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2 CIMIC Group Limited Annual Report 2017
A world-leading infrastructure,
mining, services and public
private partnerships group
Developing, investing in and managing
infrastructure concession assets, leveraging
CIMIC Group’s financial strength.
Photo: Canberra Light Rail Stage One PPP, Australian Capital Territory, CPB Contractors, Pacific Partnerships and UGL.
CIMIC Group Limited Annual Report 2017 3
Our activity focused
businesses
CIMIC Group provides leadership, strategy,
corporate governance and financial strength to
its operating companies.
CONSTRUCTION
MINING
MINERAL PROCESSING
CPB Contractors combines
the design and construction
expertise and track record
formerly delivered by Leighton
Contractors and Thiess in
Australia and New Zealand.
It includes the people and
projects of Leighton Asia, the
contractor behind some of
Asia’s most complex 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
public private partnerships in
conjunction with CIMIC Group’s
Pacific Partnerships, design
and construct, construct only,
construction management, and in
alliances and joint ventures.
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
that delivers value for our clients.
The team understands how to
optimise resources over the
mining lifecycle and how to
manage market changes and
evolving requirements, tailoring
Thiess’ services to optimise the
mining value chain unique to
each mine.
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 through excellence
in engineering and innovative
solutions.
From pre-feasibility and
commissioning through to
operations, Sedgman has
completed close to 200
processing and materials
handling projects in diverse
and remote locations globally.
Sedgman has a balanced
commodity portfolio across base
and precious metals, industrial
minerals, coal and iron ore, as
well as associated minesite
infrastructure.
4 CIMIC Group Limited Annual Report 2017
Photo: WestConnex M4 East, New South Wales, Australia, CPB Contractors.
SERVICES
PUBLIC PRIVATE PARTNERSHIPS
ENGINEERING
OTHER INVESTMENTS
PACIFIC PARTNERSHIPS
develops, invests in and manages
infrastructure concession
assets, leveraging CIMIC Group’s
financial strength and Operating
Company capabilities.
Pacific Partnerships offers
clients seamless value for money
solutions for the finance, design,
construction, operations and
maintenance of key infrastructure
under public private partnership
(PPP) and build own operate
transfer (BOOT) structures.
CIMIC has been responsible for
the delivery of more than
20 PPPs with a value of over
$32 billion.
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.
Leading innovation, EIC
Activities provides all Operating
Companies with access to the
Group’s collective experience,
technical capabilities and leading
edge technology applications.
EIC Activities brings engineering
experts, technical solutions, lean
practices and global industry
developments – equipping tender
and project teams with more
levers to innovate, mitigate risk,
add value and drive performance.
UGL is a diversified services
company delivering critical
assets and essential services
that sustain and enhance the
environment in which we live.
UGL delivers comprehensive
engineering, operations and
maintenance services to the
rail, transportation, technology,
energy, resources, water,
renewables and defence sectors.
UGL’s capabilities extend across
a broad range of services and
whole-of-life solutions, utilising
world-leading, sustainable and
innovative technologies to deliver
great outcomes for our clients
across diverse industry sectors.
UGL’s skilled workforce, project
delivery expertise in asset
management, operations
and maintenance, design
and construction, project
management capability, and end-
to-end engineering is backed
by a continuous focus on safety,
innovation and improvement.
CIMIC Group Limited Annual Report 2017 5
Our worldwide
expertise
Ulaanbaatar
MONGOLIA
Doha
QATAR
New Delhi
Shanghai
Dubai
UNITED
ARAB
EMIRATES
INDIA
Mumbai
Kolkata
HONG KONG
PHILIPPINES
MALAYSIA
Kuala Lumpur
SINGAPORE
INDONESIA
PAPUA
NEW
GUINEA
Jakarta
Port Moresby
BOTSWANA
Johannesburg
AUSTRALIA
Brisbane
Perth
Sydney
Adelaide
Melbourne
COUNTRIES WITH CURRENT CIMIC GROUP PROJECTS AND INVESTMENTS
International and Australian offices
6 CIMIC Group Limited Annual Report 2017
Photo: APA Group’s Emu Downs Solar Farm project, Western Australia, UGL.
CANADA
Edmonton
Vancouver
USA
PAPUA
NEW
GUINEA
NEW
CALEDONIA
Auckland
Wellington
NEW ZEALAND
Santiago
CHILE
CIMIC Group Limited Annual Report 2017 7
Our Principles
guide our
actions
Our approach to business is summarised in four
Principles which guide our actions and act as a
common unifying bond across our operations:
Integrity, Accountability, Innovation and Delivery.
Each of these Principles is underpinned by a
continual focus on Safety.
INTEGRITY Being honest and acting with
respect for ourselves, our colleagues, our
clients, our suppliers and shareholders.
ACCOUNTABILITY Taking responsibility
for achieving outcomes and focusing on
finding solutions.
INNOVATION Committing to continuous
improvement. Through an ability to be
self-critical we can find better, more
efficient ways of doing things.
DELIVERY Our ability to deliver drives our
reputation and credibility.
SAFETY underpins everything we do. The
provision of a safe and healthy working
environment for all our employees and
those under our care is vital.
These Principles pervade every
aspect of our operations.
We hold ourselves to a consistently
high standard of health and safety
wherever we operate, regardless of the
regulatory requirements and the operating
environment. We are committed to the
elimination of fatalities and permanent
disabilities, and the systematic reduction
of all other injuries.
To achieve our health and safety
objectives, we continually focus on
strengthening our risk management
systems, instilling a strong safety culture
and reducing the frequency and severity
of our injuries.
8 CIMIC Group Limited Annual Report 2017
Photo: Express Rail Link, West Kowloon Terminus Station North project, Hong Kong, Leighton Asia.
CIMIC Group Limited Annual Report 2017 9
Executive Chairman’s
review
Dear shareholders,
2017 was a landmark year for CIMIC Group, with the
delivery of an outstanding operating performance
and improved shareholder returns. We achieved
this outcome with a clear focus on excelling for our
clients and on building rewarding and safe careers
for our people.
In more than 20 countries, across Australia, the
Pacific, Asia, and North and South America, our
people continued to deliver exceptional projects for
our clients in 2017.
From our public private partnership, services
and construction operations, through which we
are providing major infrastructure and services
that transform communities, to our mining and
mineral processing operations, that are sustainably
delivering many of the world’s major commodities,
we again demonstrated that we have the expertise
and passion to achieve great outcomes.
Focus on innovation
In 2017, we had a strong focus on innovation,
making it intertwined in everything we do.
Innovation involves asking how we can make a
task safer or simpler, and how we can achieve
more value by working differently with technical
solutions, improved methods and processes.
In March 2017, we launched the CIMIC Group
Innovation Awards to promote and recognise
innovation within the business, in order to better
share our ideas and continually improve. The entries
highlighted how our people are solving problems,
evolving and developing new ideas, and making
improvements in safety and operational delivery.
EIC Activities, our engineering and technical
services business, plays a key role in guiding and
supporting our companies to invest in innovation.
The people in EIC Activities devote a significant
part of their time to innovation, an investment
which is amplified across our companies, ensuring
we stay at the forefront of our industries, offer our
clients the best solutions and provide our people
with an exciting working environment.
Reflecting this focus, I was pleased that CIMIC
Group was the first Australasian company to
achieve Kitemark certification for excellence in
Building Information Modelling (BIM) in design
and construction from the international
standards leader, British Standards Institution
(BSI). BSI certification is the international
benchmark for excellence in digital engineering
and project delivery.
In more than 20 countries,
our 50,000 people delivered
exceptional outcomes for
our clients in 2017.
Marcelino Fernández Verdes
Executive Chairman
10 CIMIC Group Limited Annual Report 2017
Photo: Transmission Gully PPP, New Zealand, CPB Contractors.
Pacific Partnerships is sponsor and equity investor.
Ventia to provide operations and maintenance.
Our team
Shareholder returns
We employ a talented team of more than 50,000
people around the world. Their drive in 2017 was
impressive, as we responded to the high level of
opportunities in our markets. On behalf of the
Board, I would like to publicly thank our people
for the tangible difference they made to the
communities which rely on the infrastructure,
services and commodities we deliver; their
exceptional work during the past year should
be recognised.
I’m pleased to advise that our operating
companies completed 2017 without a fatality;
we will continue our unrelenting focus on safety
and culture during 2018 and beyond. For more
information, please review the safety section of
our Sustainability Report.
I would like to welcome Michael Wright, who was
appointed as CEO and Managing Director on
1 December 2017 and thank Adolfo Valderas for
his contribution to the Company in his various
leadership roles, most recently as the CEO and
Managing Director. Adolfo played an integral
role in achieving the Group’s present robust and
competitive position, and he remains involved with
the Company as an Alternate Director.
Michael has a proven record of achievement
and leadership with the Group, and has gained
experience across all our disciplines during his
20-year career with us. The Board and I are
confident in his ability to guide CIMIC Group on
its future path.
I would also like to welcome Kate Spargo, who
joined the Board as an Independent Non-Executive
Director on 20 September 2017. Kate’s background
as an independent company director and deep
knowledge of the sectors in which CIMIC Group
operates, including her highly regarded experience
with UGL, makes her a valuable addition to
the Board.
Demonstrating our focus on sustainable proceeds
for shareholders, I am pleased to inform you that
we further improved shareholder returns in 2017.
We again reached the top of our profit guidance
range, reporting net profit after tax of $702 million,
an increase of 21% on 2016. Our strong performance
has enabled the Board to declare a 100% franked
final dividend of 75 cents per share (anticipated to
be $243.2 million in total based on shares on issue as
at 31 December 2017) to be paid on 4 July 2018. This
represents a full year payout ratio of 62.3% of net
profit after tax, consistent with our dividend policy.
CIMIC’s share price increased 47.3% during the year,
in contrast to the 7% improvement in the S&P/ASX
200 index. Combining the share price appreciation
and dividends paid in 2017, we achieved a total
shareholder return of 51%.
Thank you
In summary, I am pleased with the Group’s
strong performance in 2017 and excited about
our future. There is an extensive pipeline of new
work opportunities ahead for CIMIC Group,
providing us with a positive outlook. In 2018, we
will maintain our focus on generating sustainable
returns for shareholders as we pursue new project
opportunities, including public private partnerships.
In closing, I would like to thank you, 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 2018.
Sincerely,
Marcelino Fernández Verdes
Executive Chairman
CIMIC Group Limited Annual Report 2017 11
Chief Executive
Officer’s review
Dear shareholders,
It is both an honour and a privilege to have been
appointed as the CEO and Managing Director of
CIMIC Group – a company that I have been a part
of for 20 years.
Culture, people and safety
Everything we do at CIMIC is predicated on our
people. The value we deliver to our clients is only
possible because of the expertise and passion of
our people. Making sure they return home safely
to their families is the most important thing we do.
In 2017 we continued our focus on the elimination
of fatalities and the systematic reduction of all
other injuries, by further embedding critical safety
controls (such as our Safety Essentials) and by
constantly challenging our workplace culture.
It is paramount that we keep striving to improve
in health, safety and wellbeing, and I was pleased
to see again this year the genuine commitment of
our leaders and our teams to this goal.
We also maintained our focus on the development
of our people, deploying leadership programs
across our business, and continuing to develop
our award winning graduate program. Our
commitment to investing in our employees and
providing long-term, rewarding careers was
demonstrated by the many internal promotions
during the year.
We gave greater attention to diversity and
inclusion, rolling out training programs in
unconscious bias, equal employment opportunity,
discrimination, bullying and harassment, as well as
developing workforce reporting to track diversity
participation. In 2017, across our operations, we
also again proactively addressed the pay gap
between men and women.
Since year end we have launched a network to
connect our people and attract new employees by
promoting our gender equality focus, in particular
in the area of encouraging women into non-
traditional roles and industries. The network was
born out of an initiative of senior women working
on one of Australia’s biggest projects, who wanted
to promote diversity in the traditionally male
environment of tunnelling. Today, our concept is
broader: to create change and increase diversity
by providing opportunities for female employees
through networking, development and support
across all of our businesses and disciplines.
I am pleased to report we
achieved an outstanding
operating performance and
have an extensive pipeline of
opportunities ahead.
Michael Wright
Chief Executive Officer
12 CIMIC Group Limited Annual Report 2017
Photo: Liantang/Heung Yuen Wai Boundary Control Point, Hong Kong, Leighton Asia.
Performance overview
Work won and our outlook
I am pleased to report that in 2017 we achieved
a solid operating performance due to the
ongoing efforts of our people. We leveraged
our competitive position and favourable market
conditions to produce an outstanding result
and further diversify work in hand across our
core businesses.
We achieved net profit after tax at the top end
of our guidance and further strengthened our
balance sheet, positioning us well for strategic
growth opportunities, including public private
partnerships, and sustained shareholder returns.
Highlights of the 2017 result compared with
2016 were:
• Net profit after tax of $702 million, up 21%,
at the top end of guidance of $640 million to
$700 million
• Revenue1 of $13.4 billion, up 24%, with solid
Reflecting the expertise and passion of our people,
we secured new work of $18.4 billion during 2017,
bringing work in hand to $36 billion.
All of our core businesses contributed to the
diversification and growth of work in hand, with
an increase of 15% in work in hand in our core
businesses of construction, services and mining.
During the period:
• We expanded our leading position in
construction, winning several large scale
infrastructure projects, including CPB
Contractors’ selection to deliver a new metro
railway crossing deep under Sydney Harbour.
The $2.81 billion contract (CPB Contractors share
is 45%) is to deliver twin 15.5km tunnels and
associated civil works on Stage 2 of the Sydney
Metro – Australia’s biggest public transport
project.
contributions from all core businesses
• CPB Contractors was also chosen for
• Strong earnings before interest and tax, profit
before tax, and net profit after tax margins2 of
7.5%, 7.1% and 5.2% respectively
• Strong cash flows from operating activities3
of $1.5 billion, up 27%; and an earnings before
interest, tax, depreciation and amortisation cash
conversion rate of 101%
• Free operating cash flow4 of over $1.0 billion,
up 12%
• Net cash of $910 million at 31 December 2017,
up by more than $500 million.
This was supported by our robust balance sheet
and improved investment grade rating, which
was upgraded one notch during 2017, by both
Standard & Poor’s and Moody’s Investors Service.
These achievements are due to the exceptional
work of our 50,000 people. Their safety is, and
always will be, our first priority and this was
demonstrated in a 2.6 total recordable injury
frequency rate, an improvement from 2016.
Further details on our Company’s performance are
contained in the Operating and Financial Review
section within this Annual Report.
construction of Victoria’s multi-billion dollar West
Gate Tunnel, generating revenue of
$2.49 billion.
• Leighton Asia is undertaking a major new
tunnelling project in Singapore, the Deep Tunnel
Sewerage System Phase 2 contract, generating
revenue of $470 million.
• Both CPB Contractors and Leighton Asia are
undertaking major airport upgrades in Hong
Kong and Queensland.
1
Revenue excludes revenue from joint ventures and associates.
2
Margins are calculated on revenue which excludes revenue from
joint ventures and associates.
3
Cash flows from operating activities before interest, finance costs,
taxes and dividends received.
4
Free operating cash flow is defined as net cash from operating
activities less net capital expenditure for property, plant and
equipment.
CIMIC Group Limited Annual Report 2017 13
For the second year, we were also included
in the FTSE4Good Index which measures the
performance of companies demonstrating strong
environmental, social and governance practices.
The Sustainability Report within this Annual
Report sets out our performance across a range
of metrics, as well as providing case studies which
show how acting sustainably can lead to improved
returns for shareholders.
Looking forward
Our focus is to sustain our leading position in
infrastructure, mining and services, with particular
attention on developing our public private
partnership business. We will continue to develop
our safety and performance culture and deliver
additional client value through collaboration
opportunities between our companies.
This includes further embedding our approach
to safety, innovation, leadership, governance,
project delivery and risk control in all aspects of
our operations, and continuing to develop the
Group’s culture for the benefit of our clients, our
shareholders and our people.
Based on our strategic and operational success in
2017 and the extensive pipeline of opportunities
in the current year, we expect to continue to drive
our business forward in 2018.
I look forward to sharing more about our
future plans at the Annual General Meeting later
this year. Thank you for your ongoing support
and confidence.
Sincerely,
Michael Wright
Chief Executive Officer
• We contributed our financial strength and
diverse capabilities to the third New Zealand
Schools public private partnership initiative.
Pacific Partnerships and CPB Contractors
are undertaking work spanning the design,
construction and financing of the project.
• We advanced our position as a leading services
provider, with UGL extending its operation and
maintenance of the Melbourne suburban train
network. The contract is providing revenue of
approximately $1.9 billion over the initial term.
UGL also secured several solar projects across
Australia and a utilities upgrade contract
in Singapore.
• We achieved growth in mining and mineral
processing, with Thiess announcing new
contracts and extensions in Australia and
Indonesia. This included an extension at the
Solomon Hub mine in Western Australia to
2020, generating revenue of $650 million, as
well as other expansions across its six operating
countries.
Our work in hand, combined with our focus on
bidding discipline, means we are positioned to
achieve net profit after tax in the range of
$720 million to $780 million in 2018, subject to
market conditions.
There is at least $110 billion of tenders relevant to
CIMIC Group to be bid and/or awarded in 2018,
and around $285 billion of projects coming to
the market in 2019 and beyond, including about
$65 billion worth of public private partnership
projects. We are in a strong position to benefit
from this pipeline. As Marcelino outlined, our
focus on innovation is helping us to develop
technologies, systems and processes that improve
our productivity and the results for our clients and
shareholders.
Sustainability
Sustainability is integral to the creation of value.
Our approach is about building a reputation
as a provider of choice with our clients and
shareholders, and creating a positive legacy for
our stakeholders and the communities in which we
work and live.
Our sustainability performance was recognised
in 2017 by the industry leading Dow Jones
Sustainability Indices (DJSI), where we were the
only construction and engineering company to
be included in DJSI’s Australia Index. We were
recognised as an ‘industry best’ performer in
several categories.
14 CIMIC Group Limited Annual Report 2017
C Photo: Level Crossing Removal Project: Caulfield to Dandenong, Victoria, Australia, CPB Contractors.
CPB Contractors has also completed level crossing removal projects at St Albans, Blackburn and Mitcham in Victoria.
CIMIC Group Limited Annual Report 2017 15
2017
CIMIC Group
at a glance
$2.81bn
Value of the tunnels and civil contract
being delivered by CPB Contractors
(in JV) for Sydney Metro Stage 2
93
Power projects delivered by UGL in
the past five years, plus a further
10 renewable energy projects
1,580
Passenger rail cars maintained by UGL,
with maintenance of a further
1,260 rail cars overseen
27,000
Engineering drawings and
models created by Sedgman
during 2017
Photo: Kaltim Prima Coal, Sangatta, Indonesia, Thiess.
16 CIMIC Group Limited Annual Report 2017
$3.56bn
Combined value of three major
gateway projects* in Hong Kong into
China delivered by Leighton Asia
$32bn
Value of the more than 20 PPPs
delivered by CIMIC, with the expertise
residing in Pacific Partnerships
12,000
EIC Activities’ hours devoted to
innovation, totalling 10% of its
total work hours
$4.2bn
Replacement value of the mobile equipment
fleet operated and maintained by Thiess –
the largest fleet contractor globally
600t
Weight of the Cat 797 dump truck and
the Liebherr T282 each, the largest
haul trucks operated by Thiess
47.3%
CIMIC’s share price increase during
2017, in contrast to the 7% improvement
in the S&P/ASX 200 index
$702m
CIMIC’s net profit after tax,
an increase of 21% on 2016,
at the top of guidance
20Mt
Tonnes of coal processed across
Sedgman operational sites
during 2017
* $1.16 billion Hong Kong-Zhuhai-Macao Bridge Passenger Clearance Building; $1.2 billion West Kowloon Terminus
Station North and $1.2 billion Liantang / Heung Yuen Wai Boundary Control Point project.
CIMIC Group Limited Annual Report 2017 17
27,000
Engineering drawings and
models created by Sedgman
during 2017
Providing the leading end-to-end offer -
from planning to infrastructure to operations
and maintenance - for mining and minerals
projects globally.
Photo: Lake Vermont coal handling and processing plant upgrade, and ongoing mine operations, Queensland, Australia,
Thiess and Sedgman.
18 CIMIC Group Limited Annual Report 2017
Contents
Directors’ Report
Operating and Financial Review
Remuneration Report
Sustainability Report
Financial Report
Additional Information
Shareholdings
Shareholder Information
Glossary
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37
59
77
159
265
267
269
270
CIMIC Group Limited Annual Report 2017 19
In this Annual Report a reference to ‘CIMIC Group’, ‘we’, ‘us’ or ‘our’ is a reference to CIMIC Group Limited
ABN 57 004 482 982 and certain entities that it controls unless otherwise stated.
The CIMIC Group corporate governance statement is available on our website, in the section titled ‘Corporate
Governance’ (www.cimic.com.au/our-approach/corporate-governance).
20 CIMIC Group Limited Annual Report 2017
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CIMIC Group Limited Annual Report 2017 21
Photo: Northern Beaches Hospital, New South Wales, Australia, CPB Contractors.
22 CIMIC Group Limited Annual Report 2017
Directors’ Report
CIMIC Group Limited Annual Report 2017 23
24 CIMIC Group Limited Annual Report 2017
CIMIC Group Limited Annual Report 2017 | Directors’ Report
Directors’ Report
The Directors present their report for the 2017 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 6 February 2018.
DIRECTORS’ RESUMÉS
The Directors as at the date of this Directors’ Report are:
MARCELINO FERNÁNDEZ VERDES
Executive Chairman
MEng (Civil)
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 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 as Chairman and CEO of ACS Servicios y Concesiones, S.L. in 2006. He was appointed the Chief
Executive Officer of ACS, Actividades de Construcción y Servicios, S.A. on 11 May 2017. 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.
MICHAEL WRIGHT
Chief Executive Officer and Managing Director
MEngSc, BEng (Civil), FIEAust
Appointed CEO and Managing Director on 1 December 2017.
Mr Wright is a highly regarded leader with experience across multidisciplinary projects in Australia, Asia, Africa and the Americas.
With more than 25 years’ experience across the mining, construction and services sectors, and almost 20 years with the CIMIC
Group, he has held various senior executive positions, his last being Deputy CEO of CIMIC. Prior to that, Mr Wright held the position
of Thiess Managing Director, as well as the role of Group Executive Mining and Mineral Processing for CIMIC, with oversight of both
Thiess and Sedgman. Prior roles included Executive General Manager for Thiess’ Australian Mining, Executive General Manager of
Thiess’ Services business, General Manager of Leighton Asia’s China and Mongolia operations, and General Manager for Silcar, a
joint venture between Thiess and Siemens.
Mr Wright serves as a Director of the Minerals Council of Australia, the Sustainable Minerals Institute and the Queensland Male
Champions of Change. He is also a Fellow of the Institute of Engineers Australia.
RUSSELL CHENU
Independent Non‐executive Director
BCom, MBA, CPA
Appointed Independent Non‐executive Director in June 2014.
Chairman of the Audit and Risk Committee. Member of the Ethics, Compliance and Sustainability Committee and the Remuneration
and Nomination Committee.
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 professional who previously 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 CFO of James Hardie Industries plc from 2004 to 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).
25
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CIMIC Group Limited Annual Report 2017 | Directors’ Report
JOSÉ-LUIS DEL VALLE PÉREZ
Non-executive Director
LLB
Appointed Non-executive Director in March 2014.
Member of the Ethics, Compliance and Sustainability Committee and the Remuneration and Nomination Committee.
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 is a member and Board Secretary of ACS Group and a number of its subsidiaries, and is currently a member of
the Supervisory Board of HOCHTIEF AG.
TREVOR GERBER
Independent Non-executive Director
BAcc, CA, SA
Appointed Independent Non-executive Director in June 2014.
Chairman of the Remuneration and Nomination Committee. Member of the Audit and Risk Committee and the Ethics, Compliance
and Sustainability Committee.
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) and Vicinity Centres Limited (since April 2014). He was a director
of Regis Healthcare Limited (since October 2014 to 1 November 2017).
PEDRO LÓPEZ JIMÉNEZ
Non-executive Director
MEng (Civil), MBA
Appointed Non-executive Director in March 2014.
Member of the Ethics, Compliance and Sustainability Committee and the Remuneration and Nomination Committee.
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 is currently Deputy VC/Chair of Dragados S.A., Deputy VC/Chair of ACS Services y Concesiones S.A., VC/Chair ACS
Servicios Communicaniones y Energia S.A., Vice-Chairman of the Executive Committee of ACS Group, Chair of Supervisory Board of
HOCHTIEF AG, Board Member of the Malaga Picasso Museum and Vice Chairman of the Royal Board of the National Library of
Spain.
Mr López Jiménez is currently the 1st Vice-Chairman of the European Club Association (E.C.A) and Vice Chairman of the Real Madrid
Football Club.
26
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CIMIC Group Limited Annual Report 2017 | Directors’ Report
CIMIC Group Limited Annual Report 2017 | Directors’ Report
JOSÉ-LUIS DEL VALLE PÉREZ
Non-executive Director
LLB
Appointed Non-executive Director in March 2014.
Member of the Ethics, Compliance and Sustainability Committee and the Remuneration and Nomination Committee.
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 is a member and Board Secretary of ACS Group and a number of its subsidiaries, and is currently a member of
the Supervisory Board of HOCHTIEF AG.
TREVOR GERBER
Independent Non-executive Director
BAcc, CA, SA
and Sustainability Committee.
Appointed Independent Non-executive Director in June 2014.
Chairman of the Remuneration and Nomination Committee. Member of the Audit and Risk Committee and the Ethics, Compliance
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) and Vicinity Centres Limited (since April 2014). He was a director
of Regis Healthcare Limited (since October 2014 to 1 November 2017).
PEDRO LÓPEZ JIMÉNEZ
Non-executive Director
MEng (Civil), MBA
Appointed Non-executive Director in March 2014.
Member of the Ethics, Compliance and Sustainability Committee and the Remuneration and Nomination Committee.
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 is currently Deputy VC/Chair of Dragados S.A., Deputy VC/Chair of ACS Services y Concesiones S.A., VC/Chair ACS
Servicios Communicaniones y Energia S.A., Vice-Chairman of the Executive Committee of ACS Group, Chair of Supervisory Board of
HOCHTIEF AG, Board Member of the Malaga Picasso Museum and Vice Chairman of the Royal Board of the National Library of
Mr López Jiménez is currently the 1st Vice-Chairman of the European Club Association (E.C.A) and Vice Chairman of the Real Madrid
Spain.
Football Club.
26
DAVID ROBINSON
Non-executive Director
MCom, BEc, FCA, CTA
Appointed Non-executive Director in December 1990.
Chairman of the Ethics, Compliance and Sustainability Committee until 31 October 2017 and currently a member of the Committee.
Previously an Alternate Director for Mr López Jiménez (from June 2014 to 31 October 2017) and Mr Peter Sassenfeld (from
November 2011 to June 2013).
Mr Robinson is a graduate of the University of Sydney and a registered company auditor and tax agent. He is a chartered
accountant and Partner of ESV Accounting and Business Advisors, which advises local and overseas companies with interests in
Australia. Mr Robinson participates in construction industry affairs. Mr Robinson is a Director of Catholic Schools NSW Limited.
Until 31 December 2017, he was a Trustee of Mary Aikenhead Ministries, the responsible entity for the health, aged care and
education works of the Sisters of Charity in Australia. Mr Robinson is a Director of HOCHTIEF Australia and was 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
Non-executive Director
MBA
Appointed Non-executive Director in November 2011.
Member of the Audit and Risk Committee.
Mr Sassenfeld has an MBA from the University of Saarland.
Mr Sassenfeld was appointed as the CFO of HOCHTIEF AG in November 2011 and is a Director of HOCHTIEF Australia. 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.
KATHRYN SPARGO
Independent Non-executive Director
LLB (Hons), BA, FAICD
Appointed Non-executive Director in September 2017.
Appointed Chairman of the Ethics, Compliance and Sustainability Committee effective 1 November 2017.
Ms Spargo holds a Bachelor of Law with Honours and an Arts degree from the University of Adelaide. Ms Spargo is a fellow of the
Australian Institute of Company Directors.
Ms Spargo has broad commercial experience, both in advisory roles (having worked in legal practice in the public and private
sectors), and as a director of listed and unlisted companies.
Ms Spargo is a Director of the following additional ASX listed companies: Xenith IP Ltd (since April 2017), Sigma Healthcare Limited
(since December 2015), Sonic Healthcare Limited (since July 2010) and Adairs Limited (since May 2015). She is also a director of the
Geelong Football Club and Coinvest Ltd. Ms Spargo’s previous Board positions include Chairman of UGL, as well as directorships at
Fulton Hogan, SMEC Holdings, Fletcher Building, Pacific Hydro, Suncorp Portfolio Services, IOOF, Investec Bank, and Transfield
Services Infrastructure Fund.
ALTERNATE DIRECTORS’ RESUMÉS
ÁNGEL MURIEL
Alternate Director
PhD in Applied Economics
Appointed Alternate Director for Mr Sassenfeld on 1 November 2017.
From 2002 to 2006 Mr Muriel was the CFO of Iridium in Chile. He then went on to work in North America until 2011, where he was
the CFO of ACS Infrastructure Development Inc., the ACS Group’s PPP operations, in North America.
In 2011 Mr Muriel was the CFO of Iridium Concesiones de Infraestructuras, S.A., in Madrid, Spain, the concession-arm of ACS
Group, and in 2012 he became Head of Corporate Mergers and Acquisitions at HOCHTIEF, in Essen, Germany, until April 2014 when
he joined CIMIC Group, in Sydney, Australia, as Chief Development Officer and Managing Director of Pacific Partnerships. In
addition to these roles, from June 2015 to May 2017, Mr Muriel was CIMIC Group’s Chief Financial Officer.
Since June 2017, Mr Muriel has a senior role at the ACS Corporation Headquarters in Madrid, Spain.
27
27
CIMIC Group Limited Annual Report 2017 | Directors’ Report
ROBERT SEIDLER AM
Alternate Director
LLB
Appointed Alternate Director for Mr del Valle Pérez in June 2014. Previously an Alternate Director for Mr Sassenfeld (from June
2014 to 31 October 2017). 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 is the New South Wales Government’s 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).
ADOLFO VALDERAS
Alternate Director
MEng (Civil), MBA
Appointed Alternate Director for Mr López Jiménez on 1 November 2017.
Mr Valderas was previously CEO and Managing Director of the Company up until 30 November 2017. 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, construction, services, operations, maintenance and PPPs. He is currently the CEO of Dragados and 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.
COMPANY SECRETARIES’ RESUMÉS
LOUISE GRIFFITHS
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. She 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.
LYN NIKOLOPOULOS
Company Secretary
BBus, FGIA
Appointed Company Secretary in June 2017. Prior to the CIMIC appointment, Ms Nikolopoulos was Company Secretary of UGL since
October 2006. Ms Nikolopoulos has a Bachelor of Business from the University of Technology Sydney and holds a Graduate Diploma
in Applied Corporate Governance from the GIA. She is a fellow of the GIA and has over 17 years’ experience in a company secretary
role. Ms Nikolopoulos is also the company secretary of a number of subsidiaries of CIMIC.
During the period, Nigel Lowry resigned as a company secretary on 21 July 2017.
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28
ROBERT SEIDLER AM
Alternate Director
LLB
dating back to November 2003.
Appointed Alternate Director for Mr del Valle Pérez in June 2014. Previously an Alternate Director for Mr Sassenfeld (from June
2014 to 31 October 2017). Mr Seidler AM has served as an Alternate Director for a number of HOCHTIEF-nominated directors
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 is the New South Wales Government’s 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).
ADOLFO VALDERAS
Alternate Director
MEng (Civil), MBA
Appointed Alternate Director for Mr López Jiménez on 1 November 2017.
Mr Valderas was previously CEO and Managing Director of the Company up until 30 November 2017. 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, construction, services, operations, maintenance and PPPs. He is currently the CEO of Dragados and 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.
COMPANY SECRETARIES’ RESUMÉS
LOUISE GRIFFITHS
Company Secretary
BSc, BA, AGIA
LYN NIKOLOPOULOS
Company Secretary
BBus, FGIA
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. She 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.
Appointed Company Secretary in June 2017. Prior to the CIMIC appointment, Ms Nikolopoulos was Company Secretary of UGL since
October 2006. Ms Nikolopoulos has a Bachelor of Business from the University of Technology Sydney and holds a Graduate Diploma
in Applied Corporate Governance from the GIA. She is a fellow of the GIA and has over 17 years’ experience in a company secretary
role. Ms Nikolopoulos is also the company secretary of a number of subsidiaries of CIMIC.
During the period, Nigel Lowry resigned as a company secretary on 21 July 2017.
CIMIC Group Limited Annual Report 2017 | Directors’ Report
CIMIC Group Limited Annual Report 2017 | Directors’ Report
BOARD MEETINGS
The number of Board and Board Committee meetings held, and the number of meetings attended by each Director, during the
2017 Financial Year are set out in the table below.
Board
Audit and Risk
Committee
Ethics, Compliance &
Sustainability
Committee
Remuneration &
Nomination
Committee
Board Sub-
Committee#
Directors
M Fernández
Verdes
A Valderas1
M Wright2
R Chenu
J L del Valle Pérez
T Gerber
P Lopéz Jiménez
D Robinson3
P Sassenfeld
K Spargo4
H
6
6
-
6
6
6
6
6
6
1
A
5
6
-
6
6
4
6
6
5
-
H
-
-
-
4
-
4
-
-
4
-
A
4+
4+
-
4
4+
4
4+
4+
3
-
H
-
-
-
4
4
4
4
4
-
1
A
4+
4+
-
4
4
4
4
4
-
-
H
-
-
-
4
4
4
4
-
-
-
A
4+
4+
-
4
4
4
4
4+
1+
-
H
2
-
-
2
-
-
-
2
-
-
Alternate Director
Á Muriel5
R Seidler AM6
A Valderas7
-
-
-
-
-
-
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.
-
4*
-
-
4*
-
-
4*
-
-
5*
-
-
-
-
-
-
-
-
-
-
H
A
A
1
-
-
2
-
-
-
2
-
-
-
2*
-
# Matters delegated to a sub-committee of the Board.
*
+
1 Mr Valderas ceased to be CEO and Managing Director on 30 November 2017. Attendance reflects his capacity as CEO and Managing Director
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.
over the period. Refer to note 6 below.
2 Mr Wright was appointed as CEO and Managing Director on 1 December 2017. No meetings were held after his appointment.
3 Mr Robinson ceased to be Chair of the Ethics, Compliance and Sustainability Committee on 31 October 2017 and resigned as an Alternate
Director for Mr López Jiménez on 31 October 2017. Mr Robinson remains as a member of the Ethics, Compliance and Sustainability Committee
and as a Director of the Board.
4 Ms Spargo was appointed to the Board on 20 September 2017 and was appointed the Chair of Ethics, Compliance and Sustainability
Committee effective 1 November 2017.
5 Mr Muriel was appointed as an Alternate Director for Mr Sassenfeld effective 1 November 2017.
6 Mr Seidler ceased to be an Alternate Director for Mr Sassenfeld effective 31 October 2017. He is currently an Alternate Director for Mr del
Valle Pérez.
7 Mr Valderas was appointed as an Alternate Director for Mr López Jiménez effective 1 November 2017.
In addition to scheduled 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 scheduled meetings.
28
29
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CIMIC Group Limited Annual Report 2017 | 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.
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
Ordinary
shares
Options over
shares
Rights over
shares
Ordinary
shares
Options over
shares
Rights over
shares
Directors
M Fernández Verdes
M Wright
R Chenu
J L del Valle Pérez
T Gerber
P López Jiménez
D Robinson
P Sassenfeld
K Spargo
Alternate Directors
Á Muriel
R Seidler AM
A Valderas
2,7451
-
4,085
1,0001
2,000
1,1921
1,489
1,8581
2,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
619 (ACS)
822,369 (ACS)*
12,931 (HOCHTIEF AG)
-
-
278,902 (ACS)
-
524,936 (ACS)~
-
9,186 (HOCHTIEF AG)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
These shares are held by the relevant director on trust for HOCHTIEF Australia.
These 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).
1
*
~
No Director held a relevant interest in Devine.
14,991
2,341
31,863
36,377
-
62,768
-
900 (ACS)
1,504 (ACS)
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 2017 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.
To assist the Board in discharging its responsibilities the Company has adopted a governance framework which provides for:
•
the delegation of accountability for achieving compliance with regulatory requirements (and other requirements) to the most
appropriate person or group within the organisation; and
an assurance and reporting process for the evaluation and oversight of compliance with these requirements to the Board.
•
In the 2017 Financial Year:
•
•
the Company submitted its NGER Scheme report with EY (formerly known as Ernst and Young) (our NGER Scheme external
auditor) providing limited assurance; and
across the 157.8 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 15 breaches which involved written warnings from environmental regulators and four fines
totalling $38,200, the detail of which is set out in the Sustainability Report.
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.
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CIMIC Group Limited Annual Report 2017 | Directors’ Report
CIMIC Group Limited Annual Report 2017 | 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.
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
Ordinary
Options over
Rights over
shares
shares
shares
Ordinary
Options over
Rights over
shares
shares
shares
Directors
M Fernández Verdes
2,7451
M Wright
R Chenu
J L del Valle Pérez
T Gerber
P López Jiménez
D Robinson
P Sassenfeld
K Spargo
Alternate Directors
Á Muriel
R Seidler AM
A Valderas
-
4,085
1,0001
2,000
1,1921
1,489
1,8581
2,000
14,991
2,341
31,863
-
-
-
-
-
-
-
-
-
-
36,377
62,768
-
-
-
-
-
-
-
-
-
-
-
-
619 (ACS)
822,369 (ACS)*
12,931 (HOCHTIEF AG)
278,902 (ACS)
524,936 (ACS)~
9,186 (HOCHTIEF AG)
-
-
-
-
-
-
900 (ACS)
1,504 (ACS)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
*
~
These shares are held by the relevant director on trust for HOCHTIEF Australia.
These 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.
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 2017 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.
To assist the Board in discharging its responsibilities the Company has adopted a governance framework which provides for:
the delegation of accountability for achieving compliance with regulatory requirements (and other requirements) to the most
appropriate person or group within the organisation; and
an assurance and reporting process for the evaluation and oversight of compliance with these requirements to the Board.
In the 2017 Financial Year:
auditor) providing limited assurance; and
the Company submitted its NGER Scheme report with EY (formerly known as Ernst and Young) (our NGER Scheme external
across the 157.8 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 15 breaches which involved written warnings from environmental regulators and four fines
totalling $38,200, the detail of which is set out in the Sustainability Report.
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.
•
•
•
•
30
UNISSUED SHARES
SHARE RIGHTS
As at the date of this Directors’ Report, there are no rights over unissued shares in the Company.
The following rights were issued in the past in accordance with our employee incentive schemes:
2012 Deferred
Rights
2013 Deferred
Rights
Classes of Rights
2014 Deferred
Rights
91
82
35
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
2013
Performance
Rights
99
2014
Performance
Rights
88
1 Jan 2013
1 Jan 2014
31 Dec 2015
31 Dec 2016
1,004,925
2,503
(2,503)
-
-
321,987
-
-
-
-
119,990
6,279
(6,279)
-
-
705,426
-
-
-
-
704,802
334,985
(165,376)
(169,609)
-
Number of participants
at date of grant
Date of grant
Date of performance
period end
Number of rights
Original grant
On issue 8 Feb 20171
Vested since 8 Feb 2017
Lapsed since 8 Feb 2017
On issue 6 Feb 20182
1
2
Date of the Directors’ Report contained in the 2016 CIMIC Annual Report.
Date of this Directors’ Report.
OPTIONS
There was no LTI grant in the 2017 Financial Year.
As at the date of this Directors’ Report, there are 311,088 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 (2015 options), the
details of which are set out below:
2015 options
Number of participants at date of grant
Date of grant
Exercise price
Expiry date
Number of options
Original number issued
On issue 8 Feb 20171
Lapsed since 8 Feb 2017
Vested since 8 Feb 2017
Exercised since 8 Feb 2017
On issue 6 Feb 20182
1 Date of the Directors’ Report contained in the 2016 CIMIC Annual Report.
2 Date of this Directors’ Report.
36
29 October 2015
$27.53
29 October 2020
735,636
552,231
(49,861)
502,370
(191,282)
311,088
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 2017 Financial Year, 91,777 ordinary shares were acquired on-
market at an average price of $36.67 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’.
31
31
CIMIC Group Limited Annual Report 2017 | Directors’ Report
No person who was an officer of the Company during the 2017 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’ of the Company. ‘Officer’ is defined in
the Constitution as any director, alternate director, managing director, executive director or secretary of the Company or related
bodies corporate.
The Constitution states that, to the extent permitted by law, the Company indemnifies every person who is or has been an Officer,
against all losses, liabilities, costs, charges and expenses incurred while acting in that capacity.
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 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 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 2017 Financial Year, the Company has paid or agreed to pay premiums in respect of contracts
insuring persons who are or have been an Officer against certain liabilities (including legal costs) incurred in that capacity.
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 2017 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 2017 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 2017 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.
•
•
32
32
CIMIC Group Limited Annual Report 2017 | Directors’ Report
CIMIC Group Limited Annual Report 2017 | Directors’ Report
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 2017 Financial Year were as follows:
Non-audit services
Other assurance services
Taxation and other services
Total
Amount paid/payable $’000
366.4
-
366.4
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, 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.
33
33
No person who was an officer of the Company during the 2017 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
bodies corporate.
The Constitution includes indemnities in favour of people who are, or have been, an ‘Officer’ of the Company. ‘Officer’ is defined in
the Constitution as any director, alternate director, managing director, executive director or secretary of the Company or related
The Constitution states that, to the extent permitted by law, the Company indemnifies every person who is or has been an Officer,
against all losses, liabilities, costs, charges and expenses incurred while acting in that capacity.
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 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 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 2017 Financial Year, the Company has paid or agreed to pay premiums in respect of contracts
insuring persons who are or have been an Officer against certain liabilities (including legal costs) incurred in that capacity.
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 2017 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 2017 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 2017 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.
•
•
•
32
CIMIC Group Limited Annual Report 2017 | 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 annual financial report of CIMIC Group Limited for the financial year ended 31 December
2017, 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 A Leotta
Partner
Chartered Accountants
Sydney, 6 February 2018
34
34
CIMIC Group Limited Annual Report 2017 35
36 CIMIC Group Limited Annual Report 2017
Operating and Financial
Review
A leading international construction
contractor delivering road, rail, tunnelling, defence,
building and resources infrastructure projects.
Photo: WestConnex M4 Widening, New South Wales, Australia, CPB Contractors.
CPB Contractors is also delivering WestConnex M4 East and the New M5.
CIMIC Group Limited Annual Report 2017 37
38 CIMIC Group Limited Annual Report 2017
CIMIC Group Limited Annual Report 2017 | Directors’ Report
CIMIC Group Limited Annual Report 2017 | Operating and Financial Review
FINANCIAL HIGHLIGHTS
Revenue of $13.4 billion up 23.7% on FY16 with solid contributions from all core businesses.
EBITDA of $1,513.7 million up 38.1% on FY16; PBT of $959.2 million up 29.6% on FY16.
OPERATING PERFORMANCE
NPAT of $702.1 million up 21.0% on FY16, at the top end of guidance range of $640 million to $700 million.
No significant one off impacts.
Strong EBIT, PBT and NPAT margins of 7.5%, 7.1% and 5.2% respectively.
EPS (basic) of 216.5 cents per share up 22.6%.
Strong cash flows from operating activities of $1,523.4 million in FY17, up 26.8% on FY16.
EBITDA conversion rate of 101% for FY17.
CASH FLOWS
Maintained focus on managing working capital and generating sustainable cash-backed profits.
Gross capital expenditure of $424.1 million, up 51.4% on FY16, due to increased mining and tunnelling activity.
Free operating cash flow generation of $1,056.9 million in FY17, up 11.9% on FY16.
FINANCIAL POSITION
Net cash of $910.4 million up $501.1 million since December 2016.
Net contract debtors of $1.4 billion, similar level as December 2016. The $675.0 million contract debtors portfolio provision
Successfully refinanced and expanded $2.6 billion syndicated bank facility reflecting strength of balance sheet.
remains unchanged.
Moody’s Investors Service rating upgraded to Baa2 from Baa3 and Standard & Poor’s rating upgraded to BBB from BBB-, both
earlier in 2017.
Average cost of debt has decreased 140 basis points since FY16 to 4.1%.
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 annual financial report of CIMIC Group Limited for the financial year ended 31 December
2017, 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 A Leotta
Partner
Chartered Accountants
Sydney, 6 February 2018
WORK IN HAND AND PIPELINE
New work of $18.4 billion awarded in FY17, up 36.7% on FY16, bidding discipline maintained.
Solid work in hand of $36.0 billion, up $2.0 billion on FY16, equivalent to more than two years of revenue.
Robust pipeline with at least $110 billion of tenders relevant to CIMIC to be bid and/or awarded in 2018, and around $285
billion of projects are coming to the market in 2019 and beyond, including about $65 billion worth of PPP projects.
SHAREHOLDER RETURNS
Share price of $51.45 at 31 December 2017, up 47.3% in FY17, compared to an increase in the S&P/ASX 200 index of 7.0%.
Final dividend of 75 cents per share, 100% franked, up 21.0% on FY16, to be paid on 4 July 2018.
Total dividend for the year of 135 cents per share, 100% franked, up 22.7% on FY16, representing a payout ratio of 62.3%.
Total shareholder return of 51%, combining the share price appreciation and dividends paid in FY17.
GUIDANCE
FY18 NPAT is expected to be in the range of $720 million to $780 million, an increase of 3% to 11% on FY17, subject to market
conditions.
Sound balance sheet provides flexibility to pursue strategic growth opportunities and sustain shareholder returns.
Continue to develop safety and performance culture and deliver additional client value through leveraging collaboration
opportunities.
34
39
39
2017
2016
chg. $
chg. %
CIMIC Group Limited Annual Report 2017 | Operating and Financial Review
FINANCIAL HIGHLIGHTS
Financial performance
$m
Group revenue
Revenue – joint ventures and associates
Revenue 1
EBITDA
EBITDA margin2
EBIT
EBIT margin2
Profit before tax
PBT margin2
NPAT
NPAT margin2
EPS (basic)
16,110.7
(2,681.2)
13,429.5
1,513.7
11.3%
1,002.4
7.5%
959.2
7.1%
702.1
5.2%
216.5c
13,534.5
(2,680.9)
10,853.6
1,095.8
10.1%
758.4
7.0%
740.4
6.8%
580.3
5.3%
176.6c
Financial position
$m
Net cash/(debt)
Operating leases
Net cash/(debt) (including operating leases)
December
2017
910.4
(538.6)
371.8
December
20163
409.3
(466.9)
(57.6)
Net contract debtors4
1,383.8
1,324.6
Cash flows
$m
Cash flows from operating activities5
Interest, finance costs, taxes and dividends
received
Net cash from operating activities6
Gross capital expenditure7
Gross capital proceeds 8
Net capital expenditure
Free operating cash flow 9
Work in hand 10
$m
Work in hand beginning of period
New work11
Acquisitions / (divestments) 12
Executed work
Total work in hand end of period
2017
2016
1,523.4
(161.0)
1,362.4
(424.1)
118.6
(305.5)
1,056.9
December
2017
34,012.0
18,369.5
(260.9)
(16,110.7)
36,009.9
1,201.4
(74.4)
1,127.0
(280.2)
97.8
(182.4)
944.6
December
2016
29,004.4
13,433.1
5,109.0
(13,534.5)
34,012.0
2,576.2
(0.3)
2,575.9
417.9
120bp
244.0
50bp
218.8
30bp
121.8
(10)bp
39.9c
chg. $
501.1
(71.7)
429.4
59.2
chg. $
322.0
(86.6)
235.4
(143.9)
20.8
(123.1)
112.3
19.0%
-
23.7%
38.1%
32.2%
29.6%
21.0%
22.6%
chg. %
122.4%
15.4%
(745.5)%
4.5%
chg. %
26.8%
116.4%
20.9%
51.4%
21.3%
67.5%
11.9%
chg. $
chg. %
5,007.6
4,936.4
(5,369.9)
(2,576.2)
1,997.9
17.3%
36.7%
(105.1)%
19.0%
5.9%
1 Revenue excludes revenue from joint ventures and associates of $2,681.2 million (FY16: $2,680.9 million).
2 Margins are calculated on revenue as defined above.
3 Amounts have been restated at December 2016 due to the finalisation of the purchase price allocation on the UGL acquisition.
4 Net contract debtors represents the net of amounts due from customers and amounts due to customers (refer to the Financial
Report, ‘Note 8: Trade and other receivables’ – ‘Additional information on contract debtors’).
5 Cash flows from operating activities is defined as the cash flows from operating activities before interest, finance costs, taxes and
dividends received.
6 Net cash from operating activities is defined as the cash flows from operating activities after interest, finance costs, taxes and
dividends received.
7 Gross capital expenditure is payments for property, plant and equipment.
8 Gross capital proceeds are proceeds received from the sale of property, plant and equipment.
9 Free operating cash flow is defined as net cash from operating activities less net capital expenditure for property, plant and
equipment.
10 Work in hand includes CIMIC’s share of work in hand from joint ventures and associates.
11 New work includes new contracts and contract extensions and variations including the impact of foreign exchange rate
movements.
12 $5,109.0 million relates to UGL’s work in hand at acquisition date, 24 November 2016; $(260.9) million relates to Macmahon
work in hand at divestment date, 6 July 2017.
40
40
CIMIC Group Limited Annual Report 2017 | Operating and Financial Review
CIMIC Group Limited Annual Report 2017 | Operating and Financial Review
FINANCIAL HIGHLIGHTS
Financial performance
$m
Group revenue
Revenue – joint ventures and associates
Revenue 1
EBITDA
EBITDA margin2
EBIT
EBIT margin2
Profit before tax
PBT margin2
NPAT
NPAT margin2
EPS (basic)
Financial position
$m
Net cash/(debt)
Operating leases
Cash flows
$m
received
Cash flows from operating activities5
Interest, finance costs, taxes and dividends
Net cash from operating activities6
Gross capital expenditure7
Gross capital proceeds 8
Net capital expenditure
Free operating cash flow 9
Work in hand 10
$m
New work11
Work in hand beginning of period
Acquisitions / (divestments) 12
Executed work
Total work in hand end of period
2017
2016
chg. $
chg. %
December
December
16,110.7
(2,681.2)
13,429.5
1,513.7
11.3%
1,002.4
7.5%
959.2
7.1%
702.1
5.2%
216.5c
2017
910.4
(538.6)
371.8
1,523.4
(161.0)
1,362.4
(424.1)
118.6
(305.5)
1,056.9
13,534.5
(2,680.9)
10,853.6
1,095.8
10.1%
758.4
7.0%
740.4
6.8%
580.3
5.3%
176.6c
20163
409.3
(466.9)
(57.6)
1,201.4
(74.4)
1,127.0
(280.2)
97.8
(182.4)
944.6
2,576.2
(0.3)
2,575.9
417.9
120bp
244.0
50bp
218.8
30bp
121.8
(10)bp
39.9c
chg. $
501.1
(71.7)
429.4
59.2
chg. $
322.0
(86.6)
235.4
(143.9)
20.8
(123.1)
112.3
December
December
chg. $
chg. %
2017
34,012.0
18,369.5
(260.9)
(16,110.7)
36,009.9
2016
29,004.4
13,433.1
5,109.0
(13,534.5)
34,012.0
5,007.6
4,936.4
(5,369.9)
(2,576.2)
1,997.9
19.0%
-
23.7%
38.1%
32.2%
29.6%
21.0%
22.6%
chg. %
122.4%
15.4%
(745.5)%
4.5%
chg. %
26.8%
116.4%
20.9%
51.4%
21.3%
67.5%
11.9%
17.3%
36.7%
(105.1)%
19.0%
5.9%
Net cash/(debt) (including operating leases)
Net contract debtors4
1,383.8
1,324.6
2017
2016
1 Revenue excludes revenue from joint ventures and associates of $2,681.2 million (FY16: $2,680.9 million).
2 Margins are calculated on revenue as defined above.
3 Amounts have been restated at December 2016 due to the finalisation of the purchase price allocation on the UGL acquisition.
4 Net contract debtors represents the net of amounts due from customers and amounts due to customers (refer to the Financial
Report, ‘Note 8: Trade and other receivables’ – ‘Additional information on contract debtors’).
5 Cash flows from operating activities is defined as the cash flows from operating activities before interest, finance costs, taxes and
6 Net cash from operating activities is defined as the cash flows from operating activities after interest, finance costs, taxes and
7 Gross capital expenditure is payments for property, plant and equipment.
8 Gross capital proceeds are proceeds received from the sale of property, plant and equipment.
9 Free operating cash flow is defined as net cash from operating activities less net capital expenditure for property, plant and
10 Work in hand includes CIMIC’s share of work in hand from joint ventures and associates.
11 New work includes new contracts and contract extensions and variations including the impact of foreign exchange rate
12 $5,109.0 million relates to UGL’s work in hand at acquisition date, 24 November 2016; $(260.9) million relates to Macmahon
work in hand at divestment date, 6 July 2017.
dividends received.
dividends received.
equipment.
movements.
40
SHAREHOLDER RETURNS
TOTAL SHAREHOLDER RETURN
Combining the share price appreciation and dividends paid in 2017, CIMIC delivered a total shareholder return of 51% in 2017.
Shareholder returns
Closing share price
Market capitalisation ($m)
Final dividend per share
Interim dividend per share
Total dividends per share
EPS (basic)
Payout ratio for ordinary dividends (2017 estimate at the time the dividend is paid)
31 December
2017
$51.45
16,682.9
75c
60c
135c
216.5c
62.3%
31 December
2016
$34.94
11,329.4
62c
48c
110c
176.6c
61.5%
PERFORMANCE OF CIMIC SHARES
CIMIC’s share price performed strongly during the year and closed at $51.45 (representing a market capitalisation of $16.7 billion
as at 31 December 2017), an increase of 47.3% or $16.51 per share since 31 December 2016. By comparison the S&P/ASX 200 index
increased 7.0% to 6,065.1 points during the same period.
Indexed performance of CIMIC shares
60%
50%
40%
30%
20%
10%
0%
-10%
Jan-17
Feb-17 Mar-17
Apr-17 May-17
Jun-17
Jul-17
Aug-17
Sep-17 Oct-17 Nov-17 Dec-17
CIM-AU close
ASX200 index
DIVIDENDS
CIMIC seeks to reward shareholders by paying dividends in line with profits. In the year under review, CIMIC again delivered on this
approach. Ordinary dividends for the year totalled 135 cents per share, 100% franked, up 22.7% on FY16, and comprised of:
an interim dividend of 60 cents per share, 100% franked, paid on 4 October 2017; and
a final dividend of 75 cents per share, 100% franked, to be paid on 4 July 2018.
CIMIC estimates that the final dividend payable will be $243.2 million. This 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 on 14 December 2017, which
commenced on 29 December 2017, 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.
SHARE BUY-BACK PROGRAM
On 12 December 2016, CIMIC announced an 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. As at 28 December 2017, no additional shares had been bought back under the
2016 buy-back program.
On 14 December 2017, another 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 2017 was announced. As at 6 February 2018, no additional shares have been bought back since the
commencement of the current buy-back program. The timing and number of any shares purchased will depend on CIMIC’s share
price and market conditions in the future.
EPS (basic) was 216.5 cents, an increase of 22.6% on FY16 (compared to a 21.0% increase in NPAT).
41
41
CIMIC Group Limited Annual Report 2017 | Operating and Financial Review
STRATEGY
OPERATING MODEL
CIMIC’s mission is to generate sustainable economic returns for shareholders by successfully delivering projects for our clients
while providing safe, rewarding and fulfilling careers for our people. Key elements of our strategy are a disciplined approach to risk
management and a focus on cash generation, complemented by a strategic approach to capital allocation, always underpinned by
an uncompromising focus on safety.
CIMIC has activity-focused businesses in construction, mining, mineral processing, operations and maintenance services, PPPs and
engineering. The size of these businesses creates economies of scale and strengthens their position in their respective markets.
They are broadly diversified by market sector, activity, geography, type of client, contract type, volume and duration.
Our competitive position and size, combined with our strong balance sheet, puts CIMIC in a robust position to take advantage of
growth opportunities, both organic and strategic, in our different markets. The Group’s diversity provides clients with integrated
solutions from development to financing to engineering, construction, mining, operations and maintenance. The ability to offer a
complementary suite of capabilities, throughout the life cycle of a client’s infrastructure or resources projects, differentiates CIMIC.
The Group continuously seeks to expand and leverage these competencies to further develop in Australia, Asia-Pacific and other
select geographies.
Crucial to the strategy is the generation of cash-backed profits, and the development of diversified income streams which helps to
reduce volatility, and manage risk whilst generating sustainable returns. Shorter-term projects (e.g. construction) are balanced with
medium-term projects (e.g. mining and large scale construction) and longer-term projects (e.g. PPPs, operations and maintenance
services, and life-of-mine projects).
Underlying the Group’s activity-focused businesses are common systems and processes. This approach facilitates innovation and
the sharing of knowledge, and provides a rigorous governance framework.
Our Principles of Integrity, Accountability, Innovation and Delivery, underpinned by Safety, guide all of the Group’s activities.
ACQUISITIONS, DIVESTMENTS AND INVESTMENTS
CIMIC’s strong balance sheet enables the Group to continue to evaluate acquisition or investment options that complement our
capabilities and strategy as opportunities arise.
On 6 July 2017, CIMIC’s wholly owned subsidiary CIMIC Group Investments Pty Limited, sold its 23.64% shareholding in Macmahon
on the ASX for a price of $0.165 per share, totalling $46.9 million.
42
42
CIMIC Group Limited Annual Report 2017 | Operating and Financial Review
CIMIC Group Limited Annual Report 2017 | Operating and Financial Review
STRATEGY
OPERATING MODEL
CIMIC’s mission is to generate sustainable economic returns for shareholders by successfully delivering projects for our clients
while providing safe, rewarding and fulfilling careers for our people. Key elements of our strategy are a disciplined approach to risk
management and a focus on cash generation, complemented by a strategic approach to capital allocation, always underpinned by
an uncompromising focus on safety.
CIMIC has activity-focused businesses in construction, mining, mineral processing, operations and maintenance services, PPPs and
engineering. The size of these businesses creates economies of scale and strengthens their position in their respective markets.
They are broadly diversified by market sector, activity, geography, type of client, contract type, volume and duration.
Our competitive position and size, combined with our strong balance sheet, puts CIMIC in a robust position to take advantage of
growth opportunities, both organic and strategic, in our different markets. The Group’s diversity provides clients with integrated
solutions from development to financing to engineering, construction, mining, operations and maintenance. The ability to offer a
complementary suite of capabilities, throughout the life cycle of a client’s infrastructure or resources projects, differentiates CIMIC.
The Group continuously seeks to expand and leverage these competencies to further develop in Australia, Asia-Pacific and other
select geographies.
Crucial to the strategy is the generation of cash-backed profits, and the development of diversified income streams which helps to
reduce volatility, and manage risk whilst generating sustainable returns. Shorter-term projects (e.g. construction) are balanced with
medium-term projects (e.g. mining and large scale construction) and longer-term projects (e.g. PPPs, operations and maintenance
services, and life-of-mine projects).
Underlying the Group’s activity-focused businesses are common systems and processes. This approach facilitates innovation and
the sharing of knowledge, and provides a rigorous governance framework.
Our Principles of Integrity, Accountability, Innovation and Delivery, underpinned by Safety, guide all of the Group’s activities.
CIMIC’s strong balance sheet enables the Group to continue to evaluate acquisition or investment options that complement our
ACQUISITIONS, DIVESTMENTS AND INVESTMENTS
capabilities and strategy as opportunities arise.
On 6 July 2017, CIMIC’s wholly owned subsidiary CIMIC Group Investments Pty Limited, sold its 23.64% shareholding in Macmahon
on the ASX for a price of $0.165 per share, totalling $46.9 million.
FINANCIAL PERFORMANCE
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 costs
Profit before tax
PBT margin
Income tax
Profit for the year
Non-controlling interests
NPAT
NPAT margin
EPS (basic)
2017
2016
chg. $
chg. %
16,110.7
(2,681.2)
13,429.5
(12,377.2)
(49.9)
13,534.5
(2,680.9)
10,853.6
(10,051.2)
(44.0)
1,002.4
7.5%
(43.2)
959.2
7.1%
(268.6)
690.6
11.5
702.1
5.2%
216.5c
758.4
7.0%
(18.0)
740.4
6.8%
(188.0)
552.4
27.9
580.3
5.3%
176.6c
2,576.2
(0.3)
2,575.9
(2,326.0)
(5.9)
244.0
50bp
(25.2)
218.8
30bp
(80.6)
138.2
(16.4)
121.8
(10)bp
39.9c
19.0%
-
23.7%
23.1%
13.4%
32.2%
140.0%
29.6%
42.9%
25.0%
(58.8)%
21.0%
22.6%
REVENUE
Revenue increased by $2.6 billion, or 23.7%, to $13.4 billion in FY17. Revenue increases were recorded across all core businesses.
Work in hand, a forward indicator of revenue, also increased (refer to the section of this Operating and Financial Review titled ‘New
work and work in hand’ for further information).
Revenue by segment13
$m
Construction
Mining & mineral processing
Services
Corporate
Revenue
Revenue – joint ventures and associates
Group revenue
2017
2016
chg. $
chg. %
7,599.1
3,164.4
2,607.2
58.8
13,429.5
2,681.2
16,110.7
7,316.8
2,786.2
204.2
546.4
10,853.6
2,680.9
13,534.5
282.3
378.2
2,403.0
(487.6)
2,575.9
(0.3)
2,576.2
3.9%
13.6%
-
(89.2)%
23.7%
-
19.0%
Group revenue from the various market segments was split 73:27 between domestic and international markets, compared with
64:36 in FY16, largely due to the acquisition of UGL.
CONSTRUCTION REVENUE
Construction revenue was $7.6 billion for FY17, an increase of 3.9%, or $282.3 million, compared to FY16. This reflects a substantial
contribution from the ramp up of large scale transport infrastructure projects.
During the period, the Group’s major projects included:
rail and road developments in Australia, including Sydney Metro Northwest, WestConnex M4 and M5 in New South Wales,
and the CityLink Tulla Widening and the Level Crossing Removal projects in Victoria;
social infrastructure projects including the Northern Beaches Hospital in New South Wales;
infrastructure projects in Hong Kong including the Passenger Clearance Building for the Hong Kong Boundary Crossing
Facilities, the West Kowloon Terminus Station, and the Liantang / Hueng Yuen Wai Boundary Control Point; and
revenue from PPP projects, including Transmission Gully in New Zealand, and Canberra Light Rail in Australia.
MINING & MINERAL PROCESSING REVENUE
Mining & mineral processing revenue was $3.2 billion for FY17, an increase of 13.6%, or $378.2 million, compared to FY16. The
increase in revenue reflects contract extensions and increased production levels, as resource markets gradually show improving
trends, as well as the benefits of diversification across commodities and geographic markets.
Lake Vermont, Mount Owen, Curragh North and Solomon mines in Australia;
Byerwen mineral processing project in Australia;
Kaltim Prima Coal mine in Indonesia;
During the period, the Group’s major projects included:
Ukhaa Khudag mine and Oyu Tolgoi project in Mongolia; and
Jwaneng mine in Botswana.
42
13 2016 revenue comparatives have been restated by $439.8 million, to include the results of the Commercial & residential segment
within the Corporate segment results.
43
43
CIMIC Group Limited Annual Report 2017 | Operating and Financial Review
SERVICES REVENUE
Services revenue was $2.6 billion for FY17 which reflects the Group’s strengthened position in the operations and maintenance
services market.
During the period, the Group’s major projects included:
maintenance and supply chain services to over 1,200 passenger cars in Sydney’s metropolitan rail fleet;
provision of rail signalling systems, tunnel systems and rolling stock as well as franchisee operations for a period of 15 years as
part of the Operation, Trains and System contract for the Sydney Metro Northwest Rail project;
heavy resource maintenance works for Chevron, BP, BHP, Rio Tinto, Woodside and Alcoa, across Australia; and
rail rolling stock maintenance works for Pacific National and Freightliner in New South Wales.
CORPORATE REVENUE
Corporate revenue was $58.8 million for FY17, a decrease of 89.2%, or $487.6 million, compared to FY16, mainly due to a reduction
in commercial and residential property activity.
REVENUE – JOINT VENTURES AND ASSOCIATES
Revenue from joint ventures and associates was $2.7 billion for FY17, which mainly included contributions from HLG Contracting
and Ventia.
EXPENSES
Expenses were $12.4 billion for FY17, an increase of 23.1%, or $2.3 billion, compared to FY16, in line with the increase in revenue.
The major direct expenses were materials, subcontractors, plant costs, depreciation and personnel costs.
Depreciation and amortisation
Depreciation and amortisation was $511.3 million for FY17, an increase of 51.5%, or $173.9 million, compared to FY16. The higher
level of depreciation is driven by increased mining activity and the ramp up of tunnelling activity on the large infrastructure
projects.
EBIT
EBIT was $1,002.4 million for FY17, an increase of 32.2% or $244.0 million compared to FY16. This solid result was driven by the
growth in revenue as well as our focus on project delivery. The EBIT margin was 7.5%, a 50 basis point increase on FY16.
NET FINANCE COSTS
Finance cost detail
$m
Debt interest expenses
Facility fees, bonding and other costs
Total finance costs
Interest income
Net finance costs
2017
(80.9)
(33.9)
(114.8)
71.6
(43.2)
2016
(67.1)
(24.4)
(91.5)
73.5
(18.0)
chg. $
(13.8)
(9.5)
(23.3)
(1.9)
(25.2)
chg. %
20.6%
38.9%
25.5%
(2.6)%
140.0%
The increase in net finance costs is primarily related to the increased level of debt to fund the acquisition of UGL in 2016. The
balance of the net finance costs was mainly due to fees and other costs related to the Group’s bonding and guarantee facilities,
which are integral to the successful delivery of projects; and interest income of $71.6 million.
As a consequence of the Group’s strengthened balance sheet over recent years, which allowed the refinancing of the Group’s
working capital facilities in 2017, the average cost of debt has decreased.
Average cost of debt calculation
$m
Debt interest expenses (a)
Gross debt14
Gross debt average (b)
Average cost of debt (a/b)
2017
(80.9)
903.4
1,959.0
4.1%
2016
(67.1)
1,167.2
1,224.0
5.5%
14 Total interest bearing liabilities.
44
44
CIMIC Group Limited Annual Report 2017 | Operating and Financial Review
CIMIC Group Limited Annual Report 2017 | Operating and Financial Review
Services revenue was $2.6 billion for FY17 which reflects the Group’s strengthened position in the operations and maintenance
SERVICES REVENUE
services market.
PROFIT BEFORE TAX
PBT was $959.2 million for FY17, an increase of 29.6%, or $218.8 million, compared to FY16. The PBT margin was solid at 7.1%
reflecting a robust performance from all core businesses.
During the period, the Group’s major projects included:
maintenance and supply chain services to over 1,200 passenger cars in Sydney’s metropolitan rail fleet;
provision of rail signalling systems, tunnel systems and rolling stock as well as franchisee operations for a period of 15 years as
part of the Operation, Trains and System contract for the Sydney Metro Northwest Rail project;
heavy resource maintenance works for Chevron, BP, BHP, Rio Tinto, Woodside and Alcoa, across Australia; and
rail rolling stock maintenance works for Pacific National and Freightliner in New South Wales.
Corporate revenue was $58.8 million for FY17, a decrease of 89.2%, or $487.6 million, compared to FY16, mainly due to a reduction
CORPORATE REVENUE
in commercial and residential property activity.
REVENUE – JOINT VENTURES AND ASSOCIATES
Revenue from joint ventures and associates was $2.7 billion for FY17, which mainly included contributions from HLG Contracting
and Ventia.
EXPENSES
projects.
EBIT
Expenses were $12.4 billion for FY17, an increase of 23.1%, or $2.3 billion, compared to FY16, in line with the increase in revenue.
The major direct expenses were materials, subcontractors, plant costs, depreciation and personnel costs.
Depreciation and amortisation
Depreciation and amortisation was $511.3 million for FY17, an increase of 51.5%, or $173.9 million, compared to FY16. The higher
level of depreciation is driven by increased mining activity and the ramp up of tunnelling activity on the large infrastructure
EBIT was $1,002.4 million for FY17, an increase of 32.2% or $244.0 million compared to FY16. This solid result was driven by the
growth in revenue as well as our focus on project delivery. The EBIT margin was 7.5%, a 50 basis point increase on FY16.
NET FINANCE COSTS
Finance cost detail
$m
Debt interest expenses
Total finance costs
Interest income
Net finance costs
Facility fees, bonding and other costs
2017
(80.9)
(33.9)
(114.8)
71.6
(43.2)
2016
(67.1)
(24.4)
(91.5)
73.5
(18.0)
The increase in net finance costs is primarily related to the increased level of debt to fund the acquisition of UGL in 2016. The
balance of the net finance costs was mainly due to fees and other costs related to the Group’s bonding and guarantee facilities,
which are integral to the successful delivery of projects; and interest income of $71.6 million.
As a consequence of the Group’s strengthened balance sheet over recent years, which allowed the refinancing of the Group’s
working capital facilities in 2017, the average cost of debt has decreased.
chg. $
(13.8)
(9.5)
(23.3)
(1.9)
(25.2)
2017
(80.9)
903.4
1,959.0
4.1%
chg. %
20.6%
38.9%
25.5%
(2.6)%
140.0%
2016
(67.1)
1,167.2
1,224.0
5.5%
Average cost of debt calculation
$m
Debt interest expenses (a)
Gross debt14
Gross debt average (b)
Average cost of debt (a/b)
14 Total interest bearing liabilities.
44
Profit before tax by segment15
$m
Construction
Mining & mineral processing
Services
HLG
Corporate
Profit before tax
2017
2016
623.7
338.8
164.8
(48.0)
(120.1)
959.2
595.5
275.6
8.6
29.4
(168.7)
740.4
chg. $
28.2
63.2
156.2
(77.4)
48.6
218.8
chg. %
4.7%
22.9%
-
(263.3)%
(28.8)%
29.6%
Construction
Construction PBT was $623.7 million for FY17, an increase of 4.7% or $28.2 million. This result is driven by revenue growth of 3.9%
and further expansion of the segment’s already strong margins. The margin improvement reflects ongoing focus on disciplined
tendering, cost control and project delivery.
Mining & mineral processing
Mining and mineral processing PBT was $338.8 million for FY17, an increase of 22.9% or $63.2 million. This result is reflective of
13.6% revenue growth combined with an expanded PBT margin, a result of a continued focus on driving efficiencies and creating
value for clients.
Services
Services PBT was $164.8 million for FY17. This result includes a full year’s contribution from UGL, following the acquisition. PBT was
driven by realising benefits from the successful integration of UGL throughout the year.
HLG
HLG PBT was ($48.0) million for FY17. This loss is due to costs as a result of the ongoing strategic review as well as project
settlements.
Corporate
Corporate PBT was ($120.1) million for FY17, an improvement of 28.8% or $48.6 million. The FY17 Corporate segment mainly
includes contributions from Corporate, EIC Activities, Pacific Partnerships and the former Commercial & residential segment, with
the FY16 result being impacted by the Devine restructuring activities.
INCOME TAX
Income tax expense was $268.6 million for FY17, an increase of 42.9%, or $80.6 million, compared to FY16. This equates to an
effective tax rate of 28.0% compared with 25.4% for FY16. Impacting the effective tax rate are income tax differentials relating to
profits and losses from the various overseas jurisdictions in which the Group operates as well as tax adjustments on acquisitions
and divestments. The lower rate in FY16 reflected income tax rate differentials and the impact of income tax refunds relating to the
earlier divestments of the John Holland and 50% share of Ventia.
NON-CONTROLLING INTERESTS
Non-controlling interests were $11.5 million for FY17, a decrease of 58.8%, or $16.4 million, compared to FY16. This is a result of
reduced losses attributable to the share of minority owners for the period, primarily relating to the Group’s investment in Devine.
NET PROFIT AFTER TAX
NPAT was $702.1 million for FY17, an increase of 21.0%, or $121.8 million, compared to FY16. Earnings per share (basic) were 216.5
cents, an increase of 22.6% on FY16.
15 2016 PBT comparatives have been restated by ($74.7) million, to include the results of the Commercial & residential segment
within the Corporate segment results.
45
45
CIMIC Group Limited Annual Report 2017 | Operating and Financial Review
FINANCIAL POSITION
CIMIC’s balance sheet further strengthened during 2017, as the company maintained its focus on managing working capital and
generating sustainable cash-backed profits.
Net cash/(debt)
$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)
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
Total assets
Liabilities and equity
$m
Current liabilities
Trade and other payables
Current tax liabilities
Provisions
Interest bearing liabilities
Total current liabilities
Non-current liabilities
Trade and other payables
Provisions
Interest bearing liabilities
Total non-current liabilities
Total liabilities
Equity
December
2017
1,813.8
(265.6)
(637.8)
910.4
(538.6)
371.8
December
2017
1,383.8
December
2017
1,813.8
3,216.3
29.0
210.8
32.2
5,302.1
1,090.8
167.6
382.7
169.2
145.4
1,224.0
1,089.7
4,269.4
December
201616
1,576.5
(618.2)
(549.0)
409.3
(466.9)
(57.6)
December
201616
1,324.6
December
201616
1,576.5
3,209.6
28.0
213.0
47.7
5,074.8
1,235.8
166.9
616.5
135.4
328.1
1,355.7
1,146.9
4,985.3
9,571.5
10,060.1
December
2017
December
201616
4,737.4
40.4
311.8
265.6
5,355.2
152.0
69.3
637.8
859.1
4,781.1
126.6
333.3
618.2
5,859.2
287.0
73.5
549.0
909.5
6,214.3
6,768.7
3,357.2
3,291.4
chg. $
237.3
352.6
(88.8)
501.1
(71.7)
429.4
chg. $
59.2
chg. $
237.3
6.7
1.0
(2.2)
(15.5)
227.3
(145.0)
0.7
(233.8)
33.8
(182.7)
(131.7)
(57.2)
(715.9)
(488.6)
chg. $
(43.7)
(86.2)
(21.5)
(352.6)
(504.0)
(135.0)
(4.2)
88.8
(50.4)
(554.4)
65.8
chg. %
15.1%
(57.0)%
16.2%
122.4%
15.4%
(745.5)%
chg. %
4.5%
chg. %
15.1%
0.2%
3.6%
(1.0)%
(32.5)%
4.5%
(11.7)%
0.4%
(37.9)%
25.0%
(55.7)%
(9.7)%
(5.0)%
(14.4)%
(4.9)%
chg. %
(0.9)%
(68.1)%
(6.5)%
(57.0)%
(8.6)%
(47.0)%
(5.7)%
16.2%
(5.5)%
(8.2)%
2.0%
16 Amounts have been restated at December 2016 due to the finalisation of the purchase price allocation on the UGL acquisition.
46
46
CIMIC Group Limited Annual Report 2017 | Operating and Financial Review
CIMIC Group Limited Annual Report 2017 | Operating and Financial Review
CIMIC’s balance sheet further strengthened during 2017, as the company maintained its focus on managing working capital and
FINANCIAL POSITION
generating sustainable cash-backed profits.
Net cash/(debt)
$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)
Net contract debtors
$m
Net contract debtors
Assets
$m
Current assets
Cash and cash equivalents
Trade and other receivables
Current tax assets
properties
Assets held for sale
Total current assets
Inventories: consumables and development
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
Total assets
Liabilities and equity
$m
Current liabilities
Trade and other payables
Current tax liabilities
Provisions
Interest bearing liabilities
Total current liabilities
Non-current liabilities
Trade and other payables
Provisions
Interest bearing liabilities
Total non-current liabilities
Total liabilities
Equity
December
December
December
December
December
2017
December
201616
2017
1,813.8
(265.6)
(637.8)
910.4
(538.6)
371.8
2017
1,383.8
1,813.8
3,216.3
29.0
210.8
32.2
5,302.1
1,090.8
167.6
382.7
169.2
145.4
1,224.0
1,089.7
4,269.4
4,737.4
40.4
311.8
265.6
5,355.2
152.0
69.3
637.8
859.1
201616
1,576.5
(618.2)
(549.0)
409.3
(466.9)
(57.6)
201616
1,324.6
1,576.5
3,209.6
28.0
213.0
47.7
5,074.8
1,235.8
166.9
616.5
135.4
328.1
1,355.7
1,146.9
4,985.3
4,781.1
126.6
333.3
618.2
5,859.2
287.0
73.5
549.0
909.5
9,571.5
10,060.1
December
2017
December
201616
6,214.3
6,768.7
3,357.2
3,291.4
chg. $
237.3
352.6
(88.8)
501.1
(71.7)
429.4
chg. $
59.2
chg. $
237.3
6.7
1.0
(2.2)
(15.5)
227.3
(145.0)
0.7
(233.8)
33.8
(182.7)
(131.7)
(57.2)
(715.9)
(488.6)
chg. $
(43.7)
(86.2)
(21.5)
(352.6)
(504.0)
(135.0)
(4.2)
88.8
(50.4)
(554.4)
65.8
chg. %
15.1%
(57.0)%
16.2%
122.4%
15.4%
(745.5)%
chg. %
4.5%
chg. %
15.1%
0.2%
3.6%
(1.0)%
(32.5)%
4.5%
(11.7)%
0.4%
(37.9)%
25.0%
(55.7)%
(9.7)%
(5.0)%
(14.4)%
(4.9)%
chg. %
(0.9)%
(68.1)%
(6.5)%
(57.0)%
(8.6)%
(47.0)%
(5.7)%
16.2%
(5.5)%
(8.2)%
2.0%
NET CASH / (DEBT)
Net cash was $910.4 million at 31 December 2017, an increase of 122.4%, or $501.1 million, compared to 31 December 2016. This
increase is primarily a result of the operating cash flows during the year, less payments for capital expenditure as well as dividends.
Interest bearing liabilities
Current and non-current interest bearing liabilities were $903.4 million at 31 December 2017, a reduction of 22.6%, or $263.8
million, compared to 31 December 2016.
During 2017, CIMIC successfully refinanced and expanded a $2.6 billion syndicated bank facility which is used to fund working
capital. The refinancing was heavily over-subscribed and the strong response from lenders in Australia and Asia allowed the facility
to be upsized. The new facility provides increased financial flexibility and supports the Group’s strategy.
Bonding
CIMIC has 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 2017 were $3.6 billion (31 December 2016: $4.0 billion). An
additional $1.6 billion (31 December 2016: $1.6 billion) was undrawn of which $839.6 million (31 December 2016: $575.4 million)
was committed and $735.1 million (31 December 2016: $1.0 billion) was uncommitted.
Credit ratings
On 10 May 2017, Standard & Poor’s upgraded CIMIC’s investment grade rating from ‘BBB-/A-3’ to ‘BBB /A-2’ with a stable outlook.
On 3 August 2017, Moody’s Investors Service upgraded CIMIC’s investment grade rating from ‘Baa3’ to ‘Baa2’ with a stable outlook.
These rating upgrades are a positive reflection of the strength of the Group’s financial position.
CURRENT ASSETS
Trade and other receivables
Trade and other receivables were $3,216.3 million at 31 December 2017, an increase of 0.2%, or $6.7 million, compared to
31 December 2016. The figure includes $2,495.9 million (31 December 2016: $2,607.9 million) of amounts due from customers
(refer to net contract debtors below). The remaining balance relates to sundry debtors, joint venture and other receivables.
Net contract debtors
The Group’s net contract debtors were $1,383.8 million at 31 December 2017, a similar level compared to 31 December 2016.
The Group’s $675.0 million contract debtors portfolio provision remains unchanged as at 31 December 2017.
NON-CURRENT ASSETS
Trade and other receivables
Trade and other receivables were $1,090.8 million at 31 December 2017, a decrease of 11.7%, or $145.0 million, compared to
31 December 2016. This figure includes $1,046.3 million (31 December 2016: $1,043.2 million) of non-current loan receivables
owed by HLG Contracting, refer to the Financial Report, ‘Note 8: Trade and other receivables’ for details.
Investments accounted for using the equity method
Equity accounted investments include project-related associates and joint ventures, PPP projects, along with the Group’s
investments in HLG Contracting and Ventia.
Investments accounted for using the equity method were $382.7 million at 31 December 2017, a decrease of 37.9%, or $233.8
million, compared to 31 December 2016. This is largely due to the reduction in the carrying value of the Group’s investment in HLG
Contracting. For details on the valuation of HLG Contracting refer to the Financial Report, ‘Note 26: Joint ventures entities’. The
December 2017 balance excludes CIMIC’s investment in Macmahon, due to the divestment of CIMIC’s shareholding in FY17.
Deferred tax assets
Deferred tax assets were $145.4 million at 31 December 2017, a decrease of 55.7%, or $182.7 million, compared to 31 December
2016. Deferred tax assets are impacted by the timing difference of tax obligations as well as acquisitions and divestments. In 2016,
the balance of $328.1 million included an increase of $208.6 million largely due to the acquisition of UGL.
Property, plant and equipment
Property, plant and equipment was $1,224.0 million at 31 December 2017, a decrease of 9.7%, or $131.7 million, compared to
31 December 2016. At 31 December 2017, $538.6 million worth of equipment was financed by the Group under operating leases.
Additions to property, plant and equipment during the period included investment in job-costed tunnelling machines for major
road and rail projects, and capital expenditure on plant and equipment to deliver increased production on a number of mining
projects. The balance also includes the effect of foreign exchange rate fluctuations.
16 Amounts have been restated at December 2016 due to the finalisation of the purchase price allocation on the UGL acquisition.
46
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CIMIC Group Limited Annual Report 2017 | Operating and Financial Review
Intangibles
Intangibles were $1,089.7 million at 31 December 2017, a decrease of 5.0%, or $57.2 million, compared to 31 December 2016. The
change during the year mainly represents the amortisation of customer contracts, which includes customer contracts acquired as
part of the UGL acquisition. Intangibles include $922.5 million of goodwill.
CURRENT LIABILITIES
Trade and other payables
Trade and other payables were $4,737.4 million at 31 December 2017, a decrease of 0.9%, or $43.7 million, compared to
31 December 2016. This figure includes $1,112.1 million (31 December 2016: $1,283.3 million) of amounts due to customers. The
remaining balance includes trade creditors and accruals, joint venture payables and other creditors.
Current tax liabilities
Current tax liabilities were $40.4 million at 31 December 2017, a decrease of 68.1%, or $86.2 million, compared to 31 December
2016. Changes in tax liabilities are driven by the timing of income tax payments as required to be made across the various
jurisdictions in which the Group operates and tax payments in FY17 for the FY16 Nextgen divestment.
Provisions
Provisions were $311.8 million at 31 December 2017, a decrease of 6.5%, or $21.5 million, compared to 31 December 2016. The
provision is for employee benefits and relates to wages and salaries, annual leave, long service leave, retirement benefits and
deferred bonuses.
NON-CURRENT LIABILITIES
Trade and other payables
Trade and other payables were $152.0 million at 31 December 2017, a reduction of 47.0%, or $135.0 million, compared to
31 December 2016.
Provisions
Provisions were $69.3 million at 31 December 2017, a decrease of 5.7%, or $4.2 million, compared to 31 December 2016. This
figure includes employee benefits relating to long service leave, retirement benefits and deferred bonuses.
EQUITY
Equity was $3,357.2 million as at 31 December 2017, an increase of 2.0%, or $65.8 million, compared to 31 December 2016.
48
48
CIMIC Group Limited Annual Report 2017 | Operating and Financial Review
CIMIC Group Limited Annual Report 2017 | Operating and Financial Review
Intangibles
CURRENT LIABILITIES
Trade and other payables
Current tax liabilities
Provisions
deferred bonuses.
NON-CURRENT LIABILITIES
Trade and other payables
31 December 2016.
Provisions
EQUITY
Intangibles were $1,089.7 million at 31 December 2017, a decrease of 5.0%, or $57.2 million, compared to 31 December 2016. The
change during the year mainly represents the amortisation of customer contracts, which includes customer contracts acquired as
part of the UGL acquisition. Intangibles include $922.5 million of goodwill.
Trade and other payables were $4,737.4 million at 31 December 2017, a decrease of 0.9%, or $43.7 million, compared to
31 December 2016. This figure includes $1,112.1 million (31 December 2016: $1,283.3 million) of amounts due to customers. The
remaining balance includes trade creditors and accruals, joint venture payables and other creditors.
Current tax liabilities were $40.4 million at 31 December 2017, a decrease of 68.1%, or $86.2 million, compared to 31 December
2016. Changes in tax liabilities are driven by the timing of income tax payments as required to be made across the various
jurisdictions in which the Group operates and tax payments in FY17 for the FY16 Nextgen divestment.
Provisions were $311.8 million at 31 December 2017, a decrease of 6.5%, or $21.5 million, compared to 31 December 2016. The
provision is for employee benefits and relates to wages and salaries, annual leave, long service leave, retirement benefits and
Trade and other payables were $152.0 million at 31 December 2017, a reduction of 47.0%, or $135.0 million, compared to
Provisions were $69.3 million at 31 December 2017, a decrease of 5.7%, or $4.2 million, compared to 31 December 2016. This
figure includes employee benefits relating to long service leave, retirement benefits and deferred bonuses.
Equity was $3,357.2 million as at 31 December 2017, an increase of 2.0%, or $65.8 million, compared to 31 December 2016.
CASH FLOWS
Cash flows from operating activities
$m
Cash flows from operating activities
Interest, finance costs, taxes and dividends received
Net cash from operating activities
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
Cash acquired from acquisition of investments in controlled
entities and businesses
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
$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
2017
2016
chg. $
chg. %
1,523.4
(161.0)
1,362.4
1,201.4
(74.4)
1,127.0
322.0
(86.6)
235.4
26.8%
116.4%
20.9%
2017
2016
chg. $
chg. %
(14.2)
(424.1)
118.6
46.9
-
(14.7)
(280.2)
97.8
180.8
244.4
0.5
(143.9)
20.8
(133.9)
(244.4)
(3.4)%
51.4%
21.3%
(74.1)%
-
(59.0)
(32.0)
(27.0)
84.4%
(60.1)
(40.9)
(432.8)
(325.1)
(152.7)
(281.7)
265.0
111.8
(151.1)
(81.5)%
(73.2)%
53.6%
2017
2016
chg. $
chg. %
-
(8.6)
1,517.0
(1,705.9)
(21.2)
-
(395.6)
(29.3)
(643.6)
(425.9)
(18.8)
380.4
(380.1)
(276.9)
(12.6)
(320.5)
(389.0)
(1,443.4)
425.9
10.2
1,136.6
(1,325.8)
255.7
12.6
(75.1)
359.7
799.8
-
(54.3)%
-
-
(92.3)%
-
23.4%
(92.5)%
(55.4)%
CASH FLOWS FROM OPERATING ACTIVITIES
Cash flows from operating activites were $1,523.4 million for FY17. There was a significant increase in cash flow generation from
operating activities during FY17, a result of CIMIC’s continued focus on managing working capital and generating cash-backed
profits.
The EBITDA conversion rate was 101% in FY17, which remains at a consistently high level.
Income taxes paid have increased by $59.8 million for FY17. Changes in taxes paid are impacted by the timing of payments of taxes
and receipt of refunds outside of the financial year to which they relate. Finance costs paid have increased due to the higher
average gross debt in the period, primarily due to the acquisition of UGL.
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash outflows from investing activities were $432.8 million for FY17. This compares to an outflow of $281.7 million in FY16.
Gross capital expenditure was $424.1 million for FY17, an increase of 51.4%, or $143.9 million, compared to FY16. The increase
reflects investment in job-costed tunnelling machines for major road and rail projects, and capital expenditure on plant and
equipment for mining projects, in line with the increase of activities and revenue in these areas.
Gross capital proceeds were $118.6 million for FY17, which reflected the sale of mining plant into operating leases, in line with the
Group’s fleet management strategy.
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash outflows from financing activities were $643.6 million for FY17 compared to $1,443.4 million in FY16. This mainly
represents a reduction of the Group’s net borrowings as well as dividends paid during the year.
48
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CIMIC Group Limited Annual Report 2017 | Operating and Financial Review
NEW WORK AND WORK IN HAND
CIMIC maintained its position as a leading international contractor and the world’s largest mining services provider, winning $18.4
billion worth of new work. The new work was broadly diversified by activity which supports the delivery of sustainable returns.
The Group’s total work in hand was $36.0 billion at 31 December 2017, an increase of 5.9%, or $2.0 billion, compared to
31 December 2016. This work in hand is equivalent to over two years of revenue.
Work in hand
$m
Work in hand beginning of period
New work
Acquisitions / (divestments)
Executed work
Total work in hand end of period
December 2017 December 2016
chg. $
chg. %
34,012.0
18,369.5
(260.9)
(16,110.7)
36,009.9
29,004.4
13,433.1
5,109.0
(13,534.5)
34,012.0
5,007.6
4,936.4
(5,369.9)
(2,576.2)
1,997.9
17.3%
36.7%
(105.1)%
19.0%
5.9%
Work in hand was 73:27 between domestic and international markets, compared with 68:32 in FY16.
MAJOR CONTRACT AWARDS AND SCOPE INCREASES IN 2017
New work comprised $13.6 billion of new contracts and $4.8 billion of contract extensions and variations, including the impact of
foreign exchange rate movements.
Work in hand by segment17
$m
Construction
Mining & mineral processing
Services
HLG
Corporate
Total work in hand
December
2017
14,929.0
10,445.4
6,662.6
842.2
3,130.7
36,009.9
% December
2016
12,959.0
10,025.4
4,926.3
1,798.1
4,303.2
34,012.0
41%
29%
19%
2%
9%
100%
%
chg. $
chg. %
38%
30%
14%
5%
13%
100%
1,970.0
420.0
1,736.3
(955.9)
(1,172.5)
1,997.9
15.2%
4.2%
35.2%
(53.2)%
(27.2)%
5.9%
CONSTRUCTION WORK IN HAND
Construction work in hand was $14.9 billion at 31 December 2017, an increase of 15.2%, or $2.0 billion compared to
31 December 2017. Construction work in hand is diversified across a range of markets and sectors in Australia, New Zealand and
Asia–Pacific.
A number of significant construction projects were awarded during the year including projects with revenue of:
$2.8 billion to design and construct the Sydney Metro, Stage 2, New South Wales ($1.265 billion, CPB Contractors);
$2.5 billion to design and construct the West Gate Tunnel, Victoria;
$1.1 billion to design and construct the Metro Tunnel Rail works, Victoria ($312 million, CPB Contractors);
$497 million to design the Mackay Ring Road, Stage 1, Queensland ($215 million, CPB Contractors);
$470 million to construct the Deep Tunnel Sewerage System Phase 2, Singapore;
$436 million to construct the East Kowloon Cultural Centre, Hong Kong;
$400 million to construct the New Parallel Runway at Brisbane Airport, Queensland ($200 million, CPB Contractors);
$390 million to construct the Terminal 2 (T2) foundation and substructure works at International Airport, Hong Kong ($273
million, Leighton Asia);
$365 million to upgrade a section of the Pacific Highway (on the Woolgoolga to Ballina sector), New South Wales;
$278 million to deliver the Terminal 1 Annex Building and Carpark 4 Expansion for the International Airport, Hong Kong;
$276 million to construct three road projects, Western Australia ($196 million, CPB Contractors);
$219 million to design and construct the Christchurch Convention and Exhibition Centre, New Zealand;
$175 million to design and construct the third stage of the North Link road project, Western Australia;
$148 million to deliver the Black Point Power Station Combined Cycle Gas Turbine, Hong Kong;
$145 million to design and construct the Capricornia Correctional Centre, Queensland; and
$103 million to deliver a PPP schools initiative, New Zealand.
17 Since June 2017, the former Commercial & residential segment has been included within the Corporate segment (FY16: $724.2
million).
50
50
NEW WORK AND WORK IN HAND
CIMIC maintained its position as a leading international contractor and the world’s largest mining services provider, winning $18.4
billion worth of new work. The new work was broadly diversified by activity which supports the delivery of sustainable returns.
The Group’s total work in hand was $36.0 billion at 31 December 2017, an increase of 5.9%, or $2.0 billion, compared to
31 December 2016. This work in hand is equivalent to over two years of revenue.
Work in hand
$m
New work
Work in hand beginning of period
Acquisitions / (divestments)
Executed work
Total work in hand end of period
December 2017 December 2016
chg. $
chg. %
34,012.0
18,369.5
(260.9)
(16,110.7)
36,009.9
29,004.4
13,433.1
5,109.0
(13,534.5)
34,012.0
5,007.6
4,936.4
(5,369.9)
(2,576.2)
1,997.9
17.3%
36.7%
(105.1)%
19.0%
5.9%
Work in hand was 73:27 between domestic and international markets, compared with 68:32 in FY16.
MAJOR CONTRACT AWARDS AND SCOPE INCREASES IN 2017
New work comprised $13.6 billion of new contracts and $4.8 billion of contract extensions and variations, including the impact of
foreign exchange rate movements.
Work in hand by segment17
December
% December
%
chg. $
chg. %
2017
14,929.0
10,445.4
6,662.6
842.2
3,130.7
36,009.9
2016
12,959.0
10,025.4
4,926.3
1,798.1
4,303.2
41%
29%
19%
2%
9%
100%
34,012.0
100%
38%
30%
14%
5%
13%
1,970.0
420.0
1,736.3
(955.9)
(1,172.5)
1,997.9
15.2%
4.2%
35.2%
(53.2)%
(27.2)%
5.9%
Mining & mineral processing
$m
Construction
Services
HLG
Corporate
Total work in hand
CONSTRUCTION WORK IN HAND
Asia–Pacific.
Construction work in hand was $14.9 billion at 31 December 2017, an increase of 15.2%, or $2.0 billion compared to
31 December 2017. Construction work in hand is diversified across a range of markets and sectors in Australia, New Zealand and
A number of significant construction projects were awarded during the year including projects with revenue of:
$2.8 billion to design and construct the Sydney Metro, Stage 2, New South Wales ($1.265 billion, CPB Contractors);
$2.5 billion to design and construct the West Gate Tunnel, Victoria;
$1.1 billion to design and construct the Metro Tunnel Rail works, Victoria ($312 million, CPB Contractors);
$497 million to design the Mackay Ring Road, Stage 1, Queensland ($215 million, CPB Contractors);
$470 million to construct the Deep Tunnel Sewerage System Phase 2, Singapore;
$436 million to construct the East Kowloon Cultural Centre, Hong Kong;
$400 million to construct the New Parallel Runway at Brisbane Airport, Queensland ($200 million, CPB Contractors);
$390 million to construct the Terminal 2 (T2) foundation and substructure works at International Airport, Hong Kong ($273
million, Leighton Asia);
$365 million to upgrade a section of the Pacific Highway (on the Woolgoolga to Ballina sector), New South Wales;
$278 million to deliver the Terminal 1 Annex Building and Carpark 4 Expansion for the International Airport, Hong Kong;
$276 million to construct three road projects, Western Australia ($196 million, CPB Contractors);
$219 million to design and construct the Christchurch Convention and Exhibition Centre, New Zealand;
$175 million to design and construct the third stage of the North Link road project, Western Australia;
$148 million to deliver the Black Point Power Station Combined Cycle Gas Turbine, Hong Kong;
$145 million to design and construct the Capricornia Correctional Centre, Queensland; and
$103 million to deliver a PPP schools initiative, New Zealand.
CIMIC Group Limited Annual Report 2017 | Operating and Financial Review
CIMIC Group Limited Annual Report 2017 | Operating and Financial Review
MINING & MINERAL PROCESSING WORK IN HAND
Mining & mineral processing work in hand was $10.4 billion at 31 December 2017, an increase of 4.2%, or $420.0 million compared
to 31 December 2016. CIMIC continued to diversify its mining & mineral processing portfolio by commodity and geography.
The Group won several significant mining & mineral processing contracts including projects with revenue of:
$650 million to provide mining services at the Solomon Hub, Western Australia;
$500 million to provide mining services at the Mount Pleasant mine, New South Wales;
$450 million to continue mining operations at the Yallourn mine, Victoria ($195 million, Thiess);
$440 million to provide mining services at BHP Billiton Mitsubishi Alliance’s (BMA) Caval Ridge and Peak Downs mines,
Queensland;
$437 million to provide mining services at the Gunung Bara Utama mine until 2024, Indonesia;
$300 million to expand operations at the Kaltim Prima Coal Sangatta mine, Indonesia;
$300 million contract extension at Harum Energy’s Mahakam Sumber Jaya (MSJ) mine until 2021, Indonesia;
$207 million to undertake mineral processing operations at the Byerwen and Woodlawn projects, Queensland and New South
Wales;
$189 million to continue to operate at the Jellinbah Plains mine, Queensland; and
$134 million contract and contract extension to provide mining solutions at the adjoining Satui and Wahana mines, Indonesia.
SERVICES WORK IN HAND
Services work in hand was $6.7 billion at 31 December 2017 up 35.2%, or $1.7 billion compared to 31 December 2016. The services
work in hand is diversified across a range of markets in Australia, New Zealand and Asia-Pacific. 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.
Several major services contracts were awarded during the year including:
$1.9 billion contract to continue the operations and maintenance of the Melbourne suburban train network for a further
seven years, Victoria;
several contracts for the engineering, procurement design and construction of solar farms in Australia (e.g. Collinsville Solar
Farm in New South Wales, White Rock in Queensland, and Bannerton Solar Park in Victoria); and
the provision of maintenance services for the next five years to Esso Australia, Victoria.
OTHER WORK IN HAND
HLG work in hand was $842.2 million at 31 December 2017. The reduction during 2017 was a result of projects being delivered,
while maintaining a disciplined bidding approach as part of the ongoing strategic review.
Corporate work in hand mainly includes contributions from the former Commercial & residential segment and CIMIC’s share of
work in hand from investments such as Ventia and previously Macmahon.
17 Since June 2017, the former Commercial & residential segment has been included within the Corporate segment (FY16: $724.2
million).
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51
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CIMIC Group Limited Annual Report 2017 | 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. The Group’s risk management framework is continually monitored and there have been no
material changes to the risks presented below since the 2016 Annual Report.
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 management approach
Risk description
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.
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.
The Group maintains a diverse portfolio of projects and investments across a range of
markets and geographies. Regular and rigorous reviews of the Group’s current and
potential geographies, industries, activities and competitors are undertaken. Oversight
of key risks is maintained by the Audit and Risk Committee, supported by a quarterly
Risk Report that aggregates and highlights risks to the Group achieving its objectives.
The Group maintains a project, contract and investment portfolio that is diversified by
geography, market, activity and client to mitigate the impact of emerging trends and
market volatility.
The Group continually seeks opportunities to improve its operations and thereby the
value proposition it delivers to clients.
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.
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 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.
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.
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.
Work delivery is subject to various inherent uncertainties.
Work delivery challenges may
manifest in actual costs increasing
from our earlier estimates.
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.
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CIMIC Group Limited Annual Report 2017 | Operating and Financial Review
RISK MANAGEMENT
SIGNIFICANT CHANGES
SIGNIFICANT CHANGES DURING FY17
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. Since December 2016, the arbitration has continued
in accordance with the contractual terms. The Arbitrators have been appointed and have made orders for the conduct of the
proceedings and it is anticipated that the hearings will be in 2019 with a determination thereafter.
On 20 January 2017, CIMIC completed its compulsory acquisition of UGL, following an off-market takeover offer announced on
10 October 2016.
On 10 May 2017, Standard & Poor’s upgraded CIMIC’s investment grade rating one-notch to ‘BBB/A-2’ with a stable outlook.
On 1 June 2017, CIMIC announced Stefan Camphausen’s promotion to CIMIC Group Chief Financial Officer.
On 6 July 2017, CIMIC sold its 23.64% shareholding in Macmahon.
On 3 August 2017, Moody’s Investors Service upgraded CIMIC’s investment grade rating one-notch to ‘Baa2’ with a stable
outlook.
On 20 September 2017, CIMIC announced the appointment of Kathryn Spargo as an Independent Non-Executive Director.
On 25 September 2017, CIMIC successfully refinanced and expanded a $2.6 billion syndicated bank facility as part of its long-
term financing strategy.
On 1 November 2017, CIMIC announced Michael Wright’s promotion to CIMIC Group Chief Executive Officer and Managing
Director effective from 1 December 2017.
On 1 November 2017, CIMIC announced the appointment of Ignacio Segura as Deputy Chief Executive Officer and Chief
Operating Officer.
On 1 November 2017, CIMIC announced the appointment of Ángel Muriel as an Alternate Director for Peter Sassenfeld and
the appointment of Adolfo Valderas as an Alternate Director for Pedro López Jiménez.
On 14 December 2017, CIMIC announced a further on-market buy-back of up to 10% of CIMIC’s fully paid ordinary shares for a
period of 12 months commencing on 29 December 2017. The previous share buy-back (announced 12 December 2016) ended
on 28 December 2017.
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 31 December 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 2017.
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. The Group’s risk management framework is continually monitored and there have been no
material changes to the risks presented below since the 2016 Annual Report.
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
The Group is committed to the health, safety and security of our people and the
incident or event may put our people
communities in which we work. Safety policies and standards apply across the Group.
and the 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 and Sustainability Committee.
The Group often works within, or adjacent to, sensitive environments.
An environmental incident or
The Group is committed to the highest standard of environmental performance.
unplanned event may occur that
Operating Companies’ environmental policies and procedures are aligned with the
adversely impacts the environment or
Group Policy and Standards. Should an incident occur, emergency response plans will
the communities in which we work.
be enacted. The Ethics, Compliance and Sustainability Committee oversees
External factors may affect the Group’s markets and growth plans.
environmental performance.
Changes in economic, political or
The Group maintains a diverse portfolio of projects and investments across a range of
societal trends, or unforeseen
external events and actions, may
affect business development and
project delivery.
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.
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
The Group continually seeks opportunities to improve its operations and thereby the
adjust operations, thereby impacting
value proposition it delivers to clients.
The Group’s reputation is critical to securing future work and attracting and retaining quality personnel, subcontractors and
existing and future contracts.
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
regulatory compliance. This is supported by a comprehensive range of Group level
secure future work opportunities,
policies and standards, including our Code of Conduct. CIMIC promotes clear
investment, suppliers or joint venture
governance through the empowerment of individuals with delegated authority,
partners.
appropriate segregation of duties, and clear accountability and oversight for risks.
The Group targets work that meets a defined risk appetite and appropriately balances risk and reward.
Work procurement challenges may
Application of the Group work procurement standards and approval process maximises
impact our ability to secure high-
the likelihood of securing quality work with commensurate returns for the risks taken.
quality 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.
Work delivery is subject to various inherent uncertainties.
Work delivery challenges may
Significant resources are devoted to the avoidance, management and resolution of
manifest in actual costs increasing
work delivery challenges. Operating Companies provide project teams with guidance
from our earlier estimates.
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.
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CIMIC Group Limited Annual Report 2017 | Operating and Financial Review
OPERATING ENVIRONMENT OUTLOOK
CIMIC is a world-leading infrastructure, mining, services and public private partnerships group. We have businesses in construction
(CPB Contractors and Leighton Asia), mining and mineral processing (Thiess and Sedgman), operation and maintenance services
(UGL), public private partnerships (Pacific Partnerships) and engineering (EIC Activities). Our mission is to generate sustainable
shareholder returns by delivering innovative and competitive solutions for clients and safe, fulfilling careers for our people. With a
history since 1899, and more than 50,000 people in 20 countries, we strive to be known for our principles of Integrity,
Accountability, Innovation and Delivery, underpinned by Safety. CIMIC is well placed in geographies and markets that should
continue to grow and support a broad range of opportunities for the foreseeable future.
CONSTRUCTION MARKET
Construction activity is largely underpinned by government investing in infrastructure projects. Across Australia and the
Asia-Pacific, governments are expected to invest strongly to address growing populations, increasing levels of urbanisation, the
impacts of climate change and deficits caused by historic underinvestment.
Australia’s long run of annual GDP growth is expected to continue with real growth forecast of 2.75% in 2017-18 and 3% in
2018-19.18 This positive outlook, combined with strong population growth of 1% to 2%19 per annum from 2016 to 2026, should
help to sustain demand for substantial infrastructure spending over the next few years, and provide a broad range of construction
opportunities.
The Australian Federal Government’s 2017-18 Budget has committed $75 billion to road and rail infrastructure investment through
to 2026-27.20 This commitment builds on its 2013-21 road, rail and air transport infrastructure investment plan, and is spearheaded
by major transport projects, including $5.3 billion for the delivery of Western Sydney Airport and $10 billion for the National Rail
Program.21
Over $42 billion of infrastructure commitments outlined in the Federal Budget are dedicated to the three eastern mainland
Australian states. 22 In addition, each of the State Governments have infrastructure investment programs, some of which are
substantial in their own right. This commitment to direct investment in infrastructure is expected to be complemented by the
private sector, via the financing of a range of major State and Federal Government transport and social infrastructure projects
under PPP models (see ‘PPP Market’ section below).
The Australian Industry Group’s November 2017 Construction Outlook Survey reported that, “For the 2017/18 financial year, the
value of turnover from all major construction work is expected to recover by 7.1% …an expanding pipeline of publicly funded
infrastructure investment is expected to drive stronger activity over the year.”23
Economic growth across the Group’s key markets in New Zealand and the wider Asia-Pacific region also remains positive and should
continue to drive a range of construction opportunities, particularly for transport related infrastructure.
PPP MARKET
The Australian PPP market is well developed and governments – at both a State and Federal level – have turned to the private
sector for more than two decades to complement the delivery of infrastructure. The PPP market has been tapped to develop road,
rail, health, education, defence, justice, correctional, water, convention centre, social housing and student accommodation
projects. Given government constraints on budgets, PPPs are expected to play an increasingly important part in meeting the future
infrastructure needs of the country. This is reflected in the National PPP Policy Framework, agreed to by the Coalition of Australian
Governments, where all projects with a total capital value exceeding $50 million may be considered for PPP agreements.24 The
Group’s Pacific Partnerships business was created to address the opportunities in this market and future growth.
18 Budget Strategy and Outlook: Budget Paper No. 1, p.8, accessed 25 January 2018.
19 3101.0 Australian Demographic Statistics June 2017, Table 9 Series B(d).
20 Based on Commonwealth of Australia data, Budget 2017-18: Stronger growth to create more and better paying jobs, May 2017,
p. 8, accessed 6 June 2017.
21 Based on Commonwealth of Australia data, Budget 2017-18: Stronger growth to create more and better paying jobs, May 2017,
p. 9, accessed 6 June 2017.
22 Based on Commonwealth of Australia data, Budget 2017-18: Stronger growth to create more and better paying jobs, May 2017,
pp. 10-11, accessed 6 June 2017.
23 Construction Outlook, Ai Group/Australian Constructors Association, November 2017.
24 Infrastructure Australia, Public Private Partnerships, accessed 6 June 2017 at http://infrastructureaustralia.gov.au/policy-
publications/public-private-partnerships/.
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CIMIC Group Limited Annual Report 2017 | Operating and Financial Review
MINING AND MINERAL PROCESSING MARKET
As a world leading mining services provider, CIMIC Group remains in a strong position to capitalise on opportunities as they arise in
the contract mining and mineral processing market. Our expertise spans most of the world’s commodities including metallurgical
and thermal coal, iron ore, copper, nickel, zinc, gold, diamonds and oil sands. The Australian Government’s Resources and Energy
Quarterly reported in December 201725 that Australia’s resources and energy export earnings are forecast to reach an all-time high
of $214 billion in 2017-18. In real terms, this represents 28% growth on 2015-16. This growth is largely driven by steel-making
commodities and coal. From FY17 to FY19 (June/July), export volumes are expected to grow by 8.6% for metallurgical coal, by 0.8%
for thermal coal and by 7.9% for iron ore, sustaining a good level of mining services activity.
The longer term demand outlook remains positive for minerals, underpinned by sustained economic growth, particularly from Asia.
This demand, long-term client partnerships, and the Group’s competitive position provides confidence for the future.
SERVICES MARKET
The market for Australian maintenance services is estimated at $39.5 billion. 26 Continuing investment in infrastructure
development and an increase in the proportion of the Australian market that is outsourced (currently around 55%) is expected to
grow private sector opportunities for companies by about 5.2% per annum until FY21. This growth will be led primarily by the oil
and gas and mining sectors, rail sector, roads, water and wastewater, and telecommunications. 27
CIMIC is well positioned to extend its services capabilities both in existing and new markets by leveraging existing client
relationships as well as developing new client value propositions by benefiting from the Group’s complementary activities.
25 Australian Government Department of Industry, Innovation and Science (Office of the Chief Economist) Resources and Energy
Quarterly, December 2017.
26 BIS Shrapnel (BIS Oxford Economics), Maintenance in Australia 2016 – 2031, October 2016.
27 BIS Shrapnel (BIS Oxford Economics), Maintenance in Australia 2016 – 2031, October 2016.
55
55
OPERATING ENVIRONMENT OUTLOOK
CIMIC is a world-leading infrastructure, mining, services and public private partnerships group. We have businesses in construction
(CPB Contractors and Leighton Asia), mining and mineral processing (Thiess and Sedgman), operation and maintenance services
(UGL), public private partnerships (Pacific Partnerships) and engineering (EIC Activities). Our mission is to generate sustainable
shareholder returns by delivering innovative and competitive solutions for clients and safe, fulfilling careers for our people. With a
history since 1899, and more than 50,000 people in 20 countries, we strive to be known for our principles of Integrity,
Accountability, Innovation and Delivery, underpinned by Safety. CIMIC is well placed in geographies and markets that should
continue to grow and support a broad range of opportunities for the foreseeable future.
CONSTRUCTION MARKET
Construction activity is largely underpinned by government investing in infrastructure projects. Across Australia and the
Asia-Pacific, governments are expected to invest strongly to address growing populations, increasing levels of urbanisation, the
impacts of climate change and deficits caused by historic underinvestment.
Australia’s long run of annual GDP growth is expected to continue with real growth forecast of 2.75% in 2017-18 and 3% in
2018-19.18 This positive outlook, combined with strong population growth of 1% to 2%19 per annum from 2016 to 2026, should
help to sustain demand for substantial infrastructure spending over the next few years, and provide a broad range of construction
opportunities.
Program.21
The Australian Federal Government’s 2017-18 Budget has committed $75 billion to road and rail infrastructure investment through
to 2026-27.20 This commitment builds on its 2013-21 road, rail and air transport infrastructure investment plan, and is spearheaded
by major transport projects, including $5.3 billion for the delivery of Western Sydney Airport and $10 billion for the National Rail
Over $42 billion of infrastructure commitments outlined in the Federal Budget are dedicated to the three eastern mainland
Australian states. 22 In addition, each of the State Governments have infrastructure investment programs, some of which are
substantial in their own right. This commitment to direct investment in infrastructure is expected to be complemented by the
private sector, via the financing of a range of major State and Federal Government transport and social infrastructure projects
under PPP models (see ‘PPP Market’ section below).
The Australian Industry Group’s November 2017 Construction Outlook Survey reported that, “For the 2017/18 financial year, the
value of turnover from all major construction work is expected to recover by 7.1% …an expanding pipeline of publicly funded
infrastructure investment is expected to drive stronger activity over the year.”23
Economic growth across the Group’s key markets in New Zealand and the wider Asia-Pacific region also remains positive and should
continue to drive a range of construction opportunities, particularly for transport related infrastructure.
PPP MARKET
The Australian PPP market is well developed and governments – at both a State and Federal level – have turned to the private
sector for more than two decades to complement the delivery of infrastructure. The PPP market has been tapped to develop road,
rail, health, education, defence, justice, correctional, water, convention centre, social housing and student accommodation
projects. Given government constraints on budgets, PPPs are expected to play an increasingly important part in meeting the future
infrastructure needs of the country. This is reflected in the National PPP Policy Framework, agreed to by the Coalition of Australian
Governments, where all projects with a total capital value exceeding $50 million may be considered for PPP agreements.24 The
Group’s Pacific Partnerships business was created to address the opportunities in this market and future growth.
18 Budget Strategy and Outlook: Budget Paper No. 1, p.8, accessed 25 January 2018.
19 3101.0 Australian Demographic Statistics June 2017, Table 9 Series B(d).
20 Based on Commonwealth of Australia data, Budget 2017-18: Stronger growth to create more and better paying jobs, May 2017,
21 Based on Commonwealth of Australia data, Budget 2017-18: Stronger growth to create more and better paying jobs, May 2017,
22 Based on Commonwealth of Australia data, Budget 2017-18: Stronger growth to create more and better paying jobs, May 2017,
23 Construction Outlook, Ai Group/Australian Constructors Association, November 2017.
24 Infrastructure Australia, Public Private Partnerships, accessed 6 June 2017 at http://infrastructureaustralia.gov.au/policy-
p. 8, accessed 6 June 2017.
p. 9, accessed 6 June 2017.
pp. 10-11, accessed 6 June 2017.
publications/public-private-partnerships/.
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CIMIC Group Limited Annual Report 2017 | Operating and Financial Review
FUTURE DEVELOPMENTS
GROUP PROSPECTS
CIMIC is a leading provider of construction, PPPs, mining and mineral processing, operations and maintenance services, and
engineering in Australia and overseas. CIMIC’s core markets continue to offer a broad range of opportunities. CIMIC’s work in hand
and a large pipeline of future opportunities support our positive outlook.
Cross River Rail PPP project, Queensland;
Sydney Metro (construction and O&M), New South Wales;
CIMIC is currently bidding on, or has been shortlisted for, major projects including:
WestConnex PPP investment and WestConnex Stage 3, New South Wales;
Outer Suburban Arterial Roads package 3 PPP, Victoria;
Melbourne Metro Rail link, Victoria;
North-South Corridor, Singapore;
Snowy Hydro 2.0 project, New South Wales;
Kai Tak Sports Park, Hong Kong;
Various projects in Canada and Chile including additional mining works in the oil sands and AMSA Minera Centinela as well as
the Jwaneng expansion project, Botswana; and
Mining and processing opportunities in New South Wales, Queensland and Western Australia.
The Group has a robust pipeline with at least $110 billion of tenders relevant to CIMIC to be bid and/or awarded in 2018, and
around $285 billion of projects are coming to the market in 2019 and beyond, including about $65 billion worth of PPP projects.
CIMIC continues to consider opportunities to expand into new regions and markets, by leveraging its existing capabilities as well as
analysing acquisition opportunities.
The Group’s positive outlook has its foundations in its continued focus on maintaining a strong balance sheet, generating cash, and
being disciplined in tendering and project delivery. This focus, combined with the Group’s strong competitive position and the
opportunities across core markets, provides a solid base for sustainable returns.
GUIDANCE
CIMIC expects 2018 NPAT to be in the range of $720 million to $780 million, representing an increase of 3% to 11% on 2017 NPAT,
subject to market conditions.
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CIMIC Group Limited Annual Report 2017 57
58 CIMIC Group Limited Annual Report 2017
Remuneration Report
A diversified services company delivering critical
assets and essential services that sustain and
enhance the environment in which we live.
Photo: Melbourne Suburban Network Operations and Maintenance contract,
Victoria, Australia, UGL is a key joint venture partner.
CIMIC Group Limited Annual Report 2017 59
60 CIMIC Group Limited Annual Report 2017
CIMIC Group Limited Annual Report 2017 | Operating and Financial Review
CIMIC Group Limited Annual Report 2017 | Remuneration Report
FUTURE DEVELOPMENTS
GROUP PROSPECTS
CIMIC is a leading provider of construction, PPPs, mining and mineral processing, operations and maintenance services, and
engineering in Australia and overseas. CIMIC’s core markets continue to offer a broad range of opportunities. CIMIC’s work in hand
and a large pipeline of future opportunities support our positive outlook.
CIMIC is currently bidding on, or has been shortlisted for, major projects including:
WestConnex PPP investment and WestConnex Stage 3, New South Wales;
Cross River Rail PPP project, Queensland;
Outer Suburban Arterial Roads package 3 PPP, Victoria;
Sydney Metro (construction and O&M), New South Wales;
Melbourne Metro Rail link, Victoria;
Snowy Hydro 2.0 project, New South Wales;
North-South Corridor, Singapore;
Kai Tak Sports Park, Hong Kong;
Various projects in Canada and Chile including additional mining works in the oil sands and AMSA Minera Centinela as well as
the Jwaneng expansion project, Botswana; and
Mining and processing opportunities in New South Wales, Queensland and Western Australia.
The Group has a robust pipeline with at least $110 billion of tenders relevant to CIMIC to be bid and/or awarded in 2018, and
around $285 billion of projects are coming to the market in 2019 and beyond, including about $65 billion worth of PPP projects.
CIMIC continues to consider opportunities to expand into new regions and markets, by leveraging its existing capabilities as well as
analysing acquisition opportunities.
The Group’s positive outlook has its foundations in its continued focus on maintaining a strong balance sheet, generating cash, and
being disciplined in tendering and project delivery. This focus, combined with the Group’s strong competitive position and the
opportunities across core markets, provides a solid base for sustainable returns.
CIMIC expects 2018 NPAT to be in the range of $720 million to $780 million, representing an increase of 3% to 11% on 2017 NPAT,
GUIDANCE
subject to market conditions.
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 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 2017) are
set out below. Details of former Senior Executives are set out on page 68, and the current and former Non-executive Directors as at
31 December 2017 are set out on page 69.
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 2017 Financial Year was delivered as a mix of fixed and variable remuneration as set out in
the following table:
Fixed
Variable
Fixed remuneration
Short-Term Incentive
(STI)
Long-Term Incentive (LTI) An option plan vesting 2 years after award and available to exercise over 3 years.
Base salary, non-monetary benefits and superannuation (as applicable).
Annual cash incentive paid to eligible Senior Executives for performance against
approved and measurable objectives.
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 2017 are identified in the table below.
Executive Directors
Marcelino Fernández Verdes
Executive Chairman
Michael Wright
CEO and Managing Director
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. Mr Fernández
Verdes has continued in his capacity as Executive Chairman.
Appointed as Deputy CEO and became KMP on 24 August 2017.
On 1 December 2017, Mr Wright was appointed as CEO and
Managing Director.
Executives
Stefan Camphausen
CFO
Appointed as CFO and became KMP on 1 June 2017.
The remuneration components described in this section apply to current Senior Executives Mr Wright and Mr Camphausen as well
as to former Senior Executives Mr Adolfo Valderas and Mr Ángel Muriel. Both Mr Valderas and Mr Muriel ceased employment
during the year and took up roles within the ACS Group.
The remuneration arrangements applicable to Mr Fernández Verdes are described separately in the ‘Remuneration – Executive
Chairman’ section on page 64.
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CIMIC Group Limited Annual Report 2017 | 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 and other salary-sacrificed benefits as agreed from time to time.
Effective 1 April 2017, an increase was made to the fixed remuneration for Mr Muriel from $1,000,000 per annum to $1,200,000
per annum to reflect his experience and contribution, and the market position of the role.
Effective 1 June 2017, the fixed remuneration for Mr Camphausen was set at $750,000 per annum in recognition of his promotion
to the role of CFO, replacing Mr Muriel.
Effective 24 August 2017, the fixed remuneration for Mr Wright was set at $1,200,000 per annum in recognition of his promotion to
the role of Deputy CEO and subsequent promotion to the role of CEO and Managing Director, replacing Mr Valderas on 1 December
2017.
STI
Summary of 2017 STI
Senior Executive
participation
How much could
Senior Executives
earn under the 2017
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?
Messrs Wright, Camphausen, Valderas and Muriel participated in the 2017 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 2017 were:
Percentage of Total Fixed Remuneration (TFR)
Threshold
Target
Stretch
Senior Executives
M Wright
S Camphausen
36% (ie, 60% of the
target STI opportunity
of 60% of TFR)
60% (ie, 100% of the
target STI opportunity
of 60% of TFR)
Former Senior Executives
A Valderas
Á Muriel
45% (ie, 60% of the
target STI opportunity
of 75% of TFR)
75% (ie, 100% of the
target STI opportunity
of 75% of TFR)
90% (ie, 150% of the
target STI
opportunity of 60%
of TFR)
112.5% (ie, 150% of
the target STI
opportunity of 75%
of TFR)
The 2017 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 2017, 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 other 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 2017 Financial
Year.
Performance against financial and non-financial key performance indicators (KPIs) was assessed
following the end of the 2017 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.
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CIMIC Group Limited Annual Report 2017 | Remuneration Report
Fixed remuneration received by Senior Executives comprises base salary, non-monetary benefits and superannuation (as
FIXED REMUNERATION
applicable).
Non-monetary benefits included such items as fringe benefits and other salary-sacrificed benefits as agreed from time to time.
STI outcomes for the 2017 Financial Year
STI payments for the 2017 Financial Year were determined based on Senior Executive performance against the applicable financial
and non-financial KPIs, as described above. In general, during the 2017 Financial Year, the Group focused on enhancing cash flow
performance and strengthening its balance sheet to position itself for future strategic growth opportunities, as well as achieving
sustainable returns for shareholders.
Effective 1 April 2017, an increase was made to the fixed remuneration for Mr Muriel from $1,000,000 per annum to $1,200,000
The following table sets out the outcomes for the 2017 Financial Year for each Senior Executive who participated in the 2017 STI.
Percentage of available STI earned1
Senior Executives
Current
M Wright*
S Camphausen*
Former
A Valderas*
Á Muriel*
STI earned (A$)
Percentage of target STI
Percentage of maximum STI
363,1172
395,7533
141.6
150
94.4
100
94.4
100
* Where applicable, this table sets out the STI earned for each Senior Executive up until the date on which they ceased to be a Senior Executive.
1,457,7044
731,2505
141.6
150
1.
For newly appointed Senior Executives the table sets out the STI earned from the date they were appointed as a Senior Executive.
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.
2. Mr Wright was appointed as Deputy CEO on 24 August 2017. This amount represents the STI earned from this date. Mr Wright’s STI award
was approved by the Board, on the recommendation of the Remuneration and Nomination Committee, on 6 February 2018 and is payable in
April 2018.
3. Mr Camphausen was appointed as CFO on 1 June 2017. This amount represents the STI earned from this date. Mr Camphausen’s STI award
was approved by the CEO, in consultation with the Executive Chairman, and endorsed by the Remuneration and Nomination Committee, on 6
February 2018 and is payable in April 2018.
4. Mr Valderas ceased employment with the Group in his role as CEO and Managing Director on 30 November 2017 immediately prior to moving
onto a role with ACS Group. This pro rata STI award was approved by the Board, on the recommendation of the Remuneration and
Nomination Committee, on 6 February 2018 and is payable in the normal course in April 2018.
5. Mr Muriel ceased employment with the Group in his role as CFO on 31 May 2017 immediately prior to moving onto a role with ACS Group.
This pro rata STI award was approved by the CEO in consultation with the Executive Chairman, and endorsed by the Remuneration and
Nomination Committee, on 6 February 2018 and is payable in the normal course in April 2018.
LTI
There was no LTI grant in 2017. 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?
What are the
methods of
exercise?
Do the options
attract dividends
and voting rights?
What happens if
there is a change of
control?
Messrs Wright, Camphausen, Valderas and Muriel 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 be exercised 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, vested in full in November 2017, with any vested options that remain
unexercised expiring on 29 October 2020.
In accordance with the terms of the award, the Company determined at vesting that all options
available to be exercised in the first year after vesting (ie, up to 28 October 2018) will be paid in cash in
lieu of an allocation of shares based on the current market price of shares at the date of exercise, less
the exercise price and all applicable taxes and levies. The vested options available to be exercised in
years 2 and 3 of the exercise window are expected to be settled by an allocation of shares.
The options do not carry any rights to dividends or voting. If the Company determines that shares are to
be allocated upon the exercise of options, these will rank equally with other ordinary shares on issue.
If a change of control occurs, the Company in its discretion may determine whether, and the extent to
which, any unvested options will vest or cease to be subject to restrictions (as applicable), having regard
to all relevant circumstances including performance to-date and the nature of the change of control.
63
63
per annum to reflect his experience and contribution, and the market position of the role.
Effective 1 June 2017, the fixed remuneration for Mr Camphausen was set at $750,000 per annum in recognition of his promotion
to the role of CFO, replacing Mr Muriel.
Effective 24 August 2017, the fixed remuneration for Mr Wright was set at $1,200,000 per annum in recognition of his promotion to
the role of Deputy CEO and subsequent promotion to the role of CEO and Managing Director, replacing Mr Valderas on 1 December
2017.
STI
Summary of 2017 STI
Senior Executive
participation
How much could
Senior Executives
earn under the 2017
Financial Year STI?
Messrs Wright, Camphausen, Valderas and Muriel participated in the 2017 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 2017 were:
Percentage of Total Fixed Remuneration (TFR)
Threshold
Target
Stretch
Senior Executives
M Wright
36% (ie, 60% of the
60% (ie, 100% of the
90% (ie, 150% of the
S Camphausen
target STI opportunity
target STI opportunity
target STI
of 60% of TFR)
of 60% of TFR)
opportunity of 60%
Former Senior Executives
A Valderas
Á Muriel
45% (ie, 60% of the
75% (ie, 100% of the
112.5% (ie, 150% of
target STI opportunity
target STI opportunity
the target STI
of 75% of TFR)
of 75% of TFR)
opportunity of 75%
of TFR)
of TFR)
Over what period was
The 2017 Financial Year.
performance
measured?
What were the
performance
conditions?
Financial measures
Non-financial measures
80% of the amount that could be earned as STI was
20% of the amount that could be earned as
based on performance against financial measures
STI was based on performance against safety
and targets applicable to the relevant role.
For Senior Executives in 2017, this financial
component was based on NPAT and operating cash
flow.
targets and/or other non-financial measures
relevant to the role.
Why were those
performance
measures chosen?
The financial measures are designed to encourage
The non-financial measures are designed to
Senior Executives to focus on the key financial
encourage a direct relationship between the
objectives of the Group consistent with the business
measures set and the individual Senior
plan for the relevant year and the Group’s strategic
Executive’s role. They also ensure that
contributions to critical initiatives are
recognised and rewarded.
How is the STI paid?
The STI is paid in cash following finalisation of the audited financial statements for the 2017 Financial
How was
performance against
targets assessed?
Performance against financial and non-financial key performance indicators (KPIs) was assessed
following the end of the 2017 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
objectives.
Year.
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.
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CIMIC Group Limited Annual Report 2017 | Remuneration Report
What if a Senior
Executive ceases
employment?
Can Senior
Executives hedge
their risk under the
option plan?
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, genuine redundancy or other special circumstances):
‐
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 current market
price of shares 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.
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’ roles as Executive Chairman of CIMIC, Chairman and CEO of HOCHTIEF AG and CEO of
ACS Group 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
In accordance with the terms of Mr Fernández Verdes’ Executive Service Agreement (ESA), the key components of his
remuneration are:
an annual allowance as a contribution to his living expenses. Mr Fernández Verdes’ ESA was re‐negotiated in 2016 such that for
2017 (and any subsequent years), the allowance amount as set out in the table below is to be indexed in line with CPI changes:
Year
2016
2017
2018
Fixed allowance amount (A$) Reason
522,132 Effective 1 January 2016 to accommodate 1.5% CPI increase
Effective 1 January 2017 to accommodate 1.3% CPI increase
528,920
508,855
Effective 1 April 2017 to accommodate a reduction in Fringe Benefits Tax
518,124 Effective 1 January 2018 to accommodate 1.8% CPI increase
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.
Mr Fernández Verdes receives remuneration from HOCHTIEF AG in consideration for his employment as HOCHTIEF AG Chairman
and CEO, and from ACS Group in consideration for his employment as ACS Group CEO. Details of this remuneration are available in
the HOCHTIEF AG Annual Report at http://www.reports.hochtief.com and the ACS Group Annual Report at
http://www.grupoacs.com/shareholders‐investors/annual‐report/
.
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 CEO on 13 March 2014) to the price at close of trading on the last trading day before the SAR is
exercised, with a maximum payment per SAR of $32.29.
The SARs 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.
The SARs will lapse on 13 March 2019 unless they have been exercised or forfeited before that date.
64
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CIMIC Group Limited Annual Report 2017 | Remuneration Report
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 would have forfeited any unvested or vested but unexercised SARs if he
did 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. Mr Fernández Verdes will forfeit any unvested or vested but unexercised SARs 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.
On 9 February 2017, Mr Fernández Verdes exercised 480,000 SARs (40% of the total number of SARs available to exercise in the
first year after vesting) resulting in a gross cash payment of $10,147,200. The payment was calculated by reference to the CIMIC
closing share price on 8 February 2017 of $38.85.
Effective 1 March 2017, the Board approved on 7 February 2017 to clarify the original intent and application of the exercise
conditions in the terms of the one-off award in his ESA – by replacing the condition ‘you are not able to exercise more than 40% of
SARs in any one financial year’ with ‘following the vesting date, you will be able to exercise up to 40% of your vested SARs in each
of the two periods of twelve months from the vesting date and any remaining vested but unexercised SARs may be exercised in the
third period of twelve months following the vesting date’. This clarification has not resulted in any variation to the calculation of the
fair value of the SARs pre and post clarification. The calculation of the fair value of the SARs has previously been based on the
original intent of the award reflecting twelve month periods from the vesting date rather than by reference to financial years.
On 26 July 2017, Mr Fernández Verdes exercised 480,000 SARs (40% of the total number of SARs available to exercise in the second
year after vesting) resulting in a gross cash payment of $11,673,600. The payment was calculated by reference to the CIMIC closing
share price on 25 July 2017 of $42.03.
The current position with respect to the one-off award of SARs granted to Mr Fernández Verdes in the 2014 Financial Year are set
out in the following table.
Grant
date
Granted
(number)
1,200,000
10
June
2014
30-day
VWAP at
start of
vesting
period
(A$)
17.71
Test
date
(vesting
date)
13
March
2016
Vested
(%)
Forfeited
(%)
Exercised
(number)
Fair
value
per
SAR1
(A$)
Outstanding
as at 31 Dec
2017
(number)
100
-
960,000
30.60
240,000
Total
maximum
potential
value of
remaining
grant2 (A$)
7,749,600
1.
2.
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 2017. 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 is calculated as the number of outstanding SARs multiplied by the maximum payment per SAR ($32.29).
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.
COMPANY PERFORMANCE
As required by the Corporations Act, the 5 year financial performance of the Group has been set out in the following table.
‐
‐
and
What if a Senior
Executive ceases
employment?
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, genuine redundancy or other special circumstances):
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);
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 current market
price of shares 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.
Can Senior
Executives hedge
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,
their risk under the
which includes options.
option plan?
REMUNERATION – Executive Chairman
POLICY AND APPROACH
Nomination Committee.
The Board approves the Executive Chairman’s remuneration arrangements following consideration by the Remuneration and
The Board considered Mr Fernández Verdes’ roles as Executive Chairman of CIMIC, Chairman and CEO of HOCHTIEF AG and CEO of
ACS Group 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.
In accordance with the terms of Mr Fernández Verdes’ Executive Service Agreement (ESA), the key components of his
an annual allowance as a contribution to his living expenses. Mr Fernández Verdes’ ESA was re‐negotiated in 2016 such that for
2017 (and any subsequent years), the allowance amount as set out in the table below is to be indexed in line with CPI changes:
Fixed allowance amount (A$) Reason
522,132 Effective 1 January 2016 to accommodate 1.5% CPI increase
528,920
508,855
Effective 1 January 2017 to accommodate 1.3% CPI increase
Effective 1 April 2017 to accommodate a reduction in Fringe Benefits Tax
518,124 Effective 1 January 2018 to accommodate 1.8% CPI increase
COMPONENTS
remuneration are:
Year
2016
2017
2018
Mr Fernández Verdes receives remuneration from HOCHTIEF AG in consideration for his employment as HOCHTIEF AG Chairman
and CEO, and from ACS Group in consideration for his employment as ACS Group CEO. Details of this remuneration are available in
the HOCHTIEF AG Annual Report at http://www.reports.hochtief.com and the ACS Group Annual Report at
http://www.grupoacs.com/shareholders‐investors/annual‐report/
.
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 CEO on 13 March 2014) to the price at close of trading on the last trading day before the SAR is
exercised, with a maximum payment per SAR of $32.29.
The SARs vested in full on 13 March 2016 and are exercisable for 3 years from the date of vesting. No more than 40% of the SARs
can be exercised each year for the first 2 years after vesting, and any remaining SARs can be exercised in the final year of the
The SARs will lapse on 13 March 2019 unless they have been exercised or forfeited before that date.
exercise period.
64
FY 2016
23.93
34.94
46.0
0.98
148.0
1.77
740
580
FY 2015
22.51
24.30
8.0
1.14
58.2
1.54
735
520
FY 20144
16.28
22.50
38.2
1.17
36.3
2.00
1,131
677
FY 2013
17.90
16.11
(10.0)
1.05
(38.8)
1.51
736
509
1. Opening share price is determined as the market open price traded on the first trading day of the relevant financial year.
2.
3.
4.
Closing share price is determined as the market close price traded on the last trading day of the relevant financial year.
TSR is determined over a rolling 3 year period.
The December 2014 amounts shown above include both continuing and discontinued operations.
Dividend
per
share
paid (A$)
TSR3
(%)
EPS
(A$)
PBT
(A$M)
NPAT
(A$M)
Return
on
equity
(%)
Cash flow
from
operations
(A$M)
Year-on-year performance snapshot
Opening
share
price -
Jan1
(A$)
35.38
Share
price
appreci-
ation
(%)
45.4
Gross
debt to
equity
ratio
(%)
26.9
Closing
share
price -
Dec2
(A$)
51.45
1.22
154.3
2.17
959
702
21
16
13
19
17
FY 2017
1,523
1,201
35.2
1,920
25.7
1,410
79.2
1,115
65.5
65
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CIMIC Group Limited Annual Report 2017 | Remuneration Report
STATUTORY SENIOR EXECUTIVE REMUNERATION TABLE
SHORT-TERM EMPLOYEE BENEFITS
POST-EMPLOYMENT
Cash
salary
(A$)
Cash
bonuses
(STI)
(A$)(a)
Special
bonuses
(A$)
Non-
monetary
benefits
(A$)(d)
Other
(A$)(e)(f)
Super-
annuation
benefits
(A$)
Termination
benefits
(A$)
SUBTOTAL
($A)
Senior Executives
M Fernández
Verdes
2017 Financial Year
2016 Financial Year
M Wright1*
2017 Financial Year
2016 Financial Year
S Camphausen2*
2017 Financial Year
538,068
363,117
-
-
465,856
395,753
-
-
2016 Financial Year
Former Senior Executives
A Valderas3*
2017 Financial Year
1,579,413
1,457,704
2016 Financial Year
Á Muriel4*
2017 Financial Year
1,250,000
1,631,250
483,929
731,250
-
-
-
-
- 3,000,000(b)
6,288 517,218
11,887 522,134
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,216
3,777
6,000
7,119
-
-
-
-
-
-
-
11,659
-
-
-
-
-
-
-
-
-
-
-
-
-
523,506
3,534,021
914,304
-
873,268
-
3,037,117
2,883,466
1,218,956
2016 Financial Year
* Where applicable, this table sets out the payments and benefits to each Senior Executive up until the date on which they ceased to be a
1,125,000
1,000,000
5,701
225,000(c)
-
-
-
2,355,701
Senior Executive. For newly appointed Senior Executives the table sets out the payments and benefits from the date they were appointed as
a Senior Executive.
1. Mr Wright was appointed as Deputy CEO on 24 August 2017 and his fixed remuneration set at $1,200,000 per annum effective from this date.
On 1 December 2017, Mr Wright was appointed as CEO and Managing Director in place of Mr Valderas. Refer to ASX Announcement dated 1
December 2017 for a summary of Mr Wright’s terms of employment and the ‘Summary of Executive Services Agreements’ section of this
Remuneration Report for further information.
2. Mr Camphausen was appointed as CFO and became KMP on 1 June 2017 and his fixed remuneration set at $750,000 per annum effective
from this date.
3. Mr Valderas was appointed as Alternate Director for Mr López Jiménez on 1 November 2017. Mr Valderas ceased employment from the roles
of CEO and Managing Director on 30 November 2017 immediately prior to moving onto a role with ACS Group. Mr Valderas continues in his
capacity as Alternate Director for Mr López Jiménez. This table sets out the payments and benefits to Mr Valderas as a Senior Executive up
until 30 November 2017.
4. Mr Muriel ceased employment with the Group in his role as CFO on 31 May 2017 immediately prior to moving onto a role with ACS Group. Mr
Muriel was appointed Alternate Director for Mr Sassenfeld effective 1 November 2017. This table sets out the payments and benefits to Mr
Muriel as a Senior Executive up until 31 May 2017. The termination benefits comprised of statutory entitlements only. The Company
determined that Mr Muriel would retain a portion of his 2015 LTI options prorated to the date of his cessation of employment in accordance
with the terms of the grant.
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CIMIC Group Limited Annual Report 2017 | Remuneration Report
STATUTORY SENIOR EXECUTIVE REMUNERATION TABLE
SHORT-TERM EMPLOYEE BENEFITS
Cash
salary
(A$)
Cash
bonuses
(STI)
(A$)(a)
Special
Non-
bonuses
monetary
Other
(A$)(e)(f)
(A$)
benefits
(A$)(d)
POST-EMPLOYMENT
SUBTOTAL
Super-
Termination
($A)
annuation
benefits
(A$)
benefits
(A$)
LONG-TERM EMPLOYEE BENEFITS
SARs fair value
(A$)(g)
Share rights fair
value (LTI and
STI deferral)
(A$)(g)
Options fair
value (A$)(g)
TOTAL
PAYMENTS
AND
ACCRUALS
(A$)
PERCENTAGE OF
BONUSES (%)(h)
PERCENTAGE OF
SHARE-BASED
INCENTIVE (%)(i)
- 3,000,000(b)
6,288 517,218
11,887 522,134
9,845,536
13,712,646
-
-
-
-
10,369,042
17,246,667
-
-
-
-
-
-
-
(48,279)
-
104,486 (cash-settled)
12,080 (equity-settled)
-
(18,706)
-
35,987 (cash-settled)
4,161 (equity-settled)
-
(321,939)
182,236
759,947 (cash-settled)
182,312 (equity-settled)
181,952
(296,522)
423,769 (cash-settled)
90,393 (equity-settled)
132,674
982,591
-
894,710
-
3,657,437
3,247,654
1,436,596
-
17.4
37.0
-
44.2
-
39.9
50.2
50.9
-
-
7.0
-
2.4
-
17.0
11.2
15.2
Senior Executives
M Fernández
Verdes
2017 Financial Year
2016 Financial Year
M Wright1*
2016 Financial Year
S Camphausen2*
-
-
-
-
-
-
-
2016 Financial Year
Former Senior Executives
A Valderas3*
2017 Financial Year
1,579,413
1,457,704
2016 Financial Year
1,250,000
1,631,250
Á Muriel4*
2017 Financial Year
483,929
731,250
2017 Financial Year
538,068
363,117
6,000
7,119
2017 Financial Year
465,856
395,753
11,659
873,268
-
-
-
-
-
-
-
-
-
-
-
-
-
2,216
3,777
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
523,506
3,534,021
914,304
-
-
3,037,117
2,883,466
1,218,956
2,355,701
2016 Financial Year
1,000,000
1,125,000
225,000(c)
5,701
* Where applicable, this table sets out the payments and benefits to each Senior Executive up until the date on which they ceased to be a
Senior Executive. For newly appointed Senior Executives the table sets out the payments and benefits from the date they were appointed as
a Senior Executive.
On 1 December 2017, Mr Wright was appointed as CEO and Managing Director in place of Mr Valderas. Refer to ASX Announcement dated 1
December 2017 for a summary of Mr Wright’s terms of employment and the ‘Summary of Executive Services Agreements’ section of this
2. Mr Camphausen was appointed as CFO and became KMP on 1 June 2017 and his fixed remuneration set at $750,000 per annum effective
Remuneration Report for further information.
from this date.
3. Mr Valderas was appointed as Alternate Director for Mr López Jiménez on 1 November 2017. Mr Valderas ceased employment from the roles
of CEO and Managing Director on 30 November 2017 immediately prior to moving onto a role with ACS Group. Mr Valderas continues in his
capacity as Alternate Director for Mr López Jiménez. This table sets out the payments and benefits to Mr Valderas as a Senior Executive up
4. Mr Muriel ceased employment with the Group in his role as CFO on 31 May 2017 immediately prior to moving onto a role with ACS Group. Mr
Muriel was appointed Alternate Director for Mr Sassenfeld effective 1 November 2017. This table sets out the payments and benefits to Mr
Muriel as a Senior Executive up until 31 May 2017. The termination benefits comprised of statutory entitlements only. The Company
determined that Mr Muriel would retain a portion of his 2015 LTI options prorated to the date of his cessation of employment in accordance
until 30 November 2017.
with the terms of the grant.
11.3
(a) Amounts for the 2017 Financial Year represent cash STI payments to the Senior Executives for the 2017 Financial Year to be paid in April 2018.
(b) For Mr Fernández Verdes, this amount pertains to the special bonus payment approved by the Board on 3 December 2016. Neither Mr
2,656,224
167,849
50.8
-
1. Mr Wright was appointed as Deputy CEO on 24 August 2017 and his fixed remuneration set at $1,200,000 per annum effective from this date.
(c) This payment was awarded for his significant contribution and exceptional performance as CFO of CIMIC, and Chief Development Officer and
Valderas nor Mr Fernández Verdes participated in this Board meeting.
Managing Director of Pacific Partnerships which was 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 2017 and 2016 Financial Year amounts pertain to the fixed allowance amount approved for 2017 and 2016
(f)
(g)
(respectively).
For Mr Wright, this amount pertains to the living away from home allowance amount for 2017. Refer to the ‘Summary of Executive Services
Agreements’ section of this Remuneration Report for further information.
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 2017 Financial Year. For equity-settled awards, the fair value of equity instruments is
determined as at the grant date and is progressively allocated over the vesting period. For cash-settled awards, the fair value is re-measured
at each reporting 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 equity instruments has been determined in accordance with AASB 2.
Refer to the Financial Report, ‘Note 36: Employee benefits’ for further information.
(h) The percentage calculation is based on the sum of any cash bonus (STI and/or special bonus) amounts in the 2017 Financial Year as a
(i)
percentage of total payments and accruals.
The percentage of each Senior Executive’s remuneration for the 2017 Financial Year that consisted of equity as a percentage of total payments
and accruals.
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CIMIC Group Limited Annual Report 2017 | Remuneration Report
FORMER SENIOR EXECUTIVES
For former Senior Executives who ceased employment in their applicable roles during the year, remuneration (including
termination benefits where applicable) is reported in the Statutory Senior Executive Remuneration Table (refer above) for the
period up until the date they ceased to be a Senior Executive.
Former Senior Executives
Name
A Valderas
Title (on date departed)
CEO and Managing Director
Á Muriel
CFO, Chief Development
Officer and Managing Director
of Pacific Partnerships
Change during the 2017 Financial Year
Appointed as Alternate Director for Mr López Jiménez on 1
November 2017. Ceased from the roles of CEO and Managing
Director on 30 November 2017 immediately prior to moving onto a
role with ACS Group. Mr Valderas continues in his capacity as
Alternate Director.
Ceased employment with the Group in his role as CFO on 31 May
2017 immediately prior to moving on to a role with ACS Group.
Appointed as Alternate Director for Mr Sassenfeld and became a
member of KMP effective 1 November 2017.
SUMMARY OF EXECUTIVE SERVICE AGREEMENTS
Mr Fernández Verdes
The key terms of Mr Fernández Verdes’ ESA are:
• an annual allowance as a contribution to his living expenses. Mr Fernández Verdes’ ESA was re-negotiated in 2016 for 2017 and
subsequent years with the same terms and conditions, but to reflect the change in his dual roles as CEO and Executive
Chairman to Executive Chairman only. For 2017 and subsequent years, the allowance amount will increase in line with CPI
changes;
• 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 entitlements).
Other Senior Executives
Remuneration and other terms of employment for all other Senior Executives are formalised in ESAs.
The key terms of the ESAs for Senior Executives are:
Key terms of the ESA
Annual review of remuneration
Length of notice period where
either party is able to terminate the
ESA
Specified term of employment
Specified payments on termination
(apart from any payments in lieu of
notice and any payable statutory
entitlements)
Any additional
payments/allowances (apart from
any fixed or variable remuneration)
Restraint period to apply following
termination
Senior Executives
M Wright
Yes
6 months
S Camphausen
Yes
3 months
Former Senior Executives
A Valderas
Yes
6 months
Á Muriel
Yes
6 months
No
No
Effective from 1
December 2017, a
living away from
home allowance of
$72,400 per annum
to cease on the
earlier of 1 December
2019 or upon
permanent relocation
to Sydney
3 months
No
No 1
No
No
No
No
No
No
No
3 months
6 months
6 months
1 For the purposes of calculating Mr Camphausen’s long service leave entitlement, his prior service at HOCHTIEF will be recognised.
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CIMIC Group Limited Annual Report 2017 | Remuneration Report
FORMER SENIOR EXECUTIVES
For former Senior Executives who ceased employment in their applicable roles during the year, remuneration (including
termination benefits where applicable) is reported in the Statutory Senior Executive Remuneration Table (refer above) for the
period up until the date they ceased to be a Senior Executive.
Former Senior Executives
Name
A Valderas
Title (on date departed)
Change during the 2017 Financial Year
CEO and Managing Director
Appointed as Alternate Director for Mr López Jiménez on 1
November 2017. Ceased from the roles of CEO and Managing
Director on 30 November 2017 immediately prior to moving onto a
role with ACS Group. Mr Valderas continues in his capacity as
Alternate Director.
Á Muriel
CFO, Chief Development
Ceased employment with the Group in his role as CFO on 31 May
Officer and Managing Director
2017 immediately prior to moving on to a role with ACS Group.
of Pacific Partnerships
Appointed as Alternate Director for Mr Sassenfeld and became a
member of KMP effective 1 November 2017.
SUMMARY OF EXECUTIVE SERVICE AGREEMENTS
Mr Fernández Verdes
The key terms of Mr Fernández Verdes’ ESA are:
• an annual allowance as a contribution to his living expenses. Mr Fernández Verdes’ ESA was re-negotiated in 2016 for 2017 and
subsequent years with the same terms and conditions, but to reflect the change in his dual roles as CEO and Executive
Chairman to Executive Chairman only. For 2017 and subsequent years, the allowance amount will increase in line with CPI
changes;
• 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 are no specified payments to be made on termination (apart from any payments in lieu of notice and any payable
there is no specified term; and
•
•
statutory entitlements).
Other Senior Executives
Remuneration and other terms of employment for all other Senior Executives are formalised in ESAs.
The key terms of the ESAs for Senior Executives are:
Key terms of the ESA
Senior Executives
M Wright
Annual review of remuneration
Yes
Length of notice period where
6 months
either party is able to terminate the
ESA
Specified term of employment
Specified payments on termination
(apart from any payments in lieu of
notice and any payable statutory
No
No
No
No 1
entitlements)
Any additional
payments/allowances (apart from
December 2017, a
any fixed or variable remuneration)
living away from
Effective from 1
No
Former Senior Executives
S Camphausen
A Valderas
Yes
3 months
Yes
6 months
Á Muriel
Yes
6 months
No
No
No
No
No
No
home allowance of
$72,400 per annum
to cease on the
earlier of 1 December
2019 or upon
permanent relocation
to Sydney
3 months
Restraint period to apply following
3 months
6 months
6 months
1 For the purposes of calculating Mr Camphausen’s long service leave entitlement, his prior service at HOCHTIEF will be recognised.
termination
68
The ESAs also specify the remuneration mix that applies to a Senior Executive’s remuneration package.
The entitlement of Senior Executives to unvested LTI awards on termination of their employment is dealt with under the plan rules
and the specific terms of grant.
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 2017 are set out in the following table.
Non-executive Directors during 2017
Name
Current Non-executive Directors
Russell Chenu
José-Luis del Valle Pérez
Trevor Gerber
Pedro López Jiménez
David Robinson
Peter-Wilhelm Sassenfeld
Kathryn (Kate) Spargo
Current Alternate Directors
Robert Seidler AM
Adolfo Valderas
Ángel Muriel
Former Alternate Directors
David Robinson
Title (at 31 December 2017)
Change during the 2017 Financial Year
Independent Non-executive Director
Non-executive Director
Independent Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Independent Non-executive Director
Alternate Director for Mr del Valle Pérez
Alternate Director for Mr López Jiménez
Alternate Director for Mr Sassenfeld
Appointed 20 September 2017
Ceased as Alternate Director for Mr
Sassenfeld effective 31 October 2017.
Continues in his capacity as Alternate
Director for Mr del Valle Pérez.
Appointed 1 November 2017
Appointed 1 November 2017
Alternate Director for Mr López Jiménez
Ceased 31 October 2017
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.
With the exception of Mr Valderas and Mr Muriel, who continue to hold 2015 LTI options from their previous roles as Senior
Executives, 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 in accordance with compulsory
Superannuation Guarantee requirements under Australian legislation.
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CIMIC Group Limited Annual Report 2017 | Remuneration Report
FEE LEVELS AND FEE POOL
The Non-executive Directors fees remained unchanged since 1 January 2014 when there was an increase of the annual fees paid to
the Committee Chair and members of the Audit and Risk Committee.
In consideration of the length of time since any increase to fees, on 6 February 2018 the Board approved an increase in all annual
fees paid to Committee Chairs and members in line with the Consumer Price Index increase of 1.8% (all capital cities for September
quarter 2016 to September quarter 2017) effective 1 January 2018.
Board and Committee fees for 2017 and 2018
Name
Board
Audit and Risk Committee
Ethics, Compliance and Sustainability Committee
Remuneration and Nomination Committee
Special Committees2
2017
Chair1 (A$) Member (A$)
185,000
30,000
20,000
20,000
3,850
nil
55,000
40,000
40,000
3,850
20183
Chair1 (A$) Member (A$)
189,000
31,000
21,000
21,000
4,000
nil
56,375
41,000
41,000
4,000
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 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.
These Board and Committee fees were approved by the Board on 6 February 2018 and effective 1 January 2018.
2.
3.
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 $4.5 million (including
superannuation contributions), as approved by shareholders at the 2013 AGM.
ALTERNATE DIRECTORS
CIMIC does not pay fees for Board membership to Alternate Directors. Financial arrangements for Alternate Directors are a private
matter between the Non-executive Director and the relevant Alternate Director.
70
70
Board and Committee fees for 2017 and 2018
Name
Board
Audit and Risk Committee
Ethics, Compliance and Sustainability Committee
Remuneration and Nomination Committee
Special Committees2
2017
20183
Chair1 (A$) Member (A$)
Chair1 (A$) Member (A$)
nil
55,000
40,000
40,000
3,850
185,000
30,000
20,000
20,000
3,850
nil
56,375
41,000
41,000
4,000
189,000
31,000
21,000
21,000
4,000
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 Executive Chairman are set out in the ‘Remuneration – Executive Chairman’ section of
this Remuneration Report.
2.
3.
This fee is payable to all Non-executive Directors for each day of service on a Special Committee.
These Board and Committee fees were approved by the Board on 6 February 2018 and effective 1 January 2018.
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 $4.5 million (including
superannuation contributions), as approved by shareholders at the 2013 AGM.
ALTERNATE DIRECTORS
CIMIC does not pay fees for Board membership to Alternate Directors. Financial arrangements for Alternate Directors are a private
matter between the Non-executive Director and the relevant Alternate Director.
CIMIC Group Limited Annual Report 2017 | Remuneration Report
CIMIC Group Limited Annual Report 2017 | Remuneration Report
FEE LEVELS AND FEE POOL
The Non-executive Directors fees remained unchanged since 1 January 2014 when there was an increase of the annual fees paid to
the Committee Chair and members of the Audit and Risk Committee.
NON-EXECUTIVE DIRECTOR TOTAL REMUNERATION
Details of Non-executive Directors’ remuneration for the 2017 Financial Year and 2016 Financial Year are set out in the following
table.
In consideration of the length of time since any increase to fees, on 6 February 2018 the Board approved an increase in all annual
fees paid to Committee Chairs and members in line with the Consumer Price Index increase of 1.8% (all capital cities for September
Non-executive Director Remuneration
SHORT-TERM BENEFITS
quarter 2016 to September quarter 2017) effective 1 January 2018.
Board and
Committee fees
(A$)
Other (A$)
Extra service
fees1 (A$)
POST-EMPLOYMENT
BENEFITS
Superannuation
contributions (A$)
TOTAL
REMUNERATION FOR
SERVICES
AS A NON-EXECUTIVE
DIRECTOR (A$)
Non-executive Directors
R Chenu
2017 Financial Year
2016 Financial Year
J del Valle Pérez
2017 Financial Year
2016 Financial Year
T Gerber
2017 Financial Year
2016 Financial Year
P López Jiménez
2017 Financial Year
2016 Financial Year
D Robinson2
2017 Financial Year
2016 Financial Year
P Sassenfeld5
2017 Financial Year
2016 Financial Year
K Spargo6
2017 Financial Year
2016 Financial Year
280,000
280,000
225,000
225,000
275,000
272,857
225,000
222,857
221,667
216,389
215,000
215,000
58,609
-
-
-
-
-
-
-
-
-
95,8903
95,8903
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19,832
19,462
-
-
19,832
19,462
-
-
28,9424
28,5724
-
-
5,553
-
299,832
299,462
225,000
225,000
294,832
292,319
225,000
222,857
346,499
340,851
215,000
215,000
64,162
-
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 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 of Devine.
4.
These amounts are inclusive of $9,110 in 2017 and $9,110 in 2016 from Devine in respect of his services as non-executive director.
5. 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.
6. Ms Spargo was appointed as Independent Non-executive Director on 20 September 2017. This table sets out payments and benefits to Ms
Spargo from the date of appointment.
70
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CIMIC Group Limited Annual Report 2017 | Remuneration Report
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 2017 Financial Year.
Name
Balance at 31 Dec
2016
Purchases
Received on
exercise of
options/rights
Sales
Closing
Balance1
Directors
M Fernández Verdes
M Wright
R Chenu
J del Valle Pérez
T Gerber
P López Jiménez
D Robinson
P Sassenfeld
K Spargo
Alternate Directors
R Seidler AM
A Valderas5
Á Muriel
Senior Executive
S Camphausen
Former Senior Executive
Á Muriel
2,7452
-3
4,085
1,0002
2,000
1,1922
1,489
1,8582
2,0004
2,341
15,587
14,9916
-7
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16,276
-
-
14,991
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,7452
-
4,085
1,0002
2,000
1,1922
1,489
1,8582
2,000
2,341
31,863
14,991
-
14,9918
1.
2.
3.
The closing balance is at 31 December 2017 or as at the date of departure as KMP.
These shares are held by the relevant director on trust for HOCHTIEF Australia.
The opening balance is at 24 August 2017 which was Mr Wright’s date of appointment as Deputy CEO and KMP. Mr Wright was appointed as
CEO and Managing Director on 1 December 2017.
The opening balance is at 20 September 2017 which was Ms Spargo’s date of appointment as Independent Non-executive Director.
4.
5. Mr Valderas was appointed as Alternate Director for Mr López Jiménez on 1 November 2017. Mr Valderas ceased employment from the roles
of CEO and Managing Director on 30 November 2017 immediately prior to moving onto a role with ACS Group. Mr Valderas continues in his
capacity as Alternate Director. Mr Valderas remained a member of KMP for the full 2017 Financial Year.
The opening balance is at 1 November 2017 which was Mr Muriel’s date of appointment as Alternate Director for Mr Sassenfeld. Refer also to
note 8 below.
The opening balance is at 1 June 2017 which was Mr Camphausen’s date of appointment as CFO and KMP.
The closing balance is at 31 May 2017 which was the date Mr Muriel ceased employment with the Group in his role as CFO immediately prior
to moving onto a role with ACS Group. Refer also to note 6 above.
6.
7.
8.
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CIMIC Group Limited Annual Report 2017 | Remuneration Report
MOVEMENT IN RIGHTS HELD BY KMP UNDER THE PREVIOUS LTI
Grants of share rights under the previous LTI were made to eligible Senior Executives in 2014 in accordance with the terms of their
individual ESA. The awards were made subject to EPS and TSR performance conditions measured over a 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
2016
(number)
Granted
(number)
Granted
(fair value)
(A$)
Vested and
exercised1
(number)
Lapsed
(number)
Balance at
31 Dec 20173
(number)
Vested
and
exercised2
(value)
(A$)
Former Senior Executives
2014
A Valderas
Á Muriel
2014
32,552
29,982
-
-
-
-
16,276
14,991
595,099
548,116
16,276
14,991
-
-
1.
2.
3.
Following performance testing, the TSR hurdle was met and 100% of the TSR parcel vested on 14 March 2017. The EPS hurdle was not met and
the EPS parcel did not vest. All unvested share rights lapsed on 14 March 2017.
The vested and exercised value is calculated by multiplying the number of vested rights by the volume weighted average price of shares of the
5 trading days from 14 March 2017 ($36.56).
See note 1.
MOVEMENTS IN OPTIONS HELD BY KMP UNDER LTI
Grants of options under the LTI were approved to be made to eligible Senior Executives in February 2016 as their 2015 LTI. On 28
October 2015, the Board approved the replacement of the previous performance rights based plan with an options based plan. The
2015 award represents the first grant under the new plan. Full details of the award can be found on page 63 of this Remuneration
Report.
No options under the LTI were awarded for the 2017 year.
The following table sets out the movement of options granted in previous financial years under the current LTI.
Name
Award
year
Balance at
31 Dec
20161
(number)
Vested2
(number)
Vested3
(value)
(A$)
Exercised
(number)
Exercised4
(value)
(A$)
Lapsed
(number)
Lapsed3
(value)
(A$)
Balance at
31 Dec
20175
(number)
ADDITIONAL EQUITY DISCLOSURES
Australian Accounting Standards.
This section provides additional information regarding KMP equity holdings as required by the Corporations Act and applicable
MOVEMENT IN KMP SHAREHOLDINGS (DIRECTORS AND SENIOR EXECUTIVES)
The following table sets out the movement in KMP shareholdings (either direct or indirect) during the 2017 Financial Year.
Name
Balance at 31 Dec
Purchases
Received on
exercise of
options/rights
Sales
Closing
Balance1
M Fernández Verdes
Directors
M Wright
R Chenu
J del Valle Pérez
T Gerber
P López Jiménez
D Robinson
P Sassenfeld
K Spargo
Alternate Directors
R Seidler AM
A Valderas5
Á Muriel
Senior Executive
S Camphausen
Former Senior Executive
Á Muriel
2016
2,7452
-3
4,085
1,0002
2,000
1,1922
1,489
1,8582
2,0004
2,341
15,587
14,9916
-7
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16,276
14,991
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,7452
-
4,085
1,0002
2,000
1,1922
1,489
1,8582
2,000
2,341
31,863
14,991
-
14,9918
The closing balance is at 31 December 2017 or as at the date of departure as KMP.
These shares are held by the relevant director on trust for HOCHTIEF Australia.
The opening balance is at 24 August 2017 which was Mr Wright’s date of appointment as Deputy CEO and KMP. Mr Wright was appointed as
CEO and Managing Director on 1 December 2017.
The opening balance is at 20 September 2017 which was Ms Spargo’s date of appointment as Independent Non-executive Director.
5. Mr Valderas was appointed as Alternate Director for Mr López Jiménez on 1 November 2017. Mr Valderas ceased employment from the roles
of CEO and Managing Director on 30 November 2017 immediately prior to moving onto a role with ACS Group. Mr Valderas continues in his
capacity as Alternate Director. Mr Valderas remained a member of KMP for the full 2017 Financial Year.
The opening balance is at 1 November 2017 which was Mr Muriel’s date of appointment as Alternate Director for Mr Sassenfeld. Refer also to
note 8 below.
The opening balance is at 1 June 2017 which was Mr Camphausen’s date of appointment as CFO and KMP.
The closing balance is at 31 May 2017 which was the date Mr Muriel ceased employment with the Group in his role as CFO immediately prior
to moving onto a role with ACS Group. Refer also to note 6 above.
1.
2.
3.
4.
6.
7.
8.
72
of CEO and Managing Director on 30 November 2017 immediately prior to moving onto a role with ACS Group. Mr Valderas continues in his
capacity as Alternate Director for Mr López Jiménez. This table sets out the movements for the full 2017 Financial Year in which he remained a
KMP for the full period.
7. Mr Muriel ceased employment with the Group and in his role as CFO on 31 May 2017 immediately prior to moving onto a role with ACS
8.
Group. Mr Muriel was appointed Alternate Director for Mr Sassenfeld and re-joined as a member of KMP effective 1 November 2017.
The opening balance is at 31 December 2016. There were no movements up until the date Mr Muriel ceased employment with the Group in
his role as CFO on 31 May 2017. Therefore, the amount stated reflects the opening balance on the date Mr Muriel was appointed Alternate
Director for Mr Sassenfeld and became a member of KMP effective 1 November 2017.
73
73
Senior Executives
M Wright
S
Camphausen
Former Senior Executives
A Valderas6
2,258,573
Á Muriel7
1,308,937
1. Where applicable, this table sets out the balance of options from the date they were appointed KMP if after 31 December 2016.
2.
3.
Following the assessment of vesting conditions, the 2015 award vested in full in November 2017.
These values are calculated by multiplying the number of options by the difference of the closing market price on 2 November 2017 ($49.12)
and the exercise price ($27.53).
The exercised value is equivalent to the cash amount received upon the exercise of options.
These balances consist of vested options which are unexercisable at 31 December 2017.
4.
5.
6. Mr Valderas was appointed as Alternate Director for Mr López Jiménez on 1 November 2017. Mr Valderas ceased employment from the roles
23,537
4,925
62,768
36,377
846,933
177,211
355,433
77,167
104,612
60,627
104,612
76,2808
922,242
557,459
-
337,948
39,228
8,208
39,228
8,208
15,691
3,283
41,844
24,250
-
15,653
2015
2015
2015
2015
-
-
-
-
CIMIC Group Limited Annual Report 2017 | Remuneration Report
SHARES PURCHASED ON MARKET
The following shares were purchased on market in 2017 for the purpose of satisfying vested awards under the EIP:
Ordinary shares
Shares purchased (number)
91,777
Average price paid per share (A$)
36.67
The CIMIC Group Limited Directors’ Report for the 2017 Financial Year is signed at Sydney on 6 February 2018 in accordance with
a resolution of the Directors.
Marcelino Fernández Verdes
Executive Chairman
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r
o
p
e
R
y
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a
n
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CIMIC Group Limited Annual Report 2017 75
Photo: Kidston Solar Farm, Queensland, Australia, UGL.
76 CIMIC Group Limited Annual Report 2017
Sustainability Report
CIMIC Group Limited Annual Report 2017 77
78 CIMIC Group Limited Annual Report 2017
CIMIC Group Limited Annual Report 2017 | Remuneration Report
CIMIC Group Limited Annual Report 2017 | Sustainability Report
SHARES PURCHASED ON MARKET
The following shares were purchased on market in 2017 for the purpose of satisfying vested awards under the EIP:
Sustainability Report
Ordinary shares
Shares purchased (number)
Average price paid per share (A$)
91,777
36.67
MEASURING PERFORMANCE AGAINST OUR SUSTAINABILITY COMMITMENTS AND TARGETS
The CIMIC Group Limited Directors’ Report for the 2017 Financial Year is signed at Sydney on 6 February 2018 in accordance with
a resolution of the Directors.
Marcelino Fernández Verdes
Executive Chairman
COMMITMENT
Target
SAFETY
Zero work-related fatalities
Reduce Class 1 injuries
Reduce potential Class 1 injuries
Reduce TRIFR1
Safety management systems in place
INTEGRITY
No serious breaches of Code of Conduct
Maintain Group-wide Code training
CULTURE
Undertake Group-wide employee
engagement surveys of staff
Roll out ‘One’ leadership program
Train and develop future leaders
Promote gender equity
Promote diversity
Foster female participation
INNOVATION
Increase IS 2 rated projects
Delivering sustainable returns
Further develop knowledge capture
through iPKL
Utilise technology in delivery of projects
ENVIRONMENT
No Level 1 or 2 environmental incidents
No legal breaches, fines or penalties
Environmental management systems in
place
FY2017
Result
Performance Commentary
Target Date
No fatalities recorded
2 Class 1 injuries versus 3 in 2016
Reduced from 138 to 103
Reduced from 2.7 to 2.6
All Operating Companies certified to ISO 18001 and/or
AS/NZ 4801
No serious breaches recorded
18,870 employees received training
Approx. 12,500 staff surveyed in 2017, all wages
employees to be surveyed in 2018
Conducted workshops across all Australian key states
and Hong Kong for 550 participants
Graduate Program cohort intake increased from 137 to
174
Graduate Program features an above-industry female
participation rate of 22% for the 2017 cohort.
Conducted Group-wide pay equity review and
implemented remediation actions.
4,587 employees undertook face-to-face EEO,
Discrimination, Bullying and Harassment training
Positive results across most of the Group
Delivered or worked on 19 (versus 16 in 2016)
Economic value retained of $805m in 2017
Increased number of projects on which data captured
from 1,500 to more than 1,950
Increased use of BIM and GIS.
Achieved internationally renowned BSI Kitemark
certification for application of BIM in design and
construction.
No Level 1 incidents reported.
10 level 2 incidents reported.
4 legal breaches resulting in fines
100% of Operating Company management systems
certified to ISO 14001
Annual
Annual
Annual
Annual
Annual
Ongoing
Ongoing
Dec 2017
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Annual
Annual
Annual
Achieved
Partly achieved
Not achieved
74
1 Total Recordable Injury Frequency Rate.
2 The Infrastructure Sustainability (IS) rating scheme is Australia’s only comprehensive rating system for evaluating sustainability across design,
construction and operation of infrastructure. Refer to www.isca.org.au.
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
ABOUT THIS SUSTAINABILITY REPORT
Sustainability is integral to the creation of value at CIMIC and has four key elements:
delivering reliable returns to our shareholders so they continue to support and invest in the Group;
building and maintaining a reputation with clients for the successful delivery of projects and services, and being recognised as
their contractor of choice;
providing safe, rewarding and fulfilling careers so we have a workforce capable of, and motivated to, successfully deliver projects
and services in the future; and
developing a reputation with stakeholders as a creator of positive legacies and as a good corporate citizen.
Our approach is 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
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.
CIMIC’s sustainability objectives are to:
develop a culture where employees understand the important role of sustainability and integrate these factors into business
decisions to meet the needs of clients and stakeholders;
be recognised as the industry leader in delivering sustainable projects and services which develops customer loyalty, facilitates the
winning of new/repeat work and leaves positive legacies for stakeholders;
constantly innovate to improve efficiency and reduce waste thereby lowering costs, improving our value proposition and growing
client loyalty; and
be recognised as an employer of choice which helps to attract, engage, motivate and retain employees.
This Sustainability Report section of the Annual Report is structured around five sustainability themes; safety, integrity, culture,
innovation, and environment. These themes provide the framework for addressing CIMIC’s sustainability commitments and
performance.
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. 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.
This Sustainability Report utilises a number of case studies which are identified by their breakout boxes. These case studies are used to
highlight examples of current sustainability practices, to demonstrate the diversity of the Group’s activities, and to reinforce that acting
sustainability often creates value.
For the financial year ended 31 December 2017, we have utilised the 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 153 - 156.
CPB Contractors;
Leighton Asia, including Leighton India and Leighton Offshore;
Thiess;
Sedgman (a wholly owned subsidiary of the Company since 13 April 2016);
REPORT BOUNDARY AND SCOPE
This Sustainability Report is for the 12-month period to 31 December 2017, unless otherwise noted. The scope of this Sustainability
Report covers CIMIC Group Limited and its Operating Companies which include, amongst others:
UGL (a wholly owned subsidiary of the Company since the acquisition was completed on 20 January 2017);
Pacific Partnerships;
EIC Activities; and
Leighton Properties.
The scope of this Sustainability Report does not include the operations of CIMIC Group’s investments where CIMIC Group does not
have 100% ownership, namely (as at 31 December 2017):
Devine: CIMIC owns a 59% stake in the listed property development company;
Ventia: CIMIC holds 47% of an investment partnership for the merged services business of CPB Contractors and Thiess; and
HLG Contracting: CIMIC holds a 45% share in the Middle East-based construction company.
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
RECOGNITION OF THE UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS
CIMIC recognises the global commitment of governments and businesses to the 2030 Agenda for Sustainable Development and the
Sustainable Development Goals (SDGs). Our commitment is reflected in CIMIC’s Sustainability Policy which notes that ‘the Group will
abide by the principles of the UN Global Compact and acknowledges its role in contributing to the UN Sustainable Development Goals.’
The SDGs are a universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity. They
include 17 ‘Global Goals’ (as per the table below) with 169 identified targets. The SDGs have been spearheaded by the United Nations
through a deliberative process involving its 193 Member States.
Some of the 17 SDGs are more relevant to CIMIC’s business than others. A review of the SDGs and the 169 targets3, based on CIMIC’s
exposure to, or ability to directly or indirectly influence these goals and targets shows that 41 - as per the following table - are relevant
to CIMIC. Goals or targets that have direct relevance to CIMIC are denoted with a tick () while those indirectly relevant to CIMIC are
denoted by a dot (). Directly relevant would, for example, include the SDG’s target to substantially increase water-use efficiency (i.e.
SDG 6) across all sectors. As CIMIC Group is a substantial user of water, this has obvious direct relevance. Indirectly relevant may, for
example, include situations when governments adopt goals or targets that may have some application to CIMIC’s activities. This could
include adoption of a goal or target to build educational facilities (i.e. SDG 4) which may present the Group with investment and
construction opportunities.
be recognised as the industry leader in delivering sustainable projects and services which develops customer loyalty, facilitates the
Sustainable Development Goals and targets relevant (directly and indirectly) to CIMIC
End poverty in all its forms everywhere
- Non applicable
End hunger, achieve food security and improved nutrition and promote sustainable agriculture
- Non applicable
Ensure healthy lives and promote well-being for all at all ages
By 2030, reduce by one third premature mortality from non-communicable diseases through prevention and treatment
and promote mental health and well-being.
Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
By 2030, ensure equal access for all women and men to affordable and quality technical, vocational and tertiary
education, including university.
By 2030, substantially increase the number of youth and adults who have relevant skills, including technical and
vocational skills, for employment, decent jobs and entrepreneurship.
By 2030, ensure that all learners acquire the knowledge and skills needed to promote sustainable development,
including, among others, through education for sustainable development and sustainable lifestyles, human rights,
gender equality, promotion of a culture of peace and non-violence, global citizenship and appreciation of cultural
diversity and of culture’s contribution to sustainable development.
• Build and upgrade education facilities that are child, disability and gender sensitive and provide safe, non-violent,
inclusive and effective learning environments for all.
Achieve gender equality and empower all women and girls
End all forms of discrimination against all women and girls everywhere.
Eliminate all forms of violence against all women and girls in the public and private spheres, including trafficking and
sexual and other types of exploitation.
Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in
political, economic and public life.
Ensure availability and sustainable management of water and sanitation for all
By 2030, improve water quality by reducing pollution, eliminating dumping and minimising release of hazardous
chemicals and materials, halving the proportion of untreated wastewater and substantially increasing recycling and safe
reuse globally.
By 2030, substantially increase water-use efficiency across all sectors and ensure sustainable withdrawals and supply of
freshwater to address water scarcity and substantially reduce the number of people suffering from water scarcity.
By 2020, protect and restore water-related ecosystems, including mountains, forests, wetlands, rivers, aquifers and
lakes.
Support and strengthen the participation of local communities in improving water and sanitation management.
Ensure access to affordable, reliable, sustainable and modern energy for all
• By 2030, increase substantially the share of renewable energy in the global energy mix.
By 2030, double the global rate of improvement in energy efficiency.
Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
Achieve higher levels of economic productivity through diversification, technological upgrading and innovation,
including through a focus on high-value added and labour-intensive sectors.
Take immediate and effective measures to eradicate forced labour, end modern slavery and human trafficking and
secure the prohibition and elimination of the worst forms of child labour, including recruitment and use of child soldiers,
and by 2025 end child labour in all its forms.
3 From the ‘Report of the Inter-Agency and Expert Group on Sustainable Development Goal Indicators (E/CN.3/2017/2): Revised list of global Sustainable
Development Goal indicators’.
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81
ABOUT THIS SUSTAINABILITY REPORT
Sustainability is integral to the creation of value at CIMIC and has four key elements:
delivering reliable returns to our shareholders so they continue to support and invest in the Group;
building and maintaining a reputation with clients for the successful delivery of projects and services, and being recognised as
their contractor of choice;
and services in the future; and
providing safe, rewarding and fulfilling careers so we have a workforce capable of, and motivated to, successfully deliver projects
developing a reputation with stakeholders as a creator of positive legacies and as a good corporate citizen.
Our approach is 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
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.
CIMIC’s sustainability objectives are to:
develop a culture where employees understand the important role of sustainability and integrate these factors into business
decisions to meet the needs of clients and stakeholders;
winning of new/repeat work and leaves positive legacies for stakeholders;
constantly innovate to improve efficiency and reduce waste thereby lowering costs, improving our value proposition and growing
client loyalty; and
be recognised as an employer of choice which helps to attract, engage, motivate and retain employees.
This Sustainability Report section of the Annual Report is structured around five sustainability themes; safety, integrity, culture,
innovation, and environment. These themes provide the framework for addressing CIMIC’s sustainability commitments and
performance.
REPORTING APPROACH
STRUCTURE OF THE SUSTAINABILITY REPORT
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. 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.
This Sustainability Report utilises a number of case studies which are identified by their breakout boxes. These case studies are used to
highlight examples of current sustainability practices, to demonstrate the diversity of the Group’s activities, and to reinforce that acting
sustainability often creates value.
For the financial year ended 31 December 2017, we have utilised the 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 153 - 156.
REPORT BOUNDARY AND SCOPE
This Sustainability Report is for the 12-month period to 31 December 2017, unless otherwise noted. The scope of this Sustainability
Report covers CIMIC Group Limited and its Operating Companies which include, amongst others:
Leighton Asia, including Leighton India and Leighton Offshore;
Sedgman (a wholly owned subsidiary of the Company since 13 April 2016);
UGL (a wholly owned subsidiary of the Company since the acquisition was completed on 20 January 2017);
CPB Contractors;
Thiess;
Pacific Partnerships;
EIC Activities; and
Leighton Properties.
The scope of this Sustainability Report does not include the operations of CIMIC Group’s investments where CIMIC Group does not
have 100% ownership, namely (as at 31 December 2017):
Devine: CIMIC owns a 59% stake in the listed property development company;
Ventia: CIMIC holds 47% of an investment partnership for the merged services business of CPB Contractors and Thiess; and
HLG Contracting: CIMIC holds a 45% share in the Middle East-based construction company.
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
Protect labour rights and promote safe and secure working environments for all workers, including migrant workers, in
particular women migrants, and those in precarious employment.
Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation
Develop quality, reliable, sustainable and resilient infrastructure, including regional and trans-border infrastructure, to
support economic development and human well-being, with a focus on affordable and equitable access for all.
• By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency
and greater adoption of clean and environmentally sound technologies and industrial processes, with all countries taking
action in accordance with their respective capabilities.
Reduce inequality within and among countries
Ensure equal opportunity and reduce inequalities of outcome, including by eliminating discriminatory laws, policies and
practices and promoting appropriate legislation, policies and action in this regard.
Make cities and human settlements inclusive, safe, resilient and sustainable
• By 2030, provide access to safe, affordable, accessible and sustainable transport systems for all, improving road safety,
notably by expanding public transport, with special attention to the needs of those in vulnerable situations, women,
children, persons with disabilities and older persons.
• By 2030, enhance inclusive and sustainable urbanisation and capacity for participatory, integrated and sustainable
human settlement planning and management in all countries.
Strengthen efforts to protect and safeguard the world’s cultural and natural heritage
Ensure sustainable consumption and production patterns
• Implement the 10-Year Framework of Programmes on Sustainable Consumption and Production Patterns, all countries
taking action, with developed countries taking the lead, taking into account the development and capabilities of
developing countries.
By 2030, achieve the sustainable management and efficient use of natural resources.
By 2020, achieve the environmentally sound management of chemicals and all wastes throughout their life cycle, in
accordance with agreed international frameworks, and significantly reduce their release to air, water and soil in order to
minimise their adverse impacts on human health and the environment.
By 2030, substantially reduce waste generation through prevention, reduction, recycling and reuse.
Encourage companies, especially large and transnational companies, to adopt sustainable practices and to integrate
sustainability information into their reporting cycle.
• Promote public procurement practices that are sustainable, in accordance with national policies and priorities.
Take urgent action to combat climate change and its impacts
• Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries.
Conserve and sustainably use the oceans, seas and marine resources for sustainable development
By 2025, prevent and significantly reduce marine pollution of all kinds, in particular from land-based activities, including
marine debris and nutrient pollution.
Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat
desertification, and halt and reverse land degradation and halt biodiversity loss
• By 2020, ensure the conservation, restoration and sustainable use of terrestrial and inland freshwater ecosystems and
their services, in particular forests, wetlands, mountains and drylands, in line with obligations under international
agreements.
• By 2020, promote the implementation of sustainable management of all types of forests, halt deforestation, restore
degraded forests and substantially increase afforestation and reforestation globally.
• By 2030, combat desertification, restore degraded land and soil, including land affected by desertification, drought and
floods, and strive to achieve a land degradation-neutral world.
Take urgent and significant action to reduce the degradation of natural habitats, halt the loss of biodiversity and, by
2020, protect and prevent the extinction of threatened species.
Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective,
accountable and inclusive institutions at all levels
End abuse, exploitation, trafficking and all forms of violence against and torture of children.
Substantially reduce corruption and bribery in all their forms.
Develop effective, accountable and transparent institutions at all levels.
Ensure responsive, inclusive, participatory and representative decision-making at all levels.
Ensure public access to information and protect fundamental freedoms, in accordance with national legislation and
international agreements.
Promote and enforce non-discriminatory laws and policies for sustainable development.
Strengthen the means of implementation and revitalize the Global Partnership for Sustainable Development
- Non applicable
This Sustainability Report references the SDGs, with relevant logos, when the goals and targets align with CIMIC’s sustainability
commitments and reporting.
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Protect labour rights and promote safe and secure working environments for all workers, including migrant workers, in
MATERIAL ISSUES
particular women migrants, and those in precarious employment.
Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation
Develop quality, reliable, sustainable and resilient infrastructure, including regional and trans-border infrastructure, to
support economic development and human well-being, with a focus on affordable and equitable access for all.
• By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency
and greater adoption of clean and environmentally sound technologies and industrial processes, with all countries taking
action in accordance with their respective capabilities.
Reduce inequality within and among countries
Ensure equal opportunity and reduce inequalities of outcome, including by eliminating discriminatory laws, policies and
practices and promoting appropriate legislation, policies and action in this regard.
Make cities and human settlements inclusive, safe, resilient and sustainable
• By 2030, provide access to safe, affordable, accessible and sustainable transport systems for all, improving road safety,
notably by expanding public transport, with special attention to the needs of those in vulnerable situations, women,
children, persons with disabilities and older persons.
• By 2030, enhance inclusive and sustainable urbanisation and capacity for participatory, integrated and sustainable
human settlement planning and management in all countries.
Strengthen efforts to protect and safeguard the world’s cultural and natural heritage
Ensure sustainable consumption and production patterns
• Implement the 10-Year Framework of Programmes on Sustainable Consumption and Production Patterns, all countries
taking action, with developed countries taking the lead, taking into account the development and capabilities of
developing countries.
By 2030, achieve the sustainable management and efficient use of natural resources.
By 2020, achieve the environmentally sound management of chemicals and all wastes throughout their life cycle, in
accordance with agreed international frameworks, and significantly reduce their release to air, water and soil in order to
minimise their adverse impacts on human health and the environment.
By 2030, substantially reduce waste generation through prevention, reduction, recycling and reuse.
Encourage companies, especially large and transnational companies, to adopt sustainable practices and to integrate
sustainability information into their reporting cycle.
• Promote public procurement practices that are sustainable, in accordance with national policies and priorities.
Take urgent action to combat climate change and its impacts
• Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries.
Conserve and sustainably use the oceans, seas and marine resources for sustainable development
By 2025, prevent and significantly reduce marine pollution of all kinds, in particular from land-based activities, including
marine debris and nutrient pollution.
Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat
desertification, and halt and reverse land degradation and halt biodiversity loss
• By 2020, ensure the conservation, restoration and sustainable use of terrestrial and inland freshwater ecosystems and
their services, in particular forests, wetlands, mountains and drylands, in line with obligations under international
agreements.
• By 2020, promote the implementation of sustainable management of all types of forests, halt deforestation, restore
degraded forests and substantially increase afforestation and reforestation globally.
• By 2030, combat desertification, restore degraded land and soil, including land affected by desertification, drought and
floods, and strive to achieve a land degradation-neutral world.
Take urgent and significant action to reduce the degradation of natural habitats, halt the loss of biodiversity and, by
2020, protect and prevent the extinction of threatened species.
Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective,
accountable and inclusive institutions at all levels
End abuse, exploitation, trafficking and all forms of violence against and torture of children.
Substantially reduce corruption and bribery in all their forms.
Develop effective, accountable and transparent institutions at all levels.
Ensure responsive, inclusive, participatory and representative decision-making at all levels.
Ensure public access to information and protect fundamental freedoms, in accordance with national legislation and
Promote and enforce non-discriminatory laws and policies for sustainable development.
Strengthen the means of implementation and revitalize the Global Partnership for Sustainable Development
international agreements.
- Non applicable
This Sustainability Report references the SDGs, with relevant logos, when the goals and targets align with CIMIC’s sustainability
commitments and reporting.
DEFINING MATERIAL ISSUES
In 2015 and 2016, CIMIC undertook materiality assessments to identify and confirm the important potential economic, environmental,
social and governance issues that could affect the business, both positively and negatively. The process involved 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 Dow Jones Sustainability Index and
CDP (formerly the Carbon Disclosure Project).
The identified material issues were set out in the stand-alone 2015 Sustainability Report and updated in the Sustainability Report
section of the 2016 Annual Report. The 39 material issues identified are again used in this 2017 Annual Report as a framework for
discussion of those issues that the Group believes are most material and of interest to stakeholders. The material issues, the relevant
GRI Standard they refer to and section of the Annual Report or chapter of the Sustainability Report (and page/s) in which they are
addressed, are set out in the table below:
Material issues (by ESG factors)
Applicable GRI Standard
Section/Page number
Economic
Availability of funding for future infrastructure projects given
government budget constraints and competing demands
Changes in economic factors (regulation, government policy, new
technology, availability of capital, etc) that could impact capital
productivity
CIMIC Group’s ability to deliver projects that meet the needs of its
clients
Continuing population growth, greater urbanisation, and the future
growth of China and India
Growth in renewable energy supply potentially leading to a decline in
demand for thermal coal and the impact on contract mining
opportunities
Growth in demand for renewable energy and the impact on
construction opportunities
Increased globalisation and a more competitive business
environment
Increased sovereign/political risk and Australia’s attractiveness as an
investment destination
General Disclosures
General Disclosures
OFR4
OFR
Customer Health and Safety
Innovation, 134
General Disclosures
OFR
General Disclosures
Innovation, 135;
Environment, 149
General Disclosures
Innovation, 135
General Disclosures
General Disclosures
OFR
OFR
Environment
Dealing with climate change threats and opportunities, developments
in government’s emissions policies and reducing carbon emissions
Ensuring legal compliance with all environmental regulations and
avoiding reputational liabilities
Improving energy efficiency on projects, in the supply chain and in
corporate activities
Minimising the use of materials (e.g. concrete, steel, packaging) and
working with the supply chain to reduce environmental impacts
Protecting biodiversity and ecosystem health (including erosion and
sediment management) when delivering projects
Reducing the production of hazardous and non-hazardous waste
Reducing the consumption and wastage of water
Emissions, Economic Performance
Environmental Compliance,
Effluents and Waste
Energy
Materials
Biodiversity
Effluents and Waste
Water, Effluents and Waste
Environment, 135,
143 - 146
Environment, 142 -
143
Environment, 143 -
146
Environment, 148
Environment, 149
Environment, 146
Environment, 147 -
148
82
4 OFR – Operating and Financial Review section of this Annual Report.
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Governance
Aligning remuneration with performance to encourage and reward
the creation of shareholder value
Balancing transparency in disclosing information for investors while
not giving away commercial advantage
Collaborating with industry not-for-profits to generate shared value
Encouraging free, fair and open competition, and complying with all
applicable competition laws
Ensuring compliance in overseas markets when operating across
different cultures and languages
Ensuring environmentally and socially responsible sourcing and
governance factors are integrated into procurement processes
Impact of changes in local or regional political or regulatory regimes
that may impact business development and project delivery
Managing risk across a diverse and complex range of markets and
geographies
Payment of a fair rate of company tax and disclosure of the payments
made
Social
Application of appropriate labour standards where people are
treated fairly and with respect
Attracting, developing and retaining employees to meet the evolving
needs of the business
Availability of a skilled and trained workforce that can deliver projects
and manage the business
Avoidance of all forms of bribery and corruption including facilitation
payments
Avoidance of all forms of child or forced labour in the supply chain
Changes in social factors (government policy, industrial relations, new
technology, etc) that could impact labour productivity
Contributing to the development of local communities who can affect
or be affected by the Group's activities
Creating safer and healthier workplaces for the well-being of
employees and all those in the Group's care
Encouraging a culture of innovation where people are continually
looking for new and better ways of doing things
Ensuring the safety of the public while delivering projects
Fostering a more diverse workforce that reflects the communities in
which the Group operates
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
Promoting gender equity in remuneration and promotion decisions
Respecting the rights of local communities when delivering projects
for clients
Supporting corporate community investment (i.e. sponsorship,
donations and corporate partnerships) in local communities and
society
General Disclosures, Employment
Integrity, 118
Public Policy, Marketing and
Labelling, Customer Privacy
General Disclosures
Anti-competitive Behaviour
Anti-corruption, Anti-competitive
Behaviour, Socioeconomic
Compliance
Supplier Environmental
Assessment, Supplier Social
Assessment
General Disclosures
Integrity, 101 - 103
Innovation, 131
Integrity, 102
Integrity, 99 - 102
Integrity, 103 - 104
OFR
General Disclosures
Innovation, 133 - 135
Economic Performance
Integrity, 102
Non-discrimination, Freedom of
Association and Collective
Bargaining, Human Rights
Assessment
Employment, Labour/
Management Relations, Training
and Education
Employment, Training and
Education
Anti-corruption, Public Policy
Child labour, Forced or
compulsory labour, Human Rights
Assessment
General Disclosures
Integrity, 109 - 111,
Culture, 109 - 114,
118
Culture, 111 - 114;
Innovation, 129
Integrity, 99 - 101
Integrity, 110
OFR
Local Communities, Indirect
Economic Impacts
Occupational Health and Safety
Integrity, 107, 117
Safety, 86 - 96
Training and Education
Innovation, 124 - 136
Customer Health and Safety
Employment, Diversity and Equal
Opportunity
General Disclosures, Procurement
Practices, Indirect Economic
Impacts
Employment, Diversity and Equal
Opportunity
Rights of Indigenous Peoples,
Local Communities
Indirect Economic Impacts
Safety, 96
Culture, 114, 115,
116, 117
Integrity, 107, 117
Culture, 115
Integrity, 104, 106
Stakeholders, 105
It is our intention to extend our engagement to other stakeholders as we progress on the sustainability journey.
84
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
CIMIC Group Limited Annual Report 2017 | Sustainability Report
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), 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 2015. Where comparable data is available, it has been provided.
Additionally, in 2016 CIMIC acquired the resources engineering company Sedgman and, in early 2017, completed the acquisition of
diversified services company UGL. Information for Sedgman has been aggregated from 2016 and for UGL from 2017. In future reports,
the Group expects to be able to provide more detailed operational performance measures by Operating Company.
85
85
Governance
the creation of shareholder value
applicable competition laws
different cultures and languages
Aligning remuneration with performance to encourage and reward
General Disclosures, Employment
Integrity, 118
Balancing transparency in disclosing information for investors while
Public Policy, Marketing and
Integrity, 101 - 103
not giving away commercial advantage
Labelling, Customer Privacy
Collaborating with industry not-for-profits to generate shared value
General Disclosures
Innovation, 131
Encouraging free, fair and open competition, and complying with all
Anti-competitive Behaviour
Integrity, 102
Ensuring compliance in overseas markets when operating across
Anti-corruption, Anti-competitive
Integrity, 99 - 102
Ensuring environmentally and socially responsible sourcing and
Supplier Environmental
Integrity, 103 - 104
governance factors are integrated into procurement processes
Assessment, Supplier Social
Behaviour, Socioeconomic
Compliance
Assessment
Impact of changes in local or regional political or regulatory regimes
General Disclosures
OFR
that may impact business development and project delivery
Managing risk across a diverse and complex range of markets and
General Disclosures
Innovation, 133 - 135
Payment of a fair rate of company tax and disclosure of the payments
Economic Performance
Integrity, 102
geographies
made
Social
Application of appropriate labour standards where people are
Non-discrimination, Freedom of
Integrity, 109 - 111,
treated fairly and with respect
Attracting, developing and retaining employees to meet the evolving
Employment, Labour/
Culture, 109 - 114,
needs of the business
Management Relations, Training
118
Availability of a skilled and trained workforce that can deliver projects
Employment, Training and
Avoidance of all forms of bribery and corruption including facilitation
Anti-corruption, Public Policy
Culture, 111 - 114;
Innovation, 129
Integrity, 99 - 101
and manage the business
payments
Avoidance of all forms of child or forced labour in the supply chain
Child labour, Forced or
Integrity, 110
Association and Collective
Bargaining, Human Rights
Assessment
and Education
Education
compulsory labour, Human Rights
Assessment
Changes in social factors (government policy, industrial relations, new
General Disclosures
OFR
technology, etc) that could impact labour productivity
Contributing to the development of local communities who can affect
Local Communities, Indirect
Integrity, 107, 117
or be affected by the Group's activities
Economic Impacts
Creating safer and healthier workplaces for the well-being of
Occupational Health and Safety
Safety, 86 - 96
employees and all those in the Group's care
looking for new and better ways of doing things
Encouraging a culture of innovation where people are continually
Training and Education
Innovation, 124 - 136
Ensuring the safety of the public while delivering projects
Customer Health and Safety
Safety, 96
Fostering a more diverse workforce that reflects the communities in
Employment, Diversity and Equal
Culture, 114, 115,
which the Group operates
Opportunity
116, 117
Providing local communities with full, fair and reasonable opportunity
General Disclosures, Procurement
Integrity, 107, 117
to participate in the economic benefits (i.e. employment,
Practices, Indirect Economic
procurement, or as subcontractors) of the Group’s activities
Impacts
Promoting gender equity in remuneration and promotion decisions
Employment, Diversity and Equal
Culture, 115
Respecting the rights of local communities when delivering projects
Rights of Indigenous Peoples,
Integrity, 104, 106
Supporting corporate community investment (i.e. sponsorship,
Indirect Economic Impacts
Stakeholders, 105
donations and corporate partnerships) in local communities and
Opportunity
Local Communities
It is our intention to extend our engagement to other stakeholders as we progress on the sustainability journey.
for clients
society
84
CIMIC Group Limited Annual Report 2017 | Sustainability Report
SUMMARY OF GROUP PERFORMANCE
CREATING SHAREHOLDER VALUE
Human Capital Return on
Investment 5
Revenue per person
Labour (revenue) productivity
#
$k
$m/MhW
SAFETY
Total fatalities
Of which: Australia
International
Total Class 1 Injuries
Of which: Australia
International
#
#
#
#
#
#
TRIFR
Lost Time Injury Frequency Rate
Potential Class 1 incidents
Million hours worked
TRIs/MhW
LTI/MhW
#
MhW
INTEGRITY
Employees undertaking formal,
on-line Code training
Continuous Disclosure breaches
Significant breaches of Code
#
#
#
$k/employee
CULTURE
Total direct employees
Total employees 10
Personnel costs
Payroll ratio 11
Average tenure of employment
Number of new hires
Of which: Male
Female
Total turnover numbers and
rate 12
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
#
$m
years
#
#
#
# / %
# / %
# / %
# / %
# / %
# / %
%
%
#
%
%
2017
1.30
355.5
85.1
2017
0
0
0
2
1
1
2.64
1.07
103
157.8
2017
18,870
0
0
2016
1.33
380.1
88.6
2016
3
1
2
3
1
2
2.74
1.00
1386
122.4
2016
9,624
0
0
2017
37,779
51,001
3,530
93.4
3.4
23,511
22,324
1,187
20,909 / 56.0
1,426 / 11.8
483 / 4.0
919 / 7.6
241 / 2.0
1 / 12.5
9.3
10.5
88914
2.714
93.9
2016
35,3948
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
013 / 0
9.3
9.1
161
2.0
97.7
2015
1.28
475.0
101.3
2015
1
1
0
2
1
1
3.3
0.92
192
131.0
2015
4,334
0
0
2015
28,078
-
3,059
109.5
3.0
-
-
-
42.7
-
-
-
-
1 / 12.5
9.4
14.3
294
3.9
96.8
2014
1.01
459.6
66.5
2014
3
3
0
5
1
4
3.8
1.08
333
252.57
2014
N/A
0
-
2014
36,5129
-
4,363
119.5
3.9
-
-
-
56.5
-
-
-
-
1 / 12.5
12.3
10.2
72015
3.2
-
2013
1.12
401.9
91.0
2013
5
1
4
9
2
7
5.7
1.27
469
247.4
2013
N/A
0
-
2013
55,990
-
5,908
105.5
4.0
-
-
-
25.6
-
-
-
-
2 / 20
12.2
12.9
821
2.9
-
5 Total Revenue less Total Operating Expenses less Total Employee Related Costs (TERC) divided by TERC. As reported to DJSI.
6 2016 and 2017 result includes UGL’s performance, for comparison purposes, following the acquisition although CIMIC did not control UGL during 2016.
On a like-for-like basis, excluding UGL the 2017 Potential Class 1 figure would be 67 and the 2016 figure would be 98.
7 As of 31 December 2014 the numbers of employees including the discontinued operations of JHG and Ventia was 45,214. See note below.
8 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.
9 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.
10 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%), Devine (59%) and Ventia (47%) as at 31 December 2017.
11 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.
12 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.
13 CIMIC had one female Director until 10 November 2016.
14 Number and percentage for, and from, 2017 includes employees and subcontractors reflecting increased data capture.
15 Includes Indigenous employees of JHG and Services until 2014.
86
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
CIMIC Group Limited Annual Report 2017 | Sustainability Report
2017
1.30
355.5
85.1
2017
0
0
0
2
1
1
2.64
1.07
103
157.8
2017
18,870
0
0
2017
37,779
51,001
3,530
93.4
3.4
23,511
22,324
1,187
SUMMARY OF GROUP PERFORMANCE
CREATING SHAREHOLDER VALUE
Human Capital Return on
Investment 5
Revenue per person
Labour (revenue) productivity
$m/MhW
#
$k
#
#
#
#
#
#
#
#
#
#
#
#
SAFETY
Total fatalities
Of which: Australia
International
Total Class 1 Injuries
Of which: Australia
International
TRIFR
Lost Time Injury Frequency Rate
Potential Class 1 incidents
Million hours worked
TRIs/MhW
LTI/MhW
#
MhW
INTEGRITY
Employees undertaking formal,
on-line Code training
Continuous Disclosure breaches
#
Significant breaches of Code
CULTURE
Total direct employees
Total employees 10
Personnel costs
Payroll ratio 11
Number of new hires
Of which: Male
Female
Average tenure of employment
years
$m
$k/employee
rate 12
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
# / %
# / %
# / %
# / %
%
%
#
%
%
1,426 / 11.8
483 / 4.0
919 / 7.6
241 / 2.0
1 / 12.5
9.3
10.5
88914
2.714
93.9
2016
1.33
380.1
88.6
2016
3
1
2
3
1
2
2.74
1.00
1386
122.4
2016
9,624
0
0
2016
35,3948
50,874
2,432
85.2
3.1
12,564
11,816
748
871 / 9.7
304 / 3.4
270 / 3.0
013 / 0
9.3
9.1
161
2.0
97.7
2015
1.28
475.0
101.3
2015
1
1
0
2
1
1
3.3
0.92
192
131.0
2015
4,334
2015
28,078
3,059
109.5
3.0
0
0
-
-
-
-
-
-
-
1 / 12.5
9.4
14.3
294
3.9
96.8
2014
1.01
459.6
66.5
2014
3
3
0
5
1
4
3.8
1.08
333
252.57
2014
N/A
0
-
2014
36,5129
4,363
119.5
3.9
-
-
-
-
-
-
-
-
1 / 12.5
12.3
10.2
72015
3.2
-
2013
1.12
401.9
91.0
2013
5
1
4
9
2
7
5.7
1.27
469
247.4
2013
N/A
2013
55,990
5,908
105.5
4.0
0
-
-
-
-
-
-
-
-
-
2 / 20
12.2
12.9
821
2.9
-
Total turnover numbers and
# / %
20,909 / 56.0
12,850 /46.0
42.7
56.5
25.6
1,135 / 12.6
-
5 Total Revenue less Total Operating Expenses less Total Employee Related Costs (TERC) divided by TERC. As reported to DJSI.
6 2016 and 2017 result includes UGL’s performance, for comparison purposes, following the acquisition although CIMIC did not control UGL during 2016.
On a like-for-like basis, excluding UGL the 2017 Potential Class 1 figure would be 67 and the 2016 figure would be 98.
7 As of 31 December 2014 the numbers of employees including the discontinued operations of JHG and Ventia was 45,214. See note below.
8 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.
9 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.
10 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%), Devine (59%) and Ventia (47%) as at 31 December 2017.
11 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.
12 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.
13 CIMIC had one female Director until 10 November 2016.
14 Number and percentage for, and from, 2017 includes employees and subcontractors reflecting increased data capture.
15 Includes Indigenous employees of JHG and Services until 2014.
86
INNOVATION
Cumulative green buildings completed
Cumulative ISCA16 certified and rated
projects
Green Standard project registrations
Green Standard project certifications
Green Standard employee certifications
#
#
#
#
#
ENVIRONMENT
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
EIFR17
Violations with fines >$10k
Value of fines related to above
Energy consumption - Diesel
Energy consumption - Electricity
Energy consumption - Other 18
Total energy consumption
Energy intensity 19
% change on prior period
Energy consumption (NGER) 20
Water use (withdrawals and re-use)
Of which: Withdrawals
Reuse
Water discharges
Water intensity 21
GHG emissions - Scope 122
GHG emissions - Scope 2
GHG emissions - Scope 3
Carbon intensity 24
% change on prior period
GHG emissions - Scope 1 (NGER)25
GHG emissions - Scope 2 (NGER)
Level of assurance of NGER data
Total material volumes 26
#
#
#
#
#
#
#
#
#
#
No/MhW
#
$k
GWH
GWH
GWH
GWH
GWH/$m
TJ
ML
ML
ML
ML
ML/$m
kt.C02-e
kt.C02-e
kt.C02-e
kt.C02-e/$m
kt.C02-e
kt.C02-e
Type
kT
2017
65
19
5
7
54
0
10
8
2
497
462
35
15
9
6
0.06
2
30
8,569
145
75
8,790
0.65
-9%
1.2
11,466
7,414
4,052
476
0.86
2,202
128
1,653
0.17
-8.2%
68.3
53.5
Limited
3,990
2016
63
16
7
19
57
2016
0
6
5
1
520
493
27
10
9
1
0.05
0
0
7,722
94
13
7,820
0.72
24%
0.8
12,664
7,239
5,425
1,668
1.17
1,964
89
2,66623
0.19
25.3%
45.3
32.9
Limited
4,842
2015
57
12
14
14
41
2015
0
4
2
2
820
782
38
4
2
2
0.03
0
0
7,477
109
75
7,661
0.58
-24%
1.4
11,935
6,837
5,098
3,957
0.90
1,913
93
3,497
0.15
-25.6%
77.4
72.1
Limited
4,077
2014
46
6
27
29
-
2014
0
18
16
2
1787
1528
259
12
11
1
0.14
0
0
12,224
269
233
12,726
0.76
31%
2.6
-
-
-
-
-
3,191
219
4,731
0.20
35.2%
153.2
92.5
Limited
5,951
2013
34
2
8
12
-
2013
0
21
19
2
1997
1857
140
3
2
1
0.08
1
15
12,605
244
174
13,023
0.58
-
2.7
-
-
-
-
-
3,172
210
-
0.15
-
206.2
128.5
Limited
-
16 Infrastructure Sustainability Council of Australia.
17 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.
18 2013 excludes solid fuels from Leighton Asia, India and offshore operations.
19 Energy intensity is ‘Total energy consumption’ divided by ‘Total revenue from continuing operations’.
20 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.
21 Water intensity is ‘Total water use’ divided by ‘Total revenue from continuing operations’.
22 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.
23 Scope 3 emissions have been adjusted for the 2016 year when they were previously over-stated.
24 Carbon intensity is ‘Total Scope 1’ and ‘Total Scope 2’ emissions divided by ‘Revenue from external customers.
25 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.
26 Materials includes John Holland and Ventia for 2014.
87
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
SAFETY
OUR APPROACH
CIMIC is committed to minimising harm in workplaces, promoting physical and mental health, and protecting the public. Providing a
safe and healthy workplace is a core value of the CIMIC Group. We depend entirely on our people and must keep them safe. Like the
clients, communities and governments with which we work, CIMIC expects health and safety to be a key aspect of our operations.
Health and safety is a priority for CIMIC Group's Board and Executive Leadership Team27, and we continue to invest in the culture,
systems and innovations to keep our people safe.
We hold ourselves to a consistently high standard of health and safety wherever we operate, regardless of the regulatory requirements
and the operating environments in which we work. In order to achieve this standard, we must strive to continually improve our
performance.
Minimising harm in workplaces
Measures in place
Actions taken during 2017
Performance
Promote physical and mental health
Measures in place
Actions taken during 2017
100% of Operating Company management systems certified to ISO 18001 and/or AS/NZS
4801
Safety Essentials (or similar) in place across CPB Contractors, Leighton Asia, Thiess,
Sedgman and UGL, providing the systems, procedures and knowledge to manage highest
risk activities
focus on ‘above‐the‐line’ controls used to eliminate, substitute, isolate or engineer out risk
Thiess’ Health Safety & Security management system is available in Spanish, English,
Bahasa (Indonesian) and Mongolian representing the main languages across the global
mining business
safety materials at Leighton Asia are formatted to use simple illustration and diagrams to
overcome different languages and relatively low levels of literacy
each Operating Company has a comprehensive rehabilitation and ‘Return to Work’
program
CIMIC review of investigation processes to improve how we are learning from PC1
incidents and to better mitigate risks
CPB Contractors implemented Safety Essential campaigns – Working Near Live Services and
Managing Work in and Around Mobile Plant
CPB Contractors developed Safety Essential campaigns – Mobile Elevating Work Platform
(MEWP) and associated videos
Leighton Asia implemented mandatory one‐day safety leadership training for senior
managers in the Hong Kong supply chain, to enhance focus on subcontractor/supplier
safety
Leighton Asia developed a frontline job hazard analysis tool to manage safety risks which
includes a series of simple step‐by‐step illustrated instructions on the required controls
Thiess developed an international travel safety and security module delivered by e‐learning
Thiess implemented Geotechnical Safety Essential, and reinforced governance on mine site
dam structures
Thiess leadership Chairs the Minerals Council of Australia Industry Health & Safety
Committee, and the Queensland Resource Council Health & Safety Committee
no fatalities recorded
reduced Group TRIFR from 2.7 in 2016 to 2.6 in 2017
CPB Contractors’ Torrens Road to River Torrens project (T2T Alliance) recognised with the
CCFSA28 inaugural Healthy Workers Healthy Futures Award
CPB Contractors and the Hong Kong business unit, within Leighton Asia, achieved
reductions of 25% and 30% respectively in their total recordable injury frequency rates
across 2017
Leighton Asia received a Gold Award for Temporary Works Excellence on the Hong Kong
Boundary Crossing Facilities’ Passenger Clearance Building
CPB Contractors granted accreditation as Rail Infrastructure Manager and Rolling Stock
Operator by the Office of the National Rail Safety Regulator
safety engagement score of 88% in employee survey a strong indicator of safety culture
Health and Safety Policy which promotes employee physical and mental well‐being
conducted initiatives to improve employee health and well‐being including participation in;
‘Mates in Construction’ mental well‐being and support, heart health promotion in Thiess,
‘RU OK Day’ events and ‘World Health Day’ at Thiess
Thiess introduced a broad focus on the prevention of occupational illnesses by completing
a company‐wide baseline risk assessment across all projects. Key focus areas
27 Means CIMIC’s Board and all Operating Company Boards and all individuals holding the position of Executive General Managers within the Group.
28 Civil Contractors Federation of South Australia.
88
88
CIMIC Group Limited Annual Report 2017 | Sustainability Report
CIMIC Group Limited Annual Report 2017 | Sustainability Report
CIMIC is committed to minimising harm in workplaces, promoting physical and mental health, and protecting the public. Providing a
safe and healthy workplace is a core value of the CIMIC Group. We depend entirely on our people and must keep them safe. Like the
clients, communities and governments with which we work, CIMIC expects health and safety to be a key aspect of our operations.
Health and safety is a priority for CIMIC Group's Board and Executive Leadership Team27, and we continue to invest in the culture,
systems and innovations to keep our people safe.
We hold ourselves to a consistently high standard of health and safety wherever we operate, regardless of the regulatory requirements
and the operating environments in which we work. In order to achieve this standard, we must strive to continually improve our
SAFETY
OUR APPROACH
performance.
Minimising harm in workplaces
Measures in place
Actions taken during 2017
CIMIC review of investigation processes to improve how we are learning from PC1
100% of Operating Company management systems certified to ISO 18001 and/or AS/NZS
Safety Essentials (or similar) in place across CPB Contractors, Leighton Asia, Thiess,
Sedgman and UGL, providing the systems, procedures and knowledge to manage highest
focus on ‘above‐the‐line’ controls used to eliminate, substitute, isolate or engineer out risk
Thiess’ Health Safety & Security management system is available in Spanish, English,
Bahasa (Indonesian) and Mongolian representing the main languages across the global
safety materials at Leighton Asia are formatted to use simple illustration and diagrams to
overcome different languages and relatively low levels of literacy
each Operating Company has a comprehensive rehabilitation and ‘Return to Work’
4801
risk activities
mining business
program
incidents and to better mitigate risks
CPB Contractors implemented Safety Essential campaigns – Working Near Live Services and
Managing Work in and Around Mobile Plant
CPB Contractors developed Safety Essential campaigns – Mobile Elevating Work Platform
(MEWP) and associated videos
Leighton Asia implemented mandatory one‐day safety leadership training for senior
managers in the Hong Kong supply chain, to enhance focus on subcontractor/supplier
safety
Leighton Asia developed a frontline job hazard analysis tool to manage safety risks which
includes a series of simple step‐by‐step illustrated instructions on the required controls
Thiess developed an international travel safety and security module delivered by e‐learning
Thiess implemented Geotechnical Safety Essential, and reinforced governance on mine site
dam structures
Thiess leadership Chairs the Minerals Council of Australia Industry Health & Safety
Committee, and the Queensland Resource Council Health & Safety Committee
reduced Group TRIFR from 2.7 in 2016 to 2.6 in 2017
CPB Contractors’ Torrens Road to River Torrens project (T2T Alliance) recognised with the
CCFSA28 inaugural Healthy Workers Healthy Futures Award
CPB Contractors and the Hong Kong business unit, within Leighton Asia, achieved
reductions of 25% and 30% respectively in their total recordable injury frequency rates
across 2017
Leighton Asia received a Gold Award for Temporary Works Excellence on the Hong Kong
Boundary Crossing Facilities’ Passenger Clearance Building
CPB Contractors granted accreditation as Rail Infrastructure Manager and Rolling Stock
Operator by the Office of the National Rail Safety Regulator
safety engagement score of 88% in employee survey a strong indicator of safety culture
Promote physical and mental health
Measures in place
Health and Safety Policy which promotes employee physical and mental well‐being
Actions taken during 2017
conducted initiatives to improve employee health and well‐being including participation in;
‘Mates in Construction’ mental well‐being and support, heart health promotion in Thiess,
‘RU OK Day’ events and ‘World Health Day’ at Thiess
Thiess introduced a broad focus on the prevention of occupational illnesses by completing
a company‐wide baseline risk assessment across all projects. Key focus areas
27 Means CIMIC’s Board and all Operating Company Boards and all individuals holding the position of Executive General Managers within the Group.
28 Civil Contractors Federation of South Australia.
88
Performance
no fatalities recorded
included improvements in testing for and management of dust as well as the
musculoskeletal disorders and mental health
Sedgman’s employee wellness programs included flu shots, skin checks, team step
challenges and group fitness classes, as well as initiatives to raise awareness of mental
health
safety engagement score of 88% in employee survey a strong indicator of safety culture
public safety integrated into Safety Essentials and at design phase of projects
numerous, project‐by‐project initiatives tailored to manage risks as appropriate
no incidence of injury to any member of the public or other external stakeholder
Performance
Protect the public
Measures in place
Actions taken during 2017
Performance
MINIMISING HARM IN WORKPLACES
CIMIC is committed to eliminating all fatalities and serious injuries at all workplaces and aims to create workplaces
with a culture that focuses on safety and productivity, while also enhancing the wellbeing of our teams. This means ensuring that
everyone ‐ subcontractors, clients, suppliers and visitors are treated with the same degree of care as our employees. We treat all
workers on our sites equally, irrespective of their role.
We also monitor the potential for any occupational illnesses that the Group's activities may cause and seek to mitigate any impacts. If
an injury or illness does occur, CIMIC works to identify the causes, prevent recurrence and provide rehabilitation opportunities to
achieve the earliest safe return to work and normal daily routines.
Our focus areas are: continuing to strengthen our health and safety risk management systems, in particular our critical risk
management programs, instilling a strong safety culture, and improving the health and wellbeing of our teams. In 2017, CIMIC
undertook an employee engagement survey which asked about the Group’s safety culture, amongst a range of other subjects. More
detail on the safety related responses can be found in the section ‐ ‘Visible leadership’ ‐ on page 109 within the Culture chapter.
Strong risk management systems ensure that safety is paramount. Through our risk management systems, we aim to systematically
identify, assess and control risks in the design, planning and implementation of the projects we deliver. Identified risks are eliminated
or where elimination is not possible, mitigated as far as reasonably practicable through ‘hard’ engineering controls29.
Given the changing nature of our work and the diversity of our workplaces, maintaining high safety standards and awareness is
essential to our people and our business. We have a safety first culture across the Group, one that does not tolerate uncontrolled
safety risk. Leadership, training and communication, in addition to rigorous risk management systems, underpin our robust safety
culture. Each of our major Operating Companies maintains management systems that are certified to ISO 18001 and/or AS/NZS 4801.
Fatalities
No fatalities were reported in 2017. While we are pleased by this outcome we remain conscious that our employees work in high risk
industries. We remain focussed on critical risk identification and the implementation of critical risk management strategies. This
includes the use of training, education, audits, workplace inspections and the ongoing in field verification of critical controls to ensure
our teams are not exposed to uncontrolled risk.
Other injuries
There were 2 Class 1 Injuries (C1I) reported during 2017, both on construction projects: the first in Queensland, and the second in India.
Investigations into the causes of these events were completed which identified a range of actions that were communicated and
adopted, with the objective of eliminating the risk of recurrence in the future.
The Group’s preferred lag measure is to capture Recordable Injuries (RI)30 and to calculate our Total Recordable Injury Frequency Rate
(TRIFR)31, which reflects the average number of recordable injuries per Million hours Worked (MhW). The Group recorded a TRIFR in
2017 of 2.64, down from 2.74 in 2016.
TRIFR (TRIs/MhW)
Group
2017
2.64
2016
2.74
29 Controls used to eliminate, substitute, isolate or engineer out the risk from causing harm.
30 Any occurrence that results in a fatality, permanent disability, lost time injury, restricted work injury, and medical treatment injuries. It does not
include first aid injuries.
31 For the purposes of this report, TRIFR is calculated on a base of 1,000,000 hours worked. It is noted that some regions, such as the USA and Canada,
use a base of 200,000 hours worked for frequency rate calculations. For comparability with a 200,000 hour base, divide the rates reported by 5.
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Innovative demolition gantry results in incident‐free work area
CPB Contractors’ project team on the CityLink Tulla Widening project in Victoria was required to demolish 1.1km of concrete barrier tail
to expose the existing bridge and drill 9000 dowel holes. All work had to be performed above a busy fast‐food outlet, live traffic and
three tram routes. Instead of using an elevated work platform, the project team developed a 49‐meter‐long, self‐driving demolition
gantry.
While similar working platforms have been used before, this initiative pushed the boundaries introducing new innovations, including:
extending the demolition gantry to make it the longest of its kind ever used in Australia;
bunding the platform to provide water capture and recycling;
automatically moving track from behind the platform to in front; and
using a diesel generator to self‐power the platform, instead of relying on winching or hauling.
The self‐driving gantry not only produced significant savings and reduced the construction program by two months, but eliminated
community impacts and provided reduced safety risks while maintaining the safe operation of a freeway.
The Group records the number of Lost Time Injuries (LTI’s)32 which are a widely‐recognised metric and the Lost Time Injury Frequency
Rate (LTIFR)33 is used as a lag indicator of injury prevention performance to benchmark across industries. In 2017, the Group’ LTIFR was
steady at 1.0, based on 169 LTIs.
LTIFR (accidents/MhW)
Group
2017
1.07
2016
1.00
Fits like a glove: reducing cut hand injuries in UGL
Analysis of the high number of ‘cut hand’ injuries recorded on UGL’s Structural, Mechanical and Process (SMP) contract at the Ichthys
LNG plant in Darwin revealed traditional approaches to hand safety were not as effective as they could be. The project team developed
and implemented a safety campaign to raise awareness of ‘cut hand’ injuries by taking an entirely new look at the Personal Protective
Equipment (PPE) used on‐site. The team’s simple matrixed process, termed the ‘One Glove’ initiative, aimed to reduce the risk of hand
injuries involved in certain tasks by using colour coding to match the correct glove type for the tool or task.
The ‘One Glove’ initiative:
reduced the incidence of cut hand injuries on the project;
raised awareness that big, bulky gloves do not automatically provide cut protection;
improved the comfort, dexterity and safety of the glove types worn on the project;
increased the use of tools in the field, eliminating the risk of placing hands in ‘the line of fire’;
reduced the number of gloves used onsite from 27 to seven, delivering cost savings;
offers the ability to improve hand safety in other operating environments, across geographies and in the wider construction
industry; and
identified the need for a glove to be developed to prevent/minimise crush injuries.
The ‘One Glove’ initiative has used an image‐based matrix that matches coloured gloves with tools or tasks enabling frontline teams to:
understand the correct levels of hand protection for the most common tasks on the project; select the right glove for the task or tool;
and improve their approach to hand safety.
32 An occurrence that results in a fatality, permanent disability or time lost from work of one day/shift or more.
33 Accidents (defined as LTIs on the previous page) per million hours worked (MhW).
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
CIMIC Group Limited Annual Report 2017 | Sustainability Report
Innovative demolition gantry results in incident‐free work area
CPB Contractors’ project team on the CityLink Tulla Widening project in Victoria was required to demolish 1.1km of concrete barrier tail
to expose the existing bridge and drill 9000 dowel holes. All work had to be performed above a busy fast‐food outlet, live traffic and
three tram routes. Instead of using an elevated work platform, the project team developed a 49‐meter‐long, self‐driving demolition
gantry.
While similar working platforms have been used before, this initiative pushed the boundaries introducing new innovations, including:
extending the demolition gantry to make it the longest of its kind ever used in Australia;
bunding the platform to provide water capture and recycling;
automatically moving track from behind the platform to in front; and
using a diesel generator to self‐power the platform, instead of relying on winching or hauling.
The self‐driving gantry not only produced significant savings and reduced the construction program by two months, but eliminated
community impacts and provided reduced safety risks while maintaining the safe operation of a freeway.
The Group records the number of Lost Time Injuries (LTI’s)32 which are a widely‐recognised metric and the Lost Time Injury Frequency
Rate (LTIFR)33 is used as a lag indicator of injury prevention performance to benchmark across industries. In 2017, the Group’ LTIFR was
steady at 1.0, based on 169 LTIs.
LTIFR (accidents/MhW)
Group
2017
1.07
2016
1.00
Fits like a glove: reducing cut hand injuries in UGL
Analysis of the high number of ‘cut hand’ injuries recorded on UGL’s Structural, Mechanical and Process (SMP) contract at the Ichthys
LNG plant in Darwin revealed traditional approaches to hand safety were not as effective as they could be. The project team developed
and implemented a safety campaign to raise awareness of ‘cut hand’ injuries by taking an entirely new look at the Personal Protective
Equipment (PPE) used on‐site. The team’s simple matrixed process, termed the ‘One Glove’ initiative, aimed to reduce the risk of hand
injuries involved in certain tasks by using colour coding to match the correct glove type for the tool or task.
The ‘One Glove’ initiative:
reduced the incidence of cut hand injuries on the project;
raised awareness that big, bulky gloves do not automatically provide cut protection;
improved the comfort, dexterity and safety of the glove types worn on the project;
increased the use of tools in the field, eliminating the risk of placing hands in ‘the line of fire’;
reduced the number of gloves used onsite from 27 to seven, delivering cost savings;
offers the ability to improve hand safety in other operating environments, across geographies and in the wider construction
industry; and
identified the need for a glove to be developed to prevent/minimise crush injuries.
The ‘One Glove’ initiative has used an image‐based matrix that matches coloured gloves with tools or tasks enabling frontline teams to:
understand the correct levels of hand protection for the most common tasks on the project; select the right glove for the task or tool;
and improve their approach to hand safety.
Compliance
During 2017, with the exception of the 2 C1Is, there were no material incidents of non-compliance with regulations and/or voluntary
codes.
The prosecution from the February 2015 fatality at the Dawson South coal mine in Queensland was finalised. A $150,000 fine was
incurred without a conviction. The prosecution from the 2012 Collinsville coal mine drill fire incident in Queensland was also finalised,
with a fine of $95,000 imposed without a conviction. Both matters are now closed.
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 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 total number of PC1 injuries decreased by 35 in 2017 to 103, this result
included the performance of UGL, following the acquisition of that company. On a comparable basis, excluding UGL, the number of
reported PC1s would have reduced from 98 to 67.
PC1 (#)
Group
2017
103
2016
138
A range of other lead indicators are used across the Group which are tailored to their specialist businesses. Looking forward, the Group
is investigating ways that it can use its data to develop better predictive indicators of potential incidents.
Safety in construction
Each of CIMIC’s Operating Companies has safety management systems that, while similar in their approach, are tailored to meet each
individual Operating Companies’ risks and hazards.
For CPB Contractors, managing these critical risks is an absolute priority that is undertaken through the Safety Essentials, which are a
collection of minimum requirements that are focused on providing projects with the standards, procedures 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.
Essential to tackle safety when working in and around mobile plant
Following last year’s campaign concentrating on working at heights, CPB Contractors launched a campaign in 2017 to reinforce the
requirements for working in and around mobile plant. Items of mobile plant, such as trucks, excavators, cranes and utilities are
constant features of projects and the hazards they pose must be recognised and safely managed.
The requirements for working in and around mobile plant were highlighted across projects in the campaign, focusing on the following
five key essential behaviours:
to stay outside the plant operating zone;
to positively communicate before entering the plant operating zone;
that plant movement is halted before entering the plant operating zone;
that everyone stays inside pedestrian walkways; and
to remain behind a barrier when refuelling.
The campaign was presented by leaders at pre-start meetings, with posters featuring a QR code providing access, through mobile
devices, to a video showing practical examples of how to safely operate in and around mobile plant.
In response to a fatality in 2016 at the new Royal Adelaide hospital, CPB Contractors has developed a campaign around the Safety
Essential - mobile cranes and lifting operations. A video was developed to promote safe work practices for Mobile Elevating Work
Platforms. EIC Activities has also developed a scissor lift guarding system using solid state phased array lidar34 to engineer out the risk
of crush injuries. This system will progressively be introduced to other Group construction sites throughout 2018.
32 An occurrence that results in a fatality, permanent disability or time lost from work of one day/shift or more.
33 Accidents (defined as LTIs on the previous page) per million hours worked (MhW).
90
34 Lidar is a surveying method that measures distance to a target by illuminating that target with a pulsed laser light, and measuring the reflected pulses
with a sensor.
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
Our Leighton Asia business has developed a series of Class One Practices (COPs). Similar in nature to CPB Contractors’ 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
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;
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 with the
Leighton Asia business.
Innovative hanging scaffold structure provides safe working environment
Hong Kong’s Express Rail Link - West Kowloon Terminus Station North project - features a dramatic curved roof structure above the
station entrance. One of the challenges faced by the construction team was to provide access to the roof structure for cladding works
in a tight space. The team consulted experienced scaffold designers and suppliers from the United Kingdom to build a scaffold structure
suspended from the roof.
This innovative solution brought substantial benefits in terms of safety, project progress and cost including:
building the scaffold structure on the ground, before it was winched up into specific location, minimised high risk, working at
heights tasks;
allowing internal roof cladding works and architectural finishes on the atrium levels to be carried out simultaneously, enabling the
team to start work six months early; and
saving the use of 59,000m3 of standard system scaffold which delivered a significant reduction in cost to the project.
In view of the success at the project, Leighton Asia adopted the same design to complete works on an internal roof at the Passenger
Clearance Building for the Hong Kong-Zhuhai-Macao Bridge project.
One of the biggest challenges facing Leighton Asia is the communication of safety standards and process control to nationals. Leighton
Asia currently operates in India, Hong Kong, Philippines, Singapore, Indonesia and Malaysia and has the challenge of communication in
many different languages, including English, Chinese (Cantonese & Mandarin), Hindi, Tamil, Bahasa (Indonesian) and Tagalog. In
addition to the challenges with Language, there are relatively low literacy rates across many of the regions in which we operate.
In order to overcome these challenges, Leighton Asia has been very active in recent years with the simplification of many of the
‘frontline safety tools’ and the development of safety standards and process with the ‘end-user focus’ in mind. This has resulted in
many of the traditionally text-heavy documents being reformatted and now using simple illustrations, diagrams and more simplified
wording.
Managing class 1 risks at Leighton Asia
Leighton Asia has developed a key frontline risk management tool – the Job Hazard Analysis (JHA) process for engineers and
supervisors. The JHA effectively manages Class 1 risk activities through the clear identification and implementation of task-specific
control measures.
The JHA includes a series of simple, step-by-step, illustrated instructions on the required controls as stipulated within the construction
method statements and our business procedures and standards for the management of Class 1 risk. It ensures that both the ownership
of specific work activities, and the accountability for implementation of specific control measures and safety standards, are clearly
assigned and communicated to our engineers and frontline supervisors. The JHA is also used as the primary tool for communication at
task launch meetings and field control briefings in order to clearly communicate task-specific construction methods and work
sequences, potential Class 1 risks, and their associated control measures.
The JHA process is a simplified tool, which has been developed with the end-user in mind so as to ensure all supervisors and our
workforce fully understand, and are aligned to, our approach in achieving safe productivity on our projects. The JHA is also used by
management, supervisors and engineers as a simple verification tool in order to spot check and ensure compliance with our safety
standards and controls at the frontline.
Leighton Asia’s ‘Strive for L.I.F.E’ initiatives, such as the Strive for L.I.F.E training centres, reinforce the COPs. Since opening in 2010,
122,740 Leighton Asia employees have completed training courses through the Strive for L.I.F.E. training centres.
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
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 – safe transportation, use, security and disposal of explosives;
geotechnical – ensuring ground movement is managed;
heights – working safely at heights;
isolation – ensuring energy sources are identified and positively isolated;
lifting – working safely with cranes and other lifting equipment;
traffic – safe operation and interaction of all light, medium and heavy vehicles on‐site and to ensure infrastructure is designed,
constructed and maintained; and
tyres – working safely with tyres and tyre handling equipment.
Improving safety while servicing haul trucks
Conventional methods for maintaining the differential link bearings on Thiess’ CAT 793F haul trucks require several crane lifts, hot
works and multiple manual handling tasks to be performed over two working shifts per truck. With four bearing change cycles on
average each month, there was an opportunity to significantly reduce risk to people, by lowering the amount of repetitive, higher‐risk
manual work, which would reduce equipment downtime and increase production potential.
The truck maintenance team at the Solomon iron ore mine set themselves the challenge of reducing risk in the service process. The
team designed and developed a site‐first, bespoke service bench that immediately eliminated all but two lifts and removed the need
for hot works and significantly reduced manual handling, all of which avoided hazards before they could result in an injury. The bench
has enabled the service task to be completed in half the time, far more safely, and enabled further maintenance improvements by
freeing up work hours. Work hours have dropped from 72 hours per task to 30 hours. This has reduced equipment downtime by almost
50%, creating approximately 12 hours of increased production potential per truck, per change.
Portable tyre blast barrier delivers safety and efficiency gain
At Thiess’ Balikpapan support facility, the maintenance team sought to innovate to minimise downtime related to tyre work, whilst
upholding the highest safety standards.
The solution was to fabricate a portable tyre blast barrier which replaced the previously used tyre safety cage. The barrier allows the
on‐board inflation of a tyre, so maintenance personnel no longer need to remove a tyre to inflate it. Using this new portable tool,
downtime has halved, to 30 minutes, getting a machine back into normal operation faster and ensuring personnel are protected in the
event of a tyre bursting.
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:
hazardous / stored energy
operating energised equipment
working at heights
dropped objects
mobile plant, vehicles and pedestrians
entanglement and crushing
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
lifting activities and suspended loads
Critical Controls include measures to ensure safe processes/systems and operating practices are in place, and that they are integrated
into model procedures. Sedgman is committed to the principles of ‘Safety in Design’ using HAZOP35 workshops, among other tools, to
ensure potential hazards are identified and addressed at the design stage.
Horizontal conveyor crumple zone
Sedgman employees at an iron ore mine in Western Australia have devised a low‐cost, zero maintenance solution to the risks
associated with cable breakage on a conveyor take‐up. Horizontal conveyor take‐ups store huge amounts of potential energy. In the
event of a wire cable breakage, this potential energy is transferred into kinetic energy due to the elasticity in the conveyor belt. This
has the potential to slingshot the trolley into the structure causing major damage or serious injury. Sedgman’s innovation fits a
‘crumple zone’ in the trolley’s path that is able to absorb this kinetic energy safely.
35 Hazard and Operability study (HAZOP) ‐ a structured and systematic examination of a complex planned or existing process or operation in order to
identify and evaluate problems that may represent risks to personnel or equipment.
93
93
Our Leighton Asia business has developed a series of Class One Practices (COPs). Similar in nature to CPB Contractors’ 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 with the
Leighton Asia business.
Innovative hanging scaffold structure provides safe working environment
Hong Kong’s Express Rail Link - West Kowloon Terminus Station North project - features a dramatic curved roof structure above the
station entrance. One of the challenges faced by the construction team was to provide access to the roof structure for cladding works
in a tight space. The team consulted experienced scaffold designers and suppliers from the United Kingdom to build a scaffold structure
suspended from the roof.
This innovative solution brought substantial benefits in terms of safety, project progress and cost including:
building the scaffold structure on the ground, before it was winched up into specific location, minimised high risk, working at
allowing internal roof cladding works and architectural finishes on the atrium levels to be carried out simultaneously, enabling the
heights tasks;
team to start work six months early; and
saving the use of 59,000m3 of standard system scaffold which delivered a significant reduction in cost to the project.
In view of the success at the project, Leighton Asia adopted the same design to complete works on an internal roof at the Passenger
Clearance Building for the Hong Kong-Zhuhai-Macao Bridge project.
One of the biggest challenges facing Leighton Asia is the communication of safety standards and process control to nationals. Leighton
Asia currently operates in India, Hong Kong, Philippines, Singapore, Indonesia and Malaysia and has the challenge of communication in
many different languages, including English, Chinese (Cantonese & Mandarin), Hindi, Tamil, Bahasa (Indonesian) and Tagalog. In
addition to the challenges with Language, there are relatively low literacy rates across many of the regions in which we operate.
In order to overcome these challenges, Leighton Asia has been very active in recent years with the simplification of many of the
‘frontline safety tools’ and the development of safety standards and process with the ‘end-user focus’ in mind. This has resulted in
many of the traditionally text-heavy documents being reformatted and now using simple illustrations, diagrams and more simplified
wording.
Managing class 1 risks at Leighton Asia
control measures.
Leighton Asia has developed a key frontline risk management tool – the Job Hazard Analysis (JHA) process for engineers and
supervisors. The JHA effectively manages Class 1 risk activities through the clear identification and implementation of task-specific
The JHA includes a series of simple, step-by-step, illustrated instructions on the required controls as stipulated within the construction
method statements and our business procedures and standards for the management of Class 1 risk. It ensures that both the ownership
of specific work activities, and the accountability for implementation of specific control measures and safety standards, are clearly
assigned and communicated to our engineers and frontline supervisors. The JHA is also used as the primary tool for communication at
task launch meetings and field control briefings in order to clearly communicate task-specific construction methods and work
sequences, potential Class 1 risks, and their associated control measures.
The JHA process is a simplified tool, which has been developed with the end-user in mind so as to ensure all supervisors and our
workforce fully understand, and are aligned to, our approach in achieving safe productivity on our projects. The JHA is also used by
management, supervisors and engineers as a simple verification tool in order to spot check and ensure compliance with our safety
standards and controls at the frontline.
Leighton Asia’s ‘Strive for L.I.F.E’ initiatives, such as the Strive for L.I.F.E training centres, reinforce the COPs. Since opening in 2010,
122,740 Leighton Asia employees have completed training courses through the Strive for L.I.F.E. training centres.
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
Safety in services
To address UGL’s greatest exposures to fatal or permanently disabling injuries, the company has developed the Critical Risk Control
(CRC) Protocol. The CRC Protocol outlines the mandatory minimum standards required to achieve a step change across UGL’s business,
specifically defining how to identify, eliminate or manage critical risks. The CRC Protocols cover the following critical risks:
working at height
operation of mobile plant
working in confined spaces
excavation and trenching
cranes and lifting operations
energy isolation
working with electricity
managing traffic
handling and storage of hazardous chemicals
working with asbestos
working in and around the rail corridor
movement of rolling stock
Reducing potential finger injuries with valve testing cage
A key responsibility of UGL’s maintenance team at the Blackwater coal handling preparation plant in Queensland involves removing
and testing the valves that connect water and compressed air pipes throughout the plant. The team identified the potential risk of
finger injuries while testing the valves. Team members designed, built and fitted a cage to prevent hand injuries. The cage protects
employees during valve testing and has eliminated the potential risks of manual handling injuries caused by pinch, crush points or
uncontrolled valve movements.
Occupational illnesses
CIMIC is committed to monitoring the potential for occupational illnesses that Group activities may cause, and seeks to mitigate any
impacts. An occupational illness is a work‐related condition or disorder caused predominantly by repeated or long‐term exposure to an
agent(s) or event(s). The most likely types of occupational illnesses at the Group’s major Operating Companies include hearing loss,
dermatitis or other skin irritations and musculoskeletal disorders, such as long term back or neck conditions.
Each project/workplace is required to maintain a record of all injuries or occupational illnesses that are new cases and that were work
related. In 2017, Group Operating Companies reported 15 instances of occupational illnesses which related to musculoskeletal
disorders and dermatitis. This generated an OIFR36 of 0.09 for CIMIC Group.
CIMIC Operating Companies have comprehensive occupational health and monitoring programs in place to ensure adequate
assessment and control of the health hazards associated with the working environment.
Managing asbestos as a hazard
CPB Contractors has a comprehensive suite of tools to support the management of asbestos hazards. Any task that involves working
with asbestos is defined as a High Risk Construction task. A Safe Work Method Statement must be developed, approved and included
into the relevant work pack/s. The key principles of dealing with these hazards are:
eliminate the risk by removing it;
substitute the hazard and replace with a safer option;
isolate the hazard by guarding or enclosing it;
engineer the hazard by modifying equipment of the work process;
administrative controls which include policies, procedures, training, etc; and
providing personal protective equipment.
Removal or disposal of asbestos, including demolition, is undertaken in accordance with the applicable regulatory provisions and by
personnel trained in the appropriate safe work methodologies.
Australia’s rates of skin cancer are the highest in the world and due to the outdoor nature of construction and mining activity,
employees are at risk. The Group’s Operating Companies provide PPE to reduce the risk including long sleeve shirts, broad‐brimmed
hats, safety‐rated sun glasses and sun cream. CIMIC has also worked with, and supported, the Cancer Council of Australia to promote
sun awareness and maintaining a healthy lifestyle.
36 Occupational Illness Frequency Rate: the number of occupational illnesses reported per million hours worked.
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Safety in services
To address UGL’s greatest exposures to fatal or permanently disabling injuries, the company has developed the Critical Risk Control
(CRC) Protocol. The CRC Protocol outlines the mandatory minimum standards required to achieve a step change across UGL’s business,
specifically defining how to identify, eliminate or manage critical risks. The CRC Protocols cover the following critical risks:
working with electricity
managing traffic
handling and storage of hazardous chemicals
working with asbestos
working in and around the rail corridor
movement of rolling stock
working at height
operation of mobile plant
working in confined spaces
excavation and trenching
cranes and lifting operations
energy isolation
uncontrolled valve movements.
Occupational illnesses
Reducing potential finger injuries with valve testing cage
A key responsibility of UGL’s maintenance team at the Blackwater coal handling preparation plant in Queensland involves removing
and testing the valves that connect water and compressed air pipes throughout the plant. The team identified the potential risk of
finger injuries while testing the valves. Team members designed, built and fitted a cage to prevent hand injuries. The cage protects
employees during valve testing and has eliminated the potential risks of manual handling injuries caused by pinch, crush points or
CIMIC is committed to monitoring the potential for occupational illnesses that Group activities may cause, and seeks to mitigate any
impacts. An occupational illness is a work‐related condition or disorder caused predominantly by repeated or long‐term exposure to an
agent(s) or event(s). The most likely types of occupational illnesses at the Group’s major Operating Companies include hearing loss,
dermatitis or other skin irritations and musculoskeletal disorders, such as long term back or neck conditions.
Each project/workplace is required to maintain a record of all injuries or occupational illnesses that are new cases and that were work
related. In 2017, Group Operating Companies reported 15 instances of occupational illnesses which related to musculoskeletal
disorders and dermatitis. This generated an OIFR36 of 0.09 for CIMIC Group.
CIMIC Operating Companies have comprehensive occupational health and monitoring programs in place to ensure adequate
assessment and control of the health hazards associated with the working environment.
Managing asbestos as a hazard
CPB Contractors has a comprehensive suite of tools to support the management of asbestos hazards. Any task that involves working
with asbestos is defined as a High Risk Construction task. A Safe Work Method Statement must be developed, approved and included
into the relevant work pack/s. The key principles of dealing with these hazards are:
eliminate the risk by removing it;
substitute the hazard and replace with a safer option;
isolate the hazard by guarding or enclosing it;
engineer the hazard by modifying equipment of the work process;
administrative controls which include policies, procedures, training, etc; and
providing personal protective equipment.
Removal or disposal of asbestos, including demolition, is undertaken in accordance with the applicable regulatory provisions and by
personnel trained in the appropriate safe work methodologies.
Australia’s rates of skin cancer are the highest in the world and due to the outdoor nature of construction and mining activity,
employees are at risk. The Group’s Operating Companies provide PPE to reduce the risk including long sleeve shirts, broad‐brimmed
hats, safety‐rated sun glasses and sun cream. CIMIC has also worked with, and supported, the Cancer Council of Australia to promote
sun awareness and maintaining a healthy lifestyle.
Rehabilitation
Each of the Group’s contracting companies has a comprehensive ‘Return to Work’ program which seeks to identify and provide
rehabilitation opportunities for injured employees so they can be reintegrated into the workforce where possible. The program
outlines our commitment to assisting injured workers remain at work, or return to work safely and as soon as possible, following a
workplace injury or illness.
Getting back to work is an important step in recovering from a work-related injury and often means an employee has also returned to a
normal life, reducing the financial and emotional impact on them and their family. Returning to work may mean going back to their old
job, being placed on alternate duties, working reduced hours or moving into another role. All of these options will be considered as
part of an injury management strategy.
Rehabilitation in India
On a Leighton Asia project in India, a worker was pinned by a load which fell due to a mechanical failure. Tragically, this resulted in the
worker’s lower legs having to be amputated.
A welfare assistance package was immediately put in place for the worker and his family, and a comprehensive rehabilitation and
support plan developed. This included trauma counselling, post-hospital discharge, convalescing accommodation, medical review
timelines, compensation review and a prosthesis plan leading into 2018.
PROMOTE PHYSICAL AND MENTAL HEALTH
CIMIC actively supports initiatives that help employees to achieve or maintain physical and mental health. We are
committed to promoting healthy activities and encouraging people to undertake regular health assessments. Our approach also
provides employees and their families with free, voluntary and confidential access to an Employee Assistance Program (EAP) to
facilitate the resolution of personal and work related issues.
CIMIC’s ‘Fit for work + Fit for life’ health initiative aims to promote the steps that all employees can take to:
achieve or maintain physical and mental health;
avoid or better manage both physical and mental health conditions such as fatigue, depression and anxiety; and
provide care and support for ourselves and others.
Sedgman team step challenge knows no limits
From Shanghai to Santiago, Vancouver to Middlemount, Sedgman employees stepped it out for four weeks in February and March
2017 as they took part in the inaugural team step challenge. A total of 156 employees in 28 teams participated by monitoring their
steps (or participating in other forms of exercise) and competing to see which team would travel the furthest.
The results were impressive with the winning team, Shanghai Devils, contributing an average of 461,658 steps. This is the equivalent of
372km per person. Gary Whitby of the K22 Paper Jam team from the Perth office contributed the greatest distance, an impressive
565km which is more than 20km per day.
The goal of the challenge was to kick-start a healthy 2017 by encouraging Sedgman employees to increase their levels of physical
activity. The team structure of the activity meant participants encouraged and inspired their colleagues. Teams commented that
working towards a common goal forged teambuilding and stronger relationships with their colleagues.
‘Fit for work + Fit for life’ is about employees looking after themselves and looking out for others. The Group’s intranet provides
information on a range of health and mental health topics and how to get support. It includes links to the Group's health related
policies, the Employee Assistance Program, and information about specialists including beyondblue, Lifeline, Mates in Construction and
Mates in Mining.
36 Occupational Illness Frequency Rate: the number of occupational illnesses reported per million hours worked.
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Across the Group in 2017, 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.
Support for ‘R U OK Day?’
On 14 September 2017, teams from across CIMIC Group were encouraged to participate by asking each other “Are you OK?” or holding
an R U OK? Day event. The day reminds employees that they can help to create a work environment where they are all connected and
protected from suicide.
Suicide prevention organisation R U OK?, as part of a concerted campaign, has been urging workmates to support one another. Given
safety and risk aversion is at the heart of Fly-In, Fly-Out work practices, the campaign is a much needed reminder that identifying well-
being concerns in the workplace is not as obvious as identifying physical danger.
Employers and business leaders are being urged to do more to foster workplace cultures that encourage peer-to-peer conversations
about wellbeing. CIMIC Group is pleased to support this initiative.
R U OK Day? resources including posters, presentations and videos were made available on intranets. Across the Group, many projects
and workplaces held morning teas or barbecues where personal experiences and industry statistics were shared to foster workplace
cultures that encourage peer-to-peer conversations about wellbeing.
CIMIC offers access to an EAP, a free, voluntary and confidential employee assistance program available 24/7 to all CIMIC Group
employees and their immediate families. The aim of the EAP access is to assist with the resolution of personal and work related issues
which may affect work performance or quality of life. An external counselling service, Gryphon Psychology (or their global affiliate in
overseas markets) provides short-term personal counselling. Gryphon Psychology counsellors are recognised for their professional
qualifications and experience in the provision of employee assistance programs.
PROTECT THE PUBLIC
CIMIC is committed to ensuring the health and safety of anyone who may be exposed to the Group's activities. This
commitment and care extends to clients, suppliers, surrounding communities 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, realigned traffic lanes, auto flaggers, physical barrier guards and truck mounted
attenuators.
UGL develops safety device for rail car passengers
UGL is a leading manufacturer of rail passenger carriages, and safety is integral to the engineering solution provided by UGL. After a
Government inquiry into a NSW rail accident, teams in UGL’s Rail and Technology Systems divisions responded to a recommendation
from the inquiry that passengers must be able to self-initiate emergency escape from a train and collaborated to develop an Internal
Emergency Door Release (IEDR) safety device. The door release system can be activated by passengers in the event of an emergency,
and onboard rail crews can also monitor and operate it.
Retrofitting networked equipment onto trains can be expensive and difficult but the customised IEDR safety device meets stringent
customer requirements and can be cost-effectively retrofitted to existing trains. Teams in two UGL divisions collaborated to develop
the IEDR safety device. The UGL Rail and Defence team contributed knowledge in rail car construction and installation, and the
Technology Systems team contributed expertise in safe system design, electronics design, software and product manufacturing.
Across the Group, projects and workplaces are required to prepare and maintain detailed ‘Emergency Response Plans’ to ensure that
arrangements are in place to effectively respond to foreseeable emergencies. ‘Emergency Response Plans’ must be developed and put
in place to:
minimise injury and damage;
minimise harm to the environment; and
preserve the businesses operability and reputation.
The ‘Emergency Response Plans’ underpin more externally focused ‘Crisis Management Plans’ which coordinate any necessary Group
crisis response, and ensure appropriate Group capabilities are in place to respond if required.
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OUTLOOK AND FUTURE PLANS
We are committed to our people returning home safely at the end of a day’s work. In 2018, we plan to:
maintain a consistent and unwavering focus on critical risk management and the application of critical risk controls;
focus on reducing the occurrence of C1 and PC1 incidents through:
ensuring each past incident is effectively investigated;
putting in place hard controls where possible to ensure that similar incidents do not occur across the Group; and
reviewing the controls put in place in response to C1 and PC1 incidents to measure their effectiveness;
Across the Group in 2017, 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.
On 14 September 2017, teams from across CIMIC Group were encouraged to participate by asking each other “Are you OK?” or holding
an R U OK? Day event. The day reminds employees that they can help to create a work environment where they are all connected and
Support for ‘R U OK Day?’
protected from suicide.
Suicide prevention organisation R U OK?, as part of a concerted campaign, has been urging workmates to support one another. Given
safety and risk aversion is at the heart of Fly-In, Fly-Out work practices, the campaign is a much needed reminder that identifying well-
being concerns in the workplace is not as obvious as identifying physical danger.
Employers and business leaders are being urged to do more to foster workplace cultures that encourage peer-to-peer conversations
about wellbeing. CIMIC Group is pleased to support this initiative.
R U OK Day? resources including posters, presentations and videos were made available on intranets. Across the Group, many projects
and workplaces held morning teas or barbecues where personal experiences and industry statistics were shared to foster workplace
cultures that encourage peer-to-peer conversations about wellbeing.
CIMIC offers access to an EAP, a free, voluntary and confidential employee assistance program available 24/7 to all CIMIC Group
employees and their immediate families. The aim of the EAP access is to assist with the resolution of personal and work related issues
which may affect work performance or quality of life. An external counselling service, Gryphon Psychology (or their global affiliate in
overseas markets) provides short-term personal counselling. Gryphon Psychology counsellors are recognised for their professional
qualifications and experience in the provision of employee assistance programs.
PROTECT THE PUBLIC
CIMIC is committed to ensuring the health and safety of anyone who may be exposed to the Group's activities. This
commitment and care extends to clients, suppliers, surrounding communities 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, realigned traffic lanes, auto flaggers, physical barrier guards and truck mounted
attenuators.
UGL develops safety device for rail car passengers
UGL is a leading manufacturer of rail passenger carriages, and safety is integral to the engineering solution provided by UGL. After a
Government inquiry into a NSW rail accident, teams in UGL’s Rail and Technology Systems divisions responded to a recommendation
from the inquiry that passengers must be able to self-initiate emergency escape from a train and collaborated to develop an Internal
Emergency Door Release (IEDR) safety device. The door release system can be activated by passengers in the event of an emergency,
and onboard rail crews can also monitor and operate it.
Retrofitting networked equipment onto trains can be expensive and difficult but the customised IEDR safety device meets stringent
customer requirements and can be cost-effectively retrofitted to existing trains. Teams in two UGL divisions collaborated to develop
the IEDR safety device. The UGL Rail and Defence team contributed knowledge in rail car construction and installation, and the
Technology Systems team contributed expertise in safe system design, electronics design, software and product manufacturing.
Across the Group, projects and workplaces are required to prepare and maintain detailed ‘Emergency Response Plans’ to ensure that
arrangements are in place to effectively respond to foreseeable emergencies. ‘Emergency Response Plans’ must be developed and put
in place to:
minimise injury and damage;
minimise harm to the environment; and
preserve the businesses operability and reputation.
The ‘Emergency Response Plans’ underpin more externally focused ‘Crisis Management Plans’ which coordinate any necessary Group
crisis response, and ensure appropriate Group capabilities are in place to respond if required.
continue to identify and manage the risk of occupational illnesses;
upgrade our Synergy Health & Safety Database and implement across all major operating companies;
develop and improve on evidence-based lead indicators; and
consolidate and simplify our safety systems across the CIMIC Group.
In CPB Contractors:
grow our capacity to deliver safe outcomes in partnership with our subcontractors by enhancing the pre-commencement meetings
roll out a MEWP safety campaign using the new video;
prior to starting on site and conducting quarterly subcontractor forums at a project level;
enhance the level of training provided to people delivering pre-start talks so as to deliver consistent and effective safety messaging;
create an investigations Community of Practice (CoP) to improve the quality of incident investigations; and
review and enhance occupational health programs, especially with regard to processes to manage the exposure to silica in
tunneling operations.
In Leighton Asia:
develop new lead metrics to measure and track success of the ‘Starts with me’ campaign;
develop personalized KPI’s for each business leaders/senior manager to track their performance with leadership walks, and
attendance at safety meetings, workshops, forums and events;
arrange a pilot supply chain partnering workshop with senior managers of key suppliers in Asia to create greater engagement; and
conduct business wide occupational health exposure risk assessments to determine specific health risks associated with
construction activities and ensure specific mitigations strategies are correctly implemented.
increase connectivity and the transfer of safety processes through the use of ‘tough tablets’ in the workplace;
In Thiess:
develop a Stress Strain Index to facilitate the early identification of increased risks at project level;
utilise ‘tough tablets’ to communicate video 'How to Guides' for key critical controls;
utilise ‘tough tablets’ to support the data collection required for ALFA (‘Ask, Listen, Find-out and Act’) programs;
implement the Occupational Hygiene Standard that was developed to address identified health and hygiene risks; and
relaunch the ‘Our HSE Culture Framework’ utilising the CIMIC standard.
In UGL:
reduce risk of fatalities by aligning key safety tools (such as Safe Work Method Statements, Safety Conversation, Take5) to critical
risks and developing, and delivering, online training packages for the top six critical risks;
deliver a health and safety summit to roll out the 2018 health, safety and environment plan, and to build health and safety
leadership skills and alignment; and
improve Health Safety Environment and Quality (HSEQ) systems with the implementation of the Group’s common system –
Synergy.
In Sedgman:
review the Critical Controls and Golden Rules, and merge and rebrand to Safety Essentials to align with other Operating
Companies’, including the development of new materials to assist the rollout to frontline employees, contractors, supervisors and
site management teams;
develop and implement a targeted coaching program of front line leaders i.e. project managers, project engineers,
production/maintenance coordinators and supervisors, to increase the focus on health and safety;
refresh and roll out leadership and behavioural elements of the COMPASS program with an updated online refresher program
developed and implemented;
promoting ‘Fit for Work, Fit for Life’ including: identifying latent manual handling hazards and developing risk mitigation strategies,
including identifying potential engineering solutions to minimise the risk; offering health program such as flu shots, skin checks and
the team step challenge; and implementing improved management of the occupational exposure to dust, particularly coal dust;
improving HSEQ systems with the implementation of the Group’s common system – Synergy; and
utilise an IT platform to improve the efficiency and effectiveness of site based sub-contractor management processes and
procedures.
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INTEGRITY
OUR APPROACH
We expect our people to act with integrity and 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. The Code of Conduct supports our Principles –
Integrity, Accountability, Innovation and Delivery, underpinned by Safety ‐ and outlines the standards of behaviour we expect,
regardless of Operating Company, role or country.
This Code of Conduct applies to CIMIC directors, 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 of Conduct.
Where the Code of Conduct or a policy sets higher standards of behaviour than local laws, rules, customs or norms, the higher
standards will apply. The Code of Conduct 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 breaches. We refreshed the Code of
Conduct in 2015 to make it easier to read and deployed new online training to employees at the end of 2016. The Code of Conduct
training has been translated into local languages to reflect the communities in which we operate.
Zero tolerance for bribery and corruption
Measures in place
Actions taken during 2017
Performance
Code of Conduct available to all employees supported by Group Code of Conduct –
Management, Monitoring and Reporting Policy which includes comprehensive protection
for whistleblowers
Anti‐Bribery and Corruption Policy; Gifts and Hospitality Policy; Dealing with Third Parties
Policy; Approval to Operate Internationally Policy
Group‐wide independent Ethics Line available for reporting
ensured Code of Conduct available to all UGL employees following the takeover
18,870 employees undertook formal Code training
no instances of significant fines or sanctions for non‐compliance with Australian and
international laws and regulations during the year
no significant breaches of Code of Conduct
26 calls made to the ‘Ethics Line’, all matters were dealt with internally by the Reportable
Conduct Group, under the supervision of the Ethics, Compliance and Sustainability
Committee
in the employee engagement survey, a key highlight was the extent to which employees
rated their manager as “a great role model of the Principles”
Operate honestly and transparently
Measures in place
Continuous Disclosure Policy; Privacy Policy; Record Retention Policy; Securities Trading
Policy
Actions taken during 2017
Performance
made 102 announcements and disclosures via ASX
no breaches of continuous disclosure
Group is unaware of any substantiated complaints regarding breaches of privacy or other
matters by clients or other stakeholders
Support sustainable procurement
Measures in place
Actions taken during 2017
Procurement Policy and Procedures which integrate sustainability commitment; Dealing
with Third Parties Procedure
Sustainability Policy commits Group to integrating environmentally and socially responsible
sourcing into procurement
Thiess established a Supply Chain Australian Indigenous Engagement Action Group to ramp
up its commitment to creating opportunities for Indigenous businesses and employees
UGL hosted an Aboriginal and Torres Strait Islander Supplier Showcase
Group introduced an innovative supply chain financing program to facilitate early payment
of supplier’s invoices in exchange for a small settlement discount
Thiess has a successful joint venture with Wirlu‐Murra Yindjibarndi Services, who provide
labour services at the Solomon project in Western Australia
Diversity Policy which promotes indigenous employment and indigenous suppliers in the
supply chain
Sustainability Policy which commits Group to leaving positive legacies
Thiess launched new 2017‐2020 Reconciliation Action Plan (RAP)
numerous, project‐by‐project initiatives tailored to meet the needs of local communities
Thiess’ stretch RAP received endorsement from Reconciliation Australia
Performance
Leave a positive legacy
Measures in place
Actions taken during 2017
Performance
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
INTEGRITY
OUR APPROACH
We expect our people to act with integrity and 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. The Code of Conduct supports our Principles –
Integrity, Accountability, Innovation and Delivery, underpinned by Safety ‐ and outlines the standards of behaviour we expect,
regardless of Operating Company, role or country.
This Code of Conduct applies to CIMIC directors, 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 of Conduct.
Where the Code of Conduct or a policy sets higher standards of behaviour than local laws, rules, customs or norms, the higher
standards will apply. The Code of Conduct 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 breaches. We refreshed the Code of
Conduct in 2015 to make it easier to read and deployed new online training to employees at the end of 2016. The Code of Conduct
training has been translated into local languages to reflect the communities in which we operate.
Zero tolerance for bribery and corruption
Measures in place
Code of Conduct available to all employees supported by Group Code of Conduct –
Management, Monitoring and Reporting Policy which includes comprehensive protection
for whistleblowers
Anti‐Bribery and Corruption Policy; Gifts and Hospitality Policy; Dealing with Third Parties
Policy; Approval to Operate Internationally Policy
Group‐wide independent Ethics Line available for reporting
Actions taken during 2017
ensured Code of Conduct available to all UGL employees following the takeover
Performance
no instances of significant fines or sanctions for non‐compliance with Australian and
18,870 employees undertook formal Code training
international laws and regulations during the year
no significant breaches of Code of Conduct
26 calls made to the ‘Ethics Line’, all matters were dealt with internally by the Reportable
Conduct Group, under the supervision of the Ethics, Compliance and Sustainability
Committee
Policy
Operate honestly and transparently
Measures in place
Continuous Disclosure Policy; Privacy Policy; Record Retention Policy; Securities Trading
in the employee engagement survey, a key highlight was the extent to which employees
rated their manager as “a great role model of the Principles”
Actions taken during 2017
made 102 announcements and disclosures via ASX
Performance
no breaches of continuous disclosure
Support sustainable procurement
Measures in place
Procurement Policy and Procedures which integrate sustainability commitment; Dealing
Group is unaware of any substantiated complaints regarding breaches of privacy or other
matters by clients or other stakeholders
Actions taken during 2017
Thiess established a Supply Chain Australian Indigenous Engagement Action Group to ramp
with Third Parties Procedure
sourcing into procurement
Sustainability Policy commits Group to integrating environmentally and socially responsible
up its commitment to creating opportunities for Indigenous businesses and employees
UGL hosted an Aboriginal and Torres Strait Islander Supplier Showcase
Group introduced an innovative supply chain financing program to facilitate early payment
of supplier’s invoices in exchange for a small settlement discount
Performance
Thiess has a successful joint venture with Wirlu‐Murra Yindjibarndi Services, who provide
labour services at the Solomon project in Western Australia
Leave a positive legacy
Measures in place
Diversity Policy which promotes indigenous employment and indigenous suppliers in the
supply chain
Sustainability Policy which commits Group to leaving positive legacies
Actions taken during 2017
Thiess launched new 2017‐2020 Reconciliation Action Plan (RAP)
numerous, project‐by‐project initiatives tailored to meet the needs of local communities
Performance
Thiess’ stretch RAP received endorsement from Reconciliation Australia
ZERO TOLERANCE FOR BRIBERY AND CORRUPTION
CIMIC Group prohibits, and has zero tolerance for, all forms of bribery and corruption and is committed to
the prevention, detection and initiatives to eliminate bribery and corruption in accordance with the CIMIC Code of Conduct.
Where the Code or a policy sets higher standards of behaviour than local laws, rules, customs or norms, the higher standards will apply.
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, directly or through an intermediary. CIMIC also explicitly prohibits facilitation payments which
are 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.
The Group does not make donations, either in kind or directly, to political organisations, political parties, politicians, or trade unions,
and does not make or solicit payments to organisations which predominantly act as conduits to fund political parties or individuals
holding or standing for elective office.
The CIMIC Code of Conduct is supplemented by an Anti-Bribery and Corruption Policy and 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:
identify roles, responsibilities and obligations of leadership and employees;
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 of Conduct and ensuring it is confidential, objective,
independent and fair; and
setting out key contacts and details.
Dealing with third parties
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 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.
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.
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 of Conduct.
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 Policy 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’37 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
37 The Dealing with Third Parties Policy has a detailed definition for ‘High Risk’. A third party is designated as High Risk if any of the following apply:
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); the remuneration payable to the third party is based on success fees for the award of
contracts or achievement of a defined outcome, are in cash; includes a non-refundable up-front payment (other than mobilisation payments for design
or construction services); 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 60 or higher in the most recent Corruption Perceptions Index (as
published from time to time by Transparency International) (Corruption Perceptions Index); or due diligence enquiries identify potential issues.
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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.38
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).
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.
Working in other countries
CIMIC seeks to ensure that it does not operate in countries that could pose significant integrity, legal, financial, operational,
reputational, security and other business risks to the Group. CIMIC’s Approval to Operate Internationally Policy ensures that, before
operations commence in a new country, a comprehensive assessment of risks associated with operating in that country is undertaken,
documented and approved.
The Approval to Operate Internationally Policy mandates a traffic lights system whereby:
a ‘Green Light’ country is one that has been approved for Group entity operations. Typically, Green Light Countries are defined as
retaining a low level of business risk and have either existing or potential opportunities to create a sustainable business with
consistent and acceptable after tax returns;
an ‘Amber Light’ country is one that has been approved for Group entities to pursue specific opportunities on a case-by-case basis.
Typically, Amber Light Countries are defined as retaining a medium level of political, security, corruption or other business risk.
Approval will only be granted on a prospect-by-prospect basis;
a ‘Red Light’ country is one that is not currently approved for operation; and
a ‘Black Light’ country is one where Group entities are banned from pursuing opportunities. These countries include prohibited
activities in countries sanctioned by the United Nations Security Council and/or Australia (refer to
http://www.dfat.gov.au/sanctions/sanctions-regimes).
CIMIC has a detailed process of risk assessment in place for country approvals. This includes the requirement for the relevant Operating
Company to undertake an evaluation using a standardised risk assessment template, followed by a structured review process which
involves Operating Company functional managers and CIMIC function heads including Strategy, Legal, Finance, Human Resources, Risk
and Pre-Contracts, and the CIMIC CEO. CIMIC maintains a Register of Approved Countries which is integrated with the Group
Delegations of Authority and Group Tendering Policy.
Political donations
CIMIC does not make donations, either in kind or directly, to political organisations, political parties, politicians, or trade unions, and
does not make or solicit payments to organisations which predominantly act as conduits to fund political parties or individuals holding
or standing for elective office
In keeping with the Code of Conduct, the Group did not make any donations, either in kind or directly, to political organisations,
political parties, politicians, or trade unions in 2015, 2016 or 2017.
Supporting and protecting whistle-blowers
CIMIC is committed to providing support and protection for whistle-blowers. The Group makes available the ‘Ethics Line’, a confidential
channel for employees, subcontractors and partners to voice their concerns should they come across potentially unethical practices.
Matters can be reported to the Ethics Line via phone, fax, online, by email or post.
The Ethics Line is an independent service operated by STOPline Pty Ltd, a leading provider of disclosure management services. It is
contactable 24 hours-a-day, seven days-a-week, and the service is 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 and are anonymous.
The Group Code of Conduct – Management, Monitoring and Reporting Policy requires that CIMIC and each Operating Company must
maintain a Reportable Conduct Group (RCG), with membership comprising the CEO/COO or Managing Director, CFO, General Counsel,
and Head of HR, or as otherwise determined by the CEO. The RCG is required: to monitor, investigate and respond appropriately to
matters investigated and brought before it; and report to the CIMIC Ethics, Compliance and Sustainability Committee on a regular basis
about matters reported, actions taken, and the success or otherwise of systems in place to support compliance with the Code.
38 Other than third parties designated as Low Risk, such as a government or state-owned enterprise ranked lower than 40 in the Corruptions Perceptions
or an existing client designated as Low Risk by the CEO.
100
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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.38
On behalf of the Board, the Ethics, Compliance and Sustainability Committee (ECSC) 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.
Where either the Third Party Anti-Bribery and Corruption Declaration or the integrity checks are not to the satisfaction of the approving
In 2017, the nature of the calls to the Ethics Line were as follows:
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).
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.
Working in other countries
documented and approved.
CIMIC seeks to ensure that it does not operate in countries that could pose significant integrity, legal, financial, operational,
reputational, security and other business risks to the Group. CIMIC’s Approval to Operate Internationally Policy ensures that, before
operations commence in a new country, a comprehensive assessment of risks associated with operating in that country is undertaken,
The Approval to Operate Internationally Policy mandates a traffic lights system whereby:
a ‘Green Light’ country is one that has been approved for Group entity operations. Typically, Green Light Countries are defined as
retaining a low level of business risk and have either existing or potential opportunities to create a sustainable business with
consistent and acceptable after tax returns;
an ‘Amber Light’ country is one that has been approved for Group entities to pursue specific opportunities on a case-by-case basis.
Typically, Amber Light Countries are defined as retaining a medium level of political, security, corruption or other business risk.
Approval will only be granted on a prospect-by-prospect basis;
a ‘Red Light’ country is one that is not currently approved for operation; and
a ‘Black Light’ country is one where Group entities are banned from pursuing opportunities. These countries include prohibited
activities in countries sanctioned by the United Nations Security Council and/or Australia (refer to
http://www.dfat.gov.au/sanctions/sanctions-regimes).
CIMIC has a detailed process of risk assessment in place for country approvals. This includes the requirement for the relevant Operating
Company to undertake an evaluation using a standardised risk assessment template, followed by a structured review process which
involves Operating Company functional managers and CIMIC function heads including Strategy, Legal, Finance, Human Resources, Risk
and Pre-Contracts, and the CIMIC CEO. CIMIC maintains a Register of Approved Countries which is integrated with the Group
Delegations of Authority and Group Tendering Policy.
CIMIC does not make donations, either in kind or directly, to political organisations, political parties, politicians, or trade unions, and
does not make or solicit payments to organisations which predominantly act as conduits to fund political parties or individuals holding
Political donations
or standing for elective office
In keeping with the Code of Conduct, the Group did not make any donations, either in kind or directly, to political organisations,
political parties, politicians, or trade unions in 2015, 2016 or 2017.
Supporting and protecting whistle-blowers
CIMIC is committed to providing support and protection for whistle-blowers. The Group makes available the ‘Ethics Line’, a confidential
channel for employees, subcontractors and partners to voice their concerns should they come across potentially unethical practices.
Matters can be reported to the Ethics Line via phone, fax, online, by email or post.
The Ethics Line is an independent service operated by STOPline Pty Ltd, a leading provider of disclosure management services. It is
contactable 24 hours-a-day, seven days-a-week, and the service is 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 and are anonymous.
The Group Code of Conduct – Management, Monitoring and Reporting Policy requires that CIMIC and each Operating Company must
maintain a Reportable Conduct Group (RCG), with membership comprising the CEO/COO or Managing Director, CFO, General Counsel,
and Head of HR, or as otherwise determined by the CEO. The RCG is required: to monitor, investigate and respond appropriately to
matters investigated and brought before it; and report to the CIMIC Ethics, Compliance and Sustainability Committee on a regular basis
about matters reported, actions taken, and the success or otherwise of systems in place to support compliance with the Code.
38 Other than third parties designated as Low Risk, such as a government or state-owned enterprise ranked lower than 40 in the Corruptions Perceptions
or an existing client designated as Low Risk by the CEO.
100
Calls to the Ethics Line (#)
Conflicts
Breaches of code/procedures
Misappropriation/theft
Fraud
Human resources related
Other
Total
2017
6
3
1
1
8
7
26
2016
5
2
0
0
10
6
23
Of the matters reported in 2017, all were investigated and closed out by the respective Operating Company’s Reportable Conduct
Group and the Board’s ECSC apprised of the details
Communication and training
Employees are required to undertake Group Code of Conduct training within three months of commencing within the Group, and this
training is to be repeated every two years. The Code is accessible in each office and project site, and available on the CIMIC and each
Operating Company intranet. Any updates to the Code of Conduct are promptly communicated to all employees.
It is mandatory for all decision-makers in senior management, as well as employees in ‘high risk’ 39 roles, to undertake a two hour
standardised face-to-face training session delivered by a CIMIC or Operating Company General Counsel or delegate, outlining the
importance of the Code and bribery and corruption prevention and control and, in addition, the online training module (including
assessment).
All other salaried employees are to complete the online training module (including assessment) while blue collar workers participate in
toolbox talks. Where online training is not available, alternative delivery of training will be provided (via CD or paper). Across the
Group, 18,870 employees completed Code of Conduct training in 2017.
OPERATE HONESTLY AND TRANSPARENTLY
CIMIC expects all of its people to operate and communicate honestly and transparently, to maintain the confidence and trust
of shareholders and other stakeholders. We are committed to building open and transparent relationships, and working collaboratively
with the communities in which we work. We will comply with all applicable laws, wherever we operate, and where a code or a policy of
CIMIC sets higher standards of behaviour than local laws, rules, customs or norms, the higher standards will apply. CIMIC is also
committed to providing information to shareholders and to the market in a manner which is consistent with the meaning and intention
of the ASX Listing Rules.
Continuous disclosure and insider trading
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 affect the Group’s operations.
CIMIC also maintains a comprehensive Securities Trading Policy which seeks to ensure that CIMIC Group officers and executives comply
with the law prohibiting insider trading, and that their dealings in shares are beyond reproach. CIMIC Group people may only deal in
the company’s securities within designated trading windows which are six-week periods commencing on the next trading day after
release of the Group’s quarterly/half year/full year results. Employees must still obtain prior approval from the CIMIC Company
Secretary before they can trade and a record is maintained of all approvals given.
During 2017, there were no breaches of continuous disclosure.
Privacy and record retention
The Group regards the fair and lawful treatment of personal information with utmost importance. The Group’s Privacy Policy applies to
all employees, 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:
39 High Risk Employees will be determined by the Reportable Conduct Group and may include the following roles: senior corporate management (all
executives, General Managers and Group Managers); senior project management (all Project Directors / Managers and Superintendents); finance and
administration (including accounting, legal, finance, insurance, treasury and HR); procurement and contract administration / management; business
development; government relations; and plant managers.
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in Australia, including that of its Australian customers and business partners, in accordance with the Australian Privacy Act 1988
(Cth) (Privacy Act) and the Australian Privacy Principles; and
outside Australia, in accordance with the applicable law.
The Group also has a Record Retention Policy which integrates with an Information Management Policy. These policies set the
requirements for the identification, retention and/or destruction of all records containing Group Information.
CIMIC is aware of the passage of the Privacy Amendment (Notifiable Data Breaches) Act 2017 which established a Notifiable Data
Breaches (NDB) scheme in Australia. The NDB scheme requires organisations covered by the Privacy Act to notify any individuals likely
to be at risk of serious harm by a data breach. The Group is working to ensure that it is able to meet all of the obligations of the NDB.
The Group is aware of a data breach impacting some UGL employees. The breach involved a third party contractor engaged to provide
expense management services and the information was primarily backed-up data from March 2016. The data exposed was historical,
archived and partially anonymised.
The Group is unaware of any substantiated complaints regarding breaches of privacy by employees, clients or other stakeholders.
Tax payment and disclosure
CIMIC is committed to making positive contributions to the economic environment in which it operates. This includes the
management and payment of taxes in a sustainable manner with regard to the commercial and social imperatives of governments, our
business and our stakeholders and supported by our strong corporate governance policies. The Group complies with the taxation laws
of the jurisdictions in which it operates and does not participate in tax evasion, undertake innovative or aggressive tax planning
transactions nor enters into transactions that do not have a legitimate business purpose.
CIMIC understands that corporate tax payable by the Group provides important contributions to the financing of government public
services and programs and investment in public infrastructure. In addition, the Group is a substantial generator of payroll taxes and
other taxes and duties which also contribute to government revenue.
The Group reports an aggregate amount of tax paid and, in 2017, the Group’s effective tax rate was 28.0%, compared to the Australian
corporate tax rate of 30%. The effective tax rate is primarily impacted by:
entitlements under the Australian Government’s Research and Development tax incentive; and
the blend of different tax rates on profits and losses from the various jurisdictions in which the Group operates;
taxes on the gains and losses of divestments.40
The Group has continued to maintain an average effective tax rate of around 30% over the past three years. Our performance is set out
in the Financial Report in this, and previous, Annual Reports.
CIMIC is committed to the integrity of the tax related disclosures contained in the financial statements and to maintaining open and
transparent relationships with relevant tax authorities. In Australia, CIMIC is regarded as a ‘key taxpayer’ under the Australian Taxation
Office’s (ATO) Risk Differentiation Framework and participates in the ATO’s annual Pre-lodgment Compliance Review program. The
program is based on transparent and cooperative disclosure and enables CIMIC to provide increased confidence in relation to the
amount and timing of tax paid.
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 allowances41.
Open and transparent relationships
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 2017, 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.
40 The amounts of which are disclosed in Note 6: Income tax expense in the Financial Report within the Annual Report.
41 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.
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in Australia, including that of its Australian customers and business partners, in accordance with the Australian Privacy Act 1988
(Cth) (Privacy Act) and the Australian Privacy Principles; and
outside Australia, in accordance with the applicable law.
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. 42
The Group also has a Record Retention Policy which integrates with an Information Management Policy. These policies set the
requirements for the identification, retention and/or destruction of all records containing Group Information.
CIMIC is aware of the passage of the Privacy Amendment (Notifiable Data Breaches) Act 2017 which established a Notifiable Data
Breaches (NDB) scheme in Australia. The NDB scheme requires organisations covered by the Privacy Act to notify any individuals likely
to be at risk of serious harm by a data breach. The Group is working to ensure that it is able to meet all of the obligations of the NDB.
The Group is aware of a data breach impacting some UGL employees. The breach involved a third party contractor engaged to provide
expense management services and the information was primarily backed-up data from March 2016. The data exposed was historical,
archived and partially anonymised.
The Group is unaware of any substantiated complaints regarding breaches of privacy by employees, clients or other stakeholders.
Tax payment and disclosure
CIMIC is committed to making positive contributions to the economic environment in which it operates. This includes the
management and payment of taxes in a sustainable manner with regard to the commercial and social imperatives of governments, our
business and our stakeholders and supported by our strong corporate governance policies. The Group complies with the taxation laws
of the jurisdictions in which it operates and does not participate in tax evasion, undertake innovative or aggressive tax planning
transactions nor enters into transactions that do not have a legitimate business purpose.
CIMIC understands that corporate tax payable by the Group provides important contributions to the financing of government public
services and programs and investment in public infrastructure. In addition, the Group is a substantial generator of payroll taxes and
other taxes and duties which also contribute to government revenue.
The Group reports an aggregate amount of tax paid and, in 2017, the Group’s effective tax rate was 28.0%, compared to the Australian
corporate tax rate of 30%. The effective tax rate is primarily impacted by:
the blend of different tax rates on profits and losses from the various jurisdictions in which the Group operates;
entitlements under the Australian Government’s Research and Development tax incentive; and
taxes on the gains and losses of divestments.40
The Group has continued to maintain an average effective tax rate of around 30% over the past three years. Our performance is set out
in the Financial Report in this, and previous, Annual Reports.
CIMIC is committed to the integrity of the tax related disclosures contained in the financial statements and to maintaining open and
transparent relationships with relevant tax authorities. In Australia, CIMIC is regarded as a ‘key taxpayer’ under the Australian Taxation
Office’s (ATO) Risk Differentiation Framework and participates in the ATO’s annual Pre-lodgment Compliance Review program. The
program is based on transparent and cooperative disclosure and enables CIMIC to provide increased confidence in relation to the
amount and timing of tax paid.
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 allowances41.
Open and transparent relationships
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 2017, 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.
The Group does not sell banned or disputed products.
SUPPORT SUSTAINABLE PROCUREMENT
CIMIC understands the need to manage supply chain risks, and to procure goods and services in a
transparent, competitive, compliant and sustainable manner. Procurement is a key element of the Group’s operations that is crucial for
project delivery, cost control, sustainability and financial performance – for the Group and for its clients.
We seek to encourage support for local suppliers where this makes commercial sense and they are able to meet all expectations. CIMIC
also promotes the fair treatment of suppliers and payment within negotiated and contractually agreed terms.
CIMIC Group’s Procurement Policy aims to ensure Group employees procure goods and services in a transparent, competitive,
compliant and sustainable manner, and to maximise value by encouraging effective competition and employee accountability.
Supplier criteria should include pricing along with other factors, including the supplier’s ability to meet specifications, contract
conditions, warranties, total life-cycle cost, indigenous and local community involvement and supplier rating as per the approved
supplier list. 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.
Thiess ramping up Indigenous engagement in the supply chain
Thiess has ramped up its commitment to creating opportunities for Indigenous businesses and employees, setting up an action group
to drive current initiatives and generate new ideas. The newly established Supply Chain Australian Indigenous Engagement Action
Group included representatives from across the business who have sought, and will continue to seek guidance from, traditional owner
groups and key Indigenous organisations.
A tangible example is Thiess’ joint venture with Wirlu-Murra Yindjibarndi Services, who provide labour services for our non-process
infrastructure at our Solomon project in Western Australia. Other partnerships include using employment service RBY Workstars to
place Indigenous workers on Thiess projects, and membership of Supply Nation an organisation that assists companies to connect with
Indigenous businesses across the country.
CPB Contractors and some of their construction project teams from across New South Wales and the Australian Capital Territory held
an inaugural Indigenous & social inclusion business forum for 100 Group and external participants in Sydney. The forum provided an
opportunity to engage with representatives from the Indigenous supply chain and for CPB Contractors to present current and future
project opportunities which might be attractive to Indigenous suppliers.
UGL fosters Indigenous suppliers
In Perth, UGL celebrated NAIDOC Week by hosting an Aboriginal and Torres Strait Islander Supplier Showcase, featuring presentations
from Aboriginal organisations including Red Spear Safety Engineering (a provider of engineered safety solutions to the resource sector),
ICRG (a mining and oil and gas resources services company), Jatu Clothing (a supplier of personal protective equipment), Kulbardi (a
stationery and workplace supplies company) and Warrikal (a provider of mechanical engineering services, preventative asset
management and shutdown works to the resources, energy and marine sectors).
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 subcontractors (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.
40 The amounts of which are disclosed in Note 6: Income tax expense in the Financial Report within the Annual Report.
41 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.
102
42 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 2017 | Sustainability Report
Focus on value to create competitive edge
When buying the big ticket items used in mining operations – equipment, parts, fuel, explosives – negotiating the best value can save
the company, and its clients, significant amounts. Some of the major products required to run its mining operations require a
significant cost investment by Thiess. Therefore, cost savings within its supply chain meaningfully contribute to its profitability and to
its competitiveness, which ultimately benefits their clients.
A recent bid to find a suitable fuel supplier for Thiess’ Indonesian operations demonstrates how a strategic approach helped save
millions of dollars while still achieving the high standards expected from suppliers. Thiess leveraged their regional scale to get a much
more competitive price on fuel, which in turn saved Thiess, and their clients, money. However, price was not the only factor. Other
considerations included certainty of supply which is critical in mining operations and the supplier’s approach to safety, environment,
good governance and local community support.
CIMIC’s Operating Companies have introduced an innovative Early Payment Program (EPP) which utilises supply chain financing to
enable payment of invoices within 10 business days in exchange for a small settlement discount. The EPP provides suppliers with
inexpensive financing as the program is backed by CIMIC’s strong credit rating. The EPP improves supplier’s cash-flow as it facilitates
access to payments more quickly and, if suppliers are paid in another currency, to mitigate the impact of exchange rate fluctuations.
All suppliers must comply with the Code of Conduct, as specified by our Dealing with Third Parties Policy. The Policy 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.
LEAVE A POSITIVE LEGACY
CIMIC seeks to identify the potential impacts of projects and seek ways to minimise harm and to leave positive
legacies.
Minimise community disruption
CIMIC’s Operating Companies seek to minimise disruption, as much as practicably possible, to communities impacted by the Group's
activities in delivering projects and services. Sometimes our construction, mining or services activities may impinge on local
communities as we deliver 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.
Community relations smooths delivery of rail projects
When the Group delivers projects, our people become the face of that project, and often the face of the client which is a big
responsibility. Proactive involvement in the community delivers a range of benefits. Effective engagement can shape an improved
design solution, reducing the risk of rework, and saving time and cost further down the track.
The major Regional Rail Link project in Victoria passed through some of the most culturally and linguistically diverse communities in
Australia. There were around 1,800 homes and businesses located within 50 metres of work sites and every day, more than 19,000 rail
customers travelled through work areas. CPB Contractors needed to manage and keep people informed about rail disruptions,
extensive and frequent changes to traffic layouts, impacts on local businesses, and the impact of extended noise from around-the-clock
works.
A particularly challenging issue involved the demolition and replacement of a historic footbridge, which attracted significant
community interest. CPB Contractors worked with community groups and the local council to develop a striking new design for the
bridge. When the new bridge was lifted into place, hundreds of community members came out to celebrate what will be a legacy of the
project.
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.
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Focus on value to create competitive edge
When buying the big ticket items used in mining operations – equipment, parts, fuel, explosives – negotiating the best value can save
the company, and its clients, significant amounts. Some of the major products required to run its mining operations require a
significant cost investment by Thiess. Therefore, cost savings within its supply chain meaningfully contribute to its profitability and to
its competitiveness, which ultimately benefits their clients.
A recent bid to find a suitable fuel supplier for Thiess’ Indonesian operations demonstrates how a strategic approach helped save
millions of dollars while still achieving the high standards expected from suppliers. Thiess leveraged their regional scale to get a much
more competitive price on fuel, which in turn saved Thiess, and their clients, money. However, price was not the only factor. Other
considerations included certainty of supply which is critical in mining operations and the supplier’s approach to safety, environment,
good governance and local community support.
CIMIC’s Operating Companies have introduced an innovative Early Payment Program (EPP) which utilises supply chain financing to
enable payment of invoices within 10 business days in exchange for a small settlement discount. The EPP provides suppliers with
inexpensive financing as the program is backed by CIMIC’s strong credit rating. The EPP improves supplier’s cash-flow as it facilitates
access to payments more quickly and, if suppliers are paid in another currency, to mitigate the impact of exchange rate fluctuations.
All suppliers must comply with the Code of Conduct, as specified by our Dealing with Third Parties Policy. The Policy 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
LEAVE A POSITIVE LEGACY
matters.
legacies.
Minimise community disruption
CIMIC seeks to identify the potential impacts of projects and seek ways to minimise harm and to leave positive
CIMIC’s Operating Companies seek to minimise disruption, as much as practicably possible, to communities impacted by the Group's
activities in delivering projects and services. Sometimes our construction, mining or services activities may impinge on local
communities as we deliver 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.
Community relations smooths delivery of rail projects
When the Group delivers projects, our people become the face of that project, and often the face of the client which is a big
responsibility. Proactive involvement in the community delivers a range of benefits. Effective engagement can shape an improved
design solution, reducing the risk of rework, and saving time and cost further down the track.
The major Regional Rail Link project in Victoria passed through some of the most culturally and linguistically diverse communities in
Australia. There were around 1,800 homes and businesses located within 50 metres of work sites and every day, more than 19,000 rail
customers travelled through work areas. CPB Contractors needed to manage and keep people informed about rail disruptions,
extensive and frequent changes to traffic layouts, impacts on local businesses, and the impact of extended noise from around-the-clock
A particularly challenging issue involved the demolition and replacement of a historic footbridge, which attracted significant
community interest. CPB Contractors worked with community groups and the local council to develop a striking new design for the
bridge. When the new bridge was lifted into place, hundreds of community members came out to celebrate what will be a legacy of the
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.
works.
project.
104
Mitchell Freeway Extension project offers improved safety
Western Australia’s new Mitchell Freeway Extension, designed and constructed by CPB Contractors, has now opened to traffic. The
6km of dual carriageway, with capacity for future expansion to three lanes, delivered improved public transport access, generating
significant community and economic benefits for Perth’s far northern suburbs.
For two years before construction started the project team worked with community and stakeholders on the project’s design and
construction phase. This meant that the team was able to incorporate improved safety for pedestrians and cyclists into the design.
Features included a four-metre-wide shared path constructed along the west side of the extension, as well as underpasses and a
pedestrian bridge. The project also utilised energy efficient LED lighting for the roads network, and for the pedestrian and cyclist shared
path.
Our Operating Companies seek to 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.
Level Crossing Removal project team thanks community
CPB Contractors has been working as part of an Alliance to remove level crossings in the St Albans, Mitcham and Blackburn areas for
the Victorian Government. The Blackburn Level Crossing Removal project team has thanked the community for its patience during
construction after the recent completion of a new road bridge in Blackburn.
During the road bridge’s construction, the Rotary Club of Forest Hill was heavily impacted and for six months had to change the
location of its biggest fundraiser, the monthly craft market. The project team worked with the Rotary Club, and stallholders, traders
and the council to help relocate the market until construction was completed. A ‘thank you’ day for the community coincided with the
market’s return to Blackburn Station’s revamped forecourt area and a $500 cheque was presented to the Rotary Club from money
raised at Blackburn team functions.
Project life cycle
CIMIC Operating Companies work with clients to evaluate the lifecycle consequences of their projects and, where possible, deliver
solutions that add value in the long-term.
Integrating commissioning in the delivery program
CPB Contractors and UGL secured a A$127 million contract for the delivery of a 140ML per day Nutrient Removal Plant (NRP) at
Melbourne Water’s Western Treatment Plant. Clients increasingly consider commissioning and performance reliability in their
evaluation, so the NRP team’s tender demonstrated a whole-of-life solution including the proposed commissioning approach –
detailing how the project would complete construction activities and bring the various process systems online.
Community investment
CIMIC seeks to deliver shared value for the communities impacted by our activities. We undertake to support local charities and
community groups impacted by our projects and services, and to facilitate employee volunteering and charity support. For the
community, our initiatives should make a tangible, genuine and lasting improvement to the quality of people’s lives. In 2017, CIMIC
directly invested $500,000 in corporate community investment programs, up from $400,000 in 2016.
Each Operating Company develops its own program of which underpins their social licence to operate and empowers our clients to
achieve their community objectives. Some examples of supported projects in 2017 include:
Community investment at UGL
At the Gladstone Liquefied Natural Gas (GLNG) project, UGL, in partnership with our client Santos is sponsoring Life Education’s
Gladstone Regional program. The program delivers practical programs helping Australian children make safer and healthier life choices.
UGL’s GLNG and Australia Pacific Liquefied Natural Gas (APLNG) project teams supported the Aboriginal Rugby League Carnival helping
Queensland based Aboriginal Rugby League teams attend the event.
The team at UGL Viva Geelong tied its fundraising for the Very Special Kids charity to its Goal Zero safety campaign during their
Turnaround period. The team achieved 55 out of 59 days at Goal Zero. Very Special Kids cares for more than 900 children across
Victoria with life-threatening conditions by providing a children’s hospice and professional family support services.
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WestConnex M4 East supports the Leukaemia Foundation and the Sydney Children's Hospital Foundation
CPB Contractors’ team on Sydney’s WestConnex M4 East have been recognised for their fund raising efforts in the World’s Greatest
Shave which raises money for the Leukaemia Foundation. The M4 East team raised $53,000 for this worthy cause which made them the
5th largest fund raiser in New South Wales and the 10th largest nationally. This was a great effort by the team, their client, joint venture
partners and many other friends and family connected to the project.
The WestConnex M4 East Northcote tunnel team generously donated $20,000 to the Sydney Children’s Hospital Foundation after
receiving the prize money as part of a supplier competition. Sydney Children’s Hospital Foundation CEO Nicola Stokes said, “thank you
to the WestConnex M4 East Tunnel team for thinking of sick kids and graciously donating their prize winnings. This kind and generous
act will make such a positive difference to our young patients’ stay in our Hospital.”
Supporting bridge building in Rwanda
In 2017, CIMIC again sent two volunteers from the Group (including a 2016 civil engineering graduate) to build an 80-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 some 5,000 people who live nearby to avoid a dangerous crossing
which, during the rainy season, cuts them off from work, markets or schools.
Respect local cultures and peoples
CIMIC is committed to respecting local cultures and indigenous peoples, and supporting opportunities to aid national development in
overseas markets.
Thiess has a Reconciliation Action Plan (RAP) which reaffirms that Operating Company’s commitment to enriching and empowering the
lives of Aboriginal and Torres Strait Islander people, and building greater understanding of and respect for culture. The objectives of the
RAP are:
building relationships – to build authentic, long-term relationships with Aboriginal and Torres Strait Islander people and
communities to support positive outcomes;
fostering respect – to create a supportive environment built on mutual respect for every member of Thiess’ team and for the
people who work with us:
creating opportunities – to create a work environment and culture that best supports the growth of Aboriginal and Torres Strait
Islander people and Indigenous businesses; and
tracking progress and reporting – to develop and deliver an action-oriented, evidence-based plan that strengthens Thiess’
strategic approach to supporting Aboriginal and Torres Strait Islander people.
The RAP includes a range of actions, some specific targets, timelines for implementation and identifies the responsible person. Thiess’
RAP has received endorsement from Reconciliation Australia, the national expert body on reconciliation in Australia.
CPB Contractors is committed to diversity and social inclusion, and to providing people experiencing disadvantage with access to
employment and training opportunities in the regions where they operate. The focus is on providing employment and training
opportunities to Indigenous people, unemployed youth, people with disabilities and refugees.
NAIDOC celebrations at RAAF Williamtown air base
At the RAAF Williamtown Redevelopment Stage 2 project, the CPB Contractors team recently joined with their client, the Australian
Department of Defence (Defence), to celebrate NAIDOC (National Aborigines and Islanders Day Observance Committee) Week. NAIDOC
week is a time to celebrate Aboriginal and Torres Strait Islander history, culture and achievements, and is an opportunity to recognise
the contributions that Indigenous Australians make to our country and our society.
An event at the base featured Indigenous dancers from the local Worimi people from the Hunter Valley region of New South Wales,
along with senior Defence officials. NAIDOC Week 2017 provided project teams an opportunity to learn and experience Indigenous
culture, language and music in line with this year’s theme Our Languages Matter.
CPB Contractors’ aim is to provide direct employment, as well as indirect employment through subcontractors and suppliers, access to
training and upskilling for people experiencing disadvantage, and to build positive and inclusive workplaces through engagement with
the workforce. CPB Contractors seeks to support the social sustainability endeavours and expectations of clients, and works to ensure
intended and agreed outcomes are met at projects.
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WestConnex M4 East supports the Leukaemia Foundation and the Sydney Children's Hospital Foundation
CPB Contractors’ team on Sydney’s WestConnex M4 East have been recognised for their fund raising efforts in the World’s Greatest
Shave which raises money for the Leukaemia Foundation. The M4 East team raised $53,000 for this worthy cause which made them the
5th largest fund raiser in New South Wales and the 10th largest nationally. This was a great effort by the team, their client, joint venture
partners and many other friends and family connected to the project.
Canberra Metro participates in Indigenous ceremony
The Canberra Metro project has participated in a traditional Smoking Ceremony and Welcome Dance performed on behalf of
Indigenous Elders. The Smoking Ceremony was conducted on the Canberra Metro’s Flemington Road construction site, a significant
mid-point location being built by CPB Contractors and their joint venture partner. The PPP project also includes Pacific Partnerships as
an equity investor.
The WestConnex M4 East Northcote tunnel team generously donated $20,000 to the Sydney Children’s Hospital Foundation after
receiving the prize money as part of a supplier competition. Sydney Children’s Hospital Foundation CEO Nicola Stokes said, “thank you
to the WestConnex M4 East Tunnel team for thinking of sick kids and graciously donating their prize winnings. This kind and generous
act will make such a positive difference to our young patients’ stay in our Hospital.”
Supporting bridge building in Rwanda
In 2017, CIMIC again sent two volunteers from the Group (including a 2016 civil engineering graduate) to build an 80-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 some 5,000 people who live nearby to avoid a dangerous crossing
which, during the rainy season, cuts them off from work, markets or schools.
CIMIC is committed to respecting local cultures and indigenous peoples, and supporting opportunities to aid national development in
Respect local cultures and peoples
overseas markets.
Thiess has a Reconciliation Action Plan (RAP) which reaffirms that Operating Company’s commitment to enriching and empowering the
lives of Aboriginal and Torres Strait Islander people, and building greater understanding of and respect for culture. The objectives of the
building relationships – to build authentic, long-term relationships with Aboriginal and Torres Strait Islander people and
fostering respect – to create a supportive environment built on mutual respect for every member of Thiess’ team and for the
creating opportunities – to create a work environment and culture that best supports the growth of Aboriginal and Torres Strait
RAP are:
communities to support positive outcomes;
people who work with us:
Islander people and Indigenous businesses; and
tracking progress and reporting – to develop and deliver an action-oriented, evidence-based plan that strengthens Thiess’
strategic approach to supporting Aboriginal and Torres Strait Islander people.
The RAP includes a range of actions, some specific targets, timelines for implementation and identifies the responsible person. Thiess’
RAP has received endorsement from Reconciliation Australia, the national expert body on reconciliation in Australia.
CPB Contractors is committed to diversity and social inclusion, and to providing people experiencing disadvantage with access to
employment and training opportunities in the regions where they operate. The focus is on providing employment and training
opportunities to Indigenous people, unemployed youth, people with disabilities and refugees.
NAIDOC celebrations at RAAF Williamtown air base
At the RAAF Williamtown Redevelopment Stage 2 project, the CPB Contractors team recently joined with their client, the Australian
Department of Defence (Defence), to celebrate NAIDOC (National Aborigines and Islanders Day Observance Committee) Week. NAIDOC
week is a time to celebrate Aboriginal and Torres Strait Islander history, culture and achievements, and is an opportunity to recognise
the contributions that Indigenous Australians make to our country and our society.
An event at the base featured Indigenous dancers from the local Worimi people from the Hunter Valley region of New South Wales,
along with senior Defence officials. NAIDOC Week 2017 provided project teams an opportunity to learn and experience Indigenous
culture, language and music in line with this year’s theme Our Languages Matter.
CPB Contractors’ aim is to provide direct employment, as well as indirect employment through subcontractors and suppliers, access to
training and upskilling for people experiencing disadvantage, and to build positive and inclusive workplaces through engagement with
the workforce. CPB Contractors seeks to support the social sustainability endeavours and expectations of clients, and works to ensure
intended and agreed outcomes are met at projects.
A Smoking Ceremony is one of the primary ancient rituals performed by Aboriginal and Torres Strait Islander people. The Smoking
Ceremony is a welcoming and cleansing process, while the welcome dance is a cleaning of the air and a blessing. The tradition has been
passed down through successive generations with evidence of the practice in ancient times suggested from carbon dating at
ceremonial sites. The Smoking Ceremony was also a means to bring together disputing parties, settle conflicts and to restore harmony
in the community.
The Group has not identified any incidents of violations involving the rights of Indigenous peoples during the reporting period.
Use of local employees and businesses
CIMIC Operating Companies seek opportunities for the engagement of local employees and businesses where possible and give
preference to nationals over expatriates when practical. This approach is reflected in the Sustainability Policy and the Procurement
Policy which encourage indigenous and local community involvement.
Developing a local workforce is building a legacy in PNG
In Port Moresby in Papua New Guinea (PNG), CPB Contractors is delivering the unique Asia Pacific Economic Cooperation (APEC) Haus
building project for Oil Search in time to host APEC delegates for the annual Economic Leaders’ Meeting in November 2018. CPB
Contractors has again turned to a proven national workforce that has delivered a number of projects including the National Football
Stadium project.
The team, comprising approximately 75-80% local employees, continue to work with CPB Contractors’ expert supervisors to deliver the
highest quality of projects in PNG, on time and on budget. Through on-the-job training and skills development, utilizing local
subcontractors and suppliers, and giving back to the communities in which they work, CPB Contractors is building a very positive social
legacy in PNG.
OUTLOOK AND FUTURE PLANS
We are committed to acting with integrity and doing the right thing, regardless of where we operate. In 2018, we plan to:
continue to reinforce the Code through senior management roadshows and presentations;
review foreshadowed changes to legislation relating to Whistleblowers and Modern Slavery to ensure CIMIC Group’s policies and
procedures meet all requirements and are fit for purpose; and
maintain our focus on Code training for all employees.
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CULTURE
OUR APPROACH
CIMIC understands the importance of a culture that encourages a can‐do attitude, and harnesses the talents of our people to deliver
results. Our teams comprise industry leaders who contribute their skills, knowledge and experience each day to the benefit of our
clients, project partners and wider stakeholders. We drive results, encourage innovation, celebrate diversity, and recognise and reward
excellence. We invest in our people and back them every step of the way.
Our culture related sustainability commitments are: to provide supportive workplaces; to train and develop our people; to encourage
diversity; and to reward performance. 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. We believe this assists us to foster a culture of high performance.
Provide supportive workplaces
Measures in place
Workplace Behaviour Policy; Anti‐Bullying, Harassment and Discrimination Policy; Diversity
Actions taken during 2017
Performance
Train and develop people
Measures in place
Actions taken during 2017
Performance
Encourage diversity
Measures in place
Actions taken during 2017
& Inclusion Policy; Flexible Working Policy; Parental Leave Policy
strong safety management commitment which is embedded in the Group’s principles
employee value proposition that aims to provide safe, rewarding and fulfilling careers for
our people
conducted a neuro‐diversity program on inclusion of people with Autism Spectrum
Disorder in our workforce
undertook anonymous, Group‐wide employee survey of around 12,500 staff
CIMIC Group recognised by LinkedIn as 7th best place to work in Australia
engagement survey results showed that 69% of employees ‘would recommend my
company as a great place to work’ and 72% said they are ‘proud to work for my company’
comprehensive learning and development plans in place across all Operating Companies
Professional Development Policy
Economic Information System (EIS) on‐line training modules rolled out
contract management training delivered to 825 project related employees
provided 128 (90 in 2016) intern/vacation positions which placed students into short‐term
programs with CPB Contractors, Thiess, Sedgman, EIC Activities and UGL
regularly cooperated with schools and universities through active scholarships with
universities, student presentation and technical lectures, career support
presented at a number of university career fairs including: University of Technology
Sydney, Monash University, University of Queensland, University of Newcastle, James Cook
University, University of NSW, Queensland University of Technology, as well as the large
multi‐university career fairs ‘Big Meet’ – in Sydney, Brisbane, Melbourne and Perth
utilised GradConnection43 online social media platforms, via Facebook and Instagram, to
promote the CIMIC Group Graduate program
Graduate and intern roles advertised on university Career Hub pages
Foundation (Graduates) training topics implemented in 2017: applied
technical/engineering across multiple disciplines (civil, mining, electrical and mechanical)
contracts, procurement, finance, client, risk, diversity/cultural awareness, safety and
wellbeing
conducted senior leadership ‘Program One’ workshops across all Australian key states and
Hong Kong for 550 participants
Group Frontline Leadership program implemented in Australia, Asia, Canada, Chile
launched a Group‐wide CIMIC ‘Jobs Board’
increased the number of graduates to 174 (137 in 2016)44
recognised by AAGE45 as top graduate employer 2017
recognised as a Top 100 Graduate Employer of 2017 by GradConnection
Diversity and Inclusion Policy; Anti‐Bullying, Harassment and Discrimination Policy
Diversity & Inclusion Executive Council, chaired by CEO and with all Operating Company
Managing Directors, Chief Financial Officer and Chief HR Officer as members
launched WiSE Program (a female mentoring program) with University of Western Sydney
launched Equal Employment Opportunity Discrimination, Anti‐Bullying, Harassment &
Discrimination training
launched Unconscious Bias training
43 GradConnection is a platform linking students and graduates to employment opportunities annually, in conjunction with The Australian Financial
Review, GradConnection announces the Top100 most popular graduate employers.
44 Including UGL and Sedgman participants
45 Australian Association of Graduate Employers ‐ the peak industry body representing organisations that recruit and develop Australian graduates.
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conducted female employee round table discussions and addressed opportunities and
barriers to attraction and retention raised
acknowledged International Women’s Day across Australian construction business to raise
awareness of gender diversity issues
Thiess launched new diversity and inclusion vision: ‘everyone matters always’
Reconciliation Australia endorsed Thiess’ 2017‐2020 Reconciliation Action Plan
conducted Human Rights Impact Assessment pilot in November/December 2017 in India
continued to report workforce composition under the Workplace Gender Equality Act 2012
(Cth)
4,587 employees undertook face‐to‐face Equal Employment Opportunity, Discrimination,
Bullying and Harassment training
Remuneration Policy ‐ promoting individual accountability and aims to fairly motivate,
recognise and fairly compensate without bias
incentive schemes linked to creation of sustainable returns for shareholders
conducted Group‐wide pay equity review and implemented remediation actions
continued to refine the Group job level framework and remuneration ranges
rolled out simplified, options based, long‐term incentive scheme for senior executives
aligned with share price growth for the Group
continued to review performance management approach
all remuneration increases and bonuses have a recent performance review rating of ‘meets
expectations or above’ as a key input
made payments to individual female employees where unexplained pay gaps were
identified
Performance
Reward performance
Measures in place
Actions taken during 2017
Performance
Actions taken during 2017
Economic Information System (EIS) on‐line training modules rolled out
comprehensive learning and development plans in place across all Operating Companies
Professional Development Policy
Employee details
As at 31 December 2017, the Group directly employed 37,779 people, 14,904 in Australia and 22,875 in international operations, up
from 28,535 last year (8,148 in Australia and 20,387 in international operations).
Direct employees (#)
Group
2017
37,779
2016
35,394
Based on a share of the employees in our investments as follows – HLG Contracting (45%), Ventia (46.96%) and Devine (59.11%) ‐ our
total number of employees is 51,001, up from 50,874 last year.
PROVIDE SUPPORTIVE WORKPLACES
CIMIC is committed to providing workplaces where people are supported, are free from harassment and bullying,
and are encouraged to reach their potential. We encourage innovation and provide support for new initiatives, and
support a culture where, rather than punish, we learn from failures.
In 2017, the CIMIC Group was named in the top 10 best companies in Australia for attracting and keeping top talent. Coming in at
number seven on LinkedIn’s Top Companies list, the Group outperformed our competitors to be the only company in its sectors to
secure a top spot. This means that for the second year running, CPB Contractors is once again the only construction company to be in
LinkedIn’s top 10 ‘best companies’ rankings.
Visible leadership
We encourage leaders to provide open, honest, visible leadership and to demonstrate alignment with our mission and principles.
CIMIC continued to build on its Group‐wide leadership framework ‘Program One’ which was launched in 2016. Senior leadership
workshops were held for 550 participants across all Australian key states and Hong Kong and the Group Frontline Leadership program
was implemented in Australia, Asia, Canada and Chile.
CIMIC launched the Group’s first new internal newsletter ‘Pulse’ in 2016 to engage our global workforce and to deliver consistent
messaging and communication. Pulse has continued to be used in 2017 as a forum for bringing news to our employees across our more
than 430 projects, to share ideas and information, and as means of communication for our leaders. Pulse is an important initiative in
creating a unified culture across the Group.
In 2017, CIMIC introduced an anonymous, Group‐wide employee survey of staff to better understand the experience of our people in
the workplace. The survey of around 12,500 people had an 80% participation rate with almost 9,500 completing the survey, providing
some 22,000 comments. The participants represent around 25% of total direct employees.
The survey asked questions about safety, people’s roles, communication, manager support, leadership, development opportunities,
teamwork, culture and their confidence in the company. 88% of respondents believe the Group is committed to the health and safety
of employees, and a similar percentage report that health and safety is a priority for their manager. Other response highlights include:
96% of respondents saying, “If I notice a workplace hazard I would stop and take action”;
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CULTURE
OUR APPROACH
CIMIC understands the importance of a culture that encourages a can‐do attitude, and harnesses the talents of our people to deliver
results. Our teams comprise industry leaders who contribute their skills, knowledge and experience each day to the benefit of our
clients, project partners and wider stakeholders. We drive results, encourage innovation, celebrate diversity, and recognise and reward
excellence. We invest in our people and back them every step of the way.
Our culture related sustainability commitments are: to provide supportive workplaces; to train and develop our people; to encourage
diversity; and to reward performance. 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. We believe this assists us to foster a culture of high performance.
Provide supportive workplaces
Measures in place
Workplace Behaviour Policy; Anti‐Bullying, Harassment and Discrimination Policy; Diversity
& Inclusion Policy; Flexible Working Policy; Parental Leave Policy
strong safety management commitment which is embedded in the Group’s principles
employee value proposition that aims to provide safe, rewarding and fulfilling careers for
Actions taken during 2017
conducted a neuro‐diversity program on inclusion of people with Autism Spectrum
our people
Disorder in our workforce
undertook anonymous, Group‐wide employee survey of around 12,500 staff
CIMIC Group recognised by LinkedIn as 7th best place to work in Australia
engagement survey results showed that 69% of employees ‘would recommend my
company as a great place to work’ and 72% said they are ‘proud to work for my company’
Performance
Train and develop people
Measures in place
contract management training delivered to 825 project related employees
provided 128 (90 in 2016) intern/vacation positions which placed students into short‐term
programs with CPB Contractors, Thiess, Sedgman, EIC Activities and UGL
regularly cooperated with schools and universities through active scholarships with
universities, student presentation and technical lectures, career support
presented at a number of university career fairs including: University of Technology
Sydney, Monash University, University of Queensland, University of Newcastle, James Cook
University, University of NSW, Queensland University of Technology, as well as the large
multi‐university career fairs ‘Big Meet’ – in Sydney, Brisbane, Melbourne and Perth
utilised GradConnection43 online social media platforms, via Facebook and Instagram, to
promote the CIMIC Group Graduate program
Graduate and intern roles advertised on university Career Hub pages
Foundation (Graduates) training topics implemented in 2017: applied
technical/engineering across multiple disciplines (civil, mining, electrical and mechanical)
contracts, procurement, finance, client, risk, diversity/cultural awareness, safety and
wellbeing
conducted senior leadership ‘Program One’ workshops across all Australian key states and
Hong Kong for 550 participants
Group Frontline Leadership program implemented in Australia, Asia, Canada, Chile
launched a Group‐wide CIMIC ‘Jobs Board’
increased the number of graduates to 174 (137 in 2016)44
recognised by AAGE45 as top graduate employer 2017
recognised as a Top 100 Graduate Employer of 2017 by GradConnection
Diversity and Inclusion Policy; Anti‐Bullying, Harassment and Discrimination Policy
Diversity & Inclusion Executive Council, chaired by CEO and with all Operating Company
Managing Directors, Chief Financial Officer and Chief HR Officer as members
Performance
Encourage diversity
Measures in place
Actions taken during 2017
launched WiSE Program (a female mentoring program) with University of Western Sydney
launched Equal Employment Opportunity Discrimination, Anti‐Bullying, Harassment &
Discrimination training
launched Unconscious Bias training
43 GradConnection is a platform linking students and graduates to employment opportunities annually, in conjunction with The Australian Financial
Review, GradConnection announces the Top100 most popular graduate employers.
44 Including UGL and Sedgman participants
45 Australian Association of Graduate Employers ‐ the peak industry body representing organisations that recruit and develop Australian graduates.
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95% said “I understand my health and safety responsibilities”;
94% of respondents acknowledged that “I understand how to identify hazards in the workplace”;
90% answered positively that “I have the training to know how to protect myself in the workplace”;
72% said “I am proud to work for my company”;
70% responded favourably to the question, “My manager is a great role model (demonstrates CIMIC Group principles: Integrity,
Accountability, Innovation, Delivery) for employees”; and
69% answered that “I would recommend my company as a great place to work”.
The feedback is helping us to continue improving how we support our people and work together, so we can provide safe rewarding
careers and ensure our people can perform at their best. The Group plans to survey wages employees in 2018.
Freedom from harassment
The Group is committed to providing a supportive and positive working environment where employees are treated fairly and with
respect. 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. This commitment is enshrined in the Code of Conduct, Diversity &
Inclusion Policy, Anti-Bullying, Harassment and Discrimination Policy, and Workplace Behaviour Policy.
In 2017, CIMIC conducted a neuro-diversity program on inclusion of people with autism spectrum disorder in our workforce. Neuro-
diverse individuals on the autism spectrum possess in-demand skills especially aligned with STEM subjects (Science, Technology,
Engineering and Mathematics). When trialled in CPB Contractors, the experience has seen benefits including; more inclusive work
places, reduced sick leave, increased engagement and retention, and participants have become brand ambassadors. Workplace
adjustments are minimal and are aligned with all employee expectations.
Freedom of association and collective bargaining
We recognise the right of employees to freely associate and collectively bargain, and aim to fairly, consultatively and constructively
engage with workers, union representatives and regulators. Our Operating Companies are responsible, on an individual basis, for
managing workplace relations. This approach to employee relations helps to ensure that any matters that arise on a project can be
quickly identified and resolved in the field, by our dedicated, market-focused businesses.
Flexible industrial relations on Canberra Light Rail project delivers value for money
The Canberra Light Rail project is a first for the Australian Capital Territory and consists of a 12km track with 13 stops, including a
terminus at each end route.
Working with the Canberra Metro partners, Pacific Partnerships is providing equity funding and project leadership as part of the special
purpose vehicle. CPB Contractors is a joint venture partner delivering the design and construction. UGL is a joint venture partner that
will deliver operations and maintenance (O&M) services for 20 years.
The project’s O&M solution took an innovative approach to resourcing and introduced a new ‘multi-skilled’ driver model. Selected
drivers will be trained in both driving and customer service roles. This provides valuable flexibility. Drivers performing customer
services can be reallocated to driver duties if the rostered driver is unavailable. The solution, developed in consultation with the
relevant union, increases utilisation and eliminates the need to maintain a pool of stand-by drivers, reducing labour costs.
In Australia, approximately 50% of the Group’s employees are covered by collective bargaining agreements; 28% at CPB Contractors,
69% at Thiess, 19% at Sedgman and 62% at UGL.
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.
Human rights and forced/child labour
CIMIC is committed to abiding by the principles of the United Nations Global Compact which explicitly identify, amongst other things
that business should:
support and respect the protection of internationally proclaimed human rights;
make sure that they are not complicit in human rights abuses;
uphold the freedom of association and the effective recognition of the right to collective bargaining;
uphold the elimination of all forms of forced and compulsory labour;
uphold the effective abolition of child labour; and
uphold the elimination of discrimination in respect of employment and occupation.
CIMIC rejects all forms of forced labour and will not tolerate child labour or any form of exploitation of children or young people. The
Group will comply with the International Labour Organisation (ILO) with respect to under-age workers. 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.
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95% said “I understand my health and safety responsibilities”;
94% of respondents acknowledged that “I understand how to identify hazards in the workplace”;
90% answered positively that “I have the training to know how to protect myself in the workplace”;
72% said “I am proud to work for my company”;
70% responded favourably to the question, “My manager is a great role model (demonstrates CIMIC Group principles: Integrity,
Accountability, Innovation, Delivery) for employees”; and
69% answered that “I would recommend my company as a great place to work”.
The feedback is helping us to continue improving how we support our people and work together, so we can provide safe rewarding
careers and ensure our people can perform at their best. The Group plans to survey wages employees in 2018.
Freedom from harassment
The Group is committed to providing a supportive and positive working environment where employees are treated fairly and with
respect. 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. This commitment is enshrined in the Code of Conduct, Diversity &
Inclusion Policy, Anti-Bullying, Harassment and Discrimination Policy, and Workplace Behaviour Policy.
In 2017, CIMIC conducted a neuro-diversity program on inclusion of people with autism spectrum disorder in our workforce. Neuro-
diverse individuals on the autism spectrum possess in-demand skills especially aligned with STEM subjects (Science, Technology,
Engineering and Mathematics). When trialled in CPB Contractors, the experience has seen benefits including; more inclusive work
places, reduced sick leave, increased engagement and retention, and participants have become brand ambassadors. Workplace
adjustments are minimal and are aligned with all employee expectations.
Freedom of association and collective bargaining
We recognise the right of employees to freely associate and collectively bargain, and aim to fairly, consultatively and constructively
engage with workers, union representatives and regulators. Our Operating Companies are responsible, on an individual basis, for
managing workplace relations. This approach to employee relations helps to ensure that any matters that arise on a project can be
quickly identified and resolved in the field, by our dedicated, market-focused businesses.
Flexible industrial relations on Canberra Light Rail project delivers value for money
The Canberra Light Rail project is a first for the Australian Capital Territory and consists of a 12km track with 13 stops, including a
terminus at each end route.
Working with the Canberra Metro partners, Pacific Partnerships is providing equity funding and project leadership as part of the special
purpose vehicle. CPB Contractors is a joint venture partner delivering the design and construction. UGL is a joint venture partner that
will deliver operations and maintenance (O&M) services for 20 years.
The project’s O&M solution took an innovative approach to resourcing and introduced a new ‘multi-skilled’ driver model. Selected
drivers will be trained in both driving and customer service roles. This provides valuable flexibility. Drivers performing customer
services can be reallocated to driver duties if the rostered driver is unavailable. The solution, developed in consultation with the
relevant union, increases utilisation and eliminates the need to maintain a pool of stand-by drivers, reducing labour costs.
In Australia, approximately 50% of the Group’s employees are covered by collective bargaining agreements; 28% at CPB Contractors,
69% at Thiess, 19% at Sedgman and 62% at UGL.
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.
CIMIC is committed to abiding by the principles of the United Nations Global Compact which explicitly identify, amongst other things
Human rights and forced/child labour
that business should:
support and respect the protection of internationally proclaimed human rights;
make sure that they are not complicit in human rights abuses;
uphold the freedom of association and the effective recognition of the right to collective bargaining;
uphold the elimination of all forms of forced and compulsory labour;
uphold the effective abolition of child labour; and
uphold the elimination of discrimination in respect of employment and occupation.
CIMIC rejects all forms of forced labour and will not tolerate child labour or any form of exploitation of children or young people. The
Group will comply with the International Labour Organisation (ILO) with respect to under-age workers. 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.
110
These commitments are enshrined in the Code of Conduct and supported by the Group’s Dealing with Third Parties Procedure which
requires, amongst other things, for specific due diligence to be undertaken regarding slavery, forced or child labour. Third parties are
required to sign a declaration asking whether “slavery, forced or child labour has 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?”
CIMIC is closely monitoring the Australian Government's proposed model for a Modern Slavery in Supply Chains Reporting
Requirement and will comply with whatever legislative arrangements are put in place.
In 2017, CIMIC conducted a pilot Human Rights Impact Assessment (HRIA) in our Leighton India construction business. With its more
than 9,900 direct employees as at 31 December 2017, Leighton India represents ~26% of the Group’s direct workforce.
The aim of the pilot was to develop greater awareness around human rights and to assess the impact of our operations on a range of
areas relating to human rights. These areas included: conditions of employment, including worker accommodation; relations with
suppliers and contractors; workplace health and safety; and management of risks around forced labour, child labour and young
workers, non-discrimination and freedom of association.
The HRIA identified a number of areas where Leighton India is providing employment conditions beyond what is common industry
practice and/or required by local legislation, including safety, training of unskilled workers and worker medical services. The HRIA also
identified initiatives that will assist in the prevention of employment of workers under the age of 18, improvement in site security, and
accuracy of employee payments, such as facial recognition technology linked to site entry.
Learnings from the pilot will used as a basis for an HRIA of the Group’s operations in Indonesia in 2018.
Encourage innovation and support new initiatives
CIMIC encourages innovation and provides support for new initiatives. We seek to develop a culture whereby our people learn from
their mistakes, rather than punish any failures.
ALFA asks the simple questions
ALFA – or Ask, Listen, Find out and Act – is a Thiess framework which focuses on uncovering site-specific difficulties and inefficiencies
faced every day while completing work. Beginning in 2013, the improvement initiative engages managers and teams to identify difficult
work situations and discover opportunities for improvements, particularly around safety.
ALFA identifies the main tasks people perform and how they interact across work functions, observing the communication channels
used. Teams participate in anonymous interviews where they share their challenges and observations. Through ALFA, an improvement
team is able to analyse the data collected from interviews, prioritising the issues and the solutions people use in everyday activities.
At Thiess’ Australian operations, ALFA revealed improvements to maintenance warehouse workflow, workforce skill and training
registers, mine road maintenance, and two-way radio communication.
Digital feedback kiosks engage rail teams
Inefficient communication processes at the UGL Unipart rail maintenance facility in Sydney were a leading cause of employee
disengagement. The UGL team developed digital feedback kiosks to provide accessible, real-time and two-way communication across
the large site. Positioned at different locations on-site, these kiosks have improved employee engagement and facilitated a dramatic
increase of information availability, cross-functional consultation, and the identification and reporting of on-site risks and hazards.
TRAIN AND DEVELOP PEOPLE
CIMIC invest in the training and development of people to equip our workforce for the future. We must ensure that
the knowledge and expertise of our people grows so that we can maintain our position as a leader in the industries
in which we operate. To do this we identify skill gaps, train and develop our people, and share knowledge across the Company. In doing
so, we improve employee attraction, retention and engagement which ensures we have the skills to execute on our strategy.
Investing in training
CIMIC invests in skills-based, vocational and technical training that supports our business requirements and the development of our
employees. Investing in learning and development is imperative, CIMIC values its employees and aims to contribute on an ongoing
basis to each employees' learning and development journey.
CIMIC has developed a Group-wide ‘Capability Framework’ 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 training, and health
and safety programs, to support our business requirements.
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Innovation facilitates training of road-header operators
The WestConnex M4 East tunnelling project in Sydney, being delivered by a joint venture including CPB Contractors, has faced a
shortage of skilled road-header operators given the amount of tunnel work currently underway in Australia. Road-headers are a piece
of excavating equipment consisting of a boom-mounted cutting head mounted to a tractor or crawler which moves the entire machine
forward into the rock face.
Traditional road-headers have a single cab that precluded on-the-job training. CPB Contractors developed an innovative new cabin
design with a road-header manufacturer. The fully equipped dual operator cabin enables the training of new operators in a safe, real-
world environment with an experienced operator, without interrupting tight program timelines. Additional safety improvements have
been incorporated into the new design which provide improved dust filtration system and better noise attenuation.
Across the Group, we delivered 713,377 hours of training in 2017 which equates to nearly 19 hours per annum for each direct
employee.
Training courses included:
EIS46 online training modules covering subjects such as; forecast at completion, revenue, billings and collections, revenue, cost,
profit & loss, and financial position;
equal employment opportunity discrimination;
anti-bullying, harassment & discrimination;
unconscious bias training;
contract management; and
foundation topics (for Graduates) which included: applied technical/engineering across multiple disciplines (civil, mining, electrical
and mechanical), contracts, procurement, finance, client, risk, diversity/cultural awareness, and safety & wellbeing.
In addition, through EIC Activities, 31 applied technical training webinars were delivered (up from 10 in 2016) with 1000+ viewings.
On-the-job work experience at the Gold Coast Light Rail project
On the Gold Coast Light Rail Stage 2, CPB Contractors engaged three students from a local high school to take part in on-the-job work
experience. The innovative Constructive Kids’ Traineeships are offered by the project with strong support from Southport State High
School. The program is designed for students who intend to pursue a career in the civil construction industry and once complete they
will receive a Certificate II in Civil Construction.
The year 11 students are completing a 12-month school based traineeship with the project and graduated in August 2017. The
traineeship has provided an excellent opportunity for the students to gain invaluable ‘on-the-job’ skills that could put them ahead of
the game for employment opportunities.
Invest in future leaders
CIMIC invests in its future leaders by recruiting and providing graduates with exposure to a global organisation across multiple
industries. CIMIC manages a Group-wide, two-year Graduate Program during which graduates participate in structured development
days providing in-depth information on key areas of the business.
The 2017 intake of graduates commenced with the Group in February, with an induction held in Sydney. This year, 174 graduates (up
from 137 in 2016), 136 males and 38 females, commenced with CPB Contractors, Leighton Asia, Broad Construction, Thiess, Sedgman,
UGL and EIC Activities, with opportunity for exposure to Pacific Partnerships and CIMIC. The program operates globally with graduates
in New Zealand, Hong Kong, Botswana, Chile and Indonesia. In 2018 the program will further expand into Canada and Mongolia.
Total graduates, trainees and apprentices employed at end of 2017 (#)
Graduates
Trainees and apprentices
Male
189
159
Female
56
36
46 EIS is a set of processes, business rules, tools and standardised reports for the management, control, and reporting of key project activities, revenue,
cost, margin and working capital.
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
Innovation facilitates training of road-header operators
The WestConnex M4 East tunnelling project in Sydney, being delivered by a joint venture including CPB Contractors, has faced a
shortage of skilled road-header operators given the amount of tunnel work currently underway in Australia. Road-headers are a piece
of excavating equipment consisting of a boom-mounted cutting head mounted to a tractor or crawler which moves the entire machine
forward into the rock face.
Leighton Asia investing in future talent
To bring the best young talent on board, Leighton Asia’s recruitment team in Hong Kong has gone the extra mile to secure a sustainable
pipeline of talent for their business. On top of delivering annual career talks and promotions in various universities, and hiring through
normal application procedures, Leighton Asia has taken the opportunity to secure talent at an early stage through a Summer Internship
Program.
Traditional road-headers have a single cab that precluded on-the-job training. CPB Contractors developed an innovative new cabin
design with a road-header manufacturer. The fully equipped dual operator cabin enables the training of new operators in a safe, real-
world environment with an experienced operator, without interrupting tight program timelines. Additional safety improvements have
been incorporated into the new design which provide improved dust filtration system and better noise attenuation.
Across the Group, we delivered 713,377 hours of training in 2017 which equates to nearly 19 hours per annum for each direct
EIS46 online training modules covering subjects such as; forecast at completion, revenue, billings and collections, revenue, cost,
employee.
Training courses included:
profit & loss, and financial position;
equal employment opportunity discrimination;
anti-bullying, harassment & discrimination;
unconscious bias training;
contract management; and
foundation topics (for Graduates) which included: applied technical/engineering across multiple disciplines (civil, mining, electrical
and mechanical), contracts, procurement, finance, client, risk, diversity/cultural awareness, and safety & wellbeing.
In addition, through EIC Activities, 31 applied technical training webinars were delivered (up from 10 in 2016) with 1000+ viewings.
On-the-job work experience at the Gold Coast Light Rail project
On the Gold Coast Light Rail Stage 2, CPB Contractors engaged three students from a local high school to take part in on-the-job work
experience. The innovative Constructive Kids’ Traineeships are offered by the project with strong support from Southport State High
School. The program is designed for students who intend to pursue a career in the civil construction industry and once complete they
will receive a Certificate II in Civil Construction.
The year 11 students are completing a 12-month school based traineeship with the project and graduated in August 2017. The
traineeship has provided an excellent opportunity for the students to gain invaluable ‘on-the-job’ skills that could put them ahead of
the game for employment opportunities.
Invest in future leaders
CIMIC invests in its future leaders by recruiting and providing graduates with exposure to a global organisation across multiple
industries. CIMIC manages a Group-wide, two-year Graduate Program during which graduates participate in structured development
days providing in-depth information on key areas of the business.
The 2017 intake of graduates commenced with the Group in February, with an induction held in Sydney. This year, 174 graduates (up
from 137 in 2016), 136 males and 38 females, commenced with CPB Contractors, Leighton Asia, Broad Construction, Thiess, Sedgman,
UGL and EIC Activities, with opportunity for exposure to Pacific Partnerships and CIMIC. The program operates globally with graduates
in New Zealand, Hong Kong, Botswana, Chile and Indonesia. In 2018 the program will further expand into Canada and Mongolia.
Total graduates, trainees and apprentices employed at end of 2017 (#)
Graduates
Trainees and apprentices
Male
189
159
Female
56
36
Since 2015, high performers in the program have been offered positions in the Graduate Trainee Program upon graduation. This
enables Leighton Asia to identify potential talent at an early stage and to stay ahead of the curve in a competitive market.
75% of the high performers from Leighton Asia’s 2015 Summer Intern Program were employed as Graduate Trainees after graduation.
All of the Trainees are still working at Leighton Asia. In 2017, the team employed around 50% of high performers from the 2016
Summer Intern Program, which meet around half of Leighton Asia’s demand for young talent in 2017.
CIMIC Group is also involved in range of other university focused programs that aim to equip our workforce for the future. These
include:
participation in the WiSE (Women in Science and Engineering) Program with University of Western Sydney in a mentoring capacity
offering advice, information and networking opportunities for students;
regularly cooperating with schools and universities through active scholarships with universities, student presentation and technical
lectures and career support;
participating in a number of university career fairs 2017 including: University of Technology Sydney, Monash University, University
of Queensland, University of Newcastle, James Cook University, University of NSW, Queensland University of Technology, as well as
the large multi-university career fairs ‘Big Meet’ – in Sydney, Brisbane, Melbourne and Perth;
utilising GradConnection online social media platforms, via Facebook and Instagram, to promote the CIMIC Group Graduate
program; and
advertising graduate and intern roles on university Career Hub pages.
In 2017, a survey of over 2,500 graduates ranked CIMIC as the 66th top graduate employer. The Australian Association of Graduate
Employers survey recognises those organisations which provide the most positive experience for their new graduates as determined by
the graduates themselves. CIMIC also placed 52nd in GradConnection’s Top100 Most Popular Graduate Employers.
Inspiring the next generation of engineers
The Transmission Gully project team in New Zealand were proud to be involved in the 2017 IPENZ47 Week of Engineering, which ran
from 31 July to 5 August. The Week of Engineering featured a series of events, held across the country, aimed at inspiring and
informing young people interested in pursuing a career in engineering.
In one of the events, a group of local Porirua College Year 12 and 13 students spent the day touring the Transmission Gully project site
and talking with CPB Contractors’ civil and structural engineers about what led them into their career choice and what it means to
them to be an engineer. CPB Contractors also took part in the successful Engineering Expo held at Te Papa in August.
In 2017, Thiess offered university students in Australia scholarship opportunities in: mining engineering, women in engineering, and to
Aboriginal and Torres Strait Islanders. These scholarships support students through their studies and offer them an opportunity to
launch their mining career.
Thiess also offers a two-week vacation program aimed at providing real on-the-job experience in a structured environment. They also
have the opportunity to work on-site and experience living in remote locations, build relationships and network with industry contacts
early in their career, and receive the opportunity to be fast-tracked into the CIMIC Group Graduate Program.
During 2017, CIMIC conducted senior leadership ‘Program One’ workshops across all Australian key states and Hong Kong for 550
participants. The Group’s Frontline Leadership program was also implemented in Australia, Asia, Canada and Chile.
The Group conducted talent reviews and succession planning for critical roles across all Operating companies in October 2017. The
outcomes of these reviews will be used for development planning in 2018.
46 EIS is a set of processes, business rules, tools and standardised reports for the management, control, and reporting of key project activities, revenue,
47 Engineering New Zealand - formerly known as IPENZ – is a non-profit membership organisation, is New Zealand’s professional body for engineers,
dedicated to promoting the interests of engineers and engineering.
cost, margin and working capital.
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
Recruit internally
CIMIC seeks to recruit internally and provide existing staff with opportunities to fill vacancies before looking externally. We believe that
we have an obligation to develop opportunities for our own people which helps to create a more sustainable workforce. Selection
should be based on competency, experience and qualifications, and assessed against bona fide and defined job requirements.
Employment processes and decisions should be free from bias and discrimination.
In 2017, we launched a Group‐wide CIMIC ‘Jobs Board’ where employees can search for job opportunities at all of our companies, in
one place. The Jobs Board allows employees to search by company, location and job category, and to set up a targeted job alert which
will send employees an e‐mail when a position becomes available that matches their search criteria.
In 2017, the Group recruited 23,511 new employees, 22,324 male and 1,187 female.
The relatively short term duration of many of the Group’s construction projects and the fixed term employment model of trades and
manual workers, means that comparisons of turnover rates with other industries are not meaningful. CIMIC believes that a more
appropriate turnover rate to use should reflect the departures of only white collar workers (staff).
Voluntary and involuntary departures48 (%) – staff
only
Group
Overall
25.5
Male
19.5
Female
6.0
The turnover rate, across most of the Group’s entities, has remained static or declined markedly since 2016.
The average tenure of our people is 3.4 years (versus 3.1 years in 2016), reflecting the defined duration nature of the Group’s project
activities. However, as the table below shows, the Group has many experienced and long serving employees with management
experience, which includes key operational roles such as project managers, foremen and site superintendents.
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
41.0
21.0
7.3
14.1
4.7
2.6
Female
2.7
2.3
1.2
2.2
0.6
0.3
We recognise and reward the hard work and loyalty of our employees and understand that this is an important and effective motivator
for retention.
ENCOURAGE DIVERSITY
CIMIC recognises that diverse and inclusive teams promote innovation, performance and productivity, and that our
workforces should reflect the diverse communities in which we work. Our diversity and inclusion strategic objectives
are to:
promote and improve female participation in our Group and achieve gender equity, including pay equity;
increase indigenous employment and use of indigenous suppliers in our supply chain;
invest in local employment to ensure the future workforce is reflective of the country in which we operate; and
cultivate an inclusive workplace of fairness and equity which fosters the unique skills and talent of our people.
Our workforce is predominantly made up of permanently employed full time and fixed term employees. Given the project nature of the
much of the Group’s activities, many trade‐related employees such as scaffolders riggers, fitters, steel‐fixers, electricians, etc. are
recruited on fixed terms for construction projects. When the project, or their contribution to the project, is completed they leave for
other opportunities. This skews the Group’s workforce composition to one with a relatively low level of permanent full time workers
compared to many other industries. It should also be noted that the construction and mining industries have, historically, employed
relatively few women. “The construction industry is the most male‐dominated sector in Australia: in 2016 women represent only 12%
of the workforce.”49
Workforce composition (%)
Permanent full time
Permanent part time
Fixed term
Casual
Male
54.9
0.1
29.6
6.0
Female
7.7
0.4
0.7
0.5
48 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.
49 ‘Construction Industry: Demolishing gender structures’, University of New South Wales ‐ Built Environment, Arts & Social Sciences and Centre for
Social Impact, December 2016.
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Female participation and gender equity
CIMIC actively promotes and seeks to improve female participation in our Group and to achieve gender equity, including pay equity.
A key objective is to increase the number of females employed at all levels in CIMIC Group. A focus for CIMIC is to overcome the
challenges associated with the relatively small numbers of women entering the engineering trades and profession. Allied with this
objective is to retain these females once we have attracted them to our company. Furthermore, 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.
CIMIC reported certain gender related information to the Australian Government’s Workplace Gender Equality Agency (WGEA) based
on the year ended 30 June 2017. The 2016/17 WGEA submissions show that, for the larger contracting entities of CPB Contractors,
Thiess, Sedgman and UGL, which have substantial employee numbers, females accounted for around 11-14% of management positions
and 11-19% of non-management positons. While these results reflect the traditionally male dominated nature of the construction and
mining industries, they are broadly encouraging in comparison to the previous reporting period.
Female participation (% of each Operating Company’s workforce)50
Group
2016/17
All
managers
13.5
All non-
managers
15.1
2015/16
All
managers
10.5
All non-
managers
15.0
CIMIC is working hard to close the pay gap and making efforts to ensure gender equity to produce positive change. In 2016, CIMIC
undertook a pay equity review across all of our companies which confirmed we had a pay gap. We took steps to address this issue,
increasing remuneration for women who were paid less than males for equivalent roles based on skills and experience. In 2017, we
analysed the data again as part of a pay equity review and, in some instances, we identified that there was still a pay gap based solely
on gender. We have implemented remediation actions including making adjustments to Total Fixed Remuneration (TFR) for
unexplainable pay gaps >10%.
CPB Contractors supporting Women in Construction
In March 2017, CPB Contractors marked International Women’s Day by announcing a corporate membership of the National
Association of Women in Construction (NAWIC). This is part of our commitment to supporting women in CPB Contractors, a core
element of our plan for diversity and social inclusion. The NAWIC membership provides access to networking events, awards and
scholarships as we increase our efforts to attract, develop and retain women, and to foster greater participation in engineering and
project management.
Women currently account for 25% of CPB Contractors’ staff and 19.3% of the total Australia and New Zealand workforce. The latter
figures compare with 13.8% for similar organisations in Australia. While CPB Contractors is making progress, we are committed to
doing more – including having women form at least 25% of our annual Graduate Program intake.
CIMIC has an established Diversity & Inclusion Executive Council, chaired by the CEO and with all Operating Company Managing
Directors, the Chief Financial Officer and Chief HR Officer as members. The Council provides leadership to the Group on fostering a
diverse and inclusive culture. The Council has supported initiatives including:
conducting round table discussions with female employees across the Group, focusing on understanding the issues faced by
women in operational/project based roles, and addressing opportunities and barriers to attraction and retention raised;
establishing a women’s network;
supporting opportunities for teams, across the Group, to acknowledge International Women’s Day and to raise awareness of
gender diversity issues; and
improved workforce reporting to track diversity participation.
Digging deep for diversity
Eight female engineers are promoting diversity and challenging the traditionally male environment of tunnelling on the New M5
project. The New M5 project, the second stage of WestConnex, involves excavating 9km twin tunnels from Kingsgrove to St Peters and
an underground interchange, and is being delivered by a Joint Venture made up of CPB Contractors, Dragados and Samsung.
The engineers are part of the Women in Non-Traditional Roles (WINTR) initiative established at the project to encourage involvement
of women in construction. WINTR aims to build networks for women in non-traditional roles, raise the profile of women currently in
these roles and to help retain and expand the number of women in non-traditional fields. The female engineers are working at
tunnelling sites across the project, with positions ranging from undergraduate roles to management positions. In addition to the eight
female engineers, women are filling a wide range of roles on the New M5, including safety, environment and community relations.
The promotion and increase of female participation continues to be a key priority for the Group. The Group’s new Graduate Program
features an above-industry female participation rate of 22% for the 2017 cohort.
48 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.
49 ‘Construction Industry: Demolishing gender structures’, University of New South Wales ‐ Built Environment, Arts & Social Sciences and Centre for
50 Based on Australian Government’s Workplace Gender Equality Agency (WGEA) reports for year ended 30 June 2016. Detailed reports by Operating
Company can be found at https://www.wgea.gov.au/report/public-reports.
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115
Recruit internally
CIMIC seeks to recruit internally and provide existing staff with opportunities to fill vacancies before looking externally. We believe that
we have an obligation to develop opportunities for our own people which helps to create a more sustainable workforce. Selection
should be based on competency, experience and qualifications, and assessed against bona fide and defined job requirements.
Employment processes and decisions should be free from bias and discrimination.
In 2017, we launched a Group‐wide CIMIC ‘Jobs Board’ where employees can search for job opportunities at all of our companies, in
one place. The Jobs Board allows employees to search by company, location and job category, and to set up a targeted job alert which
will send employees an e‐mail when a position becomes available that matches their search criteria.
In 2017, the Group recruited 23,511 new employees, 22,324 male and 1,187 female.
The relatively short term duration of many of the Group’s construction projects and the fixed term employment model of trades and
manual workers, means that comparisons of turnover rates with other industries are not meaningful. CIMIC believes that a more
appropriate turnover rate to use should reflect the departures of only white collar workers (staff).
Voluntary and involuntary departures48 (%) – staff
only
Group
Overall
25.5
The turnover rate, across most of the Group’s entities, has remained static or declined markedly since 2016.
The average tenure of our people is 3.4 years (versus 3.1 years in 2016), reflecting the defined duration nature of the Group’s project
activities. However, as the table below shows, the Group has many experienced and long serving employees with management
experience, which includes key operational roles such as project managers, foremen and site superintendents.
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
for retention.
ENCOURAGE DIVERSITY
We recognise and reward the hard work and loyalty of our employees and understand that this is an important and effective motivator
CIMIC recognises that diverse and inclusive teams promote innovation, performance and productivity, and that our
workforces should reflect the diverse communities in which we work. Our diversity and inclusion strategic objectives
are to:
promote and improve female participation in our Group and achieve gender equity, including pay equity;
increase indigenous employment and use of indigenous suppliers in our supply chain;
invest in local employment to ensure the future workforce is reflective of the country in which we operate; and
cultivate an inclusive workplace of fairness and equity which fosters the unique skills and talent of our people.
Our workforce is predominantly made up of permanently employed full time and fixed term employees. Given the project nature of the
much of the Group’s activities, many trade‐related employees such as scaffolders riggers, fitters, steel‐fixers, electricians, etc. are
recruited on fixed terms for construction projects. When the project, or their contribution to the project, is completed they leave for
other opportunities. This skews the Group’s workforce composition to one with a relatively low level of permanent full time workers
compared to many other industries. It should also be noted that the construction and mining industries have, historically, employed
relatively few women. “The construction industry is the most male‐dominated sector in Australia: in 2016 women represent only 12%
Male
19.5
Male
41.0
21.0
7.3
14.1
4.7
2.6
Female
6.0
Female
2.7
2.3
1.2
2.2
0.6
0.3
Male
54.9
0.1
29.6
6.0
Female
7.7
0.4
0.7
0.5
of the workforce.”49
Workforce composition (%)
Permanent full time
Permanent part time
Fixed term
Casual
Social Impact, December 2016.
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We aspire to have an inclusive culture that values and sustains diversity and a work-life balance. One of the ways we make our
workplace more attractive to women is to offer a paid parental leave scheme to eligible employees of the Group, in Australia. This
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. We provide
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 other countries, paid parental leave is provided in accordance with current local legislation.
Support for White Ribbon Day
The Group was pleased to support White Ribbon Day, which focuses on women’s safety and the prevention of violence against women.
White Ribbon Day specifically targets violence against women by men, and engages men in raising awareness of this issue, and by
providing education and tools to stop violence against women in their community.
To mark White Ribbon Day, we supported women and girls experiencing poverty and homelessness by supplying everyday personal
hygiene products and necessities (such as hairbrushes, deodorants, toothbrushes, toothpaste, sanitary products, shampoo and
conditioner) to homeless women, women at risk or women experiencing domestic violence.
CIMIC also supported the campaign by promoting the contact details of a number of support groups including 1800Respect, NSW
Domestic Violence Line, Men’s Referral Service, Lifeline and the CIMIC Group Employee Assistance Program.
Indigenous employment
CIMIC appreciates that 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. The Group is committed to offering employment,
training and enterprise opportunities for Australian Indigenous people including internship opportunities for Aboriginal and Torres
Strait Islander university students through our partnership with CareerTrackers.
In 2017, our Indigenous employment rates, including sub-contractors, was as follows:
Indigenous employment in Australia (# and % of the workforce)51
Total
2017
889 ( 2.7%)
The overall number and rate of Indigenous employees has fallen from a peak in 2013/14 which coincided with the delivery of some
large and remote oil and gas projects. Since their completion, construction opportunities have been skewed more towards urban
transport infrastructure. Given that Indigenous populations are more heavily weighted towards those remote areas, there have not
been as many opportunities for Indigenous employees.
Despite the aforementioned demographic changes, a range of initiatives are being pursued to improve Indigenous employment and
participation in the workforce.
CPB Contractors recognised a ‘Most Valuable Partner’ by CareerTrackers
CPB Contractors' work in supporting the future of Indigenous leadership in Australia has been recognised at CareerTrackers’ annual
gala event in Sydney, with a 'Most Valuable Partner' award for outstanding commitment, participation and leadership. CPB Contractors’
CareerTrackers internships are genuine training and employment pathways, with an equal footing for interns to access opportunities
such as the CIMIC Group Graduate Program. Currently, seven Indigenous CareerTrackers interns have been successful in securing spots
in the Graduate Program.
Over the summer vacation (2016-2017), CPB Contractors placed 18 Indigenous university students into internships at projects and in
their corporate office, across disciplines including Engineering, Finance and Community Engagement. Since 2010, CPB Contractors has
supported 59 Indigenous university students in completing internships through CareerTrackers. CPB Contactors was also the first
corporate organisation in Australia to sign a 10-year partnership with CareerTrackers under the 10x10 Program.
51 Includes subcontractors of CPB Contractors, Thiess and UGL.
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116
We aspire to have an inclusive culture that values and sustains diversity and a work-life balance. One of the ways we make our
workplace more attractive to women is to offer a paid parental leave scheme to eligible employees of the Group, in Australia. This
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. We provide
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 other countries, paid parental leave is provided in accordance with current local legislation.
Support for White Ribbon Day
The Group was pleased to support White Ribbon Day, which focuses on women’s safety and the prevention of violence against women.
White Ribbon Day specifically targets violence against women by men, and engages men in raising awareness of this issue, and by
providing education and tools to stop violence against women in their community.
To mark White Ribbon Day, we supported women and girls experiencing poverty and homelessness by supplying everyday personal
hygiene products and necessities (such as hairbrushes, deodorants, toothbrushes, toothpaste, sanitary products, shampoo and
conditioner) to homeless women, women at risk or women experiencing domestic violence.
Indigenous employment
CIMIC appreciates that 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. The Group is committed to offering employment,
training and enterprise opportunities for Australian Indigenous people including internship opportunities for Aboriginal and Torres
Strait Islander university students through our partnership with CareerTrackers.
In 2017, our Indigenous employment rates, including sub-contractors, was as follows:
Indigenous employment in Australia (# and % of the workforce)51
Total
2017
889 ( 2.7%)
The overall number and rate of Indigenous employees has fallen from a peak in 2013/14 which coincided with the delivery of some
large and remote oil and gas projects. Since their completion, construction opportunities have been skewed more towards urban
transport infrastructure. Given that Indigenous populations are more heavily weighted towards those remote areas, there have not
been as many opportunities for Indigenous employees.
Despite the aforementioned demographic changes, a range of initiatives are being pursued to improve Indigenous employment and
participation in the workforce.
CPB Contractors recognised a ‘Most Valuable Partner’ by CareerTrackers
CPB Contractors' work in supporting the future of Indigenous leadership in Australia has been recognised at CareerTrackers’ annual
gala event in Sydney, with a 'Most Valuable Partner' award for outstanding commitment, participation and leadership. CPB Contractors’
CareerTrackers internships are genuine training and employment pathways, with an equal footing for interns to access opportunities
such as the CIMIC Group Graduate Program. Currently, seven Indigenous CareerTrackers interns have been successful in securing spots
in the Graduate Program.
Over the summer vacation (2016-2017), CPB Contractors placed 18 Indigenous university students into internships at projects and in
their corporate office, across disciplines including Engineering, Finance and Community Engagement. Since 2010, CPB Contractors has
supported 59 Indigenous university students in completing internships through CareerTrackers. CPB Contactors was also the first
corporate organisation in Australia to sign a 10-year partnership with CareerTrackers under the 10x10 Program.
CIMIC Group Limited Annual Report 2017 | Sustainability Report
CIMIC Group Limited Annual Report 2017 | Sustainability Report
14 new Indigenous starters complete induction program
WestConnex M4 East and the New M5, being delivered by a consortium including CPB Contractors, have welcomed 14 new starters
who completed the Aboriginal and Torres Strait Islander Pre-Employment Program. This Program was designed to assist participants
with backgrounds in related industries to prepare for work on a major infrastructure project.
The WestConnex participants (seven from the M4 East and seven from the New M5) took part in a two-week residential TAFE program
which included course work (60% of a Certificate II in Civil Construction), team building activities, cultural teaching, and reflection and
discussion. Current WestConnex staff from both Indigenous and non-Indigenous backgrounds visited the group and provided advice on
what it takes to succeed in the construction industry. The program was run by the M4 East and New M5 Training Academy, in
conjunction with Aboriginal Employment Strategy (AES) and Western Sydney TAFE, who worked together to facilitate the program and
provide the candidates who were interviewed and selected by the project supervisors and superintendents.
Local employment
CIMIC is committed to investing in local employment to ensure that our future workforce is reflective of the countries in which we
operate. We aspire 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 as seen in the table below:
CIMIC also supported the campaign by promoting the contact details of a number of support groups including 1800Respect, NSW
Domestic Violence Line, Men’s Referral Service, Lifeline and the CIMIC Group Employee Assistance Program.
Nationals (as a % of workforce)
Group
2017
94
201652
-
Training delivering results in India
With more than 9,000 direct employees in our Indian operations, the Leighton Asia team has developed targeted training and well-
being initiatives that support the development of employees and aligns with our business requirements. Leighton Asia has partnered
with a well-recognised professional trade school in India to market, recruit and deliver courses to our direct, skilled and trade trained
workers. The courses are approved and certified by the Construction Skills Development Council of India, as well as the Australian
Technical and Further Education training provider, or TAFE as it is known in Australia.
The courses consist of three months of on-the-job training and six weeks at a training centre, covering essential work skills such as
welding, scaffolding, mechanical, electrical, plumbing and steel fixing. Safety awareness is a vital part of the training with a
comprehensive safety training module included in all programs. The courses have been undertaken by 2,083 employees so far.
Additional trade skills courses will be added during the year.
Inclusive workplaces
CIMIC seeks to cultivate an inclusive workplace of fairness and equity which fosters the unique skills and talent of our people.
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.
Age distribution of the Group’s workforce (%) – staff only
<30
30-40
41-50
51-60
>60
Male
26.6
33.1
19.2
9.2
2.6
Female
2.3
3.4
2.1
1.2
0.3
Additionally, we need to continually recruit younger talent that will facilitate succession planning and support our ability to build
capable leadership for the future.
Unconscious bias training
In 2017, CIMIC launched unconscious bias training for leaders, from supervisors to senior executives and those involved in recruitment.
Unconscious biases are social stereotypes about certain groups of people that individuals form outside their own conscious awareness.
Everyone holds unconscious beliefs about various social and identity groups, and these biases stem from one’s tendency to organize
social worlds by categorizing.
As a starting point, we need to understand our unconscious biases – be they related to gender, race, ability, sexual preference, religion
or any other individual characteristic – and how they can influence our decisions and behaviour towards others. Awareness helps us
avoid incorrect assumptions and maximising the contribution of others.
Our unconscious bias training builds on other initiatives we put in place in 2017, including a new equal employment opportunity,
discrimination, bullying and harassment training program, a refreshed Code of Conduct e-learning module and workforce reporting to
track diversity participation.
51 Includes subcontractors of CPB Contractors, Thiess and UGL.
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52 2016 figures were not collected or available.
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REWARD PERFORMANCE
We believe that the role of remuneration is to motivate, recognise and fairly compensate employees to achieve business
objectives and contribute to the Group’s sustainability, for the benefit of shareholders and our people. CIMIC encourages
individual accountability and reward performance against clearly defined roles and goals. 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.
The Remuneration Report in this Annual Report sets out the components and the Group’s approach to remuneration of senior and
other executives.
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.
Individual responsibility
Accountability is one of the Principles and we encourage individuals to take responsibility for their role and to make decisions aligned
with Group's mission, principles and strategies.
Accountability is about taking responsibility for achieving outcomes and focusing on finding solutions. 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.
Accountability means that employees know what they need to do and are committed to delivering. For CIMIC people, it also means
being an example to our colleagues, taking pride in what we do, owning mistakes and correcting them, and prioritising safety, so that
our people take care of their colleagues and themselves. Accountability applies whether our people are leading a business, a small
team, or themselves as they interact with a colleague or solve a problem with a client.
Measurable goals
At CIMIC, we set clearly defined and measurable goals aligned with the Group's principles and objectives. Performance management
aims to develop and evaluate the individual in line with the organisation’s strategic plans and objectives. Performance management is
not an annual event but an ongoing process that allows employees to develop, deliver value to the organisation and meet their
aspirations.
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 facilitate the transparent discussion of employee achievement against key performance indicators and
expectations.
We continued to review our 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.
In 2017, we continued to refine the Group job level framework and remuneration ranges introduced in 2015, and implemented
remuneration ranges for a number of our larger overseas operations. This initiative helps to ensure competitive remuneration levels
are consistently applied across the Group’s operations.
further expand the graduate program to Canada and Mongolia;
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 2018, we plan to:
undertake Human Rights Impact Assessment in Indonesia;
continue to undertake Group-wide employee survey of staff and to widen the survey to wages employees;
extend the neuro-diversity program to other Operating Companies;
pilot a partnership with DCC Careers to attract more women through recruitment;
use results of 2017 talent reviews and succession planning as basis for development planning;
continue to roll-out unconscious bias training; and
continue to refine our performance management systems to provide more focus on setting objectives and targets, providing
‘One’ leadership program to include a rollout of the Leading Managers program;
implement an online learning laboratory for all employees;
feedback, and developing the knowledge and expertise of our people.
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CIMIC Group Limited Annual Report 2017 119
120 CIMIC Group Limited Annual Report 2017
The world’s largest mining services provider
commited to delivering sustainable mining solutions.
Photo: Rocky’s Reward, Western Australia, Thiess.
CIMIC Group Limited Annual Report 2017 121
122 CIMIC Group Limited Annual Report 2017
CIMIC Group Limited Annual Report 2017 | Sustainability Report
CIMIC Group Limited Annual Report 2017 | Sustainability Report
[BLANK]
INNOVATION
OUR APPROACH
Innovation is one of the Group’s principles and is critical to our future. We define innovations as repeatable, new and better ways
that increase value for the Group – from idea generation to implementation.
We seek to foster innovation, capture knowledge, encourage collaboration, manage risk and to focus on the future. Many of the
projects that we deliver are bespoke and so 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.
Foster innovation
Measures in place
Actions taken during 2017
Performance
Capture knowledge
Measures in place
Actions taken during 2017
Performance
Encourage collaboration
Measures in place
Actions taken during 2017
Performance
innovation embedded in Group’s principles, Sustainability Policy and the mission of EIC
Activities
dedicated engineering and technical services business – EIC Activities – leads Group’s
commitment to innovation
EIC Activities employees commit to spend 10% of their time on innovation projects
Spigit software platform to capture innovations
launched innovation program campaign to systematically identify ways to make our
operations safer and more efficient or effective and expand our operations with new
products and services
trained 650 employees in the use of BIM and GIS
BIM and GIS used on 290 projects up from 194 in 2016
EIC Activities’ employees achieved innovation time of 10% and spent 12,000 hours on
innovation
Leighton Asia’s Mass Transit Railway ‐ South Island Line (East) project in Hong Kong
awarded the British Construction Industry 2017 International Project of the Year Award.
CPB Contractors’ Post Entry Quarantine Facility Project in Victoria awarded the Master
Builders Association of Victoria’s Excellence in Construction Awards (MBAVECA) for
Excellence in Construction of Industrial Buildings
CPB Contractors’ Melbourne International Roll‐on Roll‐off Automotive Terminal (MIRRAT)
in Victoria awarded the MBAVECA’s Best Sustainable Project
CPB Contractors’ Wynyard Walk project in New South Wales awarded the Association of
Consulting Structural Engineers’ NSW 2016 excellence in Engineering Awards in the
category of Award for Large Building Projects
Interactive Project Knowledge Library (iPKL)
EIC Activities provided training and webinars to over 3,800 participants during 2017
EIC Activities hosted 21 best practice ‘Webinar Wednesdays’, watched by over 1,400
people
conducted 31 applied technical training webinars (up from 10 in 2016) with 1000+ webinar
viewings
iPKL expanded to capturing details of over 1,950 projects with over 30,000 documents,
including 544 case studies
achieved Australian first BSI53 BIM Design and Construction KITEMARK certification ‐ BSI
PAS 1192‐2, BS 1192 and BS 1192‐4
23 communities of practice established in iPKL to promote collaboration across the Group
supported launch of Beyond Zero Emissions’ zero carbon industry plan ‘Rethinking Cement’
five Green Standard projects registered in 2017 and seven certifications received
building projects have received 91 Green Star certifications since 2006
54 employees accredited to ‘green project’ standards
CPB Contractors is Australia’s leading sustainability contractor having 19 registrations or
certifications from ISCA
$2.7 billion of revenue generated from CPB Contractors’ sustainably rated or ‘green’
projects
122
53 The British Standards Institution (BSI) Kitemark for Design and Construction provides independent and impartial evidence that companies are
delivering Building Information Modelling (BIM) projects.
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
Manage risk
Measures in place
Actions taken during 2017
Performance
Focus on the future
Measures in place
Actions taken during 2017
Performance
Risk Policy; Risk Management Policy; Business Resilience Policy; and Quality Management
Policy
risk management framework based on ISO 31000:2009
quality management systems based on ISO 9001:2008
relevant aspects of the Risk Policy and procedures included in the Tender Policy to ensure a
more rigorous approach to risk management at tender stage.
64 tender review management committee meetings were held across the Group to assess
tenders that were being submitted to clients to ensure they complied with Tender Policy
and were measured against the work being tendered.
risk management framework embedded within existing processes and aligned to the
Group’s objectives, both short and longer term
Risk Policy; Risk Management Policy; Group Strategy Policy; annual strategic plan
undertaken systematic review of potential longer‐term risks and opportunities for the
business
identified risks and opportunities captured in Group’s risk matrix
Creating value
The Group’s shared Principles, which include innovation, help the Company to generate sustainable cash‐backed profits which
creates value for shareholders. The direct economic value, as defined by the GRI, that CIMIC generated and distributed over
the past three years is set out in the table below.
Economic value created (A$m)54
Economic value generated: Revenue
Economic value distributed
Of which: Operating costs
Employee wages and benefits
Payments to providers of capital
Payments to governments55
Community investments
Economic value retained
2017
13,429
(12,625)
2016
10,847
(10,494)
2015
13,273
(12,685)
(8,315)
(3,530)
(510)
(269)
(0.5)
(7,462)
(2,432)
(412)
(188)
(0.3)
(8,824)
(3,059)
(580)
(221)
(0.8)
805
353
588
Other shareholder return metrics can be found in the Operating and Financial Review section and the Remuneration Report within this
Annual 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 subcontractors 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;
by generating profits and paying tax, or collecting value‐added, payroll or other taxes, we aid governments in their efforts to raise
revenue which contributes to the provision of services and supports investment in infrastructure; 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.
54 Restated for 2014 for comparison to reflect continuing operations after disposals. This calculation follows the formula set by the GRI.
55 The Group incurred tax expenses of A$430.4 million in 2014 and A$135.1 million in 2013 due to the profits on sale and income from its discontinued
operations.
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
Manage risk
Measures in place
Actions taken during 2017
relevant aspects of the Risk Policy and procedures included in the Tender Policy to ensure a
Risk Policy; Risk Management Policy; Business Resilience Policy; and Quality Management
Policy
risk management framework based on ISO 31000:2009
quality management systems based on ISO 9001:2008
more rigorous approach to risk management at tender stage.
64 tender review management committee meetings were held across the Group to assess
tenders that were being submitted to clients to ensure they complied with Tender Policy
and were measured against the work being tendered.
Performance
risk management framework embedded within existing processes and aligned to the
Group’s objectives, both short and longer term
Focus on the future
Measures in place
Actions taken during 2017
undertaken systematic review of potential longer‐term risks and opportunities for the
Risk Policy; Risk Management Policy; Group Strategy Policy; annual strategic plan
Performance
identified risks and opportunities captured in Group’s risk matrix
business
Creating value
The Group’s shared Principles, which include innovation, help the Company to generate sustainable cash‐backed profits which
creates value for shareholders. The direct economic value, as defined by the GRI, that CIMIC generated and distributed over
the past three years is set out in the table below.
Economic value created (A$m)54
Economic value generated: Revenue
Economic value distributed
Of which: Operating costs
Employee wages and benefits
Payments to providers of capital
Payments to governments55
Community investments
Economic value retained
2017
13,429
(12,625)
2016
10,847
(10,494)
2015
13,273
(12,685)
(8,315)
(3,530)
(510)
(269)
(0.5)
(7,462)
(2,432)
(412)
(188)
(0.3)
(8,824)
(3,059)
(580)
(221)
(0.8)
805
353
588
Other shareholder return metrics can be found in the Operating and Financial Review section and the Remuneration Report within this
Annual 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
our operations and maintenance services are integral to the upkeep of critical infrastructure – we help keep the lights on, trains
paid and secure employment;
rolling, water flowing and motorways tolling;
by engaging many thousands of subcontractors 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;
by generating profits and paying tax, or collecting value‐added, payroll or other taxes, we aid governments in their efforts to raise
revenue which contributes to the provision of services and supports investment in infrastructure; 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.
New schools lead to new opportunities
On sites in Auckland, Hamilton and Christchurch in New Zealand, a consortium including CPB Contractors and Pacific Partnerships is
constructing five new schools under a NZ$200 million PPP arrangement. The design emphasises dynamic flexible spaces that can work
with 40 or 200 students, and support different ways of teaching and learning. The spaces open up for outside learning, are accessible
for all abilities and can be used by the community outside of school hours.
After construction, the consortium will maintain the schools for 25-years which means school principals and boards don’t have to
spend time managing the property. They can focus on education, and that is a win-win for the students and their communities.
FOSTER INNOVATION
We promote a culture where employees are encouraged to adapt, innovate and be self-critical, and to learn from rather than
punish failures. This approach also means that we have developed a structured approach to investing in, and supporting,
research and development and incubators that will promote innovation and help improve the business.
EIC Activities is CIMIC Group’s engineering and technical services business. EIC Activities partners with all of CIMIC Group's Operating
Companies in the transport, industrial and resources infrastructure and building sectors across diverse markets. Innovation is
embedded in the EIC Activities name which stands for Engineering, Innovation and Capability.
EIC Activities works with teams from the earliest pre-bid, tender and project establishment phases where opportunities to innovate,
mitigate risk and add value are strongest. Their diverse team of subject matter experts are some of the industry's most respected
engineers, academics and practitioners. The team has extensive project experience across different geographies, markets, clients and
contract types – including construct only and design and construct, managing contractor and early contractor involvement, to
participating in alliances, PPPs and build-own-operate-transfer (BOOT) projects.
EIC Activities challenges and improves concept designs, construction methods and operations and maintenance practices, increases
self-performance and helps deliver competitive solutions. EIC Activities’ involvement in tenders and projects consistently results in
projects achieving significant cost and program savings, and delivering valued outcomes for clients.
Prefabricated to overcome time, building constraints
Faced with an airport height restriction and tight programme, Leighton Asia’s Hong Kong-Zhuhai-Macao Bridge Passenger Clearance
Building (PCB) project team has worked collaboratively with their specialist subcontractors and supply chain to split the roof of PCB into
segments, and unitised production to pre-assemble 95% of the structure and finishes off-site. Each segment, on average, measuring 52
metres by 28.5 metres, and weighing 600 tonnes, is barged individually into Hong Kong and then lifted and jacked into place. The
solution has successfully enabled the delivery of a fast-track, innovative and safe solution, eliminating on-site interfaces and the risk of
working at height.
EIC Activities employees are actively encouraged to spend 10% of their time on innovation projects. In 2017, this meant that over
12,000 hours were spent on innovation with 44 approved innovation projects receiving $1.5 million of funding. EIC Activities supports
its capability through other technical groups within the ACS Group, including HOCHTIEF, Dragados and Turner.
In 2017, CIMIC launched a Group-wide Innovation Program to further enhance the idea generation and implementation of repeatable,
new and better ways that increase value for the Group. The Innovation Program encourages employees to submit their ideas at any
time. Additional campaigns will drive targeted idea generation, collaboration, selection and innovation implementation in areas that
are important to the Group. The Program utilises a dedicated management software package – Spigit – which enables employees to tap
into the collective intelligence of colleagues, partners and customers to find the best ideas and make the right decisions.
Lesson learnt provide guiding light on solar project
Delivering a renewable power project can offer a range of challenges and, when the team has one year to deliver, it is vital to draw on
the lessons learnt, proven capabilities and expertise from previous projects. UGL took this approach with the design and construction
of the Emu Downs 20MW Solar Farm in Cervantes, Western Australia.
The project started in December 2016 and, despite unseasonal rains coming at a pivotal time in the construction schedule, the project
team collaborated to develop some innovative construction methodologies that are driving productivity. A key example is a customised
frame the team designed, built and installed to reduce repetitive tasks and keep the solar tracking structures separate while
assembling. This frame has improved safety performance by reducing manual handling and is contributing to more efficient production
rates at the site.
In 2017, CIMIC launched the inaugural CIMIC Group 2017 Innovation Awards (Awards). The Awards were held to promote and
recognise innovators, and to generate new ideas for product and process innovations and ways to improve work safety. The Awards
cover three broad categories; occupational safety and health, technology and processes, and energy and environmental protection.
The Awards showcased 99 innovations which were developed in workplaces – from the shopfloor and site offices to virtual
environments using the latest digital technologies.
54 Restated for 2014 for comparison to reflect continuing operations after disposals. This calculation follows the formula set by the GRI.
55 The Group incurred tax expenses of A$430.4 million in 2014 and A$135.1 million in 2013 due to the profits on sale and income from its discontinued
operations.
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CAPTURE KNOWELDGE
A key facet of innovation is systematically and rigorously capturing knowledge to leverage learnings and to avoid re-invention.
CIMIC utilises technology to share knowledge and facilitate access to the Group's intellectual property. We also encourage
knowledge capture by integrating this with our reward systems.
After launching its custom built interactive Project Knowledge Library (iPKL) in 2016, EIC Activities has continued to build out and
develop this platform. With a user friendly interface and powerful search function, iPKL holds key data from 1,950 completed civil,
building and process plant projects.
iPKL holds project resources such as: pre-contract documents, workpack/execution resources, project data sheets, images, case
studies, lessons learned, final project reports, innovations, technical papers, award submissions and awards received, capability
statements, and more. iPKL provides tender and project teams access to technical and operational knowledge from successful projects.
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.
iPKL used on WestConnex New M5 project
A CPB Contractors team at Bexley is responsible for excavating road header tunnels and constructing a ventilation structure within the
tunnel for the WestConnex New M5 project. The New M5 will provide twin, 9km long, motorway tunnels and a new underground
interchange. The team used iPKL to find final project reports, work packs, work method statements and lessons learnt for tunnel
projects that included road header tunnelling, continuously reinforced concrete pavement placement, grouting, tunnel drainage
option-eering, waterproofing, formwork and falsework propping.
The team wanted to build on proven practice and gain insights on the construction methods they were considering. iPKL was a
treasure chest of documentation from past projects for the team. They not only found what they thought they were looking for, but
much more in just a few clicks. Quality teams have also utilised inspection test plans and checklists, and everyone, regardless of their
role on the project, has learnt from the safety alerts and safety lessons held in iPKL.
The iPKL platform includes communities of practice which bring the best knowledge from around the Group to the front line of
effective project delivery. These communities are designed to facilitate knowledge sharing, informal discussions, question and answer
sessions, and the sharing of best practice examples and lessons. The communities of practice include topics such as: asset
management; building; concrete and quarry materials; digital engineering; environment; geotechnical; heavy lift; knowledge
management; mechanical and electrical engineering; methods and lean; project planning; rail; roads and civil works; structural
engineering; survey; sustainability; temporary works; utility management; and water and waste water.
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.
Data step change using multi-rotor UAVs in open cut mines
Mine areas requiring surveying for safety and production purposes can be inaccessible or unsafe for personnel. Thiess researched,
designed and implemented the use of two types of multi-rotor unmanned aerial vehicles (UAVs) across four of their Australian open cut
sites. This has enabled a step change in the quantity, quality and timeliness of data acquisition using remote technology, and has
improved safety and operational predictability while delivering time and cost savings.
The UAVs remove personnel from unsafe work environments and eliminate disruption to production. The customised and low-cost
UAV solutions can be used across mining, services and construction projects.
Thiess gathers real time data to improve mining performance
Thiess’ OnShift LIVE is an in-house designed and developed reporting platform that places real-time machine performance statistics at
the fingertips of decision-makers on mining sites. Productivity and utilisation information is automatically updated and presented in an
easy, accessible format that is substantially faster compared to past methods. Currently deployed across three of Thiess’ APAC sites, it
has helped to minimise costs and maximise performance through optimal fleet allocation and operator management.
Sedgman partners with clients through early involvement and the application of resource engineering capability, leveraging the
knowledge gained from their experience to deliver the most commercially effective solutions.
Monitoring vibration remotely
Vibrating screens provide the basic material sizing functionality in a Coal Handling Processing Plant (CHPP). Vibrating screens have a
high capital cost and are expensive to replace as they are usually located in the central areas within the CHPP structure. Using simple
design methodology, which incorporates accelerometers, and in-house developed software, Sedgman devised tools that enable screen
vibration characteristics to be monitored remotely. Both preventative monitoring and remedial monitoring can be undertaken ensuring
better management of screen life and greater plant efficiency.
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
CIMIC Group Limited Annual Report 2017 | Sustainability Report
CAPTURE KNOWELDGE
A key facet of innovation is systematically and rigorously capturing knowledge to leverage learnings and to avoid re-invention.
CIMIC utilises technology to share knowledge and facilitate access to the Group's intellectual property. We also encourage
knowledge capture by integrating this with our reward systems.
Digital engineering
EIC Activities is leading the Group’s digital engineering technologies – BIM and GIS – which enable project teams to collaborate in
virtual environments. Our Operating Companies are rapidly moving on from traditional practices where 2D (two-dimensional) drawings
were used for planning and construction teams made adjustments on-site during the building process.
3D visualisation solution tracks project progress
Sedgman has identified an opportunity to use technology to capture, assess and objectively evaluate construction progress on mineral
processing plants. Doing so has helped to improve their business practices, driving greater efficiency, accuracy and objectivity.
EIC Activities assisted Sedgman to find and implement some newly developed and innovative software to avoid the need for the
typical, semi-regular, physical surveys of construction progress. The new software compares extremely accurate laser scanned survey
data with the design BIM model. The software comprehensively reports on the completion status of a project and also captures the
spatial conformance of all elements being constructed to the design. Implementation has resulted in:
productivity gains, by eliminating the need for on-site visual assessments;
greater precision, reliability and objectivity in measuring construction progress; and
increased accuracy in determining the financial status and performance of a project.
Today, across the CIMIC Group, we are applying the digital engineering process and our teams are collaborating in virtual environments
– ranging up to 6D and XD – and making powerful information available in the field which is improving day-to-day tasks and project
performance. BIM extends the dimensions we work in to add value and improve outcomes with the additional dimensions being:
3D – provides visualisation and coordination of a project’s scope;
4D – show how a project’s schedule will develop sequentially;
5D – integrates accurate costs information about a project;
6D – incorporates project lifecycle information and considers the whole-of life cost of a project; and
XD – allows for analysis and improved data access and linkages.
BIM is used for generating and managing digital information with virtual models representing the project scope and existing interfaces.
Teams build digitally first using integrated data and technologies to measure, map, visualise and control project delivery and outcomes.
Digital engineering is increasingly being mandated by clients and is becoming the norm for tenders and projects in construction,
mining, mineral processing and services.
A digital transformation in India
Leighton Asia’s business in India is setting up for success by using digital engineering to streamline design and construction. Digital
engineering specialists from Leighton Asia and EIC Activities are working together to optimise solutions and share learnings across the
Group. One project recently used a 3D model to proof a client’s design and identified an escalator clashing with a major beam.
Resolving issues like this, before going to site, mitigates risks and allows proper planning ahead of the game.
Most recently, EIC Activities has been working with project teams to implement 4D modelling which improves schedule integrity
through simulation. 4D modelling adds a time dimension to a 3D Computer Assisted Design (CAD) model, enabling teams to analyse the
sequence of events on a timeline and to visualise the time it takes to complete tasks within the construction process.
Leighton Asia is now moving to the next level and working with EIC Activities to embed digital engineering into business practices,
standards and templates. They are also creating a virtual model of the way they construct and a virtual catalogue of the products used
and built with. With these tools in place Leighton Asia can take safe, efficient and consistent processes and methodologies from site to
site.
CIMIC’s expertise in, and, application of, BIM for design and construction has been recognised by the global market leader in business
standards, the British Standards Institution (BSI). CIMIC is currently the only company in Australia to have received the
acknowledgment of BSI Kitemark for Design and Construction - BSI PAS 1192-2, BS 1192 and BS 1192-4.
After launching its custom built interactive Project Knowledge Library (iPKL) in 2016, EIC Activities has continued to build out and
develop this platform. With a user friendly interface and powerful search function, iPKL holds key data from 1,950 completed civil,
building and process plant projects.
iPKL holds project resources such as: pre-contract documents, workpack/execution resources, project data sheets, images, case
studies, lessons learned, final project reports, innovations, technical papers, award submissions and awards received, capability
statements, and more. iPKL provides tender and project teams access to technical and operational knowledge from successful projects.
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.
iPKL used on WestConnex New M5 project
A CPB Contractors team at Bexley is responsible for excavating road header tunnels and constructing a ventilation structure within the
tunnel for the WestConnex New M5 project. The New M5 will provide twin, 9km long, motorway tunnels and a new underground
interchange. The team used iPKL to find final project reports, work packs, work method statements and lessons learnt for tunnel
projects that included road header tunnelling, continuously reinforced concrete pavement placement, grouting, tunnel drainage
option-eering, waterproofing, formwork and falsework propping.
The team wanted to build on proven practice and gain insights on the construction methods they were considering. iPKL was a
treasure chest of documentation from past projects for the team. They not only found what they thought they were looking for, but
much more in just a few clicks. Quality teams have also utilised inspection test plans and checklists, and everyone, regardless of their
role on the project, has learnt from the safety alerts and safety lessons held in iPKL.
The iPKL platform includes communities of practice which bring the best knowledge from around the Group to the front line of
effective project delivery. These communities are designed to facilitate knowledge sharing, informal discussions, question and answer
sessions, and the sharing of best practice examples and lessons. The communities of practice include topics such as: asset
management; building; concrete and quarry materials; digital engineering; environment; geotechnical; heavy lift; knowledge
management; mechanical and electrical engineering; methods and lean; project planning; rail; roads and civil works; structural
engineering; survey; sustainability; temporary works; utility management; and water and waste water.
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.
Data step change using multi-rotor UAVs in open cut mines
Mine areas requiring surveying for safety and production purposes can be inaccessible or unsafe for personnel. Thiess researched,
designed and implemented the use of two types of multi-rotor unmanned aerial vehicles (UAVs) across four of their Australian open cut
sites. This has enabled a step change in the quantity, quality and timeliness of data acquisition using remote technology, and has
improved safety and operational predictability while delivering time and cost savings.
The UAVs remove personnel from unsafe work environments and eliminate disruption to production. The customised and low-cost
UAV solutions can be used across mining, services and construction projects.
Thiess gathers real time data to improve mining performance
Thiess’ OnShift LIVE is an in-house designed and developed reporting platform that places real-time machine performance statistics at
the fingertips of decision-makers on mining sites. Productivity and utilisation information is automatically updated and presented in an
easy, accessible format that is substantially faster compared to past methods. Currently deployed across three of Thiess’ APAC sites, it
has helped to minimise costs and maximise performance through optimal fleet allocation and operator management.
Sedgman partners with clients through early involvement and the application of resource engineering capability, leveraging the
knowledge gained from their experience to deliver the most commercially effective solutions.
Monitoring vibration remotely
Vibrating screens provide the basic material sizing functionality in a Coal Handling Processing Plant (CHPP). Vibrating screens have a
high capital cost and are expensive to replace as they are usually located in the central areas within the CHPP structure. Using simple
design methodology, which incorporates accelerometers, and in-house developed software, Sedgman devised tools that enable screen
vibration characteristics to be monitored remotely. Both preventative monitoring and remedial monitoring can be undertaken ensuring
better management of screen life and greater plant efficiency.
126
127
127
BSI certification demonstrates to customers, competitors, suppliers, staff, and investors that CIMIC’s management systems are of an
industry-respected, best practice standard. In a competitive market, the BSI Kitemark proves CIMIC’s BIM credentials.
BSI has assessed CIMIC Group’s delivery of projects to contract requirements, measurement and monitoring of client satisfaction
against the delivery of a project, and the management of the supply chain or our role within it. BSI Kitemark certification:
measures the satisfaction of the Group’s clients; and
demonstrates the Group’s BIM maturity;
helps to embed collaboration on BIM projects across the supply chain;
provides a competitive edge when bidding for BIM tenders.
CIMIC Group Limited Annual Report 2017 | Sustainability Report
The Group is also implementing GIS across a range of projects which enables the integration, storage and analysis of geographic
information to improve the effectiveness of project design, planning and delivery. GIS can integrate and support analysis of
topographic, environmental, demographic and land use data to help with business decisions and project management.
Geographic Information Systems assisted permit-to-excavate
On the 4km Torrens Road to River Torrens project in South Australia, which includes the largest program of service relocations (i.e.
water, gas, power, sewerage, etc.) ever undertaken in South Australia, EIC Activities has developed a GIS assisted Permit-To-Excavate
(PTE) program in collaboration with CPB Contractors. The GIS PTE solution provides field teams with greater access to more accurate
underground utilities information – critical for safe excavation, avoiding services strikes and keeping projects on schedule.
The GIS PTE program provides a single point of reference for utility and excavation permit information. The easy-to-read excavation
maps use consistent symbols, show all impacted utilities and encourage spatial thinking. A key feature is its self-service web application
which allows everyone on the project - in the office and in the field - to view, search and submit excavation permits. It provides timely
information, supports decision making and increases everyone’s safety.
Twelve months ago, our projects and sites across the Group were accessing 250,000 maps per week and, at the end of 2017, that figure
is three million maps per week on our GIS platform.
EIC uses GIS to improve concrete supply
CPB Contractors, in joint venture, is delivering two tunnelling projects on Sydney’s massive WestConnex motorway. Construction will
require in excess of 1 million cubic metres of concrete – the equivalent of more than 2,500 Olympic swimming pools. Certainty of
service delivery, within the specified time limits, is critical for a successful project.
EIC Activities developed a GIS algorithm to map the capability and potential routes of each potential concrete supplier, under a range
of conditions (i.e. considering traffic flows in peak hours), to meet the strict supply requirements. As no single supplier had the
capability to fulfill the entire requirements, GIS was used to establish preferred suppliers (and back-ups) for each delivery site. EIC
Activities’ GIS work assisted in delivering savings of tens of millions of dollars while ensuring a consistent, guaranteed concrete supply
within the required delivery time limits.
CIMIC currently has 290 projects (including in Ventia) using GIS data and BIM technology, up from 194 in 2016. In 2017, we trained
more than 650 people in the use of BIM and GIS.
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
The Group is also implementing GIS across a range of projects which enables the integration, storage and analysis of geographic
information to improve the effectiveness of project design, planning and delivery. GIS can integrate and support analysis of
topographic, environmental, demographic and land use data to help with business decisions and project management.
Geographic Information Systems assisted permit-to-excavate
On the 4km Torrens Road to River Torrens project in South Australia, which includes the largest program of service relocations (i.e.
water, gas, power, sewerage, etc.) ever undertaken in South Australia, EIC Activities has developed a GIS assisted Permit-To-Excavate
(PTE) program in collaboration with CPB Contractors. The GIS PTE solution provides field teams with greater access to more accurate
underground utilities information – critical for safe excavation, avoiding services strikes and keeping projects on schedule.
The GIS PTE program provides a single point of reference for utility and excavation permit information. The easy-to-read excavation
maps use consistent symbols, show all impacted utilities and encourage spatial thinking. A key feature is its self-service web application
which allows everyone on the project - in the office and in the field - to view, search and submit excavation permits. It provides timely
information, supports decision making and increases everyone’s safety.
Twelve months ago, our projects and sites across the Group were accessing 250,000 maps per week and, at the end of 2017, that figure
is three million maps per week on our GIS platform.
EIC uses GIS to improve concrete supply
CPB Contractors, in joint venture, is delivering two tunnelling projects on Sydney’s massive WestConnex motorway. Construction will
require in excess of 1 million cubic metres of concrete – the equivalent of more than 2,500 Olympic swimming pools. Certainty of
service delivery, within the specified time limits, is critical for a successful project.
EIC Activities developed a GIS algorithm to map the capability and potential routes of each potential concrete supplier, under a range
of conditions (i.e. considering traffic flows in peak hours), to meet the strict supply requirements. As no single supplier had the
capability to fulfill the entire requirements, GIS was used to establish preferred suppliers (and back-ups) for each delivery site. EIC
Activities’ GIS work assisted in delivering savings of tens of millions of dollars while ensuring a consistent, guaranteed concrete supply
within the required delivery time limits.
CIMIC currently has 290 projects (including in Ventia) using GIS data and BIM technology, up from 194 in 2016. In 2017, we trained
more than 650 people in the use of BIM and GIS.
Technical training
During the year, EIC Activities continued to deliver its ‘Webinar Wednesday’ program. Held every second Wednesday, EIC Activities and
watched by more than 1,400 employees in 2017, EIC Activities hosted 21 webinars covering a range of engineering‐related topics with
a focus on risks and opportunities, best practice and emerging technologies.
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 roughly 40‐minute webinars are interactive, with a question and answer session at the
end of each presentation. For those who miss the live session, the webinars are available on the intranet for viewing later.
Subjects covered in 2017 included:
Understand your Roadworks Specifications
Supporting Incremental & Transformational Business Improvement
Dam Engineering
Laser Scanning: Supporting BIM Workflows
Ballasted, Slab and Embedded Rail Track – Why and Where
GIS: Thinking Outside the Map
Virtual Reality – Way Beyond a Toy
Geoview – Instrumentation Data Management System
Cement Replacement in Concrete
ISCA Stakeholder Engagement
ISCA version 2: Economic Theme Development
Commissioning: strategies for Success
AS5100: 2017 Bridge Design
Sedgman China Procurement Capability
A Real BIM Story from Sedgman
Innovation at APLNG
New ISCA Scorecard
Lesson Learned in 3D Models
Project Planning
Low Level Bridge Replacement
Applied Technical Knowledge
ENCOURAGE COLLABORATION
CIMIC seeks to support and leverage opportunities for external industry collaboration that may benefit the Group
and/or our industries. We aim to develop a leadership position in the delivery of 'green' rated projects and actively
encourage clients to mandate the use of these rating systems. CIMIC also promotes and supports research and development projects
that have potential to improve the safety, efficiency or sustainability of the industry.
Green rated projects
While for many people, sustainability means ‘being green’ or ‘caring about the environment’, it is becoming an increasingly important
part of our business. Sustainability is becoming a mandatory feature of many tenders which now require sustainability ratings.
Governments are increasingly seeking to integrate sustainability into their procurement in a way that achieves value for money and
generates benefits, not only for the project, but also for society and the economy, while minimising damage to the environment.
Melbourne Airport T4 achieves LEED certification
CPB Contractors, in joint venture with their subsidiary Broad Construction, has achieved Leadership in Energy and Environmental
Design (LEED) certification from the US Green Building Council for the Melbourne Airport Terminal 4 project. LEED is the most widely
used green building rating system in the world and a globally recognised symbol of sustainability achievement.
The project provides an excellent example of CPB Contractors’ ability to deliver highly efficient and cost‐saving green buildings.
Terminal 4’s sustainability features include:
a 90% reduction in waste to landfill;
30% recycled content in the building; and
more than 86% of the wood was sustainably sourced from a certified forest.
The Terminal 4 project included construction of a new 3‐storey terminal building with baggage handling and re‐claim facilities, check‐in
kiosks and associated infrastructure, staff amenities, retail areas and connections to existing concourses.
In Australia, some State governments are now mandating that many of their infrastructure projects achieve IS56 ratings or other
sustainability ratings. For example:
State
NSW
QLD
WA
Agency
Transport for NSW
Department of Planning and
Environment
Transport and Main Roads
Main Roads WA
VIC
Vic Roads
Mandate
All projects >$50m CAPEX will pursue an IS Design and as Built rating
All critical state significant infrastructure will consider the use of IS rating scheme
and propose a suitable rating type and level for planning approval
All projects >$100m CAPEX will pursue an IS rating
All projects >$100m CAPEX will pursue an IS rating
All projects <$100m & >$20m will use the IS rating scheme framework for
reporting
All projects >$100m CAPEX will pursue an IS rating
128
56 Infrastructure Sustainability Council of Australia (ISCA), IS International rating tool v1.0, Briefing Pack 2017.
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129
CIMIC Group Limited Annual Report 2017 | Sustainability Report
The Group’s ability to deliver projects that meet these sustainability specifications is increasingly becoming a source of competitive
advantage. CPB Contractors has developed an innovative capability in the area of sustainable buildings and infrastructure. CPB
Contractors is currently the leading sustainability contractor in the Australian market, working on or having delivered 18 IS registered
or certified projects worth more than A$20 billion in total.
Sustainability integral to construction of Sydney Metro rail project
Stage 2 of the Sydney Metro project – Australia’s biggest public transport project – exemplifies the importance that clients are placing
on integrating sustainability with construction. CPB Contractors, with its joint venture partners, has been selected by Transport for
NSW (TfNSW) to deliver a new metro railway crossing deep under the world-famous Sydney Harbour.
Design and construction works under the A$2.81 billion contract include the delivery of twin 15.5km tunnels, excavation of six new
underground stations, and demolition and removal of existing buildings on the construction sites. During tunnelling activities, the total
spoil excavated is expected to be around 2.4 million cubic metres which could fill Sydney’s Darling Harbour twice.
Sustainability underpins the core project objectives for the Sydney Metro, and is integrated by TfNSW across project targets and
initiatives57. For TfNSW, 'sustainability' at Sydney Metro means optimising environmental and social outcomes, transport service
quality, and cost effectiveness.
The sustainability themes and targets for Sydney Metro are closely aligned with CIMIC’s own sustainability commitments. In the
environmental area, for example, some of the sustainability initiatives embedded in the contract for the Sydney Metro project include:
recording zero major pollution incidents;
offsetting 25% of the electricity needs for the construction phase of the project, reducing carbon emissions by the equivalent of
planting 225,800 trees;
achieving at least a 20% reduction in carbon emissions associated with construction, when compared to business as usual58;
achieving 100% beneficial reuse of usable spoil;
recycling or reusing 90% of recyclable construction and demolition waste;
recycling or reusing 60% of office waste during the construction phase;
reducing water use by at least 10% compared to business as usual;
sourcing at least 33% of the water used in construction from non-potable sources;
implementing rainwater harvesting and reuse systems at construction sites and above ground stations;
reducing the environmental footprint of materials used on the project by at least 15% compared to business as usual;
using concrete which has an average Portland cement replacement level of more than 25%, saving the equivalent carbon
emissions of planting 784,000 trees;
using reinforcing steel where 60% is produced using energy-reducing processes in its manufacture;
sourcing 100% reused, recycled timber or responsibly sourced timber;
minimising vegetation clearing; and
identifying climate change risks and implement climate change initiatives to ensure detailed design and construction activities are
resilient to climate change, based on the latest climate change projections.
The initiatives identified by TfNSW demonstrate how clients are seeking to integrate sustainable outcomes in the procurement of
infrastructure. This is increasingly becoming policy as noted in the New South Wales Government’s Draft Strategy: Future Transport
2056. “Addressing the environmental sustainability of the transport system is essential to minimise direct and indirect impacts on the
natural environment. Direct impacts include noise, waste and urban stormwater runoff. Indirect impacts include air pollution, reduced
liveability of urban environments and the environmental impacts of materials used by the transport system.” 59
In 2017, CPB Contractors and Leighton Asia reported the following Green Standard projects:
Green Standard construction projects (#)
ISCA
Green Star
BEAM Plus
LEED60
Green Roads61
Registered as at 31 Dec
2017
8
0
1
0
2
Cumulative certifications
since 2006
17
91
7
11
0
57 Sydney Metro City & Southwest: Sustainability Strategy 2017-24, July 2017.
58 'Business as usual' (BAU) is defined as that which is used in the applicable rating scheme for the respective target (e.g. ISCA Rating Tool, Green Star
and TfNSW CERT) – as per the aforementioned Sydney Metro City & Southwest: Sustainability Strategy 2017-24.
59 Future Transport 2056: Draft Future Transport Strategy 2056, NSW Government, October 2017.
60 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.
61 Greenroads is an independent non-profit that advances sustainability performance management and education for transportation capital projects.
130
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
CIMIC Group Limited Annual Report 2017 | Sustainability Report
IS ratings awarded to FMBH level crossing removal and WestConnex New M5
The ISCA has awarded the highest level available in ISCA’s IS sustainability rating scheme – a ‘Leading Rating’ for ‘As Built’ – to the
Furlong Main Blackburn Heatherdale (FMBH) Level Crossing Removal project in Melbourne. The WestConnex New M5 was also
awarded a ‘Leading Rating’ for the design phase with a rating score of 76. Both projects exceeded targeted ratings, demonstrating CPB
Contractors’ commitment to sustainable outcomes on their projects.
In 2017, CPB Contractors generated revenue of $2.7 billion from sustainably rated or ‘green’ projects.
CPB Contractors' green project revenue ($m)
Total
2017
2,703
2016
2,083
2015
1,922
CPB Contractors’ ability to deliver quality, reliable and resilient buildings and infrastructure that serves the short and long-term needs
of people and communities positions the company well for the future.
Excellence in Construction Award for Melbourne International Ro-Ro Terminal (MIRRAT)
The Master Builders Association of Victoria awarded their Excellence in Construction - Best Sustainable Project award to Melbourne’s
International Ro-Ro Terminal (MIRRAT) which was constructed by CPB Contractors. While the physical centrepiece of this facility is a
world’s best practice ‘6 Star Green Star’ ‘As Built’ rated building, a host of other less obvious achievements make it a stand out.
A 100kW solar panel system generates the equivalent of 75% of the energy used by the administration building and 260,000 tonnes of
recycled concrete, brick, glass and asphalt replaced virgin materials during the construction of the hard stand areas. Water sensitive
urban design features, such as bio-retention wetland basins, are used to improve the quality of stormwater runoff from the large car
parking areas.
Setting an example, CIMIC and its Operating Companies are headquartered in a number of green rated offices including:
Office address
177 Pacific Hwy, North Sydney, NSW
567 Collins St, Melbourne, VIC
HQ South Tower, 520 Wickham
Street, Brisbane, QLD
202 Pier Street, Perth WA
Companies based in this office
CIMIC, CPB Contractors, Broad, EIC Activities,
Pacific Partnerships, Leighton Properties
CPB Contractors, EIC Activities, Pacific
Partnerships
CPB Contractors, Broad, EIC Activities, Pacific
Partnerships
CPB Contractors, Broad, EIC Activities
179 Grey Street, South Bank QLD
40 Miller Street, North Sydney, NSW
Sun Hung Kai Centre, 30 Harbour
Road, Hong Kong
Thiess
UGL
Leighton Asia
Green rating
5 Star Green Star – Office As Built rating,
5½ Star NABERS Energy rating62
5 Star Green Star – Office As Built rating, 5-
star NABERS Energy and Water ratings
6 Star Green Star - Office Interiors, 6 Star
Green Star - Office As Built
5.5 Star NABERS Energy rating, 3.5 Star
NABERS Water Rating
3.5 Star NABERS Energy rating
5 Star NABERS Energy rating
LEED Silver certification
Collaboration with industry and NGOs
The Group seeks to support and leverage opportunities for external industry collaboration that may benefit the Group and/or our
industries. Any collaboration is undertaken within the boundaries of the Code of Conduct.
Team work at iron ore mine
An iron ore mine at Western Australia has seen collaboration internally and externally to deliver a significant expansion project.
Sedgman, together with its joint venture partner Civmec (the SCJV), had a key role at the site undertaking engineering, procurement,
construction and commissioning work.
The Group’s ability to deliver projects that meet these sustainability specifications is increasingly becoming a source of competitive
advantage. CPB Contractors has developed an innovative capability in the area of sustainable buildings and infrastructure. CPB
Contractors is currently the leading sustainability contractor in the Australian market, working on or having delivered 18 IS registered
or certified projects worth more than A$20 billion in total.
Sustainability integral to construction of Sydney Metro rail project
Stage 2 of the Sydney Metro project – Australia’s biggest public transport project – exemplifies the importance that clients are placing
on integrating sustainability with construction. CPB Contractors, with its joint venture partners, has been selected by Transport for
NSW (TfNSW) to deliver a new metro railway crossing deep under the world-famous Sydney Harbour.
Design and construction works under the A$2.81 billion contract include the delivery of twin 15.5km tunnels, excavation of six new
underground stations, and demolition and removal of existing buildings on the construction sites. During tunnelling activities, the total
spoil excavated is expected to be around 2.4 million cubic metres which could fill Sydney’s Darling Harbour twice.
Sustainability underpins the core project objectives for the Sydney Metro, and is integrated by TfNSW across project targets and
initiatives57. For TfNSW, 'sustainability' at Sydney Metro means optimising environmental and social outcomes, transport service
quality, and cost effectiveness.
The sustainability themes and targets for Sydney Metro are closely aligned with CIMIC’s own sustainability commitments. In the
environmental area, for example, some of the sustainability initiatives embedded in the contract for the Sydney Metro project include:
recording zero major pollution incidents;
planting 225,800 trees;
offsetting 25% of the electricity needs for the construction phase of the project, reducing carbon emissions by the equivalent of
achieving at least a 20% reduction in carbon emissions associated with construction, when compared to business as usual58;
achieving 100% beneficial reuse of usable spoil;
recycling or reusing 90% of recyclable construction and demolition waste;
recycling or reusing 60% of office waste during the construction phase;
reducing water use by at least 10% compared to business as usual;
sourcing at least 33% of the water used in construction from non-potable sources;
implementing rainwater harvesting and reuse systems at construction sites and above ground stations;
reducing the environmental footprint of materials used on the project by at least 15% compared to business as usual;
using concrete which has an average Portland cement replacement level of more than 25%, saving the equivalent carbon
emissions of planting 784,000 trees;
using reinforcing steel where 60% is produced using energy-reducing processes in its manufacture;
sourcing 100% reused, recycled timber or responsibly sourced timber;
minimising vegetation clearing; and
identifying climate change risks and implement climate change initiatives to ensure detailed design and construction activities are
resilient to climate change, based on the latest climate change projections.
The initiatives identified by TfNSW demonstrate how clients are seeking to integrate sustainable outcomes in the procurement of
infrastructure. This is increasingly becoming policy as noted in the New South Wales Government’s Draft Strategy: Future Transport
2056. “Addressing the environmental sustainability of the transport system is essential to minimise direct and indirect impacts on the
natural environment. Direct impacts include noise, waste and urban stormwater runoff. Indirect impacts include air pollution, reduced
liveability of urban environments and the environmental impacts of materials used by the transport system.” 59
In 2017, CPB Contractors and Leighton Asia reported the following Green Standard projects:
Green Standard construction projects (#)
Registered as at 31 Dec
Cumulative certifications
2017
since 2006
ISCA
Green Star
BEAM Plus
LEED60
Green Roads61
8
0
1
0
2
17
91
7
11
0
130
57 Sydney Metro City & Southwest: Sustainability Strategy 2017-24, July 2017.
58 'Business as usual' (BAU) is defined as that which is used in the applicable rating scheme for the respective target (e.g. ISCA Rating Tool, Green Star
and TfNSW CERT) – as per the aforementioned Sydney Metro City & Southwest: Sustainability Strategy 2017-24.
59 Future Transport 2056: Draft Future Transport Strategy 2056, NSW Government, October 2017.
60 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.
CPB Contractors’ construction team, leveraging its extensive site knowledge and experience, used Sedgman’s 12D CAD models to install
GPS machine guidance on key earthwork plant to ensure the accuracy of the build matched the final optimised design. Further
demonstrating the benefits of the CIMIC Group companies working together, EIC Activities was also involved at the iron ore mine,
providing technical engineering support for the project.
61 Greenroads is an independent non-profit that advances sustainability performance management and education for transportation capital projects.
62 The office at 177 Pacific Highway received a 5½ star NABERS Energy Base Building rating out of a possible 6 stars in January 2018.
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Recognising that CPB Contractors had previously performed a succession of project scopes at the iron ore mine, the SCJV worked with
CPB Contractors to complete the bulk earthworks at the site for the expansion. The scope of works includes installation of a primary
crusher, a surge bin and a 6.2km overland conveyor linking to the existing downstream facility. The work included:
moving more that 1 million m3 of earthworks material;
placing more than 6,000m3 of concrete;
transporting more than 3,000 tonnes of steelwork to site in modular sections from China, with the largest section measuring 15m
wide; and
a number of crane lifts, the largest of which was a 260 tonne container used for raw and unprocessed ore (a ROM bin).
CIMIC Group Limited Annual Report 2017 | Sustainability Report
The Group’s Operating Companies have been encouraged to build 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. The Group does have membership of a number of
trade associations and industry groups. All corporate memberships of industry bodies relevant to the Group’s business require CEO
approval and membership will be coordinated by CIMIC.
The Group partners with and/or is a member of organisations such as:
Property Council of Australia
Queensland Natural Gas Exploration & Production Industry Safety
Forum
QRC (Queensland Resources Council)
Roads Australia
Queensland Resource Council
Safety Institute of Australia
South Australian Chamber of Mines and Energy
Spanish-Australian Chamber of Commerce
Supply Nation
The Association for Payroll Specialists
Women in Mining
Business Leaders' Health and Safety Forum (NZ)
STRATERRA (Natural Resources of New Zealand)
Asosiasi Kontraktor Indonesia (Indonesian Contractors Association)
Asosiasi Pertambangan Batubara Indonesia
AustCham (The Australian Chamber of Commerce Hong Kong and
Indonesia Australia Business Council
Indonesian Mining Services Association (IMSA – ASPINDO)
Indonesian Mining Association
Infrastructure New Zealand
Macau)
Business Environment Council (Hong Kong)
Green Building Council (Hong Kong)
Hong Kong Construction Association
Hong Kong Federation of Electrical and Mechanical Contractors
The Lighthouse Club (Hong Kong and the Philippines)
Association of Structural Engineers of the Philippines
Makati Business Club (Philippines)
Philippines Constructors Association
Building and Construction Authority (Singapore)
Singapore Business Federation
Singapore Contractors Association Ltd
Tunnelling and Underground Construction Society (Singapore)
Masters Builders Association Malaysia
Confederation of Indian Industry
Royal Institution of Chartered Surveyors (India)
Alberta Mine Safety Association
Botswana Chamber of Mines
Southern African Institute of Mining and Metallurgy
AUSTMINE (Australian Mining Equipment and services
export association)
Australian Asphalt Pavement Association
Australian Association of Graduate Employers
Australian Chamber of Commerce and Industry
Australian Coal Preparation Society
Australian Constructors Association
Australian Industry Group
Australian Institute of Building
Australian Institute of Company Directors
Australia-Latin America Business Council
Australian Mines & Metals Association
Australian Shareholders' Association
Australian Society of Concrete Paving (ASCP)
buildingSMART Australasia
Business Council of Australia
Chamber of Commerce (local industry networks)
Chamber of Minerals and Energy of Western Australia
Civil Contractors Federation
Committee of Economic Development of Australia
Concrete Institute of Australia
Consult Australia
Corporate Tax Association (of Australia)
Curtin University’s Advanced Technologies Research
and Innovation Alliance (CATRINA)
Industry Capability Network
Infrastructure Association of Queensland (IAQ)
Infrastructure Partnerships Australia
Infrastructure Sustainability Council of Australia
International Project Finance Association
International Road Federation
Diversity Council of Australia
Engineers Australia
Green Building Council of Australia
Lean Construction Institute
Master Builders Association (various state branches)
Minerals Council of Australia
National Association of Women in Construction
New South Wales Minerals Council
Permanent Way Institution
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
The Group’s Operating Companies have been encouraged to build 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. The Group does have membership of a number of
trade associations and industry groups. All corporate memberships of industry bodies relevant to the Group’s business require CEO
approval and membership will be coordinated by CIMIC.
The Group partners with and/or is a member of organisations such as:
AUSTMINE (Australian Mining Equipment and services
Property Council of Australia
export association)
Queensland Natural Gas Exploration & Production Industry Safety
Australian Asphalt Pavement Association
Forum
Australian Association of Graduate Employers
QRC (Queensland Resources Council)
Australian Chamber of Commerce and Industry
Roads Australia
Australian Coal Preparation Society
Australian Constructors Association
Australian Industry Group
Australian Institute of Building
Australian Institute of Company Directors
Australia-Latin America Business Council
Australian Mines & Metals Association
Australian Shareholders' Association
Australian Society of Concrete Paving (ASCP)
buildingSMART Australasia
Business Council of Australia
Queensland Resource Council
Safety Institute of Australia
South Australian Chamber of Mines and Energy
Spanish-Australian Chamber of Commerce
Supply Nation
The Association for Payroll Specialists
Women in Mining
Infrastructure New Zealand
Business Leaders' Health and Safety Forum (NZ)
STRATERRA (Natural Resources of New Zealand)
Asosiasi Kontraktor Indonesia (Indonesian Contractors Association)
Chamber of Commerce (local industry networks)
Asosiasi Pertambangan Batubara Indonesia
Chamber of Minerals and Energy of Western Australia
Indonesia Australia Business Council
Civil Contractors Federation
Indonesian Mining Services Association (IMSA – ASPINDO)
Committee of Economic Development of Australia
Indonesian Mining Association
AustCham (The Australian Chamber of Commerce Hong Kong and
Concrete Institute of Australia
Consult Australia
Macau)
Corporate Tax Association (of Australia)
Business Environment Council (Hong Kong)
Curtin University’s Advanced Technologies Research
Green Building Council (Hong Kong)
and Innovation Alliance (CATRINA)
Diversity Council of Australia
Engineers Australia
Green Building Council of Australia
Industry Capability Network
Infrastructure Association of Queensland (IAQ)
Infrastructure Partnerships Australia
Hong Kong Construction Association
Hong Kong Federation of Electrical and Mechanical Contractors
The Lighthouse Club (Hong Kong and the Philippines)
Association of Structural Engineers of the Philippines
Makati Business Club (Philippines)
Philippines Constructors Association
Building and Construction Authority (Singapore)
Infrastructure Sustainability Council of Australia
Singapore Business Federation
International Project Finance Association
Singapore Contractors Association Ltd
International Road Federation
Lean Construction Institute
Tunnelling and Underground Construction Society (Singapore)
Masters Builders Association Malaysia
Master Builders Association (various state branches)
Confederation of Indian Industry
Minerals Council of Australia
National Association of Women in Construction
New South Wales Minerals Council
Permanent Way Institution
Royal Institution of Chartered Surveyors (India)
Alberta Mine Safety Association
Botswana Chamber of Mines
Southern African Institute of Mining and Metallurgy
UGL in industry partnership to improve project delivery
Western Australia’s Curtin University and UGL have formed a new industry partnership to establish national standards for leaner
maintenance practices, aiming to improve project delivery and turnaround times. UGL will work in collaboration with Curtin’s Advanced
Technologies Research and Innovation Alliance (CATRINA).
CATRINA is an industry-led alliance, with the aim of enhancing collaboration between major clients, technology providers, contractors
and academics to solve productivity issues in Australia. The alliance strives to improve productivity in engineering, fabrication,
construction and project maintenance. Curtin and UGL welcome other industry operators to partner with CATRINA to help drive
research in lean practices, innovative technologies, and building information modelling that could benefit business and get projects
delivered on time and on budget.
Research and development
CIMIC actively promotes and supports research and development projects that have potential to improve the safety, efficiency or
sustainability of the industry.
Geotechnics make a difference
Unseen by most of us, substructures anchor the buildings and infrastructure we construct and operate. Built below ground (footings,
piles, tunnels) and with earth (embankments, slopes, retaining walls), substructures play a key role in every asset’s settlement, stability,
and serviceability.
EIC Activities employs geotechnical specialists who are leaders in the fields of soft soil engineering and earthworks. The advice they can
provide, and solutions they develop, can save significant time and costs, and be the difference between winning and losing a tender.
EIC Activities’ approach is built on technical expertise, field experience and modelling. They look at every challenge from the first
principles of physics and soil mechanics to establish strong technical justification, and use advanced numerical modelling to
demonstrate that the solution meets project requirements. The combination brings teams, their design consultants, verifiers and
clients on board with an optimal solution. In recent examples, the team’s geotechnical advice on a mine infrastructure earthworks
strategy achieved cost savings of 20% and design optimisation for a pedestrian tunnel saved three months in time.
MANAGING RISK
CIMIC is committed to having a risk management framework in place to identify, assess and treat risks that
have the potential to impact materially the operations, people, and reputation, environment and communities in which the Group
works, and the financial prospects of the Group.
The CIMIC 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. The Framework is based on International Standard ISO 31000:2009 ‘Risk
management – principles and guidelines’, and forms the basis for CIMIC’s risk management activities. 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.
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. 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.
Mine technology provides new safety benefits
Australian technology, previously used only in underground mines, is now improving risk, safety and communication on CPB
Contractors’ WestConnex M4 East project. The 6.5km Sydney tunnel project has employed Mine Site Technology (MST) to track all
underground workers and vehicles at all times.
Using a shock and vibration-resistant Wi-Fi network, the system enables the location of all personnel and plant underground to be
known as well as workers to carry mobile phones so they can speak directly to the surface and send text messages. Individual tracking
tags are also attached to safety lamps and can be affixed to helmets. The system is being used every day for general safety and
communication requirements but would also be critical in an emergency.
The Wi-Fi system also allows remote connection to equipment and tunnel guidance systems to download any machine faults or
performance parameters, as well as updating tunnel guidance systems with the latest tunnel profile information. The Australian MST
innovation has set a new standard in underground communication and safety in construction, connecting and ensuring the safety of
the 250 tunnellers who are delivering this major project.
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The Group’s Governance System includes a broadly encompassing set of Charters, Codes, Policies, Procedures and supporting
documents (i.e. tools, reference material, forms, etc.) which are the foundation to drive a systematic, planned and consistent approach
to meet the requirements of the business, clients and other stakeholders, and to ensure compliance with all regulatory obligations.
The Board has established three Board Committees to help discharge its governance responsibilities, the:
and each has a formal charter setting out the matters relevant to the composition and operation of such Committees.
Audit and Risk Committee (ARC);
Ethics, Compliance and Sustainability Committee (ECSC); and
Remuneration and Nomination Committee,
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.
Reducing risk when replacing a critical railway bridge
CPB Contractors was contracted to remove and replace a critical rail bridge on a line linking BHP Billiton’s Newman iron ore mine to
Port Hedland in a remote part of Western Australia. The replacement was executed as a pilot project within a very tight 12‐hour
shutdown period and the project would have incurred significant penalties if not delivered in time.
The methodology incorporated self‐propelled mobile transporters for moving the old bridge, and jacks and skids for the new bridge
installation. EIC helped to produce the winning tender solution and, post the award of the contract, provided geotechnical, hydraulic
and heavy lift engineering expertise, and a full time engineer to oversee the rail scope of works. Utilising this innovative installation
method, the project delivery team challenged the tender installation method and delivered significant reductions in risk and manpower
savings, whilst successfully meeting BHP Billiton’s objectives of keeping the line safe and operational. CPB Contractors is hopeful that
their successful delivery of the pilot will lead to future projects with BHP Billiton.
The Group utilises its Pre‐contracts Information Management System (PIMS) to assess prospects, manage tenders and coordinate
approvals. Feeding into this process, the Group uses its Computer Aided Tendering System (CATS) tender software to prepare accurate
estimates for tenders. CATS helps to provide a standardised approach to estimating, ensuring that quantities, prices and other variables
are accounted for so as to produce clear and accurate forecasts.
Quality
Delivering quality projects that meet our client’s and other stakeholder requirements is the result of good planning and skilful
execution. A quality outcome is a function of how we manage risk and everyone has accountabilities in this regard.
Across the Group, we have 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);
UGL – AS/NZS ISO 9001 (Bureau Veritas Quality System Verification); and
Sedgman – ISO 9001:2015 (SAI Global)63.
Quality delivery at the Post Entry Quarantine Facility
CPB Contractors has successfully delivered the Australian Government’s new $300 million Post Entry Quarantine (PEQ) Facility in
Victoria, where imported animals and plants are held for a specified period in a quarantined environment before release. The new PEQ
Facility plays a critical role in keeping Australia safe from exotic pests and diseases. The PEQ Facility has a gross floor area of over
50,000m2, consisting of seven principal quarantine compounds and numerous administrative and support buildings across a 144‐
hectare site.
CPB Contractors’ quality assurance program ensured that all facilities handed over were ready to operate. This included implementing
a stringent quality assurance plan, developed and verified by an independent Commonwealth approved third party assessor. Facilities
had to be handed over defect‐free – it was not an option to perform rectification work in an operational bio‐containment zone. And
despite the challenges, the PEQ facility was delivered with an exemplary safety record. The project team completed 1.7 million hours of
work with no LTIs and maintained a strong focus on the safety of Commonwealth staff and quarantined animals in operational
compounds at all times.
63 Certification covers Sedgman’s Brisbane, Perth, Gold Coast and Santiago offices for the following scope: the provision of consultancy, concept and
feasibility study management, building services design, engineering design and procurement, construction contract administration, and environmental
and planning services to the urban development and resources sector. Additional locations are planned for addition to the certification in 2018.
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
The Group’s Governance System includes a broadly encompassing set of Charters, Codes, Policies, Procedures and supporting
documents (i.e. tools, reference material, forms, etc.) which are the foundation to drive a systematic, planned and consistent approach
to meet the requirements of the business, clients and other stakeholders, and to ensure compliance with all regulatory obligations.
The results were acknowledged by Master Builders of Victoria who recognised CPB Contractors with their prestigious Excellence in
Construction of Industrial Buildings Award. A fitting result for quality of the project that was delivered. At the time of this Report, PEQ
is also a finalist in the 2018 Australian Construction Achievement Award.
The Board has established three Board Committees to help discharge its governance responsibilities, the:
Audit and Risk Committee (ARC);
Ethics, Compliance and Sustainability Committee (ECSC); and
Remuneration and Nomination Committee,
and each has a formal charter setting out the matters relevant to the composition and operation of such Committees.
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.
Reducing risk when replacing a critical railway bridge
CPB Contractors was contracted to remove and replace a critical rail bridge on a line linking BHP Billiton’s Newman iron ore mine to
Port Hedland in a remote part of Western Australia. The replacement was executed as a pilot project within a very tight 12‐hour
shutdown period and the project would have incurred significant penalties if not delivered in time.
The methodology incorporated self‐propelled mobile transporters for moving the old bridge, and jacks and skids for the new bridge
installation. EIC helped to produce the winning tender solution and, post the award of the contract, provided geotechnical, hydraulic
and heavy lift engineering expertise, and a full time engineer to oversee the rail scope of works. Utilising this innovative installation
method, the project delivery team challenged the tender installation method and delivered significant reductions in risk and manpower
savings, whilst successfully meeting BHP Billiton’s objectives of keeping the line safe and operational. CPB Contractors is hopeful that
their successful delivery of the pilot will lead to future projects with BHP Billiton.
The Group utilises its Pre‐contracts Information Management System (PIMS) to assess prospects, manage tenders and coordinate
approvals. Feeding into this process, the Group uses its Computer Aided Tendering System (CATS) tender software to prepare accurate
estimates for tenders. CATS helps to provide a standardised approach to estimating, ensuring that quantities, prices and other variables
are accounted for so as to produce clear and accurate forecasts.
Quality
Delivering quality projects that meet our client’s and other stakeholder requirements is the result of good planning and skilful
execution. A quality outcome is a function of how we manage risk and everyone has accountabilities in this regard.
Across the Group, we have 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
Leighton Asia – ISO 9001:2008 (India, Singapore, Malaysia, Indonesia ‐ Lloyd’s Quality System Certification, Hong Kong – HKQAA
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);
Quality System Certification, Philippines – Bureau Veritas Quality System Verification);
UGL – AS/NZS ISO 9001 (Bureau Veritas Quality System Verification); and
Sedgman – ISO 9001:2015 (SAI Global)63.
Quality delivery at the Post Entry Quarantine Facility
CPB Contractors has successfully delivered the Australian Government’s new $300 million Post Entry Quarantine (PEQ) Facility in
Victoria, where imported animals and plants are held for a specified period in a quarantined environment before release. The new PEQ
Facility plays a critical role in keeping Australia safe from exotic pests and diseases. The PEQ Facility has a gross floor area of over
50,000m2, consisting of seven principal quarantine compounds and numerous administrative and support buildings across a 144‐
hectare site.
CPB Contractors’ quality assurance program ensured that all facilities handed over were ready to operate. This included implementing
a stringent quality assurance plan, developed and verified by an independent Commonwealth approved third party assessor. Facilities
had to be handed over defect‐free – it was not an option to perform rectification work in an operational bio‐containment zone. And
despite the challenges, the PEQ facility was delivered with an exemplary safety record. The project team completed 1.7 million hours of
work with no LTIs and maintained a strong focus on the safety of Commonwealth staff and quarantined animals in operational
compounds at all times.
FOCUS ON THE FUTURE
CIMIC is focused on actively monitoring the Group's existing and potential markets for disruptions,
trends or changes that may present risk or opportunities, and actively capitalising on opportunities.
Some of these potential disruptions, trends or changes that could impact on the Group include, climate change, increased usage of
renewable energy, and electric and autonomous vehicles.
Climate change
It is widely recognised that warming of the planet, caused by greenhouse gas emissions, poses serious risks to the global economy and
will have an impact across many economic sectors. CIMIC is committed to increasing resilience to climate risks by undertaking risk
assessments, and by designing and adapting activities to respond to potential and actual impacts.
As outlined in more detail in the sub-section ‘Build Resilience To Climate Risks’ on page 149, CIMIC has reviewed the recommendations
of the Financial Stability Board’s industry-led task force: the Task Force on Climate-related Financial Disclosures (TCFD) which assesses
climate-related risks and opportunities. Some of the high-level implications of climate change are expected to be that:
increasing levels of acute and chronic risks are likely to lead to a range of construction opportunities (and increased revenues)
from remediation work and investments to create greater resilience to the potential effects of climate change;
while the contract mining of thermal coal is unlikely to see growth in the mid-to-longer term, it will remain a relatively stable
market for the foreseeable future; and
contract mining activities will be supplemented by opportunities to provide these services for other resources such as lithium for
use in alternative technologies such as batteries.
Renewable energy
The International Energy Agency has identified the likely growth in renewable energy over the next 20+ years. “In our main scenario, a
30% rise in global energy demand to 2040 means an increase in consumption for all modern fuels, but the global aggregates masks a
multitude of diverse trends and significant switching between fuels. Moreover, hundreds of millions of people are still left in 2040
without basic energy services. Globally, renewable energy – the subject of an in-depth focus in World Energy Outlook (WEO) 2016 –
sees by far the fastest growth. Natural gas fares best among the fossil fuels, with consumption rising by 50%. Growth in oil demand
slows over the projection period, but tops 103 million barrels per day (mb/d) by 2040. Coal use is hit hard by environmental concerns
and, after the rapid expansion of recent years, growth essentially grinds to a halt.”64
CIMIC sees that growth of renewable energy supply will generate construction and operations and maintenance opportunities where
both CPB Contractors and UGL have significant experience.
Contracts to design and build new solar farms
In 2017, UGL was awarded four Engineering, Procurement and Construction (EPC) contracts for solar farms in Queensland, New South
Wales and Victoria. UGL will provide Operation and Maintenance (O&M) services at all the solar farms.
At the Collinsville Solar Farm in Queensland, UGL will deliver and provide O&M services for five years for a project that will diversify the
power supply network and provide a major source of renewable energy for northern Queensland. The project is expected to generate
enough energy to power 15,000 homes.
In New South Wales, UGL will deliver and operate and maintain for two years, with a one-year option, the White Rock Solar Farm, a
pioneering hybrid solar/wind renewable energy facility for the New England Tablelands. The facility is expected to generate 46,000
megawatt hours of electricity, enough to supply the equivalent of 7,200 average New South Wales homes.
UGL was also been awarded a contract to design and build stage one of the Bannerton 110MW DC Solar Park, near Robinvale in
Victoria. UGL will undertake EPC work for stage one of the solar park, including the associated substation and grid connection and, once
operational, provide O&M services for a two-year period.
UGL has delivered five solar projects and currently has six additional solar projects under construction: Emu Downs in Western
Australia; Stages 1 and 2 at Kidston, and the Collinsville project in Queensland; White Rock in New South Wales; and the Bannerton
project in Victoria.
63 Certification covers Sedgman’s Brisbane, Perth, Gold Coast and Santiago offices for the following scope: the provision of consultancy, concept and
feasibility study management, building services design, engineering design and procurement, construction contract administration, and environmental
and planning services to the urban development and resources sector. Additional locations are planned for addition to the certification in 2018.
134
64 International Energy Agency’s 2016 Work Energy Outlook.
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
Electric and autonomous vehicles
As a constructor of transport infrastructure, CIMIC will potentially be impacted by the transition to both electric and autonomous
vehicles. While difficult to forecast how and when these transitions will occur, many others, such as the NRMA are grappling with these
issues.
“The environmental benefits of alternative fuelled vehicles are immense. Transport emissions currently account for 14% of Australian
greenhouse gas emissions. The cars of the future are unlikely to be powered by petrol and diesel as most cars are today. Environmental
and societal pressures are being used by regulators to put pressure on Original Equipment Manufacturers (OEMs) to develop cleaner,
more efficient vehicles. An autonomous vehicle-led future will also depend on greater uptake of alternative fuel vehicles. Indeed,
World Economic Forum research suggests that citizens expect that autonomous vehicles are to be powered by hybrid and electric
technology. 65
Growth in electric cars will take time but it is worth noting that in July 2017, Volvo announced plans to produce only electric or hybrid
vehicles from 2019. Hyundai, Honda and Toyota are currently pursuing hydrogen technology while, in 2015, Toyota released the
Mirai, one of the first commercially available cars powered by hydrogen. The government of Norway has plans to deploy a hydrogen
refuelling network.
At the same time, significant progress is being made on the development of fully autonomous vehicles. Again, the NRMA noted, “As
autonomous vehicles progress through greater levels of automation, there may be a requirement for infrastructure modification to
support their operation. Autonomous vehicles will eventually need to communicate with each other as well as other infrastructure like
bridges, highways, tunnels and buildings. As more and more autonomous vehicles become reality, petrol stations may be replaced with
charging stations, highways may require sensors or wireless technological additions, and car parking stations may act as mixed-use
spaces. Depending on the technology that is rolled out over the coming years, mobile and wireless networks may need to be upgraded,
particularly in rural and regional areas that presently do not have access to fast wireless technology. These potential barriers and
challenges will need to be addressed. Current trials around the world will teach us more about the implications for infrastructure and
whether or not major upgrades or additions may be necessary for the proper operation of autonomous vehicles.”
The combination of electric/hybrid and autonomous vehicles will have significant consequences for a range of industries including
mechanical workshops, panel beaters, insurers, chauffers and taxi drivers, truck drivers and couriers, traffic police, etc. However, there
is still going to be a need for mass public transport and road infrastructure in the future, especially based on the longer-term forecasts
for population growth and urbanisation that will continue to occur in the Group’s major markets. This infrastructure is likely to sustain
a good level of construction and operations and maintenance opportunities. Additionally, retrofitting existing infrastructure with the
necessary technology to support electric and autonomous vehicles should also provide opportunities.
OUTLOOK AND FUTURE PLANS
We are committed to bringing an innovative approach to the successful delivery of projects. In 2018, we plan to:
continue to work with ISCA to maintain our industry-leading position as a constructor of sustainable infrastructure;
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;
roll out targeted sustainability training sessions in CPB Contractors to senior leaders, pre-contracts and estimators staff, project
managers, procurement and project related sustainability and environmental employees on subjects including integrating
sustainability into design, the value of ISCA and Green Star ratings, sustainable procurement and, supplier evaluation, amongst
others;
further encourage, through EIC Activities, the sharing of technical engineering excellence across the Group;
leverage the engineering expertise and experience of our major shareholder, HOCHTIEF, and its related entities; and
publish our response to the TCFD recommendations.
65 NRMA, The future of car ownership, August 2017.
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CIMIC Group Limited Annual Report 2017 137
138 CIMIC Group Limited Annual Report 2017
CIMIC Group’s engineering and
technical services business.
Photo: Wynyard Walk, New South Wales, Australia. Pedestrian tunnel design optimisation by EIC Activities.
Design and construction by CPB Contractors.
Photographer Trevor Mein
CIMIC Group Limited Annual Report 2017 139
140 CIMIC Group Limited Annual Report 2017
CIMIC Group Limited Annual Report 2017 | Sustainability Report
CIMIC Group Limited Annual Report 2017 | Sustainability Report
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ENVIRONMENT
OUR APPROACH
CIMIC Group’s Operating Companies deliver their services across a range of diverse and sensitive areas. We understand that effective
management of the environment is not only an ethical imperative, but it makes commercial sense. An enhanced reputation for
environmental management can provide a competitive advantage in winning and delivering work. For these reasons, sound
environmental management practices are integral to our people’s everyday decisions and processes.
Our environmental sustainability commitments are to:
prevent the incidence, and mitigate the impact, of any pollution to air, water or land;
use energy efficiently, reduce energy intensity, utilise renewables when efficient to do so and minimise greenhouse gas emissions;
use resources efficiently, encourage recycling and take a lifecycle approach to reducing waste;
minimise water usage and implement opportunities for water efficiency and recycling;
continually innovate to improve the efficiency of resources used and reduce their impact on the environment and society;
minimise disturbances and avoid impacts on habitats and ecology, and promote biodiversity; and
increase resilience to climate risks by undertaking risk assessments, and by designing and adapting activities to respond to potential
and actual impacts.
The Group manages its environmental footprint using consistent processes and methods that reflect best practice so as to mitigate
environmental risk.
Prevent pollution
Measures in place
Actions taken during 2017
Performance
Code of Conduct; Environmental Policy supplemented by Operating Company Policies and
systems
100% of Operating Company management systems certified to ISO 14001
maintained rigorous approach to environmental management
numerous, project‐by‐project initiatives tailored to manage risks as appropriate
solid environmental result with no Level 1 incidents and 10 Level 2 incidents recorded
significant reduction in Level 3 incidents in both Australian and international operations
four fines totalling $38,200
CPB Contractors’ Bruce Highway ‐ Cooroy to Curra project in Queensland awarded the
2017 Australasia Environmental Excellence Award
Use energy efficiently and reduce emissions
Measures in place
Actions taken during 2017
Performance
Reduce waste
Measures in place
Actions taken during 2017
Performance
Conserve water
Measures in place
Actions taken during 2017
Performance
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies
and systems
reported Australian energy use and Scope 1 and Scope 2 emissions to the Clean Energy
Regulator as per the Group’s NGER obligations
submitted a comprehensive response to CDP’s 2017 Climate Change survey
reviewed and drafted response to TCFD
facilitated CIMIC Group 2017 Innovation Awards in three categories including ‘energy and
environmental protection’
Energy Management System (EnMS) (in accordance with ISO 50001) implemented on
selected Hong Kong projects
numerous, project‐by‐project initiatives tailored to energy efficiency and reducing
emissions as appropriate
received limited assurance from EY for Group’s NGER Report
received a ‘C’ rating from CDP
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies
and systems
conducted waste management reviews on all new Hong Kong contracts and waste
management plans and implemented on all projects
numerous, project‐by‐project initiatives tailored to reduce waste as appropriate
numerous schemes to reduce waste such as the recycling and reuse of 25,000 tonnes of
rock and spoil on the Wynyard Walk project in Sydney
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies
and systems
submitted a comprehensive response to CDP’s 2017 Water survey
numerous, project‐by‐project initiatives tailored to conserve water as appropriate
received a ‘B’ rating from CDP
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Use materials efficiently and reduce impact
Measures in place
Actions taken during 2017
Performance
Protect biodiversity
Measures in place
Actions taken during 2017
Performance
Build resilience to climate risks
Measures in place
Actions taken during 2017
Performance
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies
and systems
supported launch of the ‘Rethinking Cement’ report
numerous, project‐by‐project initiatives tailored to use materials efficiently as appropriate
aggregate water usage reduced with a reduction in water intensity
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies
and systems
numerous, project‐by‐project initiatives tailored to protect diversity as appropriate
reshaped 561ha, top‐soiled 428ha and seeded 42ha of mining projects
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies
and systems
comprehensive ‘Assessing Climate Risk’ guidance in place to support development of
Climate Resilience Plans on CPB Contractors’ construction projects
drafted response to TCFD
numerous, project‐by‐project initiatives tailored to build resilience as appropriate
climate change resilience initiatives integrated into the award of the $2.8bn Sydney Metro
project
PREVENT POLLUTION
CIMIC is committed to preventing the incidence, and mitigating the impact, of any pollution to air, water or
land. We recognise that, by doing so, 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.
State‐of‐the‐art techniques to protect waterways
On the Transmission Gully project, in New Zealand, CPB Contractors is taking an innovative approach to protecting the unique
Pāuatahanui inlet. Home to around 50 species of birds, the inlet is the only large area of salt marsh and seagrass in the Wellington
region, and is the largest ‘relatively unmodified’ estuary in the southern North Island of New Zealand.
Among the most important devices being used to prevent dirty water run‐off are sediment‐retention ponds. These are much more than
simple ponds. They use coagulant and ‘treatment socks’ to aid filtration of run‐off and make it settle quickly, trapping it in the ponds.
Water gradually becomes almost completely clean before it exits through a floating decant into gullies and streams.
Transmission Gully motorway is the largest project in the country to use these types of ponds, with more than 40 planned in total,
each treating up to five hectares of catchment. The system, which has been developed in New Zealand and proven effective in the
Auckland region, is a great example of ‘Kiwi ingenuity’.
Sediment‐retention ponds and decanting earth bunds, which capture and settle out dirty water, will protect around 95% of the
groundwork in the project. The other 5% of run‐off will move through devices such as ‘catch drains’ and ‘super silt fences’, which use
filter fabric reinforced with wire mesh to contain sediment. As much as possible, rainwater is captured in clean water diversions and
channelled away from earthworks.
The Group’s 2017 environmental performance was positive with no Level 166 incidents recorded (zero also recorded in 2016) and 10
Level 267 incidents recorded (versus 6 in 201668). The number of Level 2 incidents has declined markedly over recent years.
Environmental incidents
Level 1 (#)
Level 2 (#)
Level 3 (#)
Environmental incident frequency rate (#/MhW)69
Number of breaches (#)70
Number of violations of legal obligations/regulation resulting in fines
Value of fines incurred ($)
2017
0
10
497
0.06
15
4
38,200
66 Pollution or degradation which has high severity impacts on the community and/or environment and may have irreversible residual impacts.
67 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.
68 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.
69 The frequency rate is the total number of Level 1 and Level 2 incidents per million man hours worked.
70 Resulting in written warnings or infringement notices from environmental regulators.
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
Use materials efficiently and reduce impact
Measures in place
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies
Actions taken during 2017
supported launch of the ‘Rethinking Cement’ report
Performance
Protect biodiversity
Measures in place
numerous, project‐by‐project initiatives tailored to use materials efficiently as appropriate
aggregate water usage reduced with a reduction in water intensity
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies
Actions taken during 2017
numerous, project‐by‐project initiatives tailored to protect diversity as appropriate
Performance
reshaped 561ha, top‐soiled 428ha and seeded 42ha of mining projects
Build resilience to climate risks
Measures in place
Sustainability Policy; Environmental Policy supplemented by Operating Company Policies
comprehensive ‘Assessing Climate Risk’ guidance in place to support development of
Climate Resilience Plans on CPB Contractors’ construction projects
Actions taken during 2017
drafted response to TCFD
Performance
climate change resilience initiatives integrated into the award of the $2.8bn Sydney Metro
numerous, project‐by‐project initiatives tailored to build resilience as appropriate
and systems
and systems
and systems
project
PREVENT POLLUTION
CIMIC is committed to preventing the incidence, and mitigating the impact, of any pollution to air, water or
land. We recognise that, by doing so, 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.
State‐of‐the‐art techniques to protect waterways
On the Transmission Gully project, in New Zealand, CPB Contractors is taking an innovative approach to protecting the unique
Pāuatahanui inlet. Home to around 50 species of birds, the inlet is the only large area of salt marsh and seagrass in the Wellington
region, and is the largest ‘relatively unmodified’ estuary in the southern North Island of New Zealand.
Among the most important devices being used to prevent dirty water run‐off are sediment‐retention ponds. These are much more than
simple ponds. They use coagulant and ‘treatment socks’ to aid filtration of run‐off and make it settle quickly, trapping it in the ponds.
Water gradually becomes almost completely clean before it exits through a floating decant into gullies and streams.
Transmission Gully motorway is the largest project in the country to use these types of ponds, with more than 40 planned in total,
each treating up to five hectares of catchment. The system, which has been developed in New Zealand and proven effective in the
Auckland region, is a great example of ‘Kiwi ingenuity’.
Sediment‐retention ponds and decanting earth bunds, which capture and settle out dirty water, will protect around 95% of the
groundwork in the project. The other 5% of run‐off will move through devices such as ‘catch drains’ and ‘super silt fences’, which use
filter fabric reinforced with wire mesh to contain sediment. As much as possible, rainwater is captured in clean water diversions and
channelled away from earthworks.
The Group’s 2017 environmental performance was positive with no Level 166 incidents recorded (zero also recorded in 2016) and 10
Level 267 incidents recorded (versus 6 in 201668). The number of Level 2 incidents has declined markedly over recent years.
Environmental incidents
Level 1 (#)
Level 2 (#)
Level 3 (#)
Environmental incident frequency rate (#/MhW)69
Number of breaches (#)70
Number of violations of legal obligations/regulation resulting in fines
Value of fines incurred ($)
2017
0
10
497
0.06
15
4
38,200
66 Pollution or degradation which has high severity impacts on the community and/or environment and may have irreversible residual impacts.
67 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.
68 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.
69 The frequency rate is the total number of Level 1 and Level 2 incidents per million man hours worked.
70 Resulting in written warnings or infringement notices from environmental regulators.
142
In CPB Contractors, the eight Level 2 incidents related to issues including: out of hours work; a fuel spill resulting from vandalism; minor
discharges of water into nearby waterways; loss of containment or complaints or dust leaving sites; and reports of offensive odours
beyond a project’s boundaries. All incidents have been managed in line with CPB Contractors’ incident management procedures and in
consultation with regulators where required.
Eight legal breaches were recorded in CPB Contractors for environmental incidents and two fines totalling $23,000 were incurred. The
first of these related to a discharge of iron rich water to the Cooks River from the WestConnex New M5 project in New South Wales in
November 2016. The fine of $15,000 was issued in 2017. The second fine of $8,000 related to the generation of offensive odours at the
St Peters interchange on the New M5 project.
Cooroy to Curra project wins Environmental Excellence Award
CPB Contractors’ Bruce Highway - Cooroy to Curra (C2C) project in Queensland has been awarded the Australasian Chapter of the
International Erosion Control Association’s (IECA Aust) 2017 IECA Australasia Environmental Excellence Award. The C2C project consists
of a 10.5km, 4-lane divided highway on a green-fields alignment just south of Gympie, QLD.
The C2C project involves 1.9 million m3 cut-to-fill, 13 bridges, four major waterway diversions, and is situated within a high rainfall,
undulating hinterland area amongst underlying dispersive soils. The judging panel commended the project on getting each step of the
erosion sediment control planning and implementation right, resulting in effective outcomes with demonstrated cost efficiencies.
In Leighton Asia, two Level 2 incidents were recorded in 2017 which related to inappropriate tree felling, subsequently mitigated by
compensatory tree planting, and a discharge of silt into marine waters during extreme weather (typhoon).
Six legal breaches were recorded in Leighton Asia for instances of potential mosquito breeding on sites. A fine of $200 was imposed by
the regulator for one of those incidents, which occurred at a project in Singapore. Legal action for the other incidents is still in process.
UGL recorded one breach for an environmental violation which resulting in a fine of $15,000 which related to a discharge of sediment
laden water into a river system in New South Wales outside of licence parameters. The incident was investigated in accordance with
UGL’s environmental management processes and corrective actions were implemented to prevent a reoccurrence. No residual
environmental damage has been incurred.
The number of Level 3 incidents across the Group has continued to fall over time with a reduction from 520 in 2016 to 497 in 2017.
The Group has adopted a comprehensive, systematic and collective approach to hazard and risk management, and by continuously
monitoring and improving our performance, we ensure we remain competitive in the markets in which we operate.
USE ENERGY EFFICIENTLY AND REDUCE EMISSIONS
CIMIC is committed to using energy efficiently, reducing energy intensity, utilising renewables when efficient to do
so and minimising greenhouse gas emissions.
The Group is a substantial user of energy, particularly driven by Thiess’ mining activities which consume large volumes of diesel in the
operations of haul trucks, excavators and bulldozers, much of which is supplied directly by clients.
The Group’s energy consumption for 2017 was as follows:
Energy consumption
Total Gigawatt hours (GWH)
Of which: Liquid, gas and solid fuel (%)
Electricity (%)
Energy spend ($m)
2017
8,790
98.4
1.6
225
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 power use in a rail maintenance facility
UGL Unipart, a joint venture between UGL and UK-based supply chain logistics company Unipart, provides heavy maintenance and
supply chain services to 1,050 passenger cars for Sydney’s metropolitan fleet. At UGL Unipart’s Auburn maintenance facility in Sydney,
a lighting upgrade was undertaken to replace outdated and inefficient lighting which was responsible for approximately two thirds of
total electricity consumption.
The upgrade involved replacing more than 3000 inefficient fittings with modern and efficient LEDs. The project reduced the energy
used for lighting by more than 2,000MWh or about 60%, and also led to a reduction in annual maintenance costs. For teams working
on-site, the new lighting provides enhanced lighting quality and uniformity across the site, boosting productivity and importantly
improving worker safety. Greenhouse gas emissions have also been reduced by around 1,700 tonnes per year.
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
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.
However, it is important to note that there are a number of industry relevant challenges inherent to the development of setting
relevant strategies, metrics and targets to reduce greenhouse gas emissions, including:
the diversity of the Group’s construction, mining, minerals processing, and operations and maintenance portfolio which
complicates the development of meaningful and comparable baselines;
each project within an activity (particularly construction and operations and maintenance) is bespoke and has different energy
usage and emissions profile;
individual construction projects have finite delivery timeframes and the energy usage and emissions profile can vary significantly
depending on different phases of the project; and
energy usage and emissions profiles of individual projects can vary by geography, especially between Australia and overseas
markets.
We aim to reduce emissions by working together with our clients and business partners on each of our bespoke projects. And because
they are bespoke, many solutions are unique or tailored for the circumstances of the individual project.
Our Operating Companies use a range of systems to track and report on our energy use and calculate our greenhouse gas emissions.
The majority (~92%) of the Group’s Scope 1 emissions are generated by the contract mining activities of the Group’s Operating
Company Thiess.
Scope 1 greenhouse gas emissions (kt.CO2‐e)
Total71
2017
2,202
2016
1,964
2015
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 and find ways to operate more effectively and efficiently in undertaking the construction to reduce
the emissions from each individual project. In 2017, CIMIC’s Scope 2 emission grew by 12%, significantly less than revenue which grew
by nearly 24%.
Use of LED lighting on a construction project
CPB Contractors’ Furlong Main Blackburn Heatherdale Level Crossing Removal project in Melbourne implemented an innovative
lighting solution. The team were required to excavate over 200,000m3 to lower the rail line over a 41‐day rail occupation period. With
work occurring around the clock, in a confined area, good lighting was essential.
Instead of using mobile lighting towers, the team used semi‐permanent LED lighting for improved visibility. The lighting solution
involved:
30 lights installed on a ‘daisy chain’ at the top of cut, outside the work area;
a semi‐permanent set up allowing work to continue 24/7 without interruption; and
installing lighting prior to the rail shut down, freeing resources for critical activities.
Using LEDs provided stronger, targeted lighting and avoided light spill in nearby communities. The end result was:
a saving of 38,745 litres of fuel;
greenhouse gas emissions reduced by 90%;
saving in hire costs by avoiding the hire of 30 light towers;
saving in maintenance costs from refuelling and relocating;
improved safety and efficiency by reducing the amount of equipment within a narrow work zone corridor; and
avoiding the need to relocate lights during the rail shut down, improving efficiency.
CIMIC’s Scope 2 greenhouse gas emissions are almost entirely derived from the consumption of purchased electricity as the purchase
of heat or steam is rarely undertaken in the Group’s markets, unlike in many Northern Hemisphere locations. These electricity
purchases are primarily used to:
power some construction equipment, (i.e. tunnel boring machines and cranes);
provide outdoor lighting on construction, mining, and operations and maintenance projects; and
illuminate workshops, site sheds and other project related facilities.
Scope 2 greenhouse gas emissions (kt.CO2‐e)
Total
2017
128
2016
89
2015
93
71 UGL’s emission not reported for the year’s prior to CIMIC’s ownership.
144
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
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.
However, it is important to note that there are a number of industry relevant challenges inherent to the development of setting
relevant strategies, metrics and targets to reduce greenhouse gas emissions, including:
the diversity of the Group’s construction, mining, minerals processing, and operations and maintenance portfolio which
complicates the development of meaningful and comparable baselines;
each project within an activity (particularly construction and operations and maintenance) is bespoke and has different energy
individual construction projects have finite delivery timeframes and the energy usage and emissions profile can vary significantly
energy usage and emissions profiles of individual projects can vary by geography, especially between Australia and overseas
usage and emissions profile;
depending on different phases of the project; and
markets.
We aim to reduce emissions by working together with our clients and business partners on each of our bespoke projects. And because
they are bespoke, many solutions are unique or tailored for the circumstances of the individual project.
Our Operating Companies use a range of systems to track and report on our energy use and calculate our greenhouse gas emissions.
The majority (~92%) of the Group’s Scope 1 emissions are generated by the contract mining activities of the Group’s Operating
Company Thiess.
Scope 1 greenhouse gas emissions (kt.CO2‐e)
Total71
2017
2,202
2016
1,964
2015
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 and find ways to operate more effectively and efficiently in undertaking the construction to reduce
the emissions from each individual project. In 2017, CIMIC’s Scope 2 emission grew by 12%, significantly less than revenue which grew
by nearly 24%.
Use of LED lighting on a construction project
CPB Contractors’ Furlong Main Blackburn Heatherdale Level Crossing Removal project in Melbourne implemented an innovative
lighting solution. The team were required to excavate over 200,000m3 to lower the rail line over a 41‐day rail occupation period. With
work occurring around the clock, in a confined area, good lighting was essential.
Instead of using mobile lighting towers, the team used semi‐permanent LED lighting for improved visibility. The lighting solution
involved:
30 lights installed on a ‘daisy chain’ at the top of cut, outside the work area;
a semi‐permanent set up allowing work to continue 24/7 without interruption; and
installing lighting prior to the rail shut down, freeing resources for critical activities.
Using LEDs provided stronger, targeted lighting and avoided light spill in nearby communities. The end result was:
a saving of 38,745 litres of fuel;
greenhouse gas emissions reduced by 90%;
saving in hire costs by avoiding the hire of 30 light towers;
saving in maintenance costs from refuelling and relocating;
improved safety and efficiency by reducing the amount of equipment within a narrow work zone corridor; and
avoiding the need to relocate lights during the rail shut down, improving efficiency.
CIMIC’s Scope 2 greenhouse gas emissions are almost entirely derived from the consumption of purchased electricity as the purchase
of heat or steam is rarely undertaken in the Group’s markets, unlike in many Northern Hemisphere locations. These electricity
purchases are primarily used to:
power some construction equipment, (i.e. tunnel boring machines and cranes);
provide outdoor lighting on construction, mining, and operations and maintenance projects; and
illuminate workshops, site sheds and other project related facilities.
Scope 2 greenhouse gas emissions (kt.CO2‐e)
Total
2017
128
2016
89
2015
93
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;
CIMIC’s Scope 3 greenhouse gas emissions includes other indirect emissions, generated from activities such as:
electricity‐related activities not covered in Scope 2;
outsourced activities; and
waste disposal.
Scope 3 greenhouse gas emissions (kt.CO2‐e)
Total
2017
1,653
2016
2,666
2015
3,497
Guiding the industry towards zero carbon cement
CPB Contractors and EIC Activities have taken a lead role in launching a report that provides a pathway to zero carbon cement. The
Rethinking Cement72 report, produced by climate solutions think tank Beyond Zero Emissions (BZE), sets out a pathway for modernising
cement, eliminating carbon emissions, and building strong and durable infrastructure.
BZE is a nationally recognised and respected independent, not‐for‐profit climate change think‐tank providing peer reviewed research,
detailed costings and guidance enabling Australian industries to transition to a low carbon economy. Rethinking Cement focuses on
cement production, the single biggest industrial producer of emissions. Cement production causes 8% of global carbon emissions –
more than the global car fleet.
About 55% per cent of cement emissions come from the chemical process of limestone calcination, which releases carbon dioxide as a
waste product, and is unavoidable if limestone‐based cement continues to be used. Some 32% comes from burning fuel to drive the
chemical process, and the remaining 13% comes from the indirect emissions created in the generation of the electricity which is used
for grinding and moving materials around a cement plant.
BZE’s research proposes that Australia can enjoy a zero carbon cement industry in 10 years using already commercialised technologies,
such as geopolymer cements, high‐blend cements and mineral carbonation. A key strategy is to replace 50% of existing cements with
geopolymers as their manufacture produces fewer emissions – potentially zero. Geopolymer cement can be produced from fly ash (a
by‐product of coal‐fired power stations) and ground granulated blast furnace slag (a steel production waste product), with the report
suggesting that Australia had 400 million tonnes of fly ash stockpiled from over a century of coal‐burning. Just a quarter of these
stockpiles of fly ash could supply an estimated 20 years or more of domestic cement production.
Geopolymer are already cost‐competitive and, in many cases, outperform traditional concrete in terms of:
flexural strength ‐ geopolymers have greater ability to be bent without cracking;
resistance to chlorides, acids and salts, making them a better option for uses such as sewer pipes and marine environments;
fire‐resistance, which suits applications such as road and rail tunnels; and
shrinkage – geopolymers shrink less as they dry which can reduce unsightly cracking.
In Australia, a number of suppliers are currently offering geopolymer cements and they have been used on projects including retaining
walls, precast footpaths, airport taxi‐ways, precast panels for buildings, sewer pipes, kerb‐sides, pavements and railway sleepers.
CIMIC is proud to support BEZ’s launch of the Rethinking Cement report which, we hope, will stimulate government and industry to
shift to a zero carbon cement industry.
CIMIC is registered to report under the NGER Scheme. 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 NGER Scheme obligations
including:
having established legal review processes to identify operational control73 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.
71 UGL’s emission not reported for the year’s prior to CIMIC’s ownership.
144
72 Zero Carbon Industry Plan ‐ Rethinking Cement, Beyond Zero Emissions, Aug 2017.
73 'Operational control' is the concept used when determining the corporate group which has NGER obligations for the facility and therefore avoids the
double counting of emissions reporting by a client and the contractor.
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The Group has reported the following emissions and energy usage NGER Scheme data based on its Australian operations and those
facilities where the Group has operational control:
Greenhouse gas emissions and energy consumption74
2016/1775
2015/1676
2014/15
2013/14
2012/13
2011/12
2010/11
2009/10
2008/09
Total Scope One
emissions (t CO2-e)
68,295
50,639
77,412
153,239
206,245
730,542
775,441
684,758
478,444
Total Scope Two
emissions (t CO2-e)
53,534
32,910
72,142
92,522
128,495
132,516
187,887
243,487
114,785
Total Net energy
consumed (GJ)
1,233,835
884,558
1,434,467
2,604,328
2,660,483
6,918,762
8,435,737
7,811,131
5,278,962
CIMIC’s reported emissions and energy usage increased in 2016/17 versus the prior year, largely as a consequence of the acquisition of
UGL for which CIMIC took on the reporting obligation. UGL contributed 52% of the increase in Scope 1 emissions, 82% of the increase in
Scope 2 emissions and 64% of the increase in net energy consumed. The balance of the increase was largely due to increased activity
levels in CPB Contractors from a number of very large infrastructure projects.
EY (formerly Ernst & Young) provided a limited assurance audit in 2017 and signed off on the preparation of CIMIC’s Energy and
Emissions Report.
REDUCE WASTE
CIMIC is committed to using resources efficiently, encouraging recycling and taking a lifecycle approach to reducing waste.
This often means reducing waste through smarter design and procurement.
Recycling rock and spoil from the Wynyard Walk project
CPB Contractors has successfully completed a $150 million pedestrian link, between Wynyard Station in Sydney’s CBD to the waterfront
development at Barangaroo, for Transport for NSW (TfNSW). It allows people to travel from the station to Barangaroo in approximately
six minutes, avoiding steep inclines and eliminating dangerous road crossings for pedestrians. The link is expected to accommodate up
to 23,000 office workers and attract up to 33,000 visitors per day.
The project included demolition of two high rise commercial towers, underpinning of several existing towers, tunnelling a new 180
metre-long nine metre-wide walkway, and construction of a multi-storey portal, a paved pedestrian plaza and a pedestrian bridge over
Sussex Street. Around 25,000 tonnes of rock and spoil was removed during construction and 100% of the excavated sandstone was
recycled and used at the new Barangaroo Reserve.
In 2017, CIMIC’s Operating Companies generated a total of 8,227,843 tonnes of waste, of which ~68% was diverted for recycling, ~19%
was reused and ~9% was disposed of in landfill. The significant waste generated in 2017 relates to significant increase in tunnelling
works which generate spoil77 that needs to be disposed of. Much of the spoil generated from Sydney’s WestConnex project is
transported to infrastructure and construction projects within the Illawarra region of New South Wales.
Waste generation (tonnes)
Disposed - landfill
Diverted - reuse
Diverted - recycling
Diverted - other
Total
2017
726,887
1,526,012
5,569,579
405,365
8,227,842
Smart cross-project furniture recycling at WestConnex
One of CPB Contractors’ joint venture construction teams on the new M4 East phase of Sydney’s WestConnex project was able to
achieve a positive environmental outcome and improved financial result when outfitting their new site office.
The team needed to procure furniture which was estimated to cost between A$25,000 and A$35,000. It was suggested that the team
work with a demolition contractor hired to dispose of furniture from offices earmarked for demolition on the Sydney Metro project. As
a result, CPB Contractors was able to recycle, at a reduced cost, quality furniture while the demolition contractor saved on disposal
costs.
74 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.
75 Reported to NGER, expected to be published by the Clean Energy Regulator at the end of Feb 2018.
76 2015/16 NGER Scope 1 emissions and Net energy consumed was amended from the information reported to the Clean Energy Regulator (and in the
2016 Annual Report) due to additional fuel use being reported by a subcontractor.
77 Waste material brought up during the course of an excavation or a dredging or mining operation.
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During the year, the Group generated 109.8 thousand tonnes of hazardous waste. More than 90% of this was generated from
construction projects in Australia which largely relates to spoil removed from sites where land has previously been contaminated.
Approximately half of this waste generated related to a major defence facility project in Queensland and the balance from projects
across the country. As part of wide ranging and extensive earthworks undertaken to deliver projects, spoil with the potential for
contamination, i.e. from asbestos or PFOS78, is dealt with using specific processes and controls, and in line with all regulatory guidelines
and requirements, and industry best practice.
The Group’s other Operating Companies generated relatively small amounts of waste which included: oily water from workshop
facilities, and oils and grease from construction sites; used lubricating oils and contaminated soil from the clean-up of small spills; and
sewerage, batteries and grease. Hazardous waste streams are diverted for reuse/recycling where possible and, if this is not possible,
disposed as per regulatory requirements.
The Group is not aware of generated, transported, imported, exported or having treated any other hazardous waste and has not
shipped any hazardous waste internationally.
CONSERVE WATER
CIMIC is committed to minimising water usage and implementing opportunities for water efficiency and recycling.
Construction, mining and services projects can be substantial users of water for dust suppression, operation of
minerals processing plants (i.e. coal handling preparation plants) and equipment washing. Opportunities to reduce water use and
increase recycling are positive for the environment but also help save cost.
Innovative approach to dust suppression reduces water usage
CPB Contractors’ Furlong Main Blackburn Heatherdale Level Crossing Removal project has implemented an innovative solution for dust
suppression (see also ‘Use of LED lighting on a construction project’ on page 144). The team employed 80 temporary dust sprinklers for
dust suppression, instead of relying solely on water carts typically used in the construction industry. The system at Blackburn was
connected to rainwater tanks which led to the use of approximately 200,000 litres of recycled water instead of potable water.
Other benefits of the temporary sprinkler system included:
avoiding the need to hire and operate three water tankers, saving tens of thousands of dollars;
reducing fuel use, saving 3,690 litres, and the inherent carbon emissions;
using biodiesel in generators, reducing greenhouse gas emissions by 90%;
achieving more effective dust suppression with a fine mist spray distributed from the top of the cut, versus a truck dropping water
from a spreader bar, which was vital for the health and safety of the construction team and the nearby community; and
reducing mobile plant in the work area as sprinklers were placed clear of construction, improving the safety of workers.
The project was awarded first place and received prize money of $5,000 in the CIMIC Group 2017 innovation awards - Energy and
Environmental Protection. The project team chose to donate $1,000 of the prize money to Nadrasca, a community organisation that
was affected during construction. Nadrasca provides services for people with disabilities. The team also donated $1,000 to MS Nerve
Centre, another organisation impacted during construction. The MS Nerve Centre provides support for people living with multiple
sclerosis. The remaining prize money was used for an event, where the project team and senior CPB Contractors representatives
discussed the innovation and workshopped its application to other projects.
Each project undertaken by the Group develops a water management plan to effectively manage water according to the unique
conditions of that project. These water management plans are integrated with, and form a subset of, broader environmental
management plans.
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.
Water conservation program at Balikpapan Support Facility
To meet operational requirements at Thiess’ Balikpapan Support Facility, the team tackled the challenge of achieving more
environmentally-friendly, cost-effective clean water sources. They developed a regional-first water conservation program comprising
rainwater collection and the upgrading of the facility’s Wastewater Treatment Plant (WWTP).
On average, 5KL/day of water can now be reused from the WWTP and 40KL/day of water can be collected from the rainwater tank,
delivering a total additional intake of 45KL/day of fresh water. Groundwater consumption has reduced from 30KL per day to 10KL per
day. Water handling and sourcing fresh water costs have been reduced by 81% without any additional use of potable water.
78 Perfluorooctane sulfonate – a chemical historically used in a range of industrial applications including firefighting foams.
147
147
2016/1775
2015/1676
2014/15
2013/14
2012/13
2011/12
2010/11
2009/10
2008/09
Emissions Report.
REDUCE WASTE
The Group has reported the following emissions and energy usage NGER Scheme data based on its Australian operations and those
facilities where the Group has operational control:
Greenhouse gas emissions and energy consumption74
Total Scope One
Total Scope Two
emissions (t CO2-e)
emissions (t CO2-e)
Total Net energy
consumed (GJ)
68,295
50,639
77,412
153,239
206,245
730,542
775,441
684,758
478,444
53,534
32,910
72,142
92,522
128,495
132,516
187,887
243,487
114,785
1,233,835
884,558
1,434,467
2,604,328
2,660,483
6,918,762
8,435,737
7,811,131
5,278,962
CIMIC’s reported emissions and energy usage increased in 2016/17 versus the prior year, largely as a consequence of the acquisition of
UGL for which CIMIC took on the reporting obligation. UGL contributed 52% of the increase in Scope 1 emissions, 82% of the increase in
Scope 2 emissions and 64% of the increase in net energy consumed. The balance of the increase was largely due to increased activity
levels in CPB Contractors from a number of very large infrastructure projects.
EY (formerly Ernst & Young) provided a limited assurance audit in 2017 and signed off on the preparation of CIMIC’s Energy and
CIMIC is committed to using resources efficiently, encouraging recycling and taking a lifecycle approach to reducing waste.
This often means reducing waste through smarter design and procurement.
Recycling rock and spoil from the Wynyard Walk project
CPB Contractors has successfully completed a $150 million pedestrian link, between Wynyard Station in Sydney’s CBD to the waterfront
development at Barangaroo, for Transport for NSW (TfNSW). It allows people to travel from the station to Barangaroo in approximately
six minutes, avoiding steep inclines and eliminating dangerous road crossings for pedestrians. The link is expected to accommodate up
to 23,000 office workers and attract up to 33,000 visitors per day.
The project included demolition of two high rise commercial towers, underpinning of several existing towers, tunnelling a new 180
metre-long nine metre-wide walkway, and construction of a multi-storey portal, a paved pedestrian plaza and a pedestrian bridge over
Sussex Street. Around 25,000 tonnes of rock and spoil was removed during construction and 100% of the excavated sandstone was
recycled and used at the new Barangaroo Reserve.
In 2017, CIMIC’s Operating Companies generated a total of 8,227,843 tonnes of waste, of which ~68% was diverted for recycling, ~19%
was reused and ~9% was disposed of in landfill. The significant waste generated in 2017 relates to significant increase in tunnelling
works which generate spoil77 that needs to be disposed of. Much of the spoil generated from Sydney’s WestConnex project is
transported to infrastructure and construction projects within the Illawarra region of New South Wales.
Waste generation (tonnes)
Disposed - landfill
Diverted - reuse
Diverted - recycling
Diverted - other
Total
2017
726,887
1,526,012
5,569,579
405,365
8,227,842
Smart cross-project furniture recycling at WestConnex
One of CPB Contractors’ joint venture construction teams on the new M4 East phase of Sydney’s WestConnex project was able to
achieve a positive environmental outcome and improved financial result when outfitting their new site office.
The team needed to procure furniture which was estimated to cost between A$25,000 and A$35,000. It was suggested that the team
work with a demolition contractor hired to dispose of furniture from offices earmarked for demolition on the Sydney Metro project. As
a result, CPB Contractors was able to recycle, at a reduced cost, quality furniture while the demolition contractor saved on disposal
74 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.
75 Reported to NGER, expected to be published by the Clean Energy Regulator at the end of Feb 2018.
76 2015/16 NGER Scope 1 emissions and Net energy consumed was amended from the information reported to the Clean Energy Regulator (and in the
2016 Annual Report) due to additional fuel use being reported by a subcontractor.
77 Waste material brought up during the course of an excavation or a dredging or mining operation.
costs.
146
CIMIC Group Limited Annual Report 2017 | Sustainability Report
During 2017, the Group’s contracting activities withdrew used 11.6 million kilolitres of water and discharged almost 0.5 million
kilolitres.
Water use (ML)
Withdrawals
Re-use
Discharge
Group
7,414
4,052
(476)
Sedgman, when operating minerals processing plants on behalf of their clients, is generally required to comply with their client’s water
management plans.
Of total water demand, 35% (~4.0 million kilolitres) was met through recycling or reusing water. Of the water that was withdrawn, it
was sourced as follows:
Source of water withdrawals (%)
Mains
Groundwater
Rainwater collected
Waste water
Surface water
The discharges of water went to the following areas:
Discharges of water (%)
Wastewater
Surface water
Marine water
Group
7
20
3
28
41
Group
21
55
23
USE MATERIALS EFFICIENTLY AND REDUCE IMPACT
CIMIC is committed to continually innovating to improve the efficiency of resources used and reducing their impact on the
environment and society. Improving the efficiency of the resources we use helps to lower our costs and improve our value
proposition.
In 2017, the Group’s Construction and Services Operating Companies spent some $883 million on 3.99 million tonnes of materials.
2017
3,990
883
2017
86
9
5
<1
2017
49
38
12
<1
2016
4,842
926
2016
86
13
1
<1
2016
62
32
6
<1
Material use (kilotonnes) and spend ($m)
Quantity
Spend
The quantities of construction materials purchased and the spend on those materials is split as follows:
Quantities (%)
Concrete
Steel
Asphalt
Timber
Spend (%)
Concrete
Steel
Asphalt
Timber
148
148
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
Sedgman, when operating minerals processing plants on behalf of their clients, is generally required to comply with their client’s water
Mitchell Freeway Extension trials sustainable materials
CPB Contractors has successfully delivered a new 6km section of the Mitchell Freeway, north of Perth in Western Australia which
incorporates a number of sustainability features and materials, some of which had never before been incorporated in a Western
Australian freeway road project, including:
non-recyclable glass fines were trialled in the road base layer, providing a use for glass that is unsuitable for re-manufacture, and
therefore, an alternative to land-fill. The use of glass fines and other recycled materials in road building helps to reduce
environmental impact by reducing landfill and energy from the production of pavement materials. Glass fines are created during
the glass recycling process; and
the use of energy efficient LED lighting for the roads network and pedestrian and cyclist shared path.
The Mitchell Freeway Extension project also featured: revegetation using a mix of native species common to the local area, such as
Banksias, Grevilleas and Melaleucas, which included more than 200kg of native seed and approximately 320,000 native plants.
It is hoped that the trial of glass fines will encourage greater use of recycled materials in standard construction practices across the
industry.
Of the Group’s total expenses in 2017: subcontractors were 32%; personnel costs were 29%; materials were 20%; plant costs, including
depreciation and lease payments were 14%; and other expenses were 6%.
PROTECT BIODIVERSITY
CIMIC is committed to minimising disturbances and avoiding impacts on habitats and ecology, and promoting
biodiversity.
During the design and planning phases of our diverse infrastructure, resources and property projects, we work to avoid environmental
impacts to sensitive locations. Where this is not possible, we deploy strategies to minimise disturbance while efficiently, effectively and
safely completing work. A range of measures to manage and mitigate potential impacts are implemented in areas with sensitive
ecological communities. The Group’s approach includes the development of biodiversity management plans that consider local
contexts, baseline surveys, monitoring results and specialist advice.
A feat of environmental engineering on Transmission Gully
Innovative work is happening at the northern end of the Transmission Gully project, north of Wellington in New Zealand, to shift
sections of the Te Puka Stream sideways and up to 20 metres above its current position to allow for the new motorway route. CPB
Contractors, in joint venture, is progressively diverting water through a pipe system along the valley floor. Once diverted, the ground is
then excavated and the area filled more than 45 metres high to the final level of the new motorway.
After the new streambed is constructed, it can follow a natural course, with its banks densely planted in native shrubs and trees, and
the new stream restocked with native fish. The fish were relocated from Te Puka Stream prior to construction starting, in one of the
largest fish relocation exercises in the country. With this restocking and revegetation, rather than being subject to farming and burn-
offs as in past decades, it is expected that valleys such as Te Puka will eventually be richer in wildlife than before the project started.
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.
Rehabilitation of mining area (ha)
Australia/Pacific
Asia
Total
Reshaped
192.1
369.3
561.4
Top-soiled
69.7
358.5
428.2
Seeded
42.0
0
42.0
BUILD RESILIENCE TO CLIMATE RISKS
It is widely recognised that warming of the planet, caused by greenhouse gas emissions, poses serious risks to the global
economy and will have an impact across many economic sectors. CIMIC is committed to increasing resilience to climate risks
by undertaking risk assessments, and by designing and adapting activities to respond to potential and actual impacts.
CIMIC has reviewed the recommendations of the TCFD CIMIC intends to publish a fuller response to the recommended disclosures of
the TCFD during 2018 on its website. In the meantime, the TCFD framework provides a useful structure to help investors and others
understand how CIMIC assesses climate-related risks and opportunities.
149
149
During 2017, the Group’s contracting activities withdrew used 11.6 million kilolitres of water and discharged almost 0.5 million
Of total water demand, 35% (~4.0 million kilolitres) was met through recycling or reusing water. Of the water that was withdrawn, it
kilolitres.
Water use (ML)
Withdrawals
Re-use
Discharge
management plans.
was sourced as follows:
Source of water withdrawals (%)
Mains
Groundwater
Rainwater collected
Waste water
Surface water
Discharges of water (%)
Wastewater
Surface water
Marine water
The discharges of water went to the following areas:
USE MATERIALS EFFICIENTLY AND REDUCE IMPACT
CIMIC is committed to continually innovating to improve the efficiency of resources used and reducing their impact on the
environment and society. Improving the efficiency of the resources we use helps to lower our costs and improve our value
In 2017, the Group’s Construction and Services Operating Companies spent some $883 million on 3.99 million tonnes of materials.
Material use (kilotonnes) and spend ($m)
The quantities of construction materials purchased and the spend on those materials is split as follows:
Group
7,414
4,052
(476)
Group
7
20
3
28
41
21
55
23
Group
2017
3,990
883
2016
4,842
926
2017
2016
2017
2016
86
9
5
<1
49
38
12
<1
86
13
1
<1
62
32
6
<1
proposition.
Quantities (%)
Quantity
Spend
Concrete
Steel
Asphalt
Timber
Spend (%)
Concrete
Steel
Asphalt
Timber
148
CIMIC Group Limited Annual Report 2017 | Sustainability Report
Some of the important climate-related points to highlight that were identified in CIMIC’s TCFD review include that:
CIMIC has a robust governance and management system in place to oversee climate-related risks and opportunities;
CIMIC is a service provider and not generally the long term owner of infrastructure, property or resources assets, other than where
CIMIC’s project finance arm – Pacific Partnerships – invests in infrastructure projects, and therefore has only a limited exposure to
the risks of climate change over the longer term;
the relatively short term duration of the contracting services CIMIC provides means that the risks, and associated costs, can
reasonably be identified and factored into tenders, thereby reducing their financial impact;
climate risk assessments are regularly undertaken with, or on behalf of, clients however the Group’s exposure to the long-term
performance of client’s asset is largely limited to what clients are prepare to consider in their life-cycle assessments and to pay for;
increasing levels of acute and chronic risks are likely to lead to a range of construction opportunities (and increased revenues) from
remediation work and investments to create greater resilience to the potential effects of climate change;
while the contract mining of thermal coal79 is unlikely to see growth in the mid-to-longer term, it will remain a relatively stable
market for the foreseeable future;
contract mining activities will be supplemented by opportunities to provide these services for other resources such as lithium for
use in alternative technologies such as batteries; and
the bespoke, short-term nature of the Group’s diverse portfolio of construction projects creates challenges in developing
meaningful carbon reduction metrics and targets, both at an aggregate level but also on an intensity basis.
The conclusion that can be drawn from the initial TCFD review is that CIMIC, while exposed to the impacts of climate change, like all
businesses, has significant resilience due to the nature of the contracting services it provides. Some of the recognised risks will likely
impact the Group, but these can be readily identified and priced, limiting their financial impact, while a range of opportunities should
develop across the business that may generate additional sources of revenue in the future.
Sydney Metro includes climate change resilience initiatives
On Stage 2 of the A$2.81 billion Sydney Metro project, CPB Contractors, with its joint venture partners, is working with its client,
Transport for NSW (TfNSW) to integrate climate change risk assessment during construction 80. At this stage, short-term climate change
risks identified during the construction phase of the project relate to increased intensity and frequency of extreme rainfall events and
increased temperatures, including:
increases in the number of days where personnel are unable to work due to stop work thresholds resulting in delays in program
and lost days;
an inundation of any excavations during construction;
flooding roads, congestion, and increased risk of road incidents during construction, affecting workers and/or equipment
accessing sites resulting in delays in program and lost days;
increases in the number of precautionary shut down periods during extreme storm events;
increases in damage and delays to equipment;
an increasing load on temporary water treatment devices, and erosion control devices, increasing flooding events and affecting
water quality treatment levels achieved; and
increases in dust issues.
Sydney Metro is expected to include contractual requirements for contractors (i.e. CPB Contractors, with its joint venture partners) to
identify climate change risks and implement climate change initiatives to ensure detailed design and construction activities are resilient
to climate change, based on the latest climate change projections.
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:
continue to focus on initiatives to report on and reduce greenhouse gas emissions;
publish a full response to the recommended disclosures of the TCFD on our website;
continue to participate in DJSI and CDP (formerly the Carbon Disclosure Project) surveys as a means of demonstrating the Group’s
sustainability performance to a broad range of stakeholders;
further develop and improve support tools and processes to integrate sustainability on infrastructure projects; and
participate again in the CIMIC HOCHTIEF Innovation Awards, using these identify and communicate worthwhile initiatives.
79 Thermal coal (or steaming coal) is burned for steam to run turbines to generate electricity either to public electricity grids or directly by industry
consuming electrical power (such as chemical industries, paper manufacturers, cement industry and brickworks). Metallurgical coal (or coking coal) is
used in the process of creating coke necessary for iron and steel-making.
80 Sydney Metro | city & southwest, Sustainability Strategy 2017-24, July 2017.
150
150
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CIMIC Group Limited Annual Report 2017 | Sustainability Report
OUR AWARDS
SUSTAINABILITY
CIMIC
DJSI again recognised CIMIC with inclusion in the DJSI Australia Index, the only construction and engineering company to be
included. CIMIC was identified as the construction and engineering sector global leader in four categories; 1. Risk & Crisis
Management, 2. Building Materials, 3. Environmental Policy and Management System, 3. Resource Conservation and Resource
Efficiency, and 4. Labor Practice Indicators.
CDP acknowledged CIMIC again with a ‘C’ rating for its ‘Climate Change’ submission which indicates that CIMIC has “Knowledge of
impacts on, and of, climate change issues”81.
CDP again recognised CIMIC with a ‘B’ rating for its ‘Water’ submission which indicates that CIMIC has provided “evidence of
actions associated with good environmental management”82.
FTSE Russell again commended CIMIC’s sustainability by including the company 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.
CIMIC received a SEAL83 Organisational Impact Award which recognises overall corporate sustainability performance.
SAFETY
CPB Contractors
Civil Contractors Federation of South Australia inaugural Healthy Workers Healthy Futures Award for 2017 to Torrens Road to River
Torrens project (T2T Alliance).
Leighton Asia
Hong Kong Development Bureau’s Gold Award for Temporary Works Excellence on the Hong Kong Boundary Crossing Facilities’
Passenger Clearance Building.
Hong Kong government’s Labour Relations Bronze Award to the Tseung Kwan O – Lam Tin Tunnel – Main Tunnel and Associated
Works project.
increases in the number of days where personnel are unable to work due to stop work thresholds resulting in delays in program
Royal Society for Prevention of Accidents (RoSPA) Health and Safety Silver Award for the Springleaf Station and Tunnels project in
Singapore.
Singapore’s Workplace Health and Safety Council’s Sharp Award to the Springleaf Station and Tunnels project.
Singapore government’s Land Transport Authority Accident Free Million Man-hours Award to the Springleaf Station and Tunnels
project.
The Safety Organisation of the Philippines’ Award of Distinction to the North Luzon Expressway (NLEX) Harbor Link project.
Institute of Quality & Environment Management Services (IQEMS) Kalinga Safety Gold Award to the Esplanade project in India.
Some of the important climate-related points to highlight that were identified in CIMIC’s TCFD review include that:
CIMIC has a robust governance and management system in place to oversee climate-related risks and opportunities;
CIMIC is a service provider and not generally the long term owner of infrastructure, property or resources assets, other than where
CIMIC’s project finance arm – Pacific Partnerships – invests in infrastructure projects, and therefore has only a limited exposure to
the risks of climate change over the longer term;
the relatively short term duration of the contracting services CIMIC provides means that the risks, and associated costs, can
reasonably be identified and factored into tenders, thereby reducing their financial impact;
climate risk assessments are regularly undertaken with, or on behalf of, clients however the Group’s exposure to the long-term
performance of client’s asset is largely limited to what clients are prepare to consider in their life-cycle assessments and to pay for;
increasing levels of acute and chronic risks are likely to lead to a range of construction opportunities (and increased revenues) from
remediation work and investments to create greater resilience to the potential effects of climate change;
while the contract mining of thermal coal79 is unlikely to see growth in the mid-to-longer term, it will remain a relatively stable
market for the foreseeable future;
contract mining activities will be supplemented by opportunities to provide these services for other resources such as lithium for
use in alternative technologies such as batteries; and
the bespoke, short-term nature of the Group’s diverse portfolio of construction projects creates challenges in developing
meaningful carbon reduction metrics and targets, both at an aggregate level but also on an intensity basis.
The conclusion that can be drawn from the initial TCFD review is that CIMIC, while exposed to the impacts of climate change, like all
businesses, has significant resilience due to the nature of the contracting services it provides. Some of the recognised risks will likely
impact the Group, but these can be readily identified and priced, limiting their financial impact, while a range of opportunities should
develop across the business that may generate additional sources of revenue in the future.
Sydney Metro includes climate change resilience initiatives
On Stage 2 of the A$2.81 billion Sydney Metro project, CPB Contractors, with its joint venture partners, is working with its client,
Transport for NSW (TfNSW) to integrate climate change risk assessment during construction 80. At this stage, short-term climate change
risks identified during the construction phase of the project relate to increased intensity and frequency of extreme rainfall events and
increased temperatures, including:
and lost days;
an inundation of any excavations during construction;
flooding roads, congestion, and increased risk of road incidents during construction, affecting workers and/or equipment
accessing sites resulting in delays in program and lost days;
increases in the number of precautionary shut down periods during extreme storm events;
increases in damage and delays to equipment;
an increasing load on temporary water treatment devices, and erosion control devices, increasing flooding events and affecting
water quality treatment levels achieved; and
increases in dust issues.
Sydney Metro is expected to include contractual requirements for contractors (i.e. CPB Contractors, with its joint venture partners) to
identify climate change risks and implement climate change initiatives to ensure detailed design and construction activities are resilient
to climate change, based on the latest climate change projections.
OUTLOOK AND FUTURE PLANS
In 2017, we plan to:
We are committed to, wherever possible, preventing or otherwise mitigating and remediating any harmful effects from our operations.
continue to focus on initiatives to report on and reduce greenhouse gas emissions;
publish a full response to the recommended disclosures of the TCFD on our website;
continue to participate in DJSI and CDP (formerly the Carbon Disclosure Project) surveys as a means of demonstrating the Group’s
sustainability performance to a broad range of stakeholders;
further develop and improve support tools and processes to integrate sustainability on infrastructure projects; and
participate again in the CIMIC HOCHTIEF Innovation Awards, using these identify and communicate worthwhile initiatives.
CULTURE
CIMIC
LinkedIn ranked CIMIC Group as number 7 on its ‘Top Companies 2017: Where Australia wants to work now’ list.
CPB Contractors
CareerTrackers 'Most Valuable Partner' award for outstanding commitment, participation and leadership.
Australian Institute of Building (AIB) Australian Building Professional of the Year awarded to Stephen Jenkins, Project Manager for
the Permanent Facilities Compound (PFC) in Port Moresby.
AIB national and state Professional Excellence award in the Research, Development and Technology category presented to
Engineering Manager Andrew Richmond.
AIB Professional Excellence Award – Commercial Construction (Interior Construction) presented to Cyril Cahill, Broad Construction
Manager for the Supreme Courts Project in Western Australia.
79 Thermal coal (or steaming coal) is burned for steam to run turbines to generate electricity either to public electricity grids or directly by industry
consuming electrical power (such as chemical industries, paper manufacturers, cement industry and brickworks). Metallurgical coal (or coking coal) is
used in the process of creating coke necessary for iron and steel-making.
80 Sydney Metro | city & southwest, Sustainability Strategy 2017-24, July 2017.
150
81 CDP’s 2017’ Climate Change Basic Performance Review Report’, October 2017.
82 CDP’s ‘2017 Company response status and score’ and CDP’s ‘Scoring introduction 2016’.
83 The SEAL (Sustainability, Environmental Achievement & Leadership) Awards launched in 2017 and is an awards-driven environmental advocacy
organization.
151
151
Indonesian Ministry of Minerals & Energy Aditama Award (highest level) to Sangatta mine in the Contractor category of the Mines
Department Safety Awards.
Indonesian Ministry of Minerals & Energy Utama Award (second highest level) to MSJ mine in the Contractor category of the Mines
Department Safety Awards.
Indonesian Ministry of Manpower HIV & Aids Prevention Award to the Sangatta mine in recognition of education efforts in the
prevention of HIV & Aids.
Thiess
CIMIC Group Limited Annual Report 2017 | Sustainability Report
AIB High Recommendation Award – Commercial Construction $25 million to $100 million presented to Craig MacNair, Broad Project
Manager for the Broadway on the Mall Project in Queensland.
National Association of Women in Construction (NAWIC) Scholarship for Future Leaders Award presented to Ali Blanch, HR and IR
Manager on the WestConnex M4 East project in New South Wales.
NAWIC Merit award in the Project Manager category presented to Kirsten Evans, Project Manager on the Sydney Metro Northwest
project in New South Wales.
NAWIC award for outstanding achievement by a student presented to Marielle Salom, an engineering student with the Victorian,
South Australian & Tasmanian business unit.
Leighton Asia
LinkedIn Silver Award as the ‘Most Engaging Employer Brand’ in Hong Kong.
INNOVATION
CPB Contractors
Master Builders Association of Victoria’s Excellence in Construction Awards (MBAVECA) for Excellence in Construction of Industrial
Buildings presented to Post Entry Quarantine Facility Project in Victoria.
MBAVECA Best Sustainable Project awarded to the Melbourne International Ro-Ro Automotive Terminal (MIRRAT) in Victoria.
Association of Consulting Structural Engineers NSW 2016 excellence in Engineering Awards in the category of Award for Large
Building Projects presented to Wynyard Walk project in New South Wales.
Finalist in the National Infrastructure Awards (NIA) in the category of Smart Infrastructure Project to the Groundwater
Replenishment Scheme Stage 1 in Western Australia.
Finalist in the National Infrastructure Awards (NIA) in the category of Contractor Excellence to the Wynyard Walk project in New
South Wales.
Finalist in the NIA in the category of Government Partnership Excellence to the Gateway WA Perth Airport and Freight Access
Project.
Finalist in the 2018 Australian Construction Achievement Award (ACAA) to the Northern Beaches Hospital at Frenchs Forest in New
South Wales.
Finalist in the 2018 ACAA to the Post Entry Quarantine Facility at Mickleham in Victoria.
Finalist in the 2018 Australian Construction Achievement Award (ACAA) to the Northern Beaches Hospital in New South Wales.
Finalist in the 2017 international New Civil Engineer Tunnelling Awards (NCETA) in the category of Contractor Innovation of the Year
to the walking scrubber concept on the WestConnex M4 East in New South Wales.
Finalist in the 2017 NCETA in the category of Designer Innovation of the Year for the use of BIM on the WestConnex M4 East in New
South Wales.
Leighton Asia
British Construction Industry 2017 International Project of the Year Award to the Mass Transit Railway (MTR) South Island Line
(East) in Hong Kong.
UGL
AusRAIL PLUS 2017 Young Rail Professionals Pitching Competition winner was Jamie Ross-Smith, Head of Asset Systems.
ENVIRONMENT
CPB Contractors
Australasian Chapter of the International Erosion Control Association (IECA) awarded the 2017 IECA Australasia Environmental
Excellence Award to the Cooroy to Curra (C2C) project in Queensland.
Leighton Asia
Hong Kong Construction Association Environmental Merit Award for outstanding performance for the 2016 year.
Hong Kong Awards for Environmental Excellence – Certificate of Merit received by the Central–Wan Chai Bypass – Tunnel Buildings,
Systems and Fittings, and works associated with Tunnel Commissioning.
Thiess
Indonesian Ministry of Environment & Forestry Blue PROPER Award recognising environmental performance.
152
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GRI INDEX
Legend
● Covered in full ◕ Covered for the most part
◑ Covered in part Not covered
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
Cover
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
86, 109, 112, 114, 114, 116, 117 ,
103 - 104
Operating and Financial Review, 103 - 104
81, Group Policies84
131
Executive Chairman’s review, CEO’s review
Operating and Financial Review
80, Group Policies, Code85
99, 100, Code, Ethics-line86
2017 Governance Statement,87 Corporate
Governance88
Corporate Governance
2015 Sustainability Report, Corporate Governance
83
Directors’ Report, 2017 Governance Statement
Directors’ Report, 2017 Governance Statement,
www.cimic.com.au
2017 Governance Statement,
Directors’ Report, 2017 Governance Statement,
www.cimic.com.au
2017 Governance Statement, Board & committee
charters89
2017 Governance Statement
2017 Governance Statement
2017 Governance Statement, Board & committee
charters
2017 Governance Statement, Board & committee
charters
86 - 151, 2017 Governance Statement, Board &
committee charters
133, 2017 Governance Statement, Board & committee
charters
100, 133, 2017 Governance Statement, Board &
committee charters
100, 2017 Governance Statement, Board & committee
charters
Remuneration Report
Remuneration Report
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84 The CIMIC Group Policies can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance/group-policies.
85 The CIMIC Group Code of Conduct can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance/group-policies.
86 The CIMIC Group Ethics Line can be accessed at: http://www.cimic.com.au/ethics-line.
87 The 2017 Corporate Governance Statements can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance.
88 The Group’s approach to Corporate Governance can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance.
89 The Board and Committee Charters can be accessed at: http://www.cimic.com.au/our-approach/corporate-governance.
153
153
AIB High Recommendation Award – Commercial Construction $25 million to $100 million presented to Craig MacNair, Broad Project
Manager for the Broadway on the Mall Project in Queensland.
National Association of Women in Construction (NAWIC) Scholarship for Future Leaders Award presented to Ali Blanch, HR and IR
Manager on the WestConnex M4 East project in New South Wales.
NAWIC Merit award in the Project Manager category presented to Kirsten Evans, Project Manager on the Sydney Metro Northwest
NAWIC award for outstanding achievement by a student presented to Marielle Salom, an engineering student with the Victorian,
project in New South Wales.
South Australian & Tasmanian business unit.
LinkedIn Silver Award as the ‘Most Engaging Employer Brand’ in Hong Kong.
Leighton Asia
INNOVATION
CPB Contractors
Master Builders Association of Victoria’s Excellence in Construction Awards (MBAVECA) for Excellence in Construction of Industrial
Buildings presented to Post Entry Quarantine Facility Project in Victoria.
MBAVECA Best Sustainable Project awarded to the Melbourne International Ro-Ro Automotive Terminal (MIRRAT) in Victoria.
Association of Consulting Structural Engineers NSW 2016 excellence in Engineering Awards in the category of Award for Large
Building Projects presented to Wynyard Walk project in New South Wales.
Finalist in the National Infrastructure Awards (NIA) in the category of Smart Infrastructure Project to the Groundwater
Replenishment Scheme Stage 1 in Western Australia.
Finalist in the National Infrastructure Awards (NIA) in the category of Contractor Excellence to the Wynyard Walk project in New
Finalist in the NIA in the category of Government Partnership Excellence to the Gateway WA Perth Airport and Freight Access
Finalist in the 2018 Australian Construction Achievement Award (ACAA) to the Northern Beaches Hospital at Frenchs Forest in New
Finalist in the 2018 ACAA to the Post Entry Quarantine Facility at Mickleham in Victoria.
Finalist in the 2018 Australian Construction Achievement Award (ACAA) to the Northern Beaches Hospital in New South Wales.
Finalist in the 2017 international New Civil Engineer Tunnelling Awards (NCETA) in the category of Contractor Innovation of the Year
to the walking scrubber concept on the WestConnex M4 East in New South Wales.
Finalist in the 2017 NCETA in the category of Designer Innovation of the Year for the use of BIM on the WestConnex M4 East in New
South Wales.
Project.
South Wales.
British Construction Industry 2017 International Project of the Year Award to the Mass Transit Railway (MTR) South Island Line
AusRAIL PLUS 2017 Young Rail Professionals Pitching Competition winner was Jamie Ross-Smith, Head of Asset Systems.
Australasian Chapter of the International Erosion Control Association (IECA) awarded the 2017 IECA Australasia Environmental
Excellence Award to the Cooroy to Curra (C2C) project in Queensland.
Hong Kong Construction Association Environmental Merit Award for outstanding performance for the 2016 year.
Hong Kong Awards for Environmental Excellence – Certificate of Merit received by the Central–Wan Chai Bypass – Tunnel Buildings,
Systems and Fittings, and works associated with Tunnel Commissioning.
Indonesian Ministry of Environment & Forestry Blue PROPER Award recognising environmental performance.
South Wales.
Leighton Asia
(East) in Hong Kong.
UGL
ENVIRONMENT
CPB Contractors
Leighton Asia
Thiess
152
CIMIC Group Limited Annual Report 2017 | Sustainability Report
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
102‐49
102‐50
102‐51
102‐52
102‐53
102‐54
Topic specific disclosures
Annual Report section, Page number/s and or URL
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
Changes in reporting
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
Remuneration Report, 2017 AGM Results90
Not disclosed
Not disclosed
83
110
83
83
83
80, Financial Report
83
83
80, see also footnotes on pages 86 and 87, Operating
and Financial Review, Financial Report
80, Operating and Financial Review, Financial Report
80, Operating and Financial Review, Financial Report
Operating and Financial Review, Financial Report
80, Operating and Financial Review, Financial Report
Justin Grogan, EGM Sustainability, CIMIC Group Limited
80
102‐55
102‐56
GRI content index
External assurance
153 ‐ 156
Not externally assured
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
201‐1
201‐2
201‐3
201‐4
202‐1
202‐2
203‐1
203‐2
204‐1
Anti‐corruption
205‐1
Operations assessed for risks related to
205‐2
205‐3
206‐1
301‐1
301‐2
301‐3
302‐1
302‐2
302‐3
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
Energy consumption outside of the organization
Energy intensity
124
135, 149, 2015 Sustainability Report
118
102
Not disclosed
117
124
124
Not disclosed
99, 100
98, 101
100
102
87, 148
87, 146, 148
87, 146, 148
87, 143
87, 143
87, 143
Application level /
omission
●
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90 The 2017 AGM results can be accessed at: http://www.cimic.com.au/investor‐and‐media‐centre/financial‐results‐and‐meetings/agm.
154
154
CIMIC Group Limited Annual Report 2017 | Sustainability Report
CIMIC Group Limited Annual Report 2017 | Sustainability Report
Topic specific disclosures
Annual Report section, Page number/s and or URL
Application level /
Stakeholders’ involvement in remuneration
Remuneration Report, 2017 AGM Results90
omission
●
GRI
standard
302‐4
302‐5
Topic specific disclosures
Annual Report section, Page number/s and or URL
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
87, 143
87, 143
87, 147
87, 147
87, 147
149
149
149
Not disclosed
87, 143
87, 143
87, 143
87, 143
87, 143
87, 143
Not disclosed
87, 147
146
87, 142
146
142
307‐1
Non‐compliance with environmental laws and
142, Directors’ Report
308‐1
regulations
Supplier Environmental Assessment
New suppliers that were screened using
environmental criteria
103 ‐ 104
●
308‐2
Negative environmental impacts in the supply
103 ‐ 104
chain and actions taken
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
86, 114
Not disclosed
114
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
Not disclosed
86, 88, 89, 91, 94
403‐3
Workers with high incidence or high risk of
91, 93, 94
403‐4
404‐1
404‐2
404‐3
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
Programs for upgrading employee skills and
transition assistance programs
Percentage of employees receiving regular
performance and career development reviews
As per statutory obligations
111
111, 112, 114
118
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
statements
Defining report content and topic Boundaries
List of material topics
Restatements of information
Changes in reporting
Reporting period
Date of most recent report
Reporting cycle
102‐45
Entities included in the consolidated financial
80, Financial Report
80, see also footnotes on pages 86 and 87, Operating
and Financial Review, Financial Report
80, Operating and Financial Review, Financial Report
80, Operating and Financial Review, Financial Report
Operating and Financial Review, Financial Report
80, Operating and Financial Review, Financial Report
Contact point for questions regarding the report
Justin Grogan, EGM Sustainability, CIMIC Group Limited
Claims of reporting in accordance with the GRI
80
Standards
102‐55
102‐56
GRI content index
External assurance
153 ‐ 156
Not externally assured
Economic Topic‐specific Disclosures
Economic performance
Direct economic value generated and distributed
124
201‐1
201‐2
Financial implications and other risks and
opportunities due to climate change
201‐3
Defined benefit plan obligations and other
201‐4
Financial assistance received from government
retirement plans
Market Presence
202‐1
Ratios of standard entry level wage by gender
Not disclosed
compared to local minimum wage
202‐2
Proportion of senior management hired from the
117
135, 149, 2015 Sustainability Report
204‐1
Proportion of spending on local suppliers
Not disclosed
local community
Indirect Economic Impacts
203‐1
Infrastructure investments and services
supported
203‐2
Significant indirect economic impacts
Procurement Practices
205‐1
Operations assessed for risks related to
Anti‐corruption
corruption
205‐2
Communication and training about anti‐
corruption policies and procedures
205‐3
Confirmed incidents of corruption and actions
taken
Anti‐competitive Behaviour
206‐1
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
Energy consumption outside of the organization
Energy intensity
87, 143
87, 143
87, 143
Not disclosed
Not disclosed
83
110
83
83
83
83
83
118
102
124
124
99, 100
98, 101
100
102
87, 148
87, 146, 148
87, 146, 148
GRI
standard
102‐37
102‐38
102‐39
102‐40
102‐41
102‐42
102‐43
102‐44
102‐46
102‐47
102‐48
102‐49
102‐50
102‐51
102‐52
102‐53
102‐54
301‐1
301‐2
301‐3
302‐1
302‐2
302‐3
154
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Application level /
omission
◕
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155
155
CIMIC Group Limited Annual Report 2017 | Sustainability Report
GRI
standard
Topic specific disclosures
Annual Report section, Page number/s and or URL
Application level /
omission
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
86, 114, 116, 117, Directors’ Report, 2017 Governance
Statement
Not disclosed
Not disclosed
407‐1
Operations and suppliers in which the right to
99
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
99
99
Not disclosed
106
110
Not disclosed
Not disclosed
413‐1
Operations with local community engagement,
104
impact assessments, and development programs
413‐2
Operations with significant actual and potential
104, 105
negative impacts on local communities
Supplier Social Assessment
414‐1
New suppliers that were screened using social
103 ‐ 104
criteria
414‐2
Negative social impacts in the supply chain and
103 ‐ 104
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
100
96, 105
96
96
101, 102
102
101
419‐1
Non‐compliance with laws and regulations in the
91, 102
social and economic area
156
156
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CIMIC Group Limited Annual Report 2017 157
Photo: Gold Coast Light Rail Stage 2, Queensland, Australia, CPB Contractors.
158 CIMIC Group Limited Annual Report 2017
Financial Report
CIMIC Group Limited Annual Report 2017 159
160 CIMIC Group Limited Annual Report 2017
CIMIC Group Limited Annual Report 2017 | Sustainability Report
CIMIC Group Limited Annual Report 2017 | Financial Report
GRI
standard
Topic specific disclosures
Annual Report section, Page number/s and or URL
Application level /
omission
Diversity and Equal Opportunity
405‐1
Diversity of governance bodies and employees
86, 114, 116, 117, Directors’ Report, 2017 Governance
405‐2
Ratio of basic salary and remuneration of women
Statement
Not disclosed
406‐1
Incidents of discrimination and corrective actions
Not disclosed
Freedom of Association and Collective
407‐1
Operations and suppliers in which the right to
99
freedom of association and collective bargaining
to men
Non‐discrimination
taken
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
incidents of forced or compulsory labor
Security Practices
411‐1
Incidents of violations involving rights of
policies or procedures
Rights of Indigenous Peoples
indigenous peoples
Human Rights Assessment
410‐1
Security personnel trained in human rights
Not disclosed
412‐1
Operations that have been subject to human
rights reviews or impact assessments
412‐2
Employee training on human rights policies or
Not disclosed
procedures
412‐3
Significant investment agreements and contracts
Not disclosed
that include human rights clauses or that
underwent human rights screening
Local Communities
413‐1
Operations with local community engagement,
104
impact assessments, and development programs
413‐2
Operations with significant actual and potential
104, 105
negative impacts on local communities
Supplier Social Assessment
414‐1
New suppliers that were screened using social
103 ‐ 104
414‐2
Negative social impacts in the supply chain and
103 ‐ 104
criteria
actions taken
Public Policy
415‐1
Political contributions
Customer Health and Safety
416‐1
Assessment of the health and safety impacts of
96, 105
product and service categories
416‐2
Incidents of non‐compliance concerning the
health and safety impacts of products and
services
Marketing and Labelling
417‐1
Requirements for product and service
information and labelling
417‐2
Incidents of non‐compliance concerning product
101, 102
and service information and labelling
417‐3
Incidents of non‐compliance concerning
102
marketing communications
Customer Privacy
418‐1
Substantiated complaints concerning breaches of
101
customer privacy and losses of customer data
Socioeconomic Compliance
419‐1
Non‐compliance with laws and regulations in the
91, 102
social and economic area
99
99
106
110
100
96
96
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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.
Summary of significant accounting policies
2. Revenue
3.
Expenses
4. Net finance income / (costs)
5. Auditors’ remuneration
6.
Income tax expense
7. Cash and cash equivalents
8.
Trade and other receivables
9. Current tax assets
10. Inventories
11. Investments accounted for using the equity method
12. Other investments
13. Deferred taxes
14. Property, plant and equipment
15. Intangibles
16. Trade and other payables
17. Current tax liabilities
18. Provisions
19. Interest bearing liabilities
20. Share capital
21. Reserves
22. Retained earnings
23. Dividends
24. Earnings per share
25. Associates
26. Joint venture entities
27. Joint operations
28. Notes to the Statement of Cash flows
29. Acquisitions and 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
162
163
164
165
166
167
167
176
176
177
178
179
180
180
182
183
183
184
184
185
186
188
188
188
189
190
191
192
193
194
195
197
204
207
208
209
210
213
215
216
217
227
234
237
252
255
256
257
156
161
161
CIMIC Group Limited Annual Report 2017 | Financial Report
Consolidated Statement of Profit or Loss
for the 12 months to 31 December 2017
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
Note
2
3
25, 26
4
4
6
12 months to
December 2017
$m
12 months to
December 2016
$m
13,429.5
(12,377.2)
(49.9)
1,002.4
10,853.6
(10,051.2)
(44.0)
758.4
71.6
(114.8)
(43.2)
959.2
(268.6)
690.6
73.5
(91.5)
(18.0)
740.4
(188.0)
552.4
(Profit) / loss for the year attributable to non‐controlling interests
11.5
27.9
Profit for the year attributable to shareholders of the parent entity
702.1
580.3
Dividends per share ‐ Final
Dividends per share ‐ Interim
Basic earnings per share
Diluted earnings per share
23
23
24
24
75.0¢
60.0¢
216.5¢
216.5¢
62.0¢
48.0¢
176.6¢
176.4¢
The consolidated statement of profit or loss is to be read in conjunction with the notes to the consolidated financial report.
162
162
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Consolidated Statement of Profit or Loss
for the 12 months to 31 December 2017
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
Note
12 months to
December 2017
12 months to
December 2016
$m
$m
13,429.5
(12,377.2)
(49.9)
1,002.4
10,853.6
(10,051.2)
(44.0)
758.4
71.6
(114.8)
(43.2)
959.2
(268.6)
690.6
75.0¢
60.0¢
216.5¢
216.5¢
(91.5)
(18.0)
740.4
(188.0)
552.4
62.0¢
48.0¢
176.6¢
176.4¢
2
3
4
4
6
23
23
24
24
Profit for the year attributable to shareholders of the parent entity
702.1
580.3
Consolidated Statement of Other Comprehensive
Income
for the 12 months to 31 December 2017
Profit for the year attributable to shareholders of the parent entity
702.1
580.3
12 months to
December 2017
$m
12 months to
December 2016
$m
Note
Share of profit / (loss) of associates and joint venture entities
25, 26
Earnings before interest and tax ("EBIT")
73.5
- Effective portion of changes in fair value of cash flow hedges (net of tax)
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)
Items that will not be reclassified to profit or loss:
- Recycling of associate reserve
- Recycling of fair value reserve
21
21
21
21
(222.0)
4.4
35.7
(14.5)
‐
‐
(21.2)
(20.0)
(Profit) / loss for the year attributable to non‐controlling interests
11.5
27.9
Total comprehensive income / (expense) for the year attributable to shareholders
484.5
560.3
Other comprehensive income / (expense) for the year
(217.6)
(20.0)
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
473.0
11.5
532.4
27.9
484.5
560.3
The consolidated statement of profit or loss is to be read in conjunction with the notes to the consolidated financial report.
162
The consolidated statement of other comprehensive income is to be read in conjunction with the notes to the consolidated financial
report.
163
163
CIMIC Group Limited Annual Report 2017 | Financial Report
Consolidated Statement of Financial Position
as at 31 December 2017
31 December
2017
Note
$m
Restated1
31 December
2016
$m
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
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
7
8
9
10
30
8
10
11
12
13
14
15
16
17
18
19
16
18
19
20
21
22
1,813.8
3,216.3
29.0
210.8
32.2
5,302.1
1,090.8
167.6
382.7
169.2
145.4
1,224.0
1,089.7
4,269.4
9,571.5
4,737.4
40.4
311.8
265.6
5,355.2
152.0
69.3
637.8
859.1
1,576.5
3,209.6
28.0
213.0
47.7
5,074.8
1,235.8
166.9
616.5
135.4
328.1
1,355.7
1,146.9
4,985.3
10,060.1
4,781.1
126.6
333.3
618.2
5,859.2
287.0
73.5
549.0
909.5
6,214.3
6,768.7
3,357.2
3,291.4
1,750.3
(554.3)
2,183.0
3,379.0
(21.8)
3,357.2
1,750.3
(325.6)
1,876.5
3,301.2
(9.8)
3,291.4
Total equity
1 Amounts have been restated at December 2016 due to the finalisation of the purchase price allocation on the UGL acquisition
as set out in Note 29: Acquisitions and disposals of controlled entities and businesses.
The consolidated statement of financial position is to be read in conjunction with the notes to the consolidated financial report.
164
164
‐
580.3
580.3
(27.9)
552.4
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Consolidated Statement of Financial Position
as at 31 December 2017
Consolidated Statement of Changes in Equity
for the 12 months to 31 December 2017
31 December
Restated1
2017
31 December
Note
$m
Note
Reserves1
Share
capital
Retained
earnings
Attributable
to equity
holders1
Non‐
controlling
interests
Total
equity1
$m
$m
$m
$m
$m
$m
Total equity at 1 January 2016
2,052.5
423.6
1,616.7
4,092.8
22.5
4,115.3
Inventories: consumables and development properties
Trade and other receivables
Inventories: development properties
Investments accounted for using the equity method
Assets
Cash and cash equivalents
Trade and other receivables
Current tax assets
Assets held for sale
Total current assets
Other investments
Deferred tax assets
Property, plant and equipment
Intangibles
Total non‐current assets
Total assets
Liabilities
Trade and other payables
Current tax liabilities
Provisions
Interest bearing liabilities
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
7
8
9
10
30
8
10
11
12
13
14
15
16
17
18
19
16
18
19
20
21
22
2016
$m
1,576.5
3,209.6
28.0
213.0
47.7
5,074.8
1,235.8
166.9
616.5
135.4
328.1
1,355.7
1,146.9
4,985.3
10,060.1
126.6
333.3
618.2
287.0
73.5
549.0
909.5
1,813.8
3,216.3
29.0
210.8
32.2
5,302.1
1,090.8
167.6
382.7
169.2
145.4
1,224.0
1,089.7
4,269.4
9,571.5
40.4
311.8
265.6
152.0
69.3
637.8
859.1
6,214.3
6,768.7
3,357.2
3,291.4
1,750.3
(554.3)
2,183.0
3,379.0
(21.8)
3,357.2
1,750.3
(325.6)
1,876.5
3,301.2
(9.8)
3,291.4
Total equity attributable to equity holders of the parent
Non‐controlling interests
Total equity
1 Amounts have been restated at December 2016 due to the finalisation of the purchase price allocation on the UGL acquisition
as set out in Note 29: Acquisitions and disposals of controlled entities and businesses.
Total transactions with shareholders
(302.2)
(729.2)
(320.5)
(1,351.9)
(4.4)
(1,356.3)
4,737.4
4,781.1
Total equity at 31 December 2016
1,750.3
(325.6)
1,876.5
3,301.2
(9.8)
3,291.4
5,355.2
5,859.2
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
21
‐
‐
‐
‐
‐
‐
‐
702.1
702.1
(11.5)
690.6
(217.6)
‐
(217.6)
‐
(217.6)
‐
(395.6)
(395.6)
(11.1)
‐
‐
‐
(11.1)
‐
(11.1)
(395.6)
(406.7)
‐
‐
(0.5)
(0.5)
(395.6)
(11.1)
(0.5)
(407.2)
Total equity at 31 December 2017
1 Amounts have been restated at December 2016 due to the finalisation of the purchase price allocation on the UGL acquisition
as set out in Note 29: Acquisitions and disposals of controlled entities and businesses.
1,750.3
2,183.0
3,379.0
(554.3)
(21.8)
3,357.2
The consolidated statement of financial position is to be read in conjunction with the notes to the consolidated financial report.
The consolidated statement of changes in equity is to be read in conjunction with the notes to the consolidated financial report.
164
165
165
Profit for the year
Other comprehensive income
Transactions with shareholders in their
capacity as shareholders:
- Dividends
-
-
Share based payments
Share buy‐back
‐
‐
‐
‐
(4.4)
(20.0)
(320.5)
(17.8)
(425.9)
(592.1)
‐
‐
‐
‐
23
21
- Acquisitions of controlled entities
29
‐
(587.7)
(320.5)
(17.8)
(425.9)
(587.7)
(20.0)
‐
(20.0)
20, 21
(302.2)
(123.7)
‐
(320.5)
‐
‐
‐
(17.8)
CIMIC Group Limited Annual Report 2017 | Financial Report
Consolidated Statement of Cash Flows
for the 12 months to 31 December 2017
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
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
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
20
28 (b)
28 (b)
28 (b)
23
7
12 months to
December 2017
$m
12 months to
December 2016
$m
Note
14,089.9
12,402.7
(12,566.5)
(11,201.3)
1,523.4
1,201.4
-
26.0
(106.2)
(80.8)
6.9
24.9
(85.2)
(21.0)
28 (a)
1,362.4
1,127.0
(14.2)
(424.1)
118.6
46.9
-
(59.0)
(60.1)
(40.9)
(432.8)
-
(8.6)
1,517.0
(1,705.9)
(21.2)
-
(395.6)
(29.3)
(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)
(643.6)
(1,443.4)
286.0
1,576.5
(48.7)
1,813.8
(598.1)
2,167.8
6.8
1,576.5
The consolidated statement of cash flows is to be read in conjunction with the notes to the consolidated financial report.
166
166
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Consolidated Statement of Cash Flows
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
12 months to
12 months to
December 2017
December 2016
Note
$m
$m
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 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 2017, as follows:
•
•
•
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; and
AASB 2017-2 Amendments to Australian Accounting Standards – Further Annual Improvements 2014-2016 Cycle.
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.
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
14,089.9
12,402.7
(12,566.5)
(11,201.3)
1,523.4
1,201.4
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
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
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
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
28 (a)
1,362.4
1,127.0
-
26.0
(106.2)
(80.8)
(14.2)
(424.1)
118.6
46.9
-
(59.0)
(60.1)
(40.9)
(432.8)
-
(8.6)
1,517.0
(1,705.9)
(21.2)
-
(395.6)
(29.3)
286.0
1,576.5
(48.7)
1,813.8
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
(643.6)
(1,443.4)
20
28 (b)
28 (b)
28 (b)
23
7
The consolidated statement of cash flows is to be read in conjunction with the notes to the consolidated financial report.
166
167
167
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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.
168
168
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Accounting estimates and judgements
Basis of consolidation continued
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.
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.
168
169
169
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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.
Services revenue arises from operations and maintenance and other utility services supplied to oil, gas, power and water facilities;
and operations and maintenance of rail systems, locomotives and wagons. Revenue from services rendered is recognised in the
income statement in proportion to the stage of completion of the transaction at reporting date. The stage of completion is assessed
by reference to work performed. No revenue is recognised if there are significant uncertainties regarding recovery of the
consideration due or if the costs incurred or to be incurred cannot be measured reliably.
Other revenue includes rental income which is recognised as services are provided, and revenue from the sale of property
developments and land sales which is recognised when the significant risks and rewards of ownership have been transferred.
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 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
a) Revenue recognition
d) Earnings per share
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.
Services revenue arises from operations and maintenance and other utility services supplied to oil, gas, power and water facilities;
and operations and maintenance of rail systems, locomotives and wagons. Revenue from services rendered is recognised in the
income statement in proportion to the stage of completion of the transaction at reporting date. The stage of completion is assessed
by reference to work performed. No revenue is recognised if there are significant uncertainties regarding recovery of the
consideration due or if the costs incurred or to be incurred cannot be measured reliably.
Other revenue includes rental income which is recognised as services are provided, and revenue from the sale of property
developments and land sales which is recognised when the significant risks and rewards of ownership have been transferred.
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.
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.
b) Finance costs
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.
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.
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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Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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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CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
f) Derivative financial instruments
i)
Property, plant and equipment
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
or loss.
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
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
Property developments
Inventories are carried at the lower of cost and net realisable value. Inventories comprise:
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
their existing condition and location.
Cost is based on the weighted average principle and includes expenditure incurred in acquiring the inventories and bringing them to
h) Assets held for sale and liabilities associated with assets held for sale
Assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale
transaction, rather than through continuing use, and a sale is considered highly probable. They are measured at the lower of their
carrying amount and fair value less costs to sell.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to
sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative
impairment loss previously recognised.
Assets classified as held for sale are presented separately from the other assets in the statement of financial position. Assets are not
depreciated or amortised while they are classified as held for sale.
Liabilities associated with assets held for sale are presented separately from other liabilities in the statement of financial position.
Interest and other expenses attributable to the liabilities associated with assets held for sale continue to be recognised.
Property, plant and equipment 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.
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.
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.
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Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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 8
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 asset’s 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 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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CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
l)
Intangible assets continued
Brand names
amortised over their estimated 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
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.
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 8
IT systems are carried at cost less accumulated amortisation and any impairment losses.
IT systems
years.
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 asset’s 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 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.
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.
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CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
2. REVENUE
Construction revenue
Mining and mineral processing revenue
Services 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 equipment
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 sale of assets
Property development - cost of goods sold
Foreign exchange gains / (losses)
Operating lease payments - plant and equipment
Operating lease payments - other
Design, engineering and technical consulting fees
Gain on fair value of option to acquire shares
Other expenses
Total expenses
12 months to
December 2017
$m
12 months to
December 2016
$m
Note
7,599.1
3,164.4
2,607.2
58.7
7,316.8
2,786.2
204.2
539.5
13,429.4
10,846.7
0.1
6.9
31
13,429.5
10,853.6
12 months to
December 2017
$m
12 months to
December 2016
$m
Note
(2,455.1)
(3,928.5)
(1,061.3)
(3,530.2)
(463.7)
(47.6)
(8.0)
-
-
12.9
(62.3)
3.3
(256.7)
(123.6)
(51.6)
-
(404.8)
(1,666.8)
(3,641.6)
(901.2)
(2,432.0)
(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)
(12,377.2)
(10,051.2)
14
15
15
26
26
176
176
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
2. REVENUE
4. NET FINANCE INCOME / (COSTS)
Construction revenue
Mining and mineral processing revenue
Services 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 equipment
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 sale of assets
Property development - cost of goods sold
Foreign exchange gains / (losses)
Operating lease payments - plant and equipment
Operating lease payments - other
Design, engineering and technical consulting fees
Gain on fair value of option to acquire shares
Other expenses
Total expenses
12 months to
12 months to
December 2017
December 2016
Note
$m
$m
7,599.1
3,164.4
2,607.2
58.7
7,316.8
2,786.2
204.2
539.5
13,429.4
10,846.7
0.1
6.9
31
13,429.5
10,853.6
12 months to
12 months to
December 2017
December 2016
Note
$m
$m
(2,455.1)
(3,928.5)
(1,061.3)
(3,530.2)
(463.7)
(47.6)
(8.0)
-
-
12.9
(62.3)
3.3
(256.7)
(123.6)
(51.6)
-
(404.8)
(1,666.8)
(3,641.6)
(901.2)
(2,432.0)
(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)
(12,377.2)
(10,051.2)
14
15
15
26
26
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
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 2017
$m
12 months to
December 2016
$m
Note
37 (b)
37 (b)
37 (b)
34.1
27.6
9.7
0.2
71.6
(86.3)
(0.9)
(13.4)
(6.0)
(0.2)
(8.0)
(114.8)
27.2
24.6
8.8
12.9
73.5
(57.9)
(9.2)
(14.4)
(7.1)
(0.1)
(2.8)
(91.5)
Net finance income / (costs)
(43.2)
(18.0)
176
177
177
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
5. AUDITORS’ REMUNERATION
Audit and review services
Deloitte Touche Tohmatsu (“Deloitte”)
- Audit and review of financial statements – Deloitte Australia
- Audit and review of financial statements – related overseas firms
Other auditors
- Audit and review of financial statements – other auditors
Audit and review services
Other assurance services
Deloitte
- Other assurance services – Deloitte Australia
- Other assurance services – related overseas firms
Other auditors
- Other assurance services – other auditors
Other assurance services
Other services
Deloitte
-
-
In relation to taxation and other services – Deloitte Australia
In relation to taxation and other services – related overseas firms
Other auditors
- Other services – other auditors
Other services
12 months to
December 2017
$’000
12 months to
December 2016
$’000
3,040
1,270
422
4,732
363
3
20
386
-
-
29
29
2,850
1,204
258
4,312
-
-
36
36
135
-
4
139
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.
178
178
Audit and review services
Deloitte Touche Tohmatsu (“Deloitte”)
- Audit and review of financial statements – Deloitte Australia
- Audit and review of financial statements – related overseas firms
Other auditors
Audit and review services
Other assurance services
Deloitte
- Other assurance services – Deloitte Australia
- Other assurance services – related overseas firms
Other auditors
- Other assurance services – other auditors
Other assurance services
In relation to taxation and other services – Deloitte Australia
In relation to taxation and other services – related overseas firms
Other services
Deloitte
-
-
Other auditors
Other services
- Other services – other auditors
12 months to
12 months to
December 2017
December 2016
$’000
$’000
3,040
1,270
422
4,732
363
3
20
386
-
-
29
29
2,850
1,204
258
4,312
-
-
36
36
135
-
4
139
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.
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
5. AUDITORS’ REMUNERATION
6.
INCOME TAX EXPENSE
- Audit and review of financial statements – other auditors
Total income tax expense in statement of profit or loss
Income tax expense recognised in the statement of profit or loss
Current tax expense
Deferred tax expense
Over provision in prior periods
Deferred tax recognised directly in equity
Revaluation of cash flow and net investment hedges
Recycling of reserves
Total deferred tax (expense) / benefit recognised in equity
Reconciliation of prima facie tax to income tax expense
Profit from continuing operations
Profit before tax
12 months to
December 2017
$m
12 months to
December 2016
$m
(104.9)
(164.6)
0.9
(116.3)
(97.7)
26.0
(268.6)
(188.0)
(1.8)
-
(1.8)
6.2
8.6
14.8
959.2
959.2
740.4
740.4
Prima facie income tax expense at 30% (31 December 2016: 30%)
(287.8)
(222.1)
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
Loss on sale of investment
Other
Current period income tax expense
Over provision in prior periods
Income tax expense
-
(14.9)
10.6
2.0
(12.2)
(27.2)
37.7
22.3
22.5
(18.7)
9.4
3.5
(7.0)
(21.6)
-
20.0
(269.5)
(214.0)
0.9
26.0
(268.6)
(188.0)
178
179
179
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
7. CASH AND CASH EQUIVALENTS
Funds on deposit
Cash at bank and on hand
Cash and cash equivalents
December 2017
$m
December 2016
$m
663.3
1,150.5
1,813.8
597.6
978.9
1,576.5
As at 31 December 2017: $267.7 million (31 December 2016: $166.7 million) of cash at bank in relation to the sale of receivables
during the reporting period and $33.7 million (31 December 2016: $34.4 million) 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
Current1
Non-current
Note
December 2017
$m
December 2016
$m
3,170.9
(675.0)
2,495.9
180.7
479.9
46.2
11.5
3,282.9
(675.0)
2,607.9
302.7
364.3
46.5
17.3
1,087.8
1,077.8
5.1
28.9
4,307.1
4,445.4
3,216.3
1,090.8
3,209.6
1,235.8
35
37 (b)
Total trade and other receivables
1 Contract debtors includes an amount equal to $1.15 billion (31 December 2016: $1.15 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
4,307.1
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.
180
180
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
7. CASH AND CASH EQUIVALENTS
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.
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.
Since December 2016, the arbitration has continued in accordance with the contractual terms. The Arbitrators have been appointed
and have made orders for the conduct of the proceedings and it is anticipated that the hearings will be in 2019 with a
determination thereafter.
2The Group has trade and other receivables relating to HLG Contracting LLC (“HLG Contracting”) totaling US$816.1 million (31
December 2016: US$751.1 million) equivalent to $1,046.3 million (31 December 2016: $1,043.2 million) with an expected repayment
date of 30 September 2021.
Following the completion of the new four-year syndicated loan facility to refinance existing borrowing facilities (refer to Note 26: Joint
venture entities for further information) all non-interest bearing loans and accrued interest have been transferred to interest bearing
loans.
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, such as the new syndicated loan facility. Repayment of these amounts can be subject to prior written consent
from the financier, or where a permitted payment under the financing arrangement occurs.
3The non-current tax asset of $5.1 million (31 December 2016: $28.9 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.
As at 31 December 2017: $267.7 million (31 December 2016: $166.7 million) of cash at bank in relation to the sale of receivables
during the reporting period and $33.7 million (31 December 2016: $34.4 million) of cash reserved for warranties is classified as
Funds on deposit
Cash at bank and on hand
Cash and cash equivalents
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
Current1
Non-current
Total trade and other receivables
Pty Ltd (Chevron) (Gorgon Contract).
The position is:
December 2017
December 2016
$m
$m
663.3
1,150.5
1,813.8
597.6
978.9
1,576.5
December 2017
December 2016
Note
$m
$m
35
37 (b)
3,170.9
(675.0)
2,495.9
180.7
479.9
46.2
11.5
3,282.9
(675.0)
2,607.9
302.7
364.3
46.5
17.3
1,087.8
1,077.8
5.1
28.9
4,307.1
4,445.4
3,216.3
1,090.8
4,307.1
3,209.6
1,235.8
4,445.4
1 Contract debtors includes an amount equal to $1.15 billion (31 December 2016: $1.15 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
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.
180
181
181
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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 2017
$m
Restated1
December 2016
$m
2,495.9
2,607.9
(1,112.1)
(1,283.3)
1,383.8
1,324.6
1,227.5
156.3
1,383.8
1,071.8
252.8
1,324.6
69,350.3
71,055.8
Total progressive value of all contracts in progress at reporting date
70,734.1
72,380.4
Contract debtors provision
Balance at beginning of reporting period
Net provision (made) / used
12 months to
December 2017
$m
12 months to
December 2016
$m
(675.0)
(675.0)
‐
‐
Balance at reporting date2
1 Amounts have been restated at December 2016 due to the finalisation of the purchase price allocation on the UGL acquisition
as set out in Note 29: Acquisitions and disposals of controlled entities and businesses.
2The Group maintains a contract debtors provision to cover the risk on a portfolio basis of unrecoverable contract debtors.
(675.0)
(675.0)
9. CURRENT TAX ASSETS
The current tax asset of $29.0 million (31 December 2016: $28.0 million) represents the amount of income taxes recoverable from
the payment of tax in excess of the amounts due to the relevant tax authority.
182
182
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
8. TRADE AND OTHER RECEIVABLES CONTINUED
10. INVENTORIES
December 2017
Restated1
December 2016
$m
$m
2,495.9
2,607.9
(1,112.1)
(1,283.3)
1,383.8
1,324.6
1,227.5
156.3
1,383.8
1,071.8
252.8
1,324.6
69,350.3
71,055.8
12 months to
12 months to
December 2017
December 2016
$m
$m
(675.0)
(675.0)
‐
‐
(675.0)
(675.0)
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
70,734.1
72,380.4
Contract debtors provision
Balance at beginning of reporting period
Net provision (made) / used
Balance at reporting date2
9. CURRENT TAX ASSETS
1 Amounts have been restated at December 2016 due to the finalisation of the purchase price allocation on the UGL acquisition
as set out in Note 29: Acquisitions and disposals of controlled entities and businesses.
2The Group maintains a contract debtors provision to cover the risk on a portfolio basis of unrecoverable contract debtors.
The current tax asset of $29.0 million (31 December 2016: $28.0 million) represents the amount of income taxes recoverable from
the payment of tax in excess of the amounts due to the relevant tax authority.
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 2017
$m
December 2016
$m
60.2
134.5
34.6
229.3
149.1
149.1
66.3
110.8
28.2
205.3
174.6
174.6
378.4
379.9
210.8
167.6
378.4
213.0
166.9
379.9
Finance costs capitalised to property developments during the period were $2.2 million (31 December 2016: $5.5 million). Property
developments pledged as security for interest bearing liabilities - refer to Note 35(j): Financial instruments - Assets pledged as
security.
11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Associates
Joint venture entities
Total investments accounted for using the equity method
December 2017
$m
December 2016
$m
Note
25
26
38.9
343.8
382.7
72.9
543.6
616.5
182
183
183
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
12. OTHER INVESTMENTS
December 2017
$m
December 2016
$m
Note
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
1.5
5.8
7.3
92.7
69.2
161.9
‐
169.2
169.2
1.9
5.4
7.3
53.1
75.0
128.1
‐
135.4
135.4
December 2017
$m
Restated1
December 2016
$m
357.4
15.6
6.5
19.8
99.2
(391.3)
(83.1)
42.5
(98.9)
27.5
126.5
23.7
145.4
452.8
17.6
5.8
(18.4)
113.2
(296.5)
(71.0)
53.7
(101.5)
13.7
164.5
(5.8)
328.1
Deferred tax assets which have not been recognised in respect of tax losses
1 Amounts have been restated at December 2016 due to the finalisation of the purchase price allocation on the UGL acquisition
as set out in Note 29: Acquisitions and disposals of controlled entities and businesses.
127.7
116.0
184
184
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
12. OTHER INVESTMENTS
14. PROPERTY, PLANT AND EQUIPMENT
December 2017
December 2016
Note
$m
$m
Land
Buildings
Note
$m
$m
Leasehold land,
buildings and
improvements
$m
Plant and
equipment
$m
Total property,
plant and
equipment
$m
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 2017
Restated1
December 2016
$m
$m
1.5
5.8
7.3
92.7
69.2
161.9
‐
169.2
169.2
357.4
15.6
6.5
19.8
99.2
(391.3)
(83.1)
42.5
(98.9)
27.5
126.5
23.7
145.4
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
(101.5)
13.7
164.5
(5.8)
328.1
184
Deferred tax assets which have not been recognised in respect of tax losses
127.7
116.0
1 Amounts have been restated at December 2016 due to the finalisation of the purchase price allocation on the UGL acquisition
as set out in Note 29: Acquisitions and disposals of controlled entities and businesses.
At 1 January 2016
Cost or fair value
Accumulated depreciation
Net book amount
Year ended 31 December 2016
Opening net book amount
Additions
Acquisitions
Disposals
Transfers
Depreciation
Effects of exchange rate fluctuations
Closing net book amount1
Year ended 31 December 2016
Cost or fair value
Accumulated depreciation and impairment
Net book amount
Year ended 31 December 2017
Opening net book amount
Additions
Disposals
Transfers2
Depreciation
Effects of exchange rate fluctuations
Closing net book amount1
Year ended 31 December 2017
Cost or fair value
Accumulated depreciation and impairment
Net book amount
29
0.4
-
0.4
0.4
-
2.7
(0.2)
-
-
-
2.9
2.9
-
2.9
2.9
-
(2.9)
-
-
-
-
-
-
-
0.6
(0.4)
0.2
0.2
-
1.9
(0.1)
-
(0.1)
-
1.9
2.4
(0.5)
1.9
1.9
-
(1.6)
-
(0.3)
-
-
0.2
(0.2)
-
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
51.4
2.5
(0.4)
0.1
(9.2)
(0.1)
44.3
1,299.5
421.6
(100.8)
100.4
(454.2)
(86.8)
1,179.7
1,355.7
424.1
(105.7)
100.5
(463.7)
(86.9)
1,224.0
85.5
(41.2)
44.3
3,222.6
(2,042.9)
1,179.7
3,308.3
(2,084.3)
1,224.0
1 Plant and equipment with net book value of $nil (31 December 2016: $47.8 million) is held under finance lease.
2This balance includes amounts for assets re-acquired by the Group following the restructuring of certain leasing agreements.
185
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CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
15. INTANGIBLES
At 1 January 2016
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
Year ended 31 December 2017
Opening net book amount
Additions
Disposals
Impairment
Amortisation
Effects of exchange rate fluctuations
Closing net book amount
Year ended 31 December 2017
Cost or fair value
Accumulated amortisation and impairment
Net book amount
Goodwill1
Note
$m
29
385.6
(15.2)
370.4
370.4
563.2
-
-
-
-
1.4
935.0
948.6
(13.6)
935.0
935.0
-
-
-
-
(12.5)
922.5
936.1
(13.6)
922.5
Other
intangibles2
$m
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
211.9
14.2
(2.8)
(8.0)
(47.6)
(0.5)
167.2
378.2
(211.0)
167.2
Total intangibles
$m
659.2
(131.8)
527.4
527.4
646.9
13.9
(1.0)
(10.0)
(32.5)
2.2
1,146.9
1,317.8
(170.9)
1,146.9
1,146.9
14.2
(2.8)
(8.0)
(47.6)
(13.0)
1,089.7
1,314.3
(224.6)
1,089.7
1 Amounts have been restated at December 2016 due to the finalisation of the purchase price allocation on the UGL acquisition
as set out in Note 29: Acquisitions and disposals of controlled entities and businesses.
2Other intangibles include:
IT software systems of $105.6 million with a useful life of up to 8 years (31 December 2016: $127.4 million up to 7 years);
Customer contracts with useful lives of:
o
o
1 to 5 years $17.4 million (31 December 2016: $29.2 million); and
10 to 15 years $36.2 million (31 December 2016: $39.2 million);
Engineering license of $2 million (31 December 2016: $2.1 million) with an indefinite useful life; and
Devine brand name of $6.0 million (31 December 2016: $14.0 million) with an indefinite useful life.
186
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CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
15. INTANGIBLES
15. INTANGIBLES CONTINUED
At 1 January 2016
Cost or fair value
Net book amount
Accumulated amortisation and impairment
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
Year ended 31 December 2017
Opening net book amount
Additions
Disposals
Impairment
Amortisation
Effects of exchange rate fluctuations
Closing net book amount
Year ended 31 December 2017
Cost or fair value
Accumulated amortisation and impairment
Net book amount
29
Goodwill1
Other
Total intangibles
Note
$m
intangibles2
$m
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
211.9
14.2
(2.8)
(8.0)
(47.6)
(0.5)
167.2
378.2
(211.0)
167.2
385.6
(15.2)
370.4
370.4
563.2
1.4
935.0
948.6
(13.6)
935.0
935.0
-
-
-
-
-
-
-
-
(12.5)
922.5
936.1
(13.6)
922.5
$m
659.2
(131.8)
527.4
527.4
646.9
13.9
(1.0)
(10.0)
(32.5)
2.2
1,146.9
1,317.8
(170.9)
1,146.9
1,146.9
14.2
(2.8)
(8.0)
(47.6)
(13.0)
1,089.7
1,314.3
(224.6)
1,089.7
1 Amounts have been restated at December 2016 due to the finalisation of the purchase price allocation on the UGL acquisition
as set out in Note 29: Acquisitions and disposals of controlled entities and businesses.
2Other intangibles include:
IT software systems of $105.6 million with a useful life of up to 8 years (31 December 2016: $127.4 million up to 7 years);
Customer contracts with useful lives of:
o
o
1 to 5 years $17.4 million (31 December 2016: $29.2 million); and
10 to 15 years $36.2 million (31 December 2016: $39.2 million);
Engineering license of $2 million (31 December 2016: $2.1 million) with an indefinite useful life; and
Devine brand name of $6.0 million (31 December 2016: $14.0 million) with an indefinite useful life.
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 2017
$m
Restated1
December 2016
$m
448.1
98.1
376.3
922.5
460.6
98.1
376.3
935.0
1 Amounts have been restated at December 2016 due to the finalisation of the purchase price allocation on the UGL acquisition
as set out in Note 29: Acquisitions and disposals of controlled entities and businesses.
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. At 31 December 2016, the goodwill had been
provisionally allocated to the cash-generating units that will benefit from the synergies. Accounting for business combination is now
complete, and the 31 December 2016 comparative has been restated retrospectively to increase goodwill by $21.0 million, with
$15.8 million attributed to the services segment and $5.2 million attributed to the construction segment.
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 & mineral processing
Services
Discount rate
range
Growth rate
range
11-17%
7-18%
11%
3-5%
3%
3%
Sensitivity to changes in assumptions
The recoverable amount of intangible assets exceeds their carrying values at 31 December 2017. 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.
186
187
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CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
16. TRADE AND OTHER PAYABLES
Trade creditors and accruals
Other creditors
Amounts payable to related parties
Trade and other payables
December 2017
Note
$m
Restated1
December 2016
$m
4,334.4
4,621.7
525.0
27.8
404.9
36.9
4,887.2
5,063.5
37 (b)
35 (b)
Derivative financial liabilities
35 (b)
2.2
4.6
Total trade and other payables
Current
Non‐current
4,889.4
5,068.1
4,737.4
152.0
4,781.1
287.0
Total trade and other payables
1 Amounts have been restated at December 2016 due to the finalisation of the purchase price allocation on the UGL acquisition
as set out in Note 29: Acquisitions and disposals of controlled entities and businesses.
4,889.4
5,068.1
17. CURRENT TAX LIABILITIES
The current tax liability of $40.4 million (31 December 2016: $126.6 million) represents the amounts payable in respect of current
and prior periods.
18. PROVISIONS
Employee Benefits
Current
Non‐current
Total provisions
December 2017
$m
December 2016
$m
311.8
69.3
381.1
333.3
73.5
406.8
The provision for employee benefits relates to wages and salaries, annual leave, long service leave, retirement benefits and deferred
bonuses.
188
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CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
16. TRADE AND OTHER PAYABLES
19. INTEREST BEARING LIABILITIES
Current
Interest bearing loans
Finance lease liabilities
Interest bearing liabilities - limited recourse loans
Total current liabilities
Non-current
Interest bearing loans
Total non-current liabilities
Note
December 2017
$m
December 2016
$m
219.0
-
46.6
265.6
637.8
637.8
328.1
22.8
267.3
618.2
549.0
549.0
Total interest bearing liabilities
28(b), 35(g),(i)
903.4
1,167.2
Derivative financial liabilities
35 (b)
2.2
4.6
1 Amounts have been restated at December 2016 due to the finalisation of the purchase price allocation on the UGL acquisition
as set out in Note 29: Acquisitions and disposals of controlled entities and businesses.
The current tax liability of $40.4 million (31 December 2016: $126.6 million) represents the amounts payable in respect of current
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
and prior periods.
18. PROVISIONS
Employee Benefits
Current
Non‐current
Total provisions
bonuses.
December 2017
Restated1
December 2016
$m
$m
Note
4,334.4
4,621.7
525.0
27.8
404.9
36.9
4,887.2
5,063.5
37 (b)
35 (b)
4,889.4
5,068.1
4,737.4
152.0
4,889.4
4,781.1
287.0
5,068.1
December 2017
December 2016
$m
$m
311.8
69.3
381.1
333.3
73.5
406.8
The provision for employee benefits relates to wages and salaries, annual leave, long service leave, retirement benefits and deferred
188
189
189
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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 2017
No. of shares
December 2016
No. of shares
324,254,097
338,503,563
-
(14,249,466)
324,254,097
324,254,097
Company
12 months to
December 2017
$m
12 months to
December 2016
$m
1,750.3
-
2,052.5
(302.2)
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 reduced share capital with the total premium paid over par value of $123.7 million
taken to the share buy-back reserve in 2016.
1,750.3
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. No shares were bought back under this scheme.
On 14 December 2017, 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 2017. As at 31 December 2017 no shares have been bought
back under this new scheme.
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.
190
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CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
20. SHARE CAPITAL
21. RESERVES
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 2017
December 2016
No. of shares
No. of shares
324,254,097
338,503,563
-
(14,249,466)
324,254,097
324,254,097
Company
12 months to
12 months to
December 2017
December 2016
$m
$m
1,750.3
-
1,750.3
2,052.5
(302.2)
1,750.3
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 reduced share capital with the total premium paid over par value of $123.7 million
taken to the share buy-back reserve in 2016.
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. No shares were bought back under this scheme.
On 14 December 2017, 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 2017. As at 31 December 2017 no shares have been bought
back under this new scheme.
to any proceeds of liquidation.
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
12 months to
December 2017
$m
Restated1
12 months to
December 2016
$m
Note
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
29
Balance at reporting date
Equity reserve
Balance at beginning of reporting period1
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
384.3
(222.0)
162.3
(11.5)
4.4
(7.1)
-
-
-
-
-
-
(619.6)
-
(619.6)
(123.7)
-
(123.7)
44.9
(2.5)
(8.6)
33.8
348.6
35.7
384.3
3.0
(14.5)
(11.5)
20.0
(20.0)
-
21.2
(21.2)
-
(31.9)
(587.7)
(619.6)
-
(123.7)
(123.7)
62.7
1.0
(18.8)
44.9
Total reserves at reporting date
1 Amounts have been restated at December 2016 due to the finalisation of the purchase price allocation on the UGL acquisition
as set out in Note 29: Acquisitions and disposals of controlled entities and businesses.
(554.3)
(325.6)
190
191
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CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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
Note
12 months to
December 2017
$m
12 months to
December 2016
$m
1,876.5
702.1
(395.6)
2,183.0
1,616.7
580.3
(320.5)
1,876.5
23
192
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CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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
2017 final dividend
Subsequent to reporting date the Company announced a 100% franked final dividend in
respect of the year ended 31 December 2017. The dividend is payable on 4 July 2018. This
dividend has not been provided for in the statement of financial position1
23. DIVIDENDS
Dividends recognised in the reporting period to 31 December 2017
30 June 2017 interim ordinary dividend 100% franked paid on 4 October 2017
31 December 2016 final dividend 100% franked paid on 4 July 2017
Total dividends recognised in reporting period to 31 December 2017
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
Cents per
share
$m
75.0
243.2
60.0
62.0
194.6
201.0
395.6
48.0
50.0
155.6
164.9
Total dividends recognised in reporting period to 31 December 2016
1The Board has determined a final dividend of 75 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 14 December 2017, which commenced on 29 December 2017, there may be fewer shares on issue on the record date
for the dividend than the number of shares on issue as at the date of this financial report. The final payable amount is based on
number of shares on issue at the record date.
320.5
Company
December 2017
$m
December 2016
$m
Dividend franking account
Balance of the franking account, adjusted for franking credits / debits which arise from the
224.6
398.2
payment / refund of income tax provided for in the financial statements
The impact of the 2017 final dividend, determined after the reporting date, on the dividend franking account will be a reduction of
$104.2 million (2016: $86.1 million).
21. RESERVES CONTINUED
Nature and purpose of reserves
Foreign currency translation reserve
Hedging reserve
relating to future transactions.
Fair value reserve
realised or impaired.
Associates equity reserve
Equity reserve
with 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
The fair value reserve includes the cumulative net increase above cost of the fair value of available-for-sale assets until the asset is
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
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.
Note
12 months to
12 months to
December 2017
December 2016
$m
$m
1,876.5
702.1
(395.6)
2,183.0
1,616.7
580.3
(320.5)
1,876.5
23
192
193
193
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
24. EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
12 months to
December 2017
12 months to
December 2016
216.5¢
216.5¢
176.6¢
176.4¢
Profit / (loss) attributable to shareholders of the parent entity used in the calculation of basic
and diluted earnings per share ($m)
702.1
580.3
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
324,254,097
328,649,980
Contingently issuable shares1
Weighted average number of ordinary shares and potential ordinary shares used as the
denominator in calculating diluted earnings per share
102,170
235,225
324,356,267
328,885,205
1Contingently issuable shares relate to share rights under plans disclosed in Note 36: Employee benefits.
194
194
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CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
24. EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
12 months to
12 months to
December 2017
December 2016
216.5¢
216.5¢
176.6¢
176.4¢
Profit / (loss) attributable to shareholders of the parent entity used in the calculation of basic
702.1
580.3
and diluted earnings per share ($m)
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in calculating basic
324,254,097
328,649,980
earnings per share
Contingently issuable shares1
Weighted average number of ordinary shares and potential ordinary shares used as the
324,356,267
328,885,205
denominator in calculating diluted earnings per share
1Contingently issuable shares relate to share rights under plans disclosed in Note 36: Employee benefits.
102,170
235,225
25. ASSOCIATES
The Group has the following investments in associates:
Name of entity
Principal activity
Country
Ownership interest
December
2017
%
December
2016
%
Canberra Metro Holdings Trust1
Canberra Metro Holdings Pty Ltd1
Canberra Metro Pty Ltd
Dunsborough Lakes Village Syndicate1
LCIP Co-Investment Unit Trust2
Macmahon Holdings Limited1
Metro Trains Australia Pty Ltd1
Metro Trains Melbourne Pty Ltd1
Metro Trains Sydney Pty Ltd1
On Talent Pty Ltd
Wellington Gateway General Partner No.1
Limited2
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Development
Investment
Australia
Construction, Contract Mining Australia
Australia
Services
Australia
Services
Australia
Services
Australia
Recruitment
New Zealand
Investment
30
30
30
20
11
-
20
20
20
30
15
30
30
30
20
11
21
20
20
20
30
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 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.
194
195
195
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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 2017
$m
12 months to
December 2016
$m
478.1
1,318.0
(460.7)
(1,285.7)
17.4
32.3
0.5
(8.8)
(8.3)
9.1
(3.0)
6.1
0.5
(34.4)
(33.9)
(1.6)
(0.2)
(1.8)
December 2017
$m
December 2016
$m
113.9
182.3
296.2
90.4
166.9
257.3
186.6
134.7
321.3
102.7
145.7
248.4
Equity accounted associates at reporting date1,2
38.9
72.9
1Results of HLG Contracting are included within results of associates until 1 December 2016 when joint control was obtained. Assets
and liabilities of HLG Contracting as at 31 December 2016 and 31 December 2017 are included with those of other joint ventures and
are disclosed within Note 26: Joint venture entities.
2 The Group’s shareholding in listed associates for which there are published quotations had a market value at reporting date of: $nil
(31 December 2016: $24.7 million), as the Group disposed of its shareholding in Macmahon Holdings Limited during the reporting
period.
There were no impairments of equity accounted associates during the reporting period (31 December 2016: $nil).
In the opinion of the directors, there are no individually material associates as at 31 December 2017.
196
196
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
25. ASSOCIATES CONTINUED
The Group’s share of associates’ results, assets and liabilities are as follows:
26. JOINT VENTURE ENTITIES
The Group has the following joint venture entities:
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 2017
December 2016
$m
$m
478.1
1,318.0
(460.7)
(1,285.7)
17.4
32.3
December 2017
December 2016
$m
$m
0.5
(8.8)
(8.3)
9.1
(3.0)
6.1
113.9
182.3
296.2
90.4
166.9
257.3
0.5
(34.4)
(33.9)
(1.6)
(0.2)
(1.8)
186.6
134.7
321.3
102.7
145.7
248.4
Equity accounted associates at reporting date1,2
38.9
72.9
1Results of HLG Contracting are included within results of associates until 1 December 2016 when joint control was obtained. Assets
and liabilities of HLG Contracting as at 31 December 2016 and 31 December 2017 are included with those of other joint ventures and
are disclosed within Note 26: Joint venture entities.
2 The Group’s shareholding in listed associates for which there are published quotations had a market value at reporting date of: $nil
(31 December 2016: $24.7 million), as the Group disposed of its shareholding in Macmahon Holdings Limited during the reporting
period.
There were no impairments of equity accounted associates during the reporting period (31 December 2016: $nil).
In the opinion of the directors, there are no individually material associates as at 31 December 2017.
Name of entity
Principal activity
Country
Ownership interest
December 2017
%
December 2016
%
APM Group (Aust) Pty Ltd & Broad Construction Services
(NSW/VIC) Pty Ltd1
Construction
Australia
Applemead Proprietary Limited
Development
Australia
Auckland Road Maintenance Alliance (West) Management JV1
Construction
New Zealand
Australian Terminal Operations Management Pty Ltd
Bac Devco Pty Limited1
Barclay Mowlem Thiess Joint Venture1
Canberra Metro Operations Pty Ltd
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 Mining Pty Ltd1
Doubleone 3 Unit Trust1
Erskineville Residential Project Pty Ltd
Great Eastern Highway Upgrade
GSJV Guyana Inc1
GSJV Limited (Barbados)1
HLG Contracting LLC
Kings Square No.4 Unit Trust
Kings Square Pty Ltd
LCS Employment Agency Ltd
Leighton Abigroup Joint Venture1
Leighton BMD JV1
Services
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
Development
Construction
Construction
Australia
Australia
Australia
Contract Mining
Guyana
Contract Mining
Barbados
Construction
Development
Development
Services
Construction
Construction
United Arab
Emirates
Australia
Australia
Macau
Australia
Australia
-
-
-
50
-
-
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
-
50
75
50
50
45
50
50
-
50
50
50
50
50
50
33
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
75
50
50
45
50
50
50
50
50
196
197
197
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
26. JOINT VENTURE ENTITIES CONTINUED
Name of entity
Principal activity
Country
Ownership interest
December 2017
December 2016
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
Construction
India
Construction
Australia
Construction
Australia
Construction
Australia
Services
United Arab
Emirates
Construction
Australia
Construction
Construction
India
India
Majwe Mining Joint Venture (Proprietary) Limited
Contract Mining Botswana
Manukau Motorway Extension1
Mode Apartments Pty Ltd
Mode Apartments Unit Trust
Moonee Ponds Pty Ltd
Mosaic Apartments Holdings Pty Ltd1
Mosaic Apartments Pty. Ltd1
Mosaic Apartments Unit Trust
MPEET Pty Ltd
Mulba Mia Leighton Broad Joint Venture1
Naval Ship Management (Australia) Pty Ltd2
New Future Alliance (SIHIP)
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 Venture1
SmartReo Pty Ltd
Southern Gateway Alliance (Mandurah)
Thiess Hochtief Joint Venture1
Thiess United Group Joint Venture1
Ventia Services Group Pty Limited
Viridian Noosa Pty Ltd1
Viridian Noosa Trust1
198
Construction
New Zealand
Development
Australia
Development
Australia
Development
Australia
Development
Australia
Development
Australia
Development
Australia
Services
Australia
Construction
Australia
Services
Australia
Construction
Australia
Contract Mining Australia
Construction
New Zealand
Mining
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Services
Australia
Development
Australia
Development
Australia
%
-
-
-
55
36
-
50
50
60
50
30
30
50
50
50
50
50
50
50
80
50
50
44
44
-
-
50
50
69
50
50
47
50
50
%
50
50
50
55
36
88
50
50
60
50
30
30
50
50
50
50
50
50
50
80
50
50
44
44
50
50
50
50
69
50
50
47
50
50
198
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
26. JOINT VENTURE ENTITIES CONTINUED
26. JOINT VENTURE ENTITIES CONTINUED
Name of entity
Principal activity
Country
Ownership interest
December 2017
December 2016
Name of entity
Principal activity
Country
Wallan Project Pty Ltd1
Wallan Project Trust1
Wedgewood Road Hallam No. 1 Pty Ltd
Wellington Tunnels Alliance
Wrap Southbank Unit Trust
WSO M7 Stage 3 JV
Investment
Investment
Australia
Australia
Development
Australia
Construction
New Zealand
Development
Australia
Construction
Australia
Ownership interest
December 2017
December 2016
%
30
30
50
-
-
50
%
30
30
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.
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.
Leighton Construction India (Private) Limited2
Leighton Contractors & Baulderstone Hornibrook Bilfinger Berger
Construction
India
Construction
Australia
Majwe Mining Joint Venture (Proprietary) Limited
Contract Mining Botswana
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
Manukau Motorway Extension1
Mode Apartments Pty Ltd
Mode Apartments Unit Trust
Moonee Ponds Pty Ltd
Mosaic Apartments Holdings Pty Ltd1
Mosaic Apartments Pty. Ltd1
Mosaic Apartments Unit Trust
MPEET Pty Ltd
Mulba Mia Leighton Broad Joint Venture1
Naval Ship Management (Australia) Pty Ltd2
New Future Alliance (SIHIP)
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 Venture1
SmartReo Pty Ltd
Southern Gateway Alliance (Mandurah)
Thiess Hochtief Joint Venture1
Thiess United Group Joint Venture1
Ventia Services Group Pty Limited
Viridian Noosa Pty Ltd1
Viridian Noosa Trust1
%
-
-
-
55
36
-
50
50
60
50
30
30
50
50
50
50
50
50
50
80
50
50
44
44
-
-
50
50
69
50
50
47
50
50
%
50
50
50
55
36
88
50
50
60
50
30
30
50
50
50
50
50
50
50
80
50
50
44
44
50
50
50
50
50
50
47
50
50
69
Construction
Australia
Construction
Australia
Services
United Arab
Emirates
Construction
Australia
Construction
Construction
India
India
Construction
New Zealand
Construction
New Zealand
Development
Australia
Development
Australia
Development
Australia
Development
Australia
Development
Australia
Development
Australia
Services
Australia
Construction
Australia
Services
Australia
Construction
Australia
Contract Mining Australia
Mining
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Services
Australia
Development
Australia
Development
Australia
198
199
199
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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 2017
$m
12 months to
December 2016
$m
2,203.1
1,362.9
(2,169.4)
(1,331.5)
33.7
31.4
0.4
2.6
(70.1)
(48.1)
(69.7)
(45.5)
(36.0)
(14.1)
(20.0)
(56.0)
(28.1)
(42.2)
December 2017
$m
December 2016
$m
2,086.2
1,257.6
3,343.8
(1,837.1)
(1,162.9)
(3,000.0)
2,143.7
1,386.9
3,530.6
(1,968.3)
(1,018.7)
(2,987.0)
The Group’s share of joint venture entities’ net assets at reporting date1,2
1 The Group disposed of its investment in Nextgen Group Holdings Pty Limited during the 2016 year for a profit of $70.1 million. Refer
to Note 3: Expenses.
543.6
343.8
2Results of HLG Contracting are included within results of joint ventures from 1 December 2016 when joint control was obtained.
Assets and liabilities of HLG Contracting as at 31 December 2016 and 31 December 2017 are included within both periods above.
There were no impairments of investments in joint ventures during the reporting period (31 December 2016: $nil).
200
200
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
26. JOINT VENTURE ENTITIES CONTINUED
The Group’s share of joint venture entities’ results, assets and liabilities are as follows:
26. JOINT VENTURE ENTITIES CONTINUED
a) Material joint ventures
Set out below are the joint venture entities of the Group as at 31 December 2017 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
relationship
HLG Contracting LLC1
United Arab Emirates
Equity method
Joint venture
1There is no quoted market value for HLG Contracting LLC as it is not a listed entity.
HLG Contracting LLC (“HLG Contracting”)
Measurement method Nature of
December 2017
December 2016
Ownership interest held by the
Company
%
45
%
45
HLG Contracting’s new shareholder structure agreed on 30 November 2016 is a step towards realising its long term strategic
objectives in the region. This allows HLG Contracting to continue to deliver leading projects for clients. A strategic review of the HLG
Contracting business is ongoing.
CIMIC continues to equity account for the investment. During the reporting period, the carrying value of the Group’s investment in
HLG Contracting decreased to $245.6 million from $366.5 million (equivalent to US$191.6 million at 31 December 2017 and US$263.9
million at 31 December 2016). The decrease was due to a foreign exchange translation loss of $28.2 million and the Group’s share
of equity accounted loss of $92.7 million for the period. The recoverable amount of the Group’s investment was calculated using a
value in use calculation.
The key assumptions used in the value in use calculation:
Discount rate
Growth rate
Legacy project
receivables
Borrowings
Forecast cash flow
16% (31 December 2016: 15%)
3% (31 December 2016: 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, approximately half will be collected within the medium term and
approximately half collected subsequently
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 provided to HLG Contracting.
The Group continues to hold a call option to purchase the remaining 55% shareholding in HLG Contracting. This option has no current
impact on the control of the company. As at 31 December 2017 the fair value of the call option was determined to be US$54.0 million
(31 December 2016: US$54.0 million), equivalent to $69.2 million (31 December 2016: $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. No gain or loss was recognised in the period.
During the period HLG Contracting entered into a new four-year syndicated loan facility to refinance existing borrowing
facilities. CIMIC continues to gaurantee the HLG Contracting facilities with a secured and drawn amount of US$326.1 million as at 31
December 2017 (equivalent to $418.1 million) compared to US$239.7 million as at 31 December 2016 (equivalent to $332.9 million).
No amounts have been recognised in relation to these facilities at 31 December 2017 or 31 December 2016.
200
201
201
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
to Note 3: Expenses.
12 months to
12 months to
December 2017
December 2016
$m
$m
2,203.1
1,362.9
(2,169.4)
(1,331.5)
33.7
31.4
0.4
2.6
(70.1)
(48.1)
(69.7)
(45.5)
(36.0)
(14.1)
(20.0)
(56.0)
(28.1)
(42.2)
December 2017
December 2016
$m
$m
2,086.2
1,257.6
3,343.8
(1,837.1)
(1,162.9)
(3,000.0)
2,143.7
1,386.9
3,530.6
(1,968.3)
(1,018.7)
(2,987.0)
The Group’s share of joint venture entities’ net assets at reporting date1,2
343.8
543.6
1 The Group disposed of its investment in Nextgen Group Holdings Pty Limited during the 2016 year for a profit of $70.1 million. Refer
2Results of HLG Contracting are included within results of joint ventures from 1 December 2016 when joint control was obtained.
Assets and liabilities of HLG Contracting as at 31 December 2016 and 31 December 2017 are included within both periods above.
There were no impairments of investments in joint ventures during the reporting period (31 December 2016: $nil).
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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.
Summarised profit or loss
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 income1
Dividends received from HLG Contracting
12 months to
December 2017
$m
12 months to
December 2016
$m
1,989.5
(28.1)
2,702.5
(24.3)
(2,094.1)
(2,782.9)
2.0
1.2
(130.7)
(103.5)
-
(75.4)
(75.4)
(206.1)
-
(206.1)
-
1.3
(82.7)
(81.4)
(184.9)
(2.6)
(187.5)
-
(206.1)
(187.5)
45%
45%
(92.7)
-
(92.7)
(84.4)
-
(84.4)
-
-
1Results of HLG Contracting are included within results of joint ventures from 1 December 2016 when joint control was obtained.
Assets and liabilities of HLG Contracting as at 31 December 2016 and 31 December 2017 are included within both periods above.
202
202
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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.
26. JOINT VENTURE ENTITIES CONTINUED
a) Material joint ventures continued
Summarised profit or loss
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 income1
12 months to
12 months to
December 2017
December 2016
$m
$m
1,989.5
(28.1)
2,702.5
(24.3)
(2,094.1)
(2,782.9)
2.0
1.2
(130.7)
(103.5)
-
(75.4)
(75.4)
(206.1)
(206.1)
1.3
(82.7)
(81.4)
(184.9)
(2.6)
(187.5)
-
-
-
-
-
(206.1)
(187.5)
45%
45%
(92.7)
(84.4)
(92.7)
(84.4)
-
-
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 2017
$m
December 2016
$m
96.8
3,713.8
3,810.6
1,539.0
1,539.0
223.4
3,742.4
3,965.8
1,744.4
1,744.4
(436.7)
(2,743.9)
(3,180.6)
(733.7)
(2,704.8)
(3,438.5)
(1,312.6)
(1,130.8)
(310.6)
(326.4)
(1,623.2)
(1,457.2)
545.8
814.5
245.6
366.5
Dividends received from HLG Contracting
1Results of HLG Contracting are included within results of joint ventures from 1 December 2016 when joint control was obtained.
Assets and liabilities of HLG Contracting as at 31 December 2016 and 31 December 2017 are included within both periods above.
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 2017
$m
December 2016
$m
98.2
36.7
177.1
42.2
202
203
203
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
27. JOINT OPERATIONS
The Group has the following interest in joint operations:
Name of arrangement
Principal activity
Country
Ownership interest
December 2017
December 2016
%
%
Bacchus Marsh Joint Venture
Baulderstone Leighton Joint Venture
Casey Fields1
CH2 – UGL
Development
Australia
Construction
Australia
Development
Australia
Construction
Australia
China State - Leighton Joint Venture
Construction
Hong Kong
CHT Joint Venture
CPB & BMD JV
CPB & Bombardier JV
CPB & JHG JV
CPB Black & Veatch Joint Venture1
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)
CPB Southbase JV
Erskineville Residential Project
EV LNG Australia Pty Ltd & Thiess Pty Ltd (EVT JV)
Gammon - Leighton Joint Venture
Gateway WA
Henry Road Edenbrook Joint Venture1
HYLC Joint Venture1
JHCPB JV
JH & CPB & GHELLA JV
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
New Zealand
Development
Australia
Construction
Australia
Construction
Hong Kong
Construction
Australia
Development
Australia
Construction
Australia
Construction
Australia
Construction
Australia
John Holland – Leighton (South East Asia) Joint Venture
Services
Hong Kong
John Holland Pty Ltd, UGL Engineering Pty Ltd and GHD Pty Ltd
trading as Malabar Alliance
Construction
Australia
Leighton - China State Joint Venture
Leighton - China State Joint Venture
Construction
Hong Kong
Construction
Hong Kong
Leighton - China State - Van Oord Joint Venture
Construction
Hong Kong
Leighton - Chun Wo Joint Venture
Leighton - Chun Wo Joint Venture
Leighton - Chun Wo Joint Venture
Construction
Hong Kong
Construction
Hong Kong
Construction
Hong Kong
Leighton China State John Holland Joint Venture (City of Dreams)1 Construction
Macau
-
50
33
50
50
50
50
50
50
50
40
50
33
75
50
50
50
68
30
50
50
45
50
50
51
51
45
84
60
70
40
30
50
33
50
50
50
-
-
-
50
40
50
33
-
50
50
50
68
30
50
50
-
50
50
51
51
45
84
60
-
40
204
204
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
27. JOINT OPERATIONS CONTINUED
Name of arrangement
Principal activity
Country
Ownership interest
December 2017
%
December 2016
%
Leighton China State Joint Venture (Wynn Resort)1
Construction
Macau
Leighton ‐ Gammon Joint Venture
Leighton ‐ HEB Joint Venture
Construction
Hong Kong
Construction
New Zealand
Leighton Abigroup Consortium (Epping to Thornleigh)
Leighton Contractors Downer Joint Venture1
Construction
Leighton Fulton Hogan Joint Venture (Sapphire to Woolgoolga)1 Construction
Construction
Australia
Australia
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
Hong Kong
Construction
Australia
Construction
Hong Kong
Construction
Hong Kong
Construction
Hong Kong
Leighton ‐ John Holland Joint Venture (Lai Chi Kok)
Construction
Hong Kong
John Holland – Leighton (South East Asia) Joint Venture
Services
Hong Kong
John Holland Pty Ltd, UGL Engineering Pty Ltd and GHD Pty Ltd
Construction
Australia
Swietelsky CPB Rail Joint Venture (formerly known as Leighton
Swietelsky Joint Venture)1
Leighton ‐ Total Joint Operation
LLECPB Crossing Removal JV
Metropolitan Road Improvement Alliance (formerly Building
Roe 8)
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 Systems JV
OWP Joint Venture
Rizzani Leighton Joint Venture
Construction
Indonesia
Construction
Australia
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
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Thiess John Holland Joint Venture (Airport Link)
Construction
Australia
Thiess John Holland Joint Venture (Eastlink)
Construction
Australia
50
50
80
50
50
50
50
50
‐
50
75
51
50
55
51
67
50
71
50
50
25
50
40
50
50
50
60
67
‐
65
33
50
50
50
50
50
80
50
50
50
50
50
50
50
75
51
50
55
51
67
50
71
50
50
25
50
40
50
50
50
60
67
33
65
33
50
50
50
205
205
27. JOINT OPERATIONS
The Group has the following interest in joint operations:
Name of arrangement
Principal activity
Country
Ownership interest
December 2017
December 2016
%
%
Bacchus Marsh Joint Venture
Baulderstone Leighton Joint Venture
Casey Fields1
CH2 – UGL
CHT Joint Venture
CPB & BMD JV
CPB & Bombardier JV
CPB & JHG JV
China State - Leighton Joint Venture
Construction
Hong Kong
CPB Black & Veatch Joint Venture1
CPB Dragados Samsung Joint Venture (formerly known as
Construction
Australia
Leighton Dragados Samsung Joint Venture)
CPB John Holland Dragados Joint Venture (formerly known as
Construction
Australia
Thiess John Holland Dragados Joint Venture)
CPB Samsung John Holland Joint Venture (formerly known as
Construction
Australia
Leighton Samsung John Holland Joint Venture)
CPB Southbase JV
Erskineville Residential Project
EV LNG Australia Pty Ltd & Thiess Pty Ltd (EVT JV)
Gammon - Leighton Joint Venture
Gateway WA
Henry Road Edenbrook Joint Venture1
HYLC Joint Venture1
JHCPB JV
JH & CPB & GHELLA JV
trading as Malabar Alliance
Leighton - China State Joint Venture
Leighton - China State Joint Venture
Leighton - Chun Wo Joint Venture
Leighton - Chun Wo Joint Venture
Leighton - Chun Wo Joint Venture
Leighton - China State - Van Oord Joint Venture
Construction
Hong Kong
Leighton China State John Holland Joint Venture (City of Dreams)1 Construction
Macau
Development
Australia
Construction
Australia
Development
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
New Zealand
Development
Australia
Construction
Australia
Construction
Hong Kong
Construction
Australia
Development
Australia
Construction
Australia
Construction
Australia
Construction
Australia
Construction
Hong Kong
Construction
Hong Kong
Construction
Hong Kong
Construction
Hong Kong
Construction
Hong Kong
-
50
33
50
50
50
50
50
50
50
40
50
33
75
50
50
50
68
30
50
50
45
50
50
51
51
45
84
60
70
40
30
50
33
50
50
50
-
-
-
50
40
50
33
-
50
50
50
68
30
50
50
-
50
50
51
51
45
84
60
-
40
204
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
27. JOINT OPERATIONS CONTINUED
Name of arrangement
Principal activity
Country
Thiess KMC JV
Thiess Wirlu‐Murra Joint Venture
UGL Cape
UGL Kentz
Contract Mining Canada
Contract Mining Australia
Services
Australia
Construction
Australia
Veolia Water ‐ Leighton‐ John Holland Joint Venture
Construction
Hong Kong
Ownership interest
December 2017
%
December 2016
%
51
50
50
50
24
51
50
50
50
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.
206
206
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
27. JOINT OPERATIONS CONTINUED
28. NOTES TO THE STATEMENT OF CASH FLOWS
Name of arrangement
Principal activity
Country
December 2017
December 2016
Ownership interest
a) Reconciliation of profit / (loss) for the year to net cash from operating activities
Thiess KMC JV
Thiess Wirlu‐Murra Joint Venture
UGL Cape
UGL Kentz
Contract Mining Canada
Contract Mining Australia
Services
Australia
Construction
Australia
Veolia Water ‐ Leighton‐ John Holland Joint Venture
Construction
Hong Kong
%
51
50
50
50
24
%
51
50
50
50
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.
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 acquisition of controlled entities
- Net (gain) / loss on fair value of investments
- 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
December 2017
$m
12 months to
December 2016
$m
690.6
552.4
463.7
47.6
-
-
(36.6)
(12.9)
8.0
(0.6)
227.2
(6.1)
(2.5)
-
(149.7)
180.1
(4.2)
49.6
(247.9)
156.1
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
Net cash from operating activities
1,362.4
1,127.0
b) Reconciliation of liabilities arising from financing activities
December
2016
$m
Cash flows
$m
Non – cash changes
December
2017
$m
Acquisition
Disposal
Amortisation
of borrowing
costs
Foreign
Exchange
Movement
Interest bearing loans
Finance lease liabilities
Interest bearing liabilities
– limited recourse loans
Total liabilities from
financing activities
877.1
22.8
31.9
(21.2)
267.3
(220.8)
1,167.2
(210.1)
-
-
-
-
-
-
-
-
1.2
-
-
(53.4)
(1.6)
0.1
856.8
-
46.6
1.2
(54.9)
903.4
206
207
207
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
29. ACQUISITIONS AND DISPOSALS OF CONTROLLED ENTITIES AND BUSINESSES
2017 Acquisitions
Bacchus Marsh JV
On 6 July 2017, Townsville City Project Trust acquired an unincorporated joint operation which is a planned residential land
development project located in Bacchus Marsh Victoria. Townsville City Project Trust is 50% owned by Leighton Properties Pty Ltd
and 50% by Devine Limited, controlled entities of CIMIC Group.
Devine Limited held a 50% interest in the previous unincorporated joint operation. Devine Limited’s interest in the joint operation is
unchanged via a 50% interest in the acquiring company Townsville City Project Trust but the CIMIC Group interest has increased
from 50% to 100% interest in the joint operation. The purchase consideration was $21.3 million cash with deferred consideration of
$9.2 million.
The acquisition has been accounted for under AASB 3 Business Combinations.
The contribution by the acquired joint operation to the Group from the acquisition date to the end of the period ended 31 December
2017 was immaterial. Had the acquisition occurred on 1 January 2017, the acquired joint operation’s contribution to the Group for
the year ended 31 December 2017 would have been immaterial. The business is now reported within the Corporate 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.
2016 Acquisitions
UGL
On 10 October 2016, CIMIC Group Investments No.2 Pty Limited (CGI2), a controlled entity within the Group, became a substantial
shareholder in 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 were
consolidated from this date. CGI2 subsequently increased its ownership interest in UGL to 100%, which was completed on 20 January
2017.
Details of the business combination were disclosed in Note 29: Acquisitions and disposals of controlled entities and businesses in the
Group’s annual financial statements for the year ended 31 December 2016.
The Group’s 2016 annual financial statements included provisional fair values for assets and liabilities acquired in the business
combination. Accounting for the business combination is now complete, and the 31 December 2016 comparative information has
been restated retrospectively to increase the fair value of trade and other payables at the acquisition date by $60.0 million, increase
deferred tax assets by $18.0 million, and increase goodwill and equity reserve each by $21.0 million.
208
208
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
29. ACQUISITIONS AND DISPOSALS OF CONTROLLED ENTITIES AND BUSINESSES
29. ACQUISITIONS AND DISPOSALS OF CONTROLLED ENTITIES AND BUSINESSES CONTINUED
2017 Acquisitions
Bacchus Marsh JV
On 6 July 2017, Townsville City Project Trust acquired an unincorporated joint operation which is a planned residential land
development project located in Bacchus Marsh Victoria. Townsville City Project Trust is 50% owned by Leighton Properties Pty Ltd
and 50% by Devine Limited, controlled entities of CIMIC Group.
Devine Limited held a 50% interest in the previous unincorporated joint operation. Devine Limited’s interest in the joint operation is
unchanged via a 50% interest in the acquiring company Townsville City Project Trust but the CIMIC Group interest has increased
from 50% to 100% interest in the joint operation. The purchase consideration was $21.3 million cash with deferred consideration of
$9.2 million.
The acquisition has been accounted for under AASB 3 Business Combinations.
The contribution by the acquired joint operation to the Group from the acquisition date to the end of the period ended 31 December
2017 was immaterial. Had the acquisition occurred on 1 January 2017, the acquired joint operation’s contribution to the Group for
the year ended 31 December 2017 would have been immaterial. The business is now reported within the Corporate 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.
2016 Acquisitions
UGL
share.
2017.
On 10 October 2016, CIMIC Group Investments No.2 Pty Limited (CGI2), a controlled entity within the Group, became a substantial
shareholder in 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
On 24 November 2016, CGI2’s ownership interest in UGL increased to over 50% and thereby gained control. The results of UGL were
consolidated from this date. CGI2 subsequently increased its ownership interest in UGL to 100%, which was completed on 20 January
Details of the business combination were disclosed in Note 29: Acquisitions and disposals of controlled entities and businesses in the
Group’s annual financial statements for the year ended 31 December 2016.
The Group’s 2016 annual financial statements included provisional fair values for assets and liabilities acquired in the business
combination. Accounting for the business combination is now complete, and the 31 December 2016 comparative information has
been restated retrospectively to increase the fair value of trade and other payables at the acquisition date by $60.0 million, increase
deferred tax assets by $18.0 million, and increase goodwill and equity reserve each by $21.0 million.
Sedgman
On 23 February 2016, CIMIC Group Investments Pty Ltd, a controlled entity of the Company, increased its ownership interest in
Sedgman, an entity formerly listed on the ASX, to 51% and thereby gained control of Sedgman. The acquisition of Sedgman shares
was made under an unconditional off-market takeover offer for Sedgman shares. 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.
The revaluation of CIMIC’s previously held investment to fair value resulted in a gain on remeasurement of $25.4 million in the 6
months to 30 June 2016. 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 in the 6 months to 30 June 2016 (refer to Note 3: Expenses).
Details of the business combination were disclosed in Note 29: Acquisitions and disposals of controlled entities and businesses in the
Group’s annual financial statements for the year ended 31 December 2016. The fair values of assets and liabilities recognised as a
result of the business combination have been finalised with no adjustments made from the values previously disclosed.
Disposals
There were no disposals of controlled entities or businesses during the 12 months to 31 December 2017 (31 December 2016: $nil).
30. HELD FOR SALE
Assets and liabilities held for sale include marine fleet of $31.2 million (31 December 2016: $37.2 million), development properties
of $0.9 million (31 December 2016: $3.6 million), plant & equipment of $0.1 million (31 December 2016: $nil), and mining
equipment of $nil (31 December 2016: $6.9 million) actively marketed for sale.
208
209
209
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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
•
• HLG
Services
•
•
•
•
Public Private Partnerships (“PPPs”)
Engineering
Commercial & Residential
Corporate
The performance of each segment forms the primary basis for all management reporting to the CODM.
The Commercial and Residential segment does not meet the size threshold of a reportable segment at 31 December 2017. The
2016 comparatives have been restated to include the results of the Commercial and Residential segment within the Corporate
segment results. Consistent with prior years, PPPs and Engineering segments are also included within the Corporate segment
results.
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 2017
$m
12 months to
December 2016
$m
December 2017
$m
December 2016
$m
10,053.8
3,375.7
7,339.9
3,513.7
13,429.5
10,853.6
1,203.5
1,277.8
2,481.3
1,288.2
1,360.3
2,648.5
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.
210
210
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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.
The Commercial and Residential segment does not meet the size threshold of a reportable segment at 31 December 2017. The
2016 comparatives have been restated to include the results of the Commercial and Residential segment within the Corporate
segment results. Consistent with prior years, PPPs and Engineering segments are also included within the Corporate segment
results.
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
31. SEGMENT INFORMATION CONTINUED
12 months to
December 2017
Construction
Revenue
Segment revenue
Inter-segment
revenue
Segment associates
and joint venture
revenue
Revenue
Result
Segment EBIT
Mining &
Mineral
Processing
$m
Services
HLG
Corporate
Eliminations
Total
$m
$m
$m
$m
$m
3,312.0
2,983.0
902.1
1,303.1
(0.6)
16,110.7
-
-
-
-
0.6
-
$m
7,611.1
(0.6)
(11.4)
(147.6)
(375.8)
(902.1)
(1,244.3)
7,599.1
3,164.4
2,607.2
-
58.8
626.5
352.4
166.0
(2.8)
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
623.7
(13.6)
338.8
(1.2)
164.8
(91.7)
43.7
(48.0)
(50.8)
(69.3)
(120.1)
-
-
-
-
-
(2,681.2)
13,429.5
1,002.4
(43.2)
959.2
(268.6)
690.6
11.5
702.1
Revenue
Non-current assets
12 months to
12 months to
December 2017
December 2016
December 2017
December 2016
$m
$m
$m
$m
10,053.8
3,375.7
7,339.9
3,513.7
13,429.5
10,853.6
1,203.5
1,277.8
2,481.3
1,288.2
1,360.3
2,648.5
Other
Share of profit /
(loss) of associates
and joint venture
entities
Depreciation &
amortisation
Other material non-
cash income /
(expenses)
Geographical information
Australia Pacific
Asia, Middle East, Americas & Africa
Total
property, plant and equipment; and intangibles.
Major customers
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;
No revenue from transactions with a single external customer amount to 10% or more of the Group’s revenue.
(0.6)
9.7
10.2
(90.7)
21.5
-
(49.9)
(156.9)
(314.5)
(35.0)
-
-
-
-
-
(4.9)
30.1
-
-
(511.3)
30.1
210
211
211
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
31. SEGMENT INFORMATION CONTINUED
Construction
$m
Mining &
Mineral
Processing
$m
Services
HLG
Corporate
Eliminations
Total
$m
$m
$m
$m
$m
7,439.4
(102.2)
2,947.0
-
231.7
-
1,227.1
-
1,791.5
-
(102.2)
102.2
13,534.5
-
(20.4)
(160.8)
(27.5)
(1,227.1)
(1,245.1)
7,316.8
2,786.2
204.2
-
546.4
12 months to
December 2016
Revenue
Segment revenue
Inter-segment
revenue
Segment associates
and joint venture
revenue
Revenue
Result
Segment EBIT
591.9
284.8
10.6
(6.5)
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
35.9
29.4
(122.4)
(46.3)
(168.7)
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)
48.1
(88.6)
(244.6)
-
-
(2.3)
-
-
75.0
(1.9)
36.6
-
-
-
-
-
-
-
-
(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
212
212
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
31. SEGMENT INFORMATION CONTINUED
32. COMMITMENTS
Construction
Services
HLG
Corporate
Eliminations
Total
Mining &
Mineral
Processing
$m
$m
$m
$m
$m
$m
$m
Expenditure commitments in relation to operating leases contracted at the reporting date but
not recognised as liabilities, are payable as follows:
December 2017
$m
December 2016
$m
7,439.4
(102.2)
2,947.0
-
231.7
-
1,227.1
1,791.5
-
(102.2)
102.2
13,534.5
-
- within one year
-
-
later than one year but not later than five years
later than five years
(20.4)
(160.8)
(27.5)
(1,227.1)
(1,245.1)
(2,680.9)
Total
7,316.8
2,786.2
204.2
546.4
10,853.6
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
Property
- within one year
-
-
later than one year but not later than five years
later than five years
Other
- within one year
-
-
later than one year but not later than five years
later than five years
286.2
531.8
179.1
997.1
29.8
16.4
0.1
144.6
191.0
-
113.9
321.4
179.1
0.8
-
-
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
-
12 months to
December 2016
Revenue
Segment revenue
Inter-segment
revenue
Segment associates
and joint venture
revenue
Revenue
Result
Segment EBIT
Net finance income /
(costs)
Segment result
Other
Share of profit /
(loss) of associates
and joint venture
entities
Depreciation &
amortisation
Other material non-
cash income /
(expenses)
591.9
3.6
595.5
284.8
(9.2)
275.6
10.6
(2.0)
8.6
(6.5)
35.9
29.4
(122.4)
(46.3)
(168.7)
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
(11.6)
0.7
(0.1)
(81.1)
48.1
(88.6)
(244.6)
-
-
(2.3)
-
-
75.0
(1.9)
36.6
-
-
-
-
-
-
-
-
758.4
(18.0)
740.4
(188.0)
552.4
27.9
580.3
(44.0)
(337.4)
111.6
Total operating lease commitments
997.1
998.0
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.
212
213
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CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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
214
December 2017
$m
December 2016
$m
120.1
13.0
-
133.1
80.9
-
-
80.9
15.5
15.5
-
-
-
-
15.5
15.5
7.1
-
-
7.1
0.8
-
-
0.8
3.4
-
-
3.4
3.5
-
-
3.5
214
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
32. COMMITMENTS CONTINUED
Capital commitments
33. CONTINGENT LIABILITIES
Bank guarantees, insurance bonds and letters of credit
Capital expenditure contracted for at reporting date but not recognised as liabilities is as follows:
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 2017
$m
December 2016
$m
2,411.3
1,077.5
106.9
2,815.8
958.2
193.6
Included in the table above are amounts where the Group has indemnified bank guarantees and performance and payment bonds
in respect of all of the Group’s joint ventures and associates in the normal course of business totalling $620.9 million (31 December
2016: $1,014.4 million).
Other contingencies
i)
The Company is called upon to give, in the ordinary course of business, guarantees and indemnities in respect of the
performance by controlled entities, associates and related parties of their contractual and financial obligations. The value of
these guarantees and indemnities is indeterminable in amount.
later than one year but not later than five years
ii) There exists in some entities within the Group the normal design liability in relation to completed design and construction
projects.
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. ASIC has now advised CIMIC that its
investigation has concluded and it will take no further action.
The Company is cooperating with the AFP investigation. The Company does not know when the investigation 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 had 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. On
23 July 2017 the plaintiff filed a notice seeking to discontinue the proceeding. The discontinuance is subject to Court approval.
214
215
215
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
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 2017
December 2016
$m
$m
15.5
15.5
15.5
15.5
120.1
13.0
-
133.1
-
-
7.1
-
-
7.1
0.8
-
-
0.8
80.9
80.9
-
-
-
-
3.4
-
-
3.4
3.5
-
-
3.5
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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 7 February 2018. The Company anticipates that the matter referred
to in (vi) above will be a subject of the inquiry.
x) On 20 December 2017, the Company announced to the ASX that it had been made aware of additional proceedings relating to
an alleged failure by UGL to disclose its true financial position in the period 8 August – 5 November 2014 (prior to the purchase
of UGL by the Company). The Company denies the claim and will defend the proceedings.
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.
216
216
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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 7 February 2018. The Company anticipates that the matter referred
to in (vi) above will be a subject of the inquiry.
x) On 20 December 2017, the Company announced to the ASX that it had been made aware of additional proceedings relating to
an alleged failure by UGL to disclose its true financial position in the period 8 August – 5 November 2014 (prior to the purchase
of UGL by the Company). The Company denies the claim and will defend the proceedings.
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 $1,262.4 million (31 December 2016: $1,145.6 million) and Asia, Middle East, Americas & Africa $3,045.3
million (31 December 2016: $3,299.8 million).
The ageing of the Group’s receivables at the reporting date was: not past due: $314.0 million (31 December 2016: $564.1 million);
past due: $264.9 million (31 December 2016: $353.5 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:
6% (31 December 2016: 8%).
Provision for impairment of trade debtors
Balance at beginning of reporting period
Net provision (made) / used
Balance at reporting date
12 months to
December 2017
$m
12 months to
December 2016
$m
(1.9)
-
(1.9)
(5.4)
3.5
(1.9)
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 2016: $nil).
216
217
217
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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 2017 the Group had undrawn bank facilities of $2,531.0 million (31 December 2016: $1,686.4 million), and undrawn
guarantee facilities of $875.0 million (31 December 2016: $546.3 million).
Contractual maturities of financial liabilities and cash flow hedge contracts as at 31 December 2017:
Carrying
amount
$m
Contractual
cash flows
$m
Less than
1 year
$m
1-5 years
$m
More than
5 years
$m
December 2017
Non-derivative financial liabilities
Interest bearing loans
Finance lease liabilities
Limited recourse loans
Total interest bearing liabilities1
903.4
(1,027.8)
(298.8)
(729.0)
856.8
(980.8)
(251.8)
(729.0)
-
46.6
-
-
(47.0)
(47.0)
-
-
-
-
-
-
Trade and other payables
(4,887.2)
(4,887.2)
(4,735.5)
(151.7)
-
Derivative financial liabilities / (assets)
Forward exchange contracts used for foreign
currency hedging:
Net derivative financial liabilities / (assets)2
(2.2)
Inflow
Outflow
Other cashflow hedges:
Net derivative financial (assets)
Inflow
Outflow
(7.1)
Total net derivative financial liabilities / (assets)
(9.3)
128.9
(133.6)
127.4
(118.7)
1.5
(14.9)
5.2
-
0.5
5.2
-
-
-
13.9
(13.4)
218
-
-
-
-
-
218
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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 2017 the Group had undrawn bank facilities of $2,531.0 million (31 December 2016: $1,686.4 million), and undrawn
guarantee facilities of $875.0 million (31 December 2016: $546.3 million).
Contractual maturities of financial liabilities and cash flow hedge contracts as at 31 December 2017:
35. FINANCIAL INSTRUMENTS CONTINUED
b)
Liquidity risk continued
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
$m
Contractual
cash flows
$m
Less than
1 year
$m
1-5 years
$m
More than
5 years
$m
877.1
22.8
267.3
(996.5)
(373.2)
(327.1)
(296.2)
(23.4)
(23.4)
-
(268.3)
(18.3)
(250.0)
-
Carrying
amount
Contractual
cash flows
$m
$m
Less than
1 year
$m
1-5 years
More than
$m
5 years
$m
Total interest bearing liabilities
1,167.2
(1,288.2)
(414.9)
(577.1)
(296.2)
Trade and other payables1
(5,063.5)
(5,063.5)
(4,776.9)
(286.6)
-
Total interest bearing liabilities1
903.4
(1,027.8)
(298.8)
(729.0)
-
Net derivative financial liabilities / (assets)2
3.0
856.8
(980.8)
(251.8)
(729.0)
-
46.6
-
-
(47.0)
(47.0)
-
-
Derivative financial liabilities / (assets)
Forward exchange contracts used for foreign
currency hedging:
December 2017
Non-derivative financial liabilities
Interest bearing loans
Finance lease liabilities
Limited recourse loans
Trade and other payables
(4,887.2)
(4,887.2)
(4,735.5)
(151.7)
Derivative financial liabilities / (assets)
Forward exchange contracts used for foreign
currency hedging:
Net derivative financial liabilities / (assets)2
(2.2)
Other cashflow hedges:
Net derivative financial (assets)
(7.1)
Inflow
Outflow
Inflow
Outflow
128.9
(133.6)
127.4
(118.7)
1.5
(14.9)
5.2
-
-
-
5.2
-
0.5
Total net derivative financial liabilities / (assets)
(9.3)
13.9
(13.4)
Inflow
Outflow
Other cashflow hedges:
Net derivative financial (assets)
Inflow
Outflow
128.3
(131.9)
121.6
(125.0)
6.7
(6.9)
(15.7)
1.3
(16.0)
0.9
-
0.4
(16.0)
-
-
-
-
Total net derivative financial liabilities / (assets)
(12.7)
(18.3)
(2.5)
(15.8)
-
1 Amounts have been restated at December 2016 due to the finalisation of the purchase price allocation on the UGL acquisition
as set out in Note 29: Acquisitions and disposals of controlled entities and businesses.
2 Net derivative financial liabilities / (assets) relating to foreign currency hedging includes $4.4 million (31 December 2016: $4.6
million) of derivatives in an asset position and $2.2 million (31 December 2016: $1.6 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 2016: $nil), are disclosed in Note 26: Joint venture entities.
219
219
-
-
-
-
-
-
-
-
-
218
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
35. FINANCIAL INSTRUMENTS CONTINUED
c)
Equity price risk
Equity price risk is the risk that the fair value of either a listed or unlisted equity investment, derivative equity instrument, or a
portfolio of such financial instruments decreases in the future. The Group invests in equity investments through its participation in
major PPP infrastructure projects. Investments may also be made as part of its strategic plans to form alliances or to invest in
specialised but complementary businesses to access specialised skills, markets, or additional capacity. Equity investments are not
made for trading or speculative purposes.
Fair values
For the fair values of listed and unlisted investments 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.
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 $2.0 million (31 December 2016: $1.0 million). It is expected that the current hedged forecast transactions will occur during
the periods outlined in section (b) above and will affect the statement of profit or loss in the same periods. There are no gains or
losses recognised in the statement of profit or loss during the period due to hedge ineffectiveness.
Exposure to foreign currency risk
The most significant foreign currencies the Group is exposed to is the United States dollar (US$) along with the U.A.E Dirham (AED)
and Hong Kong dollar (HKD), both of which are pegged to the US$. The applicable Australian dollar to United States dollar exchange
rates during or at the end of the relevant reporting period, were as follows:
Assets and liabilities
Statement of Profit or Loss
December 2017 December 2016
12 months to
December 2017
12 months to
December 2016
US$ United States dollar
0.78
0.72
0.76
0.74
At 31 December 2017, the share of the Group’s assets and liabilities denominated in US$ was: assets US$4,238.3 million (31
December 2016: US$4,318.4 million); liabilities US$1,795.6 million (31 December 2016: US$1,473.1 million). The majority of these
US$ 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 2016.
220
220
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CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
35. FINANCIAL INSTRUMENTS CONTINUED
c)
Equity price risk
made for trading or speculative purposes.
Fair values
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
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.
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 $2.0 million (31 December 2016: $1.0 million). It is expected that the current hedged forecast transactions will occur during
the periods outlined in section (b) above and will affect the statement of profit or loss in the same periods. There are no gains or
losses recognised in the statement of profit or loss during the period due to hedge ineffectiveness.
Exposure to foreign currency risk
The most significant foreign currencies the Group is exposed to is the United States dollar (US$) along with the U.A.E Dirham (AED)
and Hong Kong dollar (HKD), both of which are pegged to the US$. The applicable Australian dollar to United States dollar exchange
rates during or at the end of the relevant reporting period, were as follows:
Assets and liabilities
Statement of Profit or Loss
December 2017 December 2016
12 months to
12 months to
December 2017
December 2016
US$ United States dollar
0.78
0.72
0.76
0.74
At 31 December 2017, the share of the Group’s assets and liabilities denominated in US$ was: assets US$4,238.3 million (31
December 2016: US$4,318.4 million); liabilities US$1,795.6 million (31 December 2016: US$1,473.1 million). The majority of these
US$ 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 2016.
35. FINANCIAL INSTRUMENTS CONTINUED
Equity
Statement of Profit or Loss
December 2017
$m
December 2016
$m
12 months to
December 2017
$m
12 months to
December 2016
$m
US$ depreciates by 5% against AU$ (AU$ appreciates)
US$ appreciates by 5% against AU$ (AU$ depreciates)
(144.3)
144.3
(159.6)
159.6
2.1
1.9
(2.1)
2.1
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 $14.9 million (31 December 2016: increased by $8.3 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 liabilities
Total fixed rate instruments
Variable rate instruments
Financial assets
Financial liabilities
Total variable rate instruments
December 2017
$m
December 2016
$m
-
-
(506.8)
(773.3)
(506.8)
(773.3)
1,813.8
1,576.5
(396.6)
(393.9)
1,417.2
1,182.6
220
221
221
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
35. FINANCIAL INSTRUMENTS CONTINUED
f) Net fair values of financial assets and liabilities
Fair value hierarchy
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:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
inputs for the asset or liability that are not based on observable market data.
Level 3:
31 December 2017
Assets
Equity and stapled securities available-for-sale
-
Listed investments
- Unlisted investments
Financial assets at fair value through profit or loss
- Unlisted investments
- Option to acquire shares
Derivatives
Total assets
Liabilities
Derivatives
Total liabilities
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
- Option to acquire shares
Derivatives
Total assets
Liabilities
Derivatives
Total liabilities
222
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
1.5
-
-
-
-
1.5
-
-
-
-
-
-
11.5
11.5
(2.2)
(2.2)
-
5.8
92.7
69.2
-
1.5
5.8
92.7
69.2
11.5
167.7
180.7
-
-
(2.2)
(2.2)
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
-
1.9
5.4
53.1
75.0
17.3
133.5
152.7
-
-
(4.6)
(4.6)
222
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
35. FINANCIAL INSTRUMENTS CONTINUED
f) Net fair values of financial assets and liabilities
Fair value hierarchy
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
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 2017
$m
12 months to
December 2016
$m
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as
Balance at beginning of reporting period
Unlisted equity and stapled securities available-for-sale
Acquisitions
Additions
Transfers1
Disposals
Gains/(losses) recognised in other comprehensive income
7.3
-
0.8
-
(0.8)
-
Balance at reporting date
1 Transfers from equity accounted investments following loss of significant influence in LCIP Co-Investment Unit Trust.
7.3
73.9
0.7
-
4.6
(71.8)
-
7.3
sheet approximate fair values.
have been identified as follows:
The table below analyses other financial instruments carried at fair value, listed in order of valuation method. The different levels
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
prices) or indirectly (i.e. derived from prices); and
Level 3:
inputs for the asset or liability that are not based on observable market data.
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
Financial assets at fair value through profit or loss
Balance at beginning of reporting period
Additions
Gains recognised through profit or loss
Changes recognised in foreign currency translation reserve
Balance at reporting date
12 months to
December 2017
$m
12 months to
December 2016
$m
128.1
2.0
37.6
(5.8)
161.9
51.8
1.3
75.0
-
128.1
Level 1
$m
Level 2
$m
Level 3
$m
Total
$m
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.
223
223
Equity and stapled securities available-for-sale
Financial assets at fair value through profit or loss
31 December 2017
Assets
-
Listed investments
- Unlisted investments
- Unlisted investments
- Option to acquire shares
Derivatives
Total assets
Liabilities
Derivatives
Total liabilities
31 December 2016
Assets
Equity and stapled securities available-for-sale
Financial assets at fair value through profit or loss
-
Listed investments
- Unlisted investments
- Unlisted investments
- Option to acquire shares
Derivatives
Total assets
Liabilities
Derivatives
Total liabilities
1.5
167.7
180.7
1.5
1.9
-
-
-
-
-
-
-
-
-
-
-
-
11.5
11.5
(2.2)
(2.2)
-
-
-
-
-
-
-
-
17.3
17.3
(4.6)
(4.6)
-
5.8
92.7
69.2
-
-
-
-
-
-
-
5.4
53.1
75.0
1.5
5.8
92.7
69.2
11.5
(2.2)
(2.2)
1.9
5.4
53.1
75.0
17.3
(4.6)
(4.6)
222
1.9
133.5
152.7
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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$214.3 million, equivalent to $274.8 million; carrying value
US$201.3 million, equivalent to $258.1 million (31 December 2016: fair value US$212.4 million, equivalent to $295.0 million;
carrying value US $201.3 million, equivalent to $279.6 million).
Unlisted debt: Guaranteed Senior Notes fair value US$210.5 million, equivalent to $269.9 million; carrying value US$194.0
million, equivalent to $248.7 million (31 December 2016: fair value US$368.3 million, equivalent to $511.6 million; carrying
value US$339.0 million, equivalent to $470.8 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
Growth rates
2.5% - 3.0% The impact on a change in the
Internal rate of return
Discount rates
Option to acquire shares Expected exercise period
EBITDA multiple
Discount rates
9%
10% - 15%
1 – 10 years
6-12 times
15%
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 18 September 2017, CIMIC Finance Limited, a wholly owned subsidiary of the Company, refinanced and expanded the core
syndicated bank facility for $2,600.0 million, maturing across two tranches on 18 September 2020 and 18 September 2022. Carrying
amount at 31 December 2017: $245.0 million (carrying amount at 31 December 2016: $nil). There are $12.7 million of capitalised
borrowing costs recognised against the loan facility (31 December 2016: $nil).
224
224
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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$214.3 million, equivalent to $274.8 million; carrying value
US$201.3 million, equivalent to $258.1 million (31 December 2016: fair value US$212.4 million, equivalent to $295.0 million;
carrying value US $201.3 million, equivalent to $279.6 million).
Unlisted debt: Guaranteed Senior Notes fair value US$210.5 million, equivalent to $269.9 million; carrying value US$194.0
million, equivalent to $248.7 million (31 December 2016: fair value US$368.3 million, equivalent to $511.6 million; carrying
value US$339.0 million, equivalent to $470.8 million).
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
Cash flow hedges
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.
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
Valuation process
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.
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
2017: US$79.0 million (31 December 2016: US$79.0 million) equivalent to $101.3 million (31 December 2016: $109.7 million), of
which US$79.0 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% which matured 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
2017: US$115.0 million (31 December 2016: US$260.0 million) equivalent to $147.4 million (31 December 2016: $361.1 million), of
which none 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 2017: US$201.3 million
(31 December 2016: US$201.3 million) equivalent to $258.1 million (31 December 2016: $279.6 million).
Significant unobservable inputs
Range of inputs
Relationship of unobservable inputs to
Bilateral loans
fair value
2.5% - 3.0% The impact on a change in the
9%
unobservable inputs would not change
significantly amounts recognised in profit
10% - 15%
or loss, total assets or total liabilities or
total equity
1 – 10 years
6-12 times
15%
At 31 December 2017, bilateral loan facilities outstanding were $112.0 million (31 December 2016: $115.0 million).
Other unsecured loans
Other unsecured loans outstanding as at 31 December 2017: $5.7 million (31 December 2016: $11.6 million). Other unsecured loans
expected to be settled within twelve months after reporting date: $5.7 million (31 December 2016: $11.6 million).
h) Finance lease liabilities
The Group has no finance lease liabilities remaining at 31 December 2017.
Financial assets/
financial liabilities
Unlisted investments
Growth rates
Option to acquire shares Expected exercise period
Internal rate of return
Discount rates
EBITDA multiple
Discount rates
g)
Interest bearing loans
Syndicated loans
On 18 September 2017, CIMIC Finance Limited, a wholly owned subsidiary of the Company, refinanced and expanded the core
syndicated bank facility for $2,600.0 million, maturing across two tranches on 18 September 2020 and 18 September 2022. Carrying
amount at 31 December 2017: $245.0 million (carrying amount at 31 December 2016: $nil). There are $12.7 million of capitalised
borrowing costs recognised against the loan facility (31 December 2016: $nil).
224
225
225
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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 2017: $46.6 million (31 December 2016: $17.3 million).
The Group had borrowings attributable to their UGL subsidiary secured against the assets of the subsidiary. Carrying amount as at
31 December 2017: $nil (31 December 2016: $250.0 million).
j) Assets pledged as security
The total carrying value of financial assets pledged as security at the reporting date is as follows:
Assets pledged as security
Property development - mortgaged
Other assets - fixed and floating charge
Total pledged assets
December 2017
$m
December 2016
$m
158.9
78.4
203.0
1,267.6
237.3
1,407.6
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
Gross amounts of
bank accounts with
a debit balance
(financial asset)
$m
Gross amounts of
bank accounts
with a credit
balance (financial
liability)
$m
Net cash amount
Amounts subject
to master netting
arrangements
Net amount
48.6
(4.9)
43.7
$m
$m
-
December 2017
Cash1
December 2016
Cash1
25.4
(25.3)
0.1
-
1The Group has transactional banking facilities that notionally pool grouped bank accounts with credit and debit balances.
226
$m
-
-
226
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
35. FINANCIAL INSTRUMENTS CONTINUED
i)
Limited recourse loans
36. EMPLOYEE BENEFITS
a) Rights plans
The Group has limited recourse property development loans secured against certain property development assets of the Group.
Carrying amount as at 31 December 2017: $46.6 million (31 December 2016: $17.3 million).
The Group had borrowings attributable to their UGL subsidiary secured against the assets of the subsidiary. Carrying amount as at
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.
At 31 December 2016 the 2012 and 2013 awards had been fully vested or lapsed. Therefore, there has been no movements
recognised in the current year profit or loss or reserves for these schemes which were disclosed in the 2016 CIMIC annual report as
these were fully complete at that date.
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.
227
227
31 December 2017: $nil (31 December 2016: $250.0 million).
j) Assets pledged as security
The total carrying value of financial assets pledged as security at the reporting date is as follows:
December 2017
December 2016
$m
$m
158.9
78.4
203.0
1,267.6
237.3
1,407.6
Assets pledged as security
Property development - mortgaged
Other assets - fixed and floating charge
Total pledged assets
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
Gross amounts of
Gross amounts of
Net cash amount
Amounts subject
Net amount
bank accounts with
bank accounts
a debit balance
with a credit
(financial asset)
balance (financial
to master netting
arrangements
$m
liability)
$m
$m
48.6
(4.9)
43.7
$m
-
December 2017
Cash1
December 2016
Cash1
1The Group has transactional banking facilities that notionally pool grouped bank accounts with credit and debit balances.
25.4
(25.3)
0.1
-
$m
-
-
226
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
36. EMPLOYEE BENEFITS CONTINUED
a) Rights plans continued
Amount recognised during the reporting period: Gain $3.3 million (31 December 2016: Expense $0.6 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 2015
- Granted
- Vested4
-
Forfeited/Lapsed
Unvested rights at 31 December 2016
- Granted
- Vested5
-
Forfeited/Lapsed5
Unvested rights at 31 December 2017
2014 LTI award
1 January 2014
31 December 2016
$13.81
$19.78
704,802
400,642
-
-
(65,657)
334,985
-
(165,376)
(169,609)
-
1 Each 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.
2 The 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.
3 The 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.
4 The volume weighted average share price during the reporting period to 31 December 2016 was $31.30.
5 The performance hurdles for the 2014 LTI were partially met at the test date in February 2017 and as a result 0% of the EPS grant
vested and 100% of the TSR grant vested on 14 March 2017. The remaining unvested rights lapsed in accordance with the terms of
the award. The five day volume weighted average share price starting from 14 March 2017 was $36.56.
228
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CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Amount recognised during the reporting period: Gain $3.3 million (31 December 2016: Expense $0.6 million).
36. EMPLOYEE BENEFITS CONTINUED
a) Rights plans continued
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 2015
- Granted
- Vested4
-
Forfeited/Lapsed
- Granted
- Vested5
-
Forfeited/Lapsed5
Unvested rights at 31 December 2016
Unvested rights at 31 December 2017
2014 LTI award
1 January 2014
31 December 2016
$13.81
$19.78
704,802
400,642
-
-
-
-
(65,657)
334,985
(165,376)
(169,609)
1 Each 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.
2 The 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.
3 The 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.
4 The volume weighted average share price during the reporting period to 31 December 2016 was $31.30.
5 The performance hurdles for the 2014 LTI were partially met at the test date in February 2017 and as a result 0% of the EPS grant
vested and 100% of the TSR grant vested on 14 March 2017. The remaining unvested rights lapsed in accordance with the terms of
the award. The five day volume weighted average share price starting from 14 March 2017 was $36.56.
36. EMPLOYEE BENEFITS CONTINUED
a) Rights plans continued
One-Off Awards
One-off awards of Deferred Share Rights were granted under the Equity Incentive Plan (“EIP”) for no cost to the employee and entitle
the participant to receive one fully paid ordinary share in the Company per right. In 2012, 2013, and 2014 one-off awards were
granted to employees:
to replace existing cash-based service and retention arrangements where payment was due to vest over the longer-term;
and
as one-off awards to new and existing employees for recruitment and retention purposes.
All share rights issued expire on the earlier of their 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: $nil (31 December 2016: Expense $0.1 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 2015
- Granted
- Vested3
-
Forfeited/Lapsed
Unvested rights at 31 December 2016
- Granted
- Vested4
-
Forfeited/Lapsed
Unvested rights at 31 December 2017
$16.20 -$25.66
811,018
82,651
-
(70,831)
(9,317)
2,503
-
(2,503)
-
-
$18.06
22,034
8,248
-
(4,124)
(4,124)
-
-
-
-
-
$16.18 - $21.50
43,542
12,930
-
(6,651)
-
6,279
-
(6,279)
-
-
1 The fair values were calculated using a five day volume weighted average share price up to and including the relevant reference
date.
2 This grant represents an additional award in accordance with contractual entitlements.
3 The volume weighted average share price during the reporting period to 31 December 2016 was $31.30.
4 The volume weighted average share price during the reporting period to 31 December 2017 was $40.99.
228
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CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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: $nil (31 December 2016: Gain $0.1 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 and 31 December 2017
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.
2 The volume weighted average share price during the reporting period to 31 December 2015 was $22.96.
3 The five day volume weighted average share price up to and including 23 February 2016 was $29.48.
230
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CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
36. EMPLOYEE BENEFITS CONTINUED
a) Rights plans continued
36. EMPLOYEE BENEFITS CONTINUED
b) Share Appreciation Rights
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: $nil (31 December 2016: Gain $0.1 million).
Date of grant
Date of performance period end
Grant fair value1
Original grant
Unvested rights at 31 December 2014
Unvested rights at 31 December 2015
- Granted
- Vested2
-
Forfeited/Lapsed
- Granted
- Vested3
-
Forfeited/Lapsed
2012 STI Deferral
2013 STI Deferral
2014 STI Deferral
award
award
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
-
-
-
-
-
Unvested rights at 31 December 2016 and 31 December 2017
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.
2 The volume weighted average share price during the reporting period to 31 December 2015 was $22.96.
3 The five day volume weighted average share price up to and including 23 February 2016 was $29.48.
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 did 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 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 $9.8 million (31 December 2016: Expense $13.7 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 2015
- Granted
-
-
Exercised
Forfeited/Lapsed
(234,480)
(76,448)
Unexercised rights at 31 December 2016
- Granted
-
-
Exercised2
Forfeited/Lapsed
Unexercised rights at 31 December 2017
Exercisable rights
- At 31 December 20163
- At 31 December 2017
Non-exercisable rights
- At 31 December 20164
- At 31 December 20175
10 June 2014
13 March 2019
$30.60
1,200,000
1,200,000
-
-
-
1,200,000
-
(960,000)
-
240,000
480,000
-
720,000
240,000
1 The fair value was re-evaluated on 31 December 2017 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 The closing market share price on 8 February 2017 and 25 July 2017 were $38.85 and $42.03 respectively. Refer to ‘Remuneration –
Executive Chairman’ in the Remuneration Report within this Annual Report.
3 This represents 40% of the total vested share appreciation rights available to exercise in the first year from the date of vesting.
4 This represents 60% of the total vested share appreciation rights unavailable to exercise in the first year from the date of vesting.
5 This represents the remaining vested share appreciation rights which will become available to exercise in the final year of the exercise
period.
230
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CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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.
The performance hurdles were met in full at the test date in October 2017 and as a result 100% of outstanding options vested in
November 2017.
In accordance with the terms of the award, the Company determined on 31 October 2017 that all options available to be exercised
in the first year (year 1 options) after vesting to 28 October 2018 will be paid in cash in lieu of an allocation of shares. The exercise
settlement method for the vested options in years 2 and 3 of the exercise window remain by way of an allocation ordinary shares.
In accordance with accounting standard AASB 2 Share-based payment, this decision to cash settle is considered a modification of
these year 1 options from equity-settled to cash-settled. Accordingly, a liability was recognised for cash settlement at the date of
modification, with a corresponding adjustment to equity. There was no incremental fair value granted to option holders as a result
of this modification.
232
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CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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.
November 2017.
The performance hurdles were met in full at the test date in October 2017 and as a result 100% of outstanding options vested in
In accordance with the terms of the award, the Company determined on 31 October 2017 that all options available to be exercised
in the first year (year 1 options) after vesting to 28 October 2018 will be paid in cash in lieu of an allocation of shares. The exercise
settlement method for the vested options in years 2 and 3 of the exercise window remain by way of an allocation ordinary shares.
In accordance with accounting standard AASB 2 Share-based payment, this decision to cash settle is considered a modification of
these year 1 options from equity-settled to cash-settled. Accordingly, a liability was recognised for cash settlement at the date of
modification, with a corresponding adjustment to equity. There was no incremental fair value granted to option holders as a result
of this modification.
36. EMPLOYEE BENEFITS CONTINUED
c) Options
Amount recognised during the reporting period: Expense $1.0 million (31 December 2016: Expense $1.0 million).
Date of grant
Date of expiry
Grant fair value1
Original grant
Unexercised options
Unexercised options at 31 December 2015
- Granted
-
-
Exercised2
Lapsed
Unexercised options at 31 December 2016
- Granted
-
-
Exercised3
Lapsed
Unexercised options at 31 December 2017
Exercisable options
- At 31 December 2016
- At 31 December 20174
Non-exercisable options
- At 31 December 2016
- At 31 December 20175
Options – 2015 Long-Term Incentive
29 October 2015
29 October 2020
$4.53
735,636
735,636
-
-
(183,405)
552,231
-
(191,282)
(49,861)
311,088
-
9,656
-
301,432
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 2016 was $31.30.
3 The volume weighted average share price during the reporting period to 31 December 2017 was $40.99.
4 This represents the unexercised vested options in year 1 of the exercise window. A liability of $0.2 million has been recognised at 31
December 2017 for these cash settled options.
5 This represents the unexercised vested options available to exercise in years 2 and 3 of the exercise window.
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 $192.8 million (31 December 2016: $127.8 million) of defined contribution expenses.
232
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CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
37. RELATED PARTY DISCLOSURES
a) Key management personnel (KMP)
KMP compensation:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
Share-based payments
Total KMP compensation
12 months to
December 2017
$’000
12 months to
December 2016
$’000
8,145
10,538
93
-
-
10,773
19,011
84
-
-
14,377
24,999
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), 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 KMP
There were no loans to KMP in the current or prior reporting period.
234
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CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
37. RELATED PARTY DISCLOSURES
a) Key management personnel (KMP)
KMP compensation:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
Share-based payments
Total KMP compensation
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), 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 KMP
There were no loans to KMP in the current or prior reporting period.
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.
12 months to
12 months to
December 2017
December 2016
$’000
$’000
93
-
-
10,773
19,011
84
-
-
14,377
24,999
8,145
10,538
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 2017
$’000
December 2016
$’000
12,261
10,025
1,075,520
1,067,742
(2,124)
(25,649)
(2,203)
(34,679)
1Refer to Note 8: Trade and other receivables, which contains the disclosure of interest free and interest bearing loan receivables
from HLG Contracting.
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 was recognised as at 31
December 2016 to the shareholders of UGL for their shares remaining to be compulsorily acquired and those shares acquired pre-
year end settled at December 2016.
Revenue – income from related parties
Associates
Joint venture entities
Revenue - interest received / receivable from related parties
Associates
Joint venture entities
Revenue - unwinding of discounts on non-current receivables - related parties
Associates
Joint venture entities
Finance costs - impact of discounting - related parties
Associates
12 months to
December 2017
$’000
12 months to
December 2016
$’000
3,600
3,224
4,519
3,771
-
34,066
24,974
2,270
-
9,678
8,045
731
(197)
(115)
234
235
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CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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 2017
Number of
employees
December 2016
Number of
employees
51,000
50,500
CIMIC Group is domiciled in Australia and is a company listed on the ASX. 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:
7 (31 December 2016: 6).
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 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 6 February 2018, HOCHTIEF Australia Holdings Limited held 235,661,965 shares in the
Company.
236
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CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
37. RELATED PARTY DISCLOSURES CONTINUED
b) Transactions with other related parties continued
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES
a) Parent entity disclosures
As at, and throughout, the financial year ended 31 December 2017 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 2017 is set out below:
c) Company information
7 (31 December 2016: 6).
CIMIC Group is domiciled in Australia and is a company listed on the ASX. 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:
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 and other services (including environmental,
Comprehensive income
Profit / (loss) for the period
Other comprehensive income
Total comprehensive income for the period
The ultimate Australian parent entity is HOCHTIEF Australia Holdings Limited and the ultimate parent entity is Actividades de
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 2017
$m
12 months to
December 2016
$m
22.9
-
22.9
(98.4)
-
(98.4)
December 2017
$m
December 2016
$m
64.9
4,814.5
4,879.4
29.1
1,227.7
1,256.8
24.9
5,327.9
5,352.8
232.5
1,113.8
1,346.3
3,622.6
4,006.5
1,750.3
(87.0)
1,959.3
3,622.6
1,750.3
(75.8)
2,332.0
4,006.5
Number of employees
Number of employees at reporting date1
1Includes a proportional share of employees of Ventia and HLG Contracting.
December 2017
December 2016
Number of
employees
Number of
employees
51,000
50,500
telecommunications and operations and maintenance).
d) Ultimate parent entity
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 6 February 2018, HOCHTIEF Australia Holdings Limited held 235,661,965 shares in the
Company.
236
237
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CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities
Name of entity
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 BHD
Ashmore Developments Pty Limited
Ausindo Holdings Pte Ltd
BCJHG Nominees Pty Ltd
BCJHG Trust
BKP Electrical Limited2
Boggo Road Project Pty Limited
Boggo Road Project Trust
Broad Construction Services (NSW/VIC) Pty Ltd
Broad Construction 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 Limited4
CIMIC Residential Investments Pty Ltd
Contrelec Engineering Pty Ltd
CPB Contractors (PNG) Limited (formerly known as LCPL (PNG) Limited)
CPB Contractors Pty Ltd1
CPB Contractors UGL Engineering Joint Venture
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
Devine Land Pty Ltd
238
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
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%
NSW
NSW
VIC
VIC
Malaysia
NSW
Singapore
VIC
VIC
Fiji
QLD
QLD
WA
QLD
WA
WA
NSW
NSW
NSW
VIC
VIC
VIC
VIC
QLD
100% Papua New Guinea
100%
100%
59%
59%
59%
59%
59%
59%
59%
59%
59%
NSW
VIC
QLD
QLD
QLD
QLD
QLD
VIC
VIC
QLD
QLD
238
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities
Name of entity
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 BHD
Ashmore Developments Pty Limited
Ausindo Holdings Pte Ltd
BCJHG Nominees Pty Ltd
BCJHG Trust
BKP Electrical Limited2
Boggo Road Project Pty Limited
Boggo Road Project Trust
Broad Construction Services (NSW/VIC) Pty Ltd
Broad Construction 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 Limited4
CIMIC Residential Investments Pty Ltd
Contrelec Engineering Pty Ltd
CPB Contractors Pty Ltd1
CPB Contractors UGL Engineering Joint Venture
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
Devine Land Pty Ltd
Interest
held
Place of
incorporation
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
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%
59%
Malaysia
NSW
Singapore
NSW
NSW
VIC
VIC
VIC
VIC
Fiji
QLD
QLD
WA
QLD
WA
WA
NSW
NSW
NSW
VIC
VIC
VIC
VIC
QLD
NSW
VIC
QLD
QLD
QLD
QLD
QLD
VIC
VIC
QLD
QLD
238
b) Controlled entities continued
Name of entity
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
EIC Activities Pty Ltd (NZ)
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 2017 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 Sdn Bhd3
Giddens Investment Limited
GSJV Limited (Barbados)2
GSJV Limited (Guyana)2
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
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%
100%
50%
50%
80%
80%
100%
100%
QLD
QLD
QLD
QLD
QLD
NSW
QLD
QLD
QLD
QLD
QLD
VIC
New Zealand
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)
(A)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
239
239
CPB Contractors (PNG) Limited (formerly known as LCPL (PNG) Limited)
100% Papua New Guinea
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities continued
Name of entity
HWE Mining Pty Limited
Inspection Testing & Certification Pty Ltd
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
Leighton (PNG) Limited
Leighton Asia (Hong Kong) Holdings (No. 2) Limited
Leighton Asia Limited
Leighton Asia Southern Pte. Ltd.
Leighton Companies Management Group LLC
Leighton Contractors (Asia) Limited
Leighton Contractors (China) Limited
Leighton Contractors (Indo-China) Limited
Leighton Contractors (Laos) Sole Co., Limited
Leighton Contractors (Malaysia) Sdn Bhd
Leighton Contractors (Philippines), Inc.
Leighton Contractors Asia (Cambodia) Co., Ltd
Leighton Contractors Asia (Vietnam) Limited
Leighton Contractors Inc
Leighton Contractors Infrastructure Nominees Pty Ltd
Leighton Contractors Infrastructure Pty Ltd
Leighton Contractors Infrastructure Trust
Leighton Contractors Lanka (Private) Limited
240
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
Interest
held
Place of
incorporation
100%
100%
100%
100%
100%
100%
100%
59%
59%
59%
100%
100%
100%
59%
100%
100%
100%
VIC
Australia
QLD
WA
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
ACT
QLD
QLD
VIC
100% Papua New Guinea
100%
100%
100%
49%
100%
100%
100%
100%
100%
40%
100%
100%
100%
100%
100%
100%
100%
Hong Kong
Hong Kong
Singapore
United Arab
Emirates
Hong Kong
Hong Kong
Hong Kong
Laos
Malaysia
Philippines
Cambodia
Vietnam
United States
VIC
VIC
VIC
Sri Lanka
240
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities continued
Name of entity
HWE Mining Pty Limited
Inspection Testing & Certification Pty Ltd
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
Leighton (PNG) Limited
Leighton Asia (Hong Kong) Holdings (No. 2) Limited
Leighton Asia Limited
Leighton Asia Southern Pte. Ltd.
Leighton Companies Management Group LLC
Leighton Contractors (Asia) Limited
Leighton Contractors (China) Limited
Leighton Contractors (Indo-China) Limited
Leighton Contractors (Laos) Sole Co., Limited
Leighton Contractors (Malaysia) Sdn Bhd
Leighton Contractors (Philippines), Inc.
Leighton Contractors Asia (Cambodia) Co., Ltd
Leighton Contractors Asia (Vietnam) Limited
Leighton Contractors Inc
Leighton Contractors Infrastructure Nominees Pty Ltd
Leighton Contractors Infrastructure Pty Ltd
Leighton Contractors Infrastructure Trust
Leighton Contractors Lanka (Private) Limited
Interest
held
Place of
incorporation
b) Controlled entities continued
Name of entity
Interest
held
Place of
incorporation
Leighton Contractors Pty Ltd (formerly known as Leighton Services Australia Pty
Limited)
(B)
100%
NSW
Australia
Leighton Engineering & Construction (Singapore) Pte Ltd
Leighton Engineering Snd Bhd
Leighton Equity Incentive Plan Trust
Leighton Foundation Engineering (Asia) Limited
Leighton GBS SDN. BHD.
Leighton Group Property Services Pty Ltd
Leighton Harbour Trust
Leighton Holdings Infrastructure Nominees Pty Ltd
Leighton Holdings Infrastructure Pty Ltd
Leighton Holdings Infrastructure Trust
Leighton India Contractors Private Limited3
Leighton Infrastructure Investments Pty Limited
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
(B)
(B)
(B)
(B)
(B)
(B)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Singapore
Malaysia
NSW
Hong Kong
Malaysia
VIC
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 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 Portfolio Services Pty Limited
Leighton Projects Consulting (Shanghai) Limited
Leighton Properties (Brisbane) Pty Limited
Leighton Properties (VIC) Pty Ltd1
Leighton Properties (WA) Pty Limited
Leighton Properties Pty Limited1
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Hong Kong
Cayman Islands
Singapore
Singapore
Singapore
Singapore
Malaysia
Singapore
ACT
China
QLD
VIC
NSW
QLD
(B)
(B)
(B)
(B)
(B)
241
241
100% Papua New Guinea
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
100%
100%
100%
100%
100%
100%
100%
59%
59%
59%
100%
100%
100%
59%
100%
100%
100%
100%
100%
100%
49%
100%
100%
100%
100%
100%
40%
100%
100%
100%
100%
100%
100%
100%
VIC
QLD
WA
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
VIC
ACT
QLD
QLD
VIC
Hong Kong
Hong Kong
Singapore
United Arab
Emirates
Hong Kong
Hong Kong
Hong Kong
Laos
Malaysia
Philippines
Cambodia
Vietnam
United States
VIC
VIC
VIC
240
Sri Lanka
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities continued
Name of entity
Interest
held
Place of
incorporation
Leighton U.S.A. Inc.
Leighton‐LNS Joint Venture
LH Holdings Co Pty Ltd
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)
Newcastle Engineering Pty Ltd
Nexus Point Solutions Pty Ltd
Oil Sands Employment LTD
Olympic Dam Maintenance Pty Ltd
Opal Insurance (Singapore) Pte Ltd
Optima Activities Pty 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
RailFleet Maintenance Services Pty Ltd
Riverstone Rise Gladstone Pty Ltd
Riverstone Rise Gladstone Unit Trust
Ruby Equation Sdn Bhd3
Sedgman Asia Ltd
Sedgman Botswana (Pty) Ltd
242
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(A)
(B)
(A)
(B)
(B)
(B)
(B)
100%
80%
100%
100%
100%
100%
100%
100%
59%
59%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
(B)
100%
59%
95%
99%
100%
59%
59%
100%
100%
100%
United States
Hong Kong
VIC
VIC
VIC
VIC
NSW
VIC
NSW
VIC
VIC
Australia
Australia
NSW
Canada
Australia
Singapore
NSW
VIC
VIC
VIC
VIC
New Zealand
VIC
QLD
Indonesia
Indonesia
Australia
QLD
QLD
Malaysia
Hong Kong
Botswana
242
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
Moorookyle Devine Pty Ltd
Moving Melbourne Together Finance Pty Ltd
MTCT Services Pty Ltd (formerly United Group Pty Ltd)
b) Controlled entities continued
Name of entity
Leighton U.S.A. Inc.
Leighton‐LNS Joint Venture
LH Holdings Co Pty Ltd
LMENA No. 1 Pty Limited
LMENA Pty Limited
LNWR Pty Limited
LNWR Trust
LPWRAP Pty Ltd
Martox Pty Limited
Newcastle Engineering Pty Ltd
Nexus Point Solutions Pty Ltd
Oil Sands Employment LTD
Olympic Dam Maintenance Pty Ltd
Opal Insurance (Singapore) Pte Ltd
Optima Activities Pty 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
RailFleet Maintenance Services Pty Ltd
Riverstone Rise Gladstone Pty Ltd
Riverstone Rise Gladstone Unit Trust
Ruby Equation Sdn Bhd3
Sedgman Asia Ltd
Sedgman Botswana (Pty) Ltd
Interest
held
Place of
incorporation
United States
Hong Kong
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(A)
(B)
(A)
(B)
(B)
(B)
(B)
100%
80%
100%
100%
100%
100%
100%
100%
59%
59%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
59%
95%
99%
100%
59%
59%
100%
100%
100%
VIC
VIC
VIC
VIC
NSW
VIC
NSW
VIC
VIC
Australia
Australia
NSW
Canada
Australia
Singapore
NSW
VIC
VIC
VIC
VIC
VIC
QLD
Indonesia
Indonesia
Australia
QLD
QLD
Malaysia
Hong Kong
Botswana
242
b) Controlled entities continued
Name of entity
Sedgman Canada Limited
Sedgman Chile SPA
Sedgman Consulting Pty Ltd
Sedgman Consulting Unit Trust
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 Limitada3
Sedgman Operations Employment Services Pty Ltd
Sedgman Operations Pty Ltd
Sedgman Pty Ltd
Sedgman SAS (Columbia)
Sedgman South Africa (Proprietary) Ltd
Sedgman South Africa Holdings (Proprietary) Ltd
Silverton Group Pty Ltd
Sustaining Works Pty Limited
Talcliff Pty Ltd
Tambala Pty Ltd3
Telecommunication Infrastructure Pty Ltd
Thai Leighton Limited
Thiess (Mauritius) Pty Ltd2
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 Contractors Oil Sands No. 1 Ltd
Thiess India Pvt Ltd3
Thiess Infrastructure Nominees Pty Ltd
Thiess Infrastructure Pty Ltd
Thiess Infrastructure Trust
Thiess Khishig Arvin JV LLC
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
Interest
held
Place of
incorporation
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%
Canada
Chile
QLD
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%
100%
100%
100%
100%
80%
Canada
Canada
India
VIC
VIC
VIC
Mongolia
243
243
Pacific Partnerships Services NZ Limited (formerly known as Leighton PPP Services
New Zealand
(B)
100%
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities continued
Name of entity
Thiess Minecs India Pvt Ltd3
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 Bhd
UGL (NZ) Limited
UGL (Singapore) Pte Ltd
UGL Canada Inc2
UGL Engineering Private Limited4
UGL Engineering Pty Ltd1
UGL Operations and Maintenance (Services) Pty Limited1
UGL Operations and Maintenance Pty Ltd1
UGL Pty Limited1
UGL Rail (North Queensland) Pty Ltd
UGL Rail Fleet Services Pty Limited
UGL Rail Pty Ltd
UGL Rail Services Pty Limited1
UGL Resources (Contracting) Pty Ltd
UGL Resources (Malaysia) Snd Bhd
UGL Unipart Rail Services Pty Ltd
United Goninan Construction Pty Ltd
United Group Infrastructure (NZ) Limited
244
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
Interest
held
Place of
incorporation
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%
100%
70%
100%
100%
India
QLD
Mongolia
Mozambique
New Caledonia
New Zealand
QLD
NSW
South Africa
VIC
NSW
QLD
QLD
QLD
QLD
QLD
Malaysia
New Zealand
Singapore
Canada
India
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Malaysia
Australia
Australia
New Zealand
244
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
b) Controlled entities continued
Name of entity
Thiess Minecs India Pvt Ltd3
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 Bhd
UGL (NZ) Limited
UGL (Singapore) Pte Ltd
UGL Canada Inc2
UGL Engineering Private Limited4
UGL Engineering Pty Ltd1
UGL Operations and Maintenance (Services) Pty Limited1
UGL Operations and Maintenance Pty Ltd1
UGL Pty Limited1
UGL Rail (North Queensland) Pty Ltd
UGL Rail Fleet Services Pty Limited
UGL Rail Pty Ltd
UGL Rail Services Pty Limited1
UGL Resources (Contracting) Pty Ltd
UGL Resources (Malaysia) Snd Bhd
UGL Unipart Rail Services Pty Ltd
United Goninan Construction Pty Ltd
United Group Infrastructure (NZ) Limited
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
Interest
held
Place of
incorporation
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%
100%
70%
100%
100%
India
QLD
Mongolia
Mozambique
New Caledonia
New Zealand
South Africa
QLD
NSW
VIC
NSW
QLD
QLD
QLD
QLD
QLD
Malaysia
New Zealand
Singapore
Canada
India
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Malaysia
Australia
Australia
New Zealand
244
b) Controlled entities continued
Name of entity
United Group Infrastructure (Services) Pty Ltd
United Group International Pty Ltd
United Group Investment Partnership2
United Group Melbourne Transport Pty Ltd
United Group Water Projects (Victoria) Pty Ltd
United Group Water Projects Pty Ltd
United KG (No. 1) Pty Ltd
United KG (No. 2) Pty Ltd
United KG Construction Pty Ltd
United KG Engineering Services Pty Ltd
United KG Maintenance Pty Ltd
Western Improvement Network Finance Pty Limited
Western Port Highway Trust
Yoltax Pty Limited
Zelmex Pty Limited
Interest
held
Place of
incorporation
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(B)
(A)(B)
(B)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
59%
59%
Australia
Australia
USA
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
VIC
VIC
NSW
ACT
1These companies have the benefit of ASIC Instrument 2016/785 as at 31 December.
2Entity has a 30 June reporting date.
3Entity has a 31 March reporting date.
4This company is a party to the Deed of Cross Guarantee as Holding Entity.
(A) Incorporated / established in the 2017 reporting period.
(B) Entities included in the tax‐consolidated Group.
Where the Group has an ownership interest of less than 50%, the entity is consolidated where the Group can demonstrate its control
of the entity, in that 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.
245
245
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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 2017 as they are no longer required by the
Group in the ordinary course of business:
145 Ann Street Pty Ltd
145 Ann Street Trust
Lei Shun Employment Limited
Leighton Africa (Mauritius) Limited
Leighton Commercial Properties Pty Limited
Leighton Funds Management Pty Limited
Leighton Offshore / Leighton Engineering & Construction JV
Leighton Properties (NSW) Pty Ltd
Leighton Property Funds Management Limited
Leighton Property Management Pty Limited
Mainco Melbourne Pty Ltd
Sedgman South Africa Investments Limited (BVI)
HWE Newman Assets Pty Limited
Thiess Sedgman Joint Venture
Leighton Pacific St Leonards Pty Limited
e) Parent entity commitments and contingent liabilities
Contingent liabilities under indemnities given on behalf of controlled entities in respect of the parent: bank guarantees: $2,307.1
million (31 December 2016: $1,864.8 million); insurance bonds: $1,060.3 million (31 December 2016: $699.1 million); letters of
credit: $102.4 million (31 December 2016: $180.6 million).
During the reporting period, the parent was released from bank guarantees totalling $nil million (31 December 2016: $nil milllion),
insurance, performance and payments bonds totalling $nil million (31 December 2016: $nil million) and letters of credit totalling $nil
million (31 December 2016: $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 2016:
$nil).
246
246
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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.
The following controlled entities have been liquidated during the period to 31 December 2017 as they are no longer required by the
d)
Liquidation of controlled entities
Group in the ordinary course of business:
145 Ann Street Pty Ltd
145 Ann Street Trust
Lei Shun Employment Limited
Leighton Africa (Mauritius) Limited
Leighton Commercial Properties Pty Limited
Leighton Funds Management Pty Limited
Leighton Offshore / Leighton Engineering & Construction JV
Leighton Properties (NSW) Pty Ltd
Leighton Property Funds Management Limited
Leighton Property Management Pty Limited
Mainco Melbourne Pty Ltd
Sedgman South Africa Investments Limited (BVI)
HWE Newman Assets Pty Limited
Thiess Sedgman Joint Venture
Leighton Pacific St Leonards Pty Limited
e) Parent entity commitments and contingent liabilities
Contingent liabilities under indemnities given on behalf of controlled entities in respect of the parent: bank guarantees: $2,307.1
million (31 December 2016: $1,864.8 million); insurance bonds: $1,060.3 million (31 December 2016: $699.1 million); letters of
credit: $102.4 million (31 December 2016: $180.6 million).
During the reporting period, the parent was released from bank guarantees totalling $nil million (31 December 2016: $nil milllion),
insurance, performance and payments bonds totalling $nil million (31 December 2016: $nil million) and letters of credit totalling $nil
million (31 December 2016: $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 2016:
$nil).
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
f) Material subsidiaries including consolidated structured entities
Set out below are the Company’s principal subsidiaries at 31 December 2017. Unless otherwise stated, the subsidiaries as listed
below have share capital consisting solely of ordinary shares, which are held directly by the Company, and the proportion of
ownership interests held equals to the voting rights held by the Company.
Name of entity
Principal activity
CPB Contractors Pty Limited1
Construction
Thiess Pty Ltd
Contract Mining &
Construction
Country of
incorporation
Australia
Australia
Leighton Asia Limited
Construction
Hong Kong
Leighton International Limited Construction
UGL Pty Limited2
Services
Cayman
Islands
Australia
Ownership interest held by the
Company
Ownership interest held by non-
controlling interests
December 2017
December 2016
December 2017
December 2016
%
100
100
100
100
100
%
100
100
100
100
95
%
-
-
-
-
-
%
-
-
-
-
5
1CPB Contractors Pty Limited has the benefit of ASIC Instrument 2016/785 as at 31 December 2017. For further information, refer to
section (i).
2As at 31 December 2016 the Group owned 95% of the shares of UGL but had exercised the right to compulsorily acquire the
remaining shares with a liability recognised for the remaining shares at December 2016. The compulsory acquisition process
completed on 20 January 2017.
Non-controlling interests
There were no material non-controlling interests relating to the Company’s material subsidiaries disclosed above as at 31 December
2017. There were no material transactions with non-controlling interests during the period to 31 December 2017.
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 2017
$m
December 2016
$m
-
-
189.5
189.5
0.7
0.7
189.3
190.0
246
247
247
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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: $1,698.4 million (31 December
2016: 2,014.3 million); aggregate amounts payable: $1,226.5 million (31 December 2016: $1,085.2 million); interest received /
receivable: $37.4 million (31 December 2016: $23.0 million); interest paid / payable: $19.3 million (31 December 2016: $9.3 million);
fees charged: $nil million (31 December 2016: $nil million); dividends received: $nil million (31 December 2016: $nil million); fees
paid: $105.0 million (31 December 2016: $100.0 million).
i) Deed of Cross Guarantee
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 (“ASIC Instrument”). The ASIC Instrument applies in relation to a financial year
ending on or after 1 January 2017.
Pursuant to the ASIC Instrument, the Company and certain wholly owned subsidiaries entered into the Deed of Cross Guarantee
dated 19 December 2016 (“CIMIC Deed”) for the principal purpose of enabling these entities to take advantage of relief from the
requirements of the Corporations Act to prepare and lodge a financial report, Directors’ report and auditor’s report (“Financial
Reporting Relief”) available under the ASIC Instrument for financial years ending 31 December 2016 onwards. The effect of the CIMIC
Deed is that the Company guarantees to each creditor payment in full of any debt in the event of the winding up of any of the
subsidiaries which are party to the Deed 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
subsidiaries have given similar guarantees in the event the Company or any other subsidiary party to the CIMIC Deed is wound up.
On 19 December 2017, the following UGL group entities which were formerly part of a separate Deed of Cross Guarantee dated 11
May 2000 pursuant to the former ASIC Class Order [CO 98/1418] (“UGL Deed”) executed and subsequently lodged with ASIC
revocation deeds (one in respect of UGL as the trustee under the UGL Deed, and one in respect of United KG Construction Pty Ltd
ACN 060 569 977 as the alternative trustee under the UGL Deed) which will have the effect of revoking the UGL Deed in its entirety
with effect 6 months from the date of lodgement with ASIC i.e with effect from 19 June 2018:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
UGL Pty Limited (ACN 009 180 287);
UGL Engineering Pty Ltd (ACN 096 365 972);
UGL Operations and Maintenance Pty Ltd (ACN 114 888 201);
UGL Rail Services Pty Ltd (ACN 000 003 136);
UGL Operations and Maintenance (Services) Pty Ltd (ACN 010 045 299);
MTCT Services Pty Ltd (ACN 070 140 251);
UGL Rail Pty Ltd (ACN 097 323 852);
UGL Rail (North Queensland) Pty Ltd (ACN 010 491 273);
United KG Maintenance Pty Ltd (ACN 068 787 128);
Olympic Dam Maintenance Pty Ltd (ACN 080 664 679);
United KG Engineering Services Pty Ltd (ACN 004 318 601);
United KG Construction Pty Ltd (ACN 060 569 977);
United KG (No. 1) Pty Limited (ACN 055 548 224);
United KG (No. 2) Pty Ltd (ACN 006 052 400);
UGL Rail Fleet Services Pty Limited (ACN 090 681 566);
Inspection Testing & Certification Pty Ltd (ACN 009 310 972);
United Group International Pty Ltd (ACN 059 986 140);
United Group Infrastructure (Services) Pty Ltd (ACN 079 343 427);
UGL (NZ) Limited (NZ 401 728); and
United Group Infrastructure (NZ) Limited (NZ 379 696),
(the “Released Entities”).
248
248
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
h) Parent entity transactions with wholly-owned controlled entities
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES CONTINUED
i) Deed of Cross Guarantee continued
Transactions with wholly-owned controlled entities were as follows: aggregate amounts receivable: $1,698.4 million (31 December
2016: 2,014.3 million); aggregate amounts payable: $1,226.5 million (31 December 2016: $1,085.2 million); interest received /
receivable: $37.4 million (31 December 2016: $23.0 million); interest paid / payable: $19.3 million (31 December 2016: $9.3 million);
fees charged: $nil million (31 December 2016: $nil million); dividends received: $nil million (31 December 2016: $nil million); fees
paid: $105.0 million (31 December 2016: $100.0 million).
i) Deed of Cross Guarantee
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 (“ASIC Instrument”). The ASIC Instrument applies in relation to a financial year
ending on or after 1 January 2017.
Pursuant to the ASIC Instrument, the Company and certain wholly owned subsidiaries entered into the Deed of Cross Guarantee
dated 19 December 2016 (“CIMIC Deed”) for the principal purpose of enabling these entities to take advantage of relief from the
requirements of the Corporations Act to prepare and lodge a financial report, Directors’ report and auditor’s report (“Financial
Reporting Relief”) available under the ASIC Instrument for financial years ending 31 December 2016 onwards. The effect of the CIMIC
Deed is that the Company guarantees to each creditor payment in full of any debt in the event of the winding up of any of the
subsidiaries which are party to the Deed 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
subsidiaries have given similar guarantees in the event the Company or any other subsidiary party to the CIMIC Deed is wound up.
On 19 December 2017, the following UGL group entities which were formerly part of a separate Deed of Cross Guarantee dated 11
May 2000 pursuant to the former ASIC Class Order [CO 98/1418] (“UGL Deed”) executed and subsequently lodged with ASIC
revocation deeds (one in respect of UGL as the trustee under the UGL Deed, and one in respect of United KG Construction Pty Ltd
ACN 060 569 977 as the alternative trustee under the UGL Deed) which will have the effect of revoking the UGL Deed in its entirety
with effect 6 months from the date of lodgement with ASIC i.e with effect from 19 June 2018:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
UGL Pty Limited (ACN 009 180 287);
UGL Engineering Pty Ltd (ACN 096 365 972);
UGL Operations and Maintenance Pty Ltd (ACN 114 888 201);
UGL Rail Services Pty Ltd (ACN 000 003 136);
UGL Operations and Maintenance (Services) Pty Ltd (ACN 010 045 299);
MTCT Services Pty Ltd (ACN 070 140 251);
UGL Rail Pty Ltd (ACN 097 323 852);
UGL Rail (North Queensland) Pty Ltd (ACN 010 491 273);
United KG Maintenance Pty Ltd (ACN 068 787 128);
Olympic Dam Maintenance Pty Ltd (ACN 080 664 679);
United KG Engineering Services Pty Ltd (ACN 004 318 601);
United KG Construction Pty Ltd (ACN 060 569 977);
United KG (No. 1) Pty Limited (ACN 055 548 224);
United KG (No. 2) Pty Ltd (ACN 006 052 400);
UGL Rail Fleet Services Pty Limited (ACN 090 681 566);
Inspection Testing & Certification Pty Ltd (ACN 009 310 972);
United Group International Pty Ltd (ACN 059 986 140);
United Group Infrastructure (Services) Pty Ltd (ACN 079 343 427);
UGL (NZ) Limited (NZ 401 728); and
United Group Infrastructure (NZ) Limited (NZ 379 696),
(the “Released Entities”).
The purpose of the revocation was to effect the removal of the Released Entities from the former UGL Deed structure (i.e. release
them from their covenants in respect of the cross-guarantee of group debts).
The following Released Entities subsequently entered into and lodged with ASIC an assumption deed dated 19 December 2017
pursuant to the ASIC Instrument in order to become party to the CIMIC Deed for the purposes of enabling these entities to obtain
financial reporting relief under the ASIC Instrument for financial year ended 31 December 2017 (comprising the entities within the
UGL group structure which require financial reporting relief):
•
•
•
•
•
UGL Pty Limited (ACN 009 180 287);
UGL Engineering Pty Ltd (ACN 096 365 972);
UGL Rail Services Pty Ltd (ACN 000 003 136);
UGL Operations and Maintenance Pty Ltd (ACN 114 888 201); and
UGL Operations and Maintenance (Services) Pty Ltd (ACN 010 045 299).
Also on 19 December 2017, the parties to the CIMIC Deed executed and subsequently lodged with ASIC revocation deeds which have
the effect of releasing the following two entities from the CIMIC Deed as they no longer require financial reporting relief under the
ASIC Instrument:
•
•
Leighton Properties (WA) Pty Limited ACN 132 787 476; and
Broad Construction Services (NSW/VIC) Pty Ltd ACN 097 831 411.
The purpose of the revocation is to release the above two entities from their covenants under the CIMIC Deed. The revocation takes
effect 6 months from the date of lodgement with ASIC i.e. with effect from 19 June 2018.
As a result of the changes described above, the following entities are party to the CIMIC Deed as at 31 December 2017 and seek to
rely on financial reporting relief in respect of the financial year ended 31 December 2017:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
CIMIC Group Limited (ACN 004 482 982) (as trustee);
CIMIC Finance Limited (ACN 002 323 373) (as alternative trustee);
CIMIC Admin Services Pty Limited (ACN 086 383 977);
CPB Contractors Pty Limited (ACN 000 893 667);
Broad Group Holdings Pty Ltd (ACN 052 046 518);
Broad Construction Services (WA) Pty Ltd (ACN 106 101 893);
Broad Construction Pty Ltd (ACN 089 532 061);
Leighton Properties Pty Limited (ACN 009 765 379);
Leighton Properties (VIC) Pty Limited (ACN 086 206 813);
UGL Pty Limited (ACN 009 180 287);
UGL Engineering Pty Ltd (ACN 096 365 972);
UGL Rail Services Pty Ltd (ACN 000 003 136);
UGL Operations and Maintenance Pty Ltd (ACN 114 888 201); and
UGL Operations and Maintenance (Services) Pty Ltd (ACN 010 045 299).
On 28 December 2017, Sedgman Pty Limited and its wholly-owned subsidiaries executed and subsequently lodged with ASIC
revocation deeds which have the effect of revoking the Deed of Cross Guarantee dated 26 April 2007 (Sedgman Deed) in its entirety
6 months from the date of lodgement with ASIC i.e. with effect from 28 June 2018. The purpose of the revocation was to effect the
removal of all entities which were party to the Sedgman Deed as they no longer require financial reporting relief.
248
249
249
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
38. CIMIC GROUP LIMITED AND CONTROLLED ENTITIES 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 19 December 2016 (referred to as the CIMIC Deed above), after eliminating all transactions
between parties to the Deed of Cross Guarantee, at 31 December 2017 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 2017
$m
12 months to
December 2016
$m
678.1
(194.8)
483.3
4,102.3
50.8
(53.2)
(395.6)
4,187.6
480.5
(119.9)
360.6
4,062.2
-
-
(320.5)
4,102.3
250
250
CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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 19 December 2016 (referred to as the CIMIC Deed above), after eliminating all transactions
between parties to the Deed of Cross Guarantee, at 31 December 2017 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
Guarantee
Guarantee
Dividends paid
Retained earnings at reporting date
Retained earnings brought forward - adjustment for new entities party to the Deed of Cross
Retained earnings brought forward - adjustment for entities removed from the Deed of Cross
(53.2)
12 months to
12 months to
December 2017
December 2016
$m
$m
678.1
(194.8)
483.3
4,102.3
50.8
480.5
(119.9)
360.6
4,062.2
-
-
(395.6)
4,187.6
(320.5)
4,102.3
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 2017
$m
December 2016
$m
1,018.4
2,559.4
40.1
31.2
611.0
1,839.3
20.5
37.2
3,649.1
2,508.0
4,039.7
4,945.4
-
2.3
1,537.7
1,664.9
170.0
413.7
6,161.1
9,810.2
151.3
113.7
6,877.6
9,385.6
3,181.4
2,447.8
31.0
151.4
219.0
36.9
87.2
119.2
3,582.8
2,691.1
746.9
45.7
232.3
252.2
1,277.1
4,859.9
1,275.9
44.4
109.7
264.8
1,694.8
4,385.9
4,950.3
4,999.7
1,750.3
(987.6)
4,187.6
4,950.3
1,750.3
(852.9)
4,102.3
4,999.7
250
251
251
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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. The Group is required to disclose known or reasonably estimable information relevant to assessing
the possible impact that the application of the new accounting standard will have on the Group’s financial statements.
The Group’s preliminary assessment of the impact of new standards and interpretations is set out below:
a) AASB 9 Financial Instruments
AASB 9 Financial Instruments (revised December 2014) and AASB 2014-7 Amendments to Australian Accounting Standards arising
from AASB 9 (December 2014)
This standard replaces AASB 139 Financial Instruments: Recognition and Measurement. AASB 9 includes revised guidance on the
classification and measurement of financial instruments, including a new expected credit loss model for calculation of impairment
on financial assets, and new general hedge accounting requirements. It also carries forward guidance on recognition and de-
recognition 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.
Restatement of comparatives is not required, however, the comparative period can be restated if it can be done so without the use
of hindsight.
Accordingly, the Group has undertaken an assessment of the classification and measurement impacts of the new standard and
estimated the following impacts:
-
-
-
-
-
-
-
the Group does not expect the new standard to have a significant impact on the classification of its financial assets;
the Group does not hold any financial liabilities at fair value through profit or 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;
AASB 9 will require extensive new disclosures, in particular surrounding hedge accounting, credit risk and expected credit
losses;
an adjustment in reserves attributable to CIMIC shareholders and to non-controlling interest to the opening balance at 1
January 2018 will be recognised. The change in method from recognition of incurred losses to recognition of expected credit
losses for impairment of financial assets, might lead to a currently estimated adjustment reducing equity by around $500
million (after tax) with regards to the non-current loan receivables from HLG Contracting. External independent advice has
been utilised in determining the estimated expected credit loss on application of AASB 9;
in addition to the above management are currently assessing whether any specific project finance obligations would require
the recognition of expected credit losses; and
otherwise the increase in the loss allowance on financial assets is not expected to be significant.
b) AASB 15 Revenue from Contracts with Customers
AASB 15 Revenue from Contracts with Customers, AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB
15, AASB 2015-8 Amendments to Australian Accounting Standards – Effective Date of AASB 15, and AASB 2016-3 Amendments to
Australian Accounting Standards – Clarifications to 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.
CIMIC Group has operations across different industry sectors and geographical locations which are subject to different legal and
contractual frameworks. The Group has therefore coordinated with the different operating companies and project teams from across
the business to assess the potential impacts of the new standard on the business units of the Group.
Significant judgments and estimates are used in determining the impact, such as the 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. In making this assessment we have considered, for applicable contracts, the individual status of legal proceedings,
including arbitration and litigation. The implementation project is ongoing and therefore all impacts are current estimates which are
subject to finalisation prior to final implementation.
252
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CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
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. The Group is required to disclose known or reasonably estimable information relevant to assessing
the possible impact that the application of the new accounting standard will have on the Group’s financial statements.
The Group’s preliminary assessment of the impact of new standards and interpretations is set out below:
a) AASB 9 Financial Instruments
from AASB 9 (December 2014)
AASB 9 Financial Instruments (revised December 2014) and AASB 2014-7 Amendments to Australian Accounting Standards arising
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 de-
recognition 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.
Restatement of comparatives is not required, however, the comparative period can be restated if it can be done so without the use
of hindsight.
estimated the following impacts:
Accordingly, the Group has undertaken an assessment of the classification and measurement impacts of the new standard and
-
-
-
-
-
-
-
the Group does not expect the new standard to have a significant impact on the classification of its financial assets;
the Group does not hold any financial liabilities at fair value through profit or 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;
AASB 9 will require extensive new disclosures, in particular surrounding hedge accounting, credit risk and expected credit
losses;
an adjustment in reserves attributable to CIMIC shareholders and to non-controlling interest to the opening balance at 1
January 2018 will be recognised. The change in method from recognition of incurred losses to recognition of expected credit
losses for impairment of financial assets, might lead to a currently estimated adjustment reducing equity by around $500
million (after tax) with regards to the non-current loan receivables from HLG Contracting. External independent advice has
been utilised in determining the estimated expected credit loss on application of AASB 9;
in addition to the above management are currently assessing whether any specific project finance obligations would require
the recognition of expected credit losses; and
otherwise the increase in the loss allowance on financial assets is not expected to be significant.
b) AASB 15 Revenue from Contracts with Customers
AASB 15 Revenue from Contracts with Customers, AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB
15, AASB 2015-8 Amendments to Australian Accounting Standards – Effective Date of AASB 15, and AASB 2016-3 Amendments to
Australian Accounting Standards – Clarifications to 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.
CIMIC Group has operations across different industry sectors and geographical locations which are subject to different legal and
contractual frameworks. The Group has therefore coordinated with the different operating companies and project teams from across
the business to assess the potential impacts of the new standard on the business units of the Group.
Significant judgments and estimates are used in determining the impact, such as the 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. In making this assessment we have considered, for applicable contracts, the individual status of legal proceedings,
including arbitration and litigation. The implementation project is ongoing and therefore all impacts are current estimates which are
subject to finalisation prior to final implementation.
252
39. NEW ACCOUNTING STANDARDS CONTINUED
b) AASB 15 Revenue from Contracts with Customers continued
Controlled Entities
Construction revenue
The contractual terms and the way in which the Group operates its construction contracts is predominantly derived from projects
containing one performance obligation. Contracted revenue will continue to be recognised over time, however the new standard
provides new requirements for variable consideration such as incentives, as well as accounting for claims and variations as contract
modifications which all impart a higher threshold of probability for recognition. 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 occur for these modifications.
Mining & mineral processing revenue
Revenue from mining contracts and mineral processing is predominantly recognised on the basis of the value of work completed.
There are several stages in mine development and production that are dependent on the contract terms which could represent
separate performance obligations. Under AASB 15, revenue is required to be allocated to each performance obligation and
recognised as the performance obligations have been achieved which can be at a point in time or over time. The appropriate
allocation of revenue may result in a change in the timing of revenue recognition that may be accelerated or deferred on contracts
compared to current recognition timing, however this is currently not expected to be material to the Group.
Services revenue
Services revenue arises from maintenance and other services supplied to infrastructure assets and facilities which may involve a
range of services and processes. Under AASB 15, these are predominantly to be recognised over time with reference to inputs on
satisfaction of the performance obligations.
The services that have been determined to be one performance obligation are highly inter-related and fulfilled over time therefore
revenue continues to be recognised over time. As with construction revenue, incentives, variations and claims exist which are subject
to the same higher threshold criteria of only recognising revenue to the extent it is highly probable that a significant reversal of
revenue will not happen.
Tender costs & contract costs
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.
Other contract costs and fulfilment costs are not expected to be material.
Conclusion
The expectation is that the above adjustments, across all controlled entities, are accounted for as a cumulative catch up on the
original contract under AASB 15. Whilst the Group’s analysis is still on going, based on the current assessment an adjustment in
reserves attributable to CIMIC shareholders and to non-controlling interest to the opening balance at 1 January 2018 will be
recognised.
The higher recognition thresholds in the new standard might lead to a currently estimated adjustment reducing equity by around
$650 million (after tax).
Joint Ventures - HLG Contracting (“HLG”)
As HLG is accounted for as an equity method joint venture, the book carrying value of CIMIC’s investment in HLG reflects the Group’s
share of HLG’s operating results, including HLG’s recognition of Construction revenue through the Group’s recognition of its share of
HLG’s profit or losses. While HLG is a non-controlled entity, CIMIC has performed an analysis of the impact that might be expected
due to the adoption of AASB 15, based on the information currently available to CIMIC as a shareholder of HLG and applying
consistent recognition criteria as outlined in “Construction revenue”. As HLG is a jointly controlled investment, CIMIC does not exert
the same degree of control over HLG’s implementation project as it does over its own and therefore this estimate of the projected
impact is subject to a higher degree of estimation uncertainty. Based on this analysis, an adjustment to HLG’s book value, which will
also be reflected in CIMIC’s equity to the opening balance at 1 January 2018 will be recognised. The higher recognition threshold in
the new standard might lead to a currently estimated adjustment reducing equity by around $250 million (after tax).
253
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CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
39. NEW ACCOUNTING STANDARDS CONTINUED
b) AASB 15 Revenue from Contracts with Customers continued
Transition
The Group plans to adopt AASB 15 using the cumulative effect method, with the effect of initially applying this standard recognised
at the date of initial application (i.e. 1 January 2018). As a result under AASB 15 there will be an adjustment to the opening balance
of the Group’s equity.
c) Other impacts of AASB 9 and AASB 15
Tax impacts
Adjustments under the new standards are subject to tax effect accounting and therefore the net deferred tax position will also be
impacted, notwithstanding the finalisation of all adjustments. Adopting the new standards might lead to a currently estimated
increase of the Group’s net deferred tax assets of around $100 million. The equity reductions as discussed in Notes 39 a) and 39 b)
are after tax estimations and as such already take into account this tax impact.
Impact on cash flows and guidance
Adjustments arising on application of AASB 9 and AASB 15 are not expected to have an impact on the cash flows to be derived by
the CIMIC Group.
Net profit after tax guidance for 2018 takes into account the application of the new accounting stadards.
d) 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 right-of-use assets and lease liabilities for almost all leases. Lessor accounting remains similar to the
current standard – i.e. lessors continue to classify leases as finance or operating leases. AASB 16 applies to annual reporting periods
beginning on or after 1 January 2019 and replaces AASB 117 Leases and the related interpretations.
As at the reporting date, the Group has non-cancellable operating lease commitments of $950.8 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 a broad
range of considerations at the time including financing, risk management and operational strategies following the anticipated
completion of a project.
Some 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 finalised its quantification of 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 total net 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;
the straight-line operating lease expense will be replaced with a depreciation charge for the right-of-use assets and interest
expense on lease liabilities;
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 a number of leases held in the Group at different stages of their terms; and
repayment of the principal portion of all lease liabilities will be classified as financing activities.
254
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CIMIC Group Limited Annual Report 2017 | Financial Report
CIMIC Group Limited Annual Report 2017 | Financial Report
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
Notes to the Consolidated Financial Statements
for the 12 months to 31 December 2017
39. NEW ACCOUNTING STANDARDS CONTINUED
e) Other new accounting standards
The following new or amended standards are not expected to have a significant impact on the Group’s consolidated financial
statements:
AASB 2014-10 Amendments to Australian Accounting Standards: Sale or Contribution of Assets Between an Investor and its
Associate or Joint Venture;
AASB 2017-1 Amendments to Australian Accounting Standards – Transfers of Investment Property, Annual Improvements
2014-2016 Cycle and Other Amendments;
AASB Interpretation 22 Foreign Currency Transactions and Advance Consideration; and
AASB Interpretation 23 Uncertainty Over Income Tax Treatments , AASB 2017-4 Amendments to Australian Accounting
Standards – Uncertainty over Income Tax Treatments.
40. EVENTS SUBSEQUENT TO REPORTING DATE
Adjustments arising on application of AASB 9 and AASB 15 are not expected to have an impact on the cash flows to be derived by
Subsequent to reporting date:
Net profit after tax guidance for 2018 takes into account the application of the new accounting stadards.
The Group determined a 100% franked dividend of 75 cents per share to be paid on 4 July 2018.
The Directors approved the financial report on 6 February 2018.
39. NEW ACCOUNTING STANDARDS CONTINUED
b) AASB 15 Revenue from Contracts with Customers continued
Transition
The Group plans to adopt AASB 15 using the cumulative effect method, with the effect of initially applying this standard recognised
at the date of initial application (i.e. 1 January 2018). As a result under AASB 15 there will be an adjustment to the opening balance
Adjustments under the new standards are subject to tax effect accounting and therefore the net deferred tax position will also be
impacted, notwithstanding the finalisation of all adjustments. Adopting the new standards might lead to a currently estimated
increase of the Group’s net deferred tax assets of around $100 million. The equity reductions as discussed in Notes 39 a) and 39 b)
are after tax estimations and as such already take into account this tax impact.
of the Group’s equity.
c) Other impacts of AASB 9 and AASB 15
Tax impacts
Impact on cash flows and guidance
the CIMIC Group.
d) 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 right-of-use assets and lease liabilities for almost all leases. Lessor accounting remains similar to the
current standard – i.e. lessors continue to classify leases as finance or operating leases. AASB 16 applies to annual reporting periods
beginning on or after 1 January 2019 and replaces AASB 117 Leases and the related interpretations.
As at the reporting date, the Group has non-cancellable operating lease commitments of $950.8 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 a broad
range of considerations at the time including financing, risk management and operational strategies following the anticipated
completion of a project.
Some 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 finalised its quantification of 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 total net 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;
the straight-line operating lease expense will be replaced with a depreciation charge for the right-of-use assets and interest
expense on lease liabilities;
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 a number of leases held in the Group at different stages of their terms; and
repayment of the principal portion of all lease liabilities will be classified as financing activities.
-
-
-
-
254
255
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CIMIC Group Limited Annual Report 2017 | 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 159-255, 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 2017 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 to the financial statements
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 Instrument 2016/785.
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 2017.
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 6th day of February 2018.
Signed for and on behalf of the Board in accordance with a resolution of the Directors:
Michael Wright
Chief Executive Officer and Managing Director Chairman Audit and Risk Committee
Russell Chenu
256
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CIMIC Group Limited Annual Report 2017 | 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 159-255, 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 2017 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 to the financial statements
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 Instrument 2016/785.
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 2017.
Financial Reporting Standards.
Dated at Sydney this 6th day of February 2018.
Signed for and on behalf of the Board in accordance with a resolution of the Directors:
Michael Wright
Russell Chenu
Chief Executive Officer and Managing Director Chairman Audit and Risk Committee
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 2017, 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 2017 and of its
financial performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
4. The Directors draw attention to Note 1 to the financial statements, which includes a statement of compliance with International
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 our 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 for the current period. 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 construction revenue and
recovery of related 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’.
As disclosed in Note 1(a), construction revenues
are recognised based on the stage of completion.
This is measured as the percentage of work
performed up to the reporting date with respect
256
Our procedures included, amongst others:
• Evaluating management’s
and
controls
in respect of the recognition of
construction revenue. As part of this process we
tested key controls including:
processes
257
257
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
cost
contingencies;
estimation
the
of
• Determination of contractual entitlement and
assessment of the probability of customer
approval of variations and acceptance of
claims; and
Estimation of project completion date.
•
in contract debtors
The Group recognises
progressive valuation of work completed as well
to customers. The
as amounts
recognition of these amounts is based on
management’s assessment of the expected
amounts recoverable.
invoiced
the preferred contractor
In November 2009, CIMIC, together with its
consortium partners (“the Consortium”), was
to
announced as
construct the Gorgon LNG Jetty and Marine
Structures Project (“Gorgon Contract”)
for
Chevron 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 to the validity and valuation of some of
the CORs.
•
As at 31 December 2017, contract debtors include
an amount of $1.15 billion in relation to the
Gorgon Contract. CIMIC has only recognised
revenue in prior reporting periods equal to the
costs incurred in respect of the Gorgon Contract
in accordance with the relevant accounting
standards.
On 9 February 2016, although negotiations
continued, the Consortium formally issued a
Notice of Dispute to Chevron pursuant to the
relevant provisions of the Gorgon Contract and
moved into an arbitration prescribed by the
contract.
Since December 2016
the arbitration has
continued in accordance with the contractual
terms. The Arbitrators have been appointed and
have made orders for the conduct of the
proceedings and it is anticipated that the hearings
will be in 2019 with a determination thereafter.
In order to further pursue its entitlement under
the Gorgon Contract, on 20 August 2016 CIMIC
it had also commenced
announced
proceedings in the United States against Chevron
that
258
258
-
-
-
preparation,
the review process conducted at the
tendering phase by the Group’s Tender
Review Management Committee;
the
and
authorisation of monthly valuation
reports for all contracts; and
the comprehensive project reviews that
are undertaken by Group management
on a quarterly basis.
review
• Visiting a sample of sites 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
variations and claims;
delay risk;
high potential impact and high likelihood
of risk events;
changes,
-
-
- material new contracts;
-
-
high value contracts; and
loss making contracts.
the contracts selected
For
procedures were performed, amongst others:
the
following
-
-
-
-
-
-
-
and
obtaining an understanding of
the
to
terms and conditions
contract
evaluate whether these were reflected in
management’s estimate of forecast costs
and revenue;
testing a sample of costs incurred to date
and agreeing
to supporting
these
documentation;
assessing the forecast costs to complete
through discussion and challenging of
finance
project managers
personnel;
testing contractual entitlement
for
changes,
claims
variations
recognised within contract revenue to
supporting documentation and by
reference to the underlying contract;
evaluating significant exposures
to
liquidated damages for late delivery of
contract works;
evaluating contract performance in the
period since year end to audit opinion
date to confirm management’s year end
revenue recognition judgements; and
evaluating the probability of recovery of
outstanding amounts by reference to the
status of contract negotiations, historical
recoveries
supporting
documentation.
other
and
and
•
In respect of the Gorgon Contract, the following
procedures were performed:
to the total anticipated contract work to be
performed. Construction revenue is recognised by
management after assessing all factors relevant
-
the review process conducted at the
tendering phase by the Group’s Tender
Review Management Committee;
to each contract, including specifically assessing
-
the
preparation,
review
and
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
Structures Project (“Gorgon Contract”)
for
Chevron 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 to the validity and valuation of some of
the CORs.
As at 31 December 2017, contract debtors include
an amount of $1.15 billion in relation to the
Gorgon Contract. CIMIC has only recognised
revenue in prior reporting periods equal to the
costs incurred in respect of the Gorgon Contract
in accordance with the relevant accounting
standards.
On 9 February 2016, although negotiations
continued, the Consortium formally issued a
Notice of Dispute to Chevron pursuant to the
relevant provisions of the Gorgon Contract and
moved into an arbitration prescribed by the
contract.
Since December 2016
the arbitration has
continued in accordance with the contractual
terms. The Arbitrators have been appointed and
have made orders for the conduct of the
proceedings and it is anticipated that the hearings
will be in 2019 with a determination thereafter.
In order to further pursue its entitlement under
the Gorgon Contract, on 20 August 2016 CIMIC
announced
that
it had also commenced
proceedings in the United States against Chevron
258
authorisation of monthly valuation
reports for all contracts; and
-
the comprehensive project reviews that
are undertaken by Group management
on a quarterly basis.
• Visiting a sample of sites 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.
•
For
the contracts selected
the
following
procedures were performed, amongst others:
obtaining an understanding of
the
contract
terms and conditions
to
evaluate whether these were reflected in
management’s estimate of forecast costs
and revenue;
testing a sample of costs incurred to date
and agreeing
these
to supporting
documentation;
assessing the forecast costs to complete
through discussion and challenging of
project managers
and
finance
personnel;
-
testing contractual entitlement
for
changes,
variations
and
claims
recognised within contract revenue to
supporting documentation and by
reference to the underlying contract;
evaluating significant exposures
to
liquidated damages for late delivery of
contract works;
evaluating contract performance in the
period since year end to audit opinion
date to confirm management’s year end
revenue recognition judgements; and
-
evaluating 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 were performed:
-
-
-
-
-
-
-
-
-
-
-
Corporation
companies.
Inc., KBR
Inc. and
related
We
focused on recognition of construction
revenue and recovery of related contract debtors
including recovery of Gorgon LNG Jetty and
Marine Structures Project contract debtors as 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 terms
leading to complex and judgemental revenue
recognition from contracts and the judgement
involved in evaluating the probability of recovery
of contract debtors.
Recoverability of carrying value of investment in
and loans receivable from HLG Contracting LLC
Refer 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 2017 is the
equity accounted investment in HLG at a carrying
value of $245.6 million and loans (including
interest) receivable from HLG totalling $1.05
billion.
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,
the
recoverability of
contract
certain
receivables, as well as economic assumptions
such as growth rate and foreign currency
exchange rates.
future contract wins and
legacy
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.
Carrying value of construction goodwill
Refer to Note 15 ‘Intangibles’.
Included in the Group’s consolidated statement of
financial position at 31 December 2017 is goodwill
relating to Construction of $448.1 million.
Management has assessed the recoverable
amount of the goodwill relating to Construction
-
-
-
-
-
evaluating the probability and timing of
recovery of outstanding amounts by
reference to the status of contract
negotiations, the status of the arbitration
process, the status of legal proceedings
and other supporting documentation;
enquiring of management, internal legal
counsel and management appointed
external legal counsel in respect of the
current status of negotiations;
enquiring of internal legal counsel of
status of proceedings in the United
States
Chevron
courts
Corporation and KBR Inc.;
reading documents submitted into the
arbitration process and enquiring of
management, internal legal counsel and
management appointed external legal
counsel in respect of the current status
of the arbitration process; and
assessing the appropriateness of the
relevant disclosures in the financial
statements.
against
conjunction with valuation experts, our
In
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
critically
including
assessing the following assumptions:
receivable,
loans
-
-
-
-
-
and
flows
discount rate;
forecast
cash
expenditure;
forecast recoverability of certain legacy
contract receivables;
terminal growth rate; and
foreign currency exchange rates.
capital
We corroborated market related assumptions in
respect of discount rate and foreign currency
exchange rates by reference to external data.
Testing on a sample basis the mathematical
accuracy of the cash flow models.
•
• Comparing the HLG prepared business plan to
•
forecasts in the cash flow models.
Performing sensitivity analysis on a number of
assumptions, including the deferral of cash
receipts on certain legacy contract receivables
and on revenue assumptions.
• Assessing the appropriateness of the relevant
disclosures in the financial statements.
conjunction with valuation experts, our
In
procedures included, amongst others:
•
Evaluating the ‘value in use’ discounted cash
flow model developed by management to assess
the goodwill,
the recoverable amount of
following
the
including critically assessing
assumptions:
259
259
utilising discounted cash flow models which
incorporate significant judgement in respect of
assumptions such as discount rates and future
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.
-
-
-
-
and
cash
flows
discount rate;
forecast
expenditure;
growth rates by reference to recent bid
wins and pipeline of prospective
projects; and
terminal growth rate.
capital
We corroborated market related assumptions in
respect of the discount rate by reference to
external data.
Testing on a sample basis the mathematical
accuracy of the cash flow model
•
• 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,
rate and
forecast profitability.
including discount
•
• Assessing the appropriateness of the relevant
disclosures in the financial statements.
Other Information
The directors are responsible for the other information within the Company’s annual report for the year
ended 31 December 2017, but does not include the financial report and our 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 our audit 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 to be 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.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
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 has no realistic alternative but to do so.
260
260
utilising discounted cash flow models which
incorporate significant judgement in respect of
assumptions such as discount rates and future
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.
-
-
-
-
discount rate;
expenditure;
forecast
cash
flows
and
capital
growth rates by reference to recent bid
wins and pipeline of prospective
projects; and
terminal growth rate.
We corroborated market related assumptions in
respect of the discount rate by reference to
external data.
•
Testing on a sample basis the mathematical
accuracy of the cash flow model
• 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
rate and
forecast profitability.
• Assessing the appropriateness of the relevant
disclosures in the financial statements.
Other Information
The directors are responsible for the other information within the Company’s annual report for the year
ended 31 December 2017, but does not include the financial report and our 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 our audit 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 to be 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.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
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 has no realistic alternative but to do so.
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 misstatement
when 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 a basis 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 in the 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 our opinion. 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’s 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 period and 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 rare circumstances, 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.
260
261
261
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 61 to 74 of the Directors’ Report for the year
ended 31 December 2017.
In our opinion, the Remuneration Report of CIMIC Group Limited, for the year ended 31 December 2017,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
DELOITTE TOUCHE TOHMATSU
J A Leotta
Partner
Chartered Accountants
Sydney, 6 February 2018
262
262
n
o
i
t
a
m
r
o
f
n
I
l
a
n
o
i
t
i
d
d
A
CIMIC Group Limited Annual Report 2017 263
Photo: Columbarium and Garden of Remembrance, Hong Kong, Leighton Asia.
264 CIMIC Group Limited Annual Report 2017
Additional Information
CIMIC Group Limited Annual Report 2017 265
266 CIMIC Group Limited Annual Report 2017
Report on the Remuneration Report
Opinion on the Remuneration Report
TWENTY LARGEST SHAREHOLDERS
The 20 largest shareholders on the Company’s register of members held 93.14% of the Company’s issued capital.
CIMIC Group Limited Annual Report 2017 | Additional Information
Shareholdings
The information below is current as at 23 January 2018.
We have audited the Remuneration Report included in pages 61 to 74 of the Directors’ Report for the year
Name
ended 31 December 2017.
In our opinion, the Remuneration Report of CIMIC Group Limited, for the year ended 31 December 2017,
complies with section 300A of the Corporations Act 2001.
Responsibilities
Standards.
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
DELOITTE TOUCHE TOHMATSU
J A Leotta
Partner
Chartered Accountants
Sydney, 6 February 2018
HOCHTIEF AUSTRALIA HOLDINGS LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMINEES PTY LTD
BNP PARIBAS NOMINEES PTY LTD
BNP PARIBAS NOMS PTY LTD
MILTON CORPORATION LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
AMP LIFE LIMITED
GWYNVILL INVESTMENTS PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
CITICORP NOMINEES PTY LIMITED
GWYNVILL TRADING PTY LIMITED
SBN NOMINEES PTY LIMITED <10004 ACCOUNT>
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2
NATIONAL NOMINEES LIMITED
MR JONATHAN LEIGHTON STANLEY ELLIS
BNP PARIBAS NOS (NZ) LTD
Total
Total shares on issue
No. of shares
235,661,965
32,856,170
13,999,668
8,613,752
3,380,086
1,230,000
1,073,664
1,063,654
791,239
756,309
561,779
427,188
326,809
275,372
244,791
230,100
153,065
143,237
138,150
93,903
% of issued
capital
72.68
10.13
4.32
2.66
1.04
0.38
0.33
0.33
0.24
0.23
0.17
0.13
0.10
0.08
0.08
0.07
0.05
0.04
0.04
0.03
302,020,901
324,254,097
93.14
100
DISTRIBUTION SCHEDULE
The Company has 324,254,097 ordinary shares on issue. The distribution of shareholders is as follows:
Size of shareholding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
No. of holders
25,354
4,377
402
193
19
30,345
Ordinary shares held
6,391,523
8,891,293
2,813,861
4,239,035
301,918,385
324,254,097
% of issued capital
1.97
2.74
0.87
1.31
93.11
100
The voting rights for ordinary shares are as follows: on a show of hands every member present in person or by proxy or attorney or
duly appointed representative has one vote, and on a poll every member so present has one vote for every fully paid share held by
that member.
There were 591 shareholders with less than a marketable parcel (11 shares), based on the closing market price of $48.41 on 23
January 2018.
262
267
267
CIMIC Group Limited Annual Report 2017 | Additional Information
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.
SHARE RIGHTS
The Company has zero share rights on issue.
OPTIONS
The Company has 311,088 options on issue. The distribution is as follows:
Size of holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
The options do not carry any rights to voting.
No. of holders
-
8
8
10
-
26
Options
-
32,023
52,179
226,886
-
311,088
268
268
CIMIC Group Limited Annual Report 2017 | Additional Information
CIMIC Group Limited Annual Report 2017 | Additional Information
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:
Shareholder information
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.
SHARE RIGHTS
The Company has zero share rights on issue.
The Company has 311,088 options on issue. The distribution is as follows:
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.
No. of holders
-
8
8
10
-
26
Options
32,023
52,179
226,886
-
-
311,088
ENQUIRIES AND SHARE REGISTRY
If you have any questions about your shareholding, dividend payments, tax file number, change of address or any other enquiry,
please contact Computershare Investor Services Pty Limited:
•
•
•
•
Telephone: 1300 850 505 (local) or +61 3 9415 4000 (international)
Fax: (03) 9473 2500 (local) or +61 3 9473 2500 (international)
Email: www.investorcentre.com/contact
Post: GPO Box 2975, Melbourne, VIC, 3001, Australia
REGISTERED OFFICE
Principal registered office in Australia
Level 25, 177 Pacific Highway, North Sydney, NSW, 2060, Australia
Telephone: +61 2 9925 6666
Fax: +61 2 9925 6000
Website: www.cimic.com.au
TAX FILE NUMBERS
Since 1 July 1991, all companies have been obliged to deduct tax at the top marginal rate from unfranked dividends paid to
investors resident in Australia who have not supplied them with a tax file number or exemption particulars. Tax will not be
deducted from the franked portion of a dividend.
If you have not already done so, a Tax File Number Notification form or Tax File Number Exemption form should be completed for
each holding and returned to our Share Registrar, Computershare Investor Services Pty Limited. Please note you are not required
by law to provide your tax file number if you do not wish to do so.
SECURITIES EXCHANGE LISTINGS
CIMIC’s shares are listed on the ASX and are traded under the stock code ‘CIM’. The ASX home branch is Sydney, Australia. A
Subsidiary, CIMIC Finance (USA) Pty Limited, has notes on issue which are listed on the Singapore Exchange.
YEAR-ON-YEAR PERFORMANCE SNAPSHOT
The five-year performance of the Group is set out in a table within the ‘Company Performance’ section of the Remuneration
Report.
CORPORATE GOVERNANCE STATEMENT
The CIMIC Group corporate governance statement is available on our website, in the section titled Corporate Governance
(www.cimic.com.au/our-approach/corporate-governance).
ANNUAL GENERAL MEETING
The 57th Annual General Meeting of the members of CIMIC will be held in the Wentworth Ballroom, Sofitel Sydney Wentworth, 61-
101 Phillip Street, Sydney, New South Wales on 13 April 2018. Shareholders will be notified of the meeting and any resolutions in
accordance with the Corporations Act.
SHAREHOLDER COMMUNICATIONS
Shareholder communications, including this Annual Report, are available on our website (www.cimic.com.au). CIMIC encourages
shareholders to receive notification of all communications by email. Printed copies of shareholder communications are available on
request by contacting +61 2 9925 6666 or visiting our website: www.cimic.com.au/enquiries-form.
268
269
269
CIMIC Group Limited Annual Report 2017 | Glossary
Glossary
Term
2Q17
3Q17
4Q17
2016 Financial Year or FY16
2017 Financial Year or FY17
FY18
A$ or $
AASB
Above-the-line
ACS or ACS Group
AGM or Annual General Meeting
Alternate Director
ASIC
AS/NZ
ASX
ASX Principles and Recommendations
Australian Accounting Standards
BIM
Board
Broad Construction
CDP
CEO
CEO and Managing Director
CFO
Class 1 Injury
CO2-e or Carbon dioxide equivalent
Code of Conduct
Committee
Company or CIMIC
Constitution
Corporations Act
Corruption Perceptions Index
CPB Contractors or CPB
Deferred Right
Deputy CEO
Deloitte
Devine
Director
DJSI
Description
Second quarter of the 2017 Financial Year
Third quarter of the 2017 Financial Year
Fourth quarter of the 2017 Financial Year
Financial year ending 31 December 2016
Financial year ending 31 December 2017
Financial year ending 31 December 2018
Australian dollars, unless otherwise stated
Australian Accounting Standards Board
Higher order controls such as engineering and design controls, rather than personal
protective equipment or administrative controls, which aim to improve safety outcomes
Actividades de Construcción y Servicios S.A.
Annual General Meeting of CIMIC’s shareholders
Alternate Director of CIMIC
Australian Securities and Investments Commission
Denotes a standard created by Standards Australia
ASX Limited
ASX Corporate Governance Council’s Corporate Governance Principles and
Recommendations (3rd Edition)
Australian Accounting Standards developed, issued and maintained by the AASB
Building Information Modelling, a digital representation of physical and functional
characteristics of a facility
Board of directors of CIMIC
Broad Construction is a new-build, fit-out and refurbishment construction contractor
wholly owned by CPB Contractors
A not-for-profit that runs the global disclosure system CDP (formerly the ‘Carbon Disclosure
Project’)
Chief Executive Officer
CEO and Managing Director of CIMIC
Chief Financial Officer of CIMIC
A fatality or injury that permanently affects the future of a worker. e.g. quadriplegia,
paraplegia, loss of eyesight
Is a term for describing different greenhouse gases in a common unit
CIMIC Group Code of Conduct
Any Board/management committee of the Company from time to time
CIMIC Group Limited
Constitution of CIMIC Group Limited
Corporations Act 2001 (Cth)
An annual ranking, published since 1995 by Transparency International (TI) of countries "by
their perceived levels of corruption, as determined by expert assessments and opinion
surveys"
CPB Contractors Pty Ltd
An entitlement to a Share subject to satisfaction of applicable conditions (including service
based vesting conditions)
Deputy Chief Executive Officer of CIMIC
Deloitte Touche Tohmatsu
Devine Limited
Director of CIMIC
Dow Jones Sustainability Index
DJSI Australia Index
Dow Jones Sustainability Australia Index
Dragados
EBIT
EBITDA
270
Is an international contractor established in 1941 and is the construction arm of the ACS
Group specialising in major infrastructure projects
Earnings before interest and taxes
Earnings before interest, taxes, depreciation and amortisation
270
CIMIC Group Limited Annual Report 2017 | Glossary
CIMIC Group Limited Annual Report 2017 | Glossary
Term
2Q17
3Q17
4Q17
FY18
A$ or $
AASB
ASIC
AS/NZ
ASX
BIM
Board
CDP
CEO
CFO
Glossary
2016 Financial Year or FY16
2017 Financial Year or FY17
Description
Second quarter of the 2017 Financial Year
Third quarter of the 2017 Financial Year
Fourth quarter of the 2017 Financial Year
Financial year ending 31 December 2016
Financial year ending 31 December 2017
Financial year ending 31 December 2018
Australian dollars, unless otherwise stated
Australian Accounting Standards Board
Above-the-line
Higher order controls such as engineering and design controls, rather than personal
protective equipment or administrative controls, which aim to improve safety outcomes
ACS or ACS Group
Actividades de Construcción y Servicios S.A.
AGM or Annual General Meeting
Annual General Meeting of CIMIC’s shareholders
Alternate Director
Alternate Director of CIMIC
Australian Securities and Investments Commission
Denotes a standard created by Standards Australia
ASX Limited
Recommendations (3rd Edition)
ASX Principles and Recommendations
ASX Corporate Governance Council’s Corporate Governance Principles and
Australian Accounting Standards
Australian Accounting Standards developed, issued and maintained by the AASB
Building Information Modelling, a digital representation of physical and functional
Broad Construction
Broad Construction is a new-build, fit-out and refurbishment construction contractor
A not-for-profit that runs the global disclosure system CDP (formerly the ‘Carbon Disclosure
CEO and Managing Director
CEO and Managing Director of CIMIC
Class 1 Injury
A fatality or injury that permanently affects the future of a worker. e.g. quadriplegia,
CO2-e or Carbon dioxide equivalent
Is a term for describing different greenhouse gases in a common unit
Any Board/management committee of the Company from time to time
Corruption Perceptions Index
An annual ranking, published since 1995 by Transparency International (TI) of countries "by
their perceived levels of corruption, as determined by expert assessments and opinion
An entitlement to a Share subject to satisfaction of applicable conditions (including service
characteristics of a facility
Board of directors of CIMIC
wholly owned by CPB Contractors
Project’)
Chief Executive Officer
Chief Financial Officer of CIMIC
paraplegia, loss of eyesight
CIMIC Group Code of Conduct
CIMIC Group Limited
Constitution of CIMIC Group Limited
Corporations Act 2001 (Cth)
surveys"
CPB Contractors Pty Ltd
based vesting conditions)
Deputy Chief Executive Officer of CIMIC
Deloitte Touche Tohmatsu
Devine Limited
Director of CIMIC
Dow Jones Sustainability Index
DJSI Australia Index
Dow Jones Sustainability Australia Index
Is an international contractor established in 1941 and is the construction arm of the ACS
Group specialising in major infrastructure projects
Earnings before interest and taxes
Earnings before interest, taxes, depreciation and amortisation
Code of Conduct
Committee
Company or CIMIC
Constitution
Corporations Act
CPB Contractors or CPB
Deferred Right
Deputy CEO
Deloitte
Devine
Director
DJSI
Dragados
EBIT
EBITDA
EIC Activities
EIP
EPS
ESA
ESG
FleetCo
Former Director
FTSE4Good Index
FY
GIS
Graduate
Graduate Program
GRI
Green Standard projects
Group or CIMIC Group
HAZOP
HLG Contracting or HLG
HOCHTIEF Australia
HOCHTIEF or HOCHTIEF AG
Independent Non-executive Director
ISCA
ISO
John Holland or JHG
John Holland sale
JV
KMP
KPI
Leighton Asia
Leighton India
Leighton International
LNG
LTI
Macmahon
Moody's
Nextgen
NGER Scheme
NGO
NPAT
Non-executive Director
Operating Companies
Pacific Partnerships or PP
PBT
Performance Right
Potential Class 1 Injury or PC1
EIC Activities Pty Ltd
The CIMIC Equity Incentive Plan approved by shareholders at the 2012 AGM, under which
the STI and LTI programs are administered
Earnings per share
Executive service agreement
Environmental, Social and Governance
The Company’s mining equipment hire business
Former Director of CIMIC
The FTSE4Good Index measures the performance of companies demonstrating strong
environmental, social and governance practices.
Financial year
Geographic Information Systems capture, store, manipulate, analyse, manage, and present
spatial or geographical data
A member of the Graduate Program
CIMIC Group Graduate Program
The Global Reporting Initiative
Refers to nationally or international recognised rating systems for infrastructure projects,
such as ISCA and Greenroads, and for building projects such as the Green Star and LEED.
CIMIC Group Limited and certain entities it controls
A hazard and operability study (HAZOP) is a structured and systematic examination of a
complex planned or existing process or operation in order to identify and evaluate
problems that may represent risks to personnel or equipment
HLG Contracting LLC (previously known as Al Habtoor Leighton LLC)
HOCHTIEF Australia Holdings Limited, a wholly owned subsidiary of HOCHTIEF AG
HOCHTIEF Aktiengesellschaft
Independent Non-executive Director of CIMIC
Infrastructure Sustainability Council of Australia
Denotes a standard of the International Organisation for Standardisation
John Holland Group Pty Limited, a former wholly owned subsidiary of CIMIC
In December 2014, the Group announced the successful divestment of JHG to CCCC
International Holding Limited. Completion of the sale occurred on 20 April 2015
Joint venture
Key Management Personnel as defined in AASB 124 Related Party Disclosures
Key performance indicators
Leighton Asia Limited
Leighton India Contractors Private Limited
A controlled entity of CIMIC that is responsible for the Group’s offshore oil and gas
business
Liquefied natural gas
Long-Term Incentive
Macmahon Holdings Limited
Moody's Investors Service
A network and data centre telecommunications company
National Greenhouse and Energy Reporting Scheme which operates under the National
Greenhouse and Energy Reporting Act 2007 (Cth)
Non-governmental organisation that is independent from states and international
governmental organisations
Net profit after tax
Non-executive Director of CIMIC
CPB Contractors Pty Limited & Leighton Asia Limited, Leighton India Contractors Private
Limited, Leighton Offshore, Thiess Pty Ltd, Sedgman Pty Limited, UGL Pty Limited, Pacific
Partnerships Pty Ltd, EIC Activities Pty Ltd and Leighton Properties Pty Limited
Pacific Partnerships Pty Ltd
Profit before tax
An entitlement to a Share subject to satisfaction of applicable conditions (including
performance based vesting conditions)
An incident that has the potential to be a Class 1 Injury as classified by the Managing
Director of that business or an Executive General Manger
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CIMIC Group Limited Annual Report 2017 | Glossary
PPP
Principles
Safety Essentials
SAR
Sedgman
Special Committee
S&P
STI
Subsidiary
SDG
TFR
Thiess
TRIFR
TSR
Turner
UGL or Services
Ventia
VWAP
Public private partnership
The CIMIC Group Limited Principles of integrity, accountability, innovation underpinned by
safety.
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
Share appreciation right
Sedgman Pty Limited
Any special committee of the Company from time to time
Standard & Poor’s
Short-term incentive
Subsidiary of the Company as defined in the Corporations Act
2030 Agenda for Sustainable Development and the Sustainable Development Goals
Total Fixed Remuneration
Thiess Pty Ltd
Total recordable injury frequency rate
Total shareholder return
A North America-based, international construction services company and a leading builder
in diverse market segments that is wholly owned by HOCHTIEF AG
UGL Pty Limited
50:50 Partnership for CPB Contractors’ and Thiess’ operations and maintenance services
businesses with certain funds managed by affiliates of Apollo Global Management, LLC.
Completion of the transaction occurred on 31 March 2015, with the business now
operating under the name ‘Ventia’
Volume weighted average price
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The contractor behind some of Asia’s
most complex projects in the construction, building,
civil engineering and infrastructure sectors.
Photo: Express Rail Link, West Kowloon Terminus Station North project, Hong Kong, Leighton Asia.
CIMIC Group Limited Annual Report 2017 275
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A market leader in the design, construction and
operation of mineral processing plants and
associated minesite infrastructure.
Photo: Sonoma Operations team, Sonoma Mine, Collinsville, Queensland, Australia, Sedgman.
CIMIC Group Limited Annual Report 2017 277
For more information please contact CIMIC:
PO Box 1002, Crows Nest NSW 1585, Australia
T +61 2 9925 6666
F +61 2 9925 6000
www.cimic.com.au/enquiries-form
ABN 57 004 482 982
CIMIC.COM.AU
© CIMIC Group Limited