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Annual Report
CIMIC Group Limited
ABN 57 004 482 982
Cover Dividers and Spine 8.indd 1
15/02/2017 9:32 am
Executive Chairman’s review
I’m pleased to report that we
achieved our objectives in 2016,
delivering strong, sustainable
returns for our shareholders.
Marcelino Fernández Verdes
Executive Chairman
2016 achievements
With a strong operational and
management team in place, we
achieved a great deal in 2016:
reporting net profit after tax at the
top end of our guidance, increasing
shareholder returns, and delivering
exemplary building, infrastructure
and resources projects for our clients.
In 2016, our projects were delivered
through dedicated businesses
focused on our core areas:
• Construction (CPB Contractors
incorporating Leighton Asia);
• Mining and mineral processing
(Thiess and Sedgman);
Cover Dividers and Spine 8.indd 2
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Executive Chairman’s review
building on
a solid foundation
to deliver
strong and
sustainable
shareholder
returns
• Public Private Partnerships or PPPs
(Pacific Partnerships); and
• Engineering (EIC Activities).
We are currently incorporating
diversified services company UGL
into our stable, following a successful
takeover offer in late 2016. UGL’s
areas of expertise will continue to
be the delivery of critical assets and
essential services to our clients.
By focusing the skills, experience
and expertise of our Operating
Companies into activity driven
businesses that work together we
have gained a competitive edge.
Our team
Around the world, we have a first-
rate team of 50,500 people who
are focused on delivering our 434
active projects, to the benefit of our
shareholders and clients.
I am immensely proud of all that our
people have achieved in recent years,
including the many changes involved
in our transformation to an activity-
focused operating model.
an integral part in CIMIC Group’s
achievements during the past three
years, first as Chief Operating Officer
and then as Deputy Chief Executive
Officer. The Board and I have every
confidence in Adolfo’s ability to lead
CIMIC Group.
I am honoured to continue as
Executive Chairman and I look
forward to continuing to guide CIMIC
Group in this capacity.
With these achievements in place,
and a strong leadership team
established, I was pleased to hand
over my responsibilities as Chief
Executive Officer and Managing
Director to Adolfo Valderas in
October 2016. Adolfo has played
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In 2016, CIMIC launched the new CIMIC Group Graduate Program. The program
develops our future leaders, providing graduates with on-the-job training,
structured learning in their discipline and exposure to a global business. When
joining our Operating Companies, graduates benefit from a global program that
provides a structured learning plan over a two year period. They experience three
eight-month rotations with placements in various roles, projects or Operating
Companies within the Group. The success of the program led CIMIC Group to
be recognised as one of the GradConnection Top100 Most Popular Graduate
Employers for 2016 and to be rated by the Australian Association of Graduate
Employers as a Top 75 Graduate Employer for 2017.
Shareholder returns
and dividends
Our strong performance in 2016, as
outlined by Adolfo on the following
page, has enabled the Board to
declare a 100% franked final dividend
of 62 cents per share to be paid on
4 July 2017. On a full year basis, total
2016 dividends were 110 cents per
share ($357 million in total), a 14.6%
increase compared with 2015.
Basic earnings per share was 176.6
cents, up 14.9% (relative to an 11.5%
increase in net profit after tax),
boosted by the benefits of the share
buy-back.
Our focus on shareholder returns
continued in 2016 and there was a
43.8% increase in CIMIC’s share price
during the year. Combining the share
price appreciation and dividends in
respect of the 2016 Financial Year,
CIMIC delivered a total shareholder
return of 48%.
On 28 December 2016, we concluded
an on-market share buy-back,
improving shareholder returns
and demonstrating our disciplined
approach to capital management.
On 12 December 2016, we announced
the commencement of a further on-
market share buy-back of up to 10%
of our fully paid ordinary shares over
12 months commencing from
29 December 2016.
Sustainability
For CIMIC, sustainability is the
integration of 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.
In 2016, our commitment to acting
sustainably was reinforced through
the launch of our Sustainability
Policy. This Policy sets out minimum
requirements for sustainability across
the Group. Amongst other things, the
Policy commits the Group to abiding
by the principles of the UN Global
Compact and we acknowledge
our role in contributing to the UN
Sustainable Development Goals. The
Sustainability Policy is available on
our website at www.cimic.com.au.
Looking forward
Public and private clients in CIMIC’s
markets are continuing to invest,
providing exciting opportunities for
CIMIC to contribute our civil, mining,
mechanical and electrical capabilities,
and our PPP, project and operational
experience.
Our financial strength is also an
advantage as we pursue new
opportunities and look to expand.
In closing, I would like to thank all of
our shareholders for your continued
support.
I look forward to updating you further
on our Company’s performance at
the Annual General Meeting on 13
April 2017.
Sincerely,
Marcelino Fernández Verdes
Executive Chairman
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15/02/2017 9:32 am
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FY16
3M16
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9M16
FY16
Chief Executive Officer’s review
2016 was an important year for CIMIC Group,
one in which we built on the solid foundation
established during the transformation of
our businesses in 2014 and 2015.
Performance overview
Our 2016 result was solid,
demonstrated by an 11.5% increase in
net profit after tax to $580.3 million,
which was at the top end of our
guidance range of $520 million to
$580 million.
Our margins further improved during
the year as we efficiently managed
costs and risks.
Our strong balance sheet position
was also sustained. Cash flows from
operating activities9 were strong at
$1.2 billion. We reported net cash
excluding operating leases of
$409.3 million as at 31 December
2016, after net investments of
$1 billion, including the share buy-
back program, the acquisition of
shares in UGL, Sedgman and Devine,
and the divestment of Nextgen.
Revenue4 was $10.9 billion and
showed a positive growth trend
throughout 2016, increasing quarter
on quarter since the second quarter
of the year.
Further details on our Company’s
performance are contained in the
Operating and Financial Review
section within this Annual Report.
Work won and our outlook
CIMIC has a robust pipeline of
$34 billion of work in hand13 as at
31 December 2016, boosted by the
acquisition of UGL, and a robust
project pipeline.
We were successful in light and
heavy rail, winning the Gold Coast
Light Rail Stage Two in Queensland,
the Canberra Light Rail Stage One
in the Australian Capital Territory
(a PPP project), and the removal of
certain level crossings in Victoria.
Our other civil contract wins included
the design and construction of an
extension of the Roe Highway in
Adolfo Valderas
Chief Executive Officer
For footnotes refer to
Operating and Financial Review.
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1 Leighton Asia, Tseung Kwan O -
Lam Tin Tunnel, Hong Kong
2 Thiess, Oyu Tolgoi copper and
gold project, Mongolia
3 CPB Contractors and Pacific
Partnerships, Canberra Light Rail
Stage One, Australian Capital
Territory, Australia
1
2
3
Western Australia and, in Hong Kong,
the Tseung Kwan O – Lam Tin Tunnel,
and a columbarium, to name just
a few.
In mining and mineral processing,
we diversified by geography and
commodity, expanding into oil
sands in Canada. We were also
awarded new coal mining work in
Indonesia, won multiple contracts
in Queensland’s Bowen Basin, and
secured a contract extension at a
diamond mine in Botswana.
Looking ahead, around $100 billion of
tenders, relevant to CIMIC, have been
identified for 2017 and there are in
the order of $250 billion of projects
coming to the market in 2018
and beyond.
This robust pipeline of infrastructure,
mining and services projects is
expected to deliver growth in the
medium and long term, and our
2017 guidance is to achieve net
profit after tax in the range of
$640 million to $700 million,
subject to market conditions.
Strategic acquisition of UGL
In October last year, we launched a
successful takeover offer for UGL,
a diversified services company.
We now own 100% of UGL and it is
currently being integrated as part
of CIMIC Group.
Including UGL amongst our
companies is a great opportunity
– both for CIMIC and UGL. UGL’s
competencies, in the rail, transport
and technology systems, power,
resources, water and defence
sectors are complementary to our
existing operations or enhance our
capabilities in new activities.
UGL has a strong brand and more
than 6,800 employees across
Australia, New Zealand and South
East Asia. We are already working
alongside UGL in consortia and
through subcontracts, confirming
our confidence in UGL.
We also recently announced an offer
to acquire the shares in Macmahon
that we do not already own through
an off-market takeover offer at a
price of $0.145 per share. We have
been an investor in Macmahon
since June 2007. We will keep the
market informed of our progress
with the offer.
Culture, people and safety
We have made significant changes to
put in place strong foundations for
our future, as demonstrated by our
recent project wins.
We are now working to build on
this by further solidifying a culture
of innovation, collaboration and
learning. By sharing and continuing
to build on the knowledge that
resides within our business, we are
in a better position to successfuly
deliver for our clients and provide
fulfilling careers for our people.
We are doing this in a number
of ways, small and large. CPB
Contractors and Leighton Asia are
working as one construction unit.
Both Pacific Partnerships and UGL
have successfully won work with
CPB Contractors. EIC Activities is
collaborating closely with all of our
Group companies and has launched
a Group-wide project knowledge
database. The complementary skill
sets of Thiess and Sedgman has
enabled them to deliver projects as a
team. Group-wide we have launched
a graduate program, a leadership
program, an internal communication
platform, and brought increased
focus to good physical and mental
health in our workplaces.
These are just a handful of examples
of the great work that is going on
across CIMIC Group.
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Conclusion
Lastly, I would like to convey the
enthusiasm of the whole CIMIC
team for the year ahead. The
Company is well positioned to
benefit from the strong pipeline
of infrastructure, mining, services
and operations and maintenance
projects across all of the regions
where we operate.
I look forward to updating you
further at the Annual General
Meeting on 13 April 2017.
Sincerely,
Adolfo Valderas
Chief Executive Officer and
Managing Director
Building Materials; Environmental
Policy and Management Systems; and
Resource Conservation and
Resource Efficiency.
RobecoSam included CIMIC in its
2017 Sustainability Yearbook and
we were awarded a bronze class
distinction for excellent sustainability
performance based on the 2016 DJSI
submission. CIMIC was one of only 10
companies in the global construction
and engineering industry to be
recognised.
Following a review in June 2016,
CIMIC was also included in the
FTSE4Good Index which measures
the performance of companies
demonstrating strong Environmental,
Social and Governance (ESG)
practices.
During 2016, the Australian Council
of Superannuation Investors
(ACSI), which benchmarks the
public disclosures of S&P/ASX200
companies with reference to material
ESG risks, rated CIMIC at the level of
‘detailed’ in its 2016 research report.
This is the second highest rating of
ACSI’s five categories.
We also continue to focus on making
CIMIC a safe place to work. In
2016, we continued to improve our
Total Recordable Injury Frequency
Rate (TRIFR) measured per million
hours worked. To me, safety means
providing a workplace where every
single one of our employees is
safe each and every day – with no
exceptions.
Therefore, it is with great sadness
that I report the death of three of
our colleagues at CPB Contractors,
Leighton Asia and Thiess project
sites following incidents in 2016. On
behalf of the Board and all of CIMIC’s
people, I express my sincere sorrow
and personal sympathies to the
families and friends of our colleagues
who passed away. I am determined
to focus on ensuring that these
tragedies are not repeated.
Sustainability
I’m pleased to report that the Group
was again recognised in 2016 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 again included in DJSI’s
Australia Index, and CIMIC and UGL
were the only two construction and
engineering companies to be so
recognised. CIMIC was recognised
as a construction and engineering
global leader in three categories:
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Contents
Section
Directors’ Report
• Operating and Financial Review
• Remuneration Report
Sustainability Report
Financial Report
Additional Information
• Shareholdings
• Shareholder information
Glossary
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.
CIMIC Group’s corporate governance
statement is available on our website,
in the section titled ‘Corporate
Governance’ (www.cimic.com.au/our-
approach/corporate-governance).
Page
1
10
29
43
85
185
186
188
189
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Directors’
Report
CPB Contractors, Gold Coast Light Rail Stage 2,
Queensland Australia
CPB Contractors has been selected by GoldlinQ Pty Ltd to design and construct
Stage 2 of the Gold Coast light rail project. CPB Contractors will deliver a 7.3km
northern extension of the Gold Coast light rail from Gold Coast University Hospital to
Helensvale, to connect Stage 1 with the main Brisbane to Gold Coast rail line. Stage 2
is critical to meeting the increasing demand for public transport and to support the
Gold Coast 2018 Commonwealth Games.
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1
CIMIC Group Limited Annual Report 2016 | Directors’ Report
CIMIC Group Limited Annual Report 2016 | Directors’ Report
Directors’ Report
The Directors present their report for the 2016 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
8 February 2017.
DIRECTORS’ RESUMÉS
The Directors as at the date of this Directors’ Report are:
MARCELINO FERNÁNDEZ VERDES (61)
Executive Chairman
Civ Eng
Appointed Executive Chairman in June 2014 having been a Non-executive Director from October 2012 until March 2014.
Mr Fernández Verdes was CEO and Managing Director of the Company from March 2014 until October 2016.
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.
ADOLFO VALDERAS (46)
Managing Director and Chief Executive Officer
Civ Eng, MBA
Appointed CEO and Managing Director in October 2016.
Mr Valderas was previously Deputy Chief Executive Officer and Chief Operating Officer of the Company. Mr Valderas is a civil engineer
and has significant experience in managing complex, multinational operations and projects across Australia, Europe, the United States,
Canada, South America and China. Mr Valderas has direct experience in delivering projects in high speed rail, road and bridges, water
treatment and construction. Mr Valderas was formerly the Chairman and CEO of Iridium Concesiones de Infraestructuras (Iridium), a role
he held from 2010 to 2013. Iridium is an ACS Group company responsible for developing and managing all types of government
concessions involving transport and public works infrastructure. Between 2000 and 2010, Mr Valderas held roles with Dragados, most
recently as Deputy International Manager. Prior to 2000, he held a variety of positions within the construction industry.
RUSSELL CHENU (67)
Independent Non-executive Director
BCom, MBA, CPA
Appointed Independent Non-executive Director in 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 was
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), James Hardie
Industries plc (since August 2014) and Reliance Worldwide Corporation Limited (since April 2016).
JOSÉ-LUIS DEL VALLE PÉREZ (66)
Non-executive Director
LLB
Appointed Non-executive Director in 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.
Appointed Independent Non-executive Director in 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: Sydney Airport Limited (Chairman 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
TREVOR GERBER (61)
Independent Non-executive Director
BAcc, CA, SA
October 2014).
PEDRO LÓPEZ JIMÉNEZ (74)
Non-executive Director
Civ Eng, MBA
Appointed Non-executive Director in 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) and Board Member of the Alcala University.
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 Chairman In Office of Dragados S.A. He is a
Board Member of Ghesa Ingeniería y Tecnología S.A. (since 1971) and 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
Mr López Jiménez is currently a Board Member of the Malaga Picasso Museum, Vice Chairman of the Royal Board of the National Library
of Spain, Vice-Chairman of the European Club Association (E.C.A) and Vice Chairman of the Real Madrid Football Club.
October 2014.
DAVID ROBINSON (60)
Non-executive Director
MCom, BEc, FCA, CTA
Appointed Non-executive Director in December 1990. Appointed Alternate Director for Mr López Jiménez in 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. Adviser to local and
overseas companies with interests in Australia. Participant in construction industry affairs. A Trustee 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 a Director
since May 2015).
PETER-WILHELM SASSENFELD (50)
Non-executive Director
MBA
Appointed Non-executive Director in 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.
2
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CIMIC Group Limited Annual Report 2016 | Directors’ Report
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.
TREVOR GERBER (61)
Independent Non-executive Director
BAcc, CA, SA
Appointed Independent Non-executive Director in 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: Sydney Airport Limited (Chairman 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 (74)
Non-executive Director
Civ Eng, MBA
Appointed Non-executive Director in 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) and Board Member of the Alcala University.
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 Chairman In Office of Dragados S.A. He is a
Board Member of Ghesa Ingeniería y Tecnología S.A. (since 1971) and 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, Vice Chairman of the Royal Board of the National Library
of Spain, Vice-Chairman of the European Club Association (E.C.A) and Vice Chairman of the Real Madrid Football Club.
DAVID ROBINSON (60)
Non-executive Director
MCom, BEc, FCA, CTA
Appointed Non-executive Director in December 1990. Appointed Alternate Director for Mr López Jiménez in 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. Adviser to local and
overseas companies with interests in Australia. Participant in construction industry affairs. A Trustee 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 a Director
since May 2015).
PETER-WILHELM SASSENFELD (50)
Non-executive Director
MBA
Appointed Non-executive Director in 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.
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CIMIC Group Limited Annual Report 2016 | Directors’ Report
CIMIC Group Limited Annual Report 2016 | Directors’ Report
ALTERNATE DIRECTOR’S RESUMÉ
ROBERT SEIDLER AM (68)
Alternate Director
LLB
Appointed Alternate Director for Mr del Valle Pérez and Mr Sassenfeld in 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 has over 40 years’ experience as a lawyer, non-executive director on listed and unlisted companies in industries as diverse
as funds management, banking, investment banking, hotel management as well as serving on government committees in both Australia
and Japan.
Mr Seidler AM is the Vice President of the Australia Japan Business Cooperation Committee, Chairman of Hunter Philip Japan Limited and
New South Wales Governments Special Envoy to Japan. Mr Seidler AM has also been made a member of the Order of the Rising Sun by
the Emperor of Japan.
Mr Seidler AM was appointed as a Director of HOCHTIEF Australia in November 2011 and is a Director of Investa Office Management
since June 2016 and Investa Listed Funds Management Limited since April 2016. He 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).
Mr Seidler AM is a Director of the following additional ASX listed entity: Investa Office Fund (since July 2016).
COMPANY SECRETARIES’ RESUMÉS
LOUISE GRIFFITHS (37)
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.
NIGEL LOWRY (43)
Company Secretary
BA, LLB, MCom
Appointed as an additional Company Secretary in October 2016. Mr Lowry has been practicing law for over 15 years, specialising in
corporate, property and finance transactions. Mr Lowry has held previous positions at Macquarie Bank Limited and King & Wood
Mallesons in Sydney and at Linklaters LLP and Slaughter & May in London. Mr Lowry has a Bachelor of Arts and a Bachelor of Laws
(Honours) from the University of Sydney and a Master of Commerce from the University of New South Wales.
FORMER OFFICEHOLDERS
During the 2016 Financial Year the following people ceased to be officeholders of the Company:
Name
Relevant interests in CIMIC
Relevant interests in ACS and/or HOCHTIEF AG
Name
John Easy
Kirstin Ferguson
Position
Group General Counsel and Company Secretary
Independent, Non-executive Director
Period
3 November 2014 to 22 January 2016
10 July 2014 to 10 November 2016
4
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BOARD MEETINGS
Financial Year are set out in the table below.
The number of Board and Board Committee meetings held, and the number of meetings attended by each Director, during the 2016
Board
Audit and Risk
Ethics, Compliance &
Remuneration &
Committee
Sustainability
Committee
Nomination
Committee
Special Board
Committee~
Current Directors
M Fernández
Verdes1
A Valderas2
R Chenu
J L del Valle Pérez
T Gerber3
P Lopéz Jiménez4
D Robinson5
P Sassenfeld
Alternate Director
R Seidler AM
Former Director
K Ferguson6
and/or Committee.
H
A
*
+
2016.
H
9
1
9
9
9
9
9
9
-
8
A
8#
-#
7
8
8
8
9
8
9*
6
H
-
-
4
-
4
-
4
4
-
4
A
4+
-
4
3+
4
4+
4
4
4*
3
H
4
-
4
4
4
4
-
-
-
4
A
4
-
4
4
4
3
-
-
4*
3
H
-
-
6
6
6
6
-
-
-
4
A
3+
-
6
5
6
6
5+
4+
5*
3
H
1
-
2
-
-
-
2
-
-
1
The number of meetings held during the period the Director/Alternate Director/Former 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/Former Director was a member of the Board
~ Meetings held to consider annual results and the Company’s Constitution.
# Unable to attend a Board meeting due to a declared conflict of interest.
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.
1 Mr Fernández Verdes ceased to be CEO on 18 October 2016 and a member of the Ethics, Compliance and Sustainability Committee on 11 November
2 Mr Valderas was appointed as CEO on 18 October 2016 and Managing Director on 27 October 2016.
3 Mr Gerber became a member of the Ethics, Compliance and Sustainability Committee on 9 February 2016.
4 Mr Lopéz Jiménez became a member of the Ethics, Compliance and Sustainability Committee on 9 February 2016.
5 Mr Robinson ceased to be a member of the Audit and Risk Committee and became Chair of the Ethics, Compliance and Sustainability Committee on
11 November 2016.
6
Dr Ferguson resigned as a Director on 10 November 2016.
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
Directors’ Report are listed in the table below.
Details of the Directors’ relevant interests in the issued capital of the Company and its related body corporates as at the date of this
Ordinary
Options over
Rights over
shares
shares
Ordinary
Options over
Rights over
shares
shares
shares
M Fernández Verdes
A Valderas
R Chenu
J L del Valle Pérez
T Gerber
P López Jiménez
D Robinson
P Sassenfeld
shares
2,7451
15,587
4,085
1,0001
2,000
1,1921
1,489
1,8581
104,612
32,552
1,453 (ACS)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,001,527 (ACS)*
12,931 (HOCHTIEF AG)
-
-
-
524,145 (ACS) ~
7,054 (HOCHTIEF AG)
278,902 (ACS)
418,266 (ACS)
-
-
-
-
-
-
-
Mr Seidler AM (Alternate Director for Mr Sassenfeld and Mr del Valle Pérez) holds 2,341 ordinary shares, nil options and nil rights.
1
*
~
These shares are held by the relevant director on trust for HOCHTIEF Australia.
1,000,916 shares are held by Gesguiver, S.L. (a closely related party to Mr Fernández Verdes).
These shares are held by Fapin Mobi, S.L. (a closely related party to Mr López Jiménez).
No Director held a relevant interest in Devine.
A
1
-
2
-
-
-
2
-
2*
1
-
-
-
-
-
-
-
-
5
CIMIC Group Limited Annual Report 2016 | Directors’ Report
BOARD MEETINGS
The number of Board and Board Committee meetings held, and the number of meetings attended by each Director, during the 2016
Financial Year are set out in the table below.
Board
Audit and Risk
Committee
Ethics, Compliance &
Sustainability
Committee
Remuneration &
Nomination
Committee
Special Board
Committee~
H
9
1
9
9
9
9
9
9
-
8
A
8#
-#
7
8
8
8
9
8
9*
6
H
-
-
4
-
4
-
4
4
-
4
A
4+
-
4
3+
4
4+
4
4
4*
3
H
4
-
4
4
4
4
-
-
-
4
A
4
-
4
4
4
3
-
-
4*
3
H
-
-
6
6
6
6
-
-
-
4
A
3+
-
6
5
6
6
5+
4+
5*
3
H
1
-
2
-
-
-
2
-
-
1
A
1
-
2
-
-
-
2
-
2*
1
Current Directors
M Fernández
Verdes1
A Valderas2
R Chenu
J L del Valle Pérez
T Gerber3
P Lopéz Jiménez4
D Robinson5
P Sassenfeld
Alternate Director
R Seidler AM
Former Director
K Ferguson6
H
A
The number of meetings held during the period the Director/Alternate Director/Former 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/Former Director was a member of the Board
and/or Committee.
~ Meetings held to consider annual results and the Company’s Constitution.
# Unable to attend a Board meeting due to a declared conflict of interest.
*
+
1 Mr Fernández Verdes ceased to be CEO on 18 October 2016 and a member of the Ethics, Compliance and Sustainability Committee on 11 November
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.
2016.
2 Mr Valderas was appointed as CEO on 18 October 2016 and Managing Director on 27 October 2016.
3 Mr Gerber became a member of the Ethics, Compliance and Sustainability Committee on 9 February 2016.
4 Mr Lopéz Jiménez became a member of the Ethics, Compliance and Sustainability Committee on 9 February 2016.
5 Mr Robinson ceased to be a member of the Audit and Risk Committee and became Chair of the Ethics, Compliance and Sustainability Committee on
11 November 2016.
Dr Ferguson resigned as a Director on 10 November 2016.
6
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
Ordinary
shares
2,7451
Options over
shares
-
Rights over
shares
-
Options over
shares
-
Rights over
shares
-
15,587
4,085
1,0001
2,000
1,1921
1,489
1,8581
A Valderas
R Chenu
J L del Valle Pérez
T Gerber
P López Jiménez
D Robinson
P Sassenfeld
104,612
-
-
-
-
-
-
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.
These shares are held by the relevant director on trust for HOCHTIEF Australia.
1,000,916 shares are held by Gesguiver, S.L. (a closely related party to Mr Fernández Verdes).
These shares are held by Fapin Mobi, S.L. (a closely related party to Mr López Jiménez).
32,552
-
-
-
-
-
-
-
-
418,266 (ACS)
-
-
-
-
Ordinary
shares
1,001,527 (ACS)*
12,931 (HOCHTIEF AG)
1,453 (ACS)
-
278,902 (ACS)
-
524,145 (ACS) ~
-
7,054 (HOCHTIEF AG)
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-
-
-
-
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•
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.
CIMIC Group Limited Annual Report 2016 | Directors’ Report
CIMIC Group Limited Annual Report 2016 | Directors’ Report
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.
OPTIONS
As at the date of this Directors’ Report, there are 552,231 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, the details of which are set out below:
CEO AND CFO DECLARATION
The CEO and CFO have provided a declaration to the Board concerning the Group’s financial records, financial statements and notes in
respect of the 2016 Financial Year in accordance with section 295A of the Corporations Act.
ENVIRONMENTAL REGULATION
Under section 299(1)(f) of the Corporations Act, an entity is required to provide a summary of its environmental performance in terms of
compliance with Australian environmental regulations.
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.
Number of participants at date of grant
Date of grant
Exercise price
Expiry date
Number of options
Original grant
On issue 10 Feb 20161
Exercised since 10 Feb 2016
Vested since 10 Feb 2016
Lapsed since 10 Feb 2016
On issue 8 Feb 20172
Date of the Directors’ Report contained in the 2015 CIMIC Annual Report.
1
2
Date of this Directors’ Report.
There was no LTI grant in the 2016 Financial Year.
2015 Options
36
29 October 2015
$27.53
29 October 2020
735,636
735,636
-
-
183,405
552,231
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 2016 Financial Year was a director or partner of the Group’s external auditor at
a time the Group’s external auditor conducted the audit.
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
an Officer or auditor of the Company, against costs and expenses incurred by that person in that capacity in successfully defending
•
•
in good faith; and
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 the 2016 Financial Year:
•
•
the Company submitted its NGER Scheme report with EY (our NGER Scheme external auditor) providing limited assurance; and
across the 122.4 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 2 fines totalling $9,800 and 10 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 Sustainability Report within this Annual Report.
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. During the 2016 Financial Year 337,683 ordinary shares were acquired on-market at an
average price of $30.60 per share. 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 36: 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.
UNISSUED SHARES
SHARE RIGHTS
As at the date of this Directors’ Report, there are 343,767 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:
AUDIT
Number of participants at
date of grant
Date of grant
Date of performance
period end
Number of rights
Original grant
On issue 10 Feb 20161
Vested since 10 Feb 2016
Lapsed since 10 Feb 2016
On issue 8 Feb 20172
2012 Deferred
Rights
91
2013 Deferred
Rights
82
Classes of Rights
2014 Deferred
Rights
35
2013 Performance
Rights
99
2014 Performance
Rights
88
1 Jan 2012 –
1 Jan 2013
5 Sep 2012 –
31 Dec 2017
3 May 2013 –
1 Jan 2014
31 Dec 2014 –
1 Jan 2017
31 Oct 2014 –
1 Jan 2015
31 Dec 2014 –
1 Jul 2017
1 Jan 2013
1 Jan 2014
31 Dec 2015
31 Dec 2016
1,004,925
82,651
(70,831)
(9,317)
2,503
321,987
242,942
(238,604)
(4,338)
-
119,990
89,378
(83,099)
-
6,279
705,426
281,529
(271,192)
(10,337)
-
704,802
400,642
-
(65,657)
334,985
1
2
Date of the Directors’ Report contained in the 2015 CIMIC Annual Report.
Date of this Directors’ Report.
6
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CIMIC Group Limited Annual Report 2016 | Directors’ Report
OPTIONS
As at the date of this Directors’ Report, there are 552,231 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, the details of which are set out below:
Number of participants at date of grant
Date of grant
Exercise price
Expiry date
Number of options
Original grant
On issue 10 Feb 20161
Exercised since 10 Feb 2016
Vested since 10 Feb 2016
Lapsed since 10 Feb 2016
On issue 8 Feb 20172
1
2
Date of the Directors’ Report contained in the 2015 CIMIC Annual Report.
Date of this Directors’ Report.
There was no LTI grant in the 2016 Financial Year.
2015 Options
36
29 October 2015
$27.53
29 October 2020
735,636
735,636
-
-
183,405
552,231
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. During the 2016 Financial Year 337,683 ordinary shares were acquired on-market at an
average price of $30.60 per share. 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 36: 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 2016 Financial Year was a director or partner of the Group’s external auditor at
a time the Group’s external auditor conducted the audit.
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.
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CIMIC Group Limited Annual Report 2016 | Directors’ Report
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 an Operating Company.
•
INSURANCE FOR GROUP OFFICERS
During and since the end of the 2016 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 CIMIC 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 2016 Financial Year to
entities within the Group are set out in the table below.
The Board has considered the position and, in accordance with the advice received from the Audit and Risk Committee, is satisfied that
the provision of non-audit services during the 2016 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 2016 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.
•
•
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 2016 Financial Year were as follows:
Non-audit services
Other assurance services
Taxation and other services
Total
Amount paid/payable $’000
-
135
135
ROUNDING OF AMOUNTS
As the Company is a company of the kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191
dated 24 March 2016, the Directors have chosen to round amounts in this Directors’ Report and the accompanying Financial Report to
the nearest hundred thousand dollars, unless otherwise indicated.
8
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CIMIC Group Limited Annual Report 2016 | Directors’ Report 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 year ended 31 December 2016, 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 J Leotta Partner Chartered Accountants Sydney, 8 February 2017 9
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CIMIC Group Limited Annual Report 2016 | Directors’ Report 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 year ended 31 December 2016, 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 J Leotta Partner Chartered Accountants Sydney, 8 February 2017 9 CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
Operating and Financial Review
PRINCIPAL ACTIVITIES, OPERATIONS AND STRUCTURE
CIMIC Group (ASX: CIM) is one of the world’s leading international contractors and the world’s largest contract miner. CIMIC Group 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, mineral processing, engineering, concessions, and operation and maintenance
CIMIC GROUP provides leadership, strategy, corporate
governance and financial strength to its Operating Companies:
CPB Contractors, Leighton Asia, Thiess, Sedgman, UGL,
Pacific Partnerships and EIC Activities.
CONSTRUCTION
MINING
MINERAL PROCESSING
The company combines
the construction expertise
and track record formerly
delivered by Leighton
Contractors and Thiess,
two of Australasia’s most
successful contractors.
CPB Contractors also
includes the people and
projects of LEIGHTON ASIA,
the contractor behind some
of Asia’s most prestigious
projects.
CPB CONTRACTORS
is a leading international
construction contractor,
with operations spanning
Australia, New Zealand, Asia,
India and Papua New Guinea.
CPB Contractors delivers
projects spanning all key
sectors of the construction
industry, including roads, rail,
tunnelling, defence, building
and resources infrastructure.
The company works with
clients across a range of
delivery models, including
design and construct,
construct only, construction
management, in Alliances
and Joint Ventures, and
Public Private Partnerships
in conjunction with CIMIC
Group’s Pacific Partnerships.
SEDGMAN is a market
leader in the design,
construction and operation
of mineral processing plants
and associated minesite
infrastructure. With a track
record in successful project
and operation delivery,
Sedgman is focused on
realising value for clients.
From pre-feasibility and
commissioning through to
operations, Sedgman has
completed more than 170
processing and handling
projects globally. Sedgman
has a balanced commodity
portfolio across base and
precious metals, industrial
minerals, coal and iron ore as
well as associated minesite
infrastructure.
THIESS is the world’s largest
mining services provider.
The team offers the widest
range of in-house surface
and underground mining
capabilities across Australia,
Botswana, Canada, Chile,
Indonesia and Mongolia.
Thiess’ expertise spans most
of the world’s commodities
including metallurgical
and thermal coal, copper,
diamonds, gold, iron ore,
lignite, nickel and oil sands.
From fully-resourced, end-
to-end solutions, to targeted
services, to supporting
clients’ in-house teams,
the focus is on flexibility.
The team understands the
lifecycle of a mine and how
to manage market changes
and evolving requirements,
tailoring Thiess’ services to
optimise the mining value
chain unique to each mine.
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CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
services to the infrastructure, resources and property markets. It operates in more than 20 countries throughout the Asia Pacific,
the Middle East, North and South America and Sub-Saharan Africa and, as at 31 December 2016, employed approximately
50,500 people directly and through its investments.
CIMIC Group also owns investments in companies including
Devine, Ventia, HLG Contracting and Macmahon.
SERVICES
PUBLIC PRIVATE
PARTNERSHIPS
ENGINEERING
OTHER
INVESTMENTS
UGL is a diversified services
company delivering critical
assets and essential services
that sustain and enhance the
environment in which
we live.
PACIFIC PARTNERSHIPS is
CIMIC Group’s project finance
arm. It is a leading developer
of Public Private Partnerships
and Build Own Operate
Transfer projects.
Leveraging the financial
strength and diverse
capabilities of CIMIC Group, it
offers clients seamless value
for money solutions for the
finance, design, construction,
operations and maintenance
of key infrastructure.
CIMIC has been responsible
for the delivery of more than
20 PPPs with a market value
of around $32 billion.
UGL is a leading provider
of end-to-end engineering,
construction and
maintenance services and
is active across rail and
transport, communications
and technology systems,
oil and gas, power and
resources, water and defence
markets. UGL partners with
some of the world’s largest
blue-chip companies and
government agencies,
private enterprise and public
institutions.
UGL’s skilled workforce,
expertise in project
management and end-to-end
engineering, is backed by a
continuous focus on safety,
innovation and improvement.
EIC ACTIVITIES is CIMIC
Group’s engineering and
technical services business.
Its engineering and risk
mitigation expertise provides
a competitive advantage
for winning and delivering
profitable projects that also
generate value for clients.
EIC Activities leads
innovation. Partnering
with tender and project
teams across the transport,
industrial and resources
infrastructure and building
sectors, it increases self
performance and delivers
competitive solutions that
achieve significant safety,
cost, time and productivity
gains.
59.11%
46.96%
45.0%
20.54%
CIMIC 2016 ANNUAL REPORT A4 FA.indd 11
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Percentage ownership
as at 31 December 2016
11
CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
FINANCIAL HIGHLIGHTS
NPAT PERFORMANCE AND MARGINS
•
•
•
•
•
NPAT of $580.3 million up 11.5% on FY15, at the top end of the guidance range of $520 million to $580 million.
NPAT margin 5.3%, up 140 basis points on FY15.
$9.0 million net negative impact of one-offs on NPAT1.
EBIT and PBT margins of 7.0% and 6.8% respectively, increases of 70 and 130 basis points on FY15.
EPS (basic) was 176.6 cents, up 14.9% on FY15 (compared to an 11.5% increase in NPAT), as well as being boosted by the benefits of
the share buy-back.
CASH FLOWS
•
•
•
Strong cash flows from operating activities of $1.2 billion in FY16, an EBITDA conversion rate of 110%.
Net cash from operating activities up 4.3% in 4Q16 year on year to $556.6 million.
Free operating cash flow generation of $846.8 million in FY16.
FINANCIAL POSITION
•
Net cash of $409.3 million after net investments of $1.0 billion, including the share buy-back program, the acquisition of shares in
UGL, Sedgman and Devine, and the divestment of Nextgen. Net cash would have been approximately $1.4 billion, if adjusted for
these items.
Net finance costs reduced by $85.9 million in FY16 to $18.0 million.
Net contract debtors of $1.4 billion, down 7.6% on FY15. The $675.0 million contract debtors portfolio provision remains unchanged.
REVENUE
•
•
Revenue of $10.9 billion in FY16.
A positive revenue trend, up 17.8% (10.3% excluding UGL) in 4Q16 versus 3Q16.
WORK IN HAND
•
Solid work in hand of $34.0 billion, boosted by the acquisition of UGL (UGL contributed $4.9 billion to work in hand, of which over
75% is recurring).
Robust project pipeline, around $100 billion of tenders, relevant to CIMIC, have been identified for 2017 (of which 69% is in Australia
and New Zealand), $55 billion is in construction, $25 billion is in mining and $20 billion is in services.
In the order of $250 billion of projects, relevant to CIMIC, have been identified as coming to the market in 2018 and beyond (of
which 60% Australia and New Zealand), $165 billion is in construction, $45 billion is in mining and $40 billion is in services.
STRATEGIC ACQUISITIONS
•
•
Strengthened balance sheet supports investments in strategic growth opportunities such as UGL and Sedgman.
The strategic acquisition of leading diversified services company UGL, expanding CIMIC’s capabilities and providing an additional
platform for growth.
SHAREHOLDER RETURNS
•
•
Share price of $34.94, up 43.8% in FY16, compared to an increase in the ASX 200 index of 7.0%.
The Board has determined a 100% franked final dividend of 62 cents per share, to be paid on 4 July 2017. The total dividend payable
of $201.0 million is an estimate only, based on the number of shares on issue as at the date of the Financial Report. Due to the
further share buy-back announced by CIMIC on 12 December 2016, which commenced on 29 December 2016, 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 the Financial Report.
Combining the share price appreciation and dividends in respect of the 2016 Financial Year, CIMIC delivered a total shareholder
return of 48%.
•
•
•
•
•
GUIDANCE
•
2017 NPAT in the range of $640 million to $700 million, subject to market conditions, an increase of 10% to 21% on FY16.
1 $9.0m net negative impact of one-offs post tax, includes Nextgen of $52.5 million; Sedgman gain $32.6 million; onerous leases (incl. 177
Pacific Highway) $(46.8) million; Devine and other $(47.3) million.
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FINANCIAL HIGHLIGHTS (CONTINUED)
Financial performance 2
$m
Group revenue3
Revenue – joint ventures and associates
Revenue 4
EBIT
EBIT margin5
Profit before tax
PBT margin5
NPAT
NPAT margin5
EPS (basic)
Financial position6
$m
Net cash/(debt)
Operating leases
Equity
Gearing7
Net cash/(debt) (including operating leases)
2016
2015
chg. $
chg. %
13,534.5
(2,680.9)
10,853.6
758.4
7.0%
740.4
6.8%
580.3
5.3%
176.6c
2016
409.3
(466.9)
(57.6)
3,312.4
1.7%
16,128.8
(2,848.0)
13,280.8
838.9
6.3%
735.0
5.5%
520.4
3.9%
153.7c
2015
1,111.5
(583.4)
528.1
4,115.3
(14.7)%
(2,594.3)
167.1
(2,427.2)
(80.5)
70bp
5.4
130bp
59.9
140bp
22.9c
(16.1)%
(5.9)%
(18.3)%
(9.6)%
0.7%
11.5%
14.9%
(702.2)
116.5
(585.7)
(802.9)
-
(63.2)%
(20.0)%
(110.9)%
(19.5)%
-
December
December
chg. $
chg. %
Net contract debtors 8
1,384.6
1,499.2
(114.6)
(7.6)%
Cash flows from operating activities
2016
2015
chg. $
chg. %
$m
Cash flows from operating activities9
Interest, finance costs, taxes and dividends received
Net cash from operating activities10
Gross capital expenditure11
Free operating cash flow 12
Work in hand 13
$m
Opening work in hand
New work14
Acquisition work in hand15 (UGL)
Executed work
Total work in hand
1,201.4
(74.4)
1,127.0
(280.2)
846.8
1,919.6
(469.4)
1,450.2
(266.3)
1,183.9
2016
29,004.4
13,433.1
5,109.0
(13,534.5)
34,012.0
2015
31,001.8
14,131.4
-
(16,128.8)
29,004.4
(718.2)
395.0
(323.2)
(13.9)
(337.1)
(1,997.4)
(698.3)
5,109.0
2,594.3
5,007.6
(37.4)%
(84.1)%
(22.3)%
5.2%
(28.5)%
(6.4)%
(4.9)%
-
(16.1)%
17.3%
December
December
chg. $
chg. %
2 UGL contributed revenue and net profit after tax of $204.2 million and $5.3 million respectively, relating to the 24 November 2016 to
31 December 2016 period that CIMIC held a greater than 50% share of UGL.
3 Group revenue includes revenue from joint ventures and associates of $2,680.9 million (FY15: $2,848.0 million) and excludes interest
income of $73.5 million (FY15: $89.9 million) which has also been reclassified to net finance costs in the 2015 comparable period.
4 Revenue excludes revenue from joint ventures and associates of $2,680.9 million (FY15: $2,848.0 million).
5 Margin is calculated on revenue as defined.
6 Includes UGL balance sheet position as at 31 December 2016.
7 Gearing is expressed as the ratio of net debt and operating leases to net debt, operating leases and shareholders’ equity.
8 Net contract debtors represents the net of amounts due from customers and amounts due to customers. (Refer to Financial Report,
‘Note 8: Trade and other receivables’ – ‘Additional information on contract debtors’.)
9 Cash flows from operating activities is defined as the cash inflow from operating activities before interest, finance costs, taxes and
dividends received.
dividends received.
10 Net cash from operating activities is defined as the cash inflow from operating activities after interest, finance costs, taxes and
11 Gross capital expenditure is payments for property, plant and equipment.
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.
14 New work includes new contracts and contract extensions and variations including the impact of foreign exchange rate movements.
15 Includes UGL’s work in hand at acquisition date, 24 November 2016.
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CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
FINANCIAL HIGHLIGHTS (CONTINUED)
Financial performance 2
$m
Group revenue3
Revenue – joint ventures and associates
Revenue 4
EBIT
EBIT margin5
Profit before tax
PBT margin5
NPAT
NPAT margin5
EPS (basic)
Financial position6
$m
Net cash/(debt)
Operating leases
Net cash/(debt) (including operating leases)
Equity
Gearing7
2016
2015
chg. $
chg. %
13,534.5
(2,680.9)
10,853.6
758.4
7.0%
740.4
6.8%
580.3
5.3%
176.6c
December
2016
409.3
(466.9)
(57.6)
3,312.4
1.7%
16,128.8
(2,848.0)
13,280.8
838.9
6.3%
735.0
5.5%
520.4
3.9%
153.7c
December
2015
1,111.5
(583.4)
528.1
4,115.3
(14.7)%
(2,594.3)
167.1
(2,427.2)
(80.5)
70bp
5.4
130bp
59.9
140bp
22.9c
(16.1)%
(5.9)%
(18.3)%
(9.6)%
0.7%
11.5%
14.9%
chg. $
chg. %
(702.2)
116.5
(585.7)
(802.9)
-
(63.2)%
(20.0)%
(110.9)%
(19.5)%
-
Net contract debtors 8
1,384.6
1,499.2
(114.6)
(7.6)%
Cash flows from operating activities
$m
Cash flows from operating activities9
Interest, finance costs, taxes and dividends received
Net cash from operating activities10
Gross capital expenditure11
Free operating cash flow 12
Work in hand 13
$m
Opening work in hand
New work14
Acquisition work in hand15 (UGL)
Executed work
Total work in hand
2016
2015
chg. $
chg. %
1,201.4
(74.4)
1,127.0
(280.2)
846.8
December
2016
29,004.4
13,433.1
5,109.0
(13,534.5)
34,012.0
1,919.6
(469.4)
1,450.2
(266.3)
1,183.9
December
2015
31,001.8
14,131.4
-
(16,128.8)
29,004.4
(718.2)
395.0
(323.2)
(13.9)
(337.1)
(37.4)%
(84.1)%
(22.3)%
5.2%
(28.5)%
chg. $
chg. %
(1,997.4)
(698.3)
5,109.0
2,594.3
5,007.6
(6.4)%
(4.9)%
-
(16.1)%
17.3%
2 UGL contributed revenue and net profit after tax of $204.2 million and $5.3 million respectively, relating to the 24 November 2016 to
31 December 2016 period that CIMIC held a greater than 50% share of UGL.
3 Group revenue includes revenue from joint ventures and associates of $2,680.9 million (FY15: $2,848.0 million) and excludes interest
income of $73.5 million (FY15: $89.9 million) which has also been reclassified to net finance costs in the 2015 comparable period.
4 Revenue excludes revenue from joint ventures and associates of $2,680.9 million (FY15: $2,848.0 million).
5 Margin is calculated on revenue as defined.
6 Includes UGL balance sheet position as at 31 December 2016.
7 Gearing is expressed as the ratio of net debt and operating leases to net debt, operating leases and shareholders’ equity.
8 Net contract debtors represents the net of amounts due from customers and amounts due to customers. (Refer to Financial Report,
‘Note 8: Trade and other receivables’ – ‘Additional information on contract debtors’.)
9 Cash flows from operating activities is defined as the cash inflow from operating activities before interest, finance costs, taxes and
dividends received.
10 Net cash from operating activities is defined as the cash inflow from operating activities after interest, finance costs, taxes and
dividends received.
11 Gross capital expenditure is payments for property, plant and equipment.
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.
14 New work includes new contracts and contract extensions and variations including the impact of foreign exchange rate movements.
15 Includes UGL’s work in hand at acquisition date, 24 November 2016.
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CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
STRATEGY
RISK MANAGEMENT
OPERATING MODEL
Since 2014, CIMIC’s operating model has been focused on the delivery of construction, mining and mineral processing, PPPs, and
engineering projects through dedicated activity-focused businesses. In FY16 CIMIC consolidated its strategy, following the reorganisation
of its businesses in the prior years around its core activities, and existing and strategic markets. This has assisted the Group to deliver an
improved operating performance.
CIMIC further diversified its existing activities, during FY16, mining new materials markets (e.g. mineral sands) and new geographies (e.g.
Canada), as well as through the strategic acquisitions of UGL and Sedgman. This was achieved by leveraging the Group’s financial
strength, focusing on cash generation and an improved risk profile.
The acquisition of UGL complements and expands CIMIC’s services capabilities and provides a platform to develop and grow our presence
in this strategic sector. Strong growth is expected from services opportunities particularly in road and rail infrastructure, oil and gas,
defence, water and renewable energy. CIMIC is already working alongside UGL in delivering the Melbourne Water Nutrient Removal
Plant, and the Sydney Metro Northwest Operations, Trains and Systems Public Private Partnership, which is a significant part of
Australia’s largest transport infrastructure project.
The Group’s mission is to generate sustainable economic returns for shareholders by delivering projects for our clients while providing
safe, rewarding and fulfilling careers for our people. CIMIC is in an exceptional position to capitalise on growth opportunities and pursue
selective acquisitions to support long-term sustainable growth, both domestically and internationally. The strategic acquisitions during
FY16, and the unconditional takeover offer for Macmahon in FY17, reflect this growth-oriented strategy.
The Group’s objectives are to:
•
continue to strengthen existing capabilities and win a fair share of work in construction, mining and mineral processing, services and
PPPs, by building on the Group’s strong competitive position;
develop and expand the Group’s services business by benefiting from complementary activities and securing opportunities in market
growth areas in Australia and select new geographies;
further expand in the PPP sector, building on the robust pipeline of opportunities in the Australia Pacific region;
achieve growth by diversifying according to commodity and activity in select markets and geographies, e.g. by further exporting
mining skills into North and South America;
expand existing capabilities into adjacent markets and services;
continue to pursue operational excellence and optimise operations to achieve sustainable profits and improve sustainability;
further develop 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; and
continue to foster a disciplined approach to capital allocation, e.g. the acquisitions of UGL and Sedgman, the share buy-back and the
divestment of Nextgen.
•
•
•
•
•
•
•
The Principles of Integrity, Accountability, Innovation and Delivery, underpinned by Safety, guide all of the Group’s activities.
ACQUISITIONS, DIVESTMENTS AND GROWTH
On 23 February 2016, CIMIC increased its ownership interest in Sedgman, a resources engineering entity formerly listed on ASX, to 51%
and thereby gained control of Sedgman. The acquisition was made through an unconditional off-market takeover offer. CIMIC
subsequently increased its ownership interest in Sedgman to greater than 90% and exercised its right to compulsorily acquire the
remaining shares and delist the Company, which was completed on 13 April 2016.
On 24 November 2016, CIMIC increased its ownership interest in diversified services company UGL, an entity formerly listed on ASX, to
over 50% and thereby gained control of UGL. The acquisition was made through an unconditional off-market takeover offer. CIMIC
subsequently increased its ownership interest in UGL to greater than 90% and exercised its right to compulsorily acquire the remaining
shares and delist the Company, which was completed on 20 January 2017. CIMIC is currently incorporating UGL into the Group’s stable.
On 5 December 2016, CIMIC completed the divestment of its interest in Nextgen, a network and data centre telecommunications
company. CIMIC sold its 29% holding to Ontario Teachers’ Pension Plan resulting in a profit before tax gain on sale of $70.1 million.
CIMIC’s strong balance sheet enables the Group to continue to evaluate acquisition or investment options that match our capabilities as
opportunities arise.
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15
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
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
the Group.
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
The Group is committed to the health, safety and security of our people and the
or event may put our people and the
communities in which we work. Safety policies and standards apply across the Group.
community at risk.
Compliance is regularly reviewed. The Group seeks continual improvement in safety
performance. Governance of safety is overseen by the Board and the Ethics, Compliance
The Group often works within, or adjacent to, sensitive environments.
and Sustainability Committee.
An environmental incident or
The Group is committed to the highest standard of environmental performance. Operating
unplanned event may occur that
Companies’ environmental policies and procedures are aligned with the Group Policy and
adversely impacts the environment or
Standards. Should an incident occur, emergency response plans will be enacted. The Ethics,
the communities in which we work.
Compliance and Sustainability Committee oversees environmental performance.
Work delivery is subject to various inherent uncertainties.
Work delivery challenges may manifest
Significant resources are devoted to the avoidance, management and resolution of work
in actual costs increasing from our
delivery challenges. Operating Companies provide project teams with guidance and
earlier estimates.
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 management, commensurate with the scale, complexity
External factors may affect the Group’s markets and growth plans.
and status of the project.
Changes in economic, political or
The Group maintains a diverse portfolio of projects and investments across a range of
societal trends, or unforeseen external
markets and geographies. Regular and rigorous reviews of the Group’s current and
events and actions, may affect business
potential geographies, industries, activities and competitors are undertaken. Oversight of
development and project delivery.
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.
Reduction in demand for global
The Group maintains a project, contract and investment portfolio that is diversified by
commodities and/or price may cause
geography, market, activity and client to mitigate the impact of emerging trends and
resource clients to curtail or cease
market volatility.
capital investment programmes, or
adjust operations, thereby impacting
The Group continually seeks opportunities to improve its operations and thereby the value
existing and future contracts.
proposition it delivers to clients.
The Group’s reputation is critical to securing future work and attracting and retaining quality personnel, subcontractors and suppliers.
Issues impacting brand and reputation
The Group is committed to the highest standard of ethical conduct, and statutory and
may affect the Group’s ability to secure
regulatory compliance. This is supported by a comprehensive range of Group level policies
future work opportunities, investment,
and standards, including our Code of Conduct. CIMIC promotes clear governance through
suppliers or joint venture partners.
the empowerment of individuals with delegated authority, appropriate segregation of
The Group targets work that meets a defined risk appetite and appropriately balances risk and reward.
duties, and clear accountability and oversight for risks.
Work procurement challenges may
Application of the Group work procurement standards and approval process maximises the
impact our ability to secure high-quality
likelihood of securing quality work with commensurate returns for the risks taken.
projects and contracts.
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.
CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
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, safety 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 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.
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 continually seeks opportunities to improve its operations and thereby the value
proposition it delivers to clients.
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.
CIMIC 2016 ANNUAL REPORT A4 FA.indd 15
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CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
SHAREHOLDER RETURNS
Shareholder returns
Closing share price
Market capitalisation ($m)
Final dividend per share
Interim dividend per share
Total dividends per share
EPS (basic)
Payout ratio for ordinary dividends (2016 estimated at the time the dividend is paid)
2016
$34.94
$11,329.4
62c
48c
110c
176.6c
61.5%
2015
$24.30
$8,225.6
50c
46c
96c
153.7c
61.6%
PERFORMANCE OF CIMIC SHARES
CIMIC’s share price performed strongly during the year and closed 2016 at $34.94 (representing a market capitalisation of $11.3 billion as
at 31 December 2016), an increase of 43.8% or $10.64 per share. By comparison the ASX 200 index increased 7.0% to 5,665.8 points
during the same period and the All Ordinaries index increased 7.0% to 5,719.1 points.
Indexed performance of CIMIC shares
70%
60%
50%
40%
30%
20%
10%
0%
-10%
Jan-16
Feb-16 Mar-16
Apr-16 May-16
Jun-16
Jul-16
Aug-16
Sep-16 Oct-16 Nov-16 Dec-16
CIM-AU close
ASX 200 index
TOTAL SHAREHOLDER RETURN
Combining the share price appreciation and dividends in respect of the 2016 Financial Year, CIMIC delivered a total shareholder return of
48% in 2016.
DIVIDENDS
The Group seeks to reward shareholders by paying dividends over time in line with profits. In the year under review, CIMIC delivered on
this approach. Ordinary dividends for the year totalled 110 cents per share and comprised:
•
•
an interim dividend of 48 cents per share, franked at 100%, paid on 5 October 2016; and
a final dividend of 62 cents per share, franked at 100%, to be paid on 4 July 2017.
SHARE BUY-BACK PROGRAM
On 28 December 2016, CIMIC concluded its on-market share buy-back of up to 10% of its fully paid ordinary shares over 12 months.
During the buy-back, CIMIC purchased and cancelled 14,249,466 shares (equivalent to 4.2% of the capital stock at the beginning of the
share buy-back program) an average price of $29.89 per share.
On 12 December 2016, CIMIC announced a further on-market share buy-back of up to 10% of its fully paid ordinary shares for a period of
12 months commencing on 29 December 2016. The initiative continues to reflect CIMIC’s strong balance sheet position, strong cash flow
generation and a disciplined approach to capital management. The further 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 CIMIC’s share price and market
conditions.
EPS (basic) was 176.6 cents, an increase of 14.9% on FY15 (compared to an 11.5% increase in NPAT), as well as being boosted by the
benefits of the share buy-back.
SIGNIFICANT CHANGES
SIGNIFICANT CHANGES DURING FY16
•
Since 2015, CPB Contractors together with its consortium partners, Saipem SA and Saipem Portugal Comércio Maritimo LDA,
have been in negotiations with Chevron Australia Pty Ltd (Chevron) in relation to collection of contract debtors from the Gorgon LNG
Jetty and Marine Structures Project (Gorgon Contract). On 9 February 2016 the Consortium formally, issued a Notice of Dispute to
Chevron in connection with the Gorgon Contract. Following a period of prescribed negotiation, the parties have entered a private
arbitration as prescribed by the Gorgon Contract. The 3 arbitrators have been appointed with the Chairman appointed
during December 2016. The First Procedural Conference is currently envisaged for the first quarter of 2017, together with a
potential Barrow Island site visit for the Arbitrators soon thereafter. The procedural timetable for the arbitration should be
determined at the First Procedural Conference. Subject to the relevant timetables, arbitrators availability and completion of the
relevant procedural steps, the hearings should commence in approximately early 2019 with an award thereafter. The above process
is following normal arbitration procedure.
On 20 August 2016, in order to pursue further its entitlement under the contract, CIMIC also commenced proceedings in the United
States against Chevron Corporation Inc and separately against KBR Inc. The commencement of the proceedings has no effect on the
arbitration process under the contract process or CIMIC’s entitlement to the amounts under negotiation/arbitration. In the United
States, each of the matters as against Chevron Corporation and KBR was referred to the Federal Court and is ongoing.
On 13 April 2016, CIMIC completed its compulsory acquisition of Sedgman, following an off-market takeover offer announced on
13 January 2016.
10 October 2016.
Subsidiary Leighton Contractors (Asia) Limited agreed a settlement with its client Wynn Resorts in relation to the Wynn Palace
Macau project, which opened on 22 August 2016.
On 20 January 2017, CIMIC completed its compulsory acquisition of UGL, following an off-market takeover offer announced on
Changes to management and the CIMIC Board including the appointment of Mr Valderas as CEO on 18 October 2016 and Managing
Director on 27 October 2016, with Mr Fernández Verdes continuing as Executive Chairman.
On 1 December 2016, CIMIC annouced HLG Contracting’s new shareholder structure. CIMIC’s shareholding in HLG Contracting
remained unchanged at 45%. CIMIC also has a call option to purchase the remaining 55% of shares in HLG Contracting.
On 5 December 2016, CIMIC completed the divestment of its interest in Nextgen. CIMIC sold its 29% holding to Ontario Teachers’
Pension Plan resulting in a profit before tax gain on sale of $70.1 million.
On 12 December 2016, CIMIC announced a further on-market share buy-back of up to 10% of its fully paid ordinary shares over a
12 month period starting on 29 December 2016. The previous share buy-back ended on 28 December 2016.
On 14 December 2016, Standard & Poor’s confirmed its current investment grade rating for CIMIC of ‘BBB-/A-3’ with a stable
outlook, and, on 10 October 2016, Moody’s maintained an investment grade rating for CIMIC of ‘Baa3’ with a stable outlook.
SIGNIFICANT CHANGES SINCE BALANCE DATE
On 24 January 2017, CIMIC announced an offer to acquire the remaining shares in Macmahon that it does not already own, at a price
of $0.145 per share, made through an unconditional off-market takeover offer.
On 25 January 2017, CIMIC, through the UGL-CH2M JV-GE Consortium, which includes UGL and its joint venture partner CH2M,
terminated its contract with JKC Australia LNG Pty Ltd for the design, construction and commissioning of the Ichthys Combined Cycle
Power Plant. The termination is adequately covered by provisions, and has not had any material impact on FY17 guidance.
•
•
•
•
•
•
•
•
•
•
SHAREHOLDERS
The largest shareholder in CIMIC is HOCHTIEF Australia Holdings Limited, a wholly owned subsidiary of HOCHTIEF AG, which owns 72.68%
of CIMIC as at 23 January 2017. HOCHTIEF AG is listed on the Frankfurt Stock Exchange. The largest shareholder in HOCHTIEF AG is
Spanish based company ACS, which held 71.72% of the shares in HOCHTIEF as at 31 December 2016.
16
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17
CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
SIGNIFICANT CHANGES
SIGNIFICANT CHANGES DURING FY16
•
Since 2015, CPB Contractors together with its consortium partners, Saipem SA and Saipem Portugal Comércio Maritimo LDA,
have been in negotiations with Chevron Australia Pty Ltd (Chevron) in relation to collection of contract debtors from the Gorgon LNG
Jetty and Marine Structures Project (Gorgon Contract). On 9 February 2016 the Consortium formally, issued a Notice of Dispute to
Chevron in connection with the Gorgon Contract. Following a period of prescribed negotiation, the parties have entered a private
arbitration as prescribed by the Gorgon Contract. The 3 arbitrators have been appointed with the Chairman appointed
during December 2016. The First Procedural Conference is currently envisaged for the first quarter of 2017, together with a
potential Barrow Island site visit for the Arbitrators soon thereafter. The procedural timetable for the arbitration should be
determined at the First Procedural Conference. Subject to the relevant timetables, arbitrators availability and completion of the
relevant procedural steps, the hearings should commence in approximately early 2019 with an award thereafter. The above process
is following normal arbitration procedure.
On 20 August 2016, in order to pursue further its entitlement under the contract, CIMIC also commenced proceedings in the United
States against Chevron Corporation Inc and separately against KBR Inc. The commencement of the proceedings has no effect on the
arbitration process under the contract process or CIMIC’s entitlement to the amounts under negotiation/arbitration. In the United
States, each of the matters as against Chevron Corporation and KBR was referred to the Federal Court and is ongoing.
On 13 April 2016, CIMIC completed its compulsory acquisition of Sedgman, following an off-market takeover offer announced on
13 January 2016.
Subsidiary Leighton Contractors (Asia) Limited agreed a settlement with its client Wynn Resorts in relation to the Wynn Palace
Macau project, which opened on 22 August 2016.
On 20 January 2017, CIMIC completed its compulsory acquisition of UGL, following an off-market takeover offer announced on
10 October 2016.
Changes to management and the CIMIC Board including the appointment of Mr Valderas as CEO on 18 October 2016 and Managing
Director on 27 October 2016, with Mr Fernández Verdes continuing as Executive Chairman.
On 1 December 2016, CIMIC annouced HLG Contracting’s new shareholder structure. CIMIC’s shareholding in HLG Contracting
remained unchanged at 45%. CIMIC also has a call option to purchase the remaining 55% of shares in HLG Contracting.
On 5 December 2016, CIMIC completed the divestment of its interest in Nextgen. CIMIC sold its 29% holding to Ontario Teachers’
Pension Plan resulting in a profit before tax gain on sale of $70.1 million.
On 12 December 2016, CIMIC announced a further on-market share buy-back of up to 10% of its fully paid ordinary shares over a
12 month period starting on 29 December 2016. The previous share buy-back ended on 28 December 2016.
On 14 December 2016, Standard & Poor’s confirmed its current investment grade rating for CIMIC of ‘BBB-/A-3’ with a stable
outlook, and, on 10 October 2016, Moody’s maintained an investment grade rating for CIMIC of ‘Baa3’ with a stable outlook.
•
•
•
•
•
•
•
•
•
SIGNIFICANT CHANGES SINCE BALANCE DATE
•
On 24 January 2017, CIMIC announced an offer to acquire the remaining shares in Macmahon that it does not already own, at a price
of $0.145 per share, made through an unconditional off-market takeover offer.
On 25 January 2017, CIMIC, through the UGL-CH2M JV-GE Consortium, which includes UGL and its joint venture partner CH2M,
terminated its contract with JKC Australia LNG Pty Ltd for the design, construction and commissioning of the Ichthys Combined Cycle
Power Plant. The termination is adequately covered by provisions, and has not had any material impact on FY17 guidance.
SHAREHOLDERS
The largest shareholder in CIMIC is HOCHTIEF Australia Holdings Limited, a wholly owned subsidiary of HOCHTIEF AG, which owns 72.68%
of CIMIC as at 23 January 2017. HOCHTIEF AG is listed on the Frankfurt Stock Exchange. The largest shareholder in HOCHTIEF AG is
Spanish based company ACS, which held 71.72% of the shares in HOCHTIEF as at 31 December 2016.
CIMIC 2016 ANNUAL REPORT A4 FA.indd 17
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CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
FINANCIAL PERFORMANCE
CIMIC’s financial performance continues to show the benefits of the transformation strategy. The Group’s activity-focused operating
model and attention to producing cash-backed, sustainable profits has delivered NPAT of $580.3 million, an increase of 11.5% on FY15.
FINANCIAL PERFORMANCE (CONTINUED)
MINING & MINERAL PROCESSING REVENUE
Mining & mineral processing revenue was $2.8 billion for FY16, a decrease of 3.4%, or $96.6 million, compared to FY15. During the second
half of the year, mining & mineral processing showed an improving trend in revenue. CIMIC maintains its strong position in the resources
Financial performance
$m
Group revenue
Revenue – joint ventures and associates
Revenue
Expenses
Share of profit/(loss) of joint ventures and associates
EBIT
EBIT margin
Net finance costs16
Profit before tax
PBT margin
Income tax
Profit for the year
Non-controlling interests
NPAT
NPAT margin
EPS (basic)
2016
2015
chg. $
chg. %
sector, and further diversified into new commodity and geographic markets during the period.
13,534.5
(2,680.9)
10,853.6
(10,051.2)
(44.0)
758.4
7.0%
(18.0)
740.4
6.8%
(188.0)
552.4
27.9
580.3
5.3%
176.6c
16,128.8
(2,848.0)
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%
153.7c
(2,594.3)
167.1
(2,427.2)
2,376.2
(29.5)
(80.5)
70bp
85.9
5.4
130bp
32.6
38.0
21.9
59.9
140bp
22.9c
(16.1)%
(5.9)%
(18.3)%
(19.1)%
203.4%
(9.6)%
(82.7)%
0.7%
(14.8)%
7.4%
365.0%
11.5%
14.9%
REVENUE
Revenue decreased by $2.4 billion, or 18.3%, to $10.9 billion in FY16. Revenue showed a positive growth trend throughout FY16, with
revenue increasing quarter on quarter since 2Q16. Work in hand, a forward indicator of revenue, also increased reflecting this trend.
Refer to section titled ‘New work and work in hand’ of this Operating and Financial Review.
Revenue by segment17
$m
Construction
Mining & mineral processing
Services
Commercial & residential
Corporate
Revenue
Revenue – joint ventures and associates
Group revenue
2016
2015
chg. $
chg. %
7,316.8
2,786.2
204.2
439.8
106.6
10,853.6
2,680.9
13,534.5
9,319.9
2,882.8
-
987.5
90.6
13,280.8
2,848.0
16,128.8
(2,003.1)
(96.6)
204.2
(547.7)
16.0
(2,427.2)
(167.1)
(2,594.3)
(21.5)%
(3.4)%
-
(55.5)%
17.7%
(18.3)%
(5.9)%
(16.1)%
Group revenue from the various market segments was split 64:36 between domestic and international markets, compared with
63:37 in FY15.
CONSTRUCTION REVENUE
Construction revenue was $7.3 billion for FY16, a decrease of 21.5%, or $2.0 billion, compared to FY15, reflecting the completion of a
number of large, primarily LNG-related infrastructure projects and the transition to the delivery of various large urban infrastructure
projects that are in preliminary stages.
The major mining & mineral processing projects by revenue included:
Lake Vermont, Mount Owen and Curragh North coal mines in Australia;
•
•
•
•
Solomon iron ore mine in Australia;
Prominent Hill copper and gold mine in Australia; and
Kaltim Prima coal mine in Indonesia.
SERVICES REVENUE
$204.2 million.
Services revenue from UGL, consolidated from 24 November 2016 (the period that CIMIC held an interest greater than 50%), was
COMMERCIAL & RESIDENTIAL REVENUE
Commercial & residential revenue was $439.8 million for FY16, a decrease of 55.5%, or $547.7 million, compared to FY15. The decline in
revenue is a result of the significant sales in FY15. This reflects CIMIC’s strategy to reduce the size and scope of its non-core business,
while continuing to maximise the value of its property investments.
CORPORATE REVENUE
Corporate revenue was $106.6 million for FY16, an increase of 17.7%, or $16.0 million, compared to FY15.
REVENUE – JOINT VENTURES AND ASSOCIATES
Revenue from joint ventures and associates was $2.7 billion for FY16, a decrease of 5.9%, or $167.1 million, compared to FY15.
Included in FY16 joint ventures and associates revenue is contributions from HLG Contracting and Ventia. Sedgman was an equity
accounted associate until CIMIC gained control on 23 February 2016.
EXPENSES
Expenses were $10.1 billion for FY16, a decrease of 19.1%, or $2.4 billion, compared to FY15. The decrease was in excess of the reduction
in revenue, and reflects the Group’s disciplined approach to cost management.
Depreciation and amortisation
Depreciation and amortisation was $337.4 million for FY16, a decrease of 38.0%, or $206.4 million, compared to FY15. FY15 included a
one-off impairment of $50.0 million due to the decline in the recoverable amount of the marine fleet that was idle, in the construction
segment.
EBIT
increase on FY15.
NET FINANCE COSTS
EBIT was $758.4 million for FY16, a decrease of 9.6%, or $80.5 million, compared to FY15. The EBIT margin was 7.0%, a 70 basis point
Net finance costs were $18.0 million for FY16, a decrease of 82.7%, or $85.9 million, compared to FY15. The decrease was due to the
Group’s improved financial structure, the buy-back of US$298.7 million of 10-Year Fixed-Rate Guaranteed Senior Notes in June 2015 that
resulted in a one-off expense in FY15, and significantly reduced interest costs over the remaining term of the Notes.
Facility fees, bonding and other costs
Finance cost detail
$m
Debt interest expenses
Total finance costs
Interest income
Net finance costs
2016
(67.1)
(24.4)
(91.5)
73.5
(18.0)
2015
chg. $
chg. %
(152.7)
(41.1)
(193.8)
89.9
(103.9)
85.6
16.7
102.3
(16.4)
85.9
(56.1)%
(40.6)%
(52.8)%
(18.2)%
(82.7)%
19
• Wynn Palace resort development in Macau.
16 Net finance costs includes interest income of $73.5 million (FY15: $89.9 million), and finance costs of $91.5 million
(FY15: $193.8 million).
17 Sedgman 2015 comparable figures have been reallocated from the corporate segment to an expanded mining & mineral processing
segment.
18
CIMIC 2016 ANNUAL REPORT A4 FA.indd 18
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rail and road activities in Australia, including Sydney Metro Northwest, WestConnex M4 and M5 in New South Wales, Moreton Bay
Rail Link in Queensland, the CityLink Tulla Widening and the Level Crossing Removal projects in Victoria;
social infrastructure projects including the Northern Beaches hospital in New South Wales;
LNG-related civil contracts in Western Australia, QGC Surat Basin project and APLNG gas gathering project in Queensland;
infrastructure activities in Hong Kong including the Passenger Clearance Building for the Hong Kong Boundary Crossing Facilities, the
West Kowloon Terminus Station, and the Hung Hom Station and Stabling Sidings; and
During the period, the major projects by revenue included:
•
•
•
•
CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
FINANCIAL PERFORMANCE (CONTINUED)
MINING & MINERAL PROCESSING REVENUE
Mining & mineral processing revenue was $2.8 billion for FY16, a decrease of 3.4%, or $96.6 million, compared to FY15. During the second
half of the year, mining & mineral processing showed an improving trend in revenue. CIMIC maintains its strong position in the resources
sector, and further diversified into new commodity and geographic markets during the period.
The major mining & mineral processing projects by revenue included:
•
•
•
•
Lake Vermont, Mount Owen and Curragh North coal mines in Australia;
Solomon iron ore mine in Australia;
Prominent Hill copper and gold mine in Australia; and
Kaltim Prima coal mine in Indonesia.
SERVICES REVENUE
Services revenue from UGL, consolidated from 24 November 2016 (the period that CIMIC held an interest greater than 50%), was
$204.2 million.
COMMERCIAL & RESIDENTIAL REVENUE
Commercial & residential revenue was $439.8 million for FY16, a decrease of 55.5%, or $547.7 million, compared to FY15. The decline in
revenue is a result of the significant sales in FY15. This reflects CIMIC’s strategy to reduce the size and scope of its non-core business,
while continuing to maximise the value of its property investments.
CORPORATE REVENUE
Corporate revenue was $106.6 million for FY16, an increase of 17.7%, or $16.0 million, compared to FY15.
REVENUE – JOINT VENTURES AND ASSOCIATES
Revenue from joint ventures and associates was $2.7 billion for FY16, a decrease of 5.9%, or $167.1 million, compared to FY15.
Included in FY16 joint ventures and associates revenue is contributions from HLG Contracting and Ventia. Sedgman was an equity
accounted associate until CIMIC gained control on 23 February 2016.
EXPENSES
Expenses were $10.1 billion for FY16, a decrease of 19.1%, or $2.4 billion, compared to FY15. The decrease was in excess of the reduction
in revenue, and reflects the Group’s disciplined approach to cost management.
Depreciation and amortisation
Depreciation and amortisation was $337.4 million for FY16, a decrease of 38.0%, or $206.4 million, compared to FY15. FY15 included a
one-off impairment of $50.0 million due to the decline in the recoverable amount of the marine fleet that was idle, in the construction
segment.
EBIT
EBIT was $758.4 million for FY16, a decrease of 9.6%, or $80.5 million, compared to FY15. The EBIT margin was 7.0%, a 70 basis point
increase on FY15.
NET FINANCE COSTS
Net finance costs were $18.0 million for FY16, a decrease of 82.7%, or $85.9 million, compared to FY15. The decrease was due to the
Group’s improved financial structure, the buy-back of US$298.7 million of 10-Year Fixed-Rate Guaranteed Senior Notes in June 2015 that
resulted in a one-off expense in FY15, and significantly reduced interest costs over the remaining term of the Notes.
Finance cost detail
$m
Debt interest expenses
Facility fees, bonding and other costs
Total finance costs
Interest income
Net finance costs
2016
(67.1)
(24.4)
(91.5)
73.5
(18.0)
2015
chg. $
chg. %
(152.7)
(41.1)
(193.8)
89.9
(103.9)
85.6
16.7
102.3
(16.4)
85.9
(56.1)%
(40.6)%
(52.8)%
(18.2)%
(82.7)%
CIMIC 2016 ANNUAL REPORT A4 FA.indd 19
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CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
FINANCIAL PERFORMANCE (CONTINUED)
FINANCIAL POSITION
NET FINANCE COSTS (CONTINUED)
The average cost of debt was 5.5% during the period, impacted by the higher cost of fixed rate US bonds and finance leases.
Throughout FY16, CIMIC continued its working capital and operating cash flow focus which resulted in a strong balance sheet at
31 December 2016. The financial position at 31 December 2016 includes the consolidation of UGL, (refer to the Financial Report, ‘Note
29: Acquisitions, disposals of controlled entities and businesses’).
Average cost of debt calculation
$m
Debt interest expenses (a)
Gross debt18
Gross debt average (b)
Average cost of debt (-a/b)
2016
(67.1)
1,167.2
1,224.0
5.5%
PROFIT BEFORE TAX
PBT was $740.4 million for FY16, an increase of 0.7%, or $5.4 million, compared to FY15. PBT margin was 6.8%, a 130 basis point increase
on FY15.
Profit before tax by segment
$m
Construction
Mining & mineral processing
Services
HLG
Commercial & residential
Corporate
Profit before tax
2016
2015
chg. $
chg. %
595.5
275.6
8.6
29.4
(74.7)
(94.0)
740.4
649.2
232.3
-
17.9
70.5
(234.9)
735.0
(53.7)
43.3
8.6
11.5
(145.2)
140.9
5.4
(8.3)%
18.6%
-
64.2%
(206.0)%
(60.0)%
0.7%
Construction margins have again increased, through the continued transformation of our business culture, including an improved risk
management and bidding approach, with stricter criteria for the on-boarding of projects. Construction PBT was $595.5 million for FY16, a
decrease of 8.3% or $53.7 million, compared with the 21.5% reduction in revenue.
Mining & mineral processing increased its contribution with expanded margins as a result of CIMIC’s strategy to diversify by commodity
and geography, achieved in part through the acquisition of Sedgman and further expansion into North and South American markets.
Mining & mineral processing PBT was $275.6 million for FY16, an increase of 18.6%, or $43.3 million.
HLG PBT was $29.4 million for FY16, an increase of 64.2%, or $11.5 million.
Commercial & residential PBT was a $74.7 million loss for FY16, a decrease of $145.2 million. The decrease was in part a result of Devine
undertaking a strategic review of its business, as well as a much larger contribution from property development sales in FY15.
Corporate PBT was a $94.0 million loss for FY16, a decrease of 60.0%, or $140.9 million. Corporate PBT significantly improved due to
reduced finance costs, and an increased contribution from associates and joint ventures. One-off gains from the acquisition of Sedgman
and the divestment of Nextgen were partly offset by onerous leases (including the 177 Pacific Highway, North Sydney lease).
INCOME TAX
Income tax expense was $188.0 million for FY16, a decrease of 14.8%, or $32.6 million, compared to FY15.
The effective tax rate of 25.4% was largely impacted by refunds on overpayment of income taxes in prior years relating to the divestment
of the John Holland and Ventia businesses; a conservative approach was taken to estimating taxes due on these divestments. Also
impacting the effective tax rate are income tax differentials relating to profits and losses from the various jurisdictions in which the Group
operates.
NET PROFIT AFTER TAX
NPAT was $580.3 million for FY16, an increase of 11.5%, or $59.9 million, compared to FY15. The NPAT margin was 5.3%, a 140 basis
point increase on FY15.
Profit for the year (profit after tax and before minorities) was $552.4 million. Non-controlling interests were $27.9 million, attributable to
the share of the minority owners in Devine’s losses for the period.
EPS (basic) was 176.6 cents, an increase of 14.9% on FY15 (compared to an 11.5% increase on NPAT), as well as being boosted by the
benefits of the share buy-back.
18 Total interest bearing liabilities.
20
CIMIC 2016 ANNUAL REPORT A4 FA.indd 20
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Net cash/(debt) and gearing
$m
Cash and cash equivalents
Current interest bearing liabilities
Non-current interest bearing liabilities
Net cash/(debt)
Operating leases
Net cash /(debt) (including operating leases)
Inventories: consumables and development properties
Inventories: development properties
Investments accounted for using the equity method
Net contract debtors
Net contract debtors
Equity
Gearing
$m
Assets
$m
Current assets
Cash and cash equivalents
Trade and other receivables
Current tax assets
Assets held for sale
Total current assets
Non-current assets
Trade and other receivables
Other investments
Deferred tax assets
Property, plant and equipment
Intangibles
Total non-current assets
Total assets
Liabilities and equity
$m
Current liabilities
Trade and other payables
Current tax liabilities
Provisions
Interest bearing liabilities
Non-current liabilities
Trade and other payables
Provisions
Interest bearing liabilities
Total non-current liabilities
Total liabilities
Equity
December
December
chg. $
chg. %
December
December
chg. $
chg. %
2016
1,384.6
2015
1,499.2
(114.6)
(7.6)%
December
December
chg. $
chg. %
2016
2015
2016
1,576.5
(618.2)
(549.0)
409.3
(466.9)
(57.6)
3,312.4
1.7%
1,576.5
3,209.6
28.0
213.0
47.7
5,074.8
1,235.8
166.9
616.5
135.4
310.1
1,355.7
1,125.9
4,946.3
4,721.1
126.6
333.3
618.2
-
5,799.2
287.0
73.5
549.0
909.5
2015
2,167.8
(217.4)
(838.9)
1,111.5
(583.4)
528.1
4,115.3
(14.7)%
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
81.3
283.4
217.4
48.7
331.6
84.5
838.9
1,255.0
(591.3)
(400.8)
289.9
(702.2)
116.5
(585.7)
(802.9)
-
(27.3)%
184.4%
(34.6)%
(63.2)%
(20.0)%
(110.9)%
(19.5)%
-
(591.3)
550.0
1.4
(51.0)
(188.1)
(279.0)
346.6
(108.4)
(456.6)
9.7
190.6
42.9
598.5
623.3
344.3
45.3
49.9
400.8
(48.7)
(44.6)
(11.0)
(289.9)
(345.5)
(27.3)%
20.7%
5.3%
(19.3)%
(79.8)%
(5.2)%
39.0%
(39.4)%
(42.5)%
7.7%
159.5%
3.3%
113.5%
14.4%
3.6%
28.4%
55.7%
17.6%
184.4%
-
34.7%
(13.4)%
(13.0)%
(34.6)%
(27.5)%
10,021.1
9,676.8
December
December
chg. $
chg. %
2016
2015
3,675.7
1,045.4
6,708.7
5,561.5
1,147.2
20.6%
3,312.4
4,115.3
(802.9)
(19.5)%
21
Liabilities associated with assets held for sale
Total current liabilities
4,306.5
1,492.7
CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
FINANCIAL POSITION
Throughout FY16, CIMIC continued its working capital and operating cash flow focus which resulted in a strong balance sheet at
31 December 2016. The financial position at 31 December 2016 includes the consolidation of UGL, (refer to the Financial Report, ‘Note
29: Acquisitions, disposals of controlled entities and businesses’).
Net cash/(debt) and gearing
$m
Cash and cash equivalents
Current interest bearing liabilities
Non-current interest bearing liabilities
Net cash/(debt)
Operating leases
Net cash /(debt) (including operating leases)
Equity
Gearing
Net contract debtors
$m
Net contract debtors
Assets
$m
Current assets
Cash and cash equivalents
Trade and other receivables
Current tax assets
Inventories: consumables and development properties
Assets held for sale
Total current assets
Non-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
December
2016
1,576.5
(618.2)
(549.0)
409.3
(466.9)
(57.6)
December
2015
2,167.8
(217.4)
(838.9)
1,111.5
(583.4)
528.1
3,312.4
1.7%
4,115.3
(14.7)%
chg. $
chg. %
(591.3)
(400.8)
289.9
(702.2)
116.5
(585.7)
(802.9)
-
(27.3)%
184.4%
(34.6)%
(63.2)%
(20.0)%
(110.9)%
(19.5)%
-
December
2016
1,384.6
December
2015
1,499.2
chg. $
chg. %
(114.6)
(7.6)%
December
2016
December
2015
chg. $
chg. %
1,576.5
3,209.6
28.0
213.0
47.7
5,074.8
1,235.8
166.9
616.5
135.4
310.1
1,355.7
1,125.9
4,946.3
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
(591.3)
550.0
1.4
(51.0)
(188.1)
(279.0)
346.6
(108.4)
(456.6)
9.7
190.6
42.9
598.5
623.3
(27.3)%
20.7%
5.3%
(19.3)%
(79.8)%
(5.2)%
39.0%
(39.4)%
(42.5)%
7.7%
159.5%
3.3%
113.5%
14.4%
Total assets
10,021.1
9,676.8
344.3
3.6%
Liabilities and equity
$m
Current liabilities
Trade and other payables
Current tax liabilities
Provisions
Interest bearing liabilities
Liabilities associated with assets held for sale
Total current liabilities
Non-current liabilities
Trade and other payables
Provisions
Interest bearing liabilities
Total non-current liabilities
Total liabilities
Equity
December
2016
December
2015
chg. $
chg. %
4,721.1
126.6
333.3
618.2
-
5,799.2
287.0
73.5
549.0
909.5
3,675.7
81.3
283.4
217.4
48.7
4,306.5
331.6
84.5
838.9
1,255.0
1,045.4
45.3
49.9
400.8
(48.7)
1,492.7
(44.6)
(11.0)
(289.9)
(345.5)
28.4%
55.7%
17.6%
184.4%
-
34.7%
(13.4)%
(13.0)%
(34.6)%
(27.5)%
6,708.7
5,561.5
1,147.2
20.6%
3,312.4
4,115.3
(802.9)
(19.5)%
CIMIC 2016 ANNUAL REPORT A4 FA.indd 21
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CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
FINANCIAL POSITION (CONTINUED)
NET CASH / (DEBT) AND GEARING
Net cash was $409.3 million at 31 December 2016, a decrease of 63.2%, or $702.2 million, compared to 31 December 2015. Net cash at
31 December 2016 would have been approximately $1.4 billion if adjusted for the share buy-back, the net impact of the investments in
UGL, Sedgman and Devine, and the Nextgen divestment.19
At 31 December 2016, the Group’s gearing was 1.7% compared to below zero at 31 December 2015.
Interest bearing liabilities
Current and non-current interest bearing liabilities were $1,167.2 million at 31 December 2016, an increase of 10.5%, or $110.9 million,
compared to 31 December 2015. The increase is a result of consolidating UGL’s interest bearing liabilities, as well as foreign exchange
impacts on interest bearing liabilities. This has been offset by the repayment of $276.9 million of finance leases during the course of the
year.
Bonding
CIMIC had significant bonding and guarantee facilities available which are integral to the successful delivery of existing and future work in
hand. Bonds and guarantees outstanding at 31 December 2016 were $3,967.6 million. An additional $1,544.8 million was undrawn of
which $575.4 million was committed and $969.4 million was uncommitted.
Credit ratings
On 14 December 2016, Standard & Poor’s confirmed its current investment grade rating for CIMIC of ‘BBB-/A-3’ with a stable outlook. On
10 October 2016, Moody’s Investors Service maintained an investment grade rating for CIMIC of ‘Baa3’ with a stable outlook.
CURRENT ASSETS
Trade and other receivables
Trade and other receivables were $3,209.6 million at 31 December 2016, an increase of 20.7%, or $550.0 million, compared to
31 December 2015. The figure includes $2,607.9 million (31 December 2015: $2,145.0 million) of amounts due from customers (refer to
net contract debtors below). The remaining balance relates to sundry debtors, joint venture working capital and other receivables.
The Group’s net contract debtors was $1,384.6 million at 31 December 2016, a decrease of 7.6%, or $114.6 million, compared to
31 December 2015. CIMIC continued to deliver an improvement in the level of net contract debtors and to de-risk the balance sheet
during the period. The Group has achieved a decline since 31 December 2015 due to its focus on debtor reduction and cash collection
initiatives.
The Group’s $675.0 million contract debtors portfolio provision remains unchanged at 31 December 2016.
Current tax assets
Current tax assets were $28.0 million at 31 December 2016, an increase of 5.3%, or $1.4 million, compared to 31 December 2015.
Inventories: consumables and development properties
Inventories: consumables and development properties were $213.0 million at 31 December 2016, a decrease of 19.3%, or $51.0 million,
compared to 31 December 2015. The reduction is due to the sale of development property assets over the course of the year.
Assets held for sale
Assets held for sale were $47.7 million at 31 December 2016, a decrease of 79.8%, or $188.1 million, compared to 31 December 2015.
Assets held for sale at 31 December 2016 of $37.2 million relate to the Group’s marine fleet. The 31 December 2015 balance included
Arutmin Indonesia mining assets, which have been sold in FY16.
NON-CURRENT ASSETS
Trade and other receivables
Trade and other receivables were $1,235.8 million at 31 December 2016, an increase of 39.0%, or $346.6 million, compared to
31 December 2015. This figure includes $1,043.2 million (31 December 2015: $842.7 million) of non-current loan receivables and interest
receivable owed by HLG Contracting, (refer to the Financial Report, ‘Note 8: Trade and other receivables’).
Inventories: development properties
Inventories: development properties were $166.9 million at 31 December 2016, a decrease of 39.4%, or $108.4 million, compared to
31 December 2015.
19 Share buy-back program ($425.9 million); the net impact of the purchase of UGL of $701.4 million; the net impact of the purchase of
shares in Sedgman and Devine, less the cash acquired from the consolidation of Sedgman, of $76.9 million; and Nextgen proceeds of
$180.8 million.
22
CIMIC 2016 ANNUAL REPORT A4 FA.indd 22
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FINANCIAL POSITION (CONTINUED)
Investments accounted for using the equity method
Investments accounted for using the equity method were $616.5 million at 31 December 2016, a decrease of 42.5%, or $456.6 million,
compared to 31 December 2015. This decrease is partly due to Sedgman no longer being recognised as an associate, as well as the
divestment of Nextgen. The consolidated financial statements include the full consolidation of Sedgman since the Group gained control
Equity accounted investments include project related associates and joint ventures, such as the Transmission Gully PPP in New Zealand,
along with the Group’s holdings in HLG Contracting, Ventia and Macmahon. For HLG Contracting refer to the Financial Report, ‘Note 26:
Other investments were $135.4 million at 31 December 2016, an increase of 7.7%, or $9.7 million, compared to 31 December 2015.
Deferred tax assets were $310.1 million at 31 December 2016, an increase of $190.6 million, compared to 31 December 2015. This
includes deferred tax assets from the acquisition of UGL.
Property, plant and equipment
Property, plant and equipment was $1,355.7 million at 31 December 2016, an increase of 3.3%, or $42.9 million, compared to
31 December 2015. At 31 December 2016, an additional $466.9 million was financed by the Group under operating leases. Additions to
property, plant and equipment during the period included the fit-out of 177 Pacific Highway, North Sydney and job-costed tunnelling
machines for new projects. The balance includes property, plant and equipment acquired from the acquisition of UGL of $72.7 million,
and the effect of foreign exchange fluctuations of $41.6 million.
Intangibles were $1,125.9 million at 31 December 2016, an increase of 113.5%, or $598.5 million, compared to 31 December 2015.
Intangibles includes $914.0 million of goodwill. Additions to intangibles during FY16 included goodwill of $480.7 million and intangibles of
$70.6 million in relation to the acquisition of UGL, and $61.5 million of goodwill in relation to the acquisition of Sedgman.
Trade and other payables were $4,721.1 million at 31 December 2016, an increase of 28.4%, or $1,045.4 million, compared to
31 December 2015. This figure includes $1,223.3 million (31 December 2016: $645.8 million) of amounts due to customers. The
remaining balance includes trade creditors, joint venture payables and other creditors.
Current tax liabilities were $126.6 million at 31 December 2016, an increase of 55.7%, or $45.3 million, compared to 31 December 2015.
Provisions were $333.3 million at 31 December 2016, an increase of 17.6%, or $49.9 million, compared to 31 December 2015. The
provision for employee benefits relates to wages and salaries, annual leave, long service leave, retirement benefits and deferred bonuses.
The increase is primarily due to recognising employee provisions in relation to the acquisition of UGL.
Liabilities associated with assets held for sale
Liabilities associated with assets held for sale were $nil at 31 December 2016. $48.7 million of finance leases that related to Arutmin were
on 23 February 2016.
Joint venture entities’.
Other investments
Deferred tax assets
Intangibles
CURRENT LIABILITIES
Trade and other payables
Current tax liabilities
Provisions
repaid during the year.
NON-CURRENT LIABILITIES
Trade and other payables
31 December 2015.
Provisions
EQUITY
Trade and other payables were $287.0 million at 31 December 2016, a decrease of 13.4%, or $44.6 million, compared to
Provisions were $73.5 million at 31 December 2016, a decrease of 13.0%, or $11.0 million, compared to 31 December 2015. This figure
includes employee benefits relating to long service leave, retirement benefits and deferred bonuses.
Equity was $3,312.4 million as at 31 December 2016, a decrease of 19.5%, or $802.9 million, compared to 31 December 2015. The
reduction in equity during the year is primarily due to the impact of the share buy-back, as well as the acquisitions of UGL and Sedgman.
This is offset by the net impact of the profit for the year and dividends paid.
23
CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
FINANCIAL POSITION (CONTINUED)
Investments accounted for using the equity method
Investments accounted for using the equity method were $616.5 million at 31 December 2016, a decrease of 42.5%, or $456.6 million,
compared to 31 December 2015. This decrease is partly due to Sedgman no longer being recognised as an associate, as well as the
divestment of Nextgen. The consolidated financial statements include the full consolidation of Sedgman since the Group gained control
on 23 February 2016.
Equity accounted investments include project related associates and joint ventures, such as the Transmission Gully PPP in New Zealand,
along with the Group’s holdings in HLG Contracting, Ventia and Macmahon. For HLG Contracting refer to the Financial Report, ‘Note 26:
Joint venture entities’.
Other investments
Other investments were $135.4 million at 31 December 2016, an increase of 7.7%, or $9.7 million, compared to 31 December 2015.
Deferred tax assets
Deferred tax assets were $310.1 million at 31 December 2016, an increase of $190.6 million, compared to 31 December 2015. This
includes deferred tax assets from the acquisition of UGL.
Property, plant and equipment
Property, plant and equipment was $1,355.7 million at 31 December 2016, an increase of 3.3%, or $42.9 million, compared to
31 December 2015. At 31 December 2016, an additional $466.9 million was financed by the Group under operating leases. Additions to
property, plant and equipment during the period included the fit-out of 177 Pacific Highway, North Sydney and job-costed tunnelling
machines for new projects. The balance includes property, plant and equipment acquired from the acquisition of UGL of $72.7 million,
and the effect of foreign exchange fluctuations of $41.6 million.
Intangibles
Intangibles were $1,125.9 million at 31 December 2016, an increase of 113.5%, or $598.5 million, compared to 31 December 2015.
Intangibles includes $914.0 million of goodwill. Additions to intangibles during FY16 included goodwill of $480.7 million and intangibles of
$70.6 million in relation to the acquisition of UGL, and $61.5 million of goodwill in relation to the acquisition of Sedgman.
CURRENT LIABILITIES
Trade and other payables
Trade and other payables were $4,721.1 million at 31 December 2016, an increase of 28.4%, or $1,045.4 million, compared to
31 December 2015. This figure includes $1,223.3 million (31 December 2016: $645.8 million) of amounts due to customers. The
remaining balance includes trade creditors, joint venture payables and other creditors.
Current tax liabilities
Current tax liabilities were $126.6 million at 31 December 2016, an increase of 55.7%, or $45.3 million, compared to 31 December 2015.
Provisions
Provisions were $333.3 million at 31 December 2016, an increase of 17.6%, or $49.9 million, compared to 31 December 2015. The
provision for employee benefits relates to wages and salaries, annual leave, long service leave, retirement benefits and deferred bonuses.
The increase is primarily due to recognising employee provisions in relation to the acquisition of UGL.
Liabilities associated with assets held for sale
Liabilities associated with assets held for sale were $nil at 31 December 2016. $48.7 million of finance leases that related to Arutmin were
repaid during the year.
NON-CURRENT LIABILITIES
Trade and other payables
Trade and other payables were $287.0 million at 31 December 2016, a decrease of 13.4%, or $44.6 million, compared to
31 December 2015.
Provisions
Provisions were $73.5 million at 31 December 2016, a decrease of 13.0%, or $11.0 million, compared to 31 December 2015. This figure
includes employee benefits relating to long service leave, retirement benefits and deferred bonuses.
EQUITY
Equity was $3,312.4 million as at 31 December 2016, a decrease of 19.5%, or $802.9 million, compared to 31 December 2015. The
reduction in equity during the year is primarily due to the impact of the share buy-back, as well as the acquisitions of UGL and Sedgman.
This is offset by the net impact of the profit for the year and dividends paid.
CIMIC 2016 ANNUAL REPORT A4 FA.indd 23
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CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
CASH FLOW
Cash flows from operating activities
$m
Cash flows from operating activities
Interest, finance costs, taxes and dividends received
Net cash from operating activities
Gross capital expenditure
Free operating cash flow
Cash flows from investing activities
$m
Payments for intangibles
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Proceeds from sale of investments in controlled entities and
businesses
Proceeds from sale of equity accounted investments
Cash acquired from acquisition of investments in controlled
entities and businesses
Income tax paid in relations to proceeds from sale of
investments in controlled entities and businesses
Payments for investments
Loans to associates and joint ventures
Net cash from investing activities
Cash flows from financing activities
$m
Own shares purchased from shareholders of the Company
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 shareholders of the Company
Payments to acquire non-controlling interests
Net cash from financing activities
2016
2015
chg. $
chg. %
CIMIC maintains its position as a leading international contractor and the world’s largest contract miner with a diversified portfolio of
1,201.4
(74.4)
1,127.0
(280.2)
846.8
1,919.6
(469.4)
1,450.2
(266.3)
1,183.9
(718.2)
395.0
(323.2)
(13.9)
(337.1)
(37.4)%
(84.1)%
(22.3)%
5.2%
(28.5)%
2016
2015
chg. $
chg. %
(14.7)
(280.2)
97.8
-
(15.2)
(266.3)
156.2
1,671.0
0.5
(13.9)
(58.4)
(1,671.0)
180.8
244.4
-
-
180.8
244.4
(3.3)%
5.2%
(37.4)%
-
-
-
(32.0)
(263.0)
231.0
(87.8)%
(325.1)
(152.7)
(281.7)
(35.1)
-
1,247.6
(290.0)
(152.7)
(1,529.3)
826.2%
-
(122.6)%
2016
2015
chg. $
chg. %
(425.9)
(18.8)
380.4
(380.1)
(276.9)
(12.6)
(320.5)
(389.0)
(1,443.4)
-
(4.1)
871.2
(2,915.4)
(124.7)
-
(385.9)
-
(2,558.9)
(425.9)
(14.7)
(490.8)
2,535.3
(152.2)
(12.6)
65.4
(389.0)
1,115.5
-
358.5%
(56.3)%
(87.0)%
122.1%
-
(16.9)%
-
(43.6)%
From operating activities
Cash flows from operating activites were $1.2 billion for FY16. FY16 showed a strong level of cash flow generation from operating
activities, a result of CIMIC’s continued focus on working capital management. EBITDA conversion was 110% in FY16. FY15 cashflows from
operating activities were boosted by property sales and the initial benefits of CIMIC’s working capital management strategy.
Free operating cash flow was $846.8 million for FY16. Income taxes paid have decreased by $294.0 million. The significant reduction in
the amount of taxes paid is primarily due to the timing of payments of taxes and receipt of refunds outside of the financial year to which
they relate. Finance costs have reduced due to the Group’s improved financial structure and lower cost of debt. Gross capital expenditure
was $280.2 million for FY16, an increase of 5.2%, or $13.9 million, compared to FY15. The increase was due in part to capital expenditure
on job-costed tunnelling machines for new projects, as well as the fit-out of 177 Pacific Highway, North Sydney.
From investing activities
Net cash outflows from investing activities were $281.7 million for FY16. This compares to an inflow of $1.2 billion in FY15. The significant
cash flows for FY16 included the net impact of the purchase of shares in UGL and Sedgman, $152.7 million loans to associates and joint
ventures, offset in part by $180.8 million proceeds from the divestment of Nextgen. FY15 included $1.7 billion of proceeds from the sale
of John Holland and 50% of Ventia, less $263.0 million of income tax paid in relation to proceeds received from the sale of these
investments.
From financing activities
Net cash outflows from financing activities were $1.4 billion for FY16 compared to $2.6 billion in FY15. The FY16 financing cash flows
include $425.9 million invested in the share buy-back, and payments for the acquisition of shares in UGL, Sedgman and Devine.
FY16 also included a $276.9 million repayment of finance leases. In FY15, the cash outflows from financing activities included the net
repayment of $2.0 billion in relation to interest bearing liabilities. This included the repurchase of 10-Year Fixed-Rate Guaranteed Senior
Notes, the repayment of other Guaranteed Senior Notes, and other bilateral, syndicated and other unsecured loans. (Refer to Financial
Report, ‘Note 19: Interest bearing liabilities’).
24
CIMIC 2016 ANNUAL REPORT A4 FA.indd 24
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NEW WORK AND WORK IN HAND
work in hand.
The Group’s total work in hand was $34.0 billion at 31 December 2016, an increase of 17.3%, or $5.0 billion, compared to 31 December
2015. Work in hand includes the full consolidation of UGL at 31 December 2016.
Work in hand
$m
Opening work in hand
New work
Acquisition work in hand (UGL)
Executed work
Total work in hand
December
December
chg. $
chg. %
2016
29,004.4
13,433.1
5,109.0
(13,534.5)
34,012.0
2015
31,001.8
14,131.4
-
(16,128.8)
29,004.4
(1,997.4)
(698.3)
5,109.0
2,594.3
5,007.6
(6.4)%
(4.9)%
-
(16.1)%
17.3%
Work in hand was split 68:32 between domestic and international markets, compared with 65:35 in FY15.
MAJOR CONTRACT AWARDS AND SCOPE INCREASES IN 201620
During the period, $13.4 billion of new work was awarded. New work comprised $8.0 billion of new contracts and $5.4 billion of contract
extensions and variations, including the impact of foreign exchange rate movements.
In Australia and New Zealand, CIMIC won several major contracts, including:
$500 million contract to design and construct the Level Crossing Removal Project: Caulfield to Dandenong in Victoria;
$300 million contract to design and construct the first stage of Capital Metro, Canberra’s light rail project, and the project’s
$300 million 20-year maintenance concession contract in the Australian Capital Territory;
$330 million design and construction contract for a 5km extension of the Roe Highway in Perth in Western Australia (CIMIC’s share
$200 million contract to design and construct the second stage of the Gold Coast light rail project in Queensland;
$350 million contract for network integrity and facilities management for Telstra across Australia (CIMIC’s share approximately
$160 million contract to construct the Bruce Highway – Cooroy to Curra, Section C in Queensland; and
$250 million contract for delivery of Wideband services for Telstra across Australia (CIMIC’s share approximately $117 million).
approximately $235 million);
$164 million);
Overseas major awards include:
$1.58 billion contract to construct the Tseung Kwan O – Lam Tin Tunnel in Hong Kong (CIMIC’s share approximately $805 million);
$710 million in contract expansions and extensions at the Melak coal mine in East Kalimantan, Indonesia;
$840 million contract to provide mining services in Canada’s Athabasca region (CIMIC’s share approximately $428 million);
$320 million contract to construct a Columbarium and Garden of Remembrance in Hong Kong;
$223 million contract for phases two and three of the Maker Maxity development in India; and
$370 million contract extension at Debswana Diamond Company’s Jwaneng mine in Botswana (CIMIC’s share approximately $222
•
•
•
•
•
•
•
•
•
•
•
•
•
Work in hand by segment21
December
%
December
%
chg. $
chg. %
2016
12,959.0
10,025.4
4,926.3
1,798.1
724.2
38%
30%
14%
5%
2%
3,579.0
11%
34,012.0 100%
2015
12,448.1
9,600.0
-
2,403.6
1,427.6
3,125.1
43%
33%
-
8%
5%
11%
29,004.4 100%
510.9
425.4
4,926.3
(605.5)
(703.4)
453.9
5,007.6
4.1%
4.4%
-
(25.2)%
(49.3)%
14.5%
17.3%
million).
$m
Construction
Services
HLG
Mining & mineral processing
Commercial & residential
Corporate
Total work in hand
CONSTRUCTION WORK IN HAND
Construction work in hand was $13.0 billion at 31 December 2016, an increase of 4.1%, or $510.9 million. Construction work in hand is
diversified across a range of markets and sectors in Australia and overseas. The major projects include the delivery of social, rail and road
infrastructure, predominantly in Austalia and Hong Kong.
20 Australian dollar values at date of announcement of the awards, unless otherwise noted.
21 Mining & mineral processing work in hand has been restated to include Sedgman; FY15: $92.0 million being reclassified from
corporate.
25
CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
NEW WORK AND WORK IN HAND
CIMIC maintains its position as a leading international contractor and the world’s largest contract miner with a diversified portfolio of
work in hand.
The Group’s total work in hand was $34.0 billion at 31 December 2016, an increase of 17.3%, or $5.0 billion, compared to 31 December
2015. Work in hand includes the full consolidation of UGL at 31 December 2016.
Work in hand
$m
Opening work in hand
New work
Acquisition work in hand (UGL)
Executed work
Total work in hand
December
2016
29,004.4
13,433.1
5,109.0
(13,534.5)
34,012.0
December
2015
31,001.8
14,131.4
-
(16,128.8)
29,004.4
chg. $
chg. %
(1,997.4)
(698.3)
5,109.0
2,594.3
5,007.6
(6.4)%
(4.9)%
-
(16.1)%
17.3%
Work in hand was split 68:32 between domestic and international markets, compared with 65:35 in FY15.
MAJOR CONTRACT AWARDS AND SCOPE INCREASES IN 201620
During the period, $13.4 billion of new work was awarded. New work comprised $8.0 billion of new contracts and $5.4 billion of contract
extensions and variations, including the impact of foreign exchange rate movements.
In Australia and New Zealand, CIMIC won several major contracts, including:
•
•
$500 million contract to design and construct the Level Crossing Removal Project: Caulfield to Dandenong in Victoria;
$300 million contract to design and construct the first stage of Capital Metro, Canberra’s light rail project, and the project’s
$300 million 20-year maintenance concession contract in the Australian Capital Territory;
$330 million design and construction contract for a 5km extension of the Roe Highway in Perth in Western Australia (CIMIC’s share
approximately $235 million);
$200 million contract to design and construct the second stage of the Gold Coast light rail project in Queensland;
$350 million contract for network integrity and facilities management for Telstra across Australia (CIMIC’s share approximately
$164 million);
$160 million contract to construct the Bruce Highway – Cooroy to Curra, Section C in Queensland; and
$250 million contract for delivery of Wideband services for Telstra across Australia (CIMIC’s share approximately $117 million).
•
•
•
•
•
Overseas major awards include:
•
•
•
•
•
•
$1.58 billion contract to construct the Tseung Kwan O – Lam Tin Tunnel in Hong Kong (CIMIC’s share approximately $805 million);
$710 million in contract expansions and extensions at the Melak coal mine in East Kalimantan, Indonesia;
$840 million contract to provide mining services in Canada’s Athabasca region (CIMIC’s share approximately $428 million);
$320 million contract to construct a Columbarium and Garden of Remembrance in Hong Kong;
$223 million contract for phases two and three of the Maker Maxity development in India; and
$370 million contract extension at Debswana Diamond Company’s Jwaneng mine in Botswana (CIMIC’s share approximately $222
million).
Work in hand by segment21
$m
Construction
Mining & mineral processing
Services
HLG
Commercial & residential
Corporate
Total work in hand
%
December
2016
12,959.0
10,025.4
4,926.3
1,798.1
724.2
3,579.0
38%
30%
14%
5%
2%
11%
34,012.0 100%
December
2015
12,448.1
9,600.0
-
2,403.6
1,427.6
3,125.1
43%
33%
-
8%
5%
11%
29,004.4 100%
%
chg. $
chg. %
510.9
425.4
4,926.3
(605.5)
(703.4)
453.9
5,007.6
4.1%
4.4%
-
(25.2)%
(49.3)%
14.5%
17.3%
CONSTRUCTION WORK IN HAND
Construction work in hand was $13.0 billion at 31 December 2016, an increase of 4.1%, or $510.9 million. Construction work in hand is
diversified across a range of markets and sectors in Australia and overseas. The major projects include the delivery of social, rail and road
infrastructure, predominantly in Austalia and Hong Kong.
20 Australian dollar values at date of announcement of the awards, unless otherwise noted.
21 Mining & mineral processing work in hand has been restated to include Sedgman; FY15: $92.0 million being reclassified from
corporate.
CIMIC 2016 ANNUAL REPORT A4 FA.indd 25
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CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
NEW WORK AND WORK IN HAND (CONTINUED)
OPERATING ENVIRONMENT OUTLOOK
MINING & MINERAL PROCESSING WORK IN HAND
Mining & mineral processing work in hand was $10.0 billion at 31 December 2016, an increase of 4.4%, or $425.4 million. CIMIC
continued to diversify its mining & mineral processing work in hand by commodity and geography, and during the year new work
included work won in North and South America.
SERVICES WORK IN HAND
Services work in hand was $4.9 billion at 31 December 2016. Services work in hand is diversified across a range of markets in Australia,
New Zealand and South East Asia. Major contracts include metro rail network operations and maintenance, freight rail and naval ship
maintenance, and asset management services across oil and gas, water and power.
The major projects secured in FY16 by UGL and included in work in hand are:
•
$594 million contract for the supply and maintenance of locomotives to Pacific National, extending existing maintenance
agreements to 30 June 2026;
$570 million contract for maintenance and asset management services, including the initial maintenance facility installation works
for New Intercity Fleet in New South Wales;
$250 million contract for the continued provision of long term maintenance support for the Australian Navy’s ANZAC Class ships;
$127 million contract to design and construct a water treatment plant for Melbourne Water in Victoria, in a joint venture with CPB
Contractors; and
$100 million contract to engineer, procure and construct and operate and maintain the first phase of the Genex Solar project at
Kidston in North Queensland.
HLG WORK IN HAND
The Group’s share of HLG work in hand was $1.8 billion at 31 December 2016.
The major projects awarded to HLG Contracting in the period were:
•
$177 million contract to build the Gate Avenue commercial development at the DIFC Project in Dubai (CIMIC’s share approximately
$80 million); and
$215 million contract for the construction of the residential Al Mutahidah Towers in Qatar (CIMIC’s share approximately $97 million).
•
•
•
•
•
COMMERCIAL & RESIDENTIAL WORK IN HAND
Commercial & residential work in hand was $724.2 million at 31 December 2016, a decrease of 49.3%, or $703.4 million. The decrease
reflects the sale of development properties during the period.
OPPORTUNITIES
There is a robust pipeline of infrastructure, mining and mineral processing, and services opportunities relevant to CIMIC of around $100
billion of tenders, relevant to CIMIC, have been identified for 2017, (of which 69% is in Australia and New Zealand), $55 billion is in
construction, $25 billion is in mining and $20 billion is in services. In the order of $250 billion of projects, relevant to CIMIC, have been
identified as coming to the market in 2018 and beyond, (of which 60% Australia and New Zealand), $165 billion is in construction, $45
billion is in mining and $40 billion is in services.
CIMIC, through CPB Contractors and Pacific Partnerships, has been shortlisted for several large projects including the Melbourne Metro
Rail Link in Victoria, the Sydney Metro – TSE (Tunnels and Station Excavation works) and selected projects under the Western Sydney
Roads Upgrade Program in New South Wales.
Parramatta Light Rail in New South Wales and Perth MAX Light Rail in Western Australia;
Canberra Hospital Redevelopment in the Australian Capital Territory;
Health infrastructure projects in New South Wales;
In addition, CIMIC is pursuing numerous major domestic and international infrastructure projects such as:
•
•
•
• Western package of the Outer Suburban Arterial Roads in Victoria (PPP);
• Metro Trains Melbourne operations and maintenance extension in Victoria;
•
Sydney Metro City and Southwest Augmentation in New South Wales;
•
Northern Island Prison in New Zealand (PPP);
•
Central Kowloon Route – Kai Tak West, T2 Foundation and Substructure Airport in Hong Kong; and
•
North-South Corridor – N105 in Singapore.
CIMIC expects to expand its mining and mineral processing activities into other markets, for example by exporting its contract mining
skills further into North and South America providing CIMIC with additional diversification by commodity. This strategy is reflected in the
recent mining services contract award in the Canadian oil sands.
The acquisition of UGL provides significant opportunities to extend its service capabilities across CIMIC’s complementary operations, in
existing and new markets. UGL remains well positioned to benefit from the strong growth expected in services opportunities across road
and rail infrastructure, oil and gas, defence, water and renewable energy.
26
CIMIC 2016 ANNUAL REPORT A4 FA.indd 26
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In the markets where CIMIC operates, public and private clients continue to invest (including through PPP models), providing a robust
pipeline of projects and opportunities for CIMIC to contribute its financial strength, civil, mining, and mechanical, and electrical
engineering capabilities, and project and operational experience.
CONSTRUCTION MARKET
Australia’s 26-year run of GDP growth22 is expected to be maintained with 2% and 3% real growth forecast in FY16/17 and FY17/18
respectively. 23 This outlook, combined with robust population growth of 1% to 2%24 and the Australian Government’s continued delivery
on its 2013-2020 $50 billion road, rail and air transport infrastructure investment plan,25,26 underpin continued infrastructure investment.
Private sector financing of numerous major projects under PPP models complements such public infrastructure funding. Combined, these
factors support a good level of construction, operations and maintenance, and PPP opportunities for the Group.
Transport infrastructure, a core capability of the Group, has a particularly strong growth outlook driven by a forecast increase in
government expenditure and private sector funding.
The Australian Industry Group Construction Outlook Survey reported in November 2016 that: “The total value of turnover from all major
construction work is expected to recover by 4.6% in 2016/17. Engineering construction is expected to rise by 3.6% through the year ….
The value of infrastructure-related engineering work (a sub-set of engineering construction in this data) is expected to rise by 13.5%,
driven by strong growth in road (+17.9%) and rail (+16.1%) projects. This is in line with a range of large-scale Government transport
projects that are either underway or are in the pipeline.” 27
CIMIC’s international operations also have a positive outlook, offering growth opportunities in construction and, in the longer term,
operation and maintenance services.
PPP MARKET
Australia has one of the world’s most well-developed PPP markets, having procured numerous transport and social infrastructure PPP
projects over the past two decades in the road, rail, health, education, defence, justice, correctional, water, convention centre, social
housing and student accommodation sectors.
The current PPP market includes several large rail projects. PPP opportunities are continuing to emerge to deliver varying combinations of
design, construction, finance and operations and maintenance of track, stations, rolling stock, and rail systems.
There is also a stable pipeline of social infrastructure PPPs in terms of schools, prisons with scope to provide non-custodial services, and
hospitals. In the coming years there is also expected to be a return of some major road projects as PPPs. The recent wave of government
asset sales in New South Wales (i.e. the sale of the electricity assets) and in Victoria (i.e. the Port of Melbourne sale), mean these states
are in terms of the number of PPP projects coming to the markets.
Expected PPP projects in procurement during 2017 include:
Transport infrastructure:
• Melbourne Metro Rail in Victoria;
• Melbourne Outer Suburban Arterial Roads Network in Victoria;
Parramatta Light Rail Project in New South Wales; and
Canberra Light Rail - Stage 2 in Australian Capital Territory.
Social infrastructure expected to be procured in 2017 include:
Partnerships with Hospital Operators in New South Wales; and
New Western Australia Prison in Western Australia.
•
•
•
•
22 The Hon Scott Morrison MP, Budget Strategy and Outlook: Budget Paper No. 1, 2-3.
23 The Hon Scott Morrison MP, Mid-Year Economic and Fiscal Outlook 2016-17, December 2016, p. 7.
24 Australian Bureau of Statistics, Annual Population Change – Year Ending 30 June 2016, 3101.0 Australian Demographic Statistics, Jun
25 Australian Government, The Australian Government’s Response to Infrastructure Australia’s Australian Infrastructure Plan, November
2016 – ABS.
2016, p.3.
26 Australian Government, ‘Jobs and growth: investing in infrastructure’, Budget 2016-17,
http://budget.gov.au/201617/content/glossies/jobs-growth/html/jobs-growth-03.htm.
27 Construction Outlook, AI Group/Australian Construction Association, November 2016.
27
CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
OPERATING ENVIRONMENT OUTLOOK
In the markets where CIMIC operates, public and private clients continue to invest (including through PPP models), providing a robust
pipeline of projects and opportunities for CIMIC to contribute its financial strength, civil, mining, and mechanical, and electrical
engineering capabilities, and project and operational experience.
CONSTRUCTION MARKET
Australia’s 26-year run of GDP growth22 is expected to be maintained with 2% and 3% real growth forecast in FY16/17 and FY17/18
respectively. 23 This outlook, combined with robust population growth of 1% to 2%24 and the Australian Government’s continued delivery
on its 2013-2020 $50 billion road, rail and air transport infrastructure investment plan,25,26 underpin continued infrastructure investment.
Private sector financing of numerous major projects under PPP models complements such public infrastructure funding. Combined, these
factors support a good level of construction, operations and maintenance, and PPP opportunities for the Group.
Transport infrastructure, a core capability of the Group, has a particularly strong growth outlook driven by a forecast increase in
government expenditure and private sector funding.
The Australian Industry Group Construction Outlook Survey reported in November 2016 that: “The total value of turnover from all major
construction work is expected to recover by 4.6% in 2016/17. Engineering construction is expected to rise by 3.6% through the year ….
The value of infrastructure-related engineering work (a sub-set of engineering construction in this data) is expected to rise by 13.5%,
driven by strong growth in road (+17.9%) and rail (+16.1%) projects. This is in line with a range of large-scale Government transport
projects that are either underway or are in the pipeline.” 27
CIMIC’s international operations also have a positive outlook, offering growth opportunities in construction and, in the longer term,
operation and maintenance services.
PPP MARKET
Australia has one of the world’s most well-developed PPP markets, having procured numerous transport and social infrastructure PPP
projects over the past two decades in the road, rail, health, education, defence, justice, correctional, water, convention centre, social
housing and student accommodation sectors.
The current PPP market includes several large rail projects. PPP opportunities are continuing to emerge to deliver varying combinations of
design, construction, finance and operations and maintenance of track, stations, rolling stock, and rail systems.
There is also a stable pipeline of social infrastructure PPPs in terms of schools, prisons with scope to provide non-custodial services, and
hospitals. In the coming years there is also expected to be a return of some major road projects as PPPs. The recent wave of government
asset sales in New South Wales (i.e. the sale of the electricity assets) and in Victoria (i.e. the Port of Melbourne sale), mean these states
are in terms of the number of PPP projects coming to the markets.
Expected PPP projects in procurement during 2017 include:
Transport infrastructure:
• Melbourne Metro Rail in Victoria;
• Melbourne Outer Suburban Arterial Roads Network in Victoria;
•
•
Parramatta Light Rail Project in New South Wales; and
Canberra Light Rail - Stage 2 in Australian Capital Territory.
Social infrastructure expected to be procured in 2017 include:
•
•
Partnerships with Hospital Operators in New South Wales; and
New Western Australia Prison in Western Australia.
22 The Hon Scott Morrison MP, Budget Strategy and Outlook: Budget Paper No. 1, 2-3.
23 The Hon Scott Morrison MP, Mid-Year Economic and Fiscal Outlook 2016-17, December 2016, p. 7.
24 Australian Bureau of Statistics, Annual Population Change – Year Ending 30 June 2016, 3101.0 Australian Demographic Statistics, Jun
2016 – ABS.
25 Australian Government, The Australian Government’s Response to Infrastructure Australia’s Australian Infrastructure Plan, November
2016, p.3.
26 Australian Government, ‘Jobs and growth: investing in infrastructure’, Budget 2016-17,
http://budget.gov.au/201617/content/glossies/jobs-growth/html/jobs-growth-03.htm.
27 Construction Outlook, AI Group/Australian Construction Association, November 2016.
CIMIC 2016 ANNUAL REPORT A4 FA.indd 27
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CIMIC Group Limited Annual Report 2016 | Operating and Financial Review
CIMIC Group Limited Annual Report 2016 | Remuneration Report
OPERATING ENVIRONMENT OUTLOOK (CONTINUED)
MINING & MINERAL PROCESSING MARKET
The Australian Government’s Resources and Energy Quarterly reported in September 2016 that: “The outlook for Australia’s production
of bulk commodities remains generally positive, despite challenging conditions facing most producers. Production of iron ore is forecast
to grow over the next year … Metals production is largely expected to increase over the outlook period, led by growth in gold, copper and
alumina … the outlook for Australia’s energy commodities is mixed. LNG production is forecast to continue to increase in line with growth
in export capacity ...”28. The oil and gas sector is transitioning from construction into operations and maintenance, creating further
services opportunities.
Whilst there have been recent commodity price increases, uncertainty about price forecasts and price sustainability means the market for
mining and minerals processing remains challenging. However, the Group remains in a strong position to capitalise on opportunities as
they arise in the mining and minerals processing markets. Long-term client partnerships, the successful negotiation of contract extensions
and the Group’s competitive position provide confidence for the future. CIMIC plans to increase its market and commodity diversification
and is analysing several growth opportunities.
Investment levels in the mining market appear to be stabilising. The Reserve Bank of Australia notes “… the largest subtraction of mining
investment (net of imports) from GDP growth looks to have already occurred; the ABS (‘Australian Bureau of Statistics’) capital
expenditure (capex) survey of investment intentions and Bank liaison point to a smaller subtraction in 2016/17”29. The ABS survey points
to an expected capex spend of $39.9 billion for 2016-17, down from an actual spend of $53.4 billion in 2015-1630.
SERVICES MARKET
The size of the market for infrastructure maintenance services in Australia is estimated at $20.5 billion having grown by 6.6% per annum
during the past five years 31. Continuing investment in infrastructure development and an increase in the proportion of the Australian
market that is outsourced (currently around 50% which is low relative to other developed countries), is expected to result in
infrastructure maintenance services growth of 3.5% per annum until FY2231. The highest growth is projected for service providers that can
leverage systems, technologies and client relationships to implement best practice in service delivery.
The Australian Government’s Defence White Paper released in February 2016, indicates an increase in funding for maintenance of the
Defence Estate. Furthermore, substantial investment is expected to be made by the Australian Government in specialist defence
equipment (e.g. tanks, ships, aircraft) and supporting infrastructure over the medium to long term, which is expected to result in
increased demand for asset maintenance services.
Through its acquisition of UGL, CIMIC is well positioned to grow its services capabilities in existing and new markets by benefiting from
the Group’s complementary activities. As well, there is expected to be additional growth in services opportunities in the road and rail
infrastructure, oil and gas, water, defence and renewable energy markets.
FUTURE DEVELOPMENTS
GROUP PROSPECTS
CIMIC is a leading provider of construction, mining and mineral processing, services, PPP and engineering in Australia and overseas. The
opportunities in these sectors provide the main longer-term drivers for the Group, particularly as governments in Australia-Pacific and
Asia roll out initiatives to address significant infrastructure deficits.
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. Also, the Group continues to analyse local merger and acquisition opportunities to support its
development and future growth.
The pipeline of infrastructure projects (many of which will be delivered through PPP models) remains high, underpinning demand for the
Group’s activities. In the short-term, the Group’s competitive position and work in hand provide a solid base for future revenue and
profitability.
While the opportunities in our existing markets will continue to be the primary drivers of demand for the Group, CIMIC continues to
consider opportunities to expand into new regions and markets, where it can leverage its existing capabilities.
GUIDANCE
2017 NPAT is expected to be within the range of $640 million to $700 million, subject to market conditions, an increase of 10% to 21% on
FY16.
28 Australian Government Department of Industry, Innovation and Science (Office of the Chief Economist) Resources and Energy
Quarterly, September 2016.
29 Domestic Economic Conditions, November 2016 p.30 – RBA.
30 Private New Capital Expenditure and Expected Expenditure, Australia, Sep 2016 – ABS.
31 IBISWorld Industry Report OD5330, “Infrastructure Maintenance Services in Australia”, November 2015.
28
CIMIC 2016 ANNUAL REPORT A4 FA.indd 28
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SCOPE
Act.
page 37.
•
•
•
•
•
•
•
Remuneration Report
The information provided in this Remuneration Report has been audited and is in accordance with the requirements of the Corporations
For the purposes of this Remuneration Report, the Key Management Personnel (KMP) are referred to as either Senior Executives (which
includes the Executive Chairman) or Non-executive Directors (including Alternate Directors). Details of the Senior Executives (as at 31
December 2016) are set out below. Details of the current and former Non-executive Directors as at 31 December 2016 are set out on
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
following table:
Senior Executive remuneration for the 2016 Financial Year was delivered as a mix of fixed and variable remuneration as set out in the
Fixed
Fixed remuneration
Base salary, non-monetary benefits and superannuation (as applicable).
Short-Term Incentive (STI) Annual cash incentive paid to eligible Senior Executives for performance against
approved and measurable objectives.
Variable
Long-Term Incentive (LTI)
An option plan vesting 2 years after award and available to exercise over 3 years.
Awards are provided to select Senior Executives on a periodic basis and at the
discretion of the Company.
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.
Senior Executives.
Executive Directors
SENIOR EXECUTIVE REMUNERATION – COMPONENTS IN DETAIL
The Senior Executives as at 31 December 2016 are identified in the table below.
The Remuneration and Nomination Committee considers and proposes the remuneration of the CEO (including any incentive awards) to
the Board for approval, and receives and reviews the remuneration (including any incentive awards) approved by the CEO for any other
Marcelino Fernández Verdes
Executive Chairman
Appointed as CEO on 13 March 2014. Elected Executive Chairman
on 11 June 2014. Previously a Non-executive Director from
10 October 2012 to 13 March 2014. On 18 October 2016, Mr
Fernández Verdes stepped down as CEO and Mr Valderas was
appointed as CEO. Mr Fernández Verdes has continued in his
capacity as Executive Chairman.
Deputy CEO on 28 October 2015. On 18 October 2016, Mr
Valderas was appointed as CEO and ceased to be Chief Operating
Officer. Appointed as Managing Director on 27 October 2016.
Adolfo Valderas
CEO and Managing Director
Appointed as Chief Operating Officer on 4 December 2013 and as
Executive
Angel Muriel Bernal
CFO, Chief Development
Appointed as Chief Development Officer and Managing Director of
Officer and Managing
Director of Pacific
Partnerships
Pacific Partnerships on 1 July 2014. Appointed as CFO and became
a KMP on 23 July 2015.
The remuneration components described in this section apply to Mr Valderas and Mr Muriel Bernal. The remuneration arrangements
applicable to Mr Fernández Verdes are described separately in the ‘Remuneration – Executive Chairman’ section on page 32.
29
CIMIC Group Limited Annual Report 2016 | Remuneration Report
Remuneration Report
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 Executive Chairman) or Non-executive Directors (including Alternate Directors). Details of the Senior Executives (as at 31
December 2016) are set out below. Details of the current and former Non-executive Directors as at 31 December 2016 are set out on
page 37.
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 2016 Financial Year was delivered as a mix of fixed and variable remuneration as set out in the
following table:
Fixed
Fixed remuneration
Short-Term Incentive (STI) Annual cash incentive paid to eligible Senior Executives for performance against
Base salary, non-monetary benefits and superannuation (as applicable).
Variable
Long-Term Incentive (LTI)
approved and measurable objectives.
An option plan vesting 2 years after award and available to exercise over 3 years.
Awards are provided to select Senior Executives on a periodic basis and at the
discretion of the Company.
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 Remuneration and Nomination Committee considers and proposes the remuneration of the CEO (including any incentive awards) to
the Board for approval, and receives and reviews the remuneration (including any incentive awards) approved by the CEO for any other
Senior Executives.
SENIOR EXECUTIVE REMUNERATION – COMPONENTS IN DETAIL
The Senior Executives as at 31 December 2016 are identified in the table below.
Executive Directors
Marcelino Fernández Verdes
Executive Chairman
Adolfo Valderas
CEO and Managing Director
Executive
Angel Muriel Bernal
CFO, Chief Development
Officer and Managing
Director of Pacific
Partnerships
Appointed as CEO on 13 March 2014. Elected Executive Chairman
on 11 June 2014. Previously a Non-executive Director from
10 October 2012 to 13 March 2014. On 18 October 2016, Mr
Fernández Verdes stepped down as CEO and Mr Valderas was
appointed as CEO. Mr Fernández Verdes has continued in his
capacity as Executive Chairman.
Appointed as Chief Operating Officer on 4 December 2013 and as
Deputy CEO on 28 October 2015. On 18 October 2016, Mr
Valderas was appointed as CEO and ceased to be Chief Operating
Officer. Appointed as Managing Director on 27 October 2016.
Appointed as Chief Development Officer and Managing Director of
Pacific Partnerships on 1 July 2014. Appointed as CFO and became
a KMP on 23 July 2015.
The remuneration components described in this section apply to Mr Valderas and Mr Muriel Bernal. The remuneration arrangements
applicable to Mr Fernández Verdes are described separately in the ‘Remuneration – Executive Chairman’ section on page 32.
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There was no LTI grant in 2016. The table below provides a summary of the 2015 LTI currently on foot.
The following table sets out the outcomes for the 2016 Financial Year for each Senior Executive who participated in the 2016 STI.
STI earned (A$)
Percentage of target STI
Percentage of maximum STI
In consultation with the Remuneration and Nomination Committee, the threshold, target and stretch values for all of the financial KPIs are approved
1,631,2502
1,125,0003
145
150
96.7
100
For Mr Valderas, this STI award was approved by the Board, on the recommendation of the Remuneration and Nomination Committee, on 7 February
For Mr Muriel Bernal, this STI award was approved by the CEO, with the consideration of the Remuneration and Nomination Committee, on 30
Percentage of available STI earned1
Senior Executives
Current
A Valderas
A Muriel Bernal
by the Executive Chairman.
2017 and is payable in April 2017.
January 2017 and is payable in April 2017.
1.
2.
3.
LTI
Summary of 2015 LTI grants
Senior Executive
participation
the LTI.
Mr Valderas and Mr Muriel Bernal participated in the 2015 LTI. Mr Fernández Verdes did not participate in
What are the vesting
Options will vest over a 2 year performance period, subject to the Senior Executive’s continued
conditions and why
employment with the CIMIC Group. The options have an in-built performance hurdle, being the exercise
were they chosen?
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. Details
of the exercise price calculation are set out in ‘Note 36: Employee benefits’ to the Financial Report within
this Annual Report. 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.
When are the
The options vest 2 years after the grant date, and are available to exercise for a period of 3 years subject to
options available to
the discretion of the Remuneration and Nomination Committee. The Senior Executive is permitted to
exercise?
exercise up to 40% of their vested options in each of the first 2 years after vesting and the remaining
unexercised portion in year 3 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 most recent options awarded, being
the 2015 awards, are scheduled to vest on 29 October 2017, with any vested options that remain
unexercised expiring on 29 October 2020.
Do the options
The options do not carry any rights to dividends or voting. Shares allocated upon exercise of options rank
attract dividends and
equally with other ordinary shares on issue.
there is a change of
options will vest, having regard to all relevant circumstances including performance to-date and the nature
If a change of control occurs, the Board may determine whether, and the extent to which, any unvested
of the change of control.
If a Senior Executive resigns or is summarily terminated, any vested but unexercised and any unvested
option grants will lapse. Generally, if a Senior Executive leaves due to any other circumstances (eg,
retrenchment or genuine redundancy):
-
-
a pro rata portion of the Senior Executive’s unvested options will 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 retains authority to exercise discretion on leaver treatment for Senior Executives.
voting rights?
What happens if
control?
What if a Senior
Executive ceases
employment?
CIMIC Group Limited Annual Report 2016 | Remuneration Report
CIMIC Group Limited Annual Report 2016 | Remuneration Report
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.
On 1 January 2016, an increase was made to the fixed remuneration for Mr Muriel Bernal from $700,000 to $1,000,000 in recognition of
his promotion to the role of CFO on 23 July 2015.
On 1 November 2016, an increase was made to the fixed remuneration for Mr Valderas from $1,200,000 to $1,500,000 in recognition of
his promotion to the role of CEO on 18 October 2016.
STI
Summary of 2016 STI
Senior Executive
participation
How much could Senior
Executives earn under
the 2016 Financial Year
STI?
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?
Mr Valderas and Mr Muriel Bernal participated in the 2016 STI. Mr Fernández Verdes did not participate in
the 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.
The STI opportunities for 2016 for Mr Valderas and Mr Muriel Bernal were:
Percentage of Total Fixed Remuneration (TFR)
Threshold
45% (ie, 60% of the target STI
opportunity of 75% of TFR)
Target
75% (ie, 100% of the target STI
opportunity of 75% of TFR)
Stretch
112.5% (ie, 150% of the target STI
opportunity of 75% of TFR)
The 2016 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 2016, 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.
The STI is paid in cash following finalisation of the audited financial statements for the 2016 Financial Year.
Performance against financial and non-financial key performance indicators (KPIs) was assessed following
the end of the 2016 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 Executive Chairman, retains an overriding ability to adjust the STI amount before
payment taking into account all relevant circumstances.
STI outcomes for the 2016 Financial Year
STI payments for the 2016 Financial Year were determined based on Senior Executive performance against the applicable financial and
non-financial KPIs, as described above. In general, during the 2016 Financial Year, the Group focused on growth opportunities and
strategic acquisitions, most notably Sedgman and UGL.
Can Senior
No. The Group’s Securities Trading Policy (consistent with the Corporations Act) prohibits Senior Executives
Executives hedge
from entering into hedging arrangements regarding both vested and unvested securities, which includes
their risk under the
options.
option plan?
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CIMIC Group Limited Annual Report 2016 | Remuneration Report
The following table sets out the outcomes for the 2016 Financial Year for each Senior Executive who participated in the 2016 STI.
Percentage of available STI earned1
STI earned (A$)
Percentage of target STI
Percentage of maximum STI
1,631,2502
1,125,0003
96.7
100
In consultation with the Remuneration and Nomination Committee, the threshold, target and stretch values for all of the financial KPIs are approved
by the Executive Chairman.
For Mr Valderas, this STI award was approved by the Board, on the recommendation of the Remuneration and Nomination Committee, on 7 February
2017 and is payable in April 2017.
For Mr Muriel Bernal, this STI award was approved by the CEO, with the consideration of the Remuneration and Nomination Committee, on 30
January 2017 and is payable in April 2017.
145
150
1.
2.
3.
Senior Executives
Current
A Valderas
A Muriel Bernal
LTI
There was no LTI grant in 2016. The table below provides a summary of the 2015 LTI currently on foot.
Summary of 2015 LTI grants
Senior Executive
participation
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?
Can Senior
Executives hedge
their risk under the
option plan?
Mr Valderas and Mr Muriel Bernal participated in the 2015 LTI. Mr Fernández Verdes did not participate in
the LTI.
Options will vest over a 2 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. Details
of the exercise price calculation are set out in ‘Note 36: Employee benefits’ to the Financial Report within
this Annual Report. 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 2 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. The Senior Executive is permitted to
exercise up to 40% of their vested options in each of the first 2 years after vesting and the remaining
unexercised portion in year 3 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 most recent options awarded, being
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 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.
If a Senior Executive resigns or is summarily terminated, any vested but unexercised and any unvested
option grants will lapse. Generally, if a Senior Executive leaves due to any other circumstances (eg,
retrenchment or genuine redundancy):
-
a pro rata portion of the Senior Executive’s unvested options will 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 retains authority to exercise discretion 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.
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Summary of special bonus payment to Mr Fernández Verdes
Mr Fernández Verdes was awarded by the Board a special bonus payment of $3,000,000 on 15 December 2016. Refer to the Company
Announcement on the ASX dated 15 December 2016 for more information on this payment.
The Board acknowledged that Mr Fernández Verdes’ achievements as CEO and Executive Chairman have exceeded expectations through
his successful leadership resulting in the exceptional performance of CIMIC Group throughout the transformation process which
commenced in 2014. The Board recognised that these changes have placed CIMIC Group in a robust and competitive position.
COMPANY PERFORMANCE
As required by the Corporations Act, the 5 year financial performance of the Group has been set out in the following table.
Year-on-year performance snapshot
Opening
Closing share
share
price -
January1
price -
Share
price
December2
apprecia-
(A$)
tion (%)
Dividend
per share
paid (A$)
TSR3
(%)
EPS
(A$)
PBT
(A$M)
NPAT
(A$M)
34.94
46.0
0.98 148.0 1.77
740
580
24.30
8.0
1.14
58.2 1.54
735
520
1,920
25.7
22.50
38.2
1.17
36.3 2.00
1,131
677
1,410
79.2
16.11
(10.0)
1.05
(38.8) 1.51
736
509
1,115
65.5
17.88
(7.1)
0.80
(45.8) 1.33
566
450
1,274
94.6
Return
Cash flow
equity
operations
from
(A$M)
1,201
Gross
debt to
equity
ratio
(%)
35.2
on
(%)
16
13
19
17
16
FY 2016
FY 2015
FY 20144
FY 2013
FY 2012
(A$)
23.93
22.51
16.28
17.90
19.25
1.
2.
3.
4.
Opening share price is determined as the market open price traded on the first trading day of the relevant financial year.
Closing share price is determined as the market close price traded on the last trading day of the relevant financial year.
TSR is determined over a rolling 3 year period.
The December 2014 amounts shown above include both continuing and discontinued operations.
CIMIC Group Limited Annual Report 2016 | Remuneration Report
CIMIC Group Limited Annual Report 2016 | Remuneration Report
REMUNERATION – Executive Chairman
POLICY AND APPROACH
The Board approves the Executive Chairman’s remuneration arrangements following consideration by the Remuneration and Nomination
Committee.
The Board considered Mr Fernández Verdes’ role as both CEO and Executive Chairman1 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
focused on achieving long-term financial returns.
COMPONENTS
The key components of Mr Fernández Verdes’ remuneration are:
•
an annual allowance as a contribution to his living expenses. In accordance with the terms of his Executive Service Agreement (ESA),
effective 1 January 2017, the gross allowance payable increased from $522,132 to $528,920, representing an increase in line with the
Consumer Price Index (CPI) of 1.3%;
a one-off award of Share Appreciation Rights (SARs) in 2014; and
the payment of a discretionary bonus at any time during the course of employment following the variation to his ESA by the Board on
3 December 2016.
•
•
Mr Fernández Verdes receives remuneration from HOCHTIEF AG in consideration for his employment as HOCHTIEF AG CEO. Details of this
remuneration is available in the HOCHTIEF AG Annual Report at http://www.reports.hochtief.com.
Summary of one-off award to Mr Fernández Verdes
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 his 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 CEO1 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 $32.29.
The SARs vested in full on 13 March 2016 and are exercisable for 3 years from the date of vesting. No more than 40% of the SARs can be
exercised each year for the first 2 years after vesting, and any remaining SARs can be exercised in the final year of the exercise period. No
vested SARs have been exercised as at 31 December 2016.
The SARs will lapse on 13 March 2019 unless they have been exercised or forfeited before that date.
Mr Fernández Verdes would have forfeited any unvested or vested but unexercised SARs if he had ceased to be the CEO of CIMIC before
31 December 2014. Further, Mr Fernández Verdes will forfeit any unvested or vested but unexercised rights if he does not remain a
member of either the Executive Board or the Supervisory Board of HOCHTIEF AG for the period from appointment to 13 March 2017 or if
his employment is summarily terminated. If Mr Fernández Verdes had ceased employment with CIMIC prior to vesting but after 31
December 2014 in any other circumstance (ie, he was not summarily terminated) but remained a member of either the Executive Board
or the Supervisory Board of HOCHTIEF AG, any unvested SARs would have remained on foot and vested and become exercisable in the
ordinary course.
Details of the one-off award of SARs granted to Mr Fernández Verdes in the 2014 Financial Year are set out in the following table.
Grant date
Granted
(number)
10 June 2014
1,200,000
30-day
VWAP at
start of
vesting
period (A$)
17.71
Test date
(vesting date)
Vested
(%)
Forfeited
(%)
13 March 2016
100
-
Fair
value
per
SAR1
(A$)
16.76
Maximum
potential
value of grant
as at 31 Dec
20162 (A$)
8,270,400
Total
maximum
potential
value of
grant3 (A$)
38,748,000
1.
2.
3.
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 2016. 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 potential value of the grant as at 31 December 2016 is calculated by deducting the exercise price ($17.71) from the closing share price
on 31 December 2016 ($34.94) and multiplying this by the proportion of SARs that were available to exercise at that date (40%).
The maximum potential value is calculated as the number of rights multiplied by the maximum payment per SAR ($32.29).
1 On 18 October 2016, Mr Valderas was appointed as CEO in place of Mr Fernández Verdes. Mr Fernández Verdes continues in his capacity as Executive
Chairman.
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CIMIC Group Limited Annual Report 2016 | Remuneration Report
Summary of special bonus payment to Mr Fernández Verdes
Mr Fernández Verdes was awarded by the Board a special bonus payment of $3,000,000 on 15 December 2016. Refer to the Company
Announcement on the ASX dated 15 December 2016 for more information on this payment.
The Board acknowledged that Mr Fernández Verdes’ achievements as CEO and Executive Chairman have exceeded expectations through
his successful leadership resulting in the exceptional performance of CIMIC Group throughout the transformation process which
commenced in 2014. The Board recognised that these changes have placed CIMIC Group in a robust and competitive position.
COMPANY PERFORMANCE
As required by the Corporations Act, the 5 year financial performance of the Group has been set out in the following table.
Year-on-year performance snapshot
Closing share
price -
December2
(A$)
Share
price
apprecia-
tion (%)
Dividend
per share
paid (A$)
TSR3
(%)
EPS
(A$)
PBT
(A$M)
NPAT
(A$M)
Return
on
equity
(%)
Cash flow
from
operations
(A$M)
34.94
46.0
0.98 148.0 1.77
740
580
24.30
8.0
1.14
58.2 1.54
735
520
22.50
38.2
1.17
36.3 2.00
1,131
677
16.11
(10.0)
1.05
(38.8) 1.51
736
509
17.88
(7.1)
0.80
(45.8) 1.33
566
450
16
13
19
17
16
Gross
debt to
equity
ratio
(%)
35.2
1,201
1,920
25.7
1,410
79.2
1,115
65.5
1,274
94.6
Opening
share
price -
January1
(A$)
23.93
22.51
16.28
17.90
19.25
FY 2016
FY 2015
FY 20144
FY 2013
FY 2012
1.
2.
3.
4.
Opening share price is determined as the market open price traded on the first trading day of the relevant financial year.
Closing share price is determined as the market close price traded on the last trading day of the relevant financial year.
TSR is determined over a rolling 3 year period.
The December 2014 amounts shown above include both continuing and discontinued operations.
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CIMIC Group Limited Annual Report 2016 | Remuneration Report
CIMIC Group Limited Annual Report 2016 | Remuneration Report
STATUTORY SENIOR EXECUTIVE REMUNERATION TABLE
SHORT-TERM EMPLOYEE BENEFITS
Cash
salary
(A$)
Cash
bonuses
(STI)
(A$)(a)
Special
bonuses
(A$)
Non-
monetary
benefits
(A$)(d)
Other
(A$)(e)
POST-EMPLOYMENT
Super-
annuation
benefits
(A$)
Termination
benefits (A$)
SUBTOTAL
($A)
LONG-TERM EMPLOYEE BENEFITS
SARs fair value
Share rights fair
(A$)(f)
value (LTI and STI
Options fair
value (A$)(f)
TOTAL PAYMENTS
AND ACCRUALS
(A$)
PERCENTAGE OF
PERCENTAGE OF
BONUSES (%)(g)
SHARE-BASED
INCENTIVE (%)(h)
deferral) (A$)(f)
Senior Executives
M Fernández Verdes1
2016 Financial Year
2015 Financial Year
A Valderas2
2016 Financial Year
2015 Financial Year
A Muriel Bernal3
2016 Financial Year
2015 Financial Year
1.
On 18 October 2016 Mr Valderas was appointed as CEO in place of Mr Fernández Verdes. Mr Fernández Verdes continues in his capacity as
Executive Chairman.
-
-
-
-
3,000,000(b)
-
11,887
35,363
522,134
509,559
1,250,000
994,511
1,631,250
1,350,000
-
-
1,000,000
306,719
1,125,000
1,125,000
225,000(c)
-
2,216
2,123
5,701
-
-
-
-
-
-
-
-
-
-
-
-
-
3,534,021
544,922
-
2,883,466
- 2,346,634
2,355,701
-
- 1,431,719
13,712,646
3,272,618
-
-
-
-
-
-
182,236
344,736
167,849
167,849
-
-
17,246,667
3,817,540
181,952
31,320
132,674
22,837
3,247,654
2,722,690
2,656,224
1,622,405
17.4
-
50.2
49.6
50.8
69.3
-
-
11.2
13.8
11.3
11.8
(a)
(b)
Amounts for the 2016 Financial Year represent cash STI payments to the Senior Executives for the 2016 Financial Year to be paid in April 2017.
For Mr Fernández Verdes, this amount pertains to the special bonus payment approved by the Board on 3 December 2016. Neither Mr Valderas nor
(c)
This payment was awarded for his significant contribution and exceptional performance as CFO of CIMIC, and Chief Development Officer and
Mr Fernández Verdes participated in this Board meeting.
Managing Director of Pacific Partnerships to be paid in April 2017.
(d) Non-monetary benefits included such items as fringe benefits and other salary-sacrificed benefits as agreed from time to time. For Mr Fernández
Verdes, this amount pertains to transport benefits considered necessary by the Company in the execution of his duties.
(e)
For Mr Fernández Verdes, the 2016 and 2015 Financial Year amounts pertain to the fixed allowance amount approved for 2016 and 2015
(f)
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 2016 Financial Year. 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
(g)
The percentage calculation is based on the sum of any cash bonus (STI and/or special bonus) amounts in the 2016 Financial Year as a percentage of
(h)
The percentage of each Senior Executive’s remuneration for the 2016 Financial Year that consisted of equity as a percentage of total payments and
(respectively).
accordance with AASB 2.
total payments and accruals.
accruals.
2. Mr Valderas was appointed as CEO on 18 October 2016 and his remuneration was increased on 1 November 2016. All other material terms of Mr
Valderas’ employment agreement are unchanged and consistent with disclosures made in CIMIC’s 2015 Remuneration Report.
3. Mr Muriel Bernal was appointed as CFO on 23 July 2015. This table sets out the payments to Mr Muriel Bernal from the date he was appointed as
CFO and became a member of the KMP.
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LONG-TERM EMPLOYEE BENEFITS
LONG-TERM EMPLOYEE BENEFITS
Share rights fair
SARs fair value
LONG-TERM EMPLOYEE BENEFITS
Share rights fair
SARs fair value
(A$)(f)
value (LTI and STI
SARs fair value
Share rights fair
(A$)(f)
value (LTI and STI
deferral) (A$)(f)
(A$)(f)
value (LTI and STI
deferral) (A$)(f)
deferral) (A$)(f)
Options fair
Options fair
value (A$)(f)
Options fair
value (A$)(f)
value (A$)(f)
TOTAL PAYMENTS
TOTAL PAYMENTS
AND ACCRUALS
TOTAL PAYMENTS
AND ACCRUALS
(A$)
AND ACCRUALS
(A$)
(A$)
PERCENTAGE OF
PERCENTAGE OF
BONUSES (%)(g)
PERCENTAGE OF
BONUSES (%)(g)
BONUSES (%)(g)
PERCENTAGE OF
PERCENTAGE OF
SHARE-BASED
PERCENTAGE OF
SHARE-BASED
INCENTIVE (%)(h)
SHARE-BASED
INCENTIVE (%)(h)
INCENTIVE (%)(h)
13,712,646
13,712,646
3,272,618
13,712,646
3,272,618
3,272,618
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
182,236
182,236
344,736
182,236
344,736
344,736
167,849
167,849
167,849
167,849
167,849
167,849
181,952
181,952
31,320
181,952
31,320
31,320
132,674
132,674
22,837
132,674
22,837
22,837
17,246,667
17,246,667
17,246,667
3,817,540
3,817,540
3,817,540
3,247,654
3,247,654
2,722,690
3,247,654
2,722,690
2,722,690
2,656,224
2,656,224
1,622,405
2,656,224
1,622,405
1,622,405
17.4
17.4
17.4
-
-
-
-
-
-
-
-
-
50.2
50.2
49.6
50.2
49.6
49.6
50.8
50.8
69.3
50.8
69.3
69.3
11.2
11.2
13.8
11.2
13.8
13.8
11.3
11.3
11.8
11.3
11.8
11.8
(a)
Amounts for the 2016 Financial Year represent cash STI payments to the Senior Executives for the 2016 Financial Year to be paid in April 2017.
For Mr Fernández Verdes, this amount pertains to the special bonus payment approved by the Board on 3 December 2016. Neither Mr Valderas nor
(b)
Amounts for the 2016 Financial Year represent cash STI payments to the Senior Executives for the 2016 Financial Year to be paid in April 2017.
(a)
Amounts for the 2016 Financial Year represent cash STI payments to the Senior Executives for the 2016 Financial Year to be paid in April 2017.
(a)
Mr Fernández Verdes participated in this Board meeting.
For Mr Fernández Verdes, this amount pertains to the special bonus payment approved by the Board on 3 December 2016. Neither Mr Valderas nor
(b)
For Mr Fernández Verdes, this amount pertains to the special bonus payment approved by the Board on 3 December 2016. Neither Mr Valderas nor
(b)
This payment was awarded for his significant contribution and exceptional performance as CFO of CIMIC, and Chief Development Officer and
(c)
Mr Fernández Verdes participated in this Board meeting.
Mr Fernández Verdes participated in this Board meeting.
Managing Director of Pacific Partnerships to be paid in April 2017.
This payment was awarded for his significant contribution and exceptional performance as CFO of CIMIC, and Chief Development Officer and
(c)
This payment was awarded for his significant contribution and exceptional performance as CFO of CIMIC, and Chief Development Officer and
(c)
(d) Non-monetary benefits included such items as fringe benefits and other salary-sacrificed benefits as agreed from time to time. For Mr Fernández
Managing Director of Pacific Partnerships to be paid in April 2017.
Managing Director of Pacific Partnerships to be paid in April 2017.
Verdes, this amount pertains to transport benefits considered necessary by the Company in the execution of his duties.
(d) Non-monetary benefits included such items as fringe benefits and other salary-sacrificed benefits as agreed from time to time. For Mr Fernández
(d) Non-monetary benefits included such items as fringe benefits and other salary-sacrificed benefits as agreed from time to time. For Mr Fernández
For Mr Fernández Verdes, the 2016 and 2015 Financial Year amounts pertain to the fixed allowance amount approved for 2016 and 2015
(e)
Verdes, this amount pertains to transport benefits considered necessary by the Company in the execution of his duties.
Verdes, this amount pertains to transport benefits considered necessary by the Company in the execution of his duties.
(respectively).
For Mr Fernández Verdes, the 2016 and 2015 Financial Year amounts pertain to the fixed allowance amount approved for 2016 and 2015
(e)
For Mr Fernández Verdes, the 2016 and 2015 Financial Year amounts pertain to the fixed allowance amount approved for 2016 and 2015
(e)
In accordance with the requirements of the Australian Accounting Standards, remuneration includes a proportion of the fair value of equity
(f)
(respectively).
(respectively).
compensation granted or outstanding during the 2016 Financial Year. The fair value of equity instruments is determined as at the grant date and is
In accordance with the requirements of the Australian Accounting Standards, remuneration includes a proportion of the fair value of equity
(f)
In accordance with the requirements of the Australian Accounting Standards, remuneration includes a proportion of the fair value of equity
(f)
progressively allocated over the vesting period. The amount included as remuneration is not related to or indicative of the benefit (if any) that Senior
compensation granted or outstanding during the 2016 Financial Year. The fair value of equity instruments is determined as at the grant date and is
compensation granted or outstanding during the 2016 Financial Year. The fair value of equity instruments is determined as at the grant date and is
Executives may ultimately realise should the equity instruments vest. The fair value of equities at the date of their grant has been determined in
progressively allocated over the vesting period. The amount included as remuneration is not related to or indicative of the benefit (if any) that Senior
progressively allocated over the vesting period. The amount included as remuneration is not related to or indicative of the benefit (if any) that Senior
accordance with AASB 2.
Executives may ultimately realise should the equity instruments vest. The fair value of equities at the date of their grant has been determined in
Executives may ultimately realise should the equity instruments vest. The fair value of equities at the date of their grant has been determined in
The percentage calculation is based on the sum of any cash bonus (STI and/or special bonus) amounts in the 2016 Financial Year as a percentage of
accordance with AASB 2.
accordance with AASB 2.
total payments and accruals.
The percentage calculation is based on the sum of any cash bonus (STI and/or special bonus) amounts in the 2016 Financial Year as a percentage of
The percentage calculation is based on the sum of any cash bonus (STI and/or special bonus) amounts in the 2016 Financial Year as a percentage of
The percentage of each Senior Executive’s remuneration for the 2016 Financial Year that consisted of equity as a percentage of total payments and
total payments and accruals.
total payments and accruals.
accruals.
The percentage of each Senior Executive’s remuneration for the 2016 Financial Year that consisted of equity as a percentage of total payments and
The percentage of each Senior Executive’s remuneration for the 2016 Financial Year that consisted of equity as a percentage of total payments and
accruals.
accruals.
(g)
(g)
(g)
(h)
(h)
(h)
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SUMMARY OF EXECUTIVE SERVICE AGREEMENTS
Mr Fernández Verdes
The key terms of Mr Fernández Verdes’ ESA are:
•
fixed allowance amounts as per the table below. The ESA was renegotiated for 2017 and subsequent years with the same terms and
conditions and reflects the change in dual roles of CEO and Executive Chairman to Executive Chairman. For 2017, and any subsequent
years, the allowance amount will increase in line with the CPI.
ENGAGEMENT OF REMUNERATION CONSULTANTS
No remuneration recommendations (as defined by the Corporations Act) were provided by any advisor.
NON-EXECUTIVE DIRECTOR REMUNERATION
The Non-executive Directors who held office during 2016 are set out in the following table.
Year
2014
2015
2016
2017
Fixed allowance amount (A$) Reason
For 10 months service
370,000
495,000 Effective 1 January 2015
514,416 Effective 1 April 2015 to accommodate increase in Fringe Benefits Tax
522,132 Effective 1 January 2016 to accommodate 1.5% CPI increase
528,920 Effective 1 January 2017 to accommodate 1.3% CPI increase
•
•
•
•
•
a one-off award of SARs in 2014 as described in the ‘Remuneration – Executive Chairman’ section of this Remuneration Report.
Mr Fernández Verdes is not eligible to participate in the formal STI or LTI;
provision for the payment of a discretionary bonus at any time during the course of employment, as per the variation to the ESA
approved by the Board on 3 December 2016;
either party may terminate the ESA, the period of notice being the minimum period required by applicable legislation;
there is no specified term; and
there are no specified payments to be made on termination (apart from any payments in lieu of notice and any payable statutory
entitlement).
Other Senior Executives
Remuneration and other terms of employment for all other Senior Executives are formalised in ESAs.
Non-executive Directors during 2016
Name
Current Non-executive Directors
Russell Chenu
José-Luis del Valle Pérez
Trevor Gerber
Pedro López Jiménez
David Robinson
Peter-Wilhelm Sassenfeld
Current Alternate Directors
David Robinson
Robert Seidler AM
Former Non-executive Director
Kirstin Ferguson1
Title (at 31 December 2016)
Independent Non-executive Director
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
1.
Dr Ferguson resigned as Non-executive Director effective 10 November 2016.
Independent Non-executive Director
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 Chairs 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 Directors in addition to Board and Committee fees.
remuneration is reviewed annually;
either party is able to terminate the ESA on 6 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 6 month paid restraint period applies following termination.
The key standard terms of the ESAs for Senior Executives are:
•
•
•
•
•
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.
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ENGAGEMENT OF REMUNERATION CONSULTANTS
No remuneration recommendations (as defined by the Corporations Act) were provided by any advisor.
NON-EXECUTIVE DIRECTOR REMUNERATION
The Non-executive Directors who held office during 2016 are set out in the following table.
Non-executive Directors during 2016
Name
Current Non-executive Directors
Russell Chenu
José-Luis del Valle Pérez
Trevor Gerber
Pedro López Jiménez
David Robinson
Peter-Wilhelm Sassenfeld
Current Alternate Directors
David Robinson
Robert Seidler AM
Former Non-executive Director
Kirstin Ferguson1
Title (at 31 December 2016)
Independent Non-executive Director
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
Independent Non-executive Director
1.
Dr Ferguson resigned as Non-executive Director effective 10 November 2016.
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 Chairs 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 Directors in addition to Board and Committee fees.
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FEE LEVELS AND FEE POOL
Board and Committee fees for 2016
Name
Board
Audit and Risk Committee
Ethics, Compliance and Sustainability Committee
Remuneration and Nomination Committee
Special Committees2
Chair1 (A$)
nil
55,000
40,000
40,000
3,850
Member (A$)
185,000
30,000
20,000
20,000
3,850
1. Mr Fernández Verdes receives no additional remuneration from the fee pool for his duties as Executive Chairman (or membership of any Committee).
Details of his remuneration for his role as CEO and Executive Chairman are set out in the ‘Remuneration – Executive Chairman’ section of this
Remuneration Report.
This fee is payable to all Non-executive Directors for each day of service on a Special Committee.
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 in general meeting. The maximum annual amount is currently $4.5 million (including superannuation
contributions), as approved by shareholders at the 2013 AGM.
ALTERNATE DIRECTORS
CIMIC does not pay fees for Board membership to Alternate Directors. Financial arrangements for Alternate Directors are a private matter
between the Non-executive Director and the relevant Alternate Director.
NON-EXECUTIVE DIRECTOR TOTAL REMUNERATION
Details of Non-executive Directors’ remuneration for the 2016 Financial Year and 2015 Financial Year are set out in the following table.
Non-executive Director Remuneration
SHORT-TERM BENEFITS
POST-EMPLOYMENT
BENEFITS
Board and
Other (A$)
Extra service
Superannuation
fees1 (A$)
contributions (A$)
Committee fees
(A$)
TOTAL
REMUNERATION
FOR SERVICES
AS A NON-
EXECUTIVE
DIRECTOR (A$)
Current Non-executive Directors
R Chenu
2016 Financial Year
2015 Financial Year
T Gerber
2016 Financial Year
2015 Financial Year
P López Jiménez
2016 Financial Year
2015 Financial Year
J del Valle Pérez
2016 Financial Year
2015 Financial Year
D Robinson2
2016 Financial Year
2015 Financial Year
P Sassenfeld6
2016 Financial Year
2015 Financial Year
K Ferguson7
2016 Financial Year
2015 Financial Year
Former Non-executive Director
280,000
280,000
272,857
255,000
222,857
205,000
225,000
225,000
216,389
215,000
215,000
215,000
236,458
275,000
-
-
-
-
-
-
-
-
-
-
-
-
-
1,925
-
-
-
-
-
-
-
-
-
-
1,925
95,8903
57,0425
1,925
19,462
19,046
19,462
19,046
-
-
-
-
-
28,5724
24,4655
1,565
16,683
19,046
299,462
300,971
292,319
274,046
222,857
205,000
225,000
225,000
340,851
298,4325
215,000
216,565
253,141
295,971
1.
These amounts represent additional service fees payable to Non-executive Directors for service on a Special Committee.
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 Robinson received Director fees from a related party, Devine, in respect of his services as Non-executive Director.
This amount is inclusive of $9,110 from Devine in respect of his services as Non-Executive Director.
These amounts have been restated to include Director fees comprising $57,042 in fees and $5,419 in superannuation contributions received from a
related party, Devine, as a result of his appointment on 27 May 2015.
6. Mr Sassenfeld received no Director fees directly from CIMIC in respect of his services as Non-executive Director. The amounts in the table represent
4.
5.
the payment by CIMIC to HOCHTIEF AG in respect of Mr Sassenfeld’s services.
7.
Dr Ferguson resigned as a Non-executive Director effective 10 November 2016.
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NON-EXECUTIVE DIRECTOR TOTAL REMUNERATION
Details of Non-executive Directors’ remuneration for the 2016 Financial Year and 2015 Financial Year are set out in the following table.
Non-executive Director Remuneration
SHORT-TERM BENEFITS
Board and
Committee fees
(A$)
Other (A$)
Extra service
fees1 (A$)
POST-EMPLOYMENT
BENEFITS
Superannuation
contributions (A$)
TOTAL
REMUNERATION
FOR SERVICES
AS A NON-
EXECUTIVE
DIRECTOR (A$)
Current Non-executive Directors
R Chenu
2016 Financial Year
2015 Financial Year
T Gerber
2016 Financial Year
2015 Financial Year
P López Jiménez
2016 Financial Year
2015 Financial Year
J del Valle Pérez
2016 Financial Year
2015 Financial Year
D Robinson2
2016 Financial Year
2015 Financial Year
P Sassenfeld6
2016 Financial Year
2015 Financial Year
Former Non-executive Director
K Ferguson7
2016 Financial Year
2015 Financial Year
280,000
280,000
272,857
255,000
222,857
205,000
225,000
225,000
216,389
215,000
215,000
215,000
-
-
-
-
-
-
-
-
95,8903
57,0425
-
-
-
1,925
-
-
-
-
-
-
-
1,925
-
-
19,462
19,046
19,462
19,046
-
-
-
-
28,5724
24,4655
-
1,565
299,462
300,971
292,319
274,046
222,857
205,000
225,000
225,000
340,851
298,4325
215,000
216,565
253,141
295,971
-
-
These amounts represent additional service fees payable to Non-executive Directors for service on a Special Committee.
1.
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
16,683
19,046
236,458
275,000
1,925
-
retired on 1 July 2008. This entitlement totals $363,495.
3. Mr Robinson received Director fees from a related party, Devine, in respect of his services as Non-executive Director.
4.
5.
This amount is inclusive of $9,110 from Devine in respect of his services as Non-Executive Director.
These amounts have been restated to include Director fees comprising $57,042 in fees and $5,419 in superannuation contributions received from a
related party, Devine, as a result of his appointment on 27 May 2015.
6. 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.
Dr Ferguson resigned as a Non-executive Director effective 10 November 2016.
7.
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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 2016 Financial Year.
Name
Directors
A Valderas
R Chenu
J del Valle Pérez
M Fernández Verdes
T Gerber
P López Jiménez
D Robinson
P Sassenfeld
Former Director
K Ferguson
Alternate Director
R Seidler
Senior Executive
A Muriel Bernal
Balance at 31 Dec
2015
Purchases Received on exercise
of options/rights
Sales Closing Balance1
-
3,285
1,0002
2,7452
2,000
1,1922
1,489
1,8582
1,500
2,341
-
-
8003
-
-
-
-
-
-
-
-
-
15,5874
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,587
4,085
1,0002
2,7452
2,000
1,1922
1,489
1,8582
1,500
2,341
-
1.
2.
3.
4.
The closing balance is at 31 December 2016 or as at the date of departure.
These shares are held by the relevant director on trust for HOCHTIEF Australia.
These shares represent an on-market purchase.
These shares were received on the vesting and exercise of share rights.
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 Earnings Per Share (EPS) and Total Shareholder Return (TSR) performance conditions
measured over a 3 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
Balance at
Granted
Granted
year
(number)
(fair value)
31 Dec
2015
(number)
Vested
and
exercised1
(number)
Vested
and
exercised
(value)
(A$)
Lapsed
Balance at
(number)
31 Dec 2016
(number)
Senior Executives
A Valderas
A Muriel
Bernal
2014
2014
32,552
29,982
-
-
-
-
-
-
-
-
32,552
29,982
1.
Performance hurdles for the 2014 LTI are due to be tested in February 2017.
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 page 31 of this Remuneration Report.
(A$)
-
-
No options under the LTI were awarded for the 2016 year.
The following table sets out the movement of options granted in previous financial years under the current LTI.
Name
Award
Balance
Granted
Granted
Vested1
year
at 31 Dec
(number)
(fair
(number)
2015
(number)
Vested
(value)
(A$)
Vested and
unexercised
(number)
Exercised
(number)
Exercised
Balance at
(value)
(A$)
31 Dec
20162
(number)
2015
104,612
2015
76,280
-
-
-
-
-
-
-
-
-
-
-
-
104,612
76,280
value)
(A$)
-
-
Senior Executives
A
Valderas
A Muriel
Bernal
1.
2.
Options awarded on 29 October 2015 will vest 2 years following grant on 29 October 2017.
Of this number, all options are unvested and not yet exercisable.
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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 Earnings Per Share (EPS) and Total Shareholder Return (TSR) performance conditions
measured over a 3 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
2015
(number)
Granted
(number)
Granted
(fair value)
(A$)
Vested
and
exercised1
(number)
Vested
and
exercised
(value)
(A$)
Lapsed
(number)
Balance at
31 Dec 2016
(number)
Senior Executives
A Valderas
A Muriel
Bernal
2014
2014
32,552
29,982
-
-
-
-
-
-
-
-
-
-
32,552
29,982
1.
Performance hurdles for the 2014 LTI are due to be tested in February 2017.
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 page 31 of this Remuneration Report.
No options under the LTI were awarded for the 2016 year.
The following table sets out the movement of options granted in previous financial years under the current LTI.
Name
Award
year
2015
Senior Executives
A
Valderas
A Muriel
Bernal
2015
Balance
at 31 Dec
2015
(number)
104,612
76,280
Granted
(number)
Granted
(fair
value)
(A$)
Vested1
(number)
Vested
(value)
(A$)
Vested and
unexercised
(number)
Exercised
(number)
Exercised
(value)
(A$)
Balance at
31 Dec
20162
(number)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
104,612
76,280
1.
2.
Options awarded on 29 October 2015 will vest 2 years following grant on 29 October 2017.
Of this number, all options are unvested and not yet exercisable.
CIMIC 2016 ANNUAL REPORT A4 FA.indd 41
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41
15/02/2017 9:44 am
42
CIMIC 2016 ANNUAL REPORT A4 FA.indd 42
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CIMIC Group Limited Annual Report 2016 | Remuneration ReportDEFERRED SHARE RIGHTS UNDER STI Share rights were previously awarded to Senior Executives based on the value of the deferred component of the STI awards. These deferred share rights vest after a 1 year deferral period. Full details of the deferred share rights can be found on pages 28 to 30 of the 2014 Annual Report. This practice of deferral was discontinued for the 2015 Financial Year. Name Award year Grant date Vesting date1 Award value at grant (A$) Granted (number) Fair value per share right (A$) Vested1 (%) Forfeited (%) Senior Executives A Valderas 2014 1 January 2015 31 December 2015 325,000 15,587 20.85 100 - 1.On 10 February 2016, the Company approved the final vesting of this award.SHARES PURCHASED ON MARKET The following shares were purchased on market in 2016 for the purpose of satisfying vested awards under the EIP: Shares purchased (number) Average price paid per share (A$) Ordinary shares 337,683 29.3137 The CIMIC Group Limited Directors’ Report for the 2016 Financial Year is signed at Sydney on 8 February 2017 in accordance with a resolution of the Directors. Marcelino Fernández Verdes Executive Chairman 42 Sustainability
Report
CPB Contractors and Pacific Partnerships,
Transmission Gully, New Zealand
The 27km, four lane Transmission Gully motorway is one leg of the 110km Wellington
Northern Corridor Road of National Significance. It is expected to open for traffic by
2020 following a five-year construction period. Transmission Gully is New Zealand’s first
road project to be procured through a PPP. Environmental management is a
key priority in the sensitive and steep terrain.
CIMIC 2016 ANNUAL REPORT A4 FA.indd 43
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43
CIMIC Group Limited Annual Report 2016 | Sustainability Report
CIMIC Group Limited Annual Report 2016 | Sustainability Report
Sustainability Report
This sustainability section of the Annual Report is structured around our five sustainability commitments which are to:
•
•
•
provide safe communities and safe, supportive and positive workplaces for our people;
act with integrity - honestly and respectfully – in all relationships with the Group’s stakeholders;
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 clients; and
use resources efficiently, minimise waste and promote the delivery of energy efficient, environmentally and socially responsible
projects.
•
•
Our commitments are derived from, and based on, our principles – Integrity, Accountability, Innovation and Delivery – underpinned by
Safety. They provide a common unifying bond for our people and set the framework for the behaviours of our people. The Principles and
our commitments uphold our mission which is to maximise long-term value for shareholders by sustainably delivering projects for our
clients while providing safe, rewarding and fulfilling careers.
STRUCTURE OF THE SUSTAINABILITY REPORT
REPORTING APPROACH
CIMIC Group is committed to operating sustainably and reporting on our ESG performance and progress. This unaudited Sustainability
Report, integrated into our Annual Report, demonstrates both that commitment and how deeply embedded sustainability is in our
business.
For the financial year ended 31 December 2016, we have adopted a Global Reporting Initiative (GRI) Sustainability Reporting Standards
framework for the preparation of this Sustainability Report. By doing so we aim to generate reliable, relevant and standardised
information with which our stakeholders can assess our opportunities and risks, and enable more informed decision-making – both within
the business and externally. The GRI index can be found on pages 81-84.
REPORT BOUNDARY AND SCOPE
This report is for the 12 month period to 31 December 2016, unless otherwise noted. The scope of this report covers CIMIC Group Limited
and its 100% controlled operations which include, amongst others:
•
•
•
•
CPB Contractors (formerly Leighton Contractors, with the name change effective from 4 January 2016);
Leighton Asia, including Leighton India and Leighton Offshore;
Thiess;
Sedgman (a wholly owned subsidiary of the Company since 13 April 2016. Data has been included where available, and for the ease
and comparability of sustainability reporting, for the half year from 1 July 2016 to 31 December 2016);
Pacific Partnerships;
EIC Activities; and
Leighton Properties.
•
•
•
Devine: CIMIC owns a 59.11% stake in the listed property development company;
Ventia: CIMIC holds 46.96% of an investment partnership for the merged services business of CPB Contractors and Thiess;
HLG Contracting: CIMIC holds a 45.0% share in the Middle East-based construction company; and
The scope of this report does not include the operations of CIMIC Group’s investments where CIMIC Group does not have 100%
ownership, namely (as at 31 December 2016):
•
•
•
• Macmahon: CIMIC owns a 20.54% stake (as at 31 December 2016) in the listed mining contracting company.
This report also does not cover the operations of UGL which was subject to a takeover by CIMIC during late 2016. UGL’s sustainability
performance will be covered in future CIMIC Sustainability Reports now that CIMIC has integrated UGL.
AVAILABILITY OF INFORMATION
In 2014, the Group commenced a significant operational transformation, establishing dedicated, streamlined and efficient businesses
focused on construction (CPB Contractors and Leighton Asia), contract mining services (Thiess), public private partnerships (Pacific
Partnerships), and engineering (EIC Activities). Given this transformation, a number of comparable operational safety and environmental
performance measures are not available prior to the 2015 year. Where comparable data is available, it has been provided. In future
reports, the Group expects to be able to provide more detailed operational performance measures by Operating Company.
EXTERNAL ASSURANCE
This report, prepared using the GRI Sustainability Reporting Standards, has not been externally assured. It is our intention over the next
few years to continually improve our disclosure and engagement so as to achieve fully compliant GRI reporting.
44
44
44
CIMIC 2016 ANNUAL REPORT A4 FA.indd 44
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MEASURING OUR PERFORMANCE
CREATING SHAREHOLDER VALUE
Human Capital Return on
Investment 1
Revenue per person
Labour (revenue) productivity
$m/MhW
PROVIDING SAFE COMMUNITIES AND
WORKPLACES
Total fatalities
Of which: Australia
International
Total Class 1 Injuries
Of which: Australia
International
Lost Time Injury Frequency Rate
TRIFR 2
Potential Class 1 incidents
Million hours worked
ACTING WITH INTEGRITY
Income tax rate
LTI/MhW
TRIs/MhW
MhW
Total strategic community investment $m
DEVELOPING A PERFORMANCE CULTURE
Average tenure of employment
years
$k/employee
Total direct employees
Total employees 6
Personnel costs
Payroll ratio 7
Number of new hires
Of which: Male
Female
rate 8
Of which: Male staff (voluntary)
Female staff (voluntary)
Of which: Male staff
(involuntary)
Female staff (involuntary)
Females on the Board
Females in the workforce
Females in senior management
Indigenous employees in
Australia
Indigenous employees in
Australian workforce
Local participation in
International workforce
INNOVATING TO DELIVER PROJECTS
Cumulative green buildings
completed
Cumulative ISCA11 certified and
rated projects
#
$k
#
#
#
#
#
#
#
%
#
$m
#
#
#
%
%
#
%
%
#
#
2016
1.33
369.8
88.6
2016
3
1
2
0
0
0
1.00
2.7
97
122.4
2016
25
0.34
2016
35,3944
50,874
2,432
85.2
3.1
12,564
11,816
748
9.3
9.1
161
2.0
97.7
2016
63
16
# / %
# / %
# / %
# / %
# / %
871 / 9.7
304 / 3.4
1,135 / 12.6
270 / 3.0
09 / 0
2015
1.28
475.0
101.3
2015
0.92
3.2
192
131.0
2015
30
0.8
2015
28,078
3,059
109.5
3.0
1
1
0
2
1
1
-
-
-
-
-
-
-
-
1 / 12.5
9.4
14.3
294
3.9
96.8
2015
57
12
2014
1.01
459.6
66.5
2014
1.08
3.8
333
252.53
2014
34
4.3
2014
36,5125
4,363
119.5
3.9
3
3
0
5
1
4
-
-
-
-
-
-
-
-
1 / 12.5
12.3
10.2
72010
3.2
-
2014
50
6
2013
1.12
401.9
91.0
2013
1.27
5.7
469
247.4
2013
36
6.9
2013
55,990
5,908.1
105.5
4.0
5
1
4
9
2
7
-
-
-
-
-
-
-
-
2 / 20
12.2
12.9
821
2.9
-
2013
35
2
Total turnover numbers and
# / %
12,850 / 46.0
42.7
56.5
25.6
27.6
1 Total Revenue less Total Operating Expenses less Total Employee Related Costs (TERC) divided by TERC. As reported to DJSI.
2 Total Recordable Injury Frequency Rate.
3 As of 31 December 2014 the numbers of employees including the discontinued operations of JHG and Ventia was 45,214. See note below.
4 For the purposes of environmental, safety and other ratios based on people numbers or hours, the base is 28,535 employees which excludes UGL as of 31
Dec 2016 as the Group did not have control during the year and does not report UGL’s operating performance.
5 Reflects total employees from continuing operations as at 31 December 2015; total employees including continuing operations was 45,214 – 22,355 in
6 Total employees includes both direct employees of CIMIC Group and a proportion of the headcount of indirect employees from investments as follows:
Australia and 22,859 in the Group’s international operations.
HLG Contracting (45%) and Ventia (50%) as at 31 December, 2016.
7 Total personnel costs divided by the total number of direct employees. For 2014, the ratio is based on continuing operations and total employees of
36,512. Ratio is distorted because it includes redundancy cost and most of the redundancies occurred in the second half of the year, thereby inflating the
ratio. For 2013, ratio is based on continuing operations, restated to match 2014.
8 Given that a large proportion of the workforce is hired on a project basis, overall employee turnover rates are not an effective method to measure staff
retention. Therefore, turnover rates including only permanently employed staff has been provided.
9 CIMIC had one female Director until 10 November 2016.
10 Includes Indigenous employees of JHG and Services until 2014.
11 Infrastructure Sustainability Council of Australia.
45
2012
1.13
369.8
89.6
2012
3
1
2
4
6
10
1.18
6.6
600
232.4
2012
22
6.4
2012
56,323
5,538.3
98.3
3.7
-
-
-
-
-
-
-
-
-
-
1 / 10
12
10
594
2.1
2012
27
45
CIMIC Group Limited Annual Report 2016 | Sustainability Report
MEASURING OUR PERFORMANCE
#
#
$k
$m/MhW
#
#
#
#
#
#
LTI/MhW
TRIs/MhW
#
MhW
CREATING SHAREHOLDER VALUE
Human Capital Return on
Investment 1
Revenue per person
Labour (revenue) productivity
PROVIDING SAFE COMMUNITIES AND
WORKPLACES
Total fatalities
Of which: Australia
International
Total Class 1 Injuries
Of which: Australia
International
Lost Time Injury Frequency Rate
TRIFR 2
Potential Class 1 incidents
Million hours worked
ACTING WITH INTEGRITY
Income tax rate
%
Total strategic community investment $m
DEVELOPING A PERFORMANCE CULTURE
Total direct employees
Total employees 6
Personnel costs
Payroll ratio 7
Average tenure of employment
Number of new hires
Of which: Male
Female
Total turnover numbers and
rate 8
Of which: Male staff (voluntary)
Female staff (voluntary)
Of which: Male staff
(involuntary)
Female staff (involuntary)
Females on the Board
Females in the workforce
Females in senior management
Indigenous employees in
Australia
Indigenous employees in
Australian workforce
Local participation in
International workforce
INNOVATING TO DELIVER PROJECTS
Cumulative green buildings
completed
Cumulative ISCA11 certified and
rated projects
# / %
# / %
%
%
#
$m
$k/employee
years
#
#
#
# / %
# / %
# / %
# / %
%
%
#
#
2016
1.33
369.8
88.6
2016
3
1
2
0
0
0
1.00
2.7
97
122.4
2016
25
0.34
2016
35,3944
50,874
2,432
85.2
3.1
12,564
11,816
748
12,850 / 46.0
871 / 9.7
304 / 3.4
1,135 / 12.6
270 / 3.0
09 / 0
9.3
9.1
161
2.0
97.7
2016
63
16
2015
1.28
475.0
101.3
2015
1
1
0
2
1
1
0.92
3.2
192
131.0
2015
30
0.8
2015
28,078
-
3,059
109.5
3.0
-
-
-
42.7
-
-
-
-
1 / 12.5
9.4
14.3
294
3.9
96.8
2015
57
12
2014
1.01
459.6
66.5
2014
3
3
0
5
1
4
1.08
3.8
333
252.53
2014
34
4.3
2014
36,5125
-
4,363
119.5
3.9
-
-
-
56.5
-
-
-
-
1 / 12.5
12.3
10.2
72010
3.2
-
2014
50
6
2013
1.12
401.9
91.0
2013
5
1
4
9
2
7
1.27
5.7
469
247.4
2013
36
6.9
2013
55,990
-
5,908.1
105.5
4.0
-
-
-
25.6
-
-
-
-
2 / 20
12.2
12.9
821
2.9
-
2013
35
2
2012
1.13
369.8
89.6
2012
3
1
2
10
4
6
1.18
6.6
600
232.4
2012
22
6.4
2012
56,323
-
5,538.3
98.3
3.7
-
-
-
27.6
-
-
-
-
1 / 10
12
10
594
2.1
-
2012
27
-
1 Total Revenue less Total Operating Expenses less Total Employee Related Costs (TERC) divided by TERC. As reported to DJSI.
2 Total Recordable Injury Frequency Rate.
3 As of 31 December 2014 the numbers of employees including the discontinued operations of JHG and Ventia was 45,214. See note below.
4 For the purposes of environmental, safety and other ratios based on people numbers or hours, the base is 28,535 employees which excludes UGL as of 31
Dec 2016 as the Group did not have control during the year and does not report UGL’s operating performance.
5 Reflects total employees from continuing operations as at 31 December 2015; total employees including continuing operations was 45,214 – 22,355 in
Australia and 22,859 in the Group’s international operations.
6 Total employees includes both direct employees of CIMIC Group and a proportion of the headcount of indirect employees from investments as follows:
HLG Contracting (45%) and Ventia (50%) as at 31 December, 2016.
7 Total personnel costs divided by the total number of direct employees. For 2014, the ratio is based on continuing operations and total employees of
36,512. Ratio is distorted because it includes redundancy cost and most of the redundancies occurred in the second half of the year, thereby inflating the
ratio. For 2013, ratio is based on continuing operations, restated to match 2014.
8 Given that a large proportion of the workforce is hired on a project basis, overall employee turnover rates are not an effective method to measure staff
retention. Therefore, turnover rates including only permanently employed staff has been provided.
9 CIMIC had one female Director until 10 November 2016.
10 Includes Indigenous employees of JHG and Services until 2014.
11 Infrastructure Sustainability Council of Australia.
45
CIMIC 2016 ANNUAL REPORT A4 FA.indd 45
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45
15/02/2017 9:44 am
CIMIC Group Limited Annual Report 2016 | Sustainability Report
CIMIC Group Limited Annual Report 2016 | Sustainability Report
Green Standard projects
registered
Green Standard projects certified
Green Standard employee
certifications
#
#
#
USING RESOURCES EFFICIENTLY
Total Level 1 incidents
Total Level 2 incidents
Of which: Australia
International
Total Level 3 incidents
Of which: Australia
International
Total Breaches
Of which: Australia
International
EIFR12
Violations with fines >$10k
Value of fines related to above
Energy consumption - Diesel
Energy consumption - Electricity
Energy consumption - Other 13
Total energy consumption
Energy intensity 14
Energy intensity 15
% change on prior period
Energy consumption (NGER) 16
Water use (withdrawals and re-use)
Of which: Withdrawals
Reuse
Water discharges
Water intensity 17
Water intensity 18
GHG emissions - Scope 119
GHG emissions - Scope 2
GHG emissions - Scope 3
Carbon intensity 20
% change on prior period
GHG emissions - Scope 1 (NGER)21
GHG emissions - Scope 2 (NGER)
Level of assurance of NGER data
Waste generated
Of which: Recycled
Landfill
Total material volumes 22
Of which: Concrete
Asphalt
Steel
Timber
DJSI Economic dimension
DJSI Environmental dimension
DJSI Social dimension
DJSI Total sustainability score
#
#
#
#
#
#
#
#
#
#
No/MhW
#
$k
GWH
GWH
GWH
GWH
GWH/$m
GWH/MhW
TJ
ML
ML
ML
ML
ML/$m
ML/MhW
kt.C02-e
kt.C02-e
kt.C02-e
kt.C02-e/$m
kt.C02-e
kt.C02-e
Type
kT
kT
kT
kT
kT
kT
kT
kT
Out of 100
Out of 100
Out of 100
Out of 100
14
6
57
2016
0
6
5
1
520
493
27
10
9
1
0.05
0
0
7,722
94
13
7,820
0.72
63.9
9%
0.8
12,664
7,239
5,425
1,668
1.17
103.5
1,964
89
3,423
1.19
25.3%
45.3
32.9
Limited
502
322
180
4,842
4,169
39
630
6
85
85
69
80
14
8
41
2015
0
4
2
2
824
782
38
4
2
2
0.03
0
0
7,477
109
75
7,661
0.58
58.5
16%
1.4
11,935
6,837
5,098
3,957
0.90
91.1
1,913
93
3,497
0.15
-25.6%
77.4
72.1
Limited
329
203
127
4,077
3,418
309
238
111
79
87
74
81
9
8
-
2014
0
18
16
2
1787
1528
259
12
11
1
0.145
0
0
12,224
269
233
12,726
0.76
50.4
-4%
2.6
-
-
-
-
-
-
3,191
219
4,731
0.20
35.2%
153.2
92.5
Limited
-
-
-
5,951
4,880
359
580
132
78
78
73
76
-
7
-
2013
0
21
19
2
1997
1857
140
3
2
1
0.08
1
15
12,605
244
174
13,023
0.58
52.6
-
2.7
-
-
-
-
-
-
3,172
210
-
0.15
-
206.2
128.5
Limited
-
-
-
-
-
-
-
-
78
81
68
76
-
-
-
2012
0
34
32
2
1869
1663
206
26
25
1
0.15
0
0
-
-
-
-
-
-
-
6.9
-
-
-
-
-
-
-
-
-
-
-
730.5
132.5
Limited
-
-
-
-
-
-
-
-
74
71
65
70
12 Environmental Incident Frequency Rate (EIFR) is total number of Level 1 and Level 2 environmental incidents per million hours worked. 2014 EIFR
excludes John Holland and Ventia.
13 2013 excludes solid fuels from Leighton Asia, India and Offshore operations.
14 Energy intensity is ‘Total energy consumption’ divided by ‘Total revenue from continuing operations’.
15 Energy intensity is ‘Total energy consumption’ divided by ‘Million hours worked’.
16 As reported to the Australian Government Clean Energy Regulator under the National Greenhouse and Energy Reporting Act 2007 (NGER Act), includes
energy consumption from the operation of facilities under the Group’s operational control.
17 Water intensity is ‘Total water use’ divided by ‘Total revenue from continuing operations’.
18 Water intensity is ‘Total water use’ divided by ‘Million hours worked’.
19 For 2013 and 2014, period is to 30 June and includes John Holland and Ventia. For 2015, the period is to 31 December and includes internal reporting of
emissions regardless of who has operational control of facilities.
20 Carbon intensity is ‘Total Scope 1’ and ‘Total Scope 2’ emissions divided by ‘Total revenue from continuing operations’.
21 As reported to the Australian Government Clean Energy Regulator under the NGER Act, includes greenhouse gas emissions from the operation of
facilities under the Group’s operational control.
22 Materials includes John Holland and Ventia for 2014.
46
46
46
CIMIC 2016 ANNUAL REPORT A4 FA.indd 46
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MATERIAL ISSUES
DEFINING MATERIAL ISSUES
In November 2016, CIMIC again undertook a materiality assessment to identify and confirm the important potential economic,
environmental, social and governance issues that could affect the business, both positively and negatively. The process built on the
assessment undertaken in the prior year and involved a series of interviews with senior management from across the Group and ESG
analysts at broking firms, an assessment of media reports about the Group, reviews of client sustainability reports, and reference to
recent sustainability reporting submissions such as the DJSI and CDP.
The topics and themes identified from these sources were then used to develop a shortlist of 39 potential material issues which formed
the basis of a web-facilitated survey. The survey was then sent to a selection of stakeholders identified through our strategic plans and in
consultation with our Operating Companies. These included:
• Senior managers from across the Group and employees with operational responsibility for sustainability-related functions;
• ESG and equity analysts providing broking coverage of the Group; and
• Managers representing the Group’s major equity investors and financiers.
It is our intention to extend our engagement to other stakeholders as we progress on the sustainability journey. A desktop review of our
major client’s sustainability issues was also undertaken and cross-checked against the results.
Respondents were asked to prioritise the 39 identified potential material issues which were structured using GRI Guidelines (Economic,
Governance, Environmental and Social - including labour practices, human rights, society, product responsibility) to rank, on a five point
scale, their:
•
•
importance in their assessment of, and decision regarding, CIMIC Group; and
current or potential impact in terms of revenue, costs, investments or risk, on the medium and long-term success of the CIMIC Group.
The 39 identified material issues, and their ranking in terms of both importance and impact, were:
Material issues and their ranking
Ensuring the safety of the public while delivering projects
Avoidance of all forms of bribery and corruption including facilitation payments
Ensuring legal compliance with all environmental regulations and avoiding reputational liabilities
Environmental
Creating safer and healthier workplaces for the well-being of employees and all those in the Group's care
Social
CIMIC Group’s ability to deliver projects that meet the needs of its clients
Managing risk across a diverse and complex range of markets and geographies
Ensuring compliance in overseas markets when operating across different cultures and languages
Attracting, developing and retaining employees to meet the evolving needs of the business
Avoidance of all forms of child or forced labour in the supply chain
Availability of a skilled and trained workforce that can deliver projects and manage the business
Availability of funding for future infrastructure projects given government budget constraints and
Economic
competing demands
Application of appropriate labour standards where people are treated fairly and with respect
Encouraging free, fair and open competition, and complying with all applicable competition laws
Aligning remuneration with performance to encourage and reward the creation of shareholder value
Encouraging a culture of innovation where people are continually looking for new and better ways of
Social
doing things
Respecting the rights of local communities when delivering projects for clients
Impact of changes in local or regional political or regulatory regimes that may impact business
development and project delivery
18.
Protecting biodiversity and ecosystem health (including erosion and sediment management) when
Environmental
Payment of a fair rate of company tax and disclosure of the payments made
Balancing transparency in disclosing information for investors while not giving away commercial
delivering projects
advantage
Changes in economic factors (regulation, government policy, new technology, availability of capital, etc)
Economic
Increased globalisation and a more competitive business environment
Reducing the production of hazardous and non-hazardous waste
that could impact capital productivity
Promoting gender equity in remuneration and promotion decisions
Reducing the consumption and wastage of water
Changes in social factors (government policy, industrial relations, new technology, etc) that could impact
Social
labour productivity
27.
Providing local communities with full, fair and reasonable opportunity to participate in the economic
Social
benefits (i.e. employment, procurement, or as subcontractors) of the Group’s activities
28.
Increased sovereign risk and Australia’s attractiveness as an investment destination
Economic
ESG factor
Social
Social
Economic
Governance
Governance
Social
Social
Social
Social
Governance
Governance
Social
Governance
Governance
Governance
Economic
Environmental
Social
Environmental
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
19.
20.
21.
22.
23.
24.
25.
26.
47
47
CIMIC Group Limited Annual Report 2016 | Sustainability Report
MATERIAL ISSUES
DEFINING MATERIAL ISSUES
In November 2016, CIMIC again undertook a materiality assessment to identify and confirm the important potential economic,
environmental, social and governance issues that could affect the business, both positively and negatively. The process built on the
assessment undertaken in the prior year and involved a series of interviews with senior management from across the Group and ESG
analysts at broking firms, an assessment of media reports about the Group, reviews of client sustainability reports, and reference to
recent sustainability reporting submissions such as the DJSI and CDP.
The topics and themes identified from these sources were then used to develop a shortlist of 39 potential material issues which formed
the basis of a web-facilitated survey. The survey was then sent to a selection of stakeholders identified through our strategic plans and in
consultation with our Operating Companies. These included:
• Senior managers from across the Group and employees with operational responsibility for sustainability-related functions;
• ESG and equity analysts providing broking coverage of the Group; and
• Managers representing the Group’s major equity investors and financiers.
It is our intention to extend our engagement to other stakeholders as we progress on the sustainability journey. A desktop review of our
major client’s sustainability issues was also undertaken and cross-checked against the results.
Respondents were asked to prioritise the 39 identified potential material issues which were structured using GRI Guidelines (Economic,
Governance, Environmental and Social - including labour practices, human rights, society, product responsibility) to rank, on a five point
scale, their:
•
•
importance in their assessment of, and decision regarding, CIMIC Group; and
current or potential impact in terms of revenue, costs, investments or risk, on the medium and long-term success of the CIMIC Group.
The 39 identified material issues, and their ranking in terms of both importance and impact, were:
Material issues and their ranking
Ensuring the safety of the public while delivering projects
Avoidance of all forms of bribery and corruption including facilitation payments
Ensuring legal compliance with all environmental regulations and avoiding reputational liabilities
Creating safer and healthier workplaces for the well-being of employees and all those in the Group's care
CIMIC Group’s ability to deliver projects that meet the needs of its clients
Managing risk across a diverse and complex range of markets and geographies
Ensuring compliance in overseas markets when operating across different cultures and languages
Attracting, developing and retaining employees to meet the evolving needs of the business
Avoidance of all forms of child or forced labour in the supply chain
Availability of a skilled and trained workforce that can deliver projects and manage the business
Availability of funding for future infrastructure projects given government budget constraints and
competing demands
Application of appropriate labour standards where people are treated fairly and with respect
Encouraging free, fair and open competition, and complying with all applicable competition laws
Aligning remuneration with performance to encourage and reward the creation of shareholder value
Encouraging a culture of innovation where people are continually looking for new and better ways of
doing things
Respecting the rights of local communities when delivering projects for clients
Impact of changes in local or regional political or regulatory regimes that may impact business
development and project delivery
Protecting biodiversity and ecosystem health (including erosion and sediment management) when
delivering projects
Payment of a fair rate of company tax and disclosure of the payments made
Balancing transparency in disclosing information for investors while not giving away commercial
advantage
Increased globalisation and a more competitive business environment
Reducing the production of hazardous and non-hazardous waste
Changes in economic factors (regulation, government policy, new technology, availability of capital, etc)
that could impact capital productivity
Promoting gender equity in remuneration and promotion decisions
Reducing the consumption and wastage of water
Changes in social factors (government policy, industrial relations, new technology, etc) that could impact
labour productivity
Providing local communities with full, fair and reasonable opportunity to participate in the economic
benefits (i.e. employment, procurement, or as subcontractors) of the Group’s activities
Increased sovereign risk and Australia’s attractiveness as an investment destination
ESG factor
Social
Social
Environmental
Social
Economic
Governance
Governance
Social
Social
Social
Economic
Social
Governance
Governance
Social
Social
Governance
Environmental
Governance
Governance
Economic
Environmental
Economic
Social
Environmental
Social
Social
Economic
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
47
CIMIC 2016 ANNUAL REPORT A4 FA.indd 47
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CIMIC Group Limited Annual Report 2016 | Sustainability Report
PROVIDING SAFE COMMUNITIES AND WORKPLACES
Measures in place
Actions during 2016
Performance
- 100% of Operating Company
- Maintained a diligent focus on making
- Recorded a fatality at CPB Contractors’
management systems certified to ISO
workplaces safe and continued to
new Royal Adelaide Hospital project in
18001 and/or AS/NZ4801
constantly assess the health and safety
South Australia
of our people
- Recorded a fatality at Leighton Asia’s
Liantang/Heung Yuen Wai Boundary
Control Point project in Hong Kong
- Recorded a fatality at Thiess’ Sangatta
coal mine project in Indonesia
- Reduced Group TRIFR from 3.2 in 2015
to 2.7 in 2016
- Thiess achieved zero Recordable Injuries
(RI) in July, the first Recordable Injury
free month since 2003
- Safety Essentials (or similar) in place
- Geotechnical Safety Essential campaign
- Broad Construction (a subsidiary of CPB
across CPB Contractors, Leighton Asia,
launched in Thiess
Contractors) received an Excellence in
Thiess and Sedgman to provide projects
- Sedgman ‘Critical Controls’ were rolled
Workplace Health and Safety Award) for
with the rules, tools and knowledge to
out in 2016 including implementation of
the fit-out of the David Malcom Justice
manage activities that pose the greatest
Critical Controls audits on operational
Centre in Perth
risk to people
Integrated Sedgman into CIMIC Group
recorded in Sedgman
- One Potential Class 1 (PC1) injury
- Use of ‘above-the-line’ controls used to
Introduced trial of secondary guarding
- Trial to be evaluated
eliminate, substitute, isolate or
systems on construction scissors lifts
- Campaign communicated to employees
engineer out risk
- Rolled out a ‘working at heights’
campaign in CPB Contractors
- Health and Safety Policy which
-
Introduced the ‘Mates in Construction’
- Program in place
promotes employee physical and
suicide prevention training program
mental wellbeing
across CPB Contractors’ sites and offices
- Thiess’ Health Safety & Security
- Systems in place
- Management system being accessed by
foreign speakers
sites
-
-
safety systems
management system available in
Spanish (as well as English, Bahasa and
Mongolian)
OUR APPROACH
Safety underpins everything we do. A business that depends on its people must provide a safe and healthy workplace. CIMIC Group
creates a safe and healthy workplace by performing work safely, encouraging workers to identify and fix workplace hazards, and by
promoting mental health and physical health to our workers.
CIMIC Group promotes, across all of its Operating Companies, a culture of sharing safety innovation, best practices and learning. The
Group is committed to driving safety through simplification of safety systems, and the identification and elimination of Class One Risks
through the creation of evidence-based lead indicators that drive key safety behaviours and outcomes.
The Group recognises that each of its Operating Companies is best placed to identify and control the hazards and risks associated with
that Operating Company. CIMIC supports the Operating Companies through integrated reporting at the CIMIC Group level and to the
CIMIC Board’s Ethics, Compliance and Sustainability Committee.
Our projects aim to integrate hazard identification and risk assessment into the design process with the aim of eliminating or minimising
risk of injury throughout the life of the asset (considering construction, testing and commissioning, operations and maintenance, and
decommissioning and demolition). Every project is required to have a Safety and Health Management Plan that is integrated with the
Group’s management systems.
The Group’s approach is that we take responsibility for everyone on our projects – employees, sub-contractors or visitors. We treat all
workers on our sites equally, irrespective of their role. CIMIC and its Operating Companies recognise that all workers on site are in our
FATALITIES AND CLASS 1 INJURIES
The Group is deeply saddened by the death of three of its workers in 2016: the first in February at the new Royal Adelaide Hospital
Project, being constructed by a joint venture including CPB Contractors; the second, in June, related to an incident at our Thiess Sangatta
Mine in Indonesia; and the third, in November, at Leighton Asia’s Liantang/Hueny Yuen Wai Boundary Control Point project in New
Territories Hong Kong.
care.
49
48
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CIMIC 2016 ANNUAL REPORT A4 FA.indd 48
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CIMIC Group Limited Annual Report 2016 | Sustainability Report 48 29. Growth in renewable energy supply potentially leading to a decline in demand for thermal coal and the impact on contract mining opportunities Economic 30. Continuing population growth, greater urbanisation, and the future growth of China and India Economic 31. Fostering a more diverse workforce that reflects the communities in which the Group operates Social 32. Growth in demand for renewable energy and the impact on construction opportunities Economic 33. Ensuring environmentally and socially responsible sourcing and governance factors are integrated into procurement processes Governance 34. Contributing to the development of local communities who can affect or be affected by the Group's activities Social 35. Improving energy efficiency on projects, in the supply chain and in corporate activities Environmental 36. Minimising the use of materials (e.g. concrete, steel, packaging) and working with the supply chain to reduce environmental impacts Environmental 37. Dealing with climate change threats and opportunities, developments in government’s emissions policies and reducing carbon emissions Environmental 38. Supporting corporate community investment (i.e. sponsorship, donations and corporate partnerships) in local communities and society Social 39. Collaborating with industry not-for-profits to generate shared value Governance 95 responses were received from those surveyed. The results of this survey are summarised in the chart below with the 28 most important and highest impact responses (of the 39 identified material issues) plotted, based on their ratings. IMPORTANCE AND IMPACT MAP The remaining 11 material issues are still addressed in this report because of their importance to ratings bodies such as DJSI or they are key topics identified in the GRI reporting framework, and they are still relevant to some stakeholders. An explanation of our approach to dealing with each individual material issue is set out in more detail in this Sustainability Report. Public safetyBribery & corruptionEnvironmental complianceWorkplace safetyProject deliveryManaging riskOverseas complianceEmployee attraction & retentionChild labourWorkforce availabilityFunding availabilityLabour standardsEncouraging competitionAligning remunerationCulture of innovationRespecting communitiesPolitical or regulatory changeProtecting biodiversityTax policyTransparent disclosureGlobalisation & competitionReducing wasteEconomic changesGender equityUse of waterSocial changesLocal particaptionSoverign riskImportnaceImpactHigh (5.0) Low (3.8) Low (3.2) High (4.8) 48
CIMIC Group Limited Annual Report 2016 | Sustainability Report
PROVIDING SAFE COMMUNITIES AND WORKPLACES
Measures in place
- 100% of Operating Company
management systems certified to ISO
18001 and/or AS/NZ4801
Actions during 2016
- Maintained a diligent focus on making
workplaces safe and continued to
constantly assess the health and safety
of our people
- Safety Essentials (or similar) in place
- Geotechnical Safety Essential campaign
across CPB Contractors, Leighton Asia,
Thiess and Sedgman to provide projects
with the rules, tools and knowledge to
manage activities that pose the greatest
risk to people
- Use of ‘above-the-line’ controls used to
eliminate, substitute, isolate or
engineer out risk
- Health and Safety Policy which
promotes employee physical and
mental wellbeing
- Thiess’ Health Safety & Security
management system available in
Spanish (as well as English, Bahasa and
Mongolian)
launched in Thiess
- Sedgman ‘Critical Controls’ were rolled
out in 2016 including implementation of
Critical Controls audits on operational
sites
Integrated Sedgman into CIMIC Group
safety systems
Introduced trial of secondary guarding
systems on construction scissors lifts
-
-
- Rolled out a ‘working at heights’
campaign in CPB Contractors
Introduced the ‘Mates in Construction’
suicide prevention training program
across CPB Contractors’ sites and offices
-
Performance
- Recorded a fatality at CPB Contractors’
new Royal Adelaide Hospital project in
South Australia
- Recorded a fatality at Leighton Asia’s
Liantang/Heung Yuen Wai Boundary
Control Point project in Hong Kong
- Recorded a fatality at Thiess’ Sangatta
coal mine project in Indonesia
- Reduced Group TRIFR from 3.2 in 2015
to 2.7 in 2016
- Thiess achieved zero Recordable Injuries
(RI) in July, the first Recordable Injury
free month since 2003
- Broad Construction (a subsidiary of CPB
Contractors) received an Excellence in
Workplace Health and Safety Award) for
the fit-out of the David Malcom Justice
Centre in Perth
- One Potential Class 1 (PC1) injury
recorded in Sedgman
- Trial to be evaluated
- Campaign communicated to employees
- Program in place
- Systems in place
- Management system being accessed by
foreign speakers
OUR APPROACH
Safety underpins everything we do. A business that depends on its people must provide a safe and healthy workplace. CIMIC Group
creates a safe and healthy workplace by performing work safely, encouraging workers to identify and fix workplace hazards, and by
promoting mental health and physical health to our workers.
CIMIC Group promotes, across all of its Operating Companies, a culture of sharing safety innovation, best practices and learning. The
Group is committed to driving safety through simplification of safety systems, and the identification and elimination of Class One Risks
through the creation of evidence-based lead indicators that drive key safety behaviours and outcomes.
The Group recognises that each of its Operating Companies is best placed to identify and control the hazards and risks associated with
that Operating Company. CIMIC supports the Operating Companies through integrated reporting at the CIMIC Group level and to the
CIMIC Board’s Ethics, Compliance and Sustainability Committee.
Our projects aim to integrate hazard identification and risk assessment into the design process with the aim of eliminating or minimising
risk of injury throughout the life of the asset (considering construction, testing and commissioning, operations and maintenance, and
decommissioning and demolition). Every project is required to have a Safety and Health Management Plan that is integrated with the
Group’s management systems.
The Group’s approach is that we take responsibility for everyone on our projects – employees, sub-contractors or visitors. We treat all
workers on our sites equally, irrespective of their role. CIMIC and its Operating Companies recognise that all workers on site are in our
care.
FATALITIES AND CLASS 1 INJURIES
The Group is deeply saddened by the death of three of its workers in 2016: the first in February at the new Royal Adelaide Hospital
Project, being constructed by a joint venture including CPB Contractors; the second, in June, related to an incident at our Thiess Sangatta
Mine in Indonesia; and the third, in November, at Leighton Asia’s Liantang/Hueny Yuen Wai Boundary Control Point project in New
Territories Hong Kong.
49
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CIMIC Group Limited Annual Report 2016 | Sustainability Report
CIMIC Group Limited Annual Report 2016 | Sustainability Report
The Board and management extend their deepest condolences to the family, friends and co-workers of the deceased. The project teams
have been working with the relevant authorities and detailed investigations have been initiated to establish the causes of these tragic
events.
There were no other Class 1 Injuries (C1I) within the Group during 2016.
OTHER INJURIES
The Group records the number of Lost Time Injuries (LTI’s)23 which are industry-recognised metrics and the Lost Time Injury Frequency
Rate (LTIFR)24 is used as a lag indicator of injury prevention performance. In 2016, the Group’ LTIFR slightly increased by 0.08 to 1.00 from
0.92.
LTIFR (accidents/MhW)
CPB Contractors
Leighton Asia
Thiess
Sedgman
Other (including CIMIC, EIC Activities, Pacific Partnerships)
Group
2016
0.8
1.5
0.2
0
0
1.00
2015
0.4
1.64
0.4
-
0
0.92
The Group’s preferred lag measure of injuries is Total Recordable Injuries (TRI)25. The Total Recordable Injury Frequency Rate (TRIFR)26,
which captures LTIs, Medically Treated Injuries (MTIs) and Restricted Work Injures (RWIs), provides a higher level and captures a wider
range of injuries, which impact our workers. The Group’s performance in 2016 was 2.7, down from 3.2 in 2015, a 16% reduction. The
table below sets out the TFRIR by Operating Company.
TRIFR (TRIs/MhW)
CPB Contractors
Leighton Asia
Thiess
Sedgman
Other (including CIMIC, EIC Activities, Pacific Partnerships)
Group
2016
3.4
3.0
1.4
4.6
0
2.7
2015
4.0
3.7
2.0
-
0
3.2
LEAD INDICATORS
The Group uses lead indicators of safety performance to identify and help prioritise where effort is needed in order to reduce the
potential for injury to people. Lead indicators, used in this way, become important tools for risk avoidance and minimisation across any
business.
A key lead indicator that the Group measures is identifying and investigating Potential Class 1 injuries (PC1). A PC1 is an incident that may
have resulted in a fatality or a permanent disabling injury. The number of PC1 injuries reduced from 192 in 2015 to 97 in 2016.
PC1 (#)
CPB Contractors
Leighton Asia
Thiess
Sedgman
Other (including CIMIC, EIC Activities, Pacific Partnerships)
Group
2016
56
22
19
1
0
97
2015
93
55
44
-
0
192
SAFETY IN CONSTRUCTION
Consistent with CIMIC’s approach to safety, each of our Operating Companies have safety management systems that, while similar in
their approach, are tailored to meet each individual Operating Companies’ risks and hazards.
The Group is continuing to streamline reporting through the implementation of a common safety system. The benefits of having uniform
reporting, definitions and standards across the Operating Companies will assist us in the identification and roll-out of best practice and to
share safety information more efficiently across the Group.
•
•
•
•
•
•
CPB Contractors’ Safety Essentials are a collection of minimum requirements that are focused on providing projects with the rules, tools
and knowledge to manage activities that pose the greatest risk to our people. The Safety Essentials cover activities such as:
• Electrical work – managing the risk of electric shock;
Live services – risk of working with live services such as power, electricity, gas, water and petroleum;
Live traffic – where there is a risk of being struck by live traffic, or project activities impacting on passing vehicles or pedestrians;
• Mobile cranes and lifting operations – when working with mobile plant that is used to lift, suspend and/or carry, and lower a load;
• Mobile plant – where the public or workers risk being struck by operating mobile plant; and
• Working at heights – where there is a risk of a worker falling or an object falling from height.
Originally launched in 2010, the Safety Essentials were refreshed and reinvigorated in 2015/2016 after a period of extensive review and
consultation with project staff.
As a result of the fatality at the New Royal Adelaide Hospital, CPB Contractors has begun investigating a secondary guarding system (SGS)
that can be fitted to an elevated work platform (EWP - scissor lift). The proposed SGS utilises sonic technology (or radio waves) that are
integrated into the controls of the scissor lift. When the EWP approaches a hard object it will automatically reduce the speed of operation
of the EWP, therefore eliminating most of the risk of being caught between the EWP and the hard object. CPB Contractors is confident
that its initiative will be able to be successfully transferred to the industry so as to improve safety standards on other construction
projects.
In Australia, due to the outdoor nature of construction and construction activity, employees are susceptible to skin cancer. CIMIC has
worked with and supported the Cancer Council of Australia to promote sun awareness and maintaining a healthy lifestyle. The Group also
provides personal protective equipment to reduce the risk including long sleeve shirts, broad-brimmed hats and safety-rated sun glasses.
Our Leighton Asia business has developed a series of Class One Practices (COPs). Similar in nature to the CPB Safety Essentials, the COPs
cover the high risk activities carried out at project sites, such as:
• Working at heights – risks associated with working at heights including falling objects and working above the ground;
Lifting operations – risks associated with crane operations, safe working loads and rigging requirements;
Isolation and hazardous energies – risks associated with electricity, chemicals, kinetic energy and mechanical energy;
• Vehicle and mobile plant movement – risks associated with the interactions between workers and plant and between plant; and
• Temporary works – risks associated with temporary works such as form work and scaffolding.
COPs build on the application of minimum standards and set best practice for controlling safety hazards and risks associated within
Leighton Asia. Leighton Asia’s ‘Strive for L.I.F.E’ initiatives, such as the Strive for L.I.F.E training centres, reinforce COPs. Since opening in
2010, 95,452 Leighton Asia employees have been trained through the Strive for L.I.F.E. training centres.
SAFETY IN MINING AND MINERALS PROCESSING
Thiess’ Safety Essentials describe clear minimum requirements for high risk activities in mining and are mandatory for all Thiess sites.
They comprise non-negotiable critical controls and core procedures, and are produced in English, Spanish, Bahasa (Indonesian) and
Mongolian. The Safety Essentials globally cover higher risk activities such as:
• Explosives – for the safe transportation, use, security and disposal of explosives;
• Geotechnical – to ensure ground movement is managed;
• Heights – for working safely at heights;
Isolation – to ensure energy sources are identified and positively isolated;
Lifting – to work safely with cranes and other lifting equipment;
maintained; and
• Tyres – for working safely with tyres and tyre handling equipment.
• Traffic – for the safe operation and interaction of all vehicles on site and to ensure infrastructure is designed, constructed and
In 2016, Thiess added the Geotechnical Safety Essential which highlights the critical controls necessary to deal with geotechnical hazards
and risks such as rock-falls, rock-bursts, and slope failures.
Thiess has continued to reduce injury rates through the development of lead indicators that drive the behaviours aimed at reducing
hazards and incidents through the proactive identification of those hazards and risks. Thiess has set a target that 60% of all actions taken
to treat or eliminate hazards should arise out of proactive activities such as audits, workplace inspections and observations. The other
40% of actions taken are reactive, arising as a consequence of safety incidents. This approach aims to reduce hazards before they can
result in an injury.
23 An occurrence that resulted in a fatality, permanent disability or time lost from work of one day/shift or more. While the criteria for LTIs vary across
industries, essentially any injury that results in the injured employee losing one shift is generally regarded as an LTI.
24 Accidents per million hours worked (MhW).
25 All fatalities, lost time injuries, cases restricted for work, cases of substitute work due to injury, and medical treatment cases by medical professionals
(doctors, nurses, etc.). It does not include a first aid injury.
26 TRI per million hours worked (MhW).
50
50
50
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CIMIC Group Limited Annual Report 2016 | Sustainability Report
CPB Contractors’ Safety Essentials are a collection of minimum requirements that are focused on providing projects with the rules, tools
and knowledge to manage activities that pose the greatest risk to our people. The Safety Essentials cover activities such as:
• Electrical work – managing the risk of electric shock;
Live services – risk of working with live services such as power, electricity, gas, water and petroleum;
•
Live traffic – where there is a risk of being struck by live traffic, or project activities impacting on passing vehicles or pedestrians;
•
• Mobile cranes and lifting operations – when working with mobile plant that is used to lift, suspend and/or carry, and lower a load;
• Mobile plant – where the public or workers risk being struck by operating mobile plant; and
• Working at heights – where there is a risk of a worker falling or an object falling from height.
Originally launched in 2010, the Safety Essentials were refreshed and reinvigorated in 2015/2016 after a period of extensive review and
consultation with project staff.
As a result of the fatality at the New Royal Adelaide Hospital, CPB Contractors has begun investigating a secondary guarding system (SGS)
that can be fitted to an elevated work platform (EWP - scissor lift). The proposed SGS utilises sonic technology (or radio waves) that are
integrated into the controls of the scissor lift. When the EWP approaches a hard object it will automatically reduce the speed of operation
of the EWP, therefore eliminating most of the risk of being caught between the EWP and the hard object. CPB Contractors is confident
that its initiative will be able to be successfully transferred to the industry so as to improve safety standards on other construction
projects.
In Australia, due to the outdoor nature of construction and construction activity, employees are susceptible to skin cancer. CIMIC has
worked with and supported the Cancer Council of Australia to promote sun awareness and maintaining a healthy lifestyle. The Group also
provides personal protective equipment to reduce the risk including long sleeve shirts, broad-brimmed hats and safety-rated sun glasses.
Our Leighton Asia business has developed a series of Class One Practices (COPs). Similar in nature to the CPB Safety Essentials, the COPs
cover the high risk activities carried out at project sites, such as:
• Working at heights – risks associated with working at heights including falling objects and working above the ground;
•
•
• Vehicle and mobile plant movement – risks associated with the interactions between workers and plant and between plant; and
• Temporary works – risks associated with temporary works such as form work and scaffolding.
Lifting operations – risks associated with crane operations, safe working loads and rigging requirements;
Isolation and hazardous energies – risks associated with electricity, chemicals, kinetic energy and mechanical energy;
COPs build on the application of minimum standards and set best practice for controlling safety hazards and risks associated within
Leighton Asia. Leighton Asia’s ‘Strive for L.I.F.E’ initiatives, such as the Strive for L.I.F.E training centres, reinforce COPs. Since opening in
2010, 95,452 Leighton Asia employees have been trained through the Strive for L.I.F.E. training centres.
SAFETY IN MINING AND MINERALS PROCESSING
Thiess’ Safety Essentials describe clear minimum requirements for high risk activities in mining and are mandatory for all Thiess sites.
They comprise non-negotiable critical controls and core procedures, and are produced in English, Spanish, Bahasa (Indonesian) and
Mongolian. The Safety Essentials globally cover higher risk activities such as:
• Explosives – for the safe transportation, use, security and disposal of explosives;
• Geotechnical – to ensure ground movement is managed;
• Heights – for working safely at heights;
•
•
• Traffic – for the safe operation and interaction of all vehicles on site and to ensure infrastructure is designed, constructed and
Isolation – to ensure energy sources are identified and positively isolated;
Lifting – to work safely with cranes and other lifting equipment;
maintained; and
• Tyres – for working safely with tyres and tyre handling equipment.
In 2016, Thiess added the Geotechnical Safety Essential which highlights the critical controls necessary to deal with geotechnical hazards
and risks such as rock-falls, rock-bursts, and slope failures.
Thiess has continued to reduce injury rates through the development of lead indicators that drive the behaviours aimed at reducing
hazards and incidents through the proactive identification of those hazards and risks. Thiess has set a target that 60% of all actions taken
to treat or eliminate hazards should arise out of proactive activities such as audits, workplace inspections and observations. The other
40% of actions taken are reactive, arising as a consequence of safety incidents. This approach aims to reduce hazards before they can
result in an injury.
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trains our leaders on protective factors;
connects our people with mental health support services offered by our Employee Assistance Program and specialists such as
beyondblue, Lifeline, Mates in Construction and Mates in Mining.
CIMIC Group Limited Annual Report 2016 | Sustainability Report
CIMIC Group Limited Annual Report 2016 | Sustainability Report
The Sedgman ‘Critical Controls’ were rolled out in 2016. These describe clear minimum requirements for high risk activities and are
mandatory for all Sedgman sites. Sedgman’s Critical Controls cover the following material risk activities:
of drugs and alcohol, and sleep and mental health issues. This broad approach acknowledges the interconnected nature of physical and
mental health. These ‘Fit for Work + Fit for Life’ initiatives are an essential element in achieving safe and productive workplaces and will
• Hazardous / stored energy
• Operating energised equipment
• Working at heights
•
• Dropped objects
• Mobile plant, vehicles and pedestrians
• Entanglement and crushing
Lifting activities and suspended loads
Confined space entry
•
• Excavations
• Hot work activities
• Working in hot or cold environments
• Hazardous substances
• Working on or entering a stockpile
• Working over or adjacent to water
Critical Controls include measures to ensure safe processes/systems and safe operating practices are in place, and that they are
integrated into model procedures. Sedgman is committed to the principles of Safety in Design, and the safe design process uses HAZOP
workshops, among other tools, to ensure potential hazards are identified and addressed at the design stage.
Sedgman undertakes monthly HSE Campaigns, providing posters and supporting materials to all sites. A ‘Stop to Spot’ campaign was
launched in early 2016, to highlight the importance of identifying hazards in any task and being prepared for change. In the second half of
2016, Sedgman launched the ‘I’m Committed’ campaign, which focussed on individual commitments to safety and putting them into
action, both at work and at home.
WORKPLACE HEALTH INITIATIVES
In June 2016, CIMIC launched the ‘Fit for work + Fit for life’ initiative, building on our principles and addressing the prevalence of mental
health issues in construction and mining industries. ‘Fit for work + Fit for life’ is about promoting the steps all employees can take to
achieve or maintain their physical and mental health, to avoid or better manage both physical and mental health conditions such as
fatigue, depression and anxiety, and to provide care and support for ourselves and others.
be a central focus for Thiess in 2017.
PUBLIC SAFETY
of public transport and pedestrians.
The Group takes great care to protect the health and safety of its clients and the public which can include passing motorists, passengers
Infrastructure and building projects are being developed in densely populated urban areas. Safety is incorporated into design and results
in the installation of prevention measures such as safety and crash barriers, as well as road or rail closures if necessary. Engineering
solutions include variable speed signs, auto flaggers, barrier guards and truck mounted attenuators.
On the Transmission Gully project in New Zealand, CPB Contractors and HEB Construction (the CPB HEB JV) put in place traffic
management systems to support safety around a number of additional site access points along State Highway 1. Concrete barriers are
being used to provide additional protection, dedicated paths behind concrete barriers are being constructed alongside the roadway in
both directions to provide safe passage for cyclists and any pedestrians past the work zone, and the speed limit has been reduced at all of
the project site access points to minimise any potential conflicts between construction vehicles and the travelling public.
All projects prepare and maintain emergency management plans, which allow for effective responses to health and safety emergencies
and crises on projects, should they occur. The Group maintains a ‘Group Crisis Management Plan’ which coordinates any Group crisis
response, and ensures appropriate Group capabilities are in place to respond if required.
During 2016, with the exception of the three fatalities, there were no material incidents of non-compliance with regulations and/or
COMPLIANCE
voluntary codes.
•
•
OUTLOOK AND FUTURE PLANS
We are committed to our people returning home safely at the end of a day’s work. In 2017, we plan to:
•
focus on reducing the occurrence of C1I and PC1 Injuries through:
ensuring each past incident is effectively investigated;
putting in place engineering controls to ensure that similar incidents do not occur across the Group; and
reviewing the controls put in place in response to C1I and PC1 Injuries to measure their effectiveness;
continue to drive down our TRIFR and LTIFR;
consolidate and simplify our safety systems across the CIMIC Group; and
• develop and improve on evidence-based lead indicators.
‘Fit for work + Fit for life’:
• builds awareness of mental health in our workplace;
•
• builds employee resilience through promoting physical health which supports mental health; and
•
Across the Group in 2016, activities have included: executive briefings with beyondblue, one of Australia’s leading mental health support
specialists; Australian managers training in physical and mental health protective factors; peer support training; and promoting
campaigns such as R U OK and White Ribbon Day.
Awareness of the importance of mental health and suicide prevention is growing across the construction sector with the help of specialist
organisations such as Mates in Construction (MIC). A 2016 health and well-being initiative has seen the introduction of MIC suicide
prevention training program across CPB Contractors’ sites and offices. CPB Contractors has implemented MIC training in four states
where MIC operates (NSW, QLD, WA and SA) and is working with a similar provider to deliver comparable training in other states.
CPB Contractors has also made additional MIC training available to employees who volunteer to be a MIC Connector or ASSIST worker. A
Connector is trained to keep someone needing help safe and to connect them to professional support. ASSIST workers can be compared
to a first aid officer; they are trained to listen and talk to someone contemplating suicide, and to help them develop a plan to maintain life
and keep safe. Crew members, leading hands, supervisors and managers have volunteered for the additional training and we now have a
strong network of Connectors and ASSIST workers across shifts and the rest and recuperation cycle. Awareness is maintained with
reminder tool box talks and refresher MIC training was undertaken during the year, and will continue to be provided. This initiative fits
well with other elements of the Group’s Health, Safety and Wellbeing strategy including a very active approach to injury management,
fly-in-fly-out (FIFO) inductions and on-site health programs.
Sedgman’s health initiatives focus on ensuring our people are mentally and physically healthy to ensure they are at their best to enjoy life
at or outside work. Some of Sedgman’s key health initiatives are the Online Health Assessment, Step Team Challenge, Group Activity
Classes, Better Sleep Program, Flu Shots, Know Your Number – Resilience, and Skin Checks. Other supporting initiatives are the launch of
their next campaign ‘Be in Game’ which will focus on themes such as Staying Alert, Bring Your Own Game, Resilience and Bouncing Back,
and the Sedgman Team Spirit.
In 2016, a visible commitment was made to the health and wellbeing of people at Thiess' Safety Summit. This included the launch of
Thiess’ Health and Wellbeing Framework. The Framework encompasses the four pillars of: health protection; promotion; monitoring; and
intervention. One of the key activities that followed the Summit was the development of Health and Hygiene Risk Assessments. The
outcome of these risk assessments will assist to ensure Thiess provides multi-faceted programs that address the four pillars of their
Framework, while continuing to educate people in the risks and protective factors.
Thiess has also maintained a focus on ensuring teams are ‘Fit for work + Fit for life’ by encouraging projects to implement wellness
programs. This has included promotion, monitoring and intervention programs targeting personal health and lifestyle factors, the impact
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CIMIC Group Limited Annual Report 2016 | Sustainability Report
of drugs and alcohol, and sleep and mental health issues. This broad approach acknowledges the interconnected nature of physical and
mental health. These ‘Fit for Work + Fit for Life’ initiatives are an essential element in achieving safe and productive workplaces and will
be a central focus for Thiess in 2017.
PUBLIC SAFETY
The Group takes great care to protect the health and safety of its clients and the public which can include passing motorists, passengers
of public transport and pedestrians.
Infrastructure and building projects are being developed in densely populated urban areas. Safety is incorporated into design and results
in the installation of prevention measures such as safety and crash barriers, as well as road or rail closures if necessary. Engineering
solutions include variable speed signs, auto flaggers, barrier guards and truck mounted attenuators.
On the Transmission Gully project in New Zealand, CPB Contractors and HEB Construction (the CPB HEB JV) put in place traffic
management systems to support safety around a number of additional site access points along State Highway 1. Concrete barriers are
being used to provide additional protection, dedicated paths behind concrete barriers are being constructed alongside the roadway in
both directions to provide safe passage for cyclists and any pedestrians past the work zone, and the speed limit has been reduced at all of
the project site access points to minimise any potential conflicts between construction vehicles and the travelling public.
All projects prepare and maintain emergency management plans, which allow for effective responses to health and safety emergencies
and crises on projects, should they occur. The Group maintains a ‘Group Crisis Management Plan’ which coordinates any Group crisis
response, and ensures appropriate Group capabilities are in place to respond if required.
COMPLIANCE
During 2016, with the exception of the three fatalities, there were no material incidents of non-compliance with regulations and/or
voluntary codes.
OUTLOOK AND FUTURE PLANS
We are committed to our people returning home safely at the end of a day’s work. In 2017, we plan to:
•
focus on reducing the occurrence of C1I and PC1 Injuries through:
ensuring each past incident is effectively investigated;
putting in place engineering controls to ensure that similar incidents do not occur across the Group; and
reviewing the controls put in place in response to C1I and PC1 Injuries to measure their effectiveness;
continue to drive down our TRIFR and LTIFR;
consolidate and simplify our safety systems across the CIMIC Group; and
•
•
• develop and improve on evidence-based lead indicators.
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CIMIC Group Limited Annual Report 2016 | Sustainability Report
CIMIC Group Limited Annual Report 2016 | Sustainability Report
ACTING WITH INTEGRITY
Measures in place
- Code of Conduct available to all
employees
- Group Code Of Conduct – Management,
Monitoring and Reporting Policy in
place which includes comprehensive
protection for whistleblowers
Actions during 2016
- Refreshed Code of Conduct and
associated training modules
Issued new Procurement Policy and
Procedures which integrates
sustainability and issued rigorous
‘Dealing with Third Parties Procedure’
-
- Anti-Bribery and Corruption Policy in
place
- Continued to communicate Policy to
employees and maintained focus on
Code training
- Group-wide independent Ethics Line
- Changed Ethics Line provider
available for reporting
- Anti-Bullying, Harassment and
Discrimination Policy in place
- Diversity and Inclusion Policy in place
-
Implemented Group Equal Employment
Opportunity, Discrimination, Bullying &
Harassment training. Released in Q416
- Leadership development and succession
planning programs in place
- Ensuring Code of Conduct available to
all Sedgman employees.
- Held executive leadership conference
with a focus on ‘leading with principle’
reinforcing our principles in action
Introduction and implementation of
Group Principles to Sedgman as an
Operating Company
-
- Continuous Disclosure Policy in place
- Privacy Policy in place
- Not applicable
Performance
- 3,124 people acknowledged having read
-
the refreshed Code of Conduct
4,924 employees across the Group
undertook formal on-line Code of
Conduct training including the refreshed
module released in December 2016
- 2,513 operational employees
participated in a pre-start or toolbox
Code of Conduct training session
- 1,576 employees participated in high
risk role workshops
- No instances of significant fines or
sanctions for non-compliance with
Australian and international laws and
regulations during the year
- 23 calls made to the ‘Ethics Line’
(including 10 related to human
resources). Matters were dealt with
internally by the Reportable Conduct
Group, under the supervision of the
ECSC
- To date 209 employees across the
Group undertook face to face training.
The roll out of training across all
employees of the Group will be an
ongoing initiative in 2017
- Attendance of all Group executive
leadership teams
- No significant breaches of Code
- No breaches of continuous disclosure
and the Group is unaware of any
substantiated complaints regarding
breaches of privacy by clients or other
stakeholders
OUR APPROACH
We expect our people to act with integrity - honestly and respectfully – with their colleagues, and in all relationships with the Group’s
stakeholders including our clients, suppliers, shareholders and the community.
The Group Code of Conduct sets the foundation for the way we work every day. It is important for each employee – as an individual - and
unites us as one company. The Code is underpinned by our principles of Integrity, Accountability, Innovation and Delivery, and outlines
the standards of behaviour we expect, regardless of Operating Company, role or location. This Code applies to CIMIC directors and all
employees of the Group, and all alliances and joint ventures in all jurisdictions. The Group seeks to have third parties engaged by the
Group agree to abide by their own code (containing equivalent standards of behaviour) or, if they do not have one, the Group Code.
Where the Code or a policy sets higher standards of behaviour than local laws, rules, customs or norms, the higher standards will apply.
The Code provides a framework, but cannot describe every situation, law or policy that may apply. We expect our people to exercise
good judgement, justify their actions, and try to prevent any potential breaches.
We refreshed the Code of Conduct in 2016 to make it easier to read and deployed new online training to employees at the end of the
year. The Code of Conduct training has been translated into local languages to reflect the communities in which we operate.
AVOIDING BRIBERY AND CORRUPTION
The Group prohibits, and has zero tolerance for, all forms of bribery and corruption. Our people must obey all relevant laws and
regulations, and must not participate in any arrangement which gives any person an improper benefit or an unfair advantage to any
party, directly or through an intermediary. This includes facilitation payments (payments of cash or in kind made to secure or expedite a
routine service, or to ‘facilitate’ a routine Government action), even if allowed under local laws or customs.
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Prevention of bribery and corruption relies on the following key factors:
• promotion of, and adherence to, an ethical culture of integrity and accountability;
• management accountability;
• effective employee recruitment procedures;
• on-going training and awareness and enforcement;
carrying out periodic risk assessments; and
strong internal control systems which includes a robust whistleblower regime.
•
•
which:
and
We have an Anti-Bribery and Corruption Policy supported by the Group Code of Conduct - Management, Monitoring and Reporting Policy
•
identifies roles, responsibilities and obligations of leadership and employee groups;
• prescribes training requirements of various roles in the Group; and
• details related processes, including:
obligations of employees and managers in reporting a concern about a suspected breach of the Code;
confirming protection available to whistleblowers;
outlining investigation processes for an alleged breach of the Code – ensuring it is confidential, objective, independent and fair;
setting out key contacts and details.
Subcontractors and other third parties the Group works with can make a significant contribution to our success. The Group will only do
business with third parties for legitimate purposes, in accordance with the Code, relevant laws and where that business relationship will
benefit the Group. Third parties are entities and individuals outside of CIMIC Group and may include clients, joint venture partners,
subcontractors, consultants and suppliers, agents or intermediaries (as defined by our Dealing with Third Parties Policy).
The Group will not do business with a third party that does not share a similar approach to the Group in relation to ethical matters, or
where engaging with the third party will harm the reputation of the Group. We aim to have effective business relationships with
subcontractors and other third parties, and to encourage them to adopt similar business principles, practices and procedures to those of
the Group. Group employees must ensure that any third party understands the Group’s expectations and the Code.
When the Group has a controlling position in a joint venture or similar arrangement, the Code (or another code containing equivalent
standards of behaviour) must be adopted for the joint venture or other arrangement. In other circumstances, the Group will remain
bound by the Code and will seek to have partners adopt the Code.
Before entering into a commercial relationship with a third party on behalf of the Group, appropriate due diligence must be conducted in
accordance with the Dealing with Third Parties Procedure and all contracts must be approved in accordance with the Group Delegations
of Authority.
•
•
fee or charge.
Each contract with a third party must be in writing and all contracts must:
reflect the entire agreement between the Group and the third party;
• describe in a transparent manner and with an appropriate amount of detail the services and/or goods to be provided; and
contain terms that provide a clear link between, and are commensurate with, the provision of goods or services and the payment of a
‘High Risk’27 third parties may only be engaged where:
•
they have completed and executed a Third Party Anti-Bribery and Corruption Declaration, where it has been established that the
business relationship is a legitimate one, and that the third party will comply with the Code or, if it has a code of similar scope and
•
integrity checks on the third party have been completed (e.g. internet searches on the company and key individuals) and are
content to the Code, its own code; and
acceptable to the approving manager.
Other third parties may only be engaged where they have completed a Third Party Anti-Bribery and Corruption Declaration.
Where either the Third Party Anti-Bribery and Corruption Declaration or the integrity checks are not to the satisfaction of the approving
manager, further enquires must be made. These could include:
• enquiries of the third party about the specific concerns; and
• detailed due diligence by an approved specialist due diligence provider (e.g. Thomson Reuters or Control Risks).
27 The Dealing With Third Parties Procedure has a detailed definition for ‘High Risk’ which includes but is not limited to: if it is a potential/new joint venture
partner; it is an agent and/or intermediary (which includes legal, tax, immigration, financial, security and industrial relations advisers, lobbyists, customs
and shipping agents); it is nominated or recommended by a public official or other representative of a government or state-owned enterprise; it is an
individual (rather than a company or partnership), other than permanent or contract employees; the engagement relates directly to a project for a
government or state-owned enterprise in any country which has a ranking of 80 or higher in the most recent Corruption Perceptions Index (as published
from time to time by Transparency International) such as Mongolia, India, the Philippines, Sri Lanka, Thailand, China, Indonesia, Vietnam, Laos, Papua New
Guinea, Cambodia and Myanmar; or ‘Low Risk’ due diligence enquiries identifies potential issues.
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CIMIC Group Limited Annual Report 2016 | Sustainability Report
Prevention of bribery and corruption relies on the following key factors:
• promotion of, and adherence to, an ethical culture of integrity and accountability;
• management accountability;
• effective employee recruitment procedures;
• on-going training and awareness and enforcement;
•
•
carrying out periodic risk assessments; and
strong internal control systems which includes a robust whistleblower regime.
We have an Anti-Bribery and Corruption Policy supported by the Group Code of Conduct - Management, Monitoring and Reporting Policy
which:
•
• prescribes training requirements of various roles in the Group; and
• details related processes, including:
identifies roles, responsibilities and obligations of leadership and employee groups;
obligations of employees and managers in reporting a concern about a suspected breach of the Code;
confirming protection available to whistleblowers;
outlining investigation processes for an alleged breach of the Code – ensuring it is confidential, objective, independent and fair;
and
setting out key contacts and details.
Subcontractors and other third parties the Group works with can make a significant contribution to our success. The Group will only do
business with third parties for legitimate purposes, in accordance with the Code, relevant laws and where that business relationship will
benefit the Group. Third parties are entities and individuals outside of CIMIC Group and may include clients, joint venture partners,
subcontractors, consultants and suppliers, agents or intermediaries (as defined by our Dealing with Third Parties Policy).
The Group will not do business with a third party that does not share a similar approach to the Group in relation to ethical matters, or
where engaging with the third party will harm the reputation of the Group. We aim to have effective business relationships with
subcontractors and other third parties, and to encourage them to adopt similar business principles, practices and procedures to those of
the Group. Group employees must ensure that any third party understands the Group’s expectations and the Code.
When the Group has a controlling position in a joint venture or similar arrangement, the Code (or another code containing equivalent
standards of behaviour) must be adopted for the joint venture or other arrangement. In other circumstances, the Group will remain
bound by the Code and will seek to have partners adopt the Code.
Before entering into a commercial relationship with a third party on behalf of the Group, appropriate due diligence must be conducted in
accordance with the Dealing with Third Parties Procedure and all contracts must be approved in accordance with the Group Delegations
of Authority.
Each contract with a third party must be in writing and all contracts must:
reflect the entire agreement between the Group and the third party;
•
• describe in a transparent manner and with an appropriate amount of detail the services and/or goods to be provided; and
•
contain terms that provide a clear link between, and are commensurate with, the provision of goods or services and the payment of a
fee or charge.
‘High Risk’27 third parties may only be engaged where:
•
they have completed and executed a Third Party Anti-Bribery and Corruption Declaration, where it has been established that the
business relationship is a legitimate one, and that the third party will comply with the Code or, if it has a code of similar scope and
content to the Code, its own code; and
integrity checks on the third party have been completed (e.g. internet searches on the company and key individuals) and are
acceptable to the approving manager.
•
Other third parties may only be engaged where they have completed a Third Party Anti-Bribery and Corruption Declaration.
Where either the Third Party Anti-Bribery and Corruption Declaration or the integrity checks are not to the satisfaction of the approving
manager, further enquires must be made. These could include:
• enquiries of the third party about the specific concerns; and
• detailed due diligence by an approved specialist due diligence provider (e.g. Thomson Reuters or Control Risks).
27 The Dealing With Third Parties Procedure has a detailed definition for ‘High Risk’ which includes but is not limited to: if it is a potential/new joint venture
partner; it is an agent and/or intermediary (which includes legal, tax, immigration, financial, security and industrial relations advisers, lobbyists, customs
and shipping agents); it is nominated or recommended by a public official or other representative of a government or state-owned enterprise; it is an
individual (rather than a company or partnership), other than permanent or contract employees; the engagement relates directly to a project for a
government or state-owned enterprise in any country which has a ranking of 80 or higher in the most recent Corruption Perceptions Index (as published
from time to time by Transparency International) such as Mongolia, India, the Philippines, Sri Lanka, Thailand, China, Indonesia, Vietnam, Laos, Papua New
Guinea, Cambodia and Myanmar; or ‘Low Risk’ due diligence enquiries identifies potential issues.
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CIMIC Group Limited Annual Report 2016 | Sustainability Report
CIMIC Group Limited Annual Report 2016 | Sustainability Report
The Group does not enter into any agreements in relation to services such as lobbying, facilitating client relationships, relationship
management, strategic advice, or other stakeholder management services which may directly or indirectly influence decision makers
considering any bid for work.
The Group has a Privacy Policy which applies to all employees of the Group, third parties engaged by the Group, and all alliances and joint
ventures in all jurisdictions. The objectives of this Policy are to treat personal information:
•
in Australia, including that of its Australian customers and business partners, in accordance with the Australian Privacy Act 1988 (Cth)
COMMUNICATION AND TRAINING
CIMIC Group Code of Conduct training is completed by employees within 3 months of commencing within the Group and then repeated
every two years. Training includes online training for white collar workers, toolbox talks for blue collar workers, and face-to-face training
for high risk roles. In 2016, we required employees to acknowledge that they had read the refreshed Group Code of Conduct. In
December 2016, we deployed the online training for the refreshed Group Code of Conduct. Training completion (by employee numbers)
are provided below:
Completion of formal Code of Conduct training (#)
CIMIC
CPB Contractors
Leighton Asia
Thiess
Sedgman
EIC Activities
Pacific Partnerships
Group
2016 (On-line only)
38
414
3,513
511
435
0
13
4,924
2016 (Total)
82
1,717
4,270
2,380
1,089
25
61
9,624
2015 (Total)
47
2,486
630
1,030
-
101
40
4,334
MONITORING AND WHISTLEBLOWERS
CIMIC provides the ‘Ethics Line’, a confidential way for employees, sub-contractors and partners to voice their concerns should they come
across potentially unethical practices. In 2016, we appointed a new provider and promoted the Ethics Line across the Group, including
our projects.
The Ethics Line is an independent service operated by STOPline Pty Ltd, a leading provider of disclosure management services. It is a 24
hours-a-day, seven days-a-week service staffed by highly trained consultants who are able to access a comprehensive interpreter service
covering all the regions where we operate and the languages our people speak. All reports made to the Ethics Line are treated
confidentially. Matters can be reported to the Ethics Line via phone, fax, on-line, by email or post.
CIMIC and each Operating Company maintain a Reportable Conduct Group, with membership comprising the CEO or Managing Director,
CFO, General Counsel, and Head of Human Resources, or as otherwise determined by the CEO. Its responsibilities include monitoring and
responding appropriately to matters investigated and brought before it, and reporting to the CIMIC Board Ethics, Compliance &
Sustainability Committee (ECSC), a sub-committee of the CIMIC Board, on a regular basis about matters reported, actions taken, and the
success or otherwise of systems in place to support compliance with the Code. The Group monitors the volume and type of disclosures
received through the Ethics Line. Any complaints that are received are dealt with in accordance with the Code.
The ECSC, on behalf of the Board, monitors and reviews the ethical standards and practices generally within the Group, compliance with
the Code, and compliance with applicable legal and regulatory requirements. The ECSC receives quarterly reporting at a high level on the
nature of all calls to the Ethics Line. Any serious matters are also reported to the ECSC.
In 2016, the nature of the calls to the Ethics Line were as follows:
Calls to the Ethics Line (#)
Conflicts
Breaches of code/procedures
Misappropriation/theft
Fraud
Human resources related
Other
Total
2016
5
2
0
0
10
6
23
Of the matters reported in 2016, two were considered substantive enough to be reported to the Reportable Conduct Group for further
investigation. Both related to allegations regarding training processes and have been dealt with internally.
DISCLOSURE AND PRIVACY
Listed companies, such as CIMIC, must comply with the continuous disclosure obligations in the ASX Listing Rules and the Corporations
Act. This is also essential for the maintenance of shareholder confidence and market trust.
A Market Disclosure and Communications Framework is in place and the Group has supporting procedures for the gathering and release
of information to the ASX. Our corporate governance processes are continuously reviewed to ensure compliance with changes to the
Corporations Act and other legislation that affects the Group’s operations.
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(the Privacy Act) and the Australian Privacy Principles; and
• outside Australia, in accordance with the applicable law.
breaches of privacy by clients or other stakeholders.
FREE AND FAIR COMPETITION
During 2016, there were no breaches of continuous disclosure and the Group is unaware of any substantiated complaints regarding
The Group is committed to the principles of free and fair competition as reflected in our Code of Conduct. The Group will always compete
vigorously but fairly, and comply with all applicable competition laws. The Group will also comply with all applicable national and
international laws, regulations and restrictions relating to the movement of materials, goods and services.
In 2016, there were no significant fines or non-monetary sanctions for breaches of laws or regulations related to anti-competitive
conduct, marketing communications, or other matters of non-compliance.
No legal actions were commenced or are outstanding with respect to anti-competitive, anti-trust or monopoly behaviour. There were no
instances of significant fines or sanctions for non-compliance with Australian and international laws and regulations during the year.28
The Group does not sell banned or disputed products.
SUPPLY CHAIN AND LOCAL SUPPLIERS
Our Operating Companies aim to build sustainable supply chains, relevant to their focused businesses. The major elements of the Group’s
supply chain are materials (concrete, steel, and asphalt), plant and equipment, and fuel and sub-contractors (such as electricians,
plumbers, glaziers, steel fixers and other tradespeople). We seek to minimise the impact of our construction materials such as steel,
timber and concrete by working with our suppliers to identify measures to improve the efficient use of these resources. Measures
identified include: providing financial incentives for subcontractors to reduce wastage of reinforcing steel (rebar), cabling and pipes;
reusing inert waste and secondary aggregate as backfill on projects; and redeployment of concrete waste to build temporary road
structures, hard stands and precast concrete road barriers, amongst other things.
In 2016, CIMIC launched its Group Procurement Policy which applies to all project related and corporate procurement of CIMIC Group
globally, including joint ventures. The new Policy aligns with our Code of Conduct and will play a key role in supporting project delivery,
cost control, sustainability and financial performance. Suppliers are assessed against relevant performance dimensions: compliance with
health, safety and labour standards (15%), compliance with sustainability/ environmental regulations (15%), quality (15%), schedule
compliance (15%), technical assistance (10%), responsiveness (10%), contract terms and conditions (10%), quality certificates (5%),
withholdings and warranties (5%).
All suppliers must comply with the Dealing with Third Parties Procedure referred to above. The Procedure aims to avoid dealing with third
parties who do not share a similar approach to the Group in relation to ethical matters, including supply related matters.
Locally sourced goods and services support local employment, boost regional economic growth and create upskilling opportunities. In
some cases, purchasing locally made products and services can minimise transport costs and reduce fuel consumption and associated
greenhouse gas emissions.
For example, on the Transmission Gully project in New Zealand, the CPB HEB JV is a founding member of the Porirua Youth2Work
program and has pledged to inspire local youth into careers in the construction industry. The CPB HEB JV is recruiting around 100 local
labourers and 100 plant machinery operators as the project gears up for the first season of major earthworks.
CPB Contractors also completed the construction of Papua New Guinea’s (PNG) new National Football Stadium in Port Moresby,
redeveloping an existing playing field to create a 15,000 seat venue to host rugby league and the 2016 Pacific Games. The project
featured 88% involvement of PNG-based companies and a national workforce involvement rate of 90%. Practical completion was
achieved 24 days ahead of schedule with no LTIs and a TRIFR of 1.51.
28 CIMIC is continuing to cooperate with the relevant authorities regarding an alleged breach of the Code by employees within the Leighton International
business prior to 2012 that, if substantiated, may have contravened Australian laws. This matter was self-reported to the Australian Federal Police and
CIMIC does not know when the investigations will be concluded.
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CIMIC Group Limited Annual Report 2016 | Sustainability Report
The Group has a Privacy Policy which applies to all employees of the Group, third parties engaged by the Group, and all alliances and joint
ventures in all jurisdictions. The objectives of this Policy are to treat personal information:
•
in Australia, including that of its Australian customers and business partners, in accordance with the Australian Privacy Act 1988 (Cth)
(the Privacy Act) and the Australian Privacy Principles; and
• outside Australia, in accordance with the applicable law.
During 2016, there were no breaches of continuous disclosure and the Group is unaware of any substantiated complaints regarding
breaches of privacy by clients or other stakeholders.
FREE AND FAIR COMPETITION
The Group is committed to the principles of free and fair competition as reflected in our Code of Conduct. The Group will always compete
vigorously but fairly, and comply with all applicable competition laws. The Group will also comply with all applicable national and
international laws, regulations and restrictions relating to the movement of materials, goods and services.
In 2016, there were no significant fines or non-monetary sanctions for breaches of laws or regulations related to anti-competitive
conduct, marketing communications, or other matters of non-compliance.
No legal actions were commenced or are outstanding with respect to anti-competitive, anti-trust or monopoly behaviour. There were no
instances of significant fines or sanctions for non-compliance with Australian and international laws and regulations during the year.28
The Group does not sell banned or disputed products.
SUPPLY CHAIN AND LOCAL SUPPLIERS
Our Operating Companies aim to build sustainable supply chains, relevant to their focused businesses. The major elements of the Group’s
supply chain are materials (concrete, steel, and asphalt), plant and equipment, and fuel and sub-contractors (such as electricians,
plumbers, glaziers, steel fixers and other tradespeople). We seek to minimise the impact of our construction materials such as steel,
timber and concrete by working with our suppliers to identify measures to improve the efficient use of these resources. Measures
identified include: providing financial incentives for subcontractors to reduce wastage of reinforcing steel (rebar), cabling and pipes;
reusing inert waste and secondary aggregate as backfill on projects; and redeployment of concrete waste to build temporary road
structures, hard stands and precast concrete road barriers, amongst other things.
In 2016, CIMIC launched its Group Procurement Policy which applies to all project related and corporate procurement of CIMIC Group
globally, including joint ventures. The new Policy aligns with our Code of Conduct and will play a key role in supporting project delivery,
cost control, sustainability and financial performance. Suppliers are assessed against relevant performance dimensions: compliance with
health, safety and labour standards (15%), compliance with sustainability/ environmental regulations (15%), quality (15%), schedule
compliance (15%), technical assistance (10%), responsiveness (10%), contract terms and conditions (10%), quality certificates (5%),
withholdings and warranties (5%).
All suppliers must comply with the Dealing with Third Parties Procedure referred to above. The Procedure aims to avoid dealing with third
parties who do not share a similar approach to the Group in relation to ethical matters, including supply related matters.
Locally sourced goods and services support local employment, boost regional economic growth and create upskilling opportunities. In
some cases, purchasing locally made products and services can minimise transport costs and reduce fuel consumption and associated
greenhouse gas emissions.
For example, on the Transmission Gully project in New Zealand, the CPB HEB JV is a founding member of the Porirua Youth2Work
program and has pledged to inspire local youth into careers in the construction industry. The CPB HEB JV is recruiting around 100 local
labourers and 100 plant machinery operators as the project gears up for the first season of major earthworks.
CPB Contractors also completed the construction of Papua New Guinea’s (PNG) new National Football Stadium in Port Moresby,
redeveloping an existing playing field to create a 15,000 seat venue to host rugby league and the 2016 Pacific Games. The project
featured 88% involvement of PNG-based companies and a national workforce involvement rate of 90%. Practical completion was
achieved 24 days ahead of schedule with no LTIs and a TRIFR of 1.51.
28 CIMIC is continuing to cooperate with the relevant authorities regarding an alleged breach of the Code by employees within the Leighton International
business prior to 2012 that, if substantiated, may have contravened Australian laws. This matter was self-reported to the Australian Federal Police and
CIMIC does not know when the investigations will be concluded.
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TAX POLICY
The Group is committed to managing all taxes in a sustainable manner with regard to the commercial and social imperatives of our
business and stakeholders. The Group does not undertake purely tax driven transactions. Specifically, no innovative or aggressive tax
planning transaction is undertaken and all transactions must have a legitimate business purpose.
received sound and speech therapy enabling him to overcome his disability and participate in the hearing world. Through Thiess’ support
and assistance, funds were also raised at the Gala Ball enabling the centre’s vital programs and initiatives to continue in 2017. From
humble beginnings to present day, Thiess has been an important part of the centre’s 25 year success, and in 2017 the relationship will see
the hearing screening program delivered to regional Queensland mining communities.
In 2016, the Group’s effective tax rate was 25.4%, compared to the Australian corporate tax rate of 30%, primarily due to refunds of
overpaid income taxes relating to divestment activity that took place in 2014. Our performance over the past four years is laid out in the
‘Measuring our performance’ table in this Sustainability Report. Despite the drop in rate in 2016, the Group continued to maintain an
average effective tax rate of 30% over the last three years. Based on Australian Taxation Office reported figures, for the 2014/15 year29,
CIMIC ranked 13th in respect of the amount of tax payable by Australian public and foreign-owned corporate tax entities.
CIMIC understands that corporate tax payable by the Group provides important contributions to the financing of government services
and programs, and the provision of important infrastructure. In addition, the Group is a substantial generator of payroll tax, as well as
excise and stamp duty, which also contributes to government revenue.
CIMIC does not receive significant financial aid from governments, apart from standard tax relief measures that are available to similar
businesses in the jurisdictions where CIMIC operates such as the Australian Government’s Research and Development tax incentives or
accelerated depreciation allowances30.
POLITICAL DONATIONS
In keeping with the Code, the Group did not make any donations, either in kind or directly, to political organisations, political parties,
politicians, or trade unions in 2015 or 2016.
LOCAL COMMUNITY ENGAGEMENT
The objectives of the Group’s Sustainability Policy, issued in 2016, include amongst other things, encouraging initiatives and successfully
delivering projects that meet client expectations, provide value for money, and leave net positive legacies for CIMIC Group, our clients,
users, the environment and communities. We work with relevant community stakeholders, especially those most affected by our
operations, and seek to identify and address their concerns and expectations. Each Operating Company has its own community
engagement policy and framework. We also incorporate a Stakeholder Engagement Plan in the planning process for each project, which
includes the recording and tracking of the management in relation to community concerns.
From time-to-time our construction activities may impinge on local communities as we deliver infrastructure projects for our clients.
When they do, we try to minimise the impact of our activities by engaging proactively, being approachable and developing positive
relationships with community members. We understand that communities may be concerned about the potential impact of traffic, noise,
dust, access changes, the siting of new infrastructure (i.e. tunnel vents or noise walls) or even the resumption of property. Generally
these impacts are the outcome of decisions made by our clients. However, our Operating Companies will seek to minimise these impacts
as far as possible and to carry out the work in a proactive, approachable, empathetic and positive way.
The Group has not identified any incidents of violations involving the rights of Indigenous peoples during the reporting period.
COMMUNITY INVESTMENT
Our objectives are to deliver shared value for the community and CIMIC Group. For the community, our initiatives should make a
tangible, genuine and lasting improvement to the quality of people’s lives.
The Group may support local community groups and charities through sponsorships and donations that are legal, ethical and further the
interests of the Group, and have mutual benefit to the community or broader society and CIMIC Group. During the 2016 Financial Year,
the Group directly gave more than $0.34 million to the community through partnerships, sponsorships, donations and workplace giving.
Our people are also encouraged to fundraise and volunteer to help create sustainable communities.
Support for Central Queensland Rescue Helicopter Service (CQ Rescue) Mackay and Capricorn were part of Thiess’ regional partnerships
for 2016. This support enables CQ Rescue to continue to provide world class aero-medical and emergency rescue services 24/7 and 365
days of the year to all residents, workers and visitors in and around Central Queensland. Sponsorship of these critical emergency service
providers ensured the Group’s mining related sites and mining communities in the Bowen and Callide Basins were covered for any
eventuality. This year saw an increase in the number of rescues across the region; through Thiess’ support CQ Rescue was able to service
these requests and save lives. Support also extended to individual site participation in CQ Rescue activities, sponsoring signature
fundraising events, and coordinating T-shirt drives which raised additional funds. In 2017, the ongoing relationship with CQ Rescue will
see Thiess as a key sponsor of pilot and paramedic training; all vital requirements to enable ongoing day and night time rescues.
Thiess’ 21 year partnership with Hear and Say has changed the lives of thousands of Queensland children with a hearing impairment. In
2016, Thiess continued its support of Hear and Say by sponsoring the Child Champion Program, where ‘Harrison’, the sponsored child,
29 2014-15 Report of Entity Tax Information, Corporate Tax Transparency, Australian Taxation Office.
30 Governments at local, State and Federal levels are important clients. The Group does receive income from Governments in the form of fees,
reimbursement of costs or contractual entitlements for infrastructure construction and operations and maintenance work performed on a competitively
tendered basis.
58
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Sedgman was proud to support the beyondblue mental health initiative, with a number of their people supporting a fund raising drive.
Sedgman was acknowledged as a beyondblue ‘Fundraising Legend’ for their contribution in 2016.
In May 2016, WestConnex contractor, the CPB Contractors Samsung John Holland Joint Venture (CPBSJH), was able to support the locally
disadvantaged community nearby the project. Partnering with local charity organisation, the Exodus Foundation, CPBJSH facilitated the
donation of several hundred pieces of furniture, white goods and bedding from the former Phillip Lodge Motel in Ashfield. Founded in
1989, the Exodus Foundation strives to combat disadvantage in Sydney's inner west by providing food, social health and wellbeing
services to those who need it most.
CPB Contractors’ project team at the Acute Services Building Christchurch Hospital in New Zealand provided some Christmas cheer for
children in the hospital over the holiday season. Many of the 200 workers on the project met to hand over toys donated by the team and
the project’s subcontractors. Because the 75 bed children’s ward is very close to the construction zone, and is full at this time of year, the
team wanted to do something that would help add some fun to the children’s day and distract from the noise and activity outside.
Hospital staff said they were overwhelmed by the ‘incredible generosity’ of the CPB Contractors workers and subcontractors.
In 2016, CIMIC relocated its head office to a new, sustainable facility at 177 Pacific Highway, North Sydney (see ‘Innovating to deliver
projects’ section of this Sustainability Report for more detail) which also serves as the headquarters for all of the Group’s NSW
operations. In moving from the former head office at St Leonards, which had been the Group’s base since 1984, a range of furniture and
other goods were surplus to requirements. Some of these were donated to the CatholicCare ‘Out of Home Care’ program at West
Gosford on the NSW Central Coast which provides care for children and young people from 0-18 years of age who are not able to live with
their own families. Other surplus furniture was donated to The Salvation Army, to generate financial support for the Salvos’ varied social
and community service programs, and some also went to the Rough Edges charity that helps homeless people in Darlinghurst.
In 2016, CIMIC sent two volunteers from the Group (including a 2016 civil engineering graduate) to build a 40-metre long pedestrian
bridge in Rwanda alongside employees from HOCHTIEF. The project was delivered in partnership with the charity organisation Bridges to
Prosperity. Building this new bridge will help local residents to avoid a dangerous crossing which, during the rainy season, cuts them off
from work, markets or schools. Estimates suggest that this project will benefit 5,780 people directly and another 9,280 indirectly.
COLLABORATION WITH INDUSTRY AND NGOS
The Group has built strong relationships with industry and not-for-profit groups, including non-governmental organisations (NGOs), at
local, regional and national levels, as part of our commitment to achieving sustainable outcomes for the Group, our industries and the
broader community.
We partner with and/or are members of groups such as:
• AusIMM (Australasian Institute of Mining and
Metallurgy)
• QBCC Licence
• QCoal Foundation
• AustCham (Australian Chamber of Commerce)
• QRC (Queensland Resources Council)
• AUSTMINE (Australian Mining Equipment and services
• Queensland Resource Council
export association)
• Australian Industry Group
• Australian Constructors Association
• Australian Health Promotion Association
• Australian Mines & Metals Association
• RACQ CQ Rescue Mackay
• RACQ CQ Rescue Capricorn Reconciliation Australia
• Resource Industry Network
• Royal Flying Doctors Service
• South Australian Chamber of Mines and Energy
• Central Queensland Mine Rehabilitation Group
• STEM Queensland Academy of Science, Maths and Technology
• Chamber of Commerce Local Industry Networks
• Supply Nation
• Chamber of Minerals and Energy (CME)
• University of Queensland
• Chamber of Minerals and Energy of Western Australia
• Women in Mining (NSW, WA, QLD)
• Committee of Economic Development Australia
• Women in Resources National Awards
• Workplace Giving
•
•
International Society of Explosives Engineers
• Hong Kong Construction Association
Indonesian Contractors Association
• Masters Builders Association Malaysia
Infrastructure Sustainability Council of Australia
• Singapore Contractors Association Ltd
• STRATTERA (Natural Resources of New Zealand)
• Diversity Council of Australia
• Green Building Council of Australia
• Hear and Say
• Hunter Coal Environment Group
ICN Industry Capability Network
• Minerals Council of Australia
• New South Wales Minerals Council
•
•
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CIMIC Group Limited Annual Report 2016 | Sustainability Report
received sound and speech therapy enabling him to overcome his disability and participate in the hearing world. Through Thiess’ support
and assistance, funds were also raised at the Gala Ball enabling the centre’s vital programs and initiatives to continue in 2017. From
humble beginnings to present day, Thiess has been an important part of the centre’s 25 year success, and in 2017 the relationship will see
the hearing screening program delivered to regional Queensland mining communities.
Sedgman was proud to support the beyondblue mental health initiative, with a number of their people supporting a fund raising drive.
Sedgman was acknowledged as a beyondblue ‘Fundraising Legend’ for their contribution in 2016.
In May 2016, WestConnex contractor, the CPB Contractors Samsung John Holland Joint Venture (CPBSJH), was able to support the locally
disadvantaged community nearby the project. Partnering with local charity organisation, the Exodus Foundation, CPBJSH facilitated the
donation of several hundred pieces of furniture, white goods and bedding from the former Phillip Lodge Motel in Ashfield. Founded in
1989, the Exodus Foundation strives to combat disadvantage in Sydney's inner west by providing food, social health and wellbeing
services to those who need it most.
CPB Contractors’ project team at the Acute Services Building Christchurch Hospital in New Zealand provided some Christmas cheer for
children in the hospital over the holiday season. Many of the 200 workers on the project met to hand over toys donated by the team and
the project’s subcontractors. Because the 75 bed children’s ward is very close to the construction zone, and is full at this time of year, the
team wanted to do something that would help add some fun to the children’s day and distract from the noise and activity outside.
Hospital staff said they were overwhelmed by the ‘incredible generosity’ of the CPB Contractors workers and subcontractors.
In 2016, CIMIC relocated its head office to a new, sustainable facility at 177 Pacific Highway, North Sydney (see ‘Innovating to deliver
projects’ section of this Sustainability Report for more detail) which also serves as the headquarters for all of the Group’s NSW
operations. In moving from the former head office at St Leonards, which had been the Group’s base since 1984, a range of furniture and
other goods were surplus to requirements. Some of these were donated to the CatholicCare ‘Out of Home Care’ program at West
Gosford on the NSW Central Coast which provides care for children and young people from 0-18 years of age who are not able to live with
their own families. Other surplus furniture was donated to The Salvation Army, to generate financial support for the Salvos’ varied social
and community service programs, and some also went to the Rough Edges charity that helps homeless people in Darlinghurst.
In 2016, CIMIC sent two volunteers from the Group (including a 2016 civil engineering graduate) to build a 40-metre long pedestrian
bridge in Rwanda alongside employees from HOCHTIEF. The project was delivered in partnership with the charity organisation Bridges to
Prosperity. Building this new bridge will help local residents to avoid a dangerous crossing which, during the rainy season, cuts them off
from work, markets or schools. Estimates suggest that this project will benefit 5,780 people directly and another 9,280 indirectly.
COLLABORATION WITH INDUSTRY AND NGOS
The Group has built strong relationships with industry and not-for-profit groups, including non-governmental organisations (NGOs), at
local, regional and national levels, as part of our commitment to achieving sustainable outcomes for the Group, our industries and the
broader community.
We partner with and/or are members of groups such as:
• AusIMM (Australasian Institute of Mining and
Metallurgy)
• AustCham (Australian Chamber of Commerce)
• AUSTMINE (Australian Mining Equipment and services
export association)
• Australian Industry Group
• Australian Constructors Association
• Australian Health Promotion Association
• Australian Mines & Metals Association
• Central Queensland Mine Rehabilitation Group
• Chamber of Commerce Local Industry Networks
• Chamber of Minerals and Energy (CME)
• Chamber of Minerals and Energy of Western Australia
• Committee of Economic Development Australia
• Diversity Council of Australia
• Green Building Council of Australia
• Hear and Say
• Hunter Coal Environment Group
ICN Industry Capability Network
•
Infrastructure Sustainability Council of Australia
•
• Minerals Council of Australia
• New South Wales Minerals Council
59
• QBCC Licence
• QCoal Foundation
• QRC (Queensland Resources Council)
• Queensland Resource Council
• RACQ CQ Rescue Mackay
• RACQ CQ Rescue Capricorn Reconciliation Australia
• Resource Industry Network
• Royal Flying Doctors Service
• South Australian Chamber of Mines and Energy
• STEM Queensland Academy of Science, Maths and Technology
• Supply Nation
• University of Queensland
• Women in Mining (NSW, WA, QLD)
• Women in Resources National Awards
• Workplace Giving
•
• Hong Kong Construction Association
Indonesian Contractors Association
•
• Masters Builders Association Malaysia
• Singapore Contractors Association Ltd
• STRATTERA (Natural Resources of New Zealand)
International Society of Explosives Engineers
CIMIC 2016 ANNUAL REPORT A4 FA.indd 59
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CIMIC Group Limited Annual Report 2016 | Sustainability Report
CIMIC Group Limited Annual Report 2016 | Sustainability Report
OUTLOOK AND FUTURE PLANS
We are committed to acting with integrity and doing the right thing, regardless of where we operate. In 2017, we plan to:
•
• maintain our focus on training for all employees;
•
continue to reinforce the Code through senior management roadshows and presentations;
implement the ‘Thiess 2017 Industry and Social Investment Plan’ to grow their social licence and meet legislative and contractual
obligations, and social responsibilities;
implement and support 2017 Community Relations Action Plans across all Thiess sites;
identify and establish a national social investment partnership with an indigenous organisation, and a regional partnership in Western
Australia;
•
•
incorporate more detailed stakeholder engagement reporting into monthly reports;
identify and enable full, fair and reasonable opportunities for local suppliers across projects;
• develop and deliver CARE Program31 training package and supporting materials to Thiess project managers and relationship leads;
•
•
• provide school based training opportunities to build individual skill development and community capacity; and
continue to engage with our stakeholders to identify risk and to minimise impacts on local communities.
•
31 Thiess’ CARE Program provides a framework for company-wide community investments so as to support local communities.
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DEVELOPING A PERFORMANCE CULTURE
Measures in place
Actions during 2016
Performance
- Professional Development Policy and
- Developed a Group leadership
- Conducted a conference for top 100
culture of developing leadership
framework and program – ‘Program
leaders to set expectations and align
capability and skills
One’
- Comprehensive learning and
- Launched new Group-wide Graduate
- CIMIC ranked by industry peak body
development plans in place across all
Program
Operating Companies
behaviours around Principles. The
Group will roll out frontline leadership
training in March 2017
Australian Association of Graduate
Employers (AAGE) as a Top 75 Graduate
Employer
- CIMIC ranked in the AFR and
GradConnection Top100 Most Popular
Graduate Employer Awards, Top 10
Finalist for the category of Engineering
and Resources Graduate Programs
- Health and Safety Policy and procedures
- Launched new ‘Fit for work + Fit for life’
- This is an on-going activity
in place to apply appropriate labour
health initiative
standards
- Remuneration Policy that promotes
- No increase in remuneration or bonuses
- All remuneration increases and bonuses
individual accountability
can be approved without a current
rating from a recent performance
have a recent performance review
rating as a key input
-
Implemented mental health awareness
sessions across the Group’s
construction projects in Australia and
Thiess’ mining projects
review
- Continued to review performance
management approach to ensure all
employees have their performance
reviewed at least annually and this
review is used as the basis for any
increases to remuneration as well as for
any bonus payments
- Remuneration Policy which aims to
- Commenced a pay equity review for
- The review is in the final stages and as
fairly motivate, recognise and fairly
Australian operations utilising the new
part of the final recommendations we
compensate without bias
Group job level framework as well as
will develop targeted initiatives linked
the outcomes from the 2016 bonus and
to the findings
total fixed remuneration review process
- The initiatives agreed will have
- The job level and remuneration range
performance measures associated with
are reviewed at recruitment and
them so that progress can be tracked
whenever a remuneration increase is
over time
proposed for an individual
- Remuneration Policy
- Continued to refine the Group job level
- This is an on-going activity
framework and remuneration ranges
that were introduced in late 2015. Both
of these initiatives help to ensure
competitive remuneration levels are
consistently applied across the
Australian operations. The framework
and ranges will be rolled out to
international operations over the next
year
-
Incentive schemes linked to creation of
- Rolled out simplified, options based,
- The performance period for the first
sustainable returns for shareholders
long-term incentive scheme for senior
grant of options ends on 28 October
executives aligned with share price
2017 at which date performance will be
growth for the Group
tested for the first time
- Employee value proposition that aims to
-
Continued engagement of employees
- CPB Contractors ranked 10th in list of
provide safe, rewarding and fulfilling
- Launched new Group wide employee
Australian companies best at attracting
careers for our people
newsletter – ‘Pulse’
and keeping top talent
- Providing safe and fulfilling careers
-
Relocated CIMIC, EIC Activates, Pacific
-
Minimal impact to productivity and
Partnerships, Leighton Properties, and
safety of employees
CPB Contractors’ head office and NSW
office to 177 Pacific Hwy, North Sydney
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CIMIC Group Limited Annual Report 2016 | Sustainability Report
DEVELOPING A PERFORMANCE CULTURE
Measures in place
- Professional Development Policy and
culture of developing leadership
capability and skills
Actions during 2016
- Developed a Group leadership
framework and program – ‘Program
One’
- Comprehensive learning and
- Launched new Group-wide Graduate
development plans in place across all
Operating Companies
Program
Performance
- Conducted a conference for top 100
leaders to set expectations and align
behaviours around Principles. The
Group will roll out frontline leadership
training in March 2017
- CIMIC ranked by industry peak body
Australian Association of Graduate
Employers (AAGE) as a Top 75 Graduate
Employer
- CIMIC ranked in the AFR and
GradConnection Top100 Most Popular
Graduate Employer Awards, Top 10
Finalist for the category of Engineering
and Resources Graduate Programs
- Health and Safety Policy and procedures
in place to apply appropriate labour
standards
- Launched new ‘Fit for work + Fit for life’
- This is an on-going activity
-
health initiative
Implemented mental health awareness
sessions across the Group’s
construction projects in Australia and
Thiess’ mining projects
- Remuneration Policy that promotes
- No increase in remuneration or bonuses
- All remuneration increases and bonuses
individual accountability
- Remuneration Policy which aims to
fairly motivate, recognise and fairly
compensate without bias
- Remuneration Policy
-
Incentive schemes linked to creation of
sustainable returns for shareholders
- Employee value proposition that aims to
provide safe, rewarding and fulfilling
careers for our people
can be approved without a current
rating from a recent performance
review
- Continued to review performance
management approach to ensure all
employees have their performance
reviewed at least annually and this
review is used as the basis for any
increases to remuneration as well as for
any bonus payments
- Commenced a pay equity review for
Australian operations utilising the new
Group job level framework as well as
the outcomes from the 2016 bonus and
total fixed remuneration review process
- The job level and remuneration range
are reviewed at recruitment and
whenever a remuneration increase is
proposed for an individual
- Continued to refine the Group job level
framework and remuneration ranges
that were introduced in late 2015. Both
of these initiatives help to ensure
competitive remuneration levels are
consistently applied across the
Australian operations. The framework
and ranges will be rolled out to
international operations over the next
year
- Rolled out simplified, options based,
long-term incentive scheme for senior
executives aligned with share price
growth for the Group
-
Continued engagement of employees
- Launched new Group wide employee
newsletter – ‘Pulse’
Relocated CIMIC, EIC Activates, Pacific
Partnerships, Leighton Properties, and
CPB Contractors’ head office and NSW
office to 177 Pacific Hwy, North Sydney
- Providing safe and fulfilling careers
-
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CIMIC 2016 ANNUAL REPORT A4 FA.indd 61
have a recent performance review
rating as a key input
- The review is in the final stages and as
part of the final recommendations we
will develop targeted initiatives linked
to the findings
- The initiatives agreed will have
performance measures associated with
them so that progress can be tracked
over time
- This is an on-going activity
- The performance period for the first
grant of options ends on 28 October
2017 at which date performance will be
tested for the first time
- CPB Contractors ranked 10th in list of
Australian companies best at attracting
and keeping top talent
Minimal impact to productivity and
safety of employees
-
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CIMIC Group Limited Annual Report 2016 | Sustainability Report
CIMIC Group Limited Annual Report 2016 | Sustainability Report
OUR APPROACH
As a service organisation, our success is dependent on the quality of our service which is driven largely by the skills, passion and expertise
of our people. CIMIC Group's workforce is project-focused, committed to the achievement of high quality standards, and gains
satisfaction from meeting or beating targets. CIMIC Group places considerable emphasis on leadership, responsibility and accountability,
and is committed to developing the individual skills and career paths of its employees.
EMPLOYMENT
As at 31 December 2016, the Group directly employed 28,535 people, 8,148 in Australia and 20,387 in the international operations, up
from 27,939 last year (7,610 in Australia and 20,329 in the international operations).
Direct employees (#)
CIMIC
CPB Contractors
Leighton Asia
Thiess
Sedgman
UGL
EIC Activities
Pacific Partnerships
Devine
Leighton Properties
Group
2016
101
5,031
14,950
7,852
464
6,801
83
41
58
13
35,394
2015
93
4,740
13,954
9,024
-
-
63
38
139
27
28,078
Based on a share of the employees in our investments as follow – HLG Contracting (45%) and Ventia (50%) - our total number of
employees is 50,874, up from 43,433 last year. The acquisition of a substantial shareholding in UGL by 31 December 2016 is the largest
factor in the total employee increase since 2015.
ATTRACTING, DEVELOPING AND RETAINING EMPLOYEES
To maintain our position as a leader in the industries in which we operate, we must ensure that the knowledge and expertise of our
people grows. To do this we identify skill gaps, train and develop our people, and share knowledge across the Company. By doing so we
improve employee attraction, retention and engagement which ensures we have the skills to execute on our strategy.
Our workforce is predominantly made up of permanently employed full time and fixed term employees. Typically, many trade-related
employees such as labourers are recruited on fixed terms for construction projects and then leave for other opportunities when the
project, or their contribution to the project, is completed.
Workforce composition (%)
Permanent full time
Permanent part time
Fixed term
Casual
In 2016, the Group recruited 12,564 new employees, 748 female and 11,816 male.
Recruitment (#)
CIMIC
CPB Contractors
Leighton Asia
Thiess
Sedgman
EIC Activities
Pacific Partnerships
Leighton Properties
Group
Male
55.7
0.3
34.6
0.3
Male
20
2,537
7,916
1,249
51
25
18
0
11,816
Female
8.3
0.4
0.5
0.1
Female
20
417
138
141
19
7
5
1
748
Developing our people and leadership are critical to our success. In 2016, CIMIC Group developed ‘Program One’ which is a new Group
wide leadership framework and program which will be utilised to consistently build our leadership capability across the Group. The
program launched with a global conference led by the Executive Chairman with the top 100 executive leaders from across the Group
participating. The conference focused on ‘leading with principle’ and setting the leadership expectations required for CIMIC Group. Our
priorities into 2017 will be to roll out the program to our frontline leadership group.
In 2016, a Group-wide ‘Capability Framework’ has been developed which is designed to deliver consistent training for core capabilities
that are a priority for our business. We invest in training that supports our business requirements and the development of our
employees. Each of our Operating Companies conducts regular skills-based training and programs, such as technical and vocational
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training, and health and safety programs, to support our business requirements. In 2016, across the Group we delivered 234,463 hours of
training which equates to more than 8 hours per annum for each direct employee.
In addition, approximately 2,100 employees attended technical training as part of the Graduate and professional development training
programs provided by our focused engineering entity, EIC Activities. The Civil Graduate engineers training in CPB Contractors was
delivered via a monthly webinar series, covering 10 core competencies. Other technical training was delivered at project sites or head
offices in a classroom setting. EIC Activities has developed a list of ‘On-Demand’ technical training that can be delivered to CIMIC Group
Operating Companies on a project or regional basis.
Attracting talent is critical to building our future workforce. In 2016, CIMIC Group launched a new Group wide Graduate program.
78 graduates from across CPB Contractors, Thiess and EIC Activities commenced in February 2016. Throughout the two-year program,
graduates participate in structured development days providing in-depth information on key areas of the business. The new Group
Graduate Program has replaced programs previously delivered by individual Operating Companies. The new Group-wide program
provides consistent development experiences for all graduates and opens opportunities for rotations across the Group, including into
CIMIC. The 2016 graduates are from the engineering (75%), supply chain, legal, finance, safety and human resources disciplines.
Graduates, trainees and apprentices employed in 2016 (#)
Graduates
Trainees and apprentices
Male
55
113
Female
23
44
In its first year, CIMIC Group’s graduate program has been ranked by peak industry body Australian Association of Graduate Employers
(AAGE) 32 as a Top 75 Graduate employer. The AAGE Top Graduate Employer ranking is a definitive guide to the best Australian graduate
programs as the ranking is determined entirely from survey feedback gathered from graduates who have been on formal graduate
programs. The survey requests graduates to anonymously respond and rate their organisation across 25 categories.
CIMIC Group was also ranked in the GradConnection Top100 Most Popular Graduate Employer Awards during 2016 as well as being a Top
10 Finalist for the category of Engineering and Resources Graduate Programs. GradConnection is Australia's most popular online
marketing channel for graduate opportunities and, at any one time, works with over 250 Australian graduate employers and has an
average of 150,000 to 200,000 visitors to their site each month.
GradConnection stated that, “It isn't often that we see a new graduate program rank at all on this list as students tend towards programs
that have existed in the market for some time. With this in mind it's a considerable achievement for CIMIC Group to rank so well and we
expect bigger and better things from their program in the future.”
At the Prominent Hill copper and gold mine in South Australia, production and maintenance teams are supported by first-class training
and development specialists experienced in production and maintenance training. Key initiatives include:
• an on-site $800k truck and excavator simulator to further develop plant operator skills;
• a dedicated training and development program for experienced operators. Thiess has trained more than 30 experienced operators
through the Certification (Level 4) in Training and Assessment, empowering these experienced operators to develop the workforce to
the next level;
•
•
thorough training program for ‘green’ truck operators which involves a minimum of 120 hours of practical training assessment; and
robust verification of operator competency through written, verbal and practical assessments.
Given the relatively short term duration of many of the Group’s construction projects and the fixed term employment model of trades
and manual workers, the turnover rate of our employees reflects the departures of only white collar workers (staff).
Voluntary and involuntary departures33 (%) – staff
Overall
only
CIMIC
CPB Contractors
Leighton Asia
Thiess
EIC Activities
Pacific Partnerships
35.5
34.3
29.4
14.3
28.6
34.2
Male
21.5
24.6
24.1
11.6
22.2
26.3
Female
14.0
9.6
5.3
2.7
6.3
7.9
While the average tenure of our people is 3.1 years, the Group has many experienced and long serving employees. The Group’s
management, which includes key operational roles such as project managers, foremen and site superintendents, generally enjoy a
substantially longer tenure. We recognise and reward the hard work and loyalty of our employees and understand that this is an
important and effective motivator for retention.
32 The survey is conducted by the Australian Association of Graduate Employers (AAGE), the peak industry body for the graduate recruitment and
33 Percentages are based on total voluntary and involuntary departures for the 2016 year divided by the total number of employees at the end of 2015.
development market.
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CIMIC Group Limited Annual Report 2016 | Sustainability Report
training, and health and safety programs, to support our business requirements. In 2016, across the Group we delivered 234,463 hours of
training which equates to more than 8 hours per annum for each direct employee.
In addition, approximately 2,100 employees attended technical training as part of the Graduate and professional development training
programs provided by our focused engineering entity, EIC Activities. The Civil Graduate engineers training in CPB Contractors was
delivered via a monthly webinar series, covering 10 core competencies. Other technical training was delivered at project sites or head
offices in a classroom setting. EIC Activities has developed a list of ‘On-Demand’ technical training that can be delivered to CIMIC Group
Operating Companies on a project or regional basis.
Attracting talent is critical to building our future workforce. In 2016, CIMIC Group launched a new Group wide Graduate program.
78 graduates from across CPB Contractors, Thiess and EIC Activities commenced in February 2016. Throughout the two-year program,
graduates participate in structured development days providing in-depth information on key areas of the business. The new Group
Graduate Program has replaced programs previously delivered by individual Operating Companies. The new Group-wide program
provides consistent development experiences for all graduates and opens opportunities for rotations across the Group, including into
CIMIC. The 2016 graduates are from the engineering (75%), supply chain, legal, finance, safety and human resources disciplines.
Graduates, trainees and apprentices employed in 2016 (#)
Graduates
Trainees and apprentices
Male
55
113
Female
23
44
In its first year, CIMIC Group’s graduate program has been ranked by peak industry body Australian Association of Graduate Employers
(AAGE) 32 as a Top 75 Graduate employer. The AAGE Top Graduate Employer ranking is a definitive guide to the best Australian graduate
programs as the ranking is determined entirely from survey feedback gathered from graduates who have been on formal graduate
programs. The survey requests graduates to anonymously respond and rate their organisation across 25 categories.
CIMIC Group was also ranked in the GradConnection Top100 Most Popular Graduate Employer Awards during 2016 as well as being a Top
10 Finalist for the category of Engineering and Resources Graduate Programs. GradConnection is Australia's most popular online
marketing channel for graduate opportunities and, at any one time, works with over 250 Australian graduate employers and has an
average of 150,000 to 200,000 visitors to their site each month.
GradConnection stated that, “It isn't often that we see a new graduate program rank at all on this list as students tend towards programs
that have existed in the market for some time. With this in mind it's a considerable achievement for CIMIC Group to rank so well and we
expect bigger and better things from their program in the future.”
At the Prominent Hill copper and gold mine in South Australia, production and maintenance teams are supported by first-class training
and development specialists experienced in production and maintenance training. Key initiatives include:
• an on-site $800k truck and excavator simulator to further develop plant operator skills;
• a dedicated training and development program for experienced operators. Thiess has trained more than 30 experienced operators
through the Certification (Level 4) in Training and Assessment, empowering these experienced operators to develop the workforce to
the next level;
thorough training program for ‘green’ truck operators which involves a minimum of 120 hours of practical training assessment; and
robust verification of operator competency through written, verbal and practical assessments.
•
•
Given the relatively short term duration of many of the Group’s construction projects and the fixed term employment model of trades
and manual workers, the turnover rate of our employees reflects the departures of only white collar workers (staff).
Voluntary and involuntary departures33 (%) – staff
only
CIMIC
CPB Contractors
Leighton Asia
Thiess
EIC Activities
Pacific Partnerships
Overall
35.5
34.3
29.4
14.3
28.6
34.2
Male
21.5
24.6
24.1
11.6
22.2
26.3
Female
14.0
9.6
5.3
2.7
6.3
7.9
While the average tenure of our people is 3.1 years, the Group has many experienced and long serving employees. The Group’s
management, which includes key operational roles such as project managers, foremen and site superintendents, generally enjoy a
substantially longer tenure. We recognise and reward the hard work and loyalty of our employees and understand that this is an
important and effective motivator for retention.
32 The survey is conducted by the Australian Association of Graduate Employers (AAGE), the peak industry body for the graduate recruitment and
development market.
33 Percentages are based on total voluntary and involuntary departures for the 2016 year divided by the total number of employees at the end of 2015.
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Length of service with the Group in years (% of workforce)
- Less than 1 year
- Greater than or equal to 1 year and less than 3 years
- Greater than or equal to 3 years and less than 5 years
- Greater than or equal to 5 years and less than 10 years
- Greater than or equal to 10 years and less than 15 years
- Greater than or equal to 15 years
Male
38.7
18.8
11.4
15.7
4.3
1.9
Female
2.4
1.9
1.7
2.5
0.4
0.3
In order to improve employee attraction, encourage diversity and retention, the Group continues to implement a Group paid parental
leave scheme to eligible employees of the Group, in Australia. In other countries, paid parental leave is provided in accordance with
current local legislation.
In Australia, the Group paid parental leave scheme comprises paid parental leave to the primary carer of a child or adopted child. The
Group provides an additional return to work incentive to support employees returning following parental leave. The Group provides
partners of primary carers a period of paid leave upon the birth or adoption of a child. The Group’s paid parental leave scheme is an
important retention strategy which recognises the importance of employees managing personal and family commitments with work
obligations.
In 2016, CPB Contractors was ranked 10th in the list of the top 25 Australian companies that are the best in attracting and keeping top
talent, according to LinkedIn data. This list was compiled based on the actions of millions of LinkedIn users and analysed job applications,
engagement and new hire staying power, to determine those companies who can hire better and keep the best. The results were
normalised to ensure that companies were measured against their peers versus the total universe of companies.
To engage our global workforce and deliver consistent messaging and communication CIMIC launched the Group’s first new internal
newsletter – Pulse, in 2016. Bringing news to our employees across more than 430 projects, Pulse is about the sharing of ideas and
information by our people and our companies. The newsletter is an important initiative in creating a unified culture across the Group.
PERFORMANCE MANAGEMENT AND ALIGNING REMUNERATION
We believe that people perform best when they have clearly defined goals and when they are empowered to operate and are held
accountable for delivering. This assists us to foster a culture of high performance.
Each of our Operating Companies has a framework for managing the performance of its people. Skill mapping against role requirements is
used to identify gaps in capability and consistently and equitably assess employee performance. Regular performance reviews for all staff
facilitates the transparent discussion of employee achievement against key performance indicators and expectations.
The Remuneration Report in this Annual Report sets out the Group’s approach to remuneration of senior and other executives. Individual
remuneration is determined with reference to Group policy regarding the mix of fixed and variable remuneration, the performance and
experience of the individual, comparable jobs within the Group and remuneration for comparable jobs amongst peer companies.
In 2013, the Leighton Superannuation Plan and the AMEC Superannuation Fund members were transferred to the defined contribution
category within the same plan. As a result, there are no defined benefit superannuation plans at year end.
FOSTERING A DIVERSE WORKFORCE
Employing a diverse range of people is important to CIMIC Group. It promotes diverse ways of thinking about, and executing on, our
principles and mission.
Our approach to diversity and inclusion aims to identify and embrace the diverse thinking that is reflected by our differences such as our
personality, communication styles, career paths, educational backgrounds, parental status, gender, sexual orientation, age, disability,
ethnicity and religion. We recognise that:
• diverse and inclusive teams promote innovation, performance and productivity;
•
•
these advantages are strongest when our workforces reflect the diverse communities in which we work; and
these diverse communities provide a valuable source of talent.
The Group’s diversity and inclusion (D&I) strategy has prioritised four strategic objectives to ensure we leverage the diverse contributions
of our people:
• Gender Equality: promote and improve female participation and achieve gender equality, including pay equity in the workplace;
•
• National Inclusion: invest in local employees to ensure the future workforce is reflective of the country in which we operate; and
• Workplace Culture: cultivate an inclusive workplace of fairness and equity which fosters the unique skills and talents of our people.
Indigenous Australia: increase Indigenous employment and the use of Indigenous suppliers;
In 2016, the Group strengthened our governance to support diversity with the launch of a D&I Executive council led by the CEO with
participation of Managing Directors from each Operating Company. The Council regularly review our Group wide workforce reporting to
track progress against our diversity objectives, and together with the Board, continue management’s focus on diversity and inclusion.
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We are focused on the diversity of our business in three areas: gender diversity; local participation internationally; and Indigenous
employment in Australia. We are also aware of the importance of age diversity to our business.
The primary aim of the Group's Diversity Policy is to increase and leverage the diversity that exists across the organisation. This includes
increasing and retaining the number of women employed at all levels in CIMIC Group by seeking to overcome the challenges associated
with the relatively small numbers of women entering the engineering trades and profession. As we increase female representation across
CIMIC Group, we are seeking to ensure that women are not over-represented in administrative and professional service roles, and under-
represented in the trade, engineering and leadership roles that are core to our business.
We report certain gender related information to the Australian Government’s Workplace Gender Equality Agency (WGEA) based on the
year ended 30 June 2016. The 2015/16 WGEA submissions show that, for the reporting entities of CIMIC, CPB Contractors, Thiess and
Leighton Properties, females accounted for around 18% of both management and non-management positons. While these results reflect
the traditionally male dominated nature of the construction and mining industries, they are encouraging in comparison to the 2016
WGEA industry data for construction (15.9%) and mining (15.8%).
Female participation (% of each Operating Company’s workforce)34
All managers
All non-managers
34.0
9.5
14.5
14.1
7.1
11.8
28.6
46.9
21.0
13.6
19.3
50.0
15.2
38.7
Nationals
85
98
98
CIMIC
CPB Contractors
Thiess
Sedgman
Leighton Properties
EIC Activities
Pacific Partnerships
Nationals (as a % of workforce)
CPB Contractors
Leighton Asia
Sedgman
Our aim is to employ an international workforce that reflects the populations in which we operate and to be an employer of choice in the
regions in which we operate. Across our major contracting businesses, we are achieving a relatively high level of local participation.
Aboriginal and Torres Strait Islander people are the first inhabitants of Australia, and we respect and value Indigenous people, their land
and communities and their culture and heritage. Providing employment and opportunities for Indigenous Australians is a social objective
we share with our clients. In 2016, CIMIC Group had a number of programs and partnerships in place to support the employment of
Indigenous employees and the use of Indigenous suppliers including our Oothungs (sisters in mining) program, strategic partnerships with
Indigenous employment services such as CareerTrackers and CareerSeekers and the implementation of a Group wide procurement policy
which supports the use of Indigenous suppliers in our supply chain.
Our objectives include increasing and retaining the number of Indigenous people employed by the Group and increasing opportunities for
indirect economic participation e.g. through subcontracting or supply contracts; and building our knowledge of, and capacity in,
Indigenous participation. With the decline of remote projects e.g oil and gas, we are focused on urban projects to increase our Indigenous
workforce. In 2016, our Indigenous employment rates were as follows:
Indigenous employment (# and % of each Operating Company’s workforce)
CPB Contractors
Thiess
Male
21 (0.5%)
84 (2.9%)
Female
11 (0.2%)
42 (1.5%)
CPB Contractors is also a 50% shareholder in Ngarda Civil and Mining (Ngarda) 35, one of Australia's largest Indigenous contracting
companies, and a multi-disciplined service provider in mining, civil construction and infrastructure works across Australia. Ngarda has a
workforce of 168, 85 percent of whom are Indigenous people. The company currently has 6 apprentices, 47 trainees and 2 academy
based trainees. There are 27 Indigenous personnel completing Certificate III in Metalliferous Mining Operations.
CPB Contractors also has a 10-year partnership with CareerTrackers (entered into in 2013) which supports the long-term career
aspirations of Aboriginal and Torres Strait Islander university students through the creation of private sector internship opportunities.
Ensuring we have the right balance of age groups in our workforce is also important to CIMIC Group. We need to retain the experience
that mature age workers have gained from working in our industry and our organisations for long periods. Our Operating Companies are
working towards achieving this goal.
34 Based on Australian Government’s Workplace Gender Equality Agency (WGEA) report for year ended 30 June 2016. Detailed reports by company can be
found at https://www.wgea.gov.au/report/public-reports.
35 Ngarda Civil and Mining Pty Limited is a Pilbara based industry leader in Indigenous employment in the Australian mining industry.
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CIMIC Group Limited Annual Report 2016 | Sustainability Report
We are focused on the diversity of our business in three areas: gender diversity; local participation internationally; and Indigenous
employment in Australia. We are also aware of the importance of age diversity to our business.
The primary aim of the Group's Diversity Policy is to increase and leverage the diversity that exists across the organisation. This includes
increasing and retaining the number of women employed at all levels in CIMIC Group by seeking to overcome the challenges associated
with the relatively small numbers of women entering the engineering trades and profession. As we increase female representation across
CIMIC Group, we are seeking to ensure that women are not over-represented in administrative and professional service roles, and under-
represented in the trade, engineering and leadership roles that are core to our business.
We report certain gender related information to the Australian Government’s Workplace Gender Equality Agency (WGEA) based on the
year ended 30 June 2016. The 2015/16 WGEA submissions show that, for the reporting entities of CIMIC, CPB Contractors, Thiess and
Leighton Properties, females accounted for around 18% of both management and non-management positons. While these results reflect
the traditionally male dominated nature of the construction and mining industries, they are encouraging in comparison to the 2016
WGEA industry data for construction (15.9%) and mining (15.8%).
Female participation (% of each Operating Company’s workforce)34
CIMIC
CPB Contractors
Thiess
Sedgman
Leighton Properties
EIC Activities
Pacific Partnerships
All managers
34.0
9.5
14.5
14.1
7.1
11.8
28.6
All non-managers
46.9
21.0
13.6
19.3
50.0
15.2
38.7
Our aim is to employ an international workforce that reflects the populations in which we operate and to be an employer of choice in the
regions in which we operate. Across our major contracting businesses, we are achieving a relatively high level of local participation.
Nationals (as a % of workforce)
CPB Contractors
Leighton Asia
Sedgman
Nationals
85
98
98
Aboriginal and Torres Strait Islander people are the first inhabitants of Australia, and we respect and value Indigenous people, their land
and communities and their culture and heritage. Providing employment and opportunities for Indigenous Australians is a social objective
we share with our clients. In 2016, CIMIC Group had a number of programs and partnerships in place to support the employment of
Indigenous employees and the use of Indigenous suppliers including our Oothungs (sisters in mining) program, strategic partnerships with
Indigenous employment services such as CareerTrackers and CareerSeekers and the implementation of a Group wide procurement policy
which supports the use of Indigenous suppliers in our supply chain.
Our objectives include increasing and retaining the number of Indigenous people employed by the Group and increasing opportunities for
indirect economic participation e.g. through subcontracting or supply contracts; and building our knowledge of, and capacity in,
Indigenous participation. With the decline of remote projects e.g oil and gas, we are focused on urban projects to increase our Indigenous
workforce. In 2016, our Indigenous employment rates were as follows:
Indigenous employment (# and % of each Operating Company’s workforce)
CPB Contractors
Thiess
Male
21 (0.5%)
84 (2.9%)
Female
11 (0.2%)
42 (1.5%)
CPB Contractors is also a 50% shareholder in Ngarda Civil and Mining (Ngarda) 35, one of Australia's largest Indigenous contracting
companies, and a multi-disciplined service provider in mining, civil construction and infrastructure works across Australia. Ngarda has a
workforce of 168, 85 percent of whom are Indigenous people. The company currently has 6 apprentices, 47 trainees and 2 academy
based trainees. There are 27 Indigenous personnel completing Certificate III in Metalliferous Mining Operations.
CPB Contractors also has a 10-year partnership with CareerTrackers (entered into in 2013) which supports the long-term career
aspirations of Aboriginal and Torres Strait Islander university students through the creation of private sector internship opportunities.
Ensuring we have the right balance of age groups in our workforce is also important to CIMIC Group. We need to retain the experience
that mature age workers have gained from working in our industry and our organisations for long periods. Our Operating Companies are
working towards achieving this goal.
34 Based on Australian Government’s Workplace Gender Equality Agency (WGEA) report for year ended 30 June 2016. Detailed reports by company can be
found at https://www.wgea.gov.au/report/public-reports.
35 Ngarda Civil and Mining Pty Limited is a Pilbara based industry leader in Indigenous employment in the Australian mining industry.
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Age distribution of the Group’s workforce (%) – staff only
<30
30-40
41-50
51-60
>60
Male
30.3
31.8
19.4
7.4
1.8
Female
2.5
3.3
2.1
1.2
0.2
As well, we need to continually recruit younger talent that will facilitate succession planning and support our ability to build capable
leadership for the future.
ENSURING GENDER EQUITY
CIMIC Group has an ongoing commitment to ensure gender equality in the workplace. In 2016, the Group utilised the new job level
framework together with key criteria for the bonus and total fixed remuneration review process to ensure pay equity and commenced
the third formal pay equity review following changes to our operating model. The 2016 pay equity review is due to be completed in early
2017. As CIMIC operates in a male dominated industry we have been conscious to ensure that our findings are based on rigorous and
defensible analysis. With this in mind we have been working with an independent third party to provide guidance and oversight to the
analysis. As part of the final recommendations we will develop targeted initiatives linked to the findings. In addition, we will continue to
place particular focus on ensuring equity in decision making for remuneration increases and bonus payments for males and females in the
upcoming remuneration and bonus review.
The promotion and increase of female participation continues to be a key priority for the Group. The Group’s new Graduate Program
featured an above-industry female participation rate of 30 percent for the 2016 cohort. Internal networking events were hosted including
national diversity roundtable discussions to generate dialogue about how to attract and retain operational women in our business.
To support the elimination of discrimination on the basis of gender, and remove any barriers to equal participation of female employees,
the Group developed new Equal Employment Opportunity, Discrimination, Bullying and Harassment training, supported by a video from
the CEO, and refreshed the Group Code of Conduct e-learning module for all employees. In 2017, we will focus on addressing unconscious
bias.
LABOUR STANDARDS, FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING
The Group does not tolerate harassment, discrimination, bullying, vilification, occupational violence or victimisation on any grounds,
whether by race, gender, sexual preference, marital status, age, religion, colour, national extraction, social origin, political opinion,
disability, family or carer’s responsibilities, or pregnancy, as reflected in Group policies including the Group Anti Bullying, Harassment and
Discrimination Policy and supported by the recent implementation of face-to-face Group Equal Employment Opportunity, Discrimination,
Bullying and Harassment training.
We recognise the right of our employees to freely associate and collectively bargain. We aim to fairly, consultatively and constructively
engage with workers, union representatives and regulators. Some 40.7% of the Group’s employees in Australia are covered by collective
bargaining agreements, 26.2% at CPB Contractors, 67.1% at Thiess and 19.5% at Sedgman.
The Group is not aware of any instances where its operations, or those of its suppliers, have seen workers’ rights to exercise freedom of
association or collective bargaining violated or at significant risk.
The Group rejects all forms of forced labour. No employee may be obliged to work by the direct or indirect use of force and/or
intimidation. Only people who voluntarily make themselves available for work may be employed. The Group does not tolerate child
labour or any form of exploitation of children or young people and will comply with the International Labour Organisation (ILO) with
respect to under-age workers.
The Group’s Dealing with Third Parties Procedure requires specific due diligence to be undertaken regarding, amongst other things,
slavery, forced or child labour. Third parties are required to sign a declaration asking if “slavery, forced or child labour been used
anywhere by the Third Party or, to the best of the Third Party’s knowledge, by any direct suppliers to the Third Party?”
OUTLOOK AND FUTURE PLANS
We place considerable emphasis on leadership, responsibility and accountability, and are committed to developing the individual skills
and career paths of our employees. In 2017, we plan to:
• undertake Group-wide employee engagement surveys;
•
•
•
•
roll out ‘One’ leadership program commencing with frontline leadership training and support;
increase intake of the 2017 Graduate Program cohort to 140;
implement an online learning laboratory for all employees; and
focus on addressing unconscious bias.
INNOVATING TO DELIVER PROJECTS
Measures in place
Actions during 2016
Performance
- Comprehensive risk management
- EIC Activities implemented best practice
- EIC Activities provided training and
framework in place based on ISO
‘Webinar Wednesday’ series aimed at
webinars to over 1,100 participants
31000:2009
education regarding risks and
during 2016
opportunities, sharing best practice and
highlighting emerging technologies
- Comprehensive quality management
- Launched new interactive Project
-
iPKL captures details of over 1,900
systems in place based on ISO
Knowledge Library (iPKL)
projects including 252 case studies
- EIC Activities structured to provide
- Trained 215 employees in the use of
- BIM and GIS used on 168 projects
training and advice in digital
engineering
Building Information Modelling (BIM)36
and Geographic Information System
(GIS)37
-
Innovation embedded in the Group’s
-
Issued Sustainability Policy which
- CPB Contractors continues to be
9001:2008
Principles
supports the adoption and delivery of
Australia’s leading sustainability
appropriate industry rating schemes
contractor having 16 projects registered
and standards that drive sustainability
or certified by Infrastructure
outcomes for clients
Sustainability Council of Australia (ISCA)
- 14 Green Standard 38 projects registered
in 2016 and 6 projects verified
- 54 Green Star39 rated building projects
completed since 2007
- $2.1 billion of revenue generated from
CPB Contractors’ sustainably rated or
‘green’ projects
OUR APPROACH
One of the Group’s four Principles is Innovation. For CIMIC, innovation means challenging conventional practices and adopting to new
technologies, proactively investing for the future, sharing knowledge and learning from mistakes. In today’s highly competitive
environment, our clients depend on our use of innovative technology and business systems to deliver operational excellence and to
pioneer new and better ways to overcome challenges. By working closely with clients, partners, suppliers and subcontractors, we solve
tomorrow’s problems today through world-class expertise, management and quality.
Innovation is a mindset that questions and imagines what’s possible. Innovation is about creating a flexible and collaborative
environment where our people are encouraged to challenge and change their current work practices, and add value to whatever they do.
We recognise that, essentially, there are two types of innovation: incremental and transformational. Incremental innovation happens all
day, every day – it is about continuous improvement. As we strive to deliver our clients’ needs more effectively and efficiently, we focus
on improving client service, work practices, productivity and re-engineering processes. These are all valuable but, alone, they do not
achieve sustainable competitive advantage – they just keep us in the game.
Transformational, disruptive or game-changing innovation comes from creating products and services that no-one has yet developed.
Over our history we have challenged what we do, the services we provide, the markets we serve, and even our core competencies, but
our future depends on continuing to find a compelling reason to exist. We must continually ask ourselves – are we doing today what we
need to do in order to be relevant tomorrow?
ENCOURAGING INNOVATION
EIC Activities is 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 Activities delivers solutions, capability and innovation in the
disciplines of infrastructure, industrial, building and specialist design for projects tendered and delivered by the Group. EIC Activities
supports its capability through other technical groups within the ACS Group, including HOCHTIEF, Dragados and Turner. The EIC name
stands for Engineering, Innovation and Capability.
During the year, EIC Activities launched its interactive Project Knowledge Library (iPKL). Custom built by EIC Activities, with a user friendly
interface and powerful search function, iPKL holds key data from 1,500 past civil, building and process plant projects. iPKL gives tender
and project teams access to technical and operational knowledge from successful projects. iPKL holds project execution resources
(workpack documents), project data sheets, lessons learned, case studies, innovations, technical papers, awards, images and pre-contract
36 BIM - a digital representation of physical and functional characteristics of a facility.
37 GIS is designed to capture, store, manipulate, analyse, manage, and present spatial or geographical data.
38 Includes the ISCA and Greenroads rating systems for infrastructure projects, and the Green Star and LEED rating systems for building projects.
39 Green Star is Australia's only national and voluntary rating system for buildings and communities and was launched by the Green Building Council of
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INNOVATING TO DELIVER PROJECTS
Measures in place
- Comprehensive risk management
framework in place based on ISO
31000:2009
Actions during 2016
- EIC Activities implemented best practice
‘Webinar Wednesday’ series aimed at
education regarding risks and
opportunities, sharing best practice and
highlighting emerging technologies
Performance
- EIC Activities provided training and
webinars to over 1,100 participants
during 2016
- Comprehensive quality management
- Launched new interactive Project
systems in place based on ISO
9001:2008
Knowledge Library (iPKL)
-
iPKL captures details of over 1,900
projects including 252 case studies
- EIC Activities structured to provide
- Trained 215 employees in the use of
- BIM and GIS used on 168 projects
training and advice in digital
engineering
-
Innovation embedded in the Group’s
Principles
-
Building Information Modelling (BIM)36
and Geographic Information System
(GIS)37
Issued Sustainability Policy which
supports the adoption and delivery of
appropriate industry rating schemes
and standards that drive sustainability
outcomes for clients
- CPB Contractors continues to be
Australia’s leading sustainability
contractor having 16 projects registered
or certified by Infrastructure
Sustainability Council of Australia (ISCA)
- 14 Green Standard 38 projects registered
in 2016 and 6 projects verified
- 54 Green Star39 rated building projects
completed since 2007
- $2.1 billion of revenue generated from
CPB Contractors’ sustainably rated or
‘green’ projects
OUR APPROACH
One of the Group’s four Principles is Innovation. For CIMIC, innovation means challenging conventional practices and adopting to new
technologies, proactively investing for the future, sharing knowledge and learning from mistakes. In today’s highly competitive
environment, our clients depend on our use of innovative technology and business systems to deliver operational excellence and to
pioneer new and better ways to overcome challenges. By working closely with clients, partners, suppliers and subcontractors, we solve
tomorrow’s problems today through world-class expertise, management and quality.
Innovation is a mindset that questions and imagines what’s possible. Innovation is about creating a flexible and collaborative
environment where our people are encouraged to challenge and change their current work practices, and add value to whatever they do.
We recognise that, essentially, there are two types of innovation: incremental and transformational. Incremental innovation happens all
day, every day – it is about continuous improvement. As we strive to deliver our clients’ needs more effectively and efficiently, we focus
on improving client service, work practices, productivity and re-engineering processes. These are all valuable but, alone, they do not
achieve sustainable competitive advantage – they just keep us in the game.
Transformational, disruptive or game-changing innovation comes from creating products and services that no-one has yet developed.
Over our history we have challenged what we do, the services we provide, the markets we serve, and even our core competencies, but
our future depends on continuing to find a compelling reason to exist. We must continually ask ourselves – are we doing today what we
need to do in order to be relevant tomorrow?
ENCOURAGING INNOVATION
EIC Activities is 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 Activities delivers solutions, capability and innovation in the
disciplines of infrastructure, industrial, building and specialist design for projects tendered and delivered by the Group. EIC Activities
supports its capability through other technical groups within the ACS Group, including HOCHTIEF, Dragados and Turner. The EIC name
stands for Engineering, Innovation and Capability.
During the year, EIC Activities launched its interactive Project Knowledge Library (iPKL). Custom built by EIC Activities, with a user friendly
interface and powerful search function, iPKL holds key data from 1,500 past civil, building and process plant projects. iPKL gives tender
and project teams access to technical and operational knowledge from successful projects. iPKL holds project execution resources
(workpack documents), project data sheets, lessons learned, case studies, innovations, technical papers, awards, images and pre-contract
36 BIM - a digital representation of physical and functional characteristics of a facility.
37 GIS is designed to capture, store, manipulate, analyse, manage, and present spatial or geographical data.
38 Includes the ISCA and Greenroads rating systems for infrastructure projects, and the Green Star and LEED rating systems for building projects.
39 Green Star is Australia's only national and voluntary rating system for buildings and communities and was launched by the Green Building Council of
Australia (GBCA) in 2003.
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CIMIC Group Limited Annual Report 2016 | Sustainability Report
CIMIC Group Limited Annual Report 2016 | Sustainability Report
documents such as capability statements and submitted tenders. It supports efficient bid preparation and project delivery, and by using it
to access and store key information resources helps the Group to fast track learning, repeat successes and innovate to win challenging
projects.
EIC Activities has developed a web based GIS module that is enabling projects to mitigate sub-surface utilities risks (e.g. gas, electricity,
water and telecommunications). Identification and relocation of utilities can present projects with a risk to safety, reliability and
reputation which has traditionally been mitigated by a paper based administrative process relying on a small number of specialists to
author and review the information. EIC Activities’ new GIS Permit to Disturb (PTD) system incorporates inputs from the Dial-Before-You-
Dig service and develops a master utility model. The GIS PTD system is accessible to all project members enabling staff at the workplace
to access up-to-date information. The new system streamlines the approval process by compiling all the relevant information in the one
place.
We currently have 81 projects (including in Ventia) using GIS data. An additional 14 projects are being, or have been, delivered using BIM
in 2015, bringing the total to 87 projects utilising this technology. In 2016, we trained 215 people in the use of BIM and GIS.
During the year, EIC Activities launched its Webinar Wednesday program. Held on the second Wednesday of each month, EIC Activities
hosts webinars covering a range of engineering-related topics with a focus on:
•
• best practice; and
• emerging technologies.
risks and opportunities;
soft soil engineering;
The webinars aim to promote discussion and socialisation of technical knowledge throughout the Group and connect colleagues
interested in a variety of engineering topics. The 30-minute webinars are interactive, with a Q&A session at the end of each presentation.
Subjects covered in 2016 included:
•
• an insight to BIM - a key digital engineering process;
• utility management;
• digital engineering;
• an introduction to Sedgman;
• methods and lean (production); and
•
surveying.
Thiess has established innovation groups – on its intranet – providing a range of useful tools that enable greater efficiency and increased
productivity. The intranet provides a dedicated innovation space that allows employees to collaborate with subject-matter-experts and
innovation champions, and enables increased knowledge sharing and best practice.
In June 2016, Thiess’ Technical Services, Principal Mining Geologist, Helgi Stedman, won a professional excellence award from the
Australian Institute of Mining and Metals. Mr Stedman was recognised for his contribution to the industry through his innovative idea of
using blast-hole data to improve the precision of geological models. Since first trials of the technique began at Lake Vermont in 2012, coal
recovery has steadily improved from low 90s to almost 100%. This technique puts Thiess at the forefront of maximising coal recovery
while improving performance results for Thiess and its clients.
Sedgman has leveraged commercially available Virtual Reality (VR) hardware to develop its own VR environment for viewing and
reviewing designs as 3D models. Enhancing traditional design processes, the tool has been used during safety reviews to better highlight
and eliminate any potential risks for the constructor or operator. The tool also presents opportunities for site familiarisation and training.
Sedgman’s annual ‘Meakin Innovation Award’ was presented to 3 employees who adapted an existing technology by using specialist
clamps for the purposes of installing light poles, switches, hose reels and small pipes to plant structures. The team developed a
customised pressed steel plate to be used in conjunction with the clamps to simplify installation, reducing time and cost.
Over the last year, Sedgman has developed and tested a Radio-Frequency Identification (RFID) density tracer system at two coal handling
preparation plants. The RFID system uses tracers of different size and densities which are inserted into the dense medium cyclones (DMC)
and are detected by antennas mounted on the DMC product (coal) and reject (waste) screens. The separation efficiency and residence
time can then be determined from the data. Test work was conducted to compare the traditional sampling method of evaluating DMC
performance against the RFID tracer method and the results were very similar. This RFID method eliminates the need to manually handle
multiple 200L drums of coal/reject, reducing risk of injury.
CPB Contractors is now using mobility solutions to enable foremen and engineers to spend more time out on the job supervising works
and to reduce project costs. For example, the introduction of a mobile platform means several thousand sub-contractors now complete
plant and labour time sheets on their own smartphones. The digital forms are sent to foremen for approval and costing, eliminating paper
dockets and significantly reducing data entry overhead costs. Further work is underway to facilitate electronic proof-of-delivery for
materials received on site and to develop electronic work packs – key documents used on-site to manage packages of work.
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Increasingly, governments are seeking to integrate sustainability into their procurement in a way that achieves value for money and
generates benefits not only for the organisation, but also for society and the economy, while minimising damage to the environment. CPB
Contractors has developed an innovative capability in the area of sustainable buildings and infrastructure, and is currently the leading
sustainability contractor in the Australian market, working on or having delivered 16 ISCA registered or certified projects worth more than
$18.5 billion in total.
In 2016, CPB Contractors reported the following Green Standard projects:
CPB Contractors’ Green Standard projects (#)
Registered
Certified
ISCA – Design
ISCA – As built
Green Star – Design
Green Star – As built
Green Star – Interiors
Green Star – Performance
LEED40 – Silver
Green Roads41 – Pilot
ISCA
Green Star
LEED
Green Roads
Total
8
4
2
0
0
0
1
1
2015
1,274
521
82
45
1,922
22
0
4
9
3
1
0
0
2014
687
774
95
36
1,592
2016
1,801
202
0
80
2,083
In 2016, revenue generated by CPB Contractors from sustainably rated or ‘green’ projects was almost $2.1 billion. CPB Contractors’
position as a sustainable contractor with a track-record in delivering ISCA rated projects positons the company well for the future.
CPB Contractors' Green Standards project revenue ($m)
The 177 Pacific Highway project in North Sydney, developed by Leighton Properties and constructed by CPB Contractors, is a 30 storey,
40,000 square metre A-grade commercial office tower and is 5-star Green Star and 5-star NABERS rated. The project features a number of
sustainable initiatives including:
• water efficient fittings/fixtures to minimise potable water consumption in conjunction with a 90,000 litre rainwater capture system
servicing irrigation, toilet and urinal flushing demands;
using concrete mixes developed to utilise industrial waste products as aggregate, reducing the requirement for raw mined aggregates
and using recycled/reclaimed water, together with the selection of structural reinforcing steels with high strength grades, to minimise
the material requirement;
of breathable air for occupants; and
demand control ventilation that adjusts ventilation rates and ensures carbon dioxide (CO2) levels are kept low, maximising the quality
a highly efficient lighting design that incorporates re-programmable lighting control zones of no greater than 100 square metres,
providing greater control flexibility and reducing tenant energy consumption and running costs.
A notable feature of the design is the large cutaway (cut-out) sections of the building which increase the amount of sunlight to the
community in North Sydney. The ingenious solution incorporates large cutaway sections within the centre of the tower to allow solar
access to Council's ‘special areas’ on the winter solstice. The provision of these cut-away sections also permitted the building to rise 42
metres above Council’s previously defined maximum height limit.
MANAGING RISK
The recognition and management of risk is embedded in all activities of the Group and is a core part of our culture. The Group’s exposure
to risk stems from its broad and evolving business risk profile, which covers areas including operations, safety, reputation, regulation,
contracts, human resources, finance, information and strategy.
As required by the CIMIC Board, management has implemented a policy framework designed to ensure that the Group’s material
business risks are identified and that adequate controls are in place and function effectively, and for management to report to the Board
on whether those risks are managed effectively. This framework incorporates the maintenance of comprehensive policies, procedures
and guidelines which span the Group’s diverse contracting and project development activities, including setting financial controls,
conducting business audits, investment and acquisition overview, and ensuring high standards in corporate communications and external
affairs. The CIMIC Group Risk Framework is based on International Standard ISO 31000:2009 ‘Risk management – Principles and
guidelines’, and forms the basis for CIMIC’s risk management activities.
40 Leadership in Energy and Environmental Design (LEED) is a rating system devised by the United States Green Building Council (USGBC) to evaluate the
environmental performance of a building and encourage market transformation towards sustainable design.
41 Greenroads is an independent non-profit that advances sustainability performance management and education for transportation capital projects.
•
•
•
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Increasingly, governments are seeking to integrate sustainability into their procurement in a way that achieves value for money and
generates benefits not only for the organisation, but also for society and the economy, while minimising damage to the environment. CPB
Contractors has developed an innovative capability in the area of sustainable buildings and infrastructure, and is currently the leading
sustainability contractor in the Australian market, working on or having delivered 16 ISCA registered or certified projects worth more than
$18.5 billion in total.
In 2016, CPB Contractors reported the following Green Standard projects:
CPB Contractors’ Green Standard projects (#)
ISCA – Design
ISCA – As built
Green Star – Design
Green Star – As built
Green Star – Interiors
Green Star – Performance
LEED40 – Silver
Green Roads41 – Pilot
Registered
8
4
2
0
0
0
1
1
Certified
0
4
22
9
3
1
0
0
In 2016, revenue generated by CPB Contractors from sustainably rated or ‘green’ projects was almost $2.1 billion. CPB Contractors’
position as a sustainable contractor with a track-record in delivering ISCA rated projects positons the company well for the future.
CPB Contractors' Green Standards project revenue ($m)
ISCA
Green Star
LEED
Green Roads
Total
2016
1,801
202
0
80
2,083
2015
1,274
521
82
45
1,922
2014
687
774
95
36
1,592
The 177 Pacific Highway project in North Sydney, developed by Leighton Properties and constructed by CPB Contractors, is a 30 storey,
40,000 square metre A-grade commercial office tower and is 5-star Green Star and 5-star NABERS rated. The project features a number of
sustainable initiatives including:
• water efficient fittings/fixtures to minimise potable water consumption in conjunction with a 90,000 litre rainwater capture system
•
•
•
servicing irrigation, toilet and urinal flushing demands;
using concrete mixes developed to utilise industrial waste products as aggregate, reducing the requirement for raw mined aggregates
and using recycled/reclaimed water, together with the selection of structural reinforcing steels with high strength grades, to minimise
the material requirement;
demand control ventilation that adjusts ventilation rates and ensures carbon dioxide (CO2) levels are kept low, maximising the quality
of breathable air for occupants; and
a highly efficient lighting design that incorporates re-programmable lighting control zones of no greater than 100 square metres,
providing greater control flexibility and reducing tenant energy consumption and running costs.
A notable feature of the design is the large cutaway (cut-out) sections of the building which increase the amount of sunlight to the
community in North Sydney. The ingenious solution incorporates large cutaway sections within the centre of the tower to allow solar
access to Council's ‘special areas’ on the winter solstice. The provision of these cut-away sections also permitted the building to rise 42
metres above Council’s previously defined maximum height limit.
MANAGING RISK
The recognition and management of risk is embedded in all activities of the Group and is a core part of our culture. The Group’s exposure
to risk stems from its broad and evolving business risk profile, which covers areas including operations, safety, reputation, regulation,
contracts, human resources, finance, information and strategy.
As required by the CIMIC Board, management has implemented a policy framework designed to ensure that the Group’s material
business risks are identified and that adequate controls are in place and function effectively, and for management to report to the Board
on whether those risks are managed effectively. This framework incorporates the maintenance of comprehensive policies, procedures
and guidelines which span the Group’s diverse contracting and project development activities, including setting financial controls,
conducting business audits, investment and acquisition overview, and ensuring high standards in corporate communications and external
affairs. The CIMIC Group Risk Framework is based on International Standard ISO 31000:2009 ‘Risk management – Principles and
guidelines’, and forms the basis for CIMIC’s risk management activities.
40 Leadership in Energy and Environmental Design (LEED) is a rating system devised by the United States Green Building Council (USGBC) to evaluate the
environmental performance of a building and encourage market transformation towards sustainable design.
41 Greenroads is an independent non-profit that advances sustainability performance management and education for transportation capital projects.
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OUTLOOK AND FUTURE PLANS
We are committed to bringing an innovative approach to the successful delivery of projects. In 2017, we plan to:
continue to work with ISCA and Green Star on projects that are externally recognised as being sustainable;
invest in EIC Activities’ research and development of innovative engineering and project management software solutions;
further develop the iPKL, gathering key data on projects and using the tool to give tender and project teams access to technical and
operational knowledge;
leverage the engineering expertise and experience of our major shareholder, HOCHTIEF, and its related entities; and
further encourage, through EIC Activities, the sharing of technical engineering excellence across the Group.
•
•
•
•
•
CIMIC Group Limited Annual Report 2016 | Sustainability Report
CIMIC Group Limited Annual Report 2016 | Sustainability Report
The Group’s key risks, including those arising due to externalities such as the economic, natural and social operating environments, are
set out in the table in the Operating and Financial Review Section in this Annual Report, together with the Group’s approach to managing
those risks.
These technical webinars reached over 1,100 employees across the Group either during the live broadcast or by being accessed on-line at
a later date. The majority of these were delivered by EIC Activities staff. One was a guest webinar by Sedgman and others included
presenters from other Operating Companies, demonstrating the degree of collaboration occurring across the Group.
QUALITY
Delivering projects that meet our clients and other stakeholder requirements is the result of good planning and skilful execution.
Everyone has accountabilities in this regard.
The Group has people in pure quality and systems roles with direct accountability for ensuring compliance with ISO 9001:2008 Quality
Management Systems. These people also coordinate with key stakeholders and subject matter experts to improve our procedures so we
work more efficiently and develop effective controls to ensure that work is done in compliance with quality requirements. The Group’s
quality certification includes:
• Thiess – AS/NZS ISO 9001 (DNV-GL Quality System Certification);
• CPB Contractors – AS/NZS ISO 9001:2008 (SGS Quality System Certification);
•
Leighton Asia – ISO 9001:2008 (India, Singapore, Malaysia, Indonesia - Lloyd’s Quality System Certification, Hong Kong – HKQAA
Quality System Certification, Philippines – Bureau Veritas Quality System Verification); and
• Sedgman – ISO 900142.
CREATING VALUE
The direct economic value that CIMIC generated and distributed over the past 3 years is set out below.
Economic value created ($m)43
Economic value generated: Revenue
Economic value distributed
Of which: Operating costs
Employee wages and benefits
Payments to providers of capital
Payments to governments44
Community investments
Economic value retained
2016
10,847
(10,488)
(7,456)
(2,432)
(412)
(188)
(0.3)
359
2015
13,273
(12,685)
(8,824)
(3,059)
(580)
(221)
(0.8)
588
2014
16,780
(16,194)
(11,170)
(4,362)
(636)
(22)
(4.3)
586
Other shareholder return information can be found in the Operating and Financial Review section of this Annual Report and in the
Remuneration Report. But value is more than purely dividends and share appreciation for shareholders. CIMIC creates value in other
ways that have significant benefits to communities and society:
•
the infrastructure and property projects we construct for clients (roads, railways, hospitals, schools, offices, gas plants, wind farms,
water recycling plants, telecommunications lines, etc) are fundamental to improving the productivity of economies and the quality of
people’s lives;
contract mining produces resources (coal, iron ore, nickel, copper, gold, diamonds) which are critical for economic development and
prosperity, and help to generate royalties and tax income for governments, stimulate local communities, and generate well paid and
secure employment;
•
• our operations and maintenance services are integral to the upkeep of critical infrastructure – we help keep the lights on, trains
rolling, water flowing and motorways tolling;
• by engaging many thousands of sub-contractors to provide services to our projects, and the payments we make, we provide
•
employment opportunities and foster local suppliers, many of them in regional and remote communities; and
the innovation of our people leads to safer construction techniques for the industry and new services which can be exported to other
markets, ultimately earning income for the country.
42 Certification covers Sedgman’s Brisbane, Gold Coast and Santiago offices and Townsville workshop locations for the following scope: concept
development, feasibility, minerals processing and materials handling design, engineering, fabrication, installation, and repair and maintenance services to
the resources sector. Additional locations and services will be considered for certification in the future.
43 Restated for 2014 for comparison to reflect continuing operations after disposals. This calculation follows the formula set by the GRI.
44 The Group incurred tax expenses of $430.4 million in 2014 and $135.1 million in 2013 due to the profits on sale and income from its discontinued
operations.
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OUTLOOK AND FUTURE PLANS
We are committed to bringing an innovative approach to the successful delivery of projects. In 2017, we plan to:
continue to work with ISCA and Green Star on projects that are externally recognised as being sustainable;
•
invest in EIC Activities’ research and development of innovative engineering and project management software solutions;
•
further develop the iPKL, gathering key data on projects and using the tool to give tender and project teams access to technical and
•
operational knowledge;
leverage the engineering expertise and experience of our major shareholder, HOCHTIEF, and its related entities; and
further encourage, through EIC Activities, the sharing of technical engineering excellence across the Group.
•
•
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CIMIC Group Limited Annual Report 2016 | Sustainability Report
CIMIC Group Limited Annual Report 2016 | Sustainability Report
USING RESOURCES EFFICIENTLY
Measures in place
- 100% of Operating Company
management systems certified to ISO
14001
Actions during 2016
- Maintained rigorous approach to
environmental management
- Environmental Policy in place
-
Issued revised CIMIC Group
Environmental Policy
- Sustainability Policy in place
-
Issued Sustainability Policy which
commits the Group to abiding by the
principles of the UN Global Compact
and acknowledges our role in
contributing to the UN Sustainable
Development Goals
Performance
- Excellent environmental result with no
Level 1 incidents and only 6 Level 2
incidents recorded
- Significant reduction in Level 3 incidents
in both Australian and international
operations
- 10 minor legal breaches, one of which
resulted in a fine of $3,800
- Gateway WA project awarded national
2016 Civil Contractors Federation Earth
Award
- Melbourne International RoRo &
Automotive Terminal (MIRRAT)
recognised as a finalist in the Banksia
Foundation’s Sustainable Cities Award
- Policy rolled out across Group
- Commitment to the efficient use of
resources enshrined in the Sustainability
Policy
- Participated in HOCHTIEF Energy
Awards which promoted energy
efficiency across the Group
- CIMIC Operating Companies took out
first position and filled 6 of the top ten
positions
OUR APPROACH
Respect for the environment is a demonstration of CIMIC Group's core values of Integrity, Accountability, Innovation and Delivery. We
undertake to use resources efficiently, minimise waste and promote the delivery of energy efficient, environmentally and socially
responsible projects. By constantly innovating we seek to improve efficiency and reduce waste, thereby lowering costs, improving our
value proposition and growing client loyalty.
Operating across a range of diverse and sensitive areas, we are committed to managing our environmental footprint using consistent
processes and methods that reflect best practice and mitigate environmental risk. Effective management of the environment is a
commercial and ethical imperative, and is part of our everyday decisions and processes. An enhanced reputation in environmental
management gives us a competitive advantage in winning and delivering work.
Each of our Operating Companies maintains an environmental management system which comprises governance documentation, and
comprehensive environmental management plans, procedures and other supporting documents. All of the Group’s Operating Companies
management systems are certified to ISO 14001.45
Minimising project and business-wide impacts, such as erosion and sediment control, protection of flora and fauna, and reducing our
carbon emissions, are important focus areas for environmental management at CIMIC Group.
MANAGING HAZARDS AND RISKS
We recognise that by preventing and mitigating pollution and degradation, we avoid potential operational delays, remediation costs,
fines and legal fees, and enhance our relationships with the communities and markets in which we operate. We also understand that by
delivering on specifications and standards set by regulators, clients and other stakeholders, we stand to gain the confidence of the
markets and communities in which we operate, and avoid potential litigation and increased insurance premiums.
The Group’s 2016 environmental performance was positive with no Level 146 incidents recorded (0 also recorded in 2015) and 6 Level 247
incidents recorded (versus 4 in 201548). The number of Level 2 incidents has declined markedly over recent years.
45 The Sedgman Environment Management System has been certified to the ISO 14001:2004 Environmental Management standard. The Gold Coast,
Townsville, Brisbane and Santiago (Studies and Design scope) has been certified to this/these standards. All projects and operational sites are internally
audited for compliance with the requirements of the Sedgman HSEQ management system.
46 Pollution or degradation which has high severity impacts on the community and/or environment and may have irreversible residual impacts.
47 Pollution or degradation which has moderate severity impacts on the community and/or environment (1 to 3 months duration) but is fully reversible
with no residual impacts.
48 From Q3 2016, any incident in CPB Contractors that relates to formal warning or legal breach is classified as a Level 2 incident, pushing up the number of
Level 2 incidents for the second half of 2016. This change does not apply retrospectively i.e. result in reclassification of past incidents.
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Environmental incidents
CPB
Leighton Asia
Thiess
Sedgman
Environmental incident frequency rate (#/MhW) 49
Level 1 (#)
Level 2 (#)
Level 3 (#)
Number of breaches (#)
Value of fines ($)
Contractors
0.23
0
5
9
335
6,000
0.01
0
1
15
1
3,800
0
0
0
0
0
162
0
0
0
8
0
0
In CPB Contractors, the 5 Level 2 incidents related to:
adjacent concrete lined channel (Wolli Creek);
• WestConnex New M5: discharge to surface water of less than 1 cubic metre of drilling mud into a stormwater pipe and into the
• WestConnex New M5: receipt of a formal warning letter from the Department of Planning & Environment for late delivery of a report
(with no direct environmental impact);
• M4 Widening: sediment released onto a public road in Auburn;
• Northwest Rapid Transit: a low level of dust was generated in the precast yard works area; and
• WestConnex M4 East: turbid water was observed passing the site boundary.
9 legal breaches were recorded in CPB Contractors for environmental incidents and a fine of $6,000 was incurred for out of hours work
after 1pm on a Saturday at 177 Pacific Hwy, North Sydney.
In Leighton Asia, 1 Level 2 incident was recorded in 2016 in Singapore on the construction of the Springleaf Station and Tunnels project
due to mosquito breeding. The breach resulted in a fine from the regulator of approximately $3,800. Another potential Level 2 incident
also occurred in Singapore on the Downtown Line Stage 3 project, however no penalty has been received to date.
The number of Level 3 incidents across the Group have continued to fall over time with a reduction from 824 in 2015 to 520 in 2016.
The Group has adopted a comprehensive, systematic and collective approach to hazard and risk management, and by continuously
monitoring and improving our performance, we ensure we remain competitive in the markets in which we operate.
DEALING WITH CLIMATE CHANGE AND REDUCING EMISSIONS
CIMIC understands the need to reduce emissions by boosting energy productivity, reducing waste, rehabilitating degraded land,
increasing renewable energy and driving innovation. Our responses to climate change involve the adoption of a number of approaches.
We aim to reduce emissions by working together with our clients and business partners. Our Operating Companies use a range of systems
to track and report on our energy use and calculate our greenhouse gas (GHG) emissions.
Scope One greenhouse gas emissions (kt.CO2-e)
CPB Contractors
Leighton Asia
Thiess
Sedgman
Other (including CIMIC, Pacific Partnerships, EIC
Activities, Leighton Properties, Devine) 50
Total
2016
106
52
1,805
1
1
1,964
2015
124
60
1,729
-
1
1,913
For CIMIC, absolute measures of emissions are important but not the most relevant measures. Emissions are driven by the demands of
our clients but we continue to try to find ways to operate more effectively and efficiently in undertaking the construction so as to reduce
the emissions from each individual project.
Similarly, two infrastructure projects – such as a hospital and a railway line – may have similar costs but generate very different emission
footprints. Both are necessary to the welfare of the community but are not comparable in terms of their overall contribution to the
Group’s emissions. The Group’s challenge – on a project-by-project basis – is to reduce emissions wherever possible.
For example, on the $1.15 billion Sydney Metro Northwest Tunnels and Station Civil Project, being delivered by a CPB Contractors John
Holland Dragados (CPBJHD) joint venture, the project was able to achieve a significant reduction in energy use and a 24% reduction in
Scope One and Scope Two emissions. Scope One reductions have been achieved through:
•
the use of B5 blended fuel;
• plant selection criteria targeting plant less than 4 years old;
• use of hybrid excavators;
•
fuel efficient training and awareness programs; and
49 The frequency rate is the total number of Level 1 and Level 2 incidents per million man hours worked.
50 Scope 1 and Scope 2 emission for ‘Other’ have been extrapolated for the 2016 year based on 2015/16 NGER data.
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CIMIC Group Limited Annual Report 2016 | Sustainability Report
Environmental incidents
Environmental incident frequency rate (#/MhW) 49
Level 1 (#)
Level 2 (#)
Level 3 (#)
Number of breaches (#)
Value of fines ($)
CPB
Contractors
0.23
0
5
335
9
6,000
Leighton Asia
Thiess
Sedgman
0.01
0
1
15
1
3,800
0
0
0
162
0
0
0
0
0
8
0
0
In CPB Contractors, the 5 Level 2 incidents related to:
• WestConnex New M5: discharge to surface water of less than 1 cubic metre of drilling mud into a stormwater pipe and into the
adjacent concrete lined channel (Wolli Creek);
• WestConnex New M5: receipt of a formal warning letter from the Department of Planning & Environment for late delivery of a report
(with no direct environmental impact);
• M4 Widening: sediment released onto a public road in Auburn;
• Northwest Rapid Transit: a low level of dust was generated in the precast yard works area; and
• WestConnex M4 East: turbid water was observed passing the site boundary.
9 legal breaches were recorded in CPB Contractors for environmental incidents and a fine of $6,000 was incurred for out of hours work
after 1pm on a Saturday at 177 Pacific Hwy, North Sydney.
In Leighton Asia, 1 Level 2 incident was recorded in 2016 in Singapore on the construction of the Springleaf Station and Tunnels project
due to mosquito breeding. The breach resulted in a fine from the regulator of approximately $3,800. Another potential Level 2 incident
also occurred in Singapore on the Downtown Line Stage 3 project, however no penalty has been received to date.
The number of Level 3 incidents across the Group have continued to fall over time with a reduction from 824 in 2015 to 520 in 2016.
The Group has adopted a comprehensive, systematic and collective approach to hazard and risk management, and by continuously
monitoring and improving our performance, we ensure we remain competitive in the markets in which we operate.
DEALING WITH CLIMATE CHANGE AND REDUCING EMISSIONS
CIMIC understands the need to reduce emissions by boosting energy productivity, reducing waste, rehabilitating degraded land,
increasing renewable energy and driving innovation. Our responses to climate change involve the adoption of a number of approaches.
We aim to reduce emissions by working together with our clients and business partners. Our Operating Companies use a range of systems
to track and report on our energy use and calculate our greenhouse gas (GHG) emissions.
Scope One greenhouse gas emissions (kt.CO2-e)
CPB Contractors
Leighton Asia
Thiess
Sedgman
Other (including CIMIC, Pacific Partnerships, EIC
Activities, Leighton Properties, Devine) 50
Total
2016
106
52
1,805
1
1
1,964
2015
124
60
1,729
-
1
1,913
For CIMIC, absolute measures of emissions are important but not the most relevant measures. Emissions are driven by the demands of
our clients but we continue to try to find ways to operate more effectively and efficiently in undertaking the construction so as to reduce
the emissions from each individual project.
Similarly, two infrastructure projects – such as a hospital and a railway line – may have similar costs but generate very different emission
footprints. Both are necessary to the welfare of the community but are not comparable in terms of their overall contribution to the
Group’s emissions. The Group’s challenge – on a project-by-project basis – is to reduce emissions wherever possible.
For example, on the $1.15 billion Sydney Metro Northwest Tunnels and Station Civil Project, being delivered by a CPB Contractors John
Holland Dragados (CPBJHD) joint venture, the project was able to achieve a significant reduction in energy use and a 24% reduction in
Scope One and Scope Two emissions. Scope One reductions have been achieved through:
•
• plant selection criteria targeting plant less than 4 years old;
• use of hybrid excavators;
•
fuel efficient training and awareness programs; and
the use of B5 blended fuel;
49 The frequency rate is the total number of Level 1 and Level 2 incidents per million man hours worked.
50 Scope 1 and Scope 2 emission for ‘Other’ have been extrapolated for the 2016 year based on 2015/16 NGER data.
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• enforced efficiency routines including regular maintenance of plant and no idling policies for heavy plant.
IMPROVING ENERGY EFFICIENCY
Scope Two reductions have been achieved through:
• design optimisation which reduced the tunnel diameter, reducing the quantity of materials to be removed and sent offsite, and
reducing the volume of concrete used in each segment of panel lining the tunnel; and
reduced electricity associated with segment production and handling.
•
Scope Two greenhouse gas emissions (kt.CO2-e)
CPB Contractors
Leighton Asia
Thiess
Sedgman
Other (including CIMIC, Pacific Partnerships, EIC
Activities, Leighton Properties, Devine)
Total
the extraction and production of purchased materials such as concrete, asphalt and steel;
fuel for transport-related activities in vehicles not owned or controlled by the Group;
Scope Three includes other indirect emissions, such as:
•
•
• electricity-related activities not covered in Scope Two;
• outsourced activities; and
• waste disposal.
Scope Three greenhouse gas emissions (kt.CO2-e)
CPB Contractors
Leighton Asia
Thiess
Sedgman
Other (including CIMIC, Pacific Partnerships, EIC
Activities, Leighton Properties, Devine)
Total
2016
29
31
20
1
7
89
2016
1,848
1,572
1
1
1
3,423
2015
41
36
15
-
7
100
2015
606
2,882
8
-
1
3,497
We are registered to report under Australia’s National Greenhouse and Energy Reporting Act 2007 (Cth) (NGER). Energy use and
emissions data is collected for all Company projects and sites irrespective of the operational control status. The Group has comprehensive
measures in place to manage its Australian NGER obligations including:
• having established legal review processes to identify operational control51 status at the tender and contract stages;
• utilising Group-wide accounting systems to manage all data; and
• having the Group’s data and processes subjected to annual external assurance audits.
The Group has reported the following emissions and energy usage NGER data:
Greenhouse gas emissions and energy consumption52
2015/1653
2014/15
2013/14
2012/13
2011/12
2010/11
2009/10
2008/09
Total Scope One
emissions (t CO2-e)
45,260
77,412
153,239
206,245
730,542
775,441
684,758
478,444
Total Scope Two
emissions (t CO2-e)
32,910
72,142
92,522
128,495
132,516
187,887
243,487
114,785
Total Net energy
consumed (GJ)
807,792
1,434,467
2,604,328
2,660,483
6,918,762
8,435,737
7,811,131
5,278,962
EY provided a limited assurance audit in 2016 and signed off on the preparation of CIMIC’s Energy and Emissions Report.
The Group is a substantial user of energy, particularly driven by the mining operation of Thiess which utilises large volumes of diesel. The
Group’s energy consumption for 2016 was as follows:
Energy consumption
Total Gigawatt hours (GWH)
Of which: Liquid, gas and solid fuel (%)
Electricity (%)
Energy spend ($m)
CPB Contractors
Leighton Asia
399
93
7
27
248
83
17
29
Thiess
1,825
99
1
84.5
In 2016, CIMIC participated in the first HOCHTIEF Energy Award54 which elicited 44 submissions, representing projects and ideas from
across CIMIC Group, HOCHTIEF and Turner. CIMIC Group companies took out 1st and 3rd places, and filled 6 of the top 10 positions.
Thiess’ ‘Lighting Plant Refurbishment Program for the energy-efficient lighting plant in mines’ initiative was awarded 1st place. The
program’s key benefits include 75% less fuel use and carbon emissions, 60% less frequent servicing, refuelling decreased from every
3days to just 12 times each year, and servicing extended from every 250 hours to every 400 hours – now carried out in tandem with
refuelling. When the 160-strong fleet of lighting plants is refurbished, Thiess is set to save more than 3.2 million litres of diesel and 8.5
million kilograms of CO2-e each year.
The 3rd placed project was Thiess’ ‘Novel gas technology to displace diesel in the world’s largest mining trucks’ initiative which aims to
replace 80% of the diesel required for heavy-duty mining trucks through the use of natural gas. Other CIMIC Group initiatives in the top
10 included:
•
•
reducing fuel consumption on haul trucks at the Melak coal mine by adjusting engine power output (Thiess Indonesia) – 5th place;
improving the efficiency of generator sets on the Melak coal mine project by controlling power spikes and optimising output to meet
consumption demands (Thiess Indonesia) – 7th place;
• use of a Remote Area Power System which incorporates a coordinated generator, solar panels and battery bank at the Melbourne
International RoRo & Automotive Terminal (MIRRAT) (CPB Contractors) – 8th place; and
•
increasing the efficiency of a plant yard at Laverton in Victoria by upgrading to energy efficient LED fittings and a 20kW solar system
The Group is working hard on initiatives such as those outlined above that promote the delivery of energy efficient, environmentally and
(CPB Contractors) – 10th place.
socially responsible projects.
REDUCING WATER CONSUMPTION
The Group’s construction and mining projects seek to identify and implement opportunities for water efficiency and savings. Each of the
Group’s projects develops a water management plan to effectively manage water according to the unique conditions of that project.
Generally Sedgman is required to comply with their client’s water management plans.
During 2016, the Group’s contracting activities used almost 12.7 million kilolitres of water and discharged almost 2.2 million kilolitres.
Water use (ML)
Withdrawals
Re-use
Discharge
CPB Contractors
Leighton Asia
1,710
41
(135)
1,853
53
(1,800)
Thiess
3,676
5,331
(268)
The water management plans address the environmental values of the surrounding environment; potential water sources; and the
regulatory commitments and landholder obligations that a particular project must meet. The plans systematically address all risks
associated with water management on the project and identifies controls that the project will put in place to manage environmental
values and associated risks. They also focus on identifying options for minimising potable water use and maximising recycling and water
reuse. These options are critical on projects where water is scarce.
On the Sydney Metro Northwest - the CPB Contractors John Holland Dragados (CPBJHD) joint venture achieved a 37% reduction in total
water used below the reference footprint, as the result of the closed loop recirculation networks used for cooling on the project tunnel
boring machines. Potable water use was reduced through on-site rainwater harvesting and the use of recycled water.
51 'Operational control' is the concept used when determining the corporate group which has NGER obligations for the facility.
52 National Greenhouse and Energy Reporting figures are for where the Group has ‘Operational control’ for the facility as per the NGER definition and are
for Australian operations only.
53 Reported to NGER, expected to be published by the Clean Energy Regulator at the end of Feb 2017.
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74
54 A competition run across HOCHTIEF’s various operating entities that sought to identify and recognise best practice examples and good ideas to save
energy and improve energy efficiency.
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IMPROVING ENERGY EFFICIENCY
The Group is a substantial user of energy, particularly driven by the mining operation of Thiess which utilises large volumes of diesel. The
Group’s energy consumption for 2016 was as follows:
Energy consumption
Total Gigawatt hours (GWH)
Of which: Liquid, gas and solid fuel (%)
Electricity (%)
Energy spend ($m)
CPB Contractors
399
93
7
27
Leighton Asia
248
83
17
29
Thiess
1,825
99
1
84.5
In 2016, CIMIC participated in the first HOCHTIEF Energy Award54 which elicited 44 submissions, representing projects and ideas from
across CIMIC Group, HOCHTIEF and Turner. CIMIC Group companies took out 1st and 3rd places, and filled 6 of the top 10 positions.
Thiess’ ‘Lighting Plant Refurbishment Program for the energy-efficient lighting plant in mines’ initiative was awarded 1st place. The
program’s key benefits include 75% less fuel use and carbon emissions, 60% less frequent servicing, refuelling decreased from every
3days to just 12 times each year, and servicing extended from every 250 hours to every 400 hours – now carried out in tandem with
refuelling. When the 160-strong fleet of lighting plants is refurbished, Thiess is set to save more than 3.2 million litres of diesel and 8.5
million kilograms of CO2-e each year.
The 3rd placed project was Thiess’ ‘Novel gas technology to displace diesel in the world’s largest mining trucks’ initiative which aims to
replace 80% of the diesel required for heavy-duty mining trucks through the use of natural gas. Other CIMIC Group initiatives in the top
10 included:
•
•
reducing fuel consumption on haul trucks at the Melak coal mine by adjusting engine power output (Thiess Indonesia) – 5th place;
improving the efficiency of generator sets on the Melak coal mine project by controlling power spikes and optimising output to meet
consumption demands (Thiess Indonesia) – 7th place;
• use of a Remote Area Power System which incorporates a coordinated generator, solar panels and battery bank at the Melbourne
•
International RoRo & Automotive Terminal (MIRRAT) (CPB Contractors) – 8th place; and
increasing the efficiency of a plant yard at Laverton in Victoria by upgrading to energy efficient LED fittings and a 20kW solar system
(CPB Contractors) – 10th place.
The Group is working hard on initiatives such as those outlined above that promote the delivery of energy efficient, environmentally and
socially responsible projects.
REDUCING WATER CONSUMPTION
The Group’s construction and mining projects seek to identify and implement opportunities for water efficiency and savings. Each of the
Group’s projects develops a water management plan to effectively manage water according to the unique conditions of that project.
Generally Sedgman is required to comply with their client’s water management plans.
During 2016, the Group’s contracting activities used almost 12.7 million kilolitres of water and discharged almost 2.2 million kilolitres.
Water use (ML)
Withdrawals
Re-use
Discharge
CPB Contractors
1,710
41
(135)
Leighton Asia
1,853
53
(1,800)
Thiess
3,676
5,331
(268)
The water management plans address the environmental values of the surrounding environment; potential water sources; and the
regulatory commitments and landholder obligations that a particular project must meet. The plans systematically address all risks
associated with water management on the project and identifies controls that the project will put in place to manage environmental
values and associated risks. They also focus on identifying options for minimising potable water use and maximising recycling and water
reuse. These options are critical on projects where water is scarce.
On the Sydney Metro Northwest - the CPB Contractors John Holland Dragados (CPBJHD) joint venture achieved a 37% reduction in total
water used below the reference footprint, as the result of the closed loop recirculation networks used for cooling on the project tunnel
boring machines. Potable water use was reduced through on-site rainwater harvesting and the use of recycled water.
54 A competition run across HOCHTIEF’s various operating entities that sought to identify and recognise best practice examples and good ideas to save
energy and improve energy efficiency.
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Of total water demand, 43% (5.4 million kilolitres) was met through recycling or reusing water. Of the water that was withdrawn, it was
sourced as follows:
In 2016, we generated a total of 502,047 tonnes of waste, of which 64% was diverted for recycling and the balance was disposed of in
Source of water withdrawals (%)
Mains
Groundwater
Surface water
Marine water
The discharges of water went to the following areas:
Discharges of water (%)
Surface water
Marine environment
Other discharges
CPB Contractors
43
29
28
0
Leighton Asia
97
3
0
0
CPB Contractors
1
0
99
Leighton Asia
100
0
0
Thiess
2
97
1
0
Thiess
100
0
0
CPB Contractors and UGL have been selected by Melbourne Water to deliver the approximately $127 million Western Treatment Plant -
Treatment Capacity Increase Project in a 50:50 joint venture. The new treatment facility at Werribee is designed to integrate with the
existing Western Treatment Plant and involves the design and construction of a new sewage treatment facility with a hydraulic capacity
of 140 million litres per day. The Group is proud to be able to apply its construction capability to upgrading a facility that processes
around half of Melbourne's sewage and produces almost 40 billion litres of recycled water a year.
USING MATERIALS EFFICIENTLY
We aim to continually innovate so as to improve the efficiency of the resources we use and reduce waste, thereby lowering our costs,
improving our value proposition and benefiting the environment. In 2016, CPB Contractors and Leighton Asia spent some $924 million on
4.84 million tonnes of materials.
Material use (million tonnes) and spend ($m)
Quantity
Spend
CPB Contractors
2.68
396
Leighton Asia
2.16
530
The quantities of construction materials purchased and the spend on those materials is split as follows:
Quantities (%)
Concrete
Steel
Asphalt
Spend (%)
Concrete
Steel
Asphalt
CPB Contractors
92
7
1
CPB Contractors
62
32
6
Leighton Asia
79
21
0
Leighton Asia
23
77
0
Of the Group’s total expenses in 2016: materials were 17%; sub-contractors were 36%; personnel costs were 24%; plant costs, including
depreciation and lease payments were 14%; and other expenses were 9%.
• prioritisation of erosion controls to reduce sedimentation management needs;
seasonal earthworks programming to avoid high rainfall months and elevated erosion periods;
On the Sydney Metro Northwest, the CPBJHD joint venture project team, in collaboration with the tunnel boring machine (TBM)
manufacturer, developed an innovative traverse and relaunch methodology which, utilising the TBM propulsion system, avoids
installation and relocation of jacking systems, that had not been implemented anywhere in the world to date. This innovative process
reduced the construction program by 2.5 months, reduced construction noise by over 10 decibels and reduced materials inputs, avoiding
the use of over 600 tonnes of structural steel.
Use of materials on the Sydney Metro Northwest was significantly reduced, with a 45% reduction in ‘ecopoints’ 55 below the reference
footprint, thanks largely to an innovative concrete mix for the high-strength concrete used in the tunnel lining segments. A reduction of
330,000 tonnes of concrete was achieved due to a reduction in segment thickness from 370mm to 260mm.
REDUCING WASTE
To minimise the impact of our operations on the environment we encourage our teams, wherever possible, to take a life-cycle approach
to resource efficiency. This means reducing waste through smarter design and procurement, and recycling when this is possible.
55 Ecopoints are a measure of overall environmental impact developed by BRE. The annual environmental impact caused by a typical UK citizen creates 100
Ecopoints; more Ecopoints indicates a higher environmental impact.
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landfill.
Landfill
Recycled
Waste generation (tonnes)
CPB Contractors
Leighton Asia
44,119
264,628
52,151
128,415
Thiess
7,710
5,023
The Group is not aware of having transported, imported, exported or having treated any hazardous waste and has not shipped any
hazardous waste internationally.
CPB Contactors has successfully delivered the MIRRAT facility in Victoria. The project has become the first in the state to be awarded a ‘6-
Star Green Star’ ‘Design’ rating from the Green Building Council of Australia and ‘Excellent’ rating in both the ‘Design’ and ‘As-Built’
categories from ISCA. The facility will be Australia’s largest car terminal, with a berth length of 920 metres and the capacity to handle up
to one million units a year. Sustainability initiatives included:
• over 260,000 tonnes of recycled brick, glass and concrete used in the construction of the pavements across the site;
• 95% of the waste generated onsite during construction has been recycled;
recycled sand has been used throughout the site to backfill trenches;
through the use of recycled materials and efficient design the carbon footprint of the materials used in the facility has been reduced
by over 30%, which equates to over 4,000 tonnes of CO2 and
rainwater harvesting is being used across the site to provide water for the wash-bay and toilet flushing.
The project features a host of other sustainability initiatives.
PROTECTING BIODIVERSITY
We aim to avoid environmental impacts to sensitive locations during the design and planning phases of our diverse infrastructure,
resources and property projects. Where this is not possible, we deploy strategies to minimise disturbance while efficiently, effectively and
safely completing work. In areas with sensitive ecological communities, the Group employs a range of measures to manage and mitigate
potential impacts. Central to this is the development of biodiversity management plans that consider local contexts, baseline surveys,
monitoring results and specialist advice.
The rehabilitation of disturbed areas remains an integral element of dealing with biodiversity on our construction, mining projects and
services. This typically involves progressively reshaping disturbed areas, establishing erosion control structures, and topsoiling and
seeding. Rehabilitation aims to ensure that areas are safe, stable and suitable for agreed land uses, such as agriculture, grazing or natural
habitats. In 2016, Thiess rehabilitated 1,314 hectares of land on its mining projects.
Rehabilitation of mining area (ha)
Australia/Pacific
Asia
Total
Reshaped
Top-soiled
Seeded
266
314
580
228
408
635
99
0
99
At the Moreton Bay Rail (MBR) project in Queensland, CPB Contractors successfully dealt with a number of environmental challenges
including undertaking substantial ‘Greenfield’ works within populated residential areas and dense coastal bushland. Notably, the project
intersects estuarine and freshwater waterways, and is adjacent to the Moreton Bay Marine Park and Ramsar-listed56 Hays Inlet. Key
project initiatives include:
• detailed design to avoid disturbance and prioritised drainage construction to minimise onsite water-management devices;
catchment size reduction to allow use of type-two controls that reused mulch (over 5,000 cubic metres) and rock from site works;
• use of short and long-term stabilisation techniques, and innovative soil-binding technologies, to reduce water quality impacts and to
avoid large, traditional sediment basins;
• application of more than 173,100 square metres of hydro-seed, 13,500 square metres of bonded fibre matrix and 16,000 square
metres of turf; and
•
community group involvement in rehabilitating marine-plant areas.
These key initiatives resulted in a timely delivered project, successfully rehabilitated sites, 0 environmental incidents and a positive
relationship developed with the surrounding community.
•
•
•
•
•
56 The Convention on Wetlands of International Importance, called the Ramsar Convention, is the intergovernmental treaty that provides the framework
for the conservation and wise use of wetlands and their resources.
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In 2016, we generated a total of 502,047 tonnes of waste, of which 64% was diverted for recycling and the balance was disposed of in
landfill.
Waste generation (tonnes)
Landfill
Recycled
CPB Contractors
44,119
264,628
Leighton Asia
52,151
128,415
Thiess
7,710
5,023
The Group is not aware of having transported, imported, exported or having treated any hazardous waste and has not shipped any
hazardous waste internationally.
CPB Contactors has successfully delivered the MIRRAT facility in Victoria. The project has become the first in the state to be awarded a ‘6-
Star Green Star’ ‘Design’ rating from the Green Building Council of Australia and ‘Excellent’ rating in both the ‘Design’ and ‘As-Built’
categories from ISCA. The facility will be Australia’s largest car terminal, with a berth length of 920 metres and the capacity to handle up
to one million units a year. Sustainability initiatives included:
• over 260,000 tonnes of recycled brick, glass and concrete used in the construction of the pavements across the site;
• 95% of the waste generated onsite during construction has been recycled;
recycled sand has been used throughout the site to backfill trenches;
•
through the use of recycled materials and efficient design the carbon footprint of the materials used in the facility has been reduced
•
by over 30%, which equates to over 4,000 tonnes of CO2 and
rainwater harvesting is being used across the site to provide water for the wash-bay and toilet flushing.
•
The project features a host of other sustainability initiatives.
PROTECTING BIODIVERSITY
We aim to avoid environmental impacts to sensitive locations during the design and planning phases of our diverse infrastructure,
resources and property projects. Where this is not possible, we deploy strategies to minimise disturbance while efficiently, effectively and
safely completing work. In areas with sensitive ecological communities, the Group employs a range of measures to manage and mitigate
potential impacts. Central to this is the development of biodiversity management plans that consider local contexts, baseline surveys,
monitoring results and specialist advice.
The rehabilitation of disturbed areas remains an integral element of dealing with biodiversity on our construction, mining projects and
services. This typically involves progressively reshaping disturbed areas, establishing erosion control structures, and topsoiling and
seeding. Rehabilitation aims to ensure that areas are safe, stable and suitable for agreed land uses, such as agriculture, grazing or natural
habitats. In 2016, Thiess rehabilitated 1,314 hectares of land on its mining projects.
Rehabilitation of mining area (ha)
Australia/Pacific
Asia
Total
Reshaped
266
314
580
Top-soiled
228
408
635
Seeded
99
0
99
At the Moreton Bay Rail (MBR) project in Queensland, CPB Contractors successfully dealt with a number of environmental challenges
including undertaking substantial ‘Greenfield’ works within populated residential areas and dense coastal bushland. Notably, the project
intersects estuarine and freshwater waterways, and is adjacent to the Moreton Bay Marine Park and Ramsar-listed56 Hays Inlet. Key
project initiatives include:
• detailed design to avoid disturbance and prioritised drainage construction to minimise onsite water-management devices;
• prioritisation of erosion controls to reduce sedimentation management needs;
seasonal earthworks programming to avoid high rainfall months and elevated erosion periods;
•
catchment size reduction to allow use of type-two controls that reused mulch (over 5,000 cubic metres) and rock from site works;
•
• use of short and long-term stabilisation techniques, and innovative soil-binding technologies, to reduce water quality impacts and to
avoid large, traditional sediment basins;
• application of more than 173,100 square metres of hydro-seed, 13,500 square metres of bonded fibre matrix and 16,000 square
metres of turf; and
community group involvement in rehabilitating marine-plant areas.
•
These key initiatives resulted in a timely delivered project, successfully rehabilitated sites, 0 environmental incidents and a positive
relationship developed with the surrounding community.
56 The Convention on Wetlands of International Importance, called the Ramsar Convention, is the intergovernmental treaty that provides the framework
for the conservation and wise use of wetlands and their resources.
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OUTLOOK AND FUTURE PLANS
We are committed to, wherever possible, preventing or otherwise mitigating and remediating any harmful effects from our operations. In
2017, we plan to:
•
• promote waste management and minimisation initiatives on all projects in Leighton Asia;
• encourage employees to understand and abide by the principles of the UN Global Compact and to provide education on the Group’s
continue to focus on initiatives to report on and reduce GHG emissions;
role in contributing to the UN Sustainable Development Goals;
• use CDP (formerly the Carbon Disclosure Project) and the DJSI as tools to engage employees on the important role of sustainability
reporting;
• participate again in the HOCHTIEF Innovation Award (Energy and Environmental Protection category) with a focus on using the Award
to identify and communicate worthwhile initiatives; and
further develop and improve support tools and processes to integrate sustainability on infrastructure projects.
•
OUR AWARDS
SUSTAINABILITY
CIMIC
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• DJSI again recognised CIMIC with inclusion in the DJSI Australia Index. CIMIC was identified as the construction and engineering sector
global leader in three categories: 1. Building Materials; 2. Environmental Policy and Management System; and 3. Resource
• RobecoSam included CIMIC in the 2017 Sustainability Yearbook and awarded a Bronze Class distinction for CIMIC’s excellent
sustainability performance based on the 2016 DJSI submission. CIMIC was one of only 10 companies in the global ‘Construction &
Conservation and Resource Efficiency.
Engineering’ industry recognised.
• CDP recognised CIMIC with a ‘C’ rating for its ‘Climate Change’ submission and a ‘B’ rating for its ‘Water’ submission.
• FTSE Russell recognised CIMIC’s sustainability with inclusion in the FTSE4Good Index Series following an independent assessment
according to FTSE4Good criteria. The FTSE4Good Index Series is designed to measure the performance of companies demonstrating
strong ESG practices.
PROVIDING SAFE COMMUNITIES AND WORKPLACES
CPB Contractors
• Master Builders-Bankwest Excellence in Construction Awards in Western Australia - Excellence in Workplace Health and Safety Award
was presented to Broad Construction (a subsidiary of CPB Contractors) for the fit-out of the David Malcom Justice Centre in Perth.
Leighton Asia
• 22nd Annual Hong Kong Considerate Contractors Site Award Scheme - Gold award to Central-Wanchai Bypass - Central Interchange.
• Construction Industry Safety Award Scheme for Public Works Building Contracts - Silver award to the Hong Kong-Zhuhai-Macao
Bridge, Hong Kong Boundary Crossing Facilities - Passenger Clearance Building.
• Ministry of Manpower, Workplace Safety and Health Council SHARP Award and RoSPA Gold Award to the Springleaf Station & Tunnel
project for the Thomson-East Coast Line in Singapore.
• Singapore’s Building and Construction Authority Green and Gracious Builder Award - Excellent rating (2014 – 2017).
• A total of thirty awards were received from a number of institutional and client sources in Hong Kong by employees and projects.
DEVELOPING A PERFORMANCE CULTURE
CIMIC
• Australian Association of Graduate Employers (AAGE) ranked CIMIC as a Top 75 Graduate employer.
• AFR & GradConnection ranked CIMIC as one of the Top 100 Graduate Employers of Australia in their 2017 list. CIMIC was also
recognised as a Top 10 Finalist in the category of popular graduate employers in the Engineering and Resources sector.
•
LinkedIn ranked CPB Contractors 10th in their list of ‘Australia’s Top Attractors’.
• Civil Contractors NZ, Auckland branch - Young Engineer of the Year awarded to Brad Wallace, Senior Project Engineer.
• Railway Technical Society of Australasia’s 2016 Young Rail Professional of the Year - Samuel Lilley, Project Engineer – Rail Systems.
• 2016 National Association of Women in Construction (NAWIC) Award for Achievement in Design was presented to Kate Taylor, Senior
• 2016 LinkedIn Hong Kong Employer Awards - Bronze Rising Star Award for the effective use of LinkedIn features for recruiting and
•
Labour Department of Hong Kong - The Most Improved Trainees Award in the Youth Employment and Training Programme awarded
to Happy Leung, Building Technician.
• Queensland Resources Council’s Indigenous Advocacy Award presented to Penny Hamilton, Diversity Manager.
• South Australian Women in Resources Award for outstanding South Australian Tradeswoman awarded to Kristy Hasting, an operator
at the Prominent Hill copper-gold mine.
• National Association of Women in Construction (NAWIC) - Queensland and Northern Territory Chapters' Award for Achievement in
Construction (General Building) presented to Julie Martin, Principal – Electrical.
• 2016 NAWIC Award for Achievement in Construction (General Building) was presented to Julie Martin, Principal – Electrical Specialist
CPB Contractors
Design Manager.
Leighton Asia
attracting talent.
Thiess
EIC Activities
Design.
79
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CIMIC Group Limited Annual Report 2016 | Sustainability Report
OUR AWARDS
SUSTAINABILITY
CIMIC
• DJSI again recognised CIMIC with inclusion in the DJSI Australia Index. CIMIC was identified as the construction and engineering sector
global leader in three categories: 1. Building Materials; 2. Environmental Policy and Management System; and 3. Resource
Conservation and Resource Efficiency.
• RobecoSam included CIMIC in the 2017 Sustainability Yearbook and awarded a Bronze Class distinction for CIMIC’s excellent
sustainability performance based on the 2016 DJSI submission. CIMIC was one of only 10 companies in the global ‘Construction &
Engineering’ industry recognised.
• CDP recognised CIMIC with a ‘C’ rating for its ‘Climate Change’ submission and a ‘B’ rating for its ‘Water’ submission.
• FTSE Russell recognised CIMIC’s sustainability with inclusion in the FTSE4Good Index Series following an independent assessment
according to FTSE4Good criteria. The FTSE4Good Index Series is designed to measure the performance of companies demonstrating
strong ESG practices.
PROVIDING SAFE COMMUNITIES AND WORKPLACES
CPB Contractors
• Master Builders-Bankwest Excellence in Construction Awards in Western Australia - Excellence in Workplace Health and Safety Award
was presented to Broad Construction (a subsidiary of CPB Contractors) for the fit-out of the David Malcom Justice Centre in Perth.
Leighton Asia
• 22nd Annual Hong Kong Considerate Contractors Site Award Scheme - Gold award to Central-Wanchai Bypass - Central Interchange.
• Construction Industry Safety Award Scheme for Public Works Building Contracts - Silver award to the Hong Kong-Zhuhai-Macao
Bridge, Hong Kong Boundary Crossing Facilities - Passenger Clearance Building.
• Ministry of Manpower, Workplace Safety and Health Council SHARP Award and RoSPA Gold Award to the Springleaf Station & Tunnel
project for the Thomson-East Coast Line in Singapore.
• Singapore’s Building and Construction Authority Green and Gracious Builder Award - Excellent rating (2014 – 2017).
• A total of thirty awards were received from a number of institutional and client sources in Hong Kong by employees and projects.
DEVELOPING A PERFORMANCE CULTURE
CIMIC
• Australian Association of Graduate Employers (AAGE) ranked CIMIC as a Top 75 Graduate employer.
• AFR & GradConnection ranked CIMIC as one of the Top 100 Graduate Employers of Australia in their 2017 list. CIMIC was also
recognised as a Top 10 Finalist in the category of popular graduate employers in the Engineering and Resources sector.
CPB Contractors
LinkedIn ranked CPB Contractors 10th in their list of ‘Australia’s Top Attractors’.
•
• Civil Contractors NZ, Auckland branch - Young Engineer of the Year awarded to Brad Wallace, Senior Project Engineer.
• Railway Technical Society of Australasia’s 2016 Young Rail Professional of the Year - Samuel Lilley, Project Engineer – Rail Systems.
• 2016 National Association of Women in Construction (NAWIC) Award for Achievement in Design was presented to Kate Taylor, Senior
Design Manager.
Leighton Asia
• 2016 LinkedIn Hong Kong Employer Awards - Bronze Rising Star Award for the effective use of LinkedIn features for recruiting and
•
attracting talent.
Labour Department of Hong Kong - The Most Improved Trainees Award in the Youth Employment and Training Programme awarded
to Happy Leung, Building Technician.
Thiess
• Queensland Resources Council’s Indigenous Advocacy Award presented to Penny Hamilton, Diversity Manager.
• South Australian Women in Resources Award for outstanding South Australian Tradeswoman awarded to Kristy Hasting, an operator
at the Prominent Hill copper-gold mine.
EIC Activities
• National Association of Women in Construction (NAWIC) - Queensland and Northern Territory Chapters' Award for Achievement in
Construction (General Building) presented to Julie Martin, Principal – Electrical.
• 2016 NAWIC Award for Achievement in Construction (General Building) was presented to Julie Martin, Principal – Electrical Specialist
Design.
79
CIMIC 2016 ANNUAL REPORT A4 FA.indd 79
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CIMIC Group Limited Annual Report 2016 | Sustainability Report
CIMIC Group Limited Annual Report 2016 | Sustainability Report
INNOVATING TO DELIVER PROJECTS
CIMIC
• Winner of Treasury Management International’s 2016 Corporate Innovation Award for Working Capital Management.
• Winner of a Highly Commended Award for the Best Trade Solution in the Adam Smith Awards Asia 2016.
CPB Contractors
•
Infrastructure Partnerships Australia’s 2016 National Infrastructure Award for Contractor Excellence was presented to Sydney Metro
Northwest (CPB Contractors, with consortium members John Holland and Dragados).
• 2016 Australian Construction Achievement Award recognised the Gateway WA Alliance (CPB Contractors with Georgiou Group, GHD,
AECOM and BG&E) as a finalist for the Gateway WA Perth Airport and Freight Access Project.
• 2016 Sustainability in Infrastructure Award – IS Project or Asset Leadership in Infrastructure Sustainability Award was awarded to the
Activities, brands, products, and services
Operating and Financial Review, www.cimic.com.au
Melbourne International Roll On-Roll Off Automotive Terminal.
• Civil Contractors NZ, Auckland branch - Best Project over $20 million presented to The Causeway.
• Roads Australia 2016 John Shaw Medal was awarded to Gordon Ralph. The John Shaw Medalist is chosen by an elite committee of
past winners and presented to an industry champion who has made a lasting contribution to Australia’s roads.
Leighton Asia
• 2016 Indonesia Property Awards - Best Government Development and Best Landscape Architectural Design presented to New
Australia Embassy Compound project (Leighton Asia with Total Bangun Persada).
Thiess
• Aus IMM’s Professional Excellence Award for 2016 was awarded to Principal Mining Geologist, Helgi Stedman, for his contributions to
the industry.
Sedgman
• Australian Institute of Steel Detailers 2016 Annual Queensland Steel Excellence Award for Integrated Project Delivery awarded to
Sedgman and Steelcad Drafting for the Byerwen coal handling and preparation plant. The project involved over 500 tonnes of detailed
steel and utilised a digital 3D model to coordinate the design and fabrication, saving significant detailing time.
Governance
102-18
Governance structure
EIC Activities
•
ISCA’s 2016 Sustainability in Infrastructure Awards - Individual Leadership in Infrastructure Sustainability Award was presented to
Glenn Hedges, Principal – Sustainability.
USING RESOURCES EFFICIENTLY
CPB Contractors
• 2016 Civil Contractors Federation’s Western Australia and National Earth Awards for Excellence in Civil Construction awarded to the
Nominating and selecting the highest governance body
2016 Corporate Governance Statement,
Gateway WA project for projects valued more than $75 million.
• Banksia Foundation recognised the Melbourne International RoRo Automotive Terminal and CPB Contractors, in partnership with
Worley Parsons, Arcadis and PLUS Architecture, as a finalist in their Sustainable Cities Award.
Leighton Asia
Indian Green Building Council Gold rating for Tritvam Residential Project in Kochi, India.
•
• Hong Kong Awards for Environmental Excellence – Construction Sector - Merit award for the Express Rail Link.
Thiess
• HOCHTIEF Energy Award – 1st place was awarded to Thiess’ Lighting Plant Refurbishment initiative which saved around 2 million kWh
per annum due to a series of integrated energy efficiency measures related to lighting plant in mines.
● Covered in full
◕ Covered for the most part
◑ Covered in part
Code = Covered in the Code of Conduct
Topic specific disclosures
Annual Report section, Page number/s and or URL
Application level /
omission
◑◕
GRI INDEX
Legend
GRI
standard
102-1
102-2
102-3
102-4
102-5
102-6
102-7
102-8
102-9
102-10
102-11
102-12
102-13
102-14
102-15
102-16
102-17
102-19
102-20
102-24
102-25
102-27
102-28
102-29
Information on employees and other workers
Supply chain
45, 62 - 66,
57
Significant changes to the organization and its supply chain
Operating and Financial Review, 57
General Disclosures
Organisational profile
Name of the organization
Location of headquarters
Location of operations
Ownership and legal form
Markets served
Scale of the organization
Precautionary Principle or approach
External initiatives
Membership of associations
Strategy
Statement from senior decision-maker
Key impacts, risks, and opportunities
Ethics and integrity
44
www.cimic.com.au
www.cimic.com.au
Financial Report, www.cimic.com.au
Operating and Financial Review, www.cimic.com.au
Operating and Financial Review, 62
72, Group Policies57
59
Executive Chairman’s review, CEO’s review
Operating and Financial Review
2016 Corporate Governance Statement,60 Corporate
Governance61
Corporate Governance
2015 Sustainability Report, Corporate Governance
Directors’ Report, 2016 Corporate Governance
Statement, www.cimic.com.au
Directors’ Report, 2016 Corporate Governance
Statement, www.cimic.com.au
Values, principles, standards, and norms of behaviour
Mechanisms for advice and concerns about ethics
44, 54 - 57, Group Policies, Code58
54 - 56, Code, Ethics-line59
Delegating authority
Executive-level responsibility for economic,
environmental, and social topics
102-21
Consulting stakeholders on economic, environmental, and
47
102-23
Chair of the highest governance body
social topics
committees
Conflicts of interest
102-22
Composition of the highest governance body and its
2016 Corporate Governance Statement,
102-26
Role of highest governance body in setting purpose,
2016 Corporate Governance Statement, Board &
values, and strategy
committee charters62
Collective knowledge of highest governance body
Evaluating the highest governance body’s performance
2016 Corporate Governance Statement
2016 Corporate Governance Statement
Identifying and managing economic, environmental, and
2016 Corporate Governance Statement, Board &
social impacts
102-30
Effectiveness of risk management processes
2016 Corporate Governance Statement, Board &
102-31
Review of economic, environmental, and social topics
44 - 80, 2016 Corporate Governance Statement, Board
102-32
Highest governance body’s role in sustainability reporting
56, 2016 Corporate Governance Statement, Board &
102-33
Communicating critical concerns
47, 2016 Corporate Governance Statement, Board &
102-34
Nature and total number of critical concerns
47, 2016 Corporate Governance Statement, Board &
committee charters
committee charters
& committee charters
committee charters
committee charters
committee charters
Remuneration Report
Remuneration Report
102-35
102-36
Remuneration policies
Process for determining remuneration
●
●
●
●
●
●
●
●
◕
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
57 The CIMIC Group Policies can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance/group-policies.
58 The CIMIC Group Code of Conduct can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance/group-policies.
59 The CIMIC Group Ethics Line can be accessed at: http://www.cimic.com.au/ethics-line.
60 The 2016 Corporate Governance Statements can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance.
61 The Group’s approach to Corporate Governance can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance.
62 The Board and Committee Charters can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance.
80
80
80
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81
CIMIC Group Limited Annual Report 2016 | Sustainability Report
GRI INDEX
Legend
● Covered in full
◕ Covered for the most part
◑ Covered in part
Code = Covered in the Code of Conduct
Topic specific disclosures
Annual Report section, Page number/s and or URL
Application level /
omission
◑◕
GRI
standard
102-1
102-2
102-3
102-4
102-5
102-6
102-7
102-8
102-9
102-10
102-11
102-12
102-13
102-14
102-15
102-16
102-17
102-18
102-19
102-20
102-21
102-22
102-23
102-24
102-25
102-26
102-27
102-28
102-29
102-30
General Disclosures
Organisational profile
Name of the organization
Activities, brands, products, and services
Location of headquarters
Location of operations
Ownership and legal form
Markets served
Scale of the organization
Information on employees and other workers
Supply chain
Significant changes to the organization and its supply chain
Precautionary Principle or approach
External initiatives
Membership of associations
Strategy
Statement from senior decision-maker
Key impacts, risks, and opportunities
Ethics and integrity
Values, principles, standards, and norms of behaviour
Mechanisms for advice and concerns about ethics
Governance
Governance structure
Delegating authority
Executive-level responsibility for economic,
environmental, and social topics
Consulting stakeholders on economic, environmental, and
social topics
Composition of the highest governance body and its
committees
Chair of the highest governance body
Nominating and selecting the highest governance body
Conflicts of interest
Role of highest governance body in setting purpose,
values, and strategy
Collective knowledge of highest governance body
Evaluating the highest governance body’s performance
Identifying and managing economic, environmental, and
social impacts
Effectiveness of risk management processes
102-31
Review of economic, environmental, and social topics
102-32
Highest governance body’s role in sustainability reporting
102-33
Communicating critical concerns
102-34
Nature and total number of critical concerns
102-35
102-36
Remuneration policies
Process for determining remuneration
44
Operating and Financial Review, www.cimic.com.au
www.cimic.com.au
www.cimic.com.au
Financial Report, www.cimic.com.au
Operating and Financial Review, www.cimic.com.au
Operating and Financial Review, 62
45, 62 - 66,
57
Operating and Financial Review, 57
72, Group Policies57
59
Executive Chairman’s review, CEO’s review
Operating and Financial Review
44, 54 - 57, Group Policies, Code58
54 - 56, Code, Ethics-line59
2016 Corporate Governance Statement,60 Corporate
Governance61
Corporate Governance
2015 Sustainability Report, Corporate Governance
47
2016 Corporate Governance Statement,
Directors’ Report, 2016 Corporate Governance
Statement, www.cimic.com.au
2016 Corporate Governance Statement,
Directors’ Report, 2016 Corporate Governance
Statement, www.cimic.com.au
2016 Corporate Governance Statement, Board &
committee charters62
2016 Corporate Governance Statement
2016 Corporate Governance Statement
2016 Corporate Governance Statement, Board &
committee charters
2016 Corporate Governance Statement, Board &
committee charters
44 - 80, 2016 Corporate Governance Statement, Board
& committee charters
56, 2016 Corporate Governance Statement, Board &
committee charters
47, 2016 Corporate Governance Statement, Board &
committee charters
47, 2016 Corporate Governance Statement, Board &
committee charters
Remuneration Report
Remuneration Report
●
●
●
●
●
●
●
●
◕
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
57 The CIMIC Group Policies can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance/group-policies.
58 The CIMIC Group Code of Conduct can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance/group-policies.
59 The CIMIC Group Ethics Line can be accessed at: http://www.cimic.com.au/ethics-line.
60 The 2016 Corporate Governance Statements can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance.
61 The Group’s approach to Corporate Governance can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance.
62 The Board and Committee Charters can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance.
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CIMIC Group Limited Annual Report 2016 | Sustainability Report
Topic specific disclosures
Annual Report section, Page number/s and or URL
GRI
standard
102-37
102-38
102-39
102-40
102-41
102-42
102-43
102-44
102-45
102-46
102-47
102-48
Stakeholders’ involvement in remuneration
Annual total compensation ratio
Percentage increase in annual total compensation ratio
Stakeholder engagement
List of stakeholder groups
Collective bargaining agreements
Identifying and selecting stakeholders
Approach to stakeholder engagement
Key topics and concerns raised
Reporting practice
Entities included in the consolidated financial
statements
Defining report content and topic Boundaries
List of material topics
Restatements of information
102-49
Changes in reporting
102-50
102-51
102-52
102-53
102-54
Reporting period
Date of most recent report
Reporting cycle
Contact point for questions regarding the report
Claims of reporting in accordance with the GRI
Standards
102-55
102-56
GRI content index
External assurance
Economic Topic-specific Disclosures
Economic performance
Direct economic value generated and distributed
Financial implications and other risks and
opportunities due to climate change
Defined benefit plan obligations and other
retirement plans
Financial assistance received from government
Market Presence
Ratios of standard entry level wage by gender
compared to local minimum wage
Proportion of senior management hired from the
local community
Indirect Economic Impacts
Infrastructure investments and services
supported
Significant indirect economic impacts
Procurement Practices
Proportion of spending on local suppliers
Anti-corruption
201-1
201-2
201-3
201-4
202-1
202-2
203-1
203-2
204-1
205-1
Operations assessed for risks related to
205-2
205-3
206-1
301-1
301-2
301-3
302-1
corruption
Communication and training about anti-
corruption policies and procedures
Confirmed incidents of corruption and actions
taken
Anti-competitive Behaviour
Legal actions for anti-competitive behaviour,
anti-trust, and monopoly practices
Environmental Topic-specific Disclosures
Materials
Materials used by weight or volume
Recycled input materials used
Reclaimed products and their packaging
materials
Energy
Energy consumption within the organization
Remuneration Report, 2016 AGM Results63
Not disclosed
Not disclosed
47
66
47
47
47
44, Financial Report
44
47
44, see also footnotes on pages 45 and 46, Operating
and Financial Review, Financial Report
44, 47, Operating and Financial Review, Financial
Report
44, Operating and Financial Review, Financial Report
44, Operating and Financial Review, Financial Report
44, Operating and Financial Review, Financial Report
Justin Grogan, EGM Sustainability
44
81 - 84
44
70
73, 2015 Sustainability Report
64
58
Not disclosed
65
70
70
57
54, 55
54, 56
57
57
46, 76
46, 76
46, 76
46, 74
Application level /
omission
●
Topic specific disclosures
Annual Report section, Page number/s and or URL
Application level /
omission
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
◑
●
●
◑
●
●
◕
●
●
●
●
●
●
●
●
46, 74
46
46, 74
46, 74
46, 75
75
46, 75
77
77
77
46, 73, 74
46, 74
46, 74
46,
46, 73, 74
46, 75
46, 76
46, 72
76 - 77
75, 77
57
57
57
64
50
GRI
standard
302-2
302-3
302-4
302-5
Energy consumption outside of the organization
Energy intensity
Reduction of energy consumption
Reductions in energy requirements of products
and services
Water
303-1
303-2
Water withdrawal by source
Water sources significantly affected by
withdrawal of water
303-3
Water recycled and reused
Biodiversity
304-1
Operational sites owned, leased, managed in, or
adjacent to, protected areas and areas of high
biodiversity value outside protected areas
304-2
Significant impacts of activities, products, and
services on biodiversity
Habitats protected or restored
IUCN Red List species and national conservation
Not disclosed
list species with habitats in areas affected by
Emissions of ozone-depleting substances (ODS)
73
Nitrogen oxides (NOX), sulfur oxides (SOX), and
Not disclosed
operations
Emissions
Direct (Scope 1) GHG emissions
Energy indirect (Scope 2) GHG emissions
Other indirect (Scope 3) GHG emissions
GHG emissions intensity
Reduction of GHG emissions
other significant air emissions
Effluents and Waste
Water discharge by quality and destination
Waste by type and disposal method
Significant spills
Transport of hazardous waste
Water bodies affected by water discharges
and/or runoff
Environmental Compliance
307-1
Non-compliance with environmental laws and
46, 72
regulations
Supplier Environmental Assessment
308-1
New suppliers that were screened using
308-2
Negative environmental impacts in the supply
environmental criteria
chain and actions taken
New employee hires and employee turnover
62, 63
Benefits provided to full-time employees that are
Not disclosed
Social Topic-specific Disclosures
Employment
not provided to temporary or part-time
employees
Parental leave
Labor/Management Relations
402-1
Minimum notice periods regarding operational
As per statutory obligations
Occupational Health and Safety
403-1
Workers representation in formal joint
management–worker health and safety
changes
committees
403-2
Types of injury and rates of injury, occupational
45, 49, 50, 51
diseases, lost days, and absenteeism, and
number of work-related fatalities
403-3
Workers with high incidence or high risk of
50, 51
diseases related to their occupation
403-4
Health and safety topics covered in formal
As per statutory obligations
agreements with trade unions
Training and Education
Average hours of training per year per employee
63
304-3
304-4
305-1
305-2
305-3
305-4
305-5
305-6
305-7
306-1
306-2
306-3
306-4
306-5
401-1
401-2
401-3
404-1
83
●
◕
◕
◕
●
●
●
◕
◕
●
●
●
●
●
◕
◕
●
●
●
●
●
●
●
●
●
●
●
◑
●
●
●
63 The 2016 AGM results can be accessed at: http://www.cimic.com.au/investor-and-media-centre/financial-results-and-meetings/annual-reports-and-
annual-general-meetings.
82
82
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83
Topic specific disclosures
Annual Report section, Page number/s and or URL
CIMIC Group Limited Annual Report 2016 | Sustainability Report
GRI
standard
302-2
302-3
302-4
302-5
Energy consumption outside of the organization
Energy intensity
Reduction of energy consumption
Reductions in energy requirements of products
and services
Water
303-1
303-2
Water withdrawal by source
Water sources significantly affected by
withdrawal of water
303-3
Water recycled and reused
304-1
304-2
304-3
304-4
305-1
305-2
305-3
305-4
305-5
305-6
305-7
306-1
306-2
306-3
306-4
306-5
Biodiversity
Operational sites owned, leased, managed in, or
adjacent to, protected areas and areas of high
biodiversity value outside protected areas
Significant impacts of activities, products, and
services on biodiversity
Habitats protected or restored
IUCN Red List species and national conservation
list species with habitats in areas affected by
operations
Emissions
Direct (Scope 1) GHG emissions
Energy indirect (Scope 2) GHG emissions
Other indirect (Scope 3) GHG emissions
GHG emissions intensity
Reduction of GHG emissions
Emissions of ozone-depleting substances (ODS)
Nitrogen oxides (NOX), sulfur oxides (SOX), and
other significant air emissions
Effluents and Waste
Water discharge by quality and destination
Waste by type and disposal method
Significant spills
Transport of hazardous waste
Water bodies affected by water discharges
and/or runoff
Environmental Compliance
46, 74
46
46, 74
46, 74
46, 75
75
46, 75
77
77
77
Not disclosed
46, 73, 74
46, 74
46, 74
46,
46, 73, 74
73
Not disclosed
46, 75
46, 76
46, 72
76 - 77
75, 77
307-1
Non-compliance with environmental laws and
46, 72
308-1
regulations
Supplier Environmental Assessment
New suppliers that were screened using
environmental criteria
308-2
Negative environmental impacts in the supply
chain and actions taken
57
57
57
Social Topic-specific Disclosures
Employment
401-1
401-2
401-3
New employee hires and employee turnover
Benefits provided to full-time employees that are
not provided to temporary or part-time
employees
Parental leave
Labor/Management Relations
62, 63
Not disclosed
64
402-1
Minimum notice periods regarding operational
As per statutory obligations
403-1
403-2
changes
Occupational Health and Safety
Workers representation in formal joint
management–worker health and safety
committees
Types of injury and rates of injury, occupational
diseases, lost days, and absenteeism, and
number of work-related fatalities
50
45, 49, 50, 51
403-3
Workers with high incidence or high risk of
50, 51
diseases related to their occupation
Health and safety topics covered in formal
agreements with trade unions
Training and Education
Average hours of training per year per employee
As per statutory obligations
63
403-4
404-1
83
Application level /
omission
●
◕
◕
◕
●
●
●
◕
◕
●
●
●
●
●
◕
◕
●
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●
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●
●
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◑
●
●
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CIMIC 2016 ANNUAL REPORT A4 FA.indd 83
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GRI
standard
404-2
404-3
Topic specific disclosures
Annual Report section, Page number/s and or URL
Programs for upgrading employee skills and
transition assistance programs
Percentage of employees receiving regular
performance and career development reviews
62, 63
61, 64
Diversity and Equal Opportunity
405-1
Diversity of governance bodies and employees
405-2
406-1
Ratio of basic salary and remuneration of women
to men
Non-discrimination
Incidents of discrimination and corrective actions
taken
Freedom of Association and Collective
Bargaining
45, 64 - 66, Directors’ Report, 2016 Corporate
Governance Statement
Not disclosed
Not disclosed
407-1
Operations and suppliers in which the right to
66
freedom of association and collective bargaining
may be at risk
Child Labor
408-1
Operations and suppliers at significant risk for
incidents of child labor
Forced or Compulsory Labor
409-1
Operations and suppliers at significant risk for
410-1
411-1
412-1
412-2
412-3
incidents of forced or compulsory labor
Security Practices
Security personnel trained in human rights
policies or procedures
Rights of Indigenous Peoples
Incidents of violations involving rights of
indigenous peoples
Human Rights Assessment
Operations that have been subject to human
rights reviews or impact assessments
Employee training on human rights policies or
procedures
Significant investment agreements and contracts
that include human rights clauses or that
underwent human rights screening
Local Communities
413-1
Operations with local community engagement,
impact assessments, and development programs
413-2
Operations with significant actual and potential
negative impacts on local communities
Supplier Social Assessment
414-1
New suppliers that were screened using social
criteria
414-2
Negative social impacts in the supply chain and
415-1
416-1
416-2
417-1
417-2
417-3
418-1
actions taken
Public Policy
Political contributions
Customer Health and Safety
Assessment of the health and safety impacts of
product and service categories
Incidents of non-compliance concerning the
health and safety impacts of products and
services
Marketing and Labelling
Requirements for product and service
information and labelling
Incidents of non-compliance concerning product
and service information and labelling
Incidents of non-compliance concerning
marketing communications
Customer Privacy
Substantiated complaints concerning breaches of
customer privacy and losses of customer data
Socioeconomic Compliance
66
66
Not disclosed
58
54 - 57
Not disclosed
84
58
58
57
57
58
53 - 53
53 - 53
57
57
57
57
419-1
Non-compliance with laws and regulations in the
53, 57
social and economic area
84
Application level /
omission
●
●
●
◑
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
84
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Financial
Report
Thiess, Dawson South Coal Mine, Queensland Australia
Thiess has a long history and unrivalled experience operating at the Dawson Mine,
having been part of the original joint venture in 1962 to establish and operate what
was then known as Moura Mine. In 2005 Anglo Coal entered into an alliance with the
Thiess Sedgman Joint Venture (TSJV) to deliver the $346 million Dawson project -
a massive upgrade and expansion. Thiess resumed operations at Dawson in February
2015, undertaking the open-cut mining of the existing pit at Dawson South.
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CIMIC Group Limited Annual Report 2016 | Financial Report
Consolidated Statement of Profit or Loss
for the 12 months to 31 December 2016
Share of profit / (loss) of associates and joint venture entities
25, 26
Earnings before interest and tax ("EBIT")
Revenue
Expenses
Finance income
Finance costs
Net finance income / (costs)
Profit before tax
Income tax (expense) / benefit
Profit for the year
Dividends per share - Final
Dividends per share - Interim
Basic earnings per share
Diluted earnings per share
12 months to
12 months to
December 2016
December 2015
Note
$m
$m
10,853.6
13,280.8
(10,051.2)
(12,427.4)
2
3
4
4
6
23
23
24
24
(44.0)
758.4
73.5
(91.5)
(18.0)
740.4
(188.0)
552.4
(14.5)
838.9
89.9
(193.8)
(103.9)
735.0
(220.6)
514.4
62.0¢
48.0¢
176.6¢
176.4¢
50.0¢
46.0¢
153.7¢
153.4¢
(Profit) / loss for the year attributable to non-controlling interests
27.9
6.0
Profit for the year attributable to shareholders of the parent entity
580.3
520.4
Financial Report
TABLE OF CONTENTS
Consolidated Statement of Profit or Loss
Consolidated Statement of 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.
2.
3.
Summary of significant accounting policies
Revenue
Expenses
4. Net finance income / (costs)
5.
6.
7.
8.
9.
Auditor’s remuneration
Income tax (expense) / benefit
Cash and cash equivalents
Trade and other receivables
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 profit / (loss) for the period to net cash from operating activities
29. Acquisitions, disposals of controlled entities and businesses
30. Held for sale
31. Segment information
32. Commitments
33. Contingent liabilities
34. Capital risk management
35. Financial instruments
36. Employee benefits
37. Related party disclosures
38. CIMIC Group Limited and controlled entities
39. New accounting standards
40. Events subsequent to reporting date
Directors’ Declaration
Independent Auditor’s Report to the Members of CIMIC Group Limited
Page
87
88
89
90
91
92
92
101
101
102
103
104
105
105
107
108
108
109
109
110
111
113
113
113
114
115
116
117
118
119
120
122
130
133
134
136
137
140
142
143
143
153
160
164
178
179
180
181
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The consolidated statement of profit or loss is to be read in conjunction with the notes to the consolidated financial report.
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CIMIC Group Limited Annual Report 2016 | Financial Report
Consolidated Statement of Profit or Loss
for the 12 months to 31 December 2016
Revenue
Expenses
Share of profit / (loss) of associates and joint venture entities
Earnings before interest and tax ("EBIT")
Finance income
Finance costs
Net finance income / (costs)
Profit before tax
Income tax (expense) / benefit
Profit for the year
(Profit) / loss for the year attributable to non-controlling interests
Profit for the year attributable to shareholders of the parent entity
Dividends per share - Final
Dividends per share - Interim
Basic earnings per share
Diluted earnings per share
12 months to
December 2016
$m
12 months to
December 2015
$m
10,853.6
13,280.8
(10,051.2)
(12,427.4)
(44.0)
758.4
73.5
(91.5)
(18.0)
740.4
(188.0)
552.4
(14.5)
838.9
89.9
(193.8)
(103.9)
735.0
(220.6)
514.4
27.9
6.0
580.3
520.4
62.0¢
48.0¢
176.6¢
176.4¢
50.0¢
46.0¢
153.7¢
153.4¢
Note
2
3
25, 26
4
4
6
23
23
24
24
The consolidated statement of profit or loss is to be read in conjunction with the notes to the consolidated financial report.
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CIMIC Group Limited Annual Report 2016 | Financial Report
CIMIC Group Limited Annual Report 2016 | Financial Report
Consolidated Statement of Other Comprehensive Income
for the 12 months to 31 December 2016
Consolidated Statement of Financial Position
as at 31 December 2016
12 months to
December 2016
$m
12 months to
December 2015
$m
Note
Profit for the year attributable to shareholders of the parent entity
580.3
520.4
Other comprehensive income attributable to shareholders of the parent entity:
Items that may be reclassified to profit or loss:
-
-
-
Foreign exchange translation differences (net of tax)
Effective portion of changes in fair value of cash flow hedges (net of tax)
Change in fair value of available-for-sale assets (net of tax)
Items that will not be reclassified to profit or loss:
-
-
-
Change in value of equity reserves (net of tax)
Recycling of associate reserve
Recycling of fair value reserve
21
21
21
21
21
21
35.7
(14.5)
-
-
(21.2)
(20.0)
213.8
2.6
6.0
(13.8)
-
-
Other comprehensive income / (expense) for the year
(20.0)
208.6
Total comprehensive income / (expense) for the year attributable to shareholders
560.3
729.0
of the parent entity
Total comprehensive income / (expense) for the year attributable to shareholders
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 shareholders
of the parent entity
532.4
27.9
723.0
6.0
560.3
729.0
The consolidated statement of other comprehensive income is to be read in conjunction with the notes to the consolidated financial report.
The consolidated statement of financial position is to be read in conjunction with the notes to the consolidated financial report.
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Assets
Cash and cash equivalents
Trade and other receivables
Current tax assets
Assets held for sale
Total current assets
Inventories: consumables and development properties
Trade and other receivables
Inventories: development properties
Investments accounted for using the equity method
Other investments
Deferred tax assets
Property, plant and equipment
Intangibles
Total non-current assets
Liabilities associated with assets held for sale
Total assets
Liabilities
Trade and other payables
Current tax liabilities
Provisions
Interest bearing liabilities
Total current liabilities
Trade and other payables
Provisions
Interest bearing liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Non-controlling interests
Total equity
Total equity attributable to equity holders of the parent
31 December
31 December
2016
$m
2015
$m
Note
7
8
9
10
30
8
10
11
12
13
14
15
16
17
18
19
30
16
18
19
20
21
22
1,576.5
3,209.6
28.0
213.0
47.7
5,074.8
1,235.8
166.9
616.5
135.4
310.1
1,355.7
1,125.9
4,946.3
10,021.1
126.6
333.3
618.2
-
287.0
73.5
549.0
909.5
6,708.7
1,750.3
(304.6)
1,876.5
3,322.2
(9.8)
3,312.4
4,721.1
3,675.7
5,799.2
4,306.5
3,312.4
4,115.3
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
9,676.8
81.3
283.4
217.4
48.7
331.6
84.5
838.9
1,255.0
5,561.5
2,052.5
423.6
1,616.7
4,092.8
22.5
4,115.3
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CIMIC Group Limited Annual Report 2016 | Financial Report
Consolidated Statement of Financial Position
as at 31 December 2016
Assets
Cash and cash equivalents
Trade and other receivables
Current tax assets
Inventories: consumables and development properties
Assets held for sale
Total current assets
Trade and other receivables
Inventories: development properties
Investments accounted for using the equity method
Other investments
Deferred tax assets
Property, plant and equipment
Intangibles
Total non-current assets
Total assets
Liabilities
Trade and other payables
Current tax liabilities
Provisions
Interest bearing liabilities
Liabilities associated with assets held for sale
Total current liabilities
Trade and other payables
Provisions
Interest bearing liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity attributable to equity holders of the parent
Non-controlling interests
Total equity
31 December
2016
$m
31 December
2015
$m
Note
7
8
9
10
30
8
10
11
12
13
14
15
16
17
18
19
30
16
18
19
20
21
22
1,576.5
3,209.6
28.0
213.0
47.7
5,074.8
1,235.8
166.9
616.5
135.4
310.1
1,355.7
1,125.9
4,946.3
10,021.1
4,721.1
126.6
333.3
618.2
-
5,799.2
287.0
73.5
549.0
909.5
6,708.7
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
9,676.8
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
3,312.4
4,115.3
1,750.3
(304.6)
1,876.5
3,322.2
(9.8)
3,312.4
2,052.5
423.6
1,616.7
4,092.8
22.5
4,115.3
The consolidated statement of financial position is to be read in conjunction with the notes to the consolidated financial report.
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CIMIC Group Limited Annual Report 2016 | Financial Report
CIMIC Group Limited Annual Report 2016 | Financial Report
Consolidated Statement of Changes in Equity
for the 12 months to 31 December 2016
Consolidated Statement of Cash Flows
for the 12 months to 31 December 2016
Share
Capital
Reserves
$m
Retained
Earnings
Note
$m
$m
$m
Attributable
to Equity
Holders
$m
Non-controlling
Interests
Total
Equity
$m
$m
Total equity at 1 January 2015
2,052.5
219.0
1,482.2
3,753.7
27.9
3,781.6
Profit for the year
Other comprehensive income
Transactions with shareholders in their
capacity as shareholders:
-
-
Dividends
Share based payments
- Other
Total transactions with shareholders
23
-
-
-
-
-
-
-
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 1 January 2016
2,052.5
423.6
1,616.7
4,092.8
22.5
4,115.3
-
580.3
580.3
(27.9)
552.4
(20.0)
-
(20.0)
-
(20.0)
Profit for the year
Other comprehensive income
Transactions with shareholders in their
capacity as shareholders:
Dividends
Share based payments
Share buy-back
-
-
-
-
-
-
-
-
23
21
Acquisitions of controlled entities
29
-
(566.7)
20, 21
(302.2)
(123.7)
(17.8)
-
(320.5)
(320.5)
-
-
-
(17.8)
(425.9)
(566.7)
-
-
-
(320.5)
(17.8)
(425.9)
(4.4)
(571.1)
Own shares purchased from shareholders of the Company
20
Total transactions with shareholders
(302.2)
(708.2)
(320.5)
(1,330.9)
(4.4)
(1,335.3)
Total equity at 31 December 2016
1,750.3
(304.6)
1,876.5
3,322.2
(9.8)
3,312.4
The consolidated statement of changes in equity is to be read in conjunction with the notes to the consolidated financial report.
The consolidated statement of cash flows is to be read in conjunction with the notes to the consolidated financial report.
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Proceeds from sale of investments in controlled entities and businesses
Proceeds from sale of investments
Cash acquired from acquisition of investments in controlled entities and businesses
29
Income tax paid in relation to proceeds from sale of investments in controlled entities and
Cash flows from operating activities
Cash receipts in the course of operations (including GST)
Cash payments in the course of operations (including GST)
Cash flows from operating activities
Dividends received
Interest received
Finance costs paid
Income taxes (paid) / received
Net cash from operating activities
Cash flows from investing activities
Payments for intangibles
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
businesses
Payments for investments
Loans to associates and joint ventures
Net cash from investing activities
Cash flows from financing activities
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 shareholders of the Company
Payments to acquire non-controlling interests
Net cash from financing activities
Net increase / (decrease) in cash held
Cash and cash equivalents at the beginning of the period
Effects of exchange rate fluctuations on cash held
Cash and cash equivalents at reporting date
12 months to
12 months to
December 2016
December 2015
Note
$m
$m
12,402.7
15,981.0
(11,201.3)
(14,061.4)
1,201.4
1,919.6
28
1,127.0
6.9
24.9
(85.2)
(21.0)
(14.7)
(280.2)
97.8
-
180.8
244.4
(32.0)
(325.1)
(152.7)
(281.7)
(425.9)
(18.8)
380.4
(380.1)
(276.9)
(12.6)
(320.5)
(389.0)
(598.1)
2,167.8
6.8
1,576.5
15.7
32.7
(202.8)
(315.0)
1,450.2
(15.2)
(266.3)
156.2
1,671.0
(263.0)
(35.1)
1,247.6
(4.1)
871.2
(2,915.4)
(124.7)
(385.9)
138.9
1,976.9
52.0
2,167.8
-
-
-
-
-
-
(1,443.4)
(2,558.9)
7
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CIMIC Group Limited Annual Report 2016 | Financial Report
Consolidated Statement of Cash Flows
for the 12 months to 31 December 2016
Cash flows from operating activities
Cash receipts in the course of operations (including GST)
Cash payments in the course of operations (including GST)
Cash flows from operating activities
Dividends received
Interest received
Finance costs paid
Income taxes (paid) / received
Net cash from operating activities
Cash flows from investing activities
Payments for intangibles
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Proceeds from sale of investments in controlled entities and businesses
Proceeds from sale of investments
Cash acquired from acquisition of investments in controlled entities and businesses
29
Income tax paid in relation to proceeds from sale of investments in controlled entities and
businesses
Payments for investments
Loans to associates and joint ventures
Net cash from investing activities
Cash flows from financing activities
Own shares purchased from shareholders of the Company
20
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 shareholders of the Company
Payments to acquire non-controlling interests
Net cash from financing activities
Net increase / (decrease) in cash held
Cash and cash equivalents at the beginning of the period
Effects of exchange rate fluctuations on cash held
Cash and cash equivalents at reporting date
12 months to
December 2016
$m
12 months to
December 2015
$m
Note
12,402.7
15,981.0
(11,201.3)
(14,061.4)
1,201.4
1,919.6
6.9
24.9
(85.2)
(21.0)
28
1,127.0
15.7
32.7
(202.8)
(315.0)
1,450.2
(15.2)
(266.3)
156.2
1,671.0
-
-
(263.0)
(35.1)
-
1,247.6
-
(4.1)
871.2
(2,915.4)
(124.7)
-
(385.9)
-
(14.7)
(280.2)
97.8
-
180.8
244.4
(32.0)
(325.1)
(152.7)
(281.7)
(425.9)
(18.8)
380.4
(380.1)
(276.9)
(12.6)
(320.5)
(389.0)
(1,443.4)
(2,558.9)
(598.1)
2,167.8
6.8
1,576.5
138.9
1,976.9
52.0
2,167.8
7
The consolidated statement of cash flows is to be read in conjunction with the notes to the consolidated financial report.
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CIMIC Group Limited Annual Report 2016 | Financial Report
Notes to the Consolidated Financial Statements continued
for the 12 months to 31 December 2016
Notes to the Consolidated Financial Statements continued
for the 12 months to 31 December 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
CIMIC Group 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 39: 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 Corporations (Rounding in Financial / Directors’ Reports) Instrument 2016/191
dated 24 March 2016 and in accordance with that ASIC Instrument, 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 2016, as follows:
•
•
•
•
•
•
•
•
•
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 2015-1 Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting Standards 2012-
2014 Cycle;
AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101;
AASB 2015-3 Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality; and
AASB 2015-4 Amendments to Australian Accounting Standards – Financial Reporting Requirements for Australian Groups with a
Foreign Parent.
AASB 2015-5 Investment Entities: Applying the Consolidation Exception; and
AASB 1057 Application of Australian Accounting Standards, AASB 2015-9 Amendments to Australian Accounting Standards –
Scope and Application Paragraphs.
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.
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 value of amounts due from and
due to customers and amounts receivable from and payable to related parties. Refer to Note 8: Trade and other receivables, Note 16:
Trade and other payables and Note 37: Related party disclosures.
- 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 arising from business combinations.
Lease classification;
Asset disposals:
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 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 or 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.
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Notes to the Consolidated Financial Statements continued
for the 12 months to 31 December 2016
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 value of amounts due from and
due to customers and amounts receivable from and payable to related parties. Refer to Note 8: Trade and other receivables, Note 16:
Trade and other payables and Note 37: Related party disclosures.
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 arising from 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 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 or 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.
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Notes to the Consolidated Financial Statements continued
for the 12 months to 31 December 2016
Notes to the Consolidated Financial Statements continued
for the 12 months to 31 December 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Basis of consolidation continued
a)
Revenue recognition
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 Group has significant influence, but not control or joint control, over the entity. Significant
influence is presumed to exist when the Group 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 Group’s share of the profit or loss and other comprehensive income of equity accounted
investments, after adjustments for impairment and after aligning the accounting policies with those of the Group, from the date that
significant influence commences until the date that significant influence ceases.
When the Group’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 Group and its associates are eliminated to the extent of the Group’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 Group 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 venture (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.
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 earned and incurred. Where the project
result cannot be reliably estimated, profits are deferred and the difference between consideration received 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 and mineral processing 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 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 tax assets.
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CIMIC Group Limited Annual Report 2016 | Financial Report
Notes to the Consolidated Financial Statements continued
for the 12 months to 31 December 2016
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 earned and incurred. Where the project
result cannot be reliably estimated, profits are deferred and the difference between consideration received 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 and mineral processing 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 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 tax assets.
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Notes to the Consolidated Financial Statements continued
for the 12 months to 31 December 2016
Notes to the Consolidated Financial Statements continued
for the 12 months to 31 December 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
d)
Earnings per share
f)
Derivative financial instruments
Basic earnings per share
Basic earnings per share is determined by dividing profit attributable to shareholders 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 there is an ability to offset and an intention to
settle.
Trade and other receivables
Contract and trade debtors include all net receivables from construction, contract mining and mineral processing, property development,
and other services. 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 forecast losses. Contract and trade debtors
are normally settled within 60 days of billing.
Where payments received exceed the revenue recognised, the difference is recorded as a liability in the statement of financial position.
Changes in the fair value of the option are recorded in profit and loss. If the option is called the joint venture will be acquired in a business
Other amounts receivable generally arise from transactions other than the revenue generating activities and include amounts in respect of
sales of assets and taxes receivable. Interest may be charged at market rates based on individual debtor arrangements. 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 amounts paid for the rights to receive future goods or services.
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 settled on terms aligned with the normal
commercial terms in the Group’s countries of operation.
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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.
Call option to acquire remaining shares in joint venture
combination and the fair value of the option at the point it is utilised will form part of the purchase consideration for the remaining shares.
Inventories are carried at the lower of cost and net realisable value. Inventories comprise:
g)
Inventories
Property developments
Raw materials and consumables
existing condition and location.
fair value less costs to sell.
loss previously recognised.
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.
Cost is based on the weighted average principle and includes expenditure incurred in acquiring the inventories and bringing them to their
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
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
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.
CIMIC Group Limited Annual Report 2016 | Financial Report
Notes to the Consolidated Financial Statements continued
for the 12 months to 31 December 2016
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.
Call option to acquire remaining shares in joint venture
Changes in the fair value of the option are recorded in profit and loss. If the option is called the joint venture will be acquired in a business
combination and the fair value of the option at the point it is utilised will form part of the purchase consideration for the remaining shares.
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 weighted average 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.
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Notes to the Consolidated Financial Statements continued
for the 12 months to 31 December 2016
Notes to the Consolidated Financial Statements continued
for the 12 months to 31 December 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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 values 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.
l)
Intangible assets continued
Brand names
useful lives
Customer contracts
Brand names acquired as part of a business combination are recognised separately from goodwill. 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
Customer contracts acquired as part of a business combination are recognised separately from goodwill. 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
Subsequent costs
Subsequent expenditure is 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.
amortised over their estimated useful lives.
IT systems
j)
Leased assets
Leases under which the Group assumes substantially all of the risks and benefits of ownership are classified as finance leases. Other leases
are classified as operating leases.
Finance leases
A lease asset 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. A finance lease liability is recognised at 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
Goodwill
Goodwill arising from business combinations is included in intangible assets. Goodwill on acquisition of associates is included in equity
accounted investments. 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.
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 projects. IT systems are amortised over their estimated useful lives of up to 7 years.
IT systems are carried at cost less accumulated amortisation and any impairment losses.
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. An assets 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.
n)
Employee benefits
Liabilities in respect of employee benefits which are not due to be settled within twelve months are discounted at period end using rates
which most closely match the terms of maturity of the related liabilities. Corporate bond rates are utilised where a deep market exists.
Rates from national government securities are utilised where a deep market for Corporate bonds does not exist.
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.
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Notes to the Consolidated Financial Statements continued
for the 12 months to 31 December 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
l)
Intangible assets continued
Brand names
Brand names acquired as part of a business combination are recognised separately from goodwill. 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
Customer contracts
Customer contracts acquired as part of a business combination are recognised separately from goodwill. 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.
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 projects. IT systems are amortised over their estimated useful lives of up to 7 years.
IT systems are carried at cost less accumulated amortisation and any impairment losses.
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. An assets 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.
n)
Employee benefits
Liabilities in respect of employee benefits which are not due to be settled within twelve months are discounted at period end using rates
which most closely match the terms of maturity of the related liabilities. Corporate bond rates are utilised where a deep market exists.
Rates from national government securities are utilised where a deep market for Corporate bonds does not exist.
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.
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Notes to the Consolidated Financial Statements continued
for the 12 months to 31 December 2016
Notes continued
for the 12 months to 31 December 2016
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
2. REVENUE
n) Employee benefits continued
Share-based payment transactions
Ownership based remuneration is provided to employees via the plans outlined in Note 36: 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 its par value, being the consideration received by the Company.
Dividends
Provision is not made for dividends unless the dividend has been declared by the Directors, but not distributed, at or before the end of the
period.
p)
Foreign currency translation
Functional and presentation currency
The consolidated financial statements are presented in Australian dollars.
Transactions
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions 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 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.
Construction contracting services
Mining contracting services and mineral processing
Property development revenue
Other revenue
Revenue from external customers
Dividends / distributions
Total revenue
3. EXPENSES
Materials
Subcontractors
Plant costs
Personnel costs
Depreciation and impairment of property, plant and equipment1
Amortisation of intangibles
Impairment of intangibles
Net gain / (loss) on sale of equity accounted investments
Net gain / (loss) on acquisition of controlled entities
Net gain / (loss) on disposal of controlled entities
Net gain / (loss) on sale of assets
Property development - cost of goods sold2
Foreign exchange gains / (losses)
Operating lease payments - plant and equipment
Operating lease payments - other
Design, engineering and technical consulting fees
Gain on fair value of option to acquire shares
Other expenses
Total expenses
12 months to
12 months to
December 2016
December 2015
Note
$m
$m
7,439.3
2,609.2
323.5
474.7
9,365.2
2,912.8
875.7
119.3
10,846.7
13,273.0
6.9
7.8
31
10,853.6
13,280.8
12 months to
12 months to
December 2016
December 2015
Note
$m
$m
(1,666.8)
(3,641.6)
(901.2)
(1,804.0)
(4,470.7)
(954.1)
(2,432.0)
(3,059.4)
14
15
15
26
29
26
(304.9)
(32.5)
(10.0)
70.1
46.6
-
(1.4)
(471.3)
(1.3)
(230.5)
(157.1)
(53.3)
75.0
(339.0)
(496.6)
(47.2)
(2.7)
-
-
25.4
(14.6)
(916.5)
(1.4)
(220.9)
(130.8)
(44.5)
-
(289.4)
1 Plant and equipment depreciation includes impairments during the period of $nil (31 December 2015: $50.0 million) that arose due to a
decline in the recoverable amount of marine fleet that was idle in the Construction segment.
2 Property development – cost of goods sold includes write-downs of $nil (31 December 2015: $8.2 million).
(10,051.2)
(12,427.4)
100
100
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Notes continued
for the 12 months to 31 December 2016
2. REVENUE
Construction contracting services
Mining contracting services and mineral processing
Property development revenue
Other revenue
Revenue from external customers
Dividends / distributions
Total revenue
3. EXPENSES
Materials
Subcontractors
Plant costs
Personnel costs
Depreciation and impairment of property, plant and equipment1
Amortisation of intangibles
Impairment of intangibles
Net gain / (loss) on sale of equity accounted investments
Net gain / (loss) on acquisition of controlled entities
Net gain / (loss) on disposal of controlled entities
Net gain / (loss) on sale of assets
Property development - cost of goods sold2
Foreign exchange gains / (losses)
Operating lease payments - plant and equipment
Operating lease payments - other
Design, engineering and technical consulting fees
Gain on fair value of option to acquire shares
Other expenses
12 months to
December 2016
$m
12 months to
December 2015
$m
Note
7,439.3
2,609.2
323.5
474.7
9,365.2
2,912.8
875.7
119.3
10,846.7
13,273.0
6.9
7.8
31
10,853.6
13,280.8
12 months to
December 2016
$m
12 months to
December 2015
$m
Note
(1,666.8)
(3,641.6)
(901.2)
(1,804.0)
(4,470.7)
(954.1)
(2,432.0)
(3,059.4)
14
15
15
26
29
26
(304.9)
(32.5)
(10.0)
70.1
46.6
-
(1.4)
(471.3)
(1.3)
(230.5)
(157.1)
(53.3)
75.0
(339.0)
(496.6)
(47.2)
(2.7)
-
-
25.4
(14.6)
(916.5)
(1.4)
(220.9)
(130.8)
(44.5)
-
(289.4)
Total expenses
(12,427.4)
1 Plant and equipment depreciation includes impairments during the period of $nil (31 December 2015: $50.0 million) that arose due to a
decline in the recoverable amount of marine fleet that was idle in the Construction segment.
2 Property development – cost of goods sold includes write-downs of $nil (31 December 2015: $8.2 million).
(10,051.2)
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Notes continued
for the 12 months to 31 December 2016
Notes continued
for the 12 months to 31 December 2016
4. NET FINANCE INCOME / (COSTS)
5. AUDITORS’ REMUNERATION
Finance income
Interest income
-
Related parties
- Other parties
Unwinding of discounts on non-current receivables
-
Related parties
- Other parties
Total finance income
Finance costs
Interest expense
-
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
12 months to
December 2016
$m
12 months to
December 2015
$m
Note
37 (b)
37 (b)
37 (b)
37 (b)
27.2
24.6
8.8
12.9
73.5
-
(57.9)
(9.2)
(14.4)
(7.1)
(0.1)
(2.8)
(91.5)
25.8
19.5
7.8
36.8
89.9
(1.3)
(136.0)
(15.4)
(32.0)
(6.9)
(1.1)
(1.1)
(193.8)
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
Audit and review of financial statements – other auditors
Other auditors
Audit and review services
Other assurance services
Deloitte
Other assurance services
Other services
Deloitte
-
-
-
-
-
- Other assurance services – Deloitte Australia1
- Other assurance services – related overseas firms1
Other auditors
- Other assurance services – other auditors
In relation to taxation and other services – Deloitte Australia1
In relation to taxation and other services – related overseas firms
- Other services – other auditors
Other auditors
Other services
12 months to
12 months to
December 2016
December 2015
$’000
$’000
2,850
1,108
258
4,216
-
-
36
36
-
4
2,652
1,226
359
4,237
40
12
50
102
-
-
135
781
139
781
Net finance income / (costs)
(18.0)
(103.9)
1The 12 months to December 2015 has been restated to include additional fees for audit services and other services relating to the prior
year paid in the 12 months to 31 December 2016.
The Group may use Deloitte on assignments in addition to their statutory audit duties to utilise their expertise and experience with the
Group. These assignments are assessed and approved in accordance with the Group’s External Auditor Independence Charter.
102
102
103
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Notes continued
for the 12 months to 31 December 2016
5. AUDITORS’ 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
Audit and review services
Other assurance services
Deloitte
- Other assurance services – Deloitte Australia1
- Other assurance services – related overseas firms1
Other auditors
- Other assurance services – other auditors
Other assurance services
Other services
Deloitte
-
-
In relation to taxation and other services – Deloitte Australia1
In relation to taxation and other services – related overseas firms
Other auditors
- Other services – other auditors
Other services
12 months to
December 2016
$’000
12 months to
December 2015
$’000
2,850
1,108
258
4,216
-
-
36
36
2,652
1,226
359
4,237
40
12
50
102
135
781
-
4
-
-
139
781
1The 12 months to December 2015 has been restated to include additional fees for audit services and other services relating to the prior
year paid in the 12 months to 31 December 2016.
The Group may use Deloitte on assignments in addition to their statutory audit duties to utilise their expertise and experience with the
Group. These assignments are assessed and approved in accordance with the Group’s External Auditor Independence Charter.
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Notes continued
for the 12 months to 31 December 2016
Notes continued
for the 12 months to 31 December 2016
6.
INCOME TAX (EXPENSE) / BENEFIT
7. CASH AND CASH EQUIVALENTS
Income tax (expense) / benefit recognised in the statement of profit or loss
Current tax expense
Deferred tax (expense) / benefit
(Under) / over provision in prior periods
Total income tax (expense) / benefit in statement of profit or loss
Deferred tax recognised directly in equity
Revaluation of cash flow and net investment hedges
Revaluation of available-for-sale assets
Recycling of reserves
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) before tax
12 months to
December 2016
$m
12 months to
December 2015
$m
(116.3)
(97.7)
26.0
(188.0)
6.2
-
8.6
14.8
(123.9)
(113.3)
16.6
(220.6)
8.8
2.6
-
11.4
740.4
740.4
735.0
735.0
Prima facie income tax (expense) / benefit at 30% (31 December 2015: 30%)
(222.1)
(220.5)
The following items have affected income tax (expense) / benefit for the year:
Gain on fair value of option to acquire shares
Tax losses not recognised
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
Other
Current period income tax (expense) / benefit
(Under) / over provision in prior periods
Income tax (expense) / benefit
22.5
(18.7)
9.4
3.5
(7.0)
(21.6)
20.0
(3.2)
(6.0)
(26.3)
9.6
0.5
(7.0)
15.7
(214.0)
(237.2)
26.0
16.6
(188.0)
(220.6)
Funds on deposit
Cash at bank and on hand
Cash and cash equivalents
8. TRADE AND OTHER RECEIVABLES
Contract debtors1
Contract debtors provision
Total contract debtors
Trade debtors
Other amounts receivable
Prepayments
Derivative financial assets
Amounts receivable from related parties2
Non-current tax asset3
Total trade and other receivables
Current
Non-current
Total trade and other receivables
(Gorgon Contract).
The position is:
December 2016
December 2015
$m
$m
597.6
978.9
1,576.5
475.9
1,691.9
2,167.8
December 2016
December 2015
Note
$m
$m
35
37 (b)
3,282.9
(675.0)
2,607.9
302.7
364.3
46.5
17.3
1,077.8
28.9
4,445.4
3,209.6
1,235.8
4,445.4
2,820.0
(675.0)
2,145.0
181.3
241.3
34.7
4.5
916.8
25.2
3,548.8
2,659.6
889.2
3,548.8
As at 31 December 2016: $166.7 million (31 December 2015: $165.3 million) of cash at bank in relation to the sale of receivables during
the reporting period and $34.4 million (31 December 2015: $nil) of cash reserved for warranties is classified as restricted cash.
1 Contract debtors includes an amount equal to $1.15 billion (31 December 2015: $1.13 billion) relating to the Gorgon LNG Jetty and Marine
Structures Project being undertaken by CPB Contractors Pty Ltd (CPB), a wholly owned subsidiary of CIMIC, together with its consortium
partners, Saipem SA and Saipem Portugal Comercio Maritime LDA (together the Consortium) for Chevron Australia Pty Ltd (Chevron)
In November 2009 the Consortium was announced as the preferred contractor to construct the 2.1 kilometre Chevron Gorgon LNG
Jetty and Marine Structures project on Barrow Island, 70 kilometres off the Pilbara coast of Western Australia.
The scope of work consisted of the design, material supply, fabrication, construction and commissioning of the LNG Jetty. The scope
also included supply, fabrication and construction of marine structures including a heavy lift facility, tug pens and navigation aids.
The jetty comprised steel trusses approximately 70 metres long supported by concrete caissons leading to the loading platform
approximately 4 kilometres from the shore.
Initial acceptance of the jetty and marine structures took place on 15 August 2014.
During the project, changes to scope and conditions led to the Consortium submitting Change Order Requests (CORs). The Consortium,
Chevron and Chevron’s agent, entered into negotiations in relation to some of the CORs.
104
104
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Notes continued
for the 12 months to 31 December 2016
7. CASH AND CASH EQUIVALENTS
Funds on deposit
Cash at bank and on hand
Cash and cash equivalents
December 2016
$m
December 2015
$m
597.6
978.9
1,576.5
475.9
1,691.9
2,167.8
As at 31 December 2016: $166.7 million (31 December 2015: $165.3 million) of cash at bank in relation to the sale of receivables during
the reporting period and $34.4 million (31 December 2015: $nil) of cash reserved for warranties is classified as restricted cash.
8. TRADE AND OTHER RECEIVABLES
Contract debtors1
Contract debtors provision
Total contract debtors
Trade debtors
Other amounts receivable
Prepayments
Derivative financial assets
Amounts receivable from related parties2
Non-current tax asset3
Total trade and other receivables
Current
Non-current
Note
December 2016
$m
December 2015
$m
3,282.9
(675.0)
2,607.9
302.7
364.3
46.5
17.3
1,077.8
28.9
4,445.4
3,209.6
1,235.8
2,820.0
(675.0)
2,145.0
181.3
241.3
34.7
4.5
916.8
25.2
3,548.8
2,659.6
889.2
35
37 (b)
Total trade and other receivables
1 Contract debtors includes an amount equal to $1.15 billion (31 December 2015: $1.13 billion) relating to the Gorgon LNG Jetty and Marine
Structures Project being undertaken by CPB Contractors Pty Ltd (CPB), a wholly owned subsidiary of CIMIC, together with its consortium
partners, Saipem SA and Saipem Portugal Comercio Maritime LDA (together the Consortium) for Chevron Australia Pty Ltd (Chevron)
(Gorgon Contract).
4,445.4
3,548.8
The position is:
In November 2009 the Consortium was announced as the preferred contractor to construct the 2.1 kilometre Chevron Gorgon LNG
Jetty and Marine Structures project on Barrow Island, 70 kilometres off the Pilbara coast of Western Australia.
The scope of work consisted of the design, material supply, fabrication, construction and commissioning of the LNG Jetty. The scope
also included supply, fabrication and construction of marine structures including a heavy lift facility, tug pens and navigation aids.
The jetty comprised steel trusses approximately 70 metres long supported by concrete caissons leading to the loading platform
approximately 4 kilometres from the shore.
Initial acceptance of the jetty and marine structures took place on 15 August 2014.
During the project, changes to scope and conditions led to the Consortium submitting Change Order Requests (CORs). The Consortium,
Chevron and Chevron’s agent, entered into negotiations in relation to some of the CORs.
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Notes continued
for the 12 months to 31 December 2016
Notes continued
for the 12 months to 31 December 2016
8. TRADE AND OTHER RECEIVABLES CONTINUED
8. TRADE AND OTHER RECEIVABLES CONTINUED
On 9 February 2016 the Consortium formally issued a Notice of Dispute to Chevron in connection with the Gorgon Contract relating
to the CORs. Following a period of prescribed negotiation, the parties have entered a private arbitration as prescribed by the
Gorgon Contract. As the Gorgon Contract does not specify a time limit within which the process must be determined, there can be
no certainty as to when the matter will be finalised.
On 20 August 2016, in order to pursue further its entitlement under the contract, CIMIC Group commenced proceedings in the
United States against Chevron Corporation and KBR Inc. The commencement of the proceedings has no effect on the contract
process or CIMIC’s entitlement to the amounts under negotiation / claimed in the aribtration.
The Group’s share of the total amount claimed equals approximately $1.86 billion. CIMIC confirms its view that CPB remains entitled to
that amount plus interest (being an amount exceeding $500 million that will continue to accrue) and costs (Total Entitlement).
CIMIC has only recognised revenue equal to the costs incurred in respect of the Gorgon Contract in accordance with the relevant accounting
standard, AASB 111, resulting in an amount equal to $1.15 billion (approximately 50% of the Total Entitlement) being recognised as a
Contract debtor at 31 December 2016 (Contract debtors).
loan receivables:
-
2The Group has the following trade and other receivables relating to HLG Contracting LLC (formerly known as Al Habtoor Leighton LLC)
(HLG Contracting):
-
-
non-current interest free shareholder loans provided to HLG Contracting of US$148.8 million (31 December 2015: US$115.2
million) equivalent to $206.6 million (31 December 2015: $157.8 million), maturing on 30 September 2018;
non-current interest bearing loans of US$497.7 million (31 December 2015: US$415.0 million) equivalent to $691.3 million
(31 December 2015: $568.5 million), maturing on 30 September 2018; 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 Contracting. Repayment of these amounts is expected to occur after the settlement of HLG Contracting’s
external debt in September 2018, or where HLG Contracting receives prior written consent from the financier, or where a
permitted payment under the financing arrangement occurs; and
non-current interest receivable of US$104.6 million (31 December 2015: US$85.0 million), equivalent to $145.3 million (31 December
2015: $116.4 million), is receivable from HLG Contracting on the interest bearing shareholder loans.
3The non-current tax asset of $28.9 million (31 December 2015: $25.2 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.
106
106
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Additional information on contract debtors
Amounts due from customers
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
Total progressive value of all contracts in progress at reporting date
72,440.4
73,001.8
Contract debtors provision
Balance at beginning of reporting period
Net provision (made) / used
Balance at reporting date1
9. CURRENT TAX ASSETS
1The Group maintains a contract debtors provision to cover the risk on a portfolio basis of unrecoverable contract debtors.
The current tax asset of $28.0 million (31 December 2015: $26.6 million) represents the amount of income taxes recoverable from the
payment of tax in excess of the amounts due to the relevant tax authority.
December 2016
December 2015
$m
$m
2,607.9
(1,223.3)
1,384.6
1,131.8
252.8
1,384.6
2,145.0
(645.8)
1,499.2
1,268.0
231.2
1,499.2
71,055.8
71,502.6
12 months to
12 months to
December 2016
December 2015
$m
$m
(675.0)
(675.0)
-
-
(675.0)
(675.0)
CIMIC Group Limited Annual Report 2016 | Financial Report
Notes continued
for the 12 months to 31 December 2016
8. TRADE AND OTHER RECEIVABLES CONTINUED
Additional information on contract debtors
Amounts due from customers
Amounts due to customers
-
-
contract debtors
trade and other payables
Net contract debtors
Net contract debtors excluding retentions
Retentions
Net contract debtors
Cash received to date
December 2016
$m
December 2015
$m
2,607.9
(1,223.3)
1,384.6
1,131.8
252.8
1,384.6
2,145.0
(645.8)
1,499.2
1,268.0
231.2
1,499.2
71,055.8
71,502.6
Total progressive value of all contracts in progress at reporting date
72,440.4
73,001.8
Contract debtors provision
Balance at beginning of reporting period
Net provision (made) / used
Balance at reporting date1
1The Group maintains a contract debtors provision to cover the risk on a portfolio basis of unrecoverable contract debtors.
(675.0)
12 months to
December 2016
$m
12 months to
December 2015
$m
(675.0)
(675.0)
-
-
(675.0)
9. CURRENT TAX ASSETS
The current tax asset of $28.0 million (31 December 2015: $26.6 million) represents the amount of income taxes recoverable from the
payment of tax in excess of the amounts due to the relevant tax authority.
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Notes continued
for the 12 months to 31 December 2016
Notes continued
for the 12 months to 31 December 2016
10. INVENTORIES
12. OTHER INVESTMENTS
Property developments
Cost of acquisition
Development expenses capitalised
Rates, taxes, finance and other costs capitalised
Total property developments
Other inventories
Raw materials and consumables at cost
Total other inventories
Total inventories
Current
Non-current
Total inventories
December 2016
$m
December 2015
$m
66.3
110.8
28.2
205.3
174.6
174.6
248.5
95.9
39.9
384.3
155.0
155.0
379.9
539.3
213.0
166.9
379.9
264.0
275.3
539.3
Finance costs capitalised to property developments during the period were $5.5 million (31 December 2015: $3.8 million). Property
developments pledged as security for interest bearing liabilities - refer to Note 35(j): Financial instruments - Assets Pledged as Security.
December 2016
December 2015
$m
$m
11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Associates
Joint venture entities
Total investments accounted for using the equity method
December 2016
$m
December 2015
$m
Note
25
26
72.9
543.6
616.5
558.9
514.2
1,073.1
Equity and stapled securities available-for-sale
Listed investments
Unlisted investments
Total equity and stapled securities available-for-sale
35 (f)
Other financial assets at fair value through profit or loss
Unlisted investments
Call option to acquire shares
Total other financial assets at fair value through profit or loss
35 (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
Other
Total deferred taxes
Unrecognised deferred tax assets
December 2016
December 2015
Note
$m
$m
1.9
5.4
7.3
53.1
75.0
128.1
-
135.4
135.4
452.8
17.6
5.8
(18.4)
113.2
(296.5)
(71.0)
53.7
(119.5)
13.7
164.5
(5.8)
310.1
1.6
72.3
73.9
51.8
-
51.8
-
125.7
125.7
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
Deferred tax assets which have not been recognised in respect of tax losses
116.0
3.1
108
108
109
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CIMIC Group Limited Annual Report 2016 | Financial Report
Notes continued
for the 12 months to 31 December 2016
12. OTHER INVESTMENTS
Equity and stapled securities available-for-sale
Listed investments
Unlisted investments
Total equity and stapled securities available-for-sale
35 (f)
Other financial assets at fair value through profit or loss
Unlisted investments
Call option to acquire shares
Total other financial assets at fair value through profit or loss
35 (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
Other
Total deferred taxes
Unrecognised deferred tax assets
Note
December 2016
$m
December 2015
$m
1.9
5.4
7.3
53.1
75.0
128.1
-
135.4
135.4
1.6
72.3
73.9
51.8
-
51.8
-
125.7
125.7
December 2016
$m
December 2015
$m
452.8
17.6
5.8
(18.4)
113.2
(296.5)
(71.0)
53.7
(119.5)
13.7
164.5
(5.8)
310.1
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
Deferred tax assets which have not been recognised in respect of tax losses
116.0
3.1
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Notes continued
for the 12 months to 31 December 2016
14. PROPERTY, PLANT AND EQUIPMENT
Land
Buildings
Leasehold land,
buildings and
improvements
Plant and
equipment
Total property,
plant and
equipment
Note
$m
$m
$m
$m
$m
At 1 January 2015
Cost or fair value
Accumulated depreciation
Net book amount
Year ended 31 December 2015
Opening net book amount
Additions1
Disposals
Net transfers (to) / from assets held for sale
Depreciation
Effects of exchange rate fluctuations
Closing net book amount2
Year ended 31 December 2015
Cost or fair value
Accumulated depreciation and impairment
Net book amount
Year ended 31 December 2016
Opening net book amount
Additions1
Acquisitions
Disposals
Net transfers (to) / from assets held for sale
Depreciation
Effects of exchange rate fluctuations
Closing net book amount2
Year ended 31 December 2016
Cost or fair value
Accumulated depreciation and impairment
Net book amount
5.2
-
5.2
5.2
-
(4.8)
-
-
-
0.4
0.4
-
0.4
0.4
-
2.7
(0.2)
-
-
-
2.9
2.9
-
2.9
29
37.6
(16.0)
21.6
21.6
-
(20.7)
-
(0.7)
-
0.2
0.6
(0.4)
0.2
0.2
-
1.9
(0.1)
-
(0.1)
-
1.9
2.4
(0.5)
1.9
96.7
(61.2)
35.5
35.5
3.0
-
-
(11.7)
0.8
27.6
3,869.6
(2,305.4)
1,564.2
4,009.1
(2,382.6)
1,626.5
1,564.2
248.9
(207.5)
54.0
(484.2)
109.2
1,284.6
1,626.5
251.9
(233.0)
54.0
(496.6)
110.0
1,312.8
86.9
(59.3)
27.6
3,372.7
(2,088.1)
1,284.6
3,460.6
(2,147.8)
1,312.8
27.6
28.2
4.4
(0.6)
-
(8.2)
-
51.4
1,284.6
252.0
80.1
(102.0)
39.8
(296.6)
41.6
1,299.5
1,312.8
280.2
89.1
(102.9)
39.8
(304.9)
41.6
1,355.7
109.6
(58.2)
51.4
3,415.6
(2,116.1)
1,299.5
3,530.5
(2,174.8)
1,355.7
1 Additions to property, plant and equipment include finance lease additions of $nil (12 months to December 2015: $6.7 million).
2 Plant and equipment with net book value of $47.8 million (31 December 2015: $288.4 million) is held under finance lease.
Notes continued
for the 12 months to 31 December 2016
15. INTANGIBLES
At 1 January 2015
Cost or fair value
Net book amount
Accumulated amortisation and impairment
Year ended 31 December 2015
Opening net book amount
Additions
Disposals
Impairment
Amortisation
Effects of exchange rate fluctuations
Closing net book amount
Year ended 31 December 2015
Cost or fair value
Accumulated amortisation and impairment
Net book amount
Year ended 31 December 2016
Opening net book amount
Acquisitions
Additions
Disposals
Impairment
Amortisation
Effects of exchange rate fluctuations
Closing net book amount
Year ended 31 December 2016
Cost or fair value
Accumulated amortisation and impairment
Net book amount
1Other intangibles include:
Goodwill
Other intangibles1
Total intangibles
Note
$m
$m
$m
376.1
(12.3)
363.8
363.8
-
-
(2.7)
-
9.3
370.4
385.6
(15.2)
370.4
370.4
542.2
-
-
-
-
1.4
914.0
927.6
(13.6)
914.0
293.9
(101.7)
192.2
192.2
15.3
(4.2)
-
(47.2)
0.9
157.0
273.6
(116.6)
157.0
157.0
83.7
13.9
(1.0)
(10.0)
(32.5)
0.8
211.9
369.2
(157.3)
211.9
29
670.0
(114.0)
556.0
556.0
15.3
(4.2)
(2.7)
(47.2)
10.2
527.4
659.2
(131.8)
527.4
527.4
625.9
13.9
(1.0)
(10.0)
(32.5)
2.2
1,125.9
1,296.8
(170.9)
1,125.9
IT software systems of $127.4 million with a useful life of up to 7 years (31 December 2015: $126.6 million up to 4 years);
Customer contracts with useful lives of:
2 to 5 years $29.2 million (31 December 2015: $4.3 million); and
10 to 15 years $39.2 million (31 December 2015: $nil);
o
o
Wai Ming engineering license of $2.1 million with an indefinite useful life (31 December 2015: $2.1 million); and
Devine brand name of $14.0 million (31 December 2015: $24.0 million) with an indefinite useful life. The model used to calculate
recoverable amount utilises the royalty relief method and a royalty rate of 0.6% (31 December 2015: 0.6%). The model uses five
year cash flow projections and long term growth rates of 3.0% (31 December 2015: 3.0%). A pre-tax discount rate of 11.0% (31
December 2015: 11.5%) has been used in discounting the projected cash flow.
110
110
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Notes continued
for the 12 months to 31 December 2016
15. INTANGIBLES
At 1 January 2015
Cost or fair value
Accumulated amortisation and impairment
Net book amount
Year ended 31 December 2015
Opening net book amount
Additions
Disposals
Impairment
Amortisation
Effects of exchange rate fluctuations
Closing net book amount
Year ended 31 December 2015
Cost or fair value
Accumulated amortisation and impairment
Net book amount
Year ended 31 December 2016
Opening net book amount
Acquisitions
Additions
Disposals
Impairment
Amortisation
Effects of exchange rate fluctuations
Closing net book amount
Year ended 31 December 2016
Cost or fair value
Accumulated amortisation and impairment
Net book amount
1Other intangibles include:
Note
Goodwill
$m
Other intangibles1
$m
Total intangibles
$m
376.1
(12.3)
363.8
363.8
-
-
(2.7)
-
9.3
370.4
385.6
(15.2)
370.4
370.4
542.2
-
-
-
-
1.4
914.0
927.6
(13.6)
914.0
293.9
(101.7)
192.2
192.2
15.3
(4.2)
-
(47.2)
0.9
157.0
273.6
(116.6)
157.0
157.0
83.7
13.9
(1.0)
(10.0)
(32.5)
0.8
211.9
369.2
(157.3)
211.9
29
670.0
(114.0)
556.0
556.0
15.3
(4.2)
(2.7)
(47.2)
10.2
527.4
659.2
(131.8)
527.4
527.4
625.9
13.9
(1.0)
(10.0)
(32.5)
2.2
1,125.9
1,296.8
(170.9)
1,125.9
IT software systems of $127.4 million with a useful life of up to 7 years (31 December 2015: $126.6 million up to 4 years);
Customer contracts with useful lives of:
2 to 5 years $29.2 million (31 December 2015: $4.3 million); and
10 to 15 years $39.2 million (31 December 2015: $nil);
o
o
Wai Ming engineering license of $2.1 million with an indefinite useful life (31 December 2015: $2.1 million); and
Devine brand name of $14.0 million (31 December 2015: $24.0 million) with an indefinite useful life. The model used to calculate
recoverable amount utilises the royalty relief method and a royalty rate of 0.6% (31 December 2015: 0.6%). The model uses five
year cash flow projections and long term growth rates of 3.0% (31 December 2015: 3.0%). A pre-tax discount rate of 11.0% (31
December 2015: 11.5%) has been used in discounting the projected cash flow.
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Notes continued
for the 12 months to 31 December 2016
Notes continued
for the 12 months to 31 December 2016
15. INTANGIBLES CONTINUED
16. TRADE AND OTHER PAYABLES
Impairment tests for cash-generating units containing goodwill
Goodwill is attributable to cash generating units in the following segments:
Construction
Mining & mineral processing
Services
Balance at reporting date
December 2016
$m
December 2015
$m
455.4
98.1
360.5
914.0
334.6
35.8
-
370.4
As disclosed in Note 29: Acquisitions and Disposals of controlled entities and businesses, a portion of goodwill arising on the acquisition of
UGL is attributable to existing construction and services businesses. The goodwill has been provisionally allocated to the cash-generating
units that will benefit from the synergies. Of the total goodwill acquired of $480.7 million, $120.2 million has been allocated to cash-
generating units within the Construction segment and $360.5 million has been allocated to cash-generating units within the new segment
Services, refer to Note 31: 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:
Economic forecasts
Discount Rate:
Growth Rate:
Risk in the industry and country in which each unit operates
Relevant to the market conditions and business plan
Cash-generating units
Construction
Mining and mineral processing
Services
Discount rate
range
Growth rate
range
11-17%
11-20%
11%
3-5%
3%
3%
Sensitivity to changes in assumptions
The recoverable amount of intangible assets exceeds their carrying values at 31 December 2016. The Group considers that for the carrying
value to equal the recoverable amount, there would have to be unreasonable changes to key assumptions. The Group considers the
chances of these changes occurring as unlikely.
Trade creditors and accruals
Other creditors
Amounts payable to related parties
Trade and other payables
Total trade and other payables
Current
Non-current
Total trade and other payables
17. CURRENT TAX LIABILITIES
prior periods.
18. PROVISIONS
Employee Benefits
Current
Non-current
Total provisions
bonuses.
Derivative financial liabilities
35 (b)
4.6
1.4
The current tax liability of $126.6 million (31 December 2015: $81.3 million) represents the amounts payable in respect of current and
December 2016
December 2015
Note
$m
$m
4,561.7
3,457.5
404.9
36.9
509.6
38.8
5,003.5
4,005.9
37 (b)
35 (b)
5,008.1
4,007.3
4,721.1
287.0
5,008.1
3,675.7
331.6
4,007.3
December 2016
December 2015
$m
$m
333.3
73.5
406.8
283.4
84.5
367.9
The provision for employee benefits relates to wages and salaries, annual leave, long service leave, retirement benefits and deferred
112
112
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Notes continued
for the 12 months to 31 December 2016
16. TRADE AND OTHER PAYABLES
Trade creditors and accruals
Other creditors
Amounts payable to related parties
Trade and other payables
December 2016
$m
December 2015
$m
Note
4,561.7
3,457.5
404.9
36.9
509.6
38.8
5,003.5
4,005.9
37 (b)
35 (b)
Derivative financial liabilities
35 (b)
4.6
1.4
Total trade and other payables
Current
Non-current
Total trade and other payables
17. CURRENT TAX LIABILITIES
5,008.1
4,007.3
4,721.1
287.0
5,008.1
3,675.7
331.6
4,007.3
The current tax liability of $126.6 million (31 December 2015: $81.3 million) represents the amounts payable in respect of current and
prior periods.
18. PROVISIONS
Employee Benefits
Current
Non-current
Total provisions
December 2016
$m
December 2015
$m
333.3
73.5
406.8
283.4
84.5
367.9
The provision for employee benefits relates to wages and salaries, annual leave, long service leave, retirement benefits and deferred
bonuses.
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Notes continued
for the 12 months to 31 December 2016
Notes continued
for the 12 months to 31 December 2016
19. INTEREST BEARING LIABILITIES
20. SHARE CAPITAL
Current
Interest bearing loans
Finance lease liabilities
Interest bearing liabilities - limited recourse loans
Total current liabilities
Non-current
Interest bearing loans
Finance lease liabilities
Total non-current liabilities
Note
December 2016
$m
December 2015
$m
328.1
22.8
267.3
618.2
549.0
-
549.0
20.1
145.3
52.0
217.4
740.1
98.8
838.9
Total interest bearing liabilities1
35 (g)
1,167.2
1,056.3
131 December 2016: Total interest bearing liabilities excludes $nil (31 December 2015: $48.7 million) of interest bearing liabilities
included in held for sale as at the end of the reporting period. Refer to Note 30: Held for Sale.
Issued and fully paid share capital
Balance at beginning of reporting period
Shares bought back1
Balance at reporting date
Share capital
Balance at beginning of reporting period
Par value of shares bought back1
Balance at reporting date
Company
December 2016
December 2015
No. of shares
No. of shares
338,503,563
338,503,563
(14,249,466)
-
324,254,097
338,503,563
Company
12 months to
12 months to
December 2016
December 2015
$m
$m
2,052.5
(302.2)
1,750.3
2,052.5
-
2,052.5
1 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 a 12 month period, which commenced on 29 December 2015 and concluded on 28 December 2016. As at 31
December 2016, 14,249,466 shares were bought back for $425.9 million and subsequently cancelled. The associated par value of the shares
cancelled totalling $302.2 million has reduced share capital with the total premium paid over par value of $123.7 million taken to the share
On 12 December 2016, the CIMIC Group Board approved a further on-market share buy-back of up to 10% of CIMIC’s fully paid ordinary
shares for a period of 12 months commencing 29 December 2016. As at 31 December 2016, nil shares have been bought back under this
buy-back reserve.
program.
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.
114
114
115
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Notes continued
for the 12 months to 31 December 2016
20. SHARE CAPITAL
Issued and fully paid share capital
Balance at beginning of reporting period
Shares bought back1
Balance at reporting date
Share capital
Balance at beginning of reporting period
Par value of shares bought back1
Company
December 2016
No. of shares
December 2015
No. of shares
338,503,563
338,503,563
(14,249,466)
-
324,254,097
338,503,563
Company
12 months to
December 2016
$m
12 months to
December 2015
$m
2,052.5
(302.2)
2,052.5
-
Balance at reporting date
1 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 a 12 month period, which commenced on 29 December 2015 and concluded on 28 December 2016. As at 31
December 2016, 14,249,466 shares were bought back for $425.9 million and subsequently cancelled. The associated par value of the shares
cancelled totalling $302.2 million has reduced share capital with the total premium paid over par value of $123.7 million taken to the share
buy-back reserve.
2,052.5
1,750.3
On 12 December 2016, the CIMIC Group Board approved a further on-market share buy-back of up to 10% of CIMIC’s fully paid ordinary
shares for a period of 12 months commencing 29 December 2016. As at 31 December 2016, nil shares have been bought back under this
program.
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.
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Notes continued
for the 12 months to 31 December 2016
21. RESERVES
Foreign currency translation reserve
Balance at beginning of reporting period
Included in statement of other comprehensive income
Balance at reporting date
Hedging reserve
Balance at beginning of reporting period
Included in statement of other comprehensive income
Balance at reporting date
Fair value reserve
Balance at beginning of reporting period
Included in statement of other comprehensive income
Balance at reporting date
Associates equity reserve
Balance at beginning of reporting period
Included in statement of other comprehensive income
Balance at reporting date
Equity reserve
Balance at beginning of reporting period
Acquisition of non-controlling interests
Balance at reporting date
Share buy-back reserve
Balance at beginning of reporting period
Premium paid over par on share buy-back
Balance at reporting date
Share based payments reserve
Balance at beginning of reporting period
Included in statement of profit or loss
Share based payments
Balance at reporting date
Notes continued
for the 12 months to 31 December 2016
12 months to
December 2016
$m
12 months to
December 2015
$m
Note
21. RESERVES CONTINUED
Nature and purpose of reserves
Foreign currency translation reserve
348.6
35.7
384.3
3.0
(14.5)
(11.5)
20.0
(20.0)
-
21.2
(21.2)
-
(31.9)
(566.7)
(598.6)
-
(123.7)
(123.7)
62.7
1.0
(18.8)
44.9
134.8
213.8
348.6
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
29
29
The foreign currency translation reserve comprises foreign exchange differences arising from the translation of the financial statements
of operations where their functional currency is different to the presentation currency of the Group, as well as from the translation of
liabilities that hedge the Group’s net investment in foreign operations.
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments
The fair value reserve includes the cumulative net increase above cost of the fair value of available-for-sale assets until the asset is realised
The associates equity reserve is used to record the Group’s share of the changes in the reserves of associates.
The equity reserve accounts for the differences between the fair value of, and the amounts paid or received for, equity transactions with
The share buy-back reserve represents the excess above par value of CIMIC shares that were purchased and subsequently cancelled. The
cancellation of the shares creates a non-distributable 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 share based payments during the reporting period.
Hedging reserve
relating to future transactions.
Fair value reserve
or impaired.
Associates equity reserve
Equity reserve
non-controlling interests.
Share buy-back reserve
Share based payments reserve
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
12 months to
December 2016
December 2015
Note
$m
$m
23
1,616.7
580.3
(320.5)
1,876.5
1,482.2
520.4
(385.9)
1,616.7
Total reserves at reporting date
(304.6)
423.6
116
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Notes continued
for the 12 months to 31 December 2016
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 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 increase above cost of 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 changes 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.
Share buy-back reserve
The share buy-back reserve represents the excess above par value of CIMIC shares that were purchased and subsequently cancelled. The
cancellation of the shares creates a non-distributable reserve.
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 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 2016
$m
12 months to
December 2015
$m
Note
23
1,616.7
580.3
(320.5)
1,876.5
1,482.2
520.4
(385.9)
1,616.7
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Notes continued
for the 12 months to 31 December 2016
Notes continued
for the 12 months to 31 December 2016
23. DIVIDENDS
24. EARNINGS PER SHARE
2016 final dividend
Subsequent to reporting date the Company announced a 100% franked final dividend in respect of
the year ended 31 December 2016. The dividend is payable on 4 July 2017. This dividend has not
been provided for in the statement of financial position1
Dividends recognised in the reporting period to 31 December 2016
30 June 2016 interim ordinary dividend 100% franked paid on 5 October 2016
31 December 2015 final dividend 100% franked paid on 8 April 2016
Total dividends recognised in reporting period to 31 December 2016
Dividends recognised in the reporting period to 31 December 2015
30 June 2015 interim ordinary dividend 100% franked paid on 2 October 2015
31 December 2014 final dividend (including special dividend) 100% franked paid on 10 April 2015
Total dividends recognised in reporting period to 31 December 2015
Cents per
share
$m
62.0
201.0
48.0
50.0
46.0
68.0
155.6
164.9
320.5
155.7
230.2
385.9
12 months to
12 months to
December 2016
December 2015
176.6¢
176.4¢
153.7¢
153.4¢
Basic earnings per share
Diluted earnings per share
diluted earnings per share ($m)
Profit / (loss) attributable to shareholders of the parent entity used in the calculation of basic and
580.3
520.4
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in calculating basic earnings
328,649,980
338,503,563
per share
Weighted average effect of share options on issue
Contingently issuable shares1
in calculating diluted earnings per share
Weighted average number of ordinary shares and potential ordinary shares used as the denominator
328,885,205
339,231,253
1Contingently issuable shares relate to share rights under plans disclosed in Note 36: Employee Benefits.
-
-
235,225
727,690
1The Board has determined a final dividend of 62 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 further on-market share buy-back announced by the Company on 12
December 2016, which commenced on 29 December 2016, 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.
Company
December 2016
$m
December 2015
$m
Dividend franking account
Balance of the franking account, adjusted for franking credits / debits which arise from the
398.2
437.8
payment / refund of income tax provided for in the financial statements
The impact of the 2016 final dividend, determined after the reporting date, on the dividend franking account will be a reduction of $86.1
million (2015: $72.2 million).
118
118
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Notes continued
for the 12 months to 31 December 2016
24. EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
Profit / (loss) attributable to shareholders of the parent entity used in the calculation of basic and
diluted earnings per share ($m)
12 months to
December 2016
12 months to
December 2015
176.6¢
176.4¢
153.7¢
153.4¢
580.3
520.4
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
328,649,980
338,503,563
Weighted average effect of share options on issue
Contingently issuable shares1
Weighted average number of ordinary shares and potential ordinary shares used as the denominator
in calculating diluted earnings per share
1Contingently issuable shares relate to share rights under plans disclosed in Note 36: Employee Benefits.
-
-
235,225
727,690
328,885,205
339,231,253
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Notes continued
for the 12 months to 31 December 2016
25. ASSOCIATES
The Group has the following investments in associates:
Name of entity
Principal activity
Country
Canberra Metro Holdings Trust1
Canberra Metro Holdings Pty Ltd1
Canberra Metro Pty Ltd
Dunsborough Lakes Village Syndicate1
HLG Contracting LLC5 (formerly known as Al
Habtoor Leighton LLC)
LCIP Co-Investment Unit Trust3
Macmahon Holdings Limited1
Metro Trains Australia Pty Ltd1, 6
Metro Trains Melbourne Pty Ltd1, 6
Metro Trains Sydney Pty Ltd1, 6
On Talent Pty Ltd1
Paradip Multi Cargo Berth Private Limited2
Sedgman Limited1, 4
Wellington Gateway General Partner No.1
Limited3
Construction
Construction
Construction
Development
Construction
Australia
Australia
Australia
Australia
United Arab Emirates
Investment
Australia
Construction, Contract Mining Australia
Australia
Services
Australia
Services
Australia
Services
Australia
Recruitment
India
Development
Australia
Mineral Processing
New Zealand
Investment
Ownership interest
December 2016
%
December 2015
%
30
30
30
20
-
-
21
20
20
20
33
-
-
15
-
-
-
20
45
11
20
-
-
-
-
26
37
15
All associates have a statutory reporting date of 31 December with the following exceptions:
1 Entities have a 30 June statutory reporting date.
2 Entities have a 31 March statutory reporting date.
3 The 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 As at 31 December 2015, the Group’s ownership interest in Sedgman was 37%, and it was an equity accounted associate of the Group. In
the period to 31 December 2016 the Group increased its ownership interest in Sedgman to 100%. Refer to Note 29: Acquisitions and
disposals of controlled entities and businesses.
5 HLG Contracting LLC (“HLG Contracting”) was an equity accounted associate of the Group as at 31 December 2015. In the period to 31
December 2016 joint control was obtained with no increased shareholding and the entity has been reclassified as a Joint Ventue. Refer to
Note 26: Joint venture entities.
6 Entities attained through the purchase of UGL refer to Note 29: Acquisitions and disposals of controlled entities and businesses.
Percentages are based on 100% ownership of UGL, acquired on 20 January 2017.
Notes continued
for the 12 months to 31 December 2016
25. ASSOCIATES CONTINUED
The Group’s share of associates’ results, assets and liabilities are as follows:
Revenue
Expenses
Earnings before interest and tax (“EBIT”)
Finance income
Finance costs
Net finance income / (costs)
Profit / (loss) before tax
Income tax (expense) / benefit
Profit / (loss) for the period1
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
12 months to
12 months to
December 2016
December 2015
$m
$m
1,318.0
1,401.8
(1,285.7)
(1,420.4)
32.3
(18.6)
December 2016
December 2015
$m
$m
0.5
(34.4)
(33.9)
(1.6)
(0.2)
(1.8)
186.6
134.7
321.3
102.7
145.7
248.4
2.5
(25.0)
(22.5)
(41.1)
8.1
(33.0)
2,015.8
869.9
2,885.7
1,628.5
698.3
2,326.8
Equity accounted associates at reporting date1,2
72.9
558.9
1Results of HLG Contracting are included within results of associates until 1 December 2016 when joint control was obtained. The assets
and liabilities of HLG Contracting are included in the above table as at 31 December 2015. Assets and liabilities of HLG Contracting as at
31 December 2016 are included with those of other joint ventures and are disclosed within Note 26: Joint Venture Entities.
2The Group’s shareholding in listed associates for which there are published price quotations had a market value at reporting date of: $24.7
million (31 December 2015: $97.9 million).
There were no impairments of equity accounted associates during the reporting period (31 December 2015: $nil).
In the opinion of the directors, there are no individually material associates as at 31 December 2016.
120
120
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Notes continued
for the 12 months to 31 December 2016
25. ASSOCIATES CONTINUED
The Group’s share of associates’ results, assets and liabilities are as follows:
Revenue
Expenses
Earnings before interest and tax (“EBIT”)
Finance income
Finance costs
Net finance income / (costs)
Profit / (loss) before tax
Income tax (expense) / benefit
Profit / (loss) for the period1
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
12 months to
December 2016
$m
12 months to
December 2015
$m
1,318.0
1,401.8
(1,285.7)
(1,420.4)
32.3
(18.6)
0.5
(34.4)
(33.9)
(1.6)
(0.2)
(1.8)
2.5
(25.0)
(22.5)
(41.1)
8.1
(33.0)
December 2016
$m
December 2015
$m
186.6
134.7
321.3
102.7
145.7
248.4
2,015.8
869.9
2,885.7
1,628.5
698.3
2,326.8
Equity accounted associates at reporting date1,2
72.9
558.9
1Results of HLG Contracting are included within results of associates until 1 December 2016 when joint control was obtained. The assets
and liabilities of HLG Contracting are included in the above table as at 31 December 2015. Assets and liabilities of HLG Contracting as at
31 December 2016 are included with those of other joint ventures and are disclosed within Note 26: Joint Venture Entities.
2The Group’s shareholding in listed associates for which there are published price quotations had a market value at reporting date of: $24.7
million (31 December 2015: $97.9 million).
There were no impairments of equity accounted associates during the reporting period (31 December 2015: $nil).
In the opinion of the directors, there are no individually material associates as at 31 December 2016.
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Notes continued
for the 12 months to 31 December 2016
26. JOINT VENTURE ENTITIES
The Group has the following joint venture entities:
Name of entity
Principal activity
Country
Ownership interest
December 2016
%
December 2015
%
A.C.N. 115 687 057 Pty Ltd1
APM Group (Aust) Pty Ltd & Broad Construction Services
(NSW/VIC) Pty Ltd1
Construction
Australia
Construction
Australia
Applemead Proprietary Limited
Development
Australia
Auckland Road Maintenance Alliance (West) Management JV1
Construction
New Zealand
Australian Terminal Operations Management Pty Ltd1, 3
Services
Bac Devco Pty Limited1
Barclay Mowlem Thiess Joint Venture1
Canberra Metro Operations Pty Ltd1
City West Property Holding Trust (Section 63 Trust)
City West Property Holdings Pty Limited
City West Property Investment (No. 1) Trust
City West Property Investment (No. 2) Trust
City West Property Investment (No. 3) Trust
City West Property Investment (No. 4) Trust
City West Property Investment (No. 5) Trust
City West Property Investment (No. 6) Trust
City West Property Investments (No. 1) Pty Limited
City West Property Investments (No. 2) Pty Limited
City West Property Investments (No. 3) Pty Limited
City West Property Investments (No. 4) Pty Limited
City West Property Investments (No. 5) Pty Limited
City West Property Investments (No. 6) Pty Limited
Cockatoo Iron Ore1
Cockatoo Mining Pty Ltd1
Doubleone 3 Unit Trust1
Erskineville Residential Project Pty Ltd
Fallingwater Trust1
Great Eastern Alliance
HLG Contracting LLC (formerly known as Al Habtoor
Leighton LLC)
Kentz E & C Pty Ltd
Kings Square No.4 Unit Trust
Kings Square Pty Ltd
Kurunjang Development Pty Ltd1
Development
Construction
Services
Development
Development
Development
Development
Development
Development
Development
Development
Development
Development
Development
Development
Development
Development
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Contract Mining
Australia
Contract Mining
Australia
Development
Construction
Development
Construction
Construction
Construction
Development
Development
Investment
Australia
Australia
Australia
Australia
United Arab
Emirates
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
-
75
45
-
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
15
-
-
50
50
50
50
122
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26. JOINT VENTURE ENTITIES CONTINUED
Name of entity
Principal activity
Country
Ownership interest
December 2016
December 2015
Leighton Contractors & Baulderstone Hornibrook Bilfinger Berger
Construction
Australia
Notes continued
for the 12 months to 31 December 2016
LCS Employment Agency Ltd
Leighton Abigroup Joint Venture1
Leighton BMD JV1
Leighton Construction India (Private) Limited2
Joint Venture1
Leighton Holland Browse JV1
Leighton Kumagai Joint Venture (MetroRail)1
Leighton Services UAE Co LLC
Leighton / Ngarda Joint Venture (LNJV)1
Leighton-Infra 13 Joint Venture2
Leighton OSE Joint Venture2
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
MPEET Pty Ltd3
Mulba Mia Leighton Broad Joint Venture1
Naval Ship Management (Australia) Pty Ltd1, 3
New Future Alliance (SIHIP)
Nextgen Group Holdings Pty Limited
Ngarda Civil and Mining Pty Limited1
Northern Gateway Alliance
RTL JV1
RTL Mining and Earthworks Pty Ltd1
S.A.N.T. (MGT Holding) Pty Ltd
S.A.N.T. (Term-Holding) Pty Ltd
Sedgman Civmec Joint Venture
SmartReo Pty Ltd
Southern Gateway Alliance (Mandurah)
The Kurunjang Development Trust1
Services
Macau
Construction
Australia
Construction
Australia
Construction
India
Construction
Australia
Construction
Australia
Services
United Arab
Emirates
Construction
Australia
Construction
Construction
India
India
Contract Mining Botswana
Construction
New Zealand
Construction
Australia
Development
Australia
Development
Australia
Development
Australia
Development
Australia
Development
Australia
Development
Australia
Services
Australia
Construction
Australia
Services
Australia
Construction
Australia
Services
Australia
Contract Mining Australia
Mining
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Development
Australia
Construction
New Zealand
%
50
50
50
50
50
50
55
50
88
50
50
60
50
-
50
50
50
50
50
50
50
50
50
80
-
50
50
44
44
50
50
50
50
%
50
50
50
50
50
50
55
50
88
50
50
60
50
50
50
50
50
50
50
50
50
-
-
80
29
50
50
44
44
50
50
-
50
69 69
-
50
123
CIMIC Group Limited Annual Report 2016 | Financial Report
Notes continued
for the 12 months to 31 December 2016
26. JOINT VENTURE ENTITIES CONTINUED
Name of entity
Principal activity
Country
Ownership interest
December 2016
December 2015
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 Holland Browse JV1
Leighton Kumagai Joint Venture (MetroRail)1
Leighton Services UAE Co LLC
Leighton / Ngarda Joint Venture (LNJV)1
Leighton-Infra 13 Joint Venture2
Leighton OSE Joint Venture2
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
MPEET Pty Ltd3
Mulba Mia Leighton Broad Joint Venture1
Naval Ship Management (Australia) Pty Ltd1, 3
New Future Alliance (SIHIP)
Nextgen Group Holdings Pty Limited
Ngarda Civil and Mining Pty Limited1
Northern Gateway Alliance
RTL JV1
RTL Mining and Earthworks Pty Ltd1
S.A.N.T. (MGT Holding) Pty Ltd
S.A.N.T. (Term-Holding) Pty Ltd
Sedgman Civmec Joint Venture
SmartReo Pty Ltd
Southern Gateway Alliance (Mandurah)
The Kurunjang Development Trust1
Services
Macau
Construction
Australia
Construction
Australia
Construction
India
Construction
Australia
Construction
Australia
Construction
Australia
Services
United Arab
Emirates
Construction
Australia
Construction
Construction
India
India
Contract Mining Botswana
Construction
New Zealand
Construction
Australia
Development
Australia
Development
Australia
Development
Australia
Development
Australia
Development
Australia
Development
Australia
Services
Australia
Construction
Australia
Services
Australia
Construction
Australia
Services
Australia
Contract Mining Australia
Construction
New Zealand
Mining
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Development
Australia
CIMIC 2016 ANNUAL REPORT A4 FA.indd 123
%
50
50
50
50
50
50
55
50
88
50
50
60
50
-
50
50
50
50
50
50
50
50
50
80
-
50
50
44
44
50
50
50
50
%
50
50
50
50
50
50
55
50
88
50
50
60
50
50
50
50
50
50
50
50
-
50
-
80
29
50
50
44
44
50
50
-
50
69 69
-
50
123
123
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CIMIC Group Limited Annual Report 2016 | Financial Report
Notes continued
for the 12 months to 31 December 2016
Notes continued
for the 12 months to 31 December 2016
26. JOINT VENTURE ENTITIES CONTINUED
26. JOINT VENTURE ENTITIES CONTINUED
Name of entity
Principal activity
Country
Ownership interest
December 2016
December 2015
The Group’s share of joint venture entities’ results, assets and liabilities are as follows:
Thiess Alstom Joint Venture1
Thiess Barnard Joint Venture
Thiess Downer EDI Works JV1
Thiess Hochtief Joint Venture1
Thiess United Group Joint Venture1
Ventia Services Group Pty Limited
Viridian Noosa Pty Ltd1
Viridian Noosa Trust1
Wallan Project Pty Ltd1
Wallan Project Trust1
Wedgewood Road Hallam No. 1 Pty Ltd
Wedgewood Road Hallam Trust
Wellington Tunnels Alliance
Wrap Southbank Unit Trust
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Services
Australia
Development
Australia
Development
Australia
Investment
Investment
Australia
Australia
Development
Australia
Development
Australia
Construction
New Zealand
Development
Australia
%
-
-
-
50
50
47
50
50
50
50
50
50
50
50
%
50
50
75
50
50
50
50
50
50
50
50
50
50
50
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.
3Enities attained through the purchase of UGL refer to Note 29: Acquisitions and disposals of controlled entities and businesses. Percentages
are based on 100% ownership of UGL, which was obtained on 20 January 2017.
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.
Revenue
Expenses
Earnings before interest and tax (“EBIT”)
Finance income
Finance costs
Net finance income / (costs)
Profit / (loss) before tax
Income tax (expense) / benefit
Profit / (loss) for the period1
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Expenses.
12 months to
12 months to
December 2016
December 2015
$m
$m
1,362.9
(1,331.5)
31.4
2.6
(48.1)
(45.5)
(14.1)
(28.1)
(42.2)
2,143.7
1,386.9
3,530.6
(1,968.3)
(1,018.7)
(2,987.0)
1,446.2
(1,385.6)
60.6
4.0
(42.5)
(38.5)
22.1
(3.6)
18.5
481.1
763.3
1,244.4
(419.4)
(310.8)
(730.2)
December 2016
December 2015
$m
$m
The Group’s share of joint venture entities’ net assets at reporting date1,2
543.6
514.2
1 The results of HLG Contracting are included within the table above from 1 December 2016 when Joint Control was obtained.
2 The Group disposed of its investment in Nextgen Group Holdings Pty Limited in the year for a profit of $70.1 million. Refer to Note 3:
There were no impairments of investments in joint ventures during the reporting period (31 December 2015: $nil).
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Notes continued
for the 12 months to 31 December 2016
26. JOINT VENTURE ENTITIES CONTINUED
The Group’s share of joint venture entities’ results, assets and liabilities are as follows:
Revenue
Expenses
Earnings before interest and tax (“EBIT”)
Finance income
Finance costs
Net finance income / (costs)
Profit / (loss) before tax
Income tax (expense) / benefit
Profit / (loss) for the period1
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
12 months to
December 2016
$m
12 months to
December 2015
$m
1,362.9
(1,331.5)
31.4
2.6
(48.1)
(45.5)
(14.1)
(28.1)
(42.2)
1,446.2
(1,385.6)
60.6
4.0
(42.5)
(38.5)
22.1
(3.6)
18.5
December 2016
$m
December 2015
$m
2,143.7
1,386.9
3,530.6
(1,968.3)
(1,018.7)
(2,987.0)
481.1
763.3
1,244.4
(419.4)
(310.8)
(730.2)
The Group’s share of joint venture entities’ net assets at reporting date1,2
543.6
514.2
1 The results of HLG Contracting are included within the table above from 1 December 2016 when Joint Control was obtained.
2 The Group disposed of its investment in Nextgen Group Holdings Pty Limited in the year for a profit of $70.1 million. Refer to Note 3:
Expenses.
There were no impairments of investments in joint ventures during the reporting period (31 December 2015: $nil).
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Notes continued
for the 12 months to 31 December 2016
26. JOINT VENTURE ENTITIES CONTINUED
a) Material joint ventures
Set out below are the joint venture entities of the Group as at 31 December 2016 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
HLG Contracting LLC1
United Arab Emirates
Equity method
Joint venture
1There is no quoted market value for HLG Contracting LLC (HLG Contracting) as it is not a listed entity.
HLG Contracting LLC (“HLG Contracting”)
Ownership interest held by the
Company
December 2016
December 2015
%
45
%
45
On 30 November 2016 an agreement was reached with with HLG Contracting’s existing shareholders which allowed one shareholder, Al
Habtoor Holdings LLC, to transfer their shareholding to the other partner Riad Al Sadik. Following this transfer CIMIC’s shareholding
remained unchanged at 45% with Riad Al Sadik now owning the remaining 55%.
Following the completion of this agreement CIMIC management have determined they have joint control of HLG Contracting in accordance
with AASB 10 Consolidated Financial Statements. As a result of this change in control, CIMIC’s investment in HLG Contracting is now
classified as a joint venture, whereas it was previously classified as an associate. CIMIC continues to equity account for the investment
and as such there was no impact on the carrying value of the investment as a result of this change.
As part of the contractual arrangements around shareholder exit, CIMIC assumed certain obligations from the other shareholders including
guaranteeing various performance bonds (refer Note 33: Contingent Liabilities), acquired certain loans from Al Habtoor Group LLC for
US$27.2 million (equivalent to $37.8 million) and acquired a call option to purchase the remaining 55% shareholding in HLG Contracting.
This option has no current impact on the control of the company. The option is a derivative, as defined by AASB 139 Financial Instruments:
Recognition & Measurement (AASB 139) and is required to be carried at fair value with any gain and loss recognised in profit and loss in
the period.
As at 31 December 2016 the fair value of the call option was determined to be US$54.0 million (equivalent to $75.0 million). In accordance
with AASB 139 the option has been classified as a financial asset held at fair value through profit or loss and the resulting gain has been
reflected in Note 3: Expenses. The asset value has been disclosed in Note 12: Other investments.
HLG Contracting’s new shareholder structure is a step towards reaching its long term strategic objectives in the region. This will allow HLG
Contracting to continue to deliver leading projects for clients. A strategic review of the HLG Contracting business has commenced and is
ongoing.
During the reporting period, the carrying value of the Group’s investment in HLG Contracting decreased from $444.7 million to $366.5
million (equivalent to US$263.9 million in 2016 and US$324.6 million in 2015). The decrease was due to the Group’s share of equity
accounted loss of $84.4 million, offset by a foreign exchange translation gain of $6.2 million.
The recoverable amount of the Group’s investment was calculated using a value in use calculation.
Notes continued
for the 12 months to 31 December 2016
26. JOINT VENTURE ENTITIES CONTINUED
a) Material joint ventures continued
The key assumptions used in the value in use calculation:
Discount rate
15% (31 December 2015: 15%)
Growth rate
Legacy project
receivables
3% (31 December 2015: 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 Contracting. It is assumed of the remaining unprovided
legacy project receivables, 55% will be collected within twenty-four months and 45% collected
subsequently (31 December 2015: 56% and 44% respectively)
Borrowings
Borrowings obtained to fund working capital will be progressively repaid during the forecast period
Forecast cash flow
management, risk adjusted downward by the Group. Cash flows beyond five years are extrapolated using
The calculation uses five year cash flow projections based on forecasts provided by HLG Contracting’s
the estimated growth rate
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 likelihood 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 Contracting.
The Group has pledged the following security against borrowings by HLG Contracting under certain facilities totalling US$239.7 million (31
December 2015: two facilities totalling US$259.8 million) equivalent to $332.9 million (31 December 2015: $356.0 million):
letters of credit of US$85.4 million (31 December 2015: US$68.2 million), equivalent to $118.6 million (31 December 2015: $93.4
guarantees of US$154.3 million (31 December 2015: US$191.6 million), equivalent to $214.3 million (31 December 2015: $262.6
−
−
million); and
million).
No amounts have been recognised in relation to these letters of credit or guarantees.
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Notes continued
for the 12 months to 31 December 2016
26. JOINT VENTURE ENTITIES CONTINUED
a) Material joint ventures continued
The key assumptions used in the value in use calculation:
Discount rate
Growth rate
Legacy project
receivables
Borrowings
Forecast cash flow
15% (31 December 2015: 15%)
3% (31 December 2015: 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 Contracting. It is assumed of the remaining unprovided
legacy project receivables, 55% will be collected within twenty-four months and 45% collected
subsequently (31 December 2015: 56% and 44% 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 Contracting’s
management, risk adjusted downward by the Group. Cash flows beyond five years are extrapolated using
the estimated growth rate
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 likelihood 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 Contracting.
The Group has pledged the following security against borrowings by HLG Contracting under certain facilities totalling US$239.7 million (31
December 2015: two facilities totalling US$259.8 million) equivalent to $332.9 million (31 December 2015: $356.0 million):
−
letters of credit of US$85.4 million (31 December 2015: US$68.2 million), equivalent to $118.6 million (31 December 2015: $93.4
million); and
guarantees of US$154.3 million (31 December 2015: US$191.6 million), equivalent to $214.3 million (31 December 2015: $262.6
million).
−
No amounts have been recognised in relation to these letters of credit or guarantees.
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Notes continued
for the 12 months to 31 December 2016
26. JOINT VENTURE ENTITIES CONTINUED
a) Material joint ventures continued
The following tables provide summarised financial information and reconciles the carrying amount of the Group’s interest, and its share
of profit or loss and other comprehensive income of its equity accounted investment in HLG Contracting.
December 2016
December 2015
$m
$m
Summarised profit or loss1
Revenue
Depreciation and amortisation
Other expenses
Share of profit / (loss) of joint venture entities
Earnings before interest and tax (“EBIT”)
Finance income
Finance costs
Net finance income / (costs)
Profit / (loss) before tax
Income tax (expense) / benefit
Profit / (loss) for the period
Other comprehensive income
Total comprehensive income
Group’s ownership interest
Group’s total share of:
Profit / (loss) for the period
Other comprehensive income
Total comprehensive income
Dividends received from HLG Contracting
12 months to
December 2016
$m
12 months to
December 2015
$m
2,702.5
(24.3)
2,573.5
(9.8)
(2,782.9)
(2,529.1)
1.2
(103.5)
1.3
(82.7)
(81.4)
(184.9)
(2.6)
(187.5)
-
(187.5)
6.2
40.8
3.2
(74.0)
(70.8)
(30.0)
(1.8)
(31.8)
-
(31.8)
45%
45%
(84.4)
-
(84.4)
(14.3)
-
(14.3)
-
-
1 Results give the full results of HLG Contracting for the periods shown. HLG Contracting was classified as an associate until 1 December
2016.
Notes continued
for the 12 months to 31 December 2016
26. JOINT VENTURE ENTITIES CONTINUED
a) Material joint ventures continued
Summarised balance sheet
Current assets
Cash and cash equivalents
Other current assets
Total current assets
Non-current assets
Total non-current assets
Current liabilities
Financial liabilities (excluding trade payables)
Other current liabilities
Total current liabilities
Non-current liabilities
Financial liabilities (excluding trade payables)
Other non-current liabilities
Total non-current liabilities
Net assets (100%)
Group’s share of net assets (45%)
b)
Individually immaterial joint ventures
223.4
3,742.4
3,965.8
1,744.4
1,744.4
278.4
3,854.7
4,133.1
1,674.9
1,674.9
(733.7)
(2,704.8)
(3,438.5)
(602.9)
(2,802.2)
(3,405.1)
(1,130.8)
(1,252.6)
(326.4)
(162.1)
(1,457.2)
(1,414.7)
814.5
988.2
366.5
444.7
December 2016
December 2015
$m
$m
177.1
42.2
514.2
18.5
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
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Notes continued
for the 12 months to 31 December 2016
26. JOINT VENTURE ENTITIES CONTINUED
a) Material joint ventures continued
Summarised balance sheet
Current assets
Cash and cash equivalents
Other current assets
Total current assets
Non-current assets
Total non-current assets
Current liabilities
Financial liabilities (excluding trade payables)
Other current liabilities
Total current liabilities
Non-current liabilities
Financial liabilities (excluding trade payables)
Other non-current liabilities
Total non-current liabilities
Net assets (100%)
Group’s share of net assets (45%)
b)
Individually immaterial joint ventures
December 2016
$m
December 2015
$m
223.4
3,742.4
3,965.8
1,744.4
1,744.4
278.4
3,854.7
4,133.1
1,674.9
1,674.9
(733.7)
(2,704.8)
(3,438.5)
(602.9)
(2,802.2)
(3,405.1)
(1,130.8)
(1,252.6)
(326.4)
(162.1)
(1,457.2)
(1,414.7)
814.5
988.2
366.5
444.7
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 2016
$m
December 2015
$m
177.1
42.2
514.2
18.5
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Notes continued
for the 12 months to 31 December 2016
27. JOINT OPERATIONS
The Group has the following interest in joint operations:
Name of arrangement
Principal activity
Country
Ownership interest
December 2016
December 2015
%
%
Bacchus Marsh1
Baulderstone Leighton Joint Venture
Building ROE 8
Casey Fields1
CH2 – UGL4
China State Leighton Joint Venture
CHT Joint Venture
CPB Black & Veatch Joint Venture (formerly known as Leighton
Contractors Black & Veatch Joint Venture)1
CPB Contractors UGL Engineering Joint Venture
CPB Dragados Samsung Joint Venture (formerly known as
Leighton Dragados Samsung Joint Venture)
CPB John Holland Dragados Joint Venture (formerly known as
Thiess John Holland Dragados Joint Venture)
CPB Samsung John Holland Joint Venture (formerly known as
Leighton Samsung John Holland Joint Venture)
Edenbrook
Erskineville Residential Project
EV LNG Australia Pty Ltd & Thiess Pty Ltd (EVT JV)
Gammon - Leighton Joint Venture
Garlanja Joint Venture1
HYLC Joint Venture1
JHCPB JV
Development
Australia
Construction
Australia
Construction
Australia
Development
Australia
Construction
Australia
Construction
Hong Kong
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Development
Australia
Development
Australia
Construction
Australia
Construction
Hong Kong
Construction
Australia
Construction
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
Australia
Leighton China State John Holland Joint Venture (City of Dreams)1 Construction
Leighton China State Joint Venture (Wynn Resort) 1
Construction
Macau
Macau
Leighton China State Van Oord Joint Venture
Construction
Hong Kong
Leighton Contractors Downer Joint Venture1
Leighton Fabrication and Modularisation Ltd
Construction
Australia
Construction
Thailand
50
50
71
55
50
50
50
50
50
40
50
33
50
50
50
50
-
50
50
50
51
84
60
50
80
50
40
50
45
50
-
50
50
-
55
-
50
50
50
-
40
50
33
50
50
50
50
75
50
-
50
51
84
60
50
80
50
40
50
45
50
50
Notes continued
for the 12 months to 31 December 2016
27. JOINT OPERATIONS CONTINUED
Name of arrangement
Principal activity
Country
Ownership interest
December 2016
December 2015
%
%
Leighton Fulton Hogan Joint Venture (Sapphire to Woolgoolga)1
Construction
Australia
Leighton Fulton Hogan Joint Venture (SH16 Causeway Upgrade)
Construction
New Zealand
Leighton John Holland Joint Venture (Thomson Line)
Construction
Singapore
Leighton Offshore - John Holland Joint Venture (LTA Project)
Construction
Singapore
Leighton - John Holland Joint Venture (Lai Chi Kok)
Construction
Hong Kong
Murray & Roberts Marine Malaysia - Leighton Contractors
Construction
Malaysia
Swietelsky CPB Rail Joint Venture (formerly known as Leighton
Services
Australia
Task Joint Venture (Thiess & Sinclair Knight Merz)
Construction
Australia
Leighton M&E - Southa Joint Venture
Leighton York Joint Venture
Leighton - Able Joint Venture
Leighton - Chubb E&M Joint Venture
Leighton - John Holland Joint Venture
Leighton - Total Joint Operation
Link 200 Joint Venture1
Link 200 Station Joint Venture1
Link 200 Tunnel Joint Venture1
LLECPB Crossing Removal JV
Malaysia Joint Venture1
N.V. Besix S.A. & Thiess Pty Ltd (Best JV)
NRT – Design & Delivery JV
NRT - Infrastructure Joint Venture
NRT Systems1, 4
OWP Joint Venture
Rizzani Leighton Joint Venture
Swietelsky Joint Venture)1
Thiess Balfour Beatty Joint Venture
Thiess Decmil Kentz Joint Venture1
Thiess Degremont JV
Thiess Degremont Nacap Joint Venture1
Thiess MacDow Joint Venture1
Thiess Pty Ltd & York Civil Pty Ltd
Thiess Sedgman Joint Venture1,2,3
Thiess Southbase Joint Venture
Construction
Australia
Construction
Australia
Construction
Hong Kong
Construction
Hong Kong
Construction
Hong Kong
Construction
Indonesia
Construction
Hong Kong
Construction
Hong Kong
Construction
Hong Kong
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Services
Services
Australia
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
New Zealand
Construction
Australia
Construction
Australia
50
50
50
50
50
75
51
50
55
51
70
-
-
-
50
50
50
30
50
40
75
50
50
60
67
33
65
33
50
100
-
-
50
50
-
50
50
50
50
50
75
51
50
55
51
70
48
60
60
-
50
50
50
-
-
75
50
50
60
67
33
65
33
50
65
68
50
50
50
50
Thiess John Holland Joint Venture (Airport Link)
Thiess John Holland Joint Venture (Eastlink)
Thiess John Holland Joint Venture (Lane Cove Tunnel)
Construction
Australia
130
130
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Notes continued
for the 12 months to 31 December 2016
27. JOINT OPERATIONS CONTINUED
Name of arrangement
Principal activity
Country
Ownership interest
December 2016
December 2015
%
%
Leighton Fulton Hogan Joint Venture (Sapphire to Woolgoolga)1
Construction
Australia
Leighton Fulton Hogan Joint Venture (SH16 Causeway Upgrade)
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 York Joint Venture
Leighton - Able Joint Venture
Leighton - Chubb E&M Joint Venture
Leighton - John Holland Joint Venture
Construction
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
LLECPB Crossing Removal JV
Murray & Roberts Marine Malaysia - Leighton Contractors
Malaysia Joint Venture1
N.V. Besix S.A. & Thiess Pty Ltd (Best JV)
NRT – Design & Delivery JV
NRT - Infrastructure Joint Venture
NRT Systems1, 4
OWP Joint Venture
Rizzani Leighton Joint Venture
Swietelsky CPB Rail Joint Venture (formerly known as Leighton
Swietelsky Joint Venture)1
Construction
Indonesia
Construction
Hong Kong
Construction
Hong Kong
Construction
Hong Kong
Construction
Australia
Construction
Malaysia
Construction
Australia
Construction
Australia
Construction
Australia
Services
Services
Australia
Australia
Construction
Australia
Services
Australia
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 MacDow Joint Venture1
Thiess Pty Ltd & York Civil Pty Ltd
Thiess Sedgman Joint Venture1,2,3
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
New Zealand
Construction
Australia
Construction
Australia
Thiess John Holland Joint Venture (Lane Cove Tunnel)
Construction
Australia
50
50
50
50
50
75
51
50
55
51
70
-
-
-
50
50
50
30
50
40
75
50
50
60
67
33
65
33
50
-
100
-
50
50
-
50
50
50
50
50
75
51
50
55
51
70
48
60
60
-
50
50
-
50
-
75
50
50
60
67
33
65
33
50
65
68
50
50
50
50
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Notes continued
for the 12 months to 31 December 2016
Notes continued
for the 12 months to 31 December 2016
27. JOINT OPERATIONS CONTINUED
28. RECONCILIATION OF PROFIT / (LOSS) FOR THE YEAR TO NET CASH FROM OPERATING ACTIVITIES
Name of arrangement
Principal activity
Country
Thiess KMC JV
UGL Cape1, 4
UGL Kaefer1, 4
UGL Kentz1, 4
Contract Mining Canada
Services
Services
Australia
Australia
Construction
Australia
Veolia Water - Leighton- John Holland Joint Venture
Construction
Hong Kong
Ownership interest
December 2016
December 2015
%
51
50
50
50
24
%
-
-
-
-
24
All joint operations have a reporting date of 31 December with the following exceptions:
1 Arrangements have a 30 June reporting date. These entities have different statutory reporting dates to the Group as they are aligned
with the joint operations partners’ reporting date and / or the reporting date is prescribed by local statutory requirements.
2 Entity has been transferred to controlled entities during the period.
3 On acquisition of Sedgman this entity was 100% owned by the Group and was fully consolidated, disclosure is given for comparative
purposes.
4Entities attained through the purchase of UGL refer to Note 29: Acquisitions and disposals of controlled entities and businesses.
Percentages are based on 100% ownership of UGL, acquired on 20 January 2017.
Profit / (loss) for the year
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangibles
- Net (gain) / loss on disposal of equity accounted investments
- Net (gain) / loss on sale of controlled entities
- Net (gain) / loss on acquisition of controlled entities
Property development and property joint venture write-downs
- Net (gain) / loss on sale of assets
Impairment of intangibles
Foreign exchange losses
- Net amounts set aside to provisions
Share of (profits)/ losses of associates
Share based payments
- Net (gain) / loss on fair value of option to acquire shares
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
12 months to
December 2016
December 2015
$m
552.4
$m
514.4
304.9
32.5
(70.1)
-
(46.6)
1.4
10.0
-
1.3
202.7
5.3
1.0
(75.0)
(161.3)
305.8
203.3
(42.7)
(271.2)
173.3
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)
Net cash from operating activities
1,127.0
1,450.2
132
132
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Notes continued
for the 12 months to 31 December 2016
28. RECONCILIATION OF PROFIT / (LOSS) FOR THE YEAR TO NET CASH FROM OPERATING ACTIVITIES
Profit / (loss) for the year
Adjustments for:
-
-
Depreciation of property, plant and equipment
Amortisation of intangibles
- Net (gain) / loss on disposal of equity accounted investments
- Net (gain) / loss on sale of controlled entities
- Net (gain) / loss on acquisition of controlled entities
- Net (gain) / loss on sale of assets
-
-
-
Impairment of intangibles
Property development and property joint venture write-downs
Foreign exchange losses
- Net amounts set aside to provisions
-
-
Share of (profits)/ losses of associates
Share based payments
- Net (gain) / loss on fair value of option to acquire shares
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 2016
$m
12 months to
December 2015
$m
552.4
514.4
304.9
32.5
(70.1)
-
(46.6)
1.4
10.0
-
1.3
202.7
5.3
1.0
(75.0)
(161.3)
305.8
203.3
(42.7)
(271.2)
173.3
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)
Net cash from operating activities
1,127.0
1,450.2
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Notes continued
for the 12 months to 31 December 2016
Notes continued
for the 12 months to 31 December 2016
29. ACQUISITIONS AND DISPOSALS OF CONTROLLED ENTITIES AND BUSINESSES
29. ACQUISITIONS AND DISPOSALS OF CONTROLLED ENTITIES AND BUSINESSES CONTINUED
Acquisitions – UGL Limited
Acquisitions – Sedgman Pty Limited
On 10 October 2016, CIMIC Group Investments No.2 Pty Limited (CGI2), a controlled entity within the Group, became a substantial
shareholder in UGL Limited (UGL), an entity formerly listed on the ASX, by acquiring an interest of 13.84% of shares on issue. On obtaining
the initial interest CIMIC announced a final unconditional offer for the remaining shares pursuant to a takeover at a price of $3.15 per
share.
On 24 November 2016, CGI2’s ownership interest in UGL increased to over 50% and thereby gained control. The results of UGL have been
consolidated from this date. CGI2 subsequently increased its ownership interest in UGL to more than 90% and exercised its right to
compulsorily acquire the remaining shares, which was completed on 20 January 2017. The shareholding at 31 December 2016 was 95%.
Cash consideration paid to 31 December 2016 to acquire the non-controlling interest was $248.5 million and a liability for $29.3 million is
recognised for the remaining shares.
On 23 February 2016, CIMIC Group Investments Pty Ltd, a controlled entity of the Company, increased its ownership interest in Sedgman
Pty Limited (Sedgman), an entity formerly listed on the ASX, to 51% and thereby gained control of Sedgman. As at 31 December 2015, the
Group’s ownership interest in Sedgman was 37%. The acquisition of Sedgman shares was made under an unconditional off-market
takeover offer for Sedgman. CIMIC Group Investments Pty Ltd subsequently increased its ownership interest in Sedgman to 90% and
exercised its right to compulsorily acquire the remaining shares in Sedgman, which was completed on 13 April 2016.
Purchase consideration to 23 February 2016
$m
Cash paid on date of obtaining control
Fair value of previously held equity interest
Purchase consideration to 24 November 2016
$m
Total purchase consideration to 23 February 2016
Cash paid to obtain control
The provisional value of assets and liabilities recognised as a result of the acquisition are as follows:
Cash and cash equivalents
Trade and other receivables
Inventories: consumables
Other current assets
Investments accounted for using the equity method
Property, plant and equipment
Intangibles
Current and deferred tax
Trade and other payables
Provisions
Interest bearing liabilities
Net identifiable assets / (liabilities)
Less: non-controlling interests
Add: Goodwill
Net assets / (liabilities) acquired
262.1
Provisional fair value
on acquisition
$m
152.7
259.6
37.0
28.4
39.6
72.7
70.6
268.2
(972.3)
(82.8)
(315.3)
(441.6)
223.0
480.7
262.1
The value of assets and liabilities recognised as a result of the acquisition are as follows:
Investments accounted for using the equity method
Cash and cash equivalents
Trade and other receivables
Other current assets
Other investments
Property, plant and equipment
Intangibles
Current and deferred tax
Trade and other payables
Provisions
Interest bearing liabilities
Net identifiable assets / (liabilities)
Less: non-controlling interests
Add: Goodwill
Net assets / (liabilities) acquired
Fair value on
acquisition
$m
5.7
104.6
110.3
91.7
73.8
4.0
6.3
0.4
16.4
13.1
4.3
(86.6)
(23.7)
(4.5)
95.2
(46.4)
61.5
110.3
The goodwill is attributable to the future profitability and expertise of UGL, as well as the synergies expected to be achieved from
integrating UGL with the pre-existing CIMIC cash generating units (CGUs) of CIMIC in the construction segment. An element of the acquired
goodwill has been provisionally allocated to this segment refer to Note 15: Intangibles. The values of assets and liabilities acquired have
not been finalised due to the proximity of the acquisition to the end of the period. No goodwill is deductible for tax purposes.
The acquisition has been accounted for under Accounting Standard AASB 3 Business Combinations. Under AASB 3 the Group can elect, on
an acquisition by acquisition basis, to recognise non-controlling interests in an acquired entity either at fair value or at the non-controlling
interest’s share of the acquired entity’s net identifiable assets / (liabilities). For the acquisition of UGL, the CIMIC Group elected to
recognise the non-controlling interests at the non-controlling interest’s share of the acquired entity’s net identifiable liabilities.
The contribution by UGL to the Group from the acquisition date to the end of the period ended 31 December 2016 was $204.2 million
revenue and $5.3 million profit after tax after making adjustments for the acquisition in accordance with AASB 3. Had the acquisition
occurred on 1 January 2016, UGL’s contribution to the Group for the year ended 31 December 2016 would have been $1,983.3 million
revenue and $104.3 million of loss after tax. The loss includes $200.0 million of provisions recorded prior to acquisition on the Ichthys
Projects.
The goodwill is attributable to the future profitability and expertise of Sedgman, as well as the synergies expected to be achieved between
Sedgman’s mineral processing activities and the Group’s mining operations. No goodwill is deductible for tax purposes.
The acquisition has been accounted for under Accounting Standard AASB 3 Business Combinations. For the acquisition of Sedgman the
Group elected to recognise the non-controlling interests at fair value.
The revaluation of CIMIC’s previously held investment to fair value resulted in a gain on remeasurement of $25.4 million. In addition the
associates reserve of $21.2 million was recycled from equity to profit and loss, resulting in a total gain on acquisition before tax of
$46.6 million (refer to Note 3: Expenses).
The contribution by Sedgman to the Group from the acquisition date to the end of the period ended 31 December 2016 was $223.7 million
of revenue. Had the acquisition occurred on 1 January 2016, Sedgman’s contribution to the Group for the year ended 31 December 2016
would have been $255.7 million revenue. The business is now integrated with mining operations and reported within the mining and
mineral processing segment (refer to Note 31: Segment information), as such it is not possible to assess the contribution of the business
to profit for the year.
134
134
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Notes continued
for the 12 months to 31 December 2016
29. ACQUISITIONS AND DISPOSALS OF CONTROLLED ENTITIES AND BUSINESSES CONTINUED
Acquisitions – Sedgman Pty Limited
On 23 February 2016, CIMIC Group Investments Pty Ltd, a controlled entity of the Company, increased its ownership interest in Sedgman
Pty Limited (Sedgman), an entity formerly listed on the ASX, to 51% and thereby gained control of Sedgman. As at 31 December 2015, the
Group’s ownership interest in Sedgman was 37%. The acquisition of Sedgman shares was made under an unconditional off-market
takeover offer for Sedgman. CIMIC Group Investments Pty Ltd subsequently increased its ownership interest in Sedgman to 90% and
exercised its right to compulsorily acquire the remaining shares in Sedgman, which was completed on 13 April 2016.
Purchase consideration to 23 February 2016
$m
Cash paid on date of obtaining control
Fair value of previously held equity interest
Total purchase consideration to 23 February 2016
The value of assets and liabilities recognised as a result of the acquisition are as follows:
Cash and cash equivalents
Trade and other receivables
Other current assets
Investments accounted for using the equity method
Other investments
Property, plant and equipment
Intangibles
Current and deferred tax
Trade and other payables
Provisions
Interest bearing liabilities
Net identifiable assets / (liabilities)
Less: non-controlling interests
Add: Goodwill
Net assets / (liabilities) acquired
5.7
104.6
110.3
Fair value on
acquisition
$m
91.7
73.8
4.0
6.3
0.4
16.4
13.1
4.3
(86.6)
(23.7)
(4.5)
95.2
(46.4)
61.5
110.3
The goodwill is attributable to the future profitability and expertise of Sedgman, as well as the synergies expected to be achieved between
Sedgman’s mineral processing activities and the Group’s mining operations. No goodwill is deductible for tax purposes.
The acquisition has been accounted for under Accounting Standard AASB 3 Business Combinations. For the acquisition of Sedgman the
Group elected to recognise the non-controlling interests at fair value.
The revaluation of CIMIC’s previously held investment to fair value resulted in a gain on remeasurement of $25.4 million. In addition the
associates reserve of $21.2 million was recycled from equity to profit and loss, resulting in a total gain on acquisition before tax of
$46.6 million (refer to Note 3: Expenses).
The contribution by Sedgman to the Group from the acquisition date to the end of the period ended 31 December 2016 was $223.7 million
of revenue. Had the acquisition occurred on 1 January 2016, Sedgman’s contribution to the Group for the year ended 31 December 2016
would have been $255.7 million revenue. The business is now integrated with mining operations and reported within the mining and
mineral processing segment (refer to Note 31: Segment information), as such it is not possible to assess the contribution of the business
to profit for the year.
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Notes continued
for the 12 months to 31 December 2016
Notes continued
for the 12 months to 31 December 2016
29. ACQUISITIONS AND DISPOSALS OF CONTROLLED ENTITIES AND BUSINESSES CONTINUED
Acquisitions continued
There were no acquisitions of controlled entities or businesses during the 12 months to 31 December 2015.
Disposals
There were no disposals of controlled entities or businesses during the 12 months to 31 December 2016.
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.
30. 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. As at 31 December 2015 inventories of $30.4
million, property, plant and equipment of $194.2 million and interest bearing liabilities of $47.1 million were expected to be disposed
in the period to 31 December 2016.
An agreement for the sale of the majority of assets was formally signed in January 2016 and the sale was finalised in the period. Certain
inventory and property, plant and equipment items were not disposed of and were reclassified to property, plant and equipment or
inventory and utilised elsewhere within the mining operations.
Other assets and liabilities held for sale
Other assets and liabilities held for sale includes marine fleet of $37.2 million (31 December 2015: $nil), development properties of $3.6
million (31 December 2015: $11.0 million), mining equipment of $6.9 million (31 December 2015: $0.2 million) and interest bearing
liabilities of $nil (31 December 2015: $1.6 million) actively marketed for sale.
31. SEGMENT INFORMATION
Description of segments
segments and a corporate head office:
Construction
• Mining & Mineral Processing
•
•
•
Services
HLG
reportable segments.
Geographical information
Geographical information
Australia Pacific
Asia, Middle East, Americas & Africa
Total
and equipment; and intangibles.
Major customers
Operating segments have been identified based on separate financial information that is regularly reviewed by the CIMIC CEO, who is also
the Chief Operating Decision Maker (“CODM”). The CIMIC Group is structured on a decentralised basis comprising the following main
•
•
•
•
Public Private Partnerships (“PPPs”)
Engineering
Commercial & Residential
Corporate
The performance of each segment forms the primary basis for all management reporting to the CODM.
Following the acquisition of UGL Limited (“UGL”) as outlined in Note 29: Acquisitions and disposals of controlled entities and businesses,
UGL’s results have been identified to be reportable in a separate segment called Services. Furthermore, following the acquisition of
Sedgman Limited as outlined in Note 29: Acquisitions and disposals of controlled entities and businesses, Sedgman Limited’s results are
reported along with the contract mining results in a newly expanded segment called Mining & Mineral Processing. Accordingly, the equity
accounted amounts of Sedgman Limited have been restated in the 12 months to 31 December 2015 period for comparative purposes,
from the Corporate segment to the Mining & Mineral Processing segment in accordance with AASB 8 Operating Segments.
The types of activities 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. The corporate segment represents the corporate head office and includes transactions relating to Group finance, taxation, treasury,
corporate secretarial and certain strategic investments. Included within the corporate segment disclosed are the results of the non-
Revenue
Non-current assets
12 months to
12 months to
December 2016
December 2015
December 2016
December 2015
$m
$m
$m
$m
7,339.9
3,513.7
8,530.3
4,750.5
10,853.6
13,280.8
1,288.2
1,360.3
2,648.5
774.2
1,341.3
2,115.5
Revenue is allocated based on the geographical location of the entity generating the revenue. Assets are allocated based on the
geographical location of the assets. Geographical non-current assets comprise: inventories; development properties; property, plant
No revenue from transactions with a single external customer amount to 10% or more of the Group’s revenue.
136
136
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Notes continued
for the 12 months to 31 December 2016
31. SEGMENT INFORMATION
Description of segments
Operating segments have been identified based on separate financial information that is regularly reviewed by the CIMIC CEO, who is also
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
•
• Mining & Mineral Processing
•
•
Services
HLG
•
•
•
•
Public Private Partnerships (“PPPs”)
Engineering
Commercial & Residential
Corporate
The performance of each segment forms the primary basis for all management reporting to the CODM.
Following the acquisition of UGL Limited (“UGL”) as outlined in Note 29: Acquisitions and disposals of controlled entities and businesses,
UGL’s results have been identified to be reportable in a separate segment called Services. Furthermore, following the acquisition of
Sedgman Limited as outlined in Note 29: Acquisitions and disposals of controlled entities and businesses, Sedgman Limited’s results are
reported along with the contract mining results in a newly expanded segment called Mining & Mineral Processing. Accordingly, the equity
accounted amounts of Sedgman Limited have been restated in the 12 months to 31 December 2015 period for comparative purposes,
from the Corporate segment to the Mining & Mineral Processing segment in accordance with AASB 8 Operating Segments.
The types of activities 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. The corporate segment represents the corporate head office and includes transactions relating to Group finance, taxation, treasury,
corporate secretarial and certain strategic investments. Included within the corporate segment disclosed are the results of the non-
reportable segments.
Geographical information
Geographical information
Australia Pacific
Asia, Middle East, Americas & Africa
Total
Revenue
Non-current assets
12 months to
December 2016
$m
12 months to
December 2015
$m
December 2016
$m
December 2015
$m
7,339.9
3,513.7
8,530.3
4,750.5
10,853.6
13,280.8
1,288.2
1,360.3
2,648.5
774.2
1,341.3
2,115.5
Revenue is allocated based on the geographical location of the entity generating the revenue. Assets are allocated based on the
geographical location of the assets. Geographical non-current assets comprise: inventories; development properties; property, plant
and equipment; and intangibles.
Major customers
No revenue from transactions with a single external customer amount to 10% or more of the Group’s revenue.
CIMIC 2016 ANNUAL REPORT A4 FA.indd 137
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Notes continued
for the 12 months to 31 December 2016
31. SEGMENT INFORMATION CONTINUED
12 months to
December 2016
Construction
$m
Mining &
Mineral
Processing
$m
Services
HLG
Commercial &
Residential
Corporate
Eliminations
Total
Construction
Services
HLG
Commercial &
Corporate1
Eliminations
Total
Mining &
Mineral
Processing1
Residential
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
Revenue
Segment revenue
Inter-segment
revenue
Segment joint
venture and
associate revenue
Revenue
Result
Segment EBIT
7,439.4
(102.2)
2,947.0
-
231.7
-
1,227.1
-
444.7
-
1,346.8
-
(102.2)
102.2
13,534.5
-
(20.4)
(160.8)
(27.5)
(1,227.1)
(4.9)
(1,240.2)
7,316.8
2,786.2
204.2
-
439.8
106.6
591.9
284.8
10.6
3.6
(9.2)
Net finance income /
(costs)
Segment result
Income tax (expense) / benefit
Profit / (loss) for the year
(Profit) / loss for the year attributable to non-controlling interests
Profit / (loss) for the year attributable to shareholders of the parent entity
595.5
275.6
(2.0)
8.6
(6.5)
35.9
29.4
(87.8)
13.1
(74.7)
(34.6)
(59.4)
(94.0)
Other
Share of profit /
(loss) of associates
and joint venture
entities
Depreciation &
amortisation
Other material non-
cash income /
(expenses)
(11.6)
0.7
(0.1)
(81.1)
(3.8)
51.9
(88.6)
(244.6)
(2.3)
-
(0.8)
-
-
-
75.0
(10.0)
(1.1)
46.6
-
-
-
-
-
-
-
-
(2,680.9)
10,853.6
758.4
(18.0)
740.4
(188.0)
552.4
27.9
580.3
(44.0)
(337.4)
111.6
Notes continued
for the 12 months to 31 December 2016
31. SEGMENT INFORMATION CONTINUED
12 months to
December 2015
Revenue
Segment revenue
Inter-segment
revenue
Segment joint
venture and
associate revenue
Revenue
Result
Segment EBIT
Net finance income
/ (costs)
Segment result
Other
Share of profit /
(loss) of associates
and joint venture
entities
Depreciation &
amortisation
cash income /
(expenses)
9,514.0
(136.5)
3,220.4
-
1,159.5
1,064.2
-
1,398.7
(91.5)
(228.0)
228.0
(57.6)
(337.6)
(1,159.5)
(76.7)
(1,216.6)
9,319.9
2,882.8
987.5
90.6
13,280.8
661.1
(11.9)
649.2
248.2
(15.9)
232.3
(14.3)
32.2
17.9
39.7
30.8
70.5
(95.8)
(139.1)
(234.9)
Income tax (expense) / benefit
Profit / (loss) for the year
(Profit) / loss for the year attributable to non-controlling interests
Profit / (loss) for the year attributable to shareholders of the parent entity
(1.9)
16.4
(14.3)
15.5
(30.2)
(14.5)
(206.6)
(333.2)
Other material non-
(2.7)
-
(1.0)
(8.2)
(3.0)
-
1 The Mining & Mineral Processing segment has been restated in the 12 months to 31 December 2015 period for comparative purposes, to
reflect the equity accounted amounts of Sedgman Limited; these amounts were reclassified from the Corporate segment.
16,128.8
-
(2,848.0)
838.9
(103.9)
735.0
(220.6)
514.4
6.0
520.4
(543.8)
(10.9)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
138
138
139
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Notes continued
for the 12 months to 31 December 2016
31. SEGMENT INFORMATION CONTINUED
12 months to
December 2015
Construction
$m
Mining &
Mineral
Processing1
$m
Services
HLG
Commercial &
Residential
Corporate1
Eliminations
Total
$m
$m
$m
$m
$m
$m
Revenue
Segment revenue
Inter-segment
revenue
Segment joint
venture and
associate revenue
Revenue
Result
Segment EBIT
9,514.0
(136.5)
3,220.4
-
(57.6)
(337.6)
9,319.9
2,882.8
661.1
248.2
-
-
-
-
-
(15.9)
(11.9)
Net finance income
/ (costs)
Segment result
Income tax (expense) / benefit
Profit / (loss) for the year
(Profit) / loss for the year attributable to non-controlling interests
Profit / (loss) for the year attributable to shareholders of the parent entity
232.3
649.2
-
-
1,159.5
1,064.2
-
-
1,398.7
(91.5)
(228.0)
228.0
(1,159.5)
(76.7)
(1,216.6)
-
987.5
90.6
(14.3)
32.2
17.9
39.7
30.8
70.5
(95.8)
(139.1)
(234.9)
Other
Share of profit /
(loss) of associates
and joint venture
entities
Depreciation &
amortisation
Other material non-
cash income /
(expenses)
(1.9)
16.4
(206.6)
(333.2)
(2.7)
-
-
-
-
(14.3)
15.5
(30.2)
-
-
(1.0)
(8.2)
(3.0)
-
16,128.8
-
(2,848.0)
13,280.8
838.9
(103.9)
735.0
(220.6)
514.4
6.0
520.4
(14.5)
(543.8)
(10.9)
-
-
-
-
-
-
-
-
1 The Mining & Mineral Processing segment has been restated in the 12 months to 31 December 2015 period for comparative purposes, to
reflect the equity accounted amounts of Sedgman Limited; these amounts were reclassified from the Corporate segment.
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CIMIC Group Limited Annual Report 2016 | Financial Report
Notes continued
for the 12 months to 31 December 2016
32. 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
Total
Representing:
Cancellable operating leases
Plant and equipment
Property
Other
Non-cancellable operating leases
Plant and equipment
- within one year
-
-
later than one year but not later than five years
later than five years
Property1
- 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 2016
$m
December 2015
$m
32. COMMITMENTS CONTINUED
Capital commitments
Capital expenditure contracted for at reporting date but not recognised as liabilities is as follows:
257.5
497.9
242.6
998.0
6.1
22.4
0.1
121.7
151.0
-
116.2
340.9
238.2
0.9
0.5
-
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
-
Total operating lease commitments
998.0
900.9
1 The increase is mainly due to the Group’s new property leases at 177 Pacific Highway, North Sydney and leases assumed as part of the
acquisitions of UGL and Sedgman.
Operating leases
The Group leases plant and equipment used in mining and mineral processing, construction and services activities. 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.
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Notes continued
for the 12 months to 31 December 2016
Property, plant and equipment
Payable:
- within one year
later than one year but not later than five years
-
-
-
-
-
-
-
-
later than five years
Total
Investments
Payable:
- within one year
later than five years
Total
Payable:
- within one year
later than five years
Total
Payable:
- within one year
later than five years
Total
later than one year but not later than five years
Share of Joint Ventures’ commitments - property, plant and equipment
later than one year but not later than five years
Share of Associates’ commitments - property, plant and equipment
later than one year but not later than five years
December 2016
December 2015
$m
$m
15.5
19.4
15.5
19.4
80.9
80.9
-
-
-
-
3.4
-
-
3.4
3.5
-
-
3.5
0.6
-
-
0.6
-
-
30.9
-
-
30.9
2.7
-
-
2.7
CIMIC Group Limited Annual Report 2016 | Financial Report
Notes continued
for the 12 months to 31 December 2016
32. COMMITMENTS CONTINUED
Capital commitments
Capital expenditure contracted for at reporting date but not recognised as liabilities is as follows:
Property, plant and equipment
Payable:
- within one year
-
-
later than one year but not later than five years
later than five years
Total
Investments
Payable:
- within one year
-
-
later than one year but not later than five years
later than five years
Total
Share of Joint Ventures’ commitments - property, plant and equipment
Payable:
- within one year
-
-
later than one year but not later than five years
later than five years
Total
Share of Associates’ commitments - property, plant and equipment
Payable:
- within one year
-
-
later than one year but not later than five years
later than five years
Total
December 2016
$m
December 2015
$m
80.9
-
-
80.9
0.6
-
-
0.6
15.5
19.4
-
-
-
-
15.5
19.4
3.4
-
-
3.4
3.5
-
-
3.5
30.9
-
-
30.9
2.7
-
-
2.7
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Notes continued
for the 12 months to 31 December 2016
33. CONTINGENT LIABILITIES CONTINUED
Other contingencies continued
CIMIC Group Limited Annual Report 2016 | Financial Report
CIMIC Group Limited Annual Report 2016 | Financial Report
Notes continued
for the 12 months to 31 December 2016
33. CONTINGENT LIABILITIES
Bank guarantees, insurance bonds and letters of credit
Indemnities given by third parties on behalf of controlled entities and equity accounted investments are as follows:
Bank guarantees
Insurance, performance and payment bonds
Letters of credit
December 2016
$m
December 2015
$m
2,815.8
1,982.5
958.2
193.6
898.5
262.9
viii) On 6 December 2016, the Company announced to the ASX that it had been made aware of additional proceedings relating to an
alleged failure to disclose the report to the AFP (referred to in (vi) above) which had commenced on 23 November 2016. The
additional proceedings purport to be for the same class as the proceedings in (vii) above and in relation to similar issues. The
Company denies the claim and will defend the proceedings.
ix) 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 inquiry lapsed at the proroguing of the 44th Parliament. On 11 October 2016, the
Senate readopted the inquiry. The Committee is to report by 30 June 2017. The Company anticipates that the matter referred to in
(vi) above will be a subject of the inquiry.
Included in the table above are amounts where the Group has indemnified performance and payment bonds in respect of all of the Group’s
joint ventures and associates in the normal course of business totalling $1,014.4 million (31 December 2015 $547.1 million).
Letters of credit include those provided for the Group’s capital commitments totalling $80.3 million (31 December 2015: $3.3 million).
34. CAPITAL RISK MANAGEMENT
Other contingencies
i)
The Group 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 entities within the Group the normal design liability in relation to completed design and construction projects.
35. FINANCIAL INSTRUMENTS
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.
iii) Certain entities within 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 38: 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 ASX 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, 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 ASIC investigations. The Company does not know when the investigations will be
concluded.
vii) On 7 October 2013, the Company announced to the ASX 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 commenced on 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.
The activities of the Group result in exposure to credit, liquidity and market risk (equity price, foreign currency 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 the trade receivables relating to
the Gorgon LNG Jetty and Marine Structures Project, and the loan receivables from HLG Contracting (refer to Note 8: Trade and other
receivables), there were no other 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 $1,145.6 million
(31 December 2015: $682.7 million) and Asia, Middle East, Americas & Africa $3,299.8 million (31 December 2015: $2,866.1 million).
The ageing of the Group’s receivables at the reporting date was: not past due: $564.1 million (31 December 2015: $497.7 million); past
due: $353.5 million (31 December 2015: $282.5 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: 8% (31
December 2015: 6%).
Provision for impairment of trade debtors
Balance at beginning of reporting period
Net provision (made) / used
Balance at reporting date
12 months to
12 months to
December 2016
December 2015
$m
$m
(5.4)
3.5
(1.9)
(12.0)
6.6
(5.4)
The impairment provision relates to trade debtors 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 2015: $nil).
142
142
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CIMIC Group Limited Annual Report 2016 | Financial Report
Notes continued
for the 12 months to 31 December 2016
33. CONTINGENT LIABILITIES CONTINUED
Other contingencies continued
viii) On 6 December 2016, the Company announced to the ASX that it had been made aware of additional proceedings relating to an
alleged failure to disclose the report to the AFP (referred to in (vi) above) which had commenced on 23 November 2016. The
additional proceedings purport to be for the same class as the proceedings in (vii) above and in relation to similar issues. The
Company denies the claim and will defend the proceedings.
ix) 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 inquiry lapsed at the proroguing of the 44th Parliament. On 11 October 2016, the
Senate readopted the inquiry. The Committee is to report by 30 June 2017. The Company anticipates that the matter referred to in
(vi) above will be a subject of the inquiry.
34. 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.
35. FINANCIAL INSTRUMENTS
The activities of the Group result in exposure to credit, liquidity and market risk (equity price, foreign currency 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 the trade receivables relating to
the Gorgon LNG Jetty and Marine Structures Project, and the loan receivables from HLG Contracting (refer to Note 8: Trade and other
receivables), there were no other 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 $1,145.6 million
(31 December 2015: $682.7 million) and Asia, Middle East, Americas & Africa $3,299.8 million (31 December 2015: $2,866.1 million).
The ageing of the Group’s receivables at the reporting date was: not past due: $564.1 million (31 December 2015: $497.7 million); past
due: $353.5 million (31 December 2015: $282.5 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: 8% (31
December 2015: 6%).
Provision for impairment of trade debtors
Balance at beginning of reporting period
Net provision (made) / used
Balance at reporting date
12 months to
December 2016
$m
12 months to
December 2015
$m
(5.4)
3.5
(1.9)
(12.0)
6.6
(5.4)
The impairment provision relates to trade debtors 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 2015: $nil).
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CIMIC Group Limited Annual Report 2016 | Financial Report
Notes continued
for the 12 months to 31 December 2016
35. 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 2016 the Group had undrawn bank facilities of $1,686.4 million (31 December 2015: $1,861.5 million), and undrawn
guarantee facilities of $546.3 million (31 December 2015: $563.9 million).
Contractual maturities of financial liabilities and cash flow hedge contracts as at 31 December 2016:
December 2016
Non-derivative financial liabilities
Interest bearing loans
Finance lease liabilities
Limited recourse loans
Carrying
amount
Contractual
cash flows
$m
$m
Less than
1 year
$m
1-5 years
More than
5 years
$m
$m
Total interest bearing liabilities1
1,105.0
(1,315.2)
(703.9)
(300.4)
Trade and other payables
4,005.9
(4,005.9)
(3,674.3)
(331.6)
877.1
22.8
267.3
(996.5)
(23.4)
(373.2)
(23.4)
-
(327.1)
(296.2)
(268.3)
(18.3)
(250.0)
-
-
Total interest bearing liabilities1
1,167.2
(1,288.2)
(414.9)
(577.1)
(296.2)
Trade and other payables
5,003.5
(5,003.5)
(4,716.9)
(286.6)
-
Derivative financial liabilities / (assets)
Forward exchange contracts used for foreign
currency hedging:
Net derivative financial liabilities / (assets)2
Inflow
Outflow
Other cashflow hedges:
Net derivative financial (assets)
Inflow
Outflow
3.0
(15.7)
128.3
(131.9)
121.6
(125.0)
6.7
(6.9)
1.3
(16.0)
0.9
-
0.4
(16.0)
Total net derivative financial liabilities / (assets)
(12.7)
(18.3)
(2.5)
(15.8)
-
-
-
-
-
144
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Notes continued
for the 12 months to 31 December 2016
35. FINANCIAL INSTRUMENTS CONTINUED
b)
Liquidity risk continued
Contractual maturities of financial liabilities and cash flow hedge contracts as at 31 December 2015:
December 2015
Non-derivative financial liabilities
Interest bearing loans
Finance lease liabilities
Limited recourse loans
Derivative financial liabilities / (assets)
Forward exchange contracts used for foreign
currency hedging:
Net derivative financial liabilities / (assets)2
Inflow
Outflow
Total net derivative financial liabilities / (assets)
Carrying
amount
$m
Contractual
cash flows
$m
Less than
1-5 years
More than
1 year
$m
$m
5 years
$m
761.8
291.2
52.0
(959.7)
(301.5)
(54.0)
(65.9)
(191.0)
(54.0)
(310.9)
(593.4)
(110.5)
-
(300.4)
-
-
-
-
-
-
(3.1)
(3.1)
89.6
(81.6)
8.0
48.9
(51.1)
(2.2)
40.7
(30.5)
10.2
131 December 2016: Total interest bearing financial liabilities includes $nil (31 December 2015: $48.7 million) of interest bearing liabilities
included in held for sale as at the end of the reporting period. Refer to Note 30: Held for Sale.
2 Net derivative financial liabilities / (assets) relating to foreign currency hedging includes $4.6 million (31 December 2015: $4.5 million)
of derivatives in an asset position and $1.6 million (31 December 2015: $1.4 million) of derivatives in a liability position.
Guarantees have not been included in the maturity analysis for financial liabilities above. Guarantees provided to joint ventures, with a
carrying value of $nil (31 December 2015: $nil), are disclosed in Note 26: Joint Venture Entities.
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
Guarantees
c)
Equity price risk
speculative purposes.
Fair values
For the fair values of listed and unlisted investments and derivative equity instruments, 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.
CIMIC Group Limited Annual Report 2016 | Financial Report
Notes continued
for the 12 months to 31 December 2016
35. FINANCIAL INSTRUMENTS CONTINUED
b)
Liquidity risk continued
Contractual maturities of financial liabilities and cash flow hedge contracts 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 / (assets)
Forward exchange contracts used for foreign
currency hedging:
Net derivative financial liabilities / (assets)2
Inflow
Outflow
Total net derivative financial liabilities / (assets)
(3.1)
(3.1)
89.6
(81.6)
8.0
48.9
(51.1)
(2.2)
40.7
(30.5)
10.2
-
-
-
-
131 December 2016: Total interest bearing financial liabilities includes $nil (31 December 2015: $48.7 million) of interest bearing liabilities
included in held for sale as at the end of the reporting period. Refer to Note 30: Held for Sale.
2 Net derivative financial liabilities / (assets) relating to foreign currency hedging includes $4.6 million (31 December 2015: $4.5 million)
of derivatives in an asset position and $1.6 million (31 December 2015: $1.4 million) of derivatives in a liability position.
Guarantees
Guarantees have not been included in the maturity analysis for financial liabilities above. Guarantees provided to joint ventures, with a
carrying value of $nil (31 December 2015: $nil), are disclosed in Note 26: Joint Venture Entities.
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 and derivative equity instruments, 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.
CIMIC 2016 ANNUAL REPORT A4 FA.indd 145
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Notes continued
for the 12 months to 31 December 2016
35. FINANCIAL INSTRUMENTS CONTINUED
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 $8.3 million (31 December 2015: increased by $13.6 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
Total fixed rate instruments
Variable rate instruments
Financial assets
Financial liabilities1
Total variable rate instruments
Held for sale.
December 2016
December 2015
$m
$m
-
(773.3)
(773.3)
-
(753.9)
(753.9)
1,576.5
(393.9)
1,182.6
2,167.8
(351.0)
1,816.8
CIMIC Group Limited Annual Report 2016 | Financial Report
CIMIC Group Limited Annual Report 2016 | Financial Report
Notes continued
for the 12 months to 31 December 2016
35. FINANCIAL INSTRUMENTS CONTINUED
d)
Foreign currency risk
Foreign currency risk is the risk that the value of a financial commitment, a recognised asset or liability will fluctuate due to changes in
foreign currency rates. The Group’s foreign currency risk arises primarily from net investments in foreign operations. The Group uses
non-derivative financial instruments, such as borrowings in the foreign currencies, to hedge its investments in foreign operations. Foreign
currency gains and losses arising from translation of net investments in foreign operations are recognised in the foreign currency
translation reserve until realised.
Shareholders 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, shareholders 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 $1.0
million (31 December 2015: $0.6 million). It is expected that the current hedged forecast transactions will occur during the periods
outlined in section (b) above and will affect the statement of profit or loss in the same periods. There are no gains or losses recognised in
the statement of profit or loss during the period due to hedge ineffectiveness.
Exposure to foreign currency risk
The most significant foreign currencies the Group is exposed to is the United States dollar (US$) along with the U.A.E Dirham (AED) and
Hong Kong dollar (HKD), both of which are pegged to the US$. The applicable Australian dollar to United States dollar exchange rates
during or at the end of the relevant reporting period, were as follows:
Assets and liabilities
Statement of Profit or Loss
December 2016 December 2015
12 months to
December 2016
12 months to
December 2015
US$ United States dollar
0.72
0.73
0.74
0.75
1Total interest bearing financial liabilities includes liabilities associated with held for sale during the reporting period. Refer to Note 30:
At 31 December 2016, the share of the Group’s assets and liabilities denominated in US$ was: assets US$4,318.4 million (31 December
2015: US$4,165.3 million); liabilities US$1,473.1 million (31 December 2015: US$1,777.4 million). The majority of these US$ balances are
held in entities with a US$ functional currency.
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 2015.
Equity
Statement of Profit or Loss
December 2016
$m
December 2015
$m
12 months to
December 2016
$m
12 months to
December 2015
$m
US$ depreciates by 5% against AU$ (AU$ appreciates)
US$ appreciates by 5% against AU$ (AU$ depreciates)
(159.6)
159.6
(121.6)
110.0
(2.1)
2.1
(2.2)
2.5
146
146
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Notes continued
for the 12 months to 31 December 2016
35. FINANCIAL INSTRUMENTS CONTINUED
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 $8.3 million (31 December 2015: increased by $13.6 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
Total fixed rate instruments
Variable rate instruments
Financial assets
Financial liabilities1
Total variable rate instruments
December 2016
$m
December 2015
$m
-
(773.3)
(773.3)
-
(753.9)
(753.9)
1,576.5
(393.9)
1,182.6
2,167.8
(351.0)
1,816.8
1Total interest bearing financial liabilities includes liabilities associated with held for sale during the reporting period. Refer to Note 30:
Held for sale.
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Notes continued
for the 12 months to 31 December 2016
35. FINANCIAL INSTRUMENTS CONTINUED
f)
Net fair values of financial assets and liabilities
Fair value hierarchy
Notes continued
for the 12 months to 31 December 2016
35. FINANCIAL INSTRUMENTS CONTINUED
f)
Net fair values of financial assets and liabilities continued
Fair value hierarchy continued
AASB 13 Fair Value Measurement requires disclosure of fair value measurements by level of the fair value hierarchy. The fair values of
financial assets and liabilities held at fair value have 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 balance sheet
approximate fair values.
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:
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 analyse the changes in Level 3 instruments 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)
Unlisted equity and stapled securities available-for-sale
Balance at beginning of reporting period
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 2016
Assets
Equity and stapled securities available-for-sale
-
Listed investments
- Unlisted investments
Financial assets at fair value through profit or loss
- Unlisted investments
Derivatives
Total assets
Liabilities
Derivatives
Total liabilities
31 December 2015
Assets
Equity and stapled securities available-for-sale
-
Listed investments
- Unlisted investments
Financial assets at fair value through profit or loss
- Unlisted investments
Derivatives
Total assets
Liabilities
Derivatives
Total liabilities
148
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
1.9
-
-
-
1.9
-
-
-
-
-
17.3
17.3
(4.6)
(4.6)
-
5.4
53.1
75.0
133.5
-
-
Level 1
$m
Level 2
$m
Level 3
$m
1.6
-
-
-
1.6
-
-
-
-
-
4.5
4.5
(1.4)
(1.4)
-
72.3
51.8
-
124.1
-
-
1.9
5.4
53.1
92.3
152.7
(4.6)
(4.6)
Total
$m
1.6
72.3
51.8
4.5
130.2
(1.4)
(1.4)
148
149
12 months to
12 months to
December 2016
December 2015
$m
$m
72.3
0.4
4.6
(71.9)
-
5.4
51.8
1.3
75.0
128.1
63.7
-
-
-
8.6
72.3
47.0
-
4.8
51.8
12 months to
12 months to
December 2016
December 2015
$m
$m
Acquisitions
Transfers1
Disposals
Gains/(losses) recognised in other comprehensive income
Balance at reporting date
1 Transfers from equity accounted investments following loss of significant influence in LCIP Co-Investment Unit Trust.
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
Changing inputs to the Level 3 valuations to reasonably possible alternative assumptions would not change significantly amounts
recognised in profit or loss, total assets, total liabilities or total equity.
Methods and valuation techniques
period.
Listed and unlisted investments
revenues and discount rates.
Listed and unlisted debt
values.
The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting
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
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
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Notes continued
for the 12 months to 31 December 2016
35. 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 analyse the changes in Level 3 instruments as follows:
12 months to
December 2016
$m
12 months to
December 2015
$m
Unlisted equity and stapled securities available-for-sale
Balance at beginning of reporting period
Acquisitions
Transfers1
Disposals
Gains/(losses) recognised in other comprehensive income
72.3
0.4
4.6
(71.9)
-
Balance at reporting date
5.4
1 Transfers from equity accounted investments following loss of significant influence in LCIP Co-Investment Unit Trust.
63.7
-
-
-
8.6
72.3
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 2016
$m
12 months to
December 2015
$m
51.8
1.3
75.0
128.1
47.0
-
4.8
51.8
Changing inputs to the Level 3 valuations to reasonably possible alternative assumptions would not change significantly amounts
recognised in profit or loss, total assets, total liabilities or total equity.
Methods and valuation techniques
The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting
period.
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.
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Notes continued
for the 12 months to 31 December 2016
35. FINANCIAL INSTRUMENTS CONTINUED
f) Net fair values of financial assets and liabilities continued
Methods and valuation techniques continued
The fair value of interest bearing liabilities is:
Listed debt: 10-Year-Fixed-Rate Guaranteed Notes fair value US$212.4 million, equivalent to $295.0 million; carrying value US$201.3
million, equivalent to $279.6 million (31 December 2015: fair value US$207.5 million, equivalent to $284.2 million; carrying value US
$201.3 million, equivalent to $275.8 million).
Unlisted debt: Guaranteed Senior Notes fair value US$368.3 million, equivalent to $511.6 million; carrying value US$339.0 million,
equivalent to $470.8 million (31 December 2015: fair value US$377.6 million, equivalent to $517.3 million; carrying value US$339.0
million, equivalent to $464.4 million).
Cash flow hedges
The Group’s foreign currency forward contracts are not traded in active markets. The fair values of these contracts are estimated using a
valuation technique that maximises the use of observable market inputs, e.g. market exchange and interest rates and are included in Level
2 of the fair value hierarchy.
Option to acquire shares
The Group’s option to acquire shares is not related to a listed entity and as such the fair value cannot be observed from a market price. The
Monte-Carlo simulation technique used incorporates market observable data including multiples of similar companies to derive a value
of the company and compares this to the contractual exercise price to determine a fair value.
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 CIMIC’s CFO.
Discussions on valuation processes and outcomes are held between the valuation team and CFO as required. The methods and valuation
techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting period.
Valuation inputs
The following table summarises the quantitative information about the significant unobservable inputs used in level 3 fair value
measurements. There were no significant inter-relationships between unobservable inputs that materially affect fair values.
Financial assets/ financial
liabilities
Significant unobservable inputs
Range of inputs
Relationship of unobservable inputs to fair
value
Unlisted investments
Internal rate of return
Growth rates
Discount rates
Expected exercise period
Option to acquire shares
EBITDA multiple
Discount rates
2.5% - 3.0%
9%
10% - 15%
1 – 10 years
6-12 times
15%
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
g)
Interest bearing loans
Syndicated loans
On 21 June 2013, CIMIC Finance Limited, a wholly owned subsidiary of the Company, entered into a syndicated bank facility for $1,000.0
million, maturing on 21 June 2016. On 8 December 2014 the maturity date of this facility was extended to 8 December 2017. Carrying
amount at 31 December 2016: $nil million (carrying amount at 31 December 2015: $nil million).
Notes continued
for the 12 months to 31 December 2016
35. FINANCIAL INSTRUMENTS CONTINUED
g)
Interest bearing loans continued
Guaranteed Senior Notes
CIMIC Finance Limited (2008)
On 15 October 2008, CIMIC Finance Limited, 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
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
2016: US$79.0 million (31 December 2015: US$79.0 million) equivalent to $109.7 million (31 December 2015: $108.2 million), of which
$nil million is due for repayment within twelve months from the reporting date.
CIMIC Finance (USA) Pty Limited (2010)
Guaranteed Senior Notes in three series:
On 21 July 2010, CIMIC Finance (USA) Pty Limited, a wholly owned subsidiary of the Company, issued a total of US$350.0 million
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 2016:
US$260.0 million (31 December 2015: US$260.0 million) equivalent to $361.1 million (31 December 2015: $356.1 million), of which US$145
million is due for repayment within twelve months from the reporting date.
CIMIC Finance (USA) Pty Limited (2012)
Fixed-Rate Guaranteed Senior Notes.
On 13 November 2012, CIMIC Finance (USA) Pty Limited, a wholly owned subsidiary of the Company, issued US$500.0 million of 10-Year
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. The Group repurchased US$298.7 million, equivalent to
$409.2 million, of Guaranteed Senior Notes on 24 June 2015. Carrying amount at 31 December 2016: US$201.3 million (31 December
2015: US$201.3 million) equivalent to $279.6 million (31 December 2015: $275.8 million).
Bilateral loans
Other unsecured loans
h)
Finance lease liabilities
At 31 December 2016, bilateral loan facilities outstanding were $115.0 million (31 December 2015: $nil).
Other unsecured loans outstanding as at 31 December 2016: $11.6 million (31 December 2015: $20.1 million). Other unsecured loans
expected to be settled within twelve months after reporting date: $11.6 million (31 December 2015: $20.1 million).
The Group has leased mining plant and equipment in Mongolia under finance leases that expire within one year of the reporting date.
150
150
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Notes continued
for the 12 months to 31 December 2016
35. FINANCIAL INSTRUMENTS CONTINUED
g)
Interest bearing loans continued
Guaranteed Senior Notes
CIMIC Finance Limited (2008)
On 15 October 2008, CIMIC Finance Limited, 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
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
2016: US$79.0 million (31 December 2015: US$79.0 million) equivalent to $109.7 million (31 December 2015: $108.2 million), of which
$nil million is due for repayment within twelve months from the reporting date.
CIMIC Finance (USA) Pty Limited (2010)
On 21 July 2010, CIMIC 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 2016:
US$260.0 million (31 December 2015: US$260.0 million) equivalent to $361.1 million (31 December 2015: $356.1 million), of which US$145
million is due for repayment within twelve months from the reporting date.
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. The Group repurchased US$298.7 million, equivalent to
$409.2 million, of Guaranteed Senior Notes on 24 June 2015. Carrying amount at 31 December 2016: US$201.3 million (31 December
2015: US$201.3 million) equivalent to $279.6 million (31 December 2015: $275.8 million).
Bilateral loans
At 31 December 2016, bilateral loan facilities outstanding were $115.0 million (31 December 2015: $nil).
Other unsecured loans
Other unsecured loans outstanding as at 31 December 2016: $11.6 million (31 December 2015: $20.1 million). Other unsecured loans
expected to be settled within twelve months after reporting date: $11.6 million (31 December 2015: $20.1 million).
h)
Finance lease liabilities
The Group has leased mining plant and equipment in Mongolia under finance leases that expire within one year of the reporting date.
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Notes continued
for the 12 months to 31 December 2016
35. FINANCIAL INSTRUMENTS CONTINUED
i)
Limited recourse loans
The Group has limited recourse property development loans secured against certain property development assets of the Group. Carrying
amount as at 31 December 2016: $17.3 million (31 December 2015: $52.0 million).
The Group has borrowings attributable to their UGL subsidiary secured against the assets of the subsidiary. Carrying amount as at
31 December 2016: $250.0 million (31 December 2015: $nil).
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 2016
$m
December 2015
$m
203.0
1,267.6
1,407.6
351.5
121.6
473.1
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 35 (i): Financial instruments - Limited Recourse Loans.
A fixed and floating charge over certain other assets of Devine, part of the Commercial & Residential segment, is held by Devine’s principal
bankers relating to their commercial and residential property lending.
UGL has a number of facilities secured against the assets of the UGL group.
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
Notes continued
for the 12 months to 31 December 2016
36. EMPLOYEE BENEFITS
a) 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”), Short-Term
Incentive Plan (Deferral) (“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 Nomination 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 vesting date where performance hurdles are not met 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.
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: Expense $0.1 million (31 December 2015: Gain $3.0 million).
Date of grant
Date of performance period end1
Grant fair value for EPS hurdle (“parcel B”)3
Original grant
Unvested rights at 31 December 2014
Granted
Vested4
Forfeited/Lapsed5
Unvested rights at 31 December 2015 and 31 December 2016
2012 LTI and 2012 LTI
additional award 2012 LTI additional award 2012 LTI additional award
1 Jan 2012
31 Dec 2014
1 Jan 2012
31 Dec 2015
1 Jan 2012
31 Dec 2017
$9.34
$15.84
565,092
320,122
-
-
-
$9.22
$14.93
21,768
21,768
-
-
-
$9.02
$14.07
21,768
21,768
-
-
-
(320,122)
(21,768)
(21,768)
-
-
-
Net cash amount
Amounts subject
to master netting
arrangements
Net amount
Grant fair value for TSR performance hurdle (“parcel A”)2
Gross amounts of
bank accounts with a
debit balance
(financial asset)
Gross amounts of
bank accounts with
a credit balance
(financial liability)
$m
$m
25.4
(25.3)
$m
0.1
$m
$m
-
-
-
-
December 2016
Cash1
December 2015
Cash1
1,276.2
(607.2)
669.0
1The Group has transactional banking facilities that notionally pool grouped bank accounts with credit and debit balances.
152
152
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Notes continued
for the 12 months to 31 December 2016
36. EMPLOYEE BENEFITS
a) 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”), Short-Term
Incentive Plan (Deferral) (“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 Nomination 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 vesting date where performance hurdles are not met 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.
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: Expense $0.1 million (31 December 2015: Gain $3.0 million).
2012 LTI and 2012 LTI
additional award 2012 LTI additional award 2012 LTI additional award
1 Jan 2012
31 Dec 2014
1 Jan 2012
31 Dec 2015
1 Jan 2012
31 Dec 2017
Date of grant
Date of performance period end1
Grant fair value for TSR performance hurdle (“parcel A”)2
Grant fair value for EPS hurdle (“parcel B”)3
Original grant
Unvested rights at 31 December 2014
-
-
-
Granted
Vested4
Forfeited/Lapsed5
$9.34
$15.84
565,092
320,122
-
-
$9.22
$14.93
21,768
21,768
-
-
(320,122)
(21,768)
Unvested rights at 31 December 2015 and 31 December 2016
-
-
CIMIC 2016 ANNUAL REPORT A4 FA.indd 153
$9.02
$14.07
21,768
21,768
-
-
(21,768)
-
153
153
15/02/2017 9:45 am
Notes continued
for the 12 months to 31 December 2016
36. EMPLOYEE BENEFITS CONTINUED
a) Rights plans continued
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.
2The fair values were calculated at grant date using Monte-Carlo simulation pricing models. Volatility in share prices and expected dividend
levels were estimated based on historic levels for a period consistent with the relevant performance period.
3The fair values were calculated at grant date using binomial tree pricing models. Volatility in share prices and expected dividend levels
were estimated based on historic levels for a period consistent with the relevant performance period.
4This grant represents an amendment to an existing award.
5The volume weighted average share price during the reporting period to 31 December 2015 was $22.96.
6The five day volume weighted average share price up to and including 6 May 2016 was $37.26.
7The performance hurdles for the 2013 LTI were partially met at the test date in February 2016 and as a result 99.26% of the EPS grant
vested and 94.21% of the TSR grant vested in May 2016. The remaining unvested rights lapsed in accordance with the terms of the award.
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 Nomination 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 vesting date where performance hurdles are not met or
termination of the individual’s employment except in certain special circumstances.
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 $0.6 million (31 December 2015: Expense $2.4 million).
CIMIC Group Limited Annual Report 2016 | Financial Report
CIMIC Group Limited Annual Report 2016 | Financial Report
Notes continued
for the 12 months to 31 December 2016
36. EMPLOYEE BENEFITS CONTINUED
a) Rights plans continued
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 fair values were calculated at grant date using Monte-Carlo simulation pricing models. Volatility in share prices and expected dividend
levels were estimated based on historic levels for a period consistent with the relevant performance period.
3The fair values were calculated at grant date using binomial tree pricing models. Volatility in share prices and expected dividend levels
were estimated based on historic levels for a period consistent with the relevant performance period.
4The volume weighted average share price during the reporting period to 31 December 2015 was $22.96.
5The 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.
6The volume weighted average share price during the reporting period to 31 December 2016 was $31.30.
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 Nomination 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 vesting date where performance hurdles are not met 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:
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: Gain $0.7 million (31 December 2015: Expense $0.3 million).
Date of grant
Date of performance period end1
Grant fair value for TSR performance hurdle (“parcel A”)2
Grant fair value for EPS hurdle (“parcel B”)3
Original grant
Unvested rights at 31 December 2014
-
-
-
Granted4
Vested5
Forfeited/Lapsed
Unvested rights at 31 December 2015
-
-
-
Granted
Vested6
Forfeited/Lapsed7
Unvested rights at 31 December 2016
154
Unvested rights at 31 December 2014
704,802
2013 LTI award
1 January 2013
31 December 2015
$9.41
$14.87
705,426
410,074
Original grant
Date of grant
Date of performance period end1
Grant fair value for TSR performance hurdle (“parcel A”)2
Grant fair value for EPS hurdle (“parcel B”)3
5,836
-
(134,381)
281,529
-
(271,192)
(10,337)
-
154
Unvested rights at 31 December 2015
Granted4
Vested5
Forfeited/Lapsed
Granted
Vested6
Forfeited/Lapsed
Unvested rights at 31 December 2016
2014 LTI award
1 January 2014
31 December 2016
$13.81
$19.78
704,802
14,730
-
(318,890)
400,642
-
-
(65,657)
334,985
155
-
-
-
-
-
-
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Notes continued
for the 12 months to 31 December 2016
36. EMPLOYEE BENEFITS CONTINUED
a) Rights plans continued
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.
2The fair values were calculated at grant date using Monte-Carlo simulation pricing models. Volatility in share prices and expected dividend
levels were estimated based on historic levels for a period consistent with the relevant performance period.
3The fair values were calculated at grant date using binomial tree pricing models. Volatility in share prices and expected dividend levels
were estimated based on historic levels for a period consistent with the relevant performance period.
4This grant represents an amendment to an existing award.
5The volume weighted average share price during the reporting period to 31 December 2015 was $22.96.
6The five day volume weighted average share price up to and including 6 May 2016 was $37.26.
7The performance hurdles for the 2013 LTI were partially met at the test date in February 2016 and as a result 99.26% of the EPS grant
vested and 94.21% of the TSR grant vested in May 2016. The remaining unvested rights lapsed in accordance with the terms of the award.
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 Nomination 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 vesting date where performance hurdles are not met 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 $0.6 million (31 December 2015: Expense $2.4 million).
Date of grant
Date of performance period end1
Grant fair value for TSR performance hurdle (“parcel A”)2
Grant fair value for EPS hurdle (“parcel B”)3
Original grant
Unvested rights at 31 December 2014
-
-
-
Granted4
Vested5
Forfeited/Lapsed
Unvested rights at 31 December 2015
-
-
-
Granted
Vested6
Forfeited/Lapsed
Unvested rights at 31 December 2016
CIMIC 2016 ANNUAL REPORT A4 FA.indd 155
2014 LTI award
1 January 2014
31 December 2016
$13.81
$19.78
704,802
704,802
14,730
-
(318,890)
400,642
-
-
(65,657)
334,985
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Notes continued
for the 12 months to 31 December 2016
36. EMPLOYEE BENEFITS CONTINUED
a) Rights plans continued
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 values were calculated at grant date using Monte-Carlo simulation pricing models. Volatility in share prices and expected dividend
levels were estimated based on historic levels for a period consistent with the relevant performance period.
3The fair values were calculated at grant date using binomial tree pricing models. Volatility in share prices and expected dividend levels
were estimated based on historic levels for a period consistent with the relevant performance period.
4This grant represents an amendment to an existing award.
5The volume weighted average share price during the reporting period to 31 December 2015 was $22.96.
6The volume weighted average share price during the reporting period to 31 December 2016 was $31.30.
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 vesting date where performance conditions are not met 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 $0.1 million (31 December 2015: Expense $0.5 million).
Date of grant
1 Jan 2012 - 31 Dec 2012
3 May 2013
31 Oct 2014
Date of performance period end
5 Sep 2012 - 31 Dec 2017 31 Dec 2014 - 1 Jan 2017 31 Dec 2014 - 1 Jul 2017
One-off Awards – 2012
Awards
One-off Awards – 2013
Awards
One-off Awards – 2014
Awards
Grant fair value1
Original grant
Unvested rights at 31 December 2014
-
-
-
Granted2
Vested3
Forfeited/Lapsed
Unvested rights at 31 December 2015
-
-
-
Granted
Vested4
Forfeited/Lapsed
Unvested rights at 31 December 2016
$16.20 -$25.66
811,018
307,980
-
(157,231)
(68,098)
82,651
-
(70,831)
(9,317)
2,503
$18.06
22,034
16,497
-
-
(8,249)
8,248
-
(4,124)
(4,124)
-
$16.18 - $21.50
Unvested rights at 31 December 2015
43,542
37,650
12,930
(37,650)
-
12,930
-
(6,651)
-
6,279
1The fair values were calculated using a five day volume weighted average share price up to and including the relevant reference date.
2This grant represents an additional award in accordance with contractual entitlements.
3The volume weighted average share price during the reporting period to 31 December 2015 was $22.96.
4The volume weighted average share price during the reporting period to 31 December 2016 was $31.30.
Notes continued
for the 12 months to 31 December 2016
36. EMPLOYEE BENEFITS CONTINUED
a) 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.
Amount recognised during the reporting period: Gain $0.1 million (31 December 2015: Gain $0.3 million).
Date of grant
Date of performance period end
Grant fair value1
Original grant
Unvested rights at 31 December 2014
-
-
-
-
-
-
Granted
Vested2
Forfeited/Lapsed
Granted
Vested3
Forfeited/Lapsed
announcement.
2012 STI Deferral award 2013 STI Deferral award 2014 STI Deferral award
1 Jan 2013
1 Jan 2014
1 Jan 2015
31 Dec 2014
31 Dec 2015
31 Dec 2015
$23.32
193,907
126,764
(124,455)
(2,309)
-
-
-
-
-
-
$17.51
299,953
286,113
(51,633)
234,480
-
-
-
-
-
$20.85
76,448
76,448
76,448
-
-
-
-
-
-
(234,480)
(76,448)
Unvested rights at 31 December 2016
1 The fair values were calculated using a five day volume weighted average price over the five days following the Company’s full year results
2The volume weighted average share price during the reporting period to 31 December 2015 was $22.96.
3The five day volume weighted average share price up to and including 23 February 2016 was $29.48.
156
156
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CIMIC Group Limited Annual Report 2016 | Financial Report
Notes continued
for the 12 months to 31 December 2016
36. EMPLOYEE BENEFITS CONTINUED
a) 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.
Amount recognised during the reporting period: Gain $0.1 million (31 December 2015: Gain $0.3 million).
Date of grant
Date of performance period end
Grant fair value1
Original grant
Unvested rights at 31 December 2014
-
-
-
Granted
Vested2
Forfeited/Lapsed
Unvested rights at 31 December 2015
-
-
-
Granted
Vested3
Forfeited/Lapsed
Unvested rights at 31 December 2016
2012 STI Deferral award 2013 STI Deferral award 2014 STI Deferral award
1 Jan 2013
1 Jan 2014
1 Jan 2015
31 Dec 2014
31 Dec 2015
31 Dec 2015
$23.32
193,907
126,764
-
(124,455)
(2,309)
-
-
-
-
-
$17.51
299,953
286,113
-
-
(51,633)
234,480
-
$20.85
76,448
-
76,448
-
-
76,448
-
(234,480)
(76,448)
-
-
-
-
1 The fair values were calculated using a five day volume weighted average price over the five days following the Company’s full year results
announcement.
2The volume weighted average share price during the reporting period to 31 December 2015 was $22.96.
3The five day volume weighted average share price up to and including 23 February 2016 was $29.48.
CIMIC 2016 ANNUAL REPORT A4 FA.indd 157
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Notes continued
for the 12 months to 31 December 2016
36. EMPLOYEE BENEFITS CONTINUED
b) Share Appreciation Rights
Share Appreciation Rights – 2014 One-off Award to Marcelino Fernández Verdes (Executive Chairman)
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 have vested in full on 13 March 2016 and are 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.
On 18 October 2016 Mr Valderas Martínez was appointed as CEO however Mr Fernández Verdes continues in his capacity as Executive
Chairman.
Amount recognised during the reporting period: Expense $13.7 million (31 December 2015: Expense $3.3 million).
Share Appreciation Rights - 2014 One-off Award to M Fernández Verdes
Date of grant
Date of expiry
Grant fair value1
Original grant
Unexercised rights
Unexercised rights at 31 December 2014
-
-
-
Granted
Exercised2
Forfeited/Lapsed
Unexercised rights at 31 December 2015 and as at 31 December 2016
Exercisable rights
-
-
At 31 December 2015
At 31 December 20162
Non-exercisable rights
-
-
At 31 December 2015
At 31 December 20163
10 June 2014
13 March 2019
$16.76
1,200,000
1,200,000
-
-
-
1,200,000
-
480,000
-
720,000
1 The fair value was re-evaluated on 31 December 2016 using Monte-Carlo simulation pricing models. Volatility in share prices and expected
dividend levels were estimated based on historic levels for a period consistent with the relevant performance period.
2 This represents 40% of the total vested share appreciation rights available to exercise in the first year from the date of vesting.
3 This represents 60% of the total vested share appreciation rights unavailable to exercise in the first year from the date of vesting.
Notes continued
for the 12 months to 31 December 2016
36. EMPLOYEE BENEFITS CONTINUED
c) Options
Long-Term Incentive Plan – 2015 Award
Unexercised options at 31 December 2014
Unexercised options at 31 December 2015
Date of grant
Date of expiry
Grant fair value1
Original grant
-
-
-
-
-
-
Granted
Vested2
Lapsed
Granted
Vested3
Lapsed
Other information
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 $1.0 million (31 December 2015: Expense $0.2 million).
Options – 2015 Long-Term Incentive
29 October 2015
29 October 2020
$4.53
735,636
735,636
735,636
-
-
-
-
-
(183,405)
552,231
Unexercised options at 31 December 2016
1 The fair values were calculated at grant date using Black Scholes pricing models. Volatility in share prices and expected dividend levels
were estimated based on historic levels for a period consistent with the relevant performance period.
2 The volume weighted average share price during the reporting period to 31 December 2015 was $22.96.
3 The volume weighted average share price during the reporting period to 31 December 2016 was $31.30.
No further offers will be made under the Short-Term Incentive Plan (STI) Deferral and all legacy grants vested in early 2016.
d) Defined contribution superannuation funds
During the period, the Group recognised $127.8 million (31 December 2015: $192.2 million) of defined contribution expenses.
158
158
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CIMIC Group Limited Annual Report 2016 | Financial Report
Notes continued
for the 12 months to 31 December 2016
36. EMPLOYEE BENEFITS CONTINUED
c) 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 $1.0 million (31 December 2015: Expense $0.2 million).
Date of grant
Date of expiry
Grant fair value1
Original grant
Unexercised options at 31 December 2014
-
-
-
Granted
Vested2
Lapsed
Unexercised options at 31 December 2015
-
-
-
Granted
Vested3
Lapsed
Unexercised options at 31 December 2016
Options – 2015 Long-Term Incentive
29 October 2015
29 October 2020
$4.53
735,636
-
735,636
-
-
735,636
-
-
(183,405)
552,231
1 The fair values were calculated at grant date using Black Scholes pricing models. Volatility in share prices and expected dividend levels
were estimated based on historic levels for a period consistent with the relevant performance period.
2 The volume weighted average share price during the reporting period to 31 December 2015 was $22.96.
3 The volume weighted average share price during the reporting period to 31 December 2016 was $31.30.
Other information
No further offers will be made under the Short-Term Incentive Plan (STI) Deferral and all legacy grants vested in early 2016.
d) Defined contribution superannuation funds
During the period, the Group recognised $127.8 million (31 December 2015: $192.2 million) of defined contribution expenses.
CIMIC 2016 ANNUAL REPORT A4 FA.indd 159
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Notes continued
for the 12 months to 31 December 2016
37. RELATED PARTY DISCLOSURES
a) Key management personnel
Key management personnel compensation:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
Share-based payments
Total key management personnel compensation
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 to the overall operations of the Group.
12 months to
December 2016
$’000
12 months to
December 2015
$’000
10,538
6,639
Aggregate amounts receivable from related parties at reporting date
84
-
-
14,377
24,999
83
-
20
3,839
10,581
The terms and conditions of transactions with KMP 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 received fees from HOCHTIEF Australia Holdings Limited for services provided to that company,
which is a related party. D Robinson also received directors’ fees from Devine Limited as a result of his appointment on 27 May 2015.
R Seidler received fees from HOCHTIEF Australia Holdings Limited, for services provided to that company.
Loans to key management personnel
There were no loans to Key Management Personnel (KMP) in the current or prior reporting period.
Notes continued
for the 12 months to 31 December 2016
37. RELATED PARTY DISCLOSURES CONTINUED
b) Transactions with other related parties
December 2016
December 2015
$’000
$’000
10,025
1,067,742
843,039
73,764
(2,203)
(34,679)
(1,138)
(37,687)
Aggregate amounts payable to related parties at reporting date
Associates1
Joint venture entities1
Associates
Joint venture entities
HLG Contracting.
1Refer to Note 8: Trade and other receivables, which contains the disclosure of interest free and interest bearing loan receivables from
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 did
not already own. This offer expired on 29 December 2015 with CIMIC increasing its shareholding from 51% to 59% (refer to Note 38:
CIMIC Group Limited and controlled entities). The amounts payable to the previous shareholders of Devine was held within trade and
other payables as at 31 December 2016: $nil (31 December 2015: $10,097,000).
On 19 December 2016 the Group increased its ownership interest in UGL to more than 90% and exercised its right to compulsorily
acquire the remaining shares, which was completed on 20 January 2017. A liability for $29,374,000 is recognised as at 31 December
2016 to the shareholders of UGL for their shares that are to be compulsorily required and those shares acquired pre-year end not yet
settled.
160
160
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Notes continued
for the 12 months to 31 December 2016
37. 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 to the overall operations of the Group.
Aggregate amounts receivable from related parties at reporting date
Associates1
Joint venture entities1
Aggregate amounts payable to related parties at reporting date
Associates
Joint venture entities
December 2016
$’000
December 2015
$’000
10,025
1,067,742
843,039
73,764
(2,203)
(34,679)
(1,138)
(37,687)
1Refer to Note 8: Trade and other receivables, which contains the disclosure of interest free and interest bearing loan receivables from
HLG Contracting.
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 did
not already own. This offer expired on 29 December 2015 with CIMIC increasing its shareholding from 51% to 59% (refer to Note 38:
CIMIC Group Limited and controlled entities). The amounts payable to the previous shareholders of Devine was held within trade and
other payables as at 31 December 2016: $nil (31 December 2015: $10,097,000).
On 19 December 2016 the Group increased its ownership interest in UGL to more than 90% and exercised its right to compulsorily
acquire the remaining shares, which was completed on 20 January 2017. A liability for $29,374,000 is recognised as at 31 December
2016 to the shareholders of UGL for their shares that are to be compulsorily required and those shares acquired pre-year end not yet
settled.
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Notes continued
for the 12 months to 31 December 2016
Notes continued
for the 12 months to 31 December 2016
37. RELATED PARTY DISCLOSURES CONTINUED
b) Transactions with other related parties continued
37. RELATED PARTY DISCLOSURES CONTINUED
b) Transactions with other related parties continued
Revenue – income from related parties
Joint venture entities
Associates
Revenue - interest received / receivable from related parties
Associates
Joint venture entities
12 months to
December 2016
$’000
12 months to
December 2015
$’000
3,771
4,519
20,000
-
24,974
2,270
24,472
1,285
December 2016
December 2015
Number of
employees
Number of
employees
50,500
43,400
Number of employees
Number of employees at reporting date1
c) Company information
1Includes a proportional share of employees of Ventia and HLG Contracting.
CIMIC Group 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 177 Pacific Highway, North Sydney, NSW, Australia, 2060. Number of employees
at reporting date: 6 (31 December 2015: 7).
The Group operates in the infrastructure, resources and property markets. Principal activities of the Group within these markets are
construction, mining and mineral processing, public private partnerships, engineering, property development and other services (including
Revenue - unwinding of discounts on non-current receivables - related parties
environmental, telecommunications and operations and maintenance).
Associates
Joint venture entities
Finance costs - interest paid / payable to related parties
Joint venture entities
Finance costs - impact of discounting - related parties
Associates
8,045
731
7,771
-
d) Ultimate parent entity
y Servicios, SA (ACS) incorporated in Spain.
The ultimate Australian parent entity is HOCHTIEF Australia Holdings Limited and the ultimate parent entity is Actividades de Construcción
-
(1,299)
Australia Holdings Limited during the period.
CIMIC Directors, Mr D Robinson, Mr P Sassenfeld, Mr M Fernández Verdes and alternate director Mr R Seidler were directors of HOCHTIEF
CIMIC 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 8 February 2017, HOCHTIEF Australia Holdings Limited held 235,661,965 shares in the Company.
(115)
(1,125)
162
162
163
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Notes continued
for the 12 months to 31 December 2016
37. RELATED PARTY DISCLOSURES CONTINUED
b) Transactions with other related parties continued
Number of employees
Number of employees at reporting date1
1Includes a proportional share of employees of Ventia and HLG Contracting.
c) Company information
December 2016
Number of
employees
December 2015
Number of
employees
50,500
43,400
CIMIC Group 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 177 Pacific Highway, North Sydney, NSW, Australia, 2060. Number of employees
at reporting date: 6 (31 December 2015: 7).
The Group operates in the infrastructure, resources and property markets. Principal activities of the Group within these markets are
construction, mining and mineral processing, 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 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 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 8 February 2017, HOCHTIEF Australia Holdings Limited held 235,661,965 shares in the Company.
CIMIC 2016 ANNUAL REPORT A4 FA.indd 163
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Notes continued
for the 12 months to 31 December 2016
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES
a) Parent entity disclosures
As at, and throughout, the financial year ended 31 December 2016 the parent entity of the Group was CIMIC Group Limited. A summarised
statement of profit or loss and summarised statement of financial position at 31 December 2016 is set out below:
Interest
held
Place of
incorporation
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 earnings
Total equity
Company
12 months to
December 2016
$m
12 months to
December 2015
$m
98.4
-
98.4
2,601.4
-
2,601.4
December 2016
$m
December 2015
$m
24.9
5,327.9
5,352.8
232.5
1,113.8
1,346.3
38.8
6,102.0
6,140.8
236.9
1,037.8
1,274.7
4,006.5
4,866.1
1,750.3
(75.8)
2,332.0
4,006.5
2,052.5
62.7
2,750.9
4,866.1
Notes continued
for the 12 months to 31 December 2016
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities
Name of entity
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.
Arus Tenang SND BHD3, 6
Ashmore Developments Pty Limited
Ausindo Holdings Pte Ltd
BCJHG Nominees Pty Ltd
BKP Electrical Limited3, 6
BCJHG Trust
Boggo Road Project Pty Limited
Boggo Road Project Trust
Broad Construction Services (NSW/VIC) Pty Ltd2
Broad Construction Services (QLD) Pty Ltd1
Broad Construction Services (WA) Pty Ltd1
Broad Group Holdings Pty Ltd1
CIMIC Admin Services Pty Limited1
CIMIC Finance (USA) Pty Ltd
CIMIC Finance Limited1
CIMIC Group Investments Pty Limited
CIMIC Group Investments No. 2 Pty Limited
CIMIC Group Limited5
CIMIC Residential Investments Pty Ltd
Contrelec Engineering Pty Ltd
Devine Building Management Services Pty Ltd
CPB Contractors Pty Ltd1
D.M.B. Pty. Ltd.
Devine Bacchus Marsh Pty Ltd
Devine Colton Avenue Pty Ltd
Devine Constructions Pty Ltd
Devine Funds Pty Ltd
Devine Funds Unit Trust
Devine Homes Pty Ltd
(A),(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(B), (C)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
59%
59%
59%
59%
59%
59%
59%
59%
Malaysia
NSW
Singapore
QLD
QLD
NSW
NSW
VIC
VIC
VIC
Fiji
QLD
QLD
WA
QLD
WA
WA
NSW
NSW
NSW
VIC
VIC
VIC
VIC
QLD
NSW
QLD
QLD
QLD
QLD
QLD
VIC
QLD
CPB Contractors (PNG) Limited (formerly known as LCPL (PNG) Limited)
100%
Papua New Guinea
164
164
165
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Notes continued
for the 12 months to 31 December 2016
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities
Name of entity
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.
Arus Tenang SND BHD3, 6
Ashmore Developments Pty Limited
Ausindo Holdings Pte Ltd
BCJHG Nominees Pty Ltd
BKP Electrical Limited3, 6
BCJHG Trust
Boggo Road Project Pty Limited
Boggo Road Project Trust
Broad Construction Services (NSW/VIC) Pty Ltd2
Broad Construction Services (QLD) Pty Ltd1
Broad Construction Services (WA) Pty Ltd1
Broad Group Holdings Pty Ltd1
CIMIC Admin Services Pty Limited1
CIMIC Finance (USA) Pty Ltd
CIMIC Finance Limited1
CIMIC Group Investments Pty Limited
CIMIC Group Investments No. 2 Pty Limited
CIMIC Group Limited5
CIMIC Residential Investments Pty Ltd
Contrelec Engineering Pty Ltd
CPB Contractors (PNG) Limited (formerly known as LCPL (PNG) Limited)
CPB Contractors Pty Ltd1
D.M.B. Pty. Ltd.
Devine Bacchus Marsh Pty Ltd
Devine Building Management Services Pty Ltd
Devine Colton Avenue Pty Ltd
Devine Constructions Pty Ltd
Devine Funds Pty Ltd
Devine Funds Unit Trust
Devine Homes Pty Ltd
(C)
(C)
(A),(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(B), (C)
(C)
(C)
(C)
(C)
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%
QLD
QLD
NSW
NSW
VIC
VIC
Malaysia
NSW
Singapore
VIC
Fiji
QLD
QLD
WA
QLD
WA
WA
NSW
NSW
NSW
VIC
VIC
VIC
VIC
QLD
100%
Papua New Guinea
100%
59%
59%
59%
59%
59%
59%
59%
59%
NSW
QLD
QLD
QLD
QLD
QLD
VIC
QLD
CIMIC 2016 ANNUAL REPORT A4 FA.indd 165
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165
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CIMIC Group Limited Annual Report 2016 | Financial Report
Notes continued
for the 12 months to 31 December 2016
Notes continued
for the 12 months to 31 December 2016
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities continued
Name of entity
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
Fleetco Canada Rentals Ltd
Fleetco Chile SPA
Fleetco Finance Pty Limited
Fleetco Holdings Pty Limited
Fleetco Management Pty Limited
Fleetco Rentals AN Pty Limited
Fleetco Rentals CT 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 Rentals UG Pty. Limited
Fleetco Services Pty Limited
Ganu Puri Snd. Bhd3, 6
Giddens Investment Limited
GSJV Limited (Barbados)3
GSJV Limited (Guyana)3
Hamilton Harbour Developments Pty Ltd
Hamilton Harbour Unit Trust (Devine Hamilton Unit Trust)
Hunter Valley Earthmoving Co Pty Ltd
HWE Cockatoo Pty Ltd
Interest
held
Place of
incorporation
Interest
held
Place of
incorporation
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%
100%
100%
50%
50%
80%
80%
100%
100%
(C)
(B)
(B)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
QLD
QLD
QLD
QLD
QLD
QLD
NSW
QLD
QLD
QLD
QLD
QLD
VIC
Canada
Chile
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
Malaysia
Hong Kong
Barbados
Guyana
QLD
QLD
NSW
NT
b) Controlled entities continued
Name of entity
HWE Mining Pty Limited
HWE Newman Assets Pty Limited
Inspection Testing & Certification Pty Ltd3, 6
Intermet Engineering Pty Ltd
Jarrah Wood Pty Ltd
JH AD Holdings Pty Ltd
JH AD Investments Pty Ltd
JH AD Operations Pty Ltd
JH Rail Holdings Pty Ltd
JH Rail Investments Pty Ltd
JH Rail Operations Pty Ltd
JH ServiceCo Pty Ltd
JHAS Pty Ltd
JHI Investment Pty Ltd
Joetel Pty. Limited
Kings Square Developments Pty Ltd
Kings Square Developments Unit Trust
Legacy JHI Pty Ltd
Lei Shun Employment Limited
Leighton (PNG) Limited
Leighton Africa (Mauritius) 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) Snd Bhd
Leighton Contractors (Philippines), Inc.
Leighton Contractors Asia (Cambodia) Co., Ltd
Leighton Contractors Asia (Vietnam) Limited
Leighton Contractors Inc.
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(A)
100%
100%
100%
100%
100%
100%
100%
100%
59%
59%
59%
100%
100%
100%
59%
100%
100%
100%
100%
100%
100%
100%
95%
100%
49%
100%
100%
100%
100%
100%
40%
100%
100%
100%
Australia
VIC
VIC
QLD
WA
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
ACT
QLD
QLD
VIC
Macau
Mauritius
Hong Kong
Hong Kong
Singapore
VIC
United Arab
Emirates
Hong Kong
Hong Kong
Hong Kong
Laos
Malaysia
Philippines
Cambodia
Vietnam
United States
100%
Papua New Guinea
166
166
167
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CIMIC Group Limited Annual Report 2016 | Financial Report
Notes continued
for the 12 months to 31 December 2016
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities continued
Name of entity
HWE Mining Pty Limited
HWE Newman Assets Pty Limited
Inspection Testing & Certification Pty Ltd3, 6
Intermet Engineering Pty Ltd
Jarrah Wood Pty Ltd
JH AD Holdings Pty Ltd
JH AD Investments Pty Ltd
JH AD Operations Pty Ltd
JH Rail Holdings Pty Ltd
JH Rail Investments Pty Ltd
JH Rail Operations Pty Ltd
JH ServiceCo Pty Ltd
JHAS Pty Ltd
JHI Investment Pty Ltd
Joetel Pty. Limited
Kings Square Developments Pty Ltd
Kings Square Developments Unit Trust
Legacy JHI Pty Ltd
Lei Shun Employment Limited
Leighton (PNG) Limited
Leighton Africa (Mauritius) 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) Snd Bhd
Leighton Contractors (Philippines), Inc.
Leighton Contractors Asia (Cambodia) Co., Ltd
Leighton Contractors Asia (Vietnam) Limited
Leighton Contractors Inc.
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(A)
Interest
held
Place of
incorporation
100%
100%
100%
100%
100%
100%
100%
100%
59%
59%
59%
100%
100%
100%
59%
100%
100%
100%
100%
VIC
VIC
Australia
QLD
WA
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
ACT
QLD
QLD
VIC
Macau
100%
Papua New Guinea
100%
100%
100%
95%
100%
49%
100%
100%
100%
100%
100%
40%
100%
100%
100%
Mauritius
Hong Kong
Hong Kong
Singapore
VIC
United Arab
Emirates
Hong Kong
Hong Kong
Hong Kong
Laos
Malaysia
Philippines
Cambodia
Vietnam
United States
CIMIC 2016 ANNUAL REPORT A4 FA.indd 167
167
167
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CIMIC Group Limited Annual Report 2016 | Financial Report
CIMIC Group Limited Annual Report 2016 | Financial Report
Notes continued
for the 12 months to 31 December 2016
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) 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 Contractors Pty Ltd (formerly known as Leighton Services Australia Pty
Limited)
Leighton Engineering & Construction (Singapore) Pte Ltd
Leighton Engineering Snd Bhd
Leighton Equity Incentive Plan Trust
Leighton Foundation Engineering (Asia) Limited
Leighton Funds Management Pty Limited2
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
Leighton Infrastructure Investments Pty Limited2
Leighton International Limited
Leighton International Mauritius Holdings Limited No. 4
Leighton Investments Mauritius Limited
Leighton Investments Mauritius Limited No. 2
Leighton Investments Mauritius Limited No. 4
Leighton Joint Venture
Interest
held
Place of
incorporation
Name of entity
Interest
held
Place of
incorporation
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
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
NSW
Singapore
Malaysia
NSW
Hong Kong
QLD
VIC
VIC
VIC
India
NSW
Cayman Islands
Mauritius
Mauritius
Mauritius
Mauritius
Hong Kong
Leighton (PNG) Limited (formerly known as LCPL (PNG) Limited)
100%
Papua New Guinea
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 Snd Bhd
Leighton Offshore Stealth Pte Ltd
Leighton Pacific St Leonards Pty Limited
Leighton Pacific St Leonards Unit Trust
168
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Hong Kong
Cayman Islands
Singapore
Singapore
Singapore
Singapore
Singapore
Malaysia
Singapore
VIC
(C)
(C)
Pacific Partnerships Services NZ Limited (formerly known as Leighton PPP Services
New Zealand
168
169
CIMIC 2016 ANNUAL REPORT A4 FA.indd 168
15/02/2017 9:45 am
Notes continued
for the 12 months to 31 December 2016
b) Controlled entities continued
Leighton Portfolio Services Pty 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 Limited2
Leighton Properties Pty Limited1
Leighton Property Funds Management Limited2
Leighton Property Management Pty Limited2
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
Moorookyle Devine Pty Ltd
Moving Melbourne Together Finance Pty Ltd
MTCT Services Pty Ltd (formerly United Group Pty Ltd)3, 6
Newcastle Engineering Pty Ltd3, 6
Nexus Point Solutions Pty Ltd
Olympic Dam Maintenance Pty Ltd3, 6
Opal Insurance (Singapore) Pte Ltd
Pacific Partnerships Holdings Pty Ltd
Pacific Partnerships Investments Pty Ltd
Pacific Partnerships Investments Trust
Pacific Partnerships Pty Ltd
NZ Limited)
Pacific Partnerships Services Pty Limited
Pioneer Homes Australia Pty Ltd
PT Leighton Contractors Indonesia
PT Thiess Contractors Indonesia
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
100%
100%
100%
100%
100%
100%
59%
59%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
59%
100%
99%
United States
Hong Kong
ACT
China
QLD
NSW
VIC
NSW
QLD
ACT
NSW
VIC
VIC
VIC
VIC
NSW
VIC
NSW
VIC
VIC
Australia
Australia
NSW
Australia
Singapore
VIC
VIC
VIC
VIC
VIC
QLD
Indonesia
Indonesia
CIMIC Group Limited Annual Report 2016 | Financial Report
Notes continued
for the 12 months to 31 December 2016
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities continued
Name of entity
Interest
held
Place of
incorporation
Leighton Portfolio Services Pty 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 Limited2
Leighton Properties Pty Limited1
Leighton Property Funds Management Limited2
Leighton Property Management Pty Limited2
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
Moorookyle Devine Pty Ltd
Moving Melbourne Together Finance Pty Ltd
MTCT Services Pty Ltd (formerly United Group Pty Ltd)3, 6
Newcastle Engineering Pty Ltd3, 6
Nexus Point Solutions Pty Ltd
Olympic Dam Maintenance Pty Ltd3, 6
Opal Insurance (Singapore) Pte Ltd
Pacific Partnerships Holdings Pty Ltd
Pacific Partnerships Investments Pty Ltd
Pacific Partnerships Investments Trust
Pacific Partnerships Pty Ltd
Pacific Partnerships Services NZ Limited (formerly known as Leighton PPP Services
NZ Limited)
Pacific Partnerships Services Pty Limited
Pioneer Homes Australia Pty Ltd
PT Leighton Contractors Indonesia
PT Thiess Contractors Indonesia
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
100%
100%
100%
100%
100%
100%
59%
59%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
59%
100%
99%
ACT
China
QLD
NSW
VIC
NSW
QLD
ACT
NSW
United States
Hong Kong
VIC
VIC
VIC
VIC
NSW
VIC
NSW
VIC
VIC
Australia
Australia
NSW
Australia
Singapore
VIC
VIC
VIC
VIC
New Zealand
VIC
QLD
Indonesia
Indonesia
CIMIC 2016 ANNUAL REPORT A4 FA.indd 169
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Notes continued
for the 12 months to 31 December 2016
Notes continued
for the 12 months to 31 December 2016
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities continued
Name of entity
RailFleet Maintenance Services Pty Ltd3, 6
Riverstone Rise Gladstone Pty Ltd
Riverstone Rise Gladstone Unit Trust
Ruby Equation Snd Bhd3, 6
Sedgman Asia Ltd
Sedgman Botswana (Pty) Ltd
Sedgman Canada Limited
Sedgman Chile SPA
Sedgman Consulting Pty Ltd
Sedgman Employment Services Pty Ltd
Sedgman Engineering Technology (Beijing) Company Limited
Sedgman International Employment Services Pty Ltd
Sedgman LLC
Sedgman Malaysia SND BHD
Sedgman Mozambique Limitada
Sedgman Operations Employment Services Pty Ltd
Sedgman Operations Pty Ltd
Sedgman Pty Ltd
Sedgman SAS (Columbia)
Sedgman South Africa (Pty) Ltd
Sedgman South Africa Investments Limited (BVI)
Silverton Group Pty Ltd
Sustaining Works Pty Limited
Talcliff Pty Ltd
Tambala Pty Ltd
Telecommunication Infrastructure Pty Ltd
Thai Leighton Limited
Thiess (Mauritius) Pty Ltd3
Thiess Africa Investments Pty Ltd
Thiess Botswana (Proprietary) Limited
Thiess Chile SPA
Thiess Contractors (Malaysia) Snd. Bhd.
Thiess Contractors (PNG) Limited
Thiess Contractors Canada Ltd
Thiess India Pvt Ltd4
170
Interest
held
Place of
incorporation
Interest
held
Place of
incorporation
100%
59%
59%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
59%
100%
100%
49%
100%
100%
100%
100%
100%
Australia
QLD
QLD
Malaysia
Hong Kong
Botswana
Canada
Chile
QLD
QLD
China
QLD
Mongolia
Malaysia
Mozambique
QLD
QLD
QLD
Colombia
South Africa
South Africa
WA
QLD
QLD
Mauritius
VIC
Thailand
Mauritius
South Africa
Botswana
Chile
Malaysia
100%
Papua New Guinea
100%
100%
Canada
India
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(C)
(A)
(A)
b) Controlled entities continued
Name of entity
Thiess Infrastructure Nominees Pty Ltd
Thiess Infrastructure Pty Ltd
Thiess Infrastructure Trust
Thiess Khishig Arvin JV LLC
Thiess Minecs India Pvt Ltd4
Thiess Mining Maintenance Pty Ltd
Thiess Mongolia LLC
Thiess Mozambique Limitada
Thiess NC
Thiess NZ Limited
Thiess Pty Ltd
Thiess Sedgman Joint Venture
Thiess South Africa (Pty) Ltd
Think Consulting Group Pty Ltd
Townsville City Project Pty Ltd
Townsville City Project Trust
Trafalgar EB Pty Ltd
Trafalgar EB Unit Trust
Tribune SB Pty Ltd
Tribune SB Unit Trust
UGL (Asia) Snd Bhd3, 6
UGL (NZ) Limited3, 6
UGL (Singapore) Pte Ltd3, 6
UGL Canada Inc3, 6
UGL Engineering Private Limited3, 6
UGL Engineering Pty Ltd3, 6
UGL Limited3, 6
UGL Operations and Maintenance (Services) Pty Limited3, 6
UGL Operations and Maintenance Pty Ltd3, 6
UGL Rail (North Queensland) Pty Ltd3, 6
UGL Rail Fleet Services Pty Limited3, 6
UGL Rail Pty Ltd3, 6
UGL Rail Services Pty Limited3, 6
UGL Resources (Contracting) Pty Ltd3, 6
(C)
(C)
(C)
(C)
(C)
(C)
100%
100%
100%
100%
90%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
80%
59%
59%
59%
59%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
VIC
VIC
VIC
Mongolia
India
QLD
Mongolia
Mozambique
New Caledonia
New Zealand
South Africa
QLD
NSW
VIC
NSW
QLD
QLD
QLD
QLD
QLD
Malaysia
Australia
Singapore
Canada
India
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
170
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Notes continued
for the 12 months to 31 December 2016
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities continued
Name of entity
Thiess Infrastructure Nominees Pty Ltd
Thiess Infrastructure Pty Ltd
Thiess Infrastructure Trust
Thiess Khishig Arvin JV LLC
Thiess Minecs India Pvt Ltd4
Thiess Mining Maintenance Pty Ltd
Thiess Mongolia LLC
Thiess Mozambique Limitada
Thiess NC
Thiess NZ Limited
Thiess Pty Ltd
Thiess Sedgman Joint Venture
Thiess South Africa (Pty) Ltd
Think Consulting Group Pty Ltd
Townsville City Project Pty Ltd
Townsville City Project Trust
Trafalgar EB Pty Ltd
Trafalgar EB Unit Trust
Tribune SB Pty Ltd
Tribune SB Unit Trust
UGL (Asia) Snd Bhd3, 6
UGL (NZ) Limited3, 6
UGL (Singapore) Pte Ltd3, 6
UGL Canada Inc3, 6
UGL Engineering Private Limited3, 6
UGL Engineering Pty Ltd3, 6
UGL Limited3, 6
UGL Operations and Maintenance (Services) Pty Limited3, 6
UGL Operations and Maintenance Pty Ltd3, 6
UGL Rail (North Queensland) Pty Ltd3, 6
UGL Rail Fleet Services Pty Limited3, 6
UGL Rail Pty Ltd3, 6
UGL Rail Services Pty Limited3, 6
UGL Resources (Contracting) Pty Ltd3, 6
(C)
(C)
(C)
(C)
(C)
(C)
Interest
held
Place of
incorporation
100%
100%
100%
100%
90%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
80%
59%
59%
59%
59%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
VIC
VIC
VIC
Mongolia
India
QLD
Mongolia
Mozambique
New Caledonia
New Zealand
QLD
NSW
South Africa
VIC
NSW
QLD
QLD
QLD
QLD
QLD
Malaysia
Australia
Singapore
Canada
India
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
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Notes continued
for the 12 months to 31 December 2016
Notes continued
for the 12 months to 31 December 2016
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities continued
Name of entity
UGL Resources (Malaysia) Snd Bhd3, 6
UGL Unipart Rail Services Pty Ltd3, 6
United Goninan Construction Pty Ltd3, 6
United Group Infrastructure (NZ) Limited3, 6
United Group Infrastructure (Services) Pty Ltd3, 6
United Group International Pty Ltd3, 6
United Group Investment Partnership3, 6
United Group Melbourne Transport Limited3, 6
United Group Water Projects (Victoria) Pty Ltd3, 6
United Group Water Projects Pty Ltd3, 6
United KG (No. 1) Pty Ltd3, 6
United KG (No. 2) Pty Ltd3, 6
United KG Construction Pty Ltd3, 6
United KG Engineering Services Pty Ltd3, 6
United KG Maintenance Pty Ltd3, 6
Western Port Highway Trust
Yoltax Pty. Limited
Zelmex Pty. Limited
Interest
held
Place of
incorporation
c) Acquisition and disposal of controlled entities
Refer to Note 29: Acquisitions and disposals of controlled entities and businesses for further details.
100%
70%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
59%
59%
(C)
Malaysia
Australia
Australia
Australia
Australia
Australia
USA
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
NSW
ACT
1These companies (CIMIC Group Limited (CGL) Class Order Companies) have the benefit of ASIC Class Order 98/1418 as at 31 December
2016.
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
2016, 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 2016 reporting period.
(C) Entities included in the tax-consolidated Group.
6Enities attained through the purchase of UGL refer to Note 29: Acquisitions and disposals of controlled entities and businesses. Percentages
are based on 100% ownership of UGL, acquired on 20 January 2017.
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 it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity.
The following controlled entities have been liquidated during the period to 31 December 2016 as they are no longer required by the Group
d)
Liquidation of controlled entities
in the ordinary course of business:
111 Margaret Street Pty Ltd
Boggo Road Lots 6 and 7 Pty Ltd
BOS Australia Pty Ltd
Canberra Metro Finance Pty Limited
Green Construction Company
Leighton Asia (China) Limited
Leighton Contractors (Mauritius) Limited
Leighton Engineering Joint Venture
Leighton Gbs Snd. Bhd
Leighton Geotech Limited
Moonamang Joint Venture Pty Ltd
Queens Square Pty Ltd
Sedgman Consulting Unit Trust
Thiess Infraco Pty Ltd
Thiess Southland Pty Ltd
Victoria Point Docklands Pty Ltd
Woodforde JV Pty Ltd
Leighton International Holdings Limited
Leighton International Projects (India) Private 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: $1,864.8 million
(31 December 2015: $1,950.1 million); insurance bonds: $699.1 million (31 December 2015: $761.3 million); letters of credit: $180.6
million (31 December 2015: $262.6 million). During the reporting period, the parent was released from bank guarantees totalling $nil
million (31 December 2015: $nil milllion), insurance, performance and payments bonds totalling $nil million (31 December 2015: $nil
million) and letters of credit totalling $nil million (31 December 2015: $nil 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 2015: $nil).
172
172
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Notes continued
for the 12 months to 31 December 2016
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
c) Acquisition and disposal of controlled entities
Refer to Note 29: Acquisitions and disposals of controlled entities and businesses for further details.
d)
Liquidation of controlled entities
The following controlled entities have been liquidated during the period to 31 December 2016 as they are no longer required by the Group
in the ordinary course of business:
111 Margaret Street Pty Ltd
Boggo Road Lots 6 and 7 Pty Ltd
BOS Australia Pty Ltd
Canberra Metro Finance Pty Limited
Green Construction Company
Leighton Asia (China) Limited
Leighton Contractors (Mauritius) Limited
Leighton Engineering Joint Venture
Leighton Gbs Snd. Bhd
Leighton Geotech Limited
Leighton International Holdings Limited
Leighton International Projects (India) Private Limited
Moonamang Joint Venture Pty Ltd
Woodforde JV Pty Ltd
Queens Square Pty Ltd
Sedgman Consulting Unit Trust
Thiess Infraco Pty Ltd
Thiess Southland Pty Ltd
Victoria Point Docklands Pty Ltd
e) Parent entity commitments and contingent liabilities
Contingent liabilities under indemnities given on behalf of controlled entities in respect of the parent: bank guarantees: $1,864.8 million
(31 December 2015: $1,950.1 million); insurance bonds: $699.1 million (31 December 2015: $761.3 million); letters of credit: $180.6
million (31 December 2015: $262.6 million). During the reporting period, the parent was released from bank guarantees totalling $nil
million (31 December 2015: $nil milllion), insurance, performance and payments bonds totalling $nil million (31 December 2015: $nil
million) and letters of credit totalling $nil million (31 December 2015: $nil 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 2015: $nil).
CIMIC 2016 ANNUAL REPORT A4 FA.indd 173
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Notes continued
for the 12 months to 31 December 2016
Notes continued
for the 12 months to 31 December 2016
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
f) Material subsidiaries including consolidated structured entities
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
h) Parent entity transactions with wholly-owned controlled entities
Set out below are the Company’s principal subsidiaries at 31 December 2016. 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.
Transactions with wholly-owned controlled entities were as follows: aggregate amounts receivable: $2,014.3 million (31 December 2015:
$2,565.6 million); aggregate amounts payable: $1,085.2 million (31 December 2015: $955.6 million); interest received / receivable: $23.0
million (31 December 2015: $14.1 million); interest paid / payable: $9.3 million (31 December 2015: $5.1 million); fees charged: $nil million
(31 December 2015: $nil million); dividends received: $nil million (31 December 2015: $2,166.0 million); fees paid: $100.0 million (31
Name of entity
Principal activity
Country of
incorporation
CPB Contractors Pty Limited
(formerly Leighton Contractors
Pty Ltd)1
Thiess Pty Ltd
Construction
Australia
Contract Mining &
Construction
Australia
Leighton Asia Limited
Construction
Hong Kong
Leighton International Limited
Construction
UGL Limited2
Services
Cayman
Islands
Australia
Ownership interest held by the
Company
Ownership interest held by non-
controlling interests
December 2016
December 2015
December 2016
December 2015
December 2015: $95.0 million).
i) Deed of Cross Guarantee
%
100
100
100
100
100
%
100
100
100
100
-
%
-
-
-
-
%
-
-
-
-
1CIMIC Group Limited (CGL) Class Order Company has the benefit of ASIC Class Order 98/1418. For further information, refer to section (i).
2As at 31 December 2016 the Group owned 95% of the shares of UGL Limited but had exercised the right to compulsorily acquire the
remaining shares. A liability is recognised for the remaining shares.
-
Non-controlling interests
There were no material non-controlling interests relating to the Company’s material subsidiaries disclosed above as at 31 December
2016. There were no material transactions with non-controlling interests during the period to 31 December 2016 other than the
acquisition of the shares from the non-controlling interest share holders. Refer to Note 29: Acquisitions and disposals of controlled
entities and businesses.
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 32: 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 2016
$m
December 2015
$m
0.7
0.7
189.3
190.0
6.4
6.4
213.3
219.7
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.
On 28 September 2016, ASIC Class Order 98/1418 dated 13 August 1998 was repealed by ASIC Corporations (Amendment and Repeal)
Instrument 2016/914, and ASIC replaced its financial reporting relief for wholly-owned companies with the new ASIC Corporations (Wholly-
owned Companies) Instrument 2016/785 (New ASIC Instrument). The New ASIC Instrument applies in relation to a financial year ending
on or after 1 January 2017, while ASIC Class Order 98/1418 continues to apply, despite its repeal, in relation to a financial year ending
before 1 January 2017. Therefore, the CGL Class Order Companies have been able to rely on the benefit of relief afforded by ASIC Class
Order 98/1418 as at 31 December 2016.
One of the conditions to obtain relief under the New ASIC Instrument is that before the end of the relevant financial year, the company
seeking relief must be a party to a deed of cross guarantee.
The Company has decided to revoke the current Deed of Cross Guarantee dated 10 June 2008 in its entirety and enter into a new Deed of
Cross Guarantee in order to:
(a) effect the removal of a number of entities from the Group’s Deed of Cross Guarantee structure (i.e. release them from their covenants
in respect of the cross-guarantee of Group debts); and
(b) update the form of the Deed of Cross Guarantee so that it reflects the new ASIC pro forma deed (which, due to the update of the
New ASIC Instrument, will be required going forward for the proper administration of the deed).
As a result, the Company and each of the CGL Class Order Companies who are party to the Deed of Cross Guarantee dated 10 June 2008
have been released from their obligations under the Deed by executing two Revocation Deeds dated 19 December 2016 (one in respect
of CGL as the trustee under the Deed, and one in respect of CIMIC Finance Limited as the alternative trustee under the Deed), which have
both been lodged with ASIC. These Revocation Deeds will take effect 6 months from the date of lodgement with ASIC. The Company and
each of the CGL Class Order Companies (except for the following companies which are small proprietary companies and therefore not
seeking to rely on the financial reporting relief provided by the new ASIC Instrument) have also executed a new Deed of Cross Guarantee
dated 19 December 2016 in compliance with the requirements of the New ASIC Instrument:
Leighton Contractors Infrastructure Nominees Pty Ltd;
Leighton Contractors Infrastructure Pty Ltd;
Leighton Funds Management Pty Limited;
Leighton Holdings Infrastructure Nominees Pty Ltd;
Leighton Holdings Infrastructure Pty Ltd;
Leighton Infrastructure Investments Pty Limited;
Leighton Properties (Brisbane) Pty Limited;
Leighton Property Funds Management Limited;
Leighton Property Management Pty Limited; and
LH Holdings Co Pty Ltd.
The Deed of Cross Guarantee dated 19 December 2016 has been lodged with ASIC.
Thiess Pty Limited and HWE Mining Pty Limited executed Revocation Deeds dated 9 December 2016 and subsequently lodged the
Revocation Deeds with ASIC which will have the effect of revoking the Deed of Cross Guarantee dated 17 December 2015 in its entirety 6
months from the date of lodgement with ASIC. The Deed is being revoked as HWE Mining Pty Limited no longer requires financial reporting
relief.
174
174
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CIMIC Group Limited Annual Report 2016 | Financial Report
Notes continued
for the 12 months to 31 December 2016
38. 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: $2,014.3 million (31 December 2015:
$2,565.6 million); aggregate amounts payable: $1,085.2 million (31 December 2015: $955.6 million); interest received / receivable: $23.0
million (31 December 2015: $14.1 million); interest paid / payable: $9.3 million (31 December 2015: $5.1 million); fees charged: $nil million
(31 December 2015: $nil million); dividends received: $nil million (31 December 2015: $2,166.0 million); fees paid: $100.0 million (31
December 2015: $95.0 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.
On 28 September 2016, ASIC Class Order 98/1418 dated 13 August 1998 was repealed by ASIC Corporations (Amendment and Repeal)
Instrument 2016/914, and ASIC replaced its financial reporting relief for wholly-owned companies with the new ASIC Corporations (Wholly-
owned Companies) Instrument 2016/785 (New ASIC Instrument). The New ASIC Instrument applies in relation to a financial year ending
on or after 1 January 2017, while ASIC Class Order 98/1418 continues to apply, despite its repeal, in relation to a financial year ending
before 1 January 2017. Therefore, the CGL Class Order Companies have been able to rely on the benefit of relief afforded by ASIC Class
Order 98/1418 as at 31 December 2016.
One of the conditions to obtain relief under the New ASIC Instrument is that before the end of the relevant financial year, the company
seeking relief must be a party to a deed of cross guarantee.
The Company has decided to revoke the current Deed of Cross Guarantee dated 10 June 2008 in its entirety and enter into a new Deed of
Cross Guarantee in order to:
(a) effect the removal of a number of entities from the Group’s Deed of Cross Guarantee structure (i.e. release them from their covenants
in respect of the cross-guarantee of Group debts); and
(b) update the form of the Deed of Cross Guarantee so that it reflects the new ASIC pro forma deed (which, due to the update of the
New ASIC Instrument, will be required going forward for the proper administration of the deed).
As a result, the Company and each of the CGL Class Order Companies who are party to the Deed of Cross Guarantee dated 10 June 2008
have been released from their obligations under the Deed by executing two Revocation Deeds dated 19 December 2016 (one in respect
of CGL as the trustee under the Deed, and one in respect of CIMIC Finance Limited as the alternative trustee under the Deed), which have
both been lodged with ASIC. These Revocation Deeds will take effect 6 months from the date of lodgement with ASIC. The Company and
each of the CGL Class Order Companies (except for the following companies which are small proprietary companies and therefore not
seeking to rely on the financial reporting relief provided by the new ASIC Instrument) have also executed a new Deed of Cross Guarantee
dated 19 December 2016 in compliance with the requirements of the New ASIC Instrument:
Leighton Contractors Infrastructure Nominees Pty Ltd;
Leighton Contractors Infrastructure Pty Ltd;
Leighton Funds Management Pty Limited;
Leighton Holdings Infrastructure Nominees Pty Ltd;
Leighton Holdings Infrastructure Pty Ltd;
Leighton Infrastructure Investments Pty Limited;
Leighton Properties (Brisbane) Pty Limited;
Leighton Property Funds Management Limited;
Leighton Property Management Pty Limited; and
LH Holdings Co Pty Ltd.
The Deed of Cross Guarantee dated 19 December 2016 has been lodged with ASIC.
Thiess Pty Limited and HWE Mining Pty Limited executed Revocation Deeds dated 9 December 2016 and subsequently lodged the
Revocation Deeds with ASIC which will have the effect of revoking the Deed of Cross Guarantee dated 17 December 2015 in its entirety 6
months from the date of lodgement with ASIC. The Deed is being revoked as HWE Mining Pty Limited no longer requires financial reporting
relief.
CIMIC 2016 ANNUAL REPORT A4 FA.indd 175
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CIMIC Group Limited Annual Report 2016 | Financial Report
CIMIC Group Limited Annual Report 2016 | Financial Report
Notes continued
for the 12 months to 31 December 2016
Notes continued
for the 12 months to 31 December 2016
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
i) Deed of Cross Guarantee continued
i) Deed of Cross Guarantee continued
A consolidated statement of profit or loss and statement of financial position, comprising the Company and entities which are a party to
the Deed of Cross Guarantee dated 10 June 2008, after eliminating all transactions between parties to the Deed of Cross Guarantee, at 31
December 2016 is set out below:
Deed of Cross Guarantee
Statement of Profit or Loss
Profit / (loss) before tax
Income tax (expense) / benefit
Profit / (loss) for the period
Retained earnings brought forward
Retained earnings brought forward - adjustment for new entities party to the Deed of Cross
Guarantee
Retained earnings brought forward - adjustment for entities removed from the Deed of Cross
Guarantee
Dividends paid
Retained earnings at reporting date
12 months to
December 2016
$m
12 months to
December 2015
$m
480.5
(119.9)
360.6
4,062.2
-
-
2,748.0
(169.1)
2,578.9
1,858.3
-
10.9
(320.5)
4,102.3
(385.9)
4,062.2
Inventories: consumables and development properties
Deed of Cross Guarantee
Statement of Financial Position
Assets
Cash and cash equivalents
Trade and other receivables
Assets held for sale
Total current assets
Trade and other receivables
Inventories: development properties
Investments
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
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity
December 2016
December 2015
$m
$m
2,508.0
2,925.4
611.0
1,839.3
20.5
37.2
4,945.4
2.3
1,664.9
151.3
113.7
6,877.6
1,027.2
1,897.2
1.0
-
4,973.1
81.7
2,014.1
165.6
129.2
7,363.7
9,385.6
10,289.1
2,447.8
3,241.5
36.9
87.2
119.2
44.5
111.7
18.7
2,691.1
3,416.4
1,275.9
1,064.7
44.4
109.7
264.8
1,694.8
44.5
108.2
246.9
1,464.3
4,385.9
4,880.7
4,999.7
5,408.4
1,750.3
(852.9)
4,102.3
4,999.7
2,052.5
(706.3)
4,062.2
5,408.4
176
176
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CIMIC Group Limited Annual Report 2016 | Financial Report
Notes continued
for the 12 months to 31 December 2016
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
i) Deed of Cross Guarantee continued
Deed of Cross Guarantee
Statement of Financial Position
Assets
Cash and cash equivalents
Trade and other receivables
Inventories: consumables and development properties
Assets held for sale
Total current assets
Trade and other receivables
Inventories: development properties
Investments
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
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity
December 2016
$m
December 2015
$m
611.0
1,839.3
20.5
37.2
2,508.0
4,945.4
2.3
1,664.9
151.3
113.7
6,877.6
1,027.2
1,897.2
1.0
-
2,925.4
4,973.1
81.7
2,014.1
165.6
129.2
7,363.7
9,385.6
10,289.1
2,447.8
3,241.5
36.9
87.2
119.2
44.5
111.7
18.7
2,691.1
3,416.4
1,275.9
44.4
109.7
264.8
1,694.8
1,064.7
44.5
108.2
246.9
1,464.3
4,385.9
4,880.7
4,999.7
5,408.4
1,750.3
(852.9)
4,102.3
4,999.7
2,052.5
(706.3)
4,062.2
5,408.4
CIMIC 2016 ANNUAL REPORT A4 FA.indd 177
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CIMIC Group Limited Annual Report 2016 | Financial Report
CIMIC Group Limited Annual Report 2016 | Financial Report
Notes continued
for the 12 months to 31 December 2016
Notes continued
for the 12 months to 31 December 2016
39. 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 2016, 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:
39. NEW ACCOUNTING STANDARDS CONTINUED
AASB 16 – Leases
AASB 9 Financial Instruments (revised December 2014) and AASB 2014-7 Amendments to Australian Accounting Standards arising
from AASB 9 (December 2014)
after 1 January 2019.
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. The Group does not intend to early adopt the standard. Retrospective application is required with some
exceptions.
While the Group has yet to undertake a detailed assessment of the classification and measurement impacts of the new standard
the Group expects the following impacts:
-
-
-
-
the Group does not expect the new guidance to have a significant impact on the classification and measurement of its financial
assets;
the Group does not hold any financial liabilities at fair value through profit and loss and as such there is no impact of the new
standard on financial liabilities;
as a general rule more hedge relationships may be eligible for hedge accounting. Existing hedge relationships would appear to
qualify as continuing hedge relationships upon adoption of the new standard; and
the new impairment model requires the recognition of impairment provisions based on expected credit losses rather than only
incurred credit losses. Whilst the Group has not yet finalised its detailed assessment of the impact of AASB 9 and its interaction
with AASB 15 Revenue from Contracts with Customers it may result in earlier recognition of credit loss provisions.
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 the timing and quantum of revenue recognised. It replaces existing
guidance, including AASB 118 Revenue and AASB 111 Construction Contracts. The core principle of AASB 15 is that an entity shall
recognise revenue when control of a good or service transfers to a customer. This standard will become mandatory for reporting
periods beginning on or after 1 January 2018. The standard permits either a full retrospective or a modified retrospective approach
for the adoption.
The Group is assessing the impact on its consolidated financial statements resulting from the application of the new standard. Broadly
there is an increased threshold to recognising revenue and related assets in the new standard. Given the number of projects operated
by the Group, revenue in any particular year is not expected to vary significantly in percentage terms however there is expected to
be a reduction in assets recognised on the balance sheet. The following areas have been identified that are likely to be significantly
affected.
-
-
Currently under AASB 111 Construction Contracts costs incurred during the tender process are capitalised within net contract
debtors when it is deemed probable the contract will be won. Under the new standard costs can only be capitalised if they are
both expected to be recovered and either would not have been incurred if the contract had not been won or if they are intrinsic
to the delivery of a project. As such a reduction in net contract debtors is expected.
Construction revenue is predominantly derived on projects with one performance obligation. Contracted revenue will continue
to be recognised over time on a percentage completion basis however the new standard imparts a higher threshold of
probability for recognition of claims and variances. Revenue is currently recognised when it is probable that work performed
will result in revenue whereas under the new standard revenue is recognised when it is highly probable that a significant
reversal of revenue will not happen. As such a reduction in net contract debtors may be seen under the new standard.
- Mining projects typically involve payment on the delivery of ore to a client. There are several stages in mine development and
production that, dependent on the contract terms, could represent separate performance obligations. Revenue is required to
be allocated to each performance obligation and recognised on transfer of control. The appropriate allocation of revenue may
result in a change in the timing of revenue recognition that may be accelerated or deferred compared to the current method.
The new standard requires significant increases in disclosures in relation to revenue derived from contracts, key judgments
and future revenue expected to be generated.
-
AASB 16 Leases specifies how to recognise, measure and disclose leases. The standard provides a single lessee accounting model,
requiring lessees to recognise assets and liabilities for almost all leases. AASB 16 applies to annual reporting periods beginning on or
As at the reporting date, the Group has non-cancellable operating lease commitments of $969.4 million, refer to Note 32:
Commitments. The Group manages its owned and leased assets to ensure there is an appropriate level of equipment to meet its
current obligations and to tender for new work. The decision as to whether to lease or purchase an asset is dependent on the finance
available at the time and the residual risk of ownership following the anticipated completion of a project.
Many of the operating leases currently held expire prior to the implementation of the standard and decisions on future leases will
be made as projects are tendered for. As such the Group has not quantified the effect of the new standard, however the following
impacts are expected:
-
-
-
the total assets and liabilities on the balance sheet will increase with a decrease in net total assets, due to the reduction of the
capitalised asset being on a straight line basis whilst the liability reduces by the principal amount of repayments. Net current
assets will show a decrease due to an element of the liability being disclosed as a current liability;
interest expenses will increase due to the unwinding of the effective interest rate implicit in the lease. Interest expense will be
greater earlier in a leases life due to the higher principal value causing profit variability over the course of a lease life. This
effect may be partially mitigated due to number of leases held in the Group at different stages of their terms; and
operating cash flows will be higher as repayment of the principle portion of all lease liabilities will be classified as financing
activities.
The following new or amended standards are not expected to have a significant impact on the Group’s consolidated financial statements:
AASB 2016-1 Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for Unrealised Losses;
AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 107;
AASB 2016-5 Amendments to Australian Accounting Standards – Classification and Measurement of Share-based Payment
Transactions;
or Joint Venture; and
AASB 2014-10 Amendments to Australian Accounting Standards: Sale or Contribution of Assets Between an Investor and its Associate
AASB 2015-10 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128
40. EVENTS SUBSEQUENT TO REPORTING DATE
Subsequent to reporting date:
The Group determined a 100% franked dividend of 62 cents per share to be paid on 4 July 2016.
On 24 January 2017, CIMIC announced its intention to acquire the remaining shares of Macmahon that it did not already own, at a
price of $0.145 per share, made through an unconditional off‐market takeover offer.
On 25 January 2017, CIMIC, through the UGL-CH2M JV-GE Consortium, which includes UGL and its joint venture partner CH2M,
terminated its contract with JKC Australia LNG for the design, construct and commissioning of the Ichthys Combined Cycle Power
Plant. The termination is adequately covered by provisions held at 31 December 2016.
The Directors approved the financial report on 8 February 2017.
178
178
179
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CIMIC Group Limited Annual Report 2016 | Financial Report
Notes continued
for the 12 months to 31 December 2016
39. NEW ACCOUNTING STANDARDS CONTINUED
AASB 16 – Leases
AASB 16 Leases specifies how to recognise, measure and disclose leases. The standard provides a single lessee accounting model,
requiring lessees to recognise assets and liabilities for almost all leases. AASB 16 applies to annual reporting periods beginning on or
after 1 January 2019.
As at the reporting date, the Group has non-cancellable operating lease commitments of $969.4 million, refer to Note 32:
Commitments. The Group manages its owned and leased assets to ensure there is an appropriate level of equipment to meet its
current obligations and to tender for new work. The decision as to whether to lease or purchase an asset is dependent on the finance
available at the time and the residual risk of ownership following the anticipated completion of a project.
Many of the operating leases currently held expire prior to the implementation of the standard and decisions on future leases will
be made as projects are tendered for. As such the Group has not quantified the effect of the new standard, however the following
impacts are expected:
-
-
-
the total assets and liabilities on the balance sheet will increase with a decrease in net total assets, due to the reduction of the
capitalised asset being on a straight line basis whilst the liability reduces by the principal amount of repayments. Net current
assets will show a decrease due to an element of the liability being disclosed as a current liability;
interest expenses will increase due to the unwinding of the effective interest rate implicit in the lease. Interest expense will be
greater earlier in a leases life due to the higher principal value causing profit variability over the course of a lease life. This
effect may be partially mitigated due to number of leases held in the Group at different stages of their terms; and
operating cash flows will be higher as repayment of the principle portion of all lease liabilities will be classified as financing
activities.
The following new or amended standards are not expected to have a significant impact on the Group’s consolidated financial statements:
AASB 2016-1 Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for Unrealised Losses;
AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 107;
AASB 2016-5 Amendments to Australian Accounting Standards – Classification and Measurement of Share-based Payment
Transactions;
AASB 2014-10 Amendments to Australian Accounting Standards: Sale or Contribution of Assets Between an Investor and its Associate
or Joint Venture; and
AASB 2015-10 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128
40. EVENTS SUBSEQUENT TO REPORTING DATE
Subsequent to reporting date:
The Group determined a 100% franked dividend of 62 cents per share to be paid on 4 July 2016.
On 24 January 2017, CIMIC announced its intention to acquire the remaining shares of Macmahon that it did not already own, at a
price of $0.145 per share, made through an unconditional off‐market takeover offer.
On 25 January 2017, CIMIC, through the UGL-CH2M JV-GE Consortium, which includes UGL and its joint venture partner CH2M,
terminated its contract with JKC Australia LNG for the design, construct and commissioning of the Ichthys Combined Cycle Power
Plant. The termination is adequately covered by provisions held at 31 December 2016.
The Directors approved the financial report on 8 February 2017.
CIMIC 2016 ANNUAL REPORT A4 FA.indd 179
179
179
15/02/2017 9:45 am
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
www.deloitte.com.au
Independent Auditor’s Report to the members of CIMIC Group Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of CIMIC Group Limited (“CIMIC”, or the “Company”) and its subsidiaries (the “Group”), which
comprises the Consolidated Statement of Financial Position as at 31 December 2016, the Consolidated Statement of Profit or Loss,
the Consolidated Statement of Other Comprehensive Income, the Consolidated Statement of Changes in Equity and the
Consolidated Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 31 December 2016 and of its financial performance for
the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
the Code.
Key Audit Matters
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further
described in the Auditor’s Responsibilities for the Audit of the Financial Report section of this report. We are independent of the
Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the “Code”) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the
Company, would be in the same terms if given to the directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter
How the scope of our audit responded to the Key Audit
Matter
Recognition of revenue and recovery of contract debtors
including recovery of Gorgon LNG Jetty and Marine Structures
Project contract debtors
Refer to Note 1(a) ‘Revenue recognition’, Note 2 ‘Revenue’ and
Note 8 ‘Trade and other receivables’.
The Group’s two largest sources of revenue are contract mining
controls including:
and construction projects.
Mining revenues are derived from contracts based on the value
of work completed.
Construction revenues are derived from contracts where
revenue is recognised based on the stage of completion. This
is measured as the percentage of work performed up to the
reporting date with respect to the total anticipated contract
work to be performed. Construction revenue is recognised by
management after assessing all factors relevant to each
contract, including specifically assessing the following as
applicable:
-
-
-
-
Determination of stage of completion;
Estimation of total contract revenue and costs including the
estimation of cost contingencies;
Determination of contractual entitlement and assessment
of the probability of customer approval of variations and
acceptance of claims; and
Estimation of project completion date.
The Group recognises in contract debtors progressive valuation
of work completed as well as amounts invoiced to customers.
The recognition of these amounts is based on management’s
assessment of the expected amounts recoverable.
In November 2009, CIMIC, together with its consortium
partners (“the Consortium”), was announced as the preferred
contractor to construct the Gorgon LNG Jetty and Marine
Our procedures included, amongst others:
•
Evaluating management’s processes and controls in
respect of the recognition of revenue from contract mining
and construction. As part of this process we tested key
the review process conducted at the tendering
phase by
the Group’s Tender Review
Management Committee;
the preparation, review and authorisation of
monthly valuation reports for all contracts; and
the comprehensive project reviews that are
undertaken by Group management on a
quarterly basis.
•
•
A sample of site visits across the Group’s major divisions
and geographies to enhance our understanding of the
Group’s contracting processes, the consistency of their
application, and
to discuss directly with project
management the risks and opportunities in relation to
individual contracts.
Selecting a sample of contracts for testing based on a
number of quantitative and qualitative factors which may
indicate that a greater level of judgement is required in
recognising revenue, including:
history of issues identified;
significant unapproved changes, variations and
high potential impact and high likelihood of risk
claims;
delay risk;
events;
- material new contracts;
high value contracts; and
loss making contracts.
-
-
-
-
-
-
-
-
-
180
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
181
CIMIC 2016 ANNUAL REPORT A4 FA.indd 180
15/02/2017 9:45 am
CIMIC Group Limited Annual Report 2016 | Financial Report 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 85-179, 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 2016 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 38 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 CEO and CFO for the financial year ended 31 December 2016. 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 8th day of February 2017. Signed for and on behalf of the Board in accordance with a resolution of the Directors: Adolfo Valderas Russell Chenu Chief Executive Officer Chairman Audit and Risk Committee 180
Independent Auditor’s Report to the members of CIMIC Group Limited
Report on the Audit of the Financial Report
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
www.deloitte.com.au
Opinion
We have audited the financial report of CIMIC Group Limited (“CIMIC”, or the “Company”) and its subsidiaries (the “Group”), which
comprises the Consolidated Statement of Financial Position as at 31 December 2016, the Consolidated Statement of Profit or Loss,
the Consolidated Statement of Other Comprehensive Income, the Consolidated Statement of Changes in Equity and the
Consolidated Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 31 December 2016 and of its financial performance for
the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further
described in the Auditor’s Responsibilities for the Audit of the Financial Report section of this report. We are independent of the
Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the “Code”) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the
Company, would be in the same terms if given to the directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter
How the scope of our audit responded to the Key Audit
Matter
Recognition of revenue and recovery of contract debtors
including recovery of Gorgon LNG Jetty and Marine Structures
Project contract debtors
Refer to Note 1(a) ‘Revenue recognition’, Note 2 ‘Revenue’ and
Note 8 ‘Trade and other receivables’.
The Group’s two largest sources of revenue are contract mining
and construction projects.
Mining revenues are derived from contracts based on the value
of work completed.
Construction revenues are derived from contracts where
revenue is recognised based on the stage of completion. This
is measured as the percentage of work performed up to the
reporting date with respect to the total anticipated contract
work to be performed. Construction revenue is recognised by
management after assessing all factors relevant to each
contract, including specifically assessing the following as
applicable:
-
-
-
-
Determination of stage of completion;
Estimation of total contract revenue and costs including the
estimation of cost contingencies;
Determination of contractual entitlement and assessment
of the probability of customer approval of variations and
acceptance of claims; and
Estimation of project completion date.
The Group recognises in contract debtors progressive valuation
of work completed as well as amounts invoiced to customers.
The recognition of these amounts is based on management’s
assessment of the expected amounts recoverable.
In November 2009, CIMIC, together with its consortium
partners (“the Consortium”), was announced as the preferred
contractor to construct the Gorgon LNG Jetty and Marine
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
CIMIC 2016 ANNUAL REPORT A4 FA.indd 181
Our procedures included, amongst others:
•
•
•
Evaluating management’s processes and controls in
respect of the recognition of revenue from contract mining
and construction. As part of this process we tested key
controls including:
-
-
-
the review process conducted at the tendering
phase by
the Group’s Tender Review
Management Committee;
the preparation, review and authorisation of
monthly valuation reports for all contracts; and
the comprehensive project reviews that are
undertaken by Group management on a
quarterly basis.
A sample of site visits across the Group’s major divisions
and geographies to enhance our understanding of the
Group’s contracting processes, the consistency of their
application, and
to discuss directly with project
management the risks and opportunities in relation to
individual contracts.
Selecting a sample of contracts for testing based on a
number of quantitative and qualitative factors which may
indicate that a greater level of judgement is required in
recognising revenue, including:
-
-
-
-
history of issues identified;
significant unapproved changes, variations and
claims;
delay risk;
high potential impact and high likelihood of risk
events;
- material new contracts;
-
-
high value contracts; and
loss making contracts.
181
181
15/02/2017 9:45 am
182
CIMIC 2016 ANNUAL REPORT A4 FA.indd 182
15/02/2017 9:45 am
StructuresProject(“Gorgon Contract”) forChevron Australia Pty Ltd (“Chevron”).Initial acceptance of the jetty and marine structures took place on 15 August 2014.During the project, changes to scope and conditions led to the Consortium submitting Change Order Requests (“CORs”)as entitled under the contract. The Consortium, Chevron and Chevron’s agent KBR Inc. remain in negotiations in relation tothe validity and valuation ofsome of the CORs.As at 31 December 2016, contract debtors includes an amount of$1.15 billionin relation to the Gorgon Contract.CIMIC’s share of the totalamount under negotiation isapproximately $1.9 billion. CIMIC is of the viewthat it remains entitled to that amount plus interest (being an amount exceeding $0.5 billionthat will continue to accrueuntil paid)and costs (“Total Entitlement”). CIMIC has only recognised revenue equal to the costs incurred in respect of the Gorgon Contract in accordance with the relevant accounting standardsresulting in an amount ofapproximately 50%of the Total Entitlement ($1.15billion) being recognised in contract debtors at 31 December 2016.Although negotiations continue, the Consortium formally issued a Notice of Dispute to Chevron pursuant to the relevant provisions of the Gorgon Contract on 9 February 2016. That Notice required the Consortium to enter into a further prescribed negotiation process which, if unsuccessful, may lead to a private arbitration.The parties have moved into an arbitration prescribed by the contract.As the Gorgon Contract does not specify a time limit within which the process must be determined, there can be no certainty as to when the matter will be finalised.In addition, and in order to further pursue its entitlement under the Gorgon Contract, on 20 August 2016 CIMIC announced that it had commenced proceedings in the United States against Chevron CorporationInc., KBR Inc. and related companies. We focused on recognition of revenue and recovery of contract debtors including recovery of Gorgon Contract contract debtorsas key audit matters due to the number and type of estimation events over the course of a contract life, the unique nature of individual contract termsleading to complex and judgemental revenue recognition from contracts and the judgement involved in evaluating the probability of recovery of contract debtors.•For the sample of contracts selected the following procedures were performed, amongst others:- we obtained an understanding of the contract terms and conditions to evaluate whether thesewere reflected in management’s estimate of forecast costs and revenue;- we tested a sample of costs incurred to date and agreed these to supporting documentation;- we assessed theforecast costs to complete through discussion and challenge of project managers and finance personnel;- we tested contractual entitlement for changes, variations and claims recognised within contract revenueto supporting documentation and by reference to the underlying contract;- we evaluated significant exposures to liquidated damages for late delivery of contract works;- we evaluated contract performance in the period since year end to audit opinion date to confirm management’s year end revenue recognitionjudgements; and- we evaluated the probability of recovery of outstanding amounts by reference to the status of contract negotiations, historical recoveries and other supporting documentation.•In respect of the Gorgon Contract, the following procedures wereperformed:- we evaluated the probability and timing of recovery of outstanding amounts by reference to historical recoveries, the status of contract negotiations, Notice of Dispute, legal proceedings and other supporting documentation;- we made enquiries ofinternal legal counsel and management appointed external legal counsel in respect of the current status of negotiations;- we read documents lodged with United States courts commencing legal proceedings against Chevron Corporation and KBRInc.;and- we assessed the appropriateness of the relevant disclosures in the financial statements.Recoverability of carrying value of investment in and loans receivable from HLG ContractingLLCRefer to Note 26 ‘Joint Venture Entities – HLG Contracting LLC(“HLG”)’and Note 8 ‘Trade and other receivables’.Included in the Group’s consolidated statement of financial position at 31 December 2016 is the equity accounted investment in HLG at a carrying value of $366.5 millionand loans (including interest) receivable from HLG totalling $1.04billion. The assessment of the recoverable amount of the Group’s investment in and loans receivable from HLG involves significant judgement in respect of assumptions such as discount rates, current work in hand, future contract wins and the recoverability of certain legacy contract receivables, as well as economic assumptions such as growth rate and foreign currency exchange rates.The recoverable amount of the Group’s investment in and loans receivable from HLG was a key audit matterdue to the significant judgement involved in forecasting future cash flows and the selection of assumptions.In conjunction with valuation experts, our procedures included, amongst others:•Evaluating the ‘value in use’ discounted cash flow model developed by management to assess the recoverable amount of the investment and the loans receivable, including critically assessing the following assumptions:- discount rate; - forecast cash flowsand capital expenditure;- forecast recoverability of certain legacy contract receivables;- terminal growth rate; and- foreign currency exchange rates.Where possible we corroborated market related assumptions by reference to external data.•Testing on a sample basis the mathematical accuracy of the cash flow models.•Assessingthe historical accuracy of forecasting of the Group in relation to HLG.•Performing sensitivity analysis on a number of assumptions, including the deferral of cash receipts on certain legacy contract receivables and on revenue assumptions.•Assessingthe appropriateness of the relevant disclosures in the financial statements.182Carrying value of goodwillRefer to Note 15 ‘Intangibles’.Included in the Group’s consolidated statement of financial position at 31 December 2016 is goodwill relating to Servicesof $360.5million, Miningand Mineral Processingof $98.1 million, and Construction of $455.4million. Management hasassessedthe recoverable amount of the goodwillrelating to Constructionutilising discounted cash flow models which incorporate significant judgement inrespect of assumptions such asdiscount rates andfuture contract wins, as well as economic assumptions such as growth rates.We focused on this area as a key audit matter due to the judgement involved in forecasting future cash flows and the selection of assumptions.In conjunction withvaluation experts, our procedures included, amongst others:•Evaluating the ‘value in use’ discounted cash flow model developed by management to assess the recoverable amount of the goodwill, including critically assessing the following assumptions:- discount rate;- forecast cash flowsand capital expenditure;- growth rates by reference to recent bid wins and pipelineof prospective projects; and- terminal growth rate.Where possible we corroborated market related assumptions by reference to external data.•Testing on a sample basis the mathematical accuracy of the cash flow model and agreeing relevant data to the latest Board approved forecasts.•Assessing the historical accuracy of forecasting of the Group in relation to cash flows of cash generating units.•Performing sensitivity analysis on a number of assumptions, including discount rates and forecast profitability.•Assessingthe appropriateness of the relevant disclosures in the financial statements.Acquisition of UGL LimitedRefer to Note 30 ‘Acquisitions, disposals and discontinued operations’. On 10 October 2016 the Group made an unconditional cash off-market takeover offer for all of the shares it did not own in UGL Limited (“UGL”) for $3.15 per share. On 24 November 2016 the Group increased its ownership interest inUGLto over 50% and thereby gained controlat that date.The purchase considerationpaid for UGL was $262.1million.As at 31 December 2016, the Group’s ownership interest in UGL was 95%. Accounting for this transaction is complex, requiring management to exercise judgement to determine the fair value of acquired assets and liabilities, includingcontracts anddetermining the allocation of purchase consideration to goodwill and separately identifiable intangible assets such as customer contracts.We focussed on this area as a key audit matter due to the size of the acquisition and the judgementinvolved in accounting for the transaction.In conjunction with valuation experts, ourprocedures included, amongst others:•Reading the bidder’s statementand target’s statementfor the unconditional cash off-market takeover offerto understand key terms and conditions.•Critically evaluating the fair value model developed by management to determine the value of UGL’s intangible customer contracts to the Group. •Assessing the reliability of third party valuations utilised by managementin their determination of fair value of acquired assets and liabilitiesincluding provisions for loss making contracts. •Performing testing on certain fair value adjustments,including tocontracts, withinthe provisional fair value accounting for the transaction. •Assessing the appropriateness of the relevant disclosures in the financial statements.Other Information The directors are responsible for the other information. The other information comprises the information included in the Executive Chairman and CEO’s Review, Directors’ Report and Additional Information within the Company’s annual report for the year ended31 December 2016, but does not include the financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with ouraudit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears tobe materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Directors’ Responsibilities Thedirectors 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 2001and 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 preparing the financial report, the directors are responsible for assessing the abilityof the Groupto continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realisticalternative but to do so. 183 CIMIC 2016 ANNUAL REPORT A4 FA.indd 183
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StructuresProject(“Gorgon Contract”) forChevron Australia Pty Ltd (“Chevron”).Initial acceptance of the jetty and marine structures took place on 15 August 2014.During the project, changes to scope and conditions led to the Consortium submitting Change Order Requests (“CORs”)as entitled under the contract. The Consortium, Chevron and Chevron’s agent KBR Inc. remain in negotiations in relation tothe validity and valuation ofsome of the CORs.As at 31 December 2016, contract debtors includes an amount of$1.15 billionin relation to the Gorgon Contract.CIMIC’s share of the totalamount under negotiation isapproximately $1.9 billion. CIMIC is of the viewthat it remains entitled to that amount plus interest (being an amount exceeding $0.5 billionthat will continue to accrueuntil paid)and costs (“Total Entitlement”). CIMIC has only recognised revenue equal to the costs incurred in respect of the Gorgon Contract in accordance with the relevant accounting standardsresulting in an amount ofapproximately 50%of the Total Entitlement ($1.15billion) being recognised in contract debtors at 31 December 2016.Although negotiations continue, the Consortium formally issued a Notice of Dispute to Chevron pursuant to the relevant provisions of the Gorgon Contract on 9 February 2016. That Notice required the Consortium to enter into a further prescribed negotiation process which, if unsuccessful, may lead to a private arbitration.The parties have moved into an arbitration prescribed by the contract.As the Gorgon Contract does not specify a time limit within which the process must be determined, there can be no certainty as to when the matter will be finalised.In addition, and in order to further pursue its entitlement under the Gorgon Contract, on 20 August 2016 CIMIC announced that it had commenced proceedings in the United States against Chevron CorporationInc., KBR Inc. and related companies. We focused on recognition of revenue and recovery of contract debtors including recovery of Gorgon Contract contract debtorsas key audit matters due to the number and type of estimation events over the course of a contract life, the unique nature of individual contract termsleading to complex and judgemental revenue recognition from contracts and the judgement involved in evaluating the probability of recovery of contract debtors.•For the sample of contracts selected the following procedures were performed, amongst others:- we obtained an understanding of the contract terms and conditions to evaluate whether thesewere reflected in management’s estimate of forecast costs and revenue;- we tested a sample of costs incurred to date and agreed these to supporting documentation;- we assessed theforecast costs to complete through discussion and challenge of project managers and finance personnel;- we tested contractual entitlement for changes, variations and claims recognised within contract revenueto supporting documentation and by reference to the underlying contract;- we evaluated significant exposures to liquidated damages for late delivery of contract works;- we evaluated contract performance in the period since year end to audit opinion date to confirm management’s year end revenue recognitionjudgements; and- we evaluated the probability of recovery of outstanding amounts by reference to the status of contract negotiations, historical recoveries and other supporting documentation.•In respect of the Gorgon Contract, the following procedures wereperformed:- we evaluated the probability and timing of recovery of outstanding amounts by reference to historical recoveries, the status of contract negotiations, Notice of Dispute, legal proceedings and other supporting documentation;- we made enquiries ofinternal legal counsel and management appointed external legal counsel in respect of the current status of negotiations;- we read documents lodged with United States courts commencing legal proceedings against Chevron Corporation and KBRInc.;and- we assessed the appropriateness of the relevant disclosures in the financial statements.Recoverability of carrying value of investment in and loans receivable from HLG ContractingLLCRefer to Note 26 ‘Joint Venture Entities – HLG Contracting LLC(“HLG”)’and Note 8 ‘Trade and other receivables’.Included in the Group’s consolidated statement of financial position at 31 December 2016 is the equity accounted investment in HLG at a carrying value of $366.5 millionand loans (including interest) receivable from HLG totalling $1.04billion. The assessment of the recoverable amount of the Group’s investment in and loans receivable from HLG involves significant judgement in respect of assumptions such as discount rates, current work in hand, future contract wins and the recoverability of certain legacy contract receivables, as well as economic assumptions such as growth rate and foreign currency exchange rates.The recoverable amount of the Group’s investment in and loans receivable from HLG was a key audit matterdue to the significant judgement involved in forecasting future cash flows and the selection of assumptions.In conjunction with valuation experts, our procedures included, amongst others:•Evaluating the ‘value in use’ discounted cash flow model developed by management to assess the recoverable amount of the investment and the loans receivable, including critically assessing the following assumptions:- discount rate; - forecast cash flowsand capital expenditure;- forecast recoverability of certain legacy contract receivables;- terminal growth rate; and- foreign currency exchange rates.Where possible we corroborated market related assumptions by reference to external data.•Testing on a sample basis the mathematical accuracy of the cash flow models.•Assessingthe historical accuracy of forecasting of the Group in relation to HLG.•Performing sensitivity analysis on a number of assumptions, including the deferral of cash receipts on certain legacy contract receivables and on revenue assumptions.•Assessingthe appropriateness of the relevant disclosures in the financial statements.182Carrying value of goodwillRefer to Note 15 ‘Intangibles’.Included in the Group’s consolidated statement of financial position at 31 December 2016 is goodwill relating to Servicesof $360.5million, Miningand Mineral Processingof $98.1 million, and Construction of $455.4million. Management hasassessedthe recoverable amount of the goodwillrelating to Constructionutilising discounted cash flow models which incorporate significant judgement inrespect of assumptions such asdiscount rates andfuture contract wins, as well as economic assumptions such as growth rates.We focused on this area as a key audit matter due to the judgement involved in forecasting future cash flows and the selection of assumptions.In conjunction withvaluation experts, our procedures included, amongst others:•Evaluating the ‘value in use’ discounted cash flow model developed by management to assess the recoverable amount of the goodwill, including critically assessing the following assumptions:- discount rate;- forecast cash flowsand capital expenditure;- growth rates by reference to recent bid wins and pipelineof prospective projects; and- terminal growth rate.Where possible we corroborated market related assumptions by reference to external data.•Testing on a sample basis the mathematical accuracy of the cash flow model and agreeing relevant data to the latest Board approved forecasts.•Assessing the historical accuracy of forecasting of the Group in relation to cash flows of cash generating units.•Performing sensitivity analysis on a number of assumptions, including discount rates and forecast profitability.•Assessingthe appropriateness of the relevant disclosures in the financial statements.Acquisition of UGL LimitedRefer to Note 30 ‘Acquisitions, disposals and discontinued operations’. On 10 October 2016 the Group made an unconditional cash off-market takeover offer for all of the shares it did not own in UGL Limited (“UGL”) for $3.15 per share. On 24 November 2016 the Group increased its ownership interest inUGLto over 50% and thereby gained controlat that date.The purchase considerationpaid for UGL was $262.1million.As at 31 December 2016, the Group’s ownership interest in UGL was 95%. Accounting for this transaction is complex, requiring management to exercise judgement to determine the fair value of acquired assets and liabilities, includingcontracts anddetermining the allocation of purchase consideration to goodwill and separately identifiable intangible assets such as customer contracts.We focussed on this area as a key audit matter due to the size of the acquisition and the judgementinvolved in accounting for the transaction.In conjunction with valuation experts, ourprocedures included, amongst others:•Reading the bidder’s statementand target’s statementfor the unconditional cash off-market takeover offerto understand key terms and conditions.•Critically evaluating the fair value model developed by management to determine the value of UGL’s intangible customer contracts to the Group. •Assessing the reliability of third party valuations utilised by managementin their determination of fair value of acquired assets and liabilitiesincluding provisions for loss making contracts. •Performing testing on certain fair value adjustments,including tocontracts, withinthe provisional fair value accounting for the transaction. •Assessing the appropriateness of the relevant disclosures in the financial statements.Other Information The directors are responsible for the other information. The other information comprises the information included in the Executive Chairman and CEO’s Review, Directors’ Report and Additional Information within the Company’s annual report for the year ended31 December 2016, but does not include the financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with ouraudit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears tobe materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Directors’ Responsibilities Thedirectors 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 2001and 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 preparing the financial report, the directors are responsible for assessing the abilityof the Groupto continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realisticalternative but to do so. 183 184
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Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatementwhen it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: •Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. •Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate inthe circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. •Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. •Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,future events or conditions may cause the Group to cease to continue as a going concern. •Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. •Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report.We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current periodand are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rarecircumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.Report on the Remuneration ReportOpinion on the Remuneration ReportWe have audited the Remuneration Report included in pages 29to 42of the directors’ report for the year ended 31 December 2016. In our opinion, the Remuneration Report of CIMIC Group Limited, for the year ended 31 December 2016, complies with section 300A of the Corporations Act 2001. ResponsibilitiesThe 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.DELOITTE TOUCHE TOHMATSU J A Leotta Partner Chartered AccountantsSydney, 8 February 2017184 Additional
Information
Leighton Asia, Express Rail Link - Contract 810A, Hong Kong
The West Kowloon Terminus Station North is the largest civil contract awarded for
the Hong Kong Section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link.
Located in the heart of Kowloon, the terminus will serve as Hong Kong’s international
gateway to China. A key element of the project is the dramatic roof structure above
the station entrance made up of 7,000 tonnes of steel trusses.
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185
Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatementwhen it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: •Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. •Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate inthe circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. •Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. •Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,future events or conditions may cause the Group to cease to continue as a going concern. •Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. •Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report.We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current periodand are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rarecircumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.Report on the Remuneration ReportOpinion on the Remuneration ReportWe have audited the Remuneration Report included in pages 29to 42of the directors’ report for the year ended 31 December 2016. In our opinion, the Remuneration Report of CIMIC Group Limited, for the year ended 31 December 2016, complies with section 300A of the Corporations Act 2001. ResponsibilitiesThe 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.DELOITTE TOUCHE TOHMATSU J A Leotta Partner Chartered AccountantsSydney, 8 February 2017184 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
No. of shares
235,668,760*
Voting power
71.88%
* Number of shares as at 29 July 2016, the date of disclosure in the substantial shareholding notice given to the Company.
The Company has 343,767 share rights on issue. The distribution is as follows:
No. of holders
Share rights
SHARE RIGHTS
Size of holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
OPTIONS
Size of holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
The options do not carry any rights to voting.
The share rights do not carry any rights to voting.
The Company has 552,231 options on issue. The distribution is as follows:
2
38
9
7
0
56
0
1
12
15
1
29
No. of holders
1,721
120,044
59,058
162,944
-
343,767
Options
-
1,113
94,705
351,801
104,612
552,231
CIMIC Group Limited Annual Report 2016 | Additional Information
CIMIC Group Limited Annual Report 2016 | Additional Information
Shareholdings
The information below is current as at 23 January 2017.
TWENTY LARGEST SHAREHOLDERS
The 20 largest shareholders on the Company’s register of members held 92.55% of the Company’s issued capital.
Name
HOCHTIEF AUSTRALIA HOLDINGS LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
MILTON CORPORATION LIMITED
BNP PARIBAS NOMINEES PTY LTD
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