2015
Annual Report
CIMIC Group Limited
ABN 57 004 482 982
For more than 80 years
CIMIC Group, through its
Operating Companies,
has played a significant role
in building our region.
Marcelino Fernández Verdes
Executive Chairman and Chief Executive Officer
our fresh approach to business
Since the establishment of
our mining operations as a
small earthmoving business
in 1934 by five brothers,
and the foundation of our
construction business in
1949, CIMIC and its Operating
Companies have been closely
involved with engineering,
mining and infrastructure
contracting in Australia and
around the globe.
In 2014 and 2015 we extended this
history - transforming our operating
model, delineating our operations by
activity and establishing new businesses.
We now have businesses covering
mining, construction, public private
partnerships (PPPs), and engineering.
Each has a separate focus, whilst sharing
a common approach to governance.
To reflect our new approach to business,
we have refreshed our branding (outlined
overleaf) and our Code of Conduct, and
launched Group-wide Principles, to unify
our culture and operations.
Our Principles are Integrity,
Accountability, Innovation and Delivery
– underpinned by a continual focus on
Safety. The Principles exist to guide our
actions and act as a common unifying
bond across our operations.
Our Principles guide us as we work to
meet the needs of our clients and
other stakeholders, and this is what
ultimately helps drive continued
shareholder returns.
*
our fresh approach to business
Safety underpins everything we do.
The provision of a safe and healthy
working environment for all our
employees and those under our
care is vital. We hold ourselves to a
consistently high standard of health and
safety wherever we operate and we are
committed to the elimination of injuries.
These changes, along with many others
we have made during the past year, aim
to sustain CIMIC as a leader.
RECENT APPOINTMENT
During the year we
appointed Adolfo Valderas
as Deputy Chief Executive
Officer, in addition to his
role as the Group’s Chief
Operating Officer.
Adolfo has had an integral role in
the transformation of our operations
during the past two years, and he will
be of great value to our company in
this new role.
Adolfo will leverage the many
opportunities before us to the benefit
of our shareholders, clients and
employees.
Trained as a civil engineer, Adolfo
has held leadership roles with
ACS companies (construction and
PPPs) internationally and brings his
considerable management capabilities
to the position.
Adolfo Valderas
Deputy Chief Executive Officer
and Chief Operating Officer
* While Leighton Contractors has been renamed as CPB Contractors,
Leighton Asia has retained its name.
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In January 2016 we launched a new
brand for our Australian-headquartered
construction operations, following the
merger of the construction businesses of
Thiess and Leighton Contractors.
Pacific Partnerships is the name of our
Public Private Partnership (PPP) business,
formed by blending the PPP and Build
Own Operate Transfer capabilities of
CIMIC’s Operating Companies into a
single entity.
These project awards demonstrate
that our construction operations are
successfully delivering innovative
and cost effective solutions that
meet our clients’ needs. This means
we are increasingly competitive and
strongly positioned for future project
opportunities in our markets in
Australia, the South Pacific and Asia.
The company’s new name –
CPB Contractors – reflects
its heritage and capability in
Construction, Civil, Projects
and Building, as well as the
expertise of our People.
The logo uses three shapes from
the CIMIC logo and signifies
transformation in action. The use of
orange reflects its Leighton heritage.
Our global construction operations,
incorporating CPB Contractors and
Leighton Asia, performed well during
2015, successfully delivering work for
clients and winning new work.
Major project awards for 2015 included
nationally significant Australian
transport infrastructure projects such
as the WestConnex M4 East Motorway
and New M5 Motorway (NSW), Torrens
Road to River Torrens motorway (SA),
CityLink Tulla Widening from Bulla
Road to Power Street (VIC) and Mitchell
Freeway Extension (WA). Major gas
infrastructure awards included the
Collaborative Well Delivery project for
Australia Pacific LNG and the Surat
Basin project for QGC.
In Asia, we were awarded the Liantang
/ Heung Yuen Wai Boundary Control
Point between Hong Kong and China for
the Government of Hong Kong SAR and
the Shatin to Central Link – Exhibition
Station and Western Approach Tunnel
for MTR Corporation Limited.
The PPP expertise within
Pacific Partnerships has a
long heritage as part of the
CIMIC Group.
CIMIC has been responsible for the
delivery of more than 20 PPPs with
a market value of around $32 billion.
These include approximately 135km
of arterial roads, 35km of major road
and rail tunnels, 1,400km of rail track,
Australia’s longest rail tunnel, New
Zealand’s first road PPP, 10 social
infrastructure PPPs totalling over
$11 billion and more than 2,000
hospital beds.
The Pacific Partnerships logo utilises
the shapes of the CIMIC logo, with the
arrow representing Pacific Partnership’s
key point of differentiation, being
its role in bringing together three
elements:
• development of infrastructure with
CIMIC Operating Companies;
delivering the $3.7 billion operations,
trains and systems package. The project
includes construction, procurement of
rolling stock and operation for 15 years.
• direct investment in those
infrastructure projects; and
• the provision of operation and
maintenance services as a long-term
partner to clients.
In New Zealand, for example, Pacific
Partnerships manages the concession
for the 27km, four-lane Transmission
Gully motorway which is currently being
constructed by CPB Contractors (in
joint venture) north of Wellington. The
project includes a 25-year operations
and maintenance contract.
In Sydney, Pacific Partnerships has
equity in North West Rail Link, where
CPB Contractors (in joint venture) is
In South Australia, Pacific Partnerships
is the concession manager of the new
Royal Adelaide Hospital, Australia’s
most advanced hospital and the single
largest infrastructure project in the
state’s history.
The creation of Pacific Partnerships
optimises our capabilities in
infrastructure construction, PPP
services, and operations and
maintenance services so that we may
grow our share of large and complex
PPP projects and offer end-to-end
services to clients.
In 2014, Thiess was confirmed as our
global mining business and, in 2015,
this position was strengthened with
the expansion of its operations by
commodity and geography.
In 2014 and 2015, we combined our
existing engineering skills into a new,
focused engineering entity named
EIC Activities. The EIC name stands for
Engineering, Innovation and Capability.
Thiess, our global mining
business, is the world’s
largest contract mining
company, with technical
and operational services,
capabilities and projects
across Australia, New
Zealand, Indonesia, Mongolia,
India, Botswana and Chile
covering the world’s major
mineral commodities.
During the year, Thiess was awarded
new work at BHP Billiton’s Rocky’s
Reward nickel mine in Western Australia
and at Antofagasta Minerals’ Encuentro
Oxides copper mine in Chile. The
project wins extend Thiess’ operations
to include nickel mining and expand
Thiess’ global footprint to a new region:
South America.
Thiess also won further work with
existing clients at the coal mines of
Ukhaa Khudag in Mongolia; Lake
Vermont, Dawson and the QCoal
Northern Hub in Queensland; and
Mount Owen in New South Wales.
This demonstrates Thiess’ continued
commitment to delivering innovative,
technical mining solutions focused on
the whole spectrum of mining services.
Expanding Thiess’ strong mining
service capability into the Americas and
leveraging its bases in Australia and
Asia will allow Thiess to drive further
growth in 2016 and deliver sustainable
mining solutions to clients across its
global operations.
In 2015, Thiess also launched
FleetCo – Australia’s most diverse
mining equipment hire company.
FleetCo’s range of services includes
flexible equipment contracts for an
extensive mining fleet, including up
to ultra class equipment, and includes
comprehensive, tailored maintenance
support from one of the world’s leaders
in mining asset management and
maintenance.
EIC Activities’ research and technology
capability enables us to build digitally
first, through virtual construction and
Building Information Modelling (BIM) – a
way of improving planning, construction
and operation of projects with the help
of 3D computer models. BIM improves
our ability to measure, map, visualise and
control our business, and our research
and development function captures and
shares innovation across our business.
Identifying and remedying risks
earlier has led to significant cost
savings and, in some instances, earlier
project completion. The outcomes are
producing benefits for CIMIC and
our clients.
In a recent example, EIC Activities
developed an Instrumentation and
Monitoring Data Management System.
Effective measurement of data is
essential during a project’s life cycle.
The EIC Activities system has improved
our engineering processes. It is
customisable, flexible and scalable and
has delivered time and cost savings
on projects.
EIC Activities brings together
all the Group’s technical
expertise. EIC Activities
delivers solutions, capabilities
and innovations across the
industries of infrastructure,
industrial and building and
in the disciplines of
knowledge management,
engineering methodology,
specialist design and
technical services.
EIC Activities undertakes early reviews
of prospects to identify risks and
mitigations, and provides engineering
solutions to complex technical
problems. In doing so, EIC Activities
enhances our ability to mitigate and
manage risk.
An established
international contractor.
A local partner.
Working for corporate and
government clients, including
through PPPs, the CIMIC Group
has a track-record of partnering
with clients to deliver the highest
quality outcomes on-time, and at a
competitive price.
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1 CIMIC owns 50% of Ventia 2 CIMIC owns 45% of Habtoor Leighton Group
An established
international contractor.
A local partner.
Our commitment to our clients, and to all of our
stakeholders, is that Integrity, Accountability,
Innovation, Delivery and Safety underpin our
operations. This is our promise everywhere we
operate - in more than 20 countries throughout
the Asia Pacific, the Middle East, Sub-Saharan
Africa and South America.
Our mission is to generate sustained returns
for our shareholders by delivering projects for
our clients while providing safe, rewarding and
fulfilling careers for our people.
While each project is unique, we achieve this aim
through a consistent focus on technical excellence,
innovation, a steadfast approach to client
partnership and value creation, and the experience
amassed from operations that have been in
existence since the 1930s. As we continue to
evolve as an organisation, we draw on the passion
and skills of our people who are integral to
our achievements.
Our major shareholder, HOCHTIEF, and its major
shareholder, the ACS Group, are both leaders
in their fields, renowned for innovation. As we
maintain and constantly develop our ability to
deliver pioneering solutions for clients, we draw on
the world-wide network of HOCHTIEF and
the ACS Group, to the benefit of local clients.
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CIMIC Group Limited Annual Report 2015
2015 Annual Report
CONTENTS
Section
Executive Chairman and CEO’s Review
Directors’ Report
Operating and Financial Review
Remuneration Report
Financial Report
Additional Information
Shareholdings
Shareholder information
Glossary
Page
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6
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46
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146
In this Annual Report a reference to ‘CIMIC Group’, ‘we’, ‘us’ or ‘our’ is a reference to CIMIC Group Limited ABN 57 004 482 982 and
certain entities that it controls unless otherwise stated.
The CIMIC Group corporate governance statement is available on our website, in the section titled ‘Board and Governance’
(www.cimic.com.au/our‐approach/corporate‐governance).
The CIMIC Group sustainability report is available on our website at: www.cimic.com.au/our‐approach/sustainability.
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Elizabeth Quay is a major initiative by
the Government of Western Australia
to develop Perth as contemporary and
globally competitive. In partnership with
its subsidiary Broad, CPB Contractors
undertook inlet and public realm
development works, both marine and
land-based, including dredging, piling
and major concrete and earth works.
The outcome is a world-class urban
landscape, surrounding a central water
inlet, in the heart of the city.
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CIMIC Group Limited Annual Report 2015
Executive Chairman and CEO’s Review
Dear Shareholders,
In 2015, we at the CIMIC Group made significant progress on our goal of delivering sustainable returns to our shareholders. I am pleased
to outline for you below our achievements in this and many other areas, and to provide you with this Annual Report which reviews our
progress in more detail.
PERFORMANCE OVERVIEW
First of all, demonstrating our focus on sustainable earnings, we achieved 2015 net profit after tax of $520.4 million, at the top end of
our guidance range of $450 million to $520 million. The 20% growth in net profit after tax on the prior comparable period1 for continuing
operations came from the steady increase in our margins at both the earnings before interest and tax and the net profit after tax levels.
This was achieved through steady improvements to our cost base as we reduced overheads, managed risks and costs and enhanced our
tendering approach, despite the divestment of John Holland and 50% of our Services business, Ventia.
Our strong balance sheet further improved as we reduced risks and systematically improved operations. Operating cash flow was $1.92
billion, an increase of $510 million on FY14, reflecting improved project performance and working capital management. We reported net
cash (including operating leases) of $528.1 million as at 31 December 2015 and gearing significantly below zero, with the associated
reduction in our finance costs assisting with the margin improvement. Demonstrating that we are on the right track with our disciplined
approach to the management of net contract debtors, we substantially reduced this figure during the year to $1.5 billion.
With respect to our emphasis on shareholder returns, there was an 8% increase in CIMIC’s share price during the year, in contrast to the
decline in the S&P/ASX 200 index. In January 2016 we commenced an on‐market share buy‐back of up to 10% of our fully paid ordinary
shares over 12 months. This will improve shareholder returns and enhance capital efficiency while maintaining sufficient balance sheet
flexibility to pursue future growth and investment in market opportunities. These developments underscore our robust balance sheet
position, solid cash flow generation and disciplined approach to capital management.
The Board has determined a 100% franked final dividend of 50 cents per share ($168.5 million in total based on shares on issue as at 10
February 2016) to be paid on 8 April 2016. This represents a full year payout ratio of 62% of net profit after tax. Due to the share buy‐back
the Board estimates the payout ratio will be approximately 60% of net profit after tax at the time the dividend is paid, consistent with our
dividend policy.
Further details on our Company’s performance are contained in the Operating and Financial Review within this Annual Report.
NEW WORK AND OUTLOOK
Thiess, CPB Contractors (formerly Leighton Contractors) and Leighton Asia all reported success in winning new work during 2015. In total,
CIMIC won new work of $14.132 billion including several major construction projects and mining contract awards, bringing our level of
work in hand to $29 billion3 as at 31 December 2015.
In the challenging environment in resources, Thiess continued to win new work and further diversify its mining portfolio including winning
a nickel mining contract in Western Australia and a copper mining services contract in Chile. Coal mining contract extensions in Mongolia
(at Ukhaa Khudag), New South Wales (at Mount Owen) and Queensland (at Lake Vermont, Dawson and QCoal Northern Hub) were also
awarded.
In the construction sector, CPB Contractors and Leighton Asia secured major wins. The Group had particular success in rail and road
projects, securing packages of the New M5 Motorway and M4 East Motorway in Sydney, level crossing removals and the CityLink Tulla
Widening both in Victoria, the Torrens Road to River Torrens motorway in Adelaide, as well as work to expand the rail network in Hong
Kong. In social infrastructure, project wins included the Fakeeh Academic Medical Centre4 in Dubai; and, in LNG works, wins included gas
field development and gas infrastructure in Queensland.
I am particularly pleased to inform you that, since year‐end, our new PPP company, Pacific Partnerships, was selected, with CPB
Contractors, to deliver with their partners the first stage of Canberra’s light rail project. This is the first major win for the Group’s
integrated approach to PPPs, being involved at the equity, construction, and operation and maintenance levels. Our PPP expertise,
financial strength, diverse capabilities and major project experience position us strongly for light rail and other projects in the PPP
pipeline including rail, road and social infrastructure.
1 Performance is for the comparable 12 month period to December 2014, which includes 50% of Ventia’s profit after tax of $76.6 million, and excludes the
$472.5 million ($675.0 million before tax) contract debtors portfolio provision in continuing operations. Refer to the Operating and Financial Review within
the Annual Report for a reconciliation.
2 New work includes new contracts and contract extensions and variations including the impact of foreign exchange rate movements.
3 Work in hand includes CIMIC’s share of work in hand from Joint Ventures and Associates. Work in hand includes work in hand beyond five years of $1,663
million (Mining $921 million, Corporate $742 million) and 2014 has been restated to include work in hand beyond five years of $817 million (Mining $110
million, Corporate $707 million).
4 Awarded to our 45% owned investment HLG.
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CIMIC Group Limited Annual Report 2015
CIMIC’s markets offer a range of new project opportunities. There is a strong pipeline of infrastructure and mining projects relevant to
CIMIC of $60 billion (60% of which is in Australia and New Zealand) which is expected to be awarded in FY16; and more than $170 billion
(70% of which is in Australia and New Zealand) in FY17 and FY18. Of these figures, mining accounts for $18 billion in FY16, and, currently,
more than $20 billion in subsequent years.
Our performance in 2015 gives us confidence for 2016 and our markets continue to offer a strong pipeline of infrastructure projects,
which is expected to support growth in the medium and longer term.
After reaching the top end of our forecast in 2015, with net profit after tax of $520.4 million, our 2016 guidance is for the Group to
achieve net profit after tax in the range of $520 million to $580 million, subject to market conditions.
OPERATING MODEL AND GOVERNANCE
Operating in 2015 under our activity‐focused organisational structure, we concentrated on developing a common culture across the
CIMIC Group companies (see ‘Principles’ section below) and continued the roll out of more efficient systems.
Our governance changes have included the standardisation and simplification of our tools, processes and business systems. Our aim is to
continue to simplify and optimise the consistency of our governance and reporting. Doing so has provided greater clarity for
accountability across our operations, improved our risk management, delivered cost efficiencies and assisted us to continue to deliver
sustainable shareholder returns.
In 2015 and early 2016, we introduced new brands for our existing and new companies – CIMIC Group, CPB Contractors, Pacific
Partnerships, EIC Activities and FleetCo. The new names are an indication of our reshaped business. Our brands are explained in the fold
out cover of this Annual Report.
We also launched offers to acquire the shares in two of our investments, Devine Limited and Sedgman Limited. We made the offer for
Devine in 2015 and achieved an increase in our stake to 59.11%. A review of Devine’s operations is underway and a new CEO (a former
CIMIC Group executive) and Board members have been appointed. The Sedgman offer is in progress and we will update the market as
appropriate. As at 5 February, CIMIC’s shareholding in Sedgman has been increased to 46.44% through purchasing shares on market.
PRINCIPLES
As part of our focus on culture I engaged with our employees in all parts of the business, including through a series of townhall meetings,
during the year to promote our Principles: Integrity, Accountability, Innovation and Delivery – underpinned by a continual focus on
Safety. For us:
Integrity means respect and honesty for ourselves, our colleagues, clients, suppliers and shareholders;
Accountability means commitment to what we are responsible for;
Innovation means continued adaptation and evolution; and
Delivery is the driver of our reputation and credibility.
Our Principles provide a shared identity and language for CIMIC’s people and guide our actions. They underlie our ability to deliver
leading results for our clients, sustained success for our shareholders, and safe, fulfilling careers for our people. These Principles are
universal across all of our operations.
Integrity is embedded in in all of our companies, evidenced by the strong support for our revised Group Code of Conduct, which was
rolled out during the year. Based on our Principles, it sets the foundation for the way we work every day.
PEOPLE & SAFETY
I am immensely proud of all we have achieved as a business during the year and this is down to the hard work of our people. So ensuring
their safety is paramount.
In 2015 we continued to improve our Total Recordable Injury Frequency Rate (TRIFR) measured per million hours worked.
Whilst we are pleased to have made this progress in our TRIFR, we won’t be satisfied until all of our people are safe, every day.
It is with great sadness that I report the death of one of our colleagues due to a work‐related incident during 2015. On behalf of the Board
and all of CIMIC’s people, I extend my deepest sympathies to the family and friends of our colleague who passed away and confirm our
ongoing commitment to ensuring safety is paramount and underpins all we do at CIMIC Group.
SUSTAINABILITY
I am pleased to launch today the CIMIC Group Sustainability Report. The document outlines how we integrate environmental, social and
governance factors into our decision making to maximise long term shareholder value and contribute to safe and healthy employees,
communities and ecosystems.
Our sustainability commitments are to:
provide safe communities and supportive, safe and positive workplaces for our people;
act with integrity – honestly and respectfully – in all relationships with the Group’s stakeholders;
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CIMIC Group Limited Annual Report 2015
develop a united and collaborative culture where engaged employees are aligned to achieve superior performance and integrate
governance, economic, environmental and social considerations into their roles;
seek competitive advantage by innovating to deliver construction, mining and services projects that satisfy the governance,
economic, environmental and social needs of our clients; and
use resources efficiently, minimise waste and promote the delivery of energy efficient, environmentally and socially responsible
projects.
In 2015 the Group was again recognised by the industry leading Dow Jones Sustainability Indices (DJSI) which tracks the performance of
the companies which lead their industries in terms of corporate sustainability. CIMIC was included in DJSI’s Australia Index, one of only
two construction and engineering companies to be so recognised. CIMIC was also included in RobecoSAM’s 2016 Sustainability Yearbook
and was acknowledged as the construction and engineering ‘industry mover’ for achieving the largest proportional improvement in its
sustainability performance within the top 15% of the industry compared to the previous year.
I encourage you to visit our website to read our Sustainability Report.
CONCLUSION
Throughout 2015 we made significant improvements to CIMIC’s competitive position.
We entered 2016 from a stronger base. With a strong pipeline of infrastructure and mining projects relevant to CIMIC of $60 billion
expected to be awarded in FY16, we are ready to keep pursuing our pipeline of work, and continuing to win and deliver profitable
projects.
Looking forward, we remain focused on further developing our core contracting business, and extending into new markets and exploring
new value creating opportunities within our existing and complementary areas of expertise.
In closing, I would like to thank all of our shareholders for your continued support and to convey the enthusiasm of the whole CIMIC team
for the year ahead.
I look forward to updating you further on our Company’s performance at the AGM on 21 April 2016.
Sincerely,
Marcelino Fernández Verdes
Executive Chairman and Chief Executive Officer
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Lake Vermont is Thiess’ largest Australian
project with production of 10.7 million tonnes
of product coal per year. Thiess is achieving
world-class production at the site through
operational excellence, industry-leading plant
and equipment, and specialised extraction
methods. Services include coal mining, drill
and blast, overburden removal, mobile plant
and equipment, processing and rehabilitation.
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CIMIC Group Limited Annual Report 2015
Directors’ Report
The Directors present their report for the 2015 Financial Year in respect of the Company and certain entities it controlled. This Directors’
Report has been prepared in accordance with the requirements of Division 1 of Part 2M.3 of the Corporations Act and is dated
10 February 2016.
DIRECTORS’ RESUMÉS
The Directors as at the date of this Directors’ Report are:
MARCELINO FERNÁNDEZ VERDES (60)
Executive Chairman and Chief Executive Officer
Civ Eng
Appointed CEO of the Company on 13 March 2014. Appointed Executive Chairman on 11 June 2014. Mr Fernández Verdes was a Non‐
executive Director from October 2012 until his appointment as CEO.
Mr Fernández Verdes has been a member of the Executive Board of HOCHTIEF AG in Essen since April 2012. In November 2012, he was
appointed Chairman of the Executive Board of HOCHTIEF AG and assumed responsibility for the HOCHTIEF Asia Pacific division.
Mr Fernández Verdes studied construction 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 Construcciones, 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. 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 the ACS Group in 2000, and
to the Board of Directors of ACS Servicios y Concesiones, S.L. (Chairman and CEO) in 2006.
RUSSELL CHENU (66)
Independent Non‐executive Director
BCom, MBA, CPA
Appointed Independent Non‐executive Director on 11 June 2014. Mr Chenu has a Bachelor of Commerce from the University of
Melbourne and an MBA from the Macquarie Graduate School of Management. Mr Chenu is an experienced corporate and finance
executive who has held senior finance and management positions with a number of ASX listed companies. In a number of these senior
roles, he has been engaged in significant strategic business planning and business change, including several turnarounds, new market
expansions and management leadership initiatives.
Mr Chenu was appointed as interim CFO of James Hardie Industries plc in October 2004 and was appointed as CFO in February 2005
before retiring in November 2013. As CFO, he was responsible for accounting, treasury, taxation, corporate finance, information
technology and systems, and procurement.
Mr Chenu is a Director of the following additional ASX listed entities: Metro Performance Glass Limited (since July 2014) and James Hardie
Industries plc (since August 2014).
JOSÉ LUIS DEL VALLE PÉREZ (65)
Non‐executive Director
LLB
Appointed Non‐executive Director on 13 March 2014. Mr del Valle Pérez completed a degree in Law from the University Complutense of
Madrid in 1971 and, since 1974, has been Abogado del Estado de España (State Attorney of Spain). He has been a Member of the Bar
Association of Madrid since 1976. As Spanish State Attorney he performed his duties in the Delegations of the Ministry of Finance and the
Courts of Justice of Burgos and of Toledo, and in the Legal Departments of the Ministry of Health and of the Ministry of Labour and Social
Security. Mr del Valle Pérez was previously a Director of the legal department of the political party UCD (from 1977 to 1981) and a
Member of the Parliament (Congreso de los Diputados) of Spain (from 1979 to 1982). He was also Deputy Minister for Territorial
Administration from 1981 to 1982. Since 1983 Mr del Valle Pérez has been a Director of and/or legal advisor to many Spanish companies,
including Banesto (merged with Banco Santander), Continental Industrias del Caucho (a subsidiary of Continental AG), Fococafé and
Continental Hispánica (a subsidiary of Continental Grain Inc).
Mr del Valle Pérez was appointed as a Director of ACS in 1989 and is currently a Director and General Secretary of the ACS Group and is
also the Secretary and/or Director of its main subsidiaries and affiliates.
KIRSTIN FERGUSON (42)
Independent Non‐executive Director
PhD, LLB (Hons), BA (Hons), FAICD
Appointed Independent Non‐executive Director on 10 July 2014. Dr Ferguson has a PhD in Business (Queensland University of
Technology) and Honours degrees in Law (Queensland University of Technology) and Arts (University of New South Wales). Dr Ferguson is
a Fellow of the Australian Institute of Company Directors, a Graduate of the AICD Company Directors Course and a Graduate of the AICD
International Company Directors Course. During her executive career, Dr Ferguson was CEO of the global workplace health and safety
organisation, Sentis, and Director of Corporate Services of Deacons (now Norton Rose Fulbright).
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CIMIC Group Limited Annual Report 2015
Dr Ferguson is a Director of the following additional ASX listed entity: SCA Property Group (since January 2015).
Dr Ferguson is also a Non‐executive Director of the Australian Broadcasting Corporation (ABC) (since November 2015), Hyne & Sons Pty
Limited (since August 2013) and the Queensland Theatre Company (since May 2013), and Adjunct Professor of the Queensland University
of Technology (since April 2015). Previously, Dr Ferguson was a Non‐executive Director of SunWater Limited (between October 2008 and
August 2015), Dart Energy Limited (between November 2012 and March 2013) and the Queensland Rugby Union (between April 2011
and April 2013), and was the Independent Chairman of the Thiess Advisory Board (between February 2013 and June 2014).
TREVOR GERBER (60)
Independent Non‐executive Director
BAcc, CA, SA
Appointed Independent Non‐executive Director on 11 June 2014. Mr Gerber was an executive at Westfield Holdings Limited until 1999.
During his 14 year career at Westfield, Mr Gerber’s roles included Group Treasurer and Director of Funds Management responsible for
Westfield Trust and Westfield America Trust. Mr Gerber has been a professional director since 2000. His board experience has been
varied and includes property, funds management, hotels/tourism, infrastructure, aquaculture and aged care.
Mr Gerber is a Director of the following additional ASX listed entities: Chairman of Sydney Airport Limited (since May 2015 and a Director
since April 2002), Tassal Group Limited (since April 2012), Vicinity Centres Limited (since April 2014) and Regis Healthcare Limited (since
October 2014).
PEDRO LÓPEZ JIMÉNEZ (73)
Non‐executive Director
Civ Eng, MBA
Appointed Non‐executive Director on 13 March 2014. Mr López Jiménez has a degree in civil engineering and an MBA from IESE Business
School, Madrid. He has been awarded the Grand Cross of Isabel La Católica.
During his career Mr López Jiménez has held the following positions: General Director of Ports for the Ministry of Public Works (Spain),
Secretary of State of Urban Affairs and Public Works (Spain), Board Member of Instituto Nacional de Industria (State owned holding
company), Manager of the Thermal Plant Constructions in Hidroelectrica Española, CEO of Empresarios Agrupados (thermal and nuclear
plants engineering and construction management), Chairman and CEO of Endesa S.A., Board Member of Unión Eléctrica S.A. and Empresa
Nacional Hidroelectrica de la Ribagorçana, Chairman of Unión Fenosa S.A., Vice Chairman of Indra Sistemas S.A., Board Member of
Compañía Española de Petróleos S.A.U., Board Member of ENCE S.A, Board Member of Keller Group plc, and Chairman of Gtceisu
Construcción S.A. Additionally, he was the founder of CEOE (Confederation of Spanish Industries), Member of its first Executive
Committee, founder and first Chairman of FEIE (Federation of Spanish Utility Companies), Board Member of Club Español de Energía
(Spanish Energy Association).
Mr López Jiménez currently serves as Board Member (and Member of the Executive Committee) of ACS (since 1989), Vice Chairman of
ACS Servicios y Concesiones, Vice Chairman of ACS Servicios, Comunicaciones y Energía and is Chairman In Office of Dragados S.A. He is a
Board Member of Ghesa Ingeniería y Tecnología S.A. (since 1971) and is Board Member of Gtceisu Construcción S.A. He was appointed as
Chairman of the Supervisory Board of HOCHTIEF AG and Chairman of its Human Resources Committee and its Nomination Committee in
October 2014.
Mr López Jiménez is currently a Board Member of the Malaga Picasso Museum, Álcala University, and the European Club Association, and
is the Vice Chairman of the Real Madrid Football Club.
DAVID ROBINSON (60)
Non‐executive Director
MCom, BEc, FCA, CTA
Appointed Non‐executive Director on 17 December 1990. A Member of the Thiess Advisory Board from 18 June 2013 to 30 June 2014.
Appointed Alternate Director for Mr López Jiménez on 11 June 2014. Previously an Alternate Director for Mr Peter Sassenfeld (from
November 2011 to June 2013). A graduate of the University of Sydney. Registered company auditor and tax agent. A chartered
accountant and Partner of ESV Accounting and Business Advisors (ESV) (following the merger between Harveys, of which Mr Robinson
was Principal, and ESV in July 2015). Adviser to local and overseas companies with interests in Australia. Participant 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. A former Director of Leighton Properties from May 2000 to August
2012.
Mr Robinson is the Chairman of the following additional ASX listed entity: Devine Limited (Chairman since January 2016 and Director
since May 2015).
8
CIMIC Group Limited Annual Report 2015
PETER‐WILHELM SASSENFELD (49)
Non‐executive Director
MBA
Appointed Non‐executive Director on 29 November 2011. Mr Sassenfeld has an MBA from the University of Saarland.
Mr Sassenfeld was appointed as the CFO of HOCHTIEF AG in November 2011. Prior to this role he was the CFO of Ferrostaal AG. Mr
Sassenfeld has previously worked as the CFO of Krauss Maffei AG and in senior finance roles at Bayer AG and the Mannesmann Group.
ALTERNATE DIRECTOR’S RESUMÉ
ROBERT SEIDLER AM (67)
Alternate Director
LLB
Appointed Alternate Director for Mr del Valle Pérez and Mr Sassenfeld on 11 June 2014. Mr Seidler AM has served as an Alternate
Director for a number of HOCHTIEF‐nominated directors dating back to November 2003. He has a degree in Law from the University of
Sydney and is a former partner of Blake Dawson (now Ashurst).
Mr Seidler AM is the Vice President of the Australia Japan Business Cooperation Committee and Chairman of Hunter Philip Japan Limited.
He is 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 is currently a member of the New South Wales Government's Export and
Investment Advisory Panel. Mr Seidler AM was appointed as a Director of HOCHTIEF Australia in November 2011. He was the Chairman of
the Advisory Boards of Leighton Properties and Leighton Asia, India and Offshore (from November 2012 to June 2014) and was the
Chairman of Leighton Asia (from November 2011 to September 2012) and a Director of Leighton Properties (from May 2010 to August
2012) and Leighton International (from November 2009 to November 2011).
COMPANY SECRETARIES’ RESUMÉS
LOUISE GRIFFITHS (36)
Company Secretary
BSc, BA, AGIA
Appointed Company Secretary in January 2016. Ms Griffiths was formerly the Assistant Company Secretary of the Company, having held
that role since May 2011. Ms Griffiths has a Bachelor of Science in Criminology and a Bachelor of Arts in Community Justice. Ms Griffiths
is an Associate of the Governance Institute of Australia (GIA) and holds a Graduate Diploma in Applied Corporate Governance from the
GIA. Ms Griffiths served as a member of the GIA’s New South Wales Professional Development Committee between February 2013 and
September 2014. Ms Griffiths is also the company secretary of a number of subsidiaries of CIMIC.
JOHN EASY (51)
Formerly Group General Counsel and Company Secretary
LLB, BCom, FGIA
Mr Easy held the position of Group General Counsel and Company Secretary between November 2014 and January 2016. Mr Easy was
previously the General Counsel and Company Secretary for DEXUS Property Group from 2004 to 2014 having been employed in its legal
team since 1997.
VANESSA REES (46)
General Manager, Group Governance, formerly Group Company Secretary
Dip Law, AssocD Acc, FGIA
Ms Rees held the position of Group Company Secretary from August 2013 to August 2015, before moving into the newly created role of
General Manager, Group Governance. Prior to joining CIMIC, Ms Rees held various listed company secretarial positions with Ascalon
Capital Managers Limited and Investa Property Group.
9
CIMIC Group Limited Annual Report 2015
BOARD MEETINGS
The number of Board and Board Committee meetings held, and the number of meetings attended by each Director, during the 2015
Financial Year are set out in the table below.
Board
Special Board
Committee~
Audit and Risk
Committee
Ethics, Compliance &
Sustainability
Committee
Remuneration &
Nomination
Committee
H
5
5
5
5
5
5
5
5
‐
A
5
5
5
5
4
5
5
4
5*
H
2
3
‐
2
‐
‐
3
‐
‐
A
2
3
‐
1
‐
‐
3
‐
1*
H
‐
4
‐
4
4
‐
4
4
‐
A
4+
4
3+
4
3
4+
4
4
4*
H
3
3
3
3
‐
‐
‐
‐
‐
A
3
2
3
3
‐
1+
2+
1+
3*
H
‐
2
2
2
2
2
‐
‐
‐
A
2+
1
2
2
2
2
1+
‐
2*
Current Directors
M Fernández Verdes
R Chenu
J L del Valle Pérez
K Ferguson
T Gerber
P Lopéz Jiménez
D Robinson
P Sassenfeld
Alternate Director
R Seidler AM
The number of meetings held during the period the Director/Alternate Director was a member of the Board and/or Committee.
The number of meetings attended by the Director during the period the Director/Alternate Director was a member of the Board and/or Committee.
Notes
H
A
~ Meetings held to consider half year and annual results, annual report, notices of AGM and other related matters.
*
+
The number of meetings attended by the Alternate Director in his capacity as an Alternate Director or as a standing invitee.
The number of meetings attended by the Director as a standing invitee of the Committee.
In addition to these formal meetings, briefing sessions were held for Directors on various issues during the year. Where required, the
Board and its Committees also considered matters out of session by way of circulating resolution.
DIRECTORS’ INTERESTS
Details of the Directors’ relevant interests in the issued capital of the Company and its related body corporates as at the date of this
Directors’ Report are listed in the table below.
Name
Relevant interests in CIMIC
Relevant interests in ACS and/or HOCHTIEF AG
M Fernández Verdes
R Chenu
J L del Valle Pérez
K Ferguson
T Gerber
P López Jiménez
D Robinson
P Sassenfeld
Ordinary
shares
2,7451
Options over
shares
‐
Rights over
shares
‐
Ordinary
shares
1,003,302 (ACS)*
10,314 (HOCHTIEF AG)
Options over
shares
Rights over
shares
‐
3,285
1,0001
1,500
2,000
1,1921
1,489
1,8581
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
278,902 (ACS)
769,426 (ACS)
597,470 (ACS)~
12,338 (HOCHTIEF AG)
‐
‐
‐
‐
‐
‐
‐
Notes
Mr Seidler AM (Alternate Director for Mr Sassenfeld and Mr del Valle Pérez) holds 2,341 ordinary shares, nil options and nil rights.
1
*
~
No Director held a relevant interest in Devine Limited.
These shares are held by the relevant director on trust for HOCHTIEF Australia.
1,002,691 shares are held by Gesguiver, S.L. (a closely related party to Mr Fernández Verdes).
597,470 shares are held by Fapin Mobi, S.L. (a closely related party to Mr López Jiménez).
DIRECTOR AND SENIOR EXECUTIVE REMUNERATION
Details of the Company’s remuneration policy and remuneration paid to the Group’s KMP are detailed in the Remuneration Report within
this Annual Report.
CEO AND CFO DECLARATION
The CEO and CFO have given a declaration to the Board concerning the Group’s financial records, financial statements and notes in
accordance with section 295A of the Corporations Act.
10
CIMIC Group Limited Annual Report 2015
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 regulation.
Within Australia, the Company is required to report under the NGER Scheme. In addition, the Operating Companies are subject to project
specific regulations across the various jurisdictions in which they operate. Failure to comply with these corporate and project specific
requirements may result in penalties such as remediation of damage, court injunctions, and criminal and civil penalties.
To assist the Board in discharging its responsibilities the Company has adopted a governance framework which provides for:
the delegation of accountability for achieving compliance with regulatory requirements (and other requirements) to the most
appropriate person or group within the organisation; and
an assurance and reporting process for the evaluation and oversight of compliance with these requirements to the Board.
In the 2015 Financial Year:
the Company submitted its NGER Scheme report with EY (our NGER Scheme external auditor) providing limited assurance; and
across the 144.1 million hours worked on projects there were no material breaches of legislation or conditions of approval (ie, those
resulting in prosecution, significant financial penalties or contractual action against the Company, executive officers or individuals).
However, there were 3 fines totalling $3,500 and 4 written warnings from environmental regulators.
For further information regarding the Company’s environmental governance, management approach, and performance (which expands
beyond compliance) please refer to the 2015 Sustainability Report on our website at: www.cimic.com.au/our‐approach/sustainability.
UNISSUED SHARES
SHARE RIGHTS
As at the date of this Directors’ Report there are 1,096,928 rights over unissued shares in the Company. These are rights which were
issued in accordance with our employee incentive schemes and are set out below:
Classes of Share Rights
STI Rights
LTI Rights
Total Rights
Number of Share Rights
414,757
682,171
1,096,928
OPTIONS
As at the date of this Directors’ Report there are 735,636 options over unissued shares in the Company. These options were granted
under the LTI plan and were made to eligible Senior Executives in February 2016 as their 2015 LTI. On 28 October 2015, the Board
approved the replacement of the previous performance rights based plan with an options based plan. The 2015 option award represents
the first grant under the new plan, the details of which are set out below:
Option details
Number of participants
Date of grant
Exercise price
Expiry date
Number of options
Original grant
On issue 10 Feb 20161
Notes
1
Date of this Directors’ Report
36
29 October 2015
$27.53
29 October 2020
735,636
735,636
On vesting, these rights and options may be satisfied through the issue of ordinary shares in the Company or the allocation of ordinary
shares in the Company acquired on‐market. Holders of these rights and options receive no voting rights and are not entitled to participate
in any share or rights issue made by the Company.
Refer to the Remuneration Report for summaries of our STI, LTI and option plans and ‘Note 37: Employee benefits’ to the Financial Report
within this Annual Report for further details. Refer to the Shareholdings section of this Annual Report for details regarding the
distribution of holdings of STI Rights, LTI Rights and options.
AUDIT
The declaration by the Group’s external auditor, 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 section of
this Directors’ Report titled ‘Lead Auditor’s independence declaration under section 307C of the Corporations Act’.
No person who was an officer of the Company during the 2015 financial year was a director or partner of the Group’s external auditor at
a time the Group’s external auditor conducted the audit.
11
CIMIC Group Limited Annual Report 2015
INDEMNITY FOR GROUP OFFICERS AND AUDITORS
CONSTITUTION
The Constitution includes indemnities in favour of people who are, or have been, an ‘Officer’ or auditor of the Company. ‘Officer’ is
defined in the Constitution as any Director, Secretary or executive officer of the Company.
The Constitution states that, to the extent permitted by law, the Company indemnifies 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.
DIRECTORS’ DEED OF INDEMNITY
The Company has entered into deeds of indemnity, insurance and access with its current and former Directors. Under each director’s
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 AND EMPLOYEES
The Company has entered into deeds of indemnity with particular Officers, employees or former Officers and employees of the Company
and Operating Companies. These deeds of indemnity give similar indemnities in favour of those Officers, employees or former Officers
and employees in respect of liabilities incurred by them while acting in their applicable capacities in the Company or any Operating
Company, or while acting at the request of the Company or any Operating Company as an Officer or employee of a non‐controlled entity.
The Officers and employees who have the benefit of 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, as defined by that deed.
In February 2013 the Board resolved to extend similar 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 Company Secretary) of
the Company, an Operating Company or a subsidiary of an Operating Company; or
a Director, Company Secretary or an executive (in a role that has been approved by the CEO, CFO or Company Secretary) of a non‐
controlled entity at the request of the Company or Operating Company.
INSURANCE FOR GROUP OFFICERS
During and since the end of the 2015 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 Company Secretary of CIMIC or any subsidiary and includes any other person who is concerned with,
or takes part in, the management of the Company or a Subsidiary.
Under the directors’ deeds and the deeds of indemnity described above, the Company has undertaken to the relevant Officer, employee
or former Officer or employee that it will insure the Officer or employee against certain liabilities incurred in their applicable capacity in
the Company or any Subsidiary or as an Officer or employee of a non‐controlled entity where the position is, or was, held at the request
of the Company or any Subsidiary.
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 following table.
The Board has considered the position and, in accordance with the advice received from the Audit and Risk Committee, is satisfied that
the provision of non‐audit services during the 2015 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 in the following table, did not compromise the
auditor independence requirements of the Corporations Act for the following reasons:
all non‐audit services were reviewed by the Audit and Risk 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 2015 Financial Year and the
quantum of the fees which relate to non‐audit 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 External Auditor Independence Charter.
12
CIMIC Group Limited Annual Report 2015
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 2015 Financial Year were as follows:
Non‐audit services
Other assurance services
Taxation and other services
Total
Amount paid/payable $’000
‐
575
575
ROUNDING OFF OF AMOUNTS
As the Company 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.
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 CIMIC Group Limited.
As lead audit partner for the audit of the financial report of CIMIC Group Limited for the financial year ended 31 December 2015, I declare
that to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Yours faithfully
Deloitte Touche Tohmatsu
G Couttas
Partner
Chartered Accountants
Sydney, 10 February 2016
13
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14
CIMIC Group Limited Annual Report 2015
Operating and Financial Review
PRINCIPAL ACTIVITIES
CIMIC Group, previously known as Leighton Holdings, is one of the world’s leading construction companies and the world’s largest
contract miner. It provides construction, mining, engineering, public‐private partnerships (PPP), and operation and maintenance services
to the infrastructure, resources and property markets.
CIMIC’s primary objective is to generate sustainable returns for shareholders by delivering projects for clients while providing safe,
rewarding and fulfilling careers for our people, competitive solutions for clients, and a stable future for the Group.
OPERATIONS AND STRUCTURE
CIMIC delivers its services through specialised companies: CPB Contractors, Leighton Asia, Thiess, Pacific Partnerships, and EIC Activities.
CIMIC Group Limited (ASX: CIM) is one of the world’s leading international contractors and the world’s largest contract miner. CIMIC
(previously Leighton Holdings) has operations that have been in existence since 1934, was listed on the Australian Securities Exchange in 1962
and has its head office in Sydney, Australia. CIMIC provides construction, mining, engineering, concessions, and operation and maintenance
services to the infrastructure, resources and property markets. It operates in more than 20 countries throughout the Asia Pacific, the Middle
East, Sub‐Saharan Africa and South America and, as at 31 December 2015, employed approximately 43,400 people directly and through its
proportional ownership of HLG and Ventia.
Construction
Mining
PPPs
Engineering
Leading international
construction contractors.
Delivering projects across the
construction industry, including
roads, rail, tunnelling, defence
and building.
CPB Contractors (formerly
Leighton Contractors) launched
its new name and brand in
January 2016. The Leighton Asia
name is unchanged.
Thiess is the world’s largest
contract miner operating at 24
mines across six countries.
Flexible and scalable in
approach, Thiess’ broad
capabilities encompass mine
planning, operations and
technical services, continuous
mining systems, mobile plant
management, product handling
and processing and mine
infrastructure.
Thiess has long‐term mining
contracts in coal and iron ore, as
well as gold, diamonds, nickel
and copper.
EIC Activities is the CIMIC
Group’s engineering business.
It provides specialist design,
technical support, research and
technology for Group projects
and enhances the Group’s ability
to mitigate and manage risk.
EIC undertakes substantial
concept design and construction
reviews for Group projects,
identifying critical risks and
providing engineering solutions
to complex technical problems.
Pacific Partnerships is the CIMIC
Group’s PPP arm. It develops
and invests in infrastructure
projects built by CIMIC’s
operating companies and is a
long‐term partner to clients
through the provision of
operation and maintenance
services throughout the life of
the asset.
After the construction and ramp‐
up phases of PPP projects are
complete, the Group’s equity
investments may be recycled by
selling them in part or in full or
will be retained on the balance
sheet and form the basis for an
efficient investment portfolio. A
similar model for resources
sector projects is also envisaged
under a Build‐Operate‐Transfer
model.
15
CIMIC Group Limited Annual Report 2015
INVESTMENTS AND OTHER ACTIVITIES
As at 31 December 2015, CIMIC’s investments were:
45% of Habtoor Leighton Group (HLG), a Middle‐East based construction company;
50% of Ventia, a services company;
46.44% of Sedgman Limited, a resources engineering company (as at 5 February 2016);
19.74% of Macmahon Holdings Limited, a mining contracting company;
59.11% of Devine Limited, a property development company; and
28.9% of Nextgen Group, a network and data centre telecommunications company.
The Group also has investments in:
property through Leighton Properties and Devine. The Group is seeking to maximise the value of its property investments using a
low capital‐intensive approach; and
FleetCo, an international mining equipment hire business, offering one of Australia’s most diverse ranges of mining hire equipment.
SHAREHOLDERS
The largest shareholder in CIMIC is HOCHTIEF Australia Holdings Limited, a wholly owned subsidiary of HOCHTIEF AG, which owns 69.93%
of CIMIC as at 25 January 2016. HOCHTIEF AG is listed on the Frankfurt Stock Exchange. The largest shareholder in HOCHTIEF AG, ACS held
66.54% of the shares in HOCHTIEF as at 13 October 2015.
16
CIMIC Group Limited Annual Report 2015
STRATEGY
OPERATING MODEL
In 2014, CIMIC transitioned to a new operating model, focused on the delivery of construction, mining, PPPs and engineering through
dedicated, activity‐focused businesses. The new structure, which has been in operation for approximately 18 months, has enabled CIMIC
to:
improve its cost base:
o
o
by taking advantage of economies of scale and synergies; and
by reducing management layers, bureaucracy and cost;
improve project delivery:
o
o
by fostering an entrepreneurial culture; and
by placing a strong focus on risk management; and
improve cash generation.
These achievements have substantially lowered the cost base of CIMIC and its Operating Companies, improving competitiveness.
Improved cost base
Through its focus on costs, CIMIC has become more efficient, cut administrative overheads on a sustainable basis, and improved project
earnings. The Group’s new cost base forms the basis for its ongoing activity and sustained profitability.
In construction, the focus on reducing costs and improving efficiencies has made the business more competitive and enhanced its value
offering to clients. In mining, the focus on productivity and planning improvements and the generation of savings assisted the Group to
win new work. Thiess continues to enhance its value proposition by working with clients to optimise productivity, workforce rosters and
overall mine planning.
Improved project delivery
Through fostering an entrepreneurial culture and a strong focus on risk management, CIMIC improved project delivery during 2015.
Promoting this culture amongst project managers has increased attention to sustainability of profit and cash generation within each
project. Standardised business processes and systems have supported the decentralisation of decision making and accountability to the
project manager level.
EIC Activities’ early reviews of bid prospects to identify risks and mitigations assisted with the promotion of robust risk criteria for the
onboarding of new work and its provision of engineering solutions to complex technical problems resulted in improvements in project
cost and timeframes.
Improved cash generation
Following improvements during 2014, in 2015 CIMIC maintained its focus on working capital management and further significant progress
was made (refer section titled ‘Financial Position and Cash Flow’). Working capital on current projects is closely managed and contract
terms and conditions are designed to ensure that projects are cash‐flow positive and that variations do not result in a build‐up of working
capital. The current remuneration system incentivises cash flow management.
CAPITAL MANAGEMENT AND GROWTH
Transactions
On 11 November 2015 CIMIC made an off‐market takeover bid for shares in Devine. As a result of the offer CIMIC increased its stake in
Devine to 59.11%. A review of Devine’s operations is underway and a new CEO (a former CIMIC Group executive) and Board members
have been appointed.
On 13 January 2016, CIMIC announced its intention to acquire the shares in Sedgman that it did not already own (63.01%). CIMIC is
seeking to increase its shareholding in Sedgman to a level where it can better support the future direction of Sedgman. CIMIC intends to
continue the business of Sedgman including the company’s plans for increasing market and commodity diversification. The Sedgman offer
is in progress and we will update the market as required. As at 5 February 2016, CIMIC’s shareholding in Sedgman had increased to
46.44% through purchasing shares on market.
Organic growth
CIMIC will continue to pursue organic growth through:
winning our fair share of construction and mining projects given our strong competitive position;
diversification by commodity and activity in our existing markets and geographies and expansion into other countries, for example
by exporting contract mining skills into North and South America;
further expansion in the PPP sector, given the current high demand for PPP projects in Australia Pacific and Asia; and
further development of FleetCo, our mining equipment hire business, which is using CIMIC’s existing business resources to gain new
opportunities and provide a flexible service to clients.
New opportunities
In addition, CIMIC’s strengthened balance sheet will enable the Group to evaluate growth options that match our capabilities as
opportunities arise.
17
CIMIC Group Limited Annual Report 2015
RISK MANAGEMENT
CIMIC defines risk management as the identification, assessment and treatment of risks that have the potential to impact materially the
Group’s operations, people, and reputation, the environment and communities in which the Group works, and the financial prospects of
the Group.
CIMIC’s risk management framework is tailored to its business, embedded mostly within existing processes and aligned to the Company’s
objectives, both short and longer term.
Given the diversity of the Group’s operations and the breadth of its geographies and markets, a wide range of risk factors have the
potential to affect the achievement of business objectives. Key risks, including those arising due to externalities such as the economic,
natural and social operating environments, are set out in the following table, together with the Group’s approach to managing those
risks.
Risk description
Risk management approach
The Group’s operations require planning, training and supervision to manage workplace health and safety hazards.
A workplace health and safety incident
or event may put our people and the
community at risk.
The Group is committed to the health and security of our people and the communities in
which we work. Safety policies and standards apply across the Group. Compliance is
regularly reviewed. The Group seeks continual improvement in safety performance.
Governance of safety is overseen by the Board and the Ethics, Compliance and
Sustainability Committee.
The Group often works within, or adjacent to, sensitive environments.
An environmental incident or
unplanned event may occur that
adversely impacts the environment or
the communities in which we work.
Work delivery is subject to various inherent uncertainties.
Work delivery challenges may manifest
in actual costs increasing from our
earlier estimates.
The Group is committed to the highest standard of environmental performance. Operating
Companies’ environmental policies and procedures are aligned with the Group Policy and
Standards. Should an incident occur, emergency response plans will be enacted. The Ethics,
Compliance and Sustainability Committee oversees environmental performance.
Significant resources are devoted to the avoidance, management and resolution of work
delivery challenges. Operating Companies provide project teams with guidance and
support to achieve project and business objectives. EIC Activities also helps to identify and
mitigate risk. Project oversight is maintained by regular performance reviews that involve
Operating Company and CIMIC Group management, commensurate with the scale,
complexity and status of the project.
External factors may affect the Group’s markets and growth plans.
Changes in economic, political or
societal trends, or unforeseen external
events and actions, may affect business
development and project delivery.
The Group maintains a diverse portfolio of projects and investments across a range of
markets and geographies. Regular and rigorous reviews of the Group’s current and
potential geographies, industries, activities and competitors are undertaken. Oversight of
key risks is maintained by the Audit and Risk Committee, supported by a quarterly Risk
Report that aggregates and highlights risks to the Group achieving its objectives.
The Group maintains a project, contract and investment portfolio that is diversified by
geography, market, activity and client to mitigate the impact of emerging trends and
market volatility.
The Group continually seeks opportunities to improve its operations and thereby the value
proposition it delivers to clients.
Reduction in demand for global
commodities and/or price may cause
resource clients to curtail or cease
capital investment programmes, or
adjust operations, thereby impacting
existing and future contracts.
The Group’s reputation is critical to securing future work and attracting and retaining quality personnel, subcontractors and suppliers.
Issues impacting brand and reputation
may affect the Group’s ability to secure
future work opportunities, investment,
suppliers or joint venture partners.
The Group is committed to the highest standard of ethical conduct, and statutory and
regulatory compliance. This is supported by a comprehensive range of Group level policies
and standards, including our Code of Conduct. CIMIC promotes clear governance through
the empowerment of individuals with delegated authority, appropriate segregation of
duties, and clear accountability and oversight for risks.
The Group targets work that meets a defined risk appetite and appropriately balances risk and reward.
Work procurement challenges may
impact our ability to secure high‐quality
projects and contracts.
Application of the Group work procurement standards and approval process maximises the
likelihood of securing quality work with commensurate returns for the risks taken. Pre‐
contracts assurance teams manage and assure the work procurement process. EIC
Activities supports the Group with project design, risk identification and engineering
solutions during the tender phase. The Tender Review Management Committee oversees
and approves the risk profile for key tenders.
18
CIMIC Group Limited Annual Report 2015
SHAREHOLDER RETURNS
Shareholder returns
$
Closing share price
Final dividend per share
Ordinary
Special
Total final dividend per share
Interim dividend per share
Total dividends per share
Earnings per share (basic) from continuing operations
Earnings per share (basic) from discontinued operations
Total Earnings per share (basic)
Payout ratio for ordinary dividends (2015 estimated at
the time the dividend is paid)
2015
$24.30
50c
‐
50c
46c
96c
153.7c
‐
153.7c
60%
2014
Comparable1
128.4c
71.6c
200.0c
60%
2014
$22.50
53c
15c
68c
57c
125c
(33.9c)
233.9c
200.0c
60%
PERFORMANCE OF CIMIC SHARES
2015 was a successful year for CIMIC’s share price performance. CIMIC’s shares closed 2015 at $24.30 (representing a market
capitalisation of $8.22 billion as at 31 December 2015), an increase during the year of 8.0% or $1.80 per share. By comparison, the share
prices of other companies in the engineering and services sector declined, as did the S&P/ASX 200 index (down 0.8% to 5,344.5 points).
Indexed performance of CIMIC shares
30%
25%
20%
15%
10%
5%
0%
‐5%
‐10%
‐15%
21/01/2015
19/03/2015
18/05/2015
14/07/2015
8/09/2015
3/11/2015
31/12/2015
CIM‐AU Close
XAO‐AU Close
TOTAL SHAREHOLDER RETURN
Combining the share price appreciation and dividends declared for the year, CIMIC delivered a total shareholder return of 13.14% in
2015.
DIVIDENDS
The Group’s dividend policy seeks to reward shareholders by paying dividends over time in line with profits. In the year under review,
CIMIC delivered on this policy. Ordinary dividends for the year total 96 cents per share and comprised:
an interim dividend of 46 cents per share, franked at 100%, paid on 2 October 2015; and
a final dividend of 50 cents per share, franked at 100%, to be paid on 8 April 2016 ($168.5 million in total based on shares on issue as
at 10 February 2016).
This represents a full year payout ratio of 62% of NPAT. Due to the share buy‐back the Board estimates the payout ratio will be
approximately 60% of NPAT by the time the dividend is paid, consistent with our dividend policy.
1 Performance is for the comparable 12 month period to December 2014, which includes 50% of Ventia's profit after tax of $76.6 million, and excludes the
$472.5 million ($675.0 million before tax) contract debtors portfolio provision in continuing operations. See explanation in financial highlights below.
19
CIMIC Group Limited Annual Report 2015
SHARE BUY‐BACK PLAN
On 14 December 2015, CIMIC announced it would commence an on‐market share buy‐back of up to 10% of its fully paid ordinary shares
over the following 12 months, and buying commenced in January 2016.
The share buy‐back plan provides on‐going benefits to shareholders through improved returns. CIMIC estimates that a 10% buy‐back
could result in a recurring benefit to future EPS of more than 6%. Furthermore, it will enhance capital efficiency.
The initiative is reflective of CIMIC’s strong balance sheet position, solid cash flow generation and disciplined approach to capital
management. It signals the Company’s belief that the current share price is attractive. The buy‐back is being funded by a combination of
CIMIC’s existing cash balances and working capital facilities.
The timing and number of shares purchased will depend on the CIMIC share price and market conditions. Between 13 January 2016 and
18 January 2016, CIMIC purchased 1,493,291 shares (equivalent to 0.44% of the capital stock), which were cancelled on a daily basis.
20
CIMIC Group Limited Annual Report 2015
FINANCIAL HIGHLIGHTS
FINANCIAL PERFORMANCE
2014 reported financial performance has been adjusted to create a prior comparable period by:
including the Group’s retained 50% of Services businesses’ (now named Ventia) after‐tax contribution as equity accounted in
continuing operations (in 2014 100% of Services contribution is included in NPAT from discontinued operations); and
excluding the contract debtors portfolio provision.
These transactions affect the comparability of the 2014 results with 2015. As a consequence, both reported and comparable profit is
presented for 2014.
Financial performance
$m
Group Revenue4
Revenue Joint Ventures and Associates
Revenue
Interest revenue
Revenue excluding interest revenue
Expenses
Share of profit / (loss) of JVs & Associates
EBIT
EBIT margin5
Net finance costs6
Profit before tax
PBT margin5
Income tax
Profit for the year
Non‐controlling interests
NPAT from continuing operations
NPAT margin
NPAT from discontinued operations
Profit for the year attributable to members
2015
16,218.7
(2,848.0)
13,370.7
(89.9)
13,280.8
(12,427.4)
(14.5)
838.9
6.3%
(103.9)
735.0
5.5%
(220.6)
514.4
6.0
520.4
3.9%
‐
520.4
2014
Comparable2
18,406.0
(1,530.2)
16,875.8
(87.8)
16,788.0
(16,068.3)
93.4
813.1
4.8%
(152.2)
660.9
3.9%
(224.6)
436.3
(2.1)
434.2
2.6%
714.8
1,149.0
CDP3
Adjustment
50% Services
Adjustment
675.0
675.0
675.0
(202.5)
472.5
472.5
472.5
76.6
76.6
76.6
76.6
76.6
(76.6)
‐
2014
Reported
18,406.0
(1,530.2)
16,875.8
(87.8)
16,788.0
(16,743.3)
16.8
61.5
0.4%
(152.2)
(90.7)
(0.5%)
(22.1)
(112.8)
(2.1)
(114.9)
(0.7%)
791.4
676.5
FINANCIAL POSITION
2014 reported financial position was adjusted to show the impact of divestments (John Holland and 50% of the Services business).
Financial position
$m
Net cash (+)/Net Debt
Operating leases
Net cash (+)/Net Debt (including operating leases)
Equity
Gearing8
Net contract debtors9
Cash flow from operating activities
$m
Cash flow from operating activities10
Interest, finance costs, taxes and dividends received
Net cash from operating activities
Gross capital expenditure11
Free operating cash flow
December
2015
1,111.5
(583.4)
528.1
4,115.3
Below zero
1,499.2
December
2015
1,919.6
(469.4)
1,450.2
(266.3)
1,183.9
December 2014
Proforma7
624.8
(604.8)
20.0
3,781.6
Below zero
1,965.1
December
2014
1,409.8
(266.0)
1,143.8
(705.1)
438.7
December 2014
Reported
(1,018.4)
(604.8)
(1,623.2)
3,781.6
30%
1,965.1
Chg. % FY
36.2%
76.5%
26.8%
(62.2%)
169.9%
2 Performance is for the comparable 12 month period to December 2014, which includes 50% of Ventia's profit after tax of $76.6 million, and excludes the
$472.5 million ($675.0 million before tax) contract debtors portfolio provision in continuing operations.
3 Contract debtors portfolio provision.
4 Group Revenue includes revenue from joint ventures and associates of $2,848.0 million (FY14: $1,530.2 million) and interest income of $89.9 million
(FY14: $87.8 million).
5 Margin calculated on revenue excluding interest income $89.9 million (FY14: $87.8 million).
6 Net finance cost includes interest income $89.9 million (FY14: $87.8 million) and finance costs of $193.8 million (FY14: $240.0 million).
7 Proforma financial position as at 31 December 2014 showed the financial position after receipt of cash from divestments of $1,643.2 million.
8 Gearing is expressed as the ratio of net debt and operating leases to net debt, operating leases and shareholders’ equity.
9 Net contract debtors represents the net of amounts due from customers and amounts due to customers. (Refer to Financial Statements ‘Note 8: Trade
and Other Receivables – Additional information on contract debtors’.)
10 Cash flow from operating activities is defined as the cash inflow from operating activities before dividends received, interest, finance costs and tax.
11 Gross capital expenditure is payments for property, plant and equipment.
21
CIMIC Group Limited Annual Report 2015
FINANCIAL HIGHLIGHTS CONTINUED
SOLID INCREASE IN NPAT
NPAT of $520.4 million at the top end of the guidance range; up 19.9% on the prior comparable period (pcp) for the Group’s
continuing operations
Improving sustainability and quality of profits across the Group
EBIT and NPAT margins of 6.3% and 3.9% respectively, representing 150 and 130 basis point increases on the pcp, on revenue of
$13.28 billion
STRONG FINANCIAL POSITION
Net cash (excluding operating leases) up $486.7 million as at 31 December 2015 to over $1 billion (including operating leases,
increase was $508.1 million)
Positive trend in net contract debtors, down 23.7% on FY14 to $1.5 billion as balance sheet de‐risking continues (substantial
reduction in 4Q15 of $619 million)
SUBSTANTIAL IMPROVEMENT IN CASH FLOW
Cash flow from operating activities of $1.92 billion, up $509.8 million on FY14, reflects improved project performance and working
capital management
Gross capital expenditure of $266.3 million, a 62.2% reduction on FY14
Free operating cash flow12 of $1.2 billion, compared to $0.44 billion in FY14
FIRM LEVEL OF WORK IN HAND13
New work14 of $14.13 billion won during 2015; firm level of work in hand of $29 billion as at 31 December 2015
Strong pipeline of infrastructure and mining projects relevant to CIMIC of $60 billion (60% of which is in Australia and New Zealand)
is expected to be awarded in FY16; and more than $170 billion in FY17 and FY18 (70% of which is in Australian and New Zealand). Of
these figures, mining accounts for $18 billion in FY16, and, currently, more than $20 billion in subsequent years
SHAREHOLDER RETURNS
Share price increase of 8%, compared with the decline in the share price of other companies in the engineering and services sector
and in the S&P/ASX 200 index
The Board has determined a 100% franked final dividend of 50 cents per share ($168.5 million in total based on shares on issue as at
10 February 2016) to be paid on 8 April 2016. This represents a full year payout ratio of 62% of NPAT. Due to the share buy‐back the
Board estimates the payout ratio will be approximately 60% of NPAT at the time the dividend is paid, consistent with our dividend
policy
On‐market share buy‐back commenced to improve shareholders returns and enhance capital efficiency
GUIDANCE
FY16 NPAT in the range of $520 million to $580 million, subject to market conditions
12 Free operating cash flow is net cash from operating activities including gross capital expenditure.
13 Work in hand includes CIMIC’s share of work in hand from Joint Ventures and Associates. Work in hand includes work in hand beyond five years of
$1,663 million (Mining $921 million, Corporate $742 million) and 2014 has been restated to include work in hand beyond five years of $817 million (Mining
$110 million, Corporate $707 million).
14 New work includes new contracts and contract extensions and variations including the impact of foreign exchange rate movements.
22
CIMIC Group Limited Annual Report 2015
SIGNIFICANT CHANGES
SIGNIFICANT CHANGES DURING FY15
Changes to management including the appointment of Adolfo Valderas as Deputy Chief Executive Officer and Angel Muriel as Chief
Financial Officer;
S&P confirmed its current investment credit grade rating of 'BBB‐/A‐3' with a stable outlook, and Moody’s maintained an
investment‐grade rating for CIMIC of 'Baa3' with a stable outlook;
Repayment in June 2015 of A$409.2 million (US$298.7 million) of its US$500 million 10‐Year Fixed‐Rate Guaranteed Senior Notes
which bear an interest rate of 5.95% and mature in November 2022;
Repayment of $600.0 million of amounts drawn under a syndicated bank facility;
Payment of the 10 April 2015 100% franked final ordinary dividend of 53 cents per share, and 100% franked special dividend of 15
cents per share;
Payment of the 2 October 2015 100% franked interim ordinary dividend of 46 cents per share;
The announcement and closure of an off‐market takeover bid for all ordinary shares in Devine that CIMIC did not own at $0.75 cash
per share. After the final reconciliation of acceptances received with the share registry, the Group has a relevant interest in 59.11%
of Devine shares; and
The announcement of on‐market share buy‐back of up to 10% of its fully paid ordinary shares over a 12 month period. The share
buy‐back plan provides on‐going benefits to shareholders through improved returns.
SIGNIFICANT CHANGES SINCE BALANCE DATE
The announcement on 13 January 2016 of CIMIC’s intention to acquire the 63.01% of Sedgman shares that it did not already own, at
a price of $1.07 per share, by way of an all‐cash, unconditional off‐market takeover;
The Board determined a 100% franked final dividend of 50 cents per share; and
During 2015 CPB Contractors Pty Ltd, a wholly owned subsidiary of the Group, together with its consortium partners, Saipem SA and
Saipem Portugal Comércio Maritimo LDA, has been in negotiations with Chevron Australia Pty Ltd in relation to collection of contract
debtors from the Gorgon LNG Jetty and Marine Structures Project (Gorgon Contract). Since 31 December 2015 the Company has
commenced a further process of negotiations under the Gorgon Contract which may see the parties enter into a private arbitration
under the provisions of the Gorgon Contract. The continuation of the negotiation process to 31 December 2015 and the further
steps now being taken do not require any change to the accounting treatment of the contract debtors relating to the Gorgon
Contract included within total contract debtors (note 8: Trade and other receivables) in the Group’s financial report.
23
CIMIC Group Limited Annual Report 2015
FINANCIAL PERFORMANCE
Financial performance
$m
Group Revenue
Revenue Joint Ventures and associates
Revenue
Interest revenue
Revenue excluding interest revenue
EBIT
Profit before tax
Income tax
Non‐controlling interests
NPAT from continuing operations
NPAT margin
NPAT
2015
16,218.7
(2,848.0)
13,370.7
(89.9)
13,280.8
838.9
735.0
(220.6)
6.0
520.4
3.9%
520.4
2014
Comparable
18,406.0
(1,530.2)
16,875.8
(87.8)
16,788.0
813.1
660.9
(224.6)
(2.1)
434.2
2.6%
1,149.0
2014
Reported
18,406.0
(1,530.2)
16,875.8
(87.8)
16,788.0
61.5
(90.7)
(22.1)
(2.1)
(114.9)
(0.7%)
676.5
REVENUE
Revenue reached $13.37 billion, and including Joint Ventures and Associates, Group Revenue15 of $16.22 billion was recorded in FY15 and
may be analysed as follows:
Group revenue
$m
Construction
Contract mining
HLG
Commercial & residential
Corporate
Group Revenue
2015
9,514.0
3,063.6
1,191.7
1,100.7
1,348.7
16,218.7
2014
Comparable
12,431.0
3,973.0
763.9
1,027.3
210.8
18,406.0
Construction revenue was $9.51 billion in FY15, reflecting the focus on more profitable work and stricter bidding discipline. The major
projects by revenue included:
LNG‐related contracts in Western Australia, the Northern Territory and Queensland, including Gorgon, Wheatstone, Ichthys, and
QCLNG;
rail and road activities in Australia, including Sydney Metro Northwest in New South Wales, Moreton Bay Rail Link in Queensland,
Gateway WA in Western Australia and upgrades to the Pacific Highway;
social infrastructure projects including the New Royal Adelaide Hospital in South Australia;
activities in Hong Kong, including the Passenger Clearance Building for the Hong Kong Boundary Crossing Facilities, the West
Kowloon Terminus Station, and Hung Hom Station and Stabling Sidings; and
Wynn Palace resort development in Macau.
Contract mining revenue was $3.06 billion in FY15, reflecting the environment in the resources sector. Thiess continues to enhance its
competitiveness by improving productivity and overall mine planning and by generating savings. The major projects by revenue included:
Solomon iron ore mine, Lake Vermont coal mine, Mount Owen coal mine, and Prominent Hill copper and gold mine in Australia; and
Kaltim Prima Coal in Indonesia.
Group revenue from the various market segments in continuing operations was split 63:37 between domestic and international,
compared with 71:29 in FY14.
Project‐related Associates and Joint Ventures generated revenue of $2.85 billion during FY15, an increase of 86.1% from the prior
comparable period.
15 Group Revenue includes revenue from Joint Ventures and Associates of $2,848.0 million (FY14: $1,530.2 million) and interest income of $89.9 million
(FY14: $87.8 million).
24
CIMIC Group Limited Annual Report 2015
EXPENSES
Total expenses of $12.43 billion were incurred in the 2015 Financial Year, representing a decrease of 22.7% on FY14. Significant cost
savings were achieved during the year as a result of the streamlining of the operating model. EBIT and NPAT margins increased to 6.3%
and 3.9% respectively, representing 150 and 130 basis point increases on the prior comparable period. The increase was the result of
reduced overheads, effective management of costs and risks, and enhancements to our tendering approach.
Depreciation and amortisation
Depreciation and amortisation expense was $543.8 million in FY15, representing a decrease of 5.9% or $34.1 million compared to the
prior comparable period.
EBIT
EBIT was $838.9 million up 3.2% on the prior comparable period, and the EBIT margin expanded to 6.3%, representing a 150 basis point
increase on the prior comparable period. Both construction and contract mining operating activities delivered substantial increases in
contributions.
The key drivers were:
the increased earnings contribution from construction activity of $661.1 million, up 14.7% on the prior comparable period, as a
result of strong domestic operations performance by CPB Contractors; and
the increased earnings contribution from mining of $240.9 million, up 24.7% on the prior comparable period, reflective of Thiess’
success in focusing on productivity and planning improvements and generating savings.
The performance in construction related to the transformation of business culture, including an improved risk management and bidding
approach, with stricter criteria for the on‐boarding of projects and tighter discipline, which is focusing the business on higher margin
projects. In mining, the performance related to an improved competitive structure. This was the result of a proactive approach to working
with clients to generate cost reductions, streamlined corporate costs and effective management of machinery and equipment.
Net finance costs
Net finance costs were $103.9 million in FY15 representing an improvement of 31.7% on FY14, following the receipt of cash from the
divestments of John Holland and 50% of the Services businesses and the improved financial structure of the Group. The debt buy‐back of
US$298.7 million of 10‐Year Fixed‐Rate Guaranteed Senior Notes in June 2015 resulted in one‐off expenses in the first half of the year,
but will deliver significantly reduced interest costs over the term of the Notes.
PROFIT BEFORE TAX
The pre‐tax results for the operating segments are set out below.
Profit before tax
$m
Construction
Contract mining
HLG
Commercial & residential
Corporate
Total profit before tax
2015
649.2
225.0
17.9
70.5
(227.6)
735.0
2014
Comparable16
551.0
173.0
28.8
58.8
(150.7)
660.9
2014
Reported
551.0
173.0
28.8
58.8
(902.3)
(90.7)
Construction and contract mining operations delivered strong increases in pre‐tax contributions, rising 17.8% and 30.1% respectively.
Commercial and residential made an increased pre‐tax contribution, up 19.9%. This was as a result of Leighton Properties’ contribution
and the Group’s sale of a development site in St Leonards New South Wales for $121 million that was partially offset by Devine’s loss.
TAX
The Group reported a total tax expense of $220.6 million for 2015 compared to reported $452.5 million for both continuing and
discontinued operations for 2014. This equates to an effective tax rate of 30.0% and compares with an effective tax rate of 34.0% for the
prior comparable period, which was impacted by tax on the divestments of John Holland and 50% of the Group’s Services businesses.
16 The Corporate segment includes 50% of Ventia’s profit after tax of $76.6 million and excludes $675.0 million contract debtors portfolio provision.
25
CIMIC Group Limited Annual Report 2015
FINANCIAL POSITION AND CASH FLOW
FINANCIAL POSITION
A combination of operating cash flows, greater working capital focus and asset sales led to a significant improvement in the balance sheet
position in 2015. As a result, the Group has again increased its net cash position (including operating leases).
Financial position
$m
Net cash /Net debt
Operating leases
Net cash /Net debt (including operating leases)
Equity
Gearing
Net contract debtors
2015
1,111.5
(583.4)
528.1
4,115.3
Below zero
1,499.2
2014
Proforma17
624.8
(604.8)
20.0
3,781.6
Below zero
1,965.1
Chg. % FY
77.9%
(3.5%)
2,540.5%
8.8%
n/a
(23.7 %)
2014
Reported
(1,018.4)
(604.8)
(1,623.2)
3,781.6
30%
1,965.1
CASH FLOW
Sustainable progress was made in cash flow. Operating cash flow18 totalled $1.92 billion in FY15, an increase of 36.2% on FY14 driven by
the improvement in project performance and working capital.
Free operating cash flow
Free operating cash flow was $1.18 billion, an increase of $745.2 million or 169.9% on FY14:
Free operating cash flow
$m
Cash flow from operating activities
Interest, finance costs, taxes and dividends received
Net cash from operating activities
Gross capital expenditure
Free operating cash flow
Net cash / Net debt
2015
1,919.6
(469.4)
1,450.2
(266.3)
1,183.9
1,111.5
2014
Reported
1,409.8
(266.0)
1,143.8
(705.1)
438.7
624.8
Chg. % FY
36.2%
76.5%
26.8%
(62.2%)
169.9%
77.9%
From operating activities
The cash flow from operating activities totalled $1.92 billion in FY15, an increase of 36.2%, or a $509.8 million increase in net cash inflow
in 2015. The increase was the result of the improvement in working capital and CIMIC’s proactive approach to optimising cash
management and daily focus on cash collection.
Net Contract Debtors
Net contract debtors represents the net of amounts due from customers and amounts due to customers, (refer to the Financial
Statements, ‘Note 8: Trade and Other Receivables’):
Net contract debtors
$m
Net contract debtors
December
2015
1,499.2
December
2014
1,965.1
Net contract debtors have reduced by $465.9 million from $1.97 billion at 31 December 2014 to $1.5 billion at 31 December 2015.
CIMIC continued to deliver an improvement in the level of outstanding net contract debtors, substantially de‐risking the balance sheet.
Despite a decrease in overclaims and the impact of foreign exchange, the Group achieved a reduction of $465.9 million since December
2014, due to its focus on debtor reduction and cash‐collection initiatives.
From investing activities
Cash inflow from investing activities totalled $1.25 billion in FY15 (including $1.67 billion of proceeds from the sale of John Holland and
50% of Ventia), compared to a $1.15 billion outflow in FY14.
Gross capital expenditure has been substantially reduced to $266.3 million in FY15 due to a focus on efficiency, with improved asset
utilisation.
17 Proforma financial position as at 31 December 2014 showed the financial position after receipt of cash from divestments of $1,643.2 million.
18 Cash flow from operating activities is defined as the cash inflow from operating activities, before dividends, interest, finance costs and tax.
26
CIMIC Group Limited Annual Report 2015
Cash flow from investing activities
$m
Gross capital expenditure
Proceeds from sale of property, plant and equipment
Proceeds from divestments
Income tax paid on divestments
Payments for investments in controlled entities
Proceeds from sale of investments
Payments for investments
Cash disposed from sale of investments in controlled entities
Other
Cash flow from investing activities
2015
(266.3)
156.2
1,671.0
(263.0)
‐
‐
(35.1)
‐
(15.2)
1,247.6
2014
Reported
(705.1)
81.8
‐
‐
(110.0)
33.7
(1.9)
(420.5)
(28.3)
(1,150.3)
From financing activities
Cash outflow from financing activities totalled $2,558.9 million in FY15, compared to a $200.0 million inflow in FY14.
The total financing activities cash outflow includes a $2,044.2 million net cash outflow in relation to interest bearing liabilities, which
included the repurchase of A$409.2 million (US$298.7 million) of US$500 million 10‐Year Fixed‐Rate Guaranteed Senior Notes, the
repayment of $600.0 million of amounts drawn under a syndicated bank facility, repayments of other Guaranteed Senior Notes of $246.6
million (US$180.0 million), and the repayment of other bilateral, syndicated and other unsecured loans.
Cash flow from financing activities
$m
Net repayment of borrowings
Finance leases
Dividends paid
Other
Cash flow from financing activities
NET CASH
The net cash position is set out below.
Net cash
$m
Cash and cash equivalents
Cash due from divestments
Current interest bearing liabilities
Non‐current interest bearing liabilities
Net cash
Operating leases
Net cash including operating leases
2015
(2,044.2)
(124.7)
(385.9)
(4.1)
(2,558.9)
December
2015
2,167.8
‐
(217.4)
(838.9)
1,111.5
(583.4)
528.1
2014
Reported
779.6
(181.7)
(395.9)
(2.0)
200.0
December 2014
Proforma
1,976.9
1,643.2
(1,163.3)
(1,832.0)
624.8
(604.8)
20.0
Net cash position
The net cash position (including operating leases) was $528.1 million at 31 December 2015. This represents a substantial improvement
from December 2014 when the net cash position was $20.0 million.
Debt position
Interest bearing liabilities
Current and non‐current interest‐bearing liabilities totalled $1,056.3 million at 31 December 2015 compared with $2,995.3 million at 31
December 2014. The $1,939.0 million reduction in interest bearing liabilities from December 2014 was due mainly to repayments (noted
above in ‘From Financing Activities’) and despite foreign exchange rate movements.
Bonding
The Group has significant bonding and guarantee facilities available which are integral to the successful delivery of current and future
work in hand. Bonds and guarantees outstanding at 31 December 2015 were $3,143.9 million. An additional $1,536.6 million was
undrawn of which $614.2 million was committed and $922.4 million was uncommitted.
Credit ratings
S&P confirmed its current investment credit grade rating of 'BBB‐/A‐3' with a stable outlook, and Moody’s maintained an investment‐
grade rating for CIMIC at 'Baa3' with a stable outlook.
27
CIMIC Group Limited Annual Report 2015
OTHER CAPITAL EMPLOYED
Major elements of the balance sheet, other than cash and interest bearing liabilities (refer section titled ‘Net cash’), are set out below:
Other capital employed
$m
Current trade and other receivables
Current trade and other payables
Property, plant and equipment
Non‐current trade and other receivables
Equity‐accounted investments
December
2015
2,659.6
(3,675.7)
1,312.8
889.2
1,073.1
December
2014
3,426.1
(4,309.8)
1,626.5
922.8
1,013.6
Current trade and other receivables
Current trade and other receivables of $2,659.6 million have been reduced since 31 December 2014 by $766.5 million. The figure
included $2,145.0 million of amounts due from customers. The remaining balance relates to sundry debtors, joint venture working capital
and other receivables.
Current trade and other payables
Current trade and other payables of $3,675.7 million include amounts due to customers, trade creditors, joint venture payables, and
other creditors. Overall, the balance has reduced since 31 December 2014 by $634.1 million.
Non‐current trade and other receivables
Non‐current trade and other receivables of $889.2 million included $842.7 million of loan receivables and accrued interest owed by HLG.
Property, plant and equipment
At 31 December 2015 the Group’s property, plant and equipment balance was $1,312.8 million, with an additional $583.4 million
financed by the Group under operating leases.
Property, plant and equipment purchases for the year totalled $266.3 million and disposals were $156.2 million. The net decrease in
property, plant and equipment for the period was $313.7 million and depreciation was $496.6 million.
Equity‐accounted investments
Equity‐accounted investments grew due to increased capital in joint ventures. Equity‐accounted investments included project‐related
associates and joint ventures, such as the Transmission Gully PPP in New Zealand and various property investments. Also included in this
item are the Group’s holdings in HLG, the Services investment partnership (Ventia), Nextgen Group and some listed entities.
Habtoor Leighton Group (HLG)
The Group’s total exposure to HLG as at 31 December 2015 was $1,643.4 million and comprised:
$444.7 million carrying value of the investment;
$842.7 million in loan receivables and accrued interest, in non‐current receivables; and
$356.0 million in off‐balance sheet letters of credit and guarantees.
Ventia
In the second half of 2014 CIMIC formed a 50% investment partnership with funds managed by affiliates of Apollo Global Management
LLC, called Ventia. Ventia’s project wins during the year included:
$270 million award to Visionstream Australia, a division of Ventia, for the first year of a five‐year Multi‐Technology Integrated
Master Agreement with NBN; and
$200 million award for a five‐year water maintenance contract in Melbourne.
Nextgen Group
CIMIC owns 28.9% of Nextgen Group, a network and data centre telecommunications company.
28
CIMIC Group Limited Annual Report 2015
NEW WORK19 AND WORK IN HAND
20
CIMIC’s new work and work in hand progressed well through the year at firm levels and the Group maintained its position as a leading
infrastructure group with a diversified portfolio of work in hand.
At 31 December 2015, work in hand was $29 billion. The change in work in hand from 31 December 2014 reflects a more disciplined and
rigorous approach to pre‐contract risk assessment and market conditions.
Work in hand20
$m
New work
Executed work21
Total WIH
December
2015
14,131
(16,129)
29,004
December
2014
14,666
(18,318)
31,002
PIPELINE
CIMIC’s markets offer a range of new project opportunities. (Refer section titled ‘Operating Environment’). There is a strong pipeline of
infrastructure and mining projects relevant to CIMIC of $60 billion (60% of which is in Australia and New Zealand) which is expected to be
awarded in FY16; and more than $170 billion in FY17 and FY18 (70% of which is in Australia and New Zealand). Of these figures, mining
accounts for $18 billion in FY16, and, currently, more than $20 billion in subsequent years.
MAJOR CONTRACT AWARDS AND SCOPE INCREASES IN 2015
During the period, $14.13 billion of new work was awarded.
In Australia the major awards were22:
$4.3 billion contract for the design and construction of Sydney’s new M5 Motorway, in joint venture (CIMIC’s share is $1.5 billion);
$2.7 billion contract for the design and construction of Sydney’s M4 East Motorway, in joint venture (CIMIC’s share is approximately
$900 million);
$1.3 billion contract extension at Lake Vermont Coal Mine in Queensland;
$760 million contract extension at Mount Owen Coal Mine in New South Wales;
$570 million (approximately) contract for the design and construction of parts of the CityLink Tulla Widening in Melbourne;
$347 million contract for the removal of four level crossings in Victoria;
$300 million contract to deliver gas field development works in Queensland; and
$160 million contract to undertake operations at the Rocky’s Reward nickel mine in Western Australia.
Overseas the major awards (excluding HLG) were:
$1.2 billion contract for the construction of a boundary control point on the border between Hong Kong and China;
$1 billion contract extension at the Ukhaa Khudag coal mine in Mongolia;
$929 million contract for works on the Shatin to Central MTR Link in Hong Kong, in joint venture (CIMIC’s share is 51%); and
$137 million services agreement for the Encuentro Oxides opens pit copper mine in Chile.
In addition, since year end, Pacific Partnerships and CPB Contractors were selected, with their partners, as the preferred proponents to
deliver the first stage of Canberra’s light rail project.
Work in hand20 by segment
$m
Construction
Contract mining
HLG
Commercial & residential
Corporate
Total WIH
December
2015
12,448
9,508
2,404
1,427
3,217
29,004
% of total
December 2014
% of total
43%
33%
8%
5%
11%
100%
12,222
11,063
2,443
1,979
3,295
31,002
39%
36%
8%
6%
11%
100%
Work in hand was split 65:35 between domestic and international, compared with 60:40 in FY14.
19 New work includes new contracts and contract extensions and variations including the impact of foreign exchange rate movements.
20 Work in hand includes CIMIC’s share of work in hand from Joint Ventures and Associates. Work in hand includes work in hand beyond five years of
$1,663 million (Mining $921 million, Corporate $742 million) and 2014 has been restated to include work in hand beyond five years of $817 million (Mining
$110 million, Corporate $707 million).
21 Group revenue excluding interest revenue.
22 Australia dollar value as at date of announcement of the awards, unless otherwise noted.
29
CIMIC Group Limited Annual Report 2015
CONSTRUCTION WORK IN HAND
At December 2015, the Group’s construction work in hand was $12.45 billion, diversified across a range of markets and sectors in
Australia and overseas. The 1.8% increase from the prior period was primarily due to the successful approach taken by CPB Contractors to
the winning of new work, particularly during the second half.
CONTRACT MINING WORK IN HAND
CIMIC continued to diversify its contract mining work in hand by market and commodity and, as at 31 December 2015, the figure was
$9.5 billion. Importantly, during the period, CIMIC won an award in the Americas.
HLG WORK IN HAND
As at 31 December 2015, HLG’s work in hand was stable at $5.3 billion and the Group’s share was $2.4 billion, after doubling in the prior
year.
The major projects awarded to HLG in the period were:
QR2.2 billion contract for the construction of reservoirs and pumping stations in Qatar.
AED468 million contract for the first phase of the Fakeeh Academic Medical Centre;
AED263 million contract for the Khalifa Industrial Zone Area A secondary infrastructure in Abu Dhabi; and
OPPORTUNITIES
CIMIC’s markets offer a large range of new project opportunities, particularly as governments in Australia Pacific and Asia roll out
initiatives to address significant infrastructure deficits.
There is a strong pipeline of infrastructure and mining projects relevant to CIMIC of $60 billion (60% of which is in Australia and New
Zealand) which is expected to be awarded in FY16; and more than $170 billion in FY17 and FY18 (70% of which is in Australia and New
Zealand). Of these figures, mining accounts for $18 billion in FY16, and, currently, more than $20 billion in subsequent years.
Puhoi to Warkworth project in New Zealand;
In PPPs, CIMIC is positioned to capitalise on the pipeline of domestic and overseas infrastructure projects including:
Grafton Prison in New South Wales;
Melbourne Metro;
New Zealand Schools bundle three;
Parramatta Light Rail in New South Wales;
Perth MAX Light Rail;
Canberra Hospital Redevelopment; and
Singapore Marina East desalination plant.
Beyond these projects, Australian State Governments are progressively identifying infrastructure requirements that will come to the
market in the next few years, for example the Sydney Metro City and Southwest, and Western Harbour Tunnel and WestConnex
extensions in New South Wales. In Asia CIMIC is bidding on, or expecting to bid on, numerous infrastructure projects, in particular in Hong
Kong and Singapore.
30
CIMIC Group Limited Annual Report 2015
OPERATING ENVIRONMENT
The Australian Government plans for significant investment in infrastructure. Combined with CIMIC’s focus on project‐level cash
collection and efficiency gains, this provides the Group with great opportunities.
CONSTRUCTION MARKET OUTLOOK
Non‐resource infrastructure construction is expected to be the most important source of growth in Australia, with resources construction
reducing and projects completing. Over the coming years, transport infrastructure has high growth prospects, underpinned by billions of
dollars of state transport investment plans and funding supported by the privatisation of assets and PPPs.
CIMIC’s international infrastructure markets have positive prospects, with a gradually improving investment outlook in ASEAN countries
supported by major markets and stronger industry growth rates.
CONTRACT MINING OUTLOOK
Production and exports of most commodities are expected to continue to grow, albeit at a slower pace than during recent years.
Client needs have been and are changing from expansion to a focus on efficiency and productivity. While the global market outlook
remains challenging, it still holds pockets of growth opportunities.
Although the market outlook for mining remains challenging, we believe the Group is in a strong position to capitalise on the
opportunities that exist both domestically and globally.
FUTURE DEVELOPMENTS
GROUP PROSPECTS
The Group remains focused on improving project delivery (with a clear focus on cash, profitability and sustainability) and on the
development of its PPP business. In addition, the Group analyses M&A market opportunities.
The pipeline of urban infrastructure projects in Australia remains high, underpinning demand for the Group’s construction and contract
mining expertise. In the near‐term, a firm level of work in hand will provide a solid base of revenue.
The opportunities in our markets and geographies will continue to be the primary drivers of demand for the Group. CIMIC will also look to
expand into other countries, for example by exporting its contract mining skills into North and South America, an initiative that has
already commenced with the recent award of mining services for the Encuentro Oxides open pit copper mine in Chile. The Group may
also consider making investments in local companies to support its expansion.
GUIDANCE
FY16 NPAT is expected to be within the range of $520 million to $580 million, subject to market conditions.
31
CIMIC Group Limited Annual Report 2015
Remuneration Report (Audited)
SCOPE
The information provided in this Remuneration Report has been audited and is in accordance with the requirements of the Corporations
Act.
For the purposes of this Remuneration Report, the Key Management Personnel (KMP) are referred to as either Senior Executives (which
includes the CEO and Executive Chairman) or Non‐executive Directors (including Alternate Directors). Details of the Senior Executives (as
at 31 December 2015) are set out below. Details of departed Senior Executives are set out on page 39, and details of the Non‐executive
Directors are set out on page 40.
SENIOR EXECUTIVE REMUNERATION – POLICY AND APPROACH
REMUNERATION PRINCIPLES
The key remuneration principles that underpin CIMIC’s approach to Senior Executive remuneration are to:
align to Group principles and business needs;
link performance to reward; and
promote behaviours that deliver Group sustainability and align to shareholder interests.
REMUNERATION COMPONENTS
Senior Executive remuneration for the 2015 Financial Year was delivered as a mix of fixed and variable remuneration as set out in the
following table:
Fixed
Variable
Fixed remuneration
Short term Incentive (STI)
Long term Incentive (LTI)
Base salary, non‐monetary benefits and superannuation (as applicable).
Annual cash incentive paid to eligible Senior Executives for performance against
approved and measurable objectives.
An option plan vesting two years after award and available to exercise over three
years. Awards are provided to select Senior Executives.
APPROACH TO SETTING REMUNERATION
Individual remuneration is determined by reference to:
Group policy regarding the mix of fixed and variable remuneration;
performance and experience of the individual;
comparable jobs within the Group; and
remuneration for comparable jobs amongst peer companies.
The Board approves the CEO’s remuneration arrangements following consideration by the Remuneration and Nomination Committee.
Remuneration levels for other Senior Executives are approved by the CEO, and reviewed by the Remuneration and Nomination
Committee annually and upon change in a Senior Executive’s position.
SENIOR EXECUTIVE REMUNERATION – COMPONENTS IN DETAIL
The Senior Executives as at 31 December 2015 are identified in the table below. Details of departed Senior Executives (who ceased to be
KMP during the year) are set out in the table on page 39.
Executive Director
Marcelino Fernández Verdes
Executive Chairman and CEO
Executives
Angel Muriel Bernal
Adolfo Valderas Martínez
Chief Financial Officer, Chief
Development Officer and
Managing Director of Pacific
Partnerships
Deputy Chief Executive
Officer and Chief Operating
Officer
Appointed as CEO 13 March 2014. Elected Executive Chairman 11
June 2014. Previously a Non‐executive Director from 10 October
2012 to 13 March 2014.
Appointed as Chief Development Officer and Managing Director of
Pacific Partnerships on 1 July 2014. Appointed as Chief Financial
Officer and became a KMP on 23 July 2015.
Appointed as Chief Operating Officer on 4 December 2013 and
Deputy Chief Executive Officer on 28 October 2015.
The remuneration components described in this section apply to Mr Muriel Bernal and Mr Valderas Martínez as well as Mr Loizaga
Jiménez, who ceased employment during the year. The remuneration arrangements applicable to Mr Fernández Verdes are described
separately in the ‘CEO Remuneration’ section on page 35.
32
CIMIC Group Limited Annual Report 2015
FIXED REMUNERATION
Fixed remuneration received by Senior Executives comprises base salary, non‐monetary benefits and superannuation (as applicable).
Non‐monetary benefits included such items as fringe benefits, expatriate benefits and other salary‐sacrificed benefits as agreed from
time to time. During 2015 an increase was made to the fixed remuneration for Mr Valderas Martínez from $950,000 to $1,200,000
effective 28 October 2015 in recognition of his promotion to the role of Deputy Chief Executive Officer.
STI
Summary of 2015 STI
Senior Executive
participation
Mr Valderas Martínez and Mr Muriel Bernal participated in the 2015 STI. The CEO did not participate in the
STI.
How much could Senior
Executives earn under
the 2015 Financial Year
STI?
The STI opportunity provides a reward for threshold, target and stretch performance based on performance
conditions referred to below. The table reflects the potential earnings as a percentage of fixed remuneration
for the relevant executive. During 2015 the target STI opportunity for Mr Valderas Martínez was increased
from 60% to 75% of fixed remuneration in recognition of his appointment as Deputy Chief Executive Officer.
The STI opportunities for 2015 for Mr Valderas Martínez and Mr Muriel Bernal were:
Percentage of fixed remuneration
Threshold
45% (ie, 60% of the
target STI
opportunity)
Target
75% (ie, 100% of the
target STI
opportunity)
Stretch
112.5% (ie, 150% of
the target STI
opportunity)
The 2015 Financial Year.
Financial measures
80% of the amount that could be earned as STI was
based on performance against financial measures and
targets applicable to the relevant role.
For Senior Executives in 2015, this financial component
was based on NPAT and operating cash flow.
The financial measures are designed to encourage
Senior Executives to focus on the key financial
objectives of the Group consistent with the business
plan for the relevant year and the Group’s strategic
objectives.
Non‐financial measures
20% of the amount that could be earned as STI
was based on performance against safety targets
and/or non‐financial measures relevant to the
role.
The non‐financial measures are designed to
encourage a direct relationship between the
measures set and the individual Senior
Executive’s role. They also ensure that
contributions to critical initiatives are recognised
and rewarded.
Senior Executives are entitled to full payment of their STI following finalisation of the audit for the 2015
Financial Year.
Performance against financial and non‐financial key performance indicators (KPIs) was assessed following
the end of the 2015 Financial Year to determine the actual STI payments. A scorecard‐based calculation was
made and, the resulting STI amount adjusted, if required, following a qualitative assessment.
Notwithstanding any STI amount determined, the Remuneration and Nomination Committee, on the
recommendation of the CEO, retains an overriding ability to adjust the STI amount before payment taking
into account all relevant circumstances.
Over what period was
performance
measured?
What were the
performance
conditions?
Why were those
performance measures
chosen?
How is the STI paid?
How was performance
against targets
assessed?
STI outcomes for the 2015 Financial Year
STI payments for the 2015 Financial Year were determined based on Senior Executive performance against the applicable financial and
non‐financial KPIs, as described above. In general, during the 2015 Financial Year, the Group:
continued to focus on standardisation, simplification and streamlining by making improvements to the efficiency of the business and
further reducing costs;
reported strong operating cash flow which, together with proceeds from the divestments, enabled significant debt repayments; and
de‐risked, deleveraged and strengthened its balance sheet with gearing and net contract debtors improving.
The following table sets out the outcomes for the 2015 Financial Year for each current and departed Senior Executive who participated in
the 2015 STI.
33
CIMIC Group Limited Annual Report 2015
Percentage of available STI earned1
Senior Executive
Current
A Muriel Bernal
A Valderas Martínez
Departed
J Loizaga Jiménez3
1.
2.
LTI
Summary of 2015 LTI grants
Senior Executive
participation
What was granted?
STI earned (A$)2
Percentage of target STI
Percentage of maximum STI
1,125,000
1,350,000
‐
150
150
‐
100
100
‐
Threshold, target and stretch values for all of the financial KPIs are approved by the CEO.
The STI awards were approved by the Remuneration and Nomination Committee on 28 January 2016 on recommendation from the CEO and are
payable in March 2016.
3. Mr Loizaga Jiménez ceased employment with the Group on 23 July 2015. His cessation of employment did not give rise to any entitlements under
the STI.
What are the vesting
conditions and why
were they chosen?
When are the options
available to exercise?
Do the options attract
dividends and voting
rights?
What happens if
there is a change of
control?
What if a Senior
Executive ceases
employment?
Mr Valderas Martínez and Mr Muriel Bernal participated in the 2015 LTI. The CEO did not participate in the
LTI.
In 2015, Senior Executives were granted options with a value equivalent to 60% of fixed remuneration for Mr
Valderas Martínez and 75% of fixed remuneration for Mr Muriel Bernal. As the share options formed part of
the Senior Executive’s remuneration, they were granted at no cost to the executive. Each option entitles the
participant to receive one fully paid ordinary share in the Company, on payment of an exercise price of
$27.53.
Options will vest over a two‐year performance period, subject to the Senior Executive’s continued
employment with the CIMIC Group. The options have an in‐built performance hurdle, being the exercise price
of the options, meaning that at the time of exercise, the market price of CIMIC shares must be above the
exercise price of the options before the Senior Executive can derive any benefit from the award. This
structure was selected to provide participants with a clear line of sight as to the targets that must be satisfied,
and a stronger alignment between individual performance and vesting outcomes, ensuring a Group‐wide
focus on sustained growth and Group prosperity.
The options vest two years after the grant date, and are available to exercise for a period of 3 years subject to
the discretion of the Remuneration and Nomination Committee as recommended by the CEO. The Senior
Executive is permitted to exercise up to 40% of their vested options in each of the first two years after vesting
and the remaining unexercised portion in year three of the exercise window. Any options that remain
unexercised at the end of the exercise window (ie, 5 years after the grant date) will expire. The 2015 awards
are scheduled to vest on 29 October 2017, with any vested options that remain unexercised expiring on 29
October 2020.
The options do not carry any rights to dividends or voting. Shares allocated upon exercise of options rank
equally with other ordinary shares on issue.
If a change of control occurs, the Board, on the recommendation of the CEO, may determine whether, and the
extent to which, any unvested options will vest, having regard to all relevant circumstances including
performance to‐date and the nature of the change of control.
In general, if a Senior Executive resigns or is summarily terminated, any vested but unexercised and any
unvested option grants will lapse. If a Senior Executive leaves due to any other circumstances (eg, redundancy,
retirement or total and permanent disability):
‐
a pro rata portion of the Senior Executive’s unvested options may remain on foot following his or her
termination and vest subject to the original conditions of the award (with the balance lapsing); and
any vested but unexercised options held at the date of cessation of employment will remain on foot until
the expiry date, subject to the same restrictions on exercise as if the Senior Executive had remained with
the Group.
‐
In these circumstances, any entitlement on exercise will be paid in cash based on the share price at the date of
exercise, less the exercise price and all applicable taxes and levies. The Remuneration and Nomination
Committee reviews CEO determinations on leaver treatment for Senior Executives.
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
options.
Can Senior Executives
hedge their risk under
the option plan?
34
CIMIC Group Limited Annual Report 2015
2015 LTI grants to Senior Executives
Details of options granted to Senior Executives in the 2015 Financial Year are set out in the following table.
Name
Grant date
Number
granted
VWAP at date of
award (A$)1
Exercise price
(A$)
Vesting
date
Fair value per
option2 (A$)
Maximum
value of
grant3 (A$)
Current
A Muriel
Bernal
A Valderas
Martínez
1.
2.
29 October
2015
29 October
2015
76,280
104,612
27.53
27.53
27.53
27.53
29 October
2017
29 October
2017
4.53
345,548
4.53
473,892
The VWAP of CIMIC’s shares over the five trading days following Board approval of the plan on 28 October 2015.
The fair value of equity instruments is determined as at the date of grant (in accordance with AASB 2 Share‐based payment) 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.
The maximum value of the grant has been estimated based on the fair value per option. The minimum total value of the grant, if the applicable
vesting conditions are not met, is nil. As the vesting date for the grant has not yet been met, nothing has been paid or forfeited to date.
3.
CEO REMUNERATION
POLICY AND APPROACH
The Board approves the CEO’s remuneration arrangements following consideration by the Remuneration and Nomination Committee.
The Board considered Mr Fernández Verdes’ role as both CEO of CIMIC and CEO of HOCHTIEF AG and structured his remuneration
arrangements differently from other Senior Executives, but consistent with the Group’s remuneration framework and focussed on
achieving long‐term financial returns.
COMPONENTS
The key components of the CEO’s remuneration are:
a lump‐sum annual allowance as a contribution to his living expenses. Effective 1 April 2015 the gross allowance payable increased
from $495,000 to $514,416 to ensure the net allowance received was unchanged following an increase in the Fringe Benefits Tax rate
from 47% to 49%; and
a one‐off award of SARs in 2014.
Mr Fernández Verdes receives remuneration from HOCHTIEF AG in consideration for his employment as HOCHTIEF AG CEO. Details of this
remuneration are available in the HOCHTIEF AG Annual Report at http://www.reports.hochtief.com.
No remuneration is received by Mr Fernández Verdes for his duties as Executive Chairman of CIMIC.
Summary of one‐off award to the CEO
Mr Fernández Verdes was granted a one‐off award of 1,200,000 SARs in 2014 in accordance with the terms of his ESA. As the SARs form
part of the CEO’s remuneration, they are granted at no cost to him. The SARs do not carry any rights to dividends or voting.
The SARs entitle Mr Fernández Verdes to receive a cash payment reflecting the increase in value of the share price of CIMIC from a base
price of $17.71 (being the VWAP of fully paid ordinary shares in CIMIC traded on the ASX over the 30‐day period before Mr Fernández
Verdes’ appointment as CEO on 13 March 2014) to the price at close of trading on the last trading day before the SAR is exercised, with a
maximum payment per SAR of $32.29.
The SARs will vest on 13 March 2016 and will be exercisable for three years from this date. No exercise price is payable on vesting of the
SARs. Due to inconsistent treatment surrounding the exercise conditions applied to the CEO’s SARs when compared with the options
granted under CIMIC’s LTI, the Board amended the terms of Mr Fernández Verdes’ award on 28 October 2015 to allow him to exercise up
to 40% per annum of the SARs in the first two years of the exercise period, and all remaining unexercised SARs in the final year. Under the
previous conditions he was permitted to exercise not more than 40% of the SARs in any financial year, including the final year of the
exercise period. This amendment was approved by the HOCHTIEF AG Supervisory Board on 17 November 2015, and the closing share
price on this date was $25.82. The total fair value on 17 November 2015, immediately prior to the amendment, was $9,300,000.
Following the amendment, on 18 November 2015 the total fair value was $9,372,000, representing an increase of $72,000.
The SARs will lapse on 13 March 2019 unless they have been exercised or forfeited before that date.
Mr Fernández Verdes would have forfeited any unvested or vested but unexercised SARs if he had ceased to be the CEO of CIMIC before
31 December 2014. Further, Mr Fernández Verdes will forfeit any unvested or vested but unexercised rights if he does not remain a
member of either the Executive Board or the Supervisory Board of HOCHTIEF AG for the period from appointment to 13 March 2017 or if
his employment is summarily terminated. If Mr Fernández Verdes ceases employment with CIMIC prior to vesting but after 31 December
2014 in any other circumstance (ie, he is not summarily terminated) but remains a member of either the Executive Board or the
Supervisory Board of HOCHTIEF AG, any unvested SARs will remain on foot and vest and become exercisable in the ordinary course.
35
CIMIC Group Limited Annual Report 2015
Details of the one‐off award of SARs granted to the CEO in the 2014 Financial Year are set out in the following table.
Name
M Fernández Verdes
1.
Grant date
Granted
(number)
10 June 2014
1,200,000
30‐day VWAP at
start of vesting
period (A$)
17.71
Test date
(vesting date)
13 March 2016
Fair value per share
appreciation right1
(A$)
6.52
Maximum
value of grant2
(A$)
38,748,000
The fair value of the SARs is determined at the date of grant (in accordance with AASB 2 share‐based payment) and was re‐evaluated on 31
December 2015.
The maximum value is calculated as the number of rights multiplied by the maximum payment per share appreciation right ($32.29).
2.
COMPANY PERFORMANCE
As required by the Corporations Act, the five‐year performance of the Group has been set out in the following table.
Year‐on‐year performance snapshot
Opening
share
price1
(A$)
Closing
share
price
(A$)
Share price
apprecia‐
tion (%)
Dividend
per
share
paid (A$)
TSR2
(%)
EPS
(A$)
PBT
(A$M)
NPAT
(A$M)
Return
on
equity
(%)
Cash flow
from
operations
(A$M)
22.51
24.30
8.0
1.14
58.2
1.54
735
520
16.28
22.50
38.2
1.17
36.3
2.00
1,131
677
17.90
16.11
(10.0)
1.05
(38.8)
1.51
736
509
19.25
17.88
(7.1)
0.80
(45.8)
1.33
566
450
20.99
19.04
(9.3)
0.60
(6.8)
1.01
475
340
13
19
17
16
13
Gross
debt to
equity
ratio
(%)
25.7
1,920
1,410
79.2
1,115
65.5
1,274
94.6
328
77.5
28.63
20.85
(27.2)
0.60
(50.6)
(1.33)
(491)
(409)
(17)
1,700
78.7
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.
The December 2014 amounts shown above include both continuing and discontinued operations.
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 2011 and 2012 to 2015 Financial Year information in this table.
December
2015
December
20143
December
2013
December
2012
December
2011
Transitional
Financial
Year4
June 2011
1.
2.
3.
4.
36
CIMIC Group Limited Annual Report 2015
STATUTORY SENIOR EXECUTIVE REMUNERATION TABLE
SHORT‐TERM EMPLOYEE BENEFITS
POST‐EMPLOYMENT
Cash
salary
(A$)
Cash
bonuses
(STI)
(A$)(a)*
Non‐
monetary
benefits
(A$)(b)
Other
(A$)(c)
Superannuation
benefits (A$)
Termination
benefits (A$)
SUBTOTAL
($A)
‐
‐
‐
‐
35,363
‐
509,559
370,000
Current Senior Executives
M Fernández Verdes1
2015 Financial Year
2014 Financial Year
A Muriel Bernal2
2015 Financial Year
2014 Financial Year
A Valderas Martínez
2015 Financial Year
2014 Financial Year
Departed Senior Executives
J Loizaga Jiménez3
2015 Financial Year
2014 Financial Year
* Where applicable, this table sets out the payments and benefits to each Senior Executive up until the date on which they ceased employment with
1,431,719
‐
1,350,000
975,000
2,346,634
1,899,423
1,125,000
‐
603,237
1,508,485
306,719
‐
994,511
924,423
‐
585,000
‐
200,000
544,922
370,000
583,333
723,485
19,904
‐
2,123
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
the Group (as appropriate), with the exception of ‘Cash bonuses (STI)’ which captures full year amounts.
1. Mr Fernández Verdes was appointed CEO on 13 March 2014 and Executive Chairman on 11 June 2014. Previously he was a Non‐executive Director
from 10 October 2012 to 13 March 2014. Remuneration paid to Mr Fernández Verdes as a Non‐executive Director in the 2014 Financial Year is
disclosed in the Non‐executive Director Remuneration section of the 2014 Remuneration Report.
2. Mr Muriel Bernal commenced employment with the Group on 1 July 2014, and was appointed CFO on 23 July 2015. This table sets out the payments
to Mr Muriel Bernal from the date he was appointed CFO and became a member of the KMP.
3. Mr Loizaga Jiménez ceased employment with the Group on 23 July 2015. The termination benefits comprised of statutory entitlements only. His
cessation of employment did not give rise to any entitlements under the LTI or STI.
37
CIMIC Group Limited Annual Report 2015
LONG‐TERM EMPLOYEE BENEFITS
Share rights fair
value (SARs)
(A$)(d)
Share rights fair
value (LTI and STI
deferral) (A$)(d)
Options fair
value (A$)(d)
TOTAL PAYMENTS
AND ACCRUALS
(A$)
Percentage of cash
bonuses (STI) (%) (e)
Percentage of
share‐based
incentive (%) (f)
3,272,618
2,334,000
‐
‐
‐
‐
‐
‐
‐
‐
167,849
‐
344,736
279,579
‐
220,744
‐
‐
22,837
‐
31,320
‐
3,817,540
2,704,000
1,622,405
‐
2,722,690
2,179,002
‐
‐
603,237
1,729,229
‐
‐
69.3
‐
49.6
44.7
‐
33.8
‐
‐
11.8
‐
13.8
12.8
‐
12.8
(a) Amounts for the 2015 Financial Year represent cash STI payments to the Senior Executives for the 2015 Financial Year to be paid in March 2016.
(b) Non‐monetary benefits included such items as fringe benefits, expatriate benefits and other salary‐sacrificed benefits as agreed from time to time.
(c)
(d)
For Mr Fernández Verdes, this amount pertains to vehicle benefits considered necessary by the Company in the execution of his duties.
For Mr Fernández Verdes, the 2015 Financial Year amount pertains to the fixed allowance amount established for 2015. The 2014 Financial Year
amount pertains to the fixed allowance amount established for 2014 and is based on 10 months’ service. For Mr Loizaga Jiménez, the 2014 Financial
Year amount pertains to a one‐off relocation allowance to assist with his relocation to Sydney.
In accordance with the requirements of the Australian Accounting Standards, remuneration includes a proportion of the fair value of equity
compensation granted or outstanding during the 2015 Financial Year (ie, grants of STI deferred share rights and LTI grants as at 31 December 2015).
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 equities at the date of their grant has been determined in accordance with AASB 2.
(e) Percentage calculation is based on the cash STI received in the 2015 Financial Year as a percentage of total payments and accruals.
(f)
The percentage of each Senior Executive’s remuneration for the 2015 Financial Year that consisted of equity as a percentage of total payments and
accruals.
38
CIMIC Group Limited Annual Report 2015
DEPARTED SENIOR EXECUTIVES
For departed Senior Executives who ceased employment with the Group during the year, remuneration (including termination benefits
where applicable) is reported in the Statutory Senior Executive Remuneration table for the period up until the date they ceased to be
KMP.
Departed Senior Executives
Name
J Loizaga Jiménez
Title (on date departed)
Chief Financial Officer
Change during the 2015 Financial Year
Ceased as KMP and ceased employment on 23 July
2015
SUMMARY OF EXECUTIVE SERVICE AGREEMENTS
Mr Fernández Verdes
The key terms of Mr Fernández Verdes’ ESA are:
fixed allowance amounts established for 2014 ($370,000 ‐ based on 10 months’ service) and 2015 ($495,000 and increased to
$514,416 effective 1 April 2015 following the increase to the Fringe Benefits Tax rate from 47% to 49% on 1 April 2015) are adjusted
for inflation in 2016 and any adjustments after that date as agreed with the Board and negotiated with the CEO;
a one‐off award of SARs in 2014 as described in the ‘CEO Remuneration’ section of this Remuneration Report. Mr Fernández Verdes is
not eligible to participate in the STI or LTI;
either party may terminate the ESA, the period of notice being the minimum period required by applicable legislation;
there is no specified term;
there are no specified payments to be made on termination (apart from any payments in lieu of notice and any payable statutory
entitlement); and
a six‐month restraint period (in Australia) applies following termination but specifically allows Mr Fernández Verdes to accept roles
with ACS, HOCHTIEF AG and their related companies.
Other Senior Executives
Remuneration and other terms of employment for all other Senior Executives are formalised in ESAs.
remuneration is reviewed annually;
The key standard terms of the ESAs for Senior Executives are:
either party is able to terminate the service agreement on six months’ notice;
there is no specified term;
there are no specified payments to be made to the Senior Executive on termination (apart from any payments in lieu of notice and
any payable statutory entitlements); and
a six‐month paid restraint period applies following termination.
The ESAs also specify the remuneration mix that applies to a Senior Executive’s remuneration package.
The entitlement of Senior Executives to unvested deferred STI and LTI awards on termination of their employment is dealt with under the
plan rules and the specific terms of grant.
39
CIMIC Group Limited Annual Report 2015
ENGAGEMENT OF REMUNERATION CONSULTANTS
No remuneration consultants were engaged during 2015 with regards to Senior Executive remuneration.
NON‐EXECUTIVE DIRECTOR REMUNERATION
The Non‐executive Directors who held office during 2015 are set out in the following table.
Non‐executive Directors during 2015
Name
Current Non‐executive Directors
Russell Chenu
José Luis del Valle Pérez
Kirstin Ferguson
Trevor Gerber
Pedro López Jiménez
David Robinson
Peter‐Wilhelm Sassenfeld
Current Alternate Directors
David Robinson
Robert Seidler AM
Title (at 31 December 2015)
Independent Non‐executive Director
Non‐executive Director
Independent Non‐executive Director
Independent Non‐executive Director
Non‐executive Director
Non‐executive Director
Non‐executive Director
Alternate Director for Mr López Jiménez
Alternate Director for Mr del Valle Pérez and Mr Sassenfeld
SETTING NON‐EXECUTIVE DIRECTOR REMUNERATION
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 the 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.
Non‐executive Directors do not receive shares, options or any performance‐related incentives.
Superannuation is payable to Australian‐based Non‐executive Directors in addition to Board and Committee fees.
40
CIMIC Group Limited Annual Report 2015
FEE LEVELS AND FEE POOL
Board and Committee fees for 2015
Name
Board
Audit and Risk Committee
Ethics, Compliance and Sustainability Committee
Remuneration and Nomination Committee
Special Committees2
1.
Member
185,000
30,000
20,000
20,000
3,850
The CEO receives no additional remuneration for his duties as Executive Chairman (or membership of any Committee). Details of his remuneration
for his role as CEO are set out in the ‘CEO Remuneration’ section of this Remuneration Report.
This fee is payable to all Non‐executive Directors for each day of service on a Special Committee.
Chairman1
nil
55,000
40,000
40,000
3,850
2.
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 $4.5 million (including superannuation contributions), as
approved by shareholders at the 2013 AGM.
ALTERNATE DIRECTORS
CIMIC does not pay fees for Board membership to Alternate Directors. Financial arrangements for Alternate Directors are a private matter
between the Non‐executive Director and the relevant Alternate Director.
NON‐EXECUTIVE DIRECTOR TOTAL REMUNERATION
Details of Non‐executive Directors’ remuneration for the 2015 Financial Year and 2014 Financial Year are set out in the following table.
41
CIMIC Group Limited Annual Report 2015
Non‐executive Director Remuneration
SHORT‐TERM BENEFITS
Board and
Committee fees
(A$)
Other (A$)
Operating
Company Board
fees and extra
service fees1
(A$)
POST‐EMPLOYMENT
BENEFITS
Superannuation
contributions (A$)
Total Remuneration
for services
as a Non‐executive
Director (A$)
Current Non‐executive Directors
R Chenu
2015 Financial Year
2014 Financial Year
K Ferguson
2015 Financial Year
2014 Financial Year
T Gerber
2015 Financial Year
2014 Financial Year
P López Jiménez
2015 Financial Year
2014 Financial Year
J del Valle Pérez
2015 Financial Year
2014 Financial Year
D Robinson2
2015 Financial Year
2014 Financial Year
P Sassenfeld3
2015 Financial Year
2014 Financial Year
1.
280,000
159,890
275,000
134,696
255,000
140,000
205,000
182,385
225,000
172,477
215,000
215,000
215,000
225,000
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
1,925
‐
1,925
‐
‐
‐
‐
‐
‐
‐
1,925
77,792
‐
‐
19,046
10,870
19,046
9,392
19,046
10,548
‐
‐
‐
‐
19,046
18,279
1,565
18,279
300,971
170,760
295,971
144,088
274,046
150,548
205,000
182,385
225,000
172,477
235,971
311,071
216,565
243,279
For the 2015 Financial Year this amount represents additional service fees payable to Non‐Executive Directors for service on a Special Committee. For
the 2014 Financial Year this amount represents the total fees paid to the members of the Operating Company Advisory Boards (disbanded June
2014).
2. Mr Robinson will receive a maximum benefit on retirement limited to his entitlement under the Non‐executive Director Retirement Plan as if he had
retired on 1 July 2008. This entitlement totals $363,495.
3. Mr Sassenfeld received no Director fees directly from CIMIC in respect of his services as Non‐executive Director. The amounts in the table represent
the payment by CIMIC to HOCHTIEF AG in respect of Mr Sassenfeld’s services.
42
CIMIC Group Limited Annual Report 2015
ADDITIONAL EQUITY DISCLOSURES
This section provides additional information regarding KMP equity holdings as required by the Corporations Act and applicable Australian
Accounting Standards.
MOVEMENT IN KMP SHAREHOLDINGS (DIRECTORS AND SENIOR EXECUTIVES)
The following table sets out the movement in KMP shareholdings (either direct or indirect) during the 2015 Financial Year.
Name
Balance at
31 Dec 2014
Purchases
Received on
exercise of
options
Received on
vesting of
shares
Sales
Closing
Balance1
Directors
R Chenu
J del Valle Pérez
K Ferguson
M Fernández Verdes
T Gerber
P López Jiménez
D Robinson
P Sassenfeld
Current Senior Executives
A Muriel Bernal
A Valderas Martínez
Departed Senior Executives
J Loizaga Jiménez
1.
2.
2,500
1,0002
1,500
2,7452
2,000
1,1922
1,489
1,8582
‐
‐
‐
785
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
3,285
1,0002
1,500
2,7452
2,000
1,1922
1,489
1,8582
‐
‐
‐
The closing balance is at 31 December 2015 or as at the date of departure.
These shares are held by the relevant director on trust for HOCHTIEF Australia.
43
CIMIC Group Limited Annual Report 2015
MOVEMENTS IN RIGHTS UNDER THE PREVIOUS LTI
Grants of share rights under the previous LTI were made to eligible Senior Executives in 2014 in accordance with the terms of their
individual ESA. The awards were made subject to EPS and TSR performance conditions measured over a three‐year period, and remain on
foot until the original vesting date. Full details of these awards can be found on pages 29 to 31 of the 2014 Annual Report.
The following table sets out the movement of share rights granted in previous financial years under the previous LTI.
Name
Award
year
Balance at
31 Dec
2014
(number)
Granted
(number)
Granted
(fair value)
(A$)
Vested and
exercised
(number)1
Vested and
exercised
(value)
(A$)
Lapsed
(number)
Balance at
31 Dec 2015
(number)
‐
2014
29,982
Current Senior Executives
2014
A Muriel
Bernal
A Valderas
Martínez
Former Senior Executives
2014
J Loizaga
Jiménez2
1.
2. Mr Loizaga Jiménez’s cessation of employment did not give rise to any entitlements under his LTI awards.
Performance hurdles for the 2014 LTI are due to be tested in February 2017.
34,266
32,552
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
29,982
32,552
34,266
‐
MOVEMENTS IN OPTIONS UNDER LTI
Grants of options under the LTI were approved to be made to eligible Senior Executives in February 2016 as their 2015 LTI. On 28 October
2015, the Board approved the replacement of the previous performance rights based plan with an options based plan. The 2015 award
represents the first grant under the new plan. Full details of the award can be found on pages 34 to 35 of this Remuneration Report.
The following table sets out the movement of options granted during the 2015 Financial Year under the LTI.
Name
Award
year
Balance
at 31 Dec
2014
(number)
Granted
(number)
Granted
(fair
value)
(A$)
Vested1
(number)
Vested
(value)
(A$)
Vested and
unexercised
(number)
Exercised
(number)
Exercised
(value)
(A$)
Balance
at
31 Dec
20152
(number)
‐
2015
76,280
Current Senior Executives
A Muriel
Bernal
A
Valderas
Martínez
1. Options awarded on 29 October 2015 will vest two years following grant on 29 October 2017.
2. Of this number, all options are unvested and not yet exercisable.
473,892
104,612
345,548
2015
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
76,280
104,612
44
CIMIC Group Limited Annual Report 2015
DEFERRED SHARE RIGHTS UNDER STI
Share rights were previously awarded to Senior Executives based on the value of the deferred component of the STI awards. These
deferred share rights vest after a one‐year deferral period. Full details of the deferred share rights can be found on pages 28 to 30 of the
2014 Annual Report. This practice of deferral was discontinued for the 2015 Financial Year.
Name
Award
year
Grant date
Vesting date1
Award
value at
grant (A$)
Granted
(number)
Fair value
per share
right (A$)
Vested1
(%)
Forfeited
(%)
Current Senior Executives
A Valderas Martínez
1.
‐
Final vesting of this award is subject to approval of the CEO. As at 31 December 2015, no decision on final vesting had been made and therefore none
of the award had vested.
31 December 2015
1 January 2015
325,000
15,587
20.85
2014
‐
ONE‐OFF AWARD GRANTED TO MR FERNÁNDEZ VERDES IN 2014
In the 2014 Financial Year, a one‐off award of SARs was awarded to Mr Fernández Verdes on his appointment as CEO. The award will
expire on 13 March 2019.
Full details of this award can be found in the ‘CEO Remuneration’ section of this Remuneration Report.
Name
Grant date
Vesting date
Granted1
(number)
Fair value2
per SAR (A$)
Vested (%)
Forfeited (%)
M Fernández Verdes
1. No SARs vested or lapsed during the reporting period.
2.
10 June 2014
The fair value of equity instruments is determined as at the date of grant (in accordance with AASB 2 Share‐based payment) 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.
13 March 2016
1,200,000
$6.52
‐
‐
SHARES PURCHASED ON MARKET
The following shares were purchased on market in 2015 for the purpose of satisfying vested awards under the EIP:
Ordinary shares
Shares purchased (number)
193,927
Average price paid per share (A$)
21.2797
The CIMIC Group Limited Directors’ Report for the 2015 Financial Year is signed at Sydney on 10 February 2016 in accordance with a
resolution of the Directors.
Marcelino Fernández Verdes
Executive Chairman and Chief Executive Officer
45
i
F
n
a
n
c
a
i
l
New Royal Adelaide Hospital (nRAH) will
be Australia’s most advanced hospital and
the single largest infrastructure project in
South Australia’s history. Pacific Partnerships
is providing project management, contract
administration, financial management and
corporate governance services for the
project. CPB is undertaking the design
and construction.
R
e
p
o
r
t
46
CIMIC Group Limited Annual Report 2015`
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 from continuing operations
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. Share Capital
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, disposals and discontinued operations
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. CIMIC Group Limited and controlled entities
40. New accounting standards
41. Events subsequent to reporting date
Directors’ Declaration
Independent Auditor’s Report to the Members of CIMIC Group Limited
Page
48
49
50
51
52
53
53
62
63
64
65
66
67
67
69
69
69
70
70
71
72
74
75
75
76
77
78
79
80
81
82
86
90
92
93
94
98
99
102
104
105
105
115
123
126
138
139
140
141
`
47
CIMIC Group Limited Annual Report 2015`
Consolidated Statement of Profit or Loss
for the year ended 31 December 2015
Continuing operations
Revenue
Expenses
Finance costs
Share of profit / (loss) of associates and joint venture entities
Profit / (loss) before tax
Income tax (expense) / benefit
Profit / (loss) for the year from continuing operations
Discontinued operations
12 months to
December 2015
$m
12 months to
December 2014
$m
Note
2
3
4
6
13,370.7
16,875.8
(12,427.4)
(16,743.3)
(193.8)
(14.5)
735.0
(220.6)
514.4
(240.0)
16.8
(90.7)
(22.1)
(112.8)
Profit / (loss) for the year from discontinued operations
30
‐
791.4
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
Earnings per share for profit / (loss) from continuing and discontinued operations
Basic earnings per share
Diluted earnings per share
Earnings per share for profit / (loss) from continuing operations
Basic earnings per share
Diluted earnings per share
Earnings per share for profit / (loss) from discontinued operations
Basic earnings per share
Diluted earnings per share
514.4
6.0
520.4
50.0¢
46.0¢
153.7¢
153.4¢
678.6
(2.1)
676.5
68.0¢
57.0¢
200.0¢
198.8¢
153.7¢
153.4¢
(33.9¢)
(33.7¢)
‐
‐
233.9¢
232.5¢
23
23
24
24
24
24
24
24
The consolidated statement of profit or loss is to be read in conjunction with the notes to the consolidated financial report.
`
48
CIMIC Group Limited Annual Report 2015`
Consolidated Statement of Profit or Loss and other
Comprehensive Income
for the year ended 31 December 2015
Profit / (loss) for the year attributable to members of the parent entity
520.4
676.5
12 months to
December 2015
$m
12 months to
December 2014
$m
Note
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)
BItems that will not be reclassified to profit or loss
- Change in value of equity reserves (net of tax)
Other comprehensive income / (expense) for the year
Total comprehensive income / (expense) for the year attributable to members
of the parent entity
21
21
21
21
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
Continuing operations
Discontinued operations
Total comprehensive income / (expense) for the year attributable to members
of the parent entity
213.8
2.6
6.0
234.9
(5.3)
4.4
(13.8)
(0.8)
208.6
233.2
729.0
909.7
723.0
6.0
911.8
(2.1)
729.0
909.7
729.0
‐
729.0
118.6
791.1
909.7
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the notes to the
consolidated financial report.
`
49
0
B
0
B
0
B
0
B
0
B
0
CIMIC Group Limited Annual Report 2015`
Consolidated Statement of Financial Position
as at 31 December 2015
Assets
Cash and cash equivalents
Trade and other receivables
Trade and other receivables ‐ proceeds receivable on sale of controlled entities and businesses
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
2015
$m
31 December
2014
$m
Note
7
8
8
9
10
31
8
10
11
12
13
14
15
16
17
18
19
31
16
18
19
20
21
22
2,167.8
2,659.6
‐
26.6
264.0
235.8
5,353.8
889.2
275.3
1,073.1
125.7
119.5
1,312.8
527.4
4,323.0
1,976.9
3,426.1
1,643.2
53.0
361.6
254.4
7,715.2
922.8
356.7
1,013.6
112.3
240.8
1,626.5
556.0
4,828.7
9,676.8
12,543.9
3,675.7
81.3
283.4
217.4
48.7
4,306.5
331.6
84.5
838.9
1,255.0
5,561.5
4,309.8
622.9
310.9
1,163.3
93.8
6,500.7
272.6
157.0
1,832.0
2,261.6
8,762.3
4,115.3
3,781.6
2,052.5
423.6
1,616.7
4,092.8
22.5
4,115.3
2,052.5
219.0
1,482.2
3,753.7
27.9
3,781.6
The consolidated statement of financial position is to be read in conjunction with the notes to the consolidated financial report.
`
50
CIMIC Group Limited Annual Report 2015`
Consolidated Statement of Changes in Equity
for the year ended 31 December 2015
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 2014
2,028.6
(9.7)
1,201.3
3,220.2
25.9
3,246.1
Profit for the year
Other comprehensive income
Transactions with owners in their
capacity as owners:
- Contributions of equity
- Dividends
-
Share based payments
- Other
‐
‐
23.9
‐
‐
‐
Total transactions with owners
23.9
‐
676.5
676.5
2.1
678.6
233.2
‐
233.2
‐
‐
(4.5)
‐
(4.5)
‐
(395.6)
‐
‐
23.9
(395.6)
(4.5)
‐
(395.6)
(376.2)
‐
‐
‐
‐
(0.1)
(0.1)
233.2
23.9
(395.6)
(4.5)
(0.1)
(376.3)
Total equity at 31 December 2014
2,052.5
219.0
1,482.2
3,753.7
27.9
3,781.6
Profit / (loss) 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
‐
‐
‐
‐
‐
‐
‐
‐
520.4
520.4
(6.0)
514.4
208.6
‐
208.6
‐
‐
(4.0)
‐
(4.0)
‐
‐
(385.9)
(385.9)
‐
‐
(4.0)
‐
(385.9)
(389.9)
‐
‐
‐
‐
0.6
0.6
208.6
‐
(385.9)
(4.0)
0.6
(389.3)
Total equity at 31 December 2015
2,052.5
423.6
1,616.7
4,092.8
22.5
4,115.3
The consolidated statement of changes in equity is to be read in conjunction with the notes to the consolidated financial report.
`
51
CIMIC Group Limited Annual Report 2015`
Consolidated Statement of Cash Flows
for the year ended 31 December 2015
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 activities1
Dividends received
Interest received
Finance costs paid
Income taxes (paid) / received
Net cash from operating activities1
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
Income tax paid in relation to proceeds from sale of investments in controlled entities and
businesses
Cash disposed from sale of investments in controlled entities and businesses
Payments for investments
Proceeds from sale of investments
Net cash from investing activities1
Cash flows from financing activities
Proceeds from share issues
Cash payments in relation to employee share plans
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 activities1
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
December 2015
$m
12 months to
December 2014
$m
Note
15,981.0
25,628.6
(14,061.4)
(24,218.8)
1,919.6
1,409.8
15.7
32.7
(202.8)
(315.0)
23.5
25.3
(229.1)
(85.7)
29
1,450.2
1,143.8
(15.2)
(266.3)
156.2
‐
1,671.0
(263.0)
(28.3)
(705.1)
81.8
(110.0)
‐
‐
‐
(420.5)
(35.1)
‐
(1.9)
33.7
1,247.6
(1,150.3)
‐
(4.1)
871.2
(2,915.4)
(124.7)
‐
(385.9)
(2,558.9)
138.9
1,976.9
52.0
23.9
(25.9)
1,458.2
(678.6)
(181.7)
(0.3)
(395.6)
200.0
193.5
1,720.7
62.7
7
2,167.8
1,976.9
1. 31 December 2014: Includes both continuing and discontinuing operations.
The consolidated statement of cash flows is to be read in conjunction with the notes to the consolidated financial report.
`
52
CIMIC Group Limited Annual Report 2015
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2015
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
CIMIC Group Limited (formerly 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 joint arrangements.
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 (“IASB”).
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 40: 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 2015, as follows:
AASB 2014‐1 (Part A) Amendments to Australian Accounting Standards – Annual Improvements 2010‐2012 and 2011‐2013
Cycles;
AASB 2014‐1 (Part C) Amendments to Australian Accounting Standards – Materiality;
AASB 2014‐1 (Part E) Amendments to Australian Accounting Standards – Financial Instruments; and
AASB 2014‐2 Amendments to AASB 1053 – Transition to and between Tiers, and related Tier 2 Disclosure Requirements.
While these standards introduced new disclosure requirements, they do not affect the Group’s accounting policies or any of the amounts
recognised in the financial statements.
53
CIMIC Group Limited Annual Report 2015
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2015
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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;
Asset disposals:
- Controlled entities and businesses: determination of loss of control and fair value of consideration; and
- Other assets: determination as to whether the significant risks and rewards of ownership have transferred;
Estimation of the economic life of property, plant and equipment and intangibles;
Asset impairment testing, including assumptions in value in use calculations;
Assessment of the fair value of available‐for‐sale assets and derivatives; 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.
54
CIMIC Group Limited Annual Report 2015
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2015
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Basis of consolidation continued
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 entity. 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 accounted for using the equity method and recognised initially at cost. The cost of the investments includes
transaction costs and goodwill on acquisition.
The consolidated financial statements include the Company’s share of the profit or loss and other comprehensive income of equity
accounted investments, after adjustments for impairment 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, 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 statement of financial position at cost, including transaction costs and goodwill on acquisition, 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 adjusted for where necessary, to ensure consistency with the policies adopted by the
Group.
Other investments
Other investments are accounted for as either available‐for‐sale financial assets, or fair value through profit and loss financial assets.
55
CIMIC Group Limited Annual Report 2015
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2015
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 operating lease. Other property development revenue is recognised as services
are provided.
Other revenue 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.
c)
Income tax
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.
56
CIMIC Group Limited Annual Report 2015
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2015
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 where a right of offset exists.
Trade and other receivables
Contract and trade debtors include all net receivables from construction, contract mining 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.
Financial assets at fair value through profit or loss
A financial asset is classified as at fair value through profit or loss if it is classified as held‐for‐trading or is designated as such on initial
recognition. Financial assets designated as at fair value through profit and loss comprise equity securities that otherwise would have
been classified as available‐for‐sale. These financial assets are measured at fair value at each reporting date and movements in fair value
are taken into the statement of profit and 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.
57
CIMIC Group Limited Annual Report 2015
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2015
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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.
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.
g)
Inventories
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.
58
CIMIC Group Limited Annual Report 2015
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2015
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
i)
Property, plant and equipment
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;
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.
j)
Leased assets
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.
l)
Intangible assets
(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.
59
CIMIC Group Limited Annual Report 2015
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2015
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
l)
Intangible assets continued
(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 10
years.
IT systems are carried at cost less accumulated amortisation and any impairment losses.
m)
Impairment
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.
60
CIMIC Group Limited Annual Report 2015
Notes to the Consolidated Financial Statements continued
for the year ended 31 December 2015
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
n) Employee benefits continued
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) 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.
p) 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.
61
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
2. REVENUE
Construction contracting services
Mining contracting services
Property development revenue
BOther revenue
BRevenue from external customers
Interest
- Related parties
- Other parties
Unwinding of discounts on non‐current receivables
- Related parties
- Other parties
Dividends / distributions
Interest and dividends
12 months to
December 2015
$m
12 months to
December 2014
$m
Note
9,365.2
2,912.8
875.7
119.3
12,228.5
3,666.7
728.4
156.3
13,273.0
16,779.9
25.8
19.5
7.8
36.8
7.8
97.7
24.2
25.8
6.6
31.2
8.1
95.9
38 (b)
38 (b)
Total revenue from continuing operations1
32
13,370.7
16,875.8
131 December 2014: Total revenue from continuing operations excludes $5,433.6 million of revenue from discontinued operations. Refer to
note 30: Acquisitions, disposals and discontinued operations.
62
5
5
B
5
7
B
5
7
B
5
7
B
5
7
B
5
7
5
6
B
5
8
B
5
8
B
5
8
B
5
8
B
5
8
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
3. EXPENSES
Materials
Subcontractors
Plant costs
Personnel costs
Depreciation of property, plant and equipment
Amortisation of intangibles
Net gain / (loss) on sale of assets and controlled entities
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 from continuing operations1
12 months to
December 2015
$m
12 months to
December 2014
$m
Note
4
4
4
4
(1,804.0)
(4,470.7)
(954.1)
(3,059.4)
(496.6)
(47.2)
10.8
(10.9)
(908.3)
(1.4)
(220.9)
(130.8)
(44.5)
(289.4)
(2,775.9)
(5,587.3)
(1,216.8)
(4,362.5)
(543.2)
(34.7)
47.3
(680.3)
(759.9)
(0.4)
(275.1)
(94.0)
(106.6)
(353.9)
(12,427.4)
(16,743.3)
131 December 2014: Total expenses from continuing operations exclude $5,199.2 million of expenses from discontinued operations. Refer
to note 30: Acquisitions, disposals and discontinued operations.
63
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
4.
ITEMS INCLUDED IN PROFIT / (LOSS) BEFORE TAX FROM CONTINUING OPERATIONS1
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
Total finance costs
Depreciation of property, plant and equipment
- Buildings
Leasehold land, buildings and improvements
-
- Plant and equipment2
Total depreciation of property, plant and equipment
Amortisation
-
BIntangibles
Net gain / (loss) on disposal of controlled entities
‐ Controlled entities
Net gain / (loss) on sale of assets
-
Investments
- Plant and equipment
Total gain / (loss) on sale of assets
Impairments
-
Impairment of goodwill
- Property development and property joint venture write‐downs
- Contract debtors provision
Total impairments
12 months to
December 2015
$m
12 months to
December 2014
$m
Note
38 (b)
38 (b)
28
15
15
8
(1.3)
(136.0)
(15.4)
(32.0)
(6.9)
(1.1)
(1.1)
(4.2)
(175.2)
(19.1)
(29.2)
(10.3)
(0.4)
(1.6)
(193.8)
(240.0)
(0.7)
(11.7)
(484.2)
(496.6)
(0.8)
(6.6)
(535.8)
(543.2)
(47.2)
(34.7)
25.4
‐
‐
(14.6)
(14.6)
(2.7)
(8.2)
‐
(10.9)
30.4
16.9
47.3
‐
(5.3)
(675.0)
(680.3)
Items
included
131 December 2014:
in profit / (loss) before tax from continuing operations exclude the following from
discontinuedoperations: $1.2 million relating to finance costs, $68.4 million relating to depreciation, $4.9 million relating to amortisation,
and $973.2
million relating to gain on sale of controlled entities and businesses.
2 Plant and equipment depreciation includes impairments during the period of $50.0 million that arose due to a decline in the recoverable
amount of marine fleet, in the Construction segment, that is currently idle.
64
9
9
B
1
0
2
B
1
0
2
B
1
0
2
B
1
0
2
B
1
0
2
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
5. AUDITOR’S REMUNERATION
Audit and review services
Deloitte Touche Tohmatsu (“Deloitte”)
- Audit and review of financial statements – Deloitte Australia1
- Audit and review of financial statements – related overseas firms1
Other auditors
- Audit and review of financial statements – other auditors
BAudit and review services
Other assurance services
Deloitte
- Other assurance services – Deloitte Australia1
Other auditors
- Other assurance services – other auditors
Other assurance services
Other services
Deloitte
12 months to
December 2015
$’000
12 months to
December 2014
$’000
2,318
1,057
359
3,734
‐
50
50
3,123
1,316
559
4,998
1,474
298
1,772
In relation to taxation and other services – Deloitte Australia
575
319
In relation to taxation and other services – related overseas firms
-
-
Other auditors
- Other services – other auditors
Other services
‐
‐
8
‐
575
327
1The 12 months to December 2014 has been restated to include additional fees for audit services and other services relating to prior year
paid in the 12 months to 31 December 2015.
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 External Auditor Independence Charter.
65
1
1
6
B
1
2
2
B
1
2
2
B
1
2
2
B
1
2
2
B
1
2
2
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
6.
INCOME TAX (EXPENSE) / BENEFIT
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 and net investment hedges
Revaluation of available‐for‐sale assets
Total deferred tax (expense) / benefit recognised in equity
Reconciliation of prima facie tax to income tax (expense) / benefit
Profit / (loss) from continuing operations
Profit / (loss) from discontinued operations
Profit / (loss) before tax
12 months to
December 2015
$m
12 months to
December 2014
$m
(123.9)
(113.3)
16.6
(220.6)
8.8
2.6
11.4
735.0
‐
735.0
(602.4)
154.6
(4.7)
(452.5)
2.2
1.9
4.1
(90.7)
1,221.8
1,131.1
Prima facie income tax (expense) / benefit at 30% (31 December 2014: 30%)
(220.5)
(339.3)
The following items have affected income tax (expense) / benefit for the year:
Entertainment and other non‐allowable items
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
Tax differential on divestments / other
Current period income tax (expense) / benefit
(Under) / over provision in prior periods
Income tax (expense) / benefit1
(3.2)
(6.0)
(26.3)
9.6
0.5
(7.0)
15.7
(237.2)
(9.9)
(12.1)
(31.2)
11.7
7.8
4.9
(79.7)
(447.8)
16.6
(4.7)
(220.6)
(452.5)
131 December 2014: Total income tax (expense) / benefit amount includes $430.4 million relates to discontinued operations. Refer to note
30: Acquisitions, disposals and discontinued operations.
66
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
7. CASH AND CASH EQUIVALENTS
Funds on deposit
Cash at bank and on hand
Cash and cash equivalents1
December 2015
$m
December 2014
$m
475.9
1,691.9
2,167.8
203.4
1,773.5
1,976.9
131 December 2014: The Group disposed of $420.5 million of cash and cash equivalents related to discontinued operations. Refer to note
30: Acquisitions, disposals and discontinued operations.
As at 31 December 2015 $165.3 million of cash at bank and cash on hand is classified as restricted cash in relation to the sale of
receivables during the reporting period.
8. TRADE AND OTHER RECEIVABLES
Contract debtors
Contract debtors provision5
Total contract debtors
Proceeds receivable on sale of controlled entities and businesses4
Trade debtors
Other amounts receivable
Prepayments
Derivative financial assets
Amounts receivable from related parties1
Non‐current tax asset2
Total trade and other receivables3
Current
Non‐current
Total trade and other receivables3
Note
December 2015
$m
December 2014
$m
36 (b)
38 (b)
2,820.0
(675.0)
2,145.0
‐
181.3
241.3
34.7
4.5
916.8
25.2
3,302.6
(675.0)
2,627.6
1,643.2
511.5
359.0
41.1
1.2
771.7
36.8
3,548.8
5,992.1
2,659.6
889.2
3,548.8
5,069.3
922.8
5,992.1
67
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
8. TRADE AND OTHER RECEIVABLES CONTINUED
Additional information on contract debtors
Amounts due from customers
‐ net contract debtors
Amounts due to customers
‐
trade and other payables
Net contract debtors
Net contract debtors excluding retentions
Retentions
Net contract debtors
Cash received to date
December 2015
$m
December 2014
$m
2,145.0
(645.8)
1,499.2
1,268.0
231.2
1,499.2
2,627.6
(662.5)
1,965.1
1,806.4
158.7
1,965.1
71,502.6
66,321.1
Total progressive value of all contracts in progress at reporting date
73,001.8
68,286.2
1The 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$115.2 million (31 December 2014: US$109.6 million)
equivalent to $157.8 million (31 December 2014: $135.3 million), maturing on 30 September 2017;
non‐current interest bearing loans of US$415.0 million (31 December 2014: US$415.0 million) equivalent to $568.5
million (31 December 2014: $512.3 million), maturing on 30 September 2017; and
the repayment of the above loans is subject to certain restrictions as a result of the loans being subordinate to other
external debt held by HLG. Repayment of these amounts is expected to occur after the settlement of HLG’s external debt
in September 2017, or where HLG receives prior written consent from the financier, or where a permitted payment under
the financing arrangement occurs.
non‐current interest receivable of US$85.0 million (31 December 2014: US$67.1 million), equivalent to $116.4 million (31
December 2014: $82.9 million), is receivable from HLG on the interest bearing shareholder loans.
2The non‐current tax asset of $25.2 million (31 December 2014: $36.8 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.
331 December 2014: During the reporting period, the Group disposed of $1,361.8 million of trade and other receivables in relation to
discontinued operations. Refer to note 30: Acquisitions, disposals and discontinued operations.
431 December 2014: Receivable in relation to businesses disposed during the reporting period. Refer to note 30: Acquisitions, disposals
and discontinued operations.
5The Group raised in the prior reporting period a contract debtors provision to cover the risk on a portfolio basis of unrecoverable
contract debtors. This amount has remained unchanged in the current year.
Contract debtors provision
Balance at beginning of reporting period
Net provision (made) / used
Balance at reporting date
12 months to
December 2015
$m
12 months to
December 2014
$m
(675.0)
‐
(675.0)
‐
(675.0)
(675.0)
68
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
9. CURRENT TAX ASSETS
The current tax asset of $26.6 million (31 December 2014: $53.0 million) represents the amount of income taxes recoverable from the
payment of tax in excess of the amounts due to the relevant tax authority.
10. INVENTORIES
Property developments
Cost of acquisition
Development expenses capitalised
Rates, taxes, finance and other costs capitalised
Total property developments1
Other inventories
Raw materials and consumables at cost1
Total other inventories1
Total inventories2
Current
Non‐current
Total inventories2
December 2015
$m
December 2014
$m
248.5
95.9
39.9
384.3
155.0
155.0
333.0
143.9
39.1
516.0
202.3
202.3
539.3
718.3
264.0
275.3
539.3
361.6
356.7
718.3
131 December 2015: Total property developments exclude $11.0 million of property development (31 December 2014: $nil) and raw
materials and consumables at cost exclude $30.4 million (31 December 2014: $30.5 million) of other inventory included in assets held for
sale at the end of the reporting period. Refer to note 31: Held for Sale.
231 December 2014: During the reporting period, the Group disposed of $53.6 million of inventory. Refer to note 30: Acquisitions, disposals
and discontinued operations.
Finance costs capitalised to property developments during the period: $3.8 million (31 December 2014: $9.4 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 method1
December 2015
$m
December 2014
$m
Note
25
26
558.9
514.2
528.7
484.9
1,073.1
1,013.6
1 31 December 2014: The Group disposed of $26.7 million of investments accounted for using the equity method in relation to discontinued
operations. Refer to note 30: Acquisitions, disposals and discontinued operations.
69
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
12. OTHER INVESTMENTS
Equity and stapled securities available‐for‐sale
Listed
Unlisted
Total equity and stapled securities available‐for‐sale
36 (f)
Other financial assets at fair value through profit or loss
Listed
Unlisted
Total other financial assets at fair value through profit or loss
36 (f)
Current
Non‐current
Total 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 taxes1
Unrecognised deferred tax assets
Note
December 2015
$m
December 2014
$m
1.6
72.3
73.9
‐
51.8
51.8
‐
125.7
125.7
1.6
63.7
65.3
‐
47.0
47.0
‐
112.3
112.3
December 2015
$m
December 2014
$m
341.4
13.9
2.1
(2.2)
99.9
(297.9)
(64.0)
73.3
(191.3)
11.8
139.7
(7.2)
119.5
304.0
30.5
0.4
87.3
128.5
(281.1)
(64.5)
77.3
(178.7)
13.2
124.0
(0.1)
240.8
Deferred tax assets which have not been recognised in respect of tax losses
3.1
3.0
131 December 2014: The Group disposed of $48.4 million of deferred taxes in relation to discontinued operations. Refer to note 30:
Acquisitions, disposals and discontinued operations.
70
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
14. PROPERTY, PLANT AND EQUIPMENT
Land
Buildings
Accumulated depreciation
Leasehold land, buildings and improvements
Accumulated depreciation
Plant and equipment
Accumulated depreciation
Note
December 2015
$m
December 2014
$m
0.4
5.2
0.6
(0.4)
0.2
86.9
(59.3)
27.6
37.6
(16.0)
21.6
96.7
(61.2)
35.5
3,372.7
(2,088.1)
1,284.6
3,869.6
(2,305.4)
1,564.2
Total property, plant and equipment1,2,3
28
1,312.8
1,626.5
1Plant and equipment of $288.4 million (31 December 2014: $364.3 million) is under finance lease.
231 December 2015: Total property, plant and equipment excludes $194.4 million of property, plant and equipment included in assets held
for sale (31 December 2014: $223.9 million). Refer to note 31: Held for Sale.
331 December 2014: The Group disposed of $267.5 million of property, plant and equipment in relation to discontinued operations. Refer
to note 30: Acquisitions, disposals and discontinued operations.
71
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
15. INTANGIBLES
Cost
Balance at 31 December 2013
Additions
Disposals2
Effects of exchange rate fluctuations
Balance at 31 December 2014
Balance at 1 January 2015
Additions
Disposals
Effects of exchange rate fluctuations
Balance at 31 December 2015
Amortisation and impairment
Balance at 31 December 2013
Amortisation
Disposals2
Balance at 31 December 2014
Balance at 1 January 2015
Amortisation
Impairment of goodwill
Disposals
Effect of exchange rate fluctuations
Balance at 31 December 2015
Carrying amounts
Balance at 31 December 2014
Balance at 31 December 2015
1Other intangibles include:
Goodwill
$m
Other intangibles
1
$m
Total intangibles
$m
415.1
‐
(71.8)
32.8
376.1
376.1
‐
‐
9.5
385.6
(17.6)
‐
5.3
(12.3)
(12.3)
‐
(2.7)
‐
(0.2)
(15.2)
318.5
28.3
(54.2)
1.3
293.9
293.9
15.3
(37.2)
1.6
273.6
(85.8)
(39.6)
23.7
(101.7)
(101.7)
(47.2)
‐
33.0
(0.7)
733.6
28.3
(126.0)
34.1
670.0
670.0
15.3
(37.2)
11.1
659.2
(103.4)
(39.6)
29.0
(114.0)
(114.0)
(47.2)
(2.7)
33.0
(0.9)
(116.6)
(131.8)
363.8
370.4
192.2
157.0
556.0
527.4
IT software systems of $126.6 million with a useful life of up to 4 years (31 December 2014: $153.0 million up to 10 years);
Devine Limited brand name of $24.0 million (31 December 2014: $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 11.5% (31 December 2014: 11.0%) and growth rate of 3.0% (31 December 2014: 3.0%) has been used in
discounting the projected cash flow;
Customer contracts with useful lives of:
o
o
1 to 5 years ‐ $4.3 million (31 December 2014: $12.5 million); and
5 to 10 years ‐ $nil (31 December 2014: $0.9 million)
Wai Ming engineering license with an indefinite useful life: $2.1 million (31 December 2014: indefinite ‐ $1.8 million).
231 December 2014: Disposals of $97.0 million during the period relate to businesses disposed during the period. Refer to note 30:
Acquisitions, disposals and discontinued operations.
72
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
15. INTANGIBLES CONTINUED
Impairment tests for cash‐generating units containing goodwill
Cash‐generating units in the following segments have the following carrying amounts of
goodwill:
Construction
Contract mining
Balance at reporting date
December 2015
$m
December 2014
$m
334.6
35.8
370.4
328.0
35.8
363.8
As a result of the CIMIC Group’s Strategic Review of its operations, the Group identified six separate businesses which include those
focussed on construction, contract mining, PPP’s and engineering as outlined in note 32: Segment information.
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 CIMIC Group Business Plan. The recoverable amount of each cash‐generating unit exceeds its carrying
amount.
The key assumptions used in the value in use calculations 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
Discount Rate
Growth Rate
Cash‐generating units
Construction
Contract mining
Risk in the industry and country in which each unit operates
Relevant to the market conditions and business plan
Discount rate
range
10‐18%
16%
Growth rate
range
3‐5%
3%
Sensitivity to changes in assumptions
The recoverable amount of intangible assets exceeds the carrying value at 31 December 2015. Management considers that for the
carrying value to equal the recoverable amount, there would have to be unreasonable changes to key assumptions. Management
considers the chances of these changes occurring as unlikely.
73
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
16. TRADE AND OTHER PAYABLES
Trade creditors and accruals
Other creditors
Amounts payable to related parties
Trade and other payables
Note
December 2015
$m
December 2014
$m
3,457.5
3,901.3
509.6
38.8
625.2
55.2
4,005.9
4,581.7
38 (b)
36 (b)
Derivative financial liabilities
36 (b)
1.4
0.7
Total trade and other payables1
Current
Non‐current
Total trade and other payables1
4,007.3
4,582.4
3,675.7
331.6
4,007.3
4,309.8
272.6
4,582.4
131 December 2014: The Group disposed of $1,488.7 million of trade and other payables in relation to discontinued operations. Refer to
note 30: Acquisitions, disposals and discontinued operations.
74
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
17. CURRENT TAX LIABILITIES
The current tax liability of $81.3 million (31 December 2014: $622.9 million) represents the amounts payable in respect of current and
prior periods.
18. PROVISIONS
Employee benefits
Balance at beginning of reporting period
Provisions made during the reporting period
Disposed during the reporting period
Provisions used during the reporting period
Effect of movements in foreign exchange
Total provisions
Current
Non‐current
Total provisions
December 2015
$m
December 2014
$m
467.9
168.4
‐
(276.6)
8.2
367.9
283.4
84.5
367.9
655.1
533.3
(167.5)
(563.5)
10.5
467.9
310.9
157.0
467.9
The provision for employee benefits relates to wages and salaries, annual leave, long service leave, retirement benefits and deferred
bonuses.
75
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
19. INTEREST BEARING LIABILITIES
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
Note
December 2015
$m
December 2014
$m
20.1
145.3
52.0
217.4
740.1
98.8
‐
983.9
94.7
84.7
1,163.3
1,635.8
188.1
8.1
838.9
1,832.0
Total interest bearing liabilities1,2
36(g)
1,056.3
2,995.3
131 December 2015: Total interest bearing liabilities excludes $48.7 million of interest bearing liabilities included in held for sale as at the
end of reporting period (31 December 2014: $93.8 million). Refer to note 31: Held for Sale.
231 December 2014: The Group disposed of $0.4 million of interest bearing liabilities in relation to discontinued operations. Refer to note
30: Acquisitions, disposals and discontinued operations.
76
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
20. SHARE CAPITAL
Issued and fully paid share capital
Balance at beginning of reporting period
Exercise of options
Balance at reporting date
Share capital
Balance at beginning of reporting period
Exercise of options
Balance at reporting date
Company
December 2015
No. of shares
December 2014
No. of shares
338,503,563
337,235,188
‐
1,268,375
338,503,563
338,503,563
Company
12 months to
December 2015
$m
12 months to
December 2014
$m
2,052.5
‐
2,052.5
2,028.6
23.9
2,052.5
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.
77
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
21. RESERVES
Foreign currency translation reserve
Balance at beginning of reporting period
Included in statement of comprehensive income
Balance at reporting date
Hedging reserve
Balance at beginning of reporting period
Included in statement of comprehensive income
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
Vesting of share based payments
Balance at reporting date
Total reserves at reporting date1
12 months to
December 2015
$m
12 months to
December 2014
$m
134.8
213.8
348.6
(100.1)
234.9
134.8
0.4
2.6
3.0
14.0
6.0
20.0
21.2
‐
21.2
(18.1)
(13.8)
(31.9)
66.7
0.1
(4.1)
62.7
5.7
(5.3)
0.4
9.6
4.4
14.0
21.2
‐
21.2
B(17.3)
(0.8)
(18.1)
71.2
21.4
(25.9)
66.7
423.6
219.0
131 December 2014: Includes amounts reclassified and included in the statement of profit or loss of $8.6 million. Refer to note 30:
Acquisitions, disposals and discontinued operations.
78
2
7
3
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
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 share based payments issued to employees over the vesting
period, and to recognise the value attributable to the vesting of share based payments during the reporting 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 2015
$m
12 months to
December 2014
$m
Note
23
1,482.2
520.4
(385.9)
1,616.7
1,201.3
676.5
(395.6)
1,482.2
79
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
23. DIVIDENDS
2015 final dividend
Subsequent to reporting date the Company announced a 100% franked final dividend in
respect of the year ended 31 December 2015. The dividend is payable on 8 April 2016. This
dividend has not been provided for in the statement of financial position.1
Dividends recognised in the reporting period to 31 December 2015
30 June 2015 interim ordinary dividend 100% franked paid on 2 October 2015
B31 December 2014 final dividend (including special dividend) 100% franked paid on 10 April
2015
Dividends recognised in the reporting period to 31 December 2014†
30 June 2014 interim ordinary dividend 25% franked paid on 3 October 2014
31 December 2013 final ordinary dividend 50% franked paid on 4 April 2014
Cents per
share
$m
50.0
168.5
46.0
68.0
57.0
60.0
155.7
230.2
385.9
193.0
202.6
395.6
1The Board has determined a final dividend of 50 cents per share. The total dividend payable is an estimate only, based on the number
of shares on issue as at the date of this financial report. Due to the on‐market share buy‐back announced by the Company on 14
December 2015, there may be fewer shares on issue on the record date for the dividend than the number of shares on issue as at the
date of this financial report.
†The unfranked por(cid:415)on of the dividend has been declared Conduit Foreign Income.
Company
December 2015
$m
December 2014
$m
Dividend franking account
Balance of the franking account, adjusted for franking credits / debits which arise from the
437.8
597.3
payment / refund of income tax provided for in the financial statements
The impact of the 2015 final dividend, determined after the reporting date, on the dividend franking account will be a reduction of
$72.2 million (2014: $98.2 million).
80
2
7
8
B
2
8
9
B
2
8
9
B
2
8
9
B
2
8
9
B
2
8
9
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
24. EARNINGS PER SHARE
Basic earnings per share
From continuing operations
From discontinued operations
Total basic earnings per share
Diluted earnings per share
From continuing operations
From discontinued operations
Total diluted earnings per share
Profit / (loss) attributable to members of the parent entity used in the calculation of basic and
diluted earnings per share ($m)
From continuing operations
From discontinued operations
12 months to
December 2015
12 months to
December 2014
153.7¢
‐
153.7¢
153.4¢
‐
153.4¢
520.4
‐
520.4
(33.9¢)
233.9¢
200.0¢
(33.7¢)
232.5¢
198.8¢
(114.6)
791.1
676.5
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
338,503,563
338,201,371
‐
‐
727,690
2,004,831
339,231,253
340,206,202
1Share options are not dilutive for 31 December 2015 as the exercise value of options was not in excess of the weighted average share
price during the period. Share options were also not dilutive for 31 December 2014, as all unexercised and outstanding 2009 options
granted on 4 May 2009 lapsed on 4 May 2014.
2Contingently issuable shares relate to share rights under plans disclosed in note 37: Employee Benefits.
81
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
25. ASSOCIATES
The Group has the following investments in associates:
Name of entity
Principal activity
Country
Al Habtoor Leighton LLC
Dunsborough Lakes Village Syndicate1
LCIP Co‐Investment Unit Trust3
Macmahon Holdings Limited1
Sedgman Limited1, 4
Paradip Multi Cargo Berth Private Limited2
Wellington Gateway General Partner No.1
Limited3
Wellington Gateway General Partner No.2
Limited3
United Arab Emirates
Construction
Australia
Development
Australia
Investment
Construction, Contract Mining Australia
Construction, Contract Mining Australia
Development
Investment
India
New Zealand
Investment
New Zealand
Ownership interest
December 2015
%
December 2014
%
45
20
11
20
37
26
15
‐
45
20
11
20
37
26
15
15
All associates have a statutory reporting date of 31 December with the following exceptions:
1Entities have a 30 June statutory reporting date.
2Entities have a 31 March statutory reporting date.
3The Group’s investment was equity accounted as a result of the Group’s active participation on the Board and the Group’s ability to
impact decision making, leading to the assessment that significant influence exists.
4 On 13 January 2016 CIMIC Group Limited, through its wholly owned subsidiary CIMIC Group Investments Pty Limited, announced that it
intends to make an unconditional offer to acquire the 63.01% of Sedgman that it does not already own pursuant to an off‐market
takeover at a price of $1.07 per share. Subsequent to 31 December 2015 CIMIC has increased its shareholding and has an ownership
interest of 46.44% as at 5 February 2016.
Al Habtoor Leighton LLC (“HLG”)
During the reporting period, the carrying value of the Group’s investment in HLG increased from $383.4 million to $444.7 million
(equivalent to US$324.6 million in 2015 and US$310.6 million in 2014). The increase was due to a foreign exchange translation gain of
$42.1 million, an equity injection of $33.5 million partially offset by the Group’s share of equity accounted loss of $14.3 million. The
recoverable amount of the Group’s investment was calculated using a value in use calculation.
The key assumptions used in the value in use calculation:
Discount rate
Growth rate
Legacy project
receivables
Borrowings
Forecast cash flow
15% (31 December 2014: 16%)
3% (31 December 2014: 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, 56% will be collected within twenty‐four months and 44% collected
subsequently (31 December 2014: 61% and 39% 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
82
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
25. ASSOCIATES CONTINUED
Al Habtoor Leighton LLC (“HLG”) continued
Management considers that for the recoverable amount to fall below the carrying value there would have to be unreasonable changes to
key assumptions. Management considers the chances of these changes occurring as unlikely.
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$259.8 million (31 December
2014: two facilities totalling US$292.5 million) equivalent to $356.0 million (31 December 2014: $361.1 million):
letters of credit of US$68.2 million (31 December 2014: US$78.7 million), equivalent to $93.4 million (31 December 2014: $97.1
million); and
guarantees of US$191.6 million (31 December 2014: US$213.8 million), equivalent to $262.6 million (31 December 2014: $264.0
million).
Share of total assets and liabilities of associates’ results, assets and liabilities:
Revenue
Expenses
Profit / (loss) before tax
Income tax (expense) / benefit
Profit / (loss) for the period3
Current assets
Non‐current assets
Total assets
Current liabilities
BNon‐current liabilities
Total liabilities
12 months to
December 2015
$m
12 months to
December 2014
$m
1,401.8
(1,442.9)
(41.1)
8.1
(33.0)
1,035.3
(1,043.9)
(8.6)
(3.0)
(11.6)
December 2015
$m
December 2014
$m
1,701.0
816.5
2,517.5
1,357.1
601.5
1,958.6
1,519.6
788.4
2,308.0
1,265.0
514.3
1,779.3
Equity accounted associates at reporting date1,2
558.9
528.7
131 December 2014: The Group disposed of investments in associates totalling $13.1 million in relation to discontinued operations. Refer
to note 30: Acquisitions, disposals and discontinued operations.
2Investments in listed associates for which there are published price quotations had a market value at reporting date of: $97.9 million (31
December 2014: $67.7 million).
331 December 2014: Total Profit / (loss) for the period from continuing operations excludes $14.8 million which has been separately
presented in share of profit / (losses) of associates and joint ventures from discontinued operations. Refer note 30: Acquisitions, disposals
and discontinued operations.
There were no impairments of investments during the reporting period (31 December 2014: $nil). Refer to note 4: Items included in
profit/(loss) before tax. The recoverable amount of the investments is based on value in use calculations. Pre‐tax discount rates within a
range of 14%‐18% were used in these calculations.
83
2
9
9
B
3
1
0
B
3
1
0
B
3
1
0
B
3
1
0
B
3
1
0
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
25. ASSOCIATES CONTINUED
Set out below are the associates of the Group as at 31 December 2015 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.
Name of entity
Place of business / country of
incorporation
Measurement method
Nature of
relationship
Al Habtoor Leighton LLC1
United Arab Emirates
Equity method
Associate
1There 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
Ownership interest held by the
Company
December 2015
December 2014
%
45
%
45
December 2015
$m
December 2014
$m
Commitments ‐ Associates
6.4
10.3
Contingent Liabilities ‐ Associates
Letters of credit and guarantees
356.0
361.1
84
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
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
Summarised profit or loss
Revenue
Profit / (loss) for the period
Other comprehensive income
Total comprehensive income
December 2015
$m
December 2014
$m
45%
45%
1,859.9
753.7
(1,532.3)
(636.6)
444.7
1,159.5
(14.3)
‐
(14.3)
1,383.3
653.1
(1,166.6)
(486.4)
383.4
735.1
‐
‐
‐
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 2015
$m
December 2014
$m
114.2
145.3
(18.7)
(11.6)
85
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
26. JOINT VENTURE ENTITIES
The Group has the following joint venture entities:
Name of entity
Principal activity
Country
Ownership interest
December 2015
%
December 2014
%
A.C.N. 115 687 057 Pty Ltd (formerly known as Promet Engineers
Pty Limited)1
Construction
Australia
APM Group (Aust) Pty Ltd & Broad Construction Services
(NSW/VIC) Pty Ltd1
Applemead Proprietary Limited
Auckland Road Maintenance Alliance (West) Management JV1
Bac Devco Pty Limited1
Barclay Mowlem Thiess Joint Venture1
City West Property Holding Trust (Section 63 Trust)
City West Property Holdings Pty Limited
City West Property Investment (No. 1) Trust
BCity 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
Copperstring Pty Ltd1
Doubleone 3 Unit Trust1
Erskineville Residential Project Pty Ltd
Fallingwater Trust1
Garlanja Joint Venture1
Great Eastern Alliance
Hollywood Apartments Pty Ltd
Hollywood Apartments Trust
Kentz E & C Pty Ltd
Kings Square No.4 Unit Trust
Kings Square Pty Ltd
Kurunjang Development Pty Ltd1
Construction
Australia
Development
Australia
Construction
New Zealand
Development
Construction
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
Contract Mining
Australia
Contract Mining
Australia
Construction
Development
Construction
Development
Construction
Construction
Development
Development
Construction
Development
Development
Investment
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
50
50
50
50
33
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
‐
50
50
15
‐
‐
‐
‐
50
50
50
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
15
75
75
50
50
50
50
50
50
86
3
1
6
B
3
2
8
B
3
2
8
B
3
2
8
B
3
2
8
B
3
2
8
B
3
2
9
B
3
2
9
B
3
2
9
B
3
0
4
B
3
0
4
B
3
0
4
B
3
0
4
B
3
0
4
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
26. JOINT VENTURE ENTITIES CONTINUED
Name of entity
Principal activity
Country
Ownership interest
December 2015
December 2014
LCS Employment Agency Ltd
Leighton Abigroup Joint Venture1
Leighton BMD JV1
Leighton Construction India (Private) Limited2
Leighton Contractors & Baulderstone Hornibrook Bilfinger Berger
Joint Venture1
Leighton Kumagai Joint Venture (MetroRail)1
Leighton OSE Joint Venture2
Leighton Services UAE Co LLC
Leighton / Ngarda Joint Venture (LNJV)1
Leighton‐Infra 13 Joint Venture2
Leighton Holland Browse JV1
Majwe Mining Joint Venture (Proprietary) Limited
Manukau Motorway Extension1
Marine & Civil Pty Ltd1
Mode Apartments Pty Ltd
Mode Apartments Unit Trust
Moonee Ponds Pty Ltd
Mosaic Apartments Holdings Pty Ltd1
Mosaic Apartments Pty. Ltd.1
Mosaic Apartments Unit Trust
Mulba Mia Leighton Broad Joint Venture1
New Future Alliance (SIHIP)
Nextgen Group Holdings Pty Limited
Ngarda Civil and Mining Pty Limited1
Northern Gateway Alliance
Riverina Estate Developments Pty Ltd1
Riverina Estate Developments Trust1
RTL JV1
RTL Mining and Earthworks Pty Ltd1
S.A.N.T. (MGT Holding) Pty Ltd
S.A.N.T. (Term‐Holding) Pty Ltd
SmartReo Pty Ltd
Southern Gateway Alliance (Mandurah)
The Kurunjang Development Trust1
Thiess Alstom Joint Venture1
Services
Macau
Construction
Australia
Construction
Australia
Construction
India
Construction
Australia
Construction
Australia
Construction
Services
India
UAE
Construction
Australia
Construction
India
Construction
Australia
Contract Mining Botswana
Construction
New Zealand
Construction
Australia
Development
Australia
Development
Australia
Development
Australia
Development
Australia
Development
Australia
Development
Australia
Construction
Australia
Construction
Australia
Services
Australia
Contract Mining Australia
Construction
New Zealand
Investment
Australia
Development
Australia
Mining
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Development
Australia
Construction
Australia
%
50
50
50
50
50
55
50
36
88
50
50
60
50
50
50
50
50
50
50
50
50
80
29
50
50
‐
‐
44
44
50
50
50
69
50
50
%
50
50
50
50
50
55
50
50
88
50
50
60
50
50
‐
‐
50
50
50
50
50
66
29
50
50
50
50
44
44
‐
‐
50
69
50
50
87
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
26. JOINT VENTURE ENTITIES CONTINUED
Name of entity
Principal activity
Country
Ownership interest
December 2015
December 2014
Thiess Barnard Joint Venture
Thiess Black and Veatch Joint Venture (VIC)
Thiess Black and Veatch Joint Venture1
Thiess Downer EDI Works JV1
Thiess Hochtief Joint Venture1
Thiess United Group Joint Venture1
Ventia Services Group Pty Limited (formally known as LS HoldCo
Pty Ltd)
Viridian Noosa Pty Ltd1
Viridian Noosa Trust1
VR Pakenham Pty Ltd1
VR Pakenham Trust1
Wallan Project Pty Ltd1
Wallan Project Trust1
Wedgewood Road Hallam No. 1 Pty Ltd
BWedgewood Road Hallam Trust
Wellington Tunnels Alliance
Wrap Southbank Unit Trust
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Services
Australia
Development
Australia
Development
Australia
Development
Australia
Development
Australia
Investment
Investment
Australia
Australia
Development
Australia
Development
Australia
Construction
New Zealand
Development
Australia
%
50
‐
‐
75
50
50
50
50
50
‐
‐
50
50
50
50
50
50
%
50
50
50
75
50
50
50
50
50
50
50
50
50
50
50
50
48
All joint venture entities have a statutory reporting date of 31 December with the following exceptions:
1Entities have a 30 June statutory reporting date.
2Entities 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.
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.
88
3
6
5
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
26. JOINT VENTURE ENTITIES CONTINUED
The Group’s share of joint venture entities’ results, assets and liabilities are as follows:
Revenue
Expenses
Profit / (loss) before tax
Income tax (expense) / benefit
Profit / (loss) for the period2
Current assets
Non‐current assets
Total assets
Current liabilities
Non‐current liabilities
Total liabilities
The Group’s share of joint venture entities’ net assets at reporting date1
12 months to
December 2015
$m
12 months to
December 2014
$m
1,446.2
(1,424.1)
22.1
(3.6)
18.5
494.9
(459.6)
35.3
(6.9)
28.4
December 2015
$m
December 2014
$m
481.1
763.3
1,244.4
419.4
310.8
730.2
514.2
521.5
670.3
1,191.8
415.4
291.5
706.9
484.9
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 2015
$m
December 2014
$m
514.2
484.9
18.5
28.4
131 December 2014: The Group disposed of investments in joint ventures totalling $13.6 million in relation to discontinued operations.
Refer to note 30: Acquisitions, disposals and discontinued operations.
231 December 2014: Total Profit / (loss) for the period from continuing operations excludes $0.6 million which has been separately
presented in share of profit / (losses) of associates and joint ventures from discontinued operations. Refer to note 30: Acquisitions,
disposals and discontinued operations.
89
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
27. JOINT OPERATIONS
The Group has the following interest in joint operations:
Name of arrangement
Principal activity
Country
Ownership interest
December 2015
December 2014
%
%
Bacchus Marsh1
Baulderstone Leighton Joint Venture
Casey Fields1
China State Leighton Joint Venture
CHT Joint Venture
Deer Park1
Edenbrook Estate1
Erskineville Residential Project
EV LNG Australia Pty Ltd & Thiess Pty Ltd (EVT JV)
Gammon ‐ Leighton Joint Venture
Garlanja Joint Venture1
Garlanja Joint Venture1
Henry Road Pakenham Joint Venture1
HYLC Joint Venture1
Development
Australia
Construction
Australia
Development
Australia
Construction
Hong Kong
Construction
Australia
Development
Australia
Development
Australia
Development
Australia
Construction
Australia
Construction
Hong Kong
Construction
Australia
Construction
Australia
Development
Australia
Construction
Australia
John Holland – Leighton (South East Asia) Joint Venture
Services
Hong Kong
Leighton ‐ China State Joint Venture
Leighton ‐ Chun Wo Joint Venture
Leighton ‐ Chun Wo Joint Venture
Leighton ‐ Gammon Joint Venture
Leighton/HEB Joint Venture
Construction
Hong Kong
Construction
Hong Kong
Construction
Hong Kong
Construction
Hong Kong
Construction
New Zealand
Leighton Abigroup Consortium (Epping to Thornleigh)
Construction
Leighton China State John Holland Joint Venture (City of Dreams)1 Construction
Leighton China State Joint Venture (Wynn Resort) 1
Construction
Australia
Macau
Macau
Leighton China State Van Oord Joint Venture
Leighton Contractors Black & Veatch Joint Venture (formerly
known as Thiess Black and Veatch Joint Venture) 1
Leighton Contractors Downer Joint Venture1
Leighton Dragados Samsung Joint Venture
Leighton Fabrication and Modularisation Ltd
Leighton Fulton Hogan Joint Venture (Sapphire to Woolgoolga)1
Leighton Fulton Hogan Joint Venture (SH16 Causeway Upgrade)
Construction
Hong Kong
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Thailand
Construction
Australia
Construction
New Zealand
Leighton John Holland Joint Venture (Thomson Line)
Construction
Singapore
Leighton Offshore ‐ John Holland Joint Venture (LTA Project)
Construction
Singapore
Leighton M&E ‐ Southa Joint Venture
Leighton Samsung John Holland Joint Venture
Construction
Australia
Construction
Australia
50
50
55
50
50
‐
50
50
50
50
75
‐
‐
50
50
51
84
60
50
80
50
40
50
‐
50
50
40
50
50
50
50
50
50
33
50
50
55
50
50
50
50
50
50
50
‐
25
50
50
50
‐
84
‐
50
80
50
40
50
45
50
50
‐
‐
50
50
50
50
‐
‐
90
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
27. JOINT OPERATIONS CONTINUED
Name of arrangement
Principal activity
Country
Ownership interest
December 2015
December 2014
%
%
Leighton Swietelsky Joint Venture1
Leighton York Joint Venture
Leighton ‐ Able Joint Venture
Leighton ‐ Chubb E&M Joint Venture
Leighton ‐ John Holland Joint Venture
Services
Australia
Construction
Australia
Construction
Hong Kong
Construction
Hong Kong
Construction
Hong Kong
Leighton ‐ John Holland Joint Venture (Lai Chi Kok)
Construction
Hong Kong
Leighton ‐ Total Joint Operation
Link 200 Joint Venture1
Link 200 Station Joint Venture1
Link 200 Tunnel Joint Venture1
Murray & Roberts Marine Malaysia ‐ Leighton Contractors
Malaysia Joint Venture1
N.V. Besix S.A. & Thiess Pty Ltd (Best JV)
NRT ‐ Infrastructure Joint Venture
OWP Joint Venture
Rizzani Leighton Joint Venture
Taiwan Track Partners Joint Venture
Construction
Indonesia
Construction
Hong Kong
Construction
Hong Kong
Construction
Hong Kong
Construction
Malaysia
Construction
Australia
Construction
Australia
Services
Australia
Construction
Australia
Construction
Taiwan
Task Joint Venture (Thiess & Sinclair Knight Merz)
Construction
Australia
Thiess Balfour Beatty Joint Venture
Thiess Decmil Kentz Joint Venture1
Thiess Degremont JV
Thiess Degremont Nacap Joint Venture1
Thiess John Holland Dragados Joint Venture
Thiess MacDow Joint Venture1
Thiess Pty Ltd & York Civil Pty Ltd
Thiess Sedgman Joint Venture1
Thiess Southbase Joint Venture
Thiess John Holland Joint Venture (Airport Link)
Thiess John Holland Joint Venture (Eastlink)
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
New Zealand
Construction
Australia
Construction
Australia
Thiess John Holland Joint Venture (Lane Cove Tunnel)
Construction
Australia
Thiess John Holland Motorway Services
Veolia Water ‐ Leighton‐ John Holland Joint Venture (formerly
known as John Holland Veolia Water Australia Joint Venture
(Hong Kong Sludge))
Construction
Australia
Construction
Hong Kong
All joint operations have a reporting date of 31 December with the following exceptions:
1Arrangements have a 30 June reporting date.
50
75
51
50
55
51
70
48
60
60
50
50
50
75
50
‐
60
67
33
65
33
50
50
65
68
50
50
50
50
‐
24
50
‐
51
50
50
51
70
48
60
60
50
50
50
‐
‐
28
60
67
33
65
33
50
50
65
50
50
50
50
50
50
24
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.
91
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
28. RECONCILIATION OF PROPERTY, PLANT AND EQUIPMENT CARRYING VALUES
12 months to December 2015
Note
Opening carrying amount
Additions1
Disposals
Transfers from assets held for sale
Depreciation
31
Effects of exchange rate fluctuations
Carrying amount at reporting date
Leasehold land,
buildings and
improvements
$m
Plant and
equipment
$m
Total property,
plant and
equipment
$m
Buildings
$m
21.6
‐
(20.7)
‐
(0.7)
‐
0.2
35.5
3.0
‐
‐
(11.7)
0.8
27.6
1,564.2
1,626.5
248.9
(207.5)
54.0
(484.2)
109.2
251.9
(233.0)
54.0
(496.6)
110.0
1,284.6
1,312.8
Land
$m
5.2
‐
(4.8)
‐
‐
‐
0.4
1Additions to property, plant and equipment include finance lease additions of $6.7 million.
92
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
29. RECONCILIATION OF PROFIT / (LOSS) FOR THE YEAR TO NET CASH FROM OPERATING ACTIVITIES
Profit / (loss) for the year
Adjustments for non‐cash items:1
- Depreciation of property, plant and equipment
- Amortisation of intangibles
- Net (gain) / loss on sale of controlled entities
- Net (gain) / loss on sale of assets
-
Impairment of goodwill
- Property development and property joint ventures write‐downs
-
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
12 months to
December 2015
$m
12 months to
December 2014
$m
514.4
678.6
496.6
47.2
(25.4)
14.6
2.7
8.2
1.4
168.4
40.9
0.1
1,089.9
(41.7)
173.4
(634.5)
(276.6)
(129.4)
611.6
39.6
(973.2)
(48.9)
‐
5.3
(5.6)
542.3
11.2
19.9
533.5
73.4
148.2
(268.7)
(561.8)
338.4
Net cash from operating activities
1,450.2
1,143.8
131 December 2014: Includes both continuing and discontinued operations.
93
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
30. ACQUISITIONS, DISPOSALS AND DISCONTINUED OPERATIONS
December 2015 acquisitions and disposals of controlled entities and businesses
Acquisitions
There were no acquisitions of controlled entities and businesses during the period to 31 December 2015.
Disposals
On 31 March 2015 and 15 May 2015, a subsidiary of Thiess Pty Limited, a controlled entity of the Company, disposed of its interests in PT
Solo Ngawi Jaya, PT Ngawi Kertosono Jaya and PT Cinere Serpong Jaya for $68.0 million. In the year to 31 December 2015 the disposed
companies contributed $nil net profit after tax to the consolidated net profit for the period.
December 2014 acquisitions and disposals of controlled entities and businesses
Acquisitions
There were no acquisitions of controlled entities and businesses during the period to 31 December 2014.
Disposals – John Holland Group (“JHG”)
On 12 December 2014, the Group sold 100% of its shareholding in JHG to CCCC International Holding Limited (“CCCCI”). The terms of
the executed sale agreement mean that the Group no longer controls JHG and accordingly the transaction was recorded as a disposal
of controlled entities in accordance with Accounting Standard AASB 10 Consolidated Financial Statements (“AASB 10”). The disposal
was accounted for under the requirements of AASB 10 as follows: the total consideration receivable was $723.9 million (comprising:
cash consideration (which had not been received as at the 31 December 2014 reporting date)) less the carrying value of JHG’s net
assets of $301.5 million and the recycling of reserves of $1.1 million, resulting in a gain before tax of $423.5 million. JHG’s
contribution from 1 January 2014 to 12 December 2014 to Group revenue of $3,195.5 million and $36.5 million to Group net profit
after tax, along with the gain on disposal, were recorded within discontinued operations.
Cash consideration was received in full in the current reporting period.
94
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
30. ACQUISITIONS, DISPOSALS AND DISCONTINUED OPERATIONS CONTINUED
Disposals – John Holland Group (“JHG”) continued
Gain on disposal
Cash consideration net of transaction costs
Carrying amount on disposal
Recycling of reserves
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
Current tax asset
Inventories: consumables
Assets held for sale
Investments accounted for using the equity method
Deferred tax assets
Property, plant and equipment
Intangibles
Trade and other payables
Provisions
Net assets disposed
Cash flows resulting from sale
Cash consideration (not received at 31 December 2014)
Cash disposed
Net cash outflow
12 months to December 2014
$m
723.9
(301.5)
1.1
423.5
331.2
842.8
0.3
7.3
2.2
13.1
27.6
222.9
36.2
(1,094.3)
(87.8)
301.5
‐
(331.2)
(331.2)
The following controlled entities were disposed as part of the sale of JHG:
John Holland Group Pty Ltd
JHG Mutual Limited
John Holland Melbourne Rail Franchise Pty Ltd
John Holland (NZ) Ltd
John Holland Pty Ltd
John Holland Queensland Pty Ltd
John Holland Rail Pty Ltd
John Holland Sydney NRT Pty Ltd
95
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
30. ACQUISITIONS, DISPOSALS AND DISCONTINUED OPERATIONS CONTINUED
Disposals – Thiess Services & Leighton Contractors Services businesses (“Services”)
On 17 December 2014, the Group sold 50% of its share of the Services businesses to funds managed by affiliates of Apollo Global
Management, LLC (“Apollo”), and entered into a joint venture arrangement with Apollo. The terms of the executed sale agreements
were such that the Group no longer controls Services and accordingly the transaction was recorded as a disposal of controlled entities
in accordance with Accounting Standard AASB 10 Consolidated Financial Statements (“AASB 10”) and the acquisition of an interest in
a joint venture entity. The disposal was accounted for under the requirements of AASB 10 as follows: the total consideration
receivable was $860.6 million (comprising: cash consideration of $633.3 million (which had not been received as at the 31 December
2014 reporting date)) and non‐cash consideration of $227.3 million (fair value of the 50% retained interest)) less the carrying value of
Services’ net assets of $318.4 million, and the recycling of reserves of $7.5 million, resulting in a gain before tax of $549.7 million. The
portion of this gain which was attributable to recognising the investment retained in the former subsidiaries at their fair values was
$274.8 million; the portion of the gain attributable to the investment in the former subsidiaries disposed was $274.9 million. Services’
contribution from 1 January 2014 to 17 December 2014 to Group revenue of $2,238.1 million and $153.4 million to Group net profit
after tax, along with the gain on disposal, were recorded within discontinued operations. Cash consideration was received in full in
the current reporting period.
Gain on disposal
Cash consideration net of transaction costs
Non‐cash consideration
Carrying amount on disposal
Recycling of reserves
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
Current tax assets
Inventories: consumables
Investments accounted for using the equity method
Deferred tax assets
Property, plant and equipment
Intangibles
Trade and other payables
Provisions
Interest bearing liabilities
Non controlling interests
Net assets disposed
Cash flows resulting from sale
Cash consideration (not received at 31 December 2014)
Cash disposed
Net cash outflow
12 months to December 2014
$m
633.3
227.3
(318.4)
7.5
549.7
89.3
519.0
0.4
46.3
13.6
20.8
44.6
60.8
(394.4)
(79.7)
(0.4)
(1.9)
318.4
‐
(89.3)
(89.3)
96
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
30. ACQUISITIONS, DISPOSALS AND DISCONTINUED OPERATIONS CONTINUED
Disposals – Thiess Services & Leighton Contractors Services businesses (“Services”) continued
The following controlled entities were disposed as part of the sale of Services:
Chargepoint Pty Ltd
Delron Cleaning Pty Ltd
Delron Group Facility Services Pty Limited
Silcar Pty Ltd
Silcar Nouvelle Caledonie SAS
Thiess Services Ltd
Thiess Services Pty Ltd
Leighton Services Australia Pty Limited
Vision Hold Pty Limited
Visionstream Australia Pty Limited
Visionstream Pty Limited
Visionstream Services Pty Limited
Vytel Pty Limited
Discontinued operations of controlled entities and businesses
As a result, the JHG and Services sales have been classified as discontinued operations.
The combined results of the discontinued operations (JHG and Services businesses) included in the profit for the prior year are set out
below.
Profit for the period from discontinued operations
Revenue
Expenses
Finance Costs
Share of profits / (losses) of associates and joint venture entities
Profit / (loss) before tax before gain / (loss) on sale of discontinued operations
Gain / (loss) on sale of assets from discontinued operations
Profit / (loss) before tax
Income tax (expense) / benefit from discontinued operations before gain on sale of assets
Income tax (expense) / benefit on gain on sale of assets
Income tax (expense) / benefit from discontinued operations
Profit / (loss) for the year from discontinued operations
Cash flows from discontinued operations
Net cash from / (used in) operating activities
Net cash from / (used in) investing activities
Net cash from / (used in) financing activities
Net cash flow for the year
12 months to
December 2014
$m
5,433.6
(5,199.2)
(1.2)
15.4
248.6
973.2
1,221.8
(58.7)
(371.7)
(430.4)
791.4
(292.6)
(40.6)
(4.1)
(337.3)
97
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
31. HELD FOR SALE
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 finance lease liabilities relating to Arutmin were reclassified for the first time as held for sale under AASB 5
Non‐current Assets Held for Sale and Discontinued Operations at 31 December 2013.
During the reporting period, negotiations were ongoing. An agreement for the sale of assets was formally signed in January 2016. As
a result, both the composition of the assets and liabilities to be sold and the expected timing of the sale changed. This resulted in a
net $28.5 million of assets held for sale being reclassified to property, plant and equipment and inventories (after the impact of
foreign exchange changes). The associated finance lease liabilities of $46.7 million were also reclassified to interest bearing liabilities.
The change in assets and associated finance lease liabilities held for sale had no impact on the profit or loss for the current and prior
reporting periods.
The remaining assets and associated finance lease liabilities have continued to be classified as held for sale at 31 December 2015 as
the sale is still expected within 12 months of reporting date.
Assets
Inventories: consumables
Total current assets
Property, plant and equipment*
Total non‐current assets
Total assets
Liabilities
Interest bearing liabilities*
Total current liabilities
Total non‐current liabilities
Total liabilities
December 2015
$m
December 2014
$m
Arutmin
Arutmin
30.4
30.4
194.2
194.2
224.6
(47.1)
(47.1)
30.5
30.5
222.6
222.6
253.1
(93.8)
(93.8)
‐
‐
(47.1)
(93.8)
*Other held for sale
Other held for sale includes development properties $11.0 million (31 December 2014 $nil) mining equipment of $0.2 million (31
December 2014 rail and mining equipment: $1.3 million) and interest bearing liabilities $1.6 million (31 December 2014 $nil) actively
marketed for sale in addition to the Arutmin amounts disclosed above.
98
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
32. SEGMENT INFORMATION
Description of segments
Operating segments have been identified based on separate financial information that is regularly reviewed by the CIMIC Group
Chief Executive Officer, the Chief Operating Decision Maker (“CODM”). The CIMIC Group is structured on a decentralised basis
comprising the following main segments and a corporate head office:
Construction
Contract Mining
Public Private Partnerships (“PPPs”)
Engineering
Habtoor Leighton Group (“HLG”)
Commercial & Residential
The performance of each segment forms the primary basis for all management reporting to the CODM.
The composition of the Group’s reportable segments was changed in the prior reporting period. Whilst the Group has identified
PPPs and Engineering as reportable segments, the results of these segments are considered immaterial for the current and prior
reporting period and are included in the Corporate segment.
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 segment. Performance is measured
based on segment result. Information regarding the results of each reportable segment, as reported to the CODM, is included on
pages 100‐101. The corporate segment represents the corporate head office and includes transactions relating to Group finance,
taxation, treasury, corporate secretarial and certain strategic investments. Amounts from 2014 have been restated with interest
revenue recorded in Corporate of $28.8m being reclassified to HLG.
Differences in the reporting for management and financial accounting are individually, and in total, not material.
Geographical information
BGeographical information
BAustralia Pacific
BAsia, Middle East & Americas
BTotal
Revenue
Non‐current assets
12 months to
December 2015
$m
12 months to
December 2014
$m
December 2015
$m
December 2014
$m
8,585.6
4,785.1
13,370.7
12,431.0
4,444.8
16,875.8
774.2
1,341.3
2,115.5
1,189.9
1,349.3
2,539.2
Revenue is based on the geographical location of the customer and the location of the service provided. Assets are based on the
geographical location of the assets. Geographical 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.
99
4
6
6
B
5
5
9
B
5
5
9
B
5
5
9
B
5
5
9
B
5
5
9
4
6
7
B
5
6
0
B
5
6
0
B
5
6
0
B
5
6
0
B
5
6
0
4
6
8
B
5
6
1
B
5
6
1
B
5
6
1
B
5
6
1
B
5
6
1
4
6
9
B
5
6
2
B
5
6
2
B
5
6
2
B
5
6
2
B
5
6
2
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
32. SEGMENT INFORMATION CONTINUED
12 months to
December 2015
Revenue
Segment revenue before interest
Interest revenue
Segment revenue
Inter‐segment revenue
Segment joint venture and associate revenue
Construction
$m
Contract
Mining
$m
Habtoor
Leighton
Group
$m
Commercial &
Residential
$m
Corporate
$m
Eliminations
$m
Total
$m
9,514.0
3,063.6
1,159.5
1,064.2
1,555.5
(228.0)
16,128.8
‐
‐
32.2
36.5
21.2
‐
89.9
9,514.0
3,063.6
1,191.7
1,100.7
1,576.7
(228.0)
16,218.7
(136.5)
(57.6)
‐
‐
‐
(91.5)
228.0
‐
(180.8)
(1,159.5)
(76.7)
(1,373.4)
External revenue
9,319.9
2,882.8
32.2
1,024.0
111.8
Result
Segment result before finance costs
661.1
240.9
Finance costs
Segment result
Income tax (expense) / benefit
Profit / (loss) for the year
(11.9)
649.2
(15.9)
225.0
(Profit) / loss for the year attributable to non‐controlling interests
Profit / (loss) for the year attributable to members of the parent entity
17.9
‐
17.9
76.2
(5.7)
70.5
(67.3)
(160.3)
(227.6)
Other
Share of profit / (loss) of associates and joint
venture entities
Depreciation & amortisation
Other material non‐cash expenses
(1.9)
9.1
(14.3)
15.5
(22.9)
(206.6)
(2.7)
(333.2)
‐
‐
‐
(1.0)
(8.2)
(3.0)
‐
‐
‐
‐
‐
‐
‐
‐
‐
(2,848.0)
13,370.7
928.8
(193.8)
735.0
(220.6)
514.4
6.0
520.4
(14.5)
(543.8)
(10.9)
100
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
32. SEGMENT INFORMATION CONTINUED
12 months to
December 2014
Revenue
Segment revenue before interest
Interest revenue
Segment revenue
Inter‐segment revenue
Segment joint venture and associate revenue
Construction
$m
Contract
Mining
$m
Habtoor
Leighton
Group
$m
Commercial &
Residential
$m
Corporate
$m
Eliminations
$m
Total
$m
12,431.0
3,973.0
‐
‐
12,431.0
3,973.0
735.1
28.8
763.9
‐
(212.6)
(162.5)
‐
(130.1)
(735.1)
External revenue
12,055.9
3,842.9
28.8
BResult
Segment result before finance costs and
impairment – contract debtors provision
Finance costs
Segment result before impairment – contract
debtors provision
Impairment ‐ contract debtors provision
Segment result
Income tax (expense) / benefit
Profit / (loss) for the year
576.4
193.3
(25.4)
551.0
(20.3)
173.0
‐
‐
551.0
173.0
28.8
‐
28.8
‐
28.8
996.2
31.1
1,027.3
‐
(114.6)
912.7
63.6
(4.8)
58.8
‐
58.8
551.2
27.9
579.1
(155.7)
(387.9)
35.5
(37.8)
(189.5)
(227.3)
(675.0)
(902.3)
(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
5.5
10.3
(155.0)
(408.0)
(5.3)
‐
‐
‐
‐
18.4
(17.4)
‐
‐
(14.9)
(675.0)
(368.3)
18,318.2
‐
87.8
(368.3)
18,406.0
368.3
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
(1,530.2)
16,875.8
824.3
(240.0)
584.3
(675.0)
(90.7)
(22.1)
(112.8)
(2.1)
(114.9)
16.8
(577.9)
(680.3)
101
4
9
7
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
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 leases1
Plant and equipment
Property
Other
Non‐cancellable operating leases2
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
December 2015
$m
December 2014
$m
255.9
480.2
164.8
900.9
3.2
36.6
0.2
162.6
240.6
2.3
77.0
222.0
156.1
0.2
0.1
‐
319.1
533.0
174.6
1,026.7
208.9
135.1
0.3
95.2
202.7
6.7
73.5
166.1
133.1
2.6
2.5
‐
Total operating lease commitments
900.9
1,026.7
131 December 2014: During the reporting period, the Group disposed of cancellable operating lease commitments totalling $20.6 million
related to the disposal of controlled entities and businesses.
231 December 2014: During the reporting period, the Group disposed of non‐cancellable operating lease commitments totalling $115.2
million related to the disposal of controlled entities and businesses.
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.
102
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
33. COMMITMENTS CONTINUED
Capital commitments
Capital expenditure contracted for at reporting date but not recognised as liabilities is as follows:
Property, plant and equipment1
Payable:
- within one year
-
-
later than one year but not later than five years
later than five years
Investments
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 equipment2
Payable:
- within one year
-
-
later than one year but not later than five years
later than five years
December 2015
$m
December 2014
$m
0.6
‐
‐
0.6
25.0
‐
‐
25.0
19.4
19.4
‐
‐
‐
‐
19.4
19.4
30.9
‐
‐
30.9
2.7
‐
‐
2.7
23.7
6.0
‐
29.7
8.3
‐
‐
8.3
131 December 2014: During the reporting period, the Group disposed of property, plant and equipment capital commitments totalling
$15.0 million related to the disposal of controlled entities and businesses.
231 December 2014: During the reporting period, the Group disposed of property, plant and equipment capital commitments of associates
totalling $0.4 million related to the disposal of controlled entities and businesses.
103
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
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 2015
$m
December 20141
$m
1,982.5
898.5
262.9
2,070.9
1,051.8
345.9
131 December 2014: Includes disposals of bank guarantees totalling $424.9 million, insurance, performance and payments bonds totalling
$213.8 million and letters of credit totalling $22.4 million related to the disposal of controlled entities and businesses.
Letters of credit include those provided for the Group’s capital commitments totalling $3.3 million (31 December 2014: $14.1 million) and
those provided on behalf of HLG to lenders totalling $93.4 million (31 December 2014: $97.1 million). Guarantees of $262.6 million (31
December 2014: $264.0 million) have also been provided on behalf of HLG to the lender (refer to note 25: Associates).
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: CIMIC Group 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 by employees within the Leighton International business of its Code of Ethics that, if substantiated,
may have contravened Australian laws. The AFP is investigating the CIMIC Group’s international operations. In November 2013, the
Australian Securities and Investments Commission (ASIC) made public statements about its cooperation with the AFP in the AFP’s
investigation. On 28 March 2014, ASIC informed the Senate Estimates Committee that it had commenced a formal investigation into
potential breaches of the Corporations Act relating to a number of matters being investigated by the AFP.
The Company is cooperating with the AFP and the ASIC investigations. The Company does not know when the investigations will be
concluded.
vii) On 7 October 2013, the Company announced to the Australian Securities Exchange that it had been made aware of proceedings
relating to an alleged failure to disclose the report to the AFP (referred to in (vi) above) which had commenced 4 October 2013. On
14 April 2015 the proceedings were stayed by the Victorian Supreme Court and on 7 September 2015 the Victorian Court of Appeal
dismissed the plaintiff’s appeal of that decision and permanently stayed the proceedings. In any event, the plaintiff has in the
interim commenced nearly identical proceedings in relation to the same subject matter. The Company continues to deny the claim
and is defending the proceedings.
viii) On 24 June 2015 the Senate of the Parliament of the Commonwealth of Australia referred an inquiry into foreign bribery to the
Senate Economics References Committee. The Company anticipates that the matter referred to in (vi) above will be a subject of the
inquiry.
104
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
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 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 the Australia Pacific, Asia, Middle East and Americas regions in the infrastructure, resources and property
markets. The activities of the Group comprise mainly construction, contract mining, PPPs, engineering 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 and deposit
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 $682.7 million (31 December 2014: $2,676.0 million) and Asia, Middle East & Africa $2,866.1
million (31 December 2014: $3,316.1 million).
The ageing of the Group’s receivables at the reporting date was: not past due: $497.7 million (31 December 2014: $2,239.2 million); past
due: $282.5 million (31 December 2014: $345.4 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: 6% (31
December 2014: 4%).
Provision for impairment of trade debtors
Balance at beginning of reporting period
Net provision (made) / used
Balance at reporting date
12 months to
December 2015
$m
12 months to
December 2014
$m
(12.0)
6.6
(5.4)
(18.1)
6.1
(12.0)
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 2014: $nil).
105
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
36. FINANCIAL INSTRUMENTS CONTINUED
b)
Liquidity risk
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 2015 the Group had undrawn bank facilities of $1,861.5 million (31 December 2014: $1,590.3 million), and undrawn
guarantee facilities of $563.9 million (31 December 2014: $916.4 million).
Contractual maturities of financial assets and financial liabilities as at 31 December 2015:
December 2015
Non‐derivative financial liabilities
Interest bearing loans
Finance lease liabilities
Limited recourse loans
Total interest bearing liabilities1
Carrying
amount
$m
Contractual
cash flows
$m
Less than
1 year
$m
1‐5 years
$m
More than
5 years
$m
761.8
291.2
52.0
(959.7)
(301.5)
(54.0)
1,105.0
(1,315.2)
(65.9)
(191.0)
(54.0)
(310.9)
(593.4)
(110.5)
‐
(300.4)
‐
‐
(703.9)
(300.4)
Trade and other payables
4,005.9
(4,005.9)
(3,674.3)
(331.6)
Derivative financial liabilities
Forward exchange contracts used for foreign
currency hedging:
Outflow
Other cash flow hedges:
Outflow
Total derivative financial liabilities
1.4
‐
1.4
(81.6)
(51.1)
(30.5)
‐
(81.6)
‐
‐
(51.1)
(30.5)
Total trade and other payables
4,007.3
(4,087.5)
(3,725.4)
(362.1)
Derivative financial assets
Forward exchange contracts used for foreign
currency hedging:
Inflow
Total derivative financial assets
(4.5)
(4.5)
89.6
89.6
48.9
48.9
40.7
40.7
‐
‐
‐
‐
‐
‐
‐
1Total interest bearing financial liabilities includes liabilities associated with held for sale during the reporting period. Refer to note 31: Held
for sale.
106
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
36. FINANCIAL INSTRUMENTS CONTINUED
b)
Liquidity risk continued
Contractual maturities of derivative financial assets and financial liabilities as at 31 December 2014:
December 2014
Non‐derivative financial liabilities
Interest bearing loans
Finance lease liabilities
Limited recourse loans
Total interest bearing liabilities1
Carrying
amount
$m
Contractual
cash flows
$m
Less than
1 year
$m
1‐5 years
$m
More than
5 years
$m
2,619.7
(3,051.0)
(1,076.0)
(1,097.4)
(877.6)
376.6
92.8
(396.9)
(96.9)
(128.1)
(88.0)
(268.8)
(8.9)
‐
‐
3,089.1
(3,544.8)
(1,292.1)
(1,375.1)
(877.6)
Trade and other payables
4,581.7
(4,581.7)
(4,309.1)
(272.6)
Derivative financial liabilities
Forward exchange contracts used for foreign
currency hedging:
Outflow
Other cash flow hedges:
Outflow
Total derivative financial liabilities
0.5
0.2
0.7
(11.1)
(9.4)
(1.7)
(0.2)
(11.3)
(0.2)
(9.6)
‐
(1.7)
Total trade and other payables
4,582.4
(4,593.0)
(4,318.7)
(274.3)
Derivative financial assets
Forward exchange contracts used for foreign
currency hedging:
Inflow
Total derivative financial assets
(1.2)
(1.2)
51.6
51.6
51.6
51.6
‐
‐
‐
‐
‐
‐
‐
‐
‐
1Total interest bearing financial liabilities includes liabilities associated with held for sale during the reporting period. Refer to note 31: Held
for sale.
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 2014: $nil), are disclosed in note 25: Associates.
107
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
36. FINANCIAL INSTRUMENTS CONTINUED
c)
Equity price 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 PPP
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.
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.
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 $0.6
million (31 December 2014: $0.5 million). It is expected that the current hedged forecast transactions will occur during the periods
outlined in section (b) above and will affect the statement of profit or loss in the same periods. There are no gains or losses recognised in
the statement of profit or loss during the period due to hedge ineffectiveness.
Exposure to foreign currency risk
The most significant foreign currencies the Group is exposed to are the United States dollar (US$), the U.A.E Dirham (AED) and Hong Kong
dollar (HKD), both of which are pegged to the US$. The applicable Australian dollar to United States dollar exchange rates during or at
the end of the relevant reporting period, were as follows:
Equity
Statement of Profit or Loss
December 2015 December 2014
12 months to
December 2015
12 months to
December 2014
US$ United States dollar
0.73
0.81
0.75
0.90
The Group's exposure to foreign currency risk at balance date was: assets US$4,165.3 million (31 December 2014: US$4,501.7 million);
liabilities US$1,777.4 million (31 December 2014: US$2,677.1 million).
108
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
36. FINANCIAL INSTRUMENTS CONTINUED
d) Foreign currency risk continued
Sensitivity analysis
A movement in the United States dollar (US$) 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 2014.
Equity
Statement of Profit or Loss
December 2015
$m
December 2014
$m
12 months to
December 2015
$m
12 months to
December 2014
$m
US$ depreciates by 5% against AU$ (AU$ appreciates)
US$ appreciates by 5% against AU$ (AU$ depreciates)
(121.6)
110.0
(111.9)
123.6
(2.2)
2.5
(3.1)
3.4
e)
Interest rate risk
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 ‘Interest bearing loans’.
At the 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 $13.6 million (31 December 2014: increased by $0.9 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:
Fixed rate instruments
Financial assets
Financial liabilities1
Variable rate instruments
Financial assets
Financial liabilities1
December 2015
$m
December 2014
$m
‐
(753.9)
(753.9)
‐
(1,281.4)
(1,281.4)
2,167.8
(351.0)
1,816.8
1,976.9
(1,807.7)
169.2
1Total interest bearing financial liabilities includes liabilities associated with held for sale during the reporting period. Refer to note 31: Held
for sale.
109
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
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 2015
Assets
Equity and stapled securities available‐for‐sale
-
Listed
- Unlisted
Financial assets at fair value through profit or loss
-
Listed
- Unlisted
Derivatives
Total assets
Liabilities
Derivatives
Total liabilities
31 December 2014
Assets
Equity and stapled securities available‐for‐sale
-
Listed
- Unlisted
Financial assets at fair value through profit or loss
-
Listed
- Unlisted
Derivatives
Total assets
Liabilities
Derivatives
Total liabilities
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
1.6
‐
‐
‐
‐
1.6
‐
‐
‐
‐
‐
‐
4.5
4.5
(1.4)
(1.4)
‐
72.3
‐
51.8
‐
1.6
72.3
‐
51.8
4.5
124.1
130.2
‐
‐
Level 1
$m
Level 2
$m
Level 3
$m
1.6
‐
‐
‐
‐
1.6
‐
‐
‐
‐
‐
‐
1.2
1.2
(0.7)
(0.7)
‐
63.7
‐
47.0
‐
110.7
‐
‐
(1.4)
(1.4)
Total
$m
1.6
63.7
‐
47.0
1.2
113.5
(0.7)
(0.7)
110
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
36. FINANCIAL INSTRUMENTS CONTINUED
f) Net fair values of financial assets and liabilities continued
Fair value hierarchy 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 and unlisted financial assets at fair value through profit and loss; the determination of the fair value
of these securities is discussed below. The tables below analyses the changes in Level 3 instruments as follows:
Unlisted equity and stapled securities available‐for‐sale
Balance at beginning of reporting period
Gains/(losses) recognised in other comprehensive income
Balance at reporting date
Financial assets at fair value through profit or loss
Balance at beginning of reporting period
Additions
Gains recognised through profit or loss
Balance at reporting date
12 months to
December 2015
$m
12 months to
December 2014
$m
63.7
8.6
72.3
57.4
6.3
63.7
12 months to
December 2015
$m
12 months to
December 2014
$m
47.0
‐
4.8
51.8
33.7
10.0
3.3
47.0
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.
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.
111
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
36. FINANCIAL INSTRUMENTS CONTINUED
f) Net fair values of financial assets and liabilities continued
Valuation techniques continued
The fair value of interest bearing liabilities is:
Listed debt: 10‐Year‐Fixed‐Rate Guaranteed Notes fair value US$207.5 million, equivalent to $284.2 million; carrying value US $201.3
million, equivalent to $275.8 million (31 December 2014: fair value US$529.1 million; carrying value US$500.0 million).
Unlisted debt: Guaranteed Senior Notes fair value US$377.6 million, equivalent to $517.3 million; carrying value US$339.0 million,
equivalent to $464.4 million (31 December 2014: fair value of US$569.3 million; carrying value US$519.0 million).
Cash flow hedges
The Group’s foreign currency forward contracts are not traded in active markets. The fair values of these contracts are estimated using a
valuation technique that maximises the use of observable market inputs, e.g. market exchange and interest rates and are included in
Level 2 of the fair value hierarchy.
Valuation process
The internal valuation process for unlisted investments, unlisted debt and cash flow hedges is managed by a team in the Group finance
department which performs the valuations required for financial reporting purposes. The valuation team reports to the Group’s Chief
Financial Officer (“CFO”). Discussions on valuation processes and outcomes are held between the valuation team and CFO as required.
The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting
period.
Valuation inputs
The following table summarises the quantitative information about the significant unobservable inputs used in level 3 fair value
measurements. There were no significant inter‐relationships between unobservable inputs that materially affect fair values.
Significant unobservable
input(s)
Growth rates
Internal rate of return
Discount rates
Bond curves
Exchange rates
Interest rates
Financial assets/ financial liabilities
Unlisted investments
Unlisted debt
Cash flow hedges
g)
Interest Bearing Loans
Syndicated Loans
Range of inputs
Relationship of unobservable inputs to fair value
2.5% ‐ 3.0%
9%
10% ‐ 15%
1% ‐ 4%
US$
1% ‐ 5%
The impact on 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, CIMIC Finance Limited (formerly 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. On 8 December 2014 the maturity date of this facility was extended to
8 December 2017. At 31 December 2015 this facility was undrawn (carrying amount at 31 December 2014: $600.0 million).
Guaranteed Senior Notes
CIMIC Finance Limited (2008)
On 15 October 2008, CIMIC 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% which matured 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
112
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
36. FINANCIAL INSTRUMENTS CONTINUED
g)
Interest Bearing Loans continued
Guaranteed Senior Notes continued
CIMIC Finance Limited (2008) continued
Interest on the above notes is paid semi‐annually on the 15th day of April and October in each year. Carrying amount at 31 December
2015: US$79.0 million (31 December 2014: US$169.0 million) equivalent to $108.2 million (31 December 2014: $208.6 million), of which
US$nil is due for repayment within twelve months from the reporting date.
The Group repaid the Series B Notes of US$90.0 million, equivalent to $123.3 million on 15 October 2015.
CIMIC Finance (USA) Pty Limited (2010)
On 21 July 2010, CIMIC Finance (USA) Pty Limited (formerly 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% which matured 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 2015:
US$260.0 million (31 December 2014: US$350.0 million) equivalent to $356.1 million (31 December 2014: $432.1 million), of which US$nil
is due for repayment within twelve months from the reporting date.
The Group repaid the Series A Notes of US$90.0 million, equivalent to $123.3 million on 21 July 2015.
CIMIC Finance (USA) Pty Limited (2012)
On 13 November 2012, CIMIC Finance (USA) Pty Limited, a wholly owned subsidiary of the Company, issued US$500.0 million of 10‐Year
Fixed‐Rate Guaranteed Senior Notes.
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 2015: US$201.3 million
(31 December 2014: US$500.0 million) equivalent to $275.8 million (31 December 2014: $617.3 million).
The Group repurchased US$298.7 million, equivalent to $409.2 million, of Guaranteed Senior Notes on 24 June 2015.
Bilateral Loans
At 31 December 2015, bilateral loan facilities were undrawn (31 December 2014: $500.0 million).
In the previous reporting period, Leighton Contractors (India) Private Limited and Thiess Mongolia LLC (formerly known as Leighton LLC),
both wholly owned subsidiaries of the Company, entered into new short term bilateral facilities. At 31 December 2015 these facilities
were repaid in full (carrying amount at 31 December 2014: $151.1 million).
Other Unsecured Loans
Other unsecured loans outstanding as at 31 December 2015: $20.1 million (31 December 2014: $110.6 million). Other unsecured loans
expected to be settled within twelve months after reporting date: $20.1 million (31 December 2014: $110.6 million).
h) Finance Lease Liabilities
The Group has leased mining plant and equipment in Indonesia, Mongolia and Australia under finance leases that expire within three
years of the reporting date.
113
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
36. FINANCIAL INSTRUMENTS CONTINUED
i)
Limited Recourse Loans
The Group has limited recourse property development loans secured against certain property development assets of the Group and
overseas borrowings by subsidiaries secured against the assets of the overseas subsidiaries. Carrying amount as at 31 December 2015:
$52.0 million (31 December 2014: $92.8 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 2015
$m
December 2014
$m
351.5
121.6
473.1
386.4
137.5
523.9
Loans relating to development properties are secured by mortgages over the Group’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, is held
by Devine’s principal bankers relating to their commercial and residential property lending.
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
1,276.2
(607.2)
669.0
1,580.1
(890.6)
689.5
‐
‐
‐
‐
December 2015
Cash1
7December 2014
Cash1
1The 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.
114
5
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
37. EMPLOYEE BENEFITS
Share based payments
a)
Share plans
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 2014: $nil). Expense recognised during the reporting period: $nil (31 December 2014: $nil).
b) Rights plans
Equity Incentive Plans – 2012, 2013, and 2014 Awards
Shareholder approval was obtained at the Annual General Meeting on 22 May 2012 for the Equity Incentive Plan (“EIP”). The EIP provides
the legal framework for the awards of share rights made in 2012, 2013 and 2014 under the Long‐Term Incentive Plan (“LTI”), STI Deferral
Plan (“STI”) and One‐off Awards described below.
Long‐Term Incentive Plan – 2012 Awards
The Long‐Term Incentive Plan (“LTI”) – 2012 Awards performance share rights were granted for no cost to the employee 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”) (ie, 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.
115
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
37. EMPLOYEE BENEFITS CONTINUED
Share based payments continued
b) Rights plans continued
Long‐Term Incentive Plan – 2012 Additional Award
Additional awards of performance share rights were made under the same vesting and performance conditions as the 2012 LTI, and
measured over three, four and five year performance periods.
Amount recognised during the reporting period: Gain $3.0 million (31 December 2014: Expense $2.1 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 2013
- Granted
- Vested2
Lapsed
-
Unvested rights at 31 December 20143
- Granted
- Vested3
Lapsed4
-
Unvested rights at 31 December 2015
2012 LTI and 2012 LTI
additional award
2012 LTI additional
award
2012 LTI additional
award
1 Jan 2012
Feb 2015
$9.34
$15.84
565,092
543,810
‐
(180,696)
(42,992)
320,122
‐
‐
1 Jan 2012
Feb 2016
$9.22
$14.93
21,768
21,768
‐
‐
‐
1 Jan 2012
Feb 2017
$9.02
$14.07
21,768
21,768
‐
‐
‐
21,768
21,768
‐
‐
‐
‐
(320,122)
(21,768)
(21,768)
‐
‐
‐
1Each 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. The 2012 LTI additional awards are
measured over a three, four and five year performance period respectively.
2The volume weighted average share price during the reporting period to 31 December 2014 was $19.72.
3 The volume weighted average share price during the reporting period to 31 December 2015 was $22.96.
4 The performance hurdles for the 2012 LTI and three year additional award were not met at the test in February 2015 and as a result
100% of the award lapsed immediately. The three year, four year and five year additional awards lapsed due to termination of
employment.
116
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
37. EMPLOYEE BENEFITS CONTINUED
Share based payments continued
b) Rights plans continued
Long‐Term Incentive Plan – 2013 Awards
The Long‐Term Incentive Plan (“LTI”) – 2013 Awards performance share rights were granted for no cost to the employee 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 $0.3 million (31 December 2014: Expense $3.1 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 2013
- Granted
- Vested2
-
Lapsed
Unvested rights at 31 December 2014
- Granted3
- Vested4
-
Lapsed
Unvested rights at 31 December 2015
2013 LTI award
1 Jan 2013
Feb 2016
$9.41
$14.87
705,426
687,416
‐
(184,390)
(92,952)
410,074
5,836
‐
(134,381)
281,529
1Each 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 volume weighted average share price during the reporting period to 31 December 2014 was $19.72.
3 This grant represents an amendment to an existing award.
4 The volume weighted average share price during the reporting period to 31 December 2015 was $22.96.
117
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
37. EMPLOYEE BENEFITS CONTINUED
Share based payments continued
b) Rights plans continued
Long‐Term Incentive Plan – 2014 Awards
The Long‐Term Incentive Plan (“LTI”) – 2014 Awards performance share rights were granted for no cost to the employee 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 2014) 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; no rights
will vest if TSR is less than or equal to 0%; 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 6% per annum before any parcel B share rights vest (50% vest at threshold) then pro rata to
10% per annum and then at 10% per annum all parcel B share rights vest.
Amount recognised during the reporting period: Expense $2.4 million (31 December 2014: Expense $5.6 million).
Date of grant
Date of expiry1
Grant fair value for TSR performance hurdle (“parcel A”)2
Grant fair value for EPS hurdle (“parcel B”)2
Original grant
Unvested rights at 31 December 2013
- Granted
- Vested3
-
Lapsed
Unvested rights at 31 December 2014
- Granted4
- Vested5
-
Lapsed
Unvested rights at 31 December 2015
2014 LTI award
1 Jan 2014
Feb 2017
$13.81
$19.78
704,802
‐
704,802
‐
‐
704,802
14,730
‐
(318,890)
400,642
1Each 2014 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.
2The fair value of equity instruments is determined as at the date of grant (in accordance with Australian Accounting Standard AASB 2
Share Based Payments).
3The volume weighted average share price during the reporting period to 31 December 2014 was $19.72.
4 This grant represents an amendment to an existing award.
5 The volume weighted average share price during the reporting period to 31 December 2015 was $22.96.
118
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
37. EMPLOYEE BENEFITS CONTINUED
Share based payments continued
b) Rights plans continued
One‐Off Awards
One‐off awards of Deferred Share Rights were granted under the Equity Incentive Plan (“EIP”) for no cost to the employee and entitle the
participant to receive one fully paid ordinary share in the Company per right. In 2012, 2013, and 2014 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. The only performance condition is continued employment.
Amount recognised during the reporting period: Expense $0.5 million (31 December 2014: Expense $3.1 million).
Date of grant
Date of expiry
Grant fair value
Original grant
Unvested rights at 31 December 2013
- Granted
- Vested1
-
Lapsed
Unvested rights at 31 December 2014
- Granted2
- Vested3
-
Lapsed
Unvested rights at 31 December 2015
One‐off Awards – 2012
Awards
One‐off Awards – 2013
Awards
One‐off Awards – 2014
Awards
1 Jan 2012 ‐ 31 Dec 2012
3 May 2013
31 October 2014
5 Sept 2012 ‐ 31 Dec
2017
$16.20 ‐$25.66
811,018
609,844
‐
(293,031)
(8,833)
307,980
‐
(157,231)
(68,098)
82,651
31 Dec 14 ‐ 1 Jan 17
31 Dec 14 ‐ 1 July 17
$18.06
22,034
22,034
‐
(5,537)
‐
16,497
‐
‐
(8,249)
8,248
$16.18 ‐ $21.50
43,542
‐
43,542
(5,892)
‐
37,650
12,930
(37,650)
‐
12,930
1The volume weighted average share price during the reporting period to 31 December 2014 was $19.72.
2 This grant represents an additional award in accordance with contractual entitlements.
3 The volume weighted average share price during the reporting period to 31 December 2015 was $22.96.
119
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
37. EMPLOYEE BENEFITS CONTINUED
Share based payments continued
b) Rights plans continued
Short‐Term Incentive Plan (Deferral) – 2012, 2013 and 2014 Awards
During the period 2012 to 2014, a percentage of the amount which was earned by executives as a short‐term incentive for each financial
year was paid in cash, and a percentage delivered as deferred share rights, vesting of which was deferred for one to two years without
any additional performance measures. The Company 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 Company 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 were granted following the determination of individual short‐term incentive payments. The
number of deferred share rights granted was 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 to the employee and entitle the participant to receive one fully paid ordinary share in
the Company per right.
No further awards will be made under the STI Deferral from the 2015 financial year. Amount recognised during the reporting period: Gain
$0.3 million (31 December 2014: Expense $5.9 million).
Date of grant
Date of expiry
Grant fair value
Original grant
Unvested rights at 31 December 2013
- Granted
- Vested1
-
Lapsed
Unvested rights at 31 December 2014
- Granted
- Vested2
-
Lapsed
Unvested rights at 31 December 2015
2012 STI Deferral award 2013 STI Deferral award 2014 STI Deferral award
1 January 2013
1 January 2014
1 January 2015
31 December 2014
31 December 2015
31 December 2015
$23.32
193,907
191,697
‐
(56,368)
(8,565)
126,764
‐
(124,455)
(2,309)
‐
$17.51
299,953
‐
299,953
‐
(13,840)
286,113
‐
‐
(51,633)
234,480
$20.85
76,448
‐
‐
‐
‐
‐
76,448
-
-
76,448
1The volume weighted average share price during the reporting period to 31 December 2014 was $19.72.
2 The volume weighted average share price during the reporting period to 31 December 2015 was $22.96.
120
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
37. EMPLOYEE BENEFITS CONTINUED
Share based payments continued
c)
Share Appreciation Rights
Share Appreciation Rights – 2014 One‐off Award to Marcelino Fernández Verdes (CEO)
Board approval was obtained on 11 December 2014 for the granting of share appreciation rights to Mr Fernández Verdes subject to a
two year vesting period. The share appreciation rights were granted at no cost to Mr Fernández Verdes and entitle Mr Fernández Verdes
to receive a cash payment reflecting the increase in value of the share price of the Company from the base share price of $17.71 to the
share price at close of trading on the last trading day before the share appreciation right is exercised, with a maximum payment per
share appreciation right of $32.29. The base price is the volume average weighted price of fully paid ordinary shares in CIMIC traded on
the ASX over the 30 day period before Mr Fernández Verdes’ appointment as CEO on 13 March 2014. All unvested or vested but
unexercised share appreciation rights are subject to forfeiture if Mr Fernández Verdes had ceased to be the CEO of CIMIC before 31
December 2014 or if he does not remain a member of either the Executive Board or the Supervisory Board of HOCHTIEF for the period up
to and including 13 March 2017. The share appreciation rights will vest two years after his date of appointment and will be exercisable
for three years from the date of vesting. No more than 40% of the share appreciation rights can be exercised each year for the first two
years after vesting, and any remaining share appreciation rights can be exercised in the final year of the exercise period.
Amount recognised during the reporting period: Expense $3.3 million (31 December 2014: Expense $2.3 million).
Share Appreciation Rights ‐ 2014 One‐off Award to M Fernández Verdes
Date of grant
Date of expiry
Grant fair value
Original grant
Unvested rights at 31 December 2013
- Granted
- Vested1
-
Lapsed
Unvested rights at 31 December 2014
- Granted
- Vested2
-
Lapsed
Unvested rights at 31 December 2015
1The volume weighted average share price during the reporting period to 31 December 2014 was $19.72.
2 The volume weighted average share price during the reporting period to 31 December 2015 was $22.96.
10 June 2014
13 March 2019
$6.52
1,200,000
‐
1,200,000
‐
‐
1,200,000
‐
‐
‐
1,200,000
121
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
37. EMPLOYEE BENEFITS CONTINUED
Share based payments continued
d) Options
Long‐Term Incentive Plan – 2015 Award
Board approval was obtained on 28 October 2015 for a discretionary award of options over unissued ordinary shares in the company to
be made to selected executives. The award of options was made under the legal framework of the EIP approved by shareholders on 22
May 2012. The exercise price is the volume weighted average price of fully paid ordinary shares in CIMIC over the five trading days
following Board approval of the award (excluding the date of the approval).
All options issued expire on the earlier of their expiry date or termination of the individual’s employment except in certain circumstances.
Options vest two years after the grant date, subject to individual service and contribution hurdles approved by the Company. Any
Options that do not vest will immediately lapse. No more than 40% of the options can be exercised each year for the first two years after
vesting, and any remaining options can be exercised in the final year of the exercise period. All options must be exercised prior to the
expiry date.
Amount recognised during the reporting period: Expense $0.2 million (31 December 2014: Expense $nil).
Date of grant
Date of expiry
Grant fair value
Original grant
Unexercised options at 31 December 2014
- Granted
- Vested1
-
Lapsed
Unexercised options at 31 December 2015
Options – 2015 Long‐term Incentive
29 October 2015
29 October 2020
$4.53
735,636
‐
735,636
‐
‐
735,636
1 The volume weighted average share price during the reporting period to 31 December 2015 was $22.96.
Other information
All offers under the Leighton Management Share Plan (“LMSP”) are subject to pre‐conditions of issue and are at the discretion of the
Company. No further offers will be made under the Short‐term Incentive plan (STI) Deferral and all legacy grants vest in early 2016.
Defined contribution superannuation funds
During the period, the Group recognised $192.2 million (31 December 2014: $342.1 million) of defined contribution expenses.
122
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
38. RELATED PARTY DISCLOSURES
Key management personnel
Key management personnel compensation:
Short‐term employee benefits
Post‐employment benefits
Long‐term benefits
Termination benefits
Share‐based payments
12 months to
December 2015
$’000
12 months to
December 2014
$’000
6,582
13,810
78
‐
20
3,839
10,519
117
‐
23,861
9,570
47,358
Loans to key management personnel
There were no loans to key management personnel in the current or prior reporting period.
a) Key management personnel
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 partner of ESV Accounting and Business Advisors (ESV) (following the merger between Harveys, of which D Robinson was
principal, and ESV in July 2015), which receives fees from HOCHTIEF Australia Holdings Limited for services provided to that company,
which is a related party. D Robinson also receives directors’ fees from Devine Limited as a result of his appointment on 27 May 2015,
which is a related party.
R Seidler received fees from HOCHTIEF Australia Holdings Limited for services provided to that company, which is a related party.
123
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
38. RELATED PARTY DISCLOSURES CONTINUED
b) 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 entities2
Aggregate amounts payable to related parties at reporting date
Associates
Joint venture entities
December 2015
$’000
December 2014
$’000
843,039
73,764
735,179
826,648
(1,138)
(37,687)
(1,287)
(53,962)
1Refer to note 8: Trade and other receivables for disclosure of interest free and interest bearing loan receivables from HLG.
231 December 2014: Includes $790.1 million relating to the disposal of the Services business included within ‘Proceeds receivable on sale
of controlled entities and businesses’ within note 8: Trade and other receivables.
On 12 November 2015 CIMIC Group Limited made an offer of $0.75 per Devine Limited share to acquire the 49% of Devine that it does
not already own. This offer expired on 29 December 2015 with CIMIC increasing its shareholding from 51% to 59% (refer to note 39).
The amounts payable of $10,096,967 to the previous shareholders of Devine is held within trade and other payables at 31 December
2015.
Revenue – income from related parties
Joint venture entities
Revenue ‐ interest received / receivable from related parties
Associates1
Joint venture entities
Revenue ‐ unwinding of discounts on non‐current receivables ‐ related parties
Associates
Finance costs ‐ interest paid / payable to related parties
Joint venture entities1
Finance costs ‐ impact of discounting ‐ related parties
Associates
12 months to
December 2015
$’000
12 months to
December 2014
$’000
20,000
‐
24,472
1,285
22,620
1,555
7,771
6,648
(1,299)
(4,195)
(1,125)
(351)
131 December 2014: Associates’ revenue excludes $0.2 million from discontinued operations. Joint venture entities’ finance costs excludes
$0.8 million from discontinued operations.
124
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
38. RELATED PARTY DISCLOSURES CONTINUED
b) Transactions with other related parties (continued)
Number of employees
Number of employees at reporting date1
12015 includes a proportional share of employees of Ventia and HLG.
c) Company information
December 2015
Number of
employees
December 2014
Number of
employees
43,400
36,512
CIMIC Group 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: 7 (31 December 2014: 7).
The Group operates in the infrastructure, resources and property markets. Principal activities of the Group within these markets are
construction, contract mining, public private partnerships, engineering, property development and other services (including
environmental, telecommunications and operations and maintenance).
d) 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.
CIMIC Group 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.
CIMIC Group Limited Directors Mr J del Valle Pérez and Mr P López Jiménez were directors of ACS during the period.
At the date of this financial report, being 10 February 2016, HOCHTIEF Australia Holdings Limited held 235,661,965 shares in the
Company.
125
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
39. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES
a) Parent entity disclosures
As at, and throughout, the financial year ended 31 December 2015 the parent entity of the Group was CIMIC Group Limited. A statement
of profit or loss and statement of financial position at 31 December 2015 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 2015
$m
12 months to
December 2014
$m
2,601.4
‐
2,601.4
945.0
‐
945.0
December 2015
$m
December 2014
$m
38.8
6,102.0
6,140.8
236.9
1,037.8
1,274.7
1,544.9
2,656.9
4,201.8
747.4
799.8
1,547.2
4,866.1
2,654.6
2,052.5
2,052.5
62.7
2,750.9
4,866.1
66.7
535.4
2,654.6
131 December 2014: Subsequent to the reporting date, certain operating companies of the Group declared dividends totalling $600.0
million, payable to CIMIC Group Limited (formerly known as Leighton Holdings Limited) on 31 January 2015. This would have the effect of
increasing retained earnings to $1,135.4 million.
126
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
39. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities
Name of entity
111 Margaret Street Pty Ltd
145 Ann Street Pty Ltd
145 Ann Street Trust
512 Wickham Street Pty Ltd
512 Wickham Street Trust
A.C.N. 126 130 738 PTY LTD
A.C.N. 151 868 601 PTY. LTD.
Ashmore Developments Pty Limited
Ausindo Holdings Pte Ltd
BCJHG Nominees Pty Ltd (formerly known as John Holland Infrastructure Nominees
Pty Ltd)
BCJHG Trust (formerly known as John Holland Infrastructure Trust)
Boggo Road Lots 6 and 7 Pty Limited
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
Canberra Metro Finance Pty Limited
CIMIC Admin Services Pty Limited1 (formerly known as Leighton Admin Services Pty
Limited)
CIMIC Finance (USA) Pty Ltd (formerly known as Leighton Finance (USA) Pty Ltd)
CIMIC Finance Limited1 (formerly known as Leighton Finance Ltd)
CIMIC Group Investments Pty Limited (formerly known as Leighton Holdings
Investments Pty Limited)
CIMIC Group Limited5 (formerly known as Leighton Holdings Limited)
CIMIC Residential Investments Pty Ltd (formerly known as Leighton Residential
Investments Pty Ltd)
CPB Contractors Pty Ltd1 (formerly known as Leighton Contractors Pty Limited)
D.M.B. Pty. Ltd.
Devine Bacchus Marsh Pty Ltd
Devine Building Management Services Pty Ltd
Devine Colton Avenue Pty Ltd
Interest
held
Place of
incorporation
(C)
(C)
(A),(C)
(C)
(C)
(C)
(C)
(C)
(B), (C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(B), (C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(B)
59%
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%
59%
59%
59%
59%
QLD
QLD
QLD
NSW
VIC
VIC
NSW
Singapore
VIC
VIC
QLD
QLD
WA
WA
QLD
WA
WA
VIC
NSW
NSW
NSW
VIC
Vic
NSW
QLD
QLD
QLD
QLD
127
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
39. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
Name of entity
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 Projects (VIC) Pty Ltd
Devine Queensland No.10 Pty Ltd
Devine SA Land Pty Ltd
Devine Springwood No. 1 Pty Ltd
Devine Springwood No. 2 Pty Ltd
Devine Springwood No. 3 Pty Ltd
Devine Woodforde Pty Ltd
DoubleOne 3 Building Management Services Pty Ltd
DoubleOne 3 Pty Ltd
EIC Activities Pty Ltd (formerly known as A.C.N. 601 639 810 PTY. LTD.)
Fleetco Finance Pty Limited
Fleetco Holdings Pty Limited
Fleetco Management Pty Limited
Fleetco Rentals AN Pty Limited
Fleetco Rentals CT Pty. Limited
Fleetco Rentals GE Pty. Limited
Fleetco Rentals HD Pty. Limited
Fleetco Rentals LB Pty. Limited
Fleetco Rentals No. 1 Pty Limited
Fleetco Rentals OO Pty. Limited
Fleetco Rentals Pty Limited
Fleetco Rentals RR Pty. Limited
Fleetco Services Pty Limited
Giddens Investment Limited
Green Construction Company
Hamilton Harbour Developments Pty Ltd
Hamilton Harbour Unit Trust (Devine Hamilton Unit Trust)
Hunter Valley Earthmoving Co Pty Ltd
HWE Cockatoo Pty Ltd
HWE Mining Pty Limited
Interest
held
Place of
incorporation
59%
59%
59%
59%
59%
59%
59%
59%
59%
59%
59%
59%
59%
59%
59%
59%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
76%
76%
100%
100%
100%
QLD
VIC
QLD
QLD
QLD
QLD
QLD
QLD
QLD
NSW
QLD
QLD
QLD
QLD
QLD
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
Hong Kong
United States
QLD
QLD
NSW
NT
VIC
(C)
(C)
(C)
(C)
(B)
(B)
(B)
(B)
(B)
(C)
(B)
(C)
(B)
(C)
(C)
(C)
(C)
128
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
39. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
Name of entity
HWE Newman Assets Pty Limited
Jarrah Wood Pty Ltd
JH AD Holdings Pty Ltd (formerly known as John Holland AD Holdings)
JH AD Investments Pty Ltd (formerly known as John Holland AD Investments Pty Ltd)
JH AD Operations Pty Ltd (formerly known as John Holland AD Operations Pty Ltd)
JH Rail Holdings Pty Ltd
JH Rail Investments Pty Ltd
JH Rail Operations Pty Ltd
JH ServiceCo Pty Ltd (formerly known as John Holland Services Pty Ltd)
JHAS Pty Ltd (formerly known as John Holland Aviation Services Pty Ltd)
JHI Investment Pty Ltd (formerly known as John Holland Investment Pty Ltd)
Joetel Pty. Limited
Kings Square Developments Pty Ltd
Kings Square Developments Unit Trust
LCPL (PNG) Limited
Legacy JHI Pty Ltd (formerly known as John Holland Infrastructure Pty Ltd)
(C)
Lei Shun Employment Limited
Leighton (PNG) Limited
Leighton Africa (Mauritius) Limited
Thiess Mozambique Limitada (formerly Leighton Africa Mozambique, Limitada)
Leighton Asia (China) Limited
Leighton Asia (Hong Kong) Holdings (No. 2) Limited
Leighton Asia Limited
Leighton Asia Southern Pte. Ltd.
Leighton Commercial Properties Pty Limited
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 (Mauritius) Limited
Leighton Contractors (Philippines), Inc.
Leighton Contractors Asia (Cambodia) Co., Ltd
Leighton Contractors Asia (Vietnam) Limited
Leighton Contractors Inc.
(B)
(A)
Interest
held
Place of
incorporation
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
100%
100%
100%
100%
100%
59%
59%
59%
100%
100%
100%
59%
100%
100%
VIC
WA
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
ACT
QLD
QLD
100%
Papua New Guinea
100%
100%
VIC
Macau
100%
Papua New Guinea
100%
100%
100%
100%
100%
100%
100%
49%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Mauritius
Mozambique
Hong Kong
Hong Kong
Hong Kong
Singapore
VIC
United Arab
Emirates
Hong Kong
Hong Kong
Hong Kong
Laos
Malaysia
Mauritius
Philippines
Cambodia
Vietnam
United States
129
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
39. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
Name of entity
Leighton Contractors Infrastructure Nominees Pty Ltd2
Leighton Contractors Infrastructure Pty Ltd2
Leighton Contractors Infrastructure Trust3
Leighton Contractors Lanka (Private) Limited
Leighton Engineering & Construction (Singapore) Pte Ltd
Leighton Engineering Joint Venture
Leighton Engineering Sdn Bhd
Leighton Equity Incentive Plan Trust
Leighton Foundation Engineering (Asia) Limited
Leighton Funds Management Pty Limited2
Leighton Gbs Sdn. Bhd.
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 India Contractors Private Limited4 (formerly known as Leighton Welspun
Contractors Private Limited)
Leighton Infrastructure Investments Pty Limited2
(C)
(C)
(C)
(C)
(A)
(C)
(C)
(C)
(C)
(C)
(C)
Leighton International Holdings Limited
Leighton International Limited
Leighton International Mauritius Holdings Limited No. 4
Leighton International Projects (India) Private Limited4
Leighton Investments Mauritius Limited
Leighton Investments Mauritius Limited No. 2
Leighton Investments Mauritius Limited No. 4
Leighton Joint Venture
Leighton M&E Limited
Leighton Middle East & Africa (Holding) Limited
Leighton Offshore / Leighton Engineering & Construction JV
Leighton Offshore Eclipse Pte Ltd
Leighton Offshore Faulkner Pte Ltd
Leighton Offshore Mynx Pte Ltd
Leighton Offshore Pte Ltd
Leighton Offshore Sdn Bhd
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%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
VIC
VIC
Sri Lanka
Singapore
Malaysia
Malaysia
NSW
Hong Kong
QLD
Malaysia
Thailand
VIC
VIC
VIC
India
NSW
Cayman Islands
Cayman Islands
Mauritius
India
Mauritius
Mauritius
Mauritius
Hong Kong
Hong Kong
Cayman Islands
Singapore
Singapore
Singapore
Singapore
Singapore
Malaysia
130
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
39. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
BName of entity
Leighton Offshore Stealth Pte Ltd
Leighton Pacific St Leonards Pty Limited
Leighton Pacific St Leonards Unit Trust
Leighton Portfolio Services Pty Limited
Leighton PPP Services NZ Limited
Leighton Projects Consulting (Shanghai) Limited
Leighton Properties (Brisbane) Pty Limited2
Leighton Properties (NSW) Pty Ltd
Leighton Properties (VIC) Pty Ltd1
Leighton Properties (WA) Pty Limited1
Leighton Properties Pty Limited1
Leighton Property Funds Management Limited2
Leighton Property Management Pty Limited2
Leighton Services Australia Pty Limited
Leighton U.S.A. Inc.
Leighton‐LNS Joint Venture
LH Holdings Co Pty Ltd2
LMENA No. 1 Pty Limited
LMENA Pty Limited
LNWR Pty Limited
LNWR Trust
LPWRAP Pty Ltd
Martox Pty. Limited
Moonamang Joint Venture Pty Ltd
Moorookyle Devine Pty Ltd
Nexus Point Solutions Pty Ltd
Opal Insurance (Singapore) Pte Ltd
BPacific Partnerships Holdings Pty Ltd
BPacific Partnerships Investments Pty Ltd
BPacific Partnerships Investments Trust
BPacific Partnerships Pty Ltd
BPioneer Homes Australia Pty Ltd
BPT Leighton Contractors Indonesia
BPT Thiess Contractors Indonesia
BQueens Square Pty Ltd
Interest
held
Place of
incorporation
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
100%
100%
100%
100%
100%
100%
59%
100%
59%
100%
100%
100%
100%
100%
100%
59%
100%
99%
100%
Singapore
VIC
ACT
New Zealand
China
QLD
NSW
VIC
NSW
QLD
ACT
NSW
NSW
United States
Hong Kong
VIC
VIC
VIC
VIC
NSW
VIC
NSW
WA
VIC
NSW
Singapore
VIC
VIC
VIC
VIC
QLD
Indonesia
Indonesia
VIC
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(B), (C)
(C)
(C)
(C)
(C)
(C),(B)
(C)
(A),(C)
(C)
(C)
(C)
(B),(C)
(C)
B
B
131
7
2
0
B
8
2
3
B
8
2
3
B
8
2
3
B
8
5
1
B
8
2
3
B
8
2
5
B
8
2
5
B
8
2
9
7
4
8
7
4
9
7
5
0
7
5
1
7
5
2
7
5
3
7
5
4
7
5
5
7
5
6
7
5
7
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
39. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
BName of entity
Riverstone Rise Gladstone Pty Ltd
Riverstone Rise Gladstone Unit Trust
Silverton Group Pty Ltd
Sustaining Works Pty Limited
Talcliff Pty Ltd
Telecommunication Infrastructure Pty Ltd
Thai Leighton Limited
Thiess (Mauritius) Pty Ltd3
Thiess Africa Investments Pty Ltd
Thiess Botswana (Proprietary) Limited (formerly known as Leighton Africa
(Botswana) (Proprietary) Limited)
Thiess Chile SPA
Thiess Contractors (Malaysia) Sdn. Bhd.
Thiess Contractors (PNG) Limited
Thiess Contractors Canada Ltd
Thiess India Pvt Ltd4
Thiess Infraco Pty Ltd
Thiess Infrastructure Nominees Pty Ltd
Thiess Infrastructure Pty Ltd
Thiess Infrastructure Trust
Thiess Minecs India Pvt Ltd4
Thiess Mining Maintenance Pty Ltd
Thiess Mongolia LLC (formerly known as Leighton LLC)
Thiess NC
Thiess NZ Limited
Thiess Pty Ltd
Thiess South Africa (Pty) Ltd (formally known as Leighton Africa (South Africa)
(Proprietary) Limited)
Thiess Southland Pty Ltd
Think Consulting Group Pty Ltd
Townsville City Project Pty Ltd
Townsville City Project Trust
Trafalgar EB Pty Ltd
Tribune SB Pty Ltd
Victoria Point Docklands Pty Ltd
Western Port Highway Trust
Woodforde JV Pty Ltd3
Interest
held
Place of
incorporation
59%
59%
100%
100%
59%
100%
100%
100%
100%
100%
100%
100%
QLD
QLD
WA
QLD
QLD
VIC
Thailand
Mauritius
South Africa
Botswana
Chile
Malaysia
100%
Papua New Guinea
Canada
India
QLD
VIC
VIC
VIC
India
QLD
Mongolia
New Caledonia
New Zealand
QLD
South Africa
NSW
VIC
NSW
QLD
QLD
QLD
VIC
100%
100%
100%
100%
100%
100%
90%
100%
100%
100%
100%
100%
100%
100%
100%
76%
76%
59%
59%
59%
100%
59%
(C)
(C)
(C)
(A)
(B), (A)
(B)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
132
7
5
8
B
8
2
3
B
8
2
3
B
8
2
3
B
8
5
1
B
8
2
3
B
8
2
5
B
8
2
5
B
8
2
9
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
39. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
BName of entity
Yoltax Pty. Limited
Zelmex Pty. Limited
Interest
held
Place of
incorporation
59%
59%
NSW
ACT
1These companies (CIMIC Group Limited (CGL) Class Order Companies) have the benefit of ASIC Class Order 98/1418 as at 31 December
2015.
2These 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
2015, as they are small proprietary companies.
3Entity has a 30 June reporting date.
4Entity has a 31 March reporting date.
5This company is a party to the Deed of Cross Guarantee as Holding Entity.
(A) Entities controlled under shareholder agreements.
(B) Incorporated / established in the 2015 reporting period.
(C) Entities included in tax‐consolidated Group.
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.
133
7
9
3
B
8
6
5
B
8
6
5
B
8
8
6
B
8
5
9
B
8
6
1
B
8
6
1
B
8
6
6
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
39. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
c) Acquisition and disposal of controlled entities
Refer to note 30: Acquisitions, disposals and discontinued operations for further details.
d)
Liquidation of controlled entities
The following controlled entities have been liquidated during the period to 31 December 2015 as they are no longer required by the
Group in the ordinary course of business:
A.C.N. 112 829 624 Pty Ltd
Ewenissa Pty. Limited
HWE Maintenance Services Pty Ltd
John Holland Development and Investment Pty Ltd
John Holland Engineering Pty Ltd
Leighton Arranging Pty Ltd
Leighton Finance International Pty Ltd
Leighton Group Property Services No.1 Pty Ltd
Leighton Offshore Australia Pty Ltd
Leighton Motorway Investments No.2 Pty Limited
Leighton Staff Shares Pty. Limited
Leighton Superannuation Pty Ltd
Gridcomm Pty Ltd
Nestdeen Pty Ltd
Plant and Equipment Leasing Pty Limited
PT Cinere Serpong Jaya
PT Ngawi Kertosono Jaya
PT Solo Ngawi Jaya
River Links Developments Pty Ltd
Technical Resources Pty Limited
e) Parent entity commitments and contingent liabilities
Contingent liabilities under indemnities given on behalf of controlled entities in respect of the parent: bank guarantees: $1,950.1 million
(31 December 2014: $1,824.8 million); insurance bonds: $761.3 million (31 December 2014: $1,018.8 million); letters of credit: $262.6
million (31 December 2014: $326.0 million). During the reporting period, the Parent was released from bank guarantees totalling $nil
million (31 December 2014: $424.9 million), insurance, performance and payments bonds totalling $nil million (31 December 2014:
$213.8 million) and letters of credit totalling $nil million (31 December 2014: $22.4 million) related to the disposal of controlled entities
and businesses.
Capital expenditure contracted for at the reporting date but not recognised as liabilities of the parent was $nil (31 December 2014: $nil).
134
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
39. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
f) Material subsidiaries including consolidated structured entities
Set out below are the Company’s principal subsidiaries at 31 December 2015. 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
CPB Contractors Pty Limited
(formerly Leighton Contractors
Pty Ltd)1
Contract Mining &
Construction
Country of
incorporation
Australia
Thiess Pty Ltd
Leighton Asia Limited
Leighton International Limited
Contract Mining &
Construction
Contract Mining &
Construction
Australia
Hong Kong
Contract Mining &
Construction
Cayman
Islands
Ownership interest held by the
Company
Ownership interest held by non‐
controlling interests
December 2015
December 2014
December 2015
December 2014
%
100
100
100
B100
%
100
100
100
B100
%
%
‐
‐
‐
‐
‐
‐
‐
‐
1These companies (CIMIC Group Limited (CGL) Class Order Companies) have the benefit of ASIC Class Order 98/1418. For further
information, refer to section (i).
Non‐controlling interests
There were no material non‐controlling interests relating to the Company’s material subsidiaries disclosed above as at 31 December 2015
and as such no material transactions with non‐controlling interests during the period to 31 December 2015.
g)
Unconsolidated structured entities
The Group is party to several lease agreements with unconsolidated structured entities during the reporting period. These transactions
were undertaken to develop operational and financing synergies across the Group. The unconsolidated structured entities are financed
by external parties and the Group does not hold any equity interests or assets such as loans or receivables with these entities. The
relevant activities of the structured entities are directed by contractual agreements. The entities are controlled by external parties and
therefore are not consolidated by the Group.
The Group is only exposed to the variability of returns in relation to return conditions at lease expiry, which are not known at this time.
These items are also included at note 19: Interest bearing liabilities and note 33: Commitments.
The table below provides a summary of the Group’s exposure to unconsolidated structured entities.
Exposures to unconsolidated structured entities
Finance lease liabilities
Total on balance sheet liabilities
Operating lease commitments
Total liabilities due to unconsolidated structured entities
December 2015
$m
December 2014
$m
6.4
6.4
213.3
219.7
11.9
11.9
363.0
374.9
135
8
1
8
B
9
3
9
B
9
3
2
B
9
3
2
B
9
3
9
B
9
3
2
8
1
9
B
9
3
9
B
9
3
2
B
9
3
2
B
9
3
9
B
9
3
2
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
39. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
h) Parent entity transactions with wholly‐owned controlled entities
Transactions with wholly‐owned controlled entities were as follows: aggregate amounts receivable: $2,565.6 million (31 December 2014:
$1,698.5 million); aggregate amounts payable: $955.6 million (31 December 2014: $798.6 million); interest received / receivable: $14.1
million (31 December 2014: $40.6 million); interest paid / payable: $5.1 million (31 December 2014: $19.1 million); fees charged: $nil (31
December 2014: $nil); dividends received: $2,166.0 million (31 December 2014: $837.7 million); fees paid: $95.0 million (31 December
2014: $180.0 million).
i) Deed of Cross Guarantee
Pursuant to ASIC Class Order 98/1418 dated 13 August 1998, relief was granted to the CGL Class Order Companies from the Corporations
Act 2001 requirements for preparation, audit and publication of financial statements. The Company and each of the CGL 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 CGL 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 CGL Class Order Companies have also given similar guarantees in the event that the
Company or other CGL Class Order Companies party to the Deed of Cross Guarantee are wound up.
Thiess Pty Limited, HWE Mining Pty Limited, LMENA Pty Limited, LMENA No.1 Pty Limited and Leighton Properties (NSW) Pty Ltd have
been released from its obligations under the Deed by executing a Revocation Deed dated 17 December 2015 which has been lodged with
ASIC.
Entities party to Deed of Cross Guarantee
A consolidated statement of profit or loss and statement of financial position, comprising the Company and entities which are a party to
the Deed, after eliminating all transactions between parties to the Deed of Cross Guarantee, at 31 December 2015 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
BRetained earnings brought forward ‐ adjustment for entities removed from the deed of Cross
Guarantee
Dividends paid
Retained earnings at reporting date
12 months to
December 2015
$m
12 months to
December 2014
$m
2,748.0
(169.1)
2,578.9
1,858.3
‐
10.9
(385.9)
4,062.2
1,897.7
(220.1)
1,677.6
576.3
‐
‐
(395.6)
1,858.3
136
8
5
1
B
9
7
2
B
9
6
5
B
9
6
5
B
9
7
2
B
9
6
5
B
9
8
9
B
9
6
1
B
9
6
2
B
9
7
6
B
9
7
7
B
9
7
6
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
39. CIMIC GROUP 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
8Total 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
Total current liabilities
Trade and other payables
Provisions
Interest bearing liabilities
Deferred tax liabilities
Total non‐current liabilities
BTotal liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity
December 2015
$m
December 2014
$m
1,027.2
1,897.2
B‐
1.0
2,925.4
4,973.1
81.7
502.4
1,511.7
‐
165.6
129.2
1,402.7
3,195.1
‐
202.4
4,800.2
3,797.3
91.9
725.2
803.5
76.2
633.2
207.7
7,363.7
6,335.0
10,289.1
11,135.2
3,241.5
2,746.9
44.5
111.7
18.7
215.8
341.7
664.9
3,416.4
3,969.3
1,064.7
44.5
108.2
246.9
1,464.3
3,009.2
111.6
703.8
‐
3,824.6
4,880.7
7,793.9
5,408.4
3,341.3
2,052.5
(706.3)
4,062.2
5,408.4
2,052.5
(569.5)
1,858.3
3,341.3
137
8
7
0
9
3
6
B
1
0
5
4
B
1
0
4
7
B
1
0
4
7
B
1
0
5
4
B
1
0
4
7
B
1
0
7
7
B
1
0
4
9
B
1
0
5
0
B
1
0
6
4
B
1
0
6
5
B
1
0
6
4
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
40. 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 2015, 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 2014) and AASB 2014‐7 Amendments to Australian Accounting Standards arising
from AASB 9 (December 2014)
This standard replaces AASB 139 Financial Instruments: Recognition and Measurement. AASB 9 includes revised guidance on the
classification and measurement of financial instruments, including a new expected credit loss model for calculation of impairment
on financial assets, and new general hedge accounting requirements. It also carries forward guidance on recognition and
derecognition of financial instruments from AASB 139. The standard will become mandatory for reporting periods beginning on or
after 1 January 2018. Retrospective application is required with some exceptions. The Group is still assessing the potential impact
on its consolidated financial statements resulting from the application of AASB 9.
AASB 15 Revenue from Contracts with Customers and AASB 2014‐5 Amendments to Australian Accounting Standards arising from
AASB 15
AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces
existing guidance, including AASB 118 Revenue, AASB 111 Construction Contracts, Interpretation 13 Customer Loyalty Programmes,
Interpretation 15 Agreements for the Construction of Real Estate, Interpretation 18 Transfers of Assets from Customers, and
Interpretation 131 Revenue – Barter Transactions Involving Advertising Services.
The core principle of AASB 15 is that an entity shall recognise revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or
services.
This standard will become mandatory for reporting periods beginning on or after 1 January 2018. The Group is assessing the
potential impact on its consolidated financial statements resulting from the application of AASB 15 and due to the replacement of
AASB 111 it is expected to have a significant impact on presentation and disclosure of construction contracts.
IFRS 16 – Leases
IFRS 16 specifies how to recognise, measure, present and disclose leases. The standard provides a single lessee accounting model,
requiring lessees to recognise assets and liabilities for all leases unless the term is 12 months or less or the underlying asset has a
low value lessors continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting substantially
unchanged from its predecessor, IAS 17.
IFRS 16 was issued in January 2016 and applies to annual reporting periods beginning on or after 1 January 2019. The Group is
assessing the potential impact on its consolidated financial statements resulting from the application of IFRS 16 as it is expected to
have a significant impact on presentation and disclosure of leases
The following new or amended standards are not expected to have a significant impact on the Group’s consolidated financial statements:
Amendments to IAS 7 Statement of Cash Flows ‐ improvements to disclosures
AASB 2014‐3 Amendments to Australian Accounting Standards – Accounting for acquisitions of interests in joint operations
AASB 2014‐4 Amendments to Australian Accounting Standards – Clarification of acceptable methods of depreciation and
amortisation
AASB 2014‐9 Amendments to Australian Accounting Standards – Equity method in separate financial statements
AASB 2014‐10 Amendments to Australian Accounting Standards – Sale or contribution of assets between investor and its associate
and joint venture
AASB 2015‐1 Amendments to Australian Accounting Standards – Annual improvements to Australian Accounting Standards 2012‐
2014 cycle
AASB 2015‐2 Amendments to AASB 101
AASB 2015‐3 Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality
AASB 2015‐4 Financial Reporting Requirements for Australian Groups with a Foreign Parent
AASB 2015‐5 Investment Entities: Applying the Consolidation Exception
AASB 1056 Superannuation Entities – replaces AAS 25 Financial Reporting by Superannuation Plans
138
CIMIC Group Limited Annual Report 2015
Notes continued
for the year ended 31 December 2015
41. EVENTS SUBSEQUENT TO REPORTING DATE
Subsequent to reporting date:
The Group determined a 100% franked dividend of 50.0 cents per share.
On 14 December 2015 the CIMIC Group Board approved a proposal to conduct an on‐market share buy‐back of up to 10% of
CIMIC’s fully paid ordinary shares over the next 12 months. The buy‐back will be funded by a combination of CIMIC’s existing
cash balances and working capital facilities. No shares were bought back in the period ended 31 December 2015 but
subsequent to year end the company has bought back ordinary shares on market with the relevant announcements made to
the ASX. The shares so purchased have been cancelled.
During 2015 CPB Contractors Pty Ltd, a wholly owned subsidiary of the Group, together with its consortium partners, Saipem SA
and Saipem Portugal Comércio Maritimo LDA, has been in negotiations with Chevron Australia Pty Ltd in relation to collection of
contract debtors from the Gorgon LNG Jetty and Marine Structures Project (“Gorgon Contract”). Since 31 December 2015 the
Company has commenced a further process of negotiations under the Gorgon Contract which may see the parties enter into a
private arbitration under the provisions of the Gorgon Contract. The continuation of the negotiation process to 31 December
2015 and the further steps now being taken do not require any change to the accounting treatment of the contract debtors
relating to the Gorgon Contract included within total contract debtors (note 8: Trade and other receivables) in the Group’s
financial report.
On 13 January 2016 CIMIC Group Limited, through its wholly owned subsidiary CIMIC Group Investments Pty Limited (CGI),
announced its intention to make an unconditional offer to acquire the 63.01% of Sedgman that it does not already own
pursuant to an off‐market takeover at a price of $1.07 per share. Refer to note 25: Associates.
The Directors approved the financial report on 10 February 2016.
139
Statutory Statements
DIRECTORS’ DECLARATION
1.
In the opinion of the Directors of CIMIC Group Limited (“the Company”):
a)
The financial statements and notes, set out on pages 48 to 139, 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 2015 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 2015.
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 10th day of February 2016.
Signed for and on behalf of the Board in accordance with a resolution of the Directors:
Marcelino Fernández Verdes
Executive Chairman and Chief Executive Officer
Russell Chenu
Chairman Audit and Risk Committee
140
Independent Auditor’s Report to the members of CIMIC Group Limited
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
Report on the financial report
We have audited the accompanying financial report of CIMIC Group Limited, which comprises the Consolidated Statement of Financial
Position as at 31 December 2015, 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 48 to 140.
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 CIMIC Group 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 CIMIC Group 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 2015 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 32 to 45 of the directors’ report for the year ended 31 December 2015.
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 CIMIC Group Limited for the year ended 31 December 2015, 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, 10 February 2016
141
A
d
d
i
t
i
o
n
a
l
I
n
f
o
r
m
a
t
i
o
n
EIC Activities’ digital engineering capability
enables the Group to build digitally through
virtual construction and Building Information
Modelling (BIM). This has led to a way
of improving planning, construction and
operation of buildings with the help of 3D
computer models. BIM provides improved
ability to measure, map, visualise and control
our business.
142
CIMIC Group Limited Annual Report 2015
Shareholdings
The information below is current as at 25 January 2016.
TWENTY LARGEST SHAREHOLDERS
The 20 largest shareholders on the Company’s register of members hold 90.96% of the Company’s issued capital.
Name
HOCHTIEF Australia Holdings Limited
J P Morgan Nominees Australia Limited
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
National Nominees Limited
BNP Paribas Noms Pty Ltd
Milton Corporation Limited
BNP Paribas Nominees Pty Ltd
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited ‐ A/C 2
Argo Investments Limited
Gwynvill Investments Pty Limited
HSBC Custody Nominees (Australia) Limited
Gwynvill Trading Pty Limited
AMP Life Limited
HSBC Custody Nominees (Australia) Limited‐Gsco Eca
National Nominees Limited
Sandhurst Trustees Ltd
Navigator Australia Ltd
Mr Jonathan Leighton Stanley Ellis
Total
Total shares on issue
No. of shares
235,661,965
31,057,553
17,936,470
8,187,683
7,015,192
1,559,133
791,239
645,616
617,160
488,202
439,733
427,188
326,805
284,791
216,880
213,471
185,364
183,340
159,552
138,150
306,535,487
337,010,272
% of issued capital
69.93
9.22
5.32
2.43
2.08
0.46
0.23
0.19
0.18
0.14
0.13
0.13
0.10
0.08
0.06
0.06
0.06
0.05
0.05
0.04
90.96
100
DISTRIBUTION SCHEDULE
The Company has 337,010,272 ordinary shares on issue. The distribution of shareholders is as follows:
Size of shareholding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
No. of holders
30,563
5,936
570
268
22
37,359
Ordinary shares held
8,271,635
12,091,308
3,949,073
5,919,781
306,778,475
337,010,272
% of issued capital
2.45
3.59
1.17
1.76
91.03
100
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 1,081 shareholders with less than a marketable parcel (21 shares), based on the closing market price of $24.53 on 25 January
2016.
SUBSTANTIAL SHAREHOLDERS
The names of the substantial shareholders and the number of equity securities to which they have a relevant interest, as disclosed in
substantial holding notices given to the Company under the Corporations Act are:
Name
HOCHTIEF Australia Holdings Limited and its associates as detailed in the
notice dated 12 May 2014
* Number of shares as at 12 May 2014, the date of disclosure in substantial shareholding notices given to the Company.
No. of shares
235,664,817*
Voting power
69.62
143
CIMIC Group Limited Annual Report 2015
SHARE RIGHTS
The Company has 1,096,928 share rights on issue. The distribution is as follows:
Size of holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
No. of holders
8
35
30
26
1
100
Share rights
4,606
89,267
229,859
649,275
123,921
1,096,928
The share rights do not carry any rights to voting.
OPTIONS
The Company has 735,636 options on issue*. The distribution is as follows:
Share rights
Size of holding
‐
1 – 1,000
2,960
1,001 – 5,000
113,716
5,001 – 10,000
514,348
10,001 – 100,000
104,612
100,001 and over
735,636
Total
* The issue of options under the LTI plan were made to eligible Senior Executives in February 2016 as their 2015 LTI. On 28 October 2015, the Board
No. of holders
0
1
14
20
1
36
approved the replacement of the previous performance rights based plan with an options based plan. The 2015 award represents the first grant under
the new plan.
The options do not carry any rights to voting.
144
CIMIC Group Limited Annual Report 2015
Shareholder information
ENQUIRIES AND SHARE REGISTRY
If you have any questions about your shareholding, dividend payments, tax file number, change of address or any other enquiry, please
contact Computershare Investor Services Pty Limited:
Telephone: 1300 850 505 (local) or +61 3 9415 4000 (international)
Fax: (03) 9473 2500 (local) or +61 3 9473 2500 (international)
Email: www.investorcentre.com/contact
Post: GPO Box 2975, Melbourne, VIC, 3001, Australia
REGISTERED OFFICE
Principal registered office in Australia
472 Pacific Highway, St Leonards, NSW, 2065, Australia
Telephone: +61 2 9925 6666
Fax: +61 2 9925 6000
Website: www.cimic.com.au
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
CIMIC’s shares are listed on the ASX and are traded under the stock code ‘CIM’. The ASX home branch is Sydney, Australia. A Subsidiary,
CIMIC Finance (USA) Pty Limited, has notes on issue which are listed on the Singapore Exchange.
YEAR‐ON‐YEAR PERFORMANCE SNAPSHOT
The five‐year performance of the Group is set out in a table within the ‘Company Performance’ section of the Remuneration Report.
CORPORATE GOVERNANCE STATEMENT
The CIMIC Group corporate governance statement is available on our website, in the section titled Corporate Governance
(www.cimic.com.au/our‐approach/corporate‐governance).
SUSTAINABILITY REPORT
The CIMIC Group sustainability report is available on our website at: www.cimic.com.au/our‐approach/sustainability.
ANNUAL GENERAL MEETING
The 55th Annual General Meeting of the members of CIMIC will be held in the Wentworth Ballroom, Sofitel Sydney Wentworth, 61‐101
Phillip Street, Sydney, New South Wales on 21 April 2016. Shareholders will be notified of the meeting and any resolutions in accordance
with the Corporations Act.
SHAREHOLDER COMMUNICATIONS
Shareholder communications, including this Annual Report, are available on our website (www.cimic.com.au). CIMIC encourages
shareholders to receive notification of all communications by email. Printed copies of shareholder communications are available on
request by contacting +61 2 9925 6666 or visiting our website: www.cimic.com.au/enquiries‐form.
145
CIMIC Group Limited Annual Report 2015
Glossary
Term
4Q15
2H14 or 2H15
2014 Financial Year or FY14
2015 Financial Year or FY15
2016 Financial Year or FY16
A$ or $
AASB
ACS or ACS Group
AGM
ASIC
ASEAN
ASX
ASX Principles and Recommendations
CDP
CEO
CFO
Company or CIMIC
Constitution
Corporations Act
Deloitte
Devine
Divestments or the divestment or sale of
John Holland and Services
DJSI
EBIT
EIP
EPS
ESA
FY
FY17
FY18
Group or CIMIC Group
HLG
HOCHTIEF Australia
HOCHTIEF or HOCHTIEF AG
John Holland or JHG
John Holland sale
JV
KMP
KPI
LNG
LTI
Moody's
NGER Scheme
NPAT
Operating Companies
PBT
pcp
PPP
SAR
Sedgman
Services or Ventia
Description
Fourth quarter of the 2015 Financial Year
Second six month period of the relevant Financial Year
Financial year ended 31 December 2014
Financial year ended 31 December 2015
Financial year ending 31 December 2016
Australian dollars, unless otherwise stated
Australian Accounting Standards Board
Actividades de Construcción y Servicios S.A.
Annual General Meeting of CIMIC’s shareholders
Australian Securities and Investments Commission
Association of Southeast Asian Nations
Australian Securities Exchange
ASX Corporate Governance Council’s Corporate Governance Principles and
Recommendations (3rd Edition)
Contract debtors portfolio provision
Chief Executive Officer
Chief Financial Officer
CIMIC Group Limited
Constitution of CIMIC Group Limited dated 5 November 1998
Corporations Act 2001 (Cth)
Deloitte Touche Tohmatsu
Devine Limited
The John Holland sale and sale of 50% of the Group’s Services businesses (refer to ‘Services
or Ventia’ definition)
Dow Jones Sustainability Indices
Earnings before interest and taxes
The CIMIC Equity Incentive Plan approved by shareholders at the 2012 AGM, under which
the STI and LTI programs are administered
Earnings per share
Executive service agreement
Financial year
Financial year ending 31 December 2017
Financial year ending 31 December 2018
CIMIC Group Limited and certain entities it controls
Habtoor Leighton Group
HOCHTIEF Australia Holdings Limited, a wholly owned subsidiary of HOCHTIEF AG
HOCHTIEF Aktiengesellschaft
John Holland Group Pty Limited, a former wholly owned subsidiary of CIMIC
In December 2014, the Group announced the successful divestment of JHG to CCCC
International Holding Limited. Completion of the sale occurred on 20 April 2015
Joint venture
Key Management Personnel as defined in AASB 124 Related Party Disclosures
Key performance indicators
Liquefied natural gas
Long term incentive
Moody's Investors Service
National Greenhouse and Energy Reporting Scheme which operates under the NGER Act
2007 (Cth)
Net profit after tax
CPB Contractors, Thiess, Leighton Properties, Leighton Asia, India and Offshore, Pacific
Partnerships and EIC Activities
Profit before tax
Prior comparable period
Public private partnership
Share appreciation right
Sedgman Limited
50:50 Partnership for CPB Contractors’ and Thiess’ operations and maintenance services
businesses with certain funds managed by affiliates of Apollo Global Management, LLC.
Completion of the transaction occurred on 31 March 2015, with the business now
146
CIMIC Group Limited Annual Report 2015
S&P
STI
Subsidiary
TRIFR
TSR
VWAP
WIH
operating under the name ‘Ventia’
Standard & Poor’s
Short term incentive
Subsidiary of the Company as defined in the Corporations Act
Total recordable injury frequency rate
Total shareholder return
Volume weighted average price
Work in hand
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© CIMIC Group Limited I February 2016
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