors Private Limited2, 3
Development
Australia
Construction
Services
Construction
Australia
Australia
Australia
Development
Australia
Development
Australia
Development
Australia
Construction
Australia
Development
Australia
Development
Australia
Development
Australia
Services
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Development
Australia
Development
Australia
Investment
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Hong Kong
Construction
India
Construction
Australia
Construction
Australia
Construction
Construction
Services
India
India
UAE
Construction
India
%
50
75
50
75
50
50
50
50
50
50
‐
50
50
50
65
80
50
50
47
50
50
50
50
50
50
50
‐
50
55
88
50
50
50
‐
%
50
75
50
75
50
50
50
50
‐
‐
50
50
50
50
65
80
50
50
47
50
‐
‐
50
50
50
50
50
‐
55
88
‐
‐
50
65
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
Notes continued
for the year ended 31 December 2013
133
133
26. JOINT VENTURE ENTITIES CONTINUED
26. JOINT VENTURE ENTITIES CONTINUED
Name of entity
Principal activity
Country
Ownership interest
December 2013
December 2012
Name of entity
Principal activity
Country
Ownership interest
December 2013
December 2012
Majwe Mining Joint Venture (Proprietary) Limited
Manukau Motorway Extension1
Marine & Civil Pty Ltd (formerly M & C 2 Pty Ltd) 1
Moonee Ponds Pty Ltd
Mosaic Apartments Holdings Pty Ltd1
Mosaic Apartments Pty Ltd1
Mosaic Apartments Unit Trust
Mulba Mia Leighton Broad Joint Venture1
New Future Alliance (SIHIP)
Nextgen Group Holdings Pty Ltd5
Ngarda Civil and Mining Pty Limited1
North Parramatta No.1 Pty Ltd1
North Parramatta No.1 Unit Trust1
Northern Gateway Alliance
Promet Engineers Pty Limited1
Rail Link Joint Venture1
Riverina Estate Developments Pty Ltd1
Riverina Estate Developments Trust1
Roche Thiess Linfox Joint Venture1
RTL Mining and Earthworks Pty Ltd1
Silcar Pty Limited4
SmartReo Pty Ltd
Southern Gateway Alliance (Mandurah)
The Kurunjang Development Trust1
Thiess Alstom Joint Venture1
Thiess Barnard Joint Venture
Thiess Black and Veatch Joint Venture1
Thiess Downer EDI Works Joint Venture1
Thiess Hochtief Joint Venture1
Thiess Services Arkwood Joint Venture1
Thiess United Group Joint Venture1
TSDI Pty Ltd1
Viridian Noosa Pty Limited1
Viridian Noosa Trust1
VR Pakenham Pty Ltd1
Contract Mining Botswana
Construction
New Zealand
Construction
Australia
Development
Australia
Development
Australia
Development
Australia
Development
Australia
Construction
Australia
Construction
Australia
Services
Australia
Contract Mining Australia
Development
Australia
Development
Australia
Construction
New Zealand
Construction
Australia
Construction
Australia
Development
Australia
Development
Australia
Contract Mining Australia
Construction
Australia
Services
Australia
Construction
Australia
Construction
Australia
Development
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Services
Australia
Construction
Australia
Services
Australia
Development
Australia
Development
Australia
Development
Australia
%
60
50
50
50
50
50
50
50
66
30
50
25
25
50
50
65
50
50
44
44
‐
50
69
50
50
50
50
75
50
‐
50
50
50
50
50
%
60
50
50
‐
50
50
50
50
66
‐
50
‐
‐
50
50
65
50
50
44
44
50
‐
69
50
50
50
50
75
50
50
50
50
50
50
50
134
%
50
25
50
50
50
50
50
50
%
50
25
50
50
50
50
50
50
VR Pakenham Trust1
Wallan Project Pty Ltd1
Wallan Project Trust1
Wedgewood Road Hallam No. 1 Pty Ltd
Wedgewood Road Hallam Trust
Wellington Tunnels Alliance
Westlink (Services) Pty Limited1
Wrap Southbank Unit Trust
Development
Australia
Investment
Investment
Australia
Australia
Development
Australia
Development
Australia
Construction
New Zealand
Services
Australia
Development
Australia
All joint venture entities have a statutory reporting date of 31 December with the following exceptions:
1 Entities have a 30 June statutory reporting date.
2 Entities have a 31 March statutory reporting date.
These entities have different statutory reporting dates to the Group as they are aligned with the joint venture partners’ reporting
date and / or the reporting date is prescribed by local statutory requirements.
3 On 27 December 2013, Leighton International Limited, a controlled entity of the Group, acquired the remaining 39.9% interest in
Leighton Welspun Contractors Private Limited. Refer note 30: Acquisitions and Disposals of Controlled Entities and Businesses for
further detail.
4 On 29 July 2013, Thiess Services Pty Limited, a controlled entity of the Group, acquired the remaining 50% interest in Silcar Pty
Limited. Refer note 30: Acquisitions and Disposals of Controlled Entities and Businesses for further detail.
5 On 28 June 2013, the Group acquired a 29.9% interest in the Nextgen Group Holdings Pty Limited joint venture following the sale of
70.1% of the Telecommunication Assets business to the Ontario Teachers’ Pension Plan on that date. Refer to note 30: Acquisitions
and Disposals of Controlled Entities and Business for further detail.
Where the Group has an ownership interest in a joint venture entity greater than 50% but does not control the arrangement due to
the existence of joint control, the joint venture is not consolidated.
Leighton Holdings Limited Annual Report 2013
134
134
Notes continued
for the year ended 31 December 2013
26. JOINT VENTURE ENTITIES CONTINUED
Name of entity
Principal activity
Country
Ownership interest
December 2013
December 2012
VR Pakenham Trust1
Wallan Project Pty Ltd1
Wallan Project Trust1
Wedgewood Road Hallam No. 1 Pty Ltd
Wedgewood Road Hallam Trust
Wellington Tunnels Alliance
Westlink (Services) Pty Limited1
Wrap Southbank Unit Trust
Development
Australia
Investment
Investment
Australia
Australia
Development
Australia
Development
Australia
Construction
New Zealand
Services
Australia
Development
Australia
%
50
25
50
50
50
50
50
50
%
50
25
50
50
50
50
50
50
All joint venture entities have a statutory reporting date of 31 December with the following exceptions:
1 Entities have a 30 June statutory reporting date.
2 Entities have a 31 March statutory reporting date.
These entities have different statutory reporting dates to the Group as they are aligned with the joint venture partners’ reporting
date and / or the reporting date is prescribed by local statutory requirements.
3 On 27 December 2013, Leighton International Limited, a controlled entity of the Group, acquired the remaining 39.9% interest in
Leighton Welspun Contractors Private Limited. Refer note 30: Acquisitions and Disposals of Controlled Entities and Businesses for
further detail.
4 On 29 July 2013, Thiess Services Pty Limited, a controlled entity of the Group, acquired the remaining 50% interest in Silcar Pty
Limited. Refer note 30: Acquisitions and Disposals of Controlled Entities and Businesses for further detail.
5 On 28 June 2013, the Group acquired a 29.9% interest in the Nextgen Group Holdings Pty Limited joint venture following the sale of
70.1% of the Telecommunication Assets business to the Ontario Teachers’ Pension Plan on that date. Refer to note 30: Acquisitions
and Disposals of Controlled Entities and Business for further detail.
Where the Group has an ownership interest in a joint venture entity greater than 50% but does not control the arrangement due to
the existence of joint control, the joint venture is not consolidated.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
Notes continued
for the year ended 31 December 2013
135
135
26. JOINT VENTURE ENTITIES CONTINUED
27. JOINT OPERATIONS
The Group’s share of joint venture entities’ results, assets and liabilities are as follows:
The Group has the following interest in joint operations:
Revenue
Expenses
Profit / (loss) before tax
Income tax (expense) / benefit
Profit / (loss) for the period
Current assets
Non‐current assets
Total assets
Current liabilities
Non‐current liabilities
Total liabilities
12 months to
December 2013
$m
12 months to
December 2012
$m
^(restated)
775.6
(786.0)
(10.4)
2.1
(8.3)
1,135.1
(1,017.3)
117.8
(13.3)
104.5
December 2013
$m
December 2012
$m
^(restated)
196.9
381.9
578.8
216.2
36.3
252.5
231.2
380.6
611.8
179.0
32.8
211.8
The Group’s share of joint venture entities’ net assets at reporting date
326.3
400.0
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect
adjustments made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Individually immaterial joint ventures
The Group has interests in a number of individually immaterial joint ventures that are accounted for using the equity method.
Individually immaterial joint ventures
Aggregate amounts of the Group’s carrying value:
Net assets
Aggregate amounts of the Group’s share of profit:
Profit / (loss) for the period
December 2013
$m
December 2012
$m
326.3
400.0
(8.3)
104.5
136
%
40
50
40
38
50
50
38
38
40
50
50
50
75
80
50
50
80
40
67
50
50
50
50
50
60
50
50
50
%
40
50
40
38
50
50
38
38
40
50
50
50
75
85
50
50
80
80
67
50
50
50
50
50
60
50
50
50
Name of arrangement
Principal activity
Country
Ownership interest
December 2013
December 2012
Abigroup Contractors Pty Ltd & Coleman Rail Pty Ltd &
John Holland Pty Ltd (Integrate Rail JV) 2
Baulderstone Leighton Joint Venture2
Construction
Australia
Construction
Australia
BGC Contracting & John Holland & Macmahon Joint Venture (Roy
Construction
Australia
Hill Rail JV)1, 2
BJB Joint Venture2
China State Leighton Joint Venture2
Revitalisation Project, SA) 1, 2
Coleman Rail Pty Ltd & John Holland Pty Ltd Joint Venture (Rail
Construction
Australia
Coleman Rail Pty Ltd & John Holland Pty Ltd & York Civil Pty Ltd
Construction
Australia
Joint Venture (Tracksure Rail Upgrade)1,2
Coleman Rail Pty Ltd & John Holland Pty Ltd & York Civil Pty Ltd
Construction
Australia
Services
Australia
Construction
Hong Kong
Joint Venture (Trackworks Upgrade Adelaide) 1, 2
Degremont Thiess Services Joint Venture1, 2
Erskineville Residential Project2
EV LNG Australia Pty Ltd & Thiess Pty Ltd (EVT JV) 2
Gammon ‐ Leighton Joint Venture2
Garlanja1, 2
Hazell Brothers John Holland Joint Venture1, 2
HYLC Joint Venture1, 2
JM JV SIA Joint Venture1, 2
John Holland & Leed & Macmahon Joint Venture (Urban
Superway) 1, 2
Services
Australia
Development
Australia
Construction
Australia
Construction
Hong Kong
Construction
Construction
Construction
Construction
Construction
Australia
Australia
Australia
Australia
Australia
Australia
GHD & John Holland Joint Venture (Perth City Link Rail Alliance)1, 2 Construction
John Holland & Leed Engineering Joint Venture (NIAW) 1, 2
Construction
Australia
John Holland & UGL Joint Venture (Murrumbidgee Irrigation) 1, 2
Construction
Australia
John Holland Abigroup Contractors Joint Venture (Bulk Water) 1, 2 Construction
John Holland Abigroup Contractors Joint Venture (Coffs
Construction
Australia
Australia
Infrastructure) 1, 2
John Holland Coleman Rail Joint Venture1, 2
John Holland Colin Joss Joint Venture1, 2
John Holland Downer EDI Joint Venture1, 2
John Holland Fairbrother Joint Venture1, 2
John Holland Fulton Hogan Joint Venture1, 2
John Holland Laing O’Rourke Joint Venture1, 2
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
New Zealand
Construction
Australia
Leighton Holdings Limited Annual Report 2013
136
136
Notes continued
for the year ended 31 December 2013
27. JOINT OPERATIONS
The Group has the following interest in joint operations:
Name of arrangement
Principal activity
Country
Ownership interest
December 2013
December 2012
Abigroup Contractors Pty Ltd & Coleman Rail Pty Ltd &
John Holland Pty Ltd (Integrate Rail JV) 2
Baulderstone Leighton Joint Venture2
Construction
Australia
Construction
Australia
Development
Services
Services
Construction
Construction
Construction
Construction
Construction
Construction
Construction
BGC Contracting & John Holland & Macmahon Joint Venture (Roy
Hill Rail JV)1, 2
BJB Joint Venture2
China State Leighton Joint Venture2
Coleman Rail Pty Ltd & John Holland Pty Ltd Joint Venture (Rail
Revitalisation Project, SA) 1, 2
Coleman Rail Pty Ltd & John Holland Pty Ltd & York Civil Pty Ltd
Joint Venture (Tracksure Rail Upgrade)1,2
Coleman Rail Pty Ltd & John Holland Pty Ltd & York Civil Pty Ltd
Joint Venture (Trackworks Upgrade Adelaide) 1, 2
Degremont Thiess Services Joint Venture1, 2
Erskineville Residential Project2
EV LNG Australia Pty Ltd & Thiess Pty Ltd (EVT JV) 2
Gammon ‐ Leighton Joint Venture2
Garlanja1, 2
Construction
GHD & John Holland Joint Venture (Perth City Link Rail Alliance)1, 2 Construction
Hazell Brothers John Holland Joint Venture1, 2
HYLC Joint Venture1, 2
JM JV SIA Joint Venture1, 2
John Holland & Leed & Macmahon Joint Venture (Urban
Superway) 1, 2
John Holland & Leed Engineering Joint Venture (NIAW) 1, 2
John Holland & UGL Joint Venture (Murrumbidgee Irrigation) 1, 2
Construction
John Holland Abigroup Contractors Joint Venture (Bulk Water) 1, 2 Construction
John Holland Abigroup Contractors Joint Venture (Coffs
Construction
Infrastructure) 1, 2
John Holland Coleman Rail Joint Venture1, 2
John Holland Colin Joss Joint Venture1, 2
John Holland Downer EDI Joint Venture1, 2
John Holland Fairbrother Joint Venture1, 2
John Holland Fulton Hogan Joint Venture1, 2
John Holland Laing O’Rourke Joint Venture1, 2
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Construction
Australia
Australia
Hong Kong
Australia
Australia
Australia
Australia
Australia
Australia
Hong Kong
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
%
40
50
40
38
50
50
38
38
40
50
50
50
75
85
50
50
80
80
67
50
50
50
50
50
60
50
50
50
%
40
50
40
38
50
50
38
38
40
50
50
50
75
80
50
50
80
40
67
50
50
50
50
50
60
50
50
50
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
Notes continued
for the year ended 31 December 2013
137
137
27. JOINT OPERATIONS CONTINUED
27. JOINT OPERATIONS CONTINUED
Name of arrangement
Principal activity
Country
Ownership interest
December 2013
December 2012
Construction
Construction
Construction
Construction
John Holland Laing O’Rourke & NRW Joint Venture1
John Holland Macmahon Joint Venture (Roe and Tonkin
Highways) 1, 2
John Holland Macmahon Joint Venture (Ross River Dam) 1, 2
John Holland Pty Ltd & Pindan Contracting Pty Ltd2
John Holland Tenix Alliance Joint Venture1, 2
Construction
John Holland Veolia Water Australia Joint Venture (Blue Water)1, 2 Construction
Construction
John Holland Veolia Water Australia Joint Venture (Hong Kong
Sludge) 2
John Holland Veolia Water Australia Joint Venture (Gold Coast
Desalination Plant) 1, 2
John Holland Pty Ltd & Lend Lease Project Management &
Construction (Australia) Pty Limited2
John Holland & Bouygues Travaux Publics (Glenfield Junction
Alliance) 1
John Holland & Bouygues Travaux Publics (North Strathfield Rail
Underpass Alliance) 1
Leighton ‐ Gammon Joint Venture2
Leighton Abigroup Consortium (Epping to Thornleigh)
Construction
Construction
Construction
Construction
Construction
Construction
Leighton Boral Amey NSW Joint Venture
Leighton Boral Amey QLD Joint Venture
Services
Services
Construction
Leighton China State John Holland Joint Venture
(City of Dreams) 1, 2
Leighton China State Joint Venture (Wynn Resort) 1, 2
Leighton China State Van Oord Joint Venture2
Leighton Construction India (Private) Limited3
Leighton Contractors Downer Joint Venture1, 2
Construction
Leighton Fulton Hogan Joint Venture (Sapphire to Woolgoolga)1, 2 Construction
Leighton Fulton Hogan Joint Venture (SH16 Causeway Upgrade)
Leighton Kumagai Joint Venture (Route 9 ‐ Eagle’s Nest Tunnel) 2
Construction
Construction
Construction
Construction
Construction
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Hong Kong
Australia
Australia
Australia
Macau
Macau
Hong Kong
India
Australia
Australia
New Zealand
Hong Kong
Leighton Kumagai Joint Venture
(Wanchai East & North Point Trunk Sewerage) 2
Leighton Monnis Infrastructure JV LLC
Leighton Swietelsky Joint Venture1, 2
Leighton‐Able Joint Venture2
Leighton‐Chubb E&M Joint Venture2
Leighton‐Total Joint Operation2
Construction
Hong Kong
Construction
Mongolia
Services
Australia
Construction
Hong Kong
Construction
Hong Kong
Construction
Indonesia
%
33
50
50
50
50
74
40
64
50
54
50
50
50
44
44
70
50
45
50
50
50
50
51
51
55
50
51
50
70
%
‐
50
50
50
50
74
40
64
50
‐
‐
50
‐
‐
‐
70
50
45
50
50
50
‐
51
51
55
50
51
50
70
138
48
60
60
‐
50
28
65
‐
‐
33
65
33
‐
50
50
65
50
Name of arrangement
Principal activity
Country
December 2013
December 2012
Ownership interest
%
%
Murray & Roberts Marine Malaysia ‐ Leighton Contractors
Construction
Malaysia
Link 200 Joint Venture1, 2
Link 200 Station Joint Venture1, 2
Link 200 Tunnel Joint Venture1, 2
Malaysia Joint Venture
N.V. Besix S.A. & Thiess Pty Ltd (Best JV) 2
Taiwan Track Partners Joint Venture2
Task JV (Thiess & Sinclair Knight Merz)
Thiess Balfour Beatty Joint Venture2
Thiess Black and Veatch Joint Venture (VIC)
Thiess Decmil Kentz Joint Venture1, 2
Thiess Degremont Joint Venture1, 2
Thiess Degremont Nacap Joint Venture1, 2
Thiess John Holland Dragados Joint Venture
Thiess MacDow Joint Venture1, 2
Thiess Sedgman Joint Venture1, 2
Thiess Pty Ltd & York Civil Pty Ltd2
Construction
Hong Kong
Construction
Hong Kong
Construction
Hong Kong
Construction
Australia
Construction
Taiwan
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
48
60
60
50
50
28
60
67
50
33
65
33
75
50
50
65
50
Thiess Services and South Eastern Water (formerly US Utility
Services
Australia
Services Joint Venture) 2
All joint operations have a reporting date of 31 December with the following exceptions:
1 Arrangements have a 30 June reporting date.
2 Following the Group’s adoption of AASB 11 Joint Arrangements, certain joint arrangements which would previously have been
classified as joint ventures are now classified as joint operations.
3 Entities have a 31 March reporting date.
These entities have different statutory reporting dates to the Group as they are aligned with the joint venture partners’ reporting
date and / or the reporting date is prescribed by local statutory requirements.
Leighton Holdings Limited Annual Report 2013
138
138
Notes continued
for the year ended 31 December 2013
27. JOINT OPERATIONS CONTINUED
Name of arrangement
Principal activity
Country
Ownership interest
December 2013
%
December 2012
%
Link 200 Joint Venture1, 2
Link 200 Station Joint Venture1, 2
Link 200 Tunnel Joint Venture1, 2
Murray & Roberts Marine Malaysia ‐ Leighton Contractors
Malaysia Joint Venture
N.V. Besix S.A. & Thiess Pty Ltd (Best JV) 2
Taiwan Track Partners Joint Venture2
Task JV (Thiess & Sinclair Knight Merz)
Thiess Balfour Beatty Joint Venture2
Thiess Black and Veatch Joint Venture (VIC)
Thiess Decmil Kentz Joint Venture1, 2
Thiess Degremont Joint Venture1, 2
Thiess Degremont Nacap Joint Venture1, 2
Thiess John Holland Dragados Joint Venture
Thiess MacDow Joint Venture1, 2
Thiess Sedgman Joint Venture1, 2
Thiess Pty Ltd & York Civil Pty Ltd2
Thiess Services and South Eastern Water (formerly US Utility
Services Joint Venture) 2
Construction
Hong Kong
Construction
Hong Kong
Construction
Hong Kong
Construction
Malaysia
Construction
Australia
Construction
Taiwan
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Services
Australia
48
60
60
50
50
28
60
67
50
33
65
33
75
50
50
65
50
48
60
60
‐
50
28
‐
65
‐
33
65
33
‐
50
50
65
50
All joint operations have a reporting date of 31 December with the following exceptions:
1 Arrangements have a 30 June reporting date.
2 Following the Group’s adoption of AASB 11 Joint Arrangements, certain joint arrangements which would previously have been
classified as joint ventures are now classified as joint operations.
3 Entities have a 31 March reporting date.
These entities have different statutory reporting dates to the Group as they are aligned with the joint venture partners’ reporting
date and / or the reporting date is prescribed by local statutory requirements.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
Notes continued
for the year ended 31 December 2013
139
139
28. RECONCILIATION OF PROPERTY, PLANT AND EQUIPMENT CARRYING VALUES
29. RECONCILIATION OF PROFIT / (LOSS) FOR THE PERIOD TO NET CASH FROM OPERATING ACTIVITIES
12 months to December 2013
Note
Opening carrying amount^
Additions1
Acquisitions through business
combinations
Disposals
Written off2
Transfers3
Depreciation
Effects of exchange rate fluctuations
4
Land
$m
12.8
‐
‐
(2.1)
‐
‐
‐
‐
Carrying amount at reporting date
10.7
Leasehold land,
buildings and
improvements
$m
Buildings
$m
Plant and
equipment
$m
Total property,
plant and
equipment
$m
^(restated)
28.1
29.6
‐
(29.5)
‐
(0.1)
(2.8)
‐
25.3
75.3
13.7
1.1
‐
(4.5)
‐
(14.8)
1.3
72.1
1,955.6
1,101.3
50.0
(568.8)
(5.5)
(118.5)
(887.8)
118.2
2,071.8
1,144.6
51.1
(600.4)
(10.0)
(118.6)
(905.4)
119.5
1,644.5
1,752.6
1 Additions to property, plant and equipment include finance lease additions of $75.8 million.
2 Amounts written off during the reporting period of $10.0 million arose due to a decline in the recoverable amount of the property,
plant and equipment.
3 Includes transfers to assets held for sale of $201.9 million.
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect
adjustments made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
12 months to
12 months to
December 2013
December 2012
$m
$m
^(restated)
468.9
442.1
140
1,033.6
24.4
‐
(115.2)
(20.2)
63.0
35.0
‐
‐
4.4
476.6
47.8
13.0
(676.8)
(28.2)
(153.6)
303.8
(436.5)
162.6
905.4
27.9
78.3
(215.0)
(19.2)
18.5
15.0
81.2
10.0
(2.5)
564.0
(5.9)
16.9
(828.1)
15.5
79.7
(19.8)
(520.6)
132.7
Profit / (loss) for the period
Adjustments for non‐cash items:
- Depreciation of property, plant and equipment
- Amortisation of intangibles
- Net (gain) / loss on acquisition of controlled entities
- Net (gain) / loss on sale of controlled entities
- Net (gain) / loss on sale of assets
Impairment of investments in infrastructure toll road companies
Impairment of investments accounted for using the equity method
- Property development and property joint ventures write‐downs
‐ Impairment of property, plant and equipment
-
-
-
-
-
-
-
Foreign exchange losses
- Net amounts set aside to provisions
Share of profits of associates
Share based payments
Net changes in assets / liabilities:
- Decrease / (increase) in receivables
- Decrease / (increase) in joint ventures
- Decrease / (increase) in inventories
Increase / (decrease) in payables
Increase / (decrease) in provisions
- Current and deferred income tax movement
Net cash from operating activities
802.9
1,175.8
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect
adjustments made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
29. RECONCILIATION OF PROFIT / (LOSS) FOR THE PERIOD TO NET CASH FROM OPERATING ACTIVITIES
Profit / (loss) for the period
Adjustments for non‐cash items:
- Depreciation of property, plant and equipment
- Amortisation of intangibles
- Net (gain) / loss on acquisition of controlled entities
- Net (gain) / loss on sale of controlled entities
- Net (gain) / loss on sale of assets
-
-
Impairment of investments in infrastructure toll road companies
Impairment of investments accounted for using the equity method
- Property development and property joint ventures write‐downs
‐ Impairment of property, plant and equipment
-
Foreign exchange losses
- Net amounts set aside to provisions
-
-
Share of profits of associates
Share based payments
Net changes in assets / liabilities:
- Decrease / (increase) in receivables
- Decrease / (increase) in joint ventures
- Decrease / (increase) in inventories
-
-
Increase / (decrease) in payables
Increase / (decrease) in provisions
- Current and deferred income tax movement
140
140
12 months to
December 2013
$m
12 months to
December 2012
$m
^(restated)
468.9
442.1
905.4
27.9
78.3
(215.0)
(19.2)
18.5
15.0
81.2
10.0
(2.5)
564.0
(5.9)
16.9
(828.1)
15.5
79.7
(19.8)
(520.6)
132.7
1,033.6
24.4
‐
(115.2)
(20.2)
63.0
35.0
‐
‐
4.4
476.6
47.8
13.0
(676.8)
(28.2)
(153.6)
303.8
(436.5)
162.6
Net cash from operating activities
802.9
1,175.8
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect
adjustments made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
Notes continued
for the year ended 31 December 2013
141
141
142
30. ACQUISITIONS AND DISPOSALS OF CONTROLLED ENTITIES AND BUSINESSES
30. ACQUISITIONS AND DISPOSALS OF CONTROLLED ENTITIES AND BUSINESSES CONTINUED
Acquisitions – Leighton Welspun Contractors Private Limited
Disposals ‐ Telecommunication Assets (“TA”)
12 months to December 2013
Cash and cash equivalents
Trade and other receivables
Investments accounted for using the equity method
Property, plant and equipment
Intangibles
Current and deferred tax
Trade and other payables
Provisions
Interest bearing liabilities
Net identifiable assets and liabilities
Cash flows from acquisition
Cash consideration1
Cash acquired
Fair values
$m
27.2
239.9
1.2
26.8
11.6
17.4
(208.0)
(2.1)
(55.2)
58.8
‐
27.2
1 There was no cash consideration during the period. Subsequent to the reporting date deferred cash consideration of $110.0 million
was paid. See note 42: Events subsequent to reporting date for further detail.
Leighton Welspun Contractors Private Limited (“LWIN”)
On 27 December 2013 Leighton International Limited, a controlled entity of the Company, acquired the remaining 39.9% interest in
its Indian joint venture, LWIN, from Welspun Infra Projects Private Limited (“Welspun”), for $110.0 million, taking its ownership
interest to 100%. As a result of this purchase the Group has gained control of LWIN.
The acquisition has been accounted for under the requirements of Accounting Standard AASB 3 Business Combinations as follows:
the purchase consideration paid for LWIN was determined as $275.9 million (comprising: deferred cash consideration of $110.0
million; the acquisition date fair value of the Group’s previously held equity interest of 60.1% of $165.9 million); and the fair value of
the identifiable net assets of LWIN acquired by the Group was $58.8 million.
As the total purchase consideration exceeded the fair value of the identifiable net assets of LWIN, this resulted in the recognition of
goodwill on acquisition of $217.1 million. The goodwill is attributable to the skilled workforce, prospective projects and expected
combination synergies. In accordance with AASB 3, the Group revalued its previously held equity interest in LWIN to fair value,
resulting in a loss on remeasurement of $9.4 million, and reclassified the joint ventures’ $68.9 million foreign currency translation
reserve from equity to profit and loss, resulting in a total loss on acquisition of a controlled entity of $78.3 million.
Due to the date of the acquisition there was no contribution by LWIN as a controlled entity to the Group’s operating profit and loss
for the year ended 31 December 2013. LWIN’s contribution for the year is recorded in share of profits of joint ventures within the
LAIO segment. See note 32: Segment information.
On 28 June 2013, the Group sold 70.1% of the TA to the Ontario Teachers’ Pension Plan (“Teachers’”), and entered in to a joint
venture arrangement with Teachers’. As the Group no longer controls TA the transaction has been recorded as a disposal of
controlled entities and the acquisition of an interest in a joint venture entity. The disposal has been accounted for under the
requirements of Accounting Standard AASB 10 Consolidated Financial Statements as follows: the total consideration received was
$771.1 million (comprising: cash consideration of $614.1 million (which is subject to a potential completion adjustment) and non‐
cash consideration of $157.0 million (fair value of the 29.9% retained interest)) less the carrying value of TA’s net assets of $556.1
million, resulting in a gain before tax of $215.0 million. Refer to note 4: Items included in profit / (loss) before tax. The portion of this
gain which is attributable to recognising the investment retained in the former subsidiaries at their fair values is $64.3 million; the
portion of the gain attributable to the investment in the former subsidiaries disposed is $150.7 million. TA’s contribution from 1
January 2013 to 28 June 2013 to Group revenue of $126.0 million and $44.6 million to Group net profit after tax is recorded in the
Leighton Contractors segment. Refer to note 32: Segment information.
At 31 December 2012 TA was disclosed as held for sale (assets held for sale: $658.6m; and liabilities associated with assets held for
Net gain on disposal of controlled entities before tax
Carrying value of assets and liabilities of entities and businesses disposed
sale: $174.3m).
Gain on disposal
Cash consideration
Non‐cash consideration
Carrying amount on disposal
Cash and cash equivalents
Trade and other receivables
Inventories: consumables
Deferred tax assets
Property, plant and equipment
Intangibles
Trade and other payables
Current tax liabilities
Provisions
Interest bearing liabilities
Net assets disposed
Cash flows resulting from sale
Cash consideration
Cash disposed
Net cash inflow
$m
614.1
157.0
(556.1)
215.0
18.4
21.2
1.5
21.3
649.3
25.9
(96.5)
(6.3)
(7.7)
(71.0)
556.1
614.1
(18.4)
595.7
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
142
142
30. ACQUISITIONS AND DISPOSALS OF CONTROLLED ENTITIES AND BUSINESSES CONTINUED
Disposals ‐ Telecommunication Assets (“TA”)
On 28 June 2013, the Group sold 70.1% of the TA to the Ontario Teachers’ Pension Plan (“Teachers’”), and entered in to a joint
venture arrangement with Teachers’. As the Group no longer controls TA the transaction has been recorded as a disposal of
controlled entities and the acquisition of an interest in a joint venture entity. The disposal has been accounted for under the
requirements of Accounting Standard AASB 10 Consolidated Financial Statements as follows: the total consideration received was
$771.1 million (comprising: cash consideration of $614.1 million (which is subject to a potential completion adjustment) and non‐
cash consideration of $157.0 million (fair value of the 29.9% retained interest)) less the carrying value of TA’s net assets of $556.1
million, resulting in a gain before tax of $215.0 million. Refer to note 4: Items included in profit / (loss) before tax. The portion of this
gain which is attributable to recognising the investment retained in the former subsidiaries at their fair values is $64.3 million; the
portion of the gain attributable to the investment in the former subsidiaries disposed is $150.7 million. TA’s contribution from 1
January 2013 to 28 June 2013 to Group revenue of $126.0 million and $44.6 million to Group net profit after tax is recorded in the
Leighton Contractors segment. Refer to note 32: Segment information.
At 31 December 2012 TA was disclosed as held for sale (assets held for sale: $658.6m; and liabilities associated with assets held for
sale: $174.3m).
Gain on disposal
Cash consideration
Non‐cash consideration
Carrying amount on disposal
Net gain on disposal of controlled entities before tax
Carrying value of assets and liabilities of entities and businesses disposed
Cash and cash equivalents
Trade and other receivables
Inventories: consumables
Deferred tax assets
Property, plant and equipment
Intangibles
Trade and other payables
Current tax liabilities
Provisions
Interest bearing liabilities
Net assets disposed
Cash flows resulting from sale
Cash consideration
Cash disposed
Net cash inflow
$m
614.1
157.0
(556.1)
215.0
18.4
21.2
1.5
21.3
649.3
25.9
(96.5)
(6.3)
(7.7)
(71.0)
556.1
614.1
(18.4)
595.7
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
143
143
Notes continued
for the year ended 31 December 2013
30. ACQUISITIONS AND DISPOSALS OF CONTROLLED ENTITIES AND BUSINESSES CONTINUED
30. ACQUISITIONS AND DISPOSALS OF CONTROLLED ENTITIES AND BUSINESSES CONTINUED
Disposals ‐ Telecommunication Assets (“TA”) continued
The following controlled entities were disposed as part of the sale of TA:
Australia‐Singapore Cable (Australia) Pty Limited
Australia‐Singapore Cable (International) Limited
Australia‐Singapore Cable (Singapore) Pte Ltd
Infoplex Pty Ltd
Metronode (NSW) Pty Ltd
Metronode Investments Pty Ltd
Metronode M2 Pty Ltd
Metronode New Zealand Limited
Other acquisitions and disposals
December 2013
Acquisition – Macmahon Construction Business (“MCB”)
Metronode Pty Ltd
Metronode S2 Pty Ltd
Nextgen Networks Pty Limited
Nextgen Pure Data Pty Ltd
Nextgen Telecom (WA) Pty Ltd
Nextgen Telecom Pty Ltd
Nextgen Services Pty Ltd
Nextgen Networks International Ltd
On 27 February 2013, the Group acquired the MCB from Macmahon Holdings Limited for $24.6 million. The majority of the contracts
were acquired by the John Holland Group and the acquisition’s contribution to net profit after tax in the ten month period to 31
December 2013 is included in the John Holland segment as disclosed in note 32: Segment Information.
Acquisition – Enpower Solutions Pty Ltd (“Enpower”)
On 12 April 2013, Leighton Contractors Pty Limited, a controlled entity of the Company, acquired selected assets and liabilities of
Enpower for $3.0 million. Enpower’s contribution to net profit after tax in the eight month period to 31 December 2013 is included in
the Leighton Contractors segment as disclosed in note 32: Segment Information.
Acquisition ‐ Silcar Pty Limited (“Silcar”)
On 29 July 2013 Thiess Services Pty Limited (“Thiess Services”), a controlled entity of the Company, acquired the remaining 50%
interest in Silcar from Siemens Pty Limited (“Siemens”) for nil consideration, taking its ownership interest to 100%. Silcar’s
contribution to net profit after tax in the five month period to 31 December 2013 is included in the Thiess segment as disclosed in
note 32: Segment Information.
December 2012
Acquisitions ‐ Wai Ming Contracting Company Ltd (“Wai Ming”)
On 30 April 2012, the Group acquired Wai Ming (including $1.4 million of intangibles (refer to note 15: Intangibles)) for $4.5 million. Wai
Ming’s contribution to net profit after tax in the eight month period to 31 December 2012 is included in the Leighton Asia, India and
Offshore segment as disclosed in note 32: Segment Information.
Disposals ‐ Thiess Waste Management business (“TWM”)
On 9 July 2012, the Group signed a business sale agreement for the sale of TWM to Remondis AG & Co KG. The sale completed on 28
September 2012. The disposal has been accounted for as follows: the total consideration of $179.1 million less the carrying value of the
TWM net assets of $63.9 million, resulting in a gain before tax of $115.2 million (refer to note 4: Items included in profit / (loss) before
tax). The gain on sale after tax was $80.6 million. The TWM contribution to net profit after tax during the 31 December 2012 reporting
period was $24.3 million (31 December 2011: $9.4 million).
Thiess Waste Management business continued
12 months to December 2012
Gain on disposal
Consideration
Carrying amount on disposal
Net gain on disposal of controlled entities before tax
Carrying value of assets and liabilities of entities and businesses disposed
Cash and cash equivalents
Inventories: consumables
Trade and other receivables
Property, plant and equipment
Investments in related entities
Trade and other payables
Provisions ‐ employee and other provisions
Net assets disposed
Cash inflow resulting from sale
Deferred consideration
Consideration
Other
Swan Water Services Pty Ltd; and
Victorian Wave Partners Pty Ltd.
31. HELD FOR SALE
The following immaterial disposals of controlled entities and businesses took place in the twelve month year ended 31 December 2012:
31 December 2013 ‐ PT Arutmin Indonesian Mining Assets and Liabilities (“Arutmin”)
On 23 December 2013 PT Thiess Contractors Indonesia (“TCI”), a wholly owned subsidiary of Thiess Pty Limited, signed a Deed of
Settlement and Termination Agreement (“STA”) with PT Arutmin Indonesia, for the sale of selected assets of TCI.
The assets and associated liabilities are used to provide the TCI’s contract mining services to PT Arutmin Indonesia, the owners of the
Senakin and Satui mines.
As the sale is expected to be completed within one year from the reporting date, the selected assets and associated liabilities, as shown
overleaf, have been classified as held for sale at the reporting date, and are presented in the Thiess segment at 31 December 2013.
144
$m
179.1
(63.9)
115.2
0.1
0.3
1.1
65.7
4.7
(0.5)
(7.5)
63.9
172.4
6.7
179.1
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
30. ACQUISITIONS AND DISPOSALS OF CONTROLLED ENTITIES AND BUSINESSES CONTINUED
Thiess Waste Management business continued
12 months to December 2012
Gain on disposal
Consideration
Carrying amount on disposal
Net gain on disposal of controlled entities before tax
Carrying value of assets and liabilities of entities and businesses disposed
Cash and cash equivalents
Inventories: consumables
Trade and other receivables
Property, plant and equipment
Investments in related entities
Trade and other payables
Provisions ‐ employee and other provisions
Net assets disposed
Cash inflow resulting from sale
Deferred consideration
Consideration
Other
144
144
$m
179.1
(63.9)
115.2
0.1
0.3
1.1
65.7
4.7
(0.5)
(7.5)
63.9
172.4
6.7
179.1
The following immaterial disposals of controlled entities and businesses took place in the twelve month year ended 31 December 2012:
Swan Water Services Pty Ltd; and
Victorian Wave Partners Pty Ltd.
31. HELD FOR SALE
31 December 2013 ‐ PT Arutmin Indonesian Mining Assets and Liabilities (“Arutmin”)
On 23 December 2013 PT Thiess Contractors Indonesia (“TCI”), a wholly owned subsidiary of Thiess Pty Limited, signed a Deed of
Settlement and Termination Agreement (“STA”) with PT Arutmin Indonesia, for the sale of selected assets of TCI.
The assets and associated liabilities are used to provide the TCI’s contract mining services to PT Arutmin Indonesia, the owners of the
Senakin and Satui mines.
As the sale is expected to be completed within one year from the reporting date, the selected assets and associated liabilities, as shown
overleaf, have been classified as held for sale at the reporting date, and are presented in the Thiess segment at 31 December 2013.
Leighton Holdings Limited Annual Report 2013
145
145
146
Notes continued
for the year ended 31 December 2013
31. HELD FOR SALE CONTINUED
31 December 2012 ‐ Telecommunication Assets (“TA”)
In the prior year, a plan to sell TA was initiated and actively marketed for sale. TA comprised entities and assets that provided
telecommunications infrastructure to both external and internal parties of the Group. The assets and associated liabilities shown in the
table below were included in the Leighton Contractors segment at 31 December 2012.
The completion of this sale occurred on 28 June 2013. Refer to note 30: Acquisitions and Disposals of Controlled Entities and Businesses
for further details.
Notes continued
for the year ended 31 December 2013
32. SEGMENT INFORMATION
Description of segments
Assets
Cash and cash equivalents
Trade and other receivables
Inventories: consumables
Total current assets
Deferred tax assets
Property, plant and equipment*
Intangibles
Total non‐current assets
Total assets
Liabilities
Trade and other payables
Current tax liabilities
Interest bearing liabilities
Provisions
Total current liabilities
Provisions
Interest bearing liabilities
Total non‐current liabilities
Total liabilities
December 2013
$m
December 2012
$m
Arutmin
‐
‐
27.5
27.5
‐
193.6
‐
193.6
221.1
‐
‐
(105.1)
‐
(105.1)
‐
‐
‐
TA
10.0
10.3
1.5
21.8
25.4
575.9
35.5
636.8
658.6
(112.7)
(19.0)
‐
(4.4)
(136.1)
(1.7)
(36.5)
(38.2)
(105.1)
(174.3)
made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect adjustments
Other held for sale*
Other held for sale also includes rail and mining equipment of $8.3 million (31 December 2012 rail and barge assets: $14.2 million)
actively marketed for sale.
In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of the customer
and the location of the service provided. Segment assets are based on the geographical location of the assets. Geographical segment
non‐current assets comprise: inventories: development properties, property, plant & equipment, and intangibles.
* Total Property, plant and equipment of $201.9 million was reclassified to assets held for sale during the reporting period (includes
$193.6 million in relation to Arutmin and an additional $8.3 million transferred to ‘Other held for sale’ above during the reporting
period).
Major customers
No revenue from transactions with a single external customer amount to 10% or more of the Group’s revenue.
Operating segments have been identified based on separate financial information that is regularly reviewed by the Leighton Group Chief
Executive Officer, the Chief Operating Decision Maker (“CODM”). The Leighton Group is structured on a decentralised basis comprising
the following main operating companies and a corporate head office:
Leighton Contractors
Thiess
John Holland
Leighton Asia, India & Offshore (“LAIO”)
Habtoor Leighton Group (“HLG”)
Commercial & Residential
The performance of each operating company forms the primary basis for all management reporting to the CODM. The composition of
reportable segments has not changed since the prior reporting period. The types of services from which segments derive revenue, are
included in note 2: Revenue. The Group’s share of revenue from associates and joint ventures is included in the revenue reported for
each applicable operating company. Performance is measured based on segment result. Information regarding the results of each
reportable segment, as reported to the CODM, is included on pages 147 to 148. The corporate segment represents the corporate head
office and includes transactions relating to Group finance, taxation, treasury, corporate secretarial and certain strategic investments.
Differences in the reporting for management and financial accounting are individually, and in total, not material. These differences are
contained in the results of the corporate segment and include adjustments for tax on earnings from equity accounted investments, as
earnings from equity accounted investments are reported on a pre‐tax basis in the applicable operating company.
Geographical segments
Geographical information
Australia Pacific
Asia, Middle East & Africa
Total
Revenue
Non‐current assets
12 months to
12 months to
December 2013
December 2012
December 2013
December 2012
$m
$m
^(restated)
$m
$m
^(restated)
18,839.6
3,725.1
22,564.7
17,553.0
3,276.7
20,829.7
1,605.4
1,084.9
2,690.3
2,074.3
740.9
2,815.2
Leighton Holdings Limited Annual Report 2013
146
146
Notes continued
for the year ended 31 December 2013
32. SEGMENT INFORMATION
Description of segments
Operating segments have been identified based on separate financial information that is regularly reviewed by the Leighton Group Chief
Executive Officer, the Chief Operating Decision Maker (“CODM”). The Leighton Group is structured on a decentralised basis comprising
the following main operating companies and a corporate head office:
Leighton Contractors
Thiess
John Holland
Leighton Asia, India & Offshore (“LAIO”)
Habtoor Leighton Group (“HLG”)
Commercial & Residential
The performance of each operating company forms the primary basis for all management reporting to the CODM. The composition of
reportable segments has not changed since the prior reporting period. The types of services from which segments derive revenue, are
included in note 2: Revenue. The Group’s share of revenue from associates and joint ventures is included in the revenue reported for
each applicable operating company. Performance is measured based on segment result. Information regarding the results of each
reportable segment, as reported to the CODM, is included on pages 147 to 148. The corporate segment represents the corporate head
office and includes transactions relating to Group finance, taxation, treasury, corporate secretarial and certain strategic investments.
Differences in the reporting for management and financial accounting are individually, and in total, not material. These differences are
contained in the results of the corporate segment and include adjustments for tax on earnings from equity accounted investments, as
earnings from equity accounted investments are reported on a pre‐tax basis in the applicable operating company.
Geographical segments
Geographical information
Australia Pacific
Asia, Middle East & Africa
Total
Revenue
Non‐current assets
12 months to
December 2013
$m
12 months to
December 2012
$m
^(restated)
December 2013
$m
December 2012
$m
^(restated)
18,839.6
3,725.1
22,564.7
17,553.0
3,276.7
20,829.7
1,605.4
1,084.9
2,690.3
2,074.3
740.9
2,815.2
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect adjustments
made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of the customer
and the location of the service provided. Segment assets are based on the geographical location of the assets. Geographical segment
non‐current assets comprise: inventories: development properties, property, plant & equipment, and intangibles.
Major customers
No revenue from transactions with a single external customer amount to 10% or more of the Group’s revenue.
Leighton Holdings Limited Annual Report 2013
147
147
148
Notes continued
for the year ended 31 December 2013
Notes continued
for the year ended 31 December 2013
32. SEGMENT INFORMATION CONTINUED
32. SEGMENT INFORMATION CONTINUED
12 months to
December 2013
Revenue
Segment revenue before
interest
Interest revenue
Leighton
Contractors
$m
Thiess
$m
John
Holland
$m
Leighton
Asia, India &
Offshore
$m
Habtoor
Leighton
Group
$m
Commercial &
Residential
$m
Corporate
$m
Eliminations
$m
Total
$m
12 months to
December 2012 ^(restated)
Leighton
Contractors
$m
Thiess
$m
Holland
Offshore
$m
$m
Group
$m
Residential
Corporate
Eliminations
$m
$m
$m
Total
$m
Leighton
Habtoor
John
Asia, India &
Leighton
Commercial &
7,993.1
6,852.1
4,769.4
3,280.8
498.6
641.9
422.0
(109.1)
24,348.8
Segment revenue before
7,136.4
7,231.3
4,545.7
2,629.2
444.6
557.6
521.1
(0.2)
23,065.7
‐
10.9
0.7
‐
‐
‐
Segment revenue
7,993.1
6,863.0
4,770.1
3,280.8
498.6
641.9
Inter‐segment revenue
Segment joint venture and
associate revenue
(51.7)
(241.6)
‐
(214.3)
(15.5)
(232.7)
(13.8)
(265.9)
‐
(498.6)
‐
(8.0)
50.6
472.6
(28.1)
(385.2)
External revenue
7,699.8
6,648.7
4,521.9
3,001.1
‐
633.9
59.3
Result
Segment result before interest,
restructuring costs, losses on
acquisition, gains on sale, and
impairments
Interest
Restructuring costs
Segment result before losses
on acquisition, gains on sale
and impairments
Loss on acquisition of
controlled entities
Gain on sale of controlled
entities and businesses
Impairments
Segment result
Income tax (expense) / benefit
Profit / (loss) for the year
292.0
474.2
146.3
135.7
1.1
77.5
(88.5)
(95.4)
(39.9)
‐
‐
(7.9)
‐
196.6
434.3
138.4
‐
215.0
(18.5)
393.1
‐
‐
‐
434.3
‐
‐
(10.0)
128.4
(58.5)
‐
77.2
(78.3)
‐
‐
‐
‐
1.1
‐
‐
‐
(1.1)
1.1
(40.7)
‐
36.8
(13.0)
(58.8)
(160.3)
‐
‐
‐
‐
(81.2)
(44.4)
(15.0)
(175.3)
(Profit) / loss for the year attributable to non‐controlling interests
Profit / (loss) for the year attributable to members of the parent entity
Other
Share of profit / (loss) of
associates and joint venture
entities
Depreciation
Amortisation
Other material non‐cash
expenses
14.5
(3.9)
12.8
(8.5)
1.0
(1.1)
(4.9)
(276.5)
(21.8)
(18.5)
(370.5)
(1.1)
‐
(42.1)
(1.9)
(10.0)
(211.5)
‐
(78.3)
‐
‐
‐
(1.2)
‐
(3.6)
(3.1)
(81.2)
(15.0)
‐
62.2
(109.1)
24,411.0
109.1
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
(1,846.3)
22,564.7
1,038.3
(255.4)
(58.8)
724.1
(78.3)
215.0
(124.7)
736.1
(267.2)
468.9
39.8
508.7
9.9
(905.4)
(27.9)
(203.0)
Revenue
interest
Interest revenue
Segment revenue
Inter‐segment revenue
associate revenue
External revenue
Result
Interest
Segment result before interest,
gains on sale and impairments
Segment result before gains on
sale and impairments
Gain on sale of controlled
entities and businesses
Impairments
Segment result
Income tax (expense) / benefit
Profit / (loss) for the period
Other
Share of profit / (loss) of
associates and joint venture
entities
Depreciation
Amortisation
expenses
7,136.4
7,237.0
4,545.7
2,629.2
444.6
557.6
‐
‐
5.7
‐
‐
‐
55.6
576.7
‐
(0.2)
0.2
Segment joint venture and
(444.9)
(397.1)
(228.2)
(444.6)
(90.0)
(521.1)
6,691.5
6,839.9
4,317.5
2,457.6
467.6
55.6
342.9
237.7
84.6
212.3
(33.2)
23.8
(105.0)
‐
‐
‐
(13.8)
(47.0)
‐
(20.0)
(67.0)
‐
‐
‐
‐
(49.7)
(25.9)
(15.9)
(120.9)
‐
(15.0)
(25.9)
(135.9)
(53.3)
289.6
‐
‐
289.6
(22.6)
215.1
115.2
(31.5)
298.8
(20.3)
64.3
‐
(31.5)
32.8
(Profit) / loss for the year attributable to non‐controlling interests
Profit / (loss) for the year attributable to members of the parent entity
45.3
37.3
14.2
6.7
(47.0)
14.0
3.5
Other material non‐cash
‐
(31.5)
(31.5)
(20.0)
(17.2)
(15.0)
(275.0)
(21.9)
(470.5)
(92.4)
(190.5)
‐
‐
‐
‐
(1.2)
‐
(4.0)
(2.5)
‐
(0.2)
(171.4)
(38.6)
173.7
‐
‐
173.7
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
61.3
23,127.0
‐
(2,297.3)
20,829.7
763.1
(214.2)
548.9
115.2
(98.0)
566.1
(124.0)
442.1
8.0
450.1
74.0
(1,033.6)
(24.4)
(115.2)
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 as a result of a change in
accounting policy. Refer to note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Leighton Holdings Limited Annual Report 2013
148
148
Notes continued
for the year ended 31 December 2013
32. SEGMENT INFORMATION CONTINUED
12 months to
December 2012 ^(restated)
Leighton
Contractors
$m
Thiess
$m
John
Holland
$m
Leighton
Asia, India &
Offshore
$m
Habtoor
Leighton
Group
$m
Commercial &
Residential
$m
Corporate
$m
Eliminations
$m
Total
$m
7,136.4
7,231.3
4,545.7
2,629.2
444.6
557.6
521.1
(0.2)
23,065.7
55.6
576.7
‐
‐
(0.2)
0.2
Revenue
Segment revenue before
interest
Interest revenue
‐
5.7
‐
‐
‐
‐
Segment revenue
7,136.4
7,237.0
4,545.7
2,629.2
444.6
557.6
Inter‐segment revenue
‐
‐
‐
Segment joint venture and
associate revenue
(444.9)
(397.1)
(228.2)
(0.2)
(171.4)
‐
‐
(444.6)
(90.0)
(521.1)
External revenue
6,691.5
6,839.9
4,317.5
2,457.6
‐
467.6
55.6
Result
Segment result before interest,
gains on sale and impairments
Interest
Segment result before gains on
sale and impairments
Gain on sale of controlled
entities and businesses
Impairments
Segment result
Income tax (expense) / benefit
Profit / (loss) for the period
342.9
237.7
84.6
212.3
(33.2)
23.8
(105.0)
(53.3)
289.6
‐
‐
289.6
(22.6)
215.1
115.2
(31.5)
298.8
(20.3)
64.3
‐
(31.5)
32.8
(38.6)
173.7
‐
‐
173.7
(13.8)
(47.0)
‐
(20.0)
(67.0)
(49.7)
(25.9)
(15.9)
(120.9)
‐
‐
‐
(15.0)
(25.9)
(135.9)
(Profit) / loss for the year attributable to non‐controlling interests
Profit / (loss) for the year attributable to members of the parent entity
Other
Share of profit / (loss) of
associates and joint venture
entities
Depreciation
Amortisation
Other material non‐cash
expenses
45.3
37.3
14.2
6.7
(47.0)
14.0
3.5
(275.0)
(21.9)
(470.5)
(92.4)
(190.5)
‐
‐
‐
(31.5)
(31.5)
‐
‐
‐
‐
(1.2)
‐
(4.0)
(2.5)
(20.0)
(17.2)
(15.0)
61.3
23,127.0
‐
(2,297.3)
20,829.7
763.1
(214.2)
548.9
115.2
(98.0)
566.1
(124.0)
442.1
8.0
450.1
74.0
(1,033.6)
(24.4)
(115.2)
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 as a result of a change in
accounting policy. Refer to note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
33. COMMITMENTS
Expenditure commitments in relation to operating leases contracted at the reporting date but not
recognised as liabilities, are payable as follows:
- within one year
-
-
later than one year but not later than five years
later than five years
Representing:
Cancellable operating leases
Plant and equipment
Property
Non‐cancellable operating leases
Plant and equipment
- within one year
-
-
later than one year but not later than five years
later than five years
Property
- within one year
-
-
later than one year but not later than five years
later than five years
Other
- within one year
-
-
later than one year but not later than five years
later than five years
149
149
Notes continued
for the year ended 31 December 2013
December 2013
$m
December 2012
$m
^(restated)
33. COMMITMENTS CONTINUED
Capital commitments
Capital expenditure contracted for at reporting date but not recognised as liabilities is as follows:
433.2
905.2
198.9
1,537.3
307.0
567.4
122.9
997.3
345.9
179.4
349.1
152.9
143.1
354.0
0.2
92.9
265.6
148.0
4.0
4.2
‐
65.9
133.2
‐
72.5
165.9
43.2
0.9
6.7
7.0
1,537.3
997.3
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect adjustments
later than five years
made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Operating leases
The Group leases plant and equipment used in contract mining and construction activities and property for the purposes of office
accommodation under operating leases. Operating leases generally provide the Group with a right of renewal. Under certain property
operating leases, contingent rentals may be payable for periodic rent reviews. The Group’s leasing arrangements impose no restrictions
on any of its financial arrangements.
1 Deferred cash consideration in relation to the acquisition of 39.9% of LWIN of $110.0 million has not been included above at 31
December 2013 as it has been recognised in current payables (refer to note 16: Trade and other payables).
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect adjustments
made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
150
4.5
15.5
‐
20.0
0.5
‐
‐
0.5
30.8
32.1
‐
62.9
December 2013
December 2012
$m
$m
^(restated)
196.7
11.0
‐
207.7
360.8
154.0
‐
514.8
‐
10.0
10.0
20.0
9.3
‐
‐
9.3
17.9
4.5
‐
22.4
Property, plant and equipment
Payable:
- within one year
later than one year but not later than five years
later than five years
Investments1
Payable:
- within one year
later than one year but not later than five years
later than five years
Joint venture commitments ‐ property, plant and equipment
Payable:
- within one year
later than one year but not later than five years
later than five years
Share of associates’ commitments ‐ property, plant and equipment
Payable:
- within one year
later than one year but not later than five years
-
-
-
-
-
-
-
-
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
33. COMMITMENTS CONTINUED
Capital commitments
Capital expenditure contracted for at reporting date but not recognised as liabilities is as follows:
Property, plant and equipment
Payable:
- within one year
-
-
later than one year but not later than five years
later than five years
Investments1
Payable:
- within one year
-
-
later than one year but not later than five years
later than five years
Joint venture commitments ‐ property, plant and equipment
Payable:
- within one year
-
-
later than one year but not later than five years
later than five years
Share of associates’ commitments ‐ property, plant and equipment
Payable:
- within one year
-
-
later than one year but not later than five years
later than five years
150
150
December 2013
$m
December 2012
$m
^(restated)
196.7
11.0
‐
207.7
360.8
154.0
‐
514.8
‐
10.0
10.0
20.0
9.3
‐
‐
9.3
17.9
4.5
‐
22.4
4.5
15.5
‐
20.0
0.5
‐
‐
0.5
30.8
32.1
‐
62.9
1 Deferred cash consideration in relation to the acquisition of 39.9% of LWIN of $110.0 million has not been included above at 31
December 2013 as it has been recognised in current payables (refer to note 16: Trade and other payables).
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect adjustments
made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
Notes continued
for the year ended 31 December 2013
151
151
152
34. CONTINGENT LIABILITIES
Bank guarantees, insurance bonds and letters of credit
Contingent liabilities under indemnities given on behalf of controlled entities in respect of:
Bank guarantees
Insurance, performance and payment bonds
Letters of credit
December 2013
$m
December 2012
$m
2,619.1
1,280.0
514.2
2,346.7
739.1
720.2
Letters of credit include those provided for the Group’s capital commitments totalling $34.1 million (31 December 2012: $234.1 million)
and those provided on behalf of HLG to the lender totalling $75.6 million (31 December 2012: $130.8 million). Guarantees of $308.4
million have also been provided on behalf of HLG to the lender (refer to note 25: Associates).
a) Credit risk
Other contingencies
i)
The Company is called upon to give, in the ordinary course of business, guarantees and indemnities in respect of the performance by
controlled entities, associates and related parties of their contractual and financial obligations. The value of these guarantees and
indemnities is indeterminable in amount.
ii) There exists in some members of the Group the normal design liability in relation to completed design and construction projects.
iii) Certain members of the Group have the normal contractor’s liability in relation to construction contracts. This liability may include
litigation by or against the Group and / or joint arrangements in which the Group has an interest. It is not possible to estimate the
financial effect of these claims should they be successful. The Directors are of the opinion that adequate allowance has been made
and that disclosure of any further information about the claims would be prejudicial to the interests of the Group.
iv) Controlled entities have entered into joint arrangements under which the controlled entity may be jointly and severally liable for the
liabilities of the joint arrangement.
v) Under the terms of the Class Order described in note 39: Leighton Holdings Limited and controlled entities, the Company has
entered into approved deeds of indemnity for the cross‐guarantee of liabilities with participating Australian subsidiary companies.
vi) On 13 February 2012, the Company announced to the Australian Securities Exchange that it had reported to the Australian Federal
Police (“AFP”) a possible breach of its Code of Ethics that, if substantiated, may contravene Australian laws. The possible breach
related to payments that may have been made by a subsidiary company Leighton Offshore Pte. Limited in connection with work to
expand offshore loading facilities for Iraq's crude oil exports. At this stage it is not known whether there has been any wrongful or
illegal conduct, or whether there will be any adverse financial consequences for the Company. The AFP investigation is ongoing and
accordingly the Company is not in a position to make any further comment.
vii) On 17 May 2013 and 7 October 2013, the Company announced to the Australian Stock Exchange that it had been made aware of
proposals to commence litigation by two separate parties in relation to the Company’s continuous disclosure obligations. The
proceedings relating to the 2011 profit downgrade were commenced on 30 October 2013. The proceedings relating to an alleged
failure to disclose the report to the AFP and related matters commenced on 4 October 2013. The Company denies both claims and is
defending both sets of proceedings.
35. CAPITAL RISK MANAGEMENT
Capital planning forms part of the business and strategic plans of the Group. Decisions relating to obtaining and investing capital are
made following consideration of the Group’s key financial objectives including total shareholder return and the maintenance of an
investment grade credit rating. Performance measures include Economic Profit (EP), Cash Flow Return on Investment (CFROI), return on
revenue, return on equity, earnings growth, liquidity and borrowing capacity. The Group has access to numerous sources of capital both
domestically and internationally, including cash balances, equity, bank debt, capital markets, insurance and lease facilities. The Group is
not subject to any externally imposed capital requirements.
36. FINANCIAL INSTRUMENTS
The Group operates across Australia Pacific and Asia, Middle East & Africa regions in the infrastructure, resources and property markets.
The activities of the Group comprise mainly construction, contract mining, services and property development. The activities of the
Group result in exposure to credit, liquidity and market risk (equity price, foreign currency risk and interest rate).
Credit risk represents the risk that a counterparty will not complete its obligations under a financial instrument resulting in a financial loss
to the Group. The Group has a credit policy in place and exposure to credit risk is monitored on an ongoing basis. The Group minimises
concentrations of credit risk by undertaking transactions with a large number of customers in various countries. Derivative
counterparties are limited to investment grade financial institutions. At the reporting date, other than loan receivables from Habtoor
Leighton Group (“HLG”) (refer to note 8: Trade and other receivables), there were no significant concentrations of credit risk. The
Group’s maximum exposure to credit risk is represented by the carrying amount of each financial asset, including derivative financial
instruments, in the statement of financial position. The Group’s maximum exposure to credit risk for receivables at the reporting date by
geographic region was: Australia Pacific $3,547.8 million (31 December 2012: $2,376.1 million^) and Asia, Middle East & Africa $2,306.3
million (31 December 2012: $2,060.3 million^).
The ageing of the Group’s receivables at the reporting date was: not past due: $2,485.1 million (31 December 2012: $1,761.6 million);
past due: $293.1 million (31 December 2012: $394.1 million). Past due is defined under AASB 7 Financial Instruments: Disclosures to
mean any amount outstanding for one or more days after the contractual due date. Past due receivables aged greater than 90 days: 3%
(31 December 2012: 3%).
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect adjustments
made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Provision for impairment of receivables
Balance at beginning of reporting period
Net provision (made) / used
Balance at reporting date
The impairment provision relates to specific loans and receivables identified as being impaired. The Group did not obtain financial or
non‐financial assets as collateral during the period as a result of default by a counterparty (31 December 2012: $nil).
12 months to
12 months to
December 2013
December 2012
$m
$m
(3.4)
(14.7)
(18.1)
(2.3)
(1.1)
(3.4)
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
152
152
35. CAPITAL RISK MANAGEMENT
Capital planning forms part of the business and strategic plans of the Group. Decisions relating to obtaining and investing capital are
made following consideration of the Group’s key financial objectives including total shareholder return and the maintenance of an
investment grade credit rating. Performance measures include Economic Profit (EP), Cash Flow Return on Investment (CFROI), return on
revenue, return on equity, earnings growth, liquidity and borrowing capacity. The Group has access to numerous sources of capital both
domestically and internationally, including cash balances, equity, bank debt, capital markets, insurance and lease facilities. The Group is
not subject to any externally imposed capital requirements.
36. FINANCIAL INSTRUMENTS
The Group operates across Australia Pacific and Asia, Middle East & Africa regions in the infrastructure, resources and property markets.
The activities of the Group comprise mainly construction, contract mining, services and property development. The activities of the
Group result in exposure to credit, liquidity and market risk (equity price, foreign currency risk and interest rate).
a) Credit risk
Credit risk represents the risk that a counterparty will not complete its obligations under a financial instrument resulting in a financial loss
to the Group. The Group has a credit policy in place and exposure to credit risk is monitored on an ongoing basis. The Group minimises
concentrations of credit risk by undertaking transactions with a large number of customers in various countries. Derivative
counterparties are limited to investment grade financial institutions. At the reporting date, other than loan receivables from Habtoor
Leighton Group (“HLG”) (refer to note 8: Trade and other receivables), there were no significant concentrations of credit risk. The
Group’s maximum exposure to credit risk is represented by the carrying amount of each financial asset, including derivative financial
instruments, in the statement of financial position. The Group’s maximum exposure to credit risk for receivables at the reporting date by
geographic region was: Australia Pacific $3,547.8 million (31 December 2012: $2,376.1 million^) and Asia, Middle East & Africa $2,306.3
million (31 December 2012: $2,060.3 million^).
The ageing of the Group’s receivables at the reporting date was: not past due: $2,485.1 million (31 December 2012: $1,761.6 million);
past due: $293.1 million (31 December 2012: $394.1 million). Past due is defined under AASB 7 Financial Instruments: Disclosures to
mean any amount outstanding for one or more days after the contractual due date. Past due receivables aged greater than 90 days: 3%
(31 December 2012: 3%).
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect adjustments
made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Provision for impairment of receivables
Balance at beginning of reporting period
Net provision (made) / used
Balance at reporting date
12 months to
December 2013
$m
12 months to
December 2012
$m
(3.4)
(14.7)
(18.1)
(2.3)
(1.1)
(3.4)
The impairment provision relates to specific loans and receivables identified as being impaired. The Group did not obtain financial or
non‐financial assets as collateral during the period as a result of default by a counterparty (31 December 2012: $nil).
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
36. FINANCIAL INSTRUMENTS CONTINUED
b)
Liquidity risk
153
153
Notes continued
for the year ended 31 December 2013
Liquidity risk is the risk of having insufficient funds to settle financial liabilities when they fall due. This includes having insufficient levels
of committed credit facilities. The Group’s objective is to maintain efficient use of cash and debt facilities in order to balance the cost of
borrowing and ensuring sufficient availability of credit facilities, to meet forecast capital requirements. The Group adopts a prudent
approach to cash management which ensures sufficient levels of cash and committed credit facilities are maintained to meet working
capital requirements. Liquidity is reviewed continually by the Group’s treasury departments through daily cash monitoring, review of
available credit facilities and forecasting and matching of cash flows.
At 31 December 2013 the Group had undrawn bank facilities of $1,231.0 million (31 December 2012: $987.5 million) including $nil (31
December 2012: $40.6 million) relating to facilities held for sale, and undrawn guarantee facilities of $767.8 million (31 December 2012:
$913.4 million).
Contractual maturities of financial assets and liabilities as at 31 December 2013:
December 2013
Non‐derivative financial liabilities
Interest bearing loans
Finance lease liabilities
Limited recourse loans
Carrying
amount
$m
Contractual
cash flows
$m
Less than
1 year
$m
1‐5 years
$m
More than
5 years
$m
1,538.9
(2,019.6)
504.3
187.0
(538.3)
(199.1)
(514.8)
(265.9)
(39.5)
(674.5)
(272.4)
(159.6)
(830.3)
‐
‐
Total interest bearing liabilities*
2,230.2
(2,757.0)
(820.2)
(1,106.5)
(830.3)
Total derivative financial liabilities
Trade and other payables
5,887.6
(5,887.6)
(5,544.2)
(343.4)
Derivative financial liabilities
Forward exchange contracts used for foreign
currency hedging:
Outflow
Other cash flow hedges:
Outflow
Total derivative financial liabilities
5.1
0.6
5.7
(83.3)
(70.5)
(12.8)
(100.0)
(183.3)
‐
(70.5)
(100.0)
(112.8)
Total trade and other payables
5,893.3
(6,070.9)
(5,614.7)
(456.2)
Derivative financial assets
Forward exchange contracts used for foreign
currency hedging:
Inflow
Total derivative financial assets
(10.9)
(10.9)
204.5
204.5
201.0
201.0
3.5
3.5
* Total interest bearing liabilities includes liabilities associated with assets held for sale. Refer to note 31: Held for Sale.
‐
‐
‐
‐
‐
‐
‐
154
‐
‐
‐
‐
‐
‐
‐
‐
36. FINANCIAL INSTRUMENTS CONTINUED
Contractual maturities of financial assets and liabilities as at 31 December 2012:
Carrying
amount
$m
Contractual
cash flows
$m
Less than
1 year
$m
1‐5 years
$m
More than
5 years
$m
1,650.8
914.6
231.6
(2,161.6)
(1,026.2)
(243.4)
(426.2)
(242.9)
(129.2)
(798.3)
(909.8)
(783.0)
(114.2)
(825.6)
(0.3)
Total interest bearing liabilities*
2,797.0
(3,431.2)
(1,807.0)
(825.9)
Trade and other payables
5,186.7
(5,186.7)
(4,994.7)
(192.0)
12.1
(389.4)
(312.5)
(76.9)
0.8
12.9
(0.7)
(390.1)
(0.5)
(313.0)
(0.2)
(77.1)
Total trade and other payables
5,199.6
(5,576.8)
(5,307.7)
(269.1)
December 2012^
Non‐derivative financial liabilities
Interest bearing loans
Finance lease liabilities
Limited recourse loans
Derivative financial liabilities
Forward exchange contracts used for foreign
currency hedging:
Outflow
Other cash flow hedges:
Outflow
Derivative financial assets
Forward exchange contracts used for foreign
currency hedging:
Inflow
Total derivative financial assets
(0.4)
(0.4)
74.6
74.6
65.5
65.5
9.1
9.1
* Total interest bearing liabilities includes liabilities associated with assets held for sale. Refer to note 31: Held for Sale
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect adjustments
made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements
Guarantees
Guarantees have not been included in the maturity analysis for financial liabilities above. Guarantees provided to HLG, with a carrying
value of $nil (31 December 2012: $nil), are disclosed in note 25: Associates.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
154
154
36. FINANCIAL INSTRUMENTS CONTINUED
Contractual maturities of financial assets and liabilities as at 31 December 2012:
December 2012^
Non‐derivative financial liabilities
Interest bearing loans
Finance lease liabilities
Limited recourse loans
Total interest bearing liabilities*
Carrying
amount
$m
Contractual
cash flows
$m
Less than
1 year
$m
1‐5 years
$m
More than
5 years
$m
1,650.8
914.6
231.6
(2,161.6)
(1,026.2)
(243.4)
2,797.0
(3,431.2)
(426.2)
(242.9)
(129.2)
(798.3)
(909.8)
(783.0)
(114.2)
(825.6)
(0.3)
‐
(1,807.0)
(825.9)
Trade and other payables
5,186.7
(5,186.7)
(4,994.7)
(192.0)
Derivative financial liabilities
Forward exchange contracts used for foreign
currency hedging:
Outflow
Other cash flow hedges:
Outflow
Total derivative financial liabilities
12.1
(389.4)
(312.5)
(76.9)
0.8
12.9
(0.7)
(390.1)
(0.5)
(313.0)
(0.2)
(77.1)
Total trade and other payables
5,199.6
(5,576.8)
(5,307.7)
(269.1)
Derivative financial assets
Forward exchange contracts used for foreign
currency hedging:
Inflow
Total derivative financial assets
(0.4)
(0.4)
74.6
74.6
65.5
65.5
9.1
9.1
‐
‐
‐
‐
‐
‐
‐
* Total interest bearing liabilities includes liabilities associated with assets held for sale. Refer to note 31: Held for Sale
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect adjustments
made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements
Guarantees
Guarantees have not been included in the maturity analysis for financial liabilities above. Guarantees provided to HLG, with a carrying
value of $nil (31 December 2012: $nil), are disclosed in note 25: Associates.
Leighton Holdings Limited Annual Report 2013
155
155
156
Notes continued
for the year ended 31 December 2013
36. FINANCIAL INSTRUMENTS CONTINUED
c)
Equity price risk
Notes continued
for the year ended 31 December 2013
36. FINANCIAL INSTRUMENTS CONTINUED
d) Foreign currency risk
Equity price risk is the risk that the fair value of either a listed or unlisted equity investment, derivative equity instrument, or a portfolio
of such financial instruments decreases in the future. The Group invests in equity investments through its participation in major public
private partnership infrastructure projects. Investments may also be made as part of its strategic plans to form alliances or to invest in
specialised but complementary businesses to access specialised skills, markets, or additional capacity. Equity investments are not made
for trading or speculative purposes.
Foreign currency risk is the risk that the value of a financial commitment, a recognised asset or liability will fluctuate due to changes in
foreign currency rates. The Group’s foreign currency risk arises primarily from net investments in foreign operations. The Group uses
non‐derivative financial instruments, such as borrowings in the foreign currencies, to hedge its investments in foreign operations.
Foreign currency gains and losses arising from translation of net investments in foreign operations are recognised in the foreign currency
translation reserve until realised.
Cash flow hedges
The Group also enters cash flow hedges relating to capital commitments for equity investments. If any loss recognised in the hedge
reserve is not expected to be recovered in future periods, the amount not expected to be recovered is recognised in profit and loss.
There were no losses recognised in the current year (31 December 2012: $63.0 million loss, $44.1 million loss after tax) (refer note 4:
Items included in profit / (loss) before tax).
Fair values
For the fair values of listed and unlisted investments, see section (f) of this note.
Sensitivity analysis of listed and unlisted investments
The price risk for the listed and unlisted securities is immaterial in terms of the possible impact on profit or loss or total equity.
Members of the Group are exposed to foreign currency risk on project receipts and expenditure on plant and equipment denominated in
currencies other than their functional currency. Where this foreign currency risk is considered to be significant, members of the Group
enter into forward exchange contracts to hedge their foreign currency risk. These hedges are classified as cash flow hedges and
measured at fair value.
Cash flow hedges
The Group’s cash flow hedges protect against foreign exchange rate fluctuations on highly probable forecast transactions using foreign
exchange forward contracts. As at reporting date the fair value of these outstanding designated derivatives recognised in equity is $5.2
million (31 December 2012: $12.3 million). It is expected that the current hedged forecast transactions will occur during the periods
outlined in section (b) above and will affect the statement of profit or loss in the same periods. There are no gains or losses recognised in
the statement of profit or loss during the period due to hedge ineffectiveness.
Exposure to foreign currency risk
The most significant foreign currencies the Group is exposed to are the United States dollar (US$), the U.A.E Dirham (AED) and Hong Kong
dollar (HKD), both of which are pegged to the US$. The applicable United States dollar exchange rates during or at the end of the
relevant reporting period, were as follows:
Equity
Statement of Profit or Loss
December 2013 December 2012
December 2013
December 2012
12 months to
12 months to
US$ United States dollar
0.90
1.04
0.96
1.04
The Group's exposure to foreign currency risk at balance date was: assets US$3,726.8 million (31 December 2012: US$4,154.1 million);
liabilities US$2,604.0 million (31 December 2012: US$2,404.1 million).
Sensitivity analysis
A movement in the United States dollar (US$) against the Australian dollar (AU$) at reporting date would have increased / (decreased)
equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain
constant. The analysis was performed on the same basis for the period ended 31 December 2012.
Equity
Statement of Profit or Loss
December 2013
December 2012
December 2013
December 2012
$m
$m
$m
$m
12 months to
12 months to
US$ depreciates by 5% against AU$ (AU$ appreciates)
US$ appreciates by 5% against AU$ (AU$ depreciates)
(63.8)
70.5
(57.1)
63.1
(1.5)
1.7
(6.6)
7.3
Leighton Holdings Limited Annual Report 2013
156
156
Notes continued
for the year ended 31 December 2013
36. FINANCIAL INSTRUMENTS CONTINUED
d) Foreign currency risk
Foreign currency risk is the risk that the value of a financial commitment, a recognised asset or liability will fluctuate due to changes in
foreign currency rates. The Group’s foreign currency risk arises primarily from net investments in foreign operations. The Group uses
non‐derivative financial instruments, such as borrowings in the foreign currencies, to hedge its investments in foreign operations.
Foreign currency gains and losses arising from translation of net investments in foreign operations are recognised in the foreign currency
translation reserve until realised.
Members of the Group are exposed to foreign currency risk on project receipts and expenditure on plant and equipment denominated in
currencies other than their functional currency. Where this foreign currency risk is considered to be significant, members of the Group
enter into forward exchange contracts to hedge their foreign currency risk. These hedges are classified as cash flow hedges and
measured at fair value.
Cash flow hedges
The Group’s cash flow hedges protect against foreign exchange rate fluctuations on highly probable forecast transactions using foreign
exchange forward contracts. As at reporting date the fair value of these outstanding designated derivatives recognised in equity is $5.2
million (31 December 2012: $12.3 million). It is expected that the current hedged forecast transactions will occur during the periods
outlined in section (b) above and will affect the statement of profit or loss in the same periods. There are no gains or losses recognised in
the statement of profit or loss during the period due to hedge ineffectiveness.
Exposure to foreign currency risk
The most significant foreign currencies the Group is exposed to are the United States dollar (US$), the U.A.E Dirham (AED) and Hong Kong
dollar (HKD), both of which are pegged to the US$. The applicable United States dollar exchange rates during or at the end of the
relevant reporting period, were as follows:
Equity
Statement of Profit or Loss
December 2013 December 2012
12 months to
December 2013
12 months to
December 2012
US$ United States dollar
0.90
1.04
0.96
1.04
The Group's exposure to foreign currency risk at balance date was: assets US$3,726.8 million (31 December 2012: US$4,154.1 million);
liabilities US$2,604.0 million (31 December 2012: US$2,404.1 million).
Sensitivity analysis
A movement in the United States dollar (US$) against the Australian dollar (AU$) at reporting date would have increased / (decreased)
equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain
constant. The analysis was performed on the same basis for the period ended 31 December 2012.
Equity
Statement of Profit or Loss
December 2013
$m
December 2012
$m
12 months to
December 2013
$m
12 months to
December 2012
$m
US$ depreciates by 5% against AU$ (AU$ appreciates)
US$ appreciates by 5% against AU$ (AU$ depreciates)
(63.8)
70.5
(57.1)
63.1
(1.5)
1.7
(6.6)
7.3
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
36. FINANCIAL INSTRUMENTS CONTINUED
e)
Interest rate risk
157
157
Notes continued
for the year ended 31 December 2013
36. FINANCIAL INSTRUMENTS CONTINUED
f) Net fair values of financial assets and liabilities
Interest rate risk is the risk that the value of a financial instrument or cash flow associated with the instrument will fluctuate due to
changes in the market interest rates. The Group uses derivative financial instruments to assist in managing its interest rate exposure.
Speculative trading is not undertaken. The Group’s interest rate risk arises from the interest receivable on ’Cash and cash equivalents’
and interest payable on the ‘Interest bearing loans’.
Fair value hierarchy
been identified as follows:
At reporting date it is estimated that an increase of one percentage point in floating interest rates would have increased the Group’s
profit after tax and retained earnings by $12.1 million (31 December 2012: increased by $7.8 million). A one percentage point decrease
in interest rates would have an equal and opposite effect.
Profile
At the reporting date the interest rate profile of the Group’s interest bearing financial instruments was:
The table below analyses other financial instruments carried at fair value, listed in order of valuation method. The different levels have
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
Level 3:
inputs for the asset or liability that are not based on observable market data.
Fixed rate instruments
Financial assets
Financial liabilities
Variable rate instruments
Financial assets
Financial liabilities*
December 2013
$m
December 2012
$m
^(restated)
‐
(1,521.6)
(1,521.6)
‐
(1,408.2)
(1,408.2)
1,720.7
2,007.7
(708.6)
(1,388.8)
1,012.1
618.9
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect adjustments
made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Equity and stapled securities available‐for‐sale
* Total interest bearing liabilities includes liabilities associated with assets held for sale. Refer to note 31: Held for Sale.
Equity and stapled securities available‐for‐sale
31 December 2013
Assets
-
Listed
- Unlisted
Derivatives
Total assets
Liabilities
Derivatives
Total liabilities
31 December 2012^
Assets
-
Listed
- Unlisted
Derivatives
Total assets
Liabilities
Derivatives
Total liabilities
158
1.6
91.1
10.9
5.7
5.7
Total
$m
1.6
95.4
0.4
97.4
12.9
12.9
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
91.1
91.1
103.6
Level 1
$m
Level 2
$m
Level 3
$m
1.6
1.6
‐
‐
‐
‐
‐
‐
‐
‐
1.6
1.6
‐
‐
10.9
10.9
5.7
5.7
‐
‐
0.4
0.4
12.9
12.9
‐
‐
‐
‐
‐
‐
‐
‐
95.4
95.4
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect adjustments
made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Leighton Holdings Limited Annual Report 2013
158
158
Notes continued
for the year ended 31 December 2013
36. FINANCIAL INSTRUMENTS CONTINUED
f) Net fair values of financial assets and liabilities
Fair value hierarchy
The table below analyses other financial instruments carried at fair value, listed in order of valuation method. The different levels have
been identified as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
inputs for the asset or liability that are not based on observable market data.
Level 3:
31 December 2013
Assets
Equity and stapled securities available‐for‐sale
-
Listed
- Unlisted
Derivatives
Total assets
Liabilities
Derivatives
Total liabilities
31 December 2012^
Assets
Equity and stapled securities available‐for‐sale
-
Listed
- Unlisted
Derivatives
Total assets
Liabilities
Derivatives
Total liabilities
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
1.6
‐
‐
1.6
‐
‐
‐
‐
10.9
10.9
5.7
5.7
‐
91.1
‐
91.1
‐
‐
Level 1
$m
Level 2
$m
Level 3
$m
1.6
‐
‐
1.6
‐
‐
‐
‐
0.4
0.4
12.9
12.9
‐
95.4
‐
95.4
‐
‐
1.6
91.1
10.9
103.6
5.7
5.7
Total
$m
1.6
95.4
0.4
97.4
12.9
12.9
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect adjustments
made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Leighton Holdings Limited Annual Report 2013
159
159
160
Notes continued
for the year ended 31 December 2013
Notes continued
for the year ended 31 December 2013
36. FINANCIAL INSTRUMENTS CONTINUED
During the period there were no transfers between Level 1, Level 2 and Level 3 fair value hierarchies. Level 3 instruments comprise
unlisted equity and stapled securities; the determination of the fair value of these securities is discussed below. The table below analyses
the changes in Level 3 instruments as follows:
36. FINANCIAL INSTRUMENTS CONTINUED
Valuation process
Unlisted equity and stapled securities available‐for‐sale
Balance at beginning of reporting period
Additions
Gains recognised in other comprehensive income
Impairment1
Capital return
Balance at reporting date
12 months to
December 2013
$m
12 months to
December 2012
$m^
95.4
0.5
13.7
(18.5)
‐
91.1
62.0
33.4
‐
‐
‐
95.4
Changing inputs to the Level 3 valuations to reasonably possible alternative assumptions would not change significantly amounts
recognised in profit or loss, total assets or total liabilities or total equity.
^ Following the adoption of AASB 11 Joint Arrangements by the Group, whilst comparative balances have required restatement throughout
the consolidated financial report as a result of a change in accounting policy, there were no restatements required in relation to net fair
values of financial assets and liabilities.
1 Impairments of investments in infrastructure and toll road companies of $18.5 million during the reporting period arose from a decline in
the recoverable amount of the investment due to Cross City Tunnel entering administration. This has been included in the Corporate
segment as disclosed in note 32: Segment information.
Valuation techniques
Listed and unlisted investments
The fair values of listed investments are determined on an active market valuation basis using observable market data such as current bid
prices. The fair values of unlisted investments are determined by the use of internal valuation techniques using discounted cash flows.
Where practical the valuations incorporate observable market data. Assumptions are generally required with regard to future expected
revenues and discount rates.
Listed and unlisted debt
Fair value has been determined based on either the listed price or the net present value of cash flows using current market rates of
interest. The carrying amounts of other financial assets and liabilities in the Group’s statement of financial position approximate fair
values. The fair value of interest bearing liabilities is:
Listed debt: Medium Term Notes fair value $287.4 million; carrying value $280.0 million (31 December 2012: fair value $295.7
million; carrying value $280.0 million); and 10‐Year‐Fixed‐Rate Guaranteed Notes fair value US$538.5 million, equivalent to $598.3
million; carrying value US$492.7 million, equivalent to $547.4 million (31 December 2012: fair value US$512.1 million; carrying value
US$491.7 million).
Unlisted debt: Guaranteed Senior Notes fair value $589.4 million; carrying value $576.0 million (31 December 2012: fair value:
$727.9 million; carrying value $604.4 million).
Cash flow hedges
The Group’s foreign currency forward contracts are not traded in active markets. The fair values of these contracts are estimated using a
valuation technique that maximises the use of observable market inputs, e.g. market exchange and interest rates and are included in
Level 2 of the fair value hierarchy.
period.
Valuation inputs
Unlisted investments
Unlisted debt
Cash flow hedges
g)
Interest Bearing Loans
Syndicated Loans
Guaranteed Senior Notes
Leighton Finance Limited (2008)
Senior Notes in three series:
The internal valuation process for unlisted investments, unlisted debt and cash flow hedges is managed by a team in the Group finance
department which performs the valuations required for financial reporting purposes. The valuation team reports to the Group’s Chief
Financial Officer (“CFO”). Discussions on valuation processes and outcomes are held between the valuation team and CFO as required.
The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting
The following table summarises the quantitative information about the significant unobservable inputs used in level 3 fair value
measurements. There were no significant inter‐relationships between unobservable inputs that materially affect fair values.
Financial assets/ financial liabilities
Significant unobservable
Range of inputs
Relationship of unobservable inputs to fair value
input(s)
Growth rates
Discount rates
Bond curves
Exchange rates
Interest rates
2.5% ‐ 3.0%
10% ‐ 15%
1% ‐ 4%
US$
1% ‐ 5%
The impact on inputs to a change in the
unobservable inputs would not change significantly
amounts recognised in profit or loss, total assets or
total liabilities or total equity
On 21 June 2013, Leighton Finance Limited, a wholly owned subsidiary of the Company, entered into a syndicated bank facility for $1.0
billion, maturing on 21 June 2016. Carrying amount at 31 December 2013: $nil. This facility replaces the previous syndicated facility of
$600.0 million which had a maturity date of 8 December 2013.
On 15 October 2008, Leighton Finance Limited, a wholly owned subsidiary of the Company, issued a total of US$280.0 million Guaranteed
Series A Notes: US$111.0 million Guaranteed Senior Notes at the rate of 6.91% which matured on 15 October 2013
Series B Notes: US$90.0 million Guaranteed Senior Notes at the rate of 7.19% maturing on 15 October 2015
Series C Notes: US$79.0 million Guaranteed Senior Notes at the rate of 7.66% maturing on 15 October 2018
Interest on the above notes is paid semi‐annually on the 15th day of April and October in each year. During the reporting period the
Series A Notes of US$111.0 million (equivalent to $123.3 million), were repaid. Carrying amount at 31 December 2013: US$169.0 million
(31 December 2012: US$279.5 million) equivalent to $187.8 million (31 December 2012: $268.8 million), of which US$nil is due for
repayment within twelve months from the reporting date.
Leighton Holdings Limited Annual Report 2013
160
160
Notes continued
for the year ended 31 December 2013
36. FINANCIAL INSTRUMENTS CONTINUED
Valuation process
The internal valuation process for unlisted investments, unlisted debt and cash flow hedges is managed by a team in the Group finance
department which performs the valuations required for financial reporting purposes. The valuation team reports to the Group’s Chief
Financial Officer (“CFO”). Discussions on valuation processes and outcomes are held between the valuation team and CFO as required.
The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting
period.
Valuation inputs
The following table summarises the quantitative information about the significant unobservable inputs used in level 3 fair value
measurements. There were no significant inter‐relationships between unobservable inputs that materially affect fair values.
Financial assets/ financial liabilities
Significant unobservable
input(s)
Range of inputs
Relationship of unobservable inputs to fair value
Growth rates
Discount rates
Bond curves
Exchange rates
Interest rates
2.5% ‐ 3.0%
10% ‐ 15%
1% ‐ 4%
US$
1% ‐ 5%
The impact on inputs to a change in the
unobservable inputs would not change significantly
amounts recognised in profit or loss, total assets or
total liabilities or total equity
Unlisted investments
Unlisted debt
Cash flow hedges
g)
Interest Bearing Loans
Syndicated Loans
On 21 June 2013, Leighton Finance Limited, a wholly owned subsidiary of the Company, entered into a syndicated bank facility for $1.0
billion, maturing on 21 June 2016. Carrying amount at 31 December 2013: $nil. This facility replaces the previous syndicated facility of
$600.0 million which had a maturity date of 8 December 2013.
Guaranteed Senior Notes
Leighton Finance Limited (2008)
On 15 October 2008, Leighton Finance Limited, a wholly owned subsidiary of the Company, issued a total of US$280.0 million Guaranteed
Senior Notes in three series:
Series A Notes: US$111.0 million Guaranteed Senior Notes at the rate of 6.91% which matured on 15 October 2013
Series B Notes: US$90.0 million Guaranteed Senior Notes at the rate of 7.19% maturing on 15 October 2015
Series C Notes: US$79.0 million Guaranteed Senior Notes at the rate of 7.66% maturing on 15 October 2018
Interest on the above notes is paid semi‐annually on the 15th day of April and October in each year. During the reporting period the
Series A Notes of US$111.0 million (equivalent to $123.3 million), were repaid. Carrying amount at 31 December 2013: US$169.0 million
(31 December 2012: US$279.5 million) equivalent to $187.8 million (31 December 2012: $268.8 million), of which US$nil is due for
repayment within twelve months from the reporting date.
Leighton Holdings Limited Annual Report 2013
161
161
162
Notes continued
for the year ended 31 December 2013
36. FINANCIAL INSTRUMENTS CONTINUED
Guaranteed Senior Notes continued
Leighton Finance (USA) Pty Limited (2010)
On 21 July 2010, Leighton Finance (USA) Pty Limited, a wholly owned subsidiary of the Company, issued a total of US$350.0 million
Guaranteed Senior Notes in three series:
Series A Notes: US$90.0 million Guaranteed Senior Notes at the rate of 4.51% maturing on 21 July 2015
Series B Notes: US$145.0 million Guaranteed Senior Notes at the rate of 5.22% maturing on 21 July 2017
Series C Notes: US$115.0 million Guaranteed Senior Notes at the rate of 5.78% maturing on 21 July 2020
Interest on the above notes is paid semi‐annually on the 21st day of January and July in each year. Carrying amount at 31 December 2013:
US$349.4 million (31 December 2012: US$349.0 million) equivalent to $388.2 million (31 December 2012: $335.6 million).
h) Finance Lease Liabilities
of the reporting date.
i)
Limited Recourse Loans
Leighton Finance (USA) Pty Limited (2012)
On 13 November 2012, Leighton Finance (USA) Pty Limited, a wholly owned subsidiary of the Company, issued US$500.0 million of 10‐
Year Fixed‐Rate Guaranteed Senior Notes.
j) Assets Pledged as Security
The notes bear interest from 13 November 2012 at the rate of 5.95% per annum and mature on 13 November 2022. Interest on the notes
will be paid semi‐annually on the 13th day of May and November in each year. Carrying amount at 31 December 2013: US$492.7 million
(31 December 2012: US$491.7 million) equivalent to $547.4 million (31 December 2012: $472.8 million).
Medium Term Notes
Leighton Finance Limited, a wholly owned subsidiary of the Company, issued a total of $280.0 million Medium Term Notes on the
following dates:
28 July 2009: $230.0 million
12 August 2009: $50.0 million
Assets pledged as security
Property development ‐ mortgaged
Other assets ‐ fixed and floating charge
Total pledged assets
The notes bear interest at the rate of 9.5% paid semi‐annually on the 28th day of January and July in each year, and mature on 28 July
2014.
Loans.
Loans relating to development properties are secured by mortgages over the consolidated entity’s development property inventories. At
the reporting date, loans relating to development properties are disclosed above in note 36(i): Financial instruments ‐ Limited Recourse
Bilateral Loans
On 10 September 2012, Leighton Finance Limited, a wholly owned subsidiary of the Company, entered into a bilateral facility for $75.0
million, maturing on 10 September 2015. During the reporting period $75.0 million was repaid. Carrying amount at 31 December 2013:
$nil (31 December 2012: $75.0 million).
On 25 September 2012, Leighton Finance Limited, a wholly owned subsidiary of the Company, entered into a bilateral facility for $100.0
million, maturing on 25 September 2013. During the reporting period $100.0 million was repaid. Carrying amount at 31 December 2013:
$nil (31 December 2012: $100.0 million).
On 27 September 2012, Leighton Finance Limited, a wholly owned subsidiary of the Company, entered into a bilateral facility for $150.0
million, comprising two $75.0 million tranches each maturing on 27 April 2013 and 27 September 2013 respectively. In the prior period to
31 December 2012, $75.0 million was repaid, with an additional $75.0 million repaid during the current reporting period. Carrying
amount at 31 December 2013: $nil (31 December 2012: $75.0 million).
Notes continued
for the year ended 31 December 2013
36. FINANCIAL INSTRUMENTS CONTINUED
Other Unsecured Loans
Other unsecured loans outstanding as at 31 December 2013: $135.5 million (31 December 2012: $43.7 million). Other unsecured loans
expected to be settled within twelve months after reporting date: $135.5 million (31 December 2012: $3.1 million).
The Group has leased mining plant and equipment in Indonesia, Mongolia and Australia under finance leases that expire within five years
The Group has limited recourse property development loans secured against certain property development assets of the Group. Carrying
amount as at 31 December 2013: $187.0 million (31 December 2012: $195.1 million).
The total carrying value of financial assets pledged as security at the reporting date is as follows:
December 2013
December 2012
$m
$m^
520.3
165.1
685.4
564.5
179.3
743.8
A fixed and floating charge over certain other assets of Devine Limited (“Devine”), part of the Commercial & Residential segment, are
held by Devine’s principal bankers relating to their commercial and residential property lending.
^ Following the adoption of AASB 11 Joint Arrangements by the Group, whilst comparative balances have required restatement throughout
the consolidated financial report as a result of a change in accounting policy, there were no restatements required in relation to assets
pledged as security.
Leighton Holdings Limited Annual Report 2013
162
162
Notes continued
for the year ended 31 December 2013
36. FINANCIAL INSTRUMENTS CONTINUED
Other Unsecured Loans
Other unsecured loans outstanding as at 31 December 2013: $135.5 million (31 December 2012: $43.7 million). Other unsecured loans
expected to be settled within twelve months after reporting date: $135.5 million (31 December 2012: $3.1 million).
h) Finance Lease Liabilities
The Group has leased mining plant and equipment in Indonesia, Mongolia and Australia under finance leases that expire within five years
of the reporting date.
i)
Limited Recourse Loans
The Group has limited recourse property development loans secured against certain property development assets of the Group. Carrying
amount as at 31 December 2013: $187.0 million (31 December 2012: $195.1 million).
j) Assets Pledged as Security
The total carrying value of financial assets pledged as security at the reporting date is as follows:
Assets pledged as security
Property development ‐ mortgaged
Other assets ‐ fixed and floating charge
Total pledged assets
December 2013
$m
December 2012
$m^
520.3
165.1
685.4
564.5
179.3
743.8
Loans relating to development properties are secured by mortgages over the consolidated entity’s development property inventories. At
the reporting date, loans relating to development properties are disclosed above in note 36(i): Financial instruments ‐ Limited Recourse
Loans.
A fixed and floating charge over certain other assets of Devine Limited (“Devine”), part of the Commercial & Residential segment, are
held by Devine’s principal bankers relating to their commercial and residential property lending.
^ Following the adoption of AASB 11 Joint Arrangements by the Group, whilst comparative balances have required restatement throughout
the consolidated financial report as a result of a change in accounting policy, there were no restatements required in relation to assets
pledged as security.
Leighton Holdings Limited Annual Report 2013
163
163
164
Notes continued
for the year ended 31 December 2013
36. FINANCIAL INSTRUMENTS CONTINUED
k) Offsetting of financial assets and liabilities
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to
offset the recognised amounts and there is an intention to settle on a net basis or realise the assets and settle the liability simultaneously.
The gross and net positions of financial assets and liabilities that have been offset in the balance sheet are disclosed in the table below.
Effects of offsetting on the balance sheet
Related amounts not offset
Gross amounts of
bank accounts with a
debit balance
(financial asset)
$m
Gross amounts of
bank accounts with
a credit balance
(financial liability)
$m
Net cash amount
$m
Amounts subject
to master netting
arrangements
$m
Net amount
$m
3,103.2
(2,346.4)
756.8
3,252.7
(1,747.1)
1,505.6
‐
‐
‐
‐
December 2013
Cash1
December 2012
Cash1
1 The Group has transactional banking facilities that notionally pool grouped bank accounts with credit and debit balances. The legal right
of offset means that the actual cash balance is the sum of all credit and debit balances of grouped bank accounts in the notional pool.
Notes continued
for the year ended 31 December 2013
37. EMPLOYEE BENEFITS
Share based payments
a)
Share plans
Leighton Employee Share Plan
Shareholder approval was obtained at the Annual General Meeting on 5 November 1998 to establish the Leighton Employee Share Plan
(“LESP”). Subject to certain eligibility criteria, all permanent employees of the Group are entitled to participate in the LESP. The rules of
the LESP permit the Company to make an annual offer of shares in the Company to eligible employees should the Group achieve a return
on ordinary shareholder funds greater than the median return on ordinary shareholders funds for companies included in the ASX 100
industrials index. The maximum value of shares which may be offered to any employee in any one financial year is $1,000. The most
recent award was made on 21 February 2011. During the reporting period, the Company purchased nil shares on‐market (31 December
2012: nil). No new shares were issued under the LESP during the reporting period (31 December 2012: nil). Expense recognised during
the reporting period: $nil (31 December 2012: $nil).
Leighton Management Share Plan
Shareholder approval was obtained at the Annual General Meeting on 9 November 2006 to establish the Leighton Management Share
Plan (“LMSP”). The rules of the LMSP allow the Company to grant selected executives shares which the Company acquires on market
should the Group achieve an increase in profit during the preceding reporting period in excess of specified thresholds. Recipients under
the LMSP generally forfeit their shares if they do not remain in employment with the Group for at least three years from date of grant.
The most recent award was made on 4 April 2008. During the reporting period the Company purchased nil shares on market (31
December 2012: $nil). Expense recognised during the reporting period: $nil (31 December 2012: $nil).
b) Option plans
Leighton Senior Executive Option Plan
Shareholder approval was obtained at the Annual General Meeting on 9 November 2006 to establish the Leighton Senior Executive
Option Plan (“LSEOP”). The rules of the LSEOP allow the Company to offer selected executives options over unissued ordinary shares in
the Company. All options issued expire on the earlier of their expiry date or termination of the individual’s employment except in certain
special circumstances. Not more than 50% of the options may be exercised before the fourth anniversary of the date of grant. 100% of
options must be exercised before the fifth anniversary of the date of grant. There were no options granted under the LSEOP during the
reporting period (31 December 2012: nil).
In addition to a continuing employment service condition, the ability to exercise options is conditional on the Group achieving Total
Shareholder Return (“TSR”) (i.e. growth in share price plus dividends reinvested) or Earnings Per Share (“EPS”) (i.e. as defined in AASB
133 Earnings Per Share) performance hurdles, as follows:
50% of each grant of options will be subject to a TSR performance hurdle (“parcel A”). The TSR hurdle requires total shareholder
return of the Company compared to the ASX 100 over the performance period (from grant date to test date) to be at least at the
50th percentile before any parcel A options are exercisable (50% exercisable at threshold) then pro rata to the 75th percentile and
then at the 75th percentile or greater all parcel A options are exercisable; and
50% of each grant of options will be subject to an EPS hurdle (“parcel B”). Annual compound earnings per share growth over the
performance period must be at least 8% per annum before any parcel B options are exercisable (20% exercisable at threshold) then
pro rata to the 75th percentile and then at 12% per annum or greater all parcel B options are exercisable.
Amount recognised during the reporting period: Expense $2.4 million (31 December 2012: Gain $4.5 million).
Leighton Holdings Limited Annual Report 2013
164
164
Notes continued
for the year ended 31 December 2013
37. EMPLOYEE BENEFITS
Share based payments
a)
Share plans
Leighton Employee Share Plan
Shareholder approval was obtained at the Annual General Meeting on 5 November 1998 to establish the Leighton Employee Share Plan
(“LESP”). Subject to certain eligibility criteria, all permanent employees of the Group are entitled to participate in the LESP. The rules of
the LESP permit the Company to make an annual offer of shares in the Company to eligible employees should the Group achieve a return
on ordinary shareholder funds greater than the median return on ordinary shareholders funds for companies included in the ASX 100
industrials index. The maximum value of shares which may be offered to any employee in any one financial year is $1,000. The most
recent award was made on 21 February 2011. During the reporting period, the Company purchased nil shares on‐market (31 December
2012: nil). No new shares were issued under the LESP during the reporting period (31 December 2012: nil). Expense recognised during
the reporting period: $nil (31 December 2012: $nil).
Leighton Management Share Plan
Shareholder approval was obtained at the Annual General Meeting on 9 November 2006 to establish the Leighton Management Share
Plan (“LMSP”). The rules of the LMSP allow the Company to grant selected executives shares which the Company acquires on market
should the Group achieve an increase in profit during the preceding reporting period in excess of specified thresholds. Recipients under
the LMSP generally forfeit their shares if they do not remain in employment with the Group for at least three years from date of grant.
The most recent award was made on 4 April 2008. During the reporting period the Company purchased nil shares on market (31
December 2012: $nil). Expense recognised during the reporting period: $nil (31 December 2012: $nil).
b) Option plans
Leighton Senior Executive Option Plan
Shareholder approval was obtained at the Annual General Meeting on 9 November 2006 to establish the Leighton Senior Executive
Option Plan (“LSEOP”). The rules of the LSEOP allow the Company to offer selected executives options over unissued ordinary shares in
the Company. All options issued expire on the earlier of their expiry date or termination of the individual’s employment except in certain
special circumstances. Not more than 50% of the options may be exercised before the fourth anniversary of the date of grant. 100% of
options must be exercised before the fifth anniversary of the date of grant. There were no options granted under the LSEOP during the
reporting period (31 December 2012: nil).
In addition to a continuing employment service condition, the ability to exercise options is conditional on the Group achieving Total
Shareholder Return (“TSR”) (i.e. growth in share price plus dividends reinvested) or Earnings Per Share (“EPS”) (i.e. as defined in AASB
133 Earnings Per Share) performance hurdles, as follows:
50% of each grant of options will be subject to a TSR performance hurdle (“parcel A”). The TSR hurdle requires total shareholder
return of the Company compared to the ASX 100 over the performance period (from grant date to test date) to be at least at the
50th percentile before any parcel A options are exercisable (50% exercisable at threshold) then pro rata to the 75th percentile and
then at the 75th percentile or greater all parcel A options are exercisable; and
50% of each grant of options will be subject to an EPS hurdle (“parcel B”). Annual compound earnings per share growth over the
performance period must be at least 8% per annum before any parcel B options are exercisable (20% exercisable at threshold) then
pro rata to the 75th percentile and then at 12% per annum or greater all parcel B options are exercisable.
Amount recognised during the reporting period: Expense $2.4 million (31 December 2012: Gain $4.5 million).
Leighton Holdings Limited Annual Report 2013
165
165
166
Notes continued
for the year ended 31 December 2013
37. EMPLOYEE BENEFITS CONTINUED
b) Option plans continued
Date of grant
Date of expiry
Exercise price1
Original grant
Unexercised options
Unexercised options at 31 December 2011
- Granted
-
-
Exercised2
Lapsed
Unexercised options at 31 December 2012
- Granted
-
-
Exercised3
Lapsed4
Unexercised options at 31 December 2013
Exercisable options
- At 31 December 2012
- At 31 December 2013
Leighton Senior Executive Option Plan
2008
2009
25 Jan 2008
4 May 2009
25 Jan 2013
4 May 2014
$44.91
$18.87
1,461,000
4,833,500
666,351
4,031,000
‐
‐
‐
‐
(7,507)
(77,500)
658,844
3,953,500
‐
‐
(658,844)
‐
(71,000)
(57,500)
‐
3,825,000
111,601
1,964,250
‐
1,868,250
1 The exercise prices for the options were amended as at 1 July 2011 as per the ASX Listing Rule formula and notified to the ASX on 24
June 2011. This table represents the exercise price as at 31 December 2013.
2 The weighted average share price during the reporting period to 31 December 2012 was $18.62.
3 The weighted average share price during the reporting period to 31 December 2013 was $17.98.
4 All 2008 options granted on 25 January 2008 lapsed on 25 January 2013, being the fifth anniversary of the date of grant.
c) Rights plans
Long‐Term Incentive Plan – 2011 Award to Peter Gregg
Shareholder approval was obtained at the Annual General Meeting on 11 November 2011 for the granting of share rights under the 2011
Long‐Term Incentive Plan (“LTI”) to P Gregg. The share rights were granted for no cost and entitle the participant to receive one fully paid
ordinary share in the Company per right, subject to the terms and conditions determined by the Remuneration and Nominations
Committee, including vesting conditions linked to service and performance over the four year performance period. All share rights issued
expire on the earlier of their expiry date or termination of the individual’s employment except in certain special circumstances.
In addition to a continuing employment service condition, the vesting is conditional on the Group achieving Total Shareholder Return
(“TSR”) (i.e. growth in share price plus dividends reinvested) or Earnings Per Share (“EPS”) performance hurdles, as follows:
50% of each grant of share rights are subject to a TSR performance hurdle (“parcel A”). The TSR hurdle requires the Company’s TSR
percentile ranking against the TSR performance of the companies comprising the ASX 100 (excluding financial organisations and real
estate investment trusts) over the performance period (from grant date to test date) to be at least at the 50th percentile before any
parcel A share rights vest (50% vest at threshold) then pro rata to the 75th percentile and then at the 75th percentile or greater all
parcel A share rights vest; and
50% of each grant of share rights are subject to an EPS hurdle (“parcel B”). Annual compound earnings per share growth over the
performance period must be at least 8% per annum before any parcel B share rights vest (20% vest at threshold) then pro rata to
12% per annum and then at 12% per annum all parcel B share rights vest.
There were no further share rights granted during the reporting period to 31 December 2013.
Long‐Term Incentive Plan – 2011 Award to P Gregg
Notes continued
for the year ended 31 December 2013
37. EMPLOYEE BENEFITS CONTINUED
c) Rights plans continued
Grant fair value for TSR performance hurdle
Grant fair value for EPS hurdle (“parcel B”)
Date of grant
Date of expiry1
(“parcel A”)
Original grant
Unvested rights
- Granted
- Vested2
- Granted
- Vested3
Unvested rights at 31 December 2011
Unvested rights at 31 December 2012
Unvested rights at 31 December 20134
1 Jan 2011
31 Dec 2014
$19.01
$26.61
38,466
38,466
38,466
‐
‐
‐
‐
38,466
1 Each LTI performance hurdle is tested over a three year performance period, which runs from 1 January. Performance hurdles are to be
tested in February following the announcement of full year results for the previous financial year and then re‐tested at six month
intervals.
2 The weighted average share price during the reporting period to 31 December 2012 was $18.62.
3 The weighted average share price during the reporting period to 31 December 2013 was $17.98.
4 The performance hurdles were not met at the first test date on 10 February 2014 and as a result 25% of the award lapsed immediately.
The remainder will be carried forward to the next test date.
Leighton Holdings Limited Annual Report 2013
166
166
Notes continued
for the year ended 31 December 2013
37. EMPLOYEE BENEFITS CONTINUED
c) Rights plans continued
In addition to a continuing employment service condition, the vesting is conditional on the Group achieving Total Shareholder Return
(“TSR”) (i.e. growth in share price plus dividends reinvested) or Earnings Per Share (“EPS”) performance hurdles, as follows:
50% of each grant of share rights are subject to a TSR performance hurdle (“parcel A”). The TSR hurdle requires the Company’s TSR
percentile ranking against the TSR performance of the companies comprising the ASX 100 (excluding financial organisations and real
estate investment trusts) over the performance period (from grant date to test date) to be at least at the 50th percentile before any
parcel A share rights vest (50% vest at threshold) then pro rata to the 75th percentile and then at the 75th percentile or greater all
parcel A share rights vest; and
50% of each grant of share rights are subject to an EPS hurdle (“parcel B”). Annual compound earnings per share growth over the
performance period must be at least 8% per annum before any parcel B share rights vest (20% vest at threshold) then pro rata to
12% per annum and then at 12% per annum all parcel B share rights vest.
There were no further share rights granted during the reporting period to 31 December 2013.
Long‐Term Incentive Plan – 2011 Award to P Gregg
Date of grant
Date of expiry1
Grant fair value for TSR performance hurdle
(“parcel A”)
Grant fair value for EPS hurdle (“parcel B”)
Original grant
Unvested rights
Unvested rights at 31 December 2011
- Granted
- Vested2
Unvested rights at 31 December 2012
- Granted
- Vested3
Unvested rights at 31 December 20134
1 Jan 2011
31 Dec 2014
$19.01
$26.61
38,466
38,466
‐
‐
38,466
‐
‐
38,466
1 Each LTI performance hurdle is tested over a three year performance period, which runs from 1 January. Performance hurdles are to be
tested in February following the announcement of full year results for the previous financial year and then re‐tested at six month
intervals.
2 The weighted average share price during the reporting period to 31 December 2012 was $18.62.
3 The weighted average share price during the reporting period to 31 December 2013 was $17.98.
4 The performance hurdles were not met at the first test date on 10 February 2014 and as a result 25% of the award lapsed immediately.
The remainder will be carried forward to the next test date.
Leighton Holdings Limited Annual Report 2013
167
167
Notes continued
for the year ended 31 December 2013
37. EMPLOYEE BENEFITS CONTINUED
c) Rights plans continued
Equity Incentive Plans – 2012 and 2013 Awards
Shareholder approval was obtained at the Annual General Meeting on 22 May 2012 for a new Equity Incentive Plan. The Equity Incentive
Plan provides the legal framework for the awards of share rights made in 2012 and 2013 under the Long‐Term Incentive Plan, STI Deferral
Plan and One‐off Awards described below.
Long‐Term Incentive Plan – 2012 Awards
The Long‐Term Incentive Plan – 2012 Awards performance share rights were granted for no cost and entitle the participant to receive
one fully paid ordinary share in the Company per right, subject to the terms and conditions determined by the Remuneration and
Nominations Committee, including vesting conditions linked to service and performance over the three year performance period. All
share rights issued expire on the earlier of their expiry date or termination of the individual’s employment except in certain special
circumstances.
In addition to a continuing employment service condition, the vesting is conditional on the Group achieving Total Shareholder Return
(“TSR”) (i.e. growth in share price plus dividends reinvested) or Earnings Per Share (“EPS”) performance hurdles, as follows:
50% of each grant of share rights will be subject to a TSR performance hurdle (“parcel A”). The TSR hurdle requires the Company’s
TSR percentile ranking against the TSR performance of the companies comprising the ASX 100 (as at 1 January 2012) over the
performance period (from grant date to test date) to be at least at the 51st percentile before any parcel A share rights vest (50% vest
at threshold) then pro rata to the 75th percentile and then at the 75th percentile or greater all parcel A share rights vest; and
50% of each grant of share rights will be subject to an EPS hurdle (“parcel B”). Annual compound earnings per share growth over the
performance period must be at least 8% per annum before any parcel B share rights vest (50% vest at threshold) then pro rata to
13% per annum and then at 13% per annum all parcel B share rights vest.
Long‐Term Incentive Plan – 2012 Additional Award
Under the terms of his agreement, additional awards of performance share rights were made to C Laslett. These awards were made
under the same vesting and performance conditions as the 2012 Long‐Term Incentive Plan, and measured over three, four and five year
performance periods.
Amount recognised during the reporting period: Expense $2.3 million (31 December 2012: Expense $2.3 million).
Date of grant
Date of expiry1
Grant fair value for TSR performance hurdle (“parcel A”)
Grant fair value for EPS hurdle (“parcel B”)
Original grant
Unvested rights at 31 December 2011
- Granted
- Vested2
Unvested rights at 31 December 2012
- Granted3
- Vested4
-
Lapsed
Unvested rights at 31 December 2013
2012 LTI and C Laslett
additional award
C Laslett –additional
award
C Laslett –additional
award
1 Jan 2012
Feb 2015
1 Jan 2012
Feb 2016
1 Jan 2012
Feb 2017
$9.34
$15.84
565,092
‐
565,092
‐
565,092
1,662
‐
(22,944)
543,810
$9.22
$14.93
21,768
‐
21,768
‐
21,768
‐
‐
‐
$9.02
$14.07
21,768
‐
21,768
‐
21,768
‐
‐
‐
21,768
21,768
Leighton Holdings Limited Annual Report 2013
168
168
Notes continued
for the year ended 31 December 2013
37. EMPLOYEE BENEFITS CONTINUED
c) Rights plans continued
1 Each 2012 LTI performance hurdle is tested over a three year performance period, which runs from 1 January. Performance hurdles are to
be tested in February following the announcement of full year results for the previous financial year. C Laslett’s additional awards are
measured over a four and five year performance period respectively.
2 The weighted average share price during the reporting period to 31 December 2012 was $18.62.
3 Represents an adjustment to the number of rights issued in the prior reporting period.
4 The weighted average share price during the reporting period to 31 December 2013 was $17.98.
Long‐Term Incentive Plan – 2013 Awards
The Long‐Term Incentive Plan – 2013 Awards performance share rights were granted for no cost and entitle the participant to receive
one fully paid ordinary share in the Company per right, subject to the terms and conditions determined by the Remuneration and
Nominations Committee, including vesting conditions linked to service and performance over the three year performance period. All
share rights issued expire on the earlier of their expiry date or termination of the individual’s employment except in certain special
circumstances.
In addition to a continuing employment service condition, the vesting is conditional on the Group achieving Total Shareholder Return
(“TSR”) (i.e. growth in share price plus dividends reinvested) or Earnings Per Share (“EPS”) performance hurdles, as follows:
50% of each grant of share rights will be subject to a TSR performance hurdle (“parcel A”). The TSR hurdle requires the Company’s
TSR percentile ranking against the TSR performance of the companies comprising the ASX 100 (as at 1 January 2013) over the
performance period (from grant date to test date) to be at least at the 51st percentile before any parcel A share rights vest (50% vest
at threshold) then pro rata to the 75th percentile and then at the 75th percentile or greater all parcel A share rights vest; and
50% of each grant of share rights will be subject to an EPS hurdle (“parcel B”). Annual compound earnings per share growth over the
performance period must be at least 10% per annum before any parcel B share rights vest (50% vest at threshold) then pro rata to
14% per annum and then at 14% per annum all parcel B share rights vest.
Amount recognised during the reporting period: Expense $2.8 million (31 December 2012: Expense $nil).
Date of grant
Date of expiry1
Grant fair value for TSR performance hurdle (“parcel A”)
Grant fair value for EPS hurdle (“parcel B”)
Original grant
Unvested rights at 31 December 2012
- Granted
Lapsed
-
- Vested2
Unvested rights at 31 December 2013
2013 LTI award
1 Jan 2013
Feb 2016
$9.41
$14.87
705,426
‐
705,426
(18,010)
‐
687,416
1 Each 2013 LTI performance hurdle is tested over a three year performance period, which runs from 1 January. Performance hurdles are to
be tested in February following the announcement of full year results for the previous financial year.
2 The weighted average share price during the reporting period to 31 December 2013 was $17.98.
Leighton Holdings Limited Annual Report 2013
169
169
170
The total value of deferred share rights to be granted to eligible executives for the 2013 financial year will be determined in February
2014. Amount recognised during the reporting period: Expense $3.5 million (31 December 2012: Expense $2.6 million).
Notes continued
for the year ended 31 December 2013
37. EMPLOYEE BENEFITS CONTINUED
Date of grant
Date of expiry
Grant fair value
Original grant
- Granted
- Vested1
-
Lapsed
Unvested rights at 31 December 2012
Unvested rights at 31 December 2013
1 The weighted average share price during the reporting period to 31 December 2013 was $17.98.
2012 STI Deferral award
1 January 2013
31 December 2014
$23.32
193,907
193,907
‐
‐
(2,210)
191,697
Notes continued
for the year ended 31 December 2013
37. EMPLOYEE BENEFITS CONTINUED
c) Rights plans continued
One‐Off Awards
One‐off awards of Deferred Share Rights were granted under the Equity Incentive Plan for no cost and entitle the participant to receive
one fully paid ordinary share in the Company per right. In 2012 and 2013, one‐off awards were granted to employees:
to replace existing cash‐based service and retention arrangements where payment was due to vest over the longer‐term; and
as one‐off awards to new and existing employees for recruitment and retention purposes.
All share rights issued expire on the earlier of their expiry date or termination of the individual’s employment except in certain special
circumstances. No performance conditions apply to these awards.
Amount recognised during the reporting period: Expense $5.8 million (31 December 2012: Expense $3.4 million).
Date of grant
Date of expiry
Grant fair value
Original grant
Unvested rights at 31 December 2011
- Granted
- Vested1
Unvested rights at 31 December 2012
- Granted2
- Vested3
-
Lapsed
Unvested rights at 31 December 2013
One‐off Awards – 2012 Awards
One‐off Awards – 2013 Awards
1 Jan 2012 ‐ 31 Dec 2012
3 May 2013
5 Sept 2012 ‐ 31 Dec 2017
31 Dec 14 ‐ 1 Jan 17
$16.20 ‐$25.66
811,018
‐
811,018
(1,169)
809,849
9,924
(138,064)
(71,865)
609,844
$18.06
22,034
‐
‐
‐
‐
22,034
‐
‐
22,034
1 The weighted average share price during the reporting period to 31 December 2012 was $18.62.
2 For the 2012 Awards this represents an adjustment to the number of rights issued in the prior reporting period.
3 The weighted average share price during the reporting period to 31 December 2013 was $17.98.
Short‐Term Incentive Plan (Deferral)
For executives, a percentage of the amount which was earned as a short‐term incentive for each financial year is paid in cash, and a
percentage delivered as deferred share rights, vesting of which is deferred for two years without any additional performance measures.
The Remuneration and Nominations Committee has the ability to reduce the number of shares to be issued under share rights if
subsequent events show such a reduction to be appropriate. In making this determination, the Remuneration and Nominations
Committee may consider material changes or reversals in the Group’s financial position or profitability from one period to the next.
For each financial year, deferred share rights are granted following the determination of individual short‐term incentive payments. The
number of deferred share rights granted is determined by reference to the five day volume weighted average price of fully paid ordinary
shares in the company over the five days following the Company’s full year results announcement.
The deferred share rights were granted for no cost and entitle the participant to receive one fully paid ordinary share in the Company per
right. Awards to each Director or Specified Executive under the Short‐Term Incentive Plan (Deferral) during the 2013 Financial Year are
disclosed in note 38 (c): Related Party Disclosures ‐ Rights plans.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
170
170
37. EMPLOYEE BENEFITS CONTINUED
The total value of deferred share rights to be granted to eligible executives for the 2013 financial year will be determined in February
2014. Amount recognised during the reporting period: Expense $3.5 million (31 December 2012: Expense $2.6 million).
Date of grant
Date of expiry
Grant fair value
Original grant
Unvested rights at 31 December 2012
- Granted
- Vested1
-
Lapsed
Unvested rights at 31 December 2013
1 The weighted average share price during the reporting period to 31 December 2013 was $17.98.
2012 STI Deferral award
1 January 2013
31 December 2014
$23.32
193,907
‐
193,907
‐
(2,210)
191,697
Leighton Holdings Limited Annual Report 2013
171
171
172
Notes continued
for the year ended 31 December 2013
37. EMPLOYEE BENEFITS CONTINUED
d) Other information
All offers under the LESP and LMSP plans are subject to pre‐conditions of issue and are at the discretion of the Company. No further
offers will be made under the LSEOP plan, however the legacy share option grants remain in place and will be tested at their respective
performance measurement dates.
Defined contribution superannuation funds
During the period, the Group recognised $363.6 million (31 December 2012: $361.1 million) of defined contribution expenses.
Defined benefit superannuation funds
During the period, the Leighton Superannuation Plan and the AMEC Superannuation Fund members were transferred to the defined
contribution category within the same plans. As a result, there are no defined benefit superannuation plans at year end.
38. RELATED PARTY DISCLOSURES
Key management personnel
Key management personnel compensation included in personnel costs:
Short‐term employee benefits
Post‐employment benefits
Long‐term benefits
Termination benefits
Share‐based payments
12 months to
December 2013
$’000
12 months to
December 2012
$’000^
20,180
19,062
412
‐
347
7,132
28,071
464
2,384
408
4,205
26,523
^ Following the adoption of AASB 11 Joint Arrangements by the Group, whilst comparative balances have required restatement throughout
the consolidated financial report as a result of a change in accounting policy, there were no restatements required in relation to related
party disclosures.
Loans to key management personnel
There were no loans to key management personnel in the current or prior reporting period.
172,111
8,590
Notes continued
for the year ended 31 December 2013
38. RELATED PARTY DISCLOSURES CONTINUED
Equity holdings and transactions
a)
Shareholdings
The movement during the reporting period in the number of ordinary shares of the Company held directly, indirectly or beneficially, by
each Director or Specified Executive, including their personally‐related entities is as follows:
December 2013
1 January 2013
Purchases
Sales
shares
2013
Received
on exercise
of options
Held at
Gift
31 December
Directors
P Dwyer
M Fernández Verdes1
P Gregg2
R Higgins AO3
R Humphris OAM
M Hutchinson4
S Johns5
I Macfarlane AC6
V McFadden7
W Osborn8
D Robinson
P Sassenfeld1
H Tyrwhitt
Specified Executives
D Chandran9
I Edwards
M Gray
C Laslett
B Munro
G Palin
M Rollo
A Valderas10
R Willcock11
Held at
5,000
2,745
3,652
30,000
2,500
20,066
6,795
‐
‐
7,673
1,489
1,858
2,110
‐
110
6,830
1,219
79,370
219
475
‐
‐
6,090
2,500
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
5,000
2,745
3,652
6,090
30,000
5,000
20,066
6,795
‐
7,673
1,489
1,858
2,110
‐
110
6,830
1,219
79,370
219
475
‐
‐
180,701
Leighton Holdings Limited Annual Report 2013
172
172
Notes continued
for the year ended 31 December 2013
38. RELATED PARTY DISCLOSURES CONTINUED
Equity holdings and transactions
a)
Shareholdings
The movement during the reporting period in the number of ordinary shares of the Company held directly, indirectly or beneficially, by
each Director or Specified Executive, including their personally‐related entities is as follows:
December 2013
Directors
P Dwyer
M Fernández Verdes1
P Gregg2
R Higgins AO3
R Humphris OAM
M Hutchinson4
S Johns5
I Macfarlane AC6
V McFadden7
W Osborn8
D Robinson
P Sassenfeld1
H Tyrwhitt
Specified Executives
D Chandran9
I Edwards
M Gray
C Laslett
B Munro
G Palin
M Rollo
A Valderas10
R Willcock11
Held at
1 January 2013
Purchases
Received
on exercise
of options
Gift
shares
Held at
31 December
2013
Sales
5,000
2,745
3,652
‐
30,000
2,500
20,066
6,795
‐
7,673
1,489
1,858
2,110
‐
110
6,830
1,219
79,370
219
475
‐
‐
‐
‐
‐
6,090
‐
2,500
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
172,111
8,590
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
5,000
2,745
3,652
6,090
30,000
5,000
20,066
6,795
‐
7,673
1,489
1,858
2,110
‐
110
6,830
1,219
79,370
219
475
‐
‐
180,701
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
38. RELATED PARTY DISCLOSURES CONTINUED
Equity holdings and transactions
a)
Shareholdings continued
173
173
Notes continued
for the year ended 31 December 2013
38. RELATED PARTY DISCLOSURES CONTINUED
a)
Shareholdings continued
1 Held on behalf of HOCHTIEF Australia Holdings Limited.
2 Mr Gregg was appointed Deputy Chief Executive Officer on 12 April 2013 in addition to his role as Chief Financial Officer.
3 Appointed as a Non‐Executive Director on 18 June 2013.
4 Appointed as a Non‐Executive Director on 18 June 2013.
5 Reflects the number of shares held by Mr Johns as at 22 March 2013, being the date he resigned as Chairman and a Non‐Executive
Director.
6 Reflects the number of shares held by Mr MacFarlane AC as at 22 March 2013, being the date he resigned as a Non‐Executive Director.
7 Appointed as a Non‐Executive Director on 18 June 2013.
8 Reflects the number of shares held by Mr Osborn as at 22 March 2013, being the date he resigned as a Non‐Executive Director.
9 Mr Chandran’s role as Chief Human Resources Officer was expanded to Chief Human Resources and Corporate Services Officer on
22 May 2013.
10 Appointed as Chief Operating Officer on 4 December 2013.
11 Reflects the number of shares held by Mr Willcock as at 30 April 2013, being the date he ceased as an Executive. Mr Willcock ceased as
Group Company Secretary and General Counsel on 17 April 2013.
174
17,731
5,000
2,745
3,652
30,000
20,066
6,795
7,673
1,489
1,858
1,192
2,110
‐
‐
‐
‐
31
110
6,830
1,219
79,370
219
475
26,132
The movement during the prior reporting period in the number of ordinary shares of the Company held directly, indirectly or beneficially,
by each Director or Specified Executive, including their personally‐related entities is as follows:
1 January 2012
Purchases
Sales
shares
2012
Received
on exercise
of options
Held at
Gift
31 December
December 2012
Directors
A Drescher1
P Dwyer2
M Fernández Verdes3,4
P Gregg
R Humphris OAM
S Johns
I Macfarlane AC
W Osborn
D Robinson
P Sassenfeld3
Dr F Stieler3,5
H Tyrwhitt
M Wennemer3,6
Specified Executives
D Chandran7
R Cooke8
I Edwards9
M Gray
C Laslett
B Munro
G Palin
M Rollo10
L Voyer12
R Willcock13
C van der Laan de Vries11
Held at
17,731
‐
‐
3,652
15,000
20,066
5,795
3,673
1,489
1,858
1,192
2,110
2,745
‐
31
110
6,830
1,219
79,370
37,728
475
26,132
‐
‐
5,000
2,745
15,000
1,000
4,000
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
(2,745)
(37,509)
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
227,206
27,745
(40,254)
214,697
Leighton Holdings Limited Annual Report 2013
174
174
Notes continued
for the year ended 31 December 2013
38. RELATED PARTY DISCLOSURES CONTINUED
a)
Shareholdings continued
The movement during the prior reporting period in the number of ordinary shares of the Company held directly, indirectly or beneficially,
by each Director or Specified Executive, including their personally‐related entities is as follows:
December 2012
Directors
A Drescher1
P Dwyer2
M Fernández Verdes3,4
P Gregg
R Humphris OAM
S Johns
I Macfarlane AC
W Osborn
D Robinson
P Sassenfeld3
Dr F Stieler3,5
H Tyrwhitt
M Wennemer3,6
Specified Executives
D Chandran7
R Cooke8
I Edwards9
M Gray
C Laslett
B Munro
G Palin
M Rollo10
C van der Laan de Vries11
L Voyer12
R Willcock13
Held at
1 January 2012
Purchases
Received
on exercise
of options
Gift
shares
Held at
31 December
2012
Sales
17,731
‐
‐
3,652
15,000
20,066
5,795
3,673
1,489
1,858
1,192
2,110
2,745
‐
31
110
6,830
1,219
79,370
37,728
475
‐
26,132
‐
227,206
‐
5,000
2,745
‐
15,000
‐
1,000
4,000
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
27,745
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
(2,745)
‐
‐
‐
‐
‐
‐
(37,509)
‐
‐
‐
‐
(40,254)
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
17,731
5,000
2,745
3,652
30,000
20,066
6,795
7,673
1,489
1,858
1,192
2,110
‐
‐
31
110
6,830
1,219
79,370
219
475
‐
26,132
‐
214,697
Leighton Holdings Limited Annual Report 2013
175
175
176
Notes continued
for the year ended 31 December 2013
38. RELATED PARTY DISCLOSURES CONTINUED
a)
Shareholdings continued
1 Retired as a Non‐Executive Director on 22 May 2012.
2 Appointed as a Non‐Executive Director on 1 January 2012.
3 Held on behalf of HOCHTIEF Australia Holdings Limited.
4 Appointed as a Non‐Executive Director on 10 October 2012.
5 Retired as a Non‐Executive Director on 20 November 2012.
6 Retired as a Non‐Executive Director on 10 October 2012.
7 Appointed as Chief Human Resources Officer on 1 January 2012.
8 Ceased as Acting Managing Director of Leighton Asia, India & Offshore on 1 April 2012 and as an Executive on 30 April 2012.
9 Appointed as Managing Director of Leighton Asia, India & Offshore on 1 April 2012. He held 110 shares on appointment.
10 Appointed as Chief Risk Officer on 1 March 2012. He held 475 shares on appointment.
11 Ceased as Chief Risk Officer and Group General Counsel on 1 March 2012 and as an Executive on 15 May 2012.
12 Ceased as Managing Director and Chief Executive Officer of Habtoor Leighton Group on 1 October 2012 and as an Executive on 31
December 2012.
13 Appointed as Group Company Secretary and General Counsel on 12 June 2012.
Notes continued
for the year ended 31 December 2013
38. RELATED PARTY DISCLOSURES CONTINUED
b) Options
Specified Executives
Directors
P Gregg
H Tyrwhitt
D Chandran
I Edwards
M Gray
C Laslett
B Munro
G Palin
M Rollo
A Valderas
R Willcock
The movement during the reporting period in the number of options held directly, indirectly or beneficially, by each Director or Specified
Executive, including their personally‐related entities is as follows:
December 2013
1 January 2013
Granted
Exercised
Lapsed
110,032
(30,032)
80,000
Held at
‐
‐
‐
‐
‐
30,000
50,016
25,000
25,000
50,000
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
Held at
31 December
2013
‐
‐
‐
‐
‐
30,000
35,000
25,000
25,000
50,000
(15,016)
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
122,500 options were exercisable at 31 December 2013.
290,048
(45,048)
245,000
Leighton Holdings Limited Annual Report 2013
176
176
Notes continued
for the year ended 31 December 2013
38. RELATED PARTY DISCLOSURES CONTINUED
b) Options
The movement during the reporting period in the number of options held directly, indirectly or beneficially, by each Director or Specified
Executive, including their personally‐related entities is as follows:
December 2013
Directors
P Gregg
H Tyrwhitt
Specified Executives
D Chandran
I Edwards
M Gray
C Laslett
B Munro
G Palin
M Rollo
A Valderas
R Willcock
122,500 options were exercisable at 31 December 2013.
Held at
1 January 2013
Granted
Exercised
Lapsed
Held at
31 December
2013
‐
110,032
‐
30,000
50,016
25,000
25,000
50,000
‐
‐
‐
290,048
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
(30,032)
‐
80,000
‐
‐
(15,016)
‐
‐
‐
‐
‐
‐
(45,048)
‐
30,000
35,000
25,000
25,000
50,000
‐
‐
‐
245,000
Leighton Holdings Limited Annual Report 2013
177
177
178
Notes continued
for the year ended 31 December 2013
38. RELATED PARTY DISCLOSURES CONTINUED
b) Options continued
Notes continued
for the year ended 31 December 2013
38. RELATED PARTY DISCLOSURES CONTINUED
c) Rights plans
The movement during the prior reporting period in the number of options held directly, indirectly or beneficially, by each Director or
Specified Executive, including their personally‐related entities is as follows:
Long‐Term Incentive Plan – 2011 Award to Executive Directors, 2012 Awards, 2012 Additional Award, and 2013 Awards
The movement during the reporting period in the number of performance share rights held directly, indirectly or beneficially, by each
Director or Specified Executive, including their personally‐related entities is as follows:
December 2012
Directors
P Gregg
H Tyrwhitt
Specified Executives
D Chandran
R Cooke
I Edwards
M Gray
C Laslett
B Munro
G Palin
M Rollo
L Voyer
R Willcock
Held at
1 January 2012
Granted
Exercised
Lapsed
Held at
31 December
2012
‐
110,032
‐
24,006
30,000
50,016
25,000
25,000
50,000
‐
50,016
‐
364,070
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
110,032
‐
24,006
30,000
50,016
25,000
25,000
50,000
‐
50,016
‐
364,070
160,070 options were exercisable at 31 December 2012. Included in this figure are 11,070 options granted on 25 January 2008 which
lapsed on 25 January 2013.
The movement during the prior reporting period in the number of performance share rights held directly, indirectly or beneficially, by
each Director or Specified Executive, including their personally‐related entities is as follows:
December 2012
1 January 2012
Granted
Exercised
Lapsed
December 2013
1 January 2013
Granted
Exercised
Lapsed
Specified Executives
114,663
104,499
77,186
107,204
Directors
P Gregg
H Tyrwhitt
D Chandran
I Edwards
M Gray
C Laslett
B Munro
G Palin
M Rollo
A Valderas
R Willcock
Directors
P Gregg
H Tyrwhitt
D Chandran
R Cooke
I Edwards
M Gray
C Laslett
B Munro
G Palin
M Rollo
L Voyer
R Willcock
Specified Executives
Held at
16,978
17,504
104,486
39,182
39,182
22,202
18,284
476,980
Held at
38,466
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
38,466
17,368
18,708
39,752
39,752
39,752
22,308
‐
‐
18,010
380,040
76,197
104,499
‐
‐
‐
16,978
17,504
104,486
39,182
39,182
22,202
18,284
438,514
(36,294)
(36,294)
820,726
Held at
31 December
2013
191,849
211,703
34,346
36,212
144,238
78,934
78,934
44,510
Held at
31 December
2012
114,663
104,499
16,978
17,504
104,486
39,182
39,182
22,202
18,284
476,980
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
Leighton Holdings Limited Annual Report 2013
178
178
Notes continued
for the year ended 31 December 2013
38. RELATED PARTY DISCLOSURES CONTINUED
c) Rights plans
Long‐Term Incentive Plan – 2011 Award to Executive Directors, 2012 Awards, 2012 Additional Award, and 2013 Awards
The movement during the reporting period in the number of performance share rights held directly, indirectly or beneficially, by each
Director or Specified Executive, including their personally‐related entities is as follows:
December 2013
Directors
P Gregg
H Tyrwhitt
Specified Executives
D Chandran
I Edwards
M Gray
C Laslett
B Munro
G Palin
M Rollo
A Valderas
R Willcock
Held at
1 January 2013
Granted
Exercised
Lapsed
Held at
31 December
2013
114,663
104,499
77,186
107,204
16,978
17,504
‐
104,486
39,182
39,182
22,202
‐
18,284
476,980
17,368
18,708
‐
39,752
39,752
39,752
22,308
‐
18,010
380,040
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
191,849
211,703
‐
‐
‐
‐
‐
‐
‐
‐
(36,294)
(36,294)
34,346
36,212
‐
144,238
78,934
78,934
44,510
‐
‐
820,726
The movement during the prior reporting period in the number of performance share rights held directly, indirectly or beneficially, by
each Director or Specified Executive, including their personally‐related entities is as follows:
December 2012
Directors
P Gregg
H Tyrwhitt
Specified Executives
D Chandran
R Cooke
I Edwards
M Gray
C Laslett
B Munro
G Palin
M Rollo
L Voyer
R Willcock
Held at
1 January 2012
Granted
Exercised
Lapsed
Held at
31 December
2012
38,466
‐
76,197
104,499
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
38,466
16,978
‐
17,504
‐
104,486
39,182
39,182
22,202
‐
18,284
438,514
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
114,663
104,499
16,978
‐
17,504
‐
104,486
39,182
39,182
22,202
‐
18,284
476,980
Leighton Holdings Limited Annual Report 2013
179
179
180
Notes continued
for the year ended 31 December 2013
38. RELATED PARTY DISCLOSURES CONTINUED
c) Rights plans continued
Notes continued
for the year ended 31 December 2013
38. RELATED PARTY DISCLOSURES CONTINUED
c) Rights plans continued
One‐off Awards – 2012 Awards
The movement during the reporting period in the number of deferred share rights held directly, indirectly or beneficially, by each
Director or Specified Executive, including their personally‐related entities is as follows:
Short‐term Incentive Plan (Deferral) – 2013 Awards
personally‐related entities is as follows:
The value of deferred share rights held directly, indirectly or beneficially, by each Director or Specified Executive, including their
December 2013
Directors
P Gregg
H Tyrwhitt
Specified Executives
D Chandran
I Edwards
M Gray
C Laslett
B Munro
G Palin
M Rollo
A Valderas
R Willcock
Held at
1 January 2013
Granted
Exercised
Lapsed
Held at
31 December
2013
‐
‐
16,822
7,410
33,696
‐
50,207
49,690
‐
‐
‐
157,825
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
16,822
7,410
33,696
‐
50,207
49,690
‐
‐
‐
157,825
The movement during the prior reporting period in the number of deferred share rights held directly, indirectly or beneficially, by each
Director or Specified Executive, including their personally‐related entities is as follows:
Short‐term Incentive Plan (Deferral) – 2012 Awards
December 2012
Directors
P Gregg
H Tyrwhitt
Specified Executives
D Chandran
R Cooke
I Edwards
M Gray
C Laslett
B Munro
G Palin
M Rollo
L Voyer
R Willcock
Held at
1 January 2012
Granted
Exercised
Lapsed
Held at
31 December
2012
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
16,822
‐
7,410
33,696
‐
50,207
49,690
‐
‐
‐
157,825
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
16,822
‐
7,410
33,696
‐
50,207
49,690
‐
‐
‐
157,825
Short‐term incentive Plan (Deferral)
to be awarded1
$908,100
$1,135,125
$153,250
$52,845
$382,823
$99,004
$494,400
$364,019
$200,589
‐
‐
$3,790,155
December 2013
Directors
P Gregg
H Tyrwhitt
Specified Executives
D Chandran
I Edwards2
M Gray
C Laslett
B Munro
G Palin
M Rollo
A Valderas
R Willcock
December 2013
Directors
P Gregg
H Tyrwhitt
Specified Executives
D Chandran
I Edwards1
M Gray
C Laslett
B Munro
G Palin
M Rollo
A Valderas
R Willcock
Total cash value to be awarded as at 31 December 2013
1 The table presents the cash value of the deferral. The actual number of deferred share rights to be awarded to each Director will be
determined following the announcement of results for the 2013 Financial Year.
2 The cash value of the award is HKD 370,973.
The movement during the reporting period in the number of deferred share rights held directly, indirectly or beneficially, by each
Director or Specified Executive, including their personally‐related entities is as follows:
Short‐term Incentive Plan
(deferral) in respect of the year
ended December 2012
Granted
Exercised
Lapsed
Held at
31 December
2013
$559,125
$755,400
$95,316
$78,938
$100,000
$180,000
$200,000
$180,000
$100,000
‐
$51,548
$2,300,327
23,976
32,392
4,087
3,417
4,288
7,718
8,576
7,718
4,288
‐
2,210
98,670
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
(2,210)
(2,210)
23,976
32,392
4,087
3,417
4,288
7,718
8,576
7,718
4,288
‐
‐
96,460
1 The cash value of the award is HKD 634,538.
Leighton Holdings Limited Annual Report 2013
180
180
Notes continued
for the year ended 31 December 2013
38. RELATED PARTY DISCLOSURES CONTINUED
c) Rights plans continued
Short‐term Incentive Plan (Deferral) – 2013 Awards
The value of deferred share rights held directly, indirectly or beneficially, by each Director or Specified Executive, including their
personally‐related entities is as follows:
December 2013
Directors
P Gregg
H Tyrwhitt
Short‐term incentive Plan (Deferral)
to be awarded1
$908,100
$1,135,125
Specified Executives
D Chandran
I Edwards2
M Gray
C Laslett
B Munro
G Palin
M Rollo
A Valderas
R Willcock
Total cash value to be awarded as at 31 December 2013
1 The table presents the cash value of the deferral. The actual number of deferred share rights to be awarded to each Director will be
$153,250
$52,845
$382,823
$99,004
$494,400
$364,019
$200,589
‐
‐
$3,790,155
determined following the announcement of results for the 2013 Financial Year.
2 The cash value of the award is HKD 370,973.
Short‐term Incentive Plan (Deferral) – 2012 Awards
The movement during the reporting period in the number of deferred share rights held directly, indirectly or beneficially, by each
Director or Specified Executive, including their personally‐related entities is as follows:
December 2013
Directors
P Gregg
H Tyrwhitt
Specified Executives
D Chandran
I Edwards1
M Gray
C Laslett
B Munro
G Palin
M Rollo
A Valderas
R Willcock
1 The cash value of the award is HKD 634,538.
Short‐term Incentive Plan
(deferral) in respect of the year
ended December 2012
Granted
Exercised
Lapsed
Held at
31 December
2013
$559,125
$755,400
$95,316
$78,938
$100,000
$180,000
$200,000
$180,000
$100,000
‐
$51,548
$2,300,327
23,976
32,392
4,087
3,417
4,288
7,718
8,576
7,718
4,288
‐
2,210
98,670
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
(2,210)
(2,210)
23,976
32,392
4,087
3,417
4,288
7,718
8,576
7,718
4,288
‐
‐
96,460
Leighton Holdings Limited Annual Report 2013
181
181
182
Notes continued
for the year ended 31 December 2013
38. RELATED PARTY DISCLOSURES CONTINUED
d) Key management personnel
Notes continued
for the year ended 31 December 2013
38. RELATED PARTY DISCLOSURES CONTINUED
e) Transactions with other related parties
The terms and conditions of transactions with key management personnel and their related entities were no more favourable than those
available, or which might reasonably be expected to be available, on similar transactions to non‐Director related entities on an arm’s
length basis.
D Robinson is a principal in the firm of chartered accountants, Harveys, which receives fees from HOCHTIEF Australia Holdings Limited for
services provided to that company, which is a related party.
Unless otherwise disclosed, transactions with other related parties are made on normal commercial terms and conditions. The aggregate
of related party transactions was not material in the overall operations of the Group.
V McFadden is the non‐executive Chairman of SKILLED Group Limited, which receives fees from the Group for services provided in
relation to contract labour.
Aggregate amounts receivable from related parties at reporting date
R Seidler received consulting fees of $61,407 paid by the Company during the period. Fees were due and payable under normal payment
terms. He receives fees from HOCHTIEF Australia Holdings Limited for services provided to that company, which is a related party.
Associates1
Joint venture entities
Associates
Joint venture entities
Aggregate amounts payable to related parties at reporting date
1 Refer to note 8: Trade and other receivables for disclosure of interest free and interest bearing loan receivables from HLG.
December 2013
December 2012
$’000
$’000
^(restated)
642,625
73,176
555,125
60,203
(1,690)
(73,223)
(983)
(42,803)
12 months to
12 months to
December 2013
December 2012
$’000
$’000
^(restated)
22,670
20,695
7,174
6,318
(1,150)
(940)
(21,616)
‐
December 2013
December 2012
Number of
employees
Number of
employees
55,990
56,323
Revenue ‐ interest received / receivable from related parties
Associates
Associates
Revenue ‐ unwinding of discounts on non‐current receivables ‐ related parties
Finance costs ‐ interest paid / payable to related parties
Joint venture entities
Finance costs ‐ impact of discounting ‐ related parties
Associates
Number of employees
Number of employees at reporting date
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect adjustments
made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Leighton Holdings Limited Annual Report 2013
182
182
Notes continued
for the year ended 31 December 2013
38. RELATED PARTY DISCLOSURES CONTINUED
e) Transactions with other related parties
Unless otherwise disclosed, transactions with other related parties are made on normal commercial terms and conditions. The aggregate
of related party transactions was not material in the overall operations of the Group.
Aggregate amounts receivable from related parties at reporting date
Associates1
Joint venture entities
Aggregate amounts payable to related parties at reporting date
Associates
Joint venture entities
December 2013
$’000
December 2012
$’000
^(restated)
642,625
73,176
555,125
60,203
(1,690)
(73,223)
(983)
(42,803)
1 Refer to note 8: Trade and other receivables for disclosure of interest free and interest bearing loan receivables from HLG.
Revenue ‐ interest received / receivable from related parties
Associates
Revenue ‐ unwinding of discounts on non‐current receivables ‐ related parties
Associates
Finance costs ‐ interest paid / payable to related parties
Joint venture entities
Finance costs ‐ impact of discounting ‐ related parties
Associates
12 months to
December 2013
$’000
12 months to
December 2012
$’000
^(restated)
22,670
20,695
7,174
6,318
(1,150)
(940)
(21,616)
‐
^ Certain amounts shown here do not correspond to the consolidated financial report as at 31 December 2012 and reflect adjustments
made as detailed in note 40: Impact of the change in accounting policy on adoption of AASB 11 Joint Arrangements.
Number of employees
Number of employees at reporting date
December 2013
Number of
employees
December 2012
Number of
employees
55,990
56,323
Leighton Holdings Limited Annual Report 2013
183
183
184
Notes continued
for the year ended 31 December 2013
38. RELATED PARTY DISCLOSURES CONTINUED
f)
Company information
Leighton Holdings Limited is domiciled in Australia and is a company listed on the Australian Securities Exchange. The Company was
incorporated in Victoria, Australia. The address of the registered office is 472 Pacific Highway, St Leonards, NSW, Australia, 2065.
Number of employees at reporting date: 8 (31 December 2012: 8).
The Group operates in the infrastructure, resources and property markets. Principal activities of the Group within these markets are
construction, contract mining, property development and other services (including environmental, telecommunications and operations
and maintenance).
g) Ultimate parent entity
The ultimate Australian parent entity is HOCHTIEF Australia Holdings Limited and the ultimate parent entity is Actividades de
Construcción y Servicios, SA (“ACS”) incorporated in Spain.
Leighton Holdings Limited Directors Mr D Robinson, Mr P Sassenfeld, Mr M Fernández Verdes and alternate director Mr R Seidler were
directors of HOCHTIEF Australia Holdings Limited during the period.
At the date of this financial report, being 20 February 2014, HOCHTIEF Australia Holdings Limited held 198,178,255 shares in the
Company.
Notes continued
for the year ended 31 December 2013
39. LEIGHTON HOLDINGS LIMITED AND CONTROLLED ENTITIES
a) Parent entity disclosures
As at, and throughout, the financial year ended 31 December 2013 the parent entity of the Group was Leighton Holdings Limited. A
statement of profit or loss and statement of financial position at 31 December 2013 is set out below:
Comprehensive income
Profit/ (loss) for the period
Other comprehensive income
Total comprehensive income for the period
Statement of Financial Position
Current assets
Non‐current assets
Total assets
Current liabilities
Non‐current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings1
Total equity
Company
12 months to
12 months to
December 2013
December 2012
$m
$m^
256.0
‐
256.0
(73.9)
‐
(73.9)
December 2013
December 2012
$m
$m^
113.7
2,558.2
2,671.9
1.2
584.9
586.1
2,028.6
71.2
(14.0)
2,085.8
71.1
2,610.0
2,681.1
0.3
515.2
515.5
2,027.2
54.3
84.1
2,165.6
2,085.8
2,165.6
1 Subsequent to the reporting date, certain operating companies of the Group declared dividends totalling $610.0 million, payable to
Leighton Holdings Limited on 1 March 2014. This would have the effect of increasing retained earnings to $596.0 million.
^ Following the adoption of AASB 11 Joint Arrangements by the Group, whilst comparative balances have required restatement throughout
the consolidated financial report as a result of a change in accounting policy, there were no restatements required in relation to the
parent entity disclosure.
Leighton Holdings Limited Annual Report 2013
184
184
Notes continued
for the year ended 31 December 2013
39. LEIGHTON HOLDINGS LIMITED AND CONTROLLED ENTITIES
a) Parent entity disclosures
As at, and throughout, the financial year ended 31 December 2013 the parent entity of the Group was Leighton Holdings Limited. A
statement of profit or loss and statement of financial position at 31 December 2013 is set out below:
Comprehensive income
Profit/ (loss) for the period
Other comprehensive income
Total comprehensive income for the period
Statement of Financial Position
Current assets
Non‐current assets
Total assets
Current liabilities
Non‐current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings1
Total equity
Company
12 months to
December 2013
$m
12 months to
December 2012
$m^
256.0
‐
256.0
(73.9)
‐
(73.9)
December 2013
$m
December 2012
$m^
113.7
2,558.2
2,671.9
1.2
584.9
586.1
71.1
2,610.0
2,681.1
0.3
515.2
515.5
2,085.8
2,165.6
2,028.6
71.2
(14.0)
2,085.8
2,027.2
54.3
84.1
2,165.6
1 Subsequent to the reporting date, certain operating companies of the Group declared dividends totalling $610.0 million, payable to
Leighton Holdings Limited on 1 March 2014. This would have the effect of increasing retained earnings to $596.0 million.
^ Following the adoption of AASB 11 Joint Arrangements by the Group, whilst comparative balances have required restatement throughout
the consolidated financial report as a result of a change in accounting policy, there were no restatements required in relation to the
parent entity disclosure.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
185
185
Notes continued
for the year ended 31 December 2013
39. LEIGHTON HOLDINGS LIMITED AND CONTROLLED ENTITIES CONTINUED
39. LEIGHTON HOLDINGS LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities
Name of entity
Leighton Holdings Limited5
111 Margaret Street Pty Ltd3
145 Ann Street Pty Ltd
145 Ann Street Trust
512 Wickham Street Pty Ltd
512 Wickham Street Trust
ACN 112 829 624 Pty Ltd (formerly known as Mayfield Engineering Pty Ltd)
A.C.N. 126 130 738 Pty Ltd
A.C.N. 151 868 601 Pty Ltd
Ashmore Developments Pty Limited
Ausindo Holdings Pte Ltd
Boggo Road Project Pty Limited
Boggo Road Project Trust
BOS Australia Pty Ltd
Broad Construction Services (NSW/VIC) Pty Ltd1
Broad Construction Services (QLD) Pty Ltd1
Broad Construction Services (WA) Pty Ltd1
Broad Group Holdings Pty Ltd1
Chargepoint Pty Ltd (formerly LSE Technology (Australia) Pty Limited) 2
Delron Cleaning Pty Ltd
Delron Group Facility Services Pty Limited
Devine Bacchus Marsh Pty Ltd
Devine Constructions Pty Ltd
Devine Funds Pty Ltd
Devine Funds Unit Trust
Devine Homes Pty Ltd
Devine Land Pty Ltd
Devine Limited
Devine Management Services Pty Ltd
Devine Queensland No. 10 Pty Ltd
Devine Springwood No. 1 Pty Ltd
Devine Springwood No. 2 Pty Ltd
Devine Springwood No. 3 Pty Ltd
D.M.B Pty Ltd
Doubleone 3 Pty Ltd
Interest
held
Place of
incorporation
Interest
held
Place of
incorporation
(C)
(C)
(C)
(A),(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(A)
51%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
80%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
Vic
Qld
Qld
N/A
NSW
N/A
NSW
Vic
Vic
NSW
Singapore
Qld
Qld
WA
WA
Qld
WA
WA
NSW
WA
WA
Qld
Qld
Vic
N/A
Qld
Qld
Qld
Qld
Qld
NSW
Qld
Qld
Qld
Qld
186
ACT
VIC
VIC
VIC
VIC
VIC
VIC
Vic
Qld
N/A
NSW
NT
WA
Vic
Vic
QLD
WA
Vic
Vic
Vic
NSW
ACT
Vic
Vic
Vic
Vic
Vic
Vic
Vic
Vic
Vic
N/A
Hong Kong
United States
New Zealand
Hong Kong
(C)
(B),(C)
(B),(C)
(B),(C)
(B),(C)
(B),(C)
(B),(C)
(B),(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
75%
75%
100%
100%
100%
100%
100%
100%
100%
59%
59%
59%
100%
59%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Hamilton Harbour Developments Pty Ltd
Hamilton Harbour Unit Trust (Devine Hamilton Unit Trust)
Name of entity
Ewenissa Pty Limited
FleetCo Finance Pty Limited
FleetCo Holdings Pty Limited
FleetCo Management Pty Limited
FleetCo Rentals No.1 Pty Limited
FleetCo Rentals Pty Limited
FleetCo Services Pty Limited
Giddens Investment Limited
Green Construction Company
Gridcomm Pty Ltd
Hunter Valley Earthmoving Co Pty Ltd
HWE Cockatoo Pty Ltd
HWE Maintenance Services Pty Ltd
HWE Mining Pty Limited1
HWE Newman Assets Pty Limited
Inspire Schools Finance Pty Limited
Jarrah Wood Pty Ltd
JH Rail Holdings Pty Ltd
JH Rail Investments Pty Ltd
JH Rail Operations Pty Ltd
JHG Mutual Limited
Joetel Pty Limited
John Holland (NZ) Ltd
John Holland ‐ Leighton (South East Asia) Joint Venture
John Holland AD Holdings Pty Ltd
John Holland AD Investments Pty Ltd
John Holland AD Operations Pty Ltd
John Holland Aviation Services Pty Ltd
John Holland Development and Investment Pty Ltd
John Holland Engineering Pty Ltd
John Holland Group Pty Ltd
John Holland Infrastructure Nominees Pty Ltd
John Holland Infrastructure Pty Ltd
John Holland Infrastructure Trust
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
39. LEIGHTON HOLDINGS LIMITED AND CONTROLLED ENTITIES CONTINUED
Name of entity
Ewenissa Pty Limited
FleetCo Finance Pty Limited
FleetCo Holdings Pty Limited
FleetCo Management Pty Limited
FleetCo Rentals No.1 Pty Limited
FleetCo Rentals Pty Limited
FleetCo Services Pty Limited
Giddens Investment Limited
Green Construction Company
Gridcomm Pty Ltd
Hamilton Harbour Developments Pty Ltd
Hamilton Harbour Unit Trust (Devine Hamilton Unit Trust)
Hunter Valley Earthmoving Co Pty Ltd
HWE Cockatoo Pty Ltd
HWE Maintenance Services Pty Ltd
HWE Mining Pty Limited1
HWE Newman Assets Pty Limited
Inspire Schools Finance Pty Limited
Jarrah Wood Pty Ltd
JH Rail Holdings Pty Ltd
JH Rail Investments Pty Ltd
JH Rail Operations Pty Ltd
JHG Mutual Limited
Joetel Pty Limited
John Holland (NZ) Ltd
John Holland ‐ Leighton (South East Asia) Joint Venture
John Holland AD Holdings Pty Ltd
John Holland AD Investments Pty Ltd
John Holland AD Operations Pty Ltd
John Holland Aviation Services Pty Ltd
John Holland Development and Investment Pty Ltd
John Holland Engineering Pty Ltd
John Holland Group Pty Ltd
John Holland Infrastructure Nominees Pty Ltd
John Holland Infrastructure Pty Ltd
John Holland Infrastructure Trust
186
186
Interest
held
Place of
incorporation
(C)
(B),(C)
(B),(C)
(B),(C)
(B),(C)
(B),(C)
(B),(C)
(C)
(C)
(C)
(C)
(C)
(C)
(B),(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
75%
75%
100%
100%
100%
100%
100%
100%
100%
59%
59%
59%
100%
59%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
ACT
VIC
VIC
VIC
VIC
VIC
VIC
Hong Kong
United States
Vic
Qld
N/A
NSW
NT
WA
Vic
Vic
QLD
WA
Vic
Vic
Vic
NSW
ACT
New Zealand
Hong Kong
Vic
Vic
Vic
Vic
Vic
Vic
Vic
Vic
Vic
N/A
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
Notes continued
for the year ended 31 December 2013
187
187
188
39. LEIGHTON HOLDINGS LIMITED AND CONTROLLED ENTITIES CONTINUED
39. LEIGHTON HOLDINGS LIMITED AND CONTROLLED ENTITIES CONTINUED
Name of entity
John Holland Investment Pty Ltd
John Holland Melbourne Rail Franchise Pty Ltd
John Holland Pty Ltd
John Holland Queensland Pty Ltd
John Holland Rail Pty Ltd
John Holland Services Pty Ltd
Kingscliff Resort Trust
Kings Square Developments Pty Ltd
Kings Square Developments Unit Trust
LCPL (PNG) Limited
Leighton (PNG) Limited
Leighton Admin Services Pty Limited1
Leighton Africa Botswana (Proprietary) Limited
Leighton Africa (Mauritius) Limited (formerly Leighton Mauritius (Africa) Limited)
Leighton Africa (South Africa) Proprietary Limited (formerly Leighton Construction
and Mining Africa (Pty) Limited)
Leighton Arranging Pty Ltd
Leighton Asia (China) Limited
Leighton Asia (Hong Kong) Holdings (No. 2) Limited
Leighton Asia Limited
Leighton Asia Southern Pte. Ltd
Leighton Companies Management Group LLC
Leighton Contractors (Asia) Limited
Leighton Contractors (China) Limited
Leighton Contractors (Indo‐China) Limited
Leighton Contractors (Laos) Sole Co. Limited
Leighton Contractors (Malaysia) Sdn Bhd
Leighton Contractors (Philippines) Inc
Leighton Contractors Asia (Cambodia) Co. Ltd
Leighton Contractors Asia (Vietnam) Limited
Leighton Contractors Inc.
Leighton Contractors Infrastructure Nominees Pty Ltd2
Leighton Contractors Infrastructure Pty Ltd2
Leighton Contractors Infrastructure Trust3
Leighton Contractors Lanka (Private) Limited
Leighton Contractors (Mauritius) Limited
Leighton Contractors Pty Limited1
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(A)
(C)
(C)
(C)
(C)
Interest
held
Place of
incorporation
Name of entity
Interest
held
Place of
incorporation
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Vic
Vic
Vic
Vic
WA
Vic
Qld
Qld
Qld
Papua New Guinea
Papua New Guinea
NSW
Botswana
Mauritius
South Africa
NSW
Hong Kong
Hong Kong
Hong Kong
Singapore
100% United Arab Emirates
100%
100%
100%
100%
100%
40%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Hong Kong
Hong Kong
Hong Kong
Laos
Malaysia
Philippines
Cambodia
Vietnam
United States
Leighton M&E Limited (formerly known as Wai Ming Contracting Company Limted)
Vic
Vic
N/A
Sri Lanka
Mauritius
NSW
Leighton Middle East & Africa (Holding) Limited
Leighton Motorway Investments No. 2 Pty Limited
Leighton Offshore Arabia Co. Ltd
Leighton Offshore / Leighton Engineering & Construction Joint Venture
Leighton Offshore Australia Pty Ltd
Leighton Offshore Eclipse Pte Ltd
Leighton Engineering & Construction (Singapore) Pte Ltd
Leighton Engineering Joint Venture
Leighton Engineering Sdn Bhd (formerly known as DPS Leighton Offshore
Engineering Sdn Bhd)
Leighton Fabrication and Modularization
Leighton Finance (USA) Pty Ltd
Leighton Finance International Pty Limited
Leighton Finance Limited1
Leighton Foundation Engineering (Asia) Limited
Leighton Funds Management Pty Limited2
Leighton Geotech Limited
Leighton Group Property Services Pty Ltd
Leighton Harbour Trust
Leighton Holdings Infrastructure Nominees Pty Ltd2
Leighton Holdings Infrastructure Pty Ltd2
Leighton Holdings Infrastructure Trust
Leighton Holdings Investments Pty Limited
Leighton Holland Browse JV3
Leighton Infrastructure Investments Pty Limited2
Leighton International Holdings Limited
Leighton International Limited
Leighton India PVT Ltd)
Leighton Investments Mauritius Limited
Leighton Investments Mauritius Limited No. 2
Leighton Investments Mauritius Limited No. 4
Leighton John Holland Joint Venture (Lai Chi Kok)
Leighton LLC
Leighton International Mauritius Holdings Limited No. 4
Leighton International Projects (India) Private Limited (formerly known as Thiess
100%
70%
100%
100%
100%
100%
100%
100%
100%
49%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Singapore
Malaysia
Malaysia
Thailand
Hong Kong
Thailand
NSW
NSW
NSW
Qld
Vic
N/A
Vic
Vic
N/A
Vic
WA
NSW
Mauritius
India
Mauritius
Mauritius
Mauritius
Hong Kong
Mongolia
Hong Kong
Cayman Islands
Cayman Islands
Cayman Islands
Saudi Arabia
Singapore
Vic
Vic
Singapore
(B),(C)
(B)
(C)
(C)
(C)
(C)
(A)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(B)
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
188
188
39. LEIGHTON HOLDINGS LIMITED AND CONTROLLED ENTITIES CONTINUED
Name of entity
Interest
held
Place of
incorporation
Leighton Engineering & Construction (Singapore) Pte Ltd
Leighton Engineering Joint Venture
Leighton Engineering Sdn Bhd (formerly known as DPS Leighton Offshore
Engineering Sdn Bhd)
Leighton Fabrication and Modularization
Leighton Finance (USA) Pty Ltd
Leighton Finance International Pty Limited
Leighton Finance Limited1
Leighton Foundation Engineering (Asia) Limited
Leighton Funds Management Pty Limited2
Leighton Geotech Limited
Leighton Group Property Services Pty Ltd
Leighton Harbour Trust
Leighton Holdings Infrastructure Nominees Pty Ltd2
Leighton Holdings Infrastructure Pty Ltd2
Leighton Holdings Infrastructure Trust
Leighton Holdings Investments Pty Limited
Leighton Holland Browse JV3
Leighton Infrastructure Investments Pty Limited2
Leighton International Holdings Limited
Leighton International Limited
Leighton International Mauritius Holdings Limited No. 4
Leighton International Projects (India) Private Limited (formerly known as Thiess
Leighton India PVT Ltd)
Leighton Investments Mauritius Limited
Leighton Investments Mauritius Limited No. 2
Leighton Investments Mauritius Limited No. 4
Leighton John Holland Joint Venture (Lai Chi Kok)
Leighton LLC
Leighton M&E Limited (formerly known as Wai Ming Contracting Company Limted)
Leighton Middle East & Africa (Holding) Limited
Leighton Motorway Investments No. 2 Pty Limited
Leighton Offshore Arabia Co. Ltd
Leighton Offshore / Leighton Engineering & Construction Joint Venture
Leighton Offshore Australia Pty Ltd
Leighton Offshore Eclipse Pte Ltd
100%
70%
100%
100%
100%
100%
100%
100%
100%
49%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Singapore
Malaysia
Malaysia
Thailand
NSW
NSW
NSW
Hong Kong
Qld
Thailand
Vic
N/A
Vic
Vic
N/A
Vic
WA
NSW
Cayman Islands
Cayman Islands
Mauritius
India
Mauritius
Mauritius
Mauritius
Hong Kong
Mongolia
Hong Kong
Cayman Islands
Vic
Saudi Arabia
Singapore
Vic
Singapore
(B)
(C)
(C)
(C)
(C)
(A)
(B),(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(B)
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
Notes continued
for the year ended 31 December 2013
189
189
190
39. LEIGHTON HOLDINGS LIMITED AND CONTROLLED ENTITIES CONTINUED
39. LEIGHTON HOLDINGS LIMITED AND CONTROLLED ENTITIES CONTINUED
Name of entity
Leighton Offshore Faulkner Pte Ltd
Leighton Offshore Mynx Pte Ltd
Leighton Offshore Pte Ltd
Leighton Offshore Sdn Bhd (formerly known as Leighton International Sdn Bhd)
Leighton Offshore Stealth Pte Ltd
Leighton Offshore‐John Holland Joint Venture (LTA Project)
Leighton Pacific St Leonards Pty Limited
Leighton Pacific St Leonards Unit Trust
Leighton Portfolio Services Pty Limited
Leighton Projects Consulting (Shanghai) Limited
Leighton Properties (Brisbane) Pty Limited1
Leighton Properties (NSW) Pty Limited1
Leighton Properties (VIC) Pty Ltd1
Leighton Properties (WA) Pty Limited1
Leighton Properties Pty Limited1
Leighton Properties Resorts Pty Limited
Leighton Property Development Pty Limited
Leighton Property Funds Management Limited2
Leighton Property Management Pty Limited2
Leighton Residential Investments Pty Ltd
Leighton Services Australia Pty Limited
Leighton Staff Shares Pty Ltd
Leighton U.S.A. Inc.
Leighton Welspun Contractors Private Limited
Leighton‐John Holland Joint Venture
Leighton‐John Holland Joint Venture (Thomson Line)
Leighton‐LNS Joint Venture
LH Holdings Co Pty Ltd2
LMENA No. 1 Pty Limited1
LMENA Pty Limited2
LPWRAP Pty Ltd
Martox Pty Limited
Menette Pty Ltd
Mode Apartments Pty Ltd
Mode Apartments Unit Trust
Moonamang Joint Venture Pty Ltd
Interest
held
Place of
incorporation
Name of entity
Interest
held
Place of
incorporation
(B)
(B)
(B)
(C)
(C)
(C)
(C)
(B)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(B)
(B)
(A),(C)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
100%
100%
100%
100%
59%
100%
51%
51%
100%
Singapore
Singapore
Singapore
Malaysia
Singapore
Singapore
Vic
N/A
ACT
China
Qld
NSW
Vic
NSW
Qld
Vic
NSW
ACT
NSW
Vic
NSW
Vic
United States
India
Hong Kong
Singapore
Hong Kong
Vic
Vic
Vic
Vic
NSW
Vic
N/A
N/A
WA
Moorookyle Devine Pty Ltd
Nestdeen Pty Ltd
Nexus Point Solutions Pty Ltd
Opal Insurance (Singapore) Pte Ltd
Pioneer Homes Australia Pty Ltd3
Plant and Equipment Leasing Pty Limited
PT Cinere Serpong Jaya
PT Leighton Contractors Indonesia
PT Ngawi Kertosono Jaya
PT Solo Ngawi Jaya
PT Thiess Contractors Indonesia
River Links Developments Pty Ltd
Riverstone Rise Gladstone Pty Ltd
Riverstone Rise Gladstone Unit Trust
Silcar Pty Ltd1
Silcar Pty Ltd & Thiess Services Pty Ltd
Silcar New Caledonia SAS
Silverton Group Pty Ltd
Talcliff Pty Ltd
Technical Resources Pty Limited
Telecommunication Infrastructure Pty Ltd
Thai Leighton Limited
Thiess (Mauritius) Pty Ltd3
Thiess Contractors (Malaysia) Sdn Bhd3
Thiess Contractors (PNG) Limited3
Thiess India Pvt Ltd4
Thiess Infraco Pty Ltd
Thiess Infrastructure Nominees Pty Ltd
Thiess Infrastructure Pty Ltd
Thiess Infrastructure Trust
Thiess Mining Maintenance Pty Ltd (formerly Thiess Investments Pty Limited)
Thiess John Holland Joint Venture (Airport Link) 3
Thiess John Holland Joint Venture (Eastlink) 3
Thiess John Holland Joint Venture (Lane Cove Tunnel) 3
Thiess John Holland Motorway Services3
Thiess Minecs India Pvt Ltd4
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(A)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
51%
100%
100%
100%
51%
100%
100%
100%
95%
95%
100%
100%
51%
51%
100%
100%
100%
100%
51%
100%
100%
49%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
90%
Vic
Qld
NSW
Qld
NSW
Singapore
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Qld
Qld
N/A
Vic
N/A
WA
Qld
NSW
Vic
India
Qld
Vic
Vic
Vic
Qld
Qld
Vic
NSW
Qld
India
New Caledonia
Thailand
Mauritius
Malaysia
Papua New Guinea
Leighton Holdings Limited Annual Report 2013
190
190
Notes continued
for the year ended 31 December 2013
39. LEIGHTON HOLDINGS LIMITED AND CONTROLLED ENTITIES CONTINUED
Name of entity
Moorookyle Devine Pty Ltd
Nestdeen Pty Ltd
Nexus Point Solutions Pty Ltd
Opal Insurance (Singapore) Pte Ltd
Pioneer Homes Australia Pty Ltd3
Plant and Equipment Leasing Pty Limited
PT Cinere Serpong Jaya
PT Leighton Contractors Indonesia
PT Ngawi Kertosono Jaya
PT Solo Ngawi Jaya
PT Thiess Contractors Indonesia
River Links Developments Pty Ltd
Riverstone Rise Gladstone Pty Ltd
Riverstone Rise Gladstone Unit Trust
Silcar Pty Ltd1
Silcar Pty Ltd & Thiess Services Pty Ltd
Silcar New Caledonia SAS
Silverton Group Pty Ltd
Talcliff Pty Ltd
Technical Resources Pty Limited
Telecommunication Infrastructure Pty Ltd
Thai Leighton Limited
Thiess (Mauritius) Pty Ltd3
Thiess Contractors (Malaysia) Sdn Bhd3
Thiess Contractors (PNG) Limited3
Thiess India Pvt Ltd4
Thiess Infraco Pty Ltd
Thiess Infrastructure Nominees Pty Ltd
Thiess Infrastructure Pty Ltd
Thiess Infrastructure Trust
Thiess Mining Maintenance Pty Ltd (formerly Thiess Investments Pty Limited)
Thiess John Holland Joint Venture (Airport Link) 3
Thiess John Holland Joint Venture (Eastlink) 3
Thiess John Holland Joint Venture (Lane Cove Tunnel) 3
Thiess John Holland Motorway Services3
Thiess Minecs India Pvt Ltd4
Interest
held
Place of
incorporation
51%
100%
100%
100%
51%
100%
100%
100%
95%
95%
100%
100%
51%
51%
100%
100%
100%
100%
51%
100%
100%
49%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
90%
Vic
Qld
NSW
Singapore
Qld
NSW
Indonesia
Indonesia
Indonesia
Indonesia
Indonesia
Qld
Qld
N/A
Vic
N/A
New Caledonia
WA
Qld
NSW
Vic
Thailand
Mauritius
Malaysia
Papua New Guinea
India
Qld
Vic
Vic
Vic
Qld
Qld
Vic
NSW
Qld
India
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(A)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
Notes continued
for the year ended 31 December 2013
191
191
192
39. LEIGHTON HOLDINGS LIMITED AND CONTROLLED ENTITIES CONTINUED
39. LEIGHTON HOLDINGS LIMITED AND CONTROLLED ENTITIES CONTINUED
Name of entity
Thiess NC
Thiess NZ Limited
Thiess Pty Ltd1
Thiess Services John Holland Services Joint Venture3
Thiess Services Limited
Thiess Services Pty Ltd1
Thiess Southland Pty Ltd
Think Consulting Group Pty Ltd
Townsville City Project Pty Ltd
Townsville City Project Trust
Vision Hold Pty Limited1
Visionstream Australia Pty Limited2
Visionstream Pty Limited1
Visionstream Services Pty Limited2
Vytel Pty Limited1
Western Port Highway Trust
Yoltax Pty Limited
Zelmex Pty Limited
Interest
held
Place of
incorporation
c) Acquisition and disposal of controlled entities
Refer to note 30: Acquisitions and disposals of controlled entities and businesses for further details.
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
100%
100%
100%
100%
100%
100%
100%
100%
75%
75%
100%
100%
100%
100%
100%
100%
59%
59%
New Caledonia
New Zealand
Qld
Qld
New Zealand
Qld
NSW
Vic
NSW
QLD
NSW
NSW
Qld
NSW
NSW
N/A
NSW
ACT
1
2
3
4
5
These companies (Leighton Holdings Limited (LHL) Class Order Companies) have the benefit of ASIC Class Order 98/1418 as at 31
December 2013.
These companies are parties to the Deed of Cross Guarantee but do not have the benefit of ASIC Class Order 98/1418 as at 31
December 2013, as they are small proprietary companies.
Entity has a 30 June reporting date.
Entity has a 31 March reporting date.
This company is a party to the Deed of Cross Guarantee as Holding Entity.
(A) Entities controlled under shareholder agreements.
(B)
(C) Entities included in tax‐consolidated Group.
Incorporated / established in the 2013 reporting period.
Where the Group has an ownership interest of less than 50%, the entity is consolidated where the Group can demonstrate its control of
the entity, in that 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 following controlled entities have been liquidated during the period to 31 December 2013 as they are no longer required by the
d)
Liquidation of controlled entities
Group in the ordinary course of business:
Silverton Group (Aust) Pty Ltd
Metro Developments Australia Pty Ltd
Broad Construction Services (VIC) Pty Ltd
Broad Construction Services (SA) Pty Ltd
Broad Construction Services (NT) Pty Ltd
e) Parent entity commitments and contingent liabilities
Contingent liabilities under indemnities given on behalf of controlled entities in respect of the parent: bank guarantees: $2,385.6 million
(31 December 2012: $2,322.6 million); insurance bonds: $1,254.2 million (31 December 2012: $704.5 million); letters of credit: $414.2
million (31 December 2012: $720.2 million).
Capital expenditure contracted for at the reporting date but not recognised as liabilities of the parent was $nil (31 December 2012: $nil).
f) Material subsidiaries including consolidated structured entities
Set out below are the Company’s principal subsidiaries at 31 December 2013. Unless otherwise stated, the subsidiaries as listed below
have share capital consisting solely of ordinary shares, which are held directly by the Company, and the proportion of ownership interests
held equals to the voting rights held by the Company.
Name of entity
Principal activity
Country
Leighton Contractors Pty Ltd1 Mining & construction Australia
Thiess Pty Ltd1
Mining & construction Australia
John Holland Group Pty Ltd
Construction
Australia
Leighton Asia Limited
Mining & construction Hong Kong
Leighton International Limited Mining & construction Cayman
Islands
Ownership interest held by the
Ownership interest held by non‐
Company
controlling interests
December 2013
December 2012
December 2013
December 2012
%
100
100
100
100
100
%
100
100
100
100
100
%
‐
‐
‐
‐
‐
%
‐
‐
‐
‐
‐
1 These companies (Leighton Holdings Limited (LHL) Class Order Companies) have the benefit of ASIC Class Order 98/1418. For further
information, refer to section (h)
Non‐controlling interests
There were no material non‐controlling interests relating to the Company’s material subsidiaries disclosed above as at 31 December 2013
and as such no material transactions with non‐controlling interests during the period to 31 December 2013.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
192
192
39. LEIGHTON HOLDINGS LIMITED AND CONTROLLED ENTITIES CONTINUED
c) Acquisition and disposal of controlled entities
Refer to note 30: Acquisitions and disposals of controlled entities and businesses for further details.
d)
Liquidation of controlled entities
The following controlled entities have been liquidated during the period to 31 December 2013 as they are no longer required by the
Group in the ordinary course of business:
Silverton Group (Aust) Pty Ltd
Metro Developments Australia Pty Ltd
Broad Construction Services (VIC) Pty Ltd
Broad Construction Services (SA) Pty Ltd
Broad Construction Services (NT) Pty Ltd
e) Parent entity commitments and contingent liabilities
Contingent liabilities under indemnities given on behalf of controlled entities in respect of the parent: bank guarantees: $2,385.6 million
(31 December 2012: $2,322.6 million); insurance bonds: $1,254.2 million (31 December 2012: $704.5 million); letters of credit: $414.2
million (31 December 2012: $720.2 million).
Capital expenditure contracted for at the reporting date but not recognised as liabilities of the parent was $nil (31 December 2012: $nil).
f) Material subsidiaries including consolidated structured entities
Set out below are the Company’s principal subsidiaries at 31 December 2013. Unless otherwise stated, the subsidiaries as listed below
have share capital consisting solely of ordinary shares, which are held directly by the Company, and the proportion of ownership interests
held equals to the voting rights held by the Company.
Name of entity
Principal activity
Country
Leighton Contractors Pty Ltd1 Mining & construction Australia
Thiess Pty Ltd1
Mining & construction Australia
John Holland Group Pty Ltd
Construction
Australia
Leighton Asia Limited
Mining & construction Hong Kong
Leighton International Limited Mining & construction Cayman
Islands
Ownership interest held by the
Company
Ownership interest held by non‐
controlling interests
December 2013
December 2012
December 2013
December 2012
%
100
100
100
100
100
%
100
100
100
100
100
%
‐
‐
‐
‐
‐
%
‐
‐
‐
‐
‐
1 These companies (Leighton Holdings Limited (LHL) Class Order Companies) have the benefit of ASIC Class Order 98/1418. For further
information, refer to section (h)
Non‐controlling interests
There were no material non‐controlling interests relating to the Company’s material subsidiaries disclosed above as at 31 December 2013
and as such no material transactions with non‐controlling interests during the period to 31 December 2013.
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
193
193
Notes continued
for the year ended 31 December 2013
39. LEIGHTON HOLDINGS LIMITED AND CONTROLLED ENTITIES CONTINUED
39. LEIGHTON HOLDINGS LIMITED AND CONTROLLED ENTITIES CONTINUED
g)
Parent entity transactions with wholly‐owned controlled entities
Transactions with wholly‐owned controlled entities were as follows: aggregate amounts receivable: $867.4 million (31 December 2012:
$973.5 million); aggregate amounts payable: $583.7 million (31 December 2012: $514.0 million); interest received / receivable: $34.6
million (31 December 2012: $35.4 million); interest paid / payable: $15.8 million (31 December 2012: $0.1 million); fees charged: $nil
million (31 December 2012: $0.7 million); dividends received: $315.0 million (31 December 2012: $nil); fees paid: $135.0 million (31
December 2012: $145 million). Subsequent to the reporting date, certain operating companies of the Group declared dividends totalling
$610.0 million, payable to Leighton Holdings Limited on 1 March 2014. This would have the effect of increasing retained earnings to
$596.0 million.
h) Deed of Cross Guarantee
4,345.4
1,835.0
Pursuant to ASIC Class Order 98/1418 dated 13 August 1998, relief was granted to the LHL Class Order Companies from the Corporations
Act 2001 requirements for preparation, audit and publication of financial statements. The Company and each of the LHL Class Order
Companies are party to a Deed of Cross Guarantee dated 10 June 2008. The effect of the Deed is that the Company guarantees to each
creditor payment in full of any debt of a LHL Class Order Company in the event of its winding up under certain provisions of the
Corporations Act 2001. If a winding up occurs under other provisions of the law, the Company will only be liable in the event that after
six months any creditor has not been paid in full. The LHL Class Order Companies have also given similar guarantees in the event that the
Company or other LHL Class Order Companies party to the Deed of Cross Guarantee are wound up.
Thiess Pty Ltd, Thiess Services Pty Ltd, Silcar Pty Ltd, Leighton Properties (WA) Pty Ltd and Leighton Properties (NSW) Pty Ltd became
parties to the Deed on 19 December 2013 by virtue of a Deed of Assumption approved by ASIC.
A.C.N. 112 829 624 Pty Ltd, HWE Cockatoo Pty Ltd, HWE Maintenance Services Pty Limited and HWE Newman Assets Pty Limited have
been released from its obligations under the Deed by executing a Revocation Deed dated 19 December 2013 which has been lodged with
ASIC.
A consolidated statement of profit or loss and statement of financial position, comprising the Company and controlled entities which are
a party to the Deed, after eliminating all transactions between parties to the Deed of Cross Guarantee, at 31 December 2013 is set out
below:
Deed of Cross Guarantee
Statement of Profit or Loss
Profit / (loss) before tax
Income tax (expense) / benefit
Profit / (loss) for the period
Retained earnings brought forward
Retained earnings brought forward ‐ adjustment for new entities party to the deed of Cross
Guarantee
Retained earnings brought forward ‐ adjustment for entities removed from the deed of Cross
Guarantee
Dividends paid
Retained earnings at reporting date
12 months to
December 2013
$m
12 months to
December 2012
$m^
Liabilities associated with assets held for sale
Total current liabilities
841.3
(76.4)
764.9
(202.7)
421.8
(124.3)
36.8
(87.5)
190.3
2.0
(53.6)
(37.9)
(354.1)
576.3
(269.6)
(202.7)
^ Following the adoption of AASB 11 Joint Arrangements by the Group, whilst comparative balances have required restatement throughout
the consolidated financial report as a result of a change in accounting policy, there were no restatements required in relation to the deed
of cross guarantee.
^ Following the adoption of AASB 11 Joint Arrangements by the Group, whilst comparative balances have required restatement throughout
the consolidated financial report as a result of a change in accounting policy, there were no restatements required in relation to the deed
Inventories: consumables and development properties
Trade and other receivables
Inventories: development properties
Investments accounted for using the equity method
Deed of Cross Guarantee
Statement of Financial Position
Assets
Cash and cash equivalents
Trade and other receivables
Current tax assets
Assets held for sale
Total current assets
Other investments
Deferred tax assets
Property, plant and equipment
Intangibles
Total non‐current assets
Total assets
Liabilities
Trade and other payables
Current tax liabilities
Provisions
Interest bearing liabilities
Trade and other payables
Provisions
Interest bearing liabilities
Total non‐current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity
of cross guarantee.
December 2013
December 2012
$m
$m^
194
138.1
1,442.3
9.0
79.5
166.1
2,836.0
142.6
465.5
1,376.0
123.2
565.8
155.0
‐
127.9
1,117.3
52.3
3,119.1
2,359.3
57.0
635.5
3,051.8
737.8
3,315.7
82.6
209.3
‐
2,773.2
101.6
592.1
1,089.4
95.8
696.8
206.1
358.7
851.6
‐
‐
4,773.5
2,776.1
103.0
203.2
3,082.3
5,555.0
5,664.1
9,900.4
7,499.1
3,563.2
1,821.6
7,855.8
6,170.9
2,044.6
1,328.2
2,028.6
(560.3)
576.3
2,044.6
2,027.2
(496.3)
(202.7)
1,328.2
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
39. LEIGHTON HOLDINGS LIMITED AND CONTROLLED ENTITIES CONTINUED
Deed of Cross Guarantee
Statement of Financial Position
Assets
Cash and cash equivalents
Trade and other receivables
Current tax assets
Inventories: consumables and development properties
Assets held for sale
Total current assets
Trade and other receivables
Inventories: development properties
Investments accounted for using the equity method
Other investments
Deferred tax assets
Property, plant and equipment
Intangibles
Total non‐current assets
Total assets
Liabilities
Trade and other payables
Current tax liabilities
Provisions
Interest bearing liabilities
Liabilities associated with assets held for sale
Total current liabilities
Trade and other payables
Provisions
Interest bearing liabilities
Total non‐current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
194
194
December 2013
$m
December 2012
$m^
737.8
3,315.7
82.6
209.3
‐
4,345.4
2,773.2
101.6
592.1
1,089.4
95.8
696.8
206.1
138.1
1,442.3
9.0
79.5
166.1
1,835.0
2,836.0
142.6
465.5
1,376.0
123.2
565.8
155.0
5,555.0
5,664.1
9,900.4
7,499.1
3,563.2
1,821.6
‐
358.7
851.6
‐
4,773.5
2,776.1
103.0
203.2
3,082.3
‐
127.9
1,117.3
52.3
3,119.1
2,359.3
57.0
635.5
3,051.8
7,855.8
6,170.9
2,044.6
1,328.2
2,028.6
(560.3)
576.3
2,027.2
(496.3)
(202.7)
Total equity
^ Following the adoption of AASB 11 Joint Arrangements by the Group, whilst comparative balances have required restatement throughout
the consolidated financial report as a result of a change in accounting policy, there were no restatements required in relation to the deed
of cross guarantee.
1,328.2
2,044.6
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
Notes continued
for the year ended 31 December 2013
195
195
196
40. IMPACT OF THE CHANGE IN ACCOUNTING POLICY ON ADOPTION OF AASB 11 JOINT ARRANGEMENTS
40. IMPACT OF THE CHANGE IN ACCOUNTING POLICY ON ADOPTION OF AASB 11 JOINT ARRANGEMENTS CONTINUED
Impact on the Group’s historical financial statements on adoption of AASB 11
Impact on consolidated statement of cash flows – 31 December 2012
As a result of the adoption of AASB 11, certain amounts previously disclosed in the Group’s historical financial statements have been
adjusted to reflect the retrospective impact of the change in accounting policy adopted from 1 January 2013.
The following tables summarise the adjustments made to the Group’s consolidated statement of profit or loss and consolidated
statement of cash flows for the year ended 31 December 2012, and to the Group’s consolidated statement of financial position as at 1
January 2012 and 31 December 2012.
Impact on consolidated statement of profit or loss – 31 December 2012
12 months to
December 2012
$m
$m
As previously
reported
Change in
accounting policy
Revenue
Expenses
Finance costs
Share of profits / (losses) of associates and joint venture entities
Profit / (loss) before tax
Income tax (expense) / benefit
Profit / (loss) for the year
(Profit) / loss for the year attributable to non‐controlling interests
18,951.7
(18,142.4)
(210.1)
(36.1)
563.1
(121.0)
442.1
8.0
Profit / (loss) for the year attributable to members of the parent entity
450.1
Dividends per share ‐ Final
Dividends per share ‐ Interim
Basic earnings per share
Diluted earnings per share
60.0¢
20.0¢
133.5¢
133.1¢
1,878.0
(1,981.0)
(4.1)
110.1
3.0
(3.0)
‐
‐
‐
‐
‐
‐
‐
12 months to
December 2012
$m
As now
restated
20,829.7
(20,123.4)
(214.2)
74.0
566.1
(124.0)
442.1
8.0
450.1
60.0¢
20.0¢
133.5¢
133.1¢
12 months to
December 2012
$m
As previously
$m
Change in
reported
accounting policy
12 months to
December 2012
$m
As now
restated
Cash flows from operating activities
Cash receipts in the course of operations (including GST)
Cash payments in the course of operations (including GST)
Cash flows from operating activities
2,337.6
(2,274.7)
62.9
22,283.0
(21,008.8)
1,274.2
Dividends received
Interest received
Finance costs paid
Income taxes received / (paid)
Net cash from operating activities
Cash flows from investing activities
Payments for intangibles
Payments for plant and equipment
Payments for other investments
Loans to associates
Net cash from investing activities
Cash flows from financing activities
Proceeds from share issues
Proceeds from borrowings
Repayment of borrowings
Proceeds from sale of property, plant and equipment
Payments for investments in controlled entities and businesses
Proceeds from sale of investments in controlled entities and businesses
Proceeds from sale and finance leaseback of property, plant and
equipment
Repayment of finance leases
Dividends paid to non‐controlling interests
Dividends paid to owners of the Company
Net cash from financing activities
Net increase / (decrease) in cash held
Net cash at the beginning of the year
Effects of exchange rate fluctuations on cash held
Net cash at reporting date
19,945.4
(18,734.1)
1,211.3
19.1
28.9
(199.5)
49.6
1,109.4
(44.7)
(1,216.7)
102.1
(10.8)
172.4
(43.7)
(39.2)
‐
896.3
(542.6)
433.9
(173.9)
(3.4)
(269.6)
340.7
369.5
1,503.2
(25.7)
1,847.0
7.6
(4.1)
‐
‐
66.4
(0.4)
(8.1)
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
57.9
102.8
160.7
19.1
36.5
(203.6)
49.6
1,175.8
(45.1)
(1,224.8)
102.1
(10.8)
172.4
(43.7)
(39.2)
‐
896.3
(542.6)
433.9
(173.9)
(3.4)
(269.6)
340.7
427.4
1,606.0
(25.7)
2,007.7
(1,080.6)
(8.5)
(1,089.1)
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
196
196
40. IMPACT OF THE CHANGE IN ACCOUNTING POLICY ON ADOPTION OF AASB 11 JOINT ARRANGEMENTS CONTINUED
Impact on consolidated statement of cash flows – 31 December 2012
12 months to
December 2012
$m
As previously
reported
$m
Change in
accounting policy
12 months to
December 2012
$m
As now
restated
Cash flows from operating activities
Cash receipts in the course of operations (including GST)
Cash payments in the course of operations (including GST)
Cash flows from operating activities
Dividends received
Interest received
Finance costs paid
Income taxes received / (paid)
Net cash from operating activities
Cash flows from investing activities
Payments for intangibles
Payments for plant and equipment
Proceeds from sale of property, plant and equipment
Payments for investments in controlled entities and businesses
Proceeds from sale of investments in controlled entities and businesses
Payments for other investments
Loans to associates
Net cash from investing activities
Cash flows from financing activities
Proceeds from share issues
Proceeds from borrowings
Repayment of borrowings
Proceeds from sale and finance leaseback of property, plant and
equipment
Repayment of finance leases
Dividends paid to non‐controlling interests
Dividends paid to owners of the Company
Net cash from financing activities
Net increase / (decrease) in cash held
Net cash at the beginning of the year
Effects of exchange rate fluctuations on cash held
Net cash at reporting date
19,945.4
(18,734.1)
1,211.3
19.1
28.9
(199.5)
49.6
1,109.4
(44.7)
(1,216.7)
102.1
(10.8)
172.4
(43.7)
(39.2)
(1,080.6)
‐
896.3
(542.6)
433.9
(173.9)
(3.4)
(269.6)
340.7
369.5
1,503.2
(25.7)
1,847.0
2,337.6
(2,274.7)
62.9
22,283.0
(21,008.8)
1,274.2
‐
7.6
(4.1)
‐
66.4
(0.4)
(8.1)
‐
‐
‐
‐
‐
(8.5)
‐
‐
‐
‐
‐
‐
‐
‐
57.9
102.8
‐
160.7
19.1
36.5
(203.6)
49.6
1,175.8
(45.1)
(1,224.8)
102.1
(10.8)
172.4
(43.7)
(39.2)
(1,089.1)
‐
896.3
(542.6)
433.9
(173.9)
(3.4)
(269.6)
340.7
427.4
1,606.0
(25.7)
2,007.7
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
Notes continued
for the year ended 31 December 2013
197
197
198
40. IMPACT OF THE CHANGE IN ACCOUNTING POLICY ON ADOPTION OF AASB 11 JOINT ARRANGEMENTS CONTINUED
40. IMPACT OF THE CHANGE IN ACCOUNTING POLICY ON ADOPTION OF AASB 11 JOINT ARRANGEMENTS CONTINUED
Impact on consolidated statement of financial position – 31 December 2012
Impact on consolidated statement of financial position – 1 January 2012
31 December 2012
31 December 2012
Assets
Cash and cash equivalents
Trade and other receivables
Current tax assets
Inventories: consumables and development properties
Assets held for sale
Total current assets
Trade and other receivables
Inventories: development properties
Investments accounted for using the equity method
Other investments
Deferred tax assets
Property, plant and equipment
Intangibles
Total non‐current assets
$m
$m
As previously
reported
Change in
accounting policy
1,847.0
3,440.8
10.1
549.5
672.8
6,520.2
673.4
473.4
876.8
97.0
246.0
2,064.1
255.3
4,686.0
160.7
319.8
‐
20.3
‐
500.8
2.4
14.3
(15.0)
‐
‐
7.7
0.4
9.8
$m
As now
restated
2,007.7
3,760.6
10.1
569.8
672.8
7,021.0
675.8
487.7
861.8
97.0
246.0
2,071.8
255.7
4,695.8
Total assets
11,206.2
510.6
11,716.8
613.8
10,514.2
Liabilities
Trade and other payables
Current tax liabilities
Provisions
Interest bearing liabilities
Liabilities associated with assets held for sale
Total current liabilities
Trade and other payables
Provisions
Interest bearing liabilities
Total non‐current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity attributable to equity holders of the parent
Non‐controlling interests
Total equity
4,507.3
76.7
401.7
634.3
174.3
5,794.3
195.4
173.4
2,126.2
2,495.0
8,289.3
2,916.9
2,027.2
(229.4)
1,046.7
2,844.5
72.4
2,916.9
494.6
8.6
4.8
‐
‐
508.0
2.3
0.3
‐
2.6
510.6
‐
‐
‐
‐
‐
‐
‐
5,001.9
85.3
406.5
634.3
174.3
6,302.3
197.7
173.7
2,126.2
2,497.6
8,799.9
2,916.9
2,027.2
(229.4)
1,046.7
2,844.5
72.4
2,916.9
Assets
Cash and cash equivalents
Trade and other receivables
Current tax assets
Assets held for sale
Total current assets
Inventories: consumables and development properties
Trade and other receivables
Inventories: development properties
Investments accounted for using the equity method
Liabilities associated with assets held for sale
Other investments
Deferred tax assets
Property, plant and equipment
Intangibles
Total non‐current assets
Total assets
Liabilities
Trade and other payables
Current tax liabilities
Provisions
Interest bearing liabilities
Total current liabilities
Trade and other payables
Provisions
Interest bearing liabilities
Total non‐current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity attributable to equity holders of the parent
Non‐controlling interests
Total equity
1 January 2012
1 January 2012
$m
$m
As previously
Change in
reported
accounting policy
$m
As now
restated
1,606.0
2,961.4
92.6
489.3
4.6
5,153.9
786.7
432.7
979.8
63.6
307.3
2,521.1
269.1
5,360.3
4,554.8
66.7
331.0
669.8
‐
5,622.3
404.0
247.1
1,473.9
2,125.0
7,747.3
2,766.9
2,027.2
(209.3)
866.2
2,684.1
82.8
2,766.9
1,503.2
2,461.6
92.6
481.3
4.6
4,543.3
777.9
420.4
998.8
63.6
307.3
2,520.0
269.1
5,357.1
9,900.4
4,025.8
59.3
305.3
669.8
‐
5,060.2
352.3
247.1
1,473.9
2,073.3
7,133.5
2,766.9
2,027.2
(209.3)
866.2
2,684.1
82.8
2,766.9
102.8
499.8
8.0
‐
‐
610.6
8.8
12.3
(19.0)
‐
‐
‐
1.1
3.2
529.0
7.4
25.7
562.1
51.7
‐
‐
‐
‐
51.7
613.8
‐
‐
‐
‐
‐
‐
‐
Leighton Holdings Limited Annual Report 2013
Notes continued
for the year ended 31 December 2013
198
198
40. IMPACT OF THE CHANGE IN ACCOUNTING POLICY ON ADOPTION OF AASB 11 JOINT ARRANGEMENTS CONTINUED
Impact on consolidated statement of financial position – 1 January 2012
1 January 2012
1 January 2012
$m
$m
As previously
reported
Change in
accounting policy
Assets
Cash and cash equivalents
Trade and other receivables
Current tax assets
Inventories: consumables and development properties
Assets held for sale
Total current assets
Trade and other receivables
Inventories: development properties
Investments accounted for using the equity method
Other investments
Deferred tax assets
Property, plant and equipment
Intangibles
Total non‐current assets
Total assets
Liabilities
Trade and other payables
Current tax liabilities
Provisions
Interest bearing liabilities
Liabilities associated with assets held for sale
Total current liabilities
Trade and other payables
Provisions
Interest bearing liabilities
Total non‐current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity attributable to equity holders of the parent
Non‐controlling interests
Total equity
1,503.2
2,461.6
92.6
481.3
4.6
4,543.3
777.9
420.4
998.8
63.6
307.3
2,520.0
269.1
5,357.1
9,900.4
4,025.8
59.3
305.3
669.8
‐
5,060.2
352.3
247.1
1,473.9
2,073.3
7,133.5
2,766.9
2,027.2
(209.3)
866.2
2,684.1
82.8
2,766.9
$m
As now
restated
1,606.0
2,961.4
92.6
489.3
4.6
5,153.9
786.7
432.7
979.8
63.6
307.3
2,521.1
269.1
5,360.3
102.8
499.8
‐
8.0
‐
610.6
8.8
12.3
(19.0)
‐
‐
1.1
‐
3.2
613.8
10,514.2
529.0
7.4
25.7
‐
‐
562.1
51.7
‐
‐
51.7
613.8
‐
‐
‐
‐
‐
‐
‐
4,554.8
66.7
331.0
669.8
‐
5,622.3
404.0
247.1
1,473.9
2,125.0
7,747.3
2,766.9
2,027.2
(209.3)
866.2
2,684.1
82.8
2,766.9
Leighton Holdings Limited Annual Report 2013
199
199
200
Notes continued
for the year ended 31 December 2013
42. EVENTS SUBSEQUENT TO REPORTING DATE
Subsequent to reporting date the Group:
declared a 50% franked dividend of 60.0 cents per share; and
on 7 February 2014, $110.0 million was paid to Welspun Infra Projects Private Limited in relation to the deferred consideration
on the acquisition of the remaining 39.9% interest in Leighton Welspun Contractors Private Limited.
The Directors approved the financial report on 20 February 2014.
Notes continued
for the year ended 31 December 2013
41. NEW ACCOUNTING STANDARDS
The following standards, amendments to standards and interpretations have been identified as those which may impact the Group in the
period of initial application. They are available for early adoption at 31 December 2013, unless noted otherwise below, but have not
been applied in preparing this financial report. The Group’s assessment of these new standards and interpretations is set out below:
AASB 9 Financial Instruments (revised December 2010) and AASB 2010‐7 Amendments to Australian Accounting Standards arising
from AASB 9 (December 2010)
This standard addresses the classification, measurement and derecognition of financial assets and financial liabilities. AASB 9 will
become mandatory for the Group’s 31 December 2017 financial statements. Retrospective application is generally required,
although there are exceptions, particularly if the entity adopts the standard for the period ended 31 December 2012 or earlier. The
Group has not adopted the standard and has not yet determined the potential effect of the standard.
AASB 2011‐4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure
Requirements AASB 124
This standard makes amendments to remove individual key management personnel disclosure requirements from AASB 124. The
amendments will become mandatory for the Group’s 31 December 2014 financial statements. This amendement is not available for
early adoption. The amendments are not expected to have a significant impact on the Group’s financial statements.
AASB 2012‐3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities
AASB 2012‐3 adds application guidance to AASB 132 Financial Instruments: Presentation to address inconsistencies identified in
applying some of the offsetting criteria of AASB 132, including clarifying the meaning of "currently has a legally enforceable right of
set‐off" and that some gross settlement systems may be considered equivalent to net settlement. The amendments will become
mandatory for the Group’s 31 December 2014 financial statements. The amendments are not expected to have a significant impact
on the Group’s financial statements.
AASB 2013‐3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non‐Financial Assets
AASB 2013‐3 amends the disclosure requirements in AASB 136 Impairment of Assets. The amendments include the requirement to
disclose additional information about the fair value measurement when the recoverable amount of impaired assets is based on fair
value less costs to sell. The amendments will become mandatory for the Group’s 31 December 2014 financial statements. The
amendments are not expected to have a significant impact on the Group’s financial statements.
AASB 2013‐4 Amendments to Australian Accounting Standards – Novation of Derivatives and Continuation of Hedge Accounting
[AASB 139]
AASB 2013‐4 amends AASB 139 to permit the continuation of hedge accounting in specified circumstances where a derivative,
which has been designated as a hedging instrument, is novated from one counterparty to a central counterparty as a consequence
of laws or regulations. The amendments will become mandatory for the Group’s 31 December 2014 financial statements. The
amendments are not expected to have a significant impact on the Group’s financial statements.
Leighton Holdings Limited Annual Report 2013
200
200
Notes continued
for the year ended 31 December 2013
42. EVENTS SUBSEQUENT TO REPORTING DATE
Subsequent to reporting date the Group:
declared a 50% franked dividend of 60.0 cents per share; and
on 7 February 2014, $110.0 million was paid to Welspun Infra Projects Private Limited in relation to the deferred consideration
on the acquisition of the remaining 39.9% interest in Leighton Welspun Contractors Private Limited.
The Directors approved the financial report on 20 February 2014.
Leighton Holdings Limited Annual Report 2013
Statutory Statements
DIRECTORS’ DECLARATION
201
201
1.
In the opinion of the Directors of Leighton Holdings Limited (“the Company”):
a)
The financial statements and notes, set out on pages 92 to 200, are in accordance with the Corporations Act 2001, including:
i)
giving a true and fair view of the Company’s and the Consolidated Entity’s financial position as at 31 December 2013 and
of their performance for the financial year ended on that date; and
ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001; 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. There are reasonable grounds to believe that the Company and the controlled entities identified in note 39 will be able to meet any
obligations or liabilities to which they are or may become subject by virtue of the Deed of Cross Guarantee between the Company
and those controlled entities pursuant to ASIC Class Order 98/1418.
3. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive
Officer and Chief Financial Officer for the financial year ended 31 December 2013.
4. The Directors draw attention to note 1 to the financial statements, which includes a statement of compliance with International
Financial Reporting Standards.
Dated at Sydney this 20th day of February 2014.
Signed for and on behalf of the Board in accordance with a resolution of the Directors:
R D Humphris
Chairman
H G Tyrwhitt
Chief Executive Officer
Leighton Holdings Limited Annual Report 2013
Independent Auditor’s Report to the members of Leighton Holdings Limited
Report on the financial report
202
202
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Grosvenor Place, 225 George Street, Sydney NSW 2000
PO Box N250 Grosvenor Place, Sydney NSW 1220 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
We have audited the accompanying financial report of Leighton Holdings Limited, which comprises the Consolidated Statement of Financial
Position as at 31 December 2013, and the Consolidated Statement of Profit or Loss, the Consolidated Statement of Profit or Loss and Other
Comprehensive Income, the Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash Flows for the year then
ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the
consolidated entity, comprising the company and the entities it controlled at the year’s end or from time to time during the financial year as
set out on pages 92 to 201.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with
Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable
the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In
Note 1 the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the consolidated
financial statements comply with International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian
Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and
perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures
selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control, relevant to the company’s preparation of the
financial report that gives a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Auditor’s Independence Declaration
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the
independence declaration required by the Corporations Act 2001, which has been given to the directors of Leighton Holdings Limited, would
be in the same terms if given to the directors as at the time of this auditor’s report.
Opinion
In our opinion:
(a) the financial report of Leighton Holdings Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2013 and of its performance for the year
ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the consolidated financial statements also comply with International Financial Reporting Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 64 to 88 of the Directors’ Report for the year ended 31 December 2013. The
directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of
the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Opinion
In our opinion the Remuneration Report of Leighton Holdings Limited for the year ended 31 December 2013, complies with section 300A of
the Corporations Act 2001.
DELOITTE TOUCHE TOHMATSU
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
G Couttas
Partner
Chartered Accountants
Sydney, 20 February 2014
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
Shareholdings
Information regarding the company’s shareholders on 18 March
2014 is as follows:
TWENTY LARGEST SHAREHOLDERS
The percentage of the total holding of the twenty largest
shareholders, as shown in the company’s register of members, is
81.19%. Their names and number of shares held are as follows:
Name
No. of shares
HOCHTIEF Australia Holdings
Limited
J P Morgan Nominees Australia
Limited
HSBC Custody Nominees
(Australia) Limited
National Nominees Limited
JP Morgan Nominees Australia
Limited
Citicorp Nominees Pty Limited
Warbont Nominees Pty Ltd
Citicorp Nominees Pty Limited
BNP Paribas Noms Pty Ltd
HSBC Custody Nominees
(Australia) Limited ‐ A/C 3
Argo Investments Limited
Milton Corporation Limited
CS Fourth Nominees Pty Ltd
Gwynvill Investments Pty
Limited
Share Direct Nominees Pty Ltd
<10026 A/C>
Bainpro Nominees Pty Limited
National Nominees Limited
AMP Life Limited
Merrill Lynch (Australia)
Nominees Pty Limited
HSBC Custody Nominees
(Australia) Limited ‐ A/C 2
Total
Total shares on issue
% of
issued
capital
58.69
5.09
4.69
3.57
3.39
1.92
0.99
0.39
0.32
0.26
0.23
0.22
0.21
0.20
0.20
0.18
0.17
0.16
0.16
0.15
198,172,460
17,176,867
15,834,799
12,040,413
11,452,366
6,473,788
3,356,021
1,333,085
1,084,735
886,555
783,572
757,865
719,882
683,500
668,314
620,030
560,000
553,086
536,043
491,202
274,184,583
337,662,188
81.19
ANNUAL REPORT ����
203
203
SHARE CLASSES AND DISTRIBUTION SCHEDULE
As at 18 March 2014, the company had 377,662,118 ordinary
shares on issue, and had no other class of shares on issue as at that
date. The distribution of shareholders on that date was as follows:
Size of
shareholding
1 – 1,0001
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
No. of
shareholders
40,185
11,515
1,239
600
46
53,585
Ordinary
shares
held*
12,536,045
23,841,744
8,617,866
13,403,865
279,262,668
337,662,188
% of
issued
capital
3.71%
7.06%
2.56%
3.97%
82.70%
100.00%
*
1
The voting rights for ordinary shares are as follows: on a show
of hands every member present in person or by proxy or
attorney or duly appointed representative has one vote, and
on a poll every member so present has one vote for every fully
paid share held by that member.
There were 24 shareholders with less than a marketable parcel
(100 shares), based on the market price of $21.00 as at 18
March 2014.
SUBSTANTIAL SHAREHOLDERS
The names of the substantial shareholders and the numbers of
equity securities in which they have a relevant interest, as disclosed
in substantial holding notices given to the company under the
Corporations Act 2001 (Cth), are:
No. of
shares
198,178,255
Voting
power*
58.77%
163,844,626
54.48%
Name
HOCHTIEF Australia Holdings
Limited
(date of notice: 17 March 2014)
The following companies also hold
a relevant interest in these shares:
HOCHTIEF Asia Pacific GmbH
(the parent company of
HOCHTIEF Australia Holdings
Limited)
HOCHTIEF Aktiengesellschaft
(the ultimate holding company
of HOCHTIEF Australia Holdings
Limited)
Actividades de Construcción y
Servicios, S.A. (the ultimate holding
company of HOCHTIEF
Aktiengesellschaft)
(date of notice: 16 September
2010)
*
Voting power as at the date of change in relevant interests as
specified in the notice.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
Shareholder
information
ENQUIRIES
If you have any questions about your shareholding, dividend
payments, tax file number, change of address or any other enquiry,
you should contact our Shareholder Enquiry Line at Computershare
Investor Services Pty Limited:
by phone on 1300 855 080 (local) or +61 3 9415 4000
(international)
by fax on (03) 9473 2500 (local) or +61 3 9473 2500
(international)
by email at www.investorcentre.com/contact
in writing to:
Computershare Investor Services Pty Limited
GPO Box 2975
Melbourne VIC 3001
Australia
DIVIDEND PAYMENT
The final dividend payment of 60 cents per share will be paid on
4 April 2014 and will be franked to 50%.
DIRECT DIVIDEND DEPOSIT INTO BANK ACCOUNTS
If you are an Australian resident shareholder, any dividends will be
paid directly into your nominated bank, building society or credit
union account in Australia on the dividend payment date. Details of
dividend payments will be confirmed by an advice mailed or
emailed to you on that date.
If you have not provided your bank account details you will not
receive your dividend until you do so. You can provide your bank
account details by contacting the Share Registrar, Computershare
Investor Services Pty Limited, as set out above. If you subsequently
change your bank account details, please promptly notify the
Registrar in writing, quoting your old bank account number as an
added security check.
TAX FILE NUMBERS
Since 1 July 1991, all companies have been obliged to deduct tax at
the top marginal rate from unfranked dividends paid to investors
resident in Australia who have not supplied them with a tax file
number or exemption particulars. Tax will not be deducted from
the franked portion of a dividend.
If you have not already done so, a Tax File Number Notification
form or Tax File Number Exemption form should be completed for
each holding and returned to our Share Registrar, Computershare
Investor Services Pty Limited. Please note you are not required by
law to provide your tax file number if you do not wish to do so.
SECURITIES EXCHANGE LISTINGS
Leighton Holdings is listed on the Australian Securities Exchange
(ASX). The home branch is Sydney, Australia. Leighton Finance
(USA) Pty Ltd Notes are listed on the Singapore Exchange (SGX).
ANNUAL REPORT ����
204
204
SHAREHOLDERS
Information regarding the twenty largest shareholders, distribution
schedule and substantial shareholders is in the Shareholdings
section on page 203.
OTHER AVAILABLE PUBLICATIONS
We provide regular shareholder communications such as Quarterly
Shareholder Updates (for March and September quarters), Half
Yearly and Annual Reports to all shareholders who have indicated
their preference to receive these publications.
This year, we have introduced a new report for all shareholders
titled the 2013 Annual Review. The 2013 Annual Review will
supplement this Annual Report and will provide shareholders with
key highlights and messages from the 2013 Financial Year.
We have also introduced a new online report for all shareholders
titled the 2013 Sustainability Report. The 2013 Sustainability Report
highlights the policies, standards and initiatives that go towards
representing how we have been strengthening the foundations of
the Group. It represents our cultural and business transformation
during the past two years, presented across a range of
sustainability categories and indicators.
Interested parties wishing to receive publications should contact
the Public Information Coordinator on (02) 9925 6636.
FINANCIAL CALENDAR
A current financial calendar is available online
at: www.leighton.com.au/investor‐and‐media‐centre/financial‐and‐
event‐calendar. Please note that timing of events can be subject to
change.
BIDDER’S STATEMENT
On 14 March 2014, Leighton received a copy of HOCHTIEF's
Bidder's Statement in relation to the proportional takeover offer
for three out of every eight Leighton shares at $22.50 per share
(the "Improved Offer"). HOCHTIEF’s Bidder’s Statement was also
released to the ASX on 14 March 2014 and is expected to be
dispatched to shareholders at the end of March.
As announced to the market on 13 March 2014, the independent
Directors recommend that minority shareholders accept the
Improved Offer in the absence of a superior proposal. The
recommendation of the independent Directors will be provided in
the Leighton Target's Statement, which will also include an
Independent Expert’s Report and is due to be sent to shareholders
no later than 11 April 2014.
Shareholders are encouraged to read both of these documents
and, if they consider it appropriate, to seek professional advice
before deciding how to respond to the Improved Offer.
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
205
205
FIVE YEAR STATISTICAL SUMMARY
December
2013
December
2012*
December
2011#^
June 2011^
June 2010^
Summary of financial position
Share capital
Total equity attributable to equity holders of the parent
Total equity
Total liabilities
Total assets
Summary of financial performance
2,028.6
3,220.2
3,246.1
8,829.9
2,027.2
2,844.5
2,916.9
8,799.9
12,076.0
11,716.8
2,027.2
2,684.1
2,766.9
7,133.5
9,900.4
2,016.2
2,236.7
2,319.9
7,480.3
9,800.2
1,232.9
2,564.7
2,568.1
6,197.7
8,765.8
Revenue – Group, joint ventures and associates
24,411.0
23,127.0
12,176.9
19,376.7
18,642.1
Profit before finance costs and tax
Profit/(loss) before tax
Income tax (expense)/benefit
Profit/(loss) for the period
Profit/(loss) for the period attributable to members of
the parent entity
991.5
736.1
(267.2)
468.9
780.3
566.1
(124.0)
442.1
565.9
475.4
(130.5)
344.9
(331.3)
(490.9)
85.2
(405.7)
1,022.7
842.6
(227.5)
615.1
508.7
450.1
340.0
(408.8)
612.0
Financial statistics
Dividends per ordinary share
Earnings per ordinary share
‐ basic
‐ diluted
Return on average equity attributable to members of the
parent entity
Return on total assets
Profit before finance costs and tax to total revenue
Profit for the period attributable to members of the
parent entity to total revenue
Dividend times covered
Dividend payout ratio
Interest times covered
Net tangible assets per ordinary share
Current ratio
Total equity to total assets
Total equity to total liabilities
Gross borrowings to total equity
105.0¢
80.0¢
60.0¢
60.0¢
150.0¢
150.9¢
150.1¢
16.8%
4.2%
4.1%
2.1%
1.4
69.6%
3.9
$7.93
1.1
26.9%
36.8%
65.5%
133.5
133.1
16.5%
3.8%
3.4%
1.9%
1.7
59.9%
3.6
$7.89
1.1
24.9%
33.1%
94.6%
101.0¢
101.0¢
(133.1¢)
(133.1¢)
13.8%
(17.0%)
3.4%
4.7%
2.8%
1.7
59.4%
6.3
$7.41
0.9
28.0%
38.8%
77.5%
(4.2%)
(1.7%)
(2.1%)
(2.2)
(45.1%)
(2.1)
$6.43
0.9
23.7%
31.0%
78.7%
204.6¢
201.9¢
25.0%
7.0%
5.5%
3.3%
1.4
73.3%
5.7
$8.13
1.0
29.3%
41.4%
65.0%
#
*
^
The December 2011 Transitional Financial Year relates to a six month financial period. As such, the information presented above is not entirely comparable
to the 2010 to 2011 and the 2012 and 2013 Financial Year information in this table.
Re‐stated to include the impact upon adoption of AASB 11 Joint Arrangements, as set out in note 40: Impact of the change in accounting policy on adoption
of AASB 11 Joint Arrangements to the Financial Report on pages 195 to 198.
Periods prior to December 2012 have not been restated to include the impact of the adoption of AASB 11.
Leighton Holdings Limited Annual Report 2013
Leighton Holdings Limited Annual Report 2013
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
206
206
Safety statistics^~
Fatalities (Australia)
Fatalities (International)
TRIFR (Australia)1
TRIFR (International)1
LTIFR (Australia)2
LTIFR (International)2
Potential class 1 (Australia)3
Potential class 1 (International)3
Actual class 1 (Australia)
Actual class 1 (International)
Workforce statistics^
Number of employees
Female participation (Australia)
Female participation (International)
Indigenous participation (Australia)
Local participation (International)4
Environment statistics^
Environmental level 1 (Australia)5
Environmental level 1 (International)5
December
2013
December
2012
December
2011#
June 2011
June 2010
0
5
8.2
3.4
1.4
1.3
324
145
2
7
55,990
16.8%
7.4%
2.9%
93.5%
0
0
1
2
10.5
2.8
1.6
0.7
464
136
4
6
56,323
16.9%
7.0%
2.1%
91.7%
0
0
2
1
14.6
2.8
1.8
0.4
216
55
3
3
53,141
16.5%
7.3%
1.5%
92.9%
0
0
1
3
15.7
2.9
1.8
0.6
451
108
2
7
51,075
16.1%
7.9%
1.5%
‐*
2
0
2
2
15.8
2.8
1.6
0.8
616
73
5
6
45,340
15.3%
6.5%
1.6%
‐*
0
0
#
^
~
*
1
2
3
4
5
The December 2011 Transitional Financial Year relates to a six month financial period. As such, the information presented above is not entirely comparable
to the 20010 to 2011 and the 2012 and 2013 Financial Year information in this table.
Australian operations include New Zealand. International operations exclude Habtoor Leighton Group.
International operations include Leighton Africa and Leighton Services from 1 January 2012 to 30 June 2012 only.
Data not collected.
Total Recordable Injury Frequency Rate (per million hours worked). Rolling 12 month average.
Lost Time Injury Frequency Rate (per million hours worked). Rolling 12 month average.
Class 1 risks are those that could cause a fatality or permanent disabling injury.
Local participation refers to percentage of locally‐employed full‐time equivalent staff in our international operations. Local participation data not collected
prior to 1 July 2011.
Level 1 environmental incidents are those with highly detrimental impacts on the environment, community and/or company including irreversible and long‐
term environmental, cultural, heritage or reputational damage, breaches of statutory or approval conditions with serious legal or contractual consequences,
or those with total cleanup costs in excess of $100,000.
LEIGHTON HOLDINGS LIMITED
ANNUAL REPORT ����
95
207
Directory and offices
LEIGHTON HOLDINGS LIMITED
Principal Registered Office in Australia
Board of Directors
Principal Bankers
Australia and New Zealand Banking Group
Limited
Level 1, 20 Martin Place
Sydney NSW 2000 Australia
Commonwealth Bank of Australia
48 Martin Place
Sydney NSW 2000 Australia
National Australia Bank Limited
255 George Street
Sydney NSW 2000 Australia
Westpac Banking Corporation
Level 3, Westpac Place
275 Kent Street
Sydney NSW 2000 Australia
Auditor
Deloitte Touche Tohmatsu
Level 9, Grosvenor Place
225 George Street
Sydney NSW 2000 Australia
Share Registry
Computershare Investor Services Pty Limited
Level 3
60 Carrington Street
Sydney NSW 2000 Australia
T: 1300 855 080 (local)
T: +61 3 9415 4000 (international)
Asia/India/Offshore
Leighton Asia Limited
Leighton India
Leighton Offshore Pte Ltd
Head Office
Level 23, Three Pacific Place
1 Queen's Road East
Hong Kong
T: +852 3973 1111
F: +852 3973 1188
www.laio.com
E: info@laio.com
Leighton Holdings Limited
ABN 57 004 482 982
Head Office
472 Pacific Highway
St Leonards NSW 2065
Australia
T: +61 2 9925 6666
F: +61 2 9925 6000
www.leighton.com.au
E: leighton@leighton.com.au
Robert D Humphris OAM
Paula J Dwyer
Marcelino Fernández Verdes
Russell A Higgins AO
Michael J Hutchinson
Pedro López Jiménez
Vickki A McFadden
David P Robinson
Peter W Sassenfeld
José Luis del Valle Pérez
Alternate Director
Robert L Seidler AM
Associate Directors
Ian L Edwards
Mark C Gray
Craig A Laslett
Bruce A Munro
Glenn M Palin
Group Company Secretary
Vanessa R Rees
LEIGHTON GROUP OPERATING COMPANIES
Australia/Pacific
Leighton Contractors Pty Limited
ABN 98 000 893 667
Head Office
Level 8, Tower 1
495 Victoria Avenue
Chatswood NSW 2067
Australia
T: +61 2 8668 6000
F: +61 2 8668 6666
www.leightoncontractors.com.au
E: enquiries@leicon.com.au
Thiess Pty Ltd
ABN 87 010 221 486
Head Office
Thiess Centre
Level 5, 179 Grey Street
South Bank QLD 4101
Australia
T: +61 7 3002 9000
F: +61 7 3002 9009
www.thiess.com.au
E: feedback@thiess.com.au
John Holland Group Pty Ltd
ABN 37 050 242 147
Head Office
Level 5, 380 St Kilda Road
Melbourne VIC 3004
Australia
T: +61 3 8698 9400
F: +61 3 9696 1873
www.johnholland.com.au
E: johnholland@jhg.com.au
Leighton Properties Pty Limited
ABN 41 009 765 379
Head Office
Level 18, 100 Pacific Highway
North Sydney NSW 2060
Australia
T: +61 2 9925 6111
F: +61 2 9925 6003
www.leightonproperties.com.au
E: admin@lppl.com.au
Leighton Holdings Limited Annual Report 2013
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